Abstract

http://ssrn.com/abstract=2414754
 


 



The Corporate Settlement Mill


Dana Remus


University of North Carolina School of Law

Adam S. Zimmerman


Loyola Law School Los Angeles

March 25, 2014

101 Virginia Law Review, 2015, Forthcoming
Loyola-LA Legal Studies Paper No. 2014-13
UNC Legal Studies Research Paper No. 2414754

Abstract:     
From cases involving “robo-signed” mortgages to catastrophic oil spills, the United States legal system increasingly encourages corporate wrongdoers to design and implement their own high-volume settlement programs to compensate thousands of unrepresented victims. These private settlement systems rely on corporate economies of scale to resolve massive disputes as comprehensively as a class action, but entirely outside of the court system. We call these systems “corporate settlement mills.”

Like class action settlements and “no fault” insurance options, corporate settlement mills may ameliorate many of the most commonly criticized features of individualized litigation. They offer redress to people who often cannot afford counsel, handle large volumes of claims quickly and predictably, and reduce court congestion. For those reasons such programs are increasingly required by federal laws, regulatory bodies and as a matter of complex litigation practice.

But corporate settlement mills also have a dark side. When sophisticated corporate actors quietly settle large numbers of cases in assembly-line fashion, they threaten transparency, fair dealing, and the rule of law. We argue that this new category of dispute resolution is more dangerous than others because a single, self-interested party — the prospective defendant itself — designs and oversees the entire determination process. Corporate settlement mills thus raise fundamental questions about how far policymakers may go to privatize our public, and historically neutral, system of adjudication.

Drawing lessons from other movements to privatize government, we argue that corporate settlement mills can provide an appropriate alternative to public adjudication as long as they remain answerable to the regulators, courts, and claimants that rely on them. We therefore offer specific suggestions to make them more accountable — including targeted prospective regulation, judicial review, stakeholder participation, and ethical reform. In so doing, we broaden the debate over what constitutes mass litigation, in the hope that lawmakers realize the benefits of large private settlements, without frustrating administrative regulation or the judiciary’s authority to “say what the law is.”

Number of Pages in PDF File: 64

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Date posted: March 27, 2014 ; Last revised: August 16, 2014

Suggested Citation

Remus, Dana and Zimmerman, Adam S., The Corporate Settlement Mill (March 25, 2014). 101 Virginia Law Review, 2015, Forthcoming; Loyola-LA Legal Studies Paper No. 2014-13; UNC Legal Studies Research Paper No. 2414754. Available at SSRN: http://ssrn.com/abstract=2414754

Contact Information

Dana Remus
University of North Carolina School of Law ( email )
160 Ridge Road
Chapel Hill, NC 27599
Adam S. Zimmerman (Contact Author)
Loyola Law School Los Angeles ( email )
919 Albany Street
Los Angeles, CA 90015-1211
United States
HOME PAGE: http://www.lls.edu/aboutus/facultyadministration/faculty/facultylists-z/zimmermanadam/
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