Opioid Litigation Has Liability Lessons Every CEO Should Worry About

Watch out for the hidden costs of having a product that's too popular—just ask Johnson & Johnson.

When an Oklahoma judge ordered Johnson & Johnson to pay $572 million for causing that state’s opioid crisis, business leaders were understandably distressed. Not only did J&J have a tiny share of the market—estimated at around 1 percent—but the state didn’t present evidence of a single physician who prescribed its products improperly because of J&J’s marketing tactics. The company recently settled with two Ohio counties accusing it on the same grounds, hoping to push off federal multi-district litigation.

Watching the charges play out, it’s reasonable to ask: If J&J can be held liable for creating a “public nuisance” by selling a perfectly legal product under a government-approved label, who isn’t liable? Alcohol kills tens of thousands of people a year, and cell phones probably aren’t far behind. Distracted driving is a major cause of death on the nation’s roads.

Now that they’ve won in Oklahoma, ever-inventive trial lawyers are sure to test the public nuisance theory with cell phones, alcohol and other products, as they’ve already done with guns, lead paint and global warming. But history suggests they won’t get far. Congress responded to a wave of nuisance litigation against gun manufacturers in 2005 with a law barring most claims over crimes committed with their products. And federal judges on both coasts have rejected public nuisance lawsuits against big oil companies.

“As a tort expert, I know that sometimes something comes along that society gets in an uproar about, and courts relax traditional standards to assign blame,” says Victor Schwartz, author of a popular text on tort law and co-chair of the Public Policy Practice at Shook Hardy & Bacon in Washington. “But right now (the Oklahoma opioid) opinion looks confined to what was before it.”

The lesson business executives should take from opioid litigation is that sometimes a product is too successful for its own good, Schwartz says. And when that happens, courts can get awfully creative at finding ways to hold companies liable for the harms their products cause, regardless of what most people would consider to be the normal standards of tort law.

That’s what happened with asbestos, a miracle substance that saved untold lives during World War II as a fireproofing material but also had the unfortunate side effect of causing the deadly cancer of the chest lining known as mesothelioma. Dozens of companies have been driven into bankruptcy because they handled the stuff at some point, often with little or no evidence they did anything wrong.

Now it’s the pharmaceutical industry’s turn in the grinder. Schwartz’s advice to clients who are troubled by what happened to J&J is to take a hard look at their own products and the potential liability that might arise from them. One danger sign is a niche product that is suddenly selling like hotcakes—like fenfluramine and phentermine, once-ignored drugs that, when combined, became fen-phen, a wildly popular weight-loss cocktail that generated billions of dollars of liability after doctors learned it also caused pulmonary hypertension and heart valve abnormalities.

The biggest potential liability is over failure to warn. For that, Schwartz recommends companies hire tort lawyers to examine proposed warning labels for flaws worth suing over. He gives his clients an example from a long-ago trip to the Baltimore Aquarium, where he observed a strange thing: If a shark passed up a piece of meat that was thrown into the tank, all the other sharks did too.

“If you get a plaintiff lawyer who okays a warning, his brothers and sisters are very unlikely to bring a claim,” says Schwartz, laughing. It’s understandable for executives to hate trial lawyers, he adds, but “hate isn’t a good emotion. If hiring a plaintiff lawyer can help you, why not?”