Arizona Attorney General Mark Brnovich is asking the U.S. Supreme Court to make the owners of a massive pharmaceutical company accused of fueling America’s opioid addiction epidemic give back at least $4 billion they withdrew from the company, arguing that they’re “looting” the company to shield money that could be part of legal settlements.
Various state, tribal and local governmental entities in Arizona have joined a multijurisdictional lawsuit in Ohio that seeks damages from Purdue Pharma and other opioid manufacturers and distributors for the roles they played in the ongoing opioid problem.
The Arizona Attorney General’s Office is also suing Purdue Pharma in Pima County Superior Court, alleging that the company violated a 2007 consent decree barring it from using deceptive claims to market OxyContin. Brnovich on Wednesday filed a motion in the case seeking to add members of the Sackler family as defendants. He is seeking $25,000 per violation.
Whether Purdue engaged in illegal business practices that helped cause the opioid epidemic is a matter for other litigation, Brnovich’s office wrote in its filing to the Supreme Court on Wednesday. The issue he wants the high court to address is whether the Sackler family, which owns Purdue, fraudulently transferred billions of dollars to themselves and whether that would threaten the company’s ability to pay for the damages being sought by the plaintiffs in the Ohio case.
Specifically, Brnovich is accusing Purdue and the Sacklers of violating the Uniform Fraudulent Transfer Act, which Arizona and most other states have adopted. The law prohibits fund transfers that are intended to hinder, delay or defraud creditors.
“[T]he Sackler family, which controls Purdue, has siphoned billions of dollars out of the company in recent years. The law does not permit the Sacklers to reap a windfall while Purdue’s creditors absorb a massive loss,” Brnovich’s office wrote in its motion to the Supreme Court.
Rather than begin in the lower courts, Brnovich asked the Supreme Court to take the case directly, which is a rare occurrence. Article III of the U.S. Constitution permits the Supreme Court to take original jurisdiction over cases in which states are parties, including cases between states and citizens of other states.
Several similar lawsuits have been filed in state courts.
Brnovich told Arizona Mirror that he went straight to the Supreme Court because wanted to do something that would expedite the process, create certainty and make it easier to enforce any judgment.
“Just because no one else has tried it, that’s not going to deter me,” Brnovich said. “By throwing deep, by doing something outside of the box, by going straight to the Supreme Court, our hope is that will create some certainty much sooner than having cases wind through other state or other federal courts.”
Brnovich acknowledged that going directly to the Supreme Court is an unusual move, but said, “I would assume that if people … take a step back and look at what we did, the honest intellectual answer is, damn, that’s pretty smart, that’s pretty innovative.”
If the Supreme Court rejects his request, Brnovich said he’ll go to U.S. District Court.
The filing notes that Purdue announced earlier this year that it’s considering bankruptcy proceedings. Given that, recouping the money that was transferred to the Sacklers would help ensure the company has enough money to cover any legal liabilities, the Attorney General’s Office wrote.
Brnovich said he believes $4 billion is the “floor” for how much money the Sacklers siphoned from the company, and that the number could be as high as $10 billion.
Purdue Pharma spokeswoman Josephine Martin said it was inappropriate for Brnovich to go directly to the Supreme Court.
“The United States Supreme Court is an improper forum to conduct a trial of the claims being made by Arizona. This petition was filed solely for the purpose of leapfrogging other similar lawsuits, and we expect the Court will see it as such,” Martin said in an emailed statement.
A spokesman for two members of the Sackler family, Mortimer and Raymond Sackler, issued a statement saying, “We strongly deny these allegations, which are inconsistent with the factual record, and will vigorously defend against them.”
The Attorney General’s Office wrote in its filing that opioid-related deaths in Arizona have increased by 73 percent since 2013, including 928 in 2017. The Arizona Department of Health estimated that more than 3,000 Arizonans died of opioid overdoses between June 2017 and June 2019.
More than 1,500 governmental entities from across the country have joined the National Prescription Opiate Litigation, which is being heard in U.S. District Court for Ohio’s northern district. At least 16 entities from Arizona have joined the suit.
But rather than join that litigation, Brnovich said his preference would be a settlement led by the states, similar to the settlement between the states and tobacco companies in 1998, that would see the states administering funds from any settlement. Brnovich is part of a working group of state attorneys general who are trying to find a collective, national solution that’s separate from the Ohio litigation.
Brnovich was part of a bipartisan group of 27 attorneys general who signed a letter in June urging U.S. District Court Judge Dan Polster, who is presiding over the multi-district lawsuit in Ohio, to postpone certification of the cities and counties as a collective negotiation class so the states can weigh in.