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Incentives to Settle under Joint and Several Liability: An Empirical Analysis of Superfund Litigation

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  • Chang, Howard F
  • Sigman, Hilary

Abstract

Congress may soon restrict joint and several liability for cleanup of contaminated sites under Superfund. We explore whether this change would discourage settlements and is therefore likely to increase the program's already high litigation costs per site. Recent theoretical research by Kornhauser and Revesz finds that joint and several liability may either encourage or discourage settlement, depending on the correlation of outcomes at trial across defendants. We extend their two-defendant model to a richer framework with N defendants. This extension allows us to test the theoretical model empirically using data on Superfund litigation. We find that joint and several liability does not discourage settlements and may even encourage them. Our results support the model's predictions about the effects of several variables, such as the degree of correlation in trial outcomes. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Chang, Howard F & Sigman, Hilary, 2000. "Incentives to Settle under Joint and Several Liability: An Empirical Analysis of Superfund Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 205-236, January.
    • Handle: RePEc:ucp:jlstud:v:29:y:2000:i:1:p:205-36
    DOI: 10.1086/468068
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    Cited by:

    1. Hilary Sigman & Sarah Stafford, 2011. "Management of Hazardous Waste and Contaminated Land," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 255-275, October.
    2. Burda, Martin & Harding, Matthew, 2014. "Environmental Justice: Evidence from Superfund cleanup durations," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 380-401.
    3. Claudia M. Landeo & Kathryn E. Spier, 2009. "Naked Exclusion: An Experimental Study of Contracts with Externalities," American Economic Review, American Economic Association, vol. 99(5), pages 1850-1877, December.
    4. Zhou, J., 2010. "Access to justice : An economic approach," Other publications TiSEM 9d70f451-35c4-4878-92bf-7, Tilburg University, School of Economics and Management.
    5. Hilary Sigman, 2010. "Environmental Liability and Redevelopment of Old Industrial Land," Journal of Law and Economics, University of Chicago Press, vol. 53(2), pages 289-306, May.
    6. Chang, Howard F. & Sigman, Hilary, 2007. "The effect of joint and several liability under superfund on brownfields," International Review of Law and Economics, Elsevier, vol. 27(4), pages 363-384, December.
    7. Howard F. Chang & Hilary Sigman, 2014. "An Empirical Analysis of Cost Recovery in Superfund Cases: Implications for Brownfields and Joint and Several Liability," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 11(3), pages 477-504, September.
    8. Bielen, Samantha & Grajzl, Peter & Marneffe, Wim, 2017. "Procedural events, judge characteristics, and the timing of settlement," International Review of Law and Economics, Elsevier, vol. 52(C), pages 97-110.
    9. Mark J. Browne & Ellen S. Pryor & Bob Puelz, 2004. "The Effect of Bad-Faith Laws on First-Party Insurance Claims Decisions," The Journal of Legal Studies, University of Chicago Press, vol. 33(2), pages 355-390, June.
    10. Sheila M. Olmstead, 2010. "The Economics of Water Quality," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 44-62, Winter.
    11. Nakkas Alper, 2010. "Settling with Multiple Litigants," Review of Law & Economics, De Gruyter, vol. 6(1), pages 125-144, June.
    12. Yeon-Koo Che & Kathryn E. Spier, 2008. "Exploiting Plaintiffs through Settlement: Divide and Conquer," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(1), pages 4-23, March.
    13. Olmstead, Sheila & Richardson, Nathan, 2014. "Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches," RFF Working Paper Series dp-14-15, Resources for the Future.

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