Harrington v. Purdue Pharma L.P.

Harrington v. Purdue Pharma L.P., decided by the U.S. Supreme Court on June 27, 2024, arose from Purdue Pharma's bankruptcy following thousands of lawsuits over its marketing of OxyContin. The bankruptcy court confirmed a plan requiring the Sackler family to contribute up to $6 billion in exchange for releases shielding Sackler family members from future opioid-related civil claims, even though they had not filed for bankruptcy. William K. Harrington, the U.S. Trustee, challenged the plan, arguing that the Bankruptcy Code does not authorize such nonconsensual third-party releases. The Supreme Court agreed in a 5-4 decision, holding that the bankruptcy court lacked statutory authority to discharge claims against non-debtors without claimants' consent. The ruling invalidated the settlement and remanded the case.

In a 5-4 decision authored by Justice Neil Gorsuch, the Supreme Court held that the bankruptcy court lacked authority to grant nonconsensual third-party releases; it reversed the Second Circuit and invalidated the Purdue Pharma reorganization plan.

Whether the Bankruptcy Code authorizes a court to approve a reorganization plan that releases non-debtor third parties, such as the Sackler family, from liability to opioid claimants without their consent.

The decision restricts the use of non-debtor releases in mass tort bankruptcies, forcing the Sackler family to renegotiate or face direct opioid lawsuits. It affects how corporations and wealthy owners use bankruptcy to resolve widespread liability and may delay compensation for victims of the opioid epidemic.