Diagonal Public Enforcement.

Author:Clopton, Zachary D.
 
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Introduction I. International Cases A. Tobacco B. Antitrust C. Other Cases of Interest II. Domestic Cases A. States Enforcing Sister-State Law B. States Enforcing Federal Law III. Institutional Analysis A. Legislatures 1. Deterrence and enforcement 2. Policy influence 3. Ancillary benefits B. Executives 1. Executive forum shopping 2. Cooperating and signaling C. Summary IV. Normative Perspectives. A. A Comment on Optimal Deterrence B. Governmental Relations C. Individual and Group Interests Conclusion Introduction

As part of a comprehensive plan to fight tobacco smuggling, (1) lawyers from the European Community adopted a seemingly radical strategy: sue Big Tobacco in the United States. Beginning in 2000, the European Community filed a series of civil lawsuits against tobacco companies in U.S. courts under U.S. law. (2)

In 2016, one of those cases reached the U.S. Supreme Court. (3) After counsel for the European Community introduced his case at oral argument, Justice Alito interjected: "Isn't it rather strange that countries in Europe ... are suing in the courts of the United States for injuries sustained to their business interests in Europe? Why didn't they just sue in their own courts?" (4)

The Court ultimately rejected the European Community's suit, but not because the plaintiffs were foreign governments. (5) Indeed, for more than a century, foreign governments have sued in U.S. courts to enforce U.S. antitrust laws, environmental laws, civil rights laws, and others. (6)

Foreign governments are not the only sovereigns that enforce somone else's law. The U.S. federal system also creates opportunities for states to enforce the laws of other domestic sovereigns. (7) For example, eight states (and New York City) filed a climate change lawsuit against the five largest emitters of carbon dioxide in the United States. (8) The Supreme Court rejected the claim that was based on an asserted federal common law right to seek abatement, but it left for consideration on remand the claims based on sister-state nuisance law. (9) This suit was not unique. Opportunities exist for states to enforce sister states' antitrust laws, environmental laws, and more, (10) and states routinely enforce federal laws of various types. (11)

In some ways, the decision to introduce foreign sovereign enforcers recalls the familiar debate about when a lawmaker should diffuse regulatory and enforcement authority. That debate asks whether the benefits of increased deterrence and enforcement are worth the risks of overenforcement and incoherence. (12)

But a foreign sovereign is not just any other enforcer. For one thing, a foreign government enforcing domestic law looks like a mismatch or a category error. (13) This intuition resonates with Justice Alito's question about why foreign governments should be allowed to enforce domestic laws at all. These cases also encounter the sovereignty-based objection that extraterritorial regulation impermissibly intrudes on the internal affairs of other sovereigns. (14) Indeed, the unusual configuration of these cases supplements this extraterritoriality objection with one based on the separation of powers: The domestic lawmaker may undercut its executive branch by bringing in a foreign enforcer, while the foreign executive may circumvent its home legislature and judiciary by accepting the invitation to litigate in the courts of another sovereign. Compare the solid arrows of traditional public enforcement with the dashed arrows of "diagonal public enforcement" (15) in Figure 1 below:

While these objections merit serious consideration, a systematic evaluation of this unusual form of regulatory governance reveals that its benefits may outweigh its costs. With respect to enforcement and deterrence, there are theoretical reasons to believe that adding new enforcers will increase the efficacy and efficiency of enforcement regimes, and by selecting government enforcers (albeit foreign ones), the risks to the public interest may be minimized. (16) Meanwhile, although in some ways these suits represent another form of extraterritorial regulation, their intergovernmental nature mitigates some of the strongest sovereignty objections to extraterritorial regulation by relying on foreign governments to enforce the law voluntarily. (17) At the same time, by disaggregating lawmakers and law enforcers, these arrangements have the capacity to stimulate gridlocked or inactive institutions in the enforcing state (18) and to better protect foreign and minority interests in the lawmaking state. (19) At least under certain conditions, therefore, these trans-governmental cases may be models for deeper cooperation and improved enforcement. (20)

This Article systematically studies the phenomenon of diagonal public enforcement, or "diagonal enforcement" for short. I define diagonal enforcement to comprise cases in which one government enforces another government's laws in another government's courts. (21) The word "enforce" in this definition refers to a specific type of litigation. This Article is not concerned with every suit by a foreign or sister-state government; (22) instead, it addresses only cases in which that government sues on a regulatory or enforcement-style claim. (23) As a result, this Article focuses on areas of traditional public concern such as antitrust, securities, civil rights, and environmental law. And, notably, these are areas in which legislatures routinely consider whether to expand enforcement authority beyond domestic public enforcement. (24)

As the definition of diagonal enforcement implies, this Article brings together international and interstate enforcement. Certainly, there are salient differences between California and Nevada, on the one hand, and the United States and France on the other. Legislatures reasonably might make different decisions about when to invite sister states into court as opposed to foreign governments. But these differences do not undermine this Article's goal of assessing diagonal enforcement conceptually. And, indeed, it is precisely the intergovernmental nature of these cases that gives them their unusual status. (25)

This Article proceeds as follows. The next two Parts describe examples of diagonal enforcement: Part I addresses international cases, and Part II addresses domestic cases. This descriptive work serves both as a proof of concept-diagonal enforcement is already happening at multiple levels--and as a demonstration of some of the conceptual and institutional building blocks for diagonal enforcement regimes.

Despite its prevalence, diagonal enforcement appears to generate some reflexive backlash: Why would legislatures ever rely on foreign sovereigns to enforce domestic law, and why would foreign executives take up that task? In light of these questions, Part III attempts to demystify diagonal enforcement by exploring when it would be consistent with legislative and executive interests. Although these diagonal options may appear unusual at first glance, rational legislatures may have reasons to authorize diagonal suits, and rational executives may have reasons to forum shop for diagonal options. (26) These predictions explain existing patterns of enforcement and suggest a larger role for domestic and international diagonal enforcement after the election of President Donald Trump. (27)

Finally, Part IV turns from the institutional to the normative. First, it addresses diagonal enforcement's relationship to optimal deterrence and enforcement. Second, it assesses diagonal enforcement's effects on relationships among and within governments. Third, it asks how individual and minority interests fare when diagonal enforcement is introduced. This normative review connects to literatures on transgovernmental relations, (28) horizontal federalism, (29) and private enforcement. (30) So while Part III explains when legislatures and executives might be diagonally inclined, Part IV's normative analysis is useful for evaluating those policy choices.

In sum, diagonal enforcement is not new, but it deserves considered attention in an era when truly global solutions are out of reach and truly local solutions are not enough. This form of regulation not only has potential benefits for enforcement efficacy and interstate relations, but it also might protect minority interests and nudge governmental institutions out of gridlock.

  1. International Cases

    Since nearly the Founding, foreign states have filed lawsuits in U.S. courts. (31) Thus, when asked in 1870 if Napoleon III could sue in the United States, (32) the Supreme Court observed: "On this point not the slightest difficulty exists. A foreign sovereign ... who has a demand of a civil nature against any person here, may prosecute it in our courts." (33)

    For more than a century, U.S. courts have entertained international enforcement actions as well. (34) For example, around the turn of the twentieth century, the French government filed at least two unfair competition suits in U.S. federal courts. (35)

    This Part documents leading examples of international diagonal enforcement, focusing primarily on tobacco litigation and antitrust. This survey is not intended to be comprehensive, though I hope to identify many of the central examples of international diagonal enforcement in U.S. courts. (36)

    Before proceeding to these case studies, though, two clarifications are in order. First, this Article is unconcerned with the various background norms and common law doctrines that may undermine particular cases. For example, the so-called Revenue Rule provides that courts need not enforce the tax laws of other sovereigns. (37) While the Revenue Rule interferes with some attempts at diagonal enforcement in practice, (38) it is not an impediment to diagonal enforcement in theory. (39) Similarly, while courts may add prudential limits to domestic or international parens patriae standing, those limits are not fixed. (40)

    Second, I have...

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