Future Claims: Mass Torts
| ID | Name | Group | Other | Code
Sec |
Cross
Ref | Problem
Referenced | Proposed
Solutions |
NBRC-
0303 | Commercial Law League of America | Commercial Law League of America (CLLA) |
|
|
|
The Commerical Law League of America believes that the
following mass torts issues should be considered by the NBRC:
1) Is the bankruptcy system the appropriate forum in which to process
mass tort obligations (CLLA believes that this issue should receive
"high priority")
2) Should future claimants be dealt with in bankruptcy reorganizations
and liquidations (CLLA believes that this issue should receive
"high priority")
3) Should tort victims' claims be given priority over other unsecured
claims, secured claims, or administrative claims (CLLA believes that
this issue is a "non-priority")
4) Should punitive damages receive a lower priority repayment than
compensatory tort claims and contract-based claims (CLLA believes that
this issue is a "non-priority")
5) Should the Bankruptcy Code specifically authorize
"ride-through" for the claims of future tort victims that are
not dealt with in a bankruptcy proceeding (CLLA believes that this issue
should receive "high priority")
6) The CLLA states that additional issues that should be considered by
the NBRC are: effect of § 1123 (priority issue), channeling
injunctions to bring in insurance proceeds (moderate priority),
multi-district litigation (priority), aggressive creditors who force
liquidation (priority), and preservation of going-concerns
(priority). | No additional details are
provided. |
NBRC-
0320 | Robert M. Zinman, on behalf of the Bankruptcy
Institute | American Bankruptcy Institute
("ABI") | Numerous position papers,
memoranda and research material |
|
| The bankruptcy system is the most appropriate forum to process
mass tort obligations. | Code should be
amended to provide a comprehensive definition of "claim" so
that both present and future tort claims are bound with certainty in the
reorganization process, and not left to be dealt with afterward. Tort
claims should not be given priority over admiistrative or other
unsecured claims, and punitive damages should not be given priority over
compensatory tort claims and contract-based claims. Future claims
should not be able to "ride through" a bankruptcy proceeding,
but instead must be "conclusively dealt with by the reorganization
process." |
NBRC-
0411 | Malcolm M. Gaynor & Rick Bendix | Attorneys |
|
|
| Authors respond to a Memorandum from a Future Claims Working
Group under the direction of Professor Elizabeth Warren. Authors
respond to the following issues: 1) Defining Future Claims; 2)
Protecting the Interests of Future Claimants; 3) Discharge; 4)
Successor Liability; and , the Plan Negotiation
Process. | 1) Allow Future Liabilities to be
claims in bankruptcy, but impose limitiations to preserve interests of
other creditors. 2) Require the court to order the appointment of a
representative for each class of future claimants, taking the resultant
delays into account when considering the exclusive period. The
representative should have power to file claims ( but not excluding the
filing of individual claims) and vote on behalf of future claimants who
have not filed individual claims, but concept of "present
value" must be introduced into voting process. Exculpation of
personal liability for good faith acts is absolutely essential. Danger
that future claims will dominate voting and hinder process. Formal
judicial estimation is not always absolutely necessary. Express
statutory authority for channeling injunctions would be desirable, but
must be broad enough. Rule 7001 should be amended to clearly authorize
a channeling injunction without an adversary proceeding. 3) If
channeling injunction works, the question of whether the claims have
been discharged becomes irrelevant. "Perhaps, considering
alternative,... future claims which are not reasonably capable of
estimation should be discharged." 4) The suggested injunction
appears to be desirable, but why limit it to cases in which future
claims are capable of reasonable estimation Fianlly, the authors do not
understand why Sections 1129(a)(11) & (b)(1) need
amendment. |
NBRC-
0719 | Francis M. Allegra | Deputy Associate
Attorney General, U.S. Department of Justice |
|
|
| Author is concerned that, as it
is presently constructed, the proposal on mass tort claims will also
encompass governmental police and regulatory claims. Author explains
how the latter are quite different from the former, and the need to
clearly distinquish between the two, so that bankruptcy courts do not
become havens for lawbreakers to evade responsibility for violations of
the law that are not within the fair contemplation of the Government at
the time of the debtor's bankruptcy case. Similarly, those engaged in
dangerous activities that threaten public health and safety should not
be tempted to acquire a competitive advantage by using financial
reorganization to evade liabillity for unknown police and regulatory
claims that may arise in the future. | The
Commission should adopt a police and regulatory exception to the future
claims proposal. In the absence of such a provision, author urges that
no future claims proposal be recommended to the Congress. |
NBRC-
0719 | Lois J. Schiffer | Assistant Attorney
General, U.S. Department of Justice, Environment and Natural Resources
Division |
|
|
| Author writes in support of letter from Deputy Associate Attorney
General Francis Allegra. "The scope of the public health and
sagety problem that would be created by discharging future environmental
liabilities that are not within the Government's contemplation is
potentially enormous....Applying a future claims proposal to
governmental environmental claims may thus have the effect of wiping out
huge environmental responsibilities of polluters who will be able to
walk away from the consequences of thheir acts without making any
contribution towards the cleanup of their
pollution." | "We...strongly urge
the Commission to adopt a governmental police and regulatory exception
to any future claims proposal that it adopts." |
NBRC-
0782 | Paul D. Carrington | Professor, Duke
University School of Law |
|
|
| Author, Jeff O'Connell, and
Roger Cramton reviewed the proposed amendments to the bankruptcy
provisions dealing with mass torts. "The device of corporate
reorganization is very much to be preferred to the extended use of Rule
23, even supposing that the latter is legitimate. We are most uneasy
about the extent of protection from tort liability afforded the
representatives of future claimants. The temptation to settle those
cases will be very, very strong, and we thing [sic] that a realistic
threat of tort liability is needed to keep the parties, and even the
court, honest in brushing off numerous claims by people who are not
before the court." | No specific
solutions proposed, see discussion of problem. |
NBRC-
0851 |
Ralph Brubaker |
Assistant Professor of Law, Emory
University |
|
524 |
11 |
"The future claims proposal would amend section
524 to authorize "channeling injunctions."...the term
'channeling injunction' has become a loaded one and has been used to
justify all manner of third-party liability releases, well beyond the
legitimate reach of equitable channeling powers. In light of this
practice, my fear is that an open-ended Congressional authorization of
'channeling injunctions' could be seen as authorizing the broadest and
most abusive nonconsensual non-debtor releases. Such an auathorization
is also unnecessary. Appropriate channeling powers already exist
incident to a bankkruptcy court's in rem jurisdiction over property of
the debtor's estate, via section 105 injunctions in aid of that
jurisdiction." "With respect to insurance proceeds, to the
extent that insurance proceeds are property of the estate, the
channeling power certainly exists without any statutory amendment, by
virtue of general federal court injunctive powers ..." "The
one area where a statutory amendment seems to be in order is to make
explicit the bankruptcy court's power to enjoin subsequent successor
liability suits that violate a prior bankruptcy court order authorizing
a 'free and clear' sale of particular assets....Express statutory
authorization would make clear that such an injunction is one 'arising
under' the Bankruptcy Code and, therefore, within the core jursidiction
of a bankruptcy judge." |
"I oppose an open-ended authorization of
'channeling' injunctions as unnecessary and inviting deleterious
consequences." "I support express congressional authorization
of injunctions prohibiting successor liability suits that violate a
prior bankruptcy sale order." |
NBRC-
1020 | Robert S. Peck | Director of Legal
Affairs and Policy Research, Association of Trial Lawyers of
America |
|
|
| Author takes exception to the definition of "mass future
claim" in the proposal on the treatment of mass future claims.
"We begin our analysis by noting that there is a significant danger
tht the proposal's new definition of 'mass future claim' would embrace
liabilities that are not yet ripe for adjudicaiton, creating the
anomalous situation where the potential claimant is foreclosed from
seeking judicial relief while the potential defendant is not."
" Because the definition of 'mass future claims' would permit the
adjudication of the rights of injured plaintiffs without thehir
participation and before they were equipped to protect their own
interests, it fails to comport with minimum constitutional
guarantees." The assumption that appropriate counsel could be
appointed for each category of potential claimant is not valid.
"Finally, the breadth of claims that could be captured in such a
bankruptcy proceedings surely intrudes on the Seventh Amendment right to
trial by jury." | "To protect the
rights of future claimants as fully as the Constitution requires, we
urge that any prpoposal that is transmitted to the Congress incorporate
a meaningful right to trial by jury, that individual trot plaintiffs be
entitled to counsel of choice...and that these rights by waivable only
by a knowing and informed choice of the individual. Determinations of
such claims through alternatives such as bankruptcy proceedings should
be limited to those instances where a genuine danger exists that claims
against the defendant so far exceed resources available to the defendant
that a substantial number of tort victims will be deprived of a source
of compensation under traditional tort proceedings, and only where such
tort victims are accorded the same rights with regard to the defendant
as any other secured creditor. Even so, we suggest taht the right sof
future claimants who do ot know of their injuries and cannot
meaningfully participate in the determination of rights may not be
susceptible to discharge through bankruptcy." |
NBRC-
1060 | Thomas A. Smith | Professor of Law,
University of San Diego | Letter to Professor
Smith from Stephen K. Dexter, Law Clerk to Judge Spector, dated July 31,
1997; Copy of Order In re: Dow Corning Corporation,
Debtor. |
|
| Author sends copy of article he
wrote which was cited by Judge Arthur J. Spector in the Dow Corning
case. "In the enclosed article, I argue that the problem of fair
distribution between present and future claimants that has proven so
intractable in mass tort bankruptcies can be solved by using a
relatively simple market mechanism." | "My approach to the fair distribution problem amounts to a
kind of securitization of the cliams that tort claimants have against
the debtor in mass tort bankruptcy." |
NBRC-
1070 | Mary A. Bedikian | Attorney; Regional
Vice President, American Arbitration Association |
|
|
| Author is forwarding the AAA's
comments on the Mass Torts and Mass Future Claims concerning the
expanded use of alternative dispute resolution in cases handled by the
bankruptcy courts. | N/A |
NBRC-
1103 | Robert S. Peck | Director of Legal
Affairs and Policy Research, Association of Trial Lawyers of America
(ATLA) |
|
|
| Author again raises concerns that the Mass Future Claims Proposal
"was developed with too much emphasis on the types of liabilities
that can threaten the viability of an enterprise and too little
solicitude for the constitutional rights of injured
persons." | "I reiterate our
recommendation that the proposal incorporate a meaningful right to trial
by jury, that individual tort plaintiffs be entitled to counsel of
choice whose loyalty is undivided by any conflict of interest, and that
these rights be waivable only by a knowing and informed choice of the
individual." |
NBRC-
1119 | Stephen K. Dexter | Law Clerk to the
Hon. Arthur J. Spector | Submission,
"Treatement of Future Claims and Asset Distribution Models in Mass
Tort Bankruptcies." |
|
| Author is law clerk to Judge Spector, who is handling the Dow
Corning case, and he has focussed almost exclusively on mass tort
bankruptcy issues. He is forwarding a submission of his dealing with
the issue of how to fairly distribute the assets of a debtor if
liability is assessed. The ideas he discusses are primarily those of
Professor Thomas A. Smith of the University of San Diego School of
Law. | Author proposes the use of the Captial
Market Approach to distribution, which he discusses and
explains. |
NBRC-
1149 | Richard Haeussler |
| Unclear, this is an E-Mail with
no address or identification of author |
|
|
Author discusses "tentative notions" which
the Working Group was leaning toward, and gives his comments on
them. |
|
