Supreme Court Rejects Liability Shield at Center of Purdue Pharma Settlement

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Supreme Court Strikes Down Sackler Family’s Liability Shield in Purdue Pharma Opioid Settlement

In a significant legal blow to the Sackler family and a potential setback for victims of the opioid crisis, the Supreme Court on Thursday overturned a key provision of the $6 billion settlement between Purdue Pharma and those affected by the company’s prescription painkiller, OxyContin. The court ruled, in a 5-4 decision, that the bankruptcy code does not allow for liability shields for third parties like the Sackler family, who were not themselves declaring bankruptcy. This ruling effectively eliminates any protection from further lawsuits for the family, who controlled Purdue Pharma.

Key Takeaways:

  • The Supreme Court struck down a critical part of the Purdue Pharma settlement that granted immunity from liability to the Sackler family, raising concerns about accountability for their role in the opioid crisis.
  • The decision is a major victory for the U.S. Trustee Program, a watchdog office within the Justice Department, which argued that the liability shield was a misuse of the bankruptcy system.
  • The ruling has broad implications for other bankruptcy settlements involving claims of mass injury, particularly the Boy Scouts of America settlement, which employed a similar liability shield.
  • The court’s decision means that the Sackler family, who promised to contribute up to $6 billion to settle opioid-related lawsuits, may now face an onslaught of legal challenges. This could potentially delay or hinder the distribution of funds intended to address the opioid epidemic.
  • Despite the setback, the decision emphasizes the significance of holding powerful individuals accountable for their actions, particularly in cases involving widespread harm.

The court’s decision arose from a long and contentious legal battle surrounding Purdue Pharma and the Sackler family. Since the late 1990s, Purdue Pharma aggressively marketed OxyContin, a powerful painkiller, despite evidence of its addictive potential. This marketing strategy fueled an opioid epidemic that has ravaged communities across the United States, leading to hundreds of thousands of overdose deaths.

The settlement agreement, approved in 2021, aimed to resolve thousands of lawsuits filed against Purdue Pharma. The Sackler family, as part of the deal, agreed to contribute billions of dollars to a fund that would be distributed to states, local governments, tribes, and individuals impacted by the opioid crisis. However, the settlement also included a controversial provision that shielded the Sackler family from any further liability related to the opioid crisis. This liability shield, which drew significant criticism, gave them wide-ranging legal protection even though they were not themselves filing for bankruptcy.

The U.S. Trustee Program argued that the inclusion of this provision was a misuse of the bankruptcy system, stating that it was designed to address genuine financial distress, not to provide immunity from accountability for wrongdoing.

In his dissenting opinion, Justice Brett Kavanaugh argued that the decision was a setback for opioid victims and their families, potentially jeopardizing critical funding to combat the crisis. He stressed that the settlement had been approved by many parties involved, including those who had no love for the Sackler family. The dissenting justices believed that the decision could create uncertainty in future settlements aimed at resolving complex legal disputes.

The Supreme Court’s ruling has far-reaching consequences for both the Sackler family and the fight against the opioid epidemic. While the decision potentially reopens the door to further legal battles for the Sacklers, it also underscores the importance of holding those responsible accountable for their actions. It remains to be seen how the ruling will impact the distribution of funds from the settlement to individuals and communities affected by the opioid crisis, but its impact on the legal landscape surrounding such large-scale settlements is undeniable.

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William Edwards
William Edwards
William Edwards is a business journalist with a keen understanding of market trends and economic factors. His articles cover a wide range of business topics, from startups to global markets. William's in-depth analysis and clear writing provide valuable insights for business professionals.