27 August 2023
While the U.S. Supreme Court is sharply divided along ideological lines, it might surprise many Americans to learn that unanimous rulings happen every term, even in cases where lower courts have reached opposing conclusions.
We see a good chance of the high court coming together for a 9-0 vote in the months ahead to shoot down a terrible injustice that festered in bankruptcy courts for years — until the notorious Sackler family inadvertently put a spotlight on it.
The Sacklers made billions engineering an opioid epidemic that ruined countless lives and killed off Americans by the hundreds of thousands. You might have seen them portrayed on TV in Hulu’s “Dopesick” series, or the current “Painkiller” series on Netflix. Sackler family members have denied many of the allegations against them, and none has accepted full responsibility for the opioid plague.
Their company, Purdue Pharma, admitted that it used false marketing to con doctors into prescribing its deadly pills by lying about how addictive they were. As regulators dithered, the Sacklers conducted what one family member called a “milking” operation, stripping the company of more than $10 billion and stashing the dirty money offshore.
Purdue’s bankruptcy made the scandal even more outrageous.
The Sacklers agreed to put up $6 billion — a fraction of what they had creamed off the opioid epidemic — in exchange for blanket protection from all related legal claims. Though no one in the family had filed for personal bankruptcy, the settlement in bankruptcy court would have enabled the whole gang to walk off with billions and no worries about being held accountable in other courts.
For years, companies guilty of wrongdoing have used bankruptcy to protect the personal assets of owners and executives from civil claims against them. Many bankrupt companies refuse to settle without these “nonconsensual third-party releases.” (The “nonconsensual” part refers to granting the releases even when some parties to the bankruptcy object to them).
To avoid dragging out the proceedings, many creditors go along with the releases, recognizing that under current law, agreeing to give miscreants a free pass is the only practical way to collect money in a reasonable time frame. In the Purdue case, the price of swallowing an unjust ruling was the $6 billion that Sackler family members agreed to part with as long as they could keep the rest of their fortune unencumbered.
It’s a shame that many bankruptcy judges have given up trying to do justice, choosing expediency instead, and inventing rules for these releases that vary from jurisdiction to jurisdiction.
Among jurisdictions with a history of skepticism about bankruptcy courts granting nonconsensual releases is the San Francisco-based 9th Circuit, considered the country’s most liberal. And another? The New Orleans-based 5th Circuit, loaded with conservatives who deliver some of the most far-right appellate rulings, including the Aug. 16 decision limiting access to abortion pills.
These strange bedfellows illustrate how the Supreme Court justices might set aside their ideological differences to either arrive at a narrow set of circumstances when the releases can be imposed or, preferably from our point of view, throw out this amoral practice altogether.
Earlier this month, the high court temporarily blocked the nationwide settlement with OxyContin maker Purdue Pharma, agreeing to a White House request to put the brakes on the agreement. The court also agreed to hear arguments in December focused on whether the bankruptcy code authorizes a court to extinguish “claims held by non-debtors against non-debtor third parties, without the claimants’ consent.”
The conservative majority might be persuaded to come down against the releases because, apart from a narrow provision affecting asbestos cases, there’s no statute specifically authorizing them. The six GOP-friendly justices have been known to throw the penalty flag when lower court judges go beyond what’s written in the law to essentially make their own.
For the three more liberal justices, the specter of bankruptcy courts depriving litigants of their due process rights to sue in other courts might be all it takes to win their votes — not to mention the stink of the Sackler case.
So far, the high court hasn’t tipped its hand about how it will resolve the matter. What if the court rules 9-0 that the bankruptcy code doesn’t authorize those releases?
Congress will need to start doing the job it should have been doing all along, updating the law so that bankrupt companies can find a temporary shelter to liquidate or reorganize, while resolving relevant litigation without the corrupting influence of the releases.
At the same time, Congress also needs to ensure that bad actors can’t get away with stashing a fortune overseas while using every legal trick in the book to write another sickening chapter in the opioid epidemic.
Justice for the victims demands it.
Related Articles
Trudy Rubin: Why Ukraine’s fight is America’s fight
Other voices: Tough on crime should not mean inhumane U.S. prison conditions
Trump and all 18 others charged in Georgia election case meet the deadline to surrender at jail
Economy’s solid growth could require more Fed hikes to fight inflation, Powell says at Jackson Hole
Sheldon H. Jacobson: The price American industry may pay for remote work