Chapter 46
Cleveland, July 2019
Two months after the My Cousin Vinny episode, Paul Farrell and his team made a bold move. They filed a blockbuster brief accusing the drug manufacturers and distributors of engaging in a civil RICO. The Racketeer Influenced and Corrupt Organizations Act, designed to take down criminal organizations, had been on the books for years. Congress created the law in 1970 to dismantle the Mafia. RICO was later successfully deployed against corporate con artists, inside traders, and motorcycle gang members. By charging multiple defendants engaged in the same ongoing enterprise, prosecutors were able to wipe out criminal organizations and secure long federal prison terms for the participants. In more recent years, plaintiffs’ lawyers trained RICO’s civil statutes on the corporate world: financial services firms and the corporations behind large-scale environmental disasters like the BP oil spill in the Gulf of Mexico.
For several years, Mark P. Pifko, a thirty-nine-year-old lawyer at Baron & Budd, one of the key plaintiffs’ firms, had been using the civil RICO statutes to sue major corporations. They included Takata, the Japanese manufacturer that produced 4.5 million defective air bags, and the auto companies that installed them despite the flaws. He urged his allies in the opioid litigation to use RICO—initially to much skepticism.
On June 5, 2017, Pifko, a soft-spoken Southern California native, first told Paul Farrell on a conference call that he believed the drug companies had been engaged in an ongoing enterprise to expand the market for opioids and conspired to protect their supply lines from the DEA. “Maybe we can file a RICO,” he suggested.
Paul groaned at the suggestion. “Seems like a reach,” he told Pifko. “When I think of RICO, I think of the Mafia. What are you talking about?”
Paul had never filed a RICO case and knew little about the complex statute. As he listened to Pifko, he became marginally interested. If the plaintiffs prevailed at trial, they would be entitled to collect triple damages, and they would be able to recover their legal fees from the defendants. But proving a RICO case could turn into a costly slog. The plaintiffs would need to show that the drug companies had participated in a pattern of racketeering activity; that they had created an “enterprise” to pursue the racketeering activities; that the companies were responsible for injuries; and that those injuries resulted from their racketeering activities.
Paul had already read the 2016 Post investigative series that documented Joe Rannazzisi’s battle with the drug companies and the crafting of the Marino-Blackburn bill. He then saw the joint investigation by the Post and 60 Minutes in October 2017 that recounted how the companies had worked together to launch a carefully orchestrated influence campaign on Capitol Hill. He wondered if Pifko might be on to something.
When attorney Evan Janush discovered The Alliance’s “Crisis Playbook” a year later, in June 2018, Paul was convinced. He put out an all-points bulletin to the lawyers, giving them the go-ahead to serve The Alliance with subpoenas for emails, internal memos, and any other material that might form the foundation of a RICO filing. The Alliance was fair game because several of its members were defendants in the case.
In return, the lawyers received a cache of documents: internal strategies and communications designed to push back against the DEA; emails detailing how to orchestrate congressional hearings; messages coordinating friend-of-the-court legal briefs to be filed on behalf of drug distributors facing DEA enforcement actions; and minutes of meetings between executives of the Big Three distributors as they plotted a course to combat the aggressiveness of Joe and his team at the agency.
Paul now saw The Alliance as part of a conspiracy. It was not a traditional D.C. trade group. He understood Pifko’s point and began to believe that the drug companies, The Alliance, and other trade organizations were akin to the Commission that ran the Mafia families in New York between the 1930s and the 1980s. Some of the plaintiffs’ lawyers thought the analogy was a stretch, but for Paul, his opponents were running a criminal enterprise. There was, he believed, no better analogy.
The lawyers started to braid together thousands of other emails and documents they had obtained from the drug companies through their discovery demands. Their work culminated in a 138-page brief filed on August 12, 2019, three months before the landmark trial was set to start in Cleveland.
First, they claimed that the manufacturers, including Purdue, Mallinckrodt, Johnson & Johnson, and Teva, launched an aggressive public relations and marketing campaign to change the prescribing behavior of doctors, setting the alleged conspiracy in motion. Together, they made opioids more acceptable to the medical community and the American public. A Purdue executive told sales reps in 2000 that the goal was to “raise awareness of undertreated pain” and “to make the whole pie bigger, not only for us but for our competition as well.” To help accomplish the goal, drug manufacturers teamed up with pain patient advocacy groups, subsidizing their operations and serving on their boards. With innocuous-sounding names like the Pain Care Forum, the groups made it appear as though the pain treatment movement had the widespread support of both doctors and patients around the country. Purdue executive Robin Hogen wrote in a 2000 memo that if one of the pain advocacy groups working with his company wanted “our bucks (and they honestly cannot survive without industry support), they are going to have to learn to live with ‘industry’ reps on their board. I don’t think they can expect huge grants without some say in governance.” A U.S. Senate investigation later revealed that drug manufacturers had given the groups nearly $9 million during a five-year period.
The plaintiffs also wrote in their RICO brief, “The Manufacturer Defendants joined together to promote those false messages through direct partnerships, through organizations that they themselves created for precisely that purpose, through numerous experts and third-parties, and through organizations that set medical standards for practicing physicians. For competitors who should have been at each other’s throats to gain market share, the record reveals that, instead, they partnered with each other to grow the opioid market.”
The manufacturers and distributors also watched out for each other as the DEA’s regulatory enforcement actions became more intense during Joe’s tenure. The plaintiffs cited several emails in their motion, including the one between Purdue compliance chief Jack Crowley and his counterpart at Cardinal Health: “I’m sorry that DEA is being so aggressive with this suspicious order stuff,” he wrote in 2007. “I wish there was something I could do to help in this situation—we are all in the same boat.”
The plaintiffs also argued that the distributors capitalized on the expanded opioid market. They alleged that the companies acted together to broaden their market shares, avoid compliance with the law, shield their operations from the DEA, and undermine the agency. Joe’s crackdown on the industry, beginning in 2005, gave the companies a “common purpose to engage in a course of conduct,” a key element to proving a RICO case. The distributors, through The Alliance, shared information about whether to comply with the law or change it, collaborated on legal filings to defend drug companies in trouble with the DEA, and actively sought ways to stop the agency from regulating the industry. The plaintiffs cited internal Alliance emails and minutes of board meetings that outlined how the industry could combat the DEA and deflect attention away from the industry as the epidemic raged. They included the email Alliance executive Anita Ducca wrote in 2007, urging her colleagues to develop a strategy to push back against the agency. They cited the creation of the “Crisis Playbook,” which Alliance executives noted “protects and enhances the reputation of the industry.” The distributors ignored outside legal advice to pay closer attention to complying with the law rather than trying to change it. The plaintiffs included the statement that the Alliance president made at the height of the group’s influence campaign on Capitol Hill: “Exhaust all efforts” to pass the Marino-Blackburn bill.
The pharmacies, through their trade organization, the National Association of Chain Drug Stores, also worked closely with The Alliance and collaborated with the Pain Care Forum during the Marino-Blackburn lobbying effort. The plaintiffs also noted that two major drug manufacturers—Purdue and Endo—helped to “influence the language” in the final version of the Marino-Blackburn bill “to make it more favorable for them” while making it less effective for the DEA.
“The Manufacturer, Distributor, and Pharmacy Defendants all gamed the system to avoid compliance with the Controlled Substances Act; purposefully misled DEA that they would cooperate with DEA’s enforcement efforts to stave off enforcement actions; and coordinated to ‘gang up on the DEA’ to make enforcement even more difficult,” the plaintiffs wrote. “This was not an innocent or independent activity geared towards maximizing profits within the confines of the law.” Instead, they said the defendants “made the decision to band together to protect their commercial interests above all else, by making sure that sales were not disrupted by legitimate federal regulation.”
Lawyers for the drug companies scoffed at the allegations in their motion to dismiss the RICO and conspiracy claims. They said there was no evidence that they had worked with each other to “achieve any unlawful common purpose.” Attorneys for the drug distribution companies added that any lobbying activity by The Alliance or any other group was protected under the First Amendment. They also argued that communications between drug distributors and drug makers were being blown out of proportion by the plaintiffs. “These ‘routine business relationships’ between certain Distributors and Manufacturers fall far short of establishing the existence of a RICO enterprise,” they wrote. They also noted that the drug distributors reported all of their sales of narcotics to the DEA and had also reported suspicious orders to the agency. “There is a complete failure of proof” that the distributors were engaged in any ongoing enterprise to evade the law, they argued.
As both sides prepared for the first bellwether trial of the MDL, set to start October 21 in Cleveland, Judge Polster’s ruling on the RICO and conspiracy motions loomed large. If he permitted the plaintiffs to put on evidence of an alleged conspiracy, drug company attorneys would be forced to defend the case on two fronts—public nuisance and RICO.
On September 3 and September 10, Polster handed down a pair of rulings. In the first, he said that the plaintiffs’ claims that the companies were engaged in a conspiracy could move forward. In the second, he allowed the allegations that the companies engaged in a racketeering enterprise to be heard by a jury. Both were devastating blows to the drug industry.
Paul was delighted. It put even more pressure on the companies, forcing them to defend the case on yet another front. The rulings also could be used as a cudgel to convince the companies to settle the cases.
It’s more blood in the water, Paul thought.
Some drug company lawyers were not overly concerned. Plaintiffs’ attorneys frequently folded multiple causes of actions into their cases, hoping some would stick. Kaspar Stoffelmayr, who represented Walgreens, wondered whether the racketeering claims would hold up during a trial or on appeal. He saw the RICO claims as part of the “kitchen sink” approach to mass tort litigations; toss everything in and see what happens.
On September 14, lawyers for seven drug companies, including the Big Three distributors and CVS, Walgreens, and Walmart, asked Polster to recuse himself. The lawyers said Polster had overstepped his authority and created the appearance of a bias against the companies. They cited statements he had made early in the case encouraging a settlement so money for drug treatment and other services could go to communities reeling from the epidemic.
“Defendants do not bring this motion lightly,” the drug company lawyers wrote in their motion. “Taken as a whole and viewed objectively, the record clearly demonstrates that recusal is necessary.”
Lawyers for the manufacturers steered clear of the motion. Several had already settled their cases or were close to settling. But lawyers for the distributors and the pharmacies believed they had nothing to lose. The judge had repeatedly ruled against them in a series of critical pretrial motions. Their relationship with Polster, they thought, couldn’t get any worse.
In the two decades of defending major corporations, Stoffelmayr had never joined a motion requesting a judge to step down from a case. Polster, he believed, was too sympathetic to the plaintiffs. Still, he worried about the implications of launching a risky attack against a powerful figure. “You take a shot at the king, you better not miss,” he thought.
Polster rejected their request. The defense attorneys took their argument to the Sixth U.S. Circuit Court of Appeals in Cincinnati. On October 10, the appellate panel sided with Polster, ruling that judges in complex cases are encouraged to pursue settlements to avoid costly and time-consuming trials. But they warned the judge to watch what he said about the case going forward. The defense attorneys had taken their shot and missed.
Within eleven days, both sides would be back before Polster in his eighteenth-floor courtroom for the start of the first trial in the landmark case.