Bankruptcy Judge Grants Purdue Pharma Time Out from Government Opioid Litigation

By and | October 13, 2019

Purdue Pharma LP and its billionaire owners won a temporary reprieve from nearly 2,700 opioid lawsuits, giving the bankrupt drugmaker time to clinch a deal that would atone for its role in America’s addiction epidemic.

U.S. Bankruptcy Judge Robert D. Drain said stopping the litigation until at least Nov. 6 is the best way to get money quickly from Purdue and its Sackler family owners to help opioid victims.

The ruling means about two dozen states and hundreds of cities and counties can’t take Purdue or the Sacklers to trial for now over allegations that the company and the family inflamed the opioid crisis by illegally pushing highly addictive OxyContin painkillers.

“The Court’s decision is an essential next step in preserving Purdue’s assets for the ultimate benefit of the American public,” Purdue said in statement. “The company will work tirelessly and collaboratively during this pause in the litigation to continue to build support for the settlement structure.”

Drain said that allowing all the lawsuits to proceed during the Chapter 11 bankruptcy case would result in a “litigation festival, which I don’t think the American people want.”

Public Good

Purdue filed for bankruptcy after working out a deal with the Sacklers and 23 states that would require the family to pay at least $3 billion to help address the opioid crisis.

The deal also calls for the Sacklers to turn over Purdue to a trust that would run the company and use its profits for the public good.

Purdue and the Sacklers had asked Drain to halt all litigation against them for 180 days, but after several states, including New York and Massachusetts, argued against the request, the period was cut down to let all sides negotiate.

The Sacklers have enormous wealth, but they “have largely hidden it and are getting a free pass for putting in $3 billion,” said attorney Beth Kaswan, who represented a number of local governments in Massachusetts. By allowing the lawsuits to continue, that wealth can be uncovered, Kaswan said.

Daniel Connolly, an attorney for the Raymond Sackler family, has previously said that the money distributed to the family by Purdue over the years was used to pay taxes and reinvest in businesses that will be sold as part of the proposed settlement.

“If the stay is granted, the Sackler family hopes to reach a productive resolution where they contribute Purdue for the public benefit and provide at least $3 billion of additional money to help communities and people who need help now,” Connolly said in a statement earlier this month.

Purdue lawyer Marshall Huebner said that key members of the Sackler family have agreed to limitations on transferring their wealth.

All sides will return to court next month, when Drain may consider extending the halt. He said during Friday’s hearing that he’s “far from approving” a longer injunction, and expressed an interest in some form of fact-finding as part of a resolution of the case.

“We’re pleased with the court’s desire for transparency and its recognition of the public’s need to know the facts that led to this national epidemic,” said New York Attorney General Letitia James. “We look forward to further proceedings and holding the Sacklers responsible for the role they played in the opioid crisis.”

The case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains)

(Updates with Purdue statement in fourth paragraph, attorney comment

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