Resolution No. 6873 98
RESOLUTION NO. 6873
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CYPRESS, COUNTY OF ORANGE, APPROVING THE
SETTLEMENT AGREEMENTS WITH MCKESSON CORPORATION,
CARDINAL HEALTH, INC., AMERISOURCEBERGEN
CORPORATION, JOHNSON & JOHNSON, JANSSEN
PHARMACEUTICALS, INC., ORTHO-MCNEIL-JANSSEN
PHARMACEUTICALS, INC., AND JANSSEN PHARMACEUTICA,
INC., AGREEING TO TERMS OF THE STATE-SUBDIVISION
AGREEMENTS ALLOCATING SETTLEMENT PROCEEDS, AND TO
AUTHORIZING ENTRY INTO THE STATE-SUBDIVISION
AGREEMENTS WITH THE ATTORNEY GENERAL; AND
AUTHORIZING THE CITY MANAGER TO EXECUTE THEREOF
WHEREAS, the United States is facing an ongoing public health crisis of opioid
abuse, addiction, overdose, and death. The State of California and California local
governments spend billions of dollars each year to address the direct consequences of
this crisis;
WHEREAS, since 2017, state and local governments in California and around the
United States have been pursuing litigation (the "Litigation") against certain
manufacturers, distributors, and retailers of opioid pharmaceuticals (the "Opioid
Defendants") in an effort to hold the Opioid Defendants financially responsible for the
impact of the Opioid Epidemic on the City of Cypress ("the City");
WHEREAS, negotiations to settle claims against several of the Opioid Defendants,
specifically McKesson Corporation, Cardinal Health, Inc., AmerisourceBergen
Corporation, Johnson &Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen
Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc. (the "Settling Defendants") have
been ongoing for several years;
WHEREAS, negotiations with the Settling Defendants have resulted in proposed
nationwide settlements of state and local government claims to settle the Litigation;
WHEREAS, the proposed terms of those proposed nationwide settlements have
been set forth in the Distributors Master Settlement Agreement and the Janssen Master
Settlement Agreement (collectively "Settlement Agreements") and, in order to participate
in the Settlement Agreements, the City must enter into participation agreements with
respect to each of the Settlement Agreements ("Participation Agreements");
WHEREAS, copies of the Settlement Agreements as well as summary of the main
terms of the Settlement Agreements, the deadlines for submitting the Participation
Agreements to the Settlement Agreements and the MDL Court's Order setting deadlines
for any Plaintiff who declines to enter into the Settlement Agreements, have been
provided to the City Council with this Resolution;
WHEREAS, the Settlement Agreements provide, among other things, for the
payment of a certain sum to settling government entities in California including to the
State of California and Participating Subdivisions upon occurrence of certain events as
defined in the Settlement Agreements ("California Opioid Funds");
WHEREAS, California local governments as well as the attorneys representing
those local governments have engaged in extensive discussions with the State Attorney
General's Office ("AGO") as to how the California Opioid Funds will be allocated, which
has resulted in the "Proposed California State-Subdivision Agreement Regarding
Distribution and Use of Settlement Funds- Distributor Settlement" and the "Proposed
California State-Subdivision Agreement Regarding Distribution and Use of Settlement
Funds- Janssen Settlement" (collectively the "Allocation Agreements,") which are
agreements between all of the entities identified in the Allocation Agreements;
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WHEREAS, copies of the Allocation Agreements have been provided with this
Resolution;
WHEREAS, the Allocation Agreements propose to allocate the California Opioid
Funds 15% to a State Fund; 70% to local governments in an Abatement Accounts Fund;
and 15%to litigating local governments in a Subdivision Fund. For the avoidance of doubt,
all funds allocated to California from the Settlements will be combined pursuant to
Allocation Agreements, and 15% of that total shall be allocated to the State of California
(the"State of California Allocation"), 70%to the California Abatement Accounts Fund ("CA
Abatement Accounts Fund Allocation"), and 15% to the California Subdivision Fund ("CA
Subdivision Fund Allocation");
WHEREAS, the funds in the CA Abatement Accounts Fund (i.e., the California
Abatement Accounts Fund Allocation) will be allocated based on an allocation model
developed in connection with the proposed negotiating class in the National Prescription
Opiate Litigation (MDL No. 2804). The percentage from the CA Abatement Accounts
Fund allocated, to each eligible local government (any county or city above 10,000 in
population) ("Eligible Local Government") is set forth in Appendix 1 to each Allocation
Agreement and provided to the Council with this Resolution. The City's share of the CA
Abatement Accounts Fund is a product of the total in the CA Abatement Accounts Fund
multiplied by the City's percentage set forth in Appendix 1 (the "Local Allocation");
WHEREAS, any city that is an Eligible Local Government will be allocated its Local
Allocation share only when it becomes a Participating Subdivision by signing the
Participation Agreements to the Settlements. The Local Allocation share for a city that is
a Participating Subdivision will be paid to the county in which the city is located, rather
than to the city, so long as: (a) the county is a Participating Subdivision, and (b) the city
has not advised the Settlement Fund Administrator that it requests direct payment at least
60 days prior to a Payment Date as defined in the Settlement Agreements.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Cypress, as follows:
Section 1. The recitals set forth above are incorporated herein by this reference.
Section 2. The City Council hereby approves the Settlement Agreements,
Allocation Agreements and all exhibits thereto and authorizes the City Manager to settle
and release the City's claims against the Settling Defendants in exchange for the
consideration set forth in the Settlement Agreements, Allocation Agreements and all
exhibits thereto, including, without limitation, taking the following measures:
A. The execution of the Participation Agreement to the Distributors Master
Settlement Agreement and any and all documents ancillary thereto.
B. The execution of the Participation Agreement to the Janssen Master
Settlement Agreement and any and all documents ancillary thereto.
C. The execution of the Proposed California State-Subdivision Agreement
Regarding Distribution and Use of Settlement Funds- Distributor Settlement
by executing the signature pages thereof.
D. The execution of the Proposed California State-Subdivision Agreement
Regarding Distribution and Use of Settlement Funds- Janssen Settlement
Allocation Agreements by executing the signature pages thereof.
Section 3. The City Council hereby ratifies, confirms, and approves all actions
heretofore taken by the City Council and other appropriate public officers and agents of
the City with respect to the matters contemplated under this Resolution.
Section 4. This Resolution shall be effective on upon its adoption. The City
Clerk shall certify the adoption of this Resolution.
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PASSED AND ADOPTED by the City Council of the City of Cypress, and acting
as ex-officio governing Board of Directors of the Cypress Recreation and Park District at
a regular meeting held on the 13th day of December, 2021.
rv22a)2,/ 4
AYOR OF THE CITY OF CYPRESS
ATTEST:
CITY CL OF THE CITY OF CYPRESS
STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss
I, ALISHA FARNELL, City Clerk of the City of Cypress, DO HEREBY CERTIFY that
the foregoing Resolution was duly adopted at a regular meeting of the said City Council held
on the 13th day of December, 2021, by the following roll call vote:
AYES: 4 COUNCIL MEMBERS: Minikus, Peat, Hertz-Mallari and Morales
NOES: 0 COUNCIL MEMBERS: None
ABSENT: 1 COUNCIL MEMBERS: Marquez
otwAL
CITY CLERK1F THE CITY OF CYPRESS