Reversal of $6B opioid deal could impact clergy abuse cases

The U.S. Supreme Court's 5-4 decision Thursday that a bankruptcy agreement does not protect third parties - in this case, the Sackler family, who profited from sales of OxyContin by its company, Purdue Pharma - from civil liability could have widespread implications for other cases, including litigation against the Roman Catholic Church in California over child sexual abuse.

The ruling squelches a $6 billion deal reached between the Sackler family and states, local governments, tribes, and individuals to help with the opioid crisis the company helped create.

Justice Neil M. Gorsuch, an appointee of President Donald Trump, wrote that the bankruptcy code does not allow an agreement that allows the Sackler family to "extinguish virtually all claims against them for fraud, willful injury, and even wrongful death, all without the consent of those who have brought and seek to bring such claims," he wrote for the 5-4 majority.

"The Sacklers have not filed for bankruptcy and have not placed virtually all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge," Gorsuch added. "Describe the relief the Sacklers seek how you will, nothing in the bankruptcy code contemplates (much less authorizes) it." Harrington v. Purdue Pharma LP, 2024 DJDAR 5818 (S. Ct., filed July 28, 2023).

Gorsuch's opinion was joined by Justice Clarence Thomas, an appointee of President George H.W. Bush; Justice Samuel A. Alito Jr., an appointee of President George W. Bush; Justice Amy Coney Barrett, an appointee of President Donald Trump; and Justice Ketanji Brown Jackson, an appointee of President Joe Biden.

Justice Brett M. Kavanaugh, a Trump appointee, dissented, arguing that killing the deal, however imperfect, would deny compensation to victims. He was joined by Chief Justice John G. Roberts Jr., a Bush appointee; and Justices Sonia M. Sotomayor and Elena Kagan, who were appointed to the court by President Barack Obama. Kavanaugh noted that it had been accepted by all parties except for a few individual plaintiffs and the U.S. Trustee.

"The Court's decision rewrites the text of the U. S. Bankruptcy Code and restricts the long-established authority of bankruptcy courts to fashion fair and equitable relief for mass-tort victims," he wrote. "As a result, opioid victims are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation."

Attorney General Rob Bonta had agreed, along with the other states, to the deal with the Sacklers and did not file a brief in the Supreme Court case. But he seemed to applaud the court's decision on Thursday.

"No amount of money will ever undo the devastation that the Sacklers and Purdue Pharma have caused in perpetuating this crisis, but today's decision will allow those that have suffered at the hands of the Sacklers to hold them accountable for their greed and willful misconduct," he wrote.

North Carolina Attorney General Josh Stein said in a statement that the ruling means "we now have to go back to the negotiating table. ...Purdue and the Sacklers must pay so we can save lives and help people live free of addiction. If they won't pay up, I'll see them in court."

A Purdue Pharma spokesperson also expressed a willingness to negotiate on a new agreement. "We will immediately reach back out to the same creditors who have already proven they can unite to forge a settlement in the public interest, and renew our pursuit of a resolution that delivers billions of dollars of value for opioid abatement and allows the Company to emerge from bankruptcy as a public benefit company," Purdue Pharma said in a statement.

The ruling could have an impact on other matters such as lawsuits filed against the Roman Catholic Church in state court over sexual abuse by clergy and the Boy Scouts of America.

Jeff Anderson of Jeff Anderson & Associates, who represents plaintiffs in the sexual abuse cases against the church, hailed the court's reversal of the 2nd U.S. Circuit Court of Appeals approval of the Sackler deal. "The Supreme Court said you can't force third parties into settlements" by filing for bankruptcy, he said in a phone interview.

The U.S. Conference of Catholic Bishops filed an amicus brief asking the Supreme Court to support the 2nd Circuit decision. Multiple diocese in California have filed for bankruptcy protection since the beginning of last year following passage of a 2019 law that allowed plaintiffs a three-year window to file claims for child sexual assault past the statute of limitations.