The US Supreme Court's Platonic Bankruptcy Code.

• Date: 01 October 2019
• Author: Karlin, James

In the American and English common law systems, courts decide lawsuits between two litigants. Usually, courts base their decisions on existing precedents- previously reported decisions. When there is no clear precedent, or the court does not like the existing precedent, the court devises a new precedent. Even though that new precedent did not actually exist before and so could not have been discovered by the parties to the lawsuit, it nevertheless is the law and binds them because the court in its decision "discovered" the law that existed when the court articulated it.

A foundational legal scholar of the common law, William Blackstone, explained in 1765 (1) that judicial decisions are "evidence" of the law, and that overruled prior cases are not bad law, but rather mistaken evidence of it. The great common law scholar and US Supreme Court Justice Oliver Wendell Holmes wrote that "Judicial decisions have had retrospective operation for near a thousand years." (2) The logic of court "discovery" inexorably conquers all other logic; for example, the Supreme Court upheld in 1898 the invalidation of municipal bonds that were previously found valid, when the court "discovered" it was wrong the first time to validate them. (3)

This is in contrast to legislated law, which generally is not supposed to be "ex post facto," or govern or punish conduct that took place before the law was passed. (4) Statutes, which are enacted by Congress or Parliament, are interpreted and applied by the courts, and although courts often expand or narrow statutes in ways that may differ from their plain text, until quite recently statutes wouldn't seem to have an existence that is completely outside of their texts.

The U.S. Supreme Court, in its May 2019 decision in Mission Products Holdings v. Tempnology,5 held that a trademark licensee was entitled to keep using the trademark even though when Congress changed the Bankruptcy Code to protect intellectual property licensees in a licensor's bankruptcy, it did not include trademarks. (6)

Most noteworthy for purposes of philosophy is language in its opinion by which the Supreme Court characterized the words Congress added to the Bankruptcy Code over time as "legislative interventions":

"Each of the provisions [in the Bankruptcy Code] emerged at a different time, over a span of half a century.... And each responded to a discrete problem--as often as not, correcting a judicial ruling.... Read as generously as possible..., this...