Law Commons^™

Why Barring Settlement Bars Legitimate Suits: A Reply To Rosenberg And Shavell, Ted M. Sichelman

Ted M. Sichelman

Professors David Rosenberg and Steven Shavell recently proposed granting defendants an "option to bar settlement" to discourage frivolous suits filed for a mere "nuisance-value" settlement. By exercising this option, a defendant could prevent judicial enforcement of any ensuing settlement agreement between the parties. Rosenberg and Shavell contend that if courts were to foreclose settlement, a plaintiff would drop its nuisance-value suit, because its costs of litigating to judgment would exceed its expected benefits. They conclude that because defendants would only exercise the option if faced with a nuisance-value suit, adopting it would be socially beneficial. Although an option to bar …