“Mass Torts and the Incentives for Suit, Settlement, and Trial”

In a new article entitled Mass Torts and the Incentives for Suit, Settlement and Trial two Vanderbilt economists, Andrew F. Daughety and Jennifer F. Reinganum, try to predict the effect of proof regimes on plainitff’s incentives and therefore on the resolution of mass tort cases  Here is the abstract:

We explore how the incentives of a plaintiff and her attorney, when considering filing suit and bargaining over settlement, can differ between those suits associated with stand-alone torts cases and those suits involving mass torts.We contrast “individual-based liability determination” (IBLD),wherein a clear description of the mechanism by which a defendant’s actions translate into a plaintiff’s harm is
available, with “population-based liability determination” (PBLD), wherein cases rely upon the prevalence of harms inthepopulation to persuade a judge or jury to draw an inferenceof causation or fault. We show that PBLD creates a positive externality for the plaintiff’s side that is inherent inmany mass tort settings; this externality induces an increased propensity to file suit, higher settlement demands andgreater joint payoffs for plaintiffs and their attorneys. Consequently, the defendant in a PBLD case faces an increased ex anteexpected cost compared with the IBLD regime, thereby increasingincentives to take care. However, PBLD need not always imply anincreased likelihood of trial relative to IBLD for any filed case (though it may lead to more cases being filed); the heightened aggressiveness of the plaintiff and her attorney canactually lead to a reduction in the likelihood of trial. Thus, PBLDcan be more,  or less, efficient than IBLD (in the sense of reducing trial costs), when considering cases that would be filed inboth possible regimes.

This raises both substantive questions and methodological ones.  The article is available here on SSRN.

ADL