Tag Archives: Remedies

Staying Power of Equity

Jun 16, 2016 Caprice RobertsRemediesAdd a Comment

Let equity lure you with its sirens. Equity, first developed by the Court of Chancery, is vital to the law of remedies. It affects a range of rights, remedies, and defenses from public to private disputes. It cannot be forgotten, ignored, or fully merged. The trend, however, is to streamline equity. For example, Douglas Laycock has argued we should move beyond the law-equity divide, and Doug Rendleman has advocated fusion and functionalism for reasons that I separately have acknowledged: equity generates friction and confusion, especially regarding restitution and unjust enrichment. Sam Bray’s The System of Equitable Remedies refutes this movement. Bray instead argues that equity remains distinct from law and comprises its own system that is pervasive, rational, and useful.

I agree: equity is alive and well in America. It is not simply federal and state constitutional rights to jury trials keeping the divide relevant. Federal and state courts keep equity in play in statutory and common-law cases—from ERISA to contracts, environmental law to trade secrets, and beyond. Equity soldiers on, despite law schools’ dropping the Equity course and despite the merger of law and equity in almost all courts and the Rules of Civil Procedure. Complete merger remains elusive. Where law fails or falls short, the pull of equity is greatest. Equitable remedies are key where money substitutes provide inadequate protection. Bray bluntly states the need: “There must be some way for courts to compel action or non-action.” Overall, Bray’s work requires readers to stop and think before dismantling the distinct system of equity.

Equity raises fear in the minds of many. At worst, equity connotes unbridled, whimsical, illogical discretion that lingers too long with vast consequences to parties and nonparties. At its best, equity fosters fairness; the risk, however, is palm-tree justice. Equity also requires judicial oversight, which may be costly and challenging. Further, complete merger might streamline complex, arcane, and unnecessary barriers to equitable devices. But equitable discretion is vital to rights and remedies. Principled discretion is indispensable to the continued survival and success of equity. As to the fear of unbridled discretion, Rendleman articulates a path for judicial restraint in applying equity: “[a] judge’s discretionary decisionmaking ought to yield to her attention to rules, precedents, and standards keeping her pragmatic eye on consequences.”

Despite equity’s pitfalls, Bray persuasively shows that equity is an interlocking system and, more importantly, a rational, useful one. He maintains that the “very act” of classifying remedies as legal or equitable “helps maintain the system of equitable remedies.” Weaknesses, however, range from functional to substantive: equity maintains a divide that increasingly eludes modern understanding and potentially blocks relevant equitable doctrines and remedies from actions at law and vice versa. Henry Smith argues for equity to play a limited role guarding the formal rule of law against opportunism. Bray maintains that law-equity divide has “presumptive rationality” though rebuttable, as the utility of equitable concepts crossing the divide “is always open to argument.” He rejects Laycock’s characterization of the divide as “a dysfunctional proxy for a series of functional choices”; instead he sees a “good proxy.” Bray emphasizes equity’s essential function: “how judicial institutions help put a wronged plaintiff back in his rightful position.”

It is this fundamental thrust that (i) answers why full merger of equitable remedies is unsolvable given constitutional jury trial rights; (ii) provides a presumptive justification for a controversial line of Supreme Court cases that reinforce the distinction solely by appeal to tradition—what Bray provocatively explores elsewhere; and (iii) offers a fresh angle on the inadequacy-of-law prerequisite for equitable remedies, which despite Laycock’s declaration of its death, Bray sees as “well established in judicial practice,” reinforcing a “habit of classification” that aids the preservation of the system of equitable remedies.

Equity lives on in multiple dimensions: in the Supreme Court’s original jurisdiction and certiorari docket, from fiduciary duties to intellectual property, and throughout state and lower federal courts. Bray’s work focuses on courts’ continued use and categorization of equitable remedies, including injunctions, specific performance, quiet title, constructive trusts, accounting for profits, and more. As Bray reminds readers, the interconnectedness of equitable doctrines causes equitable remedies to work more effectively. The system provides limits through “equitable managerial devices,” such as contempt tools and devices to handle unexpected complexities, as well as “equitable constraints” that “guide the responsible exercise of judicial power.” Still, as Bray foresees, skeptics wonder: if these equitable tools and restraints work so well, why not extend them to legal remedies? Isn’t this especially apt now, because in a merged system, the judge will have knowledge of equitable doctrines that might aid a jury’s application of legal remedies? Bray’s defense of the imprecise line as “good proxy” is fair enough. But requiring a better rule is less compelling because the divide may fall through natural degradation, continued fusion, and increasing confusion. True, though the common law is not designed to effectuate dramatic change, we would be wise to bolster student, lawyer, and judicial understanding of equity’s power and constraints.

Bray also forecasts a confusion critique for using the label “equity” but opts again to stick with what we’ve got. In the same vein, the Restatement (Third) of Restitution and Unjust Enrichment maintains use of the misunderstood word “restitution.” It remains unclear if continued efforts to educate and clarify such concepts as equity and restitution can carry the water we hope. Still, in my opinion, both equity and restitution (its equitable and legal components) have staying power.

Bray helpfully details how equitable remedies remain distinct from legal remedies such as damages, mandamus, habeas, replevin, and some restitutionary relief. According to Bray, nonmonetary legal remedies that mimic equitable orders are not equitable because they are narrow, not open-ended or indeterminate. As Bray shows, courts cling to the distinction and numerous consequences flow. Equitable remedies remain the most powerful weapons for halting violative behavior, ordering corrective behavior, and deterring opportunism. To do so, judges need flexibility to “achieve the plaintiff’s rightful position,” as Bray aptly notes. With flexibility comes equity’s potential for imperfect correlation between right and remedy. Though it will not satisfy tight doctrinal tracking, Bray sees bounding in the “habit and range of motion that is conducive to managing the parties.” Either way, Bray helpfully defends why equitable range exists and remains necessary. Scholars should keep a close eye on principled reasoning to justify flexible expansions so the equitable remedy is sufficiently tethered to the right even if not precisely correlative.

Equity warrants deeper study. All combined, “the remedies and the remedy-related rules” constitute a system of equity in American law. Whether Bray convinces readers to reinforce the law-equity divide, he reminds us that such a distinct system of equity remains and convincingly demonstrates that if we forget the doctrines, lessons, and tools of equity, something meaningful will be lost.

Editor’s note: for another review of The System of Equitable Remedies please see Marco Jimenez, Justifying the Law-Equity Divide, also published today.

Why Insurance Contracts Might be the Trick to Police Reform

Jan 21, 2016 Jack PreisRemediesAdd a Comment

How do lawsuits deter misconduct? That is an issue that Professor Joanna Schwartz has written about before, and her latest article on the topic, How Governments Pay: Lawsuits, Budgets and Police Reform, could not be more timely. Over the past year, our county has witnessed dramatic instances of police abuse and the public is understandably demanding reform. Schwartz’s terrific article explains why civil rights actions may fail to instigate reform, and suggests how insurance contracts, of all things, can play a role in fixing this problem.

To understand how lawsuits deter, consider a reckless driver. You know, the type that takes corners too fast, sends texts while on the interstate, and whips past school buses with flashing lights. What will it take for the driver to finally reform herself? Well, first of all, she’ll probably get a bunch of tickets. If she gets tired of paying the tickets and fears losing her license, she’ll probably start driving more carefully. Aside from the tickets, however, the driver may end up getting sued when her reckless behavior finally causes an accident. Even though her insurance company will likely pick up the tab for any judgment, the company is likely to jack up her premiums after it pays the damages. In the end, the driver’s recklessness is going to cost her a lot of money. And this will probably convince her to become a safer driver.

Compare the reckless driver to a reckless cop—the type that stretches the facts to get a warrant, is quick deploy her Taser, and sees probable cause underneath every hoodie. What will it take for the cop to reform herself? Do reckless cops get “tickets” like reckless drivers do? The answer is almost uniformly no. Misbehaving cops are rarely subject to criminal prosecution. What about a lawsuit, then? Just like drivers, cops don’t pay their own judgments; instead, it is the employer, acting as an insurer, that pays the judgment. If the civil rights actions work like tort actions, the employer/insurer will eventually decide to “drop” the insured by firing the reckless cop. And the cop (as well as her peers who witness this process) will decide to act more appropriately.

But that assumes an enormous question: do civil rights actions work like tort actions? To figure that out, we would need to know whether the party who has the power to fire the misbehaving officer is also the party who pays the judgment. If the police chief sees his budget depleted by a reckless cop, he is likely to take corrective action. But if the judgment is paid by a third party, and the chief never suffers any ill effects, it is far less likely that he will address the problem.

So who pays judgments and settlements in civil rights actions against police officers? This is what Professor Schwartz serves up in her new article. Using FOIA requests and an immense amount of less formal gumshoeing, Schwartz catalogued the ways in which 100 of our nation’s law enforcement agencies satisfy lawsuits against their officers.

Schwartz’s study is impressive in scope. She obtained data from 62 of the 70 largest law enforcement agencies in the country and from 38 small and mid-sized agencies. The agencies included large jurisdictions like Baltimore, Los Angeles and New York City as well as tiny hamlets like Waterloo, Nebraska (with only a single sworn officer). Some agencies operated at the state level (like the Maryland State Police), some operated at the county level (like the Polk County Sherriff’s Office in Florida) and some operated at the municipal level (like the Newark Police Department). All told, Schwartz’s study accounts for 26% of the nations 765,000 law enforcement officers.

It is difficult to do justice in this small space to Schwartz’s many findings, but here are three important takeaways:

• Half of the agencies in her study were required to “financially contribute in some manner to the satisfaction of lawsuits brought against them.” (P. 3) Of course, this means that half were not required and it is fair to assume that those agencies faced little financial pressure to minimize lawsuits. (Schwartz is careful to note that, even if agencies do not face financial pressure, they may still face political pressure to reform themselves (P. 19).)
• To the extent an agency is forced to bear some financial responsibility for a lawsuit, the responsibility will normally come in three forms: (1) the agency pays the judgments or settlements directly, (2) the agency makes regular contributions to a jurisdiction-wide fund, which in turns pays the judgments or settlements, or (3) the agency pays premiums to a private insurer, which then pays the judgments or settlements.
• Most interestingly, even if an agency is required to bear financial responsibility for a lawsuit, the agency may not actually suffer any actual financial loss. Agencies often receive funding from their jurisdiction for litigation expenses. Thus, even if money is going out the agency’s front door to pay for legal costs, that same money is often coming in the back door as part of the agency’s annual budgetary allotment.

Schwartz’s most interesting insight, in my mind, is that “outside insurers may be better situated than self-insured jurisdictions to place financial pressures on law enforcement agencies.” (P. 37) Private insurers can, and presumably will, “condition low deductibles and continued coverage on personnel and policy changes.” But the leaders of a jurisdiction (such as a mayor or city council) will often find this option unappealing for two reasons.

First, imposing financial costs on a police department will almost certainly carry political costs for elected officials. Not every mayor will wish to face off with her police chief, even if the city budget can be trimmed a bit. Second, in large jurisdictions, any threat to withdraw funding for lawsuits would be empty. When a small agency loses insurance coverage and has to be dissolved (a phenomenon that Schwartz documents (P. 28-29)) the jurisdiction can often obtain law enforcement services from a neighboring jurisdiction. Large agencies, however, cannot cover gaps in enforcement in this way. The New York City Police Department, as Schwartz nicely puts it, is likely “too big to fail.” (P. 37)

If Schwartz is correct on this point—and it seems to me she is—then an interesting irony arises: outsourcing is often thought to decrease government accountability, but outsourcing here would seem to increase government accountability. This may suggest a larger truth here about outsourcing: where politicians are prone to ignore or minimize constitutional mandates, a private company, being guided by dollars and cents rather than politics, can force government to adhere to its constitutional obligations. The trick is to make sure company profits and constitutional adherence are positively correlated.

In sum, Professor Schwartz’s article is a large step forward in a field that has been operating on fuzzy assumptions for far too long. By bringing an immense amount of data to the table, the article will enable scholars and policymakers to move closer to the elusive goal of institutional reform.