48 Pages Posted: 14 Nov 2016 Last revised: 24 Nov 2016
Date Written: November 8, 2016
What does the majority owe the minority when issues are put to a vote? This question is central to direct democracy, where voters bypass the legislature and enact law directly. Some scholars have argued that voters in direct democracy bear fiduciary-like duties because they act as representatives when casting their ballots. The Supreme Court, by contrast, has suggested that voters are not agents of the people and thus have no fiduciary obligation. By focusing on whether direct-democracy voters are representatives who bear duties, both sides have framed the issue incorrectly. They have imported a legal tool — fiduciary duty — from private law designed to combat a governance problem absent from direct democracy: a principal–agent problem. The real governance problem in direct democracy is the tyranny of the majority. Once we focus on the right problem, private law — specifically corporate law — provides useful insights. Corporate law imposes duties — sometimes confusingly also called “fiduciary” — on shareholder majorities to consider minority interests when voting. Although these duties do not require the majority to subordinate its own interests like a true duty of loyalty, courts recognize the need to police for opportunism when the minority is vulnerable to exploitation. Looking to these private-law voter duties can help explain a puzzling line of Supreme Court cases reviewing the constitutionality of ballot initiatives that rolled back legislation benefiting minority groups. In direct democracy, where structural protections for the minority are lacking, courts may be playing a familiar institutional role from corporate law: keeping the majority from exploiting the minority.
Keywords: fiduciary, loyalty, duty, direct democracy, voting, voter, election law, tyranny of the majority, representative
JEL Classification: K22, K00, K10
Suggested Citation: Suggested Citation