Money Damages Research Articles

Public versus Private Enforcement of International Economic Law: Standing and Remedy

Abstract This paper develops a theory of the rules regarding standing and remedy in international trade and investment agreements. Regarding investment agreements, the paper argues that a credible government‐to‐firm commitment (or signal) that the capital importer will not engage in expropriation or related practices is required and that a private right of action for money damages is the best way to make such a commitment. In trade agreements, by contrast, importing nations have commitments that are best viewed as government to government rather than government to firm. The parties to trade agreements can enhance their mutual political welfare by declining to enforce commitments that benefit politically inefficacious exporters and can most cheaply do so by reserving to themselves the standing to initiate dispute proceedings—a right to act as a political filter. The paper also suggests why governments may prefer to utilize trade sanctions rather than money damages as the penalty for breach of a trade agree...

Public vs. Private Enforcement of International Economic Law: Of Standing and Remedy

This paper develops a positive theory of the rules regarding standing and remedy in international trade and investment agreements. In the investment setting, the paper argues that a central objective of investment treaties is to reduce the risks confronting private investors and thereby to lower the cost of capital for capital importing nations. This objective requires a credible government-to-firm commitment (or signal) that the capital importer will not engage in expropriation or related practices. A private right of action for money damages is the best way to make such a commitment. In the trade setting, by contrast, importing nations have no direct interest in reducing the risks confronting exporters of goods and services, and will desire to make market access promises more secure only if such behavior secures reciprocal benefits for their own exporters. Consequently, commitments in trade agreements are best viewed as government-to-government rather than government-to-firm. The parties to trade agreements can enhance their mutual welfare by declining to enforce commitments that benefit politically inefficacious exporters, and can most cheaply do so by reserving to themselves the standing to initiate dispute proceedings - a right to act as a political filter. The paper also suggests why governments may prefer to utilize trade sanctions rather than money damages as the penalty for breach of a trade agreement.

Remedies for damage to property: money damages or restitution in natura?

This paper compares the tort remedies of money damages and restitution in natura from an efficiency perspective. Although there is a parallel between these remedies and the remedies for breach of contract, i.e. money damages and specific performance, the analysis is fundamentally different in torts, because of the high transaction costs involved. The basis of the comparison is the relation of each of the remedies to the subjective loss for the victim. The conclusion drawn is that no rule is generally preferable, so it is crucial to sort the different types of cases and apply in each of them the remedy, which is better suited. On this premise, are evaluated the relevant rules of Germany, England and France, since each legal system tackles this issue differently.

Pursuing “Deep Pockets”

This article considers how the civil litigation and mediation process work in practice and highlights the interactional and discursive practices by which settlement activities are coordinated and managed. The research examines settlement work in a perspicuous large money damage case involving insurance issues and what complications emerge in relation to these issues. The analysis focuses on how the judge-mediator organizes settlement activities in light of the available insurance, by seeking settlement contributions first from insurance sources (“primary pockets” and “deep pockets”) and only as a last resort from the personal assets (“personal pockets”) of the uninsured defendants. The study finds that the settlement work is insurance-infused and details how the pursuit and defense of insurance “deep pockets” are central to the negotiations and the positions of the parties in the case.

A New Development in Complex Multiparty-Multicontract Proceedings: Classwide Arbitration

IN OTHER articles, we have examined the issues and problems arising from arbitrations which have been (or are purported to be) initiated by or against a limited number of individuals or companies which have in common being (or having been) involved in the same or related project(s) or transaction(s). In contrast, this article will be devoted to another aspect of complex arbitrations: that is, arbitrations initiated by groups of individuals (which may be thousands) or in other words, group actions.1 For obvious reasons, explained below, it will mainly focus on the US practice of class actions. Group actions may be injunctive or remedial, meaning that they can seek injunctive relief as well as money damages. They are still relatively rare and unknown in civil law countries. Most of the statutes authorizing multiparty actions in Europe concern consumer protection. For example, in a number of countries,2 independent administrative authorities or consumer organizations have for many years been recognized as having locus standi to apply to the courts for an injunction or a prohibition order in relation to forbidden or unfair commercial practices. On the other hand, the legislation of EU Member States has also been (or is about to be) amended to incorporate the provisions of Directive 98/27/EC which permits consumer organizations to apply to courts in fellow Member States for an injunction against an infringement of any of a number of consumer trading Directives, covering areas such as misleading advertising, unfair contract terms, consumer credit, package holidays, and consumer guarantees, that are committed in the organization’s own state by an entity in the fellow state. But these actions are representative proceedings, quite different from group actions. Although some EU and non-EU states also have legislation on group litigation,3 its scope and impact remains quite limited. The only …

Conflicted Justice: The Department of Justice's Conflict of Interest in Representing Native American Tribes

This article addresses an ongoing problem in the area of Indian law. For years, the Native American community has complained of conflicts of interest in the Department of Justice. The conflict within Justice arises from the federal government's special trust relationship with the Indian tribes. The federal government assumed a special trust relationship with the Indian tribes early in the United States' history, that has developed over time through treaties, statutes and case law. The trust relationship represents an affirmative duty on the part of the United States to protect the tribes, serve their best interests and uphold the other trust duties under a standard of good faith. As trustee, the United States, usually acting through the Department of the Interior, manages a significant portion of tribal land and a great deal of tribal resources. The Department of the Interior retains responsibility for many other federal programs and federal lands. The Department of Justice represents Interior and most other federal agencies in court. Thus, Justice must represent both tribal and non-tribal interests, often involving the same land or within the same case. Indeed, Justice must make litigating decisions in these cases with the knowledge that a position in one case may impact another case. A private trustee could not function in the manner that Justice functions. Doing so would violate the duty of undivided loyalty required from a trustee. Justice, however, maintains that the duties of a private trustee do not apply to Justice. In doing so, Justice relies on a Supreme Court case, United States v. Nevada, and a 1979 letter from then Attorney General Griffin Bell. To show the inaccuracies in Justice's position, I examine the underpinnings of Justice's position, beginning with the letter by former Attorney General Griffin Bell and then turning to Nevada v. United States. After also examining the lower courts' interpretation of Nevada, I conclude that Nevada holds simply that when Justice proceeds in the face of congressionally imposed conflicting interests, the doctrine of res judicata still applies to bind the United States and the tribal parties to that litigation. It may seem that Indian tribes could be adequately compensated for conflicts through money damages. However, due to a pair of Supreme Court cases, breach of trust actions based on conflicts of interest are not viable. In this article, I examine and explain how this avenue of redress is effectively closed to tribes. Thus, I argue the solution to the conflict problem must be found earlier in the decisional process. In order to fully protect Native American rights, any successful solution must address the problems created by the Eleventh Amendment and the rules of preclusion. I therefore recommend the creation of a separate litigating agency outside of Justice and Interior and the adoption of special preclusion rules to govern litigation by Justice as trustee. This combination will provide both procedural and substantive protection to the Native American beneficiaries and will allow the United State to fulfill its role as trustee.

The Class Certification of Medical Monitoring Claims

The tort claim of medical monitoring has produced a disarrayed set of state and federal court opinions. The procedural dimensions of this claim are as vexing as the related substantive issues with which courts and commentators have long been grappling. Ordinarily, mass tort actions, typically involving claims for money damages, are certified under Rule 23(b)(3), which class category requires the right to notice and to opt out of a proceeding, and the fulfillment of "predominance" and "superiority" requirements. Such features are absent in Rule 23's mandatory classes. Nevertheless, this Note argues that it is appropriate for claims exclusively for medical monitoring to be certified as a mandatory class action under Rule 23(b)(2) of the Federal Rules of Civil Procedure or its state law counterparts. Given that a medical monitoring fund is an equitable remedy, nonpreclusive of a future damages claim, and groupwide in nature, the (b)(2) class category adequately protects the due process rights of class plaintiffs.

The Cost of Credibility: Explaining Resistance to Interstate Dispute Resolution Mechanisms

Abstract This paper explains why the use of mandatory dispute resolution clauses is the exception rather than the rule in international agreements. On one hand, these clauses increase the sanction for violation of the agreement and thereby increase the probability that the parties will comply. On the other hand, dispute resolution clauses impose a loss on the parties when violations occur. States, therefore, must balance the credibility and compliance benefits of a mandatory dispute resolution provision against the joint costs imposed by those provisions in the event of a violation. The paper develops a series of predictive and normative results based on the trade‐off. For example, dispute resolution clauses are more likely in low‐stakes than high‐stakes agreements, in multilateral rather than bilateral agreements, and when tribunals are more accurate. The paper also offers support for the view that money damages (or other zero‐sum transfers) should be encouraged in international dispute resolution.

The Minor Suit Awards IV

IN RESPONSE not only to popular demand but also to the unexpected availability of a French judge from the winter Olympics, it's time, once again, for the Minor Suit Awards in education litigation.1 The purpose of the awards, as stated at their inception, is to serve as a lesson in judicial restraint for all those who take a sue-the-bastards approach to relatively picayune [school-related] problems that are best resolved through negotiation and . . . communication. It is also worth repeating the caveat that the line between the use and abuse of the costly judicial process is not a clear one. In a society open to innovation and adaptation, what may at first appear to be poison may eventually prove to be meat. Nevertheless, the Twin Towers tragedy provides a measure of perspective that shows some suits to be merely trivial pursuits (TP). Here are the award recipients from the Academy of Litigation Arts and Sciences (ALAS) for the most recent period, 1995-2001. The top TP Award is given in higher education to a tenured in the field of public service who sued the university for reducing his teaching assignment from a total of five to six courses to two to three courses per year. The reason for his suit was not the embarrassment of having a teaching workload that amounted to 7.5 hours per week reduced; rather, it was that the dean assigned him to devote the differential to helping a junior professor with course development. The full alleged that this assignment was endentured [sic] servitude. After all, there are limits to public service.2 The TP runner-up was a parent of a middle school student who, on her daughter's behalf, sued the school district for money damages for not allowing the girl, Abby, to use her nickname, Boo.3 If we had had a Boo-Hoo or Boo-Who award, she would have been the clear winner. In the new category of PHITS (put head in the sand), the Ostrich Award goes to the parents of a male sixth-grade student who filed a federal civil rights suit against school officials for disciplining him for inappropriate behavior. The discipline was a double detention. The inappropriate behavior was his writing near the crease in a female student's yearbook, I just sniffed your crack. Ignoring district officials' legal obligations to deter peer sexual harassment,4 his parents argued that the school's characterization of his words as harassing, obscene, or sexual infringed upon his First Amendment freedom of expression. After making clear the fatal defects in their constitutional arguments, the federal judge dismissed the parents' suit without prejudice, allowing -- virtually daring -- them to amend and refile their claim within the boundaries of Rule 11 of the Federal Rules of Civil Procedure, which authorizes sanctions for frivolous suits.5 The Without Redeeming Judicial Value Award again went, with fanfare and pom-poms, to a disappointed cheerleader. In this case, the forlorn rabble-rouser made a federal case of being selected as co-head cheerleader for only the basketball, not the football, squad. She claimed a violation of the 14th Amendment due process and equal protection clauses.6 Coming in a close second was a student who sued a school district for not designating her the class valedictorian.7 In the Creative Script Writing category, the award winner is the mother of a kindergarten child who claimed that she and her son suffered from AIDS phobia and that the district owed them money damages as the result of the school's alleged negligence. More specifically, her son found a hypodermic needle in a box of musical toys in the classroom. He promptly gave the syringe to the supervising adults, and there was no evidence that he stuck himself with it or that it had been used. The principal turned the instrument over to the police, who destroyed it without examining it for HIV. …

Bureaucracy that Kills: Federal Sovereign Immunity and the Discretionary Function Exception

Political scientists normally discuss sovereign immunity in the context of international law and relations. The domestic effects of sovereign immunity are almost never examined, even though those effects are profound and implicate a range of issues of interest to political scientists. The Federal Tort Claims Act (FCTA) (1946) is a main waiver of federal sovereign immunity and is designed to allow people injured by government employees to sue for money damages. The FTCA has a number of exceptions, the most prominent of which is known as the “discretionary function exception.” This exception retains sovereign immunity for the United States when a federal employee acts “based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty…whether or not the discretion involved be abused.” This simple exception expanded into a comprehensive tool of government that now confounds justice and federal governmental accountability.

Should Prejudgment Interest Be a Matter of Procedural or Substantive Law in Choice-of-Law Disputes?

Prejudgment interest is interest a court awards to a plaintiff who receives money damages in excess of any settlement offer made by a defendant prior to trial.! Courts award prejudgment interest for two basic reasons: (1) to compensate the aggrieved plaintiff fully,2 and (2) to alleviate congestion in the courts by encouraging prompt and equitable settlements.3 Courts consider the former rationale substantive and the latter procedural.4 States characterize their prejudgment interest rules according to whether they regard them as more substantive or procedural, that is, geared more toward plaintiff compensation or judicial economy.5 For example, some statutes contain offercounteroffer provisions and other procedural mechanisms, which suggests that the legislatures designed them and courts interpreted them mainly for purposes of judicial economy and control.6 Conversely,

Tortious Interference and the Law of Contract: "The Case for Specific Performance" Revisited

What is the role of contract law in remedying breach? question of the appropriate legal remedy, specific performance versus money damages, has provided adequate fodder for three decades of debate in the law and economics discourse. In the legal discipline at large, the topic has spurred centuries of debate, as illustrated by Oliver Wendell Holmes's famous line: The only universal consequence of a legally binding promise is, that the law makes the promisor pay damages if the promised event does not come to pass.' Holmes's approach to contractual remedy would evolve during the latter half of the twentieth century into the efficient theory, which advocates the remedy of expectation damages upon breach in order to encourage the promisor' s breach where the resulting profits to the promisor exceed the loss to the promisee.2 Although this favorite doctrine of law and economics scholars more or less describes the norm in AngloAmerican contract law, in which damages are routinely available and specific performance rarely granted, it has met and continues to meet with criticism on a variety of grounds.3

“Think Your Blackest Thoughts and Darken Them:” Judicial Mediation of Large Money Damage Disputes

This paper considers a much neglected, but distinctive and increasingly prevalent kind of mediation work: the mediation of large money damage cases by acting and former judges. The research finds that judicial mediation is a law-infused procedure different from forms of mediation in which the stuff of law and lawyers' work is only marginally relevant, if at all. The study details how judge-mediators draw on their knowledge of the law, technically and as a matter of professional practice, to make legally persuasive arguments that critically evaluate each side's case and what is likely to occur at future points, adversely altering the litigants' understanding of the risks and costs of failing to settle and thus facilitating dispute resolution. The study was developed and pursued as an ethnographic and ethnomethodological study of work.

The Mitigation of Emotional Distress Damages

In what may be a unique exception to the mitigation requirement, plaintiffs claiming damages for emotional distress need not show that they have taken any steps to mitigate their damages. The absence of mitigation rules creates a previously unrecognized tendency towards overcompensation in emotional distress claims. The mitigation rule (also known as the doctrine of avoidable consequences) requires injured parties to take all reasonable measures to minimize their damages. Mitigation is a well-established and universal principle of damages; it limits recovery in every conceivable type of action for money damages. The mitigation requirement serves to limit plaintiffs' ex post moral hazard, which arises because defendants serve as insurers of plaintiffs' losses. However, despite the rapid expansion of liability for emotional distress, courts have failed to apply the mitigation rule to such damages. The absence of mitigation rules for emotional distress creates particular problems of moral hazard that courts have not yet considered. Any evaluation of the advisability of recovery for emotional distress must take into account the absence of the traditional legal mechanism for limiting plaintiffs' moral hazard. Perhaps one reason mitigation has not been applied to emotional distress is the difficulty of crafting a workable definition of what such mitigation would look like. Some obvious definitions of mitigation, like seeking psychiatric treatment, would likely create more problems than they would solve. Thus measures to limit moral hazard in emotional distress must take the form on limitations on the scope of recovery or the amount of liability.

The Cost of Credibility: Explaining Resistance to Inter-State Dispute Resolution Mechanisms

When states enter into an agreement the credibility of their commitment is undermined by the weakness of the international enforcement system. Including a mandatory dispute resolution provision in the agreement is one of the available strategies to improve the binding nature of an agreement and, therefore, increase the credibility and value of the agreement. As a matter of practice, however, states typically do not include mandatory dispute resolution provisions in their treaties and other agreements. International law scholars have long known this fact, but have not offered an explanation for this behavior that is consistent with what we know about contract and bargaining theory. This paper explains why the use of mandatory dispute resolution provisions is the exception rather than the rule in inter-state agreements. When states violate an international commitment, they face a loss in the form of direct sanctions or a reputational loss. These sanctions can be increased through the use of a dispute resolution clause. Both direct and reputational sanctions represent a joint loss for the parties to an agreement. In the event of a breach, therefore, the parties are better off without a dispute resolution provision. On the other hand, by increasing the sanction for a violation of international law, a dispute resolution clause increases the likelihood of compliance. States, therefore, must balance the credibility and compliance benefits of a mandatory dispute resolution provision against the joint costs imposed by those provisions in the event of a violation. The analysis generates a series of results. It is shown that dispute resolution clauses are more likely when rates of compliance are high even in the absence of such clauses, when the marginal impact of the clause on compliance is large, and when the parties to the agreement face similar ex ante probabilities of breach. Dispute resolution clauses are also more likely in low stakes agreements than in high stakes ones, and in multilateral agreements rather than bilateral ones. On the normative side, the paper demonstrates that increasing the accuracy of tribunals will increase the use of dispute resolution clauses, even if the parties are risk neutral. It also offers support for the view that money damages (or other damages that take the form of transfers between the parties) should be encouraged.

Beyond "It Just Ain't Worth It": Alternative Strategies for Damage Class Action Reform

DEBORAH R. HENSLER [*] THOMAS D. ROWE JR. [**] I INTRODUCTION We begin with the premise that private class actions for money damages can yield significant social benefits. Class actions for damages can provide compensation for modest but non-trivial losses suffered by widely dispersed but similarly positioned persons as a result of the negligence or illegal behavior of others, allowing recovery for losses that cannot practically be achieved through individual litigation. In this way, damage class actions can deter such injurious behavior and thereby supplement regulatory enforcement by administrative agencies that are under-funded, susceptible to capture by the subjects of their regulation, or politically constrained. Damage class actions also may provide efficient management and resolution of large numbers of similar claims when individual litigation is feasible, but its costs would be extraordinarily high. [1] Despite these benefits, however, the financial incentives that fuel private class action litigation have the potential to undermine these goals. Private litigation that duplicates effective regulatory enforcement may impose additional costs without commensurate benefits. Non-meritorious class actions filed by lawyers who expect defendants to be willing to pay something simply to ensure that the class counsel will go away, as well as class action settlements that bear little relation to the merits of the claims, dilute the deterrent effect of class action litigation. Settlements designed in ways that make it unlikely that the defendants will deliver all of the benefits they have pledged to pay class members will not achieve their asserted compensation objectives. The efficiency gains flowing from global resolutions of claims may be outweighed by settlements that invite vast numbers of product users with weak or questionable claims to apply for benefits. During the 1990s, as damage class actions grew in numbe r and scope, both scholarly and public policy discourse on this subject focused on such negative outcomes. The theoretical bases for the concern that the goals of representative litigation may be thwarted have been well developed. To avoid litigation costs and small risks of large judgments, some defendants are willing to settle even very weak claims for their nuisance value. The incentive to settle nuisance claims--always present in litigation--is particularly great in large-scale representative litigation, with its higher-than-average risks. Recognizing this, some plaintiffs' attorneys search out defendants who can be easily persuaded to settle such claims, often earning attorneys' fees that are disproportionate to the modest effort and expense required to achieve these settlements. Conversely, some defendants who face stronger claims may seek out plaintiffs' attorneys who are willing to settle such claims at less than their true value in exchange for fees that arguably are more generous than they deserve, given what they have obtained for their class clients. In both instances, the defendants buy res judicata at an inappropriate price: In the first instance, they pay too much (and the plaintiffs' attorneys pocket the premium); in the second, they pay too little (and class members suffer the loss). In both instances, because clients in representative litigation usually cannot effectively control their attorneys, unfaithful plaintiff attorney-agents are free to pursue their own interests. In addition, the deterrent signals of litigation are distorted because the costs of the harms that are imposed on the class are not properly reflected by settlement outcomes. [2] The empirical evidence that supports the theoretical concerns is not as fully developed. No comprehensive assessment of the costs and benefits of damage class actions has been compiled, and no such assessment is in progress. [3] Empirical investigation of a small number of cases suggests, however, that the merits of some class actions are questionable and that some class action settlements provide more benefits for class counsel and defendants than for class members. …

Disaggregating Constitutional Torts

In the four decades since Monroe v. Pape, the Supreme Court has crafted a vast body of law on money damages for violations of constitutional rights. This essay argues that Monroe was wrong. The error lay not in the result, which was admirable, but in the attribution of that result to a Reconstruction-era statute applicable indifferently to all rights. Treating the availability of damages as a transsubstantive exercise in statutory interpretation obscures important differences among rights and suppresses clear thinking about remedies. A better strategy would abandon "one-size-fits-all" and adapt remedies to specific kinds of constitutional violations. The availability of money damages would then depend on an assessment of their role in enforcing particular rights - and especially on the availability of alternative remedies that make damages more or less needful.

The Death of Liability

Based on systems/strategic analysis, this paper predicts the complete failure of legal liability system. Liability is the system by which injured persons recover money damages from those who injure them. The system operates through the entry and enforcement of judgments by the courts. The paper argues that the system is vulnerable to defeat by a variety of judgment proofing techniques which can be categorized as secured debt strategies, ownership strategies, exemption strategies, and foreign haven strategies. Computerization has recently brought about dramatic reductions in the costs of pursuing these strategies, making them cost effective for more potential defendants. As use spreads, the cultural and political barriers to judgment proofing will decline, leading to wider use of the techniques and ultimately to system failure. The paper examines a variety of strategies by which the system might respond, including shareholder unlimited liability, involuntary creditor priority, asset provider liability, enterprise liability, mandatory insurance, and financial responsibility laws. The paper concludes that judgment- proofing strategists will be able to overcome all of them.

Silencing John Doe: Defamation & Discourse in Cyberspace

John Doe has become a popular defamation defendant as corporations and their officers bring defamation suits for statements made about them in Internet discussion fora. These new suits are not even arguably about recovering money damages but instead are brought for symbolic reasons-some worthy, some not so worthy. If the only consequence of these suits were that Internet users were held accountable for their speech, the suits would be an unalloyed good. However, these suits threaten to suppress legitimate criticism along with intentional and reckless falsehoods, and existing First Amendment law doctrines are not responsive to the threat these suits pose to Internet discourse. Although the constitutional privilege for opinion holds promise as a solution to this problem, the Supreme Court's jurisprudence provides little assurance that the privilege can protect the robust, uninhibited, and wide-open nature of Internet discourse without giving Internet speakers free license to harm the reputation of Copyright © 2000 by Lyrissa Barnett Lidsky t Associate Professor of Law, University of Florida College of Law. I owe a debt of gratitude to numerous people who helped me throughout the process of writing this Article: Amy Mashburn, Elizabeth Lear, Howard Lidsky, Rick Matasar, Max Steams, Chris Slobogin, Chris Hansen, Ann Beeson, Megan Gray, and Rebecca Newton Clarke. Special thanks go to David A. Anderson and Ron Krotoszynski, Jr., for reading the draft quickly and making incisive comments at critical stages of its development and to my research assistant Robert Lancaster for his extraordinary dedication in the final stages of the process. My other research assistants, Christopher Vallandingham and Susan Wynn, also provided great research support. Finally, I would like to thank all of the lawyers and parties involved in the new Internet libel cases who were kind enough to share their stories and their documents with me. HeinOnline -49 Duke L.J. 855 1999-2000

Full Faith and Credit and the Equity Conflict

This article examines whether the principles of full faith and credit require states to enforce other states' coercive equitable decrees to the same extent as judgments for money damages. In a recent decision, the Supreme Court held that a state court injunction barring a witness's testimony nationwide is not subject to full faith and credit elsewhere. Baker v. General Motors, 118 S. Ct. 657 (1998). This article suggests that both the Court's opinion and the two concurrences were unsatisfactory because the Court failed to address the key underlying issue of whether or to what extent courts may rely on state law to enjoin extraterritorial conduct. Much of this Article considers historical issues related to the extraterritorial jurisdiction of equity courts. It concludes that the issue will remain difficult to resolve unless some limitation is placed upon the longstanding view that state courts, under the guise of inherent equity power, may impose coercive orders that affect activity outside of that state. The concluding sections of the Article suggest three different approaches to resolution of the equity conflict, highlighting functional views of what the policy of preclusion should mean for the scope and effect of full faith and credit to equity decrees.