Corporate Accountability

Analysis: In shadow of landmark decisions, U.S. high court also rules for business

By Lawrence Hurley


WASHINGTON | (Reuters) – Less noticed in a flurry of high-profile rulings on race, voting rights and gay marriage was how the U.S. Supreme Court rounded off its term by delivering a string of victories to businesses and employers.


Just this week, the court handed wins to generic drug manufacturers facing design-defect lawsuits, employers battling harassment and retaliation claims and landowners struggling to obtain permits for construction projects. In all four cases, the court was split 5-4 with the conservatives in the majority.


Overall, during the term that started nine months ago, the Supreme Court has delivered a series of victories for corporate defendants on class action lawsuits and arbitration, curbing the ability of consumers to file mass claims against companies over such matters as defective products and unfair practices. Comcast Corp (CMCSA.O) and American Express Co (AXP.N) were among the big winners in those cases.


As progressive groups have been quick to point out, the U.S. Chamber of Commerce, the main group representing business interests, received a favorable outcome in 14 of the 18 cases in which it filed friend-of-the-court briefs.


The court’s business rulings represent “troubling trends that reach back a decade or more, with the court’s conservative majority making it harder for consumers, workers and small businesses to go to federal court and hold large corporations accountable,” said Doug Kendall, president of the Constitutional Accountability Center, a progressive legal group.


Kate Comerford Todd, chief counsel for appellate litigation at the Chamber’s litigation arm, brushed aside suggestions that the court – led since 2005 by Chief Justice John Roberts, an appointee of Republican President George W. Bush – was overly friendly to business.


Citing a popular view within the business community, she said the court was merely reining in the plaintiffs’ lawyers who can make millions of dollars in a single case representing multiple plaintiffs in suits against corporate defendants.


“We see a court that has in recent years beaten back the plaintiffs’ bar’s aggressive campaign to contort the rules and law to serve their purposes,” she said.




As is normal for the court in its final week, it issued rulings in some of its most divided cases.


On Monday it issued two rulings that limited the ability of employees to make harassment or retaliation claims against employers under Title VII of the 1964 Civil Rights Act.


The court ruled against an African-American Ball State University catering assistant who claimed she was harassed on the basis of race and a University of Texas doctor of Middle Eastern descent who claimed he lost his job in retaliation for complaining of bias.


The rulings prompted liberal Justice Ruth Bader Ginsburg to call out the majority in a statement from the bench, saying they had “corralled” Title VII.


The Chamber of Commerce filed briefs in both cases in support of the employer. Todd said the rulings simply set clearer rules for employers and employees alike.


“The court’s Title VII cases this week provide much needed clarity,” she added.


On the same day as the employment decisions, the court also issued its ruling on whether generic drug makers could be sued under state law for design defects in medications that already have been approved by the U.S. Food and Drug Administration.


Justice Samuel Alito wrote on behalf of the majority that although the case “arises out of tragic circumstances,” the lawsuit was blocked as a result of the FDA’s approval of the drug and the warnings that accompanied its sale. The ruling was a “straightforward application” of federal law, he said.




Perhaps the least-noticed, most significant case – and thus branded by some as the term’s biggest “sleeper” – was Tuesday’s ruling on land-use permit applications.


Ruling in favor of a Florida landowner, Coy Koontz, the court expanded the ability of property owners to challenge permit conditions imposed upon them by government land-use agencies.


Under Supreme Court precedent, government agencies have always had to provide a justification to impose conditions, but the court expanded the limitations on such requests by saying that legal review can be triggered even if officials deny a permit application and in instances in which the only condition is a money payment.


Alito again wrote for the majority, making note of the “special vulnerability of land-use permit applicants to extortionate demands for money” from government agencies.


Close observers of land-use law say the decision could limit the ability of government entities to require developers to pay for the environmental impact of a project.


Jonathan Adler, a professor at Case Western Reserve University School of Law, said the ruling requires regulators “to justify the burdens they would impose,” which he believes encourages accountability.


The Chamber of Commerce filed briefs in the permit application case in support of the property owner and the generic drug case in favor of the drug maker.


Scott Nelson, a lawyer with the consumer advocacy group Public Citizen, said he was wary of attributing too much to the chamber’s winning record.


“It’s not a situation where there’s a majority that sits down and looks to see if the Chamber of Commerce files a brief and this is the way we should vote,” he said.