By Geoff Mulvihill
Local government lawsuits against the family that owns Purdue Pharma should be allowed to proceed even as the company attempts to reach a nationwide settlement in bankruptcy court over the toll of the opioids crisis, according to a court filing on Wednesday.
The filing by 19 cities and towns in Connecticut, Massachusetts, New Jersey and Virginia comes amid acrimonious settlement negotiations with the maker of the painkiller OxyContin that is now playing out in a bankruptcy court in White Plains, New York.
Purdue and members of the family that owns it, the Sacklers, are seeking a grand settlement to end more than 2,600 lawsuits against the company that have been filed in federal court and hundreds more filed against the family in state courts. The federal cases against Purdue and many other players in the opioid industry had been consolidated in U.S. District Court in Cleveland, a process that produced the outlines of a tentative settlement last month between Purdue and some of the plaintiffs.
Purdue's bankruptcy filing was anticipated under that tentative deal, although half of state attorneys general have rejected the terms so far and have vowed to continue suing the Sacklers in their state courts.
Wednesday's filing by the local governments argued against having an injunction placed on the lawsuits targeting the family while Purdue's federal bankruptcy case plays out.
"In light of the well-documented pattern by the Sackler Family of hiding their assets from creditors, the Debtors' application is simply a transparent and improper effort on the part of the Debtors to protect the bulk of their beneficial owners' fortune from disclosure and recovery by any of their creditors," the local governments' court filing states.
The family, which Forbes magazine listed in 2016 as one of the 20 wealthiest in the country, said the bankruptcy judge should halt all lawsuits against it.
"The stay is designed to allow all parties, even those parties who oppose that proposed settlement, to collaborate in finding a solution to the current litigation morass that the company faces," descendants of Raymond Sackler, one of the late patriarchs of the company, said in a statement. "We are hopeful the bankruptcy court will grant the stay so that progress toward meaningful solutions can continue. If a stay is not granted, precious resources will be wasted on litigation expenses and that will benefit no one."
Last month, New York's attorney general said in a legal filing that the family had used Swiss and other hidden bank accounts to transfer $1 billion to themselves. An Associated Press investigation found that the Sacklers have sought to shield their fortune through a web of companies and trusts, many of them based outside the U.S.
The settlement terms call for Purdue to contribute as much as $12 billion over time to help states and local governments address the opioid crisis, with the Sackler family contributing $3 billion to $4.5 billion. The amount depends on how much they would get from selling their international drug companies.
Purdue's subsequent bankruptcy filing removes the Stamford, Connecticut-based company from the first federal trial over the toll of the opioids crisis, scheduled to begin later this month in Cleveland.
Wednesday's filing by the cities and towns says the settlement discussions remain "in their infancy" and that neither Purdue nor the Sackler family has so far made financial disclosures. Those disclosures are necessary to show whether the Sacklers would actually make good on their promise to pay, according to the court filing.
The local governments also take aim at a statement in a Purdue legal filing that sought to have all lawsuits against the family halted. That filing said the Sacklers might be "unwilling _ or unable _ to make the billions of dollars of contributions" if they have to face additional lawsuits.
The local government lawyers say that with the family willing to back out and half states pushing back, the nationwide settlement long sought by the Sacklers is unlikely to happen.
Some state attorneys general are expected to make similar arguments in filings due to the bankruptcy court by Friday.
Published: Fri, Oct 04, 2019