Research Handbooks in Law and Economics series
Edited by Jennifer H. Arlen
Chapter 10: Group litigation in the enforcement of tort law
Legal systems in the United States and elsewhere provide mechanisms for consolidating similar claims in a single proceeding. These forms of group litigation—the American class action being the best known—tend to be used in cases where the plaintiffs have common claims and each individual plaintiff’s stakes are small relative to the litigation costs of the suit. We may evaluate any litigation procedure with respect to three criteria for optimal tort liability. First, in the case of negligence liability, the applicable legal rules should ensure that negligent injurers internalize the expected cost to victims of the injurers’ failure to take due care and that non-negligent injurers are not held liable. Second, rules and processes should, all else equal, promote risk spreading and compensation by enabling victims with good cases to recover while precluding recovery for those who do not have good cases. Third, litigation rules should, all else equal, minimize victims’ recovery costs. A challenge for legal design is to maximize the net benefits of this type of litigation by taking each of these three concerns into account.
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