Roberts Court Proves Good for Business

Business has a lot to cheer about as the Supreme Court term enters its final month.

By Laura Kennedy, Researcher-Reporter, the Kiplinger letters

June 5, 2007

Is the Roberts Court a pro-business court? It sure looks that way. Though there are still a few important decisions to come, companies are compiling an impressive record in the Supreme Court's first full year with both of President Bush's appointees -- Chief Justice John Roberts and Associate Justice Samuel Alito -- sitting on the nine-judge panel.

Business boasts seven wins and only two losses after the June 4 ruling in Safeco Insurance Co. of America v. Burr decided together with GEICO General Insurance Co. v. Edo, which limited the ability of consumers to sue under a credit-reporting law and came just a week after the court's 5-4 decision in Ledbetter v. Goodyear Tire and Rubber Company Inc. In that case, the justices reversed decades of practice that allowed people to file complaints years after the initial event by insisting on a tight, 180-day timeframe for filing pay discrimination complaints under Title VII of the Civil Rights Act, which covers employment decisions based on gender, race, religion, national origin, etc. The decision is likely to make it harder to press pay discrimination suits because employees often don't know for several years that other workers are being paid more. On the other hand, the decision could work against employers if some workers react by filing suits quickly, before they have real evidence of pay discrimination.

Other decisions give businesses more antitrust protection. In a 7-2 opinion in Bell Atlantic v. Twombly, the Supreme Court made it harder for plaintiffs to sue businesses on antitrust issues, and in Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., the justices unanimously supported firms' ability to bid up supply prices and was a nod to the strength of market power.

The Court also ruled 5-4 to limit punitive damage awards in Philip Morris USA v. Williams, and put limits on awards to whistleblowers in the 6-2 Rockwell International Corp. v. United States decision. Finally, in Linda A. Watters v. Wachovia Bank, N.A., the Court ruled 5-3 that federal laws preempt state bank regulations, a big win for banks fighting to streamline the oversight process.

Business' two losses include a big one on global warming (Massachusetts v. EPA), which gave states more power to file suit against companies for environmental concerns and pushed the federal government to regulate greenhouse gas emissions. The Court's 5-4 ruling dealt a big setback to automakers and power companies. But the decision was based mostly on the issue of states' rights, and it didn't suggest an antibusiness view that would carry over to other cases. Moreover, the ruling had a plus side: It finally put firms on a path to finding out what they need to do about global warming.

The other loss also involved an environmental dispute, Environmental Defense v. Duke Energy, in which the Court unanimously enforced the Environmental Protection Agency's rules governing the expansion of power plants when the changes create more pollution.

Associate Justices Anthony Kennedy and Alito have backed business the most: They were the only two justices to side with business in all seven of its wins. However, Kennedy sided with Massachusetts in the 5-4 decision in Massachusetts v. EPA.

Although the signs are encouraging so far, several big business rulings are yet to come:

• Tellabs Inc., et al. v. Makor Issues & Rights Ltd., et al. (06-484). How much evidence does a plaintiff need to prove a defendant's intent to defraud investors? Businesses hope the standard is set high to eliminate frivolous securities lawsuit claims.

• Credit Suisse Securities v. Billing (05-1157). Do investment companies have antitrust immunity because they are already regulated by the Securities and Exchange Commission? Securities firms say yes, and antitrust officials have given them a pass for many years. Investment banks claim a ruling against them could increase the number of high-cost antitrust suits, adding to disincentives to investing in U.S. capital markets.

• Leegin Creative Leather Products v. PSKS (06-480). Should manufacturers be given some wiggle room to demand that retailers set minimum prices for their products? Such "resale price maintenance" deals are now illegal.

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