The U.S. Supreme Court on Thursday struck down a hotly contested deal that shielded members of the billionaire Sackler family from civil lawsuits related to the opioid epidemic.
The decision, in Harrington v. Purdue Pharma, clouds the future of a settlement that committed billions of dollars to victims of the opioid epidemic, but it opens up the possibility that the Sacklers, who own Purdue while it remains in bankruptcy limbo, would face a deeper reckoning.
The justices split along unusual lines. Justice Neil Gorsuch wrote the opinion, joined by Justices Amy Coney Barrett, Clarence Thomas, Ketanji Brown Jackson and Samuel Alito. Justice Brett Kavanaugh wrote the dissent, joined by Chief Justice John Roberts and Justices Sonia Sotomayor and Elena Kagan.
“The Sacklers have not filed for bankruptcy, nor have they placed virtually all their assets on the table for distribution to creditors,” Gorsuch wrote for the majority. “Yet, they seek an order discharging a broad sweep of present and future claims against them, including ones for fraud and willful injury. In all of these ways, the Sacklers seek to pay less than the code ordinarily requires and receive more than it normally permits.”
The decision reopens a deal that emerged from more than five years of legal wrangling that pitted immediate compensation for the effects of the opioid crisis against greater personal consequences for the Sackler family.
In 2019, facing a tidal wave of lawsuits over its role in driving the opioid crisis, Purdue Pharma ― but not its owners, the Sackler family ― filed for bankruptcy protection, placing all litigation on hold. Over the next several years, a deal emerged in a New York bankruptcy court to dissolve Purdue Pharma and remake it into a nonprofit whose proceeds would pay communities across the country to address the opioid epidemic. The Sackler family would also contribute up to $6 billion over several years to pay many victims of the crisis.
In return, the settlement would end all litigation against Purdue, one of the typical protections of bankruptcy. But the terms also shielded the Sacklers from any lawsuits, despite members of the family never filing for personal bankruptcy protection.
The deal sparked widespread outrage. Purdue Pharma and its trademark painkiller, OxyContin, helped trigger the opioid addiction epidemic that has killed more than half a million people in the United States while transforming its founding family into billionaires. Although the deal did not shield the Sacklers from criminal charges, none have been filed, making it unlikely the Sacklers would face a public reckoning as long as the settlement held.
Amid the public backlash, the U.S. Trustee, an arm of the U.S. Justice Department charged with oversight of bankruptcy cases, challenged the court’s authority to stretch the benefits of Chapter 11 bankruptcy protection to third parties.
“The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family,” Attorney General Merrick Garland said in a statement in late 2021.
Michael A. McCoy/For The Washington Post via Getty Images
The case reached the Supreme Court in December, when the justices seemed deeply divided between compensating victims as quickly as possible and holding the Sacklers responsible. The questioning did not break along clean ideological lines, although Roberts and Kavanaugh, both known to be sympathetic to corporate interests, were concerned about how the case would affect others in which individual actors are shielded by corporate settlements.
In its Thursday opinion, the majority wrote that its ruling was a “narrow” one that did not stand in the way of past settlements or similar deals in the future if victims agreed to give up their right to sue.
In oral arguments, the party facing off against the government was not the Sackler family but lawyers for a large class of creditors, such as state and local governments and victims of the opioid crisis and their families, who had voted by a large majority to accept the latest settlement. About 2,600 creditors rejected the deal, including some grieving families seeking their day in court.
“It’s overwhelming, the support for this deal, and among people who have no love for the Sacklers, among people who think that the Sacklers are pretty much the worst people on earth,” Kagan said.
Kavanaugh echoed those concerns in his dissent on Thursday, writing, “Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families.”
Along with Kavanaugh and Barrett, Kagan grilled government lawyer Curtis Gannon about the material consequences of a court decision that would allow litigation against the Sacklers at the risk of delaying or jeopardizing payments to victims of the epidemic.
The Purdue deal is one of the only opioid settlements that sets aside some money for individuals, such as the families of loved ones who died of overdoses and children born with neonatal abstinence syndrome. Other companies accused of supercharging the crisis ― such as pharmaceutical companies Johnson & Johnson and McKesson, and retail chain Walmart ― have agreed to pay more than $50 billion in settlements, but most will go to states, tribes and local governments struggling to offer addiction prevention and treatment.
Kavanaugh questioned how much more money could be realistically extracted from the Sacklers.
In response, Gannon pointed out that the Sacklers had increased their settlement offer once before.
The earliest version of the settlement deal, approved by U.S. Bankruptcy Judge Robert Drain in September 2021, kept the vast share of the Sacklers’ personal wealth intact. In the decade prior to Purdue’s bankruptcy filing, the Sackler family had drained the company of more than $11 billion in assets, paying some in taxes and parking the rest offshore. As part of that initial settlement, the Sacklers agreed to contribute $4.5 billion to opioid treatment and addiction prevention.
But after the Justice Department and eight states challenged that settlement, a federal judge rejected the deal. The Sacklers then raised their contribution during the appeals process to their current settlement offer of $6 billion.
A lawyer for the creditors, Gregory Garre, argued there isn’t another, better deal to be had.
“[That] was the best that was available here for the victims,” he told the justices in December, saying the $6 billion equaled 97% of what was left of the $11 billion after taxes. Allowing individual litigation against the Sacklers, he added, could ultimately drain the pool of money available for the rest of the victims.
Still, Kagan, and Justices Jackson and Gorsuch appeared leery of allowing the Sacklers to evade accountability altogether. Because the family members did not declare bankruptcy, the court never scrutinized their personal assets. A 2021 investigation by the House Committee on Oversight and Reform estimated the family’s net worth at more than $10 billion.
Jackson framed the liability shield as an extraordinary concession the Sacklers extracted by holding Purdue profits hostage.
“They actually took the assets from the company, which started the set of circumstances in which the company now doesn’t have enough money to pay the creditors,” she said.
In a more technical discussion, the justices also probed whether the bankruptcy court overstepped its congressional authority to approve measures that are “appropriate” for upholding the core settlement.
Kavanaugh, Barrett and Roberts seemed wary of eliminating third-party liability shields. The Purdue deal, they said, was comparable to countless past bankruptcy cases that insulated company officers from further liability.
Barrett questioned what scrapping this deal would mean for ongoing and future cases bringing sexual abuse claims against the Roman Catholic Church and the Boy Scouts of America. In response, Gannon said Congress may have to spell out how to treat third-party liability in those cases.
“You’d agree that the term “appropriate” doesn’t mean ‘anything goes,’ right?” Gorsuch asked Garre.