Group Litigation in the Enforcement of Tort Law
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Description
Legal systems in the United States and elsewhere provide mechanisms for consolidating similar claims in a single proceeding. These forms of group litigation—the American class action being the best known—tend to be used in cases where the plaintiffs have common claims and each individual plaintiff’s stakes are small relative to the litigation costs of the suit. We may evaluate any litigation procedure with respect to three criteria for optimal tort liability. First, in the case of negligence liability, the applicable legal rules should ensure that negligent injurers internalize the expected cost to victims of the injurers’ failure to take due care and that non-negligent injurers are not held liable. Second, rules and processes should, all else equal, promote risk spreading and compensation by enabling victims with good cases to recover while precluding recovery for those who do not have good cases. Third, litigation rules should, all else equal, minimize victims’ recovery costs. A challenge for legal design is to maximize the net benefits of this type of litigation by taking each of these three concerns into account. This chapter examines three settings in which group litigation can offer redress for harms due to tortious conduct: (a) consumer litigation for torts involving large numbers of small claims; (b) actions for securities fraud; and (c) actions involving large-scale injuries to persons or property (mass torts). Different forms of group procedures may be used to enforce legal rights in each of these three settings, the most important types being class actions, aggregate non-class litigation, and representative litigation based on the European model. This chapter first considers potential efficiency benefits of such litigation in terms of conserving litigation costs, improving deterrence, and providing compensation for harm. I then turn to the question of agency costs, examine the degree to which representative plaintiffs, courts, objectors to settlements, and government agencies can monitor class counsel, and consider the degree to which attorneys’ fees rules can incentivize counsel to provide vigorous and un-conflicted representation to members of the litigation group. The chapter argues that class actions and other procedures for group litigation offer the potential for improving social welfare by generating economic benefits that exceed their costs, but that this potential has not been fully realized to date.
Source Publication
Research Handbook on the Economics of Torts
Source Editors/Authors
Jennifer Arlen
Publication Date
2013
Recommended Citation
Miller, Geoffrey P., "Group Litigation in the Enforcement of Tort Law" (2013). Faculty Chapters. 2012.
https://gretchen.law.nyu.edu/fac-chapt/2012
