Few problems are more disruptive to the efficient negotiation and operation of comprehensive mass tort settlements than oversubscription, which, at times, appears to be fueled primarily by specious claims. In settlements with opt out rights, a flood of claims can generate a market for lemons, with the weakest claims submitted to the settlement and the strongest opting out and seeking recovery at trial or in private settlement. In binding settlements, they may result in a commons problem, requiring dramatic reductions in payment that effectively transfer recoveries from those with intrinsically strong claims to those with weak claims.
This Article evaluates the history of three mass torts where specious claim markets were uncovered and identifies common themes that reflect broader lessons about the potential for oversubscription. In particular, although commentators often focus on the incentives that drive claim recruiting, this Article focuses on case development incentives, which may be distorted by fixed settlement criteria and encourage practices that lend themselves to specious claim filings. Moreover, the manner in which this process unfolds presents special difficulties for ethical enforcement and deterrence.
To address these concerns, this Article demonstrates that settlements susceptible to targeted development require more sophisticated provisions that address the opportunity, incentive and neutralization patterns that fuel specious claim markets and suggests circumstances in which courts need to take a more active role in evaluating these provisions. Although others have suggested the use of statistical methods to frame mass tort settlement values, this Article explains that these methods may be more valuable in controlling oversubscription and specious claim filings against claim resolution facilities post-settlement and outlines how these methods may be effectively employed in this context.