Sackler Family Members Granted Immunity from Opioid Lawsuits in Purdue Settlement Deal
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The Sackler family, owners of OxyContin producer Purdue Pharma, have reached a settlement deal that will grant them immunity from civil lawsuits related to their company’s ties to the opioid addiction crisis. Under the deal, the Sacklers will pay $6 billion in exchange for immunity from any future civil cases and give up ownership of Purdue, which is set to become a new company called Knoa that uses its profits to fight the opioid crisis.
The 2nd U.S. Circuit Court of Appeals in New York reversed a 2021 lower court ruling that found Sackler family members could not be protected from civil lawsuits as part of a Purdue Pharma bankruptcy deal because, while the company filed for bankruptcy in 2019, the individual family members never filed for bankruptcy protection themselves. Tuesday’s ruling paves the way for the settlement deal, which was made in 2022.
The Sackler family has been facing lawsuits from governments and individuals accusing the company and the family of contributing to the opioid crisis, which has claimed more than 500,000 lives since 1999. The settlement deal was met with widespread backlash, with the judge who presided over the settlement saying he wished the payment had been higher.
However, the court argued that bankruptcy protections can extend to non-bankrupt parties in extraordinary cases, and legal claims against Purdue are inextricably linked to its owners, so allowing lawsuits against the Sacklers would undermine the company’s bankruptcy settlement.
The Sackler family members, most of whom sat on the company’s board, have expressed regret in written statements but have not admitted wrongdoing or been charged criminally. Purdue Pharma first pleaded guilty in 2007 to misleading the public about the highly addictive pain medication, OxyContin. Since then, the company has faced scores of lawsuits accusing it of using deceptive sales and marketing practices for its opioid painkillers, helping to spark a nationwide addiction academic.
The settlement still must be approved by a bankruptcy court judge and there’s a chance Tuesday’s ruling could be put on hold if there is an appeal to the U.S. Supreme Court. However, the appellate court’s decision has granted the Sackler family members immunity from any future civil cases, allowing them to pay $6 billion to settle the some 3,000 lawsuits filed against them.
The Sackler family was worth $10.8 billion in 2020, making them one of the 30 richest families in the United States. Three Sackler brothers—Arthur, Raymond and Mortimer—bought Purdue in the 1950s. At least eight of the Raymond and Mortimer’s children have been listed as defendants in lawsuits against Purdue—Arthur’s children have said publicly they did not participate in or benefit from the company.
Now that the appeal is concluded, Purdue must return to court to obtain final approval of the settlement deal. The agreement still must be approved by a bankruptcy court judge and there’s a chance Tuesday’s ruling could be put on hold if there is an appeal to the U.S. Supreme Court.
The Sackler family’s settlement deal has been met with criticism from those who argue that the bankruptcy system should not be allowed to shield non-bankrupt billionaires. However, the court has ruled in favor of the Sacklers, granting them immunity from any future civil lawsuits and allowing them to pay $6 billion to settle the some 3,000 lawsuits filed against them. The settlement still must be approved by a bankruptcy court judge and there’s a chance Tuesday’s ruling could be put on hold if there is an appeal to the U.S. Supreme Court. If approved, the Sacklers will give up ownership of Purdue and the company will become a new company called Knoa that uses its profits to fight the opioid crisis.