Nonpecuniary Class Action Settlements

New York University, Center for Law and Business, Working Paper No. 98-013

60 Pages Posted: 10 Jul 1999

See all articles by Geoffrey P. Miller

Geoffrey P. Miller

New York University School of Law

Lori Singer

Government of the United States of America - Office of the General Counsel

Multiple version iconThere are 2 versions of this paper

Date Written: February 1998

Abstract

Nonpecuniary settlements - agreements in which consideration other than immediate cash payments are given to class action plaintiffs in exchange for a release of liability - have become controversial methods for resolving large-scale litigation and thereby, in theory, deterring corporate misconduct. Such settlements, it is claimed, enrich attorneys but provide no substantial benefit either for the public or for the class members who have suffered harm. This study provides the first empirical and analytical investigation specifically focusing on such settlements. We categorize nonpecuniary settlements into five general types: (1) coupons, (2) securities, (3) monitoring, (4) reverter funds, and (5) fluid recoveries. We demonstrate that nonpecuniary settlements can sometimes serve the interests both of the plaintiffs and the public, although in other cases such settlements will be socially undesirable. We identify a number of features of nonpecuniary settlements that tend to enhance their value or to substantiate the inference that such settlements are fair, adequate and reasonable from the standpoint of class members. Finally, we examine a data set of 127 class action settlement notices published in the New York Times from 1993 to 1997, in order to situate the topic within the overall context of class action litigation.

Note: The views expressed in this paper are solely those of the authors and do not represent the views of the Department of Health and Human Services.

Suggested Citation

Miller, Geoffrey P. and Singer, Lori, Nonpecuniary Class Action Settlements (February 1998). New York University, Center for Law and Business, Working Paper No. 98-013. Available at SSRN: https://ssrn.com/abstract=169526 or http://dx.doi.org/10.2139/ssrn.169526

Geoffrey P. Miller (Contact Author)

New York University School of Law ( email )

Center for the Study of Central Banks
40 Washington Square South
New York, NY 10012-1099
United States
212-998-6329 (Phone)
212-995-4590 (Fax)

Lori Singer

Government of the United States of America - Office of the General Counsel ( email )

1950 N. Orchard Chicago, IL 60614
Bethesda, MD 20892-2111
312-337-7205 (Phone)
773-337-7248 (Fax)

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