Judge will halt lawsuits against Purdue Pharma, its owners
White Plains, N.Y. – A judge is pushing for a settlement of more than 2,600 lawsuits facing OxyContin maker Purdue Pharma with a decision Friday to pause litigation against the company and members of the wealthy Sackler family that owns the company.
In a hearing Friday, U.S. Bankruptcy Judge Roberts Drain contemplated stopping the suits for six months before ending up with a shorter injunction until Nov. 6 to allow the parties time to work out what would be needed to keep the litigation on hold so negotiations can continue.
Purdue filed for bankruptcy last month as part of a tentative settlement. But half the states and hundreds of local governments have refused to sign on, leading to uncertainty about the deal.
Twenty-five state governments asked the judge to let suits against Sackler family members move ahead. But the judge said that would wipe out the company’s assets.
“A trial here will simply be an autopsy,” Drain said.
The question of allowing suits to continue is not settled, but it got a boost Friday.
Just before the hearing, a committee of unsecured creditors that includes opioid crisis victims said it would support pausing the lawsuits.
That deal came at a price. The company agreed it would put $200 million into a fund in the next six months to pay for emergency relief of a crisis that has been linked to the deaths of more than 400,000 people in the U.S. since 2000.
The deal with the unsecured creditors also calls for the Sackler family members to provide financial information.
But the committee has not accepted the company’s overall settlement offer.
“We hope to be getting things that will help us decide whether we support the settlement,” the committee’s lawyer, Arik Preis, said in court Friday.
Some of the lawsuits accuse Sackler family members of fraudulently transferring money from Purdue.
Drain said states should try to resolve their suits through the negotiations in bankruptcy court because they could potentially get key Sackler information more quickly this way than through separate suits.
He also said that he can bind the parties to a deal to use any money in a settlement to deal with a crisis. He noted that when states settled with tobacco companies in the late 1990s, they ended up putting the money toward other projects.
Drain said that lawyers should not assume that the settlement proposal Purdue made last month will be the final one. That offer includes handing over the entire company plus at least $3 billion from Sackler relatives over seven years. In time, the proposed settlement could be worth up to $12 billion over time.
Drain said there was another feature of it: Handing over control of the company to a trust that would contribute future profits to the settlement also means the trustees could make all the company documents public.
Some officials have been pushing for a way to examine fully the company’s role in the opioid crisis.
But those benefits did not immediately sell all states on Drain’s decision. In a statement, Massachusetts Attorney General Maura Healey said she would continue “advocating for accountability and justice.”
After the hearing, Lauren Clinton, an assistant attorney general for the state of Washington, said, “we continue to believe what we said I court” about wanting to move ahead with a lawsuit against Purdue scheduled to be tried next year in state court.
For Purdue, though, the pause was a significant development.
“The Court’s decision is an essential next step in preserving Purdue’s assets for the ultimate benefit of the American public. The company will work tirelessly and collaboratively during this pause in the litigation to continue to build support for the settlement structure,” the company said in a statement.
To work out a longer pause in suits against the company, lawyers said they would work out ways to monitor the company’s activities and which parties could receive more Purdue and Sackler financial information.
While the judge said he would order the litigation pause, several states agreed voluntarily to adhere to its terms.
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