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Allocation Rules and the Stability of Mass Tort Class Actions

Joshua C. Teitelbaum

Georgetown University Law Center

January 2012

This paper studies the effects of allocation rules on the stability of mass tort class actions. I analyze a two-stage model in which a defendant faces multiple plaintiffs with heterogeneous damage claims. In stage 1, the plaintiffs play a noncooperative coalition formation game. In stage 2, the class action and any individual actions by opt-out plaintiffs are litigated or settled. I examine how the method for allocating the class recovery interacts with other factors -- the shape of the damage claim distribution, the scale benefits of the class action, and the plaintiffs' probability of prevailing at trial and bargaining power in settlement negotiations -- to determine the asymptotic stability of the global class. My results suggest criteria to attorney and courts for structuring and approving efficient allocations plans in mass tort class actions and for evaluating the predominance and superiority requirements for class certification in mass tort cases.

Number of Pages in PDF File: 41

Keywords: allocation rules, coalitions, damage averaging, mass tort class actions, stability

JEL Classification: C72, K41

working papers series

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Date posted: August 21, 2008 ; Last revised: November 16, 2013

Suggested Citation

Teitelbaum, Joshua C., Allocation Rules and the Stability of Mass Tort Class Actions (January 2012). Available at SSRN: http://ssrn.com/abstract=1241018 or http://dx.doi.org/10.2139/ssrn.1241018

Contact Information

Joshua C. Teitelbaum (Contact Author)
Georgetown University Law Center ( email )
600 New Jersey Avenue NW
Washington, DC 20001
United States
202-661-6589 (Phone)
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