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HomeMy WebLinkAboutR-2024-145 Resolution authorizing the Kroger Opioid Settlement RESOLUTION NO. R-2024-145 A RESOLUTION approving the Kroger Settlement Agreement and participation in the Kroger Settlement. WHEREAS, the City approved the One Washington Memorandum of Understanding Between Washington Municipalities and its Allocation Agreement II, which the City agreed to settle any claims it might have against certain pharmaceutical supply chain entities, manufacturers and distributors in exchange for a percentage of the total negotiated settlement amounts; and WHEREAS, a tentative settlement has now been reached with Kroger, which does business as QFC and Fred Meyer in Washington State, in the total amount of$47.5 million; and WHEREAS, the City is entitled to take advantage of these settlement amounts due to its participation in the One Washington memorandum; and WHEREAS, to take advantage of the settlement funding the City must approve said settlement by agreeing to the Allocation Agreement III and filling out and returning the Participation Form by the August 12, 2024 deadline; and WHEREAS, the City Council finds that it is in the best interest of the City of Yakima and its residents to enter into the settlement agreement with Kroger; and to secure a portion of the settlement proceeds to be used in the City of Yakima for approved uses as outlined in the One Washington Memorandum and Allocation Agreement III; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is hereby authorized to sign the Allocation Agreement III, the Participation Form for the Kroger Settlement Agreement, and all necessary documents and contracts to effectuate the Kroger Settlement Agreement. ADOPTED BY THE CITY COUNCIL this 5th day of August, 2024. (C-� ATTEST AK/ ���\� Patricia By s, Mayor (• .•••'i*i•• Igo ;► :• SEAL• : , ; . -osalinda Ibarra, City Clerk 'Ilk\y/•�;G o\`_' ANN., WASHINGTON STATE ALLOCATION AGREEMENT GOVERNING THE ALLOCATION OF OPIOID SETTLEMENT FUNDS PAID BY KROGER JUNE 28,2024 This Washington State Allocation Agreement Governing the Allocation of Opioid Settlement Funds Paid by Kroger(the "Allocation Agreement III") governs the distribution of funds obtained from the Kroger Co. ("Kroger") in connection with the resolution of any and all claims by the State of Washington and the counties, cities, and towns in Washington State ("Local Governments")against Kroger via the Kroger Settlement Agreement dated March 22, 2024 ("Settlement"). The Settlement can be accessed at https://nationalopioidsettlement.comi. The terms and definitions of the Settlement are incorporated into this Allocation Agreement III, and any undefined terms in this Allocation Agreement III are as defined in the Settlement. 1. This Allocation Agreement III is intended to be a State-Subdivision Agreement as defined in the Settlement. This Allocation Agreement III shall be interpreted to be consistent with the requirements of a State-Subdivision Agreement in the Settlement. 2. This Allocation Agreement III shall become effective only if all of the following occur: A. The State of Washington joins the Settlement and becomes a Settling State as provided for in the Settlement. B. The Settlement becomes final and effective and a Consent Judgment is filed and approved as provided for in the Settlement. C. The number of Local Governments that execute and return this Allocation Agreement III satisfies the participation requirements for a State- Subdivision Agreement as specified in the Settlement. 3. Requirements to become a Participating Local Government. To become a Participating Local Government that can participate in this Allocation Agreement III, a Local Government must do all of the following: A. The Local Government must execute and return this Allocation Agreement III. B. The Local Government must release its claims against Kroger identified in the Settlement and agree to be bound by the terms of the Settlement by timely executing and returning the Participation Form, which is Exhibit K of the Settlement. C. Litigating Subdivisions, also referred to as Litigating Local Governments, must dismiss Kroger with prejudice from their lawsuits. 1 D. Each of the Local Governments that is eligible to participate in this Allocation Agreement III has previously executed and signed the One Washington Memorandum of Understanding Between Washington Municipalities ("MOU") agreed to by the Participating Local Governments in Washington State, which is attached hereto as Exhibit 1. By executing this Allocation Agreement III, the local government agrees and affirms that the MOU applies to and shall govern the Local Government Share as modified by this Allocation Agreement III for the Settlement. A Local Government that meets all of the conditions in this paragraph shall be deemed a"Participating Local Government." 4. This Allocation Agreement III applies to the State of Washington's allocation of the (1)Adjusted State Remediation Payment and (2) Additional Remediation Amount, which collectively shall be referred to as the "Washington Abatement Amount." As specified in the Settlement, the Washington Abatement Amount will vary dependent on the percentage of Participating Local Governments and whether there are any Later Litigating Subdivisions. 5. This Allocation Agreement III does not apply to the State Cost Fund, State AG Fees and Costs, or any attorneys' fees, fees, costs, or expenses referred to in the Settlement or that are paid directly or indirectly via the Settlement to the State of Washington ("State's Fees and Costs"). 6. This Allocation Agreement III and the MOU are a State Back-Stop Agreement. Kroger is paying a portion of the Local Governments' attorneys' fees and costs as provided for in the Settlement. The total contingent fees an attorney receives from the Contingency Fee Fund in the Settlement, the MOU, and this Allocation Agreement III combined cannot exceed 15% of the portion of the LG Share paid to the Litigating Local Government that retained that firm to litigate against the Settling Entities(i.e., if City X filed suit with outside counsel on a contingency fee contract and City X receives $1,000,000 from the Settlement, then the maximum that the firm can receive is $150,000 for fees as to the Kroger Settlement.) 7. No portion of the State's Fees and Costs and/or the State Share as defined in Paragraphs 5 and 9 of this Allocation Agreement III shall be used to fund the Government Fee Fund("GFF") referred to in Paragraph 11 of this Allocation Agreement III and Section D of the MOU, or in any other way to fund any Participating Local Government's attorneys' fees, costs, or common benefit tax. 8. The Washington Abatement Amount shall and must be used by the State and Participating Local Governments for future Opioid Remediation as defined in the Settlement, except as allowed by the Settlement. 2 9. The State and the Participating Local Governments agree to divide the Washington Abatement Amount as follows: A. Fifty percent (50%) to the State of Washington ("State Share"). B. Fifty percent (50%) to the Participating Local Governments ("LG Share"). 10. The LG Share shall be distributed to Participating Local Governments pursuant to the MOU as amended and modified in this Allocation Agreement III. II. For purposes of this Allocation Agreement III only, the MOU is modified as follows and any contrary provisions in the MOU are struck: A. Exhibit A of the MOU is replaced by Exhibit E of the Settlement. B. The definition of"Litigating Local Governments" in Section A.4 of the MOU shall mean Litigating Subdivisions as defined in the Settlement and shall also include any local government that notified Judge Polster in Case No. 1:17-md-02804-DAP of its intent to sue Kroger in 2023 after the release of updated ARCOS data. C. The definition of"National Settlement Agreement"" in Section A.6 of the MOU shall mean the Settlement. D. The definition of"Settlement" in Section A.14 of the MOU shall mean the Settlement. E. The MOU is amended to add new Section C.4.g.vIII, which provides as follows: "If a Participating Local Government receiving a direct payment (a) uses Opioid Funds other than as provided for in the Settlement, (b) does not comply with conditions for receiving direct payments under the MOU, or(c) does not promptly submit necessary reporting and compliance information to its Regional Opioid Abatement Counsel ("Regional OAC") as defined at Section C.4.h of the MOU, then the Regional OAC may suspend direct payments to the Participating Local Government after notice, an opportunity to cure, and sufficient due process. If direct payments to Participating Local Government are suspended, the payments shall be treated as if the Participating Local Government is foregoing their allocation of Opioid Funds pursuant to Section C.4.d and C.4.j.IIli of the MOU. In the event of a suspension, the Regional OAC shall give prompt notice to the suspended Participating Local Government and the Settlement Fund Administrator specifying the reasons for the suspension, the process for reinstatement, the factors that will be considered for reinstatement, and the due process that will be provided. A suspended Participating Local 3 Government may apply to the Regional OAC to be reinstated for direct payments no earlier than five years after the date of suspension." F. The amounts payable to each law firm representing a Litigating Local Government from the GFF shall be consistent with the MOU and the process set forth in the Order Appointing the Fee Panel to Allocate and Disburse Attorney's Fees Provided for in State Back-Stop Agreements, Case No. 1:17-md-02804-DAP Doc #: 4543 (June 17, 2022). All amounts that the City of Seattle has contributed to the GFF shall be returned to the City of Seattle by the Settlement Administrator rather than paid to Hagens Berman Sobol Shapiro LLP. G. The GFF set forth in the MOU shall be funded by the LG Share of the Washington Abatement Amount only. To the extent the common benefit tax is not already payable by the Settling Entities as contemplated by Section D.8 of the MOU, the GFF shall be used to pay Litigating Local Government contingency fee agreements and any common benefit tax referred to in Section D of the MOU, which shall be paid on a pro rata basis to eligible law firms as determined by the GFF Administrator. H. To fund the GFF, fifteen percent (15%) of the LG Share shall be deposited in the GFF from each LG Share settlement payment until the Litigating Subdivisions' contingency fee agreements and common benefit tax(if any) referred to in Section D of the MOU are satisfied. Under no circumstances will any Primary Subdivision or Litigating Local Government be required to contribute to the GFF more than 15%of the portion of the LG Share allocated to such Primary Subdivision or Litigating Local Government. In addition, under no circumstances will any portion of the LG Share allocated to a Litigating Local Government be used to pay the contingency fees or litigation expenses of counsel for some other Litigating Local Government. The maximum amount of any Litigating Local Government contingency fee agreement (from the Contingency Fee Fund of the Settlement) payable to a law firm permitted for compensation shall be fifteen percent (15%)of the portion of the LG Share paid to the Litigating Local Government that retained that firm (i.e., if City X filed suit with outside counsel on a contingency fee contract and City X receives $1,000,000 from the Settlement, then the maximum that the firm can receive is $150,000 for fees.)The firms also shall be paid documented expenses due under their contingency fee agreements that have been paid by the law firm attributable to that Litigating Local Government. Consistent with Agreement on Attorneys' Fees, Costs, and Expenses, which is Exhibit R of the Settlement, amounts due to Participating Litigating Subdivisions' attorneys under this Allocation Agreement III shall not impact (i) costs paid by the subdivisions to their attorneys pursuant to a State Back-Stop 4 agreement, (ii) fees paid to subdivision attorneys from the Common Benefit Fund for common benefit work performed by the attorneys pursuant to Exhibit R of the Settlement, or(iii)costs paid to subdivision attorneys from the MDL Expense Fund for expenses incurred by the attorneys pursuant to the Settlement. J. Under no circumstances may counsel receive more for its work on behalf of a Litigating Local Government than it would under its contingency agreement with that Litigating Local Government. To the extent a law firm was retained by a Litigating Local Government on a contingency fee agreement that provides for compensation at a rate that is less than fifteen percent(15%) of that Litigating Local Government's recovery, the maximum amount payable to that law firm referred to in Section D.3 of the MOU shall be the percentage set forth in that contingency fee agreement. K. For the avoidance of doubt, both payments from the GFF and the payment to the Participating Litigating Local Governments' attorneys from the Contingency Fee Fund in the Settlement shall be included when calculating whether the aforementioned fifteen percent(15%) maximum percentage (or less if the provisions of Paragraph 10.J of this Allocation Agreement III apply) of any Litigating Local Government contingency fee agreement referred to above has been met. L. To the extent there are any excess funds in the GFF, the Settlement Administrator shall facilitate the return of those funds to the Participating Local Governments as provided for in Section D.6 of the MOU. 12. In connection with the execution and administration of this Allocation Agreement III, the State and the Participating Local Governments agree to abide by the Public Records Act, RCW 42.56 et seq. 13. All Participating Local Governments, Regional OACs, and the State shall maintain all non-transitory records related to this Allocation Agreement III as well as the receipt and expenditure of the funds from the Settlement for no less than five (5) years. 14. If any party to this Allocation Agreement III believes that a Participating Local Government, Regional OAC, the State, an entity, or individual involved in the receipt, distribution, or administration of the funds from the Settlement has violated any applicable ethics codes or rules, a complaint shall be lodged with the appropriate forum for handling such matters, with a copy of the complaint promptly sent to the Washington Attorney General, Complex Litigation Division, Division Chief, 800 Fifth Avenue, Suite 2000, Seattle, Washington 98104. 15. To the extent (i) a region utilizes a pre-existing regional body to establish its Opioid Abatement Council pursuant to the Section 4.h of the MOU, and (III) that 5 pre-existing regional body is subject to the requirements of the Community Behavioral Health Services Act, RCW 71.24 et seq., the State and the Participating Local Governments agree that the Opioid Funds paid by Kroger is subject to the requirements of the MOU and this Allocation Agreement III. 16. Upon request by Kroger, the Participating Local Governments must comply with the Tax Cooperation and Reporting provisions of the Settlement. 17. Venue for any legal action related to this Allocation Agreement III (separate and apart from the MOU or the Settlement) shall be in King County, Washington. 18. Each party represents that all procedures necessary to authorize such party's execution of this Allocation Agreement III have been performed and that such person signing for such party has been authorized to execute this Allocation Agreement III. 6 FOR THE STATE OF WASHINGTON: ROBERT W. FERGUSON Attorney General JEF Y G U R Division ief Date: +o - oc 7 FOR THE PARTICIPATING LOCAL GOVERNMENT: ik Name of Participating Local Government: �� d�lit Y���� CITY CONTRACT NO: 2 "'4! JJ 3e kj) RESOLUTION NO: A- L 3 ,- I 45 Authorized signature: Name: NNE �`(�G(Ali Title: I►`rfG/(l'"A CG1,fik IUI.Aiv A&0 Date: 8 EXHIBIT K Subdivision Participation and Release Form Governmental Entity: C lilt OF- YA IL/M A State: W A Authorized Official: /NOTE_(?. GLTY µ11N41&E2. Address 1: 121 Address 2: City, State, Zip: 'yprlt;IM& , kVA Ck VI O I Phone: VC"- S7S - (9000 Email: tiot.k.aAigt v«k; . baker @ yet/cm/wawa .Qov The governmental entity identified above ("Governmental Entity"), in order to obtain and in consideration for the benefits provided to the Governmental Entity pursuant to the Settlement Agreement dated March 22, 2024 ("Kroger Settlement"), and acting through the undersigned authorized official, hereby elects to participate in the Kroger Settlement, release all Released Claims against all Released Entities, and agrees as follows. 1. The Governmental Entity is aware of and has reviewed the Kroger Settlement, understands that all terms in this Participation and Release Form have the meanings defined therein, and agrees that by executing this Participation and Release Form,the Governmental Entity elects to participate in the Kroger Settlement and become a Participating Subdivision as provided therein. 2. The Governmental Entity shall promptly, and in any event no later than 14 days after the Reference Date and prior to the filing of the Consent Judgment, dismiss with prejudice any Released Claims that it has filed. With respect to any Released Claims pending in In re National Prescription Opiate Litigation, MDL No. 2804, the Governmental Entity authorizes the Plaintiffs' Executive Committee to execute and file on behalf of the Governmental Entity a Stipulation of Dismissal with Prejudice substantially in the form found at https.//nationalopioidsettlement com/. 3. The Governmental Entity agrees to the terms of the Kroger Settlement pertaining to Participating Subdivisions as defined therein. 4. By agreeing to the terms of the Kroger Settlement and becoming a Releasor, the Governmental Entity is entitled to the benefits provided therein, including, if applicable, monetary payments beginning after the Effective Date. 5. The Governmental Entity agrees to use any monies it receives through the Kroger Settlement solely for the purposes provided therein. 6. The Governmental Entity submits to the jurisdiction of the court in the Governmental Entity's state where the Consent Judgment is filed for purposes limited to that court's role as provided in, and for resolving disputes to the extent provided in, the Kroger Settlement. The Governmental Entity likewise agrees to arbitrate before the National Arbitration Panel K-1 as provided in, and for resolving disputes to the extent otherwise provided in, the Kroger Settlement. 7. The Governmental Entity has the right to enforce the Kroger Settlement as provided therein. 8. The Governmental Entity, as a Participating Subdivision, hereby becomes a Releasor for all purposes in the Kroger Settlement, including without limitation all provisions of Section XI (Release), and along with all departments, agencies, divisions, boards, commissions, districts, instrumentalities of any kind and attorneys, and any person in their official capacity elected or appointed to serve any of the foregoing and any agency, person,or other entity claiming by or through any of the foregoing, and any other entity identified in the definition of Releasor, provides for a release to the fullest extent of its authority. As a Releasor, the Governmental Entity hereby absolutely, unconditionally, and irrevocably covenants not to bring, file, or claim, or to cause, assist or permit to be brought, filed, or claimed, or to otherwise seek to establish liability for any Released Claims against any Released Entity in any forum whatsoever. The releases provided for in the Kroger Settlement are intended by the Parties to be broad and shall be interpreted so as to give the Released Entities the broadest possible bar against any liability relating in any way to Released Claims and extend to the full extent of the power of the Governmental Entity to release claims. The Kroger Settlement shall be a complete bar to any Released Claim. 9. The Governmental Entity hereby takes on all rights and obligations of a Participating Subdivision as set forth in the Kroger Settlement. 10. In connection with the releases provided for in the Kroger Settlement, each Governmental Entity expressly waives, releases,and forever discharges any and all provisions,rights,and benefits conferred by any law of any state or territory of the United States or other jurisdiction, or principle of common law, which is similar, comparable, or equivalent to § 1542 of the California Civil Code, which reads: General Release; extent. A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release that, if known by him or her would have materially affected his or her settlement with the debtor or released party. A Releasor may hereafter discover facts other than or different from those which it knows, believes, or assumes to be true with respect to the Released Claims, but each Governmental Entity hereby expressly waives and fully, finally, and forever settles, releases and discharges, upon the Effective Date, any and all Released Claims that may exist as of such date but which Releasors do not know or suspect to exist, whether through ignorance, oversight, error, negligence or through no fault whatsoever, and which, if known, would materially affect the Governmental Entities' decision to participate in the Kroger Settlement. K-2 1 1. Nothing herein is intended to modify in any way the terms of the Kroger Settlement, to which Governmental Entity hereby agrees. To the extent this Participation and Release Form is interpreted differently from the Kroger Settlement in any respect, the Kroger Settlement controls. I have all necessary power and authorization to execute this Participation and Release Form on behalf of the Governmental Entity. Signature: h2.400•16:3901e. Name: bkv e- 2'DAS&LA- Title: I tJ'«GN-1K_ C ,-(tt lvt A-G Date: $✓ Z`-‘ K-3 i4 =+ ',t'1,`'k`OAA`l VD . BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9.B. For Meeting of: August 5, 2024 ITEM TITLE: Resolution authorizing the Kroger Opioid Settlement SUBMITTED BY: Sara Watkins, City Attorney SUMMARY EXPLANATION: The Washington State Attorney General has reached settlement with Kroger, which does business as QFC and Fred Meyer in Washington, regarding its role in the opioid epidemic. The settlement totaled $47.5 million, payable over eleven years. To take advantage of the settlement, and receive settlement funds, the City must join the settlement by executing a number of documents and agreeing to the proposed Allocation Agreement. As with the previous distributor, manufacturer and other settlements, this settlement is contingent on eligible cities and counties joining the settlements. The full settlement agreement can be found here: https://nationalopioidsettlement.com/wp-content/uploads/2024/05/Kroger-Multistate-Settlement- Agreement-Circulated-to-States-March-25-2024.pdf ITEM BUDGETED: No STRATEGIC PRIORITY: Public Safety RECOMMENDATION: Adopt Resolution. ATTACHMENTS: Res-Kroger_Opioid Settlement.docx Kroger_Ex. K_Subdivision Participation Form.pdf WA ST Allocaton Agreement Ill.pdf 95