The liability shield would have protected members of the Sackler family from civil claims related to the opioid epidemic.
The Supreme Court on Thursday rejected a provision at the heart of a multibillion-dollar settlement with Purdue Pharma that would have channeled billions of dollars to help curb the opioid epidemic in exchange for shielding members of the wealthy Sackler family from related lawsuits.
In a 5-to-4 decision, written by Justice Neil M. Gorsuch, a majority of the justices held that the federal bankruptcy code does not authorize a liability shield for third parties in bankruptcy agreements. Justice Gorsuch was joined by Justices Clarence Thomas, Samuel A. Alito Jr., Amy Coney Barrett and Ketanji Brown Jackson.
In a strongly worded dissent, Justice Brett M. Kavanaugh wrote that the “decision is wrong on the law and devastating for more than 100,000 opioid victims and their families.” He was joined by Chief Justice John G. Roberts Jr. and Justices Sonia Sotomayor and Elena Kagan.
The decision jeopardizes a carefully negotiated settlement Purdue and the Sacklers had reached in which members of the family promised to give up to $6 billion to states, local governments, tribes and individuals to address a devastating public health crisis.
It all but ensures that members of the Sackler family, who controlled Purdue Pharma, the maker of the prescription painkiller OxyContin, will no longer be subject to a condition of the deal that had generated significant criticism: immunity from liability in opioid-related lawsuits, even as they had not declared bankruptcy.
The U.S. Trustee Program, a watchdog office in the Justice Department, had asked the Supreme Court to intervene. The liability shield, which binds potential claimants without their consent and offers wide-ranging legal protection for the Sacklers, was a misuse of a bankruptcy system aimed at addressing “true financial distress, the office said.