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VOL. 11 | NO. 16 | Saturday, April 21, 2018

Opioid Litigation, FedExForum NonCompete Top Local Law Developments

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Here are some of the legal issues making news in recent months.

NASHVILLE, Tenn. (AP) – Tennessee Attorney General Herbert Slatery says lawsuits by local prosecutors over the opioid epidemic are complicating his efforts to reach a multistate settlement with drug companies. In response, the prosecutors, who represent about half of Tennessee's counties, say local communities lose out when lawsuits like theirs are rolled into one settlement.

In a March letter, Slatery told 14 Tennessee district attorneys general that their lawsuits impede his ability to prosecute, as his office leads a 40-state coalition investigating opioid manufacturers and distributors.

Slatery filed motions to intervene in the three Tennessee lawsuits, claiming legal issues with the cases, the role of local prosecutors and their use of outside attorneys.

"The Office of the Attorney General is in the best position both to represent the interests of the state and to obtain the best possible monetary recovery for key governmental stakeholders," Slatery wrote in the letter.

The district attorneys general wrote in a response statement that Slatery is attempting to undermine their litigation, adding that they "understand the pressure that big pharma can bring to bear on organizations opposing their sales and marketing models."

They noted that a 2007 settlement of 26 states and Washington, D.C., against Purdue Pharma yielded $19.5 million, with Tennessee getting pennies on the dollar. Tennessee received $400,000 for attorneys' fees for the district attorney's office, $175,750 for the state general fund, and $143,750 for consumer education projects to fund further investigations or litigation at the attorney general's discretion.

"The results of this failed effort have been another decade lost to growing opioid fueled abuse, addiction, and death," the district attorneys general wrote about the 2007 settlement. "Our local communities have been devastated in this wake and we cannot, and we must not fail again."

The disagreement mirrors the one between Shelby County commissioners and Shelby County Mayor Mark Luttrell late last year over opioid litigation filed by the commission. Luttrell filed suit against the commission in Chancery Court arguing that their Circuit Court lawsuit against big pharma violated the county charter.

Chancellor Jim Kyle agreed with Luttrell, but left the Circuit Court lawsuit in place, giving the county administration time to file to intervene in the suit. Luttrell did just that soon after.

Commissioners argued that they were wary of the county joining litigation by state government and that money from any settlement might not be equitable for local governments.

Dunavant Talks Anti-Gang Efforts on 'Behind The Headlines'

U.S. Attorney Michael Dunavant says street gangs in various forms and coalitions are “the prime problem and concern here in West Tennessee and Memphis.”

“We are targeting the financial structure of these organizations. These are businessmen. They come together from all different types of groups, across gang rivalries for the purpose of making money,” Dunavant said in March on the WKNO/Channel 10 program “Behind The Headlines.”

The approach takes into account organizations that cross gang lines, sometimes bringing members of rival street gang members together in organizations sometimes known as “mobs.”

“It’s a money-making opportunity. One of the best ways we know to attack and dismantle these gangs, these structures, is to go after the financial incentives by money laundering,” he said. “And also, to identify people who we can’t nicely put into separate categories. We identify that they are conspiring and coming together to commit criminal acts and they are criminally responsible for the overall conspiracy.”

Dunavant’s office announced in February the indictment of 25 alleged members and associates of “Major Stacks Entertainment” – an organization that began and operated primarily in the area of Kerr Avenue and Pillow Street in South Memphis.

It included, according to the indictment on drug, firearms and money laundering charges, members of the Young Mob, Vice Lords, Gangster Disciples, Kitchen Crip and Bloods.

Dunavant expects the organizations will form again.

“It’s almost like whack-a-mole. They pop up and create some name – they create some presence on social media. They do business. They organize in such a way that it’s loose but effective,” he said. “We are certainly pursuing it vigorously. We believe we’ve made a major dent in some of them. … It’s very frustrating. It’s very challenging for law enforcement. But we are being effective.”

– Bill Dries

Holder Says Voting Rights Are Most Pressing Issue

Former U.S. Attorney General Eric Holder told a University of Memphis and National Civil Rights Museum symposium in April that Dr. Martin Luther King Jr. helped create “a new country” in 39 years of life, but that “it is necessary to be indignant and be impatient” 50 years after King’s death.

Holder, who was the nation’s first African-American attorney general, told the MLK50 symposium crowd of 700 at The Peabody hotel that voting rights remain just as important an issue as they were in King’s day and criticized claims of voter fraud used to call for more forms of identification to vote.

He also said he is dissatisfied that “simply acknowledging black lives matter too is somehow controversial.”

“I am dissatisfied that I had to have the talk with my teenaged son – a conversation that so many black families in America have had in order to protect their children about how to safely interact with law enforcement,” Holder said. “All of this remains under siege. To me this question of voting is the chief civil rights issue of our times. … Voting is not a privilege. It is a right.”

Holder also criticized the country’s political system.

“Our nation’s policies are determined by those who serve in elected office. We must make certain that these representatives accurately reflect the choices of the American electorate,” he said. “Our political system is far from fair. … It is rigged by racial and partisan gerrymandering.”

Federal Judge Dismisses Legislature Lawsuit Over Refugee Resettlement

NASHVILLE, Tenn. (AP) – A federal court judge in March dismissed the state of Tennessee's lawsuit against the federal government over the refugee resettlement program.

The Republican-led Tennessee General Assembly filed the lawsuit in March 2017, arguing the refugee program is forcing the state to spend money on additional services, including health care and education.

In his dismissal order, U.S. District Judge S. Thomas Anderson said it's speculative for Tennessee to contend it might lose $7 billion annually in federal Medicaid money if it refuses to spend state money on refugee services through Medicaid.

The lawsuit didn't have the backing of state Attorney General Herbert Slatery or Republican Gov. Bill Haslam.

The Thomas More Law Center filed the lawsuit for free.

Senate Speaker Randy McNally says lawmakers are discussing appeal options with their attorneys.

Graceland Goes to Court Twice Over FedExForum Noncompete Contract

Graceland’s legal challenge of the noncompete agreement between the city, the county and the Memphis Grizzlies organization was dismissed in February by Chancellor Jim Kyle. But Graceland was back in March with a lawsuit against EDGE – the city-county Economic Development Growth Engine agency.

Elvis Presley Enterprises filed the still pending lawsuit against EDGE following the EDGE board’s delay in voting on a new Graceland plan that seeks bond financing from EDGE for a 1,700-seat convention center with exhibit space on its Whitehaven campus.

The EDGE board later approved that plan and an earlier plan for a 6,000- to 7,000-seat, $50 million concert venue also on the Whitehaven campus. The arena plan received opposition by the city of Memphis as well as Memphis Basketball, the limited liability company of the Memphis Grizzlies that runs FedExForum for the city and county.

Kyle ruled that Graceland, in effect, didn’t have a case because the noncompete agreement doesn’t involve Graceland but is an agreement between city and county governments and Memphis Basketball LLC.

The agreement stipulates that Memphis Basketball will absorb any red ink in operating FedExForum in exchange for what is effectively veto power over any local government-financed indoor venue of more than 5,000 fixed seats.

With EDGE approving both plans and a proposal to increase the tax increment funding flow of city and county property taxes to Graceland projects, EPE believes it has found a way around the noncompete.

The increased flow of property tax revenue Graceland is seeking – from 50 percent to 65 percent of increment revenue – would go to pay more of the debt on the $90 million Guest House at Graceland resort hotel and the $45 million Elvis Presley’s Memphis entertainment complex – both already open and not subject to the noncompete. 

With the increased draw on TIF revenue for those projects, Graceland would use its own money to build the 6,000- to 7,000-seat arena.

The city administration is skeptical that the approach is a way around the noncompete and has said it doesn’t agree with the approval by the EDGE board.  

– Bill Dries

PROPERTY SALES 28 290 16,197
MORTGAGES 33 165 10,087
BUILDING PERMITS 184 608 38,544
BANKRUPTCIES 33 125 7,597