Rough Justice in Mass Future Claims: Should Bankruptcy Courts Direct Tort Reform?

Article excerpt

Edith H. Jones*

Why write about a bankruptcy law proposal in a Symposium to honor Charles Alan Wright? This is a sensible question, as Professor Wright has written little on bankruptcy,1 and bankruptcy law is hardly visible from the commanding heights of the American legal system, dominated by federal civil procedure and constitutional law, where Professor Wright reigns. But bankruptcy law has been conducting a stealthy approach on those heights for nearly two decades, and it is time someone at the top posted a lookout. I can think of no better place to begin assessing the impact of bankruptcy on federal courts, federalism, and even the Constitution, than in the company of the contributors to and the honoree of this Symposium. And no subject better illustrates the incursion of bankruptcy into traditional federal and state court territory than that of mass tort litigation.

The National Bankruptcy Review Commission ("Commission") was set up by Congress in 1994 and charged with recommending reform of bankruptcy laws. Its report, issued in October 1997, proposes codifying authority in bankruptcy courts to reorganize or liquidate companies exposed to mass future claims.2 Unfortunately, the Commission had neither the time nor the expertise to compare carefully its recommendation with the precise problems imposed by mass product liability litigation on nonbankruptcy courts.3 Notwithstanding these deficiencies, the Commission proposal enthusiastically promotes a bankruptcy alternative, which, because of the Commission's endorsement, may soon appear in omnibus bankruptcy legislation.

The purpose of this article is to urge caution before bankruptcy courts enter deeper into the mass tort litigation fray. The Commission's proposals, in my view, beg the essential questions regarding class membership and adequacy of representation. They also fail to offer a significantly superior means to resolve mass tort litigation, instead distending and distorting bankruptcy practice to accomplish their goal. These conclusions are reached by comparing the Commission's proposal with the problems that have beset Rule 23 class actions, a currently popular federal court device for resolving mass tort litigation. I take no pleasure in criticizing the Commission's proposal, for I was a member of the Commission and participated in the working group that formulated the mass future claims recommendation. If our proposal is lacking, it marks one more blow against rational treatment of mass tort litigation, a phenomenon which has sturdily resisted judicial management efforts. But despite the inadequacy of current judicial approaches, there is no progress or honor in simply changing the forum for mass tort litigation without solving its inherent problems. Had the Commission learned from the specialists in federal civil procedure, its endorsement that bankruptcy take over mass tort litigation might have been more restrained.

I. Federal Courts and Mass Future Claims

Mass tort litigation is the vexing product of an extravagant tort law, the decline of limits on barratry, and enhanced lawyer networking-both literally and figuratively. While mass litigation has been spawned because of industry's perceived inability to mass produce safe or effective products, the federal courts' attempts to mass produce justice have also routinely fallen short.

For nearly two decades, as waves of product liability litigation have assaulted civil courts, the same questions have continued to arise and yet defy solution.4 Even the question of the defendants' liability, which should be a critical matter in the fashioning of a just solution, becomes submerged beneath the overwhelming volume of claims and the huge transactional costs of defending them. In mass litigation, it is difficult to distinguish valid claims from frivolous or false ones. Transfer of cases to one forum for more "efficient" processing does not necessarily result in their expeditious conclusion. …