Rethinking the Principal-Agent Theory of Judging Jonathan R. Nash Professor of Law Emory University Rafael I. Pardo Robert T. Thompson Professor of Law

Models of Judicial Behavior Attitudinal Model most applicable to Supreme Court Justices Limits to the applicability of the attitudinal model strategic considerations lower court judges aspirations to an appointment to a higher court monitoring by higher courts legal constraints Principal-Agent Hierarchical Models higher courts review lower court decisions to constrain shirking lower courts consider reversal a sufficient sanction to deter at least some shirking

Problems with Principal-Agent Judicial Hierarchical Models Higher court “principals” generally do not select their lower court judge “agents”. Reversal may not mean much to Article III judges who enjoy life tenure and guaranteed salary.

A Natural Experiment? The Federal Bankruptcy System Bankruptcy courts are established as units of the district courts. Bankruptcy court judges Article I judges who serve for renewable 14-year terms Appointed by the courts of appeals Bankruptcy appellate panels (“BAPs”) BAP judges selected by the circuit judicial council from the pool of existing bankruptcy judges BAP judges continue to function as trial judges while serving on the BAP

Bankruptcy Appellate Structure for Core Proceedings

The Federal Bankruptcy Litigation System as the Basis for a Natural Experiment Principals: Circuit court judges have incentives to appoint bankruptcy judges whose ideological preferences mirror their own (Pardo, 2008). Actual agents: (1) bankruptcy court judges appointed by the court of appeals and (2) BAP judges selected by the circuit judicial council

Bankruptcy Court Judge Institutional Constraints on the Voting Behavior of Bankruptcy Court Judges and BAP Judges Voting Capacity Institutional Constraint Bankruptcy Court Judge BAP Judge Likelihood of appeal to court of appeals Relatively lower Relatively higher Proximity to court of appeals Low High Panel effects Extremely rare Yes Proximity to litigants

Hypotheses Hypothesis 1: Judges will cast votes according to different ideological valence depending upon whether they are casting a vote as a bankruptcy court judge or as a BAP judge. Hypothesis 2: The voting behavior of BAP judges will be more ideologically aligned with the ideological leaning of the circuit than will the voting behavior of bankruptcy court judges.

Research Design Focus on votes cast in student-loan-discharge proceedings in consumer bankruptcy cases nontechnical area of bankruptcy law with minimal role (if any) for specialized expertise potential for ideological voting by circuit court judges in debt-dischargeability determinations (Nash & Pardo, 2012) potential for ideological voting by bankruptcy judges in student-loan-discharge proceedings (Pardo & Lacey, 2005; Pardo & Lacey, 2009; Rachlinski, Guthrie & Wistrich, 2006) Collect votes by circuit court judges in BAP circuits in student-loan-discharge proceedings determine whether circuit court judges in BAP circuits vote ideologically in student-loan-discharge proceedings Collect votes cast in student-loan-discharge proceedings during the same time period by bankruptcy judges serving as BAP judges and bankruptcy court judges compare the ideological leanings of votes by bankruptcy court judges and BAP judges (i.e., the agents), and determine the extent to which the voting capacity of the judge predicts the ideological leaning of the vote determine the extent to which the ideological leaning of the circuit predicts the ideological leanings of votes by bankruptcy court judges and BAP judges

Data Sets “Principal” Dataset “Agent” Dataset published and unpublished appellate opinions (1997-2011) by the 1st, 2nd, 6th, 8th, 9th, and 10th Circuits resolving appeals involving issues arising in student-loan-discharge proceedings 46 circuit court opinions and 137 judicial votes “Agent” Dataset published and unpublished appellate opinions (1997-2011) issued by BAPs from the 1st, 2nd, 6th, 8th, 9th, and 10th Circuits resolving appeals involving issues arising in student-loan-discharge proceedings 56 BAP opinions and 168 judicial votes published and unpublished trial opinions (1997-2011) issued by bankruptcy court judges in student-loan-discharge proceedings provided that the judge have cast at least one vote as a BAP judge during the same time period in an appeal involving a student-loan-discharge proceeding 137 bankruptcy court opinions and 137 judicial votes

Variables of Interest: “Principal” Dataset Dependent Variable conservative vote by the circuit court judge Independent Variable judicial ideology (measured by Judicial Common Space (JCS) score)

Logistic Regression Model for Conservative Vote Independent Variable Odds Ratio JCS Score 2.451* (1.040, 5.778) N 135 Adjusted Count R2 0.091 Note: *** p ≤ 0.001, ** p ≤ 0.01, * p ≤ 0.05. Odds ratios presented with 95% confidence intervals in parentheses.

Probability of Conservative Vote by JCS Score

Variables of Interest: “Agent” Dataset Dependent Variable direction of vote by bankruptcy court judge or BAP judge Independent Variables voting capacity of the bankruptcy judge (i.e., as bankruptcy court judge or BAP judge) ideological composition of the circuit

Direction of Vote by Voting Capacity Liberal Conservative Total Bankruptcy Court Judge 77 (45.83) 91 (54.17) 168 (100.00) BAP Judge 70 (51.09) 67 (48.91) 137 (100.00) 147 (48.20) 158 (51.80) 305 (100.00) Note: Row percentages are reported in parentheses. The p-value from a chi-square test with two degrees of freedom is 0.360.

Logistic Regression Model for Conservative Vote Independent Variable Odds Ratio Circuit Median JCS Score 1.120 (0.369, 3.393) N 268 Adjusted Count R2 0.000 Note: *** p ≤ 0.001, ** p ≤ 0.01, * p ≤ 0.05. Odds ratios presented with 95% confidence intervals in parentheses.

Alternative Explanations? Selection process for bankruptcy court judges tends to produce ideological homogenization Insufficient sanctions available to circuit court judges Circuit judicial council does not select BAP judges based primarily on ideological leanings