Supreme Court hears case that could shield Purdue Pharma owners from opioid lawsuits

Geoff Bennett:

The U.S. Supreme Court heard arguments today in one of the most important corporate bankruptcy cases in decades.

It involves the players at the center of the opioid epidemic, Purdue Pharma and the Sackler family, who owned the company. The court is weighing whether to approve Purdue Pharma's controversial bankruptcy deal that would give billions of dollars to victims of the opioid epidemic, while protecting members of the Sackler family from current and future opioid-related civil lawsuits.

Our Supreme Court analyst, Marcia Coyle, is with us.

Marcia, you were at the Supreme Court today for the arguments. There were some fairly dense and technical arguments that the justices heard, but, big picture, what are they considering here?

Marcia Coyle:

Well, first of all, the real issue before the court is whether the bankruptcy court here had the authority somewhere in the code or elsewhere to approve a settlement that does give immunity basically to the Sackler family, as you said, from all civil opioid-related claims, even though the Sackler family was not part of this bankruptcy.

They themselves did not apply for bankruptcy. So the justices were probing both sides with some skeptical questions of both sides on whether there is authority for this. But also what was interesting, Geoff, is it was very clear that the justices had their eye on the practical implications of a decision.

If they find that there was no authority, does that — is it possible that there's a better deal to be negotiated, as the United States trustees suggested, or will there be a race to the courthouse by individual claimants, where one claimant with a huge claim could zap all the assets of the corporation should that claimant win and nothing will be left for anyone else?

Geoff Bennett:

And we should say some of the victims' families support the settlement. Others oppose it. Our team spoke with two mothers who both lost their sons to the opioid epidemic.

Here's what Ellen Isaacs — she lost her son Ryan to an overdose five years ago, and she's against the settlement. Here's what she said.

Ellen Isaacs, Mother of Opioid Victim: Forty-eight thousand dollars is what the cost is for your child to be gone, that you will get a payout. And then there's certain stipulations on top of that. The rich should not be able to create their own system of justice that is above the law. It's totally unfair to the more than 500,000 families and clocking that have lost a loved one and not being able to have accountability.

Geoff Bennett:

But the vast majority of families voted in favor of the settlement, including Dede Yoder. She's a single mom whose only son, Chris, died of an overdose back in 2017.

Dede Yoder, Mother of Opioid Victim: There is no way any family even now could go after the Sacklers. You needed — the bankruptcy included all the states, the municipalities, all the attorney generals of all the states. You needed the power of all these people in order to get this kind of settlement.

It also says that my son's life was worth something, rather than worth nothing. I mean, that — the symbolism of it to me is also important.

Geoff Bennett:

So how did those arguments play out in court today?

Marcia Coyle:

Well, it was interesting.

Justice Kavanaugh, for example, noted to the government's lawyer that these releases that the Sackler family got, they have been approved by courts for about 30 years. In fact, corporations have been looking to bankruptcy when they face mass injury claims since the 1980s. So he asked, well, why should we suddenly, after 30 years of approvals, throw this one out?

But then there was also concern like Justice Kagan raised that the Sacklers here are getting a benefit, a deal that's better than what the average person or corporation that goes into bankruptcy can get, especially with the immunity side of things.

So there was no love for the Sacklers in this courtroom today. That's one thing that was very clear. Justice Gorsuch raised some constitutional issues. Some of these claims that have been released as part of the settlement are nonconsensual claims. And he pointed out, we don't usually terminate rights without some kind of process, some kind of due process.

So I think they're really struggling with this, but, as I said earlier, they have their eye on the practical implications. And I would like to say too, Geoff, that these families, whether they're supporting or opposing this settlement, they're not getting a windfall, by any means. The average payout is going to be $3,500 to $48,000.

And it's over a long period of time, minus lawyers' fees, taxes, other stipulations. What they really, really want, if you read the briefs in the cases, they want the money in the settlement that will go towards treatment and abatement of the opioid crisis.

Geoff Bennett:

That's an important point.

You mentioned the practical implications. What are they outside of this case?

Marcia Coyle:

OK.

Well, there are real implications for bankruptcy in general. There's a fear that corporations may see this, if the releases are upheld, as a road map for corporations and wealthy individuals who own those corporations to basically get the kind of deal that the Sacklers got. Is this really consistent with how we view bankruptcy, as a fresh start, a reorganization for companies?

So it could affect just bankruptcy in general. Also, it could have an effect on future mass injury claims, as well as current ones. The Boy Scouts of America filed an amicus brief urging the court, look, if you do throw out these releases, please don't upend those that are already final or seem to be a done deal.

So there is concern, too, about how those will be affected by whatever the court decides.

Geoff Bennett:

Marcia Coyle, thank you for being our eyes and ears in the court today and for helping us understand this case.

Marcia Coyle:

Always a pleasure, Geoff.