Duke University Scho
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Private Litigation and the Deterrence of Corporate Misconduct |
ABSTRACT:
Compensating the injured and deterring future violations are frequently seen as complementary objectives of private suits. This article examines the linkage between private litigation and the deterrence of corporate misconduct. Part II considers whether holding the entity strictly liable for the misconduct of its agents maximizes the deterrence effects of vicarious liability or whether a duty-based entity liability standard would lead to more aggressive deterrent efforts by the entity. Part II then reexamines the predictive value of the economists' model that proffers that deterrence is best achieved by pricing the conduct. Though pricing the offense is a crucial strategy to deterring misconduct, Part II concludes that much more is achieved by increasing the detection efforts for misconduct than by increasing the sanction that is imposed for detected misconduct. The article takes a pragmatic approach, and thus considers the environment in which private litigation exists. Part III considers the impact of insurance on the deterrence objectives of private suits for corporate misconduct and to what extent insurance undercuts the deterrence effects of private litigation. In Part IV, the author concludes by reviewing the evidence and arguments that present a more positive view of the deterrence effects of private litigation.
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