1045-6333


TOWARD A FUNCTIONAL


 UNDERSTANDING OF STANDING


  Vikramaditya S. Khanna


  Discussion Paper No. 355


03/2002


   Harvard Law School


  Cambridge, MA 02138

The Center for Law, Economics, and Business is supported by

 a grant from the John M. Olin Foundation.


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Class: K41


 TOWARD A FUNCTIONAL UNDERSTANDING OF STANDING


    By: Vikramaditya S. Khanna

Abstract

 In this paper I provide a functional analysis of standing. The paper begins by focusing on a function for standing rules – to reduce or control undesirable litigation. However, there are many ways in which we could control or reduce undesirable litigation. We could permit anyone to initiate sue but limit remedies to only certain litigants, or we could limit remedies and restrict standing to only certain litigants, or we could deny remedies to and impose penalties on certain litigants while granting anyone permission to initiate a suit. There are a host of other possible responses as well. An important question is then: why choose to restrict standing as opposed to relying on these other ways of addressing undesirable litigation? This paper discusses this question.

 After briefly defining undesirable litigation, I discuss the various methods of controlling undesirable litigation and note that they are all essentially supplements to the basic method of controlling undesirable litigation – denying undesirable litigants a remedy. It is when this basic method fails that there is a need to consider supplements such as restrictive standing rules or penalties on litigants. I discuss when the basic method is likely to fail and in each of those cases consider which supplement would be most desirable.

 The analysis suggests that two factors are of great importance in determining which supplements to use. First, the likely number of difficult to deter undesirable litigants in a particular area of law and second, the relative accuracy of the various methods. If there are many difficult to deter undesirable litigants it may prove useful to rely on a restrictive standing rule to prevent them from bringing suit. Further, the more accurate a method is relative to its alternatives the greater the desire to rely on that method. These two factors, along with a few other matters (e.g., how easy is it to satisfy a standing rule), form an analytical matrix that one can use to analyze standing rules. There appears to be broad congruence between existing standing rules and the matrix developed in this paper.

 † Associate Professor, Boston University School of Law; John M. Olin Faculty Fellow

2002-2003; S.J.D., Harvard Law School, 1997. Email: vkhanna@bu.edu.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

TOWARD A FUNCTIONAL UNDERSTANDING OF


STANDING


    By: Vikramaditya S. Khanna*


  2002, Vikramaditya S. Khanna. All rights reserved.


     I. INTRODUCTION


 Standing is a most enigmatic and frequently debated subject.1 Although fundamentally important, there is still little agreement as to its basic purpose,2 historical pedigree,3 constituent elements,4 or on the application of

 * Associate Professor, Boston University School of Law; John M. Olin Faculty Fellow 2002-2003; S.J.D., Harvard Law School, 1997. Email: vkhanna@bu.edu. I thank Jack Beermann, Robert Bone, Joseph F. Brodley, Ronald A. Cass, Ward Farnsworth, Alan Feld, Wendy Gordon, Keith Hylton, Louis Kaplow, Santosh Khanna, Reinier Kraakman, Fred Lawrence, Steven Marks, Richard McAdams, Michael Meurer, Saikrishna Prakash, David Rossman, Ann Seidman, Robert Seidman, David Seipp, Steven Shavell, Maxwell Stearns and participants at the Harvard Law School Law & Economics Seminar and the Boston University Faculty Workshop series for their comments and suggestions. I also thank Gary Theo Beery, Laura D’Anca, Francis Chen, Cynthia Fair, and Edward Keller for their able research assistance. Also I would like to thank and acknowledge the John M. Olin Foundation for Law, Economics, and Business at Harvard Law School for funding support.

 1 See, e.g., JOHNE. NOWAK & RONALDD. ROTUNDA, CONSTITUTIONAL LAW 71 – 88 (4th ed. 1991) (describing the historical developments of standing); LAURENCE H. TRIBE, AMERICAN CONSTITUTIONAL LAW, 385-87 (2d ed., 1988)(summarizing the issues associated with standing); Kenneth C. Davis, The Liberalized Law of Standing, 37 U. CHI. L. REV. 450, 450-56 (1970)(discussing the new approach to the law of standing); Richard H. Fallon, Of Justiciability, Remedies, and Public Law Litigation, 59 N.Y.U.L.REV. 1, 5 (1984)(noting that the decision in City of Los Angeles v. Lyons restrained the doctrine of standing); William A. Fletcher, The Structure of Standing, 98 YALE L.J. 221, 224-28 (1988)(discussing the origins of modern standing law); Louis L. Jaffe, Standing to Secure Judicial Review: Public Actions, 74 HARV. L. REV. 1265, 1266 (1961)(noting that the question of standing of a citizen is one of great difficulty and of great importance); Antonin Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers, 17 SUFFOLK U. L. REV. 881, 885-88 (1983)(describing changes in standing doctrine); Cass R. Sunstein, Standing and the Privatization of Public Law, 88 COLUM. L. REV. 1432, 1434-51 (1988)[hereinafter Standing](summarizing the evolution of standing doctrine); Cass R. Sunstein, What’s Standing After Lujan? Of Citizen Suits, “Injuries”, and Article III, 91 MICH. L. REV. 163, 173-77 (1992)[hereinafter Lujan] (giving the history of standing in the United States); Steven L. Winter, The Metaphor of Standing and the Problem of Self-Governance, 40 STAN. L. REV. 1371, 1375-82 (1988)(describing various conundrums associated with standing).

 2 See, e.g., TRIBE, supra note 1, at 108-09, 111-12; Fletcher, supra note 1, at 228 – 239 (discussing injury in fact and the possibility of standing being a screen of sorts on the merits of the case); William M. Landes & Richard A. Posner, The Economics of Anticipatory Adjudication, 23 J. LEGAL STUD. 683, 715 - 19 (1994)(describing the concept of standing as a limitation on anticipatory adjudication); Martin H. Redish, The Passive Virtues, The Counter-Majoritarian Principle, and the “Judicial-Political” Model of Constitutional Adjudication, 22 CONN. L. REV. 647, 649 - 669 (1990)(discussing the values in allowing standing); Sunstein, Lujan, supra note 1, at 197 –


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

these elements.5 In light of this, it is hardly surprising that there has been a tremendous outpouring of literature analyzing and critiquing standing rules in their various forms.6 Indeed, there are many important and insightful

206(outlining the purpose of the doctrine of standing); Maxwell Stearns, Standing Back From the Forest: Justiciability and Social Choice, 83 CAL. L. REV. 1309, 1309 - 86 (1995)[hereinafter Forest](analyzing standing under the theory of social choice); Maxwell Stearns, Standing and Social Choice: Historical Evidence, 144 U. PENN. L. REV. 309, 309 - 48 (1995)[hereinafter Historical Evidence](further analyzing the social choice theory of standing).

 3 See, e.g., Jaffe, supra note 1, 1276 (noting that “[t]he very considerable weight of authority now supports the citizen mandamus suit.”); Louis L. Jaffe, Standing to Secure Judicial Review: Private Actions, 75 HARV. L. REV. 255, 261 – 89 (1961) (discussing “The Development of the Federal Law of Standing”); Fletcher, supra note 1, at 224 - 28, 265 - 72 (discussing cases categorized as federal taxpayer cases and suggesting that the taxpayer status of the plaintiff has little to do with the standing determinations in those cases); Sunstein, Lujan, supra note 1, at 168 - 97; TRIBE, supra note 1, at 385-87 (same as Jaffe); Stearns, Forest, supra note 2, at 1401 – 13(commenting on the historical context of standing); Stearns, Historical Evidence, supra note 2, at 348 – 462(same as Forest). See also David Friedman, Making Sense of English Law Enforcement in the Eighteenth Century, 2 U. CHI. L. SCH. ROUNDTABLE 475, 483-92 (1995)(discussing the logic of private enforcement); Davis, supra note 1, at 450 – 56 (discussing “The Four Key Cases”). For a discussion of standing rules in Europe see MAUROCAPPELLETTI & WILLIAM COHEN, COMPARATIVE CONSTITUTIONAL LAW 76 - 85 (1979).

 4 See, e.g., Sunstein, Lujan, supra note 1, at 183 - 97 (discussing the movement in standing jurisprudence from an emphasis on “legal injury” to “injury in fact”, causation, redressability, and separation of powers concerns under Article II); TRIBE, supra note 1, at 107 - 09, 127 - 29 (discussing the apparently conflicting opinions in taxpayer standing cases such as Flast v. Cohen, 392 US 83 (1968) and Valley Forge Christian College v. Americans United for Separation of Church and State, 454 US 464 (1982)). For cases discussing notions of environmental injury see Lujan v. Defenders of Wildlife, 112 S.Ct 2130 (1992); 504 U.S. 555 (1992); Northwest Environmental Defense Ctr. V. BPA, 117 F.3d 1520, 1529 (9th Cir. 1997) (noting that injury to fish suffices as proof of injury to persons if persons regularly used river in the past); Sierra Club v. Thomas, 105 F.3d 248 (6th Cir. 1997) (noting that a land management plan constitutes concrete injury because it controls future action with respect to that land); Idaho Conservation League v. Mumma, 956 F.2d 1508 (9th Cir. 1992)(noting that if areas to be logged are not specified, 100,000 acres is not so large as to necessarily transform claim into a generalized injury). See also Miles A. Yanick, Loss of Protection as Injury in Fact: An Approach to Establishing Standing to Challenge Environmental Planning Decisions, 29 U. MICH. J.L. REFORM 857 (1996).

 5 See cites in supra note 4; Fletcher, supra note 1, at 239 – 47 (discussing taxpayer standing cases); TRIBE, supra note 1, at 106 – 45(discussing separation of powers).

 This state of affairs is troublesome at best and confusing at worst. Furthermore, recent decisions have arguably done little to quell criticism or to clarify the law. See, e.g., Sunstein, Lujan, supra note 1, at 197 - 234; Stearns, Forest, supra note 2, at 1403 (noting that the doctrine of standing is destined to promote academic skepticism). Some recent decisions include Lujan, supra note 4 and Bennett, et al. v. Spear, et al., 117 S.Ct 1154 (1997); Federal Elections Comm’n v. Akins, 524 U.S. 11 (1998). See also Cass R. Sunstein, Informational Regulation and Informational Standing: Akins and Beyond, 147 U. PA. L. REV. 613, 616 (1999) (noting that Akins is an important recent decision on the general issue of standing).

 6 See, e.g., NOWAK & ROTUNDA, supra note 1 (noting the history of standing); TRIBE, supra note 1, at 385-464 (discussing standing generally); Davis, supra note 1, at 450 (summarizing the new law of standing); Fallon, , supra note 1 (discussing remedial standing); Fletcher, supra note 1 (describing the structure of standing); Jaffe, supra note 1 (commenting on standing in public actions);Scalia, supra note 1, (noting changes in standing doctrine); Sunstein, Standing, supra note


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

discussions of standing that examine it from a constitutional law perspective, amongst others.7 However, only a few papers, notably Kenneth Scott’s seminal article in the 1973 Harvard Law Review, examine standing through a functional lens. 8 This is so even though strong arguments have been made about the value of a functional analysis of standing both in case law and in earlier academic writings.9 It is precisely this paucity in the functionally oriented literature on standing that this article is designed to address and, as such, the article does not address other kinds of arguments.

 A functional inquiry requires setting out what function(s) or purpose(s) of standing are being examined. It is important to note at the outset that, from a functional perspective, standing discussions are composed of two related, yet distinct, questions. First, who should enforce the law – the victims, the government, or other parties. Second, assuming that we have decided who we

1, (discussing private law and its relation to standing); Sunstein, Lujan, supra note 1 (examining the law of standing after Lujan); Winter, supra note 1 (noting the origins of the public rights model).

 7 See Davis, supra note 1, at 450 (noting that recent developments in the law of standing have increased the doctrine’s complexity); Fallon, supra note 1 (discussing remedial standing as limiting Congress’s ability to empower federal courts to enforce the legal interests it may create); Fletcher, supra note 1 (discussing Article III limitations on statutory grants of standing); Jaffe, supra note 1 (examining the background of public actions); Scalia, supra note 1, (analyzing separation of powers as it applies to standing); Sunstein, Standing, supra note 1, (tracing the evolution of standing doctrine from its roots in the Constitution); Winter, supra note 1 (examining the “case or controversy” clause with regard to justiciable actions).

 8 See Kenneth E. Scott, Standing in the Supreme Court -- A Functional Analysis, 86 HARV. L. REV. 645, 669-90 (1973)(analyzing the doctrine of standing from a functional perspective); Michael C. Jensen, William H. Meckling, & Clifford G. Holderness, Analysis of Alternate Standing Doctrines, 6 INT'L REV. LAW& ECON. 205, 210-11 (1986)(analyzing the relationship between standing and efficiency); Landes & Posner, supra note 2, at 715 - 18 (discussing the economic rationale for the doctrine of standing); Stearns, Forest, supra note 2; Stearns, Historical Evidence, supra note 2 (using a social choice framework to discuss standing). My approach in this paper is to treat standing as a method for controlling or regulating undesirable litigation and to compare it against the other methods of doing so in order to set out when restrictive standing rules may be preferable. The other papers do not discuss this aspect in a comprehensive manner.

 9 See Wooten v. Loshbough, 951 F.2d 768, 769 (1991) (Posner, C.J.) (noting that “the concept of standing has a broader significance. It is a gatekeeper regulating the flow of litigation arising out of an injurious act or a series of such acts … .”); Jensen, Meckling, & Holderness, supra note 8, at 1 & 1 n.2 (noting the “Supreme Court’s admonition that standing decisions should be predicated not only upon constitutional considerations but also on ‘practicalities and prudential consequences’” and citing U.S. Parole Comm’n v. Geraghty, 445 U.S. 388, 404 n. 11 (1980) and Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464 (1982)). For the prior academic writings utilizing a functional approach to standing see Scott, supra note 8, passim; Jensen, Meckling, Holderness, supra note 8, passim; Stearns, Forest, supra note 2, passim; Stearns, Historical, supra note 2, passim; Landes & Posner, supra note 2, passim.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

want to enforce the law how do we ensure that only those people initiate suit.10

 The first question is normally addressed in the functionally oriented literature under the rubric of public versus private enforcement of law.11 For example, after careful analysis we may conclude that for a certain area of law victims, rather than the government, should enforce the law. However, this, by itself, does not tell us what the standing rule should be for this area of law. We only know that victims must be granted standing, but we do not know exactly what to do with non-victims. We could, for example, deny non-victims standing to bring suit or we could grant them standing and deny them a remedy (e.g., damages) even if they were to prove all the other elements of their cause of action at trial. There are a host of other possible responses to non-victims that could be pursued as well. Deciding which option is to be preferred is the grist of the second question and is the focus of this paper. In other words, this paper examines which of the litigation control techniques (e.g., restricting standing to, denying remedies to, or imposing penalties on certain litigant groups) should be used to control undesirable litigation and when, assuming we have decided which group(s) of potential litigants we want to enforce the law.

 This paper thus focuses on standing’s function as a method of controlling or regulating undesirable litigation (i.e., standing as a litigation screen),12 amongst its many possible functions. 13 Phrasing standing’s function in this manner raises three questions -- (i) what does undesirable litigation

 10 I am treating these questions as being determined in sequential order. In other words we first determine who should enforce the law and then think of ways to ensure that only those people bring suit. In reality these decisions are intertwined.

 11 See A. Mitchell Polinsky, Private Versus Public Enforcement of Fines, 9 J. LEGAL STUD. 105,115 - 20 (1980); William M. Landes & Richard A. Posner, The Private Enforcement of Law, 4 J. LEGAL STUD. 1, 10 -16, 31 -33 (1975); Gary S. Becker & George J. Stigler, Law Enforcement, Malfeasance, and Compensation of Enforcers, 3 J. LEGAL STUD. 1, 6-16 (1974)(proposing two models on how to improve enforcement); David Friedman, Efficient Institutions for the Private Enforcement of Law, 13 J. LEGAL STUD. 379, 385-89 (1984)(arguing that minor changes in private enforcement institutions can lead to a more efficient outcome); Steven Shavell, Liability for Harm versus Regulation of Safety, 13 J. LEGAL STUD. 357, 366-71 (1984)(discussing activities controlled mainly by liability and those subject to significant regulation); Jennifer F. Reinganum, Plea Bargaining and Prosecutorial Discretion, 78 AM. ECON. REV. 713 (1988)(discussing prosecutorial discretion to enforce); Jeannette L. Austin, The Rise of the Citizen-Suit Enforcement in Environmental law: Reconciling Private and Public Attorneys General, 81 N.W.U.L.REV. 220, 224 (1987)(noting the enforcement of federal environmental statutes); Mark A. Cohen & Paul H. Rubin, Private Enforcement of Public Policy, 3 YALE J. ONREG. 167, 173-85 (1985)(proposing private enforcement in historically regulated areas).

 12 See Scott, supra note 8, at 670 – 72 (discussing one of standing’s functions as being to screen access to the courts).

 13 See infra note 20 for a discussion of some alternative objects of standing not considered in this paper.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

mean, (ii) what alternatives exist for controlling undesirable litigation besides restricting or denying standing and (iii) when will restricting standing be the preferred technique or supplement compared to granting standing broadly and relying on these other alternatives.

 Part II.A argues that litigation is undesirable, for our purposes, when the litigant’s net private benefits of bringing suit are positive and the net social benefits of bringing suit are negative.14 In other words, society would not desire suit, but the private litigant would. Other types of social and private divergence are possible and are briefly discussed.

 Part II.B then briefly sets out some methods of controlling the social costs arising from undesirable litigation, such as restrictive standing rules, denial of remedy regimes, and penalty (i.e., sanctions) regimes. A common thread to all of these methods is the denial of remedy regime. For example, even if we restrict standing to only certain litigants that does not mean that those granted standing are immediately awarded a remedy. Litigants must still establish, to the court’s satisfaction, that they merit a remedy. Thus, a standing regime is in reality simply a denial of remedy regime coupled with a standing determination. The other litigation control techniques can also be described in a similar fashion. Consequently, a denial of remedy regime is the primary means of controlling undesirable litigation. Restrictive standing rules, penalties, and other methods are supplements to the basic denial of remedy regime. This is important because it then becomes critical to establish when a denial of remedy regime is likely to fail as only then would it be necessary to consider supplements.

 Part III conducts this inquiry by asking when might a denial of remedy regime prove insufficient to control undesirable litigation. The analysis concludes, building on prior work in the optimal law enforcement literature, that there are essentially four instances (or combinations of these four) where a denial of remedy regime may need to be supplemented. First, if a denial of remedy regime does not sort litigants into desirable and undesirable ones with perfect accuracy. Second, when litigants are motivated by gains independent of the official remedy. Third, when litigants misperceive the level of court accuracy in a denial of remedy regime. Fourth, when litigants misperceive whether they are desirable or undesirable litigants.

 14 See Steven Shavell, The Fundamental Divergence between the Private and the Social Motive to Use the Legal System, 26 J. LEGAL STUD. 575, 577 – 79 (1997) (identifying instances where the divergence leads to private incentives being greater than social incentives and also instances where social incentives to bring suit may be greater than the private incentives to bring suit.) I focus only on the former because restrictive standing rules only address this.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

 Part IV discusses how each of these reasons affects our choice of supplemental litigation filters by focusing specifically on penalties and standing filters. My primary conclusions are that two broad factors are important in this choice – the relative accuracy of each supplement (i.e., how well does each filter sort litigants into desirable and undesirable litigants) and the likely litigant population in an area of law (e.g., what proportion of litigants are undesirable, how many may be deterred by the prospect of a penalty).

 The focus on accuracy and likely litigant populations has much intuitive appeal and captures many elements that have been shown to be of importance in prior analyses. First, as most supplements attempt to sort litigants into desirable and undesirable litigant groups (say, victims and non-victims) one would expect that the sorting accuracy of each supplement would be important. Because most of the alternatives to standing (e.g., imposing penalties) normally occur after trial, or at least later than most standing determinations, they are likely to have more information about litigants, and hence be more accurate, than standing determinations.15 More accurate regimes, relative to less accurate regimes, tend to induce more victims to bring suit (as their prospects increase with better accuracy) and deter more non-victims from bringing suit (as their prospects decrease with better accuracy).16 Thus, subject to the administrative costs of such filters, the more important accuracy is as a factor and the greater the gap in accuracy between standing and penalty filters the more likely we are to favor a penalty filter.

 The likely litigant population for an area of law also reveals information about how effective each supplement is likely to be. In particular, the number of difficult-to-deter undesirable litigants is important. For example, in certain areas of law some undesirable litigants may receive gains independent of the official remedy that are so large that even our largest imposable penalties might not deter them from bringing suit. A penalty supplement is ineffective in such

 15 In general, more information leads to more accurate results. See, e.g., Richard A. Posner, An Economic Approach to the Law of Evidence, 51 STAN. L. REV. 1477 (1999); Louis Kaplow & Steven Shavell, Accuracy in the Assessment of Damages, 39 J.L. & ECON. 191 (1996); Louis Kaplow & Steven Shavell, Accuracy in the Determination of Liability, 37 J.L. & ECON. 1 (1994); Louis Kaplow, The Value of Accuracy of Adjudication: An Economic Analysis, 23 J.LEGAL STUD. 37 (1994); Stephen McG. Bundy, Valuing Accuracy—Filling Out the Framework: Comment on Kaplow, 23 J. LEGAL STUD. 411 (1994); Eleanor Swift, Smoke and Mirrors: The Failure of the Supreme Court’s Accuracy Rationale in White v. Illinois Requires a New Look at Confrontation, 22 CAP. U.L. REV. 145 (1993); Jonathan J. Koehler & Daniel Shaviro, Veridical Verdicts: Increasing Verdict Accuracy Through the Use of Overtly Probabilistic Evidence and Methods, 75 CORNELL L. REV. 247 (1990). Note that standing determinations may sometimes occur towards the end of the trial.

 16 See Kaplow, supra note 15, at 312-20 (discussing the relationship between information and accuracy); Kaplow & Shavell, supra note 15, at 11 (discussing how accuracy involves individuals’ choices among acts); John E. Calfee and Richard Craswell, Some Effects of Uncertainty on Compliance with Legal Standards, 70 VA. L. REV. 965, 995-1000 (1984) (exploring the effects of uncertainty in legal contexts).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

an area of law,17 however, a standing supplement might be effective because it could prevent such a litigant from proceeding with a suit. Consequently, the greater the number of these difficult-to-deter undesirable litigants the more we should prefer to prevent them from bringing suit by denying them standing. Of course, as there are fewer such litigants our preference for relying on a standing filter should decrease.

 Part V relaxes some of the assumptions made in the bulk of the analysis and finds the room for a standing filter increases in some instances. For example, the presence of porous standing filters is important. A porous standing filter prevents only a handful of undesirable litigants from continuing with suit, while permitting all desirable and most undesirable litigants to continue with suit. These kinds of standing filters may be useful in many instances. Further, if we can rely on more than one filter for an area of law the use of standing should also increase. Taking these and other factors plus accuracy and likely litigant populations, I develop a matrix for examining supplemental litigation control techniques.18

 Part VI then examines the current diaspora of standing-like rules and whether they exhibit any congruence with the approach developed here. 19 I argue that there is broad congruence. Part VII concludes.

 In summary, this paper makes at least four points that go towards furthering a functional analysis of standing. First, that standing discussions, from a functional perspective, are composed of two questions – who should enforce the law and second how do we go about and ensure that only these people enforce the law? Our focus is on the second question as there as has been little discussion of it, whilst there has been (and continues to be) much discussion of the first. Second, that standing is one of many potential supplements to a basic denial of remedy regime that serves to deter or prevent undesirable litigation. In the process the paper discusses ways in which denial of remedy regimes may fail to deter undesirable litigation (and hence generate a need for supplements) and some other methods of supplementing such a regimes (e.g., penalty regimes, court access fees). Third, standing and the other litigation filters are compared in terms of when they would be the best supplemental filter. This provides a matrix of factors to consider when trying to decide which supplemental litigation filter to rely upon. Finally, current

 17 See Steven Shavell, The Optimal Structure of Law Enforcement, 36 J.L.& ECON. 255, 266 (1993).

 18 See Part VI.


 19 Note that the object of this paper is not to suggest that all standing case law can be reconciled with my approach. Whether such reconciliation is possible is something left to future writings. For arguments that discuss the desirability of such consistency see Frank H. Easterbrook, Ways of Criticizing the Court, 95 HARV. L. REV. 802 (1982).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

standing-like rules are examined to ascertain if they appear consistent with the approach developed here and the paper concludes that they do.

 Before delving into the analysis a few words of clarification may be in order. First, the primary object of this paper is conceptual in nature. The primary object is not to weave a theory that explains all of private and public law standing. Second, the analysis and matrix developed here are designed for use in considering categories of litigants, not specific litigants that come before the courts. I would assume that such “category” decisions are undertaken at the level of Congress or, perhaps, the Supreme Court (or both) and not by individual courts who are trying to determine whether a particular litigant in the case before them should be permitted to bring suit.

II. DEVELOPING A FUNCTIONAL FRAMEWORK FOR ANALYZING STANDING RULES


 When developing a functional framework for examining standing rules we must first identify what functions might be served by restricting standing. Although standing rules may serve many plausible functions,20 this article considers their role as methods of controlling or regulating (i.e., screening out) socially undesirable litigation.21

 This approach is consistent with the earlier functionally oriented writing on standing. 22 Kenneth Scott,23 Maxwell Stearns,24 and Judge Richard

 20 For discussion of some of the other functions of standing such as allocating decision making authority, the unitary executive, and separation of powers see Scott, supra note 8, at 683 - 90; Harold J. Krent & Ethan G. Shenkman, Of Citizen Suits and Citizen Sunstein, 91 MICH. L. REV. 1793, 1810-21 (1993)(applying the unitary executive theory to citizen suits); Eric J. Segall, Standing Between the Court and the Commentators: A Necessity Rationale for Public Actions, 54 U. PITT.L.REV. 351, 355-57 (1993)(examining standing using separations of powers analysis). Note that standing’s other functions (e.g., separation of powers) can be brought into the analysis by treating a reduction from the optimal level of separation of powers as a social cost.

 21 This is in some sense similar to Kenneth Scott’s treatment of standing as at least a partial means to screen access to the courts. See Scott, supra note 8. My approach is broader in that I compare standing with other methods of controlling court access (or regulating undesirable litigation) and also focus on standing in most areas of law not only the arena of judicial review of government action.

 22 Professors Jensen, Meckling, and Holderness have also argued, in a paper discussing standing rules in disputes between private parties, that standing rules influence the transfer of resources. See Jensen, et al., supra note 8, at 205 – 08, 210 –12. The more liberalized the standing doctrine (i.e., the more parties who can bring suit) the more difficult resource transfers become because there are more people to negotiate with and hence the transactions costs become higher and may discourage the exchange of certain resources. See id., at 207 – 08. I agree with their analysis, and the difficulty identified by these authors is treated as a cost of a broad standing regime in my analysis (i.e., duplicative efforts and wasteful races). See, e.g., Rob Atkinson, Unsettled Standing: Who (Else) Should Enforce the Duties of Charitable Fiduciaries?, 23 J. CORP. L. 655 (1998); Joseph F. Brodley, Antitrust Standing in Private Merger Cases: Reconciling Private Incentives and Public Enforcement Goals, 94 MICH. L. REV. 1 (1995); Jean Wegman Burns, The Paradox of Antitrust and Lanham Act Standing, 42 UCLA L. REV. 47 (1994); Ann E. Carlson, Standing for the Environment,


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

Posner have argued, separately, that standing serves as a litigation screen of some sort.25 My approach builds on their work by suggesting that standing should screen undesirable litigation (as defined in Section A) and then compares standing with alternate methods of controlling undesirable litigation.

 With our focus on controlling undesirable litigation three basic questions need to be asked. First, what is meant by the phrase undesirable litigation? Second, what other methods of controlling or regulating undesirable litigation are available besides restrictive standing rules? Third, when is restricting standing a preferable alternative or supplement compared to those other methods? The first two questions are discussed in this Part and the third question is left to Parts III through V for more detailed discussion.

A. Defining Undesirable Litigation

 Undesirable litigation refers to litigation where the net private benefits of suit to the litigant (private benefits less private costs) are positive, but the net social benefits of suit (social benefits less social costs) are negative.26 In other

45 UCLA L. REV. 931 (1998); C. Douglas Floyd, Antitrust Victims Without Antitrust Remedies: The Narrowing of Standing in Private Antitrust Actions, 82 MINN. L. REV. 1 (1997); John F. Hartmann, Note, Horizontal Mergers, Competitors, and Antitrust Standing Under Section 16 of the Clayton Act: Fruitless Searches for Antitrust Injury, 70 MINN. L. REV. 931 (1986); Samuel Issacharoff & Pamela S. Karlan, Standing and Misunderstanding in Voting Rights Law, 111 HARV. L. REV. 2276 (1998); Joseph Mendelsohn, Should Animals Have Standing? A Review of Standing Under the Animal Welfare Act, 24 B.C. ENVTL. AFF. L. REV. 795 (1997); Cass R. Sunstein, Informational Regulation and Informational Standing: Akins and Beyond, 147 U. PA. L. REV. 613 (1999).

 23 See Scott, supra, note 8 (arguing that the standing doctrine serves two functions: the rationing of scarce judicial resources and the determination of the judiciary’s proper policymaking role).

 24 Professor Maxwell Stearns has also argued that standing may serve to reduce the amount of path manipulation engaged in by various organizations, usually public interest groups. See Stearns, Forest, supra note 2, at 1318 – 20. Path manipulation refers to “the ability of litigants to manipulate the substantive evolution of legal doctrine by controlling the order, or ‘path’, of case decisions” Stearns, Forest, supra note 2, at 1318. This is done to maximize the chances that courts will make rulings that lead to the results such litigants desire. See id. Standing, Stearns argues, restricts the ability of public interest groups to engage in path manipulation by requiring that a member be injured in some way. See id. This argument is, in effect, a version of standing as a screen for a particular type of undesirable litigation - path manipulative litigation.

 25 See RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 570 (5th ed., 1998)(discussing standing as a method of controlling access to the courts); Wooten, supra note 9, at 770 (Posner, C.J. suggesting that antitrust injury serves as a gatekeeper on litigation and also “minimizes the burden on the courts”); Scott, supra note 8, at 670 – 83 (noting that standing in judicial review settings can serve as an “access screen”.) Landes and Posner have also suggested that standing may serve as a means to reinforce property rights. See also Landes & Posner, supra note 2, at 718 (noting that in some cases rules of standing are necessary in order to allocate property rights to legal claims).

 26 See generally Shavell, supra note 14; Shavell, infra note 32, at 333 (noting that the private cost of a suit is less than the social cost suggesting a tendency towards excessive litigation); Kaplow, infra note 32, at 376 (on the same point).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

words, undesirable litigation involves suits that society does not want to be brought, but that the private litigant would want to bring. This, however, is not the only way in which private and social incentives to bring suit may diverge. The private – social divergences can be categorized into the following four groups.

 1. The net social benefits of litigation are negative, but the net private


 benefits of litigation are positive. In other words, private litigants
want to bring suits that society does not want them to bring. This is
the quintessential case of undesirable litigation.
27


 2. The net social benefits of litigation are negative, and the net private


 benefits are also negative (but not the same as the net social
benefits). Here society does not want private litigants to bring suit
and the private litigants have little incentive to bring suit.
28


 3. The net social benefits of litigation are positive, and the net private


 benefits are also positive (but not the same as the net social benefits).
Here society wants litigants to bring suit and they also will bring
suit.
29


 4. The net social benefits of litigation are positive, but the net private


 benefits are negative. Here society wants the litigants to bring suit,
but the litigants do not have sufficient incentive to do so.
30


 Scenarios 1 and 4 are analytically the more interesting cases because private and social incentives move in opposing directions. My attention, however, is focused on areas where scenario 1 applies (i.e., the case of undesirable litigation) because it is only then that there is a need to curtail

 27 See Shavell, supra note 14, at 578. For example, let the social benefits and costs of litigation be 10 and 11 while the private benefits and costs are 20 and 8. Here the net social benefit is –1 and the net private benefit is 12 and private litigants will bring suit that society does not want. This is undesirable litigation.

 28 See id., at 583. For example, let the social benefits and costs of litigation be 10 and 14 and the private benefits and costs be 9 and 12. Here the net social benefit is –4 and the net private benefit is –3. In this happy world litigants do not bring suit and society does not want them to bring suit.

    29 See id., at 584-85. For example, let the social benefits and costs of litigation be 12 and 11 and the private benefits and costs be 20 and 6. Here the net social benefit is 1 and the net private benefit is 14. This litigation is desirable from both society’s and the private litigant’s perspectives.

 30 See id., at 585. For example, let the social benefits and costs of litigation be 10 and 8 and the private benefits and costs be 5 and 6. Here net social benefit is 2 and net private benefit is –1. In this world society wants suit, but the litigant will not bring it. This is undesirable non-litigation.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

socially undesirable litigation – something which restrictive standing may be able to do.31

 Even though scenario 1 is our only concern it may prove illustrative to discuss some reasons for why a divergence may arise between private and social incentives to bring suit. Understanding the reasons for the divergence seems a natural prelude to considering methods of addressing the consequences of that divergence.

 To explore this further let us unpack private and social costs and benefits of litigation. I treat deterrence as the main social benefit from suit although there may be other benefits such as clarifying the law and so forth.32 The private benefits of suit to the litigant are the remedy (e.g., damages), collateral advantages (e.g., increased business opportunities), and psychic benefits (e.g., satisfaction received from just bringing the suit) that litigants expect to receive, rather than simply the deterrent effects.33 Because private litigants do not fully internalize all the social gains from bringing suit (and

 31 Note that it may be possible for undesirable non-litigation (i.e., desirable litigants not bringing suit) to be affected by standing rules. If we have very broad standing then defendants may respond by taking a tough litigation stand, which may deter many desirable litigants. See Stephen J. Spurr, An Economic Analysis of Collateral Estoppel, 11 INT’L REV. L. & ECON. 47, 50–59 (1991) (discussing why defendants may “fight harder” when stakes larger). However, a tighter standing regime may reduce the incentive to be so “tough” in litigation and hence encourage more desirable litigants to bring suit because now they do not face such an ardent foe.

 32 See Shavell, supra note 14, at 578. For discussions on deterrence as a benefit of litigation see City of Riverside v. Rivera, 477 U.S. 561, 574 – 75 (1986); Lumbert v. Illinois Department of Corrections, 827 F.2d 257, 259 (7th Cir. 1987); Quesada v. Thomason, 850 F.2d 537, 543 (9th Cir. 1988); Eugene J. Kuzinski, Note, The End of the Prison Law Firm: Frivolous Inmate Litigation, Judicial Oversight, and the Prison Litigation Reform Act of 1995, 29 RUTGERS L.J. 361, 399 (1998); Steven Shavell, The Social Versus the Private Incentive to Bring Suit in a Costly Legal System, 11 J. LEGAL STUD. 333 (1982); Louis Kaplow, Private Versus Social Costs in Bringing Suits, 15 J. LEGAL STUD. 371 (1986); Keith N. Hylton, Litigation Costs and the Economic Theory of Tort Law, 46 U. MIAMI L. REV. 111 (1991); John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 COLUM. L. REV. 669, 693, 696 (1986).

    33 See Shavell, supra note 17, at 256 - 57. The psychic advantages may not always be considered social gains. Cf. Steven Shavell, Criminal Law and the Optimal Use of Nonmonetary Sanctions as a Deterrent, 85 COLUM. L. REV. 1232, 1248 (1985). I do not discuss the possibility that there may be some gain, either to the litigant or society, from adhering to social norms on litigation. For discussion of social norms more generally, see Dan M. Kahan, Social Meaning and the Economic Analysis of Crime, 27 J. LEGAL STUD. 609, 610 (noting that social meaning is something people value) (1998); Eric A. Posner, Symbols, Signals, and the Social Norms in Politics and the Law, 27 J. LEGAL STUD. 765, 792 (discussing behavioral effect of social norms) (1998); Richard A. Posner, Social Norms, Social Meaning, and Economic Analysis of the Law: A Comment, 27 J. LEGAL STUD. 553, 554 – 57 (commenting on how social pressures affect decisions) (1998).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

because some private gains may not be considered social gains) there may be a divergence between the private and social benefits of suit.34

 Bringing suit also entails a host of possible social costs such as the costs of using the courts and litigation costs to the parties.35 The private costs to a litigant are the costs of litigation, in terms of time and resources, to that person.36 This does not include many of the social costs of suit (e.g., cost of courts to society),37 and leads to a divergence in the private and social costs of suit.38 Thus, both private and social benefits and private and social costs are likely to diverge and sometimes this will result in undesirable litigation.

 Undesirable litigation can be socially costly in many ways. First, undesirable litigation may overdeter the behavior over which litigation ensues. For example, if there is undesirable litigation in contract law that would increase the costs of entering or drafting a contract and might deter some people from entering or drafting contracts. Another cost associated with undesirable litigation would be the administrative costs associated with more suits. Further, as undesirable litigation increases we have more potential enforcers and that leads to more people expending resources to obtain relevant

 34 See Shavell, supra note 14, at 578. This leads to a divergence in private and social benefits of suit because:

 The motive of a person who brings suit … is usually to obtain compensation
for harm or other relief. Therefore, the plaintiff’s benefit from suit does not
bear a close connection to the social benefit [i.e., deterrence] associated with it
and may bear almost no connection at all . . . it could be that the plaintiff’s
benefit from suit exceeds the social deterrent benefit (suppose that damages are
high but that deterrence is slight because there is little injurers can do to reduce
harm). Or it could be that the plaintiff’s return from suit is less than its
deterrent effect (suppose that damages would be small but that deterrence
would be significant because injurers can exercise cheap and effective
precautions).

Shavell, supra note 14, at 578.
35 See Shavell, supra note 14, at 577 - 78; Scott, supra note 8, at 673 - 74.


 36 See Shavell, supra note 14, at 577 - 78.


 37 See id., at 577 - 79. For example, when a private litigant brings suit:


 [H]e bears only his own legal expenses; he does not take into account that his
suit will cause the defendant and possibly the court to incur legal expenses as
well; a bias toward excessive suit is thus engendered. Similarly, once suit has
been brought when either litigant considers making a particular expenditure
on litigation, he will not count as a cost to himself the expense that the
opposing side and the court may be forced to bear as a consequence; this leads
to an excessive level of litigation expenditures.


 Shavell, supra note 14, at 578.


 38 See id., at 575.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

enforcement information.39 However, only the first to the courthouse will be permitted to recover and thus, the enforcement expenditures by those who are not first to the courthouse are often wasteful from society’s perspective.40 Other possible costs may also arise,41 but for simplicity we limit our focus to wasteful races.42

 39 See Polinsky, supra note 11, at 115 - 20; Landes & Posner, supra note 11, at 10-16, 31-33.


 40 As Shavell and Polinsky point out this is “akin to excessive effort to catch fish from a common pool.” A. Mitchell Polinsky & Steven Shavell, The Economic Theory of Public Enforcement of Law, Discussion Paper No. 235, Harvard Law School. John M. Olin Center for Law, Economics, and Business 3 (May, 1998). Also, “private parties may find it hard to capture fully the benefits of developing expensive, but socially worthwhile, information systems (such as computerized databases of fingerprint records)” (Id., at 3) and this leads to the standard free-riding problem.

 I have assumed that the first party to the court obtains all the benefits of bringing suit and people who are second or later receive none. The race to the courthouse is then engendered. We could make alternative assumptions about enforcement structure so that the first person to the courthouse gets 50% of the benefits, the second gets 25%, and so on. However, in order to maintain analytical simplicity I have not made that assumption.

 41 For example, as more people are permitted to bring suit the transference of certain property might become more difficult because the seller may then need to deal with multiple parties rather than just the injured party. See Jensen, et al., supra note 8. The transaction costs may then increase making transfers of property potentially more difficult and costly. See id., at 207-08, 210 – 12.

 42 Note that the breadth of standing rules could have numerous effects on the likely

amount of undesirable litigation through how it influences the social benefits and costs of litigation. First, as the number of potential litigants increases with broad standing then there are more and more litigants who may bring suit thereby increasing the probability of suit (and, implicitly, the probability of being sanctioned). See Polinsky, supra note 11, at 120-24 (discussing broadening enforcement to the competitive level (i.e., anyone can sue) and the chances for enhanced deterrence). As the probability of being sanctioned increases the expected sanction, which is the actual sanction times the probability of being sanctioned, increases and so might deterrence (the primary social benefit of litigation). Cf. Louis Kaplow & Steven Shavell, Accuracy in the Determination of Liability, 37 J.L. & ECON. 1, 2 – 3 (1994).

 On the other hand, when many litigants are permitted to bring suit social costs are likely to rise. For example, as there are more potential enforcers we increase the prospects of more people expending resources to obtain relevant enforcement information. For further discussion see Polinsky, supra note 11, at 115 – 120; Landes & Posner, supra note 11, at 10 – 16, 31– 33 (1975). For discussion of chilling and overcompliance see Richard Craswell & John E. Calfee, Deterrence and Uncertain Legal Standards, 2 J.L. ECON. & ORG’N 279, 279 – 80 (1986) (discussing the link between uncertain legal standards and suboptimal compliance); Thomas M. Jorde & David J. Teece, Innovation, Cooperation and Antitrust: Striking the Right Balance, 4 HIGHTECHL.J. 1, 49 (1989) (noting that some provisions in antitrust law may deter innovation). For some discussion on collusive suits see Landes & Posner, supra note 8, at 718 - 19. However, only the first to the courthouse will be permitted to recover and thus, the enforcement expenditures by those who are not first to the courthouse are often wasteful from society’s perspective. As Shavell and Polinsky point out this is “akin to excessive effort to catch fish from a common pool.” Polinsky & Shavell, supra note 40. Also, “private parties may find it hard to capture fully the benefits of developing expensive, but socially worthwhile, information systems (such as computerized databases of fingerprint records)” (Id., at 3) and this leads to the standard free-riding problem.

 Other possible costs may arise with expanded standing, but for simplicity we limit our focus to wasteful races. For example, as more people are permitted to bring suit the transference of certain property might become more difficult because the seller may then need to deal with multiple parties rather than just the injured party. See Jensen, et al., supra note 8. The transaction


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

 The presence and costs of undesirable litigation lead us to inquire into at least two matters. First, what is undesirable litigation or more simply who should enforce the law – the victims, the government or someone else? 43 This inquiry may, for example, lead us to decide that certain litigant groups or kinds of litigation are desirable and others are not (e.g., victims are desirable litigants). Second, once we have identified in broad measure what is undesirable litigation (e.g., non-victims bringing suit) then the issue becomes how do we go about and either prevent or deter this kind of undesirable litigation. The functional literature on the first question is growing quickly and as such I do not discuss it in any great depth. The second question is little explored and is the focus of this paper.

B. Methods of Controlling Undesirable Litigation.

 Given the presence and social costs of undesirable litigation it becomes important to consider how to control or minimize such litigation. There are many ways to regulate undesirable litigation, but I will focus on only the more salient ones.44 For simplicity I will refer to victims as desirable litigants and non-victims as undesirable litigants.

 Let us start with a denial of remedy regime. Under this regime all litigants (victims and non-victims) are permitted to bring suit and at the end of the trial the court will determine whether the litigant should receive a remedy. If the litigant wins at the end of trial then she receives a remedy and if not then she receives nothing and incurs the costs of bringing suit.

 A standing rule permits non-victims and victims to file suit and if a litigant’s standing is challenged (usually quite early in the trial process) then a determination arises where the court decides whether the litigant is a victim or

costs may then increase making transfers of property potentially more difficult and costly. See id., at 207-08, 210 – 12. I expect that the costs of wasteful races to the courthouse and other costs would increase with the number of undesirable litigants who bring suit (which in turn rises with the breadth of the standing rule).

 43 Note that if we decided that an area of law should not be subject to litigation (i.e., it is a kind of undesirable litigation) then that can be re-conceptualized as an area where there are no desirable litigants or an area where no one should be allowed to enforce the law in court.

 44 There are many other methods of controlling undesirable litigation. For example, we could grant standing to everyone, but permit some government agency (i.e., not the courts) to screen the suits (as the Department of Justice is supposed to in the case of Qui Tam litigation under the False Claims Act of 1986). See 31 USC 3729 - 3731 (1994). See William E. Kovacic, Whistleblower Bounty Lawsuits as Monitoring Devices in Government Contracting, 29 LOYOLA L.A. L. REV. 1799, 1799 – 1808, 1817 – 18, 1820 (1996).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

not.45 If that person is considered a non-victim then he is denied standing and the suit terminates. If the person is considered a victim the suit continues until the end of trial where the court determines if the litigant should receive a remedy. If the litigant wins at the remedy determination stage he receives a remedy. If the litigant loses he receives nothing.

 A penalty regime allows victims and non-victims to sue, but penalizes non-victims after trial for having initiated suit. 46 Thus, litigants initiate suit and proceed to final judgment. If the litigant (X) wins at the remedy determination stage she receives a remedy and if not she receives nothing. Following the end of the trial the other side (Y) can file suit in a separate proceeding asking the court to determine if the litigant (X) is a victim or not. The court then gathers information and decides. 47 If X is categorized as a non-victim then a penalty is imposed on X and if not then no penalty is imposed. This later suit may be brought regardless of whether X won at the remedy determination stage. I also assume that the penalty imposed on non-victims is set to align the private and social incentives to bring suit (i.e., penalty = net private benefits – net social benefits) and that non-victims are aware of this.48

 45 The standing determination need not be raised by either party to a dispute, and can be (is) determined without argument. In comparison, Rule 11 of the Federal Rules of Civil Procedure contemplates both a motion for sanctions and a hearing. Fed. R. Civ. P. 11 (c)(1)(A).

 46 A penalty regime is very similar to what we see at present with the torts of malicious prosecution and abuse of process and Rule 11. See PROSSER & KEETON, TORTS 870 – 89 (discussing malicious prosecution), 889 – 97 (discussing wrongful civil proceedings), 897 – 900 (discussing abuse of process) (5th ed., 1984); Robert G. Bone, Modeling Frivolous Suits, 145 U. PENN. L. REV. 519, 532 (1997)(discussing frivolous lawsuits as defined by Rule 11); Jonathan T. Molot, How U.S. Procedure Skews Tort Law Incentives, 73 INDIANAL.J. 59, 113-16 (1997) (analyzing how Rule 11 encourages meritorious suits and discourages meritless ones); A. Mitchell Polinsky & Daniel L. Rubinfeld, Sanctioning Frivolous Suits: An Economic Analysis, 82 GEO.L.J. 397, 397 - 403 (1993) (discussing Rule 11 and sanctioning frivolous litigants and the similarities and differences).

 47 I assume for much of the analysis that the net private and social benefits of suit are obtained only upon completion of, although not necessarily success in, the original trial, except for the cost of the sanctioning proceedings which are incurred if the sanctioning proceedings are triggered.

 Note that my analysis does not preclude relying on other measures to control for litigants who get large benefits just from the initiation of a suit. Cf. Shavell, supra note 14, at 586 – 88 (noting that the state can discourage excessive litigation by imposing a properly chosen fee for bringing suit); PROSSER & KEETON, supra note 46, at 771 – 848 (discussing defamation generally).

 48 I make this assumption so that in the perfect state of the world the penalty regime would result in no undesirable litigants bringing suit. Cf. Polinsky & Rubinfeld, supra note 46, at 404 - 17. See generally, Lucian Arye Bebchuk and Howard F. Chang, An Analysis of Fee-Shifting Based on the Margin of Victory: On Frivolous Suits, Meritorious Suits, and the Role of Rule 11, 25 J. LEGAL STUD. 371 (1996); Bruce H. Kobayashi and Jeffrey S. Parker, No Armistic at 11: A Commentary on the Supreme Court’s 1993 Amendment to Rule 11 of the Federal Rules of Civil Procedure, 3 SUP. CT. ECON. REV. 93 (1993); Joseph B. Maher, Comment, Survival of the Common Law Abuse of Process Tort in the Face of a Noerr-Pennington Defense, 65 U. CHIC. L. REV. 627 (1998).


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

 A one way fee-shifting filter imposes the costs of the defendant’s legal fees on losing plaintiffs. 49 If a defendant loses in the initial trial there is no fee-shifting.50 One way fee-shifting can be viewed as simply a penalty filter 51 where (1) the penalty is set at the amount of the defendant’s legal fees rather than the amount needed to equate private and social incentives to sue 52 (2)

 49 I focus only on one-way fee-shifting because our concern is with cases where the undesirability arises from excessive suit as that is what standing can combat. Other kinds of undesirability (insufficient incentive to bring suit) could be regulated by other kinds of fee-shifting. For greater discussion of the variety of fee-shifting regimes see, e.g., Amy Farmer & Paul Pecorino, A Reputation for Being a Nuisance: Frivolous Lawsuits and Fee Shifting in a Repeated Play Game, 18 INT’L REV. L. & ECON. 147 (1998) (discussing fee-shifting in general and concluding that in the context of a reputation-based model, fee-shifting is highly effective in reducing the number of lawyers engaged in nuisance suits); Bebchuk & Chang, supra note 48; Clinton F. Beckner III & Avery Katz, The Incentive Effects of Litigation Fee-Shifting When Legal Standards Are Uncertain, 15 INT’L REV. L. & ECON. 205 (1995) (discussing the incentive effects of cost-shifting on substantive behavior, and concluding that neither the American rule nor the British rule is unequivocally better at promoting efficient substantive behavior); Keith N. Hylton, Fee Shifting and Predictability of Law, 71 CHI.-KENT L. REV. 427 (1995); Eric Talley, Liability-Based Fee Shifting Rules and Settlement Mechanisms Under Incomplete Information, 71 CHI.-KENT L. REV. 461 (1995); Pamela S. Karlan, Fee Shifting in Criminal Cases, 71 CHI.-KENT L. REV. 583 (1995).

 50 Fee-shifting regimes can vary depending on when fees are shifted and what amount of fees are shifted. On the issue of the amount of fees that should be shifted we might note two approaches to the issue. First, fees might just be the defendant’s legal fees and second, they might include court costs as well as the defendant’s legal fees. Cf. POSNER, supra note 25, at 633-34 (discussing fully compensatory filing fees). These are both slightly different versions of the same regime.

 51 Fee-shifting has a similar sort of result to penalties (it imposes penalties on the undesirable litigant after the suit) and hence its analysis will be similar. See, e.g., Hylton, supra note 49, at 452-56 (discussing a pro-plaintiff rule of cost allocation); Talley, supra note 49, at 484-87 (commenting on fee shifting regimes); Bruce L. Hay, Fee Awards and Optimal Deterrence, 71 CHICAGO-KENT LAWREVIEW 505, 511 (1995)(analyzing a model of optimal fee-awards); Polinsky & Rubinfeld, supra note 46, at 422 – 24 (noting that frivolous plaintiffs can be discouraged from suing if a penalty is made large enough); John J. Donohue III, Commentary, Opting for the British Rule, Or if Posner and Shavell Can’t Remember the Coase Theorem, Who Will?, 104 HARV. L. REV. 1093, 1096-99 (1991)(discussing the American and British rules of fee-shifting); Avery Katz, Measuring Demand for Litigation: is the English Rule Really Cheaper?, 3 J.L. ECO. & ORG’N 143, 145-49 (1987)(outlining an economic approach to litigants’ decisions); Steven Shavell, Suit, Settlement, and Trial: A Theoretical Analysis Under Alternate Methods for the Allocation of Legal Costs, 11 J. LEGAL STUD. 55, 58-62 (1982)(comparing the American and British systems of fee-shifting); Lucian A. Bebchuk, A New Theory Concerning the Credibility and Success of Threats to Sue, 25 J. LEGAL STUD. 1, 19 (1996) (explaining the allocation of litigation costs when a plaintiff bears both parties’ litigations costs if he or she loses); Harold J. Krent, Explaining One Way Fee-Shifting, 79 VA. L. REV. 2039, 2045-75 (1993)(discussing the rationale for one-way fee-shifting).

 52 Paying this amount will not eliminate the divergence between private and social incentives to sue if there are other reasons, besides the plaintiff not bearing the defendant’s legal fees, that cause the divergence (e.g., plaintiff not bearing court costs of suit, a misalignment of private and social benefits of suit). If the fees the plaintiff pays are both the defendant’s legal costs and court costs then the divergence may occur less frequently, but it might still occur (when private benefits exceed social benefits, but social benefits are less than social costs). Cf. POSNER, supra note 25, at 634.

 It is worth noting that the fee-shifting scheme does not aid us in getting all the desirable litigants to bring suit because there may still be some desirable litigants who would not bring


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the penalty is determined at the end of trial, but not in separate later proceedings (i.e., accuracy is the same as a denial of remedy regime) and (3) the penalty is determined at a lesser cost per case than with a full blown penalty filter because there are no separate proceedings.53

 A court access fee filter is when plaintiffs are required to pay a fee to the court before they are permitted to bring suit.54 Once this fee is paid the litigants proceed to the remedy determination stage. 55 If the litigant wins she receives a remedy and if she loses she receives nothing and bears her costs of litigation.

 These regimes have certain features in common. In particular, all regimes ask at the end of trial whether or not the litigant should be given a remedy. 56 Thus, under a denial of standing to non-victims regime if someone

suit -- the benefit to them is small and costs of litigation are large (i.e., standard class action type case) (see Shavell, supra note 14, at 583 - 84) -- and these litigants will still not bring suit under a one-way fee-shifting scheme (there is no recouping of fees if you as the plaintiff win). Of course, restricting standing does not appear to help such desirable litigants either.

 53 One might expect that the costs of fee-shifting per case are less than the costs of a standing determinations per case. However, we might expect to see more fee-shifting than separate sanctioning proceedings or standing determinations because fee-shifting occurs automatically when the plaintiff loses whereas sanctioning proceedings/standing determinations only occur if the defendant desires to bring such an action which is tempered by the higher costs of pursuing sanctioning proceedings/standing determinations. This might lead to scenarios where in some cases fee-shifting had lower total administrative costs and in others where sanctioning or standing regimes had lower total administrative costs. See A. MITCHELL POLINSKY, ANINTRODUCTION TOLAW& ECONOMICS50 (2d. ed. 1989) (noting that administrative costs depend both on the number of cases litigated and on the cost of resolving each case); Steven Shavell, Liability and the Incentive to Obtain Information About Risk, 21 J. LEGAL STUD. 259, 269 (1992) (discussing administrative costs under different negligence rules).

 54 See Shavell, supra note 14, at 587 (discussing the policy of making those who sue pay for state’s litigation costs). This “fee” could be in the form of actual cash payments or in the form of stricter procedural, evidentiary, or proof standards that would cause a litigant, who wishes to succeed, to expend more effort or resources than before. Actually one suspects that higher evidentiary standards are not a set fee. Higher evidentiary standards should be felt more by those who have weaker cases rather than those with stronger cases.

 55 The fee need not be specifically monetary - it just needs to be anything that would increase the costs of suit (in terms of time, effort, or money). There are examples of the usage of fees overseas. See, e.g., Christopher E. Austin, Due Process, Court Access Fees, and the Right to Litigate, 57 N.Y.U.L. REV. 768 (1982); Martin D. Beier, Economics Awry: Using Access Fees for Caseload Diversion, 138 U. PENN. L. REV. 1175 (1990).

 56 There are many instances of attempts to adjust remedies to influence litigant incentives. Some of the more well known examples are punitive damages in tort and treble damages in antitrust, which have the effect of increasing the private benefits plaintiffs face and encouraging suit. See, e.g., Brodley, supra note 22; Robert E. Cooter, Punitive Damages, Social Norms, and Economic Analysis, 60 LAW& CONTEMP. PROBS. 73 (1997); Theodore Eisenberg, John Goerdt, Brian Ostrum, David Rottman, Martin T. Wells, The Predictability of Punitive Damages, 26 J. LEGAL STUD. 623 (1997); Robert H. Lande, Are Antitrust “Treble” Damages Really Single Damages?, 54 OHIO ST. L.J. 115 (1993); A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 HARV. L. REV. 869 (1998); A. Mitchell Polinsky, Are Punitive Damages Really Insignificant,


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is granted standing that does not mean that she is automatically entitled to a remedy. She must still prove that she deserves a remedy at trial. Thus, a standing regime is simply a denial of remedy regime coupled with an early decision on standing (this is similar to motions for summary judgment). Similarly, under a court access fee regime, after the litigant pays the fee that person must still prove that a remedy is merited. Decisions on remedy are thus a common feature to all regimes. Further, most litigants presumably bring suit to recover a remedy.57 In light of this, we might assume that denial of remedy is the primary means of controlling undesirable litigation. Standing restrictions, fees, or penalties should be used only as supplements when they can help improve the results over a simple denial of remedy regime. Consequently, it is important to start with an understanding of when a denial of remedy regime is likely to be inadequate, by itself, in deterring undesirable litigation.58

Predictable, and Rational? A Comment on Eisenberg et al, 26 J. LEGAL STUD. 663 (1998); A. Mitchell Polinsky, Detrebling Versus Decoupling Antitrust Damages: Lessons From the Theory of Enforcement, 74 GEO. L.J. 1231 (1986); Cass R. Sunstein, Daniel Kahneman, & David Schkade, Assessing Punitive Damages (With Notes on Cognition and Valuation in Law), 107 YALE L.J. 2071 (1998); Note, An Economic Analysis of the Plaintiff’s Windfall in Punitive Damage Litigation, 105 HARV. L. REV. 1900 (1992).

 On the other hand, there are also examples of reducing private benefits of suit through reduced damages or nominal damages for certain litigant groups, such as bounty provisions (which award less than actual damages) in the False Claims Act and nominal recovery provisions in certain areas of Civil Rights. See, e.g., 31 U.S.C. 3730 (1994); Gretchen L. Forney, Note, Qui Tam Suits: Defining the Rights and Roles of the Government and the Relator Under the False Claims Act, 82 MINN. L. REV. 1357 (1998); Michael Waldman, “Damage Control” A Defendant’s Approach to the Damage and Penalty Provisions of the Civil False Claims Act, 21 PUB. CONT. L.J. 131 (1992).

 57 See Eric Kades, Windfalls, 108 YALE L.J. 1489 (1999); Marvin A. Kotler, Motivation and Tort Law: Acting for Economic Gain as a Suspect Motive, 41 VAND. L. REV. 63 (1988); Steven Shavell, The Level of Litigation: Private Versus Social Optimality of Suit and of Settlement, 19 INT’L REV. L. & ECON. 99 (1999); Shavell, supra note 14.

 58 Note that the way I have defined a standing regime and a denial of remedy regime is perhaps a little too tight. Under a denial of remedy regime one party may seek summary judgment. See FED. R. CIV. P. 56. This decision will be based on the information provided in the pleading (as would a standing determination). See Fed. R. Civ. P. 7(a), FED. R. CIV. P. 56(c) (stating that summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories and admissions, together with the affidavits, show that there is no genuine issue as to any material fact). If being a non-victim might lead to dismissal of the case under summary judgment then the distinction between a denial of remedy regime with summary judgment and a denial of remedy regime with a standing filter is thin. This is because both are based on similar information – is the plaintiff an injured party as per the pleadings – and occur at nearly the same time. See STEPHEN C. YEAZELL, CIVIL PROCEDURE 39-40 (4th Ed. 1996) (noting that although Fed. R. Civ. P. 56 allows motions for summary judgment at any stage of the proceedings, such motions are “not ordinarily granted until after…discovery.”).

 The distinction may still exist because summary judgment could be granted on things besides whether the litigant is a victim or not, whereas standing focuses only on this. See Fed. R. Civ. P. 56(c) (predicating an award of summary judgment upon the absence of any issue of material fact, a standard which seems a bit different from lack of injury). Note that it would appear that standing determinations and motions for summary judgment do not often occur at the same time and are not often based on the same information and thus the distinction remains. See Katherine B. Steuer and Robin L. Juni, Court Access for Environmental Plaintiffs: Standing Doctrine


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

 Before beginning the analysis just a quick note. Throughout the analysis I assume that settlement does not occur. In addition, I do not comment on how the potential population of suits comes before the courts. For example, I ignore the effects of arbitration agreements or waivers of litigation on the population of cases before the courts.59 I make these assumptions for analytical simplicity and because they are unlikely to change the primary factors of importance.60

III. WHEN MIGHT A DENIAL OF REMEDY REGIME FAIL?


 If the denial of remedy regime is a common thread to all other regimes then our primary issue is: when is a denial of remedy regime insufficient to deter undesirable litigation? It is only when this regime fails that we need to consider a supplement like a standing filter. To examine this in greater detail I begin with a highly stylized scenario to provide a benchmark case. From there I begin to peel back some critical assumptions in order to provide a richer set of situations in which a denial of remedy regime might fail. Once we have this, then we can begin to examine what supplementary techniques might be desirable.

   A. The Benchmark Case

in Lujan v. National Wildlife Federation, 15 HARV. ENVTL. L. REV. 187, 202 (1991) (noting that on a motion to dismiss a plaintiff may simply allege facts specific enough to satisfy standing requirements but on a motion for summary judgment, affidavits must be provided to support the specific allegations of the claim).

 Throughout the analysis I have assumed that standing determinations take place early in trial which leads to them being made with less information than damages determinations (which occur at the end of trial). This leads to standing being a less accurate sorting mechanism. However, in reality, sometimes objections to the litigants’ standing are made (or revisited) in the middle of trial or at later points in the trial. See Bender v. Williamsport Area School Dist., 476 U.S. 534 (1985);Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489 (1982); Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979). Although this may not be the norm, it may still occur frequently enough that it merits discussion. Let us consider two quick cases to obtain some feel for what effect this has on the analysis.

 If standing determinations are made at the same time as damages determinations then the information before the courts should be the same under both regimes. This should lead to identical accuracy effects. If standing determinations occur during trial (i.e., after trial starts but before the damages determination stage) then as a general matter the information at the standing stage will still be less than the damages stage.

 59 See Keith N. Hylton, Agreements to Waive or to Arbitrate Legal Claims: An Economic Analysis, Draft, 1999.

 60 Cf. Polinsky & Rubinfeld, supra note 46, at 404 n.17 (noting a similar assumption and saying that “[t]here is no reason to think that our principal conclusions would be affected if we took the possibility of settlement into account because the settlement amount would reflect what would happen at trial. The analysis, would, however, be much more complicated”). Further extensions undoubtedly could, and should, be done to the analysis here to take into account the potential effects of settlements.


FUNCTIONAL UNDERSTANDING OF STANDING [2002 Draft]

 The first case I consider makes four critical assumptions that will be relaxed as the analysis progresses. First, I assume that a denial of remedy regime categorizes litigants into victims (desirable litigants) and non-victims (undesirable litigants) with perfect accuracy.61 Second, I assume that litigants know that the courts work with perfect accuracy. Third, I assume that litigants are aware of what kinds of litigants they are (victims or non-victims).62 Finally, I assume that the expected private benefits of litigation are largely determined by the official remedy.63 These assumptions build on prior work in the optimal law enforcement literature. 64

 Let us then consider the results with these assumptions. First, under a denial of remedy regime non-victims know that they will be categorized as non-victims at the remedy determination stage. Initiating suit is a waste of resources for them because they receive no benefit from the suit (i.e., no remedy and all expected private gains derive from the remedy) yet bear some trial costs. Non-victims would not bring suit. Further, all victims know that by bringing suit they would be guaranteed a remedy. Victims will then bring suit if the certain private benefits they receive exceed their private trial costs. I will assume, for now, that all victims meet this condition.

 In addition, administrative costs for non-victim suits would be zero (as no non-victim bring suits), and there would be few wasteful races to the courthouse because wasteful races increase with the number of non-victim suits (which are zero here). 65 Under these sets of assumptions it is unnecessary

 61 Cf. Shavell, supra note 14, at 603-05 (noting that differences in information or beliefs about the trial outcome affect a litigant’s decision to go to trial); Kaplow, supra note 15, at 312-15 (discussing that individuals when contemplating how to act will choose to become more informed depending on the degree of accuracy they expect in adjudication).

 62 See Kaplow, supra