
By: Donald L Swanson
Here’s a dilemma:
- Should bankruptcy be available as a tool for resolving mass tort cases of all types (like it already is in asbestos contexts)?
Here’s an illustration of the dilemma:
- many tort claimants in the Johnson & Johnson case DO NOT want bankruptcy involved; but
- many tort claimants in the Purdue Pharma case were BEGGING the courts to approve the bankruptcy plan.
How do we solve this dilemma?
Many had hoped the U.S. Supreme Court would provide a resolution in its Purdue Pharma opinion. But the Supreme Court didn’t.
Instead, the Supreme Court punted to Congress like this:
- “Both sides of this policy debate may have their points. But, in the end, we are the wrong audience for them”; and
- “As the people’s elected representatives, Members of Congress enjoy the power, consistent with the Constitution, to make policy judgments” (majority opinion at 18-19).
Bankruptcy For Resolving Mass Tort Cases
Congress has already authorized the use of bankruptcy for resolving asbestos-related mass tort cases. Such authorization has been utilized extensively and effectively . . . and for a long time.
And bankruptcy has been an essential tool for resolving other mass tort cases.
The four-Justice dissent in Purdue, for example, points to the following list of mass tort contexts where bankruptcy has provided “substantial and equitable relief to victims”:
- Asbestos;
- Dalkon Shield;
- Dow Corning silicone breast implants;
- Catholic Church; and
- Boy Scouts.
The four-Justice Purdue dissent adds:
- “the bankruptcy community has recognized the resolution of mass tort claims as a widely accepted core function of bankruptcy courts for decades”; but
- “No longer.”
So, Congress needs to step up and address the dilemma.
Mass Tort Cases—Injustice?
We have lots of history in this country of disasters in mass tort contexts. Such disasters include this Johnson & Johnson reality among similarly situated claimants:
- some claimants hit the jackpot and get judgments for multiple millions of dollars in mostly punitive damages;
- many other claimants get a modest amount of money for their claims; but
- many others get nothing . . . zilch!
Is that justice for anyone? Many people apparently answer with a resounding, “Yes!”
Others say, “No. That’s a disaster!”
Scary Line!
And here’s something scary.
If Congress has any question about the need to address this dilemma urgently, all it needs to do is look at this line from the Supreme Court’s majority Purdue opinion:
- “we do not address whether our reading of the bankruptcy code would justify unwinding reorganization plans that have already become effective and been substantially consummated” (majority opinion at 19).
Say what?!
Read the preceding quote again, and then go back to the dissent’s list, identified above, of what kinds of cases would be at risk.
This is scary, indeed!!!
Conclusion
Congress needs to authorize bankruptcy relief in mass tort contexts generally, similar to what it has already provided for asbestos cases.
Otherwise, we are seeing the end of the “substantial and equitable relief to victims” that happened in cases like Dalkon Shield, Dow Corning silicone breast implants, Catholic Church, and Boy Scouts.
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