Statutes with multiple personality disorders: the value of ambiguity in statutory design and interpretation.

• Author: Grundfest, Joseph A.

1. INTRODUCTION

   Ambiguity serves a legislative purpose. When legislators perceive a need to compromise they can, among other strategies, "obscur[e] the particular meaning of a statute, allowing different legislators to read the obscured provisions the way they wish." (1) Legislative ambiguity reaches its peak when a statute is so elegantly crafted that it credibly supports multiple inconsistent interpretations by legislators and judges. Legislators with opposing views can then claim that they have prevailed in the legislative arena, and, as long as courts continue to issue conflicting interpretations, these competing claims of legislative victory remain credible.

   Formal legal doctrine, in contrast, frames legislative ambiguity as a problem to be solved rather than an opportunity to be exploited. Toward that end, judges and scholars have developed an arsenal of interpretive techniques that are designed to extract functional meaning from ambiguous statutory text and conflicting legislative history. (2) The Supreme Court regularly addresses the question of statutory interpretation in its opinions and offers guidance as to appropriate rules of construction. (3) If these interpretive techniques are effective, then different judges faced with the challenge of construing a fixed piece of legislative text and history should produce consistent interpretations.

   Legislators, staffers, and lobbyists are, however, well aware of the judiciary's interpretive technology. (4) If the judiciary can predictably ascribe a consistent meaning to a record that legislators intend to be ambiguous, then ambiguity's value as a tool of compromise is lost. Legislators therefore have an incentive to develop a technology of ambiguity that can frustrate the judiciary's most effective interpretive methods. (5)

   Judges are similarly aware of legislative techniques that are used to frustrate the judicial imputation of clear meaning. (6) Judges can respond by strengthening their own interpretive technology in order to frustrate the legislature's efforts to obscure. (7) Not all scholars are persuaded, however, that the judiciary is as committed to interpretive consistency as the formal canon suggests. (8) A judicial preference for flexible standards of statutory interpretation over more rigid rules can, for example, be viewed as consistent with a preference for discretion. (9) More broadly, judges who value the ability to exercise discretion would also rationally prefer ambiguous statutory language. (10) Indeed, there is evidence that judges also practice conscious ambiguity as part of the art of judging when courts rely on vague language or avoid critical issues in order to craft decisions that maintain judicial coalitions. (11) The Supreme Court's strongest proponent of precision in statutory construction, Justice Scalia, has gone so far as to observe that the high court has the ability to write an opinion "so that it says almost nothing," if that suits the Court's purpose. (12)

   The legislative and judicial branches thus appear to be locked in an interpretive battle. The legislature has a clear incentive to value ambiguity because it facilitates compromise. The judiciary has crafted an array of interpretive rules designed to extract consistent meaning from intentionally ambiguous statutory utterances. There is debate, however, over the strength of the judiciary's incentive to apply rigorously its own interpretive technology. The result of this conflict between the branches is a rational expectations equilibrium in which each branch's strategy must take the other's into account. (13)

   Which force prevails? There is no theoretical reason to expect that the legislative ability to obscure will systematically defeat the judicial capacity to interpret, or vice versa. The question is essentially empirical. It is also historically and textually contingent. Accordingly, there may be periods during which, with respect to specific interpretive issues, one branch's technology more completely dominates the other, only to find the situation reversed during other periods. (14)

   Testing whether the legislative ability to obscure trumps the judicial capacity to interpret is no easy matter. A rigorous test of this hypothesis requires the identification of a statute that was enacted as a result of a compromise rooted in willful rather than inadvertent legislative ambiguity. That statute's text and legislative history would then also ideally be subject to repeated judicial interpretations that are unconstrained by controlling precedent. If the courts were to coalesce quickly on a uniform interpretation of the statute then, on the facts of the statute presented, the judicial ability to interpret would prevail over the congressional capacity to obscure. On the other hand, if the courts were to disagree over the proper interpretation of the statutory language, and if their interpretations remained diffuse over time, the congressional capacity to obscure would prevail.

   An appropriate sample for such analysis is unlikely to arise at the Supreme Court or circuit court level. Because the Supreme Court rarely has occasion to interpret the same statutory language more than once, any analysis of Supreme Court practice in statutory construction will fail to control for variations in text and legislative history across different statutes. This is, we believe, a significant constraint on the usefulness of Supreme Court decisions as a database for the analysis of interpretive technology. No doubt, a Supreme Court decision interpreting an ambiguous statute constitutes a final decision on the question presented.15 The finality of such a decision does not, however, imply that the judicial ability to interpret has trumped the legislative capacity to obscure. The legislature and judiciary are involved in a repeat game process; i.e., the Supreme Court must interpret many ambiguous statutes over time. The legislative capacity to obscure can prevail in this larger "super-game," even if it is preordained to fail when the Supreme Court interprets individual statutes, as long as the Supreme Court's ultimate decisions are random over a series of independent statutory interpretations. (16) The contours of a splintered opinion in an individual Supreme Court case can also provide insight into the legislature's ability to frustrate the Court's interpretive technology. (17) A five-four split more strongly supports a legislative ability to obscure than a unanimous interpretation, but such information is at best suggestive.

   Circuit court decisions are a better source of insight regarding Congress' ability to obscure. When circuits split over the interpretation of identical statutory text and legislative history, the simple existence of the split suggests that Congress has introduced some level of ambiguity into the interpretation of the statute at issue. The number of circuits that split, the number of differing interpretations that arise, and the contours of the circuit splits provide additional useful information about the congressional ability to obscure. The small number of circuits and rules of intra-circuit stare decisis suggest, however, that appellate decisions will also be too few to support formal statistical analysis.

   A sample sufficiently large to permit formal statistical analysis of the legislative ability to obscure as pitted against the judicial capacity to interpret is thus likely to arise only if district courts have an opportunity to write a sufficiently large number of opinions interpreting a single ambiguous text before the circuit courts or the Supreme Court issue controlling precedent. District courts are generally the first (and sometimes the last) tribunals to interpret a particular federal statute. Their interpretations often represent the "law" of a statute for the first few years after a statute's enactment. If a sufficiently large number of unconstrained district court interpretations of a fixed statutory and legislative history can be gathered, then such a sample could support formal statistical analyses that pit the judicial ability to interpret against the legislative capacity to obscure. Such a sample could also provide insight into whether, for a particular statute, the resolution of statutory ambiguity has a material predictive effect on the disposition of cases. The sample could also allow for tests of various "legal realist" hypotheses. These tests could determine whether the patterns in individual judges' approaches to legislative ambiguity can be explained by an array of exogenous factors, such as a desire to control judicial docket loads, the characteristics of litigants in an individual proceeding, or the political affiliations and pre-confirmation experiences of the individual judges interpreting the ambiguous legislative record.

   We believe that the "strong inference" provision of the Private Securities Litigation Reform Act of 1995 ("PSLRA" or "Reform Act") (18) satisfies the requirements necessary for a formal statistical analysis of the sort just described. In an attempt to discourage meritless securities fraud litigation, the PSLRA requires that private plaintiffs, in addition to satisfying the specificity requirements of Federal Rule of Civil Procedure 9(b), "state with particularity facts giving rise to a strong inference that the defendant acted with the requisite state of mind." (19) The interpretation of this "strong inference" pleading requirement has become one of the most contested issues in federal securities law. (20)

   As explained below, the "strong inference" provision can be viewed either as clear on its face or as subject to significant uncertainty. The legislative history leading to the enactment of the "strong inference" provision is also exquisitely conflicted as key actors in the legislative process, representing diametrically opposed interest groups, articulated inconsistent interpretations of the standard. The record...