On Tuesday, a federal appellate court granted the Sackler family complete civil immunity from current and future opioid claims. Consequently, the billionaire owners of the now-defunct Purdue Pharma won’t have to pay billions of dollars in damages to plaintiffs who have been harmed by the opioid crisis. The Sacklers will not be liable for any lawsuits arising from their participation in Purdue’s enormously profitable OxyContin business unless the Supreme Court of the United States reverses its decision.

A bankruptcy judge approved a settlement in September 2021 that required Purdue Pharma to file for bankruptcy, then be dissolved, and its owners to pay $6 billion in restitution for the company’s role in starting and escalating the opioid crisis. Knoa Pharma would then be the name of the new business. A public board would oversee Knoa’s operations, which would produce medications for the treatment and reversal of addiction. Additionally, Knoa would continue to provide additional funding to the plaintiffs in the underlying lawsuit. In the meantime, the Sacklers would not declare bankruptcy and would be protected from individual lawsuits.

Additionally, the Sackler family’s names were removed from buildings, hospital wings, and museums as part of the 2021 settlement, which permanently prohibited them from participating in the opioid business.

However, months later, U.S. District Judge Colleen McMahon of the Southern District of New York overturned the bankruptcy court’s decision and stated that the Sacklers could not be released from their obligations under federal bankruptcy law.

On Tuesday, a unanimous three-judge panel of the U.S. Court of Appeals for the Second Circuit overruled that district court judge. The judges decided that the settlement allows the Sacklers to be protected from current and future lawsuits under the Bankruptcy Code.

The majority opinion for the panel was written by U.S. Circuit Judge Eunice C. Lee, who was appointed by Joe Biden. Senior Circuit Judges Jon O. Newman, who was appointed by Jimmy Carter, and Richard C. Wesley, who was appointed by George W. Bush, were also on the panel.

“Bankruptcy is inherently a creature of competing interests, compromises, and less-than-perfect outcomes,” Lee began. Due to these central traits, the complete fulfillment of all that is owed — whether in cash or in equity — seldom happens.”

According to Lee, the court need not address the Sacklers’ “questions about fairness and accountability… for actions that cause great societal harm” in order to rule on the appeal’s more specific issues. Instead, the court only needed to decide if, under bankruptcy law, the Sacklers can take advantage of Purdue’s liability protection even though they did not file for bankruptcy. This is because bankruptcy law typically stops all lawsuits against the filling debtor.

The unanimous panel reinstated the settlement’s approval after concluding that the bankruptcy court had the authority to approve the settlement as part of its power to discharge bankruptcy debts.

Lee cited an unrelated 2019 case to illustrate the limits of the Sacklers’ release from liability, stating that the court was aware of the ruling’s “potential for abuse.” A delivery from responsibility is not one or the other “a legitimacy identification,” or a “investment prize,” nor a “gold star for working really hard,” composed Lee.

Wesley penned a concurrence to highlight what he described as an “extraordinarily powerful tool” that a bankruptcy or other court could use. Wesley emphasized the need for a statutory codification of the bankruptcy court’s authority to extinguish claims against individuals who are not debtors in the bankruptcy proceeding.

Source – Lawandcrime