DISCOVERY AS REGULATION.

• Author: Zambrano, Diego A.

This article develops an approach to discovery that is grounded in regulatory theory and administrative subpoena power. The conventional judicial and scholarly view about discovery is that it promotes fair and accurate outcomes and nudges the parties toward settlement. While commonly held, however, this belief is increasingly outdated and suffers from limitations. Among them, it has generated endless controversy about the problem of discovery costs. Indeed, a growing chorus of scholars and courts has offered an avalanche of reforms, from cost shifting and bespoke discovery contracts to outright elimination. Recently, Judge Thomas Hardiman quipped that if he had absolute power, he would abolish discovery for cases involving less than $500,000. These debates, however, are at a standstill, and existing scholarship offers incomplete treatment of discovery theory that might move debates forward.

The core insight of the project is that in the private-enforcement context--where Congress deliberately employs private litigants as the main method of statutory enforcement--there is a surprisingly strong case that our current discovery system should be understood in part as serving regulatory goals analogous to administrative subpoena power. That is, discovery here can be seen as an extension of the subpoena power that agencies like the SEC, FTC, and EP A possess and is the lynchpin of a system that depends on private litigants to enforce our most important statutes. By forcing parties to disclose large amounts of information, discovery deters harm and, most importantly, shapes industry-wide practices and the primary behavior of regulated entities. This approach has a vast array of implications for the scope of discovery as well as the debate over costs. Scholars and courts should thus grapple with the consequences of what I call "regulatory discovery" for the entire legal system.

INTRODUCTION I. IDENTIFYING THE PROBLEM: DISCOVERY-COSTS DISPUTES A. The Discovery Costs Debates B. Discovery Avoidance C. The Problem with an Obsession over Costs II. TRADITIONAL THEORIES OF DISCOVERY III. DISCOVERY AS REGULATION A. Discovery as the Lynchpin of Private Enforcement B. Discovery as Administrative Subpoena Power 1. Ex Parte Issuance 2. Scope and Standards of Review 3. Specific Tools and Devices 4. Producer Pays and Costs 5. Important Differences 6. The Democratic Legitimacy Problem 7. The Diffusion Asymmetry C. Regulatory Discovery's Spillover Effects 1. Discovery and Primary Behavior: The Disney, Faragher, and Argentina Cases 2. Discovery, Transparency, and Public Benefits 3. Discovery's Other Positive Spillovers 4. Discovery's Negative Spillovers D. The Intersection of Private and Public Discovery IV. A NEW FRAMEWORK FOR REGULATORY DISCOVERY A. Discovery is a Plural Device B. Costs Reconsidered: Absolute Versus Relative Costs C. The Implications of Regulatory Discovery 1. Private Enforcement as a Separate Category 2. Judicial Administrability 3. Regulation and Transsubstantivity 4. The Propriety of Producer Pays 5. Transparency and Protective Orders D. The German (Dis)advantage in Civil Procedure? CONCLUSION INTRODUCTION

Discovery is the backbone of American litigation and sits at the center of a constellation of procedural doctrines. It has shaped pleading standards, qualified immunity, and summary judgment jurisprudence and, as a practical matter, determines settlement negotiations, case outcomes, and the prevalence of trials. (1) Across a range of contexts, from civil rights to antitrust and employment claims, discovery is often outcome determinative. Perhaps because of its centrality in the system, no single procedure generates more controversy. Critics cast discovery as unconstrained, burdensome, overly costly, intrusive, and "nuts." (2) Supporters, by contrast, argue that complaints about discovery costs are empirically unproven and that discovery provides "public benefits." (3) A growing chorus of commentators from both camps and even courts has offered an avalanche of reforms ranging from cost shifting and bespoke discovery contracts to outright abolition. (4) But despite such offers, existing scholarship on discovery theory, to the extent it might serve as a guide to those reforms, is incomplete. Addressing discovery's fundamental underpinning is essential to any clear-eyed assessment of proposed changes. The resulting challenge is apparent: How can we rationalize our discovery system and the core purposes it serves?

This Article tackles the discovery morass with the goal of building a firm theoretical footing for parts of the discovery system. My most basic aim is to complement discovery's traditional foundations in principles of fairness, equality, and settlement with a reconceptualization that draws on regulatory theory and administrative subpoena power. With a better understanding of how discovery could and should work, I hope to then reassess our most important discovery doctrines and scholarly debates in a fuller and more helpful light. The Article thus undertakes the following two goals, among many others:

First, it aspires to clarify the burdens of a current obsession with discovery costs--including the judicial creation of satellite doctrines that close access to court, like qualified immunity and higher pleading standards. While the Supreme Court dodges deeper questions about discovery, it often focuses on the back end of the system--its costs. This dearth of theory and constitutional analysis has atrophied discovery discourse. From the Supreme Court's decisions to raise pleading standards in Twombly and Iqbal, to the attempt to protect police officers from time-consuming depositions, discovery costs have become a justification for restrictive procedure. But tethering discovery to other doctrines like pleading and qualified immunity is potentially destabilizing. It means that as Advisory Committee amendments or technological changes like machine learning (5) potentially reduce discovery costs, discovery-dependent doctrines should immediately adjust: Twombly and Iqbal would be redundant; rules that encourage settlement unnecessary; qualified immunity obsolete; and even "rigorous" policing of class actions outdated. Although this cascading effect is logically necessary, courts are likely to ignore the consequences and leave in place outdated doctrines.

Second, the Article offers a theoretical structure and new vocabulary to move debates over discovery forward into new territory--that is to say, more productive discussions that engage with the ultimate goals of the system and whether the rules are serving those goals. When it comes to discovery, courts often glide by underlying theories, embracing the simplified view that discovery can be justified because a full exchange of information results in a fair and accurate resolution of a dispute, promotes the ends of equal justice, (6) and ameliorates asymmetries between one-shot plaintiffs and repeat player defendants. (7) Moreover, by forcing the parties to reveal all their arguments and evidence, discovery narrows issues for trial and nudges the parties toward settlement. (8) But this fairness-accuracy-settlement mantra suffers from significant limitations because it overlooks the role that discovery plays in private-enforcement cases. Taking that role into account transforms the ultimate goals of parts of the system and offers a dose of comfort: within the American private-enforcement scheme--one that relies on private litigants to enforce important statutes--our discovery rules make sense and offer an array of benefits.

At the center of the Article is a theory of private discovery that addresses these questions with a regulatory model grounded in administrative power. (9) A long and rich literature has described how the United States depends largely on private plaintiffs to enforce important statutes in contexts like employment, environmental protection, antitrust, and civil rights. (10) In these cases, private lawsuits become a regulatory tool and the legal system transforms from one where "one citizen can seek redress from another in an orderly fashion," (11) into one where citizens or groups of citizens can enforce the law for systemic regulatory purposes. (12)1 extend this literature to argue that in a lawsuit-as-regulation system, discovery is the lynchpin of private enforcement. By forcing parties to disclose large amounts of information, the discovery system deters harmful behavior, structures the regularized production of information within corporations, and, most importantly, shapes the primary behavior of regulated entities. (13) Discovery therefore serves an important purpose in a legal system that relies on private litigants to enforce the law.

While this view of discovery-as-regulation has been discussed by some scholars, the Article at its core pushes the theory forward and fully develops it by focusing on the analogy to administrative subpoena power. (14) That power is the absolute "backbone of an administrative agency's effectiveness," because it gives agencies "the ability to investigate rapidly the activities of entities within the agency's jurisdiction." (15) Agencies can issue ex parte subpoenas for vast amounts of regulated entities' information. (16) The SEC, for example, routinely requests burdensome productions of financial documents. (17) The FTC demands thousands of pages related to any potential merger. The EPA, too, makes regular inquiries into environmental polluters. Civil discovery's broad scope is partly an extension of this power. Congress enacted a wide variety of broad statutes and has delegated enforcement to private plaintiffs rather than agencies. (18) In order for these statutes to succeed, just as the FTC, EPA, and SEC possess subpoena powers, so too do plaintiffs need powerful discovery tools. Beyond individual cases, discovery promotes regulatory goals by influencing how companies run internal...