Reverse Sampling: Holding Lotteries to Allocate the Proceeds of Small-Claims Class Actions
Tel Aviv University, Faculty of Law
December 1, 2010
George Washington Law Review, Vol. 79, 2011
Small-claims class actions pose a unique dilemma: individual awards are small, and it is often not feasible to distribute them to each and every plaintiff. Courts have devised several alternative allocation procedures to cope with this problem, but none is satisfactory.
This Article proposes a different method: paying more money to fewer, randomly sampled, claimants. As each individual award entails per-claim administrative costs, using lotteries to distribute the proceeds of small-claims class actions cuts these expenses. The Article demonstrates that this method is superior to all existing alternatives. It funnels the money back to the group of victims, achieves deterrence, and maintains administrative efficiency. Finally, the Article shows that randomization is a fair allocation mechanism as all class members are equally treated, and that the use of lotteries in this context raises no legitimacy concerns.
Number of Pages in PDF File: 38
Keywords: class-actions, lotteries, civil procedure, remedies
JEL Classification: K40, K41Accepted Paper Series
Date posted: January 17, 2011 ; Last revised: June 22, 2011
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