Friday, May 11, 2007
As we mentioned yesterday, Purdue Pharma's parent company and three top executives pleaded guilty to deceptive marketing practices in connection with downplaying the addictive properties of the narcotic pain medication OxyContin. Here's today's updated New York Times article, with further information and links to the plea agreements. The new article adds information about the relationship between the plea deal and the civil litigation:
Of the $600 million in payments, Purdue Frederick will pay $470 million in fines and payments to a variety of federal and state agencies.
It also agreed to pay at least $130 million to resolve civil lawsuits brought by pain patients who claimed they became addicted as a result of having OxyContin prescribed to them. A lawyer for one company executive said that much, if not all, those funds have been paid out in the process of settling lawsuits. There are still claims against the company by private plaintiffs.
This week, Purdue agreed to pay $19.5 million to 26 states and the District of Columbia to settle complaints that it encouraged physicians to overprescribe OxyContin.
Pleading guilty to federal criminal charges and paying $600 million can't be fun, although according to the Times article, some think that the fines should have been higher. But as a matter of mass tort litigation strategy, it seems to me that the company made out pretty well. Timing is everything.
Ordinarily, a criminal plea like this one would trigger massive litigation and vastly improve plaintiffs' leverage. The guilty plea could bring new plaintiffs out of the woodwork, could attract more plaintiffs' counsel to the litigation, could encourage those already in it to invest more heavily, could alter the momentum of the litigation, could affect jurors' attitudes, and in some jurisdictions, could bind the company as a matter of offensive nonmutual issue preclusion. I've written in the past about "coattail class actions" -- private mass litigation that follows government actions.
But in the OxyContin litigation, the defendant previously defeated many individual plaintiffs, and then reportedly settled 90% of the remaining cases on the cheap about four months ago. Add the passage of time and the benefit of the statute of limitations, and it appears likely that this criminal plea won't do the kind of damage one ordinarily would expect in the mass tort context.