What Is Stare Decisis?
Stare decisis is a legal doctrine that obligates courts to follow historical cases when making a ruling on a similar case. Stare decisis ensures that cases with similar scenarios and facts are approached in the same way. Simply put, it binds courts to follow legal precedents set by previous decisions.
Stare decisis is a Latin term meaning “to stand by that which is decided.”
Embracing Stare Decisis: The Cornerstone of Consistency
The U.S. common law structure has a unified system of deciding legal matters with the principle of stare decisis at its core, making the concept of legal precedent extremely important. A prior ruling or judgment on any case is known as a precedent. Stare decisis dictates that courts look to precedents when overseeing an ongoing case with similar circumstances.
Key Takeaways
- Stare decisis is a legal doctrine that obligates courts to follow historical cases when making a ruling on a similar case.
- Stare decisis requires that cases follow the precedents of other similar cases in similar jurisdictions.
- The U.S. Supreme Court is the nation’s highest court; therefore, all states rely on Supreme Court precedents.
Decoding Legal Precedents: The Foundation of Judicial Decisions
A unique case with hardly any past reference material may become a precedent when the judge makes a ruling on it. Also, the new ruling on a similar present case replaces any precedent that has been overruled in a current case. Under the rule of stare decisis, courts are obligated to uphold their previous rulings or the rulings made by higher courts within the same court system.
For example, the Kansas state appellate courts will follow their precedent, the Kansas Supreme Court precedent, and the U.S. Supreme Court precedent. Kansas is not obligated to follow precedents from the appellate courts of other states, such as California. However, when faced with a unique case, Kansas may refer to the precedent of California or any other state that has an established ruling as a guide in setting its precedent.
All courts are bound to obey the rulings of the Supreme Court, as the highest court in the country. Therefore, decisions that the highest court makes become binding precedent or obligatory stare decisis for the lower courts in the system. When the Supreme Court overturns a precedent made by courts below it in the legal hierarchy, the new ruling becomes stare decisis on similar court hearings.
When Precedents are Challenged: Overturning History
In rare cases, the Supreme Court has reversed its own previous rulings. This is a noteworthy event, occurring sparingly in history. One of the most famous examples is 1954’s Brown v. Board of Education, which overturned the separate-but-equal doctrine of Plessy v. Ferguson from 1896, supporting segregation.
The most recent notable overturning of a precedent occurred on June 24, 2022, when the Court reversed Roe v. Wade, the 1973 ruling that legalized abortion. This decision marked Dobbs v. Jackson Women’s Health Organization as a major shift away from stare decisis.
Real World Examples: Stare Decisis in Action
In the realm of insider trading within the securities industry, the precedent case of Dirks v. SEC in 1983 is often referred to. The U.S. Supreme Court ruled that insiders are guilty if they directly or indirectly received material benefits from disclosing the information to someone who acts on it. This ruling continues to guide courts in dealing with related financial crimes.
Using Stare Decisis: The Case of Salman v. United States
In 2016, the ruling of Salman v. the United States involved Bassam Salman, who made an estimated $1.5 million from insider information indirectly received from his brother-in-law, Maher Kara, a Citigroup investment banker. Salman’s legal team contended that a conviction should only occur if compensation was given to his brother-in-law. However, the Supreme Court judge ruled, based on stare decisis from Dirks v. SEC, that confidential information gifted is still a breach. This led to Salman’s conviction for insider trading.
Considering Precedent: The Impact of Overseen Factors
In 2014, the U.S. Court of Appeals for the Second Circuit in New York overturned the insider trading conviction of hedge fund managers Todd Newman and Anthony Chiasson, requiring that misappropriated information shows a personal benefit. Salman later used this ruling as a precedent to overturn his conviction in 2013. However, the U.S. Court of Appeals for the Ninth Circuit did not have to follow the Second Circuit’s precedent and thus upheld Salman’s conviction.
When the case reached the U.S. Supreme Court, the Supreme Court affirmed the Ninth Circuit’s decision, stating that Salman’s conduct violated the fiduciary breach rule regarding gifts, as established in Dirks v. SEC.
Related Terms: common law, precedent, appellate courts, Supreme Court, insider trading.
References
- Cornell Law School, Legal Information Institute. “Stare Decisis”.
- Cornell Law School, Legal Information Institute. “Precedent”.
- Supreme Court of the United States. “About the Court”.
- The Conversation. “The Supreme Court Has Overturned Precedent Dozens of Times in the Past 60 Years, Including When It Struck Down Legal Segregation”.
- Oyez. “Roe v. Wade”.
- BallotPedia. “Dobbs v. Jackson Women’s Health Organization”.
- Supreme Court of the United States. “Dobbs v. Jackson Women’s Health Organization (19-1392)”.
- U.S. Supreme Court. “Dirks v. Securities and Exchange Commission”, pages 646-679.
- U.S. Supreme Court. “Salman v. the United States”.
- U.S. Court of Appeals for the Second Circuit. “United States v. Newman, No. 13-1837 (2d Cir. 2014)”, pages 7-10.
- U.S. Supreme Court. “Salman v. the United States”. Pages 1-3 and 6.
- U.S. Supreme Court. “Salman v. the United States”, Page 11.
