Stare Decisis

Stare Decisis

Stare decisis is a legal doctrine that directs courts to follow established precedents when deciding cases with similar facts or issues. The term is Latin for “to stand by things decided.” By promoting consistency and predictability, stare decisis helps ensure that like cases are treated alike across time.

How it works

• Precedent: A precedent is a prior judicial decision that guides later rulings. Courts consult precedents to interpret laws, apply legal principles, and resolve disputes with comparable circumstances.
• Binding vs. persuasive authority: Decisions of a higher court within the same jurisdiction are binding on lower courts (binding precedent). Decisions from other jurisdictions or lower courts may be persuasive but are not obligatory.
• Hierarchy: Because the U.S. Supreme Court is the highest court, its rulings are binding on all lower federal and state courts. State courts follow their own appellate hierarchy and Supreme Court but are not required to follow other states’ appellate decisions.

What creates or replaces a precedent

• A novel or carefully reasoned decision can become precedent when a court rules on an issue that lacks clear prior authority.
• A higher court can overrule earlier decisions; when that happens, the new ruling replaces the prior precedent and becomes binding for similar future cases.
• Lower courts must follow controlling precedent but may consider persuasive decisions from other jurisdictions when no controlling precedent exists.

Overturning precedent

Overturning precedent is uncommon but does occur. From 1789 to 2020, the U.S. Supreme Court reversed its own prior decisions 145 times out of 25,544 opinions—less than 1% of opinions. Notable examples include:

• Brown v. Board of Education (1954), which rejected the “separate but equal” doctrine established in Plessy v. Ferguson (1896).
• Dobbs v. Jackson Women’s Health Organization (2022), which overturned Roe v. Wade (1973) on abortion rights.

When the Supreme Court overrules a prior decision, lower courts must follow the new rule.

Real-world example: insider trading (Dirks and Salman)

• Dirks v. SEC (1983): The Supreme Court held that a tipper breaches fiduciary duty and exposes tippees to liability when the tipper receives a personal benefit from disclosing confidential information. The Court explained that a gift of confidential information to a relative or friend can constitute such a benefit.
• Salman v. United States (2016): The Supreme Court applied Dirks and affirmed that a tipper’s giving confidential information as a gift supplies the requisite personal benefit. Salman received material nonpublic information indirectly from a relative; the Court found the conduct within the “heartland” of Dirks, upholding insider-trading liability.
• Circuit conflict and appeals: The Second Circuit in United States v. Newman (2014) required a showing of a tangible personal benefit to convict tippees. Other circuits declined to follow Newman, and the Supreme Court ultimately resolved the issue by reaffirming the Dirks standard in Salman.

Key takeaways

• Stare decisis promotes legal stability by making courts follow precedent in similar cases.
• Precedent is binding if issued by a higher court within the same jurisdiction; other decisions may be persuasive.
• Higher courts (especially the U.S. Supreme Court) can overturn precedent, after which the new rule governs lower courts.
• Landmark reversals—like Brown and Dobbs—show that stare decisis is influential but not absolute.
• Case law examples (Dirks and Salman) illustrate how precedent shapes outcomes in specific areas, such as insider-trading law.

Selected primary authorities

• Dirks v. Securities & Exchange Commission
• Salman v. United States
• Brown v. Board of Education
• Plessy v. Ferguson
• Roe v. Wade
• Dobbs v. Jackson Women’s Health Organization
• Cornell Law School, Legal Information Institute — entries on “Stare Decisis” and “Precedent”