Harrington v. Purdue Pharma L.P.
The Supreme Court ruled that the Sackler family cannot use Purdue Pharma's bankruptcy to permanently shield themselves from opioid victims' lawsuits, because the bankruptcy code only lets courts discharge debts for people who actually file for bankruptcy and put their assets on the table.
The decision strikes down the central feature of Purdue's proposed reorganization plan and settles a long-running split among lower courts over whether bankruptcy judges can wipe out victims' claims against wealthy insiders who never went through bankruptcy themselves.
How it got here: After the district court blocked and the Second Circuit revived Purdue's reorganization plan, the U.S. Trustee asked the Supreme Court to step in, and the Court agreed to hear the case.
The Case in Depth
What happened
Purdue Pharma, maker of OxyContin and owned by the Sackler family, sat at the center of the opioid epidemic that killed roughly 247,000 Americans between 1999 and 2019. As litigation mounted, the Sacklers withdrew approximately $11 billion from Purdue — about 75% of its assets — before Purdue filed for bankruptcy in 2019. The Sacklers then offered to return roughly $4.3–6 billion to the bankruptcy estate in exchange for a sweeping court order permanently blocking all opioid-related lawsuits against them, including claims by victims who never agreed to give up their rights to sue.
The question before the Court
Can a bankruptcy court permanently erase opioid victims' lawsuits against the Sackler family — wealthy owners of Purdue Pharma who never filed for bankruptcy themselves — as part of Purdue's reorganization plan and without the victims' consent?
The Court's answer
No — the bankruptcy code does not allow a court to permanently erase lawsuits against people who never filed for bankruptcy, even when those people are closely tied to a company that did. The Sacklers, who owned Purdue and withdrew billions from it before its collapse, sought a court order permanently blocking opioid victims from suing them — without placing their full assets at risk and without the victims' consent. The Court held that no provision of the bankruptcy code authorizes that kind of relief.
The key provision at issue — § 1123(b)(6), which allows a reorganization plan to include any "appropriate" extra terms — must be read narrowly, in line with the debtor-focused provisions surrounding it. Discharge is a tool reserved for people who actually go through bankruptcy and put virtually everything on the table. The code's structure, the narrow asbestos-only exception that allows similar relief, and two centuries of bankruptcy history all confirmed that courts lack authority to extend those protections to nondebtors.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Tens of thousands of opioid victims who had been promised settlements of $3,500 to $48,000 under Purdue's plan now face an uncertain path to any recovery. More broadly, corporations and wealthy individuals involved in mass-tort lawsuits can no longer use a related company's bankruptcy to buy themselves sweeping legal immunity without the victims' consent — a tactic the dissent warned had been a cornerstone of major mass-tort settlements for decades.
What changes now
The Second Circuit's approval of Purdue's reorganization plan is reversed, and the case is sent back to lower courts. Purdue and the Sacklers must negotiate a new arrangement — whether a consensual settlement with the remaining holdouts, a restructured plan, or fresh bankruptcy proceedings. The Court's ruling leaves open whether already-completed reorganization plans in other mass-tort cases could be unwound, and signals that Congress is the appropriate body to craft any special rules for opioid-related bankruptcies.
What this does not decide
The ruling does not call into question consensual third-party releases in bankruptcy plans, does not define what makes a release "consensual," and does not address plans that fully satisfy nondebtor claims. The Court also expressly declined to say whether already-effective and substantially consummated reorganization plans in other cases could be unwound under this ruling.
Concurrences and dissents
Dissent — Justice Kavanaugh
“Today's decision is wrong on the law and devastating for more than 100,000 opioid victims and their families.”The opening line of Justice Kavanaugh's dissent, summarizing his core objection to the majority's ruling.
Justice Kavanaugh argued that § 1123(b)(6)'s broad 'appropriate' language, combined with decades of court practice approving nondebtor releases in mass-tort bankruptcies, authorized the Sackler discharge. He contended the majority misapplied the ejusdem generis canon because several provisions in § 1123(b) already affect nondebtor relationships, and that the statute's evident purpose — ensuring fair and equitable victim recovery — easily encompassed such releases. The dissent warned that without releases the Sacklers would contribute nothing, leaving more than 100,000 opioid victims with potentially no recovery, and called on Congress to fix the resulting 'chaos.'
How the Court got there
The legal reasoning, step by step
- The Court focused on § 1123(b)(6) of the bankruptcy code — a catchall provision stating that a reorganization plan 'may include any other appropriate provision not inconsistent with the applicable provisions of this title.' Plan supporters argued this sweeping language permitted any term not expressly forbidden, as long as a bankruptcy judge found it 'appropriate.'
- The Court applied the ejusdem generis canon — the interpretive principle that a catchall phrase at the end of a specific list should cover only things similar in nature to what the list already specifies. Looking at paragraphs (1) through (5) of § 1123(b), the Court found a clear common link: every one of those paragraphs concerns the debtor's own rights and responsibilities or its relationship with creditors. The catchall's reference to 'any other appropriate provision' uses the word 'other' to point back to those debtor-focused paragraphs as the relevant context.
- The word 'appropriate' in the catchall doesn't open an unlimited door — it's a context-dependent term that draws meaning from the surrounding statute. Because all the preceding paragraphs limit a court's power to adjust claims without consent only when those claims concern the debtor, an 'appropriate' provision under the catchall must be similarly constrained. Extinguishing victims' claims against the Sacklers — who are not the debtor — is a 'radically different' kind of power that the catchall cannot fairly be read to grant.
- The broader bankruptcy code reinforced this conclusion in three ways: (1) discharge is normally available only to someone who files for bankruptcy and places virtually all assets on the table — the Sacklers did neither; (2) ordinary discharge still doesn't cover fraud or willful-injury claims, yet the Sacklers sought to extinguish exactly those; and (3) Congress created a specific, limited exception (§ 524(g)) allowing courts to protect third parties from claims in asbestos bankruptcies only — demonstrating that Congress knows how to grant this authority explicitly when it wants to, and its silence elsewhere is significant.
- Bankruptcy history from 1800 through enactment of the current code in 1978 consistently reserved discharge benefits for debtors who made a full surrender of property. Every bankruptcy law the parties cited over that span followed this rule. Had Congress intended to grant courts the sweeping new power to extinguish nondebtor claims without consent, one would have expected it to say so expressly somewhere in the code.
- Finally, the Court rejected the argument that victims would be left with nothing without the Sackler release. Whether to create a special opioid bankruptcy scheme — as Congress did for asbestos cases — is a policy choice for Congress to make, not courts. Courts may not invent broad new powers simply because the outcome in a particular case seems desirable.