Introduction
By the late 1970s and early 1980s, a deregulatory movement was afoot, primarily catalyzed by businesses, trade associations, state and local officials, and newly emergent conservative public interest groups (Vogel Reference Vogel and McCraw1981; O'Conner and Epstein Reference O'Connor and Epstein1984; McGarity Reference McGarity1986; Decker Reference Decker2009). Ronald Reagan came to power on the wave of this movement. It was, of course, quite different from the reform movement that emerged in the late 1960s and early 1970s – and in some sense a reaction to it. That movement was driven by civil rights, environmental, consumer, labor, and other liberal public interest groups. Whereas “fairness,” “justice,” and “equality” were its central themes, in the late 1970s and early 1980s the themes were “freedom,” “efficiency,” and “economic growth” (McGarity Reference McGarity1986: 253–4).
Regulatory reform was high on the Reagan administration's policy agenda. However, substantial continuing public support for the aspirational goals of the new social regulation, coupled with lack of cooperation from Congress, effectively ruled out the possibility of retrenching substantive rights by legislation (Greve Reference Greve1987: 101–4; Vogel Reference Vogel1989: 260–5). Instead, the administration pursued an alternative strategy of deregulation, within the confines of existing statutory mandates, through a combination of withdrawal and redirection of the machinery of administrative implementation. This strategy involved appointing as leaders of agencies people who shared the administration's deregulatory preferences and would exercise discretion to steer the bureaucracy and regulatory policy in the direction desired by the president. Under Reagan-appointed leadership, regulatory agencies in such fields as civil rights, the environment, consumer protection, and public health and safety markedly reduced enforcement activity by numerous objective measures, such as the number of inspections, investigations, citations, civil penalties, administrative enforcement orders, and civil enforcement actions. They also embraced less interventionist regulatory standards through rulemaking, rule rescission, and other forms of regulatory policymaking. Further, the administration, acting through the Office of Management and Budget (OMB), sharply reduced agency budgets and, correspondingly, personnel (Litan and Nordhaus Reference Litan and Nordhaus1983: 119–32; McGarity Reference McGarity1986; Vogel Reference Vogel1989: 246–51; Farhang Reference 254Farhang2010: ch.6; Farhang Reference Farhang2012).
Deregulation and the Problem of Private Enforcement Infrastructures
The deregulatory strategy of the Reagan administration has been well documented by scholars. What we wish to stress here is how private lawsuits to enforce federal statutes impeded Reagan's deregulatory program. Upon assuming office, leaders of the Reagan bureaucracy well understood that private enforcement of statutory rights had been growing steeply, and they saw it as a critical obstacle to their regulatory reform agenda.
By the mid-to-late1970s, conservative activists and leading business associations had developed considerable antipathy toward the new social regulation and its encroachment on business and government prerogatives. They began to claim that lawsuits under growing federal regulatory law were having a substantial adverse impact on business interests. Statutory fee-shifting provisions that, as they saw it, forced business and government to pay the attorney's fees of plaintiffs' lawyers who prosecuted invasive, disruptive, and costly lawsuits against them, were a particular target of criticism. They also believed that liberal public interest groups used litigation and courts to shape the substantive meaning of the new regulatory statutes to their liking, thereby making regulatory policy that was injurious to the interests of business and government (O'Connor and Epstein Reference O'Connor and Epstein1984; Greve Reference Greve1987: 91; Teles Reference Teles2008: 60–6; Decker Reference Decker2009: 12–149).
Conservative activists and business associations mobilized and collaborated in forming a number of conservative public interest law groups to pursue an agenda focused, in part, on limiting federal regulation (O'Connor and Epstein Reference O'Connor and Epstein1984: 483–505; Greve Reference Greve1987: 91; Teles Reference Teles2008: 60–6; Decker Reference Decker2009: 12–149). Reagan's close associates, including high-ranking members of his California gubernatorial administration who followed him to the White House, were instrumental in founding this movement (O'Connor and Epstein Reference O'Connor and Epstein1984: 495; Teles Reference Teles2008: 60–1; Decker Reference Decker2009: 3–5). Indeed, litigation by liberal public interest groups against the Reagan gubernatorial administration, obstructing its pursuit of conservative public policies that Reagan regarded as critical, provoked members of his administration to found the first conservative public interest law group in Sacramento – the Pacific Legal Foundation – which then served as a model for many others (Zumbrun Reference Zumbrun and Edwards2004: 42–3; Teles Reference Teles2008: 62; Decker Reference Decker2009: 3–5). Reagan himself was openly hostile to liberal public interest lawyers, characterizing them in the early-to-mid 1970s as “a bunch of ideological ambulance chasers doing their own thing at the expense of the poor who actually need help”Footnote 1 (Greve Reference Greve1987: 91), and as “working for left-wing special interest groups at the expense of the public” (Decker Reference Decker2009: 74).
Upon assuming office, the Reagan administration was acutely aware that private enforcement of federal regulatory law had surged powerfully since the 1960s and that the private enforcement infrastructure presented an important obstacle to its deregulatory agenda. Reagan had appointed numerous leaders and activists from the conservative public interest law movement to important positions in the federal bureaucracy, ranging across Counselor to the President, the White House Office of Policy Development, the OMB, the Equal Employment Opportunity Commission, and the Departments of Interior, Energy, and Justice (Decker Reference Decker2009). The conservative public interest law movement had been born in opposition to the steep growth in litigation activity undertaken by both the for-profit and non-profit plaintiffs bar under the new social regulatory statutes. They had witnessed the rate of private enforcement lawsuits under federal statutes increase by 352% from Nixon's assumption of office in 1969 to Reagan's in 1981.Footnote 2 Now in power, they sought to retrench private enforcement.
According to Michael Greve, a conservative legal activist and founder of the Center for Individual Rights, Reagan administration leadership saw private rights of action with attorney's fee awards as an obstacle to deregulation. Proposals to curtail fee awards under the new social regulatory statutes – along with a constellation of other efforts to reduce sources of funding for liberal public interest groups – were pursued by conservative activists as part of a strategy to “defund the Left” (Greve Reference Greve1987: 91–106). Greve explains:
When the Reagan Administration took office in 1981, one of the priorities urged upon it was to cut federal funding for liberal and leftist advocacy groups. Well known conservative activists openly advocated a strategy of “defunding the Left.” This was necessary, they argued, for the success of the conservative social and deregulatory agenda. The incoming administration shared this assessment. President Reagan … sensed that the liberal public interest movement was a primary obstacle to his campaign promises of “regulatory relief” (91).
Private enforcement litigation was a “primary obstacle” to Reagan's deregulatory agenda because, with little prospect of actually being able to repeal or modify legislative mandates, his principal strategy for effectuating the agenda was to demobilize the administrative regulatory enforcement apparatus. The value of withdrawing or reducing administrative enforcement would be weakened if extensive private enforcement continued, and the strategy would be severely undercut if private enforcement actually expanded to fill gaps left by withdrawal of administrative machinery. Important members of the Reagan bureaucracy were in full agreement with Greve's characterization. Based on archival research, Jefferson Decker finds that some were deeply concerned that private rights of action coupled with fee shifting were producing “a state-sponsored, private governing apparatus” (Decker Reference Decker2009: 181). Moreover, as we will show, advocates of retrenching private enforcement recognized that the proliferation of fee-shifting provisions in the 1970s had produced a private enforcement infrastructure that benefited not just liberal public interest groups, but, more significantly, the for-profit American bar.
The Reagan administration's efforts to “defund the Left” included a move to abolish the Legal Services Corporation, or failing that, to reduce its appropriations (Greve Reference Greve1987; Quigley Reference Quigley1998). The administration was openly hostile to Legal Services, antipathy that dated to significant legal battles between Reagan's gubernatorial administration in California and Legal Services grantees there (George Reference George1976: 683–7; Quigley Reference Quigley1998: 248–50). The administration regarded Legal Services as “a program composed of left-wing lawyers” that “engaged as self-appointed representatives of the poor in test cases and class actions designed to erode the free enterprise system and to establish a more complete welfare state” (Cramton Reference Cramton1981: 522).
We do not include attacks on Legal Services within our conceptualization of retrenching private enforcement. The private enforcement infrastructure that we focus on in this book was constructed by creation, through law, of market incentives to mobilize attorneys as an alternative, in part, to publicly financed regulatory enforcement (Kagan Reference Kagan2001; Burke Reference Burke2002; Farhang Reference 254Farhang2010). The attack on Legal Services was an attack on public funding for legal assistance to the poor. We acknowledge that the intended effects were to deprive private attorneys (Legal Services grantees) of public resources to represent their clients, and we do not doubt the importance of the effort, just as we do not doubt the importance of public enforcement. But both are outside the scope of this book.
Attacking the Private Enforcement Infrastructure
Attention to private enforcement retrenchment in the first years of the first Reagan administration focused squarely on federal rights, not torts. Tort law was not an issue on the Reagan administration's agenda until 1985, when it made tort reform a policy priority by forming the Tort Policy Working Group. In 1986, the Working Group issued a report calling for a series of reforms, including limits on fees and caps on damages (Farley Reference Farley1991: 1015–16; Taylor Reference Taylor2012: 358 n. 5). Private enforcement retrenchment with respect to federal rights came first for the Reagan administration, and tort reform followed.
Two legislative initiatives to retrench private enforcement were considered. The first was a cross-cutting bill that would have amended over 100 statutes by limiting attorney's fee awards to successful plaintiffs in suits against government. The second involved amending the Civil Rights Act of 1871 with the goal of diminishing opportunities and incentives for private civil rights actions against state officials for violating federal rights. We explore both episodes with archival documents from the Reagan Library and the National Archives.
Starting in 1981, the OMB, with David Stockman as Director and Michael Horowitz as general counsel, developed a fee-cap bill that focused on suits against federal and state government defendants. Horowitz, who played a leading role in developing and advocating the bill, was an important figure in the conservative legal movement (Teles Reference Teles2008: ch. 3). Advocates of the fee-cap bill believed that the extensive fee-shifting legislation since the Civil Rights Act of 1964 was a critical part of the incentive structure generating excessive litigation, and the goal of the fee-cap proposal was to “drive a stake through that incentive structure” (Decker Reference Decker2009: 177). Initially titled “The Limitation of Legal Fees Awards Act of 1981,” the proposed bill would amend over 100 federal statutes allowing recovery of attorney's fees in successful suits against government, ranging across suits under, for example, civil rights, environmental, antitrust, public health and safety, and freedom of information statutes, among many others. The initiative went through a number of permutations from 1981 to 1984. Some core attributes of the initial version were:
A fee cap of $53 per hour for private attorneys representing paying clients (a figure derived from the annual salaries of government lawyers and one drastically below what courts had been awarding).
No fee awards for public interest organizations with staff attorneys, legal services organizations receiving federal funds, or for-profit attorneys representing plaintiffs on a pro bono basis.
The $53 per hour fee award would be reduced by 25% of any money judgment.
The $53 per hour fee award would be reduced if it was disproportionate to the actual damages suffered by the plaintiff.
Fee awards would apply only with respect to issues on which the plaintiff actually prevailed that were necessary for resolving the dispute.Footnote 3
Shortly after work on The Limitation of Legal Fees Awards Act of 1981 began, a related proposal emerged in the Department of Justice (DOJ), in some ways narrower and in other ways broader. In the summer of 1982, John Roberts (then Special Assistant to the Attorney General) and Kenneth Starr (then Counselor to the Attorney General) made a request to the Office of Legal Policy (OLP) in DOJ for “a memorandum outlining the range of legislative changes that could be considered” to the Civil Rights Act of 1871, commonly known as Section 1983.Footnote 4 Section 1983 is the broadest federal civil rights statute and among the most consequential. It provides a private cause of action against any person who, “under color of” state law, causes the deprivation of rights secured by the “Constitution and laws” of the United States.Footnote 5 As is clear on the face of the statute, Section 1983 covers all federal rights, not only rights of non-discrimination and others traditionally associated with civil rights policy. The statute can only be enforced by private lawsuits; it contains no government right to sue or other public enforcement provisions.
In the internal administration debate that John Roberts and Kenneth Starr helped to ignite, there emerged a consensus (judging from archival documents) that on the policy merits Section 1983 required substantial amendments to limit the growth of private lawsuits enforcing it. The statute was narrowly construed and rarely invoked during its first 90 years on the statute books (Note 1969). That changed in the 1960s, and even more in the 1970s, when Section 1983 actions began to grow significantly alongside other types of civil rights litigation and private federal statutory filings in general.
As internal Justice Department memoranda put it, explaining the need for Section 1983 amendments, civil rights litigation in general had “mushroomed” and “ballooned” in the past two decades, with the surge concentrated in private civil rights suits. One memo observed: “The number of ‘private’ civil rights suits filed in the federal district courts totaled 280 in 1960; 3,586 in 1970; 11,485 in 1980; and 13,534 in 1981. … Thus, since 1960 there has been an increase of almost 5,000%.”Footnote 6 Administration officials questioned the merits of much of the growing civil rights litigation, with one memo opining that “[n]o grievance seems too trivial to escape translation into a § 1983 claim.”Footnote 7 Amendments to Section 1983 were necessary “to stanch the flood of litigation it has engendered.”Footnote 8
The potential amendments to Section 1983 that were ventilated within DOJ were wide-ranging. They included:
Entirely abolishing, or limiting, attorney's fees awards in Section 1983 cases (under the Civil Rights Attorney's Fees Awards Act, which expressly applies to such claims), with limitations accomplished, for example, by capping hourly rates, eliminating the use of multipliers, or limiting awards to plaintiffs who decline a settlement offer and do not achieve a better result at trial.
Barring the award of punitive damages under Section 1983.
Immunizing state and local officials from money damages under Section 1983 if there is a sufficient remedy in state law.
Restricting the range of substantive statutory rights protected by Section 1983, such as to only constitutional and not statutory rights, or limiting protected statutory rights to those providing guarantees of non-discrimination.
Creating a good-faith defense for municipalities under Section 1983, so that no action would lie against local government officials if they acted in good faith with a reasonable belief that their actions were lawful.
Requiring that state remedies be exhausted as a precondition to filing a Section 1983 action, following the model of habeas corpus cases.
Restricting the scope of Section 1983 to regulate only conduct arising from state law or official policy, excluding from coverage acts by officials that violate state law but are not undertaken pursuant to state law or official policy.
Excluding acts of negligence by state and local officials from Section 1983 coverage.Footnote 9
Although both the fee bill and the potential Section 1983 amendments appear quite extreme, they are notable for the fact that they applied only in suits against government. The initial private enforcement retrenchment movement in the Reagan administration did not attempt to restrict fees in suits against the private (business) sector. This dimension of the retrenchment project came later.
Demobilizing the Private Bar
The archival record makes clear that those seeking private enforcement retrenchment were concerned about, and responding to, the growing scale of enforcement activity by the private bar. As already discussed, conservative activists had long been critical of litigation by liberal public interest groups, but their focus now turned to for-profit plaintiffs' attorneys as well. Greve observes that when the Reagan administration sought to curtail fee awards, “a sizeable portion of attorneys' fees [was] collected not by public interest groups but by big, for-profit law firms” (Greve Reference Greve1987: 103). This became an important theme and concern among Reagan White House advocates for retrenching private enforcement, articulated repeatedly in support of the fee bill. In a 1983 memo discussing the problem that the fee bill sought to address, Horowitz explained: “Not only the ‘public interest’ movement but, more alarmingly, the entire legal profession is becoming increasingly dependent on fees generated by an open-ended ‘private Attorney General’ role that is authorized under more than 100 statutes,”Footnote 10 a large portion of which had been enacted since the Civil Rights Act of 1964.
Writing to OMB Director Stockman, Horowitz characterized the fee-cap bill as “designed in part to bar fee awards to entrepreneurial attorneys who now engage in contingency litigation”Footnote 11 under federal statutes. “A literal industry of public interest law firms has developed,” he continued, “as a result of the legal fee awards with such groups regarding attorney's fees as a permanent financing mechanism,” and one central to their commercial viability and business model.Footnote 12 When Stockman transmitted a version of the fee-cap bill to Speaker of the House Tip O'Neill in 1982, he repeated Horowitz's lamentation that a “literal industry” had developed of plaintiffs' lawyers dependent on statutory fee awards.Footnote 13 In the same vein, a Justice Department memo to Counselor to the President Edwin Meese, reporting on the content of the fee-cap bill, stated that it was meant to address the problem of the “growing industry of attorneys capitalizing on civil fee awards.”Footnote 14
Reagan administration advocates of retrenching private enforcement were surely right, from the standpoint of a deregulatory agenda, that the statutory enforcement activity of the for-profit bar, mobilized by fee awards, was more alarming than the activity of the non-profit bar. The year Reagan took office, about 90% of actions enforcing federal statutes were privately prosecuted, and the fraction was rising.Footnote 15 Non-profit groups prosecuted a tiny fraction of the cases. One study found that non-profits prosecuted 2% of a sample of federal statutory actions that spanned from 1960 to 2004 (Farhang Reference 254Farhang2010: 11). To the extent that the “regulatory relief” sought by Reagan involved, in part, less aggressive enforcement of existing statutory mandates, and the private enforcement infrastructure posed a problem to presidential control, the problem was emanating overwhelmingly from the for-profit bar responding to market incentives.
John Roberts, an initiator of the proposals to amend Section 1983, was also an active participant in deliberations over the fee-cap bill. Notwithstanding differences of opinion within the administration about the political wisdom of pursuing the bill, Roberts joined those advocating it. In explaining why, he stated, “This legislation will, of course, be opposed by the self-styled public interest bar, but the abuses that have arisen in the award of attorney's fees against the government clearly demand remedial action.” Antonin Scalia endorsed the fee bill as well. Writing as a University of Chicago law professor and editor of the American Enterprise Institute's Regulation magazine (just months before his appointment to the D.C. Circuit), he argued that recent D.C. Circuit pro-fee award decisions were a “bad dream” in need of the administration's legislative remedy and that the bill would surely be opposed by the “private attorney general industry.”Footnote 16 As we shall see, after their legislative advocacy failed, Roberts and Scalia were to become among the most anti-private enforcement justices to serve on the Supreme Court in a period spanning more than 50 years.
The Reagan administration's private enforcement retrenchment initiatives failed. Examining the reasons why provides insights into the political and institutional dynamics of litigation retrenchment. Before turning to the reasons for failure, we first explore private enforcement retrenchment efforts in Congress and how they fared.
Private Enforcement Retrenchment Proposals in Congress
In order to map the legislative movement for private enforcement retrenchment and its partisan configuration in Congress, we identified all bills that sought to amend federal law so as to (1) reduce the availability of attorney's fees to plaintiffs or increase plaintiffs' liability for defendants' fees; (2) reduce the monetary damages that plaintiffs can recover; (3) reduce opportunities and incentives for class actions; (4) strengthen the operation of sanctions against counsel; and (5) strengthen the operation of offer of judgment rules.Footnote 17 These provisions fall into two groups. The fees and damages provisions seek to reduce directly the economic recovery available to successful private enforcers and thereby to reduce economic incentives for enforcement by would-be plaintiffs and their attorneys. We discussed the significance of attorney's fees and monetary damages to private enforcement in Chapter 1.
The class action, sanctions, and offer of judgment provisions seek to modify the Federal Rules in ways that disadvantage private enforcers. More specifically, we included these three procedural issues in our measure of legislative retrenchment efforts for the following reasons:
1. Class actions. Under Federal Rule of Civil Procedure 23, a plaintiff can sue on behalf of a class of absentees, typically alleging that a defendant injured a large number of people in the same way. In the context of federal rights, the device has been used extensively to enforce civil rights, environmental, consumer, antitrust, and securities laws. The device has great regulatory power and has been a target of retrenchment efforts in rulemaking and litigation, which we discuss in Chapters 3 and 4. We included in our data bills that proposed to amend existing law to curtail the operation of the class action rule.
2. Sanctions. Federal Rule of Civil Procedure 11 confers power on district judges to impose sanctions, under specified conditions, on attorneys or parties. Rule 11 applies equally to counsel for plaintiffs and defendants. As we discuss in Chapter 3, however, advocates of retrenchment have often attributed cost and delay to frivolous lawsuits and have advocated strengthening Rule 11 sanctions with the goal of targeting an allegedly frivolous complaint and thus the plaintiff's attorney who drafts it. We included in our data bills that proposed to amend existing law to broaden the scope of, or increase the sanctions under, Rule 11.
3. Offer of Judgment. Federal Rule of Civil Procedure 68 provides that a prevailing party who has rejected an offer of judgment – an offer to settle the case – more favorable to that party than the judgment ultimately obtained must pay the “costs incurred after the offer was made.” The rule seeks to promote settlements through financial incentives that are keyed to a comparison of a rejected offer and a subsequent judgment. As we discuss in Chapters 3 and 4, advocates of retrenchment have sought to strengthen the incentive for settlement by, among other things, adding reasonable attorney's fees to the post-offer costs that become non-recoverable in the circumstance just described, a move that threatens to undermine one-way statutory fee-shifting provisions that Congress included in legislation in order to stimulate private enforcement (Burbank Reference Burbank1986; Burbank Reference Burbank1989a; Burbank Reference Burbank1989b). We included in our data bills that proposed to amend existing law to increase penalties in this scenario.
Our search captured 500 bills from 1973 (when the Library of Congress bill database starts) to 2014. Table 2.1 shows the percentage of these bills containing each of our five anti-private enforcement items. Table 2.2 reflects the distribution of policy areas covered by the bills (for policy areas comprising 2% or more of the data). The largest share (25%) is represented by bills targeting civil rights and civil liberties issues, prominently including bills focused on policing, prisoners, discrimination, religion, and abortion. Multiple civil rights bills sought to amend Section 1983 and the Civil Rights Attorney's Fees Awards Act of 1976 so as to reduce litigation under them. Other important policy areas included antitrust, environmental, labor, securities, and consumer policy.
Table 2.1 Types of private enforcement issues in bills
| Private enforcement issues | Percentage of total bills in data* |
|---|---|
| Damages | 61 |
| Attorney's fees | 47 |
| Class actions | 14 |
| Sanctions | 10 |
| Offers of judgment | 6 |
* This column sums to more than 100% because one bill can seek to amend existing law with respect to multiple private enforcement issues.
Table 2.2 Policy distribution of bills
| Policy area | Percentage of cases |
|---|---|
| Civil rights and liberties | 25 |
| Policing | (5) |
| Prisoner | (2) |
| Equality | (5) |
| Religion | (3) |
| Abortion | (4) |
| Other | (6) |
| Civil rules* | 12 |
| Antitrust | 11 |
| Environmental | 6 |
| Suits against government** | 6 |
| Labor and employment | 5 |
| Intellectual property | 5 |
| Securities | 4 |
| Consumer | 4 |
| Transportation | 4 |
| Public health and safety | 3 |
| Other | 15 |
* Civil rules include proposals to amend existing general rules governing federal civil actions. These include primarily amendments to Federal Rules of Civil Procedure, but also other proposals to create transsubstantive rules to govern all federal civil actions, such as a loser pays fee rule.
** Suits against government include rules which specify that they govern suits against government in general, such as a rule cutting across all policy areas to cap legal fees or damages available in actions against government.
Twenty-nine percent of these bills contained more than one private enforcement-retrenchment item, with an average of 1.4 items per bill. The bills had an average of 11 co-sponsors, yielding a total of 6,133 instances of legislators sponsoring or co-sponsoring a bill with at least one retrenchment item in it. There were 3,608 episodes of legislators supporting a bill with a provision limiting damages, 2,913 with an attorney fee provision, and 2,149 with procedural provisions. Summing across all items, there were 9,022 instances of a legislator supporting our five retrenchment items. Fifty-seven percent of the members of Congress who served from 1973 to 2014 supported one of our retrenchment provisions at least once.
In order to analyze the relationship between legislators' party and the likelihood that they would support anti-private enforcement proposals, we constructed the following dataset. Separately for each of our items and for each legislator who served in Congress from 1973 to 2014, we calculated the total number of episodes of sponsorship or co-sponsorship per Congress. That is, the unit of analysis is a Congress-legislator count of the total number of times that each legislator in each Congress sponsored or co-sponsored one of our five items. Figure 2.1 fits a curve to the count, per Congress, of the total number of episodes of legislator support for anti-private enforcement provisions; the aggregation of proposals to reduce damages and fees (monetary recoveries); and the aggregation of proposals to change class action, sanctions, and offer of judgment rules (procedural rules). Years on the horizontal axis designate Congresses seated in that year.
Figure 2.1 Annual number of private enforcement retrenchment items: damages, attorney's fees, class actions, sanctions, offers of judgment, 1973–2014
Two things stand out in these data. First, support for anti-private enforcement bills grew strongly in the Reagan years. Because the regression curve smooths over year-to-year fluctuations, it does not reveal sharp breaks in the data, and thus the raw underlying data are instructive. During the Carter presidency, there was an average of 71 episodes per Congress of legislative support for one of our anti-private enforcement items. In Reagan's first term, the figure rose to 240 per Congress, and in his second term it rose to 457 per Congress – 544% higher than in the Carter years. Though growth was beginning in the late 1970s, it increased dramatically in the Reagan years and peaked at 1074 in the 104th Congress (1995–6), when Republicans took control. It has since declined considerably, continuing its downward slope to the present, with estimated values in the last two Congresses comparable to the late-1970s.
Second, in the first half of the 1980s, episodes of support for procedural proposals were negligible in number and flat, while fee and damages proposals exploded. Procedural proposals, however, grew significantly starting in the early 1990s. The raw Congress-level counts again tell the story. In Ronald Reagan's first term in office, there was an average of 4 episodes per Congress of support for anti-private enforcement procedural proposals, and in his second term the number was 17. In George H.W. Bush's term in office, the number rose to 28 per Congress, and in Bill Clinton's first term the figure grew to 371, for more than a 35-fold increase over the Reagan years. It peaked at 589 in the 105th Congress (1997–8) and subsequently declined, a trend continuing to the present.
Figure 2.2 provides an initial sense of the significance of ideology and party affiliation by presenting separate regression curves for the number of Democratic and Republican sponsors and co-sponsors in the top panel, and sponsors only in the bottom panel. Until Reagan took office, Democrats provided more support for these proposals than Republicans, and there was an even larger partisan disparity in sponsorship. Again, smoothed regression estimates are not useful for locating year-to-year changes. The raw data reveal that in each of the four Congresses from 1973 to 1980, while the volume of proposals was very low, Democratic support exceeded Republican support modestly when sponsors and co-sponsors are aggregated, and did so to a greater extent in sponsorship. The 97th Congress (1981–2) is the first in our dataset in which Republican support for anti-private enforcement measures exceeds Democratic support, and this is true both when sponsors and co-sponsors are aggregated and when sponsorship alone is examined. Once Reagan took office, Republican members emerged as the chief advocates of retrenchment, and the partisan gap on this issue exploded, peaking in the 105th Congress (1995–6). As the number of Republican proposals declined after this peak, so also did the absolute size of the gap between the two parties.Footnote 18
Figure 2.2 Republican and Democratic support for private enforcement retrenchment, 1973–2014
We collected bills containing the same set of five retrenchment items applied to state tort law. As with the Reagan administration's retrenchment proposals, our bill database shows that proposals in the field of federal rights led the way and tort reform followed. From 1973 through 1984 (the end of Reagan's first term), the total number of bills containing such items targeting federal rights outnumbered those targeting tort by a margin of more than three to one, and episodes of sponsorship and co-sponsorship of provisions targeting federal statutory rights outnumbered those targeting tort by a margin of about four to one. Only in the 99th Congress (1985–6), corresponding exactly to Reagan's embrace of tort reform, did tort reform surge in Congress to levels rivaling, and subsequently sometimes surpassing, proposals targeting federal rights.
In order to test systematically the relationship between legislator party and support for anti-private enforcement proposals, we use negative binomial count models. We code 0 for Democrats and 1 for Republicans. We employ Congress fixed effects to address the possibility of potential confounding factors, including the political and public salience of the private enforcement issue, the lobbying priorities of business and state governments that may wish to reduce private enforcement pressures, and election cycles. This approach leverages only variation in the relationship between legislators' party and their votes within Congresses to estimate the effects of party. This approach allows us to estimate the effects of party most effectively because it holds constant the influence of any variables that would take the same value for each legislator in a given Congress, and in this sense these estimates of the effects of party are net of the effects of any such variables (Greene Reference Greene2003: ch. 13).
We suggest earlier in this chapter that the Reagan administration's fee bill appeared to mark an important juncture in the Republican Party's anti-private enforcement campaign. The session of Congress corresponding to Reagan's first two years in office was the first session of Congress in our dataset in which Republican support for anti-private enforcement proposals exceeded Democratic support. In our statistical models, we subset the data by time periods in order to assess the effect of party before and after Reagan's assumption of office.
We estimate separate negative binomial count models for (1) the pooled number of episodes of support for all five types of anti-private enforcement provisions; (2) the aggregation of proposals to reduce damages and fees (monetary recoveries); and (3) the aggregation of proposals to change class action, sanctions, and offer of judgment rules (procedural rules). In our measure of legislator support in the models, we use counts that include both sponsorship and co-sponsorship. We do so because we are interested in the degree of legislative support for litigation retrenchment proposals. To neglect co-sponsors would be to treat a bill that a legislator introduces only for herself as equivalent to one that dozens of other members of Congress wish to support. We discuss modeling choices, interpretation, and alternative specifications in the appendix.
In Table 2.3, we estimate the effects of legislator party on support for anti-private enforcement provisions for the period from 1973 to 1980. We find no statistically significant party effect in the model for pooled episodes or the model for monetary recoveries. We do find a statistically significant effect with respect to procedural provisions, and the sign on the coefficient reflects that Democrats were more likely to support such bills. We are not inclined to make much of this result because only about 4% of members of Congress sponsored such a bill during this period – procedure had not yet emerged as a locus of significant bill activity.Footnote 19 Yet, it is worth exploring possible reasons why, although private enforcement retrenchment was an area of scarce legislative activity prior to Reagan, to the extent that it was an issue, it was not a Republican issue. In order to do so, we focus on legislative reactions to experience in class actions brought under the 1966 amendments to Federal Rule of Civil Procedure 23.
Table 2.3 Negative binomial model of legislator support for anti-private enforcement provisions, with Congress fixed effects, 1973–1980
| All bills | ||
| Coefficient | Marginal | |
| Party | −.24 | −27% |
| (.18) | ||
| Monetary recoveries | ||
| Coefficient | Marginal | |
| Party | −.11 | −12% |
| (.18) | ||
| Procedure | ||
| Coefficient | Marginal | |
| Party | −1.43*** | −318% |
| (.53) | ||
| (Congress fixed effects in all models not displayed) | ||
| N = 2154 | ||
| Adj. Dev. R2 = .10 (All bills), .06 (Monetary recoveries), .24 (Procedure) | ||
***.01; **<.05; *<.1
Standard errors in parentheses, clustered on legislator
In an environment of proliferating regulatory statutes and greater competition within the legal profession, the potential of the 1966 amendments both to serve the purposes of their drafters and to enable attorneys to do well by doing good (or, depending on one's perspective, to enrich themselves) was quickly realized. So also was the potential of the (b)(3) class action, the provision in Rule 23 most used by those seeking damages, to promote inefficient over-enforcement of substantive law. This problem surfaced quickly and dramatically in litigation under the Truth in Lending Act (TILA), a complex regulatory statute enacted in 1968 that promotes private enforcement by authorizing minimum and maximum statutory damages (in addition to actual damages, if any, which are difficult to prove) and attorney's fees.Footnote 20 Statutory damages are damages of an amount, or within a range, specified in the statute rather than being based on harm actually suffered by the plaintiff.
Although such provisions make sense as part of a private enforcement regime to induce individual litigation, minimum statutory damages can lead to devastating liability for technical statutory violations when aggregated in a class action.Footnote 21 Troubled by this evident misfit, some federal district courts refused to certify (b)(3) class actions in TILA litigation,Footnote 22 prompting Congress to cap the statutory damages recoverable in a class suit at the lesser of 1% of the creditor's net worth and, first (in 1974), $100,000,Footnote 23 and a few years later (in 1976), $500,000.Footnote 24 Indeed, of the eight bills to reduce the opportunities or incentives for class actions that were introduced in Congress from 1973 (when the Library of Congress bill database starts) through 1980, four were targeted at this specific problem.Footnote 25 Another bill would have made class actions unavailable in cases asserting claims valued at less than $10,Footnote 26 suggesting that interest extended beyond the phenomenon of over-enforcement to the very concept of using class litigation to vindicate small claims, prevent unjust enrichment, or deter illegal conduct.
The existence of such interest on the part of the Executive Branch was made clear in ambitious proposed legislation developed by the Office for Improvements in the Administration of Justice in the Carter Administration's DOJ. In August 1978 Senator DeConcini (for himself and Senator Kennedy) introduced this proposed legislation as S. 3475.Footnote 27 The accompanying commentary set out the case for a legislative approach, observing that “revision of class damage procedures should be accomplished by direct legislative enactment rather than through the rule-making process,” because “deterrence of widespread injury is of substantial public interest, and Congress should devote extensive consideration to any proposal.” The commentary also argued that, because such revision “would have significant economic ramifications,” there were “serious questions as to whether [it] is appropriately within the scope of the rule-making authority granted by the Rules Enabling Act.”Footnote 28
The proposed legislation would have repealed Rule 23(b)(3), replaced the small-claims class action with a public action (brought by or on behalf of the United States),Footnote 29 and restructured large-claims class (compensatory) actionsFootnote 30 to “increase the fairness of the procedure and to make it less expensive and time consuming.”Footnote 31 The commentary asserted that the “use of the Rule 23(b)(3) compensation-oriented procedures for actions brought to remedy pervasive small harm has posed major problems for plaintiffs, defendants and the courts.”Footnote 32 The bill responded to problems created by Rule 23 and Supreme Court decisions interpreting it (in particular those concerning notice) for plaintiffs and the federal courts, as well as to problems created for defendants.Footnote 33 A similar bill was introduced in the House in 1979.Footnote 34
Nothing came of this legislative initiative.Footnote 35 The Carter administration's proposal is notable precisely because it was led by Democrats. Indeed, of the eight class action bills in this period, seven were introduced by Democrats, and of 31 total sponsors, 27 were Democrats. One interpretation of this fact is that, once the catalytic regulatory potential of amended Rule 23 became clear, as the primary architects of the Litigation State, Democrats took the lead in attending to its supervision and calibration prior to the emergence of the counterrevolution.
Returning to discussion of the empirical models, in Table 2.4 we estimate the model for the 1981–2014 period. The results change dramatically. The party variable is statistically significant in the expected direction in all three models: all types of provisions pooled, those reducing monetary recoveries only, and those affecting procedural issues only. In the model of all anti-private enforcement provisions, moving from Democrat to Republican is associated with an increase in legislators' predicted count by 249%. The figure is 229% in the model of fees and damages and 344% in the model of procedural provisions. Interestingly, the effect of party on the level of support is highest among the procedural provisions.
Table 2.4 Negative binomial model of legislator support for anti-private enforcement provisions, with Congress fixed effects, 1981–2014
| All bills | ||
| Coefficient | Marginal | |
| Party | 1.25*** | 249% |
| (.05) | ||
| Monetary recoveries | ||
| Coefficient | Marginal | |
| Party | 1.19*** | 229% |
| (.05) | ||
| Procedure | ||
| Coefficient | Marginal | |
| Party | 1.49*** | 344% |
| (.08) | ||
| (Congress fixed effects in all models not displayed) | ||
| N = 9190 | ||
| Adj. Dev. R2 = .31 (All bills), .27 (Monetary recoveries), .47 (Procedure) | ||
***.01; **<.05; *<.1
Standard errors in parentheses, clustered on legislator
Our model pools data over about 30 years, raising two obvious questions: First, is the relevant effect present throughout this period? Second, has its magnitude changed over time? In order to answer these questions, we summarize the results from a series of models over time in Table 2.5. We aggregated the two Congresses associated with each presidential administration from 1981 to 2014, with the exception that we aggregated three Congresses under Obama since the fourth has yet to conclude. The marginal effects column reflects the percent increase in legislators' predicted count of support for private enforcement retrenchment proposals moving from Democrat to Republican. Table 2.5 shows that, with respect to the fee and damages bills, the party effects are significant in each regression. The magnitude of the party effect grew over the Reagan–Bush years and peaked in Clinton's first term. It subsequently declined, while remaining large, and then spiked during the Obama Congresses. In contrast, the effect of party on legislators' support for anti-private enforcement procedural items took slightly longer to emerge. There was no statistically significant effect in Reagan's first term. By his second term, however, the party effect emerged as durably statistically significant. Its growth has been more continuous than for the monetary recovery items, reaching its highest levels in the most recent Congresses. The large party effect across all of our bill data during the Obama years may seem odd when juxtaposed with Figure 2.2, which shows a declining absolute distance between Republican and Democratic support for the anti-private enforcement provisions. This is explained by the fact that our count models estimate the growth factor in Republican support relative to Democratic support, and Democratic support has declined to extremely low levels in recent years. To appreciate the salience of retrenching private enforcement in Congress, one must examine both Figure 2.2 (to gauge the volume of activity), and Table 2.5 (to gauge how partisan that activity is).
Table 2.5 Negative binomial coefficients and marginal effects for legislator party in models of legislator support for anti-private enforcement provisions, with Congress fixed effects, by presidential administration
| All bills | ||
| Coefficient | Marginal | |
| Reagan I (1981–4) | .47*** | 60% |
| Reagan II (1985–8) | .81*** | 125% |
| H.W. Bush (1989–92) | 1.05*** | 186% |
| Clinton I (1993–6) | 1.85*** | 536% |
| Clinton II (1997–2000) | 1.21*** | 235% |
| W. Bush I (2001–4) | 1.08*** | 194% |
| W. Bush II (2005–8) | 1.60*** | 395% |
| Obama (2009–14) | 2.09*** | 708% |
| Monetary recoveries | ||
| Coefficient | Marginal | |
| Reagan I (1981–4) | .46*** | 58% |
| Reagan II (1985–8) | .80*** | 123% |
| H.W. Bush (1989–92) | 1.07*** | 192% |
| Clinton I (1993–6) | 2.08*** | 700% |
| Clinton II (1997–2000) | 1.19*** | 229% |
| W. Bush I (2001–4) | .83*** | 129% |
| W. Bush II (2005–8) | 1.52*** | 357% |
| Obama I (2009–14) | 1.90*** | 569% |
| Procedure | ||
| Coefficient | Marginal | |
| Reagan I (1981–4) | 1.35 | |
| Reagan II (1985–8) | .98** | 166% |
| H.W. Bush (1989–92) | .91*** | 148% |
| Clinton I (1993–6) | 1.54*** | 366% |
| Clinton II (1997–00) | 1.22*** | 239% |
| W. Bush I (2001–4) | 1.80*** | 505% |
| W. Bush II (2005–8) | 2.02*** | 654% |
| Obama I (2009–14) | 2.68*** | 1359% |
***.01; **<.05; *<.1
Failure of Private Enforcement Retrenchment in Congress
The legislative project of private enforcement retrenchment mounted by the Republican Party was largely a failure. Reagan's fee bill was unable to gain traction even in the Republican-controlled Senate (Percival and Miller Reference Percival and Miller1984). Numerous proposals by congressional Republicans fared little better in the ensuing years, even when they controlled both chambers of Congress. Some of the fees and damages proposals were transsubstantive bills that would have cut across the whole landscape of the Litigation State, such as bills requiring federal courts to award attorney's fees to prevailing defendants in all civil actionsFootnote 36 or to impose a general loser pays fee-shifting rule.Footnote 37 Another transsubstantive proposal would have capped punitive damages in all civil actions in federal court against small businesses, while increasing the burden of proof for establishing entitlement to such damages.Footnote 38
Many other Republican proposals targeted particularly active areas of federal civil litigation and sought to reduce economic incentives: A 1981 bill proposed full immunity from civil damages suits for police officers who conducted illegal search and seizures in violation of the Fourth Amendment.Footnote 39 A 1982 bill proposed to repeal the attorney fee-shifting provision in the Civil Rights Attorney's Fees Awards Act of 1976.Footnote 40 A 1987 bill proposed to amend the Clayton Act to reduce the amount recoverable in many private antitrust actions from treble to actual damages.Footnote 41 A 1992 bill proposed to eliminate class actions under the Truth in Lending Act.Footnote 42
Although a substantial majority of the Republicans' procedural proposals would have amended specific statutes, some were transsubstantive, and these were overwhelmingly bills amending Rules 11 and 23. Of the Rule 11 bills, a substantial majority sought to reverse the 1993 amendments by making sanctions mandatory rather than discretionary.Footnote 43 Of transsubstantive bills targeting Rule 23, a substantial majority were precursors to the Class Action Fairness Act of 2005.Footnote 44
Republican successes were few in number. Three are well known: the Private Securities Litigation Reform Act of 1995,Footnote 45 the Prison Litigation Reform Act of 1996,Footnote 46 and the Class Action Fairness Act of 2005 (CAFA).Footnote 47 We do not deny the significance of these laws. However, excluding the jurisdictional provisions of CAFA, which themselves do not directly affect federal rights,Footnote 48 the three are narrowly focused.
Beyond these major laws, only eight more Republican-proposed private enforcement-retrenchment bills in our database passed. More telling than their number is how limited the bills were in substantive scope. They included three antitrust bills limiting multiple damages: one in 1982 applying only to actions by foreign governments,Footnote 49 one in 1984 applying only to narrowly defined “joint research and development venture[s],”Footnote 50 and one in 2004 applying only to antitrust violators who report their own cartel activity to the Justice Department and cooperate in its ensuing investigation.Footnote 51 They also included three bills limiting fee awards to disabled students or their families suing schools: two of these capped only fee awards paid from monies appropriated for the District of Columbia in each of two years, without permanent limits,Footnote 52 and the third limited fee recovery by (or imposed some fee liability on) plaintiffs' counsel for frivolous or unreasonable litigation behavior.Footnote 53 In 1995, a Republican-proposed bill passed, imposing a five-month moratorium on certain consumer class actions, again with no permanent effects.Footnote 54 In 1996, a Republican proposal passed, foreclosing fee awards in Section 1983 actions against judges for actions taken in a judicial capacity.Footnote 55
In sum, Republican successes across the issues in our database, over the three and a half decades from the emergence of the issue on the Republican agenda in 1981 until 2014, nibbled around the edges of the Litigation State. They did not challenge it seriously.
Why Private Enforcement Retrenchment by Legislation Failed
The story of the failure of the Reagan administration's fee-cap bill and initiative to amend Section 1983 teaches some important lessons about the long-run resilience of the private enforcement infrastructure against retrenchment through democratic policymaking processes. It is also important, in itself, because the failure helped to drive the retrenchment project into the federal courts, where, as we demonstrate in Chapter 4, quite significant changes in law have been effected. To appreciate the lessons, it is useful first to highlight several institutional factors that make retrenchment of rights difficult.
An institutionally fragmented legislative process empowers many actors to block legislation, making legislative change difficult on contentious issues and leading to the stickiness of the status quo. Legislative processes characterized by many “veto points” make moving the legal status quo difficult (Immergut Reference Immergut, Steinmo, Thelen and Longstreth1992: 63–4). The American separation of powers system, giving a considerable degree of constitutional independence, autonomy, and legitimacy to separate executive, legislative, and judicial branches, coupled with the strong norm of judicial review, is characterized by multiple veto points (Sundquist Reference Sundquist1988; Shugart and Carey Reference Shugart and Carey1992; Weaver and Rockman Reference Weaver, Burt, Weaver and Rockman1993). Adding to the stickiness created by these veto points, the lawmaking process within Congress is particularly fragmented. Bicameralism, an elaborate committee system that gives disproportionate powers to committee members and chairs, and the filibuster in the Senate, combine to create a multitude of players with the power to kill or radically reshape legislation that would easily command a solid majority if only it could reach a floor vote (Landes and Posner Reference Landes and Posner1975; Steinmo Reference Steinmo, Dodd and Jillson1994; Brady and Volden Reference Brady and Volden2005). This line of institutional theory has also emphasized that the relative weakness of parties in the United States encourages pivotal lawmakers to respond to important, even if very narrow and particularized, constituencies and interest groups when deciding whether and how to exercise their veto powers. The net result is a very sticky status quo. In this lawmaking system, as Moe puts it, “Whatever is formalized will tend to endure” (Moe Reference Moe1990: 240).
This is especially true when the legal change sought involves divesting groups of existing rights, and even more so when those rights enjoy a broad base of support. In his work on welfare state retrenchment, Paul Pierson observes that rights-retrenching reforms confront serious political hurdles. The legal rights and interests that retrenchers seek to remove often have already given rise to “resources and incentives that influence the formation and activity of social groups … [and] create ‘spoils’ that provide a strong motivation for beneficiaries to mobilize in favor of programmatic maintenance or expansion” (Pierson Reference Pierson1994: 40). In the context we investigate in this book, rights-oriented interest groups – which propelled the growth of private enforcement, see it as critical to their policy missions, and rely on fee awards to support litigation campaigns – together with private plaintiff's bar groups, can be counted on to mobilize against efforts to retrench private enforcement, in which they have a direct interest.
Pierson also emphasizes that the phenomenon of “negativity bias” (or an “endowment effect”) leads people to be substantially more likely to mobilize to avoid the imposition of losses of existing rights and interests, as compared to securing new ones. It also leads voters to be more likely to punish politicians who have impaired their interests than to reward politicians who have benefited them, and politicians know this (Pierson Reference Pierson1994: 17–19, 39–46; see also Eskridge and Ferejohn Reference Eskridge and Ferejohn1995: 1560). Thus, retrenchment of rights is difficult because: (1) institutional fragmentation facilitates blocking policy reforms; (2) existing rights often contribute to group capacity to defend them; and (3) “negativity bias” enlivens group mobilization to block rights retrenchment, heightening the electoral threat to retrenching politicians. These forces produce a policy status quo that is durable against change through democratic lawmaking processes.
Political Costs of Retrenchment
Ultimately, Justice Department leadership elected not to proceed with sponsoring a bill to amend Section 1983. Department officials concluded that Section 1983 amendments to limit opportunities and incentives for private civil rights enforcement, through desirable, were a losing proposition. They believed that a bill simply could not pass Congress, would taint the administration as anti-civil rights, and was electorally disadvantageous.
A memo by the head of the OLP, after embracing the desirability of Section 1983 amendments, recommended against pursuing a bill, explaining: “any effort by the administration to reform Section 1983 will become enmired in controversy and labeled as yet another assault upon the civil rights laws. Of course, it goes without saying that legislation to amend the Section will stand virtually no chance of success in Congress, particularly with a presidential election around the corner.”Footnote 56 In the same vein, another OLP memo stated:
Section 1983 clearly needs an extensive overhaul to correct its many inadequacies … However, more modest proposals in the 97th Congress met with considerable opposition from affected groups, particularly those in the civil rights community. More important, the public perception of this Administration's record on civil rights may make it politically unwise for the Administration to sponsor any legislative proposals to restrict what most people would consider key provisions of civil rights laws.Footnote 57
Although the fee-cap bill made it further in the legislative process, it ultimately failed for the same reasons. A number of high-ranking members of the Reagan administration regarded the bill's likely political and electoral costs as much too high. To be sure, advocates of the bill within the administration did not propose publicly advocating for the bill as a means to curtail enforcement of rights. Rather, they sought to frame it as a means of: (1) protecting scarce federal and state tax revenue from middle class lawyers; (2) compensating “private attorneys general” at the same rate as actual government lawyers rather than big law firm lawyers; and (3) protecting state and local autonomy from overzealous private enforcement of federal mandates against states.Footnote 58 These themes linked fiscal responsibility and federalism, which were two broad aspects of the administration's core identity. Indeed, several DOJ memoranda on potential Section 1983 amendments advanced the view that the generality of the fee-cap bill – attacking “abuses” in fee awards in general – made it more politically viable, and less politically dangerous, than “singling out civil rights statutes as the place to start cutting back attorneys' fees.”Footnote 59
However, important administration leaders were extremely doubtful that the terms of the debate over the fee-cap bill could be controlled with this rhetorical strategy. Instead, they foresaw opponents successfully turning the battle into one over the preservation of substantive rights protected by the statutes to be amended – rights to be free of racial and gender discrimination, to be shielded from predatory business practices, to drink clean water, and to breathe clean air. That is, they knew that the administration would be attacked by liberal public interest groups and the plaintiff's bar, and be perceived by a material segment of the voting public as seeking to take popular rights away from vulnerable groups.
They were correct. Liberals regarded the proposal as “designed expressly to discourage public interest litigation by reducing the incentive effect of fee shifting statutes” (Percival and Miller Reference Percival and Miller1984: 244). National media coverage conveyed such groups' dismay to the public. The Washington Post alone ran at least three articles on the fee bill in 1982. Leaders of the ACLU, the NAACP, the Wilderness Society, Public Citizen, and the Alliance for Justice – an umbrella organization representing a wide range of liberal public interest law groups – were among those that attacked the proposal in the pages of national newspapers. They emphasized its impact in the areas of civil rights, the environment, consumer welfare, labor, and social welfare benefits. They characterized its likely consequences as “crippling,” “choking off,” and “devastating” to the enforcement of rights in these fields. The losers, they maintained, would be racial minorities, environmentalists, workers, and the poor. The winners would be the wealthy.Footnote 60
Following this reporting and as if he had been reading it, Attorney General William French Smith observed that striking too severely at attorney's fee awards risked “excessive controversy.” He emphasized that in the public relations battle the administration would be cast as “anti” rights. “Attorney's fee cap proposals,” Smith wrote, “are thought by public interest litigating organizations to strike at a vital source of their financial support. Accordingly, these groups have characterized fee cap proposals as ‘anti-civil rights’ or ‘anti-environmental’ proposals.”Footnote 61 Opponents of the proposal would be able to beat it back with “the rhetoric of rights and justice,” as one supporter put it (Greve Reference Greve1987: 104). Smith also observed that the timing of the bill seemed particularly bad with an election on the horizon.Footnote 62 When the bill was sent to the president's staff to be cleared in December 1983, Counsel to the President Fred Fielding echoed Attorney General Smith's deep concern as to both the bill's political risks and its questionable electoral timing:
The circumstances in which attorneys' fees are awarded to parties prevailing against the government … typically involved civil rights litigation, welfare entitlement suits, environmental litigation, and the like. Since the “fee cap bill” would have its greatest impact in these areas, I remain deeply concerned that it will be viewed and portrayed as yet another Administration effort to limit the delivery of legal services to minorities, the poor, and the aged … I am not convinced that this is the time to open another front in the ongoing battle over our record in these areas.Footnote 63
Lack of Moderate Republican Support in Congress
In light of this political calculus, it is not surprising that the fee-cap bill was ultimately unable to attract the support of moderates in Congress, even among Republicans. As the administration surveyed the bill's legislative prospects, Democratic control of the House caused many to seriously doubt that the bill could pass that chamber. But the problem was not only with the Democrats. Administration officials assessing the bill's prospects also recognized that it would require the support of moderate Republicans and conservative Democrats, and they expressed little optimism that the bill could even pass the Republican-controlled Senate (Decker Reference Decker2009: 184).Footnote 64 Indeed, despite its efforts, the administration was unable even to find a Republican sponsor for The Limitation of Legal Fees Awards Act of 1981, which died without one (Percival and Miller Reference Percival and Miller1984: 234 n. 8).Footnote 65 Some conservative activists recognized, with disappointment, that support within Congress for civil rights, environmental, and consumer groups was very broad, including many moderate Republicans, either because of their sincere preferences or because they feared being cast as an enemy of rights that enjoyed broad public support (Greve Reference Greve1987: 101–2). Ultimately, the views of William French Smith and Fred Fielding seemed to be shared by many Republicans in Congress. Even if they had any inclination to join the administration's attack on the private enforcement infrastructure, the political calculus was against it.
Lack of Interest Group Support
In causing its (modified) fee-cap bill to be introduced in Congress, the administration appears to have underestimated the degree of opposition that it would face, and to have overestimated the degree of support the bill would enjoy. Prior to announcing the bill, the administration initiated contacts with “interested groups,” which it deemed to be State attorneys general, municipal law enforcement officers, mayors, business, and liberal public interest organizations. The administration, of course, anticipated strong opposition from liberal public interest organizations and from the for-profit plaintiffs' bar, both of which stood to lose if the fee-cap bill succeeded.Footnote 66 As we have noted, the threat or reality of such opposition weakened support for the fee-cap bill within the Republican Party. However, the administration anticipated support from states and business. As it turned out, both were internally divided.
With respect to state officials – attorneys general, local government attorneys, and mayors – the administration anticipated support because the bill would preserve state and city tax resources against fee awards and reduce incentives for private federal lawsuits against cities and states.Footnote 67 However, of these groups only the National Association of State Attorneys General promised support. The National Institute of Municipal Law Officers (an organization of local government attorneys) declined to take a public position, and the United States Conference of Mayors would at best remain silent, but threatened possible public opposition. Representatives of local government attorneys explained that they actually regarded fee awards as being of marginal significance relative to overall liability and that they would take no position on the legislation. They did not explain why, even if liability was larger than fees, they would still not support capping fees, which would reduce incentives for lawsuits and liability exposure at least somewhat.Footnote 68 The position of the Conference of Mayors provides possible illumination of their motivation.
A representative of the Conference of Mayors explained to administration officials that most members of the Conference (which represents larger cities) “would react negatively” to the bill and would oppose it. Despite the frequency of lawsuits against cities, he explained, “the mayors themselves were more likely to be sympathetic to the interests of the plaintiffs.” The representative indicated that any policy that would reduce incentives for enforcement of civil rights and environmental legislation, in particular, would be especially likely to provoke opposition given the broad popularity of such policies. The calculus for position-taking by mayors was not so straightforward as simply supporting the bill because cities are the targets of lawsuits and fee awards. Rather, the calculus also included weighing the popularity of rights-protecting federal regulation among the constituents of big city mayors, not to mention their potential sincere support for the laws. The Conference of Mayors representative also indicated that the issue of attorney's fees had arisen in the past and proven “so controversial that it has not been able to come to the floor of the Conference.” He advised that if the Conference managed to muster any public position on the administration's fee-cap bill it would be negative. Thus, of the three state groups from which the administration sought support, State AGs would support the administration, local government attorneys would not, and the Conference of Mayors might publicly oppose.Footnote 69
To the administration's surprise, business was divided as well, although for different reasons. The administration anticipated that business interests would be served by reducing fee awards to plaintiffs' counsel litigating against governments under federal statutes, since such litigation includes challenges by liberal groups to administrative regulatory policymaking calculated to move regulatory law in a liberal direction. Reducing the influence of liberal public interest organizations on federal and state policymaking, the administration thought, would capture business support for the fee-cap bill. Further, a victory for the fee-cap bill as applied to litigation against government could be the thin end of a wedge, opening the possibility of retrenching private enforcement as applied to the private sector. After the administration gauged the preferences of business leaders, it concluded that big business could be counted on for support. Small business, however, looked like a big problem. Administration strategy memos on the bill suggested, with disappointment, that it threatened to provoke the “wrath of the small business community.”Footnote 70
The reason was that, ironically, small businesses had themselves developed an interest in preserving fee awards under the Equal Access to Justice Act, and that interest was threatened by the administration's bill. With Republicans and business as legislative catalysts, in 1980 Congress had enacted the Equal Access to Justice Act, which provided for attorney's fee awards for small businesses, individuals, and organizations that prevail against the federal government in administrative or judicial proceedings in which they challenge the legitimacy of federal regulatory actions. The law, passed as part of a small business assistance statute, was primarily intended to aid small businesses in challenging excessive and unreasonable regulation by the federal government, including prosecutions of small businesses accused of violating regulatory laws. In the absence of fee shifting, it was argued, small businesses often had limited capacity or incentive to resist the abuse of federal regulatory power. The fee shift would help to level the playing field and curb excessive and unreasonable regulation (Ragozin Reference Ragozin1986: 219–21; Mezey and Olson Reference Mezey and Olson1993: 13–20; Sisk Reference Sisk1994: 220–9, 280 n. 396).Footnote 71 When the Reagan administration's fee-cap bill became public, small business groups made clear that they would not give up their new weapon quietly and that any effort to take it away would be regarded as “break[ing] faith with the small-business community,” as one business association leader declared in an interview published in the Wall Street Journal.Footnote 72
After the initial versions of Reagan's fee-cap bill failed to find a congressional sponsor even within the president's own party, the administration developed a more moderate version of the proposal. In 1984, hearings were held on this bill in a Senate subcommittee chaired by Orrin Hatch (R. UT), who championed the bill, known as the Legal Fee Equity Act of 1984, as a much needed corrective to the proliferation of statutory fee-shifting rules in the 1970s, creating “exorbitant windfalls for lawyers,” leading to an “explosion of litigation” which had “clogged the courts.”Footnote 73
Hatch had sponsored bills in 1981Footnote 74 and 1983Footnote 75 that differed in many respects from the Reagan administration bill, most prominently for present purposes because they targeted civil rights cases. Like the Legal Fee Equity Act of 1984, however, the Hatch bills contained a provision denying fees incurred after a prevailing party rejected an offer of judgment if the relief obtained was not more favorable than the offer.Footnote 76 Despite Hatch's alignment with conservatives in the administration who sought to retrench the private enforcement infrastructure, he was unable to muster support for the Legal Fee Equity Act of 1984 in his own Republican-controlled committee, where the bill died.
Alternative Pathway of Courts
Many scholars have observed that the Reagan administration's law-reform objectives were profoundly inhibited by Democratic control of one or both chambers of Congress (Litan and Nordhaus Reference Litan and Nordhaus1983: 119–32; McGarity Reference McGarity1986: 260–70; Greve Reference Greve1987: 101–4; Vogel Reference Vogel1989: 246–65; Farhang Reference 254Farhang2010: 172–213; Farhang Reference Farhang2012). One particular strand of work is relevant to the long-run inter-institutional story of private enforcement retrenchment. That strand argues, we believe persuasively, that the Reagan administration saw the federal judiciary as an important alternative avenue to effect legal change that could not be accomplished through Congress. As Mark Graber put it, “[t]he Reagan administration sought to achieve its social agenda primarily by staffing the Justice Department and judiciary with movement conservatives” (Graber Reference Graber1993: 63; see also O'Brien Reference O'Brien and Jones1988: 60–7; Murphy Reference Murphy and Berman1990: 219–21; Goldman Reference Goldman1997; Pickerill and Clayton Reference 261Pickerill and Clayton2004: 241–2; Whittington Reference Whittington2007: 226-7). It sought thereby to lay the foundation for law reform through federal litigation and federal judges – without the aid of legislators. Although this claim has generally focused on the administration's constitutional commitments, we argue that the strategy played out on the issue of private enforcement retrenchment as well.
In the OLP memorandum concluding that Section 1983 amendments “will become enmired in controversy and … stand virtually no chance of success in Congress, particularly with a presidential election around the corner,” Jonathan Rose, head of OLP, went on to propose the alternative pathway of courts. What could not be accomplished by statutory amendment could be accomplished by statutory interpretation.
I would … suggest that the Department study the possibility of pursing changes to the Section through a program of amicus participation in Section 1983 actions in the courts of appeals and the Supreme Court … I believe that the Department's participation in selected Section 1983 cases might have an important influence on the outcome of these cases and provide significant interim relief to states and cities until Congress enacts a legislative solution.Footnote 77
The Rose memo went on to identify, as an example for amicus participation, a case pending before the Supreme Court “involving several important issues concerning the availability and means of calculating attorneys' fee awards in Section 1983 actions.”Footnote 78 At the time he wrote this memo in 1983, Rose was head of the OLP, whose responsibilities included screening potential judicial nominees. As head of the screening committee, Rose has been credited as an important and successful advocate for the Reagan administration's emphasis on careful scrutiny of potential judicial nominees' ideological alignment with administration policy priorities (Goldman Reference Goldman1997: 291; Lyles Reference Lyles1997: 144; Murphy Reference Murphy2014: 96). Rose had worked with Scalia both in the firm Jones Day (with a notable corporate defense practice), and in the Nixon and Ford administrations, and he championed Scalia's appointment to the D.C. Circuit shortly after Scalia's public endorsement of the Reagan fee-cap bill in the American Enterprise Institute's Regulation magazine (Murphy Reference Murphy2014: 96).Footnote 79 Rose was recently Secretary of the Standing Committee on Rules of Practice and Procedure and Chief of the Rules Committee Support Office in the Administrative Office of the US Courts.
In the same vein, writing to then-Counselor to the President Edwin Meese, Deputy Attorney General Edward Schmults expressed both his skepticism that Congress could achieve private enforcement retrenchment via statutory amendment, and his optimism that the Supreme Court could achieve the underlying goals via statutory interpretation. About the Reagan fee bill, he wrote:
From a political standpoint … it is probable that a serious fee reform bill would sharply divide Congress … [and] like other controversial legislation, it is unlikely that the bill would be enacted into law … As in the past, real progress in curtailing abuses in the award of attorneys' fees is likely to be gained through the Supreme Court, where we have enjoyed considerable success in recent years … An administration fee reform bill will bring to the public eye many of the policies we have been espousing before the courts.Footnote 80
Schmults went on to detail successful efforts by the Justice Department to curtail statutory fee awards in civil rights, employment, and environmental litigation in federal courts, including the Supreme Court. Schmults had been a partner in the firm of White & Case (with a notable corporate defense practice), had worked in the Nixon and Ford administrations, including as Deputy Counsel to President Ford and co-chair of his Domestic Council Review Group on Regulatory Reform, and was a member of the Council of the Administrative Conference of the United States.Footnote 81 After leading the team to vet vice presidential candidates for then-Governor Reagan, he was appointed to his DOJ leadership position.Footnote 82 Schmults' duties at DOJ included working with Rose to identify judicial candidates and secure their appointment to the federal bench (Goldman Reference Goldman1997: 287–8, 308, 325).
Data on amicus filings confirm that the Reagan administration undertook an amicus campaign in earnest on private enforcement issues. We coded counts of the number of amicus briefs filed in each of our private enforcement cases (discussed in Chapter 4) that contained only the private enforcement issue, so that we can know that the briefs actually addressed the private enforcement issues (279 of 365 cases). In this body of cases, the Nixon–Ford administrations and the Carter administration filed five, six, and four amicus briefs in their three successive presidential terms. In the three presidential terms comprising the Reagan–Bush years, the numbers were 19, 17, and 18. No subsequent administration through 2014 has equaled this level.
Rose and Schmults were keen observers of American politics and government. They were optimistic that the federal judiciary, which they worked hard to staff with ideological allies, would prove the most promising terrain for a private enforcement retrenchment campaign that had proven politically divisive and electorally risky, and that had no chance of success in Congress. We show in Chapter 4 that they were right.
Conclusion
The first Reagan administration's fee-cap bill was among the most aggressive attacks on the private enforcement infrastructure in federal regulation ever undertaken, and the Section 1983 amendments that it seriously considered were comparably ambitious. They marked the beginning of a movement to retrench private enforcement, and that movement quickly spread to congressional Republicans, among whom the introduction of such bills grew steeply beginning in the early 1980s. Statutory private enforcement regimes were thereby transformed from a relatively non-partisan issue prior to the first Reagan administration into the source of partisan cleavage that we know today.
In this chapter we have documented the substantial failure of this Republican legislative project in the elected branches and the reasons for that failure. Archival materials from the Reagan administration provide a rich and clear picture of why its initiatives failed, and we believe that the episode teaches some important lessons about the resilience of the Litigation State in the domain of legislative politics. First, as a matter of political framing, it was difficult for advocates of retrenching private enforcement to separate the legal structures of private enforcement (like fee shifts) from the substantive rights to which they were attached. Their attempt to retrench enforcement provisions elicited public attention and a political response little different than if they had sought to repeal substantive rights. This rights focus of the debate caused divisions within the Reagan White House and the Republican Party, with the risk of electoral and reputational costs a key motivation for those who successfully opposed the retrenchment initiatives.
Second, over the course of time the interests tied to private enforcement deepened and widened, making private enforcement more difficult to uproot. Liberal law reform organizations became invested in retaining their own access to fee awards, and even more so in protecting the lifeblood of the private enforcement infrastructure that they had so assiduously cultivated. Moreover, the private for-profit bar thereby cultivated sought to protect its own interests, adding heft and capacity to the coalition defending the private enforcement status quo when the retrenchment movement emerged in the early Reagan years.
The interests tied to private enforcement spread even to some quarters of business, which is typically regarded as an opponent. In Chapter 1 we note the irony in conservative Republicans – over the objections of liberals – insisting on Title VII's private enforcement regime. The irony was compounded when conservative Republicans pressed for small business to participate in the bounty of fee awards through the Equal Access to Justice Act, thereby helping to cement the whole system in place by extending its benefits into the Republican base. The costs of that move – and the difficulty of retrenching private enforcement regimes, no matter who the beneficiary – became apparent when small business interests refused to support the Reagan fee-cap bill.
