Given Justice William O. Douglas’s strong stint as SEC Chairman and his academic background in corporate and securities law, a casual observer would expect his tenure on the Supreme Court to be distinguished with the authorship of major SEC decisions. Yet, even after his early recusal policy which kept him from sitting on cases in which he had government-sector involvement, Douglas did not exert the influence on the Supreme Court in securities cases that one would expect. An examination of the justices’ public archives before 1972 shows that it was lesser-known justices, such as Stanley Reed, Wiley Rutledge, Frank Murphy and Arthur Goldberg, who led the Court decision writing in favor of an expansive interpretation of the Securities Acts.44
What explains this anomaly? Inside the Supreme Court, deliberations are secret and the only evidence we have is the personal papers and notes of the justices. Those archives help answer the mystery of why Justice Douglas appears only occasionally as the author of the majority opinion. Supreme Court internal rules provide that the longest serving justice on the winning side of the case has the right to assign the opinion writing. After 1938, when the Court switched dramatically to permit broadened administrative powers within the SEC to regulate interstate commerce in securities, the controversy about the authority of the SEC to make administrative rules became settled law. When Justice Douglas, and others such as Justices Hugo Black and Robert Jackson, who had fought the battle during the New Deal for passage and the constitutionality of the Securities Acts were on the winning sides of many cases, they simply chose to assign the opinions to fellow justices.
In addition, other justices on the Court took special interest in securities and administrative law cases. Justice Reed, who had taught corporate and securities law as a professor, remained a student of securities law while on the court. His papers reflect a deep passion for understanding and implementing complicated legislation regulating the securities industry. Justice Rutledge was a strong academic lawyer, serving as dean of the University of Iowa College of Law. His private archives show an acute academic mind with wide interests in corporation, administrative law and securities fields. Justices Murphy and Goldberg, somewhat by default, also became interested in the intricate and complicated arguments about the manner in which the SEC interpreted and implemented Congressional legislation. Justice Tom Clark, after he was appointed to the Supreme Court in 1949, often joined them.45
These justices took on securities cases and fashioned a strong legal regimen that balanced their role as reviewers of the law, while permitting reasonable administrative rule making. As Justice Goldberg wrote, “It is necessary to bear the limitations of the judicial process in mind. Judicial law can help us ensure compliance by government and by our citizenry with the Bill of Rights and valid laws and regulations — matters of transcendent importance. Judges can invalidate unconstitutional law and unauthorized executive actions… But judges cannot, however, establish social and economic justice by judicial fiat.”46 These lesser-known justices adopted a conscientious fidelity to judicial review and statutory interpretation that promoted the power of the Congress and the SEC to regulate the national securities and financial markets.
This is not to say that Douglas, Frankfurter, Black and Jackson were not interested or influential. Where necessary, they exerted their influence behind the scenes, drafting memos, gentle reminders, firm rejoinders, and complimentary missives to their colleagues in their own attempts to win arguments among “the brethren,” as the justices referred to each other. They did most of their work winning securities cases out of public sight, with consensus building and persuasion, as they focused their decision-writing skills on other cases and issues, such as emerging civil and criminal rights matters, about which they felt more passionate.