1 See, e. g., ATRA (American Tort Reform Association), Legislative Watch (1993); Peter Huber, Liability: The Legal Revolution and Its Consequences 233 (New York, 1988); Walter Olson, The Litigation Explosion: What Happened When America Unleashed the Lawsuit 7 (New York: Dutton, 1991).Google Scholar

2 See, e. g., T. Dunworth & T. Eisnberg, “The Individual Versus Business in the Courts,”The World and I 488 (Washington: Washington Times Corp., 1991); T. Dunworth & N. Pace, “Statistical Overview of Civil Litigation in the Federal Courts,”RAND Working Paper R-3885-ICJ (Santa Monica, Cal.: RAND Corp., 1990); Marc Galanter, “The Life and Times of the Big Six: Or, the Federal Courts Since the Good Old Days” (prepared for Symposium on the Role of the Federal Courts, New York University, 1987) (“Galanter, ‘Life and Times’”); M. Galanter & J. Rogers, “A Transformation of American Business Disputing? Some Preliminary Observations,”Disputes Processing Research Program (DPRP) Working Paper #10-3 (Madison, Wis., University of Wisconsin, 1991) (“Galanter & Rogers, ‘Transformation’”); Richard Posner, The Federal Courts: Crisis and Reform (Cambridge: Harvard University Press, 1985) (“Posner, Federal Courts”).Google Scholar

3 See, e. g., Galanter, & Rogers, , “Transformation”; Stewart Macaulay, “Non-contractual Relations in Business: A Preliminary Study,” 28 Am. Soc. Rev. 55 (1963).Google Scholar

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6 These data can be obtained from the Inter-University Consortium for Political and Social Research (ICPSR) at ICPSR, University of Michigan, Institute for Social Research, P. O. Box 1248, Ann Arbor, MI 48106–1248. ICPSR also maintains a site on the World Wide Web which can be accessed by pointing a browser to http://icpst.umich.edu/icpsr_homepage.html.Google Scholar

7 The number is net of mergers, name changes, and other mutations.Google Scholar

8 The difference between the 1971–87 time frame for selection of corporate names and the 1971–91 time frame for observation of data derives from the need to allow sufficient time after a particular firm came into existence for disputes to reach the litigation stage. We acknowledge that the selection of a four-year period is somewhat arbitrary.Google Scholar

9 Given the large amount of controversy in this area, frequent divisions even among individuals “on the same side” regarding major policy choices, and the above-noted lack of agreement even on the basic facts of the matter, the “conventional” view we now characterize is a deliberate construction and certainly not offered as the only view out there.Google Scholar

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18 The jurisdiction of the federal courts extends to suits between parties who are citizens of different states, and either party to a lawsuit can seek federal jurisdiction (28 U. S. C. 1332).Google Scholar

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33 This assumes, of course, that the parties' estimates are normally distributed around their true values and that the parties' estimates are independent of one another. The former assumption is reasonable, but the latter one may not be if information is exchanged between the parties prior to deciding whether to litigate. Of course, any information received by one party from the other should cause the two parties' estimates to converge if it is not misinformation or bluster.Google Scholar

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47 A caveat about this process: When a company has more than one category of business, it customarily has more than one SIC code classifying its activities. However, it was impossible, in this particular study, to determine which aspect of a multifaceted company's activities led to the particular lawsuits that we located. We therefore assigned each company and its assets to the economic sector represented by its primary SIC code, and we did the same thing with the litigation reported in this document.Google Scholar

48 A typical Situation was one in which a company changed its name sometime during the 20-year window of this study. When we detected such a change, we searched for litigation under both names, and then combined the results under the latest name that we found.Google Scholar

49 All data are taken from an interview with Merle Sprinzen, Fortune magazine research director, March 1990.Google Scholar

50 The Integrated Federal Court Data Base (IFCDB) is derived from reports on case filings and closings that are made by each federal district and circuit court to the Administrative Office of the U. S. Courts. The Federal Judicial Center maintains the data base, and it is distributed to interested researchers by the Inter-University Consortium for Political and Social Research (ICPSR) at Ann Arbor, Mich.Google Scholar

51 A more extended discussion of the rationale for excluding certain kinds of cases is provided in appendix B. Appendix table B1 documents the effects of the exclusion by specific nature of suit.Google Scholar

52 See, e. g., Dunworth et al., “Corporations”); T. Dunworth & J. Rogers, “Corporations in Court: Big Business Litigation in U. S. Federal Courts, 1971–91” (presented at conference on Changing Patterns of Business Disputing, University of Wisconsin, Madison, 1993).Google Scholar

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54 The converse–that non–F2000 names have been improperly included–is much less likely because an affirmative decision was required before the inclusion of any variant on a corporate name.Google Scholar

55 For a definition of diversity jurisdictions, see note 18 supra.Google Scholar

56 In this article, each case in which an F2000 company is either lead plaintiff or lead defendant is termed an appearance for that company. Because there are some cases in which F2000 companies are both plaintiff and defendant, the total number of appearances is greater than the total number of cases. Our rationale for using the number of appearances rather than the number of cases as the measure of the litigation volume that individual companies face is that we see no difference between a case in which an F2000 company faces another F2000 company and one in which it does not, at least not with respect to the issues we are considering in this section of the report. At other times in the report, the analysis will focus on cases, not appearances. We endeavor to make it contextually obvious to the reader which we are dealing with at any given time. However, in general, the word “appearances” pertains to firms and the word “cases” pertains to lawsuits.Google Scholar

57 As in most categorizations of continuous data, the break points we use are somewhat arbitrary, and litigants at the top and bottom of the Moderate group are more like litigants at the bottom and top of the Mega and Minor groups, respectively, than they are like each other, at least with respect to frequency of appearance. Nevertheless, a categorical approach of some kind is needed to facilitate illustration of distributions of this type, and the adoption of a different schema (e. g., more numerous categories) would not materially affect the interpretations that can be made. Therefore, from time to time in the balance of this report, we employ this three-category breakdown to display frequencies of various kinds. Where appropriate, we will use narrower classifications.Google Scholar

58 Figure 3 maps concentration along a continuum from low to high by computing a statistic known as the Gini coefficient. This is a measure of concentration that would yield a score of zero if all companies within the sector had the same number of suits, and a score of one if a single company had all the litigation. The figure indicates that, certainly for most sectors, the intrasectoral level of inequality in litigation activity is extremely high albeit again at a high, level of sectoral aggregation.Google Scholar

59 The percentages reported in this and other tables in this section of the report apply to F2000 litigation only. In sec. IV, the litigation involving the F2000 firms are compared with the general population of cases.Google Scholar

60 We remind the reader that we are only able to identify the lead party on each side of a case. But many cases involve multiple parties, and if all had been identifiable when we constructed this data base, the number of appearances for any individual company could have been higher. This is especially true for asbestos litigation, which often involves multiple defendants. But though the number of appearances would go up, the overall number of cases would not.Google Scholar

61 Contention continues today. Plaintiffs' lawyers are reportedly feuding with each other and with the asbestos defense consortium known as the Center for Claims Resolution about a $1.3 billion class action settlement for 100,000 future potential claims by asbestos victims. See Andrew Blum, “Plaintiffs' Bar Airs Split on Asbestos Pact,”Nat'l L. J., 14 March 1994, at A10. We do not mean to imply here that the asbestos and Dalkon Shield litigation is unimpottant or doesn't matter; obviously it does. These and other products have produced devastating situations for those on both sides of the lawsuits that have been brought conceming them. They have imposed an unmeasurable amount of suffering on individuals and families, and billions of dollars in costs on companies. But the life and scope of such litigation is finite. It does not directly involve many firms. As shown above in sec. III, more than 90% of all F2000 asbestos litigation involves only 10 companies. Consequently, we do not believe it should not be taken as a measure of the litigation burden that business in general faces.Google Scholar

62 That these particular products will leave the litigation scene does not mean that there are no others to take their place. The most current example is breast implants. Litigation concerning the damage allegedly caused by faulty implants is taking place in federal courts now. Its magnitude and impact is by all accounts staggering. There was recently a report of a $27 million award to three plaintiffs by a Houston jury. See Barnaby Feder, “Millions Awarded in Implant Trial,” National Report Section, N. Y. Times, 14 March 1994, at A7. The proposed settlement for all present and future plaintiffs, involving Dow Corning, Bristol Squibb Myers, and Baxter International, is reported to be $3.75 billion. See Henry Weinstein, “When Law, Tragedy Intersect,”Los Angeles Times, 26 March 1994, at 1 et seq. Early breast implant cases were filed as long as a decade ago, but the product did not move to “mass tort” status until late 1991, when new filings courts surged to a volume estimated at 12,000 cases, split about evenly between federal and state courts. This makes the litigation volume for breast implant claims, at least in federal courts, about the same as the earlier volume for IUD Dalkon Shield cases.Google Scholar

63 Though inadequate as a basis for calculating total business litigation volume, or for comparing large and small business litigation patterns, the diversity jurisdiction data below do have some value for estimating litigation outcome patterns for business in general. We therefore return to them in sec. VI, where win rates are reported.Google Scholar

64 In subsequent work, we hope to remedy this, at least in some measure, at least in diversity jurisdiction.Google Scholar

65 While we do not pursue the matter here, there are two basic reasons why this might be the case: the greater stakes they have in cases in dispute, or the greater resources they can bring to bear to those disputes. Unfortunately, available theory and evidence do not permit easy separation and empirical testing of the strength of these competing explanations. The reason is that what is typically taken to signal high “stakes” in business disputing (e. g., firm size, scope, assets, even reputation) heavily overlaps with those things that also signal high resources (deep pockets, full-service law firms, lots of experience in their area, etc.). The cost of litigation may also reasonably be expected to increase at the margin of legal uncertainty on which Priest and Klein and others think all litigation centers (though the fact that costs increase there is a good reason why they might be wrong); if so, there is no reason particular reason to expect litigation to center on that margin, and where it does conventional resource constraints become more operative.Google Scholar

66 In future work, we intend to test the robustness of these and other explanations for changes in the level of litigation. The point here is not to endorse them but to suggest their obviousness as potential explanations of the modest third of the increase not accounted for by a simple increase in economic activity.Google Scholar

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69 Asbestos cases were excluded from the CJRA evaluation and were consequently unavailable in the case records provided by the 20 districts in response to the CJRA evaluation design. Earlier estimates of the multiparty character of asbestos cases were performed in Dunworth, “Product Liability” (cited in note 20).Google Scholar