Wednesday, January 26, 2011
Shay Lavie (SJD Candidate, Harvard) has posted an article entitled Reverse Sampling: Holding Lotteries to Allocate the Proceeds of Small-Claims Class Actions on SSRN. Not exactly about mass torts but related to my long time interest in sampling and case management in class actions. On the face of it I can't imagine a court going with this, but it relates to the same set of considerations that have propelled cy pres funds and fluid recovery (or attempts at fluid recovery) and so the analysis is important.
Small-claims class actions pose a unique dilemma: individual awards are small, and it is often not feasible to distribute them to each and every plaintiff. Courts have devised several alternative allocation procedures to cope with this problem, but none is satisfactory.
This Article proposes a different method: paying more money to fewer, randomly sampled, claimants. As each individual award entails per-claim administrative costs, using lotteries to distribute the proceeds of small-claims class actions cuts these expenses. The Article demonstrates that this method is superior to all existing alternatives. It funnels the money back to the group of victims, achieves deterrence, and maintains administrative efficiency. Finally, the Article shows that randomization is a fair allocation mechanism as all class members are equally treated, and that the use of lotteries in this context raises no legitimacy concerns.
Tuesday, January 25, 2011
Here is what Robin Effron at the Civil Procedure & Federal Courts Blog has to say about it:
The Fifth Circuit rejected the $21 million settlement of a class action over damage caused by the levee breaches on the grounds that it did not grapple with the fairness of dispersal of funds and instead "punted" that job to the special master.
Here is a link to the opinion. ADL
Monday, January 24, 2011
Judge Amon in the Eastern District of New York last week dismissed plaintiffs' medical monitoring claim in a proposed tobacco class action. Caronia v. Philip Morris USA, Inc., No. 06-CV-224 (E.D.N.Y. Jan. 13, 2011). Here's the decision.
Sunday, January 23, 2011
Interesting article from the New York Times on services that offer loans to litigants and the high interest rates typically charged: Lawsuit Loans Add New Risk for the Injured, by Binyamin Appelbaum. The article discusses the movement to subject such loans, and their high interest rates, to regulation. Of course, if the interest rates able to be charged are limited by state law, the effect may be to destroy the lawsuit loan market, because the default risk for such loans may be high enough that only a high-interest rate lending model may be profitable over the long term. Losing such loans would be unfortunate, because litigants with meritorious cases may need access to funds while the the justice system processes the case. Instead of regulatory capping of interest rates, why not instead rely on clear disclosure of rates in contracts, and market forces of vying lenders competing over interest rates?