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The Costs of Class Actions: Allocation and Collective Redress in the U.S. Experience

Author

Listed:
  • Calabresi, Guido
  • Schwartz, Kevin S.
Abstract
Once a preserve of the American legal landscape, the class action device today transcends geographic boundaries. In the past decade, efforts have intensified to establish collective litigation instruments in diverse legal terrains outside the United States - including Europe - often with the common goal of allowing some form of collective legal redress while avoiding perceived disadvantages of class actions in the American experience. Today more than ever, from legislators to litigants to scholars, European reformers face the challenge - and the opportunity - of making fundamental choices about the scope and shape of the collective legal remedies they wish to make available. Choices about the shape of the class action device reflect foundational judgments about the proper allocation of costs, and there is much from the U.S. experience that can inform Europe's prospective reformers. This article describes the history and current status of class action rules in the U.S., and then compares class actions and another form of extra-compensatory damages - one type of punitive damages - as means of doing the same thing. Although neither punitive damages of this sort nor class actions generally have traditionally existed in civil law systems, they both - and especially this particular form of punitive damages - can, from an economic view, be made to vindicate the same kind of social cost accounting goals. By considering these legal devices together, we hope to shed light on crucial choices facing Europe as it grapples with how best to provide collective legal redress in light of the lessons of the U.S. experience with class actions.

Suggested Citation

  • Calabresi, Guido & Schwartz, Kevin S., 2011. "The Costs of Class Actions: Allocation and Collective Redress in the U.S. Experience," IEL Working Papers 1, Institute of Public Policy and Public Choice - POLIS.
    • Handle: RePEc:uca:ucaiel:1
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    Citations

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    Cited by:

    1. Ramello, Giovanni B., 2012. "Aggregate litigation and regulatory innovation: Another view of judicial efficiency," International Review of Law and Economics, Elsevier, vol. 32(1), pages 63-71.
    2. Alain Marciano & Giovanni Battista Ramello, 2023. "Foreword," European Journal of Law and Economics, Springer, vol. 56(3), pages 423-423, December.
    3. Juergen Backhaus & Alberto Cassone & Giovanni Ramello, 2011. "The law and economics of class actions," European Journal of Law and Economics, Springer, vol. 32(2), pages 165-168, October.
    4. Wang Lin, 2018. "The Effect of Compensation System on the Dispute Resolution of Securities False Statement in China: A Law and Economics Analysis," Asian Journal of Law and Economics, De Gruyter, vol. 9(3), pages 1-9, December.

    More about this item

    Keywords

    Class actions; Collective legal redress; Punitive damages; Extra-compensatory damages; Allocation of costs; Deterrence;
    All these keywords.

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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