Federal Courts and Nominations

High Court Poised to Aim at Regulatory Power With New Trump Pick

The Roberts Court has been good for business. With a third Trump appointee, it could be even better.

The prospect of Republicans increasing their majority to 6-3, after the death of liberal icon Ruth Bader Ginsburg, could make the court more favorable for business on issues including arbitration and employment.

It also boosts conservatives’ quest against the so-called administrative state, shorthand for the tangle of New Deal-era regulations and ones that followed that Democrats see as protecting workers, the environment, and more while Republicans see it as unduly burdening free enterprise. Oil and gas drillers, utilities, management interests, and small businesses are among those who stand to benefit as the justices could end up reviewing disputes over federal environmental regulations, employment, and other protections.

Business interests have had an ear on the high court long before Trump was elected. The U.S. Chamber of Commerce has won 70% of the cases in which it filed briefs at the high court since 2006—a win rate much higher than during comparable periods in previous decades, according to analysis by the progressive Constitutional Accountability Center after the just-completed term.

“Significantly, in recent years, Justice Ginsburg was the justice most likely to reject corporate-backed positions in business cases and to vote instead in favor of workers, consumers, or the government,” said Brian Frazelle, the center’s appellate counsel.

The court’s record in business cases, with Ginsburg on the bench, means her replacement “is unlikely to change the outcome in many of these cases in the near future,” but that “doesn’t mean her absence won’t be deeply felt,” he said.

The chamber didn’t return a request for comment on the newly constituted court’s impact on business cases.

Reinforcing Arbitration

The court “has been trending significantly in a pro-business direction, by enforcing arbitration and pushing more things into arbitration, including class actions,” said Boies Schiller Flexner partner Scott Gant. He argued a debt collection case last term in which Ginsburg was the lone dissenter siding with the debtor.

Carlton Fields employment attorney Rae Vann agreed that the trend will likely continue. She said a case pending before the court involving class certification under arbitration could be heard, adding to case law that bolsters the practice.

Ginsburg was one of the four Democratic appointees who dissented in 2018’s Epic Systems v. Lewis, in which the 5-4 majority ruled employers can force employees into individual arbitration instead of banding together in class-action suits.

Authored by Justice Neil Gorsuch early in his high court tenure, it’s the type of decision that Daniel Goldberg, legal director of the progressive Alliance for Justice, says is indicative of how the potential justices on Trump’s short list, like Amy Coney Barrett and Barbara Lagoa, would rule. Another shortlister, Allison Jones Rushing, represented some of the corporate interests in the case, Goldberg said.

The rightward progression of the court has consumer-side litigants in more of what Stuart Rossman, National Consumer Law Center director of litigation, calls a defensive mode.

“The bottom line,” Rossman said, “you try to make sure that those cases don’t make it up to the Supreme Court.”

Wild Cards, Litmus Tests

Still, there are some business cases before the court where corporate interests and Republican political ones don’t necessarily align, a key one being the constitutionality of the Affordable Care Act.

Using a litmus test of striking down Obamacare, as the Trump administration has asked, could put the nominee on the opposite side of business interests that support maintaining the healthcare law to avoid disrupting the market, Gant said. The law’s fate is being argued at the high court the week after the Nov. 3 election.

A few of the conservative justices have proven to be wild cards in labor and employment issues, said Michael Foreman, law professor at Penn State University and director of the Civil Rights Appellate Clinic. He cited Gorsuch’s opinion this year, joined by Chief Justice John Roberts, that secured protections for LGBT individuals under Title VII of the 1964 Civil Rights Act.

A case this coming term, on whether a religious group should be exempt from Philadelphia’s ban on discrimination against LGBT adoptions, could effectively cut back on some of the protections in the ruling from last term, if religious organizations are found to have broader latitude to discriminate.

A larger conservative majority could also decide whether employers can use salary history to determine compensation, an issue that workers’ advocates say leads to pay gaps for women, Foreman said. A split exists in the appeals courts over how to apply the Equal Pay Act, and the court previously elected not to take a case that addressed the question.

Independent Agencies

A further shift could also prompt the court to reel in federal agencies’ regulatory power, as conservative lawyers and business interests press the high court to tackle certain legal doctrines that give agencies broad flexibility when crafting rules.

One way the high court could accomplish that is by overturning 1935’s Humphrey’s Executor ruling that the president may only fire an independent agency head for cause such as inefficiency, neglect of duty, or malfeasance.

Presidential executive orders generally aren’t considered binding on independent agencies because it’s unclear what tools the president has to enforce compliance, without being able to control who runs them. But with Humphrey set aside, a presidential executive order could require those agencies to vet proposed rules through the White House, giving the president far more influence over the Federal Reserve, Securities and Exchange Commission, and Federal Communications Commission, among others.

In a narrow decision this June, the court ruled in Seila Law v. CFPB that the president could remove at will the director of the Consumer Financial Protection Bureau, another agency created with a chairman who can only be removed for cause. This coming term, in a follow-on case to Seila Law, the justices are to consider removal protections for the head of the Federal Housing Finance Agency.

‘Administrative State’

Small businesses, in particular, have been frustrated for years by what they see as that unwieldy administrative state with too much power over various industries. They’re hopeful an addition to the Supreme Court will tilt the bench toward a textualist approach to interpreting federal law, said Karen Harned, head of the Small Business Legal Center at the National Federation of Independent Business.

“They just want to make sure that the agencies are staying in their lane and if they start rewriting laws, that the court will say, no, that’s not appropriate,” Harned said.

A conservative replacement for Ginsburg “would likely be more skeptical of broad assertions of regulatory programs under old statutes,” said George Mason University administrative law scholar Adam J. White.

A 6-3 conservative majority could help a reelected Trump administration defend regulatory rollbacks, in part by diminishing Roberts’ role, said Georgetown Law professor Lisa Heinzerling.

“The addition of another conservative justice to the court might mean that the chief justice will no longer be the swing justice, and cases like these might go in the other direction, with large consequences for reasoned decision making at the agencies,” she said.