Brooklyn Journal of Corporate, Financial & Commercial Law

First Page



Modern tort law links concepts of duty, duty of care, causation, and compensatory damages in a manner that, it is hoped, simultaneously communicates moral suasion, redresses wrongs, and incentivizes “reasonable” socially appropriate behavior. Deterrence and corrective justice differ fiercely about the scope of and rationale for liability, but both assume that tortfeasors are good for their debts (or at least insured). This is not always the case. Sometimes, debtors are insolvent. Bankruptcy law provides individuals with a route to a fresh start, and this paper considers the relationship between modern tort law and the discharge of debt in bankruptcy. The concept of a bankruptcy discharge—the “fresh start”—has deep historical roots in the idea of the “honest but unfortunate debtor.” However, recent high-profile bankruptcy cases involving mass torts have signaled to the world that something is amiss. A short list of harms, discharged in bankruptcy, include opioid addiction, allegedly carcinogenic baby powder, and sex abuse (in churches, gymnastics, and the Boy Scouts). Chapter 11’s goal of value maximization through continuation of the business enterprise is in tension with tort law’s goals of internalization and redress. This Article first links the bankruptcy power to grant global resolution of mass tort liability to the existence of financial distress. It then fleshes out the concept of “good faith” and what it means to “deserve” a bankruptcy discharge. It proceeds in four steps. First, this Article explains the utility of and common justification for granting a mandatory discharge in mass tort cases in both bankruptcy and limited fund class actions under Rule 23 of the Federal Rules of Civil Procedure. Second, it evaluates the first and second J&J talc filings in light of that standard and finds that neither passes the straight-face test. Third, it takes a dystopic look beyond the bankruptcy law silo to consider the relationship between insolvency and recourse in tort law. Lastly, this Article posits the proper relationship between bankruptcy law and recourse in tort by describing what it means to be an “honest but unfortunate enterprise” entitled to “global peace.”

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Torts Commons