The hard-fought settlement of thousands of lawsuits against Purdue Pharma was on the verge of collapse Thursday after the Supreme Court rejected liability protections for the company’s owners, members of the billionaire Sackler family. The ruling effectively blocks the release of billions of dollars that could help alleviate the ravages of opioid addiction.
The future of the lawsuits, some of which date back a decade, now hangs in the balance as states, local governments, tribes and more than 100,000 individuals who have sued the company, best known for the painkiller OxyContin, consider their next steps.
The court rejected a condition long sought by the Sacklers: immunity from all current and future opioid lawsuits in exchange for payments of up to $6 billion to plaintiffs.
Purdue called the decision “heartbreaking” in a statement because the settlement was approved by an overwhelming majority of plaintiffs.
“We will immediately contact the same creditors who have already proven they can come together to reach a settlement,” the company said, so that Purdue can emerge from bankruptcy and the funds can start flowing.
Descendants of Dr. Mortimer Sackler and Dr. Raymond Sackler issued a joint statement suggesting they were willing to continue talking and “hopeful about reaching a resolution that provides substantial resources to help combat a complex public health crisis.”
But they did not indicate whether they would agree to pay billions of dollars without the liability protection. “The unfortunate reality is that the alternative is costly and chaotic litigation in courtrooms across the country,” the statement continued. “While we are confident that we will prevail in any future litigation, given the pervasive misrepresentations about our families and the opioid crisis, we continue to believe that a swiftly negotiated agreement to provide billions of dollars to people and communities in need is the best path forward.”
In statements, a number of states indicated that they would like to resume talks.
“The court’s ruling means that we now have to go back to the negotiating table. “Purdue and the Sacklers must pay so we can save lives and help people live free from addiction,” said North Carolina Attorney General Josh Stein. “If they don’t want to pay, I will take them to court.”
A statement from lawyers negotiating for local governments noted that the continued delay was eating into potential payouts as legal fees piled up. “We will study the opinion and chart a course of action to ensure that the Sackler family does not escape justice,” the statement said.
The key question that remains in new negotiations is: How much are the Sacklers willing to pay to resolve these cases now that they cannot obtain comprehensive liability protection?
Some lawyers involved in the long-running Purdue negotiations were prepared for the possibility that the Supreme Court would rule against the current plan. Those who spoke to The New York Times spoke on condition of anonymity, citing the sensitivity of the issue. They said mediation sessions were planned and that a resolution would eventually be reached.
Protection from civil lawsuits is typically granted to companies emerging from bankruptcy restructuring, such as Purdue. But because only the company, and not the Sacklers, had filed for bankruptcy, the Supreme Court said the Sacklers were not entitled to the same protections.
In doing so, the court agreed with the US Trustee, a part of the Justice Department that oversees the federal bankruptcy system, which said a bankruptcy judge did not have the authority to grant such protection. The government argued that allowing that protection to the family would have been done without the consent of future plaintiffs, and thus would deprive them of due process rights.
A handful of states fought the settlement for months, ultimately extracting more money from the Sacklers before signing on. After the Supreme Court ruling, William Tong, the attorney general of Connecticut, one of those states, said: “The U.S. Supreme Court has been right: Billionaire wrongdoers cannot foreclose on blood money in bankruptcy court.” He expected negotiations would return to bankruptcy court.
The settlement also included payments to hundreds of tribes. Verlon Jose, chairman of the Tohono O’odham Nation, with 36,000 enrolled members living largely in Arizona, said: “The Sacklers brought suffering to millions of people, billions of dollars in damages and an epidemic of misery that spanned decades. The remaining Sacklers remain billionaires while people continue to die from addiction.”
Of the many drug companies sued in the national opioid lawsuits, a small number, including Purdue, agreed to payouts for individual victims, in addition to state and local governments. More than 100,000 individual claimants, including families of those who died from opioid overdoses, could be eligible for between $3,500 and $48,000 from the Purdue settlement.
Ryan Hampton, who co-chaired a committee in the Purdue bankruptcy that represented individual victims, said Thursday that he was primarily concerned about protecting his interest in any renegotiations.
“Lawyers from across the country are going to fight like crazy and put pressure on states’ attorneys general to ensure that every cent of victims’ compensation is protected at all costs,” he said. “Victims must come first before any state demands a share of the new negotiated deal.”
Ellen Isaacs, whose son died of an overdose, long opposed the settlement with Purdue, arguing that the Sacklers should not be given a legal free pass.
Her attorney, Michael Quinn, praised Thursday’s ruling, saying, “The decision preserves the rights of individual victims to either agree to a deal or exercise their right to sue against non-debtors,” he said, using a legal term to refer to the Sacklers.
Like the more than $50 billion in settlements already reached with other pharmaceutical companies in the national opioid lawsuit, Purdue and Sackler’s billions were intended to be spent on addiction education, treatment and prevention. Each state and its local governments have their own disbursement protocols.
Although many companies manufactured, distributed and sold opioids, Purdue is widely credited with starting the dynamic painkiller market in 1996 with the introduction of OxyContin, which it aggressively marketed as long-lasting and nearly non-addictive. Other manufacturers jumped into the lucrative business, and within a few years, opioid abuse and overdose deaths were rampant nationwide. The impact was felt by families, law enforcement, emergency services and child protective services.
In 2014, local governments began filing lawsuits against Purdue. In September 2019, Purdue, facing nearly 3,000 lawsuits, hundreds of which named the Sacklers personally, filed for bankruptcy restructuring, a move that stayed all claims.
In the more than four years since, the most persistent demand standing in the way of resolution has been the Sacklers’ insistence on permanent release from future Purdue opioid lawsuits.
As the years passed, groups of state attorneys general dropped their objections to the Sacklers’ demands in order to get the deal done.
