Supreme Court blocks Sackler family immunity deal, will hear arguments in December

Key takeaways:

• A court ruling previously protected the Sackler family from opioid lawsuits in exchange for a $6 billion contribution to Purdue Pharma’s bankruptcy plan.
• The Supreme Court blocked that deal Thursday.

The Supreme Court blocked Purdue Pharma’s bankruptcy proceedings Thursday in a decision that also halts the deal granting immunity to the Sackler family.

The Sackler family owned and operated Purdue Pharma, LLP, which manufactured OxyContin and marketed the drug with a misleading claim that the drug was less addictive. Purdue Pharma pleaded guilty to federal criminal charges for its role in the opioid crisis in 2020, and the Sacklers agreed to settle mass tort lawsuits in exchange for the company filing for bankruptcy and the family contributing roughly $6 billion to that bankruptcy.

The bankruptcy plan was overturned in a December 2021 ruling. Then, on May 30, a New York court of appeals reversed the December 2021 decision and ruled that members of the Sackler family will be protected from lawsuits over their role in the opioid epidemic.

Now, the Supreme Court has paused the settlement, agreeing to take the case and hear arguments in the December 2023 argument session, according to reporting by Reuters. The new Supreme Court term starts in October.

At issue, according to the Supreme Court, is “whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.”

Purdue Pharma said in a statement it was disappointed that the U.S. Trustee has been able to "single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country and overdose rescue medicines."

The company added that it is “confident in the legality of our nearly universally supported plan of reorganization, and optimistic that the Supreme Court will agree.”

References:

• Supreme Court decision. https://s3.documentcloud.org/documents/23904925/supreme-court-order-on-purdue-pharma.pdf. Published Aug. 10, 2023. Accessed Aug. 14, 2023.
• US Supreme Court halts Purdue Pharma bankruptcy settlement pending review. https://www.reuters.com/legal/us-supreme-court-scrutinize-purdue-pharma-bankruptcy-settlement-2023-08-10/. Published Aug. 11, 2023. Accessed Aug. 14, 2023.