But that's rather empty: any approach to problem-solving or social analysis deals with balancing costs and benefits.
Here, we've got 2 theories under the common law: trespass and nuisance. The difference between them is an arbitrary construct based on "physical invasion." Before Boomer, they're essentially equivalent: in both you get an injunction and there's no relative impact analysis allowed.
Remember the hand formula (B < P * L ) -- the essence of negligence law is the balancing of cost and benefits. But here, we've got property rights law in which there's no balancing. Why is that? Well, there is, it's just not done by courts: we bargain in the shadow of the law to avoid resource-inefficient results.
So relative impact analysis is still the essence of the law even in trespass and nuisance, but we've chosen to have the drama play out in the market.
But then along comes Boomer: now we get injunction only if the benefits of the injunction exceed costs. Why? Well, for one thing, more parties: this makes market transactions much harder, so the market can't do the relative impact balancing.
The analysis is being driven by the choice of the balancer. The reason we had simplistic rules pre-Boomer is that we didn't have a situation that required a different balancer. Again, the major dynamic is who decides, not what needs to be decided.
Now, economics is associated with rational actors weighing costs, etc. These decisions aren't being made by weighing relative merits of decision-makers, they're being made by watching the performance of just one decision-maker. So maybe the market does break down when there are more parties, in other words, but why do we never ask how the courts perform when there are more parties? The question isn't "how does the market work in two different situations" the question is "who should decide." To answer that we need to know about the courts, not just the markets.
And Boomer implicitly considers this: that's why the majority punts the issue of general pollution to the political process. Why not keep this in the courts? It's a classic problem: we have something that's socially damaging, but no realistic means of getting it litigated because the per-capita stake is so low, and nobody will bother. Heck, people may not even realize that they have been harmed.
So the dynamics of litigation are affected. But there's also the decision-making process itself: the decision-makers (judges and juries) are generalists, not specialists, so there are issues of competency as well. And there are problems of scale for the courts as well (giant cases drain judicial resources: there's less probability of settlement, for example).
The major reason that people settle cases is the cost of litigation. Plus, you've also got perceptions of the probability of winning and the damage award: the more the parties are on the same page about these things, the more likely the settlement, because the range of negotiation is well-known. Discovery causes parties to understand the contours of the case in more detail and on a more even footing.
So the Law & Economics analysis is incomplete: the same factors that disqualify the market for certain tasks eventually make the problems unfit for the courts. It's not just that one institution is getting worse (that's a trivial necessary condition, but not sufficient), they all are, and deciding who decides needs to take that into account.
Well, then. The political process. Any reason to think that will break down as numbers and complexity increase? Well, the people suffering minor harm will never lobby as hard as the few with a giant vested interest. A vast majority sometimes loses to a minority, when the majority is dormant (i.e., when per-capita stakes are low and information is difficult to penetrate).
So the Boomer court makes a good observation about the market, and maybe about itself, but then falls back on the same old error in favoring the political process.
We know what factors are at work, but that doesn't make it much easier to come to a final decision about who should decide what.
Law & Economics analisis stresses the efficient allocation of resources to their highest and best purpose. But how do we know what that is? Whoever is doing the analysis decides what that purpose is, and therein lies the flaw.
And we've got the Boomer rule in place: permanent damages (i.e., a one-time payment to compensate property owners for their total future impact). And there's also no class action allowed (because the Boomer court says problems that complex are for the political process).
But the plant would definitely go in the more populous valley, because they would not have any damages to fear. And that's not necessarily a very satisfactory result: it balances benefits and costs, but not social benefits and costs.
We didn't have distribution/fairness in Boomer. We worried about whether the benefits of the injunction exceed the costs of the injunction. We never troubled ourselves about who gets the benefits (i.e., how should it be distributed?). So, before the decision in Boomer, the plant was worth $45M and each plaintiff had lost something like $33K. The Boomer court re-distributes that: that's what the damages are.
Anyway, we've got these two issues, and we need to decide which institution should decide each of them.
Whence this indemnification, then? We've already resolved the relative impact cost benefit issue: the feed lot needs to go, so we issue the injunction. But we say Del Webb ought to pay Spur what amounts, in effect, to permanent damanges: this is the distribution question, and it's separate from the resource allocation question. Note that indemnification is pretty rare, in part because when you have many parties, it's hard to figure out. Here, however, it's easy: just Del Webb. So you'd get the injunction, but no indemnification, most likely.
Repeat: in high-numbers cases, the court will sidestep the coming-to-the-nuisance issue, and issue the injunction, but will not do the indemnification because analysis of who should pay what is too complex.
What do we want for a class action?
There are two sets of institutional choices here: