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Informational Externalities and Settlements in Mass Tort Litigations

Author

Listed:
  • Bruno Deffains

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Eric Langlais

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper elaborates on a basic model of mass tort litigation, highlighting the existence of positive informational externalities a¤orded by the discovery process (as a general technology of production of evidences) in order to study when a class action is formed, or when a sequence of individual trials is more likely. We illustrate the argument that when several plaintiffs file individually a lawsuit against the same tortfeasor, the resolution of the various cases through repeated trials produces positive informational externalities. When class actions are forbidden, these externalities only benefit to the later plaintiffs (through precedents, jurisprudence...). When they are allowed, the first filer may have an incentive to initiate a class action as far as it enables him to benefit from these externalities, through the sharing of information with later filers. We provide sufficient conditions under which a class action is formed, assuming a perfect discovery process. We also show that when contingent fees are used to reward attorneys' services, plaintiffs become neutral to the arrival of new information on their case.

Suggested Citation

  • Bruno Deffains & Eric Langlais, 2011. "Informational Externalities and Settlements in Mass Tort Litigations," Working Papers hal-04141000, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141000
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141000
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    References listed on IDEAS

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