SUPREME COURT NOTEBOOK

Nationwide opioid settlement with
OxyContin maker Purdue Pharma rejected


By Mark Sherman
Associated Press

WASHINGTON (AP) — The Supreme Court on Thursday rejected a nationwide settlement with OxyContin maker Purdue Pharma that would have shielded members of the Sackler family who own the company from civil lawsuits over the toll of opioids but also would have provided billions of dollars to combat the opioid epidemic.

The decision also could affect other major bankruptcies, including the $2.4 billion bankruptcy plan for the Boy Scouts of America that has been approved by a federal judge, lawyers said.

After deliberating more than six months, the justices in a 5-4 vote blocked an agreement hammered out with state and local governments and victims. The Sacklers would have contributed up to $6 billion and given up ownership of the company but retained billions more. The agreement provided that the company would emerge from bankruptcy as a different entity, with its profits used for treatment and prevention.

Justice Neil Gorsuch, writing for the majority, said "nothing in present law authorizes the Sackler discharge."

Chief Justice John Roberts and Justices Brett Kavanaugh, Elena Kagan and Sonia Sotomayor dissented.

"Opioid victims and other future victims of mass torts will suffer greatly in the wake of today's unfortunate and destabilizing decision," Kavanaugh wrote.

The high court had put the settlement on hold last summer, in response to objections from the Biden administration.

It's unclear what happens next, though people involved in the case said they expect talks to resume. The members of the Sackler family branches who own Purdue suggested they'll return to negotiations.

"The unfortunate reality is that the alternative is costly and chaotic legal proceedings in courtrooms across the country," they said in a statement. "While we are confident that we would prevail in any future litigation given the profound misrepresentations about our families and the opioid crisis, we continue to believe that a swift negotiated agreement to provide billions of dollars for people and communities in need is the best way forward."

Edward Neiger, a lawyer representing more than 60,000 overdose victims, called the decision a major setback.

"The Purdue plan was a victim-centered plan that would provide billions of dollars to the states to be used exclusively to abate the opioid crisis and $750 million for victims of the crisis, so that they could begin to rebuild their lives," Neiger said in a statement. "As a result of the senseless three-year crusade by the government against the plan, thousands of people died of overdose, and today's decision will lead to more needless overdose deaths."

An opponent of the settlement praised the outcome.

Ed Bisch's 18-year-old son Eddie, died from an overdose after taking OxyContin in Philadelphia in 2001.

The older Bisch, who lives in New Jersey, has been speaking out against Purdue and Sackler family members ever since and is part of a relatively small but vocal group of victims and family members who opposed the settlement.

"This is a step toward justice. It was outrageous what they were trying to get away with," he said Thursday. "They have made a mockery of the justice system and then they tried to make a mockery of the bankruptcy system."

He said he would have accepted the deal if he thought it would have made a dent in the opioid crisis.

He's now calling on the Department of Justice to seek criminal charges against Sackler family members

Arguments in early December lasted nearly two hours in a packed courtroom as the justices seemed, by turns, unwilling to disrupt a carefully negotiated settlement and reluctant to reward the Sacklers.

The issue for the justices was whether the legal shield that bankruptcy provides can be extended to people such as the Sacklers, who have not declared bankruptcy themselves. Lower courts had issued conflicting decisions over that issue, which also has implications for other major product liability lawsuits settled through the bankruptcy system.

The U.S. Bankruptcy Trustee, an arm of the Justice Department, argued that the bankruptcy law does not permit protecting the Sackler family from being sued. During the Trump administration, the government supported the settlement.

The Biden administration had argued to the court that negotiations could resume, and perhaps lead to a better deal, if the court were to stop the current agreement.

Proponents of the plan said third-party releases are sometimes necessary to forge an agreement, and federal law imposes no prohibition against them.

But the court majority that also included Justices Samuel Alito, Amy Coney Barrett, Ketanji Brown Jackson and Clarence Thomas disagreed.

"The Sacklers seek greater relief than a bankruptcy discharge normally affords, for they hope to extinguish even claims for wrongful death and fraud, and they seek to do so without putting anything close to all their assets on the table," Gorsuch wrote. "Nor is what the Sacklers seek a traditional release, for they hope to have a court extinguish claims of opioid victims without their consent."

Congress could write special rules for opioid-related bankruptcies, he wrote.

And Kavanaugh, in dissent, urged lawmakers to do just that. "Only Congress can fix the chaos that will now ensue," he wrote.

Jason Amala, a lawyer representing more than 1,000 men who allege they were sexually abused as children by Boy Scout leaders and volunteers, said the decision could affect the Boy Scouts plan and others that employ similar releases from liability.

"The Supreme Court's decision is pretty simple," Amala said in a statement. "If you hurt someone, you and your insurance company will have to pay fair value to settle their claim. If you want bankruptcy protection, you will have to file your own bankruptcy, disclose your assets and liabilities, and pay whatever amount a bankruptcy judge decides is appropriate."

OxyContin first hit the market in 1996, and Purdue Pharma's aggressive marketing of it is often cited as a catalyst of the nationwide opioid epidemic, with doctors persuaded to prescribe painkillers with less regard for addiction dangers.

The drug and the Stamford, Connecticut-based company became synonymous with the crisis, even though the majority of pills being prescribed and used were generic drugs. Opioid-related overdose deaths have continued to climb, hitting 80,000 in recent years. Most of those are from fentanyl and other synthetic drugs.

The Purdue Pharma settlement would have ranked among the largest reached by drug companies, wholesalers and pharmacies to resolve epidemic-related lawsuits filed by state, local and Native American tribal governments and others. Those settlements have totaled more than $50 billion.

But the Purdue Pharma settlement would have been only the second so far to include direct payments to victims from a $750 million pool. Payouts would have ranged from about $3,500 to $48,000.

Sackler family members no longer are on the company's board, and they have not received payouts from it since before Purdue Pharma entered bankruptcy. In the decade before that, though, they were paid more than $10 billion, about half of which family members said went to pay taxes.

The case is Harrington v. Purdue Pharma, 22-859.
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Associated Press writers Geoff Mulvihill in Cherry Hill, New Jersey, and Susan Haigh in Hartford, Connecticut, contributed to this report.


Court halts enforcement of
the EPA’s plan to limit downwind
pollution from power plants


By Mark Sherman
Associated Press

WASHINGTON (AP) — The Supreme Court is putting the Environmental Protection Agency's air pollution-fighting "good neighbor" plan on hold while legal challenges continue, the conservative-led court's latest blow to federal regulations.

The justices in a 5-4 vote on Thursday rejected arguments by the Biden administration and Democratic-controlled states that the plan was cutting air pollution and saving lives in 11 states where it was being enforced and that the high court's intervention was unwarranted.

The rule is intended to restrict smokestack emissions from power plants and other industrial sources that burden downwind areas with smog-causing pollution. It will remain on hold while the federal appeals court in Washington considers a challenge to the plan from industry and Republican-led states.

Writing for the court, Justice Neil Gorsuch said the states are likely to win in the end, among the factors justifying the court's decision to block the plan for now.

In dissent, Justice Amy Coney Barrett was joined by her three liberal colleagues. Barrett said she doubted the states and industry would ultimately prevail.

Yet the high court's order, "leaves large swaths of upwind States free to keep contributing significantly to their downwind neighbors' ozone problems for the next several years," she wrote.

In a statement, the EPA noted that court's action was not a final decision. "The EPA is disappointed in today's ruling, which will postpone the benefits that the Good Neighbor Plan is already achieving in many states and communities," the EPA said.

The Supreme Court, with a 6-3 conservative majority, has increasingly reined in the powers of federal agencies, including the EPA, in recent years. The justices have restricted the EPA's authority to fight air and water pollution — including a landmark 2022 ruling that limited the EPA's authority to regulate carbon dioxide emissions from power plants that contribute to global warming. The court also shot down a vaccine mandate and blocked President Joe Biden's student loan forgiveness program.

The court is currently weighing whether to overturn its 40-year-old Chevron decision, which has been the basis for upholding a wide range of regulations on public health, workplace safety and consumer protections.

Three energy-producing states — Ohio, Indiana and West Virginia — have challenged the air pollution rule, along with the steel industry and other groups, calling it costly and ineffective. They had asked the high court to put it on hold while their challenge makes it way through the courts.

The challengers pointed to decisions in courts around the country that have paused the rule in a dozen states, arguing that those decisions have undermined the EPA's aim of providing a national solution to the problem of ozone pollution because the agency relied on the assumption that all 23 states targeted by the rule would participate.

The issue came to the court on an emergency basis, which almost always results in an order from the court without arguments before the justices.

But not this time. The court heard arguments in late February, when a majority of the court seemed skeptical of arguments from the administration and New York, representing Democratic states, that the "good neighbor" rule was important to protect downwind states that receive unwanted air pollution from other states.

The EPA has said power plant emissions dropped by 18% last year in the 10 states where it has been allowed to enforce its rule, which was finalized a year ago. Those states are Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia and Wisconsin. In California, limits on emissions from industrial sources other than power plants are supposed to take effect in 2026.

The rule is on hold in another dozen states because of separate legal challenges. Those states are Alabama, Arkansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, Oklahoma, Texas, Utah and West Virginia.

States that contribute to ground-level ozone, or smog, are required to submit plans ensuring that coal-fired power plants and other industrial sites don't add significantly to air pollution in other states. In cases in which a state has not submitted a "good neighbor" plan — or in which the EPA disapproves a state plan — the federal plan was supposed to ensure that downwind states are protected.

Ground-level ozone, which forms when industrial pollutants chemically react in the presence of sunlight, can cause respiratory problems, including asthma and chronic bronchitis. People with compromised immune systems, the elderly and children playing outdoors are particularly vulnerable.


SEC stripped of a critical
enforcement tool in fraud cases


By Mark Sherman
Associated Press

WASHINGTON (AP) — The Supreme Court on Thursday stripped the Securities and Exchange Commission of a major tool in fighting securities fraud in a decision that also could have far-reaching effects on other regulatory agencies.

The justices ruled in a 6-3 vote that people accused of fraud by the SEC, which regulates securities markets, have the right to a jury trial in federal court. The in-house proceedings the SEC has used in some civil fraud complaints, including against Houston hedge fund manager George Jarkesy, violate the Constitution, the court said.

"A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator," Chief Justice John Roberts wrote for the court's conservative majority.

Justice Sonia Sotomayor, who read from her dissent in the courtroom, said that "litigants who seek to dismantle the administrative state" would rejoice in the decision.

Federal agencies that oversee safety in mines and other workplaces are among many that can only impose civil penalties in in-house, administrative proceedings, Sotomayor wrote, joined by Justices Ketanji Brown Jackson and Elena Kagan.

"For those and countless other agencies, all the majority can say is tough luck; get a new statute from Congress," she wrote.

The case is among several this term in which conservative and business interests are urging the nine-member court to constrict federal regulators. The court's six conservatives already have done so, including in a decision last year that sharply limited environmental regulators' ability to police water pollution in wetlands.

Still awaiting decision are cases calling on the court to overturn the 40-year-old ruling colloquially known as Chevron, which has made it easier to sustain regulation of the environment, public, health, worker safety and consumer protection. Some of the same parties that supported Jarkesy at the Supreme Court are calling for Chevron to be overturned.

The SEC was awarded more than $5 billion in civil penalties in the 2023 government spending year that ended Sept. 30, the agency said in a news release. It was unclear how much of that money came through in-house proceedings or lawsuits in federal court.

The agency had already reduced the number of cases it brings in administrative proceedings pending the Supreme Court's resolution of the case.

The high court rejected arguments advanced by President Joe Biden's Democratic administration that relied on a 50-year-old decision in which the court ruled that in-house proceedings did not violate the Constitution's right to a jury trial in civil lawsuits.

The justices ruled in favor of Jarkesy after the SEC appealed a decision in which the New Orleans-based 5th U.S. Circuit Court of Appeals threw out stiff financial penalties against Jarkesy and his Patriot28 investment adviser.

The appeals court found that the SEC's case against Jarkesy, resulting in a $300,000 civil fine and the repayment of $680,000 in allegedly ill-gotten gains, should have been heard in a federal court instead of before one of the SEC's administrative law judges.

Jarkesy's lawyers noted that the SEC wins almost all the cases it brings in front of the administrative law judges but only about 60% of cases tried in federal court.

The appeals court also said Congress unconstitutionally granted the SEC "unfettered authority" to decide whether the case should be tried in a court of law or handled within the executive branch agency. And it said laws shielding the commission's administrative law judges from being fired by the president are unconstitutional.

Those issues got virtually no attention during arguments in November, and the court chose to resolve the case only on the right to a jury trial.


Court allows emergency abortions in Idaho
for now in a limited ruling


By Lindsay Whitehurst
Associated Press

WASHINGTON (AP) — The Supreme Court cleared the way Thursday for Idaho hospitals to provide emergency abortions, for now, in a procedural order that left key questions unanswered and could mean the issue ends up before the conservative-majority court again soon.

The order was briefly posted on the court's website accidentally on Wednesday and abruptly removed. By a 6-3 vote, it reverses the court's earlier order that had allowed an Idaho abortion ban to go into effect, even in medical emergencies.

Abortion is an animating issue in the 2024 election campaign, a direct result of the court's seismic ruling two years ago that overturned the nationwide right to abortion. But in this decision and another that preserved access to abortion medication, the stopped short of issuing broader rulings.

The Idaho order doesn't answer key questions about whether doctors can provide emergency abortions elsewhere, a significant issue as most Republican-controlled states have moved to restrict the procedure.

In Texas, for example, an appeals court has sided with the state, finding federal health care law does not trump a state ban on abortion. Complaints of pregnant patients being turned away from emergency rooms in Texas immediately spiked following the Supreme Court's 2022 decision to overturn Roe v. Wade, according to federal documents obtained by The Associated Press.

The Supreme Court took up the Idaho case after the Biden administration sued to allow abortions in emergency cases where a woman's health was at serious risk. Idaho had argued that its law does allow life-saving abortions and the federal government was wrongly pushing for wider exceptions.

But the contours of the issue have changed in the months since the court agreed to hear it, Justice Amy Coney Barrett wrote in a concurrence joined by Chief Justice John Roberts and Justice Brett Kavanaugh.

"I am now convinced that these cases are no longer appropriate for early resolution," Barrett wrote, pointing to revisions Idaho made to its abortion ban and the Biden administration making clear it was only seeking to allowing emergency abortions in rare cases. Kavanaugh and Barrett were both part of the majority who voted to overturn Roe v. Wade.

Justice Ketanji Brown Jackson said the court should have decided now, arguing its earlier order meant Idaho doctors were forced to watch as patients suffered or were airlifted out of state for care.

"While this court dawdles and the country waits, pregnant people experiencing emergency medical conditions remain in a precarious position," she said, underscoring her views by reading a summary of her opinion aloud in the courtroom. "This court had a chance to bring clarity and certainty to this tragic situation, and we have squandered it."

Her fellow liberals agreed with the dismissal.

Conservative Justice Samuel Alito, who authored the Dobbs v. Jackson decision that overturned Roe, disagreed with the decision to dismiss the case now. Joined by Justice Neil Gorsuch and Clarence Thomas, he suggested the court should side with Idaho. Federal health care law "conclusively shows that it does not require hospitals to perform abortions," he wrote.

The opinion's premature release marked the second time in two years that an abortion ruling went out early, though in different circumstances. The court's landmark ruling ending the constitutional right to abortion was leaked to Politico.

President Joe Biden said the court's Wednesday order ensures that Idaho women can get the care they need while the case continues to play out.

"Doctors should be able to practice medicine. Patients should be able to get the care they need," he said.

White House Press Secretary Karine Jean-Pierre said, "No woman should be denied care or wait until she's near death or forced to flee her home state just to receive the healthcare she needs."

Attorney General Merrick Garland said the Justice Department will continue pressing its case and using "every available tool to ensure that women in every state have access to that care."

A new poll from The Associated Press-NORC Center for Public Affairs Research found that about 7 in 10 U.S. adults favor protecting access to abortions for patients who are experiencing miscarriages or other pregnancy-related emergencies.

Dr. Kara Cadwallader, a family medicine doctor in Boise, said she's hopeful the ruling will allow for appropriate medical care when a patient's health is threatened in Idaho. She described a pregnant patient whose membranes ruptured halfway through her pregnancy, leaving her at risk for bleeding to death and sepsis. An Idaho hospital said they couldn't care for her because she needs an abortion and instead recommended she go out of state.

It took the patient two weeks to get an appointment set up in Seattle, Cadwallader said. Now, patients like her can get treatment in Idaho.

"That is incredibly important for those of us on the ground actually seeing patients, because we've been shipping these patients out of state unnecessarily for something we could be easily taking care of for them here at home," she said.

Abortion-rights groups said the opinion would bring temporary relief, but leave "devastating" uncertainty about the larger picture. "This fight is far from over," said Alexa Kolbi-Molinas, deputy director of the ACLU Reproductive Freedom Project.

Idaho State Attorney General Raúl Labrador said the Biden administration's position had shifted to become "far more modest" than it appeared with the case was first filed. Idaho will still be able to enforce its law in the vast majority of circumstances, he said, citing Barrett's concurrence.

Still, he also expected the issue to end up back before the Supreme Court. "We feel pretty strongly we're going to win this case in the end," he said.

The Biden administration has also appealed the Texas emergency abortion ruling to the high court, leaving another avenue for the issue to appear again. The justices are unlikely to even consider whether to take up the Texas case before the fall.
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Associated Press writers Fatima Hussein, Coleen Long and Amanda Seitz in Washington, Darlene Superville aboard Air Force 1, Christine Fernando in Chicago and Hallie Golden in Seattle contributed to this report.

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