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Oklahoma

A newcomer to the Judicial Hellholes list in 2019, the “Sooner State” moved down to the Watch List in large part due to a lack of activity in the state because of the pandemic. State leadership did little to rectify Oklahoma’s liability environment; however, the Oklahoma Supreme Court has a real opportunity to improve the state’s litigation climate in 2021. Given the Supreme Court’s recent propensity to expand liability, there is concern the Court will continue down the same path. All eyes will be on Oklahoma in the coming year.

OKLAHOMA SUPREME COURT HAS OPPORTUNITY TO ROLL BACK IMPROPER EXPANSION OF PUBLIC NUISANCE LAW

In August 2019, Cleveland County District Court Judge Thad Balkman, at the urging of Attorney General Mike Hunter (R), drastically expanded liability under the state’s public nuisance law. Judge Balkman ruled that Johnson & Johnson created a public nuisance through its marketing of ingredients used to make opioids and awarded the state $572 million to fund an “abatement program.” About six weeks later, however, Judge Balkman admitted that he had made a $107 million math error, and indicated that he would reduce the judgment to $465 million.

According to J&J, the judgment has “grave implications for all businesses operating in the state,” carries “immense public policy implications” and is “threatening wide-ranging liability” for companies that operate in the Sooner State.

INVENTIVE PUBLIC NUISANCE LEGAL THEORY

Historically, public nuisance law involved instances in which a property owner’s activities unreasonably interfered in a right that is common to the public, usually affecting land use – not the manufacturing of a legal and highly regulated product. Typical cases include blocking a public road or waterway, or permitting illicit drug dealing or prostitution on one’s property. Now, Oklahoma has expanded the law to cover costs related to a public health crisis. Oklahoma law now is well outside of the legal mainstream as evidenced by a May 2019 decision in North Dakota where a judge dismissed a similar claim against Purdue Pharma.

Manufacturers should view the Oklahoma judgment with great concern, as the applicability of vague public nuisance law to other activities will grow, particularly as states look to perceived deep pockets to fund public health or other programs. By this logic, cell phone manufacturers could be held liable for harm caused by distracted drivers. Similarly, automakers might be held liable for accidents caused by drunk drivers. And manufacturers of alcoholic beverages could be liable for economic costs and injuries associated with alcoholism. If allowed to stand, this case certainly opens the door to those possibilities.

VERDICT APPEALED

The Oklahoma Supreme Court now has the opportunity to bring the state back in line with the rest of the country and restore common sense to the state’s civil justice system.

Both sides have appealed the $456 million judgment. Johnson & Johnson, among other things, raises the question of whether public nuisance claims must be connected to a property dispute, in accordance with the traditional understanding of the tort. The state’s appeal claims the amount awarded by the trial court is insufficient to abate the crisis. The plaintiffs’ lawyers initially requested $17.5 billion over 30 years. Additionally, the State has asked for $468,920 to cover litigation costs.

In 2017, when AG Hunter joined scores of other states and municipalities in suing makers of opioids, he chose not to rely on his own office’s lawyers or even hire one of the many plaintiffs’ firms experienced in pharmaceutical litigation. Instead, without any competitive bidding process, he awarded contracts to three law firms that had generously contributed to his campaigns over the years. In fact, one of the firms he selected – Glenn Coffee & Associates – does not even tout litigation as a service offered on its website. Glenn Coffee is a former Senate Pro Tem and was an advisor to Hunter’s 2018 campaign. Prior to the start of the Johnson &

Johnson trial, Coffee withdrew his services, but not before his firm became entitled to collect millions of dollars from the settlements with Teva and Purdue Pharma.

Another firm, Texas-based Nix Patterson, a key player in the tobacco litigation in the ‘90s, boasts to clients the availability of its private plane – because apparently flying commercial just takes too long. All told, the employees and families of the three firms selected by Hunter contributed at least $72,500 to his political campaigns.

Between the settlements and the J&J verdict, as of right now, these lawyers will earn than $100 million.

ADDITIONAL OPIOID LITIGATION FILED BY AG HUNTER

In an interesting development, Hunter filed an additional lawsuit in Cleveland County against three opioid distributors; however, this time he did not rely on the state’s public nuisance law. The suit sought damages from McKesson Corporation, Cardinal Health and AmerisourceBergen for their failure to stop or report large orders that could have been under suspicion of misuse. Hunter later voluntarily dismissed the case after defendants had it removed to federal court and sued each company individually back in state court..

The sudden change in tactics by the attorney general points to an acknowledgment of the shaky ground on which his previous public nuisance claims stand. Hunter’s use of public nuisance law in the opioid context is of particular interest given that he took a dramatically different position regarding public nuisance law in another high-profile case. In May 2019, Hunter joined 17 fellow state AGs in filing an amicus brief in a climate change case in a federal appeals court in California. In that instance, the AGs argued that use of public nuisance law

is inappropriate. The brief states that “the issues surrounding climate change and its effects – and the proper balance of regulatory and commercial activity – present political questions that cannot be resolved by judicial decree.” It also should be noted that in July of 2018, Hunter authored an op-ed entitled, “Lawsuits are not the answer to climate change.” In this piece, he explicitly stated, “you cannot litigate what legislators refuse to legislate and regulators refuse to regulate.”

This is a sound and reasoned analysis, but he fails to follow the same reasoning in the state’s opioid litigation. He cautions that if the courts adopt this expansive view of public nuisance law, it would lead us into a situation in which virtually anything could be deemed a public nuisance. We agree with AG Hunter – in the context of the climate change case.

While the litigation around climate change and the opioid crisis are different matters, they each intend to “solve” complex problems through litigation. Attempting to resolve a public health crisis in court, however, requires the court to assume the responsibilities and authority of the other two branches of government.

OKLAHOMA LEGISLATURE PUSHES BACK ON STATE SUPREME COURT’S EXPANSION OF LIABILITY

In January 2020, Senator Julie Daniels (R) and Representative Mike Sanders (R) introduced a Joint Resolution to overturn the Oklahoma Supreme Court’s decision in Beason v. I.E. Miller Services, which struck down the state’s statutory limit on noneconomic damages. In 2011, the state enacted legislation that generally limited noneconomic damages, such as awards for pain and suffering, to $350,000 per person in personal injury cases. The law did not impact the ability to recover other damages such as lost wages and medical expenses.

This was blatant overreach by the court. As Justice James Edmondson stated in dissent, “[a] legislative cap on damages… is included within the historically recognized role of a legislature in defining, creating, or abolishing a legal cause of action.” Most courts have respected the prerogative of legislatures to enact reasonable limits on awards for pain and suffering. The Oklahoma Supreme Court did not.

S.J.R. 40 would have granted Oklahoma voters the opportunity to amend the state’s constitution to rein- state the limit on noneconomic damages. Unfortunately, this legislative effort was derailed by the COVID-19 shutdown.

GOOD NEWS ON COVID-19 FRONT

While the effort to place reasonable constraints on subjective noneconomic damage awards fell short due to the pandemic, Oklahoma legislators deserve credit for proactively addressing the concerns of healthcare providers, businesses, schools, and others with COVID-19 related liability.

In May, the Oklahoma legislature passed significant COVID-19 liability protections for health care providers and facilities, manufacturers and distributors of cleaning supplies or personal protective equipment, and employers.

Under the COVID-19 Public Health Emergency Limited Liability Act, health care facilities and providers that treat a person for COVID-19 during the public health emergency are protected from liability unless they are grossly negligent or engage in willful or wanton misconduct.

The Oklahoma legislature also provided needed protections for businesses, schools, and others from lawsuits claiming that they operated in a manner that exposed a person to COVID-19. S.B. 1946 provides a safe harbor from liability if a person or entity operated consistently with public health guidance, regulations, and orders applicable at the time of the alleged exposure.

Finally, the COVID-19 Product Protection Act extends liability protections to businesses that have shifted their operations to make products that are critical in protecting the public during the pandemic. Those who design, manufacture, label, sell, distribute, or donate personal protective equipment or disinfecting and cleaning supplies, who do not ordinarily make such products, will not face lawsuits claiming the product is defective unless they knew of a defect and disregarded it. This liability protection also applies to lawsuits targeting businesses, health care providers, schools and others alleging that they should not have selected, distributed or used the product.

“[A] legislative cap on damages… is included within the historically recognized role of a legislature in defining, creating, or abolishing a legal cause of action.”