A Great Game: The Dynamics of State Competition and Litigation

We theorize a multi-dimensional picture of jurisdictional competition for corporate litigation. We test this theory by examining merger litigation in a hand-collected sample of I 117 takeovers from 2005 to 20I I. We find evidence of state competition for merger litigation. Entrepreneurial plaintiffs' attorneys drive this competition by bringing suits in jurisdictions which have previously awarded more favorable judgments and higher fees and by avoiding unfavorable jurisdictions. States with an apparent interest in attracting corporate litigation respond in-kind by adjustingjudgments and awards tore-attract litigation. These states award higher attorneys' fees and dismiss fewer cases when attorneys have been migrating to other jurisdictions. Our findings illuminate the dynamics and existence of jurisdictional competition for corporate litigation. * Economic Fellow, U.S. Securities.and Exchange Commission, Division of Economic and Risk Analysis. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author's colleagues upon the staff of the Commission. •• Professor of Law, University of California, Berkeley School of Law. The authors would like to thank participants at the 2012 annual meeting of the American Law and Economics Association and workshop participants at the University of California, Berkeley School of Law, Vanderbilt School of Law, University of Virginia School of Law, The Institute for Law and Economics at the University of Pennsylvania, and the Transactional Law Workshop for their helpful comments and suggestions, as well as Robert Bartlett, Bernard Black, Jill Fisch, Sean Griffith, Justin McCrary, Dale Oesterle, Randall Thomas, Paul Rose, and Lynn Stout. We also thank Russell Gray, Eugene Kozob, Jeremy Panno, and Megan Walker for their research assistance.