Agencies as litigation gatekeepers.

AuthorEngstrom, David Freeman
PositionIntroduction through III. The Optimal Design of Agency Gatekeeper Regimes A. The Ideal Gatekeeper Role, p. 616-663

ARTICLE CONTENTS INTRODUCTION I. THE TROUBLE WITH PRIVATE ENFORCEMENT AND THE CHALLENGE OF REGULATORY DESIGN A. The Rise of the "Litigation State" B. Refining the Critique of Private Enforcement 1. The Zealousness Critique 2. The Coordination Critique 3. The Legislative Fidelity Critique C. The False Promise of "Litigation Reforms" II. THE GATEKEEPER ALTERNATIVE: FLAVORS OF AGENCY GATEKEEPING A. Taxonomy: Agency Gatekeeping in Five Dimensions 1. Affirmative/Residual 2. Retail/Wholesale 3. Binding/Advisory 4. Passive Gate/Active Displacement + Control Rights 5. Veto/License B. Using the Taxonomy and the Road Ahead III. THE OPTIMAL DESIGN OF AGENCY GATEKEEPER REGIMES A. The Ideal Gatekeeper Role 1. The Ideal Wholesale Gatekeeper 2. The Ideal Retail Gatekeeper B. Deviations from the Gatekeeper Ideal 1. Institutional Competence and Capacity 2. Regulatory "Capture" 3. Political Oversight and Bureaucratic Behavior C. Synthesis: Choosing Among Gatekeeper Designs and Tweaking Gatekeeper Performance IV. AGENCY GATEKEEPING IN ACTION: REIMAGINING JOB DISCRIMINATION REGULATION A. The Challenge of Job Discrimination Regulation After Wal-Mart Stores v. Dukes B. Proposal: Reforming the Regime by Remaking the EEOC's Gatekeeper Role 1. Dismantling EEOC Charge Processing 2. A New "Systemic" Action and Robust EEOC Gatekeeping 3. Countering Likely Objections CONCLUSION INTRODUCTION

One of the most controversial developments in the American regulatory state in recent decades is a marked shift away from administrative regulation and enforcement and toward the use of private lawsuits as a regulatory tool. (1) Champions of that trend assert that deputizing "private attorneys general" to enforce legal mandates is desirable and even necessary: private enforcement leverages private information, expertise, and resources while serving to check "capture" of public enforcement agencies by regulated parties. (2) Critics, by contrast, cast private enforcement as overzealous, uncoordinated, and democratically unaccountable. (3) Across a range of regulatory contexts, from environmental protection and civil rights to antitrust and securities, the resulting institutional design challenge is how to leverage private enforcement's virtues while mitigating its vices. More broadly, how can we rationalize overlapping and interdependent public and private enforcement mechanisms?

In recent years, a growing chorus of commentators has offered an intriguing answer: vest administrative agencies with the power to oversee and manage private litigation efforts. Agencies, it is said, can use their expertise and synoptic perspective to weigh costs and benefits and determine whether private rights of action should lie at all. (4) Alternatively, agencies might be given the power to evaluate private lawsuits on a case-by-case basis, blocking bad cases, aiding good ones, and otherwise husbanding private enforcement capacity in ways that conserve scarce public enforcement resources for other uses. (5) While the specific institutional designs vary, these proposals share a common aim: regulating private litigation efforts by granting agencies what I call litigation "gatekeeper" authority. (6)

Yet despite such calls, we lack a synthetic account of how agencies should or would exercise litigation gatekeeper powers and, by extension, how best to structure such authority. (7) This is surprising. A number of federal and state agencies already wield gatekeeper powers, offering critical but mostly untapped opportunities for empirical assessment. (8) Calls to grant agencies gatekeeper powers also raise significant but underexplored questions about whether agencies can or will deploy such powers in ways that serve rather than undermine the public good. Agencies may simply lack the capacity to accurately gauge case merits, or they may privilege pursuit of political rewards over welfare-maximizing regulation of private enforcement efforts. The latter possibility is especially concerning. Given that private enforcement is designed at least in part to counter possible agency capture, bringing agencies back into the picture risks returning the fox to the henhouse. Addressing these and other concerns is essential to any clear-eyed assessment of an expanded agency gatekeeper role. We cannot evaluate competing institutional designs-or, indeed, whether agencies should be given litigation gatekeeper authority at all-without doing so. And yet, existing scholarship offers strikingly little theory or evidence that might serve as a guide.

This Article aims to fill that gap by providing a systematic account of this under-theorized role for administrative agencies in the modern American regulatory state. My most basic aim is to develop a vocabulary for describing the many flavors of agency gatekeeping and, drawing on theory and empirical analysis of the agency gatekeeper regimes already in existence, to elaborate a set of functional design principles that policymakers working across a range of regulatory contexts can use to weigh competing approaches or assess whether granting gatekeeper authority makes sense at all. In so doing, I hope to place mounting calls to vest agencies with gatekeeper powers on a sounder analytic footing.

Anatomizing agency gatekeeping is also freeing. Armed with a better understanding of how gatekeeper authority could and would work, we can reimagine some of our most consequential regulatory regimes while recasting debate over some others in a fuller and more clarifying light. Thus, this Article provides a theoretical and empirical baseline against which to evaluate recurrent, but largely unanalyzed, calls to vest the Securities and Exchange Commission (SEC) with gatekeeper power over securities class actions. (9) It also offers insights into what to do about job discrimination regulation, where the Supreme Court's recent decision in Wal-Mart Stores. v. Dukes (10) has, by limiting the availability of class actions, rendered the regime's already dysfunctional mix of private enforcement and limited public oversight especially ripe for revision. (11) A final example is federal agency preemption of state-law causes of action, or "regulatory preemption." This growing practice has prompted several recent Supreme Court cases, as well as substantial scholarly commentary focused on the pros and cons of exclusively administrative regulation on the one hand and unbridled private enforcement on the other. (12) A systematic accounting of agency gatekeeping helps us to see these two choices not as either/or options, but rather the outer poles of a rich continuum of institutional designs that tap agencies' unique position and capacity to engage with and rationalize private litigation efforts. (13)

Beyond illuminating these more concrete issues of regulatory design, my account stands at the intersection of three broader scholarly literatures and makes a contribution to each. First, this Article contributes to the decades-long search for ways to heel litigation's excesses by bringing agency oversight mechanisms more squarely onto the menu of available litigation reforms. An oceanic literature identifies and evaluates a wide array of mechanisms for rationalizing litigation, from the usual suite of tort reforms (e.g., damages caps) to heightened pleading and liability standards, reverse fee shifts, and other options. (14) My analysis adds a new and often overlooked approach to this standard line-up of options and shows that, in many ways, agency gatekeeping is a more promising reform avenue.

Second, this Article aims to reorient a long and venerable literature on the choice between public and private enforcement of law. (15) That literature, much of it coming out of the law and economics tradition, has generated a stream of valuable insights. (16) But it has also grown increasingly divorced from regulatory reality. Indeed, many of our most consequential regulatory regimes have evolved in recent decades into hybrids of public and private enforcement in which multiple enforcers-including federal and state administrative agencies, private litigants, and state attorneys general-operate and interact within complex ecologies of enforcement. (17) The institutional design challenge in this new regulatory landscape is not choosing between public and private enforcement. Rather, it is how to coordinate multiple, overlapping, and interdependent enforcement mechanisms. This Article thus joins the ranks of legal scholarship that has moved away from a binary conception of the choice between public and private enforcement and is instead exploring their intersections. (18)

Finally, and relatedly, this analysis joins a growing scholarly literature that aims to re-think the contours and work of the administrative state by training attention on the increasingly blurred boundary between administration and litigation. As the American regulatory state has shifted away from pure administrative enforcement and toward private litigation as a regulatory tool, an increasing portion of agency action has come to operate in the shadow of private enforcement efforts or otherwise involve a subtle public-private coordinating role. (19) Other tectonic shifts in the regulatory landscape have likewise moved agencies to take on new roles and develop novel regulatory tools. Thus, the "ossification" of rulemaking has moved agencies to use serial litigation rather than onerous rulemaking procedures to achieve regulatory ends--a trend critics have dubbed "regulation by litigation." (20) Similarly, judicial constriction of class actions and punitive damages helps explain the rising use of so-called agency restitution actions, in which agencies litigate and secure large monetary judgments against regulatory targets and then distribute the proceeds to private individuals or entities who have suffered harm. (21) Just as an earlier generation of administrative law scholars surfaced critically important trends in the...

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