Political scientists have long been interested in what impact judicial decisions have on their intended audiences. Compliance has been defined as the lower court's proper application of standards the superior court has enunciated in deciding all cases raising similar or related questions. Most studies find widespread compliance in lower courts, with only rare instances of overt defiance.
This Article attempts to address three questions in the extant judicial impact literature. First, existing studies use rather insensitive measures of compliance and thus may fail to identify instances of subtle resistance to higher court rulings. Second, judicial impact literature has a restrained focus on whether the United States courts of appeals or state supreme courts comply with the decisions of the United States Supreme Court while comparatively few studies examine whether United States district courts comply with the precedents of their circuits. Scholars studying judicial politics also less frequently examine the ultimate consumers of judicial policies—the members of society who are subject to the rule the court has announced. Third, if large scale compliance exists, what mechanisms drive it? The caseload data suggest a relatively small likelihood that any individual decision will be heard on appeal. Nonetheless, many scholars assume that, even when the likelihood of reversal is remote, fear of reversal plays an important role in keeping lower courts in line.
The data analyzed in this Article allow us to address each of these questions (the appropriate measure of compliance, the impact of stare decisis at the trial court level and in the consumer population, and the mechanisms driving lower courts to comply with or resist controlling precedent). Specifically, we examine how the district courts in the Second Circuit responded to the decision of the Court of Appeals in Goldberger v. Integrated Resources, Inc., a 2000 case that mandated strict scrutiny by trial court judges of attorneys' fee applications in class actions and admonished trial courts to seek "moderation" in awarding fees. Goldberger strongly suggested that excessively high fee awards had a much greater chance of reversal than excessively low ones. If federal district courts complied with Goldberger, we would expect to see lower fee awards and greater scrutiny of fee requests. We would also expect that plaintiffs' attorneys would moderate their fee requests.
Our empirical analysis yields three primary results. First, Goldberger is not correlated with a general decline either in fee awards or in fee requests. Second, we find that Goldberger did have an impact on fee-setting practices. Third, with the ratio of the award to the request as a measure of the scrutiny with which courts review fee requests, we observe the same general pattern. Overall, our findings might suggest that district courts have complied only imperfectly with the admonitions of the Goldberger opinion. Our data are consistent with a view of Goldberger as an invitation to a dialogue: a request that the district courts which have regular exposure to the issues think harder when awarding attorneys' fees and report back on the results of that reconsideration. Our study suggests that the district courts may be complying with that broader mandate to reconsider and report, and that their consensus view is that the pre-Goldberger approach to the determination of fees in securities class action cases reflected a reasonable accommodation of the competing policies of incentivizing class counsel and protecting the class against excessive awards.
This Article is structured as follows: Part I describes fee awards generally and the Goldberger decision. The section also articulates a number of testable hypotheses concerning the impact of Goldberger. Part II describes how the dataset used in the analysis was constructed and specifies how the variables were defined. Part III contains the empirical analysis. Part IV discusses these results. A brief conclusion follows.