Even though one judge rejected OxyContin maker Purdue Pharma’s sweeping settlement of thousands of lawsuits over the opioid crisis, another refused Wednesday to allow litigation to move ahead just yet against members of the Sackler family who own the company – but also ordered negotiations for a reworked settlement.
U.S. Bankruptcy Judge Robert Drain on Wednesday granted Purdue’s request to extend an injunction until Feb. 1 protecting the company and the Sacklers from litigation. He also ordered Purdue, the Sacklers, the states and other parties to negotiate a new settlement.
In a hearing conducted Wednesday via video conference, the White Plains, N.Y.-based judge warned the family and others that he would end the protections early if there are not serious talks toward a new settlement. “If the parties do not negotiate in good faith,” he said, “they will face the consequences of the injunction unravelling.”
Justice Drain is the same judge who approved the company’s settlement in September.
The deal had been hashed out over two years of negotiations and mediation in bankruptcy court. Eventually, lawyers for the overwhelming majority of local governments and states signed on. The plan called for members of the Sackler family to give up ownership of Purdue, which would be transformed into a new company whose profits would be used to fight the opioid crisis.
Sackler family members would also contribute US$4.5-billion in cash and charitable assets, with the money to go to victims of the crisis and efforts to end the crisis, which has been linked to more than 500,000 deaths in the U.S. since 2000, counting overdoses of both prescription opioids and illicit ones, such as heroin and illegally produced fentanyl.
In exchange for the contributions, Sackler family members were also granted protections from lawsuits over opioids.
But eight states and one office in the U.S. Department of Justice objected. They said it was improper for them to be forced to give up their right to sue members of the Sackler family, who themselves were not seeking bankruptcy protection. The holdout states argued that the US$4.5-billion does not properly hold the family members accountable.
In December, U.S District Judge Colleen McMahon ruled in favour of those states, finding that judges do not have authority to grant third-party releases as Justice Drain did.
Purdue said it would appeal that ruling while also trying again to strike a settlement deal that all the states would be willing to join. The Stamford, Conn.-based company also asked Justice Drain to protect it and the family from lawsuits while that’s sorted out. An injunction previously in place was to expire Thursday.
Two states – Connecticut and Washington – argued that suits against the Sacklers should be allowed to move ahead immediately. Those states said they would not move ahead now with litigation against the company.
Irve Goldman, a lawyer for Connecticut, said in court Wednesday that their suits against the Sacklers won’t be resumed immediately if the family members are in good-faith settlement negotiations. He also said that the Sacklers have not been in such talks so far since the settlement was dissolved on Dec. 16.
Lawyers for the Sackler family did not speak at Wednesday’s hearing. Representatives of the family did not immediately respond to questions from the Associated Press.
Connecticut and Washington said in a filing that the Sacklers would agree to an appropriate settlement only if lawsuits can move ahead and they “are then forced to come to grips with the prospect of continued litigation against them.”
But Benjamin Kaminetzky, a lawyer for Purdue, told Justice Drain in court that the opposite was true. “If the stay is lifted, everyone will be scrambling to get their claims on file as quickly as possible,” he said. “In this environment, negotiations would be an afterthought at best, likely a no-thought.”
Still, he said that if the Sackler family does not negotiate in January, Purdue would not seek further injunctions to protect the family from lawsuits.
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