U.S. Chamber Warns That Cities Are Litigating Too Much (1)

State legislatures should limit or stop the burgeoning trend of cities and counties hiring outside counsel to litigate everything from opioid addiction costs to environmental contamination, the U.S. Chamber of Commerce said March 6.

The report by the Chamber’s Institute for Legal Reform proposes modifications of state laws to curb nuisance suits—a vehicle commonly used by municipalities to hail corporations into court—and enhanced immunity from such lawsuits.

Lawsuits by local governments can be attractive to cities and counties because litigation can supply financial streams not available from tight state budgets. But such complaints are counter-productive because they usurp the powers of state attorneys general and limit global settlements, the report states.

“The feeding frenzy of municipal lawsuits not only stands in the way of justice by making it harder to resolve cases, but also undermines states’ authority,” ILR Chief Operating Officer Harold Kim told Bloomberg Law March 6.

The white paper by three former state attorneys general comes amid reports that OxyContin manufacturer Purdue Pharma is considering bankruptcy as it faces more than 1,000 lawsuits over the drug.

Contingency Fee Arrangements

The report also takes aim at contingency fee arrangements with private law firms, which it says entice local officials with potentially huge payouts with little or no upfront costs.

These arrangements, under which outside law firms are paid only if they win a case, pose potential conflicts of interest and the risk of duplicative litigation, especially when state attorneys general pursue related litigation, the report states.

The report was co-authored by Ron McKenna, a former Attorney General for Washington State, Elbert Lin, a lawyer in the Washington office of Hunton Andrews Kurth LLP who was a solicitor general for West Virginia, and Drew Ketterer, of Ketterer & Ketterer in Norridgewock, Maine, who formally served as that state’s attorney general.

But Joanne Doroshow, executive director of the Center for Justice & Democracy Democracy in New York, dismissed the report as a move to cut off access to the courts to limit corporate accountability.

“Lawsuits by cities and counties, which target corrupt or illegal corporate practices, can prevent and mitigate substantial harm, recoup for taxpayers significant costs caused by corporate law-breaking, and fill large voids caused by otherwise ineffective or weak public protections,” she said.

The center, based at New York Law School, advocates against restrictions on civil litigation and the right to jury trials.

Recovering Costs

Many municipalities caught up in the nationwide current wave of opioid addiction lawsuits also cite their long-standing authority to bring such suits, affirmed in similar litigation brought against tobacco companies decades ago.

They also contend they bear the substantial front-line costs of the epidemic, including first responders and medical examiners who must deal with rising overdoses and deaths in their communities.

The lawsuits, they say, are a way for cities and towns to ensure that recoveries go back to them, unfiltered by state budgetary policy choices.

“Contingency fee arrangements make it possible for underfunded and understaffed local offices to bring litigation that is too large, complex, and expensive for a city to bring on its own,” Doroshow said, adding that corporations can have virtually limitless resources by comparison.

The report’s authors, however, counter that courts are already questioning the ability of cities and counties to bring such suits.

They cite a recent Connecticut decision dismissing a suit by a coalition of 37 municipalities against Purdue Pharma and other opioid makers.

In that case, City of New Haven v. Purdue Pharma LP, the Connecticut Superior Court held that the municipalities couldn’t demonstrate they were directly harmed by the manufacturers’ alleged conduct.

Allowing such suits also would mean courts and juries would have to “calculate the impact on each of thirty-seven cities of the activities of each of the twenty-five defendants, as distinguished from each other, and as distinguished from the impact of all the other strains on municipal budgets,” the court said.