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Thursday, March 26, 2015

Narrowing During Oral Argument in Caulkett

On Tuesday, the Supreme Court heard argument in Bank of America, N.A. v. Caulkett, which substantially concerned the viability of the 1992 precedent Dewsnup v. Timm. The resulting conversation ranged far and wide on the subject of precedent, including reflections about when to overrule and about what I’ve called personal precedent. In this post, I’ll focus on the justices' extensive ruminations on the subject of "narrowing," or interpreting a precedent not to apply in a situation where that precedent is best read to apply. (Many of my points stem from my recent article on the subject.)

1. Scalia on Narrowing and Ambiguity

Justice Scalia got the ball rolling:

JUSTICE SCALIA: Ms. Spinelli, I – I dissented in Dewsnup, and I continue to believe that dissent was correct. Why should I not limit Dewsnup to the facts that it involved, which is a partially underwater mortgage?

MS. SPINELLI: Justice Scalia, I don’t think that can be done coherently given the reasoning of the Court in Dewsnup. ....

JUSTICE SCALIA: Yes, I understand that, but I think the reasoning was wrong, and – and very often, we – we adhere to a prior decision that, on the facts of that case – and Dewsnup did – did say, you know, we’re just limiting it to the facts of this case, and we’re not saying what these terms means elsewhere in the Bankruptcy Act. So let’s take Dewsnup at its word and just limit it to what it involved, which was a partially underwater mortgage. Now, why shouldn’t I do that?

Later, counsel pressed statutory stare decisis as a reason to adhere to Dewsnup, and Justice Scalia responded:

JUSTICE SCALIA: I’m not talking about overruling. I'm saying [that Dewsnup should] subsist as far as partially underwater mortgages are concerned. The issue before us is whether we should extend it to totally underwater [mortgages].

In this passage, Justice Scalia is talking about narrowing precedent. To wit, Scalia repeatedly says that, instead of “overruling” Dewsnup, he wants to “limit” it “to the facts that it involved.” Now, when people talk about “limiting a decision to its facts,” they often mean that the precedent is limited to the precise circumstances in which it arose, such that it will basically never have future application. But that isn’t how Scalia is using the expression. Instead, he envisions that the erroneous precedent would continue to operate within a significant range of factual scenarios--namely, "partially underwater mortgages." If Scalia is indeed using the phrase “to its facts” to mean “to a relatively small range of situations,” then he might as well leave out the phrase “to its facts” and just say he’s talking about narrowing, full stop.

Justice Scalia also emphasizes what I have argued is a rule-of-thumb condition on legitimate narrowing—namely, the presence of ambiguity in the narrowed precedent. In the passages above, for instance, Scalia emphasizes that “Dewsnup did – did say, you know, we’re just limiting it to the facts of this case . . . [s]o let’s take Dewsnup at its word . . . .” Scalia and other justices made additional comments in this vein during the argument. I’ll have more to say about this in point #3 below, but for now I just want to note Scalia’s effort to find precedential ambiguity before narrowing erroneous cases.

2. Alito versus Scalia on Narrowing Cautiously

Justice Scalia’s views on narrowing are fairly nuanced, as evidenced by the fact that—despite his remarks above—he has written several famous opinions vehemently objecting to narrowing. Perhaps the finest of those opinions appeared in the 2007 Establishment Clause case Hein v. Freedom From Religion Foundation. Writing the lead plurality, Justice Alito limited the principle of taxpayer standing adopted in Flast v. Cohen, noting (for example) that Flast “has largely been confined to its facts.” Scalia then wrote a  concurrence in the judgment blasting Alito’s opinion as unprincipled. In Scalia's view, the Court should cut it out with half measures and just overrule Flast already.

Scalia’s sentiment in Hein seems a bit out of synch with his open support of narrowing in Caulkett. As the target of Scalia’s Hein opinion, Justice Alito was well-positioned to detect this tension. He accordingly offered counsel a suggestion: 

JUSTICE ALITO: There is a dissenting opinion in a different area of the law on taxpayer stand[ing] under the Establishment Clause, a brilliant dissenting opinion that you might want to rely on in this context.


It's revealing--and understandable--that Justice Alito remembers Scalia's blistering concurrence in the judgment in Hein as a dissent. (It's also notable that Alito's rather esoteric joke generated a laugh line; clearly, that was a room full of court watchers, in more ways than one.)

Scalia might deny that there is any tension between his positions in Hein and in Caulkett. In Hein itself, Scalia offered the following explanation of his views:

[The lead opinion by Justice Alito] offers no intellectual justification for this limitation [of Flast], except that “[i]t is a necessary concomitant of the doctrine of stare decisis that a precedent is not always expanded to the limit of its logic.” That is true enough, but since courts purport to be engaged in reasoned decisionmaking, it is only true when (1) the precedent’s logic is seen to require narrowing or readjustment in light of relevant distinctions that the new fact situation brings to the fore; or (2) its logic is fundamentally flawed, and so deserves to be limited to the facts that begot it. Today’s plurality claims neither of these justifications.

In other words, narrowing can be OK, at least when the narrowing Court clearly states that the narrowed precedent is "fundamentally flawed." The point of this clear statement requirement, it seems, is to ensure that the erroneous precedent, once narrowed, can never grow again. In Hein, for instance, Scalia criticized Justice Alito’s opinion for allegedly “pick[ing] a distinguishing fact that may breathe life into Flast in future cases.” By contrast, Scalia appears to believe that narrowing would be appropriate in Caulkett—assuming that the Court’s opinion makes clear that Dewsnup was wrong. 

My own view is that Scalia is being too rigid here. As I suggested in my paper: “[A] judge who believes that a precedent is wrong might reasonably want to stem the precedent’s damage right away, while also leaving open the possibility of reassessment based on new information at a future time.” So it should be possible to narrow a precedent today without foreclosing the possibility of its future expansion tomorrow.

3. The Chief and Arbitrary Narrowing

Apart from concern about a precedent’s being erroneous, there’s another important factor to consider before narrowing: whether the narrowed precedent makes sense. We’ve already seen that Justice Scalia obliquely raised this point: as Scalia pointed out, Dewsnup itself suggested that its precedential scope was limited to the facts there at issue. But does that kind of generic disclaimer really mean that Dewsnup can be limited in any imaginable way? Enter the Chief Justice:

CHIEF JUSTICE ROBERTS: I mean, I understand the notion and agree with it completely that if you have a decision that's wrong, you don’t extend it in any way. But there are factual distinctions and there are factual distinctions. I mean, Dewsnup may have been decided on a Tuesday, and this case could be decided on a Thursday, but you would not say, you know, we're not extending it you know, we're simply not going to extend it to other cases.

The Chief then went on to question whether it was rational to narrow Dewsnup according to the rule put forward by Justice Scalia.

In the past, Scalia himself has inveighed against efforts at narrowing that, in his view, were unsustainably arbitrary. In Planned Parenthood v. Casey, for instance, Scalia “confess[ed] never to have heard of this new, keep-what-you- want-and-throw-away-the-rest version” of precedent and  “wonder[ed] whether, as applied to Marbury v. Madison, for example, the [plurality’s] new version of stare decisis would be satisfied if we allowed courts to review the constitutionality of only those statutes that (like the one in Marbury) pertain to the jurisdiction of the courts.”

The Chief didn't offer a test for when narrowing becomes unsustainably arbitrary, but my paper suggested that a good rule of thumb is that narrowing is legitimate when it accords with a reasonable reading of precedent and doesn't contradict background legal principles. 

4. Justice Kagan on Narrowing and Reliance

Finally, Justice Kagan had some thoughtful remarks on the role of reliance interests in cases concerning narrowing. Here’s her main discussion:

JUSTICE KAGAN: ... I find myself in the same position as Justice Scalia. I read the two Dewsnup opinions, and it seems to me that Justice Scalia clearly has the better of the argument. And then – 



JUSTICE KAGAN: And then the question is, what do we do about that and where do we go from there.

And it does strike me that if you know, these are the most sophisticated parties that can possibly be imagined, Bank of America and other banks, and it seems to me that they would be making essentially a bet on and they would, you know, think about all the things what is the probability that Dewsnup will be extended to completely underwater mortgages.

And presumably, they discounted all their various calculations in order to take into account the probability that another court would say, you know, Dewsnup is not very persuasive, and we’re just not willing to extend it any further.

And I think that's probably what Bank of America and other banks did, is they said, you know, we think there is X percent chance that Dewsnup will be extended and Y percent chance that it won't, and they made their cost and pricing calculations based on that calculation.

So if that's the case, why should we worry about reliance?

What Justice Kagan is effectively saying here is that reliance interests might operate differently in cases involving narrowing, as opposed to overruling. The reason for this is that narrowing isn’t always or even usually a surprise. For instance, narrowing can be predictable when a case is known to be out of favor at the Court. And as suggested above, legitimate narrowing generally means narrowing along a preexisting precedential ambiguity. From a reliance perspective, this matters (I've argued) because "persons who rely on reasonably disputable interpretations of precedent do so while accepting the risk that fallible courts might reasonably go the other way."

Justice Kagan was able to take this line of thinking one step further by focusing on the actual nature of the affected parties in Caulkett. In some cases, Kagan suggests, unsophisticated parties might not appreciate precedential nuance and so might be caught off guard by narrowing, making their reliance costs a serious concern. But in Caulkett, Kagan surmised, “sophisticated” banks were perfectly situated to engage in precedential analysis and so factor that into their “pricing calculations.” So, as Kagan put it, “why should we worry about reliance?” While I don’t think these points make reliance irrelevant, they do significantly mitigate reliance concerns.

I might have more to post on this remarkably rich argument, but this post is too long as it is.

Posted by Richard M. Re on March 26, 2015 at 02:30 PM | Permalink


Then I go back to my original theory. On the substance of this, one mode of narrowing that no one on the Court seemed too interested in, though it's basically Respondents' argument, is retheorizing the narrowed precedent. Dewsnup read "allowed secured claim" in 506(d) to mean an allowed claim secured by a lien, a reading which would seem to decide this case unless Dewsnup is overruled or narrowed to its facts, or more precisely some set of like facts, on the ground that it's wrong. Respondents, however, would distinguish Dewsnup while preserving its result by inventing a new rationale for that result - that "allowed secured claim" means an allowed claim secured by a lien plus some value. This mode of narrowing doesn't seem to work in this case - the reading Respondents propose is nearly as divorced from the text as Dewsnup's reading - but I think that retheorizing a precedent, if done candidly which it often isn't, is a more attractive mode of narrowing than cordoning off an acknowledged legal error to an arbitrarily selected set of facts.

Posted by: Asher | Mar 27, 2015 8:13:05 PM

Well, I actually hear a fair amount of background laughter in the audio.

But I do agree that--appropriately enough--it was Justice Scalia who laughed loudest.

Posted by: Richard | Mar 27, 2015 7:05:00 PM

"(It's also notable that Alito's rather esoteric joke generated a laugh line; clearly, that was a room full of court watchers, in more ways than one.)"

When I read the transcript I thought maybe the room incorrectly assumed Alito was alluding to his own brilliant dissenting opinion and laughed at that, since I doubt that an audience most likely largely comprised of bankruptcy lawyers (Caulkett was the only case heard that day) would know about Hein. But if you listen to the audio there's really only one loud laugh in the courtroom, and it's Scalia's. (Small chuckle from what sounds like Kennedy.) I guess the court reporter couldn't write "JUSTICE SCALIA: (Laughter)."

Posted by: Asher | Mar 27, 2015 4:08:56 PM

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