Equity in American Law Transcript
Derek Webb:
Welcome to this event. Good to see everybody here. So, first of all, I want to introduce myself to those of you who have not seen me around campus. My name is Derek Webb. I’m an assistant professor of law here at Catholic University. I teach civil procedure and Constitutional Law and legal history. Taught a class the seminar on the creation of the Constitution. I’ve been here for about a year and a half and absolutely loving it. And today we are going to have a very fun, interesting conversation about equity in American law.
And before we launch, I thought I’d begin our conversation today with just a quick prayer to put us in this nice state of mind. So, this is the prayer of Thomas Aquinas before study. In the name of Father, the Son, Holy Spirit. Come Holy Spirit, Divine creator, true source of light and fountain of wisdom. Pour forth Your brilliance upon my intellect. Dissipate the darkness, which covers me, that of sin and ignorance. Grant me a penetrating mind to understand, a retentive memory, method and ease and learning, the lucidity to comprehend, and abundant grace in expressing myself. Guide the beginning of my work, direct its progress, and bring it to successful completion. This I ask through Jesus Christ, true God and true man, living and reigning with You and the Father forever and ever. Amen. In the name of the Father, the Son, and the Holy Spirit.
So, what we’re going to do today, we’re going to have little format where we’ll have about 20 minutes where we’ll be discussing the meaning of equity, what just basically is and a good deal of the history of equity as well, and its connection or lack of connection to bigger other big concepts people talk about in philosophy of law, particularly the natural law theory. Then we’re going to transition to the role that equity has played in some recent supreme court cases. So, this is not just about 1791 today, we’re also taking a look at some cases that have come out or just recently been argued in 2024, 2025, and 2026. Specifically, I think we’re going to look at three cases. Trump v. CASA, SEC v. Jarkesy, and recently argued Trump v. Cook.
Equity is a somewhat mysterious subject to lots of law students and lawyers. And so, to help us kind navigate through this, we have two of really the country’s leading scholars on equity, civil procedure, and legal history. So, let me first begin with an introduction of, to my right, my friend, Professor Aditya Bamzai. Aditya Bamzai is a professor of law at the University of Virginia. He has taught administrative law, civil procedure, computer crime and conflicts of law, as well as seminars on advanced administrative law, sovereign debt, and the Constitution and legal controversies of the founding era.
His work on these and related subjects has been published in a variety of leading journals. He’s a co-author of the ninth edition of the Casebook Administrative Law, the American Public Law System Cases and Materials. Professor Bamzai has argued cases relating to the separation of powers and national security in the US Supreme Court for intelligence surveillance court review, the DC Circuit and other federal courts of appeals.
Before entering the academy, Professor Bamzai was an attorney advisor in the Office of Legal Counsel of the US Department of Justice, I think something that the two of you share, and an appellate attorney in both private practice and for the National Security Division of the Department of Justice. Earlier in his career, he was a law clerk to Justice Antonin Scalia of the US Supreme Court and to Judge Jeffrey Sutton of the US Court of Appeals for the sixth Circuit.
He’s a graduate of Yale University and of the University of Chicago Law School where he was editor-in-chief of the Law Review. He also gave me my very, very first start in civil procedure, right as I was wrapping up my clerkship with Judge Sutton. I happened to be down in Charlottesville and I let Aditya know that I was in town and he said, “Oh, well, I’m not going to let this opportunity go by. I’m actually going to be teaching class in civil procedure late this afternoon. Why don’t you come by and tell us a little bit about the work of the rules committee” So, on pretty much my second or third day of vacation from this pretty intense clerkship, Aditya put me to work.
Aditya Bamzai:
That was when Judge Sutton was the chair the rules committee.
Derek Webb:
Yes. Exactly. Right.
Aditya Bamzai:
So, you had a lot of insight to provide.
Derek Webb:
Right. Exactly. So, thank you for that introduction.
Aditya Bamzai:
Thank you for coming to class.
Derek Webb:
Now I get to introduce you. And to my left here is Professor Renée Lerner. Professor Lerner is the Donald Philip Rothschild research professor of law at the George Washington University School of Law School. Professor at Lerner is an expert in the fields of US and English legal history, civil and criminal procedure and comparative law. Her book, The Jury, A Very Short Introduction published by Oxford University Press in 2023, discusses the history and practice of the jury around the globe. The book was the subject of a major symposium of the George Washington Law Review in October 2024.
She’s also the author with John Langbein, her mentor and Bruce Smith of the book, History of the Common Law: The Development of Anglo-American Legal Institutions in 2009. She’s currently writing a book about the American civil jury from the colonial period to the present. Her recent writings include the Civil Jury Trial Clause of the Seventh Amendment and the Re-examination Clause of the Seventh Amendment Essays and the Heritage Guide to the Constitution and The Resilience of Substantive Rights and the False Hope of Procedural Rights: The Case of the Second Amendment and the Seventh Amendment. She also, of course, is the author of some essays on the Seventh Amendment for the Interactive Constitution to the National Constitution Center, which we had a chance to work on last year together.
Professor Lerner received an AB summa cum laude in history from Princeton University. She was a Rhodes Scholar at Oxford University where she studied English legal history. At Yale Law School, she was article’s editor of the Yale Law Journal. She served as a law clerk to Justice Anthony Kennedy of the US Supreme Court and to Judge Stephen Williams of the US of Appeals for the District of Columbia Circuit.
From 2003 to 2005, she served as a Deputy Assistant Attorney General in the Office of Legal Counsel at the US Department of Justice. She was a witness also interestingly in a murder case in Paris, France before a mixed panel of professional judges and major jurors. Maybe we’ll get to that as well. So, please welcome Professor Bamzai and Professor Lerner.
So, thank you both very much for coming today and we’re really lucky to have you here to be able to discuss this concept, which for some is a little nebulous, but also has lots of contemporary relevance today, the issue of equity in American law. So, I thought we would just begin with just laying the very basic groundwork and you are abundantly qualified to help us understand this.
So, what exactly is equity? I mean, when you open up, and of course I have my little pocket Constitution here. When you open up the constitution, you do see the reference to equity in Article III that the federal courts will have jurisdiction over all cases in law and equity. There’s a reference to cases in common law in the Seventh Amendment. So, there’s some references to equity in the constitution. So, right away, somebody flipping through the text of the Constitution and says, “Okay. Equity’s plugged in here, we need to know something about it.” Perhaps I’ll begin with you, Professor Lerner. Can you just lay out for us what does it mean to be in equity or to do equity?
Renée Lettow Lerner:
Sure. And this causes a lot of confusion among not just law students but lawyers and judges as well. So, I’m glad to have the opportunity to talk about this.
Renée Lettow Lerner:
The whole point of equity is to be a system of juryless adjudication, so no juries, that is the point of equity. There is of course confusion over the meaning of equity. Equity can mean just in our ordinary English language, doing justice, doing justice in the particular case. It can mean that. But it can also mean, and this is the meaning that we’ll use most often today, it can also mean the particular substantive law and procedure of a specific court in England and later the United States that is chancery. So, this is the substantive law and procedure used in courts of chancery.
Renée Lettow Lerner:
The procedure of equity versus common law is, as Professor Webb mentioned, mentioned several times in the Constitution. In Article III, it talks about courts of law and equity. In the Seventh Amendment, it’s implied when it talks about in suit at common law, the right to trial by jury shall be preserved, meaning the distinction between the common law on the one hand and equity on the other. So, that’s what that reference refers to.
Renée Lettow Lerner:
We today do not really understand the distinction between law and equity, all that well. And the reason we don’t understand it is because law and equity are merged in our system. This merger process began with New York in 1848, the Field Code of New York. And in the US got a huge impetus from the Federal Rules of Civil Procedure, which I’m sure you’re all very familiar with in 1938. And we are so used to that merged system of law and equity that we don’t understand the distinction originally between the two. But that distinction is absolutely crucial to understanding those phrases in the constitution, but also really our entire legal system.
Renée Lettow Lerner:
So, I’m going to lay out a little bit what those distinctions are. Equity arose originally in response to deficiencies in the common law system. The common law system has advantages on the one hand, but disadvantages on the other. The common law system as I’m using it, I’m using it in a procedural sense. It revolves around the use of juries. Everything in the common law system and in the common law courts was designed to facilitate jury trial.
Okay. So, what does that mean in practice? It means cases had to be radically simplified. The English judges thought that you could not put a complicated dispute in front of a jury and expect a good result. So, cases had to be very dramatically simplified sometimes to the point where the merits of the case got lost. We’ll talk about that in a minute. This was done in the common law system in several ways. It was done by using the writ system. The writ system put one claim in front of a jury at any given time. You could not join writs together. So, you had a writ concerning contract and one concerning tort. Even if they came out of the same transaction, the same events, they could not be joined together in a single suit. You had to bring one writ. So, no joiner of claims, in other words.
In addition to that, the cases were pled down using the pleading process pled down to a single factual issue for the jury. Later on, that was relaxed somewhat and a few factual issues would go to a jury at a time, but not many. And all involving the single claim. Joinder of parties was very, very narrow. The parties really had to have a lot in common before they could be joined in an action. Their interests had to be joint and not several as the common law put it.
There was absolutely no discovery, no pre-trial discovery whatsoever. You had to hold a trial to find out what happened. That was of course a big impetus to jury trial. Very simplified remedies. Basically, you got money damages or your stuff back. That was about it. No complicated remedies like injunctions, declaratory judgments, receiverships, nothing like that at the common law. So, you can see how such a system could handle perhaps expeditiously simple disputes, but anything more complicated had to go somewhere else.
And fairly early in the English legal system, people realized that that simplified common law system was not going to work for every case. Something had to be done. The king was the fountain of justice. So, he had to come up with another means of adjudicating complicated cases. What did he do? He established non-jury courts. Chief of which was chancery. There was also admiralty in maritime cases. The lord chancellor presided over chancery. The lord chancellor was an interesting figure in English politics. He had a lot of jobs. Among other things, he was a close advisor to the king and he presided over the House of Lords. So, he was a busy guy.
In addition to that, he was almost always before Henry VIII, a bishop or an archbishop. And I think I need not explain why to this audience, Henry VIII changed that tradition. And in fact, I saw a wonderful reproduction of a portrait of Sir Thomas More just outside this room. So, of course, Henry VIII didn’t quite know what he was getting when he had a layman, Sir Thomas become lord chancellor. But the tradition of the lord chancellor’s being bishops or archbishops was extremely important to the procedure of chancery.
He was the lord chancellor already familiar from his own courts, his ecclesiastical courts. Very familiar with Roman Canon procedure, which had been developing on the continent of Europe. That’s the procedure he used in his diocesan courts. So, it was natural to him to use it then in the court of chancery a secular court. And that court then had many of those features that we are familiar with today in our current procedure. Liberal jointer of claims and parties. Many, many factual issues could be raised, including complicated factual issues, which the common law judges worked very hard to keep away from juries as much as possible.
Discovery, document discovery, depositions, interrogatories, all of those things that we know and love from the federal rules of civil procedure. And complicated remedies, of course, injunctions, declaratory judgments, receiverships. You can see then that when law and equity merged, essentially equity took over. In the words of Stephen Subrin, a very famous commentator on the merger of law and equity, equity conquered the common law.
And so, what we know today in civil procedure essentially comes from equity. And it had to be so because in a merged system, only equity can handle the more complicated cases. But as a result, we’ve lost track of just how simplifying the common law system was and how relatively complex equity was as a result. And I think it will stop there.
Derek Webb:
That’s wonderful. And so, just to refresh, that was very helpful, thank you for that. In England as a historical matter, there were two, or really even maybe three main courts. Principal courts that people could go to. There was common law courts, then there were these chancery courts or equity courts, and then maritime or admiralty courts.
Renée Lettow Lerner:
Sure.
Derek Webb:
Right. And one big concept usually people have when they think about equity is this is what you couldn’t get in common law, as you said. And there’s one idea that I think floats around is that equity courts and going to equity, you hope to get a more flexible set of remedies than you could get in common law. Do you abide by that common understanding of what equity offered to people?
Renée Lettow Lerner:
Oh, certainly. That was one of its advantages. One of its advantages was remedies. But in addition, of course, all the discovery, you could not get discovery at common law.
Derek Webb:
I’m so glad you mentioned discovery and joinder because all my … Actually, I don’t see really any of my … One or two, someone was interested in here. Maybe there’s a reason for that. But we are all going through now rules of joinder, for claims and individual and parties, and also, we just wrapped up discovery. And this is all thanks to…
Renée Lettow Lerner:
Equity.
Derek Webb:
… to equity. Very interesting. And ultimately, you’re going to equity to get a more flexible remedy and specifically an order like an injunction or telling a party to do something or not do something, which I gather was not as often available in courts of law.
Renée Lettow Lerner:
That’s right. Yeah. It was too complicated a remedy for juries. That’s what the judges thought.
Derek Webb:
Okay. Great. All right. So, Professor Bamzai think now has a little bit more of a perspective. So, that really brings us up to the founding moments, the creation of the Constitution, and so the English backstory of how these three different courts worked and the different remedies that you can get in different courts. And Professor Bamzai is now actually teaching a class on legal issues at the founding, I think has some thoughts and perspectives, particularly in how these ideas of equity were getting cashed out and thought about at the founding period might be.
Aditya Bamzai:
Yeah. Absolutely. And so, again, thanks so much for having me and for the introduction, Derek. Delighted to be here.
Derek Webb:
I’m thrilled to have you.
Aditya Bamzai:
And to hear Renée’s thoughts on this issue. And I thought I would pick up just by pointing out again that as Professor Lerner said, “Equity can be used in many different senses.” This term. And one sense would refer to this historical distinction between common law and equity courts. And another sense would be in the manner of doing equity, being a little bit more flexible with respect to legal rules. And actually, both of those senses were controversial at the time of the American Constitution’s adoption.
And so, if we think about the existence of chancery court, and I think Professor Lerner’s background gives you a sense of why they might’ve been controversial. They’re associated with royal governorship, they’re associated with the royal governors. And so, as those courts start to be created in many of the colonies, and I’m thinking about the pre-1776 era, like 1730s, 1740s, 1750s, their reactions from the colonial assemblies.
So, for example, the Pennsylvania Chancery Court, when it starts to get off the ground, the Pennsylvania assembly adopts a resolution that says, “The Court of Chancery as its presently established, is contrary to the charter of privileges granted to the freemen of this province.” So, they want to push back against separate courts of chancery, which they think are related to the governor. At the same time, as far as I can tell, actually, there’s a sense in which what Professor Lerner had mentioned is a merger of law and equity, which takes place at some later point in time in the 19th century through the field codes is occurring in this era as well.
So, maybe the controversy was over separate courts of chancery that are going to be run by an executive as opposed to what they were associating with these common law courts, which they might’ve thought of is somehow more democratic or subject to jury trials. In any event, whatever the reason, there’s a controversy over courts of chancery at this time period.
And then there’s also a controversy over equity in the other sense. And when I say there’s a controversy, there are definitely people who invoke equity in that sense of legal rules should be targeted towards purpose or we should have more of a flexible understanding of positive law to do justice as opposed to simply stick to the words themselves. There are people who just articulate different positions on this type of issue.
And as you well know, one of the key cases that are decided at the state court level before the constitution’s adopted is this case Rutgers v. Waddington, which is out of New York, and it’s out of a strange court, at least a court that we would think to be strange today, the mayor’s court of New York, literally the mayor of New York is presiding over this court system. And Rutgers is a case decided in 1784. There are no cases being decided in this era at the federal level because there’s no federal court system at that time before the Constitution’s adoption in 1787 and creation of the federal court system.
Aditya Bamzai:
So, Rutgers is an interesting case that we can look at to get a sense of how legal actors approached questions of judicial review, statutory interpretation of this time period, especially because we have a full report of it.
And it’s argued by people with whom you would be familiar, like Alexander Hamilton is representing one of the parties. And so, the general issue, it’s a complicated case, but the general issue that’s at stake over here is the degree to which folks who are acting during the time of the British occupation of New York City loyalists have to pay some damages to folks whose property they use, who would’ve fled New York City at the time the American Revolution is occurring.
And as you can imagine, this was a huge issue in these days, years after the American Revolution, where some people naturally say, “Well, my property was abused, I would like some money compensation for that.” Whereas other folks might say, “Well, we should let bygones be bygones. We should not dwell on the past because that’s just going to open up old wounds.” So, that’s the background of this case.
Aditya Bamzai:
And maybe one way to think about it’s that the issue is how strictly or how flexibly to interpret the New York statute that’s at stake in the case. And Hamilton is taking the more flexible perspective, you might say, the more equity-oriented, equitable perspective in this argument. And the mayor’s court agrees with him in a way. And then there’s a reaction to that. And various people who are in New York criticize the mayor’s court decision in Rutgers v. Waddington and they take what might be thought of as the more textual perspective.
And actually, what we see is this is occurring in 1784, then a few years later we have the introduction of the terms law and equity in the federal constitution. And so, Professor Lerner had mentioned that. And some of the same folks who criticize Rutgers v. Waddington, they end up writing some of what are known as the anti-federalist papers. And so, one of them, Brutus XI, which is written either by Melancton Smith or Robert Yates, and maybe Professor Webb was going to tell us here who the actual author is.
Derek Webb:
You give us some thoughts on that.
Aditya Bamzai:
I’d actually be curious because I was doing a little bit of research myself into this, and apparently, it’s disputed. The point is that these essays, Brutus XI is one in which whoever the author of that is criticizes the inclusion of the term equity in Article III and says, “Well, what this is going to allow federal courts to do is interpret the law too flexibly.” And so, he’s using equity in the sense of equitable interpretation of the law.
Derek Webb:
Spirit maybe as well.
Aditya Bamzai:
Spirit of the law. Exactly. So, this is a critique from that perspective. And I mean, I think when I look at a case like Rutgers, very curious to know your views, Professor Webb, it seems to me that this debate between the purposive or equitable reading of the law and what might be thought of as the more textual reading of the law, it dates back to that era and it dates back much, much earlier than that as maybe people in the audience know. So, as I was reflecting on it myself, you can look up the Confessions of St. Augustine, and in Book XII there’s a discussion of how to interpret religious text. So, that’s in a different context, but it involves some of the same disputes about interpretation and these deeper questions.
Derek Webb:
Right. Yeah. Wonderful. And yeah, if you are interested in following this at the stage of the creation of the Constitution, there is a great exchange between Brutus early January 1788, and then Hamilton responds in Federalist 80, Federalist 81, where he’s specifically responding to this argument that now federal judges will be able to interpret the Constitution in light of not just law, but equity, which is spirit, which is vague set of norms that any particular judge might bring to it.
And so, Brutus is very worried about the inclusion of this word equity in the Constitution. And Hamilton tries to reassure him basically in the spirit of Professor Lerner’s comments, that equity is a much more technical concept. It does not mean spirit, it does not mean vague sets of norms that the judges can willy-nilly appeal to. It’s in a very cabin technical meeting that does not open the door, the floodgates to judges using their own thoughts about the just and the good and the right. But it’s a great opening flash point in a conversation between Brutus and Hamilton on this idea about equity. Your reference to St. Augustine though opens up one door, which we’re interested in exploring here, obviously at CUA.
Aditya Bamzai:
Before we move off this, are you going to tell us who wrote Brutus?
Derek Webb:
Of course. Yeah. I don’t have how much time we have for this, but yeah, Melancton Smith is my thesis, and there was actually a great small thing, a little smoking gun evidence of this that Melancton Smith actually wrote a letter to Abraham Yates in January of 1788, saying, “The anti-federalists haven’t written anything about the Supreme Court or about the judiciary. It’s all focused on Congress and a little bit on the presidency, but the Supreme Court is the thing that’s going to cinch the powers this federal government and bring it all into a consolidation.”
So, Melancton Smith is writing all of this, and then he lays out, “Here are the five or six things we really need to hit in our next set of essays.” And then within a week and a half of that Brutus then shifts gears from the writing about the powers of the Constitution and in congress to the judicial power. And then he verbatim actually quotes from that letter. So, at the very least, there seems to be some connection there.
Renée Lettow Lerner:
That looks solid evidence.
Derek Webb:
Yeah, we thought so.
Renée Lettow Lerner:
Yeah. Excellent.
Derek Webb:
So, on the point of this big point, about natural law and equity, I love to get your thoughts on that. And in a way, the Brutus-Hamilton exchange in a way kind of leads to that, when judges are doing equity, when they were doing equity in chancery courts, was it the chancellor, was the chancellor and his assistants looking to principles of natural law as they were fashioning specific remedies in cases or any more so there than they were in the other courts in England at the time, do you think?
Renée Lettow Lerner:
Yeah. Well, of course the chancellor, as I’ve said, was almost always a bishop or an archbishop. So, he was quite familiar with world principles, the principles of taught by the Catholic Church and the natural law interpretations. So, that was a natural source for him to draw on in developing the jurisprudence. The chancellors early on had a fair bit of discretion in what they could do, a really large amount. And there was no appeal from the chancellor except to the king.
So, in effect, there was no appeal early on until the 17th century. By the 17th century parliament started to say, “You know what? The appeal goes to us in Parliament.” So, then there was an appeal from the chancellor. But before that, you can see there was a lot of potential for a chancellor to be a tyrant, given his vast discretion over procedure and remedies, especially. He controlled all cases involving trusts. And to give you a sense of how important trusts were in England in the 16th century, half the land in England was held in trust. So, this is someone with just immense powers in England.
And people feared them, and some of the chancellors abused them. Notably Cardinal Wolsey was notorious for abusing his powers in equity. And so, there got to be the feeling that chancery had to be tamed in some way. And of course, one of those ways was, I’ve mentioned already that parliament took appeals from chancery. So, that started to happen, the House of Lords specifically.
But then the chancellors themselves over time tamed themselves. What do I mean by that? I mean that they doctrinalized chancery. They took free-floating principles of justice, natural law and so forth, and developed them into rules. That was done by the three great chancellors is what we call them. It was Lord Nottingham in the 17th century, Lord Hardwicke in the 18th century, and Lord Eldon in the early 19th century. And they really developed an elaborate series of rules that they themselves had to follow. And so, they in effect defang themselves. They said, “We will follow these rules. We will not act as tyrants and just take away people’s property and put them into receivership.” And this kind of thing.
So, that’s what happened over time with equity, with chancery. And then that whole system got translated to the United States. And James Kent was a huge, he was a chancellor of New York, and he wanted to make sure that New York and other states as well followed principles of law. And he did that in part by developing his own reporter. He got a protege of his to report his cases, which he carefully fed to the protege. And then those were published and distributed all over the United States. And so, you have courts in Mississippi following Chancellor Kent in New York.
And it was not only a way to tame chancery, but it was also a form of unification, national unification, which is part of what James Kent wanted to do. He thought that the Constitution alone would not be enough to hold this place together. And he thought you did that in part through developing principles of private law that he wanted to see all of the states adopt.
Derek Webb:
So, equity was doctrinalized, would you say, by 1787, 1788. So, when Brutus is writing at this point, he’s not accurately depicting the state of equity jurisprudence at that time you think?
Aditya Bamzai:
Well, right. And the Chancellor still had some discretion, but it was mostly reduced to principles of law.
Derek Webb:
But one final follow-up on that, even though it’s doctrinalized and put into rules or principles, was there still no play in the joints or opportunity for judges in equity courts to use principles, whether you call it natural law or justice or fairness, that they’re meditating upon. They’re referring to the principles and the rules to help them formulate that, but they’re still doing maybe some of that work, perhaps or not.
Aditya Bamzai:
Sure. I mean, inevitably there’s always discretion in how judges interpret the law and apply it even in systems that have elaborate rules. And so, that was the case.
Derek Webb:
Professor Bamzai. Yeah.
Aditya Bamzai:
Well, so one of your thoughts was about whether there was more or less flexibility in equity versus common law, or whether there was more or less invocation of natural law in the common law context. And on this point, I thought that one interesting set of examples is related to this huge controversy that occurs in the 1790s. It’s one of the early sets of judicial controversies over the common law of crimes and whether federal courts have a criminal common law jurisdiction.
And just to give you examples of how this arose. Well, one way in which this arises is that there’s an individual who allegedly proposes a bribe to a federal official. And this is at a time, so early 1790s when there are some statutes on the books about prohibitions on bribing federal officials, but it just so happens not a statute on the books about bribing this particular federal official.
And so, the question arises whether this is a crime, and you can see the practicalities of this, which is that countries just getting off the ground. And so, congress is just not enacted a comprehensive federal criminal code. There are just gaps in the code. And so, some people want to say, well, there can be a common law of crimes. There can be this common law of trying to figure out how crimes … Which we would find to be very strange and vague today, but there can be this set of criminal prohibitions that are not codified.
Whereas others, they want to argue that no, crimes need to be codified in order for this to be fair or this to be appropriate action by federal courts. And so, there’s a series of cases on this topic, and if you look them up, they end up being in some ways a flashpoint and a creation of the Federalist versus the Democratic, Republican Parties. Because one of the crimes that allegedly is in the common law is the common law crime sedition. And after a court in what I think 1794 holds, that there is no common law crimes, not the Supreme Court, a lower court than the Federalist Party or the Nascent Federalist Party versus the Democratic Republicans think.
Well, what we ought to do is we ought to act, enact the Sedition Act part of the Alien and Sedition Acts. And this leads to a split in the creation of the first party system and the whole controversy over the Alien and Sedition Acts. Well, connecting it to your point about natural law, if you go look at the common law of crimes cases, where are they getting the common law of crimes? What is that? Where are they getting it? And you would find they’re getting it from writers like Vattel and Grotius and Pufendorf, these natural law theorists of the 1700s and 1600s.
And so, what we see, I think in that context, there’s no invocation of equity as such. We see a comparable reference to the natural law, but at the same time, we do see a backlash to that. And ultimately you find, and this would take some time up to the 18 teens, there’s a Supreme Court case that purports to reject the common law of crimes altogether once the Jeffersonians get some justice on the court.
So, that’s to say that there was this dispute about the common law of crimes, and it turned a little bit on natural law being used in what might be thought of as a common law setting. And stepping back, I think from the dispute, or maybe this is a topic you wanted to address later, the broader question is how does all of this bear and how do these ideas of natural law or equity in the sense of equitable interpretation of law versus a more textual or strict interpretation of the law, how does it bear these disputes on our considerations today? We have new cases that come up that require people to interpret law.
And this is obviously a white whale of constitutional scholarship. I don’t purport to be able to give an answer to that here in the moment, but it seems to me that at least one way you can think about it is that what are the rules internal to our system? How would we do interpretation when it comes to issues that are perhaps not controversial, like the interpretation of a contract or interpretation and statutes in areas that are not controversial?
Then we could ask ourselves, well, ought we, or are we required to use the same sets of interpretive principles, whatever they might be in the context of controversial cases. Whatever those rules might be, whether they require use of adherence to the text or purposive interpretation in the contract context, should we use the same sets of rules when hot button constitutional issues are at stake? And then for those of you who are thinking back, what are the assumptions that I’m making in proposing this as an approach? Obviously, this is an Aristotelian perspective on cases should be treated alike. And then people will start to argue about what are cases and what are unlike cases. And I think that’s question that lurks in this whole debate.
Derek Webb:
Okay. One final little historical question then, let’s maybe move up to 2024, ’25 and ’26. As a practical matter in the states in America from 1787 on and in the federal courts, how was this actually happening? Were in the state courts and the federal courts, were they simply meeting in different courtrooms when they were hearing a common law case versus an equity case? When was this merger ultimately that you speak of? When did that finally happen, but at the founding period, were they really having separate cases with not only separate procedures?
Renée Lettow Lerner:
Yeah. So, there were some states that had a very strong reaction against chancery and what were called the prerogative courts. That is the courts that sat without juries like admiralty, and as Professor Banzai pointed out. And so, those states, and they included Massachusetts, the Puritans in Massachusetts had had very bad experiences with the prerogative courts in religious terms. They were persecuted for heresy, essentially, in front of the prerogative courts.
And so, when the Puritans came to Massachusetts, one of the things they really wanted to do was to abolish chancery altogether. Well, they found that it was almost impossible to do that because as I’ve explained, only chancery can handle the more complicated disputes. So, what they ended up doing was patching in parts of equity into the common law system. So, as Professor Banzai suggested, that was the first mini-merger of law and equity that was going on in places like Massachusetts that tried to get along without chancery courts.
Most states though, had separate courts of chancery. And they were presided over often by a chancellor as in New York. And Thomas Jefferson interestingly thought that keeping law and equity distinct was quite important. He thought that if you tried to merge the two together, you would get a very uneven and unhappy patchwork, and you might expand the discretion of judges, which was not a favorite thing of his. So, that was one of the things that was going on.
In general, I would say at the time there was a great deal of emphasis on justifying legal rules by natural law, by looking at natural law. And you’ll see that as soon as you look at Blackstone, as soon as you open Blackstone, you see that immediately. Blackstone is trying to justify both common law rules and equitable rules in chancery based on natural law. So, there was no sharp distinction in the 18th century mind between the two in terms of use of natural law. And Blackstone himself is drawing on some of the sources that Professor Bamzai mentioned. So, Pufendorf, Vattel, Grotius.
Derek Webb:
From your standpoint then, basically natural is being used in the formulation development or the finding of both common law and principles and equity more so?
Renée Lettow Lerner:
Yeah. That’s right.
Derek Webb:
Okay. All right.
Aditya Bamzai:
I’ll just add one thing on that, which you all know, which is perhaps many civil procedures, first experience with this law equity distinction is that rule one of the federal rules of civil procedures says, “There shall be one cause of action, a civil action.”
Derek Webb:
That’s my favorite rule.
Aditya Bamzai:
By that time, there is not this distinction and the process between the moment in time that we’ve been talking about, which is when the Constitution adopted to 1938, there’s just a gradual merging of these two court systems.
Derek Webb:
Good.
Renée Lettow Lerner:
There were separate proceedings in federal courts though in law and equity up to the merger.
Derek Webb:
1938 Yeah
Renée Lettow Lerner:
Yeah. So, the individual judges would either sit as judges at law or judges in equity.
Derek Webb:
So, you can read about equity in big old dusty books like this that Professor Bamzai has brought along, as you can tell, but you can also read about them or about the issue of equity in cases that are truly being splattered around and on ripped from the headlines today, and some of the most significant cases that are going up to the court and have been going up to the court for a few years now.
And so, if you’re not even interested in these deep abstruse historical questions, you should still be, I think maybe interested in keeping your eye on what equity means and what it doesn’t mean because it’s having big, maybe even arguably outcome-determinative significance in a number of the most high-profile cases that are going up to the Supreme Court today, specifically about what can courts do for you or what they can’t do for you.
And so, maybe the most high, well, they’re all high-profile, but one really, really high-profile case that came out last term, Trump v. CASA about what are called universal injunctions or what people sometimes refer as cosmic injunctions. And Justice Barrett’s majority opinion went into great detail in terms of sifting through what courts in equity at the founding, both in England and then in America did or didn’t do with regard to non-party relief, parties and people who are not parties of the case, could courts do anything for those people who are not parties to the case. And it all got worked out through the question of the history of equity on that particular question. I know Professor Bamzai has a particular interest in this area. I wonder if you could maybe say just a few words about how the court was thinking through these big questions of equity in that major case.
Aditya Bamzai:
Yeah. And so, I think that if we just make sure that everybody knows what’s happening in cases like the universal injunction cases, there are cases in which somebody goes into court and they argue, my rights are being violated perhaps against the US government. And there are other similarly situated people who are not part of that lawsuit. And then the question is, when the court is adjudicating that issue, is the court in a position to say in their order for relief, everybody agrees that they’re in a position after the merger of law and equity in all subsequent developments to say, “Well stop infringing on this individual’s rights, this particular plaintiff’s rights.”
Derek Webb:
And this was in the context of the birthright citizenship case of order.
Aditya Bamzai:
Correct. The particular case arises in that context, but everybody agrees that that particular person’s rights can be remedied through some equitable order. Question is whether that court can also issue relief for other similarly situated people outside of the parties who are there before the court. And if we just think practically about what that means and doesn’t mean. On the one hand, what it means is that when a court decides a legal question involving people’s rights, then potentially what it would mean is that individual’s rights could be remedied. And everybody else’s rights who are allegedly being violated could be remedied in the moment by that particular federal district judge.
What it could also mean depending on what perspective you have about the lawsuit, it could mean that the executive branch’s actions are blocked immediately. And so, all of their enforcement efforts are blocked immediately. So, if you think the executive branch’s actions are actually legal, again, setting aside any particular case, it would just mean that the district court would have the ability to block that as opposed to only remedy the one party before the court.
Derek Webb:
And in our politics, perhaps there have been an uptick in the use of nationwide injunctions up to Trump v. CASA.
Aditya Bamzai:
Yes. I understand that there have, and based on, I’ve never actually done this study myself, but I understand that there have over the last 20 years. And we see the use of them against the Biden Administration, we see the use of against the Trump Administration until CASA came along and said that, “No, actually when the district judge is giving this type of relief, the relief ought to be party specific.” In general, but potentially there could be some nuances there. For instance, the court set aside the possibility that class action relief could be given to similarly situated parties who are not technically there before the court, but were being represented. Or conceivably, actually, some justices have suggested that some statutes allow for broader relief such as the Administrative Procedure Act.
Having set those aside though, there is, as Professor Webb said, a great development of the law of equity. This is all according to the majority based in the law of equity. And I’m actually very curious to know Professor Webb or Professor Lerner’s perspectives on this because I do wonder whether actually the framing of CASA or what underlies CASA has less to do with what I might think of as the law of equity and more to do with the law of judgments. And by judgments, I mean irrespective of whether we think of the type of relief as equitable or legal, common law, or there were various prerogative writs that Professor Lerner alluded to, but writs like mandamus or things like that, which I take it technically fell on the legal side of the line as opposed to the equitable side of line. Would anything change? Would anything turn on our views of the law of mandamus as opposed to the law of equity?
And my suspicion is that actually what’s underlying the CASA approach is the law of judgments, namely that federal courts generally provide judgments to the parties before them. And this comes out a little bit in some footnotes in the opinion like Footnote 13 and Footnote 15 are more focused on the law of judgments. So, this might be one instance where it just so happens that because of the development of this doctrine over time and equity being part of the argumentation in this litigation, that the court is focused on equity. I do wonder whether that is the history of equity bears on the outcome in that case, my own view on this topic.
Derek Webb:
That’s what I mean.
Renée Lettow Lerner:
Yeah. I think that looking at it from the perspective of the law of judgments is a very fruitful way to look at it. The chancellor himself could only bind the parties before him in England, so those before him. And of course, that was in part to prevent him from becoming a tyrant, because you could imagine if the chancellor with all that power could issue sweeping injunctions, binding thousands and thousands of people and binding the entire government, that would turn him into a tyrant.
And so, part of the way he was cabined was to say he can only bind the parties before him in that particular litigation. So, then after that, I think it may make sense to turn to principles of law of judgments to try to see whether other judgments should take that into account, other decisions and other cases should take that into account.
Aditya Bamzai:
And to be clear, one way in which it makes sense that equity became a theme in this type of litigation is that typically when we think of the common law side, in our modern world, we think of money damages. And usually there aren’t these disputes except in the class action context where Party A steps in before the court and says, “I should get money damages and all these other people also get money damages.” No, we usually think that those other people, they control their own action unless we have a certified class action, we think of it.
Whereas with respect to what we would think of today as equitable relief, which is this specific performance type relief, sometimes it’s hard to distinguish between Party A and Party B as they’re seeking relief from the government. And so, I think that was what was underlying this case and how it got litigated so that there was a sense in which this question about the law of judgments arises most frequently in disputes where a party seeking equitable relief against the government.
Derek Webb:
Right. And it is because they were seeking equitable relief. They were seeking an injunction that this then fell into the category of equitable relief. And whether courts and equity could get issue injunctions to parties and non-parties, and maybe they just felt sufficient to the day deciding this question in the context of injunctions and equitable relief was sufficient for that particular case. They didn’t need to go way in on the law of judgments as applied outside the context of equity.
Aditya Bamzai:
Or as I think about it, just one way I might put the point is that the law of judgments typically says federal courts can issue relief for the parties before them. And there was just no difference in equity. It was treated the same way and there’s no evidence that it was treated differently. And that maybe makes sense if the CASA courts use of equity.
Derek Webb:
A lot more to say here. Maybe just if you don’t mind, Professor Lerner, could you maybe say just a word on SEC v. Jarkesy.
Renée Lettow Lerner:
Oh, I love to say more than a word.
Derek Webb:
I know you would.
Renée Lettow Lerner:
I know we don’t have much time.
Derek Webb:
I know. And then we’ll turn it over to questions. So, start thinking about questions you might have for our panelists. A word on Jarkesy.
Aditya Bamzai:
So, Jarkesy, what happened in Jarkesy, the Supreme Court said that in civil fraud cases, the Securities Exchange Commission, if it wanted to get a civil penalty from a party, that that point had to be decided by a jury and not by the SEC’s own in-house adjudication process within administrative law judge. So, that’s what the case held. The Supreme Court I think did not quite understand, again, the distinction between law and equity, we are in a post-merger world, and so it’s very understandable that they would think, “Well, of course, all sorts of complicated issues should go to juries.” That is certainly not what the English judges thought. That is not what the American founders thought either.
The case itself was extremely complicated. I don’t think that many people have waded through the 70-page, very dense opinion by the ALJ. I actually did. I felt some obligation to do this, to see just how complicated it was. It is intensely complicated. And there are other issues besides civil penalties in that case, unjust enrichment and so on and so forth. There were allegedly material misrepresentations with respect to the individual investments Jarkesy made, his portfolio, the auditors he used, his agents, very, very complicated case.
And all of that goes into assessing the civil penalty. There is no way that an 18th century English judge would’ve put that before a jury, just no way. As I say, they engaged in very significant restriction of issues for a jury. So, in cases that could not be simplified in that way, what did they do? Well, they sent them to chancery. They sent them to arbitration. And English judges could be very heavy-handed in forcing arbitration. It was not necessarily purely voluntary on the part of the parties. And they used special juries.
And this I think has been an underappreciated point about the common law. The common law did not turn everything over to an ordinary jury. They, in particular, Lord Mansfield, used special juries in really effective ways in the late 18th century, as England was becoming a global commercial power. Mansfield realized, you don’t turn these cases over to ordinary juries to do whatever they feel like. We are now an international power.
And so, what he did was he developed special juries of merchants. He would call together groups of merchants and say, “All right, here’s this complicated commercial dispute. What do you say?” And he would work together with these juries to reach the right result. He would also call juries of sea captains together in maritime insurance cases. And for a sea power as England was, these were very important cases. And again, he would work together with the sea captains to figure out, was the captain correct to throw the cargo overboard in the storm, for example. So, there were lots of different mechanisms besides ordinary juries that judges could use to decide cases. And I think the US Supreme Court should pay more attention to those mechanisms and not turn everything over to an ordinary jury where they’re really lost in a lot of ways.
Derek Webb:
Okay. Thank you. But equity and common law distinction, historical distinctions play a huge role in that decision with a big blockbuster ruling saying that you get juries rather than these in-house proceedings. Okay. We’ve laid the groundwork historically and maybe at least hit on a couple really big cases in which equity has arisen. I’d love to hear from faculty, students, guests, any questions you might have on anything dealing with things that we’ve talked about today. Yeah, sir.
Speaker 4:
Thanks so much for the talk. It was very enlightening about the distinction between law and equity and how that developed. As a first-year law student, one of the biggest headaches that we have to first face is figuring out jurisdiction, subject matter and personal. So, as law and equity are developing, and as they merge at the start of our nation, do we see discussions of jurisdiction between the two courts? Are there even people who are perhaps even form shopping between the two courts? Could you perhaps comment a little bit on that, if there are any?
Renée Lettow Lerner:
Yeah. The plaintiff was basically constantly form shopping. Every plaintiff had a decision to make, and the plaintiff was in England and in America as well. The plaintiff had to decide, “Am I going to bring a suit in equity or at law?” And that decision then could be monitored in certain ways. So, for example, if the plaintiff decided to bring the case in equity before a chancellor, the chancellor could look at it and say, “Well, I’m not seeing equitable issues here. This case is not appropriate for equitable resolution.” And issue a decree of no equity.
And then at that point, the litigant would have to try to go over to the common law side and try to bring the suit there. So, if the plaintiff went to the common law side mistakenly, the judge could say, “This is not an issue for a jury. I’m going to non-suit you.” And so, at that point, he could try with equity with the chancellor. So, it was really a decision by the plaintiff as monitored and supervised by the judges.
Derek Webb:
Okay. Any other questions? Please.
Speaker 5:
So, thank you all for being here. This talk has covered the history of equity up to the founding and then how law and equity has progressed in federal courts up through today. But I’m curious, broadly speaking, it seems like a lot of state courts have followed the federal practice of merging these courts, but the only one that comes to mind is Delaware, where there are still separate courts of chancery. And I was wondering, over the last 250 years, have there been any interesting wrinkles in the state court context where that merger or lack thereof has caused things to occur in a different way?
Renée Lettow Lerner:
So, when the Field Code was developed as David Dudley Field and his fellow commissioners wrote the Field Code in 1848, it was adopted by New York immediately. So, then law equity merged in New York. The states that were coming into being, especially west of the Mississippi, they had no legal systems yet. And so, they saw this code and they said, “Well, this looks terrific. Let’s borrow it.” So, basically, all of the states west of the Mississippi merged law and equity quite early in their histories.
So, in the other states, the older states, that was a piecemeal process. And when I took the Virginia Bar Exam in 1995, Virginia still had not merged law and equity. It still had separate suits and law and equity. Since then, they’ve merged it. But we had to learn separate terminology for each type of suit. So, it’s very piecemeal. Following the Federal Rules of Civil Procedure, many, many states, with the exception of course, of certain like Virginia, many, many states went ahead and merged at that point. They just followed the federal rules in effect. So, that’s the history of how that developed.
Derek Webb:
Do you want to get any follow-up in that?
Aditya Bamzai:
Not on this point, because I think Professor Lerner knows a lot more about this than I do. Maybe I’ll just weigh in on … Should I weigh in on the form shopping issue? Because I think that this is an interesting background to the Trump v. CASA case. Potentially one of the concerns there was the possibility that one could go to different courts and then get injunctions that cut in different directions against the same set of officers, leaving them unsure exactly how to proceed. And so, if we think about that possibility, that could have been one of the problems that the court thought it’s solving by saying, “Well, there’s only a limited role for these types of universal injunctions.”
Derek Webb:
Yeah. Great. We are now pretty much at time, so I want to wrap up. One is out there. You now know who to blame for having to learn all these complex rules about joinder and discovery, but we know who to thank for coming here today to speak with us. So, Professor Lerner, Professor Bamzai, thank you.
