Abstract: In this paper, we examine the impact of the PSLRA and more particularly the impact the type of lead plaintiff on the size of settlements in securities fraud class actions. We thus provide insight into whether the type of plaintiff that heads the class action impacts the overall outcome of the case. Furthermore, we explore possible indicia that may explain why some suits settle for extremely small sums - small relative to the "provable losses" suffered by the class, small relative to the asset size of the defendant-company, and small relative to other settlements in our sample. This evidence bears heavily on the debate over "strike suits." Part I of this paper sets forth the contemporary debate surrounding the need for further reforms of securities class actions. In this section, we set forth the insights advanced in three prominent reports focused on the competitiveness of U.S. capital markets. In Part II we first provide descriptive statistics of our extensive data set, and then use multivariate regression analysis to explore the underlying relationships. In Part III, we closely examine small settlements for clues to whether they reflect evidence of strike suits. We conclude in Part IV with a set of policy recommendations based on our analysis of the data.

Abstract: The federal and Victorian class action regimes are intended to facilitate aggregation of multiple claims. Aggregation can improve efficiency by combining similar claims and can enhance access to justice by providing a mechanism to litigate small claims. This article considers whether these efficiency and access aims are being achieved. The authors argue that whilst some developments in class action jurisprudence have been consistent with these legislative aims, other have not. Several features of Australian class action jurisprudence and practice have hampered the healthy development of the legislative regimes, including adverse costs orders, unclear threshold requirements, evasive posturing and unresolved class communication issues. Finally, having identified these difficulties, the authors propose reform possibilities and priorities.

Abstract: 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 ­and any effort to reform, reduce, redirect that practice ­should be deterrence. All that matters, we argue, is whether the defendant-wrongdoer is forced to internalize the social costs of its actions ­not to whom it pays those costs.

Abstract: The use of sampled evidence in mass tort cases is at the crossroads. In McLaughlin v. Phillip Morris, Judge Jack B. Weinstein of the Eastern District of New York certified a nationwide class action on behalf of an estimated 50 million "light" cigarette smokers. In the face of the overwhelming cost of gathering evidence from tens of millions of plaintiff class members, he announced a dramatic trial plan to completely abandon individualized adjudication in favor of aggregate factual determinations based on evidence from statistical samples. The central issue in the interlocutory appeal now before the Second Circuit is the legality of statistical sampling. This Article strenuously defends Judge Weinstein's strategy of relying on evidence produced through proven methods of sampling. Such an aggregate strategy is not only much more cost-effective than case-by-case evidence gathering, it is also much more likely to arrive at an accurate determination of damages. By laying out a comprehensive proposal for the use of sampled evidence in litigation, the authors hope to hasten the day when legal decision makers finally accept a practice than has been a hallmark of scientific decision making for the past sixty years.

Abstract: This article contends that the absence of an opt-out class action remains a yawning gap within English civil procedure. Various recent reform proposals have favoured opt-in procedural vehicles as the way forward. However, key features of these proposals – an opt-in approach and the use of a representative claimant – are subject to considerable reservations in jurisprudence from both England and elsewhere. Following a critique of these features, the article proposes that an ‘opt-out regime with brakes’ should be introduced, taking into account both the requirement for proportionality under the Civil Procedure Rules, and the invaluable lessons provided by the established Commonwealth statutory class actions regimes.

Abstract: This article examines a form of securities class action that is growing increasingly popular in US courts: the foreign cubed action, brought against a foreign issuer on behalf of a class that includes foreign investors who purchased securities on a foreign exchange These cases are becoming an important part of the regulatory landscape (as evidenced by recent high-profile lawsuits involving issuers such as Vivendi, Bayer and Royal Ahold), and they create the potential for particularly severe conflict with other countries on the question of how best to regulate global economic activity Yet they point out quite clearly that the traditional conduct and effects tests for subject-matter jurisdiction are inadequate to the task of delimiting the reach of US securities laws in the global capital markets The article draws on a study of almost 50 foreign cubed claims It analyzes the arguments made by foreign investors seeking to justify the application of US law to their claims - arguments that base an expansive theory of regulatory jurisdiction on the interconnections among the world's capital markets It then turns to judicial disposition of such claims, examining the various stages of litigation (including class certification) at which courts confront jurisdictional questions and identifying a series of assumptions that courts make in attempting to draw jurisdictional lines It then uses those assumptions to predict how courts will respond to multinational class actions in the continued absence of legislative guidance regarding subject-matter jurisdiction under the securities laws

Abstract: Countries around the world are getting more interested in implementing procedures similar to those for class actions in the United States in order to deter corporate fraud and to enhance investor protection. This paper first explores the key elements in establishing a securities class action device in foreign countries and presents several examples that illustrate the difficulties in modeling a U.S.-style securities class action regime outside the United States. This paper then presents the case of Taiwan as a novel example insofar as the law granted a nonprofit organization, the Investors Protection Center, a monopoly in the organization's pursuit of securities class actions. Herein, the Securities Investors and Futures Traders Protection Act of 2002 has two important functions: it provides several provisions that relax restrictions in civil procedures that are hostile to group litigation, and it mandates the establishment of the Investors Protection Fund, which provides financial support for securities litigation. The non-distribution constraint of nonprofit organizations provides the Taiwan approach a natural insulation from the problem of frivolous lawsuits suffered by the United States, where lawyers' incentives serve as the main motive behind securities class action practice. And although the Taiwan government's control over the Investors Protection Center has raised public concerns about the independence and the fairness of Taiwan's securities class action practice, the innovative practice of Taiwan's securities class actions serves as an excellent source for comparative legal studies, especially for countries whose government exercises most regulatory powers but whose goal is to promote private securities law enforcement.

Abstract: Class actions, which allow individual plaintiffs to represent a group of others in a similar situation in a claim against a same defendant, are still a specificity of US law. Recently, transnational class actions, either against a foreign defendant or including foreign class members, have become popular. The author addresses the possibility of bringing such claims involving parties that are residents of a European country. The United States, traditionally known for the extraterritorial application of their laws and for easily retaining jurisdiction of their courts, are trying to coordinate the legal systems involved by being concerned with the possibility of recognition in a foreign country of class action judgments. Therefore, the original issue needs to be addressed of the recognition and the res judicata effect of these judgments in European countries that do not know similar collective judicial procedures.

Abstract: Class actions have gone global. Foreign parties are no longer a rarity in U.S. class litigation. In addition to being named as defendants, foreigners increasingly form a significant part of the group of absent class members. U.S. courts have thus begun to consider some novel issues, including whether due process requires foreigners to be treated as an opt-in rather than an opt-out class; whether a judgment or settlement in the suit is capable of being enforced or recognized as res judicata abroad and thus whether class certification is justified in the first place; and whether a foreign forum grants comparable access to justice in the form of group litigation and thus represents an adequate alternative forum for purposes of a forum non conveniens defense. Knowledge about the relevant foreign procedure, institutions, and jurisprudential values thus becomes crucial for decision-making in this area. In this Article, I attempt to contribute to that information with a look at group litigation devices in Switzerland. In discussing both proposals to introduce an American-style class action that were rejected in the present effort to draft a federal code of civil procedure and the workings of existing group litigation devices, I try to explore the major reasons for the Swiss reluctance to add the class action to the country's existing procedural vehicles.

Abstract: Law and economics scholars generally view regulation and litigation as substitutes in the task of deterring potentially harmful conduct. Existing normative models suggest that the desirable mix of regulation and litigation will depend on a number of variables, but all largely agree that, on the margin, optimality requires that as public regulation increases, private litigation should decline and vice versa. To investigate whether this condition holds, we examine the factors that affect plaintiffs attorneys’ decisions about where and when to file class actions using a unique dataset covering the class action experience of 130 insurance companies during the period 1992 to 2002. We find no evidence to support the proposition that public regulation and private litigation function as substitute channels to deter harmful behavior. In fact, we find some evidence that litigation and regulation tend to piggy-back on each other at least in the insurance industry. More important in the attorneys’ filing decisions is whether or not cases regarding the same general allegation and cases filed in the same state have been successful in the past.

Abstract: The restriction of the groups of claimants represented in three recent shareholder class actions — to those aggrieved shareholders who were also the clients of the law firm acting for the class representatives — and the judicial termination of these class proceedings as long as this restriction continued to be employed, both highlight the existence of a number of fundamental problems with the class action regimes that currently operate in the Federal Court of Australia and in the Supreme Court of Victoria This article provides a critical analysis of this controversial phenomenon

Abstract: Any proposed settlement of a class action lawsuit must be approved by the trial judge, who must conclude that the settlement is fair, adequate, and reasonable. The article notes how in considering whether to approve class action settlements, courts consider the reaction of the class members to be the most important single factor. However, these same judges routinely characterize the silence of class members regarding a proposed settlement to represent enthusiastic endorsement of the settlement's terms. Judges read too much into this silence. My article explains why class member silence is a perfectly rational response even for class members who find the proposed settlement to be inadequate or unreasonable. The article demonstrates how courts approve inadequate settlements because judges misinterpret the class response. Finally, the article proposes possible solutions to the problem of silent class members.

Abstract: Class actions have gone global. Foreign parties are no longer a rarity in U.S. class litigation. In addition to being named as defendants, foreigners increasingly form a significant part of the group of absent class members. U.S. courts have thus begun to consider some novel issues, including whether due process requires foreigners to be treated as an opt-in rather than an opt-out class; whether a judgment or settlement in the suit is capable of being enforced or recognized as res judicata abroad and thus whether class certification is justified in the first place; and whether a foreign forum grants comparable access to justice in the form of group litigation and thus represents an adequate alternative forum for purposes of a forum non conveniens defense. Knowledge about the relevant foreign procedure, institutions, and jurisprudential values thus becomes crucial for decision-making in this area. In this Article, I attempt to contribute to that information with a look at group litigation devices in Switzerland. In discussing both proposals to introduce an American-style class action that were rejected in the present effort to draft a federal code of civil procedure and the workings of existing group litigation devices, I try to explore the major reasons for the Swiss reluctance to add the class action to the country's existing procedural vehicles.

Abstract: The gender discrimination class action Dukes v. Wal-Mart, whose certification was recently affirmed in the Ninth Circuit, presents a large-scale challenge to the company's excessive reliance on subjective judgment in employment decision-making. It is one in a growing number of similar suits, all of which are fundamentally attacks on the continued operation of entrenched gender stereotypes in the allocation of workplace opportunities. The breadth of this aim is one of the strengths of these suits, but it also raises a significant question: because this kind of litigation targets a broad social phenomenon, is it reasonably possible to distinguish employers who are part of the problem from those who are not? This Article argues that, given the real possibility of judicial and public resistance to these suits, there is a serious need for some articulation of what employer practices would be sufficient to demonstrate legal compliance sufficient to forestall litigation like Dukes. Past litigation, the evaluations of human resources experts, and Supreme Court interpretations of the requirements of federal antidiscrimination law all provide some guidance as to employer policies that could satisfy these compliance efforts. But a growing body of empirical research suggests that workplace programs designed for compliance do not necessarily improve circumstances for women and minorities. Any discussion of compliance must grapple with this problem. This Article argues that employers, and those offering them guidance, must develop strategies for compliance that will in fact remove barriers to equality, but that litigation like Dukes may not be appropriate to target employers who have made substantial compliance efforts, even if those efforts have not eliminated inequalities.

Abstract: The prevailing view among securities regulation scholars is that compensating victims of secondary market securities fraud is inefficient. As the theory goes, diversified investors are as likely to be on the gaining side of a transaction tainted by fraud as the losing side. Therefore, such investors should have no expected net losses from fraud because their expected losses will be matched by expected gains. This Article argues that this view is flawed; even diversified investors can suffer substantial losses from fraud, presenting a compelling case for compensation. The interest in compensation, however, should be advanced by better means than are currently in place. The present system relies on securities class action lawsuits to compensate victims, but these suits not only undercompensate victims, but also underdeter fraud. To improve compensation and better deter fraud, this Article explores the creation of an investor compensation fund. Under this proposal, when a share of stock is sold in the secondary market, a fee, payable by the selling shareholder, will be placed into a fund for fraud victim restitution. The size of the fee will vary by the fraud risk rating assigned to the firm whose stock is sold and, naturally, will affect that stock's trading price. Therefore, firms will have incentives to institute corporate governance practices that minimize the likelihood of fraud. I. INTRODUCTION II. RESPONSE TO THE ANTI-COMPENSATION ARGUMENT A. Asymmetries Stemming from the Market's Reaction to Fraud Announcements B. The Potential for Loss is Substantial for all Investors C. Buy-and-Hold Investors are Likely to Suffer Significant Harm from Securities Fraud D. The Undiversified Investor Has a Legitimate Claim to Protection From Fraud E. Political Considerations III. SECURITIES CLASS ACTIONS IV. THE INVESTOR COMPENSATION FUND PROPOSAL A. Overview B. The Proposal C. Possible Objections and Implementation Challenges 1. Mandatory Nature of the Program 2. The Role of the Federal Government 3. Deterrence Effects 4. Fraud Risk Ratings 5. Creation of a Fund Instead of Publication of Ratings Only 6. Equitable Considerations 7. Effect on Financial Markets a. Volatility b. Volume c. Accuracy and Overall Level of Prices 8. Political Considerations D. Summary and Concluding Thoughts on the ICF and Securities Litigation V. A CONSIDERATION OF ALTERNATIVE REFORM PROPOSALS A. Fair Fund Expansion B. U.S. Insurance-Based Proposals C. Canadian Securities Misinformation Insurance VI. CONCLUSION APPENDIX I APPENDIX II I. INTRODUCTION In 1985, Frank Easterbrook and Daniel Fischel, in an influential article, asserted that active traders with diversified portfolios are as likely to be on the gaining side of a transaction tainted by securities fraud as on the losing side. (1) Therefore, diversified investors should have no expected net losses from fraud because their expected losses will match their expected gains. (2) The idea of compensation for securities fraud losses has been under attack in the legal academy virtually ever since this article was published. Though Easterbrook and Fischel ultimately argue against ending compensation for securities fraud losses, (3) scholars, nevertheless, have used Easterbrook and Fischel's insight to decry the provision of securities fraud compensation as inefficient and to promote reforms that would eliminate it from the securities regulation regime. (4) In 2005, the U.S. Chamber of Commerce Institute for Legal Reform commissioned an empirical study to test the theoretical assertion that securities fraud risk can be diversified away. The study purported to find that large diversified institutional investors generally break even on their investments in firms accused of fraud. …

Abstract: In 1995, my colleague John Beckerman and I had an experience shared by very few legal academics. We wrote an article recommending dramatic changes in the manner securities class actions are organized and saw Congress enact into law a bill that included essentially all the recommendations we had made. The article was Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency Costs in Securities Class Actions, 104 Yale L.J. 2053 (1995); the law was the Private Securities Litigation Reform Act of 1995 ("PSLRA"); the relevant provisions, now generally known as "the lead plaintiff provisions," prescribe procedures for the selection of lead plaintiffs and lead counsel in securities class actions. In this Essay, I recount some aspects of the unique history of the lead plaintiff provisions and reflect on what has happened in the decade or so that they have been in effect. The Essay has six parts. Part I describes the questions that led Professor Beckerman and me to undertake research concerning the dynamics of securities class actions and summarizes our findings and recommendations. Part II sets forth our perspective on how our recommendations came to be enacted into law. Part III describes post-enactment developments that have been consistent with our expectations - most notably, the emergence of institutional investors as major players in securities class action litigation and the related increase in investors' recoveries. Part IV describes post-enactment developments that we did not anticipate, including one precipitated by the emergence of the Internet and another that involves the difficulty, which we should have anticipated, that courts have had in deciding which class member has the largest loss and therefore is the presumptive lead plaintiff. In Part V, we conclude that even had Congress followed a more deliberative process before enacting our recommendations into law, it probably would not have come up with a substantially better approach for organizing the process by which lead plaintiffs and lead counsel are appointed in securities class actions. In Part VI, we recommend that Congress clarify the language of the statute in one minor respect and that courts make changes in how they deal with two administrative issues relating to securities class action litigation.

Abstract: Employment discrimination class action suits are part of a new wave of structural reform litigation. Like their predecessors - the school desegregation cases in the 1950s, the housing and voting inequalities cases in the 1960s, prison conditions suits in the 1970s, and environmental lawsuits since then - these are systemic challenges to major institutions affecting large segments of the public. This article explores the effectiveness of various employment discrimination remedies in reforming workplace cultures, promoting corporate accountability, and implementing real diversity. Reviewing the architecture and aftermath of consent decrees in five major employment discrimination cases - the cases against Shoney's, Texaco, Home Depot, Mitsubishi, and Coca-Cola - the article evaluates the ways in which consent decrees have changed over time and the lessons learned from the implementation of these settlements. Mega-Cases identifies several hallmarks of more promising settlements and then compares the features of consent decrees in those landmark cases with recent social science literature on remedies that do - and do not - make a difference in workplace inclusivity. Emerging research in organizational sociology has found that, strikingly, diversity training has a negligible effect on the admission of women and minorities to the ranks of corporate management, but that structures requiring accountability (such as affirmative action plans, diversity managers and financial incentives) are effective in increasing diversity. The final part of the article addresses resistance to change. Unsurprisingly, in those situations in which corporations seemed most committed to changing their cultures regarding equity and diversity, the consent decrees seemed to work most effectively. The question is what to do about corporations and executives who seem unwilling to change - especially if they don't have the resources of a mega-corporation and particularly if diversity training doesn't seem to produce results. An answer may be to develop an understanding that diversity is good for business. The socio-economic literature makes a strong case that employee diversity creates very favorable economic consequences for corporations. While most major corporations seem aware of the economic benefits of having their workforces resemble the demographics of the nation, smaller companies are less responsive to the need for diversity. One danger of promoting the market support for diversity is that exclusively economic arguments can overshadow the moral or philosophical case for gender and racial justice. A very legitimate question is whether one of the more promising methods of promoting diversity is effective only at the risk of losing the soul of the anti-discrimination principle?

Abstract: Criminal prosecution has been used with increasing frequency recently in connection with a variety of business failures and other financial offenses. Indeed, it appears that there are few such offenses that cannot be prosecuted criminally even though they also give rise to civil remedies. While some such offenses seem to be quite serious frauds, others seem to be as minor as getting the accounting rules wrong. Thus, the question addressed in this essay is how to define a business crime and what should be the proper role of criminal prosecution in connection with business offenses. I start with the proposition that we should criminalize conduct only when lesser remedies do not work to deter the offense. I then describe the array of private civil remedies available, ranging from simple compensatory damages to punitive damages to class actions and derivative actions and find that there are few business offenses that cannot be well addressed by these devices. I conclude that as a general matter private civil remedies are much more efficient at addressing business and financial crimes. The expansion of criminal prosecution may be due to some extent to problems with the way civil remedies work in practice, but for the most part it is difficult to explain except as a result of failure to understand the role of criminal law and to define financial crimes with any precision.

Abstract: When several plaintiffs file individually a lawsuit against the same tortfeasor, the resolution of the various cases through repeated trials produces positive informational externalities, which benefit to the later plaintiffs (since there exist precedents, jurisprudence...). Thus, the first filers may have an incentive to initiate a class action as far as it enables the various plaintiffs to share their information. This feature has not been stressed in the literature, and in contrast strategic uses of class actions have been studied in more details (Che (1996), Marceau and Mongrain (2003)). In this paper, we elaborate on a basic strategic model of litigation settlement, focusing on the interactions between the characteristics of the discovery process (as a general technology of production of evidences) in mass tort litigation, those of the compensation rules set by Courts, and the structure of litigation costs, in order to study when a class action fails to occur, and when sequential trials are more likely. We consider the case of a perfect discovery process. We provide sufficient conditions under which a class action is formed. We show that when victims have heterogeneous claims, the compensatory damages rule awarded by Courts is of major importance for the formation of the class action, whatever the degree of heterogeneity: all else equal, there always exists a degree of \textit{damage averaging} under which the class action occurs. We also show that when contingent fees are used to reward attorneys' services, plaintiffs become neutral to the arrival of new information on their case.

Abstract: This article examines a form of securities class action that is growing increasingly popular in U.S. courts: the foreign cubed action, brought against a foreign issuer on behalf of a class that includes foreign investors who purchased securities on a foreign exchange. These cases are becoming an important part of the regulatory landscape (as evidenced by recent high-profile lawsuits involving issuers such as Vivendi, Bayer and Royal Ahold), and they create the potential for particularly severe conflict with other countries on the question of how best to regulate global economic activity. Yet they point out quite clearly that the traditional conduct and effects tests for subject-matter jurisdiction are inadequate to the task of delimiting the reach of U.S. securities laws in the global capital markets. The article draws on a study of almost 50 foreign cubed claims. It analyzes the arguments made by foreign investors seeking to justify the application of U.S. law to their claims - arguments that base an expansive theory of regulatory jurisdiction on the interconnections among the world's capital markets. It then turns to judicial disposition of such claims, examining the various stages of litigation (including class certification) at which courts confront jurisdictional questions and identifying a series of assumptions that courts make in attempting to draw jurisdictional lines. It then uses those assumptions to predict how courts will respond to multinational class actions in the continued absence of legislative guidance regarding subject-matter jurisdiction under the securities laws.

Abstract: In the last few decades, mass tort litigation has wrestled with widespread, multijurisdictional problems that have greatly stressed the caseloads of courts. Certifying for trial multiple-incident, product-liability class actions for personal injuries has promised the resolution of expansive problems. But as appellate courts have increasingly held, these actions are not appropriate for class treatment because they involve numerous individualized issues that require unmanageable individualized adjudication. Without a perceived workable alternative, many trial courts have continued to try radical class action trial plans that violate state substantive law and federal constitutional law, but which bring tremendous pressure to settle upon defendants who fear they may not be able to obtain appellate review. Attempting to defuse this crisis, Congress recently passed the Class Action Fairness Act of 2005, greatly expanding federal jurisdiction for class actions. Once class actions are removed to federal court, however, the Act still provides no alternative for federal courts to the Hobson's choice framed by plaintiffs' counsel: certify a class, or be inundated with thousands of unmanageable, wasteful, and repetitive individual cases. But that is a false dichotomy. This article argues that the alternative to mass tort class actions is not such isolated repetitive litigation, but instead an expansive set of litigation networks of counsel, judges, and clients, using recent advances in information technology, that provide much of the efficiency promised by class actions without violating state substantive or federal constitutional law. As an example, the article discusses the functioning of litigation networks in the ongoing litigation concerning phenylpropanolamine (PPA), an ingredient in cough and cold remedies and appetite suppressants that has been alleged to cause stroke. By sharing information, pooling resources, developing specialized expertise, and coordinating strategy, these networks not only reduce the costs and improve the representation of individual litigation, but also develop accurate claim values for settlement of numerous cases and allow for improved case management over time through pragmatic experimentation. The article concludes that mass tort litigation networks provide a fruitful alternative to impermissible product-liability class actions for personal injuries, and that judges should deny requests to certify such class actions and instead encourage and assist in the creation and functioning of litigation networks.

Abstract: This article examines shareholder class actions and offers a proposal for reforming this area of litigation. After describing the nature and dynamics of these lawsuits (see Part II), the article in Part III outlines the criticisms of shareholder class actions. These criticisms take two basic forms, one of which mirrors those made against class action lawsuits in general, and another which is unique to shareholder lawsuits. As to the former, shareholder class actions often result in relatively trivial payments to the class members, while plaintiffs' lawyers receive millions of dollars in fees; and the class members have virtually no say in the conduct of the lawsuit or the terms of any settlement. As to the latter type of criticism made against shareholder class actions, the lawsuits often contain an inherent irrationality, at least from the standpoint of the plaintiffs themselves. The lawsuits are brought by stockholders against their own corporation. Since any settlement basically comes out of the shareholders' own assets, accompanied by an extremely high transaction price in the form of lawyers' fees, the lawsuit can actually yield a net negative return to the class members. Evidence suggests that shareholder class action litigation results more from a company's stock price movements than from the actual commission of fraud by the corporation. The connection between stock market movements and shareholder class action filings is discussed in Part IV, as are various studies analyzing the underlying merits of such lawsuits. In Part VI, a reform proposal is offered, which aims to take advantage of the unique role that shareholders occupy vis-a-vis the corporation. Most other class actions involve plaintiffs who have no legal or economic connection to defendants. Most, for instance, involve lawsuits brought by consumers against the manufacturers of allegedly defective products. In shareholder litigation, however, the plaintiffs are the owners of the defendant corporation, and hence in a unique position to remedy past misdeeds of the corporation and to deter future wrongdoing. Recognizing that shareholder class actions have failed to produce any real compensatory relief to injured investors and that such actions can actually have negative effects on shareholders, the reform proposal offered in Part VI concentrates exclusively on the goal of deterring future securities fraud.

Abstract: Hoffman v. Monsanto raises questions about the civil litigation system. Are courts appropriate institu- tions, and are class actions the appropriate procedure, for resolving disputes about genetically modified organisms (GMOs)? After addressing the institutional question, this article focuses on procedure. Although class actions are designed to empower group litigation, environmental class actions are rarely permitted. This is partly because their claims for private law actions seeking monetary compensation cause courts to focus on individual aspects of the problem, and the collective harm caused by widespread environmental effects is overlooked. Because most environmental lawsuits are prohibitively complex and expensive for individuals to litigate, this results in a denial of justice. It also prevents courts from playing their institutional role in the struggle to craft appropriate legal responses to GMOs. Greater focus on the role of groups and the collective nature of environmental harms would lead to different approaches to interpreting class action procedure.

Abstract: Table of ContentsI. Introduction 112II. The Empirical Landscape 117A. Global Studies 118B. Discrimination Type-Specific Studies 123III. The Chicago Dataset 125A. The Genesis of the Project 125B. The Content of the Dataset 129IV. The Outcomes: Measuring Success 139A. Refining the Dataset: Class Action and Multiple Party Litigation 139B. Gross Amounts of Recovery 144C. Gross Amounts of Loss 151D. Level of Success 152V. Lessons from the Data 157VI. Conclusion 160I. IntroductionNobody really knows what happens to employment discrimination claims in the federal courts. Of the more than 17,000 cases terminated in 2005, only 535, or 3.4%, went to trial.1 Perhaps another 25% of these were resolved by pre-trial motions.2 It is generally assumed that some 70% of these cases end in settlement.3 But this is only an assumption, because employment discrimination settlements are almost uniformly governed by private contracts containing confidentiality clauses.4 Often, the court records merely indicate that these cases have been voluntarily dismissed, and even when there is an indication of settlement, no data reflecting the terms are available. Thus, these settlements have been invisible in the burgeoning empirical scholarship about employment discrimination outcomes-until now. This Article analyzes the outcomes of close to 500 employment discrimination cases resolved by magistrate judges in the Chicago federal district court. Beginning in 1999, what I will call the "Chicago Project" established a coded dataset of settlement terms without any identification of parties, so as to comply with confidentiality agreements.5Why do settlement outcomes matter?6 For the same reasons that verdicts matter: They affect public perceptions and public policy. The public policy discourse about employment discrimination is highly contested, with divergent competing narratives. Are these claimants whiners and complainers, out to make a quick buck on meritless allegations? Or are they true victims of the subtle but significant forms of discrimination that still abound in the workplace, who do not receive fair and unbiased treatment in the courts?Conservative pundits assert that employers are being held hostage by the discrimination laws.7 They are besieged by frivolous claims and forced into nuisance settlements to avoid out-of-control legal fees. If they risk litigation, they are at the mercy of jury whims that can lead to crippling awards. Employment discrimination claims are a sub-set of the litigation explosion that is crippling American business and making us non-competitive in the global marketplace. Capitalizing upon and fueling these fears, insurance companies now offer "employment practices liability insurance," to protect against runaway expenses, with websites claiming that, for example, "settlements in [sexual harassment] cases in 2003 exceeded 50 million" dollars.8 The media also contribute to questionable representations of employment discrimination litigation. One study found that newspaper reports reflected an 85% win rate for plaintiffs with average recoveries of $1. …

Abstract: Starting with a simple economic model of the value of civil litigation from each side's perspective, this paper analyses a wide range of potential litigation cost strategies, settlement offers and negotiations, together with relevant applications and insights from game theory. Specific issues examined include: optimal settlement agreements, optimal settlement timing, optimal choice of lawyers; principal-agent problems aligning lawyer cost incentives; optimal client-lawyer contracts; "Conditional Fee Agreements" (CFAs); success rules and size of success premia; the exploitation and mitigation of liquidity and bankruptcy constraints; impact of collateral, "Security for Costs" and "Freezing Orders"; optimal "Part 36 Offers"; public and "without prejudice" offers; fixed rate and state-contingent offers; the role of mediation and alternative dispute resolution (ADR); the effect of litigant group size, co-ordination and class actions; rationale for confidential no-liability settlement agreements; effects of legal aid; time-value to trial and optionality of news; the impact of the "Law of Costs"; optimal trial cost applications and requests for "leave to appeal". Both familiar and paradoxical new results are confirmed by the analysis.

Abstract: Finnish Parliament accepted in February 2007 a new law on class actions (literally group actions), which entered into force 1 October, 2008. The legislative process was particularly slow. Finland has been preparing a law on class actions since the early 1990s and this was - depending on the criteria of counting - the fourth try. Some fifteen years ago the idea of class actions was something new in Europe. Time passes quickly however, and the new Finnish law cannot be described as radical by any meaning of the word. Many European countries have changed their existing procedural codes and enacted new laws to make class action litigation possible. The new Finnish class action law differs from the mainstream in fundamentally limiting its scope of application. Although the law is titled as being a general law on class actions, it only applies to consumer cases where the government-funded Consumer Ombudsman is acting as the lead counsel. This was not the case in the beginning. Years ago, the first law proposals had much broader scope of application but as the lobbying between potential defendants (the industry) and plaintiffs (consumer agencies etc.) became polarized, it became evident that there can be either a major compromise or no law at all. This article analyses the Finnish lawmaking process from comparative and economic policy viewpoints. First, the article discusses how did the Finnish legislative process end up with a certain outcome. It is argue that neither well-founded economic nor empirical arguments had any relevant role. Instead, partisan claims on class action cases in the United States and their potential implications to companies were used as a strong argument to restrict the law's scope of application. The official preparatory documents did not present any study on experiences from the United States. There was non-partisan empirical evidence of the use of class actions only from Sweden. Second, this article compares the claims presented in the Finnish lawmaking process to studies and legislative work made in other countries. The article concludes that the most of the claims were based on partisan opinions, not on well-founded studies. The examples of other Nordic countries however show that there is nothing uncommon in implementing class actions in a Northern European legal system. Misuse of class actions is not likely due to e.g. fundamental differences in the substance of accident law and the rules regarding the indemnification of legal costs in litigation. Third, this article argues that the main reason why the Finnish class action law failed was the dynamics of the legislative process. The idea of reaching a consensus in preparatory work before a law is submitted to the parliament means that if certain interest groups are able to form a strong opposition, the law may never enter the parliament no matter of the substantial arguments. The result is that an unknown number of cases are not litigated at all in Finland because the scope of application of the law is restricted. Regulatory authorities have no resources to provide as extensive preventive threat as would a complementary private mechanism.

Abstract: Defendants in Sherman Act Section 1 class action cases have historically faced a low likelihood of success in their attempts to defeat class certification, in part because courts often started from a presumption that all class members were harmed by price-fixing. Recent trends in recent judicial decisions, however, have suggested that courts are starting to take a harder look at whether classes should be certified in Section 1 cases. In this paper, we demonstrate that the presumption of harm on all class members is not justified in many cases. Instead, given the economic characteristics of many industries, a rigorous economic analysis will be required to determine whether antitrust impact for each proposed class member can be established using common proof. What is more, determining whether this condition holds in a given situation generally requires that analyses based on individual data be performed—exactly the outcome that the use of the class action mechanism is intended to avoid. This creates a “common proof paradox” in Section 1 cases. We go on to show that the potential hurdles for class certification are even greater in Sherman Act Section 2 cases.