Alon Klement (Buchman Faculty of Law, Tel Aviv University), Zvika Neeman (Tel Aviv University – Eitan Berglas School of Economics), Alma Cohen (Harvard Law School; Tel Aviv University – Eitan Berglas School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)), and Eilon Solan (Tel Aviv University) have posted Trials that Speak for Thousands: Optimal Bellwether Selection in Multidistrict Litigation on SSRN. Here is the abstract:
Bellwether trials play a central role in multidistrict litigation (MDL), generating information that can shape the resolution of thousands of claims. Their usefulness, however, depends critically on how the cases to be tried are selected. Existing methods—party selection, random sampling, and judicial selection—suffer from important limitations when the number of bellwether trials is small and the parties have strategic incentives over selection.
This Article develops a new mechanism for bellwether selection, that is based on the familiar I-cut-you-choose principle. Rather than attempting to eliminate the parties’ conflicting incentives, the mechanism harnesses them to produce a strategically robust and symmetric sample whose cases are evenly distributed across the underlying population. It provides a formal definition of representativeness based on the distance between the cumulative distributions of the bellwether sample and the full case population and show that, under this criterion, the resulting sample is optimal.
The Article also examines how the mechanism can be adapted to alternative selection objectives and addresses practical problems of implementation, including non-meritorious claims, settlement of selected cases, and the use of bellwether results in allocating aggregate settlements. More broadly, the Article shows how mechanism design can improve the informational value, fairness, and credibility of bellwether trials.
Highly Recommended!
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