VANCOUVER—As it continues its efforts to form a nationwide class-action lawsuit against more than 40 opioid manufacturers and distributors, British Columbia is seeking to “pierce the corporate veil” and target the wealthy family members behind one of the companies.
Purdue Pharma Inc., which produces the painkiller OxyContin, filed for bankruptcy protection on Sunday amid numerous class-action lawsuits in the United States. Anticipating the move, lawyers for B.C.’s lawsuit have named members of the Sackler family as defendants.
B.C. is suing more than 40 pharmaceutical companies to recoup costs related to the ongoing opioid crisis. The lawsuit states that of the 3,987 Canadians who died of an apparent opioid overdose in 2017, 1,399 were B.C. residents. B.C. is also seeking to get the case certified as a class-action, at which point the lawsuit will automatically include all Canadian provinces and territories.
A lead lawyer for the case told Star Vancouver that his team is pursuing members of the Sackler family directly for what they say is their role in the opioid crisis.
“If individuals are found liable, the (provincial and territorial) claims are not automatically covered by a corporate bankruptcy. We will still seek recovery (of the money),” said Reidar Mogerman in an email.
B.C. first launched its lawsuit in June 2018, but on July 25, 2019, the province submitted a request to add individual members from the Sackler family as defendants. Specifically, it names Raymond Sackler, Richard Sackler, Kathe Sackler, Jonathan Sackler and Theresa Sackler, among others.
The application to include the Sacklers in the lawsuit says that the Sacklers have an approximate net worth of $13 billion and that some of the above-mentioned Sacklers “held officer positions with Purdue USA at various times from the 1990s to the 2000s.”
“The Sackler defendants personally participated in the development, approval and implementation of Purdue Pharma USA’s aggressive and deceptive marketing of prescription opioids,” reads the application.
It alleges the Sacklers were “aware of the dangers associated with OxyContin and prescription opioids but took no steps to curtail the prolific prescribing” and instead were “actively and personally involved in forming strategies to increase sales.”
The Sacklers’ lawyer and publicist both declined to comment on behalf of the family. Family members have denied wrongdoing with regards to the opioid crisis in the United States.
Mogerman, who said the application to include the Sacklers will be heard on Oct. 7, said the family’s lawyers have indicated they will challenge the move.
An emailed statement from the Canadian branch of Purdue also denies wrongdoing and said the company has “always” marketed its products in line with Health Canada rules, regulations and codes, including the Food and Drugs Act and the Pharmaceutical Advertising Advisory Board Code.
According to the arguments laid out in the B.C. case against the Sacklers, in 2007 the company entered a guilty plea in a U.S. lawsuit, admitting the company had misbranded OxyContin as less addictive, less subject to abuse and less likely to cause side effects than other painkillers.
According to the New York Times, Purdue and the Sackler family are close to settling lawsuits with two-dozen American state governments. In the settlement, Purdue would dissolve and be replaced by a public benefit trust that also sells OxyContin — but its profits would be used to pay those who sued Purdue and pay for research and development of medication to treat opioid addictions.
The Sacklers would also pay nearly $3 billion over seven years, and the settlement would not include an admission of wrongdoing, reports the Times.
Mogerman said the Canadian claims against the company and family “must be accounted for, or the Sacklers will face the endless and expensive litigation that they are trying to avoid.”
“We have a historic and tragic health-care crisis in Canada and we will make those who are responsible contribute to the urgently needed solutions,” he continued.
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B.C. has assembled a working group for other provinces to provide feedback on its lawsuit. In August, B.C. Attorney General David Eby said that New Brunswick, Newfoundland and Labrador, Nova Scotia and Quebec are participating in the national working group. Saskatchewan has confirmed its participation as well.
Eby added Alberta is “still deciding whether and how they’ll participate.” Ontario announced its interest publicly in the lawsuit, with attorney general spokesperson Brian Gray saying the province supports B.C.’s effort.
The move to hold the Sacklers accountable is an attempt at “piercing the corporate veil,” says class-action lawyer David Klein.
Klein, who is not involved in the case but has been watching it closely, said that because the Sacklers are billionaires Canadian provinces might be able to recover some money from them — but that would be contingent on them having money left over after they resolve U.S. lawsuits, which may conclude before Canada’s.
Companies are considered separate legal persons under both Canadian and American law, Klein said, and when there’s any wrongdoing by employees or directors, it’s usually the company that’s held responsible.
“Piercing the corporate veil means that you’re able to attach liability to directors, officers, employees or even shareholders. It’s quite difficult and quite rare.”
Klein said he could not recall any class-action lawsuits in Canada that held individuals at a company responsible but “it does happen from time to time, without doubt” in other forms of litigation.
Eby said in a statement Monday that so far there has been “no effort” by Purdue or the Sacklers to involve Canadian provinces and territories in the settlements that are rumoured to be in the works in the United States.
“B.C. remains ready and willing to participate in the reported effort to achieve global resolution of the claims against Purdue entities and the Sacklers,” he said.
“If, however, B.C. is not included in this process, we are determined to continue to pursue our claims against the Purdue entities and against members of the Sackler family to the fullest extent permitted by law.”
With files from Nadine Yousif and Jacques Gallant.