REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Attorney to Execute the Participation Agreement to opt in to the Proposed National Opioid Settlement as a Non-Litigating Entity Involving Opioid Manufacturer Purdue Pharma L.P. and the Sackler Family
Report
BACKGROUND
In January 2025, a new proposed settlement was announced to resolve several lawsuits involving Purdue Pharma and the Sackler Family. The lawsuits alleged Purdue Pharma and the Sackler Family helped fuel the nation’s opioid epidemic by inventing, manufacturing, and aggressively marketing opioid products. The proposed settlement calls for up to $7.4 billion to resolve the claims made by states and local governments, including those municipalities that were not parties to the litigation. According to the settlement, the Sackler family and their former company Purdue Pharma L.P. will pay $7.4 billion over 15 years. California is expected to receive $440 million.
Over the last ten years, prescription drug manufacturers, distributors and pharmacies have proposed or finalized opioid settlements totaling more than $50 billion resulting from lawsuits and claims that these companies fueled the opioid crisis. The City Attorney previously requested Council authorization to participate in opioid settlements in 2021 (RTC No. 21-1125) and 2024 (RTC No. 24-0799). Since 2021, the City has received $540,397.26 in settlement funds, and expended $51,585.59 to date. Of those funds, the City has expended $8,578.70 on the purchase of Naloxone utilized by the Department of Public Safety (DPS) and $43,006.89 to the Sunnyvale Elementary School District for providing intervention and prevention resources. The balance of the settlement is held in a project fund to be allocated to programs to combat the opioid crisis in Sunnyvale, including a continued agreement with the Sunnyvale Elementary School District, annual Naloxone replacement for DPS, and Naloxone training at the Sunnyvale Library. It is anticipated that funds received from the Purdue Pharma settlement would be used similarly.
Based on the terms of the settlement agreement, the actual amount each entity will receive depends on the number of non-litigating entities that opt in. A certain percentage of cities and counties must participate in the settlement, otherwise the amount attributed to California will be reduced. Additionally, any funds received pursuant to this settlement would be limited to expenditures of approved “abatement costs,” including opioid abatement, treatment, education, and recovery. The settlement also includes a non-monetary component regarding the Sackler family’s control of Purdue Pharma and bars them from selling opioids in the United States.
EXISTING POLICY
Charter Section 908(b): The City Attorney shall have the power and be required to represent and appear for the City, its Council, boards and commissions, in any or all legal actions or proceedings in which they or any of them are concerned or are a party.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it is a fiscal action that has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
DISCUSSION
As a non-litigating entity, Sunnyvale may opt in to participate in the Purdue Pharma nationwide settlement. Signing the Participation Agreement will bind Sunnyvale into the terms of the Agreement so long as enough municipalities opt in to the settlement. It will also release the company from a separate, future lawsuit brought by Sunnyvale, however it is not recommended that Sunnyvale pursue its own lawsuit.
The calculation and allocation to Sunnyvale will be based upon the previous intrastate allocation as determined by the Attorney General. The percentage of funds allocated to each of the non-litigating entities was based upon three nationally accepted opioid metrics: incident of opioid use disorder, opioid overdose deaths per capita, and morphine milligram equivalents (i.e., the number and strength of opioid pills that entered the jurisdiction during the settlement period). Additionally, the funds must be spent on eligible abatement activities and expenditures. The City must also follow financial reporting requirements regarding the expenditure of settlement funds.
Because the amount received by the City will depend on the number of municipalities that opt-in, it is difficult to ascertain the amount that Sunnyvale would be eligible to receive until after the deadline to participate has passed.
The City must register for the settlement and opt in to the Participation Agreement by September 30, 2025. The City has received a copy of the Participation Agreement (Attachment 1). A discussion regarding spending and allocating the settlement funds, or other options for using the settlement funds, will take place once funding amounts are known.
FISCAL IMPACT
Payment of initial settlement funds are set to begin in early 2026. Sunnyvale’s share of the $7.4 billion settlement will be adjusted depending on the number of other entities that opt-in. Based on the limitations of uses of the settlement funds (i.e., opioid abatement, treatment, education, recovery), the City may subsequently elect to send its share to Santa Clara County for use on the City’s behalf or to expend the funds itself. The funds will be accounted for in a project in the Fiscal Year 2026/27 budget to ensure they are used for eligible purposes.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Authorize the City Attorney to sign the Participation Agreement, in substantially the same form as in Attachment 1 to the report, on behalf of the City of Sunnyvale to opt in to the Purdue Pharma L.P. and Sackler Family National Opioid Settlement as a Non-Litigating Entity.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Anais Martinez Aquino, Senior Assistant City Attorney
Reviewed by: Rebecca L. Moon, City Attorney
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Subdivision Participation and Release Form, Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds—Purdue/Sackler Settlement