Is the Supreme Court ‘biased’ toward business?

Last December, the New England Legal Foundation (NELF) held its 10th annual CEO Forum in Boston on the topic, “Supreme Business: Business Cases and the ‘New’ Supreme Court.”
Prompted by President Bush’s recent appointments of Chief Justice John Roberts and Associate Justice Samuel Alito, we asked our panelists to analyze whether the change in the court had significantly affected its approach to business cases.
The Forum topic was especially timely because, by December 2006, the Roberts court already had agreed to hear an unusually large number of business law cases compared to prior years.
By the end of the 2006 term, 33 of the 68 cases (48.5 percent) heard and decided by the Supreme Court involved business or property issues.
While the Forum was a great success, and our panelists (who included two former U.S. Solicitors General) provided a fascinating glimpse of Supreme Court advocacy at the highest levels, the panelists ultimately did not answer the question we had posed.
To be fair, it was simply too early at that time to identify with any confidence trends in the Roberts Court’s business law jurisprudence.
Still too early to tell?
And even now, it may still be too early. A close reading of the Supreme Court’s business decisions last term does not reveal any particular pattern. While some commentators have characterized the Roberts Court as “uniformly” moving to the right and have labeled it as “pro business,” these views are too simplistic.
Closer to the truth would be a conclusion that the court’s business decisions reveal an ad hoc approach in which each case was judged on its own merits, with no overarching economic, business, or political viewpoint or theory being applied.
This view is certainly consistent with the very nature of common law jurisprudence. It also reflects the reality that the business cases this past term usually turned on specific statutory, regulatory, or pleading requirements – each of which had to be interpreted in its own context and against a backdrop of broader legal and constitutional concerns.
It is true the court issued what some might characterize as “pro-business” decisions in many instances. For example, it vacated the multi-million dollar punitive damage award (Philip Morris USA v. Williams), raised the bar for plaintiffs’ Section 10(b)(5) lawsuits under the Securities Exchange Act of 1934 (Tellabs, Inc. v. Makor Issues & Rights, Ltd.), and tightened the standard for pleading conspiracy in anti-trust cases (Bell Atlantic Corp. v. Twombly).
However, the court’s decisions in environmental and other major cases could well increase regulatory and other burdens on business.
The court in Massachusetts v. EPA ruled that the Clean Air Act authorizes the EPA to regulate the emission of carbon dioxide from new motor vehicles. It also held in United Haulers Association, Inc. v. Oneida-Herkimer Solid Waste Management Authority that a state’s requirement that trash haulers bring solid waste only to state-owned facilities did not violate the Commerce Clause, even though it eliminated the haulers’ freedom to dispose of waste more cheaply across state lines.
Even some allegedly “pro-business” decisions, when inspected more closely, seem to negate any claim the “new” Supreme Court is more favorably biased towards business than the Rehnquist Court, or is more likely to give clearer answers in business cases. Although the court overturned the punitive damages award in Philip Morris USA v. Williams, Justice Breyer’s majority decision, while forbidding on due process grounds the imposition of punitive damages for alleged injuries to nonparties, remanded the case without dealing with the issue most troubling to the business community – the total lack of proportion between the compensatory damages in the case ($822,000) and the punitive damages award ($79 million).
Similarly, it would be wrong to interpret the court’s decision in Tellabs, Inc. v. Makor Issues & Rights, Ltd. as arising from a pro-business bias. In fact, Justice Ginsburg’s majority decision was simply a middle-of-the-road application of the stricter pleading standard for 10(b)(5) actions required by the Private Securities Litigation Reform Act of 1995.
NELF, which filed an amicus brief in Tellabs, had argued with others for an even stricter standard. In any event, it is not the Roberts Court that made it harder for plaintiffs to sue under 10(b)(5). Congress and President Clinton did that when they respectively enacted and signed the PSLRA.

Strange bedfellows
That two “liberal” Justices – Breyer and Ginsburg – authored the majority opinions in these cases illustrates what is perhaps the one certain lesson of the 2006 term, namely that business cases, like politics, can make strange bedfellows.
Look, for example, at the odd constellation of justices in Watters v. Wachovia, 127 S.Ct 1559 (2007). The question before the court was whether a wholly owned mortgage lending subsidiary of a national bank could be regulated by state banking authorities.
The answer depended on the enforceability of a regulation of the Office of the Comptroller of the Currency preempting state regulation of national bank subsidiaries. NELF, speaking for the business community, argued as amicus that the OCC regulation was a reasonable interpretation of the National Banking Act, and that parallel regulation by federal and state authorities would result in inefficiency, waste, and ultimately higher costs for consumers.
Justice Ginsburg’s majority opinion rejecting the state’s claim of parallel regulatory authority was joined by Justices Kennedy, Souter, Breyer, and Alito. Justice Stevens argued in dissent that preemption should be based on an explicit federal statute, not a mere OCC regulation, and that the majority’s decision imperiled the delicate balance between federal and state authority in the banking field.
Joining Justice Stevens in defense of federalism were two “conservatives,” Justices Roberts and Scalia. Could there be a clearer demonstration that social liberalism and conservatism do not automatically align with or against business’ perceived interests?
For those of us who labor nearly every day to persuade the courts to recognize the vital importance to the country of the free market and a vibrant business sector, the Supreme Court’s more hospitable attitude towards business cases is welcome.
It indicates that the court recognizes there are outstanding issues in this area that need to be clarified. However, based on the decisions of the 2006 term we should expect in that judicial arena as in any other that business interests will prevail on the strength and cogency of legal arguments, not the makeup of the bench.
Martin Newhouse is president of the New England Legal Foundation. NELF is a 501(c)(3) not-for-profit public interest foundation whose mission is promoting public discourse on the proper role of free enterprise in our society and advancing free market principles in the courtroom.