Litigation Rulemaking.

Author:Mittal, Urja

NOTE CONTENTS INTRODUCTION 1013 I. COURT RULEMAKING 1015 II. AGENCIES AND COURTS 1017 III. AGENCIES AT THE FRONT END 1021 A. Binding Arbitration Clauses 1021 1. CMS Rule on Binding Arbitration 1022 2. CFPB Rules on Binding Arbitration 1025 3. Litigation Rulemaking and Rule 12 1027 B. Class Waivers in Arbitration Agreements 1031 1. NLRB Decisions on Class Waivers 1032 2. Litigation Rulemaking and Rule 23 1034 IV. AGENCIES AT THE BACK END 1036 A. Confidential Court Orders and Settlement Agreements 1036 1. NHTSA & CPSC Best Practices for Protective Orders and 1037 Settlement Agreements 2. Litigation Rulemaking and Rule 26 1039 B. Class Action Settlements 1041 1. FTC Orders to Claims Administrators 1043 2. Litigation Rulemaking and Rule 23 1044 V. AGENCIES AS LITIGATION RULEMAKERS 1046 A. Court Rulemaking Versus Litigation Rulemaking 1047 B. Benefits of Litigation Rulemaking 1049 1. Domain-Level Expertise 1050 2. Polycentric Problem Solving 1052 3. Coherence 1054 C. Drawbacks of Litigation Rulemaking 1055 1. Agency Capture 1055 2. Transsubstantivity 1058 D. Institutional Implications 1060 1. Legitimacy 1060 2. Agency-Court Dynamics 1062 3. Substantive Outcomes 1065 CONCLUSION 1066 INTRODUCTION

At mid-century, Charles Clark, one of the primary drafters of the Federal Rules of Civil Procedure, (1) articulated the need for a regular reexamination and revival of procedural law: "Unless revivified, the modern new procedure will soon become as hard and unyielding as the old systems to which reform was directed. Such, after all, is the nature of red tape, which procedure is and which all orderly conduct of human activities must be." (2) Quoting an earlier historian of the law, Clark compared the '"inveterate nature of the incongruity between procedure and substantive law,' for 'the former petrifies while the latter is in its budding growth,' and 'the conservatism of the lawyer preserves the incongruity.'" (3)

Indeed, the law of civil procedure calls for constant revision. Over the past half-century, the growth of the federal docket, (4) the rise of alternative forms of dispute resolution, (5) and the advent of the administrative state (6) have all contributed to dramatic changes in the landscape of litigation. Today, heeding Clark's call, administrative agencies are newly revivifying procedural law. By tailoring the rules of civil procedure to different areas of substantive law, agencies are effectively amending the Federal Rules of Civil Procedure, ensuring that they do not become "hard and unyielding." This Note describes these agency actions and how they compare to the traditional approach to procedural lawmaking.

This Note proceeds in five parts. Part I begins by reviewing the established process of drafting and amending the Federal Rules of Civil Procedure, as set out in the Rules Enabling Act. A closer look at this process illuminates how federal courts have established their procedural regime in the past and foreshadows the similarities between the existing rulemaking process and the new, agency-led approach.

Part II outlines the different relationships between administrative agencies and federal courts. The two primary ways in which agencies relate to federal courts are (1) through the review of agency action by federal courts and (2) through agencies functioning as litigation gatekeepers for private enforcement suits brought in federal courts. This Note introduces an emerging, third relationship between agencies and federal courts: agencies acting as litigation rulemakers. As litigation rulemakers, agencies are taking actions that effectively amend the Federal Rules and are thereby setting the procedural boundaries for claims brought in federal court.

Agencies acting as litigation rulemakers are shaping court procedures at both the front and back end of litigation. Part III details examples of litigation rulemaking at the front end of federal litigation, where agencies are deciding what kinds of claims can proceed in federal court and what forms these claims can take. For instance, through notice-and-comment rulemaking, some agencies have required that certain claims be adjudicated in federal court. In another case, an agency has decided that class waivers of arbitration are not permitted. Part IV examines how agencies have engaged in litigation rulemaking at the back end of federal litigation, where agencies are shaping the kinds of relief available to parties litigating disputes in federal court. For example, a few agencies have limited the confidentiality of court orders and settlement agreements through guidance that urges parties to disclose certain information to federal agencies. Another agency has ordered the disclosure of information relating to class action settlements. These examples illustrate how agencies are able to play a role in writing the procedural rules at each stage of federal litigation.

Finally, Part V compares the conventional court rulemaking process with litigation rulemaking and investigates its benefits and drawbacks. The benefits include the ability of agencies to use their expertise to fashion procedural rules appropriate for each regulatory regime, the capacity of agencies to engage in polycentric problem solving, and the ability of agencies to tailor procedural regimes to make them more coherent with particular substantive aims. The drawbacks include the potential for outside influence and agency capture to affect litigation rulemaking and the decline of transsubstantive procedural law. On net, the benefits likely outweigh the costs. But court rulemaking has not receded into the past; rather, agencies are now joining forces with the courts in reshaping the Federal Rules. As a result, litigation rulemaking and court rulemaking can and should complement each other. The Note concludes with a discussion of what the advent of agency-led litigation rulemaking means for federal litigation and for the relationship between administrative agencies and federal courts generally.

The agency actions discussed in this Note are important not only because they are each individually significant--and in many cases, the subject of active, high-profile litigation and debate--but also because they illuminate the capacity of agencies to regulate courts and the litigation that takes place within the courthouse doors. While the examples are drawn from a range of agencies, each demonstrates how courts are being constrained in a heretofore unrecognized way. In addition, when federal courts respond to litigation rulemaking through judicial review of agency action, a novel dialectic arises. This dialectic between agencies and courts raises new questions about the legitimacy of litigation rulemaking, the scope of judicial review, and the role of Congress in overseeing this agency-court relationship.

On balance, I conclude that this kind of agency action not only abides by traditional separation-of-powers boundaries but is also desirable. In Clark's words, litigation rulemaking promotes congruity between procedural and substantive law. In combination with court rulemaking, litigation rulemaking not only helps ensure that the Federal Rules are "revivified," but also enhances the democratic legitimacy of the overall project.


    Historically, the task of drafting the rules of procedure for federal litigation has been assigned to the federal courts themselves. In the Rules Enabling Act of 1934, Congress authorized the federal courts to set their own rules of practice, procedure, and evidence, subject to Congress's ability to reject, modify, or defer any of the rules. (7) Pursuant to the Act, the federal courts coordinate the task of rulemaking through the Judicial Conference of the United States and its Committee on Rules of Practice and Procedure, typically referred to as the Standing Committee. (8) The Standing Committee regularly reviews recommendations from its five advisory committees and proposes changes to the rules to the Judicial Conference as "necessary to maintain consistency and otherwise promote the interest of justice." (9) The different advisory committees that propose changes are comprised of federal judges, practicing lawyers, law professors, state judges, and representatives from the Department of Justice. (10)

    One of the advisory committees focuses on drafting and amending the Federal Rules of Civil Procedure. As initially drafted, the Rules were meant to comprise a transsubstantive procedural regime for federal courts, collapsing distinctions between law and equity and granting judges greater discretion to shape courtroom proceedings. (11) I refer to the Rules Enabling Act process for drafting and amending the Federal Rules of Civil Procedure as court rulemaking.

    Today, the court rulemaking process involves at least seven stages of comment and review and typically takes two to three years from start to finish. Anyone can begin the process of drafting or amending a Rule by proposing a suggestion to the Standing Committee, which will refer the proposal to the relevant advisory committee. The advisory committee will decide whether to accept, defer, or reject the suggestion. If accepted, the suggestion will be drafted as an amendment and published for public comment. The advisory committee will then consider the public comments and send a report to the Standing Committee with its final recommendations. If the Standing Committee approves the proposed rule change, it will send its recommendation to the Judicial Conference along with its own report. The Judicial Conference will then consider proposed amendments at its annual September meeting, and if approved, the amendments will be transmitted to the Supreme Court. If the Supreme Court approves the rules, it must then send the proposed amendments to Congress. If Congress does not enact legislation within seven months to reject, modify, or defer the rules, the rules take effect as law on December 1 of that year. (12)


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