Risk regulation and regulatory litigation

Rutgers Law Review

Volumn 64, Issue 1, 2011, Pages 73-115

  Luff, Patrick ^a,b,c  

^a WASHINGTON AND LEE UNIVERSITY   (United States)

^b UNIVERSITY OF OXFORD   (United Kingdom)

^c UNIVERSITY OF MICHIGAN LAW SCHOOL   (United States)

Author keywords

[No Author keywords available]

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EID: 84920588886     PISSN: 00360465     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (131)

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9. http://www.lexisnexis.com
10. WALTER K. OLSON, THE LITIGATION EXPLOSION: WHAT HAPPENED WHEN AMERICA UNLEASHED THE LAWSUIT (1991).
11. Arthur R. Miller, The Pretrial Rush to Judgment: Are the "Litigation Explosion," "Liability Crisis," and Efficiency Clichés Eroding Our Day in Court and Jury Trial Commitments?, 78 N.Y.U. L. REV. 982 (2003)
12. Deborah R. Hensler, Reading the Tort Litigation Tea Leaves: What's Going on in the Civil Liability System?, 16 JUST. SYS. J. 139, 141 (1993).
13. MORTON KELLER, AMERICA'S THREE REGIMES: A NEW POLITICAL HISTORY 241 (2007)
14. Marc Galanter, The Day After the Litigation Explosion, 46 MD. L. REV. 3, 37-39 (1986)
15. Austin Sarat, The Litigation Explosion, Access to Justice, and Court Reform: Examining the Critical Assumptions, 37 RUTGERS L. REV. 319, 320 (1985)
16. DEBORAH HENSLER ET AL., RAND INST. FOR CIVIL JUSTICE, TRENDS IN TORT LITIGATION: THE STORY BEHIND THE STATISTICS 6-7 (1987)
17. ANDREW P. MORRISS ET AL., REGULATION BY LITIGATION 5-7 (2009)
18. Richard A. Epstein, Implications for Legal Reform, in REGULATION THROUGH LITIGATION 310, 314 (W. Kip Viscusi ed., 2002)
19. David Rosenberg, The Regulatory Advantage of Class Action, in REGULATION THROUGH LITIGATION 244, 247 (W. Kip Viscusi ed., 2002)
20. CASS R. SUNSTEIN, AFTER THE RIGHTS REVOLUTION: RECONCEIVING THE REGULATORY STATE 12-31 (1990)
21. Karen Yeung, The Regulatory State, in THE OXFORD HANDBOOK OF REGULATION 64, 72 (Robert Baldwin et al. eds., 2010)
22. Robert L. Rabin, Federal Regulation in Historical Perspective, 38 STAN. L. REV. 1189, 1192 (1986)
23. Coal Worker's Pneumoconiosis, PUBMED HEALTH (June 10, 2011), http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0001187.
24. 26 U.S.C. § 4121 (2006)
25. Black Lung Benefits Act, 30 U.S.C. §§ 901-945 (2006).
26. 20 C.F.R. § 725.304 (2011).
27. 28 U.S.C. § 1254 (2006)
28. C.F.R. §§725.421(a)
29. 20 C.F.R. §§ 725.490(a), 725.701(b).
30. Nat'l Mining Ass'n v. Dep't of Labor, 292 F.3d 849, 860, 875 (D.C. Cir. 2002)
31. Regulations Implementing the Federal Coal Mine Health and Safety Act of 1969, as Amended, 68 Fed. Reg. 69,929, 69,930 (Dec. 15, 2003)
32. RICHARD A. NAGAREDA, MASS TORTS IN A WORLD OF SETTLEMENT 16 (2007)
33. 40 C.F.R. § 61.145 (2011)
34. Kraciun v. Owens-Corning Fiberglas Corp., 895 F.2d 444, 447-48 (8th Cir. 1990)
35. Abram Chayes, The Role of the Judge in Public Law Litigation, 89 HARV. L. REV. 1281 (1976)
36. Distinguishing between states acting or not acting on behalf of their citizens may seem to suggest states are not always doing just that. Even if the cynic says that this rarely occurs, the standard theory of the modern liberal state is that states are agents of citizens, who retain ultimate autonomy, and therefore, any state action is (or should be) taken on behalf of its citizens. However, there is a difference, I believe, between a state attorney general bringing parens patriae cases on behalf of citizens and the state performing its normal functions on behalf of its citizens - the citizens themselves can do the former and not the latter. There is still some blurriness in cases involving, for example, state pensions. But in bringing such cases, the state acts in essence as a trustee, which is still a different relationship than what normally exists between citizens and the state. As a result, even though the state might keep the recoveries in these cases, it is essentially holding them in trust for the injured parties or reimbursing itself for payments made to the injured parties before or during the course of the litigation.
37. ELIZABETH FISHER, RISK REGULATION AND ADMINISTRATIVE CONSTITUTIONALISM (2007)
38. Julia Black, The Role of Risk in Regulatory Processes, in THE OXFORD HANDBOOK OF REGULATION 302, 302 (Robert Baldwin et al. eds., 2010)
39. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK (1996)
40. EMBRACING RISK: THE CHANGING CULTURE OF INSURANCE AND RESPONSIBILITY (Tom Baker & Jonathan Simon eds., 2002).
41. DAVID A. MOSS, WHEN ALL ELSE FAILS: GOVERNMENT AS THE ULTIMATE RISK MANAGER 162-79 (2002)
42. CHRISTOPHER HOOD ET AL., THE GOVERNMENT OF RISK: UNDERSTANDING RISK REGULATION REGIMES 1-9 (2001)
43. JENNY STEELE, RISKS AND LEGAL THEORY 75-81 (John Gardner ed., 2004)
44. Lawrence M. Friedman, Legal Culture and the Welfare State, in DILEMMAS OF LAW IN THE WELFARE STATE 13, 19 (Gunther Teubner ed., 1986).
45. RESTATEMENT (SECOND) OF TORTS § 328A (1965).
46. RESTATEMENT (SECOND) OF TORTS § 936 (1979).
47. DEBORAH LUPTON, RISK 5-13 (1999)
48. Mary Douglas, Risk as a Forensic Resource, 119 DAEDALUS 1, 1-13 (1990).
49. RICHARD H. THALER & CASS R. SUNSTEIN, NUDGE: IMPROVING DECISIONS ABOUT HEALTH, WEALTH, AND HAPPINESS 83-100 (2008)
50. However, as the complexity of the contracts increase in terms of both the nature of things being contracted for and the relative bargaining powers of the parties, we see something like this level of regulation. Sales of stock, despite being nothing more than transfers of ownership, are heavily regulated.
51. This would likely be true in most cases even if courts granted costs and attorneys' fees to successful litigants or if there were a mechanism for bringing pro se suits without court costs. Most people with jobs, families, and other obligations will not pursue a lawsuit until some threshold is reached above the cost of suing alone. The potential rewards would have to be seen as sufficient to justify a sole litigant's opportunity costs. This becomes even more true when the cost of bringing suit includes discovering the defect. If the problem is one requiring some technical expertise, such as shoddy electrical soldering, a legally cognizable defect may not even be recognizable.
52. One might argue that a typical manufacturer's warranty gives sufficient and exclusive protection against defects. That may be true, but if a product like a television has a one-year warranty and the majority of those produced last for only eighteen months, I suspect that a class action suit will be forthcoming. But this might not happen because people would instead buy televisions from other manufacturers and eventually the company making the shoddy televisions would go out of business. However, this result might not occur when the issue is a shoddy toaster or kettle, possibly because they are so cheap to replace.
53. Alexander Tsesis, Furthering American Freedom: Civil Rights & the Thirteenth Amendment, 45 B.C. L. REV. 307, 329-44 (2004)
54. 198 U.S. 45, 57-58 (1905)
55. This is another interesting point. Regulators would seem in many cases to be more interested in the acts than the injuries, at least when they are performing the ex ante part of their jobs. But by the time tort law gets involved, whether an act occurred or not is irrelevant if the act has not produced an injury. At the same time, we might interject here that cases alleging defamation per se assume damages, but that may be only because of the difficulty of proving damages in a way that satisfies the normal, common law requirements, not because we do not think there are injuries arising from the acts. That is, presuming damages may be more about the lack of specificity of the damages rather than about the desire to punish (and perhaps to deter) some negligent or antisocial act.
56. 42 U.S.C. § 2000e-2 (2006)
57. 20 U.S.C. § 1681 (2006)
58. Rhodes v. Chapman, 452 U.S. 337, 339-40, 351-52 (1981)
59. Cal. Global Warming Solutions Act of 2006, CAL. HEALTH & SAFETY CODE §§ 38550-38599 (West 2011)
60. State Climate Change Laws Resource Center, COLUMBIA LAW SCHOOL, CENTER FOR CLIMATE CHANGE LAW, http://www.law.columbia.edu/centers/climatechange/resources/state (last visited Nov. 11, 2011).
61. CAL. BLDG. CODE REGS. § 1613 (2010)
62. Stanley L. Brodsky & Robert J. Cramer, Concerns About Litigation: Conceptualization, Development, and Measurement, 36 J. PSYCHIATRY & L. 525, 526-27 (2008)
63. Louise Nash et al., The Psychological Impact of Complaints and Negligence Suits on Doctors, 12 AUSTRALASIAN PSYCHIATRY 278 (2004)
64. Terence Daintith, The Techniques of Government, in THE CHANGING CONSTITUTION 209 (Jeffrey Jowell & Dawn Oliver eds., 3d ed. 1994).
65. ROBERT BALDWIN & MARTIN CAVE, UNDERSTANDING REGULATION: THEORY, STRATEGY, AND PRACTICE 35-39 (1999).
66. Robert Baldwin et al., Introduction, in A READER ON REGULATION 3-4 (Robert Baldwin et. al. eds., 1998)
67. Giandomenico Majone, The Rise of the Regulatory State in Europe, 17 W. EUR. POL. 77, 78 (1994)
68. Philip Selznick, Focusing Organizational Research on Regulation, in REGULATORY POLICY AND THE SOC. SCI. 363, 363 (Roger G. Noll ed., 1985)
69. C. H. Foreman, Jr., Regulatory Agencies, in INT'L ENCYCLOPEDIA OF SOC. AND BEHAV. SCI. 12982, 12982 (Neil J. Smelser & Paul B. Baltes eds., 2001).
70. I will grant that any voluntary organization with even a modicum of formality will have the ability to issue an authoritative set of rules within its sphere of influence. However, I use "authoritative" here to indicate the availability of the state's power to coerce through the use of force.
71. Robert Baldwin et al., Introduction: Regulation - The Field and the Developing Agenda, in THE OXFORD HANDBOOK OF REGULATION 5-6 (Robert Baldwin et al. eds., 2010).
72. ANTHONY I. OGUS, REGULATION: LEGAL FORM AND ECONOMIC THEORY 2 (1994)
73. Lawrence Lessig, The New Chicago School, 27 J. LEGAL STUD. 661, 662 (1998)
74. Richard A. Posner, Social Norms and the Law: An Economic Approach, 87 AM. ECON. REV. 365, 365 (1997)
75. In this case, I understand "rule" to mean an order backed by the force of law, even where that binding order is an expression of some norm endorsed by the state.
76. BRONWEN MORGAN & KAREN YEUNG, AN INTRODUCTION TO LAW AND REGULATION: TEXT AND MATERIALS 3 (2007)
77. Even though many cases result in unpublished, nonprecedential opinions, individuals and firms still use them to predict future rulings. Therefore, even these cases regulate conduct.
78. This conundrum will be discussed further in Part III.B.
79. Humble Oil & Ref. Co. v. Harang, 262 F. Supp. 39, 42 (E.D. La. 1966);
80. JAMES M. FISCHER, UNDERSTANDING REMEDIES § 21 (2d ed. 2002)
81. DOUGLAS LAYCOCK, MODERN AMERICAN REMEDIES: CASES AND MATERIALS 235 (3d ed. 2002)
82. Humble Oil, 292 F. Supp. at 43.
83. DAN B. DOBBS, LAW OF REMEDIES § 12.8(3) (2d ed. 1993)
84. Bradley v. Milliken, 338 F. Supp. 582, 594-95 (E.D. Mich. 1971);
85. Swann v. Charlotte-Mecklenburg Bd. of Educ., 311 F. Supp. 265, 270 (W.D.N.C. 1970).
86. Carl Tobias, Public Law Litigation and the Federal Rules of Civil Procedure, 74 CORNELL L. REV. 270, 279-80 (1989)
87. We may already be getting ahead of ourselves by suggesting that regulation must affect behavior. While it seems uncontroversial to say that regulation affects behavior, the presence of behavioral change in response to some influence may be neither necessary nor sufficient for us to call some influence regulatory.
88. John D. Graham & Jonathan Baert Wiener, Confronting Risk Tradeoffs, in RISK VERSUS RISK: TRADEOFFS IN PROTECTING HEALTH AND THE ENVIRONMENT 1-2 (John D. Graham & Jonathan Baert Wiener eds., 1995)
89. At least when those actions are directed at third parties, I mean to exclude, for example, agency actions dealing with setting internal budgets and the like, even though these too will influence behavior and indeed are often actions undertaken with the intent of influencing behavior.
90. John G.U. Adams, The Efficacy of Seat Belt Legislation, SAE TECHNICAL PAPER SERIES, 1, 10 (1982)
91. Wiel Janssen, Seat-Belt Wearing and Driving Behavior: An Instrumented-Vehicle Study, 26 ACCIDENT ANALYSIS & PREVENTION 249, 259-60 (1994)
92. Sam Peltzman, The Effects of Automobile Safety Regulation, 83 J. POL. ECON. 677, 677 (1975)
93. JOHN ADAMS, RISK (1995).
94. W. Kip Viscusi, Overview, in REGULATION THROUGH LITIGATION 19-20 (W. Kip Viscusi ed., 2002)
95. JOHN FUND & MARTIN MORSE WOOSTER, THE DANGERS OF REGULATION THROUGH LITIGATION: THE ALLIANCE OF PLAINTIFF'S LAWYERS AND STATE GOVERNMENTS (2000);
96. WALTER K. OLSON, THE RULE OF LAWYERS: HOW THE NEW LITIGATION ELITE THREATENS AMERICA'S RULE OF LAW (2003);
97. Victor E. Schwartz & Leah Lorber, State Farm v. Avery: State Court Regulation Through Litigation Has Gone Too Far, 33 CONN. L. REV. 1215 (2001);
98. Eric A. Posner, Tobacco Regulation or Litigation?, 70 U. CHI. L. REV. 1141, 1155-56 (2003)
99. W. KIP VISCUSI, SMOKE-FILLED ROOMS: A POSTMORTEM ON THE TOBACCO DEAL (2002)
100. Samuel Issacharoff, Regulating After the Fact, 56 DEPAUL L. REV. 375, 380 (2007)
101. DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE: A CRITICAL INTRODUCTION (1991).
102. Steven P. Croley, Theories of Regulation: Incorporating the Administrative Process, 98 COLUM. L. REV. 1, 34 (1998);
103. George J. Stigler, The Theory of Economic Regulation, 2 BELL J. ECON. & MGMT. SCI. 3, 3 (1971)
104. Ralph K. Winter, Jr., Economic Regulation vs. Competition: Ralph Nader and Creeping Capitalism, 82 YALE L.J. 890, 893-94 (1973)
105. STEPHEN BREYER, REGULATION AND ITS REFORM 23 (1982).
106. MANCUR OLSON, JR., THE LOGIC OF COLLECTIVE ACTION: PUBLIC GOODS AND THE THEORY OF GROUPS 2 (1965)
107. Kenneth S. Abraham, The Insurance Effects of Regulation by Litigation, in REGULATION THROUGH LITIGATION 212, 231-32 (W. Kip Viscusi ed., 2002)
108. Edward T. Schroeder, Note, A Tort by Any Other Name? In Search of the Distinction Between Regulation Though Litigation and Conventional Tort Law, 83 TEX. L. REV. 897, 900 (2005).
109. CHARLES E. CLARK, HANDBOOK OF THE LAW OF CODE PLEADING § 57 (2d ed. 1947)
110. Suppose further that the market value of that amount of fence painting was in fact $20 and that I cannot find substitute performance for any less than the market rate. I might seek damages of $10 to pay for the cost of covering, if I had not yet paid Mr. X, or $20 (the amount paid for unperformed services plus the cost to cover) if I had paid in advance. Mr. X would have been equally well off if he had performed either contract: he would have ended up with $10 in either case.
111. Leave aside for now whether he ought to have known that before making the $10 contract, or assume that he decided that $10 was better than nothing, and that the $20 contract came along between the time of making the original contract and the time when he was to perform.
112. Riggs v. Palmer, 22 N.E. 188, 191 (N.Y. 1889)
113. RONALD DWORKIN, LAW'S EMPIRE 15-20 (1986).
114. In other words, it is impossible to conclude with certainty the extent of the damages when the suit is brought.
115. I exclude from here any litigation brought by the state under the assumption that any such litigation (enforcement actions, for example), even if concerning both acts and consequences that are completed, will be considered public and hence regulatory, specifically because it is brought by the state. This requires the assumption that all public-law litigation is regulatory, which I am happy to assume, since I expect that whatever characteristics I use to describe regulatory litigation, any public-law litigation will have those characteristics. What is more important is to identify what it is about nonregulatory "private" litigation that makes it nonregulatory.
116. We might think that there should be a separate category for those cases where the cause of the dispute is an omission of an act that has not been performed by the time of the litigation but is capable of performance, and we could be tempted to characterize this breach as ongoing rather than completed. This category is ultimately unsatisfying, however, because the fact of bringing suit "completes" the omission, making it a past event. But a further question is whether we should characterize those cases where performance is no longer desired, and those where performance is still required (meaning the omission can be corrected) and the suit is brought for the consequences of the delay. In the former case, if we think that bringing suit completes the omission, the suit becomes one for the damages arising from the delay (assuming there is an agreement to complete performance at some time in the future). But the cause of action is the same in this case as in the latter, since there is just a different remedy sought. So we need not think of the two cases as different in a relevant way.
117. A further note on this point is that the consequences themselves are bifurcated-the past consequences are treated differently depending on whether the consequences of the past act are found to be ongoing and whether the future consequences are prevented through an injunction or structural reform.
118. As we will see below, the ability to exercise influence is probably one of the necessary elements of any definition of regulation. We will have to consider whether bargaining power, which is the means of acquiring the ability to influence, is necessary to regulatory litigation. I suspect that it is a necessary but not a sufficient condition, as I have stated.
119. Cutler Cleveland, Deepwater Horizon Oil Spill, ENCYCLOPEDIA OF EARTH (Sept. 9, 2011, 10:02 p.m.), http://www.eoearth.org/article/Deepwater-Horizon-oil-spill?topic=5036
120. MALCOLM M. FEELEY & EDWARD L. RUBIN, JUDICIAL POLICY MAKING AND THE MODERN STATE: HOW THE COURTS REFORMED AMERICA'S PRISONS (2000).
121. Wicker v. Hoppock, 73 U.S. (6 Wall.) 94, 99 (1867)
122. United States v. Hatahley, 257 F.2d 920, 923 (10th Cir. 1958)
123. Park v. Moorman Mfg. Co., 241 P.2d 914, 920 (Utah 1952)
124. DOUGLAS LAYCOCK, MODERN AMERICAN REMEDIES 15 (3d ed. 2002)
125. Rhodes v. Chapman, 452 U.S. 337, 343 (1981).
126. Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367 (1992)
127. We could also view this as a question of whether a case has to be regulatory at the beginning or whether it can become regulatory over time, since if it can be regulatory based only on how it looks at its beginning, then the nature of the remedy would not matter. If a case must be regulatory at the start of the proceedings, then the entry of the decree will not affect whether it is regulatory. The previous discussion of scale, however, suggests that litigation can indeed become regulatory over time, as would be the case if a class action began and both parties assumed that only 100 people would be affected, and then it later came to light that there actually would be 100,000 class members. If we view regulatory litigation in part as resting on the influence the plaintiff is able to exercise against the defendant, then that change would make the case regulatory. Additionally, in some cases it may not be the claim that makes the case regulatory at all, but rather the remedy. An example is in cases where the remedy is the instantiation of the plaintiffs' bargaining power, such as where the remedy comes in the form of a settlement that requires behavioral changes on the part of the defendant.
128. JACK B. WEINSTEIN, INDIVIDUAL JUSTICE IN MASS TORT LITIGATION: THE EFFECT OF CLASS ACTIONS, CONSOLIDATIONS, AND OTHER MULTIPARTY DEVICES (1995).
129. I say most because some types of law, such as those that facilitate behavior or that tax individuals and businesses, are at least partly about something other than attempting to decrease social risk through the influence on behavior.
130. W. Kip Viscusi, Tobacco: Regulation and Taxation through Litigation, in REGULATION THROUGH LITIGATION 22, 46 (W. Kip Viscusi ed., 2002)
131. Even where the norm is not served - that is, when there is unintentional regulation - there is still the attempt, and therefore the intent, to serve it.