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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. The State of

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Speaker 1: Arizona says it has evidence that the Sackler family has

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Speaker 1: been looting billions of dollars from Perdue Pharma, knowing the

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Speaker 1: company was facing massive financial liabilities for its role in

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Speaker 1: the opioid crisis, and Arizona is going straight to the

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Speaker 1: Supreme Court with its case in a novel and brazen move.

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Speaker 1: Joining me is Steve Sanders are professor at the mar

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Speaker 1: School of Law, Indiana University. Steve, just how unusual is

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Speaker 1: this straight to the Supreme Court, Julie. It's very unusual,

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Speaker 1: and given the Supreme Court's track record of disfavoring this

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Speaker 1: kind of action, I feel almost safe in saying that

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Speaker 1: the state is doing this as a publicity stunt. I mean,

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Speaker 1: we're talking about it right there, getting the attention that

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Speaker 1: they want on the issue. The state, in its filing

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Speaker 1: in the Supreme Court says, probably appropriately that the opioid crisis.

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Speaker 1: It calls it the worst man made crisis in world history,

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Speaker 1: talks about, you know, the thousands of lives that have

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Speaker 1: been lost and the millions of dollars that this crisis

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Speaker 1: has caused. But the suit specifically, as you said, is

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Speaker 1: not against Produe Pharma per se for its role. Perdue

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Speaker 1: Pharma and other makers of opioids are facing lots of

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Speaker 1: lawsuits from states and other entities and people who blame

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Speaker 1: them for causing the opioid crisis through their marketing efforts

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Speaker 1: and so forth. But this suit specifically alleges that the

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Speaker 1: Sackler family, which owns Perdue Pharma it's a privately held company,

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Speaker 1: is taking money out of the company wrongfully. Now, of

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Speaker 1: course owners are entitled to take money out of their companies,

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Speaker 1: but most states, including Arizona, have laws that say you

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Speaker 1: can't take money out if you're doing it in anti

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Speaker 1: cipation of the company going bankrupt or potentially not having

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Speaker 1: sufficient resources to pay for example, court judgments that might

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Speaker 1: come against it. These are wrongful transfers of assets. Essentially,

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Speaker 1: it's a in many ways a very garden variety claim.

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Speaker 1: As a state law claim, there's not even any federal

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Speaker 1: law involved here. I really just think that Arizona is

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Speaker 1: asking the Supreme Court to do this, to take this

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Speaker 1: case directly in order to get to get attention for it.

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Speaker 1: Article three of the Constitution does give the Supreme Court

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Speaker 1: original jurisdiction in cases where a state is a party.

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Speaker 1: How much discretion does the court have to turn states away? Well,

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Speaker 1: the Court clearly believes it has a complete discretion to

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Speaker 1: do that, and you're right. So when the Framers draft

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Speaker 1: at the Constitution, they gave the Supreme Court both original

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Speaker 1: jurisdiction meaning you can go there and file your lawsuit

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Speaker 1: in that court for the first time, and also appellate jurisdiction,

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Speaker 1: meaning you know they correct air or is that lower

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Speaker 1: courts have made about the law. Most of the cases

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Speaker 1: we're familiar with are a matter of the Supreme Court

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Speaker 1: exercising it's appellate jurisdiction, taking cases from lower courts in

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Speaker 1: either affirming them or overturning them. But there is a

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Speaker 1: couple of narrow categories of cases where the court has

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Speaker 1: original jurisdiction. One is suits between one state and another state.

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Speaker 1: Another category is suits where just the state is a

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Speaker 1: party but the other party is a private entity or

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Speaker 1: private individuals. The Supreme Court in the last half century

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Speaker 1: or so has occasionally taken cases between two states, often

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Speaker 1: water disputes and boundary disputes, but it has pretty consistently

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Speaker 1: turned away cases involving just where the state is a

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Speaker 1: plaintiff or defendant and the other party is not a state.

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Speaker 1: The court believes those cases are better handled in the

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Speaker 1: lower courts. There's some dispute about the court's ability to

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Speaker 1: turn away case involving two states. It's pretty clear, though,

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Speaker 1: with a case like this one against the Sackler family

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Speaker 1: that Arizona is bringing. The Supreme Court has original jurisdiction,

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Speaker 1: but it doesn't have what's called exclusive jurisdiction, and it

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Speaker 1: doesn't have mandatory jurisdiction, and so the Supreme Court really

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Speaker 1: is not well equipped to sit as a trial court,

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Speaker 1: where facts are sifted through and there have to be

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Speaker 1: depositions and witnesses and so forth. The Supreme Court typically

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Speaker 1: appoints a special master, a sort of specialized attorney who

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Speaker 1: plays judge and handles all of that stuff that would

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Speaker 1: ordinarily happen in a trial court, and then the Supreme

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Speaker 1: Court decides what to do with that report. I think

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Speaker 1: here it's based on its track record, based on the

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Speaker 1: fact it's pretty clear the Supreme Court is going to

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Speaker 1: take the attitude. Look, file your case in the appropriate court,

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Speaker 1: a state court, or if you have a federal theory,

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Speaker 1: file it in federal court, and if the issues are

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Speaker 1: important enough, someday we'll get to it. Maybe he Justice

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Speaker 1: Clarence Thomas in descent suggest that the Supreme Court should

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Speaker 1: be taking these cases. Well. Several years ago, two states,

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Speaker 1: Oklahoma and Nebraska, I believe it was sued the state

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Speaker 1: of Colorado saying that Colorado's decision to legalize marijuana was

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Speaker 1: having detrimental effects on their states and their state interests,

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Speaker 1: and so they filed suit directly, and the they attempted

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Speaker 1: to file suit directly in the Supreme Court, Supreme Court

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Speaker 1: declined to hear it. That's where Justice Thomas's descent came about.

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Speaker 1: Just as Thomas may have a little better argument that

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Speaker 1: the Supreme Court doesn't have the discretion either under the

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Speaker 1: Constitution or statutory law which fills in the details of jurisdiction,

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Speaker 1: it's more of a question whether the Supreme Court has

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Speaker 1: the ability to turn aside cases between two different states.

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Speaker 1: Because the Supreme Court is the only court that can

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Speaker 1: hear that. The other courts don't have jurisdiction to hear

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Speaker 1: those here. I don't think Justice Thomas was referring to

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Speaker 1: this kind of case where only one party is a state.

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Speaker 1: It's more clear in federal law that here that the

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Speaker 1: Supreme Court does have discretion because there is nothing preventing

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Speaker 1: Arizona from filing this case in some other lower court.

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Speaker 1: Nearly every state is suing per Due. I think it's

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Speaker 1: about forty eight out of fifty. So one wonders why

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Speaker 1: the Supreme Court would just hear a case by one state.

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Speaker 1: But Arizona's a g told the New York Times that

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Speaker 1: he knew the suit was a long shot, but quote,

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Speaker 1: sometimes you've just got a throw deep. Well, you know,

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Speaker 1: there's some speculation that Arizona's jockeying to sort of take

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Speaker 1: the lead role among the states, you know, the various

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Speaker 1: states maybe fighting to see who controls this litigation if

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Speaker 1: it's consolidated in some way. But once again, I think,

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Speaker 1: you know, one could also interpret that statement by Arizona's

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Speaker 1: attorney general as you know, we want to get a

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Speaker 1: lot of attention for this case. We want people to

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Speaker 1: be talked about it. We want to draw attention to

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Speaker 1: the opioid crisis and to the role that pharmaceutical manufacturers

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Speaker 1: and their owners have played. And you know what do

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Speaker 1: we have to lose by filing this suit. It will

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Speaker 1: probably get turned down, but we'll get lots of attention

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Speaker 1: and lots of publicity on this um, you know, serious

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Speaker 1: crisis as a result. Also, Oklahoma has settled with Perdue

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Speaker 1: for two seventy million dollars. Perdue recently announced it's considering bankruptcy.

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Speaker 1: So I would expect that the states are kind of

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Speaker 1: jockeying for position well, and and again they'll they'll be

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Speaker 1: jockeying to see who's going to get to the trough

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Speaker 1: to actually make sure that judgments they may obtain can

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Speaker 1: be covered. But once again, if Perdue is contemplating bankruptcy,

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Speaker 1: that's exactly what laws like this one in Arizona and

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Speaker 1: other states are intended to prevent. They're intended to prevent

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Speaker 1: a company from transferring assets away from itself into the

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Speaker 1: hands of owners or other people when it no is

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Speaker 1: that it's going to need these resources potentially to pay

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Speaker 1: off judgments. So you know, there's nothing frivolous in the

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Speaker 1: legal claims that Arizona is making. Arizona is basically saying

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Speaker 1: this is so urgent that we can't wait for years

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Speaker 1: for it to work its way through the courts. We

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Speaker 1: need to start at the top. Well, it's a fascinating issue.

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Speaker 1: Thanks so much for joining us. Steve happy to do it.

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Speaker 1: That's Steve Sanders, a professor at the Mars School of

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Speaker 1: Law at Indiana University. Thanks for listening to the Bloomberg

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Speaker 1: Law Podcast. You can subscribe and listen to the show

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Speaker 1: on Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcast.

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Speaker 1: I'm June Brosso. This is Bloomberg