Recognizing the Value of Failure in Civil Litigation

Alexander A. Reinert, Screening Out Innovation: The Merits of Meritless Litigation, 89 Ind. L. J. __ (forthcoming 2014) available at SSRN.

Throughout life, we are told that we should learn from our mistakes.  Alex Reinert, in Screening Out Innovation:  The Merits of Meritless Litigation, forces us to consider why civil litigation shouldn’t have to do the same.  Reinert elegantly defines meritless–as distinct from frivolous–litigation, argues why the civil justice system should value it, and argues that Congress, the Court, and federal rulemakers should change the way they think about substantive and procedural change.

In civil litigation, the question of how to manage the tension between efficiency and justice has been resolved by resort to an argument that frivolous claims should be screened out, and screened out early.  That proposition appears uncontroversial on its face.  Yet, changes like the Twiqbal pleading standard and the Private Securities Litigation Reform Act (PSLRA) are criticized for taking this proposition too far.  The argument is that these efforts to achieve efficiency screen out meritorious cases along with the frivolous.  Those in favor of these changes respond by arguing that it is worth sacrificing a few meritorious cases because the overall system benefits when frivolous cases are eliminated.  Proponents argue this leaves more room for meritorious cases to receive careful attention.  What gets left out of this debate, at least explicitly, is the role of meritless cases in the system and how those meritless cases should be valued when considering substantive and procedural reform.

Reinert takes this question on.  First, he unpacks the difference between a frivolous claim and a meritless one. Frivolous cases are those in which a judge can determine that “the plaintiff has no arguable basis to believe that she may establish the defendant’s liability on the basis of any of the legal theories she alleges.”  In contrast, meritless cases are those in which the judge “determines, after adversarial briefing or discovery, that a plaintiff’s theory of relief is insufficient or that a reasonable jury could not find facts that would allow a plaintiff to recover.”  In other words, frivolous cases are generally losers from the outset.  Meritless cases might be losers, but the only way to determine that status is to engage in some amount of adversarial practice.

Once Reinert defines these terms, he surveys a number of instances where the Court and Congress have adopted procedural and substantive restrictions in the name of screening out frivolous cases.  These changes are made without appreciating that frivolous and meritless cases are distinct.  For example, the inquiry for qualified immunity changed from a subjective to an objective reasonableness standard, asking whether the claim shows a violation of “clearly established” law.  The justification for this change was that the old standard was ineffective in filtering out both frivolous and meritless claims against government officials.  Reinert argues that these changes are flawed because frivolous and meritless cases are, in fact, not equal.

Meritless claims, Reinert argues, are actually good for the system.  For example, when a plaintiff loses a case, future plaintiffs and the system itself learn something from that loss.  Whether it is how to differentiate between existing precedents or the simple fact that a particular legal claim is a loser, the loss teaches us something.  Another benefit of meritless litigation is that a loss will lead to a positive change in the law. Lilly Ledbetter’s case is an example.  She lost her lawsuit, but Congress remedied that loss for future litigants by softening the statute of limitations for bringing discrimination claims on the basis of pay disparities.  If her meritless claim hadn’t been adjudicated, Congress would not have acted.  In addition, even if meritless cases do not lead to formal legal change, those cases might have broader social consequences as the public weighs in.  For example, lawsuits challenging the Obama Administration’s surveillance activities have helped shape the public debate and have even led the Administration to affirmatively change its policies and practices without court order.  Meritless cases also provide litigants with a sense that they have been heard, even if they lose.  Finally, those cases signal to potential litigants what their chances might be, guiding their decision to file a claim, arbitrate, or settle.  Reinert’s ultimate point is that even when these meritless cases fail, they teach us something, and that something improves the system.

Yet, because Congress and the Court conflate meritless and frivolous claims, both are screened out of the system as if they are the same.  As Reinert argues, substantive and procedural restrictions have increased, which means these claims are screened out even earlier in the litigation process.  Losing meritless claims so early means that their value is not realized at all.  For example, lawyers might resist taking cases unless they are certain the case can clear the “clearly established” hurdle for qualified immunity.  The result is that cases that might have defined the outer bounds of clearly established constitutional violations will not be pursued.  And even if they are, because courts can skip the clearly established step in their analysis, the law regarding what qualifies as a violation is paralyzed.  Reinert’s point is that substantive and procedural reforms, like the standard and timing of qualified immunity, should be made with an appreciation of what meritless litigation contributes to the civil justice system.  If meritless litigation were considered, the argument goes, different and better changes might be made.

Reinert’s article provides numerous examples of how meritless and frivolous claims are systemically different.  While not exhaustive, his discussion is broad, stretching across all manner of procedural and substantive provisions.  My only minor qualm with the article is that Reinert does not explicitly address federal civil rulemaking.  That is an area rife with discussions that, unfortunately, conflate meritlessness and frivolousness and undervalue meritless claims.  The latest round of proposed amendments to the federal discovery rules are a ready example how an under-appreciation of meritless claims can result in imperfect procedural change.  These amendments will make it more difficult for parties to request discovery necessary to develop their claims by requiring, among other things, a demonstration of proportionality.  However, Reinert’s larger and important point does not suffer at all for not discussing federal rulemaking; it is only another example of why his argument makes sense.

Reinert deftly demonstrates how meritless cases should influence substantive and procedural reform.  In a debate that is dominated by concerns about efficiency, he reminds us that the “justice” side of the equation is often understated and underdeveloped.  His work is a critical contribution.  Indeed, his article is such a success because he so convincingly argues that there is great value in failure.