Attorney General Tong Statement on Appeals Court Decision Enabling Purdue Settlement to Proceed(Hartford, CT) – Attorney General William Tong today issued a statement following a decision by the U.S. Circuit Court of Appeals for the Second Circuit overturning a U.S. District Court ruling that vacated a Purdue bankruptcy order over its reliance on so-called “nonconsensual third-party releases” forcing states and other parties to grant unprecedented lifetime legal immunity to the Sackler family.
The U.S. District Court ruling from Judge Colleen McMahon ultimately paved the way for Attorney General Tong and eight other dissenting attorneys general to negotiate a settlement forcing Purdue and the Sacklers to pay $6 billion to victims, survivors and states, to permanently exit the global opioid business, and to force the Sacklers to reckon face-to-face with victims and survivors at a public hearing. Today’s decision enables the settlement to proceed and allows for the consummation of the bankruptcy plan.
As part of that settlement, Connecticut did not participate in the appeal before the Second Circuit. Should this matter come before the U.S. Supreme Court, Connecticut has reserved its right to continue its opposition to third-party releases. Attorney General Tong testified in 2021 before the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law in support of reforms to bankruptcy laws that would prohibit non-bankrupt individuals and businesses from exploiting loopholes in the bankruptcy code to evade accountability.
“Purdue and the Sackler family destroyed thousands of lives in their relentless pursuit of profit. They cravenly sought to hide behind country’s broken bankruptcy code to escape justice and shield their blood money. The U.S. District Court refused billionaire wrongdoers the right to exploit our bankruptcy laws, and we will firmly stand behind that decision should this matter come before the U.S. Supreme Court. I believe Judge McMahon was right in the District Court. Non-consensual third-party releases are wrong, and I believe the law should not, and does not permit them. But the Second Circuit decided otherwise. What this decision does not change is the fact that Connecticut led our sister states to a $6 billion settlement that will fund critical treatment and prevention efforts across the country, and will give direct relief to families of victims and survivors of addiction,” said Attorney General Tong. “Our settlement was both significant and imperfect—there will never be enough justice to match the depths of pain and suffering the Sackler family caused. But we recognized that we had pushed this as far as we could, and that it was necessary to get communities, victims and their families the resolution and billions of dollars funding desperately needed to save lives and fight the opioid epidemic."
Connecticut first filed suit against Purdue and individual members of the Sackler family in 2018, alleging that the company and family peddled a series of falsehoods to push patients toward its opioids, reaping massive profits while opioid addiction skyrocketed. Connecticut expanded and amended that suit in 2019 to add additional defendants and allegations, including the fraudulent transfer of hundreds of millions of dollars from Purdue Pharma to the Sacklers to shield their wealth from accountability.
Purdue Pharma filed for bankruptcy in September 2019. In 2021, the bankruptcy court approved an inadequate Purdue bankruptcy plan that granted a lifetime legal shield to the Sackler family, unlawfully blocking states like Connecticut from pursuing claims against the family. The plan required the Sackler family to pay $4.3 billion over nine years to the states, municipalities and plaintiffs that sued the company. California, Connecticut, Delaware, Maryland, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia objected to and ultimately appealed the plan. The United States Trustee, an arm of the Department of Justice, also appealed.
In December 2021, the U.S. District Court vacated the Purdue bankruptcy order, agreeing with the non-consenting states that the bankruptcy court lacked authority to force states to release their claims against the Sackler family.
Settlement highlights include:
• The Sackler families must pay $6 billion to the states—$1.675 billion and nearly 40 percent more than the initial bankruptcy plan. The final payments are spread over 18 years, with larger payments frontloaded so that State will receive more money, sooner as compared to the previous bankruptcy plan.
• Connecticut will receive approximately $95 million from the settlement which will be used to fund opioid treatment and prevention. The agreement authorizes Connecticut to use a portion of the settlement funds to establish an Opioid Survivors Trust to directly aid survivors and victims of the opioid epidemic.
• The Sackler families must apologize for their role in the opioid epidemic, and to the victims whose lives have been devastated.
• The Sackler family must allow institutions to remove the family name from buildings, scholarships, and fellowships.
• As a result of the settlement, Sacklers participated in a public hearing in March 2022 where victims and their survivors were given an opportunity to directly address the family.
• Purdue must make public additional documents previously withheld as privileged legal advice, including legal advice regarding advocacy before Congress, the promotion, sale, and distribution of Purdue opioids, structure of the Purdue Compliance Department and its monitoring and abuse deterrence systems, and documents regarding recommendations from McKinsey & Company, Razorfish, and Publicis related to the sale and marketing of opioids.
• The settlement was conditioned upon approval by the bankruptcy court, on the Second Circuit’s reversal of the District Court’s order, and consummation of the bankruptcy plan.