RETHINKING PRELIMINARY REMEDIES.

• Author: Brooks, Eric

ABSTRACT

It is universally assumed that courts, when picking a preliminary remedy, should consider more than the legal merits. They also should consider factors like the "equities," "public interest," and "irreparable harm."

But that assumption is mostly wrong. The idea behind it is that at the preliminary stage, the merits are too uncertain to give courts the full guidance they need. Yet this is not true. For example, judges are often unsure of the merits even after a final hearing. But few think that judges may therefore filter their final decisions through an equitable balancing test. And even if uncertainty did distinguish preliminary from final hearings, it would not justify current doctrine. By factoring in the equities, current doctrine allows courts to replace the substantive law with their own freelance efficiency analysis. But whatever effect a court's uncertainty should have on its preliminary decisions, the effect cannot plausibly be to change the body of governing law. By calling for this, current doctrine is unsound.

What should replace it? To answer that, this essay focuses on what truly distinguishes preliminary hearings: not uncertainty, but the fact that the court will get to reconsider its decision later. To take fullest advantage of this chance, a court should consider not only the merits of its preliminary choices, but also those choices' option value. Maximizing option value is a more constraining aim than the goals of current doctrine. This essay explains how to weigh option value against the merits to create a more accurate preliminary-remedy test.

1. OUR FLAWED APPROACH TO PRELIMINARY REMEDIES A. Prelude: How Courts Approach Final Decisions B. Flaw One: Weighing the Equities Wrongly C. Flaw Two: Considering the Equities at All II. PRELIMINARY REMEDIES RETHOUGHT A. Courts Should Account for Option Value B. How to Measure Option Value (In Theory) C. How to Measure Option Value (In Practice) CONCLUSION INTRODUCTION

   National Federation of Independent Business v. Department of Labor, OSHA hit the news last year for holding that OSHA's vaccine-or-test rule was illegal. (1) But to a certain crowd, the bombshell was what the Supreme Court did next.

   The Court was considering whether to stay the OSHA rule pending full judicial review of it. (2) Under textbook remedies law, this meant that it was supposed to consider more than whether the rule was lawful. Because stays are an "equitable" remedy, the case law tells us, the Court also should have weighed three other factors: "whether the applicant will be irreparably injured absent a stay"; whether "the stay will substantially injure the other parties interested in the proceeding"; and "where the public interest lies." (3)

   In NFIB, though, the Court junked the last three factors. After finding that the rule exceeded OSHA's statutory powers, it said:

   The equities do not justify withholding interim relief. We are told by the States and the employers that OSHA's mandate will force them to incur billions of dollars in unrecoverable compliance costs and will cause hundreds of thousands of employees to leave their jobs. For its part, the Federal Government says that the mandate will save over 6,500 lives and prevent hundreds of thousands of hospitalizations. It is not our role to weigh such tradeoffs. In our system of government, that is the responsibility of those chosen by the people through democratic processes. (4) And with that: "The applications for stays ... are granted." (5)

   This ending was startling, at least to American lawyers interested in remedies: "Did the Supreme Court Overrule Equity?" asked one; (6) might "Equity [be] dead (for stays)," pondered another. (7)

   To anyone else, however, NFIB's coda should not have been terribly shocking. After all, when a court decides after a full hearing that an agency's rule is illegal, it vacates the rule, with rare exceptions not relevant here. (8) It may not keep the illegal rule alive because it thinks that the rule is nonetheless "equitable" or in the "public interest." So once the Supreme Court found that the vaccine-or-test rule was illegal, the rule was doomed. It would have been strange if the Court had nevertheless kept the illegal rule on life support for a few months based on a "public interest" rationale that would soon become irrelevant. (And if that does not sound too bad to you, you probably would not love the reverse--if the Court had found the rule lawful, but then stayed it anyway because it thought the rule bad policy.)

   NFIB was an easy case for ignoring the equities because the Court seemed sure that the vaccine-or-test rule was illegal. (9) But its move cannot be cabined. In this essay, I will show how the principle behind NFIB implies a stronger result: that the Court should have ignored the "equities" and "public interest" even if it had not been sure of the merits.

   In fact, the equities and public interest should never factor into a court's preliminary decision, at least when considering these factors would also be verboten after a full hearing. Considering them at only the preliminary stage is not a benign procedural rule. It is a way to change the governing substantive law. At best, it tells courts to apply different bodies of law in different months, depending only on the vagaries of the court's litigation calendar. At worst, it lets a court ignore the law in favor of its own policy views.

   For instance, imagine if the NFIB Court had not been sure of the merits, and had thus gone with the equities. Then, for many months after January 2022, the government's right to impose a vaccine-or-test rule would have hinged on a policy assessment--perhaps something like the arbitrary-and-capricious review that administrative decisions often get. (10) But then one day--whatever day the district court got around to publishing its final decision--the right would instantly turn on a different legal framework, pure statutory interpretation. The textbook reason for treating the preliminary and final stages so differently is that during the earlier stage, the law was uncertain. But even if the court's degree of uncertainty should factor into the preliminary analysis somehow, it is hard to see why the way it should matter is to change the governing body of law.

   In fact, as I show in Part I, uncertainty does not even distinguish the preliminary and final stages of a case. Sometimes courts are unsure about the merits even after a full hearing. But that does not license them to throw up their hands and decide the case based on their sense of fairness. Instead, we expect them to make their best guess of the law and pick a final remedy accordingly. If they do not, we might accuse them of thwarting democracy. Uncertainty thus cannot be a reason to treat preliminary and final remedies differently.

   In Part I, I also expose a more technical problem with current doctrine. Even if it were proper to weigh the equities or public interest at the preliminary stage, courts would need to do so in a way that is internally coherent. But the near-consensus theory of how to weigh these factors is unsound. The problem, in short, is that the theory gives those factors only half weight when, to be coherent, it would need to give them full weight.

   While this criticism is separate from my first, the two problems are entwined. By giving the equities and public interest only half weight, the modern approach masks (but does not erase) its disrespect for the substantive law. That might be why the problem has gone largely unnoticed. But once we see the technical flaw, we will see that if the equities and public interest are to play any role in preliminary decisions, they should play a much larger role: the merits should drop out entirely. Because most judges would balk at that, it will seem more appealing to instead junk the other two factors.

   But if the equities and public interest are out, should we treat preliminary and final remedies identically? No. I will show why in Part II. A court that wants to minimize the deviation between its rulings and the substantive law should want to minimize this deviation over the whole future, not just the deviation between now and the final hearing. Thus, when a court knows that it will have a second crack at a case, it should prefer (all else equal) a preliminary remedy whose effects can be reversed. So when deciding on a preliminary remedy, courts should consider not only the merits, but also the remedy's option value, the room it leaves the court to reverse course later. (11)

   Maximizing "option value" might sound suspiciously like minimizing "irreparable harm," a prong of current preliminary-remedy doctrine. But these aims are only cousins. Maximizing option value is a more constraining objective. While it still forces a court to consider more than just the merits, it frees the court from deciding whether a remedy's effects count as harms. Plus, there turns out to be a significant class of cases in which all a court's remedial choices will have nearly the same option value. In these cases, option value should fall out of the equation.

   When option value washes out, we will end up with a startlingly simple test: courts should award a preliminary remedy exactly when they would issue a full remedy on the same record. In other words, in many cases, courts should simply decide the merits. There should be no separate test for stays or preliminary injunctions.

   This would be a big change. But if a court's job is to apply the substantive law, not to reinvent it for one stage of a case, then current doctrine is far off.

1. OUR FLAWED APPROACH TO PRELIMINARY REMEDIES

   The modern approach to preliminary remedies has a critical flaw. Courts and scholars assume that because the law has not been "determined authoritatively," courts should get more leeway to base their decisions on factors like the "equities" and "public interest" that would otherwise be forbidden. (12) The intuition is that...