Parties sought to halt settlement until Purdue Canada proved it was not unlawful or prejudicial
In a recent class action lawsuit, the Ontario Superior Court of Justice refused to stay the implementation of a $150 million settlement between Purdue Canada and the Canadian Governments over opioid-related healthcare costs.
The motion to stay was brought by the Peter Ballantyne Cree Nation, Lac La Ronge Indian Band, the City of Grand Prairie, and the Corporation of the City of Brantford. The moving parties sought to halt the settlement until Purdue Canada demonstrated that it was not unlawful, prejudicial, or an abuse of process.
The settlement, approved by the Supreme Court of British Columbia, involved claims to recover healthcare costs expended by 14 federal, provincial, and territorial governments in Canada. The negotiations lasted over two years and culminated in an agreement reached in May 2022.
The court found no merit in the moving parties’ claims that Purdue Canada needed to prove its financial stability before proceeding with the settlement. The moving parties argued that Purdue Canada, which had benefited from a stay of proceedings granted by the Ontario court, should disclose its financial status to ensure the settlement's fairness. They expressed concerns about Purdue Canada's ability to satisfy any future judgments, suggesting that the company might be insolvent or unable to pay additional claims.
The Ontario Superior Court, however, noted that Purdue Canada was not a debtor in the ongoing Chapter 11 proceedings in the United States but was related to the Purdue US companies through common ownership by the Sackler families. The related party stay granted by the Ontario court was intended to pause litigation and facilitate a global resolution of opioid-related claims. Still, it did not restrict Purdue Canada from negotiating settlements.
Despite the moving parties’ concerns about Purdue Canada's solvency, the court found that the evidence did not support these claims. Purdue Canada's general manager testified that the settlement payments could be made over seven years without compromising the company's operations. The court emphasized that the settlement was structured to allow Purdue Canada to remain a going concern while making the necessary payments.
The court also noted that other Canadian litigants had successfully obtained lift stay orders to pursue their claims against Purdue Canada, indicating that the moving parties had similar opportunities to advance their actions. Additionally, the court found no evidence that Purdue Canada had failed to act in good faith throughout the proceedings.
Ultimately, the court ruled that there was no sufficient basis to grant the requested orders or stay the settlement, affirming that Purdue Canada had acted in good faith and had negotiated the settlement at arm's length with the Canadian Governments. The motion was dismissed, allowing the settlement to proceed.
