April 8, 2012

Odd WSJ report about Chrysler discharging punitive damages liability through bankruptcy

The Wall Steet Journal ran a story last week reporting that Chrysler, through its bankruptcy reorganization, discharged its liability for punitive damages in products liability lawsuits arising from vehicles manufactured before the bankruptcy.  The story gives the impression that Chrysler's "immunity" from punitive damages is somehow unique or unusual, but as Professsor Todd Zywicki of the Volokh Conspiracy points out, "That WSJ article was weird–it is black-letter bankruptcy law that you can discharge products liability and other tort claims in bankruptcy.  . . . The real anomaly here is actually GM. There for purely political reasons the government allowed claims against GM to pass through bankruptcy."