Securities Law in the Roberts Court: Agenda or Indifference?

I. INTRODUCTION To outsiders, securities law is not all that interesting. The body of the law consists of an interconnecting web of statutes and regulations that fit together in ways that are decidedly counter-intuitive. Securities law rivals tax law in its reputation for complexity and dreariness. Worse yet, the subject regulated-capital markets-can be mystifying to those uninitiated in modern finance. Moreover, those markets rapidly evolve, continually increasing their complexity. If you do not understand how the financial markets work, it is hard to understand how securities law affects those markets. Nothing in the biographies of the current members of the Supreme Court suggest they are likely to be well equipped to deal with the federal securities laws or modern financial markets. This lacunae of securities expertise is a relatively recent phenomenon. For most of the first 50 years after the federal securities laws were adopted, the Court had at least one Justice with a background in the securities laws, either as a regulator-William O. Douglas1-or as a practitioner-Lewis F. Powell, Jr.2 Powell's retirement left the Rehnquist Court with a void in securities expertise for most of its tenure, and his departure marked a significant decline in the Court's securities caseload, as demonstrated by Table 1 below. Usually the Justices' collective lack of familiarity with the securities laws means that few petitions for certiorari are granted in securities cases; the Court simply does not decide that many cases in the field. As Table 1 below demonstrates, the Rehnquist Court averaged slightly more than one securities case per term during its nearly 20 year run, a figure consistent with the average number heard by the Warren Court. The first six years of the Roberts Court have departed from that long-term pattern. The Roberts Court has decided 12 cases in the field of securities law, a whopping 2.6% of its docket. That increase suggests the Justices have taken a new interest in the field, despite the lack of a Justice with a background in securities law. Does this upsurge in securities cases reflect a new agenda for the Supreme Court in the field of securities law? A closer examination of the cases suggests that the numbers may deceive. As Table 2 demonstrates, no single Justice has stepped forward to take charge of the field of securities regulation as Powell did during his time on the Burger Court. Only Chief Justice Roberts and Justice Breyer have written more than one majority opinion in the area. Before his retirement, Justice Stevens appears to have been engaged with the field, but most of his seven opinions in the field were dissents or concurrences; his interest does not translate into influence, as it did for Powell. When one turns to the substance of the opinions written in these cases, one finds little effort to grapple with the relation between the financial markets and the securities laws. There are vigorous debates among the Justices in some of these cases, but they revolve around questions of statutory interpretation and the relationship between the judiciary and the administrative state. The dominant theme is judicial modesty. One exception would appear to be the topic of securities class actions. The passage of the Private Securities Litigation Reform Act (PSLRA) in 1995,3 and its follow-on, the Securities Litigation Uniform Standards Act (SLUSA) in 1998,4 have generated a number of interpretive opportunities for the Roberts Court. Most of these cases have revolved around straightforward issues of statutory interpretation, but on occasion these statutes raise issues that have forced the Justices to grapple with the policy implications of their decisions for securities class action practice. Those decisions have caused critics to label the Roberts Court as "pro business."5 Does the "pro business" Roberts Court have a negative attitude toward securities class actions? …