Solving Jurisdiction's Social Cost

• Publication year: 2021

SOLVING JURISDICTION'S SOCIAL COST

Dustin E. Buehler(fn*)

Abstract: Federal court subject-matter jurisdiction rules incur a significant social cost- when jurisdiction is found lacking, courts must dismiss, no matter how many years and resources the parties have spent on the case. Indeed, hundreds of belated jurisdictional dismissals occur each year after parties have already engaged in discovery, dispositive motions, or even trial.

Federal judges tolerate this waste largely because they view nonwaivable jurisdictional rules as a function of structural values rooted in the Constitution, rather than efficiency concerns. In contrast, scholars tend to focus primarily on efficiency arguments while discussing jurisdictional nonwaivability, de-emphasizing important structural interests. Both theories are overly monistic and fail to consider the full range of jurisdictional values.

This Article advances two claims. First, jurisdictional values are pluralistic and multipolar, implicating structural and efficiency interests that are fundamentally incommensurable. We should not simply attempt to maximize a single set of jurisdictional values. And because there is no single unit of measurement for weighing structural values such as "separation of powers" against efficiency interests such as "litigation waste," we should resist forcing these interests through a cost-benefit analysis. Instead, courts and rule makers should seek equilibrium among all relevant values when fashioning jurisdictional rules.

Second, using this equilibration approach, the Article proposes a solution to jurisdiction's social cost: Courts should resolve all subject-matter jurisdiction questions at the outset of litigation. Federal district courts should affirmatively certify the existence of jurisdiction in every case; after that point, objections to statutory federal jurisdiction would be waived. Moreover, to accommodate both structural and efficiency interests, appellate courts should have discretion to immediately review jurisdictional orders when the benefits of doing so outweigh the costs. Lastly, federal courts should use the threat of sanctions to deter private-party abuse of jurisdictional rules.

INTRODUCTION ................................................................................ 654

I. A PLURALISTIC THEORY OF JURISDICTION ..................... 658

A. Structural Values ................................................................ 659

B. Efficiency Values ............................................................... 661

C. Problems Presented by the Structural-Efficiency Dichotomy .......................................................................... 663

1. Value Monism .............................................................. 663

2. Incommensurability ...................................................... 665

D. The Search for Equilibrium Among Competing Values .... 668

II. DECONSTRUCTING JURISDICTIONAL VALUES ................ 672

A. Delineating Structural Values ............................................. 672

1. Separation of Powers: Legislative and Judicial Prerogatives .................................................................. 673

2. Federalism: State and Federal Prerogatives .................. 675

3. Working with Structural Values ................................... 677

B. Unpacking Efficiency Values ............................................. 678

1. The Goal: Socially Optimal Jurisdictional Rules .......... 679

2. The Problem: Perverse Private-Party Incentives .......... 680

a. Incentives to File Jurisdictionally Suspect Lawsuits ................................................................. 681

b. Incentives for Defendants to Wait and See ............ 683

c. Incentives for Plaintiffs to Belatedly Challenge Jurisdiction ............................................................. 687

3. Inadequate Incentives for Early Adjudication of Jurisdictional Issues by Federal Courts .................. 688

III. A NEW APPROACH FOR SOLVING JURISDICTION'S SOCIAL COST ............................................................................ 689

A. Critique of Existing Proposals ............................................ 690

B. A New Approach: Achieving Jurisdictional Equilibrium .. 694

1. Early Jurisdictional Rulings .......................................... 694

a. Mandatory Jurisdictional Certification .................. 694

b. Facilitating Certification: Jurisdictional Pleading and Discovery ........................................................ 697

2. Foreclosing Jurisdictional Challenges .......................... 700

a. Cutting off Objections to Statutory Jurisdiction .... 700

b. Using Article III as a Jurisdictional Backstop ........ 702

3. Interlocutory Appeal of Jurisdictional Rulings ............. 703

4. Using Sanctions to Deter Abuse by Litigants ............... 705

CONCLUSION .................................................................................... 707

INTRODUCTION

In recent years, the Supreme Court has reminded us that federal court subject-matter jurisdiction is both inflexible and unforgiving.(fn1) It has stressed that the parties cannot consent to or waive jurisdictional requirements,(fn2) and that federal courts have an obligation to raise jurisdictional defects, on their own initiative if necessary.(fn3) The Court also has emphasized that litigants can raise jurisdictional defects at any time, even for the first time on appeal.(fn4) And once again, we have witnessed the harsh effect of latent jurisdictional defects: The court must dismiss the suit, forcing the parties to start over, no matter how many years and resources they have spent on litigation up to that point.(fn5)

The social waste generated by jurisdictional nonwaivability(fn6) is real and alarming. Federal courts conduct a belated jurisdictional inquiry in approximately five hundred cases each year,(fn7) analyzing subject-matter jurisdiction for the first time months or years after the close of the pleadings,(fn8) and sometimes only after the case is on appeal.(fn9) Courts dismiss about forty percent of these cases, wasting resources the parties have already spent on discovery, dispositive motions, and sometimes even on trial.(fn10) Given the exorbitant cost of modern litigation-it is not unusual for litigants to spend hundreds of thousands of dollars on discovery and merits litigation(fn11)-the social cost of belated jurisdictional dismissals is intolerable.

Federal courts tolerate this waste, however, largely because they view jurisdictional nonwaivability as a function of immutable structural values rooted in the Constitution. When judges dismiss cases on jurisdictional grounds, they reference federalism and separation-of-powers interests,(fn12) casting themselves as impartial enforcers of jurisdictional boundaries drawn by Congress.(fn13) In doing so, they de-emphasize non-structural considerations, such as efficiency and economic waste. Indeed, some courts have stated that these non-structural considerations are entirely irrelevant to jurisdictional analysis.(fn14)

Several scholars have criticized this overreliance on structural interests, basing their arguments primarily on efficiency values.(fn15) They point to the significant social waste resulting from belated jurisdictional dismissals,(fn16) as well as the tendency for litigants to strategically contest jurisdiction in ways that exacerbate this waste (i.e., when a party raises a jurisdictional defect for the first time after losing on the merits, in order to void the adverse judgment).(fn17) While bringing much-needed attention to jurisdiction's social cost, many of these scholars unfortunately have been either indifferent or overtly hostile to the important structural interests underlying nonwaivable jurisdictional rules.(fn18)

In this respect, courts and commentators are talking past one another when it comes to federal jurisdiction. Remarkably, they increasingly resort to discordant, monistic theories of jurisdictional value, which fail to consider the full range of interests implicated by jurisdictional rules.(fn19) This is further complicated by the fact that the two sides are talking about values that are fundamentally incommensurable-there is no single unit of measurement that we can use to weigh structural values such as "separation of powers" against efficiency interests such as "litigation waste."(fn20) Indeed, perhaps the most surprising aspect of the debate on jurisdictional nonwaivability is that it is not a debate at all.

I aim to provoke a real debate on jurisdictional nonwaivability by advancing two primary claims. First, I argue that jurisdictional values are inherently pluralistic and multipolar, and that courts and rule makers should seek equilibrium among values when making jurisdictional rules. In practice, nonwaivable jurisdictional rules are pluralistic because they implicate both structural and efficiency values-interests that are fundamentally incommensurable. Courts and rule makers should not simply attempt to maximize a single set of jurisdictional values, nor should they force incommensurable structural and efficiency interests through a cost-benefit analysis. Instead, they should take a full inventory of relevant interests, and formulate jurisdictional rules that achieve equilibrium among those values.

Second, using an...