City of Huntington v. AmerisourceBergen Drug Corp.

• Docket Number: 22-1819,22-1822
• Decision Date: 18 March 2024
• Citation: 96 F.4th 642
• Parties: CITY OF HUNTINGTON, WEST VIRGINIA, Plaintiff - Appellant, v. AMERISOURCEBERGEN DRUG CORPORATION; Cardinal Health, Inc.; McKesson Corporation, Defendants - Appellees. Legal Scholars, Amicus Curiae, The National Association of Counties; the County Executives of America; the National League of Cities; the U.S. Conference of Mayors; the International Municipal Lawyers Association; the West Virginia Sheriffs' Association; American Public Health Association; National Association of County and City Health Officials, Amici Supporting Appellant. Cabell County Commission, Plaintiff - Appellant, v. AmerisourceBergen Drug Corporation; Cardinal Health, Inc.; McKesson Corporation, Defendants - Appellees, and CVS Health Corporation; Walgreens Boots Alliance, Inc.; the Kroger Company; Rite Aid Corporation, Defendants. Legal Scholars, Amicus Curiae, The National Association of Counties; the County Executives of America; the National League of Cities; the U.S. Conference of Mayors; the International Municipal Lawyers Association; the West Virginia Sheriffs' Association; American Public Health Association; National Association of County and City Health Officials, Amici Supporting Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

96 F.4th 642

CITY OF HUNTINGTON, WEST VIRGINIA, Plaintiff - Appellant, v. AMERISOURCEBERGEN DRUG CORPORATION;

Cardinal Health, Inc.; McKesson Corporation, Defendants - Appellees.

Legal Scholars, Amicus Curiae,

The National Association of Counties; the County Executives of America;

the National League of Cities; the U.S. Conference of Mayors;

the International Municipal Lawyers Association;

the West Virginia Sheriffs' Association; American Public Health Association;

National Association of County and City Health Officials, Amici Supporting Appellant.

Cabell County Commission, Plaintiff - Appellant, v. AmerisourceBergen Drug Corporation;

Cardinal Health, Inc.; McKesson Corporation, Defendants - Appellees,

and

CVS Health Corporation; Walgreens Boots Alliance, Inc.;

the Kroger Company; Rite Aid Corporation, Defendants.

Legal Scholars, Amicus Curiae,

The National Association of Counties; the County Executives of America;

the National League of Cities; the U.S. Conference of Mayors;

the International Municipal Lawyers Association;

the West Virginia Sheriffs' Association; American Public Health Association;

National Association of County and City Health Officials, Amici Supporting Appellant.

No. 22-1819

No. 22-1822

United States Court of Appeals, Fourth Circuit

Argued: January 25, 2024

Decided: March 18, 2024

Appeals from the United States District Court for the Southern District of West Virginia, at Huntington.David A. Faber, Senior District Judge.(3:17-cv-01362;3:17-cv-01665)

ARGUED: David Charles Frederick, KELLOGG, HANSEN, TODD, FIGEL & FREDERICK P.L.L.C., Washington, D.C., for Appellant.Paul William Schmidt, COVINGTON & BURLING, LLP, Washington, D.C.; Enu Mainigi, WILLIAMS & CONNOLLY LLP, Washington, D.C; Robert A. Nicholas, REED SMITH, LLP, Philadelphia, Pennsylvania, for Appellees.ON BRIEF: Louis M. Bograd, Michael J. Quirk, MOTLEY RICE LLC, Washington, D.C., for Appellant City of Huntington, West Virginia.Anthony J. Majestro, Christina L. Smith, POWELL & MAJESTRO, PLLC, Charleston, West Virginia, for Appellant Cabell County Commission.Ariela M. Migdal, Lillian V. Smith, Matthew N. Drecun, Kathleen W. Hickey, KELLOGG, HANSEN, TODD, FIGEL & FREDERICK, P.L.L.C., Washington, D.C., for Appellants.F. Lane Heard III, George A. Borden, Ashley W. Hardin, WILLIAMS & CONNOLLY LLP, Washington, D.C., for AppelleeCardinal Health, Inc.Timothy C. Hester, Christian J. Pistilli, Stephen F. Petkis, Nicole M. Antoine, COVINGTON & BURLING LLP, Washington, D.C., for AppelleeMcKesson Corporation.Kim M. Watterson, Pittsburgh, Pennsylvania, Joseph J. Mahady, REED SMITH LLP, Philadelphia, Pennsylvania, for AppelleeAmerisourceBergen Drug Corporation.Leslie Kendrick, Charlottesville, Virginia; Michael J. Skoler, SOKOLOVE LAW, LLC, Chestnut Hill, Massachusetts; Ruthanne M. Deutsch, Hyland Hunt, DEUTSCH HUNT PLLC, Washington, D.C., for Amici Legal Scholars.Robert B. Nealon, NEALON & ASSOCIATES, P.C., Alexandria, Virginia; J. Carl Cecere, CECERE PC, Dallas, Texas, for Amici The National Association of Counties, The County Executives of America, The National League of Cities, The U.S. Conference of Mayors, The International Municipal Lawyers Association, and the West Virginia Sheriffs' Association.Henry G. Garrard, III, BLASINGAME, BURCH, GARRARD & ASHLEY, P.C., Athens, Georgia; Deepak Gupta, Gregory A. Beck, GUPTA WESSLER PLLC, Washington, D.C., for Amici American Public Health Association and National Association of County and City Health Officials.

Before KING and BENJAMIN, Circuit Judges, and KEENAN, Senior Circuit Judge.

Question certified to the Supreme Court of Appeals of West Virginia by published order.Senior Judge Keenan directed entry of the order with the concurrence of Judge King and Judge Benjamin.

ORDER

BARBARA MILANO KEENAN, Senior Circuit Judge:

The United States Court of Appeals for the Fourth Circuit, exercising the privilege afforded by the State of West Virginia through the Uniform Certification of Questions of Law Act, West Virginia Code §§ 51-1A-1 through 51-1A-13, requests that the Supreme Court of Appeals of West Virginia exercise its discretion to answer the following question:

Under West Virginia's common law, can conditions caused by the distribution of a controlled substance constitute a public nuisance and, if so, what are the elements of such a public nuisance claim?

A negative answer to this question is outcome determinative in the present appeal.Moreover, in our view, the fact that there is no controlling appellate decision, constitutional provision, or statute of West Virginia answering this question renders it appropriate for certification.SeeW. Va. Code § 51-1A-3.We acknowledge that the Supreme Court of Appeals of West Virginia may restate this question.Seeid.§§ 51-1A-4, 51-1A-6(a)(3).

I.

A.

The Cabell County Commission and the City of Huntington, West Virginia (the plaintiffs) filed suit in 2017 against three distributors of opioids: AmerisourceBergen Drug Corporation, Cardinal Health, Inc., and McKesson Corporation(the distributors or the defendants).¹The plaintiffs alleged that these companies "created, perpetuated, and maintained" the opioid epidemic by repeatedly shipping to pharmacies orders of opioids in quantities that the distributors "knew or should have known exceed[ed] any legitimate market" for the drugs.The plaintiffs contended that the defendants' conduct resulted in a public nuisance that was subject to abatement under West Virginia common law.

After holding a bench trial in 2021, the district court issued an opinion under Federal Rule of Civil Procedure 52, ruling in favor of the distributors.City of Huntington v. AmerisourceBergen Drug Corp., 609 F. Supp. 3d 408, 412(S.D.W. Va.2022).As a threshold matter, the district court held that West Virginia's common law of public nuisance did not cover the plaintiffs' claims.Id. at 475.The district court, recognizing that the Supreme Court of Appeals of West Virginia (Supreme Court of Appeals) had not ruled on this issue, predicted that the state court would decline to extend West Virginia's common law of public nuisance to the sale, distribution, and manufacture of opioids.Id. at 472, 475.In reaching this conclusion, the district court cited the Restatement (Third) of Torts and observed that the Supreme Court of Appeals had applied the common law of public nuisance only "in the context of conduct that interferes with public property or resources."Id. at 472.The district court also held that extension of the common law of public nuisance to cover the plaintiffs' claims would be "inconsistent with the history and traditional notions of nuisance."Id.The district court did not find persuasive two West Virginia circuit court decisions in which those courts held that the common law of public nuisance may apply to the sale and distribution of opioids.²Id.The district court explained:

To apply the law of public nuisance to the sale, marketing and distribution of products would invite litigation against any product with a known risk of harm, regardless of the benefits conferred on the public from proper use of the product.The economic harm and social costs associated with these new causes of action are difficult to measure but would obviously be extensive.

Id. at 474.

The district court also rejected the plaintiffs' proposed remedy, namely, a 15-year "Abatement Plan" developed by Dr. G. Caleb Alexander, an expert in opioid abatement intervention.Id. at 417, 470-71, 484.Dr. Alexander testified at trial that the opioid epidemic and the resulting harms from the epidemic were "reasonably certain to continue" absent implementation of a $2.5 billion abatement plan, which would address "[p]revention, treatment, recovery, and special populations."

The district court held that this relief was "not properly understood" as falling within "the nature of abatement."Id. at 484.The court found that the plan did not restrict the defendants' conduct or their distribution of opioids but generally proposed programs and services to address "the attendant harms caused by opioid abuse and addiction."Id. at 470.The court reasoned that the costs of the plan had "no direct relation to any of [the distributors'] alleged misconduct" and thus did not qualify as abatement.Id. at 483.³

After the district court entered final judgment for the distributors, the plaintiffs timely appealed.

B.

Before setting forth the parties' arguments, we summarize the statutory and regulatory framework under which the United States Drug Enforcement Administration (DEA) gives persons and entities the authority to distribute controlled substances, namely, the Controlled Substances Act (CSA),21 U.S.C. §§ 801-904, and its implementing regulations.⁴We later briefly describe the specific facts giving rise to the plaintiffs' public nuisance claim against the distributors.

When Congress passed the CSA, it acknowledged that many controlled substances "have a useful and legitimate medical purpose and are necessary to maintain the health and general welfare of the American people."21 U.S.C. § 801(1).Congress also recognized, however, the potential for abuse of such substances and the "need to prevent the diversion of drugs from legitimate to illicit channels."Gonzales v. Raich, 545 U.S. 1, 13, 125 S.Ct. 2195, 162 L.Ed.2d 1(2005);see also21 U.S.C. § 801(2).Thus, Congress created in the CSA a "closed regulatory system" in which only entities registered with the DEA may manufacture, distribute, or dispense controlled substances.⁵Raich, 545 U.S. at 13, 125 S.Ct. 2195;see21 U.S.C. §§ 822,823.

A controlled substance is placed in a schedule based on the drug's potential for being abused.21 U.S.C. § 812;John Doe, Inc. v. DEA, 484 F.3d 561, 563(D.C. Cir.2007).As relevant here, Schedule II substances include oxycodone, hydrocodone, and other opioids that have both a currently accepted medical use and a "high potential for abuse" that may lead to "severe psychological or physical...