Tue 10/15/2019 19:44 PM
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Judge Thad Balkman stated today that he made a $107 million "computing error" in the landmark judgment he issued this August, which ordered the Johnson & Johnson defendants to pay approximately $572.1 million in the state of Oklahoma’s public nuisance lawsuit. Judge Balkman said at a hearing this afternoon that J&J was correct in arguing that the court erred in ordering J&J to pay $107,683,000 to fund the development and dissemination of certain treatment evaluation standards relating to neonatal abstinence syndrome, or NAS, because the abatement plan proposed by the state of Oklahoma actually called for expenditure in this category of $107,683. “That’ll be the last time I use that calculator," said Judge Balkman.

The subject of today's hearing was the final order to be entered by the court for the public nuisance ruling. In dueling briefs and during today’s proceedings, J&J and the state debated the following issues, among others:
 
  • Whether the the $572 million judgment should be reduced to correct the $107 million "calculation error," as asserted by J&J;
  • Whether the judgment should be reduced to provide J&J with a $355 million “credit” for Oklahoma’s $270 million settlement with Purdue and $85 million settlement with Teva; and
  • Whether Oklahoma may request funds from the court in the future for abatement efforts beyond "year one" of the abatement plan (the Aug. 26 judgment had stated that the $572 million awarded by the court represented funds for abatement under year one of the plan).
After hearing oral arguments from the parties, Judge Balkman took the other disputed issues under advisement, saying that he will address them in a "forthcoming ruling." The ruling will also include a correction to the “math error,” said the court.

The Aug. 26 judgment stated, “The Court finds that the sum necessary to carry out the Abatement Plan in year one is the sum of $572,102,028.” The ruling continued, “Though several of the State’s witnesses testified that the plan ‘will take at least 20 years’ to work, the State did not present sufficient evidence of the amount of time and costs necessary, beyond year one, to abate the Opioid Crisis.” Judge Balkman stated that the judgment was not a final and appealable order and directed the parties to submit proposed final orders.

In suing Johnson & Johnson and its subsidiary Janssen Pharmaceuticals, Oklahoma sought funding for an abatement plan including measures amounting to approximately $12.8 billion over a 20-year period, $15.4 billion over a 25-year period and $17.8 billion over a 30-year period.

Oral Arguments

Brad Beckworth of Nix Patterson, representing the state of Oklahoma, presented oral argument first. He told the court, “Only your Honor knows what your Honor meant” in drafting the Aug. 26 judgment. Beckworth addressed the question of settlement credits first. He emphasized that the court’s order “doesn’t mention settlement credits” for J&J. Moreover, the J&J defendants themselves did not propose joint and several liability against Purdue and Teva as the settling defendants, nor did they present related evidence, Beckworth asserted. “Of course settlement credit can be given in a joint and several case … but to have it, you have to have another defendant be found liable in tort for the same injury,” which never happened here, he contended.

As for future relief, Beckworth argued that in August, Judge Balkman found J&J liable for public nuisance, determined that the nuisance could be abated and concluded that Oklahoma’s abatement plan was “reasonable and necessary.” Although J&J may argue that the court’s judgment provided only for a one-time payment, he said, “the law and facts just don’t allow that.”

Continuing, Beckworth stated that “the standard is your honor must maintain jurisdiction as a court in equity over this matter until the nuisance is abated.” The court is required to “fully abate” the nuisance, and Oklahoma called three expert witnesses who testified that abatement would take “at least 20 years,” he said. Beckworth highlighted that “the defendants did not have an opposing witness on abatement. Not one.” He asserted that once the court finds that a public nuisance has been created, “it’s the court’s job to remove it,” adding that the nuisance created by the J&J defendants is a “menace to Oklahoma.”

As for whether the court had made a “calculation error” in adopting a $107 million cost for certain, Beckworth disagreed, telling the court that in the judgment, “I see you adopting our abatement plan.” Judge Balkman awarded Oklahoma the amounts requested in certain categories, fewer funds than requested in other categories and more funds than requested in yet other categories, said Beckworth, arguing that the overall $572 million judgment was “fully supported by the record.”

Oklahoma Attorney General Mike Hunter likewise told the court, “This is the most important case that you or I will ever be involved in.” Justice requires the defendants to “pay completely and entirely” to remedy the public nuisance they have caused, he said.

Steve Brody of O’Melveny & Myers then presented argument on behalf of Johnson & Johnson and Janssen. He said that Oklahoma’s proposed order, in requesting the ability for the state to return to court and request abatement relief in the future, is an attempt to “rewrite what the court did” in its Aug. 26 ruling. “Your Honor, you said that the state did not present evidence” that would support the payment of costs beyond year one of the abatement plan, he contended. Presenting a slide in the courtroom titled “The State Ignores the Court’s Decision,” Brody said that Oklahoma was attempting to argue against the court’s specific finding on this issue.

Continuing, Brody argued that the state was essentially trying to “get another chance” at the abatement remedy that was “not mentioned at trial.” Oklahoma is inviting the court to engage year after year in a “de facto appropriations type of action” in a nuisance action, he said. Allowing Oklahoma to obtain more abatement relief in the future would violate several principles of res judicata, he argued. Brody also stressed Judge Balkman’s comment at the bench ruling that additional funding should be left up to legislators and policymakers.

Brody reiterated J&J’s argument that the abatement plan called for an annual average expenditure of $107,683 to fund the development and dissemination of certain NAS-related treatment evaluation standards, yet the court’s judgment found the yearly cost for this item to be $107,683,000, which appeared to reflect a mistaken addition of three zeros.

Sabrina Strong of O’Melveny continued J&J’s remarks, arguing that J&J is entitled to a $355 million settlement credit to reflect the Purdue and Teva settlements. “Credit is required under Oklahoma law” to avoid violations of “principles against double recovery,” she said. Strong argued that documents filed by Oklahoma previously acknowledged the settlement credit concept, but “when the state did not recover the billions of dollars that it anticipated and hoped it would get and was disappointed with the amount [awarded by Judge Balkman], it changed course and changed its argument about the settlement credit.”

Strong also asserted that J&J asked the court to “apportion liability” among the defendants, but the court declined to do so. In addition, although Teva and Purdue settled with the state before trial, plenty of evidence regarding their conduct was presented at trial, she said. The court’s judgment itself, in determining that J&J was liable for public nuisance, stated that J&J acted in concert at times with the settling defendants, Strong argued. As a result, she concluded, there is “no support for the notion” that there was no evidence regarding Teva and Purdue’s liability that would support a settlement credit for J&J.

Beckworth, for Oklahoma, returned to the podium to argue that the court “adopted our abatement plan. You found that plan to be fair and reasonable.” He reiterated to the court, “your job under the statute is to abate the nuisance,” including through future relief. Brody, for J&J, concluded his remarks by arguing that Oklahoma’s request for future abatement was essentially a “request for reconsideration” of aspects of Judge Balkman’s Aug. 26 ruling.

Finally, Reggie Whitten of Whitten Burrage, representing Oklahoma, told Judge Balkman, “[I don’t] know what was in your mind when you wrote this order any more than anybody else does.” Whitten added that he was not sure whether the court had read relevant case law about “complete abatement” before issuing the Aug. 26 judgment. However, the parties have now briefed those cases, and “now you see what the law is,” he argued. Moreover, the court may have found that the state did not establish grounds for the abatement remedy beyond year one of the abatement plan, but “that argument’s gone” if the court appoints a special master or continues to preside over the case, Whitten said.

After hearing the parties’ remarks, Judge Balkman said, “I acknowledge the computing error contained in my Aug. 26 judgment,” saying that the cost to J&J related to developing and disseminating NAS-related standards under the abatement plan is $107,683. “I’m going to take my decision on the other remaining matters under advisement,” he said. Judge Balkman said that his forthcoming ruling will include the correction to the math error.
 
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