Item Q6 �S Q.V
I`�
County of Monroe
�y,4 ' �, "tr, BOARD OF COUNTY COMMISSIONERS
County �a� Mayor Michelle Coldiron,District 2
�1 nff `ll Mayor Pro Tem David Rice,District 4
-Ile Florida.Keys Craig Cates,District 1
Eddie Martinez,District 3
w Mike Forster,District 5
County Commission Meeting
March 17, 2021
Agenda Item Number: Q.6
Agenda Item Summary #7937
BULK ITEM: Yes DEPARTMENT: County Attorney's Office
TIME APPROXIMATE: STAFF CONTACT: Bob Shillinger(305) 292-3470
n/a
AGENDA ITEM WORDING: Approval to join opioid class action litigation filed against
McKinsey & Co. (City of Pembroke Pines v. McKinsey & Co., Florida S. District Case No. 21-cv-
60305) as part of the plaintiff class and to serve as class representative for Florida counties.
ITEM BACKGROUND: On 5/23/2018, the Board of County Commissioners (BOCC) approved a
legal services agreement with a consortium of law firms to file suit on behalf of the County in an
attempt to recoup expenses arising out of the opioid epidemic. The County's complaint was filed in
federal district court in the Southern District of Florida on 4/3/2019 (County Commissioners of
Monroe County v. Purdue Pharma, et al.). The case subsequently became part of the nationwide,
Multi District Litigation (MDL) of more than 2,000 suits brought by local government entities
against companies that manufacture, distribute, and sell opioids. All of the cases have been
consolidated and are being heard by Judge Dan A. Polster in the Northern District of Ohio. The case
is underway.
Three of the major defendants or groups of related defendants in the MDL case (Purdue, Insys, and
Mallinckrodt) have already filed bankruptcy, seeking protection for their assets. While settlement
conversations and eventual judgments are proceeding or may proceed against these defendants, it
also makes sense for the County to look at alternative avenues of recovery,particularly given the
extent of damages that the County believes it has sustained as a result of the opioid crisis,.
Over the past several years, considerable information has come to light about the fact that the global
business consulting firm McKinsey & Co. worked for Purdue Pharma for decades, and developed
and implemented strategies for Purdue Pharma about how maximize OxyContin sales, even after
Purdue pled guilty to misbranding the drug in 2007. McKinsey's work with Purdue began as early
as 2003 and continued through at least November 2017. In October 2020, Purdue pled guilty for
felony civil conspiracy for its role in marking OxyContin after the 2007 guilty plea.
McKinsey recently agreed to settle claims with Attorneys General for 47 states plus D.C. and
territories, and the States of Washington and West Virginia, by which McKinsey will agree to pay
approximately $600 million. (Of this, approximately $40 million will go to the State of Florida,
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under terms of a settlement approved by the Florida Attorney General.)
On 2/5/2021, the same consortium of attorneys representing the County in the MDL litigation filed a
class action suit in the State of Florida on behalf of local government entities against McKinsey &
Co., with causes of action including negligence,public nuisance, fraud, civil conspiracy and
violation of the Florida Deceptive and Unfair Trade Practices Act: The City ofPembroke Pines v.
McKinsey& Co., Case No. 21-cv-60305 (S. Dist. Fla.). The case was filed in the Southern District
of Florida, but is expected to be transferred to the Multi District Litigation and heard in front of
Judge Polster. The lawsuit is intended to cover Florida cities and counties. The City of Pembroke
Pines was named as class representative. The attorneys have inquired whether Monroe County is
interested in joining the class action, and whether it would be willing to serve as class representative
on behalf of Florida counties.
For the above reasons, staff requests approval to join the 2021 class action suit, and to have Monroe
County serve as class representative for counties.
As with the MDL litigation, the firms will represent the County on a contingency basis, under the
existing fee agreement. Any fees or costs will be recouped from a settlement or verdict.
PREVIOUS RELEVANT BOCC ACTION:
5/23/2018: BOCC approved agreement with consortium of 5 law firms to file suit on behalf of
County to seek compensation for expenditures related to opioid crisis.
CONTRACT/AGREEMENT CHANGES:
n/a
STAFF RECOMMENDATION: Approval.
DOCUMENTATION:
04/19/2018 Agreement
City of Pembroke Pines v. McKinsey complaint
FINANCIAL IMPACT:
Effective Date:
Expiration Date:
Total Dollar Value of Contract:
Total Cost to County:
Current Year Portion:
Budgeted:
Source of Funds:
CPI:
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Indirect Costs:
Estimated Ongoing Costs Not Included in above dollar amounts:
Revenue Producing: If yes, amount:
Grant:
County Match:
Insurance Required:
Additional Details:
n/a
REVIEWED BY:
Cynthia Hall Completed 02/26/2021 1:09 PM
Bob Shillinger Completed 03/02/2021 2:18 PM
Purchasing Skipped 03/02/2021 2:17 PM
Budget and Finance Skipped 03/02/2021 2:17 PM
Maria Slavik Skipped 03/02/2021 2:18 PM
Liz Yongue Completed 03/02/2021 4:30 PM
Board of County Commissioners Pending 03/17/2021 9:00 AM
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oar Kevin Madok, cPA
Clerk of the Circuit Court& Comptroller— Monroe County, Florida
�Il ROE couN�
DATE: May 31, 2018
TO: Pam Radloff, Director
Finance Department
FROM: Sally M. Abrams, D.C.
SUBJECT: April 19th BOCC Meeting -Approved Agenda Item
0
Attached is an electronic copy of the executed agenda item listed below for your handling,
P5 - Board granted approval to negotiate a Contract with a law firm consortium
led by Morgan & Morgan, to serve as outside litigation counsel for litigation 0.
arising out of the opioid epidemic, in response to a recently-issued Request for
Proposal. If successful negotiations cannot be reached, approval is requested to
negotiate a contract with the next highest ranked respondent until successful E
negotiations are reached. And granted approval for the County Attorney to sign
all necessary agreements.
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Please contact me at extension 3550 with any questions.
cc: County Attorney
Finance
File
KEY WEST MARATHON PLANTATION KEY PK/ROTH BUILDING
500 Whitehead Street 3117 Overseas Highway 88820 Overseas Highway 50 High Point Road
Key West,Florida 33040 Marathon,Florida 33050 Plantation Key,Florida 33070 Plantation Key,Florida 33070
305-294-4641 305-289-6027 305-852-7145 305-
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LEGAL SERVICES CONTRACT
23rd
THIS AGREEMENT is entered Into this day of
May 20 t , by and between the M NRQE COUNTY BOARD OF
COUNTY COMMISSIONERS, hereinafter referred to as the BOCC, and MORGAN & MORGAN,
P.A., can behalf of and In collaboration with ROBBINS GELLER RUDMAN & DOWN I.P., LIEFF
CABRASER HEIMANN & BERNSTEI , L.L.P., KOPELOWITZ OSTR W FERGUSON WEISELBE G
GILBERT, and HALIC ER PETTIS & SCHWAi`wriM, P.A. hereinafter collectively referred to as the
Attorneys.
WHEREAS, the BOCC wishes to enter into this agreement with the Attorneys so that the �
Attorneys will act as private legal counsel to the BOCC to undertake and prosecute claims ,
arising from the manufacturing, marketing and sale of prescription Oploid medications (the
"Oplold litigation");
NOW THEREFORE, IN CONSIDERATION of the mutual promises contained herein, the =
parties agree as follows,
1, Term, This agreement commences on the 23rd day of 0
May , 20 1$ and terminates upon either a receipt of an award
after attorneys' fees and costs or upon a determination that said award of claim shall be E
forthcoming.
2. Sggpg gf Services,. The Attorneys will provide the following services: Co
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Investigate and evaluate a claim for economic damages, undertake negotiations and/or
file suit or Institute legal proceedings as they deem necessary on behalf of the BOCC in
connection with the Oplold litigation;. and retain services of experts or other attorneys and
contractors as they deem necessary for representation of the BOCC's Interests In connection
with the Oplold litigation.
The BOCC and the Attorneys agree that no litigation on behalf of the BCC shall be
undertaken by the Attorneys without the prior approval of the BOCC or the County Attorney,
The Scope of Services shall Include the representations Included in the Request for
Proposal Submission submitted by the Attorneys In response to the Request for Proposal Issued
by Monroe County seeking outside legal counsel for the Oploid litigation, the contents of which
are Incorporated herein by reference, The Attorneys have been retained specifically because
the Attorneys are understood by the BOCC to be able to handle this matter, If the Attorneys
practice with others who may also provide services to the BOCC, the Attorneys understand that
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the BOCC expects that the Attorneys will be responsible for managing the representation, assuring
compliance of others with the terms of this Agreement and ethical requirements, preparing and
substantiating all biti , and, communicating with the BOCC. The Attorneys may not delegate or
outsourcc this work without full written disclosure to,and prior written approval from,the BOCC or
the County Attorney,.
Special Co di Repjeontat op.
a The Client Is the Monroe County Board of County Commissioners (BOCC). In the
event that the Attorneys cannot ethlcally represent the BOCC, the Attorneys shall Immediately
advise the BOCC, in writing, of that fact.
bj The Attorneys are licensed to practice lam in all jurisdictions relevant to this matter
and meet the statutory criteria for private counsel to a Board of County Commissioners (BOCC)
in the State of Florida,
c The Attorneys have been retained by the BOCC to provide the scope of services
described In Section 2 above. The Attorneys represent that they are competent and available
to handle that matter. In the event that additional matters are assigned by the BOCC to the '
Attorneys, this Agreement shall apply to those matters as well,, unless a separate Agreement Is
required by the BOCC.
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d) Review of ethical obligations before Initiating representation: the Attorneys have
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conducted a thorough Investigation and determined that neither the Attorneys nor their firms
have any ethical Impediment, real or potential, to representing the BOCC. To the extent that CO
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any ethical Impediment, real or potential, is discovered or ever arises, the Attorneys shall c®
immediately Inform the BOCC in writing of the Impediment (regardless of whether the '
Attorneys believe they have taken all steps necessary to avoid the Impediment and regardless
of whether the .Attorneys believe that the Impediment Is Insubstantial or questionable), make
full disclosure of the situation to the BOCC, obtain the BOCC's express, written consent to
continue the representation of the other client, and take all steps requested by the BOCC to
avoid or mitigate the Impediment. The Attorneys understand that If a direct or Indirect conflict
of Interest arises which, in the opinion of the BOCC, cannot be avoided or mitigated under the <
Rules of Professional Conduct of The Florida 'Bar, the BOCC may, In Its discretion, (a) obtain
reimbursement from the Attorneys for all fees and expenses paid to the Attorneys in this
matter; (b) obtain cancellation of all amounts allegedly owed by the BOCC to the Attorneys;
and, jcj obtain reimbursement for consequential expenses incurred by the BOCC, Including the
cost of replacement counsel, The BOCC understands that It will be one of multiple plaintiffs
represented by the Attorneys In the Clploid litigation, The City consents to such representation
and waives any potential conflict that might arise from such representation, The BOCC further
understands the effect of joint representation on attorney-client confidentiality. Except as
otherwise provided by Florida law with respect to the BOCC, attorney-client communications
are privileged and are protected against disclosure to a third party, by entering Into this
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Agreement, except as otherwise provided by the Rules of Professional Conduct of the Florida
Bar, the BCC waives any right It may have to require the Attorneys to disclose any confidences
the Attorneys have obtained from any other plaintiff In connection with similar litigation.
e) Provide regular briefing reports to the County Attorney and to the BCC on key
Issues as requested by that Board..
. CoMpensationt The combined fees of, and costs Incurred by, the Attorneys shall be .�
covered by a contingency fee upon receipt of any award or settlement approved by the BOCC
as follows.the Attorneys shall receive contingency fees according to the foilowing schedule:
• Contingency Fee for the period from engagement up to the commencement of
discovery. 10%,with a maximum combined fees and costs of 12.
• Contingency fee for the period from commencement of discovery up to the filing of any
motion(s) for summary judgrnent: 15 with a maximum combined fees and costs of
17.5%;or
• Contingency fee for the period from the filing of any motion(s) for summary judgment0.
through trial and appeal; 20 , with a maximum combined fees and costs of of all
gross monetary amounts recovered.
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Attorneys' fees and costs/expense reimbursement shall be based on the gross amount of the
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monetary and non-monetary recovery (whether described as damages, restitution or
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otherwise), Attorneys shall advance all costs of litigation. The Attorneys shall advance all costs
and expenses deemed reasonable and necessary for the prosecution of B CC's claims In the
Opiolds litigation.. Costs and expenses shall be reimbursed by the County only out of a
monetary recovery(i.e.,judgment or settlement). If there is no monetary recovery, the County
need not reimburse the Attorneys for costs and expenses. Attorneys shall bear all of the
financial risk associated with this litigation, The combined fees and costs are limited by, and
shall not exceed, the amount of an award or,settlement.
Termingign: This Agreement can be terminated by either party with or without cause
with thirty (30) days' prior written notice, In the event termination Is undertaken by the BCCC
without cause, the Attorneys shall nevertheless be entitled to recover their attorneys' fee and
ail reasonable costs/expenses from the monetary recovery on a quantum merufr basis..
B, Accounting Records; Records of the Attorneys pertaining to this Agreement shall be
kept on generally recognized accounting principles, acceptable to the Monroe County Clerk,
and shall be available to the BCCC or to an authorized representative for audit, The Attorneys
understands that the Attorneys must have documentation to support all aspects of each bill,
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including fees and expenses, and must maintain that documentation until at Fast four years
after the termination of the representation. This documentation shall be made available by the
Attorneys to the BOCC or their designated representative, Including an accountant; and/or, to
the Monroe County Clerk or Monroe County Cleric's representative or legal-bIli auditor, upon
written request,The Attorneys agree to cooperate with any examination of this documentation
and Attorneys' fees and expenses, e.g., by responding promptly and completely to any
questions the BOCC or Its designated representative may have, The Attorneys shall notify the
BOCC In writing at least 60 days In advance of destroying any such records and, In the event the
BOCC requests that they be preserved, shall preserve them at least one additional year or, at
the option of the BOCC, deliver them to the BOCC for storage by the BOCC, with the BOCC
responsible for paying the actual cost of storage. This documentation shall Include, for
example, original time records, expense receipts, and documentation supporting the amounts —
charged by the Attorneys for expense items generated by the Attorneys. The BOCC reserves
the right not to pay any fee or expense Item for which sufficient documentation Is not available ;
to determine whether the Item was necessary and reasonable, upon the execution of an
Agreement or Amendment to this Agreement by the BOCC, the Attorneys may provide the
documentation In digital electronic form, in Adobe portable Document Format I;Pf.1F , or in
Alchemy format In lieu of the manual preservation requirements detailed above.
a) Access to Records: The Attorneys shall maintain all books, records, and documents 0.
directly pertinent to performance under this Agreement, Including but not limited to the
I documents referred to in Section 6 of this Agreement, in accordance with generally accepted
accounting principles, consistently applied. Upon ten (10) business days of one party's written
notice to the other, representatives of the BOCC or the Attorneys shall have access, at all
on
reasonable tunes, to all the other party's books, records, correspondence, Instructions,
receipts, vouchers and memoranda (excluding computer software) pertaining to work under Co
this Agreement for the purpose of conducting a complete Independent fiscal audit. The
Attorneys shall retain all records required to be kept under this Agreement for a minimum of
five gears, and for at least four years after the termination of this Agreement. The Attorneys
shall keep such records as are necessary to document the performance of the Agreement and
expenses as Incurred, and give access to these records at the request of the BOCC, Monroe
County, the Mate of Florida, or authorized agents and representatives of said government
bodies. it is the responsibility of the Attorneys to maintain appropriate records to insure a
proper accounting of all collections and remittances. The Attorneys small be responsible for
repayment of any and all audit exceptions which are identified by the Auditor General for the
State of Florida, the Clerk. of Court for Monroe County, the BOCC, or their agents and
representatives,
Florida Public Records Law, the Attorneys agree that, unless specifically exempted or excepted
by Florida law or Rules and Regulations of The Florida Bar, the provisions of Chapter 119,
Florida Statutes, generally require public access to all records and documents which may be
wade or received under this Agreement. The Attorneys agree to consult with the County
Attorney's office concerning the application of the Public Records Law from time to time
concerning specific circumstances that may arise during the term of this Agreement.
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7, Modification; Additions to,modification to or deletions from the provisions set forth In
this Agreement shall only be effective If In writing and approved by the BCC,
& indemnification and meld Harmless: The Attorneys agree to Indemnify and hold the
BOCC harmless for any and all claims, liability, losses and causes of action which may arise out.
of Its fulfillment of the Agreement to the fullest extent allowable by Florida law and the ethics rules.
The Attorneys agree to pay all claims and losses, including related court crests and reasonable
attorneys" fees, and shall defend all suits filed due to the negligent acts, errors or omissions of
the Attorneys` employees and/or agents to the fullest extent allowable by Florida law and the ethics
rules, —
91 Insurance. professional Liability Insurance shall also be maintained as specified, In the ;
event the completion of the project(to include the work of others)is delayed or suspended as
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result of the Attorneys'failure to purchase or maintain the required Insurance, the Responder
shall Indemnify the BOCC from any and all Increased expenses resulting from such delay,
The coverage provided herein shall be provided by an Insurer with an A.M. Best Rating S
of VI or better, that Is licensed to do business In the State of Florida and that has an agent for 0.
service of process within the State of Florida, The coverage shall contain an endorsement
l providing sixty ( 0) days' notice to the BOCC prior to any cancellation of Bald coverage. Said
coverage shall be written by an Insurer acceptable to the BOCC and shall be in a form
acceptable to the BOCC,
The Attorneys shall obtain and rnalntaln the following policies: Co
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a) The Attorney"s agree to collectively maintain Professional Liability coverage with the
limits of liability provided by such policy no less than Five Million Dollars ( S,D 0,B B4O0)for
each claim with a maximum deductible of Two Million Dollars( 2,000, 00), unless otherwise
approved In advance by the BOCC,
b) The Attorneys shall require Its subconsultants to be adequately Insured at least to
the limits prescribed above„ and to any Increased limits of the Consultant, if so required by the
BOCC during the term of this Agreement, The BOCC will not pay for Increased limits of
insurance for subconsultants,
c)The Attorneys shall provide to the BOCC Certificates of Insurance or a copy of the
insurance policies required in this agreement, The BCC reserves the right to require certified
copies of such policies upon request.
10. Taxes; The BOCC and Monroe County are exempt from Federal Excise and State of
Florida use and sales taxes.
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11. Finan q ghar esi The BOCC and Monroe County will not be responsible for any finance
charges.
12. deggpdppt Contr =t It is the intent of the parties hereto that the Attorneys shall be
legally considered as Independent contractors and that neither they nor their employees or
agents shall, tender any circumstance, be considered servants or agents of the BOCC, and the
BOCC shall at no time be legally responsible for any negligence on the part of any successful
responder, its employees or agents, resulting In either bodily or personal Injury or property
damage to any Individual,firm,or corporation,
13. i losur The Attorneys shall be required to list any or all potential conflicts of
interest, as defined by Florida Statute 1.12 and the Monroe County Ethics Ordinance, The
Attorneys shall disclose all actual or proposed conflicts of Interest,financial or otherwise, direct
or Indirect, Involving any client's Interest which may conflict with the Interests of the BOCC.
14. sslenm-e The Attorneys shall not assign, transfer, convey, sublet or otherwise
dispose of this Agreement,or of any or all of their right,title or interest therein, or their power
to execute such contract to any person, company or corporation without pricer written consent .
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of the BOCC.
1 . Q2Wo1l11n9e Vltith l ays' The Attorneys shall comply with all International,federal,state
and local laws and ordinances applicable to the work or payment for work thereof. E
16. force i cteu e; The Attorneys shall not be liable for delay In performance or failure to
perform, in whole or In part, the services due to the occurrence of any contingency beyond co
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their control or the control of any of their subcontractors or suppliers, Including labor dispute, c®
strike, labor shortage, war or act of war whether an actual declaration thereof Is made or not,
Insurrection, sabotage, riot or civil commotion, act of public enemy, epidermic, quarantine
restriction, accident, fire, explosion, storm,, flood, drought, or other act of God, act of any
governmental authority,jurisdictional action,or insufficient supply of fuel,electricity, materials,
supplies, or technical failure where the Attorneys have exercised reasonable care in the
prevention thereof, and any such delay or failure shall not constitute a breach of this <
Agreement.
17, Govern]n Law Venrrue. This Agreement shall be governed and construed by and in
accordance with the laws of the State of Florida and constitutes the entire agreement between
the BOCC and the Attorneys. The venue of any court action flied relative to this Agreement
shall lie In Monroe County,Florida,
18, ntisol cl ati n: The Attorneys warrant that no person has been employed or retained
to solicit or secure this contract upon an agreement or understanding for a commission,
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percentage, brokerage, or contingent fee and that no member of the Monroe County
government or the BOCC has any Interest, financially or otherwise In the Attorneys or their
subcontractors,
19, Severabillty; If any provision of this Agreement shall be herd by a Court of competent
jurisdiction to be Invalid or unenforceable, the remainder of this Agreement,or the application
of such provision(s) other than that/those held Invalid or unenforceable, shall not be affected
thereby; and each provision of the Agreement shall be valid and enforceable to the fullest
extent permitted by law.
20, Notice: Any notice required or permitted under this Agreement shall be in writing and
hand-delivered or mailed, postage prepaid by certified mail, return receipt requested, to the
other party as follows:
For the OCC: For the Attorneys; o
Monroe County Attorney James a,Young
1111 12$h Street,Suite 408 Morgan & Morgan, P.A.
Key West, Fl.33041 76 Laura Street,Suite 1100 .
Jacksonville, FL 32202 0
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The BOCCC shall give notice to the Attorneys of any meetings at which the Attorneys' m
presence Is required or requested,
21. Ft lcs Clause: The Attorneys warrant that they have not employed, retained or Co
otherwise had act on their behalf, any former Monroe County officer or employee, In violation CD
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of 'Section 2 of Ordinance No.. 10-19 0; or, any County officer or employee In violation of
Section 3 of Ordinance No. 10-1990. for breach or violation of the provision, the BOCC may, at
Its discretion terminate this agreement without liability and may also, at Its discretion, deduct
from the agreement or purchase price, or otherwise recover, the full amount of any fee,
commission, percentage, gift, or consideration paid to the former or present County officer or
employee,
22, Pu,bI1&,,&pjIty,.,CrIMg Stat9D
gnL, A person or affiliate who has been placed on the
convicted vendor fist following a. conviction for public entity crime may not submit a response
on a contract to provide any goods or services to a public entity,may not submit a response/bid
on a contract with a public entity for the construction or repair of a public building or public
work, may not submit responses/bids on leases of real property to a public entity, may not be
awarded or perform work as a contractor, supplier, subcontractor, or consultant under a
contract with any public entity, and may not transact business with any public entity in excess
of the threshold amount provided In Florida Statutes Section 287.017,for CATEGORY TWO for a
period of 36 months from the date of being placed on the convicted vendor list.
23. General irrpents of Con#actors
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aj Ownership of Attorney flies and work product. the Attorneys understand that all flies
and work product prepared by the Attorneys or their firms at the expense of the BOCC (or for
which the BOCC Is otherwise billed) is the property of the BOCC, Without the prior written
approval of the BOCC, this work product may not be used by the Attorneys or their firms nor
disclosed by the Attorneys or their firms to others, except In the normal course of the
Attorneys' representation of the BOCC In this matter. The Attorneys agree that the BOCC owns
all rights, Including copyrights,to materials prepared by the BOCC or by the Attorneys on behalf
of the BOCC, The Attorneys shall notify the BOCC In writing at least BB clays In advance of
destroying any such records and, in the event the BOCC requests that they be preserved, shall
preserve them at least one additional year (with the BOCC responsible for paying the actual
cost of storage). The Attorneys shall provide the BOCC with prompt access to (including the
ability to make copies of) all attorney files and work product, regardless of whether the o
representation or matter is ongoing and whether attorneys' fees and expenses have been paid ;
In full,
b) Dispute resolutlow The Attorneys and the DOCC agree that all disputes regarding
attorneys' fees or expenses are to be resolved pursuant to the procedures and practices for
mediation by the Attorney Consumer Assistance Program of the Florida Bar.
.
c) Entire Agreement: The entire agreement between the BOCC and the Attorneys with
respect to the subject matter hereof Is contained in this Agreement. This Agreement
supersedes all prior oral and written proposals and communications between the BCC and the
Attorneys related to this Agreement. No provision of this Agreement shall be deemed waived, �
amended or modified by either party unless such waiver, amendment or modification Is In on
writing and signed by the party against whore the waiver, amendment or modification Is Co
claimed. This Agreement shall be binding upon and inure to the benefit of the parties hereto,
their permitted successors and assigns,
d) Caption The captions set forth herein are for convenience of reference only and shall
not define, modify, or limit any of the terms hereof.
e) Conflicts In Interpretation; The BOCC and the Attorneys agree that, In the event of
conflicting Interpretations of the terms or a terns of this Agreement by or between there, the
final Interpretation by the BOCC shall apply,
f) Adjudication of Disputes and Disagreements: The BOCC and the Attorneys agree that all
disputes and disagreements between them shall be attempted to be resolved by a meet-and-
confer session between representatives of the BOCC and the Attorneys, if the Issue or Issues
are still not resolved to the satisfaction of both within 38 days after the meet-and-confer
session, then either shall have the right to seek such relief as may be provided by this
Agreement or by Florida law..
g) Cooperation: in the event any administrative or legal proceeding Is Instituted against
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either the BOCC or the Attorneys relating to the formation, execution, performance, or breach
of this Agreement, the BOCC and the Attorneys each agree to participate, to the extent
required by the other, In all proceedings, hearings, processes, meetings, and other activities
related to tile substance of this Agreement. The BCC and the Attorneys each agree that
neither shall be required to eater into any arbitration proceedings related to this Agreement or
any Attachment or Addendum to this Agreement.
h Legal Obligations and responsibilities; Non delegation of Constitutional or Statutory
Duties: This Agreement Is not intended to relieve, nor shall It be construed as relieving,either
the BOCC or the Attorneys from any obligation or responsibility Imposed upon each by law
except to the extent of actual and timely performance thereof by the other, In which case the
performance may be offered In satisfaction of the obligation or responsibility, Further, this —
Agreement Is not Intended to authorize, nor shall It be construed as authorizing,the delegation
of the constitutional or statutory duties of the BOCC, except to the extent permitted by the
Florida Constitution, state statutes, case lave, and, specifically, the provisions of Chapter 15,
Florida Statutes.
i) Attorney's Fees and Costs: In the event any administrative proceeding or cause of action
Is Initiated or defended by the BOCC or the Attorneys relative to the enforcement or
interpretation of this Agreement, the prevailing party shall be entitled to an award of 0.
reasonable attorney's fees, court casts, investigative, and out-of-pocket expenses as an award
against the non-prevailing party, and shall Include reasonable attorney's fees, court costs,
Investigative, and out-of-pocket expenses In appellate proceedings, Mediation proceedings
initiated and conducted pursuant to this Agreement or as may be required by a court of
competent jurisdiction shall be conducted In accordance with the Florida Rules of Civil
Procedure and usual and customary procedures required by the circuit court of the Monroe CO
County Board of County Commissioners,
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j) Authority: The Attorneys warrant that they and the authorized time keepers are
authorized by law and the Rules and Regulations of The Florida Bar to engage In the
performance of the activities encompassed by this Agreement. If the Attorneys are members of
a law firm, either as partners, shareholders, associates, or other relationship, the Attorneys
warrant that they are authorized to enter into this Agreement by the Attorneys' lave firm and to
bind their respective firms to the terms and conditions contained herein,
k)ikon-DIscrirnination; The Attorneys shall not discriminate, In their employment practices
and In providing services hereunder, on the basis of race, color, sex, religion, disability, national
origin, ancestry, sexual orientation, gender Identlty or expression, familial status, or age, and
shall abide by all federal and state laws regarding, non-discrimination. Upon a determination
by a court of competent jurisdiction that such discrimination has occurred, this Agreement
automatically terminates without any further action by the BOCC, effective the date of the
court order, The Attorneys are aware of the provisions of Section 13-101 through 16-106,
Monroe County Code, relating to non-discrimination, and agree to abide by the Code's non-
discrimination requirements.
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Q.6.a
lj Claims for State or Federal Aid. The BOCC and the Attorneys agree that each shall be,
and Is,empowered to apply for, seep, and obtain federal and state funds to further the purpose
of this Agreement, provided that all applications, requests, grant proposals, and funding
solicitations by the Attorneys shall be approved by the BOCC prior to submission.
m) Von-Reliance by Non-parties: No person or entity shall be entitled to rely upon the
terms,or any of them, of this Agreement to enforce or attempt to enforce any third-party claim
or entitlement to or benefit of any service or program contemplated hereunder, and the BCC
and the Attorneys agree that neither the BOCC nor the Attorneys or any officer, agent, or
employee of each shall have the authority to Inform, counsel, or otherwise Indicate that any �+
particular Individual or group of Individuals, entity or entitles, have entitlements or benefits
under this Agreement separate and apart, inferior to, or superior to the community In general
or for the purposes contemplated under this Agreement.
2
n) Attestatlons. The Attorneys agrees to execute such documents as the BOCC may
reasonably require, Including a Drug-Free Workplace Statement, and a Public Entity Crime
Statement.
of Signatures of Parties Required: This Agreement shall not be effective until executed by
both the BCC and the Attorneys and received in final executed form by an authorized
representative of the BOCC..
pj No Personal liability: No covenant or obligation contained In this Agreement shall be
deemed to be a covenant or obligation of any member,officer,agent or employee of the Board on
of Commissioners of Monroe County, Florida (BOCC) in his or her individual capacity and no CO
member, officer, agent or employee of the BOCC shall be liable personally under this
Agreement or be subject to any personal liability or accountability by reason of the execution of ,
this Agreement.
q) Execution In Counterparts, This Agreement may be executed In any number of
counterparts, each of which shall be regarded as an original, all of which taken together shall
constitute one and the same Instrument and the BOCC and the Attorneys may execute, this
Agreement by signing any such counterpart. Pursuant to Monroe County Ordinance No. 0 S-
81 ,this Agreement may be executed using electronic signatures,
(Remainder of page Intentionally left blank.)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No.
THE CITY OF PEMBROKE PINES, ) CLASS ACTION
FLORIDA, Individually and on Behalf of All ) o
Others Similarly Situated, ) JURY TRIAL DEMANDED
Plaintiff,
vs.
MCKINSEY& COMPANY, INC.,
a.
E
Defendants. c
CLASS ACTION COMPLAINT
0
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i3
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TABLE OF CONTENTS
Page
I. INTRODUCTION...............................................................................................................I
11. JURISDICTION AND VENUE..........................................................................................7
111. PARTIES .............................................................................................................................8
IV. FACTUAL ALLEGATIONS ..............................................................................................8
A. Purdue Pleads Guilty to Misbranding OxyContin and Is Bound by a
Corporate Integrity Agreement................................................................................9
B. Purdue Hires McKinsey to Boost Opioid Sales in Light of the Company's
Guilty Plea and Corporate Integrity Agreement....................................................10
.2
0.
1. The Sacklers Distance Themselves from Purdue.......................................10 0
2. Purdue Hires McKinsey to Devise and Implement an OxyContin
Sales Strategy Consistent with the Sacklers' Goals...................................12 E
0
C. What McKinsey Does: "Consulting Is More than Giving Advice".......................15
D. Purdue Relies on McKinsey...................................................................................18
1. The Transformational Relationship ...........................................................18
E. McKinsey Delivers ................................................................................................20 CL
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1 Granular Growth........................................................................................21
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2. "Identifying Granular Growth Opportunities for OxyContin" ..................22 CL
4-
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a. Marketing—Countering Emotional Messages...............................23
b. Targeting— Selling More OxyContin to Existing High
E
Prescribers......................................................................................25
C. Titration— Selling Higher Doses of OxyContin............................27
d. Covered Persons— Sales Quotas and Incentive
Compensation ................................................................................27
e. Increasing the Overall Size of the Opioid Market: the
Larger the Pie, the Larger the Slice ...............................................29
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F. Transformation: Purdue Implements McKinsey's Strategies................................31
1. Project Turb ocharge...................................................................................33
G. McKinsey's Efforts Triple OxyContin Sales.........................................................36
H. McKinsey Knew....................................................................................................38
I. Coda.......................................................................................................................44
IGuilty Again...............................................................................................48
2. A Mea Culpa..............................................................................................49
.2
V. CLASS ACTION ALLEGATIONS ..................................................................................51 0.
0
VI. CAUSES OF ACTION......................................................................................................54
COUNT1. Negligence.......................................................................................................54 E
0
COUNT11: Gross Negligence ...........................................................................................55
COUNT 111. Negligent Misrepresentation.........................................................................56
COUNT IV: Public Nuisance ............................................................................................56
COUNT V: Fraud (Actual and Constructive) and Deceit..................................................59 CL
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COUNT VI: Civil Conspiracy...........................................................................................61
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COUNT VIL Civil Aiding and Abetting...........................................................................62
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COUNT VIII: Unjust Enrichment .....................................................................................63
COUNT IX. Violation of Florida Deceptive and Unfair Trade Practices Act ..................63
E
VII. JURY DEMAND...............................................................................................................65
VIII. PRAYER FOR RELIEF ....................................................................................................65
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I. INTRODUCTION
1. On May 10, 2007, John Brownlee ("Brownlee"), United States Attorney for the
Western District of Virginia, announced the guilty plea of the Purdue Frederick Company, the
parent of Purdue Pharma, L.P. ("Purdue"), relating to the misbranding of OxyContin. Brownlee
stated,
Even in the face of warnings from health care professionals, the media, and
members of its own sales force that OxyContin was being widely abused and
causing harm to our citizens, Purdue, under the leadership of its top executives,
continued to push a fraudulent marketing campaign that promoted OxyContin as
less addictive, less subject to abuse, and less likely to cause withdrawal. In the
process, scores died as a result of OxyContin abuse and an even greater number of
people became addicted to OxyContin; a drug that Purdue led many to believe was a.
safer, less subject to abuse, and less addictive than other pain medications on the
market.
2. Along with the guilty plea, Purdue agreed to a Corporate Integrity Agreement with c
the Office of Inspector General of the U.S. Department of Health and Human Services ("HHS").
For a period of five years, ending in 2012, Purdue was obligated to retain an Independent Monitor
and submit annual compliance reports regarding its marketing and sales practices and training of
CL
sales representatives vis-a-vis their interactions with health care providers.
0
3. In the wake of Purdue's accession to the Corporate Integrity Agreement, Purdue E
0)
CL
faced newly imposed constraints on its sales and marketing practices. The Corporate Integrity 0
i3
Agreement was a problem to solve. Despite the agreement's constraints (i.e., do not lie about
OxyContin), Purdue and its controlling owners, the Sackler family, still intended to maximize
OxyContin sales.
4. The problem was complex. As a result of the 2007 guilty plea, the Sacklers made
the strategic decision to distance the family from Purdue, which was regarded as an increasingly
dangerous "concentration of risk" for Purdue's owners. Ten days after the guilty plea was
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announced, David Sackler wrote to his dad, Richard Sackler, and uncle, Jonathan Sackler,
describing precisely what that "risk" was: legal liability for selling OxyContin. In response to
Jonathan stating that"there is no basis to sue `the family,"' David replied:
Message
From: David ackler
Seat: 5/17/2007 1108,,08 PM y
To: &Ier,Dr Ricitar
Ives,Stephen A.
Subject: RE:Idea
Attachments: imaReXljo
Well i hope you're right,and under logical circumstances I'd agree smith you,but we're living in America. This is the land
of the tree and the home of the blameless. Wewill be sued. Read the op-ed stuff In these local papers and ask yourself
how long it will take these lawyers to figure out that we might settle with theist if they can freeze our assets and threaten
us.
0.
5. Given concern over this"concentration of risk," the two sides of the Sackler family
spent considerable time and energy debating the best way to achieve distance from Purdue, and E
0
collectively considered a variety of options for doing so. One option was to sell the company to or
merge the company with another pharmaceutical manufacturer. Shire was discussed as a possible
target, as was Cephalon, Inc., UCB S.A., and Sepracor Inc. The proceeds of such a transaction
CL
could then be re-invested in diversified assets, thereby achieving the Sacklers' desired distance. 0)
le
0
6. Another option was to have Purdue borrow money in order to assure Purdue had
0)
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adequate funds to continue operating while the Sacklers, as owners, began to make substantial -
distributions of money from the company to themselves. Once again, the proceeds of the
distributions could then be re-invested in diversified assets,thereby achieving the Sacklers' desired
distance.
7. In order to pursue either of these options, the Sacklers needed to maximize opioid
sales in the short term so as to make Purdue—by then the subject of substantial public scrutiny -
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appear either as an attractive acquisition target or merger partner to another pharmaceutical
manufacturer or as a creditworthy borrower to a lender.
8. In short, the Sacklers planned to engage in a final flurry of opioid pushing in order
to rid themselves of their pharmaceutical company dependency for good.
9. Given the complexity of the problem, the Sacklers and Purdue realized that the
P Y P � Y �
would need assistance in achieving these internally contradictory objectives. Purdue did not have 2
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the capabilities in-house to design and implement a sales strategy for OxyContin that would
LM
achieve the Sacklers' objectives. They turned to the global management consulting firm McKinsey
.
& Company ("McKinsey"), which had already been advising the Sacklers and Purdue for at least 0.
three years, for help with their new problem.
10. McKinsey accepted their request,1 and by June 2009 McKinsey and Purdue were c
working together to increase sales of Purdue's opioids. McKinsey suggested a specific sales and
marketing strategy based on McKinsey's own independent research and unique methodologies,
and Purdue adopted that strategy. McKinsey and Purdue then implemented McKinsey's plan.
C.
Despite the strictures imposed upon Purdue by the Corporate Integrity Agreement, OxyContin Ie
0
sales began to multiply. E
c.
4-
11. In 2012, Purdue's Corporate Integrity Agreement ended. With its demise,
i3
McKinsey's ongoing relationship with Purdue flourished. In 2013, McKinsey proposed, and
m
i This Petition assumes that Purdue asked McKinsey to design and implement the strategy for
boosting opioid sales, and McKinsey accepted Purdue's offer. What is known is that McKinsey
performed the work for Purdue. For the purposes of this Petition, Plaintiff and other Class
Members assume Purdue initiated the relationship with McKinsey. Should it arise that instead
McKinsey pitched a proposal to increase OxyContin sales to Purdue, and Purdue accepted that
proposal, then Plaintiff will amend this Class Petition accordingly.
2 McKinsey espouses the idea of the "transformational relationship." It is not a one-off seller of
advice for any given Chief Financial Officer ("CEO") problem of the day. Rather, McKinsey
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Purdue implemented with McKinsey's ongoing assistance, Project Turbocharge, a marketing
strategy to increase opioids sales by hundreds of millions of dollars annually. Purdue then picked
a new name — Evolve 2 Excellence — and adopted it as the theme to its 2014 national sales
campaign.With McKinsey's assistance,Purdue trained its sales representatives to operate pursuant
to McKinsey's strategy for selling OxyContin.
�
12. In 2013, despite significant headwinds, OxyContin sales finally peaked. The
e
restrictions on Purdue's sales and marketing methods contained in the Corporate Integrity
Agreement should have resulted in fewer overall OxyContin sales: the guilty plea identified a
specific segment of existing OxyContin sales that were illegitimate and should thus cease. All else 0.
being equal, OxyContin sales should have decreased to account for the successful snuffing out of
improper sales. In fact, OxyContin sales did decrease in the immediate aftermath of the 2007 guilty c
plea.
13. Within five years, however, OxyContin sales would triple. McKinsey is responsible
for the strategy that accomplished this.It presented specific plans to Purdue,which Purdue adopted
and spent hundreds of millions of dollars implementing. The result: a final spasm of OxyContin
0
sales before the inevitable decline of the drug.' E
c.
4-
0
i3
argues that real value for the client derives from an ongoing "transformational" relationship with
the firm. Duff McDonald, The Firm 136 -37 (2013) ("McKinsey no longer pitched itself as a
project-to-project firm; from this point forth [the late 1970's], it sold itself to clients as an ongoing
prodder of change, the kind a smart CEO would keep around indefinitely.").
This Petition tells the story of McKinsey's transformational relationship with Purdue.
' On February 10. 2018, Purdue announced that it is no longer marketing opioids and disbanded
its OxyContin sales force.
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14. McKinsey has recently been the subject of scrutiny for its various business
practices, including its work facilitating the opioid crisis for Purdue.4 On March 7, 2019, Kevin
Sneader ("Sneader"), McKinsey's global managing partner, addressed all McKinsey employees
regarding this scrutiny. Drawing inspiration from Theodore Roosevelt, Sneader stated, "[W]e
cannot return to a time when we were in the background and unobserved. Those days have gone.
Indeed, I have little doubt that scrutiny —fair and unfair—will continue. It is the price we pay for
e
being `in the arena' and working on what matters."5
15. Weeks later, McKinsey announced that it is no longer working for any opioid
manufacturer. "Opioid abuse and addiction are having a tragic and devastating impact on our 0.
communities.We are no longer advising clients on any opioid-specific business and are continuing
0
4 See Michael Forsythe and Walt Bogdanich, McKinsey Advised Purdue Pharma How to
`Turbocharge' Opioid Sales, Lawsuit Says, N.Y. Ti ES (Feb. 1, 2019), L
https://www.nytimes.com/2019/02/01/business/purdue-pharma-mckinsey-oxycontin- 0
opiods.html. .0
W
s CL
See "The Price We Pay for Being 'In the Arena"': McKinsey's Chief Writes to Staff About -
Media Scrutiny and Scandal, FORTUNE MAGAZINE (Mar. 8, 2019),
https:Hfortune.com/2019/03/08/mckinsey-staff-letter-kevin-sneader/.
The "arena" reference is to Citizenship in a Republic, a speech delivered by Theodore E
Roosevelt on April 23, 1910: "It is not the critic who counts; not the man who points out how the
strong man stumbles, or where the doers of deeds could have done them better. The credit belongs
to the man who is actually in the arena [here, McKinsey; and the arena, opioid sales], whose face
is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again
and again, because there is no effort without error and shortcoming; but who does actually strive
to do the deeds;who knows great enthusiasms,the great devotions;who spends himself in a worthy
cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if
he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid
souls who neither know victory nor defeat."
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to support key stakeholders working to combat the crisis," McKinsey stated.' In addition to its
work for Purdue, McKinsey has performed work for"several other companies on opioids."'
16. Plaintiff now argues that the price for being in the arena is more than scrutiny,
however fair. This lawsuit argues that, like any other participant in the arena, McKinsey is liable
for its deeds. McKinsey is liable for its successful efforts to increase OxyContin sales after
Purdue's 2007 guilty plea for misbranding the drug. Indeed, McKinsey's mandate was to increase 2
e
the sales of the drug in light of the fact that Purdue had plead guilty to misbranding, and the owners
of Purdue now wished to exit the opioid market due to the perceived reputational risks of remaining
there. 0.
17. McKinsey's task was to thread the needle: to increase OxyContin sales given the
strictures imposed by the 5-year Corporate Integrity Agreement. This McKinsey did, c
turbocharging' the sales of a drug it knew fully well was addictive and deadly, while paying at
least tacit respect to the Corporate Integrity Agreement.
18. These managerial acrobatics were necessary for Purdue to seem financially
CL
attractive enough that a potential buyer would be willing to discount (or even overlook) the le
0
otherwise obvious risks associated with purchasing the maker of OxyContin. Purdue was the E
c.
4-
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' See Paul La Monica, Consulting firm McKinsey no longer working with opioid maker Purdue
Pharma, CNN BUS. (May 24, 2019), https://www.cnn.com/2019/05/24/business/mckinsey-
purdue-pharma-oxycontin/index.html. The statement was attributed to McKinsey as an entity. No E
individual's name was attributed.
' See Drew Armstrong, McKinsey No Longer Consulting for Purdue, Ends Opioid Work,
BLOOMBERG (May 23, 2019), https://www.bloomberg.com/news/articles/2019-05-24/mckinsey-
no-longer-working-with-purdue-halts-opioid-consulting. While Plaintiff is aware of work
McKinsey has performed for other opioid manufacturers, this Petition concerns McKinsey's work
with Purdue.
s If the description is overbearing, note that it is McKinsey's own, as described below.
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proverbial hot potato. The Sackler family hired McKinsey to help them hand it to someone else.
McKinsey obliged, and devised a successful strategy to purposefully increase the amount of
OxyContin sold in the United States. Their efforts tripled OxyContin sales.
19. In the end, of course, the Sacklers never sold Purdue, and no one loaned it money.
In time,the full Y ex scope of the o ioid crisis would be clear not only to experts, insiders and industry
P P P �' �
participants. Along with the rest of nation, Plaintiff is now squarely focused on the crisis.
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II. JURISDICTION AND VENUE
20. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
§1332(d)(2), because: (a) at least one member of the putative Class is a citizen of a state different a.
from Defendant McKinsey; (b) the amount in controversy exceeds $5,000,000, exclusive of
interest and costs; and (c) none of the exceptions under the subsection apply to this action. c
21. This Court has personal jurisdiction over each Defendant because Plaintiff s claims
arise out of, or relate to, Defendant's contacts with Florida.
22. At all times relevant hereto, Defendant engaged in the business of researching,
C.
designing, and implementing marketing and promoting strategies for various opioid manufacturers
0
including Purdue in the State of Florida and the City of Pembroke Pines. E
c.
23. This Court has jurisdiction over Defendant due to Defendant's conduct in the City 0
i3
of Pembroke Pines and throughout Florida. McKinsey has deliberately engaged in significant acts
a�
and omissions within the City of Pembroke Pines and other Class Members that has injured its
residents. Defendant purposefully directed their activities in the City of Pembroke Pines and other
Class Members and their residents, and the claims arise out of those activities.
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24. Venue is proper in this District because a substantial part of the events giving rise
to Plaintiffs claims occurred in, were directed to, and/or emanated from this District. 28 U.S.C.
§1391(b).
III. PARTIES
25. Plaintiff Pembroke Pines is a political subdivision of the State of Florida,
established pursuant to Fla. Const. Art. VIII, §2, which may sue and plead in its own name.
e
26. Plaintiff Pembroke Pines is responsible for the public health, safety, and welfare of o
its residents, is a citizen of the State of Florida, and has the capacity to sue. Fla. Stat. §166.021.
.
27. Defendant McKinsey & Company, Inc. is a foreign corporation with its principal a.
office at 711 Third Avenue, New York, New York 10017. It may be served with process through
its registered agent, Corporation Service Company, 80 State Street, Albany, New York 12207. c
Additionally, McKinsey maintains an office within the State at Two Brickell City Centre, 78 SW
7th Street, Suite 1000, Miami,Florida 33130, and is registered to do business in Florida. It may be
served with process through its registered agent, Corporation Service Company, 201 Hays Street,
C.
Tallahassee, Florida 32301.
0
IV. FACTUAL ALLEGATIONS
W
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28. This lawsuit concerns McKinsey's work for Purdue and its owner, the Sackler 0
i3
family, beginning at least as early as 2004, and in particular McKinsey's work in the years after
the 2007 guilty plea relating to Purdue's sales and marketing strategy for its opioids.
29. McKinsey had an ongoing relationship with Purdue beginning at least as early as
2004 and lasting decades. By June 2009 McKinsey was advising Purdue on precisely the same
sales and marketing strategy and practices for OxyContin that were the subject of the Corporate
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Integrity Agreement. McKinsey continued this work after the expiration of the Corporate Integrity
Agreement and at least through November of 2017.
A. Purdue Pleads Guilty to Misbranding OxyContin and Is Bound by a
Corporate Integrity Agreement
30. On May 10, 2007,the Purdue Frederick Company,Purdue's parent, as well as three
of Purdue's officers, pleaded guilty to the misbranding of OxyContin pursuant to various
provisions of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §301, et seq.
31. Purdue admitted that "supervisors and employees, with the intent to defraud or
mislead, marketed and promoted OxyContin as less addictive, less subject to abuse and diversion,
0.
and less likely to cause tolerance and withdrawal than other pain medications."
32. Concurrent with the guilty plea by the Purdue Frederick Company, Purdue entered
E
0
into a Corporate Integrity Agreement with the Office of Inspector General of HHS on May 7, 2007.
33. Purdue's compliance obligations under the Corporate Integrity Agreement ran for
a period of five years, expiring on May 10, 2012.
34. Pursuant to the Corporate Integrity Agreement,Purdue was obligated to implement L
0)
le
written policies regarding its compliance program and compliance with federal health care
E
0)
program and Food and Drug Administration requirements, including: CL
4-
0
"selling, marketing, promoting, advertising, and disseminating Materials or
information about Purdue's products in compliance with all applicable FDA
requirements, including requirements relating to the dissemination of information
that is fair and accurate ... including, but not limited to information concerning the
withdrawal, drug tolerance, drug addiction or drug abuse of Purdue's products;
�t
compensation (including salaries and bonuses) for Relevant Covered Persons
engaged in promoting and selling Purdue's products that are designed to ensure that
financial incentives do not inappropriately motivate such individuals to engage in
the improper promotion or sales of Purdue's products;
the process by which and standards according to which Purdue sales representatives
provide Materials or respond to requests from HCP's [health care providers] for
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information about Purdue's products, including information concerning
withdrawal, drug tolerance, drug addiction, or drug abuse of Purdue's products,"
including "the form and content of Materials disseminated by sales
representatives," and"the internal review process for the Materials and information
disseminated by sales representatives."
35. Purdue was obligated to engage an Independent Review Organization to ensure its
compliance with the strictures of the Corporate Integrity Agreement, and to file compliance reports
on an annual basis with the inspector general.
e
B. Purdue Hires McKinsey to Boost Opioid Sales in Light of the
Company's Guilty Plea and Corporate Integrity Agreement
36. The Sackler family has owned and controlled Purdue and its predecessors since
0.
1952. At all times relevant to this Petition, individual Sackler family members occupied either six 0
or seven of the seats on Purdue's board of directors, and at all times held a majority of board seats.
E
0
To advise the board of directors of Purdue was to advise the Sackler family. The interests of the
Sackler family and the Purdue board of directors, and Purdue itself, as a privately held company,
are all aligned. Practically, they are indistinguishable.9
1. The Sacklers Distance Themselves from Purdue
CL
37. After the 2007 guilty plea, the Sackler family began to reassess its involvement in 0
the opioid business. On April 18, 2008, Richard Sackler, then the co-chairman of the board of °'
0
directors along with his uncle, communicated to other family members that Purdue's business of
t�
selling OxyContin and other opioids was "a dangerous concentration of risk." Richard Sackler
recommended a strategy of installing a loyal CEO of Purdue who would safeguard the interests of
9 Craig Landau ("Landau"), soon to become CEO of Purdue, acknowledged in May 2017 that
Purdue operated with"the Board of Directors serving as the `de facto' CEO." The future CEO of
the company, in other words, understood that he would have little practical power despite his new
title. The owners ran the business.
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the Sackler family, while at the same time positioning Purdue for an eventual sale by maximizing
OxyContin sales.
38. In the event that a purchaser for Purdue could not be found, Richard stated Purdue
should"distribute more free cash flow" to the Sacklers. This would have the effect of maximizing
the amount of money an owner could take out of a business, and is a tacit acknowledgement that
reinvestment of profits in the business was not a sound financial strategy. It is, in other words, an 2
e
acknowledgement that Purdue's reputation and franchise was irrevocably damaged, and that
Purdue's opioid business was not sustainable in the long term.
39. By 2017,with the hope for any acquisition now gone,the Sacklers' decision to milk a
opioid profits by "distributing more free cash flow" on the way down had its natural effect on
Purdue. Landau, then the CEO, stated, "the planned and purposeful de-emphasis and c
deconstruction of R&D has left the organization unable to innovate."
40. In fact,in the years after the 2007 guilty plea,Purdue would retain only the absolute
minimum amount of money within Purdue as possible: $300 million. That amount was required to
C.
be retained by Purdue pursuant to a partnership agreement with separate company. Otherwise, all Ie
0
the money was distributed to the owners.10 E
c.
4-
41. Concurrently, the Sacklers backed away from day-to-day jobs at Purdue. During
i3
the ongoing investigation that resulted in the 2007 guilty pleas, "several family members who
a�
worked at Purdue stepped back from their operational roles."" In 2003, Richard Sackler himself
10 See Jared S. Hopkins,At Purdue Pharma, Business Slumps as Opioid Lawsuits Mount, WALL
ST. J. (June 30, 2019), https://www.wsj.com/articles/purdue-pharma-grapples-with-internal-
challenges-as-opioid-lawsuits-mount-11561887120?mod=hp_lead—posh.
ii Barry Meier, Pain Killer 167 (2018).
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resigned as the president to assume his role of co-chairman. Dr. Kathe Sackler and Jonathan
Sackler chose to exit their roles as senior vice presidents. Mortimer D.A. Sackler quit being a vice
president.
42. They remained on the board of directors, however.
43. At the time Richard Sackler communicated these plans to distance the family from
Purdue, the Sacklers had already established a second company, Rhodes Pharmaceuticals L.P. 2
0
("Rhodes"). The Sacklers established Rhodes four months after the 2007 guilty plea.12 Rhodes'
purpose was to sell generic versions of opioids. It was, in other words, a way for the Sacklers to
.
continue to make money off of opioids while separating themselves from Purdue.By 2016,Rhodes 0.
held a larger share of the opioid market than Purdue. Through Purdue, the Sacklers controlled
1.7% of the overall opioid market. When combined with Rhodes, however, the Sacklers' share of c
the overall opioid market was approximately 6% of all opioids sold in the United States.13
2. Purdue Hires McKinsey to Devise and Implement an
OxyContin Sales Strategy Consistent with the Sacklers' Goals
44. The Sacklers faced a problem: the need to grow OxyContin sales as dramatically
as possible so as to make Purdue an attractive acquisition target or borrower, while at the same
E
0)
time appearing14 to comply with the Corporate Integrity Agreement. CL
4-
0
i3
12
Billionaire Sackler family owns second opioid maker, FIN. TIMES (Sept. 9, 2018)
https://www.ft.com/content/2d2lcfla-b2bc-I l e8-99ca-68cf89602132.
13 Id
14 As one Purdue executive stated of Purdue's attitude toward the Corporate Integrity Agreement:
"They did not listen to their critics and insisted they had just a few isolated problems. After the
settlement, they didn't change—the way the sales force was managed and incentivized, everything
stayed the same."David Crow,How Purdue's `one-two'punch fuelled the marketfor opioids,FIN.
TIMES (Sept. 9, 2018), https://www.ft.com/content/8e64ec9c-bl33-11e8-8dl4-6fO49dO6439c.
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45. Purdue and the Sacklers were well aware of the constraints posed by the
Agreement. Indeed, during a May 20, 2009 Executive Committee Meeting, the discussion led to
whether Purdue should have a single sales force marketing all Purdue products, including
OxyContin, or instead to"create a separate Sales Force for Intermezzo (a sleeping pill)that would
be comprised of approximately 300 representatives." John Stewart ("Stewart"), the Sacklers'
chosen CEO for Purdue at the time, saw an opportunity, and asked if the Corporate Integrity 2
e
Agreement would apply if Purdue were to launch Intermezzo and another Purdue product, Ryzolt
(a branded version of Tramadol, another narcotic painkiller), using the separate sales force. Might
the new drug launch fall outside of the Corporate Integrity Agreement,? he asked.15 0.
0
46. It would not, he was told by Bert Weinstein, Purdue's Vice President of
Compliance.16 0
47. Given the tension between compliance with the Corporate Integrity Agreement and
the desire to sell more OxyContin, Purdue needed help.
48. Ethan Rasiel, a former McKinsey consultant, has described the typical way
a.
McKinsey begins working with a client: "An organization has a problem that they cannot solve Ie
0
with their internal resources. That's the most classic way that McKinsey is brought in."17
c.
49. Such was the case with Purdue. Because it did not have the requisite expertise to
i3
address the problems posed by the Corporate Integrity Agreement internally, Purdue hired
a�
McKinsey to devise a sales and marketing strategy to increase opioid sales in light of the Corporate
15 Purdue Executive Committee Meeting Notes and Actions, at 2 (May 20, 2009).
16 Id.
17 How McKinsey Became One of the Most Powerful Companies in the World, YOUTUBE (June
6, 2019), https://www.youtube.com/watch?v=BBmmMj_mall.
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Integrity Agreement and growing concern about the"concentration of risk"that Purdue's business
of selling opioids posed to its owners.
50. In short, Purdue would pay money to McKinsey in exchange for McKinsey telling
the company how to sell as much OxyContin as conceivably possible so that the Sacklers could
obtain cash to diversify their investment holdings away from Purdue.
51. Purdue's Executive Committee discussed CEO Stewart's concerns regarding the 2
e
constraints posed by the Corporate Integrity Agreement on May 20, 2009. Within weeks,
McKinsey was working with Purdue to devise and implement new marketing strategies for
OxyContin. 0.
52. Consistent with their plan to dissociate themselves from the company, the Sacklers
appointed Stewart as the CEO of Purdue in 2007. The Sacklers viewed Stewart as someone loyal c
to the family. He had previously worked for a division of Purdue in Canada. Stewart's job was to
assist the Sacklers with the divestiture or eventual orderly wind-down of Purdue. Stewart was paid
more than $25 million for his services to Purdue from 2007 through 2013.
a.
53. Stewart, as CEO, was in charge of the relationship with McKinsey. He controlled Ie
0
workflow to and from McKinsey, and required his personal approval for any work orders with E
CL
-
McKinsey.
i3
54. In addition, Purdue's Vice President of Corporate Compliance, "responsible for
a�
developing and implementing policies, procedures, and practices designed to ensure compliance
with the requirements set forth in the [Corporate Integrity Agreement]," reported directly to
Stewart.
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55. Throughout their relationship, McKinsey routinely obtained information from,
advised, communicated with, and ultimately worked for the Purdue board of directors, controlled
by the Sackler family.
56. McKinsey would also work in granular detail with the Purdue sales and marketing
staff, led during the relevant period by Russell Gasdia ("Gasdia"), Vice President of Sales and
Marketing.
e
57. From as early as June 2009 and continuing at least through July 14, 2014, Purdue
routinely relied upon McKinsey to orchestrate their sales and marketing strategy for OxyContin.
.
The relationship was characterized by ongoing interactions between teams from McKinsey and 0.
Purdue regarding not only the creation of an OxyContin sales strategy, but also its
implementation. c
C. What McKinsey Does: "Consulting Is More than Giving Advice"
58. Management consulting is the business of providing solutions to clients. Solutions
take many forms, depending on the client's needs. "Management consulting includes a broad range
of activities,and the many firms and their members often define these practices quite differently."" �
0
59. Broadly speaking, there are two schools of management consulting. "Strategy" E
c.
consulting provides big-picture advice to clients about how they approach their business: how the c
i3
business is structured, which markets to compete in, potential new business lines, and mergers and
acquisitions. The strategy consultant would provide a plan to the client that the client may choose
to adopt or not.
18 Arthur Turner, Consulting is More Than Giving Advice, HARv. BUS. REv. (Sept. 1982),
https:Hhbr.org/l982/09/consulting-is-more-than-giving-advice.
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60. "Implementation" consulting is what comes next.If strategy consulting is providing
advice to a client, "implementation" work is what happens once the client has adopted the
consultant's plan. After a client has adopted the strategy consultant's recommendations, the
implementation consultant remains in place with the client to actually do the necessary work and
execute on the plan.
61. In his 1982 Harvard Business Review article entitled "Consulting is More Than
e
Giving Advice," Professor Arthur Turner of the Harvard Business School described the then- o
current state of the consulting industry's attitude toward implementation work: "The consultant's
.
proper role in implementation is a matter of considerable debate in the profession. Some argue that 0.
one who helps put recommendations into effect takes on the role of manager and thus exceeds
consulting's legitimate bounds. Others believe that those who regard implementation solely as the c
client's responsibility lack a professional attitude, since recommendations that are not
implemented (or implemented badly) are a waste of money and time. And just as the client may
participate in diagnosis without diminishing the value of the consultant's role, so there are many
C.
ways in which the consultant may assist in implementation without usurping the manager's j ob." le
0
62. A core component of the McKinsey relationship is discretion. "The basis of any E
c.
4-
client relationship with the firm is trust. Companies share their most competitive secrets with 0
i3
McKinsey with the understanding that confidentiality is paramount. McKinsey consultants aren't
a�
even supposed to tell their own spouses about their client work."20
19 Id
20 McDonald, The Firm, at 308.
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63. Although McKinsey has historically been regarded as a"strategy" consulting firm,
by the time it was working with Purdue, implementation services were a core component of the
overall suite of services that McKinsey provided within the "transformational relationship"
McKinsey developed with its clients.21
64. Describing McKinsey's approach to implementation, one McKinsey consultant
�
stated, "On some of the most successful engagements I've seen, you can't even tell the difference 2
e
between a McKinsey team member and one of our clients because we're working that cohesively o
together. ,22
65. Another McKinsey Senior Implementation Coach described McKinsey's approach: 0.
"We're in there interacting with every element of that organization,from the welders or mechanics
on the front line, all the way up to the board of directors."23 0
66. In the broadest of generalities, then, McKinsey's business model, as a provider of
strategy and implementation consulting services, is to partner with clients to pursue business
objectives identified by McKinsey. Once the objective is identified, the client and McKinsey then
C.
engage in concerted action as a seamless and cohesive unit in order to implement the necessary le
0
means to achieve those objectives for the client. E
c.
4-
0
i3
21 For McKinsey's own description of its implementation services, see
https://www.mckinsey.com/business-functions/mckinsey-accelerate/how-we-help-
clients/implementation (last visited Jan. 5, 2021).
22 McKinsey on Implementation, YOUTUBE (Apr. 30, 2017),
https://www.youtube.com/watch?v=rEQOGVpl9CY.
23 Id
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67. Indeed, long after McKinsey's advice to Purdue was accepted and deployed as the
theme of Purdue's 2014 national sales strategy, McKinsey remained with Purdue to assure proper
implementation of McKinsey's strategies to maximize OxyContin sales.
D. Purdue Relies on McKinsey
68. McKinsey is not hired to give casual advice. They are a corporate mandarin elite,
likened to the Marines or the Jesuits.24 United States Senator Mitt Romney, during his presidential
e
campaign in 2012,told the editorial board of the The Wall Street Journal that as president he would
approach reducing the size of the government by hiring McKinsey. A former consultant himself,
Romney stated, "So I would have ... at least some structure that McKinsey would guide me to put a.
in place."In response to audience surprise,Romney said, "I'm not kidding. I would probably bring
in McKinsey."25 c
69. McKinsey is not cheap, either. A client does not choose to pay McKinsey unless it
expects to receive advice it could not have obtained within its own organization. McKinsey offers
solutions to clients facing challenges they feel they cannot adequately address on their own. In
C.
2008, McKinsey's revenue was $6 billion.
0
1. The Transformational Relationship E
70. McKinsey has long touted the notion of the "transformational relationship." It is 0
i3
the goal of every client relationship McKinsey develops, and, McKinsey argues, the best way to
extract value from a client's use of McKinsey's services.
24 Said one former McKinsey partner to Business Week in 1986: "There are only three great
institutions left in the world: The Marines, the Catholic Church, and McKinsey." McDonald, The
Firm, at 165.
25 McDonald, The Firm, at 1.
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71. At its core, the"transformational relationship" is long-term. It is the antithesis of a
one-off contract wherein McKinsey performs one discreet project for a client and then concludes
its business. Rather, "once McKinsey is inside a client,its consultants are adept at artfully creating
a feedback loop through their work that purports to ease executive anxiety but actually creates
more of it."26 The long term result can be "dependence" on the McKinsey consultants.
72. This strategy of insinuating itself into all aspects of its clients' business proved
e
enormously successful for McKinsey over the years. It was a strategy McKinsey encouraged its
consultants to take with clients to great effect:
The sell worked: Once ensconced in the boardrooms of the biggest corporate 0.
players in the world, McKinsey rarely left, ensuring a steady and growing now of `-'
billings for years if not decades. In 2002, for example, Business Week noted that at
that moment, the firm had served four hundred clients for fifteen years or more.'
0
73. Purdue was no different. McKinsey counted Purdue as a client at least as early as
2004. The precise duration of the relationship between McKinsey and Purdue and its owners has
not been ascertained, although it is known that McKinsey worked with Purdue for years before
Purdue's parent and officers first pleaded guilty to misbranding OxyContin in 2007, and that by L
0)
le
June 2009 McKinsey was actively working with Purdue to increase OxyContin sales in light of
E
W
CL
4-
0
26 Id. at 6. Purdue provides a fine example of this feedback loop in action. In 2008, when
McKinsey was advising Purdue regarding Risk Evaluation and Mitigation Strategies (REMS) for
OxyContin required by the FDA,McKinsey partner Maria Gordian wrote to fellow partners Martin
Elling ("Elling") and Rob Rosiello ("Rosiello") regarding progress in the "REMS work" as well E
as "Broader Strategy work." Regarding the latter, Gordian noted that Purdue board members
Jonathan Sackler and Peter Boer "basically `blessed' [Landau] to do whatever he thinks is
necessary to `save the business.'. . . I believe there is a good opportunity to get another project
here." (emphasis added).
Indeed, after the REMS work was completed, McKinsey continued to work on "Broader
Strategy work" for another decade.
27 Id. at at 13 6.
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that guilty plea and its accompanying Corporate Integrity Agreement. The work continued through
at least 2018.
74. McKinsey partner Maria Gordian, in her March 26, 2009 "EY 2009 Impact
Summary" internal report to McKinsey Director Olivier Hamoir and McKinsey's Personnel
Committee, recounted her accomplishments that year on the Purdue account. The document is an
annual self-assessment produced by McKinsey partners. In it, Gordian described the state of firm's 2
e
relationship for Purdue:
With client work extending through the 3rd quarter, and several additional proposals
in progress, we continue to expand the depth and breadth of our relationships at
Purdue. We look forward to deepening our relationships with the Sackler family 0.
and serving them on key business development issues, and to expanding our
relationship with [John] Stewart and other members of the senior management
team.
E
0
75. McKinsey staffed at least 36 known consultants to Purdue, from senior partners all
the way down through engagement managers to entry-level associates. Throughout the unfolding
of the nationwide opioid crisis that only continued to worsen after the 2007 guilty plea, McKinsey
remained steadfast alongside the Sacklers and Purdue every step of the way. The mea culpas would L
W
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come only later.
W
E. McKinsey Delivers CL
4-
0
76. By 2009, McKinsey was working with its long-time client to craft and implement
a sales and marketing plan to increase OxyContin sales in light of the Corporate Integrity a
Agreement and the diminishing outlook for Purdue.
77. In June 2009, McKinsey advised Purdue senior management, including Landau,
then the Chief Medical Officer ("CMO") and future CEO, regarding a variety of strategies to
increase Purdue's opioid sales that were developed using McKinsey's expertise and proprietary
approaches to problem solving.
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1. Granular Growth
78. McKinsey prides itself on certain managerial techniques it professes to have
detailed knowledge of and expertise in deploying. These techniques are generally applicable to
problems encountered by many businesses; they are conceptual frameworks that McKinsey
deploys when tasked with solving a problem for a client.
79. After the first guilty plea, the Sacklers desired dramatic, short-term growth of
e
Purdue's opioid sales so as to increase the company's attractiveness as an acquisition target or o
borrower while allowing the Sacklers to take money out of the company. One service McKinsey
.
offers to its clients is to tell them how to grow. a.
80. In order to identify growth opportunities for a client, McKinsey espouses a
"granular" approach to identifying which subsets of the client's existing business are the sources c
of growth and exploiting them for all they are worth. In August 2008, McKinsey Directors Patrick
Viguerie and Sven Smit, together with Mehrdad Baghai, published a treatise on the matter: The
Granularity of Growth: How to Identify the Sources of Growth and Drive Enduring Company
a.
Performance (2008). "The key is to focus on granularity, to breakdown big-picture strategy into
0
its smallest relevant components." as
CL
-
81. Previously, in an article in the McKinsey Quarterly (coincidentally published the c
i3
same month that Purdue pled guilty), the authors explained:
Our research on revenue growth of large companies suggest that executives should
`de-average' their view of markets and develop a granular perspective on trends,
future growth rates, and market structures. Insights into subindustries, segments,
categories, and micromarkets are the building blocks of portfolio choice.
28 The granularity of growth, Book Excerpt, McKinsey & Co. (Mar. 1, 2008),
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-
granul arity-of-growth.
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Companies will find this approach to growth indispensable in making the right
decisions about where to compete.29
82. Additionally, McKinsey encouraged a granular assessment of the geography of
corporate growth. "The story gets more precise as we disaggregate the company's performance on
the three growth drivers in 12 product categories for five geographic regions.""
83. One can imagine this strategy applied to a seller of, say, cartons of milk. If
McKinsey were to perform an analysis of the milk seller's sales and marketing and discovers that
the profit margin on milk cartons sold to university cafeterias in dairy-producing states is much
greater than the margin on cartons sold at convenience stores in the southwest, and further that the
0.
milk seller has previously devoted equal amounts of time and resources selling to both university
cafeterias and convenience stores; then McKinsey would likely advise the client to deploy
E
0
additional resources towards selling milk to university cafeterias in dairy-producing states.
McKinsey's "granular" approach to the milk seller's business channels has identified a way to
increase higher margin sales, leading to newfound growth for the client.
84. Rather than milk, McKinsey deployed this strategy on OxyContin, a controlled L
0)
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substance, after its manufacturer pled guilty to misrepresenting the addictive and deadly properties
E
0)
of the drug. CL
4-
0
2. "Identifying Granular Growth Opportunities for OxyContin"
85. McKinsey's granular analysis of Purdue's OxyContin sales efforts led to the a
implementation of a number of strategies to sell more pills.
29 Mehrdad Baghai et al., The granularity of growth, McKINSEY Q. (May 1,2007),
https://www.mckinsey.com/featured-insights/employment-and-growth/the-granularity-of-
growth.
so Id.
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86. By January 2010, McKinsey informed Purdue that, in accordance with the tenants
of its granular growth analysis, Purdue could generate "$200,000,000 to $400,000,000" in
additional annual sales of OxyContin by implementing McKinsey's strategies.
87. In June of 2012, Stewart assigned McKinsey to "understand the significance of
each of the major factors affecting OxyContin's sales."
88. This McKinsey did in excruciatingly granular detail, analyzing each sales channel
e
for Purdue's opioids for weaknesses and opportunities. For instance, McKinsey informed the
Sacklers that "deep examination of Purdue's available marketing purchasing data shows that
Walgreens has reduced its units by 18%." Further, "the Walgreens data also shows significant 0.
impact on higher OxyContin doses." In order to counter these perceived problems, McKinsey
suggested that Purdue's owners lobby Walgreens specifically to increase sales. It also suggested c
the establishment of a direct-mail specialty pharmacy so that Purdue could circumvent Walgreens
and sell directly to Walgreens' customers. In addition, McKinsey suggested the use of opioid
savings cards distributed in neighborhoods with Walgreens locations to encourage the use of
C.
Purdue's opioids despite Walgreens actions. Ie
0
89. The themes of McKinsey's work would be crystallized in a series of presentations E
c.
and updates made to the Sackler family and Purdue's board of directors in the summer of 2013
i3
entitled "Identifying Granular Growth Opportunities for OxyContin."
a�
a. Marketing— Countering Emotional Messages
90. From the outset of McKinsey's known work for Purdue,the work was grim.In June
of 2009, McKinsey teamed with Purdue's CMO (and current CEO)Landau and his staff to discuss
how best to "counter emotional messages from mothers with teenagers that overdosed in [sic]
OxyContin."
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91. Months later, McKinsey advised Purdue to market OxyContin based on the false
and misleading notion that the drug can provide "freedom" and "peace of mind" for its users, and
concomitantly reduce stress and isolation.
92. These marketing claims were tailored to avoid any pitfalls that the Corporate
Integrity Agreement might hold. While nonetheless false and misleading, these claims regarding
g Y g g g� �
"freedom" and "peace of mind" of OxyContin users were narrowly tailored in order to avoid
e
representations regarding "the withdrawal, drug tolerance, drug addiction or drug abuse of o
Purdue's products," as specified in Section III.B.2.c of the Corporate Integrity Agreement.
93. Purdue's marketing materials from that time period are illustrative of the 0.
approach:"
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31 State of Tenn. v. Purdue Pharma L.P., No. 1-173-18, Complaint at ¶24 (Tenn. Cir. Ct. May
15, 2018).
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94. In addition, McKinsey suggested the tactic of "patient pushback," wherein
McKinsey and Purdue would foment patients to directly lobby their doctors for OxyContin when
those physicians expressed reservations regarding the administration of Purdue's opioids.
b. Targeting— Selling More OxyContin to Existing High
Prescribers
95. Perhaps the key insight McKinsey provided was, using its granular approach, to
identify historically large prescribers and target ever more sales and marketing resources on them.
96. On January 20, 2010, Purdue's board of directors was informed of the ongoing
work McKinsey was performing concerning a new "physician segmentation" initiative whereby
0.
McKinsey would analyze the opioid prescribing patterns of individual physicians to identify those
that had historically been the highest prescribers. McKinsey then worked with Purdue's sales and
E
0
marketing staff to specifically target those prescribers with a marketing blitz to encourage even
further prescribing.
97. Purdue trained its sales force in tactics to market to these high prescribers based on
McKinsey's insights and designed in conjunction with McKinsey. L
0)
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98. Many of the historically highest prescribers of OxyContin—those same individuals
E
0)
that McKinsey urged Purdue to target for ever more prescriptions — had prescribed Purdue's CL
4-
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OxyContin before the 2007 guilty plea, and had already been subjected to Purdue's
misrepresentations regarding OxyContin that were the subject of that guilty plea.
99. McKinsey identified these physicians — those that had already been influenced by
Purdue's misrepresentations and were thus already high prescribers — as optimal targets for a
massive marketing push to sell more OxyContin.
100. McKinsey worked assiduously with Purdue over many years to continually refine
this approach, and required ever-more granular data for its analysis. More than three years after
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the initial introduction of the physician segmentation initiative, McKinsey requested, and Purdue
provided,"prescriber-level milligram dosing data" so that they could further analyze the individual
amounts of OxyContin prescribed by individual physicians.
101. At the same time, it requested this "prescriber-level milligram dosing data" from
Purdue,McKinsey urged the Sacklers to strictly manage the target lists of each sales representative
�
to assure that the maximum amount of each sales representative's time was spent with the most
e
attractive customers.
102. On July 23,2013,Purdue's board of directors discussed concerns about"the decline
in higher strengths" of Purdue's opioids as well as an observed decline in"tablets per Rx."In order 0.
to assure that the threat to OxyContin sales growth be addressed, McKinsey was assigned "to
actively monitor the number and size of opioid prescriptions written by individual doctors." 0
103. In unveiling of Project Turbocharge to Purdue and the Sacklers, McKinsey stated
that the most prolific OxyContin prescribers wrote "25 times as many OxyContin scripts" as less
prolific prescribers, and urged Purdue and the Sacklers to "make a clear go-no go decision to
C.
`Turbocharge the Sales Engine"' by devoting substantial capital toward McKinsey's plan. Ie
0
104. McKinsey also stated that increased numbers of visits by sales representatives to E
c.
4-
these prolific prescribers would increase the number of opioid prescriptions that they would write.
i3
105. By November 2013, McKinsey had obtained the physician-level data they had
a�
previously requested, and continued to study ways to sell additional OxyContin prescriptions by
refining and targeting the sales pitch to them. The Purdue board of directors was kept apprised of
McKinsey's progress.
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C. Titration— Selling Higher Doses of OxyContin
106. McKinsey understood that the higher the dosage strength for any individual
OxyContin prescription,the greater the profitability for Purdue. Of course, higher dosage strength,
particularly for longer periods of use, also contributes to opioid dependency, addiction, and abuse.
Nonetheless,McKinsey advised Purdue to focus on selling higher strength dosages of OxyContin.
107. Consistent with its granular growth analysis, as early as October 26, 2010
e
McKinsey advised the Sacklers and the Purdue board of directors that Purdue should train its sales o
representatives to "emphasiz[e] the broad range of doses," which would have the intended effect
.
of increasing the sales of the highest(and most profitable) doses of OxyContin. a.
108. McKinsey's work on increasing individual prescription dose strength continued
throughout the time period McKinsey worked with Purdue. The Sacklers were informed on July c
23, 2013, that Purdue had identified weakness in prescribing rates among the higher doses of
OxyContin, and reassured the Sacklers that"McKinsey would analyze the data down to the level
of individual physicians" in order to study ways to maximize the sales of the highest-dose
C.
OxyContin pills.
0
109. Purdue implemented McKinsey's suggestions through adopting the marketing E
c.
4-
slogan to "Individualize the Dose," and by 2013 encouraged its sales representatives to "practice 0
i3
verbalizing the titration message" when selling Purdue's opioids to prescribers.
a�
d. Covered Persons— Sales Quotas and Incentive
Compensation
110. McKinsey urged the use of quotas and bonus payments to motivate the sales force
to sell as many OxyContin prescriptions as possible.
111. Notably, this behavior was contemplated by the 2007 Corporate Integrity
Agreement, which required Purdue to implement written policies regarding "compensation
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(including salaries and bonuses) for [sales representatives] engaged in promoting and selling
Purdue's products that are designed to ensure that financial incentives do not inappropriately
motivate such individuals to engage in the improper promotion or sales of Purdue's products."
(emphasis added).
112. B 2010 Purdue had implemented a four-year plan, consistent with McKinse 's
Y � P Y P � Y �
strategy, to dramatically increase the quota of required annual sales visits by Purdue sales
e
representatives to prescribers. The quota was 545,000 visits in 2010; 712,000 visits in 2011;
752,000 in 2012; and 744,000 visits in 2013.
113. On August 8, 2013, as part of their"Identifying Granular Growth Opportunities for 0.
OxyContin" presentation, McKinsey urged the Sacklers to"establish a revenue growth goal (e.g.,
$150M incremental stretch goal by July 2014) and set monthly progress reviews with CEO and 0
Board."
114. In its "Identifying Granular Growth Opportunities for OxyContin" presentation to
the Purdue board of directors in July 2013, McKinsey nonetheless urged Purdue, in addition to
C.
increasing the focus of the sales force on the top prescribers, to also increase the overall quotas for Ie
0
sales visits for individual sales representatives from 1,400 to 1,700 annually. E
a.
4-
115. In 2013,McKinsey identified one way that Purdue could squeeze more productivity
i3
out of its sales force: by slashing one third of the time devoted to that Purdue devoted to training
a�
its sales force (from 17.5 days per year to 11.5 days):
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One possible way to attain benchmark—1500 calls per year Is to decrease
training days by-6 days and increase calls per day by 5% 'on-b powbio tout*
to benchmark
C.u......rr..e.....nt.call a..at..i..v...ity Potential new allocation
. ... . ...... . — — —Z — — oNumber of"on territory"days per year dumber of *nterritry"days ys per year
hem Days'- item Days,-
Number of working days 260 Number of working days 260
...........
Holidays -113 Holidays -11.3
'vacation and other time off -27.2 j Vacation and other Ume off -27.2 U
Trainings and meetings -17.5 1 Train ings and meetings -11-5
.............
Other company-related time off of field 4,a Other company-related time off of field -4,3 .2
Total days 199.7 Total days, 205.7
Aug calm per day X 7 Avg calls per day 7.35
Total catisper year 1398,, Total calla per year 1512 .2
0
I Nfte 2012 A4tt*data was used for ft analysis
SMRCE;Purdu#,Itara MAMY a cC"*,'AV I So
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0
116. By eliminating one third of the amount of time sales representatives were required
to be in training,McKinsey projected that Purdue could squeeze an additional 5%of physical calls
per day out of its newly less-trained sales force.
CL
117. Additionally, McKinsey advised Purdue on how to craft incentive compensation 0)
le
0
for the sales representatives, who were Covered Persons pursuant to the Corporate Integrity E
0)
CL
4-
Agreement. McKinsey knew that, combined with the strictures of sales quotas and less training for 0
the sales force, bonus/incentive compensation to the sales representatives based on the number of
OxyContin prescriptions the representative produced could be a powerful driver of incremental E
OxyContin sales.
e. Increasing the Overall Size of the Opioid Market: the
Larger the Pie, the Larger the Slice
118. Consistent with McKinsey's mandate, Purdue incentivized its sales staff "to
increase not just sales of OxyContin but also generic versions of extended release oxycodone."
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Typically, one would not wish to encourage the sales of generic competitors that offer a similar
product to your own. If, however,your goal is to position a company so as to look like an attractive
acquisition target, the growth of the overall opioid market is just as important as one's own market
share: "Whereas pharma salespeople are usually compensated based on their ability to grow sales
of a particular medicine, part of the bonus for Purdue's staff was calculated in relation to the size
of the overall market."32
e
119. Notably, this notion that the size of a company's market share is not as important
as the size of the overall market in which it competes is a core insight of McKinsey's granular
.
approach to identifying corporate growth opportunities. Describing their authors' conclusions in 0.
The Granularity of Growth, McKinsey stated, "One of their most surprising conclusions is that
increased market-share is seldom a driver of growth. They contend, instead, that growth is driven c
by where a company chooses to compete: which market segments it participates in ... the key is
to focus on granularity,to breakdown big-picture strategy into its smallest relevant components."33
120. In other words, "Purdue's marketing force was indirectly supporting sales of
a.
millions of pills marketed by rival companies."34"It's the equivalent of asking a McDonald's store Ie
0
W
CL
4-
0
i3
32 See David Crow, How Purdue's `one-two'punch fuelled the market for opioids, FIN. TiMEs
(Sept. 9, 2018), https://www.ft.com/content/8e64ec9c-bl33-11e8-8dl4-6fo49dO6439c.
33 The granularity of growth, Book Excerpt, McKinsey & Co. (Mar. 1, 2008),
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-
granul arity-of-growth.
34 See David Crow, How Purdue's `one-two'punch fuelled the market for opioids, FIN. TiMEs
(Sept. 9, 2018), https://www.ft.com/content/8e64ec9c-bl33-11e8-8dl4-6fo49dO6439c.
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manager to grow sales of Burger King and KFC," stated a government official with the HHS."
McKinsey designed this plan.36
F. Transformation: Purdue Implements McKinsey's Strategies
121. As early as September 11, 2009, McKinsey told Purdue that it could generate $200
million to $400 million in additional annual sales of OxyContin by implementing McKinsey's
strategy based on the opportunities its granular growth analysis had identified.McKinsey reiterated
e
its assurances regarding the hundreds of millions of dollars of additional OxyContin sales on o
January 20, 2010.
122. Purdue accepted and, with McKinsey's ongoing assistance, implemented a.
McKinsey's strategies for selling and marketing OxyContin.
123. For instance, in January 2010, Purdue was training its sales and marketing force on c
the new sales tactics based on a "physician segmentation" initiative that McKinsey urged. The
strategy developed as a result of McKinsey's granular analysis of OxyContin sales channels. The
CL
0)
35 Id.
0
36 Worth noting is that this strategy of increasing overall opioid sales directly benefitted the w
CL
Sacklers through their ownership of Rhodes See infra, ¶35. Especially worth noting is that this -
strategy also benefitted McKinsey's other opioid clients, such as Johnson and Johnson. See infra,
¶145. "They have a huge amount of inside information, which raises serious conflict issues at
multiple levels," stated a former consultant, referring to McKinsey's influential role as advisor to
multiple participants in a given industry, such as opioid manufacturing. It"puts them in a kind of E
oligarchic position." Michelle Celarier, The Story McKinsey Didn't Want Written, INSTITUTIONAL
INV. (July 8, 2019), https://www.institutionalinvestor.com/article/bIg5zjdcr97k2y/The-Story-
McKinsey-Didn-t-Want-Written.
For example, in an August 15, 2013 presentation to Purdue management entitled "Identifying
OxyContin Growth Opportunities," McKinsey noted that "McKinsey's knowledge of the ways
other pharma companies operate suggests Purdue should reassess the roles of MSL and HECON
Groups — and further drive the salesforce to be more responsive to formulary coverage changes."
(emphasis added).
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initiative sought to identify the most prolific OxyContin prescribers and then devote significant
resources towards convincing those high prescribers to continue to prescribe ever more
OxyContin, in higher doses, for longer times, to ever more patients.
124. On January 20, 2010, the Purdue board of directors was informed of the progress
in implementing McKinsey's "physician segmentation" initiative.
125. This collaboration would continue over the course of the relationship between 2
e
Purdue and McKinsey.
126. During the time that McKinsey was advising Purdue, Purdue deliberately
minimized the importance of the Corporate Integrity Agreement. In 2008, Carol Panara joined the 0.
Purdue sales force from rival Novartis. She would stay with the company until 2013, during which
time McKinsey was responsible for increasing OxyContin sales at Purdue, and culminating with c
the implementation of McKinsey's "Project Turbocharge," beginning September 2013.
127. Ms. Panara stated that the 2007 guilty plea was deliberately minimized by the
company in presentations to its sales staff: "They said, `we were sued, they accused us of mis-
C.
marketing, but that wasn't really the case. In order to settle it and get it behind us we paid a fine.' le
0
You had the impression they were portraying it as a bit of a witch hunt."37 (Purdue and its
W
CL
4-
executives paid $634.5 million in fines.) c
i3
128. Consistent with McKinsey's mandate, McKinsey devised methods for sales staff to
a�
sell OxyContin to doctors while at the same time maintaining technical compliance with the
Corporate Integrity Agreement: Ms. Panara stated that, though she was told she could not flatly
claim that OxyContin was better or safer than other opioids, "she was trained to talk about products
37 See David Crow, How Purdue's `one-two'punch fuelled the market for opioids, F1N.TIMES
(Sept. 9, 2018), https://www.ft.com/content/8e64ec9c-bl33-11e8-8dl4-6fo49dO6439c.
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in ways that implied that it was safer." She might tout OxyContin's 12-hour formulation to a
prescriber. "You could say that with a shorter-acting medication that wears off after six hours,
there was a greater chance the patient was going to jump their dosing schedule and take an extra
one a little earlier. We couldn't say [it was safer], but I remember we were told that doctors are
smart people, they're not stupid, they'll understand, they can read between the lines."3
�
1. Project Turbocharge
e
129. In 2013,the year after the Corporate Integrity Agreement expired,McKinsey urged
a number of transformational sales and marketing tactics that would further boost OxyContin sales.
McKinsey described these tactics to the Purdue board of directors in a series of updates entitled a.
"Identifying Granular Growth Opportunities for OxyContin" in July and August of 2013.
130. McKinsey dubbed their overall sales and marketing strategy for Purdue "Project c
Turbocharge," and urged the Sackler family and the board of directors to adopt it. Specifically,
McKinsey urged the board of directors to "make a clear go-no go to `Turbocharge the Sales
Engine.
CL
131. The Sacklers were impressed with McKinsey's work. On August 15, 2013,Richard
0
Sackler emailed Mortimer D.A. Sackler, "the discoveries of McKinsey are astonishing."
W
CL
-
132. Eight days later, on August 23, 2013, McKinsey partners met with the Sackler c
i3
family — not the Purdue board of directors — in order to pitch Project Turbocharge. Dr. Arnab
Ghatak ("Ghatak"), one of the McKinsey partners leading the Purdue account, recounted the
meeting to fellow partner Elling in an email exchange: "[T]he room was filled only with family,
including the elder statesman Dr. Raymond [Sackler] . . . We went through exhibit by exhibit for
38 Id
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about 2 hrs . . . They were extremely supportive of the findings and our recommendations . . . and
wanted to strongly endorse getting going on our recommendations."
133. Elling, a co-leader of the Purdue account, remarked in the same email
correspondence that McKinsey's "findings were crystal clear to" the Sacklers, and that the
Sacklers "gave a ringing endorsement of`moving forward fast."'
134. As a result of the Sackler family endorsement of McKinsey's proposals, the 2
e
following month Purdue implemented Project Turbocharge based on McKinsey's
recommendations. In adopting "Project Turbocharge," Purdue acknowledged the improper
.
connotations of the name, and re-christened the initiative they decidedly was more anodyne"E2E: 0.
Evolve to Excellence. ,39
135. Evolve to Excellence ("E2E") was the theme of Purdue's 2014 National Sales c
Meeting.
136. CEO Stewart also told sales staff that board member Paolo Costa was a"champion
for our moving forward with a comprehensive `turbocharge' process," referring to McKinsey's
C.
plan.
0
137. After Purdue adopted McKinsey's recommendations,McKinsey continued to work E
a.
4-
with Purdue sales and marketing staff reporting to Gasdia during Purdue's implementation of
i3
McKinsey's recommendations.
39 Regarding the name change, CEO Stewart wrote to McKinsey partners Rosiello and Ghatak
on August 15, 2013: "Paolo Costa was especially engaged in the discussion and he(among others)
will be a champion for our moving forward with a comprehensive `turbocharge' process—though
we do need to find a better and more permanently appropriate name." (emphasis added).
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138. In fact, the entire E2E initiative was overseen by McKinsey and some Purdue
executives, who together comprised the E2E Executive Oversight Team and Project Management
Office.
139. At the same time, the Sacklers were kept informed of the implementation of
McKinsey's Ox Contin strategy. According to a September 13, 2013 board agenda, the board of
�
directors discussed with the Sacklers the ongoing implementation of McKinsey's sales tactics. 2
e
140. McKinsey's Project Turbocharge, now re-named Evolve to Excellence, called for o
a doubling of Purdue's sales budget. Under McKinsey's prior tutelage, Purdue's promotional
.
spending had already skyrocketed. McKinsey's influence on Purdue's operations after the 2007 0.
guilty plea is stark:
0
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141. At the time of McKinsey's first known work for Purdue, Purdue spent
approximately $5 million per quarter on sales and marketing. By the time McKinsey's Project
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Turbocharge had been implemented, total quarterly sales and marketing spending at Purdue
exceeded $45 million per quarter, an increase of 800%.
142. Project Turbocharge continued despite the arrival of a new CEO at Purdue. On
January 17, 2014, new CEO Mark Timney received reports from McKinsey emphasizing that, in
order to increase profits, Purdue must again increase the number of sales visits to "high-value"
P � g g �
prescribers, i.e., those that prescribe the most OxyContin."
e
143. McKinsey also urged, consistent with their granular approach, that sales
representatives devote two-thirds of their time to selling OxyContin and one-third of their time
.
selling Butrans, another Purdue product. Previously, the split had been fifty-fifty. 0.
144. Purdue implemented McKinsey's suggestion.
G. McKinsey's Efforts Triple OxyContin Sales c
145. Purdue got what it wanted out of McKinsey. Between the years of 2008 through
2016,Purdue distributed in excess of$4 billion to the Sackler family,with$877 million distributed
in 2010 alone. a
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0)
le
0
CL
4o In fact, recent deposition testimony suggests McKinsey may have even been responsible for 0
the fact that Timney was given the CEO job at Purdue in the first place. On October 30, 2020,
Timney provided the following testimony:
Q: Are you familiar with McKinsey & Company?
A: I decline to answer on the ground that I may not be compelled to be a
witness against myself in any proceeding.
Q: Did individuals at McKinsey assist you in getting hired as the CEO of
Purdue?
A: I decline to answer on the ground that I may not be compelled to be a
witness against myself in any proceeding. (emphasis added).
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146. These distributions would not have been possible without the McKinsey's work
dramatically increasing OxyContin sales.
147. The Sacklers were aware of the value McKinsey provided: on December 2, 2013,
CEO Stewart informed Kathe Sackler and Vice President of Sales and Marketing Gasdia Project
Turbochar Y e "was already increasing and revenue." Crucially, these results were
g g
already being realized before the strategy was fully deployed as the theme of the 2014 National 2
e
Sales Meeting.
148. McKinsey's contributions to Purdue's growth after 2007 are remarkable.
OxyContin sales should have naturally declined: the Department of Justice identified OxyContin 0.
sales that were illegitimate because of Purdue's conduct, and the Inspector General of HHS entered
into a Corporate Integrity Agreement whereby Purdue was monitored to assure that those sales did c
not continue.
149. In 2007, the year of Purdue's guilty plea, net sales of OxyContin totaled
approximately $1 billion.41
C.
150. The guilty plea"did little to stem Purdue's blistering growth rate."In fact,by 2010 le
0
after McKinsey was advising Purdue on how to maximize sales, OxyContin sales exceeded $3 E
c.
4-
billion: a tripling of revenue from OxyContin sales.42
i3
41 See David Crow, How Purdue's `one-two'punch fuelled the market for opioids, F1N. TiMEs
(Sept. 9, 2018), https://www.ft.com/content/8e64ec9c-bl33-11e8-8dl4-6f049d06439c.
42 Id
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151. Under McKinsey's guidance, OxyContin would reach their all-time peak in 2013,
the year McKinsey proposed, and Purdue adopted, Project Turbocharge.43 That OxyContin sales
peaked in 2013 is especially notable, given that overall opioid prescriptions had already peaked
three years earlier, in 2010.44 McKinsey's efforts added a final boost to OxyContin sales before
the eventual unraveling, and Purdue's decision in the end to cease marketing the drug.
g g� �
152. By 2018, with OxyContin sales in their inexorable decline, Purdue announced that 2
e
it would cease sending sales representatives to healthcare providers to promote OxyContin. The
ranks of sales representatives were cut back to 200 people—the approximate size of Purdue's sales
.
staff prior to the initial launch of OxyContin. 0.
153. In 2014, according to Purdue, there were 5.4 million OxyContin prescriptions
written, 80%for twelve-hour dosing. Of those prescriptions, more than half were for doses greater c
than 60 milligrams per day.
H. McKinsey Knew
154. McKinsey has long maintained a Pharmaceuticals and Medical Products ("PMP")
a.
industry practice group dedicated to working with pharmaceutical companies. In 2003, when
0
McKinsey's relationship with Purdue began, the PMP group was led by Michael Pearson E
c.
4-
("Pearson"). Pearson worked for McKinsey for 23 years and was a member of the firm's 0
i3
43 Phil McCausland& Tracy Connor, OxyContin maker Purdue to stop promoting opioids in light
of epidemic, NBC NEWS (Feb. 10, 2018), https://www.nbcnews.com/storyline/americas-heroin-
epidemic/oxycontin-maker-purdue-stop-promoting-opioids-light-epidemic-n846726.
44 Gery P. Guy Jr, et al., Vital Signs: Changes in Opioid Prescribing Patterns in the United States,
2006-2015, MORB. MORTAL WKLY. REP. (July 7, 2017),
https://www.cdc.gov/mmwr/volumes/66/wr/mm6626a4.htm.
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shareholder council (McKinsey's equivalent of a board of directors) in addition to leading PMP
before departing McKinsey in 2008 to helm Valeant Pharmaceuticals."
155. Pearson stated, "At McKinsey pharmaceuticals was one of our biggest industry
groups. ,46 Pearson was "not the quintessential suave and intellectual McKinsey partner. He was
loud and profane and was seen in the words of one former colleague, as 'sharp-edged and shar
P � g � P
elbowed."'47
e
156. Under his leadership, McKinsey's knowledge and expertise in the pharmaceutical o
industry was significant. By 2009, McKinsey described its capabilities: "We have an unparalleled
.
depth of both functional and industry expertise as well as breadth of geographical reach. Our scale, 0.
scope, and knowledge allow us to address problems that no one else can. At heart,we are a network
of people who are passionate about taking on immense challenges that matter to leading c
organizations, and often, to the world."
157. In 2012, while advising Purdue, McKinsey described its health care capabilities
thusly: "Indeed, there is a doctor in the house. We have more than 1,700 consultants with
C.
significant healthcare experience, including more than 150 physicians and 250 consultants with Ie
0
0)
CL
4-
0
45 John Gapper, McKinsey's fingerprints are all over Valeant, FIN. TIMES (Mar. 23, 2016),
https://www.ft.com/content/Obb37fd2-ef63-1 l e5-aff5-19b4e253 664a.
Notably, Rosiello, a McKinsey partner who was a co-lead of the Purdue account, went on to
join Pearson at Valeant Pharmaceuticals in 2015 as Chief Financial Officer.
46 Michael Peltz, Mike Pearson's New Prescription for the Pharmaceuticals Industry,
INSTITUTIONAL INV. (Sept. 3, 2014),
https://www.institutionalinvestor.com/article/b l4zbjfm8nflc4/mike-pearsons-new-prescription-
for-the-pharmaceuticals-industry.
47 John Gapper, McKinsey's fingerprints are all over Valeant, FIN. TIMES (Mar. 23, 2016),
https://www.ft.com/content/Obb37fd2-ef63-1 l e5-aff5-19b4e253 664a.
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advanced degrees in genetics, immunology, biochemical engineering, neurobiology, and other life
sciences. We also have 75 consultants with advanced degrees in public health, healthcare
management, and related fields."
158. By the time McKinsey was working with Purdue on sales and marketing in 2009,
it alreadyhad extensive experience with o ioids in articular. As earl as 2002 McKinsey was
P P P Y � Y �
advising other opioid manufacturers regarding methods to boost sales of their drugs. For example,
e
on March 14, 2002, McKinsey prepared a confidential report for Johnson & Johnson regarding
how to market their opioid Duragesic.Incredibly, one of the recommendations McKinsey provided
to Johnson & Johnson was that they concentrate their sales and marketing efforts on doctors that 0.
were already prescribing large amounts of Purdue's OxyContin.48
159. As early as 2002 McKinsey had such intricate knowledge of the sales and marketing c
practices of opioid manufacturers, generally, and Purdue's efforts with OxyContin, specifically,
that it was able to recommend to a competitor of Purdue that it boost its own opioid sales by
following in the footsteps of Purdue.
a.
160. What is more, on September 13, 2013 McKinsey briefed Purdue on the ongoing le
0
concerns regarding OxyContin addiction and diversion among prescribers: E
CL
4-
0
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48 Chris McGreal, Johnson & Johnson faces multibillion opioids lawsuit that could upend big
pharma, THE; GUARDIAN (June 23, 2019), https://www.theguardian.com/us-
news/2019/jun/22/johnson-and Johnson-opioids-crisis-lawsuit-latest-trial.
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Findings on messaging and positioning I PRELIMINARY
>r
Oplolds avaralt are still viewed is effective and oocalessary Mass of painkil lam,
though side effects and addic5on are concerns a
• Key thenim from prescriber interviews on abuse deterrents include:
Preserlber awareness of abuse deterrence and label change is mixed �
-• O;m ens an im aWleffircacy Cl abuse detafmnce vary S
-- Most prescribers are concerned about abuse,butanempttd establlsh measures to -�
protect thernBelves N
Concerns remain that technology daces not address orat abuse
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abuse deterrent l€unulx'al'raans
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rerormulaGon positively trnrpacts their prescribing behavior,and that diversion,
abuse and regulatory concern s contlnue to welgh on prescribers
.
ramAyaOWAUVI27
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161. In a PowerPoint slide entitled "Findings on messaging and positioning," part of a
presentation to Purdue entitled "OxyContin growth opportunities: Phase 1 Final Report:
Diagnostic," McKinsey noted that"most prescribers are concerned about abuse," and that "most
physicians do not feel that [OxyContin] reformulation positively impacts their prescribing CL
0)
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behavior, and that diversion, abuse and regulatory concerns continue to weigh on prescribers."
E
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162. Indeed, one reason that Purdue had knowledge that their own products were CL
4-
0
addictive and dangerous is because McKinsey told them.
163. In February 2009, only months prior to McKinsey's first known work for Purdue,
Dr. Art Van Zee, in his peer-reviewed article in the American Journal of Public Health entitled
�t
"The promotion and Marketing of OxyContin: Commercial Triumph, Public Health Tragedy,"
stated the matter plainly: "Compared with noncontrolled drugs, controlled drugs, with their
potential for abuse and diversion,pose different public health risks when they are overpromoted
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and highly prescribed." (emphasis added). By 2004, "OxyContin had become the most prevalent
prescription opioid in the United States."49
164. Further, Dr. Van Zee identified the precise tactics that McKinsey deployed for
Purdue as a source of OxyContin misuse and abuse, and suggested that regulation may be
appropriate to curtail its use: "The use of prescriber profiling data to target high-opioid prescribers
�
— coupled with very lucrative incentives for sales representatives —would seem to fuel increased
e
prescribing by some physicians — perhaps the most liberal prescribers of opioids and, in some
cases, the least discriminate.""
165. Of course,to argue that McKinsey had contemporaneous knowledge of the fact that 0.
increasing OxyContin sales create ever more addiction and misuse in some ways misses the point.
It disregards the context in which McKinsey was operating after 2009: advising a monoline c
manufacturer of opioids about sales and marketing practices for its addictive products while that
manufacturer is bound by a five-year Corporate Integrity Agreement covering the very same opioid
sales and marketing practices. In 2012, OxyContin accounted for 94% of Purdue's revenue.51 As
C.
late as 2018, it remained 84% of Purdue's revenue.52 le
0
166. McKinsey's mandate was to increase Purdue's opioid sales during a time when E
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Purdue was obligated to restrict its previous marketing strategies because those strategies had
i3
49 Art Van Zee, The Promotion and Marketing of OxyContin: Commercial Triumph, Public
Health Tragedy, 99 AM. J. PUB. HEALTH 221, 221, 224 (Feb. 2009),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2622774/pdf/221.pdf.
50 id.
51 Gerald Posner, Pharma 524 (2020).
52 Id
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caused the overpreseribing of opioids and the inevitable consequences thereof. McKinsey's job
was to counter the intended results of the Corporate Integrity Agreement; to devise strategies to
sell as many pills as conceivably possible. Under McKinsey's tutelage,Purdue's growth continued
its upward trajectory unabated, the Corporate Integrity Agreement notwithstanding.
167. If McKinseywas not aware of the adverse consequences of OxyContin, the drug it
q Y � g �
was paid to sell, such ignorance could not survive the granular reality of its relationship with 2
e
Purdue. In June 2009, the earliest known work McKinsey performed for Purdue" consisted of
"countering the emotional messages from mothers with teenagers that overdosed on OxyContin."
.
168. Another indication that OxyContin sales should not be turbocharged: during 0.
McKinsey's work for Purdue, Purdue was unable to purchase product liability insurance to cover
its practice of selling OxyContin. c
169. McKinsey's method of aggressive marketing of opioids to prescribers has
demonstrably exacerbated the opioid crisis. A recent Journal of American Medical Association
study analyzed the Centers for Medicare and Medicaid Services' Open Payments database
C.
regarding pharmaceutical company marketing efforts towards doctors, as well as CDC data on le
0
prescription opioid overdose deaths and prescribing rates, in order to assess whether E
c.
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pharmaceutical marketing of opioids to physicians affected the rate of prescription opioid overdose
i3
53 In a 2013 presentation to Purdue's CEO and Vice President of Sales and Marketing, McKinsey
referenced McKinsey's"prior experiences serving Purdue that go back 10 years." Presentation by
McKinsey to John Stewart and Russell Gasdia entitled Identifying granular growth opportunities
for OxyContin: First Board Update, at 2 (July 18, 2013).
While McKinsey's relationship with Purdue dates back to approximately 2003, the earliest
known details of its work for Purdue date to June 2009. What McKinsey did for Purdue before
2009 is not presently known.
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deaths. Notably, the study analyzed these marketing practices beginning August 1, 2013 and
ending December 31, 2015.54
170. These dates are significant, as the study captures the same timeframe that
McKinsey's Project Turbocharge was implemented at Purdue.
171. The stud noted"physician prescribers are the most frequent source of prescription
Y P q P P �
opioids for individuals who use opioids nonmedically."55
e
172. The study found that"increased county-level opioid marketing was associated with o
elevated overdose mortality 1 year later, an association mediated by opioid prescribing rates; per
.
capita, the number of marketing interactions with physicians demonstrated a stronger 0.
association with mortality than the dollar value of marketing. ,56 (emphasis added).
I. Coda c
173. Marvin Bower (`Bower"), a founding father of McKinsey and managing director
of the firm from 1950 to 1967, instilled an ethos at McKinsey that has been reinforced throughout
the decades as a core value of the firm: "Deliver bad news if you must, but deliver it properly."57
C.
174. McKinsey's work with Purdue, which began just after his death in 2003, would �
0
have been unrecognizable to Bower, one of the founders of modern management consulting. E
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Instead of acknowledging the elephant in the room — that Purdue's business was knowingly 0
i3
54 Scott E. Hadland et al.,Association of Pharmaceutical Industry Marketing of Opioid Products
with Mortality from Opioid-Related Overdoses, 2 JAMA NETWORK 1 (Jan. 18, 2019),
https://j amanetwork.com/journals/j amanetworkopen/fullarticle/2720914.
55 Id
56 Id.
57 McDonald, The Firm, at 35.
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maximizing the amount of addictive and deadly opioids sold in the United States—and delivering
that bad news properly to the client, McKinsey instead committed to partner with Purdue to
maximize opioid sales, the torpedoes be damned.
175. On October 23, 2017, the president of the United States declared the ongoing
nationwide opioid epidemic a "public health emergency." Even at this late hour in the crisis,
McKinsey continued to propose solutions to the Sacklers and Purdue to further boost opioid sales.
e
These solutions were fashioned, in perfect McKinsey parlance, as "high impact interventions to
rapidly address market access challenges."
176. Less than two months after the public health emergency declaration, McKinsey 0.
proposed these high impact interventions to Purdue and its board of directors. Among them was
perhaps McKinsey's most audacious gambit of the entire Purdue relationship: paying money - 0
"rebates" —to health insurers whenever someone overdosed on Purdue's drug.
177. Once again, in perfect McKinsey parlance58, these payments for future OxyContin
overdoses were christened "Event-Based contracts." To wit:
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58 "Consultant-ese," when applied to work as grim as maximizing opioid sales in the face of a
national disaster,led one former McKinsey consultant to state: "This is the banality of evil,M.B.A.
edition."Walt Bogdanich&Michael Forsythe,McKinsey Proposed Paying Pharmacy Companies
Rebates for OxyContin Overdoses, N.Y. TIMES (Nov. 27, 2020),
https://www.nytimes.com/2020/11/27/business/mckinsey-purdue-oxycontin-opioids.html.
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Important considerations when designing an Event-Based
Contract
Kf�y facts finplic atons
Total W There art -1200,OD/OUD opioid events OD/OUD events can be tracked
per rMfloo members in a year' determine an incidence rate
• 4%of OD/OUDs involve any'c"'I OxyConkin related QDJOUD events
2 of OxyClonli", mostly(>90%) can be defined in,a Simple way
without other LROs
51
Today there are"SD even t%of OxyC a nt i n- 2019 rates expected to be around
Vefining related OD/OUDs per million members 60 events per a million rnembrs
an avant rate per year'and has grown by 5%annually per year,with a 5ellsitiVity of 45-75
between 2014-16 events per million members,
r0oaninpful rebate amounts,per OD/OUD • Need to determine which payniont
4 Rebate event can varyfrom-$6k amount is optimal
per event (cost of OxyContinl)to'$14k
lexcess needc@1 costs'y
Exposure,for For top 7 accounts,rebate exposure Exposure could vary it projected
5 ranges from-$3-15M per year,with the OD/OUD rates differ from expected
top A mounts excep t ion of CVS and Bf
0
35
178. Helpfully, McKinsey provided estimates for the future costs of these "events. ,59 E
0
McKinsey noted that, if Purdue were to start making overdose payments, it would "need to
determine which payment amount is optimal."
179. A "meaningful" amount, according to McKinsey, would be somewhere between
CL
six and fifteen thousand dollars for each person who overdoses or develops opioid-use disorder as 0)
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a result of Purdue's drugs: E
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59 McKinsey defined an "event" as "first occurrence for overdose or opioid use disorder."
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4 Meaningful rebate amounts per OD/OUD event could vary LL-
from -$6k to -$14k
to $6,360 $14,810
Low High
rebate rebate
Status quo Drug costs Medical costs
No additional Cost for I year Excess medical
event based of OxyCon t in costs for 1 year
rebate related to abuse'
Literature agrees an—$10-20k excess costs incurred by Rx apioid abusers
in the year surrounding inciting event(e.g OD or OUD diagnosis)'
gg
.2
0
E
180. The money would be paid to health insurers for the increased costs of additional 0
medical services that resulted from the fact that Purdue's medications caused opioid-use disorder
and overdoses in people whose health care costs were the payors' obligation. The money
McKinsey proposed Purdue pay out in these circumstances would not go to the individuals
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afflicted, nor the estates of the dead. 0
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181. It is little surprise, then, that McKinsey was concerned with its legal liability for 0)
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this work. Within months of recommending "event-based contracts" to Purdue, Elling raised this
concern with Ghatak and suggested corrective action: destroying evidence.
E
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Message
From: Martin EIIMng[/O=EXCHANGE LAI S/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYDI BOH F23SPDLT)/CN mRECtPIENTS/CN=6B33C,3 64F744BO4AF05FA59341,271RE-MARTIN& LLI]',
Sent: 7/4/2I718 12:10:13 PM
To: A G(drarnabghatak agrnapl.conr]
Subject: Re:]EXT]Re:Howdy
Have a great fourth. M
> on Jul 4, 7018, at 2,01 PM, A G <drarnabghatak@gmail.com> wrote:
>
> ''thanks for the heads up. will do.
>
>> on Jul 4, 2018, at 7:57 AM, Martin Elling inartin—elling(wmckir7s-ey.com> wrote:
>r
>> least sawn in the FT that Judy LeWent is being sued by states attorneys general for her role on the
Purdue Board. It probably makes sense to have a quick conversation with the risk committee to see if we
should be doing anything other that eliminating all our documents and emails. suspect not but as things
get tougher there someone might turn to us.
>> This email is confidential and may be privileged.. If you have received it
>> in error, please notify us immediately and theca delete it. Please do not
>> copy it, disclose its contents or` use it for any purpose
182. Elling's prediction that things would "get tougher" for Purdue would prove
0
prescient.
1. Guilty Again
183. On October 20, 2020, Purdue — McKinsey's co-conspirator — agreed with the
United States Department of Justice to plead guilty to improper marketing of OxyContin and other CL
0)
le
0
opioids again. This time the plea agreement concerned conduct from 2010 to 2018.
0)
CL
184. Purdue agreed to plead guilty to a dual-object conspiracy to defraud the United -
States and to violate the Food, Drug, and Cosmetic Act, 21 U.S.C. §§331, 353, among other �a
charges, relating to its opioid sales and marketing practices after the 2007 guilty plea. E
185. The new plea agreement does not identify Purdue's co-conspirators, and McKinsey
is not identified by name in the agreement. Instead, McKinsey is referred to as the "consulting
company."
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186. Purdue's new guilty plea concerns Covered Conduct (as defined in the plea
agreement) that directly implicates McKinsey in the conspiracy. It is the same conduct described
in this Complaint.
187. Indeed, the plea agreement signed by McKinsey's co-conspirator states bluntly:
"Purdue, in collaboration with [McKinsey], implemented many of [McKinsey's]
recommendations." (emphasis added).
e
188. Further, Purdue admitted that E2E "was overseen by [McKinsey] and some of
Purdue's top executives through the creation of the E2E Executive Oversight Team ("EOT") and
.
Project Management Office ("PMO")." (emphasis added). 0.
2. A Mea Culpa
189. On December 5, 2020, McKinsey issued a rare public statement regarding its work c
with a specific client on its website. The client was Purdue, and the statement was issued is
response to Purdue's second guilty plea and recent media reports regarding McKinsey's work
selling OxyContin after 2007:
a.
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McKinsey statement on its past
work with Purdue Phan a
December 5,2020—As we look back at our client service during the opioid crisis,we recognize
that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible
impact of opioid misuse and addiction on millions of families across the country.That is why last
year we stopped doing any work on opoid-specific business,anywhere in the world.
Our work with Purdue was designed to support the legal prescription and use of opioids for �
patients with legitimate medical needs„and any suggestion that our work sought to increase
overdoses or misuse and worsen a public health crisis is wrong.That said,we recognize that we
have a responsibility to take into account the broader context and implications of the work that we
do.Our work for Purdue fell short of that standard.
We have been undertaking a full review of the work in question„including into the 2018 email
0.
exchange which referenced potential deletion of documents.We continue to cooperate fully with W
the authorities investigating these matters.
190. As the statement indicates,McKinsey stopped doing work"anywhere in the world."
0
Given that Purdue's operations addressed only the United States, the global reach of McKinsey's
regret is noteworthy.
191. In August of 2013, when the Sacklers adopted McKinsey's "Project Turbocharge"
CL
for Purdue, Tim Reiner ("Reiner"), a long-time McKinsey consultant, joined Mundipharma.
0
Mundipharma is a separate company — also owned by the Sacklers — that sells opioids
W
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internationally. 0
192. Reiner is currently the Sacklers' "Chief Business Officer" at Mundipharma. As late
as 2019, Mundipharma has been asserting many of the same misleading claims about opioids that
previously led to criminal liability in the United States.60
60 See Erika Kinetz, Fake doctors,pilfered medical records drive OxyChina sales, Assoc. PRESS
(Nov. 19, 2019), https:Hapnews.com/article/4122af46fdba42119ae3db3Oaal3537c.
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193. "It's right out of the playbook of Big Tobacco. As the United States takes steps to
limit sales here,the company goes abroad," stated former commissioner of the U.S.Food and Drug
Administration, David Kessler.61
V. CLASS ACTION ALLEGATIONS
194. Plaintiff brings this case on behalf of themselves and as a class action under Fed.
R. Civ. P. 23(b)(1), 23(b)(2),23(b)(3), and 23(c)(4) on behalf of all members of the following
e
Class:All Counties and Municipal Corporations In The State Of Florida From 2004 To Present. o
195. Plaintiff reserves the right to amend or modify the Class definition with greater
specificity or further division into subclasses or limitation to particular issues. a.
196. Numerosity. The potential members of the Class as defined are so numerous that
joinder of all members is unfeasible and not practicable. While the precise number of Class c
Members has not been determined at this time, Plaintiff is informed and believe there are 67
counties in Florida and 411 incorporated municipalities.62
197. Commonality and Predominance. There are questions of law and fact common
to the Class, which predominate over any questions affecting only individual Class Members.
0
These common questions of law and fact include, without limitation: E
c.
(a) Defendant's conduct in creating, proposing, and implementing sales and 0
i3
marketing strategies for opioids manufactured by Purdue before and after Purdue's first guilty plea
a�
in 2007 relating to misbranding of OxyContin;
61 Harriet Ryan, Lisa Girion, & Scott Glover, OxyContin goes global "We're only just getting
started," L.A. TIMES (Dec. 18, 2016), https://www.latimes.com/projects/la-me-oxycontin-part3/.
62 See Florida League of Cities, http://www.floridaleagueofcities.com/research-
resources/municipal-directory (last visited Jan. 5, 2021).
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(b) Whether Defendant performed reasonable due diligence in ascertaining the
risks associated with Defendant's strategies for "turbocharging" OxyContin sales at Purdue in
2013 and thereafter;
(c) Whether Defendant's implementation of its own sales and marketing
strategies at its Client, Purdue, caused or contributed to an increase in opioid addiction;
(d) Whether Defendant's conduct with respect to developing and implementing 2
e
nationwide opioid sales and marketing practices at Purdue was negligent, grossly negligent, or o
LM
reckless;
(e) Whether Defendant's conduct with respect to developing and implementing 0.
nationwide opioid sales and marketing practices at Purdue caused or contributed to causing a
public nuisance; c
(f) Whether Defendant's conduct with respect to developing and implementing
nationwide opioid sales and marketing practices at Purdue constituted fraudulent
misrepresentations to healthcare providers regarding the safety of Purdue's opioid products;
C.
(g) Whether Defendant conspired with or aided and abetted Purdue with respect Ie
0
to developing and implementing nationwide opioid sales and marketing practices at Purdue; and E
c.
4-
(h) Whether Defendant's acceptance of funds from Purdue and other opioid
i3
manufacturers regarding Defendant's work promulgating and implementing nationwide opioid
a�
sales and marketing strategies constitutes unjust enrichment.
198. Typicality. The claims of the named Plaintiff is typical to the claims of the Class.
Plaintiff and all Class Members were exposed to undeviating behavior and sustained damages
arising out of and caused by Defendant's unlawful conduct.
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199. Adeguacy of Representation. Plaintiff will fairly and adequately represent and
protect the interests of the members of the Class. Plaintiff has retained counsel with substantial
experience in prosecuting complex litigation and class actions. Plaintiff and its counsel are
committed to vigorously prosecuting this action on behalf of the Class members and have the
financial resources to do so. Neither Plaintiff nor its counsel has any interest adverse to those of
other Class members.
e
200. Superiority of Class Action. A class action is superior to other available methods
for the fair and efficient adjudication of this controversy since joinder of all the members of the
Class is impracticable. Furthermore, the adjudication of this controversy through a class action 0.
will avoid the possibility of inconsistent and potentially conflicting adjudication of the claims
asserted herein. While certain individual claims relating to the opioid epidemic against other 0
defendants involved in the opioid stream of commerce into the State of Florida have already been
initiated by a few Class Members, no Class Member has initiated any action against McKinsey. A
class action would provide a superior vehicle for resolving the issues for all similarly affected and
C.
situated. Moreover, based upon the considerable anticipated expense of discovery and case Ie
0
preparation, completion of individual cases is not financially feasible for most Class Members E
C.
4-
especially considering the amount of damages in play for each member of the Class. There will be
i3
no difficulty in the management of this action as a class action.
a�
201. Policies Generally Applicable to the Class: Defendant has acted and failed to act
on grounds generally applicable to Plaintiff and other Class members, requiring the Court's
imposition of uniform relief to ensure compatible standards of conduct toward the Class.
202. Notice to the Class. Plaintiff contemplates that the eventual issuance of notice to
the proposed Class Members would set forth the subject and nature of the instant action. Plaintiff
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believes that information related to the total number of counties and municipalities in Florida and
publicly available information related to those counties and municipalities at issue are sufficient
for direct mail notice to reach the vast majority of putative Class Members. To the extent that any
further notices may be required, published notice in appropriate newspapers, professional
publications and journals can also be provided.
VI. CAUSES OF ACTION
0
COUNT 1:
Negligence
203. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
0.
as though fully set forth herein.
204. Negligence is established where the defendant owes the plaintiff a duty of care,
E
0
breaches that duty, and the plaintiff sustained an injury or loss proximately caused by the
defendant's breach.
205. McKinsey, through its work with Purdue, owed a duty of care to the Plaintiff and
the Class, pursuant to which it would not encourage the over-marketing and over-prescribing of a
CL
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controlled substance known at the time to be addictive and known at the time to be a threat to
public health. C 0)L
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206. In violation of this duty, for years McKinsey devised and assisted Purdue with
implementing a sales and marketing campaign, including Project Turbocharge, that would
dramatically increase the amount of OxyContin prescribed and distributed to the City of Pembroke
Pines, and other Class Members. In the process, McKinsey continually devised misleading claims
regarding OxyContin as part of their efforts to get health care providers to write more and more
OxyContin prescriptions.
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207. As a direct and proximate result of McKinsey's negligent conduct, the City of
Pembroke Pines and other Class Members have suffered and will continue to suffer harm.
COUNT 11:
Gross Negligence
208. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
as though fully set forth herein.
209. The oversupply of opioids and plague of addiction led to a widespread epidemic of
overdoses, illness, and death that claimed thousands of lives and cost many millions of dollars of
public spending — circumstances that constituted an imminent or clear and present danger
0.
amounting to more than normal and usual peril.
210. McKinsey, through its work with Purdue, owed a duty of care to the Plaintiff and
E
0
the Class, pursuant to which it would not encourage the over-marketing and over-prescribing of a
controlled substance known at the time to be addictive and known at the time to be a threat to
public health.
211. In violation of this duty, for years McKinsey devised and assisted Purdue with L
0)
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implementing a sales and marketing campaign, including Project Turbocharge, that would
0)
dramatically increase the amount of OxyContin prescribed and distributed to the City of Pembroke CL
4-
0
Pines, and other Class Members. In the process, McKinsey continually devised misleading claims
regarding OxyContin as part of their efforts to get health care providers to write more and more
OxyContin prescriptions.
e(
212. As a direct and proximate result of McKinsey's negligent conduct, the City of
Pembroke Pines and other Class Members have suffered and will continue to suffer harm.
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COUNT III;
Negligent Misrepresentation
213. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
as though fully set forth herein.
214. McKinsey, in the course of its business with Purdue, failed to exercise reasonable
care or competence when obtaining and communicating false information regarding Purdue's
opioids that McKinsey knew would be used for the guidance of others in their business
transactions,including the healthcare providers within the City of Pembroke Pines and other Class
Members who were capable of prescribing Purdue's drugs.
0.
215. The City of Pembroke Pines and other Class Members are one of a limited group
of entities to whom McKinsey knew Purdue intended to supply the false information regarding
E
0
opioids.
216. McKinsey knew that the false information was material to healthcare providers'
decision to prescribe opioids to patients. McKinsey intended that such statements be relied upon
to encourage additional opioid prescriptions. L
0)
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COUNT IV:
Public Nuisance
0)
CL
217. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202 0
as though fully set forth herein.
218. Florida courts have long recognized that anything which interferes with public
health and promotes the spread of disease, bodily injury, and/or death, may be considered a public
nuisance, and that a use or interference with real property is not required. A public nuisance is one
which interferes with public health and welfare and creates an imminent risk of public harm.
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219. McKinsey, though its work with Purdue and other opioid industry participants,
have created and continue to perpetuate and maintain a public nuisance to the citizens of the City
of Pembroke Pines through the massive distribution of millions of doses of highly addictive,
commonly abused prescription pain killers known as opioids.
220. McKinse 's conduct, including its misrepresentations and omissions regarding
�
opioids, generally, and Purdue's opioids, specifically, have fueled an opioid epidemic within the 2
e
corporate limits of the City of Pembroke Pines and other Class Members that constitutes a public
nuisance. McKinsey and Purdue knowingly exacerbated a condition that affects entire
.
municipalities, towns, and communities. 0.
221. McKinsey's conduct, including its misrepresentations and omissions regarding
opioids, generally, and Purdue's opioids, specifically, constitute unlawful acts and/or omissions of c
duties, that annoy, injure, or endanger the comfort, repose, health, and/or safety of others.
222. As a direct and proximate result of the wrongful conduct of McKinsey as set forth
herein, McKinsey negligently, intentionally, and/or unreasonably interfered with the rights of the
C.
City of Pembroke Pines and other Class Members' citizens to be free from unwarranted injuries Ie
0
addictions, diseases, sicknesses, overdoses, criminal actions, and have caused ongoing damage, E
c.
4-
harm, and inconvenience to Class Members and their residents who have been exposed to the risk
i3
of addiction to prescription drugs, who have become addicted, and/or have suffered other adverse
a�
consequences from the use of the addictive prescriptions drugs, and have been adversely affected
by the addiction and abuse of others in their communities from the highly addictive, prescription
pain medication
223. The annoyance, injury, and danger to the comfort, repose, health, and safety of
residents of City of Pembroke Pines and other Class Members includes, but is not limited to:
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(a) In 2009, the first known year in which McKinsey advised Purdue regarding
sales and marketing efforts for OxyContin, Florida's opioid-related overdose mortality rate was
15.7 per 100,000 individuals. McKinsey crafted a strategy that tripled OxyContin sales in
subsequent years;
(b) In 2014,the year McKinsey's Project Turbocharge was implemented, 1,967
Floridians died as a result of an opioid-related overdose. Three years later, after Project 2
e
Turbocharge was implemented, the number of opioid-involved overdose deaths in Florida was
5,088. —
.
(c) From 2000 to 2014, Florida's opioid-related drug overdose mortality rate 0.
effectively tripled, from 2.6 deaths per 100,000 individuals in 1999 to 7.2 in 2014. Prescription
opioids contributed to the majority of those deaths. The following year, McKinsey developed c
'Project Turbocharge," which was adopted as the national sales theme for the following year,
under the rubric of"Evolve to Excellence";
(d) By 2017, the drug overdose mortality rate in Florida had climbed
C.
significantly once again, to 25.1 deaths per 100,000 individuals. le
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(e) Prescription opioid addiction often leads to illicit opioid use and addiction; E
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(f) According to the Centers for Disease Control and Prevention("CDC"), past
i3
misuse of prescription opioids is the strongest risk factor for heroin initiation and use;
a�
(g) Florida's hospitals are reporting increasing numbers of newborns testing
positive for prescription medications; and
(h) McKinsey's crafted deceptive marketing strategies that were prepared for
Purdue, purchased by Purdue, and implemented by Purdue with McKinsey's ongoing assistance.
These strategies enflamed, purposefully, an opioid abuse and addiction epidemic that has caused
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the City of Pembroke Pines and other Class Members, its residents, its businesses, and
communities to bear enormous social and economic costs including increased health care, criminal
justice, and lost work productivity expenses, among others.
224. The conduct of McKinsey annoys, injures, and/or endangers the comfort, repose,
health, and safety of others. In addition, the conduct of McKinsey caused and continues to cause
harm to the City of Pembroke Pines and its residents.
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225. The City of Pembroke Pines and other Class Members seek to abate the public
nuisance McKinsey enflamed and all necessary relief to abate such public nuisance.
COUNT V. 0.
Fraud (Actual and Constructive) and Deceit
226. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
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0
as though fully set forth herein.
227. McKinsey made and caused to be made false representations to healthcare
providers working in the City of Pembroke Pines and other Class Members, and/or omitted
material facts, regarding the risks, efficacy, and medical necessity of opioids, generally, and
Purdue's opioids, specifically. McKinsey knew these representations were false, made recklessly
E
0)
without knowledge of the truth, and/or had no reasonable ground for believing such assertions. CL
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0
Specifically, McKinsey knowingly and/or recklessly:
(a) Downplayed the substantial risks of addiction and other side-effects of
opioids, generally, and Purdue's opioids, specifically, including crafting Purdue's marketing plan
�t
to affirmatively state in sales calls and other marketing channels that Purdue's drugs were not as
addictive or prone to abuse as they truly are; stating that classic signs of addiction were actually
an indication of"pseudoaddiction"requiring additional administration of opioids, and omitting the
high risks of addiction actually present;
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(b) Overstated the efficacy of opioids, generally, and Purdue's opioids,
specifically,including making false statements regarding the effectiveness of the drugs for treating
specific subsets of the patient population(i.e.,those with osteoarthritis)and their ability to improve
patient function; and
c Misrepresented the medical usefulness and necessity of opioids, generally
O P Y P � g Y �
and Purdue's opioids, specifically, including affirmatively marketing their drugs for off label uses
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(i.e., osteoarthritis)without solicitation and not in response to questions from healthcare providers.
228. McKinsey's and Purdue's misrepresentations and omissions had a tendency to
.
deceive others, to violate public confidence, and/or injure public interests. McKinsey, having 0.
chosen to craft the marketing plan used by Purdue to make representations to healthcare providers
regarding their opioids, were under a duty to disclose the whole truth, and not disclose partial and c
misleading truths.
229. McKinsey intended healthcare providers to rely upon McKinsey's false assertions
regarding the risks, efficacy, and medical necessity of opioids, generally, and Purdue's opioids,
C.
specifically, to increase the number of opioid prescriptions made by healthcare providers. Ie
0
230. Healthcare providers working in the City of Pembroke Pines and other Class E
c.
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Members did in fact rely on the false representations made in Purdue's marketing plan created by
i3
McKinsey and implemented with McKinsey's assistance.
a�
231. The City of Pembroke Pines and other Class Members seek to recover all damages
caused by McKinsey's fraudulent representations and omissions.
232. McKinsey acted with knowledge and willful intent, with reckless disregard for the
rights of others, and/or intentionally and with malice towards others. As such, City of Pembroke
Pines and other Class Members seek to recover punitive damages against McKinsey.
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COUNT VI:
Civil Conspiracy
233. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
as though fully set forth herein.
234. McKinsey and Purdue, working together for decades, agreed to commit numerous
unlawful acts relating to the sales and marketing of Purdue's opioid products. McKinsey and
Purdue also agreed to use unlawful means to commit lawful acts as part of these sales and
marketing efforts.
235. McKinsey and Purdue agreed to pursue the unlawful act of knowingly
0.
misrepresenting the addictive nature of opioids in marketing OxyContin to health care providers
within the City of Pembroke Pines and other Class Members.
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0
236. McKinsey and Purdue deployed the unlawful means of evading Purdue's reporting
and compliance obligations to the Inspector General of HHS for the five years Purdue was subject
to a Corporate Integrity Agreement after it pled guilty in 2007 to criminal misbranding. McKinsey
assisted Purdue with evading these compliance obligations to accomplish the lawful act of L
0)
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maximizing OxyContin revenue to Purdue.
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0)
237. McKinsey and Purdue conspired to violate the Florida Deceptive and Unfair Trade CL
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0
Practices Act, Fla. Stat. §501.201, et seq. ("FDUTPA"). McKinsey and Purdue engaged in
deceptive trade practices including: making and causing to be made misrepresentations and
omissions in marketing of opioids in general, and Purdue's opioids, specifically, that deceived or
�t
could reasonably be expected to deceive or mislead consumers.
238. McKinsey and Purdue engaged in unfair trade practices, including: intentionally
downplaying of the risks, overstating the benefits, and misrepresenting the medical necessity of
opioids, generally, and Purdue's opioids, specifically, including for off-label uses. These practices
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offend established public policy and are immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers.
239. McKinsey knowingly made or caused to be made false or misleading
representations as to the characteristics, ingredients, uses, and benefits of opioids, generally, and
Purdue's opioids, specifically, b downplayingthe risks of addiction and abuse overstating the
P� � Y � g �
efficacy, and misrepresenting the medical necessity of opioids, generally, and Purdue's opioids,
e
specifically.
240. McKinsey, a majority of the Purdue board of directors, and Purdue agreed to deploy
unlawful sales and marketing tactics to achieve the lawful purpose of maximizing revenue of a 0.
closely-held company.
241. As a consequence, McKinsey is jointly and severally liable with Purdue for the c
sales and marketing practices used to promote Purdue's opioid products including OxyContin.
242. The City of Pembroke Pines and other Class Members were damaged as a result of
unlawful acts McKinsey conspired with Purdue to commit.
a.
COUNT Vli.
Civil Aiding and Abetting
0)
243. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202 CL
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0
as though fully set forth herein.
244. McKinsey gave substantial assistance and encouragement to Purdue and the
Sacklers regarding conduct McKinsey knew to be tortious and/or in violation of a duty owed by
Purdue and the Sacklers to third persons, including the City of Pembroke Pines and other Class
Members.
245. The City of Pembroke Pines and other Class Members were damaged as a result of
the specific conduct that McKinsey encouraged and substantially assisted.
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COUNT VIII
Unjust Enrichment
246. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
as though fully set forth herein.
247. Unjust enrichment is established where the plaintiff alleges: (a) a benefit conferred
upon the defendant by the plaintiff, (b) an appreciation or knowledge by the defendant of the
benefit; and (c) the acceptance or retention by the defendant of the benefit under such
circumstances as to make it inequitable for the defendant to retain the benefit without the payment
LM
of its value.
0.
248. McKinsey was compensated for its work increasing opioid sales for Purdue. 0
249. This compensation for increasing the sales of Purdue's deadly products constitutes
E
money in the possession of McKinsey that, in equity and good conscience, McKinsey ought not
be allowed to retain.
COUNT IX:
Violation of Florida Deceptive and Unfair Trade Practices Act
250. Plaintiff realleges and incorporates by reference the allegations in paragraphs 1-202
0
as though fully set forth herein E
251. FDUTPA prohibits "unconscionable acts or practices, and unfair or deceptive acts 0
i3
or practices in the conduct of any trade or commerce." Fla. Stat. §501.204(1).
252. The City of Pembrooke Pines and other Class Members are a "consumer" and an
"[i]nterested party or person within the meaning of Fla. Stat. §501.203(6) and a "person" as
envisioned in Fla. Stat. §501.211.
253. Defendant engaged in "[t]rade or commerce" within the meaning of Fla. Stat.
§501.203(8), during the relevant time periods, as detailed further herein.
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254. Defendant's unconscionable, unfair, or deceptive acts or practices in violation of
the FDUTPA offend Florida's public policy, are immoral,unethical, oppressive, and unscrupulous,
as well as malicious, wanton, and manifesting of ill will, and they caused substantial injury to
Plaintiff. The City of Pembroke Pines and other Class Members risk irreparable injury as a result
of all McKinsey's acts, misrepresentations, and omissions in violation of the FDUTPA, and these
violations present a continuing risk to the City of Pembroke Pines, as well as to the general public.
e
Increased risk of future harm due to the widespread addiction caused by McKinsey's acts and
practices and widespread manipulation of the medical profession. McKinsey's acts and practices
in violation of the FDUTPA offend Florida public policy, are immoral, unethical, oppressive, or 0.
unscrupulous, as well as malicious, wanton, and manifesting ill will; caused and continue to cause
substantial injury to City of Pembroke Pine and other Class Members and their inhabitants; and c
put them at increased risk of future harm.
255. As a direct and proximate result of Defendant's violations of the FDUTPA,the City
of Pembroke Pines and other Class Members have suffered and continues to suffer losses
CL
constituting injury-in-fact. The City of Pembroke Pines and other Class Members are entitled, and le
0
do hereby seek,to recover their actual damages under Fla. Stat. §501.211(2) and its attorneys' fees E
c.
4-
and costs under Fla. Stat. §501.2105(1). c
i3
256. The City of Pembroke Pines and other Class Members have been seriously
aggrieved by Defendant's violations of the FDUTPA and is therefore entitled to, and does hereby,
seek an order under Fla. Stat. §501.211(1)declaring Defendant's acts and practices unlawful under
and in violation of the FDUTPA and enjoining Defendant's unfair, unconscionable, and/or
deceptive acts or practices, and awarding attorneys' fees, costs, and any other just and proper relief
available under the FDUTPA.
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VIL JURY DEMAND
257. Plaintiff, on behalf of itself and all others similarly situated, requests a trial by jury
on all issues so triable.
VIIL PRAYER FOR RELIEF
WHEREFORE, Plaintiff, on behalf of itself and all others similarly situated, respectfully
prays that this Court grant the following relief:
e
1. For an order certifying the proposed Class herein; o
2. Enter judgment in favor of Plaintiff, on behalf of itself and all others similarly
situated, against Defendant awarding Plaintiff its actual damages for the damages caused by the 0.
0
opioid epidemic, including, but not limited to: (a) costs for providing medical care, additional
therapeutic and prescription drug purchases, and other treatments for patients suffering from c
opioid-related addiction or disease, including overdoses and deaths; (b) costs for providing
treatment, counseling and rehabilitation services; (c) costs for providing treatment of infants born
with opioid-related medical conditions; (d) costs for providing care for children whose parents
CL
suffer from opioid-related disability or incapacitation; (e) costs associated with law enforcement
0
and public safety relating to the opioid epidemic; and(f) costs associated with drug court and other E
resources expended through the judicial system; 0
3. Order that Defendant compensate Plaintiff, on behalf of itself and all others
similarly situated, for past and future costs to abate the ongoing public nuisance caused by the
opioid epidemic;
4. Order Defendant to fund an"abatement fund"for the purposes of abating the opioid
nuisance;
5. Enter judgment against Defendant requiring Defendant to pay punitive damages;
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6. Enter judgment against Defendant awarding Plaintiff its reasonable attorneys' fees,
all costs and expenses, pre judgment and post judgment interest; and
All other such and further relief as this Court may deem just and proper.
DATED: February 5, 2021 ROBBINS GELLER RUDMAN
& DOWD LLP
s/Mark J. Dearman
MARK J. DEARMAN
PAUL J. GELLER
Florida Bar No. 984795
MARK J. DEARMAN
Florida Bar No. 0982407 0.
120 East Palmetto Park Road, Suite 500 0
Boca Raton, FL 33432
Telephone: 561/750-3000
561/750-3364 (fax) E
0
pgeller@rgrdlaw.com
mdearman@rgrdlaw.com y
MORGAN& MORGAN COMPLEX
LITIGATION GROUP
JAMES D. YOUNG
Florida Bar No. 567507
76 South Laura Street, Suite 1100
Jacksonville, FL 32202
Telephone: 904/361-0012 E
904/366-7677 (fax)
jyoung@forthepeople.com 0
MORGAN& MORGAN COMPLEX
LITIGATION GROUP
JUAN MARTINEZ
Florida Bar No. 1013923
201 North Franklin Street, 7th Floor
Tampa, FL 33602
Telephone: 813/393-5463
juanmartinez@forthepeople.com
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KOPELOWITZ OSTROW FERGUSON
WEISELBERG GILBERT
ROBERT C. GILBERT
Florida Bar No. 561861
SCOTT WEISELBERG
Florida Bar No. 122701
1 West Las Olas Boulevard, Suite 500
Fort Lauderdale, FL 33301
Telephone: 954/525-4100
gilbert@kolawyers.com
weiselberg@kolawyers.com
BROWNE PELICAN PLLC
MATTHEW BROWNE
7007 Shook Avenue
Dallas, TX 75214 0.
Telephone: 405/642-9588
mbrowne@brownepelican.com
HALICZER PETTIS & SCHWAMM, P.A.
EUGENE K. PETTIS
Florida Bar No. 508454 y
DEBRA R KLAUBER
Florida Bar No. 055646
One Financial Plaza
100 SE 3rd Avenue, 7th Floor
Fort Lauderdale, FL 33394
Telephone: 954/523-9922
service@hpslegal.com
Attorneys for Plaintiff CL
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