Nearly all of the U.S. Supreme Court justices seemed uncomfortable with undoing a controversial bankruptcy deal with the company behind Ox...
Nearly all of the U.S. Supreme Court justices seemed uncomfortable with undoing a controversial bankruptcy deal with the company behind OxyContin, a drug widely viewed as kick-starting the opioid epidemic.
The high court on Monday heard oral arguments in Harrington v. Purdue Pharma, specifically on the validity of the $6 billion bankruptcy deal with the pharmaceutical company that notably shields the Sackler family, who owns Purdue Pharma, from victims and their families’ civil claims.
The bankruptcy agreement was quickly challenged but eventually upheld by the U.S. Court of Appeals for the 2nd Circuit. Currently, the Biden administration is asking the court to review that deal, arguing that the agreement is illegal, largely because some of the victims who did not consent to the agreement — about 3% — are now banned from suing the Sackler family, as well.
U.S. Trustee William Harrington argues that the bankruptcy deal is a “roadmap for corporations and wealthy individuals to misuse the bankruptcy system to avoid mass-tort liability,” adding that it “erodes public confidence in the bankruptcy system.”
However, nearly all the justices asked pointed questions during oral arguments that focused on the victims and their families and how they would fare if the deal were undone.
“I think the problem, and maybe the disconnect between you and the opioid victims is you’re implying, or saying, ‘Oh if you just reject this plan, there’s gonna be more money available down the road from the Sacklers,'” Justice Justice Brett Kavanaugh said to Deputy Solicitor General Curtis Gannon. “And I don’t think you’re accounting for uncertainty of liability first of all, … and the uncertainty of recovery. And the point of this provision, as it’s been applied for 30 years, is to take into account those uncertainties in thinking if this is an appropriate settlement.”
Justice Elena Kagan offered similar sentiments. “It’s overwhelming, the support for this deal, and among people who have no love for the Sacklers,” she told Gannon. “Your position rests on a lot of highfalutin principles of bankruptcy law … that you can come in here and blow up the deal. The federal government is standing in the way against a huge, huge majority of claimants who have decided that if this provision goes under, they’re going to end up with nothing.”
Moreover, Pratik Shah, a lawyer for some of those victims, argued before the court that without the bankruptcy deal, virtually every victim would end up with “zero dollars.”
“I think this is critically important: whatever is available from the Sacklers – whether that’s $3 billion, $5 billion, $6 billion, $10 billion – there are about $40 trillion in estimated claims,” he said. “As soon as one plaintiff is successful, that wipes out the recovery for every other victim. … That is why 97% of the victims agreed to this non-consensual release. They have no love lost for the Sacklers. There is no body of victims, no one who would more like to have retribution against the Sacklers.”
However, 3% of the victims did not agree with the deal, and, as noted during oral arguments, less than 50% of the victims who were asked about the agreement responded. Some of those in disagreement have expressed that they feel the Sackler family is directly liable for their family losses or their personal suffering and want their day in court.
If the deal holds, the Sackler family, which did not have to declare bankruptcy personally, will walk away with billions of their personal fortune.
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