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The Supreme Court's Five Most Important Decisions for Business


The Supreme Court's Five Most Important Decisions for Business

Illustration by Shawn Hasto

Business interests didn’t get everything they wanted in the Supreme Court’s just-ended 2013-2014 term, illustrating that a conservative majority doesn’t necessarily bring joy to parties with Inc. or Co. or Corp. after their names. That really shouldn’t be a surprise, since some of the most important business cases involve clashes that pit one company against another.

In what might be called the Jurisprudence of Mitt Romney, the justices added teeth to the failed 2012 Republican presidential candidate’s notorious campaign quip that “corporations are people, my friend.” On June 30, the final day of the nine-month term, the high court’s conservative majority prevailed in a 5-4 decision holding that companies controlled by religious families can’t be forced by President Barack Obama’s health-reform law to cover contraception for women workers.

Among its notable aspects was the ruling majority’s assumption that corporations can be regarded as individuals for purposes of protecting constitutional rights—in this case, the First Amendment right to religious liberty. “A corporation is simply a form of organization used by human beings to achieve desired ends,” Justice Samuel Alito wrote for the majority. “When rights, whether constitutional or statutory are extended to corporations, the purpose is to protect the rights of these people.”

That’s one way to look at it—the same way, in fact, that the high court majority viewed companies’ First Amendment free-speech rights when the justices loosened campaign-spending rules in the 2010 Citizens United case. Justice Ruth Bader Ginsburg offered a disparate view, however, in her dissent in the Hobby Lobby contraceptive decision. “The court forgets that religious organizations exist to serve a community of believers,” Ginsburg wrote. “For-profit corporations do not fit that bill.”

Broadcast television: In the widely watched TV case, the justices ruled 6-3 that internet startup Aero unlawfully captured and streamed broadcast TV programming to its subscribers.

Industrial polluters: The high court held that the Environmental Protection Agency may use its permitting power to regulate greenhouse gases from power plants and certain other large industrial facilities. The EPA’s victory amounted to a qualified backing of the Obama administration’s program to address climate change.

Courtroom liability: It will now be somewhat easier for publicly traded companies to defend against shareholder class-action suits alleging fraudulent management misstatements. The justices stopped short of tossing out a key 1988 precedent that opened the door to many such suits by relieving plaintiffs’ lawyers of the obligation of proving that their clients specifically relied on alleged misstatements in making decisions to buy stock.

Intellectual property: The justices ruled unanimously that software developers can’t get a patent simply for taking an abstract idea and implementing it on a computer. The decision rejected a bid by Melbourne-based Alice Corp. to patent a computerized system for limiting the risk that one party to a financial transaction will renege on its obligations. Writing for the court, Justice Clarence Thomas said the patent improperly covered a “fundamental economic practice,” which a party can’t claim as its exclusive property.

Retailers and Internet businesses such as Google (GOOG) and Amazon (AMZN) had urged the court to use the patent case to weed out frivolous royalty demands. Software makers led by Microsoft (MSFT) had warned that strict limits on patents would reduce incentives to develop cutting-edge programs. Justice Thomas seemed to balance these concerns by saying the court wasn’t making it more difficult to obtain patents but was merely reasserting existing law.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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Companies Mentioned

  • GOOG
    (Google Inc)
    • $516.35 USD
    • 5.25
    • 1.02%
  • AMZN
    (Amazon.com Inc)
    • $299.9 USD
    • 2.17
    • 0.72%
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