An "outdated rationale" is one factor to be considered when overruling precedent.
Yes. Precedent relies on respect for the principle of stare decisis, the idea that courts should stand by what they have already decided, and thus enforce similar outcomes for similarly situated individuals.
In the united-states, the U.S. Supreme Court has established a test for when to ignore stare decisis and overturn precedent:
- the quality of the precedent's reasoning
- the workability of the rule it established
- the precedent's consistency with other related decisions
- developments since the decision was handed down; and
- reliance on the decision
Janus v. AFSCME, 138 S. Ct. 2448, 2478-79 (2018).
Your question seems to most squarely implicate factor 4, i.e., when the Court decided United States v. Al, the state of the universe required Rule X, but the universe has now changed such that Rule Y makes more sense in United States v. Bob.
Establishing that fact alone may not be enough to justify overruling a precedent, but that fact will often also support the other factors, as well. Perhaps the quality of the precedent's reasoning is low because it failed to account for the possibility of the changes Bob is relying on. Perhaps those changes are so prevalant that they have rendered the precedent's rule unworkable. Perhaps the precedent is inconsistent with related decisions that have relied on those changes to establish their rules.
An outdated rationale was key to the decision to overrule Quill
Many precedents have been overruled based -- at least in part -- on that scenario. Probably the best recent example is South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), which overruled Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and Nat. Bellas Hess v. Dept. of Revenue, 386 U.S. 753, 87 S. Ct. 1389 (1967). In those cases, the Court held that states may not impose sales-tax collection obligations on a business based on its sales into the state, unless the business had a "physical presence," such as an office, warehouse, or sales agents, in the state.
Bellas Hess reached that decision based in large part on the administrative burdens businesses would encounter in trying to discern the sales tax rates applicable to every sale across the country. Doing so would require the seller to (1) know not only what state all their buyers live in, but also whether they were also subject to sales tax based on the county, city, school district, water district, etc., in which each one lived; and if so (2) determine whether their product was within the definition of a taxable good or service in each of those jurisdictions; and if so (3) calculate tax based on the current rates of each of those jurisdictions; and then (4) comply with each jurisdiction's reporting and recordkeeping requirements. In 1967, there was no practical way for remote sellers to carry on their business without incurring massive compliance costs.
But when the Court heard Wayfair 50 years later, the same was no longer true. Although other factors also counseled in favor of setting aside stare decisis, Wayfair focused most of its attention on the technological changes that demanded a new rule, noting that everything had changed since Quill was decided.
On one hand, the importance and impact of remote sales had grown wildly:
- Internet access had grown from 2 percent of America to 89 percent.
- Remote sales had grown from $180 billion annually to more than half a trillion dollars annually, with Amazon and other e-commerce platforms supplanting Wal-Mart stores and other brick-and-mortar sellers.
- The loss of tax revenue from remote sales had grown from $3 billion to $33 billion.
But while the ease and impact of making remote sales had been increasing, the states had seriously ameliorated the burden of collecting taxes on those sales. Many states had spent the last 15 years on the Streamlined Sales and Use Tax Agreement, collaborating to bring uniformity to their sales tax definitions, administration, and collection. And technological developments from companies like Avalara -- subsidized by the states -- had greatly reduced the burden of calculating the tax due on purchases anywhere in the country.
Therefore, given "the present realities of the interstate marketplace," the Court concluded that it must overrule its holdings from Quill and Bellas Hess:
The real world implementation of Commerce Clause doctrines now makes it manifest that the physical presence rule as defined by Quill must give way to the far-reaching systemic and structural changes in the economy and many other societal dimensions caused by the Cyber Age. Though Quill was wrong on its own terms when it was decided in 1992, since then the Internet revolution has made its earlier error all the more egregious and harmful.
South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2097 (2018).
Of course, this was not the first or only case to find that the rationale for a precedent was outdated. Others include:
- “The limitation of marriage to opposite-sex couples may long have seemed natural and just, but its inconsistency with the central meaning of the fundamental right to marry is now manifest.” Obergefell v. Hodges, 576 U.S. 644, 670-71 (2015), overruling
Baker v. Nelson, 409 U.S. 810 (1972)
- "The deficiencies in Bowers became even more apparent in the years following its announcement. [Bowers relied on the prevalance of similar laws in other states as a basis for upholding Georgia's anti-sodomy law, but] the 25 States with laws prohibiting the relevant conduct referenced in the Bowers decision are reduced now to 13, of which 4 enforce their laws only against homosexual conduct. Lawrence v. Texas, 539 U.S. 558, 573 (2003), overruling Bowers v. Hardwick, 478 U.S. 186, 106 S. Ct. 2841 (1986)
- "Experience in applying the doctrine of Swift v. Tyson, had revealed its defects, political and social; and the benefits expected to flow from the rule did not accrue." Erie R. Co. v. Tompkins, 304 U.S. 64, 74-75 (1938), overruling Swift v. Tyson, 41 U.S. 1 (1842).
- "It is untenable to suggest these days that it would be a special hardship for each and every woman to perform jury service or that society cannot spare any women from their present duties." Taylor v. Louisiana, 419 U.S. 522, 533-35 (1975), overruling Hoyt v. Florida, 368 U.S. 57 (1961).
- "Austin is undermined by experience since its announcement. ... Rapid changes in technology—and the creative dynamic inherent in the concept of free expression—counsel against upholding a law that restricts political speech in certain media or by certain speakers. Today, 30–second television ads may be the most effective way to convey a political message. Soon, however, it may be that Internet sources, such as blogs and social networking Web sites, will provide citizens with significant information about political candidates and issues." Citizens United v. Fed. Election Comm'n, 558 U.S. 310, 364-65 (2010), overruling Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 110 S. Ct. 1391 (1990).