Authorizing Sauk County to Enter Into the Settlement Agreement with The Kroger Co. and Agree to the Terms of Addendum Two to the MOU Allocating Settlement Proceeds

WHEREAS, the County Board of Supervisors previously authorized the County to enter 12 into an engagement agreement with von Briesen & Roper, s.c., Crueger Dickinson LLC and 13 Simmons Hanly Conroy LLC (the “Law Firms”) to pursue litigation against certain manufacturers, 14 distributors, and retailers of opioid pharmaceuticals (the “Opioid Defendants”) in an effort to hold 15 the Opioid Defendants financially responsible for the County’s expenditure of vast money and 16 resources to combat the opioid epidemic; 17
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WHEREAS, on behalf of the County, the Law Firms filed a lawsuit against the Opioid 19 Defendants; 20
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WHEREAS, the Law Firms filed similar lawsuits on behalf of 66 other Wisconsin counties 22 and all Wisconsin cases were coordinated with thousands of other lawsuits filed against the same 23 or substantially similar parties as the Opioid Defendants in the Northern District of Ohio, captioned 24 In re: Opioid Litigation, MDL 2804 (the “Litigation”); 25
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WHEREAS, four (4) additional Wisconsin counties (Milwaukee, Dane, Waukesha, and 27 Walworth) hired separate counsel and joined the Litigation; 28
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WHEREAS, since the inception of the Litigation, the Law Firms have coordinated with 30 counsel from around the country (including counsel for Milwaukee, Dane, Waukesha, and 31 Walworth Counties) to prepare the County’s case for trial and engage in extensive settlement 32 discussions with the Opioid Defendants; 33
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WHEREAS, the settlement discussions with The Kroger Co. (the “Settling Defendant”) 35 resulted in a tentative agreement as to settlement terms pending agreement from the County and 36 other plaintiffs involved in the Litigation; 37
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WHEREAS, copies of the settlement agreement relating to the Settling Defendant 39 (“Settlement Agreement”) representing the terms of the tentative settlement agreement with the 40 Settling Defendant has been made available at https://nationalopioidsettlement.com/wp-41 content/uploads/2024/05/Kroger-Multistate-Settlement-Agreement-Circulated-to-States-March-42 25-2024.pdf; 43
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WHEREAS, the Settlement Agreement provides, among other things, for the payment of 45 certain sums to Participating Subdivisions (as defined in the Settlement Agreement) upon the 46 occurrence of certain events detailed in the Settlement Agreement; 47
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WHEREAS, the County is a Participating Subdivision in the Settlement Agreement and 49 has the opportunity to participate in the benefits associated with the Settlement Agreement 50 provided the County (a) approves the Settlement Agreement; (b) approves the Addendum Two 51
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to the Memorandum of Understanding allocating proceeds from the Settlement Agreement 52 (“MOU”) among the various Wisconsin Participating Subdivisions, a copy of which is attached to 53 this Resolution (“Addendum Two”); and (c) the Legislature’s Joint Committee on Finance 54 approves the terms of the Settlement Agreement; 55
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WHEREAS, pursuant to Section 12 of the State-Local MOU entered into between the 57 Wisconsin Participating Subdivisions and the Attorney General of the State of Wisconsin (“State-58 Local MOU”), the Attorney General has provided notice that the terms of the State-Local MOU 59 shall apply to the Settlement Agreement and all proceeds of such Settlement Agreement; 60
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WHEREAS, 2021 Wisconsin Act 57 created Section 165.12 of the Wisconsin Statutes 62 relating to the settlement of all or part of the Litigation; 63
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WHEREAS, pursuant to Wis. Stat. § 165.12(2), the Legislature’s Joint Committee on 65 Finance is required to approve the Settlement Agreement; 66
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WHEREAS, pursuant to Wis. Stat. § 165.12(2), the proceeds from any settlement of all or 68 part of the Litigation are distributed 70% to local governments in Wisconsin that are parties to the 69 Litigation and 30% to the State; 70
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WHEREAS, Wis. Stat. § 165.12(4)(b)2. provides the proceeds from the Settlement 72 Agreement must be deposited in a segregated account (the “Opioid Abatement Account”) and 73 may be expended only for approved uses for opioid abatement as provided in the Settlement 74 Agreement; 75
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WHEREAS, Wis. Stat. § 165.12(7) bars claims from any Wisconsin local government 77 against the Opioid Defendants filed after June 1, 2021; 78
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WHEREAS, the definition of Participating Subdivisions in the Settlement Agreement 80 recognizes a statutory bar on claims such as that set forth in Wis. Stat. § 165.12(7) and, as a 81 result, the only Participating Subdivisions in Wisconsin are those counties and municipalities that 82 were parties to the Litigation (or otherwise actively litigating a claim against one, some, or all of 83 the Opioid Defendants) as of June 1, 2021; 84
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WHEREAS, the Legislature’s Joint Committee on Finance is not statutorily authorized or 86 required to approve the allocation of proceeds of the Settlement Agreement among Wisconsin 87 Participating Subdivisions; 88
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WHEREAS, the Wisconsin Participating Subdivisions previously negotiated and approved 90 the allocation of proceeds among themselves, which allocation is reflected in Exhibit A to the 91 MOU, which is an agreement between all of the entities identified in the Allocation MOU as to how 92 the proceeds payable to those entities under the Settlement Agreements will be allocated; 93
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WHEREAS, the County and all other Wisconsin Participating Subdivisions agreed to and 95 entered into that certain Addendum to the MOU (“Addendum One”) that provided for allocation of 96 settlement proceeds from previous settlements with certain pharmacies and manufacturers 97 according to the same percentages as that provided in the MOU; 98
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WHEREAS, the County has been informed as to the deadlines related to the effective 100 dates of the Settlement Agreement, the ramifications associated with the County’s refusal to enter 101 into the Settlement Agreement, the form of Addendum Two and an overview of the process for 102
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finalizing the Settlement Agreements and such information, together with additional resources 103 related to the settlement can be found at https://nationalopioidsettlement.com/kroger-co-104 settlement/; 105
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WHEREAS, the County, by this Resolution, shall deposit the proceeds of the Settlement 107 Agreement consistent with the terms of this Resolution and Wis. Stat. § 165.12(4)(b); 108
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WHEREAS, pursuant to the County’s engagement agreement with the Law Firms, the 110 County shall pay up to an amount equal to 25% of the proceeds from successful resolution of all 111 or part of the Litigation, whether through settlement or otherwise, plus the Law Firms’ costs and 112 disbursements, to the Law Firms as compensation for the Law Firms’ efforts in the Litigation and 113 any settlement; 114
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WHEREAS, the Law Firms anticipate making application to the national fee fund 116 established in the Settlement Agreement seeking payment, in whole or part, of the fees, costs, 117 and disbursements owed the Law Firms pursuant to the engagement agreement with the County; 118
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WHEREAS, it is anticipated the amount of any award from the fee fund established in the 120 Settlement Agreements will be insufficient to satisfy the County’s obligations under the 121 engagement agreement with the Law Firms; 122
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WHEREAS, the County, by this Resolution, and pursuant to the authority granted the 124 County in the applicable Order emanating from the Litigation in relation to the Settlement 125 Agreement and payment of attorney fees, shall authorize and direct the escrow agent responsible 126 for the receipt and distribution of the proceeds from the Settlement Agreement to establish an 127 account for the purpose of segregating funds to pay the fees, costs, and disbursements of the 128 Law Firms owed by the County (the “Attorney Fees Account”) in order to fund a local “backstop” 129 for payment of the fees, costs, and disbursements of the Law Firms; 130
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WHEREAS, in no event shall payments to the Law Firms out of the Attorney Fees Account 132 and the fee fund established in the Settlement Agreement exceed an amount equal to 25% of the 133 amounts allocated to the County by virtue of the Addendum Two (Exhibit A to the MOU); 134
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WHEREAS, the intent of this Resolution is to authorize the County to enter into the 136 Settlement Agreement, the Addendum Two, establish the County’s Opioid Abatement Account, 137 and establish the Attorney Fees Account; and 138
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WHEREAS, the County, by this Resolution, shall authorize the County’s Administrator to 140 finalize and execute any other document or agreement necessary to effectuate the Settlement 141 Agreement and the other agreements referenced herein;