University of Pennsylvania Law Review
A difficult challenge facing the American judicial system is providing for the fair and efficient resolution of litigation arising from mass tort liability. A mass tort involves a harmful act or series of acts by a company, such as the production of a defective product, that results in injuries to numerous victims--sometimes numbering into the thousands or hundreds of thousands. The most difficult cases are those involving “long-tail” mass torts, such as those relating to asbestos, where there is a long latency period between a person's use or exposure to a harmful product and the first manifestation of harm. Removal of the defective product from the marketplace or from society as a whole will not end the continuing manifestation of injuries. Given the thousands of future claimants who will first discover their injuries in decades to come, long-tail mass torts place an enormous burden on the defendant company and the judiciary. The high costs of litigation threaten both adequate compensation for the vast number of victims and the survival of the defendant's business.
The practical inability to provide each tort victim with traditional, individualized adjudication under the usual rules of litigation in these mass tort situations has led to the use of class actions or other mechanisms designed to deal collectively, rather than individually, with numerous claimants. When a defendant company is faced with mass tort liability that threatens the viability of the enterprise, and other mechanisms either have failed or would be ineffective in avoiding the destruction of its business, it is likely to seek protection under the federal bankruptcy laws. Johns-Manville Corp.Celotex Corp.,Eagle-Picher Industries, Inc., Keene Corp., and at least a dozen other asbestos manufacturers deluged with thousands of personal injury claims; A.H. Robins Co. facing potentially devastating Dalkon Shield personal injury claims; Dow Corning Corp. under an onslaught of breast implant litigation; and other companies--all expecting countless future claimants who have not yet manifested any injury--have sought protection under Chapter 11 of the Bankruptcy Code within the past twenty years. . . .
The purpose of this Article is to discuss the positive features of the present bankruptcy system that, in general, make it a fair and effective vehicle for dealing with mass tort liability. This Article will then suggest improvements to make bankruptcy an even more effective mechanism for dealing with mass tort cases.
It is not the purpose of this paper to advocate that bankruptcy is the only, or even the best, mechanism for dealing with mass tort liability in all situations.Ideally, class actions, multidistrict litigation, alternative dispute resolution, and other vehicles for resolving mass tort liability will continue to improve as mechanisms for dealing with mass tort cases. When other mechanisms fail or are likely to be ineffective, and survival of the enterprise is threatened, however, companies with otherwise viable businesses will seek protection under the federal bankruptcy laws. The improvement of the bankruptcy system in the treatment of mass tort liability, therefore, should be a part of any comprehensive plan to improve the mechanisms for addressing mass tort liability in the American judicial system.
Alan N. Resnick,
Bankruptcy as a Vehicle for Resolving Enterprise-Threatening Mass Tort Liability, 148 U. Pa. L. Rev. 2045
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