Advertisement

European Journal of Law and Economics

, Volume 32, Issue 2, pp 169–183 | Cite as

The costs of class actions: allocation and collective redress in the US experience

  • Guido Calabresi
  • Kevin S. Schwartz
Article

Abstract

Once a preserve of the American legal landscape, the class action device today transcends geographic boundaries. In the past decade, efforts have intensified to establish collective litigation instruments in diverse legal terrains outside the United States—including Europe—often with the common goal of allowing some form of collective legal redress while avoiding perceived disadvantages of class actions in the American experience. Today more than ever, from legislators to litigants to scholars, European reformers face the challenge—and the opportunity—of making fundamental choices about the scope and shape of the collective legal remedies they wish to make available. Choices about the shape of the class action device reflect foundational judgments about the proper allocation of costs, and there is much from the US experience that can inform Europe’s prospective reformers. This article describes the history and current status of class action rules in the US, and then compares class actions and another form of extra-compensatory damages—one type of punitive damages—as means of doing the same thing. Although neither punitive damages of this sort nor class actions generally have traditionally existed in civil law systems, they both—and especially this particular form of punitive damages—can, from an economic view, be made to vindicate the same kind of social cost accounting goals. By considering these legal devices together, we hope to shed light on crucial choices facing Europe as it grapples with how best to provide collective legal redress in light of the lessons of the US experience with class actions.

Keywords

Class actions Collective legal redress Punitive damages Extra-compensatory damages Allocation of costs Deterrence 

JEL Classification

K00 

References

  1. Baumgartner, S. P. (2007). Class actions and group litigation in Switzerland. Northwestern Journal of International Law and Business, 27, 301–350.Google Scholar
  2. Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217.CrossRefGoogle Scholar
  3. Beisner, J. H., & Miller, J. D. (2003). Class action magnet courts: The allure intensifies, 4 BNA Class Action Litigation Report, 58.Google Scholar
  4. Calabresi, G., & Bobbitt, P. (1978). Tragic choices. New York: Paperback.Google Scholar
  5. Calabresi, G. (1985). Ideals, beliefs, attitudes, and the law. New York: Paperback.Google Scholar
  6. Calabresi, G. (2005). The complexity of torts–The case of punitive damages. In M. Stuart Madden (Ed.), Exploring tort law. New York: Pace University.Google Scholar
  7. Coffee, J. C. (1983a). Understanding the plaintiff’s attorney: The implications of economic theory for private enforcement of law through class and derivative actions. Columbia Law Review, 86, 669–727.CrossRefGoogle Scholar
  8. Coffee, J. C. (1983b). Rescuing the private attorney general: Why the model of the lawyer as bounty hunter is not working. Maryland Law Review, 42, 215–288.Google Scholar
  9. Coffee, J. C. (1995). Class wars: The dilemma of the mass tort class action. Columbia Law Review, 95, 1343–1465.CrossRefGoogle Scholar
  10. Commission of the European Communities. (2007). Green paper on consumer collective redress.Google Scholar
  11. Commission of the European Communities. (2008). White paper on damages actions for breach of the EC antitrust rules. (2 April 2008).Google Scholar
  12. Commission of the European Communities. (2009). Opinion of the European Economic and Social Committee on the white paper on damages actions for breach of the EC antitrust rules. (22 Sept 2009).Google Scholar
  13. Conte, A., & Newberg H. B. (2002). Newberg on class actions (4th ed.). St. Paul, MN: Thomson West.Google Scholar
  14. Friendly, H. J. (1973). Federal jurisdiction: A general view. New York: Columbia University Press.Google Scholar
  15. Handler, M. (1971). The shift from substantive to procedural innovations in antitrust suits—The twenty-third annual antitrust review. Columbia Law Review, 71, 1. Google Scholar
  16. Harbour, L. J., & Shelley, M. E. (2006). The emerging European class action: Expanding multi-party litigation to a shrinking world. ABA Annual Meeting, Section of Litigation (Aug 2006).Google Scholar
  17. Hensler, D., et al. (2000). Class action dilemmas: Pursuing public goals for private gain. Santa Monica: Rand Institute for Civil Justice.Google Scholar
  18. Issacharoff, S., & Miller, G. P. (2008). Will aggregate litigation come to Europe. Working Paper No. 08-46, Law and Economics Research Paper Series.Google Scholar
  19. Macey, J. R., & Miller, G. P. (1991). The plaintiffs’ attorney’s role in class action and derivative litigation: Economic analysis and recommendations for reform. University of Chicago Law Review, 58(1), 1–118.CrossRefGoogle Scholar
  20. McLaughlin, J. M. (2009). McLaughlin on class actions: Law and practice (6th ed.). West Publications.Google Scholar
  21. Polinsky, A. M., & Shavell, S. (1998). Punitive damages: An economic analysis. Harvard Law Review, 111, 869–962.CrossRefGoogle Scholar
  22. Posner, R. A. (1973). An economic approach to legal procedure and judicial administration. Journal of Legal Studies, 2, 399–458.CrossRefGoogle Scholar
  23. Posner, R. A. (2001). Antitrust in the new economy. Antitrust Law Journal, 68, 925–943.Google Scholar
  24. Resnik, J. (1991). From “cases” to “litigation”. Law and Contemporary Problems, 54, 5–68.CrossRefGoogle Scholar
  25. Russell, T. L. (2010). Exporting class actions to the European Union. 28 Boston University International Law Journal, 141, 168–176.Google Scholar
  26. Schwartz, G. T. (1991). The myth of the Ford Pinto case. Rutgers Law Review, 43, 1013–1068.Google Scholar
  27. Sharkey, C. M. (2003a). Punitive damages as societal damages. Yale Law Journal, 113, 347–453.CrossRefGoogle Scholar
  28. Sharkey, C. M. (2003b). Book review: Punitive damages: Should juries decide? Texas Law Review, 82, 381–411.Google Scholar
  29. Stuyck, J., et al. (2007). An analysis and evaluation of alternative means of consumer redress other than redress through ordinary judicial proceedings (17 Jan 2007), http://ec.europa.eu/consumers/redress/reports_studies/comparative_report_en.pdf.
  30. Subrin, S. N. (1988). David Dudley Field and the Field Code: A historical analysis of an earlier procedural vision. Law and History Review, 6, 311–374.CrossRefGoogle Scholar
  31. Subrin, S. N. (1989). Federal rules, local rules, and state rules: Uniformity, divergence and emerging procedural patterns. University of Pennsylvania Law Review, 137(6), 1999–2051.Google Scholar
  32. Willging, T. E., & Lee, E. G. III (2008). The impact of the Class Action Fairness Act of 2005: Fourth interim report to the Judicial Conference Advisory Committee on Civil Rules, Federal Judicial Center.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.New HavenUSA
  2. 2.New YorkUSA

Personalised recommendations