With court's blessing, billionaire Sackler family awarded legal protections in Purdue's $6B settlement

After years of litigation, a United States appeals court has endorsed Purdue Pharma’s $6 billion opioid settlement and awarded legal protections for its former owners, the billionaire Sackler family.

The U.S. Court of Appeals reversed a prior lower court decision that took away protections for the family in the settlement. Now, the Sacklers can shield themselves from opioid-related lawsuits despite not filing for bankruptcy. 

Before filing for bankruptcy, the Sackler-owned Purdue Pharma marketed OxyContin. Its aggressive marketing tactics have been credited as a driving force behind the United States opioid epidemic and have prompted many lawsuits.

Now, in a new ruling, U.S. Circuit Judge Eunice C. Lee noted the “magnified complexities” of the situation because in the mass tort litigation, “the debts owed are wide-ranging and the harm goes beyond the financial.”

“Bankruptcy is inherently a creature of competing interests, compromises, and less-than-perfect outcomes,” Lee wrote in the court’s decision. “Because of these defining characteristics, total satisfaction of all that is owed—whether in money or in justice—rarely occurs.”

The case made its way to the appeals court after a court in the Southern District of New York blocked the proposed settlement deal in late 2021, ruling that bankruptcy court judges don’t have the authority to pass a settlement that would include protections for those who have not filed for bankruptcy.

The settlement, originally reached last March, called for Purdue and the Sackler family to pay up to $6 billion to states and victims of the opioid epidemic. That settlement was a 40% boost from the prior $4.3 billion settlement between Purdue and dozens of states, which was appealed by several attorney generals who argued that the deal was insufficient.

At this point, parties opposing the plan have dropped in number since the latest appeal was filed, the appeals court noted in its decision. Now, opposers include the U.S. trustee, several Canadian municipalities and indigenous nations and some individuals. The group raised questions about fairness and accountability in “releasing parties from liability for actions that cause great societal harm,” which the court considers a debate over “the very nature” of bankruptcy that it is not required to answer.

Purdue filed for bankruptcy back in 2019 after contributing to the opioid epidemic by aggressively marketing OxyContin while downplaying its addictive properties.