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74 Duke L.J. Online 1 (2024-2025)

handle is hein.journals/duljo74 and id is 1 raw text is: Duke Law Journal Online VOLUME 74 OCTOBER 2024 MASS TORT LITIGATION, CHAPTER 11, AND GOOD FAITH: LET NOT PERFECT BE THE ENEMY OF PRETTY, PRETTY GOOD LAWRENCE PONOROFFt ABSTRACT Soon after enactment of the current Bankruptcy Code, Chapter 11 emerged as the forum of choice for companies seeking to resolve the otherwise intractable problems associated with mass tort liability. In recent years, the enactment of state law divisive merger statutes opened a new era in the evolution of mass tort liability cases. Specifically, companies could create a new entity that would assume responsibility for all outstanding tort claims, thus keeping the parent firm out of bankruptcy entirely. This practice, colloquially referred to as the Texas Two-Step, gained widespread notoriety when Johnson & Johnson placed its new subsidiary, LTL Management, LLC, into Chapter 11 to aggregate and resolve tens of thousands of asbestos claims arising from the use of its Baby Powder product. The filing produced a firestorm of criticism along the lines that the tactic was being used to escape accountability and reduce payouts to tort victims. After the Third Circuit dismissed the case as a bad faith filing, Johnson & Johnson tried again, but to no avail. Refusing to throw in the towel, and perhaps testing the definition of insanity, the company filed yet a third case. This time, however, Johnson & Johnson, obtained in advance the support of about 83 percent of current tort claimants for its proposed bankruptcy plan. The case is now pending. In this Essay, I take the contrarian view that the Texas Two-Step is not inherently evil and might simply represent the latest development in Copyright © 2024 Lawrence Ponoroff. t Dean Emeritus and Mitchell Franklin Professor Emeritus, Tulane Law School, and Professor of Legal Studies, University of Wilmington School of Law.

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