Federal Courts Law Review

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FEDERAL COURTS LAW REVIEW - 2005 Fed. Cts. L. Rev. 8

THE MARKET FOR JUSTICE, THE "LITIGATION EXPLOSION," AND THE "VERDICT BUBBLE": A CLOSER LOOK AT VANISHING TRIALS

By Frederic N. Smalkin* and Frederic N.C. Smalkin

Abstract

[a.1] Recently, a respected jurist has lamented the declining number of federal jury trials. Chief Judge William Young of the United States District Court for the District of Massachusetts, writing in the Federal Lawyer,(1) pointed out that jury trials in federal civil cases declined 26% in the decade between 1989 and 1999, which he attributed to four factors: the district court judiciary's "loss of focus" on the core function of trying jury cases; the business community's loss of interest in jury adjudication ("opting out of the legal system altogether" in favor of arbitration); Congress's "marginalizing the district court judiciary"; and the "Europeanization of American Law," which seems to refer to the expanding role of administrative adjudication in American law.(2)

[a.2] In our view, although Judge Young has correctly observed that the data show a decline in the number of completed federal civil jury trials,(3) and has also given some explanations for the numbers, he did not give sufficient credit to a major, underlying issue, which involves the economics of adjudication, beyond the business community's "loss of interest" in jury trials. We shall demonstrate that there is a marked increase in the use of alternative fora, especially arbitration, which is inevitably drawing down the number of cases that would otherwise be filed, as well as those eventually reaching trial. Although the decline in trials has come both in trials concluded before judges and juries, arbitration, as Young recognizes, has a special role in displacing jury trials, as it offers a more predictable and far less expensive dispute resolution mechanism than is provided by trial of facts to a randomly selected, broadly representative jury panel.

[a.3] We shall also demonstrate that legal history teaches that there has long been market competition among alternative fora; that fora, as well as litigants, are themselves motivated by economic considerations that make them more (or less) willing to exercise jurisdiction; and that dispute resolution will tend, over time, to move toward the most economically efficient forum. Although increased judicial "activism," e.g., increased enthusiasm for resolving cases by summary judgment, has been identified as a major culprit in the diversion of cases from trial,(4) rather little attention seems to have been paid to the role of jury verdicts - especially high-end "outliers" - as a factor in the shrinking numbers of trials.

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