What happens to a state when businesses don’t have some assurance that their good-faith efforts to comply with laws, regulations, and best practices will protect them from massive civil liability? Well, what would you do? If you thought that merely becoming unpopular could lead to your arrest in a given state, would you go there? That is the situation businesses may soon face when choosing whether to do business in Oklahoma. If I were counseling a business, I would tell them to avoid doing business in Oklahoma right now. All because the state pursued, and a district court granted, a short-sighted cash grab against those unpopular opioid makers. That decision is the subject of 1889’s latest paper.
It’s not that the drugmakers were wholly innocent. There was a non-jury trial, which means that the judge, who typically only weighs in on matters of legal doctrine and civil procedure (the rules surrounding how a trial operates — any time a lawyer objects on TV, that’s civil procedure) was also the finder of fact. In this instance, he found that Johnson & Johnson had engaged in false and misleading advertising. That’s not good, but it’s normally a pretty minor offense. Think of it like jaywalking. It’s usually a small ticket, if it’s even enforced. But if you jaywalk at a busy intersection and cause an accident, you might well be forced to pay for the damages.
That’s as it should be. Sometimes minor infractions have enormous consequences, and we want the lawbreaker to pay for the damage even if it was a small infraction. Otherwise, an innocent party will bear the costs. However, if you were the jaywalker, you would want to make sure that the injured parties were actually injured because you were jaywalking, and you would want them to prove that the whole amount of the cost you were forced to pay was actually caused by your jaywalking. If one of the drivers was texting, it’s likely he would have been in an accident anyway — and he might have been able to avoid the accident that occurred had he been paying attention to the road.
That’s what happened to Johnson & Johnson. The court found that they had engaged in misleading advertising, and it held them liable to end the opioid crisis. But the court didn’t determine how much of the crisis was due to the misleading advertising. Nor did it consider whether other opioid makers or those down the stream of commerce (doctors, patients, criminal drug dealers) contributed to the opioid crisis. Worst of all, the ruling opens the door for an innocent party to find themselves on the wrong side of the law next time.
Expanding the jaywalking hypothetical, if Johnson & Johnson is the jaywalker, the next party might be someone juggling on a unicycle in a parking lot. It’s odd, but it’s not illegal. If a driver becomes distracted by the juggler, that’s the driver’s fault, and the juggler shouldn’t have to pay anything. But in finding the jaywalker liable, the district court opinion does the equivalent of saying that the juggler could also be liable. This creates a great deal of uncertainty for businesses. If a court can, without warning, declare that a public nuisance exists, and that certain actions, which are nothing like any previous set of facts that has led to liability, are suddenly grounds for a $572,000,000 “abatement plan,” which is a remedy unlike any ever granted for a public nuisance, how can a business be sure its actions won’t lead to a similar surprise liability? The law must give proper notice of behaviors it intends to punish so that individuals and businesses know what actions are allowed.
Public nuisance is an unusual tort. With rare exceptions, it can only be brought by a public official. It doesn’t require much proof of causation and no proof of intent. The category of actions that could fall under its broadest definition is almost unlimited. With that in mind, there have always been strict limits on what constitutes a public nuisance and what courts are allowed to order when they find one. This latter limitation is likely the most important in practical effect. The only remedies for public nuisance are abatement and injunction. That means that the court can order the defendant to clean up a mess they made and tell them not to do it again. Damages – monetary compensation – were never something courts could order a defendant to pay to a government over public nuisance.
The Johnson and Johnson decision is currently on appeal to the Oklahoma Supreme Court. If they fail to overturn the ruling, the Oklahoma Legislature must restore legal certainty to the state. Requirements that the company still have control over the cause of the nuisance, that there be a connection to land use, and that a public right, as opposed to multiple private rights, is harmed by the nuisance, are all integral to restoring true justice.
But if the legislature does only one thing, it should eliminate any damages or other monetary payment resulting from public nuisance liability. If the state wants to seek damages, it can do so, but it will have to use a more appropriate legal theory that offers due process protections for defendants. Public nuisance has historically been reserved for assigning cleanup when such cleanup is possible.
A verdict for damages typically means the defendant has to pay the plaintiff for the cost of the actual harm created, possibly with other payments ordered as a punishment for, and deterrent to, egregious behavior. Abatement normally means going out and cleaning up the source of the nuisance. But in this instance, the court ordered an abatement plan that will cost Johnson & Johnson $572 Million. Even though it isn’t supposed to be “damages,” part of that payment will go to the Attorney General’s office. And an enormous sum will go to the state’s outside counsel, the attorneys who litigated the case. That doesn’t sound like abatement, but because damages are not available, the court classifies it as part of an abatement plan. So the legislature cannot simply say that no damages are available, it must clarify that monetary payment of any kind cannot be part of a public nuisance remedy.
Which raises my final point: for the opioid crisis, what does cleanup even look like? One of the requirements I mentioned earlier for a public nuisance is that the company must have control over the source of the nuisance. So even if the opioid crisis is a public nuisance, and it’s entirely Johnson & Johnson’s fault, how would you undo it? Should Johnson & Johnson forcibly reacquire every opioid it ever made and destroy them all? Should it take them away from patients who need them? Should it recall opioids made by Perdue, Teva, and other opioid manufacturers who settled prior to the trial? After all, the court’s order doesn’t distinguish between the part of the crisis Johnson & Johnson created and the parts that would have happened without its involvement.
This is why products liability is a separate cause of action, which can result in actual and punitive damages. The state should have proved up its case. If the supreme court doesn’t overturn the verdict, the legislature is going to have to adjust the public nuisance law to eliminate this monetary incentive to go after makers of unpopular products with a doctrine that was never designed for that use. The future of the state’s economy depends on it.
Mike Davis is Research Fellow at 1889 Institute. He can be reached at [email protected].