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Explaining the Flood of Asbestos Litigation: Consolidation, Bifurcation, and Bouquet Trials

  • Michelle J. White
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    The number of asbestos personal injury claims filed each year is in the hundreds of thousands and has been increasing rather than decreasing over time, even though asbestos stopped being used in the early 1970's. Eighty firms have filed for bankruptcy due to asbestos liabilities including 30 filings since the beginning of 2000. This paper examines why asbestos claims are increasing over time. Because large numbers of asbestos claims are filed in particular courts, judges in these courts have adopted procedural innovations intended to clear their dockets by encouraging mass settlements. These innovations cause trial outcomes to change in plaintiffs' favor. As a result, the innovations make the asbestos crisis worse by giving plaintiffs' lawyers an incentive to file large numbers of additional claims in the same courts. The paper uses a new dataset of asbestos trials to test the hypothesis that three important procedural innovations--consolidated trials, bifurcation, and bouquet trials--favor plaintiffs and therefore encourage the filing of additional claims. I find that bifurcation and bouquet trials nearly triple plaintiffs' expected return from trial, while consolidations of up to seven lawsuits raise plaintiffs' expected return from trial by one- third to one-half.

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    File URL: http://www.nber.org/papers/w9362.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9362.

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    Date of creation: Dec 2002
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    Handle: RePEc:nbr:nberwo:9362
    Note: LE
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    1. Landes, William M, 1993. "Sequential versus Unitary Trials: An Economic Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 22(1), pages 99-134, January.
    2. Eisenberg, Theodore, et al, 1997. "The Predictability of Punitive Damages," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 623-61, June.
    3. Kathryn E. Spier, 2002. "Settlement with Multiple Plaintiffs: The Role of Insolvency," Journal of Law, Economics and Organization, Oxford University Press, vol. 18(2), pages 295-323, October.
    4. Howard F. Chang & Hilary Sigman, 1999. "Incentives to Settle Under Joint and Several Liability," NBER Working Papers 7096, National Bureau of Economic Research, Inc.
    5. Priest, George L, 1997. "Procedural versus Substantive Controls of Mass Tort Class Actions," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 521-73, June.
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