Class Actions in the U.S. Experience: An Economist's Perception

Abstract

This paper, presented at a University of the Piedmont (Italy) conference in January 2007, analyzes several features of the U.S. experience with class action litigation, emphasizing suits alleging antitrust law violations. It observes that despite the trebling of damages under U.S. antitrust law, deterrence has been less than completely successful, as shown by the large number of important price-fixing conspiracies proven in recent years. It argues too that many class action suits are brought with insubstantial evidence of violation. An important motivator is the significant share of settlement damages realized by entreprenurial law firms organizing the class actions. The retention by judges of neutral economic experts can help sort out the evidentiary complexities of class action suits, but the approach is far from a panacea.

Keywords: Law and Legal Institutions