In which I argue that the American legal system increasingly functions in ways indistinguishable from lawlessness, for reasons that are authorized by judges and Congress.
“WHEREVER LAW ENDS, tyranny begins,” wrote John Locke, encapsulating in five words the intimate relationship between liberty and the rule of law.1 In the United States as of the second decade of the twenty-first century, law has ended in some ways and tyranny has made some beginnings.
Such a strong statement seems overwrought. Aspects of the American legal and criminal-justice systems are better than they have ever been. Compared to a century ago, attorneys and judges have more formal training in the law. Police investigative techniques and technology are incomparably better than they were a century ago. Police are better trained and police forces are (in general) better administered. Most prisons are more humanely designed than they were a hundred years ago. Prison guards are better trained and prisons are (in general) better administered.
The American legal system is also more “ruleful” than it has ever been. What is and is not permissible in the investigative process, within the courtroom, and during the appeals process is spelled out in intricate detail, and violation of these elaborate protocols can lead to the overturn of a judicial decision.
When I indict the government for lawlessness, I have things other than equipment, training, and rulefulness in mind.
First, let’s talk about the legal system not as it looks from thirty thousand feet to law professors, where everything can be fit together and rationalized, but how it looks at ground level to ordinary law-abiding citizens, of whom I count myself one. I am reminded of science-fiction author Arthur C. Clarke’s famous observation that “any sufficiently advanced technology is indistinguishable from magic.”2 From ground level, our encounters with today’s legal system as it actually functions are often indistinguishable from lawlessness.[3]
When the legal process is more costly than you can afford, it is indistinguishable from lawlessness.
If you are engaged in a business and are prudent, you have acquired liability insurance that covers the costs of legal defense against a lawsuit. If you work for a corporation, you are shielded from legal liability under most (though not all) circumstances. But if you are an ordinary private citizen of ordinary means, you usually cannot afford to pursue a legal defense against an allegation that will take you to court.[4] In the case of a criminal charge, you can hope for the best from a public defender. But in a civil case, you face a tough choice, even if you are certain that you have done nothing wrong and that the courts would eventually vindicate you. You know that you will be unable to recoup your legal costs, and that those costs will probably run well into five figures, or more, not to mention the weeks, months, or years in which the litigation hangs over your life. Citizens of average net worth usually cannot afford their day in court. So if the accuser, be it the government or a plaintiff in a lawsuit, gives you the option of giving in at a price you can afford, you give in. When defending yourself against a wrongful allegation is not financially feasible, in what sense are you protected by the rule of law?
Criminal law that is sufficiently removed from the concept of mens rea is indistinguishable from lawlessness.
For centuries, common law recognized two requirements for a criminal act: a guilty act and a guilty mind. The legal terms are actus reus and mens rea.[5] You not only had to do something wrong, you had to be aware you were doing something wrong. But the law also held that ignorance of the law is no defense. How could these two principles be reconciled? Because there weren’t many laws. Most of the laws that did exist prohibited acts that were obviously wrong in themselves (malum in se), such as murder, rape, and theft. Other laws prohibited things the state decided to prohibit (malum prohibitum) that were not wrong in themselves (for example, sumptuary laws), but these were of a manageable number and were part of daily life.
Today, we often haven’t the least idea whether we have broken a law. Setting aside state and municipal law, which add hugely to the problem, so many things have become federal crimes that it is impossible to keep track of them. Through the first half of the nineteenth century, virtually all criminal law was defined and prosecuted by the states, with fewer than a score of crimes defined by the federal government (for example, treason or bribery of federal officials).6 By World War I, the number of federal laws had reached the 500s. As of the most recent count, in 2007, the federal code numbered about 4,450 crimes. We have seen an increase of about 50 percent just since 1980.
To see the implications for the requirement of having a guilty mind, take a moment to list all the acts you can think of that qualify as malum in se. I doubt if you can come up with more than a few dozen. If you stretch them out (for example, breaking down “taking other people’s stuff” into the various categories of robbery, petty larceny, grand larceny, burglary, and so on) and if you have a good imagination, you can perhaps come up with fifty. There just aren’t that many different human actions that are self-evidently wrong in themselves and warrant criminal penalties. It is possible to imagine how this comparative handful of acts might have different definitions in different federal statutes. There might be several laws prohibiting different forms of bribery, for example. But as generously as you try to estimate, it is inevitable that an extremely large proportion of those 4,450 crimes in the federal code are malum prohibitum—not things that are bad in themselves but things that warrant criminal penalties because the government has said they do.
Various aspects of the effective lawlessness fostered by the growth in federal law are discussed in the sections of this chapter that will deal with complexity, subjectivity, and discretionary power to enforce the law. Here, I want to emphasize the degree to which the government has chosen to convert mistakes, or sometimes simply choices with which the government disagrees, into crimes.
It’s a complicated topic. For those who want to read into it, I recommend Harvey Silverglate’s Three Felonies a Day: How the Feds Target the Innocent, and a compilation of articles edited by Gene Healy, Go Directly to Jail: The Criminalization of Almost Everything.7 I will give just one example to illustrate a problem that has spilled into many aspects of American life, the responsible corporate officer (RCO) doctrine.[8]
The RCO doctrine made its appearance in 1943, when the Supreme Court held that a corporate executive could be found guilty under the criminal provisions of the Federal Food, Drug, and Cosmetic Act because the “legislation dispenses with the conventional requirement for criminal conduct—an awareness of some wrongdoing. In the interest of the larger good it puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.”9
So there was the rationale: a public danger involving health and safety. But it was a dodgy argument from the beginning. To find someone guilty of a criminal offense, just how close did the “responsible relation to a public danger” have to be? We’re talking not about sleazy corporate executives who are guilty of things that everyone considers malum in se—cheating, lying, defrauding—but executives who are going about their jobs at their personal levels of competence, which differ, but acting in good faith. Recognizing how dodgy it was, the RCO doctrine was for many years applied only to misdemeanors or offenses involving light penalties. Also, as one Supreme Court Justice approvingly observed, the RCO doctrine had been enforced in a way that “does not do grave damage to an offender’s reputation.”10
But as time went on the net broadened. In 1975, the Supreme Court ruled that not only could the RCO doctrine dispense with awareness that an action was wrong (mens rea was unnecessary), it could dispense with the element of wrongful action. An executive could be found guilty for a crime of omission.11 Prosecutors became more aggressive, seeking not only large fines but also jail time for RCO convictions. Here’s just one case to illustrate what’s happened on this slippery slope.
The defendant was Edward Hanousek, a manager for a railroad company in Alaska.12 A backhoe operator working under him accidentally ruptured an oil pipeline while removing rocks from a section of track. Hanousek was off duty at the time. He was nowhere near the site. He was nonetheless convicted of unlawful discharge under the Clean Water Act, on grounds that he was guilty of negligent failure to supervise, and sentenced to six months in prison, six months in a halfway house, and a $5,000 fine. The verdict was affirmed by the Ninth Circuit Court of Appeals. The Supreme Court refused to hear his case.
Did Hanousek make any mistakes in his own supervisory role that deserve criticism? As is usual in such cases, the defendant had made judgment calls that the prosecution said were obviously wrong and the defense said were reasonable choices given the circumstances and standard professional practice. But under the Supreme Court’s guidance, gross incompetence or negligence was not necessary to send Hanousek to jail. We have reached a state of affairs in which everything that has a bad outcome in an enterprise governed by state or federal law can have a culprit who is liable under standards of civil negligence or even, as in the Hanousek case, criminally liable.
To readers who have even a moderately complicated job, and especially to readers who supervise employees, this is nightmarish. In any complicated job, people make daily judgments about how things should be done. Some are right, some are wrong. Some have consequences, good or bad. Other factors besides one’s own decisions are constantly affecting the events that vindicate or discredit those judgments, so that it becomes unclear whether your good or bad judgment is really related to outcomes deemed good or bad. To have done nothing wrong but rather to have failed to take an alternative course of action that might (but not necessarily) have avoided the bad outcome, and then be taken to court—and occasionally even to prison—for it is to enter a Bizarro world that bears no resemblance to what most people have in mind when they think of “the rule of law.” And it happens in today’s America.
In the Hanousek case, Justice Clarence Thomas dissented from the Supreme Court’s refusal to hear the case. “I think we should be hesitant to expose countless numbers of construction workers and contractors to heightened criminal liability,” he wrote, “for using ordinary devices to engage in normal industrial operations.”13 For that, at bottom, was the environment in which Hanousek’s “crime” was committed.
When the rule of law makes us criminals for making an unintentional mistake—or for failing to act as perfect hindsight says we should have acted, even though it is not at all clear that our behavior was even a mistake—how are we defining lawfulness?
Civil law that is sufficiently arbitrary and capricious is indistinguishable from lawlessness.
Civil law’s counterpart to mens rea is negligence. Negligence is when you fail to fix the rickety step leading up to your front porch, it collapses under a visitor’s weight, and he breaks his ankle. You meant no harm, but you’re nonetheless on the hook for the victim’s medical expenses, maybe his lost income, and perhaps his pain and suffering. You were negligent, and you are obligated to make the victim whole, or as whole as possible.
This makes sense, in the same way that being punished for doing things that are malum in se makes sense. But what if you were not negligent, and are still liable for damages? What if you are fined or even imprisoned for failing to obey a pointless government regulation?
The government’s regulation of workplaces no longer consists primarily of sensible precautions involving the safety of tunnels in coal mines or the safety of areas near whirring buzz saws. They include the proper latching devices for storage bins in bakeries.[14] Suppose you’re a dentist. To find out what you need to do to comply with government regulations affecting your workplace, you can buy the 2015 OSHA Manual for Dentists for just $199, plus shipping and handling, and then work your way through its 307 pages.15 But you’ll be glad to know that your $199 also buys you a “Do-It-Yourself Documentation Kit” that will enable you to “prepare your facility for OSHA inspection.” It is 102 pages long.
If you think bakeries and dentists are atypical, Google whatever business comes to mind along with the words “OSHA” or “EPA” and take a look at some sample regulations for yourself. My point is that bakers and dentists alike rarely come across a regulation and say to themselves, “I guess I can’t get away with that anymore,” or “I guess that really is unsafe; I’m glad it was brought to my attention.” As they pore over the regulations, they are instead spending most of their time discovering all the ways they could be breaking laws that have no relationship whatsoever to negligence. But they can be fined large sums of money for failing to do precisely as the government demands.
These thousands of regulations and their interpretations are sometimes so nonsensical, it is hard to believe that the people who wrote them could be serious. Suppose, for example, that you want to clean a piece of machinery with a cleansing solvent. I give you two choices. You may pour the solvent onto a rag, rub down the machine, and throw the rag into a trash can; or you may pour the same amount of solvent onto the surface of the machine, use an identical rag to wipe the machine down, and throw away the rag into an identical trash can. What’s the difference between these two procedures? Using the right one leaves you a law-abiding citizen. Using the wrong one makes you guilty of an environmental crime. Can you guess which is which? No? Can you guess what the offenses are? No? Don’t worry, the EPA, using the provisions of the Resource Conservation and Recovery Act of 1976, knows the difference. They’ve written a memorandum about it.16
The phrase “arbitrary and capricious” that I use to label this form of lawlessness is a legal term that will return to play a major role in Part II. It is potentially the regulatory state’s point of greatest vulnerability. In the meantime, I make this simple assertion: Punishment for failure to observe an arbitrary and capricious regulation is indistinguishable from punishment for failing to obey the arbitrary and capricious demands of an absolute ruler. It is a form of lawlessness.
Law that is sufficiently complex is indistinguishable from lawlessness.
An excellent informal statement of the rule of law was given to us by James Madison in Federalist #62:
It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?[17]
A large proportion of federal laws passed in recent years fit Madison’s description of bad law.[18] Sheer length often defeats clarity. The Sarbanes-Oxley Act of 2002, which overhauled the rules for financial disclosure by corporations, is 810 pages long.19 The Patient Protection and Affordable Care Act—Obamacare—is 1,024 pages long.20 The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in response to the financial crisis of 2008, is 2,300 pages long. It goes without saying that no individual knows how to “obey” those laws in the same way people know how to obey the laws against robbery. You know that you are obeying the law only because experts you have hired to study the law tell you exactly what to do.
Probably you are not a senior executive in a corporation, the financial industry, or the health-insurance business, nor are you a health-care provider. But here’s an easy way for you to empathize with their position: If you get a letter from the IRS saying you’re going to be audited, do you get nervous even if you have filled out your tax return in good faith?
If you have income that is not recorded on a W-2 form or deductions except the most ordinary ones, being nervous is rational. The tax code as of 2013 consisted of almost four million words—about five times the length of the King James Bible.21 It is riddled with ambiguities and special provisions. The IRS can almost always find something wrong if its agents look hard enough, no matter what tax preparation software you used and no matter how faithfully you tried to do the right thing.
Nor is that “something wrong” found by the IRS necessarily wrong even according to the IRS’s own rules. Periodically, some enterprising journalist gives the same set of tax documents to different tax accountants and pays them to prepare tax returns. Different accountants using the same data invariably come up with tax bills that differ, sometimes substantially. When journalists call the IRS’s phone lines asking the same tax question of different IRS advisors, they get different answers. The fact that the IRS says you owe them money doesn’t mean they’re right and you’re wrong.
You know all this. But when the IRS sends you a notice telling you that you underpaid your taxes by $1,529, what do you do? If you know that you honestly reported your financial information and carefully followed the instructions of the tax preparation software, your natural impulse would be to argue with the IRS before paying it. But usually that’s not legal. You must pay now (or be hit with penalties and interest), and then start a long and complicated legal process for getting a refund, which, even if successful, will take months or longer, many hours of paperwork, and perhaps the cost of a lawyer. If you are sensible, you pay the full amount the same day you get the notice and try to forget about it. You probably haven’t done anything wrong, but to fight it will make matters worse.
Sometimes it is impossible to comply with all the laws even when you know what they are. Owners of restaurants get nervous, or simply sigh, knowing what’s coming next, when the inspector from the municipal health department walks through the door to do a surprise inspection. They know that the inspector will find that their kitchens fail to meet at least a few of the dozens of standards they are supposed to meet, because no busy kitchen can operate in perfect compliance with all of them. In New York City, for example, a restaurant owner was fined because the temperature of cheese slices was forty-five degrees instead of the maximum permissible forty-one degrees.22 Why were the cheese slices four degrees hotter than the prescribed maximum? Because they had been taken out of the refrigerator and placed beside a hot griddle so that they could be put on top of sizzling hamburgers. But restaurant owners pay such fines, even knowing that their kitchens are serving safe food to their customers. It’s a price of doing business.
The complexity of the law often sets up a situation that is indistinguishable not only from lawlessness but from a kleptocracy. Owners of small businesses of all kinds routinely pay lawyers they can’t easily afford in order to get a decision out of a bureaucracy—not an unusual decision, just a run-of-the-mill permission to go ahead with some innocuous business activity. The rules and regulations are so complicated that lawyers are required. The business owners pay the lawyers for the same reason that people pay bribes in Third World countries. It’s the only way to get the government to allow you do something that the government would otherwise arbitrarily refuse to let you do. I will return to this theme in the next chapter.
Law that is sufficiently subjective is indistinguishable from lawlessness.
One of the best-known legal maxims is “Hard cases make bad law.” Human affairs are complicated. Any law enforced according to objective criteria of guilt or negligence is bound to yield occasional decisions that strike just about everybody as unjust. It is for such cases that judges should have some discretion, so that the injustice may be mitigated. But that’s where “Hard cases make bad law” comes in. Sensible jurists don’t want to use the exceptional case to change the law, because judges are neither omniscient nor preternaturally wise. If the objective rules are discarded, then the rule of law morphs into a modern-day version of a primitive legal system in which people with a quarrel have to accept whatever the headman of the tribe says is right. For much of American civil law, that’s not a bad description of where things stand now.
GROUNDS FOR DAMAGES. Until late in the nineteenth century, damages were awarded for tangible damage, usually physical injury or damage to property. Then the common law gradually began to include emotional distress and eventually “lost enjoyment of life” as grounds for damages. These can be legitimate grievances and, in a perfect world, with perfectly wise headmen, people who behave negligently should be held liable for such losses. The problem is how to allow such claims to be made in an imperfect world and still retain a meaningful rule of law. A broken ankle is associated with a specific range of medical bills, a specific range of work days lost, and a limited range of pain and suffering (broken ankles hurt in well-known ways). A damage such as emotional distress has no similar anchor in objectivity. It can be real, but it can also be exaggerated or faked altogether. Even when it’s real, different personality types experience different levels of emotional distress from identical events. The reaction of a jury to testimony about emotional distress can vary radically depending on whether its members are stoics or softies.23 Similar problems are associated with estimating lost enjoyment of life. Juries are routinely called upon to make such decisions, but that doesn’t mean they are in any sense assigning objectively determined awards. The parties to the suit have to hope that the headman is wise.
COMMERCIAL LITIGATION. It used to be that important commercial promises—for example, to sell property—had to be in writing or they had no standing. With a few specific exceptions, the terms of a written agreement took precedence over anything said orally. Now the courts sometimes permit suits to be filed based on “bad faith” in negotiations, even when no agreement was reached. Alleged oral promises have been enforced by the courts. Alleged verbal agreements have been given precedence over written agreements.24 Why? The headman said so.
EMPLOYMENT LAW. You are an employer who has fired a woman for incompetence. She files a lawsuit alleging sex discrimination. You provide the court with objective evidence of the woman’s incompetence on the job. But she is able to present evidence that you have in the past made sexist remarks. You can still be required to pay damages. It is known as a “mixed-motive firing.” The jury will look into your soul and decide whether the degree of your sexism was great enough to trump the woman’s demonstrated incompetence. Now you are not just taking it to the headman; you’re taking it to the shaman.[25]
Law that is sufficiently discretionary is indistinguishable from lawlessness.
A former member of the US Attorney’s Office in New York has written about a popular training exercise among the staff: Name a famous person and then tell the junior prosecutors to figure out a plausible crime that could be pinned on him. The junior prosecutors win the game by finding the most obscure offense that fits the character of the celebrity and carries the toughest sentences.26
It’s not just a game. Ask Martha Stewart or Michael Milken. Their high-profile cases, involving defendants who could afford the finest legal representation, resulted in jail time for both. Informed legal opinion approaches a consensus that neither Stewart nor Milken committed an offense that ordinarily would have resulted in prosecution, let alone jail time. Stewart was convicted of making false statements to federal investigators about an insider-trading case that, a federal judge ruled, had so little merit that “no reasonable jury could find guilt beyond a reasonable doubt.”27 In Milken’s case, the judge threw out the only real criminal charge, insider trading, leaving charges of violating financial regulations that, as the prosecutor in the case later acknowledged, amounted to “criminalizing technical offenses.” The regulations in question hadn’t ever been charged as crimes before, nor have they been charged as crimes since.28 Facing a trial that could have sent him to jail for many years, and told that the prosecutors would go after his brother if he didn’t capitulate, Milken accepted a plea bargain.
These are the famous cases. Abuse of prosecutorial discretion also happens without publicity to people who have fallen under the scrutiny of a regulatory agency. Suppose the EPA becomes aware of a violation of one of its regulations. Evidence of that violation may be used to initiate informal negotiation with the offender or to seek administrative penalties, judicially imposed civil penalties, or criminal prosecution. The choice can make a life-changing difference to the defendant.
Which does the EPA choose? It has guidelines that look good on paper—the more severe alternatives are to be reserved for severe environmental harm, for example. But if you read more carefully, you discover that the guidelines unobtrusively expand the concept of harm to include not just actual releases of pollutants but their threatened release, and permits the definition of harm to be satisfied by the failure to report a release, regardless of its significance, and by illegal conduct that represents “a trend or common attitude within the regulated community.”29 In practice, the EPA can rationalize whatever response it prefers. What is true of the EPA is true of all the regulatory agencies. They all have high-minded guidelines—which are just that, guidelines that can be interpreted virtually as the regulators see fit.
A variation on the use of discretion, both by prosecutors in the regular courts and by bureaucrats in the regulatory agencies, is to coerce the cooperation of underlings to go after the real target. The procedure is to go to a little fish, threaten prosecution if the little fish doesn’t cooperate, promise immunity if he does cooperate, and build a case around witnesses against bigger fish on the prosecutor’s wish list, all of whom are telling the story that the prosecutor wants told (as Alan Dershowitz has put it, such witnesses “are taught not only to sing but also to compose”) under the threat of imprisonment or ruinous fines if they don’t toe the line.30
It also works the other way around. Under the US Department of Justice’s “compliance and cooperation” policy, the likelihood that a corporation will be prosecuted can be reduced if the corporation cooperates with the DOJ’s investigation of the behavior of individual employees, leading to numerous cases in which, as legal scholar Jeffrey Parker has written, “corporate officers and (more often) mid-level employees were hung out to dry by their firms, who succumbed to the threat of economically devastating charges against them.”31
Variations on the same theme apply to prosecutors, from the municipal district attorney to the army of attorneys in the DOJ, plus all the bureaucrats in regulatory agencies, from municipalities to the federal government. All of them, in their different ways, can say to the people they’ve decided to go after: “You can either take your chances on litigating this case and risk everything, or you can plead guilty to a lesser offense.”
With prosecutorial discretion goes the potential for prosecutions based on personal animus or arbitrary punishment for being insufficiently respectful. “Some lawyers comment that one of the more difficult aspects of private law practice is maintaining an appropriate level of groveling to government officials,” James DeLong writes. Referring specifically to the EPA, he points out that the listed guidelines used by regulatory agencies when they decide whether to prosecute a case do not include a de facto guideline familiar to experienced defense lawyers: “Anyone who argues too hard is unlikely to be regarded as a good person. Also in jeopardy is anyone who questions the EPA staff’s intelligence or good faith, and anyone who contends that economic concerns might be as important as environmental ones.”32 If you think this is paranoid, just ask about it with any of your friends who have to deal with regulatory agencies. Many of them will have reached the same conclusion. Don’t threaten to fight the case; it will only make matters worse.[33]
There’s no alternative to some degree of prosecutorial discretion, both for practical reasons (the court system couldn’t handle the load if defendants all chose to go to trial) and moral ones (sometimes defendants should get a break). But we do not have a system in which prosecutorial discretion is limited to those justifications. We have a system in which prosecutors use their enormous discretionary powers in corrupt ways. When that happens, it is indistinguishable from lawlessness.
Law that permits the state to take private property without compensation, or to force the transfer of private property to other private individuals, is indistinguishable from lawlessness.
The last thirteen words of the Fifth Amendment, “nor shall private property be taken for public use except with just compensation,” are known as the Takings Clause or Public Use Clause. The founders were referring to the power of eminent domain—the right of the government to say to a property owner, “You have to sell us your property whether you want to or not.” Eminent domain is a necessary thing if, for example, public roads are to be built expeditiously in a direct route. It is nonetheless a scary power for the government to hold. Thomas Jefferson opposed it, wanting landowners to hold absolute control over their property.34 Madison was not so adamant, but the word he chose to put after public was use, not a broader term such as purpose or benefit.35 The plain meaning of the term is that the property in question is transferred to ownership of the government, which in turn employs that ownership for a public good of some sort. That’s what the founders had in mind. It’s not what the Takings Clause means anymore.
COMPLETE TAKINGS. The founders never even considered the possibility that the Fifth Amendment could justify the compulsory transfer of property from one private owner to another private owner, but that’s how the Fifth Amendment is now interpreted. It began in the early 1950s, when Congress passed an urban-renewal program that would condemn large sections of the impoverished southeast quadrant of the District of Columbia for redevelopment activities that would include the sale of some of the land to private developers (Congress at that time controlled the government of the District of Columbia). When a department-store owner objected, the Supreme Court ruled in Berman v. Parker (1954) that the District’s program was constitutional because it involved a public purpose. Public purpose was deemed to fall under the definition of public use. It was a classic case of good intentions making bad law. The part of southeast DC to be condemned really was a terrible slum, and it would have been a good thing if somehow it could have been transformed into a livable neighborhood (it wasn’t).
The predictable happened: Berman v. Parker was the thin edge of the wedge. Over the decades, courts routinely deferred to legislatures and planning commissions that wanted to improve blighted communities. The definition of blighted was applied not just to terrible slums but to any neighborhood that wasn’t up to snuff, and then to neighborhoods that were just fine, on grounds that, for example, razing the neighborhood to provide space for a General Motors plant would yield “public benefits.”36 By 1984, Sandra Day O’Connor could write that “where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.”37
In 2005, the Supreme Court put the final nail in the Public Use Clause in Kelo v. City of New London. The case was as clear as could be. The home-owning plaintiffs lived in a well-maintained, long-standing working-class neighborhood. The land was being seized to facilitate Pfizer Corporation’s construction of a research facility, providing space for a luxury hotel and conference center, a marina, eighty new residences, and a large office complex. There were other outrageous aspects to the case, but it is enough to say that the Court ruled 5–4 in favor of the city, ratifying by Supreme Court precedent the evolution from “public use” to “public purpose” to “public benefit” that had been occurring in lower courts since Berman v. Parker in 1954. What it means is that if your property is worth a lot more to someone else than they want to pay, and that person or entity can offer enough goodies to the city where you live, you can be forced to sell so that someone else can make a lot of money, and you don’t have a legal leg to stand on, even if your appeal reaches the highest court in the land. It’s all perfectly constitutional.
PARTIAL TAKINGS. A de facto taking has also occurred if a government action restricts your free use of your property by declaring that you may not build on the property, or farm on it, or otherwise must refrain from using the property as you see fit. Many of these actions—ones that directly impinge on the public’s safety, health, and welfare—have always been widely accepted as legitimate as an exercise of the government’s police power. Such is the justification for building codes that reduce the likelihood of fire or collapse, or for sanitation regulations that help prevent epidemics. Zoning regulations have withstood constitutional scrutiny on similar grounds. These limitations on “using the property as you see fit” have another characteristic: almost everyone within a given community shares the cost. All property owners have to build structures that conform to the sanitation regulations, bearing the additional costs of those regulations. Even people who rent are indirectly helping pay those costs, which are passed along in the form of higher rents.
The redevelopment project that was to serve a wonderful public purpose for the people of New London never happened. The private developer couldn’t get financing and abandoned the project. As of the end of 2014, what used to be a neighborhood of family homes was still vacant land.
Is this the courts’ fault? After all, the courts that heard the case could not conduct an independent economic analysis of the project. But the judges could have asked for evidence that commitments of financing for the proposed project had been secured from banks or financing was guaranteed by the municipality. They were deciding whether to expel citizens from their homes so that other citizens could have their land. Such a momentous violation of citizens’ rights should require more than politicians’ assurances to the court that the project is a really cool idea.
When does the government’s authority to limit property rights cross the line from legitimate to lawless? Historically, “using the property as you see fit” had a simple, elegant formulation in common law: sic utere tuo ut alienum non laedas, meaning “use what is yours so as not to harm what belongs to others.”38 It provided an intuitively lawful framework for deciding how the government might limit the rights of property owners, and distinguishing between the limitations that did and did not require compensation. Thus a law that forbids a property owner from polluting his neighbor’s water doesn’t require the government to compensate him, because the government isn’t taking away anything that the property owner had a right to in the first place.
When instead the government limits the rights of some property owners but not all in pursuit of some less immediate public good—protecting the habitat of an endangered species, for example—it is in effect asking the property owner to give up some or all of the value of his property on behalf of others who do not have to pay. The Takings Clause of the Fifth Amendment would seem to require that he receive just compensation. But in Penn Central Transportation Co. v. New York in 1978, the Supreme Court decided against the default assumption that compensation is owed. Instead, Justice Brennan, writing for a 5–4 majority, announced that it was the Court’s duty to determine “when ‘justice and fairness’ require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons.”39 In this particular case, the cost to Penn Central was $150 million in lost property rights caused by the designation of Grand Central Station as a New York City landmark. The Court decided that a $150 million loss didn’t qualify Penn Central for compensation.
Once the burden of proof was lifted from government, the predictable again happened. The Penn Central decision was subsequently and successfully used to dodge the requirement for compensation in a broadening range of partial takings. At the same time, the federal government was getting into the partial-takings business on a massive scale. The National Environmental Policy Act (1970), the Clean Air Act (1970), the Clean Water Act (1972), and the Endangered Species Act (1973), among others, gave federal regulatory agencies the power to prescribe how property owners might and might not use their property, and none of those exercises of power have been subject to a requirement for compensation.40
The lawless characteristic of such takings depends on their timing. If laws restricting the use of a given piece of land are already in place when someone is considering whether to buy it, there could be an issue about whether those restrictions are constitutional, but the Supreme Court can (and has) ruled on their constitutionality. One may disagree with the Supreme Court’s understanding of the Constitution without justification for calling them lawless. If, however, the restrictions are retroactively applied to land that someone has already bought, a tincture of lawlessness comes into play. The more egregious the retroactive taking, the more lawless the behavior of government. In recent decades, those takings have become egregious.
These manifestations of lawlessness by no means exhaust the list. In the interests of concision, I have omitted discussions of issues that are already being widely discussed: the increasing militarization of the police, manifested in indiscriminate use of SWAT tactics in making arrests for people suspected of minor offenses; the increasing aggressiveness of social service agencies in defining parenting behaviors as crimes; and civil forfeiture laws that allow the state to confiscate private property that has been associated with the commission of a crime, even though the owner of the property neither participated in nor had any knowledge of that crime.41 These manifestations of lawlessness are important but, fortunately, are already meeting increasing public resistance. They backstop the point I have been making through more technical legal developments: lawlessness in contemporary America does not consist of a few aberrant cases but is systemic.
Readers who want to get a more detailed sense of the current state of affairs may go to the sources cited throughout this chapter. The best single compilation of academically oriented analyses is a 2013 collection of articles by leading legal scholars, The American Illness: Essays on the Rule of Law, edited by F. H. Buckley. Books for a general audience, in addition to ones already mentioned, are Philip Howard’s The Death of Common Sense, Life Without Lawyers, The Rule of Nobody, and The Collapse of the Common Good, and Walter Olson’s The Litigation Explosion and The Rule of Lawyers.42
How did we get into this mess? To some extent, the increasing complexity and subjectivity of the law have been encouraged by changes in technology, affluence, and the nature of an industrial economy. But these were enabling conditions, not primary causes. Ideas have consequences, and few ideas have had more consequences than those that were originally advanced by the progressives of the late nineteenth and early twentieth centuries. In the case of the legal system, the progressives succeeded in imposing on the nation (for the changes did not arise from any popular demand) a radically new way of thinking about the legal system: the purpose of the law was not only to administer justice but also to serve progressive social purposes. To make a complicated story easier to follow, I will separately trace strands that in reality were intertwined. In this chapter, I discuss the judiciary’s unleashing of the lawsuit and Congress’s instigation of lawsuits. They transformed the civil legal system. In the next chapter, I take up the creation of a separate legal system for creating and enforcing federal regulations.
Lawyers have been prominent in American political life since before the Revolution. In civic life, however, lawyers used to play a surprisingly unobtrusive role. They spent most of their time performing basic legal services—preparing wills, contracts, and deeds, for example—and resolving disputes through mediation. Most potential lawsuits were settled out of court, early and quickly, with modest compensation. Lawsuits that went to trial were almost always completed in a few days. Judgments were small. Punitive damages were not only rare and small; they were declining in the early part of the twentieth century and were even abolished in several states.43
Litigation played such a small role in American life partly because it was expensive even then but also because it was seen as something to be avoided whenever possible and never to be encouraged, and almost all lawyers shared that opinion. I italicize that point because it must seem so implausible to a contemporary reader.
It was a view that lawyers had held about their profession for two millennia. William Blackstone, writing the Commentaries in the eighteenth century, inveighed against lawyers who instigated litigation, calling them “pests of civil society, that are perpetually endeavoring to disturb the repose of their neighbors, and officiously interfering in other men’s quarrels,” pointing out that lawyers who did such things in Roman times were punished by forfeiture of a third of their goods “and perpetual infamy.”44 Walter Olson describes the view that prevailed as recently as the 1950s in the United States:
[Litigation] was grossly invasive of privacy and destructive of reputation. It was acrimonious, furthering resentments between people who might otherwise find occasion to cooperate. It tended to paralyze productive enterprise and the getting on of life in general by keeping rights in a state of suspense. It corrupted its participants by tempting them to harass each other and to twist, stretch, and hide facts. It was a playground for bullies, an uneven battlefield where the trusting, scrupulous, and plainspoken were no match for the brassy, ruthless, and glib. For all that, it was sometimes the least bad of the extremities to which someone might be reduced; but society could at a minimum discourage it where it was not absolutely necessary.45
America’s legal profession had erected three deterrents to litigation. First, ethics. The American Bar Association’s Canons of Professional Ethics explicitly forbade “stirring up litigation, directly or through agents.”46 To do so was not only ethically wrong but also against the law in many states. The second line of defense drew on the rules of legal procedure, which at that time made it difficult to bring suits without a clear basis, limited the right of discovery without good cause, and protected a citizen’s right not to be sued except in his own court and under the laws of the place where the contested action took place. The third line of defense was based on explicit, objective, legal rules to govern the usual sources of litigation—activities such as the sale of land, terms of employment, and product liability. Sometimes these rules were part of the common law governing lawsuits that involve harm (tort law), but, given the option, the courts preferred well-written contracts as a way of avoiding litigation altogether. A well-written contract relieved the court of having to make judgments about what the rights and obligations of the parties “should” have been. The parties themselves had agreed to their respective rights and obligations, and the court needed only to interpret whether the contract had been honored. With a well-written contract, this was usually so straightforward that lawsuits were not brought: it was too obvious who would win.
Then the progressives came along. In part, they believed that the legal system could serve social justice by shifting the costs of the hazards of modern life from individuals to businesses through reforms in tort law. In part, they believed that litigation was a force for good—if people were given enough access to the courts, and if judges could get enough information, and if the examination of that information was sufficiently thorough, then problems left unresolved or inequitably resolved in the bad old days could be decided with ontological fairness.
The Adoption of Strict Liability
The progressives’ victory manifested itself first in its overthrow of the traditional role of negligence. The centuries-old purpose of tort law had been to compensate—“make whole”—a person who had been harmed by the negligence of another. If no negligence was involved, no compensation was owed, no matter what harm the plaintiff had suffered. It was further assumed that a case warranting the intervention of the law was unusual. In the words of legal scholar George Priest, “Tort law sought no more than to compel redistribution where one person harmed another through an action that substantially departed from the status quo.”47
As far back as the early 1900s, prominent progressive jurists such as Benjamin Cardozo, Roscoe Pound, and Louis Brandeis began talking about a new way of looking at tort law. It would not merely compensate individuals for harms done through negligence but also redistribute the societal costs of misfortune. The logic went like this:
Accidents and other unfortunate events happen. People suffer losses or harms. When they instigate litigation and are successful, they get relief. When corporations are the defendants, they almost always have more resources than the people who have been harmed. Why not use tort law as a form of insurance that puts the burden of paying for accidents and damages on those who are best able to pay? Why not use tort law as a tool for improving society by making manufacturers and the providers of services so vulnerable to damages that they are motivated to make safer products and provide safer services? It was called strict liability—meaning that a defendant could be forced to pay even if no negligence was involved.
STRICT LIABILITY FOR PRODUCTS. Manufacturers of products were the first to be subjected to this new view of tort law. Justice Roger Traynor of the California Supreme Court began the process in 1944 in his concurring opinion in Escola v. Coca-Cola Bottling Company. A Coke bottle had exploded in a waitress’s hand, injuring her. The case was decided on the basis of res ipsa loquitur (the thing speaks for itself), because there must have been negligence somewhere along the line or the bottle wouldn’t have exploded. But Traynor’s concurring opinion stated that the court should have said that negligence didn’t have to be proved, and instead that strict liability applied. His opinion was widely read and attracted an influential legal following. Nineteen years later, in 1963, Traynor wrote the court’s majority opinion in Greenman v. Yuba Power Products, Inc., finding for the plaintiff on grounds of strict liability.48
Traynor was promoting an idea whose time had come. A year later, in 1964, the American Law Institute came out for strict liability for defective products in its Second Restatement of Torts. Within a few more years, strict product liability had been incorporated into tort law throughout the country. A manufacturer who was in no way negligent could nonetheless be found liable for damages.
Strict product liability has many attractive features. In the simplest case, it is merely a subcategory of negligence. Suppose there are two ways of making a product, both of which cost the same amount of money, but one of which makes the product safer. Under the old tort system, the manufacturer had no external incentive to find the second, safer way to make the product. Under a doctrine of strict liability, that incentive exists. In technical terms, the goal is efficiency, meaning that the legal rules lead manufacturers to internalize the cost of undetected harms but not go to such lengths that the losses outweigh the gains. The field of law and economics has produced many shelves of books and articles on such questions.49
If that were the end of the story, then strict product liability would be a clear plus. It’s not the end of the story, however, for many reasons that are not my topic here.50 One of the simpler ones is that consumers pay a lot of money for strict liability. In the case of intrinsically dangerous products such as ladders and machine tools, a large portion of the sticker price is owed to the high liability-insurance costs the manufacturer must pay no matter how well designed the product is. A less quantifiable and yet more serious problem is this: Under a regime of strict liability, the law requires people to enter a field at their own risk, bearing any costs from accidents no matter what. That’s fine if you want to manufacture Coke bottles. What if you want to design a new surgical instrument? A new small airplane? Even if your design leads to a product that is superior to its competitors, even one that is safer, anything that goes wrong with it will leave you open to lawsuits in a system where settlements can be so large that they bankrupt you. So do you try to bring your new and better product to market, or find something less risky to do?
It’s not a theoretical problem. The expected liability costs of a new product are so high that many improvements, including safety improvements, are not brought to market. An empirical analysis of states that did and did not implement product-liability reform from 1981 to 2000 indicated that tort reform that reduced manufacturers’ liability was associated with 24,000 fewer deaths compared to states that did not introduce tort reform.51
DE FACTO STRICT LIABILITY FOR SERVICES. At least a product is a thing, with a design that can be inspected and conclusions about its functioning that can be drawn based on the laws of physics. For products, a strict-liability regime can be made to work with modifications that protect innovators.
Technically, a strict-liability regime applies only to products, and negligence remains the standard in other kinds of tort actions. But in practice, the economic concept of internalizing the costs of injuries has infiltrated the rest of tort law. The idea is that providers of services should be compelled through the tort system to take the prospective cost of accidents into account as they make their decisions about how to go about their work.52 Instead of rules of negligence that hold the homeowner responsible for failing to repair the rickety step, for example, they have evolved toward a vague “there’s some conceivable way that the defendant could have avoided causing this injury” kind of logic.
That’s why you see so many public swimming pools without diving boards. Given the way that the tort system now interprets negligence, putting up warning signs and having lifeguards on duty does not necessarily protect the city from being sued if a diver is injured. It’s the same reason that elementary schools dismantle their jungle gyms, and the reason that in so many airports you are driven mildly nuts by the voice endlessly repeating, “Caution, the moving walkway is ending.”53
Another effect of the de-emphasis on the traditional understanding of negligence speaks to lawlessness. From the lawyers’ viewpoint, strict liability simplifies tort law by removing subjectivity. Reaching a decision under the old negligence standard required answers to several questions. What was the defendant’s duty? Did the defendant fail in that duty? Did the plaintiff use normal care in the use of the product? Answering those questions can be highly subjective. Strict liability comes down to a simpler proposition: “If you acted and thereby caused harm, you pay that harm.”
But that’s how lawyers look at it. From the viewpoint of manufacturers of products and providers of services, being found liable these days can feel like being struck by lightning. Under the traditional negligence doctrine, a defendant who had lost a lawsuit might walk out of the courtroom feeling that the justice system had failed because the jury wrongly deemed him to be negligent. The jury made a mistake. But under the strict-liability doctrine, fault—moral culpability—is not even an issue. The legal system doesn’t need to find that you did anything wrong to make you pay. That feels like lawlessness.
Lowering the Bar for Bringing a Lawsuit
If you were hit by a lawsuit prior to the 1930s, you at least had this comfort: the lawsuit was certain to begin with a “pleading” that spelled out the allegations against you in detail. Furthermore, the plaintiff had better come to the court prepared to prove those allegations—he had “to win upon the facts stated in the complaint or not at all.”54 The plaintiff couldn’t go on fishing expeditions and could not use a lawsuit simply to vent his grievances against the defendant. The rationale for detailed pleadings was compelling: it meant fairness for the defendant, who had a right to know why he was being hauled into court, and a means of keeping the courts from being filled with frivolous complaints.
The downside was that gathering information for the pleading could be expensive, which might prevent worthy cases from getting a hearing. Once again, the progressives had a better idea: let the plaintiff who thought he had a legitimate grievance come to court unsure of all the facts, after which would come a period during which both sides were compelled to hand over relevant information to the other side before the case was finally heard in court—what we now know as “discovery.” When the first Federal Rules of Civil Procedure (FRCP) were adopted in 1938, they changed the old evidentiary requirements for a pleading to what was called a “notice pleading,” which put the defendant on notice that he was being sued, along with a general statement of the subject of the allegation, with no need for details.55 The state courts gradually followed suit.
The floodgates were opened. Attempts to retain any element of seriousness in the initial “notice pleading” fell apart with a 1946 court decision that allowed a frivolous allegation of plagiarism against Cole Porter to go ahead, on grounds that if by some miracle the allegations turned out to have any factual basis, then the plaintiff would be entitled to damages; hence, it was appropriate to proceed.56 And so fishing expeditions became legal. The plaintiff was free to throw a barrage of accusations against a defendant with no evidence that any of them were true, and then shift the grounds of the suit depending on what was found during discovery.
This is one area in which the Supreme Court has moved to tamp down the worst excesses. In 2007, the Court’s decision in Bell Atlantic Corp. v. Twombly revised the previous, extremely loose, standard enunciated in Conley v. Gibson (1957).[57] The Court did not return to anything resembling the pre-1930s requirement for pleadings. “Here the Court is not requiring heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face,” Justice Souter wrote for the seven-justice majority. “Because the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.”58 While the standard remained loose, it did ask for an indication that there was at least smoke, if not fire.
The Broadening of Discovery
Discovery—the process by which each side can compel the other to hand over materials that might be relevant to its case—had been around since the nineteenth century, but the rules limiting the information that could be sought were strict.59 The same 1938 Federal Rules of Civil Procedure that allowed the “notice pleading” also revised the rules for discovery. Formerly, discovery could be used only for eliciting evidence that supported one’s own case, not the opponent’s. Under the new rules, each party could ask for anything that related to the “subject matter” of the litigation—which, of course, lent itself to expansive definitions. Furthermore, discovery could probe into hearsay, opinion, and other forms of evidence that would not be admissible at trial if it could be argued (and it always could) that such information could lead to other evidence that would be admissible. Depositions went from interviews that usually lasted no more than a few hours to grueling marathons that can go on for days, sometimes weeks. The most intimate details of people’s lives could be laid open, with no more justification than that such information might conceivably help the opponent’s case.
In 1970, discovery took another ominous turn. The 1938 FRCP had continued to limit the documents that could be requested. In 1970, the FRCP were amended to allow litigators to demand any documents that they wished, with no requirement that a demand had to be accompanied by an explanation of cause.60 In the case of individuals, this was still another invasion of privacy and a burdensome task, but individuals usually have just a few file cabinets’ worth of documents. When corporations are sued, responding to requests for discovery can mean going through millions of documents. Furthermore, these requests can be made of third parties who are neither plaintiffs nor defendants, sometimes costing them millions of dollars when they don’t even have a dog in the fight.
The old requirements for filing a lawsuit were not perfect. The demands for particulars in the traditional pleading were arguably too strict, putting too much of a burden on a wronged individual. But the cure—“Let ’em sue, and then sort out whether there’s anything to it”—was worse. Walter Olson puts it nicely: “Fearful of being accused of pettifogging specificity, the American courts instead made themselves into a place where nothing was secure and anything could happen. What began as a page out of Dickens ended as a page out of Kafka.”61
The last change in the civil procedure may sound innocuous to the layperson: it became possible to file suit in places other than the location where the alleged harm was done. The term of art is forum shopping, whereby the plaintiff finds a place to sue where he is most likely to have success.
For a long time, forum shopping was not permitted. The right to be sued at home went back to the Roman legal maxim Actor forum rei sequitur, “The plaintiff must pursue the defendant in his forum.” The principle was embedded in the English common law and adopted in American common law as well.
Some limited exceptions to the right to be sued at home crept into the common law to accommodate the interstate presence of corporations and, later, the growth in interstate travel by private citizens. But it was once again left to the Supreme Court of the New Deal era to introduce radical change to long-established practice. In International Shoe Co. v. Washington (1945), the Court announced that due process requires only that the defendant “have certain minimum contacts with [a state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”62 You can’t figure out what that means? Neither could anyone else. By the 1960s, both corporations and individuals could be compelled to travel to distant states to defend themselves. As time went on, it even became possible to bring suit in a state that was not where the event happened, nor where the defendant lived, but where the plaintiff lived—a precedent established in 1967 by the California Supreme Court, when a California resident was permitted to bring suit in California against a defendant from Nebraska for a traffic accident that occurred in Nevada.63
The issue here is not whether people in one state can be sued by people in other states who feel they were wronged. That has always been possible. The issue rather is where the suit must be brought—my place or yours. Different jurisdictions have different laws governing the many issues that a suit might entail. Different localities have different standards: juries in big cities tend to give larger awards than juries in small towns; juries in the Bronx tend to give bigger awards than juries in Staten Island. The result of the practice opened up by International Shoe and other decisions affecting federal courts was forum shopping on a grand scale, as plaintiffs flocked to the places where they could expect the best deal.64
The Abandonment of Lawyerly Self-Restraint
The ethical stipulation against “stirring up litigation” in the ABA’s Canons of Professional Ethics still remains, but it has been made toothless by advent of widespread legal advertising. In 1976, the Phoenix law firm of Bates and O’Steen started advertising their rates. The State Bar of Arizona initiated disciplinary proceedings. Bates and O’Steen took their case to the Arizona Supreme Court, which upheld the disciplinary judgment. They then appealed to the Supreme Court, which, on June 26, 1977, rejected the state bar’s ban. All those billboards and TV ads you now see urging people who have mesothelioma or who suffered any kind of accident to get a lawyer are owed to Bates v. State Bar of Arizona.
Like so many issues involving the law, we have contending values: maximizing the availability of legal recourse to people with unredressed injuries, and minimizing the degree to which lawyers act as “pests of civil society, that are perpetually endeavoring to disturb the repose of their neighbors.” It goes without saying that a law banning advertising by lawyers would be a violation of the First Amendment. The first lawyers who decided to test their right to advertise were bound to win, and once that happened, it was inevitable that advertising would become widespread, and it would not be limited to advertising fees. Lawyers would advertise the possibility of getting financial awards at no risk (see contingency fees below). For good or ill, advertising has indeed been a powerful force for stirring up litigation.
The spread of legal advertising interacted with an element of the American legal system that was already in place: contingency fees. Contingency fees pose difficult questions of ethics. Elsewhere in American society, professional conflicts of interest are routinely recognized and guarded against by the professions themselves. Journalists are supposed to disclose relationships they have with people, businesses, or products they write about. Professional sports leagues do not allow their athletes to bet on sports, even if they’re betting that their own team will win. Tax accountants do not charge clients based on how many ways to avoid taxes they can find. Physicians do not charge based on whether they cure the patient’s health problem. People working in each of those professions understand the incentives for bad behavior that would be created by such practices. The same incentives for bad behavior are promoted by contingency fees for attorneys, which are legal in every state and have been since 1960.
The proponents of contingency fees make two powerful arguments in response. First, contingency fees provide a way for people who can’t afford a lawyer to pursue their legitimate legal claims. Second, contingency fees have a built-in safeguard: The attorney makes money only if the suit succeeds; hence, contingency fees weed out weak cases.
Until the revolution in liability, the advantages of contingency fees probably outweighed the conflicts of interest they engendered. In the old days, winning a case involved a single client and a modest reward. A lawyer who accepted a contingency fee knew that he would probably have to take all but the strongest cases to court—it was hard to get corporations to settle out of court when mounting a strong defense didn’t take that much time or money.
By the mid-1960s, all that had changed. With strict liability in place, the ability of the plaintiff to impose large discovery costs on the defendant, and the increasing propensity of juries to award punitive damages, made even the richest corporations eager to avoid a trial. Attorneys could profitably accept weak cases that couldn’t win in a courtroom.[65] Add in the rise of class-action suits, and the potential rewards of taking a case on contingency rose from “usually modest” to “perhaps wealth beyond the wildest dreams of avarice.” Advertising in this milieu gave attorneys a way to chase ambulances on a wholesale basis.
Blackstone’s condemnation of lawyers who instigate litigation as “pests of civil society, that are perpetually endeavoring to disturb the repose of their neighbors, and officiously interfering in other men’s quarrels” takes on a special irony in the context of today’s civil society. One of the chief instigators of that litigation is government at both the state and federal level.
The term of art for this kind of legislation is private enforcement regime. Reduced to its basics, legislation that demands compliance with a set of new noncriminal regulations needs to have an enforcement mechanism. Congress can assign enforcement responsibility to a government agency such as the EPA, or it can pass legislation that creates incentives for citizens to enforce the regulation by filing lawsuits against people or businesses in violation of it. The latter alternative is a private enforcement regime.
Creating these incentives is simple. For a plaintiff, the expected value of filing a lawsuit is the expected size of the settlement times the probability of winning, minus the expected legal costs. Legislation can affect all three of those variables. Congress can increase the expected size of the settlement by stipulating that successful plaintiffs can be awarded a multiple of the actual damages (called “damage multiples”). Congress can reduce the expected legal costs by stipulating “plaintiff fee-shifting,” whereby defendants are required to cover most or all of a plaintiff’s legal costs if the plaintiff wins but not vice versa. Congress can increase the plaintiff’s likelihood of winning by wording the regulation so that it gives plaintiffs a low bar for proving their cases.
The first two mechanisms, damage multiples and plaintiff fee-shifting, are the most common components of a private enforcement regime. The use of damage multiples, though unusual, goes far back in common law. The first use of plaintiff fee-shifting occurred in the Civil Rights Act of 1870, in an attempt to help African Americans who were trying to protect their voting rights.66 Plaintiff fee-shifting was also inserted in the federal government’s first significant regulatory legislation, the Interstate Commerce Act of 1887. The Sherman Antitrust Act of 1890 was the first legislation to use both plaintiff fee-shifting and damage multiples (triple). The purpose of these mechanisms was explicitly stated in the floor debate over the bill: it was necessary to depart from long-standing common law on attorney fees and damages so that private litigants could be mobilized in the effort to bring the great monopolists under control.67
As in the case of so many reforms that began during the Progressive Era, the short-term results were minor and the long-term results were momentous. In this instance, Congress passed only forty-two private enforcement regimes from 1887 through 1963. The surge of regulatory legislation from the Johnson administration onward was accompanied by an equally steep surge in private enforcement regimes. The figure shows what happened from 1887 to 2005.68
This is one of the rare instances when social-engineering legislation had its intended outcome. Congress was asking for citizens to litigate, and they did. The rise in the private statutory litigation rate shown in the figure tracks closely with the increase in private regulatory regimes.69 So effective have these incentives been that lawsuits filed by private citizens to enforce federal statutes have recently been averaging 160,000 annually.70 By way of comparison, OSHA carries out fewer than 30,000 workplace inspections annually.
Private enforcement regimes are spread broadly among policy areas.71 Their greatest commonality is the target: 84 percent of private enforcement regimes provide incentives for actions against private entities. Only 9 percent of those regimes also create incentives for citizens to sue state governments; only 17 percent create incentives for citizens to sue the federal government.72
Are these incentives a good thing? On the plus side, they make it easier for wronged individuals to obtain redress. On the negative side, they make it easier for plaintiffs to get money from innocent defendants. How those two balance out cannot be determined quantitatively. Even if it could, the result would leave open a value judgment. In a completely just world, what would be the appropriate ratio between plaintiffs rightly compensated and defendants wrongly punished? What is known for certain is this: private enforcement regimes enacted by the federal government in combination with the unleashing of the lawsuit by the legal system have transformed the role of the lawsuit. In the words of George Priest, “Tort law in the United States was radically reformed over the past 50 years from a relatively minor mechanism for dealing with a small subset of accidents into, today, an institution that conceptually aspires to regulate all industries and social activities, making it the most significant regulatory body in American society.”73
The explanation in four words: the trial lawyers’ lobby. Some states have been able to overcome its influence, but it is so influential in national politics that it is unrealistic to expect Congress to accomplish more than cosmetic reforms.74
On a more optimistic note, the Supreme Court has moved to clean up some of the excesses of civil litigation. Earlier, I mentioned the somewhat tougher standard for pleadings that the Twombly decision promulgated. The Supreme Court has in recent years also handed down decisions that have made it easier for federal judges to issue summary judgments, made it easier to keep junk science out the courtroom, and tamped down some of the worst abuses of the class-action suit.75
On a still more optimistic note, I will argue in chapters 10 and 11 that important reforms could be prompted by the systematic civil disobedience I advocate in Part II. But that’s for later.