Party Choice of Procedure & Specific Performance
posted by Dave Hoffman
I’ve been reading Robert Bone’s excellent new Texas Law Review article, Party Rulemaking: Making Procedural Rules Through Party Choice. The paper makes several moves, which together make me question my long-held belief that preemption is impossible. (He says many, many of the things I’ve been planning to write about in an article which was to’ve been submitted in August.)1
One footnote caught my attention, since I’ve been wondering about it too. The paper is about contracts intended to tailor procedural rules in discrete cases (e.g., in a contract, providing that any disputes will be tried in federal court in Missouri, governed by Maryland law, with limited discovery). Bone writes, in note 35:
“This Article assumes specific enforcement of agreements to choose procedural rules or actions in advance. It is only through specific enforcement that parties can directly shape procedure for their cases.”
This is true. But why would it be that the default enforcement mechanism for procedural contract terms be specific performance, when the default enforcement mechanism for all other performance terms is damages? Putting aside potential stipulated remedy concerns, isn’t the idea of private procedure putting the cart (enforcement) before the horse? It’s not as if parties can contract into specific performance, at least under traditional common law rule.
One idea I’ve noodled over distinguishes terms that deal with the contract’s enforcement from terms that deal with the contract’s performance. That is, we tend to “specifically enforce” liquidated damages clauses. But that doesn’t quite work, because liquidated damage clauses are directed largely at the court system itself, and so we’re consequently not as worried about the classic specific performance objections of failed monitoring and weak legitimacy. By contrast, terms which purport to control procedure largely, though not exclusively, tell the parties what to do. Go arbitrate! Don’t take a deposition! File your complaint within a certain number of days following injury! Don’t join with others! Wouldn’t the ordinary response to such contract terms be the usual one in contract law: that is, comply or pay damages? By contrast, under Bone’s approach (which is the standard one in court, I take it), if a party wanted to change its mind, we’d have to actually order them to act, or to fail to act, putting at risk the exact institutional capital that do not hazard when performance is at issue. I’m thus left pretty confused as to why we treat procedural terms the way we do. Has anyone thought about this?
1Among those things: there appears to only be one published opinion in the history of our great Republic, Elliott-McGowan Productions v. Republic Productions, Inc., 145 F. Supp. 48 (S.D.N.Y. 1956), in which a court agreed to enforce a contract term which limited the scope of discovery. Yet on that slender reed a dozen law review articles rest.
July 6, 2012 at 11:19 am
Posted in: Contract Law & Beyond
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Responses (3)
A.J. Sutter - July 6, 2012 at 11:51 am
I admit I might not be the world’s most sophisticated practitioner, but I can’t recall ever seeing a contract with procedural rules about adjudication, other than waiver of jury trial. You’re an empirical guy — is this a real problem in practice? Or just a contrived one to be mined academically?
I share your puzzlement about why specific enforcement should be the assumed default mechanism, but according to Tina Stark’s treatise on boilerplate and the cites therein (Chap. 7), some jury trial waivers, at least, seem to be enforced specifically.
Dave Hoffman - July 6, 2012 at 11:54 am
Well, that’s part of the puzzle. The common ones – maybe so common you haven’t thought about – are forum, law, statute of limitations, jury trial, and class waiver. (Arbitration is a distinct category.) The hypothesized ones are discovery, pleading standards, evidentiary rules, limitations on joinder, etc. I don’t think this is a “problem”, I think it’s question: what is the status of private discovery, and what should the status be?
A.J. Sutter - July 6, 2012 at 10:01 pm
A meta-thought on this topic: given that some of the clauses you mention, e.g. class action and statute of limitations waivers, typically arise in highly asymmetrical contexts, such as employment applications and other labor law situations, isn’t the notion that, as Bone puts it, “parties can directly shape procedure for their cases” a bit of a fiction? Most of my deals involve parties with relatively symmetrical bargaining power, and I don’t run into such clauses. So should the questions to be explored about them also include issues like justice?
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