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Abstract:
Study of two comprehensive class action case data sets covering 1993-2002 shows that the amount of client recovery is overwhelmingly the most important determinant of the attorneys' fee award. Even in cases in which the courts engage in the lodestar calculation (the product of reasonable hours and a reasonable hourly rate), the client's recovery generally explains the pattern of awards better than the lodestar. Thus, the time and expense of a lodestar calculation may be wasteful. We also find no robust evidence that either recoveries for plaintiffs or fees of their attorneys increased over time. The mean fee award in common fund cases is well below the widely-quoted one-third figure, constituting 21.9 percent of the recovery across all cases for a comprehensive data set of published cases. A scaling effect exists: fees constitute a lower percent of the client's recovery as the client's recovery increases. Fees are also correlated with risk: the presence of high risk is associated with a higher fee, while low risk cases generate below-average fees. Fees as a percent of class recovery were found to be higher in federal than state court. The presence of "soft" relief (such as injunctive relief or coupons) has no material effect on the fee, whether or not the soft relief was calculated in the quantified benefit for the class used as the basis for computing the attorney's fee. The study also addressed costs and expenses. Like fees, these displayed significant scale effects. The paper proposes a simple methodology by which courts can evaluate the reasonableness of fee requests.

Abstract:
Juries' critics argue that judges should displace juries in setting punitive damages levels. This article, which includes the first study of punitive damages in judge-tried cases, compares judge and jury performance in awarding punitive damages and in setting their levels. Data covering one year of judge and jury trial outcomes from 45 of the nation's largest counties yield no substantial evidence that judges and juries differ in the rate at which they award punitive damages, or in the central relation between the size of punitive awards and compensatory awards. The log transform that describes the relation between punitive and compensatory awards in jury trials also describes the awards' relation in judge trials. For a given level of compensatory award, there is a greater range of punitive awards in jury trials than in judge trials. The greater spread produces trivially few jury awards that are beyond the best estimate of what judges might award in similar cases.

punitive damages, juries, judges

Abstract:
Enron and other corporate financial scandals focused attention on the accounting industry in general and on Arthur Andersen in particular. Part of the policy response to Enron, the criminal prosecution of Andersen, eliminated one of the few major audit firms capable of auditing many large, public corporations. This article explores whether Andersen's performance, as measured by frequency of financial restatements, measurably differed from that of other large auditors. Financial restatements trigger significant negative market reactions and their frequency can be viewed as a measure of accounting performance. We analyze the financial restatement activity of approximately 1,000 large, public firms from 1997 through 2001. After controlling for client size, region, time, and industry, we find no evidence that Andersen's performance significantly differed from that of other large accounting firms.

Abstract:
Policy debate rages over mandatory employment arbitration. Using a unique database of American Arbitration Association employment dispute awards, this article compares court-tried employment cases and arbitrated employment claims. It compares adjudicated and arbitrated outcomes in the class of disputes most often the subject of arbitration, non-civil rights employment claims. For higher paid employees, we find little evidence that arbitrated outcomes materially differ from trial outcomes. Employee win rates in both forums exceed 55% and median awards in both forums exceed $65,000. We find no statistically significant differences between arbitration and litigation in employee win rates or in median or mean award levels. These results are consistent with the belief that lower pay employees lack systematic, realistic access to court. We also report evidence that arbitrated disputes conclude more quickly than litigated disputes.

arbitration, trials, litigation, juries

Abstract:
This article analyzes a data set of reported decisions from 1992-2003 in which the number of opt-outs and/or objectors to class action settlements was quantified. The numbers of opt-outs and objections were uniformly low and in some cases nearly trivial. On average, less than 1% of class members opt-out and about 1% of class members object to class-wide settlements. Civil rights and employment discrimination class actions have relatively higher objection rates, but even these are less than 5% of the class. Securities, antitrust, and consumer class actions have the lowest rates of dissent. Dissent rises with the average recovery per class member and falls as a percentage of the class as the size of the class increases. Dissent is not correlated with the attorneys fee as a percent of the class recovery. The rate of objection to a settlement is negatively correlated with the chance that the settlement will be approved, but the rate of opt-outs has no correlation with settlement approval. Levels of dissent exhibit a noticeable decline over the period of the study. This study has a variety of implications for the law of class actions.

Abstract:
We study a data set of 2,858 contracts contained as exhibits in Form 8-K filings by reporting corporations over a six month period in 2002 for twelve types of contracts and a seven month period in 2002 for merger contracts. Because 8-K filings are required only for material events, these contracts likely are carefully negotiated by sophisticated parties who are well-informed about the contract terms. These contracts, therefore, provide evidence of efficient ex ante solutions to contracting problems. The vast majority of contracts did not require arbitration. Only about 11 percent of the contracts included binding arbitration clauses. The rate of arbitration clauses varied substantially by type of contract. For example, pooling and servicing agreements and trust agreements had no arbitration clauses while employment and licensing contracts had the highest rate of arbitration clauses, 37 percent and 33 percent respectively. Arbitration clauses are strongly negatively associated with standardization of contract terms: the more standardized the contract, the less likely it will mandate arbitration of disputes. Contracts with California connections tended to have high rates of arbitration clauses while contracts with New York connections tended to have low rates of arbitration clauses. Arbitration clauses were significantly more likely to appear in contracts with international connections, but even in such contracts, the clauses were infrequent in absolute terms. Only 20 percent of international contracts contained arbitration clauses compared to ten percent of domestic contracts. Our results suggest, in contracts involving two sophisticated actors, that the parties perceive preserving access to litigation to be value-enhancing compared to ex ante binding arbitration. This contrasts with widespread beliefs about arbitration's efficiency and with imposition of mandatory arbitration clauses in some standardized consumer transactions such as credit card and cellular phone contracts.

arbitration, empirical studies, contracts

Abstract:
We provide the first study of varying use of arbitration clauses across contracts within the same firms. Using a sample of 26 consumer contracts and 164 nonconsumer contracts from large public corporations, we compared arbitration clause use in consumer contracts with their use in the same firms' nonconsumer contracts. Over three-quarters of the consumer agreements provided for mandatory arbitration but less than 10% of the firms' material nonconsumer, nonemployment contracts included arbitration clauses. The absence of arbitration provisions in nearly all material contracts suggests that, ex ante, many firms value, even prefer, litigation over arbitration to resolve disputes with peers. The frequent use of arbitration clauses in the same firms' consumer contracts appears to be an effort to preclude aggregate consumer action rather than, as often claimed, an effort to promote fair and efficient dispute resolution. Other common features of civil litigation reform discussion, avoidance of juries and loser-pays attorney fee rules, find little support in the pattern of contractual terms we observe.

Arbitration, Contracts, Consumer

Abstract:
After both presenting new data and also summarizing recent empirical work on each of the six phases of a civil lawsuit (forum, pretrial, settlement, trial, judgment, and appeal), the authors draw a series of lessons for understanding and using empirical methods in the study of the legal system's operation. In so doing, they generate implications for current and projected policy debates concerning litigation, while identifying areas that demand further empirical work.

litigation, courts, empirical studies, trials, juries

Abstract:
Using a uniquely complete data set of over 50,000 observations of approximately 16,000 corporations, we test theories that seek to explain which firms become merger targets and which firms go bankrupt. We find that merger activity is much greater during prosperous periods than during recessions. In bad economic times, firms in industries with high bankruptcy rates are less likely to file for bankruptcy than they are in better years, supporting the market illiquidity arguments made by Shleifer & Vishny (1992). At the firm level, we find that, among poorly performing firms, the likelihood of merger increases with poorer performance, but among better performing firms, the relation is reversed and chances of merger increase with better performance. Such a changing relation has not been detected in prior merger studies. We also find that low-growth, resource-rich firms are prime acquisition targets and that firms' debt capacity relates negatively to the likelihood of a merger. Debt-related variables, leverage and secured debt, play an especially prominent role in distinguishing between which firms merge and which firms go bankrupt.

merger, bankruptcy, accounting

Abstract:
Incentive awards to representative plaintiffs in class action cases have been the focus of recent law reform efforts and generated inconsistent case law. But little is known about such awards. This study of 374 opinions from 1993 to 2002 finds that awards were granted in about 28% of settled class actions. Rate of awards varied by case category as follows: consumer credit actions 59%, employment discrimination cases 46%, antitrust cases 35%, securities cases 24% (before the PSLRA limited awards), corporate and mass tort actions, less than 10%. The decision to grant an incentive award was associated with increased awards of attorney costs and expenses (our proxy for representative plaintiff costs) in relation to median class member recoveries and with the case being in federal court. When given, incentive awards constituted, on average, 0.16% of the class recovery, with a median of 0.02%. Award levels varied by case category. Employment discrimination cases had large incentive awards compared to other categories. Award size was associated with the case's costs and expenses, the class recovery amount, the median recovery per class member, the case's risk, and the presence of objection to the settlement. Awards exhibited a scaling effect; their percentage of the class recovery decreased as the class recovery increased. We examine the data in light of four hypotheses about the function of incentive awards: (1) reimbursing class representatives for non-pecuniary litigation costs; (2) rewarding class representatives for superior service; (3) facilitating self-interested behavior by class counsel; and (4) achieving proportionality between awards and other outcomes in the case. We find support for the reimbursement and proportionality hypotheses and weaker support for the attorney self-interest and reward-for-service hypotheses. We find little evidence of systematic abuse in incentive awards. Given the modest frequency and size of awards, and their possible benefits, case-by-case adjudication may be more appropriate than fixed legislative or judicial rules banning awards.

class actions, litigation, securities, tort

Abstract:
Legal scholars devote much attention to the incorporation puzzle - why corporations so frequently incorporate in Delaware. This paper suggests that focusing on the incorporation decision overlooks a broader but intimately related set of questions. Choosing Delaware as the incorporation situs is, effectively, a choice-of-law decision. Incorporating in Delaware selects Delaware law for (and authorizes Delaware courts to adjudicate) legal disputes about the allocation of a firm's governance authority. In this sense, the incorporation decision is similar to any setting in which a company selects a law or authorizes a dispute resolution forum. We study a data set of 412 merger and acquisition contracts contained as exhibits in SEC Form 8-K filings over a seven month period in 2002 to assess the decisions the parties have made regarding choice-of-law and choice-of-forum. Although these contracts frequently select Delaware law and Delaware as a forum, there is a relative "flight" from Delaware in this contractual setting. Delaware corporations choose Delaware law less than other corporations choose the law of their state of incorporation. Furthermore, many contracts specifying Delaware law did not specify Delaware as the litigation forum. Contracts designating Delaware law tend to choose Delaware as a litigation forum less than contracts that designate other states' laws tend to choose such states as a litigation forum. Delaware was the place of incorporation for 189 merger contracts; it was the choice of law for 132. With respect to forum selection, 115 contracts that designated a forum had Delaware corporate acquirers. Yet only 64 contracts specified Delaware as the litigation forum. In contrast, for example, New York had eight corporate acquirers and 45 contracts specifying that New York law governed. We investigate the determinants underlying these decisions about choice-of-law and forum selection. Regression results confirm the flight from Delaware law and forum.

Choice-of-law, Delaware, Choice-of-forum, corporate governance

Abstract:
This study uses a new criminal case data set to partially replicate Kalven and Zeisel's classic study of judge-jury agreement. The data show essentially the same rate of judge-jury agreement as did Kalven and Zeisel for cases tried almost 50 years ago. This study also explores judge-jury agreement as a function of evidentiary strength (as reported by both judges and juries), evidentiary complexity (as reported by both judges and juries), legal complexity (as reported by judges), and locale. Regardless of which adjudicator's view of evidentiary strength is used, judges tend to convict more than juries in cases of "middle" evidentiary strength. Judges tend to acquit more than juries in cases in which judges regard the evidence favoring the prosecution as weak. Judges tend to convict more than juries in cases in which judges regard the evidence favoring the prosecution as strong. Rates of adjudicator agreement are thus partly a function of which adjudicator's view of evidentiary strength is used, a result not available to Kalven and Zeisel, who were limited to judges' views of the evidence. We find little evidence that evidentiary complexity or legal complexity help explain rates of judge-jury disagreement. Rather, the data support Kalven-Zeisel's explanation that judges have a lower conviction threshold than juries. Local variation exists among the sites studied. The influences of juror race, sex, and education are also considered.

Abstract:
Legal scholars have focused much attention on the incorporation puzzle - why major firms so heavily favor Delaware as their chartering state. The choice of Delaware incorporation is effectively a decision to select Delaware law to control issues of corporate governance and (less reliably) to select Delaware courts to adjudicate disputes. In this sense the incorporation decision is similar to any contract in which parties select a governing law or designate a forum. This paper considers whether theories about Delaware corporate law apply to the broader market for commercial contracts. After describing how the preconditions for such a market were established during the last half of the Twentieth Century (through the increased enforceability of choice-of-law and forum selection clauses), the paper looks at empirical evidence about major commercial contracts. Although Delaware dominates the market for incorporations, New York is the leading supplier of law and forum in commercial contracts. The paper explores several explanations for New York's popularity.

Abstract:
Two findings dominate prior empirical studies of federal civil appeals. First, appeals courts are more likely to disrupt jury verdicts than bench decisions. Second, trial court defendants fare better than plaintiffs on appeal. Theory supplies two general hypotheses - the attitudinal and selection effect hypotheses - that may explain the appellate court tilt favoring defendants in federal civil appeals. This study exploits a uniquely comprehensive database of state court trials and civil appeals, presents the first statistical models of the appeals process for a comprehensive set of state court civil trials, and provides another empirical test of the theories on appellate outcomes. Using data from 46 large counties consisting of 8,038 trials and 549 concluded appeals, we find that state court appellate reversal rates for jury trials and appeals by defendants exceed the reversal rates for bench trials and appeals by plaintiffs. The reversal rate for trials appealed by plaintiffs is 21.5% compared to 41.5% for trial outcomes appealed by defendants. The reversal rate for jury trials is 33.7% compared to 27.5% for judge trials. Both descriptive analyses as well as more formal models point support appellate judges' attitudes toward trial-level adjudicators as an important explanation for these asymmetric outcomes of civil appeals in state courts.

Abstract:
Two findings dominate prior empirical studies of federal civil appeals. First, appeals courts are more likely to disrupt jury verdicts than bench decisions. Second, trial court defendants fare better than plaintiffs on appeal. But federal cases are limited by subject matter and comprise a small fraction of the nation's civil litigation activity. This study, which exploits a uniquely comprehensive database of state court trials and civil appeals, presents the first statistical models of the appeals process for a comprehensive set of state court civil trials. Using data from 46 large counties consisting of 8,038 trials and 549 concluded appeals, we find that state court appellate reversal rates for jury trials and appeals by defendants exceed the reversal rates for bench trials and appeals by plaintiffs. The reversal rate for trials appealed by plaintiffs is 21.5% compared to 41.5% for trial outcomes appealed by defendants. The reversal rate for jury trials is 33.7% compared to 27.5% for judge trials. Both descriptive analyses as well as more formal selection models point to appellate judges' attitudes toward trial-level adjudicators as an important explanation for these asymmetric outcomes of civil appeals in state courts. Our results are generally consistent with prior research on federal court appeals but also suggest a higher reversal rate of trial outcomes in state court compared to federal court.

Abstract:
The prevailing "expert" opinion is that jury verdicts are largely immune to appellate revision. Using a database that includes all federal civil trials and appeals since 1988, we find that civil jury trials as a group are not so special on appeal. But the data do show that defendants succeed more than plaintiffs on appeal from civil trials, and especially from jury trials. Defendants appealing their losses after trial by jury obtain reversals at a 31% rate, while losing plaintiffs succeed in only 13% of their appeals from jury trials. Both descriptive analyses of the results and more formal regression models support an explanation based on appellate judges' attitudes toward trial-level adjudicators. The appellate court is more favorable to the defendant than is the trial judge and especially the jury. The large difference between appellate court and trial jury stems from the appellate judges' sizable misperceptions about the jury.

Abstract:
This comment assesses correlations among law school ranking systems for schools ranked in the top ten or twenty as measured by SSRN downloads. SSRN downloads are highly correlated with other ranking systems for law schools as a whole. But the correlations are less strong than those among other ranking systems when used to assess peer law schools - schools that in fact compete with one another. SSRN-based rankings may be at a disadvantage compared to other objective ranking systems because the SSRN database likely provides less comprehensive coverage of downloads than competing systems, such as Westlaw and LexisNexis, provide about productivity and citations.

rankings correlation

Abstract:
We analyze thousands of trials from a substantial fraction of the nation's most populous counties. Evidence across ten years and three major datasets suggests that: (1) juries and judges award punitive damages in approximately the same ratio to compensatory damages, (2) the level of punitive damages awards has not increased, and (3) juries' and judges' tendencies to award punitive damages differ in bodily injury and no-bodily-injury cases. Jury trials are associated with a greater rate of punitive damages awards in financial injury cases. Judge trials are associated with a greater rate of punitive damages awards in bodily injury cases.

Abstract:
This article uses unique data from over 300 criminal trials in four large counties to study the relations between the existence of a prior criminal record and defendants testifying at trial, between testifying at trial and juries' learning about a criminal record, and between juries' learning about a criminal record and their decisions to convict or acquit. Sixty percent of defendants without criminal records testified compared to 45 percent with criminal records. For testifying defendants with criminal records, juries learned of those records in about half the cases. Juries rarely learned about criminal records unless defendants testified. After controlling for evidentiary strength and other factors, statistically significant associations exist (1) between the existence of a criminal record and the decision to testify at trial, (2) between the defendant testifying at trial and the jury learning about the defendant's prior record, and (3) in cases with weak evidence, between the jury learning of a criminal record and conviction. For cases with strong evidence against defendants, learning of criminal records is not strongly associated with conviction rates. Juries appear to rely on criminal records to convict when other evidence in the case normally would not support conviction. Use of prior record evidence may therefore lead to erroneous convictions. Prosecutors and judges should consider the increased likelihood of erroneous conviction based on use of prior convictions in decisions to prosecute and in evidentiary rulings.

Juries, Evidence, Criminal Record

Abstract:
Prior research on summary judgment hypothesizes a substantial increase in summary judgment rates after a trilogy of Supreme Court cases in 1986 and a disproportionate adverse effect of summary judgment on civil rights cases. This article analyzes summary judgment rates in the Eastern District of Pennsylvania (EDPA) and the Northern District of Georgia (NDGA), for two time periods, 1980-81 and 2001-02. It also analyzes summary judgment rates for the Central District of California (CDCA) for 1980-81 and for other civil rights cases in the CDCA in 1975-76. The combined sample consists of over 5,000 cases. The three-district sample for 1980-81 had an overall summary judgment rate of 4.5%. The summary judgment rate increased from 6.5% to7.0% in the two-district EDPA and NDGA sample from 1980-81 to 2001-02, a statistically insignificant difference. The pattern was inconsistent across case categories. For contract, tort, and a residual category of other noncivil rights cases, there was no evidence of a significant increase in summary judgment rates over time. Interdistrict differences were not dramatic in these three areas except that NDGA had a higher rate of summary judgment in tort and contract cases than did EDPA. The most striking effect was the approximate doubling - to almost 25% - of the NDGA summary judgment rate in employment discrimination cases and a substantial increase in the NDGA summary judgment rate in other civil rights cases. Subject to the limitation that both time periods studied are removed in time from the Supreme Court's 1986 summary judgment trilogy, the only strong evidence in this study of a post-trilogy increase is in NDGA employment discrimination cases. Civil rights cases had consistently higher summary judgment rates than noncivil rights cases and summary judgment rates were modest in noncivil rights cases.

summary judgment, civil procedure, employment discrimination, civil rights

Abstract:
Empirical studies have consistently shown that punitive damages are rarely awarded, with rates of about three to five percent of plaintiff trial wins. Using the 2005 data from the Bureau of Justice Statistics Civil Justice Survey, this article shows that knowing in which cases plaintiffs sought punitive damages transforms the picture of punitive damages. Not accounting for whether punitive damages were sought obscures the meaningful punitive damages rate, the rate of awards in cases in which they were sought, by a factor of nearly 10, and obfuscates a more explicable pattern of awards than has been reported. Punitive damages were surprisingly infrequently sought, with requests found in about 10% of tried cases that plaintiffs won. Punitive damages were awarded in about 30% these trials. Awards were most frequent in cases of intentional tort, with a punitive award rate of over 60%. Greater harm corresponded to a greater probability of an award: the size of the compensatory award was significantly associated with whether punitive damages were awarded, with a rate of approximately 60% for cases with compensatory awards of $1 million or more. Regression models correctly classify about 70% or more of the punitive award request outcomes, Judge-jury differences in the rate of awards exist, with judges awarding punitive damages at a higher rate in personal injury cases and juries awarding them at a higher rate in nonpersonal injury cases. These puzzling adjudicator differences may be a consequence of the routing of different cases to judges and juries.

punitive damages, litigation, juries, tort

Abstract:
Experimental evidence generated in controlled laboratory studies suggests that the legal system in general, and punitive damages awards in particular, should display an incoherent pattern. According to the prediction, inexperienced decision makers, such as juries, should fail to convert their qualitative judgments of defendants' conduct into consistent, meaningful dollar amounts. This Article tests this prediction and finds modest support for the thesis that experience across different types of cases will lead to greater consistency in awards. Despite this support, numerous studies of damage awards in real cases detect a generally sensible pattern of damage awards. The article tries to reconcile the largely coherent pattern of real-world results with the experimental findings and suggests that careful attention to sources of coherence and incoherence can help reconcile experimental and real-world results.

Abstract:
The national settlement terminated the attorney generals' tobacco litigation before legal theories were fully tested. The theory of parens patriae, which allows the state to sue on behalf of its citizens, was developed in detail by Louisiana's legal team and has implications beyond the tobacco litigation. Understanding this theory is useful to understanding the reach and limits of state power in possible future actions such as those involving guns or other products that states may jointly challenge.

Abstract:
The national settlement terminated the attorney generals' tobacco litigation before legal theories were fully tested. The theory of parens patriae, which allows the state to sue on behalf of its citizens, was developed in detail by Louisiana's legal team and has implications beyond the tobacco litigation. Understanding this theory is useful to understanding the reach and limits of state power in possible future actions such as those involving guns or other products that states may jointly challenge.

Abstract:
Exxon Shipping Co. v. Baker acknowledged what virtually all methodologically sound punitive damages research shows. The Supreme Court relied in part on an article by the present authors and others to state that empirical studies undercut the most audible criticism of punitive damages and that no mass of runaway punitive awards existed. Paradoxically, the Court simultaneously expressed concern about jury predictability based on a high mean and standard deviation in the punitive-compensatory ratio published in our article. The Court therefore reduced a $2.5 billion punitive award relating to the Exxon Valdez oil spill to $500 million to implement a 1:1 punitive-compensatory ratio and stated that “the constitutional outer limit may well be 1:1.” This article shows that our empirical findings relied on by the Court do not support the unpredictability concern or widely applying the limiting ratio. The high mean and standard deviation are artifacts of not accounting for the key variable that explains punitive awards - the compensatory award. Stratifying the mean and standard deviation of the punitive-compensatory ratio by the level of the compensatory award shows that the ratio is reasonably stable in high award cases and significantly and explicably more variable in low award cases. Basing doctrine on summary statistics that combine these heterogenous distributions is not statistically supportable. The award reduction in Exxon Shipping may have promoted consistency with other high compensatory award cases but the 1:1 principle the case hints at is not statistically supportable across the broad range of compensatory awards, and could contribute to an inability to tailor punitive awards to the facts and circumstances of particular cases.

Punitive Damages, Tort, Empirical Studies

Abstract:
This article provides the first empirical analysis of punitive damages in securities arbitrations. Using a data set of over 6,800 securities arbitration awards, we find that claimants prevailed in 48.9 percent of arbitrations, and that 9.1% of those claimant victories included a punitive damages award. The existence of a punitive damages award was associated with claims that suggested egregious misbehavior and with claims that provided higher compensatory awards. The pattern of punitive awards is more consistent with a traditional view of punitive damages that incorporates a retributive component than with a law and economics emphasis on efficient deterrence. We also test whether securities arbitration results in different punitive damages compared with litigation before juries and judges. The relation between punitive and compensatory awards did not differ substantially between the securities arbitrators’ data and data on juries available from periodic Civil Justice Surveys by the Bureau of Justice Statistics. The rate of punitive awards by arbitrators was higher than the overall rates for juries and judges and slightly lower than the rate of punitive awards by juries in cases lacking bodily injury.

Securities, Arbitration, Punitive Damages

Abstract:
We study jury trial waivers in a data set of 2,816 contracts contained as exhibits in Form 8-K filings by reporting corporations during 2002. Because these contracts are associated with events deemed material to the financial condition of SEC-reporting firms, they likely are carefully negotiated by sophisticated, well-informed parties and thus provide presumptive evidence about the value associated with the availability of jury trials. Only a small minority of contracts, about 20 percent, waived jury trials. An additional nine percent of contracts had arbitration clauses that effectively preclude jury trials though the reason for arbitration clauses need not specifically relate to juries. We explore three groups of factors to explain the pattern of jury trial waivers: (1) contract-specific factors: the subject matter of a contract, a measure of its standardization, choice of law, and choice of forum, (2) contracting-party factors: domestic vs. international status, place of business, place of incorporation, attorney locale, and industry, and (3) factors external to the contracts and parties: perceptions of local jury fairness in the forum specified in the contract and the relative length of jury and bench trial queues in that forum. Contract-type is significantly associated with jury trial waivers. For example, over 50 percent of security agreements and over 60 percent of credit commitments waived jury trials. In contrast, only five percent of employment contracts, two percent of bond indentures, and 3.5 percent of pooling service agreements waived jury trials. Choice of forum, greater contract standardization, and perceived fairness of juries are significantly associated with jury trial waivers. Over 80 percent of the contracts designating Illinois as a forum contained jury trial waivers whereas less than half the contracts designating New York as a forum, and only about one-third of the contracts designating California, Texas, or Florida as a forum contained waiver clauses. Jury trial waivers were not more common in international contracts. Our results suggest that, contrary to a widespread perception about the alleged inadequacies of juries in complex business cases, sophisticated actors may perceive that juries often add value to dispute resolution.

Juries, Contracts, Trials, Corporations, Bivariate Probit

Abstract:
Using a database that combines all federal civil trials and appeals decided since 1988, we find that defendants succeed more than plaintiffs on appeal from civil trials. Defendants appealing their losses after trial obtain reversals at a 33% rate, while losing plaintiffs succeed in only 12% of their appeals from trials. Both descriptive analyses of the results and more formal regression models dispel explanations based solely on selection of cases and instead support an explanation based on appellate judges' attitudes toward trial-level adjudicators. The large difference between appellate court and trial court probably stems from the appellate judges' misperceptions about the trial-level treatment of plaintiffs. The appellate court consequently is more favorably disposed to the defendant than are the trial judge and the jury.

Abstract:
After establishing the importance of knowledge of settlement rates, this article first shows that different research questions can yield different settlement rates. Using data gathered from about 3,300 federal cases in the Eastern District of Pennsylvania (EDPA) and the Northern District of Georgia (NDGA), differing measures of settlement emerge depending on whether one is interested in (1) settlement as a proxy for plaintiffs' litigation success, or (2) settlement as a measure of litigated disputes resolved without final adjudication. Using settlement as a proxy for plaintiff success, we estimate the aggregate settlement rate across case categories in the two districts to have been 66.9% in 2001-02. Regardless of the method of computing settlement rates, no reasonable estimate of settlement rates supports an aggregate rate of over 90% of filed cases, despite frequent references to 90% or higher settlement rates. The aggregate rate for the EDPA alone was 71.6% and for the NDGA alone was 57.8%, suggesting significant interdistrict variation, which persists even within case categories. We report separate settlement rates for employment discrimination, constitutional tort, contract, and tort cases in the two districts. The highest settlement rate was 87.2% for tort cases in the EDPA and the lowest was 27.3% for constitutional tort cases in the NDGA. Our results suggest a hierarchy of settlement rates. Of major case categories, tort cases tend to have the highest settlement rates, then contract cases, then employment discrimination cases, followed by constitutional tort cases. Attorney fee structure and the nature of the parties may explain settlement rate variation. Our findings provide no evidence of a material change in aggregate settlement rates over time.

Settlement, Litigation, Courts, Civil Rights, Tort

Abstract:
We study choice of law and choice of forum in a data set of 2,882 contracts contained as exhibits in Form 8-K filings by reporting corporations over a six month period in 2002 for twelve types of contracts and a seven month period in 2002 for merger contracts. These material contracts likely are carefully negotiated by sophisticated parties who are well-informed about the contract terms. They therefore provide evidence of efficient ex ante solutions to contracting problems. In prior work examining merger contracts, acquiring firms incorporated in Delaware tended to select Delaware law or a Delaware forum to govern disputes under the merger agreements less frequently than firms in other states (New York in particular) specified the law or forum of those states. For the broader variety of contracts analyzed here, the contracting parties rarely opt for Delaware law other than for merger contracts and contracts establishing Delaware business trusts. New York law is the favored choice, with New York law chosen in 46 percent of the contracts and Delaware law, the second most frequent selection, chosen in 15 percent of the contracts. New York law was overwhelmingly favored for financing contracts, but was also preferred for most other types of contracts. With respect to choice of forum, the major finding is that a litigation forum was specified only for 39 percent of the contracts. Among those 39 percent of contracts, New York is the favored forum, accounting for 41 percent of the choices, with Delaware a distant second and accounting for 11 percent of the forum choices. When a forum is specified it usually matches the contract's choice of law. We also explore the decision to designate a forum, mismatches between choice of law and choice of forum, and whether parties designate an exclusive litigation forum. Overall, New York law plays a role for major corporate contracts similar to the role Delaware law plays in the limited setting of corporate governance disputes.

Abstract:
Researchers have long used federal court data assembled by the Administrative Office of the U.S. Courts (AO) and the Federal Judicial Center (FJC). The data include information about every case filed in federal district court and every appeal filed in the twelve non-specialized federal appellate courts. The varied uses of the AO database have led to its being called "by far the most prominent" database used by legal researchers for statistical analysis of case outcomes. Like many large data sets, the AO data are not completely accurate. Some reports exist relating to the AO data's reliability, but no systematic study of the AO's non-bankruptcy data has been published. In the course of a substantive study of federal litigation brought by inmates, one of us began to investigate the nature and rate of errors, exploiting a technological innovation in federal court records: the availability of docket sheets over the Internet via the federal judiciary's Public Access to Court Electronic Records project (PACER). This Article follows a similar method to begin more comprehensively the process of assessing the AO data's reliability.

Our study looks at two large categories of cases, torts and inmate civil rights, and separates two aspects of case outcomes: which party obtained judgment and the amount of the judgment when plaintiffs prevail. With respect to the coding for the party obtaining judgment, we find that the AO data are very accurate when they report a judgment for plaintiff or defendant, except in cases in which judgment is reported for plaintiff but damages are reported as zero. As to this anomalous category (which is far more significant in the inmate sample than in the torts sample), defendants are frequently the actual victors in the inmate cases. In addition, when the data report a judgment for "both" parties (a characterization that is ambiguous even as a matter of theory), the actual victor is nearly always the plaintiff. Because such cases are quite infrequent, this conclusion is premised on relatively few observations and merits further testing.

With respect to award amounts, we find that the unmodified AO data are more error prone, but that the data remain usable for many research purposes. While they systematically overestimate the mean award, the data apparently yield a more accurate estimate as to median awards. Researchers and policymakers interested in more precise estimates of mean and median awards have two reasonably efficient options available. First, as described below, they can exclude two easily identified classes of awards with evidently suspect values entered in the AO data. Second, using PACER or courthouse records, they can ascertain the true award only in the suspect cases without having to research the mass of cases. Either technique provides reasonable estimates of the median award. The second technique may provide a reasonable estimate of the mean award, at least for some case categories.

litigation, administrative office, torts, inmate litigation, damages

Abstract:
This article assesses the relation between punitive and compensatory damages by combining two data sets of extreme awards with state court data from the National Center for State Courts (NCSC) for 1992, 1996, and 2001. One data set of extreme awards consists of punitive damages awards in excess of $100 million from 1985 through 2003, gathered by Hersch and Viscusi (H-V); the other includes the National Law Journal's (NLJ) annual reports of the 100 largest trial verdicts from 2001 to 2004. The integration of these data sets provides the most comprehensive picture of punitive damages in American civil trials to date. Combining the data sets assists in observing the punitive-compensatory relation throughout the full range of trial awards. The large H-V and NLJ awards appear to fit comfortably within the pattern observed for the broader NCSC data set. We report regression results combining the three data sets, which yield reasonable models of the relation between punitive and compensatory damages. The models indicate that the compensatory award explains more than 50 percent of the variance in the punitive award. We also find no increase in punitive or compensatory awards over time in any of the three data sets.

punitive damages, juries, trials, litigation

Abstract:
Whites support the death penalty more than blacks, and men more than women. But do these differences or others like them influence how a person votes when they sit on a capital jury?
Answering that question is complicated. Whatever influence a juror's personal characteristics have on her vote is hard to detect. First, a juror's personal characteristics may get lost in the facts of the case. A juror will tend to vote for death in strong cases and for life in weak ones no matter what her own characteristics. Second, a juror's personal characteristics may get lost in the process of deliberation. The final verdict reflects the jury's will, not the individual juror's. We address both problems. We address the first by using statistical techniques to control for the facts most likely to influence a juror's verdict, thereby isolating the influence of a juror's personal characteristics. We address the second by examining each juror's first vote on the defendant's sentence, thereby revealing her own judgment before the majority can work its will.

Our findings are sobering. A juror's personal characteristics do indeed influence who is sentenced to life and who to death. The most powerful personal characteristics influencing a capital juror's first vote are race, religion, and how strongly the juror believes death is the appropriate punishment for murder. Moreover, the first vote and the factors that influence it are critically important since the first vote usually determines the final one. The initial majority rules. Finally, because black jurors are rarely a majority of the jury's members, majority rule usually means white rule.

Abstract:
The Class Action Fairness Act has taken on its real form through construction by the federal judges. That form emerges in this empirical study of judicial activity and receptivity in regard to the Act. Our data comprise the opinions under the Act published during the two and a half years following its enactment in 2005.

CAFA has produced a lot of litigation in its short life. The cases were varied, of course, but most typically the resulting published federal opinion involved a removed contract case, with the dispute turning on the statute's effective date or on federal jurisdiction. Even though the opinions shed some light on issues such as jurisdictional burden and standard of proof, most of the judicial activity was socially wasteful litigation. It emphasized transitional efforts to interpret sloppily drafted provisions.

More interesting, we saw wise but value-laden resistance by judges to CAFA, as they interpreted it in a way to dampen the early hopes of overly enthusiastic removers. Regression analysis confirms the suggestion that one can derive from percentages of cases decided in certain ways. With the exception of Republican male judges, the federal judiciary has not warmly embraced the statute.

Abstract:
This article reports on an empirical study of forum shopping in all bankruptcy reorganization of large, public companies from 1980 through 1997 (273 cases). Principal findings include: (1) forum shopping increased from about 20% to between 50% and 86% over the period studied, (2) the principal destination for shopping changed abruptly from New York to Delaware about 1990, (3) Delaware achieved a virtual national monopoly on these kinds of case by 1996, before the Chief Judge in Delaware took the large cases from the Bankruptcy judges, (4) Delaware processes cases a little faster than other districts but the difference is not statistically significant, (5) shopping rates differ significantly for firms in different cities, suggesting that shopping is in significant part a rejection of particular courts. The study is based on data from Lynn M. LoPucki's Bankruptcy Research Database.

Abstract:
State Supreme Courts (SSCs) exercise two major sources of authority: mandatory and discretionary jurisdiction. This article assesses 7,055 SSC cases decided with written opinions in 2003 to provide the first comprehensive study of the relation between jurisdictional source and SSC performance. Approximately half the cases were discretionary and half were mandatory. Jurisdictional source is associated with several important aspects of SSC behavior. Aggregated across states, 51.6 percent of discretionary jurisdiction cases resulted in reversal compared to 28.1 percent for mandatory cases. Dissent rates also vary by jurisdictional source: 26.7 percent of discretionary cases generated at least one dissenting opinion compared to 18.8 percent of mandatory cases. Striking interstate variation overlays the mandatory-discretionary distinction. Reversal rates in SSC discretionary jurisdiction cases ranged from 88 percent in Texas to 31 percent in Ohio. Across courts with substantial mandatory jurisdiction, reversal rates ranged from 68 percent in Arizona to 13 percent in Florida and 9 percent in the Texas Court of Criminal Appeals. These results are robust to models that account for state and case category effects. Surprisingly, after controlling for state and case category, discretionary case opinions are short than mandatory case opinions. Our evidence suggests that studies of SSC outcomes, dissent patterns, judicial policy preferences, and other characteristics should take account of jurisdictional source.

courts, jurisdiction, selection effects

Abstract:
Why do black defendant-black victim cases receive by far the lowest rate of death sentences? One hypothesis is that prosecutors devalue black victims' lives and do not regard black-victim murders as seriously as white victim murders. A second hypothesis, one that need not preclude the first, posits that black communities' aversion to the death penalty leads prosecutors to seek it less, or juries to impose it less, in minority communities. The first view represents a version of old-fashioned stereotypical racism. The second hypothesis could be regarded as democracy at work. Communities more hostile to the death penalty elect officials and process criminal cases in a manner that reflects local community values. This Article finds that, in addition to the number of murders, three other demographic factors influence the death sentence rate at the county level. The rate of death sentences decreases as a county's black population percent increases, as a county's per capita income increases, and as a county's homicide rate increases.

Death penalty, capital punishment, race, sentencing

Abstract:
This article reports the findings of the first phase of a three phase empirical study of the death penalty in Delaware. In phase 1, we examined only cases in which the defendant was sentenced to death. While our findings are preliminary, there appear to be, as numerous other studies have found in other jurisdictions, race of victim effects. Seventy percent of the death sentences were imposed in white victim cases, even though the majority of the murder victims are black. Additionally, Delaware has one of the highest death sentencing rates in the country. This high rate appears to be the result of a change in the Delaware death sentencing scheme from jury to judge sentencing. When that change was implemented, the number of death sentences rose dramatically. Our preliminary findings also reveal a geographic effect. Two thirds of the death sentences were imposed in New Castle County, 29% were imposed in Kent County and only 5% of the death sentences resulted from murders which occurred in Sussex County. Finally, in analyzing the outcomes of the cases in which the defendant was sentenced to death on appeal, we found an overall error rate of 44%.

Abstract:
This article revisits the controversy regarding how foreigners fare in U.S. courts. The available data, if taken in a sufficiently big sample from numerous case categories and a range of years, indicate that foreigners have fared better in the federal courts than their domestic counterparts have fared. Thus, the data offer no support for the existence of xenophobic bias in U.S. courts. Nor do they establish xenophilia, of course. What the data do show is that case selection drives the outcomes for foreigners. Foreigners' aversion to U.S. forums can elevate the foreigners' success rates, when measured as a percentage of judgments rendered. Yet that aversion waxes and wanes over the years, having generally declined in the last twenty years but with an uptick subsequent to 9/11. Accordingly, that aversion has caused the foreigners' advantage to follow the same track.

Abstract:
This article tests beliefs about the relation between local demographics and trial outcomes. It analyzes damages awards and plaintiff trial win rates at trials in federal and state courts for torts cases, products liability cases, and employment cases. In federal court trials, we find no robust evidence that award levels correlate with population demographics in the expected directions. A persistent result is a negative relation between award levels and black population percentages. We also do not find robust evidence that local demographics help explain plaintiff win rates. We do find a significant correlation between larger black population percentages and the likelihood of a plaintiff trial win in urban job discrimination, products liability, and torts cases. State court trials yield no robust evidence that race, income, or urbanization substantially help explain award levels. Poverty rates do have marginally significant correlations with increased award levels in torts and employment cases. And plaintiff win rates do correlate positively with poverty rates in state court tort cases, but this effect does not emerge in products liability or employment cases. Overall, we find little evidence of consistent demographic effects on trial outcomes.

juries, census, trials, damages

Abstract:
This article presents: (1) meta analyses of studies of cardioprotection of women and men by statins, including Lipitor (atorvastatin), and (2) a legal analysis of advertising promoting Lipitor as preventing heart attacks. The meta analyses of primary prevention clinical trials show statistically significant benefits for men but not for women, and a statistically significant difference between men and women. The analyses do not support (1) statin use to reduce heart attacks in women based on extrapolation from men, or (2) approving or advertising statins as reducing heart attacks without qualification in a population that includes many women. The legal analysis raises the question whether Lipitor's advertisements, which omit that Lipitor's clinical trial found slight increased risk for women, is consistent with the Food, Drug, and Cosmetics Act and related Food and Drug Administration (FDA) regulations. The analysis suggests that FDA regulation should not preempt state law actions challenging advertising that is not supported by FDA-approved labeling. Our findings suggesting inadequate regulation of the world's best-selling drug also counsel against courts accepting the FDA's claimed preemption of state law causes of action relating to warnings and safety. Courts evaluating preemption claims should consider actual agency performance as well as theoretical institutional competence. Billions of health care dollars may be being wasted on statin use by women but the current regulatory regime does not create incentives to prevent such behavior.

preemption, statins, FDA

Abstract:
We examine support for the death penalty among a unique group of respondents: one hundred and eighty-seven citizens who actually served as jurors on capital trials in South Carolina. Capital jurors support the death penalty as much as, if not more than, members of the general public. Yet capital jurors, like poll respondents, harbor doubts about the penalty's fairness. Moreover, jurors?black jurors and Southern Baptists in particular?are ready to abandon their support for the death penalty when the alternative to death is life imprisonment without the possibility of parole, especially when combined with a requirement of restitution. Support for the death penalty therefore exists side by side with doubts about its fairness and a distinct preference for some alternative to it. What explains this deadly paradox?

We suggest that the paradox arises where democratic politics fails to make life imprisonment without parole one of the alternatives to death, or where public education fails to inform or persuade jurors that capital defendants sentenced to life imprisonment will really remain in prison for the rest of their lives.

Abstract:
We examine support for the death penalty among a unique group of respondents: one hundred and eighty-seven citizens who actually served as jurors on capital trials in South Carolina. Capital jurors support the death penalty as much as, if not more than, members of the general public. Yet capital jurors, like poll respondents, harbor doubts about the penalty's fairness. Moreover, jurors?black jurors and Southern Baptists in particular?are ready to abandon their support for the death penalty when the alternative to death is life imprisonment without the possibility of parole, especially when combined with a requirement of restitution. Support for the death penalty therefore exists side by side with doubts about its fairness and a distinct preference for some alternative to it. What explains this deadly paradox?

We suggest that the paradox arises where democratic politics fails to make life imprisonment without parole one of the alternatives to death, or where public education fails to inform or persuade jurors that capital defendants sentenced to life imprisonment will really remain in prison for the rest of their lives.

Abstract:
Disputes over forum often center on whether a case should proceed in state or federal court. Removal to federal court can trigger a costly forum struggle. When a state case is removed to federal court only to be sent back to state court, the time and resources incurred in the detour are a toll on the judicial system and waste parties' resources. We find erroneous removal to be an increasing problem. From 1993 to 2002, a period when state tort filings noticeably decreased, the number of removed diversity tort cases increased by about 10% to about 8,900 per year. By 2003, removed cases comprised over 30% of the federal diversity docket. The percentage of removals ultimately remanded to state court increased significantly to about 20% in 2003, with the remand rate exceeding 50% in some districts. Thus, as more cases purporting to satisfy diversity jurisdiction were being removed to federal court, and just as removals were occupying an increasing part of the federal docket, removed cases were being remanded to state court at increasing rates. Erroneous removal is a growing phenomenon that should be addressed as part of serious consideration of tort reform.

Removal, remand, tort reform, litigation, procedure

Abstract:
Archival information about the legal system should inform policymaking. Despite claims of soaring civil damages awards, modern historical data show no little growth in tort awards and no real growth in punitive damages awards. The data also show a dramatic 40-year decline in trial rates from over 10 percent of case dispositions to less than two percent. The decline needs to be explained in part by using archival data. Contrary to perceptions underlying the Class Action Fairness Act of 2005, little systematic evidence exists that state and federal courts process class actions significantly differently. These results contradict the publicity campaigns and empirical studies generated by parties with policy agendas. If society does not preserve accurate information about the legal system, and promote the information's analysis and dissemination, questionable analysis will be supplied to suit the policy agendas of special interest groups. Society would not consider making economic policy being without systematic knowledge of past economic experience. It would not consider making health care policy without systematic knowledge of past pandemics, epidemics, successful health campaigns, or toxic incidents. Society should demand no less before making legal policy.

civil justice, trials, juries, class actions, torts

Abstract:
Judicial impact studies have generally found widespread compliance by lower courts. Often, however, these studies employ relatively insensitive measures of compliance, limit their focus to compliance with Supreme Court precedent, and only occasionally examine the impact of judicial decisions on the ultimate consumers of those rulings - the members of society who are subject to them. Significant questions thus remain, such as whether and to what extent lower courts in fact comply with precedent and what if any role fear of reversal plays in compliance. To address these gaps, we use regression analysis to examine how the district courts in the Second Circuit responded to the decision of the Court of Appeals in Goldberger v. Integrated Resources, Inc., a case that mandated strict scrutiny by trial court judges of attorneys' fee applications in class actions. Contrary to what might be expected, Goldberger is not correlated with a general decline in fee awards or fee requests or increased judicial scrutiny of requests. Instead, we find that as settlement size increases, both fee requests and fee awards rise at a slower rate in the cases subject to Goldberger while judicial scrutiny increases. As large settlements are the most likely to be appealed, this finding supports the proposition that compliance is tied to the probability of appeal and reversal.

Abstract:
The U.S. Chamber of Commerce uses its Survey of State Liability to criticize judiciaries and seek legal change but no detailed evaluation of the survey’s quality exists. This article presents evidence that the survey is substantively inaccurate and methodologically flawed. It incorrectly characterizes state law; respondents provide less than 10% correct answers for objectively verifiable responses. It is internally inconsistent; a state threatened with judicial hellhole status ranked first in the survey while venues not on the list ranked lower. The absence of correlation between survey rankings and observable activity suggests that other factors drive the rankings. Two factors may help explain them. First, persistent low ranking of Gulf Coast states indicates that corporate counsel cannot shed hostility to states that were prominent in asbestos and tobacco litigation, notwithstanding changes in state laws. Second, low rankings of populous states suggest respondents fail to distinguish between rates of events and the absolute number of events. Adverse events in large states may occur more often but not necessarily at higher rates than in small states. The Chamber’s uses of the survey fail to account for the sample design, fail to account for the same respondent rating multiple states, fail to account for industry effects, and fail to distinguish among respondents based on their knowledge of a state. The survey may discourage investment in the U.S. and corporate risk managers’ views suggest that the survey promotes corporate behavior that needlessly endangers the public.

tort reform, courts, punitive damages, class actions, juries

Abstract:
Civil justice issues play a prominent role in society. Family law issues such as divorce and child custody, consumer victimization issues raised by questionable trade practices, and tort issues raised by surprisingly high estimated rates of medical malpractice, questionable prescription drug practices, and other behavior are part of the fabric of daily life. Policymakers and interest groups regularly debate and assess whether civil problems are best resolved by legislative action, agency action, litigation, alternative dispute resolution, other methods, or some combinations of actions. Yet we lack systematic quantitative knowledge about the primary events in daily life that generate civil justice issues. This paper explores the desirability of, and issues related to, creating a national civil justice survey, analogous to the National Crime Victimization Survey.

tort, civil justice, litigation

Abstract:
The prevailing 'expert' opinion is that jury verdicts are largely immune to appellate revision. Using a database that combines all federal civil trials and appeals decided since 1988, we find that jury trials, as a group, are in fact not so special on appeal. But the data do show that defendants succeed more than plaintiffs on appeal from civil trials, and especially from jury trials. Defendants appealing their losses after trial by jury obtain reversals at a 31% rate, while losing plaintiffs succeed in only 13% of their appeals from jury trials. Both descriptive analyses of the results and more formal regression models dispel explanations based on selection of cases and instead support an explanation based on appellate judges' attitudes toward trial-level adjudicators. That is, these attitudes make the appellate court more favorably disposed to the defendant than are the trial judge and the jury. The especially large differences between appellate court and trial jury dispositions probably stems from the appellate judges' sizable misperceptions about the jury.

Abstract:
Many empirical legal studies use data on plaintiffs' rate of success, because of those data's ready availability and apparent import. Yet these win rates are probably the slipperiest of all judicial data. Win rates are inherently ambiguous because of the case-selection effect. The litigants' selection of the cases brought produces a biased sample from the mass of underlying disputes. The settlement process, usually conducted by rational and knowledgeable persons who take into account and thereby neutralize the very factor that one would like to study, produces a residue of litigated cases for which the win rate might indicate nothing more than the percentage of successful plaintiffs in this peculiar and nonrandom sample of cases. Nevertheless, careful research and theorizing can sometimes tease out an explanation of win-rate data by isolating case-selection effects to reveal meaningful non-case-selection effects, such as the effect of the forum chosen. This artful process of win-rate explanation involves controlling for and otherwise investigating other variables to see which of the possible explanations conform to the additional evidence, and then applying a plausibility screen to the surviving explanations.

Plaintiffs' win rates in removed cases are very low, compared to cases brought originally in federal court and to state cases. For example, the win rate in original diversity cases is 71%, but in removed diversity cases it is only 34%. In a regression controlling for many case variables, this removal effect remains sizable and significant. The explanation for this phenomenon could be the ready one based on the purpose of removal: by defeating the plaintiffs' forum advantage, defendants thereby shift the biases, inconveniences, court quality, and procedural law in their own favor. Alternatively, the explanation might lie not in forum impact, but instead in case selection: removed cases may simply be a set of weak cases involving (i) out-of-state defendants who have satisfied or settled all but plaintiffs' weakest cases or (ii) plaintiffs' attorneys who have demonstrated their incompetence by already exposing their clients to removal. Our analysis suggests that both case selection and forum impact are at work. Thus, forum really does affect outcome, with the removal process taking the defendant to a much more favorable forum.

Abstract:

Abstract:
We report on a comprehensive data base of eighteen years of published opinions (1993-2008, inclusive) on settlements in class action and shareholder derivative cases in both state and federal courts. An earlier study, covering 1993-2002, revealed a remarkable relationship between attorneys’ fees and the size of class recovery: regardless of the methodology for calculating fees ostensibly employed by the courts, the overwhelmingly important determinant of the fee was simply the size of the recovery obtained by the class. The present study, which nearly doubles the number of cases in the data base, powerfully confirms that relationship. Fees display the same relationship to class recoveries in both data sets and neither fees nor recoveries materially increased over time. Although the size of the class recovery dwarfs other influences, significant associations exist between the fee amount and both the fee method used and the riskiness of the case. We found no robust evidence of significant differences between federal and state courts. The strong association between fee and class recovery persists in cases with recoveries of $100 million or more, as do the significant associations between fee level and fee method and risk. Fees were not significantly affected by the existence of a settlement class, the presence of objectors, or opt outs from the class. Courts granted the requested fee in over 70% of the cases, with the Second Circuit granting the requested amount least often. In cases in which the requested fee was not awarded, the mean fee was 68% of the requested amount. Fees and costs exhibit scale effects with the percent of each decreasing as the class recovery amount increased. Costs are strongly associated with hours expended on the case.

Attorney Fees, Class Actions, Litigation

Abstract:
A central feature of the litigation process that affects case outcomes is the selection of cases for litigation. In this study, we present a theoretical framework for understanding the operation of this suit selection process and its relationship to the underlying distribution of potential claims and claimants. We implement the model empirically by assuming that individuals vary more in their litigiousness (inverse costs of litigation) than do corporations. This assumption, coupled with the case selection process we present, yields clear predictions on trial rates as a function of whether the plaintiff and defendant were individuals or corporations. The model also yields a prediction on the plaintiff's win rate in lawsuits as a function of the plaintiff's identity. Our empirical analysis, using data on over 200,000 federal civil litigations, yields results that are generally consistent with the theory. Lawsuits where the plaintiff is an individual are found to have higher trial rates and lower plaintiff win rates.

Abstract:
The process through which cases are selected for litigation cannot be ignored because it yields a set of lawsuits and plaintiffs that is far from a random selection either of potential claims or of potential claimants. We present a theoretical framework for understanding the operation of this suit-selection process and its relationship to the underlying distribution of potential claims and claimants. The model has implications for the trial rate and the plaintiff win rate at trial. Our empirical analysis, using data on over 200,000 federal civil litigations, yields results that are strongly consistent with the theory.

Abstract:
We develop a model of the plaintiff's decision to file a law suit that has implications for how differences between the federal government and private litigants and litigation translate into differences in trial rates and plaintiff win rates at trial. Our case selection model generates a set of predictions for relative trial rates and plaintiff win rates depending on the type of case and whether the government is defendant or plaintiff. In order to test the model, we use data on about 350,000 cases filed in federal district court between 1979 and 1997 in the areas of personal injury and job discrimination where the federal government and private parties work under roughly similar legal rules. We find broad support for the predictions of the model.

Abstract:
Theoretical works suggest that granting a supreme court discretion in choosing the cases to be decided on the merits could shift dockets away from traditional case-based adjudication and towards issue-based adjudication. According to this prediction, legislatures can recast supreme courts’ roles in society by modifying jurisdictional rules. This study tests this prediction empirically. Using a newly assembled data set on appeals terminated by the Taiwan Supreme Court for the period 1996-2008, we study the effect of jurisdictional-source procedural reform, a switch from mandatory jurisdiction to discretionary jurisdiction in 2003, on the Taiwan Supreme Court’s performance. Our study shows that the 2003 reform failed to transform the function of the Court from correcting error to a greater role in leading the development of legal doctrine as intended by the legislature. Our findings suggest that a supreme court can adjust the way it conducts business according to its own preference and the role it defines for itself, which are influenced both by the background against which it operates and the inertia of its members’ working habits. Our study informs policy-makers that merely amending procedural rules, without more, is unlikely to change the function of a supreme court. Our findings also suggest that statutorily dictated mandatory jurisdiction may not be implemented by a high court faced with caseload pressure.

Courts, Jursidiction, Appeals

Abstract:
This article assesses the relation between punitive and compensatory damages in a data set, gathered by Hersch and Viscusi (H-V), consisting of all known punitive damages awards in excess of $100 million from 1985 through 2003. It shows that a strong, statistically significant relation exists between punitive and compensatory awards, a relation that replicates similar findings in nearly all other analyses of punitive and compensatory damages. H-V's claim that no significant relation exists between punitive and compensatory awards in these data appears to be an artifact of questionable regression methodology.

punitive damages, regression

Abstract:
Study of two comprehensive class action case data sets covering 1993-2002 shows that the amount of client recovery is overwhelmingly the most important determinant of the attorney fee award. Even in cases in which the courts engage in the lodestar calculation (the product of reasonable hours and a reasonable hourly rate), the client's recovery generally explains the pattern of awards better than the lodestar. Thus, the time and expense of a lodestar calculation may be wasteful. We also find no robust evidence that either recoveries for plaintiffs or fees of their attorneys increased over time. The mean fee award in common fund cases is well below the widely quoted one-third figure, constituting 21.9 percent of the recovery across all cases for a comprehensive data set of published cases. A scaling effect exists: fees constitute a lower percent of the client's recovery of the client's recovery increases. Fees are also correlated with risk: the presence of high risk is associated with a higher fee, while low-risk cases generate lower fees. Fees as a percent of class recovery were found to be higher in federal than state court. The presence of "soft" relief (such as injunctive relief or coupons) has no material effect on the fee, regardless of whether the soft relief was included in the quantified benefit for the class used as the basis for computing the attorney fee. The study also addressed costs and expenses. Like fees, these displayed significant scale effects. The paper proposes a simple methodology by which courts can evaluate the reasonableness of fee requests.

fees, class actions

Abstract:
This article suggests that increases in awards in one area of law should not be evaluated in isolation from all other areas of law. Comparing the time trend in awards in federal torts and products liability cases with the trend in federal contracts cases yields a useful perspective on increases in damages awards in torts and products liability cases. For example, the finding that contract awards have risen faster than tort awards has important implications for the source of torts awards increases.

The article then tries to put two headline-grabbing punitive awards in perspective. By showing the relation between the Exxon Valdez punitive award and the mass of punitive awards, it suggests that the Exxon award, though headline-grabbing because of its size, fits in the larger, sober mass of awards. The article suggests that the Ninth Circuit's opinion in Exxon Valdez incorrectly quantified the harm against which the punitive award should be measured. The largest punitive award, that against the tobacco industry in Engle, can best be understood against the background of the tobacco industry's national settlement of actions brought by the state attorneys general.

punitive damages, juries, torts, tobacco

Abstract:
Determining whether race, sex, or other juror characteristics influence how capital case jurors vote is difficult. Jurors tend to vote for death in strong cases and for life in weak ones no matter what their own characteristics. And a juror's personal characteristics may get lost in the process of deliberation
because the final verdict reflects the jury's will, not the individual juror's. Controlling for the facts likely to influence a juror's verdict helps isolate the influence of a juror's personal characteristics. Examining each juror's first sentencing vote reveals her own judgement before the majority works its will. Race, religion, and how strongly the juror believes death is the appropriate punishment for murder influence a capital juror's first vote, which usually determines the final vote. Because black jurors are rarely a majority of the jury's members, majority rule usually means white rule.

Abstract:
This study compares the scholarly impact of inbred entry-level law school faculty members. The sample includes 32 law schools and approximately 700 entry-level faculty members. By our measure of performance, scholarly impact as measured by citation frequency, inbred entry-level law school faculty members do not perform as well as non-inbred entry-level faculty members.

Abstract:
This article assesses the relation between compensatory damages and punitive damages in cases leading to published opinions and BMW v. Gore's impact on the patterns of punitive damages awards in these opinions. We find that punitive damages awards are considerably higher in cases leading to published opinions than in trial level cases. But the correlation between compensatory and punitive awards found in trial level data persists in published opinions and is all but indistinguishable from the correlation in trial level data. We find no significant difference in the pattern of awards before and after BMW and no significant difference in the rate at which courts order a reduction in punitive damages awards. We also find that the mass of trial level awards provides a powerful tool for predicting the outcome of judicial review of punitive damages awards.

Abstract:
Using one year of jury trial outcomes from 45 of the nation's most populous counties, this article shows a strong and statistically significant correlation between compensatory and punitive damages. These findings are replicated in twenty-five years of punitive damages awards from Cook County, Illinois and California. In addition, we find no evidence that punitive damages awards are more likely when individuals sue businesses than when individuals sue individuals. With respect to award frequency, juries rarely award punitive damages, and appear to be especially reluctant to do so in the areas of law that have captured the most attention, products liability and medical malpractice. Punitive damages are most frequently awarded in business/ contract cases and intentional tort cases. The frequency-of-award findings are consistent with all major studies of punitive damages.

Abstract:
This study finds significant correlations between board size and profitability and between board size and solvency in a sample of small and mid-size firms. Several studies hypothesize a relationship between board size and firm financial performance. Empirical tests of the relationship exist in a few studies of large U.S. firms. We find a negative correlation between board size and profitability in small and mid-size Finnish firms. Finding a board-size effect for a new and different class of firms points towards the influence of group size on risk-taking behavior as a source of the board-size effect. A new board-size effect we report, a positive correlation between board size and firm solvency, further supports the hypothesis that board-size effects result from distortions of risk-taking behavior.

Abstract:
This study finds significant correlations between board size and profitability and between board size and solvency in a sample of small and mid-size firms. Several studies hypothesize a relationship between board size and firm financial performance. Empirical tests of the relationship exist in a few studies of large U.S. firms. We find a negative correlation between board size and profitability in small and mid-size Finnish firms. Finding a board-size effect for a new and different class of firms points towards the influence of group size on risk-taking behavior as a source of the board-size effect. A new board-size effect we report, a positive correlation between board size and firm solvency, further supports the hypothesis that board-size effects result from distortions of risk-taking behavior.