Purdue Bankruptcy – Opioid Update

Mass tort cases do not usually bankrupt the defendant. But, in the National Prescription Opiate Litigation, three of the defendants have so far declared bankruptcy. The litigation involves the claims brought by thousands of cities, counties, tribes, and other plaintiffs, all consolidated into multidistrict litigation in the Northern District of Ohio (the “MDL”).  Their damages, caused by the opioid epidemic, total in the trillions of dollars.

Purdue Pharma, often considered the creator of the opioid epidemic, declared bankruptcy in September of 2019, resulting in a stay of all opioid litigation against it in the MDL and in various state court proceedings across the country. But the fight did not stop there; it instead continued in bankruptcy court. There, Purdue, states’ attorneys general, the Plaintiff’s Executive Committee of the MDL, the Tribal Leadership Committee, and many other stakeholders participated in numerous mediations to attempt to resolve just how Purdue’s bankruptcy estate (valued at $10 billion, including $4.275 billion from the Sackler family – the owners of Purdue) would be allocated. 

Tara Sutton, partner at Robins Kaplan LLP and member of the Tribal Leadership Committee, participated in these mediations, advocating that the tribal allocation should exceed the tribal share of the U.S. population, in light of the disparate impact the opioid epidemic has had on tribes, and the lack of abatement infrastructure available to many tribes. 

After months of negotiations, an allocation agreement was reached. On March 15, 2021, Purdue Pharma submitted a proposed Plan of Reorganization to the federal Bankruptcy Court in the Southern District of New York. Under the plan, tribes will be allocated approximately 3% of the public entity allocation, which exceeds their share of the U.S. population.  “The tribes are disproportionately impacted by the opioid epidemic, and this settlement is an acknowledgement of the unique damage suffered by the tribes,” said Sutton. Robins Kaplan is proud to have achieved this result for tribes.