Products Liability, Corporate Structure and Bankruptcy: Toxic Substances and the Remote Risk Relationship

Abstract

This paper first develops criteria by which courts can distinguish between product related risks that profit maximizing firms can and cannot be expected to discover. It then argues that imposing the former--"knowable"--set of risks on firms reduces accident costs and creates no problems that corporate and bankruptcy law cannot adequately solve. In contrast, imposing the latter--"remote"—set of risks has no effect on reducing accident costs and tends to produce unsolvable problems of the kind that characterize the current asbestos cases. The paper concludes by arguing that courts are wrong to create these problems because the victims of remote risks lack a tenable distributional or moral claim to have private firms reimburse them.

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