Editor’s Note: As the Supreme Court considers the bankruptcy of Purdue Pharma and whether the nonconsensual nondebtor releases approved in that case are legally permissible, the Harvard Law School Bankruptcy Roundtable is excited to feature two articles in conversation on these issues. These articles debate the appropriateness and effectiveness of using bankruptcy to resolve mass torts and the benefits and drawbacks of global peace. They ask, and try to answer, how best to prioritize the broader public values, nonmonetary factors, and financial recoveries implicated in addressing mass tort cases. Since these cases, by some measures, constitute nearly half of the total federal litigation docket, the BRT is pleased to feature these important contributions to this debate.
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Post One: Against Bankruptcy
By Professor Abbe R. Gluck (Yale Law School), Professor Elizabeth Chamblee Burch (University of Georgia School of Law), and Professor Adam S. Zimmerman (USC Gould School of Law)
Can bankruptcy court solve a public-health crisis? Should the goal of “global peace” in complex lawsuits trump traditional litigation values in a system grounded in public participation and jurisdictional redundancy? How much leeway do courts have to innovate civil procedure? These questions have finally reached the Supreme Court in Harrington v. Purdue Pharma L.P., the $10 billion bankruptcy that purports to achieve global resolution of all current and future opioid suits against the company and its former family owners, the Sacklers.
The case provides a critical opportunity to reflect on what is lost when parties in mass torts find the “behemoth” litigation system unable to bring mass disputes to a close, when they charge multidistrict litigation as a “failure,” and when defendants contend that sprawling lawsuits across national courts have thrown them into unresolvable crises that only bankruptcy can solve. The case is just one of many recent examples of extraordinarily unorthodox civil-procedure maneuvers in both the bankruptcy and district courts that push cases further away from the federal rules and the trial paradigm in the name of settlement. Diverse defendants—many of whom, notably, are not even in financial distress—from the Catholic Diocese and Boy Scout abuse cases to Johnson & Johnson talc, 3M’s earplugs, Revlon hair straighteners, and many more, have now looked to the bankruptcy court to use its inherent authority to invent new forms of procedure to find a path to global peace.
The turn to bankruptcy raises particular concerns, especially in cases like that of the Sacklers, when parties turn to bankruptcy court to avoid traditional litigation altogether—rather than down the line after some pretrial process has occurred and claims have been fleshed out. Bankruptcy courts usually don’t declare accountability; they efficiently distribute resources. They don’t typically engage in broad discovery to reveal industry practice and spur policy reform but instead use discovery to determine the debtor’s financial health. They shift the balance of power from plaintiff to defendant, allowing the defendant to choose the forum, centralize claims, shut off tort process, and even sometimes overcome state statutes of limitations. They rarely utilize juries or hear testimony from tort victims anxious to have their day in court because the strong cultural norm in bankruptcy is to save money and streamline.
Bankruptcy courts are attractive because they are the only American courts that can overcome federalism’s jurisdictional boundaries; they can commandeer both state and federal litigants into a single forum and halt all other civil litigation no matter what court it is in. They also have stretched their own equitable powers to allow innovative corporate maneuvers, as in Purdue, that cabin liability and preclude future litigation even for entities not in financial trouble. But bankruptcy court is not supposed to be a superpower of a court that trumps all others in public litigation. And those who argue that bankruptcy courts can easily be nudged to provide more pretrial processes underestimate what a sea change that would be for bankruptcy’s culture.
Our aim here is not at bankruptcy per se; it is at its use to shut off public-harms litigation prematurely, forego the public benefits of jurisdictional redundancy, and deprive plaintiffs of control over their suit and day in court. Unorthodox bankruptcies are just the latest chapter in a decades-long saga of unorthodox civil-procedure development in the name of global peace—one that has largely escaped appellate review until now.
Click here to read the full article.
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Post Two: Bankruptcy by Another Name
By Professor Anthony Casey (University of Chicago Law School) and Professor Joshua Macey (University of Chicago Law School)
In a recent Essay, Abbe Gluck, Elizabeth Chamblee Burch, and Adam Zimmerman object to the increasing use of bankruptcy to resolve mass tort claims. They and others are concerned that bankruptcy reduces plaintiff voice, impedes the development of state law remedies, and limits discovery that can drive state and federal regulation regulatory interventions. This Online Response Essay addresses these critiques. Contrary to popular descriptions of the bankruptcy system, bankruptcy courts do not simply aim to maximize economic efficiency and financial recoveries. Bankruptcy includes numerous procedures, including robust disclosure, bellwether trials, future claims representatives, and voting, to ensure a fair process and promote non-economic goals. These provisions provide precisely the values that critics argue are missing from the bankruptcy process. And, to the extent that bankruptcy is insufficiently attentive to non-economic values, it is reasonably easy to tweak the system we have to more effectively accommodate these goals.
Click here to read the full article.
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