Discovery as Regulation

Diego A. Zambrano* October, 2020

This article develops an approach to discovery that is grounded in regulatory theory and administrative subpoena power. The conventional judicial and scholarly view about discovery is that it promotes fair and accurate outcomes and nudges the parties toward settlement. While commonly held, however, this belief is increasingly outdated and suffers from limitations. Among them, it has generated endless controversy about the problem of discovery costs. Indeed, a growing chorus of scholars and courts has offered an avalanche of reforms, from cost shifting and bespoke discovery contracts to outright elimination. Recently, Judge Thomas Hardiman quipped that if he had absolute power, he would abolish discovery for cases involving less than $500,000. These debates, however, are at a standstill, and existing scholarship offers incomplete treatment of discovery theory that might move debates forward.

The core insight of the project is that in the private-enforcement context—where Congress deliberately employs private litigants as the main method of statutory enforcement—there is a surprisingly strong case that our current discovery system should be understood in part as serving regulatory goals analogous to administrative subpoena power. That is, discovery here can be seen as an extension of the subpoena power that agencies like the SEC, FTC, and EPA possess and is the lynchpin of a system that depends on private litigants to enforce our most important statutes. By forcing parties to disclose large amounts of information, discovery deters harm and, most importantly, shapes industry-wide practices and the primary behavior of regulated entities. This approach has a vast array of implications for the scope of discovery as well as the debate over costs. Scholars and courts should thus grapple with the consequences of what I call “regulatory discovery” for the entire legal system.

Introduction

Discovery is the backbone of American litigation and sits at the center of a constellation of procedural doctrines. It has shaped pleading standards, qualified immunity, and summary judgment jurisprudence and, as a practical matter, determines settlement negotiations, case outcomes, and the prevalence of trials.¹ Across a range of contexts, from civil rights to antitrust and employment claims, discovery is often outcome determinative. Perhaps because of its centrality in the system, no single procedure generates more controversy. Critics cast discovery as unconstrained, burdensome, overly costly, intrusive, and “nuts.”² Supporters, by contrast, argue that complaints about discovery costs are empirically unproven and that discovery provides “public benefits.”³ A growing chorus of commentators from both camps and even courts has offered an avalanche of reforms ranging from cost shifting and bespoke discovery contracts to outright abolition.⁴ But despite such offers, existing scholarship on discovery theory, to the extent it might serve as a guide to those reforms, is incomplete. Addressing discovery’s fundamental underpinning is essential to any clear-eyed assessment of proposed changes. The resulting challenge is apparent: How can we rationalize our discovery system and the core purposes it serves?

This Article tackles the discovery morass with the goal of building a firm theoretical footing for parts of the discovery system. My most basic aim is to complement discovery’s traditional foundations in principles of fairness, equality, and settlement with a reconceptualization that draws on regulatory theory and administrative subpoena power. With a better understanding of how discovery could and should work, I hope to then reassess our most important discovery doctrines and scholarly debates in a fuller and more helpful light. The Article thus undertakes the following two goals, among many others:

First, it aspires to clarify the burdens of a current obsession with discovery costs—including the judicial creation of satellite doctrines that close access to court, like qualified immunity and higher pleading standards. While the Supreme Court dodges deeper questions about discovery, it often focuses on the back end of the system—its costs. This dearth of theory and constitutional analysis has atrophied discovery discourse. From the Supreme Court’s decisions to raise pleading standards in Twombly and Iqbal, to the attempt to protect police officers from time-consuming depositions, discovery costs have become a justification for restrictive procedure. But tethering discovery to other doctrines like pleading and qualified immunity is potentially destabilizing. It means that as Advisory Committee amendments or technological changes like machine learning⁵ potentially reduce discovery costs, discovery-dependent doctrines should immediately adjust: Twombly and Iqbal would be redundant; rules that encourage settlement unnecessary; qualified immunity obsolete; and even “rigorous” policing of class actions outdated. Although this cascading effect is logically necessary, courts are likely to ignore the consequences and leave in place outdated doctrines.

Second, the Article offers a theoretical structure and new vocabulary to move debates over discovery forward into new territory—that is to say, more productive discussions that engage with the ultimate goals of the system and whether the rules are serving those goals. When it comes to discovery, courts often glide by underlying theories, embracing the simplified view that discovery can be justified because a full exchange of information results in a fair and accurate resolution of a dispute, promotes the ends of equal justice,⁶ and ameliorates asymmetries between one-shot plaintiffs and repeat player defendants.⁷ Moreover, by forcing the parties to reveal all their arguments and evidence, discovery narrows issues for trial and nudges the parties toward settlement.⁸ But this fairness-accuracy-settlement mantra suffers from significant limitations because it overlooks the role that discovery plays in private-enforcement cases. Taking that role into account transforms the ultimate goals of parts of the system and offers a dose of comfort: within the American private-enforcement scheme—one that relies on private litigants to enforce important statutes—our discovery rules make sense and offer an array of benefits.

At the center of the Article is a theory of private discovery that addresses these questions with a regulatory model grounded in administrative power.⁹ A long and rich literature has described how the United States depends largely on private plaintiffs to enforce important statutes in contexts like employment, environmental protection, antitrust, and civil rights.¹⁰ In these cases, private lawsuits become a regulatory tool and the legal system transforms from one where “one citizen can seek redress from another in an orderly fashion,”¹¹ into one where citizens or groups of citizens can enforce the law for systemic regulatory purposes.¹² I extend this literature to argue that in a lawsuit-as-regulation system, discovery is the lynchpin of private enforcement. By forcing parties to disclose large amounts of information, the discovery system deters harmful behavior, structures the regularized production of information within corporations, and, most importantly, shapes the primary behavior of regulated entities.¹³ Discovery therefore serves an important purpose in a legal system that relies on private litigants to enforce the law.

While this view of discovery-as-regulation has been discussed by some scholars, the Article at its core pushes the theory forward and fully develops it by focusing on the analogy to administrative subpoena power.¹⁴ That power is the absolute “backbone of an administrative agency’s effectiveness,” because it gives agencies “the ability to investigate rapidly the activities of entities within the agency’s jurisdiction.”¹⁵ Agencies can issue ex parte subpoenas for vast amounts of regulated entities’ information.¹⁶ The SEC, for example, routinely requests burdensome productions of financial documents.¹⁷ The FTC demands thousands of pages related to any potential merger. The EPA, too, makes regular inquiries into environmental polluters. Civil discovery’s broad scope is partly an extension of this power. Congress enacted a wide variety of broad statutes and has delegated enforcement to private plaintiffs rather than agencies.¹⁸ In order for these statutes to succeed, just as the FTC, EPA, and SEC possess subpoena powers, so too do plaintiffs need powerful discovery tools. Beyond individual cases, discovery promotes regulatory goals by influencing how companies run internal investigations, how management structures operations, and how regulators formulate new rules.¹⁹ To be sure, plaintiffs lack the democratic and public legitimacy of agency officials, so their private tools cannot, and do not, fully mirror agency power. But I argue extensively that, for many reasons—including the distorted incentives of public enforcers and the fact that Congress’s choice to arm private plaintiffs with this discovery power confers a measure of democratic legitimacy in itself—this difference does not weaken the legitimacy or effect of regulatory discovery.

Conceptualizing discovery as a regulatory tool should transform our current understanding of litigation as regulation—and also changes the problem of discovery costs into a comparative question. Whether discovery costs are too high should depend less on a case’s amount in controversy and more on whether the case generates proportional regulatory benefits and fewer costs than a comparable agency investigation. In discovery disputes, courts and litigants should explicitly consider this comparison. This is not to say that agency costs are optimal, but only that an agency investigation is the conceptual alternative to private enforcement and is therefore a good point of reference. Costs, in this sense, have little to do with the individual interests of litigants. They instead must take into account the systemic benefits of enforcing a statute in a context where Congress chose private plaintiffs to investigate wrongdoing. Thus, complaints about discovery costs must grapple with the burdens of agency subpoena powers in the first place. Discovery is an alternative to—and an outsourced version of—administrative regulation.

The bulk of the Article discusses the intricacies of regulatory discovery, but a brief example demonstrates its implications. In a 2005 case against Disney, plaintiff-shareholders claimed that the company had corruptly awarded $140 million dollars to an outgoing executive.²⁰ Discovery in the case was substantial: 9,000 pages of transcripts, extensive business records, and detailed private correspondence. Under a traditional understanding of discovery—the fairness-accuracy-settlement view—all of this information exchange was a waste because the court ultimately found (at trial) that Disney was not liable.²¹ But take a regulatory and systemic view and things look very different. Disney’s board, along with a series of competitors and peers, completely reformed their governance structures based on documents produced in discovery.²² This extensive information also allowed the court to “articulate[] new standards of fiduciary duty,” gave lawyers new tools “to get their clients to accept better conduct and procedures,” and even informed new SEC regulations.²³ Discovery, in other words, regulated system-wide corporate behavior.

With this discovery theory in view, the Article then offers a few primary contributions. To begin, whereas discovery scholarship focuses on individual issues, such as costs or the language of Rule 26, this Article is the first to tie background justifications together into a single theoretical framework—one that can inform each court’s discovery analysis. This discussion of theory highlights discovery’s relationship to values like accuracy, regulation, and fairness. This also allows the Article to make a normative case for how courts should carry out discovery inquiries. Discovery is a plural device with multiple justifications and both individual and systemic implications. For example, whereas fairness and equality theories sound in individual rights, regulatory discovery, by contrast, is only systemic. So in private-enforcement cases, courts should err on the side of broad discovery by interpreting “proportionality” in relation not only to the needs of the specific case but also to the needs of the relevant statutory regime and industry. Moreover, the breadth of discovery should be related to whether the statutory regime depends largely, somewhat, or only scarcely, on private enforcement. The more a regime depends on private enforcement, the broader discovery should be, and vice versa. The Article otherwise adds to an emerging literature on the fruitful interaction between administrative law and civil procedure.²⁴

Additionally, the Article develops a better vocabulary for describing regulatory discovery’s implications, so that public discussions can be better informed. Just in the past year, arguments about discovery have gone mainstream. Judges Hardiman and Thapar recently proposed to abolish discovery for cases “worth less than $500,000.”²⁵ Judge Hardiman lamented the loss of jury trials, too. But these critiques overlook many of discovery’s core purposes. With an institutional view in mind, it’s clear that discovery can limit trials in order to save costs and avoid the burden of impaneling a jury. Similarly, under regulatory discovery, the amount in controversy may be irrelevant—what matters more is whether a plaintiff is enforcing a statute that depends on private claims. Cases worth less than $500,000 can nonetheless have significant positive spillovers on the law and regulated industries by spurring deterrence, corporate reforms, and better regulation by agencies.²⁶ For instance, documents and depositions in the seminal sexual harassment case Faragher v. City of Boca Raton²⁷—with an amount in controversy below $500,000—became the basis for widespread reforms to sexual harassment policies and personnel practices. Besides, agencies routinely issue subpoenas in cases worth less than $500,000, and private discovery may otherwise be much less burdensome than a thorough investigation by, say, the SEC or the EEOC.

Before proceeding, a word about the Article’s limitations is in order. Although the Article explores the regulatory theory of discovery, it does not argue that the current amount or breadth of discovery is systemically optimal. There may be areas where waste needs cutting back and others where broader discovery is needed. Nor does the Article argue that ex post regulation via litigation is preferable to ex ante regulation via the administrative state. It necessarily sets this question—along with associated empirical questions—to the side. Relatedly, the Article relies on important examples like the Disney, Argentina, and Faragher cases, where discovery was beneficial, but does not claim that regulatory discovery is always beneficial. Indeed, in the analogous agency context, critics of the administrative state have long complained about protracted and wasteful agency investigations that serve only to justify the initial decision to initiate an investigation. The Article’s claim is only that discovery serves regulatory purposes comparable to administrative subpoena power, for better or worse.

As a final limitation, the Article makes a claim about regulatory discovery in the context of private-enforcement statutes that may be distinct from common law or tort claims. While discovery surely can serve as regulation in mass torts, the analytic framework and its underlying legitimacy are somewhat different. Private enforcement derives legitimacy from Congress’s deliberate choice to empower private plaintiffs either to complement or replace administrative agencies.²⁸ This choice is why private discovery in those claims is analogous to administrative subpoenas. Tort claims, by contrast, rely on a long common law tradition based mostly on state law. Discovery in that context must therefore be grounded in a different theory that may or may not support an analogy to agency subpoena power. Nonetheless, discovery in mass torts cases produces similar effects, so it may be illustrative of regulatory discovery. For that and other reasons, the Article uses examples from the tort context but leaves the necessary theory building to future research.

The discussion that follows proceeds in four Parts. Part I frames the problem of discovery costs and the Supreme Court’s turn to doctrine to solve it. This Part situates the project within existing discovery scholarship and sketches the framework around which discovery theory must operate. That theory is then developed in Part II, with the three traditional theories of fairness, equality, and trial narrowing. Part III—the heart of the article—introduces an approach to discovery based on regulation. Finally, Part IV pulls these threads together to provide a novel way to address discovery disputes.

I. Identifying the Problem: Discovery-Costs Disputes

For better or worse, discovery is the central and often outcome-determinative procedure in American litigation.²⁹ It has a long history rooted in equity, where flexibility was paramount.³⁰ Away from the danger of common law juries, equity judges developed procedures that allowed parties to engage in a protracted process of producing information from and to each other. Whether through depositions or broad document requests that extended even to third parties, equity saw discovery as the definitive device for setting the tables of a judicial decision. By contrast, the common law world emphasized pleadings and trials as the information flushing events to decide a case.

The Federal Rules of Civil Procedure’s drafters combined common law and equity discovery procedures into one whole, and the system later evolved into the modern Rules 26–37, which allow parties to obtain broad information on the central facts of a case before trial. One defining feature of the current system—amended several times post-1938—is that discovery is “extremely broad,”³¹ allowing parties to obtain information “regarding any matter, not privileged, that is relevant to the subject matter involved in the action, whether or not the information sought will be admissible at trial.”³² The main drafter of the discovery rules, Edson Sunderland, argued that “[t]he new federal rules . . . authoriz[e] the parties themselves to employ an almost unlimited discovery.”³³ The rules seek a comprehensive exchange of information led by the parties. That is why the rules authorize initial disclosures (a recent development adopted in the 1990s), subpoenas, depositions, interrogatories, physical examinations, property inspections, requests for admissions, and even an iterative process where parties can engage in new information requests based on old requests. All of this leads to a far-reaching release of information related to the case and claims.

It is difficult to overstate the uniquely American nature of this information disclosure system. Discovery has become an integral part of the American concept of due process—so much so that some argue discovery is of constitutional foundation.³⁴ Other countries, however, consider it anathema. In common law countries, discovery can sometimes include broad document productions and mandatory disclosures, but it is typically limited by “specific pleading, the short time limit imposed for document production, and the definition of the obligation to produce.”³⁵ The combination of these factors results in a “considerably narrower” exchange of information vis-à-vis the United States.³⁶ In civil law countries, there is no broad exchange of documents or disclosures, and the process is wholly supervised by a judge who makes it her goal to keep the case constrained and focused.³⁷ These inquisitorial systems give parties very little power to engage in wide-ranging information requests, and they prohibit depositions.³⁸ Differences between our broad discovery system and the narrow approach prevalent in every other country have thus provoked significant foreign critiques.³⁹

Setting foreign comparisons aside, to speak of broad discovery as a homogeneous coherent procedure is misleading because there is no single process that is invariant from case to case. There are large complex litigation cases—a diverse set in itself that often involves mass torts and statutory-enforcement cases—where discovery can take up years and produce millions of records and dozens of depositions. But these are a small minority of all cases in the federal docket. In the run-of-the-mill case, litigants “employ[] no discovery at all, and a ‘substantial percentage’ of the [federal] docket employ[s] very little.”⁴⁰ Cases often settle immediately or in the early stages of discovery. Other cases need no discovery, and summary judgment is sufficient with only a few documents at hand. Yet other cases need only documentary discovery and no depositions at all. To understand discovery, we have to understand its inherent pluralism and case-dependent nature. Below, I address (a) scholarly and judicial debates about discovery costs, (b) the judicial development of doctrines meant to control discovery, and (c) that development’s problematic consequences.

A. The Discovery Costs Debates

Despite this pluralism, complex cases with extensive discovery have long shaped struggles over the role of discovery in public-law litigation and its attendant costs. Indeed, despite discovery’s rich heritage, debates for the past four decades have been bogged down almost entirely on the question of costs.⁴¹ After the emergence of class actions and the public-law bar in the late 1960s, litigation became embroiled in a battle between corporate defendants and newly empowered plaintiffs’ attorneys. In these litigation wars, corporate defendants launched attacks against any procedures that empowered plaintiffs’ attorneys, including not just class actions but also private rights of actions.⁴² Discovery, too, became entangled in this struggle over the role of litigation in the enforcement of public-law statutes.

Recently, scholarly articles about discovery have mostly focused on the problem of costs.⁴³ As Seth Endo has summarized, an avalanche of discovery reform proposals all focus on solving the alleged cost problem, including: limits to the amount of discovery in all cases, a proportionality requirement, linking requests to the amount in controversy, mandatory stays pending a motion to dismiss, information sampling, dividing the process into phases, empowering judges (and availability of sanctions), ADR, expanding the use of bespoke discovery contracts, predictive coding and other machine learning, cost-shifting, quantum meruit cost recovery, and others.⁴⁴

All of these scholarly proposals draw from a four-decade-long debate about the appropriate scope of discovery. Beginning with the 1976 Pound Conference on civil procedure, “proposals for amendment to the rules have generally involved retreats from the broadest concept of discovery.”⁴⁵ The Pound Conference prompted the creation of a variety of working groups and conferences with the sole goal of controlling discovery costs.⁴⁶ The Carter Administration followed these efforts with a directive to a new antitrust commission, asking for a “revision of discovery practices in order to limit expensive and time-consuming inquiry into areas not germane to contested issues.”⁴⁷ These efforts, and others, built substantial momentum for discovery reform that spread like a contagion and led to recurrent amendments to the rules.⁴⁸

Since the turn of the century, discovery costs debates have been reshaped by the emergence of electronically stored information.⁴⁹ Modern technologies have expanded the generation of information within corporations and regulated entities. This expansion has transformed discovery into a much more complicated process where “traditional practices” have been unable to “keep up with the explosion of the universe of discoverable material.”⁵⁰ Advisory Committee debates have responded to ESI with renewed proposals to address the problem of discovery costs. All told, the Committee has changed the discovery rules over a dozen times between 1980 and 2015.⁵¹

Whether discovery costs are an actual problem—or just a proxy fight over the role of litigation in society—depends on how one slices up the federal docket.⁵² Of course, abusive discovery exists, and discovery does impose significant costs in some cases.⁵³ But the extent of “[t]he costs may be somewhat overstated—or partially self-inflicted—and certainly they are not universally imposed across the litigation universe.”⁵⁴ Most empirical discovery studies consist of attorney or judicial surveys and very few peer into actual case data.⁵⁵ But a review of existing studies of federal litigation produces a few common conclusions:

Most civil cases (>50%) involve no discovery or very limited discovery;⁵⁶
Cases with discovery typically implicate costs that are proportional to the total stakes (median of discovery costs is 3.3% of the amount in controversy for defendants);⁵⁷
The median litigation costs (including discovery and attorneys’ fees) for defendants is $20,000;⁵⁸
High discovery costs are rare (less than 5% of cases);⁵⁹
In cases with “high” discovery costs, expenditures may account for 32% or more of the amount in controversy;⁶⁰
Cases with voluminous discovery often involve complex litigation;⁶¹
Lawyers perceive that e-discovery has increased costs;⁶²
Despite little empirical support, many judges⁶³ and lawyers⁶⁴ perceive discovery abuse as a significant problem.

The available evidence seems to show that “the federal civil system is highly effective in most cases, that total costs develop in line with stakes, and that discovery volume and cost is proportional to the amount at stake.”⁶⁵ Costs remain an issue in a minority of complex litigation cases that account for the discovery costs contagion.

B. Discovery Avoidance

For decades, the Supreme Court and lower courts have actively participated in and shaped discovery-costs debates. In many cases, courts have used discovery as a cudgel to shape nearly every facet of the modern civil-litigation system, including in some of the most important procedural and substantive cases. Courts have developed two tracks in their attempts to fight discovery. At first, courts and the Advisory Committee focused on the idea of judicial management of the discovery process.⁶⁶ But more recently, courts have engaged in a systematic attempt to control discovery costs by raising prediscovery barriers, including pleading standards, qualified immunity, and arbitration. I term these efforts “discovery avoidance.” This has led to the proliferation of doctrines parasitic to discovery across the litigation landscape.

Take, for example, the recently restated foundations of qualified immunity doctrine. The Court has repeatedly imputed to qualified immunity a prophylactic role against the burden of discovery costs on police officers. As recently detailed by Joanna Schwartz, the Court has “focused increasingly on . . . the need to protect government officials from nonfinancial burdens associated with discovery and trial. This desire has arguably shaped qualified immunity more than any other policy justification for the doctrine.”⁶⁷ The doctrine has progressively incorporated discovery costs as a larger concern. In the seminal case Harlow v. Fitzgerald, the Court justified qualified immunity as a bulwark against “the expenses of litigation, the diversion of official energy from pressing public issues, and the deterrence of able citizens from acceptance of public office,” as well as the possibility that lawsuits would affect officials’ discharge of their duties.⁶⁸ As a second-order concern, the Court also warned of the danger of “broad-ranging discovery and the deposing of numerous persons, including an official’s professional colleagues.”⁶⁹ Only three years later, the Court emphasized the danger of discovery to “be avoided if possible”⁷⁰ but still focused on its other justifications. By contrast, in the recent Ashcroft v. Iqbal, the Court claimed that “[t]he basic thrust of the qualified-immunity doctrine is to free officials from the concerns of litigation, including ‘avoidance of disruptive discovery.’”⁷¹ This evolution shows discovery’s newfound role in qualified immunity.

Another example of this kind of marriage between discovery and other procedures is found in the securities litigation context. Specifically, one of the bluntest and most significant discovery-filtering mechanisms is the Private Securities Litigation Reform Act (PSLRA).⁷² That statute contains a package of reforms intended to diminish the power of plaintiffs’ attorneys in securities litigation, especially by weakening pretrial discovery. The House Report is littered with references to the danger of discovery costs: “[T]he abuse of the discovery process to impose costs [is] so burdensome that it is often economical for the victimized party to settle”; “The cost of discovery often forces innocent parties to settle frivolous securities class actions,”; “The House and Senate heard testimony that discovery in securities class actions often resembles a fishing expedition.”⁷³ Accordingly, the statute raises pleading standards for securities claims and obligates courts to issue a discovery stay while a motion to dismiss is pending. The Supreme Court noted about these congressional changes to pleading that “[t]he basic purpose of the heightened pleading requirement . . . is to protect defendants from the costs of discovery and trial in unmeritorious cases.”⁷⁴ Again, through both of these means, discovery is completely avoided.

Qualified immunity and the PSLRA are only two of a constellation of similar changes intended to blunt discovery, including in the contexts of pleading, class actions, Lone Pine orders, and arbitration. A very similar kind of logic has been at work in the Supreme Court’s pleading jurisprudence. As is by now widely known, the Supreme Court heightened pleading standards in Twombly and Iqbal, largely because of a concern over discovery costs. The Court embraced the implicit theory that pleading should serve as a filter that reserves discovery for cases that can meet an initial threshold.⁷⁵ In the class-actions world, federal courts developed the idea of a “rigorous review” of certification motions in the 1990s partly because certification was perceived as opening the door to crippling discovery costs. Along the same lines, courts began to enforce the Federal Arbitration Act aggressively, allowing defendants to opt out of the litigation system entirely.⁷⁶ In an arbitration world divorced from the Federal Rules of Civil Procedure, discovery avoidance became paramount. In yet another context, courts faced with mass tort claims have developed “Lone Pine” orders, requiring plaintiffs to supply evidence of injury, exposure, and causation under penalty of dismissal—sometimes before discovery. This can be seen as yet another example of discovery avoidance.⁷⁷ In these cases, policing class claims before they are certified, requiring more evidence early on, and forcing plaintiffs into arbitration became ways to avoid discovery.

Setting these examples aside, we may worry that discovery concerns are merely window dressing in these cases—in what is more likely a struggle over the role of litigation in society. Although that is likely true for many judges, there are also reasons to believe judicial concerns about discovery are real. Decades of survey work have found that a significant percentage of federal judges voice strong concerns about discovery as “unnecessary,” “expensive,” and overly “burdensome.”⁷⁸ This apparent judicial attitude correlates with over a dozen initiatives to address discovery costs: from Justice Burger’s Pound Conference on litigation costs in 1976, to the 1990s disclosure amendments, all the way to the 2015 proportionality amendments to the rules. Moreover, this judicial perception of discovery does not seem to be an entirely partisan phenomenon. Twombly’s attack on discovery costs was authored by the centrist Justice Souter in a 7–2 decision (although Iqbal was 5–4); discovery reforms have mostly been the product of judicial consensus; and the judiciary has otherwise attempted to control discovery through amendments to the rules.⁷⁹ This indicates that perhaps concerns in this context are genuine. But even if some of the concerns about discovery are sincere, the way judges have operationalized those concerns has created downstream harms that may be disproportionate to the problem.

C. The Problem with an Obsession over Costs

The combined developments of rule amendments and discovery avoidance and management, as well as the nearly complete domination of scholarly debates by costs, have imposed procedural hurdles that stand in the way of a plaintiff’s day in court and have disfigured case law and rulemaking.⁸⁰ There are a flurry of problems with the changes spurred by the discovery-costs rhetoric, including the following three:

First, creating or reinforcing doctrines tethered to discovery runs the destabilizing risk of tying slow-moving legal principles to a quickly moving target. Legal devices like pleading standards, qualified immunity, and the PSLRA are now fixed deeply into the U.S. Code or court precedents. But discovery, by contrast, can change quickly due to technological developments or Advisory Committee changes. Thus, affixing these doctrines to the vagaries of the discovery process is potentially destabilizing. Because discovery now sits at the center of a network of doctrines, any changes to its reach should (but may not) provoke concomitant changes throughout the litigation system. For example, if technological changes like machine learning reduce discovery costs, discovery-dependent doctrines like pleading standards should immediately adjust, rendering existing case law outdated. Even more, the Advisory Committee proposes rule changes on a regular basis. An amendment to Federal Rule 26 that successfully reduces costs should have a cascading effect on every doctrine that was justified as a prophylactic against costly discovery: Twombly and Iqbal would be redundant; rules that encourage settlement unnecessary; qualified immunity obsolete; and even “rigorous” policing of class actions outdated. The difficulty, of course, is that discovery-avoidance doctrines will not adapt and therefore the system will be miscalibrated based on an outdated picture of discovery.

The expansion of these discovery-avoidance decisions or statutes creates the danger of doctrinal accretion. Doctrines can pile up on top of other doctrines. For instance, a current class action against the police runs the danger of running into three separate discovery-dependent doctrines: plausibility pleading, qualified immunity, and rigorous review of class certification. A plaintiff in this case is thus faced with three independent, but now accreted, doctrines that are supposed to fight off the same thing—discovery costs. This overdeters claims, is inefficient, and overcomplicates litigation.

Second, discovery avoidance empowers judges to create new doctrines out of thin air and sidelines the expertise and flexibility of the Advisory Committee. When discovery control rests on the wording of the Federal Rules of Civil Procedure, the Advisory Committee can carefully consider reforms and recalibrate the system to fit new technologies or legal developments. But the Supreme Court’s turn to doctrine to control discovery weakens that equilibrium and empowers ideological judges. As previous scholarship has explored, the Reagan and Bush Administrations began appointing judges committed to litigation reform in the 1980s.⁸¹ Many of these judges shared the view that plaintiffs’ attorneys had too much leeway under our procedural paradigm.⁸² They therefore embraced the idea of a judicial retrenchment of civil procedure as a remedy. Debates over discovery costs have given these judges—rather than the Advisory Committee—a tool to effect procedural change. Changes to qualified immunity or the PSLRA are all etched on the case law. That move disempowers the Committee and also constitutes a shift away from Advisory Committee review of empirical studies of discovery. That development contributes, yet again, to the miscalibration of the discovery process.⁸³

Finally, a sustained overemphasis on discovery costs has weakened the discovery process more generally and robs the system of necessary improvements. While the Court initially recognized that discovery rules “are to be accorded a broad and liberal treatment,” it has now moved toward a much more constrained process.⁸⁴ And this goes beyond its embrace of discovery avoidance. Beginning with a Justice Powell concurrence that raised the specter of “undue and uncontrolled discovery,”⁸⁵ the Supreme Court has complained about broad discovery more generally, culminating with the Chief Justice’s embrace of the 2015 reforms to discovery that were intended to constrain the process.⁸⁶ This subtle shift from avoidance toward rejection is likely to weaken the entire discovery process.

* * *

All of this means that discovery has helped install a series of procedural doctrines that stand in the way of a plaintiff’s day in court and on the way has disfigured case law and the rulemaking process.⁸⁷

II. Traditional Theories of Discovery

Stepping back from the marriage of discovery and costs, the core difficulty is how to move the debate forward—how to actually determine whether we have an optimal discovery system. This question cannot solely be answered by discussions about costs but must also be based on theory.⁸⁸ For when it comes to assessing discovery, we should understand that it is a plural device that serves many purposes at once that, at first sight, are difficult to see. Only theory can allow us to properly weigh discovery costs against other values in litigation and can ground the basic question: Why do we have a discovery system and what are we attempting to achieve? In this Part, I focus on this question but use the word “theory” loosely to refer to background justifications or rationales. Many of the “theories” discussed below could rightly be described as values that are nested within broader political theories.

As noted earlier, existing discovery jurisprudence does not provide a full theoretical account because it relies on an incomplete view that discovery exists to promote fairness, accuracy, and settlements. That traditional view argues that discovery is beneficial because a full exchange of information results in a fair and just resolution of a dispute⁸⁹ and a more accurate outcome,⁹⁰ and it allows one-shot plaintiffs to obtain critical information from repeat player defendants.⁹¹ Moreover, by forcing the parties to reveal all their arguments and evidence, discovery renders trials redundant and nudges the parties toward settlement.⁹² Despite its prominence, however, the fairness-accuracy-settlement conventional wisdom suffers from significant limitations—discussed further infra in Part III—because it misses the role that discovery has grown to play in complex litigation and private-enforcement cases.⁹³ My goal in this Section is to very briefly explain the conventional view of discovery, which is based on the promotion of (1) fairness, (2) equality, and (3) trial narrowing or settlements. This exploration lays the groundwork for the full development of regulatory discovery in Part III.

Fairness. The most obvious justification for liberal discovery is that a full exchange of information results in a fair resolution of a dispute and promotes the ends of justice.⁹⁴ As Justice Stevens noted, “[b]road discovery should be encouraged when it serves the salutary purpose of facilitating the prompt and fair resolution of concrete disputes.”⁹⁵ Fairness could be understood to promote goals that are consonant with procedural justice, including participation, accuracy, and efficiency. ⁹⁶ A fair process is one that “guarantees rights of meaningful participation,” and “notice and opportunity to be heard.”⁹⁷ With an accuracy-participation-efficiency mantra as the North Star of the system, it follows that discovery should be broad rather than narrow.⁹⁸ Ex ante, the more information that can be produced, the more the factfinder can achieve an accurate outcome. In theory, limits to discovery might be antithetical to fairness. Although this fairness theory has been fundamental to doctrinal developments in discovery, it has always failed to account for the entirety of the discovery process.

Equality. Broad discovery has the potential to serve as an equalizer of litigant resources. This justification is closely related to the fairness one and is sometimes treated as the same in the literature. But unlike the fairness account, this justification for discovery begins with the observation that the litigation system is riddled with resource asymmetries.⁹⁹ The role of discovery and procedure is to ameliorate those asymmetries, create a level playing field, eliminate trial “surprises,” and give different litigants equal access to justice.¹⁰⁰ It is, in other words, to promote equality.¹⁰¹ That concept is of course “notoriously slippery . . . , and its procedural implications are puzzling.”¹⁰² But in the context of discovery, we should be concerned with the concept that William Rubenstein calls “equipage equality.”¹⁰³ That is the idea that adversarialism requires “a real battle between equally-armed contestants . . . [with] some measure of equality in the litigants’ capacities to produce their proofs and arguments.”¹⁰⁴ This kind of equality is not concerned with substantive outcomes or even equality of treatment across cases.¹⁰⁵ Rather, Rubenstein argues that its focus is on the procedural equipment that the system gives litigants—the arrows that litigants can have in their quiver. Discovery can arm litigants with tools to remedy the inherent asymmetry between plaintiffs and defendants.¹⁰⁶ It is a powerful factfinding measure that provides small litigants access to documents or witness information that are otherwise only in the hands of a corporate defendant.¹⁰⁷ Discovery thus attempts to remedy informational asymmetries.

Narrowing Trials and Promoting Settlement. An institutional and historical account of discovery sees it as a tool that can narrow the scope of trial, promote settlement, and perhaps sometimes replace common law trials and juries.¹⁰⁸ At common law, there was no robust discovery and trial was instead the defining information-flushing event of a case. In a system with jurors and no discovery, however, trials were expensive and burdensome and allowed for potential late-stage surprises. One way to remedy that problem was to expand the pretrial stage and allow the parties to fully explore relevant documents and witnesses, narrowing issues for trial or even avoiding it. Some of the Federal Rules drafters sought to avoid the burdens of the common law trial by infusing the system with equity’s flexibility and broad discovery.¹⁰⁹ In other words, they sought to make the pretrial stage the fundamental information-exchanging event. Borrowing heavily from equity and the common law trial, the federal rules allowed broad document requests and regularized the concept of oral depositions, allowing the parties to directly interview the main witnesses outside of judicial supervision.¹¹⁰ The main drafter of the discovery rules, Edson Sunderland, argued that broad discovery would make trials narrower or even sometimes unnecessary¹¹¹ and may, along with other pretrial procedures, “bring parties to a point where they will seriously discuss settlement.”¹¹²

As expected, discovery has come to serve as one of the main prosettlement nudges in the procedure toolkit. While discovery and trials are separate stages of litigation, they are nonetheless closely related because discovery shapes the parties’ decision whether to settle or litigate.¹¹³ A legal case can generally be decided via dismissal, settlement, or a final judicial decision. If the claim is meritorious, settlement can be highly efficient because it saves the high transaction costs of trials. Under a standard economic view of litigation, parties decide to file suit (and settle or litigate) depending on their probability of success at trial, amount in dispute, and costs of litigation.¹¹⁴ By forcing the parties to engage in a thorough exchange of information, discovery shapes the parties’ calculation of probable success and therefore “increases settlements and decreases trials,”¹¹⁵ even if it also forces the parties to reveal weaknesses in their case. Discovery allows the parties to share the trial transaction costs as bargaining surplus.

Since at least 1938, thanks partly to broad discovery, the system has slowly evolved away from trials and toward an increasing number of dispositive motions or settlements. It is possible to justify this shift, and expensive discovery, because it avoids the greater costs of impaneling juries and conducting trials.¹¹⁶ But displacing trials and juries brings its own tradeoffs. The drafters may have miscalculated by importing expensive inquisitorial discovery devices “into a common-law-based adversarial framework after 1938.”¹¹⁷ Moreover, discovery may not always be a full or adequate substitute for trials, because it deprives judges and juries from the cases necessary to update the common law.¹¹⁸ Despite these tradeoffs, the record shows that it was part and parcel of the project to create new procedural rules that discovery would often promote settlement and narrow trials.¹¹⁹

* * *

These three theories (or more properly, rationales or justifications) have a wide variety of implications explored in Part IV. For now, it is sufficient to note that they are based on different principles—fairness, equality, and judicial economy (or narrowing trials)—and lead to distinct background values for discovery.

III. Discovery as Regulation

This Part explores in a systematic manner an additional way to conceptualize discovery. My main argument is that one of discovery’s core purposes in private-enforcement cases is actually divorced from adversarial litigation and is, instead, entirely about systemic regulation.¹²⁰ In the private-enforcement context, Congress uniquely chose private claims, and attendant discovery, rather than agency regulation as the main administrative mechanism.¹²¹ In those cases, litigation is a regulatory tool and broad discovery transforms into an essential regulatory device comparable to the administrative subpoena. By forcing parties to disclose large amounts of information, discovery deters harmful behavior and, most importantly, structures the primary behavior of regulated entities. As I discuss later, this means that courts should be more permissive with discovery requests in private-enforcement cases than in typical litigation.

Discovery even manifests in similar ways in the private action and administrative contexts. Both agency bureaucrats and private plaintiffs are engaged in the work of flushing out information using analogous tools in order to enforce some broad statutory mandate. Courts have thus treated private and public regulators in similar ways. In this section, I explain that discovery serves regulatory purposes in at least two ways: (1) it delegates to private plaintiffs government subpoena power to investigate wrongdoing; and (2) it has significant positive spillover effects on regulated entities and markets. Discovery therefore serves an important purpose in a system that relies on private litigants to enforce the law.¹²²

A. Discovery as the Lynchpin of Private Enforcement

As many have recognized, the United States employs litigation as a regulatory tool by allowing private litigants to enforce important statutes in the contexts of antitrust, environmental law, business competition, and employment, among other areas, building what some scholars call a “litigation state.”¹²³ As I argue below, discovery is the lynchpin of this private-enforcement system because it is necessary to enforce these statutory regimes, shapes litigants’ ex ante expectations, structures plaintiffs’ attorneys’ choices, and influences the behavior of regulated entities. While discovery plays this unique role in this enforcement context, it likely lacks the same underlying legitimacy in other cases, like mass torts or state-law claims.

In contrast to European and most other countries, where bureaucracies regulate ex ante, U.S. private litigants enforce the law ex post and without much government involvement. Although plaintiffs pursue their own individual interests in litigation, they promote social welfare by enforcing the law and deterring wrongdoing.¹²⁴ Most importantly, private litigation is a regulatory tool because Congress and courts have deliberately empowered litigants through private rights of action, fee-shifting provisions, and other incentives—thus building a litigation state.¹²⁵ That is, in some of our most important statutes, Congress had the choice whether to create new agencies or rely on plaintiffs through a private right of action. And while in some cases Congress did create agencies like the EPA or FTC, in other statutes Congress instead delegated joint or sole enforcement power to private plaintiffs.¹²⁶

Within the litigation state, private lawsuits transform into a kind of regulatory tool. Most scholars define the word regulation as including “any governmental effort to control behavior by other entities, such as business firms, subordinate levels of government, nonstate entities (such as political campaigns or civil society actors), or individuals.”¹²⁷ Such a working definition encompasses litigation when it is deliberately employed by Congress. Conceiving litigation as regulation transforms the legal system from one where “one citizen can seek redress from another in an orderly fashion”¹²⁸ into one where citizens or classes of citizens can enforce the law for systemic regulatory purposes. For example, lawsuits by private parties against businesses under competition or antitrust statutes can be aimed to shape behavior for legitimate governmental ends—controlling market entry or prices, limiting monopolies, or improving efficiency.¹²⁹ More broadly, regulation through litigation can influence entities by prohibiting wrongdoing, forcing companies to internalize the full costs of their conduct, or incentivizing certain behavior. The role of private parties as regulators is even clearer when they operate side-by-side with agencies and bureaucracies that enforce the very same statutes. Just like the SEC and securities class actions often aim to prevent securities fraud to preserve efficient markets, so too do the EPA and the National Environmental Law Center both aim to safeguard the environment.

Within this complex ecosystem of enforcement, private litigants have powerful litigation tools that they can employ against regulated entities, including broad discovery. Contingency fees, attorney advertising, class actions, punitive damages, and private rights of action make the initial filing of a claim feasible by incentivizing plaintiffs’ attorneys with the potential for a large recovery.¹³⁰ Those devices are therefore a key entry into the litigation state. But discovery is the lynchpin of the private-enforcement system because it shapes the parties’ ex ante expectations of whether they will be able to flush out wrongdoing and effectively pursue their case. It can structure plaintiffs’ attorneys’ choice whether to file a case on behalf of an aggrieved party or not. And it influences the behavior of regulated entities who understand the information flushing tools at plaintiffs’ disposal. In areas like employment discrimination, for instance, plaintiffs’ attorneys calculate whether discovery will produce evidence of biased treatment.

There is a necessary relationship between private-enforcement statutes and broad discovery. Once past the pleading stage, discovery allows plaintiffs to effectively become quasi-government investigators, or as courts sometimes note in limited circumstances, private attorneys general. In situations of imperfect information, as I discuss below, broad discovery empowers plaintiffs with a variety of tools to seek out wrongdoing. Take, for example, three private-enforcement regimes and the kinds of evidence plaintiffs need:

Title VII of the Civil Rights Act. Title VII prohibits employment discrimination on the basis of sex, race, color, national origin, and religion.¹³¹ Private suits are the overwhelming mode of enforcement, accounting for 98 percent of suits while government actions account for only 2 percent.¹³² In disparate treatment cases, plaintiff-employees must establish that an employer made an adverse decision based on “a discriminatory intent or motive.”¹³³ This question is heavily fact-dependent. But employers almost never leave a “‘smoking gun’ attesting to a discriminatory intent,” so plaintiffs “often must build their cases from pieces of circumstantial evidence which cumulatively undercut the credibility of the various explanations offered by the employer.”¹³⁴ Disparate impact cases also need specific data that can show “an employer’s overall pattern of conduct.”¹³⁵ Broad discovery over a wide array of employer documents is the sine qua non of these cases.¹³⁶ For instance, comparative studies show that despite the presence of robust civil antidiscrimination laws in France, those statutes remain drastically underenforced because there is no expansive American-style discovery.¹³⁷ The Supreme Court has even explicitly noted that specific causation in these cases is a fair requirement because “liberal civil discovery rules give plaintiffs broad access to employers’ records.”¹³⁸

Antitrust Laws. The Sherman Act gives plaintiffs a private right of action against individuals or firms engaged in a “contract, combination . . . or conspiracy, in restraint of trade or commerce.”¹³⁹ The Clayton Act similarly seeks to prevent or punish anticompetitive conduct by “bring[ing] to bear the pressure of ‘private attorneys general’ on a serious national problem for which public prosecutorial resources are deemed inadequate.”¹⁴⁰ Private claims “accounted for about 90% of antitrust filings in federal court each year between 1975 and 2012.”¹⁴¹ And empirical studies “have confirmed that those private enforcement actions are effective in deterring anticompetitive behavior.”¹⁴² Private claimants are often competitors or consumers harmed by anticompetitive conduct. Broad discovery is also necessary in these cases. For example, in cases alleging the existence of a cartel, the burden is on the plaintiff to establish a conspiracy to restrain trade. In such cases, “only the defendant will know or have the means to discover . . . whether it actually conspired. Moreover, the plaintiff usually cannot ascertain this fact through a reasonable prefiling investigation.”¹⁴³ To make matters more difficult for would-be claimants, “[m]odern cartels employ extreme measures to avoid detection.”¹⁴⁴ Pretrial discovery, however, can give plaintiffs access to schedules, communications, and emails that may evince a conspiracy. Broad discovery has thus become the main tool by which plaintiffs can ascertain the existence of certain antitrust violations.¹⁴⁵

Fair Labor Standards Act (FLSA). The FLSA sets minimum wage and hour regulations in employment contracts and allows employees to sue employers for minimum hourly wage and overtime payments.¹⁴⁶ Although the Department of Labor has concurrent enforcement power, it “investigates fewer than 1% of FLSA-covered employers each year” and must instead “rely on private parties to take a lead role in enforcing wage and hours laws.”¹⁴⁷ Private claims are in turn overwhelmingly enforced as class actions, allowing employees to band together in pursuit of backpay. Here’s where discovery steps in: in order to prove their work claims, employees must often rely on company records.¹⁴⁸ In some cases, those records include detailed information about company practices, communications, and even videos.¹⁴⁹ Those records are only available because of broad discovery.

Congress has enacted some of these statutes, and subsequent amendments, on the open assumption that broad discovery was essential and would be available.¹⁵⁰ For example, during debates over the Equal Employment Opportunity Act of 1972, supporters of an EEOC litigation approach—rather than cease-and-desist enforcement—argued that “[t]he Federal Rules of Civil Procedure . . . with respect to discovery . . . would greatly facilitate the collection of evidence for trial.”¹⁵¹ Similarly, some organizations that supported the Civil Rights Attorney’s Fees Awards Act of 1976 argued that attorney’s fees should be awarded to the prevailing party because “it is necessary for the plaintiff to engage in possibly staggering discovery costs,” and these costs “should not be put on the litigant, but instead should be paid by the defendant.”¹⁵² By authorizing fee shifting, the statute protected, enshrined, and legitimated broad discovery. Further, in debates over the Civil Rights Act of 1991, Senators accepted the availability of broad discovery and complained only that it was not enough to ensure enforcement. For instance, Senator Jeffords asked “[h]ow realistic [wa]s the U.S. Supreme Court’s assertion that since you have discovery procedures now that really the plaintiff is able to ascertain as to what the motives of the employer were?”¹⁵³ William H. Brown, former Chairman of the EEOC, observed that while “the discovery process [wa]s designed under [the] Federal [R]ules to ferret out certain kinds of information,” many of an employer’s reasons for making hiring decisions “are so obscure that no amount of discovery is going to be able to discover that.”¹⁵⁴ In these legislative debates, broad discovery was a fundamental background principle.

Not only has Congress continued to expand rights of action—for instance, by adding fee shifting to the Civil Rights Act in 1976 and 1991, or through alternative enforcement avenues in the Hart-Scott-Rodino Antitrust Improvement Act of 1976—but it has also considered and rejected proposals to limit private enforcement under the FLSA and other statutes.¹⁵⁵ And while Congress has significantly altered other procedural rules in the past few decades, it has not attempted to weaken broad discovery in these statutes.¹⁵⁶ Judicial narrowing of discovery for these statutory rights may therefore lack fidelity to the original legislative bargain.

Setting aside the link between these private-enforcement regimes and discovery, there is even a close historical connection between a regulatory view of discovery and the litigation state. Many key statutes emerged largely in the mid-1960s and 70s, including the Civil Rights Act and an array of environmental protection laws.¹⁵⁷ A 1970 Supreme Court decision also allowed private securities claims for the first time.¹⁵⁸ These areas came to rely, at their core, on private enforcement. Just around that time, the Advisory Committee took the key historical step toward regulatory discovery. In 1970 the Committee amended the standards for document production, removing the long-standing requirement that parties needed prior judicial approval and a showing of “good cause.”¹⁵⁹ With those mechanistic requirements out of the way, plaintiffs were unleashed to enforce the constellation of new federal statutes that were emerging and consolidating in that era.

What about mass torts? This framework does not seem to apply in the common law, and especially mass torts, context. There is a distinction as to the source of legitimacy in these two types of claims. In mass torts cases, unlike private-enforcement statutes, Congress has not deliberately chosen private plaintiffs as the primary enforcers,¹⁶⁰ nor has it established a uniform federal law on the topic.¹⁶¹ Instead, whether regulatory discovery is legitimate may depend on the relationship between state common law and state and federal discovery. While there may be other reasons to recognize discovery as regulation in common law claims, it must be supported by a different set of arguments. One might worry, for instance, that even though mass torts serve deterrent purposes, tort theory was originally rooted in a conception of litigation that emphasized remedies for private wrongdoing.¹⁶² Statutes like Title VII, by contrast, were explicitly meant to serve a broader purpose and have been interpreted to “focus[] on ‘systems and effects’ rather than tort-like individual wrongs.”¹⁶³ Moreover, because federal statutory claims are mostly enforced in federal court, their relationship to discovery can be uniform and informed by Congress.¹⁶⁴ State common law serves multiple masters: state courts and legislatures and federal courts.¹⁶⁵ So, again, the question of legitimacy is distinct and needs other supporting theories.

Setting legitimacy aside, however, the regulatory effect of discovery in mass torts cases may be very similar, or perhaps identical, to that in private-enforcement cases. Just as antitrust claims can promote deterrence and industry regulation, products liability or mass tort claims can achieve the same results.¹⁶⁶ Because of this similarity of outcome or effect, I retain examples from torts and common law cases as informative and illustrative of regulatory discovery.

B. Discovery as Administrative Subpoena Power

There are close similarities between private-enforcement discovery and the administrative state, underlining discovery’s regulatory role. The primary lesson of this Section is that discovery’s resemblance to administrative subpoenas in the private-enforcement context shows that we should conceptualize discovery as a regulatory device that shapes and structures the behavior of regulated entities.

The absolute “backbone of an administrative agency’s effectiveness is the ability to investigate rapidly the activities of entities within the agency’s jurisdiction.”¹⁶⁷ Although regulated entities usually provide information voluntarily,¹⁶⁸ agencies’ main investigatory tool is the administrative subpoena, an agency request compelling the production of documents or testimony without preapproval from courts or grand juries.¹⁶⁹ That is why almost all agencies have subpoena power.¹⁷⁰ Agencies’ authority to issue subpoenas is not inherent; it directly derives from congressional authorization in enabling acts (in addition to Section 555(d) of the Administrative Procedure Act).¹⁷¹ Congress has provided agencies the authority to compel reports or internal documents since the Interstate Commission Act of 1887, setting a precedent for the later development of the administrative state.¹⁷² According to the Department of Justice Office of Legal Policy, there are now “approximately 335 existing administrative subpoena authorities held by . . . executive branch entities under current law.”¹⁷³

When regulated entities refuse to comply with a request, agency statutes authorize agency officials to either “apply directly to an appropriate U.S. district court for enforcement assistance” or “request the Attorney General’s aid in applying to a U.S. district court for enforcement assistance.”¹⁷⁴ In addition, agencies can issue civil investigative demands, which are broad requests for information even before any investigation has officially begun.¹⁷⁵

The Supreme Court has recognized a broad administrative subpoena power that extends widely over regulated entities, an acknowledgement that “overbearing limitation of these authorities would leave administrative entities unable to execute their respective statutory responsibilities.”¹⁷⁶ Agencies’ subpoena power is a critical element inexorably intertwined with broader regulatory schemes. The Occupational Safety and Health Administration (OSHA), EPA, and Department of Labor, for example, need a routine and uncontroversial method to investigate compliance with labor and environmental regulations. That is why parties cannot easily object to an administrative subpoena and why in most litigation regulatory agencies “have obtained essentially all the information they have sought from private parties.”¹⁷⁷ In Civil Aeronautics Board v. Hermann, the Court emphasized that a determination of relevance should mostly be left to agencies, as long as they follow the appropriate procedure and their internal chains of command.¹⁷⁸ Indeed, agencies have previously threatened to file sanctions against lawyers for opposing or refusing to comply with subpoenas on feeble grounds.¹⁷⁹

Civil discovery’s broad scope could be seen as an extension (or outsourced version) of administrative subpoena power, and one could say that private discovery is directly analogous to an administrative subpoena.¹⁸⁰ Congress has enacted statutes that deliberately depend on private plaintiffs to enforce them, and in order for these statutes to succeed, just like agencies, private plaintiffs need broad and powerful tools to investigate legal violations.¹⁸¹ Perhaps that power should be more or less constrained in the context of private parties—discussed further infra in Section IV.C—because they lack the public or democratic legitimacy of government officials. But if plaintiffs truly are exercising government power, discovery rules should look very similar to those governing administrative subpoena power. And, as expected, they do.

Administrative subpoena powers actually resemble private discovery across several dimensions: (1) ex parte issuance; (2) breadth of scope and judicial standards of review; (3) specific tools and devices; and (4) the costs of production. These dimensions serve regulatory functions by giving broad independence, flexibility, and scope to regulators. At the same time, as discussed below, administrative subpoenas and private discovery are different in significant ways that correct for private enforcers’ lack of democratic legitimacy. There are a series of important distinctions between the two discovery devices—for instance, subpoena power exists prior to any litigation—that make the two kinds of discovery far from identical. I do not mean to suggest that private and public discovery are interchangeable, but only that they resemble each other in important ways that indicate a common regulatory foundation.

1. Ex Parte Issuance

Both private plaintiffs and agencies can issue subpoenas ex parte—a court only becomes involved ex post if the responding party moves to quash or for a protective order. The ability to issue discovery requests without any prior judicial approval is one of the most distinctive aspects of American discovery. And it has grown to be both powerful and essential in the context of regulation. Regulated industries generate vast amounts of information on a day-to-day basis. Prior judicial approval would constitute a substantial impediment that would increase transaction costs, decrease the amount of relevant information, and potentially disrupt the regulatory process.

Agencies can require entities to produce some information both on a regular basis or for specific investigatory purposes. For example, the SEC requires publicly listed companies to submit an array of forms regarding their financial performance or activities.¹⁸² The FTC, too, requires the submission of a collection of documents related to potential mergers. But outside these regularized channels, in order for agencies to even begin to understand their relevant industries, let alone identify wrongdoing, they must probe regulated entities with information requests. Courts have thus upheld agency powers to subject companies to searches or even inspections in the context of regulated commercial activity.¹⁸³ And agencies have expanded their power to collect information from “those who are not the custodians of required records and who do not have any sua sponte reporting duties.”¹⁸⁴ That is why in United States v. Morton Salt Co., the Court upheld broad administrative powers to obtain presuit information, even if requests for such information constitute “fishing expeditions.”¹⁸⁵ This power is fundamentally independent of the judicial process unless and until a party challenges an administrative action in court.

Internal agency procedures for issuing administrative subpoenas or civil investigative demands are expansive and relatively unconstrained. To issue an investigative demand, FTC needs only a “reason to believe” that the targeted entity has “relevant” information to “unfair or deceptive acts or practices . . . affecting commerce.”¹⁸⁶ These suspicions can be triggered by newspaper articles or employee tip-offs.¹⁸⁷ And the FTC’s internal procedure only requires a signature by “a Commissioner pursuant to a Commission resolution.”¹⁸⁸ Similarly, in National Labor Relations Board (NLRB) proceedings, regional directors as well as “any person filing a charge or petition under the NLRA,” including employers or employees, can apply to the Board for a subpoena “in order to obtain evidence that relates to any matter under investigation or in question” within the NLRB.¹⁸⁹ The postmaster general of the U.S. Postal Service can issue subpoenas after an “appropriate supervisory and legal review of request.”¹⁹⁰ SEC commissioners (and designated officers) “may subpoena witnesses, take evidence, and require the production of documentary evidence deemed relevant or material to an investigation under the Act.”¹⁹¹ Agency investigations can be triggered by little more than “official curiosity”¹⁹² and often result from random inspections.¹⁹³ And EPA administrators “may require a person who owns or operates any emission source . . . who the Administrator believes may have information necessary for the purposes set forth in this subsection” to submit records and information related to air pollution.¹⁹⁴ These agencies generally require approval through internal processes that only sometimes involve high-level officials.¹⁹⁵

Private discovery resembles agency power in that it is a fundamentally independent process that, after pleading, is not constrained by prior judicial approval. The 1938 discovery rules embodied the progressive conviction—also embraced by regulatory agencies—that “effective regulation was impossible without access to the facts concerning the regulated enterprise.”¹⁹⁶ From 1938 until 1970, however, the federal discovery rules required prior judicial approval for any document subpoena, “upon a showing of good cause.”¹⁹⁷ But, as discussed above, the Advisory Committee eliminated this requirement in 1970, allowing private parties to request any information that could plausibly be relevant. To be sure, unlike agency officials wielding administrative subpoena power, private plaintiffs must first file a complaint and potentially survive a motion to dismiss under Federal Rule 8. But even in that context, just as courts after Twombly and Iqbal require that a complaint must meet a “plausibility” standard before discovery sets in, many courts have required agencies to make “plausible arguments” in support of their jurisdiction.¹⁹⁸ Still, this plausibility analysis only takes place after a subpoena is issued, while in private-enforcement cases the defendant can move to dismiss prior to any discovery. But some statutes have empowered plaintiffs to obtain discovery prior to filing any lawsuit at all. For example, Federal Rule 27 allows a party to take a presuit deposition to perpetuate testimony.¹⁹⁹

On the whole, both administrative subpoena power and private discovery are unburdened by prior judicial approval, allowing private and public regulators to investigate wrongdoing.

2. Scope and Standards of Review

Judicial ex post review of discovery requests is broadly deferential to both private and public regulators. Courts give agencies “great latitude in supplying justification for the issuance” of administrative subpoenas.²⁰⁰ Specifically, the Supreme Court has only required a good-faith or reasonable issuance, asking lower courts to review whether an agency investigation promotes a legitimate purpose, the information is reasonably relevant, and the agency has followed the requisite administrative steps.²⁰¹ In United States v. Powell, the Court rejected the applicability of a probable cause standard to agency subpoenas.²⁰² That is why agency statutes allow officials to seek broad subpoenas over information:

FTC: “relevant to unfair or deceptive acts or practices,”²⁰³
NLRB: “that relates to any matter under investigation,”²⁰⁴
SEC: “deemed relevant or material to an investigation under the [Securities] Act,”²⁰⁵ and
FEC: “relating to the execution of the Commission’s duties.”²⁰⁶

Regulated entities almost never succeed in challenging an administrative subpoena on scope, burden, or other reasons.²⁰⁷ In the seminal decision Endicott Johnson Corp. v. Perkins, the Court held that a district court has the duty to enforce an administrative subpoena as long as it is not “plainly incompetent or irrelevant to any lawful purpose.”²⁰⁸ Even the most exacting courts have only required agencies to make a “‘plausible’ argument in support of its assertion of jurisdiction” before enforcing a subpoena.²⁰⁹ Other courts have required much less. In United States v. Sturm, Ruger & Co., the First Circuit rejected a challenge against an OSHA subpoena, noting that “[a]s long as the agency’s assertion of authority is not obviously apocryphal, a procedurally sound subpoena must be enforced.”²¹⁰ For this reason, courts have been largely deferential to agency subpoenas. For example, the SEC’s power is so vast in scope that some have claimed there is “little that the SEC cannot obtain.”²¹¹ Courts accept this broad scope even when there is no agency interest in litigation because agencies can use investigative powers for broader purposes.²¹²

Courts police private-discovery requests more closely but are often similarly deferential. The general standard under Rule 26 is that plaintiffs can obtain “discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.”²¹³ Information “need not be admissible in evidence to be discoverable.”²¹⁴ Prior to the 2015 amendments—which shifted the proportionality analysis and eliminated other language—the rule explicitly noted that requests could be “reasonably calculated” to lead to admissible evidence.²¹⁵ It is unclear whether the 2015 amendments have substantially constrained the discovery process.²¹⁶ Either way, the standard triggers flexible judicial review over “whether good cause exists for authorizing [a request] so long as it is relevant to the subject matter of the action.”²¹⁷ Under this standard, courts often impose the burden on the “party opposing discovery to show that it is not relevant.”²¹⁸ On the whole, the limits of private discovery are difficult to ascertain, but are nonetheless liberally construed by most courts.

3. Specific Tools and Devices

Beyond similarities in issuance and judicial review, there is also significant overlap in the tools available to private litigants via discovery and administrative officials via the subpoena power. At the core of both systems are two types of subpoena: ad testificandum, requiring testimony (depositions), and duces tecum, requiring the production of documents. These two types of subpoena constitute the lifeblood of the administrative and litigation states.²¹⁹ Both agencies and private parties can also issue third-party subpoenas, allowing agencies and litigants to seek documents from nonparties—for instance, a bank, internet service provider, or business in possession of personal documents—related to the target of an agency investigation.²²⁰

Granted, the similarities should not be overstated. Discovery powers within the administrative state exceed the subpoena power and are more diverse than anything available in the private context. The subpoena power is just one of an agency’s broad investigative powers independent of the initiation of formal action.²²¹ Others include requirements for recordkeeping (for instance, records necessary for those seeking to deduct expenses on tax returns) and reporting (for instance, IRS Form 1040),²²² and the power to conduct periodic (and usually unannounced) inspections of persons and businesses within their jurisdiction.²²³

The administrative subpoena power is also not uniform. It is typically understood to “include all powers, regardless of name, that Congress has granted to federal agencies to make an administrative or civil investigatory demand compelling document production or testimony.”²²⁴ Agency organic statutes sometimes provide only broad language that does not differentiate among different subpoena types. For example, the FTCA confers power on the FTC to “gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any . . . corporation,” and “[t]o require, by general or special orders, . . . corporations . . . to file with the Commission . . . reports or answers in writing to specific questions.”²²⁵ Ultimately, agency subpoena authorities vary by (1) source and scope, (2) applicable enforcement mechanisms, (3) notification provisions and other privacy protections, and (4) standards governing issuance.²²⁶ Additionally, some statutes “limit or forbid delegation of the authority [to issue subpoenas] to lower-ranking officials within the agency.”²²⁷ The number of agency officials required to sign off on a subpoena may also differ.²²⁸

Despite their differences, visualizing all of the different private and public discovery tools in their entirety shows that there is significant overlap between them. That is, there are private analogues to many of the available agency subpoena tools. Below, Table 1 explores this comparison:

Table 1: Comparison of Administrative and Private Discovery

ADMIN. SUBPOENA POWER²²⁹
Reporting Requirements²³⁰
Civil Investigatory Demands²³¹
Documents²³²
Testimony or Depositions²³³
Interrogatories²³⁴
Inspections²³⁵
No Analogue
No Analogue
Forthwith Subpoena²³⁶

PRIVATE DISCOVERY²³⁷
Initial Disclosures
No Analogue
Documents
Testimony or Depositions
Interrogatories
Property Inspections
Physical Examinations
Requests for Admissions
No Analogue

The agency tools that have no private analogues tend to be aggressive exercises of state power. For example:

Forthwith Subpoenas: A forthwith subpoena “direct[s] the person to whom it is addressed to appear immediately either to testify or bring subpoenaed items with him.”²³⁸ It typically applies in the criminal investigation context. The SEC, for instance, has the power to immediately seize documents, computer hard drives, and digital devices without any ex ante notice, increasing the level of disruption among regulated entities.²³⁹ (The SEC’s Enforcement Manual counsels that forthwith subpoenas “should only be used in exigent circumstances.”²⁴⁰).
Civil Investigative Demands (CID): A CID, like a subpoena, is a presuit device to compel production of documents, written responses to interrogatories, or sworn testimony.²⁴¹ One purpose of a CID is to allow the government “to assess quickly, and at the least cost to the taxpayers or to the party from whom information is requested, whether grounds exist for initiating” suit.²⁴² Some courts and agencies consider CIDs merely another form of subpoena unless a contrary intent is made clear.²⁴³

On the whole, the similarities of tools and devices across the administrative and litigation states underlie their common purposes: to shape and structure the behavior of regulated entities. And while there are significant differences (more fully explored below), there are more similarities across the two systems that support the legitimacy of broad discovery as an exercise of delegated government power.

4. Producer Pays and Costs

American discovery uniquely imposes the costs of production on the producing party.²⁴⁴ Under Rule 26, private plaintiffs can engage in broad discovery requests without any financial liability. This rule has generated an avalanche of commentary, some of it criticizing the rule for misaligning incentives and allowing requesting parties to externalize the costs of their actions.²⁴⁵ Critics have even accused this particular rule of fomenting gamesmanship and allowing parties to offensively impose crippling costs on opposing parties to force settlement.²⁴⁶ Like civil discovery, however, administrative subpoenas have always operated on the producer-pays rule. This symmetry signals, again, that private discovery is serving an enforcement agenda.

Administrative subpoena powers operate under a producer-pays rule even though they can be exceptionally costly and disruptive.²⁴⁷ For instance, the SEC, FTC, EPA, and CFPB routinely demand significant document productions.²⁴⁸ In this context, courts have developed a test that asks whether a subpoena imposes an “undue burden.” Courts sometimes focus on the defendants’ resources, asking whether “the actual costs of discovery are unreasonable in light of the particular size of the respondent’s operations.”²⁴⁹ Thus, for example, in NLRB v. AJD, Inc., the court enforced broad NLRB subpoenas against McDonalds despite the fact that they imposed allegedly “astronomical [costs]” of over “$1 million,” would “seriously disrupt their business operations,” and sought “160,000 pages of documents,” and that McDonalds’s maximum liability could not rise beyond $50,000.²⁵⁰ The court emphasized that the NLRB needed to investigate “labor violations at certain McDonald’s franchises” and defendant had not shown a lack of capacity to “handle the costs.”²⁵¹ Over the past few years the SEC has increasingly relied “on broadly defined subpoenas instead of informal information requests.”²⁵²

5. Important Differences

Of course, administrative subpoena power also differs from discovery in a variety of important and multifaceted ways. It is important not to understate these differences, which are, by some estimation, significant. Among others, the differences between the two include the fact that administrative subpoenas are issued prior to litigation while private discovery can only occur within litigation and that subpoena power is more expansive and varied than private discovery. Perhaps these differences, and their underlying justification, emerge from the premise that private discovery is wielded by profit-motivated attorneys while subpoena power is a public tool that operates under political checks. Although courts have not explicitly recognized this political distinction, it seems evident from the case law that judges have implicitly incorporated it into their discovery calculus.

Courts treat administrative subpoenas as more legitimate and broader than private discovery in many ways. For example, courts tolerate “fishing expeditions” in the administrative context but not in private discovery.²⁵³ Although administrative subpoena power “was once viewed with a great deal of suspicion,”²⁵⁴ this restrictive theory of administrative power was “rejected many years ago, and ha[s] not been revived.”²⁵⁵ Indeed, courts find that “official curiosity . . . [can be] ground for a[n] [agency] request for information.”²⁵⁶ On the other hand, as Edson Sunderland recognized in 1932, “[h]ostility to ‘fishing expeditions’ before trial is a traditional and powerful taboo.”²⁵⁷ And, despite evidence that Sunderland and the Rules drafters sought to create a legal universe that “frequently seemed to require discovery fishing expeditions,”²⁵⁸ the taboo remains.²⁵⁹

Courts’ acceptance of administrative fishing expeditions reflects their perception that agency subpoena power is broader, more varied, and more regularized than private discovery. The administrative subpoena is only one of several tools agencies use in the ordinary course of their business to regulate private conduct, alongside recordkeeping and reporting requirements, physical inspections, and the separate work of an agency’s Inspector General. Unlike the discovery system, “an administrative investigation is a proceeding distinct from any litigation that may eventually flow from it.”²⁶⁰ In contrast, even if judicial ex post review of discovery requests is broadly deferential to both private and public regulators, discovery requests in private litigation are still tethered to the lawsuit in which they appear. A lawsuit must be filed, and motions litigated, before private discovery may begin to serve its regulatory ends.

Despite the similarities discussed above, public discovery is also distinct from private discovery in its diversity and scope. Whereas the Federal Rules apply uniformly across federal courts (even if interpretation differs within districts and circuits), agencies do not share the same subpoena power. Moreover, because it exists outside litigation, an administrative subpoena “may serve the full range of administrative processes,”²⁶¹ including conducting “investigations to make rules, to determine policy, to recommend legislation, and to illuminate areas in order to find out whether something should be done and if so what.”²⁶² While the Article argues that private discovery also serves these purposes, courts have mostly recognized these benefits in the agency context only. Courts’ recognition of this investigative breadth reflects the thinking that “regulation c[annot] be intelligent unless the regulators ha[ve] access to information that only the regulated business could supply.”²⁶³

6. The Democratic Legitimacy Problem

As previously discussed, when public officials exercise subpoena power they enjoy a public and democratic check that private plaintiffs lack, creating an obvious legitimacy gap between the two types of discovery. At first glance, this appears to be a significant additional difference between the two types of enforcement. But, as I discuss here, this asymmetry is not as important as once thought and Congress may have already accounted for this difference.

Courts may implicitly accept wider administrative subpoenas because, while plaintiffs’ attorneys are only motivated by profit, there is a political and democratic check on agency officials. Scholars have long argued that while public enforcers take social costs into account and exercise prosecutorial discretion, private enforcers are only willing to litigate for private gain and will even file unmeritorious claims in search of settlement.²⁶⁴ A plaintiff’s private benefit could exceed the need for deterrence in a particular context, leading to an excessive and inefficient number of lawsuits.²⁶⁵ In this stylized view, private enforcers can exploit broad discovery because there are no analogues to the institutional and political constraints that agencies face.²⁶⁶ Steven Shavell, for instance, has argued that where private incentives to litigate exceed the social benefits that would result, restrictions should be implemented, including, notably, “procedural rules limiting discovery.”²⁶⁷ Similarly, Matthew Stephenson has argued that private suits—as compared to administrative enforcement—can lead to overenforcement, disrupt existing regulatory regimes, and “raise concerns about the democratic accountability of law enforcers, since private plaintiffs are not subjected to the same electoral checks that constrain executive officials.”²⁶⁸ This “democratic accountability” and “political check” critique has been at the center of private/public enforcement debates for at least two decades.

A recent spate of scholarship, however, has cast doubt on the significance of the democratic accountability problem and the political asymmetry between private and public actors.²⁶⁹ The fact that private enforcers are motivated by financial gain may not be a perverse incentive; it instead gives plaintiffs’ attorneys a reason to be selective about the cases they choose to bring, screening closely for worth and merit. William Hubbard, for instance, argues that

[a] plaintiffs’ attorney working on contingency must offset the entire cost of litigating every case with a fraction of the judgments in the successful cases. This . . . magnifies the incentive to screen cases for quality . . . because the lawyer gets paid only if the plaintiff wins or obtains a settlement (both of which are more likely if the case is stronger).²⁷⁰

To be sure, even this calculation leaves plenty of room for attorneys motivated by the possibility of settlement to bring “strike” or “nuisance” suits that defendants can pay off. But the key is that private plaintiffs must invest time and resources and are therefore at least partly disincentivized from filing unmeritorious claims.²⁷¹ Plaintiffs’ firms are generally not paid by the hour either, so they have no clear incentive to overrequest documents.²⁷²

Plaintiffs’ financial motivation and other distortions are also not asymmetrical—they exist in the administrative state too. While the underlying assumption of the democratic-accountability critique is that public officials are not financially motivated because they do not pocket damages awards, Margaret Lemos and Max Minzner have argued that public enforcers may seek large monetary awards for self-interested reasons divorced from the public interest in deterrence.²⁷³ This occurs most often when agencies can retain all or some of the proceeds of enforcement; but even when they must turn over their winnings to the general treasury, there are reputational reasons to focus on and publicize dollars earned in judgments.²⁷⁴ Agency heads have an interest in aggressive enforcement because it maximizes their agency’s budget, and this interest is shared by lower-level employees because the benefits of a larger budget trickle down to them through enhanced career opportunities.²⁷⁵ In order to build up a reputation as an effective enforcer—in the eyes of the legislature, executive officials, and judges—an agency will emphasize easily measurable accomplishments, like large monetary awards in enforcement, rather than “more amorphous forms of success.”²⁷⁶ High recoveries, in an individual case or in the aggregate, can make an enforcement program appear effective and might increase an agency’s autonomy from oversight.²⁷⁷ An additional reason to question the alleged financial-motivation asymmetry is the long literature on the danger of agency capture and its distortive consequences for enforcement.²⁷⁸ All of this means that an agency’s cost-benefit analysis is not optimal, as it is infected by reputational concerns and financial motives and may reliably err on the side of action or overenforcement.²⁷⁹

Accepting that both private and public enforcers face reputational consequences, it is unclear which of the two kinds of actors has better incentives. For private plaintiffs, there may be costs to overfiling meritless claims in the aggregate-litigation world, including potentially losing future clients.²⁸⁰ Public enforcers, by contrast, may face little individual accountability for overbroad subpoenas and could potentially waste the massive resources of the government. It’s therefore not as clear as it may first seem whether private or public enforcers would be more likely to abuse the discovery process.

Not only do private and public enforcers face potentially negative financial and reputational incentives, Congress may have already accounted for the lack of democratic legitimacy in private enforcement. As an initial matter, Congress, by choosing to arm individuals with private-enforcement power, confers a modicum of democratic legitimacy on the process.²⁸¹ But setting that aside, it appears that Congress writes statutes with greater specificity when granting primary enforcement and interpretive authority to individuals and courts, thus limiting potential “drift” by private enforcers.²⁸² Sean Farhang recently argued that Congress addresses the democratic legitimacy problem by “resolv[ing] more policy issues in the legislature, elaborating substantive statutory law in greater detail, and leverag[ing] more administrative rulemaking expertise.”²⁸³ This potentially mitigates the democratic legitimacy concern because “the actual state of the world is one in which federal regulation implemented through litigation regimes is more informed by institutional policy-making capacity in the legislature, more often attended by expert rulemaking, and more tied to democratic governance, than previously thought.”²⁸⁴

Finally, any remaining concerns over the democratic accountability deficit of private litigants are already implicitly addressed because the system has built-in safeguards in the context of private enforcement that do not exist in public enforcement:

First, as discussed above, prior to broad discovery, plaintiffs must meet the Twombly and Iqbal plausibility standard. This is a significant roadblock that agencies do not face. Agencies can request information at any time without meeting any pleading threshold. If pleading operates correctly, then it is filtering all of the unmeritorious claims that agencies or bureaucrats would not file.

Second, in recognition of agency democratic legitimacy, regulatory subpoenas can have much broader powers that a private plaintiff lacks. SEC officials, for example, can immediately seize documents or devices subject only to an ex post judicial hearing.²⁸⁵

Third, agency subpoenas are as a practical matter much more powerful than private discovery because regulated entities have reputational and repeat-player reasons to maintain an amicable relationship with regulators. Facing an agency subpoena, most regulated entities choose to cooperate rather than seek judicial review.²⁸⁶ In the face of private complaints, by contrast, businesses have no reason not to seek judicial review and to challenge broad discovery requests. Administrative subpoenas are also more burdensome because, unlike in private discovery, parties cannot engage in reciprocal cost imposition.²⁸⁷ Just like a plaintiff can force a defendant to bear the costs of searching through thousands of emails, so can a defendant increase costs by seeking expansive discovery of the plaintiff.²⁸⁸ Both parties, then, have an incentive to keep discovery within reasonable bounds lest it cause an endless series of information requests. But this inherent limit does not exist in the agency context where a regulated entity has no ability to impose costs on regulators. Moreover, while courts have carved out exceptions to the producer-pays presumption, there doesn’t seem to be a similar development in the agency context.²⁸⁹

All of these differences seem to alleviate the apparent asymmetries between private discovery and administrative subpoena power and, regardless, agency subpoenas enjoy an added weight that private enforcers lack—a difference that is justified by remaining democratic and institutional reasons to trust agencies.

7. The Diffusion Asymmetry

One final potential distinction between agency and private discovery is that private enforcers are diffused, lack economies of scale, and can impose redundant discovery costs on companies by filing hundreds or thousands of uncoordinated lawsuits. Public enforcers, the argument goes, can avoid these problems by concentrating regulation in single agencies or coordinating across separate agencies. Bureaucrats also understand the underlying purposes of statutes and can therefore better decide when to expend organizational resources to file an enforcement claim.²⁹⁰

This diffusion-redundancy critique misses the fact that a significant amount of private enforcement takes place through aggregation devices like class actions or multidistrict litigation. Whether in the context of antitrust, civil rights, or securities litigation, the main (and sometimes only) enforcement tool for private plaintiffs is to proceed as a class or through MDLs. Given that these devices often bind other plaintiffs through preclusion, private enforcers are partly limited from engaging in guerilla litigation. Aggregation also gives private plaintiffs economies of scale. In addition, discovery can sometimes be expensive because of the time spent searching, gathering, and preserving internal documents (including review by counsel).²⁹¹ So even if multiple plaintiffs can file related claims with similar discovery requests, they are likely not imposing redundant costs—a regulated entity needs only to produce documents it has already searched and gathered in response to prior requests. This casts doubt on the costly redundancy critique of private enforcement.

Private enforcers also have a potentially significant advantage in the context of discovery: they are often “organizational insiders” with better incentives and knowledge of what information is relevant.²⁹² Administrative agencies must constantly solicit information from regulated entities, issue subpoenas or investigative demands, and stay acquainted with their industries because they are one step removed from regulated entities. They are outsiders to the process. Private litigants, by contrast, are often insiders: employees, consumers, and competitors. They can understand better than any agency whether a competitor, employer, or manufacturer is violating a statute.²⁹³ We may thus expect ex ante that their discovery requests might be more targeted than those of agencies. If we are worried about costs, this may justify empowering private rather than public enforcers with discovery.

* * *

Taking all of these similarities together, and acknowledging existing significant differences, it is not difficult to see discovery as a regulatory device intertwined with private and public enforcement. Both agencies and private plaintiffs inevitably need information that only regulated entities hold. Consequently, some of our most important statutory regimes depend on private litigants who can obtain broad information from regulated entities. Discovery in these areas operates as a regulatory tool.

C. Regulatory Discovery’s Spillover Effects

Once we reconceptualize one of discovery’s roles as regulation, many of its features become easier to understand. At the core of regulatory discovery is neither fairness, nor accuracy, nor judicial economy, nor equality. Rather, regulatory discovery seeks to promote deterrence of harmful behavior and aims to shape the primary behavior of regulated entities to achieve better compliance with existing laws and norms. In this sense, discovery has positive spillover effects—social rather than private benefits—that go beyond each specific case and can shape regulated entities’ behavior, expose wrongdoing, and influence industry-wide practices and the development of substantive law.

While our current discovery paradigm is well armed to recognize discovery’s negative spillovers—providing tools like protective orders or motions to seal the record—what it lacks is a vocabulary, underlying theory, and proper tools to recognize positive spillovers. So while it is undoubtedly difficult or perhaps impossible to measure whether regulatory discovery is systemically optimal, this Section’s goal is to argue that discovery can operate as regulation that produces broad and positive effects that we currently undervalue.

One benefit that gains more prominence within a regulatory-discovery paradigm is deterrence, which has long been one of the main justifications for private enforcement. The logic is simple: the threat of a lawsuit from a plaintiff with broad investigatory powers, and the prospect of lawyers examining internal documents and witnesses, should dissuade regulated entities from violating the law. To be sure, identifying discovery’s incremental deterrent value is a challenging and a nearly “imponderable” question.²⁹⁴ But for our purposes we need only understand that discovery can promote both specific deterrence—by ensuring that a defendant’s misdeeds are exposed—and general deterrence—by increasing the costs of litigation and changing the probability of success at trial.²⁹⁵ Indeed, discovery’s investigatory role may be the most important aspect of litigation deterrence. Discovery can uniquely increase the probability of exposing wrongdoing. Neither class actions nor pleading standards can do that. In that sense, information exchange practices can have considerable influence on the cost-benefit analyses of regulated entities. If deterrence is at the heart of discovery, then discovery costs that are even higher than the cost of the lawsuit can be justified when they create sufficient deterrence “that leads actors to take steps to reduce injuries by an amount that exceeds the costs of the lawsuit.”²⁹⁶

Discovery’s regulatory and deterrent effect is broad and can be conceptualized by its influence on (1) primary behavior, (2) transparency, and (3) the substantive law. While I recognize the possibility of (4) negative spillovers, I argue that we already have sufficient tools to address or limit their consequences.

1. Discovery and Primary Behavior: The Disney, Faragher, and Argentina Cases

Discovery can influence, change, or structure the primary behavior of regulated entities. This effect is most clear in the context of corporate litigation. In a broad study of corporate law, Érica Gorga and Michael Halberstam found that “modern discovery . . . has had a profound impact on the evolution of shareholder litigation, corporate governance, and the culture of corporate disclosure in the United States.”²⁹⁷ Discovery has not only been a powerful tool for plaintiffs’ attorneys but has also restructured corporate expectations and the way that companies collect and produce information. Litigation over corporate decisions can smoke out internal emails, accounting techniques, records, and employee secrets (in depositions).²⁹⁸ Vast amounts of corporate information thus expose companies’ internal decisionmaking and force them to change methods in order to comply with routine discovery requests.²⁹⁹ Gorga and Halberstam argue that “episodic legal demands for detailed corporate internal information have induced incremental improvements in corporate governance practices, including more exacting decision procedures, internal monitoring, recordkeeping, and securities disclosure.”³⁰⁰

Even more, discovery has influenced how companies conduct internal investigations and has produced information that has directly shaped new regulations.³⁰¹ For example, the discovery that followed scandals such as Enron uncovered facts regarding internal corporate malfeasance that informed ensuing statutes and regulatory reforms.³⁰² Discovery produced in this scandal shaped the SEC’s new compensation rules.³⁰³ Gorga and Halberstam highlight how in one particular case against Disney (where the company was found not liable), discovery resulted in over nine thousand pages of transcripts, business records, and correspondence that forced the Board to dismiss the CEO and completely reform their governance structure.³⁰⁴ Analyzing this case from a purely adversarial angle would paint discovery as a giant waste. But from the regulatory point of view, discovery was wildly successfully. For one, discovery allowed the court to “articulate[] new standards of fiduciary duty in board decision-making” that would inform other companies—an otherwise difficult endeavor.³⁰⁵ These kinds of decisions also allow lawyers “to get their clients to accept better conduct and procedures,”³⁰⁶ and can have a disciplinary effect by “forc[ing] managers to answer questions they do not want to answer,” and “challeng[ing] their power and authority in a public setting.”³⁰⁷

Discovery has the potential to lead to both internal reforms and industry-wide reforms. Internally, companies engage in “introspection through litigation,” by reviewing information produced in lawsuits “to better understand weaknesses in personnel, training, management, and policies.”³⁰⁸ This is particularly useful in large and complex organizations where information is “decentralized and held by a number of different people and entities.”³⁰⁹ One anecdote from a legal-profession study captures discovery’s potential as a vehicle for internal reform: “A litigation partner in a New York firm told us that in the course of defending a product liability action, he learned facts that led him to seek out the company’s chief executive officer to tell him that the corporate product safety and quality control systems ‘were a mess.’”³¹⁰

As Joanna Schwartz has argued, “[f]or organizations interested in learning about their performance, lawsuits are, in essence, unsolicited audits by deeply dissatisfied customers who are highly motivated.”³¹¹ These “audits” are—in the language of regulatory discovery—a private version of an agency audit. For example, in the airline context, investigations and reporting requirement by the Federal Aviation Administration (FAA) lead to regular changes among airlines.³¹² But lawsuits complement this regulation in areas that the FAA otherwise does not cover.³¹³ Discovery has played a similarly complementary regulatory role in the realms of car-manufacturing defects, aircraft accidents, and hospital malpractice.³¹⁴ So, just like an FAA bureaucrat or lawyer can force regulated companies to reform their behavior, both a company’s own lawyers as well as opposing counsel can use discovery to uncover internal information that leads to corporate reform.

But discovery’s effects are not cabined to internal reform of the single company in litigation—they also inform external decisions by management in other companies.³¹⁵ This extraordinary transparency affects companies’ reputations and internal behavior and has arguably bolstered U.S. financial markets and corporate behavior. In a recent study of sovereign debt litigation, Sadie Blanchard found that creditors often complain that the system is flawed because debtor states are almost never forced to pay outstanding debt.³¹⁶ Nonetheless, market actors repeatedly claim to value this kind of litigation. Why? Because, among other things, discovery in sovereign debt cases reveals information about states’ credit-worthiness, “mitigate[s] information asymmetries about debtor behavior,” and shapes reputational governance and market decisions by third parties.³¹⁷ The key to courts’ role in these cases is not their power to bind their parties or ultimately resolve the case; it is instead that they can force states to reveal information that “other reputation-shaping institutions do not provide and that matters to investors and other third parties with sanctioning power.”³¹⁸ In one case against Argentina, U.S. creditors used discovery to reveal corruption schemes around the world, which then influenced the debt market, prosecutors, and newspapers.³¹⁹ In these cases, discovery updates, shapes, and reorganizes the market—it regulates.

Cases do not need to have a high amount in controversy in order for regulatory discovery to serve its purposes. In the seminal case Faragher v. City of Boca Raton, a former city lifeguard sued her employer and the city for sexual harassment under Title VII, a provision that relies on private enforcement.³²⁰ Plaintiff requested only nominal, compensatory, and punitive damages of unnamed amounts but likely in the tens of thousands of dollars.³²¹ Nonetheless, extensive discovery produced a formidable record that the city had failed to publicize its sexual harassment policy among employees, track the conduct of supervisors, or create a reasonable process for handling sexual harassment complaints.³²² Documents and depositions also painstakingly detailed Boca Raton’s internal hierarchy, supervision standards, hiring and personnel practices, facilities, and internal memoranda.³²³ After the Court sided with the plaintiff against the city, and explicitly questioned the city’s sexual harassment policy, details produced in the case became the basis for a revolution in employment and personnel practices. State governments, cities, and employers developed new comprehensive sexual harassment policies, dissemination processes, harassment training, comprehensive background checks, and policies for reviewing supervisory actions.³²⁴ Discovery, and a bench trial, in Faragher led to an array of reforms.

2. Discovery, Transparency, and Public Benefits

Discovery exposes wrongdoing to the public eye, securities market, and regulators, reinforcing reputational consequences for regulated entities. Litigation has public effects beyond a judicial finding of liability. By concentrating public attention on alleged wrongdoing, “litigation can and frequently does inflict nonlegal harms on defendants such as harm to their reputations.”³²⁵

Discovery is at the center of this reputation effect because it is the mechanism by which internal records and decisions can become public during litigation.³²⁶ Courts have traditionally recognized that access to court proceedings and documents is presumptively public.³²⁷ But most discovery takes place outside court,³²⁸ so it is not part of the “public trial.” The public ordinarily can access key litigation documents and depositions only when one of the parties chooses to share them³²⁹ or they are “used in [a court] proceeding.”³³⁰ Moreover, a party seeking to restrict the other parties in litigation from receiving discovery or distributing received discovery may do so through a protective order (discussed further infra in Section IV.C.5).³³¹ Absent a protective order, parties can distribute or use information exchanged in discovery for any legal purpose.³³² And in some cases, attorneys and the press have simply disregarded protective orders and leaked important discovery material.³³³ This means that there are a variety of avenues by which discovery information reaches the public: open court proceedings, documents attached to summary judgment motions or other filings, deliberate sharing by parties, document leaks, and dissemination by Rule 24 intervenors (often the press).

A recent spate of scholars has recognized that discovery can produce “social benefits” by forcing regulated entities to produce information of public consequence that shapes reputations.³³⁴ For instance, Maria Correia and Michael Klausner found in an empirical analysis of securities class actions that “CEOs, CFOs and other officers often lose their jobs in the wake of class actions and thus bear those costs.”³³⁵ Those reputational consequences are influenced by detailed information on executives’ actions produced in discovery. Prior studies of securities-fraud cases have even found that class-action filings have an immediate impact on share prices because of the potential discovery of fraud.³³⁶ As mentioned above, other studies have also found that sovereign debt markets are shaped by litigation involving debtor states.

Courts have similarly emphasized the importance of discovery in producing information relevant for public welfare.³³⁷ Congress has even considered bills to limit the issuance of protective orders where discovery is related to public health.³³⁸ Examples abound in the employment discrimination context, wage claims under the FLSA, civil enforcement of RICO claims, and sexual discrimination.³³⁹ For instance, in Barcume v. City of Flint, evidence of widespread sexual harassment only became public during discovery in a separate claim for sexual discrimination.³⁴⁰ Although outside the scope of the Article, the torts context is again informative here. One recent example is a mass torts lawsuit against Monsanto over its herbicide, Roundup, where plaintiffs’ attorneys publicized “hundreds of company emails obtained through discovery,” that showed a potential link between Roundup and cancer.³⁴¹ Although such information can be strategically deployed by plaintiffs’ attorneys to force settlement, it can often amplify accurate information with effects on social welfare.³⁴²

3. Discovery’s Other Positive Spillovers

As a result of the two effects discussed above, discovery has other positive spillovers that are unrelated to the specific case at hand—such as prompting changes in substantive law. Discovery increases the amount of public information about regulated entities, allowing system designers to update, improve, and even develop new regulations.³⁴³ As Jack Friedenthal once argued, “over the years developments in areas such as . . . employment discrimination[] and consumer protection have been the result at least partly of broad-ranging discovery provisions.”³⁴⁴ The Supreme Court even justified changes to employment discrimination law—forcing plaintiffs to show actual cause—by highlighting the availability of discovery.³⁴⁵ By generating new methods of enforcing statutes, plaintiffs’ attorneys can become engines of legal reform and can engender support for new legislation or judicial decisions.³⁴⁶

4. Discovery’s Negative Spillovers

Of course, discovery can also generate negative spillovers and significant systemic costs. But the system has built a series of safeguards to keep those negative effects in check. So while courts and existing doctrines seem to lack an underlying recognition of discovery’s positive spillovers—and a theory to support them—the system already accounts for the costs or negative effects side of the ledger.

There is an extensive literature highlighting discovery’s potential to force unfair settlements, deter socially beneficial behavior, and eliminate trials.³⁴⁷ Even setting aside cost asymmetries between plaintiffs and defendants, regulatory discovery may also expose companies to public relations fiascos via revelations of perfectly legal behavior. For example, tort law obligates companies to adopt only those safety measures whose costs are justified by their social impact; companies may calculate the potential loss of life or injuries and nonetheless proceed with their corporate activities.³⁴⁸ It is perhaps concerning that companies fearful of future discovery may balk at doing anything that even appears inappropriate to the public eye. Widespread deterrence of socially beneficial behavior could ensue. We may worry, too, that once negative spillovers are tallied and added to the costs of litigation that would mount if we embrace broad discovery, we risk reverting to an unclear view of discovery as regulation.

Moreover, there are important caveats regarding all of the positive spillover benefits discussed above. First, in Disney, Faragher, and similar cases, regulatory discovery is not operating on its own. The high costs of litigation and reputational consequences—rather than the pure production of internal information—can also spur deterrence and internal corporate reforms. Companies grudgingly change arrangements and even fire executives because it helps to reduce the occurrence or cost of future lawsuits. It’s unclear how much of this we should attribute to discovery. To be sure, trial remains an important avenue, and sometimes the only avenue, for the benefits of discovery to become truly transparent. But it is often the process of discovery, not trial, that does the hard work of getting parties to produce information. Second, there are surely many examples where a defendant absorbs the costs of regulatory discovery and, unlike the Disney case, there is no corresponding private and social gain.

But these negative spillovers and caveats are not only well recognized in the literature; courts and Congress have also built a bevy of tools to deal with these problems. Parties can move for a protective order under Rule 26(c)—even if the information is relevant and proportional—that would require “that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.”³⁴⁹ The Advisory Committee notes explicitly that “courts have recognized that interests in privacy may call for a measure of extra protection.”³⁵⁰ Parties can move to seal produced records,³⁵¹ quash overbroad or unduly burdensome subpoenas,³⁵² designate matters as privileged or work product,³⁵³ and otherwise stipulate to keep information confidential.³⁵⁴ If anything, there is some suggestive evidence that courts are granting protective orders too often.³⁵⁵ This demonstrates that the system already accounts for the possibility of negative spillovers and that what is missing is a better set of tools, theory, and vocabulary to recognize and promote positive spillovers, especially regulatory ones. One upshot of the regulatory theory of discovery is that a good measure of public availability may be necessary in order to achieve general deterrence.

D. The Intersection of Private and Public Discovery

Private discovery and public enforcement have come to intersect in a variety of ways, further reinforcing the view that discovery could be conceptualized as a regulatory tool. At the heart of their intersection is piggyback litigation—situations where private or public enforcers ride the coattails of previous enforcement by filing claims after an action has been filed or resolved.³⁵⁶

Government enforcement cases have the potential to generate vast amounts of discovery that private enforcers can employ, lowering costs and expanding the breadth of information available.³⁵⁷ Although there are significant privacy and trade-secret limits, a considerable amount of information produced in litigation against the government is inherently public. That information can become extremely useful to other litigants with overlapping or redundant private claims. For example, in the midst of litigation against tobacco companies in the 1990s, the state of Minnesota “established a publicly accessible document depository containing over 35 million pages discovered in its lawsuit.”³⁵⁸ Private plaintiffs then seized this information to build their own individual and class action cases against tobacco companies.³⁵⁹ This borrowing dramatically reduced litigation costs in follow-on litigation.

The obverse is also true—private enforcement can shed light on wrongdoing and therefore spur public regulatory action. Given that public regulators lack a functional panopticon, they often rely on signals from private plaintiffs and class actions to understand areas that need further public enforcement. A CFPB study identified hundreds of instances where public enforcement followed private actions and drew from their strategies.³⁶⁰ For example, in the analogous mass torts context, private claims against faulty Firestone Tires triggered action by the National Highway Traffic Safety Administration.³⁶¹ Private discovery is crucial in these cases.

Setting aside information produced during litigation, some private litigants can also have access to information produced to agencies during administrative investigations. In the PSLRA context, where discovery is limited during a pending motion to dismiss, courts have nonetheless allowed discovery over information that has already been produced to the SEC.³⁶² This has created an opening where private litigants can interact with agencies to amass necessary information in securities cases. Courts have allowed this under the theory that defendants suffer no undue burden or costs in producing information that they have already provided to government entities.³⁶³ Although producing entities often claim that documents are privileged, courts have refused to accept that theory.³⁶⁴ Indeed, the Financial Industry Regulatory Authority has gone as far as to provide guidance on the discoverability of financial documents produced to agencies.

IV. A New Framework for Regulatory Discovery

This Part turns to the implications of reconceptualizing discovery as a device with multiple underlying justifications, including an important regulatory rationale. The analysis attempts to answer the question of how courts should exercise their supervisory powers over discovery to fully engage with its complexity. Specifically, this Part addresses three domains: categorizing discovery disputes, understanding the relevance of costs, and grappling with regulatory discovery. Moving through these three domains elucidates a set of principles and tradeoffs that can guide judges in addressing discovery models. The analysis is not necessarily practical; it is also abstract and ignores several other important axes of dispute (confidentiality, trade secrets, etc.). The goal, however, is not to generate a comprehensive guide. Rather, it is to map some preliminary lines of analysis and offer some theoretical insights that can apply in real-world disputes.

A. Discovery is a Plural Device

When judges intervene in discovery disputes, they must first understand the needs of the case and the relevant relationship between the substantive law and the specific discovery requests at issue. But, in order to answer this preliminary question, the theories developed above counsel that discovery is a plural device with multiple justifications and both individual and systemic implications. Its background theories sometimes overlap and sometimes point in different directions. But we cannot even begin to ask questions about discovery costs or breadth without first understanding which theory of discovery we are invoking. For discovery seeks to accomplish many ends that are moral, historical, economical, and institutional. The difficulty therefore lies in understanding when, exactly, these theories intersect and when they do not and then using that as a launchpad to reform the discovery system.

Let’s begin with an understanding of why these discovery theories operate at different levels—some systemic and some individual. Fairness and equality are primarily concerned with the specific facts of the case and whether plaintiffs can obtain information that will allow them to build a legal case, gain a voice in front of a judge, and reach an accurate outcome. Participation values are, of course, more systemic. But the goal of any equitable discovery system is to make plaintiffs feel as if they received a fair shake in the legal system. Contrast that with the historical and economic idea of discovery as a way to narrow trial or make it redundant, which operates at both the individual and systemic level. But the core of discovery as a tool to narrow trials and promote settlement is mainly institutional—the role of discovery is to limit the inefficient jury and trial process.

Regulatory discovery, by contrast, is only systemic. Return, for example, to the Disney case where shareholders sued the board over executive pay. At the end of a case that produced large amounts of documents and depositions, Disney was found not liable. In hindsight, from a fairness point of view, it was neither efficient nor equitable to subject Disney to that amount of discovery. Nor did the costs force the parties to settle. Discovery seems wasteful under those two theories. But regulatory discovery is only concerned with the effects of the case on the corporate law, deterrence, cost-benefit analyses of peer companies, and exposure of wrongdoing. By that measure, discovery was wildly successful because it led to significant improvements by the SEC and the practices of in-house lawyers in peer firms.

This systemic versus individual difference also highlights the complex relationship with accuracy among these theories. A fairness justification is concerned mainly with accuracy and participation—broad discovery is appropriate because it maximizes the amount of information available to the factfinder and gives parties a voice and ability to construct a case. By contrast, an equality justification is meant not to give parties a voice but rather to help litigants overcome the asymmetries inherent between plaintiffs and defendants and one-shotters and repeat players. These goals are also related to accuracy, but they can stand on their own; we may want equality for equality’s sake. Where these asymmetries do not exist, as in business-to-business cases where parties have considerable information—e.g., a dispute over the meaning of a contractual term—then fairness may nonetheless promote broad discovery, but equality would not. Similarly, an extremely expensive discovery process in a civil rights or employment discrimination case may not be justified under the efficiency prong of the fairness justification but may nonetheless be supported by a concern for equality. Discovery’s role as a settlement inducer is not overly concerned with accuracy; the goal is instead to limit another process (trials) for efficiency reasons. Finally, regulatory discovery is not closely related to accuracy (at least at the case level) at all. It is focused entirely on broader deterrence.

Interestingly, in both the trial-substitution and regulatory theories, discovery stands in for something else, either common law trials or enforcement. This common thread connects these two theories and highlights that discovery is simply a tool that fulfills broader systemic and institutional goals.

B. Costs Reconsidered: Absolute Versus Relative Costs

With the four foundational discovery theories in view, the question of costs becomes radically different from that usually asked by courts and scholars. Recall that over the past four decades, discovery debates have centered on cost,³⁶⁵ usually defined as the money spent in litigation.³⁶⁶ Thus, although Rule 26(b) allows judges to consider six factors in assessing discovery requests³⁶⁷—of which “the monetary stakes are only one,” as the Advisory Committee takes pains to note³⁶⁸—scholars and judges tend to analyze discovery costs relative to the potential award in a particular case.³⁶⁹ As Judge Marrero of the Southern District of New York recently argued, “[t]he expense [of litigation may be] disproportionate if it significantly exceeds the value of the issue in dispute, as measured by some objective standard.”³⁷⁰ It would be irrational, the argument goes, to create a system where discovery costs are higher than the amount in controversy. So if a plaintiff in an employment case is asking for backpay in the amount of $50,000, proportional discovery would counsel that depositions and the costs of producing information should not equal an amount remotely equivalent to $50,000, let alone exceed it.³⁷¹ As discussed above, some of the empirical literature on discovery focuses precisely on this discovery-costs-to-stakes ratio. But fairness, equality, settlement, and regulation point in different ways when it comes to costs. These four theories therefore have complex relationships with costs that do not boil down to the discovery-costs-to-stakes ratio.

The fairness theory uniquely takes costs into account as an efficiency tradeoff; we should maximize accuracy and participation up until discovery costs outweigh them in a cost-benefits analysis. In a fairness paradigm, costs are determined by the discovery-costs-to-stakes ratio. Fairness is a two-way street that also includes the interests of the party responding to discovery requests. The concept of gamesmanship is almost purely used within the fairness theory. Indeed, most of the discovery-costs literature worries about lawyers who strategically impose costs on opponents, thus making the entire system unwieldy and burdensome.

The equality theory hinges on an existing asymmetry between plaintiffs and defendants and between one-shotters and repeat players, so it is, by its very nature, intended to impose unequal costs on the defendant–repeat player. In other words, costs are the point in an equality sense because the deep-pocketed or knowledge-possessing party must bear the costs of equalizing the litigation equipment of the other party. As with the fairness theory, however, costs should never exceed the stakes of the litigation.

Once we reach the view that discovery is meant to narrow issues for trial, the question of costs ceases to be about the stakes of the case or about absolute dollar numbers. The focus should instead be on a comparison of discovery costs and—hypothetically—trial costs if discovery did not exist. In other words, the question becomes entirely comparative. Discovery is substituting for what the Rules’ drafters assumed would be a more expensive trial that involved cross-examinations and the production of documents in front of a judge or jury. Ex ante, is there any reason to believe that modern discovery should be more costly than pre-1938 trials? Discovery does take much longer because it is an out of court process. It is also handled almost entirely by the parties, opening the doors to abuse, and it can be more expansive because it lacks the pressure of concentrating the entire case in a few days or weeks. On the other hand, the costs can be more predictable, and parties can thoroughly litigate the burdens in motion practice away from the factfinder. Moreover, discovery does not demand the kind of total commitment and preparation that trials require from lawyers.³⁷² In the legal industry, trials are known to be extraordinarily expensive. Another trial problem is the presentation of surprising theretofore-unseen evidence, as well as the necessity of quickly deciding questions about relevance or admissibility. Moreover, discovery avoids the burden of impaneling a jury—a cost saving that goes beyond mere dollars and also must account for the imposition on the jurors. The 1938 drafters weighed these competing values and decided that discovery was likely systemically superior to jury trials.

Regulatory discovery, for its part, also completely reconceptualizes the problem of discovery costs as a comparative question. Discovery within a private-enforcement paradigm is necessarily a government tool; its only counterpart is the administrative subpoena. The relationship between a particular case’s amount in controversy and discovery is thus somewhat beside the point. Contra Judge Hardiman’s suggestion that discovery is inappropriate for cases below $500,000, regulatory discovery can produce significant positive spillovers in small cases. As discussed above, discovery in the sexual harassment case Faragher v. City of Boca Raton—with an amount in controversy below $100,000—became the basis for widespread reforms to employment and personnel practices. The EEOC exercises its subpoena and enforcement powers in dozens of small cases every year.³⁷³ And, as discussed above, the NLRB once imposed subpoena costs of potentially $1 million dollars on McDonalds even though the maximum penalty in the case was $50,000.³⁷⁴

That is why the question of whether discovery costs are too high in a private-enforcement case depends mostly on whether the case generates more costs than a comparable agency investigation. This isn’t to say that agency costs are optimal, but only that an agency investigation is the realistic alternative to private enforcement and is therefore a good point of reference. Costs, in this view, have very little to do with the individual interests of plaintiffs or defendants. They are instead better considered within the context of the systemic benefit of enforcing a statute in which Congress chose private plaintiffs in addition to, or instead of, agencies.³⁷⁵

Framing the question in a comparative way shows that private-discovery costs can often be similar to agency-subpoena costs. One area where critics have pilloried broad discovery is securities litigation. As discussed above, Congress oriented the PSLRA around the problem of discovery costs. In isolation, discovery requests in securities cases do seem to be extremely broad, expensive, and intrusive. But compared to SEC subpoenas—which can be litigation thermonuclear devices—private discovery appears positively tame. There is unfortunately no systematic SEC data that would allow for an accurate comparison. According to public information, however, the SEC routinely issues hundreds of either informal “requests” for information or subpoenas during investigations. Anecdotal examples show at least the range of SEC investigations. For instance, large banks have recently reported that broad SEC subpoenas forced them to produce anywhere from 750,000 documents in a case involving Wells Fargo to as much as eight million documents in a case involving Goldman Sachs.³⁷⁶ Assembling these colossal productions take thousands of hours and hundreds of compliance workers and outside counsel review. Indeed, as Tesla and Kraft Heinz found recently, a single SEC subpoena can send a company’s stock tumbling.³⁷⁷ SEC investigations can also be notoriously protracted, with many continuing for more than four years.³⁷⁸ And these investigations are not outliers among agencies.³⁷⁹ With this broader context in view, the threat of private discovery in securities or antitrust cases seems much less intrusive. Judges should keep these comparative costs in mind.

C. The Implications of Regulatory Discovery

Conceptualizing discovery as a regulatory tool should restructure the way courts consider discovery questions. As mentioned above, regulatory discovery is systemic, depends on deterrence not accuracy, and most closely resembles administrative subpoenas. These differences make regulatory discovery powerful and rebut arguments presented by critics of the current discovery system. Specifically, we should focus on three consequences of regulatory discovery:

1. Private Enforcement as a Separate Category

Courts should analyze private-enforcement cases, and the breadth of discovery therein, differently than other cases. Private enforcement is a fundamentally distinct process in the U.S. legal system. It represents the delegation of government enforcement power to private plaintiffs. As discussed at length above, its closest analogue, and relevant point of departure, must be the administrative subpoena. In that context, the relevant agency’s enabling act must first authorize the relevant subpoena, and internal agency rules must then specify the scope and procedures that agency officials must follow. Administrative discovery is intimately tied with statutory authorization. This does not mean that discovery should be broader than it is—rather, it means only that our current broad discovery paradigm is justifiable in these cases.

Just as with administrative subpoenas, regulatory discovery must begin with an understanding of the purposes of the statute that authorize private enforcement. Courts cannot just blindly rely on Rule 26’s invocation that discovery extends only to matters that are “relevant to any party’s claim or defense and proportional to the needs of the case.”³⁸⁰ Instead, they must engage in a simultaneous analysis of the underlying statute that grants plaintiffs a private right of action and must ask whether there is a nexus between the discovery at issue, Rule 26, and the broader purposes of the statute. Proportionality should not be dependent on the “needs of the case” but instead on the needs of the relevant private-enforcement regime.

In regulatory cases, discovery should be informed by a spectrum of statutes that depend mostly on private enforcement, hybrid regimes that depend on both public and private action, and statutes that only agencies can enforce. ³⁸¹ In the first group, statutory regimes depend mostly on private enforcement even though there are bureaucracies, too. Enforcement of FLSA, for example, falls mostly to employees and employment class actions, not to the NLRB. So too Civil Rights Act Title VII claims, which are mostly private, even though the DOJ Civil Rights Division has some enforcement power. In these cases, broad discovery is fundamental. Without it, entire statutory regimes would go unenforced. As Judge Schiendlin once noted, “if a case has the potential for broad public impact, then public policy weighs heavily in favor of permitting extensive discovery.”³⁸² Courts should therefore read into the statutes a broad right to discovery.

In the second group, hybrid regimes abound, including some of our most important statutes. For example, agencies share enforcement authority with private parties in contexts like antitrust (Sherman Act/FTC), environmental law (Clean Water Act/EPA), and securities (Securities and Exchange Act/SEC). In those cases, broad discovery is important though not nearly as necessary as in the first group.

Within this second group, courts should err on the side of broad discovery but limit it where it seems clear that an agency could replace private enforcement. At first blush, this might be a difficult administrative task for courts. Questions of agency budgetary priorities and resources devoted to enforcement seem outside of judicial purview. Moreover, there are political reasons why agencies, and Congress, leave plenty of room for private enforcement.³⁸³ But one accessible way for courts to answer this question is to pay attention to agency or other public enforcers’ announcements, public reports, and amicus briefs. The SEC, for instance, often writes or joins amicus briefs in important cases, outlining whether a potential procedural change might weaken private and public enforcement and the broader effects of that change.³⁸⁴ So too, the FTC³⁸⁵ and EEOC³⁸⁶ often file amicus briefs, including in procedure cases.

Indeed, in Twombly, sixteen states wrote an amicus brief arguing that heightened pleading standards would not weaken enforcement because state attorneys general had the tools—including civil investigative demands—to replace private enforcement.³⁸⁷ Additionally, judges could take notice of congressional action in certain areas. Below, I offer an example of this where Congress empowered the CFPB to assume enforcement tasks after 2010 that were originally performed by private parties.

Finally, in the third group, where bureaucracies engage in the bulk of enforcement, as in OSHA cases or EEOC actions, courts may comfortably limit the scope of discovery if an agency has occupied the field or heavily regulated the area. Again, the information relevant for this determination exists in agency announcements, public reports, and amicus briefs.

This spectrum, along with the regulatory-discovery theory, allows us to reconsider the question of discovery costs. As explored above, high discovery costs are rare and may exist in less than 5 percent of all cases.³⁸⁸ Within this smaller subset of cases, the Federal Judicial Center has noted that “that patent, trademark, securities, and antitrust cases stood out for their high discovery expenses.”³⁸⁹ Two of these regimes—securities and antitrust—explicitly depend on delegated private enforcement. In the antitrust context, private enforcement accounts for 90 percent of all antitrust filings.³⁹⁰ In the securities realm, the SEC routinely declares that private enforcement is “essential” and empirical studies find that “private enforcement seems to dwarf public enforcement.”³⁹¹ These contexts are somewhere between the hybrid public-private or private-enforcement groups. Therefore, courts should err on the side on broader discovery because it serves regulatory goals.

But there are areas where courts and system designers should restrict discovery or at least increasingly supervise it. Prior to the Dodd-Frank Act, federal consumer–financial protection law was weakly enforced by either the FTC (under the FTCA) or private claims under the Fair Debt Collections Practices Act and similar statutes.³⁹² The FTCA provided no private right of action. Given the weakness of the FTC, broad discovery was justified for FDCPA and state law claims. Dodd-Frank, however, completely changed this. By creating the CFPB, and providing that agency with the power to issue broad civil investigative demands, the statute reordered the entire area award from the hybrid bucket toward public enforcement. The CFPB was given broad investigatory powers to obtain documents, tangible items, and depositions—prior to any formal investigation—and independent funding to support its mandate.³⁹³ This powerful agency, in a sense, occupied the field and displaced the relevance of private claims (both state and federal). Given a regulatory-discovery framework, it would be sensible for courts to limit discovery in this context, especially because the FTCA and Dodd-Frank still do not authorize private rights of action.³⁹⁴

2. Judicial Administrability

The proposals in this Section can lean on existing analytical frameworks that are judicially administrable. To summarize:

In private-enforcement cases, courts should err on the side of broad discovery by interpreting “proportionality” in relation not only to the needs of the specific case but also to the needs of the relevant statutory regime and industry.
The breadth of discovery should be related to whether the statutory regime depends (1) largely, (2) somewhat, or (3) scarcely, on private enforcement. The more a regime depends on private enforcement, the broader discovery should be, and vice versa.
To the extent that Congress or agencies indicate that public enforcement can replace private enforcement, courts should err on the side of narrow discovery.
In calculating the question of discovery costs, parties and courts should compare the costs of private discovery to the costs of compliance with an analogous administrative subpoena.

At first blush, this framework is complex and perhaps unwieldy—it asks courts to determine whether discovery has regulatory consequences, how it interacts with the statutory claim, and the potential benefit of having the relevant information in the public eye. This may seem like an inappropriate analysis at the discovery stage. Moreover, if courts grant public, hybrid, and private actions different levels of discovery, this might yield a nightmare of mixed and matched procedures. Complex cases potentially feature two or even three of the claim types. This casts doubt on the feasibility of the proposal.

But the key conceptual move that underlies the entire proposal is that courts should consider the regulatory public benefits of discovery. Fortunately, courts already conduct analogous analyses in several discovery contexts, weakening potential concerns with judicial administrability. To begin, when courts consider protective orders under Rule 26(c), they balance several factors, often including both “whether confidentiality is being sought over information important to public health and safety” and “whether the case involves issues important to the public.”³⁹⁵ Because of this analysis, courts have developed an arsenal of methods to analyze how discovery interacts with the public interest. For example, in the face of motions for protective orders, courts have recently allowed the public release of material covering Bill Cosby’s history of sexual assault³⁹⁶ and police video documenting the use of excessive force.³⁹⁷ In both cases, courts had to grapple with the public interest in the information produced, focusing on the statutory provisions at issue, media interest, and public-facing nature of the cases.

Similarly, in considering discovery fee-shifting motions—requests by respondents to shift the costs of production on to the requesting party—courts ask whether the litigation is “of public importance.”³⁹⁸ This analysis explicitly blurs the line between public and private enforcement. For example, courts in this context have found that cases dealing with the Exxon Valdez oil spill and the Lockerbie bombing did not warrant shifting of discovery costs because of the “nature of the cases and the strong public interest in the outcome.”³⁹⁹

In yet a third analogous context, courts conduct a similar analysis of the public interest when they consider motions or stipulations to hold documents produced to the court under seal.⁴⁰⁰ Finally, and perhaps most relevantly, as discussed above, courts implicitly consider the impact of administrative subpoenas on regulated industries.⁴⁰¹

The regulatory-discovery framework is only an extension of these four existing approaches. References to public welfare already incorporate some of the regulatory goals of private discovery. If anything, discovery as regulation would narrow the question to considerations of deterrence, the effects on the regulated industry, and the spillover effects on the law and relevant government agencies. Courts can quite comfortably engage in this analysis of social or regulatory benefits during discovery disputes. It is possible for courts to consider and weigh the spillover regulatory effects of discovery and litigation while at the same time acknowledging that “[t]he collateral effects of litigation should not be allowed to supplant th[e] primary purpose.”⁴⁰² They already do. Again, it bears emphasis that this regulatory framework only applies in a minority of cases that implicate private-enforcement regimes. There is little, if any, reason to believe that such an application would be unrealistic or unduly burdensome.

3. Regulation and Transsubstantivity

The existence of a category of cases that might benefit from broader regulatory discovery is not necessarily incompatible with our idea of transsubstantivity.⁴⁰³ The traditional understanding of the transsubstantive principle is that the rules of procedure should apply equally regardless of the substantive claim.⁴⁰⁴ The transsubstantive ideal draws directly from the Rules Enabling Act of 1934 and its prohibition of rules that “enlarge” or “abridge” substantive rights. ⁴⁰⁵ One of the principle’s core purposes is simplicity.⁴⁰⁶ Judges should be able to adjudicate substantive claims without dealing with different procedures in every case. David Marcus has argued that transsubstantivity could also be defended as a principle of institutional allocation of power between courts and Congress.⁴⁰⁷ The judiciary could “legitimately generate trans-substantive rules, that is, rules not designed to achieve any particular goals of substantive policy.”⁴⁰⁸ Substance-specific rules, by contrast, necessitate a political entity with democratic legitimacy, like Congress. Transsubstantivity, therefore, operates at its zenith when it polices these institutional boundaries.

That courts should recognize discovery’s regulatory purpose is consonant with the transsubstantive ideals of simplicity and institutional allocation. As to simplicity, discovery is the bread and butter of litigation. Magistrate judges, and many district court judges, are consummate discovery experts.⁴⁰⁹ Applying the principles discussed above on judicial administrability, judges should be able to easily recognize regulatory discovery. Moreover, as to institutional allocation, regulatory discovery draws legitimacy precisely from congressional authorization of private enforcement. It therefore does not imply that the judiciary should overstep its institutional role into the political realm. Nor does it require substance-specific rules because it does not demand that federal judges treat specific substantive categories of cases differently (securities or otherwise). It only asks judges to recognize the distinctiveness of a congressionally authorized transsubstantive category of cases—those reliant on private enforcement.

Even in cases where judges should draw on different underlying theories of discovery depending on the substantive claim, the transsubstantive ideal survives because it is compatible with judicial discretion. A tailored approach to discovery only allows judges to exercise their considerable and well-recognized power to adapt procedures to the needs of each specific case.⁴¹⁰ The discovery provisions of the FRCP are mostly phrased, and operate, like standards, not definitive rules. Indeed, the “Federal Rule drafters made a conscious choice to grant broad discretion, based on the assumption that trial judges had the experience and expertise to appropriately tailor procedures to the circumstances of individual cases.”⁴¹¹ That is why scholars have recognized for decades that district and magistrate judges adapt the discovery rules to specific cases, altering the number of interrogatories, extent and depth of document discovery, depositions, and even attorneys’ fees.⁴¹² Recognition that regulatory discovery requires tailored treatment would draw on an appropriate exercise of this existing judicial discretion.⁴¹³ So, allowing judges to expand the number of interrogatories in an antitrust class action, rather than a typical breach of contract case, is well within existing power and does not conflict with transsubstantivity.

To the extent that regulatory discovery may sometimes conflict with transsubstantivity, scholars have variously argued that such conflicts are as inevitable as they are appropriate. Robert Bone, for instance, has forcefully argued that “different cases with different substantive interests might call for different procedural rules if the substantive interests at stake have different value or if the cost of the procedure varies with different case types.”⁴¹⁴ Bone specifically noted in the context of transsubstantivity and the fairness theory of discovery: “[C]onsider the scope of pre-trial discovery. . . . [O]btaining more information is not valuable in itself; it is valuable because information revelation improves the adversarial process and increases the likelihood of an accurate result.”⁴¹⁵ In the context of regulatory discovery, more information is valuable in the realm of private enforcement and would redound to the benefit of many regulatory areas—including civil rights and employment law—where transsubstantivity may otherwise generate a negative impact.⁴¹⁶ All of this affirms, yet again, the legitimacy of regulatory discovery.

4. The Propriety of Producer Pays

In a regulatory-discovery paradigm, a producer-pays rule is quite sensible. As an initial matter, businesses that enter a heavily regulated industry are on notice about potential costs stemming from routine government enforcement. They therefore expect and price in the cost of administrative subpoenas as a regular cost of business and can pass the cost on to consumers. Moreover, in a regulated market, someone must bear the costs of regulation. If administrative subpoenas operated under a requestor-pays rule, then the government would be deterred from fully pursuing administrative enforcement or would pass on the costs to all taxpayers. It is much fairer for the regulated entities themselves, and their consumers, to internalize the costs of their operations, rather than externalize them on to taxpayers. After all, regulated entities reap benefits from the predictability and rule-of-law values that agencies bring to regulated industries. Agencies ensure that competitors are not violating the law through antitrust conspiracies or unfair business competition. Paying for discovery costs is part and parcel of paying for the benefits of this regulation. And these payments are also substitutes for engaging in private enforcement against competitors. Finally, entities can always challenge overbroad or unduly burdensome administrative subpoenas.

5. Transparency and Protective Orders

All of these benefits come with a caveat: regulated entities have grown adept at preparing confidentiality provisions or obtaining protective orders that blunt discovery’s public impact. Under Rule 26(c) “any person from whom discovery is sought may move for a protective order.”⁴¹⁷ A court has discretion, on a showing of good cause, to issue a protective order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.”⁴¹⁸ Protective orders are usually individualized and discrete, with each document evaluated separately.⁴¹⁹ In complex litigation, however, they are “a different beast.”⁴²⁰ Under “umbrella” protective orders, parties agree to a blanket order at the outset of discovery.⁴²¹ Typically, an umbrella order “permits a party to designate parts of its produced discovery as confidential upon a good faith belief that there is good cause for the designated discovery to be included in the protective order.”⁴²² Many parties also negotiate procedures for the deletion of produced documents at the close of the matter.⁴²³

Protective orders obviously present a threat to the regulatory benefits of private discovery. Scholars have suggested that these orders have recently become much more common or expansive.⁴²⁴ But even if this is true, the extent of its effect is unclear. On the one hand, limiting third-party access to discovery would blunt the positive spillovers of regulatory discovery, including the possibility of general deterrence. Disney’s competitors, the sovereign-debt market, and cities observing the Faragher case, would not have been able to restructure their behavior in response to those cases. On the other hand, protective orders retain the internal benefits of regulatory discovery, including specific deterrence, and perhaps expand them. The more a target company is assured that its internal information will not be public, the more willing it may be to engage in a thorough internal investigation. So protective orders may present a clear danger to the external benefits of discovery—general deterrence—but may enhance the “introspective” regulatory benefits of discovery—specific deterrence.

Given protective orders’ potential impact on industries and primary behavior, courts addressing motions for protective orders should consider not only the public interest in having access to certain information—which is currently part of the test—but, more importantly, all of the regulatory benefits discussed above: deterrence, corporate reform, and routinization of corporate information gathering. Lower courts dealing with protective orders focus mostly on Rule 26(c)’s “good cause” requirement. This is a flexible standard that allows courts to take into account up to eight factors (including the effects of potential disclosure, and the private and public interests at stake). Courts could comfortably fit into this analysis discovery’s positive spillover effects. Discovery as regulation demands a more exacting test for blanket protective orders because they present a significant impediment to regulatory goals.

D. The German (Dis)advantage in Civil Procedure?

As a final more speculative note, perhaps private enforcement partly explains why broad and adversarial regulatory discovery may be necessary in the United States but not in any other country. John Langbein claims in a seminal article that German procedure has an “advantage” over American procedure because of its judicially imposed discovery constraints.⁴²⁵ Langbein argues that German judges’ close supervision of fact gathering maintained a relatively narrow and focused legal process—a boon for both parties and the system. To be sure, Langbein qualified “that the main concern of this article is not the sprawling Big Case, but the traditional bipolar lawsuit in contract, tort, or entitlement.”⁴²⁶ That qualification likely removes the possibility that Langbein meant to cover regulatory discovery. But the Article has influenced similar, and sometimes broader, critiques of American discovery, with Steve Subrin going as far as asking if Americans were “nuts” for embracing broad discovery.⁴²⁷

A regulatory view of discovery, however, highlights why it is complicated, and perhaps impossible, to compare the American and German discovery processes. European countries, Japan, and Australia, along with most other countries, rely overwhelmingly on ex ante regulation or administrative enforcement to apply the law. The costs of their regulatory systems are explicit in the costs of market entry—administrative review, drawn out licensing requirements, etc.—and in the costs of a much larger bureaucracy.⁴²⁸ That allows the ex post litigation system to be either non-existent or relatively lean. But in an American-style system, where ex ante regulation is lean and private enforcement is paramount, discovery may bear the costs of regulation. This means that the relevant comparison should not be between the costs of American and German discovery but rather whether the entire American package—including ex ante and ex post regulation and the discovery system—imposes more costs than the entire German regulatory package, both ex ante and ex post. Such a comparison makes the question much more complicated and perhaps unanswerable.

I do not mean to settle this question here but merely to speculate that conceptualizing discovery as regulation may push us to rethink this comparison. To be sure, proponents of the German approach might argue that an ex ante regulatory system is superior to an ex post system with broad discovery. This question has been the subject of decades-long scholarly debates and it remains unclear whether the first-best system is a civil law approach with narrow discovery or the American approach. But taking private enforcement as a given—a choice that Congress made long ago—broad discovery seems necessary. Determining which system is more efficient would take a comprehensive study, but a priori there may not be any civil law advantage in civil procedure if the ex ante system is much more burdensome. For example, the recent European data law (GDPR) aimed at large tech firms imposed high ex ante compliance costs of billions of dollars.⁴²⁹ In the United States there is no similar regulation, but plaintiffs have increasingly sued Google and other tech companies for violating privacy-related statutes.⁴³⁰ Moreover, U.S. discovery likely contributes to a lower trial rate and higher settlement rate, of between around 50 percent and 80 percent of cases, than in European countries like France, where only 8–13 percent of cases are resolved in settlement.⁴³¹ While “[t]here are several possible explanations for this variance . . . the existence of robust (and expensive) discovery in the United States must rank high” among the possible explanations for fewer trials here.⁴³²

Conclusion

This Article attempted to move discovery debates forward by reframing the foundations of private-enforcement discovery through a regulatory theory. A focus on regulatory discovery reconceptualizes the underlying purposes of discovery and complements its traditional foundations in fairness, equality, and settlement. Private discovery resembles, and in many ways, is nothing more than administrative subpoena power delegated to private-enforcement agents. This power is fundamental in a country that depends on private litigants to enforce some of our most important statutes. Critics of the system must wrestle with this analogy. If this theory is accurate, courts must also embrace a comparative approach to discovery costs.

*Assistant Professor, Stanford Law School. My thanks to Robert Bone, Steve Burbank, Seth Endo, David Freeman Engstrom, Nora Freeman Engstrom, Amalia Kessler, Lisa Larrimore Ouellette, Saul Levmore, Richard Marcus, Anne Joseph O’Connell, Joanna Schwartz, Aaron Simowitz, Norm Spaulding, Rebecca Wexler, and the wonderful editors of the Michigan Law Review. I also thank participants at the Annual Civil Procedure Workshop at the University of Texas at Austin School of Law and the Bay Area Juniors Workshop at UC Hastings College of Law. Finally, I am most grateful to Alex Costin, Julia Fine, and Elisa Wulfsberg for invaluable research assistance.