Guest Opinion: Regulation by Litigation – Creating Problems Out of Thin Air

In case you have not noticed, our Governor has been effectively helping to create more jobs by eliminating unnecessary and burdensome regulations on Florida businesses. This is probably good news if you run a business, work for one, or have ever had to deal with a pointless rule that took time and money to comply with, for no good reason.

At the national level, the Trump Administration and its Republican allies in Congress are working to fulfill their promise to eliminate two regulations for every one enacted. Despite all this, policymakers need to also pay attention to another form of regulation that demands reform: regulation by litigation.

This type of regulation occurs when, because of a lawsuit, people or organizations are essentially forced to change their behavior—even though there’s no law, rule or statute requiring it. Lawsuit “regulations” can be just as powerful (and frustrating) as any other kind.

Of course, there is a proper role for good regulations that protect the public, and for lawsuits that enforce them.  But our system of checks and balances breaks down when lawsuits create regulation.  Courts are designed to be forums for resolving specific disputes between parties to a particular case, not to weigh public policy outcomes and impose broad regulatory rules.  Legislatures and administrative agencies, which have the legal responsibility and resources to write regulations, are politically responsible to the voters and have regular notice and comment procedures to ensure public input.  Courts do not.

Consider the current wave of so-called “slack-fill” lawsuits, which seek to regulate packaging through litigation.  The term “slack-fill” refers to the space inside a package that’s not occupied by the product.  For example, you’ve probably observed that, when you open a new bottle of ibuprofen, the bottle isn’t full to the brim with tablets.  These type of lawsuits seek monetary judgements from manufacturers to pressure them into using smaller packages even though the packages comply with all applicable regulations (and there are many).

Current regulations prohibit packages from being “deceptive.”  But no one is deceived by a bottle of ibuprofen that’s clearly labeled to contain “30 tablets” – even if there’s room in there for a few more.  And if the Food and Drug Administration wanted a rule requiring “30 tablet” bottles of ibuprofen not to have air in them, presumably it could write one.

Other slack-fill cases concern potato chip bags that clearly disclose how many ounces of potato chips are inside, chewing gum packages that clearly state the number of sticks of gum they hold, and (believe it or not!) an “eight piece” bucket of fried chicken that may have had room for more chicken.  Still more suits concern the packaging of pasta, lip balm, sports drinks, candies, protein powder, and black pepper.

Some plaintiffs’ lawyers justify attempts to create regulations by litigation as acts of a “private attorney general.”  This noble-sounding catchphrase implies there’s a serious legal right at stake for the benefit of the public at large.  The reality, however, is that a lot of these suits – like the slack-fill cases – fall well short of anything that could be confused with an important civic priority.

Important matters of enforcement should be handled by our publicAttorney General Pam Bondi, who is legally responsible for enforcing consumer protections and presumably has a broad perspective for achieving a balanced regulatory environment.  Pam Bondi also has investigatory powers that private lawyers don’t, as well as the ability to enforce regulations without going to court.

Despite such tools, however, some state attorneys general nevertheless succumb to the temptations of regulation by litigation.  Perhaps they find it expedient.  Or perhaps they are persuaded that it doesn’t cost anything to allow plaintiffs’ attorneys to represent the state—often on a contingency fee—which is a dangerous form of out-sourcing policy matters by confusing profit motives with public interest.

It’s become common for several state attorneys general to file suits together.  This can be extremely powerful when cases end in judgements or “consent decree” settlements that AGs can apply to other organizations that weren’t part of the suit.  It also creates a breakdown in political accountability because the residents of states who aren’t participating in such cases—but will be affected by the outcome—have no way of holding other states’ attorney generals to account through the ballot box.

Whatever the circumstances that give rise to such lawsuits, there’s always a risk of unintended consequences to regulation by litigation.  The slack fill cases, for example, are making it costlier for companies to sell packaged goods.  That means higher costs to consumers, less pay and fewer benefits for employees, and less hiring.  Now who do you believe is getting ripped-off when someone files a lawsuit for not having enough potato chips in the bag?

David Dignam is the owner of Key Agency Insurance Co.