The Supreme Court’s Business Cases Reviewed

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The American Enterprise Institute (AEI) for Public Policy Research Legal Center hosted its annual review of the U.S. Supreme Court’s 2007-2008 October term recently, and to mull over its regulatory framework of prime business cases, which make up the bulk of its civil lawsuits.

“Recent regulatory and financial crises bring increased urgency to the examination of the justices’ future course,” as AEI pointed out. “Will Congress and the Executive finally create a stable regulatory framework, or will there be uncontrolled litigation and regulation over past misconduct, real and imagined? What role is the Court likely to play?” These were just a few of the many questions that legal experts and practitioners addressed at the annual event.

According to the AEI’s summary of the event “by taking up cases on liability, punitive damages, and preemption, the [Supreme] Court is playing a large role in shaping the business community.”

Although Mark T. Stancel, an appellate litigator and partner at Robbins Russell, agreed that the nation’s current financial crisis ranks as a high priority for debate in the Supreme Court today, as Congress has passed a statute to bail out $700 billion in companies with distressed assets, he also argued that more attention should be focused on the lower courts.

“While it’s certainly legitimate to focus a lot on the Supreme Court and what they do with respect to the business community, I think there is surprisingly little attention paid to the lower courts, how their judges are selected, what influences they’re under, and what they do with respect to the business community, because I think that in the end…they have far more impact day to day on the business community than the Supreme Court ever will,” Stancel argued. In the end, Stancel explained that one of the concerns with the Supreme Court’s role in business litigation is that it has a tendency to oversimplify such cases.

“The U.S. Supreme Court has been too explicit and too cautious with federal regulation,” argued Catherine M. Sharkey, a professor at the New York University School of Law. Sharkey explained that the U.S. Supreme Court is responsible for setting federal guidelines in giving excessive awards in such cases.

Thus, Sharkey, as she discussed state and federal laws pertaining to punitive damages, reflected on previous Supreme Court rulings, such as Exxon Shipping v. Baker and the Bush v. Gore cases, in which she argued that the Supreme Court typically sides with federal preemption of federal tort laws in civil business court cases.

In a July 2008 Wall Street Journal article that AEI provided entitled, “The Era of Big Punitive Damage Awards Is Not Over,” Ted Frank argued, “This June, the Supreme Court, in a 5-3 decision, reduced the punitive damages in the 1989 Exxon Valdez spill from $2.5 billion to only $507 million.” “Partisans on both sides of Exxon Shipping v. Baker portrayed the decision as a victory for business—but plaintiffs’ lawyers will find a lot to like in this case. If anything, the opinion highlights the need for legislative reform of arbitrary punitive damage awards.”

Further, Frank claimed, “the Supreme Court’s opinion endorsed studies purporting to show that courts’ discretion to award punitive damages ‘has not mass-produced runaway awards’—though those studies measure median verdicts.” Nevertheless, Frank explained, “the main danger is that trial lawyers will use the Court’s 1:1 ratio as a floor, rather than a ceiling.”

“I don’t think the court is business-friendly,” said Andrew Pincus, a partner in the Washington, D.C., office of Meyer Brown. “You spend millions of dollars trying to defend yourself.” Therefore, Pincus argued that Media tend to label the Court as business friendly, but explained that the Court has only tried to give a more narrow definition of antitrust laws, as AEI also points out.

In terms of environmental case dockets, Michael S. Greve, the John G. Searle Scholar at AEI, discussed the Supreme Court’s stance concerning the business regulation of environmental policy.

“Greve tackled the Supreme Court’s environmental docket, predicting that the Court will rule against the environmentalist parties in at least four of the five pending cases,” the AEI October 2008 events summary noted. “He suggested, however, that the decisions will be limited in scope and probably not very meaningful.”

The summary further notes that Greve believes “that the state of environmental law is indicative of a central problem of governance in the United States: a consumption-oriented legal system based on the premise that the United States is a rich country that can afford to spread the wealth. The November election results will accelerate that tendency. The only institution that has not gone completely populist is the United States Supreme Court.”

Irene Warren is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.