October 7, 2009
How Transparent Are Class Action Outcomes?
In a paper that I somehow missed, Bill Rubenstein (Harvard) and Nicholas Pace (RAND) demonstrate that class action outcomes are not transparent. The paper is called "How Transparent Are Class Action Outcomes" and is available on Rubenstein's website here and SSRN. They write:
This paper examines the extent to which claiming data are available and recommends ways to increase transparency in this area. We reviewed the official court files in a sample of 31 class action settlements and we also made direct inquiries to the judges, lawyers, and settlement administrators in another set of 57 cases. Searching through the case files and communicating with the participants, we were able to gain access to data in fewer than one of five closed cases. Despite the significant time and effort we put into the task, the final outcomes of four of five class action cases were beyond our discovery. It is not that the data are non-existent – claims administrators or parties certainly have them - it is, rather, that they are secreted away. The outcomes of publicly approved settlements lie locked in private files.
Why should the reader care? Here is there analysis:
We argue that this is a problem for three reasons: because the case outcomes might not be all that they purport to be; because the lessons that they could teach – for example, about which approaches work best – are lost to secrecy; and because the public record is unnecessarily incomplete and public access unnecessarily thwarted. We end the paper by proposing a set of solutions, including requiring parties to report back to the court on the final claiming data, publicizing this data, and creating a central repository for it.
Lack of transparency is one of the most significant problems in our system. Information can be obscure not only when it is secreted away, as in this RAND study, but also when it is presented in such a complicated way or in a way calculated to put off all but the most dogged researchers -- e.g. the "fine print" -- that it is impossible for anyone but an expert to understand.
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