The Supreme Court has struck down a multi-billion dollar bankruptcy plan designed to shield the Sackler family—the former owners of Purdue Pharma, the company behind the opioid OxyContin—from civil lawsuits. In a closely divided 5-4 decision, the justices ruled that the bankruptcy code does not allow a Chapter 11 reorganization plan that protects individuals who have not declared bankruptcy themselves.
Majority opinion
“Once more, the Sacklers seek greater relief than a bankruptcy discharge normally affords, for they hope to extinguish even claims for wrongful death and fraud, and they seek to do so without putting anything close to all their assets on the table,” wrote Justice Neil Gorsuch in the majority opinion. He was joined by Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson.
Precedent and impact
Similar bankruptcy reorganization plans have been used by the Boy Scouts of America and the Catholic Church to protect individuals from civil lawsuits. However, the Court’s decision means the $6 billion settlement plan for OxyContin victims must be reconsidered. Justice Brett Kavanaugh, in his dissent, noted this outcome is unfortunate for victims awaiting compensation.
Ongoing legal battles
For years, OxyContin victims have been embroiled in a legal tug-of-war involving the Sacklers and Purdue Pharma. “Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families,” wrote Justice Kavanaugh, joined by Chief Justice John Roberts, Justice Sonia Sotomayor, and Justice Elena Kagan. Kavanaugh emphasized that deviating from established bankruptcy court authority deprives opioid victims of a substantial monetary recovery secured after years of litigation.
Bankruptcy filing and Sackler family actions
Purdue Pharma filed for Chapter 11 bankruptcy in 2019 amid numerous lawsuits over OxyContin. Concurrently, the Sacklers withdrew $11 billion from the company, transferring a significant portion overseas and to pay taxes, and began distancing themselves from Purdue Pharma.
Proposed reorganization plan
Under the proposed plan, Purdue Pharma agreed to pay $1.2 billion in administrative expenses and distributions to opioid victims. Approximately 138,000 plaintiffs could receive payments ranging from $3,500 to $48,000 over the next decade. The Sackler family agreed to contribute $6 billion but sought immunity from opioid-related claims.
Government intervention
The government argued that the Sacklers’ protections were unjustified as the family was not in financial distress, claiming the plan infringed on victims’ due process rights. Deputy Solicitor General Curtis Gannon suggested during oral arguments that the Supreme Court should urge Congress to limit the scope of such bankruptcy protections.
Purdue Pharma’s defense
An attorney for Purdue Pharma contended that without these protections, victims would not receive the full amount owed due to the volume of lawsuits against the Sacklers. He pointed out that victims had voted in favor of the plan, though less than 20% of eligible individuals participated.
The opioid crisis
The opioid epidemic has profoundly affected millions in the U.S. According to the CDC, over 280,000 people died from overdoses involving prescription opioids between 1999 and 2021, with 2021 seeing five times the number of deaths compared to 1999.
Case implications
The Harrington v. Purdue Pharma decision carries significant implications for victims of the opioid crisis seeking to hold the Sackler family accountable for their role in the marketing of OxyContin.