Auctioning Class Action and Derivative Litigation: A Rejoinder

Abstract

Randall Thomas and Robert Hansen have made a significant contribution to the literature on the auctioning of litigations in their article Auctioning Class Action and Derivative Lawsuits: A Critical Analysis. Utilizing the insights of modem auction theory, they offer a comprehensive analysis of the proposal, first developed in an earlier article of ours, that judges should experiment with auctioning class action and shareholders' derivative litigation in "large-scale, small-claim" cases. Thomas and Hansen offer valuable insights into the strengths and weaknesses of the auction idea and thereby seek to identify more precisely those cases in which litigation auctions would offer significant potential benefits. More generally, their paper demonstrates the utility of modem auction theory for the analysis of important legal issues. While generally applauding the auction idea, Thomas and Hansen criticize several elements of our initial analysis. In the pages that follow, we respond briefly to these criticisms and offer some additional thoughts.