14 Rev. Litig. 113

The Federal Civil Rules Amendments of 1993 and Complex Litigation: A Comment on Transsubstantivity and Special Rules for Large and Small Federal Cases

Mark C. Weber

The Federal Rules of Civil Procedure never had any special provisions for complex litigation, apart from the class action rule and its rule for derivative actions. Nevertheless, in the author’s view, the Federal Rules of Civil Procedure are well shaped, by design and operation, for adjudicating complex cases. The author makes this argument on the ground that the Federal Rules of Civil Procedure originated in equity practice and copied that practice’s flexible and discretionary procedural mechanisms for the adjudication of complex litigation cases. Most importantly, the joinder and consolidation rules serve to limit duplicative attorney and court activity. Furthermore, rules enabling the court to manage pretrial and trial proceedings and to narrow the issues provide for early court involvement in the case and enable the court to keep litigation manageable. The changes to the Federal Rules of Civil Procedure adopted in 1966 and 1993 left these favorable procedural mechanisms mostly unaffected. The author proposes that new contributions to the efficiency in the operation of the federal courts might be obtained by departing from the current trans-substantive approach and the insensitivity to size approach. He suggests introducing special rules for small cases rather than creating particular rules for complex litigation.


I. Introduction    The Federal Rules have always been designed for complex litigation. I refer not just to the Federal Rules of Civil Procedure of 1938, but also to the Federal Equity Rules, first enacted in 1822, and revised and expanded in 1842 and 1912. n1 Equity cases were the complex litigation of the nineteenth century, n2 and the rules the federal courts used in those cases became the model for the 1938 Rules of Civil Procedure. n3 The Federal Rules of Civil Procedure were intended for use both in complex equity cases and in simpler actions brought at common law. n4 Nevertheless, the Federal Rules have never had any special provisions for complex litigation, apart from the class action rule and its adjunct rule for derivative actions. n5    In this Article on the 1993 Rules changes, I hope to demonstrate that the Federal Rules as a whole are well shaped, by design and operation, for adjudicating complex cases. The Federal Rules are well designed for that purpose, for they originated in equity practice and copied equity practice's flexible procedural mechanisms for the adjudication of complex cases. The 1993 amendments do little to change the underlying approach of the Federal Civil Rules. Notably, they continue the pattern of earlier rulemaking efforts, which employed the same rules for all types and sizes of civil cases, and they embody ideas of flexibility and judicial discretion, just as the earlier rules did. Because the amendments continue that approach to all cases, they will not have a major impact on complex litigation. The changes the amendments make can be expected to serve complex litigation about as well as, or perhaps a little better than, the previous Rules did.    New contributions to efficiency in the operation of the federal courts might be obtained by departing from the transsubstantivity and insensitivity to size that is characteristic of the current Federal Rules, but not by the creation of special rules for various kinds of complex litigation. Instead, the federal courts would more likely benefit from special rules for small cases of the types that are commonly found on the federal civil docket: collections of federally guaranteed debt, lower damages diversity suits, Federal Employers Liability Act (FELA) n6 suits, and other cases in which litigation costs are most likely to rise out of proportion to the amount in controversy. n7 II. The Federal Rules and Complex Litigation: The Legacy of Equity Practice and the Virtues of Discretionary Procedure    The Federal Equity Rules have imparted to the Federal Rules of Civil Procedure a basic suitability for use in complex cases. The Equity Rules provided a significant service by guiding courts through complex litigation. Railroad reorganizations, bondholder suits, and class actions all fell on the equity side of the federal docket when they met federal jurisdictional standards. n8 In the closing years of the nineteenth century, more and more of these complex business cases found a home in the federal equity caseload as Congress expanded statutory jurisdiction standards to accommodate them. n9    Not all cases litigated under the Equity Rules were complex, and some cases brought at common law had complicated structures and lengthy disposition times, but in general the simpler federal cases were common law matters. n10 If anything, those cases grew simpler in structure during the nineteenth century under the dual influences of the drive for simplification of common law disputes and the push for restrictions on the liability of large industrial and commercial enterprises. The first influence, the drive for simplification, has been traced to the Jacksonian ideal of "every man his own lawyer;" n11 it reached fruition in the set patterns of jural relationships and corresponding remedies described by Hohfeld in the early twentieth century. n12 The second influence, restriction of liability, is usually ascribed to the rising power of industry after the Civil War; n13 its success lasted until the emergence of product and premises liability in the 1940s and 1950s. n14    While the original Federal Rules of Civil Procedure were largely modeled on the Federal Equity Rules, n15 the commentary that accompanied them stressed their equity origins less than their connection to the latest reforms in states using code pleading and their further improvement on those reforms in the direction of simplified litigation. n16 It is true that the original Rules of Civil Procedure drew from contemporary Field Codes, n17 and they did simplify and increase the rationality of some common law litigation. The most dramatic simplification occurred in federal districts forced by the Conformity Act n18 to apply the procedural law of states that still had elaborate pleading requirements, n19 arcane procedural terminology, n20 or elaborate motion practice serving as a weak substitute for pretrial discovery. n21 The simplicity also resulted from elimination of the part state procedure, part federal procedural common law that characterized later Conformity Act practice. n22 The supporters of the 1938 Rules were quick to emphasize the aesthetic, efficiency, and fairness advantages of simplicity. n23 The examples they most frequently cited were plain, common law actions for damages that could become complicated under Conformity Act procedure, but would be handled briskly and efficiently under the Federal Rules. n24 Still, the supporters' reliance on the Rules' simplicity and applicability to simple common law cases does not alter the reality that the original Civil Rules built upon Federal Equity Rules, whose design was for cases that were highly complex.    After the adoption of the 1938 Federal Rules, social conditions, legislative initiative, and attorney creativity led promptly to the proliferation of common law and hybrid common law and equity cases with enough complexity to rival their older equity counterparts. Antitrust and securities fraud cases began the trend, and were followed by civil rights and welfare rights cases, and ultimately by the mass disaster, environmental, and consolidated product injury cases that inspire much procedural commentary today. n25 The Rules themselves stimulated these developments. For example, the availability of a class action proceeding an equity device for a treble damages antitrust claim a common law case produced a new, hybrid form of federal complex litigation. n26 Broad joinder rules permitted elaborate multiparty disputes in tort and contract cases, breaking Hohfeldian patterns. n27    All of this took place under rules that had no special provisions for complex cases apart from those that fit under what now seem to be quite limited provisions for class and derivative actions. n28 Indeed, the federal courts' organized response to the influx of new, complex common law and hybrid matters was not a set of new rules but rather the development of a manual of suggested judicial practices without force of law, the Manual for Complex Litigation. n29    The significant Rules changes of 1966, while liberalizing party and claim structures, made few claims of special utility in complex cases, n30 again apart from those changes in the class action rule. The 1966 changes moved federal practice in common law cases still closer to equity practice, but did so largely by expanding the discretion of district judges rather than by forcing the courts to use new litigation structures. n31    Although the 1993 changes in the Federal Rules occurred at a time when the problems of complex cases were receiving unparalleled attention, n32 the new Rules still do not create any special procedures for those cases. Instead, they continue the approach to rulemaking found in the 1938 Rules, as modified in the fifty five intervening years. This approach is accurately described as transsubstantive n33 and insensitive to the size of the litigation. n34 Nevertheless, because the approach is so heavily influenced by the flexibility and discretion that characterize the early Equity Rules, the 1938 Rules, and all previous federal civil rulemaking ventures, the approach is a satisfactory one for complex litigation.    Rules ordinarily thought desirable in complex cases are the following: (1) provisions that eliminate duplicative attorney and court activity by facilitating consolidation of otherwise dispersed or parallel litigation; n35 (2) provisions that give judges early involvement in cases and responsibility for guiding cases towards disposition; n36 and (3) provisions that permit judges to make ad hoc decisions to keep litigation manageable by concentrating the litigation on matters that are actually in dispute and material to disposition of the case. n37 Measures that match those descriptions are found in the existing Federal Rules.    As would be expected in a set of rules based on equity procedures, the Federal Rules are quite hospitable to consolidation. The agrammatical maxim is that equity delights to do justice and not by halves; n38 similarly, the motto of the Federal Rules was to "make[] one lawsuit grow where two grew before." n39    It is true that some interpretations of the joinder rules have resisted the equity oriented influence of the 1966 revisions. Temple v. Synthes n40 is an example. Rule 19's idea of indispensable parties originates in equity and embodies the maxim about delight and halves. n41 The Third Circuit had applied the 1966 revision of Rule 19 to require the joinder of joint tortfeasors in common law actions when the only real cost of separate suits was inefficiency. n42 In Temple, the Supreme Court rejected this interpretation of the Rule, holding that the Rule did not modify the common law principle that joint tortfeasors need not be sued in the same action. n43 Similarly, courts generally have rejected the use of Rule 23(b)(3) in mass tort cases, although to do so most have had to rely on the Advisory Committee's Notes, rather than the language of the Rule itself. n44    In general, however, the Supreme Court and other federal courts tolerate or encourage judicial activities that bring multiple cases into one proceeding. The language of Rules 18 and 20 could hardly be more accommodating. n45 Mosley v. General Motors n46 and other leading cases n47 interpreting those Rules reinforce the breadth of that language.    The Rules have even broadened the application of otherwise narrow statutory provisions. Section 1407(a) of Title 28 permits consolidation of federal cases from around the country, but only for pretrial proceedings. n48 Nevertheless, judges have successfully retained the cases for consolidated trials by using the elastic Rule 42, which permits a court to make orders joining cases for trial, to effectively bypass the limits in the statute and keep the cases in their own courtrooms. n49    The current edges of permissible consolidation are not the Federal Rules but the jurisdictional provisions found in federal statutes. The American Law Institute Complex Litigation Project, whatever the merit of its final proposals, correctly located the barriers to consolidation of complex cases in federal court in the complete diversity rule and limits on diversity removal. n50 Commentators have also pointed out that restrictive interpretations of the federal question jurisdiction statute keep numerous complex controversies out of the federal courts. n51 Further, changes to facilitate consolidation would have to occur in these jurisdiction statutes. However, for reasons I have stated elsewhere, I believe that changes of that type would distort the mission of the federal courts and do harm to federalism values, shunting state law based mass tort proceedings from state courts into federal courts. n52    The current Rules also confer broad discretion on district judges to enable them to do the second and third tasks frequently considered of paramount importance in adjudicating complex litigation: managing pretrial and trial proceedings, and narrowing the issues to facilitate resolution of the dispute. Procedures derived from equity practice could be expected to give judges the power to control the manner in which the dispute is developed and presented. True to that form, Rule 16 confers broad power to manage cases, particularly since its 1983 amendments. n53 Even the Rules do not define the limits of the managerial power: Broad authority to manage litigation is inherent in the district courts. As an example, a court recognized the inherent power of judges to promote settlement by requiring the parties or other individuals with the authority to settle the case to appear at pretrial conferences, even before the 1993 amendment to Rule 16 explicitly granted the power. n54    With regard to judicial narrowing of issues, just as a chancellor could rule on one or more issues without the assistance of a jury by relying solely on deposition transcripts, so the federal courts, acting on the basis of written materials, may dispose of issues they deem not in material dispute via Rule 56. n55 Few students of the contemporary litigation scene would prefer to see greater summary adjudication authority given to district judges; indeed, a number of commentators question the wisdom of the broad power that now exists. n56    The experience of the states provides a response to reformers who might try to find a way to make the Rules still more discretionary to accommodate the needs of complex cases. Most state courts have managed to get along with few or no special rules for complex cases while doing a great deal of complex litigation quite successfully. n57 This point is particularly significant for Federal Rules reform, because many states have civil procedure systems with less discretion than that found in the Federal Rules provisions. n58 Code states, with a tradition of some rigidity in party structure, residual limits on discovery, and high sensitivity to jury trial rights, n59 would seem inhospitable to complex litigation; special procedures for complex cases might appear indispensable for litigants to obtain justice under these constraints. Yet the quintessential Code states of California, Illinois, and New York n60 have all entertained complex litigation, including fair numbers of mass tort cases. They have done so with little in the way of special rules. n61 Even the special rules in California, which has the most elaborate set, primarily cover scheduling and control matters n62 that are well within the power of a district judge under the present Federal Rules. These facts further support the conclusion that the Federal Rules are unlikely to need still greater discretionary features to facilitate complex litigation.    Thus, the present Federal Rules appear well suited by design for application to complex cases. If further improvements for complex cases are possible, they are likely to emerge from empirical research of the kind being undertaken now in response to the Civil Justice Reform Act (CJRA) experiments. n63 Some experimental provisions will doubtless be of benefit to the adjudication of complex cases. However, there is no reason to expect major benefits to complex cases from changes in the Federal Rules, and there is no evidence of a need for a special set of federal complex litigation rules. III. The 1993 Amendments and Complex Cases: A Modest Transsubstantive Venture, Perhaps a Modest Complex Litigation Gain    The 1993 Rules amendments display the influence of complex litigation and the steps that district judges have taken to deal with it. n64 Judge Sam Pointer, who chaired the Civil Rules Committee when it finalized the amendments, was the principal author of the second edition of the Manual for Complex Litigation. n65 Several procedural mechanisms suggested in the Manual are required or specifically permitted in the amended Rules. The most prominent example is the limit on the types, extent, and timing of the use of discovery devices, including interrogatories and depositions, that the Manual's drafters had urged judges to impose even without explicit authority in the Rules. n66 The Manual also suggested other newly required steps, such as encouraging or forcing counsel to engage in informal, voluntary information exchanges. n67    In fact, given the great attention now being given complex litigation and the career of the chair of the Civil Rules Committee, the most remarkable event is the one that did not happen: The Committee did not propose any special rules for mass torts, big antitrust cases, or other complex litigation. Instead, the Committee made a valiant effort to keep the Civil Rules both transsubstantive and insensitive to considerations of litigation size. That effort extended to the finest of details. For example, the duty of making disclosures without discovery requests covers matters pleaded with particularity. n68 Rule 9 has always required allegations of fraud and several other individual subject matters to be made with particularity. n69 The new amendment to Rule 26 does not incorporate Rule 9 by reference or repeat a similar list of subjects; instead, it applies to all matters actually pleaded with particularity, though these will frequently be those subjects covered by the specificity duty of Rule 9. n70    On the whole, the amended Rules should work a slight benefit in the litigation of complex cases. The change to Rule 11 is likely to reduce satellite litigation with its new safe harbor and discretion provisions. n71 Rule 16 codifies some of the caselaw on settlement activity by judges, reducing uncertainty in a closely watched procedural field. n72 Nevertheless, to the extent that the advantages to the amendments are real, these advantages apply to medium size and small cases just as they do to complex ones. The same is true for some of the discovery amendments, including the beneficial changes conforming the expert witness discovery to present litigation reality n73 and compelling clarification of asserted exemptions from discovery. n74    With respect to the automatic disclosure provisions of the amendment to Rule 26, the predictable complaint about applying it in complex cases is that disclosure will be duplicative. n75 If the case is worth enough, and complex cases almost by definition are, then the parties will request the material anyway, just to be certain they are not missing anything. Although there may be truth in this prediction, it is also true that parties trying to minimize their own costs will carefully examine the material they receive from the automatic disclosures before conducting additional discovery. If the case is complex, the parties surely will undertake additional discovery, but they will use the disclosed material as a basis for their requests, building upon what they know and filling in the gaps. The process need not be duplicative, and may be as efficient as anything that occurred before the Rules changes. No less discovery will take place now than took place under the pre 1993 Rules, however, unless judges intervene.    Judicial intervention seems no more likely to occur in complex cases litigated under the new discovery provisions than before. Judges had nearly as vast powers to control discovery under the previous Rules. n76 The 1993 limits on the number of interrogatories and presumptive limits on depositions are widely found in local rules or CJRA plans n77 and thus are unlikely to work much change. Some new satellite litigation might occur over claimed violations of Rule 26(a), but it is hard to imagine any discovery regime that will not induce some satellite litigation in cases when the stakes are high enough. IV. Future Rules Reform in Aid of Efficiency: Better Management for Noncomplex Litigation    The litigation explosion may be a myth, n78 but the press of litigation business still keeps the federal courts busier than they would like to be. n79 Since Congress, by adding criminal and other matters to the federal courts' jurisdiction, n80 seems to place a higher priority on goals other than ordinary civil justice, federal courts should try to do what civil work they can with as much care as they can in as little time as they can spare.    Which reforms might increase speed and reduce cost in federal civil justice without seriously detracting from the quality of adjudication? I suggest that special rules for smaller cases might be the reform of choice. The tactical advantages of complexity and delay are greatest in small and mid size cases because opponents who are economically rational will change their settlement posture when litigation costs threaten to exceed the amount to be gained or saved by the case. n81 Current professional responsibility rules are remarkably tolerant of attorneys' exploitation of cost and delay, so long as the attorney does not resort to frivolous factual or legal positions. The American Bar Association Model Rules of Professional Conduct state, "A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client." n82 A lawyer who obeys the "duty to use legal procedure for the fullest benefit of the client's cause" found elsewhere in the Model Rules n83 may obtain for the client the tactical benefit of nonfrivolous procedural steps that place disproportionate costs on the adversary. n84 Even the Advisory Committee's Notes to the 1993 amendment to Rule 1, which say that attorneys share with the court the responsibility to secure just, speedy, and inexpensive determination of actions, qualify the obligation with the language "without undue cost or delay." n85 Short of changing professional responsibility and procedural rule standards in ways that may not be desirable n86 and that would be difficult to police, the best mechanism to eliminate the disproportion is to limit the available procedures in low value cases.    Special small claims rules are a near universal feature of state civil practice. n87 The federal system itself has special rules for petty criminal cases. n88 Yet the federal courts lack equivalent rules for small civil cases. Perhaps no one wants to recognize that the federal courts have large numbers of small cases, but the truth seems inescapable. Much of the growth of the federal civil caseload since 1960 is in simple collection matters such as federally insured loan defaults and federally insured mortgage foreclosures. n89 Of course, if reforms make processing these cases in the federal courts too efficient, a "freeway" effect might generate more case traffic than desired, n90 but that problem can be controlled by enacting appropriate limits on federal jurisdiction rather than by imposing delays or other inappropriate costs on litigants who have a right to be in the federal forum. Although federal judges may not like to admit that they are frequently called upon to be small claims referees, adjudicating these cases is part of their job description and will remain so unless Congress changes the present jurisdictional standards.    The most common and most beneficial small claims rules are (1) provisions for creation of a separate calendar, sometimes one that groups the cases by plaintiff (in the federal system, the leading plaintiffs would be the United States and various federal agencies); (2) provisions for service by certified mail; and (3) prohibitions on any discovery other than form interrogatories and production requests without leave of court. n91 Various local districts are or will be experimenting with rules of this type under CJRA plans or the local rules provisions invited by the exception language of new Rule 26(a). n92 Probably the more common practice, however, will continue to be informal coercion of the parties in smaller cases to accept trial by a magistrate judge. n93 This practice undermines Congress' decision to make trial by magistrate optional, not mandatory. n94 It also violates the Supreme Court's interpretations of Article III, which require an Article III judge to be available for all ordinary civil lawsuits between private individuals that are within federal jurisdiction. n95    The difficulty with framing small case rules for federal court lies not in their content, but in their coverage. The cases to which the rules apply should be those in which the amount in controversy is below some threshold. In order to have a real impact on the federal caseload, the threshold amount should be higher than that found in most state small claims rules; perhaps a figure of $ 100,000 would be appropriate.    But not all cases that fall below the threshold should be subject to the small case rules. Some cases, particularly civil rights and discrimination matters, embody claims for vindication that go beyond the dollar amount sought for recovery. n96 Congress' decision to allow attorney's fees in cases of this type is itself a recognition that the damages are likely to be so low in comparison with litigation costs that plaintiffs need the attorney's fees incentive to bring meritorious cases. n97 The rulemakers should not use the same disproportion to reduce discovery opportunities or other allocations of public adjudicative resources. Discrimination and other civil rights actions also are among those cases with the greatest disparity in the amount of information that is available to the respective parties. In those cases, plaintiffs often cannot present a prima facie case without extensive information from government or employer files. n98 Discovery ought to be freely available to correct this imbalance; small case rules that limit discovery ought not apply to discrimination and civil rights disputes.    Moreover, injunctive relief is difficult to value; in civil rights cases, it may far exceed the importance of any seemingly equivalent cash award. n99 Perhaps all cases for injunctive relief other than those seeking recovery of specified property worth less than a given dollar amount ought to be excepted from the operation of the small claims rules.    Having Article III judges adjudicate smaller federal cases under special rules has advantages over the competing alternative of creating quasi judicial administrative agencies to adjudicate them subject to judicial appeal. n100 Regulatory agencies frequently come under the control of repeat players in the administrative process; n101 moreover, agencies' low visibility makes them subject to their own delays and to political pressures. n102 Generalist Article III judges with life tenure are much better insulated from these influences. Since the strongly criticized efforts of the executive to influence Social Security administrative decisions a decade ago, n103 Congress has wisely been reluctant to draw matters away from the federal courts into new administrative schemes.    Admittedly, creation of specialized rules for small cases, like the creation of any subject matter or size specific rules, presents problems. Having a single set of uniform rules makes practice simple. n104 More importantly, a single set of procedures is less vulnerable to the challenge that it treats one or another category of litigants unfairly, although sophisticated observers usually will be able to detect disadvantages to particular claimants or defendants created by seemingly neutral practices. n105    These problems should not defeat the proposal to treat small cases differently. With regard to simplicity and ease of practice, the procedure under specialized small case rules will be more predictable than the ad hoc limits on discovery now tolerated under Rule 26's proportionality language n106 and the categories permitted at local option in Rule 26 and Rule 16. n107 As for neutrality, categorizing cases based on size rather than subject matter is more a distinction of function than substance. n108 Even the substance specificity of form interrogatories for automobile accident diversity cases seems more like the specificity already found in form complaints in the Appendix to the Rules than like the visionary substance specific proposals of Robert Cover. n109    The real transsubstantive rub is with the exceptions to the small case rules that I advocate for discrimination and civil rights cases. n110 In those cases, however, the Civil Rules Committee would be guided by an earlier congressional judgment that those cases should be treated differently n111 for the most basic of litigation rules, the American rule generally forbidding awards of attorney's fees. n112 V. Conclusion    Desperate times demand desperate measures; the present time, however, is not desperate. Reformers should seek modest benefits of the kind that the 1993 Rules amendments are likely to confer. But if the Civil Rules Committee departs from the practice of enacting only transsubstantive and size insensitive rules, creating special rules for complex litigation will not be advantageous. On balance, the Committee could achieve some benefits by creating special rules for smaller cases, but only if the rules are drafted to exclude those cases in which litigation expenses are justifiably disproportionate to anticipated recoveries.
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