Business-Friendly Supreme Court --
Commerce Enjoyed Positive Outcomes Under Chief Justice Roberts

By E. Lee Reichert and Raymond Gifford, attorneys at Kamlet Reichert, LLP in Denver.  As a matter of disclosure, Gifford filed an amicus brief in the patent case KSR vs. Teleflex, urging the court to limit the obviousness standard. 

Predictions that the additions of Justices John Roberts and Samuel Alito would create a more business-friendly Supreme Court have been validated this term. While each case the court decides comes with specific facts and involves specific laws, the net outcomes of this term's cases are positive for business and commercial activity.

Chief Justice Roberts famously views the Supreme Court justice as playing the role of a baseball umpire and recently noted that when the First Amendment is involved, the tie goes to the speaker, not the censor. Using this analogy, business had a very good day at the plate this term, as the court made it much more difficult for plaintiffs to sue businesses in the first instance or to win large damage awards on the back end.

In the term that ended last month, the court:

• Delineated the "heightened" pleading standards that apply in securities class actions and strengthened the requirements for proving knowledge. 
• Showed disfavor for large jury awards, setting aside a $79.5 million punitive damage verdict in Oregon against Philip Morris and a $55 million verdict in California against Ford Motor Company
• Shielded employers from being sued for pay discrimination against women and minorities that occurred in past years. In this case, the court found that a female supervisor who learned at the end of her career that she was paid less than every male in similar positions had not met a 180-day statute of limitations deadline
• Protected the insurance industry by limiting the circumstances under which companies must tell customers their credit ratings are affecting the amount they pay for insurance

Not all the decisions were home runs for business. For example, in the securities case mentioned above, the defense bar had argued for an even higher pleading standard, but its approach was accepted by only two justices. Nevertheless, this case still makes it harder to bring successful securities cases.

Antitrust claims also were significantly limited this term, as the court:

• Overturned a 100-year-old antitrust precedent that forbade resale price maintenance agreements in favor of a more lenient "rule of reason" standard, thus giving retailers and suppliers more freedom to contractually dictate prices to one another
• Determined that Securities and Exchange Commission regulations - and not the Sherman Antitrust Act - apply to alleged anti-competitive behavior in initial public offerings, thereby foreclosing antitrust suits in which securities regulations already exist 
• Made it easier for businesses defending against certain antitrust claims alleging conspiracies. In a case alleging that the former Baby Bells conspired not to compete with one another, the court found it was not enough to say a conspiracy was possible but required plaintiffs to establish real evidence of a "plausible conspiracy"

The court also showed a willingness to delve into other business law areas this term. Issuing its furthest-reaching patent ruling in decades, the court tightened the "obviousness" standard for patent claims. In this increasingly important field of patent law, the court's willingness to step in and attempt a proper limitation of property rights is a sign that it is attuned to crucial business law issues.

It is likely that the court will continue to increase its business docket under Chief Justice Roberts. The court already has agreed to hear a securities case next term that will address whether plaintiffs may bring claims against vendors who allegedly help public company customers inflate stock prices with questionable transactions.

Whether business will be able to "win" before the court as consistently as it did this term remains to be seen, but it certainly looks like business will get more at-bats with more chances for hits with Chief Justice Roberts behind the plate.

Originally published in the Rocky Mountain News, July 14, 2007