Optimal Class Size, Opt-Out Rights and 'Indivisible' Remedies

36 Pages Posted: 13 Nov 2010 Last revised: 1 Nov 2011

See all articles by David M. Betson

David M. Betson

University of Notre Dame - Department of Economics

Jay Tidmarsh

Notre Dame Law School

Date Written: November 12, 2010

Abstract

Prepared for a Symposium on the ALI’s Aggregate Litigation Project, this paper examines the ALI’s proposal to permit opt-out rights when remedies and “divisible,” but not to permit them when remedies are “indivisible.” Starting from the ground up, the paper employs economic analysis to determine what the optimal size of a class action should be. We demonstrate that, in some circumstances, the optimal size of a class is a class composed of all victims, while in other cases, the optimal size is smaller. We further argue that courts should consider optimal class size in determining whether to certify a class, and that there should be no opt-out right when a class is optimally sized. The ALI’s approach does not always lead to the most efficiently sized class actions.

Keywords: Class Actions, Civil Procedure, Complex Civil Litigation, Law and Economics, Aggregate Litigation

Suggested Citation

Betson, David M. and Tidmarsh, Jay, Optimal Class Size, Opt-Out Rights and 'Indivisible' Remedies (November 12, 2010). George Washington Law Review, Vol. 79, p. 542, 2011, Notre Dame Legal Studies Paper 11-14, Available at SSRN: https://ssrn.com/abstract=1708184

David M. Betson

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

Jay Tidmarsh (Contact Author)

Notre Dame Law School ( email )

P.O. Box 780
Notre Dame, IN 46556-0399
United States
574-631-6985 (Phone)
574-631-4197 (Fax)

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