Law Commons^™

Mutual Optimism And Risk Preferences In Litigation, Keith N. Hylton

Faculty Scholarship

Why do some legal disputes fail to settle? From a bird’s eye view, the literature offers two categories of reasons. One consists of arguments based on informational disparities. The other consists of psychological arguments. This paper explores the psychological theory. It presents a model of litigation driven by risk preferences and examines the model’s implications for trials and settlements. The model suggests a foundation in Prospect Theory for the Mutual Optimism model of litigation. The model’s implications for plaintiff win rates, settlement patterns, and informational asymmetry with respect to the degree of risk aversion are examined.

Against Settlement In Transnational Business And Human Rights Litigation, Hassan M. Ahmad

All Faculty Publications

In Against Settlement, Owen Fiss argued that settlement may not always be the optimal result of civil suits, particularly those that involve novel or ambiguous areas of law or ostensible power imbalances. That work spurred a range of scholarship around the merits and demerits of settlement. And although the settlement versus litigation debate is now almost four decades old, its currency persists in common law systems in which courts are, at times, called upon to expand or even re-envision doctrines or procedural rules. This article revisits that debate. It applies Against Settlement to transnational business and human rights litigation that …

Perceptions Of Justice In Multidistrict Litigation: Voices From The Crowd, Elizabeth Chamblee Burch, Margaret S. Williams

Scholarly Works

With all eyes on criminal justice reform, multidistrict litigation (MDL) has quietly reshaped civil justice, undermining fundamental tenets of due process, procedural justice, attorney ethics, and tort law along the way. In 2020, the MDL caseload tripled that of the federal criminal caseload, one out of every two cases filed in federal civil court was an MDL case, and 97% of those were products liability like opioids, talc, and Roundup.

Ordinarily, civil procedure puts tort plaintiffs in the driver’s seat, allowing them to choose who and where to sue, and what claims to bring. Procedural justice tells courts to ensure …

Asymmetric Stakes In Antitrust Litigation, Erik Hovenkamp, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

Private antitrust litigation often involves a dominant firm being accused of exclusionary conduct by a smaller rival or entrant. Importantly, the firms in such cases generally have asymmetric stakes: the defendant typically has a much larger financial interest on the line. We explore the broad policy implications of this fact using a novel model of litigation with endogenous effort. Asymmetric stakes lead dominant defendants to invest systematically more resources into litigation, causing the plaintiff's success probability to fall below the efficient level--a distortion that carries over to ex ante settlements. We explain that enhanced damages may reduce the problem, but …

Contracting On Litigation, Kathryn E. Spier, J.J. Prescott

Articles

Two risk-averse litigants with different subjective beliefs negotiate in the shadow of a pending trial. Through contingent contracts, the litigants can mitigate risk and/or speculate on the trial outcome. Contingent contracting decreases the settlement rate and increases the volume and costs of litigation. These contingent contracts mimic the services provided by third-party investors, including litigation funders and insurance companies. The litigants (weakly) prefer to contract with risk-neutral third parties when the capital market is transaction-cost free. However, contracting with third parties further decreases the settlement rate, increases the costs of litigation, and may increase the aggregate cost of risk bearing.

Platform Procedure: Using Technology To Facilitate (Efficient) Civil Settlement., J.J. Prescott, Alexander Sanchez

Book Chapters

In this chapter, we explore the ability of courts to enhance the role of substantive law in case outcomes by reducing party litigation costs. When it becomes less costly for parties to engage actively in dispute resolution, the shadow of substantive law should, in theory, become more pronounced and case outcomes should change (and hopefully become more accurate/efficient on average). To empirically investigate this hypothesis, we examine the consequences of a large state court’s implementation of court-assisted online dispute resolution (ODR) tools for its small claims docket. A central goal of this technology is to reduce litigation costs of all …

Newsroom: Logan Quoted In Bloomberg News On Opiod Litigation 08-16-2017, Jef Feeley, Jared S. Hopkins

Life of the Law School (1993- )

No abstract provided.

Newsroom: Trump: Full Employment For Lawyers 04-04-2017, David Logan

Life of the Law School (1993- )

No abstract provided.

Medicare Secondary Payer And Settlement Delay, Eric Helland, Jonathan Klick

All Faculty Scholarship

The Medicare Secondary Payer Act of 1980 and its subsequent amendments require that insurers and self-insured companies report settlements, awards, and judgments that involve a Medicare beneficiary to the Centers for Medicare and Medicaid Services. The parties then may be required to compensate CMS for its conditional payments. In a simple settlement model, this makes settlement less likely. Also, the reporting delays and uncertainty regarding the size of these conditional payments are likely to further frustrate the settlement process. We provide results, using data from a large insurer, showing that, on average, implementation of the MSP reporting amendments led to …

Judging Multidistrict Litigation, Elizabeth Chamblee Burch

Scholarly Works

High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle.

Or do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of …

The Actavis Inference: Theory And Practice, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

In FTC v. Actavis, Inc., the Supreme Court considered "reverse payment" settlements of patent infringement litigation. In such a settlement, a patentee pays the alleged infringer to settle, and the alleged infringer agrees not to enter the market for a period of time. The Court held that a reverse payment settlement violates antitrust law if the patentee is paying to avoid competition. The core insight of Actavis is the Actavis Inference: a large and otherwise unexplained payment, combined with delayed entry, supports a reasonable inference of harm to consumers from lessened competition.

This paper is an effort to assist courts …

There Is No Such Thing As Litigation: Access To Justice And The Realities Of Adjudication, Robert Rubinson

All Faculty Scholarship

Does a "contest by judicial process" describe litigation's "means and applications"? Overwhelmingly, no. Litigation is not about judges: it is about default judgments, settlements, plea bargains. It sometimes does not even involve judges at all. Litigation is not about trials: the amount of litigation that goes to trial is infinitesimal. It is not about "process": the process is so minimal that to dignify it with that term stretches the word beyond recognition. It is not a "contest": it is an exercise where one side has no plausible chance of winning, especially since that side either has no lawyers or lawyers …

Good Pretrial Lawyering: Planning To Get To Yes Sooner, Cheaper, And Better, John M. Lande

Faculty Publications

Although the ostensible purpose for pretrial litigation is to prepare for trial, such preparation is inextricably intertwined with negotiation because the expected trial outcome is a major factor affecting negotiation. Indeed, since most litigated cases are settled, good litigators prepare for negotiation at least as much as trial. The lawyers interviewed for this article, who were selected because of their good reputations, described how they prepare for both possibilities. They recommend taking charge of their cases from the outset, which includes getting a clear understanding of clients and their interests, developing good relationships with counterpart lawyers, carefully investigating the cases, …

Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.

As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to …

Against Settlement Of (Some) Patent Cases, Megan M. La Belle

Scholarly Articles

For decades now, there has been a pronounced trend away from adjudication and toward settlement in civil litigation. This settlement phenomenon has spawned a vast critical literature beginning with Owen Fiss’s seminal work, Against Settlement. Fiss opposes settlement because it achieves peace rather than justice, and because settlements often are coerced due to power and resource imbalances between the parties. Other critics have questioned the role that courts play (or ought to play) in settlement proceedings, and have argued that the secondary effects of settlement – especially the lack of decisional law – are damaging to our judicial system. Still, …

Future Claimants And The Quest For Global Peace, Rhonda Wasserman

Articles

n the mass tort context, the defendant typically seeks to resolve all of the claims against it in one fell swoop. But the defendant’s interest in global peace is often unattainable in cases involving future claimants – those individuals who have already been exposed to a toxic material or defective product, but whose injuries have not yet manifested sufficiently to support a claim or motivate them to pursue it. The class action vehicle cannot be used because it is impossible to provide reasonable notice and adequate representation to future claimants. Likewise, non-class aggregate settlements cannot be deployed because future claimants …

Toward A Regulatory Framework For Third-Party Funding Of Litigation, Keith N. 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; those arrangements include waiver, subrogation, and settlement agreements. These existing arrangements provide valuable lessons for the appropriate regulatory approach to third-party financing of litigation.

Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”

This article is an effort to help courts and …

Some Important Causes For Settlement In American Civil Litigation, Felipe Forte Cobo

LLM Theses and Essays

This paper focuses on pure economic disputes such as contract, real property and tort conflicts, in which the economic efficiency model is very accepted. In this limited scenario, the consensual resolution of disputes is always more efficient than decisions made by a third-party decision-maker, whether from a post-trial or pre-trial perspective.

Considering that lower transaction costs drive parties towards settlement, part II of this essay provides an overview of the American costs of legal disputes, framing several issues that might be determinative to settlements. Part III explores how two specific American procedural institutes – discovery and civil jury trial – …

Segmented Settlements Are Not The Answer: A Response To Professor Squire’S Article, How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Christopher C. French

Journal Articles

In his recent article, Professor Richard Squire offers a provocative theory in which he claims the underlying claimants in shareholder litigation against corporate policyholders are overcompensated due to what he describes as “cramdown” settlements, under which insurers are forced to settle due to the “duty to contribute” that arises under multi-layered directors and officers (“D&O”) insurance programs. He also offers a novel idea regarding how this problem could be fixed by what he refers to as “segmented” settlements in which each insurer and the policyholder would be allowed to settle separately and consider only its own interests in doing so. …

Litigating Toward Settlement, Christina L. Boyd, David A. Hoffman

All Faculty Scholarship

Civil litigation typically ends when the parties compromise. While existing theories of settlement primarily focus on information exchange, we instead examine how motion practice, especially non-discovery motions, can substantially shape parties’ knowledge about their cases and thereby influence the timing of settlement. Using docket-level federal district court data, we find a number of strong effects regarding how motions can influence this process, including that the filing of a motion significantly speeds case settlement, that granted motions are more immediately critical to settlement timing than motions denied, and that plaintiff victories have a stronger effect than defendant victories. These results provide …

The Patent Litigation Explosion, James Bessen, Michael J. Meurer

Faculty Scholarship

This Article provides the first look at patent litigation hazards for public firms during the 1980s and 1990s. Litigation is more likely when prospective plaintiffs acquire more patents, when firms are larger and technologically close and when prospective defendants spend more on research and development ("R&D"). The latter suggests inadvertent infringement may be more important than piracy. Public firms face dramatically increased hazards of litigation as plaintiffs and even more rapidly increasing hazards as defendants, especially for small public firms. The increase cannot be explained by patenting rates, R&D, firm value or industry composition. Legal changes are the most likely …

The Relational Contingency Of Rights, Gideon Parchomovsky, Alex Stein

All Faculty Scholarship

In this Article, we demonstrate, contrary to conventional wisdom, that all rights are relationally contingent. Our main thesis is that rights afford their holders meaningful protection only against challengers who face higher litigation costs than the rightholder. Contrariwise, challengers who can litigate more cheaply than a rightholder can force the rightholder to forfeit the right and thereby render the right ineffective. Consequently, in the real world, rights avail only against certain challengers but not others. This result is robust and pervasive. Furthermore, it obtains irrespectively of how rights and other legal entitlements are defined by the legislator or construed by …

Secret Class Action Settlements, Rhonda Wasserman

Articles

This Article analyzes the phenomenon of secret class action settlements. To illustrate the practice, Part I undertakes a case study of a class action lawsuit that recently settled under seal. Part II seeks to ascertain the scope of the practice. Part II.A examines newspaper accounts describing class action settlements from around the country. Part II.B focuses on a single federal judicial district – the Western District of Pennsylvania – and seeks to ascertain the percentage of suits filed as class actions that were settled under seal. Having gained some understanding of the scope of the practice, the Article then seeks …

Litigation And Democracy: Restoring A Realistic Prospect Of Trial, Stephen B. Burbank, Stephen N. Subrin

All Faculty Scholarship

In this essay we review some of the evidence confirming, and some of the reasons underlying, the phenomenon of the vanishing trial in federal civil cases and examine some of the costs of that phenomenon for democratic values, including in particular democratic values represented by the right to a jury trial under the Seventh Amendment. We discuss the Supreme Court’s recent pleading decisions in Twombly and Iqbal as examples of procedural attacks on democracy in four dimensions: (1) they put the right to jury trial in jeopardy; (2) they undercut the effectiveness of congressional statutes designed to compensate citizens for …

Disputing Limited Liability, Christina L. Boyd, David A. Hoffman

All Faculty Scholarship

This project presents six years of hand-collected federal district court data to analyze the first representative sample of veil piercing litigation. Our method identifies veil piercing complaints through Westlaw's trial pleadings database and codes each case through a detailed examination of PACER records. We test a variety of hypotheses to understand how such litigations are resolved. We find that plaintiffs succeed quite often in veil piercing litigation, if success is defined as winning on motions that do not terminate a case. A variety of legal and extra-legal factors predict such interstitial veil piercing successes. Voluntary creditor causes of action promote …

Slides: Groundwater Law And Administration: From Conflict To Reform, Michael A. Gheleta

Western Water Law, Policy and Management: Ripples, Currents, and New Channels for Inquiry (Martz Summer Conference, June 3-5)

Presenter: Michael A. Gheleta, Brownstein Hyatt Farber Schreck LLP, Denver, CO

14 slides

Toward Procedural Optionality: Private Ordering Of Public Adjudication, Robert J. Rhee

UF Law Faculty Publications

Private resolution and public adjudication of disputes are commonly seen as discrete, antipodal processes. There is a generally held understanding of the dispute resolution processes. The essence of private dispute resolution is that the parties can arrange the disputed rights and entitlements per agreement and without judicial intervention. In public adjudication, however, the sovereign mandates the substantive and procedural laws to be applied, many of which cannot be changed by either a party's unilateral decision or both parties' mutual consent. Neither approach allows a party an option to unilaterally alter important aspects of the process, such as the standards of …

Toward Procedural Optionality: Private Ordering Of Public Adjudication, Robert J. Rhee

Faculty Scholarship

Private resolution and public adjudication of disputes are commonly seen as discrete, antipodal processes. There is a generally held understanding of the dispute resolution processes. The essence of private dispute resolution is that the parties can arrange the disputed rights and entitlements per agreement and without judicial intervention. In public adjudication, however, the sovereign mandates the substantive and procedural laws to be applied, many of which cannot be changed by either a party’s unilateral decision or both parties’ mutual consent. Neither approach allows a party an option to unilaterally alter important aspects of the process, such as the standards of …

Trouble With All-Or-Nothing Settlements, The Symposium: Aggregate Justice: Perspectives Ten Years After Amchem And Ortiz, Howard M. Erichson

Faculty Scholarship

When defendants settle litigation involving multiple plaintiffs, they often insist that they will settle only if they obtain releases from all or nearly all of the plaintiffs in the group. If a defendant is going to spend money to resolve claims, it prefers to take its hit and move on. As one experienced settlement administrator puts it, when a defendant approaches plaintiffs' lawyers to discuss the settlement of a mass dispute, the "subject might be broached in various terms, [but] the underlying message is the same-'How much will it cost us to get out of all of these cases?" A …