Harrington v. Purdue Pharma L.P. Revisions: 6/27/24
The Supreme Court ruled 5–4 that federal bankruptcy law does not allow a court to erase opioid victims' claims against the Sackler family as part of Purdue Pharma's bankruptcy, because the Sacklers never filed for bankruptcy or put their full assets on the table for creditors.
The decision unravels Purdue's existing reorganization plan — which promised tens of thousands of victims payments of $3,500 to $48,000 — and sets a nationwide limit on a widely used tool in mass-tort bankruptcies involving wealthy individuals who control but do not personally file for bankruptcy.
How it got here: Bankruptcy court approved Purdue's plan; district court reversed; Second Circuit reinstated it; the Supreme Court stayed that ruling and agreed to hear the case.
The Case in Depth
What happened
Purdue Pharma, owned by the Sackler family, aggressively marketed OxyContin and played a central role in the opioid crisis that killed hundreds of thousands of Americans. As lawsuits mounted, the Sacklers withdrew roughly $11 billion from Purdue before it filed for bankruptcy in 2019. In the bankruptcy, the Sacklers agreed to return several billion dollars — but only in exchange for a court order permanently canceling all opioid-related claims against them, including by victims who never agreed to give up their rights to sue.
The question before the Court
Can a federal bankruptcy court permanently cancel opioid victims' lawsuits against the Sackler family — who never filed for bankruptcy themselves — as part of Purdue Pharma's reorganization plan?
The Court's answer
No — the bankruptcy code does not authorize a court to permanently cancel opioid victims' lawsuits against the Sackler family as part of Purdue Pharma's bankruptcy. The Sacklers never filed for bankruptcy and never placed substantially all their assets on the table for creditors — the core bargain the law requires of anyone seeking a discharge of debts. The Court read the code's catchall provision (permitting plans to include "any other appropriate provision") as limited by the specific types of provisions surrounding it, all of which address only the bankrupt company's own rights and obligations — not the debts of wealthy outsiders who chose not to file for bankruptcy themselves.
The Court also found the broader statutory scheme fatal to the Sacklers' position: the code reserves discharge for actual debtors, and even real debtors cannot discharge fraud or willful-injury claims. The Sacklers sought all those protections without satisfying any of the usual requirements. The Court rejected the argument that calling the relief a "release" rather than a "discharge" changed the analysis, and said that competing predictions about what outcome would best serve victims are questions for Congress, not for courts.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Tens of thousands of opioid victims who had negotiated guaranteed payouts through Purdue's bankruptcy lose those payments and face years of additional litigation. The ruling also constrains how future mass-tort bankruptcies — involving institutions like the Boy Scouts or Catholic Church — can be structured, since courts can no longer force non-consenting victims to surrender claims against wealthy non-bankrupt defendants.
What changes now
The case returns to the lower courts. Purdue's existing reorganization plan — which promised individual victims between $3,500 and $48,000 — is effectively undone, and the Sacklers are no longer bound to their promised contribution. Parties must attempt to negotiate a new plan, potentially with consensual releases if all affected claimants agree. The Court noted that Congress could enact special rules for opioid-related bankruptcies, as it did decades ago for asbestos, but declined to do that work itself.
What this does not decide
The Court explicitly left open whether consensual third-party releases — where affected claimants voluntarily agree — are permissible, and what counts as "consensual." It also did not rule on plans that fully satisfy claimants' demands, and it expressly declined to say whether already-completed and fully consummated reorganization plans can be unwound under its reading of the law.
Concurrences and dissents
Dissent — Justice Kavanaugh
Justice Kavanaugh argued the majority misread the Bankruptcy Code's broad catchall, which grants courts discretion to approve 'any other appropriate provision.' He contended that for decades, bankruptcy courts have appropriately used non-debtor releases in mass-tort cases — including asbestos, silicone breast implants, and the Dalkon Shield — to prevent races to the courthouse and ensure fair victim recovery. He emphasized that 95 percent of voting victims and all 50 state attorneys general supported Purdue's plan, and argued the categorical prohibition leaves opioid victims with no viable path to any recovery while destabilizing future mass-tort bankruptcies.
How the Court got there
The legal reasoning, step by step
- The central question was whether §1123(b)(6) of the Bankruptcy Code — a catchall allowing Chapter 11 reorganization plans to include 'any other appropriate provision not inconsistent with' the code — gives a bankruptcy court power to permanently bar opioid victims' claims against the Sacklers, who never filed for bankruptcy themselves and never surrendered their assets.
- The Court applied the *ejusdem generis* canon — an interpretive principle holding that when a catchall follows a list of specific examples, it covers only things similar in nature to those examples. The five numbered paragraphs preceding the catchall all address the bankrupt company's own rights and responsibilities with its creditors; none reaches claims against outside parties without consent. So the catchall cannot authorize the 'radically different' power to wipe out non-debtors' debts without the claimants' agreement.
- The broader statutory scheme confirmed the reading. The bankruptcy code ordinarily limits the benefit of a discharge — the legal erasure of debt — to the actual debtor, meaning the entity that files for bankruptcy and subjects its assets to court control. Even a genuine debtor cannot discharge claims based on fraud or willful injury. The Sacklers sought all those protections without meeting any of those requirements.
- The asbestos exception in the code (§524(g)), which expressly authorizes non-debtor releases under specific conditions in asbestos mass-tort cases, reinforced the majority's conclusion: when Congress wanted courts to have this power, it said so explicitly and with conditions attached. The absence of similar language for any other context suggested no general authority exists elsewhere in the code.
- Pre-1978 bankruptcy history delivered a final strike: every American bankruptcy law from 1800 onward reserved discharge only for a debtor who surrendered substantially all of their property. No historical precedent gave courts the power to discharge debts owed to non-consenting victims by people who never filed for bankruptcy.
- The Court rejected the plan supporters' policy argument — that blocking the plan leaves opioid victims with nothing — treating it as a question for Congress rather than courts. It noted the U.S. Trustee's competing view that the Sacklers' massive legal exposure might actually push them toward better consensual deals, and pointed to the Sacklers' mid-appeal offer to add over $1 billion to secure eight holdout states as evidence such leverage could work.