Supreme Court Rejects Sackler Immunity in 5-4 Decision, Blocks Bankruptcy Shield

On June 27, 2024, the Supreme Court ruled 5-4 to reject the Purdue Pharma bankruptcy settlement that would have provided the Sackler family immunity from future opioid-related lawsuits in exchange for paying up to $6 billion. Justice Neil Gorsuch’s majority opinion held that “the bankruptcy code does not authorize this kind of order,” blocking the Sacklers’ attempt to use their company’s bankruptcy to shield themselves from personal civil liability.

Majority Opinion: Bankruptcy Code Limits

Justice Gorsuch, joined by Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson, held that bankruptcy law does not permit courts to discharge debts owed by non-debtors. Gorsuch wrote: “The Sacklers seek greater relief than a bankruptcy discharge normally affords, for they hope to extinguish even claims for wrongful death and fraud.”

The majority opinion emphasized that the Sackler family members never filed for bankruptcy themselves, yet sought to exploit Purdue’s bankruptcy to obtain sweeping immunity from civil lawsuits. The Court found this exceeded bankruptcy courts’ statutory authority under the Bankruptcy Code.

Unusual Coalition Across Ideological Lines

The 5-4 decision defied typical conservative-liberal fault lines at the Supreme Court. The majority included both conservative justices (Gorsuch, Thomas, Alito, Barrett) and liberal Justice Jackson. The dissent, written by Justice Brett Kavanaugh, was joined by Chief Justice John Roberts and Justices Sonia Sotomayor and Elena Kagan—an ideologically diverse coalition.

This unusual alignment demonstrated that the case presented complex questions about bankruptcy law and judicial authority rather than straightforward ideological disputes.

Dissent: Practical Consequences

Justice Kavanaugh’s dissent argued that rejecting the settlement would harm opioid victims and creditors who had voted overwhelmingly to approve the plan. The dissent emphasized that 95% of voting creditors supported the settlement and warned that rejecting it could delay compensation for victims by years while the Sacklers retained their wealth.

The dissent contended that bankruptcy courts should have flexibility to approve such releases when they advance successful reorganizations and creditor recovery, even if the protected parties have not filed for bankruptcy themselves.

Back to Negotiating Table

The Supreme Court’s ruling means Purdue Pharma and its creditors—numerous states, cities, counties, and Native American governments—must negotiate a new settlement. The decision opens the possibility that the Sackler family could face individual civil lawsuits seeking to recover damages and the billions they extracted from Purdue before bankruptcy.

Nearly Five Years of Bankruptcy Proceedings

The June 2024 Supreme Court decision came nearly five years after Purdue’s September 2019 bankruptcy filing. Throughout this period:

• Victims received no compensation
• The Sacklers retained their estimated $11-13 billion in extracted wealth
• Over 300,000 additional Americans died from drug overdoses
• No Sackler family members faced criminal charges

Death Toll During Legal Process

From Purdue’s 1996 OxyContin launch through the June 2024 Supreme Court decision, over 600,000 Americans died from opioid overdoses. The 28-year timeline from launch to this accountability decision demonstrates how legal complexity and appellate processes allow corporate wrongdoers to delay consequences for decades.

Pattern of Delayed Accountability Continues

Even the Supreme Court’s rejection of Sackler immunity does not guarantee accountability. The ruling requires new settlement negotiations, which could take months or years. Individual lawsuits against Sacklers would face expensive, time-consuming litigation. The family retains billions to fund legal defenses indefinitely.

The decision represents a partial victory for accountability but demonstrates how wealthy defendants can use legal processes to delay consequences for decades while retaining their extracted wealth.

Precedent for Future Bankruptcy Cases

The Supreme Court’s ruling establishes important precedent limiting bankruptcy courts’ authority to grant immunity to non-bankrupt third parties. The decision prevents future corporate owners from using the bankruptcy system as a tool to purchase blanket immunity while keeping most of their personal fortunes.

However, the 5-4 split and strong dissent suggest this remains contested legal territory, and wealthy defendants will continue seeking ways to use bankruptcy proceedings to shield themselves from personal liability.

No Criminal Accountability

The Supreme Court decision addressed only civil liability. Despite Purdue’s guilty pleas to criminal charges in both 2007 and 2020, no Sackler family members have been criminally charged or prosecuted. The $6 billion the family offered in the rejected settlement represented approximately 46-55% of their estimated extracted wealth—they attempted to keep billions while purchasing immunity from further claims.

This case represents the culmination of a 28-year accountability failure, from OxyContin’s 1996 launch through the 2024 Supreme Court decision, demonstrating how America’s legal system struggles to impose meaningful consequences on wealthy corporate actors even after hundreds of thousands of deaths and multiple guilty pleas.