The usual spate of articles by Supreme Court scribes pronouncing the Roberts Court staunchly pro-business were noticeably sparser as the latest term ended. When journalists are reduced to using the Obamacare and same-sex marriage cases as their main exhibits to prove the Supreme Court’s supposed pro-business tilt, you know it wasn’t a banner year for business.
Of course there were a few notable losses (King v. Burwell itself, Oneok, and Texas Dept. of Housing come to mind). But the fact that free enterprise did not fare well this term had comparatively little to do with the decisions the Supreme Court issued. Rather, business civil liberties suffered more overall from the various state supreme court and federal courts of appeals cases that the high court left on the cutting-room floor.
The tally that follows comprises more than just the cases of a disappointed cert seeker. WLF did not participate in more than half of the examples discussed below. However, the cert petitions mentioned here are all cases where free enterprise, individual and business civil liberties, or rule of law interests were at stake. From the free-market vantage point, it once again appears that the Court did not make enough room on its docket for cases implicating significant liberty interests. By choosing a lighter load, the Court allows legal uncertainty to linger, lower-court disobedience to fester, adventuresome new legal theories to propagate, and injustices implicating millions, if not billions, of dollars to prevail.
Here then are the top 10 cases the U.S. Supreme Court overlooked this past term:
1) PhRMA v. Alameda County—when Alameda Co. sought to offload the cost of its drug take-back program onto pharmaceutical manufacturers, it did more than just adopt a public policy of dubious merit. Forcing a company to enter into a new disposal business in order to continue selling its wares in the state may well have violated the dormant Commerce Clause too. At a time when such “extended producer responsibility” schemes are en vogue, the Court’s guidance in this area was sorely needed. Statutes like this one are bound to proliferate now and thereby interrupt the interstate market for many goods.
2) Freeman v. Grain Processing Corp.—like GenOn Power Midwest v. Bell last term, this case asked the court to decide whether the Clean Air Act preempts state common-law suits, e.g., alleging a nuisance. By dodging this question repeatedly, the Court leaves businesses subject to liability for engaging in the precise conduct for which they have obtained federal permits, an untenable situation. Dealing with EPA is no picnic, but even the CAA’s strictures are better than the uncertainty and inconsistency the Court creates by allowing the plaintiffs’ bar to undermine a uniform federal regulatory scheme.
3) BP Exploration & Production, Inc. v. Lake Eugenie Land & Development, Inc.—with Hornbeck last term and two separate BP cases this term, the Supreme Court appears to not want to touch the Deepwater Horizon aftermath with a ten-foot pole. Maybe the Court fears that hard cases make bad law, but hard cases still make bad law when the Court doesn’t act. Refusing to grant certiorari just leaves the bad law in place from the lower court(s). This case in particular deserved the Court’s attention, as permitting a gargantuan class action with uninjured class members to go forward will no doubt deter the next company beset with a massive tort from settling expeditiously. The Court gets a partial pass on this one, as it did grant cert on a similar issue in Tyson Foods v. Bouaphakeo for next term. But the problem of class actions with numerous uninjured plaintiffs is ubiquitous and will remain so unless and until the Court clarifies that all class members must demonstrate standing to sue.
4) SQM North Am. v. City of Pomona—As it did with Wellogix last term, the Court continues to pass on golden opportunities to enforce its important anti-“junk science” precedents against recalcitrant lower courts. When the justices permit lower courts to get away with thumbing their collective nose at Daubert and its progeny, the justices ensure that more of the same bad behavior will ensue. Here the Ninth Circuit had decided that a trial court should only exclude “junk science” expert testimony if it is based on a faulty methodology or theory, not for other steps in the analysis that render the testimony unreliable. If something about this case made it a poor vehicle, then Mead Johnson & Co. v. Johnson provided a similar opportunity to crack down on misapplication of Daubert by the lower courts, this time in a product-liability case.
5) Esquenazi v. U.S.—Foreign Corrupt Practices Act cases almost never make it up to the Supreme Court. There are many reasons for this, but perhaps the chief one is that companies settle to avoid the drastic consequences of an FCPA conviction. The federal government, taking advantage of this leverage, has been ramping up its FCPA enforcement efforts in recent years, and the demand for clarity by companies keen to understand the scope of the statute just keeps escalating. This case teed up the question of who counts as a “foreign official” quite nicely. By leaving that question for another day, the Court missed an opportunity to clarify a key aspect of the FCPA at a crucial juncture.
6) American Cynamid v. Gibson—Wisconsin has adopted a risk-contribution theory of liability that shifts the burden to a defendant to show that it did not cause the harm the plaintiff alleges. In short, once a plaintiff establishes harm caused by a particular kind of product (here, lead-based paint pigment) and sues all of the solvent companies that made that kind of product, the plaintiff is off the hook for saying which defendant—or even whether any of the defendants in the case—actually caused the harm. This sloppy burden-shifting offends due process to the core and should have gotten the Court’s attention long before now, however loath it may be to interfere with a traditional state domain like tort law.
7) Dean Foods Co. v. Food Lion, LLC—this antitrust case involved an alleged conspiracy between Dean Foods and one of its milk suppliers. The district court granted summary judgment to the defendants, but the Sixth Circuit reversed, essentially deciding that the plaintiffs did not have to prove that the alleged conduct caused the alleged anticompetitive harm they suffered for purposes of precluding summary judgment. Presuming causation (or drawing a ‘factual’ inference of causation) in favor of plaintiffs stacks the deck against defendants. The fact that circuit courts remain divided on this key aspect of summary judgment makes the Supreme Court’s unwillingness to tackle the case even more mystifying.
8) US Legal Services Group v. Atalese—put this case in the category of policing the Court’s precedents. The specific issue here was whether the Federal Arbitration Act preempts a state-law rule requiring arbitration agreements to affirmatively explain that the contracting party is waiving the right to sue in court. The Court has cracked down on several similar state-law attempts to undermine the FAA in the past. When it comes to the FAA, no doubt the Court wonders, like Mr. Incredible, how many times it has to save the statute: Can’t it “just … stay saved? You know, for a little bit? … Can we keep it clean for … for ten minutes?!” Since the answer from the lower courts is no, however, the Court has a job to do.
9) Purdue Pharma v. US ex rel. May—although two of the questions presented by this False Claims Act case were answered by the Court in KBR, Inc. v. U.S. ex rel. Carter, the remaining public-disclosure bar issue still deserved the Court’s attention. The Fourth Circuit has misconstrued the public-disclosure bar in a way that ten other circuit courts reject and that Congress fixed prospectively via statute. However, there are many FCA cases still in the pipeline that the Fourth Circuit’s erroneous rule will affect.
10) Take your pick: How about an extraterritorial application of EPA fines ($72 million) case like Volvo Powertrain? Or another FCA case like Gosselin Worldwide Moving, where a technical question about whether statutory penalties apply to every invoice submitted has wide application, and the absurd statutory penalty (over $50 million) vastly exceeded the amount in dispute? Or the Ford Motor v. U.S. case where the IRS refused to disgorge $475 million dollars’ worth of interest on Ford’s tax overpayment? Or even the second BP case where a record $13 billion Clean Water Act penalty rested on a disputable and novel statutory interpretation?
Just because a case has millions of dollars at stake does not, of course, make it cert worthy. However, if the Supreme Court were as fixated on helping big business as the chattering class contends, surely the Court would have seen fit to hear more cases like these.
Business frequently complains about having to deal with federal agencies where none of the government lawyers or regulators has ever worked in a for-profit business. As a result, they have funny ideas about what is practicable and what incentives drive corporate decision-making. But the dirty little secret is that the exact same set of problems infects the U.S. Supreme Court.
The clerks who draft the cert memos many times have no real-world experience of any kind. Even the justices themselves lack much experience in the for-profit sector, coming as most do from the public sector or the academy. Justice Thomas is the sole member of the court with in-house counsel experience. Several others presumably had close contact with profit-making enterprises when in private practice at their law firms. And yet, far too often, cases that really matter for free enterprise still fail to find four votes for certiorari. It is enough to make one worry whether the Court adequately assesses the wider significance of these cases.
No doubt litigants seek cert in fewer significant business cases in some years as compared to others. If there is a natural ebb and flow to what cases come to the Court, apparently we’re in the ebb for business. As other commenters have noted, next term may be shaping up better, though it is far too soon to tell for certain. In any event, the cases cited above and many others denied certiorari would have been well worth the Court’s time this year.
(See here, here, and here for wrap-ups of the court’s business cases this term).
Also published by Forbes.com at WLF’s contributor page