In response to my post yesterday, my colleague Orin Kerr asks whether Iqbal might lower the high costs of civil litigation by reducing the use of costly mechanisms such as discovery and summary judgment motions. This is a good question.
In analyzing Orin’s question, the first thing to notice is that, while Iqbal might save some costs, the decision also imposes costs. Because of Iqbal, pleading becomes more expensive. Not only is it more expensive to draft the initial complaint, because no one knows any more exactly what needs to be in the complaint, but, as numerous cases already show, Iqbal is returning us to the days when a case begins with “polishing the pleadings”: the defendant moves to dismiss, the court grants the motion with leave to replead, the plaintiff tries again, and we may go around multiple times (possibly including an appeal) before the plaintiff has a complaint that passes the applicable standards. And then we get to the costs of discovery and summary judgment.
The view of the drafters of the Federal Rules (particularly Dean Clark, who was very clear on this point) is that polishing the pleadings is a waste of time and money and we might as well get right to the other mechanisms that we’re just going to get to anyway, after polishing the pleadings.
So it’s not as simple as saying that Iqbal might save costs. What’s going to happen is that Iqbal will save some costs while imposing different costs. And I think the biggest cost that Iqbal is meant to save is not so much disovery costs per se, but the costs of settlements coerced by plaintiffs bringing doubtful claims against defendants who end up settling to avoid litigation costs (this is suggested by the Court’s opinion in the predecessor case of Bell Atlantic v. Twombly). The ultimate question is whether Iqbal will save or impose costs on balance.
As I have previously acknowledged (before I gained fame and fortune on Concurring Opinions) this is an empirical question — and one that would be quite difficult to answer reliably. The Civil Procedure professor community, including myself, is, I think, biased in favor of the traditional answer (that strict pleading requirements end up costing more than they save) because that’s what we’ve been teaching the students for the last 70 years. But really, we should admit that it is at least possible that Iqbal would produce savings in the long run.
But I am inclined to doubt it. It seems more likely that Iqbal will just end up raising costs, by adding more pleading costs to discovery costs that will end up getting incurred anyway. And more important, Iqbal seems unfair. As some lower court cases are showing, Iqbal is trapping some plaintiffs in a Catch-22: they can’t successfully plead their cases because they don’t have information that they can’t get without discovery, which can’t get started until they successfully plead. (I suppose this will result in some savings, but again, I question whether there will ultimately be net savings.)
Given that it’s very difficult to tell whether Iqbal will save or cost money in the long run, I am inclined to say that we should continue the fairer system of letting cases get started without insisting on too much detail in the pleadings. But I would be open to rethinking the matter if anyone could come up with good empirical cost data on Iqbal.
In analyzing Orin’s question, the first thing to notice is that, while Iqbal might save some costs, the decision also imposes costs. Because of Iqbal, pleading becomes more expensive. Not only is it more expensive to draft the initial complaint, because no one knows any more exactly what needs to be in the complaint, but, as numerous cases already show, Iqbal is returning us to the days when a case begins with “polishing the pleadings”: the defendant moves to dismiss, the court grants the motion with leave to replead, the plaintiff tries again, and we may go around multiple times (possibly including an appeal) before the plaintiff has a complaint that passes the applicable standards. And then we get to the costs of discovery and summary judgment.
The view of the drafters of the Federal Rules (particularly Dean Clark, who was very clear on this point) is that polishing the pleadings is a waste of time and money and we might as well get right to the other mechanisms that we’re just going to get to anyway, after polishing the pleadings.
So it’s not as simple as saying that Iqbal might save costs. What’s going to happen is that Iqbal will save some costs while imposing different costs. And I think the biggest cost that Iqbal is meant to save is not so much disovery costs per se, but the costs of settlements coerced by plaintiffs bringing doubtful claims against defendants who end up settling to avoid litigation costs (this is suggested by the Court’s opinion in the predecessor case of Bell Atlantic v. Twombly). The ultimate question is whether Iqbal will save or impose costs on balance.
As I have previously acknowledged (before I gained fame and fortune on Concurring Opinions) this is an empirical question — and one that would be quite difficult to answer reliably. The Civil Procedure professor community, including myself, is, I think, biased in favor of the traditional answer (that strict pleading requirements end up costing more than they save) because that’s what we’ve been teaching the students for the last 70 years. But really, we should admit that it is at least possible that Iqbal would produce savings in the long run.
But I am inclined to doubt it. It seems more likely that Iqbal will just end up raising costs, by adding more pleading costs to discovery costs that will end up getting incurred anyway. And more important, Iqbal seems unfair. As some lower court cases are showing, Iqbal is trapping some plaintiffs in a Catch-22: they can’t successfully plead their cases because they don’t have information that they can’t get without discovery, which can’t get started until they successfully plead. (I suppose this will result in some savings, but again, I question whether there will ultimately be net savings.)
Given that it’s very difficult to tell whether Iqbal will save or cost money in the long run, I am inclined to say that we should continue the fairer system of letting cases get started without insisting on too much detail in the pleadings. But I would be open to rethinking the matter if anyone could come up with good empirical cost data on Iqbal.
1 comment:
While you may be right that Iqbal is not good policy, there needs to be a change.
After leaving law school about a year and a half ago (I'm one of your former students) and starting a federal clerkship, what has surprised me most is the pervasive problems and staggering costs caused by merit-less litigation.
Imagine if one of your students accused you of giving a poor grade because of his or her race/gender/etc. Assuming you didn't alter the grade based on attendance, then because exam grading is anonymous, you will almost certainly win at trial. In fact, it would be clear to almost everyone that the suit was a load of crap.
Getting to trial however, or at least getting to summary judgment, would take at a minimum one year, more like two. The discovery and motion practice will cost a fortune. And even though you should ultimately win, there is still the thought in the back of your mind that some crazy jury may just give the plaintiff exactly what he or she is seeking (I've seen it happen). For those two years, the law suit will haunt your professional and personal life.
What would it cost to bring such a suit? What would it cost for the plaintiff to affect your life so profoundly? A four-page complaint and a filing fee. (Present Siegel students take note.)
The problem is there is absolutely no cost for a plaintiff to bring a lawsuit. There are enough bad lawyers out there that someone would provide representation, the representation would be on contingency, and if the plaintiff ultimately loses, he or she wouldn't have to pay a penalty. There is no disincentive to sue. There is no cost benefit analysis. There is no cost!
Anytime you have a system built upon this kind of extreme, it cannot function effectively. There must be a balance. How we provide the balance is up for debate. Perhaps we need to adopt the English Rule for attorney's fees, thus creating a cost-benefit analysis. But if you want to keep litigation free for all plaintiffs and avoid chilling valid claims, then you need to give some discretion to judges so that they can throw out frivolous cases.
What I don't understand is, what is so wrong (7th Amendment aside) with letting judges make a call on the merits of the case, limited to just to whether the case passes the smell test. For some reason we are willing to trust a group of strangers, who have no knowledge of the subject matter of suit, to make the right decision, yet we get our panties in a wad when an intelligent, respected judge, with decades of experience determines a question of fact.
Iqbal may not have been the best case, but unless you want to change the cost structure of litigation, some wiggle room is necessary.
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