Understanding Settlement in Damages (and Beyond)

Abstract

For all of the ways in which the Sabia case is extraordinary, its outcome--settlement--is decidedly ordinary. In most civil litigation, as in the Sabias' litigation against Dr. Maryellen Humes and Norwalk Hospital, "[s]ettlement is where the action is." Roughly two-thirds of all cases settle (and most of the rest are resolved through motions). Why do most cases settle? Given the costs, delay, and unpleasantness of the litigation process, why do any cases go to trial? To address these questions--that is, to explain why most cases settle as well as why some cases "fail" to settle and result in trial--legal academics have developed several theoretical accounts of litigation behavior in "ordinary, civil cases. These accounts fall into two basic categories: (1) rational actor accounts (which assume that litigants are outcome-maximizers), and (2) non-rational actor accounts (which assume that litigants want to maximize their outcomes but have difficulty doing so). The purpose of this article is to introduce these academic accounts of settlement and to consider whether they provide insight into the settlement of the Sabias' litigation against Humes and Norwalk. I believe these accounts are largely complementary rather than competing, so my own view is that each sheds some light on litigation and settlement behavior in most civil cases (including the Sabia case).