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"How Transparent Are Class Action Outcomes?"

Not very, according to a paper by Nicholas Pace (RAND) and Bill Rubenstein (Harvard)(via Lahav, Mass Tort Lit):

Class actions are among the most public forms of civil litigation, especially because a judge must review and approve a proposed class settlement following public notice and a public hearing. Ironically, however, a veil of secrecy can fall over class action litigation the moment the judge signs off on the agreement and ultimately, little information is available about how many class members actually received compensation and to what degree. This lack of transparency is especially troubling because of evidence that aggregate payments in class settlements sometimes constitute a mere fraction of the compensation fund extolled by the parties at the time of settlement review.

This paper examines the extent to which claiming data are available and recommends ways to increase transparency in this area. We reviewed the official court files in a sample of 31 class action settlements and we also made direct inquiries to the judges, lawyers, and settlement administrators in another set of 57 cases. Searching through the case files and communicating with the participants, we were able to gain access to data in fewer than one of five closed cases. Despite the significant time and effort we put into the task, the final outcomes of four of five class action cases were beyond our discovery. It is not that the data are non-existent - claims administrators or parties certainly have them - it is, rather, that they are secreted away. The outcomes of publicly approved settlements lie locked in private files.

We argue that this is a problem for three reasons: because the case outcomes might not be all that they purport to be; because the lessons that they could teach - for example, about which approaches work best - are lost to secrecy; and because the public record is unnecessarily incomplete and public access unnecessarily thwarted. We end the paper by proposing a set of solutions, including requiring parties to report back to the court on the final claiming data, publicizing this data, and creating a central repository for it.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.