Pub Date : 2017-10-27DOI: 10.4337/9781785365720.00019
C. Riefa, Séverine Saintier
The aim of the UCPD is to harmonise the laws on unfair commercial practices and with it bring adequate remedies for consumers victim of such practices. The text provided for maximum harmonisation, yet, the implementation raised considerable difficulty across Europe over the manner in which to transpose the text. One particular problem was that of enforceability which this chapter explores. While in the UK, the implementation appears to be positive some criticisms can be raised as to the application of the UTRs which come to fill a gap in the ‘tort family’ and simplifies actions to stop unfair commercial practices. In particular, the general approach of the UTRs in combatting unfair commercial practices is attractive compared to the ‘punctual approach’ of tort. It is important to note however that in the UK very few cases have been heard by the courts and thus only the tip of the iceberg seem to be taken care of. All cases also stem from administrative action and not yet from the right of private redress open to consumers. But it bodes well for any private action to see the way judges have received and used the UTRs. It is therefore possible to anticipate that the UTRs can remedy economic torts, should consumers be able to bring their cases to court. This of course is contentious given the restrictions imposed on the right of private action and the usual obstacles consumers face when trying to access justice.
{"title":"Unfair Commercial Practice Directive: Remedying Economic Torts?","authors":"C. Riefa, Séverine Saintier","doi":"10.4337/9781785365720.00019","DOIUrl":"https://doi.org/10.4337/9781785365720.00019","url":null,"abstract":"The aim of the UCPD is to harmonise the laws on unfair commercial practices and with it bring adequate remedies for consumers victim of such practices. The text provided for maximum harmonisation, yet, the implementation raised considerable difficulty across Europe over the manner in which to transpose the text. One particular problem was that of enforceability which this chapter explores. While in the UK, the implementation appears to be positive some criticisms can be raised as to the application of the UTRs which come to fill a gap in the ‘tort family’ and simplifies actions to stop unfair commercial practices. In particular, the general approach of the UTRs in combatting unfair commercial practices is attractive compared to the ‘punctual approach’ of tort. It is important to note however that in the UK very few cases have been heard by the courts and thus only the tip of the iceberg seem to be taken care of. All cases also stem from administrative action and not yet from the right of private redress open to consumers. But it bodes well for any private action to see the way judges have received and used the UTRs. It is therefore possible to anticipate that the UTRs can remedy economic torts, should consumers be able to bring their cases to court. This of course is contentious given the restrictions imposed on the right of private action and the usual obstacles consumers face when trying to access justice.<br>","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"212 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133969687","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Seeking to address concerns about runaway jury awards and bias more generally, states have limited what plaintiffs’ attorneys can and cannot argue to support their claims for non-economic damages. Our 50-state survey finds that states fall roughly into four regimes. Some states allow plaintiffs to demand a lump sum award (i.e. provide an anchor) that is supported by time units (e.g. minutes of pain and suffering). Arguments based on units of time are known as per diem arguments. Some states allow lump sum demands but not per diem arguments. Other states have precisely the opposite rule, and still others prohibit both lump sum demands and per diem arguments. Each regime is purportedly justified by assumptions about how lump sum and per diem calculations will impact a jury. For example, some courts suggest that per diem calculations will give jurors a false sense that damages are certain, and this will result in runaway awards. Other courts state that per diem calculations are a fair way to provide jurors some guidance when deciding a very difficult issue. Similar arguments are made for and against lump sum awards. But no court roots its presumptions in data.This article fills a void in the scholarly literature to inform policy and guide advocates. In this article, we describe our 2x2 between-subjects experimental method, its limitations and our results. We found that anchoring has a large impact on damages and was far more effective than per diem arguments in increasing damages. Surprisingly, per diem arguments also increased plaintiff win rates. We discuss the implications.
{"title":"Time Is Money: An Empirical Assessment of Non-Economic Damages Arguments","authors":"J. Campbell, Bernard H. Chao, C. Robertson","doi":"10.2139/SSRN.2770616","DOIUrl":"https://doi.org/10.2139/SSRN.2770616","url":null,"abstract":"Seeking to address concerns about runaway jury awards and bias more generally, states have limited what plaintiffs’ attorneys can and cannot argue to support their claims for non-economic damages. Our 50-state survey finds that states fall roughly into four regimes. Some states allow plaintiffs to demand a lump sum award (i.e. provide an anchor) that is supported by time units (e.g. minutes of pain and suffering). Arguments based on units of time are known as per diem arguments. Some states allow lump sum demands but not per diem arguments. Other states have precisely the opposite rule, and still others prohibit both lump sum demands and per diem arguments. Each regime is purportedly justified by assumptions about how lump sum and per diem calculations will impact a jury. For example, some courts suggest that per diem calculations will give jurors a false sense that damages are certain, and this will result in runaway awards. Other courts state that per diem calculations are a fair way to provide jurors some guidance when deciding a very difficult issue. Similar arguments are made for and against lump sum awards. But no court roots its presumptions in data.This article fills a void in the scholarly literature to inform policy and guide advocates. In this article, we describe our 2x2 between-subjects experimental method, its limitations and our results. We found that anchoring has a large impact on damages and was far more effective than per diem arguments in increasing damages. Surprisingly, per diem arguments also increased plaintiff win rates. We discuss the implications.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-03-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123902581","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We now have a professedly unified approach to assigning tort responsibility that treats simple and more complex cases in fundamentally different ways without acknowledging it. The strictly causal component of so-called “apportionment of fault” (the US term) provides no basis for disproportionate assignments of liability but is treated as if it does. Other considerations must actually account for unequal liability assignments in multi-actor cases. But these other elements are often role-based, reflecting whether and how defendants joined in a complex but single pattern of events that were collectively the sufficient cause of an injury.
{"title":"Causation and Fault Apportionment","authors":"S. Utz","doi":"10.2139/ssrn.3659609","DOIUrl":"https://doi.org/10.2139/ssrn.3659609","url":null,"abstract":"We now have a professedly unified approach to assigning tort responsibility that treats simple and more complex cases in fundamentally different ways without acknowledging it. The strictly causal component of so-called “apportionment of fault” (the US term) provides no basis for disproportionate assignments of liability but is treated as if it does. Other considerations must actually account for unequal liability assignments in multi-actor cases. But these other elements are often role-based, reflecting whether and how defendants joined in a complex but single pattern of events that were collectively the sufficient cause of an injury.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129213876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-10-28DOI: 10.1017/9781108289887.005
A. Sebok
This chapter contrasts the Restatement (Third) of Torts: Liability for Physical Harm’s Chapter Five (on Factual Cause) and Chapter Six (on Scope of Liability) with the treatment of causation in the Restatement (Second) of Torts’ Chapter 16 (“Legal Cause”). It was written for a book on causation in both common law and civilian jurisdictions. The chapter examines in some detail the arguments that led the Reporters of the Third Restatement to reject the expression “substantial factor” and how the work done by this phrase in the domain of cause-in-fact was handled by and expanded conception but-for causation to which was added the idea of the “causal set model”, or NESS Test. The work done by the phrase “substantial factor” in the domain of proximate cause is now done by the concept of “scope of the risk” and variants of the risk rule. The chapter emphasizes the seriousness with which the Third Restatement sought to remove from the question of cause-in-fact any subjective judgment it deemed a matter of proximate cause. The chapter points argues that this focus on rendering cause-in-fact judgments purely objective, when combined with the causal set model, produces a final product where much of the normative work that was once done in causation is now pushed off into questions of apportionment.
{"title":"Actual Causation in the Second and Third Restatements: Or, the Expulsion of the Substantial Factor Test","authors":"A. Sebok","doi":"10.1017/9781108289887.005","DOIUrl":"https://doi.org/10.1017/9781108289887.005","url":null,"abstract":"This chapter contrasts the Restatement (Third) of Torts: Liability for Physical Harm’s Chapter Five (on Factual Cause) and Chapter Six (on Scope of Liability) with the treatment of causation in the Restatement (Second) of Torts’ Chapter 16 (“Legal Cause”). It was written for a book on causation in both common law and civilian jurisdictions. The chapter examines in some detail the arguments that led the Reporters of the Third Restatement to reject the expression “substantial factor” and how the work done by this phrase in the domain of cause-in-fact was handled by and expanded conception but-for causation to which was added the idea of the “causal set model”, or NESS Test. The work done by the phrase “substantial factor” in the domain of proximate cause is now done by the concept of “scope of the risk” and variants of the risk rule. The chapter emphasizes the seriousness with which the Third Restatement sought to remove from the question of cause-in-fact any subjective judgment it deemed a matter of proximate cause. The chapter points argues that this focus on rendering cause-in-fact judgments purely objective, when combined with the causal set model, produces a final product where much of the normative work that was once done in causation is now pushed off into questions of apportionment.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"90 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128988980","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-09-19DOI: 10.4337/9781784714833.00021
Deborah A. DeMott
This essay makes a case for the salience of tort law to fiduciary law, focusing on actors who culpably participate in a fiduciary's breach of duty, whether by inducing the breach or lending substantial assistance to it. Although the elements of this accessory tort are relatively settled in the United States, how the tort applies to particular categories of actors-most recently investment bankers who serve as M&A advisors-provokes controversy. The paper also explores the less developed terrain of primary actors who breach governance duties that are not fiduciary obligations because the entity's organizational documents eliminate fiduciary duties, as Delaware law permits for LLCs and partnerships. When an accessory actor induces or otherwise assists a primary actor's breach of a non-fiduciary governance obligation, the accessory tort likely to be relevant is wrongful interference with contract. The essay notes parallels and overlaps that connect wrongful interference to culpable participation in a fiduciary's breach. Both are intentional torts for which liability turns on whether an actor in some fashion chose to participate in another actor's breach of duty, as well as whether the secondary actor acted with knowledge of the primary actor's duty and made a causally significant contribution to the breach. Both torts illustrate the foundational significance of duty within tort law: actors subject to liability on accessory theories do not owe duties that replicate those of the primary wrongdoer, who is linked by contract or a fiduciary relationship to the beneficiary. By committing an intentional tort, accessory actors breach duties they themselves owe. Framed within the ambit of tort law more generally, the outcomes in controversial M&A cases do not represent departures from well-established doctrine. These cases do help illustrate what's distinctively wrongful about lending substantial (and knowing) assistance to another actor's breach of duty. The accessory tortfeasors in the essay represent inversions of a well-known set of actors in tort doctrine, rescuers. Rescuers intervene as strangers to a situation in which another is in peril with the objective of preventing harm or mitigating its consequences for the person in peril. Like reflected figures in a warped mirror, the essay's accessory wrongdoers choose to intervene in situations in which one actor owes a duty to another but, if the intervention succeeds, the person to whom the primary was duty is left worse off than had the accessory had not caused the breach of the underlying or primary duty.
{"title":"Culpable Participation in Fiduciary Breach","authors":"Deborah A. DeMott","doi":"10.4337/9781784714833.00021","DOIUrl":"https://doi.org/10.4337/9781784714833.00021","url":null,"abstract":"This essay makes a case for the salience of tort law to fiduciary law, focusing on actors who culpably participate in a fiduciary's breach of duty, whether by inducing the breach or lending substantial assistance to it. Although the elements of this accessory tort are relatively settled in the United States, how the tort applies to particular categories of actors-most recently investment bankers who serve as M&A advisors-provokes controversy. The paper also explores the less developed terrain of primary actors who breach governance duties that are not fiduciary obligations because the entity's organizational documents eliminate fiduciary duties, as Delaware law permits for LLCs and partnerships. When an accessory actor induces or otherwise assists a primary actor's breach of a non-fiduciary governance obligation, the accessory tort likely to be relevant is wrongful interference with contract. The essay notes parallels and overlaps that connect wrongful interference to culpable participation in a fiduciary's breach. Both are intentional torts for which liability turns on whether an actor in some fashion chose to participate in another actor's breach of duty, as well as whether the secondary actor acted with knowledge of the primary actor's duty and made a causally significant contribution to the breach. Both torts illustrate the foundational significance of duty within tort law: actors subject to liability on accessory theories do not owe duties that replicate those of the primary wrongdoer, who is linked by contract or a fiduciary relationship to the beneficiary. By committing an intentional tort, accessory actors breach duties they themselves owe. Framed within the ambit of tort law more generally, the outcomes in controversial M&A cases do not represent departures from well-established doctrine. These cases do help illustrate what's distinctively wrongful about lending substantial (and knowing) assistance to another actor's breach of duty. The accessory tortfeasors in the essay represent inversions of a well-known set of actors in tort doctrine, rescuers. Rescuers intervene as strangers to a situation in which another is in peril with the objective of preventing harm or mitigating its consequences for the person in peril. Like reflected figures in a warped mirror, the essay's accessory wrongdoers choose to intervene in situations in which one actor owes a duty to another but, if the intervention succeeds, the person to whom the primary was duty is left worse off than had the accessory had not caused the breach of the underlying or primary duty.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126445170","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is clear that in spite of the common law prescription vide different rules and approaches, and the international efforts at resolving the problems of products liability and conflict of laws, it has been so much motion, but little or no movement. Consequently, this work proceeded to provide a general overview of the laws of products liability in selected countries, like the: United States of America, for the creativity with which its scholars have formulated theories and the ingenuity with which its judges had nurtured the doctrine to its dizzying height; European Union’s adoption of the USA model without its litigation explosion baggage, through the creation of barriers like, the absence of contingency fees approach, the loser pays winner’s attorney fees, discouragement of massive discovery filings, lower damage judgments, non-use of juries in civil cases, and cap on damages actions, in advancing the course of products liability in its member states ; and the impact of EU Products Liability Directives especially in, Latin America, Quebec, and the Asia-Pacific Rim with a view to finding an appropriate model or cocktail for Nigeria.
{"title":"An Overview of National Laws on Products Liability and the Recommendation for a Nigerian Model","authors":"B. A. Adeyemi","doi":"10.2139/SSRN.2861134","DOIUrl":"https://doi.org/10.2139/SSRN.2861134","url":null,"abstract":"It is clear that in spite of the common law prescription vide different rules and approaches, and the international efforts at resolving the problems of products liability and conflict of laws, it has been so much motion, but little or no movement. Consequently, this work proceeded to provide a general overview of the laws of products liability in selected countries, like the: United States of America, for the creativity with which its scholars have formulated theories and the ingenuity with which its judges had nurtured the doctrine to its dizzying height; European Union’s adoption of the USA model without its litigation explosion baggage, through the creation of barriers like, the absence of contingency fees approach, the loser pays winner’s attorney fees, discouragement of massive discovery filings, lower damage judgments, non-use of juries in civil cases, and cap on damages actions, in advancing the course of products liability in its member states ; and the impact of EU Products Liability Directives especially in, Latin America, Quebec, and the Asia-Pacific Rim with a view to finding an appropriate model or cocktail for Nigeria.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125833518","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper designs a mechanism that generalizes Judge Learned Hand’s negligence liability tests from his classic opinions in T. J. HOOPER (1932) and CARROLL TOWING (1947). The “Benighted Hand” mechanism incentivizes truthful reporting of the agents’ private costs of bilateral caretaking when agents also face different effectiveness of care and shares of injury costs. In “The Problem of Social Cost” (1960), Ronald Coase noted that Judges may not have the requisite knowledge of the costs of caretaking to determine the optimal level of care, but he and much of the subsequent literature simply treat this problem as a source of exogenous transaction costs. The mechanism design framework treats costs of obtaining private information endogenously, by incentivizing strategic agents to truthfully reveal their private information. The resulting liability schedule is efficient, but not generally compensatory. It allocates the full costs of accidents (including the costs of precaution) equally among the parties.
本文从汉德法官T. J. HOOPER(1932)和CARROLL towwing(1947)的经典观点中设计了一种机制来概括汉德法官的过失责任检验。当代理人面临不同的护理效果和伤害成本分担时，“愚昧之手”机制激励代理人如实报告双边护理的私人成本。在《社会成本问题》(1960)中，罗纳德·科斯指出，法官可能不具备必要的护理成本知识来确定最佳护理水平，但他和随后的许多文献只是将这个问题视为外生交易成本的来源。机制设计框架通过激励战略代理人如实披露其私有信息，内生地处理获取私有信息的成本。由此产生的责任时间表是有效的，但通常不是补偿性的。它将事故的全部费用(包括预防费用)平均分配给各方。
{"title":"The Benighted Hand Mechanism","authors":"J. Daniel","doi":"10.2139/ssrn.2716227","DOIUrl":"https://doi.org/10.2139/ssrn.2716227","url":null,"abstract":"This paper designs a mechanism that generalizes Judge Learned Hand’s negligence liability tests from his classic opinions in T. J. HOOPER (1932) and CARROLL TOWING (1947). The “Benighted Hand” mechanism incentivizes truthful reporting of the agents’ private costs of bilateral caretaking when agents also face different effectiveness of care and shares of injury costs. In “The Problem of Social Cost” (1960), Ronald Coase noted that Judges may not have the requisite knowledge of the costs of caretaking to determine the optimal level of care, but he and much of the subsequent literature simply treat this problem as a source of exogenous transaction costs. The mechanism design framework treats costs of obtaining private information endogenously, by incentivizing strategic agents to truthfully reveal their private information. The resulting liability schedule is efficient, but not generally compensatory. It allocates the full costs of accidents (including the costs of precaution) equally among the parties.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116751217","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Liability assignments for wrongs committed within a jurisdiction are generally intended to apply equally to all local and foreign persons. Local liability policy, however, can be circumvented through the use of foreign legal forms. Both local and foreign persons may reduce their liability exposure by conducting their activities in the local jurisdiction through a foreign form that has been endowed by its jurisdiction of origin with a wider limitation of liability. The differences in liability exposure are often significant. They appear to be tolerated or embraced because they se rve local commercial, professional, and governmental interests. Ultimately, the costs of the resultant elevated risk of loss are borne by local residents.
{"title":"The Use of Foreign Forms to Circumvent Local Liability Rules","authors":"Robert Flannigan","doi":"10.29173/ALR371","DOIUrl":"https://doi.org/10.29173/ALR371","url":null,"abstract":"Liability assignments for wrongs committed within a jurisdiction are generally intended to apply equally to all local and foreign persons. Local liability policy, however, can be circumvented through the use of foreign legal forms. Both local and foreign persons may reduce their liability exposure by conducting their activities in the local jurisdiction through a foreign form that has been endowed by its jurisdiction of origin with a wider limitation of liability. The differences in liability exposure are often significant. They appear to be tolerated or embraced because they se rve local commercial, professional, and governmental interests. Ultimately, the costs of the resultant elevated risk of loss are borne by local residents.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"10893 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116106976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2015-07-06DOI: 10.4337/9781782547143.00023
Richard Squire
In lawsuits against defendants covered by liability insurance, the parties negotiate toward a single settlement amount that collectively binds the plaintiff and all defense-side parties (the defendant and its liability insurer). This settlement method produces a collective-action problem whenever the trial outcome is uncertain and the potential damages exceed the limit of the defendant’s liability policy. When such a suit settles, the insurer often pays more, and the defendant/policyholder pays less, than each expected to pay if the case had gone to trial. The insurer is thus biased against, and the policyholder toward, pre-trial settlement. This conflict could produce an unnecessary trial or a settlement that overcompensates the plaintiff, depending on which bias prevails. To prevent such results, courts (and some insurance policies) place settlement duties on liability insurers. But enforcing these duties entails additional litigation, compliance costs, and the risk of legal error. An alternative solution would be to replace collective settlements with “segmented” settlements. Each defense-side party would bargain separately with the plaintiff for a release of the plaintiff’s right to collect any damages which, if awarded at trial, would be that defense-side party’s contractual responsibility. The collective-action problem would then disappear, as would the need for settlement duties. The benefits would be greatest in lawsuits against corporate defendants, which often have multiple excess insurers in addition to a primary insurer. Why parties continue to follow a settlement method that produces an avoidable collective-action problem is an open question in the study of insurance law.
{"title":"The Artificial Collective-Action Problem in Lawsuits Against Insured Defendants","authors":"Richard Squire","doi":"10.4337/9781782547143.00023","DOIUrl":"https://doi.org/10.4337/9781782547143.00023","url":null,"abstract":"In lawsuits against defendants covered by liability insurance, the parties negotiate toward a single settlement amount that collectively binds the plaintiff and all defense-side parties (the defendant and its liability insurer). This settlement method produces a collective-action problem whenever the trial outcome is uncertain and the potential damages exceed the limit of the defendant’s liability policy. When such a suit settles, the insurer often pays more, and the defendant/policyholder pays less, than each expected to pay if the case had gone to trial. The insurer is thus biased against, and the policyholder toward, pre-trial settlement. This conflict could produce an unnecessary trial or a settlement that overcompensates the plaintiff, depending on which bias prevails. To prevent such results, courts (and some insurance policies) place settlement duties on liability insurers. But enforcing these duties entails additional litigation, compliance costs, and the risk of legal error. An alternative solution would be to replace collective settlements with “segmented” settlements. Each defense-side party would bargain separately with the plaintiff for a release of the plaintiff’s right to collect any damages which, if awarded at trial, would be that defense-side party’s contractual responsibility. The collective-action problem would then disappear, as would the need for settlement duties. The benefits would be greatest in lawsuits against corporate defendants, which often have multiple excess insurers in addition to a primary insurer. Why parties continue to follow a settlement method that produces an avoidable collective-action problem is an open question in the study of insurance law.","PeriodicalId":410319,"journal":{"name":"Law & Society: Private Law - Torts eJournal","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128501924","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2015-01-18DOI: 10.4337/9781782547143.00010
R. Avraham
This chapter asks whether THE THEORY OF INSURANCE SUPPORTS AWARDING PAIN AND SUFFERING DAMAGES IN TORTS. The answer is an unequivocal “Yes.” Many commentators have argued that individuals do not (and should not) demand insurance for losses that do not lower their marginal utility of wealth. From this perspective, tort laws that provide victims with compensation for pain and suffering harms effectively force them to purchase insurance that they don’t value. This chapter disputes this logic on several levels. First, it suggests that so-called “pure non-monetary losses” are exceedingly rare in practice, and are difficult to define even in theory. Moreover, non-monetary losses are likely to be correlated with monetary losses, and this correlation generates a demand for insurance covering both types of losses under the traditional model used by law and economics scholars. Coverage of non-monetary losses can also be demanded under many plausible alternatives to expected utility theory. The chapter also takes issue with the empirical evidence that some have interpreted as suggesting a lack of demand for coverage of non-monetary losses. Finally, the chapter suggest that future advances in neuroscience may make it possible to accurately measure mental states associated with pain and suffering, obviating the need for the subjective testimony that introduces so much noise into the assessment of these damages.
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