February 13, 2013
Eisenberg, Fisher, and Rosen-Zvi on Loser-Pays Norm in Israeli Courts
Theodore Eisenberg, Talia Fisher, and Issachar Rosen-Zvi have posted on SSRN their paper, When Courts Determine Fees in a System with a Loser Pays Norm: Fee Award Denials to Winning Plaintiffs and Defendants.
Unlike the English rule governing court fees and costs, under which the loser pays litigation costs, and the American rule, under which each party pays its own costs, Israel vests in judges full discretion to assess fees and costs. Given concerns about both the English and American rules, and the absence of empirical information about how either functions, an empirical study of judicial fee award practices should be of general interest. We report evidence that Israeli judges apply multiple de facto fee systems: a nearly one way fee-shifting system that dominates in tort cases, a loser pays system that operates when publicly owned corporations litigate, and a loser pays system with discretion to deny fees in other cases. Although a loser pays norm dominates in Israel, with fees awarded in 80% of cases, Israeli judges often exercised their discretion to protect losing litigants, especially individuals, by denying fees. For individual plaintiffs and defendants, the denial rate exceeded 30% for defendants who prevailed against individuals and was about one-quarter for plaintiffs who prevailed against individuals. Judges protected individual plaintiffs against fee awards more than corporations. In cases lost by individual plaintiffs, fees were denied to successful defendants 29.9% of the time compared to denials in 18.0% of cases lost by corporate plaintiffs and 16.7% of cases lost by governmental plaintiffs. In cases lost by individual defendants, fees were denied to successful plaintiffs 22.7% of the time compared to 9.8% denials in cases lost by corporate defendants and 28.6% denials in cases lost by government defendants. In addition to varying by whether plaintiffs or defendants prevailed and by party status, the fee denial pattern varied by case category and judicial district. Theorizing about optimal fee rules should account for the variety of fee outcomes observed in practice.
Shill on Jurisdictional Competition and Foreign Judgment Enforcement
Prof. Gregory Shill (Hofstra) has posted on SSRN a draft of his article, Ending Judgment Arbitrage: Jurisdictional Competition and the Enforcement of Foreign Money Judgments in the United States, which will appear in the Harvard International Law Journal. Here’s the abstract:
Recent multi-billion-dollar damage awards issued by foreign courts against large American companies have focused attention on the once-obscure, patchwork system of enforcing foreign-country judgments in the United States. That system’s structural problems are even more serious than its critics have charged. However, the leading proposals for reform overlook the positive potential embedded in its design.
In the United States, no treaty or federal law controls the domestication of foreign judgments; the process is instead governed by state law. Although they are often conflated in practice, the procedure consists of two formally and conceptually distinct stages: foreign judgments must first be recognized and then enforced. Standards on recognition differ widely from state to state, but under current law once plaintiffs have secured a recognition judgment all American courts must enforce it irrespective of their own recognition law. Thus, plaintiffs can enforce in states that would have rejected the foreign judgment in the first place.
This brand of forum shopping, which I call “judgment arbitrage,” creates a fundamental structural problem that has thus far escaped scholarly attention: it undermines the power of individual American states to determine whether foreign-country judgments are enforced in their territory and against their citizens. It also suggests a powerful, if implied, conflict of recognition laws among sister U.S. states that precedes and often determines the outcome of what scholars currently consider the primary conflict, between American and foreign law. Finally, this system impedes the development of state law and weakens practical constraints on the application of foreign nations’ laws in the United States.
This Article constructs a novel framework for conceptualizing these problems, and addresses them by proposing a federal statute that would allow states to capture the benefits — and require them to internalize the costs — of their own recognition rules. Rather than scrap the current state-law system in favor of a single federal rule, as the American Law Institute and some leading scholars call for, or institute a national regime of centrally-designed uniform state laws, as the Uniform Law Commission and other commentators have urged, the statute proposed in this Article would provide incentives for competition among states for recognition law. The Article argues that sharpening jurisdictional competition would encourage experimentation, the development of superior law, and, eventually, greater uniformity in an area where scholars agree uniformity is desirable. The proposal may also suggest ways to manage other sister-state conflicts of law in an age when horizontal conflicts are proliferating.
February 12, 2013
Donelson & Prentice on Pleading Rule 10b-5 Claims Under the Private Securities Litigation Reform Act
Professors Dain Donelson and Robert Prentice (University of Texas, McCombs School of Business) have published Scienter Pleading and Rule 10b-5: Empirical Analysis and Behavioral Implications, 63 Case Western L. Rev. 441 (2012). Here’s the abstract:
Pleading requirements are the keys to the courthouse. Nowhere is this more true than with rule 10b-5 class action securities fraud claims. Provisions of the Private Securities Litigation Reform Act of 1995 impose special pleading burdens upon plaintiffs regarding the scienter element and bar them from discovery when defendants file a motion to dismiss. This Article begins with a doctrinal history of the scienter element of a rule 10b-5 claim that indicates that many key legal questions remain unsettled and that application of legal rules to specific factual allegations regarding a particular type of defendant—external auditors—is extraordinarily muddled. To determine whether the impression arising from this extensive but nonsystematic examination of the case law is accurate, we also empirically examine rule 10b-5 claims against auditors and confirm that few facts are consistently viewed by the courts as indicating the presence (or absence) of scienter. This lack of clarity in the law and its application makes it difficult for either plaintiffs or defendants to evaluate the settlement value of claims. Furthermore, the law’s excessive vagueness affords judges virtually untrammeled discretion. The literature of behavioral psychology and related fields indicates that excessive discretion exacerbates problems that arise from unconscious judicial bias.
February 11, 2013
Walsh on Crowe: Building the Federal Judiciary
Now available on the Courts Law section of JOTWELL is an essay by Kevin Walsh (Richmond) entitled Building the Federal Judiciary. It reviews a recent book by Justin Crowe (Williams College, Political Science), Building the Judiciary: Law, Courts, and the Politics of Institutional Development, Princeton University Press. Kevin’s review begins:
Scholars working within the field of “Federal Courts” have, from the beginning, been concerned about the past and future of the federal courts as instruments of government. But the beginning of Federal Courts as a field was in the early 1950s, several decades after the Judiciary Act of 1891 created the intermediate circuit courts of appeals and almost three decades after the Judiciary Act of 1925 reconfigured the relationship between the Supreme Court and all other courts in the United States deciding questions of federal law. And the trajectory that the federal judiciary has traveled since that time has been relatively consistent. To the extent that this may have resulted in a failure to appreciate the forces that had already made the federal courts so powerful by the time Federal Courts came into its own, Justin Crowe’s recent book Building the Judiciary offers a helpful corrective.