Hertz Corp. v. Friend--How Judges Think
In the first post on this topic, I set out the basics of the Supreme Court's recent opinion in Hertz Corp. v. Friend (pdf). In the second post, I stuck my nose in and graded Justice Breyer's legal writing, rewriting the opinion and reducing its length by about 25%. In this post, your humble servant gives a hypothesis on how four words could become so confusing.
In 1958, Congress defined a corporation’s citizenship as the state of its incorporation as well as the state where it had its “principal place of business.” Although those four words do not appear unduly complicated, a half century later there was no clear test for what those words meant, and the leading treatise on Federal Practice and Procedure had to devote 73 footnote-encrusted pages to elucidating what those words meant. And the differences between the circuits were not so much a “circuit split” as a “circuit mashup.”
So how do we get to such a state, where lower courts are all over the map and such a key statute goes a half century in need of construction? Well, some would blame the limitless ingenuity of defense lawyers trying to get to federal court.
Being a defense lawyer of limitless ingenuity who is fond of federal court, I reject such an insinuation. I will blame the judges.
But don’t worry. I have Judge Posner on my side. After the jump you’ll see how judges think and why oversight of judicial decisions promotes administrative clarity.
There is a clue to why this area of the law might have become so encrusted in the second portion of the Hertz Corp. v. Friend (pdf). In that section, the Court determines that it has jurisdiction to hear an appeal of the District Court’s remand order under a section in the Class Action Fairness Act. That relatively new statute is an exception to the general rule that an order remanding to state court for lack of jurisdiction cannot be appealed. Before the statute, orders refusing to find diversity based upon "principal place of business" were generally not reviewable.
Big deal, you say? So, what?
Stay with me.
Judge Posner, in his fascinating book on “How Judges Think,” posits nine theories of judicial behavior that have been empirically demonstrated in the research literature. At least a few of those theories offer a potential explanation for the proliferation of judicial barnacles on the “principal place of business” test.
- Posner’s “strategic theory” posits that judges’ decisions can be influenced by anticipated reactions of other judges, legislators, and the public.
- Posner’s sociological theory focuses on small group dynamics and aspects such as “dissent aversion” to explain why a panel of judges reaches a given result.
- Posner’s organizational theory supposes that the principal (the government) creates a structure to minimize any divergence between the interests of the principal and its agent (the judge).
- Posner’s pragmatic theory “refers to basing judgments (legal or otherwise) on consequences, rather than on deduction from premises in the manner of a syllogism.”
Apply these theories to a close or cutting edge remand decision faced by a district court and what might you get:
- In remanding a case, even where there might be jurisdiction, the court has a chance to control its docket and dispose of a case, both of which are good from an organizational point of view. Remand will be rewarded in the year end stats. Asserting jurisdiction and/or later being reversed for it, will not.
- The court can safely resolve any close question in favor of docket control without fear of being reviewed or facing the silent treatment from fellow judges. Remand for lack of jurisdiction cannot be appealed.
- The court can pragmatically tell itself that no real harm results from acting in the interest of docket control because the defendant can still defend on the merits in state court.
The courts then write creative memorandum opinions justifying their remand orders, some of which are later cited or quoted by higher courts, and 50 years on, you have 73 pages in Wright & Miller and a circuit mashup.
So are district judges are untrustworthy shirkers who need the constant threat of appellate reversal in order to be trusted? Far from it. It is really more about the system than any particular individual who inhabits it at any one moment.
Courts are human institutions, animated by human beings who are making human decisions while being influenced by human motivations. Although restrictions on appellate review exist for valid policy concerns, including the disruptive costs of running off to the court of appeals, participants in the system ought to always evaluate those restrictions in terms of whether their benefits continue to outweigh their costs. Confusion or potential mischief can be the result if any area of judicial decision making is too completely insulated from review and oversight.
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