Wednesday, October 29, 2008
Secret Settlements in Mass Tort Cases
James M. Anderson (RAND) has posted an article entitled "Understanding Mass Tort Defendant Incentives for Confidential Settlements: Lessons from Bayer's Cerivastatin Litigation Strategy" on SSRN. The abstract is below.
Settlement agreements that require a plaintiff not to disclose or publicize any information about her claim are both common and controversial. Under some conditions, however, a mass tort defendant will rationally choose to discourage such secrecy. A defendant can use publicity to act as a commitment device akin to a most-favored-nation agreement to increase its bargaining power with plaintiffs. The paper uses the real world example of Bayer's cerivastatin litigation as a case study to illustrate this theory in practice and to explore the public policy implications of this finding.