R.I.P. Purdue — What a Decades-Long Dismantling Tells Socialists about Corporate and State Power
On November 24, 2020, a death warrant was signed by Purdue Pharma LP entering into a plea agreement to one charge of dual-object conspiracy to defraud the United States and violate the Food, Drug, and Cosmetic Act (FDCA), and two charges of conspiracy to violate the Federal Anti-Kickback Statute. While not the end of one continuous investigation, various federal and state law enforcement have been investigating Purdue for essentially the same crimes since 2001, only five years after the release of OxyContin and back when the rates of overdose deaths were over three times lower than they are today. I call the plea a “death warrant” because it contains a complicated set of provisions interrelated with the company’s bankruptcy, one of which is the company’s dissolution. The major provisions in short are:
- A criminal fine of $3.544 billion, the largest ever levied against a pharmaceutical company;
- $2 billion in criminal forfeiture, $225 million of which will be paid by tomorrow and the rest which will be paid over time;
- Having Purdue dissolved and its assets and other holdings be placed through the bankruptcy court into a public benefit company owned by a trust, which will mainly be tasked with using the assets to fulfill the reparations (besides the immediately due $225 million) that the company owes to the survivors and victims of the opioid epidemic; and
- No release of any member of the Sackler family or any other Purdue executive or other person who may have individual liability for the same offenses.
I have a tendency to largely complain about settlements in prosecutions of corporations for being too lenient in financial penalty and not actually ensuring the illegal conduct stops, but this plea deal is pretty good on both of these aspects. While I think a fine as high as $10 billion would have been appropriate, $3.54 billion is comfortably in that ballpark, particularly for a pharmaceutical company that doesn’t have the comparable financial heft that might make the same penalty less appropriate for say Goldman Sachs or JPMorgan Chase if they engage in similar criminal conduct.
Even better than this, and as I have long-advocated for, the company is finally being dissolved. I do certainly have concerns about this plan for a public benefit corporation. Amtrak, PBS, and USPS are all public benefit corporations and those three have very different histories of serving the public or not. Particularly I worry because of the Department of Justice’s statement that it “looks forward to working with the creditor groups in the bankruptcy in charting the path forward for this PBC to best accomplish public health goals.” If Purdue’s creditors are allowed to cannibalize the new PBC and render it as underfunded as, well, Amtrak, PBS, and USPS, the $2 billion in criminal forfeiture will not be so impressive. Another concern would be the creditors trying to use their claims to steer the PBC in directions that benefit them (i.e. Wells Fargo is a creditor, so I wouldn’t be surprised if some Wells Fargo PR initiative to fight the opioid epidemic popped up). I am not sure there is any precedent for something like this happening in a bankruptcy court, especially in conjunction with a federal criminal prosecution, so it seems too soon to tell, one way or the other, how the PBC and $2 billion will be used.
As to the last major provision, it is certainly better to have than to not have, but I doubt that the DoJ is going to go after the Sacklers or others on an individual basis. That being said, the lack of release will be useful for both state prosecutions and civil lawsuits to avoid claims of double jeopardy, collateral estoppel, or to put it plainly, to avoid people saying this settlement is a final legal determination and there should not be any other lawsuits or prosecutions.
So that is the basics of this settlement. What can socialists learn from it? I have five major takeaways:
- Companies can, and should, be criminally prosecuted.
I will not belabor this point too much since I have written about it both specifically and in a general scheme of what “law and order” means under socialism. But it is certainly worth repeating here that some people may have realized for the first time from seeing the headline of Purdue’s plea that companies can be criminally prosecuted. The reason many people do not even realize that companies can be criminally prosecuted is because generally our law enforcement does not prosecute them. They are not prosecuted mainly due to who is in charge of setting priorities (Attorneys General, district attorneys, etc.) rather than what laws exist.
However, the ever-controversial “conspiracy” charge was the basis for all three charges pled to by Purdue which raises important and interesting questions about what “criminal justice reform” looks like for socialists beyond long term visions like prison abolition. How can we preserve criminal laws to go after companies like Purdue without having them used, as they are currently predominantly used, to incarcerate working class people in racist and violent ways? And more generally, how do socialist district attorney campaigns interact with and relate to campaigns to abolish certain criminal statutes? The question is easy enough on issues like drug possession, sex work, etc., but what makes a statute like “conspiracy” so problematic (its broad scope of conduct) is what makes it something that can be used against companies.
I generally would support some kind of reform or even abolition of criminal conspiracy, but even for people like me who do still weigh on the side of abolishing overly broad criminal statutes even if they can be used for good, we should be having discussions of what we will do once those statutes are abolished. Should we replace 18 U.S.C. 371 with something more narrowly tailored? How could we change RICO to stop it from being used to union bust but allow it to continue to be used to go after conspiracies by companies to defraud working class people?
2. If we are serious about things like a Green New Deal and Medicare For All, we will need to get the Dept. of Justice on board.
Again this is a point I have made before but it is worth making again. In a hopefully-not-too-distant future, we will pass things like a Green New Deal and Medicare for All. Both in crafting these laws and in their subsequent enforcement, we will need to the Department of Justice. I know that is not something a lot of socialists want to hear. The DoJ’s history is replete with racist gang prosecutions, racist terrorism prosecutions, and racism in general. Of course, that has unfortunately been the history of the U.S. federal government in general, from the EPA to the IRS. The task of repurposing the DoJ may be more challenging than most (or maybe even all), but we will need some kind of agency to enforce federal law so I do not think abolishing the DoJ can realistically be on the table if things like a Green New Deal and Medicare for All are also on the table (as opposed to the Department of Homeland Security, which very much should be abolished).
The reason why we need DoJ to enforce socialist or even social democratic policies is made clear by Purdue’s case. Purdue has been sued countless times for the same kind of conduct, both by civil law enforcement and by private individuals, and simply put it did not stop them. Tort law exists to make people whole as much as possible, not to enforce the law. And civil prosecutions simply do not have the power to get companies and people to take the law as anything more serious than a business expense. There is a reason why all of the largest penalties against pharmaceutical companies, not just this one, came out of criminal prosecutions. Civil law is meant to be reparative, criminal law is meant to deter, punish, and stop. If we ever expect to abolish fossil fuels and private health insurance, we need an enforcement mechanism up to that task that cannot be ignored or priced in, and criminal law is that enforcement mechanism and federal jurisdiction is the only scope sufficient in a federalist government to ensure companies do not simply hide in loopholes.
3. The legal process can work for reparations and stop ongoing harm, but it is not a substitute for policy and social change.
While this Purdue criminal plea is a rare positive redressing of decades of capitalist violence, OxyContin came out in 1996 and enforcement of the current laws failed to stop the harms it and other opioids have caused to communities across the country. This is a hard limit to the first two points that not only should be kept in mind by those campaigning for socialist candidates for district attorney and similar offices, but further it should be something that is campaigned on and subsequently implemented.
The one positive example we currently have to look towards is DA Chesa Boudin in San Francisco. In addition to charging murderous police officers and publishing a list of cases where medical examiner misconduct may have occurred, DA Boudin has gone so far as to sponsor legislation like a law to require DAs to recuse themselves from investigations of police use of force if they take donations from law enforcement unions. DA Boudin won his office largely through the work of community organizations and San Francisco DSA, and the latter has not simply declared victory with Boudin’s election but rather has continued to do the crucial work on the streets like protesting the latest Police Officer Association contract.
4. Socialists need to understand and engage with any present means of state intervention into corporate control, including things as boring as bankruptcy.
But one other important takeaway from the Purdue case is the role that the bankruptcy court has played in generating the unique terms of the dissolution and reformation as a public benefit corporation. Bankruptcy is an infamously labyrinthine set of laws, with its own set of rules separate from federal civil procedure, many of which incorporate other rules by reference or are implemented in different ways in different districts. And as I wrote in a law review article, the bankruptcy process is especially susceptible to the individual predilections and prejudices of the judges who run them.
But as I also wrote in that law review article, bankruptcy was created by creditors, not debtors, specifically to fulfill a need to maintain the circulation of capital needed for capitalists to make money. Or to put it in plain terms, capitalists can’t make money if people are too in debt to buy things or their companies are too in debt to make profits. This has always been an important way that this economic system has maintained control, by essentially writing its instruction manual in a way that appears very difficult to understand and then getting an army of lawyers who will claim to have unparalleled expertise in it.
As difficult as it is, we need to understand every part of how capitalism functions if we hope to move beyond. That doesn’t mean everyone reading this needs to go pick up a copy of Collier on Bankruptcy (lawyer joke), it just means that we need to recognize a need for having socialists who do understand these processes. Meaning me, you need me (just kidding…although…).
5. No matter how bitter and cynical we may be, we should not give up hope on one day holding people accountable for harms like the illegal occupation of Iraq and the sacrifice of thousands to the COVID-19 pandemic.
It is hard to overstate how bitter and cynical I have personally become as I wait for Black Friday to hit this country tomorrow like a wave of smallpox blankets (racist biological warfare pun very much intended). The president-elect is seemingly demented and the vice president-elect is a political enigma, but the one thing we can be sure of is that they are against socialism, for imperialism, and have no interest in really holding any of their predecessors accountable.
But even as recently as last year before the bankruptcy started, Purdue was still marketing and selling opioids and had survived dozens of civil lawsuits, many brought by state attorneys general. It seemed like Purdue and the Sackler family would just be another example of capitalists getting away with murder. Even after the bankruptcy was filed, the Sackler family put up a bulldog front and the end we finally got was never guaranteed. No, justice has not yet been fully served, certainly not before every single dollar of that $2 billion is redistributed to the communities that Purdue harmed. But as Purdue is put in its grave, it gives me hope that, while the fight will be bloody and long, we can one day get justice for the many survivors and victims of capitalist exploitation and oppression all around the world.