Justices question shielding Sacklers

Bankruptcy case raises litigation questions for Purdue Pharma owners

The Supreme Court on Monday seemed torn about both the merits and the legality of a proposed Purdue Pharma bankruptcy plan that would allocate billions of dollars to help ease the nation’s opioid crisis but also shield the family that owns the company from future lawsuits.

Justices across the ideological spectrum asked questions of lawyers from the Justice Department, which opposes the deal, and attorneys for Purdue and the vast number of parties that have an interest in the outcome.

Those parties say unraveling the settlement plan would leave some victims with nothing.

“Forget a better deal — there is no other deal,” said Washington lawyer Pratik Shah, who represents the interests of states, hospitals, tribes, insurance companies, individual victims and other creditors who agreed to the settlement.

But Curtis E. Gannon, representing the Justice Department, said that claim already has been proved untrue. After some states and individuals objected to a previous version of the plan, he said, the Sackler family — which owns Purdue — ponied up more cash, increasing their contributions from more than $4 billion to about $6 billion, to be paid over nearly two decades.

Purdue declared bankruptcy in 2019, as it faced thousands of lawsuits and allegations the company helped fuel the opioid crisis by the marketing of its blockbuster painkiller OxyContin. But members of the Sackler family did not file for bankruptcy.

The legal issue before the court is whether, according to federal bankruptcy laws, the Sacklers can be spared from future opioid-related litigation over their alleged role in fueling the nation’s crushing opioid crisis.

A panel of the U.S. Court of Appeals for the 2nd Circuit said yes, holding a bankruptcy court could approve provisions not expressly forbidden by the code.

On Monday, Justice Brett Kavanaugh seemed to agree. But others — Justice Neil Gorsuch and Ketanji Brown Jackson, for instance — noted other regional appeals courts do not allow plans that terminate, without their consent, the rights of alleged victims to sue parties who are not technically part of the bankruptcy proceedings.