Apportioning Damages Among Potentially Insolvent Actors (original) (raw)

IN this article, we study how the relative efficiency of rules for imposing liability and apportioning damages among joint tortfeasors is affected by the potential insolvency of some of the actors. ' We focus primarily on the choices between negligence and strict liability and between joint and several liability and nonjoint (several only) liability. This article extends the analysis of our prior study of multiple tortfeasors by relaxing the assumption that all actors are infinitely solvent and are therefore able to satisfy any judgment.2 gave us valuable comments. We profited from the generous financial support of the Filomen D'Agostino and Max E. Greenberg Research Fund at the New York University School of Law. 1 This question has been virtually neglected by the law and economics literature. The only wholly pertinent work that we have found is Note, The Case of the Disappearing Defendant: An Economic Analysis, 132 U. Pa. L. Rev. 145 (1983), which we discuss infra, note 91. The problem of injurers' insolvency is discussed in Steven Shavell, The Judgment Proof Problem, 6 Int'l Rev. L. & Econ. 45 (1986); see also Steven Shavell, Economic Analysis of Accident Law 167-70 (1987). Shavell, however, studies a model in which, though there are many injurers and victims, each injurer interacts with a single, passive victim so that the liability for any given loss need not be apportioned among different actors. His model does not permit the study of the problems that arise when one actor may be forced to bear the unfunded share of another actor's liability. In our article, these problems are central to Sections III and IV. There exists an interesting literature on the relationship between remote tort risks and bankruptcy. See, for example, Mark Roe, Bankruptcy and Mass Tort, 84 Colum. L. Rev. 846 (1984); Alan Schwartz, Products Liability, Corporate Structure, and Bankruptcy: Toxic Substances and the Remote Risk Relationship, 14 J. Legal Stud. 689 (1985). All use subject to JSTOR Terms and Conditions