Conflict Minerals, the DC Circuit, and the SEC: The Law of the Circuit Doctrine

In American Meat v. Department of Agriculture, Judge Henderson wrote a dissenting opinion that raised an issue of appellate procedure. She wondered how the case even got before the full court. Id. ("But, for the life of me, I do not understand how we got to the en banc stage in this case.").  

Her concern was that the original panel issued a decision that conflicted with a prior D.C. Circuit opinion. Based upon the law of the Circuit, one panel cannot overrule another. That is what Judge Henderson asserted had occurred. Id. ("The panel was also wrong for the simple reason that its merits decision—whether or not correct—did indeed 'contradict' our decision in R.J. Reynolds and therefore should not have issued."). 

The rule exists in the federal system (but not in all state systems) and ensures consistency within a circuit. When one panel speaks (on matters of law), subsequent panels must conform. That way litigants do not have to confront contrary legal interpretations within the same circuit. A subsequent panel can express distaste for the reasoning of the earlier decision but it must follow it. As Judge Henderson described: 

• One of our court’s most fundamental governing principles is the “law of the circuit doctrine” which decrees that the decision of a three-judge panel of the court “is ‘the decision of the court.’ ” LaShawn v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996) (en banc) (quoting Revision Notes to 28 U.S.C. § 46). “One three-judge panel, therefore, does not have the authority to overrule another three-judge panel of the court.” Id.  

To the extent that the earlier panel needs to be changed, the only mechanism is en banc review (or reversal by the Supreme Court or effective reversal by Congress). As a result, it takes the full court to overturn the law propounded by a panel.  

In American Meat, the panel distinguished the precedent that Judge Henderson viewed as contrary. Judge Henderson, however, found "this conclusion untenable given the centrality of the R.J. Reynolds majority’s limited reading of Zauderer." As a result, "[b]ecause that reading constituted part of R.J. Reynolds’s holding, the 'power' to overrule it could properly 'be exercised only by the full court, either through an in [sic] banc decision or pursuant to the more informal practice adopted in Irons v. Diamond.' "  

Irons, by the way, involved the introduction of what amounted to an informal en banc consideration of the matter. See Iron, n. 11 ("The foregoing part of the division's decision, because it resolves an apparent conflict between two prior decisions, has been separately considered and approved by the full court, and thus constitutes the law of the circuit.").  

As for the consequences, Judge Henderson had this to say: "I need hardly add my hope that this case is an outlier; if not, we risk adopting the habit of slapping the 'dictum' label on any holding that any two of us find inconvenient and thereby replacing law of the circuit with law of the panel."  

The majority contained a single footnote responding to the assertions. 

• Judge Henderson in her separate dissent criticizes the now vacated panel opinion for stating the panel’s view that the language of R.J. Reynolds and National Association of Manufacturers v. NLRB limiting Zauderer to instances of deception-correction did not constitute holdings. Whatever the merits of that view, the panel recognized that other judges might reasonably take the contrary view and accordingly called for the court to consider the scope of Zauderer en banc, a call to which the court responded affirmatively. The present opinion is the consequence.

Whatever the merits of the back and forth, this was a case of no harm, no foul. Had the panel followed the views of Judge Henderson, it would have ruled in a contrary fashion (having been bound by the earlier panel) but then either invited the parties to seek review en banc or requested such a review themselves. See D.C. Circuit Internal Procedures, at 58 ("If a judge calls for a vote on the petition for rehearing en banc, the Clerk’s Office transmits electronically to the full Court a new vote sheet, along with any response to the petition ordered by the Court.").  

In this case, the panel in American Meat effectively sought en banc review. As the opinion stated:  

• We recognize that reasonable judges may read Reynolds as holding that Zauderer can apply only where the government’s interest is in correcting deception. Accordingly, we suggest that the full court hear this case en banc to resolve for the circuit whether, under Zauderer , government interests in addition to correcting deception can sustain a commercial speech mandate that compels firms to disclose purely factual and non-controversial information. 

Thus, there was no period of time when litigants in the D.C. Circuit had to confront conflicting panel opinions. Moreover, correction or clarification was done by the en banc court.

Nonetheless, Judge Henderson's reminder is a good one. Courts can, and do, circumvent the "law of the circuit doctrine." They can describe their holding as slightly different, characterize the earlier case as dictum, or point to subsequent developments that essentially render the prior opinion no longer valid (say an intervening Supreme Court decision). This has the risk of creating conflicting panel decisions and of creating confusion among the circuit decisions.  

For a discussion of appellate procedure and the process of assigning judges and cases to panels at the United States Court of Appeals, see Neutral Assignment of Judges at the Court of Appeals.