Washington: OxyContin manufacturer Purdue Pharma’s bankruptcy settlement was blocked by the US Supreme Court on Thursday, which would have given protection for its wealthy Sackler family owners against lawsuits over their involvement in causing America’s lethal opioid crisis.
The final ruling overturned a previous court decision that had supported the proposal to offer immunity to Purdue’s shareholders on condition they contribute up to six billion dollars towards resolving thousands of claims accusing the company of illegally misleading about OxyContin, an extremely potent painkiller introduced in 1996.
This was viewed as a victory for President Biden’s administration which saw the settlement as an exploitation of insolvency laws designed to assist debtors experiencing economic hardships and not people like Sacklers who are yet to file for bankruptcy. Basing his judgment on this claim was Conservative Justice Neil Gorsuch whose opinion was backed by fellow conservative Justices Clarence Thomas, Samuel Alito and Amy Coney Barrett as well as liberal Justice Ketanji Brown Jackson.
“They have not filed for bankruptcy, have not placed virtually all their assets on the table for distribution to creditors; nevertheless they demand what amounts essentially to a discharge,” he wrote.
The dissenting opinion written by Justice Brett Kavanaugh with whom Chief Justice John Roberts joined came together with liberal Justices Sonia Sotomayor and Elena Kagan. “The ruling is incorrect according to law and catastrophic for above 100 thousand opioids victims along with their relatives” he noted.
Purdue sought Chapter 11 reorganization in 2019 after facing massive lawsuits claiming that it initiated an opioid epidemic with OxyContin that has culminated into more than five hundred thousand overdose fatalities across America during two decades. Whether or not American insolvency statute permits members of the Sackler family who have never declared personal bankruptcies be provided safeguards under Purdue’s restructuring process was at stake here. The decision affects other mass tort settlements in bankruptcy cases beyond just this one involving Purdue.
