The false promise of fiduciary government.

Author:Davis, Seth
Position:Abstract through III. The Problem of Intent, p. 1145-1182


This Article critiques the borrowing of private law concepts to develop doctrines of judicial review in public law. A rising chorus of scholars has argued for a fiduciary theory of government designed to constrain political discretion through judicial review based upon the model of private fiduciary duties. Treating politicians and bureaucrats as fiduciaries, they argue, promises a workable judicial solution to the problem of faction in legislative and administrative decision-making. This Article argues the promise of fiduciary government is a false one. There are problems of fit, intent, and function with fiduciary government. Politicians and bureaucrats are not like private fiduciaries because they do not serve discrete classes of beneficiaries and are not subject to demands that can be distilled into a discrete maximand. Fiduciary government, cannot be founded in the intent of the Founders or of Congress. Moreover, fiduciary government has not functioned well where courts have experimented with it. Either the analogy to fiduciary law operates at such a high level of generality that it simply restates public law problems in different terms, or it imports freestanding fiduciary principles that yield unworkable constraints on political decisionmaking. The failure of fiduciary government is instructive, however, on the promises and potential pitfalls of translating between public and private law.

INTRODUCTION I. THE THEORY OF FIDUCIARY GOVERNMENT II. THE PROBLEM OF FIT A. The Many Faces of Fiduciary Law B. Public Officials as Parents C. Public Officials as Trustees D. Public Officials as Corporate Managers E. The Decline of Fiduciary Law? F. Public Fiduciaries as a Sui Generis Category III. THE PROBLEM OF INTENT A. Constitutional Law as Fiduciary Law B. The Fiduciary Account of Administrative Law IV. THE PROBLEM OF FUNCTION A. Narrow Public Fiduciary Constraints 1. Political Corruption and the Honest Services Statute 2. Insider Trading and the STOCK Act B. Broad Fiduciary Government 1. The Federal Indian Trust Doctrine 2. The Public Trust Doctrine 3. The First Amendment Public Forum V. THE PROBLEMS WITH THREE PROPOSED FIDUCIARY REFORMS. A. Imposing the Duty of Care on Congress B. Judicial Review of Political Gerrymandering C. Hardening Hard Look Review of Agency Action VI. THE PROBLEM OF TRANSLATING BETWEEN PUBLIC AND PRIVATE LAW A. The Interdependence of Justiciability, Rights, and Remedies B. The Importance of Mediating Principles C. Connecting Values Across Doctrinal Areas D. The Possibility of Creative Restatement CONCLUSION INTRODUCTION

Private law labels some relationships of power and dependence between persons "fiduciary." With the label come duties, enforceable through private rights of action, which aim to protect the beneficiaries of delegations of power to others from becoming victims of that dependence. To some, modern life is characterized by the emergence of a "society ... based predominantly on fiduciary relations." (1) Understood thus, fiduciary law encompasses not only the traditional doctrinal categories--trust, agency, partnership, corporations, and so on--but also all "important social and economic interactions of high trust and confidence that create an implicit dependency and peculiar vulnerability of the beneficiary to the fiduciary." (2)

The work of the antebellum scholar Francis Lieber reveals how far this thinking can run. Writing in 1838, Lieber lumped constitutional law with trust law. (3) Every citizen, from the federal postmaster to the local haberdasher, was a fiduciary. The foundation of political duties, no less than that of duties that run from trustee to trust beneficiary, could be found in fiduciary law.

More recently, a rising chorus of contemporary scholars has begun to argue for a model of government designed to constrain political discretion through judicial review based upon the law of fiduciary duties. (4) Like private fiduciaries who owe duties to beneficiaries, public officials possess discretionary authority to act on behalf of citizens, who cannot protect themselves from abuse, or so the analogy runs. By applying fiduciary duties of loyalty and care to politicians and bureaucrats, fiduciary theorists aim to resolve the "problem of faction" in political and bureaucratic decisionmaking. (5) For example, fiduciary theorists point to the duty of loyalty to check incumbent "self-dealing" in legislative redistricting, (6) or, paired with a "duty of impartiality," to revive substantive due process review of economic legislation. (7) Another scholar finds in fiduciary law six principles of judicial review that cut "strongly against presidential administration" and in favor of substantial changes to federal administrative law, including hard look review of every rulemaking and of agency inaction, as well as disclosure of all agency communications with the White House during rulemaking proceedings. (8) There are other examples including, perhaps most boldly, fiduciary theories that would rewrite McCulloch v. Marylands longstanding gloss on the Necessary and Proper Clause. (9)

In short, fiduciary theorists see in fiduciary law a political morality from which to derive judicial constraints on political discretion. By "drawing on the lessons from private law enforcement of fiduciary duties," the federal courts can create a "workable approach" to judicial review of political decisionmaking. (10) That is the promise of fiduciary government.

This Article argues the promise of fiduciary government is a false one. Fiduciary constraints are riven with problems even in the private law context, where there is a consensus about the interests of beneficiaries and the ends of judicial review. Identifying when a fiduciary relationship exists is a matter of significant debate. Even where fiduciary constraints are well accepted--from trust to corporate law--specifying their content sparks more disagreement. Indeed, some scholars have argued fiduciary law is dead. (11) Hence, we face an irony. While private law scholars chart the decline and indeterminacy of fiduciary constraints and the rise of private discretion, public law scholars look to fiduciary law to constrain public discretion. Yet designing fiduciary rights and duties is even more difficult in the public law context, where, unlike its private counterpart, there is not a consensus about the interests of beneficiaries and the ends of judicial review.

As a result, the fiduciary model suffers a kind of Goldilocks problem. Taken for all it suggests, fiduciary government would hold government to the "punctilio of an honor the most sensitive." (12) That constraint is simply too much. Unsurprisingly, fiduciary theorists have acknowledged the "uncompromising moralistic rhetoric" of fiduciary law and sought to restate public fiduciary duties in compromising terms. (13) But that approach provides too little guidance. Does it advance analysis, for example, to recast the arbitrary-and-capricious standard of federal administrative law as a fiduciary duty of care? In either case, a court must still "calibrat[e] the degree of judicial deference to be accorded" and the administrative procedure it will demand of agencies. (14)

The problem lies in fiduciary doctrine itself. Fiduciary law overlays moralistic standards of conduct upon legally enforced norms, but what links the two remains uncertain. When it comes to corporate governance, for example, judges act "more as preachers than as policemen." (15) Delaware corporate law has a shadowy "penumbra," (16) with moral exhortations that "can never be fully realized nor even defined with specificity in advance." (17) Importing fiduciary law into constitutional and administrative law carries this indeterminacy with it.

My arguments unfold as follows. Part I elaborates the fiduciary theory of government. Part II discusses the problem of fit between private fiduciaries and public officials. The "hallmark" of a fiduciary relationship is an altruistic duty requiring the fiduciary to be loyal to her beneficiary. (18) This rule of undivided loyalty gives rise to a distinctive set of rules of justiciability, primary rights and duties, and remedies focused upon a discrete set of beneficiaries and interests. A trust, for example, involves a trilateral relationship among the settlor, who creates the trust, the trustee, who administers it, and the trust beneficiaries. Trust law directs the trustee to resolve conflicts of interest by reference to the settlor's intent and to a well-understood set of economic principles regarding the management of trust assets. By contrast, networks among politicians, bureaucrats, and citizens are multifarious. Much debate in political life and public law concerns not the means but the ends of regulation. There is no single maximand that a public official must pursue, and no generally accepted means for her to pursue it. Moreover, to the extent fiduciary relationships are contractual, and fiduciary duties are default terms, they provide poor guides to public law.

Part III explains the problem of intent with fiduciary government. Federal courts do not have unfettered authority to enforce freestanding fiduciary constraints on Congress and the executive as a matter of federal common law. And the interpretive case for public fiduciary law is ultimately unconvincing. The absence of fiduciary precedent is compelling evidence against the theory. The Founders, to be sure, spoke of public office as a "public trust" and were concerned with limiting "corruption," defined broadly to include "conscious or reckless abuse of the position of trust." (19) But it is far from clear that fiduciary government was a background understanding of legal rights at the Founding. When the Founders raised the theory of fiduciary government, they often did so in connection with political mechanisms--chiefly impeachment and elections--for holding government officials responsible for breaches...

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