PUBLISHED:July 14, 2017

Keeping a critical eye on enforcement

Decisions regarding the enforcement of laws are highly discretionary. The choice of a federal or state agency or attorney general to investigate, charge, litigate, or resolve a specific infraction of a statute or regulation or not gets little public, judicial, or scholarly scrutiny.

Yet enforcement is critical to establishing what a law actually means, according to Professor Margaret Lemos. In a forthcoming article, one of several that examine enforcement as a form of political representation, Lemos, the Robert G. Seaks LL .B. ’34 Professor of Law, calls it “the government function that lies at the intersection of law-making and law application.” She argues, in “Democratic Enforcement? Accountability and Independence for the Litigation State,” (102 Cornell Law Review 929-1002 (2017)), that it operates as a form of discretionary policymaking, “necessitating the same sorts of policy judgments that characterize law-making,” such as whether and when to investigate and proceed with an action (since many possible violations are likely to go consciously unchallenged by authorities). Additionally, in such matters as settlement, enforcers are making legal determinations that are quasi-judicial in nature, she writes.

Margaret LemosMargaret H. Lemos, Robert G. Seaks LL.B. ’34 Professor of Law
Faculty co-director, Duke Law Center for Judicial Studies

  • Teaches in Duke Law Master of Judicial Studies program
  • Received Duke Bar Association’s 2013 Distinguished Teaching Award and was twice voted “best first-year teacher” at Cardozo Law School
  • Former Bristow Fellow, Office of the U.S. Solicitor General and Furman Fellow at NYU Law School
  • Clerked for Judge Kermit V. Lipez of the U.S. Court of Appeals for the First Circuit, and for U.S. Supreme Court Justice John Paul Stevens

“These sorts of decisions are made across the spectrum in enforcement,” says Lemos. “In part it’s out of necessity — these are policy decisions about priorities and allocation of resources. It’s also a way of allowing the legislature to act in more general terms, because we expect that where the rubber meets the road, there’s going to be a second set of review and decision-making taking place.”

“Democratic Enforcement?” is the latest of several articles in which Lemos asks whether enforcement should trigger the sorts of demands for accountability and transparency that are applied to other forms of governance and focuses on public or governmental law enforcement and its relationship to private litigation.

For Lemos, whose ambitious and influential body of public law scholarship addresses the interrelated fields of federalism, administrative law, civil procedure, and statutory interpretation, enforcement as a topic of inquiry was a “short step” from her early scholarship on judicial interpretation of law. “From the beginning, I’ve been interested in what happens to law after it’s enacted,” she says. “How do we translate it from the words on the page to what actually is used to affect people’s lives?”

Focused primarily on civil matters, Lemos’ work on statutory interpretation sparked her interest in the role of state attorneys general in enforcing federal law. “I had been using antitrust as an example of an area of law where we depend very heavily on judicial interpretation,” she says. “Reading the relevant federal statute, it’s hard to miss the provision that says the law can be enforced by state attorneys general.” Writing “State Enforcement of Federal Law,” (86 New York University Law Review 698-765 (2011)) at a time when state attorneys general were emerging as “particularly active litigants” in federal courts, often in cases with national implications, Lemos characterized state enforcement as “both a unique model of public enforcement and a unique form of state power.” With attorneys general often elected independently from their governors and representing different parties and constituencies, enforcement authority “opens up new outlets for state-centered policy, empowering actors whose interests and incentives distinguish them from the state and institutions that dominate other channels of federal-state dialogue,” she writes.

“In the course of writing that article, I started thinking about the conventional wisdom on the difference between public and private enforcement, and how state attorneys general seem to fall between those boxes,” Lemos says. “There are conventional arguments about the qualities that we would expect from public enforcement and there are conventional arguments about the qualities we would expect from private enforcement, and state AGs had a little bit of both.” Lemos followed up with a comparative analysis of private class action lawsuits and aggregate litigation brought by state attorneys general. While both collect claims into a single suit in the pursuit of monetary or injunctive remedy, they are treated differently legally, she found.

Among other differences Lemos charts in “Aggregate Litigation Goes Public: Representative Suits by State Attorneys General,” (126 Harvard Law Review 486-549 (2012)) is the fact that these actions brought by state attorneys general are not subject to the rules protecting absent class members in private class actions. She also notes the general lack of scrutiny regarding states’ motives and interest in bringing aggregate lawsuits, and finds the principal critiques of class actions “translate readily to the public realm:” Public attorneys, like class counsel, have incentives to accept “quick and easy” settlements that exclude the largest possible sanctions, resolutions that might not achieve the objectives of compensation and deterrence that are in their clients’ best interest. Lemos recommends that the resolution of state suits should not preclude subsequent private actions.

Lemos next delved into the choices government actors make regarding the types of litigation to pursue. In “For-Profit Public Enforcement,” (127 Harvard Law Review 853-913 (2014)), Lemos and co-author Max Minzner countered the prevailing assumption that public enforcement is tied to deterrence as opposed to self-interest, pointing out that successfully pursuing large monetary awards can burnish an agency’s reputation as well as fill up its coffers. They call for “careful thinking” about the circumstances under which financial incentives can add value to public enforcement.

In “Privatizing Public Litigation” (104 Georgetown Law Journal 515-582 (2016)), Lemos analyzes what it means for the government to be a party to litigation, asking “what might be special” about government and government attorneys. Warning that relying on private attorneys or taking private financing to pursue or defend a government claim threatens “to skew government litigation away from the public interest and toward the more narrow interest of donors,” she flags the potential differences in culture and norms between government agencies and large private law firms that could affect an attorney’s strategy and approach to a public action. This is somewhat mitigated, she acknowledges, by the trend for many lawyers to move back and forth between the private and public sectors in their careers.

A key question for Lemos concerns the extent to which the use of private attorneys in public litigation amounts to the transfer of sovereign power. “In debates about privatization, one often struggles with the question of how do we know if the government is acting,” she says. “If you have a circumstance where the action is effectively funded by private dollars and prosecuted by private lawyers but is nominally still done in the name of the state, that strikes me as worrisome. If an action is captioned, North Carolina v. Smith, the state of North Carolina, acting as parens patriae, can do something that is effectively equivalent to a private class action in many ways, but doesn’t have to jump through the procedural hoops that a private class action has to jump through. You don’t want to be taking advantage of the legal doctrines that apply to the state as plaintiff when it is just a private action in disguise.

“The harder questions for me have to do with the expressive value of saying that the State of North Carolina is doing this, as opposed to some private group,” she says. “My sense is that given how discretionary enforcement actions are, saying ‘North Carolina thought it was important to go after this particular offense,’ carries some weight. And that makes it important, I think, that the decision actually is the decision of the state and that it has run through the same sort of democratic processes that we’d expect for other decisions that are supposed to speak for the people in some way.”

In another new article, “Three Models of Adjudicative Representation,” (165 University of Pennsylvania Law Review (forthcoming)), Lemos applies the lens of political theory to different types of representation and actions — individual suits, civil suits by government, and private class actions in primarily public law litigation — and demonstrates how “different types of representation include and exclude, empower and disempower, in different ways.” And with “Democratic Enforcement?” she teases out underlying theoretical questions arising from her larger body of work on enforcement, essentially asking what citizens should expect from their government when they are taking enforcement action.

Lemos anticipates continuing with her study of the similarities between enforcement and interpretive decision-making. “There is something kind of quasi- judicial about a decision that this wrongdoer violated this statute. But then there is some added decision that it’s worth it to go after them. That overlap — that imperfect overlap — between enforcement and interpretation, or something more judicial, is something I’m still trying to make sense of. The more we think of it as quasi-judicial, the more we might want independence and some kind of separation between enforcement decisions and public pressures or public opinion, lobbying. And the more we think of it as just a policy act, the more we might think public opinion matters. I think we have skipped over some foundational questions.

“Enforcement is a category of government action worthy of attention in its own right,” Lemos says, “in the same way that we would study the legislative process or the regulatory process or the judicial process.”

 

Excerpt: Privatizing Public Litigation

Margaret H. Lemos
104 Georgetown Law Journal 515-582 (2016)

Introduction

Public litigation is being privatized as public entities turn to private actors to perform, and sometimes to pay for, litigation on behalf of the state and federal governments. Consider the following examples:

  • The U.S. Department of Justice hires David Boies to lead antitrust litigation against the Microsoft Corporation.
  • The National Credit Union Administration (NCUA) hires two private law firms to represent it in litigation against large banks concerning toxic mortgage securities. One of those firms boasts “long-standing and continuous representation of the NCUA in various matters.”
  • Multiple states hire private attorneys to represent them in litigation against tobacco companies in exchange for a portion of the proceeds.
  • After the state attorney general refuses to sue, the Nevada governor creates a “Constitution Defense Fund,” supported by private donations, to pay for costs associated with prosecuting the state’s challenge to the Affordable Care Act (ACA). Other states’ challenges to the ACA are handled, in part, by a private firm and financed by a private lobbying group.
  • Private citizens, many from out of state, bankroll a special prosecutor’s efforts to target topless bars in Memphis. Ben & Jerry’s ice cream company contributes $1 from every purchase at certain locations to support the defense of Vermont’s law requiring special labels for food containing genetically modified organisms.
  • Ben & Jerry’s recently committed to using non-GMO ingredients in its own products.

Though these examples are all of recent vintage, the privatization of government litigation is not new. Indeed, much of what appears as privatization today would have been taken for granted as a historical matter. Before we had a United States Department of Justice (DOJ), it was commonplace for private lawyers to handle the federal government’s work. And private prosecutions were once the norm in many jurisdictions. Over time, however, our system “publicized” most litigation in the name of the government, shifting control from private actors to salaried public servants.

We are now witnessing at least a partial shift back as privatization becomes more prevalent, particularly at the state and local levels. The trend coincides with a marked rise in the visibility and ambition of state attorneys general. As government litigators aspire to do more, they are increasingly turning to private resources — both human and financial — to support their efforts.

Privatization in the litigation context also coincides with broader trends toward privatization more generally. At least since the 1980s, state and federal policymakers have embraced privatization as a way to cut costs and reduce the size of government. In the United States, privatization typically involves enlisting private actors to perform, on the government’s behalf, functions that otherwise would be carried out by government employees. Less intuitively, privatization also may entail a move from public to private financing for public goods and services. Both types of privatization have been the subjects of extensive debate. On the performance side, advocates argue that outsourcing work to private firms is more efficient than relying on bloated government bureaucracies staffed by overpaid and unmotivated civil servants.

Critics question whether privatization is cheaper in practice, and contend that any efficiency gains come at an intolerable cost to democratic and programmatic accountability. As for financing, privatization’s proponents argue that many government services can and should be funded individually rather than collectively — that is, via user fees and the like rather than general taxes. User fees allow governments to generate revenue while reducing taxes, and can send useful signals about the value of the services in question while ensuring that those who reap the benefits also absorb the costs. Critics worry that citizens will be unwilling or unable to bear the expense of valuable government services, particularly when nonpayers can still enjoy many of the benefits. Opponents also insist that some government goods and services are simply too fundamental to ration according to citizens’ willingness and ability to pay.

The privatization of public litigation warrants a place in these debates. Privatizing government litigation promises many of the same benefits, and threatens many of the same costs, as privatization in other contexts. In a sense, the question whether to rely on private attorneys to perform the government’s legal work presents the same “make or buy” dilemma that governments — and private firms — regularly face. And the question whether private actors should be permitted or required to finance government litigation presents the same tradeoffs between allocative efficiency and distributive fairness that have been aired in the commentary on user fees. Understanding these questions, not as discrete policy dilemmas but as part of the broader privatization phenomenon, helps clarify the interests at stake and suggests useful avenues for normative assessment.

As is true of privatization elsewhere, outsourcing the government’s legal work may or may not be cost-effective, depending on the work in question and how the government selects and supervises private attorneys. Contracting out is easiest to defend on efficiency grounds when the government needs to expand its capacity in the short-term — to handle a temporary spike in litigation, for example, or for cases that require special expertise. Although private attorneys often have higher effective hourly rates than government attorneys, it may still be cheaper for the government to “buy” the necessary manpower on an as-needed basis than to “make” it in the form of a long-term, full-time employee. Matters are more complicated for work that recurs regularly. Here, competition is critical. In the absence of meaningful competition for government legal work, replacing government employees with private contractors may well increase the costs of public litigation.

Even if we could be sure that privatizing the performance of government litigation would be cheaper, important questions would remain. Generally speaking, outsourcing is most appealing in areas where ends matter more than means: “The more precisely a task can be specified in advance and its performance evaluated after the fact, the more certainly contractors can be made to compete. ...” Relying on private actors to perform public work becomes more problematic when objective truth is elusive, or where value judgments and discretion reign. Government litigation is nothing if not discretionary. Particularly in a system dominated by settlements and plea bargains, the choices government litigators make about what claims to pursue and what remedies to seek carry profound consequences for the “law in action.” Privatization empowers private attorneys to exercise discretion on the public’s behalf. But private attorneys may bring different incentives, and different habits of practice, to their work for the government. For example, private attorneys may be more likely than salaried government employees to focus on maximizing financial penalties, or on winning cases at all costs. Competition for government contracts — while critical to cost-savings — may exacerbate those incentives by encouraging private attorneys to emphasize easily quantifiable indicia of effectiveness, such as win rates or dollars recovered. The consequence is that government litigation may be changed, not just cheaper, when private attorneys are involved.

On the question of financing, the privatization literature suggests the greatest need for caution in areas marked by substantial externalities and where distributive concerns are strongest. Both sets of considerations counsel against private funding in the litigation context. Private financing threatens to skew government litigation away from the public interest and toward the more narrow interests of donors. By treating public litigation as an item up for sale, moreover, private financing diminishes the expressive value of public litigation, sapping its civic and moral import.

More broadly, both approaches to privatizing public litigation allow private actors to stand in the shoes of government, to exercise aspects of sovereign power. As such, litigation privatization triggers concerns about democratic governance that are familiar to the broader debates over the private role in government. But this particular form of privatization also raises questions unique to litigation concerning the purposes of public litigation and its relationship to purely private suits. Decades of scholarship have mapped the differences between public and private enforcement of the law. Courts and policymakers likewise distinguish between public and private litigation in countless ways, treating them as distinct categories even in areas where they overlap. The core distinctions rest on the interests served and the incentives of those who serve them: Whereas private litigation typically seeks to vindicate the interests of the parties (and their attorneys), litigation by the government is supposed to promote the public interest. Privatization upsets those distinctions, smuggling aspects of private litigation into litigation in the government’s name. It therefore pushes us to think more carefully about what we expect from government litigation and how we ought to treat it.

This Article proceeds in four parts. Part I begins by sketching the characteristic attributes of public and private litigation, then introduces the possibility of merger — instances in which private actors participate in public litigation. The discussion focuses on two types of privatization. In one, private attorneys perform legal work on behalf of the government; in the other, private actors finance government litigation. Parts II (private performance) and III (private financing) examine the benefits and risks of each approach to privatization.

The particulars vary, but the net effect of both types of privatization is the same. Privatization makes public litigation more, well, private. Private attorneys and financiers imbue public litigation with private norms and direct it toward private goals. Though that consequence is important in its own right, it also suggests some of the longer term costs of privatizing public litigation. As Part IV explains, government litigation currently offers a path around the many — and mounting — obstacles that stand in the way of private litigation. Privatization gives private interests access to that route, allowing them to make their way to court in the shoes of the government. The path may not stay open indefinitely, however. Opponents of private litigation are already expanding their focus to take in government litigants, arguing that limitations on private suits should be applied to government actions as well. To the extent that privatization blurs the lines between public and private litigation, it may also spell the end of legal rules and practices that treat government differently, cutting off access to courts for public and private interests alike.

Reprinted with permission from: Margaret H. Lemos, Privatizing Public Litigation, 104 GEORGETOWN LAW JOURNAL 515-582 (2016) (Footnotes have been removed.)