Settlement reached in Sullivan Baby Doe opioid lawsuit

BLOUNTVILLE — Plaintiffs and the sole remaining defendant in the "Sullivan Baby Doe" opioid lawsuit reached a settlement agreement Tuesday. Details were not yet filed in court as of the close of business Wednesday, but they are expected to be revealed publicly Thursday morning.

District Attorneys General Ken Baldwin, Barry Staubus, and Dan Armstrong (First, Second and Third Judicial Districts, respectively), along with attorney J. Gerard Stranch IV (lead counsel for the plaintiffs in the case) are scheduled to formally announce the settlement and share details of it at 9 a.m. on the second floor of the historic Sullivan County Courthouse.

"The case settled on July 27, 2021," a banner on the Tennessee State Courts website read Wednesday, on the page used to announce scheduling updates in the case.

And a clerk at Kingsport Law Court confirmed to the Times News a settlement had been reached Tuesday, but the settlement itself was not yet filed.

A jury trial to determine damages scheduled to begin this week was rescheduled late last week. Had a settlement not been reached, the trial was to begin Aug. 2 and jury orientation had been scheduled for Thursday.

Those scheduling changes occurred after the sole remaining defendant in the case offered a $35 million settlement last week, and as multiple local governments (plaintiffs in the case) raced to hold meetings to consider that settlement.

In April, Sullivan County Chancellor E.G. Moody granted a default judgment in the plaintiffs’ favor; imposed sanctions for defendant Endo Health Solutions Inc. and Endo Pharmaceuticals Inc.; and reserved issuing a final judgment pending the damages trial.

Plaintiffs are seeking $2.4 billion in compensatory damages and punitive damages above and beyond that amount.

Without a settlement, a jury would determine the amount of damages paid to the plaintiffs.

The Sullivan Baby Doe lawsuit was originally filed on June 13, 2017, by Staubus, Baldwin and Armstrong in Sullivan County Circuit Court in Kingsport. The complaint originally listed prescription opioid manufacturer Purdue Pharma, L.P. and its related companies, along with Mallinckrodt PLC, Endo Pharmaceuticals, a pill mill doctor, and other convicted opioid dealers as defendants.

As part of the national scrutiny brought to bear on opioid producers and distributors, due in part to Sullivan Baby Doe’s arguments, Purdue and Mallinckrodt have declared bankruptcy, with claims proceeding against them in related courts. Endo remains the only active corporate defendant.

The settlement was not the only development in the case on Tuesday. Moody issued an order of sanctions against law firm Arnold and Porter, its attorneys, and the defendants set out in the default judgement Moody issued in April.

The court had already held Endo and its lawyers in contempt of court in early 2020 for failing to produce documents in response to plaintiffs’ discovery requests.

Some key points regarding Endo’s failure to comply with “discovery misconduct” from Moody’s April 7 order:

• “The court is especially concerned about the many false statements to plaintiffs’ counsel and to the court by the Endo defendants’ attorneys in the course of the discovery process.”

• Noting that Endo “repeatedly tried to characterize its discovery misconduct as a simple ‘misunderstanding’ between plaintiffs’ counsel and defense counsel in the discovery process," Moody’s order states, “the record demonstrates otherwise. It is clear to the court that Endo and its counsel at Arnold & Porter willfully withheld responsive records” and "many of the records that Endo knowingly withheld were highly relevant.”

• “It is apparent that Endo intended to defend itself at trial by touting its anti-diversion measures, while simultaneously depriving plaintiffs of evidence that would have undercut that defense. Accordingly, the court finds that Endo willfully withheld this information during the discovery phase to gain a litigation advantage at trial.”

• "The court further finds that Endo and its attorneys’ false statements violated the Tennessee Rules of Civil Procedure and the Tennessee Rules of Professional Conduct.”

• Later in the order, Moody wrote it is clear “Endo and its attorneys have still not learned their lesson. It appears to the court that Endo and its attorneys, after delaying trial, have resorted to trying to improperly corrupt the record.”

• The order states “it is obvious monetary sanctions are not sufficient,” regarding what it outlines as Endo’s pattern of discovery misconduct.

• “Endo and its attorneys have not shown any remorse, admitted their wrongdoing or apologized to opposing counsel or the court for their actions,” the order states. “For all these reasons, the court hereby enters a default judgment in favor of plaintiffs.”

• Additional sanctions issued by the court include awarding the plaintiffs costs and fees.

• Moody’s order required attorneys for the plaintiffs to identify, within 15 days, the attorneys for the defendants “who made the false statements” referred to in the order. The order requires each of the Arnold & Porter attorneys who are partners or shareholders and who have been admitted pro hac vice in the case to show cause why their pro hac vice admissions should not be revoked.

Pro hac vice is a legal term used to indicate a lawyer has been allowed to participate in a case in a particular jurisdiction where the lawyer otherwise has not been admitted to practice.

The order of sanctions issued by Moody on Tuesday states the issue of sanctions against Arnold and Porter, its attorneys, and the defendants for their conduct set out above will be dismissed if they:

• Apologize to the plaintiffs, without equivocation, for their conduct.

• Apologize to the court, without equivocation, for their conduct.

• Agree not to commit the same or similar conduct in the future.

• Pay the plaintiffs' attorney fees for dealing with their conduct.

• Utilize their best efforts to assist both sides in reaching a resolution of the case.

• Arnold and Porter creates an ethics program, of not less than four hours, discussing the conduct set out in the default judgement and requires each of the firm's attorneys who participated in the case to complete the program.

• Arnold and Porter provides an outline of the ethics program to the court.

• Arnold and Porter provides a list of its attorneys who have completed the course to the court within 30 days.

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