A March 2020 case decided by the Mississippi Supreme Court is an illustrative example of why there is a necessity for a change in the test for personal jurisdiction in instances involving the Internet. Fitch v. Wine Express, Inc. concerned the shipping of alcohol to Mississippi several "wine of the month" companies, online sellers of wine and other alcoholic beverages. The Defendants moved to dismiss based on a lack of personal jurisdiction, but the Mississippi Supreme Court held that personal jurisdiction was appropriate because the Defendants “purposeful[ly] availed” themselves to Mississippi." The Fitch decision was based on a long line of precedent, the foundation of which was decided in an economy of yesteryear, long before the internet resembled what it is today. In present times, e-commerce makes possible the purchasing of goods worldwide in a matter of seconds possible. At its very essence, personal jurisdiction is the power of a court to bind a defendant to a judgment. The Supreme Court restricted that power to mean that if a defendant is not present in the forum state, a defendant must have “certain minimum contacts within it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” As of 2020, International Shoe is still valid law. Subsequent cases, specifically Zippo and Calder, made attempts to apply International Shoe to the internet era with the creation of new tests, which (inadvertently) created more confusion as to what the rule is when determining personal jurisdiction when the internet is involved. Personal jurisdiction power is fundamental to the United States judicial system, and enabling it to be ubiquitous (or conversely, non-existent and irrelevant, due to it being ubiquitous) defeats the purpose of the doctrine. This comment is to be an analysis of how the doctrine of personal jurisdiction was born, what it is interpreted as today, and in light of those facts, why the Fitch decision is an example of the confusion that the Internet has created in regards to personal jurisdiction.
{"title":"Prime Example: Fitch v. Wine Express, Online Retailers, and the Need to Reevaluate Personal Jurisdiction in the Age of Amazon","authors":"Bess Fisher","doi":"10.2139/SSRN.3773097","DOIUrl":"https://doi.org/10.2139/SSRN.3773097","url":null,"abstract":"A March 2020 case decided by the Mississippi Supreme Court is an illustrative example of why there is a necessity for a change in the test for personal jurisdiction in instances involving the Internet. Fitch v. Wine Express, Inc. concerned the shipping of alcohol to Mississippi several \"wine of the month\" companies, online sellers of wine and other alcoholic beverages. The Defendants moved to dismiss based on a lack of personal jurisdiction, but the Mississippi Supreme Court held that personal jurisdiction was appropriate because the Defendants “purposeful[ly] availed” themselves to Mississippi.\" The Fitch decision was based on a long line of precedent, the foundation of which was decided in an economy of yesteryear, long before the internet resembled what it is today. In present times, e-commerce makes possible the purchasing of goods worldwide in a matter of seconds possible. At its very essence, personal jurisdiction is the power of a court to bind a defendant to a judgment. The Supreme Court restricted that power to mean that if a defendant is not present in the forum state, a defendant must have “certain minimum contacts within it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” As of 2020, International Shoe is still valid law. Subsequent cases, specifically Zippo and Calder, made attempts to apply International Shoe to the internet era with the creation of new tests, which (inadvertently) created more confusion as to what the rule is when determining personal jurisdiction when the internet is involved. Personal jurisdiction power is fundamental to the United States judicial system, and enabling it to be ubiquitous (or conversely, non-existent and irrelevant, due to it being ubiquitous) defeats the purpose of the doctrine. This comment is to be an analysis of how the doctrine of personal jurisdiction was born, what it is interpreted as today, and in light of those facts, why the Fitch decision is an example of the confusion that the Internet has created in regards to personal jurisdiction.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128981270","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 possible that a plaintiff uses information about delegation contract as a means of responding strategic interactions between his lawyer and the defendant. We induce this possibility within the class of two-player contests with delegation. In detail, we have the following main results. (i) If the defendant’s total hourly fee rate is not large, the plaintiff who becomes the underdog wants to hide information on delegation contract. (ii) If the defendant’s total hourly fee rate is large, the plaintiff wants to release the information so that the defendant is the leader and the plaintiff’s lawyer is the follower, while enjoying being the favorite. In addition, we show that if the plaintiff can choose whether to disclose the information, the total expenditure will be reduced.
{"title":"Unobservable Contract and Endogenous Timing in Legal Contests","authors":"Sunghoon Park","doi":"10.2139/ssrn.3692097","DOIUrl":"https://doi.org/10.2139/ssrn.3692097","url":null,"abstract":"It is possible that a plaintiff uses information about delegation contract as a means of responding strategic interactions between his lawyer and the defendant. We induce this possibility within the class of two-player contests with delegation. In detail, we have the following main results. (i) If the defendant’s total hourly fee rate is not large, the plaintiff who becomes the underdog wants to hide information on delegation contract. (ii) If the defendant’s total hourly fee rate is large, the plaintiff wants to release the information so that the defendant is the leader and the plaintiff’s lawyer is the follower, while enjoying being the favorite. In addition, we show that if the plaintiff can choose whether to disclose the information, the total expenditure will be reduced.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"78 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115367672","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}
Law societies appear to be powerless to serve the public interest by defending lawyers’ markets against three major threats: (1) the access to justice problem (the A2J problem of unaffordable legal services for the majority of society that is middle- and lower-income people), which has left the majority of law firms short of clients; (2) the commercial producers of legal services such as LegalZoom and Rocket Lawyer, which now have millions of customers, who are now here in Canada beginning the same process of invading lawyers’ markets, along with the many small “apps” startups that provide automated legal services; and, (3) machine (artificial) intelligence that can remove the need for lawyers in the production of many legal services, bringing about a de facto deregulation of legal services markets, as well as enhance that human intelligence that is sufficiently specialized to be enhanced. Law society actions and statements make very uncertain what they will do in regard to such threats — threats that could eventually eliminate many lawyers’ law practices, and could greatly reduce the membership of law societies, and therefore their size, as has happened in many industries. Canada’s law societies have not yet recognized them as major threats to their ability to serve the public interest. If left unchallenged and unchecked, they will do away with (supersede) more than half of each law society’s membership, i.e., the general practitioner and the small, unspecialized law firm. What law society “Access to Justice Committees” are doing should be done, but it is very small in comparison with what should be done. It merely, in a minor way, tries to help the population learn to live with the problem, but not to solve the problem. This article deals with what should be done. It concludes with a detailed list of described topics of a law society policy statement that lawyer-members should demand of their law society. The topics are: 1. Maintaining the use of the legal profession’s services by middle- and lower-income people; 2. Sponsoring the creation of support services and standardizing and packaging parts of lawyers’ work 3. Supporting the creation of a national civil service for all of Canada’s law societies 4. Coping with the challenges presented by the commercial producers of legal services and by the disruption to be caused by machine intelligence; 5. The government-law society split in responsibility in dealing with the victims of the access to justice problem (the A2J problem); 6. The creation of various types of independently-operating paralegal services workers; 7. Statistics as to the decreasing numbers of lawyers in private practice as a law society responsibility; 8. The obsolescence of the “bencher concept” of law society management by practicing lawyers; 9. Alternative business structures (ABSs) that allow law firms to become investment properties; 10. The members of law societies fall into two gro
{"title":"Law Society Policy For Access to Justice Failure","authors":"Ken Chasse","doi":"10.2139/SSRN.3397081","DOIUrl":"https://doi.org/10.2139/SSRN.3397081","url":null,"abstract":"Law societies appear to be powerless to serve the public interest by defending lawyers’ markets against three major threats: \u0000 \u0000(1) the access to justice problem (the A2J problem of unaffordable legal services for the majority of society that is middle- and lower-income people), which has left the majority of law firms short of clients; \u0000 \u0000(2) the commercial producers of legal services such as LegalZoom and Rocket Lawyer, which now have millions of customers, who are now here in Canada beginning the same process of invading lawyers’ markets, along with the many small “apps” startups that provide automated legal services; and, \u0000 \u0000(3) machine (artificial) intelligence that can remove the need for lawyers in the production of many legal services, bringing about a de facto deregulation of legal services markets, as well as enhance that human intelligence that is sufficiently specialized to be enhanced. \u0000 \u0000Law society actions and statements make very uncertain what they will do in regard to such threats — threats that could eventually eliminate many lawyers’ law practices, and could greatly reduce the membership of law societies, and therefore their size, as has happened in many industries. Canada’s law societies have not yet recognized them as major threats to their ability to serve the public interest. If left unchallenged and unchecked, they will do away with (supersede) more than half of each law society’s membership, i.e., the general practitioner and the small, unspecialized law firm. What law society “Access to Justice Committees” are doing should be done, but it is very small in comparison with what should be done. It merely, in a minor way, tries to help the population learn to live with the problem, but not to solve the problem. This article deals with what should be done. It concludes with a detailed list of described topics of a law society policy statement that lawyer-members should demand of their law society. \u0000 \u0000The topics are: \u00001. Maintaining the use of the legal profession’s services by middle- and lower-income people; \u0000 \u00002. Sponsoring the creation of support services and standardizing and packaging parts of lawyers’ work \u0000 \u00003. Supporting the creation of a national civil service for all of Canada’s law societies \u0000 \u00004. Coping with the challenges presented by the commercial producers of legal services and by the disruption to be caused by machine intelligence; \u0000 \u00005. The government-law society split in responsibility in dealing with the victims of the access to justice problem (the A2J problem); \u0000 \u00006. The creation of various types of independently-operating paralegal services workers; \u0000 \u00007. Statistics as to the decreasing numbers of lawyers in private practice as a law society responsibility; \u0000 \u00008. The obsolescence of the “bencher concept” of law society management by practicing lawyers; \u0000 \u00009. Alternative business structures (ABSs) that allow law firms to become investment properties; \u0000 \u000010. The members of law societies fall into two gro","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127115385","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 provide a simple framework in which the level of adversarial bias is endogenously determined in a litigation process. Using this model, we study the e ect of using a court-appointed expert on the level of adversarial bias and the average error rates, and nd an interesting trade-o : although the judge can reduce the number of mistakes at trial by consulting a court-appointed expert, litigants choose to hire a biased expert more frequently in response, which increases the level of adversarial bias, thereby inducing evidence distortion more often.
{"title":"Adversarial Bias and Court-Appointed Experts in Litigation","authors":"Chulyoung Kim, Chansik Yoon","doi":"10.2139/ssrn.3240472","DOIUrl":"https://doi.org/10.2139/ssrn.3240472","url":null,"abstract":"We provide a simple framework in which the level of adversarial bias is endogenously determined in a litigation process. Using this model, we study the e ect of using a court-appointed expert on the level of adversarial bias and the average error rates, and nd an interesting trade-o : although the judge can reduce the number of mistakes at trial by consulting a court-appointed expert, litigants choose to hire a biased expert more frequently in response, which increases the level of adversarial bias, thereby inducing evidence distortion more often.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129921880","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}
Drawing on empirical data collected from petitioners in Chinese courts, this article analyzes how the regime's political concern for social stability transforms petitioners' disputes and shapes the evolution of their legal consciousness. Compared with first-time petitioners who often address their complaints within a legal paradigm, the veteran petitioners take advantage of the judges' political concern for social stability and present their disputes as potentially threatening social stability. They hold the judiciary responsible to escalate disputes; they petition courts during "sensitive periods;" they employ innovative tactics to draw official attention; and they seek to secure government stability-maintenance funds as a substitute for legal remedies. However, in framing a legal dispute as a political problem, the veteran petitioners risk retaliation. This article's analysis provides insights into the operation of the court petition system, how the legal consciousness of Chinese petitioners evolves, and how in the petitioners' eyes the legitimacy of the legal system gets eroded.
{"title":"From Law to Politics: Petitioners' Framing of Disputes in Chinese Courts","authors":"Xin He","doi":"10.2139/ssrn.3204152","DOIUrl":"https://doi.org/10.2139/ssrn.3204152","url":null,"abstract":"Drawing on empirical data collected from petitioners in Chinese courts, this article analyzes how the regime's political concern for social stability transforms petitioners' disputes and shapes the evolution of their legal consciousness. Compared with first-time petitioners who often address their complaints within a legal paradigm, the veteran petitioners take advantage of the judges' political concern for social stability and present their disputes as potentially threatening social stability. They hold the judiciary responsible to escalate disputes; they petition courts during \"sensitive periods;\" they employ innovative tactics to draw official attention; and they seek to secure government stability-maintenance funds as a substitute for legal remedies. However, in framing a legal dispute as a political problem, the veteran petitioners risk retaliation. This article's analysis provides insights into the operation of the court petition system, how the legal consciousness of Chinese petitioners evolves, and how in the petitioners' eyes the legitimacy of the legal system gets eroded.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"128 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115964460","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}
Bankruptcy mediators and bankruptcy mediation advocates mistakenly aver that parties in a bankruptcy mediation just want their esteemed mediator to provide the parties with her evaluation of the case in dispute. “Just give us your evaluation.” However, experienced mediators understand that what advocates are actually saying is, “Just confirm that you agree with my side.” In this chapter, I will first discuss why giving your evaluation of the case, even when both sides insist that is what they want, could begin the descent down a slippery slope that abruptly terminates the mediation. Then, I will suggest how experienced bankruptcy mediators might bring an evaluation of the case into the bankruptcy mediation, without having the evaluation come directly from the mediator.
{"title":"How Much Justice Can You Afford","authors":"Elayne E. Greenberg","doi":"10.2139/SSRN.2990032","DOIUrl":"https://doi.org/10.2139/SSRN.2990032","url":null,"abstract":"Bankruptcy mediators and bankruptcy mediation advocates mistakenly aver that parties in a bankruptcy mediation just want their esteemed mediator to provide the parties with her evaluation of the case in dispute. “Just give us your evaluation.” However, experienced mediators understand that what advocates are actually saying is, “Just confirm that you agree with my side.” In this chapter, I will first discuss why giving your evaluation of the case, even when both sides insist that is what they want, could begin the descent down a slippery slope that abruptly terminates the mediation. Then, I will suggest how experienced bankruptcy mediators might bring an evaluation of the case into the bankruptcy mediation, without having the evaluation come directly from the mediator.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"136 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115887819","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}
Japanese civil procedure covers four types of simplified procedures: ordinary proceedings in summary courts; actions on bills, notes, and checks; actions on small claims; and payment orders. Actions on small claims were newly introduced as civil procedure in 1996 to promote public access to justice. Summary courts have jurisdiction over these actions. The use of actions on small claims once increased to adjudicate a number of cases for the reimbursement of overpayment against consumer loan companies (Kabaraikin Suits). Although they have been used with less frequency recently due to the decrease of Kabaraikin Suits and increase of the use of other ADR procedures, they have a good reputation among their users and have successfully eased the burden on judges of district courts regardless of budget constraint. However, as more and more difficult cases are filed as actions on small claims, the burden of summary courts and court clerks seems to have increased. Providing information on simplified proceedings by courts and institutions of ADRs to citizens will solve this new problem by helping them to choose appropriate proceedings.
{"title":"Simplified Civil Procedure in Japan","authors":"Etsuko Sugiyama","doi":"10.5553/ELR.000044","DOIUrl":"https://doi.org/10.5553/ELR.000044","url":null,"abstract":"Japanese civil procedure covers four types of simplified procedures: ordinary proceedings in summary courts; actions on bills, notes, and checks; actions on small claims; and payment orders. Actions on small claims were newly introduced as civil procedure in 1996 to promote public access to justice. Summary courts have jurisdiction over these actions. The use of actions on small claims once increased to adjudicate a number of cases for the reimbursement of overpayment against consumer loan companies (Kabaraikin Suits). Although they have been used with less frequency recently due to the decrease of Kabaraikin Suits and increase of the use of other ADR procedures, they have a good reputation among their users and have successfully eased the burden on judges of district courts regardless of budget constraint. However, as more and more difficult cases are filed as actions on small claims, the burden of summary courts and court clerks seems to have increased. Providing information on simplified proceedings by courts and institutions of ADRs to citizens will solve this new problem by helping them to choose appropriate proceedings.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"90 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115504346","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}
In addition to satisfying Article III’s standing requirements, the U.S. Supreme Court has long included, as one of its non-constitutional “prudential” standing rules, a requirement that plaintiffs demonstrate that their claim is within the “zone of interests” protected by a statute or constitutional provision. In a recent case, Lexmark International, Inc. v. Static Control Components, Inc., the Court disavowed zone-of-interests standing in statutory cases. After Lexmark, courts need only determine whether a particular statute authorizes a plaintiff’s cause of action. If it does, the Court held, then courts are not free to prevent a plaintiff from bringing a claim out of prudential concerns. This paper asks whether zone-of-interests standing should be retained in constitutional cases, an issue not before the Court in Lexmark. We conclude that it should not be; the Court should pursue Lexmark to its logical conclusion and eliminate zone-of-interests standing entirely. After charting the course of the zone of interests test in statutory cases from its inception to the Court’s disavowal of it in Lexmark, we examine the role it has played in constitutional cases in the Supreme Court and in the lower courts. We argue that (1) zone-of-interests standing rests on a constitutionally-dubious foundation; (2) existing doctrines better perform whatever useful functions the test was thought to serve; and (3) that the practical difficulties that bedeviled the Court’s application of the test in statutory cases remain and multiply in constitutional cases. We also consider, but reject, arguments that the test is useful for preventing courts from being flooded with certain constitutional claims or that it ought to be retained, but only for a few constitutional claims, like dormant Commerce Clause challenges.
{"title":"Zone-of-Interests Standing in Constitutional Cases after Lexmark","authors":"Brannon P. Denning, Sarah F. Bothma","doi":"10.2139/ssrn.2706644","DOIUrl":"https://doi.org/10.2139/ssrn.2706644","url":null,"abstract":"In addition to satisfying Article III’s standing requirements, the U.S. Supreme Court has long included, as one of its non-constitutional “prudential” standing rules, a requirement that plaintiffs demonstrate that their claim is within the “zone of interests” protected by a statute or constitutional provision. In a recent case, Lexmark International, Inc. v. Static Control Components, Inc., the Court disavowed zone-of-interests standing in statutory cases. After Lexmark, courts need only determine whether a particular statute authorizes a plaintiff’s cause of action. If it does, the Court held, then courts are not free to prevent a plaintiff from bringing a claim out of prudential concerns. This paper asks whether zone-of-interests standing should be retained in constitutional cases, an issue not before the Court in Lexmark. We conclude that it should not be; the Court should pursue Lexmark to its logical conclusion and eliminate zone-of-interests standing entirely. After charting the course of the zone of interests test in statutory cases from its inception to the Court’s disavowal of it in Lexmark, we examine the role it has played in constitutional cases in the Supreme Court and in the lower courts. We argue that (1) zone-of-interests standing rests on a constitutionally-dubious foundation; (2) existing doctrines better perform whatever useful functions the test was thought to serve; and (3) that the practical difficulties that bedeviled the Court’s application of the test in statutory cases remain and multiply in constitutional cases. We also consider, but reject, arguments that the test is useful for preventing courts from being flooded with certain constitutional claims or that it ought to be retained, but only for a few constitutional claims, like dormant Commerce Clause challenges.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123846111","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}
Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon
Shareholder litigation challenging corporate mergers is ubiquitous, with the likelihood of a shareholder suit exceeding 90%. The value of this litigation, however, is questionable. The vast majority of merger cases settle for nothing more than supplemental disclosures in the merger proxy statement. The attorneys that bring these lawsuits are compensated for their efforts with a court-awarded fee. This leads critics to charge that merger litigation benefits only the lawyers who bring the claims, not the shareholders they represent. In response, defenders of merger litigation argue that the lawsuits serve a useful oversight function and that the improved disclosures that result are beneficial to shareholders.This Article offers a new approach to assessing the value of these claims by empirically testing the relationship between merger litigation and shareholder voting on the merger. If the supplemental disclosures produced by the settlement of merger litigation are valuable, they should affect shareholder voting behavior. Specifically, supplemental disclosures that are, in effect, “compelled” by settlement should produce new and unfavorable information about the merger and lead to a lower percentage of shares voted in favor of it. Applying this hypothesis to a hand-collected sample of 453 large public company mergers from 2005-2012, we find no such effect. We find no significant evidence that disclosure-only settlements affect shareholder voting.These findings warrant a reconsideration of Delaware merger law. Specifically, under current law, supplemental disclosures are viewed by courts as providing a substantial benefit to the shareholder class. In turn, this substantial benefit entitles the plaintiffs’ lawyers to an award of attorneys’ fees. Our evidence suggests that this legal analysis is misguided and that supplemental disclosures do not in fact constitute a substantial benefit. As a result, and in light of the substantial costs generated by public company merger litigation, we argue that courts should reject disclosure settlements as a basis for attorney fee awards.Our approach responds to critiques of merger litigation as excessive and frivolous by reducing the incentive for plaintiffs’ lawyers to bring weak cases, but it would have an additional benefit. Current practice drags state court judges into the task of indirectly promulgating disclosure standards in connection with the approval of fee awards. We argue, instead, for a more efficient specialization between state and federal courts in the regulation of mergers: public company merger disclosure should be policed by the federal securities laws while state corporate law focuses on substantive fairness.
{"title":"Confronting the Peppercorn Settlement in Merger Litigation: An Empirical Analysis and a Proposal for Reform","authors":"Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon","doi":"10.2139/ssrn.2398023","DOIUrl":"https://doi.org/10.2139/ssrn.2398023","url":null,"abstract":"Shareholder litigation challenging corporate mergers is ubiquitous, with the likelihood of a shareholder suit exceeding 90%. The value of this litigation, however, is questionable. The vast majority of merger cases settle for nothing more than supplemental disclosures in the merger proxy statement. The attorneys that bring these lawsuits are compensated for their efforts with a court-awarded fee. This leads critics to charge that merger litigation benefits only the lawyers who bring the claims, not the shareholders they represent. In response, defenders of merger litigation argue that the lawsuits serve a useful oversight function and that the improved disclosures that result are beneficial to shareholders.This Article offers a new approach to assessing the value of these claims by empirically testing the relationship between merger litigation and shareholder voting on the merger. If the supplemental disclosures produced by the settlement of merger litigation are valuable, they should affect shareholder voting behavior. Specifically, supplemental disclosures that are, in effect, “compelled” by settlement should produce new and unfavorable information about the merger and lead to a lower percentage of shares voted in favor of it. Applying this hypothesis to a hand-collected sample of 453 large public company mergers from 2005-2012, we find no such effect. We find no significant evidence that disclosure-only settlements affect shareholder voting.These findings warrant a reconsideration of Delaware merger law. Specifically, under current law, supplemental disclosures are viewed by courts as providing a substantial benefit to the shareholder class. In turn, this substantial benefit entitles the plaintiffs’ lawyers to an award of attorneys’ fees. Our evidence suggests that this legal analysis is misguided and that supplemental disclosures do not in fact constitute a substantial benefit. As a result, and in light of the substantial costs generated by public company merger litigation, we argue that courts should reject disclosure settlements as a basis for attorney fee awards.Our approach responds to critiques of merger litigation as excessive and frivolous by reducing the incentive for plaintiffs’ lawyers to bring weak cases, but it would have an additional benefit. Current practice drags state court judges into the task of indirectly promulgating disclosure standards in connection with the approval of fee awards. We argue, instead, for a more efficient specialization between state and federal courts in the regulation of mergers: public company merger disclosure should be policed by the federal securities laws while state corporate law focuses on substantive fairness.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125276033","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 model a negligence standard where the defendant’s level of care is viewed with error by the judicial system. All cases are assumed to settle prior to trial, but the negotiated outcome reflects the expected outcome at trial. The policymaker may or may not be able to induce the optimal level of care on the part of the defendant. The optimal negligence standard bears no necessary relationship to the optimal level of care. As the standard of care rises to infinity, the outcome under the negligence standard approaches the outcome under strict liability. The level of care which may be achieved under the negligence standard is (asymptotically) at least as high as under strict liability and may be higher. Consequently, the level of social welfare under an optimally chosen negligence standard is at least as high as under strict liability and may possibly be higher. It should be noted, however, that if the defendant is made liable for the plaintiff’s pretrial legal costs, strict liability will induce the defendant to choose the optimal level of care.
{"title":"Liability Standards with an Uncertain Outcome at Trial","authors":"A. Farmer, Paul Pecorino","doi":"10.2139/ssrn.2439401","DOIUrl":"https://doi.org/10.2139/ssrn.2439401","url":null,"abstract":"We model a negligence standard where the defendant’s level of care is viewed with error by the judicial system. All cases are assumed to settle prior to trial, but the negotiated outcome reflects the expected outcome at trial. The policymaker may or may not be able to induce the optimal level of care on the part of the defendant. The optimal negligence standard bears no necessary relationship to the optimal level of care. As the standard of care rises to infinity, the outcome under the negligence standard approaches the outcome under strict liability. The level of care which may be achieved under the negligence standard is (asymptotically) at least as high as under strict liability and may be higher. Consequently, the level of social welfare under an optimally chosen negligence standard is at least as high as under strict liability and may possibly be higher. It should be noted, however, that if the defendant is made liable for the plaintiff’s pretrial legal costs, strict liability will induce the defendant to choose the optimal level of care.","PeriodicalId":413839,"journal":{"name":"LSN: Litigants & the Judiciary (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-05-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131060251","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：