Silencing Litigation Through Bankruptcy

70 Pages Posted: 22 Feb 2023 Last revised: 17 Jul 2024

See all articles by Pamela Foohey

Pamela Foohey

University of Georgia School of Law

Christopher K. Odinet

Texas A&M University School of Law

Date Written: February 20, 2023

Abstract

Bankruptcy is being used as a tool for silencing survivors and their families. When faced with claims from multiple plaintiffs related to the same wrongful conduct that can financially or operationally crush the defendant over the long term—a phenomenon we identify as onslaught litigation—defendants harness bankruptcy’s reorganization process to draw together those who allege harm and pressure them into a swift, universal settlement. In doing so, they use the bankruptcy system to deprive survivors of their voice and the public of the truth. This Article identifies this phenomenon and argues that it is time to rein in this destructive use of bankruptcy. Whereas the current literature largely discusses mass tort bankruptcy from a doctrinal, constitutional, or economic perspective, this Article examines how bankruptcy proceedings like these cause direct harms to survivors, to public trust in the justice system, and to the corporate economy. It traces the evolution of defendants’ use of bankruptcy to resolve mass torts from asbestos, IUD, and breast implant product liability litigation to its present-day use in controversies involving the Catholic Church, Purdue Pharma, the Weinstein Companies, USA Gymnastics, the Boy Scouts of America, Alex Jones’s Infowars, and Johnson & Johnson. The Article shows how the prior use of reorganization for mass torts created the necessary conditions to allow defendants to use bankruptcy to silence people and facilitate cover-ups in a wider variety of onslaught litigation. It concludes with a normative proposal for the narrow circumstances in which courts should allow bankruptcy to be used to deal with onslaught litigation, while still preserving the voices of those harmed.

Keywords: bankruptcy, chapter 11, reorganization, mass tort, tort litigation, procedural justice, due process, third-party releases, settlement, tort victims, tort survivors

JEL Classification: K13, K22, K40, K41

Suggested Citation

Foohey, Pamela and Odinet, Christopher K., Silencing Litigation Through Bankruptcy (February 20, 2023). 109 Virginia Law Review 1261 (2023), U Iowa Legal Studies Research Paper No. 2023-01, Cardozo Legal Studies Research Paper No. 712, Texas A&M University School of Law Legal Studies Research Paper, Available at SSRN: https://ssrn.com/abstract=4365005

Pamela Foohey (Contact Author)

University of Georgia School of Law ( email )

P.O. Box 388
Athens, GA 30603
United States

Christopher K. Odinet

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX Tarrant County 76102
United States

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