Professor Daniel Wilf-Townsend’s Assembly-Line Plaintiffs1 shines an empirical light on state courts and quantifies a world where “debt cases comprise the preponderant majority of civil suits,”2 defendants rarely contest the lawsuits, and “plaintiffs w[i]n the overwhelming majority of their cases.”3 The work the article undertakes is critically important,4 but it is also vital to emphasize that the predominance of debt collection lawsuits, large numbers of default lawsuits, and lack of legal representation for defendants have been issues since the beginning of the Republic.5 Wilf-Townsend analyzes U.S. state court cases between 2004 and 2020, but the quotations above come from an article studying civil cases in antebellum South Carolina.6 Issues of absent and unrepresented defendants, rubber-stamping courts, and repeat plaintiffs with assembly-line-style, low-value claims have a long history in this country.7
While there are longstanding issues, Wilf-Townsend’s work shines a new light on a troubling feature of the past few decades. He finds that just ten companies from two complementary industries (financial services and debt collection) were responsible for at minimum 18.5% of all 2019 civil filings in the nineteen jurisdictions he surveyed.8 Their filing dominance continued unabated and even grew in 2020, during a global pandemic that shut down many state courts.9 That ten corporate entities file almost one-in-five state civil cases in the country is a significant — and concerning — finding that should generate much-needed urgency toward a solution.
But while we must think big, we must also act incrementally. We can make gradual progress toward reducing the share of assembly-line litigation in two broad ways: diminishing the desire of plaintiffs to file that litigation (their demand for the product) or reducing the number of debtor-defendants that they can sue (the supply of the product).10Wilf-Townsend proposes three solutions aiming to reduce the plaintiff’s demand of the litigation “product”: congestion pricing, claim aggregation procedures, and administrative adjudication. In Part II of this Response, I discuss Wilf-Townsend’s proposed solutions and analyze their relative advantages and disadvantages.
This Response situates Assembly-Line Plaintiffs among a rich history of reports and empirical studies about repeat-player plaintiffs (typically but not exclusively corporate entities)11 and how the legal system has been routinized and made to serve creditors. The historical context of “business (pretty much) as usual” reinforces the crucial points made by Professors Jessica Steinberg, Colleen Shanahan, Anna Carpenter, and Alyx Mark in their response to Wilf-Townsend’s article. We cannot ignore that race and gender play an outsize role in these cases, that state courts have become co-opted by corporate plaintiffs and are inflicting illegitimate violence primarily on women and people of color, and that genuinely transformational reforms are needed.12 As they argue, we must broaden our focus beyond debt collection and courts and increase social provision for individuals who have turned to credit to fulfill basic needs and now cannot repay. As Professor Abbye Atkinson argues, for far too long, we have treated access to credit as an adequate form of social provision.13 The dramatic growth of unsecured consumer credit since at least the 1980s has served as the fuel of assembly-line litigation lawsuits.14“Stagnant wages and the increasing cost of living have also left the middle class economically vulnerable” in particular since the 1980s.15In the final Part, I propose an alternative solution, one that aims to reduce the supply of cases assembly-line plaintiffs can bring to court. I propose a federal law that would “kill” the ability of debt collectors to pursue a debt (in a lawsuit or outside of it) after a statutory period.16 Until we can reduce the supply of debtor-defendants at the front end by restructuring society to ensure people’s basic needs are met, we can reduce the supply of such debtor-defendants at the back end by preventing people who’ve already borrowed from continuing to be debtors forever.
I. What’s Old and What’s New
Wilf-Townsend defines assembly-line litigation as involving (1) “a sophisticated, repeat-player plaintiff” who brings “numerous, relatively small-value, and highly similar to each other” lawsuits, (2) mostly absent (defaulting) and generally unrepresented defendants, and (3) “passive” courts.17 As I argue below, the historical literature shows us that the second and third features of assembly-line litigation have been a staple of United States courts since before the country’s founding. But the rise of a small number of plaintiffs filing an increasingly outsized share of civil litigation is something that has been documented only sparsely before. Anyone who has spent time researching the civil dockets of a state court, or practicing in one, viscerally understands what Wilf-Townsend describes as the top-filer burden. But very few studies before Assembly-Line Plaintiffs reported the top filers in their jurisdictions and none have done so on a national basis.
A. On the Lack of Attorney Representation, High Defaults, and the Predominance of Debt Cases in State Courts
Wilf-Townsend argues that “[o]ver the last thirty years, state courts have undergone a generational change: in the early 1990s, almost everyone in court was represented by a lawyer; today, fewer than half of the cases filed have lawyers on both sides.”18 He is not alone in painting a rosy picture of attorney representation in the 1990s. He and others cite to the 2015 National Center for State Courts (NCSC) Civil Justice Report19 for this proposition,20 but that report unfortunately misinterpreted a methodological quirk in the 1990s data. The reality is that “litigation on unsecured debt and mortgages dominated the business of the [civil] courts” in the United States as early as the colonial period and seemingly every period in between.21 And unfortunately, the evidence from the colonial through the antebellum period to today points to a world where most individuals defaulted when sued over a debt, and very few had an attorney.22 The procedures have varied, but the available (albeit admittedly incomplete) evidence points to a history in which creditors have always had the upper hand in collection actions and courts have played a rubber-stamping role on their behalf.23
The sole indication to the contrary is a 1996 joint–NCSC and Bureau of Justice Statistics Civil Justice Report that studied state court litigation in the seventy-five largest U.S. counties during 1992 and stated that “[i]n the vast majority of contract cases, plaintiffs and defendants had professional legal representation. About 6% of contract cases had at least one pro se litigant who represented himself or herself.”24 From this figure, the 2015 NCSC Civil Justice Report presumably infers that in 1992 defendants were represented in 94% of contract cases, which is a stark contrast to the 26% defendant representation it finds in the 2015 data.25 The 2015 Report argues that “the representation status of civil litigants has changed dramatically since the publication of the 1992 Civil Justice Survey of State Courts.”26
But the rosy world of 94% attorney representation for consumers never existed. The error was caused by a misinterpretation of the 1996 Report. On the same page as the 6% pro se quote above, the 1996 Report goes on to say that “[i]n half (51%) of all the contract cases, the defendant failed to file an answer to the complaint. . . . About 45% of the uncontested cases were disposed of by default judgment . . . .”27 A 51% failure-to-answer rate is not consistent with a world in which 94% of defendants were represented. This contradiction makes sense if when referencing “the vast majority of contract cases,” the 1996 Report was referring solely to contested cases;28 that is, cases where the defendant had filed an answer or otherwise appeared. Indeed, the Codebook corresponding to the 1996 Report defines a “pro se litigant” as including “only those parties who actively ‘litigate’ (that is, make an appearance, file an answer or motions, and so forth).”29 In cases where the defendant “does not respond, answer, or appear and the case is dismissed, settled or ends in a default judgment,” the Codebook advises that the defendant should not be counted as pro se.30 Given this methodology, the 94% representation figure is untenable.31
The available evidence points to a long history of rising debt collection cases, passive courts, default judgments, and unrepresented debtors. Examining the colonial period, Professor Deborah Rosen studied two courts in New York and found an “increase in the volume and rate of litigation . . . which is attributable almost entirely to a rise in debt-related litigation.”32 She also found default rates rising from 12% in the Supreme Court of Judicature of New York and 44% in the Mayor’s Court in the 1690s to 66% and 69% respectively by the 1750s.33 Professor Bruce Mannstudied the Hartford County Court from 1700 to 1760 and focused primarily on debt cases because “of the overwhelming predominance of debt cases in civil litigation generally.”34 He found that by the 1730s, “debtors never contested more than 10 percent of the actions on written instruments entered against them. In fact, they rarely contested more than 6 percent.”35 While there is a debate among legal historians regarding the reasons for the high default rates observed in colonial times,36 multiple studies in various jurisdictions find very similar data on default rates.37
Turning to the antebellum period, Professor Thomas Russell studied one court in South Carolina and wrote that “common law courts of the United States mostly handled cases involving the collection of debts, which is to say that the courts did the work of creditors.”38 Russell found passive judging even then, noting that “[o]nly rarely did judges consider the suits, as the shortest distance from filing through judgment to execution was between the offices of the clerk and sheriff.”39 Similarly, Professor Wayne McIntosh studied the Circuit Court in St. Louis, Missouri, between 1820 and 1850 and found that debt collection cases comprised the majority of civil cases, and a significant number ended in default, leading him to conclude that “during this period the court functioned as an agent of the financial community in enforcing the claims of creditors.”40
Debt collection abuses, especially those causing further defaults, are also not new. As far back as the mid-1960s, there were reports of “sewer service” problems in state courts.41 The U.S. Attorney’s Office for the Southern District of New York (SDNY) conducted a study with postal inspectors and discovered a widespread practice of filing suits in inconvenient locations42 and (an early version of) robosigning by process servers.43 The investigation also revealed that 30% of the judgments entered in New York County Civil Court during a randomly selected period in 1968 were entered based on sewer service — that is, with no notice to the defendant.44 As the SDNY report noted then: “[T]he overwhelming majority of persons victimized by sewer service are unable to hire attorneys to move to set aside judgments entered against them without notice, [thus] the judgments remain in effect and serve to significantly burden the lives of the judgment debtors.”45
Studies from 1960s California Small Claims46 and Municipal Courts47 find similar issues. In the summer of 1967, Professor David Caplovitz interviewed over 1300 consumers who had been sued for debts in Philadelphia, New York City, Detroit, and Chicago.48 His 1974 book, Consumers in Trouble, details how consumers were harmed by collection before even courts got involved. But in the context of collection lawsuits, Caplovitz found that default judgments were entered in greater than 90% of the cases in Chicago, Detroit, and New York City.49 In Philadelphia, 83% of debtors in the sample had signed “confessions of judgment” during the credit transaction, and, since that procedure was legal at the time, all of those debtors essentially “defaulted” in their lawsuits.50 Caplovitz also found stark disparities in service of process across racial groups, at least in New York City.51 The book concluded: “Our study has documented the thesis that the courts do not administer justice in consumer disputes but rather act as the collection agents of the creditors . . . .”52
Individuals in the United States have likely never enjoyed access to civil legal representation in a significant way,53 least of all in debt collection proceedings. Data from before the Founding of the Republic through today support a story where debt collection has predominated the business of the courts and a majority of debt collection defendants have faced litigation without an attorney.54 That individuals who may be short on funds have often gone without attorneys (whom they would have to pay) is not surprising, but the level to which courts have functioned primarily as debt collectors since before the Founding of the Republic should not be forgotten.55
B. Repeat Player Concentration and Dominance of State Court Dockets
While there is a rich history documenting the predominance of debt collection litigation in many courts, the lack of representation for defendants, and the high numbers of default judgments, it is not clear at what point a small number of players began to dominate the dockets. Wilf-Townsend documents the massive and rising influence that debt collectors and financial services companies have over state court dockets. By focusing on the top filers, he has identified a phenomenon that has lurked in smaller studies of the past few decades and brought it to the forefront.
The idea that a few players dominate civil lawsuits has cropped up in earlier smaller studies. Professor Mary Spector has studied a random sample of county court cases filed in Dallas in 2007 and has found that two plaintiffs initiated just over 36% of all the cases filed, “and the top five plaintiffs accounted for . . . nearly 64.3% of the total.”56 Professor Judith Fox has studied debt collection cases filed in Indiana during the first quarter of 2009 and has found that “thirteen plaintiffs were responsible for filing almost 79% of collection actions.”57 Indeed, the top five plaintiffs were responsible for 56% of cases.58 Professor Peter Holland has examined a random sample of 4400 cases filed in Maryland collection courts by eleven debt buyers in 2009 and 2010.59 A clinical professor representing debtors in Maryland courts, Holland created his sample by selecting among “the highest volume filers in the state of Maryland.”60 Like Spector and Fox, however, Holland does not dwell on the volume of litigation generated by the top filers and the potential problems this might cause.
In contrast, Wilf-Townsend’s focus is precisely on the top ten filers, and he documents their concentration nationally as well as across time. He finds that between 2004 and 2020, debt collectors and financial services companies jumped from 68 to 95% of all top filers.61 This severe concentration appears to be a uniquely modern feature, one likely borne out of concentration in the financial services and debt purchasing industry itself.
In this Part, I have corrected Wilf-Townsend’s characterization of an “emergence of majority–pro se courts” in the last decades,62 finding instead a long history in which debt collection lawsuits make up a significant portion of court dockets, and defendants rarely contest or respond to suits and are hardly ever represented.63 This rectification makes Wilf-Townsend’s work even more important. He painstakingly documents both the size of the problem and its new concentration on a few actors. With this context, his findings illustrate a problem that has existed for hundreds of years, which has resisted a multitude of reforms,64 and which has now grown to be caused primarily by fewer than a dozen actors nationwide. It’s history repeating itself on steroids.
II. Responding to Reform Proposals
Here I briefly respond to Wilf-Townsend’s suggested reforms to address plaintiffs’ demands for assembly-line litigation. He proposes congestion pricing, turning defenses into claims, and claims processing “in the model of state agencies.”65
A. Congestion Pricing
Congestion pricing aims to “decrease the total number of filings, increase the quality of those filings, and raise revenue for improved management of those filings.”66 Wilf-Townsend describes multiple ways to implement this idea: various kinds of congestion surcharges or a cap-and-trade-style model that would allow courts to “place upper limits on docket congestion.”67
There is much to be said about the idea of forcing the top assembly-line plaintiffs to internalize more of the costs of what they do and reducing the current subsidies they enjoy from being able to use the legal system as efficiently as they currently use it.68 While agreeing that increasing the financial burden on plaintiffs is likely to have a positive forcing effect, I worry about the consequences of making courts even more reliant (through an increase in the share of fees) on fewer than a dozen entities. I have experienced firsthand the outsize influence that repeat creditors (or more properly, their lawyers)69 can have on judges, and the idea that just a few firms might end up comprising an even larger share of the court budget seems ripe for additional issues.70
B. Turning Defenses into Claims
Wilf-Townsend describes “turning defenses into claims” as “encompass[ing] interventions that enable defendants to become plaintiffs, turning their legal defenses into actionable claims that, in turn, can be aggregated as a typical plaintiff-side class action.”71 I interpret this proposal as calling for strengthening of existing consumer protection laws and affirmative causes of action vindicating consumer rights. His arguments in this section make a strong case for strengthening consumer laws such as the Fair Debt Collection Practices Act72 (FDCPA) and ensuring that consumers can use them effectively.73 For example, banning class action waivers in consumer agreements would allow consumers to band together small claims and provide them leverage they currently lack to stop bad practices.74 The reform effort should also include updating the remedies available to consumers and tying them to inflation going forward. For example, consumers are still limited to $1,000 in penalties per violation of the FDCPA.75 In the context of the FDCPA, it could also include extending the one-year statute of limitations period for consumer claims and adding that all (or specific) violations of the Act would render any further collection of the debt itself a violation.76
And that’s just the FDCPA. There are several other federal (and of course, state) statutes that could also use some updates.77 But if we take Wilf-Townsend’s argument far enough (and we should), what Congress ought to do is give consumers the ability to sue debt collectors (and others) for actions that are unfair, deceptive, or abusive.78 In other words, grant a private right of action under section 1036 of the Consumer Financial Protection Act79 and ensure there are sizeable statutory damages and attorney fee shifting.80 There are already some states with similar laws, although it is unclear whether they have any substantial effect.81 The potential downsides of such an approach are beyond the scope of this Response.
C. Toward Administrative Adjudication
Wilf-Townsend remarks that, given the way debt collection cases are processed in courts throughout the country, it “may make more sense to think of assembly-line cases as petitions from a company to the state, in which third parties are permitted to play a role but rarely do so.”82 He proposes moving from the current system to a more administrative agency–like model. In this view, the court (or perhaps now a separate state agency) would take on the role of adjudicating these disputes while at the same time protecting consumers.83 This new or redesigned entity could use “tools such as batch processing, collective adjudication, and claim sampling.”84 This is an intriguing idea, although many of the same benefits could be gained by having the Consumer Financial Protection Bureau (CFPB) or an equivalent state agency perform the oversight functions.85 As Wilf-Townsend notes, Professor Yonathan Arbel proposed something similar, although that proposal did not take into account illegal practices at the postjudgment remedy stage.86 As Steinberg and her coauthors note, however, the CFPB already has supervisory authority over many of these firms, and regulatory or enforcement authority over the rest.87 It also regularly studies the market more broadly and has a specific market-monitoring division.88
III. Reducing Litigation by Cutting Off Supply
The issues raised by assembly-line litigation go to the core legitimacy of the legal system. As I’ve argued above, these issues have persisted for hundreds of years — albeit on a smaller scale. But the magnitude of this problem — the increasing number of cases brought by assembly-line plaintiffs throughout the country — is for good reasons much larger than that reported in Assembly-Line Plaintiffs. Wilf-Townsend appropriately errs on the side of undercounting the extent of the assembly-line problem.89 And although some of us are attempting to democratize more of the small claims court data from around the country, we do not have the data available yet.90 If we could add in those lawsuits and “roll-up” plaintiffs to their corporate owners, we would see even more dramatic numbers.91
What to do about such an enduring, growing problem? Steinberg and her coauthors structure their solutions around the Movement for Black Lives and on the “premise that we achieve reform not by investing in broken institutions, but by investing in communities.”92 I could not agree more. Investing in communities and creating a legitimate social safety net would likely have a tremendous impact on assembly-line litigation, and so much more. I would characterize these solutions as cutting off the supply of litigable cases. Below, I briefly set out another kind of supply-limiting potential reform: one that aims to reduce the number of legal obligations that debt collectors can enforce in court.
My focus is on diminishing the size of the problem: decreasing the overall volume of litigation. As Wilf-Townsend illustrates, judicial debt collection is a high-throughput system.93 We need to slow down and shrink the system, if not stop it altogether. There are at least three reasons why the assembly-line litigation has reached these extraordinary numbers. First, it works. Suing people to collect on their debts is a highly profitable affair because courts are such effective collection tools, and generally speaking, people do their best to pay.94 Second, the opportunity for profits is inexhaustible because so many Americans depend on credit for basic necessities95 and are just a small incident away from being unable to repay. Third, these debts can live — and grow — forever. This last point, that if consumers don’t completely satisfy their debts, most contracts and state laws allow them to continue growing interest and fees and that they may be pursued effectively forever, was the subject of Ending Perpetual Debts, an article I wrote a few years ago.96 I propose to adopt the solution I offered in that article: a statute that would “kill” unpaid consumer debts after seven years.97 In brief:
- “Owners of unsecured consumer debts would have seven years in which to collect those debts, with the clock beginning to run 180-days after the consumer’s behavior that gave rise to the cause of action. Payments made during this period do not restart the collection clock”;
- “Judgments based on consumer debts would have a separate, non-renewable, seven-year clock. In other words, the initial seven-year extinguishment period can be extended if a court renders a judgment in a lawsuit filed before. The automatic discharge federal law I am proposing would not only automatically extinguish the legal remedy of collecting through the courts, but also any right of repayment”;
- “When the applicable seven-year period expires, the debtor’s obligation to the creditor and the creditor’s concomitant right to collect cease to exist. Similar to the bankruptcy discharge, a judgment obtained on an extinguished debt is void and can be collaterally attacked in a different proceeding”;
- “Attempting to collect on an extinguished debt would be an unfair practice giving rise to a private right of action against the collector, with statutory financial penalty, attorney’s fees, and actual costs (including disgorgement of any payments made by the consumer) obtainable from the collector. Regulators such as the Consumer Financial Protection Bureau and states’ attorneys general could also enforce the statute”; and
- “The two extinguishment periods would preempt contrary state law and could not be waived by the consumer.”98
Ending Perpetual Debts contains a longer discussion of the proposal and challenges of implementation than I have space for here,99 but I want to highlight what this could do for assembly-line litigation. We currently have a “zombie debt” (or at least, very old debt) problem.100 The CFPB’s 2021 report on the credit card market found that “[m]ost [debt] issuers reported holding a sizeable amount of debt past the statute of limitation in their inventory.”101 Given how most state statute of limitations laws work, these limitations periods can be restarted by something as simple as a consumer acknowledging that they once owed the debt.102 A creditor can then legally sue the consumer who defaults on this debt. The proposal above would give creditors seven years to collect from the moment of first default, and nothing could be done to restart the legal ability to collect. The idea would be to make debts past this period as unenforceable as confessions of judgment have become.103 The affirmative cause of action and CFPB enforcement should deter debt collectors from bringing these types of suits, but if they do bring them, there is only one piece of information that needs to be shown to determine if that lawsuit is valid: the date of the first default under the contract. If the lawsuit is brought seven years after that date, or if it’s an attempt to enforce a judgment and the judgment was obtained more than seven years prior, those attempts to collect are invalid.
The key point is to “kill” debts in the simplest and most easily verifiable way possible. The current system allows the statutory limitations period to “restart” every time someone makes a payment after a default.104 Under this “automatic discharge” system, once the creditor has declared a default under the contract, the seven-year statutory period would begin to run. Creditors would have that time — and only that time — to attempt to collect. Even if a consumer began to repay, if they did not repay in full during those seven years, their debt would nevertheless be extinguished. Creditors would also have the option to obtain a one-time (and one-time-only) extension on their debts by winning a lawsuit and obtaining a judgment.105 That judgment itself would then be collectible for another seven years, but no longer. Unlike under current law, the judgment would not be renewable. This method would also reduce the potential consumer issues in judgment enforcement.106
Ending perpetual debts would not by itself solve the assembly-line litigation problem. But, by reducing the supply of debts that could be litigated, it has the potential to significantly reduce the volume of lawsuits as well as collection activity more generally.
Assembly-Line Plaintiffs meticulously documents the widespread practices of a small number of private actors who enjoy outsize access to the state court process because of the number of lawsuits they file. The cost to these plaintiffs of using the court system to collect is low enough that these collectors operate with large profits. It all boils down to a very roundabout and costly way of subsidizing private companies that causes a great deal of suffering to the many individuals — disproportionately poor or minoritized — caught in the system.107 Wilf-Townsend shows us that this subsidy is primarily benefiting fewer than a dozen different corporations.108 His important work should spur us to act more quickly to reduce, if not completely stop, the assembly line.
* Professor of Law, University of California, Irvine School of Law. I am grateful to Daniel Wilf-Townsend for tackling these issues; Jessica Steinberg, Colleen Shanahan, Anna Carpenter, and Alyx Mark for their essay and their great work on these topics; and the editors of the Harvard Law Review Forum for in-viting me to contribute. I am indebted to Michael Koeris, without whose support this piece could not have been written.