Against Bankruptcy: Public Litigation Values Versus the Endless Quest for Global Peace in Mass Litigation

Abstract

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 process 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.

Keywords: MDL, opioids, civil procedure, mass torts, health law, due process, bankruptcy