WASHINGTON — The Supreme Court on Thursday blasted opioid maker Purdue Pharma’s massive bankruptcy reorganization, finding that the settlement inadequately included legal protections for the Sackler family, meaning billions of dollars in victim protections are at stake.
In a 5-4 vote along non-ideological lines, the court ruled that the bankruptcy court did not have the authority to exempt Sackler family members from legal claims by opioid victims.
As part of the deal, the family that controlled the company agreed to pay $6 billion, which could be used to settle opioid-related lawsuits, but in exchange for complete immunity from any future liability.
Writing for the majority, Judge Neil Gorsuch said the Sacklers could have declared bankruptcy, but instead tried to stay the company’s own bankruptcy proceedings to settle pending legal claims.
“They achieved all of this without obtaining the consent of those affected or putting anything approaching their total assets on the table for their creditors,” Gorsuch wrote.
“Nothing in current law authorizes the discharge of Sackler,” he said.
Judge Brett Kavanaugh dissented, citing the ruling’s impact on those who would benefit from the settlement.
“Today’s decision is wrong in law and devastating to more than 100,000 opioid victims and their families,” he said.
As a result of the decision, “opioid victims are deprived of the significant monetary recovery they have fought for and finally secured after years of litigation,” he said.
The ruling means that settlement talks will have to restart in the unlikely event that no deal is reached.
Purdue Pharma called the decision “heartbreaking” because of its impact on victims, but vowed to move forward with efforts to negotiate a new settlement.
“The ruling cannot deter us from our twin goals of using settlement dollars to reduce opioids and making the company an engine forever,” he said.
In a statement released by members of Sackler’s family, they said they are “hopeful to reach a resolution that provides significant resources to help combat this complex public health crisis.”
“While we are confident we will prevail in future litigation given our families and the deep distortions surrounding the opioid crisis, we continue to believe that a speedy negotiated settlement is the best way forward to provide billions of dollars for people and communities in need,” he added. they did
During oral arguments in December, a lawyer representing some of the victims told the justices that unless a deal, including the Sackler settlement, is reached, there is “no viable way” for victims to receive compensation.
The ongoing effects of the case have drawn more attention the opioid crisis and the role Sackler-owned Purdue played in its creation.
As part of the proposed settlement, the Supreme Court put it on hold When the case began last year, the Sackler family agreed to pay nearly $6 billion that could be used to settle opioid-related lawsuits, but in exchange for complete immunity from any liability in future cases.
The settlement, including the assets Purdue owns, would be significantly more valuable as the reorganized company dedicates itself to addressing the impact of opioid abuse.
No Sacklers have been involved in the company since 2019.
Purdue made billions from OxyContin, the widely available painkiller fueling the opioid epidemic. The company’s tactics to aggressively market the drug have come under increasing scrutiny as thousands have died from opioid overdoses.
As the company’s fortunes plummeted, it sought bankruptcy protection, but members of the Sackler family did not. Instead, they struck a separate deal with Purdue and the plaintiffs that will allow the company to reinvent itself to address the opioid crisis amid pending litigation.
The U.S. Court of Appeals for the 2nd Circuit in New York upheld the plan last year over the objection of William Harrington, the attorney overseeing the U.S. government’s bankruptcy. The Department of Justice’s trustee program aims to ensure that the bankruptcy system operates in accordance with the law.
Harrington objected to the release of additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.
Purdue criticized Harrington’s role, noting that the groups representing thousands of plaintiffs could not have happened without the contribution of the Sackler family.
Various groups representing plaintiffs in the Supreme Court backed Purdue, including one representing 1,300 cities, counties and other municipalities and 60,000 people affected by the opioid epidemic.
Canadian municipalities and Indigenous First Nations were among those protesting the settlement.
Purdue flourished under brothers Mortimer and Raymond Sackler, who died in 2010 and 2017, respectively. The family reaped billions and spent lavishly, including leaping charity projects.
The family told the Supreme Court that it continues to support the settlement.
One brief information is given on behalf of Lawyers for Mortimer Sackler’s relatives, most of whom live abroad, have warned of the “significant legal costs and risks” of enforcing any foreign court order against the family if the deal is scrapped.