Consequences of Municipal Litigation

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Litigation Practice Group, was recorded on Thursday, March 12, 2020, during a live teleforum conference call held exclusively for Federalist Society members.        

 

Wesley Hodges:  Welcome to The Federalist Society’s teleforum conference call. This afternoon’s topic is titled “The Consequences of Municipal Litigation.” My name is Wesley Hodges, and I’m the Associate Director of Practice Groups at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the experts on today’s call.

 

Today, we are very fortunate to have with us a terrific panel to discuss the topic. Our moderator today is Elbert Lin, who is the partner and co-chair for the Issues and Appeals section of Hunton Andrews & Kurth and the former Solicitor General of West Virginia. After our speakers have their remarks today, we will have time for your questions. Thank you very much for participating today. Elbert, the floor is yours.

 

Elbert Lin: Thanks a lot. Thanks to FedSoc for hosting this call. Before I begin on the topic, I wanted to introduce our two speakers who are going to do the heavy lifting. We’re really fortunate to have with us today the Attorney General of Ohio, Dave Yost. He is the 51st Attorney General of Ohio. He took office in January of 2019. And prior to that, he was, for eight years, the 32nd Auditor of the state of Ohio. Attorney General Yost has a long and illustrious resume that you can see on The Federalist Society website.

 

The other speaker we have is the Chief Deputy to Attorney General Herbert Slatery in Tennessee, Jonathan Skrmetti. Jonathan was hired as the Chief Deputy in December of 2018. Before that, he was a partner at Butler Snow in Memphis, Tennessee. And before joining Butler Snow, he served as a federal prosecutor for almost a decade. Both General Yost and Jonathan are steeped in the issues of municipal litigation. And again, I think we’re very fortunate to have them here with us today.

 

So let’s just jump right into it. It’s an increasingly important topic, this question of municipality led litigation. We’re seeing it in a variety of different spaces, perhaps most prominently in the climate change space with numerous lawsuits having been filed around the country by various counties and cities against oil and gas companies like the city and county of San Francisco, for example, the city of Baltimore. But then, in addition to that, the other probably most prominent area where we’ve seen this is in the opioid context where there have been many, many, many suits filed by individual municipalities against various companies in the distribution chain for opioids.

 

But that’s not it. We’ve also seen these kinds of suits in other contexts. Jonathan may touch on that as he gets into it. But what I’d like to talk about today is some of the reasons for this trend, some of the potential concerns that we might have -- folks might have with the growing trend of municipal led litigation, and in particular because we’ve got two state officials on, perhaps some of the concerns specifically about the overlap or usurpation of state power between states and municipalities, which are creatures of the state.

 

We’ll talk a little bit about potential solutions and then open the floor up to questions from those who have any. So why don’t we turn first to Jonathan and just sort of an open-ended question to start it off. I’m interested, Jonathan, to what you attribute this recent surge in municipal led litigation.

 

Jonathan Skrmetti:  Sure. Thank you, Elbert. I think there are really two tracks here, although the boundary between them is a little blurry sometimes. You can really think of them in terms of a for-profit track and a public interest track. So when you look at the climate change suits or where you see cities suing over things like the Affordable Care Act or immigration issues, I think part of that is just driven by a desire by city leaders to make a statement, to align themselves in a very public and defined way with their policy preferences. And I think it’s largely political.

 

With respect to things like the opioid cases, anecdotally, I’m not aware of too many municipalities that went out actively seek counsel in those cases. My understanding is a lot of those representation agreements were based on pitches that were made. So I think what you see there is just entrepreneurial plaintiff’s lawyers perhaps looking for new avenues, given tort reforms effects on the overall legal system, who have found this new potential source of work for the foreseeable future, who have been going out and pitching these counties and cities.

 

And it’s, I think, an easy pitch to make. They can come in -- and no offense to them, but most of the counties and cities are not engaged in largescale national litigation on a regular basis. And they’re not -- and again, this is not pejorative, but they’re just not sophisticated litigants. So when a lawyer comes in and says, “Hey, we can get you free money. We just need a contingency,” it’s hard to be against free money.

 

So it’s easy to understand why folks are signing up for these. So I think it’s really, with respect to the for-profit cases, pure business development. There’s a new way for plaintiffs’ attorneys to find work, and they are getting more sophisticated at it every iteration.

 

Elbert Lin:  Jon, if I could just follow up on the public interest track -- and I like the two track approach that you’ve taken here. When you talk about the political reasons, how much of that do you think is kind of pushing back against what they see as what has or has not happened at the state and federal level?

 

Jonathan Skrmetti:  To some extent, that’s significant. Memphis and Nashville are fairly blue cities in a red state. And so, you know, there are limited avenues for people in those cities to express their policy preferences through the instruments of the state. But you do see a lot of cities in blue states that are filing similar lawsuits. Baltimore, for instance, has been active or New York City. So I think part of it is frustration with states not being aligned with the cities. I think part of it is just wanting to get into the arena, wanting to take a side, wanting to unleash their own lawyers into the fight to try to make a difference.

 

Elbert Lin:  Attorney General Yost, let’s turn to your state specifically. Can you tell us a little bit about Ohio’s experience with municipal litigation and what about it has grabbed your attention and what about it has raised your antenna?

 

Dave Yost:  It’s been the opioid litigation. It’s been a little bit frustrating with so many voices speaking. We have a couple of hundred different lawsuits, including the state’s lawsuits. We’re in federal court. We’re in state court. We’ve got different theories and different defendants. And you can imagine the nightmare that is to try to have any kind of settlement discussions.

 

I think Jonathan had it exactly right. This is business development on the part of the plaintiffs bar. The legal and intellectual challenges with this business model are manifold. They’re not going to get settled in this -- we’re not going to work through the policy implications in the opioid litigation because it’s too far down the stream. But looking forward, I think that we really need to think hard about those impacts and about the legal theories and legal relationships between the different levels of government.

 

I spoke with a former partner in one of the nation’s very large plaintiffs’ firms who told me that the managing partner, in describing this new business model, said it’s better to wrestle with a thousand monkeys than 50 gorillas, referring to the attorneys general.

 

Elbert Lin:  You mentioned a little bit about the policy questions in terms of which is better and the overlap of state power and municipal power. And that’s something that interests me. I think your office filed a petition for mandamus in the opioid litigation. Could you tell us a little bit about that and the arguments that sort of motivated it?

 

Dave Yost:  Certainly. Our argument came down -- there were several arguments. The main thrust of this is that these kind of lawsuits largely sound in the doctrine of parens patriae, which is a function of the sovereign. And in our system of government, the state is quasi-sovereign within the United States federal framework. But the states -- the cities and counties rather are not sovereign.

 

So in a very real way, these local jurisdictions have stepped into the shoes of the sovereign. I don’t think usurpation is too strong of a term. They’re usurping the standing and the rights that belong to the state. Now, that might sound like a pretty dusty common law argument descended out of England. But there’s a real practical issue here.

 

And I’d like you to consider for a moment the plight of a hypothetical Bob Buckeye, who lives in Cleveland, Ohio. Now, his neighborhood has been ravaged by the opioid crisis. He has three governments that are suing for the damage done to his community. There’s the city of Cleveland, in which he lives. But the city of Cleveland is contained within the county of Cuyahoga. And they have a lawsuit, too. The county of Cuyahoga is contained within the state of Ohio, which also has it’s lawsuit, and I would argue really was the proper entity to bring these complaints.

 

But let’s think about the practicality here. From the defendant’s point of view and from a justice point of view, who are you compensating here? Because the claims look exactly the same whether you live in Cleveland or Cuyahoga or the state of Ohio. That leads to the very real possibility, I would argue the likelihood of duplicate or triplicate damages by multiple plaintiffs alleging the same conduct on behalf of the people that are so situated.

 

That is more than just a theory. Cuyahoga County, because they won the lottery and got an early trial date, actually had a settlement earlier this year at a premium because the companies wanted to avoid -- you know, the bellwether trial in a place like Cleveland. They paid a lot of money to try to settle that out. I immediately sent a letter to the defendants that settled and said, “Hey, that’s great, but, by the way, our claims are separate. And, you know, there’s no offset here against the state’s claims regarding that portion of the population that lives in Cuyahoga County.” And I got a letter back about the horse that I rode in on from the defendants saying, “Yes, there is an offset, and we intend to assert it.”

 

This is not a theoretical problem. Let’s go one step further, and then I’ll turn it back to my colleagues. Let’s also think about attorneys’ fees. Bob Buckeye, who ostensibly is a member of the community that’s to receive the compensation for wrong done, is now paying a contingency fee to the lawyers for Cleveland in the form of a reduced award out of the damages or settlement, either way it goes. He also has to pay for Cuyahoga’s lawyer, again a contingency settlement. And of course, we have the cost of representation for the state, as well.

 

So we have three sets of lawyers all getting their cut under their contracts, but we’re all representing Bob Buckeye. And I don’t think that that makes too much sense. The final permutation there is the state of Ohio had previously adopted a limitation on the amount of a contingency fee and capped it. So we’re actually in a position where the local attorneys’ fees very likely in Ohio will exceed -- perhaps substantially exceed the attorneys’ fees paid by the state of Ohio, which, candidly, if we had represented the whole state, we would have been able to do this for a fraction of the legal costs.

 

Elbert Lin:  Yeah. Those, I think, are really, really good points. And if you just think about all the various ways that those hypotheticals can play out, there’s a lot of potential for sort of diversion and inequality in really getting at the core point here, which is vindicating the rights of those who are actually harmed. Jonathan, do you have thoughts on that and what are some of your specific concerns about the impacts of this kind of litigation?

 

Jonathan Skrmetti:  Sure. I want to echo, first of all, the idea that this is more expensive in terms of legal expenses than letting the states do it. Sometimes the state’s able to bring a case using its own lawyers. Sometimes the state uses outside counsel. But where the state does use outside counsel, you either have statutory caps. Or at the very least, you have a much higher leverage, much more sophisticated client that can supervise the attorneys.

 

It tends to get a much better deal. Whereas, when you have a lot of counties and cities, the power comes from the aggregation of the clients. And the clients themselves tend to not be too engaged in the litigation, tend not to be able to negotiate nearly as good a deal. And so you have more money going to the lawyers, less money going to resolve the problem. The public suffers as a result.

 

The lack of political accountability is also really significant here because a lot of these cases have policy implications above and beyond the pure damages. And, as I said, when you have groups of plaintiffs’ lawyers that aggregate hundreds of subdivisions, they have a lot of sway with respect to what goes on in a case. But there’s no political accountability there. They tend not to be answerable to clients in nearly the same way. Their decision making is not subject to the same type of scrutiny. So you have policy decisions that are being made by people who have not been put into a position to make policy decisions by the sovereign citizens of the state.

 

Another issue is related to that, and that’s the divergent incentives. So if you’re a plaintiffs’ attorney, typically, if you’re a for-profit plaintiffs’ attorney, you’re looking to make as much money as you can make. And in a lot of cases, that aligns with your client’s interests. Just to use an easy example, if there’s a car wreck, your client wants as much money as they can get. So your interests are completely aligned. You’re trying to maximize the payout. They’re very happy with that, and the system works.

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But when you talk about these big national cases, there may be a lot of considerations above and beyond maximizing the payout. For instance, take opioids for example. You’ve got entities that are engaged in, some of them at least, significant and important work in the American healthcare industry. The three distributors -- the three big distributors distribute something like three-quarters of the prescription drugs in the country. Especially in light of recent events, I think everyone would agree it’s important not to disrupt that function.

 

There’s also the idea that there could be injunctive relief that’s really important as a matter of policy. Well, getting the right and most thorough injunctive relief may, in negotiations, involve a tradeoff with maximizing the money available. And somebody who’s purely focused on the money is not going to necessarily be making the choice that benefits the public the most, depending on how you value the injunctive relief.

 

Timing is also an issue because if you are a well-heeled plaintiffs’ attorney you can afford to hold out. You can afford to take every case to trial. You can afford to go through the appellate process. But sometimes that takes years and years. If you’re working to try to remedy an immediate problem, such as opioids, sometimes it makes sense to get as much money as possible as soon as possible and to not necessarily maximize the payout because getting the money immediately is more important than getting the most money possible over, say, six or eight years.

 

There’s also the entirely separate and extremely painful process of settlement. So if you have thousands of litigants, herding cats is just an understatement of an analogy. You have a lot of different plaintiffs’ attorneys. You have a lot of attorneys general. And it’s difficult to get any subset of that group moving in the same direction. Getting everyone moving in the same direction is just hard.

 

Getting lawyers to agree to anything is a challenge. And when you have that many lawyers and that much at stake, it becomes an extremely difficult task. And, in the meantime, just the raw number of lawsuits is costing the defendants a lot of money. That’s not necessarily the biggest consideration. But when you’re talking about hundreds of millions of dollars a year in legal fees, that does mean there’s less money on the table to be recovered.

 

And traditionally, in big consumer protection type cases like this, the state AG’s would go in, get a multistate settlement, get the money, divvy it up, and it would tend to happen quite a bit faster and with significantly less resource consumption all around. So there are a lot of challenges that come out of the new model.

 

Elbert Lin:  So just to play devil’s advocate for a minute, maybe we start with General Yost. What do you say to -- the sort of private, for-profit track issue I think is separate? But what do you say to the mayor, the county supervisor, county counsel that says, “But our state legislature, state attorney general, or governor is not taking action. Are we supposed to sit ideally by while we watch these harms occur to our citizens?” In the state of Ohio, General Yost, you are in the fight on the opioid matters. But what about sort of the theoretical county someplace else where they don’t have a state official who’s stepped up to take action?

 

Dave Yost:  Well, this goes back to the idea of sovereignty. And of course, the people are sovereign. But we have structures in our government to decide who does what. The states don’t mint money or regulate interstate commerce or raise armies. The federal government does not have general police powers. So we need to ask ourselves the same kind of questions about the relationship between state and local governments.

 

And in fact, even where, as in Ohio, there are home rule provisions in the Constitution, there are matters that belong to the state and not to the locals, just as the state of Ohio, for example -- if we are unhappy with the federal regulation of the money supply, there isn’t a damn thing we can do about it. We might be totally convinced, and we might even be right about our criticisms of the federal action. But we don’t have the legal authority to interfere.

 

And I think that we need to have a robust discussion about where those lines are because it’s certainly true that local governments ought to be able to abate nuisances that are of a local nature. But when we start talking about, for example, climate change, climate change is not a local nuisance. Without getting into the merits of the debate, whatever those effects are, they are the same throughout the state of Ohio, and they’re not different in Cleveland versus it’s suburb of Lakewood.

 

Elbert Lin:  Yeah. I think you raise a really good point there, which is that there are things that are of uniquely local concern for which municipalities are well-suited and probably rightly in a position to seek to vindicate. But what we’re seeing in this recent trend is lawsuits by municipalities that are seeking to abate, remedy, vindicate, combat harms that are more widespread that are the same across the state. Jonathan, did you have anything to add on this question of sort of sovereignty and what to say to the municipality who says, “But what do I do if I’ve got no relief at the state level?”

 

Jonathan Skrmetti:  It’s hard to tell people they can’t do anything, even when that’s the right answer. But for some of these issues, the thing to do is get out and vote, get folks to vote. If the leader of a municipality thinks the state’s doing the wrong thing, it’s not necessarily their job to supplant the state. But we have a democratic system, and they can certainly test those ideas, run for office, or encourage other people to run for office. And the unfortunate truth is not everybody gets their way in politics.

 

And if someone lives in a state that doesn’t want to adopt their policy preferences, sometimes that just means the state’s not going to adopt their policy preferences. But I think trying to engage people who are concerned in constructive mechanisms, such as getting involved in state politics or writing op eds, educating people, all those are things that can be done within our political system that can make a difference but don’t necessarily involve overturning the respective roles of the different levels of government in the country.

 

Elbert Lin:  So I want to turn to talk a little bit now about, for lack of a better word, sort of solutions side of this. In the litigation context, I think the main solution for me that comes to mind is to raise these questions of sovereignty. I think, as General Yost, you did in your petition, I’m also familiar with a case in Nevada involving the city of Reno where defendants have raised similar kind of state sovereignty, municipal creatures of the state-type arguments. You know, we depend there on the courts. As far as I know, I haven’t seen that argument succeed with regularity. Am I missing something there in terms of possible ways to stem the tide in the litigation context?

 

Dave Yost:  Well, the case law that does exist is pretty favorable to that point of view. I think the Sixth Circuit in denying Ohio’s writ of mandamus -- petition for writ of mandamus basically said, “You haven’t exhausted your remedies. You could intervene in the MDL litigation in federal court in Cleveland.” Well, that was a little bit of a Hobson’s choice. I don’t know of any state that wants to litigate its own claims in federal court.

 

In addition to that, by the time that ruling came down last summer, we were already well-progressed towards trial dates for the first two counties that had been set as bellwethers. We deemed that it was -- we would probably not be heard by the court because of the lateness of raising the argument. That’s not to say that that might not work in the future. There are other ways to approach this.

 

I’d like to just mention one. And this goes back to, Elbert, your question about kind of the political track or the legitimacy of local grievances that struggle to be heard. In Ohio, we have worked hard with the local governments, plaintiffs’ counsel, Governor DeWine, to establish what we call One Ohio. And at this point, we have governments representing 85 percent of the population of Ohio have signed on to a memorandum of understanding that creates a unified approach to negotiating these disparate lawsuits.

 

Most of the money is going to go, frankly, to the local governments or to a charity or a foundation -- charitable foundation that will fund remediation and abatement in local communities. But that really makes sense. The way Ohio’s set up, we deliver services at the local level, not the state level. In the future, I think we can avoid, perhaps, some of the blue city/red state arguments, or the converse in a few states, by good leadership that actually reaches out and tries to hear and act cooperatively on the grievances that might be well-founded.

 

But beyond that, Elbert, you -- I read a wonderful paper that I believe you authored, if I’m not wrong, about, I think, four avenues or channels that we might think about in resolving the tensions that we’ve been talking about for the last half hour.

 

Elbert Lin:  I appreciate the softball from you there. I would like to sort of lay out what we thought about it. It’s a white paper that we wrote for the U.S. Chamber of Commerce Institute for Legal Reform. But I did want to just add one more thing on top of what General Yost said about the case law being favorable or not. I did want to emphasis I think that’s exactly right. I haven’t seen the sort of sovereignty argument catch a lot of wind in the current context.

 

But I think the General is exactly right. There are cases not just in Ohio, but elsewhere, Alabama for one, Rhode Island for another, that make clear that the attorney general is the one who speaks for the state or that the state is the only entity that has the ability to bring these parens patriae lawsuits.

 

Dave Yost:  Actually, as the Supreme Court notes in one of its cases, we live in the United States of America, not the United Cities and Counties of America.

 

Elbert Lin:  There you go. There’s the angle of the litigation context, but there is, as General Yost mentioned, also this question of what can we do perhaps at a legislative level, which I think is, for those of us who litigate, often something that we forget about. But in this paper, we kind of tried to look at the issue from the standpoint of a lawsuit where you’ve got a plaintiff versus a defendant bringing a particular cause of action in a particular forum.

 

And so if you’re looking to find a way to curb this trend, you could put your potential legislative solutions into those four buckets: ways to limit the number of willing plaintiffs, ways to limit the number of defendants that are capable of being sued, ways to limit the causes of action, and ways to limit the available fora for these types of suits. And there’s a bunch of different ways to sort of skin the cat in each of these categories. For example, with limiting a willing plaintiff, you could go directly at the problem, so to speak, and pass legislation that limits the power of municipalities to sue in their own rights, whether its broadly or with respect to certain types of claims.

 

You could find ways to curb or disincentivize the use of private contingency fee counsel. You could require, say, state approval or some sort of state review, oversight over lawsuits that concern matters of statewide concern as opposed to, as General Yost had talked about, matters of local of unique concern. So that’s category one, as an example.

 

Category two, in terms of defendants capable of being sued, that’s something that is pretty common is state legislation in terms of right to farm acts, laws that are aimed at addressing particular kinds of lawsuits that occur with some regularity. Whether a policy decision has been made by the legislature to that, those kinds of activities are to be immune or be subject to less litigation because the legislature has conclude that, as a matter of policy, it’s something that the state favors. So that’s another angle.

 

And then causes of action is eliminating particular kinds of causes of action, perhaps putting boundaries on what constitutes a public nuisances. Every state legislature has the ability to put limits on or guardrails around what state common law is or some more traditional tort reform type things, strengthening statutes of limitation or statutes of repose. We have seen some activity, and I’d like to talk to both General Yost and Jonathan about their particular states. General Yost had talked a little bit about Ohio already.

 

But one example that was passed in Texas is a bill that gives the attorney general the responsibility to review contracts for contingent fee outside counsel for political subdivisions and that the attorney general has to approve those contracts. So that does put a check on this process. And as Jonathan mentioned, in many of these cases, the reason why these lawsuits are brought is because municipalities are being approached by and are hiring private contingency fee counsel.

 

But why don’t I turn to Jonathan first? Can you tell us a little bit about whether there’s activity that you can talk about that’s happened in Tennessee or perhaps ideas or things that you’ve seen in other states?

 

Jonathan Skrmetti:  Sure. So in the legislature right now is a bill similar to the Texas statute, which would give the attorney general the responsibility to review certain contingent fee contracts. I forget what the categorical breakdown is. But I believe they try to limit it to, essentially, cases of statewide import. But there’s been a lot of pushback from a variety of directions against that, and I certainly think it will be a challenge for the legislature to get that through.

 

Beyond that, I think that this is an issue that’s still percolating. Opioids puts it into stark relief and has started to get people thinking about the nature of the structural problems. But I think Tennessee’s temperament is sometimes to think about things and steer a cautious course. And I suspect that’s where we’re at now in that you’ve got people who are just contemplating it and trying to figure out what the best solution is.

 

I do think it’s important that before the next big series of public interest cases involving whatever the next industry is following the opioid industry -- it’s important to have some resolution because, as we’ve seen in opioids, it’s just an intractable situation to try to litigate all these cases all at once and bring any sort of reasonable resolution to it. But I also want to point out that the citizens affected are the citizens of both the state and the counties and the municipalities, as General Yost noted. And one way to try to resolve this is just to identify what’s in everybody’s best interest.

 

I think if the state and the attorneys general are able to deliver solutions that benefit the people of the state, it may involve sharing some credit. It certainly may involve a lot of listening and working with the subdivisions. But a rising tide raises all boats. And if there’s a good solution out there that’s going to involve remedies for the opioid crisis, for instance, part of the process is just talking to the subdivisions and getting them on board.

 

And it could be that it’s an acculturation issue and that, once everybody trusts each other enough to know that there’s going to be a solution that provides common benefits to all, it may be easier to get everyone moving in the right direction. But we’re very early in that conversation. And certainly, I don’t think you’re going to see the optimal outcome in the immediate set of cases.

 

Elbert Lin:  General Yost, did you have anything to add beyond what you’ve already said?

 

Dave Yost:  Obviously, there is the potential to do a legislative solution. In Ohio, there’s politics involved with that. This is a very -- Ohio looks like a country. It’s purple. We’ve got heavy industry. We’ve got rural areas. We’ve got very progressive enclaves. We’ve got very conservative places. And really anything you can find anywhere in the country in terms of a social construct or the nature of a community, you can find it here in Ohio. And finding unanimity or even consensus is a daunting task.

 

Elbert Lin:  I think that’s right, and I think Jonathan put it, I think, well. The opioids context has both put the issue in stark relief but also, I think, complicates the ability to address the problem at a more general level. He makes a very good point about how, you know, there’s this challenge in wanting to address the issue writ large but balancing that with whatever the particular issue of the day is and being able to try to undo one without upsetting the other. Why don’t we, Wesley, stop here and see if there are questions from the audience?

 

Wesley Hodges:  Absolutely. Thank you so much for the discussion thus far. Here is our first caller.

 

Luke Saha (sp):  Hi, this is Luke Saha calling in from Flint, Michigan. I’m really glad that we’re addressing this particular issue because, given my current location, I’m just curious to see if this trend could follow as far as like environmental laws, particularly using sort of like a public nuisance laws to generate those kind of lawsuits. I know they already kind of generate class actions here in Flint as in regard to the water crisis. So I was wondering if any of you would be able to comment on sort of like the environmental legal application.

 

Elbert Lin:  I got, I think, most of that. It was a little bit garbled, but let me repeat what I think I heard, which was an interest in whether the panelists have any thoughts on this kind of a phenomenon, in particular the use of public nuisance in the environmental context.

 

Jonathan Skrmetti:  And Elbert, this is Jonathan. You know, I think it depends on the nature of the nuisance. So if you’re talking about a localized issue—and I suspect that’s what the caller is talking about here—I think it makes sense for localities to be engaged. But if you’re talking about something that has a statewide impact, then the lawyer acting on behalf of all the state would be the more appropriate person to handle it. And if you’re talking about something with a nationwide impact, I think you’re probably going to run into a federal preemption issue.

 

And that’s as it should be. Localities should handle local issues. States should handle state issues. And the federal government should handle nationwide issues. It makes sense for people to act in their areas of expertise where they’re getting the most feedback. Somebody in a little corner of the country isn’t necessarily going to have the perspective of the whole country. But certainly if something’s affecting their corner of the country specifically, they ought to be the ones who are able to do something about it.

 

Elbert Lin:   I would have said exactly the same thing. General Yost, did you have any thoughts?

 

Dave Yost:  Can I just say that I agree with my esteemed colleague from Tennessee.

 

Elbert Lin:  Wesley, do we have any other questions?

 

Wesley Hodges:  We do have one more in the queue. Here’s our second caller.

 

Caller 2:  The state sponsored litigation—that’s what I’m going to call it—often results in Purdue Pharma filing bankruptcy where they get pennies on the dollar. I wonder how much of it is politically motivated for an AG or a local politician to say, “Well, I litigated the opioid crisis and I should be reelected.” I’d just like you to comment on that.

 

Dave Yost:  I certainly am not going to proport to answer for 50 state attorneys general. But I can tell you that the Purdue bankruptcy was planned by Purdue. It has support of about have of the states. Look, the opiate epidemic is real. Purdue in particular may have been the worst actor. They deliberately misrepresented the addictive nature of their products, misinformed doctors, and the record is pretty substantive about their marketing practices.

 

We have an incredible death toll and huge damage that has been done to our communities here in Ohio and really across the country because of what state of Ohio firmly believes are the unethical and improper acts that they undertook in the marketplace. So to suggest that that’s a political stunt or maneuver I think is a very cynical view of the world. It certainly is not the motivation of my predecessor who filed those lawsuits, and it is not my motivation in completing that litigation.

 

Jonathan Skrmetti:  I agree emphatically with General Yost with respect to Purdue. And just to add to that, I think when you compare the track records of the private plaintiffs’ bar with the attorneys general, I think you’ll see that the former are probably more responsible for bankruptcies than the later because an attorney general is going to hear from his constituents if he reduces the number of jobs available, puts a company out of business, unless that company has done egregious wrong. And Purdue certainly fits that category. People will say something.

 

Whereas if you’re a private attorney with no accountability to anyone and all you’re focused on is maximizing the amount of money that comes in, you’re not going to care as much about the effect on the business, the effect on the business climate, the effect on a given industry, and the availability of alternatives for consumers. So I think the incentives of the AGs are much better aligned with the good of the public and the good of the business community overall than are the interests of private counsel.

 

Elbert Lin:  Yeah. I think that’s a very good point, Jonathan. And it gets to what you had said before about it’s one thing to have a government plaintiff. It’s another thing to have a government attorney who represents that government plaintiff or, in the case of an attorney general, where the attorney general kind of seeks for himself and the state. It’s one thing to have that and another to have farmed out your legal representation as a government entity to a private party who, legal ethics issues sort of separate, may not have the same incentives.

 

Wesley Hodges:  Well, looking at the queue, we are out of questions. Elbert, do you have anything that you would like to ask or go into detail before we move to closing thoughts today?

 

Elbert Lin:  I don’t. I really appreciate General Yost and Jonathan being with us today. Why don’t I toss it to them and see if either of them has sort of closing thoughts on where this is headed or whether there’s something they would like to leave the audience with?

 

Dave Yost:  This is Dave Yost. I would just kind of summarize what I think all of us have said, which is I don’t think that there’s going to be a systemic solution to these problems we’ve discussed, in the context of the current opiate litigation. This is an unprecedented and huge piece of litigation. And we’re learning a lot from it. And the final chapters haven’t been written.

 

But it’s very difficult to put the genie back in the bottle while the genie is flying about. I think the one thing that we didn’t talk about a lot -- but to kind of bring this home from being a legal and kind of question of governance sort of discussion is the very real economic costs involved with pack of piranha litigation where you’re subject to thousands of governments who are all bringing claims that are, in some ways, very similar but also have some disparate elements, differing defendants, etc. If you are wrongly accused by 50 states attorneys general, you may well look to try a few cases and get jury verdicts and make some case law, even.

 

But with the size of the exposure possibility of duplicate and triplicate damages, this becomes a very untenable position for corporate defendants who, after all, have major economic impacts. They’re the ones who create the jobs. That’s where tax revenue comes from, whether it’s individual taxes or corporate taxes or both. It comes from economic activity. And at some point, the scale and the ungoverned process I think begins to create costs in our economy and for our society that are completely out of scale to the potential benefit that this dispute resolution process ought to be providing.

 

We need to think carefully and thoroughly about this so that legitimate complaints can be aired, justice can be achieved but that there is economic freedom and some reasonable degree of predictability in the marketplace. And I fear that those things are fraying badly in the current environment.

 

Jonathan Skrmetti:  I’m just going to say amen to that. I think that was very well put, General.

 

Elbert Lin:  Thank you. Thank you both. Thank you. I appreciate the time that you’ve taken to be a part of this panel and educate -- bring this issue to the attention of our audience.

 

Wesley Hodges:  Terrific. Well, it has been our absolute privilege to have such an accomplished panel today. Thank you to each of you. On behalf of The Federalist Society, thank you for the benefit of your valuable time and expertise. We welcome all of your feed back by email at [email protected]. Thank you all for joining. The call is now adjourned.

 

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