SCOTUS rules Sackler family can’t be protected under Purdue bankruptcy case

The Supreme Court ruled Thursday, June 27, that the Sackler family — which owned Purdue Pharma and marketed the opioid pain reliever OxyContin — is not immune from lawsuits. The high court said the deal made with a bankruptcy court to avoid liability is improper. 

The 5-4 decision was ideologically mixed. The opinion was written by Justice Neil Gorsuch, joined by Justices Thomas, Alito, Barrett and Jackson. The dissenting opinion was written by Justice Brett Kavanaugh and joined by Chief Justice John Roberts and Justices Sotomayor and Kagan. 

Download the SAN app today to stay up-to-date with Unbiased. Straight Facts™.

Point phone camera here

Here are the facts of the case from the court: 

Between 1996 and 2019, Purdue made $34 billion in revenue mostly from the sale of OxyContin. That gave the Sackler family an estimated net worth of $14 billion. In 2007, a Purdue affiliate pleaded guilty to a federal felony for misbranding OxyContin as “less addictive” and “less subject to abuse” than other pain medications. Thousands of lawsuits followed, so the Sacklers began taking $11 billion out of the company thinking the lawsuits would eventually impact them directly.

During bankruptcy proceedings with Purdue, the family proposed to return $4.3 billion to the company in exchange for a judicial order releasing them from all opioid-related claims.

The Supreme Court just decided that can’t happen. 

“The code generally reserves discharge for a debtor who places substantially all of their assets on the table,” Justice Gorsuch wrote in the majority opinion. “And, ordinarily, it does not include claims based on ‘fraud’ or those alleging ‘willful and malicious injury.’ The Sackler discharge defies these limitations. The Sacklers have not filed for bankruptcy, nor have they placed virtually all their assets on the table for distribution to creditors. Yet, they seek an order discharging a broad sweep of present and future claims against them, including ones for fraud and willful injury.” 

Gorsuch also wrote that the decision is a “narrow one.” 

“Nothing in the opinion should be construed to call into question consensual third-party releases offered in connection with a bankruptcy reorganization plan,” Gorsuch explained. “Nor does the Court express a view on what qualifies as a consensual release.”

However, there is concern this decision could negatively impact what opioid victims ultimately receive as compensation. 

“Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families,” Justice Kavanaugh wrote in the dissent. “The Court’s decision rewrites the text of the U.S. Bankruptcy Code and restricts the long-established authority of bankruptcy courts to fashion fair and equitable relief for mass-tort victims.” 

The families of the late Dr. Mortimer Sackler and late Dr. Raymond Sackler said in a statement that they remain hopeful about reaching a resolution that provides substantial resources to combat a complex public health crisis.

The statement continued, “The unfortunate reality is that the alternative is costly and chaotic legal proceedings in courtrooms across the country. While we are confident that we would prevail in any future litigation given the profound misrepresentations about our families and the opioid crisis, we continue to believe that a swift negotiated agreement to provide billions of dollars for people and communities in need is the best way forward.”

It’s unclear exactly what happens next. The bankruptcy deal will have to be renegotiated and some victims’ families want the Sacklers to face criminal charges.