Updated Report with Appendix
Appendix only

Late last year the International Center for Law and Economics published a study finding that Philadelphia civil courts, and the Philadelphia Complex Litigation Center (PCLC) in particular, are marked by structural biases that likely attract plaintiffs with little or no connection to the city, leading to relatively disproportionate litigation and verdicts. Today we release a supplemental appendix to the study, also authored by Professor of Law and Economics at George Mason University School of Law, Joshua D. Wright, presenting further research demonstrating that, indeed, a substantial fraction of plaintiffs with cases pending at the Philadelphia Complex Litigation Center seem to have have no discernible or relevant connection to Philadelphia or to Pennsylvania.

Removing cases that were identified as lacking sufficient data, 1,370 cases were analyzed and coded. From this sample the plaintiff’s home address was identified in 1,355 cases. Of these, 638 cases had electronically filed complaints yielding the alleged location of injury in 369 cases.

In total, it was found that:

• Of the 1,357 cases, 913 (67.2%) were brought by plaintiffs who live out-of-state without any apparent connection to Pennsylvania or Philadelphia. 
• Only 180 cases (13.3%) reveal plaintiffs who live in or allege injury in Philadelphia. 
• The most substantial case types where the plaintiffs were overwhelmingly out-of-state are hormone therapy, denture adhesive cream, and Paxil birth defect cases. 
• Although most or all of the companies involved in these cases do business in Philadelphia and a few have some sort of administrative offices there, the vast majority of defendants do not have their principal place of business in Philadelphia or even in Pennsylvania. It is unlikely that venue was moved to the PCLC in most or any of the cases. 

This preliminary analysis supports the conclusion that Philadelphia courts demonstrate a meaningful preference for plaintiffs by coaxing “business” from other courts and providing a unique combination of advantages for plaintiffs.

Here is the full report with the new appendix attached; the Appendix by itself is available here. Please contact us if you are interested in speaking with Professor Wright about the report or would like a comment on the report or the pending legislation.

By Geoffrey Manne

This morning our dear colleague, Larry Ribstein, passed away. The intellectual life of everyone who knew him and of the legal academy at large is deeply diminished for his passing.

For me, as for many others, Larry was an important influence, not only intellectually but personally, as well. Larry was the godfather of Truth on the Market, which got its start when a few of us, including Bill Sjostrom, Josh, Thom and me, pinch hit for Larry at Ideoblog in November 2005. It took eight of us, including my dad, to fill his shoes, and still his traffic went down. More than anyone else, Larry was instrumental in my decision to leave law teaching to work at Microsoft. Completely unsure what to do and worried about how it would affect my ability to return to law teaching, I called Larry, who had no doubt. He sealed the deal by pointing out that a move like that one would open some completely unanticipated, and potentially great, career paths and telling me not to worry so much about getting back to law teaching. He was right, of course, and, thus also an important influence on the creation of the International Center for Law and Economics. And Larry was a friend, one of those I always looked forward to seeing at ALEA and other conferences, more than once providing the necessary marginal incentive to attend.

We grieve for Ann, Sarah and Susannah and mourn his passing.

The outpouring in the blogosphere from Larry’s friends, admirers, colleagues, and the like is, not surprisingly, moving. As they are found, remembrances will be posted here at Truth on the Market.

International Center for Law and Economics' Executive Director Geoffrey Manne was recently interviewed on Verizon's acquisition of spectrum from cable operators by Marketplace's Tech Report. The report, which aired Tuesday, December 28, explores Version's various deals with cable companies to route around political blockages and acquire much needed spectrum. However, the Department of Justice recently decided to launch an antitrust invesitgation into the deals just days after AT&T dropped its bid for T-Mobile.

Manne injected some reality into the discussion:

In a sort of perfect world, you hear people say well, the spectrum that the cable companies own that they're not using, smaller competitors should be buying that so they can compete with AT&T and Verizon and others. Well, that's a nice idea, I guess, but the smaller companies aren't buying it and Verizon snapped up that spectrum so that they could continue to provide the level of service that they'd like to.

Listen to the embedded player below or head to the web site to hear the entire segment.

In an Op-Ed in the Hill, International Center for Law and Economics' Executive Director Geoffrey Manne explains the real problem with the National Defense Authorization Act:

National Defense Authorization Act (NDAA) is a bad piece of legislation, but not for the reason most people think. The NDAA has set the political world alight over fears that it allows the U.S. government to arrest American citizens inside the U.S. and then ship them off as terrorists into indefinite military detention without trial. Reasonable fears, to be sure – except they don’t arise from the NDAA; rather, the power to do just that likely already exists.

The real problem with the NDAA is that it does nothing to resolve the root, underlying threat to American civil liberties: Congress' abdication of its responsibility to define the standards that govern for whom and when military detention is appropriate.

The Wall Street Journal is reporting on a bill before the Pennsylvania house Judiciary Committee that would offset the current advantage for plaintiffs by changing the courts' jurisdiction rules. While plaintiffs can currently parachute into Philadelphia from anywhere in the state, the new plan would allow Pennsylvania's local courts to hear personal injury cases only when the plaintiff is a resident, a corporation is locally headquartered, or the incident occurred in the district.

The piece cites a paper issued by the International Center for Law & Economics and authored by Professor of Law and Economics at George Mason University School of Law, Joshua D. Wright. As the Wall Street Journal indicates,

Philadelphia plaintiffs are less likely to settle than plaintiffs elsewhere and show a marked preference for jury trials, according to a report for the International Center for Law and Economics by Joshua Wright based on data from Administrative Office of Pennsylvania Courts. Philadelphia juries find in favor of plaintiffs more often than non-Philly juries—"by as much as 23.7% in absolute terms in 2005."

Information privacy represents one of the most exciting, rapidly growing areas of legal scholarship, yet information privacy law scholars rarely express any faith in market principles. Government regulators seem a bit more conflicted, with recent pronouncements from the Commerce Department, FTC, and Congress premised largely on market-based, notice-and-choice principles, but emphasizing the limits of markets.

This Friday, Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado will host representatives from these three institutions to debate the Economics of Privacy. Joining them will be an interdisciplinary group of leading thinkers from other disciplines, such as economists studying the behavioral economics of privacy and computer scientists who specialize in human-computer interaction studying the limits of notice-and-choice. Executive Director Geoffrey Manne has been invited as one of these guests and will explore the markets of privacy, explaining the advantages of relying on market forces, self-regulation, and FTC’s existing enforcement mechanisms to protect privacy in the 21st century.

A new report titled "Defining and Measuring Search Bias: Some Preliminary Evidence" has just been released.

Google has been the subject of persistent claims that its organic search results are improperly “biased” toward its own content. Among the most influential is an empirical study released earlier this year by Benjamin Edelman and Benjamin Lockwood, claiming that Google favors its own content “significantly more than others.” The authors conclude in their study that Google’s search results are problematic and deserving of antitrust scrutiny because of competitive harm.

A new report released by the International Center for Law & Economics and authored by Joshua Wright, Professor of Law and Economics at George Mason University, critiques, replicates, and extends the study, finding Edelman & Lockwood’s claim of Google’s unique bias inaccurate and misleading. Although frequently cited for it, the Edelman & Lockwod study fails to support any claim of consumer harm -- or call for antitrust action -- arising from Google’s practices.

Prof. Wright’s analysis finds own-content bias is actually an infrequent phenomenon, and Google references its own content more favorably than other search engines far less frequently than does Bing:

Philadelphia civil courts have come under fire for attracting and favoring plaintiffs from outside the city at the expense of its consumers and businesses. A new study, entitled "Are Plaintiffs Drawn to Philadelphia’s Civil Courts? An Empirical Examination," issued by the International Center for Law & Economics and authored by Professor of Law and Economics at George Mason University School of Law, Joshua D. Wright, finds evidence that Philadelphia civil courts are indeed marked by structural biases that attract plaintiffs with little or no connection to the city, leading to disproportionate litigation and verdicts relative to other courts.

Using data from the Administrative Office of Pennsylvania Courts, Professor Wright compares filing trends and case outcomes in Philadelphia to the rest of Pennsylvania and other representative state courts. As explained in greater depth in the paper, Philadelphia courts, when measured against non-Philadelphia Pennsylvania state courts and federal district courts, exhibit marked and significant dissimilarities supporting an inference that something intrinsically unusual is occurring in Philadelphia. Philadelphia courts host an especially large number of cases, Philadelphia courts have a larger docket than expected, Philadelphia plaintiffs are less likely to settle than other non-Philadelphia Pennsylvania plaintiffs, and Philadelphia plaintiffs are disproportionately likely to prefer jury trials. These findings are consistent with a conclusion that Philadelphia courts demonstrate a marked and meaningful preference for plaintiffs.

Here is the full report. Please This e-mail address is being protected from spambots. You need JavaScript enabled to view it if you are interested in speaking with Professor Wright about the report or would like a comment on the report or the pending legislation.

Tomorrow, Todd Zywicki, Academic Affiliate at the International Center for Law and Economics and a Foundation Professor of Law at George Mason University School of Law, will speak on payment systems with particular concern to the Canadian context at a conference sponsored by the C.D. Howe Institute in Toronto. The conference is titled “The Canadian Payments System: Ensuring Competition, Innovation and Stability” and will feature Patricia Meredith, the Chair of the Task Force for the Payments System Review in Canada, and Steve Rauschenberger, President of Rauschenberger Partners LLC, among others.

As the organizers notes, “Getting [payment systems] right will be integral to building a competitive, functioning and efficient payment system, with important consequences for industry and the Canadian economy as a whole.”

This conference comes on the heels of a recently released paper on the subject and is a continuation of the research he has been conducting for the International Center for Law and Economics’ Financial Regulatory Program White Paper Series, including his previous paper “The Economics of Payment Card Interchange Fees and the Limits of Regulation“

We are pleased to announce the release of the second paper in the ICLE Financial Regulatory White Paper Series.  “The Way We Should Pay: Comments on The Way We Pay:Transforming the Canadian Payments System” was authored by Todd J. Zywicki, Academic Affiliate at the International Center for Law and Economics and Foundation Professor of Law at George Mason University School of Law, and Philippe Bergevin, a Policy Analyst at the C.D. Howe Institute.

As outlined in the Task Force for the Payment System Review report, Canada’s payments system is falling behind. The thirty-year-old Interac system has facilitated widespread adoption of debit cards in Canada, but it is proving increasingly antiquated to the needs of a modern global economy. This paper explores the current state of the payment system in Canada within a global context and discusses the strong economic principles that should guide the work of the Task Force. Building on a robust framework of innovation and competition, it aims to positively orient the Task Force’s future decisions, while continually reaffirming the negative impact that can result from misaligned institutional incentives.

We are pleased to announce the first paper in our 2011 Antitrust and Consumer Protection White Paper Series, "If Search Neutrality is the Answer, What's the Question?" by Geoffrey A. Manne of Lewis & Clark Law School and ICLE, and Joshua D. Wright of George Mason Law School & Department of Economics and ICLE.

In this paper we evaluate both the economic and non-economic costs and benefits of search bias. In Part I we define search bias and search neutrality, terms that have taken on any number of meanings in the literature, and survey recent regulatory concerns surrounding search bias. In Part II we discuss the economics and technology of search. In Part III we evaluate the economic costs and benefits of search bias. We demonstrate that search bias is the product of the competitive process and link the search bias debate to the economic and empirical literature on vertical integration and the generally-efficient and pro-competitive incentives for a vertically integrated firm to discriminate in favor of its own content. Building upon this literature and its application to the search engine market, we conclude that neither an ex ante regulatory restriction on search engine bias nor the imposition of an antitrust duty to deal upon Google would benefit consumers. In Part V we evaluate the frequent claim that search engine bias causes other serious, though less tangible, social and cultural harms. As with the economic case for search neutrality, we find these non-economic justifications for restricting search engine bias unconvincing, and particularly susceptible to the well-known Nirvana Fallacy of comparing imperfect real world institutions with romanticized and unrealistic alternatives.