WASHINGTON – The Supreme Court on Thursday blew up the massive bankruptcy reorganization of opioid maker Purdue Pharma, ruling that the deal improperly included legal protections for the Sackler family, meaning billions of dollars secured for victims. now they are threatened.
The court, in a 5-4 vote along non-ideological lines, ruled that the bankruptcy court did not have the authority to release members of the Sackler family from lawsuits filed by opioid victims.
As part of the settlement, the family, which controlled the company, had agreed to pay $6 billion that could be used to settle opioid-related claims, but only in exchange for a complete release from any liability in future cases.
Justice Neil Gorsuch, writing for the majority, said the Sacklers could have filed for bankruptcy but instead attempted to take advantage of the company's own bankruptcy proceedings in an effort to resolve pending legal claims.
“They obtained all of this without obtaining the consent of those affected or putting anything close to their total assets on the table with their creditors,” Gorsuch wrote.
“Nothing in current law authorizes Sackler's release,” he added.
Justice Brett Kavanaugh dissented, citing the decision's impact on those who would benefit from the agreement.
“Today's decision is legally flawed and devastating for the more than 100,000 opioid victims and their families,” he wrote.
As a result of the ruling, “opioid victims are now deprived of the substantial monetary recovery they long fought for and finally obtained after years of litigation,” he added.
The ruling means that settlement talks would have to start again, with the possibility that no deal could be reached.
During oral arguments in December, a lawyer representing some of the victims told the justices that there was “no viable path” for the victims to receive compensation if the agreement that included the Sackler settlement was not upheld.
The case brought more attention to the lingering effects of the opioid crisis and the role Sackler-owned Purdue played in creating it.
As part of the proposed settlement, which the Supreme Court put on hold last year when it took up the case, the Sackler family had agreed to pay about $6 billion that could be used to settle opioid-related lawsuits, but only in exchange for a full release. from any liability in future cases.
Aden McCracken Tyrone of Pennsylvania holds a sign honoring his parents in front of the United States Supreme Court on December 4, 2023 in Washington, DC.
Michael A. McCoy | The Washington Post | fake images
The deal, including Purdue's assets, would be worth much more, and the reorganized company will be dedicated to addressing the impact of opioid abuse.
No Sackler has had a stake in the company since 2019.
Purdue made billions from OxyContin, a widely available painkiller that fueled the opioid epidemic. The company's tactics to aggressively market the drug came under increasing scrutiny as thousands of people died from opioid overdoses.
When the company's fortunes plummeted, it sought bankruptcy protection, but members of the Sackler family did not. Instead, they negotiated a separate settlement with Purdue and plaintiffs in pending lawsuits that would allow the company to reinvent itself to address the opioid crisis.
The New York-based U.S. Court of Appeals for the Second Circuit last year approved the plan over the objection of William Harrington, the U.S. government trustee overseeing the bankruptcy. The Department of Justice's trustee program is intended to ensure that the bankruptcy system operates as required by law.
Harrington opposed releasing additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.
Purdue criticized Harrington's role, saying groups representing thousands of plaintiffs have signed on to the settlement, which could not have happened without the Sackler family's contribution.
At the Supreme Court, several groups representing plaintiffs sided with Purdue, including one that includes 1,300 cities, counties and other municipalities and another that represents 60,000 people affected by the opioid epidemic.
Canadian municipalities and Indigenous First Nations were among those who opposed the deal.
Purdue thrived under the leadership of brothers Mortimer and Raymond Sackler, who died in 2010 and 2017, respectively. The family reaped billions and spent lavishly, including on ostentatious charitable projects.
The family told the Supreme Court that it continues to support the agreement.
In a brief filed on behalf of Mortimer Sackler's relatives, most of whom reside abroad, lawyers warned of “significant litigation costs and risks” in seeking to enforce any foreign court judgment against the family if the agreement was rejected.
