Jury Selection and the Coase Theorem

• Author: Dru Stevenson
• Position: Professor of Law and Helen & Harry Hutchins Research Professor, South Texas College of Law
• Pages: 1645-1673

1645

Jury Selection and the Coase Theorem

Dru Stevenson

I. INTRODUCTION .................................................................................... 1646

II. BACKGROUND ON VOIR DIRE AND PEREMPTORY STRIKES .................... 1651

III. THE COASE THEOREM ......................................................................... 1654

A. BASIC ELEMENTS OF THE COASE THEOREM ...................................... 1654

B. APPLICATION OF THE COASE THEOREM TO JURY SELECTION ............. 1658

C. NON-NEGOTIABLE GOVERNING RULES ............................................. 1662

D. SOME CAVEATS AND OBJECTIONS ..................................................... 1670

IV. CONCLUSION ....................................................................................... 1672

 Professor of La w and Helen & Harry Hutchins Research Professor, South Texas

College of Law. The author would like to thank the Iowa Law Review editors for terrif ic editing,

those who organized and participated in the Batson symposium, and research assistants Skyler

Varnadore and Georgina Jenkins.

1646 IOWA LAW REVIEW [Vol. 97:1645

I. INTRODUCTION

Peremptory challenges offer a unique application for the Coase

Theorem.1 Taken in isolation from the rest of the litigation sequence, jury

selection is distinct in its complete absence of negotiation between the

parties, despite their physical presence together in the courtroom during

voir dire. Every other component of American trials includes the

opportunity for parties to negotiate either a settlement for the dispute or a

stipulation regarding some item,2 such as the introduction of particular

evidence or testimony. In contrast, the rituals for jury selection evolved in a

way that excludes interchange between the parties. The procedures could

have developed differently, of course, as we can imagine a world where the

attorneys engage in “trading” exclusions of their least desirable jurors.

Nevertheless, for historical reasons shrouded in medieval history,3 we have

no trading, or transacting, between the litigators. In Coasian terms, jury

selection and peremptory challenges are an instance of maximum

transaction costs, and a rare instance where transaction costs peak despite

the face-to-face proximity of two parties.4

The Coase Theorem posits roughly that legal rules or rights matter least

where parties have the most opportunity to negotiate; conversely, rules and

rights matter more when parties have less opportunity to bargain around the

laws. This is my paraphrasing; Coase himself did not provide a one-sentence

version of his argument in his original article, and he attributed the moniker

“Coase Theorem” to the economist George Joseph Stigler.5 Transaction

costs are the economist’s moniker for describing or measuring the obstacles

to trades, or more properly, to negotiations. Thus, where transaction costs

are at their peak, legal rules or assignments of rights have their greatest

import. When such costs are low and the parties can readily negotiate, legal

1. See R. H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960). Coase’s article

helped launch the law-and-economics movement in the legal academy; citations to it ha ve

become ubiquitous in the academic literature. For an excellent overview of the subsequent

literature and Coase’s reaction to the impact of his article, see Daniel A. Farber, Parody

Lost/Pragmatism Regained: The Ironic History of the Coase Theorem, 83 VA. L. REV. 397 (1997).

2. See Robert J. Rhee, A Price Theory of Legal Bargaining: An Inquiry into the Selection of

Settlement and Litigation Under Uncertainty, 56 EMORY L.J. 619 (2006).

3. See SANDRA DAY O’CONNOR, THE MAJESTY OF THE LAW: REFLECTIONS OF A SUPREM E

COURT JUSTICE 215–17 (Craig Joyce ed., 2003); Elaine A. Carlson, Batson, J.E.B., and Beyo nd:

The Paradoxical Quest for Reasoned Peremptory Strikes in the Jury Selection Process, 46 BAYLOR L. REV.

947, 951–56 (1994).

4. To this author’s knowledge, Coase himself never discussed ju ry selection, even though

his writings discuss many cases and verdicts.

5. See R.H. COASE, THE FIRM, THE MARKET, AND THE LAW 157 (1988). Farber’s summary

of the Theorem reads: “According to the Coase Theorem, assuming that transaction costs don’t

prevent contracting around legal rules, the legal rules don’t matter—or more precisely, the

parties will always bargain their way to an economically efficient outcome, regardless of the

legal rule. Bargaining washes out legal rules, in other words.” Farber, supra note 1, at 401

(footnote omitted).