WASHINGTON — The Supreme Court on Thursday blocked a massive bankruptcy reorganization of opioid maker Purdue Pharma, finding that the settlement improperly included legal protections for the Sackler family, meaning it provided victims Billions of dollars are now at stake.
In a non-ideological 5-4 vote, the court ruled that the bankruptcy court did not have the authority to exempt members of the Sackler family from legal claims brought by opioid victims.
As part of the deal, the family that controls the company agreed to pay $6 billion that can be used to settle opioid-related claims, but only in exchange for a full release from any liability in future cases.
Justice Neil Gorsuch, writing for the majority, said the Sacklers could have declared bankruptcy but instead sought to use the company’s own bankruptcy proceedings to resolve pending legal claims.
“They obtained all this without the consent of those affected and without putting anything approaching their total assets on the table with creditors,” Gorsuch wrote.
“There is nothing in current law that authorizes Sackler’s firing,” he added.
Justice Brett Kavanaugh dissented, citing the impact of the decision on those who would benefit from the settlement.
“Today’s decision is legally wrong and devastating to the more than 100,000 opioid victims and their families,” he wrote.
He added that as a result of the ruling, “opioid victims are now deprived of the substantial monetary damages they long fought for and ultimately received after years of litigation.”
The ruling means settlement talks must begin again and there is a risk that no agreement can be reached.
During oral arguments in December, attorneys representing some of the victims told the judge that if the agreements, including the Sackler agreement, were not upheld, there would be “no feasible path” for victims to obtain compensation.
The case further draws attention to the ongoing impact of the incident. opioid crisis and the role Sackler-owned Purdue University played in creating it.
As part of the proposed deal, the Supreme Court put on hold When the case was taken up last year, the Sacklers agreed to pay about $6 billion, which could be used to settle opioid-related claims, but only in exchange for being completely relieved of any liability in future cases.
Aden McCracken Tyrone of Pennsylvania holds a sign honoring his parents outside the U.S. Supreme Court on December 4, 2023 in Washington, DC.
Michael A. McCoy | The Washington Post | Getty Images
The value of the settlement, which includes assets held by Purdue, will increase significantly and the reorganized company will work to address the impact of opioid abuse.
No one from the Sackler family has been involved with the company since 2019.
Purdue University has made billions of dollars from OxyContin, a widely used painkiller that fueled the opioid epidemic. As thousands of people die from opioid overdoses, the company’s strategy of aggressively marketing the drug has come under increasing scrutiny.
As the company’s fortunes plummeted, it sought bankruptcy protection, but members of the Sackler family refused to do so. Instead, they struck a separate agreement with Purdue and plaintiffs in pending litigation that will allow the company to reinvent itself to address the opioid crisis.
The New York-based 2nd U.S. Circuit Court of Appeals approved the plan last year over the objections of William Harrington, the U.S. government trustee overseeing the bankruptcy. The Ministry of Justice’s Trusteeship Scheme is designed to ensure that the insolvency system operates in accordance with legal requirements.
Harrington opposed the release of additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.
Purdue has criticized Harrington’s role, saying groups representing thousands of plaintiffs have signed on to the settlement, which would not have happened without the Sackler family’s donation.
Purdue was supported by various groups representing the plaintiffs at the Supreme Court, including one including 1,300 cities, counties and other municipalities and another representing 60,000 people affected by the opioid epidemic.
Cities and First Nations across Canada are opposed to this solution.
Purdue thrived under the leadership of brothers Mortimer and Raymond Sackler, who died in 2010 and 2017, respectively. The family amassed a multi-billion dollar fortune and spent it lavishly, including on Compelling charity projects.
The family told the Supreme Court they continue to support the settlement.
in a Briefings submitted by representatives Lawyers for Mortimer Sackler, whose relatives mostly live overseas, have warned that seeking to enforce any foreign court judgments against the family would face “huge litigation” if the settlement is rejected costs and risks”.
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