[And other fake news from the Supreme Court’s Purdue Pharma
hearing ]
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ACTUALLY, OPIOID VICTIMS LOVE THE SACKLER IMMUNITY SHIELDS  
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Maureen Tkacik
December 5, 2023
The American Prospect
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_ And other fake news from the Supreme Court’s Purdue Pharma
hearing _

Jen Trejo holds a photo of her son Christopher outside the Supreme
Court, December 4, 2023., STEPHANIE SCARBROUGH/AP PHOTO

 

The first hour and a half or so of Monday morning’s Supreme Court
hearing on the constitutionality of the Purdue Pharma bankruptcy
settlement, which shields from liability every member of Purdue’s
OxyContin-peddling Sackler family, and a 24-page list of related
parties
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in exchange for their contribution of some $6 billion to the estate of
the opioid empire, went about as you’d expect. Attorneys for both
sides went back and forth variously over whether the settlement was
“appropriate” under, and/or “not inconsistent” with, the
bankruptcy code. The judges poked and prodded and showed off their
intelligence. It was another day at the office.

And then came Pratik Shah, an Akin Gump attorney who purported to
represent the real “victims” of Purdue’s malfeasance, retained
to offer a final ten minutes of discussion by the official Committee
of Unsecured Creditors of Purdue, which includes some 130,000 people
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either personally experienced, or lost an immediate family member to,
the OxyContin scourge.

“Mr. Chief Justice, and may it please the court, the U.S. Trustee
does not speak for the victims of the opioid crisis,” Shah began his
melodramatic oratory. “Quite the opposite. The Trustee appointed the
official committee, my client, as the fiduciary representing their
interests. _Every one_ of the creditor constituencies in this case
comprising individual victims and public entities harmed by
Purdue _overwhelmingly _supports the plan. Indeed, it was
the _creditors _that insisted on the release of the creditor claims
against the Sacklers for the same injuries.”

The Purdue settlement, Shah went on to explain, had been a thing of
beauty, “grounded in a massive record built on years of creditor
victim-led efforts” and supported by an _overwhelming _96 percent
of the “personal injury” creditor class who had bothered voting.
The bankruptcy trustee was now irrationally and “irresponsibly”
trying to undo this, in favor of a “value-destroying
victim-against-victim race to the courthouse” in which it would take
“years, probably decades” for victims “to see a cent.” Though
he has argued at least 17 cases before the Supreme Court, Shah retains
an air of unctuous, debate-team intensity that caused Justice Kagan to
remark that he “sounded very emphatic”—hearty laughs from the
crowd—but he was just getting warmed up.

“Where is the evidence in the record that shows there is a better
deal to be had? It does not exist. Every piece of evidence, every
factual finding contradicts it. Basic economics, collective action
contradict it … We have $40 trillion of claims!” Shah told the
judges. “Without the release, the plan will unravel, Chapter 7
liquidation will follow, and there will be_ no viable
path_ to _any _victim recovery!” Or, he concluded, they could
“approve the tailored release as essential to restructuring the
debtor-creditor relationship in this case on which_ lives literally
depend_.”

Justice Brett Kavanaugh appeared fully convinced
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Shah’s performance, at one point even lightly chastising Deputy
Solicitor General Curtis Gannon for challenging “30 years of
bankruptcy court practice” without even once referencing “the
victims,” who after all had “overwhelmingly approved” the deal.
Justice Sotomayor was somewhat less receptive, noting that while Shah
was “making this very dramatic,” she did not believe nullifying
the liability releases would have the apocalyptic impact he claimed.

Incredibly, no one brought up the salient fact that the mothers and
fathers and brothers who had lost sons and daughters and siblings to
the ravages of Oxy addiction only stood to win somewhere
between $3,500 and $40,000
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the settlement. They might have learned this accounting from any one
of the three or four dozen victims downstairs carrying cardboard
tombstones with the names of dead loved ones and signs saying “NO
SACKLER IMMUNITY AT ANY $$” But nobody acknowledged the protesters,
either.

The significance of this bankruptcy is for the _future_ victims of
other rapacious corporations, now that the Sacklers have given them a
“road map” for exploiting the bankruptcy code.

Which is why Shah’s histrionics were such a radiant mind-atrocity to
behold. For Purdue’s victims, the damage is done. The lives are
snuffed out and the money is gone. None of the victims care all that
much about the terms of the settlement; even the abatement dollars and
the treatment and harm reduction programs are little more than a
charade. Only lawyers, who racked up nearly a half-billion dollars in
fees in just the first two years of the Purdue bankruptcy, have the
privilege of caring about the money at this point. For everyone else,
the significance of the Purdue bankruptcy is for
the _future_ victims of other rapacious corporations, now that the
Sacklers have given them what the Trustee described in its filing
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a “road map” for exploiting the bankruptcy code to make quick work
of wrongful death lawsuits.

Since the Sackler settlement first began to make headlines, prison
medical care provider Corizon Health
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nursing home chain Consulate Health Care
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used loopholes in the bankruptcy code to settle hundreds of wrongful
death cases for “less than a penny on the dollar,” by selectively
sending certain assets into bankruptcy court while keeping the others
bankruptcy remote. In 2021, the $382 billion drug giant Johnson &
Johnson decided to use the same ploy for its baby powder business,
which owes billions of dollars in jury awards stemming from the
company’s decision to keep its talc-based powder on the market for
more than four decades after it learned the stuff contained
carcinogenic levels of asbestos, in a secret strategy
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became known as the “Texas Two-Step.” More recently, the generic
painkiller manufacturer Mallinckrodt convinced a friendly bankruptcy
judge to shave an extra $1 billion
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an already-reduced $1.7 billion settlement it had already agreed to
pay for its massive role
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creating and proliferating the opioid crisis.

All of these cases rely on using sympathetic (and maybe just
flat-out corrupt
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judges and the promise of “efficiency” to fast-track bankruptcy
“settlements” that keep coveted assets out of the estates while
cramming liability shields against all manner of “related parties”
down the throats of unsecured creditors. As we have written before
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the nation is at a crossroads: Either corporations that murder their
customers face consequences, or they don’t.

And yet Shah acknowledged _none _of this context, instead choosing
to insult the intelligence of everyone in the court (except, of
course, Kavanaugh, who parroted his talking points at every
opportunity) by portraying his shameless lobbying for the Supreme
Court codification of ruling-class impunity as some kind of _crusade
for the little guy_. Even for someone who lives in the astroturf
capital of the universe and has written extensively about the opioid
crisis, it was tough to stomach.

In 2021, Ryan Hampton, a recovering Oxy addict who was one of just two
victims named to the Creditors Committee, the rest of it dominated by
big hospital chains and massive corporations like CVS, published a
depressing account of his two years working on the Purdue bankruptcy
called _Unsettled: How the Purdue Pharma Bankruptcy Failed the
Victims of the American Overdose Crisis_. Flipping through it
yesterday afternoon, I found it indispensable companion material to
the proceedings I’d just witnessed.

In the book, Hampton says the fact that liability releases were
unanimously viewed as a “foregone conclusion” poisoned the process
from the beginning. “We were a bargaining chip for the attorneys and
big groups and used to beef up corporate claims,” he wrote. “Every
way we turned, we heard the same song: ‘We do things this way
because this is the way things are always done.’ I was shocked,
again and again, to find intelligent, educated, well-intentioned
people fighting tooth and nail to defend and uphold a system that was
just as toxic and destructive as Purdue itself.”

Maybe Netflix is to thank for this, but at least some of our Supreme
Court justices appeared to be beginning to grasp that toxicity.
Justice Ketanji Brown Jackson asked a lot of questions that seemed
designed to remind her colleagues how the Sacklers had siphoned $11
billion out of the company and “offshore” between 2008 and 2017.
Justice Amy Coney Barrett repeatedly followed up on Jackson’s
questions and seemed notably sympathetic to the government’s case,
and Neil Gorsuch elicited a laugh from the crowd when he teased
Purdue’s attorney over a dubious 1619 case
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brief deployed to bolster his notion that non-debtor releases have a
venerable history in bankruptcy cases (and are not, as many
scholars argue
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a peculiar phenomenon of our hyper-financialized age).

_Purdue_ is widely seen as the most important corporate bankruptcy
case to come before the Supreme Court in three decades; bankruptcy is
an insular, incestuous world, and most other lawyers have little
notion of how lawless (and lucrative) it is. Now that the Sackler
family and the million streaming docuseries they inspired have blared
a spotlight on the grift, maybe the Court will actually shut it down,
if only to spite Pratik Shah.

_Maureen Tkacik is investigations editor at the Prospect and a senior
fellow at the American Economic Liberties Project._

Read the original article at Prospect.org.
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Used with the permission. © The American Prospect, Prospect.org,
2023. All rights reserved. 

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* oxycontin
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* Sackler family
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* Supreme Court
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* immunity
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