Blue Slips Ignored to Fill Federal Bench

Shareholder Advocate Winter 2020

February 10, 2020

By Molly J. Bowen

A key measure of a president’s legacy is his or her impact on the federal judiciary. President Donald Trump’s tenure has been marked by a remarkably voluminous and rapid change to the federal bench.

The highest-profile changes were on the Supreme Court. In April 2017, Justice Gorsuch joined the Court, replacing late Justice Scalia, and in October 2018, Justice Brett Kavanaugh, replacing retired Justice Anthony Kennedy. But the federal courts of appeal—the final arbiter of all but the few disputes considered by the Supreme Court—have also seen dramatic change. Fifty judicial nominees to the federal court of appeals have been confirmed, making more than one-quarter of all active federal appellate judges Trump appointees. Significantly, that has flipped three federal courts of appeals—previously, the majority of judges on the Second, Third, and Eleventh Circuit Court of Appeal were nominated by a Democratic president and now, the majority of judges on each circuit is the appointee of a Republican president. Additionally, 112 judges have been confirmed to the federal district courts during the Trump administration.

The dramatic increase in the pace of judicial confirmations is revealed through a comparison of the number of federal appellate judges confirmed at this same point under each recent president:

Federal Appellate Judges Confirmed
Trump 48
Obama 24
George W. Bush 30
Clinton 27
George H.W. Bush 31
Reagan 23

The rapid pace of judicial confirmations is explained, in part, by the significant number of vacant federal judicial seats at the start of President Trump’s term. Another contributing factor is the change in approach to the “blue slip” tradition. This tradition allows the senators from the state from which a federal court nominee hails to express their approval of the nominee by returning a “blue slip,” or conversely their disapproval by declining to return a blue slip. During the Obama administration, Judiciary Committee Chair Patrick Leahy (Democrat from Vermont) observed an unusually strict interpretation under which failure to receive both blue slips constituted a veto of the nominee. Eighteen judicial nominees (a combination of federal appellate and district court judges) did not advance because they did not have support from home-state senators. Many of those seats remained vacant for the entirety of President Obama’s term and were ultimately filled by Trump nominees. In contrast, Chuck Grassley (Republican from Iowa) and Lindsey Graham (Republican from South Carolina) who have served as Judiciary Committee Chairs during President Trump’s term advanced federal appellate nominees even if one of their home-state senators objected by withholding a blue slip.

Trump’s nominees are widely considered more conservative than any prior set. What this means for securities fraud and shareholder rights litigation is not yet clear but the Second Circuit’s shift to a majority of judges appointed by Republican presidents may in time be the most telling. Historically, the majority of securities cases have been filed in district courts within the Second Circuit. Under that court’s current composition, the three-judge panels considering appeals or the fuller en banc court providing an additional layer of review before the Supreme Court are more likely to have a Republican-appointed majority. This may influence the types of arguments that are appealing to the Second Circuit—such as a heavier emphasis on textual arguments—and potentially how this appellate court approaches key issues such as class certification in private cases and review of regulations issued by the Securities and Exchange Commission.

At the Supreme Court, one jurist to watch is Justice Neil Gorsuch. In his early-career writings, Justice Gorsuch championed reforms to the securities laws that arguably limited shareholder rights, but whose most significant securities opinion as a Tenth Circuit judge was more mixed, holding that a plaintiff failed to establish liability for an opinion statement that was sincerely held, but not challenging precedent that opinion statements with no reasonable basis may create liability. Since joining the Supreme Court, Justice Gorsuch has not authored any significant securities’ opinions but did, notably, join the dissent in Lorenzo v. SEC, taking the position that the defendant could not be liable for false or misleading statements in an email that he sent. The Shareholder Advocate will continue to monitor key cases and the impact of the changing judiciary on the investor community.