McKinsey & Co. goes to court later this month to convince a federal judge to dismiss a large portion of lawsuits filed over its consulting work for opiate manufacturers—and it’s got the U.S. Chamber of Commerce and nearly a dozen states on its side.
McKinsey faces about 100 lawsuits from cities, counties, school districts, unions, Native American tribes and others, all coordinated in multidistrict litigation in California’s Northern District. The consulting firm, which is based in New York and incorporated in Delaware, has moved to dismiss 62 cases because they lack personal jurisdiction. Also, according to McKinsey, cases in 22 states should be dismissed because their claims were settled in 2021 as part of a $642 million agreement with attorneys general in 50 states, the District of Columbia and five U.S. territories.
“In exchange for global resolution, McKinsey bargained for closure,” wrote McKinsey attorney David Cheifetz, of New York’s Stroock & Stroock & Lavan, in a Monday filing supporting dismissal. “Instead, it got more lawsuits. And not just from any plaintiffs—but from subdivisions of the settling states who already benefit from McKinsey’s $642 million settlement.”
McKinsey has garnered amicus support from 11 states, including Connecticut and Texas, and the U.S. Chamber of Commerce and the American Tort Reform Association. In separate briefs, they raised concerns about the “dramatic consequences” and “interminable quagmire” that would result should cities and counties be allowed to usurp the role of states and, consequently, threaten the ability of defendants to obtain global settlements.
“These follow-on complaints, and other, similar duplicative municipal litigation against businesses, threaten to usurp the states’ traditional authority to act in the interests of their citizens,” wrote Jaime Santos, a Washington, D.C., partner at Goodwin Procter, for the two business groups. “Allowing the municipality complaints to proceed will harm not just the settling parties but the prospects of resolution for future MDLs—and the administration of justice itself.”
Lawyers representing the cities and counties, and school districts, don’t agree. In opposing the dismissal motions, they insist their clients have separate concerns that warrant pursuing their own lawsuits against McKinsey, a consultant to Purdue Pharma and others.
U.S. District Judge Charles Breyer has scheduled a March 31 hearing on the motions.
McKinsey’s dismissal argument based on last year’s multistate agreement relies on the doctrine of res judicata and the releases in the consent judgments with states that include California, Florida, Georgia, New York, Pennsylvania and Texas.
“State law uniformly authorizes each state’s attorney general to represent all state residents in litigation raising issues of statewide, public interest and this includes residents of a city, town, county or school district, who are, of course, the same states residents,” wrote Cheifetz. “This authority necessarily includes the power to settle and release claims in a manner that binds the state as a whole—including each unit of local government—and the states properly exercised that authority here when they entered into the consent judgments.”
That power, according to the amicus brief by the business groups, is increasingly being threatened as more local governments pursue their own cases.
“The municipality complaints here are a particularly extreme example of an increasing flow of litigation by municipalities seeking large sums through outside counsel,” Santos wrote. “Tens of thousands of localities would be encouraged to compete with state authorities for a slice of the pie in future cases.”
Opposing McKinsey’s argument, plaintiffs’ attorney Aelish Baig, of Robbins Geller Rudman & Dowd in San Francisco, called McKinsey’s argument “fiction piled on fiction.” She noted several cities and counties have gone to trial or settled cases with opioid defendants. And, unlike the $26 billion opioid deal last year with Johnson & Johnson’s Janssen Pharmaceuticals and the three largest distributors of opiate pharmaceuticals, the consent judgments with McKinsey did not specify that cities and counties were part of those agreements.
“The judgments are silent as to subdivision claims, a telling omission, given that the settling parties undoubtedly were aware of the potential for such claims,” she wrote. “The court should not give McKinsey by order what it could not secure at the bargaining table.”
Opposing the jurisdictional argument, lead plaintiffs’ counsel Elizabeth Cabraser, of San Francisco’s Lieff Cabraser Heimann & Bernstein, noted that McKinsey conducted “ZIP code-specific research” and targeted specific doctors by geographic location. But, in a Monday reply, another McKinsey attorney, Mark McPherson, of Morrison & Foerster in San Francisco, insisted that there was no connection between his client and the 19 states at issue.
“The law does not permit the subject states to exercise specific jurisdiction over McKinsey based on anyone’s conduct but McKinsey’s,” he wrote. “Here, for all their effort, plaintiffs cannot point to any conduct by McKinsey—as opposed to its clients—expressly aimed at the subject states.”