Supreme Court rejects Purdue settlement

The Supreme Court rejected the Purdue opioid settlement plan that would have provided $6 billion to states, localities, and victims of the opioid crisis.

In a 5-to-4 decision, a majority held that federal bankruptcy code does not allow liability shields for third parties in bankruptcy agreements (i.e., members of the Sackler family cannot be protected from future lawsuits because they did not file for bankruptcy, only Purdue did).

“In this case, the Sacklers have not filed for bankruptcy or placed all their assets on the table for distribution to creditors, yet they seek what essentially amounts to discharge. No provision of the code authorizes that kind of relief,” Justice Neil Gorsuch wrote in the majority opinion. In the dissenting opinion, Justice Brett Kavanaugh said the “decision is wrong on the law and devastating for more than 100,000 opioid victims and their families.”

Advocates and families of those who have died from opioids are split, with some wanting the settlement to be upheld so that the money for families and opioid abatement can go out quickly, and others not wanting to give a pass to the Sacklers via the liability shield.

Purdue and the Sacklers said they will continue working with creditors to reach a resolution. Several states and local governments have also said they are eager to resume settlement talks. The alternative to a settlement is thousands of lawsuits filed across the country, a costly and difficult process that would likely eat up potential payouts. But it is not clear if or how a settlement could be reached, given the Sacklers’ resistance to any agreement without the liability shield.