The precedential and persuasive value of unpublished dispositions.

• Author: Roberson, Andrew R.
• Position: Tax Court memorandum decisions

In planning and reporting the treatment of transactions for Federal tax purposes, taxpayers and their advisors must review and analyze the Internal Revenue Code ("Code"), legislative history, Treasury Regulations ("Regulations"), Internal Revenue Service ("IRS") guidance (both public and private), and case law. This article focuses on unpublished opinions, which sometimes contain legal analyses of fact patterns that are similar to transactions either being considered by a taxpayer or challenged by the IRS.

Most tax cases are decided by the United States Tax Court ("Tax Court"). As a trial court of national jurisdiction, the Tax Court encounters unique questions surrounding the application of stare decisis and the practice of comity. Where an appellate court decision is squarely on point and an appeal lies to that court alone, the Tax Court applies its Golsen rule and binds itself to that decision. But does the Golsen rule really extend to all such decisions? Over 80% of federal appellate court decisions are "unpublished" (1)--and the Tax Court has not been entirely clear on the weight, if any, it will accord to such decisions. Because federal appellate courts diverge widely on how they treat their own unpublished dispositions, that somewhat difficult question becomes even more nuanced for the Tax Court to answer.

This article first examines the federal appellate courts' local rules on unpublished dispositions as well as how the Tax Court treats these dispositions. It then discusses the weight the Tax Court gives to its own "unpublished" dispositions and the level of deference, if any, that the Tax Court extends to decisions of district courts. Finally, the article looks at reliance on unpublished dispositions in the planning context, particularly with respect to a defense against the imposition of penalties.

Unpublished Appellate Court Opinions

Today, unpublished opinions are a common judicial tool for disposing of cases. However, "[f]rom the dawn of the twentieth century until the mid-1970s," the mantra of the federal judiciary was "full publication, strong precedent, and unfettered citation." (2) In 1973, the Advisory Council on Appellate Justice drafted a report that recommended limiting the publication of opinions to those that met a certain defined standard, and recommended that those not designated for publication should not be cited as precedent. It proposed the following model rule to guide the publication determination (the "Model Rule"): (3)

1. Standard for Publication An opinion of the [court] shall not be designated for publication unless:

1. The opinion establishes a new rule or law or alters or modifies an existing rule; or

2. The opinion involves a legal issue of continuing public interest; or

3. The opinion criticizes existing law; or

4. The opinion resolves an apparent conflict of authority.

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5. All opinions that are not found to satisfy a standard for publication as prescribed by section (1) of this rule shall be marked Not Designated for Publication. Opinions marked Not Designated for Publication shall not be cited as precedent by any court or in any brief or other materials presented to any court.

The Model Rule provided a framework for the federal appellate courts in adopting their own local rules on unpublished dispositions. These rules can be grouped into three categories: (1) Publication Rules; (2) Citation Rules; and (3) Precedential Value.

Publication Rules by Circuit

The Model Rule provided a template for some circuits; others have significantly added or modified those standards. The circuits can be grouped into three general categories:

* Those that have largely adopted the Model Rule considerations (Fourth) (4) (including those that have added a few additional classifications (Fifth, Sixth, Ninth, and D.C.) (5));

* Those that have created their own formulations of what may lead to publication (First and Second and Federal) (6) (although some provide relatively nebulous guidance (Third and Tenth) (7)); and

* Those that offer no guidance on whether a decision should be published (Seventh, Eighth, and Eleventh). (8)

Citation Rules by Circuit

Once a court decides that it will not officially publish a disposition, the corresponding question arises regarding the extent that case may be subsequently cited. Up until 2007, circuit courts had widely disparate rules regarding citation of unpublished opinions, with some flatly prohibiting judges and lawyers from even citing to them. In 2007, however, Federal Rule of Appellate Procedure 32.1 ("Rule 32.1") was enacted. It provides:

(a) Citation Permitted. A court may not prohibit or restrict the citation of federal judicial opinions, orders, judgments, or other written dispositions that have been:

(i) designated as "unpublished," "not for publication," "non-precedential," "not precedent," or the like; and

(ii) issued on or after January 1, 2007.

Due to its prospective nature, circuit court rules differ on whether to apply Rule 32.1 retroactively:

* The Third, Fifth, Eleventh, and Federal Circuits do not provide any rules that explicitly modify Rule 32.1; (9)

* The Second, Seventh, and Ninth Circuits rely on Rule 32.1 but explicitly forbid citation of unpublished opinions prior to January 1, 2007; (10)

* The Fourth and Eighth Circuits disfavor citation of a pre-January 1, 2007 unpublished opinion, but allow it if such an opinion bears on a material issue and no published opinion would serve as well; (11)

* The First and D.C. Circuits remove Rule 32.1's prospective limitation at least as to their own circuit's unpublished opinions (though the D.C. Circuit substitutes an earlier date); (12) and

* The Sixth and Tenth Circuits give full retroactive effect to Rule 32.1. (13)

In sum, Rule 32.1 has fallen short of its goal of bringing uniformity to the citation of unpublished dispositions.

Circuit Rules on Precedential Value of Unpublished Dispositions

While Rule 32.1 sought uniformity with respect to the citation of unpublished opinions, the Advisory Committee Comment to that rule expressly noted that it provided no guidance regarding their precedential status:

Rule 32.1 is extremely limited.... It says nothing about what effect a court must give to one of its unpublished opinions or to the unpublished opinions of another court. Rule 32.1 addresses only the citation of federal judicial dispositions that have been designated as "unpublished" or "non-precedential"--whether or not those dispositions ... are precedential in some sense.

With that lack of guidance, it is not surprising that federal appellate courts also deviate on the weight, if any, given to unpublished opinions. (14)

* On one end of the spectrum, four circuits appear to accord no weight to unpublished opinions (or a circuit's equivalent thereof) and do not even hint that they may hold any persuasive weight.

** The Second Circuit, which issues either unpublished summary orders or published opinions, states that "[r]ulings by summary orders do not have precedential effect." (15)

** The Third Circuit first decides whether an opinion should be designated as precedential, and that decision determines whether an opinion gets published. In other words, the precedential question precedes the publication question. The Third Circuit designates an opinion as "precedential" or "not precedential" depending on whether such opinion "has precedential or institutional value." (16) If it does not, but rather only has value "to the trial court or the parties," it is designated as "not precedential." (17) And the Third Circuit "by tradition does not cite to its not precedential opinions as authority." (18)

** The Seventh Circuit issues only published opinions and unpublished orders. While all opinions "constitute the law of the circuit," all orders "are not treated as precedents." (19)

** The Ninth Circuit simply states that its "[u]npublished dispositions and orders ... are not precedent." (20)

* Five circuits indicate that unpublished opinions, while falling short of binding precedent, may be considered as persuasive authority or for their persuasive value. (21)

** The First Circuit will not consider its own "unpublished judicial opinion[s], order[s], judgments], or other written disposition[s] ... as binding precedent"; it will "consider such dispositions for their persuasive value." (22)

** The Eighth Circuit states that unpublished opinions "are not precedent" (without any modifier such as "binding"); however, it also does not foreclose consideration of them because they can be cited to the court if they have "persuasive value on a material issue and no published opinion of this court or another court would serve as well." (23)

** Similarly, the Tenth Circuit states that while "[unpublished decisions are not precedential," they still "may be cited for their persuasive value." (24)

** The Eleventh Circuit provides that while its "[u]npublished opinions are not considered binding precedent ... they may be cited as persuasive authority." (25)

** The Federal Circuit allows for its judges "to look to a non-precedential disposition for guidance or persuasive reasoning, but will not give one of its own nonprecedential dispositions the effect of binding precedent." (26)

* Two circuits, while not giving any explicit instructions on how they view their unpublished dispositions, implicitly suggest that they may give weight to their unpublished dispositions.

** While the Fourth Circuit disfavors citation to pre-January 1, 2007 unpublished dispositions, it explicitly provides that a party may cite to one if that party believes that it "has precedential value in relation to a material issue in a case and that there is no published opinion that would serve as well." (27) It also distinguishes an unpublished disposition from a mere summary opinion, which is only issued when "all judges on a panel ... agree following oral argument that an opinion in a case would have no precedential value." (28)

** The...