The City of Sparks received notice that a federal district court in Ohio has issued an order approving a nationwide “negotiation class,” which will centralize litigation against 13 different opioid entities.  A copy of the court order is attached.  The class action is based out of a federal district court in Ohio, but it applies to all counties, cities, towns, and other incorporated places in the U.S. – even if a city has already filed a separate lawsuit against opioid entities. 

The formation of the class is being brought to the City Council’s attention because the court has styled the class as an “opt-out” class as opposed to an “opt-in” class.  This means the City must affirmatively opt out of the class if it does not want to be bound by the terms of any settlement reached by the class members.  As a result, the establishment of this class has forced the City’s hand to decide whether it should be part of the national class in the Ohio federal court or whether it should opt out and retain the ability to independently sue opioid entities in either state or federal court.  Forty-nine (49) cities and counties have been named class representatives in the Ohio litigation, including several California cities and counties; King County, Washington; and Phoenix, Arizona.  No entities from Nevada are included as class representatives.  The court has given all counties and municipalities an opt-out deadline of November 22, 2019.  The opt-out form, called an Exclusion Request Form, a copy of which is attached, must be signed by an official or employee authorized to take legal action on behalf of the City. 

According to filings in the multi-district litigation, any settlement reached by the federal negotiation class is anticipated to be divided among the class members by a predetermined formula based on factors like the amount of opioids distributed within the area, the number of opioid deaths in each jurisdiction, and the number of people who suffer opioid use disorders.  However, the Ohio court’s notice also indicates that if a city stays in the class but the county it is located in opts out, then (1) that city may need to be paid through a “Special Needs Fund” if there is enough money in the fund, or (2) may not be able to obtain any proportionate settlement amount because the planned distribution of any settlement would funnel through the counties.  Therefore, there is some risk that the City will not be able to collect a proportionate share of funds under the allocation formula if it stays in the class.  The Washoe County Board of County Commissioners considered the negotiation class at is meeting on October 22, 2019 and elected to opt out and continue to pursue its litigation in Nevada state court.  Washoe County’s decision to opt out could affect the City’s ability to effectively participate in the class and collect its share of any settlement funds.

The City Council has several options to address the creation of the negotiation class, including: (1) do not opt out and remain in the Ohio court’s negotiation class; (2) opt out and retain the right to sue various opioid entities, with more specific litigation-related decisions to be made at a later date; and (3) opt out and provide direction to the City Manager and City Attorney to take steps to retain outside counsel and sue the appropriate opioid-related entities in Nevada state court or federal court.  Eglet Adams law firm, located in Las Vegas, is already representing the State of Nevada, Washoe County, City of Reno, Carson City, Clark County, City of Henderson, City of Las Vegas, City of North Las Vegas, Churchill County, Douglas County, Esmeralda County, Humboldt County, Lincoln County, Lyon County, Mineral County, City of Fernley, and City of West Wendover in litigation against various opioid entities in Nevada state court.  Representatives from Eglet Adams have indicated that the firm would be interested in initiating similar litigation on behalf of the City of Sparks.  A draft Agreement for Legal Services is attached. 

1. The City Council could direct the City Attorney’s Office to refrain from filing an Exclusion Request Form, keeping the City of Sparks in the multi-district litigation negotiation class.
2. The City Council could direct the City Attorney’s Office to file an Exclusion Request Form and direct the City Manager to bring a future agenda item before the City Council to address options for opioid-related litigation.
3. The City Council could direct the City Attorney’s Office to file an Exclusion Request Form and direct the City Manager and City Attorney’s Office to retain outside counsel to pursue litigation against the appropriate opioid-related entities.

Alternative 1:

I move to direct the City Attorney’s Office to refrain from filing an Exclusion Request Form, which will keep the City of Sparks as part of the negotiation class established by the United States District Court for the Northern District of Ohio in Case No. 1:17-md-2804.

Alternative 2:

I move to direct the City Attorney’s Office to sign and submit an Exclusion Request Form, which will exclude the City of Sparks from the multi-district litigation negotiation class established by the United States District Court for the Northern District of Ohio in Case No. 1:17-md-2804, and direct the City Manager to bring a future agenda item before the City Council to address options for potential opioid-related litigation.

Alternative 3:

I move to direct the City Attorney’s Office to sign and submit an Exclusion Request Form, which will exclude the City of Sparks from the opioid litigation negotiation class established by the United States District Court for the Northern District of Ohio in Case No. 1:17-md-2804, and direct the City Manager and City Attorney’s Office to retain Eglet Adams law firm to evaluate opioid-related impacts on the City of Sparks and pursue litigation against the appropriate opioid-related entities.