Purdue Pharma allowed to protect Sackler owners from opioid lawsuits

Members of the Sackler family, which owns Purdue Pharma, could be shielded from lawsuits linked to the US opioid crisis in exchange for payments of up to $6 billion, appellate judges have ruled, reversing a lower court ruling.

The decision addresses a controversial provision of US law that freed Purdue’s Sackler family owners from liability as part of the company’s bankruptcy settlement. Purdue, maker of the powerful painkiller OxyContin, filed for bankruptcy in New York in 2019 amid a wave of litigation over its role in an opioid epidemic that has killed nearly 1 million people in the US.

In 2021 a bankruptcy judge approved a settlement that required the family’s owners to pay $4.5 billion and granted them immunity from future lawsuits. A federal judge overturned that settlement later that year.

The company’s Sackler owners then agreed to increase their financial contribution from $4.5bn to $6bn, drawing support from a number of dissident victim groups and states that opposed the original deal.

On Tuesday, a three-judge panel of the US Court of Appeals for the Second Circuit reversed a lower court ruling, saying bankruptcy law allows for civil liability protections to be extended to parties who are not in bankruptcy in certain situations.

“It is just and proper for the bankruptcy court to include the release in . . . specific factual circumstances,” Justice Eunice Lee wrote in the majority opinion.

The announcement paves the way for the bankruptcy court to approve a modified settlement that will protect the Sackler family from lawsuits.

The bankruptcy trustee, a division of the Justice Department that opposed the release, declined to comment on whether it would appeal the decision to the Supreme Court.

Such releases have become controversial in US bankruptcy cases, with appeals courts or legal circuits in different regions differing on whether to approve them.

Purdue’s initial $4.5 billion settlement was thrown out after a legal appeal by a group of eight US states and the attorney for the Southern District of New York, who argued that owners the Sackler family individually filed for Chapter 11. without benefiting from the bankruptcy process. own security.

Opponents of the original settlement pointed to an analysis presented in bankruptcy court that showed members of the Sackler family that owns Purdue took more than $10bn from the company between 2008 and 2017.

Purdue’s lawyers warned that without such an agreement, years of litigation would delay payments to victims and shrink the available pot.

In a statement, the families of the late Mortimer Sackler and the late Raymond Sackler said Tuesday that they believe “the long-awaited implementation of this resolution is critical to providing adequate resources for people and communities. We honor the agreement.” Happy with the court’s decision to allow it to proceed and look forward to its early effect.