Sacklers Threaten to Pull Out of Opioid Settlement Without Broad Legal Immunity

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At least 2,700 lawsuits and hundreds of thousands of claims have been registered against Purdue, beginning in 2014, when the opioid epidemic began to crest. The plaintiffs span a vast array including 48 states, local governments, tribes, hospitals, individuals and monitors of infants born with symptoms of withdrawal to opioids, all of whom have been ravaged and financially depleted by opioids.

In more recent years, individual Sacklers themselves have been named in a growing number of the cases.

Nearly two years ago, Purdue filed for bankruptcy restructuring, which put an automatic stay on those lawsuits. But the Sacklers themselves did not file for bankruptcy, although they insisted that they, too, benefit from the liability releases expected to be given to their company.

The issue of releases for the Sacklers and other third parties is at the heart of the resistance to the bankruptcy plan now pursued by nine states, including Maryland, Washington and Connecticut. The District of Columbia, the federal Justice Department and U.S. Trustee, a program in the Justice Department that monitors bankruptcy cases, as well as some Canadian local governments and First Nations, have joined in the objections.

According to current law in the Second Circuit Court of Appeals, in which Judge Drain’s court is located, the judge can grant releases to the Sacklers and other third-party individuals who have not filed for bankruptcy. But, broadly speaking, the issue is unsettled.

Other federal circuits prohibit it. The question has been taken up by members of Congress, and may well drive an appeal by the objectors, should Judge Drain confirm the plan. The hammering questions by objecting lawyers have so far been intended not only to raise questions about the plan, but to lay a foundation for such appeals.

Alain Delaquérière contributed research.