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US Supreme Court blocks OxyContin maker Purdue Pharma’s settlement shielding owners from lawsuits


Conservative Justice Neil Gorsuch wrote the ruling, which was joined by fellow conservative Justices Clarence Thomas, Samuel Alito and Amy Coney Barrett, as well as liberal Justice Ketanji Brown Jackson.

“The Sacklers have not filed for bankruptcy and have not placed virtually all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge. They hope to win a judicial order releasing pending claims against them brought by opioid victims. They seek an injunction ‘permanently and forever’ foreclosing similar suits in the future,” Gorsuch wrote. “And they seek all this without the consent of those affected.”

Justice Brett Kavanaugh wrote a dissenting opinion that was joined by fellow conservative Chief Justice John Roberts, and liberal Justices Sonia Sotomayor and Elena Kagan.

Purdue filed for Chapter 11 bankruptcy in 2019 to address its debts, nearly all of which stemmed from thousands of lawsuits alleging that OxyContin helped kick-start an opioid epidemic that has caused more than half a million US overdose deaths over two decades.

The US Supreme Court has rejected a settlement for OxyContin maker Purdue Pharma, which sought to protect its owners from lawsuits. Photo: AFP

At issue in the case was whether US bankruptcy law lets Purdue’s restructuring include legal protections for the members of the Sackler family, who have not filed for personal bankruptcy. These so-called “non-debtor releases” originally arose in the context of asbestos litigation, but their use has been expanded by companies looking to use such protections as a bargaining chip.

The Stamford, Connecticut-based company estimates that its bankruptcy settlement, approved by a US bankruptcy judge in 2021, would provide US$10 billion in value to its creditors, including state and local governments, individual victims of addiction, hospitals and others who have sued the company.

The Biden administration and eight states challenged the settlement. All the states dropped their opposition after the Sacklers agreed to contribute more to the settlement fund, but the US Trustee – the Justice Department’s bankruptcy watchdog – and some individual opioid plaintiffs maintained their opposition.

Several state attorneys general issued statements praising the court’s ruling, with some saying that it would bring Purdue Pharma back to the negotiating table.

“Purdue and the Sacklers must pay so we can save lives and help people live free of addiction,” said Josh Stein, attorney general of North Carolina. “If they won’t pay up, I’ll see them in court.”

A group comprising more than 60,000 people who have filed personal injury claims stemming from their exposure to Purdue opioid products told the Supreme Court they support the settlement, including legal immunity for members of the Sackler family.

In upholding the settlement in May 2023, the Manhattan-based 2nd US Circuit of Appeals concluded that federal bankruptcy law permits legal protections for non-bankrupt parties like the Sacklers in extraordinary circumstances. It ruled that the legal claims against Purdue were inextricably linked to claims against its owners, and that allowing lawsuits to continue targeting the Sacklers would undermine Purdue’s efforts to reach a bankruptcy settlement.

The US Supreme Court rejected Purdue Pharma’s US$6 billion opioids settlement, shielding the Sackler family that controlled the drug maker from future litigation. Photo: AFP

The Supreme Court in August 2023 paused bankruptcy proceedings concerning Purdue and its affiliates when they agreed to take up the administration’s appeal of the 2nd Circuit’s ruling.

During arguments in December, a Justice Department lawyer said the Sackler family members withdrew billions from Purdue before agreeing to contribute up to US$6 billion to the opioid settlement, and argued that the deal effectively “permits the Sacklers to decide how much they’re going to contribute”.

Lawsuits against Purdue and Sackler family members accused them of fuelling the opioid epidemic through deceptive marketing of its pain medication. The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020.

Members of the Sackler family have denied wrongdoing but expressed regret that OxyContin “unexpectedly became part of an opioid crisis”. They said in May 2023 that the bankruptcy settlement would provide “substantial resources for people and communities in need”.

Purdue has accused the US Trustee of managing to “single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country and overdose rescue medicines”.



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