The Supreme Court Sack[ler]s Third-Party Releases in Chapter 11: Should Congress Seize the Cudgel?

On June 27, 2024, the Supreme Court issued its ruling in Harrington v. Purdue Pharma L.P., holding that nonconsensual third-party releases included in a Chapter 11 plan of reorganization, other than one relating to asbestos liability claims, were impermissible under the federal Bankruptcy Code. The releases at issue would have immunized members of the Sackler family, who controlled Purdue Pharma, from liability in connection with the company’s role in the opioid crisis. The Sacklers represent the epitome of the unpopular litigant, so no tears need be shed for them. In a sense, they just received a dose of their own medicine. The decision was as narrow as it gets (five-to-four), and the majority predictably grounded its holding squarely in the statutory text (or absence thereof). I have no particular quibble with that result, as the statutory, unlike the policy, arguments in support of a release from personal liability for nondebtors were always a bit of a stretch. The decision, however, was disconcertedly overbroad in failing to clearly distinguish direct and derivative claims, and it will inevitably make it more difficult to formulate and confirm mass tort reorganizations. This effect will be unfortunate—both for mass tort debtors and their victims. This abstract has been taken from the author's introduction.