Note

College Athletics, Coercion, and the Establishment Clause: The Case of Clemson Football

Once a person turns eighteen and goes to college, do they immediately become less susceptible to the influences of those in power and their peers? The Supreme Court tells us that they do. While consistently willing to find that prayers at middle school graduations and high school football games are violations of the Establishment Clause under the coercion test, the Court has stated that adults are more mature and “presumably” less susceptible to religious coercion. Scholars and the circuit courts of appeals have taken varying approaches and arrived at different outcomes when considering adult claimants. None, however, have articulated a uniform test for adults to establish coercion. Using indicative language from the Supreme Court, this Note argues for the first time that adult claimants must show that a State action has a “real and substantial likelihood” of coercion in order to bring a successful Establishment Clause challenge. It further proposes that a spectrum of susceptibility to coercion exists under the Establishment Clause based on certain populations’ ages and respective environments.

After articulating the standard of coercion for adults and the spectrum of susceptibility to coercion, this Note applies both to a prominent example of overt incorporation of religion into a public university—the Clemson University football program. The Clemson football coaching staff unabashedly integrates religion into many aspects of the program, from Bible studies led and organized by staff to baptisms of players on the practice field. Using psychological and educational research about the effects of coaches and teammates on a college student-athlete’s values, beliefs, and behaviors, this Note argues that college student-athletes are uniquely prone to coercion and places them on the spectrum of susceptibility to coercion. Finally, it applies the standard of coercion for adults to conclude that religious aspects of Clemson’s football program are unconstitutional under the Establishment Clause.

Introduction

Situated in the small college town of Clemson, South Carolina, the Clemson University (“Clemson”) football team boasts quite a record. With NCAA College Football Playoff (“CFP”) National Championships in 2016 and 2018, consecutive CFP appearances and Atlantic Coast Conference Championships from 2015 to 2019, and at least ten wins in each season from 2011 to 2019, head coach Dabo Swinney has built a culture of success in his program around his slogan “all in.”1 1.National Champions, https://daboswinney.com/championships/ [https://perma.cc/9S7H-SPP4] (last visited Sept. 28, 2020); Greg Wallace, Inside a Top 10 College Football Team’s Summer Conditioning Program, Bleacher Rep. (June 6, 2014), https://bleacher­report.com/articles/2088395-inside-a-top-10-college-football-teams-summer-conditioning-program [https://perma.cc/274C-3ZG5] (internal quotation marks omitted).Show More While the students, alumni, and fans of Clemson football may consider football their religion, there is a tenet of actual sectarian religion deeply ingrained and woven into the program’s culture.2 2.Tim Rohan, Faith, Football and the Fervent Religious Culture at Dabo Swinney’s Clemson, Sports Illustrated (Sept. 4, 2019), https://www.si.com/college-football/2019/09/04/clemson-dabo-swinney-religion-culture [https://perma.cc/46JS-8ZGA].Show More As documented by the Freedom from Religion Foundation’s (“FFRF”) 2014 letter sent to Clemson’s Senior Associate General Counsel, several of the program’s practices—which originate from the coaching staff’s conduct and are not student-led or organized—indicate not only an “endorsement of religion over nonreligion,” but also a preference for “Christian worship.”3 3.Letter from Patrick C. Elliott, Staff Att’y, Freedom from Religion Found., to Erin Swan Lauderdale, Senior Assoc. Gen. Couns., Clemson Univ. 1 (Apr. 10, 2014) [hereinafter FFRF Letter], https://ffrf.org/images/clemson_letter.pdf [https://perma.cc/Y26K-4HUA]. FFRF sent this letter to Clemson after they reviewed records obtained through a FOIA request. Id.Show More Coach Swinney has maintained an “an outwardly religious program.”4 4.Kevin Trahan, Freedom from Religion Foundation Complains About Clemson Football Program, SBNation (Apr. 15, 2014), https://www.sbnation.com/college-football/2014/4/15/5616602/clemson-football-dabo-swinney-religious-freedom-complaint.Show More Quite simply, “[a]t Clemson, God is everywhere.”5 5.Brad Wolverton, With God on Our Side, Chron. of Higher Educ. (Nov. 24, 2013), https://www.chronicle.com/article/With-God-on-Our-Side/143231 [https://perma.cc/7Q3G-M4PG].Show More

In 2011, James Trapp became the official chaplain of the football team at Coach Swinney’s personal invitation and insistence.6 6.FFRF Letter, supra note 3, at 1.Show More In his paid role as chaplain, Mr. Trapp went beyond simply leading team prayers. He “was regularly given access to the entire football team in between drills for the purpose of bible study,” maintained an office in the Jervey Athletic Center where he kept Bibles for distribution and displayed Bible quotes, and planned and facilitated sessions on “being baptized” in the athletic center.7 7.Id. at 2–3.Show More Mr. Trapp also organized more than eighty devotionals for the football team between March 2012 and April 2013, which were approved by Coach Swinney and led by members of the coaching staff.8 8.Id. at 4.Show More Further, he organized the team’s transportation via coach buses to local churches for annual “Church Day[s]” during training camp.9 9.Id.Show More

Journalists have reported other instances of the coaching staff’s endorsement of religion. In the fall of 2012, star wide receiver DeAndre Hopkins was baptized on the field in his uniform and pads at the conclusion of practice.10 10.Rohan, supra note 2; see also Wolverton, supra note 5 (describing DeAndre Hopkins’s baptism in a livestock trough on the practice field).Show More Then-Assistant Coach Jeff Scott even tweeted a photo that captured the scene.11 11.Coach Jeff Scott (@coach_jeffscott), Twitter (Sept. 2, 2012, 10:14 PM), https://twitter.com/coach_jeffscott/status/24244533830313984.Show More Following Hopkins’s baptism, it is estimated that between ten and fifteen player baptisms occurred over the next two seasons—many of which took place during camp in a pond by the practice field.12 12.Rohan, supra note 2.Show More Coach Swinney tells recruits and their families that he is a Christian and, if they “have a problem with that, [they] don’t have to be [there].”13 13.Wolverton, supra note 5.Show More One recruit’s mother distinctly remembers Coach Swinney’s guarantee “that every single player that comes through this program will hear about the Gospel of Christ.”14 14.Rohan, supra note 2.Show More

If Clemson were a public high school instead of a public university, this situation would present a clear violation of the Establishment Clause of the First Amendment.15 15.See Lee v. Weisman, 505 U.S. 577, 592 (1992) (“[T]here are heightened concerns with protecting freedom of conscience from subtle coercive pressure in the elementary and secondary public schools.”).Show More The Supreme Court has stated, however, that college students “are . . . young adults” and are therefore “less impressionable than younger students.”16 16.Widmar v. Vincent, 454 U.S. 263, 274 n.14 (1981). Widmar was decided on free speech grounds as the Court did not find the State’s interest in creating more separation between church and state than required by the Establishment Clause “sufficiently ‘compelling’ to justify content-based discrimination against respondents’ religious speech.” Id. at 276. For further discussion of circuit courts of appeals’ application of Widmar to the coercion test in cases involving higher education, see also infra notes 110–12 and accompanying text.Show More Yet, the Court has not spoken directly on the issue of religious coercion with respect to adult college students at a public university. While the religious nature of Clemson’s football program presents only one example of overt incorporation of religion at a public university, the initial, more important, and unanswered question is what must adult claimants show in order to litigate a successful Establishment Clause challenge.17 17.By “adult,” I mean individuals who have reached the age of majority in their respective states.Show More

Using the prominent example of Clemson football,18 18.Clemson’s football program presents one of many examples of the incorporation of religion into college football. For examples of other football programs that have hired chaplains, see Freedom from Religion Found., Pray to Play: Christian Coaches and Chaplains Are Converting Football Fields into Mission Fields 13–15 (2015) [hereinafter Pray to Play], https://ffrf.org/images/Pray_To_Play_FINAL_REPORT1.pdf [https://perma.cc/A4QB-T8V­H]. Examples of the incorporation of religion can also be found in other college sports, such as basketball. See, e.g., Whitelaw Reid, Man of Faith: How Tony Bennett’s Religion Has Shaped His UVa Tenure, Daily Progress (Nov. 24, 2010), https://www.dailyprogress.com/­sports/man-of-faith-how-tony-bennett-s-religion-has-shaped/article_de7b70b5-54f2-5f94-bc4f-dc4449748bb8.html [https://perma.cc/CM7C-K9JR] (“As a number of recruits have signed to play for [Tony] Bennett, the first thing they’ve talked about . . . . [is] the connection they’ve felt with Bennett through God.”).Show More this Note answers that question by articulating a coercion standard for adults, arguing that a spectrum of susceptibility to coercion exists under the Establishment Clause, and suggesting where college student-athletes fit along that spectrum. While some scholars have written about the Establishment Clause and college athletics, they do not apply the modern coercion test,19 19.The modern coercion test focuses on psychological coercion as articulated in Lee v. Weisman. See infra Section I.B.Show More articulate a coercion standard for adults, or advance a theory regarding a range of susceptibility to coercion. For example, Clayton Adams, emphasizing a need to protect a “government employee’s right to speak on matters of public concern,” applied a “modified coercion test” to religious aspects of various college football programs—including the Clemson football program.20 20.Clayton D. Adams, Personal Foul, Roughing the Speaker: The Illusory War Between the Establishment Clause & College Football, 84 Miss. L.J. Supra 167, 183, 194–202 (2015).Show More Kris Bryant suggested that the Court should adopt a “Coercion/Endorsement Test ‘with teeth’” when analyzing the Establishment Clause claims of public university students.21 21.Kris Bryant, Take a Knee: Applying the First Amendment to Locker Room Prayers and Religion in College Sports, 36 J. Coll. & U.L. 329, 359–60 (2009).Show More Gil Fried and Lisa Bradley briefly suggested that there is an “Establishment Clause case law scale from elementary school prayer to prayer opening legislative sessions cases” and recognized that “college prayer cases” fall “in between these two ends of the continuum” without theorizing further.22 22.Gil Fried & Lisa Bradley, Applying the First Amendment to Prayer in a Public University Locker Room: An Athlete’s and Coach’s Perspective, 4 Marq. Sports L.J. 301, 303, 310–13 (1994).Show More Fried and Bradley, however, then applied the now disfavored Lemon test to analyze college locker room prayers.23 23.Id.Show More In a similar vein, other scholars have addressed the Establishment Clause’s application to students at public universities, or adults in general, without applying the psychological coercion test, articulating a coercion standard for adults, or proposing a theory regarding a range of susceptibility to coercion.24 24.See, e.g., Phillip E. Marbury, Comment, Audience Maturity and the Object of the Establishment Clause, 6 Liberty U. L. Rev.565, 579 (2012) (arguing that “audience maturity is a significant factor” in the Court’s modern Establishment Clause jurisprudence); Elizabeth B. Halligan, Coercing Adults? The Fourth Circuit and the Acceptability of Religious Expression in Government Settings, 57 S.C. L. Rev.923, 924–26 (2006) (analyzing Mellen v. Bunting, a Fourth Circuit case that struck down a prayer at a public military university because of public prayer’s potential impact on adult audience members); Deanna N. Pihos, Assuming Maturity Matters: The Limited Reach of the Establishment Clause at Public Universities, 90 Cornell L. Rev.1349, 1373 (2005) (arguing that the respective ages of high school and college students is a “questionable distinction on which to create two different standards of Establishment Clause protection” under the coercion, Lemon, and endorsement tests).Show More

This Note addresses the gap in the literature regarding how to treat adult claimants under the coercion test of the Establishment Clause. Instead of suggesting a new or modified coercion test or using a now disfavored test, this Note articulates a practical coercion standard for adults that is rooted in the current jurisprudence. Part I of this Note traces the development of the modern coercion test in the Supreme Court and the test’s application to cases involving higher education in the circuit courts of appeals. Then, Part II proposes a coercion standard for adults and, based on their respective environments, places various populations along a spectrum according to their level of susceptibility to coercion. Finally, Part III applies the coercion standard for adults and coercion spectrum to college student-athletes. It argues that college student-athletes should be seen as more susceptible to coercion than typical college students and that various religious-oriented aspects of the Clemson football program violate the Establishment Clause. A conclusion follows.

  1. * J.D., University of Virginia School of Law, 2021; M.Ed., Clemson University, 2015. I am especially grateful to Professor Micah Schwartzman for sparking this research and for supporting me in the development of this Note. I also sincerely appreciate the members of the Virginia Law Review who assisted in the editing and preparation of the Note—especially Olivia Roat. ↑
  2. National Champions, https://daboswinney.com/championships/ [https://perma.cc/9S7H-SPP4] (last visited Sept. 28, 2020); Greg Wallace, Inside a Top 10 College Football Team’s Summer Conditioning Program, Bleacher Rep. (June 6, 2014), https://bleacher­report.com/articles/2088395-inside-a-top-10-college-football-teams-summer-conditioning-program [https://perma.cc/274C-3ZG5] (internal quotation marks omitted). ↑
  3.  Tim Rohan, Faith, Football and the Fervent Religious Culture at Dabo Swinney’s Clemson, Sports Illustrated (Sept. 4, 2019), https://www.si.com/college-football/2019/09/04/
    clemson-dabo-swinney-religion-culture [https://perma.cc/46JS-8ZGA]. ↑
  4. Letter from Patrick C. Elliott, Staff Att’y, Freedom from Religion Found., to Erin Swan Lauderdale, Senior Assoc. Gen. Couns., Clemson Univ. 1 (Apr. 10, 2014) [hereinafter FFRF Letter], https://ffrf.org/images/clemson_letter.pdf [https://perma.cc/Y26K-4HUA]. FFRF sent this letter to Clemson after they reviewed records obtained through a FOIA request. Id. ↑
  5. Kevin Trahan, Freedom from Religion Foundation Complains About Clemson Football Program, SBNation (Apr. 15, 2014), https://www.sbnation.com/college-football/2014/4/15/
    5616602/clemson-football-dabo-swinney-religious-freedom-complaint. ↑
  6. Brad Wolverton, With God on Our Side, Chron. of Higher Educ. (Nov. 24, 2013), https://www.chronicle.com/article/With-God-on-Our-Side/143231 [https://perma.cc/7Q3G-M4PG]. ↑
  7. FFRF Letter, supra note 3, at 1. ↑
  8. Id. at 2–3. ↑
  9. Id. at 4. ↑
  10. Id. ↑
  11. Rohan, supra note 2; see also Wolverton, supra note 5 (describing DeAndre Hopkins’s baptism in a livestock trough on the practice field). ↑
  12.  Coach Jeff Scott (@coach_jeffscott), Twitter (Sept. 2, 2012, 10:14 PM), https://twitter.com/coach_jeffscott/status/24244533830313984. ↑
  13. Rohan, supra note 2. ↑
  14. Wolverton, supra note 5. ↑
  15. Rohan, supra note 2. ↑
  16. See Lee v. Weisman, 505 U.S. 577, 592 (1992) (“[T]here are heightened concerns with protecting freedom of conscience from subtle coercive pressure in the elementary and secondary public schools.”). ↑
  17. Widmar v. Vincent, 454 U.S. 263, 274 n.14 (1981). Widmar was decided on free speech grounds as the Court did not find the State’s interest in creating more separation between church and state than required by the Establishment Clause “sufficiently ‘compelling’ to justify content-based discrimination against respondents’ religious speech.” Id. at 276. For further discussion of circuit courts of appeals’ application of Widmar to the coercion test in cases involving higher education, see also infra notes 110–12 and accompanying text. ↑
  18. By “adult,” I mean individuals who have reached the age of majority in their respective states. ↑
  19. Clemson’s football program presents one of many examples of the incorporation of religion into college football. For examples of other football programs that have hired chaplains, see Freedom from Religion Found., Pray to Play: Christian Coaches and Chaplains Are Converting Football Fields into Mission Fields 13–15 (2015) [hereinafter Pray to Play], https://ffrf.org/images/Pray_To_Play_FINAL_REPORT1.pdf [https://perma.cc/A4QB-T8V­H]. Examples of the incorporation of religion can also be found in other college sports, such as basketball. See, e.g., Whitelaw Reid, Man of Faith: How Tony Bennett’s Religion Has Shaped His UVa Tenure, Daily Progress (Nov. 24, 2010), https://www.dailyprogress.com/­sports/man-of-faith-how-tony-bennett-s-religion-has-shaped/article_de7b70b5-54f2-5f94-bc4f-dc4449748bb8.html [https://perma.cc/CM7C-K9JR] (“As a number of recruits have signed to play for [Tony] Bennett, the first thing they’ve talked about . . . . [is] the connection they’ve felt with Bennett through God.”). ↑
  20. The modern coercion test focuses on psychological coercion as articulated in Lee v. Weisman. See infra Section I.B. ↑
  21. Clayton D. Adams, Personal Foul, Roughing the Speaker: The Illusory War Between the Establishment Clause & College Football,
    84

    Miss. L.J. Supra

    167

    , 183, 194–202 (2015). ↑

  22. Kris Bryant, Take a Knee: Applying the First Amendment to Locker Room Prayers and Religion in College Sports, 36 J. Coll. & U.L
    .

    329, 359–60 (2009). ↑

  23. Gil Fried & Lisa Bradley, Applying the First Amendment to Prayer in a Public University Locker Room: An Athlete’s and Coach’s Perspective, 4 Marq. Sports L.J. 301, 303, 310–13 (1994). ↑
  24. Id. ↑
  25.  See, e.g., Phillip E. Marbury, Comment, Audience Maturity and the Object of the Establishment Clause, 6 Liberty U. L. Rev.

    565, 579 (2012) (arguing that “audience maturity is a significant factor” in the Court’s modern Establishment Clause jurisprudence); Elizabeth B. Halligan, Coercing Adults? The Fourth Circuit and the Acceptability of Religious Expression in Government Settings, 57 S.C. L. Rev.

    923, 924–26 (2006) (analyzing Mellen v. Bunting, a Fourth Circuit case that struck down a prayer at a public military university because of public prayer’s potential impact on adult audience members); Deanna N. Pihos, Assuming Maturity Matters: The Limited Reach of the Establishment Clause at Public Universities, 90 Cornell L. Rev.

    1349, 1373 (2005) (arguing that the respective ages of high school and college students is a “questionable distinction on which to create two different standards of Establishment Clause protection” under the coercion, Lemon, and endorsement tests). ↑

Conflicts of Precedent

The law of the circuit doctrine requires three-judge panels in the federal courts of appeals to give stare decisis effect to past decisions of the circuit, which can only be overruled by the circuit sitting en banc or by the U.S. Supreme Court. This doctrine presents a recurring dilemma for circuit panels: the applicability of circuit precedent that is undermined by, but not conclusively overruled by, intervening Supreme Court precedent. The circuits have developed disparate approaches to addressing these scenarios: some permit three-judge panels to overrule undermined circuit precedent, others require an en banc proceeding to reject circuit precedent that is not unequivocally overruled by the Supreme Court, and still others have an internal procedure for circuit judges to agree on the proper approach.

This Note explores how federal courts of appeals ought to treat undermined-but-not-overruled circuit precedent. It first rejects the potential argument that horizontal stare decisis in the court of appeals is compelled by the Constitution or by statute. As such, the Note explains how the values of uniformity, institutional legitimacy, accuracy, reliance, and judicial economy are served by the practices of vertical and horizontal stare decisis, and it concludes that those values are better served by following vertical precedent than horizontal. Accordingly, this Note argues that circuit panels should apply a presumption in favor of overruling undermined precedent to align circuit doctrine with recent Supreme Court decisions. Moreover, the Note argues that the strength of this presumption should be tailored to the context of the case. By re-orienting the focus of precedent toward Supreme Court decisions rather than contradicted circuit doctrine, the courts of appeals can bring greater uniformity to the content of federal law, enhance efficiency within the legal system, and better enable the Supreme Court to realize its position atop the judicial hierarchy.

I. Introduction

Recall the classic case of Flood v. Kuhn, where the U.S. Supreme Court had to decide whether the Sherman Antitrust Act applied to professional baseball.1 1.407 U.S. 258, 259 (1972).Show More The Court was not writing on a blank slate in Kuhn; fifty years earlier in Federal Baseball Club of Baltimore Inc. v. National League of Professional Baseball Clubs, it held that the Sherman Act did not cover professional baseball.2 2.259 U.S. 200, 209 (1922).Show More But in the meantime, the Supreme Court had interpreted the Sherman Act to reach professional boxing3 3.United States v. Int’l Boxing Club of N.Y., Inc., 348 U.S. 236, 242 (1955).Show More and football.4 4.Radovich v. Nat’l Football League, 352 U.S. 445, 452 (1957). The Supreme Court had also reaffirmed Federal Baseball Club’s holding in Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953) (per curiam), but that case was decided before International Boxing Club or Radovich.Show More By the time of Flood v. Kuhn, Federal Baseball Club was an outlier, and yet the Court adhered to baseball’s unique exemption from antitrust liability on the grounds of stare decisis.5 5.Kuhn, 407 U.S. at 283–84.Show More

Now let’s put a twist on that story. Imagine that at Time 1, a federal court of appeals, rather than the Supreme Court, decided Federal Baseball Club and held professional baseball to be exempt from the Sherman Act. Subsequently at Time 2, the U.S. Supreme Court held that the Sherman Act was applicable to professional boxing and football. At Time 3, the equivalent of Flood v. Kuhn, challenging the continued viability of Federal Baseball Club, comes before the court of appeals. How should the court proceed in light of the Time 2 Supreme Court decisions that cast doubt on, but do not directly overturn, the appellate court’s Time 1 precedent?

This type of case poses a significant dilemma for stare decisis in the federal courts of appeals. Under the law of the circuit doctrine, circuit precedents are binding on that court unless a majority of active judges in the circuit overturn a decision in an en banc proceeding or the precedent is directly overruled by the Supreme Court.6 6.See, e.g., Lewis v. Humboldt Acquisition Corp., 634 F.3d 879, 881 (6th Cir. 2011) (en banc).Show More But in some circuits, when a Supreme Court decision casts doubt on—without directly overruling—a prior circuit precedent, a panel of court of appeals judges can overrule that precedent and bypass an en banc proceeding.7 7.See, e.g.,United States v. Villareal-Amarillas, 562 F.3d 892, 898 n.4 (8th Cir. 2009).Show More In other circuits, a panel’s authority to overrule circuit precedent under these circumstances is very narrowly circumscribed.8 8.See, e.g.,United States v. Staten, 466 F.3d 708, 717–20 (9th Cir. 2006).Show More This type of situation commonly arises when the Supreme Court interprets a statute that bears some relation to the one addressed by a circuit precedent. The issue also presents itself when the Supreme Court interprets the same constitutional or statutory provision as the circuit precedent but considers different factual subject matter.

The problem of undermined-but-not-overruled circuit precedent is a recurring dilemma for federal courts of appeals.9 9.Andrew C. Michaels, Implicit Overruling and Foreign Lost Profits, 25 B.U. J. Sci. & Tech. L. 408, 409 (2019) (“[H]ow might a court choose between following a directly-on-point circuit panel precedent, versus a subsequent Supreme Court case that is less directly on point but arguably overruled that panel precedent? Despite the fact that federal circuit courts (and district courts) are faced with this question on a regular basis, the answer is not clear.”).Show More The Sixth Circuit, for example, recently faced this dilemma in Jacobs v. Alam.10 10.915 F.3d 1028 (6th Cir. 2019).Show More The plaintiff filed a Bivens11 11.Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971).Show More action against federal law enforcement agents to recover damages for excessive force, false arrest, malicious prosecution, fabrication of evidence, and civil conspiracy.12 12.Jacobs, 915 F.3d at 1033.Show More The Sixth Circuit (but not the Supreme Court) had previously recognized Bivens claims for damages in all of those contexts.13 13.See Webb v. United States, 789 F.3d 647, 659–60, 666–72 (6th Cir. 2015) (discussing the merits of Bivens actions for malicious prosecution, false arrest, fabrication of evidence, and civil conspiracy); Burley v. Gagacki, 729 F.3d 610, 621 (6th Cir. 2013) (explaining plaintiff’s burden for an excessive force Bivens action).Show More But after those Sixth Circuit decisions, the Supreme Court decided Ziglar v. Abbasi, which concluded that if a case presents a new Bivens context that is “different in a meaningful way from previous Bivens cases decided by [the Supreme] Court,” then the deciding court should not make a Bivens remedy available if there are “special factors counselling hesitation.”14 14.137 S. Ct. 1843, 1857, 1859 (2017) (emphasis added) (quoting Carlson v. Green, 446 U.S. 14, 18 (1980)) (internal quotation marks omitted).Show More The Sixth Circuit panel in Jacobs recognized that had Abbasi not been decided, “defendants’ appeal would have no merit” under circuit precedent.15 15.Jacobs, 915 F.3d at 1036.Show More But although Abbasi did not directly overrule those Bivens circuit precedents,16 16.AccordLoumiet v. United States, 292 F. Supp. 3d 222, 229 (D.D.C. 2017) (rejecting the theory that “after Abbasi, a district court may no longer rely on circuit court precedent recognizing a Bivens cause of action in a context that has not expressly been recognized (or expressly rejected) by the Supreme Court”).Show More the decision called into question whether they were still good law, or whether the court needed to perform a special factors analysis. Ultimately, the Jacobs panel did not “deem these Sixth Circuit precedents inconsistent with Ziglar [v. Abbasi],” and thus, it concluded that it was bound to follow them without resort to a special factors analysis.17 17. Jacobs, 915 F.3d at 1036–39.Show More

The D.C. Circuit, however, took the opposite tack in the context of Bivens claims following Ziglar v. Abbasi. In Loumiet v. United States, the court considered whether to permit a Bivens action for a First Amendment retaliation claim.18 18.948 F.3d 376, 378 (D.C. Cir. 2020).Show More Although the D.C. Circuit had previously recognized Bivens claims in this context,19 19.See, e.g., Haynesworth v. Miller, 820 F.2d 1245, 1255 (D.C. Cir. 1987) (holding that “retaliatory prosecution constitutes an actionable First Amendment wrong redressable under Bivens” (footnote omitted)).Show More the court held that “those cases have been overtaken by Abbasi’s holding that the new-context analysis may consider only Supreme Court decisions approving Bivens actions.”20 20.Loumiet, 948 F.3d at 382.Show More Instead, the D.C. Circuit panel performed a special factors analysis and held that a Bivens remedy was not available for First Amendment retaliation, despite the fact that its own circuit precedents supported a contrary decision.21 21.Id.at 382–86; accordVanderklok v. United States, 868 F.3d 189, 198–99 (3d Cir. 2017) (concluding that “[the circuit’s own] past pronouncements are thus not controlling” in the context of Bivens claims that had not been addressed by the Supreme Court).Show More

While the problem of undermined circuit precedent is frequently presented, the circuits have not developed a sufficiently nuanced framework for handling these challenging cases. The courts of appeals take disparate approaches in addressing these situations, and notably, no circuit tailors its approach to the specific legal context presented by the case.

In light of the motivations behind vertical and horizontal stare decisis, this Note argues that circuit court panels ought to apply a general presumption in favor of overruling an undermined circuit precedent. Importantly, however, special circumstances justify a stronger or weaker application of this general rule. This Note proceeds in four parts. Part II examines how the federal courts of appeals have handled latent conflicts between on-point circuit precedents and intervening Supreme Court cases that undermine those decisions. Part III explores the practice of stare decisis in the American judiciary. It explains the potential constitutional, statutory, and pragmatic sources of vertical and horizontal precedent at the court of appeals level. Part IV proposes an approach for how courts of appeals ought to handle these conflicts grounded in the justifications behind vertical and horizontal stare decisis. Part V concludes.

  1. * J.D., University of Virginia School of Law, 2020. Winner of the Roger and Madeleine Traynor Prize. Special thanks are first owed to my advisor Caleb Nelson, who provided invaluable commentary and direction throughout this project. I would also like to thank those whose feedback further refined the paper, including Hanaa Khan, Jackson Myers, Jonah Panikar, and the rest of the Virginia Law Review’s hard-working staff. Final and most important thanks are owed to my wife, Allyson Dickman, whose editorial assistance and constant encouragement made this Note possible. ↑

  2. 407 U.S. 258, 259 (1972). ↑

  3. 259 U.S. 200, 209 (1922). ↑

  4. United States v. Int’l Boxing Club of N.Y., Inc., 348 U.S. 236, 242 (1955). ↑

  5. Radovich v. Nat’l Football League, 352 U.S. 445, 452 (1957). The Supreme Court had also reaffirmed Federal Baseball Club’s holding in Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953) (per curiam), but that case was decided before International Boxing Club or Radovich. ↑

  6. Kuhn, 407 U.S. at 283–84. ↑

  7. See, e.g., Lewis v. Humboldt Acquisition Corp., 634 F.3d 879, 881 (6th Cir. 2011) (en banc). ↑

  8. See, e.g., United States v. Villareal-Amarillas, 562 F.3d 892, 898 n.4 (8th Cir. 2009). ↑

  9. See, e.g., United States v. Staten, 466 F.3d 708, 717–20 (9th Cir. 2006). ↑

  10. Andrew C. Michaels, Implicit Overruling and Foreign Lost Profits, 25 B.U. J. Sci. & Tech. L. 408, 409 (2019) (“[H]ow might a court choose between following a directly-on-point circuit panel precedent, versus a subsequent Supreme Court case that is less directly on point but arguably overruled that panel precedent? Despite the fact that federal circuit courts (and district courts) are faced with this question on a regular basis, the answer is not clear.”). ↑

  11. 915 F.3d 1028 (6th Cir. 2019). ↑

  12. Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971). ↑

  13. Jacobs, 915 F.3d at 1033. ↑

  14. See Webb v. United States, 789 F.3d 647, 659–60, 666–72 (6th Cir. 2015) (discussing the merits of Bivens actions for malicious prosecution, false arrest, fabrication of evidence, and civil conspiracy); Burley v. Gagacki, 729 F.3d 610, 621 (6th Cir. 2013) (explaining plaintiff’s burden for an excessive force Bivens action). ↑

  15. 137 S. Ct. 1843, 1857, 1859 (2017) (emphasis added) (quoting Carlson v. Green, 446 U.S. 14, 18 (1980)) (internal quotation marks omitted). ↑

  16. Jacobs, 915 F.3d at 1036. ↑

  17. Accord Loumiet v. United States, 292 F. Supp. 3d 222, 229 (D.D.C. 2017) (rejecting the theory that “after Abbasi, a district court may no longer rely on circuit court precedent recognizing a Bivens cause of action in a context that has not expressly been recognized (or expressly rejected) by the Supreme Court”). ↑

  18. Jacobs, 915 F.3d at 1036–39. ↑

  19. 948 F.3d 376, 378 (D.C. Cir. 2020). ↑

  20. See, e.g., Haynesworth v. Miller, 820 F.2d 1245, 1255 (D.C. Cir. 1987) (holding that “retaliatory prosecution constitutes an actionable First Amendment wrong redressable under Bivens” (footnote omitted)). ↑

  21. Loumiet, 948 F.3d at 382. ↑

  22. Id. at 382–86; accord Vanderklok v. United States, 868 F.3d 189, 198–99 (3d Cir. 2017) (concluding that “[the circuit’s own] past pronouncements are thus not controlling” in the context of Bivens claims that had not been addressed by the Supreme Court). ↑

Defining Appraisal Fair Value

Appraisal is a statutory mechanism that entitles dissenting stockholders of Delaware merger targets to receive a judicially determined valuation of their shares. During a decade when Delaware courts significantly constrained other legal avenues of merger dissent, appraisal petitions increased dramatically, with individual cases potentially implicating billions of dollars of stockholder value. Recent appraisal case law has sparked considerable controversy over the role of market prices in courts’ appraisal valuations. Courts and commentators have struggled to articulate exactly when market prices are the best evidence of fair value, as well as what types of market prices are most relevant to appraisal fair value. This Note presents a revised conception of appraisal fair value that is informed by economic theory and rooted in Delaware corporate law’s longstanding goals of facilitating capital formation and maximizing stockholder value.

This Note proposes two changes to existing conceptions of merger deal prices in appraisal cases. First, the appraisal statute should be understood to exclude the value of reduced agency costs from appraisal awards. Second, when material non-public information is disclosed to the buyer but withheld from the market, both the appraisal statute and basic notions of market efficiency demand that courts take cognizance of it. The best way to operationalize these conceptual modifications is to presume that the target’s unaffected stock price equals fair value unless the petitioner establishes that material information was withheld from the market.

This approach adds needed clarity to the Delaware Supreme Court’s salutary recent embrace of the efficient capital markets hypothesis in the appraisal context. Adopting it would increase stockholder value, encourage efficient change-of-control transactions, and simplify appraisal proceedings. It preserves appraisal’s foundational role as a safeguard against the exploitation of minority stockholders by compensating them when the deal price omits suppressed material information.

I. Introduction

Section 262 of the Delaware General Corporation Law (“DGCL”) provides that a dissenting target stockholder in a merger or consolidation transaction may petition the Court of Chancery for an award of the fair value of her shares.1 1.Del. Code Ann. tit. 8, § 262 (2020). The appraisal remedy is limited to two types of transactions: “squeeze-outs” effected under §§ 253 and 267, and other mergers or consolidation transactions involving some cash consideration. See id.Show More Appraisal is a critical safety net for minority stockholders, and appraisal petitions increased dramatically during the past decade as Delaware courts have constrained other methods for challenging change-of-control transactions.2 2.See infra notes 20–22 and accompanying text.Show More Disagreement persists about whether and when the market price, the deal price, or some other metric is the best indicator of fair value. Each of these approaches is rooted in an incomplete conception of the determinants of merger prices. This Note presents a revised model of merger deal prices that resolves many of the theoretical and practical impediments to articulating a properly functional appraisal remedy. It then suggests a method for operationalizing the revised model.

In two 2017 decisions, the Delaware Supreme Court (“Supreme Court”) relied on the Efficient Capital Markets Hypothesis (“ECMH”) to reverse the Court of Chancery and endorse the deal price as the best evidence of fair value. The decisions and the Supreme Court’s treatment of the ECMH sparked widespread debate about the proper role of the ECMH in appraisal law and the broader purposes of the appraisal statute. Unresolved questions about the proper role of the ECMH and its broader purposes remain pending before the Supreme Court as of the time of this writing. Although Delaware’s recent emphasis on the ECMH is a welcome development, its failure to account for the role of reduced agency costs and the value of non-public information threatens to undermine the benefits of adopting the ECMH. A more complete theory of appraisal law must acknowledge two critical facts. First, agency cost reductions—the value created by replacing existing managers with more effective ones—are a key motivation for pursuing mergers, and they should belong to the acquirer. To incentivize efficient change-of-control transactions, courts should exclude the value of reduced agency costs from appraisal awards. Second, the value of non-public information about the target company is often a key element of merger prices. By relying on the ECMH without explicitly incorporating the value of non-public information into appraisal fair value, courts subvert the theory’s ability to provide reliable estimates of fair value. The best formulation of the appraisal remedy—and the one most consistent with the ECMH, the appraisal statute, and the purposes of Delaware corporate law—presumes market prices are fair in the absence of evidence that material non-public information was withheld from the market.

To define the “fair value” of an appraisal petitioner’s shares, it is first necessary to re-examine the composition of merger deal prices. If the target company’s stock trades in an efficient market, then its stock price “reflects all publicly available information as a consensus, per-share valuation.”3 3.Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd. (Dell), 177 A.3d 1, 16 (Del. 2017).Show More The existing stock price sets the presumptive baseline for merger fair value because no rational stockholder would tender her shares to an acquirer at a lower price than she would receive on the open market.4 4.It is assumed that the Supreme Court has endorsed the ECMH inclusive of that theory’s conventional assumption that market participants are rational. See Steven M. Sheffrin, Rational Expectations 99 (2d ed. 1996). This assumption is uncontroversial in the present context—i.e., it is beyond doubt that no reasonable shareholder would tender her shares at a lower price than she could readily receive elsewhere—but it has been contested in others. See, e.g., Franco Modigliani & Richard A. Cohn, Inflation, Rational Valuation and the Market, 35 Fin. Analysts J. 24, 24 (1979) (arguing that persistent inflation distorts market prices of securities, a finding inconsistent with some forms of the ECMH); Lawrence H. Summers, Does the Stock Market Rationally Reflect Fundamental Values?, 41 J. Fin. 591 (1986) (arguing that empirical evidence does not conclusively confirm the ECMH and that market prices do not always rationally reflect the fundamental values of securities). This Note does not aspire to contribute to scholarly commentary on the ECMH; like the Supreme Court, it adopts the hypothesis as a tool for deciding appraisal cases. See Dell, 177 A.3d at 24; see also Are Markets Efficient?, Chi. Booth Rev. (June 30, 2016), https://review.chicagobooth.edu/­economics/2016/video/are-markets-efficient [https://perma.cc/7HBU-C4ZL] (interview with Eugene Fama and Richard Thaler) (“The point is not that markets are efficient. . . . It’s just a model.”).Show More The second component of merger prices is the value of merger “synergies,” the value created by combining formerly separate business units. Agency cost reductions are a third source of value, created when an acquirer replaces existing management with superior business administrators. Finally, material non-public information (MNPI) is an often-overlooked fourth component of merger value. Prospective buyers receive MNPI during the diligence phase of merger transactions.5 5.See infra Section III.B.Show More MNPI is by definition relevant to company value; it is information which “would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information available” about the company.6 6.Klang v. Smith’s Food & Drug Ctrs., Inc., 702 A.2d 150, 156 (Del. 1997) (quoting Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985)). Note, too, that MNPI may be value-positive or value-negative. See infra Section III.D.Show More

The appraisal statute excludes from appraisal awards “any element of value arising from the accomplishment or expectation of the merger,”7 7.Del. Code Ann. tit. 8, § 262(h) (2020).Show More and synergies are consequently not included in appraisal awards. This Note will argue that the statute should also bar appraisal petitioners from recovering the value of agency cost reductions because they, too, are created by the transaction itself. This observation has important policy implications for capital formation; most importantly, excluding reduced agency costs is essential to incentivizing efficient change-of-control transactions.

Courts and academics analyzing appraisal have neglected to account for the value of non-public information as a determinant of merger prices. MNPI is definitionally value-laden, but in a world governed by the ECMH, it is not incorporated into market prices.8 8.This Note adopts the “semi-strong” form of the ECMH embraced by the Supreme Court, which holds that market prices incorporate all publicly available information about asset prices. See Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. (Aruba III), 210 A.3d 128, 137–38, 138 n.53 (Del. 2019).Show More When MNPI disseminated to the buyer is withheld from the market (e.g., if the board fails to disclose a conflict when it recommends stockholders vote in favor of a merger), the risk of minority stockholder exploitation is high. Appraisal analysis should therefore explicitly acknowledge that suppressed MNPI is relevant to company value. However, MNPI will often be prohibitively difficult for courts to value. For example, suppose that an appraisal petitioner establishes at trial that the merger buyer induced the target’s CEO to support an unfairly low deal price by secretly offering her employment at the merged firm. It will likely be very difficult to determine with precision how this undisclosed conflict affected the ultimate sale price; the petitioner certainly should have received a better price for her shares, but it is not clear how much. This presents a dilemma for implementing the proposed merger deal price model in appraisal cases.

The solution is to define market prices as the baseline for appraisal fair value, presuming that the target’s unaffected stock price is the best evidence of the company’s value. This automatically excises synergies and agency cost reductions from appraisal awards. The presumption can be surmounted by evidence of MNPI suppression. Where this threshold is met, the court should exercise its discretion to determine the appraisal award, as it currently does, bearing in mind that buyers are entitled to the value they create through synergies and reduced agency costs. This approach will meaningfully simplify appraisal proceedings and refocus the remedy on the policy goals it serves—facilitating capital formation and encouraging efficient, non-exploitative mergers.

Part II situates the appraisal remedy within its doctrinal context. It introduces appraisal as an important safeguard against minority stockholder exploitation in change-of-control transactions, one that operates outside of the traditional breach of fiduciary duty merger litigation arena. It details several cases that collectively embody the recent controversy over the ECMH’s role in appraisal proceedings and concludes with an economic analysis of appraisal’s role in the broader corporate contract. Part III presents the revised merger deal price framework. Starting with the assumption that Delaware corporate law exists to facilitate investment and maximize long-term stockholder value, it argues that courts should exclude agency cost reductions and include the value of MNPI. It then develops the foregoing analysis into a method for adjudicating appraisal petitions that relies on a rebuttable presumption that market prices are fair.

Part IV analyzes the proposed framework’s likely consequences. It applies the framework to three noteworthy recent appraisal cases, reaching divergent results from the Delaware courts in each. It then argues that, if adopted, the adjudicatory model would bring much-needed clarity and rigor to the Supreme Court’s embrace of the ECMH, enabling courts to more fully utilize the ECMH’s analytical advantages. It would reduce some of the complexity associated with judicial determinations of company value, decrease the volume of appraisal petitions, and discourage speculative appraisal petitions—an outcome consistent with recent trends in Delaware deal jurisprudence. Next, it considers the likely effects on capital formation and the broader merger and acquisition (“M&A”) market. Excluding agency cost reductions would allow M&A buyers to retain the value they create when they replace inefficient management, increasing their incentives to pursue efficient corporate control transactions. It would also further the goal of maximizing stockholder value by eliminating appraisal premia. And, by incorporating MNPI into the fair value calculation, the suggested framework would discourage collusion between targets and buyers during the deal process, thereby preserving appraisal’s traditional function as a check on process adequacy. Part IV closes by describing appraisal’s continuing importance under the revised framework. Many firms’ shares do not trade in efficient markets, and this Note makes no attempt to supplant appraisal’s established role in such cases. Furthermore, appraisal will remain an effective judicial tool for policing process adequacy, particularly in conflict transactions. A brief conclusion follows in Part V.

  1. * J.D. & M.B.A., University of Virginia, 2020. I am very grateful to Professor Quinn Curtis, who introduced me to corporate law and advised me on this Note. For helpful comments and suggestions, I thank Wade Houston, Will Walsh, George Geis, Joe Fore, Nick Carey, Rebecca Lamb, F.D. Carroll, Matt Hoffer-Hawlik, and Matt Levine. I thank Charlotte K. Newell for educating me about the history of Delaware’s appraisal statute, and the staff of the Virginia Law Review for their input and editorial work on this Note—especially Matt West. ↑
  2. Del. Code Ann. tit. 8, § 262 (2020). The appraisal remedy is limited to two types of transactions: “squeeze-outs” effected under §§ 253 and 267, and other mergers or consolidation transactions involving some cash consideration. See id. ↑
  3. See infra notes 20–22 and accompanying text. ↑
  4. Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd. (Dell), 177 A.3d 1, 16 (Del. 2017). ↑
  5. It is assumed that the Supreme Court has endorsed the ECMH inclusive of that theory’s conventional assumption that market participants are rational. See Steven M. Sheffrin, Rational Expectations 99 (2d ed. 1996). This assumption is uncontroversial in the present context—i.e., it is beyond doubt that no reasonable shareholder would tender her shares at a lower price than she could readily receive elsewhere—but it has been contested in others. See, e.g., Franco Modigliani & Richard A. Cohn, Inflation, Rational Valuation and the Market, 35 Fin. Analysts J. 24, 24 (1979) (arguing that persistent inflation distorts market prices of securities, a finding inconsistent with some forms of the ECMH); Lawrence H. Summers, Does the Stock Market Rationally Reflect Fundamental Values?, 41 J. Fin. 591 (1986) (arguing that empirical evidence does not conclusively confirm the ECMH and that market prices do not always rationally reflect the fundamental values of securities). This Note does not aspire to contribute to scholarly commentary on the ECMH; like the Supreme Court, it adopts the hypothesis as a tool for deciding appraisal cases. See Dell, 177 A.3d at 24; see also Are Markets Efficient?, Chi. Booth Rev. (June 30, 2016), https://review.chicagobooth.edu/­economics/2016/video/are-markets-efficient [https://perma.cc/7HBU-C4ZL] (interview with Eugene Fama and Richard Thaler) (“The point is not that markets are efficient. . . . It’s just a model.”). ↑
  6. See infra Section III.B. ↑
  7. Klang v. Smith’s Food & Drug Ctrs., Inc., 702 A.2d 150, 156 (Del. 1997) (quoting Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985)). Note, too, that MNPI may be value-positive or value-negative. See infra Section III.D. ↑
  8. Del. Code Ann. tit. 8, § 262(h) (2020). ↑
  9. This Note adopts the “semi-strong” form of the ECMH embraced by the Supreme Court, which holds that market prices incorporate all publicly available information about asset prices. See Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. (Aruba III), 210 A.3d 128, 137–38, 138 n.53 (Del. 2019). ↑
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