WASHINGTON — The Supreme Court on Thursday invalidated opioid maker Purdue Pharma's massive bankruptcy reorganization, finding that the settlement improperly included legal protections for the Sackler family, meaning billions of dollars secured for victims are now at risk.
The court ruled, by a 5-4 vote on non-ideological grounds, that the bankruptcy court did not have the authority to release Sackler family members from legal claims brought by opioid victims.
As part of the deal, the family, which controls the company, agreed to pay $6 billion that could be used to settle opioid-related claims, but only in exchange for a complete 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 take advantage of the company's bankruptcy proceedings in an attempt to resolve outstanding legal claims.
“They obtained all of this without obtaining the consent of those affected or putting anything approaching the totality of their assets on the table for their creditors,” Gorsuch wrote.
He added: “There is nothing in the current law that allows the dismissal of the Sacklers.”
Justice Brett Kavanaugh dissented, citing the decision's impact on those who would benefit from the settlement.
“Today’s decision is wrong as a matter of law and devastating to more than 100,000 opioid victims and their families,” he wrote.
He added that as a result of this ruling, “opioid victims are now deprived of the significant monetary recovery they have long fought for and finally received after years of litigation.”
The ruling means that settlement talks must begin again, with the possibility of no agreement being reached.
During oral arguments in December, a lawyer representing some of the victims told the justices there was “no viable path” to damages if the deal including the Sackler agreement was not upheld.
The case drew more attention to the lingering effects of the opioid crisis and the role the Sackler-owned Purdue played in creating it.
As part of the proposed deal, which the Supreme Court blocked last year when it heard the case, the Sacklers agreed to pay about $6 billion that could be used to settle opioid-related claims, but only in exchange for compensation. Complete exemption from any liability in future cases.
Aden McCracken Tyrone of Pennsylvania holds a sign in honor of his parents outside the U.S. Supreme Court on December 4, 2023 in Washington, D.C.
Michael A. McCoy | The Washington Post | Getty Images
The settlement, including assets held by Purdue, will be of much greater value, as the reorganized company is set to dedicate itself to addressing the impact of opioid abuse.
None of the Sacklers have had any involvement in the company since 2019.
Purdue made billions from OxyContin, a widely available painkiller that fueled the opioid epidemic. The company's tactics for aggressively marketing the drug have come under increasing scrutiny as thousands of people have died from opioid overdoses.
As the company’s fortunes declined, it sought bankruptcy protection, but the Sacklers did not. Instead, they negotiated a separate deal with Purdue and the plaintiffs in the pending lawsuits that would allow the company to reinvent itself to address the opioid crisis.
The New York-based US Court of Appeals for the Second Circuit last year approved the plan over the objection of William Harrington, the US government trustee overseeing bankruptcy. The Department of Justice's conservatorship program aims to ensure that the bankruptcy system operates as required by law.
Harrington objected to the release of additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.
Bourdeaux criticized Harrington's role, saying groups representing thousands of plaintiffs signed on to the settlement, which would not have happened without the Sacklers' input.
At the Supreme Court, various groups representing the plaintiffs supported Purdue, including a group of 1,300 other cities, counties and municipalities and others representing 60,000 people affected by the opioid epidemic.
Canadian municipalities and Indigenous First Nations were among those who objected to the settlement.
Purdue thrived under the leadership of brothers Mortimer and Raymond Sackler, who died in 2010 and 2017, respectively. The family earned billions of dollars and spent lavishly, including on huge charitable projects.
The family told the Supreme Court they continue to support the settlement.
In a brief filed on behalf of Mortimer Sackler's relatives, most of whom live abroad, lawyers warned of the “significant costs and litigation risks” of seeking to enforce any foreign court judgments against the family if the settlement is overturned.
