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The Conservative Case for Class Actions$
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Brian T. Fitzpatrick

Print publication date: 2019

Print ISBN-13: 9780226659336

Published to Chicago Scholarship Online: May 2020

DOI: 10.7208/chicago/9780226659473.001.0001

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Do Class Actions Deter Wrongdoing?

Do Class Actions Deter Wrongdoing?

Chapter:
(p.99) Chapter Eight Do Class Actions Deter Wrongdoing?
Source:
The Conservative Case for Class Actions
Author(s):

Brian T. Fitzpatrick

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226659473.003.0009

Some critics of class actions claim that they do not deter misconduct. But this claim is entirely inconsistent with the “Chicago School” theory of internalization of costs: if corporations have to pay when they do something wrong, they will only do something wrong when the benefits outweigh the harm they cause. Some claim that corporations cannot avoid the alleged misconduct because they cannot predict when they might be sued in a class action, but this is belied by the resources they expend on risk assessment. Others claim that, even if cost internalization works in theory, there is no empirical evidence it works in practice. Wrong again: there are several studies showing that increased exposure to class action lawsuits changes corporate behavior.

Keywords:   class action, Chicago School, deterrence, cost internalization, empirical, risk assessment

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