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Monday, March 31, 2014

Two by Zimmerman on Mass Compensation Schemes

Adam Zimmerman (Loyola-LA) has posted two pieces to SSRN.  First up is Presidential Settlements and the abstract provides:

Large groups repeatedly turn to the White House to collectively resolve complex disputes, much like a class action.  Such presidential settlements go back at least as far as the early republic, as well as the Progressive Era, when Teddy Roosevelt famously brokered settlements among private groups following a rash of accidental injuries and deaths in mining, rail, and even, football.  More modern variants include mass compensation schemes like the Holocaust Victim Settlement, Pan Am Flight 103 Settlement, and the BP Oil Spill Settlement brokered by Presidents Clinton, Bush and Obama. In each case, the President helped resolve a sprawling class action-like dispute among warring parties, while also advancing a broader executive agenda. Just as the President has extended power over the administrative state, presidential settlements demonstrate the growth of executive authority in mass dispute resolution to provide restitution for widespread harm.

But this use of executive power creates problems for victims purportedly served by presidential settlements.  When the President settles massive private disputes, he resolves them like other forms of complex litigation, but without the judicial review, transparency, and participation thought necessary to resolve potential conflicts of interests among the victims. The Presidents’ other duties as the Chief Executive also aggravate conflicts with groups who may rely entirely on such settlements for relief. 

This Article recommends that the President adopt complex litigation principles to reduce conflicts of interests, to increase transparency, and to improve public participation in White House driven settlements.  Envisioning the President as the “Settler-In-Chief,” this Article also raises new questions about how the coordinate branches of government, as well as actors inside the White House, may regulate executive settlement practice consistent with the Separation of Powers.

Next is The Corporate Settlement Mill and the abstract provides:

From cases involving “robo-signed” mortgages to catastrophic oil spills, the United States legal system increasingly encourages corporate wrongdoers to design and implement their own high-volume settlement programs to compensate thousands of unrepresented victims.  These private settlement systems rely on corporate economies of scale to resolve massive disputes as comprehensively as a class action, but entirely outside of the court system.  We call these systems “corporate settlement mills.”

Like class action settlements and “no fault” insurance options, corporate settlement mills may ameliorate many of the most commonly criticized features of individualized litigation.  They offer redress to people who often cannot afford counsel, handle large volumes of claims quickly and predictably, and reduce court congestion.  For those reasons such programs are increasingly required by federal laws, regulatory bodies and as a matter of complex litigation practice.

But corporate settlement mills also have a dark side.  When sophisticated corporate actors quietly settle large numbers of cases in assembly-line fashion, they threaten transparency, fair dealing, and the rule of law.  We argue that this new category of dispute resolution is more dangerous than others because a single, self-interested party — the prospective defendant itself — designs and oversees the entire determination process.  Corporate settlement mills thus raise fundamental questions about how far policymakers may go to privatize our public, and historically neutral, system of adjudication.

Drawing lessons from other movements to privatize government, we argue that corporate settlement mills can provide an appropriate alternative to public adjudication as long as they remain answerable to the regulators, courts, and claimants that rely on them.  We therefore offer specific suggestions to make them more accountable — including targeted prospective regulation, judicial review, stakeholder participation, and ethical reform. In so doing, we broaden the debate over what constitutes mass litigation, in the hope that lawmakers realize the benefits of large private settlements, without frustrating administrative regulation or the judiciary’s authority to “say what the law is.”

--SBS

http://lawprofessors.typepad.com/tortsprof/2014/03/two-by-zimmerman-on-mass-compensation-schemes-.html

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