U.S. appeals court rejects novel opioid settlement framework

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(Reuters) – A federal appeals court on Thursday overturned a judge’s approval of a novel plan by lawyers representing cities and counties suing drug companies over the U.S. opioid crisis that would bring every community nationally into their settlement talks.

The 6th U.S. Circuit Court of Appeals by a 2-1 vote declined to approve an unprecedented “negotiation class” of 33,000 cities, towns and counties who could have a vote on whether to accept any settlements proposed with drug manufacturers and distributors.

That class was certified in September by U.S. District Judge Dan Polster in Cleveland, who oversees roughly 3,000 lawsuits largely by cities and counties accusing the companies of fueling the nation’s deadly opioid addiction epidemic.

The negotiation class would allow cities and counties that have not sued over the crisis to participate in settlement talks. Any settlement reached with a drug company would need to win support of at least 75% of class members to be approved.

While companies do not have to use the negotiation class to settle cases, many including the U.S. drug distributors McKesson Corp (NYSE:MCK), Cardinal Health Inc (NYSE:CAH) and AmerisourceBergen (NYSE:ABC) Corp objected to Polster’s decision.

U.S. Circuit Judge Eric Clay, writing for the majority, said the federal rule of civil procedure that governs class actions did not authorize certifying a class not to jointly litigate or settle a case but only to negotiate a deal.

“The primary problem here is that the negotiation class ordered by the district court simply is not authorized by the structure, framework, or language” of the rule, Clay wrote.