The bankruptcy deal of Purdue Pharma, emblematic of an unorthodox maneuver in civil procedure, will soon come under review by the Supreme Court. The case, presenting as another instance of public harms litigation, is akin to other such cases that have recently permeated diverse sectors, from the Catholic Diocese and Boy Scouts grappling with abuse cases, to corporate behemoths like Johnson & Johnson in their talc litigation, 3M’s earplug case and Revlon’s hair straightener case. We’ve observed a thematic vein whereby organizations are veering away from traditional civil litigation processes, seeking somewhat of a sanctuary within the bankruptcy court. This unusual shift to bankruptcy court, often perceived as a compensatory mechanism for the perceived inefficiencies of tort litigation, has been met with intense scrutiny.
At the heart of the matter, do we see bankruptcy court as an effective resolution to public health crises? Are parties in tort litigation allowed to sidestep discovery and the determination of legal liability for the sake of getting to a universal settlement more quickly and disbursing funds to victims, cities, and states? The Purdue Pharma case certainly poses these questions, but its examination by the court centers on a more specific issue: whether its owners, the Sackler family, could be protected from all civil liability in exchange for a $6 billion contribution to the settlement as part of Purdue’s bankruptcy resolution. This arguably contentious element of nondebtor release is the exact issue under the court’s microscope.
The case is also a litmus test of how much procedural leeway the court is willing to grant as a resolution for mass torts – lawsuits brought by large contingents who have been similarly affected. Preeminent legal mind, Justice Clarence Thomas, warned in his dissent from the denial of review on the issue that we should guard our constitutional protections and not sacrifice them on the altar of convenience.
Abounding bankruptcy-focused resolutions like Purdue Pharma’s case may have widespread implications for legal traditions and ethical boundaries. The U.S. Trustee argues that by sheltering the Sacklers from the process of tort litigation, the release could impinge on due process. It could upend the time-honored tradition of ensuring that every party has their day in court. The Trustee also underscores federalism concerns, observing that the release provisions enable a bankruptcy judge to definitively enjoin state-law claims by nondebtor third parties.
In conclusion and as echoed by Purdue, the bankruptcy plan flagged by Purdue promises a quick disbursement of ‘life-saving funds’ to victims and opioid recovery programs. However, the larger question looming over us pertains to whether our system should prioritize the need for global peace at the outset, eschewing the redundancy – or rather, the layers of scrutiny that come with our state and federal court systems.