Previously posted on SSRN.

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 $6 billion bankruptcy that purports to achieve global resolution of all current and future opioids 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 crisis that only bankruptcy can solve. The case is just one of many recent examples of extraordinarily unorthodox and creative 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.

Unlike ordinary state and federal trial courts, bankruptcy courts don’t generally lay blame for millions of deaths; they efficiently distribute resources. Petitioners in bankruptcy aren’t called “victims” or “plaintiffs”; they are “creditors” with limited voting rights over the distribution of an estate. Bankruptcy courts don’t develop state tort doctrines. They don’t engage in broad discovery designed to reveal accountability and spur policy reform. They rarely utilize juries or hear testimony from tort victims anxious to have their day in court; instead, testimony tends to focus on the debtor’s financial health.

Yet diverse defendants—many of whom, notably, are not even in financial distress—from 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. Bankruptcy courts are attractive in part because they possess some powers that, ironically, state and Article III federal courts do not—they are the only American courts that can overcome federalism’s jurisdictional boundaries; they are only courts with the power to 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; it is instead, an Article I court designed for efficient, private resolution of claims, centered on capturing private value for private actors–not the elaboration and development of law and public norms.

There is a long history of creative procedures in service of global settlement. As each fails to deliver what parties want, attorneys innovate anew. If the sole goal is money, perhaps bankruptcy is an answer. But money is often one of only several goals in litigation. From discovery and limited trials in opioids and tobacco, for example, evidence about the manufacturers’ behavior emerged that not only made companies accountable, but also helped spur legislative policy change. Such evidence likely never would have come to light in a bankruptcy proceeding. There’s a reason that when Purdue filed for bankruptcy, victims of the opioid crisis cried that the company was avoiding “punishment.” Victims of the Catholic Diocese have recently charged that the Diocese’s chapter 11 filing deprived them their chance to tell their story and hold wrongdoers to account.

Forty years ago, in Against Settlement, Owen Fiss famously that civil lawsuits should be understood in light of the public good they serve, rather than the mere private ends of private dispute resolution and money changing hands. 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.

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