THE COST OF DISCOVERY AND SUMMARY JUDGMENT MOTIONS

In our recent articles published in the PLUS Journal, available through the PLUS website or here and here, we tackle the broad question of settlement timing in class actions and its relationship to settlement amounts.  As can be expected, settlement amounts increase as litigation progresses into later stages, which we’ve defined as:

• Early Pleading:  Anytime prior to a ruling on the first motion to dismiss
• Late Pleading:   After the first motion to dismiss has been granted without prejudice but before a later motion has been denied.  This is the period during which a plaintiff is filing a second or later consolidated complaint.
• Discovery:  Anytime after a motion to dismiss has been denied and a case heads into discovery.  This phase includes cases settled soon after the motion has been denied and cases that settle on the eve of trial or even pending appeal.

Here we take a deeper look into settlements occurring within the last  phase,Discovery:

As we can see from the graph, cases that settle at some point during the discovery process but before any Motions for Summary Judgment are filed will settle for approximately $42 million, on average.  That amount rises to $63 million once the Motion for Summary Judgment is filed and defendants decide it’s better to settle rather than risk an adverse ruling on the motion.  For a case to proceed this deep into litigation, the judge has already weighed in on its merits.  As such, it’s not surprising that very few Motions for Summary Judgment are ruled on in the defendants’ favor.  Most motions for summary judgment are denied. Out of 80 motions ruled on in cases filed between 2000-2012, 56 were granted and 84 were denied.Once a summary judgment motion is denied, the price of settlement nearlydoublesto $120 million, on average.  That amount is more than four timesthe average settlement size of a case settling prior to the judge’s ruling on the first Motion to Dismiss ($23.3 million).

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