Precedent and Reliance

• Publication year: 2013

Precedent and Reliance

Randy J. Kozel

PRECEDENT AND RELIANCE

Randy J. Kozel^*

Among the most prevalent justifications for deference to judicial precedent is the protection of reliance interests. The theory is that when judicial pronouncements have engendered significant reliance, there should be a meaningful presumption against adjudicative change. Yet there remains a fundamental question as to why reliance on precedent warrants judicial protection in the first place. American courts have made clear that deference to precedent is a flexible policy rather than an absolute rule. The defeasibility of precedent raises the possibility that stakeholders who fail to mediate their reliance on precedent forfeit any claim to judicial protection through the doctrine of stare decisis.

This Article explores the dynamics and implications of precedential reliance. It contends that the case for protecting reliance on precedent is uncertain. There are several reasons why reliance might potentially be worth protecting, but all are subject to serious limitations or challenges. To bolster the doctrine of stare decisis while the status of precedential reliance continues to be worked out, the Article suggests a conceptual move away from backward-looking reliance and toward the forward-looking interest in managing the disruptive impacts of adjudicative change for society at large.

[Page 1460]

Introduction

Precedent occupies an intriguing place in American legal discourse. The prospect of deference to past decisions, even decisions that are dubious or erroneous, has spawned its fair share of critics on both theoretical and practical grounds.¹ Nevertheless, the abstract virtues of following precedent continue to draw widespread support. Among those virtues is the protection of reliance expectations. The basic claim is that stakeholder reliance should occasionally persuade judges to accept interpretations of the law they would otherwise reject.²

If reliance expectations possess the power to forestall the evolution and refinement of the law, there ought to be a well-developed account of where that power comes from. The explanation cannot be that judicial overrulings are breaches of promise. Consider the experience of the U.S. Supreme Court. Time and again, the Court has cautioned that while deference to precedent is "the preferred course,"³ it is not "an inexorable command."⁴ The Court can, does, and will continue to overrule its precedents when it sees fit. At the same time, the Court consistently invokes precedential reliance as a prime rationale for deferring to precedent. Justice Scalia has explained this solicitude by asserting that reliance on "unabandoned" precedent "is always justifiable reliance."⁵

These two propositions—precedent is mutable; and reliance on the durability of precedent is both reasonable and entitled to judicial respect—stand in apparent tension. Indeed, the flexibility of stare decisis provides some basis for contending that it is actually unreasonable to rely on the durability of precedent. Given the unveiled reality that judicial decisions are subject to reconsideration, stakeholders might be expected to take their own measures to mitigate the costs of a potential overruling, just as actors must take precautions or purchase insurance in order to manage other types of risk. Moreover, by publicly announcing that precedents are subject to reconsideration, the Court

[Page 1461]

might be seen as avoiding any normative obligation to stakeholders who would be harmed by an overruling. Precedents are not promises,⁶ and when the Court chooses to overturn a prior decision, it does nothing more than exercise an option that it previously reserved. Why, then, should precedential reliance serve as an obstacle to adjudicative change?

The primary goal of this Article is to situate reliance interests within a universe of precedential uncertainty. The Article begins by drawing out some of the nuance that pervades the relationship between precedent and reliance. I hope to show that the arguments for treating precedential reliance as deserving of judicial protection are complex and warranting of greater scrutiny than they tend to receive in the caselaw.

The Article's second aim is to articulate a proposal for rationalizing the modern doctrine of stare decisis in its treatment of stakeholder expectations. I suggest that the doctrine might be put on firmer ground through a conceptual shift. The reason for being attentive to stakeholder expectations need not be ex ante effects on investment incentives or a moral obligation to protect those who relied on past judicial decisions. The significance of stakeholder expectations may stem from something simpler: a desire to control the disruptive impacts of adjudicative change for the benefit of society as a whole. From this perspective, the question is less about whether past reliance should be protected and more about how departures from precedent are likely to prove disruptive going forward. Deferring to a precedent whose overruling would have dramatic effects on settled expectations becomes a mechanism for controlling the degree of disruption that is injected into the legal system through the process of adjudicative change.

Reframing the debate in terms of disruption and transition costs would not obviate the need for continued analysis of reliance interests. It may be that the disruption-oriented approach is insufficiently protective of precedential reliance because it understates the fairness and rule-of-law implications of

[Page 1462]

adjudicative change.⁷ I accept the possibility that such an argument may eventually emerge as persuasive. My claim is that shifting the conceptual focus to forward-looking disruption is a useful means of fortifying the modern doctrine of stare decisis so long as the case for protecting reliance qua reliance remains uncertain.

The focus on forward-looking disruption also has implications for the scope of impact that is relevant to the stare decisis enterprise. Overrulings can create destabilizing consequences for stakeholders beyond those who are directly affected by the applicable substantive rule. Employing the lens of forward-looking disruption underscores the utility of a systemic perspective that contemplates the numerous ways, both direct and indirect, that an overruling can affect individuals and institutions.⁸ The Supreme Court has hinted at this type of wide-ranging vision of systemic effects on a few occasions, but its treatments of the issue have been abbreviated.⁹ Connecting the systemic perspective with the disruption-based account provides a framework for fuller appreciation of the costs that can attend departures from settled law.

This Article begins in Part I by surveying the theoretical grounds on which stare decisis is commonly justified and explaining the value of a more foundational inquiry into the reliance interest. After a brief interlude in Part II to set the Article's methodological parameters, Part III addresses the leading arguments for deeming precedential reliance as worthy of judicial protection through the doctrine of stare decisis. Part IV suggests the desirability of recasting the jurisprudential concern with reliance in terms of the avoidance of future disruption costs. Part V then explains how the analytical move toward disruption emphasizes the need for a systemic view of the consequences of judicial overruling. Finally, Part VI offers some thoughts about the inquiry into systemic disruption within the context of litigating and resolving concrete disputes. My focus throughout will be the experience of the U.S. Supreme Court, though much of my analysis will be applicable to any court that treats its own precedents as worthy of presumptive deference on grounds including their tendency to generate reliance interests.

[Page 1463]

I. Justifying Stare Decisis

The classic explanation of why even dubious precedents may warrant respect is Justice Brandeis's declaration in 1932 that "in most matters it is more important that the applicable rule of law be settled than that it be settled right."¹⁰ The Supreme Court has returned to this sentiment over the years,¹¹ though it should be remembered that Justice Brandeis also emphasized (in the very same opinion) the wisdom of overruling erroneous decisions of a particular sort: those that misinterpret the Constitution.¹² In constitutional cases, he contended, "[t]he Court bows to the lessons of experience and the force of better reasoning."¹³

The tension between the importance of settlement and the desire to reap the benefits of "experience" and "better reasoning" has continued to shape disputes over precedent into the twenty-first century. That tension transcends the distinction between constitutional and statutory cases. Though the Court portrays its statutory decisions as entitled to the strongest form of deference,¹⁴

[Page 1464]

the presumption of adhering to precedent operates even in the constitutional context.¹⁵ Some extra justification is required before a prior decision of either sort may be repudiated.¹⁶

The Court's rationale for deferring to precedent draws on several animating principles. Stare decisis serves the "constitutional ideal" of the "rule of law"¹⁷ by ensuring—and demonstrating to the interested public—that "bedrock principles are founded in the law rather than in the proclivities of individuals."¹⁸ Given the presumptive resistance to overruling past decisions, change tends to be incremental rather than revolutionary, facilitating the gradual assimilation of new rules into the overarching legal framework.¹⁹ Institutionalizing a presumption of deference also reduces the incidence of

[Page 1465]

interpretive vacillation²⁰ and fosters a sense of stability and order, which (the argument goes) enhances public confidence and gives citizens a firmer basis for planning their affairs.²¹ The salience of these values is reinforced by the Justices' musings outside the...