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Federal appeals court prevents negotiation class formation in opioid-related litigation
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Federal appeals court prevents negotiation class formation in opioid-related litigation

The US Court of Appeals for the Sixth Circuit on Thursday reversed a ruling creating a negotiation class of opioid manufacturers, distributors and pharmacies in a multi-district litigation designed to streamline settlement agreements between cities adversely affected by the opioid epidemic and opioid manufacturers.

This suit arose as a result of opioid manufacturers, distributors and pharmacies allegedly misleading medical professionals into prescribing opioids at unprecedented rates, resulting in high rates of addiction. Plaintiffs argue they were harmed by this practice because they were forced to divert significant funding to emergency public health services and public safety responses to the opioid epidemic. Since the federal courts have been involved in opioid litigation, they have sought to facilitate settlement agreements. In order to further the goal of settlement, plaintiffs moved to certify a negotiation class under Federal Rule of Civil Procedure 23(b)(3). However, the defendants opposed this certification.

In its opinion, the appellate court determined that the district court had abused its power in creating a negotiation class because its creation was not rooted in Rule 23(b)(3). The court reasoned:

Unlike settlement classes under the pre-2018 Rule, there is not textual basis in this subsection—or any other—for the existence of a negotiation class. The class formed in the present case is not being formed for the purpose of litigation or for purposes of settlement, but rather for the purposes of negotiation. At most, the class is being formed, pursuant to a set of rules outside the parameters of Rule 23, to explore the possibility of negotiating a settlement. But the rule contemplates settlement classes that are formed after a deal has been reached and the parties wish to formalize their arrangement. Ultimately, the speculative possibility that this negotiation class will settle a broad swath of the MDL does not bring it within the narrow textual confines of Rule 23 as a settlement class.

However, a dissenting judge argued that Rule 23 allowed the formation of negotiation classes. The dissent stated, “we should not focus exclusively on the naked words of Rule 23 at the expense of the Federal Rules of Civil Procedure’s equitable backdrop and in ignorance of the obvious precedent set by the settlement class’s creation and proliferation. The present negotiation class certification presents not serious policy, constitutional, or state sovereignty entanglements.”