(Reuters) — Bankrupt OxyContin maker Purdue Pharma can shield its owners, members of the wealthy Sackler family, from opioid lawsuits in exchange for a $6 billion contribution to the company’s broader bankruptcy settlement, a U.S. appeals court ruled on Tuesday.
The New York-based 2nd US Circuit Court of Appeals said US bankruptcy law allows legal protection for non-bankrupt parties, such as the Sacklers, in extraordinary circumstances.
In a majority opinion written by 2nd Circuit Judge Eunice Lee, the court ruled that the legal claims against Purdue were inextricably linked to claims against its owners and that allowing the lawsuits to continue targeting the Sacklers would undermine Purdue̵7;s efforts to reach a bankruptcy settlement.
Judge Richard Wesley wrote a separate opinion in which he “reluctantly” agreed that protection for the Sacklers was legal, based on the court’s previous ruling. But U.S. bankruptcy law does not expressly allow courts to strike out lawsuits against non-debtors like the Sacklers, and Congress or the U.S. Supreme Court should step in to clarify an issue that has divided courts across the U.S., Wesley wrote.
Purdue has sought to use its bankruptcy case to settle thousands of lawsuits, many filed by state and local governments, alleging that OxyContin helped start an opioid epidemic that caused more than 500,000 deaths in the United States over two decades.
Purdue has pleaded guilty to charges related to its opioid marketing, while its owners have expressed remorse but denied wrongdoing.
The Sackler family members have agreed to contribute up to $6 billion to a trust that will be used to pay claims from states, addiction victims, hospitals and others who have sued Purdue over its misleading marketing of OxyContin.
In exchange, the Sackler family will receive broad legal protection from lawsuits related to the opioid crisis.
The families of the late Mortimer Sackler and the late Raymond Sackler said in a joint statement that they look forward to moving forward after the long wait for a 2nd Circuit decision.
“The Sackler families believe the long-awaited implementation of this resolution is critical to providing significant resources for people and communities in need,” the families said.
The Sackler grant accounts for most of the cash payment in a broader bankruptcy settlement that values Purdue at more than $10 billion.