The FINAL VERSION of this paper will be published in the November, 1994 Santa Clara University Law Review..

Copyright 1994-95 by the Santa Clara Law Review

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An Analysis of the Rules of Contribution and No Contribution for Joint and Several Liability in Conspiracy Cases

Timothy James Stanley [*]

Table Of Contents

Abstract

I. Introduction

II. Definitions and Assumptions

• A. Definitions of the Rules
• B. Assumptions

III. Deterrence

• A. Symmetric Information

  • 1. Identical Defendants
  • 2. Dissimilar Defendants
    • a. Different Liability Responsibility
    • b. Different Probabilities of Loss at Trial
• B. Asymmetric Information
  • 1. Different Beliefs of Liability Responsibility
  • 2. Different Beliefs of Probabilities of Loss at Trial
• C. Information Exchange in Settlements
  • 1. Defendants' Incentives to Provide Information
  • 2. Plaintiff's Willingness to Accept Information in Lieu of a Monetary Settlement
  • 3. Defendants' Incentives to Collect and Hide Information
• D. The Effect of Risk Aversion on Deterrence
• E. The Effect of Litigation Costs on Deterrence
• F. Insulation of Decisionmakers

IV. Settlement

• A. Defendants' Disincentive to Settle Under the Contribution with Settlement Reduction Rule
• B. Complete Settlement Under the No Contribution and Contribution with Claim Reduction Rules

V. Extensions

• A. Lifting of Model Assumptions

  • 1. Uncertain Detection

  • 2. Independent Trial Outcomes and Sequential Settlement
  • 3. Uncertain Contribution
• B. Mary Carter Agreements
• C. Fairness and Equity Among Defendants

VI. Allocating Damages Under the Contribution Rules

• A. Administrative Costs
• B. Influence Costs
• C. Plaintiff's Willingness to Settle
• D. Deterrence
• E. Fairness
• F. The Per Capita Liability Allocation Rule and the Coase Theorem, An Example
• G. Unfairness, Control and Bad Threats

VII. Conclusions and Recommendations

VIII. Technical Appendix (not contained in this html version)

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Notes

I wish to thank Timothy Church, Donald Dunn, Louis Kaplow, A. Mitchell Polinsky, Steven Shavell, James Stanley, Stacy Stanley, Robert Wilson and the participants in the Law and Economics Seminar at Harvard Law School and the Comparative Institutional Analysis Seminar at Stanford University for helpful comments. I would also like to thank Faruk Gul and Robert Wilson for teaching me and answering my questions on incentive theory and game theory during the course of writing this paper, and Ian Ayres and the Stanford Law Teaching Program for encouragement in the writing process. An earlier version of this article was awarded the 1994 Richard S. Goldsmith Award from the Stanford Center on Conflict and Negotiation, Stanford Law School. Return to text