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Shauhin Talesh on Problems with the Civil Legal System and Arbitration

Prof. Talesh and Prof. Glater recording podcast

Prof. Talesh examines how procedural rules in litigation have morphed in ways that undermine plaintiffs’ substantive civil rights, tilting the playing field in favor of defendants.

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Podcast Transcript

[Narrator] Welcome to UCI Law Talks, presenting bold perspectives on law from the University of California, Irvine School of Law. Join the conversation on Twitter @UCILaw, #UCILawTalks.

[Jonathan Glater] Welcome to UCI Law Talks. I'm Jonathan Glater and this week I'm speaking to Shauhin Talesh, Assistant Professor of Law here at UCI with a joint appointment in criminology, law, and society and sociology at the university. Thank you for joining us and welcome.

[Shauhin Talesh] Thanks for having me.

[JG] So I was trying to figure out how to describe you and your research and decided I shouldn't try that. I should ask you to start by telling us a little bit about what your research program encompasses.

[ST] Sure. So I write about how private organizations respond to legal regulations and what these responses, how these responses impact rights in terms of procedural fairness and substantive justice. Now more broadly, I’m an empirical legal scholar which means I go out and collect data on sort of how law is operating in society and then I report findings on that and also what's considered a long society scholar so I’m particularly interested in the gap between the law in action and the law on the books. So the law on the books would be what courts statutes and what administrative regulations say versus how law is implemented on the ground in action in society among individuals and organizations in society. And so, sometimes even though the law in the book says one thing, the law in action or how laws are implement and interpreted on the ground among the lives of individuals and organizations is very different and I'm very much interested in capturing that gap and explaining and theorizing that gap.

[JG] When we're talking about empirical work, I think many of us have in mind some notion of big objective easily quantifiable data but the kind of research that you're doing it sounds like is a little bit different. Can you explain a little bit about how you get at the gap as you put it?

[ST] Sure. So that's correct that imperial legal scholarship has been more recently defined as largely quantitative, doing lots of statistics, etcetera. But there's a large portion of people who also do what's called qualitative empirical work here. So I do – I go into the field and I interview research subjects. I do what's called ethnography which means I go into a field. I go into an organization for example and I spend a lot of time watching the organization, the people, the interactions on the ground and I'm there for a very long time so long that I start to see repetitive behaviors and I can start to deduce findings if you will. And so, I do participant observation, I do interviews, I do archival historical work which means I go into archives and I collect lots of history on a statute for example or an organization for example and I code or use various empirical tools to make findings. So empirical legal scholarship I think is defined more properly, defined more broadly as including both qualitative empirical work and quantitative empirical work.

[JG] It sounds like what you're doing is dare I say, kind of like being a reporter.

[ST] I mean it's similar to being a reporter you know asking different questions and I think the big distinction would be that of course when I go into the field I have a research question and that research question is often generated from various theories. So I draw from political science studies of interest groups and businesses. I draw from sociology, what's called organizational sociology and how organizations respond to laws. So my research questions and my questions in the field are derived from various theories that I'm trying to test or to explore to extend or to refine. So in that sense, it would be a little bit different but I do think some of the techniques are similar. Although I think another distinction would be that I'm going to take the interviews or the participant observation findings that I have and code them for various trends. Whereas I think reporters are not typically coding data if you will and so that's a big distinction I think but there are similarities.

[JG] So that raises the question then about the research question underlying the paper that you sent me before – before we started this conversation. Can you say a little bit about what your – what the question was that you wanted to set out an answer?

[ST] Sure. The papers – the title of the papers, The Process is the Problem. It's a spinoff of a very famous book written by a mentor and friend in Malcolm Feeley, who wrote a famous book in the ‘70’s called, The Process is the Punishment. He looked and studied through ethnographic research lower criminal courts in New Haven and he came to the conclusion that look, criminal defendants have a lot of substantive rights and due process protections but the process is the punishment. They can't effectuate those rights particularly in these lower criminal courts because to come to the hearing they have to take off time from work, there's inconvenience, there's difficulties and challenges in finding a lawyer and so he concludes that the process is actually the punishment. And so, I've written a paper that's tried to draw on some of my research and of course I'm somebody who doesn't really study criminal law but studies civil and my finding looking at the civil justice system as well as alternative dispute resolution systems in particular arbitration is that the process isn't the punishment, it’s the problem. And so the paper really walks people through the civil justice system and the various stages of litigation through pleadings, discovery, motion practice, class actions, and talks about the goals of each of those mechanisms are and how through the rules and the alteration of the rules the process – the process through which litigants use these systems has become problematic. And so, I make the point that look there are more substantive rights than ever before. Individuals in society have more consumer rights than ever before more civil rights on the books than ever before. There are more substantive protections than ever before. But the process, the procedures, the rules of the game are problematic and so it's very hard for people in action, right, with the law on the books and the law in action to effectuate those substantive rights that we have. And so, there's a problem and so that's what the paper walks people through in sort of step by step form.

[JG] You call it – I think I'm remembering it right that there's a deformation – right – of civil procedure here that  creates this gap between the reality and what the law – right – purports to offer. And I want to make sure we explore a little bit, the nature of your critique. So you identify specific trends in different aspects or different moments in the litigation process that work against civil litigants and I wonder if you can just take us take us through them.

[ST] Absolutely. And before I do that, I want to make one point which is that the paper talks about the idea that the advocacy of private organizations and the defense bar have created a situation where the Supreme Court has announced a lot of decisions that have caused the civil justice system to have procedural problems. The rules have been changed; the court cases have interpreted the rules in a way that have made it very problematic for litigants to effectuate their rights. Okay so that's a very important underlying theme to the paper that I want to get out at the outset and so you say well okay tell us more. So I will. Let's take pleadings. Pleadings are the initial stages of litigation. You file formal documents to the court. In the case of a plaintiff, they file a complaint and the defendant files an answer. This is the initial stages of litigation. Now, originally when the Federal Rules of Civil Procedure were enacted in 1938, the idea of the pleadings was – the purpose of the pleadings was to give notice to the other side of the lawsuit. What the major claims are to initiate the lawsuit, to think of a funnel starting very broadly, we let lots of cases into the court system and eventually we’ll funnel out the bad cases that don't need to be in and be left with the cases that should go through the justice system. And in fact, rule 882 states that the complaint should offer a short and plain statement showing that the pleader i.e. the complainant is entitled to relief. Okay. And famous Supreme Court case Conley v. Gibson says as long as there is no set of facts such that plaintiffs couldn't establish their claim, the motion to dismiss that the defendant brings to try to eliminate the lawsuit should be denied. So very broad starting and what's happened in the last 8-10 years there’s been two major Supreme Court cases the Twombly v. Bell Atlantic and Iqbal v. Ashcroft 2007-2009 that have changed the pleading standards dramatically. We no longer have what's called a notice pleading standard; we have what most scholars think of as a heightened pleading standard. You must show not – you must show that your claims that you are alleging in your complaint are plausible and requiring much more facts, conclusions in the complainer to be stricken. And so it has put tremendous burden on plaintiffs in pleading their cases and putting their complaints forward to allege facts – facts that often they don't have at the initial part of the lawsuit. And so empirical data now – you know we have data we come back on a person that loves to talk about data and so now we have data that suggests that defendants and defense lawyers are bringing more motions to dismiss challenging those complaints and more motions to dismiss are being granted. The defendants are bringing more motions to dismiss in cases that they probably wouldn't have under the old standard because under the old standard, it wouldn’t have been worth their time or money to bring those cases. And especially of note is that in cases of discrimination or civil rights where the information that plaintiffs need is in the hands of the defendants, are very hard now. It's very hard for plaintiffs to bring those lawsuits because the second stage of a lawsuit which is discovery, which is where you try to gather facts from the other side, hasn't taken place yet. And so, it has put a lot of pressure on plaintiffs in cases of civil rights or discrimination or cases where it's very hard to have the information of you know a pattern in practice of discrimination at the outs of the lawsuits. It’s put a lot of pressure on plaintiffs. And so that's sort of stage one right, the initial outset of the lawsuit is the complaint which was supposed to be broad and to allow cases it has now become much more narrow.

[JG] I just want to make sure we're all clear on – so you alluded to Rule eight. Rule eight of what?

[ST] Federal Rules of Civil Procedure. So the federal rules were created in 1938 to govern how federal courts are to handle civil not criminal cases. 

[JG] And working with your funnel analogy, it sounds like what the court has done to – not so much that the rules have changed but the interpretation of the rules has changed. And the effect of that is the funnel is in a sense getting shallower.

[ST] Become a straw. The funnel has become a straw and so cases are being winnowed out at the outset when in fact the design of the system was actually to allow a funnel to have more cases come in. And then, as we work through the cases through discovery and motions for summary judgment, we can funnel out, you know, the cases that don't necessarily survive.

[JG] Right.

[ST] And that actually leads right into discovery if I can–

[JG] Yes.

[ST] –talk. So let's say your case does survive, the pleading stage and the motion to dismiss brought by the defendant is denied. Okay now you conduct what's called discovery which is when both plaintiffs and defenders try to discover facts to support their case and there's been an evolution in discovery. The idea of discovery initially was to allow parties access to information so they can effectuate their case and seek relief. And the scope of discovery has changed in the last 35 years and that's what I want to just elaborate on here. In the 1970’s, the scope of discovery was any matter which is essentially relevant to the subject matter involved in the pending action very broad. In around 2000, there are amendments; I’m skipping some amendments in ‘83 and 1993 but the scope of discovery was narrowed from subject matter to any matter that is relevant to the claim or defense of any party. So we've gone from subject matter to claimer defense. Now to be fair, at the time the rule makers did include that relevant information was information that was reasonably calculated to lead to the discovery of inadmissible evidence. Okay. Well, in about six weeks – December 1st the rules have changed the scope of discovery has changed once again. Okay. And this has been approved all the way through the rule makers process. It’s an extensive process goes up to the courts and the judges even involving some justices on the Supreme Court and starting in December 1st the new rule eliminates the language referring to the likelihood of leading to discovery admissible evidence and instead requires that discovery – the scope of discovery is only that it needs to be proportional.

[JG] To the needs of the case?

[ST] Proportional. So now, the scope has gone from subject matter to the claim or defense to now, its discovery is proportional. And when evaluating proportionality, courts are permitted to consider the amount in controversy, the importance of the issues at stake in the action, the party resources, the importance of the discovery and most notably, whether the burden or expense of the proposed discovery outweighs its likely benefit. And you say well why does that matter? How does that matter? How is this going to play out? Well, what it means is now plaintiffs are going to have to, at the outset, show that their discovery requests – the documents they're requesting, the questions they're asking of the other side is proportional and it's going to allow those factors I just rattled off are going to be mechanisms from which defense firms representing defendants are going to object. They're going to say look this request is too broad. It's too expensive; it's not commensurate with the party's resources. And so, it's given again a series of procedural weapons for defendants to use to block discovery and it's going to create probably more motions to compel more discovery battles and more clogging of the civil justice system. When again, we go back the scope of discovery originally was supposed to be broad and again it's become narrow. Okay and the paper – you know so I've talked about the pleadings, the outset, we've talked about fact investigation, discovery. Then the paper takes you – takes the reader all the way through the motions for summary judgment is another key mechanism in the litigation process if you will. It's a situ– it's a procedural tool to allow parties to have the judge resolve the case when there are no issues of material fact in dispute and one side is entitled to a judgment or decision as a matter of law. It's an opportunity to take the case away from a jury. And the summary judgment measure, if you will, has changed over time. In the 1980’s there were three Supreme Court cases that came out all within days of each other, if you will, and in sort of same period of time if you will and it's expanded the applicability of summary judgments. It’s made it easier for defendants to bring some rejection motions and ease the initial burden that defendants can bring a summary judgment and point to the absence of evidence on the other side as opposed to being required to offer evidence. And so this has caused the litigation process to be inundated with motions for summary judgment. And motions for summary judgment where defendants essentially say the plaintiff hey you can't prove your case we're going to for summary judgment. And it's forcing plaintiffs to now offer more evidence early on and reveal their – the facts of their case the strengths and weaknesses etcetera, etcetera. And it has created again another burden on the process and so at each stage you see the process being problematic, if you will. Class action is another one with the recent decision in the Wal-Mart v. Dukes case 2011, the Class Action Fairness Act of federal statute. These court cases as well as the legislation have made it more difficult for classes to come together and I should probably mention you know what a class action is. It's an opportunity for– an opportunity for individuals who may have small cases if you will to unite and so small that you wouldn't bring a lawsuit but have common interests, common issues. And so a class of individuals get together and form a larger group which then brings the lawsuit. You see this often in situations against big companies and so it's a real important mechanism in our federal rules to allow the little guy to partner up and become bigger, if you will, to go against the big corporation and very inherent in the ideas and concepts of procedural democracy. And what's happened over time is through the Supreme Court decision in 2011 Class Action Fairness Act has made it a lot harder, I think, to have classes form and go through the justice system. In particular, classifications are much harder now because the court must certify that in fact there is a class here and the Wal-Mart case has made it a lot harder. The Class Action Fairness Act has made it a lot easier for defendants to – what's called remove cases from state court and get them into federal court where federal judges are a little bit tougher in certifying classes. Okay. So again, you see that these are not substantive rights we're talking about. Everything I'm talking about so far has been process, procedure, the rules of the game, right, and the rules of the game are being tilted in one direction and so the process here is the problem, okay, in the civil context.

[JG] So what this is – this is tilting the playing field in favor of defendants right?

[ST] Correct.

[JG] Okay. And the only way this is happening is not, right, through manipulation of procedure. I should be careful about using the word manipulation but through changes to the rules of civil procedure. We're also seeing and we saw it in the cover of the The New York Times recently, increased use of arbitration clauses, right, so essentially directing complaints out of the right the states formal adjudicatory process into something else. And this you've also looked at?

[ST] Right.

[JG] Can you tell us a little bit about what you found?

[ST] Sure. So you're absolutely right. You might say hearing this, “Hey you've convinced me that wow our civil justice system is problematic; we'll go use an alternative form.” Like arbitration; it's quicker theoretically, it's faster, it's cheaper, it's thought to give parties more voice and that's a better spot. Well my empirical findings suggests that the process is the problem there too. Okay. And that's where I've devoted you know a large portion of my research for the past decade in exploring. How different arbitration systems in the design of these systems can facilitate consumer inequality and actually inhibit consumer inequality. So you have this big debate going on and the New York Times has recently run a nice piece – series of pieces on you know class action clause – arbitration clauses I should say, not Class Action Clauses. Arbitration clauses, these are clauses in contracts that essentially say hey if you want to bring a grievance, you're going to have your case heard not in the public courthouse but in the private courthouse called arbitration where we will have three or one or a series of people hear the case. Usually these are private lawyers sometimes retired judges sometimes just people hearing these cases outside the court system. Sometimes they are funded by private businesses, sometimes they're quasi-public functions but you're not going to have your day in court. You're going to have your day in a different form. So I examined how arbitration processes were essentially codified into law for consumers to use when resolving warranty disputes, especially warranties issued by automobile manufacturers or lemon laws if you will. And so my work pays particular attention to how private organizations often shape the content and meaning of legislation and regulatory rules that are designed to regulate them. So through participant observation at arbitration training programs and interviews with actors in the lemon law field, these are sort of automobile disputes consumers, you have manufactures. I examined and compared how two different arbitration systems essentially operate. One that is funded by private organizations in particular on will be automobile manufactures in California and one run by the state in particular I studied Vermont. Now it's important to see the design of these two arbitration systems are different. California has a private system where the manufacturers fund the program and contract out with a third party organization that is technically independent of the manufacturers to train their arbitrators and administer the lemon law program. The arbitrators consist of about 65% lawyers 35% non-lawyers. Now Vermont has a state-run dispute resolution system held in a public forum where they use an arbitration board or a panel of three citizens, a technical or mechanical expert and, an automotive dealer. So they hear it as a panel. California has a single and so there are differences in these two systems and essentially what I find is that despite the lemon laws on the books being the same, the law in action in both states is really different based on the way business and consumer perspectives are accounted for in the design of the arbitration system. So arbitration dispute resolution system design really matters. It's not so much as you hear even among the New York Times or in the debates among politicians; it's not so much about whether arbitration is a good thing or a bad thing or whether consumers win or lose. My point is design really matters; it's not that arbitration is a good thing or a bad thing; it's how you set these systems up that matter and no one really looks into and this. So my research revealed is that – you know – in the California system run and funded by manufacturers business values of rationality and efficiency and discretion flowed into the rules and the procedures and the meaning of law that was operating on the ground mainly through an extensive training and socialization process. So shortly after these training programs began, arbitrators were told to essentially shed any prior knowledge they have as a lawyer and exclusively follow what they're told. And so my research shows that these training programs reshape the meaning of law in three ways: one they build discretion and flexibility in the legal rules and remedies; they recontextualize legal rules and arbitrator decision making around a non-legal business logic. And three, they omit portions of the formal lemon law and thus they reshape the meaning of the remaining line in the statute. Okay. And as a result, the big finding in the papers that arbitrators are taught to adjudicate these cases not in the shadow of the formal lemon law in the statutes but in the shadow of an altered form of lemon law that mirrors the formal lemon law but is filtered was business values and influence and really subtle ways. And Vermont on the other hand, anchors its neutrality and legitimacy of its structure arbitration system in a what I call a collaborative justice model that balances interested stakeholders reflecting business and consumer logics in a state funded and designed structure. So rather than – unlike the extensive training in California, Vermonters are provided little to no training. They're essentially given a full copy of the statute and asked to review it. To the extent business values are introduced into the Vermont process by the presence of the automotive dealer and the mechanical expert, their balance with the competing consumer perspective by the presence of the three citizens. Okay, and so the big you know – my research I've written more to particles on this, but the big finding is that you know the design of the arbitration system. The processes, the procedures and rules can both facilitate consumer inequality and inhibit consumer inequality because what we find when I look at outcome data is that consumers win twice as often in Vermont as they do in California. So consumers lose a lot in the private system and that's something that politicians and policymakers and reporters talk a lot about: who wins and who loses. They talk a lot about arbitration being good and arbitration being bad but less on how these processes operate. The devil is in the details and we come back to the initial question: what's my research about? It's about those details; it's about qualitative empirical work; it's about getting on the ground and seeing how the law in action really operates.

[JG] So what are the implications then of your findings? If you were in a position to advise, right, policymakers about what kinds of adjustments they should make, if you could tell California hypothetically. Look at Vermont, these are changes you should make if you want to have the following effect on outcomes. What kind of instructions, what kind of ramifications would you identify for them?

[ST] It's a fabulous question and a really important one and I published an article on Law and Society Review in 2012 that lays out the differences between Vermont and California. And so, things like in California the role of the fact finder, the role of the arbiter, they're taught to be passive fact finders to call balls and strikes and let the parties argue the cases. Well who do you think has more information, knowledge, and experience in the arbitration form: the manufacturer or the consumer? Right, the manufacturer. In Vermont, panel arbiters indicated that they felt the impartiality neutrality of the process required arbitrators to be active fact finders, to ask those probing questions if the consumer didn't know the legal standard very well. So the role of the fact finder: I go through all these things. Training, socialization, and maybe training if you're going to allow training of arbitrators maybe there should be some supervision over how that training process is operating. Funding of the program, the role of the fact finder, the role of emotion and individual voice. Are you going to allow hearsay into these hearings or not and I go through all these mechanisms and I show how both sides do it differently and how in California the repeat players gain very subtle advantages through these procedural steps. Whereas in Vermont, they inhibit some of these very same procedural steps. So I'd say if I were you know, talking to the Consumer Protection Financial Bureau which is looking into arbitration or if I were talking to legislators, I would say let's get past arbitration being a good or bad thing and let's talk about how you design these systems because rules matter. Rules matter in the civil justice system, rules matter an arbitration system, rules matter for your children playing soccer and basketball. Rules matter, right, and the design and in the implementation of these structures can affect who's going to win. And so I mean I think the devil is in the details and unfortunately legislatures and politicians don't ever want to get to that – that space that I'm doing the research on. The ground about the role of fact finder, role of emotion, role of hearsay and how this, in a very subtle ways can cause repeat players to gain very powerful and subtle advantages.

[JG] Shauhin this is been fascinating and the details that the readiness to wade into them is clearly something that I hope we're passing on to our students. Thank you so much for joining us today.

[ST] Thank you very much.

[Narrator] Thank you for joining us for UCI Law Talks produced by the University of California Irvine, School of Law.

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