Corporate Accountability

Success for Chamber in Close Cases Continues with Schindler and Concepcion

Yesterday in Schindler Elevator Corp. v. Kirk the Supreme Court split along ideological lines again in a case of great interest to corporate America, with the Court’s five conservative members agreeing with the U.S. Chamber of Commerce and voting to make it more difficult for corporate whistleblowers to pursue qui  tam lawsuits under the False Claims Act (FCA), a federal law which allows individuals to sue on behalf of the government to help expose fraud on the part of government contractors and recover public funds.  This 5-3 decision (Kagan recused) comes on the heels of AT&T v. Concepcion, where the Court voted 5-4 to make it easier for corporations to stamp out class actions through the use of arbitration clauses in consumer contracts that prevent consumers from joining together to bring their claims.  These two decisions, which shield corporations from liability by making it more difficult for individuals to pursue claims against corporate wrongdoing, represent part of a disturbing trend of increased polarization on the Supreme Court in business cases.

Schindler and Concepcion are both big wins for the Chamber.  In Schindler, the majority relied on a reading of the FCA’s public disclosure bar that the dissent asserts is not faithful to the law’s “text, context, purpose, and history.”  The result is that Daniel Kirk, a Vietnam War veteran who suspected his former employer of falsifying federal filings relating to the number of veterans it employed is barred from making a claim under the FCA simply because he sought to verify his suspicions before filing suit by requesting the company’s filings through a Freedom of Information Act request to the Department of Labor.

In Concepcion, the majority overturned the unanimous panel below by setting aside principles of federalism to conclude that state law claims were preempted by the Federal Arbitration Act, something we argued in an amicus brief was at odds with the text and history of the Constitution’s Supremacy Clause.  The far-reaching result is that by embedding arbitration clauses into consumer contracts corporations can essentially avoid liability when the harm to the consumer isn’t great enough to warrant an individual lawsuit.

When the Chamber suffered a number of lopsided defeats earlier this term, commentators were quick to wonder whether these rulings called into question findings of three empirical studies that document that the Supreme Court has been siding with the Chamber of Commerce far more under Chief Justice Roberts than it had even under the leadership of Chief Justice Rehnquist.   This commentary misunderstood CAC’s work, which was based on long-term studies, not individual rulings or parts of terms.

Not surprisingly, the Chamber’s success rate this term has now improved and, overall, the Roberts Court has still ruled for the Chamber far more than its predecessor Courts.  Including yesterday’s decision, the Robert Court has now ruled 64% of the time in favor of Chamber positions since Alito joined the Court, compared to 56% during the stable Rehnquist Court, and just 43% during the last five years of the Burger Court.

Even more striking is the Chamber’s domination in cases decided by a 5-4 or 5-3 vote.  There are more of these closely divided business cases in the Roberts Court than ever before, and the Chamber’s success rate in these cases is startling. Adding Schindler and Concepcion to our empirical study of the Chamber’s success before the Supreme Court, the Roberts Court has favored Chamber positions more than 75% of the time (16 of 21 cases) in close cases.

This success rate is driven by the fact that the Court’s conservative bloc has been remarkably cohesive in closely divided business cases, voting on average for the Chamber in 87% of these cases.  Chief Justice John Roberts has supported the Chamber’s position in 19 out of 21 cases, eclipsed only by Justice Alito, who has yet to cast a single vote against the Chamber position in a close case.  As a comparison, the average level of support for the Chamber among the conservative bloc of the stable Rehnquist Court was just 68% in close cases.

As noted above, close cases have also increased as a percentage of overall cases.  The number of close cases with Chamber participation has nearly doubled from 18% (14 of 80) during the stable Rehnquist Court to 32% (19 of 60) during the Roberts Court through last Term.

Business cases now make up a very large percentage of the Supreme Court’s docket, the Court is ruling for the Chamber in a very high percentage of those cases, and it is splitting more than ever along ideological lines.  Those are the facts.