Supreme Court Blocks Purdue Pharma Settlement, Impacting Opioid Victim Compensation

The Supreme Court’s ruling voided Purdue Pharma’s bankruptcy plan, rejecting the Sackler family’s legal protections.

In a landmark decision back in June, the Supreme Court overturned a high-profile bankruptcy settlement involving Purdue Pharma, the maker of OxyContin. The crux of the decision lies in the settlement’s inclusion of legal protections for the Sackler family, the controlling force behind Purdue Pharma, which the court deemed inappropriate. This landmark ruling threatens billions of dollars that had been secured for opioid victims, casting uncertainty on the compensation and resolution efforts long fought for by affected individuals and communities. The 5-4 decision will undoubtedly reshape the landscape of bankruptcy settlements and the pursuit of justice for the countless victims of opioid addiction.

Justice Neil Gorsuch, writing for the majority, emphasized that the Sacklers could have declared personal bankruptcy but instead chose to leverage Purdue Pharma’s bankruptcy proceedings to resolve their pending legal claims. He criticized this maneuver, stating, “They obtained all this without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors.” Gorsuch’s opinion, joined by three conservative colleagues and liberal Justice Ketanji Brown Jackson, firmly stated, “Nothing in present law authorizes the Sackler discharge.”

Justice Brett Kavanaugh, in a strong dissent joined by Chief Justice John Roberts and liberal Justices Elena Kagan and Sonia Sotomayor, argued that the decision was detrimental to the victims. “Today’s decision is wrong on the law and devastating to the more than 100,000 opioid victims and their families,” Kavanaugh wrote, highlighting the profound impact on those who were depending on the substantial monetary recovery secured through the settlement. The dissent underscored the prolonged litigation and struggle victims endured to achieve this settlement.

Purdue Pharma expressed disappointment with the ruling, describing it as “heart-crushing.” In its statement, the company mentioned the broad support the settlement had received from various creditors, including states, local governments, personal injury victims, schools, and hospitals. Despite the setback, Purdue Pharma remains committed to negotiating a new settlement that would allocate billions to address the opioid crisis and support the company’s emergence from bankruptcy.

“Today’s ruling is heart-crushing because it invalidates a settlement supported by nearly all of our creditors – including states, local governments, personal injury victims, schools, and hospitals – that would have delivered billions of dollars for victim compensation, opioid crisis abatement, and overdose rescue and addiction treatment medicines,” the statement read. Purdue Pharma vowed to continue working towards a resolution that aligns with its goals of opioid abatement and transforming the company into a force for good.

Members of the Sackler family reiterated their hope for a resolution that would provide substantial resources to combat the opioid crisis. They maintained confidence in prevailing in any future litigation but emphasized their belief in a swift, negotiated agreement. “We continue to believe that a swift negotiated agreement to provide billions of dollars for people and communities in need is the best way forward,” the family stated. Jayne Conroy, a lawyer representing some of the plaintiffs, warned that if a new deal is not reached, various lawsuits against the Sacklers that were previously put on hold would resume.

The original settlement plan, which the Supreme Court put on hold last year, involved the Sackler family agreeing to pay approximately $6 billion to settle opioid-related claims. This payment was contingent on receiving a complete release from any future liability. The settlement included not only the Sacklers’ contribution but also assets held by Purdue, aiming to repurpose the company towards opioid abatement efforts. The plan garnered support from numerous plaintiffs’ groups representing cities, counties, municipalities, and individuals affected by the opioid epidemic.

Despite broad support, the settlement faced significant opposition from various quarters, including the U.S. government trustee William Harrington, Canadian municipalities, and Indigenous First Nations. Harrington argued that releasing additional claims against the Sacklers would be unfair to potential future plaintiffs, a stance that found resonance in the Supreme Court’s majority opinion. Critics also pointed to the complexities and potential difficulties in enforcing foreign court judgments against the Sackler family, many of whom are based overseas.

The Supreme Court’s decision has complicated the path to resolution for opioid victims and communities. However, there remains a collective agreement among the involved parties to navigate this challenging landscape and secure a new settlement. The decision highlights the complexities of balancing legal precedents with the urgent need for justice and compensation for the victims. As the legal battles continue, the focus must remain on finding a resolution that addresses the immense harm caused by the opioid epidemic and holds those responsible accountable.