Where Have All the Trials Gone? Settlements, Nontrial Adjudications, and Statistical Artifacts in the Changing Disposition of Federal Civil Cases

• Date: 01 November 2004
• DOI: http://doi.org/10.1111/j.1740-1461.2004.00021.x
• Author: Gillian K. Hadfield
• Published date: 01 November 2004

Where Have All the Trials Gone?

Settlements, Nontrial Adjudications,

and Statistical Artifacts in the Changing

Disposition of Federal Civil Cases

Gillian K. Hadfield*

If trials have been “vanishing” from the federal courts in the past few

decades, it matters, from a normative perspective, whether this trend

reflects an increase in private settlements (as many assume) or an increase

in public nontrial adjudication. In this article I investigate the coding of

“disposition” by the Administrative Office of the U.S. Courts as the first step

in an effort to assess changes in the use of trial, nontrial adjudication (such

as summary judgment and dismissal), and settlement to resolve federal civil

cases. Based on audits of the 2000 data using electronic docket information

available through PACER, I identify substantial “error” rates—as high as 70

percent—in the most ambiguous and relevant disposition codes, making

simple interpretation of the raw codes highly unreliable. Using the sample

frequencies of true dispositions determined from these audits, I correct the

2000 data. Comparing this corrected data to the raw 1970 data would lead

to the surprising conclusions that a smaller percentage of cases were dis-

posed of through settlement in 2000 than was the case in 1970, that van-

ishing trials have been replaced not by settlements but by nontrial

adjudication, and that it is the bench, not jury, trial that has been trans-

formed in this way. These conclusions are suggestive only, but they point to

the importance of performing the more onerous task of auditing the pre-

PACER data produced by the federal courts in order to assess whether we

are witnessing a fundamental shift out of public adjudication into private

settlements or merely a shift in how and when judges decide cases.

705

©2004 American Bar Association. All rights reserved.

*Professor, University of Southern California Law School, 699 Exposition Blvd., Los Angeles, CA 90089; e-

mail ghadfield@law.usc.edu.

I am grateful to Ted Eisenberg, Niels Frenzen, Marc Galanter, Deborah Hensler, Dan Klerman, Dan Ryan,

and participants in the ABA Section on Litigation’s Symposium on the Vanishing Trial (December 2003),

the Pepperdine Law School faculty workshop, the University of San Diego-University of California at San

Diego Workshop, and the USC faculty workshop for helpful comments. Thanks also to Derek Brice, Joseph

Tadros, Jeff Russell, and, especially, Garett Sleichter for excellent research assistance and to USC Law School

for research support.

Journal of Empirical Legal Studies

Volume 1, Issue 3, 705–734, November 2004

I. INTRODUCTION: THE “VANISHING TRIAL”

AND ITS CAUSES

The trial lies at the heart of most images of the American legal system. Most popular

images of litigation—in books, movies, television dramas—portray the life of the law

as one fought out in courtrooms, before judges and juries. Most lawyers, however,

are early on disabused of this image; few get through law school without hearing at

least one professor tell them that only “5 percent of cases go to trial; 95 percent

settle.” But even this “5 percent” figure of conventional wisdom, it appears, may be

an overestimate. According to Galanter (2004) and the published statistics from the

Administrative Office of the U.S. Courts (AO), it would seem that trial rates are not

just low, they are vanishing: according to these statistics, the percentage of civil cases

terminated by either a bench or jury trial fell over the past several decades, from 11.5

percent in 1962 to 1.8 percent in 2002.

Should we worry about the “vanishing trial”? That depends on what is causing

the statistics we observe to change. In the most prevalent model of lawsuits—the

one that informs the law and economics literature on suit settlement and trial in par-

ticular (Shavell 1982; Bebchuk 1984; Priest & Klein 1984; Spier 1994)—“cases”

involve a choice between taking a suit through to trial and settling it before trial; this

is the image that lies behind conventional wisdom’s quick calculation that if 5 percent

of cases are tried, then 95 percent must settle. In this model, the vanishing trial sig-

nifies a shift from public adjudication of disputes to private settlements of disputes.

As a normative matter, that is either a good thing—if one is focused, as the federal

courts and proponents of alternative dispute resolution such as Menkel-Meadow

(1995) are, on the costs of public adjudication and the imposition of public solu-

tions on private problems1—or a bad thing—if one is focused, as Fiss (1984) and

Luban (1995) are, on the loss of public opportunities to create law and express public

values.2As a matter of positive—predictive—analysis, if trials are disappearing into

settlements, then we should be looking to the determinants of settlements for the

cause: litigation costs, uncertainty, asymmetries between plaintiff and defendant, and

so on.

The problem with the settlement versus trial interpretation of case dispositions,

however, is one that Kritzer (1986) and Baar (1999) have emphasized. Cases can be

finally disposed of in many other ways. They may be abandoned by the plaintiff. They

may end in a default judgment. They may be dismissed with prejudice (and treated

706 Where Have All the Trials Gone?

1“A bad settlement is almost always better than a good trial.” In re Warner Communications Sec. Litig., 618

F. Supp. 735 (S.D.N.Y. 1985). According to a sign in the office of U.S. Magistrate’s office: “To sue is human,

to settle divine” (quoted in Menkel-Meadow (1984)). According to Learned Hand: “I must say that as a liti-

gant I should dread a lawsuit beyond almost anything short of sickness and death” (Hand 1926).

2“Where would we be if Brown v. Board of Education had settled quietly out of court?” Luban (1995).