Damages

About: Damages is a research topic. Over the lifetime, 9365 publications have been published within this topic receiving 89750 citations. The topic is also known as: compensation award.

The Housing Crisis and Bankruptcy Reform: The Prepackaged Chapter 13 Approach

Abstract: The housing crisis threatens to destroy hundreds of billions of dollars of value by causing homeowners with negative equity to walk away from their houses. A house in foreclosure is worth 30 to 50 percent less than a house that a homeowner either retains or sells on the market, and a foreclosed house damages neighboring property values as well. We advocate a reform of Chapter 13 that would allow homeowners to strip down the value of their mortgages in a prepackaged bankruptcy. Such a plan would give homeowners an incentive to keep or resell their homes, thus reducing the market value loss of homes while protecting the effective value of creditors’ interests. Two further key elements of the plan are that it uses prices based on the average house price in a particular ZIP code, which reduces moral hazard; and it is automated, requiring only a rubber stamp by a bankruptcy judge or other official, thus preserving judicial resources. Other plans, including that of the Obama administration, are compared.

Reconsidering the Importance of Law in Japanese Corporate Governance: Evidence from the Daiwa Bank Shareholder Derivative Case

Abstract: This article contributes to a reassessment of the role of law in Japanese corporate governance by focusing on the landmark Daiwa Bank shareholder derivative case. In September 2000 the Osaka district court ordered 11 current and former directors of Daiwa Bank to pay a record $775 million in damages in two cases related to the bank's well-known trading loss scandal of 1995. The court's ruling dismissed the bank's informal consultations with the government and emphasized the legal fiduciary duties of board members. The resulting "Daiwa shock" had a far-reaching effect in Japan similar to the combined impact in the U.S. of the leading Delaware cases of Van Gorkom and Caremark. The aftermath includes important substantive legal doctrine, a seemingly more activist role for courts, the increased importance of preventive legal advice, a breakdown in the market for directors' liability insurance and new legislation to limit directors' liability and address issues of corporate governance. Despite the attention-grabbing drama of the Daiwa case, this study finds important antecedents to the Daiwa decision and its aftermath. It views the court's decision as accelerating and expanding a poorly recognized underlying trend in the 1990's which saw a gradually increasing role for the formal legal system in Japanese corporate governance. It also suggests that the literature on convergence theory, with its utilization of simplified, static models of corporate governance, may be of less value in understanding the process of change in Japan than traditional notions of legal borrowing. It concludes that the popular model of Japanese corporate governance, with its assumption of a strong Japanese preference for informality over law, must be reconsidered in order to account for the increasing importance of the role of law in Japanese corporate governance.

Statutory Rules, Attorney Involvement, and Automobile Liability Claims

Abstract: The cost associated with an automobile liability incident in the United States has been hypothesized to be related to different tort reform statutes, the presence of no-fault rules, and the impact of a plaintiff s attorney. This article tests these relationships and reports the marginal impact of variables related to liability claims with individual loss data from a representative insurer. Among major tort reforms, our analysis reveals that punitive damage limits, caps on noneconomic damages, and minor reforms (sanctions on frivolous suits or defenses, prejudgment interest, and provisions for structured settlements) are associated with a reduced individual claim severity. Reform of the joint and several liability rule is associated with an increased individual claim severity in this insurance market. Low dollar thresholds and add-on no-fault rules increase liability claim severity, while no statistically significant difference in claim severity is found when the claim is subject to verbal threshold rules relative to tort law. Finally, attorney involvement is associated with a 64 percent increase in the average claim size.

Nonmarket valuation and the courts: the case of the exxon valdez

Abstract: I. INTRODUCTION On March 24, 1989, the tanker vessel Exxon Valdez went aground on Bligh Reef in Prince William Sound, Alaska, and subsequently spilled 11 million gallons of oil into the marine environment. The Exxon oil spill litigation may well be the major environmental case of this century. The September 1994 jury award of $5 billion in punitive damages is the largest ever in a pollution case and the second largest in a civil case in the United States. In phase two of the trial, the jury also awarded substantial compensatory damages of $286.8 million to commercial fishermen. The other major plaintiff, the Alaska native class, settled for $20 million just prior to going to trial. This paper focuses on compensatory damages from the perspective of four different realities: (i) economic theory ("in principle" the appropriate measure of damages), (ii) legislation and related regulatory guidelines (such as Comprehensive Environmental Response, Compensation, and Liability Act [CERCLA] and Oil Pollution Act [OPA] and the U.S. Department of the Interior [DOI] natural resource damage regulations codified at 43 CFR part 11), (iii) the court's interpretation of the law (what the presiding judge rules to be legally admissible), and (iv) the jury verdict. Identifying reliable methods for measuring the value of nonmarket resources is an important current policy problem. The DOI and the National Oceanic and Atmospheric Administration (NOAA) are in the process of establishing regulatory guidelines for implementation of the Clean Water Act and CERCLA (59 Fed. Reg. 14262) and the OPA of 1990 (59 Fed. Reg. 1062). The set of plausible alternative procedures is finite and includes: (i) market prices, (ii) travel cost methods, (iii) hedonic methods, (iv) factor income, and (v) contingent valuation (e.g., 59 Fed. Reg. at 1182). (Sections IV.A and V.B below define the specific methods applied in the case at hand.) Contingent valuation has received considerable attention because it is the only method potentially capable of measuring so-called passive use values. In the Exxon Valdez public trustees case, plaintiffs used contingent valuation to value injury to Prince William Sound (Carson et al., 1992). The defendant's strategy involved funding studies that critically examined the contingent valuation methodology rather than directly estimating potential passive use losses (Hausman, 1993). As a result of the debate initiated by these two sets of studies, a select panel including several Nobel laureates in economics reviewed contingent valuation (Arrow et al., 1993). The use of contingent valuation to estimate passive use losses remains controversial (Hanemann, 1994; Diamond and Hausman, 1994). While recent attention has focused on contingent valuation, a long-standing and extensive economics literature examines all of these valuation methodologies (recent overviews include Desvousges and Skahen, 1987; Ward and Duffield, 1992; and Kopp and Smith, 1993). But how acceptable are these methods in the courts? Judges and juries provide a very different litmus than the test of peer review by fellow economists. In a review of several cases, Cummings (1991) concludes that frequently the courts uncritically accept and inappropriately apply economic paradigms. Certainly the court environment is more demanding in terms of whether a given method seems reasonable and is readily communicated. The Exxon Valdez trial is of particular interest from this standpoint. One of the major plaintiff groups, the Alaska native class, submitted a claim for lost subsistence use. While subsistence is one of the basic types of services associated with natural resources that is specifically listed in the NOAA Proposed Rules (59 Fed. Reg. at 1140), little work exists on the development of valuation approaches for this type of resource service (for a review of this literature, see Brown and Burch, 1992). Both plaintiffs and defendants in this case implemented a hedonic approach for valuing lost subsistence use. …