Issue 1

The Banker Removal Power

The Federal Reserve (“the Fed”) can remove bankers from office if they violate the law, engage in unsafe or unsound practices, or breach their fiduciary duties. The Fed, however, has used this power so rarely that few even realize it exists. Although major U.S. banks have admitted to repeated and flagrant lawbreaking in recent years, the Fed has never removed a senior executive from one of these institutions.

This Article offers the first comprehensive account of the banker removal power. It makes four contributions. First, drawing on a range of primary sources, it recovers the power’s statutory foundations, showing that Congress created the authority to better align the interests of senior bankers and the public. Second, using a novel dataset obtained through Freedom of Information Act requests, it maps the actual practice of banker removal—who is removed, how often removal occurs, and for what reasons. It reveals that the Fed now uses the removal power mostly to prevent already-terminated, low-level employees from working at other banks, even though Congress never intended for the power to be used primarily in this way. Third, harnessing corporate law theory, the Article defends the legislative design. It argues that removal of senior bank executives for unsound management practices is a critical component of effective bank supervision, filling gaps left by regulatory rules and traditional corporate governance measures. Finally, the Article concludes by assessing obstacles to the use of the removal power against bank leadership and suggesting policy responses.

Introduction

Many observers have wondered why the Department of Justice (“DOJ”) did not prosecute more high-level executives following the 2008 financial crisis.1 1.See, e.g., Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives xvi–xvii, at xxi (2017); Jed S. Rakoff, The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?, N.Y. Rev. Books, Jan. 2014, at 4–8; William D. Cohan, How the Bankers Stayed Out of Jail, Atlantic, Sept. 2015, at 20; Dorothy S. Lund & Natasha Sarin, The Cost of Doing Business: Corporate Crime and Punishment Post-Crisis (unpublished manuscript) (on file with authors); see also John C. Coffee, Jr., Corporate Crime and Punishment: The Crisis of Underenforcement, at ix–x, 2–6, 13–14 (2020); Brandon L. Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations 5, 18 (2014).Show More Some argue that the paucity of indictments was the product of soft corruption or the government’s fear of challenging deep-pocketed defendants.2 2.See Rakoff, supra note 1, at 4, 6 (critiquing the Justice Department’s rationales for not prosecuting bank executives); Eisinger, supra note 1, at xx, 228, 233 (citing revolving door practices at the Justice Department and the risk aversion of prosecutors). For other commentary on prosecutors’ failure to charge executives in connection with the 2008 crisis, see Coffee, supra note 1, at 13 (arguing that the lack of prosecution “results chiefly from the logistical mismatch between the government’s limited enforcement resources and the nearly limitless capacity of the large corporation to resist and delay”); Garrett, supra note 1, at 6, 45–80 (showing how public corporations were able to escape criminal prosecution through the use of deferred prosecution agreements).Show More Others attribute it to the absence of executive-level criminal offenses: to them 2008 “was a bubble, not a fraud.”3 3.Coffee, supra note 1, at 4 (collecting sources).Show More Missing has been any discussion of why the Board of Governors of the Federal Reserve System (“the Fed”)—the country’s leading bank supervisor—failed to remove even a single top bank executive in connection with the crisis. This civil remedy—the “banker removal power”—allows the Fed to fire bank officers, directors, and employees for “unsafe or unsound practices” and to prohibit them from working in banking.4 4.12 U.S.C. § 1818(e). A brief definitional point: current law authorizes the Fed to remove sitting bankers as well as to temporarily suspend them or permanently prohibit them from working in banking (even if they have already been terminated). This Article uses the terms “removal power” and “removal action” broadly to encompass all three sanctions.Show More It was a core part of Franklin D. Roosevelt’s financial reform agenda.5 5.See infra Section I.A.Show More And it was designed precisely to allow the Fed to prevent an economic collapse of the sort experienced in 2008.

The mystery deepens when one considers the remarkable breadth of wrongdoing that has surfaced since the 2008 crisis. In the past twenty years, America’s largest banks have settled hundreds of major lawsuits and paid an unprecedented $195 billion in fines and penalties.6 6.See, e.g., Laura Noonan, US Banks Rack Up $200bn in Fines and Penalties over 20 Years, Fin. Times (Dec. 24, 2020), https://www.ft.com/content/989035f3-767a-43c2-b12e-2f6c0be0aa6b [https://perma.cc/R29R-AQT6].Show More They have admitted to fraud, bribery, money laundering, price fixing, bid rigging, illegal kickbacks, discriminatory lending, and a host of other consumer protection violations.7 7.See Better Markets, Wall Street’s Crime Spree 1998–2020: 395 Major Legal Actions and $195+ Billion in Fines and Settlements over the Last 20 Years, at 2 (Jan. 13, 2021).Show More In 2019, the DOJ labeled one trading desk at JPMorgan Chase a “criminal enterprise.”8 8.Tom Schoenberg & David Voreacos, JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says, Bloomberg (Sept. 16, 2019), https://www.bloomberg.com/news/articles/2019-09-16/jpmorgan-s-metals-desk-was-a-criminal-enterprise-u-s-says [https://perma.cc/FW3C-QC99].Show More Yet during this period, the Fed did not remove a single senior executive of Chase or any other major U.S. bank.

Instead, the Fed used its removal power mostly to exclude rogue low-level employees from the banking business for isolated instances of misconduct. For example, in the early 2000s, SunTrust Bank fired Roslyn Terry for stealing $21,200 while working as a teller.9 9.Prohibition Ord., Roslyn Y. Terry, Bd. of Governors of the Fed. Rsrv. Sys. No. 08-016-E-I (Aug. 29, 2008).Show More Following her termination, the Fed banned Terry from working at a bank ever again.10 10.Id.Show More The Fed’s ban had no impact on SunTrust, its management, or its practices, nor was it intended to. Primarily, it signaled Terry’s lack of fitness to other banks and potential employers.

Terry’s case—and the lack of executive removals in recent years—was not always the norm. In the early 1990s, the Fed used its removal power primarily against bank leadership. Between 1989 and 1993—the first five years for which enforcement data is publicly available—over 75% of domestic removal orders issued by the Fed targeted presidents, chief executive officers, board chairmen, and board directors. But as the banking industry consolidated in the subsequent decade, the Fed’s enforcement focus shifted toward rank-and-file workers, especially those who had already been fired by their employers and no longer worked at a bank. Over the five years ending in 2019, 72% of domestic removal actions by the Fed barred low- and mid-level employees who had already been terminated.11 11.See Compiled Data on Removal Orders Completed by the Bd. of Governors of the Fed. Rsrv. Sys. (on file with authors) [hereinafter Removal Orders].Show More

Scholars and policymakers have failed to notice this change or appreciate its significance.12 12.There is little scholarship on the removal power, and the scholarship that does exist is dated. See Joseph M. Korff, Banking, 8 B.C. Indus. & Com. L. Rev. 599, 600 (1967) (describing the effect of the Financial Institutions Supervisory Act of 1966 on the removal power); Robert J. Basil, Suspension and Removal of Bank Officials Under the Financial Institutions Reform Recovery and Enforcement Act of 1989 (“FIRREA”), 18 J. Legis. 1, 2 (1991) (discussing the effect of recent amendments on removal actions from the perspective of the private bar). One exception is work by Professor Heidi Schooner who considers removal in the context of disparate enforcement policies for large and small banks. See Heidi Mandanis Schooner, Big Bank Boards: The Case for Heightened Administrative Enforcement, 68 Ala. L. Rev. 1011, 1013, 1024–27 (2017).Show More There has been little effort to date to explain why the Fed has a removal power or to consider how the Fed should use it.13 13.The power is similarly neglected by corporate governance scholars and unknown to the voluminous administrative law literature focused on the President’s power to remove independent agency heads. See, e.g., Cass R. Sunstein & Adrian Vermeule, Presidential Review: The President’s Statutory Authority over Independent Agencies, 109 Geo. L.J. 637 (2021); Ganesh Sitaraman, The Political Economy of the Removal Power, 134 Harv. L. Rev. 352, 354 (2020); Gillian E. Metzger, The Constitutional Duty to Supervise, 124 Yale L.J. 1836, 1880–81 (2015); Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (and Executive Agencies), 98 Cornell L. Rev. 769, 772 (2013); Lawrence Lessig & Cass R. Sunstein, The President and the Administration, 94 Colum. L. Rev. 1, 110 (1994).Show More The absence of the power in the literature is particularly surprising given the salience and frequency of lawbreaking by banks and the ensuing public outrage toward bank executives.14 14.See, e.g., Letter from Elizabeth Warren, Ranking Member, Senate Subcomm. on Fin. Inst. & Consumer Prot., to Janet Yellen, Chair, Fed. Rsrv. Bd. of Governors (June 19, 2017) [hereinafter Letter from Elizabeth Warren].Show More

This Article seeks to give the banker removal power a seat back at the table. It makes four contributions. The first is historical. Through original research, Part I reconstructs the statutory development of the banker removal power. It highlights the power’s animating conception of bank executives as public fiduciaries and reveals that banker removal is not just another remedial tool in the Fed’s toolkit. Removal is the legal foundation for modern bank supervision, a distinctive form of government oversight that proceeds through continuous, confidential engagement between bankers and government officials. Policymakers first proposed the power in the late nineteenth century as a way to enhance the government’s supervisory control of banks. And Congress granted the Fed the power in 1933 in an effort to preserve an institutional arrangement for expanding the money supply that relies on deposit money issued by privately run banks.15 15.See Lev Menand, Why Supervise Banks? The Foundations of the American Monetary Settlement, 74 Vand. L. Rev. 951, 958, 1004 (2021).Show More Congress hoped that if the Fed had the power to remove untrustworthy bank leaders, banks would heed informal supervisory directives and better serve public as well as private interests.16 16.Bank supervision has been the subject of a surge of recent scholarly attention. See, e.g., id.; Daniel K. Tarullo, Bank Supervision and Administrative Law, Colum. Bus. L. Rev. (forthcoming) (unpublished manuscript) (on file with authors), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3743404 [https://perma.cc/ZY2P-3EXR]; see also Julie Andersen Hill, Bank Supervision: A Legal Scholarship Review (forthcoming) (U. Ala. Legal Stud., Research Paper No. 2627472), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3777580 [https://perma.cc/5752-7XHC]; Event Overview Bank Supervision: Past, Present, and Future, Fed. Rsrv. Bd. of Governors, Wharton Sch. & Harv. L. Sch. (Dec. 11, 2020), https://events.stlouisfed.org/event/67aec69c-628d-459d-8366-466979e3f8af/summary; Lev Menand, Too Big to Supervise: The Rise of Financial Conglomerates and the Decline of Discretionary Oversight in Banking, 103 Cornell L. Rev. 1527 (2018); Julie Andersen Hill, When Bank Examiners Get It Wrong: Financial Institution Appeals of Material Supervisory Determinations, 92 Wash. U. L. Rev. 1101, 1105 (2015). This growth is due in part to an active debate inside and outside the government over supervision’s legitimacy as a mode of administrative governance. See Jeremy Kress, Notice & Comment, The War on Bank Supervision, Yale J. Regul. (Dec. 18, 2020); Peter Conti-Brown & Nicholas R. Parrillo, Supervision, Stress Tests, and the Administrative Procedure Act (unpublished manuscript) (on file with authors); Randal Quarles, Vice Chair, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the “Law and Macroeconomics” Conference at Georgetown University Law Center: Law and Macroeconomics: The Global Evolution of Macroprudential Regulation 12 (Sept. 27, 2019). Part I of this Article introduces removal law to the supervision literature and adds to the debate by recovering a portion of supervision’s legal foundations. It reveals, among other things, that removal law treats banks as public franchises, complicating contemporary efforts by critics of bank supervision to characterize banks as purely private enterprises.Show More

In 1966, Congress gave the banking agencies a further tool to strengthen supervision—the cease-and-desist order—and rolled back removal, limiting it to situations involving “dishonesty.”17 17.See infra Section II.B.Show More In 1978, concerned by evidence of increasing executive malfeasance, Congress reversed course, allowing for removal even in cases not involving dishonesty.18 18.See Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183, § 904 (codified as amended at 12 U.S.C. § 1818).Show More Removals accelerated, and in the wake of hundreds of costly bank failures in the late 1980s, Congress further expanded the removal power in 1989. Today, the power exists at its broadest scope. Any institution-affiliated party is subject to sanction; a removal may result in a lifetime prohibition from banking; and willful or continuing “unsafe or unsound” conduct, even in the absence of fraud, suffices to justify enforcement.

This Article’s second contribution is analytic, picking up the story after 1989 and bringing it to the present. Part II introduces a novel dataset on the Fed’s removal actions between 1989 and 2019 using public information as well as orders obtained through Freedom of Information Act (“FOIA”) requests.19 19.The Fed is not the only bank regulator with the power to remove bank employees and affiliates. Little is currently known about how the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”) use their parallel power—whom they remove and for what conduct. Given the breadth of their supervisory jurisdictions, their practices are worthy of future study.Show More Details about the individuals sanctioned and their wrongdoing were hand collected from case files and contemporaneous news accounts and matched with bank characteristics.

The data reveal that the Fed uses its removal power sparingly, averaging 7.2 actions per year over the past 31 years. Even less common are Fed removals of sitting bank employees; 91% of Fed removal orders ban people who are no longer working at banks, blocking them from returning in the future. More notably, since the late 1990s, the Fed has deployed its power, now codified at 12 U.S.C. § 1818(e), primarily against rank-and-file workers for activities already subject to criminal penalties. For example, the most common reason for removal during this period was embezzlement or misuse of funds. In only three instances has the Fed used its removal power to address poor oversight and reckless management, and two of these instances involved employees of the same bank who jointly supervised a rogue trader. The Fed’s other 187 removal actions all targeted individuals who directly participated in unlawful activities.20 20.These results align with qualitative accounts of the Fed’s supervisory rollback in the late 1990s and early 2000s. See, e.g., Menand, supra note 16, at 1541, 1574. They also provide empirical evidence for concerns about the government’s enforcement posture toward senior corporate executives. See, e.g., Coffee, supra note 1, at 2.Show More

The Article’s third contribution is theoretical. Part III argues that a credible threat of removal against senior bank executives for unsound management practices is an indispensable component of contemporary bank supervision. Traditional corporate governance measures, which focus on enhancing the accountability of senior bankers to shareholders, will not eliminate incentives for banks to engage in socially harmful risk taking. Shareholders have strong incentives to exploit banks’ government backstopping and extract wealth from the public by encouraging investment in risky assets. No matter how carefully constructed, regulatory rules and statutory provisions that directly restrict the menu of choices available to banks are backward looking, crude, and inevitably incomplete.21 21.We use Dan Tarullo’s term “regulatory rules” to describe strictures promulgated through notice-and-comment in order to differentiate them from “regulation,” which we use to refer to all manner of government oversight. See Tarullo, supra note 16.Show More

This Article therefore joins a growing body of scholarship in recognizing that corporate governance reforms and prudential regulatory rules have limited capacity to curb unsafe bank behavior.22 22.See infra Sections III.A–B; see also Jonathan R. Macey & Maureen O’Hara, The Corporate Governance of Banks, 9 Fed. Rsrv. Bank N.Y. Econ. Pol’y Rev. 91, 97–99 (2003) (observing that banks have “special corporate governance problems” that “weaken the case for making shareholders the exclusive beneficiaries of fiduciary duties”); Lucian A. Bebchuk & Holger Spamann, Regulating Bankers’ Pay, 98 Geo. L.J. 247, 255–61 (2010) (observing the same problem and detailing how features of modern banking organizations heightened the basic moral hazard problems); Steven L. Schwarcz, Misalignment: Corporate Risk-Taking and Public Duty, 92 Notre Dame L. Rev. 1, 4 (2016) (describing the “misalignment” between shareholders’ interests and the public’s interest in systemically important firms); John C. Coffee, Jr., Systemic Risk After Dodd-Frank: Contingent Capital and the Need for Regulatory Strategies Beyond Oversight, 111 Colum. L. Rev. 795, 807 (2011) (noting that “the more ‘shareholder friendly’ the firm’s corporate governance system, the less attention is likely to be paid to externalities, and the greater the exposure to volatility and systemic risk”). See generally Dan Awrey & Kathryn Judge, Why Financial Regulation Keeps Falling Short, 61 B.C. L. Rev. 2295, 2299–300 (2020) (summarizing the literature on “why financial regulation so often falls short” and contributing additional explanations).Show More But contrary to the emerging view, we do not conclude from this diagnosis that entirely new regulatory methods are needed.23 23.For examples of this emerging view, see Schwarcz, supra note 22, at 23–44 (arguing that “managers should have a public governance duty not to engage their firms in excessive risk-taking that leads to [systemic] externalities”); Macey & O’Hara, supra note 22, at 92 (contending that “directors and officers of banks should be charged with a heightened duty to ensure the safety and soundness of these enterprises[, which] . . . should not run exclusively to shareholders”); Coffee, supra note 22, at 834–35 (proposing a contingent capital mechanism that would, in part, serve the function of giving creditors’ voting powers once the bank is in the “vicinity of insolvency”); John Armour & Jeffrey N. Gordon, Systemic Harms and Shareholder Value, 6 J. Legal Analysis 35, 67–70 (2014) (arguing that Caremark liability for oversight failure should be “applied in wider circumstances and to a higher standard” in banks and other systemically important financial firms); Saule T. Omarova, Bank Governance and Systemic Stability: The “Golden Share” Approach, 68 Ala. L. Rev. 1029, 1032, 1043–51 (2017) (arguing for a “golden share” regime that would “giv[e] the federal government a seat on the board of each systemically important banking organization”); Saule T. Omarova, Bankers, Bureaucrats, and Guardians: Toward Tripartism in Financial Services Regulation, 37 J. Corp. L. 621, 658–69 (2012) [hereinafter Omarova, Bankers, Bureaucrats, and Guardians] (proposing the creation of a Public Interest Council that would function to “represent the public interest in preserving financial stability and minimizing systemic risk”); Ross Levine, The Governance of Financial Regulation: Reform Lessons from the Recent Crisis, 12 Int’l Rev. Fin. 39, 41–42 (2012) (proposing a new regulatory entity “to act as the public’s sentry over financial policies and to help compel financial regulators to act in the public interest, regardless of their private interests”); see also Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the Association of American Law Schools Midyear Meeting: Corporate Governance and Prudential Regulation 11–17 (June 9, 2014), https://www.federalreserve.gov/newsevents/‌speech/tarullo20140609a.htm [https://perma.cc/9QMX-A32B] (proposing mechanisms to align corporate governance at banks with public objectives, including: changing the incentives of decision makers; restricting dividends under certain circumstances; reforming the institutions and processes of corporate decision making; and amending the fiduciary duties of bank boards).Show More Instead, we argue that regulators already have a tool that would allow them to reorient bank managers’ incentives toward the public interest. Section 1818(e) can serve this role. A credible threat of removal permits the Fed to keep senior executives and directors in line by prioritizing its judgment over that of private shareholders in order to improve the safety of the banking system as a whole. It also bolsters ongoing government supervision of banks by ensuring that Fed officials do not need to continue to rely on bank managers whom they no longer trust.

The Article’s final contribution is prescriptive. The removal power has failed to achieve its full potential to improve bank governance because the Fed rarely removes senior bankers. Part IV examines how the current statutory design enables this trend and recommends changes. In particular, it shows that the removal power was last updated before the emergence of large financial conglomerates and thus is out of sync with the reality of modern banking. Bank executives now serve in oversight, rather than operational, roles. Because the removal power relies on a single culpability standard that applies in blanket fashion to all bankers along the corporate hierarchy, regardless of their varied roles and responsibilities, it substantially raises the difficulty of removing bank leadership relative to lower-level subordinates. Accordingly, Part IV argues that Congress should expressly recognize oversight failure as a removal ground. In addition, the Fed should revise its practice of imposing uniform removal terms for all cases, instead varying the scope and duration of removal according to the type of wrongdoing at issue.

Banker removal can be a powerful tool for strengthening bank governance. It can even work silently, with few if any formal actions. But the law only works if bankers believe they will be removed for breaking the law or jeopardizing the public’s interest in a safe and sound banking system. The evidence suggests that, at the most senior levels of the banking industry, removal has ceased to fulfill this function. By providing a comprehensive account of the removal power in theory and practice, this Article takes a first step toward its renewal.

  1. See, e.g., Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives xvi–xvii, at xxi (2017); Jed S. Rakoff, The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?, N.Y. Rev. Books, Jan. 2014, at 4–8; William D. Cohan, How the Bankers Stayed Out of Jail, Atlantic, Sept. 2015, at 20; Dorothy S. Lund & Natasha Sarin, The Cost of Doing Business: Corporate Crime and Punishment Post-Crisis (unpublished manuscript) (on file with authors); see also John C. Coffee, Jr., Corporate Crime and Punishment: The Crisis of Underenforcement, at ix–x, 2–6, 13–14 (2020); Brandon L. Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations 5, 18 (2014). ↑
  2. See Rakoff, supra note 1, at 4, 6 (critiquing the Justice Department’s rationales for not prosecuting bank executives); Eisinger, supra note 1, at xx, 228, 233 (citing revolving door practices at the Justice Department and the risk aversion of prosecutors). For other commentary on prosecutors’ failure to charge executives in connection with the 2008 crisis, see Coffee, supra note 1, at 13 (arguing that the lack of prosecution “results chiefly from the logistical mismatch between the government’s limited enforcement resources and the nearly limitless capacity of the large corporation to resist and delay”); Garrett, supra note 1, at 6, 45–80 (showing how public corporations were able to escape criminal prosecution through the use of deferred prosecution agreements). ↑
  3. Coffee, supra note 1, at 4 (collecting sources). ↑
  4. 12 U.S.C. § 1818(e). A brief definitional point: current law authorizes the Fed to remove sitting bankers as well as to temporarily suspend them or permanently prohibit them from working in banking (even if they have already been terminated). This Article uses the terms “removal power” and “removal action” broadly to encompass all three sanctions. ↑
  5. See infra Section I.A. ↑
  6. See, e.g., Laura Noonan, US Banks Rack Up $200bn in Fines and Penalties over 20 Years, Fin. Times (Dec. 24, 2020), https://www.ft.com/content/989035f3-767a-43c2-b12e-2f6c0be0aa6b [https://perma.cc/R29R-AQT6]. ↑
  7. See Better Markets, Wall Street’s Crime Spree 1998–2020: 395 Major Legal Actions and $195+ Billion in Fines and Settlements over the Last 20 Years, at 2 (Jan. 13, 2021). ↑
  8. Tom Schoenberg & David Voreacos, JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says, Bloomberg (Sept. 16, 2019), https://www.bloomberg.com/news/articles/2019-09-16/jpmorgan-s-metals-desk-was-a-criminal-enterprise-u-s-says [https://perma.cc/FW3C-QC99]. ↑
  9. Prohibition Ord., Roslyn Y. Terry, Bd. of Governors of the Fed. Rsrv. Sys. No. 08-016-E-I (Aug. 29, 2008). ↑
  10. Id. ↑
  11. See Compiled Data on Removal Orders Completed by the Bd. of Governors of the Fed. Rsrv. Sys. (on file with authors) [hereinafter Removal Orders]. ↑
  12. There is little scholarship on the removal power, and the scholarship that does exist is dated. See Joseph M. Korff, Banking, 8 B.C. Indus. & Com. L. Rev. 599, 600 (1967) (describing the effect of the Financial Institutions Supervisory Act of 1966 on the removal power); Robert J. Basil, Suspension and Removal of Bank Officials Under the Financial Institutions Reform Recovery and Enforcement Act of 1989 (“FIRREA”), 18 J. Legis. 1, 2 (1991) (discussing the effect of recent amendments on removal actions from the perspective of the private bar). One exception is work by Professor Heidi Schooner who considers removal in the context of disparate enforcement policies for large and small banks. See Heidi Mandanis Schooner, Big Bank Boards: The Case for Heightened Administrative Enforcement, 68 Ala. L. Rev. 1011, 1013, 1024–27 (2017). ↑
  13. The power is similarly neglected by corporate governance scholars and unknown to the voluminous administrative law literature focused on the President’s power to remove independent agency heads. See, e.g., Cass R. Sunstein & Adrian Vermeule, Presidential Review: The President’s Statutory Authority over Independent Agencies, 109 Geo. L.J. 637 (2021); Ganesh Sitaraman, The Political Economy of the Removal Power, 134 Harv. L. Rev. 352, 354 (2020); Gillian E. Metzger, The Constitutional Duty to Supervise, 124 Yale L.J. 1836, 1880–81 (2015); Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (and Executive Agencies), 98 Cornell L. Rev. 769, 772 (2013); Lawrence Lessig & Cass R. Sunstein, The President and the Administration, 94 Colum. L. Rev. 1, 110 (1994). ↑
  14. See, e.g., Letter from Elizabeth Warren, Ranking Member, Senate Subcomm. on Fin. Inst. & Consumer Prot., to Janet Yellen, Chair, Fed. Rsrv. Bd. of Governors (June 19, 2017) [hereinafter Letter from Elizabeth Warren]. ↑
  15. See Lev Menand, Why Supervise Banks? The Foundations of the American Monetary Settlement, 74 Vand. L. Rev. 951, 958, 1004 (2021). ↑
  16. Bank supervision has been the subject of a surge of recent scholarly attention. See, e.g., id.; Daniel K. Tarullo, Bank Supervision and Administrative Law, Colum. Bus. L. Rev. (forthcoming) (unpublished manuscript) (on file with authors), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3743404 [https://perma.cc/ZY2P-3EXR]; see also Julie Andersen Hill, Bank Supervision: A Legal Scholarship Review (forthcoming) (U. Ala. Legal Stud., Research Paper No. 2627472), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3777580 [https://perma.cc/5752-7XHC]; Event Overview Bank Supervision: Past, Present, and Future, Fed. Rsrv. Bd. of Governors, Wharton Sch. & Harv. L. Sch. (Dec. 11, 2020), https://events.stlouisfed.org/event/67aec69c-628d-459d-8366-466979e3f8af/summary; Lev Menand, Too Big to Supervise: The Rise of Financial Conglomerates and the Decline of Discretionary Oversight in Banking, 103 Cornell L. Rev. 1527 (2018); Julie Andersen Hill, When Bank Examiners Get It Wrong: Financial Institution Appeals of Material Supervisory Determinations, 92 Wash. U. L. Rev. 1101, 1105 (2015). This growth is due in part to an active debate inside and outside the government over supervision’s legitimacy as a mode of administrative governance. See Jeremy Kress, Notice & Comment, The War on Bank Supervision, Yale J. Regul. (Dec. 18, 2020); Peter Conti-Brown & Nicholas R. Parrillo, Supervision, Stress Tests, and the Administrative Procedure Act (unpublished manuscript) (on file with authors); Randal Quarles, Vice Chair, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the “Law and Macroeconomics” Conference at Georgetown University Law Center: Law and Macroeconomics: The Global Evolution of Macroprudential Regulation 12 (Sept. 27, 2019). Part I of this Article introduces removal law to the supervision literature and adds to the debate by recovering a portion of supervision’s legal foundations. It reveals, among other things, that removal law treats banks as public franchises, complicating contemporary efforts by critics of bank supervision to characterize banks as purely private enterprises. ↑
  17. See infra Section II.B. ↑
  18. See Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183, § 904 (codified as amended at 12 U.S.C. § 1818). ↑
  19. The Fed is not the only bank regulator with the power to remove bank employees and affiliates. Little is currently known about how the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”) use their parallel power—whom they remove and for what conduct. Given the breadth of their supervisory jurisdictions, their practices are worthy of future study. ↑
  20. These results align with qualitative accounts of the Fed’s supervisory rollback in the late 1990s and early 2000s. See, e.g., Menand, supra note 16, at 1541, 1574. They also provide empirical evidence for concerns about the government’s enforcement posture toward senior corporate executives. See, e.g., Coffee, supra note 1, at 2. ↑
  21. We use Dan Tarullo’s term “regulatory rules” to describe strictures promulgated through notice-and-comment in order to differentiate them from “regulation,” which we use to refer to all manner of government oversight. See Tarullo, supra note 16. ↑
  22. See infra Sections III.A–B; see also Jonathan R. Macey & Maureen O’Hara, The Corporate Governance of Banks, 9 Fed. Rsrv. Bank N.Y. Econ. Pol’y Rev. 91, 97–99 (2003) (observing that banks have “special corporate governance problems” that “weaken the case for making shareholders the exclusive beneficiaries of fiduciary duties”); Lucian A. Bebchuk & Holger Spamann, Regulating Bankers’ Pay, 98 Geo. L.J. 247, 255–61 (2010) (observing the same problem and detailing how features of modern banking organizations heightened the basic moral hazard problems); Steven L. Schwarcz, Misalignment: Corporate Risk-Taking and Public Duty, 92 Notre Dame L. Rev. 1, 4 (2016) (describing the “misalignment” between shareholders’ interests and the public’s interest in systemically important firms); John C. Coffee, Jr., Systemic Risk After Dodd-Frank: Contingent Capital and the Need for Regulatory Strategies Beyond Oversight, 111 Colum. L. Rev. 795, 807 (2011) (noting that “the more ‘shareholder friendly’ the firm’s corporate governance system, the less attention is likely to be paid to externalities, and the greater the exposure to volatility and systemic risk”). See generally Dan Awrey & Kathryn Judge, Why Financial Regulation Keeps Falling Short, 61 B.C. L. Rev. 2295, 2299–300 (2020) (summarizing the literature on “why financial regulation so often falls short” and contributing additional explanations). ↑

  23. For examples of this emerging view, see Schwarcz, supra note 22, at 23–44 (arguing that “managers should have a public governance duty not to engage their firms in excessive risk-taking that leads to [systemic] externalities”); Macey & O’Hara, supra note 22, at 92 (contending that “directors and officers of banks should be charged with a heightened duty to ensure the safety and soundness of these enterprises[, which] . . . should not run exclusively to shareholders”); Coffee, supra note 22, at 834–35 (proposing a contingent capital mechanism that would, in part, serve the function of giving creditors’ voting powers once the bank is in the “vicinity of insolvency”); John Armour & Jeffrey N. Gordon, Systemic Harms and Shareholder Value, 6 J. Legal Analysis 35, 67–70 (2014) (arguing that Caremark liability for oversight failure should be “applied in wider circumstances and to a higher standard” in banks and other systemically important financial firms); Saule T. Omarova, Bank Governance and Systemic Stability: The “Golden Share” Approach, 68 Ala. L. Rev. 1029, 1032, 1043–51 (2017) (arguing for a “golden share” regime that would “giv[e] the federal government a seat on the board of each systemically important banking organization”); Saule T. Omarova, Bankers, Bureaucrats, and Guardians: Toward Tripartism in Financial Services Regulation, 37 J. Corp. L. 621, 658–69 (2012) [hereinafter Omarova, Bankers, Bureaucrats, and Guardians] (proposing the creation of a Public Interest Council that would function to “represent the public interest in preserving financial stability and minimizing systemic risk”); Ross Levine, The Governance of Financial Regulation: Reform Lessons from the Recent Crisis, 12 Int’l Rev. Fin. 39, 41–42 (2012) (proposing a new regulatory entity “to act as the public’s sentry over financial policies and to help compel financial regulators to act in the public interest, regardless of their private interests”); see also Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the Association of American Law Schools Midyear Meeting: Corporate Governance and Prudential Regulation 11–17 (June 9, 2014), https://www.federalreserve.gov/newsevents/‌speech/tarullo20140609a.htm [https://perma.cc/9QMX-A32B] (proposing mechanisms to align corporate governance at banks with public objectives, including: changing the incentives of decision makers; restricting dividends under certain circumstances; reforming the institutions and processes of corporate decision making; and amending the fiduciary duties of bank boards). ↑

Can the Reasonable Person Be Religious? Accommodation and the Common Law

Since the 1990s, in theory, the Supreme Court has applied rational basis review to neutral and generally applicable laws that incidentally burden religious practice. Strict scrutiny is reserved for those laws that lack neutrality or general applicability. In practice, however, free exercise jurisprudence has developed quite differently. Employing an aggressive exemption strategy, many petitioners have argued, and many courts have accepted, that the existence of but one secular exemption eliminates the neutrality and general applicability of a law. As such, strict scrutiny is applied. For those who would prefer to return to the free exercise jurisprudence that predated Employment Division v. Smith, this result may seem welcome, even a victory. This Note, however, suggests that such an approach should raise concern.

This Note argues that this aggressive exemption free exercise theory requires the reasonable person standard of torts to accommodate parties’ religious beliefs. Many courts that have addressed the issue have found the same. This Note then surveys the three responses courts have taken to accommodate religious belief in tort law: the “objective” approach, “the reasonable believer” test, and the “case-by-case” method. Fundamental Free Exercise and Establishment Clause problems with the “objective” and “reasonable believer” approaches demonstrate the superiority of a “case-by-case” analysis. That any accommodation is required, however, should give pause.

It is not the specific contours of tort law that give rise to the required accommodation, but rather the heavily individualized decision-making process that tort law uses. Individualized decision-making is not a symptom, but rather a feature, of the common law. As such, finding a required religious accommodation to tort law has broad ramifications for our standards-based legal system. This Note argues that this outcome suggests a fundamental flaw with the Court’s aggressive exemption free exercise jurisprudence.

Introduction

Marbury v. Madison teaches us that the judicial branch has the power to review the constitutionality of governmental acts.1 1.5 U.S. (1 Cranch) 137, 177–78 (1803).Show More This power of review comes up most frequently when congressional or state legislative acts run afoul of the Constitution. But what happens when someone claims that the common law, a product of judges and purportedly applied uniformly to all citizens, burdens a constitutional right? Can people demand exemptions from a tort standard solely because of a claim of individualized burden? Consider the following scenarios:

In May 1991,2 2.Verdict Form, Williams v. Bright, 632 N.Y.S.2d 760 (N.Y. Sup. Ct. 1995) (No. 17261/92), 1994 WL 16200195.Show More Gwendolyn Robbins was traveling through upstate New York with her father when he swerved their vehicle off the road and into a culvert at sixty-five miles per hour. Mrs. Robbins, severely injured in the crash, was rushed to a local hospital for surgery. Once there, however, she learned that proper treatment would require blood transfusions. She refused on grounds that it would violate her religious beliefs as a Jehovah’s Witness. In the face of increased medical expenses and a reduced quality of life, Mrs. Robbins remained steadfast in refusing surgery. She later pressed for damages and the cost of continuing care in a negligence suit against the owner of the car.3 3.Facts consolidated from trial and appellate court decisions. Williams v. Bright, 632 N.Y.S.2d 760, 762–63 (N.Y. Sup. Ct. 1995), rev’d in part, 658 N.Y.S.2d 910, 911 (N.Y. App. Div. 1997).Show More

In August 1963, sixteen-year-old Ruth Eider was in a chairlift traveling down a mountain when the operator negligently stopped the lift. It was late afternoon and she and her nineteen-year-old male companion were stuck. After fifteen minutes of yelling, it became clear that no one was coming to help. Raised in an ultra-orthodox Jewish household, Ms. Eider had been taught that spending the night with a man in a place inaccessible to a third party was an overwhelming moral sin. Facing this prospect, Ms. Eider jumped from the lift. She eventually sued the State of New York (the operator of the mountain) for the cost of the injuries sustained in the jump.4 4.Friedman v. State, 282 N.Y.S.2d 858, 859–63 (N.Y. Ct. Cl. 1967), modified, 297 N.Y.S.2d 850 (N.Y. App. Div. 1969).Show More

In March 2006, Marine Lance Corporal Matthew Snyder was killed in the line of duty in Iraq. Shortly thereafter, his father scheduled a funeral to commemorate his life for close friends and family. Members of the Westboro Baptist Church, a fundamentalist Christian sect, used this funeral as an opportunity to highlight their condemnation of homosexuality. They protested outside the ceremony carrying signs with slogans like “Thank God for dead soldiers,” “God hates you,” and “Semper fi fags” to spread their message. Mr. Snyder’s father sued the Church for intentional infliction of emotional distress (“IIED”). In response, the Westboro Baptist Church claimed complete immunity from tort liability on both free speech and free exercise of religion grounds.5 5.Snyder v. Phelps, 533 F. Supp. 2d 567, 569–70 (D. Md. 2008), rev’d, 580 F.3d 206 (4th Cir. 2009), aff’d, 562 U.S. 443 (2011). The district court dismissed the free exercise claim, distinguishing statutory and criminal restrictions on religious practice from other types of restrictions. Id. at 579. This Note suggests that the case law and logic of free exercise jurisprudence do not support such a distinction.Show More

Although these three incidents, separated by over four decades, would seem to have little in common, the tort suits they spawned had to grapple with a question that has beguiled courts for years: In determining culpability, to what extent can tort law be modified to accommodate the strongly held religious beliefs of a party?6 6.The first court to address this question was the Supreme Court of Errors of Connecticut in Lange v. Hoyt,159 A. 575, 577–78 (Conn. 1932). Understanding the difficulty of the issues raised, “[n]ot surprisingly, the Connecticut trial court ducked the issue and the Connecticut Supreme Court (of Errors as it then was) affirmed the ducking” by allowing the jury to consider that the plaintiff’s religious beliefs were widely held in determining reasonableness. Guido Calabresi, Ideals, Beliefs, Attitudes, and the Law: Private Law Perspectives on a Public Law Problem 47 (1985). Modern courts have similarly struggled with this question. SeeMunn v. S. Health Plan, Inc., 719 F. Supp. 525, 526 (N.D. Miss. 1989) (“This wrongful death case [involving a decedent who refused a blood transfusion on religious grounds] presents some of the most difficult questions which this court has ever been asked to resolve.”); Rozewicz v. N.Y. City Health & Hosps. Corp., 656 N.Y.S.2d 593, 594 (N.Y. Sup. Ct. 1997) (“[T]he issues before me dealing with the deceased’s refusal to accept blood transfusions raise[] some of the most difficult legal issues I have been faced with during my years on the bench.”).Show More That is, when, if ever, can religion be a valid justification for ignoring the purportedly generally applicable standards of the common law?

At first glance, the answer to that question would seem to be never. The basic command of tort law is to “be reasonable.”7 7.“Unless the actor is a child, the standard of conduct to which he must conform to avoid being negligent is that of a reasonable man under like circumstances.” Restatement (Second) of Torts § 283 (Am. L. Inst. 1965).Show More Reasonableness permeates the legal system in one form or another, a lodestar which guides court decision-making,8 8.See Benjamin C. Zipursky, Reasonableness In and Out of Negligence Law, 163 U. Pa. L. Rev. 2131, 2135–46 (2015) (detailing the many permutations of reasonableness).Show More and is determined “objectively.”9 9.See Vaughan v. Menlove (1837) 132 Eng. Rep. 490 (C.P.) (discussing the importance of an objective standard of reasonableness and rejecting inquiry into subjective motivation).Show More This would appear to foreclose any consideration of parties’ subjective religious motivation. Over the years, however, a number of courts and commentators have realized that the answer is not that simple, particularly when “objective” reasonableness conflicts with the Religion Clauses of the First Amendment.10 10.Seesupra note 6; see, e.g., Jeremy Pomeroy, Note, Reason, Religion, and Avoidable Consequences: When Faith and the Duty To Mitigate Collide, 67 N.Y.U. L. Rev. 1111 (1992); Note, Medical Care, Freedom of Religion, and Mitigation of Damages, 87 Yale L.J. 1466 (1978) [hereinafter Medical Care].Show More In response, these courts and commentators have wrestled with a framework for accommodating religious belief in reasonableness calculations. Most of these approaches, however, arose well before the Supreme Court’s modern free exercise jurisprudence came into focus in Employment Division v. Smith.11 11.Emp. Div., Dep’t of Hum. Res. v. Smith, 494 U.S. 872 (1990).Show More Consequently, they do not deal with current developments in First Amendment law. Furthermore, they fail to grapple with the serious Establishment Clause concerns raised by exempting individuals from complying with a reasonableness standard.12 12.See Anne C. Loomis, Thou Shalt Take Thy Victim as Thou Findest Him: Religious Conviction as a Pre-Existing State Not Subject to the Avoidable Consequences Doctrine, 14 Geo. Mason L. Rev. 473, 505–09 (2007) (purporting to address Establishment Clause concerns but failing to consider the full gamut outlined infra in Part II).Show More In our common law system, which is built upon a similar edifice of individualized reasonableness determinations, these considerations could reverberate broadly. This Note will attempt to address these issues.

Part I will argue that the Supreme Court’s First Amendment jurisprudence after Smith not only allows, but requires, religious accommodation where application of the reasonable person standard burdens sincerely held religious belief. In reaching this conclusion, this Part will first show that the reasonable person standard lacks the neutrality and general applicability required under Smith and its Free Exercise Clause companion, Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah.13 13.508 U.S. 520 (1993).Show More This Part will then demonstrate that a lack of neutrality and general applicability can and will undermine any compelling interest the state could put forth in application. Thus, a religious adjustment is necessary.

Part II will discuss the three approaches that courts have taken to adjust the reasonable person standard for sincerely held religious belief. It will first address the “objective” test, which purports to reject consideration of subjective thought and prohibits courts from including religious belief in reasonableness determinations. The requirement of some accommodation under Smith and Lukumi makes this approach unworkable. This Part will then address the “reasonable believer” test, in which courts treat religion as an immutable characteristic of the party, similar to the “eggshell skull” rule in torts. It will reject this test on both Free Exercise and Establishment Clause grounds. Finally, this Part will discuss the “case-by-case” approach in which religion is one of many equally weighted factors used to determine the reasonableness of an action. It will contend that this approach alleviates some of the Free Exercise and Establishment Clause problems of the “reasonable believer” standard and is the best option given the demands of the Supreme Court’s First Amendment jurisprudence.

In the admittedly small arena of “failure to mitigate damages” cases, this outcome may seem palatable and even appropriate. But the implications of finding a required adjustment are far-reaching. If something as generic as a reasonableness standard is susceptible to required religious accommodation, what other purportedly generally applicable laws or standards are similarly vulnerable? Take, for example, Snyder v. Phelps, the Westboro Baptist Church case discussed above.14 14.See supra text accompanying note 5.Show More Although the Supreme Court decided the issue in the Church’s favor on free speech grounds,15 15.Snyder v. Phelps, 562 U.S. 443, 461 (2011).Show More suppose, instead, that it had tackled the free exercise question.

Should the tort of IIED be subject to required religious accommodation because it has exemptions for speech protected under the First Amendment’s Free Speech Clause? An aggressive exemption strategy to religious accommodation under Smith and Lukumi may suggest that the answer is yes. That outcome seems unsettling. It also begs for clarity on what laws or standards, if any, are so fundamental as to avoid required religious accommodation. This Note uses the finding of a required religious accommodation to the reasonable person standard to suggest the fundamental inadequacy of the Court’s aggressive exemption jurisprudence under the Free Exercise Clause.

Settled Law

“Settled law” appears frequently in judicial opinions—sometimes to refer to binding precedent, sometimes to denote precedent that has acquired a more mystical permanence, and sometimes as a substantive part of legal doctrine. During judicial confirmation hearings, the term is bandied about as Senators, advocacy groups, and nominees discuss judicial philosophy and deeper ideological commitments. But its varying and often contradictory uses have given rise to a concern that settled law is simply a repository for hopelessly disparate ideas. Without definitional precision, it risks becoming nothing more than empty jargon.

We contend that settled law is actually a meaningful concept, even though it does not embody any single, unified idea. First, we argue that controlling law, which essentially corresponds to binding precedent, is a fundamentally distinct concept that is neither synonymous with nor a subset of settled law. Second, we draw on seminal jurisprudential theories to build a taxonomy of five frameworks that capture how legal actors can invoke settled law, both rhetorically and doctrinally. Third, we demonstrate how a clearer understanding of settled law can make doctrine more coherent and administrable. Situating certain doctrines within the appropriate frameworks, and not conflating controlling law and settled law, would resolve myriad doctrinal anomalies. Moreover, greater conceptual precision can improve political rhetoric during the confirmation process by promoting clearer dialogue and discouraging legal actors from talking past one another.

Introduction

What does it mean to say that Roe v. Wade1 1.410 U.S. 113 (1973).Show More is “settled law”? Or Citizens United v. FEC?2 2.558 U.S. 310 (2010).Show More Or even Brown v. Board of Education?3 3.347 U.S. 483 (1954).Show More

The idea of settled law has played a pivotal role in Supreme Court confirmation hearings for more than thirty years, and it has animated myriad legal doctrines as far back as the eighteenth century.4 4.See, e.g., Penhallow v. Doane’s Adm’rs, 3 U.S. (3 Dall.) 54, 118 (1795) (Cushing, J.) (describing as “settled law and usage” the idea that “courts of Admiralty can carry into execution decrees of foreign Admiralties”).Show More Yet the meaning of settled law has proved stubbornly elusive. Does it refer simply to the idea that the Supreme Court has decided a particular issue, or does it connote something more enduring about particular precedents? Does it imply that a precedent is somehow “right”? Which courts (or other legal actors) have the power to settle the law? And how exactly does that happen?

Even though settled law had come up during earlier confirmation hearings,5 5.See, e.g., Nomination of Justice William Hubbs Rehnquist: Hearings Before the S. Comm. on the Judiciary, 99th Cong. 356 (1986) (statement of Rehnquist, J.) (declaring that the incorporation of the right to a speedy trial through the Fourteenth Amendment “is settled law, and [his] opinions reflect it”); Nomination of Judge Antonin Scalia: Hearings Before the S. Comm. on the Judiciary, 99th Cong. 83 (1986) (statement of Sen. Specter) (asking whether Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), “is a settled issue”); id. at 104 (statement of Sen. Biden) (“If it’s on the books, if it is settled constitutional law for an extended period of time, and the argument to overturn that settled constitutional principle does not in fact meet the test of on its face being consistent with what the correct constitutional principle is, do you have to stick with what the settled law is?”).Show More it first took center stage in the political arena during the Bork hearings. Under intense scrutiny about his academic writings, Judge Bork repeatedly tried to parry criticism of his controversial views by promising over and over that he would respect “settled law,” even if he disagreed with it.6 6.See, e.g., Nomination of Robert H. Bork To Be Associate Justice of the Supreme Court of the United States: Hearings Before the S. Comm. on the Judiciary, 100th Cong. 279 (1987) (statement of Bork, J.) (repeatedly calling Brandenburg v. Ohio, 395 U.S. 444 (1969),“settled”); id. at 327 (declaring that “I certainly have no desire to go running around trying to upset settled bodies of law”); id. at 423 (“It seems to me that the settled law is now that the person writing the book does not have to prove that it is political or any way connected to politics. The settled law is the Government has to prove it is obscene.”); id. at 428 (“I am not changing my criticism of [Brandenburg]. I just accept it as settled law.”); id. at 434 (“It’s settled law. . . . I have said that I accept that body of precedent and will apply it. That’s all I’ve said.”); id. at 438 (declaring that “some things are absolutely settled in the law” and that “[a]ny judge understands that you don’t tear those things up”); id. at 587 (“I accept them as settled law. I have not said that I agree with all of those opinions now, but they are settled law and as a judge that does it for me.”); id. at 667 (“I have repeatedly said there are some things that are too settled to be overturned.”).Show More And notably, Judge Bork used that term to mean something quite distinct from the familiar principles of stare decisis.7 7.See id. at 989 (statement of Sen. Specter) (“[Judge Bork] flatly made a commitment to accept settled law. On the privacy cases he has not made that commitment. He has talked about various considerations of reliance and stare decisis, but he has made no commitment on privacy . . . .”).Show More Since then, every Supreme Court nominee has faced questions about settled law, even as the term’s ambiguity has grown increasingly apparent.8 8.See infra notes 278–85 and accompanying text.Show More

Discussions of settled law have become even more prominent in recent years as President Trump’s judicial nominees faced pointed questions about whether they agreed with certain precedents or, at a minimum, regarded them as settled.9 9.SeeLaura Meckler & Robert Barnes, Trump Judicial Nominees Decline To EndorseBrown v. Board Under Senate Questioning, Wash. Post (May 16, 2019, 7:28 PM), https://www.washingtonpost.com/local/education/trump-judicial-nominees-decline-to-endo­rse-brown-v-board-under-senate-questioning/2019/05/16/d5409d58-7732-11e9-b7ae-390de­4259661_story.html [https://perma.cc/F5FK-GNPW] (describing how Sen. Blumenthal frequently asks whether nominees regard Brown as correct); Marcia Coyle, Revisiting Amy Coney Barrett Statements About Abortion Rights, Nat’l L.J. (Sept. 25, 2020, 3:12 PM), https://www.law.com/nationallawjournal/2020/09/25/revisiting-amy-coney-barrett-statemen­ts-about-abortion-rights/?slreturn=20200908080816 [https://perma.cc/2EKP-YDQE] (des­cribing how Sen. Blumenthal asked then-nominee Amy Coney Barrett if she “think[s] Roe v. Wade was correctly decided”).Show More Sometimes nominees have refused to engage.10 10.See Meckler & Barnes, supra note 9 (describing nominees who refused to directly answer Sen. Blumenthal’s question about Brown); see alsoAriane de Vogue, Judicial Nominees Are Changing Their Approach to the ‘Brown v. Board’ Question at Senate Hearings, CNN (Feb. 10, 2019), https://www.cnn.com/2019/02/10/politics/brown-v-board-senate-judicial-nom­inees/index.html [https://perma.cc/8BP5-7PBZ] (noting that in response to Sen. Blumenthal’s question about Brown, now-Judge Neomi Rao described the case as “longstanding precedent of the Supreme Court,” declared that it was “not appropriate” to comment on the “correctness of particular precedents,” but argued that “it’s hard for me to imagine a circumstance in which Brown v. Board would be overruled by the Supreme Court”).Show More On other occasions, Senators and nominees have appeared to use “settled law” in conspicuously different ways,11 11.For example, in 2010, then-Senator Sessions suggested that “settled law” connoted “a more firm acknowledgment of the power of that ruling” than mere “precedent” and asked then-U.S. Solicitor General Elena Kagan whether she was using “settled law” and “precedent” interchangeably. The Nomination of Elena Kagan To Be an Associate Justice of the Supreme Court of the United States: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 231 (2010) (statement of Sen. Sessions). She responded: “I don’t mean any difference.” Id. (statement of Elena Kagan, Solicitor General of the United States).Show More a phenomenon brought into stark relief during Justice Kavanaugh’s confirmation hearing. Responding to a question from Senator Feinstein, the future Justice declared that Roe v. Wade was “settled as a precedent of the Supreme Court, entitled to respect under principles of stare decisis.”12 12.C-SPAN, Supreme Court Nominee Brett Kavanaugh Confirmation Hearing, Day 2, Part 1, C-SPAN (Sept. 5, 2018), https://www.c-span.org/video/?449705-1/supreme-court-nom­inee-brett-kavanaugh-confirmation-hearing-day-2-part-1 [https://perma.cc/7N8B-S2­MC] (relevant exchange occurring from 48:25 to 49:10).Show More The next day, The New York Times published a previously confidential e-mail from 2003 in which Kavanaugh had written: “I am not sure that all legal scholars refer to Roe as the settled law of the land at the Supreme Court level since [the] Court can always overrule its precedent, and three current Justices on the Court would do so.”13 13.Charlie Savage, Leaked Kavanaugh Documents Discuss Abortion and Affirmative Action, N.Y. Times (Sept. 6, 2018), https://www.nytimes.com/2018/09/06/us/politics/­kavanaugh-leaked-documents.html [https://perma.cc/3C4Q-7SAH].Show More These statements provided grist for some to call him disingenuous.14 14.See, e.g.,Igor Bobic, Susan Collins Downplays Brett Kavanaugh Email About Abortion Rights and ‘Settled Law’, HuffPost (Sept. 6, 2018, 4:58 PM), https://www.huffpost.com/­entry/brett-kavanaugh-susan-collins-roe-v-wade_n_5b9165b1e4b0511db3e04121 [https://p­erma.cc/4YMT-J9S5] (quoting Sen. Blumenthal urging undecided Republicans to “read this [email] and then tell [him] Judge Kavanaugh has been candid with [them]”).Show More Others argued that he was making distinct and mutually consistent claims—a prediction of whether the Court would revisit the abortion precedents versus an assessment of whether those precedents should stand undisturbed.15 15.See, e.g., id. (quoting Sen. Collins saying that Kavanaugh “was merely stating a fact, which is that three [Justices] on the [C]ourt were anti-Roe,” and “[i]f that’s the case and he was not expressing his view, then [she was] not sure what the point of it [was]”).Show More

Settled law is far more than an enigmatic buzzword that gets bandied about during confirmation hearings, though; it also serves an important structural role and has profound doctrinal implications. For example, lower-court judges often speak about their duty to follow the settled law of superior courts.16 16.See infra notes 26–27 and accompanying text.Show More Most surprisingly, an array of doctrines depend substantively on whether the law is “settled.” In the realm of constitutional torts, for instance, a plaintiff attempting to bring a Section 1983 claim usually must overcome the defendant’s qualified immunity by showing that the defendant violated a constitutional rule that was “clearly established” under “settled law.”17 17.District of Columbia v. Wesby, 138 S. Ct. 577, 589 (2018); see also id. at 591 (“The rule applied by [the court below] was not clearly established because it was not ‘settled law.’” (quoting Hunter v. Bryant, 502 U.S. 224, 228 (1991))).Show More So, too, settled law undergirds the circumstances when post-conviction relief is available,18 18.E.g., In re Jones, 226 F.3d 328, 333–34 (4th Cir. 2000) (holding that whether the settled law established the legality of a conviction is part of the Fourth Circuit’s three-prong test to determine the availability of a writ of habeas corpus).Show More lawyers’ ethical obligations under Rule 11,19 19.E.g., Pro. Mgmt. Assocs. v. KPMG LLP, 345 F.3d 1030, 1033 (8th Cir. 2003) (remanding and ordering the lower court to impose a Rule 11 sanction to a plaintiff’s counsel for ignoring the “well-settled law” of res judicata under the circumstances of the case).Show More standards of review,20 20.E.g., United States v. Gary, 954 F.3d 194, 202 (4th Cir. 2020) (quoting United States v. Ramirez-Castillo, 748 F.3d 205, 215 (4th Cir. 2014)) (holding that “if the settled law of the Supreme Court or this circuit establishes that an error has occurred,” the error satisfies the plain error standard of review).Show More and a host of other doctrines.21 21.See, e.g., Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009) (quoting Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007)) (fraudulent joinder).Show More Across these contexts, though, a firm understanding of what counts as settled law has proved chimerical.

Given the definitional morass, one might conclude that “‘settled law’ is just a euphemism.”22 22.Ilya Somin, Why “Settled Law” Isn’t Really Settled—and Why That’s Often a Good Thing, Reason: The Volokh Conspiracy (Sept. 9, 2018, 3:57 PM), https://reason.com/­2018/09/09/why-settled-law-isnt-really-settled-and/ [https://perma.cc/4N­SU-3N4A].Show More On this view, the term is so capacious as to become meaningless, conveying nothing useful about the weight that precedent deserves or the conditions (if any) under which a court should overrule it.

Our principal goal is to show that settled law does coherent and powerful work, even though it resists a single, overarching definition. In fact, settled law makes sense only when one appreciates that it comprises several distinct notions that do not share a common attribute. A more precise understanding of this hydra-like term has the power to clarify doctrine and improve political rhetoric. What seem like conceptual oddities in a number of doctrines actually make good theoretical sense when viewed through the lens of settled law. Moreover, settled law can play a meaningful role in confirmation hearings, but only if legal actors fully grasp its multifaceted nature. It offers a productive way to explore how politicians, judicial nominees, and the general public understand the judicial role, including how the obligations of Supreme Court Justices differ from those of lower-court judges.

We begin in Part I by differentiating between two concepts that we call controlling law and settled law. Controlling law essentially refers to the concept of binding precedent, including in its most conspicuous manifestation: an inferior court’s duty to follow the precedents of superior courts. Although one might think of controlling law as a species of settled law, we argue that the two are actually distinct ideas that address very different questions and are, at most, only tangentially related. Much of the confusion about settled law, in fact, stems from conflating these concepts. Not allowing discussions of settled law to revert into the familiar language of controlling law is thus a critical first step.

Part II demonstrates that settled law is not just an empty euphemism, even though it doesn’t embrace a single idea. In fact, settled law makes sense only when one appreciates that it comprises several notions that do not share a common attribute.

On an intuitive level, the starkest divide lies between normative and descriptive claims about settled law. For example, someone might classify Brown as settled law, normatively, because it achieved the right substantive result. Or, irrespective of Brown’s fundamental correctness, one might view it as descriptively settled because everyone recognizes that it’s here to stay. Even within these broad categories, though, variation abounds. For example, calling Brown normatively settled could mean that the decision was consonant with the original meaning of the Fourteenth Amendment or, alternatively, that it achieved a socially desirable outcome by advancing the cause of racial justice. Calling Brown descriptively settled could mean that the Supreme Court has left the precedent undisturbed for more than fifty years, that a future Court is unlikely to overrule it, that principles of stare decisis have effectively entrenched it, or that it has achieved wide popular acceptance.

We bring theoretical rigor to this intuition about the descriptive-normative divide by overlaying it with seminal jurisprudential theories: formalism, realism, and legal process theory. Based on these theories, we develop a taxonomy of five concepts that “settled law” can embrace.

The first two concepts derive from legal formalism.23 23.See, e.g., Warren Sandmann, The Argumentative Creation of Individual Liberty, 23 Hastings Const. L.Q. 637, 645 (1996) (“Legal formalism . . . is in its many guises one of the more dominant approaches to judicial decisionmaking.”).Show More As a normative matter, a formalist insists that law is settled when it has achieved the demonstrably “right” result based on the law’s internal logic.24 24.Thomas C. Grey, Langdell’s Orthodoxy, 45 U. Pitt. L. Rev. 1, 8 (1983).Show More But from a descriptive perspective, a formalist might accept that law is settled—even if it has not reached the objectively correct result—when the concerns of stare decisis, such as reliance, predictability, and basic fairness, are paramount.25 25.See Randy J. Kozel, Settled Versus Right: Constitutional Method and the Path of Precedent, 91 Tex. L. Rev. 1843, 1874 (2013) (citing Lawrence B. Solum, The Supreme Court in Bondage: Constitutional Stare Decisis, Legal Formalism, and the Future of Unenumerated Rights, 9 U. Pa. J. Const. L. 155, 186, 192–95 (2006)) (describing a “neoformalist” model of stare decisis in which even judicial “mistakes” can and should create binding precedents, if they are decided through a formalistic process of reasoning); Amy Coney Barrett, Originalism and Stare Decisis, 92 Notre Dame L. Rev. 1921 (2017) (describing Justice Scalia’s approach to the tension between the value of stare decisis and a formalistic, originalist reading of the Constitution).Show More

The next two concepts of settled law draw on the legal realist school.26 26.SeeFrederick Schauer, Legal Realism Untamed, 91 Tex. L. Rev. 749, 749 (2013) (“Legal Realism is conventionally understood, in part, to question legal doctrine’s determinacy and positive law’s causal effect on judicial decisions.”).Show More Descriptively, a realist regards law as settled when it faces no material threat of reversal.27 27.As we build out below, it essentially constitutes an exercise in Holmesian Prediction Theory. SeeO.W. Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 460–61 (1897).Show More Normatively, a realist will insist that law is settled only when it has achieved the “right” result, but she understands that idea very differently than a formalist does. The correct result for a legal realist corresponds to some external frame of reference, such as utility, efficiency, or social justice.28 28.For the foundational realist works encouraging an interdisciplinary approach to law, see Felix S. Cohen, Transcendental Nonsense and the Functional Approach, 35 Colum. L. Rev. 809 (1935); Jerome Frank, Law & the Modern Mind (Transaction Publishers 2009) (1930); Karl N. Llewellyn, Law and the Social Sciences—Especially Sociology, 62 Harv. L. Rev. 1286 (1949); Roscoe Pound, The Scope and Purpose of Sociological Jurisprudence (pts. 1 & 3), 24 Harv. L. Rev. 591 (1911), 25 Harv. L. Rev. 489 (1912).Show More

The fifth and final concept of settled law draws on legal process theory, which focuses on a legal decision’s methodological process rather than its substantive outcome.29 29.The seminal tome of the legal process school is Henry M. Hart, Jr. & Albert M. Sacks, The Legal Process: Basic Problems in the Making and Application of Law (William N. Eskridge, Jr. & Philip P. Frickey eds., 1994). For an overview of the related concept of procedural justice, see Lawrence B. Solum, Procedural Justice, 78 S. Cal. L. Rev. 181 (2004).Show More For the legal process theorist, law is settled if and when a duly constituted court reaches a decision through an appropriate methodology, and within this framework the descriptive and normative perspectives essentially become inseparable.

A simple illustration might help reify these five theoretical concepts. Consider the question: “Is Marbury v. Madison settled law?” Nearly everyone would say “yes,” but Table 1 identifies more precisely the five different ideas that someone could intend to communicate when asserting that Marbury is settled.

Table 1: The Taxonomy of Settled Law

Framework

Marbury v. Madison is settled law.

Normative Formalism

Marbury arrived at the objectively correct understanding of constitutional law.

Descriptive Formalism

Principles of stare decisis require continued adherence to Marbury.

Descriptive Realism

There is no material chance that the Supreme Court will overrule Marbury in the near future.

Normative Realism

Marbury achieved a desirable outcome in light of its intra- and extra-legal consequences.

Legal Process

Marbury merits continued adherence because it was issued by a duly constituted court employing an appropriate methodology.

In Part III, we show why developing a clearer understanding of settled law is far more than an academic exercise. At the intensely practical level, settled law suffuses a diverse array of doctrines, and failing to appreciate how it functions has led to pervasive confusion and mistakes. Our principal example comes from the qualified immunity context. Although courts often cast the relevant inquiry in terms of controlling law—whether binding precedent has clearly established that a particular right exists—this approach has invited a host of anomalies and errors. Instead, we argue that viewing qualified immunity through the lens of settled law makes much more sense doctrinally and normatively. Moreover, understanding qualified immunity as turning on settled law—specifically, two of the taxonomy’s five concepts—alleviates nearly all of the current conceptual problems and has the potential to refocus courts on the heart of the inquiry.

Finally, we argue that a more nuanced understanding of settled law can enhance legal dialogue, particularly the conversation about judicial nominations. Too often legal actors talk past one another because they use “settled law” to convey different ideas, and that in turn can lead to unfounded allegations of bad faith. On this level, the taxonomy is not a panacea; far from it. But greater conceptual clarity about settled law can train attention on the debates that truly matter rather than a bewitching semantic game.

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