Under the law, the power to sue and collect damages is granted exclusively to victims, namely to those who can show that their interests were set back by others’ behavior. By contrast, the law is much more generous in identifying defendants. A defendant can be liable for no reason other than that she is the “cheapest cost avoider.”
This Article questions the axiomatic equation of plaintiffs with victims. Information hurdles, as well as strategic concerns, commonly render victims unable or unwilling to litigate. Accordingly, in many cases, the restriction of granting the right to sue only to victims protects wrongdoers from liability and results in under-enforcement. Against this backdrop, this Article argues that this problem can be remedied by extending the right to sue to individuals who are not victims. Precisely as the identity of defendants rests upon policy considerations, so the identity of plaintiffs should rest upon who the prospect of compensation is more likely to incentivize to sue. Extending the power to sue to the “cheapest compensation seeker” would resolve chronic problems of under-deterrence. As the Article further shows, this solution outperforms other enforcement mechanisms currently applied by the legal system and is consistent with recent developments in tort law.
“[D]amages . . . must be paid to the victim . . . as otherwise the victim will have no incentive to sue, and that incentive is essential to the maintenance of the tort system as an effective, credible deterrent to negligence.”1
The law generally provides the victim (or the injured), and only the victim, the right to sue and collect damages. The “case-or-controversy” requirement embodies this principle, which equates plaintiffs with victims, namely with people whose interests were set back by others in wrongful ways. The view that only the victim has a right to sue is also dominant among legal theorists, including advocates of both corrective justice and law and economics.2 Surprisingly, however, the law is much more generous in identifying potential defendants. The concept of wrongfulness or fault is a flexible, policy-oriented concept, and the law commonly identifies someone as a defendant simply because she is the “cheapest cost avoider,”3 because she can insure herself, because she has deep pockets, or because of other policy-related reasons.
This Article questions the axiomatic equation of victims with plaintiffs. Particularly, it argues that precisely as the identity of the defendant ought to rest upon policy concerns, such as who the cheapest cost avoider is, so the identity of the plaintiff should rest upon who the prospect of compensation is most likely to incentivize to sue. Thus, we coin a term that is analogous to the “cheapest cost avoider” to identify who the best plaintiff is: the cheapest compensation seeker. The cheapest compensation seeker is the individual or entity who has better access to the legal system and is inclined to sue even when the expected compensation is low. In many situations, victims fail to sue either because they lack relevant information or prefer (for self-interested reasons) to avoid suing wrongdoers. In such cases, failure to extend the right to sue to third parties results in under-deterrence. Precisely as efficiency is served by expanding the scope of defendants, so it can be served by expanding the scope of plaintiffs.
The proposal to extend the right to sue to third parties cuts across legal fields and opens up numerous opportunities for enforcement of legal rights. Victims of child abuse, for example, are often children whose formal guardians are underperforming, failing to stand up for the rights of the abused. In other settings, victims lack the necessary information for mounting claims. Medical malpractice situations provide a salient example. In still other cases, victims are well informed but are reluctant to sue in order to conceal their own negligence, or because suing may cause them more harm than good. Consider employees who refrain from taking their employers to court due to fears of retaliation by the latter or because going to court would harm the employee’s reputation in the job market. Or, consider the heir to an author who does not sue for copyright violations because it will involve more wrangling with other purported or actual heirs concerning their rightful share. Alternatively, consider cases of wrongful birth in which, in order to be awarded compensation, the mother would have to testify that she would have aborted had she known the genetic impairments of her child.
Third parties can mitigate chronic under-enforcement problems. Doctors, therapists, psychologists, and teachers can be motivated, through financial incentives, to stand up for the rights of abused children. Nurses and other medical staff will often find it easier to bring a medical malpractice case than the victim. Third parties who regularly collect data from owners of smartphones and fixed street cameras, for example, including Internet service providers, possess the required information to handle many wrongs. Fellow employees and competing firms can challenge the behavior of employers.
Accordingly, instead of automatically privileging the victim, we propose a regime under which third parties could mount legal claims. Under the cheapest-compensation-seeker rule, the plaintiff need not be the victim; she can be a bystander or another person who has better knowledge or stronger incentives to sue. In essence, we add the tool of third-party enforcement to the usual distinction between private enforcement—only through victims—and public enforcement, most notably through criminal proceedings.4 We suggest what these third-party actions would actually look like, discuss their limitations, and address possible concerns. In a nutshell, our proposal relies on providing financial incentives to encourage well-positioned third parties to file a lawsuit, while simultaneously integrating the actual victim in the process. We also show that alternative avenues for augmenting the threat of litigation and deterring wrongdoing—such as a market for legal claims, punitive damages, class actions, and cash-for-information regimes—do not address the problems that the cheapest-compensation-seeker rule solves.
It may seem that this proposal is revolutionary as it deviates from current, deeply entrenched doctrines—doctrines that are not only an integral part of tort law but are also required by constitutional principles. Arguably, it is unclear why the requirement of standing needs to be revised given the long-established legal tradition that insists on “injury in fact” as a necessary component required for standing.5
We believe that this view is overdrawn and misleading for two reasons. First, existing law already contains important exceptions to the rule privileging the victim. These exceptions have been designed to address specific problems of under-enforcement. Our proposal can be regarded as extending these exceptions and developing a more general framework for addressing problems of under-enforcement. Second, our proposal is timely given recent doctrinal and technological changes. Recent doctrinal changes impose much greater hurdles on plaintiffs than existed before. Technological changes increasingly make it difficult and costly for victims to acquire information to substantiate their claims, and technology simultaneously provides greater opportunities than ever for third parties to acquire such information.
Consider first the perception that only those who suffer harm can sue. As we show below, existing law already contains exceptions to the rule privileging victims. Among these exceptions are rules such as parens patriae and qui tam litigation that allow individuals, as well as the government, to sue (and collect compensation) for harms suffered by others.6
Second, the proposal is timely given recent doctrinal changes which imposed new restrictions on plaintiffs. A decade ago, the Supreme Court reversed a fifty-year precedent and started requiring plaintiffs to meet a higher standard of pleading to survive a dismissal and proceed to discovery.7 A desire to screen out unmeritorious cases motivated adoption of the new precedents.8 The heightened pleading standards, however, made access to courts more difficult for plaintiffs. This doctrinal move has roused vigorous responses. In particular, opponents have argued that the heightened pleading requirements harm victims where the information necessary to bring a lawsuit resides with the defendant9—as is common, for instance, in medical malpractice and employment contexts.10 The pleading-standards decisions are but one example of a general trend that raises obstacles to plaintiffs, especially uninformed ones. In 2015, the Federal Rules of Civil Procedure were amended in order to curb the right to conduct discovery.11 Dozens of scholars lamented the “anti-plaintiff” approach that these amendments reflect.12 Beyond these procedural changes, plaintiffs have been suffering from other barriers, such as difficulties in proving causes of action, rising legal costs, and the inherent economies of scale that defendants, typically repeat players, possess.13 It is no wonder, then, that other commentators have concluded that “individual plaintiffs are becoming an endangered species in many litigation contexts.”14 Empirical studies corroborate this observation, showing that plaintiffs are increasingly unable or unwilling to sue.15 In response, theorists have suggested various mechanisms designed to revitalize civil suits.16 Yet, despite their ingenuity, these proposals all rest on the premise that only victims have standing. The exclusive attention given to the victims obscures other venues for reform. Where a victim ceases to be an effective plaintiff, a change of paradigm is warranted.
Technological changes also call for rethinking the narrow scope of standing for two reasons. Due to the increasing complexity of modern life, it is often difficult, if not impossible, for victims to acquire the knowledge necessary to file a suit.17 Further, victims in a variety of contexts are unaware of the wrongs committed against them. Hence, limiting standing to victims inevitably results in under-deterrence. At the same time, technology provides opportunities for third parties to detect harms and to store relevant evidence. Expanding the scope of compensation seekers is a natural legal response to the Information Age, where third parties collect a seemingly infinite amount of data. Giving standing to third parties is thus more likely than ever to remedy the defects resulting from the ignorance of victims. For both doctrinal and technological reasons, the traditional rules limiting standing to victims no longer serve contemporary needs and should be revised.
The Article proceeds as follows. To establish the case for the cheapest-compensation-seeker principle, Part II identifies exceptions to the current rule that limits standing only to victims. Part III elaborates on two types of cases that justify providing third parties with the right to bring a lawsuit—suits where victims are unable to sue and suits where victims are unwilling to sue. Part IV compares the cheapest-compensation-seeker proposal to alternative mechanisms that tackle under-enforcement, such as punitive damages and class actions. Part V addresses possible limitations to our proposal. Part VI explains the asymmetry between the ways in which we think about plaintiffs and defendants in tort cases. We further show that our proposal not only promotes the goals of tort law, but is also consistent with the ways in which tort law has evolved. Part VII offers a brief conclusion.
II. The Right to Sue: A Descriptive Account of Existing Mechanisms for Third-Party Litigation
The legal regime governing the right to file lawsuits generally forbids third-party litigation—litigants cannot vindicate other peoples’ rights. This regime is rooted in constitutional principles, i.e., the requirement that litigants must have standing to sue. It is also firmly entrenched in tort law doctrine. As this Part shows, however, the ban on third-party litigation has several exceptions. Courts, as well as legislatures, have relaxed standing requirements in response to under-enforcement concerns, namely in circumstances in which victims are unlikely to sue wrongdoers. Section A describes litigants’ power to claim redress on behalf of other individuals. Section B describes third-party litigation that benefits governmental entities.
A. Third-Party Litigation in Individuals’ Disputes
Article III of the Constitution extends the power of courts to “cases” and “controversies.”18 Although Article III does not define these terms, the Court over the years has “established . . . the irreducible constitutional minimum of standing.”19 To vindicate its rights, a plaintiff “must have suffered an ‘injury in fact.’”20 This injury has to be both “concrete and particularized” and “actual or imminent” rather than “conjectural or hypothetical.”21
There are several rationales for the rule that plaintiffs ought to be victims who seek redress for infringements of their own rights. First, standing better maintains separation of powers. If an injury is “undifferentiated and common to all members of the public, the plaintiff has a ‘generalized grievance’ that must be pursued by political, rather than judicial, means.”22 Abolishing the requirement of standing would increase the influence of interest groups (and courts) at the expense of other branches.23 Second, standing limits the class of cases that can enter courts and is therefore a tool to “ration scarce judicial resources.”24 Relatedly, denying standing to third parties prevents undesirable or unnecessary enforcement of rights, as “it may be that in fact the holders of those rights either do not wish to assert them, or will be able to enjoy them regardless of” the litigation.25 Third, victims are usually best positioned to provide evidence regarding disputed claims.26 Finally, third-party litigation is inefficient because it induces duplicative enforcement efforts27 and hampers the transfer of rights.28
Nevertheless, the rule against third-party litigation has been relaxed. Courts have granted standing to third parties when circumstances suggest that “there exists some hindrance” for the right-holder to file herself and the filing plaintiff demonstrates “a close relation” to the actual right-holder.29 For example, white criminal defendants were allowed to claim the constitutional rights of excluded black jurors.30 Particularly, the Court found that if it did not give standing to the white defendants, under-enforcement would occur as the right-holders, black jurors, “possess[ed] [little] incentive to set in motion the arduous process needed to vindicate [their] own rights.”31 Similarly, the Court allowed physicians to challenge the constitutionality of certain restrictions on abortions, acknowledging the unlikelihood that the direct victims of such restrictions would seek their day in court.32 In a similar vein, courts have allowed plaintiffs whose speech a certain statute proscribed to challenge the constitutionality of that statute based on its impact on other persons, although “the statute constitutionally might be applied to [the filing plaintiff].”33 As the Court reasoned, the denial of standing for such a plaintiff may “chill the exercise of free speech rights by persons not before the court.”34
While these examples suggest that courts have been willing to loosen standard standing requirements, those exceptions are limited in scope. Courts have refused to extend them and allow other potential third parties to file claims on behalf of nonfiling victims.35 Particularly, courts have insisted that litigants seeking redress for the harm of nonfiling right-holders must themselves be victims, namely that they would suffer some individual loss as a result of defendants’ conduct.36 While this loss could be limited and unrelated to the harm sustained by the nonfiling victims, plaintiffs must show a distinctive harm to be eligible to file.
Other exceptions to the rule against third-party litigation involving individuals’ disputes are class actions and the buying and selling of legal claims. We discuss these exceptions in greater detail below.37
B. Third-Party Litigation in Government-Related Disputes
The mo st notable exceptions to the rule against third-party litigation can be found in the context of government-related disputes. Under the doctrine of parens patriae, state attorneys general (“AG”) can mount claims on behalf of nonfiling citizens who suffered harm. The doctrine of qui tam empowers individuals to file on behalf of the government when the latter fails to protect its own rights.
1. Parens Patriae
Rooted in the common law, the doctrine of parens patriae allows states to seek monetary compensation on behalf of individual victims where such litigation protects the state’s “interest in the health and well-being—both physical and economic—of its residents in general.”38 Courts have interpreted these terms broadly, thereby allowing state AGs to file for a range of wrongful behaviors (such as antitrust violations, harmful products, and fraud claims) and against a broad spectrum of defendants (including tobacco and gun manufacturers, retail chains, health providers, insurance companies, and local businesses).39 Alongside the common law doctrine, state AGs’ authority to mount parens patriae claims is now often grounded in explicit state legislation.40
The actual breadth of the doctrine has been subject to debate among courts and scholars, most notably with regard to the states’ ability to invoke the doctrine when individual victims could, in principle, sue and collect compensation on their own. This debate resulted in part from the Supreme Court’s decision in Snapp v. Puerto Rico, where the Court noted that parens patriae claims require states to “articulate an interest apart from the interests of particular private parties, i.e., the [s]tate must be more than a nominal party.”41 Following this ruling, courts and commentators have concluded that “Snapp supports the majority view that the state’s interest may be parasitic on the interest of individual citizens,”42 and that the major condition for the application of the doctrine is for the state to act on behalf of “its residents in general” rather than “particular individuals.”43 While the Court did not indicate what number of residents is sufficient to satisfy this condition, Snapp itself suggests it need not be “all or even most of the state’s residents.”44 Parens patriae litigation has garnered considerable attention in recent years. While opponents believe it is “class action in disguise,”45 where state AGs “shift . . . the allocation of powers among the coordinate branches of government,”46 proponents view parens patriae as an important procedural tool capable of closing a significant “enforcement gap.”47
2. Qui Tam
Somewhat analogous to parens patriae, yet operating in the reverse direction, qui tam empowers individuals—referred to as “relators”—to seek redress for wrongs committed against the federal government. The statutory authorization for qui tam litigation is the False Claims Act (“FCA”), which enables third parties to sue on behalf of the federal government for fraud in connection with federal programs and expenditures.48 The qui tam provisions were designed to boost lackadaisical governmental enforcement resulting from lack of information or governmental unwillingness to sue due to “captured” regulators and conflicting interests.49
In the last decades, qui tam cases have become an important and powerful enforcement tool,50 generating greater recoveries than traditional enforcement mechanisms.51 This success stems from, among other things, the intricate procedure that accompanies qui tam litigation and integrates financial incentives to the third party, together with safeguards that maintain the interest of the victim, namely the U.S. government. Specifically, the relator is incentivized by the potential monetary award she cashes at the conclusion of the case.52 These sums range from 15–30% of the recovery that the qui tam suit realizes.53 At the same time, the relator does not hold the sole control over the case, as the government can join the action.54 Importantly, if the government decides not to join the case, the third-party relator can pursue the case independently.55 This feature guards against problems of capture and conflicting interests.56 By allowing the plaintiff this independence to proceed without the government’s consent, qui tam litigation diverges from other regimes—such as monetary incentives for whistleblowers—that encourage cooperation from private third parties but give no formal standing to the informants.57
Note that if the government decides to intervene, the case proceeds with a dual-plaintiff model in which both the government and the third party have procedural rights.58 Thus, while ill-motivated regulators could theoretically join the case and then ask the court to drop it, they would have to do so publicly, explain their motives to the court, and face the relator’s opposition.59 Indeed, instances in which the government joins the case and then drops it against the relator’s will are highly uncommon.60
The general scholarly view regards qui tam litigation as a highly effective tool to deter wrongdoing and compensate the government for its losses.61 Qui tam procedures balance between two opposing positions: unrestricted private enforcement, where the dangers of costly and frivolous class actions come to mind, and unchecked public enforcement, vulnerable to informational problems and conflicting interests. Drawing on the positive experience with existing examples of third-party litigation, the next Part introduces the idea of providing the cheapest compensation seeker—and not necessarily the victim—the right to bring an action.
III. The Cheapest Compensation Seeker
This Part advocates extending the power to sue to third parties in cases in which victims are unable or unwilling to sue. We argue that third parties are often better suited to sue and are more likely to do so than the victims. The cheapest compensation seeker is a person or an entity that is in the best position to seek compensation for a wrong because she is less averse to risk or has the best information, the best access to the legal system, or stronger incentives to sue. The failure to extend the power to sue to the cheapest compensation seeker results in serious under-enforcement and, consequently, under-deterrence.
We first establish that there is a serious problem of under-deterrence. Second, we discuss typical settings in which there are indeed third parties for whom it is cheaper or easier to sue.
A. The Problem of Under-Enforcement
Many tort theorists believe that tort law suffers from a significant problem of under-enforcement; many tort victims simply fail to claim their rights.62 Victims fail to do so for various reasons: some are unaware that they were wronged or lack sufficient evidence to substantiate their claims; others face high litigation costs or are exposed to intimidation not to litigate. One empirical study concluded that:
Research typically shows [that] Americans rarely take their disputes to court. Of every one hundred Americans injured in an accident, only ten make a liability claim, and only two file a lawsuit. Of every one hundred Americans who believe they have lost more than $1,000 because of someone else’s illegal conduct, only five file a suit. . . . Far from a nation of litigators, the United States seems to be filled with “lumpers,” people inclined to lump their grievances rather than press them.63
Many victims’ failure to sue is not irrational. Theorists identify “rational apathy” on the part of victims resulting from the combination of sizeable litigation costs and the difficulties in proving negligence.64 Rational apathy may apply to the victim but need not apply to others who may be more informed than the victim or have greater resources. Further, rational apathy is more likely to affect the poor, women, and minorities. These groups are less likely to receive high economic damages,65 and given that the compensation they get is lower than their litigation costs, it is often rational on their part not to sue.66 Moreover, given the uncertainty that characterizes litigation, victims in general, and the poor in particular, may be less willing to sue because they are likely to be risk-averse.
Victims fail to sue even when taking their case to court is the rational thing to do. As Professor David Engel has recently shown, several factors cause victims to give up on their right to demand compensation.67 First, as a practical matter, victims’ own medical and mental conditions, especially in cases of physical injuries, commonly prevent them from seeking legal redress.68 Second, as dangerous situations are now perceived to be part of our natural environment and inevitable, victims increasingly tend to blame their own inadvertences as the main cause of their harm rather than their injurers’ conduct.69 Third, emerging cultural perceptions regarding victims, which portray them as greedy and deceitful, discourage honest victims from litigating their cases, notwithstanding their injurers’ responsibility.70
These difficulties led many to skepticism concerning the usefulness of tort law,71 while less skeptical voices proposed mechanisms to reform tort law, e.g., expanding the use of class actions72 and punitive damages.73 We suggest that third parties can overcome some of the hurdles. What is needed is to identify third parties that are more capable or willing to sue than the victims. We focus, therefore, on the cases in which the victim is not the cheapest compensation seeker and identify third parties that are more likely to litigate.
What would these third-party suits look like? Who are the third parties that should be induced to vindicate the victims’ rights? Before presenting typical cases, we outline a description of the procedure for such third-party lawsuits. Such a procedure ought to serve the goal of overcoming under-enforcement and, at the same time, should take account of the legitimate interests of the victim. Under this proposal, a third party could file a third-party lawsuit. If the court found that the lawsuit presented enough facts and that the third party was an appropriate or suitable third party, the case would then be served on the victim who could decide to (a) join it; (b) oppose the complaint and ask the court to dismiss it; or (c) stay uninvolved. Under the first alternative, the court would consider the case on the merits where both the plaintiff and the third party lead the case. Under the latter two alternatives—where the victim opposes the complaint or stays uninvolved—the court would decide whether to let the third party proceed. In any case, if the complaint ended successfully, the third party who initiated the lawsuit would be entitled to a portion of the monetary fruits and the remaining proceeds would go to the victim. The reward for the third party should depend on its contribution to the successful completion of the case, as is common in class actions.74 While there may be various procedural complications,75 the gist is to provide monetary incentives and procedural rights to third parties without compromising the legitimate interests of the victim.76
To establish the desirability of the cheapest-compensation-seeker rule, one needs to establish two claims: (1) sometimes, victims are unlikely to sue; and (2) at least in some of these cases, third parties are better able or more willing to sue.
We identify two broad settings in which the cheapest compensation seeker is a third party rather than the victim: where victims are unable to sue and where victims are unwilling to sue.
1. Victims Unable to Sue
There are situations in which the victim is unable to sue; victims in these cases cannot “name” and/or “blame.”77 They cannot “name” because they do not know that someone committed a wrongful act against them—for instance, they might think that their injuries resulted from an act of nature rather than from wrongdoing. They cannot “blame” because they cannot identify the perpetrator or provide sufficient evidence to substantiate their suspicions. In these cases, private third-party lawsuits can be useful when there is an informed third party—the “cheapest” source of information. The following illustrates typical settings.
a. Deceased and Nonperforming Victims
Inability to sue can manifest itself in various ways. The purest form of inability is the case of deceased victims who are unable to bring a lawsuit:
Hypothetical I—Deceased Victims. Tim, a successful businessman, undergoes an emergent medical procedure. Tim dies due to the doctors’ negligence. Tim has no heirs and he did not leave a will.
At least according to some views, only Tim has the legal power to sue—hence, the doctors’ negligence is left unaddressed.78 While criminal sanctions are sometimes available, the odds that such sanctions will be imposed are slim. Criminal cases need to be proven “beyond reasonable doubt,” and the burden of proof may be too high. Further, in the absence of any incentives to provide information, third parties who are aware of the negligence will not be inclined to report it.79
In contrast, under the proposed cheapest-compensation-seeker rule, the looming financial reward can induce the information-holders to claim Tim’s rights. Importantly, there is a reason to believe that under these circumstances there are relevant, informed third parties, such as nurses and medical staff, that will be willing to provide information if they are likely to be rewarded.80 The case of deceased victims, then, is a straightforward setting in which the only way to vindicate the victim’s rights is to empower third parties.81 But such a case may be too rare to justify a legal reform.
A more frequent case of nonperforming victims concerns child abuse resulting from the child’s legal guardians acting negligently or abusively. Similar to deceased victims, children abused by their guardians are unlikely to stand for their rights, and the imposition of liability depends on the cooperation of third parties such as doctors, therapists, psychologists, and teachers who are willing to inform the authorities about suspected incidents of child abuse. Indeed, most states have established mandatory reporting duties requiring such third parties to report any case in which they believe a child has been abused.82 Yet the authorities often fail to properly enforce the reporting requirements or respond to these reports, such that even law-abiding third parties have weak incentives to comply. One study found that, when asked whether “they had ever failed to notify government authorities of instances of suspected abuse or neglect,” 44% of clinical psychologists, 51% of social workers, and 58% of child psychiatrists acknowledged that they had.83 Mental health professionals similarly indicated being “skeptical of the quality of state child protection staff services,” preferring to address such matters privately.84
Empowering doctors, therapists, and teachers to initiate legal proceedings against abusers could partially address the problem of children’s vulnerability and inability to sue. Moreover, the third parties’ litigation may encourage the authorities to better respond to the reports these third parties file in the first place. Knowing that failures to respond to such reports could lead to private litigation that would expose their inaction, authorities will be incentivized to seriously investigate complaints regarding child abuse.
b. Uninformed Victims
In other situations, there is a right-holder who is willing to litigate but cannot acquire the relevant information. Consider the following hypothetical:
Hypothetical II—Uninformed Victims. Warren and his ex-girlfriend, Joanna, have been embroiled in several arguments. After one of their confrontations, Joanna shatters the windows in Warren’s car. Ron, a neighbor whose security cameras videotape the adjacent premises, notices and documents the incident.
How can Ron proceed? Ron can report Joanna to the authorities, but he gains no financial reward for so doing. Of course, Ron may be motivated by nonfinancial incentives—the desire to be a good citizen (or a good neighbor). But reporting Joanna may be costly to Ron because of the negative reputation that might be associated with informers, the potential resulting conflict with Joanna, or the risks and inconvenience of implicating himself and being subject to interrogation.85
Arguably, Ron can sell his incriminating information to Warren. But such transactions are rare, if not virtually nonexistent. Such transactions suffer from inherent asymmetric information problems—Ron knows something that Warren does not. Once Warren is provided with the information, he may pursue the proceedings on his own.86 Yet Warren may be reluctant to pay for the information in the absence of any indications as to its reliability. The asymmetry in information could therefore lead to possible breakdowns in this hypothetical negotiation.87 Moreover, by their nature, information holders such as Ron are “a strong natural monopoly.”88 Hence, any market negotiation between Ron and Warren “allow[s] for holdout and rent extraction by the” former,89 leading again to “strategic behavior” and “bargaining breakdown.”90 Indeed, while third parties often possess essential information, commentators have noted that in reality “we do not see . . . payments (or requests for payment) for things like privately owned surveillance devices.”91
There seem to be numerous situations in which wrongs are committed and third parties, privy to the information, could sue successfully. As Hypothetical II demonstrates, technological advancements may provide opportunities for third parties to share valuable information concerning wrongs that is not available to the victims of these wrongs. Think of the vast amount of information collected by Internet providers, Facebook, etc.92
Note last that providing such opportunities to sue to third parties would provide the cheapest compensation seeker an incentive to search for such information. This may, of course, be desirable (if done properly and within limits) or undesirable (if done improperly). We later examine this concern of “over nosiness” of third parties.
Hypothetical II involves factual information. Would we extend our argument to other types of information? In particular, one can imagine cases in which the victim lacks legal information concerning her rights, and a third party who is a legal expert could advise the victim of her legal rights. Nonetheless, there seems to be a fundamental difference between factual and legal information. Factual information is typically held by a single person—in essence, a monopoly—and deals between the information-holder and the victim are unlikely. In contrast, legal information is held by many people and there are competitive forces that incentivize those who hold such information to share it with uninformed right-holders for a fair price.93 Indeed, as opposed to the nonexistent sale of factual information, one commonly observes transactions in which legal information is sold, namely lawyer-client agreements.
c. Medical Malpractice
Professional malpractice often raises problems of information asymmetry. The victim, who typically lacks expertise and first-hand knowledge of the facts, is disadvantaged with regard to the prospects of litigation. Moreover, in professional malpractice situations, there are many possible causes for the victim’s loss that the victim cannot discern; physical and mental injuries are often latent and the victim may perceive them to be unrelated to the wrong. When victims are uninformed, there are usually informed third parties, e.g., the injurer’s employees. These third parties have no independent incentive to share their valuable incriminating information, but they may well do so under our proposed regime.
Medical malpractice seems particularly appropriate for third-party litigation. The statistics establish a serious problem of under-claiming. According to one study, only 1.5% (!) of negligence-induced injuries ended with a demand for compensation.94 Another influential study concluded that 97% of patients who suffered an injury as a result of a negligent treatment failed to vindicate their rights, among which the elderly and the poor are over-represented.95 Other studies found that only one in eight negligent medical injuries ends with a legal claim.96 A major part of the problem is the inability of victims to “name” and “blame” the wrongs committed against them.97 In the absence of alternative effective enforcement routes, such as criminal sanctions, this under-enforcement problem plausibly translates into sub-optimal levels of care.
Note, however, one complication of medical malpractice cases: while a third party such as a nurse could be more informed with respect to the negligence (or liability) on the part of a doctor or other professional, the victim may be more informed with respect to the type and size of the harms the negligent treatment caused. In such cases, both parties need to be incentivized; incentivizing the nurse alone or the patient alone is insufficient to provide deterrence. Hence, only a “dual-plaintiff” model, in which both advance the claim and are entitled to its proceeds, achieves this goal.
Next, we discuss more controversial situations, in which the victim can—but is unwilling—to sue.
2. Victims Unwilling to Sue
Sometimes the victim can sue but is unwilling to do so for various reasons. While the victim has reasons not to bring the case, such a suit may well be desirable from a social perspective. The victim’s reluctance to sue undermines the deterrent effect of tort law and induces future wrongdoing. In the rest of this Section, we distinguish between two types of cases: cases where the victim’s reasons to avoid filing the claim are wrongful (and therefore should be ignored), and cases where the victim has legitimate reasons not to sue (and therefore such reasons ought to be seriously considered by the court).
a. Wrongful Victims
Sometimes the victim is unwilling to sue because litigation may expose his own wrongdoing. Consider the following example:
Hypothetical III—Concealing One’s Negligence. Abe was driving his car intoxicated when Beth hit his car due to Beth’s negligence. Abe is reluctant to file a lawsuit, as a lawsuit would expose him to criminal sanctions and/or higher car insurance fees. Carl, a bystander, witnessed the accident and brings a lawsuit against Beth (on behalf of Abe).
Hypothetical III is not unique. It is not rare that a lawsuit by the victim may bring to light the victim’s own faulty behavior, resulting in future undesired financial, reputational, or criminal sanctions.98
To demonstrate, American colleges have growing institutional responsibilities for wrongs that are committed on their premises—however, they “continue their patterns of ignoring or downplaying the harms.”99 It is not implausible to believe that a college would be reluctant to sue students who harmed it in order to hush the incident and prevent future reputational harm.100 Another example is the case of an heir whose rights were violated but who is unwilling to sue the wrongdoer because his own rights are in doubt, his rights may raise legal controversy, or he simply is reluctant to sue for emotional reasons.101 This case also may give rise to the claim that the refusal to sue is illegitimate or undesirable from a social perspective.
While the victim in these examples is unwilling to litigate, from a societal perspective, litigation is desirable not only because it deters the wrongdoers, but also because it exposes the wrongdoing of the victim. Giving a third party the right to sue achieves both ends, extracting damages in tort against the injurer and exposing the victim to sanctions for wrongdoing.102
b. Innocent Victims and Retaliation Threats
In some cases, the victim’s reluctance to sue is legitimate, and, consequently, the legal system ought to be more cautious in empowering third parties to sue. Take the following example:
Hypothetical IV—Reputational Concerns. Nora works in a major law firm. Her employer violates labor regulations. Nora refuses to bring a lawsuit; she believes that such a move will tarnish her reputation and prevent her from securing prestigious positions in the future.
While Nora will not bring a lawsuit, in our model, one of her colleagues can do so on her behalf. The same reputational concerns that hinder Nora from filing a lawsuit would probably drive her not to join (or even cooperate) with the third-party suit. In fact, Nora may request that the case be dismissed. How should the court react?
Unlike Hypothetical III, Nora may have good reasons to veto the lawsuit. She is seeking to minimize harms to her reputation in the job market. Under the proposed third-party litigation model, courts may well honor Nora’s request to drop the lawsuit. In that case, the third-party complaint will be dismissed without even being sent to Nora’s employer. Slightly more complicated are cases in which the plaintiff is reluctant to sue but also is unwilling to specify the reasons for his reluctance. There may be instances in which such a refusal would be justified and courts must be aware of this possibility.
Beyond the cases of reputational costs, there are other cases of expressive and emotional reluctance to sue on the part of victims. To illustrate, many victims prefer not to vindicate their rights and confront the wrongdoer simply because the latter—e.g., their doctor—apologized.103 Third parties may have the information and the willingness to sue on behalf of such victims. Along similar lines, sometimes litigation requires victims to provide evidence that, while being in their possession, imposes on them painful emotional costs. The tragic cases involving wrongful birth and wrongful life can provide an example. When genetic impairments are discovered after the birth, parents sometimes sue under the tort of wrongful birth or wrongful life (actions that are initiated in the child’s own name).104 Yet “in order to show causation in wrongful birth cases, courts require [the] mother to testify that she would have had an abortion or would have prevented conception if properly informed of her child’s defect.”105 This is a painful admission on the part of the mother, and, consequently, some parents refuse to testify. Third parties may have relevant information that indicates causation, e.g., prior willingness on the part of the mother to have an abortion. Proceedings that third parties trigger can minimize some of the harms that litigation inflicts on victims. While the victims may wish to distance themselves from the legal proceedings, they may want such proceedings to take place. For instance, reputational harms pertain to employees who personally file a lawsuit, as opposed to employees whose case someone else pursues. Likewise, the mother in the wrongful birth example might welcome a suit by a third party, on her behalf, as long as she is not involved in the process.
Last, our proposal seems particularly relevant for cases involving anticipatory retaliation threats. The current regime places the sole responsibility for a lawsuit in the hands of the victim. Given that it is only the victim who can bring a civil lawsuit, it is easier for empowered wrongdoers to threaten vulnerable victims not to litigate. In the antitrust context, it is “recognize[d] that direct purchasers sometimes may refrain from bringing a . . . suit for fear of disrupting relations with their suppliers.”106 In the context of regulator-regulatee relations, the latter are sometimes “afraid to file a lawsuit because of the potential regulatory consequences.”107 Municipalities are in a position to retaliate against local businesses.108 Members of closed communities are likewise reluctant to confront the legal status quo in their community due to fears of retaliation.109
These and other areas notwithstanding,110 the most prominent manifestation of anticipatory retaliation exists in employment relations. Consider the following two hypotheticals, which are based on actual events:111
Hypothetical V—Five hundred Mexican farmworkers arrive in North Carolina with visas to legally work for a harvest season. Each has a “know-your-rights” booklet a legal services organization provided that describes U.S. employment laws and offers assistance if the workers have a problem. A representative of their employer greets the workers, instructs them to throw their booklets away, and distributes another booklet, which warns that “history . . . shows that the workers who have talked with [legal services] have harmed themselves.” Workers report feeling that if they “keep [the] booklets or if they are ever seen with one of [the] booklets, they will be fired or have serious problems” with their employer.
Hypothetical VI—In Alabama, Diane, a poultry worker who is a U.S. citizen, develops severe pain in her hands due to the repetitive motions required by her job. When she asks to see the company nurse, Diane’s supervisor tells her that she “shouldn’t say [the pain is] work-related.” “If I say my pain comes from something I did at work, then I will be laid off without pay and three days later get fired. So, when I go to the nurse I tell her that I hurt my hands at home.”
As these examples suggest, retaliation against employees and the resulting silencing of employees is not a mere theoretical or fantastic conjecture. Title VII recognizes the prevalence of retaliation and forbids any employer:
[T]o discriminate against any of his employees or applicants . . . because he has opposed any [unlawful employment] practice . . . or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.112
Further, employers often fail to disclose, misrepresent, or even deliberately lie about the terms and conditions of work.113 Workers who are confronted with misrepresentations of this nature may be unlikely to question, rebut, or resist them for fear of losing their jobs.114 Legislatures try to address this problem by imposing duties to post notices concerning employees’ rights and to prohibit lying.115 Yet, despite these efforts, misrepresentation and anticipatory retaliation are common practices.116
Assume now that one of the Mexican workers in Hypothetical V shares the information concerning the unfair labor practices with a friend or neighbor. Currently, without willingness to sue on the part of at least one of the employees, no effective legal sanctions (other than criminal sanctions) can be employed. In contrast, if third parties, such as business competitors driven by prospective monetary awards, can sue, the incentives of the employer to use threats of this type diminish. Further, litigation initiated by the third party need not be detrimental to the employees’ interests as the employer understands that none of the workers initiated the litigation. Intimidation cannot, therefore, be effective as litigation does not hinge on the workers’ consent.
Interestingly, courts and enforcers have shown some willingness to recognize the right of third parties to file lawsuits against employers in the context of harassment claims. The doctrinal tool used by courts is a broader conception of harm, which enables a larger circle of “victims” to sue. Specifically, by arguing that the harassment (of others) amounts to a “hostile work environment,” fellow employees can file a claim, even if they are not the direct target of the harassment.117 A salient example is sexual favoritism cases; “consensual sexual relations, in exchange for tangible employment benefits,” generate a hostile working environment even if “the recipient of such sexual advances . . . does not find them unwelcome.”118
Beyond the scope of sexual favoritism, courts and policy-makers seem to have divergent views regarding third-party harassment claims.119 While some courts have insisted that only the targeted employee (that is, the direct victim of the harassment) has standing,120 other courts have allowed coworkers who belong to the same protected class of the targeted employee to file, even where the “targeted” employee chose not to sue and the harassing statements were not directed to the plaintiffs.121 Thus, for example, a female worker who overheard her employer’s sexist comments to her fellow female worker could sue her employer and demand compensation.122 But a white male police officer would have no standing to sue his supervisor for alleged racist and sexist harassment of his black and female fellow officers.123 The EEOC endorses the most expansive view of hostile work environment, as it recognizes the right of all employees to sue their employer upon discovering that the employer engaged in harassing conduct:
[There may be] situation[s] in which supervisors in an office regularly make racial, ethnic or sexual jokes. Even if the targets of the humor “play along” and in no way display that they object, co-workers of any race, national origin or sex can claim that this conduct . . . creates a hostile work environment for them.124
The move to expand the circle of potential plaintiffs is consistent with the logic of this paper. This move, however, falls short of creating a regime under which third parties are entitled to sue wrongdoers for several reasons. First, the foregoing expansion applies only in the context of hostile-environment claims, and not in other types of Title VII lawsuits. Second, even under the broadest conceptions of “injury,” the right to sue is still limited as only fellow employees working at the same organization or facility can sue, rather than any third party.125 Potential powerful and effective enforcers, such as competitors and nongovernmental organizations, are excluded. Further, the foregoing expansion of the class of “injured” persons shifts attention from the actual victim to her coworkers. By contrast, our model forces the court to take into account the real victim, as she is invited to join and can convince the court that the action should be dismissed. Perhaps these difficulties explain why Title VII “has not been the effective remedy many had originally hoped for . . . [and] ‘sexual harassment remains disturbingly common and unaddressed.’”126
The foregoing examples illustrate that third-party litigation can be valuable when the victim is unwilling, as well as unable, to sue.127 Although some of the examples provided above seem too rare to justify an urge for reform, we have identified areas of law in which the current legal doctrine unjustifiably restricts potential enforcers: medical malpractice and employment law. Yet, while the cheapest-compensation-seeker principle can be useful to handle these situations, we caution that the victim’s reasons for not suing should be examined, and, at times, those reasons will justify dismissing the case. It is sometimes unfair that innocent victims bear the costs resulting from rules designed to achieve optimal deterrence.
Next, we examine alternative mechanisms for resolving the problem of under-deterrence and establish that they are unsatisfactory.
IV. Alternative Avenues to Augment Enforcement
The cheapest-compensation-seeker rule addresses the problem of under-enforcement. There are, however, more conventional tools to incentivize victims to sue. This Part compares our proposal to other mechanisms designed to enhance enforcement of legal rights.
A. Empowering the Victim
Sometimes the law addresses under-enforcement by empowering the actual victim and incentivizing her to sue. To illustrate, in asymmetric information situations, the law sometimes eases the evidentiary requirements plaintiffs should meet—for example, through the res ipsa loquitur doctrine.128 A lower burden of proof means that victims have higher expected benefits and, consequently, stronger incentives to sue. Another example is several statutes that mandate one-way fee-shifting, i.e., shifting of legal expenses where the plaintiff wins (but if the defendant wins, each side carries its costs).129 Other procedural tools have been proposed in the literature to incentivize victims to sue.130
These tools are valuable, but they are less relevant to the cases discussed earlier. The cheapest-compensation-seeker rule applies primarily to situations in which the victim is unable or unwilling to bring a lawsuit, and in many of these cases, the proposals that empower the victim are ineffective. For example, where victims are unable to acquire the information necessary to even identify their wrongdoers, lower legal expenses, weaker evidentiary requirements, and fee-shifting provisions cannot induce these victims to vindicate their rights.131
The law also addresses under-enforcement by awarding enhanced and punitive damages.132 Punitive damages increase deterrence in cases in which many victims fail to reach courts. Victims who sue and win are awarded a multiplier on their individual damages, which (ideally) reflects the unclaimed damages of other victims.133 Yet punitive damages cannot solve the problems of under-enforcement for several reasons.
First, punitive damages presuppose that at least some victims can bring a lawsuit. When there are no informed victims who can bring a lawsuit, punitive damages are futile. Second, in cases in which there is a small probability that a victim will end up suing, punitive damages fail to provide optimal incentives. To achieve optimal deterrence in these cases, the award of punitive damages to the victims should be very high in order to reflect the small probability of a lawsuit by the remaining, uninformed victims. But under current law, punitive damages are capped;134 and even if they were not, there is a limit above which the defendant is insolvent and therefore a monetary sanction will fail to deter.135 Third, if very few cases of some type reach litigation, it is hard for courts to assess the right amount of punitive damages in those cases, as courts have no information with respect to the number and scope of cases that do not reach litigation.136 Finally, under a punitive damages scheme, many actual victims are not compensated, as the compensation to which they are theoretically entitled goes, in fact, to the atypical victim who filed a suit. Our proposed cheapest-compensation-seeker rule can at least partially benefit the actual victims, even if they did not initiate an independent lawsuit.
B. Class Actions and Other Representative Litigation
Class actions are a useful vehicle to deter defendants from inflicting small harms on a large number of potential plaintiffs. In particular, class actions address situations in which victims are reluctant to sue because the expected judgment is too small. At times, class actions would enable litigation where individual victims are uninformed. If there are numerous victims for whom it is prohibitively costly to acquire the information to initiate a lawsuit, class actions can prompt some victims to acquire the information.
The overlap between class litigation and third-party litigation, however, is not complete. First, the proposed third-party mechanism can complement class litigation where no class members initiate proceedings. Those include cases in which victims are unaware of their injuries or cases involving reputational costs that deter victims from “going public” and representing the class. Under our proposal, an informed and willing third party would be able to initiate a class action in these cases—and let members of the class join throughout the proceedings. Hence, it seems that third parties could initiate some important class actions that are currently not filed.137
Second, class actions cannot handle cases in which a single, uninformed victim suffered a large harm caused by a single defendant. Hypotheticals I–III demonstrate situations where the wrongdoer’s behavior inflicted injuries on a single victim, and thus class litigation is irrelevant. Medical malpractice, and professional malpractice more generally, typically represent similar individual settings which are not appropriate for class treatment. More broadly, the law currently tends to prefer individual litigation over class actions, even where an apparently similar behavior injures many victims.138
Third, class actions do not tackle situations in which victims do not want to sue. The victims—class members—receive notice and opportunity to opt out of the class.139 If they opt out, these victims are free to forego their individual rights, perhaps due to the reputational and financial concerns that we described in Subsection III.B.2. Opt-outs can harm, then, the deterrent power of class actions.140 In contrast, under the proposed regime, third parties can, under certain circumstances, sue on behalf of victims who choose not to pursue their claims.
By the same logic, under the proposed liberal approach to standing, associations can sue on behalf of their members and remedy some under-enforcement problems.141 Indeed, associations currently fulfill an important enforcement function where the members of these associations are reluctant or unable to sue. Similar to class actions, however, associations do not fully address under-enforcement problems. First, organizations typically have to find individual members who suffered injuries—but the need to show an injury complicates enforcement efforts. Second, in many cases, there are no potential associations that can stand for victims’ rights. Moreover, a rule that allows third parties to bring an independent lawsuit can facilitate the flow of information from third parties to relevant associations. For similar reasons, rules that allow associations and other third parties to participate in legal proceedings as amicus curiae have a narrower impact than our proposed regime.
C. A Market for Legal Claims and Information
Arguably, transactions between third parties and victims could overcome the problem of under-enforcement. Under a regime which allows such transactions, the victim can “buy” the information that a third party has. Alternatively, the victim can sell her entire legal right to a third party who has better tools to realize its value. While these alternatives currently face serious legal and ethical constraints,142 they can potentially bring to light unclaimed wrongs.
Yet market-based solutions are vulnerable to the problems raised earlier. In many cases of uninformed victims, third parties could not profitably sell the information they have to victims. The lack of information on the part of the victim, his inability to evaluate the value of his rights, and the “monopoly” that the third party has over that information are the main obstacles to the successful completion of such transactions.143
Transactions also cannot take place when the victim is reluctant to sue because she may be subject to criminal sanctions or other undesirable repercussions resulting from the legal proceedings. In such cases, there may be a conflict between the private interests of the victim and the societal interest in optimal deterrence, and the victim has no reason to buy information or sell her claim.
To sum up, a market for legal claims seems to be an ineffective remedy to the problem of under-enforcement due to information gaps and unwillingness to sue. Of course, markets for legal claims can solve other under-enforcement problems, notably those that result from victims’ financial constraints.144
D. Regulated Payments for Information
Another proposal involves payments for information. The recent use of whistleblower provisions,145 for instance, indicates that such monetary rewards can mitigate under-enforcement problems. Scholars have argued that whistleblower provisions are superior to the use of police officers and investigations on efficiency grounds,146 and they have empirically shown that where levels of moral outrage are expected to be low, financial rewards will likely be a decisive factor in inducing individuals to report misconduct.147
In our context, regulated payments for information involve payments to fact witnesses. In a recent article, Friedman and Kontorovich criticized the current regime, which provides no monetary rewards for fact witnesses.148 Instead, they suggested a regulated-payment system for fact witnesses, which courts would set according to “the posterior belief the court placed on the witness being a true witness.”149 The new rule, they concluded, would incentivize third parties to share and collect socially beneficial information.150
To what extent and under what circumstances is the use of regulated payments superior or inferior to our proposal to extend the scope of potential plaintiffs? Without challenging the recent recommendations to offer whistleblowers and fact witnesses monetary rewards, we maintain that our proposal solves problems that cannot be addressed by regulated-payment systems.
First, the regulated-payment proposals cannot solve the problem of plaintiffs who are unwilling to sue, e.g., the cases of anticipatory retaliation, such as the farmworkers or the poultry-workers (Hypotheticals V and VI). In a system that allows only the victim to initiate a lawsuit, an unwilling victim eliminates the incentives of third parties to reveal or search for information.
Second, even with respect to victims who want to sue but lack information, it is unclear that monetary rewards to third-party witnesses could induce victims to sue. Relatedly, these schemes raise a host of practical difficulties. Consider an example along the lines of Hypothetical II, where the victim Warren could not identify the wrongdoer Joanna without being tipped by Ron, the third party. Under our proposal, Ron simply files a lawsuit and serves the complaint on both Warren and Joanna. By contrast, it is unclear how Ron is supposed to proceed under the regulated-payment approach. Ron could contact Warren to try to convince him to use his power to litigate. Warren, however, who would bear the costs of filing a lawsuit, would not want to proceed without being sure that Ron had good evidence to produce. Suppose that Ron could somehow credibly convince Warren that his information was reliable. Once Ron showed Warren the incriminating evidence, the latter could presumably investigate the case on his own to save the payment to Ron.151 Perhaps the court could compel Warren to pay. But to do this, the court would have to investigate Ron’s contribution to the case, which often would be a costly endeavor. To stress, it is not impossible for third parties to extract payments under such a system. Rather, such a rule imposes hefty transaction costs, particularly where the information is pivotal to the case and the information holder cannot independently convey the information’s credibility to the victim without sharing the substance of the information.
Third, our proposal does a better job at screening frivolous and misleading information. Suppose that Ron, the third-party witness, convinced Warren that the latter has a good case against Joanna, and Warren filed the lawsuit. It would be Warren, however, who bore the costs of that lawsuit. Ron could gain from the lawsuit, but he would bear no costs; he therefore would have an incentive to provide partial, inaccurate, or even misleading information. Indeed, this is a familiar drawback of the recent cash-for-information regimes, as “there is little to deter individuals from making unjustified accusations of wrongdoing.”152 By contrast, under our proposal, the third party would initiate the proceedings and bear the costs of the legal process. Therefore, the third party’s incentives to provide unsubstantiated or speculative information would be lower relative to a regulated-payment regime.
E. Legal Obligations of Third Parties
Last, rather than paying third parties, the legal system could impose liability on them. A regime which renders third parties liable for victims’ harm, or requires them to actively help in identifying those who engage in harmful activities, incentivizes third parties to monitor and report wrongdoers. Although common law doctrines traditionally refrained from imposing positive duties on third parties, under the current legal system, “third-party policing [has become] ‘an increasingly important form of regulation and law enforcement that is now often deployed to address social problems.’”153
Third-party policing takes several forms. Under one version, third parties (or as they are often called, “gatekeepers”) are themselves potential defendants who can be sued if they fail to provide information that enables victims to sue wrongdoers. Under the more moderate versions of third-party policing, third parties are obligated to adopt procedures that would help identify wrongdoers. For example, federal, as well as state, laws now require universities and colleges to apply “bystanders’ intervention programs,” which are designed to encourage witnesses (such as students and teachers) to provide information regarding cases of bullying and sexual harassment.154
Our proposal shares some similarities with the recent trend to magnify third parties’ liabilities. Both approaches recognize that victims would often not enforce their rights effectively and need to be assisted by third parties. Our proposal, however, provides third parties with “carrots” rather than “sticks.”
While the use of “sticks” can sometimes resolve cases of under-enforcement, it suffers from several drawbacks. First, where it is hard to know or prove that a third party has knowledge concerning a victim’s loss (think of Hypothetical II), the threat of liability and a duty to provide information might be of little consequence. In many instances, it is hard to identify and “single out” in advance a third party who is well-positioned to acquire information.155 Moreover, under our proposal, third parties have an incentive to reveal the fact that they have information, but under rules involving “sticks,” they have incentives not to reveal it and, furthermore, not to acquire any information even when they can. Indeed, at least in typical contexts, imposing liability on third parties seems futile.156 Second, when a victim’s own interest is to avoid litigation, securing further information from third parties would have no effect on the victim’s decision not to sue and, therefore, have no influence on the incentives of wrongdoers. Last, third-party policing is not costless—for instance, effective third-party obligations have to be monitored and enforced. Furthermore, by sanctioning third parties, “sticks” blur the line between wrongdoers and observers. This is an undesirable byproduct because it can dull the normative weight that society assigns to wrongdoing.157
We examine below a number of objections to our proposal. While some of these objections are sound, they can be addressed by a careful implementation of procedural safeguards and by a wise use of courts’ discretionary powers.
A. Over-Nosiness and Frivolous Suits
Arguably, our proposal could trigger too-large incentives on the part of third parties to investigate, perhaps leading them to violate the privacy of victims. Further, it may also result in over-investment and duplicative efforts in detecting wrongs in order to benefit from the resulting compensation. One could even conjecture that extending standing would lead to fraudulent and frivolous legal proceedings. Alternatively, it could lead to a race to the court where third parties file suits before the victim can bring his own suit and thereby deprive him of part of his just compensation.
These considerations have to be weighed against the advantages of our proposal. Our proposal tackles under-enforcement by offering monetary rewards to information providers. Plausibly, with financial incentives, third parties will be more likely to share information and, even more so, to collect and produce it.158 The current regime offers no monetary incentives for third parties, suggesting “socially suboptimum levels” of information sharing and producing.159
It is difficult to evaluate the significance of the conflicting considerations in the abstract without solid empirical bases. Yet it is not difficult to mitigate the concerns regarding over-investing and disrupting the rights of victims for financial gains. The most obvious way is to deny compensation, block, or even sanction cases in which such abuses took place. Courts often evaluate the motives and background of third parties in class actions and qui tam litigation, and similar mechanisms could be used in our context.
To be concrete, we sketch here three procedures that mitigate these problems: early dismissals and informational requirements, continuous involvement of the victim, and aggressive sanctions.
First, under our proposal, third parties’ suits can be dismissed at an early stage—the court ought to grant the power to sue only to those third parties who demonstrate that they are likely to be effective plaintiffs. A possible criterion to identify such plaintiffs is their informational advantage. It seems relatively easy for courts to identify which third parties brought a lawsuit based on an original or solid informational basis, as the experience with qui tam litigation demonstrates.160
Combining early dismissals and a requirement for a solid informational basis should mitigate several potential problems with third-party litigation. Presumably, the threat of early dismissals would drive third parties to prepare high-quality complaints based on genuine and convincing information.161 Moreover, the class of possible plaintiffs would be highly limited in most cases—only those who possess private information that victims do not have and/or those who possess the sufficient wherewithal to survive early dismissal. Our proposal should induce third parties with unique information, such as medical staff, therapists, etc., where the victim is uninformed, and “big-guys,” such as competitors and nongovernmental organizations, where the victim is informed but unwilling to sue. As a result, concerns regarding a “race to the courthouse” and duplicative efforts to litigate seem minimal.162 Importantly, these procedures also guarantee that information that third parties gathered by using intrusive or illegal means would not give rise to standing. Finally, allowing the court broad discretion at early stages can better respect the victim’s rights—as a court can decide to stay the third-party complaint in order to give the actual victim more time to initiate a lawsuit on her own.163
The second procedural feature that mitigates these concerns is the continuous involvement of the actual victim in the process. Recall that, under the proposed model, the complaint is first served on the victim, who can elect whether to join the action or not.164 Hence, even if a third party receives the court’s preliminary approval, a notice will be sent to the defendant after the actual victim has the opportunity to express her views. The involvement of the real victim, alongside the third party, would presumably provide the court with more information, making frivolous suits less likely.
Third, an extensive use of monetary sanctions against frivolous suits would discipline third parties. Lawyers pursuing third-party lawsuits that crossed the preliminary stages but then turned out to be frivolous, based on fraudulent information, or based on information that was acquired by using intrusive means should be penalized—e.g., through Rule 11 motions.165 Another tool that the court could use to deter such suits would be to exercise its discretion to reduce the award the third party received when the case successfully ended, similar to the current practice in class litigation. Third parties who brought a successful suit, but took inappropriate steps, should be awarded a smaller portion of the proceeds.166
The positive experience with qui tam lawsuits suggests that, with a careful design, expanding the right to bring lawsuits to informed third parties is likely to be unproblematic.167 Allowing third parties to become plaintiffs might create some procedural complications, but it also would serve a socially valuable goal.
B. Crowding Out
Psychologists and behavioral economists have established that providing monetary compensation may “crowd out” other incentives, particularly altruistic incentives. In various contexts, from blood donation to volunteering, monetary incentives exclude or annul altruistic incentives.168 Similarly, it could be conjectured that providing monetary incentives may weaken or annul the altruistic incentives and not necessarily result in greater cooperation from third parties.
There are reasons to believe crowding out is not a serious problem. To bring about an altruistic reaction, the wrong committed must incite sufficient “moral disapprobation.”169 Some of the previous examples do not seem to raise such moralistic motivations.170 Further, while individuals may already voluntarily cooperate without an additional incentive when a wrong is committed in front of them, it seems likely that monetary rewards will motivate third parties to share information concerning wrongs that were not committed in front of them or will induce third parties to actively invest resources in detecting wrongs that they can easily detect.171
If anything, the current climate supports our conjectures. First, the existing level of cooperation or involvement of third parties in detecting wrongs committed by others is apparently small. The prevalent norms do not encourage third parties to intervene or report—rather, they reflect a “stay out of other people’s business” view.172 Second, under-deterrence concerns have, in recent years, triggered programs that utilize monetary incentives to induce people to share their information. Qui tam litigation—whose very goal is to encourage noninjured, informed third parties to file lawsuits—has been flourishing in the last few decades.173 In addition to qui tam litigation, whistleblower programs are clearly on the rise.174 In 2006, the Internal Revenue Service reinvigorated its cash-for-information program, and it appears that these changes indeed improved enforcement.175 Most notably, as part of the Dodd-Frank overhaul of financial and securities regulation, Congress enacted and fortified monetary-driven whistleblower programs in these areas.176 Against the backdrop of these seemingly successful programs, scholars have suggested that “conditions . . . seem ripe for further expansion” of the use of monetary incentives,177 as our Article proposes.
C. Under-Compensation (of Victims), Autonomy Losses, and Windfalls (for Third Parties)
One may still be skeptical about the desirability of a regime under which nonvictims collect compensation from wrongdoers at the expense of actual victims. As every dollar paid to the cheapest compensation seeker is deducted from the damages awarded to the actual victim, our proposal may appear objectionable on fairness grounds. Yet this proposal applies to victims who, under the current legal regime, typically remain uncompensated. Thus, although third-party litigation does not provide complete compensation to victims, it makes them better off relative to the current regime.
More generally, the proposed mechanism is in line with the emerging rules regarding injurers’ liability under conditions of factual uncertainty. Conventionally, a victim must show that an injurer’s behavior is the but-for cause of his or her harm. The but-for-cause test is biased against victims who face iterated risks that are below 50%. A classic example is patients whose chances of recovery are equal to or lower than 50%. When such patients suffer harm due to doctors’ malpractice, for example, they cannot establish that, but for the negligence of their doctors, they would have recovered.
The concern that doctors systematically inflict uncompensated harms on patients led courts and legislatures to adopt the “loss of chance” doctrine (“LOC”). This doctrine, now applied in a majority of the states,178 allows a victim to collect compensation that reflects the prospects that the harm resulted from a defendant’s wrongdoing. For example, a patient who, with proper care, had a 30% chance of recovery and who, due to her doctors’ malpractice, lost this chance will be able to collect 30% of the damages. As courts have explained, LOC guarantees that doctors internalize the costs of their misconduct and compensate victims for their losses.179
Yet, LOC inevitably compensates nonvictims at the expense of actual victims. To see this point, suppose there are ten identical patients who each had a 30% chance of recovery. The doctors treating the ten potential victims failed to treat them properly, and therefore none of the patients recover. In practice, but for the doctors’ failure to provide proper medical care, three of these patients (30%) would have recovered. Accordingly, these patients should ideally be entitled to full compensation from their respective doctors. The remaining seven patients (70%) should ideally remain uncompensated as, in reality, they suffered no harm. Under LOC, however, all ten patients receive the same compensation: an amount equal to 30% of their harm. The damages that are awarded to the seven nonvictims are essentially a windfall, and awarding such a windfall deprives the real victims of full compensation for their actual losses.
Third-party litigation shares the same rationales that underlie LOC. Courts and legislatures replaced the but-for-cause requirement with the LOC doctrine to address problems of under-enforcement. While the doctrine provides actual victims with only partial compensation (and a windfall to the nonvictims), it greatly improves the victims’ well-being because they are entitled to at least some compensation. Our proposal is similar. By encouraging nonvictims to initiate litigation against wrongdoers, it stimulates the filing of lawsuits against injurers that otherwise would escape responsibility. If applied properly, it also ensures that actual victims would receive at least some redress to their harm.180
It could be argued that our proposal is detrimental to the autonomy of victims. Arguably, we deprive victims of the power to make decisions concerning their own losses. Under one view, the loss is the property of the person who suffered from it, and consequently, she should be in charge of it.
In one respect, this consideration is beyond the scope of this Article, which focuses on the concern for efficiency. But given the examples provided above, it is not very compelling to reject our proposal on the grounds that it is detrimental to autonomy; victims who are ignorant of the causes of their harm and those who are subjected to harassment and pressure not to sue cannot be described as exercising autonomy. Further, when considering whether to allow third parties to sue, judges ought to consider the effects on the autonomy of the victims.
This Part raised some objections to our proposal. We have shown that concerns regarding frivolous suits and regarding exaggerated incentives to investigate can be mitigated through a better procedural design. Moreover, crowding-out does not seem likely under normal circumstances. And we also showed that, in other contexts, tort law undercompensates victims and provides a windfall to nonvictims in order to enhance enforcement.
VI. The Cheapest-Cost-Avoider Rule: A Conservative Revolution
This final Part places our proposal in a broader context of tort law doctrine. It shows that, while many concepts in tort law have been given flexible, policy-oriented interpretations, the perception of “plaintiffs” in torts has remained largely rigid, strictly associated with those who suffer harm as a result of injurers’ conduct. This rigid perception is unwarranted.
Over the past half century, the common law rules that long set the boundaries of injurers’ liability have been subject to important modifications. These modifications, often expanding victims’ rights to recovery, encompass many of the elements that underlie tort liability. Victims may now collect damages in circumstances in which tort law has traditionally barred compensation and for losses that have not previously been considered compensable.181
In important part, tort law’s expansion has occurred through broad interpretation of fundamental liability concepts. Current tort law doctrine, for example, has considerably reconfigured the notion of harm.182 While common law rules limited victims’ recovery rights to certain well-defined categories of losses, courts have expanded the types of harm for which victims can sue. Courts, for example, have significantly liberalized the conditions under which plaintiffs can now recover for pure economic and pure emotional losses.183 The definition of emotional loss itself has been significantly broadened, enabling victims to collect damages for psychological harms that had traditionally been deemed noncompensable.184 Similarly, tort law’s protection of interests such as privacy and autonomy has been widened, resulting in new forms of harm for which victims can claim compensation.185
In a similar vein, the rules regarding causation have been modified to allow the imposition of liability on wrongdoers in cases in which the conventional rules failed to do so. As noted, courts and legislatures have replaced the traditional but-for-cause standard with alternative rules that permit sanctioning injurers even when their factual contribution to the materialization of their victims’ harm cannot be established by the preponderance of the evidence.186 Furthermore, in drug, toxic tort, and medical malpractice cases, courts “have accepted relatively weak claims of causation . . . where proving cause and effect is often difficult.”187
While tort law doctrine has adjusted the conventional definitions of harm and causation (as well as other related tort concepts188), it has retained its traditional perception of who may demand recovery from injurers. To be sure, courts’ expansionist approach in defining harm and causation has widened the scope of the plaintiffs who could seek redress in court.189 Yet, the gradual expansion of harm falls short of fully addressing under-enforcement problems.190 Importantly, the standard to determine plaintiffs’ eligibility to file has remained unchanged. Plaintiffs must be victims who themselves suffered harm due to injurers’ activity.
Tort law doctrine’s strict approach in defining plaintiffs is perhaps most evident when one considers its corresponding treatment of who should be considered defendants. Tort law doctrine (with the encouragement of law and economics theorists) has been fully aware of the need to be flexible with respect to the identity of those who could be sued for causing harm. At times, a person may find herself to be a defendant not because she is the most proximate cause, but simply because she has deep pockets or is in a better position to insure or spread the loss, or because other potential defendants are less likely, for various reasons, to take precautions. This observation raises a puzzle. Why have theorists of law and economics, as well as the legal system itself, been flexible with respect to identifying who the defendants are but so rigid with respect to who the plaintiffs are? We offer three possible explanations.
The most obvious explanation is that the victim of a tort raises sympathy, and we wish to better protect her rights.191 One of the main concerns of tort law is to compensate the victim, and this often overshadows the concern for efficiency. The concerns for victims’ compensation should, however, support third-party litigation, at least where the victim is willing to vindicate her rights but incapable of doing so (think of Hypothetical II and uninformed victims). Moreover, the concern for fair compensation similarly supports limiting the scope of defendants only to those who are at fault. After all, it seems unfair that a person becomes liable only because she has a deep pocket or simply because she is in a better position to insure. In general, we see no a priori reason to prefer the imposition of liability on innocent defendants over granting (partial) compensation to nonvictims. If anything, the law should be more careful with the innocent’s loss than the third party’s windfall.
A second explanation relates to the desire, which also underlies the constitutional requirement of standing, to ration the scope of cases that reach courts. These “floodgates” arguments seem weak, however, as these new cases have social value in deterring wrongdoing and compensating victims.192 More importantly, there is no a priori reason to believe that litigation against faultless defendants burdens courts less than opening the gates to third-party suits.
A third, and more persuasive, explanation rests upon the legal doctrines governing tort law. Typically, plaintiffs are identified by using a seemingly “natural” characteristic, namely by the fact that they were harmed by an act of another—“victims.” In contrast, the concept of fault that is often used to identify defendants is clearly a normative concept, and it provides much more opportunity for manipulation. So while equating defendants with those who have committed wrongs does not effectively constrain the scope of defendants, given the flexibility of the term “fault,” equating plaintiffs with victims imposes a genuine constraint on the scope of plaintiffs.
This asymmetry explains, but cannot justify, the reluctance of the legal community to relax the requirement of standing. There is no a priori stronger reason to relax the requirement used to identify defendants than the reasons that exist to relax the requirements used to identify plaintiffs. Given the discussion above, it is evident that, while our proposal may seem at first sight radical, it is in effect a natural development of the type that took place in other spheres of tort law.
The cheapest-compensation-seeker rule can be analogized to the concept of the “cheapest cost avoider.” Precisely as the principle of the cheapest cost avoider demoralizes the concept of fault and thereby facilitates the attribution of fault to individuals who are not morally wrong (but instead need to be deterred), so the concept of the cheapest compensation seeker facilitates the provision of compensation to individuals who have not been wronged (but need to be incentivized to sue). While this proposal deviates from a well-entrenched doctrine, it is consistent with major developments in tort law, and it better reflects the greater stress on policy-oriented considerations that is reminiscent of contemporary tort law.
This last observation as well as the numerous exceptions to the standing requirement discussed in Part II suggest that even those who oppose reforms of the type advocated in this Article may concur with the observation that the traditional entrenched conviction that only victims can sue does not fully reflect existing legal realities. Hence, even without any further reforms, this Article reveals that, perhaps like Monsieur Jourdain’s discovery that he had “been speaking prose all [his] life, and didn’t even know it,” tort law has been extending the power to sue beyond what we have been trained to believe—to nonvictims—and we were simply not told about it.193
Can this proposal be extended to other fields of the law, in particular contract law? Should we allow a third party to sue when the promisee is not the best “compensation seeker”?
There are powerful reasons to reject such a proposal. In particular, and unlike in tort law, third parties are very rarely better litigants than the parties to a contract. Yet at least in one context, it seems that current contract law doctrine endorses such a principle, namely the right that a third-party beneficiary has to sue for violation of a third-party-beneficiary contract. While traditionally common law refused to grant standing to third-party beneficiaries (the requirement of privity), existing contract law recognizes such a right.194 One plausible explanation is that the third party is more likely to sue than the party to the contract, as it is the beneficiary’s interests that are at stake rather than the interests of the promisee.
This last observation is only an extension of the logic elaborated in this Article: standing is a procedural tool designed to realize most effectively the ends that the law ought to pursue. The rigid equation of victims with plaintiffs in tort law and the rigid equation of the parties to a contract with plaintiffs in contract law (under the privity requirement) are relics of the past, and given the complexity of contemporary society, these principles fail to serve contemporary societal needs.
* Bora Laskin Professor, Hebrew University Faculty of Law; Center of Rationality, Hebrew University.
** Phillip and Estelle Mizock Professor, Hebrew University Faculty of Law; Center of Rationality, Hebrew University.
*** Assistant Professor, Tel Aviv University Faculty of Law.
We would like to thank Massimo D’Antoni; Matt Dyson; Lee Fennell; Tali Fisher; C.E. Petit; Ariel Porat; Hans Bernhard Schaffer; and participants in the Siena-Tel Aviv-Toronto Law and Economics Workshop, Bucerius Law School faculty seminar, Hebrew University Tort-Law Forum, Tel Aviv Law School Law and Economics Workshop, Bar Ilan Law School faculty seminar, the Israeli Law and Economics Association annual meeting, and the German Law and Economics Association annual meeting for helpful comments and discussions. Evyatar Ben Artzi and Ofir Givaty provided excellent research assistance. The Aharon Barak Center for Interdisciplinary Legal Research supported this research.
1. Richard Posner, Economic Analysis of Law 223 (9th ed. 2014).
2. The former emphasize the “nexus between plaintiff and defendant” resulting from the unjust loss of the victim. Ernest J. Weinrib, Toward a Moral Theory of Negligence Law, 2 Law & Phil. 37, 38 (1983). The latter typically emphasize the better opportunity the victim has to provide relevant information. See, e.g., Steven Shavell, The Optimal Structure of Law Enforcement, 36 J.L. & Econ. 255, 273 (1993) (“[V]ictims of tortious harm will usually know the identity of injurers.”). But cf. Richard A. Epstein, Class Actions: Aggregation, Amplification, and Distortion, 2003 U. Chi. Legal F. 475. Epstein raises the possibility that “the right of action for the violation to A could be auctioned off by the state, so that the winning bidder may bring the suit and keep the proceeds of settlement or litigation,” but concludes that the current “inflexible rule that each owner of property retains the right of action for its theft or destruction” is “workable,” though it justifies class actions where the individual claims are small. Id. at 482, 484–85.
3. The “cheapest cost avoider” principle was introduced and discussed in Guido Calabresi’s classic book, The Costs of Accidents 135 (1970). See also Guido Calabresi & Jon T. Hirschoff, Toward a Test for Strict Liability in Torts, 81 Yale L.J. 1055, 1060 (1972) (expanding on the significance of the cheapest-cost-avoider principle in negligence and strict liability). For court cases employing the principle in determining injurers’ liability, see, for example, Bd. of Water Works Trs. v. Sac Cty. Bd. of Supervisors, 890 N.W.2d 50, 66 (Iowa 2017); Chi. Title Ins. Co. v. Wash. State Office of Ins. Comm’r, 309 P.3d 372, 386 (Wash. 2014) (Johnson, J., dissenting). It is worth noting, however, that while the cheapest cost avoider principle is extensively used in the United States, it does not extend to European jurisdictions.
4. For the rich literature, especially in law and economics, on the distinction between private and public enforcement, see, for example, Gary S. Becker & George J. Stigler, Law Enforcement, Malfeasance and Compensation of Enforcers, 3 J. Legal Stud. 1, 3 (1974); William M. Landes & Richard A. Posner, The Private Enforcement of Law, 4 J. Legal Stud. 1, 1 (1975); ; Shavell, supra note 2, at 258. While this literature has not elaborated on the option of integrating third-party lawsuits into the current legal scheme, some of the lessons it offers are of course relevant to our discussion.
5. Vikram David Amar & Michael Schaps, When Does Congress’s Recognition of an Injury Count to the Supreme Court? Standing and the Spokeo v. Robins Case, Verdict: Justia (Nov. 6, 2015), https://verdict.justia.com/2015/11/06/when-does-congresss-recognition-of-an-injury-count-to-the-supreme-court.
6. Zachary D. Clopton, Redundant Public–Private Enforcement, 69 Vand. L. Rev. 285, 293–95 (2016).
7. Ashcroft v. Iqbal, 556 U.S. 662, 687 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
8. Twombly, 550 U.S. at 585.
9. The literature attacking the new standards is too voluminous to be mentioned here. See, e.g., Arthur R. Miller, From Conley to Twombly to Iqbal: A Double Play on the Federal Rules of Civil Procedure, 60 Duke L.J. 1, 105 (2010) (“[I]nequality of information access . . . poses a significant—if not the most significant—problem for many people seeking affirmative relief.”).
10. For medical malpractice claims, see, for example, Robert G. Bone, Modeling Frivolous Suits, 145 U. Pa. L. Rev. 519, 550 (1997). For employment discrimination claims, see, for example, William H.J. Hubbard, A Fresh Look at Plausibility Pleading, 83 U. Chi. L. Rev. 693, 714 (2016).
11. See Patricia W. Hatamyar Moore, The Anti–Plaintiff Pending Amendments to the Federal Rules of Civil Procedure and the Pro–Defendant Composition of the Federal Rulemaking Committees, 83 U. Cin. L. Rev. 1083, 1087 (2015).
12. Id. at 1086–87; Letter from Janet Alexander, Judith Resnik, and Stephen C. Yeazell to the Committee on Rules of Practices and Procedures (Feb. 18, 2014), http://www.lfcj.com/uploads/3/8/0/5/38050985/
frcp_171_law_professors_urging_rejection_of_changing_federal_rules_2.18.14.pdf (urging the Committee on Rules of Practice and Procedure, along with 168 other law professors, “to reject the proposed amendments to the Federal Rules of Civil Procedure that would limit the scope of discovery”).
13. See generally Gideon Parchomovsky & Alex Stein, Empowering Individual Plaintiffs, 102 Cornell L. Rev. 1319, 1327–33 (2017).
14. Id. at 1364.
15. See, e.g., Frederick C. Dunbar & Faten Sabry, The Propensity to Sue: Why Do People Seek Legal Actions?, 42 Bus. Econ. 31 (2007).
16. Some criticize the heightened pleading standards and advocate for the previous, permissive standards. See Miller, supra note 9, at 19. Others call for wider and earlier discovery. E.g., Judicial Conference Advisory Comm. on Civil Rules & Comm. on Rules of Practice & Procedure, Report to the Chief Justice of the United States on the 2010 Conference on Civil Litigation 6, http://www.uscourts.
gov/sites/default/files/report_to_the_chief_justice.pdf (last visited Apr. 7, 2018). Still others promote more general proposals that aim at “empowering” plaintiffs in various ways—from a more liberal substantive law to simpler procedures and augmented damages. E.g., Parchomovsky & Stein, supra note 13, at 1357.
17. E.g., Clayton P. Gillette & James E. Krier, Risk, Courts, and Agencies, 138 U. Pa. L. Rev. 1027, 1043 n.52 (1990) (“[T]raditional doctrine (regarding the burden of proof in particular) demands too much of the victims of many modern technological risks.”).
18. U.S. Const. art. III, § 2.
19. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).
21. Id. In addition to injury in fact, two related requirements are causation and redressability. Id. at 560–61; see also Heather Elliott, The Functions of Standing, 61 Stan. L. Rev. 459, 497 n.187 (2008).
22. Fed. Election Comm’n v. Akins, 524 U.S. 11, 35 (1998) (Scalia, J., dissenting). Lujan demonstrates a slightly different manifestation of the separation-of-powers idea. While Congress enacted a provision that allows “any person” to sue, the Supreme Court in Lujan declined to turn courts, through this provision, into “continuing monitors of the wisdom and soundness of Executive action.” Lujan, 504 U.S. at 577 (internal quotation marks omitted).
23. Posner, supra note 1, at 730. Taxpayer standing illustrates this point. By denying standing from taxpayers, courts avoid endless challenges to governmental expenditures. For a short discussion, see, for example, Elliott, supra note 21, at 478–81. For a different argument along these lines, see Maxwell L. Stearns, Standing Back from the Forest: Justiciability and Social Choice, 83 Cal. L. Rev. 1309, 1351 (1995) (Standing “limit[s] the extent to which litigants can benefit by opportunistically manipulating the order in which issues are presented to federal circuit courts and, ultimately, to the Supreme Court, for consideration.”).
24. Kenneth E. Scott, Standing in the Supreme Court—A Functional Analysis, 86 Harv. L. Rev. 645, 684 (1973). For this “floodgates” argument, see also Daniel J. Meltzer, Deterring Constitutional Violations by Law Enforcement Officials: Plaintiffs and Defendants as Private Attorneys General, 88 Colum. L. Rev. 247, 308 (1988) (“[S]ome contend that a requirement of personal stake guards against a vast and undesirable increase in litigation challenging government action.”).
25. Singleton v. Wulff, 428 U.S. 106, 113–14 (1976).
26. Standing “sharpens the presentation of issues upon which the court so largely depends for illumination.” Baker v. Carr, 369 U.S. 186, 204 (1962). As Richard Posner put it, “[a]bolishing the requirement [of standing] would greatly . . . reduce the quality of adjudication.” Posner, supra note 1, at 730.
27. We discuss this point infra at note 161 and accompanying text.
28. “The costs of transferring rights are minimized when only one, clearly identifiable party has standing in a given dispute.” Michael C. Jensen et al., Analysis of Alternative Standing Doctrines, 6 Int’l Rev. L. & Econ. 205, 210 (1986); see also Eugene Kontorovich, What Standing Is Good For, 93 Va. L. Rev. 1663, 1667 (2007) (“[I]n the absence of standing restrictions . . . [e]very individual rights-holder would have veto power over a government action that affects the rights of many . . . mak[ing] strategic holdout likely.”).
29. Kowalski v. Tesmer, 543 U.S. 125, 136 (2004).
30. Powers v. Ohio, 499 U.S. 400, 401 (1991).
31. Id. at 415. In addition to the elements of “hindrance” and “close relation,” third-party standing still requires the plaintiff to show that he suffered an injury. The plaintiff in Powers met this requirement, as it was found that discrimination against black jurors “causes a criminal defendant cognizable injury [because it] places the fairness of a criminal proceeding in doubt.” Id. at 411.
32. Plausibly, a woman “may be chilled . . . by a desire to protect the very privacy of her decision from the publicity of a court suit.” In addition, a woman’s claim can be moot, as her right “will have been irrevocably lost . . . a few months, at the most, after the maturing of the decision to undergo an abortion.” Singleton v. Wulff, 428 U.S. 106, 117 (1976).
33. This doctrine is known as the “overbreadth doctrine.” E.g., Note, The First Amendment Overbreadth Doctrine, 83 Harv. L. Rev. 844, 844 (1970).
34. Brandice Canes-Wrone & Michael C. Dorf, Measuring the Chilling Effect, 90 N.Y.U. L. Rev. 1095, 1098 (2015).
35. For example, in the Supreme Court’s most recent discussion on third-party standing, the Court declined to allow attorneys to vindicate the rights of future, indigent criminal defendants, “apply[ing] the close relationship and hindrance prongs with rigor” and representing “a new commitment” to “strengthening the [doctrinal] test.” Stephen J. Wallace, Note, Why Third–Party Standing in Abortion Suits Deserves a Closer Look, 84 Notre Dame L. Rev. 1369, 1398, 1403 (2009) (discussing Kowalski v. Tesmer, 543 U.S. 125 (2004)).
36. Powers, 499 U.S. at 411.
37. See infra Sections IV.B–C.
38. Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 607 (1982).
39. E.g., Donald G. Gifford, Impersonating the Legislature: State Attorneys General and Parens Patriae Product Litigation, 49 B.C. L. Rev. 913, 914–15 (2008).
40. E.g., Margaret H. Lemos, Aggregate Litigation Goes Public: Representative Suits by State Attorneys General, 126 Harv. L. Rev. 486, 495–98 (2012).
41. 458 U.S. at 607.
42. Lemos, supra note 40, at 494.
43. Id. at 494–95 (quoting Snapp, 458 U.S. at 607 & n.14). For a brief discussion on the conditions under which individual victims will be precluded in a subsequent suit, see , for example, Principles of the Law of Aggregate Litig. § 1.02 cmt. b(1)(B) (Am. Law Inst. 2009).
44. Lemos, supra note 40, at 495.
45. Myriam Gilles & Gary Friedman, After Class: Aggregate Litigation in the Wake of AT&T Mobility v Concepcion, 79 U. Chi. L. Rev. 623, 666 (2012).
46. Gifford, supra note 39, at 939.
47. Gilles & Friedman, supra note 45, at 663.
48. 31 U.S.C. §§ 3729, 3730 (2012). There are several statutory constraints on the ability of persons to be relators, i.e., to enjoy third-party standing. Most importantly, the relator should possess significant information concerning the fraud. David Freeman Engstrom, Public Regulation of Private Enforcement: Empirical Analysis of DOJ Oversight of Qui Tam Litigation Under the False Claims Act, 107 Nw. U. L. Rev. 1689, 1709 (2013) [hereinafter Engstrom, Public Regulation].
49. E.g., David Freeman Engstrom, Private Enforcement’s Pathways: Lessons from Qui Tam Litigation, 114 Colum. L. Rev. 1913, 1949 (2014).
50. In 2010, for example, the number of qui tam lawsuits approached 600, generating around $3.5 billion in recoveries for the U.S. government. David Freeman Engstrom, Harnessing the Private Attorney General: Evidence from Qui Tam Litigation, 112 Colum. L. Rev. 1244, 1270 (2012) [hereinafter Engstrom, Harnessing].
51. E.g., Id. at 1270–71 (“Qui tam impositions have also risen dramatically, from around $2.3 million in 1998 to nearly $2.8 billion in 2011, which, as noted previously, easily rivals and even eclipses filings and recoveries in other, much-analyzed areas of law, such as securities and antitrust.”).
52. Id. at 1270.
53. 31 U.S.C. §§ 3730(b)–(d); see also Engstrom, Harnessing, supra note 50, at 1270.
54. More precisely, the complaint is filed under seal and is served on the government, but not on the defendant. The complaint remains sealed for sixty days, in which the government “may elect to intervene and proceed with the action.” 31 U.S.C. § 3730(b)(2).
55. 31 U.S.C. § 3730(c)(3). In fact, the proceeds to the relator, should the lawsuit succeed, are higher if the government decides not to join compared to a case in which it intervenes—25–30% of the total recovery in the former case, and 15–25% in the latter. Id. § 3730(d)(1)–(2). From a practical standpoint, though, the government’s decision to join seems to be highly important to the success of the relator’s claim; “nearly all cases” in which the government declines to intervene turn out to be unsuccessful. See Engstrom, Harnessing, supra note 50, at 1274–75. For a favorable discussion of this “screening” function that the government fulfills, see Anthony J. Casey & Anthony Niblett, Noise Reduction: The Screening Value of Qui Tam, 91 Wash. U. L. Rev. 1169, 1185–1207 (2014).
56. Engstrom, Harnessing, supra note 50, at 1272–73.
57. E.g., David Freeman Engstrom, Whither Whistleblowing? Bounty Regimes, Regulatory Context, and the Challenge of Optimal Design, 15 Theoretical Inquiries L. 605, 608, 611 (2014) [hereinafter Engstrom, Whistleblowing].
58. See generally Pamela H. Bucy, Private Justice, 76 S. Cal. L. Rev. 1, 68–74 (2002). Formally, if the government elects to intervene, “it shall have the primary responsibility for prosecuting the action.” 31 U.S.C. § 3730(c)(1).
59. 31 U.S.C. § 3730(c)(2)(A); see also Engstrom, Harnessing, supra note 50, at 1272 & n.93 (describing this provision and noting that some appellate courts have substantially narrowed the capacity of the government to dismiss a case where the relator objects). More generally, the government “may settle the action with the defendant notwithstanding the objections” of the relator if it convinces the court after a similar public hearing, and it can ask the court to impose other restrictions on the relator’s procedural participation. 31 U.S.C. §§ 3730(c)(2)(B)–(C).
60. For empirical findings along these lines, see Engstrom, Public Regulation, supra note 48, at 1711.
61. See Engstrom, Harnessing, supra note 50, at 1246–47 (surveying accounts of qui tam litigation).
62. See, e.g., Richard L. Abel, The Real Tort Crisis—Too Few Claims, 48 Ohio St. L.J. 443, 448–52 (1987) (surveying the literature); see also David A. Hyman & Charles Silver, Medical Malpractice Litigation and Tort Reform: It’s the Incentives, Stupid, 59 Vand. L. Rev. 1085, 1088–92 (2006).
63. Thomas F. Burke, Lawyers, Lawsuits, and Legal Rights: The Battle over Litigation in American Society 3 (Robert A. Kagan & Malcolm Feeley eds., 2002).
64. Keith N. Hylton, Litigation Costs and the Economic Theory of Tort Law, 46 U. Miami L. Rev. 111, 129 (1991); Roger Van den Bergh & Louis Visscher, Optimal Enforcement of Safety Law 3–23 (Rotterdam Inst. of Law & Econ., Working Paper No. 2008/4).
65. This unwillingness of the poor to sue is exacerbated by the unwillingness of attorneys to sue. See Catherine M. Sharkey, Unintended Consequences of Medical Malpractice Damages Caps, 80 N.Y.U. L. Rev. 391, 489–90 (2005).
66. See Phillip L. Bartlett II, Disparate Treatment: How Income Can Affect the Level of Employer Compliance with Employment Statutes, 5 N.Y.U. J. Legis. & Pub. Pol’y 419, 430–31 (2002).
67. David M. Engel, The Myth of the Litigious Society: Why We Don’t Sue (U. Chi. Press, 2016); see also Nora Freeman Engstrom, ISO the Missing Plaintiff, JOTWELL (April 12, 2017), http://torts.jotwell.com/iso-the-missing-plaintiff/ (reviewing The Myth of the Litigious Society: Why We Don’t Sue and discussing possible reasons for victims’ common failure to sue).
68. Engel, supra note 67, at 172.
69. Id. at 173.
70. Id. at 175.
71. E.g., Abel, supra note 62; Richard L. Abel, A Critique of Torts, 37 UCLA L. Rev. 785, 814–16 (1990).
72. E.g., David Rosenberg, Mandatory–Litigation Class Action: The Only Option for Mass Tort Cases, 115 Harv. L. Rev. 831, 840 (2002); Gilles & Friedman, supra note 45.
73. E.g., Parchomovsky & Stein, supra note 13, at 1362.
74. Moreover, a discretionary award can be used to incentivize the victim. For instance, where the victim cooperates with the third party, the latter should receive a smaller portion of the damages.
75. The text discusses situations in which a third party files the case. To fully cover the situations in which third-party lawsuits could be beneficial, we should consider also cases in which a third party intervenes—at least in certain circumstances—in pending proceedings that the victim started. Such intervention might be desirable where, for instance, the victim rushed to the court without sufficient evidence and the third party possesses essential information. For similar reasons, one may also need to consider the capacity of third parties to open cases that victims settled.
76. A related design option is that, after the third party files the case, the victim substitutes the third party. In such a case, the court should similarly reward third parties who were essential for the successful completion of the proceedings.
77. Cf. William L.F. Felstiner et al., The Emergence and Transformation of Disputes: Naming, Blaming, Claiming . . ., 15 Law & Soc’y Rev. 631 (1980).
78. See, e.g., Mendez v. State, 669 P.2d 364 (Or. Ct. App. 1983) (rejecting the view that “if a decedent leaves no surviving spouse, children, parents or other individuals who would be entitled to inherit the decedent’s personal property, the personal representative could . . . maintain a cause of action . . . on behalf of the state, to which any damages recovered would escheat”); John C.P. Goldberg et al., Tort Law: Responsibilities and Redress 382, 399 (3d ed. 2012) (describing the common law rule where “a cause of action dies with the person,” and saying that states “vary as to which tort claims may be asserted in survival and wrongful death actions”); Stuart M. Speiser & James E. Rooks, Recovery for wrongful Death §§ 3:1, 3:22 (4th ed., Westlaw 2015); Andrew Jay McClurg, It’s a Wonderful Life: The Case for Hedonic Damages in Wrongful Death Cases, 66 Notre Dame L. Rev. 57, 64 n.29 (1990) (“[T]he broader rule [is] that, unless a decedent leaves behind dependent survivors, there can be no recovery for wrongful death.”) (referring to case law); cf. Anthony J. Sebok, The Inauthentic Claim, 64 Vand. L. Rev. 61, 75 (2011) (“[T]ort claims survive the death of the plaintiff [only] by a set of persons named in the statute, usually members of the plaintiff’s family.”).
79. Sarah L. Swan, Bystander Interventions, 2015 Wis. L. Rev. 975, 977 (2015).
80. Of course, these information holders, employees of the hospital, may be inhibited from filing a lawsuit against their workplace. It is plausible to think that only a few third parties will do so, e.g., those who are about to leave their job. Yet our proposal significantly increases the odds of a lawsuit.
81. We note here that even if Tim’s estate is entitled to bring the lawsuit, such lawsuit may be unlikely due to informational problems. See infra Subsection III.B.1.b.
82. Swan, supra note 79, at 1004.
83. Janet A. Gilboy, Compelled Third–Party Participation in the Regulatory Process: Legal Duties, Culture, and Noncompliance, 20 Law & Pol’y 135, 147 (1998).
84. Id. at 149. For a discussion, see Swan, supra note 79, at 1004.
85. Theoretically, Ron could ask Joanna to buy his silence, forcing her to pay (Ron) for her wrongdoing. Yet knowing that Ron has nothing to gain from turning Joana in to the authorities, she may reject his offer.
86. Once Warren knows that Ron possesses valuable information, he can compel Ron through subpoena. Ezra Friedman & Eugene Kontorovich, An Economic Analysis of Fact Witness Payment, 3 J. Legal Analysis 139, 139 (2011) (referring to Fed. R. Civ. P. 45). On the other hand, without indications that the third party has information, compelling the witness is “extremely difficult.” Id. at 152. For a parallel discussion in the criminal context, see Saul Levmore & Ariel Porat, Asymmetries and Incentives in Plea Bargaining and Evidence Production, 122 Yale L.J. 690, 715, 705 (2012).
87. This general phenomenon is well-documented and is a major reason that mutually beneficial transactions are not entered into. See, for example, the classic papers that link asymmetric information with failures to settle. Lucian A. Bebchuk, Litigation and Settlement Under Imperfect Information, 15 RAND J. Econ. 404 (1984); Jennifer Reinganum & Louis Wilde, Settlement, Litigation, and the Allocation of Litigation Costs, 17 RAND J. Econ. 557, 557 (1986).
88. Friedman & Kontorovich, supra note 86, at 140.
90. Id. at 143.
91. Levmore & Porat, supra note 86, at 693. A possible exception is a situation in which the potential victim can, ex ante, “identify potential witnesses and commit to make payments to them,” e.g., an “associate assigned to witness an employee termination.” Friedman & Kontorovich, supra note 86, at 152 n.10.
92. Cf. Levmore & Porat, supra note 86, at 715 (“[F]ixed cameras, smartphones, and motivated human witnesses have the potential to bring about dramatic reductions in police forces.”).
93. For a similar analysis, see Friedman & Kontorovich, supra note 86, at 142–43; see also Levmore & Porat, supra note 86, at 703–04.
94. Troyen A. Brennan et al., Relation Between Malpractice Claims and Adverse Events Due to Negligence, 325 New Eng. J. Med. 245, 247 (1991); see also Joanna Shepherd, Uncovering the Silent Victims of the American Medical Liability System, 67 Vand. L. Rev. 151, 151 (2014).
95. David M. Studdert et al., Negligent Care and Malpractice Claiming Behavior in Utah and Colorado, 38 Med. Care 250, 250 (2000).
96. Geoff Boehm, Debunking Medical Malpractice Myths: Unraveling the False Premises Behind “Tort Reform,” 5 Yale J. Health Pol’y L. & Ethics 357, 358 (2005(; Don Dewees & Michael Trebilcock, The Efficacy of the Tort System and Its Alternatives: A Review of Empirical Evidence, 30 Osgoode Hall L.J. 57, 79–86 (1992).
97. Evidence suggests that when a medical malpractice claim is being made, the American legal system does a “reasonably good” job, i.e., good claims are generally compensated and nonmeritorious claims are generally dismissed. David M. Studdert et al., Claims, Errors, and Compensation Payments in Medical Malpractice Litigation, 354 New Eng. J. Med. 2024, 2024 (2006). Alternatively put, the problem is with medical malpractice instances that are not being claimed, essentially for the reasons identified in this Article.
98. Cf. Swan, supra note 79, at 1026 (“The fact that victims of assault are sometimes held liable for their own minor violations of campus alcohol or other policies may have a chilling effect on bystander behavior as well.”).
99. Id. at 1021; see also id. at 1021–23 (discussing the problem).
100. Cf. Caroline Kitchener, When Helping Rape Victims Hurts a College’s Reputation, Atlantic (Dec. 17, 2014), https://www.theatlantic.com/education/archive/2014/12/when-helping-rape-victims-hurts-a-universitys-reputation/383820/ (describing colleges’ interest to limit assistance to rape victims to avoid reporting and media coverage that could harm their reputation).
101. Cf. Andrew Gilden, IP, RIP, 95 Wash. U. L. Rev. 639, 643, 678 (2017) (“[T]he families of a deceased artist [have diverse] mourning practices [that] are often unpredictable, irrational, [and] inefficient . . . it is perfectly understandable that family members will act economically ‘irrationally’ in service of their tremendous emotional investments.”); David Chanen, Prince Heirs Claim Excessive Lawyer’s Fees Will Leave ‘Little . . . to Pass On’, Star Tribune (Mar. 2, 2018, 6:46 PM), http://www.startribune.com/prince-heirs-claim-excessive-lawyer-s-fees-will-leave-nothing-for-inheritance/475689933/ (describing a lawsuit by some of the heirs—but not others—against the administrators of the estate).
102. In light of the victims’ behavior in these cases, it may also be justified to award all the proceeds to the third party and leave no compensation to the actual victim.
103. Yonathan A. Arbel & Yotam Kaplan, Tort Reform Through the Backdoor: A Critique of Law and Apologies, 90 S. Cal. L. Rev. 1199, 1233–34 (2017). The concern that victims fail to vindicate their rights as a result of apology is more serious than it seems given that many defendants—in the healthcare industry, for example—have introduced apology programs. See id. at 1230–32.
104. See Wendy F. Hensel, The Disabling Impact of Wrongful Life and Wrongful Death Actions, 40 Harv. C.R.–C.L. L. Rev. 141, 143–44 (2005).
105. Id. at 166.
106. Ill. Brick Co. v. Illinois, 431 U.S. 720, 746 (1977). Nonetheless, the Court limited standing solely to direct purchasers as opposed to indirect purchasers such as end-consumers. Id.
107. Gregory Bresiger, SEC Defends Fund Registration, Traders (Feb. 1, 2005), http://www.tradersmagazine.com/issues/20050131/2131-1.html (quoting Phillip Goldstein, the president of a hedge fund who successfully challenged relevant SEC regulations in Goldstein v. S.E.C., 451 F.3d 873 (D.C. Cir. 2006)); see also Ass’n of Am. Physicians & Surgeons, Inc. v. Tex. Med. Bd., 627 F.3d 547 (5th Cir. 2010) (describing retaliation by the Texas State Board of Medical Examiners against physicians who complained about the board).
108. Golodner v. Berliner, 770 F.3d 196 (2d Cir. 2014) (illustrating this concept when a contractor alleged that a municipality retaliated against him due to a previous lawsuit he filed); see also Marc Rohr, Fighting for the Rights of Others: The Troubled Law of Third–Party Standing and Mootness in the Federal Courts, 35 U. Miami L. Rev. 393, 458 & n.283 (1981).
109. E.g., Lauren Evans, Parents Of Yeshiva Students File Class Action Lawsuit Against State Department of Education, Gothamist (Nov. 23, 2015, 3:07 PM), http://gothamist.com/2015/11/23/yeshiva_lawsuit.php (describing plaintiffs who declined to be identified for fear of retaliation from the Orthodox-Jewish community in New York); see infra note 137 (providing another example).
110. Miskovsky v. Jones, 437 F. App’x 707 (10th Cir. 2011) (involving a prisoner alleging claims of retaliation by prison officials).
111. These hypotheticals are taken from Charlotte S. Alexander, Anticipatory Retaliation, Threats, and the Silencing of the Brown Collar Workforce, 50 Am. Bus. L.J. 779, 779–80 (2013).
112. 42 U.S.C. § 2000e-3 (2012).
113. Helen Norton, Truth and Lies in the Workplace: Employer Speech and the First Amendment, 101 Minn. L. Rev. 31, 31 (2016).
114. Id. at 31–32.
115. Id. at 32–33.
116. See, e.g., Peter D. DeChiara, The Right to Know: An Argument For Informing Employees of Their Rights Under the National Labor Relations Act, 32 Harv. J. on Legis. 431, 451–452 (1995).
117. E.g., Dianne Avery & Catherine Fisk, Overview of the Law of Workplace Harassment, in Litigating the Workplace Harassment Case 1, 18–19 (Marlene Heyser ed., 2010); see also Reeves v. C.H. Robinson Worldwide, Inc., 594 F.3d 798, 807 (11th Cir. 2010) (en banc) (“Disparate treatment can take the form . . . of a ‘hostile work environment’ that changes ‘the terms and conditions of employment, even though the employee is not discharged, demoted, or reassigned.’”). The Equal Employment and Opportunity Commission (“EEOC”) guidelines are likewise illustrative, as they allow for the “injury” to be common to nontargeted employees. 29 C.F.R. § 1604.11 (2017).
118. Broderick v. Ruder, 685 F. Supp. 1269, 1280 (D.D.C. 1988). In that case, the court held that “the occurrence of [these] incidents . . . poisoned any possibility of plaintiff’s having the proper professional respect for her superiors and . . . affected her motivation and her performance of her job responsibilities.” Id. at 1273; see also Christopher M. O’Connor, Note, Stop Harassing Her or We’ll Both Sue: Bystander Injury Sexual Harassment, 50 Case W. Res. L. Rev. 501, 521–24 (1999).
119. Avery & Fisk, supra note 117, at 18.
120. See, e.g., Yuknis v. First Student, Inc., 481 F.3d 552, 554 (7th Cir. 2007) (“The fact that one’s coworkers do or say things that offend one, however deeply, does not amount to harassment if one is not within the target area of the offending conduct . . . .”).
121. Reeves, 594 F.3d at 811 (holding that an employee overhearing harassing comments that were not directed to her could sue her employer if the “totality of the evidence” indicated a hostile work environment).
122. E.g., id. at 798.
123. E.g., Childress v. City of Richmond, 134 F.3d 1205 (4th Cir. 1998); see also Drake v. Minn. Mining & Mfg., 134 F.3d 878, 884–85 (7th Cir. 1998) (holding that white employees did not show evidence of a hostile work environment where black coworkers suffered race discrimination); Swan, supra note 79, at 1014–16 (summarizing the current doctrine along these lines); O’Connor, supra note 118, at 524–26, 530–32 (discussing cases). Ironically, employees who belong to the same group as the “target” of the harassment are part of the same disempowered group, and they may likewise be reluctant to sue.
124. EEOC Policy Statement No. N–915.048, 2 EEOC Compliance Manual § 615 (Jan. 12, 1990), http://www.eeoc.gov/policy/docs/sexualfavor.html. The EEOC guidelines, of course, are not controlling in federal courts, even though they can be an influential source. O’Connor, supra note 118, at 508.
125. Moreover, the doctrinal focus on “injury” to the coworkers ushers in an implicit requirement of physical proximity between the “actual” victim and the coworker. E.g., Leibovitz v. N.Y. City Transit Auth., 252 F.3d 179, 189 (2d Cir. 2001) (denying hostile environment allegations because the employees who were actually “harassed were working in another part of the employer’s premises” and under a different supervisor).
126. Swan, supra note 79, at 1016 (quoting Joanna L. Grossman, Moving Forward, Looking Back: A Retrospective on Sexual Harassment Law, 95 B.U. L. Rev. 1029, 1047 (2015)).
127. The same considerations that justify providing third parties the right to sue on behalf of unwilling victims can similarly justify the involvement of third parties in litigated cases—in order to address cases in which unwilling plaintiffs file a lawsuit but sabotage their own case. See also supra note 75.
128. Restatement (Second) of Torts § 328D (Am. Law Inst. 1965).
129. E.g., Harold J. Krent, Explaining One–Way Fee Shifting, 79 Va. L. Rev. 2039, 2045–46 (1993).
130. E.g., Parchomovsky & Stein, supra note 13, at 1325 (“[W]e recommend setting up special procedures for fast-track litigation [and] a new remedial mechanism: advanced payment orders issued by courts [to the victim].”).
131. We acknowledge that in some situations these tools can encourage victims to look for information and bring a lawsuit. The res ipsa loquitur rule, for example, can help plaintiffs who identify their wrongdoer but cannot provide the required evidence. We suspect, though, that the capacity of the res ipsa doctrine to induce uninformed victims to litigate is limited, as evidenced by the aforementioned data. See discussion supra Subsection III.B.1.c.
132. Treble damages, for example, can be awarded to successful plaintiffs in patent and antitrust suits. For a discussion of treble damages, see Margaret H. Lemos & Alex Stein, Strategic Enforcement, 94 Minn. L. Rev. 9, 15–16 (2010).
133. Cf. Steven Shavell, On the Proper Magnitude of Punitive Damages: Mathias v. Accor Economy Lodging, Inc., 120 Harv. L. Rev. 1223, 1224 (2007) (analyzing an actual case along these lines).
134. E.g., Philip Morris USA v. Williams, 549 U.S. 346, 353 (2007) (holding that “the Constitution imposes certain limits, in respect both to procedures for awarding punitive damages and to amounts forbidden as ‘grossly excessive’” and vacating a jury award of $79.5 million in punitive damages where compensatory damages amounted to $821,000).
135. E.g., A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869, 945 (1998) (concluding that, due to these problems, there should be “a lower level of punitive damages” than the socially optimal level).
136. E.g., Steven Shavell, Foundations of Economic Analysis of Law 244 (2004); cf. Shavell, supra note 133 (criticizing an actual award of punitive damages on similar grounds).
137. A somewhat similar procedure exists in Israel, where interested organizations can bring a class action when no victim pursues legal proceedings. Circumstances in which this option was triggered are illustrative. In one case, a third party sued on behalf of Orthodox Jewish women, on grounds of gender discrimination in the largest Orthodox Jewish radio station. The third party established that probably no class member—Orthodox Jewish listeners of the station—was willing to bring a class (or individual) action due to the community pressure. CA 6897/14 Radio Kol Barama v. Kolech 12 Tammuz 5775 (2015) (Isr.). In another securities case, institutional shareholders were claimed to be in conflict with the defendant; hence, absent the third party, no litigation was expected. CC (TA) 2484-09-12 Hatzlacha v. Cohen .
138. A notable example is Wal-Mart v. Dukes, 564 U.S. 338, 368 (2011), in which the Court refused to authorize class litigation on behalf of the female employees of Wal-Mart, holding that these women did not have enough in common to join together in a single suit.
139. Some types of class actions are mandatory. Fed. R. Civ. P. 23(b)(1)–(2). These class actions, however, are rare.
140. Indeed, the literature recognized, in related contexts, the problems associated with opt-outs and suggested possible solutions. E.g., John C. Coffee, Jr., The Regulation of Entrepreneurial Litigation: Balancing Fairness and Efficiency in the Large Class Action, 54 U. Chi. L. Rev. 877, 915–17, 925–30 (1987) (identifying the problems and suggesting to tax the right to opt out); Rosenberg, supra note 72, at 862–66 (proposing to ban the right to opt out).
141. Associations can have standing on behalf of their members if they point to their members’ standing, and some courts have interpreted this exception broadly. Elliott, supra note 21, at 503–05 (criticizing appellate court cases).
142. E.g., Friedman & Kontorovich, supra note 86, at 141–42 (“[N]o jurisdiction allows compensation for the service of having witnessed.”); Sebok, supra note 78, at 74–75 ( “[The law generally] prohibits the assignment of causes of action for personal injuries.”).
143. See discussion supra Subsection III.B.1.b.
144. E.g., Michael Abramowicz, On the Alienability of Legal Claims, 114 Yale L.J. 697, 699 (2005). The problem of under-enforcement due to victims’ financial constraints could also be addressed through relaxed ethics rules and third-party financing. E.g., Ronen Avraham & Abraham Wickelgren, Third–Party Litigation Funding—A Signaling Model, 63 DePaul L. Rev. 233, 234 (2014).
145. Engstrom, Whistleblowing, supra note 57, at 606; see also infra text accompanying 174–75.
146. See Yehonatan Givati, A Theory of Whistleblower Rewards, 45 J. Legal Stud. 43, 44 (2016).
147. Yuval Feldman & Orly Lobel, The Incentives Matrix: The Comparative Effectiveness of Rewards, Liabilities, Duties, and Protections for Reporting Illegality, 88 Tex. L. Rev. 1151, 1207 (2010); cf. infra Section V.B. (discussing objections to our proposal that are based on the crowding out phenomenon).
148. Friedman & Kontorovich, supra note 86, at 139.
149. Id. at 160.
150. Id. at 157.
151. We presume here that the regulated payment is subtracted from the victim’s proceeds, as is common in whistleblower provisions. E.g., 26 U.S.C. § 7623 (b)(1) (2012).
152. Jenny Lee, Note, Corporate Corruption & the New Gold Mine: How the Dodd–Frank Act Overincentivizes Whistleblowing, 77 Brook. L. Rev. 303, 319 (2011) (internal quotation marks omitted) (quoting a December 2010 letter from Jones Day to Elizabeth M. Murphy, the Secretary of the Securities and Exchange Commission).
153. Swan, supra note 79, at 996 (quoting Sarah Swan, Home Rules, 64 Duke L.J. 823, 825 (2015)).
154. Id. at 994–96.
155. Moreover, where the law singles out one third party, “other observers are less likely to intervene.” Id. at 1013 (internal quotation marks omitted) (quoting Lynn Bowes-Sperry & Anne M. O’Leary-Kelly, To Act or Not to Act: The Dilemma Faced by Sexual Harassment Observers, 30 Acad. Mgmt. Rev. 288, 297 (2005)).
156. See generally id. (discussing third-party liability in the contexts of school bullying, sexual misconduct on college campuses, and workplace harassment).
157. Cf. id. at 1040 (criticizing current bystander intervention programs for failing to “focus on the ultimate responsibility of perpetrators”).
158. See Friedman & Kontorovich, supra note 86, at 144 (showing how monetary incentives could incentivize potential witnesses to actively place themselves in positions in which they would more likely be able to gather information).
159. Id. at 157.
160. In qui tam litigation, only “original sources” of information can bring a lawsuit. 31 U.S.C. §3730(e)(4) (2012).
161. We observe a similar phenomenon in qui tam suits. The government’s decision to join the case predicts its success. See Casey & Niblett, supra note 55, at 1172. This threat provides a “strong incentive for relators’ counsel to do top-quality work from the earliest stages.” Bucy, supra note 58, at 69.
162. Landes and Posner are known for arguing that duplicative enforcement concerns justify victims’ current monopoly on filing lawsuits. Landes & Posner, supra note 4, at 32. These concerns dissipate, however, when enforcement is only available to a limited circle of third parties.
163. In that case, if the victim does not sue, the court can revive the third party’s complaint toward the end of the limitations period.
164. See supra Section III.A.
165. The concern that monetary incentives would lead to fabrication or perjury by third parties is “greatly exaggerated.” Lisa Bernstein & Daniel Klerman, An Economic Analysis of Mary Carter Settlement Agreements, 83 Geo. L.J. 2215, 2255 (1995). First, at least with regard to physical evidence, fabrication seems difficult and risky. Levmore & Porat, supra note 86, at 714. Second, the current system already accepts similar risks, as the parties and their experts are highly incentivized to commit perjury. E.g., Bernstein & Klerman, supra at 2253–55 (discussing the incentives of defendants in multi-party cases); Friedman & Kontorovich, supra note 86, at 148 (discussing experts). Third, under our proposal, more information would flow from potential third parties to the court—increasing the odds that the court would detect one’s false testimony or evidence.
166. Consider a third party who let the harm materialize in order to gain from suing the wrongdoer on behalf of the victim. These situations seem remote to us, and they could be eliminated altogether by conditioning the discretionary award on the third party’s behavior.
167. See supra Subsection II.B.2 (experience with qui tam litigation); see also O’Connor, supra note 118, at 544 (“[In the context of sexual harassment], the existence of other third-party claims based on sexual favoritism and obscene pictures has not resulted in a flurry of litigation in those areas.”).
168. See generally Richard Titmus, The Gift Relationship: From Human Blood to Social Policy (1971) (comparing blood donation levels in Britain and the United States and arguing that the latter’s relatively low donation levels are due to the provision of monetary incentives to donors). For a survey of empirical research on Titmus’s work, see Bruno S. Frey & Reto Jegen, Motivation Crowding Theory, 15 J. Econ. Surv. 589, 590 (2001).
169. Engstrom, Whistleblowing, supra note 57, at 623.
170. In particular, the examples that discuss the rights of employees seem to lack the “physical” element that plausibly correlates with moral disapprobation. Cf. id. at 623–24 (discussing moral disapprobation and the direct, physical dimension of the activity).
171. See Friedman & Kontorovich, supra note 86, at 150.
[I]t does not seem to us that fact witnessing is the kind of voluntary activity that is subject to crowding-out effects. For one, . . . [p]eople may feel obliged to testify if they have important factual information, but few feel any civic duty to acquire factual information . . . . Secondly, even now testimony is not a voluntary activity, but rather one that can be mandated by subpoena.
Id. (emphasis in original).
172. Swan, supra note 79, at 1003. See generally id. at 997–1006, 1029 (surveying the legal norms). Even statutes that mandate a duty to report, as opposed to a duty to intervene, are rare in the United States. Id. at 1000.
173. Gilles & Friedman, supra note 45, at 625; Engstrom, Public Regulation, supra note 48, at 1692.
174. Givati, supra note 146 (describing the recent trend).
175. Engstrom, Whistleblowing, supra note 57, at 606 & n.2.
176. Id. at 606.
177. Id. at 607.
178. Boaz Shnoor & Naomi Bacon-Shnoor, To Accept or Not to Accept? A Study of States’ Supreme Courts Decisions to Accept or Reject the Loss of Chance Doctrine (Feb. 22, 2012) (unpublished manuscript), http://
180. Relatedly, in assessing our proposal, one ought also to consider the widespread practice of using contingent-fee arrangements in the vast majority of tort cases. Standard contingent-fee agreements involve the assignment of up to one-third (and sometimes even more) of victims’ damages to their representing lawyers. See Herbert M. Kritzer, Seven Dogged Myths Concerning Contingency Fees, 80 Wash. U. L.Q. 739, 757–61 (2002) (presenting data on the use of contingent-fee agreements and their content). Thus, the notion of granting third parties some of victims’ damages, when such third parties are essential for the success of the claim, is no stranger to our legal system.
181. See generally, Peter H. Schuck, The New Judicial Ideology of Tort Law, 37 Proc. Acad. Pol. Sci. 4, 4 (1988) (“On almost all fronts and in almost all jurisdictions, liability has dramatically expanded.”).
182. This is also the case in other fields of the law. Perhaps the most radical expansion of the concept of harm took place in administrative law where, in making cost-benefit calculations, agencies are required to take into account “existence value”—the psychological benefit that individuals derive from the fact that they know that some goods exist, e.g., the Grand Canyon (independently of the question of whether they experience that good, i.e., visit the Grand Canyon). David A. Dana, Existence Value and Federal Preservation Regulation, 28 Harv. Envtl. L. Rev. 343, 368–72 (2004); Note, Existence–Value Standing 129 Harv. L. Rev. 775, 776 (2016).
183. For the early, common-law based, strict compensation rules regarding pure economic and emotional harms, see, for example, Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 309 (1927) (denying recovery for pure economic losses); Mitchell v. Rochester Railway Co., 45 N.E. 354, 355 (N.Y. 1896) (holding that a party may not recover for injuries sustained as a result of “fright and alarm . . . [if] there was no immediate personal injury”). For a description of the current flexible rules, see Herbert Bernstein, Civil Liability for Pure Economic Loss Under American Tort Law, 46 Am. J. Comp. L. Supp. 111, 112–25 (1998) (describing the variety of circumstances in which current tort doctrine allows compensation for pure economic losses); Betsy J. Grey, The Future of Emotional Harm, 83 Fordham L. Rev. 2605, 2610 (2015) (reviewing the increasing recognition of victims’ right to file for pure emotional harms).
184. Dan B. Dobbs et al., Dobbs’ Law of Torts § 383 (2d ed. 2011).
185. See Alan Meisel, The Expansion of Liability for Medical Accidents: From Negligence to Strict Liability by Way of Informed Consent, 56 Neb. L. Rev. 51, 52 (1977) (“There is an ongoing expansion of liability . . . through the growth of the doctrine of informed consent . . . .”); Neil M. Richards & Daniel J. Solove, Prosser’s Privacy Law: A Mixed Legacy, 98 Calif. L. Rev. 1887, 1888 (2010) (discussing the rise in tort’s protection of individuals’ privacy).
186. See supra Section V.C.
187. Schuck, supra note 181, at 4.
188. That is so regarding several concepts of tort law. See James A. Henderson Jr., Expanding the Negligence Concept: Retreat from the Rule of Law, 51 Ind. L.J. 467, 484–514 (1975) (arguing that the general duty of reasonable care has been extensively eroded, inter alia, by abandonment of the privity rule regarding products liability, the expansion of rules governing environmental protection, and the expansion of duties owed by land possessors); Donald J. Orlowsky, Charitable Immunity—The Road to Destruction, 32 Temp. L.Q. 86, 92–95 (1958) (surveying the abandonment of charitable immunity); Carl Tobias, Interspousal Tort Immunity in America, 23 Ga. L. Rev. 359, 359–60 (1989) (discussing the transformation of marital immunity in state and federal law); Note, Government Tort Liability, 111 Harv. L. Rev. 2009, 2011–14 (1998) (reviewing changes in federal law which have made the government liable under tort law).
189. Interestingly, a similar expansionist trend can be observed in other countries and settings. See Valeérie Malabat & Veŕonique Wester-Ouisse, The Quest for Balance Between Tort and Crime in French Law, in Comparing Tort and Crime: Learning from Across and Within Legal Systems 73, 83–84 (Matthew Dyson ed., 2015) (describing a procedure, partie civile, in which a victim can join criminal proceedings and gain damages and arguing that, by broadly interpreting the relevant statute, “courts have steadily increased the scope of those who have standing to [sue]” to include, for example, unions and organized professional boards). In addition, a similar expansionist approach can be advanced by the legislature. E.g., Timothy Poodiack, The Cost Recovery Act and Tobacco Litigation in Canada: A Model for Fast Food Litigation, 38 Brook J. Int’l. L. 1269, 1270 (2013) (discussing a Canadian “statute [that] authorized [the government] to initiate litigation against tobacco manufacturers to recoup health care costs paid to treat tobacco related illnesses”).
190. See supra notes 125–26 and accompanying text.
191. For the problems resulting from the compassion toward victims, see Stephen D. Sugarman, Doing Away with Tort Law, 73 Calif. L. Rev. 555, 591 (1985).
192. Cf. Marin K. Levy, Judging the Flood of Litigation, 80 U. Chi. L. Rev. 1007, 1007 (2013) (arguing for a “presumption against court-centered floodgates arguments”).
193. Molière, The Bourgeois Gentleman, act 2, sc. 4.
194. See Restatement (Second) of Contracts § 302 (Am. Law Inst. 1981).
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