Harrington v. Purdue Pharma
Legal Issues
Overview
Overview
Purdue Pharma filed for bankruptcy while facing billions in opioid liability, and the Sackler family. Who owned Purdue and had already extracted roughly 1 billion from the company. Agreed to contribute several billion dollars to a settlement fund in exchange for a provision shielding them from future opioid lawsuits, even though they hadn't filed for bankruptcy themselves. The Supreme Court ruled 5-4 in June 2024 that the bankruptcy code does not permit this kind of third-party liability release. A bankruptcy court can't give non-bankrupt individuals a sweeping shield from civil suits as part of a reorganization plan. The decision threatened to unravel the Purdue settlement and left the opioid litigation in a complicated posture. Bryan covers it as a case about who gets to use the bankruptcy system and on what terms, and as a case that touches the entire architecture of mass-tort litigation settlements.
The Conclusion
Conclusion
The Supreme Court held 5-4 that bankruptcy courts may not release non-bankrupt third parties from civil liability as part of a reorganization plan. Purdue Pharma's settlement proposed shielding the Sackler family from future opioid-related lawsuits in exchange for their multibillion-dollar contributions, but the Court ruled this arrangement exceeded the bankruptcy code's scope.
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