SCOTUS Plays Inside Baseball With Business This Term

Sept. 22, 2016, 12:51 AM

The U.S. Supreme Court will be playing “inside baseball” on its business docket when it returns Oct. 3, a Supreme Court advocate told Bloomberg BNA.

The high court vacancy has caused the justices to take a “wait-and-see” approach in cases that are ideologically divisive, meaning that they aren’t agreeing to hear many cases where they might split 4–4, Public Citizen Litigation Group’s Scott L. Nelson, Washington, told Bloomberg BNA Sept. 14.

Cases that affect businesses often fall into this category of ideologically divisive cases, Nelson, whose practice at the Supreme Court includes consumer law and class actions, said.

But the Supreme Court still has to fill its docket, Lauren R. Goldman, who practices in Mayer Brown LLP’s Supreme Court & Appellate group in New York, told Bloomberg BNA shortly after the court finished its 2015 term in June.

As a result, the business cases that the court has agreed to hear are “narrow and technical,” Nelson said.

No Knock-Out Blows

Court-watchers often disagree over whether the Roberts Court is “pro-business.”

But both Nelson, who typically represents consumers, and Goldman, who typically represents businesses, both agreed that the outcomes for businesses last term were pretty mixed.

There were three cases that could have delivered “knock-out blows”to class actions, Nelson said.

But that mostly didn’t happen, he said.

Justice Antonin Scalia’s unexpected passing during the term wasn’t the deciding factor.

Although Scalia was often perceived as unfriendly to class actions, his vote wouldn’t have changed the outcome in any of the class action cases last term, Nelson said.

‘Wonky Procedural Issue.’

In the short run, however, Scalia’s death did impact the upcoming term’s business cases, he said.

Shortly after Scalia’s death, Dow Chemical Co. settled an antitrust case it had asked the Supreme Court to hear, citing “political uncertainties” surrounding the court.

Further, the Supreme Court has been more cautious in agreeing to hear cases where the justices are ideologically split, he said. In part, that’s because they don’t know who will eventually fill the ninth seat, and how that person might vote in those cases, Nelson said.

That’s led to a docket that is light on major business litigation, he said.

As an example, Nelson said the case that might have the biggest implications is Microsoft Corp. v. Baker, No. 15-457 (17 CLASS 256, 3/11/16).

The case deals with a “wonky procedural issue” of whether plaintiffs can ensure their ability to appeal the denial of class certification by voluntarily dismissing their individual claims, Nelson said.

That this is the most substantial business case is “saying something,” he said — namely, that for now the court has ducked other issues that were more consequential.

Unbalanced Appeals?

But Goldman said the case is still important because it deals with the “pivotal point” of a class action: class certification.

If the class is certified, the defendant typically feels a great deal of pressure to settle the case to avoid the risk of a huge damages award down the road, she said.

On the other hand, if the class isn’t certified, the defendant has very little financial incentive to settle the case, she said.

The Microsoft case could tip the scale towards class action plaintiffs by giving them an automatic appeal when their classes aren’t certified, but not giving class action defendants an automatic appeal when the classes are certified, Goldman said.

Antitrust, Too!

Goldman said another potentially significant issue could be the antitrust cases, Visa Inc. v. Osborn, No. 15-961, consolidated with Visa Inc. v. Stoumbos, No. 15-962 (17 CLASS 697, 7/8/16). The cases ask when membership in a business association can lead to antitrust liability.

The plaintiffs claim that major credit card companies and banks violated the Sherman Act, 15 U.S.C. §1, when they agreed to rules regulating ATM fees.

Because several industries have trade associations that allow companies to work together to do things they couldn’t get done by themselves, the cases have potentially disruptive consequences, Goldman said.

Billions Involved

But Nelson said most trade associations are already careful in this area because it’s always been understood that if associations of competitors agree on how they are going to conduct their businesses, that probably has antitrust implications.

Credit card networks may think they’re different from traditional associations of competitors, however, because they are providing rules for how payments get made for other business, not themselves, Nelson said.

Still, he agrees that the case could have major implications, even if limited to the parties at issue.

Credit card networks themselves are extraordinary powerful in our current economy, Nelson said.

Visa, MasterCard, JPMorgan Chase, Bank of America and Wells Fargo are all involved in the case, and the fees at issue are in the hundreds of billions of dollars.

“In 2007, U.S. cardholders used Visa’s PIN-based platform to access $395 billion in cash. As of Sept. 30, 2010, there were 397 million Visa debit cards in circulation,” the plaintiffs complaint alleges.

MasterCard cards were used to access $202 billion in cash in the U.S. in 2007, it said. As of Sept. 30, 2010, there were 123 million MasterCard debit cards in circulation.

So just the potential impact with respect to these credit card networks would make these important cases, Nelson said.

Compelled to Grant

Nelson noted that there are several business cases that the court is still considering whether to review.

The court may not be able to avoid some of those issues, he said.

In particular, he noted a petition filed by the federal government involving whether arbitration agreements barring class claims in employment agreements violates federal labor law, NLRB v. Murphy Oil USA Inc., No. 16-307.

The case, which could ultimately affect millions of employees, involves a circuit split and all parties seem to agree that Supreme Court review is necessary, Nelson said.

The court might feel compelled to take up that issue before it is back up to full strength.

That petition, and others raising the same issue, were filed in September.

Many other consequential business issues, though, will likely have to wait.

‘Major Generational Change.’

Even when a ninth justice is eventually confirmed to the court, it won’t end the uncertainty for businesses and consumers.

The court is going to undergo a “major generational change” in the next decade, with at least three more Supreme Court vacancies likely to appear, Nelson said.

It’s anyone’s guess how those seats will be filled, and what the implications for business and consumers will be, he said.

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bna.com

To contact the editor responsible for this story: Jessie Kokrda Kamens at jkamens@bna.com

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