Sackler Liability Releases Are the ‘Big Dog’ in Purdue Appeal, Judge Says
(Bloomberg) -- A federal judge vowed to move swiftly and with a narrow focus in an appeal of Purdue Pharma LP’s hotly contested deal to settle a mountain of opioid liabilities.
The key issue in the appeal is whether liability releases for members of the Sackler family who own Purdue Pharma, maker of OxyContin, are legal and constitutional, U.S. District Judge Colleen McMahon said in a hearing Tuesday. Lawyers for the company and parties appealing the deal, including an arm of the U.S. Justice Department and a handful of state attorneys general, are set to lay out their arguments in court on Nov. 30.
The releases are “the big dog here,” McMahon said. “I’m not going to allow the tail to wag the dog -- the dog is going to get dealt with as fast as I can possibly do it.”
Purdue’s settlement calls for the drugmaker to turn over all of its assets to states, cities and counties that sued it over its role in the U.S. opioid crisis. Billions of dollars would be diverted to efforts to abate the crisis, and hundreds of millions of dollars would flow to people claiming personal injury from Purdue products.
The company’s embattled owners have pledged to give some $4.5 billion of their own fortunes to help fund the settlement and to walk away from the drug business in exchange for freedom from civil liability related to Purdue’s products. Critics including the U.S. Trustee -- the Justice Department arm tasked with overseeing bankruptcy courts -- and the states of Maryland and Washington have said the means of obtaining the releases runs afoul of the law.
Purdue’s bankruptcy plan calls for forcing the releases on some unwilling parties, including some state attorneys general.
Whether the releases are viable “does not turn, in my head, on the evilness of the Sacklers or lack of evilness of the Sacklers,” McMahon said. “It turns on whether this is constitutional, whether it’s statutorily authorized.”
Purdue has urged speed in the appeals process because it can’t begin disbursing funds until it emerges from bankruptcy. U.S. Bankruptcy Judge Robert Drain approved the settlement in September, but lawyers for Purdue said on Tuesday that the company can’t emerge from the process until at least December under a deal with the Justice Department.
The U.S. Trustee has asked both McMahon and Drain to force Purdue to stop putting its settlement into effect until the appeals process has run its course. McMahon said she would issue a ruling on that on Wednesday. A hearing before Drain is set for early November.
The appeal is In Re: Purdue Pharma L.P., 21-cv-07532, U.S. District Court, Southern District of New York (Manhattan).
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