Supreme Court Halts $6B Purdue Pharma Settlement, Big Jolt For Sackler Family As Immunity Rejected

The Supreme Court has invalidated the bankruptcy reorganization plan of opioid manufacturer Purdue Pharma.

The decision centers on the controversial legal protections granted to the Sackler family, which now jeopardizes billions of dollars secured for victims of the opioid crisis.

Key Decision Details

In a close 5-4 non-ideological vote, the Supreme Court ruled that the bankruptcy court lacked the authority to release the Sackler family members from legal claims made by opioid victims.

This ruling comes as a significant setback for the proposed Purdue Pharma settlement, which included a substantial financial contribution from the Sackler family contingent on their immunity from future lawsuits.

Justice Neil Gorsuch, writing for the majority, emphasized that the Sackler family could have declared bankruptcy independently but chose to leverage the Purdue Pharma’s bankruptcy proceedings instead.

He noted, “They obtained all this without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors.”

Implications of the Ruling

The rejected settlement involved the Sackler family agreeing to pay $6 billion, aimed at settling opioid-related claims.

Justice Brett Kavanaugh, in his dissent, highlighted the adverse impact of the ruling on victims and their families.

He stated, “Today’s decision is wrong on the law and devastating to the more than 100,000 opioid victims and their families.” The decision, he warned, deprives victims of the substantial monetary recovery they had fought for over many years.

This ruling means that settlement discussions must restart, with the risk of failing to reach a new agreement.

During oral arguments in December, a lawyer for some victims expressed that there was “no viable path” to compensation if the Sackler agreement was not upheld.

Background on Purdue Pharma and the Sackler Family

Purdue Pharma, known for its widely available painkiller OxyContin, has been at the center of the opioid epidemic, which has led to thousands of overdose deaths.

Purdue Pharma’s aggressive marketing tactics have been heavily scrutinized. As Purdue’s financial situation deteriorated, it sought bankruptcy protection, but the Sackler family members did not follow suit.

Instead, they negotiated a separate deal involving the $6 billion payment, which required their release from future liabilities.

Legal and Financial Challenges Ahead

The proposed settlement, now invalidated, had been approved by the New York-based 2nd Circuit U.S. Court of Appeals last year.

This approval came despite objections from William Harrington, a U.S. government trustee overseeing the bankruptcy.

Harrington argued that releasing the Sacklers from additional claims would be unfair to potential future plaintiffs.

Various groups representing plaintiffs supported the settlement, including a coalition of 1,300 cities, counties, and other municipalities, and another group representing 60,000 individuals affected by the opioid crisis.

Despite this support, the Supreme Court’s ruling mandates a reassessment of the settlement terms.

International and Indigenous Objections

Canadian municipalities and Indigenous First Nations were among the entities that objected to the settlement, highlighting the broader impact of the opioid crisis beyond U.S. borders.

Lawyers representing the relatives of Mortimer Sackler, who are mostly based overseas, warned of significant litigation costs and challenges in enforcing any foreign court judgments against the family if the settlement was nullified.

The Path Forward

Purdue Pharma flourished under the leadership of brothers Mortimer and Raymond Sackler, who passed away in 2010 and 2017, respectively.

The family amassed billions and funded numerous charitable projects. Despite the Supreme Court’s decision, the Sackler family has expressed continued support for the settlement.

The ruling now sends all parties back to the negotiating table, facing the daunting task of crafting a new agreement that addresses the Supreme Court’s concerns while attempting to secure the long-fought-for compensation for opioid victims.

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