Bad Reliance in Public Law
Volume 68, Issue 6, 1243-1290
When and how should courts protect individual reliance upon unlawful governmental acts? This question arises in various situations in all fields of public law. However, despite its pervasiveness, the problem of “bad reliance” has hardly drawn any scholarly attention. This Article sets out to fill this gap. The Article adopts a cross-public law perspective and makes two main normative claims. First, the Article argues that given their duty to promote the rule of law, courts should usually invalidate unlawful governmental acts even if they have induced extensive reliance. However, in cases where reliance upon an unlawful governmental act was essential for the exercise of personal autonomy-understood as the ability of people to control their destiny by pursuing their own life plans-courts should nevertheless consider giving effect to unlawful acts.
Second, the Article argues that when a court decides to protect reliance upon an unlawful governmental act, it should attempt to mitigate the adverse effects that such protection may have on the ex ante incentives of governmental authorities to comply with the law. The Article presents a two-tier strategy that courts can use to achieve this goal. Under this strategy, courts should explicitly acknowledge and condemn unlawful governmental behavior. Thereafter, they should exercise broad discretion with respect to the remedial measures that should be taken to protect reliance upon it. This strategy ensures that governmental authorities will know what the law requires of them and that they will pay a reputational price for violating it. At the same time, it renders the benefits that governmental authorities can gain from such violations uncertain.
Following the normative analysis, the Article turns to examining several doctrines and devices that courts have used to protect bad reliance. This examination shows that some of the rationales and considerations discussed in the Article already find expression in judicial practice, while others offer critical insights into this practice. At the same time, the case law analysis illustrates the problems and risks associated with the protection of bad reliance along the lines prescribed by this Article. The Article argues that while these difficulties should not dissuade courts from protecting bad reliance, they should affect their choice among alternative remedial solutions.