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Full-Text Articles in Law

Information Costs And The Civil Justice System, Keith Hylton Jul 2018

Information Costs And The Civil Justice System, Keith Hylton

Faculty Scholarship

Litigation is costly because information is not free. Given that information is costly and perfect information prohibitively costly, courts will occasionally err. Finally, the fact that information is costly implies an unavoidable degree of informational asymmetry between disputants. This paper presents a model of the civil justice system that incorporates these features of the real world and probes its implications for compliance with the law, efficiency of law, accuracy in adjudication, trial outcome statistics, and the evolution of legal standards. The model’s claims are applied to and tested against the relevant empirical and legal literature.


Oligopoly Pricing And Richard Posner, Keith Hylton Apr 2018

Oligopoly Pricing And Richard Posner, Keith Hylton

Faculty Scholarship

Over a span of nearly 50 years Richard Posner’s voice has loomed large over the subject of oligopoly pricingand antitrust. The span begins in 1969 with Posner’s publication of “Oligopoly and the Antitrust Laws: A Suggested Approach,” which argues for more aggressive enforcement of Section 1 in cases involving circumstantial evidence of conspiracy. The span ends with Posner’s opinion in In re Text Messaging Antitrust Litigation, in 2015. The two writings, the first an academic article published early in Posner’s career and the second a judicial opinion published near the end of his time on the ...


Does The Quality Of The Plaintiffs' Law Firm Matter In Deal Litigation?, David Webber, Adam B. Badawi Jan 2015

Does The Quality Of The Plaintiffs' Law Firm Matter In Deal Litigation?, David Webber, Adam B. Badawi

Faculty Scholarship

This Article examines how the stock market reacts to the filing of lawsuits against mergers and acquisitions targets as the quality of the plaintiffs’ law firm varies. Our primary dataset includes all cases of this type filed in the Delaware Chancery Court from November 2003–September 2008. We group the law firms that file these suits into higher and lower quality categories using several quantitative and qualitative measures. We hypothesize that target firm share value should reflect the likelihood that litigation will result in an increase in merger consideration. This effect is likely to depend, at least in part, on ...


Private Policing Of Mergers & Acquisitions: An Empirical Assessment Of Institutional Lead Plaintiffs In Transactional Class And Derivative Actions, David Webber Jan 2014

Private Policing Of Mergers & Acquisitions: An Empirical Assessment Of Institutional Lead Plaintiffs In Transactional Class And Derivative Actions, David Webber

Faculty Scholarship

Transactional class and derivative actions have long been controversial in both the popular and the academic literatures. Yet, the debate over such litigation has thus far neglected to consider a change in legal technology, adopted in Delaware a dozen years ago, favoring selection of institutional investors as lead plaintiffs in these cases. This Article fills that gap, offering new insights into the utility of mergers and acquisitions litigation. Based on a hand-collected dataset of all Delaware class and derivative actions filed from November 1, 2003 to December 31, 2009, I find that institutional investors play as large of a role ...


Toward A Regulatory Framework For Third-Party Funding Of Litigation, Keith Hylton Jun 2013

Toward A Regulatory Framework For Third-Party Funding Of Litigation, Keith Hylton

Faculty Scholarship

Because third-party funding and sales of legal rights are equivalent in terms of their economics, I examine arrangements in which third-party sales of legal rights are permitted today – waiver, subrogation, and settlement agreements. The existing arrangements provide valuable lessons for the appropriate regulatory approach to third-party financing of litigation.


The Economics Of Third-Party Financed Litigation, Keith Hylton Oct 2011

The Economics Of Third-Party Financed Litigation, Keith Hylton

Faculty Scholarship

This paper examines the law and economics of third-party financed litigation. I explore the conditions under which a system of third-party financiers and litigators can enhance social welfare, and the conditions under which it is likely to reduce social welfare. Among the applications I consider are the sale of legal rights (such as contingent tort claims) to insurers, to patent trolls, and to financiers generally.


Injunctive And Reverse Settlements In Competition-Blocking Litigation, Keith Hylton, Sungjoon Cho Aug 2011

Injunctive And Reverse Settlements In Competition-Blocking Litigation, Keith Hylton, Sungjoon Cho

Faculty Scholarship

We distinguish standard settlements, in which the status quo is preserved, and injunctive settlements, which prohibit the defendant’s activity. The reverse settlement is a special type of injunctive settlement. We examine the divergence between private and social incentives to settle and policies that would minimize socially undesirable injunctive and reverse settlements (e.g., banning reverse settlements). The results are applied to competition-blocking litigation, such as patent infringement and antidumping.


The Economics Of Public Nuisance Law And The New Enforcement Actions, Keith Hylton Jan 2010

The Economics Of Public Nuisance Law And The New Enforcement Actions, Keith Hylton

Faculty Scholarship

In contrast to the traditional legal commentary, I find nuisance law to be a coherent body of rules that serves an explainable function. Nuisance optimally regulates activity levels. Nuisance law induces actors to choose socially optimal activity levels by imposing liability when externalized costs are far in excess of externalized benefits or far in excess of background external costs. The new enforcement actions for lead paint abatement or gun control purposes have an arguable theoretical basis in nuisance law. However, as currently framed, the lawsuits are inconsistent with significant parts of the doctrine and the theory.


Trial Selection Theory And Evidence: A Review, Keith Hylton, Haizhen Lin Apr 2009

Trial Selection Theory And Evidence: A Review, Keith Hylton, Haizhen Lin

Faculty Scholarship

Trial selection theory consists of models that attempt to explain or predict the characteristics that distinguish cases that are litigated to judgment from those that settle, and the implications of those characteristics for the development of legal doctrine and for important trial outcome parameters, such as the plaintiff win rate. This paper presents a review of trial selection theory and evidence. We start with a review of the literature, and then present a model that includes Priest-Klein and asymmetric information theories as special cases. We conclude with a review of the empirical evidence.


When Should A Case Be Dismissed? The Economics Of Pleading And Summary Judgment Standards, Keith Hylton Jan 2008

When Should A Case Be Dismissed? The Economics Of Pleading And Summary Judgment Standards, Keith Hylton

Faculty Scholarship

This paper applies a simple economic framework to the choice between pleading and summary judgment as points at which a claim can be dismissed. It concludes generally that pleading standards should vary with the evidentiary demands of the associated legal standards and the social costs of litigation. The common law's imposition of higher pleading standards for fraud claims is consistent with this proposition. The theory implies that the rigorous summary judgment standards that have been developed by antitrust courts should lead to a correspondingly rigorous assessment at the pleading stage.


Information, Litigation, And Common Law Evolution, Keith Hylton Jan 2006

Information, Litigation, And Common Law Evolution, Keith Hylton

Faculty Scholarship

It is common in the legal academy to describe trends in judicial decisions leading to new common law rules as the result of conscious judicial effort. Evolutionary models of litigation, in contrast, treat common law as resulting from pressure applied by litigants. One apparent difficulty in the theory of litigation is explaining how trends in judicial decisions favoring one litigant, and biasing the legal standard, could occur. This paper presents a model in which an apparent bias in the legal standard can occur in the absence of any effort toward this end on the part of judges. Trends can develop ...


Common Law Disclosure Duties And The Sin Of Omission: Testing The Meta-Theories, Kathryn Zeiler Jan 2005

Common Law Disclosure Duties And The Sin Of Omission: Testing The Meta-Theories, Kathryn Zeiler

Faculty Scholarship

Since ancient times, legal scholars have explored the vexing question of when and what a contracting party must disclose to her counterparty, even in the absence of explicit misleading statements. This fascination has culminated in a set of claims regarding which factors drive courts to impose disclosure duties on informed parties. Most of these claims are based on analysis of a small number of non-randomly selected cases and have not been tested systematically. This article represents the first attempt to systematically test a number of these claims using data coded from 466 case decisions spanning over a wide array of ...


The Economics Of Litigation And Arbitration: An Application To Franchise Contracts, Keith Hylton Jan 2003

The Economics Of Litigation And Arbitration: An Application To Franchise Contracts, Keith Hylton

Faculty Scholarship

If we define the deterrence benefits from contract enforcement as avoided harms net of avoidance costs, we should expect contracting parties to choose the dispute resolution forum that provides the greatest difference between deterrence benefits and dispute resolution costs for every type of dispute. We apply this general framework to franchise contracts and conduct an empirical analysis of the determinants of arbitration agreements among franchising parties. Although it is obvious that contracting parties have an incentive to choose arbitration in order to reduce dispute-resolution costs, there have been no studies of the importance of deterrence concerns. We examine the deterrence ...


Controlling Opportunistic And Anti-Competitive Intellectual Property Litigation, Michael Meurer Jan 2003

Controlling Opportunistic And Anti-Competitive Intellectual Property Litigation, Michael Meurer

Faculty Scholarship

It is useful to think of intellectual property (IP) law both as a system of property rights that promotes the production of valuable information and as a system of government regulation that unintentionally promotes socially harmful rent-seeking. This Article analyzes methods of controlling rent-seeking costs associated with opportunistic and anti-competitive IP lawsuits. My thinking is guided to some extent by the analysis of procedural measures for controlling frivolous litigation, and analysis of antitrust reforms designed to control strategic abuse of antitrust law. These analogies lead me to focus on pre-trial and post-trial control measures that reduce the credibility of weak ...


Welfare Implications Of Costly Litigation Under Strict Liability, Keith Hylton Jan 2002

Welfare Implications Of Costly Litigation Under Strict Liability, Keith Hylton

Faculty Scholarship

This paper examines a model of strict liability with costly litigation, and presents the conditions under which: (1) potential injurers take optimal precautions, (2) increasing litigation costs enhance precaution and social welfare, (3) the optimal level of liability exceeds the compensatory level, and (4) increasing the rate of settlement increases social welfare. The results have implications for controversies surrounding optimal damage awards (e.g., punitive versus compensatory), fee shifting, and the desirability of settlement.


An Asymmetric Information Model Of Litigation, Keith Hylton Jan 2000

An Asymmetric Information Model Of Litigation, Keith Hylton

Faculty Scholarship

This paper presents a cradle-to-grave model of tort liability, incorporating the decision to comply with the due-care standard, the decision to file suit, and the decision to settle. I use the model primarily to examine settlement rates, plaintiff win rates, and compliance with the due-care standard. The key results of the modelare as follows: (1) litigation to judgment occurs only when some but not all actors comply with the due-care standard, and (2) if defendants have the information advantage at trial, plaintiff win rates generally will be less than fifty percent. I apply the model and its simulation results to ...


The Influence Of Litigation Costs On Deterrence Under Strict Liability And Under Negligence, Keith Hylton Jan 1990

The Influence Of Litigation Costs On Deterrence Under Strict Liability And Under Negligence, Keith Hylton

Faculty Scholarship

This paper examines the influence of litigation costs on deterrence under strict liability and under negligence. By deterrence, I refer to the effect of the threat of liability on the care exercised by potential injurers. More precisely, this paper takes litigation costs as given and examines the social desirability of the levels of care exercised under negligence and under strict liability.