Exodus from and Transformation of American Civil Litigation

• Citation: Vol. 65 No. 6
• Publication year: 2016

Exodus from and Transformation of American Civil Litigation

Richard D. Freer

Emory University School of Law

EXODUS FROM AND TRANSFORMATION OF AMERICAN CIVIL LITIGATION

Richard D. Freer^*

Abstract

The story of American federal civil litigation over the past half century is one of exodus and of transformation—exodus from and transformation of the traditional model of "court litigation." The exodus has taken various paths, especially contractual arbitration. The Supreme Court has extended the Federal Arbitration Act to contracts of adhesion and to the adjudication of federal statutory rights. Thus arbitration has become mandatory for claims by consumers and employees. In approving this expansion, the Court increasingly makes clear that it sees nothing special about court litigation—that it and arbitration are mechanisms of equal dignity.

But, at least as envisioned historically, court litigation plays a far broader role than arbitration. It is a transparent public process, governed by the rule of law. It generates the common law that governs most aspects of our daily lives. It is pivotal in social ordering. Arbitration, in contrast, goes on behind closed doors, is not cabined by the rule of law, and does not result in reasoned opinions. Arbitration resolves the dispute at hand and does little else. Accordingly, some have argued that the view that arbitration and court litigation are equivalents cheapens the values embodied in court litigation.

That argument is strong, but would be stronger if today's version of court litigation resembled the historical model. It does not. Courts today are less often fora for public adjudication and law generation than monuments to mediation. Litigants not cajoled into settlement are hustled through a front-loaded process focused increasingly on adjudication without trial. Indeed, some judges conclude that going to trial reflects a systemic "failure."

The driving force of both the exodus from court litigation and its transformation is the perception of excessive caseload. There are not enough

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Article III judges to do the job in accord with the historical model. Thus, the Court and drafters of the Federal Rules have pursued two safety valves: getting disputes out of the courts and streamlining litigation to foster pretrial resolution. They have pursued exodus and transformation.

Introduction

The story of American federal civil litigation over the past half century is one of exodus and of transformation—exodus from and transformation of the traditional model of public dispute resolution. The exodus from what we will call "court litigation" has taken various paths. Innumerable claims are channeled out of Article III courts to legislative tribunals, and judges frequently require litigants to submit to court-annexed alternative dispute resolution (ADR).

The most notable path of exodus in recent years, however, has been to arbitration pursuant to contract between the parties. The Supreme Court has extended the Federal Arbitration Act,¹ which was passed in 1925 to facilitate enforcement of commercial arbitration clauses, to contracts of adhesion and to the adjudication of federal statutory rights. Thus arbitration has moved from the business-to-business realm to govern resolution of potential claims by consumers and employees. In approving this expansion, the Court increasingly makes clear that it sees nothing special about court litigation—that it and arbitration are mechanisms of equal dignity.

This conclusion is possible if we consider the role of court litigation merely to be the resolution of disputes. Historically, though, court litigation has reflected broader goals and values. Court litigation is a public, transparent process, governed by the rule of law. It generates the common law that governs most aspects of our daily lives. Court litigation is intended to play a significant role in social ordering. Arbitration is not. Arbitration goes on behind closed doors, unseen by the public and unreported by the media; it is not cabined by the rule of law, and does not result in written opinions to guide society. Arbitration resolves the dispute at hand and does little else. The view that arbitration and court litigation are equivalents cheapens the values embodied in court litigation. Some argue that it threatens the law-giving function of the judiciary.

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This argument is strong, but would be stronger if today's version of court litigation resembled the historical model. It does not. Courts today are less often fora for public adjudication and law generation than monuments to mediation. The current judicial bureaucracy cajoles parties into settling their disputes. Cases not settled are hustled through a front-loaded process focused increasingly on adjudication without trial. Indeed, some judges conclude that going to trial reflects a systemic "failure."² Thus, court litigation has transformed from dispute resolution and law generation to a forced march through progressively smaller windows of opportunities for public adjudication.

Both the exodus and the transformation are fueled by the perception of excessive caseload.³ There are not enough Article III judges to do the job in accord with the historical model. Yet Congress has not appreciably increased the number of Article III judges. Thus, the courts (led by the Court and drafters of the Federal Rules) have pursued two safety valves: getting disputes out of the courts and streamlining litigation to foster pretrial resolution. They have pursued exodus and transformation.

Part I of this Article discusses the traditional model of court litigation, and the values it embodies, and describes the strains put upon that model by increased docket pressure in the last quarter of the twentieth century. Part II discusses the exodus from that system, particularly as facilitated by the Court's expansive embrace of privatized arbitration. Part III outlines the transformation of court litigation, with a front-loaded process focused on settlement or adjudication without trial, and characterized increasingly by contract procedure. Finally, Part IV suggests that a broad theme underlying both the exodus and the transformation is the supremacy of contract. This theme is consistent with a general (though not universal) political embrace of deregulation and freedom of contract. The Court has erred, however, in applying principles of freedom of contract to non-negotiated, form arbitration agreements. By permitting the imposition of arbitration clauses with bans on aggregate litigation, the Court imperils access to dispute resolution of any type, at least in cases involving large numbers of negative-value claims.

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I. The Model and the Strain on It

Obviously, court litigation resolves disputes. But it does much more. As Lon Fuller explained, court litigation is "a form of social ordering," of governing and regulating the relations among people.⁴ If mere dispute resolution (and, for that matter, efficiency) were the only goal, we could decide cases by coin toss. We do not do that, however, because court litigation is supported by normative values⁵ that are reflected in various characteristics of the process.

American court litigation is public. Courthouses are public buildings, with open access to most records and proceedings.⁶ Litigation thus informs people about events that may affect their lives, such as alleged problems with widely used products or fraudulent misrepresentations to investors or consumers.⁷ More broadly, it can "supply narratives to be shared and debated by a heterogeneous citizenry."⁸ Public access allows the citizenry (including the media) to assess the performance of the judges and lawyers, and to monitor the political legitimacy of the judicial system.⁹

Court litigation is adversarial and participatory, with each side, through counsel, presenting its positions and reasoning concerning the relevant law. The system relies on this adversarial crucible, with testimony under oath, to sharpen the legal issues to be decided by the judge.¹⁰ On questions of fact, the traditional centerpiece is trial, at which each party is permitted to tell its story

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to the fact-finder. In some cases, that fact-finder is the jury, which reflects the wisdom of the common person and engages public self-governance.¹¹ Trial in open court is understood to be "constitutive of American democracy."¹²

The process is overseen by a neutral, generalist trial judge, who is charged with the responsibility of applying the rule of law. The adjudicated case ends with entry of the court's judgment, a public document announcing the outcome. The trial judge's decisions on matters of law are subject to plenary review by the court of appeals, further ensuring fidelity to the rule of law. The court's reasoning often is set forth in a written, publicly available opinion, explaining the decision in accordance with established law (or justifying a change in the law).¹³

The reasoned application of fact to law does more than resolve the dispute at hand. It limns and develops the law itself. Most of our general law of contract, tort, and property is common law, the product of the judicial branch. The authoritative interpretation of our governing documents comes from case law. And though judicial decisions are retrospective in that they make judgments about past events, they play a prospective role in guiding citizens

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about appropriate behavior.¹⁴ Moreover, the transparent public nature of the process and decisions allows the legislature to react and abrogate various holdings, which is an integral part of checks and balances.¹⁵

Like any model, this paradigm has never been fully realized.¹⁶ Excessive caseload creates pressure that may lead to change. Caseload "crises" have commanded significant attention at various times in our history. In 1956, for example, Attorney General Brownell convened a national conference on court congestion...