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The Supreme Court: Open For Business


With controversial rulings on abortion and campaign finance, the current U.S. Supreme Court has waded into some of the most explosive issues in American politics. Under the leadership of new Chief Justice John G. Roberts, the high court appears to be on the verge of rewriting vast tracts of settled Constitutional law. But there's another important emerging feature of the Roberts Court that has not drawn nearly as much attention: its sympathy to business.

Consider this: Out of 15 cases in which the U.S. Chamber of Commerce filed friend-of-the-court briefs, presenting the views of its corporate members, the chamber won 13—the chamber's highest winning percentage in its 30-year history. Indeed, the court's 2006-07 term, drawing to a close this month, has been a banner year for business, with important victories in areas ranging from antitrust and banking to shareholder suits and punitive damages.

The true sea change brought about by the Roberts court stems from its willingness to take business cases for review. The group presided over by his predecessor, William H. Rehnquist, simply wasn't interested, instead favoring cases involving criminal law, school prayer, or other matters involving fundamental constitutional rights. "There was a period there toward the end of the Rehnquist years when you couldn't buy an antitrust or securities case onto the docket to save your life," says Carter G. Phillips, an appellate specialist Sidley Austin in Washington who has argued before the Supreme Court dozens of times.

That's changed dramatically. Of 73 cases heard by the court in the current term, 29 (40%) involved or were significant to business, according to statistics compiled by Akin Gump Strauss Hauer & Feld, a law firm with an active practice before the court. That's up from around 30% during the previous two terms. Already, nearly 50% of cases for the session beginning next October involve business. A big one slated for review next term involves the degree to which shareholders may seek compensation from bankers, accountants, and lawyers who may have helped exeuctives commit securities fraud. Another promises to resolve whether federal approval of medical devices shields their makers from injury lawsuits.

TORT REFORM FRIENDLY

The new willingness of the justices to referee business matters could have a big impact on the battle over so-called tort reform. Robin S. Conrad, head of the Chamber of Commerce's litigation arm, notes that the judicial branch offers an alternative forum where business can seek changes it has failed to win from other branches of government. In the 1990s, the chamber and other business groups made this a vital part of their tort reform strategy on a state level, pouring money into local judicial campaigns to reshape state supreme courts and, ultimately, state laws. Now with a U.S. Supreme Court that's not allergic to business cases, the approach is playing out on a national level, as corporations hope to clamp down on a range of liability suits.

The results in most of the Supreme Court's rulings have left business pleased. A common theme running through a number of the court's rulings, observers say, is an interest in closing the courthouse door to claims from the very start. In a case known as Credit Suisse v. Billing, for example, the court shut down a major avenue of potential litigation for plaintiffs. Other rulings raised the bar for claimants to move their cases forward. "The justices have really written opinions that say not just that businesses should ultimately win, but that these cases should go nowhere from the very beginning," says Thomas C. Goldstein, an attorney at Akin Gump.

The court's newest justices, Roberts and Samuel J. Alito Jr., have the business community's stamp of approval. But, while some of the court's business rulings this term were decided on 5-to-4 votes—notably a decision sharply confining the time in which workers must file pay discrimination claims—those kinds of narrow splits were not typical on business matters. In fact, 12 rulings in business cases were unanimous, and most others were decided by substantial majorities, underscoring that the shift in the court has more to do with the cases being selected than the leanings of particular justices. One of the court's most liberal members, Ruth Bader Ginsburg, authored the court's 8-1 opinion in Tellabs v. Makor, which raised the hurdle for plaintiffs to move forward with securities fraud lawsuits. That's part of what leads academics and practitioners to see the Roberts court as more pragmatic than political in the business arena. "These are not expansive cases with a lot of ideological jargon in them," says Herb Hovenkamp at the University of Iowa College of Law about the court's business rulings. "They are fairly technical, fairly narrowly written."

SHRINKING DAMAGES

Still, even rulings that were measured and lacking in explicit ideological pronouncements may have the potential for broad impact. In throwing out a $79.5 million punitive damage award against Altria Group Inc.'s Philip Morris (MO)in a smoking lawsuit, for example, the court said that jurors may consider harm only to parties in the case, not to the public at large. In theory that will dramatically shrink the size of any punitive damages award. While Conrad of the chamber considers the case a win, she says she wished the court had gone further and set forth a formula to cap punitive damages. But David R. Stras, a law professor at the University of Minnesota and former clerk for Justice Clarence Thomas, calls the case "a sleeper in terms of its import" and thinks it will drastically curtail awards in other cases.

Similarly, Hovenkamp thinks the court's ruling in the Credit Suisse case could have widespread impact. In a June 18 decision, the court nixed efforts by plaintiffs to sue securities underwriters for anticompetitive conduct in the market for initial public offerings. Heavy regulation of this area by the Securities & Exchange Commission, the justices ruled, precludes private antitrust claims. While the court's decision could be read as applying narrowly to Wall Street firms subject to SEC oversight, Hovenkamp says it may well be extended to other areas, such as telecommunications, where companies are also subject to close federal monitoring for anticompetitive activity.

Advocacy groups for consumers and plaintiffs are maintaining hope by clinging to the notion that rulings made by the Roberts court are evolutionary, not revolutionary. Bonnie I. Robin-Vergeer, a senior attorney at Public Citizen Litigation Group in Washington, acknowledges "it's probably fair to say that the court is friendlier to business than in past years." But she, too, observes that many of the court's rulings have been crafted in a narrow way. "There's some saving grace in that," she says.

By Michael Orey


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