Nagareda on “Pretrial as Trial in Complex Litigation”

Richard Nagareda (Vanderbilt) has just posted an intriguing article “1938 All Over Again? Pre-Trial as Trial in Complex Litigation” on SSRN.  Here is the abstract:

ThisEssay for the Sixteenth Annual Clifford Symposium analyzes thetransformation of the pre-trial process for complex civil litigation.Settlement, rather than trial, has emerged as the dominant endgame. Asa result, in functional terms, the pre-trial phase effectively operatesas the trial. Over the past quarter-century, doctrinal developmentshave shifted steadily backward within the pre-trial phase the majorcheckpoints for judicial scrutiny of claims. The key developmentsconsist of the Supreme Court’s summary judgment “trilogy” (1986), therise of Daubert scrutiny for the admissibility of expert testimony(1993), the elaboration of a distinctive law of class actioncertification (circa 2006) and, most recently, the invigoration ofpleading standards in the Court’s Twombly and Iqbal decisions (2007 and2009).

During the same period, an equally dramatictransformation has taken place with respect to litigation scholarship.Insights from economics, cognitive psychology, and finance – amongother non-law disciplines – have broadened the vocabulary now availablefor analysis. Two big-picture points emerge from this literature:first, costs (especially, the ability to impose costs on one’sopponent) matter greatly to the choice whether to continue litigationor to settle; and, second, risk (or, more specifically, variance)matters in the pricing of civil claims via settlement, above and beyondcalculations of expected value.

The emergence of judicialcheckpoints in the pretrial phase has elicited considerable debate –most strikingly, today, over the Court’s pleading decisions. At onelevel, those decisions are rightly seen as pushing against the ethos ofthe 1938 reforms that put into place our modern notice-pleading regime.Yet, in a deeper historical sense, we actually find ourselves today inmuch the same position as the 1938 reformers. Today, as then, there isa lingering – but, often, undertheorized – sense that procedure itselfis having an undue and even deleterious effect on the pricing of claimsvia settlement. It is just that the procedure now suspected to bedistortive consists of the 1938 reforms. This Essay explains, inparticular, how the Court’s attention to pleading standards in recentyears marks a shift of emphasis from the regulation of variance in thelitigation process to a concern over cost imposition.

Thevarious pretrial checkpoints today exhibit a similar structuralfeature. They seek to manage variance or cost imposition by way ofthird-party judicial regulation – specifically, court rulings thatsignal “stop” or “go” on the road to trial. Evaluation of proceduraldoctrine as an enterprise of regulation opens up inquiry to theexistence of other potential regulatory modes. This Essay concludeswith examination of alternatives in the nature of first-partyregulation (e.g., cost shifting) and regulation in the form of judicialaction that would not be dispositive vis-à-vis trial but, rather, wouldseek to inform directly the pricing of claims in the settlementendgame.

ADL