Do German Judges Compete for Litigation by Offering Plaintiff-Friendly Procedures?

The most important function of judges is to decide cases brought to them by litigants. By contrast, they are not commonly seen as participants in a market for litigation, competing to ‘sell’ their forum to litigants.

Nevertheless, previous research  has shown that some American judges actively try to extend their influence by making their courts attractive to plaintiffs. This phenomenon is known as ‘forum selling’. Before the U.S. Supreme Court’s decision in TC Heartland, the most striking example of such behavior was the Eastern District of Texas, whose judges managed to attract a significant share of all patent infringement proceedings filed in the United States through a range of plaintiff-friendly tweaks to procedural rules. For arbitrators, in some situations, similar behavior can be observed.

But what is true for U.S. judges and arbitrators does not have to be true for judges in Continental Europe. After all, it is commonly assumed that civil law judges care solely about applying the law correctly, not about policy or caseloads. And even if one were to adopt a more realistic approach, there would be ample reasons to believe that judges would not want to attract more cases to their court. Most importantly, judges receive no direct financial rewards from increasing case numbers.

In our article, Forum Selling Abroad, we investigate whether, contrary to common assumptions about their behavior, judges in Europe sometimes compete for litigation. The study focuses on Germany, a country often held up as the paragon of the civil law approach to adjudication. It builds on dozens of interviews with German judges and lawyers conducted specifically for this article, and documents that forum selling is a reality in Germany. Particularly good evidence for forum selling can be found in patent law and press law. In antitrust, competition between courts seems to be more international, and German courts compete (albeit not very successfully) against courts in the United Kingdom, the Netherlands, Finland, and other European countries.

In both the United States and Germany, forum selling is first and foremost contingent upon venue rules that give plaintiffs almost complete choice of forum in particular kinds of cases. When plaintiffs can choose to sue in only one or two courts, judges have little to gain by aggressively competing for business, because the amount of litigation they can attract is limited. On the contrary, when plaintiffs can file nearly anywhere, an enterprising court can gain a sizable fraction of the entire nation’s litigation in that subject area. Accordingly, for example, just three out of the 115 regional courts dominate press law litigation in Germany.

Because plaintiffs choose the forum, judges and administrators willing to attract cases must make their courts more appealing to plaintiffs. Nevertheless, some of the measures taken by judges seem to be making the proceedings more efficient, thereby benefiting both the plaintiff and the defendant. For example, courts compete for cases partly by enhancing the speed and quality of their proceedings.

Other measures, however, benefit the plaintiff at the expense of the defendant. For example, our article shows that forum selling has contributed to the routine issuance of ex parte injunctions (which deny the defendant an opportunity to be heard) in press law. In fact, this practice was declared unconstitutional by the German Federal Constitutional Court in two decisions from September 2018. Other examples of such practices include the granting of injunctions to plaintiffs based on patents that may be invalid. As in the United States, forum selling in Germany results in a pro-plaintiff tilt. With the possible exception of press law, however, forum selling in Germany seems to result in less blatantly pro-plaintiff decision-making than in the United States.

One remarkable similarity between Germany and the U.S. is that courts in both countries attract cases primarily through the manipulation of procedure. This likely reflects the less stringent review of procedural decisions. While in both countries decisions relating to substantive law are generally reviewed rigorously (de novo), many procedural decisions are viewed as within the discretion of the judge of first instance and reviewed deferentially, and even if a procedural mistake is found, such a mistake is unlikely to lead to reversal.

Why do judges act this way? Don’t they want a quiet life? Our study shows that there are different factors at play. Like in the U.S., German judges engage in forum selling for a variety of reasons, including prestige and a desire to work in areas of the law they perceive as interesting.

While individual judges are the most important agents of forum selling in the U.S., court administrators also play an important role in Germany. As state officials, these administrators have the incentive to consider the effect of caseloads on government revenue and the local economy, and they use their power to allocate judges to particular kinds of cases in order to make their courts attractive. They also use their power over promotion, case allocation, and resources to reward judges who succeed in attracting cases.

With the restriction in venue choice following the U.S. Supreme Court’s decision in TC Heartland, it has become much harder for U.S. judges to engage in forum selling in patent litigation. In German patent, press and antitrust law, restricting venue choice is not on the horizon, and forum selling activities are likely to continue or even expand. Our article documents this phenomenon empirically and provides a conceptual framework to think about its policy implications.

Stefan Bechtold is a Professor of Intellectual Property at the Center for Law & Economics, ETH Zurich, Switzerland.

Jens Frankenreiter is a Senior Research Fellow at Max Planck Bonn, Germany, and a Visiting Associate Professor of Law at University of Virginia School of Law, Charlottesville.

Daniel Klerman is the Edward G. Lewis Professor of Law and History at Gould School of Law, University of Southern California, Los Angeles.