Supreme Court Pauses Purdue Pharma Opioid Settlement Pending Review - The New York Times
▻https://www.nytimes.com/2023/08/10/us/supreme-court-purdue-pharma-opioid-settlement.html?nl=todaysheadlines&emc=e
The Supreme Court on Thursday temporarily blocked a bankruptcy deal for Purdue Pharma that would have shielded members of the billionaire Sackler family, which once controlled the company, from additional civil lawsuits over the opioid epidemic and that capped the Sacklers’ personal liability at $6 billion.
The order is likely to delay any payments to the thousands of plaintiffs who have sued the Sacklers and Purdue, the maker of the prescription painkiller OxyContin, which is widely blamed for igniting the opioid crisis. Under the deal, the Sacklers had agreed to pay billions to plaintiffs in exchange for full immunity from all civil legal disputes.
That is because the Purdue agreement involves a popular but controversial practice: resolving lawsuits about mass injuries through bankruptcy courts, rather than allowing the cases to make their way through the traditional court system. In many of these agreements, third parties — in this instance, the Sacklers — are shielded from liability without being required to declare bankruptcy.
“What are the Sacklers getting out of this?” said Lindsey Simon, an associate professor at Emory University School of Law and a bankruptcy expert. “They’re getting one deal to be done. Whereas if they didn’t get it, individuals could still sue them forever.”
Put simply, Ms. Simon said, “they get all the benefit with none of the costs.”
“They’re taking on a question that’s literally the basis for billions of dollars in mass torts, from cases involving not just opioids, but the Boy Scouts, wildfires and allegations of sexual abuse in the church diocese — where third parties get a benefit from a bankruptcy they themselves aren’t going through,” said Adam Zimmerman, a law professor at the University of Southern California.
Experts cited Johnson & Johnson, which has sought to use bankruptcy court to resolve mass claims about its talcum-based baby powder.
The company faces about 40,000 lawsuits that have been on hold since 2021 over allegations that the powder contained asbestos and caused ovarian cancer. The company denies those allegations, and has said it needs the bankruptcy process to resolve current and future lawsuits.
Although companies routinely seek bankruptcy protection to be shielded from legal claims, this particular agreement was unusual because it extended liability protection to the company’s owners. Sackler family members have said they would not sign on to a settlement without an agreement protecting them from lawsuits.
The Supreme Court has been skeptical of some aggressive litigation tactics, notably in cases involving class actions and patents, suggesting that it may be wary of allowing bankruptcy courts to provide legal immunity to rich and powerful people accused of grave wrongdoing who have not themselves declared bankruptcy.