Letter from the Acting Director

I am pleased to share some our recent successes with you and to recognize the ongoing support of our Board of Overseers and the dedication of our research staff. I am particularly proud of the U.S. Supreme Court's multiple citations of ICJ work in the 07-219 Exxon Shipping Co. v. Baker (6/25/08) case related to punitive damages and the new rules in North Carolina Special Superior Court for Complex Business Cases that were based in part on a recent ICJ report on transparency in class action disbursements.

I hope you find our newsletter informative and we appreciate your interest in our efforts. Please take particular note of our upcoming events as we are making a concerted effort to engage thought leaders in new ways. As always, let me know if you have any ideas or questions related to ICJ, RAND, or our research agenda.

Best regards,

Fred Kipperman
Acting Director

Impact

U.S. Supreme Court cites ICJ Research
In the decision of Exxon Shipping Company v. Grant Baker 07- 219 (2007) the U.S. Supreme Court cites the following ICJ studies:

• E. Moller, N. Pace, & S. Carroll, Punitive Damages in Financial Injury Jury Verdicts, 28 J. Legal Studies 283, 307 (1999)
• D. Hensler & E. Moller, Trends in Punitive Damages, table 2 (Mar. 1995), and
• M. Peterson, S. Sarma, & M. Shanley, Punitive Damages: Empirical Findings 15.

The U.S. Supreme Court Amicus Brief (08-01) regarding Wyeth v. Diana Levine cites joint ICJ research, Is the Food and Drug Administration Safe and Effective? by E. Sun, RAND, and T. Philipson.

North Carolina Courts Change Rule Based on ICJ Research
A recent order of the North Carolina Special Superior Court for Complex Business Cases (the court where all state class actions are removed for management and trial) cited ICJ research by Nick Pace. The order, made within the context of a dismissal of a somewhat notorious case, now mandates that any time the parties seek to dismiss a class action in the state courts, even if the matter has not been certified, the judge will make an inquiry into whether the putative class members are being disadvantaged by the agreement to drop the litigation. Included in that inquiry is an examination of whether there is a competing class action in another state that the proposed dismissal will be subsumed into, and if the NC judge believes that there is cause for concern, the case might not be dismissed.

In concert with current ICJ research on transparency is a new requirement that "this Court concludes that it also is entitled to receive a copy of the final accounting of the distributions to the class in every class action case pending before the Court." From now on, attorneys bringing class actions in the Complex Business Court, no matter which judge is overseeing the case, will be required to "file and publish a copy of the final accounting detailing the amount of money (or coupons) actually received by the class, the amount of administrative fees, and the amount of attorney fees received....It is the only way for the public to know what happened." Citing RAND work in this area, the judge said that in "adopting these procedures the Business Court seeks to promote greater transparency that will fill the 'informational black hole' concerning final distributions and make administration of class actions more efficient and effective and thus more beneficial to class members." In addition to other benefits flowing out of increased transparency, the judge underscored "the benefit of judges being able to assess the past performance, abilities and commitment of those lawyers who seek to be class counsel in other cases. A history of final results in other cases would also alert judges to scrutinize settlements proposed by defendants who have settled their class action in ways that resulted in no benefits to class members. This Court can think of no reason why the final results should not be made known to the Court and the citizens affected."

ICJ Research Presented to Nevada Auto Theft and Insurance Fraud Task Force.
On July 22, Eric Helland testified before the Nevada Auto Theft and Insurance Fraud Task Force on his research with Paul Heaton. The report, entitled Auto Liability in Nevada Compared to Other States, extends previous ICJ research and findings by focusing on the liability situation in Nevada. The analysis suggests that recent premium growth in Nevada appears to reflect rising bodily injury costs per claim. Nevada's BI cost per claim is consistently among the highest in the nation and it is growing although Nevada's incidence of BI claiming has been stable in recent years. Factors other than general medical cost inflation appear to have contributed to Nevada's recent increases in BI costs.

Upcoming Events

ICJ Leadership Award Dinner
Honoring Charles R. Schader of AIG, a longtime ICJ Board member, will be recognized for his commitment to helping improve civil justice and for his excellent volunteer leadership at the American Museum of Natural History, on November 12. For more information about this special honor, please contact Fred Kipperman.

ICJ Public Policy Symposium
ICJ regularly invites thought leaders in the legal and policy communities to convene and discuss emerging issues and trends. On Thursday, November 6, ICJ is hosting an invitation-only policy symposium sponsored by O'Melveny & Myers LLP featuring several experts, including ICJ Board members Charles Lifland and Robert Peck, to discuss the impact of punitive damages on the civil justice system and their likely future trends.

New ICJ Initiatives

Behavioral Finance Forum (BeFi) to be hosted by RAND
The Behavioral Finance Forum, an organization dedicated to helping consumers make better financial decisions, will become an initiative of the nonprofit RAND Corporation. The Behavioral Finance Forum, also known as BeFi, was founded in 2006 by Shlomo Benartzi, professor at the Anderson School of Management at UCLA, and Warren Cormier, founder and president of the Boston Research Group. Both will continue to be involved with the forum after RAND takes on management of its activities.

Behavioral finance is the study of the psychological factors that shape peoples' financial choices and decisions, including how they invest, how they save, and how they plan for retirement. BeFi was established to bring together academic, financial, and governmental leaders interested in cutting-edge behavioral research for practical application.

For more information, please read the press release.

Public Entity Risk Institute data to be shared with RAND ICJ
On September 17, the ICJ and the Public Entity Risk Institute (PERI) announced their partnership to conduct research that will help cities, universities, and other public entities better manage legal risks. PERI is a nonprofit research institute that develops risk management education and training resources for local governments, school districts, small businesses, nonprofits and others.

Under the agreement, RAND staff will conduct research using a database maintained by PERI that includes information about public entity workers' compensation claims, judgments and legal exposures, as well as details about other legal liability issues faced by public entities.

RAND and PERI hope to break new ground in research related to the understanding of the unique risks associated with public entities. New, objective analysis using solid data will improve the risk management abilities of public entities, officials say.

PERI's Web site serves as a clearinghouse and library with information on a wide range of topics including disaster preparedness, response, and recovery; public health and safety; land use and planning; environmental liability; risk financing and insurance; technology risks; and workers' compensation. To learn more about publications and services available from PERI, visit www.riskinstitute.org.

Acknowledgements & Gratitude

ICJ Thanks Richard Fields, ICJ Board Member
Mr. Fields CEO, Juridica Capital Management Limited and new ICJ Board Member was the featured speaker together with his colleague, Timothy Scrantom, at the September 17 ICJ Policy Breakfast. Fields and Scrantom also addressed a group of RAND researchers at an ICJ Internal Symposium on September 16. The presentations focused on the future of third-party litigation funding in Europe and Australia and the role of this new tool for risk transfer in the United States.

ICJ Thanks Hon. Rebecca Love Kourlis
Rebecca Love Kourlis, former Colorado Supreme Court Justice and current Executive Director of the Institute for the Advancement of the American Legal System (IAALS), was featured at the October 10 ICJ Policy Breakfast. She also addressed RAND researchers at an ICJ Internal Symposium that same day.

ICJ Core and Center Updates

Institute for Civil Justice (ICJ)

Supplying government and private decisionmakers and the public with the results of objective, empirically-based, analytic research

ICJ Board of Overseers Meeting
October 23—24, RAND Washington, D.C. Office
New members to our board are:

• Atiba Adams, Pfizer Inc
• Alex Dimitrief, General Electric
• Richard Fields, Juridica Capital Management Limited
• Deborah Greenspan, Dickstein Shapiro LLP
• Charlie Lifland, O'Melveny & Myers, LLP
• Arturo Raschbaum, GMAC Insurance

A complete listing of the Board of Overseers can be found on the ICJ Board of Overseers page.

New Papers

• Does Liability Affect Small Business? By John Romley and Bohdan Savych
• Pay-for-Performance in California's Workers' Compensation Medical Treatment System: An Assessment of Options, Challenges, and Potential Benefits By Barbara O. Wynn and Melony Sorbero
• How Transparent Are Class Action Outcomes?: Empirical Research on the Availability of Class Action Claims Data By Nicholas Pace and William Rubenstein
• Auto Liability in Nevada Compared to Other States: Testimony for Nevada Auto Theft and Insurance Fraud Task Force By Paul Heaton and Eric Helland

New Projects

• After the Deal is Done: Outcomes in Consumer Class Action Settlements, Principal Invesitgator Nicholas Pace
• Bargaining in the Shadow of the Website: Disclosure's Impact on Litigation Behavior, Principal Investigator Eric Helland
• Compensation for Losses following Hurricane Katrina, Principal Invesitgator Lloyd Dixon

Center for Health & Safety in the Workplace (CHSW)

Conducting research and analysis that helps improve worker health and safety and reduce the economic costs of workplace accidents and illnesses. The Center provides rigorous, objective analysis and a neutral venue in which to convene stakeholders from government, industry, and labor.

CHSW Inaugural Advisory Board Meeting
October 6—7, RAND Washington, D.C. Office

The board consists of:

• Christine Baker, California Commission on Health and Safety and Workers' Compensation
• John Howard, M.D., National Institute for Occupational Safety and Health
• Cameron Mustard, Institute for Work and Health
• Jeff Shockey, Alcoa
• Kim Tum Suden, The Walt Disney Company
• Ken Wengert, Kraft Inc.
• Frank White, ORC Worldwide
• Mike Wright, United Steelworkers
• John Mendeloff, Center for Health and Safety in the Workplace (Ex Officio)

For information regarding the board members, please visit the CHSW board web page.

New Projects

CHSWC Grant received for ICJ project, Insolvent Workers' Compensation Insurance Carrier Study. Lloyd Dixon will lead the two year project from June 19, 2008 to June 18, 2010.

CHSWC Grant received for ICJ Project, Musculoskeletal Injuries. Seth Seabury will lead the one year project from June 16, 2008 to October 1, 2009.

Center for Terrorism Risk Management Policy (CTRMP)

Improving the information available to policymakers and the public about terrorism risk management, liability and insurance.

For five years the CTRMP has conducted research on terrorism risk, insurance, and liability policy. It has established itself as a credible, objective source of public policy research policy research and has produced several heavily cited publications. CTRMP was established with the understanding that it would be a temporary center. Funders agreed to participate for three years, and due to ongoing interest in the Center's projects, the Center was extended for one year.

Over the last four years, CTRMP completed

• 23 research articles or reports, including 12 publications on terrorism insurance
• 7 Congressional briefings
• 8 Congressional newsletters
• 4 meetings with Congressional staff
• 19 meetings with Administration staff and Federal agencies
• 3 conferences (two in California and one in Washington, DC)

We also held ten meetings with our Board, who provided us excellent advice and feedback on our progress. While it is hard to measure the impact, here are a few numbers:

• 12 Congressional floor citations and 9 congressional document requests
• 120 media citations

Kauffman-RAND Institute for Entrepreneurship Public Policy (KRI)

To assess and improve legal and regulatory policymaking as it relates to small businesses and entrepreneurship in a wide range of settings, including corporate governance, employment law, consumer law, securities regulation and business ethics.

The Ewing Marion Kauffman Foundation recently renewed a grant supporting KRI.

New Papers

• Small Business Assistance Programs in the United States: An Analysis of What They Are, How Well They Perform, and How We Can Learn More About Them by Qian Gu, Lynn Karoly and Julie Zissimopoulos
• Is The U.S. Health Insurance System a Barrier to Entrepreneurship? by Robert W. Fairlie, Kanika Kapur and Susan Gates
• Innovation in Academe: Federal R&D Funding and the Patenting Activities of U.S. Universities and Colleges by Donna Fossum, Elisa Eiseman, Connie Moreno, Lawrence S. Painter, Meg Blume-Kohout
• Shopping for HSA-eligible Insurance Plans: The Experience of Small Firms by James Burgdorf, Susan Gates, Kanika Kapur and Pinar Karaca-Mandic.

Center for Corporate Ethics and Governance (CCEG)

Improving public understanding of corporate ethics, law, and governance, and to identify specific ways that businesses can operate ethically, legally, and profitably at the same time.

CCEG is currently focusing on the forces and institutions that shape business ethics, including litigation, regulation, markets, executive compensation, and corporate culture. Studies recently completed or currently under way within the Center include the following:

• Investor Survey on Ethics and Public Company Governance
• Corporate Governance in China
• Defining Key Parameters of Corporate Culture
• Corporate Culture and Prosecutorial Decisions Among U.S. Attorneys

This fall, the CCEG is undertaking a series of market research visits to major corporations, as input to a new strategic plan and slate of research activities.

Recent and forthcoming accomplishments within the Center have included the completion of a high-profile study on investment advisors and broker-dealers (for the SEC), new papers on corporate governance in China and on securities litigation risk in the U.S. (with expected publication during FY09), and an essay on tax avoidance as a potential focus for new corporate scandals (published in the Summer 2008 RAND Review).