Justices Put Opioid Settlement on Hold Pending Further Review

WASHINGTON — The U.S. Supreme Court said late Thursday afternoon that it will review a bankruptcy settlement involving Purdue Pharma, in the process placing a hold on a $6 billion deal that would forever shield the Sackler family from civil opioid lawsuits.

In taking its action on Thursday, the justices sided with the Justice Department, which in July had requested the court put the settlement plan on hold while it considered reviewing the agreement. 

In a brief for the government filed with Justice Sonia Sotomator, Solicitor General Elizabeth Prelogar described the Chapter 11 reorganization plan approved as part of the deal as “one of the most significant and expansive nonconsensual releases of nondebtors’ claims against other nondebtors in the history of our bankruptcy system.”

She went on to argue that the justices should have the opportunity to resolve a longstanding disagreement in the circuits and decide whether that sweeping release of claims against the Sacklers and others is lawful.

Later in the brief, Prelogar added:  “Allowing the court of appeals’ decision to stand would leave in place a road map for wealthy corporations and individuals to misuse the bankruptcy system to avoid mass tort liability.” 

The settlement between the families of the late Mortimer and Raymond Sackler, the brothers who owned and operated Purdue Pharma, and eight states, as well as the District of Columbia, was initially agreed upon in March.

It opened the door to the Sackler family avoiding any further civil opioid litigation in exchange for payments of up to $6 billion to thousands of plaintiffs.

In a statement released at the time, the Sacklers said they believe “the long-awaited implementation of this resolution is critical to providing substantial resources for people and communities in need.”

“We are pleased with the court’s decision to allow the agreement to move forward and look forward to it taking effect as soon as possible,” they added.

In May, the 2nd U.S. Circuit Court of Appeals in New York gave its blessing to the agreement.

In a series of filings in the case over the past two weeks, attorneys for Purdue Pharma and other parties argued that the justices should stay out of the case.

Purdue’s attorneys in particular complained that to grant what they called “a baseless stay application” would only further harm victims and “needlessly delay the distribution of billions of dollars to abate the opioid crisis.”

The court’s two-paragraph order was unsigned and included no dissents.

It directed the parties to brief and argue a single question: “Whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent?”

It further directed the clerk of the court to establish a briefing schedule that will allow the case to be argued in the December 2023 argument session.

Dan can be reached at [email protected] and @DanMcCue