A Principal-Agent Theory of En Banc Review

Tom S. Clark

The Journal of Law, Economics, and Organization, 2009, vol. 25, issue 1, 55-79

Abstract: This paper adds to the existing literature on en banc rehearings in two ways. First, I incorporate theoretical results from the literature on Supreme Court certiorari decisions and argue that the ideological direction of panel decisions should influence the probability of en banc rehearing only in conjunction with the panel's ideological predisposition. Second, I build upon existing theories of en banc review by incorporating the multiple levels of the judicial hierarchy into the context in which the circuit decides to hear a case en banc. From these insights, I develop and test three hypotheses about the determinants of en banc review. Specifically, I contend that the ideological relationship between a three-judge panel, the full circuit, and the Supreme Court should all interact with the ideological orientation of the panel's decision when the circuit decides whether or not to review the panel en banc. Original data including all en banc rehearings between 1986 and 1996 are then used to test the theoretical predictions. The empirical analysis provides considerable support for the hypotheses. The findings represent two important advances in the study of the judicial hierarchy: They highlight the strategic interaction between ideological disposition and panel composition in the en banc review process and demonstrate the incentives created by the multiple levels of the federal judiciary. More broadly, the theory and findings developed here have implications for strategic auditing in a political hierarchy. (JEL K40, D72) The Author 2008. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2009
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