The Need for Dignitary Justice for Tort Creditors in Chapter 11 Bankruptcy

45 Pages Posted: 27 Mar 2022

Date Written: February 20, 2022

Abstract

The recent bankruptcies of Johnson & Johnson, the Boy Scouts of America, and Purdue Pharma have thrust the tight-knit world of Chapter 11 bankruptcy practice under the spotlight of public scrutiny. The Purdue case in particular sparked outrage and accusations that the Chapter 11 system serves the rich by keeping them insulated from liability and paying off victims of corporate malfeasance. During the summer of 2021, protesters gathered outside of Judge Robert D. Drain’s courthouse, where he was presiding over the Purdue bankruptcy proceedings. Opioid activists unfurled banners decrying Judge Drain’s “morally bankrupt bankruptcy court” and depicting the judge winking merrily over a pile of blood-soaked cash; nearby, an eerie cartoon of a red-eyed Judge Drain loomed over the scene, accompanied by the text “the devil’s judge” and “iron curtain of the Sackler massacre.” The activists claimed that Purdue “handpicked” a judge known to be “sympathetic” to them. Perhaps Senator Blumenthal’s statement at a press conference introducing the proposed Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases Act (SACKLER Act) best summarizes this sentiment: “Current bankruptcy law is unjust and unacceptable. Bankruptcy should not be a safe harbor from accountability, but that’s how the law works now.”

For the public to have and maintain faith in an adjudicatory system, it must be fair on its face. Law and psychology scholars have long since demonstrated that “experiences of injustice erode the public’s beliefs about the legitimacy of the civil justice system.” Specifically, litigants want fair and dignified treatment, which entails an opportunity to be heard. It may seem odd to practitioners to bring up dignitary concerns in bankruptcy proceedings, which focus overwhelmingly on financial matters. However, as more mass tortfeasors file for Chapter 11, it grows increasingly important to do so, as mass tort cases implicate dignitary interests on a massive scale (think, for example, of victims of sexual abuse by clergymen). This Note aims to put the Chapter 11 process and dignitary justice in conversation, and ultimately to suggest tweaks to the system which would restore some dignity to tort victims in bankruptcy court.

Part I explains the importance of doing so now, as mass tortfeasors turn to the Chapter 11 process to resolve lawsuits. It also explains what “dignity” should mean in this context, and why it has not yet been explicitly analyzed by bankruptcy scholars. Part II identifies moments in the Chapter 11 process which are particularly injurious to tort claimants’ dignity, focusing on three essential components of dignity: voice, forum neutrality, and decisionmaker trustworthiness. Part III suggests some ways to better protect future tort claimants’ dignitary interests.

Keywords: Chapter 11, dignitary justice, tort, tort victim, bankruptcy, procedure, procedural justice, dignity, Purdue Pharma

Suggested Citation

Epstein, Ella, The Need for Dignitary Justice for Tort Creditors in Chapter 11 Bankruptcy (February 20, 2022). Columbia Business Law Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4066762 or http://dx.doi.org/10.2139/ssrn.4066762

Ella Epstein (Contact Author)

Columbia Law School ( email )

435 West 116th St
NEW YORK, NY 10027

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