WHITE PLAINS, N.Y. – A U.S. bankruptcy judge on Friday temporarily halted scores of lawsuits against Purdue Pharma, and its owners, the Sackler family, a request opposed by states who say the family siphoned billions in profits from the company.
Extending that relief to the Sacklers, who haven’t filed for bankruptcy protection, is “extraordinary” but appropriate in this case, Judge Robert Drain said from the bench. Drain’s ruling stays action for three weeks in state and federal lawsuits against the Sackler family members, who own the company, as well as Purdue Pharma and related companies.
During the three-week reprieve, Purdue Pharma agreed to address one of the key concerns raised by attorneys general who objected to including the Sacklers in the temporary injunction: Access to more information about the family’s finances.
“We are disappointed by the court’s ruling, but pleased that it is limited in time to less than 30 days. We will use this time to ensure that we get access to the Sacklers’ financial information,” Connecticut Attorney General William Tong said in a statement.
New York Attorney General Letitia James, who also objected to including the Sacklers in the injunction, said: “We’re pleased with the court’s desire for transparency and its recognition of the public’s need to know the facts that led to this national epidemic. We look forward to further proceedings and holding the Sacklers responsible for the role they played in the opioid crisis.”
Both sides will return to court Nov. 6.
The company argued that halting litigation was necessary to allow progress on a tentative settlement with more than 2,600 plaintiffs who have accused Purdue of deceptively marketing its blockbuster opioid pain pill, OxyContin. Without that protection, the Sacklers had said they may back out of the settlement, valued at $10 billion to $12 billion. As part of that deal, the Sacklers agreed to relinquish control of their firm and contribute at least $3 billion to the settlement.
The drug maker would inevitably be dragged into any litigation against the family, draining resources that could otherwise go to addressing the opioid crisis, Purdue Pharma’s attorneys argued. “Litigation against the Sacklers is litigation against Purdue,” Ben Kaminetzky, an attorney for Purdue Pharma, told the court. “Continued litigation harms everyone.”
The states that objected cited, among other things, deposition testimony stating that the Sackler family took $12 billion to $13 billion in cash out of Purdue Pharma. In light of those sums, the states contend, the Sacklers’ proposed $3 billion contribution to the settlement is not enough.
“The problem is that the Sacklers who have $13 billion, $14 billion are getting a free pass by putting in $3 billion,” said Beth Kaswan, an attorney for some of the objecting parties. “I would like to see financial statements for all of the shell companies. [Otherwise] how will I know if they are further transferring assets that are already in shell companies.”
During the more than seven-hour hearing, Drain grew visibly frustrated and raised his voice several times while attorneys for states objecting to the injunction argued their cases. The state attorneys general “could be assured that the Sacklers are not getting a free ride on disclosures,” he said. “I think reasonable people can negotiate information sharing.”
“It appears clear to me that the continued pursuit of litigation would materially affect the debtors” Purdue Pharma, he said. If one state’s lawsuit was allowed to continue, others would jump back into court as well, he said.