Does ideology matter in bankruptcy? Voting behavior on the Courts of Appeals.

• Author: Nash, Jonathan Remy

ABSTRACT

This Article empirically examines whether courts of appeals judges cast ideological votes in the bankruptcy context. The empirical study is unique insofar as it is the first to examine the voting behavior of circuit court judges in bankruptcy cases. More importantly, it focuses on a particular type of dispute that arises in bankruptcy: debt-dischargeability determinations. The study implements this focused approach in order to reduce heterogeneity in result. We find, contrary to our hypotheses, no evidence that circuit court judges engage in ideological voting in bankruptcy cases. We also find, however, non-ideological factors--including the race of the judge and the disposition of the case by lower courts--that substantially influence the voting pattern of the judges in our study.

The Article makes three broad contributions. First, it indicates that bankruptcy voting is comparatively non-ideological, at least at the level of the courts of appeals. Second, by identifying the influence of certain nonideological factors on voting behavior, the Article suggests avenues for profitable future research. And third, the Article makes a methodological contribution through its fine-grained approach, which demonstrates the importance of focusing on particular legal issues in order to reduce heterogeneity in, and bolster the reliability of, findings from empirical legal studies.

TABLE OF CONTENTS INTRODUCTION I. BANKRUPTCY AND IDEOLOGY A. Subject Matter of Cases B. Specialization in the Lower Courts in Bankruptcy Cases II. THE ROLE OF IDEOLOGY IN BANKRUPTCY: A CASE STUDY IN DEBT-DISCHARGEABILITY DETERMINATIONS A. Debt-Dischargeability Determinations B. Sample Selection C. Descriptive Statistics and Bivariate Analyses 1. Direction of Vote 2. Judicial Ideology 3. Panel Effects 4. Federal Regional Circuit 5. First-Tier Appellate Court 6. Bankruptcy Court and First-Tier Appellate Court Outcomes 7. Subject Matter of Debt-Dischargeability Determinations 8. Appellant Identity 9. Time-Period Controls 10. Judge Characteristics D. Findings from Multivariate Regression Models E. Interpretation of Results CONCLUSION APPENDIX INTRODUCTION

In 1935, legal historian Charles Warren proclaimed that, although the history of bankruptcy legislation is "colorful," "[t]he law of bankruptcy is a dry and discouraging topic." (1) Forty-six years later, in his opinion dissenting from the Court's order denying a petition for writ of certiorari in a bankruptcy case, then-Justice William Rehnquist penned the following introductory words, which echoed Warren's proclamation:

Bankruptcy cases seldom receive much notice outside of those who are familiar with this branch of the law, and it is therefore understandable that there is a dearth of recent bankruptcy precedents decided on the merits in this Court as compared with constitutional cases, labor cases, and other more alluring subjects. (2) All of this might lead one to believe that "bankruptcy is a hypertechnical, code-based, number-crunching field of law where ideology has no role to play." (3) Commentators have found evidence of ideological voting in other contexts among U.S. federal courts of appeals judges. (4) Yet even these commentators speculate that bankruptcy is a field that may not draw out ideological voting. (5)

In this Article, we examine whether judges cast ideological votes in the bankruptcy context. We hypothesize that ideology influences voting in the bankruptcy context and draw on empirical evidence to evaluate our hypothesis.

Although many studies of ideological voting look broadly at cases falling within a subject matter--for example, all tax cases (6)--our empirical study examines a particular type of dispute that arises in bankruptcy. We opt for such a focused approach in order to reduce heterogeneity in result. It is quite possible that a study that sweeps in cases that raise large numbers of varied issues may reduce our ability to conclude how often ideological voting is occurring and indeed whether it is occurring at all.

Our study focuses on disputes involving the scope of an individual debtor's discharge in bankruptcy--specifically, whether a certain debt falls within the category of debts that Congress has defined as nondischargeable. We have chosen to study this subset of litigation for two reasons. First, forgiveness of debt constitutes the core substantive relief that bankruptcy law affords debtors and embodies the "fresh start" rationale that animates the law. (7) Whether to grant a debtor a discharge, and thus frustrate creditors' collection efforts, would seem to be highly ideologically charged. In short, if there is ideological voting in bankruptcy, this would seem to be a good place to find it. Second, deciding whether to discharge debt pits debtors against creditors in a predictable way. We thus avoid conflating ideological voting over debtor-creditor disputes with ideological voting over intra-creditor disputes, such as disputes between secured and unsecured creditors.

In the end, we find, contrary to our hypotheses, no evidence that ideological voting arises in voting by courts of appeals judges (8) in bankruptcy cases. We do find, however, other nonideological factors that influence circuit court judges' bankruptcy voting. For example, the race of the judge and the disposition of the case by the lower courts are substantial influences on how courts of appeals judges vote.

This Article makes three broad contributions. First, it refutes the notion that ideological voting is rampant in bankruptcy. If anything, it lends support to the view that bankruptcy voting is comparatively nonideological, at least at the level of the courts of appeals.

Second, the Article identifies nonideological factors that do influence how circuit judges vote in bankruptcy. This suggests avenues for profitable future research, both in bankruptcy and beyond.

Third, the Article makes the methodological contribution of emphasizing the importance of focusing on particular legal issues in order to reduce heterogeneity in empirical legal studies. Many empirical studies of judicial voting are susceptible to the criticism that their broad scope reduces the reliability of their findings. We endeavor to ameliorate this complaint by taking a more fine-grained approach.

This Article proceeds as follows: In Part I, we explicate the role that ideology might play in resolving disputes arising in bankruptcy. In light of speculation by some commentators that bankruptcy is comparatively nonideological, we consider two bases for that conclusion: the technical nature of bankruptcy law and the specialization of lower court judges who hear bankruptcy cases. We develop hypotheses for testing whether the ideological preferences of judges on the courts of appeals influence their votes in bankruptcy cases.

In Part II, we present our empirical study. We first explain our rationale for focusing on a single type of case--a debt-dischargeability determination in consumer bankruptcy cases. We then discuss the method by which we gathered our data. After that, we report and discuss our findings. Although we find statistically significant predictors of voting behavior in the study sample, the ideological preference of a judge is not among those predictors.

1. BANKRUPTCY AND IDEOLOGY

   Scholars have analyzed courts of appeals voting and found that circuit judges engage in ideological voting. (9) They have also discovered evidence of panel effects on federal courts of appeals--that is, the tendency of a judge to vote differently depending on the ideological preferences of the other judges on the panel with whom the voting judge sits. (10)

   There are two reasons that, notwithstanding evidence of ideological voting in other areas, one might not expect to find ideological voting--or as robust ideological voting--in the bankruptcy context. We examine, and critique, those arguments here.

   1. Subject Matter of Cases

      Following up on Jeffrey Segal and Harold Spaeth's evidence of ideological voting among Supreme Court Justices in the civil liberties area, (11) some commentators have found evidence of ideological voting even in areas often considered to be more technical--and perhaps therefore less ideological--in nature. (12) On the other hand, other commentators have found that some more technical areas exhibit comparatively less ideological voting. (13)

      Along these lines, some commentators have suggested that bankruptcy cases differ fundamentally from other areas in terms of the frequency with which politically polarizing issues arise. (14) The assumption here seems to be that bankruptcy, as a field, is comparatively nonideological. Note that this assumption does not turn on the ideological bent of circuit court judges; the point is simply that the issues that tend to arise in bankruptcy cases do not invite ideological disagreement and therefore do not invite ideological voting. (15) On this reasoning, ideological voting in bankruptcy cases is less frequent simply because issues that invite such voting arise less frequently. (16)

      To the extent that this argument suggests that the field of bankruptcy is nearly devoid of ideologically charged topics, we do not find this reasoning terribly persuasive. It is conceivable that one has to look harder for divisive issues in bankruptcy, but they are surely there. (17) Nor is it at all clear to us that politically controversial issues in bankruptcy are so few and far behind as these commentators implicitly suggest. The creditor-debtor divide pervades bankruptcy, a divide that James Madison categorized as a "common and durable source of faction[ ]" necessitating government regulation. (18) Indeed, in an experimental study involving hypothetical cases, Jeffrey Rachlinski, Chris Guthrie, and Andrew Wistrich found empirical evidence that bankruptcy judges tend to cast votes in either pro-creditor or pro-debtor directions based on their self-reported political affiliation...