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Article
Publication date: 1 February 2005

Robert Eyler

When wines are “corked”, as determined by distributors, retailers, or consumers, a winery's brand image is damaged and return on winery marketing is lost. A tainted product can…

Abstract

When wines are “corked”, as determined by distributors, retailers, or consumers, a winery's brand image is damaged and return on winery marketing is lost. A tainted product can easily disrupt or destroy the competitive advantage gained by a winery over years of differentiation techniques through marketing and image. This problem exists for wineries worldwide. Large lawsuits have recently occurred due to problems with wineries using defective intermediate products, especially corks. While there is some debate as to corked wine's cause, this study focuses assessing monetary damages in such a case and the breadth of financial effects on a winery. Tainted products easily disrupt or destroy competitive advantage gained by wineries over years of differentiation techniques through marketing. Augmentation of explicit and implicit costs, and reduced revenues, contribute to financial damages. This study provides insight on what damages to include in these calculations and how forensie economics views the discount rates to use and the dates defining business disruption.

Details

International Journal of Wine Marketing, vol. 17 no. 2
Type: Research Article
ISSN: 0954-7541

Keywords

Abstract

In recent years, the European Commission and various Member States, citing increasingly integrated markets and higher levels of cross-border activity within the European Union (“E.U.”), have called for the adoption of effective collective redress mechanisms for victims of violations of E.U. law. Although many Member States have already adopted collective action procedures under national law, these procedures have been ineffective in stimulating private enforcement of E.U. law and are often divergent in their approach to consolidating claims. E.U. lawmakers, after a lengthy period of investigation and study, have identified a set of guiding principles for the Member States to use in enacting new collective redress procedures within their national systems. The studies and papers solicited from the public during the Commission’s deliberations are explicit in their rejection of the U.S.-style opt-out class action mechanism. In their effort to avoid similarly calamitous results, European lawmakers propose that Member States adopt “opt-in” class actions, while rejecting many of the economic incentives that some believe lead to filing nonmeritorious claims, such as punitive damages and contingency fee arrangements. The European proposal is unlikely in the authors’ view to stimulate private enforcement of European law or increase victims’ access to compensation, given the flaws inherent in the opt-in class action device. Instead of looking to adopt a “U.S.-lite” approach to victim redress which is fundamentally incompatible with many judicial systems within the E.U., the authors propose that Europeans consider adopting a regulatory administered compensation system, modeled after such U.S. examples as the Securities and Exchange Commission Fair Funds and the September 11th Victim Compensation Fund. The authors also propose that regulatory administered funds can provide more effective and efficient restitution to victims than traditional litigation.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

Keywords

Book part
Publication date: 24 May 2021

Nicolae Stef and Jean-Christian Tisserand

We assess the impact of labor litigations on the ex post performance of firms. Using a sample of 44 French labor litigation cases, our empirical results confirm that the…

Abstract

We assess the impact of labor litigations on the ex post performance of firms. Using a sample of 44 French labor litigation cases, our empirical results confirm that the compensation amount requested by an employee has a significant and negative influence on the firm financial performance. Although that effect fades over time, it still remains significant four years after the employee has initiated the legal procedure. In addition, firms that have opted for a trial rather than a conciliation procedure improved their financial performance only in the first two years following the triggering of the litigation. That effect can be mainly explained by the long delays in the judgment of French labor courts. Our results contribute to the debate on the labor litigation impacts by assessing the financial opportunity of enacting pro-worker labor legislation dealing with employment redundancies.

Details

The Law and Economics of Patent Damages, Antitrust, and Legal Process
Type: Book
ISBN: 978-1-80071-024-5

Keywords

Book part
Publication date: 29 August 2018

Jean-Christian Tisserand

This chapter focuses on dispute resolution in French labor courts. We empirically investigate the forces that shape decision-making in the pretrial conciliation phase. For that…

Abstract

This chapter focuses on dispute resolution in French labor courts. We empirically investigate the forces that shape decision-making in the pretrial conciliation phase. For that purpose, we compiled a new database from legal documents. The results are twofold. First, conciliation is less likely when plaintiffs are assisted by a lawyer. Although this result might be interpreted in various ways, further analysis shows that the lawyers’ remuneration scheme is the most likely cause of this effect. Second, we find that the likelihood of settlement decreases as the amount at stake increases. These results contribute to the ongoing debate about French labor court reform.

Details

Healthcare Antitrust, Settlements, and the Federal Trade Commission
Type: Book
ISBN: 978-1-78756-599-9

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Article
Publication date: 21 August 2019

Blake Rayfield and Omer Unsal

The authors study the relationship between CEO overconfidence and litigation risk by examining employee-level lawsuit data. The purpose of this paper is to better understand the…

Abstract

Purpose

The authors study the relationship between CEO overconfidence and litigation risk by examining employee-level lawsuit data. The purpose of this paper is to better understand the executive characteristics that potentially affect the likelihood of employee litigations.

Design/methodology/approach

The authors employ a unique data set of employee lawsuits from the National Labor Relations Board – “Disposition of Unfair Labor Practice Charges” – which includes complaints, litigations and decisions. The data spans the years 2000–2014. The authors employ the option-based CEO overconfidence metric of Malmendier et al. (2011) as the primary explanatory variable.

Findings

The authors find that overconfident CEOs are less likely to be subjected to labor-related litigations. The authors document that firms with overconfident CEOs have fewer lawsuits opened by both labor unions and individuals. The authors then investigate the effect of employee litigations on firm performance to understand why overconfident CEOs are less prominent among lawsuits. The authors show that litigations lower corporate investment and value of capital expenditures for responsible firms, which may limit overconfident CEOs’ ability to invest. Therefore, the results may reveal the fact that overconfident CEOs may prefer to align with the interest of their employees to avoid reduced investment opportunities.

Originality/value

The paper makes three main contributions. First, it provides the first large-sample evidence on CEO overconfidence and labor relations. The authors employ data on firm-level labor litigation that contains both the case reason and case outcome. Second, this paper adds to the growing literature of CEO overconfidence and governance practices in the workplace. Finally, the study highlights the importance of employee treatment and explores the impact of labor lawsuits on firm value.

Details

Review of Behavioral Finance, vol. 11 no. 4
Type: Research Article
ISSN: 1940-5979

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Book part
Publication date: 22 March 2022

Roland Eisenhuth and David Marshall

The economic doctrine of market efficiency plays an essential role in securities fraud litigation. In lawsuits alleging violations of SEC Rule 10b-5, the plaintiffs typically must…

Abstract

The economic doctrine of market efficiency plays an essential role in securities fraud litigation. In lawsuits alleging violations of SEC Rule 10b-5, the plaintiffs typically must argue that the market for the relevant security is efficient, and therefore that the “fraud on the market” doctrine applies. However, the term “market efficiency” is often applied imprecisely. In this chapter, we discuss properties of efficient markets that have been proposed in academic research, legal scholarship, and case law. We explore what must be assumed about capital markets for each of these properties to hold. We then ask how, in practice, each property could be rebutted.

Details

The Law and Economics of Privacy, Personal Data, Artificial Intelligence, and Incomplete Monitoring
Type: Book
ISBN: 978-1-80262-002-3

Keywords

Book part
Publication date: 18 March 2014

Michael D. Hausfeld, Gordon C. Rausser, Gareth J. Macartney, Michael P. Lehmann and Sathya S. Gosselin

In class action antitrust litigation, the standards for acceptable economic analysis at class certification have continued to evolve. The most recent event in this evolution is…

Abstract

In class action antitrust litigation, the standards for acceptable economic analysis at class certification have continued to evolve. The most recent event in this evolution is the United States Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1435 (2013). The evolution of pre-Comcast law on this topic is presented, the Comcast decision is thoroughly assessed, as are the standards for developing reliable economic analysis. This article explains how economic evidence of both antitrust liability and damages ought to be developed in light of the teachings of Comcast, and how liability evidence can be used by economists to support a finding of common impact for certification purposes. In addition, the article addresses how statistical techniques such as averaging, price-dispersion analysis, and multiple regressions have and should be employed to establish common proof of damages.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

Keywords

Book part
Publication date: 24 May 2021

James Langenfeld and Frank Fagan

This issue of Research in Law and Economics covers several areas of important research by a variety of international scholars. It contains technical papers on the appropriate way…

Abstract

This issue of Research in Law and Economics covers several areas of important research by a variety of international scholars. It contains technical papers on the appropriate way to estimate damages in patent disputes, as well as methods for evaluating relevant markets and vertically integrated firms when determining the competitive effects of mergers and other actions. There are also papers on the implication of different legal processes, regulations, and liability rules on consumer welfare, which range from the impact of delays in legal decisions in labor cases in France to issues of criminal liability related to the use of artificial intelligence.

Details

The Law and Economics of Patent Damages, Antitrust, and Legal Process
Type: Book
ISBN: 978-1-80071-024-5

Keywords

Book part
Publication date: 18 March 2014

James Keyte, Paul Eckles and Karen Lent

In 2009, the Third Circuit decided Hydrogen Peroxide, which announced a more rigorous standard under Federal Rule of Civil Procedure 23(b)(3) for assessing whether a putative…

Abstract

In 2009, the Third Circuit decided Hydrogen Peroxide, which announced a more rigorous standard under Federal Rule of Civil Procedure 23(b)(3) for assessing whether a putative class could establish antitrust injury. Earlier this year, the Supreme Court decided Comcast v. Behrend, a case that carries potentially broad implications for both antitrust cases and Rule 23(b)(3) class actions generally. A review of the case law starting with Hydrogen Peroxide and continuing through Comcast and its progeny reveals the new rigor in antitrust class action decisions and suggests what the future may hold, including the type of arguments that may provide defendants the most likely chance of defeating class certification. After Comcast, rigor under 23(b)(3) can no longer be avoided in assessing all class actions questions, and courts should now apply Daubert fully in the class setting concerning both impact and damages. Courts should also closely evaluate plaintiffs’ proposed methodologies for proving impact to determine if they apply to each class member. Finally, courts will inevitably have to determine how rigorously to scrutinize experts’ damages methodologies and whether Comcast requires or suggests more scrutiny in assessing common evidence for measuring damages.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

Keywords

Article
Publication date: 11 October 2021

Omer Unsal

In this paper, the author utilizes a unique hand-collected dataset of workplace lawsuits, violations and allegations to test the relation between employee mistreatment and…

Abstract

Purpose

In this paper, the author utilizes a unique hand-collected dataset of workplace lawsuits, violations and allegations to test the relation between employee mistreatment and information asymmetry.

Design/methodology/approach

The author tests the impact of employee treatment on firms' information environment by utilizing the S&P 1500 firms of 17,663 firm-year observations, which include 2,992 unique firms and 5,987 unique CEOs between 2000 and 2016. These methods include panel fixed effects, as well as alternative measures of information asymmetry, event study and matched samples for further robustness tests.

Findings

The author finds that employee disputes exacerbate the information flow between insiders and outsiders. Further, the author reports that case characteristics, such as case outcome and case duration, aggravate that problem. The author documents that the positive relationship between employee mistreatment and information asymmetry is stronger for small firms and firms with smaller market power, as well as firms with a high level of equity risk.

Originality/value

This study is the first to investigate how employee relations influence a firm's information asymmetry. The author aims to contribute to the literature by studying (1) the relation between information asymmetry and employee mistreatment, (2) how firm characteristics affect the path from employee disputes to information asymmetry and (3) the influence of various other types of evidence of employee mistreatment beyond litigation on the information environment.

Details

International Journal of Managerial Finance, vol. 18 no. 5
Type: Research Article
ISSN: 1743-9132

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