Thursday, June 27, 2024

Court rejects unorthodox civil procedure for Purdue Pharma bankruptcy

Abbe Gluck

 Justice Gorsuch's opinion rejecting the deal that allowed the non-debtor Sackler family to contribute to the Purdue Pharma opioid settlement in exchange for discharge from civil liability-- an off-ramp from civil litigation, liability, and accountability--relied almost entirely on the text of the bankruptcy code.  However, this snippet is a nod to our argument, previously blogged about here, that bankruptcy cannot be used as a cure-all for the challenges of complex civil litigation:

"So, yes, bankruptcy law may serve to address some collective-action problems, but no one (save perhaps the dissent) thinks it provides a bankruptcy court with a roving commission to resolve all such problems that happen its way, blind to the role other mechanisms (legislation, class actions, multi-district litigation, consensual settlements, among others) play in addressing them."

and here:

"Thousands of opioid victims voted against the plan too, and many pleaded with the bankruptcy court not to wipe out their claims against the Sacklers without their consent. 635 B. R., at 35. 'Our system of justice,” they wrote, “demands that the allegations against the Sackler family be fully and fairly litigated in a public and open trial, that they be judged by an impartial jury, and that they be held accountable to those they have harmed."

Elizabeth Burch, Adam Zimmerman and I have made the same arguments in much more detail here, adding our view about the public benefits of litigation that are lost when bankruptcy is used to fully short-circuit the process as it was in the Sacklers' case. 

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