Lindsey Simon (Emory University School of Law) has posted Mass Tort Designation, 60 Georgia Law Review (forthcoming), on SSRN. Here is the abstract:
Mass tort defendants use the bankruptcy system to resolve intractable litigation. This much has been true for more than forty years. What has changed, however, is both the type of debtor seeking relief and the audacious approach they use to get it. Bankruptcy courts must now address dangerous products and abusive actors in a modern legal ecosystem that is rife with capture and coercion, deciding in one fell swoop what remedy to afford individuals who were harmed and what relief to grant the various companies that bear responsibility. Navigating these cases in a way that preserves value, checks mischief, and responds to both individual and societal harm is a tall order that Congress did not sufficiently scaffold. Critics of bankruptcy’s mass tort evolution—from a one-off response to failing asbestos companies to widespread inclusion in the corporate litigation playbook—challenge whether Chapter 11 is appropriate or even available to deal with today’s mass tort litigation. But like it or not, the cases keep on coming. Bankruptcy courts work to resolve mass tort cases in a manner that is consistent with the Bankruptcy Code, yet the patchwork results to date have only incentivized more debtor innovation and persistence. The Supreme Court’s rejection of Purdue Pharma’s path through bankruptcy may have shifted the goal posts for chapter 11 success, but the game will most certainly go on. This article calls for mandatory mass tort designation to a newly-created Subchapter VI—a fundamental, holistic shift in how the Code treats the entire category of cases raising some of bankruptcy’s most vexing present-day challenges. Congress must act decisively to legitimize bankruptcy as a sound forum for mass tort cases while also preserving the carefully calibrated ecosystem for traditional debtors to effectively reorganize. Specialized for mass tort cases, Subchapter VI will standardize process, reduce gamesmanship and power imbalances, and above all preserve value in the estate while simultaneously protecting claimants with the most to lose beyond dollars and cents. The bankruptcy system is nimble and adaptable; it can rise to the challenge of disentangling today’s mass tort case. This article identifies a path to facilitate that evolution and advances the discussion of mass tort bankruptcies boldly forward to new beginnings.
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