When rules of statutory interpretation change midstream

Clear Statements is a recurring series by Abbe R. Gluck on civil litigation and the modern regulatory and statutory state.

Depending on who you ask, the real “bad old days” at the Supreme Court were the late 1970s. At least that’s the impression one comes away with after reading the briefs in FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., to be argued tomorrow, Wednesday, Dec. 10. The question presented is whether the Investment Company Act of 1940 includes an implied right of action – specifically, an individual right to go to court to rescind a contract that one contends violates this investor-protection statute. But a deeper question implicated by the case is how the court handles statutory interpretation in an era of methodological change.

We were once purposivists, we are now textualists. Yada yada yada. It’s widely accepted that the court has shifted over the past decades from a more eclectic approach to questions of statutory interpretation – which often took into account congressional intent, purpose, and history alongside text – to a modern approach that is increasingly separated from congressional evidence and tethered to text, linguistic rules, and associated presumptions. This shift is core to the current array of disputes about which federal statutes allow individuals to sue to enforce their guarantees.

The question in FS Credit is similar to the question in Medina v. Planned Parenthood, decided at the end of last term. There, the question was whether Medicaid, enacted in 1965, creates a right for beneficiaries to sue to enforce Medicaid’s provision allowing them to select any qualified healthcare provider. The court held that it did not, because Medicaid does not contain what the court says it is now looking for: namely, “unmistakably” clear evidence in the text creating the individually enforceable rights. Along the way, the court criticized “a time in the mid-20th century when ‘the Court assumed it to be a proper judicial function to provide’ whatever ‘remedies it deemed necessary to make effective a statute’s purpose,’” and reflected on the past thusly: “Admittedly, this Court briefly experimented with a different approach, and that fact has given rise to some confusion in the lower courts. For a time … the Court sometimes took an expansive view of its power to imply private causes of action to enforce federal laws.”

In other words, the court’s earlier test to find an implied private right of action did not require magic language. Instead the court would look to whether the statute was enacted for the benefit of individuals like the plaintiffs, seek evidence of legislative intent to create the private remedy, and confirm that doing so would be consistent with the statute’s purpose. Anyone following the court today, of course, knows that this court really does like magic words, across a wide array of contexts. Whether it’s looking for evidence that Congress meant to delegate a “major question” to an agency or in cases like FS Credit, the modern court tends to impose a clarity tax on Congress (one that, not incidentally, raises the cost and difficulty of legislating in the first place).

But the “experiment” with that earlier approach to implied rights was by no means “brief[],” as the court suggested in Medina. The court’s eclectic and purposive approach goes back to the tradition of Blackstone, appearing in famous chestnuts from Church of the Holy Trinity v. United States (decided in 1892 and relying on statutory purpose to interpret the scope of an immigration ban as it applied to a church pastor) to NLRB v. Hearst Publications (decided in 1944 and consisting of a purposive inquiry into the meaning of “employee” under the National Labor Relations Act) to United Steelworkers v. Weber (decided in 1979 and where both the majority and dissent relied on purpose and legislative history to determine application of the Civil Rights Act to affirmative action), and scores more. Those principles were at the core of Harvard’s renowned Legal Process school of interpretation in the 1950s and 1960s, which emphasized that courts should presume, while interpreting, that legislators were “reasonable persons pursuing reasonable purposes reasonably.” They guided much of the court’s work from the New Deal to the rise of Justice Antonin Scalia’s textualism in the 1990s.

This is not to say those approaches were without their weaknesses. It is simply to say that purposivism was not a minor frolic and detour in the history of statutory interpretation. Nevertheless, as the respondents’ brief in FS Credit colorfully notes, “Petitioners (and the United States) spend much of their brief … railing against the bad old days when this Court routinely inferred private damages actions.”

Methodological change can raise tricky questions. Scalia used to say that the most legitimate statutory interpretation rules either reflect how Congress drafts a statute or are background rules Congress knows and drafts against. Chief Justice John Roberts’ opinion in Loper Bright Enterprises v. Raimondo, the case that overruled the 40-year-old approach to administrative deference announced in Chevron v. Natural Resources Defense Council, made a similar claim, namely that the only legitimate statutory interpretation rules are the ones that reflect the “reality” of Congress’ expectations when drafting laws.

But what happens when Congress drafts statutes in the shadow of one statutory interpretation regime (such as one focused on purpose and congressional intent) but the statutes live into, and are litigated under, a different one down the line? It’s hard to argue that the Congress of 1965 that enacted Medicaid could have predicted today’s textualist revolution and so written in a private right of action when “unmistakably” clear language wasn’t previously required or was even a common phrase in the lawyer’s lexicon. Could Congress go through the entire U.S. Code and update every single potential provision where a private right of action could be warranted? Of course it could, in theory. But, in fact, that’s an impossibly tall order for political agenda-setting.

Nor is this challenge confined to the implied rights of action context. Chevron itself was an interpretive rule – defer to reasonable agency interpretations of ambiguous statutory text – against which Scalia himself insisted Congress drafted, a point empirical studies bear out. Now, after Loper Bright, we have a different rule of non-deference. That doesn’t make those statutes drafted between 1984 and 2024 any less ambiguous. It just means the rules of interpretation used on them have now changed midstream.

Students always ask what courts are to do in these moments of methodological transition. Should statutes be interpreted under the rules in place at the time they were drafted? That might be one way to approach the question if the court gave any indication that it actually wants to be in a conversation with Congress when it comes to shared legislative conventions. But the majority of the court does not take that view anymore, increasingly preferring an “ordinary reader” perspective – one that interprets in line with (the fictitious notion of) how the average person would read a statute – over one that, as the court used to emphasize, reflects how Congress drafts, or what Congress intends or expects from the courts.

A time-travel approach to methodological change would also make more sense if we had a defined, precedential, interpretive approach – one where the same rules were applied, in the same way, in every case. We could then take the old rules and apply them today. But we do not have that, and never have had a regularized approach to statutory interpretation in the same way that we have for other written instruments like contracts. Why that goal has proven elusive, or not been a goal at all, is an important topic on which I have written, but it is one for another day. The point is that an interpretive approach that requires the court to interpret a statute under the interpretive rules that utilized when the statute was enacted would be very hard to reconstruct.

To be clear, it’s not a surprise the implied right of action case law has gone down this path – the FS Credit briefs themselves acknowledge the question is, at bottom, one of statutory interpretation. But there are certain areas of the law that, even as they routinely raise questions of interpretation, have nevertheless developed their own sets of interpretive tests. This often occurs in areas that have a particular crossover with an area that implicates the inherent authority and role of federal courts. The judicial power to imply rights of action in federal statutes is one such area. The test the court historically developed was specially tailored to that area and very much in the purposive framework. So now the court has to bring it in line with rest of its modern interpretive approach.

Deference to agencies was another such specialty area. The court developed a unique two-step test in Chevron that expressly incorporated using the “traditional tools of statutory construction.” That was another test tailored to one special set of questions but still framed around the then-current, eclectic approach to statutory interpretation noted above. But the post-Chevron era, as I wrote previously on this blog, is textualist.

Severability doctrine offers a third example – the question of whether, when a court strikes down part of a statute as unconstitutional, it should leave the rest of the statute standing or bring the whole ship down with the sails. The court historically applied a test that, in part, looked to congressional intent. It’s no surprise then, that in recent years, several justices, including Justices Clarence Thomas and Brett Kavanaugh, have been campaigning to move severability to a new test more consistent with the principles of today’s governing textualism. As in the implied rights of action cases, these moves are effectively new glasses for old wine that wasn’t quite made for them. Indeed, every statute passed before the 1990s is to some extent in the same position, written under one interpretive regime, litigated today under another.

The respondents in the FS Credit case see the writing on the wall. They promise the court that “[n]o one is asking this Court to return to the bad old days of the ‘ancient regime,’ when courts felt free to create an implied right of action.” And for that reason, FS Credit probably won’t have much interesting to say about the old wine in new glasses problem. But that doesn’t make it any less challenging for Congress, which cannot possibly predict how the court’s interpretive approach will evolve over time or amend statutes every time the court changes its interpretive approach – especially during a moment when the court does not really seem to paying much attention to being in dialogue with Congress in the first place.