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BUFFALO, N.Y. – State and local governments are increasingly using public nuisance law to address comprehensive, major social problems. This is leading to settlements that are too low to incentivize companies from selling risky products, and payments that don’t adequately compensate individuals suffering from corporate misconduct.

That is the crux of two scholarly research papers published this year by Clayton J. Masterman, associate professor in the ÃÛÌÒ´«Ã½ School of Law.

“Public nuisance law is at a crossroads,” says Masterman whose expertise includes tort law, health law, and law and economics. “State attorneys general are increasingly using it to sue companies when they have created a significant risk to the public. But public nuisance law generally yields financial costs that are smaller than necessary to deter companies from creating risks to public health and safety.”

The opioid lawsuits are a good illustration of the problem, says Masterman. From 2021-25, state and local governments agreed to global settlements with opioid manufacturers, distributors and retailers resolving thousands of lawsuits nationwide. The opioid companies agreed to pay approximately $50 billion, mostly to abate the ongoing effects of opioid addiction. But that seemingly large sum of money is misleading, says Masterman.

“Fifty billion dollars is a substantial amount of money, and it is already making a meaningful difference in the lives of individuals suffering from opioid addiction nationwide,” says Masterman. “But it's smaller than the profits that opioid companies made selling drugs that kicked off the ongoing crisis, and it is even smaller than the total harm done to folks suffering from addiction.”

State attorneys general use using public nuisance lawsuits to hold companies liable

“Courts need to decide whether or not public nuisance lawsuits are a viable cause of action for addressing the harms that products can cause, and those courts are currently split,” he says. “My argument is that even if state attorneys general win, and courts allow public nuisance lawsuits to proceed against manufacturers (or those manufacturers settle cases before they’re litigated to a conclusion), the amount that companies will expect to pay is too small to properly incentivize firms to avoid risking harm to the public.”

Masterman’s expertise and interest stems from law and economics. It’s an intellectual approach that applies microeconomic analysis to the law.

“Microeconomics has, for a very long time, studied how folks react to changes in price or cost,” he says. “We know, for example, that people react to price increases by consuming less of the now-more-expensive good, and that manufacturers raise prices and produce less stuff when their costs of production increase.

“A lot of the law creates prices or increased costs for undesirable conduct. If I sell a defective radiator, the law provides a price for doing so – the damages that I will need to pay my customers when they sue me in products liability. The goal of the law, in a law and economics framework, is for courts, legislators and regulators to set the legal penalties at the appropriate level to deter injuries and accidents and maximize social welfare.”

He adds: “My concern with using public nuisance law to deal with large public health risks is that the financial costs associated with abating a public nuisance are usually smaller than the profits associated with creating one, meaning the threat of lawsuits won’t sufficiently reduce those risks. If the prices we impose through legal remedies are less than the harm done or the profits companies make, the law will not incentivize those companies to market and distribute appropriately safe products. With large public health risks like climate change, addiction, ultra-processed foods, guns and other risks that have been the target of recent lawsuits, that means that people will die or suffer unnecessarily.”

Concerns for consumers  extends to manufacturers of addictive products

In his research paper, “Buyer, Beware of Addiction,” Masterman and his coauthor Erin E. Meyers, assistant professor of law in the Antonin Scalia Law School at George Mason ÃÛÌÒ´«Ã½, argue that law requires too little disclosure about how addictive products are.

“The current regulatory regime for addiction-risk disclosure arose decades ago and has not been revised to reflect modern developments in addiction science or behavioral psychology,” says Masterman. “Today, most addictive products don’t require any consumer-facing disclosure of addiction risk. At most, some drugs or nicotine products must warn customers that there is a risk of abuse or addiction. But no products quantitatively or relatively warn just how likely consumers are to become addicted if they use those products. As a result, the products encourage folks to make consumption decisions without meaningfully engaging with the risk of addiction.”  

“In that paper, my co-author and I argued that regulators should require manufacturers to provide a more robust risk disclosure to inform folks about addiction risks, and courts should permit plaintiffs to sue manufacturers of addictive products that don’t provide reasonably robust warnings,” he says.

Masterman’s other paper published this year is “Public Nuisance Remedies,” which was featured in the ÃÛÌÒ´«Ã½ of Richmond Law Review.

Courts will have opportunities to consider Masterman’s arguments

This year, plaintiffs have filed a suit in Pennsylvania against food manufacturers, alleging that the defendants failed to warn consumers about health and addiction risks from ultra-processed foods. California recently sued ExxonMobil for public nuisance, alleging that the company deceived the public about the recyclability of single-use plastics, creating environmental risks from plastic waste and health risks from microplastics in drinking water, food and human bodies. And more than a dozen states sued TikTok last year, alleging that the makers of the app intentionally designed it to addict young users.

Masterman’s hope, for these suits and others, is that “courts find a way to appropriately protect future consumers from similar risks, before ongoing addiction and environmental crises worsen.”