Supreme Court Temporarily Blocks Bankruptcy Deal for Purdue Pharma That Would Have Shielded Sackler Family
The Supreme Court has temporarily blocked a bankruptcy deal for Purdue Pharma, the maker of OxyContin, that sought to shield members of the Sackler family from additional civil lawsuits related to the opioid epidemic. The deal would have capped the Sacklers’ personal liability at $6 billion and granted them full immunity from all civil legal disputes. The decision to block the deal is likely to delay payments to the thousands of plaintiffs who have sued the Sacklers and Purdue.
The temporary block of the deal comes after objections from the Justice Department, which argued that the Sackler family was taking advantage of legal protections meant for debtors in financial distress, not billionaires. The Supreme Court has agreed to hear arguments in December to determine whether the agreement is authorized by the U.S. bankruptcy code. The ruling in this case could have far-reaching implications for similar bankruptcy deals involving mass tort cases.
The case involving Purdue Pharma and the Sackler family raises questions about the use of bankruptcy courts to resolve lawsuits related to mass injuries. These lawsuits typically involve third parties, like the Sacklers, who are shielded from liability without having to declare bankruptcy themselves. The Supreme Court’s decision to hear the case could impact similar lawsuits involving companies like Johnson & Johnson, which has sought bankruptcy court protection in order to resolve asbestos-related claims related to its talcum-based baby powder.
The legal battle over compensation for those impacted by the opioid crisis has been ongoing for years. In May, the U.S. Court of Appeals for the Second Circuit approved the settlement plan, which extended liability protection to the company’s owners, including the Sackler family. However, the plan faced objections from the government, which argued that it sets a troubling precedent and constitutes an abuse of the bankruptcy system.
While the Supreme Court’s decision to hear the case adds to the uncertainty surrounding the Purdue Pharma settlement plan, victims’ groups and entities that were expecting to receive funds to combat the opioid crisis are expressing frustration. They fear that further delays will hamper payments to those who have been waiting for over two years for their share of the settlement. Representatives for Native American tribes, which have been heavily affected by the opioid crisis, stress the urgency of the situation and the need for the funds to prevent more deaths.
The Supreme Court’s ruling on this case will have significant implications for how mass tort cases involving wealthy corporations and individuals accused of grave wrongdoing are resolved in the future.