Supreme Court blocks controversial Purdue Pharma opioid settlement

Link to ruling:

https://www.supremecourt.gov/opinions/23pdf/23-124_8nk0.pdf

It’s pretty wild that everyone acknowledges that the Sacklers engaged in a “milking program” going from 15% to 70% distributions after the first lawsuits in order to strip the company of assets and then hide behind the company to shield liability. This alone should allow claimants to pierce the corporate veil and go after the family directly.

I could see shielding from future civil liability as an option, but only after a true bankruptcy has occurred. Liquidate everything, and by that I mean everything, and then you can move on with your life. Definitely no shielding money in offshore accounts.

If you're not willing to do that ... well, see you in court. Over and over, because every individual you hurt should have a chance to come at you with a liability claim.

Matt Levine has covered this several times in the past, worth reading. From memory, the Purdue family had put away their money in legally sheltered arrangements, so even an unfavorable decision (to the Sacklers) would likely not be able to claw back much money. The previous deal traded the risk of trial for a perceived as decent compensation. My read is that the majority in the supreme court disagreed that you can always financial-engineer your way out of trials

I understand people who think the Sacklers are villains who destroyed lives, Purdue should be shut down, and we should transform the legal regime around opioids.

I understand people who think Purdue should continue, the status quo is OK, and the Sacklers are not [simply] villainous.

I don't understand people who think the Sacklers are villains who destroyed lives, but Purdue should continue operating more-or-less as-is. Which is, I think, the conclusion from this settlement. If this is you, can you help me understand? Do you think there is/was a realistic way to prescribe opioids routinely and safely?

I changed the URL from https://arstechnica.com/science/2024/06/opioid-settlement-to... to an article that has more information and a less baity title. If there's a better (more accurate and neutral) article, we can change it again.

This is a more complex case than I thought, and the dissent argument is actually very powerful and convincing:

https://www.supremecourt.gov/opinions/23pdf/23-124_8nk0.pdf

Basically, the original judge did a good job - the settlement plan was reasonable and widely popular. And the Sackler family being released from liability by putting billions of personal dollars into the payment fund meant more victims would get more money immediately.

With this ruling, the Sacklers are personally legally liable again - which may make you or I more happy, but this means that victims have to pursue a much harder and more expensive set of lawsuits to get money from the Sackler family. It also means the victims of the deal don't get a voice in the proceedings, and it may also make future payouts and bankruptcies harder if there is no reason to cooperate with the state.

The Sacklers want to have their cake and eat it. They want both:

- To avoid filing for bankruptcy, and

- For a bankruptcy settlement to release them from additional liability.

Matt Levine at Bloomberg gives an excellent explanation of what happened, the ruling, why etc without telling you what you should think is the right thing or right outcome.

His explanations from first principles covering ground you already know are just excellent. Worthwhile reading for anyone who has to explain detailed, complex & technical subject matter.

https://www.bloomberg.com/opinion/articles/2024-06-27/purdue...

> WASHINGTON — The Supreme Court on Thursday blew up the massive bankruptcy reorganization of opioid maker Purdue Pharma, finding that the settlement inappropriately included legal protections for the Sackler family, meaning that billions of dollars secured for victims is now threatened.

Does anyone find it strange that this is described as a loss for the victims?

>The court on a 5-4 vote ruled that the bankruptcy court did not have the authority to release the Sackler family members from legal claims made by opioid victims. As part of the deal, the family, which controlled the company, had agreed to pay $6 billion that could be used to settle opioid-related claims, but only in return for a complete release from any liability in future cases.

Is this actually a positive outcome or a kick-the-can?

How is there such a big divide in the court on this? Is the law really this unclear on the matter?

Pound for pound, the Sacklers probably did more damage to America than any other drug dealers in history. More damage than any serial killer or mass shooter. In my mind they should be considered public enemies 1 through N. I sincerely hope they face civil and criminal liabilities for what they’ve done.

This is the only reasonable outcome... you can't deny some people justice just because other people think it's fine.

The sacklers have done immeasurable damage to the country. All of their wealth should be removed. Their foundation should be dismantled and used to fund damage and mental health services for addicts of the opioid crisis that they went on to create.

And perhaps some of the individual pushers/purveyors of the drugs, too.

The wild part is how the justices were split: Gorsuch wrote for the majority, joined by Thomas, Alito, Barrett and Jackson. You won't often see these 5 seeing eye to eye in a split decision.

This ruling breaks my usual test that the conservative majority will nearly always side with corporate intersts because this decision definitely isn't pro-corporate.

The settlement would essentially shield the Sacklers from all liability and allow them to keep the proceeds of their crimes while paying a fine over a long period of time essentially from future earnings on thse ill-gotten gains.

The dissent seemed to say this was bad for 100,000 opioid victims. That's not a reason to legally shield the crooks who profited from their death and suffering. I'm shocked that Kagan and Sotomayor, in particular, went for that line of reasoning.

In a just world, the Sacklers would die pennieless in a 6x8 cell. Fines are just the cost of doing business. Intentionally addicting hundreds of thousands (if not millions) to opioids for profit, knowingly, should lead the loss to both your freedom and every dollar you earned from that endeavour.

> Purdue made billions from OxyContin, a widely available painkiller that fueled the opioid epidemic

> Justices Kavanaugh, Sotomayor, Kagan, and Roberts disagreed

Fascinating split

Without proper context, it’s not clear to me if this is good or bad. It bad for the victims because there’s no settlement. It’s good for justice as people with a ton of money shouldn’t be above the law.

Fraudulent Transfer...

From Reddit...

Piercing the corporate veil would mean disregarding the corporate form entirely. It usually comes up when the owner-manager of a company fails to distinguish the corporation as a separate entity with its own purpose and finances, using the company as a personal piggie bank or otherwise going about life as usual and not going through the motions required of corporations under the law.

What plaintiffs have alleged against the Sacklers is different, and specific to bankruptcy. Perdue is out of money and is bankrupt, mostly because it caused billions of dollars of damages to hundreds of thousands of people and to the states (which now have to clean up the opioid mess). But not that long before it went bankrupt, it was swimming in money. Perdue didn't use those profits to avoid harming people. Nor did it keep the money on hand to pay potential tort claims from the people it was harming. Instead, Perdue's officers and board of directors (that is, the Sacklers) approved dividends of billions of dollars to be paid to the company's shareholders (that is, again, the Sacklers).

The plaintiffs in various lawsuits have alleged that the Sacklers knew that the profits were temporary and the bill would come due, so they purposefully got the money out of the company while the getting was good. More technically: it is alleged that Perdue's owners received assets that were transferred from Purdue with actual intent to hinder, delay, or defraud creditors.

One thing you absolutely are not allowed to do is use your company to rack up a bunch of debt or liability, take all the assets out of the company, and then declare bankruptcy and expect to get to keep the money. We call that "fraudulent transfer," and if a court finds that you did fraudulent transfers from your company to your personal bank account you will be ordered to pay that money back to the company (so it can use that money to pay back its creditors and other claimants). The company still exists, it's a distinct legal person (so not technically piercing the veil), you just took the company's money as if it were a profit when you knew full well the company couldn't afford to pay out profits.

One big difference between the concepts is this: If Perdue's corporate veil were pierced, the Sacklers would be personally on the hook for all the harm their company caused -- they could lose their bank accounts, vacation homes, nice cars, artwork, everything, as if they themselves (rather than "Perdue") had been the ones going around knowingly fueling a drug addiction crisis. Whereas if they merely engaged in fraulent transfer of assets, the Sacklers are only on the hook to give back what they fraudulently took from the company during the period it can be proven that they knew of the looming liability -- limited to the statute of limitations, which I think is around 6 years. So all the money they made before that, and all the money they have from non-fraudulent sources, is safe from creditors.

What share of the guild do the medical providers that prescribed the opioids to their patients have? There would be no opioid crisis if none were willing to do it.

Did the Sacklers forget to renew their subscription to Clarence Thomas or something?

Court skipped an opportunity to quote Franklin, since "Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety" actually referred to a legislature entertaining a very similar Faustian bargain (i.e. value now in exchange for perpetual promise to remove responsibility from a family).

... but probably the correct choice, as that was a legislative, not judicial, circumstance and their decision in the time has no bearing on jurisprudence.

For those claiming the Supreme Court is a political institution, I'd like to note that this was indeed a 5-4 decision.

But one with Justices in the majority who were appointed by Biden, Trump, Bush 43, and Bush 41, and in the minority who were appointed by Bush 43, Obama, and Trump.

It was Jackson, Gorsuch, Barrett, Alito, and Thomas in the majority and Sotomayor, Kagan, Roberts, and Kavanaugh in the minority.

I blame the doctors too. I was a teen in the early/mid 2000s and even I knew about the addictiveness of oxycodone. It wasn't called hillbilly heroin for nothing.

I recently watched these 3 episodes of Last Week Tonight with John Oliver. Highly recommended.

Opioids III: The Sacklers: Last Week Tonight with John Oliver (https://www.youtube.com/watch?v=uaCaIhfETsM)

Opioids II: Last Week Tonight with John Oliver (https://www.youtube.com/watch?v=-qCKR6wy94U)

Opioids: Last Week Tonight with John Oliver (https://www.youtube.com/watch?v=5pdPrQFjo2o)

nice

I find the Supreme court decisions to be fascinating reads and overall much more interesting and complicated than most news services make them out to be.

Thank you. For my purpose as a reader it is editorial incompetence that the article neither provided that link, nor the name of the case to make it easy to lookup.

Discussed here: https://news.ycombinator.com/item?id=40810767

There will be people like Sacklers until we start putting them away and throwing away the key. We do need to put rich people in jail at least every now and again, if for no other reason than to demonstrate we're not a banana republic.

Interestingly the same kinds of tactics used to push opiates on the general public are still being used to push amphetamine analogs - but the death rate from amphetamine addiction/overdose is much much lower (>1000X lower) than that from opiate addiction/overdose so it doesn't really hit the headlines, and arguably is not as much of a concern.

From a libertarian point of view, mood- and mind-altering substance use should be the citizen's choice, but for this to not result in an epidemic of addiction, it would require a well-educated public who understands that whatever short-term apparent benefit a drug (including alcohol and nicotine and caffeine) delivers, there's always a tax that must be paid afterwards, and use must be kept below the addictive threshold, meaning if you start needing more of the drug to get the same effect, the only rational thing to do is to stop using the drug until your tolerance goes back to zero.

This of couse goes against consumer society norms, where the concept of 'less is more' is almost a heresy.

I don't understand the hatred directed at the Sacklers. Oxycodone is, just like all other opiates, highly effective at suppressing pain, potentially addictive, and deadly in large enough doses. This has been common medical knowledge for millennia. Why do so many people believe that they are responsible for overdose deaths?

Seems like the justices missed a great opportunity here to rule in favor of the settlement and then receive $$$$$$ next year as a thank you gift.

Because buying government officials is now entirely legal.

https://www.scotusblog.com/2024/06/supreme-court-limits-scop...