Exploring the Rise of Bankruptcy Court in Public Harms Litigation: Case in Focus – Harrington v. Purdue Pharma

Washington, DC – The Supreme Court will hear oral arguments on Monday in a case that highlights the increasing use of bankruptcy court by corporations involved in public harms litigation. The case in question is Purdue Pharma’s bankruptcy deal, which seeks to shield the company’s owners, the Sackler family, from civil liability in exchange for a $6 billion contribution to a settlement. This raises important questions about the role of bankruptcy court in addressing public health crises and whether bypassing the traditional civil litigation process is an effective solution.

Bankruptcy court has become an attractive option for corporations facing mass torts cases, such as the Catholic Diocese and Boy Scouts abuse cases, Johnson & Johnson’s talc litigation, 3M’s earplug case, and Revlon’s hair straightener case. These companies are turning to bankruptcy court because they believe that the traditional tort litigation process has failed to efficiently and fully resolve all pending claims.

However, there are concerns about whether bankruptcy court is an appropriate venue for resolving public health crises and whether it allows the parties involved to bypass crucial steps such as discovery and legal liability adjudication. One of the key issues in the Purdue Pharma case is whether the Sackler family should be shielded from civil liability as part of the bankruptcy deal.

Beyond this specific case, the Supreme Court’s decision will have broader implications for mass torts cases and the procedural leeway granted by the court. Justice Clarence Thomas recently expressed concerns about sacrificing constitutional protections for the sake of convenience in the context of multidistrict litigation, another procedural vehicle used to aggregate and settle mass tort cases.

The Purdue Pharma case also highlights the difficulty in certifying nationwide class-action lawsuits, which is why the national opioid litigation proceeded as a multidistrict litigation instead. The MDL statute, originally intended for antitrust litigation, has evolved into a powerful aggregating mechanism in the federal civil docket. However, the opioid MDL failed to reach a global settlement, leading Purdue Pharma to file for bankruptcy.

In a public health context, choosing bankruptcy over traditional litigation can prevent important information from being revealed through the legal process. Information obtained through pre-trial processes has often played a crucial role in generating evidence for policy reform in cases involving industries like tobacco and firearms.

The Supreme Court’s decision in the Purdue Pharma case will have significant implications for due process, federalism, and the power of bankruptcy courts. It remains to be seen whether the court will prioritize the need for a global settlement or maintain the redundancy inherent in a federalist system.

In conclusion, the Supreme Court’s upcoming decision in the Purdue Pharma case will have far-reaching consequences for the use of bankruptcy court in public harms litigation. The court’s ruling will determine whether corporations can bypass the traditional civil litigation process and whether bankruptcy court is an appropriate venue for addressing public health crises. Regardless of the outcome, this case highlights the challenges and complexities of mass torts cases and the trade-offs involved in seeking global settlements.