Loyalty has been much in the news lately. Vice President Kamala Harris recently suggested that Republican vice-presidential candidate J.D. Vance would be “loyal only to Trump, not to our country.”[1] Online retailer Etsy just announced its first-ever loyalty program in September, which is designed to reverse a decline in total sales.[2] And Elon Musk’s lawyers are back in the Delaware Court of Chancery fighting for his $55 billion pay package, while Chancellor Kathaleen McCormick is asking “whether stockholders can ratify an adjudicated breach of the duty of loyalty.”[3]

Is “loyalty” the same everywhere it arises? Or is the legal understanding of loyalty (“fiduciary loyalty”) distinctive from patriotism, customer loyalty, and other forms of ordinary loyalty? In a new article, we explore this issue empirically using corpus linguistics, a methodology for investigating language usage in systematic collections of texts called “corpora,” and we conclude that fiduciary loyalty is largely distinct from ordinary loyalty. We cannot observe directly judges’ thoughts when they decide fiduciary loyalty cases, but we know when they write about fiduciary loyalty, they use different words than ordinary people use when writing about other forms of loyalty.

Fiduciary loyalty has ancient origins, but fiduciary law is a relatively young field of academic inquiry, and many fundamental issues remain unresolved. Whether fiduciary loyalty and ordinary loyalty overlap is one of those unresolved issues, and it is of interest to judges, lawyers, and scholars for three reasons. First, understanding the source of judicial ideas about fiduciary loyalty helps explain the nature and extent of the duty of loyalty in fiduciary law. Second, standards of conduct tell fiduciaries what to do and how to do it, so it is important to know whether they should refer to ordinary ideas about loyalty. Third, even if fiduciary loyalty is largely distinct from ordinary loyalty, as we conclude, analogies to ordinary loyalty can aid in understanding the fiduciary duty of loyalty.

We do not define “loyalty.” In deciding whether fiduciary loyalty is like ordinary loyalty, we compare the language and context of loyalty in judicial opinions with the language and context of loyalty in ordinary settings. If the discourse around fiduciary loyalty is distinct from the discourse around ordinary loyalty, then we will consider fiduciary loyalty to have a special meaning. We examine language around three dimensions of loyalty:

Are judicial conceptions of fiduciary loyalty distinctive? Every loyalty relationship has a bestower of loyalty and a recipient of that loyalty, but these relationships differ in how the bestower thinks and behaves. Focusing on a particular motive or deed (or a special combination of motive and deed) creates a conception of loyalty.[4] From legal and philosophical writings about loyalty, we derive several conceptions of loyalty – such as loyalty as affirmative devotion,[5] loyalty as being true,[6] or loyalty as avoidance of conflicts[7] — and we look for evidence of these conceptions of loyalty using corpus analysis.

Is the function of fiduciary loyalty distinctive? Fiduciary relationships exist when one party (the fiduciary) exercises discretionary authority over the resources or practical interests of another party (the beneficiary).[8] Ordinary relationships that invoke the concept of loyalty do not have precisely the same structure as fiduciary relationships. (If they had the same structure, they would be fiduciary relationships.) Nevertheless, we can use corpus analysis to identify ordinary loyalty relationships, and we can compare the structure of these relationships with that of fiduciary relationships. In deciding whether fiduciary loyalty is really loyalty, the issue here is whether loyalty has a similar function in both types of relationships, even though they are structurally distinct.

Are modifiers of fiduciary loyalty distinctive? When courts decide duty of loyalty claims, they make the binary determination of whether a fiduciary is loyal or disloyal, but courts describe fiduciary loyalty as having different levels of intensity. The most common modifier is a reference to some form of “heightened” or “strict” duty of loyalty. The flipside of a heightened duty is a diminished duty of loyalty, which is less often highlighted but seems to apply in some circumstances. We can use corpus analysis to compare the modifiers of fiduciary loyalty and ordinary loyalty. In deciding whether fiduciary loyalty is really loyalty, the issue here is whether judges modify loyalty in a manner that is distinct from ordinary discourse.

In striving to answer these three questions, we rely on several large publicly available databases that for our purposes represent legal and ordinary language domains. Legal language is represented by judicial opinions compiled by the Harvard Law Library through the Caselaw Access Project, which expands public access to U.S. law by making all published U.S. court decisions freely available to the public online in a consistent format, digitized from the collection of the Harvard Law Library. We created a specialized corpus – the Corpus of Fiduciary Cases – by extracting all cases containing “fiduciary” or “duty of loyalty,” resulting in a corpus of roughly 134,500 judicial opinions and nearly 618.8 million words. Modern ordinary language is represented by three registers, i.e., varieties associated with the situation of language use: the registers of news published online (the News on the Web Corpus), magazines, and blogs (the last two from the Corpus of Contemporary American English).

In all these corpora, we look for words that are associated with “loyalty” or “loyal,” such as “loyalty and devotion” or “loyal and reliable.” Although we recognize that these associations are imprecise guides to the conceptions of loyalty, we assume that those who forged these associations chose the words with purpose. We also look at the corpora of ordinary language to discover the most common non-fiduciary loyalty relationships, using constructions like “loyalty to the client,” “loyal to the party,” or “loyal fan.” We then compare these relationships with known fiduciary relationships to determine whether loyalty has a similar function in both types of relationships, even though they are structurally distinct. Finally, we find words that modify someone’s loyalty (typically adjectives and adverbs: e.g., descriptors, a particular kind of loyalty, a value judgment about the degree to which loyalty is reasonable and justified, or manner of loyalty), and we compare the modifiers of fiduciary loyalty and ordinary loyalty.

After comparing the language and context of fiduciary loyalty in judicial opinions with the language and context of ordinary loyalty in online news, we conclude that the most common conceptions of fiduciary loyalty are distinct from the most common conceptions of ordinary loyalty. Also, judges usually modify loyalty to describe the sincerity and thoroughness of a fiduciary’s commitment, while ordinary people usually modify loyalty to vary its intensity or describe its consistency over time. Thus, the examination of associations and modifiers shows that fiduciary loyalty is largely distinct from ordinary loyalty, even though the analysis of relationships suggests that both forms of loyalty serve a similar function, namely, to motivate the bestower of loyalty to support the recipient, even when the bestower’s interests in a particular transaction are misaligned with the recipient’s interests.

ENDNOTES

[1] Gabriella Abdul-Hakim, Fritz Farrow & Will McDuffie, Harris calls Vance “rubber stamp” for Trump and his “extreme” agenda, ABC News (July 17, 2024, 5:02 AM) https://abcnews.go.com/US/harris-calls-vance-rubber-stamp-trump-extreme-agenda/story

[2] Ailing Etsy rolls out its first loyalty program in move to spark growth, CBS News (July 31, 2024, 3:05 PM) https://www.cbsnews.com/news/etsy-online-shopping-loyalty-program-insider/

[3] Peter Eavis, Delaware Judge Questions Tesla About Vote on Elon Musk’s Tesla Pay, N.Y. Times (Aug. 2, 2024) https://www.nytimes.com/2024/08/02/business/elon-musk-pay-delaware.html

[4] Scholars in other disciplines often observe that loyalty is both affective and behavioral. See, e.g., Mary Healy, Patriotism and Loyalty, in Handbook of Patriotism 476 (Mitja Sardoč, ed. 2020) (noting with respect to patriotism that “there can be both an affective and behavioral aspect”).

[5] See Josiah Royce, The Philosophy of Loyalty 16-17 (1924) (describing loyalty as the “willing and practical and thoroughgoing devotion of a person to a cause”); George P. Fletcher, Loyalty—An Essay on the Morality of Relationships 9, 24 (1993) (describing the “maximum condition” of loyalty as involving “an element of devotion”).

[6] See Simon Keller, The Limits of Loyalty 154 (2007) (“There is a sense of ‘loyal’ that is associated with being dependable, or reliable, or dutiful, or true.”).

[7] See Andrew S. Gold, The Loyalties of Fiduciary Law, in Philosophical Foundations of Fiduciary Law 176, 178 (Andrew S. Gold & Paul B. Miller eds., 2014).

[8] This definition is a mashup of two similar and widely cited definitions of fiduciary relationships. See D. Gordon Smith, The Critical Resource Theory of Fiduciary Duty, 55 Vand. L. Rev. 1399, 1402 (2002) (“[F]iduciary relationships form when one party (the ‘fiduciary’) acts on behalf of another party (the ‘beneficiary’) while exercising discretion with respect to a critical resource belonging to the beneficiary.”); Paul B. Miller, A Theory of Fiduciary Liability, 56 McGill L.J. 235, 262 (2011) (“[A] fiduciary relationship is one in which one party (the fiduciary) enjoys discretionary power over the significant practical interests of another (the beneficiary).”).

This post comes to us from Professor D. Gordon Smith, the Ira A. Fulton Chair at Brigham Young University’s J. Reuben Clark Law School, and Marianna Gracheva, a postdoctoral researcher at Northern Arizona University. It is based on their recent article, “Is Fiduciary Loyalty Really Loyalty?” available here.