Conventional wisdom holds that businesses are against litigation. But, in fact, firms often look to the civil justice system for results that are crucial to their business. For example, Volkswagen turned to Judge Charles Breyer for closure following the “clean diesel” scandal. Asbestos manufacturers turned to the bankruptcy courts to manage liability from products liability claims. And securities issuers regularly seek to resolve fraud claims through workouts that are memorialized in class action settlements.
Although litigation can be crucial to managing and resolving corporate liabilities, the procedures that courts ordinarily use can break down in complex cases like Volkswagen. In the face of such breakdowns, courts, parties, and legislatures sometimes craft “ad hoc procedures” that change the procedural rules of the road as a case proceeds. Ad hoc procedure-making allows the civil justice system to function when ordinary procedure fails. But it also presents a deep challenge to the rule-of-law values reflected in the procedures that courts ordinarily use, which seek to ensure that litigants are treated fairly and even-handedly. Instead of being created by lawmakers who operate behind a veil of ignorance, ad hoc procedure is made by lawmakers who seek to generate specific outcomes in pending cases. The circumstances under which ad hoc procedure is created raise concerns about lawmakers’ motivations, the transaction costs of one-off procedural interventions, the wisdom and fairness of those interventions, and the separation of powers.
In an article forthcoming in the N.Y.U. Law Review, Professor David Noll of Rutgers Law School and I introduce the phenomenon of ad hoc procedure and consider its place in a world where much court procedure continues to be made through the traditional model of procedural design that sets up procedural rules in advance of particular cases. Exploring examples in the United States and Europe where legislatures have enacted ad hoc procedural statutes to address procedural hurdles in complex litigation involving asbestos claims, securities fraud, and pharmaceutical mass torts, we contend that ad hoc procedure raises serious questions but also provides important procedural innovations to ensure that the civil justice system can resolve disputes that it could not using ordinary tools of dispute resolution procedure. These tradeoffs are important for businesses that find themselves in the position of defendants like Volkswagen. Faced with a procedural breakdown, litigants and their counsel should be aware of the potential benefits of ad hoc procedure-making, but also wary of concerns that it is less fair than ordinary legal procedure, which can undermine the validity, enforceability, and longevity of ad hoc procedural fixes.
Pamela Bookman is a professor at Temple where she teaches Contracts and Civil Procedure. Her work focuses on the challenges of adapting the U.S. domestic judicial system to the complexities of modern transnational disputes.