Law Commons^™

The Economics Of Class Action Waivers, Albert H. Choi, Kathryn E. Spier

Law & Economics Working Papers

Many firms require consumers, employees, and suppliers to sign class action waivers as a condition of doing business with the firm, and the US Supreme Court has endorsed companies' ability to block class actions through mandatory individual arbitration clauses. Are class action waivers serving the interests of society or are they facilitating socially harmful business practices?

This paper synthesizes and extends the existing law and economics literature by analyzing the firms' incentive to impose class action waivers. While in many settings the firms’ incentive to block class actions may be aligned with maximizing social welfare, in many other settings it …

The Economics Of Class Action Waivers, Albert H. Choi, Kathryn E. Spier

Articles

Many firms require consumers, employees, and suppliers to sign class action waivers as a condition of doing business with the firm, and the U.S. Supreme Court has endorsed companies’ ability to block class actions through mandatory individual arbitration clauses. Are class action waivers serving the interests of society or are they facilitating socially harmful business practices? This paper synthesizes and extends the existing law and economics literature by analyzing the firms’ incentive to impose class action waivers. While in many settings the firms’ incentive to block class actions may be aligned with maximizing social welfare, in many other settings it …

Working Hard Or Making Work? Plaintiffs' Attorneys Fees In Securities Fraud Class Actions, Stephen J. Choi, Jessica Erickson, A. C. Pritchard

Articles

In this article, we study attorney fees awarded in the largest securities class actions: “mega- settlements.” Consistent with prior work, we find larger fee awards but lower percentages in these cases. We also find that courts are more likely to reject or modify fee requests made in connection with the largest settlements. We conjecture that this scrutiny provides an incentive for law firms to bill more hours, not to advance the case, but to help justify large fee awards—“make work.” The results of our empirical tests are consistent with plaintiffs’ attorneys investing more time in litigation against larger companies, with …

Mootness Fees, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon, Randall Thomas

All Faculty Scholarship

In response to a sharp increase in litigation challenging mergers, the Delaware Chancery Court issued the 2016 Trulia decision, which substantively reduced the attractiveness of Delaware as a forum for these suits. In this Article, we empirically assess the response of plaintiffs’ attorneys to these developments. Specifically, we document a troubling trend—the flight of merger litigation to federal court where these cases are overwhelmingly resolved through voluntary dismissals that provide no benefit to the plaintiff class but generate a payment to plaintiffs’ counsel in the form of a mootness fee. In 2018, for example, 77% of deals with litigation were …

Courts Should Apply A Relatively More Stringent Pleading Threshold To Class Actions, Matthew J.B. Lawrence

Faculty Scholarly Works

Policymakers from Senator Edward Kennedy to Civil Rules Advisory Committee Reporter Edward Cooper have proposed that class actions be subject to a more stringent pleading threshold than individually-filed suits, yet the question has not been fully explored in legal scholarship. This Article addresses that gap. It shows that courts following the guidance of Bell Atlantic v. Twombly should apply a relatively more stringent pleading threshold to class actions, and a relatively less stringent threshold to individually-filed suits.

This contribution is set forth in two steps. First, this Article explains that, all else being equal, the anticipated systems’ costs and benefits …

The Extraordinary Deterrence Of Private Antitrust Enforcement: A Reply To Werden, Robert H. Lande, Joshua P. Davis

All Faculty Scholarship

Our article, "Comparative Deterrence from Private Enforcement and Criminal Enforcement of the U.S. Antitrust Laws," 2011 B.Y.U. L. Rev. 315, documented an extraordinary but usually overlooked fact: private antitrust enforcement deters a significant amount of anticompetitive conduct. Indeed, the article showed that private enforcement "probably" deters even more anticompetitive conduct than the almost universally admired anti-cartel enforcement program of the United States Department of Justice.

In a recent issue of Antitrust Bulletin, Gregory J. Werden, Scott D. Hammond, and Belinda A. Barnett challenged our analysis. They asserted that our comparison “is more misleading than informative.” It is unsurprising that they …

Do Class Action Lawyers Make Too Little?, Brian T. Fitzpatrick

Vanderbilt Law School Faculty Publications

Class action lawyers are some of the most frequently derided players in our system of civil litigation. It is often asserted that class action lawyers take too much from class judgments as fees, that class actions are little more than a device for the lawyers to enrich themselves at the expense of the class. In this Article, I argue that some of this criticism of class action lawyers is misguided. In particular, I perform a normative examination of fee percentages in class action litigation using the social-welfarist utilitarian account of litigation known as deterrence-insurance theory. I argue that in perhaps …

Exploding The Class Action Agency Costs Myth: The Social Utility Of Entrepreneurial Lawyers, Myriam E. Gilles, Gary B. Friedman

Articles

In this article, we challenge the traditional view that entrepreneurial plaintiffs' class action lawyers operating entirely according to their own economic self-interest serve no social utility, or worse yet, tremendous disutility. In seeking to counter this notion, we try to show that the agency costs problem long derided in class action practice is overblown: in the majority of small-claims class actions, there is no legitimate reason to care whether class members are being undercompensated (or compensated at all), nor any reason to worry that entrepreneurial lawyers are being overcompensated. Rather, we assert that the driving force behind class action practice …