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State supreme courts and judicial review of regulation. .

By expanding the doctrine of state sovereign immunity, the United States Supreme Court has made it increasingly difficult for litigants to bring suit against state institutions as a matter of federal law in federal court. (1) Nevertheless, the option to pursue analogous claims as a matter of state statutory or state constitutional law has been expanded as a result of the heralded renaissance in state constitutional law--the so-called new judicial federalism. (2) In this perspective, we will use the domain of regulatory policy to compare the seeming absence of analysis of state high court (3) decisions relative to that of federal court decisions.

Judicial review has been justified as--among other things--necessary to maintain a separation of powers, as a way to prevent arbitrariness in the law, and as a method to offset the pressure exerted by political interest groups. (4) The debate surrounding judicial involvement in regulatory policy has been accompanied by decades of widespread litigation and several controversial Supreme Court opinions aimed at limiting the judicial review of agencies. (5) To shed light on this debate in the context of state courts, we will compare judicial review by state supreme courts to that of federal courts.

While research has consistently found that regulatory agencies are remarkably successful litigants before the Supreme Court, (6) scholars have not generated nearly as much research at the state level. The last decade, however, has produced several path-breaking studies of the policymaking role of state supreme courts. (7) Such research is considered overdue, since state high courts are the courts of last resort in most cases and their collective caseloads easily dwarf that of the Supreme Court. (8) Furthermore, like the federal appellate courts, state supreme courts create important rules of legal procedure that guide the administration of law for the lower courts handling the bulk of litigation in the United States. (9)

There have been a few studies charting judicial activism in state courts. In the early 1980s, for example, state supreme courts overturned twenty-three percent of the economic regulation cases heard. (10) In contrast, while the issue of civil liberties comprised only eight percent of the cases that were appealed to them, the legislation was overturned in thirty-four percent of the cases. (11)

More recent research concludes that agenda decisions and merit votes of state supreme court justices are strategic depending on the salience of the issue and the independence afforded by the state judicial system. (12) The scholars that have focused on the institutional and political differences among state supreme courts as a way to explain differences in decisions note that courts in industrialized, politically competitive states handle a larger number of regulatory cases. (13) Some of the most sophisticated research of the last decade has focused on determining the effect that judicial selection mechanisms and the institutional arrangements has had on decisions. (14)

As recent years have brought about a new judicial federalism in regulatory policy, we should observe some difference in the activism of state supreme courts relative to that of the federal courts. According to the analysis presented here of a sample of federal circuit cases involving regulation statutes and administrative decisions from 1969 to 1996, it was determined that about thirty-seven percent of regulatory actions are reversed or limited upon review. (15) In the United States Supreme Court, the overall reversal rate over the last several decades has been thirty-nine percent, which is similar to the reversal rate of the circuit courts. (16) Economic regulation cases heavily outnumber social regulation cases, but we do not find a statistically significant difference in the reversal rates in the Supreme Court.

For state supreme courts, it was determined that the overall reversal rate is about thirty-nine percent, and the rates of reversal for social and economic regulations are about the same. (17) Thus, it appears that state supreme courts support agency regulatory decisions in about three-fifths of the cases: A rate quite similar to that of the important federal level courts. We do not find that state supreme courts are being overly activist in overturning regulations, but neither are they more deferential to state agency decisions than are federal judges.

To further explore when and why state courts do reverse regulation decisions, we developed a model using probit--a technique similar to regression. (18) The explanatory variables in the model come from three general categories, the specific results for which we discuss below: (1) those relating to the litigation environment of the particular case; (2) state court-related institutional factors; and (3) broader state political conditions.

Regarding the litigation environment, administrative agency cases are neither more nor less likely to be reversed than other regulations, with all else being equal. The presence of amicus briefs, an indication of the salience of a case, also has no significant impact. However, class action cases, perhaps considered higher profile and affecting more people, are significantly more likely to result in a regulation being reversed. Politically appointed high courts are considerably less likely to overturn regulations compared to those selected under merit retention, while competitively elected justices are also less likely to reverse regulation compared to those in merit commission states. This supports prior research concluding that merit retention appointment systems foster judicial independence, especially when compared to electoral systems. (19) All else being equal, we find that state supreme courts are more likely to reverse regulations in states with a stronger Democratic than Republican Party, though this finding varies with the strength of party control.

A regulation is reversed in 1,046 of the 2,682 cases in our dataset, but very few cases involve the closely watched issues in federal administrative law or new federalism. Out of 1,012 cases involving agency action, only 104 cases were addressed under the arbitrary and capricious standard--a very deferential standard of review for administrative actions--and of those, only 36 resulted in reversal. Another 402 cases raise the clearly erroneous standard, and 141 of these cases ended in regulatory reversal. The high courts considered government immunity in only 43 cases represented in our data, and in only slightly more than half--23--was the regulation upheld. Jurisdictional issues such as a lack of controversy, mootness, ripeness, or standing were present in 392 cases, 148 of which resulted in a regulation overturn. (20)

Thus, it seems that state supreme courts overturn state regulations at about the same rate that federal courts overturn regulations--state courts are not appreciably more or less activist in that sense. Factors relating to the litigation environment of the case and to the state court institutions themselves, along with the broader state political environment, all affect the rate of reversals. Still, state regulatory decisions go to court frequently and, by overturning almost two-fifths of regulatory decisions, state courts do play a significant role in shaping specific regulatory policies. As some of these conditions change through the adoption of merit selection plans, the continued use of class action suits to advance public policies, and changes in political competition in the states, the role of state supreme courts in regulatory policy could also change.
Appendix to Graves and Teske, Albany Law Review

Table 1--U.S. Circuit Courts Of Appeal Reversal Of Economic And
Social Regulation (1969-1996): Two-Sample Test Of Proportion

Regulation Type Proportion
 Overturned

All Regulation 0.367
Cases
Economic ([P.sub.1]) 0.350
Social ([P.sub.2]) 0.459
Difference: ([P.sub.1] - [P.sub.2]) -0.1096
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) < 0
 Z-Score: -2.738
 P < Z = 0.0031

Regulation Type Standard Error of
 Proportion

All Regulation --
Cases
Economic ([P.sub.1]) 0.0157
Social ([P.sub.2]) 0.380
Difference: ([P.sub.1] - [P.sub.2]) 0.0411
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) ~ 0
 Z-Score: -2.738
 P > |Z| = 0.0062

Regulation Type Z-Score

All Regulation --
Cases
Economic ([P.sub.1]) 22.22
Social ([P.sub.2]) 12.088
Difference: ([P.sub.1] - [P.sub.2]) --
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) > 0
 Z-Score: -2.738
 P < Z = 0.9969

Data from the Songer Database: Donald R. Songer, United States Courts
of Appeals Database Phase 3, 1925-1996 at
http://www.polisci.msu.edu/pljp/ctadata.html. Cases involving
safety, environmental regulation, or consumer protection were
deemed social regulation, while takings, taxation, other property
issues, antitrust, securities, and financial regulation were
considered economic regulation.

N = 1090 (All Regulation Cases)
N = 918 (Economic Regulation Cases)
N = 172 (Social Regulation Cases)

Table 2--U.S. Supreme Court Reversal Of Economic And Social
Regulation (1969-2001): Two-Sample Test Of Proportion

Regulation Type Proportion
 Overturned

All Regulation 0.390
Cases
Economic ([P.sub.1]) 0.403
Social ([P.sub.2]) 0.339
Difference: ([P.sub.1] - [P.sub.2]) 0.0639
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) < 0
 Z-Score: 1.586
 P < Z = 0.9437

Regulation Type Standard Error of
 Proportion

All Regulation --
Cases
Economic ([P.sub.1]) 0.0181
Social ([P.sub.2]) 0.350
Difference: ([P.sub.1] - [P.sub.2]) 0.0394
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) ~ 0
 Z-Score: 1.586
 P > |Z| = 0.1126

Regulation Type Z-Score

All Regulation --
Cases
Economic ([P.sub.1]) 22.26
Social ([P.sub.2]) 9.68
Difference: ([P.sub.1] - [P.sub.2]) --
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) > 0
 Z-Score: 1.586
 P < Z = 0.0563

Data from the Spaeth Database: Harold Spaeth, The United States
Supreme Court Database at
http://www.polisci.msu.edu/plip/supremecourt.html. Social
regulation included cases involving safety, environmental
regulation, or consumer protection. Takings, taxation, other
property issues, antitrust, securities, transportation, and
public utilities were denoted economic regulation.

N = 918 (All Regulation Cases)

N = 735 (Economic Regulation Cases)

N = 183 (Social Regulation Cases)

Table 3--State Supreme Courts Reversal of Economic and Social
Regulation (1995-1997): Two-Sample Test of Proportion

Regulation Type Proportion
 Overturned

All Regulation 0.390
Cases
Economic ([P.sub.1]) 0.392
Social ([P.sub.2]) 0.395
Difference: ([P.sub.1] - [P.sub.2]) -0.00339
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) < 0
 Z-Score: -0.092
 P < Z = 0.463

Regulation Type Standard Error of
 Proportion

All Regulation --
Cases
Economic ([P.sub.1]) 0.0154
Social ([P.sub.2]) 0.0333
Difference: ([P.sub.1] - [P.sub.2]) 0.0368
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) - 0
 Z-Score: -0.092
 P > |Z| = 0.927

Regulation Type Z-Score

All Regulation --
Cases
Economic ([P.sub.1]) 25.33
Social ([P.sub.2]) 11.86
Difference: ([P.sub.1] - [P.sub.2]) --
Hypothesis Tests [H.sub.1]: ([P.sub.1] -
 [P.sub.2]) > 0
 Z-Score: -0.092
 P < Z = 0.537

Data are from the Brace and Hall Database: Paul Brace and Melinda
Gann Hall State Supreme Court Data Project at
http://www.ruf.rice.edu/~pbrace/statecourt/. *

N = 2682 (All Regulation Cases)

N = 995 (Economic Regulation Cases)

N = 215 (Social Regulation Cases)

Table 4--Summary Statistics for State Supreme Court Data
(1995-1997)

Variable # Obs Mean Std Dev.

Regulation Overturned 2592 0.390 0.488
Agency Action 2592 0.464 0.499
Class Action 2592 0.025 0.155
Amicus Filed 2592 0.134 0.341
Intermediate Appeals Court 2592 0.795 0.404
Competitive Elections 2592 0.428 0.495
Government Appointed 2592 0.098 0.297
Democratic Control 2592 0.405 0.491
Ranney Folded Index 2592 0.851 0.106
Ranney Index * Dem Control 2592 0.352 0.429

Variable Minimum Maximum

Regulation Overturned 0 1
Agency Action 0 1
Class Action 0 1
Amicus Filed 0 1
Intermediate Appeals Court 0 1
Competitive Elections 0 1
Government Appointed 0 1
Democratic Control 0 1
Ranney Folded Index 0.307 0.993
Ranney Index * Dem Control 0 0.993

* The dataset contains all cases decided by courts of last resort in
each of the fifty states if the court in question decides fewer than
or equal to two-hundred cases. A random sample of two-hundred cases
are taken from those courts issuing more than two-hundred formal
opinions--signed or per curiam--for the years 1995, 1996 and 1997. From
this set of cases, the data identifies those falling into the Civil
Government category and selected from those the decisions in which some
government regulation was at issue. For most observations the dependent
variable, whether the regulation at issue was reversed, could be
discerned by outcome variables such as the identity of the winning
party and whether the court had reversed an administrative action, but
a few cases had to be eliminated due to ambiguities in the outcome.

Table 5--Probit Analysis of State Supreme Court Overturn of
Regulatory Actions and Statutes *

Variable [beta] Z Score P > |Z|
 (SE) **

Agency Action -0.0394 -0.76 0.449
 (0.0520)
Class Action 0.436 2.66 0.008
 (0.163)
Amicus Filed 0.0556 0.74 0.459
 (0.0750)
Intermediate Appeals Ct 0.0402 0.62 0.538
 (0.0654)
Competitive Elections -0.157 -2.79 0.005
 (0.0563)
Government Appointed -0.288 -3.03 0.002
 (0.0952)
Democratic Party Control -0.780 -1.44 0.149
 (0.541)
Ranney Folded Index -0.187 -0.64 0.521
 (0.291)
Ranney Index * Dem Control 1.093 1.75 0.081
 (0.626)
Constant -0.139 -0.55 0.582
 (0.253)

* Dependent variable is coded one (1) for cases in which a regulation
was overturned or limited

** Standard Errors are robust, corrected for clustering on states

N = 2592

Wald [chi square] = 45.95

P < .001

Table 6--Legal Issues and Standards Raised in State Supreme Court
Regulation Cases

Legal Issue Potentially Number of
 Relevant Cases Cases Present

All Challenges to Regulation 2,682 2,682
Arbitrary and Capricious Standard 1,012 104
Clearly Erroneous Standard 1,012 402
Government Immunity 2,682 43
Jurisdictional Questions (All) 2,682 392
 Failure to state a claim 2,682 73
 Standing 2,682 209
 Ripeness 2,682 96
 Mootness 2,682 57

Legal Issue Number of
 Cases Reversed

All Challenges to Regulation 1,046
Arbitrary and Capricious Standard 36
Clearly Erroneous Standard 141
Government Immunity 23
Jurisdictional Questions (All) 148
 Failure to state a claim 20
 Standing 73
 Ripeness 48
 Mootness 23


(1) See, e.g., Kimel v. Florida Bd. of Regents, 528 U.S. 62, 82-83 (2000) (precluding a suit against the state of Florida and finding that the Age Discrimination in Employment Act did not abrogate the states' immunity from suit in federal court); Florida Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627, 635-36 (1999) (affirming a trial court's order of dismissal, which found that Congress had exceeded its power when it provided for a waiver of the states immunity).

(2) See James N.G. Cauthen, Horizontal Federalism in the New Judicial Federalism: A Preliminary Look at Citations, 66 ALB. L. REV. 783 (2003) (recognizing that state courts began to rely more heavily on their own state constitutions after a conservative shift in the United States Supreme Court during the 1970s).

(3) Following other scholars, we use interchangeably the terms "state high courts" and "state supreme courts."

(4) See CASS R. SUNSTEIN, AFTER THE RIGHTS REVOLUTION: RECONCEIVING THE REGULATORY STATE 131-36 (1990) (describing the importance of statutory interpretation and the necessity of checks on the legislature's law-making authority); William N. Eskridge, Jr., Politics Without Romance: Implications of Public Choice Theory for Statutory Interpretation, 74 VA. L. REV. 275, 301-09 (1988) (using public-choice theory to expound the advantages of judicial lawmaking over the legislative process). But see JERRY L. MASHAW, GREED, CHAOS, AND GOVERNANCE: USING PUBLIC CHOICE TO IMPROVE PUBLIC LAW 195-98 (1997) (arguing that judicial review of congressional action impedes effective lawmaking); Frank B. Cross, Shattering the Fragile Case for Judicial Review of Rulemaking, 85 VA. L. REV. 1243, 1245-47, 1255-56 (1999) (asserting that judicial review of agency decisions results in differing interpretations that hinder agency regulatory power).

(5) See e.g., Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 547-49 (1978) (advising that courts should "not stray beyond the judicial province" when exercising judicial review of agency decisions); Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 864-66 (1984) (declaring that agency determinations--because of their expertise--are entitled to deference by the courts).

(6) See Martha Anne Humphries & Donald R. Songer, Law and Politics in Judicial Oversight of Federal Administrative Agencies, 61 J. POL. 207, 208-09 (1999) (noting that administratives agencies have a seventy percent success rate in litigation); see also Donald R. Songer & Reginald S. Sheehan, Who Wins on Appeal? Upperdogs and Underdogs in the United States Courts of Appeals, 36 AM. J. POL. SCI. 235, 253 (1992) (finding that the United States Government--as the litigant with vast resources--is most likely to prevail at the appellate level).

(7) See, e.g., LAURA LANGER, JUDICIAL REVIEW IN STATE SUPREME COURTS: A COMPARATIVE STUDY 123 (2002) (stating that "state supreme court justices do not operate as singularly powerful policymaking actors whose decisions are insulated from external constraints"); Paul Brace et al., Measuring the Preferences of State Supreme Court Judges, 62 J. POL. 387, 393-98 (2000) (offering new methods to discern the judicial preferences of state supreme court judges).

(8) Henry R. Glick, Policy Making and State Supreme Courts, in THE AMERICAN COURTS: A CRITICAL ASSESSMENT 87, 87-88 (John B. Gates & Charles A. Johnson eds. 1991) (reporting that in a sampling of nearly 6,000 decisions from state supreme courts, only two percent of those decisions were appealed to the United States Supreme Court).

(9) See id. at 88 (recognizing that state supreme court decisions are essential to the creation of public policy because of the high volume of cases heard compared to the relatively small number reviewed by the United States Supreme Court).

(10) Id. at 104.

(11) Id.

(12) See LANGER, supra note 7, at 125-27 (presenting the effects of internal factors on the decision making of state supreme court judges).

(13) See Burton M. Atkins & Henry R. Glick, Environmental and Structural Variables as Determinants of Issues in State Courts of Last Resort, 20 AM. J. POL. SCI. 97, 105-10 (1976) (conducting a study on the impact of environmental factors on the volume and types of cases a court is likely to hear).

(14) See Paul R. Brace & Melinda Gann Hall, The Interplay of Preferences, Case Facts, Context, and Rules in the Politics of Judicial Choice, 59 J. POL. 1206, 1206-07 (1997) (studying the effects of electoral politics on judicial voting behavior); Craig F. Emmert, An Integrated Case-Related Model of Judicial Decision Making: Explaining State Supreme Court Decisions in Judicial Review Cases, 54 J. POL. 543, 548-49 (finding that the type of issue raised, the identity of the challenging party, the constitutional arguments advanced, the centrality of the constitutional challenge, and the lower court ruling all have an impact on the state supreme court decision).

(15) Donald R. Songer, United States Courts of Appeals Database, 1925-1996, at http://www.polisci.msu.edu/pljp/ctadata.html (last visited Feb. 26, 2003). For raw data and codebooks, see infra, app. tbl. 1 (providing statistical analysis support). The analysis consists of a two-sample difference of proportions test, which tests whether the difference in the proportion of economic and social regulations reversed differ significantly given the number of cases in each category. See ALAN AGRESTI & BARBARA FINLAY, STATISTICAL METHODS FOR THE SOCIAL SCIENCES, 216-20 (3d ed. 1997) (discussing the comparison of independent samples for a qualitative response variable); cf. Humphries & Songer, Law and Politics, supra note 6, at 215 tbl. 1 (finding that federal administrative agencies were unsuccessful in forty-two percent of their cases over a similar time period). This relatively small difference can be explained by the fact that our sample includes challenges to statutes and to private enforcement suits.

(16) Harold Spaeth, The United States Supreme Court Database, at http://www.polisci.msu.edu/pljp/sctdata1.html (last visited Feb. 26, 2003). For raw data and codebooks see infra, app. tbl.2 (providing supporting statistical analysis). The analysis consists of a two-sample difference of proportions test. See AGRESTI AND FINLAY, supra note 15, at 216-20.

(17) Paul Brace & Melinda Gann Hall, The State Supreme Court Data Project, at http://www.ruf.rice.edu/~pbrace/statecourt.htm (last visited Feb. 3, 2003). For raw data and codebooks, see infra, app. tbls.3-5 (providing statistical analysis). The analysis consists of a two-sample difference of proportions test. See AGRESTI AND FINLAY, supra note 15, at 216-20.

(18) The probit model yields point estimates of a problematic relationship between various explanatory factors and a binary outcome via maximum likelihood. Because the model is nonlinear, the parameter estimates are not marginal effects, so we characterize the results in terms of the significance and of the direction of expected effects; i.e., if a coefficient is positive and large relative to its standard error, an increase can be expected in the related variable to produce an increase in the likelihood of the regulation being reversed in the case. See WILLIAM H. GREENE, ECONOMETRIC ANALYSIS, 812-16 (4th ed. 2000).

(19) See F. Andrew Hanssen, Independent Courts and Administrative Agencies: An Empirical Analysis of the States, 16 J. L. ECON. & ORGANIZATION, 534, 549 (2000).

(20) See infra app. tbl.6

Scott Graves and Paul Teske *

* Professor of Political Science, State University of New York at Stony Brook. B.A., University of North Carolina; Ph.D., Princeton University. Scott Graves, Ph.D. candidate (Political Science), State University of New York at Stony Brook; B.A., M.A., Georgia State University. The analysis herein was calculated solely by the authors using information that provided data of court decisions. See Donald R. Songer, United States Courts of Appeals Database, 1925-1996, at http://www.polisci.msu.edu/pljp/ctadata.html (last visited Feb. 26, 2003); Harold Spaeth, The United States Supreme Court Database, at http://www.polisci.msu.edu/pljp/sctdata1.html (last visited Feb. 26, 2003); Paul Brace & Melinda Gann Hall, The State Supreme Court Data Project, at http://www.ruf.rice.edu/~pbrace/statecourt.htm (last visited Feb. 3, 2003).
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Title Annotation:Perspectives: Federal Jurisprudence, State Autonomy
Author:Graves, Scott; Teske, Paul
Publication:Albany Law Review
Date:Mar 22, 2003
Words:3689
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