The Administrative State and the Common Law: Regulatory Substitutes or Complements?

• Jurisdiction: United States,Federal
• Publication year: 2016
• Citation: Vol. 65 No. 6

The Administrative State and the Common Law: Regulatory Substitutes or Complements?

Catherine M. Sharkey

THE ADMINISTRATIVE STATE AND THE COMMON LAW: REGULATORY SUBSTITUTES OR COMPLEMENTS?

Catherine M. Sharkey^*

Abstract

The modern administrative state looms larger than ever, and grows at an ever-accelerating pace. Federal agencies have proliferated in virtually every significant regulatory domain. U.S. government spending on federal regulatory activity in 2014 is estimated to have been $49.8 billion. Federal agencies now employ approximately 284,000 people, and the Code of Federal Regulations now weighs in at over 175,000 pages. Not everyone is pleased with these developments.

Four such individuals—Chief Justice Roberts, Justices Thomas, Alito, and the late Justice Scalia—have expressed their displeasure, indeed their alarm, with consistency, clarity, and vigor. They warn that the rise of administrative agencies, and the attendant ascendance of doctrines of mandatory judicial deference to agency interpretations of federal law, signals no less than the end of our government's separation-of-powers structure, and our right to live our lives without fear of bureaucratic encroachment at every turn. Their opinions and dissents sounding this theme reverberate with seemingly unprecedented urgency in the face of a never-before-encountered threat.

As it turns out, however, the same alarm bell was sounded decades ago—by Roscoe Pound. Pound viewed administrative action as lawless, capricious, and marred by prejudice. He warned that agencies were self-interested, too powerful, and ever grasping for even more power.

After outlining the uncannily similar attitude towards agencies expressed by Pound and our Supreme Court's conservative core, this Article probes how those views diverge. For Pound, the ideal regulatory alternative to agency action was the common law of torts, which he characterized as the last bastion of a democratic society. This is decidedly not the view of the conservative core. Their antagonism towards the common law of torts, which apparently runs

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even deeper than their hostility towards agencies, is on full display in their federal preemption decisions. How, then, to fill the regulatory void the conservative core seems to leave agape? This Article proposes one possible path to the answer.

Drawing inspiration from the views of Pound himself, as well as the work of Guido Calabresi, this Article proposes that courts should adopt an altogether new approach, one whereby they effectively incorporate input from federal agencies, while at the same time ensuring that such agencies do not overreach. This need not entail the wholesale rejection of agency interpretive authority espoused by the conservative core in its non-preemption decisions. Instead, and as even Pound recognized, courts can and should exercise oversight to ensure that agency interpretations and conclusions are backed by responsible rulemaking procedures and empirical support. This approach can lead to an effective tort-agency partnership, where the administrative state and common law can operate as regulatory complements.

Introduction

The growth of the national government is perhaps the most significant feature of the past century. Concomitant with this expansion is the growth of the Executive Branch, which "now wields vast power and touches almost every aspect of daily life."¹ There has been a "dramatic shift in power over the last 50 years from Congress to the Executive."² That "shift [has been] effected through the administrative agencies."³ The emergence of administrative agencies as a "fourth branch" of American government has had dramatic repercussions on the evolution of the common law of torts, and the further expansion of the administrative state calls for innovative responses.⁴ Federal

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preemption of state tort law—whereby, for example, a regulation promulgated by a federal agency ousts competing state tort law claims—is a salient illustration of how agency regulation supersedes (or even subverts) regulation by tort litigation.⁵

The conventional view is that the administrative state poses a threat to the common law of torts and, to the extent that the fourth branch is resisted or dismantled, common law torts will flourish once again.⁶ Indeed, for this symposium I was asked to address two provocative questions: Has the administrative state replaced our common law tort system in the United States? And, in the wake of preemption, is our status as a common law country now a thing of the past?

Perhaps not coincidentally (given the Pound Institute's cosponsorship of the symposium), Roscoe Pound is typically invoked as one who—with great

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chagrin—would answer both questions in the affirmative.⁷ Particularly in the later stages of his life and work, Pound evolved into a bitter critic of the New Deal and the growth of the administrative state. In a precursor to the warnings about executive overreach articulated by today's "conservative core" on the Supreme Court, Pound inveighed against the dangerous accretion of centralized power and the expansion of a discretionary Executive Branch, which he claimed—as have Chief Justice Roberts and Justices Scalia, Thomas, and Alito—threaten our balanced government and endanger the liberty of individual Americans.⁸

Roscoe Pound's rants against the administrative state reverberate in recent times in the passionate prose of Chief Justice Roberts and Justices Scalia, Alito and (especially) Thomas. As critics of the New Deal and the administrative state, Pound and these conservative core Justices envision a glorified nineteenth-century version of American government and rule of law, to which they yearn to return. But their wishful routes to the past diverge. Pound's idealized vision elevates the common law of torts, forged through jury trials and adversarial legal processes, which vests regulatory power in the people and the courts, rather than in a centralized, bureaucratic system. The conservative core Justices show no such nostalgia for the common law of torts; their arguments for taming the administrative beast have a distinctly deregulatory thrust.⁹ Their position shows that resistance to the administrative state does not

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necessarily pave the way for the flourishing of the common law of torts. A close study of recent pharmaceutical drug and medical device preemption cases demonstrates, moreover, that these Justices' hostility toward the administrative state—and, more specifically, their efforts to rein in agencies' authoritative power by curtailing doctrines that accord deference to agency interpretations of statutes and regulations—does not lead inexorably to an anti-preemption position in defense of the common law of torts.

Part I presents the conventional view that the administrative state represents an enemy of the common law of torts as regulator. Pound exemplifies the position that combines hostility toward the administrative state with a celebration of the common law of torts as substitute regulator.¹⁰ Part II presents the modern Supreme Court "conservative core" Justices' surprisingly similar attack on the administrative state, which diverges from Pound's position in its hostility toward the common law of torts, as evident in these Justices' opinions in federal preemption cases. This juxtaposition of Pound with the conservative core yields two important insights: first, the fact that the Justices' forbears tried, as mightily as do they, to staunch the growth of the administrative state suggests that the behemoth may be tamed but not defeated; second—and more significant, for purposes of this Article—it does not follow that resistance to the administrative state, standing alone, necessarily creates an environment in which the common law of torts will flourish. Certainly, this is not the aim of the current detractors of the administrative state who sit on the Supreme Court today.

Part III gestures toward a new vision of tort law in the twenty-first century. Pound¹¹ —and, later, Guido Calabresi¹² —recognized statutes as the primary challengers to judicial power. Today, that position is occupied by the

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regulatory state and its dominant federal agencies. Pound and Calabresi resisted, however, a turn toward an attitude that since has been termed "common-law chauvinism."¹³ Calabresi, moreover, promoted colloquy between the courts and legislatures, envisioning a "legislative-judicial dialogue that seeks to make modern lawmaking as responsive to the need for continuity and change as common law adjudication was said to have been in another age."¹⁴ Given the vastly important—and, seemingly, largely fixed—role of the fourth branch in the modern system of American government,¹⁵ our twenty-first-century challenge is to harness judicial oversight to promote that colloquy between courts and federal agencies.

I. Roscoe Pound and the Twentieth-Century Administrative State's Threat to Regulation by Common Law

A conventional view posits federal health and safety regulation and tort liability as regulatory substitutes.¹⁶ The growth of the administrative state poses a threat to the common law of torts, on this view, because it will replace the ex post, decentralized form of private regulation via litigation with ex ante, centralized public administrative rules.¹⁷ Pound is an effective poster child for this position, as he coupled a deep, bitter hostility toward growing administrative power with an equal passion for the common law form of regulation.

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A. Hostility Toward the Administrative State

In the mid-twentieth century, Pound became an especially acerbic critic of the New Deal and the expanding administrative state.¹⁸ He made spirited attacks on what he perceived to be the lawless, biased, and self-dealing nature of agency decision-making and, from his academic perch at Harvard Law School, disseminated his views widely to the general public.¹⁹ John...