Trial lawyers exact billions from companies that sell and distribute perfectly lawful products.
By David B. Rivkin, Jr., and O. H. Skinner
August 17, 2023, in the Wall Street Journal
Hawaii’s Supreme Court hears oral arguments Thursday in Honolulu v. Sunoco, a lawsuit brought by the state’s largest city against a group of energy companies. Honolulu alleges that the defendants have created a “public nuisance” by producing fossil fuels that emit greenhouse gases when burned. The companies argue that they are already subject to federal regulation, which supersedes any claim under state law.
Activist groups are increasingly attempting to use public-nuisance lawsuits to impose policies that they’ve failed to persuade lawmakers to enact. The list of industries under assault is long and growing. One set of public-nuisance actions targets firearm manufacturers. It was launched on behalf of local governments in New York state by plaintiff lawyers, with the firm Napoli Shkolnik, fresh from a successful action against pharmaceutical companies, serving as lead counsel. Other cases pursue chemical companies for producing so-called forever chemicals, which have been lawfully used for decades in making and packaging countless household and personal-hygiene products.
Public-nuisance lawsuits also attack beverage companies for using plastic bottles, leading to litter on beaches. School districts are suing tech companies claiming that their social-media platforms endanger children. Several cities have sued Hyundai and Kia alleging that certain cars they make are “too easy to steal.”
The financial stakes are high. The opioid cases—brought against drug manufacturers, distributors and retail pharmacy chains—have generated more than $55 billion in settlements. (Last week the U.S. Supreme Court stayed a settlement between plaintiffs and bankrupt Purdue Pharma, pending an appeal that the justices will hear in December.) The litigation against “forever chemicals” manufacturers, which is still in the early stages, has already led to more than $11 billion in tentative settlements. Given the apocalyptic rhetoric around climate change and gun violence, lawsuits against gun and energy companies, if successful, could yield hundreds of billions of dollars in damages.
Their lawsuits feature profoundly flawed theories of liability that threaten the fabric of U.S. law. Under traditional common law, a paradigmatic public nuisance suit involves clearly unlawful conduct, such as running a brothel or drug house in a residential neighborhood, blocking a public right of way, or operating a factory that emits noxious smells. Defendants in such lawsuits are the agents directly responsible for causing the alleged harm.
These new ideological public-nuisance suits target products or activities that didn’t violate any law or regulation at the time they were produced and used. The defendants are manufacturers and distributors rather than individuals who committed specific wrongful acts. Such claims often feature freestanding state-law causes of action, available to local governments that otherwise lack legal authority to bring other public enforcement actions. That enables plaintiff lawyers, working with local governments, to make an end-run around state governments, pushing “progressive” policies, even in conservative states.
As long as the threat of litigation lingers over every industry under the sun, plaintiff lawyers will have the ability to intimidate market participants and reshape the economy without ever scoring a conclusive win in a courtroom (never mind a legislature). Even corporate giants that can afford to fight sometimes find it more economical to settle a meritless claim. Litigation options and their attendant costs are even worse for small and midsize businesses, like local car dealers, gasoline stations and beverage distributors.
There have been some major litigation setbacks to this public-nuisance campaign. In 2021 the Second U.S. Circuit Court of Appeals dismissed a New York City suit against international oil companies that sought to recover, as the court put it, “damages caused by those companies’ admittedly legal commercial conduct in producing and selling fossil fuels around the world.” The same year, the Oklahoma Supreme Court tossed an opioid case against Johnson & Johnson.
But because such lawsuits are usually driven by state law, there is no opportunity for a conclusive nationwide win at the U.S. Supreme Court covering all these lawsuits; the battles have to be waged on a state-by-state basis. Federal constitutional issues arise in cases against some industries—the First Amendment for social media, the Second Amendments for gun makers. There are also some instances in which federal common law or regulatory statutes like the Clean Air Act pre-empt the application of state public-nuisance laws. That was the basis on which the Second Circuit threw out the New York case and is one of the key arguments before the Hawaii Supreme Court.
Fortunately, there are other available remedies. State legislatures could bar cities and counties from hiring plaintiff lawyers to prosecute public nuisance suits on a contingency basis, which would constitute an excellent remedial measure. They could also forbid local governments from bringing public-nuisance cases at all, or at least against manufacturers and distributors of products circulating in interstate commerce, or require approval from state officials such as the attorney general.
Conservative states would likely lead the way in enacting such reforms. These public-nuisance lawsuits harm the economy and are antithetical to American democracy, which requires decisions about economic regulation to be made by politically accountable officials, not by courts. And having governmental entities delegate litigation control to plaintiff lawyers amounts to a government-deputized shakedown of disfavored industries.
Mr. Rivkin practices appellate and constitutional law in Washington. He served at the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Mr. Skinner is executive director of Alliance For Consumers. He has served as solicitor general and handled consumer cases in the Arizona Attorney General’s Office.
Source: https://www.wsj.com/articles/public-nuisance-gun-pharma-car-theft-pollution-fossil-fuels-trial-lawyer-settlement-abuse-power-f45a8581