Stare decisis — the idea that courts are bound by precedent — is a bedrock principle of our legal system.1 But when applying precedent, how should judges define the scope of a prior holding? Roughly speaking, judges presume that they are bound by the substance of prior caselaw but reject the idea that they are bound by prior interpretive methodology.2 In other words, judges generally embrace substantive stare decisis but reject methodological stare decisis. Recently, in FTC v. Credit Bureau Center, LLC,3 the Seventh Circuit held that section 13(b) of the Federal Trade Commission Act4 (FTC Act) does not contain an implied right to restitution,5 reversing its own precedent and splitting with eight other circuits.6 To justify the court’s flip, the panel in Credit Bureau Center relied on methodological stare decisis. By prioritizing interpretive methodology over substantive precedent, the court inverted standard statutory interpretation doctrine. Ironically, this practice undermines the values stare decisis is meant to protect — including reliance interests, fidelity to Congress, and the separation of powers.
Credit Bureau Center, an online credit-monitoring service owned by Michael Brown, offered customers a “free” credit score and credit report.7 But this “free” report came with a catch. Customers who signed up for the report were automatically enrolled in a recurring $29.94 monthly subscription plan.8 What’s more, Brown hired a contractor who posted fake real estate listings on Craigslist and instructed unsuspecting renters to register for Credit Bureau Center’s “free” report.9
The Federal Trade Commission (FTC) has broad authority to protect consumers from these sorts of “unfair or deceptive acts or practices.”10 For decades, the Commission’s preferred enforcement tool has been section 13(b) of the FTC Act.11 Section 13(b) provides that “in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”12 Notably, section 13(b) does not explicitly mention restitution or other forms of equitable relief. Nevertheless, there is more than three decades of precedent holding that section 13(b) implicitly grants the Commission a wide range of equitable remedies, including restitution.13 The FTC sued Brown and Credit Bureau Center under section 13(b), seeking both restitution and a permanent injunction limiting Brown’s involvement in the credit-monitoring industry.14
The district court granted the FTC’s motion for summary judgment, imposing a permanent injunction and awarding five million dollars in restitution.15 First, the court held that Credit Bureau Center’s deceptive schemes violated consumer protection laws.16 Second, the court dismissed Credit Bureau Center’s claim that the plain text of section 13(b) does not authorize restitution.17 Thirty years earlier, in FTC v. Amy Travel Service, Inc.,18 the Seventh Circuit held that section 13(b)’s “grant of authority . . . to issue permanent injunctions includes the power to order any ancillary equitable relief,” including restitution.19 As the district court explained, Amy Travel “continues to control the disposition of this issue.”20
The Seventh Circuit affirmed the permanent injunction but vacated the restitution award.21 Writing for the panel, Judge Sykes22 held that there is no implied right to restitution in section 13(b), overturning the Seventh Circuit’s decision in Amy Travel.23 In most circuits, overturning a prior decision requires rehearing en banc.24 But the panel relied on a local procedural rule — Circuit Rule 40(e)25 — to reverse Amy Travel without rehearing by the full court.26 Judge Sykes began with the text of section 13(b) and the structure of the statute. First, she explained that the plain meaning of the term “injunction” does not “encompass other discrete forms of equitable relief like restitution.”27 Next, Judge Sykes turned to the structure of the FTC Act. Two other provisions of the Act authorize equitable relief with more straightforward language than section 13(b).28 The “conspicuous” omission of this sort of plain language in section 13(b) — when Congress included it in other provisions of the very same Act — led the panel to conclude that the FTC’s reading of section 13(b) swept too broadly.29 In contrast, Judge Sykes explained, “[s]ection 13(b) serves a different, forward-facing role” and is intended to enjoin “ongoing” or “imminent” violations of the law.30
But what of precedent? Thirty years earlier, the Seventh Circuit held in Amy Travel that section 13(b)’s permanent injunction authority also included broad power to grant equitable relief.31 Credit Bureau Center overturned this holding. As the panel explained, “[s]tare decisis cannot justify adherence to an approach that Supreme Court precedent forecloses.”32 According to the panel, modern implied-remedies jurisprudence — exemplified in Meghrig v. KFC Western, Inc.33 — demands a textualist “plain reading” of the statute.34 In Meghrig, the Supreme Court narrowly construed a statute creating a private right of action to sue polluters.35 Meghrig hinged on the textualist presumption that when a statute contains “elaborate enforcement provisions,” courts should be wary of reading in additional remedies by implication.36 Contrasting Amy Travel with Meghrig, Judge Sykes explained that “an exploration of statutory purpose is no longer the Supreme Court’s polestar in cases raising interpretive questions about the scope of statutory remedies.”37 Rather, Meghrig and other precedents compelled the panel to focus on “a close analysis of statutory text and structure” and reject the FTC’s broad reading of section 13(b).38
Chief Judge Wood39 dissented from the Seventh Circuit’s denial of rehearing en banc.40 She began by criticizing the panel’s use of Circuit Rule 40(e) to overturn Amy Travel.41 As she explained, Credit Bureau Center was a “singularly inappropriate” case for Rule 40(e): given the difficult statutory interpretation questions and longstanding precedent in play, Credit Bureau Center deserved consideration by the full court.42 Next, she turned to the panel’s construction of section 13(b). In contrast to Judge Sykes, Chief Judge Wood took a capacious view of the plain meaning of “injunction”: an “injunction” is simply an “order from the court either to do something or to refrain from doing something.”43 And that “something” may include “requiring the enjoined party to return ill-gotten gains.”44 Chief Judge Wood went on to distinguish Meghrig from the issue here. Whereas Meghrig adjudicated the cause of action available to a private plaintiff, Credit Bureau Center involved the scope of the remedy available to the government.45 Chief Judge Wood argued that courts should interpret statutes expressly granting the government a remedy more broadly than statutes creating an implied right of action for private plaintiffs.46
Credit Bureau Center highlights a destabilizing twist on stare decisis. In Credit Bureau Center, the Seventh Circuit reversed longstanding precedent and created a split with eight other circuits. According to the panel, Supreme Court precedent compelled this result. To reach this conclusion, the panel implicitly relied on methodological stare decisis — the assumption that methodological pronouncements bind future courts. By prioritizing interpretive methodology over substantive precedent, the court inverted standard statutory interpretation doctrine. Critically, this practice undermines the values stare decisis is meant to protect.
While substantive stare decisis is entrenched in our legal system, federal courts generally reject methodological stare decisis.47 In other words, courts generally do not give precedential effect to statements about interpretive methodology.48 For example, if a statute bans “vehicles in the park,” a court might give stare decisis effect to a substantive holding banning scooters, but it would not treat the choice of interpretive methodology — such as using textualist canons of construction or legislative history — as binding in future cases.49
Stare decisis comes in two forms: horizontal stare decisis (a court bound by its own precedent), and vertical stare decisis (a court bound by a higher court’s precedent).50 Federal courts generally reject methodological stare decisis in both contexts. In 2008, the Supreme Court recognized that its methodological pronouncements do not warrant reversing substantive precedent: “Principles of stare decisis, after all, demand respect for precedent whether judicial methods of interpretation change or stay the same. Were that not so, those principles would fail to achieve the legal stability that they seek and upon which the rule of law depends.”51 The Supreme Court was speaking of horizontal methodological stare decisis. But the same logic applies to vertical methodological stare decisis. The Court regularly makes inconsistent pronouncements regarding interpretive methodology, belying the notion that its methodological precedents are binding.52 And in a study by Professor Abbe Gluck and Judge Posner, only a small minority of federal judges surveyed said that they were beholden to the Supreme Court’s methodological pronouncements.53 Nevertheless, though methodological precedents are not binding, methodology still matters. Methodological canons of construction are useful linguistic presumptions that help courts faithfully interpret the legislature’s words.54 While these canons do not carry the weight of precedent, they are pragmatic “rules of thumb that help courts determine the meaning of legislation.”55
Despite this consensus that substance — not methodology — determines the scope of precedent, the Credit Bureau Center panel implicitly embraced methodological stare decisis by treating Meghrig’s interpretive approach as binding. Judge Sykes repeatedly characterized the holding in Meghrig in textualist terms: she explained that Meghrig compelled the court to focus on the “text and structure” of the FTC Act,56 criticized Amy Travel’s “starkly atextual” approach to statutory interpretation,57 and emphasized that “statutory purpose is no longer the Supreme Court’s polestar.”58 The panel invoked the full weight of stare decisis to overturn Amy Travel, holding that Meghrig “forecloses” the FTC’s interpretation of section 13(b).59
This interpretive move cannot be justified as either a straightforward application of stare decisis or as a pragmatic application of methodological canons. Rather, Credit Bureau Center’s reliance on methodology to overturn substantive precedent undermines the values stare decisis is meant to protect.60 First, consider reliance interests. Private citizens, corporations, and government agencies all rely on precedent to structure their affairs. Undermining settled expectations raises costs for litigants and courts by reopening settled questions.61 Credit Bureau Center illuminates these costs. The FTC is not the only federal agency that relies on implied equitable remedies. Agencies such as the SEC, the CFTC, and the FDA all rely on similar statutory authority.62 Each of these agencies — and the litigants before them — has to grapple with the uncertainty created by Credit Bureau Center. Furthermore, because interpretive methodologies have changed over time, reliance on methodological stare decisis could threaten a wide array of precedents. For much of the twentieth century, courts prioritized the “spirit” of a statute over its plain meaning.63 Though this interpretive approach has fallen out of favor,64 precedents from this era endure — precedents that could be destabilized by methodological stare decisis.65
Second, using methodological stare decisis to overturn existing precedent may disregard Congress’s expectations. Congress has the power to revise a statute and correct a court’s mistakes. Thus, Congress’s decision to reenact a statute without explicitly overriding precedent provides “support for the conclusion that Congress [has] accepted and ratified” the courts’ interpretation of the statute.66 This reenactment canon will often trump other canons of construction, since it offers more specific insight into the meaning of the text. Once again, Credit Bureau Center is illustrative. For over thirty-five years, circuit courts unanimously held that section 13(b) grants the FTC the power to seek broad equitable relief.67 Congress had ample opportunity to revisit the statute. Instead, it let section 13(b) stand while revisiting other portions of the FTC Act.68
Finally, this application of methodological stare decisis should be rejected because of its tendency to undermine judicial restraint and, therefore, the separation of powers. Unlike Congress, courts are countermajoritarian institutions that lack policymaking expertise. By compelling judges to follow precedent, stare decisis constrains judicial discretion.69 But if courts can use methodological stare decisis to overturn substantive precedent, they have broad power to reverse longstanding caselaw. In many cases, there is plausible precedent for both sides of a methodological proposition, allowing judges to justify a wide range of outcomes.70 For example, Credit Bureau Center pits the textualist presumption that remedies should be expressly stated against the principle that “equitable jurisdiction is not to be denied or limited in the absence of a clear and valid legislative command.”71 Opening up this debate gives substantial discretion to the courts. In contrast, deference to an on-point precedent constrains judicial decisionmaking.
In Credit Bureau Center, the panel prioritized methodological stare decisis over substantive precedent, inverting standard statutory interpretation doctrine. Ironically, this peculiar use of stare decisis undermines the values stare decisis is meant to protect. And because interpretive methodologies have changed over time, the sort of maneuver used in Credit Bureau Center threatens a wide variety of substantive precedents. To respect reliance interests, congressional expectations, and the separation of powers, courts should reject the use of methodological stare decisis to overturn substantive precedent.