Supreme Court blocks Sackler family immunity, dismantles Purdue Pharma bankruptcy plan
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Key takeaways:
- The Supreme Court shut down a deal that would have granted immunity to the Sackler family from opioid lawsuits.
- The deal would have also provided about $6 billion to states and victims of the opioid crisis.
The U.S. Supreme Court ruled 5-4 on Thursday that members of the Sackler family cannot be protected from future lawsuits for their roles in the opioid epidemic.
The ruling dismantles the Purdue Pharma bankruptcy settlement, which would have given around $6 billion to state and local governments and more than 100,000 victims and their families.
In the Harrington vs. Purdue Pharma decision, delivered by Justice Neil M. Gorsuch, the majority of justices found that a federal bankruptcy code does not authorize a court to confirm a bankruptcy plan that “seeks to discharge claims against a nondebtor without the consent of affected claimants.”
“The Sacklers have not filed for bankruptcy and have not placed virtually all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge,” Gorsuch wrote. “Our only proper task is to interpret and apply the law as we find it; and nothing in present law authorizes the Sackler discharge.”
The Sackler family owned and operated Purdue Pharma, LLP, which manufactured OxyContin and marketed the drug with a misleading claim that it was less addictive.
According to the U.S. Department of Justice, nearly 1 million Americans aged 12 years and older used OxyContin at least once nonmedically in their lifetime.
The Sackler family profited around $12 to $13 billion from the drug, according to reporting from the Wall Street Journal.
Purdue Pharma declared bankruptcy in 2019 and pleaded guilty to federal criminal charges for its role in the opioid crisis in 2020. The Sacklers agreed to settle mass tort lawsuits in exchange for the company filing for bankruptcy and the family giving around $6 billion to that bankruptcy.
The bankruptcy plan was overturned in December 2021, but a New York court of appeals reversed that decision in May 2023, ruling that the Sackler family would be granted protection from lawsuits.
The Supreme Court put a hold on the Purdue Pharma’s bankruptcy proceedings in August, again halting immunity to the Sackler family.
In a dissenting opinion, Justice Brett Kavanaugh, joined by Chief Justice John G. Roberts Jr. and Justices Sonia Sotomayor and Elena Kagan, wrote that opioid victims “are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation.”
“As I see it, today’s decision makes little sense legally, practically, or economically,” Kavanaugh wrote. “Now the opioid victims and creditors are left holding the bag, with no clear path forward.”
References:
- Harrington, United States trustee, region 2 vs. Purdue Pharma L.P. et al. https://www.supremecourt.gov/opinions/23pdf/23-124_8nk0.pdf. Accessed June 30, 2024.
- OxyContin fast facts. https://www.justice.gov/archive/ndic/pubs6/6025/6025p.pdf. Accessed June 26, 2024.
- Purdue Pharma filed for bankruptcy. What does it mean for lawsuits against the opioid manufacturer? https://www.statnews.com/2019/09/16/if-purdue-pharma-declares-bankruptcy-what-would-it-mean-for-lawsuits-against-the-opioid-manufacturer/. Published Sept. 16, 2019. Accessed June 27, 2024.
- Sacklers received as much as $13 Billion in profits from Purdue Pharma. https://www.wsj.com/articles/sacklers-received-12-billion-to-13-billion-in-profits-from-oxycontin-maker-purdue-pharma-11570221797?mod=breakingnews. Published Oct. 4, 2019. Accessed June 27, 2024.
Perspective
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The ruling is a mixed bag. Sadly, the states will lose billions of dollars that they relied on to provide care and treatment for opioid users. But overall, I think there is a legal and moral correctness to the court's denial of lifelong immunity from liability. The Sackler family does not deserve that kind of protection. What that means is they can carry on living a life of luxury, without filing for bankruptcy and worrying about future lawsuits. That seems morally wrong to me, and I am pleased that the Supreme Court has ruled that they cannot be shielded from responsibility.
The ruling will complicate many settlement agreements. The idea of immunity from liability has become more popular in settlement agreements. But settlements can, and should, proceed without wholesale immunity clauses that hurt the public.
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Harrington, United States trustee, region 2 vs. Purdue Pharma L.P. et al. https://www.supremecourt.gov/opinions/23pdf/23-124_8nk0.pdf. Accessed June 30, 2024.
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