OxyContin (left), the opioid at the center of the Purdue Pharma litigation. (Photo by Darren McCollester/Getty Images), (right) Justice Brett Kavanaugh answers questions during judicial conference in May. (AP Photo/Eric Gay)
As the Supreme Court decided 5-4 on Thursday that a settlement insulating members of the Sackler family from future litigation over Purdue Pharma’s role in the U.S. opioid crisis without “consent of affected claimants” was not allowed under bankruptcy law, Justice Brett Kavanaugh “emphatically” unleashed a dissent saying the “unfortunate and destabilizing decision” upended years of fighting in the courts for “hard-won” billions of dollars and will only harm victims and their families more.
Purdue Pharma, the OxyContin maker that agreed to dissolve under the settlement approved in the course of bankruptcy proceedings, had done so under the assurance that “vast numbers of existing and potential claims against” Sackler family members would be off the table, including claims of negligence and willful misconduct, and claims that the Sacklers “fraudulently transferr[ed] funds from Purdue in the years preceding its bankruptcy” to divert billions of dollars to “overseas trusts and family-owned companies.”
Sackler family members own Purdue, filled top roles in the company, and some “dominated the board of directors” when in the 1990s and 2000s the powerful opioid was marketed as “less addictive” and “less subject to abuse . . . than other pain medications,” as Justice Neil Gorsuch recounted it on behalf of a Supreme Court majority including Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson.
The majority held that debtor Purdue’s court-approved Chapter 11 bankruptcy reorganization plan to immunize “nondebtor” Sackler family members from future litigation “without the consent of affected claimants” was not appropriate.
“From the court overseeing Purdue’s bankruptcy, they [the Sacklers] sought and won an order extinguishing vast numbers of existing and potential claims against them,” Gorsuch explained. “They obtained all this without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors.”
“The question we face is whether the bankruptcy code authorizes a court to issue an order like that,” he added.
While the Gorsuch-led majority answered that question in the negative, Kavanaugh’s minority, joined by Chief Justice John Roberts and Justices Sonia Sotomayor and Elena Kagan, harshly criticized the ruling as flat-out “wrong on the law and devastating for more than 100,000 opioid victims and their families.”
“The Court’s decision rewrites the text of the U.S. Bankruptcy Code and restricts the long-established authority of bankruptcy courts to fashion fair and equitable relief for mass-tort victims,” Kavanaugh began. “As a result, opioid victims are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation.”
The “respectfully but emphatically” written dissent said that the complex and serious issues at play were not only appropriately handled by U.S. Bankruptcy Judge Robert Drain, but also “admirably” so under the circumstances.
The court had “approved a bankruptcy reorganization plan for Purdue Pharma that built up the estate to approximately $7 billion by securing a $5.5 to $6 billion settlement payment from the Sacklers, who were officers and directors of Purdue,” “guaranteed substantial and equitable compensation to Purdue’s many victims and creditors, including more than 100,000 individual opioid victims,” and “provided significant funding for thousands of state and local governments to prevent and treat opioid addiction,” Kavanaugh said.
All of that has been undone, to Kavanaugh’s dismay, even though a “rare consensus” was reached on the settlement by attorneys general of all 50 states in America in the face of lingering criticism that the resolution didn’t go far enough to hold the Sacklers accountable.
Kavanaugh suggested that in the absence of an agreement insulating the Sacklers from lawsuits, “there is no good reason to believe that any of the victims or state or local governments will ever recover anything,” and because of that, the court’s majority has opened the door to “too much harm for too many people.”
The dissenters called on Congress to act and stem the tide of “chaos” and suffering that will surely follow.
“Opioid victims and other future victims of mass torts will suffer greatly in the wake of today’s unfortunate and destabilizing decision. Only Congress can fix the chaos that will now ensue,” Kavanaugh wrote. “The Court’s decision will lead to too much harm for too many people for Congress to sit by idly without at least carefully studying the issue.”
Family members of Mortimer Sackler and Raymond Sackler, the since–deceased physician brothers and billionaire philanthropists whose heirs own Purdue Pharma, said in a statement to Law&Crime that in the wake of the Supreme Court’s ruling there is still some hope that “a swift negotiated agreement” may be reached.
“The Sackler families remain hopeful about reaching a resolution that provides substantial resources to help combat a complex public health crisis. The unfortunate reality is that the alternative is costly and chaotic legal proceedings in courtrooms across the country,” the statement said. “While we are confident that we would prevail in any future litigation given the profound misrepresentations about our families and the opioid crisis, 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.”
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