As a coalition of lawmakers tries to hold the billionaire Sackler family accountable for its role in the opioid crisis, Washington’s most powerful business lobby group has now jumped into the intensifying battle over whether courts can grant sweeping legal immunity to those accused of corporate crime.
At issue is a feature of bankruptcy law known as a nondebtor release, which the Sackler family — owners of opioid maker Purdue Pharma — is trying to use to shield its entire corporate empire from current and future litigation. Facing a barrage of lawsuits over its role in the opioid epidemic, Connecticut-based Purdue declared bankruptcy in a New York court known for being friendly to corporate litigants.
Last month, judge Robert Drain approved the Sackler family’s sweeping immunity plan in the US Bankruptcy Court for the Southern District of New York. The Joe Biden administration is now appealing that ruling.
Earlier this year, Democrats introduced the Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases (SACKLER) Act, a bill that would have prevented the Sacklers from obtaining liability releases. Although the legislation has sixty-three cosponsors, the measure has been stalled in committee since March, more than five months before the court accepted Purdue’s plan. Meanwhile, federal records show the US Chamber of Commerce, one of the nation’s best-funded corporate lobbying groups, has joined Purdue Pharma in lobbying on the bill.
Lobbying records filed with the Senate show that the Chamber began lobbying on the SACKLER Act between April and June. A Chamber affiliate, the Institute for Legal Reform, has also jumped into the fray. Disclosures show the group hired a former Republican aide to the Senate Judiciary Committee to lobby on the issue.
Federal records show only that the Chamber and the Institute for Legal Reform have been lobbying on the bill, which would help determine whether or not the family is able to protect its hard-won immunity. The Chamber did not respond to a request for comment about what they are specifically lobbying for or against.
For years, the Chamber has been leading a larger legislative campaign to try to shield corporations from legal liability. In the case of the SACKLER Act, the Chamber and its members may be trying to fortify a lucrative legal shield for not just the Sackler family, but for all of corporate America.
Other interests lobbying on the bill include hospital chain Tenet Healthcare, as well as drugmaker Johnson & Johnson, which has a direct connection to the opioid crisis, as it supplied poppies used in Purdue pills. Johnson & Johnson reported donating up to $500,000 to the Chamber in 2020, while Tenet gave $150,000.
A recent investigation by the Intercept revealed that Purdue has spent $1.2 million over the past year and a half on lobbying despite telling a court it is bankrupt. In federal disclosure records, the company says it has been “monitoring” the SACKLER Act.
Pushing for Immunity
The lobbying move comes as the Sacklers are making clear how much they value the legal immunity provisions of the pending bankruptcy settlement. Last month, the family threatened to scuttle the whole settlement and fight each individual case in court, unless the current court agreed to halt all current and future civil and criminal proceedings against the family and its empire.
Though Purdue is headquartered in Stamford, Connecticut, and incorporated in Delaware, the Sacklers were able to bring their bankruptcy case in White Plains, New York, because Congress has not passed bipartisan legislation to halt so-called forum shopping by corporations. Without that reform, companies can pick and choose courts whose jurisprudence offer them the best chance to protect their assets and grant them immunity from liability and prosecution.
Right now, there is a split between federal circuit courts of appeals over the issue of nondebtor releases from liability in bankruptcy cases. The Ninth and Tenth Circuits do not allow such releases under any circumstances. The Second, Fourth, and Sixth Circuits, on the other hand, allow nonconsensual nondebtor releases for third parties who contribute money to reorganization plans.
The SACKLER Act would have settled the matter in favor of the Ninth and Tenth Circuit approach, barring courts from granting nondebtors liability waivers — at least against claims by governments. But that legislation is stalled.
Closing the Loophole
Now, a group of House and Senate Democrats are racing to try to pass new legislation designed to explicitly prohibit such settlement arrangements, and short-circuit a deal that they see as unfairly generous to the drug kingpins whose products have killed hundreds of thousands of Americans.
Introduced at the end of July, the Nondebtor Release Prohibition Act of 2021 is being spearheaded by senators Elizabeth Warren (MA), Dick Durbin (IL), and Richard Blumenthal (CT), as well as representatives Jerry Nadler and Carolyn Maloney of New York and David Cicilline of Rhode Island. The legislation would similarly prevent courts from granting nondebtor releases where creditors do not agree to the liability waiver.
“Since Purdue Pharma filed for bankruptcy, the Sackler family has tried to use non-debtor releases, or non-consensual third-party releases, to protect themselves and their assets from lawsuits linked to the opioid crisis,” the lawmakers wrote in a press release. “This loophole in bankruptcy law has increasingly been used by bad actors who have not filed for bankruptcy to escape personal accountability for their actions by shielding themselves through a bankruptcy proceeding of another corporation or entity. The Nondebtor Release Prohibition Act of 2021 would virtually eliminate the use of non-consensual, non-debtor releases in private claims and those brought by the government.”
Lobbying disclosures are not yet available for this new bill. While Nadler, the House Judiciary Committee chair, introduced the legislation, it has been sitting in his committee since July 28 — more than a month before a judge approved Purdue’s settlement plan.