BOSTON, MA — Each June when the U.S. Supreme Court wraps up its term, the same question is asked in legal circles: who won more – businesses or plaintiffs?
While typically neither business leaders nor trial lawyers are known for passing on an opportunity to celebrate success, a funny thing happened this year: no one did a victory lap. Instead, there is strong disagreement over which side the Supreme Court justices favored.
“This term has been a mixed bag for us,” said Robin Conrad, executive vice president of the U.S. Chamber of Commerce’s public policy law firm, the National Chamber Litigation Center. “It goes without saying that this was not our best Supreme Court term. But it was not our worst term either.”
But others, including Gibson Vance, president of the American Association for Justice, brushed aside the suggestion that businesses did not have a stellar year at the Court. Pointing to cases such as Wal-Mart Stores v. Dukes and AT&T Mobility v. Concepcion, Vance and other civil justice advocates said the Court stripped away the ability of employees, consumers and injured parties to seek redress in the courts – all to the benefit of business.
“The Supreme Court has allowed major corporations to grant themselves immunity when they cheat consumers or employees,” said Vance, who is a shareholder in the Fort Valley, Ga., office of Beasley Allen.
But Evan Tager, a member of the Supreme Court & Appellate practice in Mayer Brown’s Washington office, shot down the idea that the Court is pro-business.
“I’m here to tell you that is not so,” Tager said. “So many pundits (have) fallen prey to what I call the ‘Texas sharp-shooting’ fallacy. It refers to a guy who shoots a bunch of bullets into the side of a barn, finds the ones that are close together, and draws a circle around them and claims to be an expert sharp shooter. (But) the fact is we looked at the 18 cases that pitted individuals against businesses (before the Court) and found the outcome was split 9-to-9.”
Class actions boost business
Conrad, recapping the term for reporters at a recent media briefing hosted by the NCLC, acknowledged the “triple-crown” wins for businesses this term: the rulings in Dukes, Concepcion and American Elec. Power Co. v. Connecticut.
In Dukes the Court blocked what would have been the nation’s largest job bias class action, saying that the nearly 1.5 million female Wal-Mart employees claiming they were denied equal pay and promotions lacked sufficient “glue” to hold their claims together in a single class action. In Concepcion, the Court ruled that a state unconscionability law could not require that mandatory arbitration clauses include a class-wide remedy. And in AEP, the Court ruled that the Clean Air Act and the actions of the Environmental Protection Agency preempted plaintiffs’ federal common law environmental claims.
“We like to think that is a good trend,” Conrad said.
Andrew Pincus, a partner in the Washington office of Mayer Brown, said that the rulings represented more of a common sense approach by the Court than any sort of pro-business bent.
The Court, Pincus said, seems to be focusing more on the issue of “whether class actions make sense.”
He noted that the costs of defending large class actions, particularly with the proliferation of e-discovery, are skyrocketing – and most of that expense is born by defendants.
In Concepcion, Pincus said, the company set up an “extremely consumer friendly” arbitration agreement. It was “looking for a system that was fair, but that didn’t have the transactional costs that litigation has.”
Wins for employees, investors buoy plaintiffs
Despite the high profile losses in the class action arena, it wasn’t entirely a bad year for plaintiffs – especially for employees with actions against their employers.
The ruling in Wal-Mart aside, “if you look at the employment cases – particularly the retaliation cases – really, employees are winning at the Supreme Court,” said Suzette Malveaux, professor at the Columbus Law School at Catholic University in Ohio. “This term was no exception to that rule.”
For example, in Kasten v. Saint-Gobain Performance Plastics Corp., the Court sided with an employee who allegedly lost his job because he made verbal complaints to his employer about the placement of time clocks, ruling that such complaints are protected under the anti-retaliation provision of the Fair Labor Standards Act.
The Court seems to be amenable to employment claims outside of the class action context, said Paul M. Smith, a partner in the Washington office of Jenner & Block.
The justices respond more to “individual cases where plaintiffs have stories to tell,” said Smith, who chairs the firm’s Supreme Court practice.
Class actions, on the other hand, are perceived as vehicles that benefit attorneys more than claimants, Smith said.
“That’s what (the Court) is most suspicious of: the plaintiffs’ bar,” Smith said.
Conrad called the business defeats in the retaliation and other employment cases “A recurring and disappointing trend.”
On the issue of investors’ rights, H. Christopher Bartolomucci, a partner in the Washington office of Bancroft, pointed to the Court’s ruling in Erica P. John Fund v. Halliburton as an example of one the Court’s many pro-plaintiff decisions. In that ruling the Court held that investors alleging securities fraud need not prove loss causation in order to obtain class certification.
“Halliburton lost,” Bartolomucci observed at a recent Supreme Court discussion in Washington hosted by the American Constitution Society for Law and Policy. “So if you think the Roberts Court is in the bag for big, bad corporations, you would think it would be in the bag for Halliburton. But it wasn’t.”
Mixed bag in preemption cases
The Court’s preemption jurisprudence continues to be unpredictable.
“These cases, like class actions, are about access to the courts,” said Allison M. Zieve, director of the Public Citizen Litigation Group, who also spoke at the ACS event.
As in past years, corporations launched vigorous preemption challenges at the Court this year – each asserting that state law tort suits or regulations were trumped by federal law – because “they don’t like lawsuits,” Zieve said. “They don’t like litigation.”
In PLIVA, Inc. v. Mensing, drug companies and business groups scored a victory when the Court held that state law failure-to-warn claims involving generic drugs are preempted by federal laws governing drug labeling.
But business was dealt one of its biggest defeats in a preemption case.
In Chamber of Commerce v. Whiting, the Chamber – backed by labor groups and the Obama Administration – lost its bid to have a state law mandating the use of the E-Verify system and stripping business licenses form companies who knowingly hire illegal workers preempted by federal immigration law.
“What the Court giveth with one hand, it can take away with another,” Pincus said.”