Business, Free Speech Winners In High Court Term
By Nina Totenberg
July 1, 2011

The U.S. Supreme Court term that ended Monday significantly altered the nation’s legal topography, making it much more difficult for people to sue big business. At the same time, the court continued its First Amendment march, making clear that at least five justices, and often more, prize the First Amendment guarantee of free speech over other constitutional values.

First, the statistics: The court split 5-to-4 in one out of five cases, with the conservative bloc of justices prevailing in the vast majority of these. Justice Anthony Kennedy, the court’s so-called swing justice, sided with the conservatives in seven out of 10 of the cases that split 5-to-4 along ideological lines; in the other three, he sided with the court’s liberal justices.

At a conference this week in Aspen, Colo., Justice Stephen Breyer told retired Justice Sandra Day O’Connor that the court is more ideologically divided now than at the time she retired in 2005. Indeed, though President Reagan appointed O’Connor, her successor, Bush appointee Samuel Alito, has proved more consistently conservative and has swung the court considerably to the right. Breyer said that with O’Connor gone, the court’s 5-to4 decisions break down into “the same usual suspects” on each side, suggesting “increased polarization” within the court.

Big Business

So what were the justices polarized about? Here are just a few of the 5-to-4 cases in which the court curbed lawsuits against big business.

In the celebrated Walmart case, the court made it much more difficult to bring class-action employment suits on behalf of women or minorities who claim they have been the victims of discrimination in pay or promotions.

A lesser-known ruling involving a cell phone contract has the potential to all but obliterate the right to sue corporations. The decision upheld fine-print clauses that bind consumers to arbitration even when state law forbids such clauses.

Lawyers who represent large companies said the decision could spur more mandatory arbitration clauses in all sorts of contracts; not just retail contracts, but employment contracts, too. Lawyer Peter Keisler said he would expect many large corporations to require new hires to sign contracts promising not to sue as a condition of employment.

“It’s almost malpractice for a lawyer of a company now not to put an arbitration clause in any kind of document, whether it’s a consumer contract or an employment agreement,” said Supreme Court advocate Tom Goldstein. “All of those agreements will be enforced and the company [will] no longer face the prospect [of class-action liability], if they write the agreement correctly.”

In another big-business win, the court’s five conservatives ruled that generic drug-makers, which account for 75 percent of the nation’s prescriptions, cannot be sued for failing to warn consumers of dangerous side-effects, as long as their labels track their brand-name counterparts.

Not all of the big-business victories this term came in 5-to-4 votes. By a unanimous vote, the court threw out an anti-pollution lawsuit brought by state and local governments against the five largest electrical power companies — companies that combine to produce approximately 10 percent of the carbon emissions in the United States. The court said the states had no right to sue.

Looking at the term overall, observers without exception, see a conservative arc that is hostile to litigation, especially litigation that seeks to regulate business practices by holding companies accountable in court for their actions.

The business community won “the triple crown” of cases, said Robin Conrad, executive director of the U.S. Chamber of Commerce Litigation Center. “Not all cases are created equal,” she said, and the chamber won all of the most important ones in which it was involved this term.

The only major case that the chamber lost involved a challenge to Arizona’s strict state law imposing harsh penalties on businesses that hire illegal workers. The case was the only one in which the chamber joined forces with labor and civil rights groups and the federal government. Carter Phillips, who represented the chamber in that case, said the outcome suggests that for at least five members of the court, federal law does not trump state law on immigration matters as much as had previously been presumed.

First Amendment

Beyond the business cases, the other major theme that has emerged for this court is a very pure approach to the First Amendment.

Every legal case presents a clash of values, observes Stanford Law School Dean Larry Kramer. And for judges, as for the rest of us, “there are things we care about more and things we care about less … for judges no less than anyone else, when a higher commitment comes in conflict with a lower one, the higher one wins.”

“Generally speaking, almost always the free-speech claims prevail” with this court, UCLA law professor Eugene Volokh said.

Just look at the cases this term: Whether it was the family of a fallen soldier objecting to protesters at his funeral, or legislators enacting a ban on the sale of violent video games to children, or a state providing matching funds to publicly financed candidates to prevent them from being outspent by privately financed opponents, the value that prevailed was always unfettered speech.

Some of these decisions were by large majorities – like the 8-to-1 decision upholding the rights of protesters to demonstrate at a military funeral. Others were 5-to-4, like the decision striking down Arizona’s matching funds for publicly financed candidates, and others were even more thinly sliced and diced, such as the court’s decision striking down California’s ban on the sale of violent video games to minors.

And there was a sleeper case, Sorrell v. IMS, in which the five conservative justices, plus Justice Sonia Sotomayor, appeared to move quite significantly toward limiting government regulation of commercial speech. The decision threw out a Vermont state ban on selling doctors’ prescription records to drug marketers.

“The court has always held that the First Amendment affords some protection for commercial speech and it has also insisted that governments have the ability to regulate commercial speech of corporations and to protect the rights of consumers and the health and safety of the American people,” said Doug Kendall of the Constitutional Accountability Center, a Washington-based think tank. “Sorrell throws all of that into question.”

Lawyer Goldstein, who won the Sorell case for the pharmaceutical industry, agrees.

“The Sorrell case is the closest the Supreme Court has ever come to giving commercial speech – marketing by businesses – complete First Amendment protection and saying that targeting businesses is a form of viewpoint discrimination that is subject to quite stringent First Amendment scrutiny,” Goldstein said. “And that, I think, is a change in the law.”

For all the importance of these decisions, they pale compared to what is expected next term – health care overhaul, affirmative action, immigration and possibly gay marriage.