Supreme Court rules on Thursday that members of the wealthy Sackler family cannot be shielded from lawsuits over their role in the opioid crisis as part of a bankruptcy settlement that directs billions of dollars to victims and families. family.
In a 5 to 4 decision, written by Justice Neil M. Gorsuch, a majority of the justices held that the federal bankruptcy code does not allow liability protection for third parties in bankruptcy agreements. product. Justice Gorsuch was joined by Justices Clarence Thomas, Samuel A. Alito Jr., Amy Coney Barrett and Ketanji Brown Jackson.
In a strong dissent, Justice Brett M. Kavanaugh wrote that “this decision is contrary to the law and harms more than 100,000 opioid victims and their families.” He was joined by Chief Justice John G. Roberts Jr. and Justices Sonia Sotomayor and Elena Kagan.
The decision jeopardizes a carefully negotiated agreement that Purdue and the Sackler family reached, in which family members promised to give up to $6 billion to states, locally, tribally, and individually to address the devastating public health crisis.
All of it is intended to ensure that members of the Sackler family, who control Purdue Pharma, the maker of the prescription painkiller OxyContin, will no longer be subject to a condition of the deal that has drawn significant criticism: immunity from liability in opioid-related lawsuits, even if they have not declared bankruptcy.
The U.S. Trust Program, an oversight office of the Justice Department, asked the Supreme Court to intervene. The Office said the liability shield, which binds potential claimants without their consent and provides broad legal protections for Dismissers, is abuse of the bankruptcy system to address “genuine financial hardship.”
The decision has broader implications for other bankruptcy settlements involving mass injury claims, including the case between the Boy Scouts of America and sexual abuse victims. The liability shield on which the Purdue agreement relies is becoming increasingly common in such settlements.
The deal, which would have required the Sacklers to pay up to $6 billion over 18 years, with nearly $4.5 billion due in the first nine years, underscores the difficult balancing act at play: ensuring said that the urgently sought money would go to victims, states and tribes, among others, despite broader concerns about the potential to free the sackers from further accountability about the opioid crisis.
Purdue Pharma and Sackler have long been seen as helping spark the crisis because of the popularity of the company’s prescription painkiller, OxyContin.
By 2007, as opioid overdose deaths surged, Purdue and three of its top executives pleaded guilty to federal criminal charges and were fined more than $600 million for misleading regulators, doctors and patients about the drug’s potential for abuse.
The first opioid lawsuits were filed against Purdue Pharma around 2014, triggering a flurry of litigation and increased scrutiny of the roles of members of the Sackler family, which has a vast fortune. giant has helped them become major donors to museums, medical schools and academic institutions.
In 2019, Purdue filed for bankruptcy restructuring, eventually halting the lawsuits. At the time, the Sacklers faced about 400 related complaints.
Movement has been controversial from start.
Below a deal approved by a bankruptcy judge In 2021, Purdue Pharma dissolved; the company will spend billions on the opioid crisis, ending thousands of related claims; and the Sacklers will be guaranteed protection from civil liability.
A federal district judge then overturned agreement, saying the plan erred in providing such protections to members of the Sackler family.
But after Sackler increased his offer to about $1.73 billion, many opponents of the plan signed on.
In May 2023, the federal appeals panel approved the latest version of the agreement. Judge Eunice C. Lee of the U.S. Court of Appeals for the Second Circuit, who wrote the decision, acknowledged the principles at stake.
“Bankruptcy is inherently a phenomenon of competing interests, compromise, and imperfect results,” Judge Lee wrote. “Because of these defining characteristics, complete satisfaction of all that is owed – whether in money or justice – rarely occurs.”
In July, the United States Trust Program petitioned the Supreme Court to review the agreement. Plan, it says in it applicationconstitutes “an abuse of the bankruptcy system.”
Purdue Pharma contends that a ruling against it would cause significant damages. They said that if the court rejects the deal, it “would harm victims and unnecessarily delay the distribution of billions of dollars to alleviate the opioid crisis.”
In August, the justices paused the settlement and agreed to hear the case.
The justices’ questioning in December reflected the tension between the consequences for victims, states, tribes and local governments if the settlement is not resolved and their concerns about allowing Sackler to be released from future lawsuits.
Justice Brett M. Kavanaugh focused on the complexity of the issue, asking the government why it is pushing to end a tactic that has been approved for “30 years in bankruptcy court.”
From the perspective of victims and their families, he said, “the federal government, which has no stake in this at all,” has challenged the deal, jeopardizing long-awaited payments to states to combat the crisis as well as money for victims and their families. Instead of focusing on a practical solution to securing funding to combat the opioid epidemic, he added, the government appears intent on promoting “this theoretical idea that they’re going to be able to recover money from the sacklers themselves.”
Justice Elena Kagan joined him, pressing the deputy solicitor general, Curtis E. Gannon, on why the Justice Department sought to undo the agreement despite the number of plaintiffs who signed on.
“It’s overwhelming the support for this deal, and even those who don’t love the Sackler family, even those who think the Sackler family are the worst people on Earth,” Justice Kagan said.
Jan Hoffman Report contributions.
