Hugo Alejandro Acciarri

Alternative Models of Res Judicata in Class Actions a Comparative Law & Economics Approach

After the upsurge of class actions in North America, since the amendment to Federal Rules of Civil Procedure (FRCP) of 1966, this initially idiosyncratic American sort of litigation has pervaded procedural systems of countries of Civil Law tradition in the following decades. Its reception has not been uniform nor easy nonetheless. It is still, moreover, a work in progress. The rise of class lawsuits is commonly acknowledged as a product of the opt-out rule adopted by the amended Rule 23 FRCP. It is also a consequence of the conclusive effect of settlement or judgment on hypothetical subsequent claims, throughout res judicata and collateral estoppel nonetheless. Civil Law jurisdictions, as France, Brazil and Argentina, in turn, include in their class action schemes variations, precisely on those matters, which give an interesting leeway for study. Our findings suggest that there is some room for improvements in those recent Civil Law schemes of class actions. Some of their peculiar innovations may look questionable but scarcely significant in practice. However, that empirical irrelevance may derive only from pre-existing chronic malfunctions in procedural systems that include them. Paradoxically, a betterment on the latter failures would make the negative impact of the analyzed variants significant on social cost.

Enforcement Deflection and Innovation

Enforcement and innovation are both usually associated with development and deemed desirable. Relationship between them is, however, less than smooth and peaceful. Some enforcement issues, although general, show particularly critical when facing innovation. Law and regulation usually take into account only a limited set of features of human activities and their products to trigger enforcement mechanisms. Herein, they are called anchor properties. If the option is cheap, there are strong incentives for interested parties to manipulate them. Result of these actions, being privately beneficial, is socially detrimental. The term deflection is used in this work to name that effect. Actions intended to deflect enforcement can be illegal, as the ones included within the doctrine of evasion in Anglo-Saxon systems (in France, fraude a la loi, in Spain, fraude de ley, in Germany, Rechtswidrige Umgehung eines Gesetzes) or even legal. Rationally turning into judgment proof is an emblematic instance of this behavior and a good benchmark to model their effects. Innovation can, and usually does, alter present relations between levels of activity/care and levels of harm, as well as correspondence between those levels and anchor properties taken as representative of them. That dynamics gives place to enforcement problems and, in special, peculiar instances of deflection. Deflection increases social costs by several ways. On the one hand, by weaken deterrence. On the other, and related to innovation, deflecting enforcement of schemes designed to promote innovation distorts competition between present and new technologies. Both, increase social cost. Moreover, some usual strategies intuitively intended to cut down chances of deflection (second-order enforcement strategies and rising the amount of sanctions) can be less efficient than rival frameworks, because they disregard some non-obvious costs.

On the Judicial Interest Rate: A Comparative Law and Economics Perspective

Although all legal systems use some form of prejudgment or post-judgment interest, there is no substantive law & economics literature providing for a comprehensive theory on the impact, functioning and assessment of the judicial interest rate. Mainstream legal scholarship has usually dealt with it as having neutral effects on private and social costs. In this paper we show that the issue is theoretically-wise far more complex and it has a definite influence on legal policy. Due to asymmetric opportunity costs for plaintiff and defendant, judicial interest rates may bring about improper delay of proceedings and/or decouple damages from recovery. Both effects influence the number of settlements and suits. On this ground, we compare different institutional settings from an economic perspective and conclude that the appropriate mechanism depends on the alternative available policy instruments, namely rules of procedure, court fees or appropriate setting of damages. Moreover, we will suggest that abolishing the statutory setting of prejudgment interest may be a worth considering proposal.