August 22, 2008
New Scholarship on Using a Cost-Benefit Analysis in Certification
Patrick Luff, a student at Michigan, has posted his piece, "Bad Bargains: The Mistake of Allowing Cost-Benefit Analyses in Class Action Certification Decisions," on SSRN. Here's the abstract:
The class action is a bete noir, attacked by corporate counsel, politicians, the media, and the public as unfair to businesses and individuals alike. In recognition of these complaints, proposed changes to the Federal Rules of Civil Procedure are a recurrent theme in complex litigation scholarship. One such example has been the suggestion that, in determining whether or not to certify a class action, the judge should weight the perceived costs and benefits that the certification decision would produce. However, as this Article will show, the arguments that favor a cost-benefit analysis stage in class action certifications fail because they are based on insufficient or misguided criteria. This Article emphasizes that the correct criteria by which to judge class certification decisions will be those that are conducive to public goods - such as deterrence of socially harmful conduct - and private goods - such as individual compensation for wrongdoing. In assessing proposed rules that would insert a cost-benefit analysis into class action certifications, this Article concludes that only a rule that avoids such a test can achieve the public and private goals that are the proper ends of the class action device.
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