Situational Severability

Severability doctrine can level an entire statute based on a single unconstitutional provision or application. Yet scant attention has been paid to the contexts in which the federal courts address severability. The courts assume that they can address severability whenever they confront a partially invalid law and that they can apply the same standard (calling for a wide-ranging search for the legislature’s likely intent) in all cases.

This unitary approach is problematic because it ignores that courts address severability in different contexts, which raise their own unique concerns. As a result, courts have answered severability questions in ways that violate the rules of Article III standing and the separation of powers. For instance, they have addressed severability at the jurisdictional stage of adjudication to determine a litigant’s standing—even though doing so runs counter to the principle that jurisdictional questions should be kept distinct from those concerning the rights and duties of the parties. And courts have deployed severability doctrine at the merits stage to identify what rights the legislature has authorized a litigant to assert—even though the severability standard gives short shrift to the principle of legislative supremacy that animates the courts’ general, text-bound approach to determining the statutory rights available to litigants. Moreover, courts have applied severability doctrine after resolution of a case to determine whether and how other parts of a partially invalid law will apply in the future—even though doing so violates basic Article III standing principles.

In offering the first comprehensive account of the ways in which courts apply severability doctrine, this Article illuminates these deficiencies. It also proposes a new, situation-sensitive approach to severability that would correct them. In short, this Article proposes that severability doctrine should be situational—just like severability itself.

Entrenchment, Incrementalism, and Constitutional Collapse

Entrenchment is fundamental to law. Grand documents like the U.S. Constitution, and mundane ones like city and corporate charters, entrench themselves against change through supermajority rules and other mechanisms. Entrenchment frustrates responsiveness, but it promotes stability, a rule of law virtue extolled for centuries. It does so through a straightforward channel: Entrenched law is difficult to change. Scholars have long understood this idea, which can be called the first status quo bias of entrenchment. This Article shows that a second bias lurks: Entrenchment makes changes that do take place incremental. As entrenchment deepens, the scope of potential change to law collapses on the status quo. To restate the idea, when we entrench law, we prevent change, at least for a time, and we confine any changes that do take place to small steps. This has implications for constitutional law, especially the debate about Article V and the separation of powers, both of which shield the Constitution from change more than scholars realize. It also illuminates several questions, especially in comparative constitutional law, such as why constitutions remain unpopular after amendment. Finally, it generates a theory of constitutional failure. When voters’ preferences evolve consistently in one direction, entrenched law eventually becomes as unstable as ordinary law, only less popular. Thus, entrenchment buys neither stability nor responsiveness. Because entrenchment confines legal change to incremental steps, amendment cannot correct the problem. This recasts questions of legal design in new light, and it may explain why some constitutions endure while others collapse.

The Untenable Case for Perpetual Dual-Class Stock

The desirability of a dual-class structure, which enables founders of public companies to retain a lock on control while holding a minority of the company’s equity capital, has long been the subject of a heated debate. This debate has focused on whether dual-class stock is an efficient capital structure that should be permitted at the time of initial public offering (“IPO”). By contrast, we focus on how the passage of time since the IPO can be expected to affect the efficiency of such a structure.

Our analysis demonstrates that the potential advantages of dual-class structures (such as those resulting from founders’ superior leadership skills) tend to recede, and the potential costs tend to rise, as time passes from the IPO. Furthermore, we show that controllers have perverse incentives to retain dual-class structures even when those structures become inefficient over time. Accordingly, even those who believe that dual-class structures are in many cases efficient at the time of the IPO should recognize the substantial risk that their efficiency may decline and disappear over time. Going forward, the debate should focus on the permissibility of finite-term dual-class structures¾that is, structures that sunset after a fixed period of time (such as ten or fifteen years) unless their extension is approved by shareholders unaffiliated with the controller.

We provide a framework for designing dual-class sunsets and address potential objections to their use. We also discuss the significant implications of our analysis for public officials, institutional investors, and researchers.