Bond v. United States and information-forcing defaults: the work that presumptions do.

Author:Stephan, Paul B.
Position:Symposium on Treaty Power and Bond v. United States
 
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Bond v. United States (1) introduces a new presumption to the art of judicial interpretation of federal statutes. A court must presume that Congress did not intend for legislation implementing a treaty to regulate traditional areas of state authority in a manner that upsets the balance between federal and state power. (2) The presumption puts the burden on Congress to indicate a contrary intention. Forcing Congress to resolve a contestable issue raises the cost of enacting laws that express the presumed-against choice. The presumption thus makes it harder to adopt legislation that invades the traditional domains of state authority, even in pursuit of international law enforcement.

The case involved Carol Anne Bond's conviction for knowing use of a chemical weapon in violation of the Chemical Weapons Convention Implementation Act of 1998. (3) Bond had coated a mailbox used by a romantic rival with toxic chemicals in hopes of injuring her. Local authorities declined to prosecute under state law, but federal prosecutors charged her with violation of the Act. (4) The lower courts rejected Bond's argument that the Act, as applied to her conduct, exceeded the enumerated powers of Congress under the Constitution and thus violated the Tenth Amendment. (5) The Court overturned her conviction, not on the ground that the Act violated the Constitution but instead because it should not be interpreted as reaching her conduct. " [W]e can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute's expansive language in a way that intrudes on the police power of the States." (6)

Over the last few decades, the Court has used a number of interpretative mechanisms that have the same structure as the Bond presumption. The presumption against extraterritoriality, the presumption against violating international law, the presumption against testing constitutional limits, and the presumption against implied causes of action all have the effect of truncating the reach of statutes. This truncation leaves courts in a significant range of cases lacking either subject matter jurisdiction or a federal rule of decision to apply to the dispute. What these presumptions do is demand that Congress, at a cost, disclose more information about its preferences regarding federal judicial intervention in the status quo. A consequence is that, absent such disclosure, a possibly unwanted status quo will endure. Bond thus reflects a general trend in the Court's approach to statutory interpretation, rather than standing as an isolated instance of rumination about the effect of treaties on congressional power.

What should we make of this trend? The legal academy offers many perspectives, including doctrinal analysis, constitutional theory, historical analysis, and political theory. One possibility, rare but not unheard of in the field of foreign relations law, is to turn to contract theory. (7) Contracts represent a profound mechanism for enabling cooperation through self-governance. Many contractual disputes turn on interpretation. What contract theorists think about the use of presumptions in contractual interpretation can inform how we approach presumptions in statutory interpretation.

Presumptions that force relevant actors to disclose information about their preferences are well known to contract theorists. Interpretative defaults pervade contract law, with a rich literature considering optimal defaults. Most lawyers will recall Hadley v. Baxendale, (8) which obligated a shipper to reveal additional information as a condition to obtaining coverage for consequential, as opposed to out-of-pocket, damages. By refusing to award the victim of a breach compensation for the full extent of injuries absent an explicit agreement, the precedent puts the burden on shippers to disclose information not known to the carrier that, if shared, would extend the range of and improve the value of the contract. (9) Although no consensus exists about whether Hadley made the right choice between shippers and carriers, most scholars who draw on the insights of economics would agree that courts should employ information-forcing defaults to optimize the disclosure of information between the parties, given the value of the information concerned, the cost of disclosure to the party holding the information, and the cost of enforcing the default in the absence of disclosure.

This general principle--use information-forcing defaults to optimize the value of disclosure between the relevant parties--can guide our thinking about the statutory interpretive presumptions that the Court increasingly has embraced and extended. Do the presumptions choose the right instances in which the value of eliciting an express decision from Congress exceeds the cost of nonintervention in the status quo? How do we assess the value of express congressional decisions? In what ways is judicial nonintervention costly?

Contracts and legislation, of course, are more different than alike, even if they both raise interpretive issues and employ information-forcing defaults. What makes a good contract, from society's perspective, is not the same as what makes good legislation. But we can take the differences into account without discarding the basic analysis. To consider the desirability of the Court's recent trend, we need to determine what further deliberation and decision by Congress would accomplish, and how judicial nonintervention affects society. The answers to these questions may not be as clear or as quantifiable as in the case of private gains and costs, but they remain the right questions to ask.

This Article first places Bond in the context of the Supreme Court's growing reliance on interpretive presumptions to limit the effect of legislation. While some of the presumptions go back to the early days of the Republic, the current Court has expanded the roster of these devices and strengthened their effect. Bond is both the newest such presumption and, compared with the others, potentially the most far-reaching. Yet the case did not cry out for such a move. But for the Court's robust use of structurally similar presumptions in recent years, one might doubt whether it would have taken this path to decide the case.

A review of the treatment of information-forcing defaults in contracts scholarship follows. Contract theory, or more precisely the strand of contract theory that draws on economics, seeks to identify socially optimal rules for contract formation, interpretation, and enforcement. It first explores what rules optimize the value of a contract for the parties, and then looks for externalities that may drive a wedge between the parties' interests and those of society. A consensus has converged on the propositions that: (a) under certain conditions, rules that induce one party to disclose private information can enhance contractual value, and (b) parties seeking to get the most out of their relationship should prefer such rules regardless of which party bears the burden of the presumption. Another, more controversial claim is that a narrower class of presumptions, called penal defaults, can reduce the negative externalities of certain contracts by forcing contracting parties to disclose information to the benefit of society, but not to their own advantage.

To clarify the specific role of these rules, this Article compares information-forcing defaults to contract rules that allow parties to design mechanisms to deal with future contingencies about which no party has special knowledge. Delegation rules allow parties to specify a set of contingencies that, upon realization, entitle a selected third party to supplement the contract to incorporate post-contractual information. From a welfare perspective, information-forcing defaults and delegations are complements, each desirable under specified conditions. But, as to any particular issue, these strategies operate at cross purposes. Choosing a delegate to resolve downstream problems reduces a party's incentive to disclose relevant information at the time of contracting. The challenge thus becomes determining the conditions, both in theory and in practice, where each approach is likely to optimize the value of a contract.

After exploring the economic analysis of contract interpretation, this Article then considers how contract theory's insights, which illuminate the welfare effects of private ordering, might inform our understanding of the production of public law through the dynamic relationship between legislators and judges. A transposition of the private law analysis to public law production requires one to have some theory about how the production of public law works and what benefits and costs it generates. This Article looks at several informal models of how Congress and the federal judiciary operate, and in particular at how they interact with respect to statutory interpretation. It then identifies the circumstances under each model that would support a conclusion that the Court's current trend may contribute to the social good.

The result is a limited defense of the Court's recent practice in general and the Bond decision in particular. The rule announced in Bond, like the presumptions against extraterritoriality, violating international law, and testing constitutional limits, represents a plausible prediction of what Congress prefers. An approach to legislative interpretation informed by contract theory would regard this as a majoritarian default that most likely enhances, rather than impairs, democratic republican decisionmaking.

  1. PRESUMPTIONS AND THE COURT

    Many specialists in foreign relations law anticipated a significant constitutional decision in Bond. The Court had intervened in the dispute once before, requiring the Third Circuit to address the petitioner's constitutional arguments rather than dismissing the claim on standing grounds. (10) The scholarly community hoped...

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