Precedent lost: Why encourage settlement, and why permit non-party involvement in settlements?

Notre Dame Law Review

Volumn 75, Issue 1, 1999, Pages 221-268

  Lederman, Leandra ^a  

^a GEORGE MASON UNIVERSITY   (United States)

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EID: 22444456561     PISSN: 07453515     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (330)

1. See, e.g., Janet Cooper Alexander, Do the Merits Matter? A Study of Settlements in Securities Class Actions, 43 STAN. L. REV. 497, 498 (1991) (stating that five percent or fewer of litigated cases are tried to judgment)
2. (citing Annual Report of the Director, Administrative Officer of the United States Courts, 1987 REPORTS OF THE PROCEEDINGS OF THE JUDICIAL CONFERENCE OF THE UNITED STATES 211);
3. Judith Resnik, Managerial Judges, 96 HARV. L. REV. 374, 405 n.126 (1982) ("Eighty-five to ninety percent of all federal civil suits end by settlement.");
4. cf. H. Lee Sarokin, Justice Rushed Is Justice Ruined, 38 RUTGERS L. REV. 431, 431 (1986) ("The study of law focuses on reported cases, which represent about two or three percent of all suits which are instituted.").
5. See Alexander, supra note 1.
6. This Article uses the term "precedent" to refer to case law that can influence a later decision in the same court or a lower court.
7. Samuel R. Gross & Kent D. Syverud, Getting to No: A Study of Settlement Negotiations and the Selection of Cases for Trial, 90 MICH. L. REV. 319, 320 (1991).
8. See infra notes 50-51 and accompanying text.
9. Precedent helps non-litigants shape their conduct. People also settle disputes "in the shadow of the law," and that law includes precedent. Robert H. Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the Law: The Case of Divorce, 88 YALE L.J. 950 (1979).
10. See infra notes 227-30 and accompanying text.
11. But cf. Owen M. Fiss, Against Settlement, 93 YALE L.J. 1073 (1984).
12. See infra notes 18-23 and accompanying text.
13. See infra notes 20-22 and accompanying text.
14. See infra note 23 and accompanying text.
15. See Fiss, supra note 8.
16. See, generally id.
17. See infra notes 40-46 and accompanying text.
18. See infra notes 24-26 and accompanying text.
19. 521 U.S. 1117 (1997).
20. 78 T.C. 350 (1982), aff'd, 820 F.2d 1220 (4th Cir. 1987).
21. See William D. Zellar, Avoiding Issue Preclusion by Settlement Conditioned upon the Vacatur of Entered Judgments, 96 YALE L.J. 860, 871 (1987).
22. Five elements characterize our 'received tradition' of adjudication. First, the lawsuit is bipolar, engaging two diametrically opposed parties. Second, litigation is retrospective; the dispute concerns discrete, complete, past events. Third, right and remedy are interdependent. Fourth, actions are self-contained: Judgment affects only the two parties and terminates judicial involvement. Finally, litigation is party-initiated and party-controlled. William D. Zellar, YALE L.J. 96 860 (1987). Id.; see also Fiss, supra note 8, at 1075 ("The advocates of A.D.R. are led to support such measures and to exalt the idea of settlement more generally because they view adjudication as a process to resolve disputes. They act as though courts arose to resolve quarrels between neighbors who had reached an impasse and turned to a stranger for help.").
23. Robert J. Pushaw, Jr., Article III's Case/Controversy Distinction and the Dual Functions of Federal Courts, 69 NOTRE DAME L. REV. 447, 458 n.62 (1994).
24. See Margaret Meriwether Cordray, Settlement Agreements and the Supreme Court, 48 HASTINGS L.J. 9, 9 (1996) ("American law treats the settlement agreement as a member of the larger family of private contracts.").
25. See, e.g., Marc Galanter & Mia Cahill, "Most Cases Settle": Judicial Promotion and Regulation of Settlements, 46 STAN. L. REV. 1339, 1371 (1994) ("Settlement typically involves arriving at a position between the original offers and demands of the parties. Thus, it involves a process of compromise in the sense that each has sacrificed some part of his claim in order to secure another part.").
26. Owen Fiss states, The dispute resolution story makes settlement appear as a perfect substitute for judgment, as we just saw, by trivializing the remedial dimensions of a lawsuit, and also by reducing the social function of the lawsuit to one of resolving private disputes. In that story, settlement appears to achieve exactly the same purpose as judgment - peace between the parties - but at considerably less expense to society. Fiss, supra note 8, at 1085.
27. See Pushaw, supra note 19, at 460 n.62 ("Under the dispute resolution model . . . [a]ny law declaration is a mere byproduct of resolving the dispute.").
28. See infra note 26 and accompanying text.
29. See Pushaw, supra note 19, at 447-48 ("[J]usticiability presupposes that a federal judge's primary function is to resolve disputes, not to declare the law.").
30. U.S. CONST. art. III, § 2 ("The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States . . . and to Controversies to which the United States shall be a Party . . . ."). The jurisdiction of a court created under Article III of the United States Constitution is therefore limited to cases and controversies. See id. art. III. The requirement that a case be "justiciable" stems from this clause. See id.
31. Andrea K. Feirstein, Note, Smith v. Commissioner: Unilateral Concessions by Taxpayers, 4 VA. TAX REV. 187, 198 (1984).
32. Cf. Fiss, supra note 8, at 1086 ("[S]ettlement is controlled by the litigants, and is subject to their private motivations and all the vagaries of the bargaining process.").
33. Settlement is inherently tied to litigation, particularly in cases in which suit has been filed. See Alexander, supra note 1, at 500.
34. See, e.g., NO ACCESS TO LAW 58 (Laura Nader ed., 1980);
35. FRED WARSHOFSKY, THE PATENT WARS: THE BATTLE TO OWN THE WORLD'S TECHNOLOGY 247-48 (1994) (explaining that patent litigation is so costly that its mere threat may prevent a company from forming or from offering a new product);
36. Mauro Cappelletti & Bryant Garth, Access to Justice: The Newest Wave in the Worldwide Movement to Make Rights Effective, 27 BUFF. L. REV. 181, 186-87 & n.11 (1978) (stating that studies show that litigation can cost up to one-half of the amount in dispute);
37. Susan S. Silbey, Case Processing: Consumer Protection in an Attorney General's Office, 15 LAW & SOC'Y REV. 849, 865, 875-76 (1980-81);
38. David M. Trubek et al., The Cost of Ordinary Litigation, 31 UCLA L. REV. 72, 84 n.31 (1983) ("There is substantial evidence that many minor disputes have amounts in dispute less than would be the cost of a lawyer's time to process them.")
39. (citing Stewart Macaulay, Lawyers and Consumer Protection Laws, 14 LAW & SOC'Y REV. 115, 129-30 (1979), and Silbey, supra, at 865, 875-76); see also Trubek et al., supra, at 113 ("The results strengthen the impression that plaintiffs get a higher return from a strategy oriented to settlement than from one geared toward formal adjudication. Thus the recovery to fee ratio is higher when the attorney spends relatively more time on settlement discussions, but is lower when he devotes relatively more time to legal research.").
40. See Bruce L. Hay, Effort, Information, Settlement, Trial, 24 J. LEGAL STUD. 29, 29 (1995) (stating that settling saves litigation costs, so parties can divide surplus created by not litigating);
41. James D. Miller, Using Lotteries to Expand the Range of Litigation Settlements, 26 J. LEGAL STUD. 69, 69 (1997) ("Litigating parties incur deadweight losses that they could avoid if they settled their case.");
42. Steven Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. LEGAL STUD. 1, 11 (1995) ("[T]he difference between the plaintiff's expected judgment and the defendant's expected judgment must exceed the sum of their trial costs for there to be a trial; otherwise they will settle to save trial costs. This makes sense, in that the two parties together will save the sum of their trial costs if they settle.") (footnote omitted).
43. Thus, in the economic model of suit and settlement, precedent becomes relevant only where one or both parties is a "repeat player," that is, a repeat litigant on the issue or issues in the case.
44. Fiss, supra note 8.
45. See id. at 1082 ("The dispute resolution story trivializes the remedial dimensions of lawsuits and mistakenly assumes judgment to be the end of the process.").
46. See id. at 1075 ("Settlement is for me the civil analogue of plea bargaining: Consent is often coerced; the bargain may be struck by someone without authority; the absence of a trial and judgment renders subsequent judicial involvement troublesome; and although dockets are trimmed, justice may not be done. Like plea bargaining, settlement is a capitulation to the conditions of mass society and should be neither encouraged nor praised."); see also Owen M. Fiss, The Supreme Court, 1978 Term, Foreword: The Terms of Justice, 93 HARV. L. REV. 1 (1979);
47. Evan Tsen Lee, Deconstitutionalizing Justiciability: The Example of Mootness, 105 HARV. L. REV. 605, 626 (1992).
48. See Fiss, supra note 8, at 1083 ("The structural reform cases dial play such a prominent role on the federal docket provide another occasion for continuing judicial involvement. In these cases, courts seek to safeguard public values by restructuring large-scale bureaucratic organizations."); id. at 1085 ("In my view, however, the purpose of adjudication should be understood in broader terms. Adjudication uses public resources, and employs not strangers chosen by the parties but public officials chosen by a process in which the public participates. These officials, like members of the legislative and executive branches, possess a power that has been defined and conferred by public law, not by private agreement. Their job is not to maximize the ends of private parties, nor simply to secure the peace, but to explicate and give force to the values embodied in authoritative texts such as the Constitution and statutes: to interpret those values and to bring reality into accord with them. This duty is not discharged when the parties settle."). Fiss views settlement as "a highly problematic technique for streamlining dockets." Id. at 1075.
49. See id.
50. This may be because the dispute resolution view is more aligned with judges' interests in encouraging settlement. See infra notes 262-65 and accompanying text.
51. See E. Donald Elliott, Symposium on Litigation Management: Managerial Judging and the Evolution of Procedure, 53 U. CHI. L. REV. 306, 325 (1986) ("Rather than argue about which oversimplification [about litigation] is more inaccurate, we should recognize that modern litigation involves a broad spectrum of different kinds of disputes, and therefore that we need a variety of different processes."); Zellar, supra note 18, at 866.
52. See, e.g., William M. Landes & Richard A. Posner, Adjudication as a Private Good, 8 J. LEGAL STUD. 235 (1979).
53. See Zellar, supra note 18, at 866 ("Private and public interests coexist as separate preferences in our jurisprudence."). Even Article III of the United States Constitution arguably reflects the public/private distinction in its "case or controversy" requirement. See Robert J. Pushaw, Jr., Congressional Power Over Federal Court Jurisdiction: A Defense of the Neo-Federalist Interpretation of Article III, 1997 BYU L. REV. 847, 864-65 ("The federal courts' principal function in Article III 'Cases' was to expound laws having national and international significance, whereas their main role in 'Controversies' was to act as an impartial arbitrator."); see also Pushaw, supra note 19.
54. See supra note 26 and accompanying text.
55. See supra note 26 and accompanying text.
56. See, e.g., Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips Corp., 510 U.S. 27, 40 (1993) (Stevens, J., dissenting) ("Judicial precedents are presumptively correct and valuable to the legal community as a whole. They are not merely the property of private litigants and should stand unless a court concludes that the public interest would be served by vacatur."); Jules Coleman & Charles Silver, Justice in Settlements, 4 Soc. PHIL. & POL'Y 102, 114-19 (1986);
57. Henry E. Klingernan, Settlement Pending Appeal: An Argument for Vacatur, 58 FORDHAM L. REV. 233, 234 (1989) ("The decision to grant or to deny vacatur implicates private and public interests that sometimes conflict.");
58. Patrick E. Longan, Congress, the Courts, and the Long Range Plan, 46 AM. U. L. REV. 625, 662 (1997) ("Without question, the government should subsidize litigation to some extent because private litigants create precedent that enables other litigants to resolve or avoid disputes; thus, that precedent has public value.");
59. David Luban, Settlements and the Erosion of the Public Realm, 83 GEO. L.J. 2619, 2622 (1995) ("[S]ettlements, like private adjudications, produce no rules or precedents binding on nonparties.").
60. See William M. Landes & Richard A. Posner, Legal Precedent: A Theoretical and Empirical Analysis, 19 J.L. & ECON. 249 (1976); Luban, supra note 44, at 2623 ("The Landes/Posner/Coleman/Silver analysis shows that precedents and legal rules are public goods. Although the original litigants of the cases "purchase" the rules, future litigants use these rules without paying.").
61. Sarokin, supra note 1, at 433. A court's decision in a case can also bind a non-party, in appropriate circumstances, through res judicata or collateral estoppel. See Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) (conditionally approving offensive use of nonmutual collateral estoppel); Bernhard v. Bank of Am. Nat'l Trust & Sav. Ass'n, 122 P.2d 892, 898 (Cal. 1942) ("There is no compelling reason, however, for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.").
62. See supra notes 3-4 and accompanying text.
63. See Leandra Lederman, Which Cases Go To Trial? An Empirical Study of Predictors of Failure to Settle, 49 CASE W. RES. L. REV. 315 (1999); see also infra notes 49-63 and accompanying text (explaining why trials are not random).
64. See infra notes 59-61 and accompanying text.
65. See Shavell, supra note 31.
66. The basic economic model assumes damages are stipulated and only liability is in dispute. See George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). Even if the parties estimate that the plaintiff has less than a 100% likelihood of being awarded the stipulated damages of $20,000, if they agree that damages are $20,000, and on the estimated likelihood that those damages will be found by the court, they will still have a settlement range equal to the aggregate of their litigation costs. For example, if the parties agree that the plaintiff has a 70% likelihood of being awarded $20,000, then the statistically expected outcome at trial is $14,000. If each party would spend $4000 to go to trial, the settlement range is $10,000 to $18,000. This assumes that the parties are risk-neutral. See infra note 53.
67. See Gross & Syverud, supra note 4, at 324 ("[I]f plaintiffs and defendants always agreed in their predictions of trial outcomes, there would be no trials at all.").
68. "Risk-neutral" parties are indifferent between a guaranteed amount, such as a $14,000 settlement, and its equivalent expected value, such as a 70% probability of receiving a $20,000 award at trial. See Jeffrey M. Perloff & Daniel L. Rubinfeld, Settlements in Private, Antitrust Litigation, in PRIVATE ANTITRUST LITIGATION 149, 152 (Lawrence J. White ed., 1988) ("Risk neutral individuals or firms make decisions solely on the basis of the expected return associated with their actions . . . .").
69. Strategic behavior is posturing by a party to capture more of the surplus created by the settlement range. See Gross & Syverud, supra note 4, at 328; Mnookin & Kernhauser, supra note 6. For example, in the example discussed above, see supra text accompanying notes 50-51, the plaintiff was willing to settle for anything over $16,000. For strategic purposes, however, he might maintain that he will not settle for anything less than $18,000. If the defendant also behaves strategically, perhaps protesting that he would not pay more than $15,000, the parties might fail to settle despite the existence of a genuine settlement range between $16,000 and $24,000. The model also ignores the effects of attorneys, see Ronald J. Gilson & Robert H. Mnookin, Disputing Through Agents: Cooperation and Conflict Between Lawyers in Litigation, 94 COLUM. L. REV. 509, 512 (1994), and the externalities of court opinions in a precedent-based system,
70. see Bruce H. Kobayashi, Case Selection, External Effects, and the Trial/ Settlement Decision, in DISPUTE RESOLUTION: BRIDGING THE SETTLEMENT GAP 17 (D.A. Anderson ed., 1996) (explaining that trials may occur because the effect of current litigation on future litigation may eliminate a settlement range);
71. Robert D. Cooter & Daniel L. Rubinfeld, Economic Analysis of Legal Disputes and Their Resolution, 27 J. ECON. LIT. 1067, 1070 (1989).
72. If a party has reputational stakes in the litigation or is concerned about the precedential effect of a court decision, he will not be motivated by the pure economic concerns of the single litigation. See Kobayashi, supra note 54; Priest & Klein, supra note 51; see also Frank B. Cross, The Precedent-Setting Value of Litigation and the Selection of Cases for Trial (unpublished paper on file with the author).
73. See Shavell, supra note 31, at 10 ("Trial is assumed to involve a cost for each side, but for simplicity, settlement is taken to be costless.").
74. See Lederman, supra note 48.
75. See supra note 1.
76. See Keith N. Hylton, Asymmetric Information and the Selection of Disputes for Litigation, 22 J. LEGAL STUD. 187 (1993) (describing a model in which divergent expectations about trial outcomes are based on asymmetric information, suggesting that the "easy" cases go to trial because a party with private information will be eager to settle cases in which he has a weaker than average case); Priest & Klein, supra note 51 (using a model in which parties' estimates of trial outcome differ because of self-serving "optimism" bias to demonstrate that, if the other assumptions of the basic model remain the same, the "close" cases will disproportionally go to trial).
77. See, e.g., Jeffrey M. Perloff et al., Antitrust Settlements and Trial Outcomes, 78 REV. ECON. & STAT. 401, 402 (1996).
78. Failure to settle may occur for at least three reasons. First, the plaintiff's expected gains may outweigh the defendant's expected losses either because the plaintiff believes its probability of winning is greater than does the defendant, or because the plaintiff expects a larger award at trial than does the defendant. Second, one or both parties might enjoy taking risks, or their lawyers may have a financial interest in the hours generated by a trial. Third . . . "breakdowns" of the settlement bargaining process may occur when parties have informational asymmetries . . . . Jeffrey M. Perloff et al., REV. ECON. & STAT. 78 401 (1996). Id. Risk-seeking behavior can also increase the likelihood of trial. Risk aversion increases the likelihood of settlement because a risk-averse party will prefer a sure outcome, such as a $12,000 payment, even if it is less than the statistically predicted (but uncertain) award at trial, such as a 70% likelihood of a $20,000 award (accompanied by a 30% likelihood of no award at all). Of course the "framing" of options as "wins" or "losses" may affect choices.
79. See Jeffrey Rachlinski, Gains, Losses, and the Psychology of Litigation, 70 S. CAL. L. REV. 113 (1996).
80. See Gross & Syverud, supra note 4, at 320 ("A trial is a failure.").
81. See Kobayashi, supra note 54.
82. In the example used above, if the defendant expects a 70% likelihood of a $20,000 payment, plus $4000 in litigation costs, but will benefit from the precedent by $8000, then the defendant's expected cost of trial changes from $18,000 ($14,000 plus $4000) to $10,000 ($14,000 plus $4000 minus $8000). This will decrease the defendant's maximum offer from $18,000 to $10,000, reducing the likelihood of settlement.
83. That is, using the same example, if the plaintiff expected to net $10,000 following trial ($14,000 expected award minus $4000 in litigation costs) but values a precedent as a $2000 cost, the plaintiff's minimum demand will decrease from $10,000 to $8000. Thus, the basic economic model reveals that, where precedent is not an issue, trials result from bargaining failures of some kind that result in elimination of a settlement range. Where trial results because of a party's desire for precedent, however, this analysis suggests that trial is not a failure but rather a purposeful attempt to direct the evolution of the law. See Kobayashi, supra note 54; Paul H. Rubin, Why is the Common Law Efficient?, 6 J. LEGAL STUD. 51, 54 (1977).
84. See infra notes 66-76 and accompanying text.
85. The model assumes that the parties' estimation errors are random, independent of each other, normally distributed, with a mean of zero, and homoskedastic - that is, that estimation error does not vary according to how close the case is to the decision standard. See Kobayashi, supra note 54; Lederman, supra note 48.
86. See Priest & Klein, supra note 51 (noting that cases closest to the "decision standard" in the case go to trial).
87. See id. Priest and Klein assume that damages are stipulated, so the only possible outcome is victory for plaintiff or victory for defendant. See id. at 17. The reason for the "50% implication" is that under Priest and Klein's assumptions, the cases that go to trial will disproportionately be those closest to the "decision standard" in the case because the parties' estimation errors will be greater in those cases. See id. Because this means that trials are equally distributed around the decision standard, the judge will find for the plaintiff 50% of the time.
88. In Priest & Klein's basic model, damages are stipulated and there are only two possible trial outcomes, liability and non-liability. See id. A particular dispute might have any degree of liability-indicative facts. The "decision standard" is the rule dividing those cases in which the decisionmaker will find the defendant liable from those cases in which he will not. It is therefore implicit in Priest and Klein's model that the decisionmaker will always accurately determine on which side of the decision standard a particular dispute lies. In other words, decisionmaker error is already factored into the location of the decision standard. See Lederman, supra note 48.
89. See Priest & Klein, supra note 51, at 25.
90. These defendants are less likely to be willing to settle promising cases and more willing to settle cases that look like losers.
91. See Kobayashi, supra note 54.
92. This model opposes the theory that the common law is "efficient," see, e.g., Gregory S. Crespi, The Adequate Assurances Doctrine After U.C.C. §2-609: A Test of the Efficiency of the Common Law, 38 VILL. L. REV. 179, 179 n.1 (1993), that is, that case law evolves toward legal rules that "maximize the aggregate wealth" of parties affected by those rules, see id. at 179 n.1
93. (citing RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW § 1.2, 12-14 (3d ed. 1986), and Rubin, supra note 64). In the model it is applied to, the current liability rule requires a particular party (such as the defendant) to bear the costs of avoidance and future liability. If the suit is litigated and the plaintiff wins, the liability rule remains the same, so avoidance and liability costs are unchanged. On the other hand, if the defendant wins, the liability rule will be reversed, so that the defendant no longer bears those costs, and the plaintiff must bear them. Under the model, the process will continue, if both sides have a substantial interest in precedents, until the liability rule is on the low-cost avoider, who will find it less expensive to avoid liability than to litigate. Thus, cases that go to trial will disproportionately be those where the law inefficiently places liability on the high-cost avoider.
94. If the model is correct in predicting which cases will go to trial, and if there is a positive probability that inefficient liability rules will be reversed at trial, this model implies that the law will evolve towards efficiency over time. The evolution towards efficiency implication has been questioned by some scholars. See, e.g., Robert Cooter & Lewis Kornhauser, Can Litigation Improve Without the Help of Judges?, 9 J. LEGAL STUD. 139, 153-54 (1980) (arguing that such factors as strategic bargaining can cause cases to go to trial whether the resulting precedent is efficient or inefficient); Cooter & Rubinfeld, supra note 54 (explaining that economic models of legal change demonstrated only a weak tendency towards efficiency);
95. Georg van Wangenheim, The Evolution of Judge Made Law, 13 INT'L REV. L. & ECON. 381, 382-83 (1993) (arguing that Public Choice theory must be considered in hypothesizing which legal rules are challenged in the judicial process).
96. See James D. Miller, Using Lotteries to Expand the Range of Litigation Settlements, 26 J. LEGAL STUD. 69, 72 (1997).
97. See Hylton, supra note 59, at 199.
98. See id.
99. See Theodore Eisenberg, The Relationship Between Plaintiff Success Rates Before Trial and at Trial, 154 J. ROYAL STAT. SOC'Y 111, 111 (1991). ("For example, if tried cases contain equal victories for plaintiffs and defendants, one cannot conclude that the applicable legal rules are even-handed. Even if the rules heavily favour the plaintiff, the similar trial success rates are consistent with there being many cases in which plaintiffs recover without going to trial.").
100. Evan H. Caminker, Why Must Inferior Courts Obey Superior Court Precedents'?, 46 STAN. L. REV. 817, 818 & n.2 (1994). Stare decisis may be accepted by judges because each judge, though preferring to impose his own views, also wants his own decisions to be followed by other judges.
101. See Erin O'Hara, Social Constraint or Implicit Collusion?: Toward a Game Theoretic Analysis of State Decisis, 24 SETON HALL L. REV. 756 (1993).
102. See Caminker, supra note 78, at 818 & n.2.
103. See O'Hara, supra note 78.
104. This ignores changes in the composition of the Court that occur over time; a change in the composition of the bench increases path-dependence.
105. See Maxwell L. Stearns, Standing Back from the Forest: Justiciability and Social Choice, 83 CAL. L. REV. 1309, 1349 & n.121 (1995).
106. See id.; see also Erwin Chemerinsky, Decision-Makers: In Defense of Courts, 71 AM. BANKR. L.J. 109, 128 (1997) ("Principles of stars decisis serve many valuable ends. First, they enhance efficiency. If appellate precedents are followed, there is no need to litigate the same issue repeatedly in different cases. The question is decided in an appellate court, and lower courts are then responsible for following that decision.").
107. 91 F.3d 1547 (3d Cir. 1996).
108. 78 T.C. 350 (1982), aff'd, 820 F.2d 1220 (4th Cir. 1987).
109. U.S. CONST. art. III, § 1; see also Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 60 (1982).
110. See U.S. CONST. art. III, § 2, cl. 1.
111. An important exception is otherwise "moot" cases that are "capable of repetition, yet evading review." Moore v. Ogilvie, 394 U.S. 814, 816 (1969) (quoting Southern Pac. Terminal Co. v. Interstate Commerce Comm'n, 219 U.S. 498, 515 (1911)). Roe v. Wade, 410 U.S. 113 (1973), is a well-known example of such a case.
112. See, e.g., Honig v. Doe, 484 U.S. 305, 317 (1988) ("Under Article III of the Constitution this Court may only adjudicate actual, ongoing controversies.") (citing Nebraska Press Ass'n. v. Stuart, 427 U.S. 539, 546 (1976)); United States Parole Comm'n. v. Geraghty, 445 U.S. 388, 404 (1980); Preiser v. Newkirk, 422 U.S. 395, 401 (1975); cf. Honig, 484 U.S. at 331 (Rehnquist, C.J., concurring) ("The logical conclusion to be drawn from these cases, and from the historical development of the principle of mootness, is that while an unwillingness to decide moot cases may be connected to the case or controversy requirement of Art. III, it is an attenuated connection that may be overridden where there are strong reasons to override it."). The rationales for mootness doctrine include ensuring adversarial presentation of issues, judicial economy, avoidance of unnecessary litigation, and avoidance of ill-considered opinions based on a poor factual record. See Susan Bandes, The Idea of a Case, 42 STAN. L. REV. 227, 245 (1990);
113. see also Note, Mootness on Appeal in the Supreme Court, 83 HARV. L. REV. 1672, 1675 (1970) [hereinafter Mootness] ("Courts [do] not 'waste' their time passing on the merits of 'nondisputes' - controversies for which there is no judicial remedy.") But cf. Bandes, supra at 245 ("[T]o the extent a case is a device to prevent the Court from squandering its resources on nonjudicial tasks, the mootness doctrine presents quite a paradox. As Chief Justice Rehnquist recently observed, the Court's 'unique resources . . . are squandered in every case in which it becomes apparent after the decisional process is underway that we may not reach the question presented.'") (quoting Honig, 484 U.S. at 332 (1988) (Rehnquist, C.J., concurring)).
114. Cases that involve political questions are also non-justiciable. See, e.g., Lea Brilmayer, The Jurisprudence of Article III: Perspectives on the "Case or Controversy" Requirement, 93 HARV. L. REV. 297 (1979); Chemerinsky, supra note 83, at 117.
115. A case is not "ripe" if its resolution is legally premature.
116. "Standing" doctrine requires a plaintiff to have a legally cognizable interest in a lawsuit to bring a claim.
117. Mootness doctrine requires a continuing interest in resolution of the lawsuit in order for the court to decide the case. Mootness is "the doctrine of standing set in a time frame." Geraghty, 445 U.S. at 397 (quoting Henry P. Monaghan, Constitutional Adjudication: The Who and When, 82 YALE L.J. 1363, 1384 (1973)). The Supreme Court has stated that a case is moot when either there is no longer a "live" controversy or the "parties lack a legally cognisable interest in the outcome." Geraghty, 445 U.S. at 396 (quoting Powell v. McCormack, 395 U.S. 486, 496 (1969)). Because a "live" controversy is required, a case can be mooted by settlement, abandonment by the plaintiff of his claim, or by full concession by the defendant. See, e.g., U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 20, 21-22 (1994) ("The parties agreed that confirmation of the plan constituted a settlement that mooted the case. . . . If a judgment has become moot [while awaiting review], this Court may not consider its merits, but may make such disposition of the whole case as justice may require.") (quoting Walling v. James V. Reuter, Inc., 321 U.S. 671, 677 (1944)); Lake Coal Co. v. Roberts & Schaefer Co., 474 U.S. 120 (1985); Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 333 (1980) ("A case or controversy is mooted in the Art. III sense upon payment and satisfaction of a final, unappealable judgment . . . ."); California v. San Pablo & Tulare R.R. Co., 149 U.S. 308 (1893) (holding that the railroad's offer to pay the State the amounts at issue and deposit of the money in a bank mooted the case); Gould v. Control Laser Corp., 866 F.2d 1391, 1392 (Fed. Cir. 1989) (stating that "settlement moots an action"); Tosco Corp. v. Hodel, 826 F.2d 948, 948 (10th Cir. 1987); Lamb v. Commissioner, 390 F.2d 157 (2d Cir. (dismissing appeal as moot where government tendered full amount sought to be refunded and court was satisfied issue would not recur for subsequent year).
118. See, e.g., Muskrat v. United States, 219 U.S. 346 (1911); Mootness, supra note 89, at 1673 (footnote omitted) ("The prohibition against rendering advisory opinions may be stimulated by the total lack of a factual record, as when a coordinate branch of government makes a request for judicial advice."). But cf. Bandes, supra note 89, at 245 ("This confusion, evident throughout the literature of justiciability, is thrown into sharp relief in the mootness context, in which concrete adverseness once existed, but no longer does. Depending on the stage of the proceedings, concrete factual development continues to be available to assist the Court, to some degree, adversity continues as well, since at least one of the parties is still willing to litigate.") (citing 13A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3533.1, at 218 (1984)).
119. See Stearns, supra note 82, at 1351, 1359 (discussing standing).
120. See id. at 1351.
121. See supra note 89.
122. See Honig v. Doe, 484 U.S. 305, 330 (1988) (Rehnquist, C.J., concurring).
123. See supra note 89 and accompanying text.
124. See supra note 92 and accompanying text.
125. See, e.g., Warth v. Seldin, 422 U.S. 490, 498 (1975); Sierra Club v. Morton, 405 U.S. 727 (1972).
126. See supra text accompanying note 99.
127. See Stephen C. Yeazell, Collective Litigation as Collective Action, 1989 U. ILL. L. REV. 43, 52 ("[T]he common law built barriers between the client and the lawyer. Each of these barriers sought to assure the client would initiate and finance litigation so he would be neither a free nor a kidnapped rider. The law of barratry forbade the stirring up of quarrels, including the filing of a suit, however meritorious, without the plaintiff's permission. Champerty consisted of agreeing to divide the spoils of a lawsuit, thereby financing litigation that would riot otherwise occur. Maintenance consisted of financing another's suit, a form of private legal aid."). Modern law has moved away from prohibitions on barratry, champerty, and maintenance. Modern law allows contingent-fee agreements, which would have been prohibited under champerty rules. See id. at 54. In NAACP v. Button, 371 U.S. 415 (1963), however, the Supreme Court held barratry and maintenance prohibitions unconstitutional as applied to the NAACP, finding the NAACP litigation a form of political expression. See id. at 429-31. The case involved the Virginia Conference of the NAACP, which focused on "financing litigation aimed at ending racial segregation" in Virginia public schools. Id. at 420 & n.4. The Virginia Conference generally financed cases in which the plaintiff retained an NAACP staff attorney, but sometimes financed other cases. See id.
128. See John Howard, Retaliation, Reinstatement, and Friends of the Court: Amicus Participation in Brock v. Roadway Express, Inc., 31 How. L.J. 241, 254 (1988) ("Litigation is not an uncommon interest group tactic. Most notable for handling cases from trial through the appellate level are groups such as the National Association for the Advancement of Colored People (NAACP) and the American Civil Liberties Union (ACLU). These organizations identify potential abuses and orchestrate implementation of their goals through carefully-managed test cases, becoming, in effect, the real party in interest.").
129. See Button, 371 U.S. at 429-31 (1963); see also supra note 101; cf. Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) (holding that a black "tester," an employee of Housing Opportunities Made Equal, who was given false information about housing availability, had standing to challenge racial steering under section 812 of the Fair Housing Act because section 804(d) of that Act made misrepresentation as to the availability of a dwelling unlawful).
130. See Gerald L. Neuman, Variations for Mixed Voices, 137 U. PA. L. REV. 1851, 1866 n.61 (1989)
131. (reviewing LOUIS FISHER, CONSTITUTIONAL DIALOGUE AS POLITICAL PROCESS (1988)) ("The direction of doctrinal development in a system that includes a norm of precedent is substantially path-dependent. Lawyers attempt to exploit this characteristic in their strategic choice of plaintiffs and defendants . . . .").
132. Nat Hentoff, Victim of Affirmative Action, VILLAGE VOICE, Jan. 6, 1998, at 20 ("Thurgood Marshall prepared his cases very carefully, structuring a dynamic of lower-court cases so that when he got to the Supreme Court with Brown v. Board of Education, the door was open."). Justice Marshall's strategy is discussed in further detail below. See infra notes 110-21 and accompanying text.
133. See supra notes 78-83 and accompanying text.
134. 347 U.S. 483 (1954).
135. 163 U.S. 537 (1896).
136. See Stearns, supra note 82, at 1364-66.
137. See id.
138. See id. at 1365 n.165.
139. 182 A. 590 (Md. 1936).
140. See Stearns, supra note 82, at 1365 n.166.
141. RICHARD KLUGER, SIMPLE JUSTICE: THE HISTORY OF BROWN V. BOARD OF EDUCATION AND BLACK AMERICA'S STRUGGLE FOR EQUALITY 187 (1975).
142. 305 U.S. 337 (1938).
143. Daniel Gyehi, A Tribute to Courage on the Fortieth Anniversary of Brown v. Board of Education, 38 How. L.J. 23, 34 & n.60 (1994).
144. 332 U.S. 631 (1948) (requiring Oklahoma to provide an equal law school education to a woman denied admission to the University of Oklahoma because she was black).
145. 339 U.S. 629 (1950) (requiring admission of qualified blacks to the University of Texas Law School).
146. 339 U.S. 637 (1950) (prohibiting the University of Oklahoma from requiring a black graduate student to sit physically separated in the classroom, to use separate tables outside the library, and to eat at separate times in the school cafeteria).
147. 347 U.S. 483 (1954).
148. See Stearns, supra note 82, at 1366.
149. See id.
150. 404 U.S. 71 (1971).
151. Joyce Ann Baugh et al., Justice Ruth Bader Ginsburg: A Preliminary Assessment, 26 U. TOL. L. REV. 1, 25-26 (1994)
152. (quoting Deborah L. Markowitz, In Pursuit of Equality: One Woman's Work to Change the Law, 11 WOMEN'S RTS. L. REP. 73, 75, 83, 97 (1989)).
153. See supra text accompanying note 9.
154. See supra notes 107-26 and accompanying text. NAACP v. Button, 371 U.S. 415 (1963), permits this kind of litigation. See supra note 103.
155. See supra note 55 and accompanying text.
156. Another technique that has been widely discussed is settlement pending appeal contingent on a joint motion for vacatur of a lower court's decision. See, e.g., Howard Slavitt, Selling the Integrity of the System of Precedent: Selective Publication, Depublication, and Vacatur, 30 HARV. C.R.-C.L. L. REV. 109, 136 n.173 (1995) ("While it is impossible to know why a losing party would want to vacate a particular opinion, the institutional litigant's likely motive was to erase negative precedent."). The scholarly outcry appropriately reflects the view that precedents are public, and therefore not subject to the parties' private agreement.
157. See, e.g., Daniel Purcell, The Public Right to Precedent: A Theory and Rejection of Vacatur, 85 CAL. L. REV. 867, 887 (1997) ("Vacatur typically comes out of an agreement between the parties, hardly an adversary tactic. Instead, the repeat player uses vacatur "against" the public in general, the larger body of future possible litigants, by depriving them of favorable precedent on which to rely. When vacatur is understood in this way - as a means of controlling future consequential damages resulting from an adverse finding - the adversary party in the current litigation becomes irrelevant.");
158. see also David M. Staker, Comment, The Use of Lower Court Judgments as Bargaining Chips: Should Courts Routinely Grant Vacatur When Parties Settle Pending Appeal?, 43 U. KAN. L. REV. 233, 242 (1994) ("By converting the judgment into a bargaining chip in the process of settlement, vacatur 'clouds and diminishes' the value of precedent.") (citation omitted). A detailed discussion of settlement contingent on vacatur is beyond the scope of this Article.
159. 521 U.S. 1117 (1997).
160. At the time of layoffs, each teacher had nine years of seniority in typing and secretarial studies. See United States v. Board of Educ., 832 F. Supp. 836, 840 (D.N.J. 1993). With respect to general bookkeeping and accounting, Ms. Taxman had nine years of seniority, and Ms. Williams had four years and three months of seniority. See id.
161. See Jan Crawford Greenburg, Civil Rights Groups Pay Teacher to Avoid Court, CHI. TRIB., Nov. 22, 1997, § 1, at 1.
162. See Taxman v. Board of Educ., 91 F.3d 1547, 1551 (3d Cir. 1996). Ms. Williams had a masters degree, and Ms. Taxman did not, but the courts did not discuss the relevance of the additional degree in the comparison of qualifications. See Yvonne Scruggs-Leftwich, Not a Case of Affirmative Action, WASH. POST, Dec. 13, 1997, at A21. Ms. Taxman apparently had two more years of teaching experience than Ms. Williams so the Piscataway School Board deemed their qualifications equal.
163. See Paul Shepard, Issue One That Isn't Going Away, CHATTANOOGA TIMES, Nov. 22, 1997, at A5.
164. See Simon Barber, Settlement to Blow Affirmative Action, BUS. DAY (S. AFR.), Nov. 27, 1997, at 15 ("If they had both been of the same race, the board later conceded the issue would have been decided by the toss of a coin.").
165. See id. The affirmative action policy had been adopted in 1983. See id.
166. See Taxman, 91 F.3d at 1563.
167. See Board of Education, 832 F. Supp. at 840.
168. See Taxman, 91 F.3d at 1552.
169. 42 U.S.C. § 2000c-1-c-17 (1994).
170. See Board of Education, 832 F. Supp. at 836.
171. See id. at 851.
172. See Taxman, 91 F.3d at 1552.
173. See id.
174. See id.
175. See id. On appeal, the United States was no longer a party to the case. See id. As a result of a change in administrations, the Justice Department apparently changed its substantive position in the case, arguing that Piscataway's approach was Constitutional. See Russ Bleemer, Court Bars DOJ from School Board Case, LEGAL TIMES, Nov. 27, 1995, at 19;
176. Russ Bleemer, Sloviter Will Be Tie-Breaker in Discrimination Case, N.J. L.J., Nov. 6, 1995, at 3. The Clinton administration then changed tacks, urging the Supreme Court to rule narrowly in favor of Ms. Taxman. See Greenburg, supra note 133, at 1.
177. Id. at 1567.
178. See Piscataway Township Bd. of Educ. v. Taxman, 521 U.S. 1117 (1997).
179. See Greenburg, supra note 133, at 1 ("'The fear is that the Supreme Court in recent times has been rather hostile to affirmative action,' said Antonia Hernandez, president and general counsel of Mexican American Legal and Educational Defense Fund, or MALDEF, which supported the school board. 'The concern was this case was going to be more of a vehicle for destroying what's left of affirmative action, rather than dealing with the facts of the case and allowing civil rights lawyers to put the best case forward.'") (citation ommitted); see also Hentoff, supra note 107, at 20 ("[Debra Williams] was also abandoned, of course, by Jesse Jackson, Hugh Price of the National Urban League, and Kweisi Mfume of the NAACP, among other members of the Black Leadership Forum. They felt they had urgent responsibilities to blacks in the mass because the Piscataway case looked like a sure loser. And the Supreme Court could bring down many affirmative action gains in hiring and admissions throughout the country."); Kathleen M. Sullivan, Supreme Court Avoidance; On Piscataway, Strategy and the High Court, WASH. POST, Dec. 7, 1997, at C1.
180. Oral argument had been scheduled for January 14, 1998. See Paula Alexander Becker, Affirmative Action and Reverse Discrimination: Does Taxman v. Board of Education of the Township of Piscataway Define the Outer Limits of Lawful Voluntary Race-Conscious Affirmative Action?, 8 SETON HALL CONST. L.J. 13, 15 n.14 (1997).
181. See Melissa Henneberger, On Race, an Optimist in an Unlikely Place, N.Y. TIMES, Dec. 14, 1997, § 14, at 2. Of the settlement, Ms. Taxman received $186,000, which reflects the $144,000 of back pay awarded by the district court plus interest, and her lawyer received $247,500.
182. See Linda Greenhouse, Affirmative Action Settlement: The Overview, N.Y. TIMES, Nov. 22, 1997, at A1.
183. See Abby Goodnough, Financial Details Are Revealed in Affirmative Action Settlement, N.Y. TIMES, Dec. 6, 1997, at A1 [hereinafter Goodnough, Financial Details];
184. Abby Goodnough, Why Piscataway Decided to Avoid Spotlight, N.Y. TIMES, Dec. 2, 1997, at B5 [hereinafter Goodnough, Avoid Spotlight].
185. See Goodnough, Avoid Spotlight, supra note 152, at B5. The Black Leadership Forum, a group of the leaders of a dozen major civil rights groups including the Urban League and the NAACP Legal Defense and Educational Fund, was the leadership of the coalition. See Greenhouse, supra note 151, at A1.
186. See Piscataway Township Bd. of Educ. v. Taxman, 521 U.S. 1117 (1997). But cf. Honig v. Doe, 484 U.S. 305, 330 (1988) (Rehnquist, C.J., concurring) ("I . . . would go still further in the direction of relaxing the test of mootness where the events giving rise to the claim of mootness have occurred after our decision to grant certiorari or to note probable jurisdiction.").
187. See supra note 26 and accompanying text.
188. Hentoff, supra note 107, at 20.
189. See Roger Abrams, Diversity Defenders Await Post-Taxman Battles, N.J. L.J., Dec. 29, 1997, at 23 ("The Taxman case was a very poor vehicle to re-examine the constitutionality of race-conscious decision making, Why? Because, by stipulation, race was the only factor that distinguished the two candidates for purposes of deciding who should be laid off. That, of course, could never be true and is never true, except in a law school hypothetical, in a stipulated case such as this one or in the minds of advocates who pray for a return to the old days, when the old-white-boy network determined who would stay and who would go.");
190. see also Barry Bearak, Rights Groups Ducked a Fight, Opponents Say, N.Y. TIMES, Nov. 22, 1997, at A1 ("There is an old adage that bad cases make for bad law, and this was one of the worst cases imaginable for defenders of affirmative action,' said Hugh B. Price, president of the National Urban League, which is part of the leadership forum. 'This case has such a narrow set of circumstances,' Mr. Price said, 'and the fear was that this case could spill over into other factual situations. The Court has ruled that race can be used as one factor in promoting diversity and you wouldn't want a wide ruling that changes that.'");
191. John Kolbe, Affirmative Action Backers Try to Buy Their Own Justice, ARIZ. REPUBLIC, Nov. 30, 1997, at H5 ("Kweisi Mfume, director of the National Association for the Advancement of Colored People; defended the settlement on grounds that the Piscataway suit, because of its special facts, was 'inappropriate' to use as a vehicle for judging affirmative action.").
192. Winkfield F. Twyman, Doing the Right Thing: One Lawyer's Sacrifice, SAN DIEGO UNION-TRIB., Nov. 27, 1997, at B9.
193. See Abrams, supra note 157, at 23 ("Recently, the Center for Individual Rights, the right-wing crowd of counter-revolutionary lawyers in Washington which has spearheaded this attack, brought suit against the University of Michigan and then separately against the University of Michigan Law School. Another suit against the University of Washington is in its early stages. These cases, when they are tried, will place the case for affirmative action in a more realistic framework than Taxman.").
194. See id. ("Although conservative groups had salivated at the prospect of winning big in Taxman, they will have to wait for years to get another chance to kill off racial equity. Eventually, the Supreme Court will hear the cases that will determine the future of our commitment to diversity.").
195. See supra notes 106-23 and accompanying text.
196. Cf. Stearns, supra note 82, at 1315.
197. Nevertheless, Chief Justice Rehnquist has argued that once the Supreme Court has granted certiorari or noted probable jurisdiction, mootness doctrine should not necessarily prohibit the Court from hearing the case if subsequent events have rendered it moot. See, e.g., Honig v. Doe, 484 U.S. 305, 329-32 (1988) (Rehnquist, C.J., concurring).
198. See supra note 1.
199. See, e.g., U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 20 (1994) ("After we granted the petition [for certiorari] . . . and received briefing on the merits, Bancorp and Bonner stipulated to a consensual plan of reorganization, which received the approval of the Bankruptcy Court. The parties agreed that confirmation of the plan constituted a settlement that mooted the case.") (citation omitted).
200. See Bearak, supra note 157, at A1 ("They were ready to fight and the other guy backed out, disappointed affirmative action opponents said yesterday, complaining that the $433,500 settlement in the Piscataway, N.J. case amounted to hush money paid by frightened civil rights groups."); Sullivan, supra note 149, at C1 ("When civil-rights groups engineered a sudden settlement last month of a major affirmative action case before the Supreme Court, mooting the case and preventing the court from reaching any ruling, many professed to be shocked, shocked, that the court's docket could be so manipulated.").
201. The Tax Court is established under Congress' power to "lay and collect taxes." U.S. CONST. art. I, § 8, cl. 1; see also I.R.C. § 7441 (1999).
202. U.S. CONST. art. I, § 8, cl. 18; see also Martin H. Redish, Legislative Courts, Administrative Agencies, and the Northern Pipeline Decision, 1983 DUKE L.J. 197, 198.
203. The Tax Court was established by Int. Rev. Code of 1954, § 7441, as amended by Pub. L. No. 91-172, § 951, 83 Stat. 730 (1969).
204. See Barnard v. Thorstenn, 489 U.S. 546 (1989). The territorial courts are those in Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa. See 56 CHARLES ALAN WRIGHT, LAW OF FEDERAL COURTS § 11 (5th ed. 1994).
205. See Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 67 n.18 (1982) ("Congress' power to create legislative courts to adjudicate public rights carries with it the lesser power to create administrative agencies for the same purpose, and to provide for review of those agency decisions in Art. III courts."). But see id. at 113 (White, J., dissenting) ("[T]here is no difference in principle between the work that Congress may assign to an Art. I court and that which the Constitution assigns to Art. III courts."); see also Murray's Lessee v. Hoboken Land & Improvement Co., 18 U.S. (1 How.) 272, 284 (1856) ("At the same time there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are susceptible of judicial determination, but which congress may or may not bring ivithin the cognizance of the courts of the United States, as it may deem proper.").
206. See Northern Pipeline, 458 U.S. at 70.
207. See Herbert C. Shelley et al., The Standard of Review Applied by the United States Court of Appeals for the Federal Circuit in International Trade and Customs Cases, 45 AM. U. L. REV. 1749, 1826 n.427 (1996) ("Article III courts are structurally more independent than their legislative counterparts (Article I courts) . . . . This is due to: (1) the life tenure afforded Article III judges; (2) Article III courts not being connected to any particular government agency; (3) Article III courts having their jurisdiction largely defined by the Constitution; and (4) the limitation on reductions in salaries of active Article III judges. Due to this greater degree of independence, it is
208. See I.R.C. § 7482 (West Supp. 1999) (dealing with Tax Court); 28 U.S.C. § 1291 (1994) (dealing with district courts).
209. See Golsen v. Commissioner, 54 T.C. 742 (1970). However, the Tax Court's jurisdiction is limited by statute, so it has no equity jurisdiction. Article I courts such as the Tax Court also do not have jury trials.
210. See I.R.C. § 7453 (West Supp. 1999).
211. 78 T.C. 350 (1982).
212. See id. at 351.
213. See November 3, 1980 Tax Court Transcript at 58, 60-61, Smith, 78 T.C. at 350 (No. 12709-77) [hereinafter Smith Transcript].
214. "A futures contract is an agreement to buy or sell a commodity at some future date for a specified price." Jerry Knight, IRS Seeks to Halt "Silver Butterfly" Tax Write-Offs, WASH. POST, Apr. 6, 1981, at A1.
215. See Smith, 78 T.C. at 352. A small economic loss could occur. See id. at 352-53; see also Samuel C. Thompson, Jr., An Examination of the Effect of Recent Legislation on Commodity Tax Straddles, 2 VA. TAX REV. 165, 167 n.12 (1983) ("Because the legs of the straddle tend to move in opposite directions with any increasing loss on one leg being balanced by increasing profit on the other, the risk of the straddle transaction is limited to the spread, or difference in value, of the legs of the straddle when the taxpayer first enters into the transaction.").
216. See Smith Transcript at 22, 24; Jerry Knight, Regan's Firm Pushed Tax Avoidance Deals, WASH. POST, Dec. 16, 1980, at A1.
217. See Jerry Knight, Silver Butterfly "The Best Little Tax Dodge in America," WASH. POST, Dec. 21, 1980, at G1.
218. The IRS had sent the taxpayers a notice of deficiency dated October 7, 1977. See Memorandum of Law in Support of Motion at 6.
219. See Rev. Rul. 77-185, 1977-1 C.B. 48. This ruling involved a simple straddle, however, not a "butterfly" straddle such as the one involved in Smith.
220. See W. John Moore, Wounded IRS Takes Aim on Tax Straddle Plans, LEGAL TIMES, Apr. 12, 1982, at 1 (quoting IRS Reply Brief).
221. See Smith, 78 T.C. at 362.
222. See Smith Transcript at 40, 59; see also Moore, supra note 188, at 1.
223. See Smith Transcript at 40, 59. The business apparently had earned millions of dollars in commissions. See id.
224. See Jerry Knight, Court Won't Let 2 Couples Drop Suit Against IRS, WASH. POST, Nov. 4, 1980, at D7.
225. See id. The excess amount over the couples' $57,000 tax deficiency was probably to cover the interest on the deficiency, their California state tax liability and interest. See I.R.C. §§ 6601, 6621 (West Supp. 1999) (regulating/governing interest on underpayments of tax); Smith Transcript at 29 (stating that $114,000 would probably cover their deficiencies plus interest; rate of interest was 18%). However, the IRS argued that the $114,000 exceeded the aggregate of those amounts. See id. at 12; Memorandum in Opposition to Petitioners' Notice of Concession at 3 & n.1.
226. The concession was offered on November 3. See Smith Transcript at 1. The trial had been scheduled for November 10, 12, and 13, and December 16 and 17. See id. at 44.
227. See id. at 2, 66.
228. See id. at 63-67; Memorandum of Law in Support of Motion at 1. It is unclear whether the taxpayers' settlement of the suit against Merrill Lynch was contingent on their full concession offer, and whether they received the $114,000 despite Judge Nims' refusal to dismiss the case. Smith is paradigmatic of the effect of a repeat player on one side of the litigation. The IRS would not accept the taxpayers' full concession because it valued the precedent more than the cost of litigating the case.
229. See Smith Transcript at 48; infra note 212 and accompanying text; cf. Mootness, supra note 89, at 1692 (stating that where the mootness doctrine "perpetually frustrate[s] 'the vital importance of keeping open avenues of judicial review,'" the need for review overrides the policies of mootness, and "the Court should not refuse review on the basis of mootness") (quoting Sibron v. New York, 392 U.S. 40, 52 (1968)).
230. A taxpayer is "any person subject to any internal revenue tax." I.R.C. § 7701 (a) (14) (West Supp. 1999). In the context of Smith, the taxpayers were the two couples, the Smiths and the Jacobsons, litigating their tax dispute against the IRS. See Smith, 78 T.C. at 350.
231. See Smith, 78 T.C. at 350; Smith Transcript at 66-67.
232. See Smith, 78 T.C. at 350. Ironically, the IRS's victory was bittersweet. The court's rejection of the IRS's argument that the silver straddles had no economic substance preserved the possibility that other taxpayers with a bona fide, if ill-founded, profit motive could deduct their losses. See IRS to Pursue Past Straddle Abuses, as Industry Circles Wagons, SEC. WK., Sept. 6, 1982, at 6 ("IRS also lost a major straddle test in tax court last spring in the Smith-Jacobson case. In that decision, attorneys point out, the service may have 'won the battle but lost the war.' Straddling by Smith and Jacobson was deemed to be tax-motivated, but the court refused to go along with the IRS's belief in the general invalidity of straddling under pre-1981 law."). The IRS moved for reconsideration of the case, in search of a broader, sweeping precedent. See Moore, supra note 188, at 1. The motion was denied. See id. The IRS continued to litigate the issue, see Landreth v. Commissioner, 859 F.2d 643, 644 (9th Cir. 1988) (citing cases), prompting Congress to act, see id.; H.R. CONF. REP. No. 98-861, at 916-17 (1984), reprinted in 1984 U.S.C.CAN. 697, 1445, 1604-05. In 1984, Congress enacted a provision governing the tax treatment of pre-1981 commodity straddles. See Deficit Reduction Act of 1984, Pub. L. No. 98-369, § 108(a), 98 Stat. 494, 630 (stating that losses from the disposition of one or more positions in a commodity straddle entered into before June 23, 1981 are deductible if the loss was incurred in a transaction entered into for profit). The provision eclipsed Smith in that it provided a statutory rule. See Miller v. Commissioner, 84 T.C. 827, 834, 842 (1985), rev'd, 836 F.2d 1274 (10th Cir. 1988).
233. See infra notes 236-38 and accompanying text.
234. See, e.g., Barrett v. Commissioner, 96 T.C. 713, 720 (1991) ("The policy of the law is to foster the peaceful settlement of disputes without litigation."); Tate & Lyle, Inc. v. Commissioner, 69 T.C.M. (RIA) 661 (1996). The Tax Court generally will not retain jurisdiction after the parties have agreed to a settlement. See LTV Corp. v. Commissioner, 64 T.C. 589 (1975).
235. See Lederman, supra note 48; Meade Witaker, Some Thoughts on Current Tax Practice, 7 VA. TAX REV. 421, 435 (1988) ("Most litigants before the Tax Court are aware that this court encourages settlement of valuation cases, because a settlement by the parties usually results in a better decision at a much earlier date.").
236. As a practical matter, unripe cases cannot be litigated in Tax Court because a notice of deficiency from the IRS and timely responsive petition are jurisdictional requirements. See I.R.C. §§ 6214, 6512(b) (West Supp. 1999); Leandra Lederman, Civilizing Tax Procedure: Applying General Federal Learning to Statutory Notices of Deficiency, 30 U.C. DAVIS L. REV. 183 (1996). Similarly, these requirements mean that a taxpayer must have standing in order to petition the Tax Court. Payment of the deficiency prior to issuance of a notice of deficiency has been held to eliminate Tax Court jurisdiction on the theory that the notice of deficiency is not valid, even if that is contrary to the parties' intent. See, e.g., Standard Oil Co. v. McMahon, 244 F.2d 11, 13 (2d Cir. 1957) ("[I]f prior payment has extinguished the 'deficiency,' there is no jurisdiction in the Tax Court even though this be contrary to the intention of the parties."); Bendheim v. Commissioner, 214 F.2d 26, 28 (2d Cir. 1954); McConkey v. Commissioner, 199 F.2d 892, 893-94 (4th Cir. 1952); Anderson v. Commissioner, 11 T.C. 841, 842 (1948). In addition, settled cases are generally entered by the court as stipulated decisions which means that the court does not generally require parties to continue litigating moot cases.
237. See Anthony v. Commissioner, 66 T.C. 367 (1976). Tax Court cases are somewhat less path-dependent than cases in other courts. If a Court of Appeals case is squarely on point in the Court of Appeals to which appeal would lie, which is the circuit in which the taxpayer resided at the time he petitioned the court, then that precedent controls the Tax Court outcome. See Golsen v. Commissioner, 54 T.C. 742 (1970), aff'd on other grounds, 445 F.2d 985 (10th Cir. 1971). In cases where there is no Court of Appeals precedent on point, the Tax Court develops its own rule, making those cases path-dependent because individual judges decide each case. But cf. Caminker, supra note 78, at 824 n.28 ("The Tax Court most starkly illustrates the duty [to obey hierarchical precedent's] path-dependent nature. Tax Court decisions are reviewable by Article III courts of appeals; which court will review a decision depends on factors such as where the disputed tax return was filed. When the Tax Court can identify in advance the court of appeals with revisory jurisdiction over a particular case, the Tax Court adheres to dial court's precedents. Hence the Tax Court may decide similar cases differently because they are appealable to different federal circuits.").
238. See supra note 93 and accompanying text.
239. If the IRS had accepted the taxpayers' concession and subsequently requested the Tax Court to decide the issue anyway, the Tax Court's willingness to do so would depend on whether the parties had actually entered into a settlement agreement, and whether that agreement had been entered by the court as a stipulated decision. If a party backs out after accepting a concession, but prior to executing a decision document, the Tax Court treats that somewhat similarly to a unilateral full concession offer rejected by the other party, but balances that party's prior acceptance of the concession. See, e.g., Greenlee v. Commissioner, 54 T.C.M. (P-H) 957, 959 (1985) ("In McGowan the substantive issue before this Court affected many taxpayers and the public interest required its resolution. This case is distinguishable in that only the petitioner and Greenlee, Inc. will be affected by our decision."); Smith v. Commissioner, 34 T.C.M. (P-H) 1252 (1965) (accepting IRS's concession and issuing an opinion reciting the facts of the case and acceptance of the concession). By contrast, if the parties have actually entered into a settlement agreement and one party subsequendy seeks to be relieved of that agreement, the Tax Court takes a stricter stance. The party seeking modification . . . must show that the failure to allow the modification might prejudice him . . . . Discretion should be exercised to allow modification where no substantial injury will be occasioned to the opposing party; refusal to allow modification might result in injustice to the moving party; and the inconvenience to the Court is slight. Adams v. Commissioner, 85 T.C. 359, 375 (1985) (citations omitted). However, Judge Parr recently expressed her view that the Tax Court has a right to reject even a bilateral settlement agreement. I write separately . . . to emphasize that nothing in the majority opinion should be understood to limit the sound discretion of the Court to reject an agreement between the parties, where good cause is shown and the interests of justice require it. It is easy to imagine a situation, not here present, where an agreement between the parties may not be in the interests of justice. For instance, agreements that would abuse the process of this Court, or that would usurp the Court's control over its calendar, or that would be contrary to sound public policy should not be enforced. Dorchester Indus., Inc. v. Commissioner, 108 T.C. 320, 343 (1997) (Parr, J., concurring). If the motion is on the eve of trial, and a trial date has been canceled in reliance on the parties' purported settlement agreement, the moving party ha[s] to satisfy standards akin to those applicable in vacating a judgment entered into by consent: "In such cases, the parties are held to their agreement without regard to whether the judgment is correct on the merits." Absent a showing of lack of formal consent, fraud, mistake, or some similar ground, a judgment entered by consent will be upheld. Id. at 335 (reviewed by the full court) (quoting Stamm Int'l Corp. v. Commissioner, 90 T.C. 315, 322 (1988)); see also Mearkle v. Commissioner, 87 T.C. 527, 528 (1986), rev'd and remanded, 838 F.2d 880 (6th Cir. 1988). Thus, if a stipulated decision had been entered, the Tax Court would be unlikely to override the parties' agreement ending the Tax Court's involvement in the case unless one party subsequently sought relief from that decision. In that situation, Merrill Lynch would have been as successful in Smith as the Black Leadership Forum was in Piscataway, discussed above, demonstrating that the agreement of the parties to the case to a settlement is key, at least in Tax Court. See supra notes 132-78 and accompanying text. Apparently, the Tax Court's position is that the parties' agreement is of foremost importance. If the parties have agreed to a bilateral settlement and one party later changes its mind, the court will apply a very deferential level of review because agreement did exist at one time. On the other hand, if the objecting party never accepted a full concession proposal, the Tax Court views the parties as still litigating and therefore subject to its decision-making power.
240. See Smith Transcript; Memorandum of Law in Support of Motion; Memorandum in Opposition to Petitioners' Notice of Concession.
241. See, e.g., McGowan v. Commissioner, 67 T.C. 599 (1976) (stating that in the interest of justice, Tax Court could retain jurisdiction despite the willingness of the IRS to concede the entire case); Hisacres New Thought Ctr. v. Commissioner, 32 T.C.M. (P-H) 726 (1963) (holding for taxpayer in the underlying case despite taxpayer opposition to IRS motions to completely concede all issues); Smith Transcript at 2.
242. See McGowan, 67 T.C. at 599 (1976); Hisacres, 32 T.C.M. (P-H) at 726. Neither case has been cited very often. McGowan was cited in one case for its substantive outcome, and the court ruled consistently with it. See Trujillo v. Commissioner, 68 T.C. 670, 672 (1977). Hisacres has not been cited for its substantive position.
243. See Lederman, supra note 48, at 342.
244. Smith was therefore a case of first impression on this procedural issue. See Smith Transcript at 63.
245. See, e.g., LTV Corp. v. Commissioner, 64 T.C. 589 (1975). The reason why, absent third-party intervention such as in Smith, a taxpayer might reject a "full concession" offered by the IRS in a Tax Court case is because of the nature of tax litigation. Taxes are computed annually, and each year is a separate cause of action, so the Tax Court's jurisdiction is over a particular tax year or years, specifically, those for which the taxpayer received a notice of deficiency and timely petitioned the court. See Commissioner v. Sunnen, 333 U.S. 591 (1948). A "full concession" by the IRS might leave the taxpayer open to subsequent disputes with the IRS in other years if the issue is a recurring one, so the taxpayer might prefer to reject the concession and litigate in order to obtain a precedent. Theoretically, the settlement amount could be adjusted to compensate the taxpayer for this inconvenience, but the IRS is not in a position to "bribe" a taxpayer to accept a settlement, or even to promise to forego audit of other years. But cf. Doctors Hill & Thomas Co. v. United States, 392 F.2d 204, 204-05 (6th Cir. 1968) (describing a situation in which the IRS offered taxpayer company not only the taxes claimed as a refund, but all the taxes the company had paid for that year).
246. See Smith Transcript at 63.
247. Judge Nims seemed concerned about taxpayer "manipulation" of the system by conceding, at the "eleventh hour," a case that was ready to go to trial. See Smith Transcript at 48.
248. See Smith Transcript at 57-59.
249. See supra note 191 and accompanying text.
250. See, e.g., Hisacres New Thought Ctr. v. Commissioner, 32 T.C.M. (P-H) 726 (1963) (finding in favor of taxpayer who opposed IRS motions to concede all issues on the ground that the issues were recurrent).
251. See McGowan v. Commissioner, 67 T.C. 599, 607-08 (rejecting IRS's concession where opinion would likely have precedential value to a large number of taxpayers).
252. See Cape Fox Corp. v. Commissioner, 63 T.C.M. (CCH) 3184 (1992); cf. LTV Corp. v. Commissioner, 64 T.C. 589 (1975).
253. Oddly enough, despite its interest in precedent, the Tax Court has a history of selective disclosure of its opinions. Its opinions in small tax cases were not publicly available for quite a while, in spite of the Code's requirements that Tax Court opinions be public documents. See Leandra Lederman, Tax Court S Cases: Does the 'S'Stand for Secret?, 79 TAX NOTES 257 (1998).
254. See supra notes 26-27 and accompanying text.
255. Although the taxpayer is the one who actually brings Tax Court litigation, functionally the taxpayer is the defendant. See Lederman, supra note 221.
256. The parties did disagree on whether the court should decide the case, but that is not the kind of adversariness that leads to clear, partisan presentation of the underlying tax issues. They were no longer adversaries on those issues.
257. See Fiss, supra note 8, at 1085 ("In our political system, courts are reactive institutions. They do not search out interpretive occasions, but instead wait for others to bring matters to their attention. They also rely for the most part on others to investigate and present the law and facts. A settlement will thereby deprive a court of the occasion, and perhaps even the ability, to render an interpretation.")
258. See supra notes 28-32 and accompanying text.
259. See supra note 32 and accompanying text.
260. See Izumi Seimitsu Kogyo Kabushibi Kaishi v. U.S. Phillips Corp., 510 U.S. 27, 41 (Stevens, J., dissenting) ("The public interest in preserving the work product of the judicial system should always at least be weighed in the balance before such a motion [vacatur] is granted."); see also supra text accompanying note 45.
261. See infra notes 235-38 and accompanying text.
262. See supra note 1.
263. See supra notes 50-64 and accompanying text.
264. See Cordray, supra note 20, at 36 ("Settlement is favored in the law for a variety of reasons. From a practical standpoint, settlements significantly ease the burden on courts. When parties resolve their dispute through settlement rather than full litigation, the growing pressure on court dockets is relieved. Settlement thus enables courts to conserve scarce judicial resources and to reduce their considerable backlog. Settlement is, as a result, 'indispensable to judicial administration.'") (quoting Janneh v. GAF Corp., 887 F.2d 433, 435 (2d Cir. 1989)); see also Carrie Menkel-Meadow, Whose Dispute Is It Anyway?: A Philosophical and Democratic Defense of Settlement (In Some Cases), 83 GEO. L.J. 2663, 2665 (1995) ("While court administrators, judges, and some lawyers suggest that we must continue to mine the advantages of settlement for caseload reduction, or equity among claimants, especially in mass torts or class action settings, many legal scholars continue to express concern with the use of settlement as a device for resolving our legal disputes.") (citations omitted).
265. 28 U.S.C. §§ 471-82 (1994). It may encourage settlement. See Menkel-Meadow, supra note 232, at 2665.
266. See Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981) ("The purpose of Rule 68 is to encourage the settlement of litigation.").
267. See Anne-Therese Bechamps, Sealed Out-of-Court Settlements: When Does the Public Have a Right to Know?, 66 NOTRE DAME L. REV. 117, 129 (1990) ("Unquestionably the interest in encouraging settlements is important. The fact that the Federal Rules of Evidence exclude settlements and offers of settlement from the realm of admissible evidence is indicative of this strong public policy.").
268. See 9 U.S.C. §§ 1-14 (1994) (regulating maritime transactions); see also 5 U.S.C. § 581 (1996 & Supp. 1999) (promoting alternative dispute resolution).
269. See supra notes 229-32 and accompanying text.
270. See, e.g., In re Warner Communications Sec. Litig., 618 F. Supp. 735, 740 (S.D.N.Y. 1985), aff;d, 798 F.2d 35 (2d Cir. 1986) (starting from "the familiar axiom that a bad settlement is almost always better than a good trial."); Henry E. Klingeman, Note, Settlement Pending Appeal: An Argument for Vacatur, 58 FORDHAM L. REV. 233, 233 n.1 (1989) ("District judges can encourage and participate in settlement negotiations through conferences. . . . The circuit court may also require a prehearing conference. . . . Rule 33 provides in pertinent part that '[t]he court may direct the attorneys for the parties to appear before the court or a judge thereof for a prehearing conference to consider the simplification of the issues and such other matters as may aid in the disposition of the proceeding by the court . . . .' The Second Circuit Court of Appeals employs staff counsel who conduct pre-argument settlement conferences.") (citations omitted) (quoting FED. R. APP. P. 33); cf. In re Memorial Hosp., 862 F.2d 1299, 1302 (7th Cir. 1988) ("It is hard to be against settlement."); Galanter & Cahill, supra note 21, at 1368 ("In addition to settlement promotion by trial judges, there are many settlement programs in other arenas, including at the appellate level. One success story reported significant increases in the settlement rates achieved by an appellate prehearing program.").
271. See generally Lisa Bernstein, Understanding the Limits of Court-Connected ADR: A Critique of Federal Court-Annexed Arbitration Programs, 141 U. PA. L. REV. 2169 (1993).
272. See Galanter & Cahill, supra note 21, at 1387 ("Courts have taken a full turn from settlement as accommodation within the structure of public rules to the dismantling of that structure as participants engage in the pursuit of settlement.").
273. See ERIK MOLLER ET AL., RAND CORP., PRIVATE DISPUTE RESOLUTION IN THE BANKING INDUSTRY 32 (1993) ("Cases that are resolved outside the traditional court system cannot be used to test current judicial interpretation. Courts not only resolve disputes but also establish, reinforce, and revise standards of conduct through their written disputes. No private ADR mechanism can serve this function. And if whole categories of cases are removed from public scrutiny, how appropriate changes in the common law and in statutory interpretation might be accomplished becomes a serious question.");
274. see also Monica L. Warmbrod, Comment, Could an Attorney Face Disciplinary Actions or Even Legal Malpractice Liability for Failure to Inform Clients of Alternative Dispute Resolution?, 27 CUMB. L. REV. 791, 804 (1996) ("Even though the parties have come to an agreement, settlement of some cases may deprive the public interest of precedent and guidance for future conduct.")
275. (citing H. Lee Sarokin, Justice Rushed Is Justice Ruined, 38 RUTGERS L. REV. 431, 433 (1986)).
276. See supra note 3; Galanter & Cahill, supra note 21, at 1386-87.
277. Settlements have so captivated many judges and policymakers that general effects are gladly sacrificed to secure settlements. Many courts are willing to destroy or alter precedent in an adjudicated case for the sake of a subse-quent settlement by the parties. In doing so, courts find more compelling "the interests of private litigants in ending litigation through settlement" than the interests of the public in the finality and precedential value of judgments. . . . What makes the processes of vacatur and stipulated reversals so interesting and disturbing is the willingness of courts to erase or manipulate precedent to promote a settlement. Id. (quoting Jill E. Fisch, Rewriting History: The Propriety of Eradicating Prior Decisional Law Through Settlement and Vacatur, 76 CORNELL L. REV. 589, 591 (1991)).
278. See supra notes 50-64 and accompanying text.
279. See supra notes 20-23 and accompanying text.
280. Cf. Purcell, supra note 130, at 904 ("Disputes between private litigants have public significance for another reason: they are adjudicated in a public courtroom. The courtroom is staffed by judges, clerks, and bailiffs whose salaries are paid by the government. The costs of litigation are certainly burdensome, but the existence of government courts allows litigants to avoid paying an arbitrator to hear their case.")
281. See, e.g., J.S. KAKATIK & R.L. ROSS, RAND CORP., COSTS OF THE CIVIL JUSTICE SYSTEM: COURT EXPENDITURES FOR VARIOUS TYPES OF CIVIL CASES (1983),
282. cited in Brunet, 1985 Survey of Books Relating to the Law: IV. Politics, Government and Public Affairs: Measuring the Costs of Civil Justice, 83 MICH. L. REV. 916, 916 (1985) (stating that the federal cost of civil litigation was $2.2 billion in fiscal year 1980);
283. RICHARD POSNER, ECONOMIC ANALYSIS OF LAW 493 (3d ed. 1986) (stating that the government provides judges' salaries and courthouses); Trubeck et al., supra note 30, at 78-79 ("[E]ven if both lawyers and clients gain from litigation, it does not follow that litigation is a cost-effective process for society. The simple fact that taxpayers rather than litigants pay the cost of operating the courts shows why calculations of social and private costs must diverge.").
284. See William M. Landes & Richard A. Posner, The Economics of Anticipatory Adjudication, 23 J. LEGAL STUD. 683, 689 (1994).
285. See supra note 45 and accompanying text.
286. See Lederman, supra note 48; Shavell, supra note 31.
287. See Shavell, supra note 31.
288. See Lederman, supra note 48; Rachlinski, supra note 60, at 171, 172 (explaining that lawyers might frame settlement offers as "gains" rather than "losses," thus encouraging the client to settle, or they might do the opposite).
289. See Lederman, supra note 48.
290. See id.; cf. Galanter & Cahill, supra note 21, at 1364 ("[B]ecause parties differ in their ability to secure shares of these savings [from avoiding litigation], settlement may add another layer of departure from equity. It is sometimes claimed that judicial intervention can offset such an effect, leading to more equitable distribution of the exchange surplus. But no systematic studies have examined this claim.") (footnote omitted).
291. See Carlton M. Smith, Innovative Settlement Techniques Can Reduce Litigation Costs, 78 J. TAX'N 76, 80 (1993)
292. ("[In a Tax Court chambers conference, the] judge also may ask the parties if they would be interested in hearing the judge's tentative views on how he or she would rule in the case, assuming the parties presented the evidence they said they would present. The judge sometimes will give his or her views as a percentage, as in: 'I think there is a 60% chance I will rule for the petitioner on this issue.' Giving views in this way often lends to quick settlements on the stated percentage basis."). Smith also notes, "A less common form of mediation that the judges employ in chambers conferences is to ask the parties if they would be willing to inform the judge of their settlement range without the other party being present. After the parties jointly discuss the case with the judge, the judge will speak to the parties separately (often with a law clerk present as a witness) to learn their settlement ranges. If the judge sees an overlap in those ranges, he may call the parties back into the room jointly and tell the parties that an overlap exists and even suggest a settlement number that both parties could live with." Carlton M. Smith, J. TAX'N 78 76( 1993 Id.;
293. see also Judith Resnik, Managerial Judges, 96 HARV. L. REV. 374, 376 (1982) ("Many federal judges have departed from their . . . relatively disinterested pose to adopt a more active, "managerial" stance. In growing numbers, judges are not only adjudicating the merits of issues presented to them by litigants, but also are meeting with parties in chambers to encourage settlement of disputes and to supervise case preparation. Both before and after the trial, judges are playing a critical role in shaping litigation and influencing results.").
294. See Lederman, supra note 48.
295. See, e.g., Jill E. Fisch, Rewriting History: The Propriety of Eradicating Prior Decisional Law Through Settlement and Vacatur, 76 CORNELL L. REV. 589, 591 n.8 (1991) ("To the extent that settlement has the effect of reducing docket congestion and resolving cases without further consumption of judicial resources, it obviously serves public as well as private interests.").
296. See Robert Scott Lewis, Recent Decision: U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership: Settlement Conditioned on Vacatur?, 47 ALA. L. REV. 883, 892 n.72 (1996) ("Much can be said for settlement; at a minimum it concludes one dispute and allows scarce judicial resources to be used in other pending litigation.")
297. (citing Thomas D. Lambros, The Future of Alternative Dispute Resolution, 14 PEPP. L. REV. 801 (1987)).
298. Cf. In re Memorial Hosp., 862 F.2d 1299, 1303 (7th Cir. 1988) ("Judges must have at heart the interests of other litigants in future cases, and hold them equal in weight with the interests of today's.").
299. Cf. Fiss, supra note 8, at 1075 ("I do not believe that settlement as a generic practice is preferable to judgment or should be institutionalized on a wholesale and indiscriminate basis. It should be treated instead as a highly problematic technique for streamlining dockets.").
300. 78 T.C. 350 (1982), aff'd, 820 F.2d 1220 (4th Cir. 1987).
301. See Smith Transcript at 10-11. As Your Honor knows better than I do, the Court is being inundated with petitions. When I became admitted to this Court; which was about eight years ago; it was normal to have 8,000 or 9,000 cases a year. I believe that it's no overstatement to say that this year approximately 20,000 cases will be docketed . . . . And what [Smith and Jacobson] have done is they have induced the Respondent and the Court to waste its [sic] time . . . . This court will now - as a result this Court will now be the recipient of hundreds or thousands of domestic silver straddle cases which there's no prospect of resolving. I think at this point it's interesting - the Court should consider that we spent about six months getting this case ready for trial . . . . There are 13 cases docketed before the Court with similar issues. If we devote our energies to those court cases and it happens again, there's no doubt that two years down the road we could be in the same situation and the Court will now have 3,000 domestic silver straddle cases. Id. 260 Id. at 48.
302. See supra text accompanying note 236.
303. See Galanter & Cahill, supra note 21, at 1364 ("There has been a tremendous push in recent years to encourage settlement with an eye to lowering the demands on courts. By definition, settlements mean there is less that courts have to do.").
304. See Fiss, supra note 8, at 1086. ("I recognize that judges often announce settlements not with a sense of frustration or disappointment, as my account of adjudication might suggest, but with a sigh of relief. But this sigh should be seen for precisely what it is: It is not a recognition that a job is done, nor an acknowledgment that ajob need not be done because justice has been secured. It is instead based on another sentiment altogether. Namely, that another case has been 'moved along,' which is true whether or not justice has been done or even needs to be done. Or the sigh might be based on the fact that the agony of judgment has been avoided."); cf. Richard A. Posner, What Do Judges and Justices Maximize? (The Same Thing Everybody Else Does), 3 SUP. CT. ECON. REV. 1, 21 (1993). If, by contrast, judges were paid by the number of cases they tried, they would have an incentive to discourage settlement unless settlements attracted more "business" in the form of cases filed there, instead of in another court, that would go to trial. If they were paid by the number of suits resolved, they might have an incentive to encourage settlement, in order to resolve more cases in a given time period.
305. Cf. Willis L.M. Reese, The Contractual Forum: Situation in the United States, 13 AM. J. COMP. L. 187, 188-89 (1964) (asserting that historical hostility to forum-selection clauses may partly be explained by judges being paid by the case).
306. Sarokin, supra note 1, at 432.
307. Id. at 432-33. But cf. Lauren K. Robel, Grass Roots Procedure: Local Advisory Groups and the Civil Justice Reform Act of 1990, 59 BROOK. L. REV. 879, 905 n.144 (1993) ("For this section, I excluded comments from judges. This one was typical, however: 'The [Civil Justice Reform Act] was well-intentioned, but based on two false premises: [one of which is that] docket problems are the result of lazy federal judges (I work harder now than when I was a lawyer).'").
308. See supra note 5 and accompanying text.
309. No one should be forced to litigate against his will. Cf. Fiss, supra note 8, at 1085 (arguing that parties should not be forced to commence litigation). But see Smith Transcript (requiring taxpayer couples to continue litigating despite their expressed desire to concede the case).
310. See supra text accompanying note 48.
311. See supra notes 104-06 and accompanying text.
312. See supra text accompanying note 104.
313. See supra text accompanying notes 149-51.
314. Of course, it is possible that the case would not have settled without the intervention of the civil rights groups. But since it is the parties' right to agree to settle a case, the fact that money towards the settlement was provided by third parties, with no strings attached, does not seem objectionable.
315. See Zellar, supra note 18, at 871.
316. Piscataway provided an easier case in which to engineer a settlement than some employment discrimination cases because only monetary damages were at issue; Ms. Taxman had been reinstated after a two-year hiatus. See Linda Greenhouse, Affirmative Action Settlement: The Overview, N.Y. TIMES, Nov. 22, 1997, at A1. The settlement was only for the back pay and fringe benefits the District Court had ordered, plus interest, not for punitive damages or emotional distress damages.
317. See Honig v. Doe, 484 U.S. 305, 330 (1988) (Rehnquist, C.J., concurring) ("Such a rule would likely have three effects: (1) The number of petitions for certiorari might decline slightly, as parties and their attorneys become aware of the obligation and liability to see the case through to decision; (2) it would likely discourage settlements after certiorari had been granted, since the settlement would be meaningless (assuming a Court decision post-settlement would apply to the parties too, not just as precedent for third parties); and (3) it might encourage settlements between the time of the petition for certiorari and the decision on the petition.").
318. See U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 20 (1994). That case settled after the Supreme Court granted the petition for a writ of certiorari and was briefed on the merits of the case. See supra note 91.
319. See supra note 165.
320. Cf. Fiss, supra note 8, at 1085 (stating that parties should not be forced to commence litigation).
321. That is, generally a person will incur the costs of litigation, rather than fail to bring suit or settle a lawsuit that has been brought, because the expected value to that person is greater than the expected value of the alternatives. See supra note 51 and accompanying text.
322. See Gail S. Coleman, Overcoming Mootness in the H-2A Temporary Foreign Farmworker Program, 78 GEO. L.J. 197, 217 (1989) ("Moot disputes, often of little importance to either party, are seldom argued with the zeal or passion of adversaries in a live dispute."); Lee, supra note 35, at 668 ("A proceeding between litigants who lack a truly adversarial posture is far less likely to produce a high quality decision than a proceeding between genuinely hostile litigants.").
323. See Pub. L. No. 98-369, § 108, 98 Stat. 630 (1984) (amended 1986) (enacted by the Tax Reform Act of 1984); see also Miller v. Commissioner, 84 T.C. 827, 842 (1985) ("The legislative history makes it clear that Congress was aware of the Commissioner's litigating position on straddles and of our decision in Smith v. Commissioner, 78 T.C. 350 (1982)."). In 1986, Congress amended § 108 of the 1984 Act to clear up conflicting interpretations. See Pub. L. 99-514, § 1808(d), 100 Stat. 2817; Tway v. Commissioner, 63 T.C.M. (RIA) 212 (1993).
324. See, e.g., Kirchman v. Commissioner, 862 F.2d 1486, 1494 (11th Cir. 1989) (citing Smith for proposition that Tax Court must examine the entire transaction); Polakof v. Commissioner, 820 F.2d 321, 324 n.6 (9th Cir. 1987) (citing Smith for proposition that subjective intent at time taxpayer entered transaction is determinative of profit motive); Dewees v. Commissioner, 870 F.2d 21, 35 (1st Cir. 1982) (citing Smith for proposition that uncorroborated testimony that transaction was entered into for profit lacks probative value); United States v. Atkins, 661 F. Supp. 491, 495 (S.D.N.Y. 1987), aff'd, 869 F.2d 135 (2d Cir. 1989) (citing Smith for proposition that existence of profit motive is a fact question on which taxpayer bears burden of proof). But cf. Tway v. Commissioner, 63 T.C.M. (RIA) 212 (1993); Stoller v. Commissioner, 59 T.C.M. (P.H.) 659 (1990); Miller v. Commissioner, 84 T.C. 827 (1985), rev'd, 836 F.2d 1274 (10th Cir. 1988).
325. See supra note 198.
326. See supra note 261. In fact, at one point in 1984, 4400 cases involving pre-1981 commodity straddles were docketed in the Tax Court. See Landreth, 859 F.2d at 645 n.4.
327. See supra note 45 and accompanying text.
328. In fact, Ms. Taxman may have been quite happy to take money away from an interest group that advanced interests that may indirectly have led to her layoff.
329. See supra notes 50-61 and accompanying text.
330. See Cordray, supra note 20, at 9 ("American law treats the settlement agreement as a member of the larger family of private contracts."); see also Zellar, supra note 18, at 871 ("[L]itigation is party-initiated and party-controlled."); Galanter & Cahill, supra note 21, at 1371 (1994) ("[Settlement] . . . involves a process of compromise in the sense that each has sacrificed some part of his claim in order to secure another part.").