Small claims class actions: a comparative analysis of the brazilian and american systems from the perspective of positive externalities

Abstract

To enable the effective private enforcement of liability rules sometimes the policy makers have to interfere, creating mechanisms to allow people do litigate claims that, otherwise, would not be taken to the courts. One of the procedural solutions to this problem are the small claims class actions. In this paper, we adopt the view that deterrence should be the focus of these policies, once the compensation is too low to even motivate injured people to pursue it. Some legal systems are more equipped to induce deterrence through class litigation of small claims and to generate other positive externalities, increasing the social welfare. Here we aim to compare the Brazilian and the American system, and to verify in what extent both class action systems are able to generate social benefits. And because it is possible to identify that deterrence is not the primary focus of Brazilian legal scenario in this topic, we intend to propose some legislative changes to put this feature and other positive externalities in the center of the debate, where it belongs.