Private Attorneys General: Bridging Gaps in Law Enforcement?

Caroline Bryant: Well, hello everyone and welcome to this Federalist Society Virtual Event. I'm Caroline Bryant and I'm Associate Director of Practice Groups with the Federalist Society. Today we're excited to host this webinar on Private Attorneys General. Our moderator today is Karen Harned. Karen is the president at Harned Strategies LLC. Previously she served as Executive Director of the National Federation of Independent Small Business Legal Center. Prior to joining the Legal Center, Ms. Harned was an attorney at a Washington DC law firm specializing in drug law where she represented several small and large businesses and their respective trade associations before Congress and federal agencies. She also served as assistant press secretary to US Senator Don Nickles of Oklahoma. If you'd like to learn more about today's moderator, her full bio can be viewed on our website at fedsoc.org. After our speakers give their presentations, we will turn to you, the audience, for questions. If you have a question, please enter it into the Q&A function at the bottom of your Zoom window and we will do our best to answer as many as we can. Finally, I'll note that as always, all expressions of opinion today are those of our guest speakers, not the Federalist Society. With that, Karen, thank you so much for joining us and the floor is yours.

Karen Harned: Thank you for helping us with this webinar today, Caroline, and for everyone joining us, I think this is going to be a great debate, a great battle of the Texans. We've got two fantastic speakers on a topic that I think is really interesting. It's about private attorney general laws - which is what a lot of people will call them - and these are laws where public citizens are allowed to or authorized to enforce the law on all of our behalf - public welfare laws. These laws have - there's I think over 3,000 across the country in different states. We see them in the federal context, especially in environmental regulation like citizen suits, but they really have regained prominence as of late in more of what you would call the culture war context, where Texas's abortion law authorized citizens to sue to enforce it. That was followed by California doing the same in the context of guns.

And at the federal level we recently saw a debate on the American Privacy Rights Act that was introduced in the House and championed by Catherine McMorris Rodgers that also included some provisions that would've provided for citizen suits. As a small business advocate myself, I've seen this in the Americans with Disabilities Act context, so it's very broad in it's prevalence, but we're going to have a good healthy debate here on whether or not it's appropriate and I cannot think of two better guests to have than Andrew Davis of Lehotsky Keller Cohn and Judd Stone of the Stone Hilton Law Firm. So with that, I'm going to start with Andrew. I'll give his quick bio and then I'm going to turn it over to Andrew, and he's going to take the position that he finds these enforcement mechanisms legally problematic. Andrew has an extensive background as a litigator. He has been lead counsel in 20 cases in state and federal courts, including the Fifth Circuit and the Texas Supreme Court. He comes from Lehotsky Keller, he was Chief Counsel for Senator Ted Cruz on the Senate Judiciary Committee, and then he also served as Assistant Solicitor General in the office of the Attorney General of Texas. So with that, I'm going to turn it over to you, Andrew, to talk about your concerns with these laws and then we'll, I'll introduce Judd, and you can go next. Andrew?

Andrew Davis: Perfect. Thank you Karen. And thanks to Judd for being here today. We've got, I think, interesting things to talk about on these topics. So as Karen outlined very helpfully to start, private attorneys general acts have sort of proliferated recently, but I think it's good to situate them first between sort of two pools of litigation. So on the classic pool, you've got your traditional private versus private suits. These are your sort of negligence courts or your breach of contract where the remedy is purely individual, right? You did something to me that was negligent. I seek damages for you for the harm that I suffered. It's purely private. Then on the other end you have the purely public acts. So you could think - a traditional one is criminal enforcement, there may be a victim in the crime, but the actual enforcement from the state, whether it's federal government or state government, is going to be trying to remedy this and get a remedy for the public, independent of the victim.

Private attorney general suits are really somewhere in between and they can run the gamut in between very close to public or somewhat private. But the whole point is they have a strong flavor of enforcing public law, even if there's sort of a hinge of private right in there. And I think it's interesting that the first time it's really came up in the courts - in the federal courts- was in 1943 in relation to the New deal where you had a New Deal statute that was passed that essentially allowed any aggrieved person to bring suit if they didn't have a real injury. And the court first then called them - this is the Second Circuit - first called them "private attorneys general acts", and that sort of took off from there. So the question is what are the legal and policy issues with these types of acts where they have a strong flavor of public law enforcement?

So in the federal context, it really stems from a non-delegation  problem. We're all familiar with non-delegation when it comes to legislative acts where the Congress cannot delegate except with an intelligible principle, but they can't delegate its legislative power to another branch. And that comes from Article One's vesting clause. The same sort of argument is similarly true when it comes to private attorneys general acts. You have Article Two, which also vests in the president all the executive power. Now it doesn't say "all", but it's really been traditionally understood to be all back from I think since Martin v. Hunter's Lessee was one of the first cases that says "all." So it is - everything has to be vested in the executive power within the president. Now this doesn't mean of course that the president is the only one who exercises it. He has subordinates who do that work for him.

Now that's why you have the appointments clause. It can't be done by one person, but the idea is it has to be under the control of the president in some way. If it's outside of the president, then someone else is exercising the executive power, not the president, and then you have a conflict with the vesting clause. So the question really is going to be for any private attorney general suit within the context of the federal government at least, is one, does this act delegate executive power to an individual to enforce? And then two, if it does, is this private individual outside of the control of the president - outside of the executive's control at least? And then I should cabin that and say that states also have very similar provisions, not necessarily the same doctrine that's interpreting them as you'll have in the federal context, but a lot of the states have the same types of vesting clauses, appointing clauses, and take-care type clauses, so a lot of the same arguments will transfer over.

So the first question then is, when you have private attorney generals, are they enforcing the law in a way that constitutes executive power - the exercise of what is vested only in the president. So on sort of the easy hand, I think you've got something like criminal law enforcement. The Supreme Court has sort of repeatedly said that criminal law enforcement is something that is enforcing the law through the executive power. So that's Morrison v. Olson, both Scalia and the majority both agreed that criminal law enforcement was that way, and then they've also referred to that in a variety of other cases. So I don't think that one's really in dispute, although I will flag that there are some people who would argue that maybe there was some private law enforcement - even in the criminal context - around the founding.

But I think generally speaking, the president is favorable towards saying that's executive power. Then you have I think a bit closer, but civil enforcement on behalf of the government. So this is for when you have a litigation that's brought by the government against an individual or a business, and this is going to be the exercise of executive power as well. So for example, in Buckley v. Valeo, the FEC was housed in the legislative branch, and the Supreme Court said, "No, can't do that. Because what you're doing with the FEC is they have an enforcement power they're able to litigate and that constitutes executive power which can't be put inside the legislative branch." And the quote I have here, it says, "A lawsuit is the ultimate remedy for a breach of the law and it is to the president and not to the Congress, that the Constitution entrusts the responsibility to take care that the laws be faithfully executed."

And then similarly in Heckler v. Cheney, the refusal to institute proceedings by the federal government was considered to be an executive power. The idea being prosecutorial discretion whether or not to bring an enforcement suit - even on the civil side - is akin to prosecution and it is something that can only be exercised by the executive department. So then you get even closer to where you're getting more private actions, but they still feel public. So this is where you get something like the False Claims Act and qui tam actions. So this is civil enforcement by a private individual, but ostensibly on behalf of the government. So this is where - at least in the False Claims Act- the fiction is that the claim of the government for money has been assigned to an individual who essentially prosecutes the civil case on behalf of the federal government. Then moving forward a little bit more, you get to civil enforcement by a private plaintiff where it is not purporting to act on behalf of the federal government or on behalf of the state, but in function it's really serving a public law type purpose.

So for example, you have something like - I think Judge Newsom wrote about this in (unintelligible) where he talked about Congress having broad authority to grant a private plaintiff the right to have a cause of action, but he can only vindicate his own rights. He's not allowed to vindicate the rights of others, simply because he has an injury that is more narrow. And the Supreme Court hasn't really addressed this in any concrete way, but there are definitely hints that this could be something that is coming in the future in doctrine. So I think the strongest case here is Friends of the Earth, Inc. v. Laidlaw. So that's a case that's in the EPA context, you had a Clean Water Act action by a private plaintiff and they were trying to get a remedy that was simply paying fines from the defendant to the federal government.

And the question there was an Article Three question. Was there standing for this organization to bring this suit? The Supreme Court said yes, because there was a deterrent value that accrued to the plaintiff, from having fines paid to the Federal Treasury. But in his concurrence, Justice Kennedy wrote that "There are difficult and fundamental questions raised when we are asked whether exactions of public fines by private litigants and the delegation of executive power, which might be inferable from the authorization are permissible in view of responsibilities committed to the executive by Article Three."

So essentially saying even though this is not an Article Three problem, in his view, it seems like it could be an Article Two problem by having an individual force fines payable to the Treasury, and Scalia and Thomas in their dissent were even clearer when they said this turns over private enforcement of the law to private individuals, which was an Article Two problem and we see that this is something I think could come up in other context in the ADA context for example, there was Acheson Hotels, which was dismissed as moot last term if I remember correctly, but it also raised some of these same type questions.

It was in the Article Three context, but also had Article Two problems. So there's questions here of course of what is the executive power and does a lawsuit where you're getting a public remedy count? But then there's separate from that the question of even if it's an executive enforcement, it's the executive power, does the president still have control of it? Because if the president still has control, then you don't really have the vesting clause problem. So there are a couple of different views on this. There's one view that could be maybe called the categorical bar, so you've got cases like Department of Transportation v. Association of American Railroads. This is the Amtrak legislative delegation case where Justice Thomas wrote in concurrence that you basically can't put the executive power or the legislative power in the hands of somebody else.

Justice Alito effectively wrote the same thing in concurrence, and this is all pretty strongly consistent with the strong (unintelligible) executive theory and then there's Scalia's dissent in Morrison, where he argued that even the concession by the majority - that the president didn't have full control - was enough to render the statute unconstitutional. Basically, the idea here is that you can't delegate outside of the president and his subordinates, even if there is some modicum of control via something like notice or the ability to try to dismiss the case. Then there's separately a more functional approach, which is what the majority did in Morrison. It's also what you see in cases like Free Enterprise Fund, when they're talking about removing - the ability to remove officials - what kind of control does the executive actually have? And that can be a multi-factor test. It can be - just defining how you see it. There's not a lot of precedent on this, but this question is always at core, when someone is exercising this power, are they going to be within the control of the presence sufficient that we can say the lines of accountability that are meant to be enforced by the constitution are correct inside this regime?

And I think that brings us pretty well into the policy area here, which is that this functional approach really asks whether the executive power has been delegated outside the president's control because it's trying to make sure there is political accountability to the decisions to enforce the law. You have the idea that when you have a single executive, whether it's the state or whether it's the federal government, you want to make sure that voters know who is enforcing the law so that they can be held responsible for their choices. When you have a private attorney general act, this is effectively allowing individuals to enforce the law. You have a problem that it's the lines of accountability or not clear, and that can be especially true whenever the statute is designed specifically to make that unclear. You can imagine in environmental law for example, where the idea of a citizen suit is so that the government doesn't have to bring these and it can rely on interested groups that have maybe views that are more outside of what would be normally considered for a candidate or for a president.

They're allowed to sort of outsource this law enforcement to their political benefit. There's also a huge risk of vexatious and nuisance litigation, and I think that can be seen pretty clearly in cases in California when you have California Proposition 65, which is ostensibly about labeling toxic chemicals, but essentially becomes a suit for repeat plaintiff's firms to just exact money from companies by filing these lawsuits, collecting money and then continuing on even if there's really no violation there and really no harm. California also has the Private Attorneys General Act. You see this in the ADA with some of these "tester firms" where it keeps suing tester litigants and collecting and especially going after smaller businesses who are not going to be able to litigate this case all the way to the end, especially with the fees that can get awarded at the end. And so instead they capitulate and you just turn into nuisance suits and I think that just shows the misaligned incentives when you have someone who's trying to enforce public laws, but they're getting a pecuniary and private benefit from them.

So I'll leave with what's next on this front. So I think we're getting more and more and more acts that are allowing these types of private claims, but I think there are some counters that are going to be on the horizon. Within the False Claims Act, I think especially it seems like the court may be interested in taking one of these cases last year in a case called Polansky, which was about the ability to dismiss a case - the government's ability to dismiss a case - brought by a private relator.. You had three justices that effectively said "We need to consider the Article Two implications of the False Claims Act and whether you can even have relators bring these suits consistent with the Constitution." It's only three, you need four votes for cert, but it's very possible this gets taken up and even if the False Claims Act is decided to be constitutional, that could put some barriers and some bounds on what is actually appropriate for a private attorneys general act

Similarly, as I mentioned, environmental suits and ADA suits could also provide a vehicle for addressing this and states as well. I think there's ability to have litigation within the states that is challenging whether or not you have these vesting clauses within the states that are consistent with the structure of the state government and there may even be some, and I don't want to get too far into this, but there may even due process arguments with with an interested prosecutor that may be able to federalize some of these arguments when it comes to state laws in order to get out of some of these states which are not going to want to adopt more vesting clause doctrine as it comes out of Supreme Court if it were to be more favorable. So that's my overview of this law and I appreciate the indulgence and look forward to hearing Judd's comments to the contrary.

Judd E. Stone II: Karen, I think you're muted.

Karen Harned: Sorry about that. Yes, thank you so much, Andrew. That was wonderful. I'm going to remind folks before I introduce Judd, that there is an opportunity to ask questions. Just go to the Q&A feature below in this forum on Zoom, and we already have a couple of good questions in there, so feel free to do more and then we'll definitely have time after Judd's presentation to hopefully take all of your questions, but if not all, most. So Judd, I said it was the "Battle of the Texans" so we had the assistant solicitor General going out against the former Solicitor General Judd Stone who was recently Solicitor General of Texas. Now he is the founding partner of Stone Hilton. He's been a lifelong advocate - an insightful, tenacious, appellate litigator. He's argued dozens of appeals in both the federal and state courts including eight cases before the United States Supreme Court. So with that, Judd is going to tell us why we should like these laws.

Judd E. Stone II: I guess I'll start there then. Let's start with why private attorneys general establishment is desirable. Then I'll take you to why it's permissible and then I guess I'll end up with why no one actually is serious about ending it anyway. Gosh, I don't think I've ever heard of a due process right to an unbiased prosecutor, but we can get to that in good time. So why it's desirable is pretty simple. I'll sort of rest this on two different pillars. There are some claims out there for which you've got essentially diffuse information. Some things are obvious to all. If we have a car accident that happens at the corner of Sixth and Congress, which is where my office is, there might be quite a few witnesses. It's going to be pretty accessible to everyone to see what happened to the cars and get the medical information of the victims.

Some things out there are not so accessible. Some people have specialized knowledge on whether or not a particular facility happens to be infringing on public wire rights. Some people there will have particular knowledge about whether or not a given Medicaid arrangement that appears to be legitimate on the surface is actually violating the anti-kickback law or otherwise sort of using the relatively arcane components including features of federal medical reimbursement in order to skim. So there are hard things to know and they're very hard to police externally. So in a circumstance where you've got really diffuse and hard to access information, pretty much the only way you're going to get any enforcement at all is either if you have one, an incredibly large, incredibly centralized governmental authority that has tons of authority to search through all kinds of facilities, more or less at will, or two, you leave that to the diffuse public to bring up violations when you think they're there.

Now I set that up as the dichotomy because gosh, I remember all the way back to the Obama administration when the primary conservative concern regarding executive power wasn't so much its enforcement, but it's non-enforcement where a law or a rule was being promulgated in some area and the problem wasn't so much the people who were getting tagged with it, it was that favored parties were getting exempted from it and it made business almost impossible to comply with the laws unless you're one of the favorite parties who is exempted from this thing or that. So look, in a world in which you have perfect or near-perfect or very fair decisions made by prosecutors in a centralized place as to what really is a good case, what's one that's in the public interest - however defined - perhaps your confidence about a public rights or public enforcement model should go up. If you think the way I do that we right now suffer from both under-enforcement and selective under-enforcement of a variety of laws with people who happen to be favored by the political ruling class, then look, there's only two choices.

You either turn the thing off or you turn it all the way on, and if laws exist and are preferentially enforced for the favor of the few or the insiders, then you have to make it possible for everyone to enforce them. And then we count on judges to sort good cases from bad and let the chips fall where they may. Obviously, that's the second best world from having an executive where we can count on men doing right and fearing no man, but I think we're far away from that, and perhaps we've always been far away from it. The reasons why it's permissible are I think even more or even more straightforward. First of all, don't get me wrong, I defer to no man in terms of my interest in Article Two's history in the Constitution, but what I think my friend Andrew - we really are friends - what I think my friend Andrew left out was the fact almost all law and lawsuits are state law, but the fact that the federal Constitution has something to say about the allocation of executive power within the executive branch specifically accountable to the president, it's an interesting topic.

It's probably been one of the most interesting topics to conservative and libertarian constitutional scholars for the last hundred years or more. It also has a surprisingly limited amount to do with how suits actually work out in the real world where people are trying to enforce things. So as well as there being, for example, a Federal False Claims Act, there are 50 state False Claims Acts, many of which have similar provisions - and by similar provisions just for those of you who haven't worked in the False Claims Act space Andrew and I both have some experience there - it's incredibly draconian, it's treble damages, it's massive penalties, attorney's fees shifting. I mean they are - it would probably be better to be caught violating RICO than to be caught violating the FCA. It is (unintelligible) in structure.

So what we're talking about is whether or not private enforcement of public enforcement of regulatory laws - designed to protect "public rights", and I put kind of quotes around that because I think the border between public and private rights is a lot fuzzier than we're all thinking about, which we'll get to in part three - if we're really concerned about that, then Article Two has only a little to do with it because there are 50 out of 51 sovereigns that simply aren't bound by Article Two in any meaningful way, and as anyone who sort of studied the convention and knew the early colonies histories, they experimented with a variety of structures of government. This is almost certainly well known, at least to people who read on these sorts of topics. But the states are really strange places from one another. I mean Texas has a fairly serious standing doctrine that reflects or maybe is a little bit more stringent than the federal article (unintelligible). Massachusetts has a supreme judicial court that allows for advisory opinions. There's no reason you can't have that sort of arrangement.

Obviously neither of those two are about executive power as such, but it's just given as sort of a flavor of how very different the state governments can be from one another. So for purposes of figuring out whether or not public enforcement is permissible at a bare minimum, I think we have to look at all the states and state non delegation doctrines. I suspect - I'd be happy to defer to Andrew if he knows better - I suspect don't fare that much better than the federal non-delegation doctrine does, which is to say it's just about a 1 out of 435 loser across the years, whether or not that should be so, it's descriptive of what is. So I guess I want to talk about since the False Claims Act has been brought up by both Andrew and I repeatedly as an exemplar, and I think that's a fair exemplar of an example of a publicly - or privately enforced public right, it's money that's owed to the federal government.

We usually think of that as a kind of quintessential public right and individuals who are private individuals who have suffered no strictly speaking, Article Three harm to themselves necessarily - that's not in every case, but it's not a requirement of the statute on its own - these individuals are able to prosecute these and if they succeed, receive a share of the - they're called relators - they receive a share of the ultimate recovery. There's one band if you follow the FCA's requirements and refer the case and the federal government decides not to take it you get a greater share, if the feds take it over you get a smaller share, but then they're doing all the litigation work. Whether the federal government decides to take a case is highly predictive of its likelihood of success on the merits because they do have people who do this sort of thing all the time.

The False Claims Act's historical pedigree is impeccable to the extent that we right now have a US Supreme Court that is historically dominant in terms of its mode of analysis for let's say liquid dateable constitutional provisions where we're looking at, for example, in the TransUnion Article Three space, we looked at historical analogs. If we're going to do that with Article Two also - which I think is the dominant mode of analysis in this court - I think it's a completely really respectable one. I think it's probably one of the only ways to have real judicial discipline - figure out the bounds, the open, very open constitutional provisions - well, gosh, so far as I can tell the first qui tam style statute is at least 400 years older than our Constitution. It's actually something more like 450 years older to be honest with you. Given that I don't do historical research for a living unless someone's paying me to do it, I won't swear to the exact year, but it is - we aren't even close to the halfway point in between the two ages.

Qui tam statutes have been a part of Anglo-American jurisprudence without exception for something like 700 years, and this is not one of those questions where we're asking what is the closest historical analog. It was quite literally a statute that authorized individuals to pursue suits in the name of the king for stolen wine and poached deer, and I believe the first statute provided that the individual who provided such a suit and prevailed would get a third. It's the exact same mechanism, the same mechanism. A private individual does not own the object, has seen or has inside information about a wrong against the state, files suit in the name of King literally (unintelligible), and is offered a portion of that when he succeeds. That is the mechanism of the false Claims Act as through Lincoln's law as through now.

So to the extent that we're looking at as a metric for what's permissible for Article Two purposes, I think it's essentially dispositive. Now, some of the questions the court has looked at and the academics have looked at about this involve more of the Article Three questions about can a private party who has suffered no injury privately whatsoever bring this sort of case? That's an interesting question. It doesn't - I don't know that that's as clear cut. Of course the fact that these kinds of suits can be seen at reports at Westminster (unintelligible) in 1789 I think is suggestive - ala TransUnion - that standing would exist, but let's put that aside and be sort of standing doctrinal journalists for a moment. If that's the case, then that's not a problem with public enforcement - or with private enforcement - that's just saying it's a narrower class of private enforcers. There are plenty of people who are harmed by a scam going on by the federal government, people who get shortchanged, people who attempted to get a contract the right way and instead lost it because of a kickback.

There are all kinds of people who can meet the Article Three standard and can also raise a qui tam lawsuit. If that's the barrier that the court's thinking about erecting, well, like I said, I think the historical evidence is strong that that's incorrect as in constitutional historical expectations, but obviously a respectful position certainly wouldn't say it'd be something that certainly would be beyond the ordinary mode of practice for the court, but that's a far cry from having an Article Two problem with every time a private individual is going to initiate a suit on behalf of a public right. Which kind of leads me to my third point, which is basically no one's actually serious about ending this. I mean, think of all the mechanisms we have right now that are basically just private parties enforcing public rights. What is a class action other than more or less a quasi-state action designed to raise up a damages number so large that it just compels compliance with effectively the force of the state against someone?

The fiction that class actions - at least the nationwide class actions - act in some meaningfully participatory way by 99% of their members, it's silly. I mean, functionally speaking, you are raising up a quasi-state action through a procedural device. Fine. It's what we've accepted as part of American law. Marty Reddish has written interesting articles about why the individual Seventh Amendment right perhaps requires opt-in rather than opt-out, but that's how we've taken this. Fine. If that's the case, that's at least an approximate substitute that has every bit the damaging power - I say "damaging" in the sense of it can bring large ruinous compulsory judgments to businesses, which I understand to be part of Andrew's complaint about that sort of executive power being wielded by private individuals - and there's just so many ways that you can shave off the problems that I heard raised by Andrew in his presentation, like for example, nuisance suits.

Well, two points to nuisance suits. One, are you really going to sit here and tell me that federal and state governments don't raise nuisance suits for the purposes of harassing people? Because, gosh, I think we both have taken a position otherwise, both in our private and public capacities, and it does not take much interaction with the federal or state government to believe that they in fact do because they really, really do. And two, if we're concerned about private nuisance suits, then we just have fee-shifting provisions. You don't deter someone from filing a $2,000 - or filing a nuisance lawsuit for a $2,000 statutory violation that's marginal without requiring fee shifting for defending the thing. No one's going to risk $20,000 of adverse fees - of adverse fee shifting - for a $2,000 verdict or a $2,000 judgment.

At least, that would be very, very uncommon. But you know, we get to a situation where there's, I think it's transparently desirable as a political matter to have at least some of this enforcement power be diffused to prevent favoritism and enforcement. There's a rich historical tradition that makes it, if not conclusively constitutional then there's a very strong argument for constitutionality and there are other ways of solving the problems that I've heard brought up today using other well-known devices such that I'm not entirely sure what the problem is here, and I certainly don't think it follows automatically from Article Two.

Karen Harned: Well, that was fantastic. Really great. I think before - we do have some good questions and I want to get to those, but I guess before I do that, Andrew, do you have a rebuttal for Judd? And then Judd, if you have a rebuttal to his rebuttal, then we can move to the questions. If not, I can just jump right in.

Andrew Davis: Yeah, I'll say a couple things. I think Judd makes a lot of very good points. I'll start from the back and work forward. So one of the things, as you mentioned, that the federal government also will engage in nuisance suits and I couldn't agree more with that. I think the big difference there though is that - at least theoretically - the government can be held accountable for its nuisance suits. You can think of high profile ones. For example, Colorado and Masterpiece Cake Shop. That was them going after and targeting somebody intentionally. It's not quite a nuisance, but the point is you had the government going after someone and a lot of Coloradans liked that, a lot of 'em didn't, but at least became something that was politically salient and could be adjudicated through the ballot box.

The same is not always true with private litigants. I mean it seems that in a lot of these instances you get private litigants who abuse the system and courts will bend over backwards not to actually hold 'em to account. Now a fee shifting provision the other way, maybe something that could help account for that, but I don't think it would entirely solve it given some of that predisposition. Also want to comment about class actions. There are certainly class actions that work as enforcement mechanisms for law, but the line is not at all sharp. There's a fuzzy line between what is a public action and what's a private action. But I do think there's a difference between a suit that is in effect enforcing the law when it's affecting private remedies or that's because there's damages to a lot of different people, assuming all the class things are met - and there are obviously a lot of issues with class actions that we don't need to get into - but when it's accomplishing a private remedy and the effect is also a public enforcement that can be different from when you have a suit that is targeting at public enforcement. When it's - the remedy in the case, for example, is enjoining something broader or having a payment of fines to the federal government that really has the flavor of a traditional public action, not just the effect of it.

When it comes to false claims acts. So I'll note that there was a case in 1980 if I remember correctly, where the court did hold that standing was appropriate - Article Three standing for qui tam action under the False Claims Act. So that has been adjudicated. And in doing so, I take Judd's point. I think the hardest part of the false claims dispute is definitely the history. I don't think that there's anybody who would argue in favor of it being a violation of Article Two that could easily dismiss this history. It's not easily dismissible, but I don't think it's dispositive in the way that Judd says. It was used in the Article three context in 1980, but even in that case, the majority specifically reserved the Article Two question and that's what's coming up now. And when we had Justice Barrett, Justice Kavanaugh and Justice Thomas all say the Article Two issue is something we need to take a look at. And Justice Thomas in his separate opinion wrote specifically that this history isn't dispositive, that there are complicating factors to it, that the structure that the federal government put in having these separation of powers fundamentally changed how we should look at these and whether they could be constitutional. So while I certainly agree that's the hard part and that any theory that this is a violation of Article Two has to reckon with that historical practice, I don't think it's necessarily dispositive in the way that Judd thinks.

The very last point I'll make is that Judd's right, that the Article Two arguments aren't necessarily true of the states and the states do have a separate role in having their enforcement and states are going to vary widely. And I think that's important. Just given the sake of time, I'm not going to delve into any specific states. There's some states that have broader non delegation provisions than others. I know Iowa has some interesting laws. I think Michigan may have the opposite where they're very permissible -permissive. I think you have to look at these, but I think that there's also this Article Two overlay where you can take a look at some the structure and to the extent that some of the states copied it, you can import some of the arguments over. But of course any take on this has to account for the fact that states have different laws and need to be litigated in a different way. And the last thing I'll say just to close is, I agree that selective non-enforcement has been a real problem. You have favored political parties, favored political actors, but I also agree with Judd, that this is the second best world and I would like to get to a first best world.

Karen Harned: Great. Judd, would you like to conclude with any remarks there before we go to questions?

Judd E. Stone II: No appellate lawyer worth his salt insists on a surrebuttal.

Karen Harned: Hahaha. Okay, so we've got five different questions here. So California's Prop 65 definitely came up - which Andrew had referenced - and he said - and this person says "Prop 65 or the ADA have lawyers solely focused on those laws who have become lobbies in their own rights and frequently are more powerful in shaping policy than the officials, not only in charge of their enforcement, but there are bars of attorneys who administer many of those laws and are often major donors to Democratic politicians. Should we reconsider the premises behind such laws and reduce incentives for these laws to be more beneficial for private attorneys than the public they are nominally supposed to benefit?" Judd, do you want to start on that one?

Judd E. Stone II: Good question. I think the antecedent question behind it is, should the structure of law and government be designed for purposes of achieving substantive governmental outcomes or should we be acting in a sort of what would be best regardless of what the polity wants, i.e. should we be making procedural rules to discourage left wing outcomes and encourage right-wing ones? Well, yes, it turns out I don't like left-wing things and I like right-wing ones. And I think to the extent that you end up getting situations where you have institutional - private institutional capture and all these things it is important. I think this is kind of mingling together two things at once. One is you get lots of bad (unintelligible) or what we'll call sort of nominal damage violations, something just formally doesn't comply with the ADA, but there's no evidence any human being has ever been impeded in any way whatsoever. That encourages people to sort of become penny-ante block walkers.

I don't think that's a public enforcement problem so much that it is just a dollar sign problem, right? If the penalty is good enough so that it incentivizes people to go out there and find zero damages violations, then you say the penalty is actual damages or actual damages plus some smaller number in order to turn down incentives. I think that's a relatively simple fix in terms of just dialing the damages numbers right. The other component, the component that involves bars of attorneys donating or being major donors to Democratic politicians, where the money ends up going, I think that's a little more intractable. I think probably the bar of every state - Texas is a very, very major red state and the bar here is still fairly to very left wing - I think that's a little bit intractable, but that's going to be true regardless of whether or not attorneys are making money from private rights of action, private rights of action that border on public enforcement and all of that.

I think that attorneys - especially when attorneys are overproduced - tend to find problems to meddle themselves in. And if you take away this particular tool in the enforcement toolbox, they're going to find something else and you're going to actually just get roughly the same amount of attorney meddling and not a lot of societal benefit by reducing it. So I think my answer would be to take away the financial incentives for the intermediaries to bring up claims that don't actually originate in ordinary humans being harmed. And then the private enforcement sort of works just fine because these individuals who've been harmed know to go to an attorney and people don't have to sort of walk around roving for these violations. But it's an undoubtedly intractable problem. I will say I find it very hard to believe that centralizing that enforcement authority in California's government is going to lead to any less left-wing of an outcome. So if I'm answering your question in terms of whose model is better, mine or Andrews, I don't think any power that gets consolidated in specifically California's government is going to be in some sense, more fair, more even handed, more apolitical, or more desirable for substantive rightwing outcomes.

Karen Harned: Very good. Andrew, do you have some thoughts on that before we move to our next question?

Andrew Davis: No, I'm going to leave that one on Judd.

Karen Harned: Okay. Now this was, I thought, interesting. Can the presenters comment on whether they think the rise of third party litigation funding has any implications for the Article Two arguments Andrew discussed? And maybe Andrew, you start with that one.

Andrew Davis: As I understand, I think there's definitely going to be - when there's funding behind public action, I don't think it changes. I have to think a little more about this, but I don't think it changes the doctrinal aspect of this, but I do think it can amplify potential concerns with having private entities enforce public law, to the extent that it only encourages more of these types of suits. If you've got a third party litigation funder who has an interest in doing this, then you're just going to get more of this litigation even if it's not financially viable because the remedy is barely benefiting the ostensible client, but it's achieving some substantive outcome in terms of public policy that is the goal of the third party litigation. Now, of course, sometimes, and oftentimes third party litigation is about giving returns to the investor who is doing this third party litigation funding.

But to that, I'll note that we frequently see a lot of organizations that are ostensibly profit maximizing organizations that have turned to social activism as a key ingredient. You have funds that are focused on ESG type things that are trying to do profit maximization while they're also trying to achieve different goals on a matter of policy. So I think you'll see the same thing with third party litigation is maybe there's a financial aspect to it, but it's going to also often be pushing goal that I think are going to be antithetical to what a lot of people - especially of our thinking - people who are concerned about more conservative issues are not going to be fans of. So to an extent I think that is a problem because it just can add fuel to the fire of these problematic suits.

Karen Harned: Judd, do you have any comments on this question?

Judd E. Stone II: Yeah, I guess just a little on the third-party litigation piece, the oldest form of third-party litigation financing is a contingency fee arrangement by a lawyer, and those have historically been left-wing as hell. I mean, if we're talking about whether formalized third-party litigation finance is as left wing as contingency fee plaintiff's attorneys, it's impossible. There's just no chance. You can't get further to the left than institutional contingency fee plaintiff litigation, as a rule. Now third-party litigation finance, I think actually is inclined to sniff out better cases because the way litigation financing works is you front some amount of money in order to enable litigation to continue, individuals who are fronting that money want to see metrics of quality in the underlying litigation - which I'm sure it won't be surprising for anyone to know - They want to hear legal theory. They want to know the best pieces of evidence. They want to meet the client, they want to know things about the case that give them reasons to believe they're going to get a reasonable risk-adjusted rate of return on their money. That's another way of saying that the public rights claim being pressed privately is probably a really good one. I mean, we're talking in the previous question about these sort of penny-ante $2,000 sanctioned ADA claims. That's not what litigation financiers go in for. We're talking about environmental or antitrust or large claims that are complex law that are hard to prosecute, but that can have extraordinarily large dollar signs at the end of them. And so to the extent that you see a circumstance like that, just by hypothesis say an environmental claim, where it's of millions of dollars or hundreds of millions of dollars in real actual identifiable damages because there's no statutory penalty for tens of millions of dollars that go to a private party at the end of these, you still have to show quanta of damages for basically all of these laws.

We can talk a little bit if we want about the sue-and-settle problems of public environmental activism that I think that one of these next questions gets into. But if you're talking about these third party finance laws, these are as a rule, the highest expected value, the most sophisticated, the most sophisticated lawyers, the most sophisticated clients and it's a substitute as against well strident left wing plaintiff's attorneys. So I think third party litigation financing is one, an unquestioned good thing and sort of - not unquestioned, unvarnished - good thing for purposes of introducing ideological parity into the space, giving conservatives a toehold into accessing this kind of finance, and two, I think targets specifically meritorious cases. So I know there's some people lately who enjoy dumping on third party litigation finance for one reason or another. Those people are mostly just carrying water for the Chamber of Commerce which wants to make it impossible to bring suits against large businesses. I'm not encumbered by that problem so I don't have to carry that water.

Karen Harned: Very nice. Okay, so let's go to this. We've got two more questions. I think we've got time for both. The first one it says, "Mr. Stone's position proposes that prosecutorial discretion from the executive branch to enforce criminal laws should not exist-" I'm not sure if you exactly said that, so I'm going to let you go first on that, Judd, "- and if that is the correct assumption, does this position elevate the legislature above the executive branch and create a dangerous imbalance of power?"

Judd E. Stone II: I forget exactly who originally had this bon mot, but this anonymous gentleman is a pyromaniac in a field of straw men. I don't presuppose. Well, first of all, I didn't speak anything about criminal laws. Private enforcement of criminal laws would be a very interesting thought experiment in a variety of different ways. I don't think anyone's advocating for that and certainly not me, but to not trip on that gotcha and only talk about the sanctions that aren't - but do feel criminal, it's not that I think the prosecutorial discretions shouldn't exist. I think as Andrew and I both agree, the first best world would be that that sort of discretion is used and it's used justly and it's used by intelligent, well-informed individuals who are, as a matter of fact, taking what the voters for a given polity in a given time think of as the public interest, seriously applying it even-handedly.

And I think we don't live in that world. I think we live in a world right now where at best we have asymmetrical unilateral enforcement, quite frankly against right-wing interests and for left-wing ones. I mean, a fact of the matter is that for Democratic presidencies going into the DOJ, they find that something like 95% of the employees agree with their agenda. And when a Republican administration goes in, something to the tune of 6 to 10% are cooperatives, mostly politicals, and then everyone else is slow walking or pursuing some other agenda against them. So don't call it the deep state, just call it 15,000 bureaucrats who are not that keen on the outcomes of elections. So if we know that that's the case, and it is, and I promise you - ask anybody who has worked anywhere near DOJ at any point - if that asymmetry exists, then I am - as a person who likes rightwing outcomes and likes rightwing policies just sort of speaking generally - I am inclined to just take DOJs Boy Scouts honor and handshake for it. I would prefer that we know we're at least getting even-handed prosecution across the board, and then we can trust if even-handed prosecution across the board isn't tolerable, then that's the circumstance under which Congress or a state legislature - if we're talking about the states, is likely to come in. I mean to end with someone else's bon mot a second time - and I hate doing that because it's a concession that someone else put it better than I did - "The best way to get a bad law repealed is to stringently enforce it."

Karen Harned: Andrew, do you have some comments before we go to our last question?

Andrew Davis: No, I think in many ways Judd and I agree that there is certainly going to be - there is a bias in how it's enforced, how laws are enforced, and it's largely a sense of who's fielding in the government and who's working there. But I don't think that the solution necessarily is going to be to have private individuals enforcing the law as it is to clean up that issue on its own.

Karen Harned: Right. Okay. And then our last question comes to us from, not anonymous, but from Robert Levy. And he says, “For Judd: The challenge with your conceptual argument is that when state enforcement is given to a private attorney general who has a monetary pecuniary interest in the outcome, then there is essentially no oversight on the exercise of state authority. The risks are that AGs see no downside in permitting these cases because they have no economic downside and the plaintiff's attorney does not care about what is in the best interests of the citizens of the state and instead is only seeking monetary relief that will go in part in their pockets." And I do appreciate, Judd, that you did indicate that a solution here could be that we need to get some of these financial rewards, if you will. Maybe those could be toned down so that there's not really that financial incentive, but didn't know if you wanted to add anything in response to this.

Judd E. Stone II: Thank you for your question, Mr. Levy. A couple of things. One, as Karen said, I think there's certainly - especially when you're dealing with situations where there's no proof of actual loss required, no proof of actual harm in the real world like the archetypal ADA circumstance, you start getting incentives between filing suits and remedying real harms. I don't want to spend too much on that because I sort of went over that beforehand. I don't think that's the essence of the core of your question. So you say "The risks are that AGs see no downside in permitting these cases because they have no economic downside and the plaintiff's attorney does not care about what's in the best interests of the citizens of the state." So, I guess I disagree with both of those premises. I spent about four years working in a state AG office.

I cannot speak as to how the federal DOJ works about this, but I'm going to assume there's some parallel traction. Other people with better information can give you better information. When I was at OAG, whether or not a given case was going to yield a big damages award was something the executive branch cared about, in part for the voters because that's persuasive, but really because it's something you hold up to the legislature and you are always going back to the legislature and saying, "I need more money for experts for this and more money for funding for lawyers for that". The state of Texas recently had a large billion dollar settlement with Meta, that's undoubtedly something that Attorney General Paxton is going to tout as a big win for him and is going to use that as a basis for increasing funding for his agency, giving him more opportunities for his lawyers and so on. So whether or not he succeeds or fails does actually - in terms of getting what he wants and his priorities - does in fact depend on financial incentives.

The fact the money goes to the legislature of the state of Texas does not mean there isn't a serious financial incentive by public officials enforcing public law. And I suspect that's the case also up and down the lines in the DOJ. I mean to go back to our False Claims Act angle, settlements with the DOJ have a hierarchy in terms of you have a line lawyer and they have to report to a superior and they have to report to a superior. But it's not as though the success of individuals' careers in sections like False Claims Act sections aren't dependent to some extent by how many dollars they bring in. They certainly are. So there really are meaningful financial incentives, perhaps not as meaningful as dollars going directly in one's pocket. But that takes me to the second point here where you said "The plaintiff's attorney doesn't care about what's in the best interest of the citizens and id instead seeking to obtain monetary relief that will go in part in her pockets."

That's true about every lawyer everywhere in every case, except for ideological injunction cases and APA cases, every case is about money. Every case is about someone putting money in someone's pocket. The whole theory behind damages actions is that the legislature believes that a given way of solving a given social problem is to transfer money from A to B. That's true for everything from Clean Water Act sanctions to trespass actions at common law to 1983 claims. That is the mechanism by which lawsuits get social change. Again, putting aside APA and injunctions which are interesting (unintelligible) is what simply encourages, for example, cities to not violate so many constitutional rights is that thorny fee-shifting provision associated with 42 USC 1983 more than anything else, which is nothing but about putting dollars in pockets. So I'm not sure that dichotomy that you're striking here really actually exists, or at least doesn't exist so very sharply.

Karen Harned: Great. And Andrew, would you like to make some comments?

Andrew Davis: I don't have anything. No. I think that the incentives here are why you're getting a lot of this litigation and when you have fee shifting, it's going to change people. And I do think that as Judd said, that the funding that goes to the government's going to change how the government thinks about it. I just think that when we have a system that's going to encourage plaintiff's attorneys to go after things, even when there's no real meaningful benefit, and it's mainly aimed at just lining their own pockets, not really benefiting a client because the client's often just ideologically motivated, that's not a good way to run a railroad.

Karen Harned: Great. So with that, I would like to - do we have time, Caroline, for them to make just any closing comments before we sign off?

Caroline Bryant: Sure, totally.

Karen Harned: Anything else that you all would like to add before we conclude?

Judd E. Stone II: Oh no, I think you've heard plenty out of me and I appreciate Andrew's thoughtful remarks.

Andrew Davis: Yeah, it was a good discussion. It was good to hear Judd's very insightful comments, so I think we agree on many of the problems. I think solutions are where we disagree.

Karen Harned: Absolutely. No, this was really, really very great and I appreciate you both taking the time to offer your perspectives today. And Caroline, thank you for hosting us.

Caroline Bryant: Absolutely. Well, on behalf of the Federalist Society, I want to thank our speakers for the benefit of their time and expertise today. Thank you also to the audience members who joined. We greatly appreciate your participation. Check out our website fedsoc.org or follow us on all major social media platforms to stay up to date with announcements and upcoming webinars. Thank you once more for tuning in. And with that, we are adjourned.