WASHINGTON — The Supreme Court said Thursday that members of the Sackler family cannot be shielded from liability for civil claims related to the opioid epidemic, jeopardizing a bankruptcy plan that would have offered such protection in exchange for channeling billions of dollars toward addressing the crisis.
In a 5-4 decision, the justices found that the deal, carefully negotiated over years with states, tribes, local governments and individuals, had broken a basic tenet of bankruptcy law by shielding members of the Sackler family from lawsuits without the consent of those who might sue.
The plan for Purdue Pharma, the maker of the prescription painkiller OxyContin, the drug widely considered to have ignited the crisis, was unusual because it offered broad protections that the Sackler family, who controlled the company, had demanded for years even as the Sacklers avoided declaring bankruptcy themselves.
“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,” Justice Neil Gorsuch wrote, joined by Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett and Ketanji Brown Jackson.
While he acknowledged that the decision left the plan in limbo, Gorsuch wrote that the threat of future lawsuits from opioid victims, states, government entities and others might compel the Sacklers “to negotiate consensual releases on terms more favorable to opioid victims.”
“If past is prologue,” Gorsuch wrote, citing the U.S. Trustee Office, which challenged the deal, “there may be a better deal on the horizon.”
It was not immediately clear what the decision would mean for other settlements involving claims of mass injury, including one involving the Boy Scouts of America and victims of sexual abuse.
In a strongly worded dissent, Justice Brett Kavanaugh, joined by Chief Justice John Roberts and Justices Sonia Sotomayor and Elena Kagan, warned of the consequences for the tens of thousands of families seeking compensation. The “decision is wrong on the law and devastating for more than 100,000 opioid victims and their families,” he wrote, later adding that rejecting the provision “simply inflicts still more injury on the opioid victims.”
The deal would have required the Sacklers to pay up to $6 billion over 18 years. Members of the Sackler family expressed hope that they would reach another settlement.
Absent one, the Sacklers said in a statement, “costly and chaotic legal proceedings in courtrooms across the country” were all but certain to follow.
The majority homed in on the method the Sacklers used to insulate themselves from opioid-related lawsuits, finding that a third party could not use the bankruptcy system to shield themselves from litigation, binding others without their consent.
The bankruptcy system, although complex, rests on “a simple bargain,” Gorsuch wrote, allowing a party in debt to release itself from its financial obligations if the debtor “proceeds with honesty and places virtually all its assets on the table for its creditors.”
Although Purdue Pharma filed for bankruptcy protection after a wave of opioid-related lawsuits, the Sacklers did not. Instead, they asked the court overseeing Purdue’s bankruptcy for “an order extinguishing vast numbers of existing and potential claims against them.”
This approach, Gorsuch wrote, allowed them to win relief “without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors.”
From 1999 to 2019, about 247,000 people in the United States died from prescription-related opioids, Gorsuch wrote, an epidemic that has cost the country $53 billion to $72 billion annually. He added, “Purdue sits at the center of these events.”
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