Supreme Court Blocks Purdue Pharma Settlement
The Supreme Court rejected a nationwide settlement with Purdue Pharma, the maker of OxyContin, which would have shielded the Sackler family from lawsuits while providing billions to combat the opioid crisis.

Key Points:

Settlement Rejected: In a 5-4 vote, the justices blocked an agreement involving state and local governments and victims. The Sacklers would have contributed up to $6 billion and given up ownership of the company, with profits used for treatment and prevention. The decision marks a victory for the minority of opioid victims who rejected the settlement to continue lawsuits against the Sacklers, and a loss for the majority who accepted it.

Legal Shield Debate: The court deliberated whether bankruptcy protections could extend to the Sacklers, who have not declared bankruptcy themselves. Lower courts had conflicting decisions on this issue.

Government Stance: The U.S. Bankruptcy Trustee argued that bankruptcy law does not allow protecting the Sackler family from lawsuits. The Biden administration suggested that negotiations could resume for a potentially better deal.

Proponents’ Argument: Supporters claimed third-party releases are necessary for agreements, with no federal law prohibiting them.

Judicial Opinions:

Majority Opinion: Justice Neil Gorsuch wrote for the court, joined by Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson.

Dissenting Opinion: Justice Brett Kavanaugh filed a dissent, joined by Chief Justice John Roberts and Justices Sonia Sotomayor and Elena Kagan.

Background:

OxyContin’s Impact: Released in 1996, OxyContin’s marketing by Purdue Pharma is often seen as a catalyst for the opioid epidemic. Despite most pills being generic, opioid-related overdose deaths have reached 80,000 in recent years, mainly due to fentanyl and other synthetic drugs.

Settlement Scale: The Purdue Pharma settlement would have been among the largest by drug companies, totaling over $50 billion. It would have been the second to include direct payments to victims, ranging from $3,500 to $48,000 from a $750 million pool.

Sackler Family: The Sacklers are no longer on the company’s board and haven’t received payouts since before Purdue Pharma’s bankruptcy. However, they received over $10 billion in the decade prior, half of which went to taxes.

Implications:

Weakened Bankruptcy Resolution: Thursday’s ruling—among the highest-profile bankruptcy decisions ever from the high court—weakens the ability of corporations and their insiders to use bankruptcy to resolve mass litigation alleging they harmed consumers.
The future of the settlement remains uncertain, with the possibility of resumed negotiations.