Is the Supreme Court Biased in Favor of Business?

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March 17 2008 3:16 PM

Is the Supreme Court Biased in Favor of Business?

Jeffrey Rosen argued that it is, in a Sunday NYT magazine article , but he supplies little evidence:

"Of the 30 business cases last term, 22 were decided unanimously, or with only one or two dissenting voices."

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-- But how many of them were decided in favor of businesses?  Weirdly, we're not told.  What if businesses won only half the time?  Or less?  Even if businesses won more often than other parties, we wouldn't be able to establish bias without knowing whether their cases were strong or weak.

"Forty percent of the cases the court heard last term involved business interests, up from around 30 percent in recent years."

-- Another meaningless statistic.  Suppose that the additional cases involve disputes between businesses and workers and that the workers always win.  We can't tell whether bias exists unless we know whether the Court rules in favor or against those business interests.  (For one case where the employee wins, go here .)

 "While the Rehnquist Court heard less than one antitrust decision a year, on average, between 1988 and 2003, the Roberts Court has heard seven in its first two terms - and all of them were decided in favor of the corporate defendants."

-- These seven cases--Volvo Trucks North America, Inc. v. Reeder-Simco, GMC, Inc. (2006); Texaco, Inc. v. Dagher (2006); Illinois Tool Works v. Independent Ink, Inc. (2006); Weyerhaeuser v. Ross-Simmons Hardwood Lumber Co., Inc. (2007); Bell Atlantic Corp. v. Twombly (2007); Leegin Creative Leather Products, Inc. v. PSKS, Inc. (2007); Credit Suisse First Boston Ltd. v. Billing (2007)--are mostly business versus business cases.  Only one case--Twombly--pitted consumers against businesses.  Credit Suisse ambiguously pitted investors (including corporate investors) against a business.  So in five or six of the seven cases in which a corporate defendant won, a corporate plaintiff lost.

 "Exactly how successful has the Chamber of Commerce been at the Supreme Court? Although the court is currently accepting less than 2 percent of the 10,000 petitions it receives each year, the Chamber of Commerce's petitions between 2004 and 2007 were granted at a rate of 26 percent, according to Scotusblog."

-- Those 10,000 petitions include lots of hopeless cases.  The Chamber of Commerce will obviously pick and choose on the basis of the quality of the case, and put resources only behind those cases that have a chance of prevailing.  Hence its high win rate.

"And persuading the Supreme Court to hear a case is more than half the battle: Richard Lazarus, a law professor at Georgetown who also represents environmental clients before the court, recently ran the numbers and found that the court reverses the lower court in 65 percent of the cases it agrees to hear; and when the petitioner is represented by the elite Supreme Court advocates routinely hired by the chamber, the success rate rises to 75 percent."

-- The overall success rate of petitions does not tell us the success rate of the Chamber of Commerce.  The pertinent statistic is that last term the Chamber of Commerce won 13 of 15 cases for which it wrote an amicus brief.  But, again, without knowing whether these cases were strong or weak, we have no way of telling whether this win record reflects bias or simply the Chamber's ability to sniff out cases where lower courts erred.

-- I looked at the 23 cases listed on the Court's website for this term.  I counted nine business cases: of these, businesses lost in 5 cases, more than half.  But this doesn't tell us anything either.  If the court has become more pro-business, most parties will settle in line with the changing jurisprudence, and there is no particular reason to think that win/loss data will tell us anything (the "selection effect" problem that dogs empirical research).

Aside from these ambiguous statistics, Rosen cites four decided cases to support his argument.  These four cases are less straightforward than they appear at first sight.  To see why, consider the question, what does it mean to be pro-business?

1.  Pro-Shareholder?

Businesses are owned by shareholders, so one might think that a pro-business Court would hold in favor of shareholders.  However, in the Charter Communications case, the Court ruled against investors, who had sued Charter's vendors for conspiring to commit securities fraud.

Alternatively, one might argue that this case is pro-business because Charter Communications' vendors won.  But that is just a way of saying that the vendors' shareholders made (or did not lose) money.  Is the case anti-business because Charter's shareholders lost or pro-business because the vendors' shareholders won?

2.  Pro-Management?

Maybe the claim is that the decision in Charter Communications favored that company's managers in some way.  Henceforth, manages will more easily be able to conspire with third parties to violate security laws, at the expense of investors.  This is also a puzzling claim.  Suppose the Supreme Court held that managers of businesses could loot the treasuries of their businesses without facing any liability at all.  Would that be a victory for business or would it mean that business as we know it has become impossible?

3.   Anti-Consumer?

Businesses exploit consumers, don't they?  In the Philip Morris case, the court threw out punitive damages awarded to a smoker who had been deceived by cigarette advertising.  Punitive damages deter firms from wrongdoing but they also raise their costs and hence the price of goods.  Whether consumers are benefited from or harmed by punitive damages is unclear.

The antitrust cases Rosen mentions reflect some skepticism with traditional antitrust law notions that disapprove of various cooperative arrangements among business.  But the intellectual foundation of this trend reflects a pro-consumer attitude, in contrast with the older antitrust law, which was anti-big business but not anti-business.

4.  Anti-State?

In Riegel, the Court held that victims of a faulty medical device cannot bring a state-law products liability claim if that device had been approved by the FDA.  This case was a victory for a business, but its real effect is to ensure that FDA regulations of medical devices prevail over state common law regulation.  This weakens the power of states relative to the federal government in this area, but does it help or hurt consumers?  It depends on whether state common law judges and juries do a better job evaluating medical products than the FDA does.  Do they?  No one knows.  Does it help businesses-shareholders and managers-in general?  It depends on whether state judges (often criticized for being in the pocket of business lobbies) are more or less pro-business than the federal government.  Some are, no doubt; others are not.  There is no reason to think that recent cases that find preemption of state law are pro-business: they are pro-federal government, not pro-business.

5.  Anti-Prosecution?

In Arthur Andersen, the Court reversed a conviction against the defunct accounting firm for shredding documents during the Enron investigation, holding that the government had failed to prove that the shredding was anything other than routine-as opposed to an effort to conceal guilt.  In what sense can such a decision be considered "pro-business"?  Compared to what?  Is the idea that the Supreme Court would have affirmed the conviction if the defendant had not been a business?  Or is the idea that any ruling that allows businesses to dispose of documents must be pro-business--as if the only "unbiased" view would be that businesses must keep all their records forever?

6.  Anti-lawsuit?

The Charterhouse Communications case is the latest of a long line of cases that pull back on much earlier cases that found private rights of action in general regulatory statutes that vested the government with the power to enforce a law.  In the past few decades, the Court has increasingly insisted that private rights of action should not be "implied" (that is, invented by courts) but should be recognized only when a statute creates them.  Many of these statutes regulate businesses, so finding private rights of action may harm businesses, or some business.  But these rights are also taken advantage of by businesses that seek to sue other businesses, so in aggregate, it is not clear whether the trend helps business or hurts it.

7.  Pro-Market?

What's really going on is that Rosen is conflating two separate ideas: "pro-business" (really: pro-rich-people; after all businesses are just legal abstractions that bring together investors, managers, employees, consumers, so that any victory for a "business" will help/hurt all sorts of people, rich and poor) and "pro-market."  The whole idea of being pro-business is, I suspect, incoherent (read Jack Balkin's post and then ask yourself, what would an "anti-business" Supreme Court jurisprudence look like?  Would businesses have to lose every case?).  But one can coherently argue about the extent to which the government should, or should not, depart from enforcing ordinary property and contract rights that underlie the free market.  Rosen's piece is probably best read as arguing that the Supreme Court has, over the years, become less sympathetic to the view that government intervention in the market serves the public interest, a view that he calls "economic populism."  If so, only the antitrust cases are really on point; the Arthur Andersen case, the Charter Communications case, and the preemption cases have little to do with market ideology.

So the Supreme Court is not increasingly pro-business, but maybe it is increasingly pro-market, finally catching up to a change in the public mood that began in the Carter administration.  To preserve the idea that its jurisprudence is "biased" in favor of business, rather than just sensible or reasonable or within the range of colorable legal argument or for that matter a long overdue reaction to its previous anti-business "bias," Rosen argues that maybe there are people out there who really are populist; he seems to think that the Supreme Court and elite, bipartisan opinion that (he acknowledges) it reflects are "biased" in favor of business because this populist sentiment no longer plays a role in its opinions.  "Unbiased," in this view, is populist.  But Rosen does not show that populism is on the rise; the fates of the two most populist presidential candidates, Huckabee and Edwards, suggest otherwise.  Even if it were, it would be puzzling to argue that the Supreme Court should hold its finger to the wind and start ruling against businesses--indeed, should have started years ago, when this "pro-business" trend Rosen decries began--and if it doesn't, that must be because of "bias."  The article boils down to the claim that the Supreme Court is biased in favor of business (that is, is excessivly pro-market) because it failed to anticipate, and today shows no inclination to heed, marginal populist sentiment that has made no inroad on electoral politics.

Eric Posner, a professor at the University of Chicago Law School, is author of The Twilight of International Human Rights Law. Follow him on Twitter.

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