“At nearly every turn during the course of subsequent negotiations, debtors have sought to undermine material terms of the deal,’’ Arizona wrote in a motion filed late Monday opposing the stay.
Purdue Pharma, maker of OxyContin, filed for bankruptcy on Sept. 15 as part of a broad opioid settlement proposal that has been accepted by 24 states but is opposed by 24 states and the District of Columbia. If Arizona were to withdraw its support, that would mean a majority of states oppose the tentative pact. Oklahoma and Kentucky have settled with Purdue.
Purdue Pharma has asked the bankruptcy court to temporarily block thousands of lawsuits against Purdue and the Sackler family as a condition to allow the settlement to progress. It has said in court filings that the Sackler family may walk away from the deal if it is not protected from the litigation.
States opposed to the deal have resisted Purdue’s effort to block the suits, but Arizona is the first of the supportive states to lodge an objection. Arizona officials did not elaborate on their motion.
“It’s in everyone’s best interest to secure a just and timely settlement,’’ Arizona Attorney General Mark Brnovich (R) said in a statement Tuesday. “Purdue and the Sackler family need to take responsibility for their role in the opioid crisis.”
Other states working on negotiations toward a final settlement showed no signs of cracking.
“While Florida is disappointed with Arizona’s decision and obviously disagrees it is the best course of action in this unique circumstance, we remain committed to our bipartisan proposed settlement with 28 states and territories,’’ said Lauren Schenone, a spokeswoman for Florida Attorney General Ashley Moody (R).
The Sackler family has pledged $3 billion to the deal, an amount that would be derived at least in part from the sale of an overseas drug company it owns. But objecting states say that is far too little, citing a statement in a recent deposition by a current Purdue financial consultant that the family took up to $13 billion in profits out of the company.
OxyContin, which has been blamed as a major driver of America’s opioid epidemic, makes up about 90 percent of Purdue Pharma’s sales.
A spokesman for Purdue Pharma said it was reviewing the objection and did not offer comment. A representative of the Sackler family declined to comment.
In opposing the stay of litigation, Arizona said it was joining legal arguments put forth by the attorneys general in 24 states that have rejected the settlement. Those states say the Sacklers are not part of the Purdue bankruptcy case and therefore should not be protected from litigation. In the case of Purdue, the states say they are exercising their “police powers’’ to sue Purdue, which they say prevents a stay of the lawsuits.
Arizona also is advancing its own novel argument. It is the only state to have filed an unusual appeal asking the U.S. Supreme Court to force the Sackler family to return the billions that it has taken out of Purdue Pharma. In that long-shot argument, it asks the Supreme Court to exercise its constitutional powers to force the Sacklers to return the money.
In legal arguments filed Monday in U.S. Bankruptcy Court, Arizona contends that Bankruptcy Court Judge Robert Drain does not have the legal authority to block Arizona’s Supreme Court appeal from moving forward.
All of the states’ motions are set to be heard Friday in Drain’s courtroom, in White Plains, N.Y.