DECISION & ORDER The court has requested the parties to address the impact of the decision of the Second Circuit Court of Appeals in the matter of Association for Accessible Medicines v. James (74 F.3d 216 (2d Cir. 2020)). In response, the Defendants have moved for summary judgment based on what they categorize as an opioid fund regime created through the New York Opioid Stewardship Act (“NYOSA”) and a 2019 Excise Tax on the sale of opioids (“2019 Excise Tax”). By way of background, the New York State Legislature in 2018 enacted the NYOSA “to address the substantial costs imposed by the national opioid public health crisis.” James, 74 F.3d at 218. In 2019, the Legislature adopted the 2019 Excise Tax which modified NYOSA and replaced it with a fixed amount based on volume of opioids sold. Defendants point out that the act did not have an end date. In support of their motion, the Defendants argue in their memorandum in support of their motion (NYSCEF Doc. 7680) that the State has already enacted its chosen policy to fund New York’s public response to the complex opioid crisis which was the product of legislative compromise. They argue that as a result, the separation of powers and political question doctrines bar Plaintiffs’ claims in the current litigation. They assert that the cases cited in their memorandum establish that “‘broad policy choices’ are ‘matters for the executive and legislative branches of government and the place to question their wisdom lies not in the courts but elsewhere,’ absent constitutional objections.” Defendants argue that: 1. Where the Legislature has enacted a comprehensive detailed regulatory scheme the decision is entitled to judicial respect. 2. The Plaintiffs seek more in costs than has been determined appropriate by the Legislature. 3. The Judiciary should not undertake tasks left to the Legislature. 4. Plaintiffs are asking the court to override the Legislature’s policy judgments. 5. The action is barred by the separation of powers and political question doctrines. While recognizing that the Second Circuit in its decision determined that the New York acts constituted a tax, Defendants further claim that this tax is distinguishable from other taxes (such as generally applicable taxes, like the corporate income tax, or certain taxes on products, like cigarettes and alcohol) in that: 1. It is specifically designed to impose costs on the manufacturers and distributors for their purported role in the opioid abuse crisis to fund the government’s response to that crisis. 2. Opioids play a vital therapeutic role. 3. The legislation imposes a tax to address the same harm alleged in this lawsuit. 4. The Legislature has determined how to assess the funding for the response to the opioid abuse crisis through this tax and plaintiffs cannot second guess or override the Legislature’s determination. Defendants separately argue that since the acts apportion financial responsibility to address any abuse of opioids, this mitigates against an ultimate finding of joint and several liability. In the event the motion is denied, Defendants contend that they would be entitled to an “offset” of damages for monies paid under the NYOSA and the 2019 Excise Tax to be considered during the remedy phase of the litigation, in the event that the case reaches that stage. Plaintiffs respond in opposition (NYSCEF Doc. 7751) that: 1. “taxation does not confer immunity, and the Defendants named in this suit engaged in actionable conduct – they must now be held accountable for that conduct”. 2. The legislative history of NYOSA reflects that monies raised through the act were not intended to fully fund the State’s response to the opioid crisis. 3. As stated in James, the “primary purpose of the opioid stewardship payment is to raise revenue, not to punish or regulate the plaintiffs and other licensees who are required to make the payment.” 4. The acts (NYOSA and the 2019 Excise Tax) contain no language purporting to grant immunity from opioid-related litigation or otherwise preempting or displacing any remedy at law. The NYOSA and 2019 Excise Tax do not immunize defendants from opioid related litigation. 5. The litigation asserts not only public nuisance but other claims and allegations of “discrete, individualized conduct by the Defendants relating to the promotion and/or distribution of opioids.” 6. The litigation also seeks “other equitable relief including injunctions to correct Defendants’ unlawful marketing and anti-diversion policies under New York law” that the NYOSA does not provide for. Plaintiffs note that the Defendants “could stop selling or distribution opioids tomorrow and effectively evade any meaningful financial obligations under the [2019 Excise Tax].” (emphasis omitted). Defendants’ reply (NYSCEF Doc. 7759) summarizes their arguments stating that: “the Legislature has addressed a complex social problem by (i) identifying the parties it determines should be financially accountable for the problem and (ii) raising significant monies from those parties to (iii) fund the government’s response to that problem, this comprehensive legislative regime displaces efforts…to take actions that go beyond and are inconsistent with the Legislature’s carefully crafted regime.” They further argue that the Second Circuit decision supports their entitlement to summary judgment in that the Court found that the funds are “statutorily directed” for use in connection with opioid abuse prevention and education and to help New Yorkers struggling with opioid addiction. Defendants argue that the abatement fund Plaintiffs’ claim was intended to stop the continuation of the public nuisance and that the Second Circuit said that the purpose of the acts was to hold the opioid manufacturers and distributors responsible for the unusual costs of the opioid epidemic. Therefore, it is asserted by the Defendants that the claims by the Plaintiff’s for the same costs are foreclosed by the separation of powers and political question doctrines. In addition, they argue that even when the legislature has not explicitly barred lawsuits or judicial action, same can be precluded. The court has considered the arguments of the parties as well as the Second Circuit’s decision in James and it appears that the NYOSA and the 2019 Excise Tax do not preclude the current litigation. The acts do not consider the potential liability of these particular defendants. The creation of the fund and tax are separate from the alleged wrongful conduct of the Defendants and does not address the allegations contained in the Complaint or the defenses raised by Defendants. The damages are to be determined at the remedy stage of the litigation. The acts do not protect against the continuation of potential abuse as the Defendants could merely pay the tax based on the production and distribution of opioids in the State of New York. Moreover, Plaintiffs’ point is well taken that the Defendants could cease doing business in the state of New York and avoid payments under the 2019 Excise Tax. Therefore, the motion for summary judgment is denied, and the issue of a potential offset based on payments made pursuant to the acts is reserved for application at the remedy phase of the litigation. Dated: February 12, 2021
