No More Time Left on the Clock: Name, Image, and Likeness as the End of the Line for Student-Athlete Compensation Under Antitrust Law

Student-athletes shall be amateurs in an intercollegiate sport, and their participation should be motivated primarily by education and by the physical, mental and social benefits to be derived. Student participation in intercollegiate athletics is an avocation, and student-athletes should be protected from exploitation by professional and commercial enterprises.

     – NCAA Constitution, Article II1NCAA, 2020-21 NCAA Division I Manual 3 (2020).

INTRODUCTION

Collegiate sports are an integral part of secondary education in the United States, and unlike anywhere else in the world,2See, e.g., Blanca Izquierdo, Opinion: College Sports: US vs. Europe, Texan News Serv. (Feb. 25, 2018), http://texannews.net/opinion-college-sports-us-vs-europe [https://perma.cc/5CC2-B3SX]. collegiate sports in the U.S. is a billion-dollar industry. Whether people agree or disagree with the merits of the system that is currently in play, collegiate athletics play a relatively central role in our higher education system, reaching out and impacting almost all facets of university life. The direct profits of collegiate athletics impact the infrastructure of college campuses and allow individual students to attend college on scholarships that would not be available to them were it not for both athletic revenue and athletically motivated donations.3See, e.g., Linda Emma, The Importance of College Athletic Programs to Universities, Seattle Post-Intelligencer, https://education.seattlepi.com/importance-college-athletic-programs-univesties-1749.html [https://perma.cc/HYH9-C68Q]. Collegiate athletics is a multibillion dollar industry,4Id. making an obvious showing of the importance of the institution of college sports to our society.

Winning in athletics also impacts the brand of the university as a whole, which more often than not translates into a wide variety of positive impacts for a school.5See Jonathan Meer & Harvey S. Rosen, The Impact of Athletic Performance on Alumni Giving: An Analysis of Microdata, 28 Econ. Educ. Rev. 287, 294 (2009). In terms of interest from prospective students, surveys have shown that approximately forty percent of U.S. high school seniors choose their college at least partly for its social life.6Emma, supra note 3. Schools with large and successful athletic programs have a reputation for being epicenters of social activity because of the important fact that athletics are a pivotal part of the American college experience as a whole. Having a successful athletic program also draws interest from brands who wish to engage in partnerships and other advertising opportunities. This commercial benefit contributes both to direct revenue and to an increase in visibility for the institution, creating a positive feedback loop of benefits centered around athletics.7Id. Allegiance to college athletics also has an impact on university donors, and there is evidence to suggest that an athletic program that performs well, particularly when the most visible sports of football and basketball are winning, will increase the alumni donations to a university.8See Meer & Rosen, supra note 5.

Student-athletes, the individuals whose athletic prowess produces the positive impacts discussed above, have historically been largely uncompensated. When the National Collegiate Athletic Association (“NCAA”) was initially established in 1906,9History, NCAA, https://www.ncaa.org/sports/2021/5/4/history.aspx [https://perma.cc/X687-P4Z7]. athletes were not given any form of scholarship.10Colleges Adopt the ‘Sanity Code’ to Govern Sports: N.C.A.A. Bans Scholarships in Which Athletic Ability Is the Major Factor, N.Y. Times, Jan. 11, 1948, at S1. Over the last century, student-athletes’ ability to be compensated has made incredible progress, changing from being prohibited from receiving any scholarships to now being allowed to monetize their Name, Image, and Likeness (“NIL”). These changes have largely been driven by student-athletes’ engagement in litigation against the NCAA, using antitrust law as a powerful sword for increasing their remuneration.

For the sake of illustration, this Note is going to follow a twenty-year-old student-athlete named Peter Playmaker. Peter Playmaker is our fictional starting wide receiver at the NCAA’s secret favorite institution, the University of Amateur Athletics (“UAA”). Every Saturday, and on the occasional Friday night, Peter Playmaker plays in front of at least one hundred thousand fans and is watched by millions more on televisions across the country. In the school’s bookstore, jerseys are sold with Peter’s number. Large pictures of him in uniform hang there and throughout the rest of the UAA campus. Though his name does not appear on the back of the jerseys sold in the bookstore—as it is the school’s tradition to keep the last name of the players off of the uniform11Based on the traditions of the University of Southern California and Notre Dame, bitter rivals who each uphold the tradition of nameless jerseys. See Gerald Elliott, Why No Names on Jerseys in College Football?, SportsRec (July 26, 2011), https://www.sportsrec.com/names-jerseys-college-football-8790028.html [https://perma.cc/4UVR-USWL].—every fan who buys the jersey knows they are buying Peter’s jersey, and most pick the number for that very purpose. He signs autographs after games, where adoring fans who have been following his football career since high school, long before he committed to play at UAA, wait to take a picture with him. His face graces school produced advertisements and the front of the football game media guide each week, and he is more or less a fixture on the front page of the UAA Times and the local newspaper.

Over the years, the compensation given to Peter Playmaker for his efforts has increased, up until the present day, where Peter Playmaker is now able to make money off his NIL. Peter Playmaker is now able to engage in brand deals with companies who wish to capitalize on the celebrity that he has achieved from playing college football. He is also now able to teach camps and give lessons to those individuals who would pay to learn the tricks of the trade from a famous college football star.12See Tom Goldman, A New Era Dawns in College Sports, as the NCAA Scrambles to Keep Up, NPR: Sports (June 28. 2021, 5:01 AM ET), https://www.npr.org/2021/06/28/1010129443/a-new-era-dawns-in-college-sports-as-the-ncaa-scrambles-to-keep-up [https://perma.cc/G4U6-AKPS]. This Note will argue that for Peter Playmaker, the money that he is able make off his NIL is going to be the summit of the metaphorical mountain of his money-making opportunities as an NCAA athlete. Thus, it is likely not worth it for him to attempt to sue the NCAA under antitrust law to earn a salary, which is what many individuals are calling for as the next step in student-athlete compensation.13See Ian Millhiser, The Supreme Court’s Unanimous Decision on Paying NCAA Student-Athletes, Explained, Vox (June 21, 2021, 12:56 PM ET), https://www.vox.com/2021/6/21/22543598/supreme-court-ncaa-alston-student-athletes-football-basketball-sports-antitrust [https://perma.cc/DX3Y-FQAW].

Part I of this Note will give an overview of the NCAA as an institution, take a look at how the compensation of student-athletes has evolved over the past century, and give a basic background of antitrust law as applied to the NCAA. Part II will examine prominent NCAA antitrust cases, take a closer look at the NCAA rule changes that followed the rulings, and review the impacts of those decisions. Part III will argue that NIL is the end of the line for the compensation of student-athletes under antitrust law, even though many argue that they should receive additional compensation, such as a salary, for their efforts. This Part will look deeply at how NIL provides a viable, less restrictive alternative that helps to tip the scales in favor of the NCAA in an antitrust “rule of reason” analysis, which is the balancing test that courts use to weigh the anticompetitive effects of a practice against the procompetitive effects in order to decide if a practice is legal under the section one of the Sherman Act. The less restrictive alternative of NIL allows student-athletes to be freed from some of the anticompetitive harms of the NCAA’s regulations, while still allowing the NCAA to reap the procompetitive benefits of preserving the market for collegiate sports by maintaining a difference between professional and collegiate sports. This Note will conclude with a strong orientation to what is next for student-athletes in this space and look at other leverage student-athletes may have in their fight for additional compensation.

Because student-athletes are continuing to mobilize and explore their options in terms of alternate forms of compensation, this Note aims to contribute to the relevant practitioner literature by analyzing the important NCAA cases of the past. This analysis will hopefully assist in (1) guiding future arguments student-athletes may attempt to make in order to increase their compensation and (2) evaluating the potential methods they could use. For student-athletes and those that wish to support them in their efforts, evaluating the reality of antitrust litigation against the NCAA going forward may help to orient the cause in a more productive and plausible direction. Additionally, this Note aims to address the strengths and weaknesses of the NCAA’s past justifications for their rules, providing a beneficial look at how the courts have interpreted the NCAA’s motives and actions in antitrust actions of the past in order to predict how they may react in the future.

I. THE NCAA, EVOLVING STUDENT-ATHLETE COMPENSATION, AND ANTITRUST LAW

A. The NCAA

The NCAA is a behemoth of an organization. Across three different divisions, the NCAA regulates almost half of 1,000,000 student-athletes at more than 1,200 member institutions.14NCAA Resources, How the NCAA Works – Association-Wide, YouTube (May 10, 2021), https://www.youtube.com/watch?v=AV016Wkpo2U [https://perma.cc/8K87-8EWY]. The member institutions sponsor more than 195,000 student-athletes who compete at the NCAA’s 90 championships across 24 different sports.15Id. The association is responsible for facilitating the legislative rule making process amongst its member institutions, planning and executing the championships in each sport, and managing programs with the intent to benefit student-athletes both athletically and academically.16Paul C. Weiler, Gary R. Roberts, Roger I. Abrams, Stephen F. Ross, Michael C. Harper, Jodi S. Balsam & William W. Berry III, Sports and the Law: Text, Cases, and Problems 719 (6th ed. 2019). In order to participate in collegiate athletics in the United States, it is essentially a precondition for an academic institution to be a member of the NCAA. The only other option for a school to consider is the National Association of Intercollegiate Athletics,17See NAIA vs NCAA, Nat’l Ass’n of Intercollegiate Athletics, https://www.naia.org
/why-naia/naia-vs-ncaa/index [https://perma.cc/FA7Q-4YNG].
which consists of less than three hundred universities and lacks the robust infrastructure of the NCAA.18College Divisions, Smarthlete for Athletes, https://www.smarthlete.com/
intercollegiate/divisions [https://perma.cc/U89A-K6X8].
For schools that wish to compete on a national stage, there is no feasible alternative organization to the NCAA.

The NCAA advertises the idea of a student-athlete who competes for a “love of the game” above all else, and who is first and foremost on campus at their respective institution to receive an education.19Weiler et al., supra note 16 (quoting NCAA Constitution and By-Laws § 2.9 (2017–18). Heavily emphasized by the NCAA is the fact that most of their student-athletes do not go on to play professional sports.20Id. at 720. Because of this, the NCAA argues that as an association, it does not serve as a developmental league for professional leagues, reinforcing its idea of student-athletes as “amateurs.”21Id. According to an NCAA report published in 2014, only two percent of NCAA student-athletes go on to play professional sports.22NCAA, NCAA Recruiting Facts 2 (2014), https://www.nfhs.org/media/886012/recruiting-fact-sheet-web.pdf [https://perma.cc/2DWX-BYA4]. However, 254 of the 254 draft picks in the 2019 National Football League (“NFL”) Draft were NCAA football players—showing just how much the NCAA is a pipeline to professional sports, whether it wants to emphasize this reality or not.23Football: Probability of Competing Beyond High School, NCAA, https://www.ncaa.org/
about/resources/research/football-probability-competing-beyond-high-school [https://perma.cc/H5WH-EFLA].
This is especially true in the sport of football, where the NFL has no developmental league akin to the National Basketball Association’s G League or Major League Baseball’s minor league farm system, so student-athletes who wish to one day play in the NFL have no choice but to attend college to wait out the three years they are required to be out of high school before they are eligible to enter the NFL Draft.24The Rules of the Draft, NFL Football Operations, https://operations.nfl.com/journey-to-the-nfl/the-nfl-draft/the-rules-of-the-draft [https://perma.cc/VB4F-ZR6U].

The NCAA’s idea of a student-athlete is sharply contrasted by the numerous lawsuits filed against the association by current and former collegiate athletes who believe that they attended an NCAA member school not just to earn their academic degree but also to unlock earning potential as an athlete. The student-athlete plaintiffs in these cases have often found themselves arguing that they should have a right to make money off their NIL or that they should be paid by the institutions or the member schools because of the fact that their labor contributes to billions of dollars in revenue for the association.

1. History of the NCAA and the Compensation Provided to Student-Athletes

The precursor to the NCAA, the Intercollegiate Athletic Association of the United States, was founded in 1905 when President Theodore Roosevelt brought together the relevant stakeholders in order to attempt to institute rule changes that would make the game of college football safer.25NCAA, supra note 9. During the previous season, in 1904, there were 18 deaths and 159 serious injuries resulting from collegiate football alone.26Id. Often, the injured individuals were not student-athletes, but rather paid players hired by a school in order to play in games to beat its bitter rivals.27See id. This mass chaos was negatively impacting the quickly growing sport, so the powers that be stepped in to attempt to make the game more palatable to the average viewer, who was not interested in watching a brutal game that could be described as somewhat similar to a Roman gladiatorial bout. Some of the new rules included the ten yards for a new set of downs and the introduction of the forward pass.28Peter Feuerherd, How Teddy Roosevelt Changed Football, JSTOR Daily: Educ. & Soc’y (Sept. 10, 2016), https://daily.jstor.org/how-teddy-roosevelt-changed-football [https://perma.cc/RPV6-27KR]. They also pushed for rules that made the very dangerous mass formations illegal and created of a neutral zone between the offense and defense that would make for less immediate collisions after the ball was snapped.29Christopher Klein, How Teddy Roosevelt Saved Football, Hist.: Hist. Stories (July 21, 2019), https://www.history.com/news/how-teddy-roosevelt-saved-football [https://perma.cc/LL95-GC88].

After these important safety changes were made, the NCAA continued to grow, and its power expanded far beyond the creation of rules that governed sports on the playing field. In 1948, the NCAA adopted the “Sanity Code” in order to govern collegiate sports, and the code made the concept of “amateurism” its cornerstone.30N.Y. TIMES, supra note 10. Amateurism, according to the NCAA, dictates that student-athletes are not permitted to do anything that would subject themselves to “professionalism” or any sort of exploitation by commercial enterprises, though this idea has changed since its inception, which is a development that will be addressed later on in Part II of this Note. The early NCAA definition described an amateur as “one who participates in competitive physical sports only for the pleasure, and the physical, mental, moral, and social benefits directly derived therefrom.”31Kristen R. Muenzen, Weakening Its Own Defense? The NCAA’s Version of Amateurism, 13 Marq. Sports L. Rev. 257, 260 (2003) (quoting Allen L. Sack & Ellen J. Staurowsky, College Athletes for Hire: The Evolution and Legacy of the NCAA’s Amateur Myth 34–35 (1998)). In practice, amateurism has been a somewhat difficult concept to work with due to the lack of clear lines that demarcate what is and what is not an acceptable action of an amateur. Some of the changes that have been made to the definition over the years do not exactly align with earlier NCAA arguments, though it does not often care to admit that this is the case.

Initially, the NCAA Sanity Code banned scholarships that were based primarily on athletic ability and cited these scholarships as being a potential threat to amateurism.32N.Y. Times, supra note 10. This attempt to uphold the principles of amateurism backfired and the NCAA found itself facing more corruption than ever before, with universities, athletic department donors, and other alumni making illegal payments to student-athletes in order to entice them to come play at their institutions. Because of this, the NCAA voted in 1956 to allow scholarships that were based primarily on athletic ability, thinking that this would slow the under the table payments of student-athletes through above board regulation by the institutions and the NCAA.33See Muenzen, supra note 31, at 260.

After O’Bannon v. NCAA,34O’Bannon v. NCAA, 7 F. Supp. 3d 955 (N.D. Cal. 2014), aff’d in part, rev’d in part, 802 F.3d 1049 (9th Cir. 2015). which will be discussed in Part II, the NCAA responded to the court’s holding by allowing full grant-in-aid, which meant schools could provide full tuition, fees, room and board, books, and a small amount of money for incidental expenses to their student-athletes to cover the cost of living.35See Kord Wilkerson, NCAA v. Alston: Tackling College Athlete Compensation, Miss. Coll. L. Rev.: Blog (Sept. 3, 2021), https://mclawreview.org/2021/09/03/ncaa-v-alston-tackling-college-athlete-compensation [https://perma.cc/WRV3-B3NL]. Following the O’Bannon decision and the NCAA’s initial reaction, there was a quiet period in terms of changes to the compensation of NCAA student-athletes. However, NIL would be the next seismic shift in this area, which will be discussed in length later on in Part II and Part III.

2. The NCAA Legislative Process

The NCAA is governed by legislation, as the rules are created by member institutions’ representatives through the legislative process. The legislative process is run by the NCAA Board of Governors, which includes representation from Division I, Division II, and Division III of the NCAA.36NCAA Resources, supra note 14. The Board of Governors creates association-wide committees, and together they suggest rule changes and new legislation to each division—who can then choose to adopt them or not.37Id. This Note will be primarily analyzing Division I legislative changes, as most of the case law has involved litigation between Division I athletes and the NCAA. This is most likely due to the fact that Division I athletes bring in a large majority of revenue for the association,38See Finances of Intercollegiate Athletics, NCAA, https://www.ncaa.org/
about/resources/research/finances-intercollegiate-athletics [https://perma.cc/E66N-B9NJ].
and that Division II and III offer reduced amounts of athletic scholarship and no athletic scholarship respectively as compared to Division I.39Division II Partial-Scholarship Model, NCAA, https://www.ncaa.org/about/division-ii-partial-scholarship-model [https://perma.cc/3C5M-JHXN]; Play Division III Sports, NCAA, https://www.ncaa.org/student-athletes/play-division-iii-sports [https://perma.cc/9Q2R-UNYP]. Division I is the primary money-making branch of the association, with the Division I March Madness basketball tournament generating over one billion dollars annually.40Weiler et al., supra note 16.

The Division I Board of Directors is responsible for over 180,000 Division I athletes at over 350 institutions, which range from very small to very large size student bodies and include both public and private schools.41NCAA Resources, How the NCAA Works – Division I, YouTube (Apr. 28, 2021), https://www.youtube.com/watch?v=d_M12OC27vI [https://perma.cc/9N2D-6HUK]. The Board is composed of mostly university presidents.42How the NCAA Works, NCAA, https://www.ncaa.org/champion/how-ncaa-works [https://perma.cc/E3AT-9A6V]. Rules can be proposed for consideration as Division I legislation either by the NCAA Board of Governors, a member school or conference, or a Division I committee.43NCAA Resources, supra note 41. Conference sponsored legislation is reviewed by a Division I committee who first debates the ideas before recommending them to the Division I Council for approval as legislation.44Id. After the Division I council votes on proposed legislation, the decision is subject to review by the Division I Board of Directors and is made official legislation after their approval.45Id.

The Power Five Conferences (Big 12 Conference, Atlantic Coast Conference, Pacific-12 Conference, Southeastern Conference, and the Big Ten Conference), form the “Autonomy Group,” which the NCAA Division I Council has given more power than other conferences to make their own rules.46Id. Schools outside of the Autonomy Group have the power to adopt the rules put in place by the group, but due to the disproportionately large budgets of the schools within the group as compared to the schools outside the group, many may not have the power to actually implement the changes in the same way as the Autonomy Group.47See John Wolohan, What Does Autonomy for the “Power 5” Mean for the NCAA?, LawInSport (Feb. 11, 2015), https://www.lawinsport.com/topics/item/what-does-autonomy-for-the-power-5-mean-for-the-ncaa [https://perma.cc/TQ7D-84P5]. Certain added expenses that will be discussed later in this Note, such as stipends for student-athletes and a scholarship that includes money allotted for transportation and academic-related supplies, have been added by the Autonomy Group since it was created in 2014.48Id.

3. The NCAA Enforcement Process

After a piece of NCAA legislation is violated and the violation has been brought to the attention of the NCAA, either through a tip from another institution or through the self-reporting mechanisms available, the NCAA enforcement staff reviews the information regarding the violation and works with the relevant institution, if they choose to cooperate.49Division I Infractions Process, NCAA, https://www.ncaa.org/enforcement/division-i-infractions-process [https://perma.cc/U73Q-HGX8]. If a violation is found to actually have occurred, there are four potential tracks for resolution.50Id. The first is a “negotiated resolution,” in which the NCAA Committee on Infractions (“COI”) and the violating institution agree on the facts and the COI reviews and approves a report that is made jointly with the institution.51Id. After the report is approved, the COI will independently come to a decision on the penalty.52Id. Through the negotiated resolution method, there is no opportunity to appeal.53Id. Second is the “summary disposition” method, in which the parties also agree on the facts of the case and draft a report; the COI reviews and makes a decision similar to the negotiated resolution method.54Id. However, using the summary disposition method, an expedited hearing about the penalties can be requested, and there is also an opportunity to appeal.55Id. The main difference between the first two methods is that in a negotiated resolution, the violations and the level of the violations must be agreed upon before the COI reviews the case.56See NCAA, Inside the Division I Infractions Process: Negotiated Resolution (2019), https://ncaaorg.s3.amazonaws.com/infractions/d1/glnc_grphcs/D1INF_InfractionsProcessNegotiatedResolution-FactSheet.pdf [https://perma.cc/4Z2G-DMLV]. In a summary disposition, the institution and the NCAA agree on the level of the case, but they do not have to agree on the exact violations that were committed before the case is reviewed.57Id.

The third method is the “written record hearing” track, where the enforcement staff’s initial allegations are challenged by the institution because they cannot come to an agreement on the facts; the COI decides on the correct violations to be charged, as well as the penalties.58NCAA, supra note 49. There is also an appeal option offered through this method.59Id. The fourth and final option is the “full hearing” track, which is reserved for limited cases where there is little to no agreement between the enforcement staff and the institution.60NCAA, Inside the Division I Infractions Process: Infractions Process Overview (2023), https://ncaaorg.s3.amazonaws.com/infractions/d1/glnc_grphcs/D1INF_InfractionsProcess
Overview.pdf [https://perma.cc/W2N8-RQZL].
The summary disposition, written record hearing, and full hearing methods all offer the opportunity to appeal.61Id. The first two methods require the institution and the NCAA to come to a certain level of agreement.62See NCAA, supra note 49. Because of the cooperation of the institution, they are usually rewarded with less harsh penalties.

B. Name, Image, and Likeness

At the inception of the NCAA, student-athletes did not receive any form of compensation unless they could qualify for scholarships in some other way, unrelated to their athletic abilities. This Note has discussed developments that have allowed student-athletes to receive full scholarships for their athletic prowess and even some compensation beyond that amount; these developments will be discussed further in Part II. However, it was not until NIL took the stage that student-athletes were allowed to attempt to make substantial amounts of money during their time as NCAA student-athletes.

Name, image, and likeness are the three elements of the “right of publicity,” a legal concept that was introduced in a Harvard Law Review article authored by Louis Brandeis and Samuel Warren.63Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193, 195 (1890); see Ed Mantilla, Name, Image, Likeness, and Interplay with Intellectual Property, JD Supra (July 8, 2021), https://www.jdsupra.com/legalnews/name-image-likeness-and-interplay-with-5098268 [https://perma.cc/6Z6P-UZHD]. The right of publicity allows individuals to capitalize on their NIL and prevent others from using their NIL for unauthorized commercial purposes.64See Mantilla, supra note 63. It is related to state-law publicity rights65See Robert C. Post & Jennifer E. Rothman, The First Amendment and the Right(s) of Publicity, 130 Yale L.J. 86, 89 (2020). and has no applicable federal statute, so student-athletes have been largely at the mercy of their state legislatures and the federal courts, the latter of which have made arguments regarding student-athletes’ NIL in various antitrust analyses.66See Mantilla, supra note 63.

In September of 2019, California began the avalanche of legislation in the NIL space with the passage of the Fair Pay to Play Act.67Cal. Educ. Code § 67456 (West 2022); see Benjamin Tulis, California Fair Pay to Play Act to Become Effective September 1, 2021, JD Supra (Sept. 1, 2021), https://www.jdsupra.com/legalnews/california-fair-pay-to-play-act-to-1720393/https://www.espn.com/
college-sports/story/_/id/27735933/california-defies-ncaa-gov-gavin-newsom-signs-law-fair-pay-play-act [https://perma.cc/8UZV-JBCS].
The Act allows college athletes to seek out and enter into endorsement deals and sponsorships, allowing them to take full control over their NIL, all without losing their collegiate scholarship eligibility.68Cal. Educ. Code § 67456 (West 2022); Tulis, supra note 67. This bill left California and the NCAA “at odds’’ with each other, as the bill allowed for behavior that was contrary to NCAA rules at the time.69See, e.g., Dan Murphy, California Defies NCAA as Gov. Gavin Newsom Signs into Law Fair Pay to Play Act, ESPN (Sept. 30, 2019), https://www.espn.com/college-sports/story/_/id/27735933/california-defies-ncaa-gov-gavin-newsom-signs-law-fair-pay-play-act [https://perma.cc/LX9Y-C6FY]. Shortly after the bill was signed, California State Senator Nancy Skinner commented on the fact that because the NCAA had frequently lost antitrust suits in the past, all that California had to do to win the disagreement was to stand their ground and wait for other states to follow their lead.70See id. She argued that the NCAA would not want to risk losing an antitrust suit regarding the new state NIL legislation when the state legislatures of a large number of their member schools passed laws that permitted student-athletes to capitalize on their NIL.71See id.

Other states did eventually follow California, but even before other states could act, the NCAA Board of Governors unanimously agreed that it was time for a modernization of NIL rules.72See id. While still maintaining a focus on “the collegiate model,” and preserving amateurism, the NCAA instructed each division to create rules that would allow for student-athletes to monetize their NIL by January 2021.73Dan Murphy, Everything You Need to Know About the NCAA’s NIL Debate, ESPN (Sept. 1, 2021), https://www.espn.com/college-sports/story/_/id/31086019/everything-need-know-ncaa-nil-debate [https://perma.cc/E439-PNHU]. The Division I Council delivered proposed changes, but due to a letter from the Department of Justice that cautioned the NCAA to consider the antitrust implications of its proposed rules, the Council delayed the vote indefinitely.74See id. The Supreme Court’s June 21, 2020 ruling in NCAA v. Alston,75NCAA v. Alston, 141 S. Ct. 2141 (2021). which will be discussed at length in Part II, alluded to the idea that the NCAA should be cautious with other aspects of their rules that had not yet been challenged under the antitrust rule of reason.76See Murphy, supra note 73; Alston, 141 S. Ct. at 2166–67 (Kavanaugh, J., concurring). This gentle nudge from the highest court in the land prompted the NCAA Board of Governors—on June 30, 2021—to issue a temporary rule change that permitted NIL activity even before the first few state NIL laws went into effect.77See Murphy, supra note 73. Now, the current NIL rules allow student-athletes to follow the laws of the state where their school is located; if their state does not have NIL legislation, student-athletes can engage in NIL activities as long as they are not violating the NCAA’s temporary guidance.78Michelle Brutlag Hosick, NCAA Adopts Interim Name, Image and Likeness Policy, NCAA (June 30, 2021, 4:20 PM), https://www.ncaa.org/about/resources/media-center/news/ncaa-adopts-interim-name-image-and-likeness-policy [https://perma.cc/SLN5-XJXC].

Currently, NIL is very lucrative for some student-athletes, and the methods of monetization are just beginning to take form. Bryce Young, the starting quarterback at the University of Alabama, a premier football program, had earned approximately $1,000,000 in solo endorsement deals by late July 2021, and has continued to earn since then.79Maria Carrasco, Some College Athletes Cash In While Others Lose Out, Inside Higher Educ. (Oct. 12, 2021), https://www.insidehighered.com/news/2021/10/12/while-some-ncaa-athletes-cash-nil-others-lose-out [https://perma.cc/X8N5-KPZZ]. At the University of North Carolina, the student-athletes are a part of a group licensing deal: the athletes earn money when uniforms bearing their name and number are sold, or for situations in which their photo is sold to an advertiser in a sponsorship deal.80Becky Sullivan, UNC Becomes the First School to Organize Group Endorsement Deals for Its Players, NPR: Sports (July 21, 2021, 3:57 PM ET), https://www.npr.org/2021/07/21/1018887697/unc-group-licensing-college-sports-players [https://perma.cc/E8PW-DC3V]. Across the 1,200 member schools of the NCAA, the potential of NIL is shaping itself as student-athletes, administrators, and brands navigate this new space.

Looking towards the future, U.S. Representative Anthony Gonzalez has asked the House Energy and Commerce Committee to look at his proposed NIL bill.81See Murphy, supra note 73. However, it was made clear in June of 2021—through two Senate hearings—that a federal law is not necessarily imminent.82Id. For the time being, it will be up to the NCAA and its member institutions to comply with state laws and ensure their regulations do not cause them to be back before the Court, arguing they are not in violation of antitrust law.83Id.

C. Antitrust and the NCAA

Antitrust law is intended to remedy unreasonable exercises of market power.84See, e.g., Herbert Hovenkamp, The Antitrust Enterprise: Principle and Execution 93 (2005). The first federal competition law, the Sherman Act, was enacted in 1890. Section one of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations,”8515 U.S.C. § 1. and section two prohibits monopolies.8615 U.S.C. § 2. The Sherman Act—and the Clayton Act, which followed it—made great strides in giving plaintiffs the ability to challenge what they felt to be unreasonable exercises of market power. However, they provide little concrete guidance in creating definitive rules of illegality in the antitrust space.87See Herbert Hovenkamp, The Rule of Reason, 70 Fla. L. Rev. 81, 87 (2018). Because of this, the courts have a large amount of power in the creation of these demarcations in antitrust,88See id. and it is through this power that the court has shaped NCAA policy.

1. Overview of Antitrust Claim Analyses

Antitrust claims are evaluated under one of three tests. The first is the “per se” analysis, where a practice is deemed unlawful without further analysis if there is “relatively little to be stripped away”89See, e.g., Hovenkamp, supra note 84, at 108. before it becomes apparent that there are anticompetitive effects, with these effects being almost inferred from the conduct itself.90See, e.g., Hovenkamp, supra note 84, at 83. Under Broadcast Music, Inc. v. Columbia Broadcasting System, Inc.,91Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979). a prominent antitrust case, horizontal price fixing and output limitations are normally said to be “per se’’ illegal under antitrust law because of the fact that the likelihood of these practices being sufficiently anticompetitive with a lack of procompetitive justifications is very high.92See NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 100 (1984). The second method under which antitrust claims are evaluated is the intermediary “quick look” test, which was used in NCAA v. Board of Regents of the University of Oklahoma.93Bd. of Regents, 468 U.S. at 100; see Hovenkamp, supra note 84, at 126. The Court in Board of Regents expressed their analysis as a rule of reason analysis, but many of the shortcuts that they took indicate a “quick look” approach was actually used.94Hovenkamp, supra note 84, at 126. The Court held that the restraint at issue was anticompetitive “on its face,” and for this reason did not require an estimate of output effects, while also diluting the market power requirement that is traditionally necessary in a rule of reason analysis.95Id. (quoting Bd. of Regents, 468 U.S. at 113). The cases that qualify for a quick look are those that have similarities to unlawful per se restraints but for some reason warrant additional examination under a less truncated analysis.96See id. at 122. The third test is the “rule of reason” analysis, under which “reasonable” restraints on competition survive antitrust scrutiny if the procompetitive effects of the practice outweigh the anticompetitive effects in a balancing test performed by the court.97Id. at 83; see Hovenkamp, supra note 84, at 107; Michael A. Carrier, The Four-Step Rule of Reason, 33 Antitrust 50, 51 (2019).

The first NCAA case to make it to the Supreme Court, Board of Regents, was important because it established two crucial precedents that would determine how courts would handle the NCAA in future antitrust cases. The first precedent was the fact that the NCAA was not a single entity, but rather a group of competitors engaged in horizontal cooperation. Because of this, the NCAA was subject to antitrust scrutiny under section one of the Sherman Act. Single entities are not subject to antitrust scrutiny under section one because under this section, there must be bilateral action to cause a violation. The single entity defense allows a party to attempt to show that they are a single entity that cannot be in violation of section one, as there would be no conspiracy between two parties.98See Pieter Van Cleynenbreugel, Single Entity Tests in U.S. Antitrust and EU Competition Law 5 (June 21, 2011) (unpublished manuscript), https://ssrn.com/abstract=1889232 [https://perma.cc/GAD8-8H3C]. The NCAA was unable to show this, thus leaving them vulnerable to future section one attacks. The second precedent established by Board of Regents can be viewed as being more positive for the NCAA than the first. The Court held that NCAA rules should not be evaluated using a “per se” analysis because of the fact that some horizontal restraints on competition have to exist in order for the NCAA’s “product” of collegiate athletics to exist at all.99See Bd. of Regents, 468 U.S. at 100–01. The NCAA rules, according to the Court, should always be tested under the “crucible” of the rule of reason,100See O’Bannon v. NCAA, 802 F.3d 1049, 1079 (9th Cir. 2015). and should be given the benefit of the presumption that their regulations are indeed procompetitive.101See, e.g., Bd. of Regents, 468 U.S. at 100–01; Thaddeus Kennedy, NCAA and an Antitrust Exemption: The Death of College Athletes’ Rights, Harv. J. Sports & Ent. L. (Aug. 31, 2020), https://harvardjsel.com/2020/08/ncaa-and-an-antitrust-exemption-the-death-of-college-athletes-rights [https://perma.cc/GW4D-M4HD]. The Court emphasized that the decision to not subject the NCAA’s rules to a “per se’’ analysis was not because of their status as a nonprofit entity, or because of the Court’s respect for the “amateurism” principle upheld by the NCAA, but rather because of the recognition that some of these restraints must be necessary for the NCAA to even exist.102Bd. of Regents, 468 U.S. at 100–01.

The O’Bannon court reemphasized the two precedents established by Board of Regents, reminding the courts that they “cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules,”103O’Bannon, 802 F.3d at 1079. with no single entity defense or other exemption in the NCAA’s favor. Additionally, the O’Bannon court further emphasized that although NCAA rules may be a part of the “character and quality of the [NCAA’s] ‘product,’ ” they should still be subject to a rule of reason analysis, under which they will only be upheld if there is a true procompetitive purpose that wins out in the balancing test the court performs.104Id. at 1063–64 (quoting Bd. Of Regents, 468 U.S. at 102). Case law up until this point left us addressing NCAA rules on a case by case basis under the rule of reason, providing plenty of opportunities for litigation.105See, e.g., In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1066 (N.D. Cal. 2019).

2. Rule of Reason Analysis

The rule of reason requires that plaintiffs plead and prove that the defendants have sufficient market power to allow them to create harm, and that with this power, they have acted in a way that is anticompetitive.106Hovenkamp, supra note 84, at 83. The plaintiff’s prima facie case focuses on whether or not “the restraint before the court require[s] an explanation,”107Id. at 106–07. and if an explanation is required and the restraint is not deemed to be per se illegal, the defendant is asked to provide a procompetitive justification.108Id. at 107. Generally, this procompetitive justification is not difficult for defendants to establish when, as is required by the rule of reason analysis, the procompetitive justification is a motivating factor for the restraint.109See id. This aligns with the policy purpose of antitrust laws, where anticompetitive restraints are discouraged, but not completely outlawed, due to their potential to benefit society in terms of efficiency and wealth maximization.

Regarding the production of evidence, the plaintiff is first asked to produce evidence of the market power of the defendant and the use of such market power in a way that can be reasonably expected to create anticompetitive effects.110Id. Without requiring the plaintiff to prove that the defendant has the ability to create the undesired impact on the market, we would not leave room for the possibility of efficiency being the explanation for the restraint, and as previously discussed, these efficiency justifications are to be encouraged under the policy of antitrust law.111See id.

After the plaintiff is able to prove the defendant has sufficient market power and the anticompetitive use of said market power, the burden of proof is shifted to the defendant and evidence of a procompetitive justification for the restraint must be provided.112Id. at 107–10. Because the defendant is the adopter of the restraint, and this can be viewed as an action done “self-consciously,” the court is harsher when reviewing the evidence of the defendant’s procompetitive justification than the plaintiff’s evidence of the anticompetitive harm.113See id. at 110. Courts may reject the defendant’s evidence of a justification if there is an unmet burden of proof that the procompetitive effects from the practice outweigh the anticompetitive ones.114See id. Even if it is proven that the restraint does indeed promote competitive balance, this may not be enough, as it is generally the object of a cartel to use anticompetitive actions to protect weaker participants.115See id.

The NCAA has often argued that their restraints are justified due to the fact that they promote competitive balance between their member institutions.116See, e.g., NCAA v. Bd. of Regents, 468 U.S. 85, 117 (1984). There is currently an “arms race,” in collegiate sports in which universities spend millions of dollars each year on coaches’ salaries and the seemingly constant renovation of athletic facilities, all in the name of impressing the big time recruits.117Lora Wuerdeman, Sidelining Big Business in Intercollegiate Athletics: How the NCAA Can De-Escalate the Arms Race by Implementing a Budgetary Allocation for Athletic Departments, 39 N.C. Cent. L. Rev. 85, 87 (2017). The NCAA argues that the tenets of amateurism dictate that the arms race must stop short of payment to the players.118Id. at 107. This idea is not only justified in the name of amateur competition, but also in order to prevent the best players from funneling into the small group of schools that can afford to best compensate them. Though the playing field is not exactly even in terms of how much money various institutions may spend on their coaches or their facilities, the NCAA compensation rules create some level of uniformity in compensation amongst student-athletes across schools, capping their earning potential at the full cost of attendance plus some added costs that will be discussed in greater detail in Part II.

After a procompetitive justification is put forward by the defendant, the plaintiff has the opportunity to present a less restrictive alternative.119Hovenkamp, supra note 84, at 114. Less restrictive alternatives are practices that offer similar competitive benefits to the challenged practice with less anticompetitive harms than the challenged practice creates.120Id. The analysis of potential less restrictive alternatives allows the court to perform what is often called the “balancing” of procompetitive and anticompetitive effects, and less restrictive alternatives often tip the scales in favor of plaintiffs in these actions.121Id. The NCAA is often able to produce procompetitive justifications for the challenged restraints in actions against them, so the effectiveness of the less restrictive alternatives in the balancing test has tipped the scales on more than one occasion, as we will see in the following four cases.

II. NCAA CASE LAW AND THE IMPACTS OF JUDICIAL RULINGS


A. White v. NCAA

White v. NCAA122White v. NCAA, No. CV 06-0999-RGK, 2006 U.S. Dist. LEXIS 101374 (C.D. Cal. Oct. 19, 2006). is the antitrust case that started it all in terms of student-athletes’ battle with the NCAA regarding compensation. Two former football players, Stanford’s Jason White and UCLA’s Brian Polak, and two former basketball players, University of San Francisco’s Jovan Harris, and University of Texas at El Paso’s Chris Craig represented the class in the suit,123Tom Farrey, Class Action Suit Against NCAA Clears Two Hurdles, ESPN (Oct. 27, 2006), https://www.espn.com/college-sports/news/story?id=2640997 [https://perma.cc/A7K3-29X5]; Thomas A. Baker III, Joel G. Maxcy & Cyntrice Thomas, White v. NCAA: A Chink in the Antitrust Armor, 21 J. Legal Aspects Sport 75, 75 (2011). alleging that the NCAA’s grant-in-aid cap on financial aid awards to student-athletes was a violation of section one of the Sherman Act.124White, 2006 U.S. Dist. LEXIS 101374, at *1. The suit was filed on their behalf by the College Athletes Coalition (“CAC”), which was an advocacy group that received support from the United Steelworkers union.125Baker et al., supra note 123, at 75. The CAC had the mission of advocating for student-athletes in all areas, and by the time the suit was filed in 2006, they had garnered the support of over 20,000 current and former NCAA Division I football and basketball players.126Id.

As it stood at the time of the complaint, the grant-in-aid cap allowed member schools to cover tuition, room and board, and books, and prevented them from giving the student-athletes financial assistance for other costs including travel, insurance, laundry, or other incidental expenses.127White, 2006 U.S. Dist. LEXIS 101374, at *1. The plaintiffs argued that the NCAA imposed a horizontal restraint on competition through that cap,128Baker, supra note 123, at 76. and that the anticompetitive harm created by the cap on grant-in-aid was that it prevented institutions from competing with each other to offer the best financial aid packages equal to the full cost of attendance to their student-athletes.129White, 2006 U.S. Dist. LEXIS 101374, at *1.

Presumably due to a fear that there may have been an unfavorable court ruling that would have pushed the NCAA past the limits it was willing to bend—and the potential for the NCAA to have to pay the treble damages the plaintiffs requested, which would have been an estimated three hundred to four hundred million dollars—the NCAA settled the case.130Baker, supra note 123, at 76. However, the NCAA maintained throughout the settlement process and after the settlement agreement was published that they had done nothing wrong. The plaintiffs agreed to a stipulation in the settlement that the agreement did not serve as a “ ‘presumption, concession, or admission’ by the NCAA of any ‘violation of law, breach of duty, liability, default or wrongdoing as to any facts or claims alleged or asserted in the action.’ ”131Baker, supra note 123, at 77 (quoting White v. NCAA, Stipulation and Agreement of Settlement, No. CV-09-0999 RGK, at 5 (C.D. Cal. filed Jan. 28, 2008).

B. Rule Changes Following the White Settlement

In the settlement, the NCAA agreed to provide a total of $218,000,000, to be available from the 2007–08 academic year through the 2012–13 academic year, for Division I institutions to use in order to enrich the lives of their student-athletes.132Id. Over a three-year period, the NCAA also agreed to allow former student-athletes to file claims of reimbursement for “bona fide” educational expenses.133Id. (quoting White v. NCAA, Stipulation and Agreement of Settlement, No. CV-09-0999 RGK, at 10 (C.D. Cal. filed Jan. 28, 2008). The reimbursement claims were to be made to a fund that had a ten million dollar maximum, so while there was an opportunity for individuals to collect on their previous expenditures, the amount available was fairly minimal given the fact that there were generations of student-athletes who paid for their own tuition, fees, books, and other academic equipment and supplies.134Id. An additional part of the settlement was an NCAA rule that allowed Division I schools to provide year-round comprehensive health insurance to student-athletes and additional coverage to student-athletes who were injured while participating in NCAA sanctioned activities.135Id. So after this quasi-victory, our very own Peter Playmaker would have been able to get year-round health insurance, as well as insurance to cover him in the unfortunate case of a torn ACL. However, he would still be unable to receive a stipend that would bring his scholarship up to an amount that would cover the complete cost of attendance at UAA, which is what brings us to O’Bannon v. NCAA.136O’Bannon v. NCAA, 7 F. Supp. 3d 955 (N.D. Cal. 2014), aff’d in part, rev’d in part, 802 F.3d 1049 (9th Cir. 2015).

C. O’Bannon v. NCAA

The O’Bannon decision brought the antitrust fight against the NCAA into a new echelon, achieving what White was not able to before the settlement. The named plaintiff, Ed O’Bannon, was a basketball star at the University of California Los Angeles.137Harmeet Kaur, Former College Basketball Star Who Sued the NCAA Says California’s Fair Pay Bill Is ‘Changing the Game’, CNN (Sept. 14, 2019, 1:19 PM ET), https://www.cnn.com/2019/09/14/us/ed-obannon-ncaa-california-bill-trnd/index.html [https://perma.cc/
QHB8-ACBZ].
O’Bannon was visiting a friend’s home when he saw his friend’s son playing a video game.138Id. When he looked more closely at the screen, O’Bannon saw that his friend’s son was actually playing a video game called NCAA Basketball, in which all of the characters on the screen resembled O’Bannon, his brother, and the rest of his teammates on the historic 1995 UCLA basketball team.139Id. The 1995 UCLA Men’s basketball team won a national championship after Ed O’Bannon scored thirty points and had seventeen rebounds in the title game. Zach Helfand, Twenty Years Ago, Tyus Edney Saved UCLA’s Last NCAA Title Run, L.A. Times (Mar. 16, 2015, 7:05 AM PT), https://www.latimes.com/sports/ucla/la-sp-ucla-1995-champs-20150316-story.html [https://perma.cc/
ZF5Y-T7YX].
After finding out how much his friend had paid for the game, and realizing that he did not get any share of the profits despite the fact that he was one of the characters in the game, O’Bannon filed suit against the NCAA.140See Kaur, supra note 137. The other plaintiffs in the O’Bannon class action were current and former Division I men’s football and basketball players who also received no compensation, though they too appeared as characters in the game.141O’Bannon, 7 F. Supp. 3d at 962–63.

The O’Bannon suit was consolidated with Keller v. Electronic Arts Inc. (In re NCAA Student-Athlete Name & Likeness Licensing Litigation), a case in which the named plaintiff, Samuel Michael Keller, was a former starting quarterback for the Arizona State University and University of Nebraska football teams.142Keller v. Elec. Arts Inc. (In re NCAA Student-Athlete Name & Likeness Licensing Litig.), 724 F.3d 1268, 1271 (9th Cir. 2013). Like O’Bannon, Keller saw that his likeness was being used in the NCAA Football video game.143Id. Despite the virtual character having the same jersey number, similar physical attributes and playing characteristics, and the same home state as Keller, Keller received none of the profits.144Id. In the case of NCAA Football, the video game creator, Electronic Arts, Inc. (“EA”), took additional steps to ensure that the characters in its game were as close to the real life athletes as possible.145Id. EA sent questionnaires to football team equipment managers at colleges across the nation in order to gather information about the mannerisms and physical attributes of the players on their teams; all of this was to help create the most accurate depictions of the players as they possibly could.146Id. EA also allowed the individual playing the game to upload a college football roster so that each of the virtual characters could be named accurately after the players they were intended to resemble.147Id.

For the first time in a court of law, the bench was tasked with answering the question of whether or not the rules that prohibit student-athletes from being paid for the use of their NIL should be subject to antitrust laws as an unlawful restraint of trade. The O’Bannon court held that the NCAA’s amateurism rules, including the ban on compensation to student-athletes for the use of their NIL, was a violation of section one of the Sherman Act.148O’Bannon v. NCAA, 7 F. Supp. 3d 955, 1009 (N.D. Cal. 2014), aff’d in part, rev’d in part, 802 F.3d 1049 (9th Cir. 2015). The remedy ordered by the district court was a remedy the NCAA had not yet seen before, which was to hold in trust five thousand dollars per year per student-athlete until they finished school.149Id. at 983. The NCAA was allowed, by the district court, to prevent the member schools from funding these trust accounts with anything other than the money the school brought in from the use of the player’s NIL.150Id. The idea was that the students would be paid up to the limit imposed by the district court if the student actually contributed to the school earning five thousand dollars from the use of their NIL; thus, schools without the funds would not be made to find spare cash with which to pay their student-athletes in order to compete with other institutions that were able to pay them.151Id.

On appeal, the NCAA first attempted to argue that there was no reason for the association to be in court in the first place due to the fact that the Court in Board of Regents so kindly gave them what they believed amounted to almost a blanket waiver on claims of antitrust liability, saying their amateurism rules were categorically consistent with the Sherman Act.152O’Bannon v. NCAA, 802 F.3d 1049, 1063–64 (9th Cir. 2015). The NCAA argued that Board of Regents did not just declare that their amateurism rules were procompetitive, but that they were automatically lawful. The O’Bannon court quickly corrected this assumption and held that Board of Regents did no such thing for the NCAA.153Id. The clarification of Board of Regents provided by the O’Bannoncourt was that the Board of Regents case stood for the idea that the Court recognized that there are procompetitive purposes to be served by the NCAA’s amateurism rules. Because of this, these rules should not be struck down using a “per se” analysis. Furthermore, the NCAA should be given an opportunity to prove the validity of their rules on a case-by-case basis by showing procompetitive effects that outweigh any anticompetitive effects, and that there is a lack of available less restrictive alternatives that would achieve the same objectives.154Id.

The NCAA went on to argue that even if it was subject to antitrust rule of reason scrutiny in general, this was not the correct case to scrutinize its rules.155Id. at 1064–65. It argued that under section one of the Sherman Act, its compensation rules could not be regulated by antitrust laws because of the fact that they are not compensation rules, but rather “mere ‘eligibility rules’ ” that do not regulate commercial activity in any way.156Id. at 1065–66. The argument was that because amateurism is an essential component of the NCAA’s product, and because amateurism means that student-athletes are not to be paid like professional athletes, the NCAA was able to declare that maintaining NCAA eligibility means that students are not paid by anyone for the use of their NIL.157Id.

The association then offered four procompetitive justifications including: “(1) promoting amateurism, (2) promoting competitive balance among NCAA schools, (3) integrating student-athletes with their schools’ academic community, and (4) increasing output in the college education market.”158Id. at 1072. The first, second, and fourth justifications have been discussed previously, but this Note has not yet touched on the third justification. The NCAA argued that if student-athletes were to be paid, it would alienate them from their peers, who were students but not athletes, and make it difficult for student-athletes to integrate into their schools’ academic community.159Id. at 1075. The court quickly swatted this argument away, finding that other college students who make money from their jobs or even their NIL in capacities other than sports do not face this difficulty. Given the public support for student-athletes receiving additional compensation, this argument was flimsy from the very beginning.

The O’Bannon court found an injury in fact, given that the student-athlete plaintiffs were able to show that they would have been paid for the use of their NIL had the NCAA’s compensation rules not prevented them from pursuing such opportunities.160Id. at 1066–67. The court held that the NCAA’s compensation rules were more restrictive than necessary.161Id. at 1074–75. The rules were found to indeed regulate commercial activity, as commerce is a broad term that encompasses “almost every activity from which [an] actor anticipates an economic gain.”162Id. at 1064–65 (quoting Phillip Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 260b (4th ed. 2013)). Given the large amounts of money brought in by the NCAA each year, it would be difficult to argue that the NCAA does not anticipate economic gain, and the court acknowledged the fact that there is “real money at issue here.”163Id. at 1065. Additionally, the court emphasized that it is the substance of the rule, not the categorization, that is important when evaluating whether or not a particular rule is a restraint of trade.164Id. The NIL rules at issue in O’Bannon clearly regulated the terms of potential commercial transactions between the student-athletes, their chosen schools, and any outside companies seeking to compensate them for their play or their NIL.165Id. In this case, the substance of the rule overwhelmingly eclipsed the categorization as a “mere ‘eligibility rule[].’ ”166Id. The court found that raising the cap on compensation to the full cost of attendance was a valid less restrictive alternative that would benefit student-athletes and provide them with additional compensation while still providing the NCAA with an option to both enforce rules that uphold their tradition of amateurism and work to preserve the distinction between professional and collegiate sports, thus preserving the market competition for collegiate sports.167Id. at 1075.

The court did give the NCAA a small victory in holding that “[t]he difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap.”168Id. at 1078. The court found that giving student-athletes scholarships up to the full cost of their attendance was strictly within the line of amateurism principles because the money would be going to cover the very legitimate cost of attending schools, unlike professional athletes who can use their salary on whatever pleases them.169Id. at 1075–76. In a somewhat shocking statement, the court rebuked the district court, stating that “in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.”170Id. at 1076.

In October of 2016, the Supreme Court of the United States declined to hear O’Bannon v. NCAA,171O’Bannon v. NCAA, 580 U.S. 815 (2016) (denying the writ of certiorari); Michael McCann, In Denying O’Bannon Case, Supreme Court Leaves Future of Amateurism in Limbo, Sports Illustrated (Oct. 3, 2016), https://www.si.com/college/2016/10/03/ed-obannon-ncaa-lawsuit-supreme-court [https://web.archive.org/web/20230227215814/https://www.si.com/college/2016/10/03/
ed-obannon-ncaa-lawsuit-supreme-court].
leaving the state of student-athlete compensation in the hands of the Ninth Circuit’s ruling.

D. Rule Changes Following the O’Bannon Decision

The rule of reason analysis in this case provided students with the ability to choose a school that would provide them up to the cost of their attendance, but the court held that it “[did] not require more.”172O’Bannon, 802 F.3d at 1079. The Power Five Autonomy Group, discussed in Part I of this Note, was created the day before the district court ruling in O’Bannon in anticipation of the O’Bannon decision having an impact on scholarships and financial aid.173See Vincent “Trey” Tumminello, The Changing Face of College Athletics: O’Bannon and Cost of Attendance, Martindale (Feb. 13, 2018), https://www.martindale.com/legal-news/article_taylor-porter-brooks-phillips-llp_2505989.htm [https://web.archive.org/web/20230227220432/https://www.
martindale.com/legal-news/article_taylor-porter-brooks-phillips-llp_2505989.htm].
The Power Five Autonomy Group wanted to be able to act as a unit and do what needed to be done to not only comply with the ruling, but also to separate itself from the other NCAA conferences. In January of 2015, less than 6 months after the district court ruling, the Power Five Autonomy Group voted in favor of a proposal that allowed their member institutions to offer the full cost of attendance scholarships.174Id.

This proposal to increase the full cost of attendance scholarship included an additional stipend to student-athletes that was not given before the O’Bannon ruling.175Id. The amount of the stipend is calculated by the financial aid officers at each individual institution.176Id. Guidance given by the Department of Education regarding how to calculate the cost of attendance is very minimal because before O’Bannon, the only reason that this calculation was used was to decide what the cap on an individual student’s loans would be.177See id. This new stipend has been a cause of controversy in the world of college athletics, with speculation that financial aid offices are now assisting schools in increasing their costs of attendance in order to pay larger stipends to their student-athletes.178See, e.g., id. Their larger stipends are intended to draw better recruits, with evidence that increasing a school’s cost of attendance by $1,000 allows schools to increase between 2.07 and 4.35 spots in recruiting rankings.179See John Charles Bradbury & Joshua D. Pitts, Full Cost-of-Attendance Scholarships and College Choice: Evidence from NCAA Football, 19 J. Sports Econ. 977, 983 (2018). Peter Playmaker now has the ability to receive paid trips home to his family and a stipend that will give him money to spend on food that is not provided by his program, as well as other incidentals and school supplies that he needs.

These changes of course increased the compensation being paid to student-athletes, but they are in no way uniform across conferences or institutions.180Tumminello, supra note 173. Getting a judicial ruling that in some way reprimanded the NCAA was an obvious breakthrough and an upgrade from the White settlement, in which the antitrust claims were not addressed because the case never made it to trial. Even given the small progress made in the increase to the full cost of attendance, student-athletes had further to go in terms of the broader compensation rules that would be argued against in Alston.

E. Alston v. NCAA as the Case that Broke the Camel’s Back

In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation would bring student-athletes and the NCAA back to the courthouse to once again to fight over the NCAA compensation rules.181See In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1062 (N.D. Cal. 2019), aff’d, 958 F.3d 1239 (9th Cir. 2020); NCAA v. Alston, 141 S. Ct. 2141, 2147 (2021). The battle began in the United States District Court for the Northern District of California, where the NCAA was asked to defend a broader subset of rules that prohibited student-athletes from receiving compensation for education-related benefits beyond the cost of attendance, calculated by the financial aid offices of their institutions.182In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d at 1062–63.

Regarding the education-related benefits, the district court found that they affected interstate commerce, and under a rule of reason analysis, found the rules restricting the amount of education-related benefits an institution could provide to be undue restraints under section one of the Sherman Act.183Id. at 1083. The NCAA was unable to show that the restraints assisted in increasing the output in collegiate sports by providing more opportunities for student-athletes, or that they aided in maintaining a competitive balance among the member institutions.184Id. at 1070 n.12. Another hard blow for the NCAA was the lack of deference that the court had for the NCAA’s concept of amateurism.185See id. at 1070–72. The court was unamused by the NCAA’s inability to define “amateurism,” and because the NCAA does allow student-athletes to be paid in certain ways, such as being paid a scholarship or the stipend that was discussed above, the idea of an amateur being someone who does not get paid did not sit well with the court.186Id. The NCAA attempted to sell, as it had in the past, the idea that an “amateur athlete” is what creates the unique product that produces the incredibly large consumer demand for collegiate sports, but the court did not understand how the NCAA was unable to define the “[p]rinciple of [a]mateurism” that allegedly drove its consumer demand.187Id. at 1074, 1070. The court reasoned that the restraints created by the NCAA that capped education-related benefits in order to preserve amateurism were created without any real evidence that they would increase consumer demand, giving them little to no procompetitive benefit.188Id. at 1099.

Additionally, the plaintiffs were able to show that the increase in student-athlete compensation that occurred after O’Bannon did not negatively impact consumer demand, as consumer demand for collegiate athletics had risen in popularity at incredibly high rates since the O’Bannon decision.189Id. at 1078. During the time between O’Bannon and Alston, student-athletes were able to receive up to the full cost of attendance, and there were even some student-athletes who received both their full grant-in-aid scholarship and a Pell grant.190Id. at 1085. The NCAA Student Assistance Fund also provided additional compensation to student-athletes in need in a way that strongly resembled pay.191Id. at 1064, 1072. The NCAA’s worry from O’Bannon that contracts would have to be renegotiated because of student-athletes receiving more compensation never came to fruition, and it was found that the TV deals were continuously increasing in value.192Id. at 1063. The NCAA was unable to provide evidence that the bylaws limiting compensation were enacted based on consumer demand, including the bylaws that had once prevented full grant-in-aid being given to student-athletes.193Id. at 1074–75. Because of the seemingly arbitrary nature of the caps on compensation, and the success of the NCAA after the previous restrictions were rolled back, the district court sided with the student-athletes.194Id. at 1074.

The district court held the NCAA rules limiting athletic scholarship and other compensation related to athletic performance to be acceptable under antitrust law, but found the other NCAA rules limiting education-related benefits to be an unlawful restraint of trade.195Id. at 1074–75. Consistent with earlier NCAA jurisprudence, the court found that rules ensuring student-athletes were not entitled to receive virtually unlimited payments unrelated to their education to be acceptable.196See id. at 1083. These rules were deemed to have procompetitive benefits that outweighed the anticompetitive effects by taking care to maintain the difference between collegiate and professional sports through restricting payments to student-athletes in that unlimited payments would completely blur the market between the two leagues.197Id. The rules limiting education-related benefits were found to be more anticompetitive with no valid procompetitive justifications, given that the NCAA already allowed a large amount of education-related benefits with no valid arguments as to why they could not be increased, and the court found a distinct difference between student-athletes receiving education-related benefits and unlimited cash payments. Antitrust law has accepted the NCAA’s argument about the need to maintain the distinctive product of the NCAA in order to preserve market competition, and this difference clearly shows that the NCAA is able to maintain their product without the restraint of capping education-related benefits. Also similar to the outcome in the O’Bannon case, the district court reinforced the “ample latitude” the court gives the NCAA to run itself and govern its member institution when the market restraints are reasonable.198See id. at 1104 (quoting O’Bannon v. NCAA, 802 F.3d 1049, 1075 (9th Cir. 2015)).

The Ninth Circuit affirmed the district court’s decision in full, praising them for “[striking] the right balance” between leaving the student-athletes with no recourse in terms of the anticompetitive harm they were facing and preserving the distinctive product of college sports, which created the relevant market for analysis.199Alston v. NCAA (In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig.), 958 F.3d 1239, 1263 (9th Cir. 2020), aff’d, 141 S. Ct. 2141 (2021). The court felt that uncapping certain education-related benefits would preserve the growing consumer demand for college sports just as well as the then-current compensation rules did.200Id. at 1250. Because these non-cash education-related benefits would be difficult to confuse with the salary of a professional athlete, they maintained a very clear cut line, which the NCAA argued was one of their highest priorities throughout the three cases discussed in this Note.201See id. at 1257–58.

The circuit court also distinguished Alston from O’Bannon, correctly calling Alston a broader case that targets the interconnected set of NCAA rules that limit the compensation student-athletes may receive, while O’Bannon was a narrower challenge to restrictions on compensation for NIL activities.202Id. at 1254. By the time the case reached the Supreme Court, a much narrower set of NCAA compensation rules would be at issue, though this case is widely touted in the popular discourse as being an NIL decision because of the movement that it spurred in the fight for student-athletes to have NIL rights.203See, e.g., Andrew Brandt, Business of Football: The Supreme Court Sends a Message to the NCAA, Sports Illustrated (June 29, 2021), https://www.si.com/nfl/2021/06/29/business-of-football-supreme-court-unanimous-ruling [https://web.archive.org/web/20230221080122/https://www.si.com/
nfl/2021/06/29/business-of-football-supreme-court-unanimous-ruling].
The impact of this case, which includes the avalanche of change in the NIL space, will be discussed later on in this Note.

On March 31, 2021, the Supreme Court of the United States heard from the representatives of the NCAA and student-athletes.204See generally NCAA v. Alston, 141 S. Ct. 2141 (2021). The issue being addressed was whether or not the subset of NCAA rules restricting education-related benefits to student-athletes was in violation of section one of the Sherman Act.205Id. at 2147. The NCAA argued that the courts should be deferential to its rules for two reasons: The first was that the Sherman Act is only meant to prohibit restraints that are “undue” and that its restraints could not fall into this category because their purpose was to preserve the market for collegiate sports by promoting amateurism.206Id. at 2151. The second reason was that because it considered itself to be a “joint venture” whose collaboration was necessary to offer the unique product of intercollegiate athletics, the courts should be less harsh when evaluating its restraints.207Id. at 2155. In Broadcast Music, Inc., the Court held that because joint ventures can have procompetitive benefits and may be necessary for a product to exist, their arrangements should be evaluated under a more deferential standard and should not be stricken down too “reflexively” without an opportunity for the balancing test of the rule of reason.208See generally Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979). However, the Court in Alston reasoned that even if the NCAA is to be considered a joint venture, it is a joint venture with monopoly power in the relevant market for intercollegiate athletic competition, so the NCAA’s restraints were still properly subject to the rule of reason.209Alston, 141 S. Ct. at 2155. The NCAA did not contest the fact that it enjoys monopoly control in the market for collegiate athletes,210Id. at 2154. which stems from the fact that, as discussed above in Part I, there is no feasible alternative organization that schools or student-athletes can choose to be a part of in order to gain the same benefits that NCAA membership provides.

The NCAA also attempted to argue that its member schools were indeed not commercial enterprises to be regulated by the Sherman Act because it had the goal of maintaining amateurism only in order to serve the “ ‘societally important non-commercial objective’ of ‘higher education.’ ”211Id. at 2158 (quoting Brief for Petitioner at 3, id. (No. 20-512)). However, the NCAA did not contest the fact that its restraints affect interstate trade and commerce, which would thus subject it to the Sherman Act, or the fact that the Sherman Act had already been applied to other nonprofit organizations in the past.212Id. The Court acknowledged that it was “unclear exactly what the NCAA [sought]” in relation to making an argument about its noncommercial purpose, and the Court clarified that whether commercial or not, the NCAA would be receiving no special exemptions from the Sherman Act.213Id. at 2159. Along a somewhat parallel line of reasoning, the NCAA put forward the idea that since antitrust law does not require businesses to use the least restrictive means of achieving legitimate business purposes, it could not be held in violation of section one of the Sherman Act just because the student-athletes could put forward a less restrictive alternative than it was currently using.214Id. at 2161. The Court reminded the NCAA that while it did not have to use the least restrictive means of achieving its legitimate business purpose because that would be an erroneous and overly intrusive inquiry, its restraints were “patently and inexplicably stricter than necessary” to achieve the procompetitive benefits that it alleged, and there were viable less restrictive alternatives it could have used.215Id. at 2162 (quoting In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1104 (N.D. Cal. 2019)).

Post-eligibility internships funded by institutions or conferences were discussed as being a form of compensation that should be provided to student-athletes.216Id. at 2164. The NCAA argued that these scholarships would be a very convenient way for NCAA member schools to circumvent the rules regarding compensation.217Id. However, because the funding would come from the institutions and conferences, not donors, the Court felt there would be a low chance of having extravagant post-eligibility internships with extremely high salaries being offered under the rules.218Id. Additionally, the Court pointed out that the NCAA had a large amount of leverage and opportunity in terms of policing phony scholarships.219Id.

The Court engaged in a complete rule of reason analysis, as the Court in Board of Regents indicated should be done when evaluating NCAA rules, given the recognition by that Court that some of the restraints were essential to the NCAA’s very existence.220Id. at 2151.; NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 117 (1984). Here, the Court found that the student-athletes had indeed shown the NCAA’s restraints to have a collectively anticompetitive effect through the rules’ suppression of collegiate athlete compensation across NCAA institutions.221Alston, 141 S. Ct. at 2166. When the burden was shifted to the NCAA to show that the rules collectively yielded a procompetitive benefit, the Court found that some of the rules were procompetitive to the extent that they prohibited compensation entirely unrelated to education and that this may have the effect of preserving the consumer demand for college sports by keeping a clear line between collegiate and professional sports.222Id. at 2153. The student-athletes were then tasked with showing that there was a substantially less restrictive alternative in terms of rules that would achieve the same procompetitive effect as the challenged set of rules.223Id. The student-athletes were only able to meet this burden on the education-related benefits.224Id. at 2160–62.

A unanimous Court held that the district court’s holding was consistent with established antitrust principles and that the rules restricting education-related benefits were in violation of section one of the Sherman Act.225Id. at 2166. The Court reasoned that although courts do give substantial latitude to entities in order to create agreements that serve legitimate business interests, the NCAA cannot be immune from established antitrust principles simply because it believes that the restriction of these education-related benefits is a “product feature” for it.226Id. at 2163. The NCAA argued that the “product feature” created by these rules is amateurism, which serves a legitimate business interest by creating the unique product of the NCAA which establishes the relevant market for collegiate sports.227Id. at 2151, 2162–63. The rules were found to be stricter than necessary, although the Court was careful to enjoin only certain restraints in order to preserve the delineation between collegiate and professional sports, and thus preserve the demand for the distinct product.228Id.

Justice Kavanaugh’s concurrence in Alston produced quite a stir in the world of collegiate sports.229See, e.g., Sean Gregory, Why the NCAA Should Be Terrified of Supreme Court Justice Kavanaugh’s Concurrence, Time (June 21, 2021, 6:24 PM ET), https://time.com/6074583/ncaa-supreme-court-ruling [https://perma.cc/4NVH-HQVJ]. During the oral argument, Justice Kavanaugh asked very pointed questions about what the endgame of the Alston litigation would be: whether it was collective bargaining, as is traditional under labor law, or NCAA legislation.230Oral Argument at 01:03:58, NCAA v. Alston, 141 S. Ct. 2141 (2021) (No. 20-512), https://www.oyez.org/cases/2020/20-512 [https://perma.cc/SWD4-ANNF]. With an obvious eye towards the future, he wrote a concurrence that was essentially a veiled threat to the NCAA.231Alston, 141 S. Ct. at 2166–69 (Kavanaugh, J., concurring); see Gregory, supra note 229. He cautioned the NCAA regarding its remaining compensation rules, articulating that they might also raise serious questions under antitrust laws, and mentioned that he believed it lacks a legally valid procompetitive justification for its remaining compensation rules, though he did not name the rules to which he was referring outright.232Alston, 141 S. Ct. at 2166–67. Perhaps the most pointed sentence in the opinion was Justice Kavanaugh’s statement that the “NCAA’s business model would be flatly illegal in almost any other industry in America.”233Id. at 2167. He argued that “[p]rice-fixing labor is price-fixing labor,” meaning that the NCAA should stay on its toes or take a serious look at the rest of its legislation if it wants to avoid seeing the hallowed halls of the Supreme Court again.234Id. at 2167–68. Justice Kavanaugh took it one step further, making this not just an antitrust issue but also a civil rights issue, by citing a brief filed by a group of African American antitrust lawyers who argued that African Americans from lower-income backgrounds are disproportionately impacted by the rules against student-athlete compensation.235Id. at 2168; see Gregory, supra note 229. Many believe that Justice Kavanaugh caused a sufficient scare that could continue to propel student-athletes forward in their fight for compensation.236See, e.g., Gregory, supra note 229.

F. Rule Changes Following the Alston Decision

The Alston decision was about education-related benefits, not NIL, but the narrative in popular culture connects Alston and NIL for very good reason.237Brandt, supra note 203. The warning that the Court gave the NCAA about the potential antitrust liability of its rules that were not reviewed in the case was the push that the NCAA needed in order to pass an interim policy that served as guidance for NIL activities. The policy, passed on June 30, 2021—just one week after the Alston decision—gives student-athletes two options for capitalizing on their NIL earning potential.238Hosick, supra note 78. The first option is to allow student-athletes to follow the state law regarding NIL in the state where their institution is located, if their state has already adopted one.239Id. The second option, for student-athletes at institutions located in a state without a state NIL law, is to participate in any NIL activity as long as it does not violate NCAA rules.240Id. The policy also allows institutions to have some autonomy and adopt their own policies and guidance to protect their own student-athletes.241See id.

In the past, one of the NCAA’s main concerns has been regulating the contact professional agents and boosters have with student-athletes. Boosters are individuals who could be said to be a representative of the university’s athletics interests.242Univ. S. Cal.: office of Athletic Compliance, Playing by the Rules (2023), https://usctrojans.com/documents/2020/8/27/usc_trojans_athletic_compliance_playing_by_the_rules_min.pdf [https://web.archive.org/web/20230227233129/https://usctrojans.com/documents/2020/8/27/usc_
trojans_athletic_compliance_playing_by_the_rules_min.pdf].
The definition of a booster for NCAA compliance purposes encompasses everyone from individuals who have purchased only a single ticket to a university athletic event to large financial donors to the athletic department.243Id. The interim policy allows student-athletes to have access to professional service providers to help them with NIL activities, as long as both the service provider and the student-athlete stay compliant with state laws and institutional rules.244See Hosick, supra note 78. Additionally, boosters are permitted to assist student-athletes with NIL activities as long as there are no impermissible recruiting inducements that would constitute “pay-for-play.”245Id. Under the no pay-for-play rule, the NCAA aims to prevent payments that are given to a student-athlete simply because they are a student-athlete.246See id. An example of this would be money given to a student-athlete that is not given in return for some sort of work done by the student-athlete, such as a handout from a donor that is not given in exchange for a brand deal or other NIL opportunity.247Id.

These rules are consistent with the NCAA’s desire to maintain the difference between collegiate and professional sports, but represent a very dramatic change from when Peter Playmaker was unable to receive even a scholarship. Now, he is able to hire a marketing agent who can pursue brand partnerships and other opportunities for him. Playmaker now has a brand partnership with a national restaurant chain and an apparel company, and he has participated in social media campaigns and commercials for each of them.248Based on real-life quarterback, J.T. Daniels at the University of Georgia. Press Release, Zaxby’s, Zaxby’s Adds UGA Quarterback J.T. Daniels to Its Roster (Aug. 17, 2021), https://www.zaxbys.com/news-media/zaxby-s-adds-uga-quarterback-j-t-daniels-to-its-roster [https://
perma.cc/N78W-QLXD].
He now sells apparel and memorabilia through his own online store and has even released a trading card.249Based on real-life wide receiver, Velus Jones Jr. at the University of Tennessee, Knoxville. Tennessee Football (@Vol_Football), Twitter (Apr. 25, 2022, 4:01 PM), https://twitter.com/vol_football/status/1518726800054104064?s=46&t=TUWUTV5wNg4Pl1oTfCNtxG [https://perma.cc/VF66-FRVS]. He has also been able to enter into partnerships with charities of his choice and has helped them raise money for causes that are important to him. None of this would be possible without the interim NIL rules, all precipitated by the Alston decision.


III. PREDICTIONS FOR THE FUTURE OF COLLEGIATE ATHLETE COMPENSATION

The Alston decision has brought student-athletes a long way, and now collegiate sports as a whole is in a place where it is time to look to the future of student-athlete compensation. With NIL and the interim NCAA guidance having been in action for an entire college football season, we have seen the impacts of the decision in many ways. The largest impacts so far have been in the realms of recruiting and transfers, with large athletic programs such as that of the University of Texas at Austin finding ways to capitalize on the opportunities. Offensive linemen at the University of Texas at Austin have been promised fifty thousand dollars per year as a part of a program called “Horns With Heart.”250Cole Thompson, New NIL Program to Give Texas Offensive Lineman $50K to Play in Austin, Sports Illustrated: FanNation: Longhorns Country (Dec. 6, 2021, 3:10 PM ET), https://www.si.com/college/texas/news/texas-longhorns-offensive-line-horns-with-hearts-paid-hookem [https://web.archive.org/web/20230223011159/https://www.si.com/college/texas/news/texas-longhorns-offensive-line-horns-with-hearts-paid-hookem]. The “Pancake Factory” initiative, as it is being called, will provide the linemen with money in order to empower them to use their NIL rights to support their favorite charities.251Id. Additionally, supporters of the university are providing all student-athletes who attend their school with the opportunity to participate in what is called the “Clark Field Collective.”252Zach Dimmitt, UT Athletics to Be Funded by Clark Field Collective in $10 Million NIL Agreement, Sports Illustrated: FanNation: Longhorns Country (Dec. 3, 2021, 11:05 AM ET), https://www.si.com/college/texas/news/texas-longhorns-athletics-clark-field-collective-name-image-likeness [https://web.archive.org/web/20230223011250/https://www.si.com/college/texas/news/texas-longhorns-athletics-clark-field-collective-name-image-likeness]. This fund, run by alumni of the university, has received ten million dollars in financial backing in order to “create NIL opportunities for UT athletes who are looking to get their foot in the door.”253Id. This large fund was advertised to the top quarterback in the transfer portal, Quinn Ewers, who made the move from the Ohio State University to the University of Texas at Austin.254See John Buhler, Quinn Ewers Rumors: Texas Putting NIL Money on the Line to Land No. 1 Transfer QB, Fansided (Dec. 7, 2021), https://fansided.com/2021/12/07/quinn-ewers-rumors-texas-football-nil-money [https://perma.cc/7SJ7-EQJU]. Many sports pundits and college football insiders have argued that this is the first big transfer of a student-athlete from one institution to another that is driven primarily by NIL opportunities and that this will certainly not be the last transfer of this kind.255See, e.g., id.; Jake Aferiat, Why Former Top QB Commit Quinn Ewers Reportedly Intends to Transfer from Ohio State, Possible Landing Spots, Sporting News (Dec. 3, 2021), https://www.sportingnews.com/us/ncaa-football/news/quinn-ewers-transfer-ohio-state-landing-spots/11004vyb20pyf1efi67w7v0p9k [https://perma.cc/A9S4-2QRS].

Other than just in terms of financial benefits for individual student-athletes, NIL has shifted the power dynamics in the landscape of collegiate athletics. Because NIL has given student-athletes a more substantial presence in the world at large, it has also allowed student-athletes to have bigger platforms in order to voice their opinions and concerns. It is believed that this greater representation will likely lead to student-athletes having a greater ability to negotiate with the NCAA over compensation rules. Each Division of the NCAA has a Student Athlete Advisory Committee that gives its members the ability to offer input and assist in crafting the proposed legislation, and these committees existed long before NIL came into play.256See Division I Student-Athlete Advisory Committee, NCAA, https://www.ncaa.org/
governance/committees/division-i-student-athlete-advisory-committee [https://perma.cc/7G7R-KPD6].
However, the student-athletes on these committees now have a voice that they did not have before, which may lead to greater strides being made in the NCAA legislative process without the need to litigate to create substantive change.

Justice Kavanaugh’s concurrence in Alston and the underlying threat that it contained are likely enough to also give student-athletes additional bargaining chips that will allow them to make gains in this fight. It was the gentle threat of antitrust liability in the Alston decision, which was not about NIL in any way, and Justice Kavanaugh’s more pointed concurrence that pushed the NCAA to pass the interim NIL legislation, so student-athletes may be able to leverage the NCAA’s desire to stay out of the courtroom to make a change.

However, there remains a question as to whether or not NCAA student-athletes will be able to use antitrust once again as a sword to gain more in terms of compensation. Because NIL appears to be the perfect less restrictive alternative, and because antitrust law does not mandate that the least restrictive alternative be used, this Note will argue that Alston is the end of the line for collegiate athlete compensation under antitrust law.

A. Availability of NIL as the Perfect Less Restrictive Alternative

In antitrust law, the availability of a less restrictive alternative is vital for plaintiffs to be able to tip the scales in their favor during the rule of reason balancing test performed by the court. It is likely that in the future, student-athletes may have a difficult time convincing the court of a less restrictive alternative since NIL provides what seems like the best option in this space. NIL allows players to make money, so the market for their compensation is not fully depressed by the NCAA and its rules. However, NIL preserves the distinction between professional and collegiate athletes because student-athletes are not being paid a salary by the teams they play for, allowing the NCAA to remain a distinct product in the sports market and thus preserving the market for collegiate sports. In practice thus far, it appears that NIL allows everyone to have exactly what they want. The student-athletes have the ability to make money, with some players having high earning potential, but the NCAA is still able to hold on to its beloved concept of amateurism.

Naysayers of NIL as a valid less restrictive alternative to the NCAA’s compensation rules initially argued that this option did not account for the thousands of NCAA student-athletes in non-revenue sports, which include essentially every sport that is not Division I men’s football or Division I men’s basketball.257Matt Haage, Examining NIL Rights in College Athletics for “Non-Revenue” Sports, The CG Sports Co. (Apr. 22, 2021), https://www.cgsportsco.com/cejih-explains/examining-nil-rights-in-college-athletics-for-non-revenue-sports [https://perma.cc/4UDK-KQUQ]. However, this has proven not to be the case. In a study done by AthleticDirectorU and Navigate Research, 17 of the top 25 most valuable college athletes—in terms of NIL potential—from the 2019-2020 school year were athletes in these non-revenue sports.258AJ Maestas & Jason Belzer, How Much Is NIL Worth to Student Athletes?, AthleticDirectorU, https://athleticdirectoru.com/articles/how-much-is-nil-really-worth-to-student-athletes [https://perma.cc/98YZ-SP63]. Gymnastics, softball, baseball, women’s tennis, and track and field were some of the sports that these athletes participated in,259Id. which may shock those individuals who believed that only the revenue sports had real potential in this space.

While it is true that not all student-athletes will make money using NIL, NIL isn’t as much about athletic ability as it is reach, and it has been proven that this reach is not necessarily attached to athletic performance in a revenue producing sport. Because of the prominence of social media and the ability it gives athletes to build their brand and find their target audience, whoever that audience may be, student-athletes in a large variety of sports have been able to find their niche.260See David Cobb, As NIL Rules Go into Effect, These NCAA Athletes Moved Quickly to Profit from Name, Image and Likeness, CBS: NCAA FB (July 1, 2021, 4:58 PM ET), https://www.cbssports.com/college-football/news/as-nil-rules-go-into-effect-these-ncaa-athletes-moved
-quickly-to-profit-from-name-image-and-likeness [https://perma.cc/3VLR-C2PG].
Lexi Sun, a volleyball player at the University of Nebraska, is just one of the student-athletes from a non-revenue sport who has been able to partner with an apparel company in their particular sport, reaching not only the fan base of her university, but also young volleyball players across the country, in order to sell her apparel.261Id.

Something very convenient about NIL is that it allows the market to work on its own to establish the market rate for student-athletes. Without the NCAA having to get involved to set a rate of compensation that very well could be subjected to antitrust scrutiny, NIL allows student-athletes to make money when there is a market demand for their services. If they are worth the money, the market will find a way to utilize their services and pay them what it believes they are worth. Great success has been seen in this NIL era in terms of student-athletes bringing in large amounts of money, so while it is clear that someone out there is willing to pay them, it just likely will not be the NCAA any time in the near future.

Additionally, if the potential less restrictive alternatives that student-athletes would attempt to put forward in future antitrust litigation are rooted in labor law and the idea of student-athletes achieving the status of employees, they are likely to lose because of the fact that antitrust case law has continued to accept the NCAA’s argument that maintaining the distinction between the NCAA and professional sports is necessary to preserve market competition. Calling a student-athlete an employee and paying them a salary while also requiring them to be an amateur would be illogical. As it stands, the differentiation between the NCAA and professional sports has been upheld to be a valid procompetitive purpose that the courts have taken care to uphold.

B. Antitrust Law Does Not Mandate the Least Restrictive Alternative Be Used

While restraints should not be stricter than necessary to achieve legitimate business purposes, antitrust law under section one of the Sherman Act does not dictate that businesses must use the least restrictive means of achieving legitimate business purposes, as the Court emphasized in Alston, because this would be an “erroneous and overly intrusive inquiry.”262NCAA v. Alston, 141 S. Ct. 2141, 2146, 2162 (2021). Because of this, student-athletes may struggle to argue that just because they are not being compensated as much as they could be, the NCAA should be forced to make an adjustment to its business model that may jeopardize the entire enterprise. The Court has not yet struck down the idea of amateurism as a differentiating factor between collegiate and professional sports, so until that happens, it may be wise for student-athletes to exploit other avenues of increasing their compensation. Additionally, in order to fix the issues that the Supreme Court had with the NCAA’s amateurism argument, it may be enough for the NCAA to simply rework its definition of amateurism in a way that expressly takes into account NIL opportunities and clearly states that being paid a salary is something that is not acceptable for an amateur. The lack of a coherent definition was an agitation for the Justices, but finding a definition that incorporates the ability to make money within the NCAA guidelines may better serve the NCAA’s purpose.

C. Power of the NCAA

The fact that the Alston decision and Justice Kavanaugh’s concurrence amount to no more than a strong warning and a small slap on the wrist is a testament to the power of the NCAA as an institution in the United States. If it had been punished more severely, in a way that would impact lasting change, we may have seen changes greater than the interim NIL policy stemming from the decision.

Antitrust case law has shown the power of the NCAA, as even in what some would argue should have been an obvious ruling in Alston that obliterated the concept of amateurism, the Court still took care to not completely destroy the business model of the NCAA. Currently, student-athletes have to combat the power of the NCAA relatively on their own time and dime, as the member schools have a much greater incentive to comply with the regulations than they do to assist student-athletes in increasing their compensation.

It is likely that if student-athletes were to be further compensated, at least some of the money would be coming from the institutions themselves, which would significantly change the landscape of institutional budgets. Expensive coaches and flashy athletic facilities that are being constantly updated are all a part of the arms race that is recruiting in collegiate athletics, and if paying student-athletes from the institutional budget became a part of that arms race, it is likely that other expenditures would have to suffer. Because a large majority of the NCAA is comprised of smaller schools that benefit more from being a part of the NCAA than larger institutions do, schools may be more concerned with keeping their NCAA membership than they are with challenging certain aspects of the rules, leaving student-athletes to fight the good fight relatively on their own.

CONCLUSION

This Note has reviewed the rich history of the NCAA, an organization that, as Justice Kavanaugh very bluntly stated, would be essentially illegal in any other industry in the United States. Through antitrust case law and NCAA rule changes, the compensation landscape of student-athletes in the United States has evolved from scholarships being illegal when connected to athletic ability263N.Y. Times, supra note 10. to allowing student-athletes to be given full cost-of-attendance scholarships, health insurance, and the ability to make money off of their NIL.

There is likely little room in antitrust law for student-athletes to grow from the Alston decision beyond the NIL opportunities that they see now. As it currently stands, the bottom line is that the NCAA will always have the ammunition of the procompetitive purpose of preserving the popularity of college sports and maintaining its product as distinct from professional sports. Though the Supreme Court did appear skeptical of this principle in Alston, it did not seize the opportunity to tell the NCAA that maintaining this distinction is no longer a valid argument. Additionally, the NCAA now has the less restrictive alternative of NIL, which allows student-athletes to capitalize on their own individual stardom at a price that is dictated by the demand of the market rather than the NCAA or institutions themselves. Peter Playmaker is now in a much better position than he was prior to the Alston ruling, but for the foreseeable future, his battle against the NCAA for additional compensation under antitrust law is likely a game with no more time left on the clock.

 

96 S. Cal. L. Rev. 989

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* Senior Submissions Editor, Southern California Law Review, Volume 96; J.D. Candidate 2023, University of Southern California Gould School of Law; B.A. Broadcast Journalism 2020, University of Southern California Annenberg School of Communication and Journalism.

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Personal Jurisdictional Limits Over Plaintiff Class Action Claims

Commentators describe recent Supreme Court decisions as changing the law, to require courts to examine the propriety of personal jurisdiction as to all joined plaintiffs’ claims against a defendant. Nevertheless, many of those commentators argue that courts remain free to ignore unnamed plaintiff class members’ claims for personal jurisdiction purposes. After demonstrating that many lower courts already applied this requirement to mass actions before the Supreme Court’s recent decisions, this Article argues to the contrary that consideration of unnamed class plaintiffs’ claims is constitutionally required for state courts, and generally required under current subconstitutional law for federal courts. It then considers possible workarounds to mitigate the effects of the requirement, including invoking national personal jurisdiction and extracting consent from corporations in return for permission to conduct business.

 

INTRODUCTION

Say that a company based in Rhode Island manufactures a product that numerous consumers across the country allege caused them injury. While the economics suggest that it would be difficult, if not impossible, for any one consumer to pursue a lawsuit, a class action would be eminently feasible.1The advent of the modern class action enabled parties allegedly suffering injuries by virtue of a corporation’s product to sue that corporation in the form of a class action. The popularity of class actions has waxed and waned over the years. See, e.g., Robert H. Klonoff, The Decline of Class Actions, 90 Wash. U. L. Rev. 729 (2013); David Marcus, The History of the Modern Class Action, Part I: Sturm und Drang, 1953–1980, 90 Wash. U. L. Rev. 587 (2013); David Marcus, The History of the Modern Class Action, Part II: Litigation and Legitimacy, 1981–1994, 86 Fordham L. Rev. 1785 (2018).

Of course, any such suit would require a showing a proper personal jurisdiction.2See infra Part I. Assuming the corporation availed itself of the forum in which a plaintiff was injured, each plaintiff could probably file an individual action in that forum.3It seems that there would be specific personal jurisdiction over such a claim. See Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024–32 (2021) (taking a broad approach to specific jurisdiction); infra notes 96–102 and accompanying text; see also J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 879–87 (2011) (plurality opinion) (no personal jurisdiction in New Jersey forum over a foreign corporation whose product allegedly injured plaintiff within the forum, where the corporation did not purposefully avail itself of the particular state forum). And the Supreme Court’s consistent holding that (absent consent) a court must have personal jurisdiction over a plaintiff’s claim against an out-of-state defendant clearly requires the court to have proper personal jurisdiction as to the named class representatives’ claims against the corporation.4See Pennoyer v. Neff, 95 U.S. 714 (1878); Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945). For further discussion, see infra notes 114–119 and accompanying text. But can a lead plaintiff pursue a class action in the forum in which she was injured—say, Idaho—even if other members of the putative plaintiff class were injured elsewhere—indeed, have no connection whatsoever to the forum? To put the question another way, must a court consider the claims of unnamed plaintiff class members in determining the propriety of personal jurisdiction?

The answer to this question is of great moment. As the foregoing example suggests, if a court must have proper personal jurisdiction as to each unnamed plaintiffs’ claim against the corporation, then the number of available forums to host a multistate class action may drop precipitously. After all, to the extent that personal jurisdiction is required only for the class representatives, then named representatives who were allegedly injured in their home state can likely obtain proper personal jurisdiction to sue in a court in their home state (and perhaps also in federal court if the requisites for some form of federal subject matter jurisdiction is met), with the rest of the class—that is, other individuals who were allegedly injured in other states—free to come along for the ride. But, on the other hand, if all members of the class must have viable personal jurisdiction as to their own claims, then presumably (absent the defendant’s consent) suit must proceed in a forum where the defendant is subject to the court’s general jurisdiction—that is, where the defendant is subject to suit on all claims, irrespective of whether the claims arise out of the defendant’s contacts with the forum state.5See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.9 (1984); infra notes 39–40 and accompanying text.

The issue has long gone unresolved.6See, e.g., Mussat v. IQVIA, Inc., 953 F.3d 441, 445 (7th Cir. 2020) (noting that the issue “has not been examined closely”). For many years, the issue was largely unexamined because of a then-prevalent broad understanding (overly broad, it turned out, in light of subsequent Supreme Court rulings) of general jurisdiction, the subset of personal jurisdiction that applies when a defendant is subject to suit on all claims, irrespective of whether the claims arise out of the defendant’s contacts with the forum state. Indeed, for a nationwide corporation, the longstanding governing regime for general jurisdiction allowed (at least as it was understood across the lower courts) for personal jurisdiction in virtually every state and federal district.7See Jonathan Remy Nash, The Rules and Standards of Personal Jurisdiction, 72 Ala. L. Rev. 465, 485–87 (2020). This broad conception of general jurisdiction as to corporations means that defendants generally did not challenge, and thus courts had no occasion to address, the propriety of personal jurisdiction as to unnamed plaintiffs’ claims.8Personal jurisdiction is waivable. Thus, a failure to object to personal jurisdiction leaves the court with no reason to examine the issue. See infra notes 34, 164, and accompanying text.

Supreme Court decisions from the previous decade have brought to the fore the issue of personal jurisdiction as to unnamed class plaintiffs. The 2010s witnessed the Court effecting an avulsive change to the law of personal jurisdiction.9See Nash, supra note 7, at 467–68. In particular, the Court greatly trimmed the availability of general jurisdiction, limiting general jurisdiction over a corporation to its place of incorporation and principal place of business.10See Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011); Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). This change in the law elevates the importance of the need to establish personal jurisdiction with respect to the claims of all class members, or only for the named class representatives. To the extent that personal jurisdiction is required for all class members, then presumably either (i) a multistate class will generally only succeed in the corporate defendant’s home state(s) under general jurisdiction, or (ii) the named plaintiffs will have to settle for a statewide class action in their own state, with putative plaintiffs in other states free to pursue their own class actions in their own states.

The Court’s 2017 decision in Bristol-Myers Squibb Co. v. Superior Court11Bristol-Myers Squibb Co. v. Superior Ct., 137 S. Ct. 1773 (2017). confirmed the likelihood that indeed personal jurisdiction is required as to all class members’ claims. Bristol-Myers did not involve a class action, but it did involve a ‘mass tort action’—that is, the aggregation of numerous plaintiffs’ tort claims—in a forum not the ‘home’ of the defendant drug manufacturer. Specific jurisdiction—that is, the subset of personal jurisdiction applicable where the plaintiffs’ claims arise out of the defendant’s contacts with the forum12See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984); infra notes 41–43 and accompanying text. —as to the in-state plaintiffs was not challenged, insofar as the injuries there resulted from purchases and ingestion of the drug in question in the forum.13Bristol-Myers Squibb, 137 S. Ct. at 1781 (noting that the California plaintiffs “were prescribed, obtained, and ingested Plavix in California”). But the defendant did challenge the California Supreme Court’s holding that specific jurisdiction was proper as to the out-of-state plaintiffs based on a “sliding scale approach to specific jurisdiction.”14Bristol-Myers Squibb Co. v. Superior Ct., 377 P.3d 874, 889 (Cal. 2016), rev’d,137 S. Ct. 1773 (2017). Under that approach, “‘the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.’”15Id. (quoting Vons Cos., Inc. v. Seabest Foods, Inc., 926 P.2d 1085, 1098 (Cal. 1996)).

The Supreme Court’s primary holding was that the state’s attempt to relax “the strength of the requisite connection between the forum and the specific claims at issue . . . if the defendant has extensive forum contacts that are unrelated to those claims” was an invalid effort to craft specific jurisdiction into “a loose and spurious form of general jurisdiction.”16Bristol-Myers Squibb, 137 S. Ct. at 1781. But, in so holding, the Court also made clear that the out-of-state plaintiffs could not rely on the personal jurisdiction of the in-state plaintiffs’ claims. Rather, each plaintiff had to establish proper personal jurisdiction as to her own claim.17Id. (“The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.”).

This secondary holding of Bristol-Myers was in many ways not surprising. In fact, as we shall see, some lower courts already understood that each plaintiff in a case that joined together their claims had to establish independent personal jurisdiction as to her own claim. Still, many courts and commentators reacted with surprise at the decision, especially at its clear implication that independent personal jurisdiction might be required even as to unnamed class action plaintiffs.18See, e.g., Mussat v. IQVIA Inc., 953 F.3d 441, 445 (7th Cir. 2020) (“Before the Supreme Court’s decision in Bristol-Myers, there was a general consensus that due process principles did not prohibit a plaintiff from seeking to represent a nationwide class in federal court, even if the federal court did not have general jurisdiction over the defendant.”); Adam N. Steinman, Beyond Bristol-Myers: Personal Jurisdiction over Class Actions, 97 N.Y.U. L. Rev. 1215, 1264 (2022) (“The Supreme Court’s decision in Bristol-Myers has raised the disturbing possibility that personal jurisdiction will restrict nationwide class actions, which are often necessary means of access and enforcement.”); Andrew D. Bradt & D. Theodore Rave, Aggregation on Defendants’ Terms: Bristol-Myers Squibb and the Federalization of Mass-Tort Litigation, 59 B.C. L. Rev. 1251, 1256–57 (2018) (“Essentially, with some exceptions that we will discuss, after Bristol-Myers, mass-tort plaintiffs can either (1) assemble a nationwide group to sue together in state court in the defendant’s home state or potentially a state where it directed nationwide conduct; (2) sue individually or in smaller groups in their own home states’ courts if they can find a way to avoid removal; or (3) sue in, or allow removal to, federal court (either in their home states or the defendant’s) where their cases will be aggregated for pretrial proceedings in an MDL.”); Daniel Wilf-Townsend, Class Action Boundaries, 90 Fordham L. Rev. 1611, 1618 (2022) (“The Court’s decision in [Bristol-Myers] immediately raised questions about how the rules of specific jurisdiction apply in the class action context to the claims of absent class members.”); David Marcus & Will Ostrander, Class Actions, Jurisdiction, and Principle in Doctrinal Design, 2019 BYU L. Rev. 1511, 1520 (2019) (describing the issue of “whether the claims of absent class members matter to the determination of whether a defendant comes with the court’s personal jurisdiction” as “a question prompted by the 2017 [Bristol-Myers] decision”).

Despite the apparent clarity with which the requirement that unnamed class plaintiffs’ claims matter for personal jurisdiction purposes now shines, the vast majority of authority has endorsed the view that unnamed class plaintiffs’ claims are irrelevant for personal jurisdiction purposes. In an opinion for a Seventh Circuit panel by Judge Diane Wood—and joined by then-Circuit Judge Amy Coney Barrett—the court in Mussat v. IQVIA, Inc., held that, “[o]nce certified, the class as a whole is the litigating entity, . . . and its affiliation with a forum depends only on the named plaintiffs.”19Mussat, 953 F.3d at 445 (citation omitted). The Sixth Circuit in Lyngaas v. Curaden AG, over a dissent on the point by Judge Thapar, followed suit, characterizing the argument in favor of considering unnamed class plaintiffs’ claims as one that “[t]he vast majority of lower courts have rejected.”20Lyngaas v. Curaden AG, 992 F.3d 412, 434 (6th Cir. 2021); see Daniel Wilf-Townsend, Did Bristol-Myers Squibb Kill the Nationwide Class Action?, 129 Yale L.J.F. 205, 207 (2019) (cataloguing cases, and finding at the time that “a substantial majority of district courts have not read [Bristol-Myers] to prohibit those class members’ participation and have instead permitted class actions to proceed largely as they would have before [Bristol-Myers] was decided”). But see Molock v. Whole Foods Market Group, Inc., 952 F.3d 293, 305-10 (D.C. Cir. 2020) (Silberman, Sr. J., dissenting) (reaching the contrary result, while the majority did not resolve the issue).

Commentators have added scholarly heft to this position.21As Professor Wilf-Townsend notes, few commentators “have grappled with the question of whether the argument [that state boundaries should matter in considering unnamed class members’ claims] should be adopted.” Wilf-Townsend, supra note 18, at 1624. Instead, most scholarly commentary has instead focused on the effects such a position “would have for aggregate litigation.” Id. In a 2018 article in the Northwestern Law Review, Professor Scott Dodson offered a tentative argument that, as he put it, “might be enough to take some class actions out from underneath Bristol-Myers Squibb.”22Scott Dodson, Personal Jurisdiction and Aggregation, 113 Nw. U. L. Rev. 1, 31 (2018). In a 2019 Brigham Young Law Review article, Professor David Marcus and student coauthor Will Ostrander expressed skepticism about some arguments in favor of ignoring unnamed class members for personal jurisdiction purposes, but ultimately signed onto that view.23See Marcus & Ostrander, supra note 18, at 1520–49. In a recent Fordham Law Review article, Professor Daniel Wilf-Townsend was more full-throated about his support for this view,24See Wilf-Townsend, supra note 18, at 1625–64. as was Professor Adam Steinman in an article in the New York University Law Review.25See Steinman, supra note 18. These commentators agree with the majority of courts—and both courts of appeals to have addressed the issue—that unnamed class plaintiffs can be ignored when determining the propriety of personal jurisdiction.

In this Article, I argue to the contrary that, under current law, courts must consider the propriety of personal jurisdiction as to each unnamed plaintiff’s class member’s claim against a defendant. State courts—my focus here—must do so as a matter of constitutional law, and federal courts must do so because they are in general—and certainly with respect to claims brought under state law—obligated under common understandings of current subconstitutional law to exert no greater personal jurisdictional authority than the courts of the state in which they sit.

In advancing the arguments here, I make four contributions. First, I offer a detailed defense of the need to consider unnamed class plaintiffs’ claims—a defense that goes beyond the syllogism that Goodyear, Daimler, and Bristol-Myers require it. I delve into, and refute, arguments in favor of ignoring unnamed class plaintiffs’ claims.26See infra Part IV.

     Other commentators have taken the position I take here but have not refuted the counterarguments that others have made. Professors Andrew Bradt and Theodore Rave do survey some of the ground that I consider and reach similar conclusions, but their focus is more broadly on the impact of the Court’s Bristol-Myers decision on various types of litigation. See Bradt & Rave, supra note 18, at 1282–91. Moreover, Professors Bradt and Rave wrote before many courts and scholars took the position that unnamed class members’ claims should be ignored. Their analysis is thus but a part of a broader project, and their discussion of class actions is more cursory and predictive than what unfolds below.

     Dean Benjamin Spencer addresses the need to consider unnamed class members’ claims, but his focus, unlike mine, is on federal courts. See A. Benjamin Spencer, Out of the Quandary: Personal Jurisdiction over Absent Class Members Explained, 39 Rev. Litig. 31, 34 (2019). Given that focus, moreover, Dean Spencer’s attention falls more on subconstitutional than constitutional issues. See id. at 35–51. Moreover, he, like Professors Bradt and Rave, wrote before the onslaught of authority in the other direction developed.

Second, I demonstrate that it is Goodyear and Daimler that have brought the importance of personal jurisdiction over unnamed class plaintiffs’ claims to the fore. Claims that Bristol-Myers’ secondary holding (confirming the need to consider other named plaintiffs’ claims in the personal jurisdiction calculus)27See supra notes 17–18 and accompanying text. necessitates this conclusion—advanced even by some who agree with my ultimate legal conclusion28See supra note 26. —are overstated.

Third, I explain the impact of the requirement that courts consider unnamed class plaintiffs’ claims in assessing the propriety of personal jurisdiction. The impact as to domestic and foreign corporate defendants is quite different. The impact as to domestic corporate defendants is to limit the number of viable legal forums for multistate class actions. While that effect is hardly insubstantial, it pales in comparison to the impact on foreign corporate defendants, which may often be to deny any domestic forumin which a multistate class action can be heard.

Fourth, I consider and evaluate ways (short of reverting to a broader conception of general jurisdiction) to remedy the situation. Expanding the use of national minimum contacts in the personal jurisdiction calculus, and extracting consent from corporate defendants to general jurisdiction (at least as to class actions) are two options. The federal government is better positioned to deploy these strategies as to federal courts (and indeed states may lack the authority altogether to do so). Finally, as a normative matter, a remedy is far more important for class actions against foreign, as opposed to domestic, corporate defendants.

This Article proceeds as follows. Part I presents the basics of personal jurisdiction, with some emphasis on Supreme Court precedent speaking to class actions. Part II highlights the stakes of requiring consideration of unnamed class plaintiffs’ claims as part of the personal jurisdiction inquiry.

Part III addresses the intermediate step of whether, outside the class action context, personal jurisdiction calculus requires consideration of the claims of joined plaintiffs. It argues that, while Bristol-Myers confirmed this requirement, many lower courts already understood that to be the law.

Part IV tackles the central question of whether personal jurisdiction calculus requires consideration of the claims of unnamed class plaintiffs. It argues that simple logic indicates that it does, and it then refutes arguments to the contrary. Part V then considers and assesses possible workarounds.

I. THE BASICS OF CONSTITUTIONAL PERSONAL JURISDICTION

This Part presents an overview of the Supreme Court’s jurisprudence governing the assertion of personal jurisdiction by state courts—and federal courts, insofar as applicable law generally directs federal district courts to follow personal jurisdiction limitations imposed on state courts—with respect to out-of-state litigants. While a state court exercise of personal jurisdiction must comply with the governing state long-arm statute, the overview here focuses on federal constitutional limits on the exercise of personal jurisdiction. Finally, after examining state court exercise of personal jurisdiction (which is my focus here, and has provided the fodder for all of the Supreme Court’s exegesis of personal jurisdiction29See 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedures § 1067.1 (4th ed. 2022) (collecting cases).), the overview concludes with a brief discussion of federal court exercise of personal jurisdiction (which, insofar as applicable law generally directs federal district courts to follow personal jurisdiction limitations imposed on state courts, largely—but not entirely—mirrors state court practice).

The Supreme Court has long recognized a limitation on a state court’s ability to assert personal jurisdiction over an out-of-state defendant.30See Pennoyer v. Neff, 95 U.S. 714, 727 (1878). The Court has attributed this limitation to the Fourteenth Amendment’s Due Process Clause.31See, e.g., Bristol-Myers Squibb Co. v. Superior Ct., 137 S. Ct. 1773, 1779 (2017) (“It has long been established that the Fourteenth Amendment limits the personal jurisdiction of state courts.”); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (“The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant.”).

     The Court’s language has occasionally also suggested that the personal jurisdictional limitation emanates out of the Constitution’s incorporation of international law. There are arguments that the ratification of the Constitution itself incorporated background principles of international law that put limits on extraterritorial assertions of personal jurisdiction. See Stephen E. Sachs, Pennoyer Was Right, 95 Tex. L. Rev. 1249, 1252 (2017) (“Personal jurisdiction . . . [is] a matter of general law—that unwritten law, including much of the English common law and the customary law of nations, that formed the basis of the American legal system and that continues to govern unusual corners of the system today.”); Lea Brilmayer & Charles Norchi, Federal Extraterritoriality and Fifth Amendment Due Process, 105 Harv. L. Rev. 1217, 1220–21 (1992) (federal long-arm statutes may be limited by the Fifth Amendment and international law); Wendy Collins Perdue, Sin, Scandal, and Substantive Due Process: Personal Jurisdiction and Pennoyer Reconsidered, 62 Wash. L. Rev. 479, 499–500 (1987) (describing the Pennoyer Court’s consideration of the Fourteenth Amendment as “startling”). Indeed, the Court’s famous announcement of territorial limits on state jurisdiction in Pennoyer dealt with a case that predated the Fourteenth Amendment. See Burnham v. Superior Ct., 495 U.S. 604, 616–17 (1990) (plurality opinion) (noting that the Pennoyer Court’s “statement of the principle that the Fourteenth Amendment prohibits [the exercise of discretion] . . . set[] forth only as dictum”). It has variously described the limitation as a recognition of (i) a personal liberty interest enjoyed by defendants,32See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982). and (ii) the limits of the sovereignty of a state beyond its borders.33See, e.g., J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 883–84 (2011) (plurality opinion). The Court in Bristol-Myers again identified sovereignty and fairness as the keys to the Fourteenth Amendment calculus. See 564 U.S. at 1780. The Court elevated fairness as the more dominant factor, though it also noted that, “at times, th[e] federalism interest may be decisive.” Id.

Over time, the Court has identified a few ways by which a state can proceed with respect to claims against an out-of-state defendant. First, any defendant can consent to a court’s personal jurisdiction (or waive any objection to personal jurisdiction).34See Ins. Corp. of Ireland, 456 U.S. at 703 (“Because the requirement of personal jurisdiction represents first of all an individual right, it can, like other such rights, be waived . . . . A variety of legal arrangements have been taken to represent express or implied consent to the personal jurisdiction of the court.”). Second, under so-called “tag jurisdiction,” personal jurisdiction is proper over an out-of-state individual who is served with process while within the state in which the cause of action has been brought.35See Burnham, 495 U.S. at 610–12 (plurality opion) (reaffirming Pennoyer v. Neff, 95 U.S. 714 (1878) on this point). But cf. Martinez v. Aero Caribbean, 764 F.3d 1062, 1069 (9th Cir. 2014) (asserting that Burnham does not apply to corporations). Third, and most importantly, the Supreme Court held in International Shoe Co. v. Washington36Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945). and its progeny that a state can (consistent with its long-arm statute) exercise personal jurisdiction over an out-of-state defendant where the defendant has sufficient “minimum contacts” with the forum state and the exercise of jurisdiction would not be unfair.37See id. at 316–20. In Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 113 (1987), the Court elucidated several factors to weigh in determining the extent of unfairness and inconvenience imposed by exertions of personal jurisdiction.

Over the years, the Court elucidated that “minimum contacts”-based personal jurisdiction came in two varieties: general jurisdiction and personal jurisdiction.38See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 & nn.8–9 (1984). General jurisdiction is personal jurisdiction that inheres notwithstanding any relationship (and even in the absence of any relationship) between the plaintiff’s claim and the defendant’s contacts with the forum.39Id. at 414 n.9 (“When a State exercises personal jurisdiction over a defendant in a suit not arising out of or related to the defendant’s contacts with the forum, the State has been said to be exercising ‘general jurisdiction’ over the defendant.”). In other words, it turns entirely on the defendant’s (substantial) contacts with the forum, not the nature of the plaintiff’s claim; it is “all-purpose” jurisdiction.40Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). In contrast, specific jurisdiction is personal jurisdiction that inheres where the plaintiff’s claim arises out of the defendant’s contacts with the forum.41Helicopteros Nacionales, 466 U.S. at 414 n.8 (“[W]hen a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant’s contacts with the forum, the State is exercising ‘specific jurisdiction’ over the defendant.”). It is personal jurisdiction that turns on “relationship among the defendant, the forum, and the litigation”;42Shaffer v. Heitner, 433 U.S. 186, 204 (1977). it is “case-linked” jurisdiction.43Goodyear, 564 U.S. at 919.

Before the last decade, with the Supreme Court having had little to say about general jurisdiction,44See Nash, supra note 7, at 483–89 (cataloguing the Court’s very limited twentieth-century holdings on general jurisdiction). lower courts offered broad interpretations.45See id. at 485–87. Lower courts variously considered a corporate defendant’s sales and physical presence (or a combination of the two, sometimes in addition to other factors) in assessing assertations of general jurisdiction.46See id. at 485–86. In the end, though, the variants of the tests almost always resulted in the recognition of general jurisdiction for nationwide corporations in virtually every state and federal district.47See id. at 486–87.

Then came the decisions in Goodyear Dunlop Tire Operations, S.A. v. Brown48Goodyear, 564 U.S. 915. and Daimler AG v. Bauman,49Daimler AG v. Bauman, 571 U.S. 117 (2014). where the Supreme Court narrowed the availability of general jurisdiction over a corporation essentially to its place of incorporation and principal place of business.50See Goodyear, 564 U.S. at 924; Daimler, 571 U.S. at 137; accord BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558–59 (2017). The factors of fairness and convenience that otherwise enter into the personal jurisdictional calculus do not factor in here and cannot deprive a court of otherwise proper general jurisdiction. See Daimler, 571 U.S. at 139 n.20. The Court in Daimler specifically noted that the bases for general jurisdiction generated by the new test “afford plaintiffs recourse to at least one clear and certain forum in which a corporate defendant may be sued on any and all claims.”51Daimler, 571 U.S. at 137. But for nationwide corporations, the new test had the effect of greatly restricting the options plaintiffs previously enjoyed.52See, e.g., Dodson, supra note 22, at 23–24.

The one remaining opening for more expansive general jurisdiction over multistate corporations is the possibility that a state can exact blanket consent to general jurisdiction in return for permission to conduct business in the state. The Court recently decided that such consent is sufficiently voluntary as to satisfy the Due Process Clause, though other questions may remain.53See Mallory v. Norfolk S. Ry. Co., 143 S. Ct. 2028 (2023). For discussion, see infra notes 247–251 and accompanying text. For discussion of the possibility that the decision in Mallory, which involves a domestic corporation consenting to general jurisdiction in a state forum, might not resolve definitively the propriety of the United States extracting consent to general jurisdiction from a foreign corporation in return for permission to conduct business in the United States, see infra notes 253–254 and accompanying text.

The Court has had much more to say about specific jurisdiction over the years, although without great success in describing its contours. Indeed, the Court has applied different tests to cases involving different types of legal claims.54See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (products liability claims); Calder v. Jones, 465 U.S. 783 (1984) (defamation claims); Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (contract claims). At its essence, however, the Court has explained that specific jurisdiction requires an out-of-state defendant to have “purposeful[ly] avail[ed]” itself of the forum state,55Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (quoting Burger King, 471 U.S. at 475). and that the plaintiff’s claim arise out of the defendant’s contacts with the forum.56Id. at 1025.

The Court’s reformulation of general jurisdiction has put more weight on specific jurisdiction: consider that, whereas many plaintiffs could easily have relied upon the lower courts’ broad construction of general jurisdiction to sue in many forums other than a defendant corporation’s place of incorporation or principal place of business, now plaintiffs wishing to sue in such forums must turn to specific jurisdiction.57See Nash, supra note 7, at 500–01. In the 2017 case of Bristol-Myers Squibb Co. v. Superior Court,58Bristol-Myers Squibb Co. v. Superior Ct., 137 S. Ct. 1773 (2017). the Supreme Court highlighted how specific jurisdiction was not malleable enough to make up for the great extent to which general jurisdiction had been shrunk. The plaintiffs in the case claimed injury as a result of ingesting a drug manufactured by the defendant Bristol-Myers Squibb Company.59Id. at 1778. Suit was brought in California state court.60Id. There were over 600 plaintiffs (though the case was not brought as a class action), most of whom were not California residents, and did not purchase or ingest the drug in California.61Id. The California Supreme Court had upheld personal jurisdiction; it employed a “sliding scale approach to specific jurisdiction,”62Bristol-Myers Squibb Co. v. Superior Ct., 377 P.3d 874, 889 (Cal. 2016), rev’d, 137 S. Ct. 1773 (2017). under which “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.”63Id. (quoting Vons Cos., Inc. v. Seabest Foods, Inc., 926 P.2d 1085, 1098 (Cal. 1996)). The Supreme Court rejected that approach, which it found “resemble[d] a loose and spurious form of general jurisdiction.”64Bristol-Myers Squibb, 137 S. Ct. at 1781. Thus, while the California residents could proceed with the suit in California, the nonresidents could not.

All of what I have discussed to this point about the Court’s personal jurisdiction jurisprudence relates to personal jurisdiction over defendants. In some sense, that is not surprising. After all, to whatever extent personal jurisdiction over a plaintiff is required, the plaintiff in a typical case presumably consents to the jurisdiction of the court in which she files suit.65For example, the Court in Adam v. Saenger, 303 U.S. 59 (1938), explained:

There is nothing in the Fourteenth Amendment to prevent a state from adopting a procedure by which a judgment in personam may be rendered in a cross-action against a plaintiff in its courts, upon service of process or of appropriate pleading upon his attorney of record. The plaintiff having, by his voluntary act in demanding justice from the defendant, submitted himself to the jurisdiction of the court, there is nothing arbitrary or unreasonable in treating him as being there for all purposes for which justice to the defendant requires his presence. It is the price which the state may exact as the condition of opening its courts to the plaintiff.

Id. at 67–68. A plaintiff-side class action, however, raises a distinct concern, since members of the plaintiff class other than the named class representatives will not have affirmatively filed suit. In Phillips Petroleum Co. v. Shutts66Phillips Petroleum Co., v. Shutts, 474 U.S. 797 (1985). —a class action brought against a corporation for nonpayment of royalties in the Kansas state courts67See id. at 799–801. —the Supreme Court explained that the ordinary opt-out procedures associated with class actions provide a sufficient base on which to rest personal jurisdiction.68It was the defendant who raised on appeal the issue of the propriety of personal jurisdiction over the non-class representatives. The Supreme Court allowed the defendant to make this argument on the ground that it was the defendant who might suffer injury if personal jurisdiction was subsequently found to be absent such that the non-class representative plaintiffs would not be bound by the court’s judgment. See id. at 805–06. The Court explained that its usual test for personal jurisdiction (as elucidated above) was designed for the purpose of “protect[ing] a defendant from the travail of defending in a distant forum, unless the defendant’s contacts with the forum make it just to force him to defend there.”69Id. at 807.

However, the Court explained, the justifications for erecting a high barrier for personal jurisdiction over defendants do not translate to the setting of non-class representative plaintiffs, since “[t]he burdens placed by a State upon an absent class-action plaintiff are not of the same order or magnitude as those it places upon an absent defendant.”70Id. at 808. A defendant hailed into an out-of-state forum faces the prospect of hiring counsel and traveling to defend itself (or else of suffering a default judgment), the possibility of liability for fees, and costs, and eventually the possibility of judgment being entered against it.71Id. In contrast, court procedures are solicitous of absent plaintiffs’ rights (for example, by requiring the class representative to act in the interests of the entire class, and by requiring court approval of any settlement).72Id. at 808–10. And, ultimately, absent plaintiffs are highly unlikely to be liable for fees or costs, “need not hire counsel or appear,” and “are not subject to coercive or punitive remedies.”73Id. at 810. Indeed, an adverse judgment will not typically bind an absent plaintiff to pay any damages; at most “a valid adverse judgment may extinguish any of the plaintiff’s claims which were litigated.”74Id.

The Court concluded that the Fourteenth Amendment’s Due Process Clause affords absent class plaintiffs some “minimal procedural due process protection,”75Id. at 811–12. See id. at 811 (“The Fourteenth Amendment does protect ‘persons,’ not ‘defendants,’ . . . so absent plaintiffs as well as absent defendants are entitled to some protection from the jurisdiction of a forum State which seeks to adjudicate their claims.”). but nowhere near as much as it affords defendants.76Id. at 811. Specifically, the Court held that personal jurisdiction over the plaintiffs was proper so long as the plaintiffs “receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel,” and are “provided with an opportunity to remove himself from the class by executing and returning an “opt out” or “request for exclusion” form to the court.”77Id. at 812. The Court also noted that “the Due Process Clause of course requires that the named plaintiff at all times adequately represent the interests of the absent class members.” Id.

It bears emphasis that the Phillips Petroleum case did not raise, nor did the Court there address, any question about the susceptibility of the defendant corporation to personal jurisdiction in the Kansas state courts.78Diane P. Wood, Adjudicatory Jurisdiction and Class Actions, 62 Ind. L.J. 597, 613 (1987) (“Because no one had raised the point, the Supreme Court’s decision in Shutts paid no attention to the question why Phillips had to answer in Kansas for its policy about interest on suspense royalties.”); Bradt & Rave, supra note 18, at 1284 (“Phillips Petroleum made no argument that the Kansas court lacked jurisdiction over itself, even with respect to claims by plaintiffs with no connection to Kansas.”). Indeed, the Court has never considered the propriety of personal jurisdiction over an out-of-state corporate defendant with respect to claims brought under a class action belonging to non-class representatives.79See Mussat v. IQVIA, Inc., 953 F.3d 441, 445 (7th Cir. 2020) (noting that the issue “has not been examined closely”).

A final note is appropriate as to the exercise of personal jurisdiction by the federal courts. The Fourteenth Amendment imposes no restriction on the federal courts; though the Supreme Court has never resolved the question definitively,80The Court has repeatedly reserved judgment on the question. See J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 885 (2011) (plurality opinion); Omni Cap. Int’l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 102 n.5 (1987); Asahi Metal Indus. Co. v. Superior Ct., 480 U.S. 102, 113 n* (1987) (plurality opinion). logic and precedent strongly suggest that the Fifth Amendment’s Due Process Clause81U.S. Const. amend. V (“No person shall . . . be deprived of life, liberty, or property, without due process of law . . . .”). imposes analogous limits on the federal courts but with national contacts (rather than contacts with any state) the proper measure.82Nash, supra note 7, at 522–43.

That said, subconstitutional law seems generally not to authorize jurisdiction based on national contacts. Rule 4(k)(1)(A) of the Federal Rules of Civil Procedure is seen to limit the personal jurisdictional reach of the federal district courts to defendants who are “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”83Fed. R. Civ. P. 4(k)(1)(A). Based on that rule, the common understanding is that federal courts are required to apply the same limitations as those that constrain the courts of the state in which it sits—i.e., the strictures of the Fourteenth Amendment and the governing long-arm statute.84See Wright & Miller, supra note 29, § 1075 (“To satisfy Rule 4(k)(1)(A), jurisdiction in a federal district court must comply with state laws regarding the jurisdictional reach of that state’s courts. It also requires an inquiry into the federal question of whether that state’s courts could constitutionally exercise personal jurisdiction consistent with the Due Process Clause of the Fourteenth Amendment to the United States Constitution.”); see also A. Benjamin Spencer, Substance, Procedure, and the Rules Enabling Act, 66 UCLA L. Rev. 654, 714–15 (2019) (arguing that while Rule 4 may run be inconsistent with the Rules Enabling Act in that they are jurisdictional, not procedural rules, the provisions limiting federal courts’ jurisdiction to state courts’ reach are valid since, because they “restrict the jurisdictional reach of federal district courts by limiting personal jurisdiction to a subset of the circumstances that the Fifth Amendment’s Due Process Clause would otherwise permit,” they do not alter substantive rights); Patrick Woolley, Rediscovering the Limited Role of the Federal Rules in Regulating Personal Jurisdiction, 56 Hous. L. Rev. 565, 588–633 (2019) (arguing that, in the absence of congressional legislation, federal courts are restricted to the jurisdictional reach of the courts of the state in which they sit). That said, some scholars have raised questions about the validity of Rule 4 in this regard. See Stephen E. Sachs, The Unlimited Jurisdiction of the Federal Courts, 106 Va. L. Rev. 1703, 1743–66 (2020) (arguing that the federal courts should look to nationwide contacts and that constraints to the contrary in the Federal Rules are invalid); Leslie M. Kelleher, Amenability to Jurisdiction as a “Substantive Right”: The Invalidity of Rule 4(k) Under the Rules Enabling Act, 75 Ind. L.J. 1191, 1226 (2000) (arguing that Rule 4’s limitations are valid in diversity cases, but not federal question cases).

Rule 4(k) does include provisions for broader exercises of personal jurisdiction, including where Congress has authorized broader jurisdiction by statute,85Fed. R. Civ. P. 4(k)(1)(C). and as to a federal claim where no state court would have personal jurisdiction.86Id. 4(k)(2). These exceptions have proven to be narrow: congress has extended the federal courts’ personal jurisdictional reach under only a few statutes,87See, e.g., 28 U.S.C. § 2361 (statutory interpleader); 15 U.S.C. §§ 77v(a), 78aa(b) (securities laws); 15 U.S.C. § 22 (antitrust laws); 29 U.S.C. § 1132(e)(2) (2012) (pension plan regulatory law). and it can be difficult to establish that no state court would have personal jurisdiction over a defendant. Moreover, neither of these exceptions applies in the setting of cases raising purely state-law claims.88Rule 4 does allow more extensive assertions of personal jurisdiction in all cases—including diversity cases—as to “a party joined under Rule 14 or 19 and is served within a judicial district of the United States and not more than 100 miles from where the summons was issued.” Fed. R. Civ. P. 4(k)(1)(B).

II. ASSESSING THE STAKES

The Supreme Court has yet to rule definitively on whether examination of unnamed plaintiff class members’ claims is required for personal jurisdiction purposes, while lower courts have mostly declined to impose such a requirement. But what would the impact be if such an examination were required? The answer to this question is important, not least because, as we shall see, some who argue against the requirement emphasize—and sometimes overstate—the impact that the requirement would impose.

The constraint on personal jurisdiction in class actions has an impact on litigation in state court, and a related, but distinct, impact on litigation in federal court. In state court, the constraint on personal jurisdiction is constitutional.89See supra notes 30–33 and accompanying text. Thus, absent consent, and leaving to the side the rare case where an entire plaintiff class can establish specific jurisdiction against the defendant, a multistate class action against a defendant can only take place in a state where general jurisdiction against the corporate defendant can be had.

In federal court, the limitation on personal jurisdiction is subconstitutional; it applies by virtue of Rule 4 of the Federal Rules of Civil Procedure.90For discussion, see supra notes 79–88 and accompanying text. However, at least with respect to class actions raising only state-law claims, current law—insofar as it instructs federal district courts to adhere the limitations to which state courts of the state in which they sit are subject91See supra notes 83–84 and accompanying text. —should limit class actions against corporate defendants precisely as laid out above with respect to actions brought in state court.

Moving beyond the state court-federal court distinction, it is critical to appreciate how personal jurisdictional constraints have a greater impact where the defendant corporation is incorporated outside the United States, as opposed to inside the United States. Assuming an absence of consent, and assuming that (as will only rarely be the case) the entire plaintiff class cannot establish specific jurisdiction against the defendant in any one forum, a multistate class action against a defendant can proceed in a jurisdiction where general jurisdiction against the corporate defendant can be had. For a corporation incorporated outside the United States, this well may mean that there is no state in which a multistate class action can be maintained. After all, such a corporation’s place of incorporation is by assumption not any U.S. state or territory, and its principal place of business may be outside the United States as well. It bears noting, however, that this restriction applies equally to actions that join together numerous plaintiffs’ claims, and even to prototypical individual claim litigation.92See Bradt & Rave, supra note 18, at 1255 n.16. But it is also worth noting that a foreign jurisdiction may not allow for a class action, even where there is proper personal jurisdiction as to all plaintiffs’ claims, whereas a state in the United States would.

In contrast, for a corporation incorporated in the United States, a class action can still be maintained in the state of the defendant’s place of incorporation or in the state of the defendant’s principal place of business.93See Wood, supra note 78, at 615 (“For a multistate class action, it should not be difficult to find a named plaintiff from a state with valid general jurisdiction over the defendant.”). To be sure, some commentators highlight additional negative impacts that can apply in cases involving corporations that are incorporated in the United States. For example, personal jurisdiction constraints may frustrate the ability of a plaintiff to bring a single class action against two corporate defendants who are ‘at home’ in different states.94See Bradt & Rave, supra note 18, at 1255 n.16; Wilf-Townsend, supra note 18, at 1620 (“[I]f two defendants are indispensable parties to a lawsuit and are not both subject to general jurisdiction in the same state, specific jurisdiction may be the only path forward for the suit to proceed.”). Once again, however, it bears noting that this restriction applies equally to cases consisting of numerous joined claims and even prototypical individual claim litigation.95See Bradt & Rave, supra note 18, at 1255 n.16.

It bears emphasis that a case decided by the Supreme Court this past Term—Ford Motor Co. v. Montana Eighth Judicial District Court96Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021). —may provide greater leeway for nationwide (or at least regional) plaintiff class actions based upon specific jurisdiction. Ford reversed the trend of Court cases constricting personal jurisdiction,97See Patrick J. Borchers, Richard D. Freer & Thomas C. Arthur, Ford Motor Company v. Montana Eighth Judicial District Court: Lots of Questions, Some Answers, 71 Emory L.J. Online 1, 11 (2021) (“The Ford majority opinion reads like the ‘old era’ (pre-2011) general jurisdiction cases . . . .”). and in particular, in contrast with Bristol-Myers, took a more expansive view of specific jurisdiction.98See id. at 7–12 (arguing that Ford is in tension with Bristol-Myers). It recognized the viability of specific jurisdiction in a state over a claim against Ford by a plaintiff injured in that Ford neither designed nor manufactured the automobile in that state.99See 141 S. Ct. at 1023. The Court reasoned that Ford’s conduct in “systematically serv[ing] a market in [the state] for the very vehicles that the plaintiffs allege malfunctioned and injured them in th[e] State[]” was sufficient to justify the exercise of specific jurisdiction.100Id. at 1028.

Even if the Ford decision leaves Bristol-Myers intact,101See Borchers, Freer & Arthur, supra note 97, at 10 (noting that, while the two cases seem in tension, “[o]ne should not assume that Ford overruled [Bristol-Myers] sub silentio”). it surely signals acceptance of broader assertions of specific jurisdiction. And class action plaintiffs, and their lawyers, may be able to take advantage of that rediscovered breadth in fashioning regional and nationwide class actions.102See Bradt & Rave, supra note 18, at 1285 (acknowledging that “[t]here may be some cases where all of the conduct that causes the class members’ injuries nationwide occurred in a single state that is not the defendant’s ‘home’ under Goodyear and Daimler (perhaps a state where the defendant has its manufacturing operations or conducted critical research or clinical trials), and thus that state would have specific jurisdiction over all of the class members’ claims”).

Some commentators point to other effects resulting from the constraint of personal jurisdiction—effects that would apply to cases with domestic corporate defendants as well as foreign ones—but these effects are often exaggerated. For one thing, Professor Wilf-Townsend contends that some states “may lack a sufficient population base to justify class actions for a wide variety of small-value claims.”103Wilf-Townsend, supra note 18, at 1656. This issue, however, is not as troubling as Professor Wilf-Townsend suggests. First it bears noting that some comparatively small states are home to a substantial number of business—Connecticut and Delaware, for example—and such states reasonably can be expected to host class actions based on general jurisdiction. Second, the fact remains that multistate (and indeed nationwide) class actions—including plaintiffs from these smaller states—can go forward in the jurisdiction(s) where the relevant defendant is subject to general jurisdiction. Thus, Professor Wilf-Townsend’s suggestion—that “a number of claims might simply never be brought to begin with,”104Id.; see also id. at 1662. —is vastly overstated. To be sure, some states “will be unlikely to ever get a chance to adjudicate” a large class action,105Id. at 1656. but these states may also be unlikely to adjudicate many cases involving claims brought under corporate law; it is hardly clear that personal jurisdiction doctrine should be fashioned so to empower state judiciaries.

Professor Wilf-Townsend also posits that residents of states that have insufficiently few in-state residents to form a viable class action “have only two hopes: (1) that their state will become the forum state in a multistate class action, enabling them to benefit from the economies of scale generated by including more class members; or (2) that another state will hear a class action in which they are included in the class definition.”106Id. at 1662. But there is a third option: the residents can file a class action in one of the defendant’s “home” jurisdictions—with themselves as (some of) the class representatives. The situation, in other words, is not as hopeless as Professor Wilf-Townsend suggests.

Closer to the line is the argument advanced by Professors Andrew Bradt and Theodore Rave, and by Professor Wilf-Townsend, that the narrowing of personal jurisdiction empowers defendants to select a forum—by means of consenting to suit—in which a more favorable settlement can be had.107See Bradt & Rave, supra note 18, at 1289–91; Wilf-Townsend, supra note 18, at 1663. In selecting a forum, the defendant is also selecting a lead counsel from that forum—one who is “willing to take the smallest sum for the largest class and then shop around for a state court willing to certify the class and approve the settlement (even if a federal court in its home state would not have).”108Bradt & Rave, supra note 18, at 1289. As Professors Bradt and Rave explain, the constriction of personal jurisdiction “creates an asymmetry in opportunities for forum shopping that may come at the expense of absent class members.”109Id. at 1290. Further augmenting the defendant’s power, the Class Action Fairness Act, which ordinarily provides a path to federal court for class actions, “does not permit absent class members to intervene and remove the case to federal court to short circuit this sort of settlement forum shopping.”110Id.

While this concern is a real one, the question arises whether the best remedy to a problem arising out of defendants having too wide a choice of forums is to afford a similar range of choices to plaintiffs and their attorneys by opening up jurisdiction in virtually all jurisdictions (at least with respect to national corporations), as ignoring unnamed class plaintiffs’ claims would do.111To put matters in a slightly different way, there are some effects that may flow from the choice of a rule for personal jurisdiction that, to paraphrase Professor Dodson, “the law rightly denies . . . [as] a legitimate basis” to evaluate the rule. Dodson, supra note 22, at 13. Greatly increasing plaintiff forum choice should not in and of itself be a goal of personal jurisdiction, much as inordinately restricting plaintiff forum choice should not be. Indeed, it is not the constriction of personal jurisdiction (compared to what it was seen to be before) alone that creates the issue, but also the freedom of defendants to consent to jurisdiction as they see fit. One might think that a more measured, better tailored response would be to facilitate access to the federal courts and put in place closer judicial scrutiny of class settlements.112But cf. Elizabeth Chamblee Burch & Margaret S. Williams, Perceptions of Justice in Multidistrict Litigation: Voices from the Crowd, 107 Cornell L. Rev. 1835, 1889–97 (2022) (presenting evidence that plaintiffs in multidistrict litigation are not pleased with their judicial experiences).

To sum up, the rule that calls for examination of unnamed class plaintiffs’ claims in the personal jurisdiction calculus would be a constitutional requirement in state court, but not in federal court. And, while some of the effects of that rule could (in particular cases) have some bite in cases with defendant corporations that are incorporated in the United States, the effects will be felt most starkly in cases with defendant corporations that are incorporated outside the United States.113Professor Steinman also identifies as costs arising out of limits on personal jurisdiction in plaintiff class actions the fact that courts must determine the proper time (vis-à-vis class certification) to determine the propriety of jurisdiction, and that personal jurisdictional limits in state and federal court may differ. See Steinman, supra note 18, at 29–34, But Professor Steinman overstates the difficulties here: while Professor Steinman describes the timing issues as “bullets” to be “dodged,” id. at 29, they seem more aptly described as ancillary issues that can and will eventually be sorted out rather easily. And the need to treat state courts and federal courts differently is hardly novel.

III. AN INTERMEDIATE STEP: THE NEED FOR JURISDICTION OVER EACH PLAINTIFF’S CLAIM OUTSIDE CLASS ACTIONS

In this Part, I discuss a question that lies along the path to considering the need to examine unnamed class plaintiffs’ claims in determining the propriety of personal jurisdiction: the question of whether, in a state court case with claims by multiple named plaintiffs against the same defendant (i.e., not a class action), each plaintiff must establish personal jurisdiction independently. I assume here that the defendant has not consented to suit.114Even where the defendant consents to suit by one plaintiff, courts have held that the consent does not extend to other co-plaintiffs. See In re Biomet M2a Magnum Hip Implant Prods. Liab. Litig., No. 3:12-MD-2391, 2019 WL 1077291, at *2 (N.D. Ind. March 7, 2019) (“The plaintiffs view the Cuckler defendants’ concession in the Collier County cases as consent to be sued in a plaintiffs’ home state, whatever state that might be. The plaintiffs cite no authority for that argument, and I can’t imagine what rule of law any such authority might support.”).

Let us begin with two uncontroversial points. First, to the extent that a defendant is subject to a forum’s general jurisdiction, there is (assuming the state has authorized it) proper personal jurisdiction to bring any and all claims against that defendant. General jurisdiction is all-purpose jurisdiction, and so personal jurisdiction is proper regardless of the identity of the plaintiffs or the nature of their claims.115See supra notes 39–40 and accompanying text. (To be sure, the contours of general jurisdiction have changed over the years,116See supra notes 44–52 and accompanying text. but the legal conclusion remains intact once one takes into account the governing definition of general jurisdiction.)

Second, to the extent that a defendant is not subject to a forum’s general jurisdiction, then personal jurisdiction will not lie if there is no plaintiff who brings a claim that arises out or relates to that defendant’s contacts with the forum.117This point follows directly from the Court’s holdings in Goodyear and Daimler. See Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011); Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). In such a case, the defendant would be at most subject to specific jurisdiction in the forum, and if no plaintiff has a claim that arises out of or relates to the defendant’s contacts, then there is no claim that meets that specific jurisdiction’s case-linked requirement. (Again, the precise contours of specific jurisdiction may have shifted over the years,118See Dodson, supra note 22, at 24–28 (discussing the narrowing of specific jurisdiction by the Supreme Court). but the legal conclusion remains intact taking into account the governing definition of specific jurisdiction.) Thus, for example, in a products liability lawsuit, it seems likely that (absent the defendant’s consent) personal jurisdiction will be lacking in a suit by a plaintiff against a defendant in a forum in which neither the plaintiff nor the defendant manufacturer is “at home,” and in which the plaintiff did not suffer injury.119See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (defendant car manufacturers did not contest jurisdiction in Oklahoma as to products liability suit where plaintiffs, who were residents of one state in process of moving to another state, were injured in Oklahoma).

Next, let us remain with the setting where the defendant is subject at most to specific jurisdiction, and there are two plaintiffs who have joined their claims against the defendant. The first plaintiff’s claim arises out of or relates to the defendant’s forum contacts, but the second plaintiff’s claim does not. (Recalling our products liability suit example from just above, let us say that the first plaintiff is a resident of the forum state, bought the product there, and was injured there, while the second plaintiff resides, bought the product, and was injured, elsewhere.) There clearly would be personal jurisdiction for the first plaintiff to pursue her claim against the defendant, but what about the second plaintiff?

Before the Court’s decision in Bristol-Myers, there were some courts that evidently accepted claims by out-of-state plaintiffs against a defendant provided merely that an in-state plaintiff brought a properly joined claimed over which the court had specific jurisdiction.120See Estate of Fox v. Johnson & Johnson, 539 S.W.3d 48, 51 (Mo. Ct. App. 2017) (“Missouri courts historically have exercised personal jurisdiction over defendants as to joined non-residents’ claims so long as jurisdiction exists as to the residents’ claims.”). For these courts, the Supreme Court’s decision in Bristol-Myers upended prior precedent on this point.

But for many courts this was not the case. These courts did require a separate showing of specific jurisdiction with respect to out-of-state plaintiffs under such circumstances.121See M.M. ex rel. Meyers v. GlaxoSmithKline LLC, 61 N.E.3d 1026, 1036–39 (Ill. App. Ct. 2016) (performing analysis to verify that “the out-of-state plaintiffs made a prima facie showing that Illinois has specific jurisdiction over defendant”), abrogated by Rios v. Bayer Corp., 178 N.E.3d 1088 (Ill. 2020); Bristol-Myers Squibb Co. v. Superior Ct., 377 P.3d 874, 888 (Cal. 2016) (after noting that “[t]he California plaintiffs’ claims . . . certainly arise from [the defendant]’s purposeful contacts with this state,” turning to nonresident plaintiffs’ claims, and concluding that “the nonresident plaintiffs’ claims bear a substantial connection to [the defendant]’s contacts in California”), rev’d, 137 S. Ct. 1773, 1781–84 (2017) (reversing the California Supreme Court not because it failed to require nonresident plaintiffs to show proper personal jurisdiction, but because the supreme court’s specific jurisdiction analysis was flawed). Admittedly, the standard for specific jurisdictionthat these courts employed was likely an outdated one. But for these courts, if the Bristol-Myers decision was a “bombshell,”122Dodson, supra note 22, at 4–5. it was not because it introduced the requirement that each plaintiff needed to establish proper personal jurisdiction with respect to her claims against the defendant,123See supra note 121. See Wood, supra note 78, at 617 (suggesting that “simple aggregation of claims” should not be enough to extend an in-state plaintiff’s specific jurisdiction to out-of-state plaintiffs’ claims against the same defendant). but rather that the case narrowed the scope of specific jurisdiction (and especially so in the wake of earlier cases vastly narrowing the scope of general jurisdiction).124See id.; Dodson, supra note 22, at 4.

     Not everyone would agree even that the Supreme Court’s rejection of the California courts’ interpretation of specific jurisdiction was surprising. For example, in the wake of the California Court of Appeals’ decision in Bristol-Myers (but before the state supreme court or U.S. Supreme Court had taken any action), Linda Silberman wrote: “Although I am sympathetic to an expanded role for specific jurisdiction . . . , the approach of the California Court of Appeals to specific jurisdiction in Bristol-Meyers”—which the state supreme court followed—“appears to reintroduce general jurisdiction by another name.” Linda J. Silberman, The End of Another Era: Reflections on Daimler and Its Implications for Federal Jurisdiction in the United States, 19 Lewis & Clark L. Rev. 675, 687 (2015).

Whatever one’s view of the law before Bristol-Myers, it seems clear that the case requires each named plaintiff must establish personal jurisdiction with respect to her own claims against the defendant. Thus, the mere fact that one plaintiff can establish proper specific jurisdiction with respect to his claim against the defendant—perhaps because that plaintiff was injured in the state in which suit has been brought—is of no avail to a second plaintiff who cannot establish independent specific jurisdiction as to her claim.

Pendent personal jurisdiction seems to be the only argument that one can make in favor of the extension of one plaintiff’s successful showing of personal jurisdiction to justify a court’s personal jurisdiction as to another plaintiff’s claim against the same defendant. As its name suggests, pendent personal jurisdiction is personal jurisdiction as to one claim that is based solely (that is, because independent personal jurisdiction as to that claim does not exist) because it is closely related to another claim as to which an independent basis for personal jurisdiction does exist.125See Wright & Miller, supra note 29, § 1069.7; 1 Robert L. Haig, Business and Commercial Litigation in Federal Courts § 2:28 (5th ed. 2021).

But, for three reasons, pendent personal jurisdiction is not availing. First, pendent personal jurisdiction has been invoked almost exclusively by federal courts. But the limitation of the personal jurisdictional reach of federal courts to state borders is not constitutional.126See Wright & Miller, supra note 29, § 1069.7; Louis J. Capozzi II, Relationship Problems: Pendent Personal Jurisdiction after Bristol-Myers Squibb, 11 Drexel L. Rev. 215, 223–31 (2018). Thus—leaving to the side subconstitutional issues127See Wright & Miller, supra note 29, § 1069.7 (“A serious jurisdictional question is raised when a plaintiff [in federal court] brings a state claim together with such a federal claim but the defendant is both beyond the reach of the forum state’s long-arm statute for purposes of the state claim and is not subject to general jurisdiction in the forum state.”); Capozzi, supra note 126, at 259–61 (discussing the consistency of pendent personal jurisdiction with state long-arm statutes). and assuming that the Fifth Amendment’s Due Process Clause is satisfied128See supra notes 80–82 and accompanying text. —there may indeed be no constitutional problem with extending pendent personal jurisdiction. In contrast, the extension by a state court of pendent personal jurisdiction to a claim necessarily implicates, and must satisfy, the Fourteenth Amendment’ strictures.

Second, in order for pendent personal jurisdiction to be of value in the context we are discussing, it would have to provide pendent personal jurisdiction as to claims brought by a different plaintiff than the claim that enjoys an independent basis for personal jurisdiction; in other words, it would have to be “pendent party personal jurisdiction.”129See Capozzi, supra note 126, at 220. In contrast, the form of pendent personal jurisdiction that federal courts almost always invoke is “pendent claim personal jurisdiction”—that is, pendent personal jurisdiction that applies to a claim brought by a plaintiff based on a second claim that enjoys an independent basis for personal jurisdiction that is brought by the same plaintiff.130See id. at 241 (“No scholars or courts have yet claimed that a federal statute or rule authorizes pendent party personal jurisdiction . . . .”); see also id. at 219, 239.

The monikers “pendent claim personal jurisdiction” and “pendent party personal jurisdiction” are reminiscent of “pendent claim jurisdiction” and “pendent party jurisdiction”131See Finley v. United States, 490 U.S. 545, 556 (1989). —both of which are now subsumed within the grant of supplemental jurisdiction under 28 U.S.C. § 136713228 U.S.C. § 1367. —on the federal subject matter jurisdiction side of the ledger. Before section 1367’s advent, the Supreme Court highlighted the extent to which the exercise of pendent party jurisdiction is more extreme farther than pendent claim jurisdiction.133See Aldinger v. Howard, 427 U.S. 1, 18 (1976) (“If the new party sought to be joined is not otherwise subject to federal jurisdiction, there is a more serious obstacle to the exercise of pendent jurisdiction than if parties already before the court are required to litigate a state law claim.”); Finley, 490 U.S. at 556 (while reading jurisdictional statute not to grant pendent party jurisdiction, also noting that “[w]hatever we say regarding the scope of jurisdiction conferred by a particular statute can of course be changed by Congress”).

To be sure, the Court never seriously questioned the constitutionality of pendent party jurisdiction;134See Finley, 490 U.S. at 549 (“We may assume, without deciding, that the constitutional criterion for pendent party jurisdiction is analogous to the constitutional criterion for pendent claim jurisdiction . . . .”); id. at 556 (while reading jurisdictional statute not to grant pendent party jurisdiction, also noting that “[w]hatever we say regarding the scope of jurisdiction conferred by a particular statute can of course be changed by Congress”). indeed, section 1367 now expressly authorizes—in the subject-matter context—federal supplemental party jurisdiction in some instances.135See supra notes 131–132 and accompanying text. But the Supreme Court had decades earlier—in United Mine Workers of America v. Gibbs—made clear the propriety of pendent subject matter jurisdiction.136United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966). In contrast, as I have noted just above, there is no reason to believe that state court assertions even of pendent claim personal jurisdiction are constitutional, let alone assertions of pendent party personal jurisdiction.137It bears emphasis that pendent party (subject-matter) jurisdiction and pendent party personal jurisdiction are creatures of, and should accordingly be judged by reference to, entirely distinct constitutional provisions. Supplemental subject-matter jurisdiction results from an interpretation of the word “case[]” in Article III. See id. at 725. In contrast, personal jurisdictional limitations arise out the Fourteenth Amendment’s Due Process Clause. See supra notes 30–33 and accompanying text.

Third, to whatever extent one could argue that pendent party personal jurisdiction had any constitutional validity before Bristol-Myers, that decision seems to bury the notion that pendent party personal jurisdiction is constitutional. It is true that the Bristol-Myers Court did not discuss pendent party personal jurisdiction. But it also is clear that pendent party personal jurisdiction would have offered a path for the Court to reach the opposite holding. Thus, the reasoning of and holding in Bristol-Myers are plainly inconsistent with pendent party personal jurisdiction.138See Capozzi, supra note 126, at 274–82.

With all of this said, one Supreme Court case—long predating Bristol-Myers, and distinguished, but not overruled, by that case139See Bristol-Myers Squibb Co. v. Superior Ct., 137 S. Ct. 1773, 1782 (2017); infra text accompanying note 148. —may imply some support for pendent party person jurisdiction.140See Bristol-Myers Squibb, 137 S. Ct. at 1788 (Sotomayor, J., dissenting). That case is Keeton v. Hustler Magazine, Inc.141Keeton v. Hustler Mag., Inc., 465 U.S. 770 (1984). Keetoninvolved a defamation suit brought by a New York resident against a magazine in New Hampshire.142Id. at 772. The plaintiff had virtually no contacts with New Hampshire,143Id. (noting the plaintiff’s “only connection with New Hampshire is the circulation there of copies of a magazine that she assists in producing”). and it was rather clear that she brought suit there simply because, unlike other states, that state had a forgiving statute of limitations that did not preclude the plaintiff’s suit.144See id. at 773, 779–80. The Supreme Court upheld the New Hampshire courts’ exercise of personal jurisdiction in spite of that.145See id. at 773–81.

For our purposes, the salient point is that New Hampshire would allow the plaintiff to collect damages not just for the effects of the defamation in New Hampshire—that is, not just for the harm she suffered in New Hampshire—but for the harm the defamation caused nationwide.146See id. at 773. The defendant argued that personal jurisdiction should not extend to the plaintiff’s claim beyond damages suffered in-state, but the Court ruled otherwise.147See id. at 776–78.

There are two ways to view the Keeton. One interpretation sees the case as straightforward and of little value to the argument that unnamed class representatives can rely on a court’s personal jurisdiction over the named representative’s claim. The other sees the case as broadly facilitating aggregation of claims, such that it bolsters the argument in the class action context of relying on the court’s jurisdiction over the named representative’s claim.

On one hand, the New Hampshire courts’ jurisdiction to (potentially) award nationwide damages is unremarkable. If an automobile accident somehow occurred directly on a border between two states, we would think it unremarkable for an injured driver to sue for all the damages she suffered in a single lawsuit filed in one state; even if the damages could somehow be apportioned between the two states, one would hardly expect her to file two separate lawsuits. The “single publication rule” is an instantiation of this point.

On this understanding, the Court’s approval of personal jurisdiction against to defendant for the plaintiffs’ damages in multiple states is hardly surprising, and it certainly provides no support for the notion of a court exerting personal jurisdiction over unnamed class members’ claims against a defendant. This understanding of Keeton also squares with the Bristol-Myers Court’s description of Keeton as “concern[ing] jurisdiction to determine the scope of a claim involving in-state injury and injury to residents of the State, not, as in [Bristol-Myers itself], jurisdiction to entertain claims involving no in-state injury and no injury to residents of the forum State.”148Bristol-Myers Squibb Co. v. Superior Ct., 137 S. Ct. 1773, 1782 (2017).

On the other hand, the Court in Keeton used language suggesting a closer jurisdictional call and that the “single publication rule” effects an aggregation of nationwide claims. The Court noted that the “single publication rule” (i) ”reduces the potential serious drain of libel cases on judicial resources,” (ii) “serves to protect defendants from harassment resulting from multiple suits,” and (iii) furthers each state’s “interest in cooperating with other States.”149Keeton, 465 U.S. at 777–78. These points all sound in the language of considerations of fairness and economy, language that well could apply broadly in many settings of claim aggregation, including aggregation of claims against additional parties.

Though the call is far from clear, there are strong reasons to prefer the first interpretation of Keeton over the second. For one thing, to the extent that the Keeton opinion purports to offer a general assessment of aggregation of claims, its emphasis on interstate federalism to the exclusion of the defendant’s liberty interests seems dated in light of the Court’s more recent emphasis on the latter.150The Court in recent years has put greater emphasis on litigant’s liberty interests than on concerns of interstate federalism. See supra note 33. Still, Keeton itself was decided shortly after Insurance. Co. of Ireland v. Compagnie des Bauxites, 456 U.S. 694 (1982), which had purported to banish interstate federalism altogether. There, the Court had asserted: “The restriction on state sovereign power . . . must be seen as ultimately a function of the individual liberty interest preserved by the Due Process Clause. That Clause is the only source of the personal jurisdiction requirement, and the Clause itself makes no mention of federalism concerns.” Id. at n.10. For another, it does seem that the aggregation of identical claims brought by a single plaintiff based on damages in multiple states is less likely to inconvenience the defendant than the aggregation of claims by multiple plaintiffs based on damages in multiple states; the aggregation of multiple plaintiffs—even if those plaintiffs are technically ‘unnamed class members’—serves to add another dimension to the aggregation.151See supra note 148 and accompanying text. In the end, especially after Bristol-Myers, the case for pendent party personal jurisdiction in state courts is a tenuous one.

IV. ASSESSING THE NECESSITY OF UNNAMED PLAINTIFF CLASS MEMBERS’ PERSONAL JURISDICTION

We come presently to the crux of the matter: whether plaintiffs other than class representatives in a class action need to have independent specific jurisdiction against a defendant. My focus here is on jurisdiction in state court because personal jurisdiction in state court is subject to constitutional state-based limits;152While conceding that, “where the Constitution commands a result, lesser authority that commands a contrary result is overridden,” Professor Wilf-Townsend argues that the case law defining due process exceptions that are afforded to class actions are not instances of Rule 23 overriding the Constitution, but are instead examples of courts defining the scope of a litigant’s due process rights in the specific context of group representative litigation.” Wilf-Townsend, supra note 18, at 1626. Professor Wilf-Townsend relies heavily on statements by the Supreme Court in Hansberry v. Lee, 311 U.S. 32, 40–41 (1940), to the effect that courts could bind nonparties to judgments rendered in “a ‘class’ or ‘representative’ suit.”

     This reliance is misplaced for three reasons. First, since the Court in Hansberry ultimately ruled that the nonparties were not bound, see id. at 45–46, the statements on which Professor Wilf-Townsend relies were dicta. Second, Professor Wilf-Townsend’s argument conflates the question personal jurisdiction with the question of whether a nonparty otherwise falling within the court’s personal jurisdiction reach can be bound to a prior judgment. There is little question but that representative class action can bind nonparties; indeed, that is the sine qua non of class action procedure. But the fact that a procedural device can bind nonparties does not mean that the court system thereby can bind nonparties who lie beyond the court’s reach. Third, and relatedly, Professor Wilf-Townsend’s interpretation of Hansberry would seem to impose no limits on a court’s freedom to bind out-of-state nonparties to in-state judgments, a result that seems clearly contrary to existing doctrine. By way of example, Professor Wilf-Townsend’s approach would seem to validate an effort by a federal court exercising the full national personal jurisdiction reach authorized by the Fifth Amendment, see supra notes 80–82 and accompanying text, to use a class action to bind nonparty residents of the European Union to a judgment; yet, such an effort would almost certainly be unconstitutional. while federal district courts are generally constrained by (subconstitutional) rule to the personal jurisdictional limits of the state in which they sit,153See supra notes 83–84 and accompanying text. the constitutional limit of personal jurisdiction in federal court is based instead upon national territorial limits.154A few commentators argue in favor of state power to exercise personal jurisdiction based not upon the state’s boundaries, but upon the national boundaries of the United States. See Ronan E. Degnan & Mary Kay Kane, The Exercise of Jurisdiction Over and Enforcement of Judgments Against Alien Defendants, 39 Hastings L.J. 799, 816–17 (1988); William S. Dodge & Scott Dodson, Personal Jurisdiction and Aliens, 116 Mich. L. Rev. 1205, 1208 (2018). But see Jonathan Remy Nash, National Personal Jurisdiction, 68 Emory L.J. 509, 543–55 (2019) (rejecting arguments in favor of congressional power to allow state courts to exercise personal jurisdiction based on U.S. national boundaries).

A. The Constitutional Requirement of Personal Jurisdiction as to Unnamed Class Members’ State-Court Claims

The previous Part explained how the Court’s decision in Bristol-Myers confirmed what most state courts already understood: that as a matter of constitutional law a state court must have proper personal jurisdiction as to the claims of each named plaintiff in a case. The question then arises whether there is any reason that the same requirement ought not to apply to the claims of unnamed plaintiffs in class actions filed in the state courts. The answer must be that the same requirement applies,155See Bradt & Rave, supra note 18, at 1288 (“The upshot . . . is that nearly all nationwide or multistate class actions will end up in federal court in the defendant’s home state or states where it is subject to general jurisdiction (unless the defendant has engaged in conduct directed nationwide in another state or consents to personal jurisdiction elsewhere).”); see also id. at 1285 (acknowledging that “[t]here may be some cases where all of the conduct that causes the class members’ injuries nationwide occurred in a single state that is not the defendant’s ‘home’ under Goodyear and Daimler (perhaps a state where the defendant has its manufacturing operations or conducted critical research or clinical trials), and thus that state would have specific jurisdiction over all of the class members’ claims,” but that, “except in these sorts of circumstances, a multistate or nationwide class action may only be maintained in a state that can exercise general jurisdiction over the defendant—or in a state where the defendant consents”). The Court’s recent opinion in Ford Motor Co. v. Montana Eighth Judicial District, 141 S. Ct. 1017 (2021), may expand the range of cases in which the latter circumstance might pertain. unless either (i) personal jurisdiction as to unnamed class members’ claims can be justified by virtue of the class representative’s claim (in a way that does not occur in the non-class aggregation context), or (ii) personal jurisdiction as to unnamed class members’ claims is simply irrelevant, that is, the unnamed class members do not matter for purposes of determining the propriety of personal jurisdiction over the defendant. Courts and commentators have offered a few arguments as to why at least one of these exceptions should obtain. I address, and refute, those arguments in the next Subpart.

B. The Unavailing Arguments Against the Requirement

1. Arguments Grounded in Supreme Court Precedent

An initial argument in favor of ignoring personal jurisdiction over unnamed class members’ claims rests on the notion that the Supreme Court has heard appeals in state-law class actions brought against corporate defendants outside their “home” jurisdictions, and yet not commented negatively (or indeed at all) on the personal jurisdictional aspect of the cases. Writing for the Seventh Circuit panel in Mussat v. IQVIA, Inc., Judge Wood asserted that “[t]he Supreme Court has regularly entertained cases involving nationwide classes where the plaintiff relied on specific, rather than general, personal jurisdiction in the trial court, without any comment about [any] supposed jurisdictional problem.”156Mussat v. IQVIA, Inc., 953 F.3d 441, 445 (7th Cir. 2020). In response to the argument “that class actions have always required minimum contacts between all class members and the forum,” Judge Wood stated that “[d]ecades of case law show that this has not been the practice of the federal courts.”157Id. Judge Wood then argued that the Court’s decision in Bristol-Myers—which did not involve a class action—did nothing to upset that supposed status quo.158See id. at 445–47. In effect, the argument seems to be that the Court has effectively ratified the status quo exercise of personal jurisdiction over unnamed plaintiff class members’ claims (without any need to make a showing thereof) that was prevalent before Bristol-Myers.159For example, in the context of determining whether a statutory requirement is jurisdictional, the Court has explained that it will continue to consider a requirement as jurisdictional where “a long line of this Court’s decisions is left undisturbed by Congress.” Union Pac. R. Co. v. Bhd. of Locomotive Eng’rs & Trainmen Gen. Comm. of Adjustment, Cent. Region, 558 U.S. 67, 82 (2009). However, the Court has also held such ratification to be unavailable where “no such ‘long line’ of authority exists” Boechler, P.C. v. Comm’r of Internal Revenue, 142 S. Ct. 1493, 1500 (2022) (quoting Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019)). That, as we shall see, is the case here. Moreover, the cases do not clearly stand for the proposition for which the Seventh Circuit’s opinion cites them. Finally, unlike the context of determining whether a statutory requirement is jurisdictional, Congress has little opportunity to disturb the Court’s personal jurisdiction decisions, at least as they apply to the state courts.

The problem here is that Judge Wood’s argument rests on a flawed presentation of the status quo. On Judge Wood’s account, the Supreme Court and lower courts “regularly” endorsed class actions grounded on specific jurisdiction as to the named class plaintiffs and without regard to the propriety of personal jurisdiction of the unnamed class plaintiffs. In fact, under the circumstances, it is farmore likely that courts saw at least many of these cases as resting on general, not specific, jurisdiction, or—more likely—as cases where the defendant consented to personal jurisdiction as to the class’s claims.

To see this, consider the two cases160With a “see also” signal, Judge Wood’s opinion also cited to the Supreme Court’s opinion in Califano v. Yamasaki, 442 U.S. 682 (1979). But Yamasaki was a class action brought under the federal courts’ federal question jurisdiction, see id. at 687–88, and thus was only subject to Fourteenth Amendment limitations by virtue of subconstitutional rule, see supra notes 83–84 and accompanying text. And, indeed, the Seventh Circuit cited Yamasaki for the proposition—grounded in subconstitutional law—that “[n]othing in Rule 23 . . . limits the geographical scope of a class action that is brought in conformity with that Rule.” Mussat v. IQVIA, Inc., 953 F.3d 441, 445 (7th Cir. 2020) (quoting Yamasaki, 442 U.S. at 702). that Judge Wood points to as support for the thesis that the Supreme Court “regularly” entertained multistate class actions resting specific jurisdiction over an out-of-state corporate defendant: Phillips Petroleum v. Shutts161Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). and Keeton v. Hustler Magazine, Inc.162Keeton v. Hustler Mag., Inc., 465 U.S. 770 (1984). Both cases were decided before Bristol-Myers and, more importantly, both were decided before the Court upended the lower courts’ understanding of general jurisdiction and both involved corporations of national scope. Thus, while Judge Wood characterizes these cases as having rested on “specific jurisdiction” over the defendant, it is far more likely that the defendant (and indeed all the parties and the Courts) assumed that general jurisdiction was properly invoked.163See Bradt & Rave, supra note 18, at 1284 (“Likely because they were operating under the more expansive understanding of general jurisdiction before Goodyear, no one involved [in Shutts] seemed to question the court’s jurisdiction over the defendant . . . . Indeed, it would have been exceedingly odd for Phillips Petroleum to have made the derivative challenge to the Kansas court’s personal jurisdiction over the absent class members if personal jurisdiction over itself was seriously questioned.”) (footnote omitted).

     To be sure, Judge Wood, in an article as an academic before her appointment to the bench, presciently anticipated the Court’s turn two decades later. See Wood, supra note 78, at 614–15 (“General jurisdiction . . . should not be found in every state where a defendant has a significant amount of business. If general jurisdiction were confined to those few places that can legitimately be viewed as an individual’s or corporation’s base of operations, the allocation of judicial business among the states would be accomplished more efficiently and more fairly, both to the states in question and, ultimately, to the litigants.”). But, in that same article, Judge Wood conceded that “most people have assumed that Shutts involved general jurisdiction over Phillips.” Id. at 616.

To whatever extent any Justices might have questioned the propriety of general jurisdiction had the issue been raised, objections to personal jurisdiction are waived if not raised upon a party’s appearance in the case.164See supra note 34 and accompanying text; Wilf-Townsend, supra note 18, at 1631 (“Shutts does not speak definitively either way as to what due process requires with respect to defendants’ rights, because its exceptions to the norms of minimum contacts for absent class members did not explicitly include a consideration of the minimum contacts test when defendants’ due process rights are invoked.”). And the fact is that personal jurisdiction over the defendant was not raised in either of the cases cited by the Seventh Circuit. Thus, even if there were a question about personal jurisdiction over the defendant with respect to the unnamed class members’ claims and even were the Court otherwise inclined to wade into the issue, the fact that the issue was not pursued would leave the courts with proper jurisdiction. As such, the Court’s failure to address the issue should in no way be seen to endorse any resolution of it.165See Steinman, supra note 18, at 1235–36; see also Stone v. Powell, 428 U.S. 465, 481 n.15 (1976) (“[O]nly in the most exceptional cases will we consider issues not raised in the [certiorari] petition.”).

The same analysis and conclusion would apply to lower court cases as well. The most likely story in class action cases involving multistate corporations is that litigants and judges would have expected general jurisdiction to apply. Furthermore, and leaving to the side judges’ speculation as to the propriety of general or specific jurisdiction over the defendant, unless the defendant raised an objection to personal jurisdiction, judges would have considered the issue waived and not given it a second thought.

Professor Steinman offers a more nuanced argument as to why precedent should hold up. But his argument is marred by an unduly constrained view of precedent, and also because the premise on which it rests is faulty. Professor Steinman echoes Judge Wood’s argument, arguing that “[i]t is not surprising . . . that courts wrestling with this challenging doctrinal question would be swayed by the fact that, for decades, the personal-jurisdiction dogs did not bark.”166Steinman, supra note 18, at 1236. In other words, he argues that the law was so settled on the issue before Bristol-Myers that we can understand, and indeed, expect, lower courts to continue to adhere to the preexisting law even in Bristol-Myers’ wake, especially given that the case does not speak directly to the point at issue.

The first problem with Professor Steinman’s argument is that it assumes that lower courts should abide by existing understandings of the law unless and until a higher court squarely and clearly changes the status quo. As Professor Steinman puts it, lower courts can follow precedent by “looking broadly at past practice and seeking consistency with the general way things are done.”167Id. at 1235. But that is hardly the only model for lower courts’ obligation to follow binding precedent; nor is it clearly the correct one. Other scholars have contrasted passive and active approaches that lower courts can take with respect to superior courts and their precedents. Professor Evan Caminker offers a “precedent model” under which lower court judges should “‘decide cases . . . based on their best current understanding of the [applicable] law.’”168Evan H. Caminker, Precedent and Prediction: The Forward-Looking Aspects of Inferior Court Decisionmaking, 73 Tex. L. Rev. 1, 9 (1994) (quoting James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 535 (1991) (plurality opinion)). He contrasts the precedent model with a “proxy model” that calls for an inferior court to “apply[] the dispositional rule that the superior court . . . predictably would embrace.”169Id. at 16. Professor Caminker further explains that either model may be normatively appropriate depending on the circumstances.170See id. at 66–74.

Along somewhat similar lines, Professor Michael Dorf describes lower courts as following an “execution model” when they “execute the law as found in already decided cases, but [do] not . . . craft novel interpretations.”171Michael C. Dorf, Prediction and the Rule of Law, 42 UCLA L. Rev. 651, 664 (1995). Professor Dorf propounds two models that contrast with the execution model—an elaboration model, under which a lower court judge decides a case by “drawing upon a range of arguments that go well beyond settled doctrine strictly construed,”172Id. at 665. and a prediction model, under which “the lower court judge strives . . . to predict what a majority of the relevant higher court would do.”173Id. at 663. Professor Dorf argues that the prediction model is attractive from a practical perspective.174See id. at 671–79.

     Although his analysis is limited to the context of federal courts applying state law under the doctrine of Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), Professor Bradford Clark offers two contrasting models. Professor Clark propounds a “static approach,” under which the federal courts “refrain from making the significant policy choices necessary both to resolve . . . indeterminacies and to recognize a novel claim or defense,” Bradford R. Clark, Ascertaining the Laws of the Several States: Positivism and Judicial Federalism After Erie, 145 U. Pa. L. Rev. 1459, 1536–37 (1997). In contrast, Professor Clark describes a predictive approach, under which “the federal court “attempts to forecast the development of state law by asking what rule of decision the state’s highest court is likely to adopt in the future,” Clark, supra, at 1497. Professor Clark notes that “[a] potential difficulty with the static approach . . . is that it works best in the context of a well-defined and relatively stable body of state law,” when, “[i]n reality, neither characteristic is always present.” Id. at 1464.

Professor Steinman’s argument relies upon a single model of precedent, without any explanation of why that particular model is appropriate in the context at hand. To be sure, it is conceivable that Professor Steinman’s assessment may be somewhat accurate as a description of what the lower courts in fact have done and are doing. But it is not an argument that the approach he suggests will converge on the correct doctrinal result.

The second problem with Professor Steinman’s argument is that it rests on a faulty premise about the status quo: much in the same way that the status quo was not what Judge Wood assumes it was, it is also not what Professor Steinman assumes it was. Professor Steinman’s analogy of the “personal-jurisdiction dogs” not barking assumes implicitly that (i) courts uniformly accepted the irrelevance of unnamed class plaintiffs’ claims in determining the propriety of personal jurisdiction over the defendant, and (ii) courts would vary in their approach only if an intervening Supreme Court decision altered that uniform preexisting understanding. But that uniform (or largely uniform) preexisting understanding was not that unnamed class plaintiffs’ claims in determining the propriety of personal jurisdiction over the defendant were irrelevant; rather, it was that general jurisdiction provided jurisdiction in the bulk of these cases, such that there was in fact personal jurisdiction as the unnamed class plaintiffs’ claims. And Bristol-Myers did not affect that result; Goodyear and Daimler did.175This reasoning also rebuffs the argument made by some courts that the disclaimer of grand effect by the majority opinion in Bristol-Myers—that the Court saw the case as involving merely a “straightforward application . . . of settled principles of personal jurisdiction,” 137 S. Ct. at 1783—means that that case did not “upend[] years of class action practice sub silentio.” Morgan v. U.S. XPress, Inc., No. 17-CV-00085, 2018 WL 3580775, at *3 (W.D. Va. July 25, 2018). If the prior practice was indeed to consider unnamed plaintiffs’ claims (at least where an objection to personal jurisdiction was raised), or if at least the prior practice was mixed on the point, see supra notes 120–24 and accompanying text, then Bristol-Myers should not be seen to have jettisoned the notion of examining unnamed plaintiff class members’ claims. To put it another way, the decisions in Goodyear and Daimler have put most lower courts—especially state courts—and litigants litigating class actions before those courts in a jurisdiction position they did not anticipate.176Professor Marcus and Ostrander make a similar argument:

Personal jurisdiction in the class action’s modern era has always depended on the relationship between the named plaintiff’s claim and the defendant’s forum contacts. In light of this history, unbroken until 2017, defendants can scarcely claim that ‘traditional notions of fair play and substantial justice,’ long dormant, suddenly awoke to require that each class member’s claim measure up by the jurisdictional metric.

Marcus & Ostrander supra note 18, at 1547. But, as discussed in the text, it is wrong to say that personal jurisdiction “has always depended” solely on the named plaintiff’s claim; instead, the issue simply did not commonly arise. And, when it did, many courts did consider unnamed plaintiffs’ claims as well. To borrow Professor Steinman’s language, the jurisdictional dogs should have started barking once they began to witness legal settings they had not seen before.177Professor Steinman’s use of the phrase, “the personal-jurisdiction dogs did not bark,” is presumably a reference to Sir Arthur Conan Doyle’s story, The Adventure of Silver Blaze (1892). There, the great detective Sherlock Holmes deduced that the abduction of a racehorse had been an inside job from the fact that a guard dog did not bark when the horse was taken. Professor Steinman seems to use the phrase in the context of personal jurisdiction to mean that courts have had no reason to think that the rules governing jurisdiction have changed over the years. The problem with Professor Steinman’s analogy is that, in the story, there was no other explanation for the dog’s failure to bark other than that the abductor was someone well known to the dog. In contrast, in the context of personal jurisdiction, as I have discussed in the text, there has been clear intervening Supreme Court precedent—to wit, the Goodyear and Daimler cases—that should be enough to alert courts to the fact that personal jurisdiction might not lie. To return to The Adventure of Silver Blaze, Holmes’ logic would have been faulty had there been some other explanation for the dog’s failure to bark—for example, had the dog been drugged (as in fact had one of the stable lads in the actual story). So, too, here.

Professor Wilf-Townsend sets out a longer, older line of Supreme Court precedent to support a broad argument that courts’ personal jurisdictional reach can extend beyond state borders in aggregate litigation. However, the cases that lay the groundwork for Professor Wilf-Townsend’s claim—mostly cases that predate the International Shoe regime for personal jurisdiction—do not support the weight he puts on them. This is because there would under current law be personal jurisdiction in the scenarios presented under the cases; moreover, many of the cases are cases that originated in federal court, meaning that the restrictions related to state boundaries would have been subconstitutional, making overcoming such restrictions unremarkable.

The Court’s 1853 decision in Smith v. Swormstedt178Smith v. Swormstedt, 57 U.S. 288 (1853). is in many ways the linchpin of Professor Wilf-Townsend’s argument. There, ministers of a church fragmenting over the issue of slavery disputed the proper distribution of church fund.179Id. at 298–302. The Supreme Court found that the lower federal court could render a binding disposition, notwithstanding the fact that the many of the parties lay beyond the borders of the state in which the federal court sat.180Id. at 309. But the church fund in question was created under Ohio law and the funds’ agent was in Ohio, where the federal court was located.181Id. at 298. Thus, viewed through a modern lens, there would be general jurisdiction in Ohio; that being the case, the existence of personal jurisdiction as to the unnamed plaintiffs’ claims is hardly surprising.

Moreover, the fact that the lower court was a federal court makes the existence of personal jurisdiction even less remarkable. While Professor Wilf-Townsend emphasizes that at the time “the jurisdiction of the lower federal courts was understood to be confined to the territory of the state in which the court sat,” he also must concede that “Congress had the power to extend the reach of federal courts beyond state lines” and indeed did just that some two decades later.182Wilf-Townsend, supra note 18, at 1641. Today, there would be little doubt about congressional authority to do so, and certainly no constitutional question about such federal court jurisdiction.

Professor Wilf-Townsend fares no better with two early twentieth-century cases, Hartford Life Insurance Co. v. Ibs183Hartford Life Ins. Co. v. Ibs, 237 U.S. 662 (1915). and Supreme Tribe of Ben-Hur v. Cauble.184Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356 (1921). Both cases involved lawsuits challenging an earlier decree brought by unnamed, out-of-state members of the class involved in the lawsuit that generated the earlier decree. The earlier decree in both cases purported to settle claims between an insurer and multiple insureds. And, in both cases, the Supreme Court held that the earlier decree was binding on the unnamed, out-of-state class members. That said, both earlier lawsuits were brought in the home jurisdiction of the insurer;185See Ibs, 237 U.S. at 666; Cauble, 255 U.S. at 357–59. thus, under modern understandings there would presumably general jurisdiction as to all claims, even those of the unnamed class members. (And, on top of that, the first lawsuit in the Cauble case was brought in federal court.186See Cauble, 255 U.S. at 357–59. )

2. Arguments Grounded in the Unique Nature of Class Actions

We turn next to arguments grounded in the notion that class actions are exceptional. The first argument, enunciated by Judge Wood before she became a judge and recently expanded upon by Professor Marcus and Ostrander, relies on the distinct nature of representational class actions as justification to apply pendent party personal jurisdiction. The second argument, advanced by Professor Dodson, argues that it is valid to ignore unnamed plaintiffs’ claims because the plaintiff class is, much like a corporation, an entity unto itself. I consider each argument in turn.

In a 1987 article, then-Professor Wood argued that the relevance of unnamed class members’ claims against the defendant should turn on “the kind of class action involved—representational or joinder.”187Wood, supra note 78, at 616. Judge Wood also identified a second factor of relevance: “the relationship between the specific jurisdiction contacts for the individual claim and the contacts for the rest of the class’s claims.” Id. Here, however, Judge Wood only meant to describe the appropriateness of specific jurisdiction as to all claims where the injuries were suffered in the forum en masse by the entire class. See id. at 617 (using the Kansas City Hyatt Regency hotel skywalk collapse case as an example). According to Judge Wood:

If a small-stakes money damage class action is properly treated as a pure representational action, which the theory of public law litigation suggests it is, . . . then the contacts supporting the individual’s claim against the defendants should support the entire class’s claims. In this case, clearly the most difficult for this variety of pendent personal jurisdiction, the notion of practical identity of interest between the named plaintiff and the absentees is stretched to the limit. . . . If, on the other hand, the public law character of small claim class actions is disregarded or rejected, and they are viewed as a simple aggregation of claims, specific jurisdiction with respect to the named plaintiff’s claim probably should not support specific jurisdiction for the absentees’ claims. Pure representational actions for injunctive relief would be analyzed in the same way, with the propriety of resting the entire suit on the specific jurisdictional links with the named plaintiff alone depending on the extent to which the public law litigation model is accepted.188Id. at 616–17 (footnote omitted).

In other words, Judge Wood argued that, though pendent party personal jurisdiction does not apply (as Bristol-Myers seems to confirm) in the context of pure aggregation, it might apply in at least some class actions.

The problem with this argument in favor of ignoring unnamed class members’ claims for personal jurisdiction purposes is that it does not offer a justification for doing so. It seems quite subjective (as Judge Wood seems to concede) whether the “public law litigation model” will be, or should be, “accepted.”189Id. at 617. But even if it will be and should be, it remains unclear how that provides justification for evading a constitutional requirement.

Professor Marcus and Ostrander provide some heft to Judge Wood’s musings. But their argument is plainly restricted to class actions in federal, not state, courts, and also overstates the efficiency benefits of ignoring unnamed class members’ claims.

Professor Marcus and Ostrander argue that a “regulatory conception” of class actions “treats the class action as a device to enable law enforcement,”190Marcus & Ostrander, supra note 18, at 1532. and that “[t]he only real argument for many negative value class actions is regulatory.”191Id. at 1532–33. And they try to bolster their argument by claiming that ignoring unnamed plaintiffs’ claims is not inconsistent with the overarching goals of personal jurisdiction:192See supra notes 32–33 and accompanying text. to “limit . . . a court’s territorial reach” in order to “ensure that the court only exercises adjudicatory power when the sovereign on whose behalf it acts has legitimate regulatory authority,”193Marcus & Ostrander, supra note 18, at 1547. and “to ensure that the exercise of adjudicatory power is reasonable.”194Id. at 1548. First, however, their discussion of the justifications for expanding limits on courts’ territorial reach makes clear that they are referring to federal, not state, courts.195Professor Marcus and Ostrander explain:

[A] federal court adjudicating a multistate class action exercises the federal government’s power and does not project one state’s sovereign prerogative beyond acceptable territorial limits. As a matter of law, the federalism argument against [Bristol-Myers’] application in class action proves too much. But the idea behind it, that a federal class action simply does not have federalism implications of the sort prompted by state court litigation, is sensible and counsels against [Bristol-Myers’] migration into the class action’s domain.

Id. at 1548 (emphases added).

Second, and moreover, Professor Marcus and Ostrander’s attempt to justify a single state’s exercise of adjudicatory power notwithstanding unnamed class members’ claims falls somewhat flat. Professor Marcus and Ostrander argue that “[t]he undifferentiated nature of the defendant decreases the likelihood that the forum state has any less of a regulatory interest in the defendant’s conduct than any other state,”196Id. at 1548–49. while “[a] single multistate class action surely compares favorably by an efficiency metric to several single state ones.”197Id. at 1549.

There is something to be said for the argument that an excessively narrow view of a state’s adjudicative authority ought not to require similarly situated plaintiffs to pursue multiple lawsuits—especially where individual lawsuits are likely not to be economically feasible. Indeed, the Supreme Court has noted that “[a] construction of the Due Process Clause which would place impossible or impractical obstacles in the way could not be justified.”198Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 313–14 (1950). But requiring a multistate class action to take place in one of the defendant’s “home” jurisdictions hardly seems impractical. Moreover, any notion that a plaintiff may have to litigate a case far from her home falls flat in light of modern trends toward virtual hearings and lawyer-dominated proceedings. And, in the context of a true nationwide class action, it will always be possible to identify a plaintiff from one of the defendant’s “home” states,199See supra note 93 and accompanying text. such that such travel will in any event not be required.

Professor Dodson provides a different justification for disregarding unnamed class members’ claims, one that rests on the unique nature of class actions. He enlists a conceptual argument advanced by some scholars—that a plaintiff class “is an entity with its own legal status and is more than the sum of its parts”200See Dodson, supra note 22, at 30; Mussat v. IQVIA, Inc., 953 F.3d 441, 445 (7th Cir. 2020) (“Once certified, the class as a whole is the litigating entity, . . . and its affiliation with a forum depends only on the named plaintiffs.”) (citation omitted).

     For earlier endorsements of an “entity theory” of class action litigation, see Edward H. Cooper, Rule 23: Challenges to the Rulemaking Process, 71 N.Y.U. L. Rev. 13, 26-32 (1996); David L. Shapiro, Class Actions: The Class a Party and Client, 73 Notre Dame L. Rev. 913, 917-60 (1998); Samuel Issacharoff, Preclusion, Due Process, and the Right to Opt Out of Class Actions, 77 Notre Dame L. Rev.1057 (2002). But see Martin H. Redish & Nathan D. Larsen, Class Actions, Litigant Autonomy, and the Foundations of Procedural Due Process, 95 Calif. L. Rev. 1573, 1588-1603 (2007) (critiquing the entity theory).  —to craft an argument that “might be enough to take some class actions out from underneath Bristol-Myers Squibb.”201Dodson, supra note 22, at 31. The argument proceeds that, just as corporations are treated as unitary entities (that is, not as the collections of their shareholders) for personal jurisdiction purposes and on that basis receive treatment as an entity for personal jurisdiction purposes,202Id. plaintiff classes are also entities and thus can receive similar special treatment for personal jurisdiction purposes.203Cf. Fischer v. Fed. Express Corp., 42 F.4th 366, 380 (3d Cir. 2022) (distinguishing mass actions under the Fair Labor Standards Act from class actions under Rule 23 on the ground that “a Rule 23 class action, once certified, is directed by the named plaintiff and class counsel, representing the absent class members, under the supervision of the court”).

While Professor Dodson’s argument is weighty, it suffers from two flaws. First, it is not at all clear that plaintiff classes are indeed unitary entities. Second, to whatever extent they are, it is nevertheless clear that they are quite dissimilar from corporations (and like entities) that earn their entity-like status outside the jurisdictional context.

Consider first the extent to which plaintiff classes traditionally have been viewed as unitary entities. Professor Dodson points out that plaintiff classes are treated as standalone entities for some other jurisdictional purposes. In particular, the total amount that a class under the Class Action Fairness Act seeks is deemed to be the amount in controversy for purposes of diversity jurisdiction,204See 28 U.S.C. § 1332(d)(6). and the Supreme Court has held that only the named plaintiffs “count” for purposes of section 1332(a)’s complete diversity requirement.205See Snyder v. Harris, 394 U.S. 332, 340 (1969); Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 365–67 (1921). But these settings are quite different. For one thing, they both lie within the sphere of federal subject-matter jurisdiction, which is of no moment to state court jurisdiction. For another thing, and more importantly, they are settings where the ‘expansion’ of federal jurisdiction clearly has no constitutional ramifications: after all, both the amount-in-controversy requirement and the complete diversity requirement are entirely creatures of statute.206While the diversity jurisdiction statute includes amount-in-controversy requirements, see 28 U.S.C. § 1332(a) (standard requirement), (d)(2) (Class Action Fairness Act requirement), Article III of the Constitution is itself devoid of any such requirement, see U.S. Const., art. III, § 2. And while the Supreme Court has interpreted the diversity statute to require complete diversity, see Strawbridge v. Curtiss, 7 U.S. 267 (1806), it has also held that mere minimal diversity satisfies the Constitution, see State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 531 (1967). These examples, therefore, seem quite inapposite to the question of state court personal jurisdictional reach, the limits of which are set constitutionally.

Professor Dodson also notes the Court’s holding that the mooting of the named class representative’s claim does not moot the class claims.207See Dodson, supra note 22, at 31 (citing Sosna v. Iowa, 419 U.S. 393, 399, 401–02 (1975)). But that holding could as easily be characterized as treating the plaintiff class as distinct from the named plaintiff (rather than as a unitary entity). After all, if unnamed plaintiff class members’ claims survive the mooting of the class representative’s claim, then effectively the entity (if there is one) is the collection of unnamed class members’ claims, not the class (consisting of named and unnamed plaintiffs) as a whole. To put it differently, if the unnamed class members’ claims survive after the class representative’s claim has been mooted, is that not a strong argument for requiring, not dispensing with the requirement, that there be proper personal jurisdiction over the unnamed class members’ claims?

An even more fundamental problem with this line of argument is that, to the extent that plaintiff classes are ‘entities,’ they are entities solely for litigation purposes. This stands in stark contrast to another example cited by Professor Dodson: the corporation. It is true that personal jurisdiction law (as well as subject-matter jurisdiction law) treats corporations as standalone entities, apart from their shareholders: a corporation is at home in its state of incorporation and its state of its principle place of business, “even if no shareholder is a citizen of either state.”208Id. (citing Daimler AG v. Bauman, 571 U.S. 117, 137 (2014)). Professor Dodson further notes that the same result obtains statutorily for federal diversity subject-matter jurisdiction purposes. See id. (citing 28 U.S.C. § 1332(c)). Recent scholarship, however, draws the constitutionality of that provision in question. See Mark Moller & Lawrence B. Solum, Corporations and the Original Meaning of “Citizens” in Article III, 72 Hastings L.J. 169 (2020). But this makes sense beyond the jurisdictional context: because of limited liability, judgment against a defendant corporation cannot be collected against the corporation’s shareholders;209See Phillip I. Blumberg, Limited Liability and Corporate Groups, 11 J. Corp. L. 573, 577–611 (1986) (surveying the history of limited liability in corporate law in England and the United States). Notably, the same is not true about partnerships (at least with respect to general partners); perhaps this is one reason for the muddled authority Professor Dodson notes on whether partnerships should receive similar treatment. See Dodson, supra note 22, at 31 n.182. nor can shareholders directly lay claim to any monies a plaintiff corporation collects.210See, e.g., James D. Cox & Thomas Lee Hazen, Treatise on the Law of Corporations § 7:2 (3d ed. 2022). In stark contrast, a plaintiff class in a damages lawsuit is assembled precisely to collect damages. The distinction strongly suggests that there is little legal basis to treat a plaintiff class as a standalone entity for personal jurisdictional purposes.211It bears noting that Professor Dodson concludes that, even if the theory discussed in this subsection “might be enough to take some class actions out from underneath Bristol-Myers [,] . . . such a theory seems to be in tension with the Supreme Court’s current trend narrowing personal jurisdiction and its current skepticism of class aggregation.” Dodson, supra note 22, at 31.

3. Arguments Grounded in the Treatment of Unnamed Plaintiff Class Members in Other Contexts

A final argument in favor of treating unnamed class plaintiffs differently is that unnamed plaintiff class members are disregarded in other procedural contexts.212See Devlin v. Scardelletti, 536 U.S. 1, 10 (2002) (noting several ways in which unnamed plaintiffs are treated differently, and finding them “justified by the goals of class action litigation”). Versions of this argument have been advanced by Judge Diane Wood in her opinion for the Seventh Circuit in Mussat v. IQVIA, Inc.,213Mussat v. IQVIA, Inc., 953 F.3d 441 (7th Cir. 2020). and by Professor Steinman in his recent article.214See Steinman, supra note 18, at 1240–46. As Professor Marcus and Ostrander note, the argument in its various forms tends to suffer from an “ipse dixit” quality: there is often little offered in the way of reasoning as to why, even if unnamed class members are ignored in one context, they should necessarily be ignored in another.215See Marcus & Ostrander, supra note 18, at 1531 (“[T]he justification . . . veers toward the ipse dixit unless it can answer the basic question: why shouldn’t an absent class member count as a party for personal jurisdiction purposes?”). Moreover, it is at least somewhat difficult to see why instruction should be drawn from settings outside personal jurisdiction where unnamed class members are ignored, when notwithstanding the fact that they are not parties, the Court has held that unnamed class members cannot be ignored and indeed do have personal jurisdiction rights.216See supra notes 66–77 and accompanying text (discussing Shutts). It bears noting that Shutts addressed only Due Process rights in the context of class actions in which claims for monetary judgments predominate. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811 n.3 (1985). Still, while Due Process requirements may differ in other types of class actions, it would seem that absent class members should still enjoy protections under the Due Process Clause. For discussion of whether Rule 23 might itself provide a basis to suspend the ordinary rules of personal jurisdiction, see infra notes 242–244 and accompanying text. In other words, the Court has reaffirmed that unnamed class members count in the precise context of personal jurisdiction. But even beyond those objections, the argument in its varied forms suffers from fatal flaws.

Let us begin with Judge Wood’s opinion in Mussat, which notes that unnamed class members “are not considered parties for assessing whether the requirement of diverse citizenship under 28 U.S.C. § 1332 has been met,”217Mussat, 953 F.3d at 447. or when a court decides whether venue is proper.218Id. There are two problems here. First, these issues are both questions of federal law that a state court would never confront. Second, and more importantly, neither of these issues has any constitutional implications. As noted above, Article III requires only minimal diversity,219See supra note 206. so the Constitution cares not whether unnamed class plaintiffs are diverse from the defendant, provided that at least one named plaintiff is. And venue is purely subconstitutional. In contrast, the personal jurisdiction limits on a state are constitutional. Thus, the examples cited by Judge Wood are inapposite.

Professor Steinman goes further,220Professor Steinman also cites the two examples relied upon by Judge Wood in Mussat. See Steinman, supra note 18, at 1242–43. So, too, does Professor Wilf-Townsend. See Wilf-Townsend, supra note 18, at 1635–36. arguing that unnamed parties’ claims form part of the same ‘constitutional case’ under Article III.221See Steinman, supra note 18, at 1240–41. Professor Wilf-Townsend also points to Article III standing as an applicable precedent. See Wilf-Townsend, supra note 18, at 1636. Indeed, it is on this basis that pendent party jurisdiction (that is, pendent party subject-matter jurisdiction, not pendent party personal jurisdiction) is constitutionally available under the supplemental jurisdiction statute.222See 28 U.S.C. § 1367(a) (providing that, with limited exceptions, “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution”); supra notes 131–132 and accompanying text. This, he argues, provides a precedent for including unnamed parties’ claims for personal jurisdiction purposes provided that they arise out of the same “common nucleus of operative fact” as a claim as to which there is proper personal jurisdiction.

In effect, Professor Steinman enlists Article III to make a case for pendent party personal jurisdiction. But Article III is inapposite to the jurisdiction of the state courts. Indeed, some state courts explicitly enjoy jurisdiction well in excess of that authorized by Article III.223See, e.g., Mass. Const, ch. III, art. II (as amended by art. XXXV) (“Each branch of the legislature, as well as the governor or the council, shall have authority to require the opinions of the justices of the supreme judicial court, upon important questions of law, and upon solemn occasions.”).

Beyond that, even to the extent that Article III is relevant, it speaks to subject matter jurisdiction, which is quite distinct from personal jurisdiction. Consider that a lawsuit by an American citizen injured abroad by a product manufactured abroad by a manufacturer based abroad might constitute a “case” for Article III purposes, yet—as the Court’s holding in Goodyear Dunlop Tires Operations, S.A. v. Brown affirms—personal jurisdiction can be lacking.224Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 927 (2011). In short, the two inquiries are orthogonal.225Professor Richard Freer observes that recent Court cases seem to be “morphing” personal jurisdiction from its traditional focus on litigants to a focus on claims, which in turn brings the focus of the inquiries for personal jurisdiction and subject-matter jurisdiction closer together. See Richard D. Freer, From Contacts to Relatedness: Invigorating the Promise of “Fair Play and Substantial Justice” in Personal Jurisdiction Doctrine, 73 Ala. L. Rev. 583, 596 (2022). To whatever extent that observation may be accurate, it does not mean that the particular analyses that each inquiry requires, or the results of those inquiries, will be similar, as the discussion in the text demonstrates.

Finally, to whatever extent one might think that Article III’s limits provided guidance with respect to state court personal jurisdiction under the Constitution as originally enacted, it bears emphasis that the Fourteenth Amendment’s subsequent passage presumably trumps Article III’s influence.226Cf. Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 65–66 (1996) (rejecting the argument that precedent holding that the Fourteenth Amendment empowers Congress to abrogate state sovereign immunity applies to the Commerce Clause because the logic applicable in the Fourteenth Amendment context “was based upon a rationale wholly inapplicable to the Interstate Commerce Clause, viz., that the Fourteenth Amendment, adopted well after the adoption of the Eleventh Amendment and the ratification of the Constitution, operated to alter the pre-existing balance between state and federal power achieved by Article III and the Eleventh Amendment”).

V. WORKING AROUND CONSTRAINTS ON PERSONAL JURISDICTION IN CLASS ACTIONS

In this Part, I consider how, assuming one wanted to overcome personal jurisdictional limits on plaintiff class actions, one might proceed to do so.227I have elsewhere questioned and lamented the Court’s constriction of general jurisdiction. See Nash, supra note 7, at 497–509. But it seems unlikely that the Court will change course on this point. In the discussion that follows, I take into account the analysis in Part III of the effects of factoring in unnamed class plaintiffs’ claims. First, that discussion highlighted that the restriction on state courts is constitutional, while the restriction on federal courts is not (at least as it pertains to state-based contacts). One thus would expect more options to override the requirement with respect to federal courts than state courts.

Second, the discussion in Part III explained that the effect of the requirement is far more onerous in cases with defendant corporations that are incorporated outside the United States than corporations that incorporated in the United States. The distinction between these corporations is of great moment for policy purposes. To be sure, plaintiffs’ lawyers presumably will always appreciate a greater set of forum options. But a reduction—even a large reduction—in the set of available domestic forums is a far cry from removing the possibility of a class action suit in any domestic forum.228See Wood, supra note 78, at 615 (“While it is true that stricter general jurisdiction rules would create some inconvenience for some plaintiffs, even this ‘cost’ of change may not be as great as it appears.”). One of the primary goals of a plaintiffs’ class action is to allow for access to the courts where individual plaintiffs’ claims might not suffice to make a lawsuit worthwhile. The option of filing a class suit in a foreign country (for example, the corporate defendant’s place of incorporation) might be cost-prohibitive. Moreover, the foreign jurisdiction might provide far less favorable treatment of class actions, let alone litigation generally.229Cf. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 240 (1981) (noting that the plaintiff “admits that the action . . . was filed in the United States because its laws regarding liability, capacity to sue, and damages are more favorable to her position than are those of Scotland”).

The access-to-justice point argues heavily in favor of overcoming limits on personal jurisdiction in cases involving foreign corporate defendants. But there is a flipside: part of the reason the Supreme Court narrowed general jurisdiction was to harmonize general jurisdiction across national boundaries.230See Daimler AG v. Bauman, 571 U.S. 117, 141 (2014) (faulting the lower court for having “paid little heed to the risks to international comity its expansive view of general jurisdiction posed,” and noting that “[o]ther nations do not share the uninhibited approach to personal jurisdiction advanced by the Court of Appeals in this case”). Any action that would tend to restore matters to the status quo—even if it was not technically by means of overruling Goodyear,Daimler, and/or Bristol-Myers—could raise harmonization and foreign policy concerns.

With this background, I turn to concrete proposals to overcome personal jurisdictional limits on plaintiff class actions. I explore two possibilities: establishing personal jurisdiction based upon minimum contacts with the United States as a whole rather than any one particular state, and extracting consent to general jurisdiction.

A. Expanding the Use of National Personal Jurisdiction

In considering the possibility of invoking national personal jurisdiction, let us begin with the state courts on whom, as I have emphasized above, the limitations on personal jurisdiction are constitutional. It would seem, then, that there would be no argument (short of constitutional amendment or an avulsive change to governing Supreme Court precedent) that could overcome those limitations. That said, various commentators have suggested that Congress might have the power to allow state courts to exert personal jurisdiction to the full territorial limits of the United States (i) in state cases raising federal claims,231See Robert C. Casad, Personal Jurisdiction in Federal Question Cases, 70 Tex. L. Rev. 1589, 1616 (1992); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 292 (3d Cir. 1981) (Gibbons, J., dissenting). (ii) in all state court cases,232See Graham C. Lilly, Jurisdiction over Domestic and Alien Defendants, 69 Va. L. Rev. 85, 148–49 (1983). and (iii) as to foreign nonresident U.S. defendants.233See Ronan E. Degnan & Mary Kay Kane, The Exercise of Jurisdiction over and Enforcement of Judgments Against Alien Defendants, 39 Hastings L.J. 799, 809–14 (1988); Dodge & Dodson, supra note 154, at 1215–17, 1224–31. See also Gary B. Born, Reflections on Judicial Jurisdiction in International Cases, 17 Ga. J. Int’l & Comp. L. 1, 42 (1987) (making the less aggressive argument that, while the Constitution allows federal courts to exercise nationwide minimum contacts as to foreign nonresident defendants, it allows state courts more leeway in exercising personal jurisdiction but does not permit state courts to exercise full-blown nationwide minimum contacts). To the extent any or all of these arguments have validity, they would clearly apply in plaintiff class actions. I have elsewhere expressed doubt as to each of these arguments.234See Nash, supra note 7, at 543–55. More importantly, courts have yet to adopt any of them.

We turn, then, to the federal courts, where the norm restricting personal jurisdiction to state boundaries is subconstitutional; the constitutional limit is set by the Fifth Amendment (not the Fourteenth) at the national boundaries. Indeed, even as things now stand, some federal statutes already allow for nationwide personal jurisdiction,235See supra notes 85, 87, and accompanying text. and Rule 4(k) already contemplates nationwide personal jurisdiction for federal claims under limited circumstances.236See supra notes 85–86 and accompanying text.

Which actors, and which tools, can bring broader availability of nationwide personal jurisdiction—including in plaintiff class actions—to fruition? First, Congress clearly has that power, and indeed has exercised it before.237See supra note 87. Second, based on the existence of Rule 4(k)(2),238See supra notes 85–86 and accompanying text. it would seem that the Supreme Court can use its rulemaking power to expand the universe of cases where federal courts can exert nationwide personal jurisdiction.239See Bradt & Rave, supra note 18 at 1286–87 (“Although there may be no constitutional problem with a federal court exercising personal jurisdiction over a multistate class action challenging a nationwide course of conduct, we do not think that paves the way for multistate class actions in federal court outside of the defendant’s home state—at least without further action from Congress or the Advisory Committee.”). That said, some scholars question this conclusion,240See supra note 84 (noting arguments that the Rules Enabling Act may constrain the role of rulemaking here). and indeed the civil rules advisory committee has apparently questioned its own power when faced with such efforts,241See A. Benjamin Spencer, Rule 4(k), Nationwide Personal Jurisdiction, and the Civil Rules Committee: Lessons from Attempted Reform, 73 Ala. L. Rev. 607, 611–14 (2022). thus leaving the matter in doubt. Finally, Professor Steinman has suggested that federal courts can even now, using Rule 23 as a base, deploy federal common law to justify national personal jurisdiction in plaintiff class actions.242See Steinman, supra note 18, at 1257–58. Professor Steinman also suggests that Rule 83 of the Federal Rules of Civil Procedure may lay the groundwork for federal courts to deploy federal common law to extend personal jurisdiction in class actions beyond state boundaries. See id. at 1257. But nothing in Rule 83 suggests that it was intended to vest such broad powers in the district courts. (Perhaps this is a basis on which some courts have asserted that “Bristol-Myers Squibb does not extend to federal class actions.”243Lyngaas v. Curaden AG, 992 F.3d 412, 435 (6th Cir. 2021) (emphasis added). ) However, other commentators have refuted the notion that the protections that Rule 23 provides to defendants are sufficient to protect as well their constitutional personal jurisdiction interests.244See Marcus & Ostrander, supra note 18, at 1531 (“[T]he claim that Rule 23 and personal jurisdiction doctrine are fungible in terms of due process is implausible.”); Spencer, supra note 26, at 44 (“It cannot be that Rule 23 itself provides the relevant jurisdictional rule. Nothing in the language of the rule addresses the personal jurisdiction of district courts over the claims of absent class members included in a certified class.”).

     Professor Wilf-Townsend argues that non-monetary class actions—that is, class actions that would fall under Rule 23(b)(1) or (b)(2)—should perhaps more easily satisfy personal jurisdiction requirements insofar as the plaintiffs’ claims are in some sense indivisible. See Wilf-Townsend, supra note 18, at 1660–61. But Professor Michael Morley reaches a different conclusion. See Michael T. Morley, Nationwide Injunctions, Rule 23(b)(2), and the Remedial Powers of the Lower Courts, 97 B.U. L. Rev. 615, 633–39 (2017). Moreover, to the extent that a court can issue an injunction that extends beyond the parties in the case (for example, a nationwide injunction), the need for a class action may in any event be obviated. See id. at 620–21.

In any event, even if some of the avenues by which to arrive at national personal jurisdiction are subject to doubt, the fact that it can be effected (at least through congressional statute) cannot be doubted. Moreover, to the extent that there are plaintiff class actions that under current law remain irrevocably in state court245It is not clear that there are many such cases even under current law. As Professors Bradt and Rave put it, given the incentives created by limits on personal jurisdiction in state court, “nearly all nationwide or multistate class actions will end up in federal court in the defendant’s home state or states where it is subject to general jurisdiction (unless the defendant has engaged in conduct directed nationwide in another state or consents to personal jurisdiction elsewhere). Single-state class actions might still be viable in other states but will almost always be removable to federal court as a matter of ordinary diversity jurisdiction or under CAFA.” Bradt & Rave, supra note 18, at 1288. where national personal jurisdiction would be appropriate, Congress can—subject to the outer limits of Article III—expand the subject matter jurisdiction of the federal courts, much as it has already done with the Class Action Fairness Act246See 28 U.S.C. § 1332(d). and the Multiparty Multiforum Trial Jurisdiction Act.247See id. § 1369. And, of course, Congress could restrict the number of available federal forums by including limitations on venue.

B. Extracting Consent

Another possible avenue to remedy limits on personal jurisdictional limits is to extract consent from would-be corporate defendants when they register to do business. Indeed, many states already have done so—granting permission to a corporation to do business in the state on the corporation granting blanket consent to general jurisdiction in the state.248See Tanya J. Monestier, Registration Statutes, General Jurisdiction, and the Fallacy of Consent, 36 Cardozo L. Rev. 1343, 1345 (2015). To the extent that consent thus obtained is valid, a multistate class action—including unnamed plaintiffs from any states—could be brought in any state where consent was granted.

The Supreme Court in Mallory v. Norfolk Southern Railway Co.249143 S. Ct. 2028 (2023). recently held that statutes exacting consent comport with the Due Process Clause.250See id. at 2038–45. That said, the Court’s opinion did not address the possibility that such state action could offend the dormant Commerce Clause.251See id. at 2047–54 (Alito, J., concurring in part and concurring in the judgment); Carol Andrews, Another Look at General Personal Jurisdiction, 47 Wake Forest L. Rev. 999, 1073 (2012) (“Even if consent through registration were to survive due process scrutiny, it would face problems under the Dormant Commerce Clause.”); cf. Bendix Autolite Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 894 (1988) (invalidating under the Commerce Clause Ohio statute that allowed for tolling of applicable statute of limitations “only for those foreign corporations that do not subject themselves to the general jurisdiction of Ohio courts”). Moreover, even if these statutes pass muster under the federal Constitution, it is entirely conceivable that state courts might find that they violate applicable state constitutional law.252For example, a state court could find that such a statute runs afoul under that state’s own version of the unconstitutional conditions doctrine. See Kay L. Levine, Jonathan Remy Nash & Robert A. Schapiro, Are State Constitutional Rights for Sale? Protecting State Constitutional Rights from Unconstitutional Conditions, 56 U.C. Davis L. Rev. 247 (2022).

To whatever extent that federal law in Mallory’s wake and applicable state law limit states’ freedom to use statutes to secure general jurisdiction, one might envision a narrower version of such statutes that might nevertheless aid in the assertion of jurisdiction over nationwide class actions: states might seek consent to jurisdiction over such class actions provided that there was valid personal jurisdiction—i.e., specific jurisdiction—over the named plaintiffs’ claims. In other words, the consent to general jurisdiction would be restricted to unnamed plaintiffs’ claims in class action suits.

One also might turn to the possibility of the federal government extracting such consents. Such an approach would surely dispense any Commerce Clause concerns that attend states’ attempts to extract consent.

Most interesting in this regard would be a federal statute that required international corporations to register to conduct business in the United States in return for which the corporations would consent to jurisdiction in the United States. Such a statute would remedy the area of greatest need after the Court’s decisions in Goodyear, Daimler, and Bristol-Myers: the ability to assemble a domestic class action against a foreign corporation. Such a statute could secure a foreign corporation’s consent to general jurisdiction—if not in every state, then in the state in which they did the most business. Or, more narrowly, the statute could (as above) seek consent as to general jurisdiction only as to unnamed plaintiffs’ claims in class action suits provided that specific jurisdiction existed as to the named plaintiffs’ claims. Finally, the statute could have its application restricted to cases in the federal courts.253All of these limitations would help ensure that the concession sought by the government has an “essential nexus” to the goals of the law, and proportional to the benefit secured by the consenting corporation, as unconstitutional condition doctrine cases in other areas seem to require. See Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987) (setting out the “essential nexus” requirement in the context of exactions under the Takings Clause); Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) (setting out the requirement of “rough proportionality” in the same context).

Such a statute would probably garner support both from plaintiffs’ attorneys, and from domestically incorporated corporations that would see it to ‘even the playing field’ between themselves and their foreign competitors. That said, depending on the Court’s holding on the validity of state registration statutes that seek consent to general jurisdiction, such a federal statute yet might be constitutionally infirm. And it might also frustrate efforts other cases have undertaken to harmonize U.S. personal jurisdiction law with that of other nations.254See supra text accompanying note 230.

CONCLUSION

In this Article, I have argued that current law generally requires courts to consider the claims of unnamed class plaintiffs in determining the propriety of personal jurisdiction. The requirement is constitutional for state courts and subconstitutional for federal courts. The impact of this requirement is greater for plaintiffs seeking to sue corporations incorporated outside the United States than ones incorporated in the United States. Congress might work around the constraint by increasing the categories of cases in which federal courts can rely on national—as opposed to state-based—personal jurisdictional limits. Another possibility—seemingly bolstered by the Court’s decision in Mallory—is for the federal government to extract consent to jurisdiction from corporations seeking to do business in the United States.

96 S. Cal. L. Rev. 943

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* Robert Howell Hall Professor of Law and Co-Associate Dean for Research, Emory University School of Law; Director of the Emory Center on Federalism and Intersystemic Governance. I am grateful to Thomas Arthur, Scott Dodson, Richard Freer, Kay Levine, and participants at a presentation at the Emory-UGA annual workshop (including, in particular, Hillel Levin, who served as commentator on the paper).

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Voting Rights in Corporate Governance: History and Political Economy

Political voting rights have become the subject of sharp legal wrangling in American political elections and the focus of headlines and popular debate. Less attention has focused on American corporate elections, where something similar has been happening: the last two decades have witnessed significant unsettling of basic shareholder voting rights, including laws and practices that were mostly stable throughout the twentieth century. Today, shareholder voting rights are in flux and, increasingly, in controversy. This Article connects the current moment of instability to the last significant era of change in shareholder voting rights—the nineteenth century—and brings historical context to a new era of dynamic change.

A small but potent literature has explored the historical evolution of nineteenth-century shareholder voting rights in corporate law, establishing that per-share vote allocations changed significantly over that century. This literature, which focuses on the shift from “democratic” vote allocations (one-person-one-vote and restricted voting) to “plutocratic” voting (one-share-one-vote), has treated vote allocations as the exclusive determinant of shareholder voting power. The literature has raised as many questions as it has answered, and it ultimately has failed to produce agreement among scholars or a cohesive narrative to explain how or why the modern framework for shareholder voting rights emerged.

This Article presents an alternative account of transformations in shareholder voting rights that tracks three evolving sets of legal rules. It shows how the voting-rights framework that was cemented by the end of the century—the framework that would go on to define twentieth-century corporate control—was determined by the interrelation of the three. One regulated the shareholder’s right to delegate votes (proxy voting), another set per-share vote allocations, and a third addressed the shareholder’s right to cumulate votes (cumulative voting). The Article shows why these three sets of rights must be understood as coactive and interdependent. It contributes new ideas to the longstanding debate about why American corporate law shifted to the rule of one-share-one-vote and concludes by returning to the present moment, arguing that shareholder voting rights have become newly unsettled through shifts along these same fault lines.

INTRODUCTION

Voting rights became the subject of sharp legal wrangling in American political elections when the U.S. Supreme Court decided Bush v. Gore in 2000 and Shelby County v. Holder in 2013.1Bush v. Gore, 531 U.S. 98 (2000); Shelby Cnty. v. Holder, 570 U.S. 529 (2013). The result has been a resurgence of legal action, academic debate, and media attention focused on Americans’ voting rights. Today, the political franchise is dynamically evolving through legislation and court battles—a process that is commanding headlines and reshaping fundamental relationships of political power in American institutions. 

Something similar has been happening to shareholder voting rights in the United States over the same period, though it has garnered much less attention. Shareholder voting laws and practices that were mostly stable throughout the twentieth century, and which capital markets participants took for granted, have become newly contested in the twenty-first century. Many aspects of shareholder voting rights are now in flux, with major debates and regulatory battles playing out over such issues as dual-class structures, ballot access, broker voting, and the universal proxy. The corporate law literature has noted many of these developments—but mostly in isolation and without a broad sweep of perspective.

In particular, over the last two decades, a small literature has emerged at the intersection of corporate law and economic history to examine the history of shareholder voting rights.2Notable contributions to this literature include Henry Hansmann & Mariana Pargendler, The Evolution of Shareholder Voting Rights: Separation of Ownership and Consumption, 123 Yale L.J. 948 (2014) [hereinafter Hansmann & Pargendler, Separation of Ownership and Consumption]; Eric Hilt, Shareholder Voting Rights in Early American Corporations, 55 Bus. Hist. 620 (2013) [hereinafter Hilt, Shareholder Voting Rights]; and Colleen A. Dunlavy, From Citizens to Plutocrats: Nineteenth-Century Shareholder Voting Rights and Theories of the Corporation, in Constructing Corporate America: History, Politics, Culture 66 (Kenneth Lipartito & David B. Sicilia eds., 2004) [hereinafter Dunlavy, Citizens to Plutocrats]. Its focus has been narrow. The literature has explored changes to per-share vote allocations over the nineteenth century, noting how the law moved away from restricted voting—which placed limits on the voting power of a corporation’s large shareholders—in favor of one-share-one-vote. This literature uses the term “shareholder voting rights” exclusively to mean per-share vote allocation, and, though it has shed light on some corners of early-nineteenth-century corporate practice, it has raised as many questions as it has answered. To date, there is no consensus among scholars about the purpose served by restricted corporate voting in the nineteenth century, and no consensus about why, by the turn of the twentieth century, it had been replaced by one-share-one-vote.

This Article ties the past to the present day, contributing to the debate over nineteenth-century corporate law history and providing some perspective on current developments. It argues that, in the nineteenth century, shareholder voting rights actually evolved along three parallel tracks. It presents a holistic and ultimately more satisfying account of this history than the literature has previously provided and connects this history of dynamic legal change to the current moment, when, once again, power struggles among the same set of players—corporate managers, large shareholders (now asset managers), and small shareholders—are reshaping shareholder voting rights along these same dimensions.

The first dimension of nineteenth-century legal change involved proxy voting, a system of rules by which a shareholder could delegate his or her vote. Because it expanded the geographic scope of a corporation’s investor base, proxy voting was important for corporate finance in a nationalizing economy. It was also a major, pro-shareholder convenience and held the potential to empower small shareholders through collective action. In practice, however, proxy voting became a mechanism for sidelining shareholders in corporate governance, mainly for the benefit of corporate managers. The group most aggrieved by this sidelining, which was described as “proxy abuse,” was large block holders—wealthy elites—who had the most invested and thus the most to lose if unscrupulous or low-quality management entrenched itself through the proxy system. State corporate laws relating to proxy voting changed considerably over the nineteenth century, moving from a regime in which proxy voting was disfavored to one in which shareholders enjoyed a nearly inviolable right to delegate their votes. Restrictions on proxy voting, enacted by many state legislatures during the nineteenth century to curb proxy abuse, were virtually swept away in the last quarter of the century, creating the modern proxy system.

The second dimension of change involved the allocation of votes per share of stock. In the early nineteenth century, a significant proportion of corporations limited the voting power of large block holders.3When Colleen A. Dunlavy first called attention to this history in 2004, it surprised many corporate law scholars. See Dunlavy, Citizens to Plutocrats, supra note 2, at 67 (“Nearly every historian, I suspect, takes it for granted that the power of individual shareholders has always been proportional to their investment . . . .” But “[t]his essentially timeless view of the distribution of power among shareholders . . . is simply wrong.”). Over time, however, law and practice began to shift in favor of “plutocratic” voting, or one-share-one-vote.4See Colleen A. Dunlavy, Social Conceptions of the Corporation: Insights from the History of Shareholder Voting Rights, 63 Wash. & Lee L. Rev. 1347, 1355–56 (2006) (“Plutocracy, government by the wealthy, best describes the social conception of the corporation embodied in this voting rule because it apportioned power among the shareholders according to their investment in the company.”). Though this shift likely had several causes, this Article focuses in particular on a cause that has not been recognized in the literature: one-share-one-vote was a way for wealthy investors, particularly at large, widely held companies, to protect against managerial proxy abuse—a significant problem that was just becoming apparent with the expansion of proxy voting. Strengthening the voting power of the largest block holders helped offset managers’ abilities to aggregate and vote the proxies of small shareholders.

The interdependence of proxy voting and vote allocations was self-evident. A shareholder’s theoretical vote allocation mattered little if the shareholder could not cast any vote. Nineteenth-century proxy laws sometimes disenfranchised whole categories of shareholders, such as non-U.S. residents, out-of-state citizens, shareholders behind in their subscription payments, fiduciaries, and shareholders residing a long distance from the meeting place. For a time in Pennsylvania, male shareholders could vote by proxy only if they resided at a distance of ten miles or more from the shareholders’ meeting; the rule was different, and more generous, for female shareholders.5Act of Apr. 7, 1849, No. 368, 1849 Pa. Laws 563 (encouraging manufacturing operations in Pennsylvania). Other states, too, used shareholder sex to determine proxy voting rights. See infra note 27 and accompanying text. The most significant categorical prohibition restricted officers and directors of a corporation from voting other holders’ shares by proxy, in some cases under threat of criminal penalty.6Research for this Article turned up prohibitions on officer proxy voting in public statutes or special legislative charters in Connecticut, Indiana, Massachusetts, New Jersey, Ohio, Pennsylvania, New Jersey, South Carolina, and West Virginia. See infra notes 46–91 and accompanying text. This prohibition is notable not only because it had significant implications for corporate power at the time, but also because proxy voting by a corporation’s management is, today, the dominant form of corporate voting.7See Melvin Aron Eisenberg, Access to the Corporate Proxy Machinery, 83 Harv. L. Rev. 1489, 1490 (1970) (“It is well known that proxy voting has become the dominant mode of shareholder decisionmaking in publicly held corporations.”).

The shift to one-share-one-vote partially tempered problems associated with the emerging proxy system, at least at widely held corporations. However, this shift disempowered small stockholders in relation to wealthy, large holders, catalyzing yet a third counter-balancing trend: the rise of cumulative voting, often as a state constitutional right, starting in the 1870s. Cumulative voting allowed shareholders to aggregate their votes for director candidates, providing a means for small shareholders to gain information and a voice on the board. By 1900, a dozen states had added a right to cumulative voting to their constitutions, while other states mandated cumulative voting through statutory law. However, the most popular states for business incorporations in the twentieth century—Delaware, New Jersey, and New York—never embraced it, preferring an enabling approach that was mostly in place by the turn of that century.8See infra Part III.

The creation of the proxy system marked a split between corporate and political governance that set the two regimes on diverging regulatory paths.9This was true, for example, regarding the regulation of electoral speech. See infra notes 21–22 and accompanying text. It invited proxy solicitation, the practice in which savvy actors pursued shareholders to request—or even purchase—their delegated votes. Proxy solicitation would go on to absorb vast corporate resources and become a major focus of regulation. It is, today, the heart of federal regulation of corporate governance. Yet for the better part of two centuries, proxy voting practices sharply limited shareholders’ franchise in one important way: shareholders voting by proxy could not easily choose among competing candidates in a contested election. In the summer of 2021, the U.S. Securities and Exchange Commission (“SEC”) amended its regulations of the proxy system by introducing the “universal proxy,” which places all candidates for election to the board on a single proxy form that resembles a political ballot.10See Universal Proxy, Exchange Act Release No. 93,596, Investment Company Act Release No. 34,419, 86 Fed. Reg. 68330 (Dec. 1, 2021); infra Part IV. Starting in late 2022, companies soliciting proxies were required to present shareholders with the full slate of candidates in contested elections, and, for the first time in American corporate history, shareholders began exercising voting choice that resembles political voting.11Because most public companies hold their annual meetings during “proxy season,” from March to June each spring, the full effect of this change will not be evident until mid-2023.

The new universal proxy potentially upends one of the three dimensions of shareholder voting rights: proxy voting. It is one of several ways in which proxy voting has recently been reshaped, including reforms to broker voting rules and, at major asset managers, the emergence of pass-through voting. These changes come on the heels of a recent, significant change to per-share vote allocations: the popularization of dual-class structures, which give extra voting strength to stock held by large, powerful holders. Both the universal proxy and dual-class structures unsettle paradigms that date back to the nineteenth-century history recounted in this Article. Framed in the context of the three-dimensional evolution of shareholder voting rights, these twenty-first-century developments potentially signal a new era of dynamic change to shareholder voting rights—change on a level not seen since the nineteenth century. 

Part I describes delegated or “proxy” voting and the rise of the American proxy system. Part II shows how the decreasing use of restricted voting, and the increasing use of one-share-one-vote, were related to the emerging proxy system and, in particular, to problems with that system. Part III introduces cumulative voting and connects its rise in the 1870s to the proxy system and the popularity of one-share-one-vote. It includes a synthesis of the three-track history and the shareholder voting rights framework at the end of the nineteenth century. An epilogue, Part IV, sketches the rising tide of new legal change to shareholder voting rights in the twenty-first century. These changes include the appearance of dual-class structures, the new universal proxy, reforms of broker voting, pass-through voting, and client-directed voting, which in combination recall the nineteenth-century era of voting-rights dynamism.12On the surge of dual-class shares, see Dunlavy, supra note 4, at 1349 (describing the increase since 1985 and especially 1994); infra Part IV.

I. THE SHAREHOLDER’S RIGHT TO DELEGATE THE VOTE

The earliest corporate laws assumed that shareholders would vote in person, gathered together in a meeting hall.13Not coincidentally, this was also how voting in political institutions worked—and many municipalities were corporations. See Pauline Maier, The Revolutionary Origins of the American Corporation, 50 Wm. & Mary Q. 51, 53 (1993) (observing that “about two-thirds of the acts of incorporation” enacted in Massachusetts “in the first decade under the state constitution of 1780, and nearly half of those enacted in the 1790s, made ‘bodies politic’ of towns, districts, or other units of local government”); see also id. at 79 (“ ‘A corporation,’ according to the definition in Francis Lieber’s Encyclopaedia Americana (1830), ‘is a political or civil institution . . . conducted according to the laws of its constitution.’ ”). However, in the eighteenth and early nineteenth centuries, at a time when American corporations were mostly formed through special legislative acts, it was common for legislatures to approve charters that authorized shareholders to vote without attending a shareholders’ meeting by delegating their votes to a person who did attend the meeting.14For an example of an eighteenth-century legislative charter granting shareholders the right to vote by proxy, see Act of Mar. 16, 1790, ch. 26, 1790 N.Y. Laws 148, 150 (incorporating the stockholders of the New York Manufacturing Society and authorizing stockholders to “give their respective votes, either by themselves, or their agents thereunto specially appointed”). For an example of a nineteenth-century legislative charter that did not give shareholders a right to vote by proxy, see Act of Dec. 31, 1824, 1824 N.J. Laws 158 (incorporating the Morris Canal and Banking Company). This was called voting by proxy, or by attorney. One study of New York corporate charters secured between 1790 and 1825 found that 82% of corporations entitled shareholders to vote by proxy; every bank charter provided this right, while only 21% of the charters for bridge corporations did.15Eric Hilt, When Did Ownership Separate from Control? Corporate Governance in the Early Nineteenth Century, 68 J. Econ. Hist. 645, 658 tbl.1 (2008) [hereinafter Hilt, Ownership/Control]. This study included 153 manufacturing corporations chartered under New York’s 1811 general incorporation law for manufacturing firms, which entitled shareholders to vote by proxy.

Over the nineteenth century, the laws and practices that regulated proxy voting became complex, evolving in ways that shaped the balance of power within corporations. These laws and practices comprised what came to be known as the “proxy system,” establishing the contours of corporate control. Today, the proxy system remains the main instrument—the beating heart—of corporate power. Since the New Deal, for publicly traded companies, it has also been the crux of federal regulation of corporate governance.

During the first half of the nineteenth century, courts of virtually all states agreed that, in the absence of a statute or provision in the legislative charter conferring a right to vote by proxy, shareholders could vote only in person at a shareholders’ meeting.16See, e.g., Philips v. Wickham, 1 Paige Chan. 590 (N.Y. Ch. 1829). Only one state’s courts took a different view. In 1812, the Hartford Bridge Company created a bylaw that let its shareholders vote by proxy, even though proxy voting was not specifically allowed under the company’s charter nor state law. After a contested election led to a challenge to the bylaw, a Connecticut judge upheld it even in the absence of clear legal authority. To do this, the judge drew a conceptual line between voting among shareholders of “monied institutions”—that is, commercial corporations like the bridge company—and voting at other types of institutions, such as non-profit and municipal corporations. State ex rel. Kilbourn v. Tudor, 5 Day 329, 333 (Conn. 1812). The idea was that voting in profit-seeking corporations could be accomplished through delegation, while political voting could not—a framework that endures to this day. This nearly unanimous approach by the states reflected a preference for shareholder governance that encouraged a democratic-style exchange of ideas among decision makers. In 1834, New Jersey’s Supreme Court put it this way:

It may be for the personal convenience of members, but it cannot be for the good of the corporation, that its business or election should be conducted by proxies. The interest of the company, the good of the public, would be better promoted and more effectually secured by the personal attendance of, and mutual interchange of opinions among the members, than by the action of proxies.17Taylor v. Griswold, 14 N.J.L. 222, 229 (1834). New Jersey courts held virtually the same view at the century’s end. See, e.g., Cone’s Ex’rs v. Russell, 21 A. 847, 849 (N.J. Ch. 1891) (observing that the “duty of corporators to attend [shareholder meetings] in person, and execute the trust or franchise reposed in or granted to them” was “implied in and forms a part of the fundamental constitution of every charter in which the contrary is not expressed”).

In 1856, Pennsylvania’s Supreme Court wrote that, since corporate shareholders were “embarked in a common enterprise,” it was reasonable to require that director elections “take place under circumstances favorable to a consultation with each other, so that [shareholders] might have the benefit of each other’s views and information relative to their common interest.”18Brown v. Commonwealth, 3 Grant 209, 209 (Pa. 1856). This was similar to arguments articulated by corporate experts in other states. For example, New York lawyer Simon Sterne critiqued proxy voting for eliminating “[t]he change of opinion which may be brought about by debate” in shareholder meetings. 4 Proceedings of the Special Committee on Railroads, Appointed Under a Resolution of the Assembly to Investigate Alleged Abuses in the Management of Railroads Chartered by the State of New York 4013 (1879) (summing up on behalf of Chamber of Commerce and Board of Trade and Transportation by Simon Sterne) [hereinafter Proceedings of the Special Committee on Railroads].

A. Proxy Solicitation

Early lawmakers probably imagined that shareholders would vote by proxy only when necessary, using care in the selection of a person to exercise their delegated votes. In reality, proxy voting became the dominant mode of corporate voting (and remains so today), and the proxy system produced an elaborate machinery for the solicitation of proxies.19See Eisenberg, supra note 7, at 1491 (“[P]roxy solicitation . . . [is] the process of systematically contacting shareholders and urging them to execute and return proxy cards which authorize named proxies to cast the shareholder’s votes, either in a manner designated in the proxy card or according to the proxies’ discretion.”). Parties soliciting proxies reached out and asked shareholders for their delegated votes—and shareholders handed them over. This led to the development of strategies to cajole proxies from shareholders, ranging from the use of postage-paid mailers, to private investigators, to, eventually, the rise of professional proxy solicitors.20See id. (describing how proxy solicitation involved “widespread mailing of written materials to shareholders, and follow-up letters and phone calls to those who do not respond,” with professional proxy solicitors “hired to do the follow-up, adding significantly to total expense”). Though aggressive solicitation tactics were reported throughout the nineteenth century, the modern proxy solicitation firm did not emerge until the 1940s, after proxy solicitation had become a focus of federal securities regulation. See Georgeson & Co., Report to Our Clients 1970 (1971) (noting the creation of the firm in 1948).

Two things are noteworthy about the emergence of this solicitation regime. First, actors seeking proxies quickly learned to use lies and misrepresentations to get them. This led to the enactment of laws regulating speech about corporate elections. In the early twentieth century, state lawmakers began enacting statutes that prohibited false or misleading statements in connection with a request for a shareholder’s proxy. This marked a serious point of divergence between political governance and corporate governance in American law. To this day, American law strongly protects false and misleading speech intended to influence political elections,21See U.S. v. Alvarez, 567 U.S. 709 (2012). yet condemns false and misleading speech designed to influence corporate elections.22See 17 C.F.R. § 240.14a-9 (2021). During the New Deal of the 1930s, proxy solicitation provided the “hook” for a significant regime of federal speech regulation related to corporate elections, administered by the SEC.

Second, early practices allowed a party soliciting proxies to create the form of proxy (or “proxy card”) used by the shareholder to sign away her vote. Forms sometimes did not specify how a proxy vote would be cast; eventually, a practice developed in which the proxy card listed only the soliciting-proxyholder’s preferred candidates, omitting the names of any other candidates running for election to the board. Shareholders signed the form weeks or even months in advance and may not have known that other candidates were running. They were, in effect, giving up any right to choose among candidates in a contested election. This practice, which was extremely effective at suppressing votes for dissident candidates, became hard-baked into corporate practice and only ceased in late 2022, when a new securities regulation went into effect. Under new SEC rules, parties soliciting proxies (typically the corporation itself) must use a “universal proxy” that lists all candidates for election, giving shareholders a choice—and a proxy form that looks, for the first time, like an electoral ballot. The effect of this change is difficult to predict, but it is already upsetting the balance of power inside firms, as shareholders voting by proxy exercise real choice for the first time.23Shaun J. Mathew & Daniel Wolf, Shareholder Activism: Lessons from the First Season of Universal Proxy, Harv. L. Sch. Forum on Corp. Gov., July 11, 2023, at https://
corpgov.law.harvard.edu/2023/07/11/shareholder-activism-lessons-from-the-first-season-of-universal-proxy/ [https://perma.cc/RL7U-WZFD] (finding that the number of proxy fights remained the same, but that at least one activist board candidate was elected in 67% of proxy fights, up from 40% the year before).

B. Benefits of Proxy Voting

Proxy voting was a major convenience for shareholders at a time when transportation and communication technologies were rudimentary. For many shareholders, especially those of modest means, travel to a shareholders’ meeting was too costly and time-consuming to make the trip worthwhile.24See, e.g., Eisenberg, supra note 7, at 1490–91 (“Physical attendance at a shareholders’ meeting is normally an uneconomical use of a shareholder’s time when he can vote by proxy.”); Debate on the Bank Bill, Raleigh Reg., Jan. 3, 1811, at 1 (“It is objected that it will be extremely inconvenient for stockholders [of a proposed state bank] to attend at Raleigh, to vote for Directors; but the bill provides for voting by proxy . . . .”). As the nineteenth century unfolded, large, capital-intensive businesses were increasingly financed by far-flung investors. This was especially true of banks in the early decades of the century. By the 1880s, a significant proportion of railroad stocks, sometimes a majority of a corporation’s stock, was held in Europe.25See, e.g., Dorothy R. Adler, British Investment in American Railways 1834–1898, at 174 n.19 (1970) (noting, for example, that by 1883, more than half of the stock of the Denver & Rio Grande Railroad was held in Europe); Women Own Stock, Fort Wayne News, Mar. 23, 1903, at 5 (noting that fifty-two percent of the stock of the Pennsylvania Railroad was owned overseas in 1890). The value of proxy voting to foreign investors increased the pressure for legislatures to liberalize proxy voting rights.

Proxy voting could also prevent small shareholders from being disenfranchised altogether by common, practical challenges, such as work responsibilities and even gender-based obligations. Some early corporate laws specified that only women could vote by proxy, for example, recognizing contemporaneous social practices that kept women home-bound.26Around the middle of the nineteenth century, legislative acts in several states distinguished between male and female shareholders with regard to proxy voting. See, e.g., Act of Apr. 7, 1849, No. 368, § 4, 1849 Pa. Laws 563, 564 (“[N]o stockholder, females excepted, residing within ten miles of the place appointed for such general meeting or election, shall vote by proxy . . . .”). A published transcript of a debate on the floor of Pennsylvania’s House of Representatives in 1842 included a discussion of whether women’s right to vote by proxy should be cut off by a proposed bill. See House of Representatives, Monday, Feb. 7, 1842, Keystone (Harrisburg, Pa.), Feb. 9, 1842, at 2. The debate recognized not only that women had a special need to vote by proxy but also that women were already voting by proxy, and, thus, a change to the law would uniquely impact women shareholders. See also, e.g., Act of Jun. 27, 1857, ch. 1951, 1857 N.H. Laws (relating to voting by proxy). In another example, a special legislative charter enacted by New Jersey’s General Assembly in 1860 allowed only “female stockholders” to vote by proxy. See Act of Mar. 21, 1860, ch. 185, § 2, 1860 N.J. Laws 470 (incorporating the Gloucester County Glass Manufacturing Company). New Hampshire enacted a law in 1856 prohibiting railroad proxyholders from exercising more than fifty proxy votes—and then, the following year, amended it to restore the right of proxy voting to “female stockholders.”27See Act of July 12, 1856, ch. 1839, § 1, 1856 N.H. Laws 1748 (limiting the right of voting by proxy in railroad corporations) (“No person shall, at any meeting of the stockholders of any railroad corporation in this State, vote by proxy on more than fifty shares . . . nor on a greater number of shares by proxy, than will be sufficient together with shares owned and voted on by himself at said meeting, to make up the number of shares as aforesaid; nor shall any stockholder authorize more than one person to vote on his shares by proxy at the same meeting . . . .”); Act of June 27, 1857, ch. 1951, § 1, 1857 N.H. Laws (explaining that proxy voting prohibition “shall not affect the right of female stockholders to vote at such meeting in the way and manner provided by existing laws”). Laws allowing women, but not men, to vote by proxy revealed a desire by legislatures to protect the franchise of small and vulnerable shareholders.

As this suggests, not all shareholders could vote by proxy; some states employed categorical prohibitions that limited the privilege of proxy voting to a select few. For example, in the early 1800s, it was common for proxy voting to be limited to U.S. residents or state residents only.28In New Jersey, some special legislative charters enacted in the early nineteenth century specifically disenfranchised shareholders who resided outside the state; an 1849 statute re-enfranchised them all. See Act of Mar. 2, 1849, 1849 N.J. Laws 310 (supplementing the Act entitled, “An Act Concerning Corporations”) (“[S]o much and such parts of the several acts of incorporation in this state, as prohibits stockholders residing out of the state, from voting on stock held by them, be, and the same are hereby repealed.”). In addition, the fiduciary law of many states did not allow guardians, trustees, or executors to delegate votes.29See, e.g., Lyle A. Anderson, Corporate Proxies 4 (Apr. 15, 1961) (M.S. thesis, Butler University) (on file with Butler University Libraries) (surveying the law and finding that fiduciaries could vote by proxy in only 28 states in 1961). In these states—under laws that continued well into the twentieth century—fiduciaries could vote in person only, which probably meant that much stock held in the name of fiduciaries was not voted at all. In addition, some states restricted the class of people who could vote as proxyholders to those owning their own stock in the company,30See, e.g., Matter of Lighthall Mfg. Co., 47 Hun. 258 (N.Y. 1st Dep’t 1888) (invalidating a bylaw requiring a proxyholder to be a shareholder). while other states prohibited shareholders from exercising others’ proxy votes.31See Dividend-Paying Corporations, ch. 149, § 22, 1891 N.H. Laws 411, 414 (“Except in railroad corporations [for which there were different, more restrictive rules], any person not a stockholder . . . may vote as proxy in the right of such stockholder; but no stockholder shall act as proxy for any other stockholder, nor shall any person act as proxy for more than one stockholder, or vote as proxy for shares exceeding one eighth of the whole capital stock.”).

As the geography of corporate finance expanded, as shareholding atomized (dividing into small stakes), and as women and workers joined the ranks of shareholders, shareholder attendance at meetings fell. This created a risk that too few shares (or shareholders) would be present at shareholder meetings to satisfy quorum rules, preventing the annual election of directors, which was required under most states’ laws.32The concern about proxy voting and quorum requirements persisted into the twenty-first century. See, e.g., Report and Recommendations of the Proxy Working Group to the New York Stock Exchange 4 (2006) (concluding that New York Stock Exchange (“NYSE”) Rule 452, regarding broker voting of uninstructed customer stock, “continues to have an important role in the proxy process today, particularly with respect to allowing issuers to achieve a quorum for regular meetings”). Thus, proxy voting was sometimes presented as essential to basic corporate governance and to the ordinary operation of firms.

In addition to offering convenience in a nationalizing (and globalizing) economy, proxy voting held unique potential as a mechanism for shareholder collective action. At least in theory, proxy voting could have allowed shareholders to act together by giving their proxies to the same person or group, who could vote them all for the same purpose. In practice, however, the collective action benefits for small shareholders never materialized. Instead, a different group of actors learned to use proxy voting to their advantage.

C. Proxy Abuse

Despite its promise for shareholder empowerment, proxy voting swiftly became known as a mechanism for abuse. Over the first half of the nineteenth century, business leaders, especially corporate officers, learned to harvest proxy votes from absent shareholders and vote them to control the outcome of elections for their own, personal benefit.33One writer described this practice as a “growing evil” in 1856:

It has been the practice, lately, of some of those interested in carrying any measure in a corporation, to send their agents to the different stockholders to obtain their proxies, so that a contest regarding the policy or propriety of a proposed measure, was not as to what was right or politic, but as to who shall succeed in obtaining the most proxies.

Recent Legislation—New Hampshire, 9 Monthly L. Rep. 326, 328 (1856). The tactics used to solicit, aggregate, and exercise proxy votes in annual corporate elections grew increasingly sophisticated over the nineteenth century. Proxy abuse sparked public outrage but proved challenging for legislatures to discourage through statutory law.

Because shareholders had few informational rights under nineteenth-century corporate law, attendance at the shareholders’ meeting was the main way for shareholders to obtain basic information about the corporation’s financial condition.34Eric Hilt’s study of New York corporations chartered from 1790 to 1825 found that only fourteen percent required annual financial statements. See Hilt, Ownership/Control, supra note 15, at 651, 659 (noting that New York manufacturing firms “only rarely required annual financial statements”). If managers did not provide sufficient information at the meeting, shareholders who were present could ask questions and raise matters for discussion. Of course, shareholders who did not attend the meeting, but instead voted by proxy, could not obtain information about the corporation through this traditional manner. Though proxy voting became increasingly popular over the nineteenth century, laws requiring the provision of information to absent shareholders lagged.35See id. at 660 (noting that in early-nineteenth-century New York “the rapid proliferation and increasing sophistication of corporations outpaced the efforts of the legislature and the courts to protect the interests of investors”). As a result, during the early decades of the nineteenth century, shareholders who delegated their votes to proxyholders risked being left completely in the dark about the corporation’s operations and prospects.

In 1850, a New York banker described how a corporation’s “reigning directors” could collaborate “to perpetuate their own control.”36A.B. Johnson, Advantages and Disadvantages of Private Corporations, 23 Hunt’s Merchants’ Mag. 626, 630 (1850). “[S]ome leader among them,” the “emperium in emperio,” would “carefully gather[] up proxies, under the facility of knowing the residence of every stockholder, and being officially in correspondence with him.”37Id. The banker was pointing out the serious advantages that corporate managers had over ordinary shareholders when it came to proxy solicitation.38See Stockholder, The Use of Proxies in the Election of Railroad Directors—Reply to Hon. E. Corning, N.Y. Times, Feb. 23, 1858, at 8 (writing that “the command of a stock list, of an abundance of postage stamps, and of a press to strike off circulars, may be the most efficient means of perpetuating power in the hands that already hold it”). A corporation’s managers had access to the transfer book and the stockholder list and could impede the access of others. They knew who owned how many shares of stock and where the shareholders lived. And because of the nature of the relationship between shareholder and corporation, the management had regular communication with all its shareholders, financed by the corporation itself.

Corporate managers were prominent members of the community, and this gave them an edge in soliciting proxies. “[T]he respectability of the directors and their officers gives them an influence,” one writer asserted, “[and] their particular stations give them opportunities to procure as often as transfers are made at the bank, proxies from the new stockholders to vote in their names at elections.”39For the New-York Daily Advertiser, N.Y. Daily Advertiser, Oct. 30, 1819, at 2. The writer went on,

You my friend know something of human nature, and can judge whether a request for this purpose coming from such a quarter, made with gentleness and affability, but with an apparent expectation that as a matter of course it will be granted.—You can judge whether it is likely in many instances to be refused.40Id.

In other words, managers were tempted to exploit their position to obtain proxies, which the author suggested was “an inconvenience inseperable [sic] from the system of voting by proxy.”41Id.

Evidence suggests that some officers and directors used dishonest tactics to obtain proxies. A Massachusetts author described in his 1863 book, Some of the Usages and Abuses in the Management of Our Manufacturing Corporations, “tricks, subterfuges, and expedients” used by corporate managers to exploit the proxy system.42J.C. Ayer, Some of the Usages and Abuses in the Management of our Manufacturing Corporations 15 (Lowell, Mass., C. M. Langley & Co. 1863). One practice, he alleged, was for the corporate treasurer’s office to require shareholders to sign their name twice to receive a dividend payment: “one book or paper, which is a receipt, and another, which is a proxy.”43Id. at 4. As he explained, the stockholders often did not understand that they had signed away their votes:

By this process a majority of the proxies of any corporation is easily taken, and kept in possession of the officers to be used by them, or their partizans [sic], at the annual meeting, for their own purposes; which, of course, gives them entire control of the franchise of the Corporation.44Id.

Widely held, dispersed stock made a corporation vulnerable to proxy abuse. Corporations with atomized shareholdings were likely to have many small shareholders who failed to vote at all. When many shareholders abstained from voting, the number of proxy votes needed to win an election fell, making it easier to seize control by proxy. If shares were held by speculators, those holders probably had little interest in voting in corporate elections and may have been open to selling their proxies.45See infra notes 95–98 and accompanying text. Overseas investors often held stock through brokers, who were known to sell proxies. Over time, many kinds of investors—rural, working-class, and overseas investors—probably became habituated to proxy voting, easily signing away their delegated votes.

D. Statutory Limits on Proxy Voting

The earliest restrictions on proxy voting were enacted for banking corporations, which were the most widely held corporations in the early nineteenth century.46See John Majewski, Toward a Social History of the Corporation: Shareholding in Pennsylvania, 1800–1840, in The Economy of Early America: Historical Perspectives & New Directions 294, 302 (Cathy Matson ed., 2006) (finding that “more than twenty thousand individuals purchased shares in Pennsylvania banks” in 1814 and that ten banks chartered in Pennsylvania in 1814 had more than one thousand shareholders). Pennsylvania’s legislature passed its first law placing limits on proxy voting at banks in 181247Act of Feb. 3, 1812, ch. 26, § 1, 1812 Pa. Laws 35 (regulating voting by proxy in several incorporated banks). and enacted a law with more extensive limits on proxy voting, at a broader range of corporations, in 1820.48Act of Mar. 28, 1820, ch. 113, § 2, 1820 Pa. Laws 169, 170 (creating new requirements including, inter alia, a six-month limit on proxies, a prohibition against blank proxies, and a requirement that proxy holders voting in elections of officers swear an oath, subject to punishment for “willful and corrupt perjury”). Special legislative charters for Ohio banks included provisions prohibiting proxy voting by salaried officers as early as 1813.49See, e.g., Act of Feb. 5, 1813, ch. 33, § 5, 1812 Ohio Laws 79, 81 (“[N]o officer of the bank, receiving a salary, shall be permitted to vote as a proxy for any stockholder.”). Ohio was broadly prohibiting proxy voting by salaried bank officers by 1816.50See Act of Feb. 23, 1816, ch. 361, § 20, 1816 Ohio Laws, reprinted in 2 The Statutes of Ohio and of the Northwestern Territory, Adopted or Enacted from 1788 to 1833 Inclusive 913–24 (Salmon P. Chase ed., Corey & Fairbank 1834). In March 1837, the legislatures of both Virginia and Massachusetts discussed limits on proxy voting at bank corporations;51Massachusetts Legislature, Bos. Courier, Mar. 4, 1837, at 3 (reporting that a Massachusetts state senator had moved for an inquiry into “the expediency of providing by law, that no stockholder in any corporation shall be allowed to vote for himself as a Director, or to carry more than—votes by proxy”). Virginia enacted a prohibition that year,52Act of Mar. 22, 1837, ch. 82, § 6, 1837 Va. Acts 57, 64 (“[N]o president, cashier, clerk or teller of said bank shall be permitted to vote at any election for directors, as the attorney, agent or proxy of any stockholder.”). and Massachusetts did so in 1840.53Act of Mar. 21, 1840, ch. 61, 1840 Mass. Acts 208 (prohibiting any shareholder of a bank from voting more than fifty votes by proxy, and limiting bank directors, cashiers, and officers to ten votes by proxy).

In an address in January 1840, Pennsylvania Governor David Rittenhouse Porter called on the state’s legislature to forbid proxy voting in banks altogether—or, if that was “going too far,” at least to prohibit shareholders from giving proxies to a bank’s own officers, directors, or agents.54Message from Governor Porter to Both Houses of the Legislature of Pennsylvania (Jan. 15, 1840), in 2 Hazard’s United States Commercial and Statistical Register 33, 40 (Hazard ed., 1840). John Majewski found that, in Pennsylvania, “significantly fewer individuals owned [bank] stock in 1840 than in 1815” and attributed this to the legislature’s discouragement of bank investment. Majewski, supra note 46, at 305. Something similar appears to have been going on in Massachusetts. That year, Massachusetts’s legislature enacted “An Act regulating the use of Proxies at the meeting of Stockholders of Banks.” Act of Mar. 21, 1840 ch. 61, 1840 Mass. Acts 208 (prohibiting any shareholder of a bank from voting more than fifty votes by proxy and limiting bank directors, cashiers, and officers to ten votes by proxy). Three years later, Massachusetts extended similar limits on proxy voting to railroad corporations. See Act of Mar. 24, 1843, ch. 68, § 3, 1843 Mass. Acts 32, 33 (limiting individual railroad shareholders to fifty votes by proxy, and railroad directors, treasurers, and other officers to twenty votes by proxy). In 1857, Massachusetts prohibited bank officers from soliciting any proxies at all—a move that suggested the 1840 act had not been effective at ending proxy abuses by bank management. See Act of May 28, 1857, ch. 243, § 1, 1857 Mass. Acts 595, 595. In 1871, Massachusetts passed further legislation to place limits on proxy voting at street railway corporations. See Act of May 26, 1871, ch. 381, § 5, 1871 Mass. Acts 730, 731 (limiting proxy voting to fifty votes per proxyholder). Proxy voting “prevents those who are interested in banks from investigating their management,” he said, presumably because managers would vote the proxies to defeat any investigation of their own actions.55Message from Governor Porter to Both Houses of the Legislature of Pennsylvania, supra note 54, at 40. When Pennsylvania’s House of Representatives debated a banking bill a few years later in 1842, its members argued over whether to eliminate proxy voting at banks only or also at insurance companies.56House of Representatives, Monday, Feb. 7, 1842, supra note 26. One legislator announced that proxy voting was “well known” to have given rise to “the grossest abuses,” and another claimed that it had “destroyed the banking system of the country.”57Id.

Pennsylvania’s legislature finally ended proxy voting in the state’s banks in April 1843.58Act of Apr. 8, 1843, No. 88, § 2, 1843 Pa. Laws 184, 184. Connecticut also prohibited proxy voting at banks from 1842 to 1844. See Act of June 9, 1842, ch. 3, § 4, 1842 Conn. Pub. Acts 8, 9; Act of June 6, 1844, ch. 4, 1844 Conn. Pub. Acts 6 (repealing the prohibition). Six years later, it issued special limits on proxy voting for manufacturing corporations, too, including a prohibition against any party voting the proxies of more than two absent shareholders.59Act of Apr. 7, 1849, No. 368, § 4, 1849 Pa. Laws 563, 564. The same statute limited large shareholders to no more than one-third of the votes, regardless of their shareholding or the size or capital structure of the firm.60Id. In other words, it limited the power of both corporate managers and wealthy block-holders, making small shareholders the beneficiaries of both changes.61Id. (“[E]ach stockholder shall be entitled to as many votes as he owns shares of stock in said company, but no person shall in any case be entitled to more than one-third of the whole number of votes to which the holders of all the shares in the capital stock of such company would be entitled . . . .”).

In New York, in December 1857, a controversy arose about managerial proxy abuse at the New York Central Railroad. Soon thereafter, Horatio J. Stow, a state senator, introduced a bill prohibiting officers of railroad corporations and banking corporations from exercising proxy votes.62Election of Moneyed Corporations, N.Y. Times, Feb. 5, 1858, at 5. Writing anonymously in the New York Times, one New York Central stockholder bemoaned how proxy voting had become “objectionable,” in spite of its convenience.63Stockholder, supra note 38. “[N]o Board of Directors should exist,” he wrote, “as that one man by proxies, or any other way, should make the Board in fact a board of mere subservients, without paying any decent regard to the feelings and votes of stockholders who are active enough to bestir themselves and offer their own votes personally.”64Id. Despite these concerns, Senator Stow’s bill did not become law, and the managers of New York railroads continued to harvest shareholders’ proxies.

In the 1860s, a shareholders’ meeting of the Albany & Susquehanna Railroad revealed the sort of extraordinary misconduct to which New York’s proxy system was vulnerable. Seeking to control the outcome of the meeting, a shareholder hired a group of New Yorkers to vote as proxies—“a rough, low class of men, such as in common parlance would doubtless be classed among the roughs and fighting men of that city.”65People v. Albany & Susquehanna R.R. Co., 1 Lans. 308, 339 (N.Y. Sup. Ct. 1869). The mastermind of the scheme paid the men to travel by train to Albany, fed them, distributed proxies among them, and brought them to the small meeting room, which they filled to capacity. Other shareholders were either excluded for lack of space or intimidated into silence. A judge concluded that these practices were “a gross perversion and abuse of the right to vote by proxy, and a clear infringement of the rights of the bona fide stockholders of the company.”66Id. at 341.

In 1864, a group associated with the struggling Chicago & Northwestern Railroad Company harvested proxies for the profitable Galena & Chicago Union Railroad Company—in part by buying proxies from New York “money brokers”67See, e.g., Great Suit in the U.S. District Court, Chi. Trib., Jan. 16, 1865, at 2.—and orchestrated the consolidation of the two railroad corporations, essentially bootstrapping a failing company to a successful one. In litigation that followed, Galena shareholders described an elaborate proxy scheme that took advantage of the fact that few Galena shareholders typically attended shareholders’ meetings.68See, e.g., id. At the June 1864 meeting in which control of the Galena had been seized via proxy, only about 900 of the corporation’s 60,284 outstanding shares were represented in person.69See WM. H. Brown, Orrington Lunt, B.W. Raymond, S.B. Cobb, John H. Foster, Nathaniel Norton, Samuel McKay, WM. H. Gillman & WM. M. Larrabee, To the Stockholders of the Galena and Chicago Union R. R. Co., Chi. Trib., Jan. 30, 1865, at 1 (detailing the proxy plot); Elliott Anthony, A Treatise on the Law of Consolidation of Railroad Companies 191–92 (Chicago, Beach & Barnard 1865) (same). Shareholders alleged that proxies had been obtained dishonestly.70See id. Instead of invalidating the consolidation, a federal judge ordered the Chicago & Northwestern to pay complaining Galena shareholders more for their stock.71See Chicago and Northwestern Railway, Chi. Trib., Oct. 23, 1866, at 1. However, the high-profile case may have set the stage for Illinois to become,72In press coverage, the Chicago Tribune called it “The Great Railroad Case”; the presiding judge was U.S. Supreme Court Justice David Davis. See The Great Railroad Case, Chi. Trib., Aug. 9, 1865, at 2; Anthony, supra note 69. just a few years later, the first state in the U.S. to adopt corporate cumulative voting to protect the rights of minority stockholders.73See infra Part III.

Massachusetts was among the first states to limit the exercise of proxy votes by railroad officers, in 1843.74See Act of Mar. 24, 1843, ch. 68, § 3, 1843 Mass. Acts 32, 33 (limiting ordinary shareholders from voting more than fifty shares as a proxy). The 1843 prohibitions were extended in an 1858 statute. Act of Mar. 24, 1858, ch. 76, § 2, 1858 Mass. Acts 58, 58. Its legislature limited railroad directors, treasurers, and other officers to twenty votes when acting as a proxy.75Act of Mar. 24, 1843, ch. 68, § 3, 1843 Mass. Acts 32, 33; Act of Mar. 24, 1858, ch. 76, § 2, 1858 Mass. Acts 58, 58. Connecticut also prohibited officers of railroad corporations from voting “upon any other stock than his own,” or soliciting proxies, in an 1852 statute. See Act of June 29, 1852, ch. 62, § 2, 1852 Conn. Pub. Acts 74, 74. In 1865, Massachusetts expanded these prohibitions in substance and scope.76Act of May 13, 1865, ch. 236, § 1, 1865 Mass. Acts 624, 624 (distinguishing between “officers” (that is, directors) and “salaried officers”). The new law was not limited to railroads but applied broadly to “any corporation.” It authorized an officer or director to vote no more than twenty shares as a proxy, unless all the shares voted by proxy came from one person. It prohibited a salaried officer from voting as a proxy at all. And it specifically prohibited officers and directors from “ask[ing] for, receiv[ing], procur[ing] to be obtained or us[ing] any proxy vote in the corporation” beyond those limits.77Id. An officer or director who violated the act could be fined up to $500, removed from corporate office, and “forever” disqualified from holding any office in that corporation again.78Id. § 2. In the decades that followed, Massachusetts’s legislature affirmed these prohibitions in various acts relating to cemetery corporations,79See Act of Mar. 26, 1866, ch. 104, 1866 Mass. Acts 68. manufacturing corporations,80See Act of May 9, 1870, ch. 224, § 19, 1870 Mass. Acts 154, 159–60. street railway corporations,81See Act of May 26, 1871, ch. 381, § 4, 1871 Mass. Acts 730–31 (adding a limit on proxy voting to fifty votes per proxyholder). and railroad corporations,82See Act of June 27, 1874, ch. 372, § 42, 1874 Mass. Acts 347, 361–62. Massachusetts’s proxy voting prohibitions also survived a substantial reorganization of the state’s statutes in 1882. See, e.g., Mass. Gen. Laws ch. 105, § 14 (1882) (relating to railroad corporations). and, in 1870, capped proxy votes exercised by persons other than officers and directors at fifty votes.83See Act of May 9, 1870, ch. 224, § 19, 1870 Mass. Acts 154, 159–60 (adding that “no person shall, as proxy or attorney, cast more than fifty votes, unless all the shares so represented by him are owned by one person”).

However, a reversal was on the horizon. In early 1888, the president of the Fitchburg Railroad Company, Elijah Brigham Phillips, was caught in an elaborate, illegal scheme to solicit proxies from shareholders and distribute them to paid agents, including fifty “tramps” recruited from a Boston charity, who voted as proxyholders to ensure Phillips’s reelection to the board.84This account of Phillips’s proxy scheme and subsequent trial come from the Boston Globe, which followed the saga closely. See A Pooh-Bah Trio, Bost. Globe, Oct. 6, 1888, at 1; Phillips Proxies: Judge Holmes Finds Against Him on the Facts, Bost. Globe, Oct. 18, 1888, at 2; King Phillips and His Dissatisfied Subjects, Bost. Globe, Jan. 29, 1889, at 1. As controversy swirled about Phillips’s upcoming trial, the Massachusetts legislature repealed the fifty-vote cap on proxy votes exercisable by independent proxyholders, signaling their willingness to remake this area of law.85Act of Apr. 3, 1888, ch. 188, § 1, 1888 Mass. Acts 152, 152. 

There was little question that Phillips was guilty: at trial, numerous witnesses testified to the secret proxy plot. However, Phillips offered a bold defense. Instead of denying the proxy plot, his lawyers admitted it—and argued that it was “a common practice” among railroads.86A Pooh-Bah Trio, supra note 84. Phillips was found guilty of illegally soliciting proxies and faced possible removal from the Fitchburg’s presidency. Instead, the judge deferred his sentence and, in the spring of 1889, the Massachusetts legislature repealed the law that he had been convicted of violating.87See Act of Apr. 5, 1889, ch. 222, § 1, 1889 Mass. Acts 932, 932. After the repeal, the judge dismissed the petition against Phillips, and he suffered no consequences.88In fact, in the months between his conviction and the law’s repeal, Phillips had been reelected to Fitchburg’s board yet again—at a shareholders’ meeting that he did not even attend. King Phillips and His Dissatisfied Subjects, supra note 84. The Fitchburg story highlights the significant political power wielded by the state’s large railroad corporations, which they used to legalize voting practices that, just a few decades earlier, had been considered serious infringements on corporate governance.

Pennsylvania’s 1820 law required a person voting another shareholder’s proxy to swear an oath, under penalty of perjury, confirming that he or she had complied with all applicable proxy rules. This created the possibility of criminal liability for proxy violations at private companies, a trend that took hold in other states.89New Hampshire’s 1891 corporate law, for example, allowed a person who “directly or indirectly solicit[s] a proxy for any other person to vote upon” to be sentenced to “imprisonment not exceeding one year, or by [a] fine not exceeding five hundred dollars, or both.” Dividend-Paying Corporations, ch.149, § 26, 1891 N.H. Laws 411, 414. Over the years, several states would authorize criminal punishments for proxy voting violations, even including imprisonment. New York authorized imprisonment for violations of its proxy law for railroad corporations in an 1880 statute; proxyholders could be prosecuted for perjury for giving false oaths, and substantive violations of the proxy law were misdemeanors.90See Act of May 29, 1888, ch. 510, § 2, 1888 N.Y. Laws 720, 721 (specifying that stockholders or proxyholders convicted of violating the substantive provisions of the statute could be punished with imprisonment no longer than a year, a fine no more than $5,000, or both). New York extended the oath requirement to proxyholders in banks in an 1882 statute. See Act of July 1, 1882, ch. 409, § 204, 1882 N.Y. Laws 581, 659. New Hampshire’s 1891 general corporation law went further, authorizing imprisonment and fines, for, among other things, “fraudulently procur[ing] or receiv[ing] the transfer of a share for the purpose of voting thereon,” or “directly or indirectly solicit[ing] a proxy for any other person to vote upon.”91Dividend-Paying Corporations, ch.149, § 26, 1891 N.H. Laws 411, 414.

E. The Purchase and Sale of Proxies

In the Galena & Chicago Union proxy abuse scandal, described above, proxyholders were reported to have gained control of the railroad by purchasing proxies from New York brokers. This hinted at a wider set of practices that plagued the proxy system.

In the late nineteenth century, many American railroad corporations were financed overseas by investors from Europe.92As one example, fifty-two percent of the stock of the Pennsylvania Railroad was reportedly owned overseas in 1890. See Women Own Stock, supra note 25. The logistics of overseas finance encouraged brokers to keep stock registered in the brokers’ own names. For example, when a Wall Street broker purchased stock in an American corporation for sale in Europe, the broker would have the stock transferred into its own name, in case the stock certificates were lost “by an accident to the steamer, miscarriage or robbery of the mails.”93Proceedings of the Special Committee on Railroads, supra note 18, at 4015–16. It was simply easier to have the certificates re-issued if they were registered in the broker’s own name. In addition, because of the snail’s pace of international travel, changes in overseas stock ownership could take “intervals of several months” before stock lists would accurately record the owner of the shares, which presented problems if the new stockholders wanted to vote or receive their dividends.94Id. at 4015. A broker could collect the dividend and credit it to the client’s account.

All of this tended to encourage practices in which Wall Street brokers held large amounts of clients’ stock in their own name, giving them voting rights in corporations in which they lacked a financial interest. Brokers quickly learned they could monetize this practice by selling proxies for their clients’ stock. In 1878, New York’s Hepburn Committee, formed to investigate abuses by the management of railroad companies, uncovered evidence of proxy abuse, including the purchase and sale of proxies.95Id. (describing Wall Street brokers “hawk[ing] around the proxies on shares which may thus happen to stand in their names, for the profit they can make on them”). A corporate lawyer testified under oath that he had personally purchased proxies from brokers for an election of the Cleveland, Columbus, Cincinnati & Indianapolis Railroad Company.96Id. at 3568 (testimony of Samuel L. M. Barlow, director of the Erie Railroad from 1872–1877) (Nov. 26, 1879). The practice was not illegal at the time, though the president of the Erie Railroad testified that he found the sale of proxies “extremely objectionable.”972 Proceedings of the Special Committee on Railroads, supra note 18, at 1447 (testimony of Hugh J. Jewett, president of the Erie Railroad). New York’s legislature prohibited the sale of proxies in railroad corporations two years later, in 1880, and, in 1890, at all corporations.98See Act of May 29, 1880, ch. 510, § 2, 1880 N.Y. Laws 720, 721 (“No person having the right to vote upon stock or bonds shall sell his vote or issue a proxy to vote upon such stock or bonds to any person for any sum of money, or any thing of value whatever.”); Act of Jun. 7, 1890, ch. 564, § 54, 1880 N.Y. Laws 1066, 1077 (“No stockholder shall sell his vote, or issue a proxy to vote, upon any stock or bonds to any person for any sum of money, or anything of value.”); see also Act of May 18, 1892, ch. 687, § 20, 1892 N.Y. Laws 1800, 1808 (“No member of a corporation shall sell his vote or issue a proxy to vote to any person for any sum of money or anything of value.”). New York’s prohibition against selling proxies endures to this day, with some limitations. See N.Y. Bus. Corp. Law § 609(e) (McKinney 2022).

Even where brokers were not selling proxies, they were voting their clients’ stock. A banker for Kuhn, Loeb & Company, admitted to the Hepburn Committee that his brokerage house had voted 56,000 shares of its clients’ stock, which stood in the firm’s name, in the 1877 directors’ election of the Erie Railroad.993 Proceedings of the Special Committee on Railroads, supra note 18, at 2520–21 (testimony of Abraham Wolff, of Kuhn, Loeb & Company); Railroad Rebates, N.Y. Daily Herald, Oct. 12, 1879, at 6. The 1880 railroad proxy law included language designed to outlaw this practice as well, but the practice endured.100See Act of May 29, 1880, ch. 510, § 2, 1880 N.Y. Laws 720, 721 (requiring proxyholders to give an oath, if requested, that “I have not, either directly or indirectly or impliedly, given any promise or any sum of money, or any thing of value whatever to induce the giving of authority to vote upon such stock . . . to me”). The New York Stock Exchange (“NYSE”) finally stepped in in 1937—nearly sixty years later—to regulate brokers’ voting of client stock, enacting the “ten-day rule.”101Jill E. Fisch, Standing Voting Instructions: Empowering the Excluded Retail Investor, 102 Minn. L. Rev. 11, 26 (2017).

Another way that proxies were monetized was through the “hypothecation” of stock. The president of the Erie Railroad told the Hepburn Committee that it had become common for stock held as collateral to be “transferred upon the books [of the corporation] into the name of the party holding it as security,” giving the creditor the right to vote the stock; the creditor would then sell a proxy for the stock for “a payment of $2 a share, or $1 a share, or $5 a share, according to the emergency of the case.”1022 Proceedings of the Special Committee on Railroads, supra note 18, at 1447 (testimony of Hugh J. Jewett, president of the Erie Railroad). The shares would be transferred back into the name of the debtor once the debt was paid, per the agreement formed between creditor and debtor. The Erie’s president objected to this transfer of voting control, telling the committee that the practice “ought in some way to be regulated and controlled.”103Id. Here, again, it appears that New York legislators struggled to draft statutory language that could effectively regulate the practice.

F. Proxy Voting as a Shareholder Right

In the last three decades of the century, nearly every state made delegated voting a right of shareholding. Massachusetts was among the states that did so, in an 1870 law (for manufacturing corporations).104See Act of May 9, 1870, ch. 224, § 19, 1870 Mass. Acts 154, 159–60. However, by then it had already placed significant limitations on proxy voting, including a prohibition against proxy solicitation by corporate officers.105Act of May 13. 1865, ch. 236, § 1, 1865 Mass. Acts 624, 624. Massachusetts’s 1870 law left the gist of these proxy restrictions in place.106See  Act of May 9, 1870, ch. 224, § 19, 1870 Mass. Acts 154, 159–60. Five years later, in 1875, New Jersey’s legislature used nearly identical language in its own law to entitle stockholders to vote by proxy but omitted the limitations on proxy voting that Massachusetts had embraced.107N.J. Rev. Stat. § 21 (1875). In 1883, when Delaware substantially revised its corporate law, it adopted the language from the New Jersey statute nearly word-for-word, creating an entitlement to proxy voting with no limitations.108Act of Mar. 14, 1883, ch. 147, § 18, 1883 Del. Laws 570, 576. Thus, by the time of the 1888 Fitchburg Railroad Company election, Massachusetts’s continuing restrictions on proxy voting made it an outlier among Eastern states. This may help explain why Phillips defended himself by claiming that allrailroad managers used the proxy system to control electoral outcomes—and why Massachusetts’s legislature changed its laws when they were challenged.

By 1900, only one or two states still had laws in force that restricted who could vote by proxy, and who could exercise proxy votes. Indeed, the story of how the prosecution of the president of the Fitchburg Railroad for illegally soliciting proxies resulted in the repeal of all of Massachusetts’s proxy-voting restrictions, despite the president’s admitted guilt and the railroad’s poor financial condition, evidences the significant power that corporate managers wielded at the end of the century to end proxy voting restrictions. The widespread (and permanent) elimination of proxy voting restrictions at the end of the century made possible a growing “separation of ownership and control,” as corporate managers became increasingly adept at harvesting and voting shareholders’ proxies.

Only a handful of U.S. states did not place meaningful restrictions on proxy voting at some point in the nineteenth century. Coincidentally, those same states—New Jersey, Delaware, and New York—would play key roles in the “race to the bottom” in the 1880s, 1890s, and early 1900s. Though the conventional story of the “race to the bottom” has ignored proxy voting restrictions, it hardly seems plausible that corporate promoters were not paying close attention to such laws when they sought jurisdictions in which to incorporate large, new companies that would be financed through the sale of stock to the public. What is likely, instead, is that promoters and managers did not publicize their interest in shopping for state laws that gave managers the greatest ability to solicit, aggregate, and vote holders’ proxies, because doing so might have revived public outrage about proxy abuse. Though financial writers continued to wring their hands about proxy abuse in the twentieth century, these concerns did not lead to legislative action until the New Deal.

* * *

By the end of the nineteenth century, proxy voting had become a right of shareholding in virtually every state; a corporation could set ground rules for proxy voting but could not prevent shareholders from delegating their votes. Not only had categorical exceptions been swept away, but courts in several states had started invalidating corporations’ proxy regulations on the ground that they “restricted [the shareholder’s] liberty of choice of the person authorized to vote under his proxy.”109Matter of Lighthall Mfg. Co., 47 Hun. 258, 262–63 (N.Y. 1st Dep’t 1888); People’s Home Sav. Bank v. Super. Ct., 38 P. 452, 453 (Cal. 1894). In 1888, a New York court threw out a manufacturing company’s bylaw on that basis; it had required a proxyholder to be a shareholder of the company.110Matter of Lighthall Mfg., 47 Hun. at 262–63. California’s highest court reached a similar decision in 1894 for a bank corporation, asserting that such a bylaw constrained a California stockholder’s “substantial right” to vote by proxy in corporate elections, which was guaranteed by state statutory law.111People’s Home Sav. Bank, 38 P. at 453 (“The substantial rights of a stockholder under the law cannot be taken from him, or even abridged by the by-laws. The right to vote by proxy is a most substantial right . . . .”). Though presented as a win for shareholders, of course, this new “liberty” was, in practice, an advantage for corporate managers. It foreclosed shareholders’ ability to contract for proxy voting rules in the charter or bylaws that would have aligned proxyholders’ voting interests with their financial interests, and it allowed virtually anyone to solicit, aggregate, and vote proxies in a corporation in which they held no interest. Some corporations even prevented their own stockholding workers from attending shareholders’ meetings, citing the workers’ power to delegate their votes.

II. PER-SHARE VOTE ALLOCATIONS

Part I showed how the rise of a proxy system of delegated voting shaped shareholders’ voting rights and created opportunities for proxy abuse, leading to a proliferation of state statutes designed to regulate proxy voting and to curb abuses. In spite of tightening laws, proxy abuse quickly became a means for sophisticated actors to control corporate elections, causing harm to shareholders, arousing public anger, and prompting round after round of legal reform.

This Part shifts focus to a separate but contemporaneous change to shareholders’ voting rights: the elimination of restricted voting and the rise of one-share-one-vote in its place. The historical literature has documented how, over the nineteenth century, corporate law evolved significantly with regard to per-share vote allocations. Though the century began with a mix of approaches in use, many of which reduced the voting power of large shareholders, it ended with most states mandating one-share-one-vote, or “plutocratic” voting.112Dunlavy noted that the usage of the word “plutocracy” widened after the middle of the nineteenth century, “just as one vote per share was becoming more common.” Dunlavy, Citizens to Plutocrats, supra note 2, at 73. One-share-one-vote would go on to define twentieth-century voting rights until, very recently, dual-class structures emerged to reintroduce differences in stock voting strength.113However, twenty-first century dual-class stock allocates greater voting rights to stock held in large blocks by wealthy shareholders than to ordinary common stock. This reverses the nineteenth-century paradigm, which reduced the voting power of large holders. See infra Part IV.

An enduring puzzle, however, is why state corporate laws moved away from restricted voting in favor of mandatory one-share-one-vote during the nineteenth century.114“Voting rights regimes [at American bank corporations] are not predictable from readily observable state-level economic, financial, or political variables.” Howard Bodenhorn, Voting Rights, Share Concentration, and Leverage at Nineteenth-Century U.S. Banks 24 (Nat’l Bureau of Econ.
Rsch., Working Paper No. 17808, 2012), https://www.nber.org/system/files/working_papers/w17808/
w17808.pdf [https://perma.cc/RAG4-N9WE].
The literature has advanced three theories of the purpose of restricted voting: a democracy theory, an investor-protection theory, and a consumer-protection theory.115See infra notes 135–162 and accompanying text. Each of these theories implies a different reason for the shift away from restricted voting to one-share-one-vote.

This Part posits that the interplay between proxy voting practices and restricted voting schemes, particularly at widely held firms, heightened problems associated with the emerging proxy system. At widely held corporations, restricted voting schemes made it easier for managers to solicit and aggregate proxies from small holders to control corporate elections. Shareholders who held large blocks of stock might have acted to defeat proxy abuse—and had strong incentives to oppose managerial self-dealing—but they were hobbled by limits on their voting power. In addition, proxy voting could be used to defeat restricted voting: wealthy shareholders could “parcel out” their holdings to affiliates, then obtain and vote proxies for those shares. By breaking up large blocks of stock subject to voting restrictions, wealthy shareholders could increase the voting power of their shares—and unless they were subject to proxy voting restrictions, they could exercise those votes as proxyholders. The expanding use of proxy voting, combined with restricted voting, disempowered large shareholders who acted in good faith (and complied with vote restrictions)—those who might have played a useful stewardship role—but probably did not prevent less scrupulous actors from turning a corporate election to their advantage.

Evidence suggests that some states initially may have responded to rising proxy abuse by experimenting with tighter voting restrictions. When that failed to produce results, legislatures may have become more open to one-share-one-vote as a countervailing strategy—and investors themselves may have demanded it. At the same time, the nationwide trend in favor of cumulative voting, starting in the 1870s, may have encouraged adopting states that had not already done so to mandate one-share-one-vote for all types of corporations.

A. Restricted Voting in Corporate Elections

 Though one-share-one-vote is the norm today in American corporate governance, this was not true in the early 1800s. Instead, at that time, a mix of approaches was in use. Some corporations used one-person-one-vote, while others employed graduated voting or voting caps (or both).116See Hilt, Shareholder Voting Rights, supra note 2, at 622 (“A spectrum of different voting rights configurations were offered to shareholders in early American corporations . . . .”); Dunlavy, Citizens to Plutocrats, supra note 2, at 73 (“Though remarkably diverse in practice, shareholder voting rights in the ante-bellum period may be arrayed along a spectrum ranging from democratic to plutocratic.”). These strategies, which limited the voting strength of large shareholders, constituted restricted voting.117See Hilt, Ownership/Control, supra note 15, at 647 (noting that restricted voting schemes “originated in seventeenth-century English business corporations, and were sometimes quite complex”); David L. Ratner, The Government of Business Corporations: Critical Reflections on the Rule of “One Share One Vote,” 56 Cornell L. Rev. 1, 3–6 (1970) (describing additional history). One-person-one-vote, sometimes described today as “democratic” voting, gave all shareholders equal rights in the management of the corporation, from the holder of a single share to the wealthiest investor.118One-person-one-vote was the common law rule at the turn of the nineteenth century, though it was rare to find a corporate charter that failed to specify a voting rule. See Dunlavy, Citizens to Plutocrats, supra note 2, at 73 (noting the common law rule and stating that “[l]inking [corporate] suffrage to human beings rather than to an amount of capital, the common law prescribed the most democratic form of shareholder voting rights”). For example, when the Wilmington Spring Water Company was incorporated in Delaware in 1804, its legislative charter specified that “no stock-holder shall be entitled to more than one vote.”119Act of Jan. 23, 1804, ch. 150, § 6, 1804 Del. Laws 331, 332 (specifying that, at director elections, “no stock-holder shall be entitled to more than one vote, which may be given by proxy”).

In graduated voting, smaller shareholdings had greater voting power per share, with diminished votes allocated to additional shares.120Dunlavy described how Alexander Hamilton advocated graduated voting, which he described as a “prudent mean” between one-person-one-vote and one-share-one-vote, for the first Bank of the United States. See Dunlavy, supra note 4, at 1356–57. Dunlavy herself adopted the term “prudent-mean voting” for graduated voting. Id. Graduated voting schemes could have two, three, four, or more tiers of voting strength.121Hilt coined the term “graduated voting” to describe such a scheme. See Hilt, Ownership/Control, supra note 15, at 653 (explaining that graduated voting rights schemes “granted one vote per share when small numbers of shares were held, but then after some threshold, a shareholder was entitled to less than one vote per share”). As discussed in more detail below, in 1837, Virginia’s legislature created a four-tiered graduated voting scheme for bank corporations. The law gave one vote per share up to ten shares; one vote per five shares, from eleven to one hundred shares; one vote per ten shares, from one hundred one to three hundred shares; and one vote for every twenty-five shares above three hundred shares.122See Act of Mar. 22, 1837, ch. 82, 1837 Va. Acts 57, 61–62; infra notes 173–190 and accompanying text. Some corporations used more elaborate sliding-scale approaches, but, whatever the specifics, the effect of graduated voting was to limit the voting power of large block-holders in relation to small holders.123See Dunlavy, supra note 4, at 1357 (describing elaborate graduated voting schemes); Hilt, Shareholder Voting Rights, supra note 2, at 620. In fact, the leveling effect was greatest at companies that had a few large holders and many small holders.

Voting caps placed an upper limit on the total number of votes a holder could cast in an election. Some caps set a vote limit,124For examples of Delaware charters that capped the votes of large block-holders, see Act of Jan. 29, 1833, ch. 218, § 3, 1833 Del. Law 221, 223 (specifying one-share-one vote, but capping a shareholder’s votes at one hundred in a corporation with one thousand authorized shares); Act of Feb. 6, 1833, ch. 268, 1833 Del. Laws 274 (same). while others prohibited a holder from exercising more than a certain percentage of the corporation’s total votes. For example, in 1849, Pennsylvania’s legislature enacted a general incorporation act for manufacturing corporations that gave all shareholders one vote per share up to one-third of the total votes.125Act of Apr. 7, 1849, No. 368, § 4, 1849 Pa. Laws 563, 564 (“All elections shall be by ballot, and each stockholder shall be entitled to as many votes as he owns shares of stock in said company, but no person shall in any case be entitled to more than one-third of the whole number of votes to which the holders of all the shares in the capital stock of such company would be entitled . . . .”). Other states imposed more restrictive caps. New Hampshire’s 1891 general corporate law statute capped a shareholder’s total votes at one-eighth of the stock.126Dividend-Paying Corporations, ch. 149, § 19, 1891 N.H. Laws 411, 413 (“Every stockholder in a corporation, except banks whose charters otherwise provide, may give one vote at any meeting thereof for every share he owns therein, not exceeding one eighth part of the whole number of shares.”). Massachusetts’s second general incorporation statute for railroads, enacted in 1874, capped shareholders at one-tenth of total shares.127Act of Jun. 27, 1874, ch. 372, § 41, 1874 Mass. Acts 347, 361. Some states employed graduated voting schemes and voting caps together, the most restrictive approach available.

Restricted voting introduced a confounding problem to corporate governance: unless the entire share distribution of the corporation was analyzed, the relative percentage of votes exercisable by any one shareholder was unknown.128See Hilt, Ownership/Control, supra note 15, at 654 (discussing this problem). Thus, a shareholder who held twenty-five percent of a corporation’s shares could not necessarily exercise twenty-five percent of votes; that shareholder’s percentage voting power depended on whether (and to what degree) the votes associated with all of the corporation’s other shares were restricted.129See, e.g., Untitled Article, N.Y. Daily Advertiser, July 16, 1819, at 2 (describing a “General Meeting of the Stockholders of the Winchester Commercial Bank” in Kentucky, attended by “84 Stockholders and proxies, representing eleven hundred and eighty seven shares; and entitled when scaled (according to the Act of Assembly) to five hundred and twenty votes”). In practical terms, restricted voting made it difficult for a party plotting to accumulate proxies to know how many votes were needed to win an election—at least without analyzing the full list of stockholders. This fact helped give the corporation’s managers the upper hand in soliciting proxies. Managers had untrammeled access to the most current list of stockholders, and thus a head start in determining how many votes could be exercised at an upcoming meeting, how many votes constituted a majority, and which shareholders enjoyed the greatest voting power—and therefore should be targeted for a proxy solicitation.130For example, New York did not require corporations to make the list of stockholders available for inspection by shareholders until 1825. See Act of Apr. 21, 1825, ch. 325, § 1, 1825 N.Y. Laws 48, 48. In this way, restricted voting and proxy voting could intersect to give managers, even those owning little stock, a control advantage in the emerging proxy system.

Over the decades, nearly all states moved from mandating restricted voting for at least some kinds of corporations, to mandating one-share-one-vote for all corporations.131See Dunlavy, supra note 4, at 1358 (2006) (“Over the course of the nineteenth century, the dominant pattern of shareholder voting rights in the United States changed dramatically [via this shift].”). In a sample of New York corporations incorporated between 1790 and 1825, Eric Hilt found that roughly the same proportion of companies used one-share-one-vote (48%) as used graduated voting and one-person-one-vote schemes combined (47%).132Hilt, Ownership/Control, supra note 15, at 658 tbl.1. Colleen Dunlavy’s study of special legislative charters from 1825 to 1835 found that 27% used graduated voting.133Dunlavy, supra note 4, at 1357. Overall, Dunlavy found that 65% of charters in her sample used either one-person-one-vote or restricted voting. Id. at 1358. Hilt has questioned this result, see Hilt, Shareholder Voting Rights, supra note 2, at 620–21 (discussing Dunlavy’s analysis), but even if his critique is correct, Dunlavy’s findings still support the overall conclusion that restricted voting was in wide use at this time. Though empirical research on corporate voting rights in this period has produced some conflicting results, all scholars generally agree that graduated voting was in wide use in the early decades of the nineteenth century.134See Hilt, Shareholder Voting Rights, supra note 2, at 620–22 (discussing “contradictory findings” of empirical studies of voting rights schemes in early American corporations).

B. Three Theories

Why did states employ restricted voting in corporate elections? The literature has offered three theories about the purpose of restricted voting in early-nineteenth-century corporations. One theory emphasizes political and social factors; the other two focus on economic considerations. Scholars who have contributed to this literature concede that none of the three theories is a perfect fit with the evidence from this period and that empirical studies have produced “contradictory findings.”135Id.; see also Dunlavy, Citizens to Plutocrats, supra note 2, at 66–68 (noting major gaps in our understanding of early American corporate governance). The theories are not even necessarily mutually exclusive.136Hilt, Shareholder Voting Rights, supra note 2, at 618; see also id. at 621 (both the investor-protection theory and the consumer-protection theory “imply that graduated voting rights should have been used only in firms that would be expected to have a reasonable degree of inequality in the size of the blocks of stock held”). It is possible that restricted voting served a combination of political, social, and economic objectives.

Dunlavy has argued that restricted voting is explained by Americans’ political conception of the business corporation and their post-Revolutionary commitment to democratic governance, which they transmitted to the corporation.137See Dunlavy, supra note 4; Dunlavy, Citizens to Plutocrats, supra note 2, at 67 (“Through the early decades of the nineteenth century, corporate governance was much more ‘democratic’ than it came to be by the end of the century.”); Ratner, supra note 117114, at 6 (“[R]estrictions on voting rights were at least in part attributable to widespread public concern that grants of power to corporations and those who controlled them would weaken democratic government.”); see also Maier, supra note 13, at 84 (describing how “[i]n attempting to construct corporations appropriate for republican America, state legislators of the late eighteenth and early nineteenth centuries grafted them firmly onto the institutional structure of the United States”). According to this theory, early corporate norms “tended to treat shareholders more like citizens in a relatively egalitarian polity,” following a democratic model.138Dunlavy, Citizens to Plutocrats, supra note 2, at 67; see also Maier, supra note 13, at 77 (describing restricted voting as “a democratic ‘counterpoise’ to corporate power such as other societies found . . . in kings, nobles, and great landed families”). Advocates of this democracy theory argue that restricted voting suppressed the power that large shareholders exercised in the corporation not only to reduce power inequities among shareholders but also with an eye to the corporation’s growing importance in the community and the economy. The democracy theory suggests that the shift to one-share-one-vote reflected changing political and social conceptions of the corporation and its role in society.

Though Dunlavy makes a persuasive case that early Americans viewed corporate organization through a political lens—and that, following the American Revolution, zeal for democracy was strong—nineteenth-century corporate governance diverged from political governance in some significant ways. The use of different restricted voting schemes for different industries suggests that Americans were not pressing for the same level of democratic voting at all types of corporations.139Hilt, Shareholder Voting Rights, supra note 2, at 619 (“[I]t is not clear why graduated voting rights would be chosen in some industries and not in others if there was a general preference for democratic governance.”). Importantly, delegated voting was not a democratic norm; proxy voting was rejected for political elections across the United States. Thus, the popularization of proxy voting in corporate elections distinguished corporate governance from democratic political governance, again suggesting that lawmakers and corporate promoters perceived differences between the two. If democratic values shaped early thinking about corporate governance, they appear to have had less salience by the middle of the nineteenth century, when a writer could comfortably assert in the New York Times that “[t]he theory of all corporate bodies is that every member of them should have a vote and an influence equal to his interest.”140Stockholder, supra note 38.

A second group of scholars, writing mainly from the law-and-economics perspective, contends that restricted voting schemes served an investor-protection purpose by helping small shareholders protect themselves from self-dealing by large holders.141Hilt, Shareholder Voting Rights, supra note 2, at 618; Bodenhorn , supra note 114. Because early nineteenth century corporate law offered few shareholder protections, such as informational rights, voting rights may have been particularly important to investors; Eric Hilt has posited that “graduated voting rights were chosen at least in part in order to attract small investors by limiting the voting power of large shareholders.”142Hilt, Ownership/Control, supra note 15, at 648. Hilt asserts that “there were few if any legal constraints on self-dealing by directors” in the early nineteenth century and concludes that “[c]onflicts between large shareholders and small shareholders” were “the central concern in early corporate governance.” Id. at 649. Hilt’s study of New York corporations chartered through 1825 found that corporations in industries with the greatest ownership concentration were associated with more-restricted voting rules, evidencing a relationship that would support his theory.143Id. at 647–48.

The democratic and investor-protection theories offer similar explanations for the purpose of restricted voting. Writings from the middle of the century connected restricted voting to intra-corporate power without specifying whether the power in question was managerial or financial. In 1850, for example, a banker wrote that restricted voting had been employed in New York to “guard against the dangers” posed by a controlling shareholder.144Johnson, supra note 36, at 630. A railroad stockholder, writing a few years later, explained that “limit[ing] the number of votes of large stockholders” through graduated voting was “not unusual” and was done “in order to prevent too much concentration of power.”145Stockholder, supra note 38. Was the problematic concentration of power strictly a financial problem for investors, or was it also a problem of managerial dominance and political might? Nineteenth-century Americans probably perceived these concerns as overlapping, making it plausible that restricted voting served both political and investor-protection objectives.

The democratic and investor-protection theories imply different reasons for the shift to one-share-one-vote, however. Dunlavy suggests that changing political conceptions of the corporation contributed to the shift to one-share-one-vote. In contrast, the investor-protection theory implies that the need for restricted voting diminished as new investor protections were created. Though investor protections did eventually strengthen in the United States, particularly in the early twentieth century, this timing post-dates the popularization of one-share-one-vote. Research has not yet confirmed that one-share-one-vote grew alongside investor protections during the early or mid-nineteenth century.

Neither the democracy theory nor the investor-protection theory accounts for all of the ways in which nineteenth-century Americans perceived that shareholder voting intersected with corporate power. For example, in 1871, the managers of the Missouri Pacific Railroad pressed the state’s legislature to enact a proposed law authorizing railroad corporations to switch from restricted voting to one-share-one-vote. The editors of the Missouri Republican supported the new law, which allowed a railroad company to eliminate restricted voting upon a shareholder vote.146Liberal Railroad Legislation, Mo. Republican, Mar. 8, 1871, at 2. The editors wrote that the original voting scheme for the Pacific Railroad had used graduated voting because “there was fear of the road becoming a political machine in the hands of the city and county of St. Louis,” which once had owned large blocks of stock.147Id. After that stock had moved into private hands, the editors reasoned, it “seem[ed] but just” to change the vote allocation.148Id. The law was passed.149See Act of Mar. 17, 1871, ch. 63, 1871 Mo. Laws 52 (amending chapter sixty-three of the General Statues, entitled “of Railroad Companies,” by adding certain sections thereto). The episode revealed the complexity of considerations that influenced voting-rights schemes at some companies.

Finally, a pair of scholars has advanced a consumer-protection theory.150Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 953–54. Henry Hansmann and Mariana Pargendler point out that many shareholders of early American corporations were also consumers of the corporations’ products and services.151See id. They posit that restricted voting empowered consumer-shareholders to use their franchise to prevent large shareholders from raising prices or harming them as consumers.152Hansmann and Pargendler did not merely argue that consumer-protection interests contributed to legal changes in vote allocations, but that the investor-protection theory was incorrect. Id. at 948 (“[R]estricted voting rules generally served not to protect shareholders as investors, but to protect them as consumers.”). Hilt argued that the existence of “direct consumer protections,” that is, price-setting provisions in corporate charters, weakens the consumer-protection theory and that the nineteenth-century sense of the word “monopoly” was different from the usage adopted by Hansmann and Pargendler. See Hilt, Shareholder Voting Rights, supra note 2, at 619. According to these scholars, the consumer-protection theory explains the relative incidence of restricted voting across industries,153Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 954. particularly what they claim was an earlier shift to one-share-one-vote among manufacturing corporations, as compared to transportation companies.154Id. at 959–64 (turnpike companies); id. at 985–87 (manufacturing companies). Research for this Article did not find support for such a comparative shift or bright-line distinction across industries, however, as discussed below.155See infra notes 180–182 and accompanying text (discussing the rejection of one-share-one-vote for manufacturing firms in some states during the period studied by Hansmann and Pargendler, and tighter voting restrictions for manufacturing firms than for turnpike companies in Virginia in particular). The charter sample studied by Hansmann and Pargendler excluded more than half of corporations chartered during this time in the states they examined, and they acknowledge that the voting rule was specified for less than half of the 22,419 corporations in their sample. Hansmann and Pargendler noted that this raised the possibility of systematic bias in their sample. Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 1010. The consumer-protection theory suggests that vote allocations changed after “superior substitutes” to restricted voting were developed for the purpose of protecting consumers.156Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 954–55.

All three of these theories were developed in part in reliance on studies of corporate charters from the earliest decades of the nineteenth century.157See Hilt, Ownership/Control, supra note 15, at 658; W.C. Kessler, A Statistical Study of the New York General Incorporation Act of 1811, 48 J. Pol. Econ. 877 (1940) (empirical study of manufacturing corporations chartered in New York from 1811–1848); Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 960 (empirical study of a subset of special legislative charters (those specifying a voting rule) from 1790 to 1859 from Connecticut, Delaware, Georgia, Maryland, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, and Virginia); Dunlavy, supra note 4, at 1354–55 (study of a sample of 1,200 corporate charters from 1825 to 1835). This research has yielded important insights but must be viewed with caution.158The main limitation is that most charter studies include only special legislative charters, and exclude charters obtained under general incorporation statutes. Only Hilt’s study of New York corporations chartered between 1790 and 1825 includes both kinds of charters. In addition, charter studies have generally not distinguished between charters of corporations that never operated (or immediately failed) and corporations that successfully operated for a period of years. Hilt determined that, of 812 corporations chartered in New York by the end of 1825, only 282 (or 35%) were still operating in 1826 or 1827. Hilt, Ownership/Control, supra note 15, at 663 tbl.2. This is a significant failure rate, and its relationship to shareholder governance remains unexplored. Study samples have been limited to a small subset of states, like New York, to the exclusion of other states.159Hilt’s work has illuminated many aspects of early New York corporate charters and notes the significant role that New York played in the development of the American economy. See Hilt, Ownership/Control, supra note 15, at 650 (describing the development of New York City into “the preeminent center of business and finance in the United States” between 1790 and 1825); see also, Kessler, supra note 157 (empirical study of manufacturing corporations chartered in New York from 1811–1848); Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 960 (listing states). They have mostly included very early corporations; the most rigorous body of work analyzing voting allocations in corporate charters was limited to the period from 1790 to 1826.160Analysis of corporate charters in early-nineteenth-century New York includes Hilt and Kessler. Hilt, Ownership/Control, supra note 15 (empirical study of the charters of 812 corporations (of all kinds) incorporated in New York between 1790 and 1825, including both special legislative charters and charters secured under the 1811 general incorporation act); Kessler, supra note 157 (empirical study of the charters of 512 manufacturing corporations incorporated in New York from 1811–1848, including both special legislative charters and charters secured under the 1811 general incorporation act). Hansmann and Pargendler’s study included legislative charters enacted as late as 1859 but excluded charters obtained under general incorporation statutes, which were common by the 1850s.161See Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 1010. According to Susan Pace Hamill, 63% of U.S. states had general incorporation statutes by 1859, including eight of the eleven states that Hansmann and Pargendler studied. See Susan Pace Hamill, From Special Privilege to General Utility: A Continuation of Willard Hurst’s Study of Corporations, 49 Am. U. L. Rev. 81 app. at 178 (1999). Because the shift to mandatory one-share-one-vote occurred in nearly all states after the Civil War, charter studies have provided, at best, an incomplete picture of changing corporate governance laws and practices.162See, e.g., Bodenhorn, supra note 114, at 6 (stating that “[o]ne share-one vote did not emerge as the standard [in the U.S.] until the late nineteenth century”); Dunlavy, supra note 4, at 1358–59 (“[S]tates had fallen in line by the 1880s.”).

C. One-Share-One-Vote and General Incorporation Laws

The literature associates the move to one-share-one-vote with the rise of general incorporation statutes in the United States.163See, e.g., Dunlavy, supra note 4, at 1358 (noting the shift in “state statutes, particularly those making general incorporation increasingly the norm”). This association is explained by researchers’ emphasis on the state of New York, which enacted one of the first general incorporation statutes, for manufacturing corporations, in 1811.164See Act of Mar. 22, 1811, ch. 67, 1811 N.Y. Laws 151. Hilt’s research found that shareholders of early New York manufacturing corporations were significantly wealthier, and held much larger stakes, than shareholders in other industries in New York. See Hilt, Shareholder Voting Rights, supra note 2. The greater comparative wealth (and associated political clout) may help explain why New York’s legislature permanently mandated one-share-one-vote for manufacturing corporations decades before virtually any other state did. New York’s 1811 law mandated one-share-one-vote, a fact that may have led scholars to associate the shift to one-share-one-vote with the rise of general incorporation laws.165In fact, the earliest general incorporation statutes mandated graduated voting—for turnpike companies. See Act of Mar. 13, 1807, ch. 38, § 2, 1807 N.Y. Laws 50, 50; Act of Jan. 7, 1817, 1837 Ohio Laws 104; see also Act of Feb. 7, 1817, ch. 38, § 20, 1816 Va. Acts 41, 49.

If we consider states outside New York, a different picture emerges. Ohio enacted a general incorporation law for manufacturing corporations in 1812 that mandated graduated voting.166Act of Jan. 11, 1812, ch. 15, 1811 Ohio Laws 24. New Jersey’s legislature experimented with one-share-one-vote for manufacturing corporations from 1816167Act of Feb. 9, 1816, 1816 N.J. Laws 17, 19 (“[E]ach stockholder shall be entitled to as many votes as he owns shares of the stock of the said company . . . .”). to 1819,168Act of Feb. 11, 1819, 1819 N.J. Laws 25 (repealing the 1816 law). then repealed one-share-one-vote and allowed corporate promoters to choose a voting rule for themselves.169In 1841, New Jersey made one-share-one-vote the default rule for all incorporated stock companies. See Act of Mar. 11, 1841, § 2, 1841 N.J. Laws 116, 117. Five years later, New Jersey’s legislature changed the rule for manufacturing corporations by removing the default; corporations could choose their own vote allocation. See Act of Feb. 25, 1846, § 11, 1846 N.J. Laws 64, 66. Evidence from Virginia likewise suggests resistance to one-share-one-vote for manufacturing corporations. In 1833, Virginia’s House of Delegates rejected a one-share-one-vote provision in a proposed charter for the Sidney Manufacturing Company, replacing it with a deeply-graduated voting scheme.170See Virginia Legislature, Richmond Enquirer, Dec. 19, 1833, at 3 (describing the amendment of the charter to remove one-share-one-vote and replace it with a five-tiered graduated voting scheme); Act of Jan. 3, 1834, ch. 184, § 8, 1834 Va. Acts 229, 231. The four other manufacturing corporations chartered during the same legislative session used graduated or capped voting, suggesting that Virginia’s General Assembly was consistent in requiring restricted voting for manufacturing corporations at this time, even when corporate promoters sought a rule of one-share-one-vote.171See, e.g., Act of Jan. 20, 1831, ch. 185, § 8, 1834 Va. Acts 231, 234 (providing the graduated voting scale); Act of Feb. 17, 1834, ch. 186, § 5, 1834 Va. Acts 234, 235 (providing the graduated voting scale); Act of Mar. 12, 1834, ch. 187, § 5, 1833 Va. Acts 236, 236–37 (providing a voting cap); Act of Mar. 4, 1834, ch. 188, § 4, 1834 Va. Acts 237, 238–39 (providing the graduated voting scale). Virginia’s 1837 corporate laws, described in the next section, required graduated voting for manufacturing corporations in the state. Even after the mid-century, West Virginia enacted a general incorporation law that mandated graduated voting for manufacturing firms.172See Act of Oct. 26, 1863, ch. 83, § 22, 1863 W. Va. Acts 76, 80 (applying to “manufacturing, mining or insuring” corporations, among others, and mandating “one vote for every share of stock not exceeding one hundred; and one vote for every four shares exceeding one hundred”). New Hampshire also mandated restricted voting for manufacturing and other corporations as late as the 1890s. See Dividend-Paying Corporations, ch. 149, § 19, 1891 N.H. Laws 411, 418 (“Every stockholder in a corporation, except banks whose charters otherwise provide, may give one vote at any meeting thereof for every share he owns therein, not exceeding one eighth part of the whole number of shares.”). Thus, while one-share-one-vote was found with increasing frequency in general incorporation statutes as the nineteenth century wore on, it was not the case that general incorporation statutes ushered in a rule of one-share-one-vote.

D. Virginia’s 1837 Voting-Rights Scheme

Virginia’s legislature responded to surging demand for corporate charters in the 1836–1837 economic boom173See Kessler, supra note 157, at 878–79 (describing 1836 and 1837 as “speculative years” and noting “the ‘bursting’ of this famous ‘bubble’ ” thereafter). Table 1 documents 35 incorporations of manufacturing firms in New York in 1836, and 24 in 1837; in 1838, only 11 manufacturing corporations were chartered statewide. Id. at 879 tbl.1. by enacting three new sets of corporate laws.174Two other states that enacted new corporate law schemes in response to this boom were Massachusetts (1836) and Connecticut (1837). Massachusetts “retained various caps on the voting power of shareholders in railroad, banking, and insurance corporations, but manufacturing corporations were permitted to set their own voting rights in their bylaws.” Dunlavy, Citizens to Plutocrats, supra note 2, at 79. In contrast, Connecticut mandated one-share-one-vote for manufacturing and mining corporations, see id., while, as discussed in the text, Virginia took yet a third approach by mandating graduated voting for manufacturing and mining companies. These laws regulated vote allocations by industry, mandating graduated voting for (1) bank corporations, (2) railroad corporations, and (3) manufacturing and mining corporations.175Act of Mar. 22, 1837, ch. 82, 1837 Va. Acts 57; Act of Feb. 13, 1837, ch. 84, 1837 Va. Acts 74; Act of Mar. 11, 1837, ch. 118, 1837 Va. Acts 101.  The statutes were not general incorporation laws, but rather broad “regulatory” statutes that were designed to streamline the special legislative charter process.176The year it enacted the manufacturing and mining company law, Virginia’s legislature also applied it to three of four spring companies it incorporated by special legislative charter. See, e.g., Act of Mar. 24, 1837, ch. 201, § 1, 1837 Va. Acts 197, 197. Because all three laws were enacted by the same legislature during the same year, it seems likely that the use of different vote-allocation schemes was purposeful.177See Bodenhorn, supra note 114, at 20 (discussing the possibility that vote allocations were random). In 1849, Virginia’s legislature simplified the 1837 laws and replaced them with a single, four-tiered voting scale to apply to all joint-stock corporations. Virginia’s legislature assigned the most graduated voting scheme to banks;178Bodenhorn observes that, although one-share-one-vote was “standard language” in bank charters in New York by 1830, this was “more the exception than the rule.” Id. at 9–10. the bank statute recognized four voting tiers, from one-share-one-vote for small holders (up to ten shares) to twenty-five-shares-one-vote (above three hundred shares).179Act of Mar. 22, 1837, ch. 82, § 6, 1837 Va. Acts 57, 62 (providing that, if challenged, a stockholder will give an oath affirming “that the stock on which his vote is to be given is bona fide his own property, or the property of his ward, or of his testator or intestate’s estate . . . and moreover, that such stock is not held by him by means of any transfer, contrived or designed to evade the provisions of this act, regulating the number of votes to be given by the stockholders respectively, or to give to himself or any other a greater number of votes than he is fairly entitled to under the provisions of this act”). It assigned three tiers of graduated voting to manufacturing and mining corporations180See Act of Feb. 13, 1837, ch. 84, § 5, 1837 Va. Acts 74, 76 (“[S]tockholders shall be entitled to one vote for every share owned by them respectively, up to the number of fifteen inclusive, and to one additional vote for every five shares from fifteen to one hundred, and to one additional vote for every twenty shares over and above one hundred; and may vote in person or by proxy . . . .”). and two tiers of graduated voting to railroad corporations.181Act of Mar. 11, 1837, ch. 118, § 18, 1837 Va. Acts 101, 108 (“In counting all votes of the company, each stockholder shall be allowed one vote for each share not exceeding ten shares, and one vote for every ten shares above ten by him held at the time in the stock of the company.”). However, the railroad voting scheme was still considerably more restrictive for large holders than a two-tiered scheme enacted for turnpike corporations in 1817, which was still in force.182The 1837 railroad law gave shareholders one-share-one-vote up to ten shares and one vote for ten shares above ten. Id. The 1817 turnpike law gave shareholders one-share-one-vote up to ten shares and one vote for five shares above ten. Act of Feb. 7, 1817, ch. 38, 1816 Va. Acts 41.

Why did Virginia’s legislature create the most deeply graduated voting scheme for banks? Researchers have found that banks in jurisdictions mandating one-share-one-vote at this time had fewer shareholders, and greater concentration of ownership, than banks operating in jurisdictions with restricted voting.183Hilt, Ownership/Control, supra note 15 (discussing fewer shareholders); Harold Demsetz & Kenneth Lehn, The Structure of Corporate Ownership: Causes and Consequences, 93 J. Pol. Econ. 1155 (1985) (discussing greater concentration); Bodenhorn, supra note 114, at 18, 25, 33–34 (discussing the research and concluding that “[b]anks in states that limited the voting rights of large shareholders exhibited more diffuse ownership, which suggests that at least some shareholders were concerned with tunneling, looting and other forms of self-dealing by majority shareholders”). Bodenhorn also presents evidence that graduated voting was associated with lower bank risk-taking and notes that, because bank runs were recurrent events in the early nineteenth century, voting rules may have had important implications for the economy. Thus, one possibility is that legislators believed that enacting a deeply-graduated vote allocation scheme would encourage more Virginians to invest in banks. Legislators may have believed that benefits would accrue to the Virginians who decided to invest, creating widely-shared prosperity, or to the financial system itself, in the form of reduced risk.

Virginia’s 1817 law for turnpike corporations had imposed a less-restrictive voting-rights scheme than any of the 1837 laws. Why would statutes enacted in 1837, twenty years after Virginia’s first turnpike general incorporation laws, impose greaterrestrictions on the voting power of large shareholders than the turnpike law did? (Recall that, under the consumer-protection theory, the voting power of large shareholdings should have been more restricted for turnpike companies than for manufacturing companies, because the former had many consumer-shareholders seeking to keep prices low, while the latter did not.)

Virginia’s legislature may have been more concerned about proxy abuse and electoral fraud in 1837 than it had been in 1817. As we have already seen, in New Jersey, fraudulent corporate elections had become a significant problem by 1825184Act of Dec. 8, 1825, 1825 N.J. Laws 81 (creating Supreme Court jurisdiction to hear complaints about corporate elections and regulating various aspects of electoral process). and apparently did not improve after a first round of legislation, resulting in additional legislative action in 1841.185Act of Mar. 11, 1841, 1841 N.J. Laws 116 (making one-share-one-vote the default rule). In New York, important legislation regulating corporate elections was enacted in 1825186See Act of Apr. 21, 1825, ch. 325, 1825 N.Y. Laws 48 (requiring, among other things, that the list of stockholders be open to inspection by stockholders for thirty days prior to any election). and, for “monied corporations,” in 1827.187Act of Sept. 11, 1827, ch. 18, tit. 2, §§ 37–42, 1827 N.Y. Laws 577, 596–97 (concerning the “Election of Directors of Monied Corporations”). And evidence from Pennsylvania188House of Representatives, supra note 26 (quoting Representative Hahn as saying that it “was well known that the grossest abuses had sprung up under this [proxy] system, as it enabled a few individuals to unite together and obtain the whole control of a banking or other institution, and manage it to suit their own ends”). and Massachusetts189Act of Mar. 21, 1840, ch. 61, 1840 Mass. Acts 208 (prohibiting any shareholder of a bank from voting more than fifty votes by proxy and limiting bank directors, cashiers, and officers to ten votes by proxy). suggests that serious proxy abuse had emerged at banks in those states by 1840. Problems associated with corporate elections were on the rise during the 1820s and 1830s, a fact that may have prompted Virginia’s General Assembly to experiment with strong new restrictions on the voting power of large shareholders. Indeed, evidence suggests that the use of restricted voting increased in legislative charters from the early 1800s to the 1850s.190Dunlavy, Citizens to Plutocrats, supra note 2, at 80. In a study of 1,233 special legislative charters from 1825 to 1835, five of the seven charters that used one-person-one-vote “were granted not in the early years but at the end of the period (in 1835—one in Kentucky, four in Ohio).” Id. The percentage of corporations using restricted voting was higher in the 1850s than the 1820s for seven out of nine industrial categories. Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 1012 tbl.1.

E. One-Share-One-Vote as a Protection Against Proxy Abuse

If state legislatures believed that tightening limits on the voting power of large shareholders at banks and railroads would curb proxy abuse, however, they were disappointed. Though restricted voting evened the playing field between wealthy elite shareholders and small shareholders, it provided a uniquely potent opening for unscrupulous managers skilled in proxy manipulation. Ambitious actors could solicit proxies from a company’s many absent, small holders to defeat the restricted votes of larger holders.

As we have seen, by the 1840s and 1850s, lawmakers and commentators were complaining of scenarios in which sophisticated corporate managers, owning little stock themselves, had developed strategies to solicit and vote small shareholders’ proxies, establishing de facto control.191See, e.g., House of Representatives, supra note 26; Stockholder, supra note 38 (addressing the president of the New York Central Railroad Company and stating that he had “the power, by proxy, to act according to your own simple will and pleasure, and thereby to promote your own ends”). The most aggrieved group in such a scenario—wealthy elites with large ownership interests in a corporation—likely recognized that they would be in a better position to exercise countervailing power in firms if the full voting power of their investments was recognized. Thus, pressure to move to one-share-one-vote may have come from business and political leaders seeking to put an end to proxy abuse.

In addition, proxy voting could be used to defeat restricted voting: wealthy shareholders could “parcel out” their holdings to affiliates, then obtain and vote proxies for those shares. Virginia’s 1837 bank law (but not its laws enacted the same year for railroads and manufacturing and mining companies) prohibited efforts to “evade” graduated voting or to give any party “a greater number of votes than he [was] fairly entitled to under” the act.192Act of Mar. 22, 1837, ch. 82, 1837 Va. Acts 57, 62. It would not be surprising if bank corporations were among the first to evidence electoral fraud and proxy abuse in Virginia. Other states sought to regulate proxy voting at banks first, as early as 1813, and only later at other kinds of corporations. Banks were among the most widely held American corporations in the early decades of the nineteenth century, a fact that may help explain why they were the first type of corporation to evidence widespread proxy abuse and, perhaps, other forms of electoral fraud. See Eric Hilt & Jacqueline Valentine, Democratic Dividends: Stockholding, Wealth, and Politics in New York, 1791–1826, 72 J. Econ. Hist. 332, 344, 344 tbl.4 (2012) (finding, in a study of 1826 New York corporations, that banks had far more shareholders than corporations in manufacturing, transportation, or other industries). This suggests a general awareness, by the late 1830s, that large shareholders at banks sometimes took steps to defeat restricted voting. As early as 1818, shareholders of the Bank of the United States had engaged in tactics to evade that bank’s deeply restricted voting scheme.193See Valerius, Bank of the United States, Nat’l Advoc., Dec. 29, 1818. In 1819, Congress passed a new law to enforce the Bank’s voting restrictions; it placed special requirements on any shareholder who attempted to exercise more than thirty votes, including the shareholder’s own votes and proxy votes. See Act of Mar. 3, 1819, § 2, ch. 73, 3 Stat. 508, 508–09; see also Hilt, Ownership/Control, supra note 15, at 657 (noting similar efforts to defeat restricted voting by shareholders of the Second Bank of the United States). Though the Bank’s charter capped shareholders at thirty votes, one writer alleged that the Bank’s “southern stockholders” had achieved one vote per share by transferring shares to friends and obtaining proxies for the shares.194Valerius, supra note 193 (suggesting that the Bank’s deeply-graduated voting scheme was “neither just or politic”).

In later decades, the same tactics would be observed in the railroad industry. The Atlantic & North Carolina Rail Road Company sharply curtailed the voting rights of large shareholders using a graduated voting scheme that was still in place as late as 1921.195Reports of the Officers of the A. & N. C. R. R. Co. to the Stockholders at Their 67th Annual Meeting Held at Morehead City, N.C., Thursday, August 4th, 1921, and Proceedings of Last Meeting 14–20 (1921) (stockholders list). In the 1870s, however, some large shareholders defeated the restrictions by “parceling out” their stock “by assignment, by gift, and otherwise,” then turned around and obtained proxies for those shares.196See Cecil Kenneth Brown, A State Movement in Railroad Development 245–46 (1928) (describing how this was done at the Atlantic & North Carolina Railroad in the late 1870s). In 1877, a judge had to step in and enjoin the practice.197Id. The persistence of such tactics, across industries, suggests that restricted voting did not always even the playing field between large and small shareholders and that it may have encouraged wealthy actors to defy corporate governance laws.198See, e.g., Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2 (acknowledging that restricted voting did not necessarily succeed at reducing “monopoly”). In his study of New York corporations between 1790 and 1825, Hilt investigated the relationship between restricted voting, ownership concentration, and the percentage of shareholders with a common last name (a higher percentage of shareholders with the same last name might indicate that a large shareholder was parceling out stock to relatives to defeat restricted voting). Hilt found no relationship between voting rights and ownership concentration, see Hilt, Ownership/Control, supra note 15, at 671, but he did find an “extremely small” positive relationship between restricted voting and commonality of the shareholders’ surnames, see Hilt, Ownership/Control, supra note 15, at 672. Curiously, however, manufacturing corporations chartered under New York’s 1811 general incorporation act, which mandated one-share-one-vote, were more likely than corporations with special legislative charters to have owners with surnames in common (and also had fewer shareholders). Hilt, Ownership/Control, supra note 15, at 673. This is the opposite of what we might expect if shareholders were parceling out stock to relatives to defeat restricted voting, since large shareholders at corporations using one-share-one-vote had no reason to redistribute their stock.

Hilt’s study of early-nineteenth-century New York corporations found a positive association between one-share-one-vote and managerial ownership.199See Hilt, Ownership/Control, supra note 15, at 674 tbl.7 (highlighting a study of shareholders of 132 New York corporations that were chartered between 1790 and 1825 and still operating in 1826 or 1827, whose complete list of shareholders could be found) (“[H]igher values of the voting rights index were associated with greater degrees of managerial ownership, and amplified the voting power of their larger stakes.”). Corporations whose directors owned significant stock had higher values on Hilt’s voting rights index, meaning that they were closer to one-share-one-vote. This is consistent with the thesis that one-share-one-vote discouraged proxy abuse. If a corporation’s officers and directors were also its largest shareholders, they did not need to engage in proxy abuse to obtain control. They could exercise control by voting their shares and would likely have preferred a rule of one-share-one-vote. On the other hand, if a corporation’s directors did not own much stock, they could exercise control only through proxy solicitation, and they probably would have preferred restricted voting. Thus, we would expect to find—as Hilt did—that corporations run by managers who owned little stock were more likely to use restricted voting.

The cumulative voting trend, which swept the United States after Illinois first adopted cumulative voting in its 1870 constitution, also pushed states toward one-share-one-vote. This is described in greater detail in Part III.

F. Shareholder Voting Beyond Director Elections

In state laws, corporate charters, and common practice, restricted voting applied to director elections, but not to other matters put to a vote. Shareholders voted on a range of matters and, outside of director elections, a strong default existed in favor of per capita voting.200See, e.g., Dunlavy, supra note 4, at 1355, 1355 n.23. In the nineteenth century,

[i]f a charter described a voting rule as applying specifically to elections, then all other decisions (e.g., regarding strategy) were to be made according to the common law—one vote per person. . . . [but b]y the turn of the century, charter provisions regarding voting in elections were viewed as applying to all decisions of shareholders.

Id. When shareholders cast votes to decide other matters, “they did so democratically: each shareholder, large and small alike, cast only one vote.”201Dunlavy, Citizens to Plutocrats, supra note 2, at 74. As a result, it was common for stockholders’ meetings to employ a mix of voting rules: the “stock vote” for director elections and a show of hands, or voting viva voce, for other matters.202Lillian Doris & Edith J. Friedman, Corporate Meetings, Minutes, and Resolutions 32–33 (6th. ed. 1947) (noting that as late as the 1940s some types of shareholder votes could be conducted on a “consensus” basis, “either by a showing of hands or by a viva voce vote”). Dunlavy notes that per capita voting was also called “vote by acclamation.” Dunlavy, Citizens to Plutocrats, supra note 2, at 74.

A Philadelphia lawyer described the default in 1884 as “the majority in number rules at corporation meetings,” unless a special provision of law could be shown that required a stock vote.203The Law of Procedure in Corporation Meetings: An Address by George M. Dallas, Esq. before the Law Academy of Philadelphia, January 15th, 1884, at 26 (Philadelphia, Allen, Lane & Scott 1884). “[T]he stock vote is never demandable,” he explained, adding that “the charter and by-laws must in each case be examined” to determine which corporate issues had to be determined by a stock vote.204Id. Large, publicly-held companies in the United States were still reporting voting results on a per capita basis, in addition to a share basis, as late as the 1950s, purely by custom.205Examples include General Motors and Standard Oil (N.J.). Procedural matters continued to be resolved according to a rule of one-shareholder-one-vote as late as the 1970s. See J. Daniel Mahoney, Conduct of the Shareholder Meeting, in Structuring the Annual Meeting 153, 159 (J. William Robinson ed., 1973) (concluding that “matters relating solely to the procedure of the meeting may usually be handled by per capita vote”) (citing Carrol R. Wetzel, Conduct of a Stockholders’ Meeting, 22 Bus. Law. 303, 308 (1967)). Corporate managers and shareholders alike derived meaning from the per-capita data, which provided a snapshot of shareholder voting from the democratic perspective.

G. The Disappearance of Restricted Voting

The rise of one-share-one-vote advanced “very unevenly” and restricted voting remained common up to and after the Civil War.206Dunlavy, Citizens to Plutocrats, supra note 2, at 81. Hansmann and Pargendler found that 42.6% of special legislative charters (across all industries) that were enacted in the 1850s and specified a voting rule employed restricted voting.207Hansmann & Pargendler, Separation of Ownership and Consumption, supra note 2, at 1012 tbl.1. Notably, this was a higher overall percentage than for legislative charters enacted in the 1820s; the use of restricted voting appears to have risen. Id. Sixty-eight percent of special legislative charters analyzed by Dunlavy for 1855 used either one-person-one-vote or restricted voting.208Dunlavy, supra note 4, at 1358. New York used general incorporation statutes to gradually mandate one-share-one-vote.209See, e.g., Act of Apr. 2, 1850, ch. 140 § 5, 1850 N.Y. Laws 211, 213 (mandating one-share-one-vote). However, in 1887, New York’s legislature tried to reverse course, passing a bill that would have allowed corporations to authorize per capita voting in the charter.210See Act of Feb. 17, 1887, No. 650, § 1, 1887 N.Y. Laws  (“A corporation having a capital stock may provide in its articles or certificate of incorporation, that each stockholder, irrespective of the amount of stock he may own, shall be entitled to one vote, and no more, at any election of directors, or upon any subject submitted at a stockholders’ meeting . . . .”); Heroes of Gettysburg, N.Y. Times, Feb. 18, 1887, at 5 (noting the introduction of the bill by Mr. Kruse). New York’s governor did not sign the bill, and it did not become law.211David B. Hill, Governor, Annual Message: State of New York (Jan. 4, 1887), in 8 State of New York: Messages from the Governors 294, 469 (Charles Z. Lincoln ed., 1909) (explaining that Governor Hill did not sign the bill). New Jersey eventually also moved to one-share-one-vote.212See, e.g., Act of Apr. 2, 1873, ch. 413, § 5, 1873 N.J. Laws 88, 90. Delaware’s first two general incorporation acts for manufacturing corporations (1875 and 1883) made one-share-one-vote the default, but the state did not mandate one-share-one-vote until 1899.213The 1875 law applied to a limited category of companies and required one-share-one-vote only at the organizational meeting of shareholders. See Act of Mar. 26, 1875, ch. 119, 15 Del. Laws 181 (1875). The 1883 general incorporation law applied to a broader category of corporations and made one-share-one-vote the default. See Act of Mar. 14, 1883, ch. 147, § 18, 17 Del. Laws 570, 576 (1893). Even after the passage of these laws, however, Delaware’s legislature continued to enact special legislative charters. One scholar found that, in 1897, only ten corporations were chartered under the 1883 general incorporation law, in comparison to “115 special act incorporations, amendments and renewals, other than those relating to municipal charters.” S. Samuel Arsht, A History of Delaware Corporation Law, 1 Del. J. Corp. L. 1, 5 (1976). In 1897, Delaware’s constitution was amended to eliminate the legislature’s power to enact special legislative charters, but it was not until 1899 that Delaware enacted a new general incorporation law. See id. at 6. The 1899 law mandated one-share-one-vote. See Act of Mar. 10, 1899, ch. 273, § 20, 21 Del. Laws 445, 451 (1899). For reasons that are unclear, Delaware’s General Assembly changed its law again only two years later to make one-share-one-vote a default rule, rather than a mandatory one, and this remains the rule there today.214Act of Mar. 7, 1901, ch. 273, § 17, 21 Del. Laws 255, 278 (1901) (returning one-share-one-vote to a default rule); Del. Code Ann. tit. 8, § 212(a) (2023).

In the last three decades of the nineteenth century, vote allocations shifted decisively in favor of one-share-one-vote. Some state legislatures took action to allow existing corporations to change their graduated vote allocations to one-share-one-vote with shareholder approval.215See Act of Mar. 17, 1871, sec. 2, § 54, 1871 Mo. Laws 52, 53 (“Any railroad heretofore incorporated under special laws of this State, by the provisions of whose charter stockholders are restricted in voting according to the number of shares held, may remove such restrictions by a vote of the stockholders . . . .”). In New Jersey, caselaw at the end of the century suggested that one-share-one-vote might be enforced retroactively against corporations that had been chartered with graduated voting years earlier as a matter of law.216See Rankin v. Newark Libr. Ass’n, 45 A. 622 (N.J. 1900) (reversing a lower court decision that had upheld a graduated voting scheme at a library corporation in light of an 1897 statute that mandated one-share-one-vote for library corporations).

Why did restricted voting disappear from American corporate governance? Hilt noted some of its costs, including “cumbersome and uncertain director elections,” and impacts on the market for corporate control, as well as the fact that shareholders circumvented restricted voting rules.217Hilt, Shareholder Voting Rights, supra note 2, at 631. This Article adds to the possibilities. Restricted voting worsened problems associated with the emerging proxy system; one-share-one-vote provided a means for large shareholders to push back. At a minimum, one-share-one-vote increased the odds that the individuals controlling the company owned significant stock in it. And, as outlined in Part III, the cumulative voting trend, which began in the 1870s to empower minority shareholders in relation to large holders, also pushed corporate governance toward one-share-one-vote.218Since the emergence of financial derivatives and structured finance techniques, some scholars have argued that the rule of one-share-one-vote is no longer optimal in all situations. See Shaun Martin & Frank Partnoy, Encumbered Shares, 2005 U. Ill. L. Rev. 775, 776 (2005) (“[T]reating shares equally leads to perverse results.”).

The solution to the problem of proxy abuse eluded American lawmakers. Corporations in a nationalizing economy needed to raise large amounts of capital, which they did by selling stock to many investors who lived far from the location of the annual shareholders’ meeting. Lawmakers probably did not want to eliminate proxy voting altogether, which risked choking off an important source of corporate finance. On the other hand, state laws designed to regulate proxy voting did not end proxy abuse. At the middle of the century, one writer suggested that states had abandoned restricted voting “from an opinion that every guard can be easily evaded, and that stockholders had better be presented with a known evil, than deluded with a fallacious remedy.”219Johnson, supra note 36, at 630.

* * *

Restricted voting faded away in the second half of the nineteenth century.220See, e.g., Shareholder Voting Rights, supra note 2, at 628 (“Certainly by the end of the nineteenth century graduated voting rights became uncommon.”). Dunlavy placed the shift “from democratic to plutocratic voting rights” in the period that followed the Civil War—the decade or so that also witnessed the invention of cumulative voting.221Dunlavy, Citizens to Plutocrats, supra note 2, at 72. (“[The shift] put in place radically new power relations in the corporation, centralizing control in boards of directors dominated by the largest shareholders and turning the mass of smaller shareholders into mere investors by the 1870s.”). By the end of the nineteenth century, most states required one-share-one-vote for newly chartered corporations.222See Ratner, supra note 117, at 8 (“By the end of the nineteenth century . . . statutory restrictions on the rule of one vote per share in business corporations had virtually disappeared . . . .”). However, many corporations that had been chartered decades earlier, under different legal regimes, continued to employ graduated or capped voting into the twentieth century. Thus, vestiges of restricted voting likely influenced shareholders’ rights and corporate control as late as the 1920s or beyond.

III.  THE SHAREHOLDER’S RIGHT TO CUMULATE VOTES

Part I described the evolution of the shareholder’s right to vote by proxy and the development of the American proxy system. Part II connected that development to legal changes regarding per-share vote allocations. Together, these parallel tracks of change produced a system in which shareholders were entitled to delegate their votes, and voting power grew in direct proportion to investment. Proxy voting and one-share-one-vote developed synergistically: the former opened a gap between ownership and control, creating opportunities for expropriation and self-dealing, while the latter partly rebalanced power by empowering large shareholders to stand up to grasping corporate “kings”—the managers who might otherwise solicit, aggregate, and vote proxies, wielding unaccountable power over commercial empires.223See, e.g., King Phillips and His Dissatisfied Subjects, supra note 84 (describing the president of the Fitchburg Railroad Company as its “king”).

This Part shifts focus to the third major dimension of shareholder voting power—one that did not take shape until the last decades of the nineteenth century. This was cumulative voting: the shareholder’s right to aggregate votes across open seats in a director election. The invention of cumulative voting—and its instant popularization across American states—responded to a shifting balance of intra-corporate power, which had emerged to favor corporate managers and large block-holders at the expense of small shareholders. Essentially, the shift to one-share-one-vote, which gained momentum after the Civil War, was disempowering small shareholders in relation to wealthy, large holders, upsetting the balance of power that had been struck, however temporarily, at the beginning of the century. One-share-one-vote reintroduced the problem that restricted voting had sought to solve—the large holdings of wealthy investors translated directly into outsized voting power, relegating small shareholders to the margin of corporate governance.

Cumulative voting arose as a right of shareholding, starting in the 1870s, in counterbalance to that trend. Sometimes called “minority representation” by contemporaneous writers, cumulative voting provided a means for small shareholders to pool their votes to gain representation on the board. By 1900, nearly half of states had created a right to cumulative voting in corporate elections, reflecting significant political support for minority representation in American corporate governance and evidencing the hydraulic nature of intra-corporate power dynamics.224See Jeffrey N. Gordon, Institutions as Relational Investors: A New Look at Cumulative Voting, 94 Colum. L. Rev. 124, 144 chart I (1994) (showing changes in mandatory and permissive cumulative voting in U.S. states from 1870–1992). Yet, cumulative voting faced strong resistance from corporate managers and was largely defeated by obstructive tactics, litigation, and the rise of the classified board. In the 1920s, Harvard economist William Z. Ripley observed that cumulative voting had been “repeatedly attacked, whittled down, actively debated, over and over again” since the late nineteenth century.225William Z. Ripley, Main Street and Wall Street 105 (1927).

A significant literature has described the rise and fall of cumulative voting in American corporate governance.226Major works on cumulative voting include Gordon, supra note 224; Frank H. Easterbrook & Daniel R. Fischel, Voting in Corporate Law, 26 J. L. & Econ. 395 (1983); Whitney Campbell, The Origin and Growth of Cumulative Voting for Directors, 10 Bus. Law. 3 (1955); and Charles M. Williams, Cumulative Voting for Directors (1951) [hereinafter Williams, Cumulative Voting]. This Part summarizes that history, presents cumulative voting as one of the three dimensions of nineteenth-century shareholder voting rights, and shows how it related both to delegated corporate voting and to the shift to one-share-one-vote.

A. The Invention of Cumulative Voting

New York, a leading state in the trend to mandate one-share-one-vote, was the first state to consider cumulative voting. A delegate to the 1867 New York constitutional convention proposed corporate cumulative voting during a period of significant proxy abuse in the state.227See supra notes 62–67 and accompanying text (describing the New York Central proxy abuse scandal of 1857–1858 and the 1869 proxy abuse scandal at the Albany & Susquehanna Railroad; another major proxy abuse scandal, in Illinois in 1864, involved the Galena & Chicago Union Rail Road Company and New York stock brokers). The proposal was voted down after a debate.228Salem Dutcher, Minority or Proportional Representation 52–53 (1872). New York would never mandate cumulative voting but did pass a statute allowing corporations to opt in to cumulative voting in 1892.229Williams, Cumulative Voting, supra note 226, at 36 (discussing New York’s approach).

Two years after New York’s failed attempt to introduce corporate cumulative voting, the Chicago Tribune advocated cumulative voting as a cure for “many of the evils, mismanagements, and corruption of our private corporations” in advance of Illinois’s upcoming constitutional convention.230Personal Representation, Chi. Trib., Sept. 20, 1869, at 2; Reform in Private Corporations, Chi. Trib., Sept. 17, 1869, at 2. Cumulative voting was proposed at the Illinois constitutional convention for both political and corporate elections.231See Williams, Cumulative Voting, supra note 226, at 22–23 (“[T]he idea [of cumulative voting in corporate elections] appears to have developed from a contemporaneous proposal in the convention to provide for cumulative voting for members of the lower house of the legislature,” which “aroused much opposition and debate.”). “Give all the share-holders the right to plump their votes,” the Tribune argued.232Reform in Private Corporations, supra note 230.  Illinois’s constitutional convention went on to adopt cumulative voting for corporate elections, making it the first state to do so.233Ill. Const. art. XI, § 3 (1870) (“The general assembly shall provide, by law, that in all elections for directors or managers of incorporated companies, every stockholder shall have the right to vote, in person or by proxy, for the number of shares of stock owned by him, for as many persons as there are directors or managers to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock, shall equal, or to distribute them on the same principle among as many candidates as he shall think fit; and such directors or managers shall not be elected in any other manner.”); Campbell, supra note 226, at 6. The convention delegate who proposed it, Joseph Medill, was an owner of the Chicago Tribune and would become, the following year, Chicago’s mayor. Medill championed John Stuart Mill’s ideas about minority representation in democracy, which Mill had published in an 1861 work, and he also connected cumulative voting directly to proxy abuse.234Campbell, supra note 226, at 4; Gordon, supra note 224, at 142 n.44 (describing Medill’s enthusiasm for Mill’s ideas); John Stuart Mill, Considerations on Representative Government (1861). In a speech at the convention, Medill said,

The men who get control of stock by proxies, which they coax or purchase on misrepresentation, elect the entire board and then do as they please. The remainder of the stockholders are in the dark. . . . This majority having obtained absolute control of the offices of the company proceed to plunder the stockholders by high salaries, multiplication of offices, speculating in its money and franchises, and abusing their trusts in every respect. That this practice is common, is notorious throughout the Union as well as within this State, and it is growing worse all the time. This provision will unquestionably afford every stockholder more power of self-protection than he now possesses.235Williams, Cumulative Voting, supra note 226, at 24 (quoting Medill). According to Williams, no arguments in opposition to corporate cumulative voting were made at the convention. Id. at 25.

Medill’s words reveal how, at its origin, cumulative voting was presented as a solution to problems that arose from the proxy system—problems that appear to have hit a new high point by 1870.236In 1873, Illinois’s Supreme Court interpreted the constitutional provision on cumulative voting as “a constitutional expression in favor of the policy of voting by proxy in private corporations.” People ex rel. Chritzman v. Crossley, 69 Ill. 195, 198 (1873) (questioning the election of directors of the Illinois Masons’ Benevolent Society).

Cumulative voting did not, of course, take off in American political law.237Though this is true, it has been used in some state and local elections. From 1870 to 1980, Illinois used a system of proportional representation for three-seat districts in the lower house of its state legislature. See John R. Low-Beer, The Constitutional Imperative of Proportional Representation, 94 Yale L. J. 163, 186 n.103 (1984). From June 1871 to March 1873, Pennsylvania experimented with cumulative voting in town councils. See Act of Mar. 28, 1973, 1885 Pa. Laws 208 (abolishing cumulative voting originally established under “ ‘an act for the further regulation of boroughs’ ”); see also Richard H. Pildes & Kristen A. Donoghue, Cumulative Voting in the United States, 1995 U. Chi. Legal F. 241 (1995) (describing the use of cumulative voting in Chilton County, Alabama, to elect representatives to the County Commission and Board of Education since 1988). But it quickly soared to popularity in corporate law—and, in a number of states, was constitutionalized as a right. Illinois’s 1870 constitution stated that “every stockholder shall have the right to vote, in person or by proxy,” cumulatively, “and such directors or managers shall not be elected in any other manner.”238Ill. Const. art. XI, § 3, (1870). Within ten years of Illinois’s invention of corporate cumulative voting, five states had added corporate cumulative voting to their constitutions;239Campbell, supra note 226, at 7 (discussing West Virginia, Pennsylvania, Missouri, Nebraska, and California) (noting that California removed cumulative voting from its constitution in 1930 but retained mandatory cumulative voting for corporations in its statutory law); see Pa. Const. art. XVI, § 4 (1874). seven more added it to their state constitutions by the century’s end.240Campbell, supra note 226, at 7 (discussing North and South Dakota, Montana, Mississippi, Idaho, Kentucky, and South Carolina). Colorado, Michigan, and Ohio241In 1887, Ohio’s Supreme Court construed the state’s corporate statute narrowly to avoid recognizing a right of cumulative voting. State ex rel. Baumgardner v. Stockley, 13 N.E. 279 (Ohio 1887). The state’s General Assembly passed a law requiring cumulative voting in 1898. Act of Apr. 23, 1898, sec. 1, § 3245, 1898 Ohio Laws 230; Schwartz v. State ex rel. Schwartz, 56 N.E. 201 (Ohio 1900). See generally June A. Striegel, Cumulative Voting, Yesterday and Today: The July, 1986 Amendments to Ohio’s General Corporation Law, 55 Cin. L. Rev. 1265 (1987) (describing changes to Ohio’s laws regarding cumulative voting). In 1927, Ohio’s legislature amended the state’s corporate law to require shareholders to give advanced, written notice of the intent to cumulate votes and to allow staggered boards, “thus counteracting the effectiveness of cumulative voting.” Striegel, supra, at 1270–71; Ohio Rev. Code Ann. § 8623–50 (1926). Ohio’s General Assembly amended the state’s corporate law in 1986 to make cumulative voting permissive rather than mandatory. See generally Striegel, supra. made cumulative voting mandatory by statute rather than in their state constitutions over the same period.242After the turn of the century, six more states enacted mandatory cumulative voting: Arizona (1910), Wyoming (1911), Alaska (1923), Arkansas (1927), Washington (1933), and Hawaii (1945). See Williams, Cumulative Voting, supra note 226, at 34 exhibit 2. The National Banking Act was amended to require cumulative voting in 1933 as part of the New Deal. Banking Act of 1933, ch. 89, sec. 19, § 5144, 48 Stat. 162, 186–88. The 1928 Uniform Business Corporation Act included a provision for mandatory cumulative voting, as did the 1950 Model Business Corporation Act; the 1955 version of the model act made a change by including alternative provisions for either mandatory or permissive cumulative voting. See Campbell, supra note 226, at 9. Texas enacted a statute making cumulative voting mandatory for railroad corporations in 1876.243Campbell, supra note 226, at 10.

Charles M. Williams reviewed the debates that led to the adoption of cumulative voting in states across the U.S. and identified the main arguments offered in its support.244Williams, Cumulative Voting, supra note 226, at 26–30. The most prominent of these was an informational argument. Advocates argued that cumulative voting would enhance the information flowing to minority shareholders about the corporation’s affairs. Proponents of cumulative voting also argued that it would give a voice to minority shareholders in decision making, extend ownership participation to the corporation akin to that found in the partnership, and contribute to the “public welfare.”245Id. at 27–30. When Pennsylvania’s Supreme Court was called to interpret the state’s new constitutional provision on cumulative voting in 1876, it wrote that the legislature’s intent “was to work a radical change in the method of conducting corporate elections.”246Hays v. Commonwealth ex rel. McCutcheon, 82 Pa. 518, 521–22 (1876). Leading corporate law experts, such as William W. Cook, argued in favor of cumulative voting to strengthen shareholders’ power at the end of the century.247William W. Cook, The Corporation Problem 87 (1891) (“Cumulative voting gives the minority of stockholders a representative in the board of directors. Their representative, as a director, will know the innermost secrets of the corporation, and will be able to expose and prevent many of the frauds that are perpetrated by a board which represents the majority interest alone.”). In 1927, economist William Z. Ripley acknowledged its “validity for the purpose of tempering unduly autocratic management.”248Ripley, supra note 225, at 105.

Of the nineteen states that adopted a right to cumulative voting in corporate elections between 1870–1900, several—including Pennsylvania and West Virginia—moved to mandatory one-share-one-vote and cumulative voting at the same moment.249From 1849 to 1874, Pennsylvania capped votes at some kinds of manufacturing corporations at one-third of total votes. Act of Apr. 7, 1849, No. 368, 1849 Pa. Laws 563. Pennsylvania’s legislature repealed the 1849 law in the 1874 statute that enacted cumulative voting. Act of Apr. 29, 1874, No. 32, §§ 10–46, 1874 Pa. Laws 73, 78–107. For example, prior to adopting cumulative voting, West Virginia had mandated graduated voting for most types of corporations.250Act of Oct. 26, 1863, ch. 83, 1863 W. Va. Acts 76 (applying to corporations chartered for “manufacturing, mining or insuring,” for “savings institutions, savings banks, or banks exclusively of discount and deposit,” for corporations “constructing lines of magnetic telegraph, and carrying on the business properly pertaining to telegraph companies,” for corporations “establishing hotels, springs companies, gas works, water works, cemeteries, or building associations,” and various non-profit corporations). Under its first general incorporation statute, enacted in 1863, shareholders were entitled to one-vote-per-share up to one hundred shares, but only one vote for every four shares over one hundred shares.251Id. § 22. When, nine years later, in 1872, West Virginia amended its constitution to create a right to cumulative voting, it simultaneously mandated one-vote-per-share and eliminated graduated voting.252W. Va. Const. art. XI, § 4 (West, Westlaw through 2022).

It made sense to do this. First, cumulative voting was presented as increasing the voice of minority shareholders in firms with concentrated ownership—a main purpose of restricted voting. Thus, some state legislatures may have understood cumulative voting as an alternative to restricted voting. In addition, cumulative voting added to the complexity of director elections but its procedures were streamlined by moving to one-share-one-vote. West Virginia’s provision gave shareholders the right to “give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute them on the same principle among as many candidates as he shall think fit.”253Id. The provision would have needed different, more complex wording if cumulative voting was to be paired with graduated voting. In other words, cumulative voting may have seemed more workable if every share of stock was accorded the same voting power.

B. Cumulative Voting Meets Resistance

Corporate managers resisted cumulative voting in a national trend that underscored their fear about the potential for cumulative voting to shift power to minority shareholders. Corporations tried creative strategies, reflecting the growth, by that time, of a sophisticated bar of corporate lawyers. In 1885, the management of the Central California Water Company tried to defeat cumulative voting by electing directors one at a time, rather than together as a group; a California court rejected this as violating the state’s constitutional provision.254Wright v. Cent. Cal. Water Co., 8 P. 70, 73 (Cal. 1885). By 1900, a case about Michigan’s cumulative voting statutes had reached the U.S. Supreme Court. In Looker v. Maynard, the Supreme Court held that Michigan’s 1885 cumulative voting statute made cumulative voting mandatory for an insurance company that had been incorporated in 1869 under a different version of the state’s corporate law.255Looker v. Maynard, 179 U.S. 46, 54 (1900).

The robustness of the right conferred by cumulative voting laws turned, in part, on the size of the board itself and whether it was classified.256Campbell, supra note 226, at 11 (“Mathematically, where there are three places on the board, a voting unit which represents one share more than one-fourth of all shares represented at the meeting, and votes its shares cumulatively for one director, can elect its candidate. If the number of directors to be elected is seventeen, a voting unit which represents only one share more than one-eighteenth of all shares can elect a director.”). As a result, state laws setting the size of the board and authorizing (and placing limits on) board classification shaped the rights that shareholders enjoyed in states where cumulative voting was mandatory. To the extent that a state’s constitution made cumulative voting an individual right, statutory laws about board size and classification operated to limit those rights and, eventually, were challenged in court as violating state constitutions.257The most important of these cases was Wolfson v. Avery, decided by the Illinois Supreme Court in 1955. Wolfson had argued that provisions of the Illinois Business Corporation Act that authorized a classified board, elected on a staggered basis for terms of two or three years, violated the Illinois state constitution’s guaranty of a right to cumulate votes for corporate directors. Wolfson was the leader of an insurgent group seeking to depose the managers of the Montgomery Ward corporation; the Montgomery Ward proxy contest in 1955 was one of the biggest corporate issues in the press. The case went all the way to the Illinois Supreme Court, which held that the statute conflicted with the constitutional provision and was therefore invalid. Wolfson v. Avery, 126 N.E.2d 701, 701–12 (Ill. 1955). In the middle of the twentieth century, a shareholder of an Illinois corporation succeeded on a claim that a state law authorizing a staggered board conflicted with his state constitutional right to cumulative voting.258Id. This was followed by a second case, in Pennsylvania, in which several large corporations filed amicus briefs to preserve the use of classified boards.259See Janney v. Philadelphia Transp. Co., 128 A.2d 76 (Pa. 1956). The Pennsylvania Supreme Court sided with the companies and held that classified boards were permissible despite the state-law right to cumulate votes.

Delaware, New York, and New Jersey—the three states that would dominate twentieth-century corporate law—declined to adopt mandatory cumulative voting. Instead, all three eventually allowed companies to opt in to cumulative voting. New York led the pack by enacting a statute in 1892 that permitted cumulative voting.260Williams, Cumulative Voting, supra note 226, at 36 (discussing New York’s approach). New Jersey adopted the same approach in 1900,2612 N.J. Comp. Stat. § 36a (1911). and Delaware did so in 1917.262At least one commentator, writing at the end of the century, believed that cumulative voting could not be used in Delaware. See Thomas Conyngton, The Organization and Management of a Business Corporation: With Special Reference to the Laws of New York, New Jersey, Delaware, West Virginia 178 (1900) (“In the State of Delaware, through an unfortunate provision in the State Constitution, it is doubtful whether cumulative voting would be legal in corporations organized under the state law.”). When Delaware got around to authorizing cumulative voting in 1917, it may already have been a dead letter. In 1914, New York lawyer Samuel Untermyer wrote that there had never “yet been any justification attempted of the failure to enforce minority representation in corporations through cumulative voting.” Samuel Untermyer, Reasons and Remedies for Our Business Troubles: An Address Delivered Before the Commercial Club and the Pittsburgh Industrial Development Commission at Pittsburgh, May 22, 1914, at 11 (1914). One study found that, by 1937, 45% of corporations registered with the SEC were incorporated in these “permissive” states.263Williams, Cumulative Voting, supra note 226, at 12. By 1956, the permissive states claimed a majority of companies listed on the NYSE.264Ethe Solomon & Roger M. Pegram, Nat’l Indus. Conf. Bd., Inc., Studies in Business Policy, No. 90: Corporate Directorship Practices 26 (1959).

C. A Century of Relative Stability

The nineteenth century gave way to a new century in which shareholder voting rights stabilized. Twentieth-century corporate managers continued to enjoy significant advantages in proxy solicitation and voting, which they refined and enhanced. Starting in the New Deal, federal regulation of the proxy system gradually increased requirements for parties soliciting proxies to disclose accurate, material information to the shareholders whose delegated votes they sought. But it did not fundamentally change the proxy system or rebalance power within it. For the most part, the American proxy system continued to exist, largely in the form that it had achieved by the end of the nineteenth century, for another hundred years.

One-share-one-vote remained the dominant—even exclusive—approach to vote allocations in the United States until the very end of the twentieth century. In 1926, the NYSE expressly outlawed dual-class structures in corporations listed on its exchange; the prohibition endured until the 1990s when the major stock exchanges began allowing corporations to go public with dual-class structures.265See Caley Petrucci, Equal Treatment Agreements: Theory, Evidence & Policy, 40 Yale J. on Reg. 620, 631-32 (2023).

Cumulative voting, which had exploded in popularity at the end of the nineteenth century, had also been hobbled by countermeasures, such as the classified board, employed widely by corporate managers. Still, cumulative voting laws remained politically popular. Jeffrey Gordon noted a “high water mark” for mandatory cumulative voting laws in the late 1940s.266Gordon, supra note 224, at 145 (1994). Gordon reached this conclusion by studying the chronology of cumulative voting provisions in state constitutions and statutes. Thereafter, corporate managers began a largely successful campaign to end cumulative voting rights.267Gordon explains that change began in the 1950s:

The seven states that adopted cumulative voting in this period all chose the permissive form. In the 1960s and early 1970s the trend was even more pronounced: states began switching wholesale from mandatory to permissive. The 1980s were a rout. Twelve states switched from mandatory to permissive. By 1992, only six states maintained mandatory cumulative voting; forty-four jurisdictions (including the District of Columbia) chose the permissive form; one state (Massachusetts) did not permit cumulative voting. No important corporate law jurisdiction maintained mandatory cumulative voting.

Id. at 145–46. The timing of those efforts coincided with a surge of shareholder activism seeking to strengthen cumulative voting—a central plank of the “corporate democracy” movement. Cumulative voting was also championed by shareholder activists who fought to add women to corporate boards, a campaign that gained significant public attention in the late 1940s and early 1950s.268See Sarah C. Haan, Corporate Governance and the Feminization of Capital, 74 Stan. L. Rev. 515, 515–16, 537, 578 (2022). In 1943, the first woman shareholder to successfully present a shareholder proposal under the SEC’s new Shareholder Proposal Rule submitted a proposal that, among other things, demanded cumulative voting.269Harriett K. Skipwith, a shareholder of the White Sewing Machine Company, was one of the first thirteen individuals to submit a shareholder proposal under the SEC’s new rule. Skipwith submitted six proposals, five of which related to shareholder voting at the company. See Rolf Enno Wubbels, Regulation of Stockholder Proxies 87–91 (1949) (MBA Thesis, New York University Graduate School of Business Administration). Skipwith’s cumulative voting proposal won 23.75% of the vote. Id. at 106.

Over the 1950s and subsequent decades, shareholder activists lost the company-by-company battle for cumulative voting, and it became increasingly uncommon. Today, only six states entitle shareholders to use cumulative voting in director elections, and cumulative voting is rarely utilized by shareholders.270See Ariz. Rev. Stat. Ann. § 10-728(b) (2022); Cal. Corp. Code § 708 (West 2022); Haw. Rev. Stat. § 414-149 (2022); Neb. Rev. Stat. § 21-270 (2022); S.D. Codified Laws § 47-1A-728 (2022); W. Va. Code § 31D-7-728 (2022); see also John F. Coyle, Altering Rules, Cumulative Voting, and Venture Capital, 2016 Utah L. Rev. 595, 600–01 (2016) (noting that nineteen states gave shareholders a right to cumulate votes in 1980 but, by 2016, only Arizona, California, Hawaii, Nebraska, South Dakota, and West Virginia did). Other states continue to allow companies to opt in to cumulative voting, but do not provide a right to cumulative voting otherwise. Unlike proxy voting, which empowered corporate managers, and one-share-one-vote, which empowered large shareholders, cumulative voting—which was designed from the start to empower small shareholders—never fulfilled its promise.271See Coyle, supra note 270, at 607 (describing how cumulative voting is “all but unknown in Silicon Valley,” despite California’s law entitling shareholders to cumulate their votes in director elections).

IV. EPILOGUE: A NEW ERA OF DYNAMIC CHANGE

After the turn of the twenty-first century, shareholder voting rights entered a new era of accelerating change. In 2008, Marcel Kahan and Edward Rock proclaimed that voting had never been more important in corporate law.272Marcel Kahan & Edward Rock, The Hanging Chads of Corporate Voting, 96 Geo. L.J. 1227, 1227 (2008). Yet, at that moment, corporate law was still years away from important upheavals in broker voting, pass-through voting, client-directed voting, and proxy voting mechanics. Delaware’s legislature authorized corporations to hold virtual-only shareholder meetings in 2000,273See Lisa M. Fairfax, Virtual Shareholder Meetings Reconsidered, 40 Seton Hall L. Rev. 1367, 1367 (2010). but it wasn’t until the COVID-19 pandemic of 2020–2022 that tech-enabled, virtual meetings became dominant, accelerating the pace of technological advancement for shareholder voting.274See Sergio Alberto Gramitto Ricci & Christina M. Sautter, Wireless Shareholder Meetings, (unpublished manuscript) (on file with the author) (documenting the recent rise of virtual shareholder meetings).

This Part summarizes evidence that the United States has entered a new era of change in shareholder voting rights, recalling the strenuous change that characterized the end of the nineteenth century, when accelerating forces pulled shareholder voting rights in competing directions. Current developments invite a comparison between shareholder voting rights in the Gilded Age of the late nineteenth-century and the so-called New Gilded Age of the twenty-first.275See Jack M. Balkin, The First Amendment in the Second Gilded Age, 66 Buff. L. Rev. 979, 979–80 (2018). Balkin writes,

The First Gilded Age was the era of industrial capitalism that began in the 1870s and 1880s and continued through the first years of the twentieth century, leading to the Progressive Era. . . . The Second Gilded Age begins, more or less, with the beginning of the digital revolution in the 1980s, but it really takes off in the early years of the commercial Internet in the 1990s, and it continues to the present day.

See also, Kent Greenfield, Reclaiming Corporate Law in a New Gilded Age, 2 Harv. L. & Pl’y Rev. 1, 3–4 (2008) (describing factors contributing to a new Gilded Age). During both periods, shifts in the balance of power among three core corporate constituencies—corporate managers, large shareholders (now asset managers), and small shareholders—put pressure on shareholder voting rights law. This building pressure coincided with major fault-line shifts in shareholder voting rights, as the “tectonic plates” of shareholder voting—proxy voting rights, vote allocations, and cumulative voting rights—moved in relation to each other. In the present moment, technology is transforming shareholder voting. Advancements in technology, especially those relating to the dissemination of information and voting mechanics, are making possible changes that could not have occurred in the nineteenth century.

A. The Re-Concentration of Voting Power in the Big Three

The re-concentration of shareholding into a very small set of private actors is the headline story of twenty-first-century corporate organization. It has reversed more than a century of increasingly dispersed shareholding—what once was called the “democratization” of shareholding276See Haan, supra note 268, at 518, (describing rhetoric in the 1950s that characterized the expansion of shareholding as its “democratization”).—by channeling voting power away from retail investors into institutional investors. At first, this power was exercised by a varied group that included mutual funds, pension funds, insurance companies, and banks, among others. More recently, that power has continued to re-concentrate into a very small set of actors, especially the “Big Three” asset managers: BlackRock, State Street, and Vanguard.277See, e.g., Lucian Bebchuk & Scott Hirst, The Specter of the Giant Three, 99 B.U. L. Rev. 721 (2019) (arguing that voting in most significant public companies may come to be dominated in the future by the Big Three).

Because the Big Three have the voting power to drive corporate policy, and have shown an increasing willingness to intervene in corporate policy, this re-concentration has upset the balance of power between shareholders and managers; corporate managers can no longer rest assured that they control voting outcomes through proxy voting. (Indeed, in a twist of irony, retail shareholders have emerged as a more consistent source of voting support of management than institutional investors.)278See, e.g., Alon Brav, Matthew Cain & Jonathon Zytnick, Retail Shareholder Participation in the Proxy Process: Monitoring, Engagement, and Voting, 144 J. Fin. Econ. 492, 504 (2022) (finding, in an empirical study, that “[m]ore retail ownership leads to more successful management proposals and fewer successful shareholder proposals, consistent with retail having stronger support for management than other shareholders in close votes”). The power of the Big Three is potentially kept in check only by state regulation and by their fiduciary obligations to beneficial holders. Corporate law and finance academics continue to assess this re-concentration, especially in light of the Big Three’s new willingness to exercise power and push for corporate reforms.279See id. at 502; Dorothy S. Lund, Asset Managers as Regulators, 171 U. PA. L. Rev. 77 (2022).

B. A Countervailing Trend: Dual-Class Structures

Dual-class corporate structures allocate different levels of voting strength to different classes of stock. Dual-class structures began appearing in the 1980s, ending almost a century of adherence to the rule of one-share-one-vote.280See T. Boone Pickens Jr., Second-Class Stock Impairs Market, Wall St. J., Feb. 13, 1986, at 30 (protesting the recent emergence of dual-class capitalizations and arguing in favor of sunset provisions). Google’s adoption of a dual-class structure in 2004 popularized the approach, and it has been used with increasing frequency in prominent Silicon Valley firms to cement insider control.281See Adi Grinapell, Dual-Class Stock Structure and Firm Innovation, 25 Stan. J.L. Bus. & Fin. 40, 43 (2020) (describing the “rapidly growing use of dual-class structures among technology-based firms” from Google in 2004 to Snap in 2017); Young Ran (Christine) Kim & Geeyoung Min, Insulation by Separation: When Dual-Class Stock Met Corporate Spin-offs, 10 U.C. Irvine L. Rev. 1, 27 (2019) (noting that the current debate about dual-class structures “was sparked when Google (now Alphabet) adopted unequal voting rights at its IPO in 2004” and was “inflamed when Snap, Inc.’s founders offered only non-voting stock to the public in its IPO in 2017”). In 2021, twenty-three percent of all initial public offerings in the U.S. utilized a dual-class structure.282Newly Public Operating Companies Snapshot: 2021, Council of Institutional Invs. (2021), https://www.cii.org//Files/issues_and_advocacy/Dual%20Class%20post%206-25-19/2022_1_
19%20Dual-Class%20IPO%20Snapshot%202021_.pdf [https://perma.cc/35SF-7FN2] (includes traditional IPO, direct listing, and de-SPAC merger).
The swift rise of dual-class structures has attracted academic interest, producing a growing literature on the subject, especially since 2017.283On dual-class stock, see generally Zohar Goshen & Assaf Hamdani, Corporate Control, Dual Class, and the Limits of Judicial Review, 120 Colum. L. Rev. 941 (2020); Grinapell, supra note 281; Kim & Min, supra note 281; Andrew Winden & Andrew Baker, Dual-Class Index Exclusion, 13 Va. L. & Bus. Rev. 101 (2019); Dov Solomon, The Importance of Inferior Voting Rights in Dual-Class Firms, 2019 BYU L. Rev. 533 (2019); Lucian A. Bebchuk & Kobi Kastiel, The Untenable Case for Perpetual Dual-Class Stock, 103 Va L. Rev. 585 (2017).

The modern trend does more than merely return shareholder voting to the nineteenth-century model, in which different shares of stock carry different vote allocations. It reverses the restricted voting paradigm of the nineteenth century. In the nineteenth century, restricted voting diminished the voting strength of shares held by large stockholders, creating what some commentators described as a more democratic (or equal) voting power between middle-income investors and wealthy elites. As we saw in Part I, however, restricted voting also functioned to empower corporate managers because it made it easier for them to seize control by proxy. Though the popularity of restricted voting early in the nineteenth century may have reflected a democratic impulse (this is up for debate), it did not produce more democratic governance of corporations.

Today, dual-class structures enhance the voting strength of elite shares—and, this time, those shares are most likely to be held by management itself, often a company founder.284See, e.g., Kim & Min, supra note 281, at 26 (“Dual-class stock enables high-vote stockholders to dominate all shareholder voting agendas, from annual director elections to mergers and acquisitions approvals.”). Commentators have argued that dual-class strategies are a direct response to the twenty-first-century empowerment of institutional investors.285See, e.g., Goshen & Hamdani, supra note 283, at 992 (“Today, with the increasing dominance of institutional investors’ ownership and the rise of hedge fund activism, managers need formal control to pursue their idiosyncratic vision even when investors think that they are wrong, and the most effective tool to accomplish that end is a dual-class structure.”). As institutional investors’ power has increased, corporate managers at some companies have responded by using per-share vote allocations to rebalance power in their favor.

Modern dual-class structures empower corporate managers by comparatively diminishing the voting rights of other shareholders. That dual-class structures are common in the tech industry, where behemoths like Alphabet and Facebook, or Meta, exercise near-sovereignty over key, communicative aspects of Americans’ lives, only underscores how this voting-rights reform reverberates across corporate policies. Although shareholder advocates largely oppose dual-class structures, there is no sign that dual-class structures are going away, or even that limits on dual-class structures (such as sunset provisions), which are popular with academics and practitioners, will be mandated by law. The struggle between concentrating shareholder voting power on one side (asset manager capitalism) and concentrating management voting power on the other (dual-class stock) has yet to play out.

C. Changes in Favor of Beneficial Holders

The re-concentration of ownership in asset managers has been met not only with push-back from corporate managers but also with new demands from small shareholders. As a result of decades of change that began around the middle of the twentieth century, Americans mostly hold public-company stock through intermediaries, such as funds and brokers.286Scott Hirst, Frozen Charters, 34 Yale J. on Regul. 91, 93 (2017) (asserting that “[a]pproximately 85% of investors hold shares through brokers”). Though this
re-concentration has empowered asset managers, it also has sparked demands that asset managers provide greater transparency, accountability, and control over voting to beneficial holders—the clients for whose benefit the asset managers invest.287Jill E. Fisch, Standing Voting Instructions: Empowering the Excluded Retail Investor, 102 Minn. L. Rev. 11, 27–29 nn.98–112 (2017) (summarizing many of these changes). Internet technology has played a key role by providing a means for investors to learn more about their funds’ voting practices.288Kathleen Day, Prodding for Disclosure of Funds’ Proxy Votes: Most Portfolio Managers Don’t Reveal Policies or Results, but the SEC Is Taking a Closer Look, Wash. Post, Apr. 8, 2001, at H1 (discussing the role of the internet in spurring disclosure by mutual funds of proxy voting).

The first steps occurred in 2003. That year, new SEC rules went into effect requiring mutual funds to make public their policies on proxy voting and to disclose information about the votes they cast.289See Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies, Securities Act Release No. 8188, Exchange Act Release No. 47,304, Investment Company Act Release No. 25,922, 68 Fed. Reg. 6564 (Feb. 7, 2003); Burton Rothberg & Steven Lilien, Mutual Funds and Proxy Voting: New Evidence on Corporate Governance, 1 J. Bus. & Tech. L. 157, 159 (2006). A few years earlier, some socially responsible mutual funds had begun voluntarily providing investors with proxy voting information. See Day, supra note 288 (reporting that the Domini Social Fund did so in 1999). These rules were designed to provide investors with tools to choose funds whose proxy voting aligned with investors’ own preferences. At the same time, the NYSE restricted uninstructed broker voting on executive compensation—the first of several moves to limit broker voting of client stock.290See Orders Relating to Equity Compensation Plans, Exchange Act Release No. 34-48108, 68 Fed. Reg. 39995 (June 30, 2003); see also Hirst, supra note 286, at 103–04 (“Because almost all brokers are members of the NYSE, the NYSE Rules govern essentially all broker voting in companies listed on U.S. exchanges.”). In 2006, an NYSE working group recommended that brokers be prohibited from voting uninstructed stock in uncontested director elections.291Report and Recommendations of the Proxy Working Group to the New York Stock Exchange, supra note 32, at 4. This change did not go into effect until 2010.292NYSE Rule 451, 2 N.Y.S.E. Guide (CCH) ¶ 2451 (Dec. 2009); NYSE Rule 452, 2 N.Y.S.E. Guide (CCH) ¶ 2452 (Dec. 2009). Section 957 of the 2010 Dodd-Frank Act codified this change. Scott Hirst asserted in 2017 that this change “went almost unremarked upon by academic researchers.” Hirst, supra note 286, at 98. Two years later, in 2012, the NYSE further expanded “Broker May Not Vote” matters to include proposals to declassify the board and to eliminate a supermajority voting requirement, among other matters.293Information Memorandum from NYSE Regul. to All NYSE and NYSE AMEX Equities Members and Member Orgs. (Jan. 25, 2012), https://www.nyse.com/publicdocs/nyse/markets/nyse/rule-interpretations/2012/12-4.pdf [https://perma.cc/N5KP-RAJM].

The crux of all these changes has been to make both funds and brokers accountable to their clients when they vote their clients’ stock—a relatively uncontroversial move that reduces agency costs while also protecting the interest of beneficial holders in determining how stock held for their benefit is voted. Yet the implication of these changes for the exercise of power in firms is substantial. These changes shift power from holders of record (asset managers and brokers) to beneficial holders, a group that includes public pension funds and retail shareholders. After many decades in which the voting power of intermediaries grew at the expense of small holders, these recent changes present a countervailing shift of power in favor of smaller holders.

D. Pass-Through & Client-Directed Voting

Another significant trend has been the rise of pass-through and “client-directed” voting strategies, especially through the use of new technologies. In 2021, one of the largest asset managers, BlackRock, announced new pass-through voting for index fund clients. Under this policy, the votes for about forty percent of indexed equities will be directed by clients of the asset manager.294See, e.g., Dorothy Flynn & Keir Gumbs, Corporate Governance Trends in 2022 and Beyond, Harv. L. Sch. F. on Corp. Gov. (Feb. 28, 2022), http://corpgov.law.harvard.edu/2022/02/28/corporate-governance-trends-in-2022-and-beyond/ [http://perma.cc/G4SK-L9DF] (explaining that under BlackRock’s approach to pass-through voting, investors can “submit their votes using their own infrastructure”). This change restores to pension funds, who invest in indexed products, something close to direct voting rights. It reflects both client demand for direct voting and a willingness of asset managers to relinquish voting power over shares under their control. Since it is adopted as a matter of practice, and is not required by law or regulation, the asset manager controls how voting control is allocated—for example, there is nothing stopping asset managers from allocating all of a fund’s votes based upon the preferences of a majority of clients.

Client-directed voting is a term coined in 2006 to describe advance voting instructions—a mechanism in which clients instruct the voting of their shares in advance, using specified criteria.295See, e.g., Fisch, supra note 287; James McRitchie, An Open Proposal for Client Directed Voting, Harv. L. Sch. F. on Corp. Gov. (July 14, 2010), http://corpgov.law.harvard.edu/2010/07/14/an-open-proposal-for-client-directed-voting/ [https://perma.cc/MR82-K4RE] (crediting the term to Stephen Norman in 2006); Alan L. Beller, Janet L. Fisher & Rebecca M. Tabb, Council of Institutional Invs., Client Directed Voting: Selected Issues and Design Perspectives (2010), http://www.cii.org/files/publications/white_papers/08_31_10_client_directed_voting_white_paper.pdf [http://perma.cc/LP62-KL84] (describing client directed voting as “one of the ‘next new things’ ”). This “set it and forget it” approach could vest significant power in the intermediary if the intermediary determines which advanced instructions its clients will choose among. Various market participants have endorsed the idea of client-directed voting, but the SEC has yet to enact rules that would make its implementation possible.

Both pass-through and client-directed voting respond to rising interest among investors, including retail shareholders, in direct-voting strategies.296See Working to Expand Proxy Voting Choice for our Clients, BlackRock (Oct. 31, 2021), http://
http://www.blackrock.com/corporate/about-us/investment-stewardship/proxy-voting-choice [http://perma.cc/
HD4P-T37E] (“[M]ore of our clients are interested in having a say in how their index holdings are voted.”).
Put simply, investors want the benefits of index investing and brokerage accounts, combined with the benefits of voting choice.

E. The Universal Proxy

Even more recently, reform of the proxy system has occurred at the federal level. While the proxy system was relatively stable over the twentieth century, one problem remained constant: shareholders who signed away their votes did so using proxy cards that limited their choice of candidates.297For more than a century, proxy rules and practices had made it difficult for shareholders to successfully nominate and elect dissident candidates to the board. In 2010, the SEC adopted a rule allowing shareholders to include their own director nominees in the company’s proxy materials; the D.C. Circuit Court of Appeals invalidated the rule. Bus. Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011); see Jill E. Fisch, The Destructive Ambiguity of Federal Proxy Access, 61 Emory L.J. 435, 435 (2012). Meanwhile, Delaware amended its corporate law to authorize a corporation’s shareholders to adopt a proxy access bylaw. See Del. Code Ann. tit. 8, § 112 (2009). By 2019, proxy access had become a “mainstream bylaw provision at S&P 500 companies,” but no shareholder had successfully taken advantage of a proxy access right. See Holly J. Gregory, Rebecca Grapsas & Claire Holland, The Latest on Proxy Access, Harv. L. Sch. F. on Corp. Gov. (Feb. 1, 2019), http://corpgov.law.harvard.edu/
2019/02/01/the-latest-on-proxy-access/ [http://perma.cc/88MP-Z7JD ].
For all of the twentieth century, and almost a quarter of the twenty-first, shareholders generally could not vote by proxy without accepting limits on their freedom of choice.298See James D. Cox & Randall S. Thomas, A Revised Monitoring Model Confronts Today’s Movement toward Managerialism, 99 Tex. L. Rev. 1275, 1293 (2021). Under longstanding rules,

a shareholder who does not attend the stockholder meeting is unable to vote for some of management’s nominees and the nominees of the dissidents on the dissidents’ proxy. This is because, under corporate law, if a shareholder submits two different proxies the most recently executed proxy is counted on the theory it revokes the earlier proxy.

Id. In the 1990s, shareholders began withholding votes for candidates on the slate provided on the proxy form, to “express their lack of confidence in management’s performance.” See Joseph A. Grundfest, Just Vote No: A Minimalist Strategy for Dealing with Barbarians Inside the Gates, 45 Stan. L. Rev. 857, 865 (1993). This practice only underscored the shareholder’s lack of real choice when voting by proxy in a contested election.

Director elections held after August 31, 2022, are subject to new SEC rules that introduce the universal proxy.299See Kai Liekefett Derek Zaba & Beth Berg, SEC Dramatically Changes the Rules for Proxy Contests, Harv. L. Sch. F. on Corp. Gov. (Nov. 19, 2021), http://corpgov.law.harvard.edu/2021/11/19/
sec-dramatically-changes-the-rules-for-proxy-contests/ [http://perma.cc/C9Z5-6DFN]; Universal Proxy, Exchange Act Release No. 93,596, Investment Company Act Release No. 34,419, 86 Fed. Reg. 68330 (Dec. 1, 2021). The SEC had originally proposed a universal proxy in 2016. See Universal Proxy, Exchange Act Release No. 79,164, Investment Company Act Release No. 32,339, 81 Fed. Reg. 79122 (Nov. 10, 2016). As Cox and Thomas explain, the SEC let the matter lapse “[i]n the face of strong opposition from company CEOs, who argued the universal proxy would prove disruptive.” Cox & Thomas, supra note 298, at 1294.
The universal proxy allows shareholders who vote by proxy to “mix and match” votes among candidates from different slates, the way that American voters can choose among candidates from different political parties in political elections.300Scott Hirst, Universal Proxies, 35 Yale J. on Regul. 437, 455–57 (2018) (originating the helpful “mix and match” explanation). Though sometimes described as a “universal proxy ballot,” a universal proxy is not a ballot in the conventional sense.301Id. at 453 (“The proxy card is not a ballot—submission of a proxy card does not represent the act of voting itself.”); Paul Menke, Universal Proxy Ballots and Private Ordering, 46 J. Corp. L. 445, 445 (2021). A proxy card is a form delegating the shareholder’s vote—and a universal proxy simply offers the shareholder a greater range of choice for instructing the proxyholder about how to exercise the delegated vote. American shareholders may perceive the universal proxy as a ballot because it will resemble an absentee or mail-in ballot of the sort used in political elections. The universal proxy brings shareholder voting close to the political model. It may affect electoral outcomes, in particular by making it easier for dissident candidates (those not on the management slate) to get elected.302The literature on the universal proxy is thin. See generally Menke, supra note 301 (arguing that corporations should be able to opt-in to universal proxies); Hirst, supra note 300 (arguing that the universal proxy is likely to cause distorted proxy contest outcomes in some cases).

* * *

The new developments described in this Part represent potentially significant changes to two of the three dimensions of shareholder voting rights explored in this Article (proxy voting and vote allocations). The history shows that the dimensions of nineteenth-century shareholder voting rights functioned interdependently; changes along one track influenced other, parallel tracks, in a process that shifted voting power back-and-forth among three core constituencies: corporate managers, small shareholders, and large shareholders. Though these tracks were governed by state law during the nineteenth century, they are significantly in the domain of federal law (or national stock exchanges) today.

With change occurring along three dimensions, shareholder voting rights in the nineteenth century were relatively fluid—and they proved difficult for legislatures to regulate effectively. The result was a long period of state-by-state experimentation, with significant variation. By the end of that century, however, state experimentation was coalescing into the now-familiar “race to the bottom.” Corporate managers had reshaped the law governing shareholder voting rights in ways that struck the balance of power in their own favor. This generated political resistance that would endure for decades. It set the stage for the tremendous industrial growth of the twentieth century, but it also assured that small shareholders would play little meaningful role in the governance of the companies in which they invested.

Several lessons emerge from this history. First, the primary conflict in corporate law is not binary but tripartite, among small shareholders, large shareholders (now asset managers), and corporate managers. Second, the wins and losses in this conflict can be difficult to discern except in hindsight. However, there can be little question that corporate power is distilled through changes to shareholder voting rights—and that changes in one area of shareholder voting increases or relieves pressure on other areas. Corporate power is hydraulic. Finally, when the dust settles, one set of actors may hold legal advantages that persist for decades. At the end of the nineteenth century, corporate managers emerged victorious and exercised de facto voting control over most big corporations for much of the twentieth century. Today, large asset managers are challenging corporate managers for power, with technologically-enabled small shareholders demanding greater voice. Whether corporate managers will again emerge as winners remains to be determined.

CONCLUSION

This Article has presented nineteenth-century shareholder voting rights in a new light, expanding the conventional account from one dimension of legal change to three. This new account is not merely academic—it helps us understand present-day currents that are shaping corporate law.

By the nineteenth century’s end, an evolving paradigm revealed three groups jockeying for power inside firms: wealthy elites holding large blocks of stock; corporate managers, who often sought a role at the top of the corporate hierarchy with little financial stake; and a growing mass of small stockholders. Legal innovations in shareholder voting over the nineteenth century created a nearly constantly changing balance of power in corporate governance, which was made only more complex by economic developments in a dynamic, industrializing economy. Against this backdrop, the balance of power inside firms was slowly tilting in favor of corporate managers, who entered the twentieth century with the upper hand.

In nineteenth-century America, per-share vote allocations were an important determinant of shareholder voting power, and so were two other dimensions of shareholder voting: the rights to delegate and to cumulate the shareholder vote in a corporate election. As this Article has shown, these three dimensions of shareholder voting developed dynamically over what was, in hindsight, a century of kinetic change in corporate power. The three-dimensional model helps explains that kinetic change—and provides a new perspective on the rise of one-share-one-vote—while reconceptualizing the present. When we cease to focus exclusively on vote allocations, our picture of shareholder voting rights gains significant depth.

This Article’s new account of nineteenth-century history suggests that the rise of proxy voting contributed to the shift to one-share-one-vote. The question of why democratic corporate voting was replaced by one-share-one-vote over the nineteenth century remains an important, if unresolved, historical mystery. Today we know, for example, that the shift to one-share-one-vote was essential to the emergence of the “rationally apathetic shareholder” who devalues or even foregoes control rights.303See, e.g., Hirst, supra note 286, at 104 (noting that it is not “rational” for shareholders to vote in corporate elections because “acquiring information to vote is costly and the likelihood of an individual influencing the outcome of an election is vanishingly small,” and adding that “[b]ecause shareholder votes are weighted by the number of shares held, it is even less likely that an individual shareholder will influence the outcome of a shareholder vote”).

Assessment of nineteenth-century shareholder voting rights reveals not only three interactive dimensions of shareholder voting, but a tripartite division of power operating behind them. The three-group paradigm is evident in the changing mix of voting-rights laws and the interests that these changes served. Graduated voting schemes, which were common in the early nineteenth century, curbed the voting power of wealthy block-holders in favor of small shareholders. Proxy voting, too, held promise to empower small shareholders—but was swiftly co-opted by corporate managers to enhance their own power. Corporations that used restricted voting were particularly vulnerable to proxy abuse. In a few states, legislatures enacted laws prohibiting proxy voting by managers—but states also responded with a gradual shift in favor of one-share-one-vote, first as a default and later as a mandatory rule. One-share-one-vote shifted power in favor of wealthy block-holders, problematizing shareholder governance all over again. The invention of the right to cumulative voting, in the last three decades of the century, functioned to restore a measure of voting power to small holders as a partial response to vote allocations and proxy practices that had empowered both large block-holders and corporate managers. The political popularity of cumulative voting was a testament to Americans’ urgent desire to rebalance power inside corporations.

The three-group paradigm is important not only because it lies behind the three-dimensional change in shareholder voting rights during the nineteenth century (and today), but also because it stands in contrast to the two-group paradigm that would go on to define twentieth-century corporate theory. Early twentieth-century corporate theorists noted an emerging separation of ownership and control, and law-and-economics scholars characterized the separation as involving two—not three—corporate constituencies battling each other for dominance. The separation of ownership and control collapsed distinctions among shareholders and treated wealthy, block-holding shareholders and working-class, small shareholders as members of a monolithic group. In the classic model, shareholders and managers faced off across a bilateral divide. Yet, a close history of nineteenth-century shareholder voting rights suggests a trilateral power struggle, one that was recognized politically and in law.

Recent developments are challenging paradigms that were nearly set in stone by the end of the nineteenth century. Two of the three dimensions of shareholder voting rights are once again in flux, with dual-class structures responding to re-concentration and with new rules around mutual fund voting, broker voting, pass-through voting, and the universal proxy. Though the ultimate result of these changes cannot be known—and though today’s change is being driven at the national level, in contrast to the nineteenth century’s state-by-state change—the history of nineteenth-century shareholder voting rights provides some clues about what happens when parallel sets of rules governing shareholder voting rights evolve in relation to each other. Winners and losers will emerge as power resolves itself through the shareholder franchise.

 

96 S. Cal. L. Rev. 881

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* Class of 1958 Uncas and Anne McThenia Professor of Law, Washington and Lee University School of Law. For their thoughtful feedback on drafts of this article, the author thanks Eric Hilt, Andrew Jennings, Elizabeth Pollman, and Jonathon Zytnick, and the faculties of Brooklyn Law School and the University of Houston Law Center. She is grateful to Alexander Keyssar for his generous insights, and to the editors at the Southern California Law Review for their superb editing.

Inflation, Market Failures, and Algorithms

Inflation is a problem of tremendous scale. But the leading response to inflation—raising interest rates—also poses economic risks. Raising interest rates rapidly may increase unemployment and heighten the chance of recession. This Article argues that there is a better way to think about anti-inflation policy. Rather than defaulting to interest rate hikes that harm markets, policymakers should prioritize laws that lower prices while improving markets. Most importantly, there is evidence that businesses have raised prices by colluding with one another, exploiting consumers’ behavioral and informational limits, and lobbying for protectionist laws that block competition. Artificial intelligence pricing algorithms and dark pattern online manipulation tools have further enhanced businesses’ ability to charge higher prices. Although those preexisting market failures did not cause the high levels of inflation that began in 2021, they create new inflation challenges and opportunities.

A key challenge is that in an era of automated pricing algorithms and market failures, direct solutions to inflation, like the end of the war in Ukraine, may not bring the full level of lowered prices that would be otherwise expected. Fortunately, market failures now also provide an inflation-fighting tool that would not otherwise exist—like a piggy bank of market improvements that the law can break open to offset some portion of inflation. Interest rate hikes would surely still be needed, perhaps to address the bulk of inflation, but avoiding even a small amount of economically harmful rate hikes is still worthwhile. Many of these market improvement opportunities lie in existing administrative agency authority, but considerably more could be done through new legislation, such as a wide-ranging Price Transparency Act. Moreover, these legal reforms are desirable independent of inflation because they would improve efficiency. Thus, policymakers should resist the urge to rely solely on interest rate hikes that destroy wealth and should instead simultaneously pursue legal rules that promote prosperity. Doing so could even transform a grave crisis into a tremendous economic opportunity.

INTRODUCTION

The dominant narrative surrounding inflation is that we must pick our economic poison: high inflation or high interest rates. Doing nothing and allowing high inflation to continue can cause economic volatility and leave people poorer if their wages fail to keep up.1There is a debate as to the extent and nature of harm resulting from inflation, but there is little doubt that high levels of inflation come with risks. See, e.g., Yair Listokin & Daniel Murphy, Macroeconomics and the Law, 15 Ann. Rev. L. & Soc. Sci. 377, 383 (2019) (“High inflation is costly both because high (and volatile) inflation is associated with uncertainty over the value of contracts, thereby reducing exchange and output in the economy, and because high inflation can cause a reduction in the amount of labor or other factors of production supplied in the economy.”); Hongyi Li & Heng-fu Zou, Inflation, Growth, and Income Distribution: A Cross-Country Study, 3 Annals Econ. & Fin. 85, 87 (2002) (“When inflation is taking place, price rises tend to run ahead of increases in money wages. Therefore inflation leads to a shift of income away from wage earners, and toward profits.”). Unfortunately, the leading policy response currently being deployed—increasing interest rates—also tends to be economically harmful, even if less harmful than inflation.2There is some economic debate about whether inflation or interest rate increases are more harmful, but because this Article focuses on comparing interest rates to other anti-inflation tools, answering that question is unnecessary for the core arguments below. The aim of interest rate hikes is to encourage less spending, which brings down prices. However, lower spending levels also slow down the economy and increase the chance of a recession.3Note that tax increases, such as those in the Inflation Reduction Act, have a similar effect. See, e.g., NPR Planet Money, Inflation Reduction Actually, NPR, at 4:59 (Aug. 19, 2022), https://www.npr.org/transcripts/1118552609 [https://perma.cc/2P7K-KQQB] (“The biggest way the Inflation Reduction Act takes money out is through new taxes on big companies. This will pull back spending . . . .”). Rising interest rates thus risk increasing poverty, eliminating jobs, and making households of all income levels worse off.4See, e.g., Jeanna Smialek, Fed Confronts a ‘New World’ of Inflation, N.Y. Times (June 24, 2022), https://www.nytimes.com/2022/06/24/business/economy/fed-inflation.html [https://perma.cc/
A7UC-WFVQ] (noting that the “painful process [of rate increases] would ramp up the risk of a recession that would cost jobs and shutter businesses”).

What if this choice between two poisons is framed incorrectly? This Article argues that lawmakers and scholars have paid insufficient attention to a more attractive policy tool for helping to reduce inflation: using legal authority to correct market failures. Three categories of market failures are particularly worthy of greater consideration. First, inflation policy conversations proceed without considering the research, especially related to behavioral economics, that suggests that even prior to the recent rise in inflation businesses deployed numerous strategies to cause customers to pay higher prices on everything from mortgages to paper towels.5See, e.g., Jon D. Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: Some Evidence of Market Manipulation, 112 Harv. L. Rev. 1420, 1449 (1999) [hereinafter Hanson & Kysar, Evidence of Market Manipulation] (“Pricing has become still another method of manipulation.”); Jon D. Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: The Problem of Market Manipulation, 74 N.Y.U. L. Rev. 630, 635 (1999) (“[M]arket outcomes frequently will be heavily influenced, if not determined, by the ability of one actor to control the format of information, the presentation of choices, and, in general, the setting within which market transactions occur.”) Hanson and Kysar provide numerous examples, including that “the manufacturer of Campbell’s Soup knows, as an empirical fact, that placing soup cans out of alphabetical order on store shelves will increase sales by exactly six percent” and “retailers, studying such research as . . . the Effects of Music on Purchasing Behavior, can lower customer blink rates from the normal average of thirty-two times a minute to a narcotic fourteen blinks a minute.” Id. at 748. Price transparency laws can help consumers find the best deals and thereby counteract those price increases.6See infra Section II.B. (summarizing the empirical literature on price increases and the law’s ability to respond). Second, another overlooked way to fix market failures would be to remove excess licensing laws, which raise consumer prices by requiring everyone from hairstylists to casket sellers to undergo training and pass an exam before offering their services.7See Morris M. Kleiner & Alan B. Krueger, Analyzing the Extent and Influence of Occupational Licensing on the Labor Market, 31 J. Lab. Econ. S173, S179 (2013) (estimating that such practices raise prices paid by about 15%). Finally, scholars and policymakers have paid some attention to antitrust as an inflation-fighting tool, but most have dismissed that possibility without analyzing the institutional nuances of different types of antitrust intervention and how they might fit into a broader anti-inflation toolkit.8See Paul Krugman, Opinion, Why Are Progressives Hating on Antitrust?, N.Y. Times (Jan. 18, 2022), https://www.nytimes.com/2022/01/18/opinion/biden-inflation-monopoly-antitrust.html [https://
perma.cc/JVL8-CR5T] (observing that “linkage of monopoly power to inflation is facing vehement, almost hysterical, criticism”). For one of the leading recent academic calls for using antitrust to fight inflation, see Hal Singer, Antitrust Should Be Used to Fight Inflation, Am. Prospect (Feb. 2, 2022), https://prospect.org/economy/antitrust-should-be-used-to-fight-inflation [https://perma.cc/42YV-5K5H].
Because legal reforms in each of these areas—price transparency, government licensing, and antitrust—move markets toward what economic theory refers to as their “perfect” equilibrium,9More specifically, perfect competition occurs when informed consumers make rational choices in a market filled with many competing sellers, among other conditions. Of course, despite the widespread use of this concept in modeling, it is widely recognized that perfection is unattainable. On the influence and limits of this notion, which draws on the concept of the widely influential concept of “perfect competition,” see Herbert Hovenkamp & Fiona Scott Morton, Framing the Chicago School of Antitrust Analysis, 168 U. Pa. L. Rev. 1843, 1854 (2020). The terminology of “perfect competition” is not used below because legal scholars tend to associate competition with antitrust, whereas the focus here is on other areas of law that advance related goals. they will be referred to below as “market improvement laws.”

Importantly, effective market improvement laws are desirable even in normal times. They would overall increase efficiency, promote economic growth, raise employment, and make a dent in economic inequality.10See, e.g., Jonathan B. Baker & Steven C. Salop, Antitrust, Competition Policy, and Inequality, 104 Geo. L.J. Online 1, 11–12 (2015) (“Market power . . . contributes to growing inequality.”); Oren Bar-Gill & Rebecca Stone, Pricing Misperceptions: Explaining Pricing Structure in the Cell Phone Service Market, 9 J. Empirical Legal Stud. 430, 453–54 (2012) (discussing in passing the regressive redistribution resulting from market failures related to behavioral economics); Einer Elhauge, Horizontal Shareholding, 129 Harv. L. Rev. 1267, 1267 (2016) (summarizing the effects of improved antitrust on inequality); Rory Van Loo, Broadening Consumer Law: Competition, Protection, and Distribution, 95 Notre Dame L. Rev. 211 (2019) (surveying the literature and finding evidence that market failures related to consumer markets, including both consumer protection and antitrust, may contribute significantly to economic inequality); Clark C. Havighurst & Barak D. Richman, The Provider Monopoly Problem in Health Care, 89 Or. L. Rev. 847, 865 (2011) (“Allowing nonprofit hospitals or other providers to gain market power by merger . . . causes extraordinary redistributions of wealth . . . .”). Note that the effects on inequality are subject to debate, especially regarding how greater competition might have an impact on workers. The above authors explore some of these uncertainties, and for greater scholarly skepticism about antitrust reducing inequality, see Daniel A. Crane, Antitrust and Wealth Inequality, 101 Cornell L. Rev. 1171, 1171, 1183 (2016); cf. Hiba Hafiz, Rethinking Breakups, 71 Duke L.J. 1491 (2022) (raising concerns about the fate of labor following antitrust breakups). Consequently, this Article concludes that policymakers should prioritize addressing whatever portion of inflation is possible through market improvement laws and other laws that are overall more economically beneficial.11The level of inflation is calculated merely by collecting information about the prices paid, and thus these mechanisms for lowering prices can offset inflation even if the underlying market failures did not cause the inflation in the first place. See infra Part I. Whether that amounts to reducing one point of inflation through market improvements or ten points, and even if interest rates still need to be used in addition to market improvement laws, the result would be some quantity less of interest rate increases that have heavy economic costs.

Despite the economic appeal of market improvement laws, scholars and lawmakers have almost completely ignored them in fighting inflation. The market improvement reforms that this Article concludes are most immediately promising—price transparency laws—are not even part of those debates. Although antitrust laws had their legislative moment in the spotlight in the 1970s,12See Antitrust Procedures and Penalties Act, Pub. L. No. 93-528, § 3, 88 Stat. 1706, 1708 (1974) (increasing fines and adding felony penalties for violations of the Sherman Act). scholars dismissed the idea that they could be used to reduce inflation based on many arguments that are not valid today, if they ever were.13See, e.g., Milton Handler, Antitrust—Myth and Reality in an Inflationary Era, 50 N.Y.U. L. Rev. 211, 222 (1975) (dismissing the idea of using antitrust to counteract inflation). These various objections are considered in greater depth below, but one common argument is that market failures did not cause inflation and thus it would be a mistake to look to market failures as a solution.14See infra Parts I & III (analyzing the sources of resistance to antitrust and offering new reasons why some skepticism is warranted). However, that reasoning would mean that we should not rely on interest rates to address all of inflation either, since the war in Ukraine and supply-chain disruptions in China caused much of the current inflation. Yet interest rates are used without asking whether they are addressing the direct causes of inflation. Despite the limits to such objections, similar arguments are being repeated today to dismiss the idea of using antitrust.15See infra Parts I & III. The real question should instead be what will work to address inflation.

If win-win market improvement laws exist, why would so many observers overlook and even dismiss their importance without engaging in a more nuanced legal institutional analysis? Although politicization clouds the debate, conceptual barriers also impede a comprehensive analysis. As a threshold matter, the scholarly inattention to market improvement laws partly reflects intellectual silos. Economists, like legal scholars, are not generalists. They focus on either macroeconomics or microeconomics, and within those broad areas have further specializations. Inflation lies in the domain of macroeconomics. Indeed, the leading alternatives to interest rates that lawmakers have pursued are macroeconomic tools such as taxes and federal spending, as demonstrated by the Inflation Reduction Act of 2022.16See President Joseph Biden, Remarks by President Biden on the Inflation Reduction Act of 2022 (July 28, 2022), https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/07/28/
remarks-by-president-biden-on-the-inflation-reduction-act-of-2022 [https://perma.cc/HWJ9-P37F] (summarizing the legislation, whose main inflation components include tax adjustments). The Act’s Medicare price negotiation provision is, however, microeconomic. Id. As mentioned above, tax increases, like increasing interest rates, tend to have the effect of slowing down the economy. See NPR Planet Money, supra note 3.
Yet consumer law, antitrust, and other market improvement laws are the domain of microeconomics.17See Yair Listokin, Law and Macro: What Took So Long?, 83 Law & Contemp. Probs. 141, 146 (2020). Further complicating matters, most legal scholars engaging in economic analysis focus on microeconomics.18Mark Kelman, Could Lawyers Stop Recessions? Speculations on Law and Macroeconomics, 45 Stan. L. Rev. 1215, 1216 (1993) (“When legal scholars and law students discuss the impact of economics on their understanding of law, they invariably think about microeconomics, not macroeconomics.”). A notable exception to this is financial regulation scholarship. Although areas such as financial regulation involve macroeconomic considerations, the broader inattention to macroeconomics has prompted the observation that “[l]aw and economics should be called law and microeconomics.”19See Yair Listokin, Law and Macroeconomics, U. Oxford (Feb. 10, 2017), https://
http://www.law.ox.ac.uk/business-law-blog/blog/2017/02/law-and-macroeconomics [https://perma.cc/68CZ-LNAU]; see also Yair Listokin, Law And Macroeconomics: Legal Remedies To Recessions (2019) (outlining the disconnect between macroeconomic approaches and legal scholarship).
Consequently, most of the scholars best situated to design microeconomic market improvement laws rarely pay attention to macroeconomic issues like inflation.20See Listokin, supra note 17, at 147 (noting financial regulation as a rapidly changing exception).

These conceptual silos may help explain why the macroeconomic inflation toolkit has not fully incorporated recent microeconomic evidence about market failures. Inflation has not been a major problem in the U.S. since the early 1980s.21See, e.g., Donald Tomaskovic-Devey & Ken-Hou Lin, Financialization: Causes, Inequality Consequences, and Policy Implications, 18 N.C. Banking Inst. 167, 171 (2013) (stating that “[o]ne of the central developments of the 1970s crisis era was . . . high inflation,” which was not “slowed” until the “early 1980s”). Whereas in 1980 the average markup on goods sold in the United States was 21% above cost, by 2016 that figure had reached 61%.22Jan De Loecker, Jan Eeckhout & Gabriel Unger, The Rise of Market Power and the Macroeconomic Implications, 135 Q.J. Econ. 561, 562 (2020). This data alone suggest that there could be a far greater magnitude of opportunity for the law to improve markets than there was in 1980.23A rise in markups is not inevitably anticompetitive, requiring a more nuanced analysis of the potential determinants. See id.; infra Part II.

Moreover, since 1980, firms have greatly enhanced their capabilities to deploy behavioral economics insights and algorithmic pricing to push consumers into paying higher prices, including through online interfaces designed to confuse shoppers, known as “dark patterns.”24See Rory Van Loo, Helping Buyers Beware: The Need for Supervision of Big Retail, 163 U. Pa. L. Rev. 1311, 1387 (2015); Ryan Calo, Digital Market Manipulation, 82 Geo. Wash. L. Rev. 995, 999 (2014); infra Section II.A (summarizing the empirical literature establishing that such practices raise prices). Despite hopes that the internet would make prices more competitive, research has found that is not necessarily the case. See Glenn Ellison & Sara Fisher Ellison, Search, Obfuscation, and Price Elasticities on the Internet, 77 Econometrica 427, 428–29 (2009) (showing how online sellers can raise prices 6% to 9% by obfuscation of quality and shipping fees). The portion of U.S. employees who need a license to legally work grew from 5% in the 1950s to almost 30% by 2013, thereby raising the average prices people pay by about an estimated 15% on everything from cosmetology to funeral services.25See Kleiner & Krueger, supra note 7, at S179. Also, the number of states granting auto dealers the exclusive right to sell manufacturers’ cars in their territory—essentially state-granted monopolies—increased from twenty-seven in 1979 to all fifty today. Francine Lafontaine & Fiona Scott Morton, Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis, 24 J. Econ. Persps. 233, 236 tbl.1, 240 (2010).  And over the last two decades, the average market concentration level increased 90%, meaning that a smaller number of companies now hold greater market share throughout the economy.26See Gustavo Grullon, Yelena Larkin & Roni Michaely, Are US Industries Becoming More Concentrated?, 23 Rev. Fin. 697, 698 (2019) (finding also that more than 75% of U.S. industries have increased in concentration). Although the consequences are disputed, several leading studies have found growing market power over time.27See, e.g., id. at 698; De Loecker et al., supra note 22 (attributing rising margins over time to market power). It is difficult to establish this relationship conclusively, due to empirical limitations.

Thus, interest rates became the default anti-inflation tool in a prior world with fewer market failures and when automated profit-maximizing algorithms did not drive market prices. In 1980, when markups were only 21% above costs, there may not have been much room to push prices lower while addressing market failures, especially because some markup is needed above costs for a business to survive.28Even some markup above marginal cost is generally assumed to be necessary. See, e.g., Ellison & Ellison, supra note 24, at 428–29 (assuming several percentage points of profit above marginal cost before calculating supracompetitive price levels). Whatever the merits of scholars’ dismissal of antitrust as a tool for combatting inflation in the 1970s and 1980s, the last time the issue received significant attention, that issue should be reexamined in light of major subsequent market developments.29See Handler, supra note 13, at 213.

Although the question of magnitude of impact is difficult to determine, as a threshold matter it is worth observing that markup increases from 21% to 61% are not insignificant next to the concerns about inflation of about 8% or 9% annually.30On levels of inflation, see Gabriel T. Rubin, U.S. Inflation Hits New Four-Decade High of 9.1%, Wall St. J. (July 13, 2022, 7:07 PM), https://www.wsj.com/articles/us-inflation-june-2022-consumer-price-index-11657664129 [https://perma.cc/48VQ-5FNC]. Yet instead of starting with anti-inflation tools that increase prosperity, lawmakers have allowed the country to rely mostly on interest rate increases that lower prosperity for all, as they did in the 1970s and 1980s. Legal scholars have also not turned their attention to the connection between market failures and inflation in any sustained manner.31Some economists have begun to turn their attention to the connection between antitrust-related issues and inflation, although even those analyses do not consider the area of market improvement laws that this Article shows is the most promising, those related to consumer law. See infra Part I. In short, there is an absence of sustained effort to update the anti-inflation policy paradigm to the modern algorithmic markup economy.

To reach the conclusion that microeconomic market improvement laws deserve greater attention in a macroeconomic inflation policy toolkit, this Article synthesizes the theory and evidence. It shows why many of the main reservations about market improvement laws can be addressed with a more comprehensive legal and economic institutional analysis. It also offers a framework for analyzing inflation laws that shows why many of the dismissals of market improvement laws rest on an incomplete economic picture.

Although a comprehensive economic cost-benefit analysis anti-inflation framework has many components, one of the most essential is giving greater weight to the side effects that inflation policies have on the economy beyond inflation. Once the side effects are not assumed to be inevitably negative, and are given greater weight, it becomes difficult to justify ignoring market improvement laws that advance both total wealth and distributional goals. Regardless of the magnitude of their impact on inflation, such laws should be the highest priority largely because they benefit society regardless of their impact on inflation. Whatever portion of interest rate increases they prevent can save the economy from damage that does not need to happen.

Another key factor in an anti-inflation framework that has received insufficiently nuanced analysis is the ease with which they can be implemented. Once that administrability factor is analyzed more fully, for example, it becomes clear that the market improvement laws that have defined past debates—especially antitrust laws that would address oligopoly industries—suffer from major limitations that other market improvement laws do not. For instance, the most significant antitrust remedy for reducing monopoly power—breaking up large companies—typically takes years to implement and may cost the broken-up firm billions of dollars to complete.32Rory Van Loo, In Defense of Breakups: Administering a “Radical” Remedy, 105 Cornell L. Rev. 1955, 1986 (2020). Thus, lower prices from breakups may not materialize for years.

In contrast, price transparency laws are better situated to create a fast reduction in prices. For example, consider a 2015 Israeli regulation that required stores to make their price information available in machine-readable form.33Itai Ater & Oren Rigbi, Price Transparency, Media and Informative Advertising, 15 Am. Econ. J.: Microeconomics 1, 2 (2023). That law was aimed at allowing third-party price comparison tools to help consumers locate the best prices.34Id. Within eight months of that regulation’s enactment, prices had begun to decline, and within two years of the regulation’s enactment prices decreased by an average of 4% to 5%.35Id. This law illustrates a larger set of commercial laws that could help consumers to better locate the best deals—or at least to pressure firms into offering lower prices out of concern that the transparency will drive away customers if the business does not lower prices. For other examples, see infra Part II. Price transparency laws may even overall act on prices faster than an increase in interest rates.36See infra Section III.A.

The point here is not that antitrust law should be ignored as an anti-inflation tool. Indeed, some areas of antitrust law could have a quicker effect on pricing, such as investigations into price fixing.37See infra Part III. Note that this difficulty in administering refers to inflation purposes, not the administrability for antitrust purposes. On the latter, see Van Loo, supra note 32. It is also possible that price transparency laws with faster price effects might be accompanied by antitrust remedies whose impact will take a few years, thereby offering a more enduring market improvement package for lowering inflation.

Instead, the point is that a more in-depth consideration of administrability shows how structural antitrust interventions may be less immediately helpful than other market improvement laws. Additionally, since these difficult-to-administer antitrust laws have dominated consideration of market improvement laws, the focus on them negatively skews perceptions of the extent to which market improvement laws should be considered in fighting inflation.38More precisely, governmental efforts have prioritized antitrust and scholarly conversations have ignored other areas of market improvement laws. See infra Part I.

These dynamics speak to a final institutional implication. Limited governmental resources and a dysfunctional legislative process mean that Congress and other governmental leaders do not implement every important policy that should exist on the economic merits. Thus, simply because a policy would improve efficiency does not mean it will be enacted as law. Yet the threat of a recession is a well-known way to break political impasse.39See generally Policy Shock: Recalibrating Risk and Regulations After Oil Spills, Nuclear Accidents, and Financial Crises (Edward J. Balleisen, Lori S. Bennear, Kimberly D. Krawiec & Jonathan B. Wiener eds., 2017) (summarizing the interplay between crises and legislation). Consequently, inflation could provide the means to enact market improvement laws that will leave the economy better off than when inflation began its precipitous rise. Responding to inflation with an emphasis on market improvement laws therefore channels the wisdom that policymakers should “[n]ever let a crisis go to waste.”40Charles C. Doyle, Wolfgang Mieder & Fred. R. Shapiro, The Dictionary of Modern Proverbs 47 (2012).

The Article proceeds as follows. Part I explains the theory behind why market improvement laws can help to combat inflation. In so doing, it addresses common objections to looking beyond interest rates. Part II reviews the evidence that market failures drive up prices, and that legal reforms can bring them back down. Part III offers several concrete suggestions for reform, ranging from a universal price transparency statute to inflation impact statements. It also sketches a framework for choosing among inflation policies. That framework shows the potential to build an anti-inflation toolkit rooted not in weakening the economy, but in strengthening it.

I. THE THEORY: WHY IMPROVED MARKETS CAN LOWER INFLATION

Economic theory alone cannot determine the best anti-inflation policy. But theory is important, particularly because empirical evidence is usually insufficient to dispositively prove that any one policy choice is optimal.41See generally Policy Shock, supra note 39 (outlining the challenges of policymaking and difficulties in assessing underlying risks). Several theoretical considerations provide essential foundational support for the possibility of using market improvement laws to counter inflation. The theory behind relying on interest rates tends to fail to recognize that (1) unlike interest rates, some alternative anti-inflation policies cause no economic harm or even have economic benefits; (2) market improvement laws can offset inflation from even unrelated causes, such as wars; (3) market improvement laws can complement direct inflation efforts; and (4) efficiency considerations alone have not produced all beneficial market laws. Each of these oversights will be taken in turn, in the process laying the theoretical foundations for a more comprehensive anti-inflation framework.

A. Avoiding Economic Harm Should Be a High Priority

All else equal, policymakers should seek to lower inflation through interventions that avoid as much collateral economic damage as possible, and ideally even through interventions that help the economy. Arguably price controls are disfavored for this reason. When inflation skyrocketed in the 1970s, an event sometimes called the “Great Inflation,” a period of price controls followed.42See Listokin & Murphy, supra note 1, at 392 (“[T]he initial response to the Great Inflation of the 1970s in the United States was an extraordinarily intrusive legal regime of price controls.”). Most aggressively, in 1971, President Nixon issued an executive order freezing wages, rents, and prices for ninety days.43Exec. Order No. 11,615, 36 Fed. Reg. 15,727 (Aug. 17, 1971). There were some exceptions. Id. That shock briefly decreased inflation, but by the mid-1970s those freezes had contributed to a recession.44See Listokin & Murphy, supra note 1, at 392 (“These price controls reduced inflation briefly but ultimately caused so much economic harm that they could not be sustained . . . .”). Largely because it is believed that they “eventually lead to the destruction of the free-enterprise system,”45Milton Friedman, Capitalism and Freedom 135 (40th anniversary ed. 2002). price controls are a heavily disfavored tool for fighting inflation.46See Robert L. Schuettinger & Eamonn F. Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation 3 (1979); Note, Price and Sovereignty, 135 Harv. L. Rev. 755, 761 (2021) (“Price controls represent not just an inadequate solution to inflation and other social problems, they also signal the success of a conception of popular sovereignty anathema to the freedom of and through the market prized by neoliberalism.”); Ben Casselman & Jeanna Smialek, Price Controls Set Off Heated Debate as History Gets a Second Look, N.Y. Times (Jan. 13, 2022), https://www.nytimes.com/2022/01/13/business/economy/inflation-price-controls.html [https://perma.
cc/6UZS-UKYK] (reporting results from a survey of economists) (“Artificially holding down prices leads to shortages, inefficiencies or other unintended consequences, like an increase in black-market activity.”). When used to address market failures, however, this antipathy for price controls does not hold.
Thus, minimizing economic harm is a priority in choosing how to respond to inflation.

Compared with price controls, interest rates are seen as a more appealing tool because they leave intact markets’ ability to set prices based on supply and (reduced) demand rather than a government-commanded price. However, interest rate increases still distort markets by causing a retraction in spending.47See, e.g., Frederic S. Mishkin, Is the Fisher Effect for Real?: A Reexamination of the Relationship Between Inflation and Interest Rates, 30 J. Monetary Econ. 195, 213 (1992) (summarizing the challenges of rate increases). That raises the question of whether preferable responses to inflation exist that would have less dire consequences.

Policymakers considered such an option in the 1970s, when lawmakers passed legislation strengthening antitrust and the Federal Trade Commission (“FTC”) exercised its authority more aggressively.48Donald I. Baker, Restating Law and Refining Remedies: The Trading Company Act, the Joint Research Act, and the Local Government Antitrust Act, 55 Antitrust L.J. 499 (1986). For examples, see Antitrust Procedures and Penalties Act, Pub. L. No. 93-528, § 3, 88 Stat. 1706, 1708 (1974) (making some violations of the Sherman Act a felony and increasing fine); William E. Kovacic, “Competition Policy in Its Broadest Sense”: Michael Pertschuk’s Chairmanship of the Federal Trade Commission 1977-1981, 60 Wm. & Mary L. Rev. 1269, 1269 (2019) (“[T]hrough the 1970s, the Federal Trade Commission . . . expanded the focus of antitrust enforcement . . . .”). It is difficult to know what effect these reforms had on inflation.49Tomaskovic-Devey & Lin, supra note 21, at 171. Nonetheless, one point is worth recognizing, because it speaks to the possibility of using market improvement laws today. Unlike with price controls and interest rate increases, there is no strong evidence that the increase in antitrust enforcement in the 1970s harmed the economy. Instead, there are good reasons, based in theory and evidence, to think that effective antitrust laws, like other market improvement laws, strengthen the economy.50This issue is not easy to rigorously study, making it difficult to draw strong conclusions, but see Jonathan B. Baker, The Antitrust Paradigm: Restoring a Competitive Economy 2–3 (2019) (seeing economic benefits in stronger antitrust enforcement of the 1970s).

Faced with a choice between two tools for lowering inflation, one that is viewed as harming the economy (interest rates) and one that is viewed as strengthening the economy (market improvement laws), it would seem straightforward to choose the latter. Since market improvement laws are preferable to interest rates on the issue of their economic effects outside of inflation, the main sources of resistance to them must lie in questions about whether and how they affect inflation.

B. Market Interventions Help Even If One-Off and Unrelated to Inflation’s Causes

One of the main sources of resistance to using antitrust to combat inflation, both in the 1970s and more recently, is that shortcomings in competition did not create inflation.51See Handler, supra note 13, at 222 (stating that those proposing to combat inflation with antitrust assume that “the deficiencies of antitrust—substantive, procedural, remedial and enforcement-related—have combined to contribute to our present economic woes”). Law professor Ramsi Woodcock recently deployed this reasoning. See Ramsi Woodcock, Opinion, Antitrust Can’t Tame Inequality, Let Alone Inflation, Hill (Jan. 28, 2022), https://thehill.com/opinion/finance/591609-antitrust-legislation-cant-tame-inequality-let-alone-inflation [https://perma.cc/46YS-AC2N] (“But . . . can [antitrust] at least tame inflation? The answer is: not by much because everyone agrees that a major cause of the present inflation is supply chain disruption . . . .”). As a result, even in the best-case scenario, antitrust solutions leave in place the structural causes of inflation.52See, e.g., Woodcock, supra note 51. That means that antitrust, and by extension market improvement laws more broadly, are seen as one-off while inflation occurs on an ongoing basis.

For instance, when gas or grain supplies shrink due to the Russia-Ukraine war, there is a real increase in cost because the supply has been lowered, and price is the product of supply and demand. Additionally, a potential structural demand-side contributor is an increase in the supply of money, such as through a government stimulus package, which can increase demand because people have a greater capacity to spend.53See id. at 324. Note that an increase in money supply need not increase inflation if, for example, it is accompanied by a lower velocity of money changing hands. Critics have thus argued that antitrust is an inadequate response to inflation because it can only be used once and does not address the inflation’s ongoing structural causes.54See, e.g., Handler, supra note 13, at 222–24 (observing the mismatch between antitrust and inflation).

Before responding to that concern, it is helpful to address a threshold mathematical issue that can lead to confusion. Inflation is calculated by averaging the prices paid on a large list of goods and services, ranging from medical expenses to paper towels. Those weighted average prices are then compared to the prices paid in a previous time period, to obtain an average price increase. Inflation is thus the rate of change in prices as measured by the percentage increase between two periods. Consequently, anything that causes the prices to change between those two periods averaged—whether market anxiety, a war abroad, supply-chain disruptions, greater competition, or something else—can contribute to raising or lowering the inputs to the number reported out as inflation. And because inflation is based on weighted average prices across markets, that average can be brought up or down by even industry-specific market improvements whose effects would then feed into the average price.55Cf. Richard S. Markovits, An Ideal Antitrust Law Regime, 64 Tex. L. Rev. 251, 266 (1985) (observing in passing that antitrust can offset some amount of inflation). Of course, there may be differences in the magnitudes or timing of the price reductions and the degree to which the reductions are sustained, as discussed in Part III. But as a purely mathematical matter, market improvement laws can offset price increases resulting from structural causes of inflation between those two measured points in time.

Nonetheless, the core proposition in the critiques that market failures did not necessarily cause most of inflation is correct. It is also therefore true that improving markets may leave in place contributors such as high demand and supply chain breakdowns.56It is possible, if not likely, that some companies are increasing inflation by raising prices more than necessary while using structural inflation as cover. But that does not appear to be the main cause of inflation, and thus the skepticism is warranted. However, interest rate changes do not necessarily directly address the bulk of inflation’s structural causes either, such as supply chain shortcomings and the Ukraine war in the current inflationary period.57For instance, interest rates cannot fix the effects of pandemics or wars on supply, which is thought to be responsible for most of the current inflation. See James Mackintosh, War, Pandemic, Inflation: Markets Struggle When Narratives Collide, Wall St. J. (Mar. 15, 2022, 9:45 AM), https://www.wsj.com/articles/war-pandemic-inflation-markets-struggle-when-narratives-collide-116473
51753 [https://perma.cc/Y7HV-QHD8]. Thus, to dismiss market improvement laws because they do not address the structural roots of inflation while allowing interest rates to be used to address all of inflation would be a policymaking double standard—or it would paralyze the government’s ability to respond to inflation if that standard is consistently applied. It is also worth noting that both interest rates and some market improvement laws both seek to influence consumer behavior, albeit in different ways.
A requirement that only the causes of inflation can be deployed in response to inflation would mean that we cannot use interest rates to address inflation caused by these supply-side developments, such as the war in Ukraine. Yet clearly that is not how either policymakers or scholars approach inflation, and thus we should not dismiss market improvement laws simply because market failures are not the direct cause of all inflation that exists.

Perhaps the most generous way to view this critique is as speaking to the perceived comprehensiveness of the solution. After the desired market improvements are achieved, prices could not be reduced further because businesses cannot sell below cost for sustained periods. Yet because market failures did not cause the inflation, some level of inflation may still remain after market improvement interventions. Accordingly, once market improvement laws reach their limits in addressing market failures, they also reach a ceiling for lowering inflation. In contrast, at least in theory, interest rates can be increased indefinitely over a span of many years.58In reality, there would be practical limits imposed by the resulting harms to the economy and society by extreme freezes in investment.

This concern ultimately speaks to the issues of magnitude and timing. A threshold observation is that because most conversations focus on antitrust, the magnitude of price reduction assumed to be possible is less than it would be if the array of legal reforms considered also included consumer laws and reduced occupational licensing. If each of these areas can lower prices by two percentage points each year, together they can offset a more meaningful magnitude of inflation each year, six percentage points each year, than any one of them could individually. Indeed, a series of one-time market improvement reforms could lower inflation for several years, in ways that are in some ways interchangeable with a series of interest rate hikes over several years—interchangeable at least in the sense of the impact on the announced inflation figures.59Of course, the underlying numbers that feed into the top-line inflation figure may look drastically different, in that the prices in different product categories would presumably be quite different depending on whether interest rates or market improvement laws were lowering prices. For now, the point is theoretical, but Part II will explore the empirical evidence of the potential magnitude of price reduction in each of these areas.

Pushing this point further, in theory, market improvement laws could even in some inflationary contexts serve as the sole anti-inflationary policy tool. (To be clear, in reality, given questions of magnitude and administrability discussed in greater depth below, market improvement laws are more likely to be partial supplements for interest rate hikes in high-inflation periods).60See infra Part III. By way of illustration, imagine a simplified island-nation that sells two products, bananas and coconut water, each accounting for half of households’ expenditures. The bananas are sold by a cartel for $10 per bunch, even though without price fixing the price would be $8 per bunch. Coconut water is sold at a competitive price of $10 per gallon. Now imagine a storm decimates the island’s coconut trees, such that the price per gallon of coconut water increases to $12. The supply-side shock would cause inflation of 10%, from an average price paid of $20 to an average price paid of $22. If authorities responded by prosecuting the banana cartel, thereby pushing the price of bananas down to $8 per bunch, the total price level would be driven back down to $20 ($8 for bananas and $12 for coconuts), thus containing inflation. This containment of inflation could last long enough for the island’s coconut producers to plant enough trees, or find alternative sources of coconuts on nearby islands, at which point the price of a gallon of coconut water could move back towards its pre-inflationary level. Under these assumptions, the antitrust intervention would have served as the sole inflation-reducing intervention needed.61The possibility of deflation in this situation could be handled in any number of ways, including many growth-oriented policies that—unlike cartels or raising interest rates—could benefit the economy. Moreover, the result would be a more competitive economy post-inflation due to the removal of the cartel.

Of course, the economic implications of such a policy become much more complex with a dynamic rather than a static model, and in a real economy. Still, this hypothetical illustrates how a market improvement policy can be used as the primary tool for responding to inflation despite not at all addressing the causes of inflation. Applying this reasoning to the current macroeconomic context, the war in Ukraine, labor shortages, and the supply-chain constraints from lockdowns in China have contributed significantly to inflation but may require several years to resolve. If market-oriented price reductions offset the price effects of some of those temporary structural contributors to inflation, they could in theory reduce inflation until those direct structural causes can be resolved. At a minimum, assuming market improvement reforms could not address all of the excess inflation, they could require some amount less of interest rate increases and thereby lessen the resulting collateral economic risks and costs of addressing inflation.

A related issue is that policy responses to inflation involve a prediction about the likely persistence of the shock to prices. One-time, short-term shocks that increase prices would ultimately provoke different policy responses, if any at all, compared with shocks expected to persist. For policy shocks that last for long periods, say decades, one-off market interventions may in the larger picture prove to be of more limited help, such as only delaying the inevitably large-scale interest rate increases. In such a scenario, market improvements could still be economically beneficial, but a less significant part of the overall response to inflation.

Two points provide valuable perspective here. First, when central banks make decisions about interest rates, they will often need to make highly uncertain predictions about the potential persistence of price shocks. It would be almost impossible to reliably predict, for instance, how long the war in Ukraine would depress energy and food supplies or how long supply chains would be disrupted by China’s COVID policies. In the face of such uncertainty about persistence, arguably the case is even stronger for starting with one-off investments in market improvements as the default initial response to signs of inflation. Then if it turns out that inflation is more enduring, policymakers would always have more aggressive interest rates as a backup or to make up the difference. So faced with uncertainty about the persistence of inflation, and about whether we’re dealing with a short-term shock, the smarter choice may still be to double down on market improvement policies that are beneficial either way, rather than potentially harming markets unnecessarily.

Second, many instances of inflation would have at least some direct structural solutions that will eventually arrive and that are preferable to interest rate increases—such as the end of a war, investment in alternative energy sources, and supply chain improvements. Additionally, interest rate increases are typically implemented gradually over many years. Simply classifying the shock as either a permanent change in the rate or a one-off event seems too binary of an analysis, whereas most causes and solutions will lie on a spectrum of duration depending on how long various structural solutions will take to arrive. Again, by offsetting some portion of otherwise needed interest rate increases in the first five to ten years of inflation, market improvement laws could, in theory, still end up preventing some level of interest rate increases in years eight to ten of an inflationary period, by buying time for slower structural causes to arrive.

Furthermore, this gap-filling effect can offer a different type of long-term benefit because inflation can result from purely psychological factors rather than any structural cause.62See, e.g., Edgar R. Fiedler, The Price-Wage Stabilization Program, 1972 Brookings Papers on Econ. Activity 199, 200 (1972) (“During that period the economy entered a cost-push inflation—a spiral of rising wages and prices, based not on union or corporate market power, but on the widely and deeply ingrained expectations of endless rapid inflation that were being cemented into the institutional framework within which price and wage decisions are made in our economy.”). In other words, even if there is no shortage of supply or increase in demand, prices can go up (or stay up) if people expect inflation.63See id. at 200. For instance, if there are widespread rumors that inflation will happen, many consumers might decide to quickly purchase large amounts of goods at the current price. The sudden spike in demand can drive up prices, further stoking fears of inflation.64See Franklin R. Shupp, Optimal Control, Uncertainty and a Temporary Incomes Policy, in Proceedings of the 1972 IEEE Conference on Decision and Control and 11th Symposium on  Adaptive Processes 21, 21 (1972) (citing expectation of price increases as the driving force behind certain kinds of inflation). Consequently, market improvement laws could prevent—or lessen the intensity of—longer lasting, self-fulfilling inflation by keeping the expectation of inflation from ever taking root in consumers’ minds, even if the direct impact on prices from market improvement laws only lasts a few years as a gap-filler until structural causes of inflation can be resolved.

In short, it would be a mistake to require that inflationary solutions directly address the causes of inflation or have the potential to address the entirety of inflation in order to be considered. Nor should market improvement laws be dismissed simply because they lead to one-off price changes while inflation is a rate of change. The more important question is whether market improvement laws can help meaningfully ameliorate inflation. At a minimum, when the direct causes of inflation have potential direct solutions that will potentially arrive within a few years, market improvement laws can still offset some of that inflation because they can lower prices with comparable if not greater speed than interest rate increases.65On the comparable timing, see the discussion of administrability infra Section III.A.

C. Market Failures and Algorithmic Pricing Are Relevant to Direct Solutions

There is a certain irony in criticism that market improvement laws do not address the structural causes of inflation. Those critiques have overlooked a key feature of market improvement laws. Such laws have a potentially important supportive role to help address inflation’s direct causes. That supportive role may be especially important in an era of algorithmic pricing and widespread market failures.

To have their full impact, direct solutions may depend on market improvement laws. Assume that structural shocks—such as China’s COVID-19 shutdown, which deprived factories of workers—increase prices by ten percentage points, but only for a year or two. If consumers are not discerning enough to choose sellers who quickly adjust prices downward after that shock has passed, then what could have been a temporary price hike can become a sustained price increase because consumers, on autopilot, are continuing to purchase as before or expecting prices to continue rising. Temporarily high inflation may thus condition consumers to expect ongoing high levels of inflation.

Price transparency laws are perhaps uniquely situated among legal reforms to eliminate this potential psychological contribution to inflation. Antitrust alone cannot fix this problem, because consumers need to be able to understand and locate low prices to provide competing businesses with sufficient incentives to offer them.66See, e.g., Oren Bar-Gill, Seduction By Contract 26 (2012) (summarizing behavioral economics pricing dynamics that operate independently of traditional measures of competition); Kelman, supra note 18, at 1263–64 (“[Monopolists] might quickly realign prices after . . . a [demand] shock to maximize revenues. The risk-averse, imperfectly competitive firm . . . may find it preferable to maintain historical mark-ups . . . It is not apparent . . . how antitrust enforcement could counteract the sorts of oligopolistic structures most likely to exhibit atypically high levels of price rigidity.”); infra Part II. If consumers can quickly understand that the structural increases in costs amount to only four percentage points, a ten percent price increase should arouse their suspicions and drive them to look for a better deal. Consumers would thereby reward sellers offering lower prices by seeking them out rather than assuming such sellers do not exist.67Ryan McCauley, Breaking A Monopoly: Vigilante Justice or the Sort of Innovative Approach We Celebrate?, 24 J. Antitrust, Unfair Competition L. & Priv. Section St. Bar Cal. 76, 76 (2015) (explaining that increased consumer consumption of lower prices encourages low price levels). Increasing consumers’ accuracy in understanding prices may therefore be necessary for direct solutions to lessen the level of inflation fully.

Market improvement laws may also directly contribute to addressing inflation before structural solutions arrive. Structural and psychological factors can combine to contribute to high levels of inflation.68See, e.g., Janet L. Yellen, Chair, Bd. Governors Fed. Rsrv. Sys., Remarks on Inflation Dynamics and Monetary Policy at the Philip Gamble Memorial Lecture 3 (Sept. 24, 2015) (“Today many economists believe that these features of inflation in the late 1960s and 1970s—its high level and lack of a stable anchor—reflected a combination of factors, including . . . the emergence of an ‘inflationary psychology’ whereby a rise in actual inflation led people to revise up their expectations for future inflation. Together, these various factors caused inflation . . . to ratchet higher over time.”). For instance, if there are structural reasons for an additional price increase of two or three percentage points, people may expect the impact to be even higher, such as eight percentage points. Moreover, the rapid changes in price mean that prices learned in past shopping trips are no longer relevant. Consequently, assessing current prices becomes more cognitively difficult. The research on behavioral economics suggests that the greater the cognitive load, the easier it is for sellers to charge anticompetitively higher prices.69See, e.g., Christine Jolls, Cass R. Sunstein & Richard Thaler, A Behavioral Approach to Law and Economics, 50 Stan. L. Rev. 1471, 1477 (1998) (providing an overview of the behavioral economics research on consumers’ cognitive limitations); infra Part II. As a result, consumers may have more difficulty determining the true competitive price during inflationary times.70In theory, the opposite cannot be ruled out—that people will pay more attention to prices during inflationary periods, perhaps because they are more concerned about prices. But the literature on price manipulation suggests it is more difficult than most assume to locate the best price. See infra Part II.

Businesses would be expected to exploit these consumer expectations and cognitive limits. Unfortunately, that issue has become politicized, as if the whole problem of inflation can be reframed as “greedflation.”71See Lydia DePillis, Is ‘Greedflation’ Rewriting Economics, or Do Old Rules Still Apply?, N.Y. Times (June 3, 2022), https://www.nytimes.com/2022/06/03/business/economy/price-gouging-inflation.
html [https://perma.cc/7LHX-W55H].
But once this conversation moves away from such framing, the idea that businesses would charge the highest prices possible simply restates economic theory about how markets work.72See, e.g., Xavier Gabaix & David Laibson, Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets, 121 Q.J. Econ. 505, 506–07 (2006) (showing why companies face market pressures to shroud prices). Furthermore, managers arguably have a fiduciary duty to charge the highest prices legally possible in order to maximize shareholder value or would see themselves as having such a duty.73See Stephen M. Bainbridge, In Defense of the Shareholder Wealth Maximization Norm: A Reply to Professor Green, 50 Wash. & Lee L. Rev. 1423, 1445 (1993).

Unlike in prior periods of high U.S. inflation, today many managers need not ever even consciously decide to capitalize on inflation or be aware that such behavior is occurring. Many prices are set by automated algorithms instructed to maximize profits.74See, e.g., Rory Van Loo, Rise of the Digital Regulator, 66 Duke L.J. 1267, 1292 (2017) (“[D]igital intermediaries run tests year-round to identify which algorithms earn higher profits.”); Ariel Ezrachi & Maurice E. Stucke, Artificial Intelligence & Collusion: When Computers Inhibit Competition, 2017 U. Ill. L. Rev. 1775, 1794 (exploring antitrust issues of algorithmic pricing); Alexander MacKay & Samuel N. Weinstein, Dynamic Pricing Algorithms, Consumer Harm, and Regulatory Response, 100 Wash. U. L. Rev. 111, 173 (2022) (concluding algorithmic pricing may raise prices even without collusion). An effective algorithm following those instructions would be expected to exploit whatever confusion arises from inflation, whether the manager knew that was happening or not. It is possible that whereas managers observing lowered costs as inflation subsides would lower prices assuming that consumers would expect such adjustments, algorithms would only do so once the consumers show, through market behavior, that they expect lower prices. Indeed, in theory, the algorithm could even learn from an inflationary period that prices could be more rapidly raised and encourage continued price increases. In other words, the algorithm would be trained to encourage inflation. Inflation would thereby become an algorithmically reinforced phenomenon. Although the research on automated pricing algorithms is still nascent, there is evidence that these algorithms increase prices.75See infra Part II.

At a minimum, policymakers would ideally consider the possible effects of algorithms on inflation. An anti-inflation toolkit that fails to consider the possible changes to inflation introduced by algorithmic pricing could produce more muted price reductions than in prior eras. That would necessitate even greater interest rate cuts to achieve the same level of price reduction as in the past, meaning more economic harm would be caused and an increased risk of recession. It follows that market improvement laws that improve consumers’ ability to advance their interests in the face of algorithmic pricing could prove to be a valuable tool in either avoiding algorithmically enhanced inflation or in getting more of an anti-inflation effect from addressing the original causes of inflation.76See infra Part II. Without such laws, there is a risk that perceptions of inflation—and businesses’ inevitable efforts to exploit those perceptions—will cause inflation to endure long after the original structural contributors have ended.

D. Lawmakers Have Not Necessarily Produced Efficient Laws

Skepticism about using market improvement laws against inflation sometimes implicitly assumes that little or nothing more can be done to improve markets.77That assumption is implied by the logic that because competition failures did not cause inflation, market improvement laws cannot combat it. See supra Section I.B. That assumption might seem sensible at first glance because an independent basis exists for market improvement laws: efficiency. Efficiency has long been one of the most powerful influences in designing the law.78See, e.g., Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L. Rev. 457 (1897) (observing economic efficiency as a value emphasized by the law); Alan Schwartz & Louis L. Wilde, Intervening in Markets on the Basis of Imperfect Information: A Legal and Economic Analysis, 127 U. Pa. L. Rev. 630, 668 (1979) (stressing efficiency as a priority for market regulation); Jedediah Britton-Purdy, David Singh Grewal, Amy Kapczynski & K. Sabeel Rahman, Building A Law-and-Political-Economy Framework: Beyond the Twentieth-Century Synthesis, 129 Yale L.J. 1784, 1789–90 (2020) (remarking on and critiquing the powerful influence of efficiency). Since market improvement laws already have such a persuasive intellectual cornerstone pushing them forward, it is understandable why observers might posit that the extra motivation added by inflation would be inconsequential. After all, if there are legal rules that would move markets toward perfection, they would improve efficiency and thus they would be expected to already exist.

If this assumption were true, lawmakers would have already passed up-to-date price transparency and antitrust laws and would have previously removed any excess governmental licensing. State and federal lawmakers would also have refrained from succumbing to interest groups’ lobbying for laws that provide protections for various products and occupations. Under this assumption, the Department of Justice (“DOJ”) and FTC would also already have all the authority, resources, expertise, and motivation necessary to prevent price increases resulting from market failures. In such a world, there would be no additional room for legal reforms to push prices down and meaningfully address inflation.

However, that assumption is suspect. There is a rich literature arguing that laws are not passed as a result of a rational process that reflects society’s best interests.79For a prominent example and application of this vast literature, see Jerry L. Mashaw, Greed, Chaos, and Governance: Using Public Choice to Improve Public Law 81–105 (1997). Laws are instead the product of a messy set of interest group advocacy and political considerations that often reflect powerful opposition to regulation.80See, e.g., Lee Anne Fennell & Richard H. McAdams, The Distributive Deficit in Law and Economics, 100 Minn. L. Rev. 1051, 1052–53 (2016) (showing how law and economics operates under a questionable assumption that the desired distribution will subsequently occur but legislative shortcomings mean that such distribution may never result); Martin Gilens, Affluence and Influence: Economic Inequality and Political Power in America 81 (2012) (“[W]hen preferences between the well-off and the poor diverge, government policy bears absolutely no relationship to the degree of support or opposition among the poor.”). More specifically, scholars have observed these political economy dysfunctions in each of the three areas of market improvement laws. Consumers have had limited success in bringing about favorable price transparency and licensing laws because they are so dispersed,81See Jean Braucher, Foreword: Consumer Protection and the Uniform Commercial Code, 75 Wash. U. L.Q. 1, 3 (1997) (describing obstacles to consumer participation). whereas concentrated industry lobbyists exert great influence on legislatures.82See Aaron Edlin & Rebecca Haw, Cartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?, 162 U. Pa. L. Rev. 1093, 1108, 1140 (2014) (exploring the role of lobbying in occupational licensing). And a consensus has emerged that the antitrust framework has fallen far short, even if there is disagreement about the best ways to improve that framework.83See Jonathan B. Baker, Finding Common Ground Among Antitrust Reformers, 84 Antitrust L.J. 705, 708–09 (2022) (summarizing reform proposals). Of course, antitrust scholars do not agree on the nature and extent of the legal framework’s shortcomings. See id. Stated otherwise, the skeptics have inadequately considered how institutional dysfunctions make it unlikely that the law has done everything it can to prevent widespread market failures that cause high prices.

Ultimately, each of the theoretical points made in this Part hinges on an empirical claim about whether most of what can be done to address market failures has already been done. Thus, to have a full sense of the potential for market improvement laws to meaningfully reduce inflation, the next Part turns to the empirical evidence.

II. THE EVIDENCE: MARKET IMPROVEMENT LAWS CAN LOWER INFLATION

Part I showed that, in theory, inflation can be addressed by improving consumer markets, rather than by holding them back. That theory rests on two key empirical assumptions: (1) market failures significantly raise consumer prices, and (2) legal reforms can address those market failures. This Part summarizes the evidence relevant to both assumptions, divided into the three areas of market improvement laws: price transparency, licensing, and antitrust.

Before turning to that discussion, a caveat is in order. A well-known limitation of macroeconomics is the ability to predict magnitude, as demonstrated by the difficulty in estimating what the effects of any given interest rate hike will have on inflation.84Mishkin, supra note 47, at 213; see also Paul Krugman, Opinion, I Was Wrong About Inflation, N.Y. Times (July 21, 2022), https://www.nytimes.com/2022/07/21/opinion/paul-krugman-inflation.html [https://perma.cc/SY6S-DDST] (“Everyone in the debate agreed that deficit spending would stimulate demand; everyone agreed that a stronger economy with a lower unemployment rate would, other things equal, have a higher inflation rate. What we had instead was an argument about magnitudes.”). Microeconomics offers greater precision by studying a particular market, but a similar magnitude challenge plagues the study of aggregate market failures across the economy, in part because information about costs, prices, and preferences are often unavailable.85Asher Schechter, The Rise of Market Power and the Decline of Labor’s Share, ProMarket (Aug. 14, 2017), https://promarket.org/rise-market-power-decline-labors-share [https://perma.cc/T8E7-EVQ6] (interviewing economists Jan De Loecker and Jan Eeckhout about data challenges). Thus, market improvement laws face predictive difficulties, but since other anti-inflation tools face related limits, that should not be grounds for dismissing market improvement laws. It bears emphasis that this Article’s core arguments do not depend on establishing any particular magnitude of market failure. They instead depend on concluding that there are some significant price-increasing market failures that the law can address.

A. Market Failures Significantly Raise Consumer Prices

Despite empirical limits, a growing body of empirical research has begun to quantify the higher prices paid due to inadequate price transparency, occupational licensing, and antitrust laws.86For a summary of some of the principal limits and why they should not block such studies from being used, see Van Loo, supra note 10. The following summary aims to provide a sense of the potential magnitudes rather than to establish any particular level of price increases.

1. Price Transparency Market Failures

Businesses systematically charge consumers higher prices by making it harder to compare options. The list of tactics that businesses use for this purpose is too vast to summarize. In one common strategy, known as drip pricing, businesses shift costs to later phases in the purchase process.87See Gabaix & Laibson, supra note 72, at 506–07. Airlines charge fees for baggage, printer manufacturers charge high prices for ink refills, and Airbnb adds cleaning and convenience fees that significantly increase the final price beyond what originally appeared in the search results.88See id. Researchers have found that these practices weaken consumers’ ability to compare full prices—even if consumers know that those costs will be added later.89See id. As another example, companies offer teaser rates for online subscriptions or credit cards, knowing that many people will not follow through with unsubscribing or changing credit cards before the prices increase.90See, e.g., Oren Bar-Gill & Ryan Bubb, Credit Card Pricing: The Card Act and Beyond, 97 Cornell L. Rev. 967, 967 (2012) (“[R]egulators should . . . consider limiting the ability of issuers to charge introductory teaser interest rates that are, in a sense, ‘too low.’ ”); Shelle Santana, Steven K. Dallas & Vicki G. Morwitz, Consumer Reactions to Drip Pricing, 39 Mktg. Sci. 188, 188 (2020) (summarizing widespread drip pricing practices).

Behavioral surcharges are not limited to complex purchases. Even in seemingly straightforward retail settings, sellers like Walmart and Target implement countless strategies to profit systematically from “market manipulation.”91See Hanson & Kysar, Evidence of Market Manipulation, supra note 5, at 1420. For instance, stores put higher-price items where most consumers’ eyes naturally gravitate on the shelves and misleadingly frame prices as being “discounted” from some original higher price.92Id. The ability to influence people’s choices has only grown in the digital era. Sellers scientifically study details including facial patterns of people in advertisements and the ordering of items on the screen.93Calo, supra note 24. I have previously argued that such practices, both across retail and the broader economy, have macroeconomic implications for issues such as the distribution of wealth.94See Van Loo, supra note 24, at 1357–59. These strategies, and countless more like them, may sound trivial, but for the purposes of anti-inflation, it is important to view them through an empirical lens.

Economists empirically studying the resulting price effects have consistently found that these strategies cause consumers to pay significantly more. For instance, excessively complex cell phone plans were associated with 8% higher consumer prices.95Bar-Gill & Stone, supra note 10 at 453–54. The reference point for the comparison was the plan at the same cell phone carrier that would have saved the most money. Id. Hiding mandatory fees on StubHub until later in the purchase process increased ticket payments by 21%.96Tom Blake, Sarah Moshary, Kane Sweeney & Steve Tadelis, Price Salience and Product Choice, 40 Mktg. Sci. 619, 619, 625 (2021). Unlike with the cell phone plans, this research reflects strategies that pushed consumers toward a different product (a different seat) that was more expensive. Id. Even in straightforward online settings, where price comparisons are a click away, economists have linked obfuscation practices such as lengthy product descriptions and add-on shipping costs to price increases of possibly around 6%.97Ellison & Ellison, supra note 24, at 428–29.

In short, the empirical evidence indicates that a lack of pricing transparency significantly increases prices by exploiting informational and behavioral market failures—even for products of identical quality.98For reviews of this literature, see Michael D. Grubb, Failing to Choose the Best Price: Theory, Evidence, and Policy, 47 Rev. Indus. Org. 303, 310–13 (2015); Bar-Gill, supra note 66, at 26; Van Loo, supra note 10, at 219–31. Moreover, many of these studies only look at one pricing strategy. Therefore, the full effects of multiple practices could produce even higher magnitudes of increased prices.99For instance, the study by Oren Bar-Gill and Rebecca Stone finding 8% increases in price looked only at consumers’ mistakes in choosing among the plans offered by a single carrier. See Bar-Gill & Stone, supra note 10, at 453. Consequently, if the plan purchased was compared to the best deal available across all carriers, and factors beyond complexity were considered, the price increase could be significantly higher. Inflation policies designed in an era before these practices became widespread do not reflect a comprehensive understanding of consumer prices today.100On the growth of such practices, see Bar-Gill, supra note 66, at 2–10; Ellison & Ellison, supra note 24, at 428.

2. Licensing Law Market Failures

Legislatures regularly enact laws that insulate existing market participants from competition and consequently produce higher prices in consumer transactions. For example, tariffs increase the prices of foreign sellers, thereby enabling domestic sellers to charge higher prices.101On the possibility of reducing tariffs in response to inflation, see Matthew Yglesias, Opinion, Biden Can Do Much More to Fight Inflation, Bloomberg (May 15, 2022), https://www.bloomberg.com/
opinion/articles/2022-05-15/biden-can-do-much-more-to-fight-inflation [https://perma.cc/HQU6-7DNT].
Less widely recognized is that state license laws protect about 25% of occupations.102See Morris M. Kleiner & Evgeny Vorotnikov, Analyzing Occupational Licensing Among the States, 52 J. Regul. Econ. 132, 134 (2017). These laws require massage therapists, hair braiders, fortune tellers, and many others to satisfy various conditions to work. They typically mandate that the aspiring worker complete a year of expensive training, pay hundreds of dollars for a license, and pass a licensure exam that also comes with a fee.103See Dick M. Carpenter II, Lisa Knepper, Kyle Sweetland & Jennifer McDonald, The Continuing Burden of Occupational Licensing in the United States, 38 Econ. Affs. 380, 380 (2018) (studying licensing laws across all fifty states). Some licensing provides valuable quality control, but the restrictions often go beyond what is needed for consumer protection—such as Louisiana and Tennessee statutes requiring that caskets only be sold by licensed sellers.104See St. Joseph Abbey v. Castille, 712 F.3d 215, 225–26 (5th Cir. 2013) (finding no rational basis for concluding that the statute helped safety, health, or consumer protection); Craigmiles v. Giles, 312 F.3d 220, 228–29 (6th. Cir. 2002) (finding that the statute whose true goal was “to privilege certain businessmen over others . . . cannot survive even rational basis”). Economists have found, for instance, that some licensing restrictions raised dental service prices by over 10% without improving oral health.105See Morris M. Kleiner & Robert T. Kudrle, Does Regulation Affect Economic Outcomes? The Case of Dentistry, 43 J.L. & Econ. 547, 573 (2000) (“[A] state that changed from a low or medium to highest restrictiveness could expect to see an increase in the price of dental services of about 11 percent.”); Coady Wing & Allison Marier, Effects of Occupational Regulations on the Cost of Dental Services: Evidence from Dental Insurance Claims, 34 J. Health Econ. 131, 131–32 (2014) (finding that limiting the authority of hygienists increases the prices of basic dental services by about 12%). Evidence also suggests that legal reforms giving nurse practitioners greater licensing independence reduced prices by as much as 16% without diminishing the “quality and safety of health services.”106Morris M. Kleiner, Allison Marier, Kyoung Won Park & Coady Wing, Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service, 59 J.L. & Econ. 261, 261 (2016). Economists’ rough estimate of the aggregate impact of licensing restrictions is that they raise consumer prices by about 15% across much of the service economy.107See Morris M. Kleiner, Occupational Licensing: Protecting the Public Interest or Protectionism? 2–3 (Upjohn Inst. Emp. Rsch., Policy Paper No. 2011-009, 2011), http://research.
upjohn.org/cgi/viewcontent.cgi?article=1008&context=up_policypapers [https://perma.cc/4JX2-2P62].

Other restrictive laws also reach consumer goods. Laws in all fifty states limit the number of franchises that can sell any manufacturer’s car in a given territory, thereby providing auto dealers with local monopolies, preventing online sales of new vehicles, and making in-person price comparisons difficult.108See, e.g., Daniel A. Crane, Tesla and the Car Dealers’ Lobby, 37 Regul. 10, 12–14 (2014); Francine Lafontaine & Fiona Scott Morton, Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis, 24 J. Econ. Persps. 233, 240 (2010). A DOJ study, relying on estimates by Goldman Sachs, concluded these statutes raise prices by 8.6%.109See Gerald R. Bodisch, U.S. Dept. Just. Antitrust Div. Econ. Analysis Grp., Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers 4 (2009), https://www.justice.gov/sites/default/files/atr/legacy/2009/05/28/246374.pdf [https://perma.cc/J6HC-MM2R] (estimating automobile price increases due to territorial monopolies at 8.6%).

A final related category is zoning laws, which often make obtaining a government building permit far more onerous. For example, economists have estimated that such zoning regulations cause a “regulatory tax” on single-family homes of over 50% of the total home value in the San Francisco Bay Area and over 20% in Boston.110See Joseph Gyourko & Raven Molloy, Regulation and Housing Supply, 5B Handbook Reg’l & Urb. Econ. 1289, 1295–96 (2015). The price impact varies greatly by location, and not all areas have zoning laws. However, because housing has a strong impact on inflation, even a few percentage points would prove particularly meaningful for inflation.111Cf. Fernando Alvarez, Andrew Atkeson & Chris Edmond, Sluggish Responses of Prices and Inflation to Monetary Shocks in an Inventory Model of Money Demand, 124 Q.J. Econ. 911, 947–49 (2009) (outlining the relationship between housing prices and inflation); See Devin Bunten, Is the Rent Too High? Aggregate Implications of Local Land-Use Regulation 25 (Fed. Rsrv. Bd. Working Paper No. 2017-64), https://www.federalreserve.gov/econres/feds/files/2017064pap.pdf [https://perma.cc/6GKH-GJPM] (finding that housing prices could overall be lowered several percentage points through more optimal zoning laws).

3. Antitrust Market Failures

The empirical study of antitrust is, in key ways, less reliable than research in other areas of market improvement laws. Nonetheless, it provides reason to believe that antitrust could play a meaningful role in lowering prices. Economists have linked many mergers and high levels of industry concentration with lower consumer welfare and higher prices.112See Orley Ashenfelter, Daniel Hosken & Matthew Weinberg, Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers, 57 J.L. & Econ. S67, S79 (2014) (“Overall, the results from the retrospective literature on mergers show that mergers in oligopolistic markets can result in economically meaningful price increases.”); see also Louis Kaplow & Carl Shapiro, Antitrust, in 1 Handbook of Law and Economics 1073, 1112 (A.M. Polinsky & S. Shavell eds., 2007) (“Collusive outcomes are less likely to occur in industries with more firms . . . .”). One study of fifty mergers, albeit not necessarily representative ones, found that most of them increased prices, typically by about 10%.113John Kwoka, Mergers, Merger Control, and Remedies: A Retrospective Analysis of U.S. Policy 39–46 (2015). If the selection of these mergers made them more likely to have been problematic, this result is more indicative of the existence of many mergers that increase prices, rather than of the percentage of mergers that do so.

Whereas that examination covered numerous industries, other research has focused on particular industries. For instance, since the mid-1990s alone, over one thousand hospital mergers have occurred.114See Eduardo Porter, Health Care’s Overlooked Cost Factor, N.Y. Times (June 11, 2013), http://
http://www.nytimes.com/2013/06/12/business/examinations-of-health-costs-overlook-mergers.html [https://
perma.cc/JV59-WBM5].
A large body of research demonstrates that hospital mergers have overall led to higher prices, but not necessarily improvements in health care quality.115See, e.g., Barak D. Richman, Antitrust and Nonprofit Hospital Mergers: A Return to Basics, 156 U. Pa. L. Rev. 121, 125 (2007) (“Recent studies suggest that market power pervades the health care sector and is responsible for a torrent of supracompetitive—and even supramonopoly—prices.”); Ashenfelter et al., supra note 112, at S84–S85 tbl.3 (summarizing post-merger hospital studies with findings ranging from no price increase to increases of 50%, 65%, and 80%). The most comprehensive of these studies, a longitudinal analysis of ninety-seven mergers between 1989 and 1996, found that hospital mergers led to price increases of 40%.116See Leemore Dafny, Estimation and Identification of Merger Effects: An Application to Hospital Mergers, 52 J.L. & Econ. 523, 528, 530, 544 (2009). Studies have found price increases following mergers in other areas as well, including banking,117See, e.g., Robert M. Adams, Lars-Hendrick Roller & Robin C. Sickles, Market Power in Outputs and Inputs: an Empirical Application to Banking 16, 24 tbl.1 (Bd. of Governors of Fed. Rsrv. Sys., Fin. & Econ. Discussion Series, Discussion Paper No. 2002-52, 2002) (finding anticompetitive markups of 10 basis points for real estate loans and 18 basis point for installment loans). insurance,118See, e.g., Leemore Dafny, Mark Duggan & Subramaniam Ramanarayanan, Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry, 102 Am. Econ. Rev. 1161, 1163 (2012) (finding that health insurer consolidation may have caused a 7% increase in premiums). and food and beverage.119See Ashenfelter et al., supra note 112, at S79, S91 (finding anticompetitive price increases of 3% for cereal and 1% to 7% for liquor).

Despite this evidence, estimating prices at specific points in time before and after individual mergers faces methodological limitations because other factors may contribute to the measured price differences.120Merger economists often use a difference-in-differences methodology to compare prices in control group markets unaffected by the merger to prices—before and after—in markets affected by the merger to determine whether margins have increased anticompetitively, rather than relying on businesses’ actual cost and price data. See John Simpson & David Schmidt, Difference-in-Differences Analysis in Antitrust: A Cautionary Note, 75 Antitrust L.J. 623, 624 (2008) (discussing assumptions underlying difference-in-differences estimations). This requires locating a similar control group, such as a different geography or stores’ own brands, presumed to be unaffected by the merger. See id. It is also difficult to know what to make of the literature finding that most industries have become more concentrated and dominated by an ever-shrinking number of competitors over the past several decades.121Among other reasons, the mechanism for the overcharge cannot necessarily be identified from any given study—it might be actual collusion, a rational avoidance of price wars, or algorithmically driven. Nor is a problematic level of concentration necessarily the result of anticompetitive conduct or mergers. For a review of this literature, see Steven Berry, Martin Gaynor & Fiona Scott Morton, Do Increasing Markups Matter? Lessons from Empirical Industrial Organization, 33 J. Econ Persps. 44, 59–62 (2019). The presence of large businesses in a concentrated industry with high markups cannot, by itself, establish that the high markups are caused by the concentration of the industry.122See Berry et al., supra note 121, at 46–47. Increased productivity and quality—such as Apple’s advancements in smart phone quality—can contribute to higher markups in concentrated industries.123See, e.g., Sam Peltzman, Productivity, Prices, and Concentration in Manufacturing: A Demsetzian Perspective, 65 J.L. & Econ. S121, S136, S151 (2022). And some mergers and industry consolidation have been linked to lower prices.124See, e.g., Ashenfelter et al., supra note 112, at S90 tbl.5, S92 tbl.5. Thus, the evidence about how industry consolidation has affected consumers is mixed, but it suggests that in at least some industries, such as health care, there are opportunities to promote more competitive prices by improving antitrust enforcement related to mergers and industry structure.

Another potential source of antitrust-related price inflation comes not from mergers or industry concentration but from price coordination among firms. One prominent example is the pharmaceutical industry. After their patents expire, drug companies such as Pfizer, Merck, and Johnson & Johnson often pay other companies to refrain from offering competing drugs. One estimate put the resulting annual price increase at 5% in the costs of pharmaceuticals.125C. Scott Hemphill, An Aggregate Approach to Antitrust: Using New Data and Rulemaking to Preserve Drug Competition, 109 Colum. L. Rev. 629, 661 (2009) (“The size of the buyer overcharge from pay-for-delay settlements likely exceeds $16 billion.”); Jeanne Whalen, Outlook is Cut for U.S. Drug Sales, Wall St. J. (Oct. 29, 2008, 12:01 AM), https://www.wsj.com/articles/SB12252424741
5878553 [https://perma.cc/Y44F-43XH] (putting drug sales at about $297 billion in 2008).

Usually, however, price coordination occurs in a more hidden manner. Legal scholars have argued that unprosecuted price-fixing is widespread.126See, e.g., Christopher R. Leslie, How to Hide a Price-Fixing Conspiracy: Denial, Deception, and Destruction of Evidence, 2021 U. Ill L. Rev. 1199, 1199, 1203–04, 1248 (2021) (“Price-fixing conspiracies overcharge consumers by billions of dollars every year.”); D. Daniel Sokol, Policing the Firm, 89 Notre Dame L. Rev. 785, 791 (2013) (summarizing the literature on price-fixing and concluding that the resulting overcharge is high). According to various studies, price-fixing has raised prices to U.S. consumers by 18% to 37% in markets ranging from baby food to cosmetics.127See John M. Connor & Robert H. Lande, The Size of Cartel Overcharges: Implications for U.S. and EU Fining Policies, 51 Antitrust Bull. 983, 983 (2006). By one estimate, the total cost to consumers globally reaches over half a trillion dollars.128John M. Connor, Global Price Fixing 1, 46–47 (K. Cowling & D.C. Mueller eds., 2d ed. 2008) (estimating price-fixing impact on prices globally based on samples); see also Flavien Moreau & Ludovic Panon, Macroeconomic Effects of Market Structure Distortions 1 (Int’l. Monetary Fund, Working Paper No. 2022-104, 2022), https://ssrn.com/abstract=4106663 [https://perma.cc/4KW3-VM3U] (estimating that breaking down French cartels would increase welfare by 3.5%).

Price-fixing may be more of a problem in today’s economy because prices are increasingly set using algorithms. Businesses’ programmers typically instruct algorithms to find the profit-maximizing price, meaning that the “invisible hand” has become the “digitized hand.”129See, e.g., Ariel Ezrachi & Maurice E. Stucke, Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy 27–29 (2016) (showing how algorithms increasingly set prices); Stephanie Assad, Emilio Calvano, Giacomo Calzolari, Robert Clark, Vincenzo Denicolò, Daniel Ershov, Justin Johnson, Sergio Pastorello, Andrew Rhodes, Lei Xu & Matthijs Wildenbeest, Autonomous Algorithmic Collusion: Economic Research and Policy Implications, 37 Oxford Rev. Econ. Pol’y 459–60 (2021) (explaining that a whole industry has arisen of third parties promising businesses help with pricing optimization). Intelligently maximizing profits inevitably amounts to finding ways to set prices above the competitive level.130For sophisticated modeling demonstrating this proposition, see Emilio Calvano, Giacomo Calzolari, Vincenzo Denicolò, & Sergio Pastorello, Artificial Intelligence, Algorithmic Pricing, and Collusion, 110 Am. Econ. Rev. 3267, 3280–81 (2020); Assad et al., supra note 129, at 460. Moreover, the potential magnitude of resulting price increases can be large, with one study showing gas prices increased by 9% to 28% after gas station owners switched from traditional to algorithmic pricing.131See Assad et al., supra note 129, at 463–64. The researchers inferred the timing of adoption of algorithmic pricing, which creates some limitations for these findings. Id. It is thus plausible that algorithms have expanded what was already believed to be a high level of undetected price-fixing throughout the economy.132Ezrachi and Stucke stated this most clearly in the context of competition, and others have added evidence to this effect. See Ezrachi & Stucke, supra note 129, at 32–33; Salil K. Mehra, Antitrust and the Robo-Seller: Competition in the Time of Algorithms, 100 Minn. L. Rev. 1323, 1325–27 (2016); Assad et al., supra note 129, at 461.

In sum, across price transparency, licensing laws, and antitrust, it would be difficult to estimate the precise total level of market failures causing higher prices across the economy. Many markets have not been studied, whether due to the lack of data available, the resource priorities of researchers, or other factors. Nonetheless, there is evidence of potentially widespread market failures causing higher prices. If so, laws effectively addressing those market failures could lead to significantly lower prices.

B. Market Improvement Laws Can Work

A causal relationship between market failures and high prices implies, but does not necessarily prove, that the law can address those high prices. Given limited governmental resources and reluctance to intervene in markets, it is important to consider the evidence about whether market improvement laws might work.

1. Price Transparency Laws Can Lower Prices

Many consumer laws lower prices. Yet unlike the attention paid to antitrust decades ago, the absence of scholarship considering consumer laws as a response to inflation suggests that this basic function of consumer laws is not broadly understood. One explanation for that inattention is that the most prominent consumer laws tend to be framed in ethical terms, such as whether a company’s practices were unfair or deceptive.133See, e.g., Katherine Porter, Modern Consumer Law 1–3 (1st ed. 2016) (summarizing some of the confusion surrounding consumer law’s identity).

Part of the disconnect may also be that the few consumer laws that most explicitly target prices only apply in narrow circumstances. Most notably, price gouging laws prohibit sellers from exploiting crises to charge considerably more. For example, sellers risk prosecution if they dramatically increase the price of masks or other medical supplies upon the start of a pandemic.134See Michelle M. Mello & Rebecca E. Wolitz, Legal Strategies for Reining in “Unconscionable” Prices for Prescription Drugs, 114 Nw. Univ. L. Rev. 859, 897–98 (2020). Another visible area of consumer pricing laws prohibits “unconscionable” prices in areas such as pharmaceuticals and mortgages, which have been described as pricing practices significantly varying from industry standards.135See id. at 933–34, 955 (summarizing laws related to unconscionable pricing); 940 Mass. Code Regs. § 8.06(6) (2023) (prohibiting mortgage lenders from offering terms that “significantly deviate from industry-wide standards or which are otherwise unconscionable.”). Although relevant as part of a broader anti-inflation toolkit, price gouging and unconscionability do not immediately appear promising for having a large-scale impact on inflation because they are designed to address unusual instances of extreme prices, not routine and systemic price increases across the economy.136Additionally, price-gouging laws are seen as potentially inefficient, contributing to shortages by eroding market forces. See Mello & Wolitz, supra note 134, at 882.

Instead, an area of consumer law offers more promise in addressing inflation despite the reality that it is less commonly understood to be about prices. What this Article refers to as price transparency laws is more commonly known as disclosures or nudges and seeks to contain the everyday pricing practices that companies deploy.

Price transparency proposals tend to raise scholarly concerns about the possibility of facilitating seller collusion, and some such mandates have been followed by increases in prices.137One study found evidence of price increases following gasoline price transparency statutes in Chile, although in higher income geographies the policies lowered prices. See Fernando Luco, Who Benefits from Information Disclosure? The Case of Retail Gasoline, 11 Am. Econ. J.: Microeconomics 277, 278–80 (2019). However, overall more informed consumer markets tend to lead to lower prices.138Dieter Pennerstorfer, Philipp Schmidt-Dengler, Nicolas Schutz, Christoph Weiss & Biliana Yontcheva, Information and Price Dispersion: Theory and Evidence, 61 Int’l Econ. Rev. 871, 872 (2020). As the examples that follow show, how the mandates are designed is important in determining whether they are helpful.139On the broader point of the potential unintended consequences of disclosures, see Omri Ben-Shahar & Carl E. Schneider, The Failure of Mandated Disclosure, 159 U. Pa. L. Rev. 647, 647, 651–65 (2011). Counterintuitively, it may be that not requiring digital price updates in some contexts would prove more helpful, as the aforementioned highway gas station signs lowered prices while national digital reporting of real-time prices seems to come with greater risks of collusion. On those risks, see Ariel Ezrachi & Maurice E. Stucke, Sustainable and Unchallenged Algorithmic Tacit Collusion, 17 Nw. J. Tech. & Intell. Prop. 217, 244 (2020).

In several field experiments, simply providing consumers with helpful information lowered the prices those consumers paid. In one experiment, researchers found that sending Medicare recipients a letter advising which of the available plans would be best saved recipients 5% in out-of-pocket expenses.140Jeffrey R. Kling, Sendhil Mullainathan, Eldar Shafir, Lee C. Vermeulen & Marian V. Wrobel, Comparison Friction: Experimental Evidence from Medicare Drug Plans, 127 Q.J. Econ. 199, 201, 215 (2012). In another, disclosures at the point of sale for payday loans lowered borrowing costs by 11%.141Marianne Bertrand & Adair Morse, Information Disclosure, Cognitive Biases, and Payday Borrowing, 66 J. Fin. 1865, 1865 (2011) (reducing payday borrowing by 11% through disclosures in a field experiment).

Other studies have found similar effects due to new laws requiring businesses to make prices more broadly available. For instance, consumers paid an estimated 20% less for gas following a law that required electronic billboards on the highways to show all nearby gas stations’ prices.142Federico Rossi & Pradeep K. Chintagunta, Price Transparency and Retail Prices: Evidence from Fuel Price Signs in the Italian Highway System, 53 J. Mktg. Rsch. 407, 409 (2016); see also Ambarish Chandra & Mariano Tappata, Consumer Search and Dynamic Price Dispersion: An Application to Gasoline Markets, 42 Rand J. Econ. 681, 700 (2011) (estimating gasoline savings of 5% gained by better searching solely in a one-mile radius). Additionally, as mentioned above, another study concluded that an Israeli statute requiring stores to make their prices and product information available in machine-readable formats led to a 4% to 5% reduction in price.143Ater & Rigbi, supra note 33.

Other research has looked at interventions that sought to help consumers better calculate prices. For example, many states have mandated that grocery stores provide unit pricing labels on the shelf to facilitate price comparisons.144A Guide to U.S. Retail Pricing Laws and Regulations, Nat’l Inst. Standards & Tech., https://www.nist.gov/pml/weights-and-measures/laws-and-regulations/retail-and-unit-pricing-laws [https://
perma.cc/YDW9-N4ZP].
These rules require stores to list per unit prices alongside the full purchase price, like the price per ounce of peanut butter or per battery. This allows shoppers to compare offerings of differing sizes and determine which items are cheapest without needing a calculator.145Id. Studies suggest that consumers use these labels to save money in their purchase choices. Even a basic application of unit pricing led to 1% savings.146J. Edward Russo, The Value of Unit Price Information, 14 J. Mktg. Rsch. 193, 193–201 (1977). When combined with other tools for comparison, such as an education campaign, information on unit price disclosures have led to 10% to 13% savings.147Clinton S. Weeks, Gary Mortimer & Lionel Page, Understanding How Consumer Education Impacts Shoppers Over Time: A Longitudinal Field Study of Unit Price Usage, 32 J. Retailing & Consumer Servs. 198, 206 (2016) (using a field experiment to quantify the savings from educating consumers about unit prices); see also Australian Competition & Consumer Comm’n, Report of the ACCC Inquiry into the Competitiveness of Retail Prices for Standard Groceries 449 (2008) (citing studies that show up to 1% savings across all consumers by improving existing unit pricing laws); James Binkley, Prices Paid in Grocery Markets: Searching Across Stores and Brands, 47 J. Consumer Affs. 465, 466 (2013) (finding that improved price comparison approaches within stores led to up to 10% savings).

Another category aimed at improving the analysis of information focuses on the algorithms that increasingly direct people to their ultimate purchase. In one study with unusual access to internal company data, economists found that a subtle change to eBay’s algorithm saved consumers 5% to 15% by returning lower-priced search results first.148Michael Dinerstein, Liran Einav, Jonathan Levin & Neel Sundaresan, Consumer Price Search and Platform Design in Internet Commerce, 108 Am. Econ. Rev. 1820, 1821 (2018). Yet search results are almost entirely unregulated, and companies have an incentive to increase the prices that consumers pay.149More specifically, they have an interest in maximizing what people pay up to the point that those prices do not drive people to shop elsewhere. See Frank Pasquale, Internet Nondiscrimination Principles: Commercial Ethics for Carriers and Search Engines, 2008 U. Chi. Legal F. 263, 267 (2008). It follows that laws pushing online marketplaces toward more helpful search results could bring consumers considerable savings.

This discussion should not be read to imply that consumer price laws are straightforward. Disclosures require careful design and measurement of results to avoid waste or even counterproductive effects.150Ben-Shahar & Schneider, supra note 139, at 647, 651–65 (summarizing many failed attempts). These complications are described in greater depth below. Note, however, that the importance of design underscores how many of the above interventions could be improved, providing even greater price reductions. For instance, the 5% Medicare savings resulted from text inserted into a letter that many people presumably did not read. The researchers observed that, had all Medicare patients followed the advice, the average savings would have been 31%.151Jason T. Abaluck & Jonathan Gruber, Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program, 101 Am. Econ. Rev. 1180, 1189–92 (2011). And while the Israeli statute produced results from mandating machine-readable disclosures, more active support for helpful digital intermediaries that would analyze all available prices for the consumer could create more powerful shopping tools, putting even greater price pressure on sellers.152For an exploration of such a proposal, see Van Loo, supra note 24, at 1387. Thus, the empirical evidence suggests that price transparency laws can significantly lower prices in a variety of markets.

2. Removing Licensing Restrictions Can Lower Prices

Unlike price transparency and antitrust laws, addressing higher prices that result from governmental licensing requirements has a more straightforward legal solution: removal of the laws that require those licenses. The above studies estimating price increases suggest that the removal of inefficient occupational licensing laws, territorial restrictions for car dealerships, and zoning laws could significantly lower prices.153See supra Part I. Indeed, some of that research goes beyond just estimating price increases by also modeling the effects of removing such laws.154For instance, one study found that prices would decrease by 4.5% in a range of services if Arkansas lowered its occupational licensing restrictions to match those of neighboring Mississippi. Thomas J. Snyder, Ark. Ctr. For Rsch. Econ., The Effects of Arkansas’ Occupational Licensure Regulations 3 (2016), https://uca.edu/acre/files/2016/06/The-Effects-of-Arkansas-Occupational-Licensure-Regulations-by-Dr.-Thomas-Snyder.pdf [https://perma.cc/P2PT-2APS].

More direct evidence also comes from studies of licensing laws that have already been improved. For instance, in jurisdictions that expanded the role of nurse practitioners and allowed them to provide medical services previously only administered by doctors (albeit still supervised in a doctor’s office), prices lowered an estimated 3% to 16%.155Kleiner et al., supra note 106, at 286. As another example, in 1983, Colorado lawmakers removed licensing requirements mandating that anyone offering funeral services graduate from a mortuary college, train for a year, and pass oral and written license examinations.156Brandon Pizzola & Alexander Tabarrok, Occupational Licensing Causes a Wage Premium: Evidence from a Natural Experiment in Colorado’s Funeral Services Industry, 50 Int’l Rev. L. & Econ. 50, 52 (2017). A comparison of the resulting prices in Colorado before and after the licensing removal found that the reforms lowered prices in Colorado by 15%.157See id. at 53. Price differences in Colorado were compared with price changes over the same time period in other states that did not have such a removal. Id.

The removal of licensing laws has mixed effects on labor markets, as discussed below. For purposes of inflation, however, improvements to widespread licensing laws offer an opportunity to lower prices substantially.158For a summary of this empirical literature, see supra Section II.A.

3. Antitrust Reforms Can Lower Prices

Unfortunately, there is limited evidence that speaks directly to the question of how antitrust reforms would work in the U.S. economy. A big part of the challenge is simply methodological. Changes to price transparency and licensing laws are more readily studied because they occur more frequently and offer researchers the ability to compare prices in a specific market before and after a statutory legal reform.159See Kleiner et al., supra note 106, at 286; see Pizzola & Tabarrok, supra note 156, at 53. In contrast, new market-wide antitrust laws have been enacted less frequently. New policies have been implemented through ex-post law enforcement processes against individual firms, but it is difficult to measure the market-wide deterrence effects of such developments.160Gregory J. Werden, Assessing the Effects of Antitrust Enforcement in the United States, 156 De Economist 433 (2008). Consequently, there are simply fewer rigorous studies of antitrust law’s ability to lower prices.

Although it is debatable what level of confidence can be had based on the existing evidence, a few studies speak to this fundamental question of antitrust effectiveness. Research from decades ago found that in the months and years after the filing of a successful price-fixing antitrust complaint, antitrust actions for price-fixing or collusion lowered prices by several percentage points.161George J. Stigler & James K. Kindahl, Nat’l Bureau Econ. Rsch., The Behavior of Industrial Prices 92 (1970) (finding that commodities prices lowered between 0.7% and 2.4% three months after the complaint and from 2.2% to 4.4% in the nine months after the complaint). But see Michael F. Sproul, Antitrust and Prices, 101 J. Pol. Econ. 741, 741 (1993) (“In a survey of 25 cases filed between 1973 and 1984, prices are found to gradually rise by about 7 percent over the 4 years following an indictment.”). If scholars are correct that most cartels go undetected,162Peter G. Bryant & E. Woodrow Eckard, Price Fixing: The Probability of Getting Caught, 73 Rev. Econ. & Stat. 531, 535 (1991) (finding that only 13% to 17% of cartels are detected). these empirical studies suggest that finding a way to prosecute those cartels could rapidly lower prices.163However, designing such a regime is complicated. See Leslie, supra note 126, at 1265 (proposing changes to the antitrust regime to allow for greater prosecution of price fixing); Sokol, supra note 126, at 848 (proposing stronger price-fixing enforcement through the use of corporate monitors); infra Part III. Of course, this raises the question of whether adequate legal authority exists or could be enacted—a topic returned to below in the discussion of administrability. But for now the point is simply that there is empirical support for tentatively concluding that a stronger regime for addressing price-fixing could provide help with inflation.

Antitrust enforcers’ ability to address industry concentration is less clear. Part of the problem is simply that the most powerful remedy—breaking up companies—is seldom applied in the United States, so there has been limited ability to study its price effects.164See Kwoka, supra note 113, at 126–32. For a critique of the analytic approach to divestitures in the United States, see Van Loo, supra note 32, at 1955. Moreover, many empirical studies of existing U.S. antitrust interventions tend not to quantify the price effects, presumably due to methodological difficulties.165See generally Bureau of Competition & Bureau of Econ., Fed. Trade Comm’n, The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition and Economics (2017).

The most methodologically convincing study comes from the Netherlands, where a new law forced some owners to divest gas stations chosen at random.166Adriaan R. Soetevent, Marco A. Haan & Pim Heijnen, Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets, 62 J. Indus. Econ. 467, 467–70 (2014). It found that when concentrated gas stations were broken up, prices decreased from 1.3% to 2.3%.167Id. at 469. Those findings come with the caveat that they do not reflect a large-scale organizational breakup. Instead, the study measured the effects of the forced sale of existing gas stations whose day-to-day operations presumably could remain uninterrupted.168See id. Although these findings are limited in terms of magnitude and market applicability, they provide some cautious support for the possibility of using divestitures in at least some contexts to lower prices.

Finally, a newer wave of research has begun to look at the strength of the overall competition policy of a country in order to determine the effects of those policies on markets.169See Amit Zac, Carola Casti, Christopher Decker & Ariel Ezrachi, Competition Policy and the Decline of the Labour Share 8 (Aug. 2, 2022) (unpublished manuscript), available at https://ssrn.com/
abstract=3824115 [https://perma.cc/LG5W-PTHX] (summarizing the competition policy index and its usage); Pauline Affeldt, Tomaso Duso, Klaus Gugler & Joanna Piechucka, Market Concentration in Europe: Evidence from Antitrust Markets 26 (German Inst. for Econ. Rsch., Working Paper, Paper No. 1930, 2021), https://papers.ssrn.com/abstract=3775524 [https://perma.cc/BDZ5-42KQ] (measuring effects of past merger enforcement on market concentration).
In one study, the antitrust regimes of large economies were evaluated in terms of factors such as the ability to impose significant penalties for violations, the level of investigative authority, and the intensity of oversight applied by enforcers.170Zac et al., supra note 169. Although this metric has limits, the study found that when countries weaken competition policies, average profits increase.171See, e.g., id. at 28–29 (finding price and profits higher in low-competition policy index countries). Another study estimated the impact of competition policy on market concentration.172Affeldt et al., supra note 169, at 18 (describing study methodology). It concluded that removing barriers to entry and blocking mergers lowered concentration levels.173Id. at 26. These findings speak to the potential impact of competition policy on prices because higher concentration levels are associated with higher markups.174De Loecker et al., supra note 22, at 598.

These findings are complicated by the debate about whether higher profits and margins are good or bad. Again, profits can increase for pro-competitive reasons, such as greater innovation.175See supra Section II.A.3. Or rising profits and margins can reflect increased market power and lower productivity. The potential for high profits also provides motivation to innovate and invest.

In sum, although antitrust reforms overall have proved more difficult to study directly than price transparency and licensing reforms, there is some limited empirical support for concluding that stronger antitrust interventions can reduce prices. Due to the debates about the benefits and drawbacks of concentration, the least controversial antitrust reforms would be those aimed at undetected price-fixing and algorithmic collusion. The variability of options not only within antitrust but also among all market improvement laws speaks to the importance of a framework for deciding among anti-inflation policy tools.

III.  DESIGNING ANTI-INFLATION LAWS

The preceding discussion has shown the theoretical and empirical foundations for using market improvement laws to address inflation. The evidence suggests that consumers face difficulties finding the best deals and that in many markets well-designed market improvement laws can lower the prices paid at magnitudes that would offset a meaningful amount of inflation. This Part offers a framework for choosing among anti-inflation policies. The goal is to comprehensively compare underappreciated microeconomic options, such as market improvement laws, to those more macroeconomic options that tend to be the default choice. It then sketches in greater detail what it would mean to integrate market improvement laws during an inflationary period.

A. A Framework for Choosing Inflation Laws

Even after recognizing that market improvement laws have significant potential to lower prices, policymakers are faced with the task of deciding how to prioritize among the various anti-inflation laws. Yet in the rare academic discussions of how more microeconomic laws may address inflation, there is usually an absence of any framework for choosing among options.176See, e.g., Handler, supra note 13 (considering the role of antitrust in inflation without clarifying a framework for making such a choice); Aneil Kovvali, Countercyclical Corporate Governance, 101 N.C. L. Rev. 141 (2022) (offering a framework for incorporating inflation and other macroeconomic considerations into corporate governance but not for choosing among responses to inflation). The discussion above has indicated four key criteria that can be used to choose among policy options: direct magnitude, indirect structural support, administrability, and side effects. Analytic shifts in applying these criteria would help to better incorporate microeconomic laws into inflation.

1. Direct Magnitude

The direct magnitude refers to the percentage of reduction in inflation as an immediate consequence of the policy. At first glance, this is one metric on which market improvement laws come up short compared to macroeconomic tools such as interest rate hikes. In theory, the Federal Reserve could raise interest rates from its current level of roughly 2% to something dramatically higher, like 40%, to tame high levels of inflation.177See Rubin, supra note 30. Similarly, in a command-and-control economy, price controls can dictate the level of inflation and thereby, in theory, reduce fifty points of inflation or more.178There are, of course, practical constraints that will be discussed below.

In contrast, market improvement laws have built-in limits to their impact on prices because businesses can only lower prices so far before operating at a loss.179See supra Part I. Additionally, there is great variability in the magnitude of price decreases from market improvement laws across industries,180See supra Part II. making it difficult to know the precise magnitude achievable across the entire economy.

One caveat is in order when comparing magnitude. Any such analysis must consider practical institutional limits. For instance, interest rates can only be raised to certain levels before the costs (especially low growth and unemployment) become too high to push further. Consequently, the various criteria for anti-inflation laws influence one another. In this case, the criterion of direct magnitude interacts with negative side effects, which can limit the practical magnitude of an anti-inflation tool.

Nonetheless, putting other criteria aside for now, there is reason to think that the direct magnitude of market improvement laws has been underestimated. This underestimation illuminates how an anti-inflation framework should analyze magnitude. Relevant academic and policy conversations have focused on antitrust.181See supra Part I. Yet among the three major areas of market improvement laws, antitrust offers the most limited empirical support for concluding that there is a possibility of high magnitude.182See supra Part II. In aggregate, the market improvement laws discussed herein have a much larger potential total anti-inflation magnitude than antitrust alone.

The broader point here is that a siloed approach to considering microeconomic laws has weakened analyses of anti-inflation laws’ direct magnitude. With respect to market improvement laws, the analysis of antitrust law’s magnitude in isolation, without considering related areas of law, obscures the relevance of market failures to inflation. For a comprehensive estimate of the direct magnitude of anti-inflation policies, it will sometimes be necessary to combine various areas of law that are united by a common economic frame.

Moreover, academics and policymakers may have underappreciated market improvement laws’ direct magnitude even within some of the three areas of law discussed herein. Studies of market improvement laws are often scattered among various markets, such as gasoline, food, and cell phone plans.183See supra Part II. These individual microeconomic studies do not immediately provide macroeconomic magnitudes. To conceptualize the magnitude of a specific type of reform, such as price transparency laws, observers must synthesize various micro-level empirical studies into a macro-level magnitude.

Thus, research silos for different areas of law and diverse markets must be overcome to obtain a more comprehensive sense of the potential direct magnitude of anti-inflation laws. Only then can policymakers and scholars form an accurate sense of whether market policies are worth being in the conversation about fighting inflation.

2. Indirect Structural Support

The direct magnitude analysis discussed above is not by itself sufficient to understand the full contributions that an anti-inflation policy has to offer. Some policies, like market improvement laws, have the potential to provide indirect support to other anti-inflation laws.184See supra Section I.C. That complementary role must also be weighed.

As mentioned above, structural solutions to inflation (such as ending China’s COVID lockdown) may not work unless consumers have the capacity and motivation to effectively compare prices. Price transparency is thus crucial for helping ensure that structural solutions, like repairing the supply chain, swiftly impact prices paid. This complementary role in addressing inflation constitutes the second criteria in this Article’s framework: indirect structural support.

The indirect structural support provided by other anti-inflation tools is less clear. In theory, antitrust enforcement and licensing reforms should also indirectly help other interventions because competitive pressures would push companies to pass on any sudden supply-chain savings to customers. However, there is some limited evidence that oligopolies may be quicker than firms in more competitive industries to pass on later cost-savings to consumers.185Adriaan Ten Kate & Gunnar Niels, To What Extent are Cost Savings Passed on to Consumers? An Oligopoly Approach, 20 Eur. J. L. & Econ. 323, 324 (2005) (“In oligopoly it turns out to be exactly the other way round. When competition is strong individual firms are price takers and do not pass on their firm-specific cost savings to price; when competition is weak individual firms have more influence on price and tend to pass on their cost savings to a greater extent.”). It seems counterintuitive at first that oligopolies would be more likely to pass on cost savings. One possible explanation is that oligopolies do not need inflation to charge higher prices because their market power in normal times allows them to do already charge closer to the profit-maximizing price. A monopoly at some point will not want to charge higher prices because higher prices decrease demand, and at a certain point the higher price brings less profits. In contrast, firms in less concentrated industries have a harder time raising prices in normal times and thus may be less interested in giving up those higher prices if they can avoid doing so. If that research is correct, antitrust would provide less indirect structural support for anti-inflation than price transparency laws. Nor do price controls and interest rates offer such indirect support that make it more likely that direct solutions will work.

Consequently, the failure to consider the indirect ways that anti-inflation laws may operate can distort the design of the policy response. In particular, a failure to consider this criterion biases the choice away from price transparency laws. Another way of thinking about structural support is as contributing to a more comprehensive picture of the full magnitude of the policy response.

3. Administrability

Administrability refers to the feasibility of effectively implementing a policy. Anti-inflation policies would ideally not only lower prices, but do so reasonably rapidly and with some degree of confidence. At first glance, these considerations cast doubt on at least some types of market improvement laws, since many of those reforms come with the risk of failure—especially antitrust laws and poorly designed disclosure mandates.186The extent to which established interventions from one market will work in a different market is especially uncertain. Additionally, market improvement laws involve decisions by various regulators, judges, and attorneys general. The dispersed nature of that implementation creates administrability challenges. Economists studying inflation have assumed that antitrust reforms take years to affect prices.187See, e.g., David Brancaccio & Jarrett Dang, Another Cure for Inflation? Making Markets More Competitive, Marketplace (Apr. 1, 2022), https://www.marketplace.org/2022/04/01/another-cure-for-inflation-making-markets-more-competitive [https://perma.cc/XE6W-GKKP] (quoting David Brancaccio as observing that with competition policies, “we’d be talking several years before that might impact prices”). Whether those perspectives are correct is subject to debate and will be returned to shortly, but it is necessary to recognize that the general perception has been that market improvement laws are low on administrability.

In contrast, policymakers are more likely to feel confident that raising interest rates will lower inflation because this tool has been used repeatedly for that purpose in the past.188See Robert L. Hetzel, The Monetary Policy of the Federal Reserve: A History 204 (Michael D. Bordo, Marc Flandreau, Chris Meissner, François Velde & David C. Wheelock eds., 2008); Jeffery Schaff & Michele Schaff, Expert’s Corner: Municipal Bond Market Improprieties and the Potential Brutality of Investing in Bonds, 11 PIABA B.J. 56, 62 (2004) (“Alan Greenspan has repeatedly testified that the Federal Reserve is in the process of raising interest rates in an effort to stave off inflation.”). It is also institutionally straightforward to implement—requiring a single administrative agency, the Federal Reserve, to make a single decision. Strictly enforcing price caps can also immediately lower the prices that consumers pay, although this is more institutionally complicated because it mostly requires the passage of legislation.189See supra Section I.B.

While these advantages to interest rates and price caps are real, they should not be exaggerated. The political response to interest rates and price controls adds unpredictability, as backlash may ensue from their potentially devastating economic side effects. That backlash may get in the way of interest rate reductions’ ability to fully address inflation.

The direct magnitude of inflation reduced by interest rate hikes is also difficult to know in advance due to macroeconomic conditions that differ from those in previous inflationary periods.190There is also some broader controversy about how inflation interacts with interest rates. See Mishkin, supra note 47, at 213 (“[T]he apparent ability of short-term interest rates to forecast inflation in the postwar United States is spurious.”); John H. Cochrane, Do Higher Interest Rates Raise or Lower Inflation? 66 (Feb. 10, 2016) (unpublished manuscript) (on file with the University of Chicago Becker Friedman Institute), https://bfi.uchicago.edu/wp-content/uploads/fisher.pdf [https://perma.cc/JN9F-GSEG] (“A review of the empirical evidence finds very weak support for the standard theoretical view that raising interest rates lowers inflation, and much of that evidence is colored by the imposition of strong priors of that sign. I conclude that a positive reaction of inflation to interest rate changes is a possibility we, and central bankers, ought to begin to take seriously.”). Additionally, it typically takes a year before interest rates meaningfully hit inflation, with peak impact occurring at close to two years.191See, e.g., Tomas Havranek & Marek Rusnak, Transmission Lags of Monetary Policy: A Meta-Analysis, 33 Int’l J. Cent. Banking 39, 57 tbl.6 (2013) (finding an average time lag of twenty-three months for the full decrease in prices to arrive); Alvarez et al., supra note 111, at 947–49 (referencing the delayed impact). Price controls can have a more immediate impact on prices, but they are extremely difficult to administer beyond the short term, making their sustained effectiveness uncertain.192Friedman, supra note 45, at 135. Thus, the Federal Reserve’s raising of interest rates comes with considerable administrability challenges. 

Moreover, differences in administrability are difficult to compare rigorously. Some market improvement laws have been found to lower prices considerably in specific markets.193See supra Part II. They can also do so on a relatively short timeline, with one field experiment finding that consumer education campaigns lowered prices paid by about 17% to 18% within six weeks.194See Weeks et al., supra note 147, at 206 (observing that these peak savings six weeks after the unit pricing materials were sent and that the savings declined to 11% to 13% by the end of the study at 20 weeks). In the aforementioned study of the Israeli statute that required price transparency for grocery stores, the researchers found that prices had begun to decline within eight months, and the full price effects of 4% to 5% happened within two years.195Ater & Rigbi, supra note 33, at 3. For a full sense of the timeline for new legislation, it is necessary to also add the time needed to write and pass a bill, although that can happen rapidly if lawmakers feel sufficient pressure. Other avenues offer a shorter timeline for an impact on consumer prices, such as administrative agencies or attorneys general enforcing current laws more aggressively.196See infra Section III.B.2.

Antitrust faces more significant administrability challenges than price transparency laws. Even assuming that industry concentration anticompetitively contributes to high prices, it is not clear what can be done about that on a short timeframe. Breaking up large companies would be the most direct response, but breakups take years and cost billions of dollars to implement.197Van Loo, supra note 32, at 1986. As a result, even a successful breakup could increase prices in the short term and may require years to lower prices. Moreover, antitrust enforcers can only prosecute a small number of cases at any time and must act against individual firms, meaning that it could take decades to go through all the major industries and bring cases against individual companies.198See Alex Kantrowitz, ‘It’s Ridiculous.’ Underfunded FTC and DOJ Can’t Keep Fighting the Tech Giants Like This, Substack (Sept. 17, 2020), https://bigtechnology.substack.com/p/its-ridiculous-underfunded-us-regulators [https://perma.cc/V5F5-63XP] (citing former FTC policy director Justin Brookman). If economists are right that some portion of rising markups is due to arguably pro-competitive factors, the identification of targets comes with the additional risk of possibly undermining consumers’ interests. Discouraging cartels and collusion is not without its challenges, but it would not come with the same level of concerns about deterring productive behavior.199For scholars’ proposals to address this limitation, see infra Section III.B. Importantly, price-fixing enforcement could produce faster price reductions within a few months of the announcement of initiating the case.200See Stigler & Kindahl, supra note 161.

Perhaps the most straightforward market improvement reform in terms of design is the removal of existing licensing laws. Whatever law that was passed can simply be repealed. However, even repeals ideally would be implemented in a thoughtful manner to preserve any valuable consumer protections. Because most licensing laws are at the state or local level, there is a complicated legislative and judicial path to reforming such laws in a systematic manner.201Aaron Edlin and Rebecca Haw originally argued this, and the Supreme Court ultimately confirmed in part. See Edlin & Haw, supra note 82, at 1099, 1100 (proposing “competitor-dominated boards that regulate their own competition and the entry of competitors . . . be treated as private actors and subject to antitrust review unless their acts are both (1) pursuant to the state’s clearly articulated purpose to displace competition and (2) subject to active state supervision”); N.C. State Bd. Of Dental Exam’r v. F.T.C., 574 U.S. 494, 495–96 (2015) (holding that state licensing boards were not immune from antitrust laws and explaining that for a licensing board to be immune from federal antitrust law, its anticompetitive conduct must be “ ‘clearly articulated and affirmatively expressed as state policy’ ” and the policy must be “ ‘actively supervised by the state’ ” (quoting FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216, 225 (2013))); Rebecca Haw Allensworth, Foxes at the Henhouse: Occupational Licensing Boards Up Close, 105 Cal. L. Rev. 1567, 1579 (2017) (“Since the Court’s decision in North Carolina Dental, issued in February 2015, over a dozen suits have been filed against state licensing boards alleging Sherman Act violations and arguing that the board is not subject to state action immunity.”); Daniel A. Crane, Tesla, Dealer Franchise Laws, and the Politics of Crony Capitalism, 101 Iowa L. Rev. 573, 602 (2016) (“Antitrust law . . . is unavailable because of the Parker state action doctrine, which permits states to enact even nakedly anticompetitive legislation so long as the anticompetitive policy is clearly and affirmatively expressed as state policy and actively supervised by the state.”). Legal avenues for challenging governmental licensing regimes may also exist, though they are uncertain.202Cf. Paul J. Larkin, Jr., Public Choice Theory and Occupational Licensing, 39 Harv. J.L. & Pub. Pol’y 209, 284 (2015) (“[S]ome federal courts have relied on the Equal Protection (or Due Process) Clause to hold unconstitutional state laws that unreasonably restrict access into certain professions.”).

Overall, the criterion of administrability disfavors market improvement laws as a tool for fighting inflation to varying degrees depending on the sub-category. But it is important not to exaggerate the administrability challenges of market improvement laws compared to interest rates and price caps. Once a broader view is taken on administrability, interest rate increases also entail institutional difficulties. It is also not clear why administrability should receive greater weight than other criteria, like side effects.

4. Side Effects

Before selecting an anti-inflation policy, its side effects must be closely considered. This criterion has traditionally focused only on the economic sacrifices that must be made to control inflation.203See, e.g., Robert J. Gordon, The Phillips Curve Now and Then 7 (Nat’l Bureau of Econ. Rsch., Working Paper No. 3393, 1990), https://ssrn.com/abstract=1806849 [https://perma.cc/242X-TZ5A] (discussing the use of a sacrifice ratio in analyzing inflation policies). That focus makes more sense in a world in which markets are as close to perfection as possible, since every major anti-inflation intervention would then be expected to distort markets away from the current level of near perfection. However, as detailed above, assumptions about markets being as efficient as possible are disconnected from the evidence of market failure across the economy. Moreover, the consequence of overlooking the possibility of beneficial side effects is to disfavor market improvement laws because beneficial side effects is the strongest reason to favor market improvement laws over alternatives.

As discussed above, significant interest rate hikes raise the risks of a recession and increased unemployment. Price caps come with the risk of harming efficiency and discouraging innovation.204See supra Section I.A. Space constraints do not allow for reexamining this assumption, though it merits greater attention than this brief treatment provides. In contrast, transparency laws, the removal of licensing restrictions, and antitrust move the economy toward greater efficiency, growth, and innovation.205See supra Part I.

This is not to say that market improvement laws are without negative side effects. Price transparency laws impose compliance costs on businesses. The impact of such costs must always be considered and mitigated as much as possible. However, all regulations inevitably have costs. Therefore, the existence of costs alone cannot determine whether a regulation is warranted. Those costs must be weighed against the benefits. Supplying customers with helpful information is a standard component of transacting that has long been expected in markets.206See, e.g., N. Gregory Mankiw, Principles of Economics 66–67 (6th ed. 2012) (discussing the basic function of information in markets). It is thus consistent with basic market functions to expect actors to inform the parties with whom they transact. Since inflation is economically destructive, and given the efficiency gains of consumers making more informed decisions, the costs of complying with regulations should not defeat a proposal for effective price transparency laws that would correct significant market failures.

Beyond the costs of complying with any given legal rule, there is also a risk of designing the policy intervention in a way that unintentionally harms the market. In particular, blocking a beneficial merger or breaking up an efficient company could lead to higher prices. This is where the existing research on what has worked in the past can help to prioritize and inform anti-inflation laws.207For some of this evidence, see supra Section II.B.

The removal of licensing laws comes with likely more controversial side effects than price transparency and antitrust laws. One of the risks of removing these laws is less consumer protection. To mitigate this, the reforms could replace licensing with optional certification. Consumers could then choose to pay more for the certified services if they would like, such as for hair salons or funeral services. Low-income consumers who otherwise might not be able to afford services would then still have the option of lower price points. Moreover, those lower-priced offerings would put some price pressure on the certified services.208On mitigating the harmful effects of removing occupational licensing, see Caleb R. Trotter, Exhuming the Privileges or Immunities Clause to Bury Rational-Basis Review, 60 Loy. L. Rev. 909, 958 (2014). Additionally, Yelp and other rating websites can mitigate the risk that removing licensing leads to worse quality because they can provide some reputational accountability.209Id. at 945. On the benefits and drawbacks of reputational mechanisms, see Yonathan A. Arbel, Reputation Failure: The Limits of Market Discipline in Consumer Markets, 54 Wake Forest L. Rev. 1239, 1240–46 (2019). Finally, it is worth noting that in many contexts, the consumer protection implications of removing licensing will not be significant. For example, seven years after the state legislature had delicensed funeral services, the Colorado Department of Regulatory Agencies investigated the impact on customers and found that the “[c]laims that the public in Colorado had suffered or might suffer significant detriment due to a lack of trained mortuary science practitioners . . . were unsupported.”210Off. of Pol’y, Rsch. & Regul. Reform, Colo. Dep’t of Regul. Agencies, 2007 Sunrise Review: Funeral Service Practitioners 16 (2007), https://ij.org/wp-content/uploads/2022/02/
sunrise/Colorado_2007_FuneralServicePractitioners.pdf [https://perma.cc/375T-DWQ9].

The removal of occupational licensing also has a complex mix of employment results. Removal should normally decrease wages because more people could enter the occupation, while also increasing the number of jobs, especially for low-income and immigrant workers who might not be able to access or afford the expensive training often required to satisfy licensing requirements.211See Snyder, supra note 154, at 21–22; Hugh Cassidy & Tennecia Dacass, Occupational Licensing and Immigrants, 64 J.L. & Econ. 1, 1 (2021) (finding that language and other obstacles mean that immigrants are less likely to seek out and obtain occupational licenses).

In summary, the removal of occupational licensing would improve market efficiency and expand employment, but it could lower some consumer protection and wages. The price savings to consumers, increase in aggregate wealth, and job creation make these side effects overall positive. Consequently, the removal of licensing has more appealing economic side effects than raising interest rates, which has overwhelmingly negative side effects.212See supra Section I.A. But occupational licensing improvements offer more mixed side effects than antitrust and price transparency improvements, which bring overwhelmingly positive side effects. More broadly, the anti-inflation analysis should comprehensively weigh the full positive and negative side effects in choosing anti-inflation policies.

* * *

Given that no policy is superior with respect to all four criteria, the task becomes how to balance the criteria. Two considerations will prove helpful. First, it is important not to let administrability and direct magnitude alone outweigh all other criteria. Yet that appears to be the traditional approach to inflation. To ignore indirect structural support and side effects risks missing more subtle impacts of policies on inflation and the economy.

Second, even if policymakers were to decide that administrability and magnitude were the most important criteria, it would be a mistake to discard other policy options. An anti-inflation toolkit can deploy multiple tools. That is particularly true because interest rates do not require legislative involvement and can be adjusted rapidly. Thus, legislatures and regulators can work to design and implement price transparency, antitrust, and licensing solutions while the Federal Reserve adjusts interest rates. Any portion of prices driven down by market improvement laws could later prevent some portion of interest rate increases and their side harms, while also making it more likely that some of the main structural solutions to inflation actually work.

In short, once the criteria of direct magnitude, indirect structural support, administrability, and side effects are all fully considered, policymakers would be hard-pressed to find a more promising area than market improvement laws, especially price transparency, to mobilize against inflation. Table 1 provides a summary of how these criteria might apply to various policies to offer a working hypothesis and illustrate this framework. The most important conceptual takeaway is that anti-inflation analyses have historically paid too little attention to the possibility that there are options that bring positive side effects. Regardless of the magnitude, policymakers should do as much as possible with laws offering side benefits to minimize the need to use those with side costs.

Table 1.  Level of Attractiveness for Fighting Inflation

 

Direct Magnitude

Structural Support

Admin-istrability

Side Effects

Interest rates

High

Low

High-Medium

Low

Price Controls

High

Low

Low

Low

Antitrust: Breakups

Low

Medium-Low

Low

High

Antitrust: Price-fixing

Medium

Medium-Low

Medium

High

Occupational Licensing

Medium

Low

Medium

High-Medium

Price Transparency

Medium

High-Medium

Medium

High

Notes: This table is meant to summarize parts of the discussion from this section and to illustrate how the framework might be applied, rather than to suggest a definitive account. Of course, more sustained analysis of each of these determinations would be warranted, and judgment calls in such an exercise are inevitable.

B. Integrating Market Improvement Laws into Inflation Policy

Recognizing that an area of law should become a higher priority in an inflationary period is an important conceptual step. However, deploying nontraditional anti-inflation tools poses a challenge of designing the institutional integration of market improvement laws into inflation policymaking. There are essentially two ways to go about this: creating new authority and changing the way existing authority is exercised. The most powerful method would be to create new authority. Most importantly, those developing responses to inflation—especially lawmakers—should create new legal rules. However, even without any new rules, a variety of existing actors can still have a potentially meaningful impact by changing how they exercise existing authority. The discussion that follows focuses on the subset of market laws that seem most immediately promising—price transparency laws—but situates such reforms within a more comprehensive market improvement strategy.

1. Creating New Laws

The review of the evidence above suggests that new legal rules can push prices down. Accordingly, a straightforward way to integrate market improvement laws into inflation policy would be to create legal rules that would help consumers to obtain and analyze pricing information, remove unhelpful licensing, and strengthen antitrust. It bears emphasis that state legislatures have passed many price transparency, antitrust, and licensing laws.213See supra Section II.B. Thus, meaningful legislative solutions need not wait for Congress.

In terms of institutional design, it would be suboptimal for lawmakers to take the lead on writing all such legal rules. Given legislatures’ limited expertise, as well as the general challenges of passing laws at the federal level and in many states, it would be preferable for an administrative agency to be empowered to study and enact market correction rules. The FTC is the logical choice among existing agencies. It has a Bureau of Economics that can research and study the price effects, a Bureau of Consumer Protection that understands consumer laws, and a Bureau of Competition that enforces antitrust.214See Bureaus & Offices, Fed. Trade Comm’n, https://www.ftc.gov/about-ftc/bureaus-offices [https://perma.cc/Y2WP-8KZ9]. Yet the FTC has limited rulemaking authority related to market improvement laws.215See Rohit Chopra & Samuel A.A. Levine, The Case for Resurrecting the FTC Act’s Penalty Offense Authority, 170 U. Pa. L. Rev. 71, 74–75 (2021).

Therefore, Congress should empower the FTC and other administrative agencies to write new market correction laws, even if only on a temporary basis until inflation subsides.216On the possibility of time-limited authority, see infra Section III.B.3. The highest-priority legislation, and probably the most politically viable, would be something like a Price Transparency Act. The act would focus on giving consumers—and the digital intermediaries that help them—the tools they need to easily locate the best deals. Such an act has potentially widespread intellectual appeal because it leverages what is known as “regulation for conservatives,” or behavioral interventions that would still allow businesses and consumers to do what they want, rather than prohibiting certain practices.217See Colin Camerer, Samuel Issacharoff, George Loewenstein, Ted O’Donoghue & Matthew Rabin, Regulation for Conservatives: Behavioral Economics and the Case for “Asymmetric Paternalism,” 151 U. Pa. L. Rev. 1211, 1212 (2003). Administrative agencies, such as the Consumer Financial Protection Bureau and the FTC, would then ideally study and write any new rules not specifically outlined in the statute.

To decide which of many possible market improvement laws to pursue, policymakers can apply the criteria of direct magnitude, indirect structural support, administrability, and side effects. They should prioritize those laws that have the strongest empirical support based on legislation enacted in other countries or in U.S. states. They can also ask what interventions have worked in some contexts, such as mandating price disclosures in grocery stores, that may be worth trying in other contexts, like auto dealerships.

This prioritization analysis involves not just asking what types of law are most appealing, but also which markets. In real terms, a dollar saved in gas purchases is no different from a dollar saved in dry cleaning, but they are potentially different in terms of inflation. To elaborate, consider how the price of gasoline per gallon has a disproportionate impact on people’s perceptions of inflation.218Ariel Shwayder, Inflation Expectations and Gasoline Prices 1 (July 28, 2016) (unpublished manuscript), https://papers.ssrn.com/abstract=4131600 [https://perma.cc/SLB9-9BPZ]. That is the case because gasoline prices are visible on billboards, regularly paid by much of the population, and frequently reported in the media.219See id. at 3. In reality, gasoline price-changes overall contribute little to inflation because they are a small part of overall consumer spending.220See id. at 47. Of course, energy prices overall can influence a broader array of areas of spending. However, because expectations of inflation can lead to actual inflation, pushing down gasoline prices can disproportionately help with lessening a direct cause of inflation. Consequently, if gas prices are elevated in ways that price transparency laws might address, devoting more resources to transparency rules for gas prices would disproportionately help manage perceptions of inflation when compared with the impacts of devoting similar resources to industries that have a weaker psychological connection to inflation. Other products with outsized influence on the perception of inflation, albeit to a lesser extent than gasoline, are food and clothing.221See id. Targeting these industries would be one way to implement a policy strategically designed to address the psychological side of inflation.

Space constraints do not allow for identifying each of the many specific legal rules that might be enacted, whether individually or under a broad Price Transparency Act. But the review of the literature above offers many promising concrete examples. Those include the kind of price transparency laws that have been demonstrated to work elsewhere, such as the Israeli grocery store statute aimed at digital intermediaries and the Italian Parliament’s mandate of gas price billboards.222See supra Section II.B.1.

Lawmakers should not, however, limit themselves to those laws that have already been implemented somewhere else. They can also look to promising proposals in each area of market improvement laws. In the past, legal scholars have proposed the types of laws that legislatures subsequently implemented to lower prices. For instance, before the Israeli legislature passed the grocery store disclosure law that ultimately lowered prices, Oren Bar-Gill had in other markets proposed “smart disclosures” that consumers could share with third-party intermediaries.223See, e.g., Bar-Gill & Stone, supra note 10, at 454–55 (proposing that cell phone companies make personal usage data available to the customer in machine-readable form). My subsequent proposal then built on Bar-Gill’s work to propose disclosures targeted at digital intermediaries in retail goods, more in line with the eventual Israeli legislation. See Van Loo, supra note 24, at 1387.

With the right political will, more aggressive reform would be warranted. For instance, it would be worthwhile to prohibit some specific manipulative practices, such as teaser rates for credit cards, as proposed by Ryan Bubb and Bar-Gill.224See Bar-Gill & Bubb, supra note 90, at 1001–02. Legislatures could also roll back the more unreasonable licensing regimes, as proposed by David Hyman and Shirley Svorny.225David A. Hyman & Shirley Svorny, If Professions Are Just “Cartels by Another Name,” What Should We Do About It?, 163 U. Pa. L. Rev. Online 101, 119 (2014) (“[L]egislatures should roll back the existing licensing infrastructure, either by affirmatively eliminating existing licensing boards or by sunsetting them and forcing the affected providers to periodically persuade a majority of the legislature that licensure is deserved.”).

Although antitrust may be less appealing as an anti-inflation tool, scholars have identified numerous antitrust reforms that are worth considering. Since price-fixing is one of the more attractive areas in terms of the inflation criteria, new legislation might target such practices, particularly those resulting from algorithmic coordination. One noteworthy proposal is Michal Gal’s idea of fighting companies’ algorithms with algorithms that would alert regulators to violations or help consumers exert pricing pressure on sellers.226See, e.g., Michal S. Gal, Limiting Algorithmic Coordination, 38 Berkeley Tech. L. Rev. (forthcoming 2023) (manuscript at 3, 5, 36), https://papers.ssrn.com/abstract=4063081 [https://perma.cc/
UAT9-CELV].
D. Daniel Sokol has proposed leniency programs and corporate monitors for addressing cartels, while Christopher Leslie sees the legal standard of proof as currently too difficult.227See Sokol, supra note 126, at 848; Leslie, supra note 126, at 1265. A number of other proposals have been made, including Einer Elhauge’s call for cracking down on potentially anticompetitive ownership structures, such as the same mutual funds owning large portions of competing firms.228See Elhauge, supra note 10, at 1316–17 (concluding that horizontal shareholdings’ “harmful economic effects could and should be reduced by using current antitrust law to challenge stock acquisitions that create anticompetitive horizontal shareholdings”). These examples are meant to sketch the landscape of reforms to consider, rather than to serve as endorsements of particular proposals.

Of course, the weaker the evidence supporting a proposal, the lower priority that proposal is for policymakers. Particularly with many antitrust proposals, the strongest support lies in theory, rather than empirics. For these types of proposals, it would be particularly important to study their impact after they are implemented, perhaps with a sunset provision requiring the new rule to be reexamined empirically and reauthorized based on that evidence after a certain number of years. Although there will often be uncertainty due to limits on what is known, in many of these cases, the obstacle seems to be politics rather than knowledge.229See infra Section III.C (discussing political economy constraints).

2. Exercising Existing Authority More Aggressively

Many legal actors could shift their priorities, or change their legal decisions, in ways that have the potential to bring down prices. These actors include attorneys general, administrative agencies, and judges.

Consumer law scholars have shown how a variety of regulations in all fifty states, and at the federal level, could discourage the kinds of pricing obfuscation practices outlined above. One move would be for attorneys general, private plaintiffs, and the FTC to more aggressively exercise the Unfair or Deceptive Acts and Practices (“UDAP”) authority that exists at the state and federal level.23015 U.S.C. § 45(a)(1). I and others have argued that UDAP authority would likely reach the kinds of behavioral pricing practices outlined above.231See Van Loo, supra note 24, at 1365; Lauren E. Willis, Deception by Design, 34 Harv. J.L. & Tech. 115, 178 (2020). For a historical treatment of UDAP authority, see Luke Herrine, The Folklore of Unfairness, 96 N.Y.U. L. Rev. 431, 526–28 (2021). I have previously argued that UDAP authority can likely reach practices designed to promote fair dealing, but various legal actors have retreated from exercising that authority due to industry lobbying. See Van Loo, supra note 24, at 1362. Since UDAP authority comes with doctrinal uncertainty, another possibility lies in simply devoting more energy to enforcing laws that clearly prohibit specific pricing practices. For instance, David Friedman has documented how retailers systematically fabricate a high price and then claim to discount it in order to make it look like a bargain.232David Adam Friedman, Reconsidering Fictitious Pricing, 100 Minn. L. Rev. 921, 922–23 (2016). They do this despite the fact that such practices are illegal.233See id. Attorneys general, administrative agencies, and sometimes private plaintiff-side attorneys could simply devote greater attention to an array of existing laws that promote price transparency.

Judges and enforcers also have some discretion to expand existing antitrust laws. Some existing proposals would directly target practices that have a well-documented and significant impact on high prices. As one example, to address pharmaceutical companies’ tactic of paying to delay competitive, generic entries, Scott Hemphill argued that such agreements should be “accorded a presumption of illegality as unreasonable restraints of trade.”234C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553, 1615 (2006). Judges face expertise limits in determining which laws are worth expanding for inflation-fighting purposes, but in most of these instances, judges would need only devote more attention and resources to determining the microeconomic cases that would lower prices while increasing consumer welfare.

Other antitrust proposals would target anticompetitive behavior more broadly. Fiona Scott Morton and Jonathan Baker argue that online platforms violate antitrust laws when their contracts favor certain partners.235Jonathan B. Baker & Fiona Scott Morton, Antitrust Enforcement Against Platform MFNs, 127 Yale L.J. 2176, 2176 (2018) (“Antitrust enforcement against anticompetitive platform most favored nations (MFN) provisions . . .  can help protect competition in online markets.”). Tim Wu and Hemphill have called for judges to shift their thinking on firms’ “parallel exclusion” tactics, such as when Visa and Mastercard adopted rules that served to block American Express from dealing with banks.236C. Scott Hemphill & Tim Wu, Parallel Exclusion, 122 Yale L.J. 1182, 1192, 1251 (2013) (“We reject this line of cases.”); see also John B. Kirkwood, Tech Giant Exclusion, 74 Fla. L. Rev. 63, 63 (2022) (“Congress should instead amend the Sherman Act to prohibit exclusionary conduct that significantly reduces competition, whether or not it results in actual or probable monopoly power.”). Additionally, Christopher Leslie has shown that “despite the fact that direct evidence of collusion is rarely available, federal judges have made it harder to prove collusion . . . by effectively requiring direct evidence.”237Leslie, supra note 126, at 1235.

As discussed above, more structural interventions, such as breaking up large firms, may not produce price results fast enough to warrant high priority. But if antitrust enforcers credibly signal that they are willing to break up firms that engage in anticompetitive pricing, or even begin to take such actions, it is possible that the threat could immediately exert downward pressure on firms fearing they will be targeted for such enforcement actions.238Cf. Jo Seldeslachts, Joseph A. Clougherty & Pedro Pita Barros, Settle for Now but Block for Tomorrow: The Deterrence Effects of Merger Policy Tools, 52 J.L. & Econ. 607, 630 (2009) (finding a deterrence effect from blocked mergers but not settlement agreements). Additionally, whereas other interventions would have more immediate price effects, a few targeted breakups or other significant antitrust remedies in major industries might bring price relief years down the line, after faster market improvement laws had reached their limits. Breakups could thereby be part of a more sustained anti-inflation strategy based on market improvements.

To be clear, legislation would be more likely to have an immediate, sustained, and economy-wide impact on collusion and other problematic behavior than solely increased enforcement of existing authority. But progress is also possible if key legal actors, especially judges, simply update their outdated decisions in accordance with market developments and advances in economic research.239For some of the tradeoffs involved in antitrust’s slowness, see Daniel A. Crane, Rules Versus Standards in Antitrust Adjudication, 64 Wash. & Lee L. Rev. 49, 109 (2007).

It is also worth noting that in the absence of any legislative action at the state or federal level, some limited new legal rules, or at least policies, are still possible through administrative agencies. To some extent this process is already underway, with the National Economic Council and the White House pushing seventeen agencies administering some form of competition policy to exercise their full authority in matters related to pricing.240See White House Competition Council, White House, https://www.whitehouse.gov/
competition [https://perma.cc/8FCL-XWJJ]; Fact Sheet: Executive Order on Promoting Competition in the American Economy, White House (July 9, 2021), https://www.whitehouse.gov/briefing-room/
statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy [https://perma.cc/5TWX-L65Q].
For example, the Federal Communications Commission voted to prohibit “sweetheart deals,” in which landlords receive payments for allowing only a single internet provider to serve a building, a practice that had significantly driven up prices for tenants.241News Release, Fed. Commc’ns Comm’n, FCC Adopts Rules to Give Tenants in Apartments and Office Buildings More Transparency, Competition and Choice for Broadband Service (Feb. 15, 2022), https://docs.fcc.gov/public/attachments/DOC-380316A1.pdf [https://perma.cc/8YFK-V25L]. Therefore, a diverse array of legal actors currently have at their fingertips the power to chip away at inflation while improving markets.

3. Encouraging Action

Legal design tools could be deployed to increase the chances that diverse legal actors overcome institutional inertia and political economy obstacles. This section briefly explores two such tools: inflation impact statements and sunset provisions.

Inflation Impact Statements. Since the contributors to prices are so dispersed, and their additions to inflation are often opaque, many of the actors who can individually play a part in addressing inflation may not feel sufficient democratic pressure to do so. Or they may fail to undertake the analysis necessary to see their potential impact on inflation because fighting inflation has not previously been an obvious component of their job. A common tool for promoting awareness and providing accountability in such situations is the impact statement.

Impact statements are currently required, among other contexts, of legislation that might have a detrimental impact on the environment.242See National Environmental Policy Act of 1969 § 102, 42 U.S.C. §§ 4321–4370e (2022). The idea in environmental law is to compel lawmakers or administrative agencies to consider the environmental impact of any new legal rules.243See id. In 1974, President Ford issued an executive order requiring administrative agencies to study and disclose the effects that their rules might have on inflation.244See Exec. Order No. 11,821, 39 Fed. Reg. 41,501 (Nov. 29, 1974). It is worth considering impact statements again today to pressure lawmakers and administrative agencies to pay greater attention to how their actions may subtly or unexpectedly influence inflation.

Inflation impact statements might also incentivize action at the state level. The federal government could publish state-level inflation reports that would summarize inflation dynamics in each state. The Bureau of Labor already collects pricing data from multiple sources in every state as part of its inflation reports and publishes some regional rates.245For one such report, see U.S. Bureau of Lab. Stat., Rep. 1046, Consumer Expenditures in 2012, at 8–9 (2014). When combined with a study of the effects of specific policies, such reports could put pressure on state-level legislators, attorneys general, and agency leaders best positioned to remove unnecessary occupational licensing laws and encourage the enforcement, or enactment, of price transparency laws. The goal of the reports would be to remove any lack of pressure state actors may feel due to their own or voters’ inadequate knowledge of how such microeconomic laws can affect inflation. Inflation impact statements could thus foster greater integration of law and macroeconomics for the benefit of society.

Sunset Inflation Laws. If lawmakers face political resistance to passing market improvement legislation, sunset provisions may help.246A recent experiment, however, suggests that sunset provisions may only increase liberal support for conservative proposals. See Kristen Underhill & Ian Ayres, Sunsets Are for Suckers: An Experimental Test of Sunset Clauses (Colum. L. and Econ., Working Paper No. 651, 2020), https://ssrn.com/abstract=3518487 [https://perma.cc/FBK4-Q4GA]. Sunset provisions ensure that laws are revoked after a certain period of time—at which point, metaphorically, the sun sets on the law. These provisions can be designed in numerous ways, but in the case of inflation-oriented sunset laws, one sensible approach could be to state in the statute that the legal rules will end once inflation reaches a moderate level for a certain duration, such as under 3% for two years. Another approach would be to simply set a certain number of years, such as ten years, after which the laws are no longer valid.

A better design would be to require an empirical assessment of the law’s effects at the end of some period of time. After a certain number of years, the new policy would be studied to determine its impact on inflation, burden on businesses, and broader influence on the economy. If it is found that the policy is ineffective, perhaps because it fails to lower prices, it would be revoked.

Sunset provisions have previously accompanied contentious price-reducing legislation. When Colorado legislators removed funeral services licensing restrictions in 1983, they were met with warnings of “significant threats to the public health, safety and welfare.”247See Off. of Pol’y, Rsch. & Regul. Reform, supra note 210, at 16. The legislature responded to those concerns by including a sunset provision in the statute, requiring a state agency to investigate the impact of the statute after several years of operation to determine whether to continue the new policy.248See Pizzola & Tabarrok, supra note 156, at 59.

Ideally, the decisions to pass and keep market improvement laws would be made based on informed studies of the laws’ impacts on markets. And if those laws are overall beneficial to society in the long term regardless of inflation levels, as would be expected from market improvement laws, then those laws should remain. However, if political compromise is necessary, then it would be preferable for market improvement laws to end with inflation rather than to not have them at all when the stakes are so high.

CONCLUSION: INFLATION AS OPPORTUNITY

Once-in-a-generation threats such as alarming inflation require a pluralistic policy response involving all parts of the government—the executive, judicial, and legislative branches at both the state and federal levels. Diverse areas of law should be considered to resolve the problem in a way that is as economically productive as possible, rather than relying on the Federal Reserve to raise interest rates out of institutional inertia. Yet the dominant analytic framework for anti-inflation law is currently an obstacle to designing such a comprehensive response.

By not connecting law and microeconomics to the macroeconomic issue of inflation, by not considering the evidence of widespread market failures, and by failing to fully consider how artificial intelligence tools interact with pricing, scholarship has contributed to an underappreciation of the potential impact of market improvement laws on price. The literature also overlooks the ways that price transparency laws can both lower prices in the short term and later provide secondary support for direct structural solutions by helping consumers find the best prices available in the marketplace once supply chains are no longer decimated. These analytic shortcomings have contributed to an inflation policy that erodes economic health and risks driving the economy toward a recession.

Fortunately, a consensus in favor of market improvement laws may be possible. The potential benefits of market improvement laws to society are undeniable and embraced across much of the political spectrum. One reason lawmakers have not always done everything they could to advance markets is that consumers are a dispersed group when compared with the concentrated interests of businesses. That political economy means sensible market improvement laws are not always passed or vigorously enforced during normal times. Instead, throughout history, the political barriers to consumer reforms have usually been overcome by shocks such as the 2008 financial crisis.249See generally Policy Shock, supra note 39. Earlier periods of high inflation were no exception, driving lawmakers to increase antitrust penalties in 1974 and enact other antitrust reforms.250See Handler, supra note 13, at 217 (calling new legislation the “first major reform of the antitrust laws in almost 20 years ”); D. Daniel Sokol, Antitrust’s “Curse of Bigness” Problem, 118 Mich. L. Rev. 1259, 1268–69 (2020) (summarizing the period’s reforms). Although the political process has since become more polarized, other bipartisan efforts are underway in a number of areas, including gun control, privacy, and antitrust, all in response to extreme concerns and events.251See e.g., Ryan Tracy, Big Tech Antitrust Bill Backers Push for Vote, Wall St. J. (July 19, 2022, 4:52 PM), https://www.wsj.com/articles/big-tech-antitrust-bill-backers-push-for-vote-1165825
8702 [https://perma.cc/WG74-RD78] (“The bill banning self-preferencing has been approved by the House committee and its Senate counterpart, with support from many Democrats and a small group of Republicans.”).
Consequently, with the threat of a deeper recession looming, it is not unrealistic to imagine inflation providing the necessary motivation to overcome the political failures that otherwise prevent beneficial market legislation.252Cf. Listokin, supra note 17, at 148 (“Law responds to pressing social problems.”).

However, policymakers should not need the threat of a recession. A more robust analytic framework for selecting anti-inflation laws would ideally push key legal actors to start with those laws that bring beneficial side effects. Indeed, since inflation tends to take years to address, different market improvement laws can be pursued simultaneously, such as using price transparency laws to help inflation within a year or two while structural antitrust interventions and occupational licensing reforms would reach prices in subsequent years. Although interest rate hikes would need to be used in parallel or shortly thereafter, those hikes can be smaller or reversed more quickly because market improvements will be simultaneously doing some of the inflation-reducing work in the background.

Indeed, even if market improvement laws fail to play a meaningful role in reducing inflation, such reforms would still prove societally beneficial. It is independently important to reverse the alarming trend of businesses in recent decades becoming more skilled at charging prices higher than justified by their costs. Investing in improving markets is particularly important in the face of evidence of a looming recession, since stronger markets can help lessen the downturn’s severity and boost the ensuing economic recovery. Thus, inflation could provide the keys to unlocking valuable legal reforms that would significantly increase total wealth in the long run. Paradoxically, in the depths of inflation may lie an uplifting economic opportunity.

96 S. Cal. L. Rev. 825

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* Professor of Law, Boston University; Affiliated Fellow, Yale Law School Information Society Project. I am indebted to Ian Ayres, Christine Desan, Louis Kaplow, Saul Levmore, Josh Macey, Adriana Robertson, David Walker, Kathy Zeiler, and to participants in the Law and Macro workshop at Wharton Business School and the Cambridge-USC Virtual Antitrust Workshop for valuable input. For formative early conversations and feedback, I am particularly grateful to Yair Listokin. Joseph Brav, Allyson Brennan, Maria Cosma, Tess Cushing, Heather Flokos, Keenan Hunt-Stone, Nicholas Massoni, Jane Murphy, and Sam Norum contributed excellent research.

Delegating War Powers

Academic scholarship and political commentary endlessly debate the President’s independent constitutional power to start wars. And yet, every major U.S. war in the last sixty years was fought pursuant to war-initiation power that Congress gave to the President in the form of authorizations for the use of military force. As a practical matter, the central constitutional question of modern war initiation is not the President’s independent war power; it is Congress’s ability to delegate its war power to the President.

It was not until quite late in American history that the practice of war power delegation became well accepted as a domestic law basis for starting wars. This Article examines the development of war power delegations from the founding era to the present to identify when and how war power delegations became a broadly accepted practice. As this Article shows, the history of war power delegation does not provide strong support for either of two common but opposite positions: that war power, as a branch of foreign affairs powers, is special in ways that make it exceptionally delegable; or that it is special in ways that make it uniquely nondelegable. More broadly, that record counsels against treating “foreign affairs delegations” as a single category, and it reveals that constitutional questions of how Congress exercises war power are as significant as whether it does.

INTRODUCTION: WAR POWER AND THE NEW NONDELEGATION DEBATES

Academic scholarship and political commentary endlessly debate the President’s independent constitutional power to start wars or launch military interventions.1See William Michael Treanor, The War Powers Outside the Courts, 81 Ind. L.J. 1333, 1333 (2006) (“War powers scholarship continues to be haunted by the War in Vietnam, and the dominant question continues to be whether Congress must approve large-scale, sustained military action.”). And yet, every major U.S. war in the last 60 years—Vietnam, the Persian Gulf War, Afghanistan, and the 2003 Iraq War—was fought pursuant to war-initiation power that Congress gave to the President in the form of authorizations for the use of military force.2See Curtis A. Bradley & Jack L. Goldsmith, Congressional Authorization and the War on Terrorism, 118 Harv. L. Rev. 2047 (2005). For example, in 2002, Congress resolved that “[t]he President is authorized to use the Armed Forces of the United States as he determines to be necessary and appropriate in order to . . . defend the national security of the United States against the continuing threat posed by Iraq . . . .” Authorization for Use of Military Force Against Iraq Resolution of 2002, Pub. L. No. 107-243, § 3(a)(1), 116 Stat. 1498, 1501 (2002). The United States has engaged in many lower-intensity conflicts during this period, some under congressional authority and others under claimed independent presidential power. Beyond the four conflicts named in the text, the most significant U.S. use of ground troops in this period was in Panama in 1989–1990, which was not authorized by Congress.

Congress’s war power—and by that term, or alternatively “war-initiation power,” we mean throughout this Article specifically the power to commence war, as distinct from power to wage it3Though, as discussed herein, lines can blur between the power to initiate war or intervene militarily and powers to control how force is used or how to wage war. —is generally understood to arise from Article I, Section 8’s power “To declare War.”4U.S. Const. art. I, § 8, cl. 11. See generally Michael D. Ramsey, Textualism and War Powers, 69 U. Chi. L. Rev. 1543 (2002). But none of the congressional war authorizations of the past sixty years was in any sense a declaration of war. None had the effect of initiating, or directing the initiation, of military conflict. Instead, they were broad delegations to the President of the power to decide when and whether to initiate hostilities. In each case the President did use force (and it was apparent beforehand that he likely would, at least to some extent), but Congress left that decision to the President.5The discretionary nature of modern war authorizations has led to the common designation “undeclared wars.” This is a misnomer. Whether one regards a “declaration” of war to be only a formal announcement or defines it more broadly as action initiating a state of hostilities, each of these conflicts was “declared” by the President, pursuant to a delegation of discretionary war-initiation authority from Congress. Michael D. Ramsey, Presidential Declarations of War, 37 U.C. Davis L. Rev. 321, 334–56 (2003). Thus, as a practical matter, the central constitutional question of modern war initiation is not the extent of the President’s independent war power; it is the extent of Congress’s ability to delegate its war power to the President.

Until very recently, that latter question seemed easy—so easy that it was rarely asked. Under the Supreme Court’s modern nondelegation doctrine, Congress can, for the most part, delegate power to the President if it includes an “intelligible principle” by which the delegated power would be exercised—and this principle presents an exceptionally low bar, reviewed by courts with a high degree of deference.6Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 474–75 (2001). So while Congress likely could not delegate to the President discretion to start wars anywhere for any reason, delegations limited to particular places or particular threats (even stated broadly) would easily pass the test.

The conventional permissive nondelegation doctrine has, however, been called sharply into question by academic commentators7See generally, e.g., Am. enter. Inst. for Pub. Pol’y Rsch., The Administrative State before the Supreme Court: Perspectives on the Nondelegation Doctrine (Peter J. Wallison & John Yoo, eds., 2022) [hereinafter Wallison & Yoo]. and, more importantly, by the Supreme Court. In particular, Justice Gorsuch’s 2019 dissent in Gundy v. United States, joined by Chief Justice Roberts and Justice Thomas, argued for a new, more restrictive approach to the doctrine.8Gundy v. United States, 139 S. Ct. 2116, 2131 (2019) (Gorsuch, J., dissenting). In a separate opinion, Justice Alito signaled willingness to revisit the doctrine in an appropriate case,9Id. at 2130–31 (Alito, J., concurring). and two Justices added since Gundy—Justices Kavanaugh and Barrett—may have sympathy for the project as well.10See, e.g., Paul v. United States, 140 S. Ct. 342, 342 (2019) (Kavanaugh, J., statement respecting the denial of certiorari). In 2022, the Court rejected the Environmental Protection Agency’s purported authority to regulate carbon emissions, reasoning that extra scrutiny and strict statutory interpretive rules apply to claims that Congress delegated to executive agencies power over “major” public policy questions.11West Virginia v. EPA,  142 S. Ct. 2587, 2595 (2022). Justice Gorsuch, joined by Justice Alito, wrote separately to emphasize the foundational constitutional importance of keeping major legislative decision-making in Congress.12Id. at 2617-18 (Gorsuch, J., concurring). One senses that a substantial revision of the nondelegation doctrine may be impending, thus provoking new scholarly attention to—among other things—the historical practice of delegation.13or recent and conflicting accounts of founding-era nondelegation practices in general, see, for example, Julian Davis Mortenson & Nicholas Bagley, Delegation at the Founding, 121 Colum. L. Rev. 277 (2021); Christine Kexel Chabot, The Lost History of Delegation at the Founding, 56 Ga. L. Rev. 81 (2021); Nicholas R. Parrillo, A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, 130 Yale L.J. 1288 (2021); Ilan Wurman, Nondelegation at the Founding, 130 Yale L.J. 1490 (2021); Aaron Gordon, Note, Nondelegation, 12 N.Y.U. J.L. & Liberty 718 (2019). For a seminal originalist discussion of delegations, see Gary Lawson, Delegation and Original Meaning, 88 Va. L. Rev. 327 (2002). In contrast, recent accounts specifically directed to foreign affairs or war powers delegations have been less frequent and less comprehensive. See generally, Note, Nondelegation’s Unprincipled Foreign Affairs Exceptionalism, 134 Harv. L. Rev. 1132 (2021); Robert Knowles, Delegating National Security, 98 Wash. U. L. Rev. 1117 (2021); Jacob C. Beach, Authorization and Delegation: AUMFs and Historical Practice, 8 Nat’l Sec. L.J. 54 (2021). For discussion of the major questions doctrine and foreign affairs (but not war powers in particular), see generally Timothy Meyer & Ganesh Sitaraman, The National Security Consequences of the Major Questions Doctrine, 122 Mich. L. Rev. (forthcoming 2023).

War powers have not yet been a focus of this renewed nondelegation debate—but they should be. That is especially so because when the issue comes up, those who consider it are often pulled in one of two opposing directions.

One view sees war-initiation power as special in ways that make it unusually—maybe even uniquely—non-delegable.14For example, this view was an important part of the constitutional criticism of the Vietnam War. See, e.g., infra notes 260–268 and accompanying text. In this view, there is something about going to war, including the stakes or the institutional advantages and proclivities of the different branches, that constitutionally requires Congress to retain ultimate control. For Congress to yield substantial discretion over such a monumental decision to the President violates a key design feature of the Constitution.

A contrary and more common view (at least in the modern era) sees war-initiation power as special in ways that make it unusually delegable. Some justices and commentators have suggested that a more stringent nondelegation doctrine, even if revived in domestic matters, would not apply to foreign affairs.15See, e.g., Gundy v. United States, 139 S. Ct. 2116, 2137 (2019) (Gorsuch, J., dissenting); Michael W. McConnell, The President Who Would Not Be King 326–35 (Stephen Macedo ed., 2020); Michael B. Rappaport, A Two-Tiered and Categorical Approach to the Nondelegation Doctrine, in Wallison & Yoo, supra note 7, at 195, 199–200. And, indeed, at the height of its nondelegation jurisprudence in the 1930s, the Court in United States v. Curtiss-Wright Export Co.16United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304 (1936); cf. Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) (finding broad domestic delegation unconstitutional). Curtiss-Wright rested on a historical account of the founding that has been sharply criticized, and the delegation in Curtiss-Wright was, despite the Court’s broad language, quite narrow (and did not involve war-initiation power). See, e.g., Charles A. Lofgren, United States v. Curtiss-Wright Export Corporation: An Historical Reassessment, Yale L.J. Nov. 1973, at 1; Michael D. Ramsey, The Myth of Extraconstitutional Foreign Affairs Power, 42 Wm. & Mary L. Rev. 379 (2000). indicated that the doctrine generally applies less strictly in foreign affairs than in domestic matters. Given that war powers are (again, at least in the modern era) a quintessential foreign affairs matter, and given that the President has some independent military powers, this view treats war powers as especially delegable.

Neither of these opposing views has been accompanied by sustained examination of historical practice. Such examination is important not just for history’s sake but because historical interpretive gloss often plays an important role in constitutional separation of powers law17See Curtis A. Bradley & Trevor W. Morrison, Historical Gloss and the Separation of Powers, 126 Harv. L. Rev. 411 (2012); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 610–11 (1952) (Frankfurter, J., concurring). and because, in addition to the rising originalist orientation of the Supreme Court, the political branches often invoke originalism to support their respective positions on war powers.

This Article examines the development of war power delegation from the founding era to the present to identify when and how war power delegations became a broadly accepted practice. Ultimately, we argue that the historical record does not provide strong support for either of the two polar views described above: that war-initiation power is exceptionally delegable, or that it is uniquely nondelegable. Throughout much of American history, both political branches sometimes treated war initiation as constitutionally distinct, but not so consistently to alone justify either of those positions. We then explore what that history suggests about both constitutional war power and foreign affairs delegations more generally.

We show first that, contrary to common assumptions, early American history offers little support for broad war-initiation delegation. If anything, the historical record reveals that such delegations were rare and narrow, and sometimes accompanied by strong expressions of concern. In that way, this Article contributes directly to the current debate about nondelegation originalism, pointing to the ways in which war power in particular was understood to operate. We then go on to show that even as war power delegations became more widely used in the nineteenth and especially the twentieth centuries, eventually becoming an accepted practice during the Cold War, constitutional objections to war power delegations have had remarkable staying power. Even if now a minority view, they resurface again and again, especially at moments of major controversy about the role of military force in American foreign policy.

We do not contend that the historical record alone yields a clear doctrinal answer to whether and to what extent the war power is delegable—and, to reiterate, by that we mean the power to commence war as distinct from powers over how to wage it.18See supra note 3 and accompanying text. A comprehensive doctrinal analysis would look at other factors, including functional arguments.

Nevertheless, our analysis of the historical record yields at least four implications for thinking about law in this area. First, this Article casts doubt on efforts to separate a category of “foreign affairs delegation” from resurgent controversies about the nondelegation doctrine in general, because it shows that foreign affairs delegation is not a single, coherent category. Those who want to breathe new life into the nondelegation doctrine, often on originalist grounds, sometimes carve out foreign affairs for special treatment as an area in which broad delegation of executive policy discretion seems especially appropriate. This Article, however, draws attention to the ways in which war-initiation power has historically been viewed as distinct from some other foreign affairs delegations. Contrary to the tendency of some constitutional critics of delegation in general to see Congress’s war power as an area in which delegation is especially appropriate, this Article spotlights arguments as to why war power delegation has sometimes been viewed as uniquely problematic. Among other things, this account complicates efforts by some jurists and commentators to pursue on originalist grounds a restrictive domestic nondelegation doctrine while preserving broad delegations as to war and foreign affairs.

Second, this Article shows that the contemporary emphasis in constitutional debates on whether Congress authorizes war or force misses the historical emphasis on how Congress does so. The stakes involved in the latter are immense, too. Any reform project aimed at restoring Congress’s “original” war powers also needs to grapple with constitutional limits to their delegation.

Third, the periodic reemergence of war power nondelegation objections illustrates how constitutional arguments have always been a major part of policy debates over U.S. military power. A defining feature of American constitutional war powers is the extent to which, even centuries after the founding, many basic legal questions remain contested, and the extent to which partisans in strategic debates over the use of military force wield constitutional arguments for political effect. This point is worth highlighting at this moment because U.S. overseas military commitments face intense resistance from both the right and the left. The history in this Article suggests that we will likely see an uptick in war power nondelegation arguments again as a tool of resistance to military adventurism—and at a time when nondelegation doctrine generally seems to be in some flux.

And, fourth, this Article shows the many ways in which war power delegations have been used or proposed to deal with a wide array of novel strategic challenges. One obvious function of war power delegation is to manage complexity, by giving the President leeway to respond quickly and flexibly to crises. This fits with standard arguments for delegation in general. The story of war power delegation is more intricate. This tool also served as a device for handling various, specific challenges—including dilemmas that were virtually unimaginable to the founders—that arose over time in the context of overseas policing, collective security, and nuclear deterrence.

The Article proceeds as follows. Part I considers what, if anything, the Constitution’s drafting and ratifying history can contribute to debates about war power delegation. Part II examines historical war power practice up to 1860 under four categories of conflicts and their legal bases: (1) formally named “wars”; (2) the “Quasi-War” with France in 1798–1800; (3) lesser-known nineteenth-century episodes in which war power delegation was considered or debated but no actual military conflict ensued; and (4) other use-of-force delegations relating to frontier conflicts with Native American tribes, piracy, and insurrections. Part III looks at delegations from the Civil War to the Second World War, a period in which the nation’s emergence as a global power was, perhaps surprisingly, not accompanied by any material delegation of war-initiation power. Part IV examines practices beginning with the Cold War, in which we find the most decisive shift to a regime of broad delegation of war power. Part V discusses the implications of this history for war powers doctrine, foreign affairs nondelegation doctrine, and war powers reform.

I. WAR POWER DELEGATION AT THE FOUNDING

A vast scholarly literature has explored the extent to which the Constitution’s original design vested the war power exclusively in Congress.19See generally Louis Fisher, Presidential War Power (3d ed. 2013); Francis D. Wormuth, Edwin B. Firmage, & Francis P. Butler, To Chain the Dog of War: The War Power of Congress in History and Law (1986); Treanor, supra note 1; Ramsey, supra note 4; Saikrishna Prakash, Unleashing the Dogs of War: What the Constitution Means by “Declare War,” 93 Cornell L. Rev. 45 (2007); John C. Yoo, The Continuation of Politics by Other Means: The Original Understanding of War Powers, 84 Cal. L. Rev. 167 (1996). Article I gave Congress the power to declare war, and Article II vested executive power in the President and made the President commander in chief. Debate rages today about whether, beyond giving the President wide powers to control the conduct of war, those Article II powers also include authority to initiate military hostilities. We do not relitigate that issue here. For present purposes, we assume that the original design gave Congress some exclusive war power—a proposition not widely contested—and ask instead what founding-era debates suggest about Congress’s ability to delegate that exclusive power (whatever its extent may have been) to the President.

We find that the founding-era debates say surprisingly little on the matter. Neither the framers nor the ratifiers appear to have engaged war power delegation directly. The war power did not play a large role in founding-era debates, and contemporaneous commentary on that power lacked detail about how it would be exercised. Further, discussions of delegation more broadly (which themselves were rare) do not have obvious implications for war power delegations. The founding-era debates and background understandings do not clearly establish congressional authority to delegate war powers. If anything, they indicate strong beliefs among at least some key framers that important war power decisions should not lie with the President, raising doubt whether those framers would have thought it permissible for Congress to broadly hand them off to the President by statute.

A. War Initiation in the Convention and Ratification Debates

The records of the 1787 Philadelphia Convention indicate that delegates discussed war powers on two material occasions. Although both exchanges convey a strong sense that Congress, not the President, should hold war-initiation power, neither considers the question of war power delegation directly or definitively.

On May 29, Edmund Randolph opened the Convention’s substantive debate by introducing the Virginia Plan,201 The Records of the Federal Convention of 1787, at 18–23 (Max Farrand ed., 1966) [hereinafter Farrand 1]. which soon prompted a discussion of the war power. The Plan said nothing directly about war power, but it proposed a national government headed by a “National Executive” which, in addition to “general authority to execute the National laws,” would have “the Executive rights vested in Congress by the [Articles of] Confederation.”21Id. at 21 (Madison’s notes). Various speakers objected that this language could be read to give war powers to the President.22Charles Pinckney objected that “the Executive powers of (the existing) Congress [under the Articles] might extend to peace & war &c which would render the Executive a Monarchy, of the worst kind, towit an elective one.” Id. at 64–65 (Madison’s notes). John Rutledge agreed: “[H]e was for vesting the Executive power in a single person, tho’ he was not for giving him the power of war and peace.” Id. at 65 (Madison’s notes). James Wilson observed that he “did not consider the Prerogatives of the British Monarch as a proper guide in defining the Executive powers. Some of these prerogatives were of a Legislative nature. Among others that of war and peace &c.” Id. at 65–66 (Madison’s notes). The delegates did not vote specifically on the war power point, but on a subsequent motion by James Madison (seconded by James Wilson) they dropped the reference to the executive powers of the Confederation Congress and substituted a direction that the executive would have power “to carry into execution the national laws” and “to appoint to offices in cases not otherwise provided for.”23Farrand 1, supra note 20, at 63 (Journal); id. at 66–67 (Madison’s notes). This motion is discussed further below.  See infra Section I.B. The task of defining legislative and executive powers ended up with the inaptly named Committee of Detail,24See McConnell, supra note 15, at 62 (noting that the “Committee gave the office of the President its name, its structure, and most of its powers”); id. at 62–73 (discussing the Committee’s work). which delivered to the Convention on August 6 a draft giving Congress the power “To make war.”252 The Records of the Federal Convention of 1787, at 182 (Max Farrand ed., 1966) [hereinafter Farrand 2].

When the full Convention reached the “make war” language on August 17, Charles Pinckney suggested that the war power should go to the Senate rather than Congress as a whole, and Pierce Butler spoke in favor of “vesting the [war] power in the President.”26Id. at 318 (Madison’s notes). Butler’s suggestion received no recorded support; Elbridge Gerry replied that he “never expected to hear in a republic a motion to empower the Executive alone to declare war.”27Id. Pinckney’s motion to reallocate Congress’s war power was “disagd. to without call of States.” Id. at 319 (Madison’s notes). Madison and Gerry famously moved to replace “make” with “declare,” which passed eight states to one.28Id. at 318–19 (Madison’s notes); id. at 313 (Journal). Sherman, Ellsworth and Mason all indicated that they opposed giving the President power to commence war. Id. at 318–19 (Sherman saying that “The Executive shd. be able to repel and not to commence war. ‘Make’ much better than ‘declare’ the latter narrowing the power too much.”) (Madison’s notes); id. at 319 (Ellsworth saying that “It shd. be more easy to get out of war, than into it.”) (Madison’s notes); id. (Mason opposing giving war power to the Executive or the Senate and adding that he “was for clogging rather than facilitating war”) (Madison’s notes). Madison argued that the change to “declare” would “leav[e] to the Executive the power to repel sudden attacks,” id. at 318 (Madison’s notes). King added that “ ‘make’ war might be understood to ‘conduct’ it which was an Executive function.” Id. at 319 (Madison’s notes). That vote established what became the Constitution’s final language,29U.S. Const. art. I, § 8, cl. 11. and the delegates seem not to have returned to it.

The August 17 debate tends to support the idea of congressional war-initiation power, but it is unhelpful on the question of delegation. Questions of how Congress would exercise war power were not addressed directly at all. One might argue that the delegates’ focus on the dangers of executive war initiation suggests that they would not have wanted Congress to delegate it broadly to the President.30See Wormuth et al., supra note 19, at 198. Ellsworth and Mason, for example, seemed to favor congressional war power as a way of reducing the likelihood of war—because they thought presidents would be too inclined toward it.31See Farrand 2, supra note 25, at 319 (Madison’s notes). Sherman and Gerry argued (along with Pinckney, Rutledge, Wilson, and Madison in the earlier debate) that the President should not have war-initiation power.32Id.; Farrand 1, supra note 20, at 65–66 (Madison’s notes). Perhaps this meant they thought the President should not have war-initiation power even with Congress’s approval, but that is not certain. Alternatively, they (or some of them) might have thought only that Congress should make the initial decision, but that decision might include empowering the President ultimately to exercise discretion. In the end, only a few delegates spoke to the war power issue (though the speakers included some of the most influential delegates).33Hamilton’s plan for the Constitution, presented on June 18, gave the Senate “the sole power of declaring war” while the “supreme Executive authority” would have “the direction of war when authorized or begun.” Farrand 1, supra note 20, at 292 (Madison’s notes). The plan did not say anything specifically about war power delegation. It seems that the delegates were thinking generally about the question of which branch should have war power, and what the scope of that power would be,34It seems clear that the delegates assumed giving declare-war power (or make-war power) to Congress would deny it to the President. Similarly, they assumed that rewriting the grant to Congress from “make” to “declare” would allow the President to exercise some powers the President would otherwise be denied—for example the power to repel sudden attacks. See Farrand 2, supra note 25, at 318 (Madison explaining that his motion to substitute “declare” for “make” would “leav[e] to the Executive the power to repel sudden attacks”) (Madison’s notes). Presumably that was because the President had the executive power and the commander-in-chief power. but were not focused on how that power would be exercised in practice, including the permissibility or impermissibility of delegating it.

This pattern continued in the ratification debates. As at the Convention, war initiation was not a major focus. When it came up, speakers seemed to assume it was a congressional power without dwelling on how they expected Congress to exercise it. For example, in an often-quoted passage, James Wilson in Pennsylvania said:

This system will not hurry us into war; it is calculated to guard against it. It will not be in the power of a single man, or a single body of men, to involve us in such distress, for the important power of declaring war is vested in the legislature at large; this declaration must be made with the concurrence of the House of Representatives. From this circumstance we may draw a certain conclusion, that nothing but our national interest can draw us into a war.352 The Documentary History of the Ratification of the Constitution 583 (Merrill Jensen ed., 1976). To similar effect, James Iredell said at the North Carolina ratifying convention: “The President has not the power of declaring war by his own authority” because that power is “vested in other hands.” 30 The Documentary History of the Ratification of the Constitution 325 (John P. Kaminski et al. eds., 2019).

The Federalist also had little to say about war initiation. The most significant discussion is in Federalist 69, in which Alexander Hamilton—a bit disingenuously—compared the President’s power under the Constitution to the power of the British monarch and the governor of New York. Regarding war power, Hamilton noted that while the monarch alone could declare war, under the Constitution that power “would appertain to the legislature.”36The Federalist  No. 69, at 417–18 (Alexander Hamilton) (Clinton Rossiter ed., 1961).

As with the comments at the Philadelphia Convention, these statements can be read to imply a nondelegable power in Congress. Although Wilson’s comment does not address delegation directly, concerns about lodging war initiation in a single person—instead demanding that such decisions ultimately rest with both houses of Congress—might also cut against allowing Congress to delegate its war power to the President. But again, that is far from certain. Such statements might only mean that Congress must make the initial decision regarding war, but that choice might include a decision to pass discretionary authority to the President. In Hamilton’s contrast between the British monarch and the Constitution’s President, even if Congress’s war-initiation power were delegable, placing it in Congress in the first instance would still represent a substantial limit on the President’s power compared to the British monarch’s.

Like the drafting debates, the statements regarding war power in the ratification period have only limited value for our inquiry. They are isolated statements by only a few participants (albeit important participants), not addressed to the particular issue of delegation, and not part of an extended discussion of the operation of war powers. Their central focus was to point out an important constitutional limit on presidential power. Their phrasing—and the fact that they were not contested by anti-federalist speakers or writers—indicates a broad consensus on the basic proposition that allocating declare-war power to Congress implicitly denied the President a corresponding independent power. But, how Congress could exercise its declare-war power is a different matter.37The framers’ failure to address the question is puzzling because late eighteenth-century wars were often not begun by formal declarations. See Ramsey, supra note 4, at 1574-78. Thus, the founding generation knew (or should have known) that giving Congress power to declare war did not resolve how Congress would exercise war-initiation power. Yet, how Congress would authorize the President to begin fighting—as important as that topic is today—seems not to have been addressed.

B. General Understandings of Delegation in the Founding Era

The framers and ratifiers might not have addressed war-initiation delegations specifically because they had a broader understanding of delegation that would encompass war power along with many other congressional powers. The founding-era view on that broader issue is sharply contested, with some scholars contending that the founding generation generally saw Congress’s powers as delegable subject perhaps to only modest limits38See, e.g., Mortenson & Bagley, supra note 13 (arguing for broad delegation power); Chabot, supra note 13 (same). while other scholars argue that the founding generation held more exacting restrictions on congressional delegation.39See, e.g., Wurman, supra note 13 (arguing for limited delegation power); Gordon, supra note 13 (same). This debate has said little about war power directly, and we do not take a position on it here.

One specific strand of that debate over the founders’ view of delegation, however, is quite relevant to war power and merits further discussion. Several commentators have suggested that, notwithstanding substantial general limits on delegation, the framers may have understood foreign affairs powers to be broadly delegable. Because that categorical exception might include war-initiation power, we address it briefly here.

The core case against delegation starts with the text of Article I, Section 1: “All legislative Powers herein granted shall be vested in a Congress of the United States . . . .”40U.S. Const. art. I, § 1. By negative implication, it may be argued, legislative powers shall not be vested elsewhere—and statutes delegating power to the President, to the extent they transfer that legislative power to the President, appear to violate this directive.41See McConnell, supra note 15, at 328. By parallel argument, Article III, Section 1 provides that “[t]he judicial Power of the United States, shall be vested in” the Article III federal courts; attempts by Congress to vest that judicial power elsewhere are unconstitutional. Id.; U.S. Const. art. III, § 1. Further, influential English political theorists including Locke and Blackstone had suggested that delegation of lawmaking power by the parliament to the monarch threatened separation of powers.42See, e.g., John Locke, Two Treatises of Government 380–81 (Peter Laslett ed., Cambridge Univ. Press, 2nd ed. 1967) (1690); 1 William Blackstone, Commentaries on the Laws of England 261 (sharply criticizing the 1539 Proclamations by the Crown Act, 31 Hen. 8 ch. 8, which briefly gave the monarch general power to issue proclamations with the force of law). These sources may indicate a background principle of nondelegation informing the founding-era understanding of Article I.43See McConnell, supra note 15, at 327–28. See also Wayman v. Southard, 23 U.S. 1, 42–43 (1825) (Marshall, C.J.) (“It will not be contended that Congress can delegate . . . powers which are strictly and exclusively legislative.”). But even if the Constitution contained such a broad nondelegation principle regarding Congress’s legislative powers, it is not clear how it would relate to war-initiation power (and other foreign affairs powers). Under the British system, war initiation—like much of foreign affairs—was a power of the monarch, not of parliament.441 Blackstone, supra note 42, at 249–50. Thus, to the framers and the thinkers who influenced them, war power may not have been considered the type of lawmaking (that is, making rules governing ordinary private behavior) to which nondelegation principles applied.45See McConnell, supra note 15, at 328–35.

The most developed defense of this position, principally based on Convention debates, comes from Professor Michael McConnell. He suggests that “the non-delegation doctrine, with its roots in the rejection of a Proclamation Power, may apply only to lawmaking, not to the former royal prerogative powers given to the legislative branch.”46Id. at 328–29. He finds support in an exchange near the outset of the Convention, in which participants discussed and rejected a proposal by Madison to specify that the executive would have power “to execute such other powers not Legislative nor Judiciary in their nature as may from time to time be delegated by the national Legislature.”47Farrand 1, supra note 20, at 67 (Madison’s notes). Madison initially proposed a general executive power to exercise delegated power but accepted an amendment limiting it to “powers not Legislative nor Judiciary in their nature.” Id. Pinckney (seconded by Randolph) moved to strike Madison’s proposed delegation revisions on the ground that they were redundant: “He said they were unnecessary, the object of them being included in the ‘power to carry into effect the national laws.’ ” Madison replied that the clause should be retained “to prevent doubts and misconstructions” but Pinckney’s motion carried 6 states to 3. Id. McConnell suggests that the Convention accepted the view that Congress could authorize presidential exercise of congressional powers if those powers were not legislative in nature, and that the President’s exercise of such delegated powers was within the law execution power.48McConnell, supra note 15, at 330–31. Thus, on his account, the delegates rejected Madison’s proposal as superfluous, not because they disagreed with it. Id. He goes on to include “formulating foreign policy” as an example of powers that are not judicial or legislative in nature and which might be especially delegable to the President.49Id. at 331 (distinguishing between former prerogative powers of the monarch and the “core legislative power to make laws binding on the people”).

Perhaps, but this seems far from certain. There was little recorded debate on this issue, and it seems unclear whether the delegates rejected Madison’s proposal because they thought it redundant (McConnell’s view) or because they opposed it on the merits. Nor is it clear whether the category of matters “not Legislative nor Judicial in their nature” approximated the former royal powers or included foreign affairs. And even if McConnell is right about the broad outlines of his conclusion, it is unclear whether Convention participants would have regarded war power as within the category of non-legislative delegable powers. Several key delegates, including Wilson and Madison himself, said or implied that war power was legislative in nature (even if some other foreign affairs powers might not be).50Wilson said directly that powers “of war & peace” were “of a Legislative nature.” Farrand 1, supra note 20, at 65–66 (Madison’s notes). Madison was recorded as agreeing with Wilson. Id. at 70 (King’s notes).

In sum, it is difficult to discern how the founding generation would have thought general principles of delegation applied to war power, even if one could determine what, if any, general principles on delegation they held in common. Lacking specific discussion of war power delegations, the founding-era debates and assumptions seem not to provide clear direction on the matter.

II. DELEGATION AND WAR POWER, 1789–1860

Given the ambiguity of the founding era regarding war power delegations, early practices may be particularly salient in establishing precedent.51Early practice may be indicative of original meaning, if close enough to ratification. Alternatively, consistent practice even well after the founding can provide a “historical gloss” on ambiguous provisions. See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 610–11 (1952) (Frankfurter, J., concurring); see generally Bradley & Morrison, supra note 17. This Part examines early congressional practice relating to delegation and military conflicts. It proceeds in four parts. First it considers conflicts that Congress formally designated as “war.” Second, it describes the most significant authorization of military force in the period apart from formal declarations, the naval “Quasi-War” in 1798–1800. Third, it considers a series of lesser-known incidents involving delegations that did not lead to material conflicts. Finally, it examines delegations relating to uses of force in frontier conflicts with Native American tribes and suppression of piracy and insurrections.52Presidents also used military force without direct congressional authority during this period, but these unilateral actions do not bear on congressional delegation.

We conclude in this Part that the early record of war-initiation delegation is surprisingly thin. Delegations during this period were scattered, relatively narrow, and often accompanied by special circumstances that caution against their use as broad precedents. Moreover, proposals to delegate war-initiation authority (or related authority) were sometimes opposed on constitutional grounds, including on the grounds that war-initiation power was especially nondelegable. These objections stand in contrast to Congress’s extensive delegations during this period as to the manner in which the President might conduct wars and other uses of force that Congress authorized.

A. Formal Wars

In the first seventy years of practice under the Constitution, Congress recognized four wars against foreign powers by name and authorized the President to use the U.S. military to fight them. Two of these are the well-known conflicts with Britain, begun in 1812, and with Mexico, begun in 1846. The other two, less commonly included on the list of formal wars, are conflicts with Tripoli (authorized in 1802) and Algiers (authorized in 1815).

The War of 1812 was the only time in this period that Congress used the phrase “declare” war. Amid rising tensions with Britain on various matters, President Madison asked Congress for a declaration of war in mid-1812, and Congress responded with an Act stating that “[W]ar . . . is hereby declared to exist between [Britain] and the United States . . . and that the President of the United States is hereby authorized to use the whole land and naval force of the United States to carry the same into effect . . . .” 53Act of June 18, 1812, Pub. L. No. 12-106, 2 Stat. 755; see Davis P. Currie, The Constitution in Congress: The Jeffersonians, 1801-1929, at 164–65 (2001).

Notably for our purposes, the 1812 statute was not a delegation of war-initiation power. Unlike modern authorizations, it did not leave war initiation to presidential discretion. Congress itself invoked the state of war. The statute went on to authorize broad presidential discretion in conducting the war. But that is distinct from war initiation. At minimum, the Commander-in-Chief clause indicates a shared power of war-making between the President and Congress.54Recall that at the Convention Gouverneur Morris observed that changing Congress’s power from “make” war to “declare” war would properly leave the power to “conduct” war to the executive. Farrand 1, supra note 20, at 319 (Madison’s notes). Congress’s recognition of broad presidential discretion signaled Congress’s decision not to direct or limit the President’s exercise of the commander-in-chief power in conducting the hostilities.

Congress’s first formal recognition of a state of war came a decade earlier in 1802. The Pasha (ruler) of Tripoli, in modern Libya, as a prelude to beginning piratical attacks on U.S. merchant shipping in the Mediterranean, formally declared war against the United States in 1801.55Currie, Jeffersonians, supra note 53, at 123–29; Ray W. Irwin, The Diplomatic Relations of the United States with the Barbary Powers, 1776-1816, at 103–09 (1931). President Jefferson asked Congress for authority to respond;56It is unclear whether U.S. military action against Tripoli in these circumstances required Congress’s approval (Hamilton argued it did not because Tripoli had begun the war). See Michael D. Ramsey, The President’s Power to Respond to Attacks, 93 Cornell L. Rev. 169, 184–88 (2007) (discussing this debate); Currie, Jeffersonians, supra note 53, at 127–28 (same). in early 1802, Congress recognized a state of war and authorized the President to conduct hostilities against Tripoli.57Act of Feb. 6, 1802, Pub. L. No. 7-4, 2 Stat. 29 (stating that “the regency of Tripoli . . . has commenced a predatory warfare against the United States” and authorizing the President to seize Tripoli’s ships and “to cause to be done all such other acts of precaution or hostility as the state of war will justify, and may, in his opinion, require”). Although Congress did not use the word “declare,” the 1802 Act resembled the subsequent 1812 declaration in other significant respects—including that it did not delegate war-initiation authority. Congress itself acknowledged the war’s existence. Again, Congress recognized broad presidential authority to conduct the war, but the President presumably would have had that authority in any event once the existence of war was established.58See Currie, Jeffersonians, supra note 53, at 125 n.15 (noting that “the Constitution itself makes the President Commander in Chief and that the unpredictable course of hostilities makes it imperative that that officer enjoy great flexibility in deploying his forces once war has been declared”).

The 1815 events with Algiers resembled the earlier Tripoli conflict. During the War of 1812, Algiers’s navy began seizing U.S. shipping, but the United States had little ability to respond with force. After hostilities with Britain ceased, President Madison asked Congress for war-making authority, which Congress granted in similar terms to the 1802 Tripoli authorization. As with Tripoli, Congress did not delegate war-initiation power; it recognized a state of war and authorized the President to direct the military conflict as he saw fit.59Act of Mar. 3, 1815, Pub. L. No. 13-91, 3 Stat. 230 (referring to Algiers’s “predatory warfare” against the United States). See Currie, Jeffersonians, supra note 53, at 165 n.7; Irwin, supra note 55, at 171–76.

Finally in this period, Congress recognized a state of war with Mexico in 1846. In popular history the Mexican War is often listed with the War of 1812 as a “declared” war. In fact, Congress’s authorization of the Mexican War tracked its authorization of the Algiers and Tripoli conflicts, not using the word “declare” but instead recognizing the existence of a state of war resulting from the other party’s acts. Prior to the war, President Polk (without Congress’s authorization) sent U.S. troops into territory claimed by both the United States and Mexico, whereupon Mexican forces attacked U.S. troops in the disputed territory. Polk then asked Congress to recognize a state of war created by Mexico, which Congress did.60Act of May 13, 1846, Pub. L. No. 29-16, 9 Stat. 9. The Act began: “Whereas, by the act of the Republic of Mexico, a state of war exists between that Government and the United States” and continued “for the purpose of enabling the government of the United States to prosecute said war to a speedy and successful termination, the President be, and he is hereby, authorized to employ the militia, naval and military forces of the United States.” Id. Leaving aside the much-debated constitutionality of Polk’s provocative deployment,61See David P. Currie, The Constitution in Congress: Descent into the Maelstrom, 1829-1861, at 104–10 (2005). for present purposes the key point is that Congress did not delegate war-initiation power to the President. As in the previous conflicts, Congress made the decision for war itself and authorized broad presidential discretion in the means of fighting it.

In sum, Congress’s treatment of formal war authorization in the early nineteenth century differed significantly from Congress’s modern authorizations. None of the four nineteenth-century acts delegated war-initiation authority. In each of them, Congress itself stated the existence of war without qualification. This contrasts with modern authorizations that, as discussed below, leave to the President the decisions when, whether, and (sometimes) against whom to begin hostilities. Early nineteenth-century practice regarding formal war authorizations thus affords little precedent for modern delegations of war-initiation power.

These four episodes do support broad congressional delegation of power over the conduct of war. But this should not be read to endorse delegation of congressional war-initiation power because the President was likely understood to have independent war-waging authority once Congress recognized a state of war. To the extent Congress has concurrent authority to manage the conduct of war, the nineteenth-century authorizations signaled that Congress would not exercise that power and left the conduct of war to the President. As a result, early precedent for the delegation of war-initiation power must be sought elsewhere.

B. The Quasi-War

The naval war with France at the end of the eighteenth century, called the Quasi-War,62See Alexander DeConde, The Quasi-War: The Politics and Diplomacy of the Undeclared War with France, 1797-1801, at 3–141 (1966); Stanley Elkins & Eric McKitrick, The Age of Federalism 581–610 (1993). On the legal aspects of the Quasi-War and cases arising from it, see generally Jane Manners, Executive Power and the Rule of Law in the Marshall Court: A Rereading of Little v. Barreme and Murray v. Schooner Charming Betsy, 89 Fordham L. Rev. 1981 (2021). is a frequently cited example of early post-ratification delegation. David Currie observed: “The bellicose legislation of the Fifth Congress was riddled with broad delegations of authority.”63David P. Currie, The Constitution in Congress: The Federalist Period, 1789-1801, at 244 (1997). As to war initiation delegation, however, that is something of an overstatement.

The conflict opened in 1797 when France began seizing U.S. merchant ships as part of an effort to cut off trade with Britain. Congress’s response was initially limited. Consistent with President Adams’s policy of strengthening defenses while seeking peace, it appropriated money for coastal fortifications (with discretion to the President in choosing their location),64Act of June 23, 1797, Pub. L. No. 5-3, 1 Stat. 521. authorized (but did not require) the President to equip and man three frigates (with very specific directions as to the treatment of the crews), and authorized (but did not require) the President to increase the strength of existing revenue cutters.65Act of July 1, 1797, Pub. L. No. 5-3, 1 Stat. 523. Congress also authorized the President to require states to supply militia if needed. Act of June 24, 1797, Pub. L. No. 5-4, 1 Stat. 522. In early 1798, Congress increased appropriations to these ends and authorized the President to raise an additional regiment of artillery and engineers.66Act of Apr. 27, 1798, Pub. L. No. 5-31, 1 Stat. 552; Act of April 27, 1798, Pub. L. No. 5-34, 1 Stat. 553; Act of May 3, 1798, Pub. L. No. 5-36, 1 Stat. 554; Act of May 4, 1798, Pub. L. No. 5-38, 1 Stat. 555. But mostly Congress rejected proposals for more aggressive measures from Federalist leaders and awaited results from a diplomatic mission sent by Adams.67See Currie, Federalist Period, supra note 63, at 239–41.

The diplomatic mission failed, and once the outcome was known in mid-1798, Congress embraced more warlike measures in the form of delegations. Congress authorized the President to use the navy to seize French ships committing “depredations” on U.S. shipping or “hovering” on the U.S. coastline for that purpose.68Act of May 28, 1798, Pub. L. No. 5-48, 1 Stat. 561. On the same day, it also approved a Federalist proposal to authorize the President to raise additional troops at his discretion (the so-called Provisional Army); however, at the insistence of Republican and moderate Federalist congressmen, the President’s authority was limited to situations in which a foreign power declared war or there was an actual or imminent invasion.69Act of May 28, 1798, Pub. L. No. 5-47, 1 Stat. 558; see Currie, Federalist Period, supra note 63, at 244–48. In June, Congress prohibited U.S. ships from sailing to French ports and prohibited French ships from sailing to U.S. ports, with discretion to the President to waive the prohibition in some circumstances.70Act of June 13, 1798, Pub. L. No. 5-53, 1 Stat. 565. Congress later that month authorized U.S. merchant ships to arm themselves and resist French attacks, with the President authorized to provide what we would now call rules of engagement and to suspend the law if France disavowed further hostilities.71Act of June 25, 1798, Pub. L. No. 5-60, 1 Stat. 572.

In July 1798, Congress took its strongest step, authorizing the President to use the navy to attack French navy ships and privateers on the high seas and to commission U.S. privateers.72Act of July 9, 1798, Pub. L. No. 5-67, 1 Stat. 578. Currie calls this act “suspiciously like a delegation of the power to determine whether or not to go to war.” Currie, Federalist Period, supra note 63, at 245. Some congressional leaders discussed declaring war, but that was never formally proposed, nor was there specific direction to the President to expand the war (merely an authorization). This was the high point of Quasi-War delegation. Although the war continued into 1800 before a new diplomatic mission restored peace, Congress’s war-related legislation in subsequent years was largely confined to reenacting prior measures and making additional appropriations.

As delegations of war-making power, these measures are important but modest. Congress gave the President some discretionary authority in war-related matters. But the only direct delegations of the decision to use force were the two 1798 statutes authorizing attacks on French ships. Of these, the first (in May 1798) was purely defensive: the President could respond to French attacks or imminent attacks along the U.S. coast. One might have thought that the President had that power in any event, as part of the power (recognized by Madison at the Convention) to repel sudden attacks.73See Ramsey, supra note 56, at 172. Representative Gallatin made this point in the debate over the bill. 8 Annals of Cong. 1820, 1831 (1798). See also id. at 1832 (Rep. Venable also making this point); id. at 1828 (Rep. Bayard arguing that the bill gave the President slightly broader powers). No material discussion of delegation was recorded in connection with the bill. Moreover, Congress likely would not have seen this as delegating much policy discretion as a practical matter, as there was no doubt at that time the President would use the force described. Nonetheless, at least formally, the statute conveyed discretion to respond to warlike measures in limited circumstances.

The July 1798 authorization was broader and somewhat more akin to modern war power delegations. It permitted—but did not require—the President to expand the conflict to the high seas and against French shipping and naval forces generally. And the case for the President having this power independently is weaker than for purely defensive measures.74See generally Prakash, supra note 19 (arguing that the President independently has only defensive response power). Although Congress debated the measure at some length, concerns about delegation were not recorded as being expressed. See 8 Annals of Cong. 2062, 2067–83 (1798). On its face, this was a material delegation. But Congress did not authorize the President to begin new hostilities—only to extend existing hostilities. Indeed, the July statute could be seen as lifting some restrictions of the previous statute, which implicitly constrained the President to defensive responses. And the July authorization was itself limited, allowing attacks on the high seas but not against French ports or other land facilities, for example in the French Caribbean colonies. Overall, it seems that Congress was trying to maintain tight control over the extent to which the conflict escalated into full-scale war, rather than transferring to the President substantial discretion over whether to escalate.

The related matter of the Provisional Army is noteworthy because Congress’s control over raising a national army (including whether there would be one at all) was such a sensitive issue at the founding. Congress delegated only limited power in this case, which might have been viewed as constitutionally comparable to delegating war power. Some members of Congress expressed grave concerns over broad delegation, successfully narrowing the measure’s proposed scope. The initial Federalist proposal, enacted by the Senate and sent to the House in April 1798, authorized the President to raise the army at his discretion, if he found it required by the public safety.758 Annals of Cong. 1525, 1631 (1798). See Currie, Federalist Period, supra note 63, at 244. House Republicans objected, specifically in constitutional terms, that this unduly delegated congressional power to the President.76See, e.g., 8 Annals of Cong. 1525 (1798) (Rep. Nicolas objecting that the bill would give the President “[t]he highest act of Legislative power”); id. at 1526 (Rep. Gallatin arguing that “if Congress were once to admit the principle that they have a right to vest in the President powers placed in their hands by the Constitution, that instrument would become a piece of blank paper”); see Currie, Federalist Period, supra note 63, at 244–48 (describing this debate). Though the delegation involved raising armies rather than initiating war, the two were thought analogous; Representative Brent, for example, argued that “if a proposition was made to transfer to the President the right of declaring war in certain contingencies, the measure would at once appear so outrageous, that it would meet with immediate opposition.”778 Annals of Cong. 1638 (1798). These objections resonated with enough Federalists that the proposal was modified to limit the President’s discretion to specified circumstances of a declaration of war or actual or imminent invasion, and only during the next recess of Congress.78Professor Currie concludes: “As delegations went, this one was pretty narrowly confined; it could hardly be doubted that Congress itself had laid down the basic policy that was to guide the President’s determination.” Currie, Federalist Period, supra note 63, at 247. With this debate on their minds from earlier in the 1798 session, the lack of delegation-based objections to the July force authorization suggests that members of Congress probably did not regard the July measure as a substantial war-initiation delegation.

To be sure, there were other delegations in the Quasi-War period that could be precedent for other types of modern delegations. But as to delegating war-initiation power, the Quasi-War affords only limited precedent. That is particularly significant because the Quasi-War was the only foreign conflict fought pursuant to delegated discretionary authority in the early post-ratification era (and indeed, as later sections show, the only one prior to the twentieth century).

C. Delegations Not Leading to Military Conflict

Perhaps the most interesting and least studied episodes of war power delegation in the post-ratification era are those in which proposed delegations were refused, or in which delegations were made but no conflict ensued. These are significant because they highlight optional war power delegations, in which the President is authorized to engage in hostilities, or to opt not to act at all. We identified four such episodes, recounted below. They indicate that no clear consensus or consistent pattern existed in the mid-nineteenth century regarding war power delegation. Further, they provide little support for the proposition, discussed above, that formerly prerogative powers were understood to be broadly delegable.79See infra Section I.B; McConnell, supra note 15, at 326–35.

1. The No-Transfer Act

In 1811, war with Britain was on the horizon. So was the United States’ acquisition of Florida. A year earlier, President Madison directed U.S. troops to take possession of West Florida (the coastal strip between the Mississippi River on the west and the Perdido River on the east),80The Perdido River forms the current border between Alabama and Florida west of Pensacola, Florida. on the view that it was part of the Louisiana territory purchased from France in 1803.81Abraham D. Sofaer, War, Foreign Affairs and Constitutional Power: The Origins 297–303 (1976). Spain, which claimed and nominally controlled West Florida, objected but lacked power to mount opposition. That left Spain in control of East Florida (east of the Perdido River) for the moment, but U.S. acquisition of East Florida seemed inevitable. Seeking to make the best of a bad situation, Spain undertook negotiations for a U.S. purchase of East Florida.

With the looming threat of war with Britain and Spain’s increasing weakness, U.S. leaders worried that Britain might seize East Florida first. On January 3, 1811, Madison asked Congress for authority to use force to secure U.S. interests in East Florida.82James D. Richardson, A Compilation of the Messages and Papers of the Presidents, 1789–1897, at 488. Congress responded with a resolution declaring that “the United States cannot see, with indifference, any part of the Spanish Provinces adjoining the said States eastward of the River Perdido, pass from the hands of Spain into the hands of any other foreign Power.”83Resolution of Jan. 15, 1811, 3 Stat. 471. Simultaneously, Congress approved the so-called No-Transfer Act, authorizing the President to use force in East Florida, either under an agreement with the “local authority” or in the event of “an attempt to occupy the said territory, or any part thereof, by any foreign government.”84Act of Jan. 15, 1811, Pub. L. No. 15-130, 3 Stat. 471. All of this was done in extraordinary secret sessions (presumably to keep Britain in the dark).85David Hunter Miller, Secret Statutes of the United States: A Memorandum 4-5 (1918); Sofaer, supra note 81, at 305–06; see also Samuel F. Bemis, John Quincey Adams and the Foundations of American Foreign Policy 301–02 (1949). Britain never made any moves to occupy East Florida, and following the War of 1812, the Monroe Administration concluded the Adams-Onis Treaty of 1819, under which, among other things, the United States purchased East Florida from Spain.86Sofaer, supra note 81, at 306.

The significance of the No-Transfer Act’s delegation of war-initiation powers is unclear. On one hand, the Act entailed a consequential transfer of power to use force from Congress to the President, made without recorded objection on that ground.87We have not found evidence that anyone in Congress objected to the No-Transfer Act on delegation grounds, although the debates are not fully recorded. Some congressmen proposed amendments to narrow the Act by limiting or deleting the authority to respond to foreign occupation, but these failed, and it does not appear that they were supported by appeals to nondelegation. See 22 Annals of Cong. 1126–33 (1811); Miller, supra note 85, at 13, 25–26 (discussing proposed amendments). Armed conflict with Britain was no small thing (as the country found a year later), and the decision to counter a British move in Florida with force carried potentially grave consequences. Unlike the Quasi-War authorizations—the most substantial prior delegations of war power—the No-Transfer Act was not a response to attacks or likely attacks on the United States or U.S. ships; it authorized the opening of new hostilities against a formidable power. On the other hand, the authorization coupled with the resolution that the United States “cannot see, with indifference” any foreign seizure of East Florida, may have been meant to leave little discretion to the President to fail to respond to a British move. The secret Act thus might be seen more as a limited declaration of war conditioned on occurrence of a specific event, rather than a delegation.88See Wormuth et al., supra note 19, at 208 (taking this view). In that sense, it is not directly analogous to modern war-initiation delegations that leave it to the President to decide on war or not war.

2. Rebuffs of Jackson

As President, former General Andrew Jackson twice sought authority to use the U.S. military to press claims against Mexico and France. Both times Congress declined to enact Jackson’s requested authorizations.

By an 1831 treaty, France agreed to pay claims by U.S. shipowners arising from French seizures during the Napoleonic Wars. France failed to pay as required, and in 1834 Jackson asked Congress for authority to make armed reprisals against French property.89President Andrew Jackson, Sixth Annual Message to Congress (Dec. 1, 1834), S. Doc. No. 23-1, at 11. See Henry Bartholomew Cox, War, Foreign Affairs, and Constitutional Power: 1829-1901, at 17–19 (1984). Congress refused, with some speakers referring to the issue of delegation (although much of the discussion focused on the practical question of whether force was necessary). Representative Claiborne argued that the proposal would “be virtually conferring upon the President unconstitutional power—a power to declare war.”90Cong. Globe, 23rd Cong., 1st Sess. 23 (1834). See Wormuth et al., supra note 19, at 200–01. Gallatin wrote of this episode: “The proposed transfer by Congress of its constitutional powers to the Executive, in a case which necessarily embraces the question of war or no war, appears to me a most extraordinary proposal, and entirely inconsistent with the letter and spirit of our Constitution, which vests in Congress the power to declare war and grant letters of marque and reprisal.” Id. at 200 (quoting Jan. 5, 1835, letter to Edward Everett). The Senate Foreign Relations Committee Report on the matter, presented by Henry Clay, specifically objected to Jackson’s request partly on delegation grounds.91Report of the Senate Committee on Foreign Relations, Jan. 6, 1835, at 22, https://www.loc.gov/item/2022697181 [https://perma.cc/N3NP-V3S7] (“[T]he authority to grant letters of marque and reprisal, being specifically delegated to Congress, Congress ought to retain to itself the right of judging of the expediency of granting them . . . . The committee are not satisfied that Congress can, constitutionally, delegate this right.”). The President’s supporters, while not defending delegations of war power, responded that reprisals, which were all Jackson proposed, were different from war.92Cox, supra note 89, at 47–48; e.g., Cong. Globe, 23rd Cong., 1st Sess. 25 (1834) (Rep. Johnson).

Similar events transpired with respect to Mexico in 1837. United States citizens pressed various claims for injuries and lost property, which Mexico declined to satisfy. Jackson proposed that he make further demands and that Congress enact legislation authorizing reprisals and other uses of force if the demands were refused.93Message from the President of the United States, on the subject of the present state of our Relations with Mexico, S. Doc. No. 24-160, at 1 (Feb. 7, 1837). The Senate authorized the demands but not the reprisals or use of force, providing instead that the President should return to Congress for further authorization if Mexico did not respond satisfactorily. The House Committee on Foreign Affairs recommended a similar approach, but the full House failed to act before the end of the session.94Cox, supra note 89, at 48. Delegation did not appear to play much role in the debates. Somewhat ironically in light of later events, see infra Section I.C.2, then-Senator James Buchanan cautioned “it was a matter of extreme delicacy for Congress to confer upon the Executive the power of making reprisals, upon a future contingency . . . . Unless an immediate and overruling necessity existed, which could brook no delay, it was always safer and more constitutional, to take the opinion of Congress upon events after they had happened, than to intrust a power so important to the President alone.” Cong. Globe, 24th Cong., 2d Sess. 210 (1837). Describing the episode later that year, new President Martin Van Buren observed the “indisposition to vest a discretionary authority in the Executive to take redress . . . .”95President Martin Van Buren, State of the Union of 1837, S. Doc. No. 25-1 (Dec. 5, 1837). Observing that he did “[n]ot perceiv[e] in what manner any of the powers given to the Executive alone could be further usefully employed” on the matter, he asked Congress to “decide upon the time, the mode, and the measure of redress.” Id. Congress refused to act on Van Buren’s renewed requests for authority against Mexico, and the matter was later settled by a treaty sending the claims to arbitration.96Cox, supra note 89, at 48–49.

It is hard to know what to make of the failure of Jackson’s initiatives. Congress declined the requests to authorize prospective uses of force. Some reference, usually by the President’s political rivals, was made to constitutional limits on vesting the President with war-initiation power. Perhaps as importantly, responses did not claim broad constitutional license to delegate war-initiation power (nor invoke the No-Transfer Act precedent). But congressional objections likely arose as much from opposition to Jackson’s warlike measures on the merits as from constitutional scruples.

3. The Maine Boundary

President Van Buren subsequently had more success obtaining a war power delegation outside the Mexico context (one may speculate that the quieter Van Buren seemed less worrisome to Congress than the bellicose Jackson). In the 1830s, the uncertain border between northern Maine and Canada became a substantial issue. An attempted settlement through arbitration failed during Jackson’s administration, and Van Buren inherited the dispute. Professing commitment to a peaceful solution, Van Buren nonetheless asked Congress for authority to use military force in the disputed territory.97Message from the President of the United States, in relation to the dispute between the State of Maine and the British Province of New Brunswick, S. Doc. No. 25-270 (1839). Perhaps surprisingly, given Congress’s rejection of Jackson’s requests for military authorizations, Congress in 1839 authorized the President “to resist any attempt on the part of Great Britain, to enforce, by arms, her claim to exclusive jurisdiction over that part of the State of Maine which is in dispute…” by “employ[ing] the naval and military forces of the United States and such portions of the militia as he may deem it advisable to call into service.”98Act of Mar. 3, 1839, § 1, Pub. L. No. 25-89, 5 Stat. 355. See Cox, supra note 89, at 21–22. Cox calls this “one of the broadest [delegations of war power] accorded any nineteenth century president” which “would have permitted Van Buren to go to war before the British attacked U.S. positions.” Id. at 21.

The debates over this measure do not provide a clear picture of how Congress understood it. Some members of Congress specifically objected to delegating war-initiation power.99E.g., Cong. Globe, 25th Cong., 3d Sess. 285 (1839) (Rep. Everett) (“It is the act of making war, and cannot be delegated.”); id. at 299 (Rep. Pickens) (“The Constitution has made Congress the judge of the necessity for war, and we have no right to delegate, directly or indirectly, any portion of that power.”). Others thought the matter largely one of defense against invasion, perhaps in which the President already had constitutional and statutory power to respond.100E.g., id. at 225 (Sen. Buchanan); id. at 274 (Rep. Saltonstall); id. at 276 (Rep. Evans). Evans argued that the bill “simply confers upon the President power, by men and money, to furnish that protection against invasion which the Constitution renders it imperative on him to furnish.” Id. Ultimately the bill passed by wide margins.101Cox, supra note 89, at 49.

This might at first seem a clear-cut case of substantial war power delegation. However, its constitutional significance may be discounted because it involved direct defense of territory disputed between Britain and the United States—and hence perhaps the President’s implied independent power to repel invasions—and it depended on the specific contingency of Britain using force in connection with that dispute. It nevertheless represents a counterpoint to earlier rebuffs of Jackson and a continuation—arguably an expansion—of the willingness to delegate in the No-Transfer Act. In particular, the Maine delegation is unique for the time in putting entirely in the President’s hands, as a practical matter, the decision whether or not to use force. As discussed, the No-Transfer Act (beginning with its title) was close to a direction to the President not to allow British seizure of East Florida. And in the Quasi-War delegation, Congress presumably understood and intended that President Adams would use naval force against France once authorized. The Maine delegation differed from those previous examples in that Congress probably preferred that military conflict not result. Congress would not have assumed that voting for delegation was a vote for war. Rather, circumstances indicated that Congress was passing to the President the decision whether to use force based on future circumstances. In this sense the episode—despite other aspects limiting its significance—can be seen as the first “modern” delegation of the decision whether to initiate war.

4. Buchanan’s Mixed Record

After the Maine dispute, the next major discussion of delegating war power occurred in the Buchanan Administration. Buchanan was somewhat more inclined to use force abroad than his immediate predecessors, but he also generally believed that the President lacked authority to initiate hostilities without congressional approval.102See Currie, Descent, supra note 53, at 127. Thus he made several requests for authority to use force in Mexico, Central America, and Paraguay, with mixed results.

Buchanan’s putative success arose after Paraguayan artillery fired on a U.S. ship, the Water Witch, on the Paraná River.103Paraguay had prohibited foreign warships from navigating rivers within Paraguay and may have mistaken the Water Witch for a warship. See Cox, supra note 89, at 230. At Buchanan’s request, Congress authorized the President, if Paraguay refused reparations, to “adopt such measures and use such force” as needed to induce Paraguay to give “just satisfaction” for the attack.104Act of June 2, 1858, Pub. L. No. 35-1, 11 Stat. 370. See Currie, Descent, supra note 53, at 130; Cox, supra note 89, at 229–30. Wormuth and Firmage refer to the incident as a “conditional declaration of war” but that seems overstated; nothing in the resolution obligated the President to use force nor created a state of war if Paraguay refused compensation. See Wormuth et al., supra note 19, at 203. Buchanan sent a naval force to the region, leading to a diplomatic settlement.

On first look, the Water Witch incident may seem to be a major step in the development of war power delegation. Like the Maine delegation some twenty years earlier, it gave the President wide discretion, both on paper and in practice, to decide whether to launch military attacks. But unlike the Maine delegation, it did not address threats to U.S. territory or immediate U.S. strategic interests. It more closely resembled the authorizations proposed by Jackson and rejected by Congress in part on the argument that they were unconstitutional delegations. Like the Maine delegation but even more so, the Paraguay delegation might be thought akin to modern war-initiation delegations.

But other events complicate the episode as a precedent for emerging consensus on war power delegation. First, Buchanan’s proposed action also resembled earlier unilateral presidential uses of force responding to affronts to U.S. interests abroad. In a notable example, in the immediately preceding Pierce Administration, U.S. forces shelled the city of Greytown, Nicaragua, after perceived mistreatment of a U.S. diplomat.105The unilateral use of force was later found constitutional in Durand v. Hollins, 8 F. Cas. 111 (C.C.S.D.N.Y. 1860). In light of this and other unilateral actions, some members of Congress may have thought congressional approval was not constitutionally required in the Water Witch incident and thus might not have regarded it as a consequential delegation. Moreover, the Paraguay delegation itself drew some sharp opposition, including on the ground that it was unconstitutional.106E.g., Cong. Globe, 35th Cong., 1st Sess. 1705, 1727, 1963 (1858) (Sen. Collamer); id. at 2547 (Rep. Letcher). Collamer specifically argued that the authorization unconstitutionally delegated the power to declare war and that such action was unprecedented. Id. at 1727 (“I insist, as a matter of constitutional law, that Congress has no power to authorize the President to commence a war at his discretion.”); id. (arguing that authorizing the President “to commerce a forcible war . . . in his discretion, when he shall think proper, is entirely unprecedented in our history”). His motion to delete the force authorization was defeated 15-25.  Cong. Globe, 31st Cong., 1st Sess. 1963 (1850); see Cox, supra note 89, at 231 n.*; Currie, Descent, supra note 53, at 129–30 & n.79 (noting “[e]ven this rather specific authorization was attacked in Congress as delegating to the President Congress’s power to declare war”). And while opposition was overcome with respect to Paraguay, it prevailed against Buchanan’s more far-reaching proposals.

Buchanan had in mind multiple aggressive uses of military force in Latin America. He asked Congress for authorization “to employ the land and naval forces of the United States” to protect the isthmus of Panama.107Currie, Descent, supra note 61, at 127; Wormuth et al., supra note 19, at 201–02. Similarly, he asked Congress for authority to use force to prevent closure of alternate routes across Nicaragua108Currie, Descent, supra note 61, at 128. and the isthmus of Tehuantepec in Mexico.109Id. at 129. Buchanan argued:

The remedy for this state of things [disorder and threats to Americans crossing between the oceans] can only be supplied by Congress, since the Constitution has confided to that body alone the power to make war. Without the authority of Congress the Executive cannot lawfully direct any force, however near it may be to the scene of difficulty, to enter the territory of Mexico, Nicaragua, or New Granada . . . even though they may be violently assailed whilst passing in peaceful transit over the Tehuantepec, Nicaragua, or Panama routes . . . . In the present disturbed condition of Mexico and one or more of the other Republics south of us, no person can foresee what occurrences may take place . . . .110Id. (citation omitted).

Buchanan also asked for authority to establish a military protectorate over parts of northern Mexico to defend the U.S. border, as well as authority to respond with force against Britain for interference with U.S. shipping.111Cox, supra note 89, at 233–36, 241–42.

Congress declined to act on all of these requests. How much this had to do with constitutional scruples is unclear; it may simply have been that a majority distrusted Buchanan’s motives. One scholar comments: “Congress was too jealous of the war-making power to heed the President’s requests, and Republican members in particular were too fearful of giving such authority to a president so sympathetic to the South’s desire for more slave territory.”112Currie, Descent, supra note 61, at 129 n.78. Accord Cox, supra note 89, at 242 (observing that “by 1860 any notion of unleashing a Democratic president with a war party at his disposal into nearly helpless Mexico was preordained to defeat in Congress”). But constitutional arguments were strongly, if perhaps conveniently, invoked. Senator Trumbull objected that Congress did not have “any authority to surrender the war-making power to the President . . .  He is not vested with it by the Constitution; and we have no right to divest ourselves of that power which the Constitution vests in us.”113Cong. Globe, 35th Cong., 1st Sess. 2748 (1858) (discussing proposed delegation with respect to Britain). See also Cong. Globe, 36th Cong., 1st Sess. 326–27 (1860) (Sen. Foster discussing proposed delegation with respect to Mexico). Buchanan responded that the requested authority “could in no sense be regarded as a transfer of the war-making power to the Executive, but only as an appropriate exercise of that power by the body to whom it exclusively belongs.”114Currie, Descent, supra note 61, at 129 n.78. Invoking precedent, he added: “In [the Water Witch incident] and in other similar cases Congress have conferred upon the President power in advance to employ the Army and Navy upon the happening of contingent future events; and this most certainly is embraced within the power to declare war.”115Id. at 129–30. Buchanan did not specify what “similar cases” he had in mind, though they likely included the No-Transfer Act and the Maine boundary delegation, described above. He may also have included authorizations to use the military to suppress domestic disorder, discussed below, although these seem distinct from the declare-war power.

Thus, Buchanan’s experiences point in different ways. Congress approved a modern-looking war power delegation in the Water Witch incident, over constitutional objections. But in multiple other cases Congress ignored Buchanan’s appeals for advance authority to initiate hostilities at his discretion. Constitutional objections to delegation featured prominently in these debates as well, though Congress often had other, more practical reasons to withhold authority.

In sum, the record of war-initiation delegation as to foreign enemies in the pre-Civil War period is thin, though not entirely barren. We count three material delegations in addition to the Quasi-War: the No-Transfer Act, the Maine boundary delegation, and the Water Witch delegation. But each delegation was expressly conditioned on a specific fact—a fact that might have triggered the President’s limited independent constitutional authority to act anyway—and was somewhat offset by other near-contemporaneous episodes in which Congress refused delegations, with some objections expressed on constitutional grounds.

D. Using Force against Native American Tribes, Piracy, and Insurrection

Three other areas, distinct from war-initiation delegations, are sufficiently related to merit discussion. First, Presidents directed hostilities throughout this period against Native American tribes on the western frontier, generally with Congress’s implicit approval (although not with specific authorization). Second, Congress authorized the navy to suppress piracy and the slave trade. Third, Congress authorized the President to use the army and militia to enforce federal laws and suppress insurrections, an authority most notably invoked by President Lincoln in the Civil War.

1. Frontier Conflicts

The United States conducted military operations against Native American tribes on the frontier throughout the post-ratification period. Tribes were generally treated as tantamount to foreign nations for treaty-making purposes—that is, tribal treaties were adopted with the Senate’s advice and consent—so by parallel reasoning, the Constitution’s war power provisions arguably should have applied to them as well. It is not entirely clear how early Congresses saw the relationship between the tribes and constitutional war power, but in any event, the frontier conflicts do not provide clear examples of war-initiation delegations. They followed a similar pattern. They were not directly declared or authorized by Congress (nor formally called war). Presidents often sought expansions of the military and additional funding on the basis of frontier conflicts, so Congress was well aware of them. But Congress appeared to assume the President had some independent power to conduct frontier conflicts—perhaps because they were internal and were (or were claimed to be) defensive in nature.

The conflict in the Ohio Valley immediately after the Constitution’s ratification is illustrative. President Washington inherited a violent northwest frontier, with large numbers of U.S. settlers moving west, provoking conflicts with Native inhabitants.116On the conflict in the northwest, see Richard H. Kohn, Eagle and Sword: The Federalists and the Creation of the Military Establishment in America, 1783-1802, at 91–143 (1975); William Hall & Saikrishna Bangalore Prakash, The Constitution’s First Declared War: The Northwestern Confederacy War of 1790-95, 107 Va. L. Rev. 119, 130–41 (2021). On debates in Congress, see Currie, Federalist Period, supra note 63, at 81–87, 157–64. See also Gregory Ablavsky, The Savage Constitution, 63 Duke L.J. 999, 1080 (2014) (noting the importance of considering the frontier wars in analyses of war powers). In 1789, he asked Congress to reauthorize and expand the small army carried over from the Articles of Confederation, citing among other things the troubled northwest. Congress did so,117Pub. L. No. 1-25, 1 Stat. 92 (1789). The authorization for troops said nothing about how they should be used. Madison observed: “By the Constitution, the President has the power of employing these troops in the protection of those parts which he thinks require them most.” 1 Annals of Cong. 724 (1825). See Currie, Federalist Period, supra note 63, at 81. and followed up with a further modest expansion in 1790.118Pub. L. No. 1-10, 1 Stat. 119 (1790). Washington dispatched an expedition under Josiah Harmar against the northwest tribes. When Harmar was defeated, Washington sent a larger expedition under Arthur St. Clair—which likewise met defeat. Congress authorized more troops, at Washington’s request, while conducting a contentious investigation into St. Clair’s defeat. The new troops, commanded by Anthony Wayne, gained a decisive victory in 1794.119Kohn, supra note 116, at 139–43.

The source of Washington’s authority to fight the northwest conflict is unclear. It is possible to see the early military statutes as broad delegations to the President to use the authorized troops as the President thought appropriate (including for offensive operations) on the frontier.120See, e.g., Adam Mendel, The First AUMF: The Northwest Indian War, 1790-1795, and the War on Terror, 18 U. Pa. J. Const. L. 1309, 1310 (2016); Matthew Waxman, Remembering St. Clair’s Defeat, Lawfare (Nov. 4, 2018, 9:00 AM), https://www.lawfareblog.com/remembering-st-clairs-defeat [https://perma.cc/2RNJ-RKKC]. Maggie Blackhawk writes that “President Washington used this broad delegation for the first American war under the newly formed Constitution — the Northwest Indian War.” Federal Indian Law as Paradigm Within Public Law, 132 Harv. L. Rev. 1787, 1826 (2019). In contrast, Hall and Prakash contend that Congress declared war (albeit without using those words) in the relevant statutes. Hall & Prakash, supra note 116, at 152–63. The statutes did not say this, though. They simply authorized troops, with no direction on their use.121The 1789 statute also authorized the President to call out the militia, specifically for defense of the frontier. Because it did not similarly authorize the use of regular troops in this way, Congress may have assumed the President already had constitutional authority to use the regular troops. It seems more likely that Congress understood the troops to be available to respond to ongoing hostilities of the northwest tribes, which had begun before Washington took office. That is, Congress may have seen the United States as already at war in the northwest, with the troop authorizations allowing Washington to use his independent power to fight an existing war but not delegating power to start new ones.122See Ramsey, supra note 56, at 177–81.

There is reason to think Washington took the latter view. While directing campaigns against the northwest tribes without express congressional authorization apart from the authorization of the army, at the same time Washington refused requests from local authorities to use troops against tribes in the southwestern territories, where only sporadic violence had occurred. Washington explained that offensive operations in the south needed specific congressional approval.123Id. at 177–79. Of course, Washington may simply have wanted to avoid southwestern conflicts while embroiled in a northwestern one. But his constitutional reservations fit well with the view that in authorizing troops Congress was not authorizing new theaters of hostilities and that the President had independent power or congressional approval to fight preexisting frontier wars but not to start new ones.

In any event, the Ohio Valley conflict seems a doubtful precedent for congressional delegation of war-initiation power. It is not clear that Congress saw itself delegating such power, as opposed to supplying troops and funds to a pre-existing and ongoing effort. The relevant statutes do not speak in terms of authorization, and modern scholars have drawn various conclusions from them.

Nineteenth-century frontier conflicts took a similar course, typically proceeding on the proposition that they were defensive wars or aspects of law enforcement.124See Wormuth et al., supra note 19, at 123–27 (noting that “[i]n theory, all the Indian wars were responses to sudden attacks” and concluding that “[t]he formless and intermittent character of Indian warfare, and its peculiar status as a rebellion of a dependent nation within the territory of the United States, no doubt encouraged the informality with which Indian wars were treated”). The 1819 Seminole War is an important example. President Monroe, without congressional authorization, directed Andrew Jackson to attack the Seminoles in Spanish Florida in response to Seminole raids into U.S. territory. During the campaign, Jackson attacked Spanish posts—which Monroe had not authorized. Jackson’s actions prompted fierce constitutional debate in Congress. But most participants in the debate conceded that no congressional authorization was needed for hostilities against the Seminoles because those operations responded to attacks; the debate focused on the propriety of attacking the Spanish (who arguably encouraged the Seminoles but had not themselves attacked the United States).125Ramsey, supra note 56, at 188–90; see 33 Annals of Cong. 583-1138 (1819) (recording debate); Currie, Jeffersonians, supra note 53, at 197–200 (summarizing the debate). This debate reinforces the more general impression that both the executive branch and Congress regarded the Native American conflicts (rightly or wrongly) as defensive and thus undertaken on independent presidential authority.

Congress’s most important (and regrettable) action regarding the frontier conflicts in this period, the so-called Indian Removal Act of 1830,126Act of May 28, 1830, Pub. L. No. 21-148, 4 Stat. 411. See generally 1 Francis Paul Prucha, The Great Father: The United States Government and the American Indians (1984) (discussing U.S. policy in this period). is notable for what it did not say. The Act authorized the President to enter into treaties with tribes to exchange land east of the Mississippi River for land in the unorganized western territories. It made no mention of military force; on its face it contemplated peaceful transfers. Of course President Jackson expected forcible removal and most congressmen likely did as well, but this assumption was not reflected in the statute. A range of conflicts with Native American tribes arose during implementation of the removal policy but Jackson and his successors did not seek further congressional force authorizations.

Thus, as with the earlier frontier conflicts, the early nineteenth-century frontier conflicts do not supply a ready precedent for broad war power delegation. It does not appear that Congress saw continuing authorizations of troops as delegating to the President authorization to start wars. Congress probably thought defensive wars (including offensive counterattacks) against the frontier tribes were constitutional, but this view likely rested on independent presidential power to respond to attacks, or perhaps implicit congressional approval to continue fighting preexisting conflicts, rather than delegation of war-initiation power. At minimum, the frontier wars of the period do not provide clear examples of war-initiation delegations.

2. Piracy

Some authorities suggest that early Congresses delegated to the President discretion to use force against pirates.127E.g., Bradley & Goldsmith, supra note 2, at 2074 & n.114. On closer examination, this suggestion is overstated.

Congress first addressed piracy in the 1790 Crimes Act, which provided punishments for various federal offenses including piratical activities, as well as (among others) treason, murder on federal property, and counterfeiting.128Act of Apr. 30, 1790, Pub. L. No. 1-9, 1 Stat. 112, 113–14 [hereinafter 1790 Crimes Act]. As with the other crimes it encompassed, the Act did not expressly authorize presidential enforcement against pirates, presumably because members of Congress thought the President had independent enforcement power under Article II. Subsequent Presidents, notably Jefferson, used U.S. naval forces against pirates to enforce the 1790 Act, without recorded constitutional concerns.129Sofaer, supra note 81, at 484–85 n.633; Gardner W. Allen, Our Navy and the West Indian Pirates 1–23 (1929); id. at 3–4 (describing Jefferson’s anti-piracy operations). President Monroe apparently regarded the 1790 Crimes Act, among other enactments, as authorizing force against a pirate base on Amelia Island, Florida (then a Spanish possession) in 1817. Sofaer, supra note 81, at 337–38.

In 1819, Congress passed an act specifically targeting piracy.130Act of Mar. 3, 1819, Pub. L. No. 15-77, 3 Stat. 510 [hereinafter 1819 Act]. By its terms the 1819 Act expired in a year, Congress extended it for two additional years in 1820. See Act of May 15, 1820, Pub. L. No. 16-113, 3 Stat. 600. The 1820 Act expired by its terms and was succeeded by further enactments in 1822 and 1825, as described below. Unlike the 1790 Act, it expressly authorized the President to use the navy to protect U.S. shipping and seize piratical ships.1311819 Act, §§ 1–2. The point of the 1819 Act, which passed without material recorded debate,132See Sofaer, supra note 81, at 365. is not entirely clear. Piratical activity in the Caribbean and the Gulf of Mexico had surged with the breakdown of Spain’s authority over its American colonies.133See Nathan S. Chapman, Due Process Abroad, 112 Nw. U. L. Rev. 377, 418–19 (2017). Under pressure from constituents, Congress may have felt a need to take visible action, perhaps to encourage greater presidential attention to the matter.134See Sofaer, supra note 81, at 365 (suggesting that Congress responded to “an aroused public”). Part of the 1819 Act also may have been designed to overrule the Supreme Court’s 1818 decision in United States v. Palmer, which held that the general language of the 1790 Act did not criminalize piratical attacks by non-citizens against non-U.S. ships.135United States v. Palmer, 16 U.S. 610, 644–45 (1818); see Sofaer, supra note 81, at 485 n.636. The 1819 Act covered “any piratical aggression” against “any vessel of the United States, or the citizens thereof, or upon any other vessel.” 1819 Act, § 2. It seems unlikely, though, that members of Congress thought the Act was constitutionally necessary to give the President enforcement authority against pirates. The 1790 Crimes Act had no express use-of-force authorization. And, as discussed below, once Congress engaged in substantial debate on the matter, members appeared to agree that the President had independent enforcement power so long as his actions did not risk war with foreign nations.

The United States stepped up anti-piracy operations after the 1819 Act, with limited success. Pirates evaded U.S. forces by developing hidden bases in remote parts of coastal Cuba and Puerto Rico, where Spanish colonial authorities either could not or would not act against them.136Chapman, supra note 133, at 418–19; Sofaer, supra note 81, at 366–69; Allen, supra note 129, at 20–21. A frustrated President Monroe asked Congress in December 1822 for authority to build additional, lighter draft ships suitable for coastal operations.137Sofaer, supra note 81, at 369 & n.651. Supporters in Congress proposed a bill authorizing such construction “for the purpose of repressing piracy, and of affording effectual protection to the citizens and commerce of the United States in the Gulf of Mexico, and the seas and territories adjacent.”13840 Annals of Cong. 371 (1822) (proposal of the House Committee on Naval Affairs). This language provoked the first substantial congressional debate on the matter, with Representative Eustis objecting to the bill as delegating war power because the apparent grant of authority to use force in adjacent territory might lead to war with Spain.139Id. at 375 (expressing “doubts whether this House was ready to invest the Executive with a power amounting to that of making war”). Representative Fuller, who introduced the bill, responded that it was not intended to authorize pursuit of pirates on land, but added that the President likely had some independent pursuit power under the law of nations.140Id. at 376; see Sofaer, supra note 81, at 369–70 & n.653 (discussing this exchange). See also 40 Annals of Cong. 379 (1822) (Rep. Cambreleng saying that “[t]his bill does not authorize the President to send a land force to pursue the pirates”); id. at 380 (Rep. Barbour saying that the extent of power under the law of nations to pursue pirates was a question determined by the President as Commander-in-Chief); id. at 382 (Rep. Colden saying that “no power was proposed to be communicated by [the bill] to the Executive which the Executive does not possess”).

An amendment proposed by Representative Smyth to authorize land operations14140 Annals of Cong. 376–77 (1822). Smyth’s proposal stated that the President was “authorized and required” to pursue pirates on land. met sharp resistance.142Id. at 377–82. Much of the discussion turned on the extent to which the law of nations allowed pursuit of pirates on land, on which there was no consensus among the members. Representative Archer also argued that Smyth “proposed in effect to divest Congress and give to the Executive the power to make war.”143Id. at 381. Fuller, who introduced the bill but opposed Smyth’s amendment, agreed with Archer. Id. at 382. Eventually Smyth withdrew his proposal, and the bill passed the House and later (without substantive debate) the Senate, becoming law upon President Monroe’s signature later that month.144Sofaer, supra note 81, at 370–71; 40 Annals of Cong. 383–84 (1822); Act of Dec. 20, 1822, Pub. L. No. 17-2, 3 Stat. 720.

After another two years of mixed results, Congress returned to the matter in December 1824 with a proposal, backed by President Monroe, to authorize land pursuit and blockade of ports in Cuba and Puerto Rico that sheltered pirates.145Sofaer, supra note 81, at 374, 488 n.674–75. The blockade authorization soundly failed in the Senate. While a range of practical concerns were expressed, Maryland Senator Samuel Smith also raised a delegation objection: “Shall we then, by sanctioning a section of this kind, put in the hands of the Executive the power of declaring war? — a power which we alone possess in Congress . . . . I am unwilling to grant a provisional power, that may lead us into war.”1461 Register of Debates in Congress, at 404 (1825). The motion to delete the blockade authorization passed 37-10. Id. at 408. A Senate motion also attempted to strike the provision authorizing land pursuit, with a number of Senators arguing that the authorization was unnecessary because the President already had this power under the law of nations. The Senate voted to retain the pursuit authorization,147Id. at 461. The Senate rejected a broader proposal by New York Senator Martin Van Buren to authorize the President to land troops to search for pirates and to engage in reprisals. Id. at 462–63. but the House deleted it, apparently on the grounds that it was unneeded. Congressman Forsythe, introducing the Senate bill on behalf of the House Committee on Foreign Relations, said “[t]here did not exist any necessity for granting this provision of the bill, since the President has it already by the law of nations.”148Id. at 714. See also id. at 726 (Forsythe repeating that “the law of nations gives [the President] power, as the Executive Magistrate”). The pursuit authorization was deleted without recorded vote after several other members agreed with Forsythe. Id. at 728. The Senate acquiesced in the deletion; the enacted bill only authorized expenditure for the construction of ships, without authorization or direction as to their use.149Act of Mar. 3, 1825, Pub. L. No. 18-102, 4 Stat. 131; see Sofaer, supra note 81, at 375–76, n.678–79; Chapman, supra note 133, at 420–22.

These events cast considerable doubt on the idea that Congress delegated expansive power to the President regarding piracy. The 1790 Act made piracy a crime and Presidents used their constitutional enforcement power to counter it in U.S. waters and on the high seas. These activities appear not to have inspired constitutional concerns.150As Professor Chapman argues, a key to understanding U.S. anti-piracy operations in this period is that they were considered law enforcement actions. See Chapman, supra note 133, at 416–17. As law enforcement, they did not in themselves implicate war powers, and thus the President had independent constitutional power to direct them (at least once Congress made piracy a federal crime). Although Congress passed the 1819 Act authorizing anti-piracy operations, Congress became hesitant as intensifying and inconclusive conflict suggested the need for operations in Spanish territory. Members appeared to think that some pursuit of pirates on land was allowed by the law of nations and thus fell within presidential enforcement power. But Congress resisted authorizing broader hostile operations that might provoke war with Spain, with some concerns expressed about unconstitutional delegation of war power. Modern suggestions that the nineteenth-century Congress delegated broad powers to use force against pirates thus seem mistaken or overstated.151A similar point applies to congressional acts authorizing suppression of the slave trade. See, e.g., Act of Mar. 2, 1807, Pub. L. No. 9-21, 2 Stat. 424, 428 (authorizing the President to use naval vessels to prohibit importation of slaves); see also Bradley & Goldsmith, supra note 2, at 2074 n.114 (noting these acts). Once Congress criminalized the slave trade, the President presumably had constitutional authority to enforce the prohibition, including on the high seas (but not in a way that initiated war with foreign nations). It is unclear what additional authority, if any, the subsequent authorizations provided.

3. Insurrections and Law Enforcement

In contrast to early concern about delegating war-initiation power, early Congresses seemed relatively (though not entirely) unconcerned about delegating authority to suppress domestic disturbances. The 1792 Militia Act conveyed broad discretion, after some debate over delegation. It gave the President authority to call the militia into federal service “whenever the United States shall be invaded, or be in imminent danger of invasion from any foreign nation or Indian tribe,” as well as “in case of an insurrection in any state, against the government thereof”152Act of May 2, 1792, Pub. L. No. 2-28, §§ 1-2, 1 Stat. 264 [hereinafter 1792 Militia Act]. See Stephen I. Vladeck, Emergency Power and the Militia Acts, 114 Yale L.J. 149, 156–63 (2004). and “whenever the laws of the United States shall be opposed, or the execution thereof obstructed, in any state, by combinations too powerful to be suppressed by the ordinary course of judicial proceedings, or by the powers vested in the marshals by this act.”1531792 Militia Act, § 2.

These were quite broad delegations, made without reference to any particular situation. In the House they prompted objections. “It was surely the duty of Congress,” one member said, “to define, with as much accuracy as possible, those situations which are to justify the execut[ive] in its interposition of a military force.”154Currie, Federalist Period, supra note 63, at 161; 3 Annals of Cong. 554 (1792) (Rep. Murray); see also 3 Annals of Cong. 574 (1792) (Rep. Mercer). The House added amendments limiting power to suppress insurrections to situations where a state requested assistance, and limiting power to enforce federal laws to situations where a federal judge found the laws could not be enforced by ordinary means. In addition, the President could use only the militia of the affected state unless it was insufficient and Congress was not in session. The 1792 Act was also effective for only two years1551792 Militia Act, sec. 10. (barely lasting to its 1794 invocation by President Washington during the Whiskey Rebellion). But even with these limitations, the Act contained much more open-ended delegations than anything on the international front for many years to come.

 A subsequent Militia Act in 1795 made the authorization permanent and dropped several of the restrictions.156Act of Feb. 28, 1795, Pub. L. No. 3-36, 1 Stat. 424. The 1795 Act eliminated the requirement of judicial certification and the limit on using militia of other states. Congress followed up with the Insurrection Act in 1807, authorizing the President to use the regular army (as well as the militia) to suppress insurrections in situations where the President was authorized to use the militia.157Act of Mar. 3, 1807, Pub. L. No. 9-41, 2 Stat. 443 (“[I]n all cases of insurrection, or obstruction to the laws, either of the United States, or of any individual state or territory, where it is lawful for the President of the United States to call forth the militia for the purpose of suppressing such insurrection, or of causing the laws to be duly executed, it shall be lawful for him to employ, for the same purposes, such part of the land or naval force of the United States, as shall be judged necessary, having first observed all the pre-requisites of the law in that respect.”). See Vladeck, supra note 152, at 163–67. The Enforcement Act of 1871 (also known as the Ku Klux Klan Act), Pub. L. No. 42-22, Sec. 3, 17 Stat. 13, authorized the President to use the military to suppress domestic violence and conspiracies to deprive people of their constitutional rights. The 1807 Act’s most famous invocation was the Civil War, as President Lincoln rested his initial military response to Southern secession in part on his authority to suppress insurrection. As the Supreme Court put it in the Prize Cases in 1863, rejecting a challenge to Lincoln’s actions:

The Constitution confers on the President the whole Executive power. He is bound to take care that the laws be faithfully executed. He is Commander-in-chief of the Army and Navy of the United States, and of the militia of the several States when called into the actual service of the United States. He has no power to initiate or declare a war either against a foreign nation or a domestic State. But by the Acts of Congress of February 28th, 1795, and 3d of March, 1807, he is authorized to called out the militia and use the military and naval forces of the United States in case of invasion by foreign nations, and to suppress insurrection against the government of a State or of the United States.158The Prize Cases, 67 U.S. (2 Black) 635, 668 (1863). The Court also indicated that Lincoln had independent constitutional authority to respond to the Confederacy’s initiation of war. In his dissent on behalf of four Justices, Justice Nelson stressed that the power to declare war “cannot be delegated or surrendered to the Executive.” Id. at 693 (Nelson, J., dissenting).

Compared to delegations of war-initiation power, these authorizations were quite broad, especially after 1795. They operated generally, not in connection with any particular uprising, and (again, especially after 1795) left it largely to the President’s discretion when using the military or militia for domestic purposes was appropriate. And as the Civil War demonstrated, they could authorize large-scale presidential uses of force.

Yet as with piracy, delegation of authority to suppress insurrection stands in a very different light from delegation of authority to start foreign wars. The President has the constitutional authority and obligation to enforce the law, as well as an implied power to repel sudden invasions;159U.S. Const. art. II, §§ 1 & 3. the Militia and Insurrection Acts gave him tools (the militia and military) to do so. The President has no corresponding constitutional power relating to war initiation in situations where Congress would be delegating to the President an exclusive power of Congress. Delegating power to use state militia forces might also be distinguished from delegating war power on a separate textual ground: unlike the Declare War Clause that simply grants that power to Congress, Article I states that Congress has the power “[t]o provide for calling forth the Militia” for certain purposes, perhaps indicating that militia powers are more appropriately delegated.160U.S. Const. art. I, § 8, cl. 12 (emphasis added).

E. Conclusion: Implications of the First 70 Years

The early history of war power delegations is complex and resists easy conclusions. But several important ones may be ventured. First, it supplies surprisingly little precedent for modern broad delegation of war-initiation power. Most foreign conflicts of the time were fought pursuant to formal congressional recognition of a state of war—even relatively small-scale ones such as those against Tripoli and Algiers. The only foreign conflict fought by delegated authority was the 1798–1800 campaign against French ships on the high seas, but that was limited in important respects and occurred in the midst of ongoing low-level conflict. That record does not show war-initiation delegation to be unconstitutional, but it does show it to be unusual.

Second, in some now-obscure situations, delegations of war-initiation power began tentatively to take hold—first in the No-Transfer Act, then in the Maine boundary delegation, and finally in the Water Witch incident. So one cannot say the early period rejected war-initiation delegation. But these episodes are balanced by contentious debates over the Provisional Army and unsuccessful requests for delegated power to use force by Presidents Jackson and Buchanan, in which there was a recurring idea that the Constitution imposed limits on Congress’s delegation of its war powers. From the Republic’s birth, there has been an influential strain of thought that regards war powers as especially nondelegable. At minimum, this evidence should caution against a quick assumption that early constitutional practice supports setting aside or loosening general nondelegation principles when it comes to war-initiation power.

At the same time, early practice finds support for broad authorizations in areas where the President had some degree of independent constitutional power. Substantial delegations of war waging (as opposed to war initiating) authority were routine, accompanying all of Congress’s declarations of war, consistent with the President’s power as commander-in-chief to carry out wars once begun. Further, Congress provided broad authorizations in related areas, including using force against pirates and to suppress insurrections161As well as slave-trading. See supra note 151 and accompanying text.—areas in which the President’s power to enforce law indicated substantial independent presidential authority.

III.  WAR POWER DELEGATIONS FROM THE CIVIL WAR TO WORLD WAR II

This Part considers historical practice relating to war power delegations from 1865 to 1945. Though likely beyond the time relevant to the Constitution’s original meaning, practice during this period—a time in which the United States emerged globally as a great power—might contribute to the “historical gloss” on the constitutional regime of delegation.

Again, however, we find little from this period to support a constitutional practice of war-initiation delegation. Congress declared three wars, and authorized the President to direct them, but otherwise most uses of force during this time relied on claimed independent presidential authority, an increasingly common feature of U.S. foreign policy.

It was also during this period, however, that the Supreme Court issued its most significant decision on the nondelegation doctrine and foreign affairs. The Court’s 1936 decision in Curtiss-Wright rejected a challenge to delegation regarding certain arms exports and stated that the nondelegation doctrine applies less strictly in foreign relations than domestic affairs. Though not involving war powers, the decision’s broad language could be read—and we show in later Parts that it would be read by some—to apply in that area.

A. Declared Wars

From 1898 to 1945, the United States fought three formally declared wars. As with earlier major wars, Congress delegated to the President vast discretion over how to wage them, but the declarations did not give the President decision-making discretion over whether to wage them.

1. War with Spain: Congressional Direction to Use Force

In 1898, U.S. relations with Spain had been fraying for years, primarily over Cuba, a Spanish colony seeking its independence. United States investors in Cuba’s agricultural industry also pressed for protection of their interests, and interventionist sentiments intensified when the battleship U.S.S. Maine mysteriously exploded in Havana harbor, where President McKinley had sent it to protect U.S. citizens and property.162David F. Trask, The War with Spain in 1898, at 28–29 (Louis Morton ed., 1981).

On April 20, 1898, Congress passed—at McKinley’s request—a joint resolution calling for Spain to withdraw from Cuba and authorizing the President to intervene militarily to support Cuban independence.163S.J. Res. 24, 55th Cong. (1898). One remarkable feature of that force resolution was its imperative voice. It not only licensed the President to use force but instructed him to do so: “the President of the United States . . . hereby is . . . directed and empowered to use the entire land and naval forces of the United States, and to call into the actual service of the United States the militia of the several States, to such extent as may be necessary” to compel Spain to withdraw from Cuba. True, the resolution’s phrase “as may be necessary” could be read either as giving the President discretion over how much and what type of force to use—or even whether to use it at all. But unlike modern force authorizations giving the President an option to use force, this act obliged him to. Moreover, at the time that Congress directed the President to use force against Spain, the President had made clear his intention to do so.164Benjamin R. Beede, The War of 1898 and the U.S. Interventions, 1898-1934: An Encyclopedia 119–21 (1994).

The April 20 resolution prompted Spain to break off diplomatic relations. McKinley then imposed a naval blockade of Cuba, and Spain responded by declaring war.165Richard F. Hamilton, President McKinley, War and Empire 117 (2006). Senator Lodge insisted that the joint resolution was “[i]n fact, if not in terms, . . . a declaration of war” because it declared “that Spanish rule in Cuba must cease.” Henry Cabot Lodge, The War with Spain 43–44 (1899). The President returned to Congress on April 25 requesting a war declaration.166Hamilton, supra note 165, at 117. A legal formality at that point, Congress that day unanimously passed by voice votes a resolution backdating its war declaration by four days, to the date of Spain’s declaration.167S.J. Res. 189, 55th Cong. (1898); Jennifer K. Elsea & Matthew C. Weed, Cong. Rsch. Serv., RL31133, Declarations of War and Authorizations for the Use of Military Force: Historical Background and Legal Implications 2 (2014); Beede, supra note 164, at 120. As in previous declared wars, Congress recognized a state of war rather than leaving the President discretion whether to do so.

2. World Wars I and II

Following German targeting of U.S. merchant ships in the Atlantic during World War I, as well as other hostile actions, President Woodrow Wilson asked Congress on April 2, 1917, to declare war against Germany. Within days Congress obliged by large majorities. Its joint resolution stipulated “[t]hat the state of war between the United States and the Imperial German Government which has thus been thrust upon the United States is hereby formally declared” and “authorized and directed”—echoing the imperative voice of the 1898 resolution—the President “to employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial German Government.”168Act of Apr. 6, 1917, ch. 1, 40 Stat. 1. Later that year, Congress declared war against Germany’s ally Austria-Hungary, after that government “committed repeated acts of war against” the United States.169Act of Dec. 7, 1917, ch. 1, 40 Stat. 429. That war resolution’s operative language mirrored the Germany resolution. Both declarations granted immense discretion to the President over how to carry on the war, but they gave no option as to whether to engage in war.170Once the war was over, the treaty ending it raised constitutional delegation questions regarding future wars. The Treaty of Versailles, which the U.S. Senate rejected, included an agreement to create a League of Nations, guaranteeing the political independence of member states and stipulating that a council of League of Nations states would advise upon the means by which members would fulfill the obligation to address aggression. League of Nations Covenant art. 10. This provision elicited U.S. political opposition on many grounds, especially policy concerns that it would ensnare the United States in dangerous foreign crises. One criticism (among many) leveled by Senate opponents was that that it undermined Congress’s exclusive power to decide whether the United States should go to war. Stephen M. Griffin, Against Historical Practice: Facing Up to the Challenge of Informal Constitutional Change, 35 Const. Comment. 79, 95–96 (2020). This objection was rarely framed as a formal constitutional objection, but it resembled a nondelegation argument: that it was constitutionally impermissible to delegate to an international body, through a treaty, power to obligate the United States to participate in war. For example, Senator Pointdexter objected that the draft League covenant “constitute[d] a delegation and transfer of sovereign powers to an alien agency. These powers are vested by the Constitution of the United States in Congress. They can not be constitutionally divested.” 57 Cong. Rec. 3749 (1919); see also 58 Cong. Rec. 7943 (1919) (statement of Senator Borah, raising questions whether the Constitution permits delegation of Congress’s war powers). Defenders generally did not argue that delegation of war powers was constitutionally permissible but that the scheme did not deprive Congress of ultimate decision-making on war. See, e.g., 58 Cong. Rec. 960 (statement of Senator Walsh). This argument recurred later in connection with the UN Charter. See infra Section IV.A.

World War II, the United States’ last formally-declared war, entailed six separate congressional war declarations.171See Elsea & Weed, supra note 167, at 84–87. These declarations—against Japan, Germany, Italy, Bulgaria, Hungary, and Rumania—used a common template. They recognized a state of war to exist and (like the 1898 and 1917 resolutions) “authorized and directed” the President to use force to defeat each enemy.172Act of Dec. 8, 1941, ch. 561, 55 Stat. 795 (Japan); Act of Dec. 11, 1941, ch. 564, 55 Stat. 796 (Germany); Act of Dec. 11, 1941, ch. 565, 55 Stat. 797 (Italy); Act of June 5, 1942, ch. 323, 56 Stat. 307 (Bulgaria); Act of June 5, 1942, ch. 324, 56 Stat. 307 (Hungary); Act of June 5, 1942, ch. 325, 56 Stat. 307 (Rumania). The President’s delegated discretion was entirely about how to wage war, not whether to enter the war.

B. Force Authorizations Other than Declared Wars, 1865–1945

Perhaps surprisingly, the post-Civil War period saw few congressional force authorizations apart from declarations of war. As it corresponded to the nation’s increasingly active and powerful position on the world stage, one might expect more force authorizations. But as discussed below, there were only a few, and even these came with significant qualifications. Presidents fought no major foreign conflicts pursuant to delegated authority during this period, although independent presidential uses of force became more frequent, more sustained, and more consequential. With the notable exception of the 1914 intervention in Mexico, discussed below, Congress played little role in, and at times opposed, increasingly interventionist U.S. foreign policy.

1. The Late Nineteenth Century

No conflicts of any sort were fought pursuant to expressly delegated authority between the end of the Civil War and Congress’s declaration of war against Spain in 1898. That was not because Presidents were uninterested in using force (although President Cleveland told Congress that he would not pursue war with Spain over Cuba even if Congress declared it).173Fisher, supra note 19, at 52. Fisher’s historical account does not discuss any U.S. uses of force between 1865 and 1898. While executive military unilateralism is more associated with the twentieth century, it had some roots in this earlier period. In general, though, the period prior to 1898 was marked by an absence of major foreign conflicts.

A prominent use of U.S. military force in the period was the 1893 landing of marines on Oahu in connection with the overthrow of Hawaii’s native ruler, Queen Lili’uokalani, by private American interests led by Sanford Dole (who became Hawaii’s head of government). President Harrison apparently did not authorize the landing in advance (though he approved it afterward), and it is unclear whether it played an important role in Dole’s success (Harrison denied that it did). Congress did not authorize this use of force, though Congress as a whole also did not object to it.174Cox, supra note 89, at 308. Harrison’s administration and the new Hawaiian government signed an annexation treaty, but newly elected President Cleveland withdrew it from Senate consideration. Id. Congress later approved U.S. annexation of Hawaii by statute.

United States Presidents (or cabinet secretaries) had more direct involvement in several other low-level deployments or uses of force, including by the Grant Administration in the Dominican Republic,175Id. at 312–15. President Grant sent naval forces to the Dominican Republic in 1869 in connection with negotiation of an annexation treaty, with orders to protect against foreign interference. See Sumner Welles, 1 Naboth’s Vineyard: The Dominican Republic, 1844-1924, at 315–408 (1928). Congress sharply debated the constitutionality of Grant’s actions, with Senator Sumner charging that he had “seized the war powers carefully guarded by the Constitution.” Cong. Globe, 40th Cong., 3rd Sess. 1605 (1869). Resolutions condemning Grant’s deployment were tabled, and the Senate rejected the treaty. Cox, supra note 89, at 315. Interest in annexation had begun under the prior Johnson administration, and a resolution was introduced in Congress to give the President authority to establish a protectorate while negotiations were proceeding. In the course of the debate, Representative Bingham objected that “Congress alone . . . is authorized ‘to declare war’ and Congress cannot delegate that authority.” Cong. Globe, 42nd  Cong., 1st Sess. 338 (1871). The proposal failed by a wide margin. Id. at 340. the Hayes Administration in Mexico,176The Hayes Administration authorized incursions across the Mexican border to pursue irregular forces and native tribes raiding into U.S. territory. Cox, supra note 89, at 302–03. the Cleveland Administration in Haiti,177President Cleveland sent warships to the coast of Haiti during unrest in that country, but apparently there were no U.S. landings or involvement in hostilities. Id. at 267. and the Harrison Administration in Brazil.178President Harrison’s secretary of navy approved using U.S. naval force to protect U.S. shipping against rebel forces in the harbor of Rio de Janeiro, Brazil; some minor exchanges of fire resulted. Id. at 308–10. None of these incidents led to significant hostilities, but they marked a trend of presidential unilateralism that intensified in subsequent years. Congress did not directly approve any of these operations.

Three incidents bordering on delegation merit brief further discussion. During the Hayes Administration, Congress passed a bill authorizing the President to use measures “short of war” in a dispute with Britain over an imprisoned U.S. citizen.179Id. at 269–70; 17 Cong. Rec. 4569, 4571, 4591 (1878). Apparently nothing came of the authorization, and presumably (in keeping with the “short of war” limitation) Congress did not intend to authorize significant hostilities against a major power over a minor matter.

Second, during the late 1880s, tensions arose with Germany over the Samoan islands, where both countries had interests. President Cleveland sent naval ships to Samoa to protect U.S. interests and then “submitted [the matter] to the wider discretion conferred by the Constitution upon the legislative branch of the Government.”180S. Exec. Doc. No. 50-68, at 2 (1889) (message of President Cleveland). Congress approved an appropriation to continue the naval deployment without directly addressing the use of force. Whether Congress regarded this as an authorization to use force if Germany attempted a takeover of the islands seems unclear; ultimately no open conflict with Germany occurred.181Cox, supra note 89, at 267–68; 20 Cong. Rec. 1376 (1889) (Senate approval); id. at 1984 (House approval). Cox states: “This legislation amounted to a virtual U.S. guarantee of Samoan independence and indicated that Congress was willing to delegate considerable discretion to the president to take military action, if necessary, without further consultation.” Cox, supra note 89, at 268. This seems to overstate. No hostilities were imminent at the time of the appropriation (although some had arisen earlier) and it is doubtful that Congress regarded itself as giving the President authority to resist a German takeover without further congressional approval. The record does not reflect any members saying the appropriation had this effect, and several members directly said it did not. See 20 Cong. Rec. 1291 (Sherman); id. at 1332 (Dolph); id. at 1336 (Reagan). No hostilities occurred in connection with the 1889 deployment. A decade later, during the McKinley administration, the U.S. military engaged in hostilities, including landing troops, in support of one side in a local civil war, but it is unclear that the administration claimed congressional approval for this action. The United States and Germany agreed by treaty (ratified in 1900) to partition the islands, with the eastern portion becoming the territory of American Samoa. See George H. Ryden, The Foreign Policy of the United States in Relation to Samoa 560–62, 571–74 (1933).

Finally, in 1891, after street violence killed two U.S. sailors and injured others in Valparaiso, Chile, diplomatic tension escalated. President Harrison issued an ultimatum to the Chilean government and began preparations for war.182Joyce S. Goldberg, The “Baltimore” Affair 1-25 (1986); Cox, supra note 89, at 271–74; Fisher, supra note 19, at 56. However, he also submitted the matter to Congress asking for “such action as may be decreed appropriate.”183Cox, supra note 89, at 273. It is unclear whether Harrison was asking Congress for a declaration of war (at least one member of Congress read his message that way) or whether he was asking for delegated authority. It is also unclear whether Harrison would have taken unilateral action if Chile rejected the ultimatum and Congress failed to authorize force.184See id. at 273–74. Cox says that “the president placed before Congress events already shaped for war and thus curtailed congressional power as decisively as if he had unilaterally committed troops in the field.” Id. This seems to overstate, as Harrison’s ultimatum did not expressly commit to war if Chile refused amends, and Congress might have found the matter too trivial to justify hostilities. See Fisher, supra note 19, at 56 (interpreting Harrison’s actions as leaving the decision to Congress). Chile defused the matter by meeting Harrison’s demands, and Congress took no action.

These three incidents are the closest Congress came to delegating war power during the period, and they fall far short of material delegations. As to Britain, Congress expressly disclaimed intent to delegate war power; in Samoa, it is unclear what level of force (if any) Congress meant to delegate; and the Chile episode can as easily be read as a request for a declaration of war rather than a request for a delegation (and, in any event, no congressional action followed). This period, like the preceding one, provides little clear practice or indication of consensus on war power delegation.

 2. The Twentieth Century before World War II

President McKinley kicked off the new century by sending U.S. forces to China to aid other Western governments in suppressing the Boxer Rebellion in 1900.185Fisher, supra note 19, at 57. Thereafter, presidential uses of force mounted, including Theodore Roosevelt’s support of Panama’s independence from Colombia (setting up U.S. control of the route of the prospective canal)186Id. at 58–59. and substantial interventions, sometimes involving commitments of ground troops spanning multiple presidencies, in the Dominican Republic, Haiti, Cuba, and Nicaragua.187Id. at 57–64.

One should not overstate the rise of presidential uses of force. All major foreign conflicts in this period were declared by Congress. Though some presidential uses of force were quite consequential, none involved substantial commitments of troops, extended hostilities, or significant U.S. casualties. They were not clearly “wars” in the constitutional sense, and were not regarded as wars by the political branches or in popular description. Congress was generally aware of these activities, sometimes conducting inquiries of them after-the-fact, and continued to authorize the armed forces used for them, which later (and to this day) led the executive branch to argue that Congress tacitly acknowledged the President’s independent constitutional power to conduct them.188See Memorandum from Steven A. Engel, Assistant Atty Gen. for the Off. of Legal Couns. to the President, April 2018 Airstrikes Against Syrian Chemical-Weapons Facilities, 6 (May 31, 2018). With Presidents less inclined to seek congressional authorization for low- and medium-level uses of force, there were limited congressional opportunities even to debate delegations.

Only one explicit congressional force authorization occurred in this period, though its significance is uncertain. It came with regard to the situation in Mexico in 1914.

Earlier, in 1910–1911, a popular uprising overthrew the longstanding dictatorial regime of Porfirio Díaz, bringing to power a democratically elected but weak government under Francisco Madero. During the unrest, President Taft considered the need to intervene to protect U.S. investments, but left the question to Congress, reporting that he had troops “in sufficient number where, if Congress shall direct that they shall enter Mexico to save American lives and property, an effective movement may be promptly made.”189Fisher, supra note 19, at 60. Taft added that he “seriously doubt[ed]” he had independent power to commit troops to Mexico—a somewhat odd stance as he had already sent troops to Cuba, Honduras and Nicaragua to suppress disorder (the latter intervention continuing until 1925). Id. at 60–63. Congress did not act.

Taft’s successor, Wilson, took a more aggressive stance. In the closing months of the Taft Administration, General Victoriano Huerta seized power from Madero, plunging Mexico into a bloody multi-sided civil war. Wilson refused to accept Huerta’s legitimacy and in 1914 used a minor incident to justify a substantial intervention. Telling Congress that Huerta had insulted U.S. forces by refusing a 21-gun salute, Wilson asked for authority to use force:

No doubt I could do what is necessary in the circumstances to enforce respect for our Government without recourse to the Congress, and yet not exceed my constitutional powers as President; but I do not wish to act in a manner possibly of so grave consequence except in close conference and cooperation with both the Senate and House. I, therefore, come to ask your approval that I should use the armed forces of the United States . . . .190H. R. Doc. 63-910, at 5 (1914). See Robert E. Quirk, An Affair of Honor: Woodrow Wilson and the Occupation of Veracruz (1962).

Congress obliged with a joint resolution declaring that “the President is justified in the employment of the armed forces of the United States to enforce his demand for unequivocal amends for certain affronts and indignities committed against the United States.”191H.R.J. Res. 251, 63rd Cong., 38 Stat. 770 (1914). The resolution included language (added to the House bill by the Senate) that the United States “disclaims any hostility to the Mexican people or any purpose to make war upon Mexico.”192Id. See 51 Cong. Rec. 6937 (House bill); 51 Cong. Rec. 7014 (Senate approval).

The language—that the President “is justified” rather than “is authorized”—suggests that Congress may have accepted Wilson’s view that the President had independent authority to act.193Congressional debate was fairly extensive and divided, with a number of members regarding the proposed resolution as effectively a declaration of war and a number denying that it gave the President any authority he did not already have. See generally 51 Cong. Rec. 6934–7002. Moreover, Wilson did not wait for Congress; while the Senate debated, Wilson ordered bombardment and seizure of the port of Veracruz, where U.S. forces remained for seven months until Huerta was overthrown.194See Fisher, supra note 19, at 60-61. Two years later in 1916, Wilson on his own authority sent troops into northern Mexico to pursue General Pancho Villa, who earlier led a raid on Columbus, New Mexico. Id. at 62.

Thus the only material force authorization (apart from war declarations) in this period was more likely a recognition of presidential power than a delegation, and in any event it disclaimed intent to authorize war; the ensuing hostilities, though perhaps consequential, were small in scale. Wilson’s presidency, like those before and after, was more significant for its growing presidential unilateralism than for delegation.

C. Curtiss-Wright and War Power Delegation

During this same era, the Supreme Court’s seminal 1936 opinion in Curtiss-Wright drew a distinction between foreign affairs delegation and domestic affairs delegation, stressing that the Constitution permits Congress greater latitude to delegate foreign affairs decision-making to the President.195United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 315–20 (1936). That case arose from a 1934 joint resolution authorizing the President to proclaim an arms embargo against Paraguay and Bolivia if he found that doing so would contribute to peace in their ongoing war. “[C]ongressional legislation which is to be made effective through negotiation and inquiry within the international field,” wrote Justice Sutherland, “must often accord to the President a degree of discretion and freedom from statutory restriction which would not be admissible were domestic affairs alone involved.”196Id. at 320.

A leading justification the Court gave was functional—the President’s institutional advantages in agility and information—but the opinion also emphasized historical practice:

Practically every volume of the United States Statutes contains one or more acts or joint resolutions of Congress authorizing action by the President in respect of subjects affecting foreign relations, which either leave the exercise of the power to his unrestricted judgment, or provide a standard far more general than that which has always been considered requisite with regard to domestic affairs.197Id. at 324. The opinion also engaged in apparently unnecessary speculation about foreign affairs powers arising outside of the Constitution, a view that has been sharply criticized. See Ramsey, supra note 16, at 379–87.

Curtiss-Wright’s implications for war power delegations are uncertain. War-initiation power of course may be thought of as a prime example of foreign affairs powers, and the Court’s invocation of the President’s institutional advantages in foreign affairs may seem particularly applicable to it. But Curtiss-Wright was not itself about U.S. war powers, only the prohibition of arms sales. Further, as our review of the historical record thus far shows, the Court’s argument from historical practice lacked support as applied to war-initiation, which (unlike some other aspects of foreign affairs) had not previously been a common subject of delegation. Nonetheless, as the following Part shows, Curtiss-Wright—especially its functional and historical claims—played a role in justifying expanded war power delegations in subsequent years.198See infra notes 211, 267, 271, and 273 and accompanying text. Citing Curtiss-Wright, the Supreme Court explained decades later in Zemel v. Rusk that “simply because a statute deals with foreign relations,” Congress may not “grant the Executive totally unrestricted freedom of choice.” But “because of the changeable and explosive nature of contemporary international relations, and the fact that the Executive is immediately privy to information which cannot be swiftly presented to, evaluated by, and acted upon by the legislature, Congress—in giving the Executive authority over matters of foreign affairs—must of necessity paint with a brush broader than that it customarily wields in domestic areas.” 381 U.S. 1, 17 (1965).

IV. THE COLD WAR AND BEYOND

This Part shows that it was in the early Cold War period—when the United States became a superpower, with large standing military forces deployed around the world—that the modern practice of war power delegations, through legislative force authorizations, took hold. A watershed moment was a 1955 force resolution that, notably, the President never exercised.

It was also in that period, however, that Presidents asserted much broader unilateral powers to use military force, and Congress largely (if tacitly and dividedly) acquiesced. To those who viewed the President’s unilateral powers as wide even without legislative authorization, force resolutions would not have posed nondelegation issues. And to those opposing that view, the nondelegation issue probably seemed secondary to reclaiming Congress’s exclusive powers.

A. Collective Security and Delegation: The UN Participation Act

From World War II’s ashes, the victorious powers created the United Nations (“UN”), with a Security Council charged with maintaining peace and security, and empowered to employ military force to do so. In subsequent years, as the East-West Cold War quickly developed, the United States embraced a network of security commitments—some formal defense treaties, some informal pledges—around the world, aimed especially at stemming Communist aggression. To the architects of these arrangements, it was important that the United States be able to react quickly to crises and to assure foreign partners and adversaries of that ability. But a constitutional system of exclusive congressional prerogative to decide on war was designed to move slowly. Thus, security imperatives encouraged both more aggressive claims of independent presidential power and wider delegation of war power by Congress.

To participate effectively in the UN, Congress enacted the UN Participation Act (“UNPA”) in December 1945.199S. Rep. No. 79-717, at 3 (1945). That statute provided that the chief U.S. diplomat at the UN would act at the President’s direction.20022 U.S.C. 287, § 3. It also contained a broad authorization to use force that remains on the books, but has never been used.

Specifically, section 6 authorized the President to negotiate agreements with the Security Council, pursuant to UN Charter Article 43, to make U.S. military forces available for maintaining peace and security.201Id. § 6. Section 6 made Article 43 agreements “subject to the approval of the Congress,”202Id. so that Congress retained responsibility over “the numbers and types of armed forces, their degree of readiness and general location, and the nature of facilities and assistance . . . to be made available to the [Council].”203Id. But the President did not need to return to Congress before providing these forces to the Council.204Id.; Participation by the United States in the United Nations Organization: Hearing on H.R. 4618 and S. 1580 Before the H. Comm. on Foreign Affairs, 79th Cong. 23 (1945) (Statement of Dean Acheson, Under-Secretary of State). Thus, if Congress approved Article 43 agreements in advance, the President could send forces into UN-approved armed conflicts as they developed. This statutory framework specified no geography. It specified no enemy. It specified no particular threat or type of threat.

The UNPA’s vast war power delegation was never activated because the idea that member states would place military forces at the Council’s disposal was stillborn. Cold War geopolitics made it impossible, given that the United States and the Soviet Union each had a veto on Council decisions. No Article 43 agreements were ever concluded. When the Charter and the UNPA were adopted, however, Article 43—and hence section 6 of the UNPA—were understood as a main way the Council would pursue its mandate to preserve international peace and security.205See id. at 92. Article 106 of the Charter refers to Article 43 as the means to enable the Council to “exercise . . . its responsibilities under article 42.” U.N. Charter art. 106. The United States planned to carry it out and expected other members to do the same.206See Ruth B. Russell, A History of the United Nations Charter: The Role of the United States, 1940-1945, at 467 (1958).

The UNPA generated some congressional pushback on nondelegation grounds, but not much. To some critics, the arrangement was a double-delegation: it delegated decisions on war to an international organization, the Security Council, and it delegated decisions about U.S. participation in that body to the President. Senator Burton Wheeler, a prominent isolationist, was foremost among the objectors and among seven senators who voted against the UNPA.20791 Cong. Rec. 11409 (1945). Wheeler noted “that there is no mention in the Constitution of any power of Congress to delegate its [Declare War] authority to the President and for him in turn to authorize his appointee to an international organization to vote to put down aggression in foreign countries.”208Id. at 11393 (1945) (Sen. Wheeler). Similarly, Senator Bushfield argued: “No one will seriously dispute the statement that Congress alone has power to declare war. Attempting to delegate such power is in direct violation of our Constitution.” Id. at 1767. Some similar objections had been raised a generation earlier to the League of Nations, but the Senate rejected the League’s founding treaty more on policy grounds and general concerns about sovereignty than formal legal objections.

In recommending passage, the Senate and House foreign relations committees stated that “[t]here exist several well-recognized and long-standing precedents for the delegation to the President of powers of this general nature.”209S. Rep. No. 79-717, at 7 (1945); see also H. Rep. No. 79-1383, at 6 (1945). Tellingly—and consistent with our reading that the historical record to this point is quite thin—they cited congressional delegations regarding international commerce in the early Republic, and only statutes specific to armed force from the Quasi-War with France.210S. Rep. No. 79-717, at 7. They also cited Curtiss-Wright for support.211Id.

The muted congressional concerns about the UNPA’s delegation might be explained on several grounds. Congress strongly supported the Charter—the Senate voted 89-2 for ratification21291 Cong. Rec. 10965 (1945).—and many members understood that its collective security system required the U.S. military to back up Security Council mandates.213The Senate Foreign Relations Committee report stated that the delegation “is simply a necessary corollary to our membership in this Organization.” S. Rep. No. 79-717, at 6; see also H. Rep. No. 79-1383, at 6 (making a similar argument); David Golove, From Versailles to San Francisco: The Revolutionary Transformation of the War Powers, 70 U. Colo. L. Rev. 1491, 1495–96 (1999) (arguing that the UN’s American architects understood that collective security required loosening some constitutional war powers constraints). Additionally, political leaders and lawyers may have viewed UN-backed emergency interventions, sometimes called at the time “police action,” as distinct from inter-state war;214See Fisher, supra note 19, at 85 (“Senator Claude Pepper (D-Fla.) opposed any delegation of Congress’s war-declaring power to an international body but believed that it would be permissible for American troops to be used, without prior congressional approval, as a ‘police force’ to combat aggression in small wars.”). therefore, legislating discretionary authority to participate in them did not delegate war-initiation power. One lesson of World War II was that early international military action might prevent major war. If used to prevent wide-reaching war, then (so the logic went) an international police action did not implicate the Constitution’s Declare War Clause, at least not in the same way.215See, e.g., 91 Cong. Rec. 10968 (Sen. Connally) (“I am convinced that the Presidential use of armed forces in order to participate in the enforcement action under the Charter would in no sense constitute an infringement upon the traditional power of Congress to declare war. We are not taking the power away from the Congress . . . . How important it is that we authorize the President to take such action in collaboration with the other United Nations in order to maintain world peace.”). A strong current of thought within Congress held that the President could engage in limited police actions unilaterally but required congressional assent for full war.216See Jane E. Stromseth, Rethinking War Powers: Congress, the President, and the United Nations, 81 Geo. L.J. 597, 607–12 (1993).

This latter view of presidential war powers was implemented five years later, when North Korea invaded the South and President Truman intervened militarily, without express congressional authorization, in what became the three-year Korean War. Truman called the move a police action, citing UN approval. Though the Korean War did not involve delegation, it marks an important moment in background constitutional practice. The issue of war-initiation delegation assumes that Congress’s war-initiation power is largely exclusive (perhaps subject to narrow exceptions). Although there were precursors, the Korean War was a high-water mark in presidential assertions of unilateral constitutional power to launch large-scale military interventions. Congressional reactions were mixed, but it was also a high-water mark among a contingent of legislators who regarded unilateralism as proper. The Cold War’s stakes, the advent of nuclear weapons, a general sense of permanent military emergency, and extensive overseas American military commitments and troop deployments all contributed to this shift in thinking.217See generally Griffin, supra note 170.

Alongside these geopolitical and security developments, the postwar period marked virtual obsolescence of formal war declarations, as a matter of both international law and U.S. domestic law.218See Elsea & Weed, supra note 167, at 21–23. The UN Charter’s outlawing of force except in self-defense or when authorized by the UN Security Council contributed to that discontinuance.219See Andrew Clapham, War 48 (2021). Beyond legal technicalities, the widespread public view of war as a moral catastrophe also cast old-fashioned war declarations as outdated. Without such clear markers, the lines around states of war—and hence war-initiation—became even blurrier.

B. Cold War Delegations

Many of the contextual factors—including perceptions of vital stakes in Cold War security crises around the world—that contributed to broader assertions of presidential powers to use force also set the stage for the broadest and potentially most consequential delegations of war power to that point in American history. The first ones, in the Eisenhower years, were never invoked. The last one of this critical early-Cold War period, in the Johnson years, was a basis for one of the United States’ costliest wars. These force authorizations entrenched the modern practice of broad war-initiation delegations.

1. A Delegation Turning Point: Eisenhower’s Force Resolutions

The post-World War II shift in thinking about presidential war powers is important to understanding two extraordinary congressional war power delegations during the Eisenhower Administration.220See Matthew Waxman, Remembering Eisenhower’s Formosa AUMF, Lawfare (Jan. 29, 2019, 8:34 AM) https://www.lawfareblog.com/remembering-eisenhowers-formosa-aumf [https://perma.cc/AZ2L-44L8]; Matthew Waxman, Remembering Eisenhower’s Middle East Force Resolution, Lawfare (March 9, 2019, 10:00 AM) https://www.lawfareblog.com/remembering-eisenhowers-middle-east-force-resolution [https://perma.cc/RY2F-M76A]. Eisenhower rejected broad presidential unilateralism, generally believing only Congress could authorize major U.S. conflicts, but in a reversal of typical positions, many in Congress regarded the President’s unilateral war powers as vast.221See Waxman, Remembering Eisenhower’s Formosa AUMF, supra note 220.

Eisenhower’s security strategy emphasized military commitments to overseas allies to offset threats posed by the Soviet Union and China. It also emphasized taming runaway defense spending. To reconcile these seemingly conflicting tenets, Eisenhower relied on the threat of massive retaliation—including with nuclear weapons—against aggression. This approach encountered a major test in 1954–1955, when Communist China shelled tiny coastal islands that were under control of U.S.-aligned Nationalist China, based on the island of Formosa. In late January 1955, Eisenhower asked Congress for authorization to use force to assure Formosa’s security.22284 Cong. Rec. 600–01 (1955). Days later, Congress obliged by nearly unanimous votes in both houses, resolving that:

[The] President . . . is authorized to employ the Armed Forces of the United States as he deems necessary for the specific purpose of securing and protecting Formosa and the Pescadores against armed attack, this authority to include the securing and protection of such related positions and territories of that area now in friendly hands and the taking of such other measures as he judges to be required or appropriate in assuring the defense of Formosa and the Pescadores.

This resolution shall expire when the President shall determine that the peace and security of the area is reasonably assured by international conditions created by action of the United Nations or otherwise, and shall so report to the Congress.223Act of Jan. 29, 1955, Pub. L. No. 84-4, 69 Stat. 7.

As tensions simmered, Eisenhower signaled the possibility of major military action—even publicly referencing nuclear options. But all sides soon stepped back from the brink. Several years later, shelling and skirmishing between Communist and Nationalist China resumed, but the conflict did not escalate.2242 D.F. Fleming, The Cold War and Its Origins, 1917-1960, at 707–28 (1961); Pang Yang Huei, Strait Rituals: China, Taiwan, and the United States in the Taiwan Strait Crisis, 1954-1958, at 187 (2019).

The 1955 force resolution gave enormous discretion to the President. It provided advance authorization to initiate military conflict—understanding that it might include nuclear escalation—to protect a distant ally. It specified no target or enemy, though Communist China was obviously the intended one. Multiple times it emphasized the President’s role as sole judge of necessity. And its duration was subject to presidential judgment that the region was secure.225See Waxman, Remembering Eisenhower’s Formosa AUMF, supra note 220. Congress eventually repealed it twenty years later, and it probably would have stayed on the books much longer had the United States not reached a diplomatic détente with Communist China.

Despite this open-endedness, the nondelegation question was peripheral in congressional debates. Senator Wayne Morse, a harsh critic of Eisenhower with deep reservations about U.S. commitments to defend Formosa,226Larry Ceplair, The Foreign Policy of Senator Wayne L. Morse, 113 Oregon Hist. Q. 6, 6 (2012). was one of the few legislators to raise this issue. He objected to the constitutionality of a “predated declaration of war.”22784 Cong. Rec. 738 (1955). According to Morse:

I respectfully submit that we have no right under our oaths of office to delegate that great constitutional obligation of Congress. . . . In my judgement, we cannot do it constitutionally. . . . [W]e have no constitutional right to authorize any President to exercise his discretion in determining whether or not he should commit an act of war . . . .228Id. at 842.

But Morse was an outlier. Eisenhower received more pushback from Congress on the grounds that its authorization was unnecessary.229See Waxman, Remembering Eisenhower’s Formosa AUMF, supra note 220. When Eisenhower consulted congressional leaders before seeking the force resolution, House Speaker Sam Rayburn “said that the President had all the powers he needed to deal with the situation,” and Rayburn even believed “that a joint resolution at this particular moment would be unwise because the President would be saying in effect that he did not have the power to act instantly.”230S. Everett Gleason, 26. Memorandum of Discussion at the 233d Meeting of the National Security Council, Washington, January 21, 1955, 9 a.m., Office of Historian, https://history.state.gov/historicaldocuments/frus1955-57v02/d26 [https://perma.cc/5J8A-8MEU].

Modern Presidents have usually requested force authorizations because the President has already initiated force or has concrete plans to do so. But an important aspect of the Formosa resolution is that it was never invoked. Eisenhower did not launch strikes, even when Communist China’s shelling of Chinese Nationalist forces later resumed. The authorization’s purpose was more about signaling than warfighting. Eisenhower’s strategy was deterrence—so China was a key audience—and he expected war power delegation to bolster the credibility of his threats.

For similar reasons, two years later, Congress passed—at Eisenhower’s urging—one of the broadest war delegations in American history. The 1957 act endorsed whatever force the President deemed necessary to prevent Communist aggression anywhere in the Middle East. It had no expiration date; in fact, it remains on the books today. Like the Formosa resolution, it was primarily about signaling rather than warfighting and has never been invoked.231See Matthew Waxman, Remembering Eisenhower’s Middle East Force Resolution, supra note 220.

As background, Eisenhower saw the Middle East as an emergency situation in 1956. The Suez crisis discredited European allies’ influence there, and the administration feared the Soviet Union would fill the vacuum without strong U.S. commitment. In January 1957, Eisenhower requested congressional support for military and economic aid for Middle East nations and sought authority to use military force to protect them. In a four-hour White House meeting with congressional leadership on January 1, 1957, the President emphasized that a force resolution would bolster deterrence and reassure allies:

[Eisenhower] added that should there be a Soviet attack in that area he could see no alternative but that the United States move in immediately to stop it. . . . He cited his belief that the United States must put the entire world on notice that we are ready to move instantly if necessary. He reaffirmed his regard for constitutional procedures but pointed out that modern war might be a matter of hours only.232Memorandum from L. A.. Minnich, Jr., Notes on Presidential-Bipartisan Congressional Leadership Meeting (Jan.1, 1957), https://history.state.gov/historicaldocuments/frus1955-57v12/d182 [https://perma.cc/7N6K-CVTK].

Two months later, Congress passed legislation endorsing the military and economic aid and included the following provision:

[T]he United States regards as vital to the national interest and world peace the preservation of the independence and integrity of the nations of the Middle East. To this end, if the President determines the necessity thereof, the United States is prepared to use armed forces to assist any such nation or group of such nations requesting assistance against armed aggression from any country controlled by international communism.233Joint Resolution to Promote Peace and Stability in the Middle East, Pub. L. No. 85-7, 71 Stat. 5.

The resolution provided that it would expire when the President determined that the “peace and security of the nations in the general area of the Middle East” was “reasonably assured” or if Congress revoked it with a concurrent resolution.234Id.

Unlike the Formosa resolution, which Congress passed quickly and overwhelmingly, the Middle East resolution prompted major debate. Some members supported the proposal, some thought it was dangerously—and possibly unconstitutionally—open-ended, and some thought it was dangerous and possibly unconstitutional in the other direction, by implying that the President lacked unilateral power to respond to emergencies.

A number of senators and representatives specifically objected that it unconstitutionally delegated Congress’s war powers.235Senator Morse again made this argument. 85 Cong. Rec. 2712 (1957) (calling the proposed resolution “an unconstitutional delegation of the power to declare war.”). See also similar statements by Senator Sam Ervin, The President’s Proposal on the Middle East: Hearings on S.J. Res. 19 and H.J. Res. 117 Before the S. Comm. on Foreign Relations and the S. Comm. on Armed Services, 85th Cong. 101–02 (1957); Resolution Regarding the Middle East: Hearing Before the S. Comm. on Foreign Relations, 85th  Cong. (1957), reprinted in Executive Session of the Senate Foreign Relations Committee 297 (U.S. Government Printing Office, 1979), as well as Congresswoman Marguerite Church, Economic and Military Cooperation with Nations in the General Area of the Middle East: Hearings Before the H. Comm. on Foreign Affairs on H.J. Res. 117, 85th Cong. 189–90 (1957) (testimony of Dean Acheson); 85 Cong. Rec. 1182–83 (1957); Congressman Usher Burdick, 85 Cong. Rec. 1201 (1957); and Congressman John Flynt, 85 Cong. Rec. at 1195–97. Senator William Fulbright, for instance, argued that the delegation overturned legislative checks—though without clearly saying whether this was a constitutional or a policy objection:

It asks for a blank grant of power over our funds and Armed Forces, to be used in a blank way, for a blank length of time, under blank conditions, with respect to blank nations, in a blank area. We are asked to sign this blank check in perpetuity or at the pleasure of the President––any President. Who will fill in all these blanks? The resolution says that the President, whoever he may be at the time, shall do it.23685 Cong. Rec. 1856 (1957).

Other legislators believed that the President’s unilateral powers to use force were vast and feared that legislative authorization would undermine that position.237See Waxman, Remembering Eisenhower’s Middle East Force Authorization, supra note 220.

In part to paper over these disagreements, the resolution avoided the term “authorize,” instead adopting a statement approving a policy of force. The Senate Report emphasized that the language had “the virtue of remaining silent” on constitutional allocations of war powers.238S. Rep. 85-70 (1957), at 1135–36, reprinted in 1957 U.S.C.C.A.N. 1128. The House Report added that “the resolution does not delegate or diminish in any way the power and authority of the Congress of the United States to declare war, and the language used in the resolution does not do so.”239H.R. Rep. 85-2, at 7 (1957). Given that Eisenhower believed congressional approval was constitutionally required to start wars, however, he must have read the resolution as a delegation—even if not technically styled as such.240Internal conversations suggest that his administration read it as such. See, e.g., Memorandum of Conversation, Mid-Ocean Club, Bermuda (Mar. 23, 1957), https://history.state.gov/
historicaldocuments/frus1955-57v12/d203 [https://perma.cc/3QH2-XVKC].

Taken together, the congressional force resolutions adopted at Eisenhower’s request represented major steps in the practice of war power delegation. They responded to a perceived strategic imperative to give the President discretion to respond immediately to threats against foreign partners. And nondelegation concerns were muffled or balanced by a rising sense among political leaders and many constitutional lawyers—though, ironically, not Eisenhower himself—that the President possessed such discretion even without congressional approval.

2. Two Cuba Crises: One Covert, One Nuclear

In the years after the Middle East resolution, Cuba was the epicenter of two major Cold War crises. Both situations involved congressional action that might be seen as war power delegations, though neither presented the issue squarely.241See Stephen M. Griffin, Long Wars and the Constitution 109–14 (2013) (discussing constitutional war powers questions arising in these episodes). One concerned the postwar institutionalization of covert paramilitary operations by the Central Intelligence Agency (“CIA”); the other concerned a congressional resolution on Cuba policy.

Congress established the CIA in 1947 and authorized it to conduct various intelligence activities.242National Security Act of 1947, Pub. L. 80-253, §§ 102(d)(4), (5), 61 Stat. 495 (1947) (prior to 2004 Amendment). See also Final Report of the Select Committee to Study Governmental Operations with Respect to Intelligence Activities, S. Rep. No. 94-755, Book 1, at 475 (1976) (“Flexibility was provided through an undefined and apparently open-ended grant of authority to the National Security Council, and through it, to the CIA.”). The statutes creating the CIA were ambiguous as to whether they authorized paramilitary operations, including training, advising, and supporting proxy forces against foreign governments. Under Eisenhower, the CIA engaged in clandestine operations against governments of, for example, Iran and Guatemala (both leading to overthrows), and Congress continued to fund the CIA.243Arthur M. Schlesinger, Jr., The Imperial Presidency 167 (1973); see also Malcolm Byrne, CIA Admits it was Behind Iran’s Coup, Foreign Affairs (Aug. 19, 2013, 1:00 AM), https://foreignpolicy.com/2013/08/19/cia-admits-it-was-behind-irans-coup [https://perma.cc/X3MT-46NF]; Kate Doyle & Peter Kornbluh, CIA and Assassinations: The Guatemala 1954 Documents, Geo. Wash. Univ. Nat’l Sec. Archive, https://nsarchive2.gwu.edu/NSAEBB/NSAEBB4/index.html [https://perma.cc/S76G-CF55]. This raises questions whether Congress had implicitly delegated broad discretion to the President to engage in such operations, and whether that delegation included war-initiation power. The answers are unclear because the legislative basis was ambiguous and neither branch seemed to regard such operations as constitutionally equivalent to war or overt military intervention.244See Griffin, supra note 241, at 100–04.

The CIA paramilitary operation that most resembled an armed invasion was the 1961 Bay of Pigs fiasco, which highlighted those ambiguities. Though originally conceived under Eisenhower, President Kennedy in 1961 implemented plans for about 1,400 U.S.-trained and -armed Cuban exiles to overthrow Fidel Castro’s regime. After landing at the island’s Bay of Pigs, the invaders were routed by government forces.245Richard M. Bissell, Jr., Jonathan E. Lewis & Frances T. Pudlo, Reflections of a Cold Warrior: From Yalta to the Bay of Pigs 190 (1996). Little is publicly known about internal legal discussions behind the operation, but afterwards the Justice Department produced a memorandum characterizing such activities as exercises of the President’s independent foreign relations powers. That document compared covert paramilitary operations to war powers, but seemed to treat them as distinct. It also argued that Congress’s continued funding of such activities represented tacit congressional approval.246Matthew Waxman, Remembering the Bay of Pigs: Law and Covert War, Lawfare (Apr. 16, 2019, 8:00 AM), https://www.lawfareblog.com/remembering-bay-pigs-law-and-covert-war [https
://perma.cc/HBJ4-XKBE]; Office of Legislative Counsel, Department of Justice, Memorandum Re: Constitutional and Legal Basis for So-Called Covert Activities of the Central Intelligence Agency (Jan. 17, 1962), https://s3.documentcloud.org/documents/5836225/73-1501862.pdf [https://perma.cc/NF6R-NFK5]. See also U.S. Intelligence Agencies and Activities: Hearings Before the H.R. Select Comm. on Intel., 94th Cong. 1737 (1975) (statement of Mitchell Rogovin, Special Counsel to the Director of Central Intelligence) (“In sum, the history of congressional action since 1947 makes it clear that Congress has both acknowledged and ratified the authority of the CIA to plan and conduct covert action.”).

Since then, Congress has legislated procedural and notification requirements for covert activities.247Intelligence Authorization Act of 1991, Pub. L. 102-88 § 503, 105 Stat. 436, 442 (1991). That act (the Hughes-Ryan Act of 1974, amended) states that “The President may not authorize the conduct of a covert action . . . unless the President determines such an action is necessary to support identifiable foreign policy objectives of the United States and is important to the national security of the United States . . . .” The findings, in writing, are required within forty-eight hours of the covert action. See also Final Report of the Select Committee to Study Governmental Operations with Respect to Intelligence Activities, S. Rep. No. 94-755, Book 1, at 508 (1976) (“Given [Congress’s knowledge of CIA covert action], congressional failure to prohibit covert action in the future can be interpreted as congressional authorization for it.”). It remains unclear, however, whether either branch regards the laws governing such activities as delegations, regulations of inherent presidential authority, or both—or whether either regards covert paramilitary activities as exercises of war powers or a separate category of foreign relations powers.

In 1962, Cuba was again the locus of Cold War crisis, arguably one of the most dangerous moments in world history. When U.S. intelligence discovered Soviet nuclear missiles on the island, Kennedy ordered a blockade—calling it a “quarantine”—and considered other military actions including air strikes. Although often considered an exercise of unilateral presidential powers,248The Justice Department concluded that Presidents have unilateral authority to impose blockades without congressional authorization. See Dep’t of Just. Memorandum, Legal and Practical Consequences of a Blockade of Cuba ( Oct. 19, 1962), https://www.justice.gov/file/20906/download [https://perma.cc/EAP8-YXPJ]. a congressional joint resolution resembling a war power delegation operated in the background.

Congress passed that Joint Resolution with overwhelming support on October 3, 1962,249Act of Oct. 3, 1962, Pub. L. No. 87-733, 76 Stat. 697. The resolution passed in the Senate 86-1, and in the House 384-7. 108 Cong. Rec. 20058, 20910–11 (1962). a few weeks before the missile crisis. It stated that “the United States is determined,” among other things:

to prevent by whatever means may be necessary, including the use of arms, the Marxist-Leninist regime in Cuba from extending, by force or the threat of force, its aggressive or subversive activities to any part of this hemisphere;

to prevent in Cuba the creation or use of an externally supported military capability endangering the security of the United States . . . .25076 Stat. at 697.

The resolution did not expressly authorize presidential action and is not generally regarded as a force authorization.251It is not, for example, included in the Congressional Research Service’s compilation of force authorizations. See Elsea & Weed, supra note 167, appendix B; see also Fisher, supra note 19, at 125 (“[The resolution] merely expressed the sentiments of Congress.”). It instead declared a policy, implying strongly that the United States was willing to use force in broad circumstances. And the Cuban Missile Crisis is usually thought of as a momentous instance of executive unilateralism.252See, e.g., Richard E. Neustadt & Graham T. Allison, Afterword to Robert F. Kennedy, Thirteen Days: A Memoir of the Cuban Missile Crisis 102 (1999).

Nonetheless, the resolution’s language resembles the 1957 Middle East resolution discussed above, which generally is regarded as a force authorization.253See Elsea & Weed, supra note 167 at 8–9, 95–96. And although the Kennedy Administration emphasized in internal deliberations the President’s Article II authority to act, it also cited this resolution for support, without clearly stating whether that support was legally (or merely politically) significant.254See U.S. Dep’t of State, Foreign Relations of the United States, 1961-1963: Volume XI, Cuban Missile Crisis and Aftermath, doc. 31 (Edward C. Keefer et al., eds., 1998) (citing views at October 19, 1962 meeting that the President had constitutional and statutory authority to take military action); Dep’t of Justice, Legal and Practical Consequences of a Blockade of Cuba, 1 Op. O.L.C. Supp. 486, 491 (Oct. 19, 1962) (expressing the view that the President had authority to take military action and that congressional resolution supported that view). The record is ambiguous as to whether members of Congress regarded this as a force authorization.255See Patrick Hulme, Congress, the Cuba Resolution and the Cuban Missile Crisis, Lawfare, (Apr. 22, 2021, 8:01 AM), https://www.lawfareblog.com/congress-cuba-resolution-and-cuban-missile-crisis. [https://perma.cc/QNW7-34GY].

In sum, around the same time Congress was enacting broad use of force delegations regarding Formosa and the Middle East, it was taking other actions that, although not formal delegations of war power, shared common attributes. One reason why their status as delegations remains ambiguous was that the executive branch simultaneously asserted (and Congress generally accepted) broad unilateral presidential war power. And, again, these episodes took place in the Cold War context of constant East-West hostilities and permanent U.S. military presence worldwide, which were further blurring the line between war and peace, or between war and military actions short of war.

3. Vietnam, War Powers Reform, and Delegation

In contrast to the Formosa and Middle East resolutions, Congress passed the 1964 Gulf of Tonkin Resolution with clear expectation that President Lyndon Johnson would use force in Vietnam—even if it was not at all clear that the conflict would become so protracted and costly. Indeed, by the time Congress enacted this resolution, the United States was already deeply involved militarily.256For several years the United States had been providing military support to the South Vietnamese government. See Elsea & Weed, supra note 167, at 9.

Following an alleged North Vietnamese attack on American naval vessels, Johnson asked Congress for a broad force authorization. Days later and nearly unanimously,257The House passed the resolution 416-0 after forty minutes of debate, while the Senate passed it 88-2 after nine hours. E.W. Kenworthy, Resolution Wins, N.Y. Times, Aug. 8, 1964, at A1. Congress provided:

That the Congress approves and supports the determination of the President, as Commander in Chief, to take all necessary measures to repel any armed attack against the forces of the United States and to prevent further aggression . . . . Consonant with the [Constitution and UN Charter] and in accordance with its obligations under the Southeast Asia Collective Defense Treaty, the United States is . . . prepared, as the President determines, to take all necessary steps, including the use of armed force, to assist any member or protocol state of the Southeast Asia Collective Defense Treaty requesting assistance in defense of its freedom . . . .This resolution shall expire when the President shall determine that the peace and security of the area is reasonably assured by international conditions created by action of the United Nations or otherwise, except that it may be terminated earlier by concurrent resolution of the Congress.258Act of Aug. 10, 1964, Pub. L. No. 88-408, 78 Stat. 384.

This language gave the president broad discretion in extent of force (“all necessary measures” and “all necessary steps”), in purpose (“to prevent further aggression”), in geography (“southeast Asia”), and in time (until “the President shall determine” that peace and security is restored). Over the next decade, Presidents used it—in addition to assertions of unilateral executive power—to justify combat involving hundreds of thousands of troops, not just in Vietnam but also in neighboring countries.259See generally John Hart Ely, War and Responsibility: Constitutional Lessons of Vietnam and Its Aftermath 13–30 (1993).

As in earlier post-war episodes, Senator Morse was a lonely voice objecting on nondelegation grounds.260Senator Ernest Gruening stated that Morse had made his case “wholly convincingly,” while himself arguing against the resolution on policy, not constitutional, grounds. 110 Cong. Rec. 18,413 (1964). Apparently, Morse was the only member of Congress to argue against the Resolution on nondelegation grounds. Only Morse and Gruening voted against it, with eighty-eight senators voting in favor. Id. at. 18,470–71. Morse labeled the resolution a “predated declaration of war, in clear violation of article I, section 8 of the Constitution, which vests the power to declare war in the Congress, and not in the President.”261Id. at 18,427. “In effect,” he asserted, “this joint resolution constitutes an amendment of article I, section 8, of the Constitution, in that it would give the President, in practice and effect, the power to make war in the absence of a declaration of war.”262Id. at 18,445. Morse did not explicitly invoke nondelegation doctrine, except in contrasting the Resolution to the recent Cuba-related resolution discussed above, which Morse explained he supported because “constitutional power of Congress was not delegated to the President in that resolution.” Id. at 18,430. The resolution’s supporters generally disregarded the nondelegation issue—sometimes referring to the 1955 and 1957 resolutions as precedent for authorizing force in broad terms.263The Senate Committee on Foreign Relations Report did not address constitutionality. S. Rep. No. 88-1329 (1964). The House Committee on Foreign Affairs Report dealt with constitutional objections summarily:

As it had during earlier action on resolutions relating to Formosa [1955] and to the Middle East [1957], the committee considered the relation of the authority contained in the resolution and the powers assigned to the President by the Constitution. While the resolution makes it clear that the people of the United States stand behind the President, it was concluded that the resolution does not enter the field of controversy as to the respective limitations of power in the executive and the legislative branches.

H.R. Rep. No. 88-1708, at 4 (1964). Similarly, Secretary of Defense Robert McNamara treated the Resolution’s constitutionality as settled. Joint Hearing Before the Comm. on Foreign Rels. and the Comm. on Armed Servs.: Hearing on a Joint Res. To Promote the Maintenance of International Peace and Security in Southeast Asia, 88th Cong. 3 (1964) (testimony of Robert McNamara). McNamara pointed to past resolutions dealing with Formosa (1955), the Middle East (1957), and Cuba (1962) and observed “There can be no doubt . . . that these previous resolutions form a solid legal precedent for the action now proposed.” Id. A few congressional backers of the resolution explicitly endorsed delegating war power to the President.264Senator Jennings Randolph stated that “[i]n effect, congressional authority for future military action in southeast Asia would be delegated to the President—and properly so—by this resolution.” 110 Cong. Rec. 18,419 (1964). Even one lukewarm supporter of the resolution accepted its constitutionality: Senator George Aiken expressed “misgivings” about Johnson’s actions but stated that he did “not believe that any of us can afford to take a position opposing the President of the United States for exercising the power which we, under our form of government and through our legislative bodies, have delegated to his office.” Id. at 18,456–57 (1964).

Although the nondelegation issue received almost no attention when the resolution was adopted, it became more controversial as the conflict became a quagmire and the Johnson and Nixon administrations expanded it. In some court cases challenging the legality of the Vietnam War, litigants argued that Congress had invalidly delegated its war powers without itself declaring war, but no courts directly adjudicated these claims.265See generally Rodric B. Schoen, A Strange Silence: Vietnam and the Supreme Court, 33 Washburn L.J. 275, 305–06 (1994) (summarizing litigation); see also, e.g., Mora v. McNamara, 389 U.S. 934, 935 (1967) (Stewart, J., dissenting from denial of cert. and highlighting improper war power delegation question as “large and deeply troubling question[]”); Sarnoff v. Connally, 457 F.2d 809 (9th Cir. 1972), cert. denied, 409 U.S. 929 (1972) (dismissing improper delegation argument as nonjusticiable political question). In a 1971 speech on the legal basis for the war, then-Assistant Attorney General for the Office of Legal Counsel William Rehnquist felt obliged to address the issue. Rehnquist argued that from historical examples (though citing none between the Quasi-War and the 1950s Eisenhower resolutions), “both Congress and the President have made it clear that it is the substance of congressional authorization, and not the form which that authorization takes, which determines the extent to which Congress has exercised its portion of the war power.”266Congress, the President, and the War Powers: Hearings Before the Subcomm. on Nat’l Sec. Pol’y and Scientific Dev. of the Comm. on Foreign Affs. H.R., 91st Cong. Rec. 543 (1970) [hereinafter Hearings Nat’l Sec. Pol’y]. Brushing aside objections of “unlawful delegation of powers,” Rehnquist noted that Curtiss-Wright demonstrated that the “principle [of unlawful delegation of powers] does not obtain in the field of external affairs.”267Id. Thus, Rehnquist concluded, “[t]he notion that an advance authorization by Congress of military operations is some sort of an invalid delegation of congressional war power is untenable in the light of the decided cases.”268Id.

This notion—that Congress’s advance authorization of military operations was an invalid delegation—surfaced often in war powers reform debates at that time, including legislative discussions that culminated in the 1973 War Powers Resolution. That resolution (which is still on the books) among other things required the President to withdraw forces from hostilities within sixty days unless Congress authorized their use. In legislative discussions leading to that act, critics argued that the Gulf of Tonkin Resolution had been an unconstitutional delegation, while some critics of the Resolution further argued that allowing the President sixty days of unilateral action was also an unconstitutional delegation. Senator Eagleton, for example, who initially supported the Resolution, voted against the final version because it delegated “a predated declaration of war to the President and any other President of the United States, courtesy of the U.S. Congress.”269119 Cong. Rec. 36,189 (1973). “That is not,” he argued, “what the Constitution of the United States envisaged when we were given the authority to declare war. We were to decide ab initio, at the outset, and not post facto.”270Id. at 36,190; see also id. at 33,556. A handful of mostly Democratic members of the House opposed the Resolution on similar nondelegation grounds. See id. at 24,700 (statement of Rep. Rarick); id. at 24,704 (statement of Rep. Drinan); id. at 36,204 (statement of Rep. Green); id. at 36,210 (statement of Rep. Young); id. at 36,216 (statement of Rep. Bennett); id. at 33,872 (statement of Rep. Holtzman). Congressional defenders of the Resolution echoed Rehnquist’s arguments based on Curtiss-Wright that, even if the resolution was a delegation, it was a valid exercise of congressional power. 271Id. at 25,115 (Senator Dole). Not all supporters staked much on Curtiss-Wright: Senator Javits stated that “it’s unlikely that we will have a resolution from the courts of this area of the Constitution which has been called a twilight zone . . . . The issue must be decided in the political arena.” War Powers: Hearings Before the Subcomm. on Nat’l Sec. Pol’y and Scientific Devs. of the Comm. on Foreign Affs. H.R., 93d Cong. 7 (1973).

The nondelegation objection to open-ended force authorizations, including the Gulf of Tonkin Resolution, was pressed at that time by prominent constitutional scholars. In a 1972 article styled Requiem for Vietnam, Professor William Van Alstyne wrote that “it seems to me clearly the case that the exclusive responsibility of Congress to resolve the necessity and appropriateness of war as an instrument of national policy at any given time is uniquely not delegable at all.”272William Van Alstyne, Congress, the President, and the Power to Declare War: A Requiem for Vietnam, U. Pa. L. Rev., Nov. 1972, at 16 (emphasis added). Van Alstyne argued the Gulf of Tonkin Resolution impermissibly delegated war powers: “[t]he congressional responsibility may not be thus diluted, no matter how eagerly Congress itself might wish to be quit of it.” Id. at 22. In extensive legislative testimony, Professor Alexander Bickel argued that absent detailed standards, Congress could not delegate to the President its own war power, “despite United States v. Curtiss-Wright Export Corporation, which was really quite a limited case.”273War Powers Legislation: Hearings Before the Comm. on Foreign Rels. on S. 731, S.J. Res. 18 and S.J. Res. 59, 92d Cong. 148–49 (1971) [hereinafter Hearings] (Letter from Alexander M. Bickel, Professor of Law, Yale University, to Sen. Jacob K. Javits, Chair, Committee on Foreign Relations (1971). See also id. at 555 (statement of Bickel) (arguing that Curtiss-Wright did not authorize “broad delegation without standards of legislative power to the President”). Curtiss-Wright’s statements about independent executive power were “largely dicta,” Bickel asserted, and the case was not about “powers to go to war, or to use the armed forces without restriction.”274Id. When asked whether he challenged the Gulf of Tonkin Resolution as an unconstitutional delegation, Bickel replied, “Oh, yes.”275Id. at 563. See also Alexander M. Bickel, Congress, the President and the Power to Wage War, 48 Chi.-Kent L. Rev. 131, 137–39 (1971) (making similar arguments). The Lawyers Committee on American Policy Towards Vietnam took a similar position.276Hearings, supra note 273, at 841–49. That group in 1970 sponsored a book by Professor Lawrence Velvel taking a narrow view of the constitutionality of war power delegations, arguing specifically against the constitutionality of the Gulf of Tonkin Resolution. Lawrence R. Velvel, Undeclared War and Civil Disobedience: The American System in Crisis 65–89 (1970). Velvel argued that while delegations are permitted in domestic affairs, “it ought to be impermissible to have delegations of the power to decide to enter future wars.” Id. at 85.

Other prominent legal voices—including Eugene Rostow, John Norton Moore, and former Supreme Court Justice Arthur Goldberg—endorsed the constitutionality of Congress delegating authority to the President to use force. Rostow rejected the arguments of Bickel and others “that, save for minor exceptions, hostilities can be authorized only by Congressional action at the time they begin [rather than in advance], and then by delegations narrowly limited in scope,”277Eugene V. Rostow, Great Cases Make Bad Law: The War Powers Act, 50 Tex. L. Rev. 833, 885 (1972). finding this argument so impractical as to be unconstitutional, and arguing that the Gulf of Tonkin Resolution was sufficiently specific.278Id. at 486–88. See also Hearings Nat’l Sec. Pol’y., supra note 266, at 127 (statement of John Norton Moore) (citing the Formosa, Middle East, and Gulf of Tonkin Resolutions to argue that “resolutions authorizing limited hostilities or delegating authority to the President are constitutional options open to Congress.”); Hearings, supra note 273, at 781 (statement of Arthur Goldberg) (concluding that Congress may authorize presidential deployment of forces without further congressional input if the President finds certain circumstances met). In his subsequent book about the Vietnam War and the Constitution, John Hart Ely noted that opposition to the conflict generated efforts by scholars to push nondelegation objections against the Gulf of Tonkin Resolution and other broad force authorizations, but he sided with the Resolution’s defenders: “The bottom line must . . . be that the Tonkin Gulf Resolution could not have been held at the time, and cannot now responsibly be said, to violate the delegation doctrine unless one postulates a general doctrine significantly stronger than any the Supreme Court (or the academy) has been willing to recognize since the 1930s.”279See generally Ely, supra note 259, at 24–26. Ely went on to say a stronger argument would be that force authorizations must be sufficiently specific regarding against whom they are directed, but he concluded the Gulf of Tonkin Resolution met that requirement.280Id. at 26.

In sum, after being almost entirely eclipsed in the early Cold War, war-power nondelegation arguments made a comeback in the wake of failure in Vietnam. As the following section shows, these arguments linger throughout the post-Cold War period, though at this point again contained to a small minority view in Congress.

C. Post-Cold War Delegations

Since the end of the Cold War, the United States has fought three major ground wars: two in Iraq, and the war against al Qaeda and the Taliban in Afghanistan and elsewhere. All three were waged pursuant to delegated war power. The President requested, and Congress legislated, these resolutions in the context of broad executive branch assertions of presidential power to use force.281Some executive branch lawyers and officials took the position that the President had sufficient unilateral power to engage in these conflicts even without congressional authorization.

1. Two Iraq War Delegations

Congress enacted force authorizations against Iraq in 1991 and 2002, both delegating discretion to initiate war. They authorized the President to use force—or not—based on the President’s judgments about the need and wisdom. In that respect they resembled the 1950s force resolutions, though unlike those earlier ones, presidential intentions to use force were apparent at the time. They also contrast with other force authorizations from the period, such as Congress’s 1983 (Lebanon) and 1993 (Somalia) resolutions authorizing force when substantial military deployment was already underway.282See Bradley & Goldsmith, supra note 2, at 2,077. In 1983, Congress approved for up to eighteen months continuation of President Reagan’s military deployment in Lebanon to enforce a fragile peace. Multinational Force in Lebanon Resolution, Pub. L. No. 98-119, §§ 3–4, 6, 97 Stat. 805, 806–07 (1983). In 1993, it approved continuation of U.S. military deployment initiated by President Bush and expanded by President Clinton, to protect humanitarian aid and UN personnel in Somalia. Resolution Authorizing the Use of United States Armed Forces in Somalia, S. J. Res. 45, 103d Cong. (1993). Although on their faces these approvals appear, like the Iraq resolutions, to be broad delegations—they authorized the President to use force (or not) at his discretion—in practice they did not operate that way, because they approved presidential decisions to use force after the fact. The military operations were already well underway. Also, although substantial casualties ensued, they were understood as lower-level uses of force than full-scale war, in part because there was no apparent sovereign adversary.

On March 23, 1999, the Senate also passed a nonbinding concurrent resolution authorizing the President to use air power against the Federal Republic of Yugoslavia in response to the Kosovo crisis. At that point, the President’s intention to use force was clear; he ordered the air campaign to commence the next day. See Cong. Rsch. Serv., RL30729, Kosovo and the 106th Congress 8 (2001). The Senate debate on the resolution contains no discussion of delegation. 145 Cong. Rec. S3065-S3118 (daily ed. March 23, 1999).

For completeness, we also note that the American Servicemembers’ Protection Act of 2002 authorizes the President to use “all means necessary and appropriate” to bring about release of certain U.S. or allied persons detained by the International Criminal Court. ASPA, Pub. L. No. 107-206, 116 Stat. 899 (2002). This statute is sometimes dubbed the “Hague Invasion Act” or “Invade the Hague Act” because that provision might be interpreted to include authorization of military force—and in that regard a possible war power delegation—though we regard that as largely symbolic and therefore do not discuss it in detail.

In the lead-up to the first Iraq War, following Iraq’s 1990 invasion of Kuwait, the George H.W. Bush Administration generally argued that it had authority to use military force against Iraq even absent congressional authorization.283See, e.g., The President’s News Conference on the Persian Gulf Crisis, 1 Pub. Papers 17, 20 (Jan. 9, 1991); Statement on Signing the Resolution Authorizing the Use of Military Force Against Iraq, 1 Pub. Papers 40 (Jan. 14, 1991). See generally H. W. Brands, George Bush and the Gulf War of 1991, 34 Presidential Stud. Q. 113 (2004). The central constitutional debate in public commentary, legislative hearings, and the eventual floor vote concerned that assertion.284Brands, supra note 283; see also The Constitutional Roles of Congress and the President in Declaring and Waging War: Hearing Before the S. Comm. on the Judiciary, 102d Cong. 1-4 (1991) (Sen. Biden). At this point, the UN Security Council had also authorized member states to use force if Iraq failed to withdraw from Kuwait by a certain date.285U.N.S.C. Res. 678 (Nov. 29, 1990). Many members both favoring and opposing force authorization emphasized the importance of Congress’s role in commencing military conflict; and many members characterized even a broad delegation not as passing the buck but as preserving Congress’s formal role in war initiation.286See, e.g., 137 Cong. Rec. 944 (1991) (statement of Senator Leahy) (“[W]e have our own constitutional responsibility . . . . It is time for the Senate to speak its mind.”); id. at 946 (statement of Senator Boren) (“[W]e may not duck and we may not dodge. We must do our duty under the Constitution as it requires.”); id. at 991 (statement of Senator Lieberman) (“by [authorizing force,] we do not pass the buck of responsibility”). The House passed a nonbinding resolution (shortly before authorizing the use of force) that declared: “the Constitution of the United States vests all power to declare war in the Congress of the United States. Any offensive action taken against Iraq must be explicitly approved by the Congress of the United States before such action may be initiated.”287137 Cong. Rec. 1034, 1049 (1991).

Congress ultimately passed, in January 1991, a joint resolution authorizing the President “to use United States Armed Forces” pursuant to and to achieve the objectives of UN Security Council Resolutions, that is to eject Iraqi forces from Kuwait.288Act of Jan. 14, 1991, Pub. L. No. 102-1, 105 Stat. 3. At that point it was virtually certain that President Bush would use force. Nonetheless, the resolution gave the President wide latitude to decide whether or not to initiate war. The only express limitation was that before commencing war, the President was required to report to congressional leadership that, in his determination, peaceful diplomatic means were insufficient to achieve the objectives.

Some congressional concerns were raised, especially in the House, about nondelegation. Like other modern force authorization debates, though, this was not a central issue and the constitutional objections remained a small minority view. A few representatives framed their criticism as constitutional protests that sound like nondelegation arguments, but it was often not clear whether they were invoking strict legal barriers or just appealing to general principles of legislative responsibility (or perhaps a different constitutional argument).289See, e.g., 137 Cong. Rec. 1050 (1991) (statement of Rep. Hamilton) (“We have a constitutional responsibility to vote at the time when and if the President concludes force is necessary . . . . The President’s resolution means Congress gives up the right to decide. It means we give the President unlimited discretion to start a war in circumstances that cannot be foreseen.”); id. at 1056 (statement of Rep. Jenkins) (“I will not transfer my responsibility as a member of the U.S. Congress to the President . . . [A] straight declaration of war resolution should be brought to this Congress for debate, not some resolution delegating to the President that sole responsibility.”); id. at 1063 (statement of Rep. Smith) (making similar argument); id. at 1100 (statement of Rep. Murphy) (same).

Nondelegation arguments emerged a bit more vocally in Congress during debate over authorizing the next Iraq War. For a decade after the Gulf War, the Iraqi regime had obstructed Security Council-mandated weapons inspections. In 2002, at President George W. Bush’s request, Congress again authorized force against Iraq. The 2002 resolution empowered the President to use military force “as he determines to be necessary and appropriate” to “defend the national security of the United States against the continuing threat posed by Iraq; and . . . enforce all relevant United Nations Security Council resolutions regarding Iraq.”290Authorization for Use of Military Force Against Iraq Resolution of 2002, Pub. L. No. 107-243, 116 Stat. 1498, 1501. The force resolution again included the condition only that the President report to congressional leadership his determination that diplomatic means were insufficient.291Id.

Though still a minority, several members of the Senate292Senator Arlen Specter stated that “It is a concern of mine as to whether there is authority for the Congress under the Constitution to make this kind of a delegation.” 148 Cong. Rec. S9871 (daily ed. Oct. 3, 2002). He went on to vote for the authorization, however. and House293See, e.g., id. at H7242 (daily ed. Oct. 8, 2002) (statement of Rep. Norton) (“As clear as it gets, this vote would be an unconstitutional delegation of the exclusive power of Congress to declare war. It is simply shocking to give away the unique life and death power to declare war bestowed on the Congress by the framers.”); id. at H7396 (daily ed. Oct. 9, 2002) (statement of Rep. Jackson-Lee) (“It is by article 1, section 8 of the Constitution of the United States that calls for us to declare war . . . . Congress may not choose to transfer its duties under the Constitution to the President.”); id. at H7425 (daily ed. Oct. 9, 2002) (Statement of Rep. Filner) (making similar argument); id. at H7009–10 (daily ed. Oct. 3, 2002) (Rep. Paul) (same). raised constitutional nondelegation concerns. Others made arguments that might be read either as legal objections or prudential ones.294Id. at S10089 (daily ed. Oct. 8, 2002) (statement of Sen. Kennedy) (“The most solemn responsibility any Congress has is the responsibility given the Congress by the Constitution to declare war. We would violate that responsibility if we delegate that responsibility to the President in advance . . . .”). Several proponents expressly defended the constitutionality of the resolution.295See, e.g., id. at S10085 (daily ed. Oct 8, 2002) (statement of Senator Lieberman). Then-Senator Joseph Biden specifically addressed delegation, arguing that the resolution included sufficient parameters to satisfy the nondelegation doctrine:

I am confused by the argument that constitutionally we are unable to delegate that authority. Historically, the way in which the delegation of the authority under the constitutional separation of powers doctrine functions is there have to be some parameters to the delegation . . . . But as I read this grant of authority, it is not so broad as to make it unconstitutional for us, under the war clause of the Constitution, to delegate to the President the power to use force if certain conditions exist. . . . [C]onstitutionally, this resolution meets the test of our ability to delegate. It is not an overly broad delegation which would make it per se unconstitutional, in my view.296Id. at S10249 (daily ed. Oct. 10, 2002) (statement of Senator Biden).

Beyond the legislative debate, the 2002 force resolution generated a rare judicial opinion on the war power nondelegation issue. After the resolution passed, a group including members of the armed forces and their relatives and members of Congress sued President Bush, seeking to enjoin him from initiating war.297Doe v. Bush, 323 F.3d 133 (1st Cir. 2003). One of the plaintiffs’ claims was that the resolution unconstitutionally delegated Congress’s power to declare war.298Id. at 141. The district court dismissed the suit and the First Circuit affirmed, holding that the dispute was unripe and “[did] not warrant judicial intervention.”299Id. at 139–44. However, it also addressed the nondelegation argument:

In this zone of shared congressional and presidential responsibility, courts should intervene only when the dispute is clearly framed. An extreme case might arise, for example, if Congress gave absolute discretion to the President to start a war at his or her will. Plaintiffs’ objection to the October Resolution does not, of course, involve any such claim . . . . The mere fact that the October Resolution grants some discretion to the President fails to raise a sufficiently clear constitutional issue.300Id. at 143 (citations omitted).

The court rejected the nondelegation argument for several reasons. First, it treated war power as “shared between the political branches,” in contrast to many other Article I legislative powers.301Id. Thus it apparently rejected the premise that war-initiation power is exclusively vested in Congress, or perhaps it recognized that war-initiation power is not always so easy to separate cleanly from war-waging or other foreign affairs powers. Second, citing Zemel v. Rusk (which had cited Curtiss-Wright for this proposition), it noted that “the Supreme Court has also suggested that the nondelegation doctrine has even less applicability to foreign affairs.”302Id. It adopted the common assumption that war power is a subset of foreign relations powers for delegation purposes, and that within that subset, broader delegation is constitutionally permitted. Third, it rebutted the argument that Congress had relinquished policymaking responsibility to the executive branch. “Nor is there clear evidence of congressional abandonment of the authority to declare war to the President,” the court said. “To the contrary, Congress has been deeply involved in significant debate, activity, and authorization connected to our relations with Iraq for over a decade, under three different presidents of both major political parties, and during periods when each party has controlled Congress.”303Id. at 143–44.

At the time of this writing, Congress is actively considering the repeal of the 1991 and 2002 Iraq force authorizations.304See Karoun Demirjian, Decades Later, Senate Votes to Repeal Iraq Military Authorizations, N.Y. Times (Mar. 29, 2023), https://www.nytimes.com/2023/03/29/us/politics/congress-iraq-war-powers-authorization.html [https://perma.cc/5KDC-T68H]. The fact that they remained on the books for years after the overthrow of Saddam Hussein’s regime, as well as the withdrawal of U.S. combat forces from Iraq, also means that they continued to operate as possible delegations for resuming conflicts or initiating news ones in and around Iraq.305See infra note 342.

2. The 2001 AUMF

Congress’s broadest force authorization may be the one following the terrorist attacks of September 11, 2001, which remains in effect. It authorizes the President to use

all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.306Authorization for Use of Military Force Pub. L. No. 107-40, 115 Stat. 224 (2001).

It specifies a purpose—to prevent further terrorist attacks by those categories of target—but it names no specific enemy or duration. It requires the target to have some nexus to the September 11 attacks but gives the President wide latitude to determine who—individuals, groups, or states—comes within that scope.307See Bradley & Goldsmith, supra note 2, at 2078–83; see also Michael Stokes Paulsen, Youngstown Goes to War, 19 Const. Comment. 215, 252 (2002) (observing that although the 2001 AUMF is a constitutional delegation because it contains an intelligible standard, it is “arguably the broadest congressional delegation of war power in our nation’s history”).

Unlike other modern war power delegations, the United States had been directly attacked on September 11. Even those who interpret the Constitution as lodging war-initiation decisions exclusively in Congress generally recognize an implicit exception for repelling invasions or attacks. So, although the 2001 AUMF is sweeping, at least part of its scope may be understood as recognizing preexisting presidential powers to respond to attacks.308During the 2001 congressional floor debate over the AUMF, many members emphasized that the United States was already party to a conflict resulting from acts of war against it. See 147 Cong. Rec. H5492–705 (daily eds. Sept. 11–14, 2001); id. at S9283–464 (daily eds. Sept. 12–14, 2001). Presumably the reasoning applies to al Qaeda (the actual perpetrators), but defining that group’s organizational and geographic boundaries and determining whether presidential power also applied against, for example, Afghanistan or other nations or entities for harboring al Qaeda, are complicated matters. Thus, the authority granted the President to use force against those not already covered by the President’s constitutional power to respond to direct attacks was potentially quite broad, especially if the nexus requirement is interpreted loosely.

Nondelegation concerns were barely raised, if at all, in Congress or commentary when the AUMF was hurriedly enacted. A few members of Congress indicated at the time that they believed that this resolution was crafted more narrowly than the Gulf of Tonkin Resolution, to avoid serving as a “blank check,” but they did not explain how so.309See Bradley & Goldsmith, supra note 2, at 2079–80 n.135 (quoting congressional members’ statements).

Although nondelegation objections were inaudible in 2001, some critics of the 2001 AUMF and proponents of amending it have more recently raised such concerns. As with the Gulf of Tonkin resolution, expansive interpretations by successive administrations—including applying it in countries far beyond Afghanistan and against new terrorist groups like the Islamic State—probably contributed to a view that at minimum Congress should name specific enemies.310See, e.g., Stephen Wertheim, End the Imperial Presidency, N.Y. Times (Aug. 25, 2021), https://www.nytimes.com/2021/08/25/opinion/declaration-war-president-Congress.html [https://perma.
cc/6T4E-KQ7W] (arguing that authorizing force without naming specific enemies breaks with original constitutional design and early practice).
In response to academic proposals to update the 2001 AUMF to allow the President to add new terrorist groups to its coverage, some commentators objected that doing so would skirt constitutional requirements. As two scholars put it:

The proposal to bypass Congress and instead delegate such future—and momentous—decisions to the President lacks anyhistorical precedent, and for good reason. It is Congress, not the Executive, that is given the authority under our Constitution to declare war. As our Founding Fathers understood well, an authorization to use military force is a measure that should be undertaken solemnly, after public debate and with buy-in from representatives of a cross-section of the nation, based upon a careful and deliberate evaluation of the nature of the specific threat. It should not be an ex antedelegation to the President to make unreviewable decisions to go to war at some future date against some as-yet-unidentified entity.311Jennifer Daskal & Stephen I. Vladeck, After the AUMF, 5 Harv. Nat’l Sec. J. 115, 138 (2014) (responding to Robert Chesney, Jack Goldsmith, Matthew C. Waxman & Benjamin Wittes, A Statutory Framework for Next-Generation Terrorist Threats (2013), https://www.hoover.org/research
/statutory-framework-next-generation-terrorist-threats [https://perma.cc/WL65-2M23]. See also Statement for the Record of Human Rights First to the U.S. House Foreign Affairs Committee Hearing on “Authorization for the Use of Military Force and Current Terrorist Threats” (July 24, 2017), https://docs.house.gov/meetings/FA/FA00/20170725/106315/HHRG-115-FA00-20170725-SD001.pdf [https://perma.cc/F8BL-8JX7] (“Authorizing the president to use force against unknown future enemies, for undefined purposes, or in unknown locations is an unconstitutional delegation of Congress’s power to declare war.”).

Note the echo of arguments from earlier eras, that there is something uniquely problematic constitutionally about delegating war-initiation power, due to its special character.

As during the Cold War, broad legislative delegations were widely accepted in the post-Cold War period as an appropriate mode of exercising war power. Still, the nondelegation objection never fully went away.

V. SUMMARY AND IMPLICATIONS

The historical record laid out in previous Parts yields several significant and surprising points about history, doctrine, and legal reform in the field of war power. As to history, we conclude that—contrary to common assumptions—the originalist or historical case for broad war-initiation delegation is weak. At the same time, however, that history does not support the opposite position, that Congress’s war power is essentially nondelegable at all. Throughout much of American history, both political branches often treated war initiation as constitutionally distinct, but not so consistently to alone justify either of those positions. Modern war power delegation practices arose in the 1950s in response to geostrategic imperatives of the Cold War, but also, importantly, against a background expansion in the exercise of unilateral presidential power to use force.

Moreover, the mixed historical record shows that treating “foreign affairs delegation” as a special constitutional category is problematic. Rather, it points in favor of disaggregating that category, and even disaggregating the sub-category “war powers delegation.” The sparse record of war-initiation delegations prior to modern times also highlights the immense practical stakes of this issue as well as the varied and evolving strategic rationales behind broad delegations. In that way our focus on how Congress exercises its war power adds new dimensions to familiar accounts of whether Congress has done so. And as to legal reform, that historical record raises important questions about calls for restoring Congress’s traditional role in initiating war.

A. The Historical Development of War Power Delegation

This Article’s account of war power delegations suggests at least three conclusions about relevant constitutional history. First, the founding era has relatively little definitive evidence to offer on the topic, particularly for those searching for affirmative support for either broad war power delegation or near-absolute war power nondelegation. The drafters and ratifiers seem not to have discussed the matter directly.312Supra Section I.A. Although some scholars suggest that war power (and other foreign affairs powers) was seen at the time as more delegable than domestic lawmaking power, the leading specific defense of this suggestion relies principally upon extrapolation from a single obscure exchange in the Convention debates, with little if any confirmation in subsequent practice or commentary.313See McConnell, supra note 15; supra Section I.B. And to the contrary, at least some key figures of the time emphasized the need to place war-initiation decisions in Congress specifically to check the President.314Supra Section I.A. The influential idea at the founding that decisions to start wars should rest with Congress, because Presidents might be too tempted toward war, is in considerable tension with unconstrained delegations of that power. 315See Beach, supra note 13 (developing this argument). Overall, though, originalist-oriented analysis of the founding era seems unlikely to generate specific conclusions on the delegability of war power, making this particular issue difficult to separate from the larger debate over Congress’s power to delegate its constitutional powers more generally.316What one thinks of the founding evidence, then, may depend on what one thinks is the appropriate baseline: to what extent did the Constitution generally disfavor congressional delegation, or allow delegation only if accompanied by fairly definite directions. As noted, see supra note 13, there is scholarly debate about whether Congress’s legislative powers were generally regarded as delegable at that time; this Article does not address that debate.

Second, broad delegations of war-initiation power were surprisingly rare in historical practice prior to the Cold War. The 1798 Quasi-War statutes, often identified as key precedents for war power delegations, were actually quite narrow and incremental, sharply limiting the President’s ability to expand the naval conflict into a larger war.317Supra Section II.B. Moreover, they were infrequently repeated. After the Quasi-War, no significant foreign conflict was initiated pursuant to delegated power until Vietnam.318Supra Parts II and III.

While early Congresses authorized hostilities on a few now-obscure occasions in which Presidents ultimately chose not to use force, each of these has limitations as clear precedent for broad delegation. The 1811 No-Transfer Act was conditioned on the occurrence of specific events. The 1839 authorization concerning the Maine border involved defense of specific disputed territory under potential military threat from a hostile power. The 1858 Water Witch authorization also depended on specific events and likely contemplated a low-level use of force.319Supra Section II.C. The only presidential use of force arguably pursuant to delegated authority between the Quasi-War and the Cold War was the 1914 intervention in Mexico, and that episode may be better understood as an exercise of independent presidential authority. See supra Section III.B. By our count, prior to the Cold War, Congress formally recognized a state of war more often (seven times: Tripoli, War of 1812, Algiers, Mexican War, Spanish-American War, World Wars I and II) than it delegated use-of-force decisions to the President (five times: Quasi-War, No-Transfer Act, Maine boundary, Water Witch, 1914 Mexico intervention). And those examples have generally received little scholarly or lawyerly attention, probably because they were never activated: Presidents did not invoke the delegated authority to use force because the facts on which they were conditioned did not occur.320See Matthew C. Waxman, The Power to Threaten War, 123 Yale L.J. 1626, 1653–62 (2014) (discussing tendency of lawyers and legal scholars to overlook cases of threatened force). Indeed, none of the nineteenth-century acts just mentioned even appears in a recent Congressional Research Service compilation of historical authorizations to use military force.321Elsea & Weed, supra note 167, appendixes A, B.

Moreover, during the nineteenth century, Congress rebuffed Presidents Jackson and Buchanan when they requested delegated authority to use force, amid arguments (among others) that such delegations were constitutionally impermissible.322See supra Sections II.B–C. For example, the Water Witch delegation was offset by Congress’s subsequent refusal to grant Buchanan wider authority to use force in Mexico and Central America. The 1839 Maine authorization came only a few years after Congress refused Jackson’s request for force authorizations against France and Mexico.323Supra Section II.C.3. And part of the Quasi-War debate involved authorization for the President to establish a Provisional Army, in which the analogous delegated power was sharply circumscribed in response to nondelegation concerns.324Supra Section II.B. So, war initiation was sometimes—but not consistently—treated as a special case for which broad delegation was impermissible. In sum, there is little historical practice to support broad delegations of war-initiation power prior to the Cold War, although a somewhat better case might be made for a limited practice of narrow delegations, particularly ones tied to specific circumstances or events.

In contrast, broad delegations of military powers were much more common in related areas. For example, all of Congress’s formal declarations and other official recognitions of a state of war contained essentially unlimited authorizations for the President to choose ways of fighting the war.325Supra Section II.C. Similarly, as to suppressing insurrections and law enforcement, Congress made open-ended authorizations with less concern or debate.326Supra Section II.E. Thus, if anything the early historical record suggests that war-initiation delegation was an area of concern—even if the doctrinal limits were unclear and contested.

The historical record of war-initiation delegation spotlights another less-obvious reason that its early practice was more contested than delegation of war-waging powers. Whereas today war-initiation power is usually seen as a core foreign affairs issue, earlier it was viewed as straddling both foreign and domestic affairs. Madison, exemplifying concerns among some constitutional architects, observed that “[w]ar is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.”327James Madison, Political Observations, in 4 Letters and Other Writings of James Madison 491–92 (Philadelphia: J. B. Lippincott & Co., 1867) (1795). This was written in 1795, when Madison was a member of Congress. When Justice Nelson, dissenting in the Prize Cases, argued that Congress’s war-initiation power cannot be delegated, he did not appeal to grave foreign policy consequences; he cited the effects on the “business and property of the citizen.”328The Prize Cases, 67 U.S. (2 Black) 635, 693 (1863) (Nelson, J., dissenting). See supra note 158 and accompanying text. The Civil War context of course makes this concern sharper. As one modern scholar puts it, even today “[t]he transition from peace to war and back again fundamentally alters many legal relationships, whether they are privately ordered through contract or publicly ordered through statutes, common law doctrines, treaties, or even the Constitution.”329J. Gregory Sidak, To Declare War, 41 Duke L.J. 27, 32 (1991). Historically, it was as much the domestic implications of war initiation as the foreign ones that gave opponents of its delegation pause.330See Beach, supra note 13.

A third conclusion about constitutional history in this area is that the pivotal period for war power delegation was the early Cold War, after which one might argue that the practice reflected a modern “historical gloss” on the Constitution.331Cf. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 610–11 (1952) (Frankfurter, J., concurring) (discussing “systematic, unbroken” practice accepted by the political branches). In a relatively short period of time, Congress passed a series of force authorizations granting or acknowledging broad presidential discretion as to whether (and sometimes even where and against whom) to begin hostilities: the Formosa resolution (1955), the Middle East resolution (1957), the Cuba resolution (1962), and the Gulf of Tonkin Resolution (1964).332See supra Section IV.B.2, including caveats therein regarding inclusion of the Cuba resolution in this list. Nothing like these authorizations had occurred previously. Yet, at the time, they were largely uncontroversial, passing by wide margins with only isolated objections on nondelegation grounds. The Gulf of Tonkin Resolution became controversial later, with the growing unpopularity and inconclusiveness of the expanded Vietnam War, and with that controversy came a rise in political and scholarly appeals to constitutional nondelegation principles.333See supra Section IV.B.3. But those objections faded as the United States withdrew from Vietnam and the Cold War was replaced by concerns over terrorism and rogue regimes.334Supra Section IV.C.

The most evident explanation for this shift is geostrategic. To be sure, the Supreme Court gave comfort through its prior Curtiss-Wright decision, indicating reduced constitutional concern about delegation in foreign affairs generally.335Supra Section III.C. But the fundamental changes presaging the new regime of war-initiation delegation were the rise of enduring Cold War military and ideological competition, the U.S. emergence as a global superpower with a worldwide ring of military bases and defensive alliances, and the advent of nuclear weapons. These new and dire circumstances underlay a broad consensus that Presidents needed powers to respond to global emergencies quickly and with a broad range of options. The constant military mobilization and sense of emergency muddied the distinction between war-initiation and presidential commander-in-chief activities, and the obsolescence of formal war declarations in international law further blurred it. Those conditions drove not only new thinking about delegation, but also new acceptance of presidential war powers unilateralism, as reflected in Korea and Cuba.336Supra Section IV.B.

Thus, while the 1955 Formosa authorization was a significant step-up from previous cases in the breadth of delegation, it occurred at a time when many officials in both political branches believed that security imperatives in the Cold War required interpreting Article II of the Constitution to allow the President to defend distant American interests from the Communist bloc. Only a few years earlier, President Truman took the United States into the Korean War without express congressional approval. Although Eisenhower, who had a narrower view of presidential powers, requested the Formosa authorization, he received at least as much congressional pushback on the grounds that he did not need it to use force as on the grounds that it granted too much discretion.337Supra Section IV. The 1914 Mexico intervention was an early foreshadowing of these developments. These developments bring us to the modern view in which war power delegations are relatively well accepted with relatively little understanding of their origins.

In sum, although on their face congressional force authorizations over time included broader delegations, these resolutions were passed in the context of broader understandings and prevailing practice of executive unilateralism. War power delegation may generally look broader over time in absolute terms, but so do background presidential powers. Perhaps one might attach to Cold War resolutions a historical gloss in favor of delegation, but those background assumptions about independent presidential powers and the perceived need at all for congressional authorization at that time render unclear whether the political branches understood that they were systematically engaging in novel legislative delegations. Indeed, as pointed out in Part IV, that growth in unilateral presidential powers has largely obscured the nondelegation questions lurking below.

B. Doctrinal Implications

This section considers the modern doctrinal implications of the foregoing history. We suggest at least four.

First, for those who would revive a strong version of the nondelegation doctrine, war power delegations are not so easily distinguished from domestic legislative delegations. As discussed, some judges and scholars who seek such a revival on originalist and structural grounds suggest that it would not extend to war alongside other foreign affairs powers.338Supra Section I.B. Our account calls that suggestion substantially into question; at minimum it should caution against assuming that such a carve-out is easy to justify. As described, originalist and early post-ratification evidence for broad war-initiation delegations is quite thin. There is little basis for assuming that the founders were less concerned about war power delegations than they were about other delegations (and some evidence that they would have been more concerned). And prior to the 1950s there was essentially no practice of broad delegation of the decision to go to war. The originalist-driven project to revive the domestic nondelegation doctrine may necessarily entail grappling with war power delegations, however much some of its advocates might wish to avoid that.

Second, the historical record cautions against treating war-related or military-related delegations as a single category. Longstanding practice indicates much greater acceptance of some kinds of broad delegations: delegations as to the method of fighting wars, and as to matters of law enforcement and suppression of domestic insurrection.339Of course, it is not always easy to draw a sharp line between these types of delegations. Presidential action to protect troops could provoke conflict, for example. For example, starting with early force authorizations after the Quasi-War, including the 1802 Tripoli resolution and every formal war declaration thereafter, Congress delegated to the President broad discretion regarding how to use military force. Importantly, these are areas in which the President is widely believed to have substantial independent constitutional power as a result of the President’s constitutional status as commander-in-chief and head of the executive branch.340See David Schoenbrod, The Delegation Doctrine: Could the Court Give it Substance?, 83 Mich. L. Rev. 1223, 1260–61 (1985) (arguing that war declarations are not delegations because the President’s discretion as to how to wage war derives from Article II powers). “Some delegations have, at least arguably, implicated the president’s inherent Article II authority,” noted Justice Gorsuch in Gundy. He continued: “The Court has held, for example, that Congress may authorize the President to prescribe aggravating factors that permit a military court-martial to impose the death penalty on a member of the Armed Forces convicted of murder—a decision that may implicate in part the President’s independent commander-in-chief authority.”341Gundy v. United States, 139 S. Ct. 2116, 2137–40 (2019) (Gorsuch, J., dissenting).

In contrast, war-initiation power—much of which was widely thought, at least in the early Republic, to be vested exclusively in Congress—lacks a similar, long-running historical pattern of broad delegation. Relatedly, to the extent there is historical precedent for delegation of war-initiation power, it involves (prior to the Cold War) specific and limited delegations rather than broad open-ended ones. There is not simply one blanket category of military- or war-related powers for which delegability was historically treated and practiced in the same way.

Third, the above considerations suggest a possible path for limited revival of nondelegation principles in war power debates and adjudication, namely, through interpretation of force authorizations’ scope. To be clear, we are not arguing that such delegation in the modern era is unconstitutional, nor do we think courts are likely anytime soon to address this issue, let alone to hold so. Delegation might be defended on grounds other than originalism and history, and at this point, recent practice has ingrained broad delegations not just as an available option for Congress but even as the preferred option for those who believe that Congress must authorize war or force. However, well short of finding them unconstitutional, legislators, judges, and other legal actors who place great weight on early historical delegation practice might be inclined to read modern force authorizations narrowly.

For example, issues have arisen with respect to the scope of the 2001 and 2002 AUMFs: Presidents have sought to use the 2001 AUMF against entities such as the Islamic State, with only tenuous relationships to the 9/11 attacks, and to use the 2002 AUMF regarding Iraq to authorize force against Syrian and Iranian targets.342See Jack Goldsmith & Matthew Waxman, The Legal Legacy of Light-Footprint Warfare, 39 Wash. Q. 7, 14–15 (2016); Charlie Savage, Obama Sees Iraq Resolution as a Legal Basis for Airstrikes, Official Says, N.Y. Times (Sept. 12, 2014), https://www.nytimes.com/2014/09/13/world/
americas/obama-sees-iraq-resolution-as-a-legal-basis-for-airstrikes-official-says.html [https://web.
archive.org/web/20230104053635/https://www.nytimes.com/2014/09/13/world/americas/obama-sees-iraq-resolution-as-a-legal-basis-for-airstrikes-official-says.html] (Syria and 2002 AUMF); Warren P. Strobel, White House Cites 2002 Iraq War Measure to Justify Killing Soleimani, Wall St. J. (Feb. 14, 2020, 3:23PM), https://www.wsj.com/articles/white-house-cites-2002-iraq-war-measure-to-justify-killing-soleimani-11581711789 [https://perma.cc/E3TT-2AYF] (Iranian targets and 2002 AUMF).
The constitutional history of delegation suggests that if courts were ever to reach the issue, they might instead read these authorizations more narrowly, similar to the way courts have begun to read ambiguous domestic delegations narrowly, as not encompassing important matters not clearly within the contemplation of the delegating Congress.343See, e.g., Nat’l Fed’n of Indep. Bus. v. DOL, OSHA, 142 S. Ct. 661, 664–65 (2022) (per curiam) (reading workplace safety delegation narrowly as not including power to mandate vaccines); id. at 667–70 (Gorsuch, J., concurring) (expressly referring to nondelegation concerns). Much like the Supreme Court held that it would not read a statute to delegate to the Environmental Protection Agency power to decide “major questions” of greenhouse gas regulation absent a clear statement by Congress of that intent,344West Virginia v. EPA, 142 S. Ct. 2587, 2595 (2022). so too courts could reason from the historical record that force authorizations should be read narrowly absent a clear legislative statement.345Cf. Kristen E. Eichensehr, The Youngstown Canon: Vetoed Bills and the Separation of Powers, 70 Duke L.J. 1245, 1286–94 (2021) (making a separate but related argument for narrowly construing force authorizations).

Of course, courts are likely for many reasons—including remedial problems and concerns about comparative expertise—to avoid this issue and treat it as non-justiciable.346See, e.g., Smith v. Obama, 217 F. Supp. 3d 283, 303 (D.D.C. 2016) (rejecting on standing and justiciability grounds a challenge to legality of military operations against Islamic State), vacated as moot sub. nom. Smith v. Trump, 731 Fed. App’x 8 (D.C. Cir. 2018); see also Sarnoff v. Connally, 457 F.2d 809, 809–10 (9th Cir. 1972) (discussing dismissals of Vietnam War nondelegation challenges as nonjusticiable). The wisdom and practicality of such an interpretive rule is beyond this Article’s scope, and it would depend on many other factors besides history. Ultimately this will likely remain a constitutional issue for the political branches to wrestle with outside of courts. But regardless of where the issue is debated and decided, the historical record—especially the founding-era concerns about this particular power and the early practice of specific and limited delegations, to the extent war powers were delegated at all—could be used to support such an interpretive approach.

One might respond to these first three doctrinal points by arguing that the President has at least some independent power to use military force, so—for the purposes of constitutional delegation analysis, and perhaps also for purposes of interpreting force authorizations—war-initiation is to some extent an overlapping set of shared powers among the political branches. But even so, assuming there is at least some zone of exclusive congressional power, the question remains how delegation operates in that zone. As noted, this Article assumes the existence of such a zone. We nevertheless acknowledge that the line separating that zone is not a bright one, and that is also among the reasons that courts are likely to regard this issue as nonjusticiable.

Finally and more generally, the above account indicates the importance of disaggregating the category of foreign affairs delegations. Since Curtiss-Wright, courts and commentators have discussed a generalized category of foreign affairs powers that (it is said) may be more easily delegated.347See Bradley & Goldsmith, supra note 2; Curtis A. Bradley, A New American Foreign Affairs Law?, 70 Univ. Colo. L. Rev. 1089, 1096–97; Note, supra note 13, at 1137–38. But see Ganesh Sitaraman & Ingrid Wuerth, The Normalization of Foreign Relations Law, 128 Harv. L. Rev. 1897, 1971–73 (2015) (documenting recent judicial trend away from foreign affairs exceptionalism). The history of war power delegations shows that this cannot be so easily assumed. As discussed, even within the foreign-affairs sub-category of military or war-related powers, some powers were historically regarded as more readily delegable than others. By extension, it seems inappropriate to generalize about delegability of foreign affairs powers. Some foreign affairs powers may indeed be readily delegable—particularly if they are associated with independent presidential powers, or with longstanding practice of congressional delegations. Others may not be, perhaps because—like war-initiation power—structurally Congress was designed to play a checking role and longstanding practice is not supportive of delegation. Specific types of foreign affairs delegations should be assessed individually rather than in general categories.

The foreign-domestic distinction in nondelegation law has held little significance in practice since Curtiss-Wright because even in domestic cases, courts have generally upheld delegations to the President under very deferential review.348Whitman v. Am. Trucking Ass’n, 531 U.S. 457, 474–75 (2001). However, the idea that the Constitution permits broader delegation in foreign than domestic affairs could become crucial if courts and the political branches were to apply the nondelegation doctrine more strictly, as some Justices say they would. In Gundy, for example, Justice Gorsuch (joined by two other Justices), signaled that expansive foreign affairs delegations might survive his stricter nondelegation analysis.349Gundy v. United States, 139 S. Ct. 2116,  2137 (2019) (Gorsuch, J., dissenting). Justice Thomas elsewhere similarly suggested that broad foreign affairs delegations might be more permissible.350Dep’t of Transp. v. Ass’n of Am. R.Rs., 575 U.S. 43, 80 (2015) (Thomas, J., concurring) (noting that the President’s exercises of discretion pursuant to foreign affairs statutes might not trigger strict nondelegation limits). Although, again, courts will likely continue to treat war-initiation disputes as nonjusticiable,351See supra note 346 and accompanying text. a number of scholars have predicted that judges applying a stricter nondelegation doctrine would likely continue to carve out foreign affairs or national security generally for different treatment.352See, e.g., Harlan Grant Cohen, The National Security Delegation Conundrum, Just Sec. (July 17, 2019), https://www.justsecurity.org/64946/the-national-security-delegation-conundrum [https://
perma.cc/6DGK-PYA5]; Knowles, supra note 13, at 1136.
Ultimately, delegation of war-initiation may still be constitutionally justified and defended on functional or other grounds, but the history of war power delegation cautions against broad-gauge categorical approaches to foreign affairs as a whole.353See Chad Squitieri, Towards Nondelegation Doctrines, 86 Mo. L. Rev. 1239, 1291 (2021) (calling generally for disaggregation of the nondelegation doctrine by subject matter).

C. Strategic Significance of War Power Delegation

The historical record also gives reason to think that the question whether Congress may delegate power to initiate major war has arguably been more consequential than whether Congress must authorize major war (defined loosely as ground wars with immense costs to the United States354This generally accords with an approach the Department of Justice has taken to defining “war” for the purposes of the Declare War Clause. See, e.g., Memorandum Opinion from Caroline D. Krass, Principal Deputy Assistant Att’y Gen., Office of Legal Couns., Dep’t of Just., to the Att’y Gen., Authority to Use Military Force in Libya, at 31 (Apr. 1, 2011) (“In our view, determining whether a particular planned engagement constitutes a ‘war’ for constitutional purposes instead requires a fact-specific assessment of the ‘anticipated nature, scope, and duration’ of the planned military operations,” and “[t]his standard generally will be satisfied only by prolonged and substantial military engagements, typically involving exposure of U.S. military personnel to significant risk over a substantial period.”).). The former issue gets almost no attention today and becomes critically important if one believes the answer to the latter is yes. Apart from the Korean War, the President has always requested and received congressional approval to launch major wars. Presidents have not always regarded this step as necessary, but they have done so. Counterfactual history is of course difficult, but it is hard to show past major wars in which a constitutional requirement of congressional approval would have made a difference.

It may be easier to identify situations where a requirement that Congress actually decide to initiate war might have influenced the outcome or timing. For example, Eisenhower believed that effectively deterring Chinese attacks on Taiwan in 1955 required diplomatic brinksmanship that in turn required congressional pre-approval to use unlimited force. At least in Eisenhower’s view, delegated war power reduced the likelihood of war compared to seeking a decision by Congress after a Chinese provocation. Requiring Congress to expressly initiate war rather than delegate the decision might reduce or delay war in other ways. In the Persian Gulf War, the Senate passed the 1991 resolution granting the President an option to initiate war by only a narrow 52-47 margin. Would Congress have passed a resolution firmly deciding to initiate war, if it could not constitutionally delegate that politically difficult decision to the President? Perhaps not, or perhaps only after diplomacy was given more time. Similarly, had Congress been required to decide on war with Iraq in 2002–2003, we wonder whether Congress might have scrutinized more carefully the intelligence about Iraq’s alleged weapons of mass destruction. It is impossible to prove the impact of such a requirement (compared to an option to delegate), but it is fair to speculate that war decisions might have played out differently or been slowed. And if merely slowing a decision for war seems insubstantial, remember that it is among the reasons most often cited for lodging war power in Congress to begin with.

The historical record also reveals that how Congress exercises its war power, specifically its choice to delegate decision-making on war, has been of great strategic importance—but for different reasons over time. That episodic history can be understood as efforts by the political branches to wrestle with new foreign policy dilemmas that did not fit neatly with a requirement or practice that Congress itself make the final decision on military intervention.

One obvious rationale for war power delegation is the generic rationale behind many legislative delegations: to manage complexity. To deal flexibly with complicated and uncertain situations, Congress often delegates substantial authority to the executive branch to implement policy within legislative parameters. War power delegations since World War II can be understood in similar terms, as recognition that fast-changing geopolitical conditions and the President’s simultaneous exercise of other military, diplomatic, and economic powers favor giving the President flexibility on whether and when to use force or initiate war. Indeed, although historically critics of war power delegation were generally concerned about presidential power, the practical impact of strict nondelegation—that is, giving Congress only a stark choice between deciding to use force or not, rather than allowing it to authorize the President to exercise some discretion—might actually have been more presidential unilateralism. As the U.S. government has dealt with a wide range of security crises, war power delegations may also thus reflect adaptive, pragmatic advantages of flexibility in how Congress legislatively exercises its war power.355Cf. Memorandum Opinion from William H. Rehnquist, Assistant Att’y  Gen., Office of Legal Couns., Dep’t of Just., to the Special Couns. to the President, The President and the War Power: South Vietnam and the Cambodian Sanctuaries, at 321, 336 (May 22, 1970) (“If Congress may sanction armed engagement of United States forces only by declaring war, the possibility of its retaining a larger degree of control through a more limited approval is foreclosed.”).

Historically, however, war power delegation has served as a device for handling various specific strategic challenges in addition to managing complexity. That history is especially useful to those who would justify broad war power delegation on functional grounds. The narrowly crafted 1811 No-Transfer Act involved special need for secrecy, for example. The UNPA involved delegation to solve particular credibility challenges for formal collective security arrangements that would have been unimaginable to the founders. Another new challenge after World War II was extended deterrence, or the credible threat of force to deter attacks on allies, particularly in the Eisenhower Administration.356See Matthew Waxman, Eisenhower and War Powers, Lawfare (Sept. 18, 2020, 8:01 AM), https://www.lawfareblog.com/eisenhower-and-war-powers [https://perma.cc/8WBJ-8GCJ]. In the UNPA and Eisenhower-era force resolution episodes, war power delegations were intended to signal policy certainty, not highlight policy discretion. That dilemma of squaring credible commitments to use force with congressional control of war initiation was also partially obviated by a shift in practice from congressional delegation to executive unilateralism. As explained next, efforts to roll back presidential war powers will bring some of these dilemmas back to the fore.

D. Implications for War Powers Reform

Finally, the historical record of war power delegation—especially questions about its acceptance at the founding and the thin body of practice since then—has implications for war powers reform. Reformists often pitch their calls as “restoring” Congress’s proper constitutional role in war initiation, but the historical record raises questions about what interbranch arrangements reformists are usually calling for a return to. For those who advocate reversion to exclusive congressional control over war initiation, it also raises tough questions about Congress’s ability to delegate discretion through future force authorizations.

Those advocating tighter congressional control of war initiation, whatever their political stripes, often appeal to originalism. In advocating reforms to the 1973 War Powers Resolution, for example, legislative sponsors often talk of restoring the original constitutional framework, in which Congress wielded exclusive control over decisions to initiate war.357See National Security Powers Act, S. 2391, 117th  Cong. (2021); Press Release, Chris Murphy, Sen., Murphy Statement on the National Security Powers Act (July 20, 2021), https://www.murphy.senate.gov/newsroom/press-releases/murphy-lee-sanders-introduce-sweeping-bipartisan-legislation-to-overhaul-congresss-role-in-national-security [https://perma.cc/ZGC3-6P9M]; Press Release, Bernie Sanders, Sen., Sanders Statement on the National Security Powers Act (July 20, 2021); see also National Security Reforms and Accountability Act, H.R. 5410, 117th Cong. (2021); Press Release, James McGovern, H.R., McGovern Statement on the National Security Reforms and Accountability Act (September 30, 2021), https://mcgovern.house.gov/news/documentsingle.
aspx?DocumentID=398752 [https://perma.cc/JS7D-UFSA]; Press Release, Peter Meijer, Rep., House of Representatives, Meijer Statement on the National Security Reforms and Accountability Act (September 30, 2021), https://meijer.house.gov/media/press-releases/meijer-mcgovern-introduce-sweeping-legislation-reassert-congressional [https://perma.cc/97A5-9KQJ].
The core of many war power reform proposals is to add teeth to the requirement that Congress must authorize major uses of military force. To reformists, it is usually assumed not just that a congressional resolution delegating power to use force is constitutionally sufficient, but that it represents the gold standard of congressional war power primacy. Note, also, that a similar view is currently shared by some members of Congress who propose (much like Eisenhower in 1955) to authorize the President in advance to use force against China to protect Taiwan358See, e.g., Elaine Luria, Congress Must Untie Biden’s Hands on Taiwan, Wash. Post (Oct. 11, 2021, 4:39 PM), https://www.washingtonpost.com/opinions/2021/10/11/elaine-luria-congress-biden-taiwan [https://perma.cc/UNE4-6QB6] (arguing for proposed Taiwan Invasion Prevention Act). In 1979, the Senate Foreign Relations Committee report accompanying the bill that became the Taiwan Relations Act expressed doubt, on nondelegation grounds, whether it would be constitutional for Congress to empower the President “prospectively to determine under what conditions the United States armed forces will be introduced into hostilities” to defend Taiwan. See S. Rep. No. 96-7, at 31-32 (1979).—a scenario that could entail large-scale war.

Such proposals may be normatively attractive, but if we take reformists’ appeal to originalism seriously, that commitment may prove more than reformists think. It is not clear that a forward-looking delegation of authority to use force would have satisfied constitutional requirements for how Congress exercised its exclusive war powers at the founding. Whereas today, requiring an express congressional force authorization for any major hostile use of armed force is generally seen as fully restorative of Congress’s powers as they were originally understood, our findings show that early understandings were uncertain—not uncertain in the way commonly discussed, as to whether Congress’s powers were exclusive, but uncertain as to how Congress was required to exercise those exclusive powers.

Our analysis suggests that those advocating a return to greater exclusive congressional war power should also grapple with whether there are any constitutional limits to its delegation. And in doing so, they would simultaneously have to consider how the strategic imperatives discussed in the previous section will continue often to push in favor of broad delegation.

CONCLUSION

This Article’s chief aim has been to describe the historical evolution of war power delegation from the founding era to the present. This account is interesting in itself, as it undercuts a common assumption that broad war-initiation delegations of the type used in modern practice are a longstanding feature of the constitutional landscape. To the contrary, the Article shows that from the Constitution’s earliest years until the mid-twentieth century, war-initiation delegations were rare and typically specific and conditioned on particular events. Broad delegations became more common only after World War II, first in the Cold War and then continuing to modern times in the conflicts with Iraq and the war on terrorism. The story of war-initiation delegations is a story of constitutional change.

The Article takes no firm position on the ultimate implications for modern war powers doctrine. That depends on one’s view of constitutional interpretation more generally—originalists, traditionalists and functionalists may, for example, draw different conclusions. At minimum, though, it is more difficult than often supposed to defend the modern approach to war initiation on grounds of longstanding historical practice. The historical record also spotlights an otherwise-obscured question about common calls to respect Congress’s original, exclusive war power: namely, whether originally there were constitutional limits to its delegation.

Our analysis also yields insights for broader debates about nondelegation. The Supreme Court has indicated that delegation may be categorically more appropriate in foreign affairs matters, and modern proponents of reviving the nondelegation doctrine have suggested that the revival might exempt delegation of foreign affairs powers. Especially for nondelegation revivalists who take originalism seriously, however, this Article cautions against categorical treatment of foreign affairs delegations, and even against categorical treatment of war-related delegations.

96 S. Cal. L. Rev. 741

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* Warren Distinguished Professor of Law, University of San Diego School of Law.

 Liviu Librescu Professor of Law, Columbia Law School. The authors thank Scott Anderson, Curtis Bradley, Harlan Cohen, Kristen Eichensehr, Jane Manners, Michael McConnell, and Kelsey Wiseman, as well as participants in the Duke-UVA Foreign Relations Law Workshop convened by Professors Bradley and Eichensehr, for their comments on earlier drafts. The authors thank Tanner Larkin, Christopher Malis, Austin Owen, Ruth Schapiro, Alec Towse, and Josh Tupler for outstanding research assistance, and they thank the Martin and Selma Rosen Research Fund for support.