US Supreme Court blocks Purdue Pharma bankruptcy settlement which would have shielded Sacklers against lawsuits

The US Supreme court rejected Purdue Pharma’s bankruptcy settlement plan, which included a measure extraordinary to protect the Sackler family from further liability regarding the American opioid crisis in exchange for funds for compensation and treatment.

Clarence Thomas was one of the four justices who backed Neil M Gorsuch’s 5-4 decision. The other three were Amy Coney Barrett, Samuel A Alito Jr and Ketanji brown Jackson.

Gorsuch’s opinion stated that “the Sacklers are seeking greater relief than bankruptcy discharges normally provide, as they want to eliminate even claims of wrongful death or fraud and do not wish to put up all of their assets.” “Sacklers can describe the relief they seek however you like, the bankruptcy code does not contemplate (much less allow) this.”

Justice Brett M Kavanaugh and Chief Justice John G Roberts Jr, as well as Justices Sonia Sotomayor & Elena Kagan, dissented.

Kavanaugh stated in his dissent, that the “decision was wrong on the law” and “devastating for more than 100,000 victims of opioids and their families”.

Harrington v Purdue Pharma is a ruling that blocks a controversial New York bankruptcy court deal. The deal was initially rejected by a district judge, but then upheld in an appeal. It was put on hold until the US Department of Justice filed a challenge at the Supreme Court. Last December, oral arguments were held.

Purdue, Connecticut-based company that manufactures the prescription opioid OxyContin was able to restructure the deal and shield the billionaires involved in the Sackler case without having to declare bankruptcy. The Sackler family agreed to give up their ownership and contribute $6bn from the enormous fortune they made with OxyContin to the settlement.

The company wanted the bankruptcy agreement as a way to settle thousands of lawsuits. Many were filed by local and state governments in the US. They alleged that Purdue Pharma caused a crisis which ultimately led to the death of half a million Americans, by falsely claiming that its flagship drug wasn’t addictive while encouraging massive overprescription.

US solicitor general Elizabeth Prelogar had argued the release of Sacklers’ future liability was not authorized by bankruptcy code, and that it constitutes “abuse” of the bankruptcy system.

Court filings show that after years of litigation and controversy, 95% of Purdue creditors agreed to sign the plan. Many reluctantly as they saw it as their only chance to get some compensation. But many states, Canadian cities and Indigenous tribes and over 2,600 people, including prominent activists, opposed the plan.

The US government claimed that it was possible to reach a settlement without resorting the protections afforded by chapter 11 bankruptcy laws or relieving the billionaires Sacklers who owned the company of any liability.

The Supreme Court ruling leaves the matter between the plaintiffs and company unresolved. This case could have implications for other corporate bankruptcy cases where owners or officials seek immunity from liability.

Mike Quinn said, “This is a win for all Americans. It shows that wealthy wrongdoers do not have the right of dictating the law and receiving liability. Anyone can stand up to them and defend their constitutional rights.” Quinn represents Ellen Isaacs whose son Ryan, who died after becoming addicted to Oxycontin, and filed a Brief on behalf of the plaintiffs. It shows that Miss Isaacs’s son did not die in vain.

Quinn was also involved in the opposition to the Purdue/Sackler bankruptcy agreement with PAIN. This activist group, led by Nan Goldin, conducted protests against international art museums which were funded by the Sacklers. He said that his clients were “considering” their options as the bankruptcy deal was likely to be sent to court.