Supreme Court considers $6 billion deal to protect Sacklers

The U.S. Supreme Court is hearing heated arguments over Purdue Pharma’s bankruptcy deal that could protect the Sackler family from future lawsuits.

In 2022, the family admitted being involved in selling OxyContin, a drug that was known to be addictive and widely abused, and paid $6 billion (£4.5 billion) to tackle opioid addiction. agreed.

In return, the bankruptcy court granted the family immunity in all civil cases.

But U.S. officials say the agreement oversteps the court’s authority.

Purdue Pharma filed for bankruptcy in 2019, but the Sacklers did not. However, protections typically maintained for companies facing collective damages claims after filing for bankruptcy were granted.

Justice Department lawyers argued in court Monday that the deal violates “key points” of bankruptcy law.

The Sackler family made billions of dollars developing and distributing OxyContin through Purdue Pharma. This painkiller turned out to be highly addictive.

In the years since, they have been accused by thousands of families of falsely aggressively marketing OxyContin and minimizing its potential dangers. Many families hope the Supreme Court will overturn the agreement and expose the Sacklers to thousands of lawsuits.

On Monday, demonstrators outside the courthouse held signs that read “The Deadliest White Collar Criminal: The Sackler Cartel” and “My Dead Son Will Not Release the Sackler.”

But other drug-affected families also support the trade. Their position was echoed by the judge who asked why the government was trying to overturn the agreement.

Liberal Justice Elena Kagan said the deal had “overwhelming” support “among people who have no affection for the Sacklers.”

Conservatives Clarence Thomas and Brett Kavanaugh also asked whether it was appropriate to reverse a plan to “ensure prompt payments” to victims’ families.

Dede Yoder fought for her son’s life for seven years, bouncing in and out of rehab clinics as he struggled with opioid addiction.

He had surgery at age 14 and was prescribed OxyContin. That was the beginning of his battle with addiction.

Yoder saw him at eight different inpatient rehabilitation centers, from Connecticut to Colorado to Cancun, Mexico.

“I probably spent $150,000 on his doctors,” she told the BBC. “I was a single mother. I didn’t have any support.”

Chris died of a drug overdose in 2017 at the age of 21. After that, Yoder’s new fight began: a fight for justice.

She said she made multiple attempts to hire a lawyer after her son’s death, but no one would take her case because she saw insurmountable obstacles to legal action against the Sacklers. .

That led her to support the family’s deal, which included at least $750 million in compensation for the families.

“If something like this happens, there’s a hell of a chance in hell for an individual to get anything out of the Sackler.” [bankruptcy deal] That’s not going to happen,” Yoder told the BBC.

At the heart of the Supreme Court’s case is the question of whether bankruptcy courts have the power to grant “third-party releases” to entities that have not filed for bankruptcy themselves.

Legal experts say the high court’s decision will have a huge impact.

“I think this is probably the biggest bankruptcy case to come before the Supreme Court in decades,” Pamela Fouhey, professor of bankruptcy law at Cardozo School of Law, told the BBC.

She noted that cases involving third-party releases are often the largest bankruptcy cases filed.

“These are major cases. They involve the most people that the bankruptcy system affects.”

Such releases have played a role in settling several lawsuits involving widespread allegations of sexual abuse, including lawsuits against USA Gymnastics, the Boy Scouts of America, and the Catholic Church.

But Fuhey said she believes third-party releases have “huge downsides for victims and survivors.”

He said the measure provides protection to third parties without exposing them personally to the scrutiny of bankruptcy courts.

“That leads to behind-the-scenes deals,” Fuhey said, adding that without a bankruptcy filing, “third parties may end up not contributing as much.” [money] as much as possible.

“You see that with the Sacklers,” she said.

The Sacklers withdrew around $11bn (£8.7tn) from Purdue Pharma over a 10-year period before filing for bankruptcy in 2019. Justice Department lawyers said the practice essentially allows the Sacklers to “determine how much to contribute” under any agreement. .

Another part of the debate before the Supreme Court is whether everyone affected must vote to approve the settlement.

More than 2,600 personal injury claimants voted against the Purdue Pharma deal, and “hundreds of thousands of claimants did not vote at all,” according to court documents.

“If there is no bankruptcy, you can’t impose settlement payments on people without their consent by vote of the other claimants,” said Ralph Brubaker, a bankruptcy professor at the University of Illinois School of Law, who filed amicus briefs against Purdue. . case.

Those with stronger claims could receive “much greater rewards than the immediate cash offered in an immediate settlement.”

Ellen Isaacs, who lost her son to opioid addiction five years ago, opposes the settlement and the way it shields the Sacklers from future lawsuits from families like hers.

“For me, it’s very important that these people are held accountable for all the people they murdered,” she told the BBC’s media partner CBS. “They were criminals and needed to be treated as such.”

She thinks the Sacklers are breaking up too easily.

The government says the current deal allows the Sacklers to avoid trillions of dollars in damages.

Of the $750 million they offered in compensation to victims, the payouts are estimated to range from $3,500 to $48,000 per family.

But for Yoder, something is better than nothing.

“I’m nearing retirement age and there’s no way I’m going to retire anymore,” she said, adding, “There’s no one in my family that could play against the Sacklers anyway.”

Without a bankruptcy agreement, she says, “the only people who make money are the lawyers. That’s it.”