On September 24, 2020, the Sixth Circuit reversed the Northern District of Ohio’s certification of a “negotiation class” in a nationwide prescription opioid MDL, concluding the text of Rule 23 does not permit certification of a class for negotiation purposes, as opposed to litigation or settlement.

• The opioid MDL consists of over 1,300 lawsuits filed by cities and counties alleging that opioid manufacturers and distributors deceived medical professionals into prescribing the drugs, resulting in significantly increased public health and safety costs. Plaintiffs asserted various claims under RICO (and its state analogues), the Controlled Substances Act (“CSA”), state statutory public nuisance law, and state common law.
• Throughout the litigation, the MDL court repeatedly encouraged settlement. To that end, 51 cities and counties moved to certify a “negotiation” class under Rule 23(b)(3)—a novel device developed by the appointed special master in collaboration with Harvard Law Professor William Rubenstein. The motion sought to include every city and county within the United States in the proposed class (about 34,458 municipalities). It also provided that:
  • (1) a prospective class member could opt out within sixty days of certification; (2) the allocation of any settlement would be determined by a mathematical county-level formula (so that prospective class members could estimate what percentage of the settlement an individual county might receive); and (3) any settlement would require super-majority approval (75%) of the class members.
  • The last two features were designed to protect prospective class members, who would not know the settlement terms prior to the certification and opt-out periods (which makes the class here different than a typical settlement class). Any settlement would have to be approved by the court. However, once approved, all class members would be bound by it, even those who did not vote for it.
  • The process was designed to eliminate a common impediment to class settlement: namely, defendants’ reluctance to enter into a settlement that may yield too many opt-outs and follow-on litigation.
• Several pharmaceutical distributors objected, as did 37 state attorneys general and six putative city class members. The district court certified the class, finding that it was not coercive (no defendant was forced to negotiate) and non-class members could proceed however they wished in terms of litigation or individual settlements. Only 556 of the 34,458 putative class members opted out.
• On appeal, the Sixth Circuit reversed. In its opinion, the court first found that the defendants had standing to pursue the appeal because, even though they were not forced to negotiate with the class, the presence of the class “fundamentally alter[ed]” the MDL by combining the entities into a single bloc. By virtue of certification, defendants were “pressured, or at least strongly incentivized, to negotiate with the class.”
• The court then held that the district court abused its discretion by certifying “a new form of class action, wholly untethered from Rule 23.” Heeding the Supreme Court’s admonitions against judicial inventiveness in Dukes and Amchem, the Sixth Circuit stated that “district courts do not have the liberty to invent a procedure with ‘no basis in the Rule’s text,’ even absent language expressly prohibiting it.” It also rejected any comparison to settlement classes because Rule 23(e) permits certification only after a settlement is proposed.
• The court further rejected the district court’s framing of the class as an “issue class” because that characterization “papered over” predominance issues given the disparate state claims. As the Sixth Circuit reasoned, the district court could not evade the predominance analysis “by certifying a negotiation class based upon a few common federal issues, while at the same time empowering the class to negotiate settlement on virtually all claims brought by the class members,” including those brought under state and local law. The court noted that prospective class members could not be sure how the class representatives would address their individual state law claims.
• Judge Moore wrote a lengthy dissent, focusing on the “equitable heritage” of the Federal Rules of Civil Procedure and how they should be interpreted flexibly to accommodate modern litigation trends. The dissent rejected the view that Rule 23 permitted only “litigation” or “settlement” classes, emphasizing how the settlement class device developed over the years despite a lack of clear textual support at the time. It also emphasized how the negotiation class honored the heritage of Rule 23 and the history of experimentation with class actions. Finally, the dissent rejected the majority’s predominance analysis, stating that predominance does not require a plaintiff to prove that each element of a claim is susceptible to classwide proof.
• The plaintiffs have sought en banc review of the panel’s decision. We will continue to follow this case, In re National Prescription Opiate Litigation, Nos. 19-4097/4099, and in the meantime you can read more here.