Civil Justice Playbook: Pro-Biz Court, Anti-Biz Docket

Monday, September 7, 2015 - 19:16

It must have been a dispiriting U.S. Supreme Court term for Washington Legal Foundation. Indeed, the sense of frustration is palpable in a blog post to the WLF Legal Pulse by General Counsel Mark Chenoweth: “The Supreme Court’s NOT Top 10: Cases the Justices Wrongly Rejected Last Term.” The purportedly pro-business Roberts Court purposefully did not come through for free enterprise.

“From the free-market vantage point," he writes, “it once again appears that the Court did not make enough room on its docket for cases implicating significant liberty interests. By choosing a lighter load, the Court allows legal uncertainty to linger, lower-court disobedience to fester, adventuresome new legal theories to propagate, and injustices implicating millions, if not billions, of dollars to prevail.”

Ouch!

Chenoweth slaps back with his NOT Top 10 – a list of cases a true friend of business would have taken up. Instead, we’re left with what amounts to a judicial pocket veto that may do more damage by the void it leaves than had the Court filled it with even a bad decision. Following is the dubious distinction list, edited for length and style:    

1. PhRMA v. Alameda County—When Alameda Co. sought to offload the cost of its drug take-back program onto pharmaceutical manufacturers, it did more than just adopt a public policy of dubious merit. Forcing a company to enter into a new disposal business in order to continue selling its wares in the state may well have violated the dormant Commerce Clause too. At a time when such “extended producer responsibility” schemes are in vogue, the Court’s guidance in this area was sorely needed.

2. Freeman v. Grain Processing—Like GenOn Power Midwest v. Bell last term, this case asked the Court to decide whether the Clean Air Act preempts state common-law suits, e.g., alleging a nuisance. By dodging this question repeatedly, the Court leaves businesses subject to liability for engaging in the precise conduct for which they have obtained federal permits, an untenable situation.

3. BP Exploration v. Lake—With Hornbeck last term and two separate BP cases this term, the Supreme Court appears to not want to touch the Deepwater Horizon aftermath with a 10-foot pole. Maybe the Court fears that hard cases make bad law, but hard cases still make bad law when the Court doesn’t act. . . . The Court gets a partial pass on this one, as it did grant cert on a similar issue in Tyson Foods v. Bouaphakeo for next term. But the problem of class actions with numerous uninjured plaintiffs is ubiquitous and will remain so unless and until the Court clarifies that all class members must demonstrate standing to sue.

4. SQM North Am. v. City of Pomona—As it did with Wellogix last term, the Court continues to pass on golden opportunities to enforce its important anti-“junk science” precedents against recalcitrant lower courts. When the justices permit lower courts to get away with thumbing their collective nose at Daubert and its progeny, the justices ensure that more of the same bad behavior will ensue.

5. U.S. v. Esquenazi—Foreign Corrupt Practices Act cases almost never make it up to the Supreme Court. There are many reasons for this, but perhaps the chief one is that companies settle to avoid the drastic consequences of an FCPA conviction. The federal government, taking advantage of this leverage, has been ramping up its FCPA enforcement efforts in recent years, and the demand for clarity by companies keen to understand the scope of the statute just keeps escalating. This case teed up the question of who counts as a “foreign official” quite nicely. By leaving that question for another day, the Court missed an opportunity to clarify a key aspect of the FCPA at a crucial juncture.

6. Gibson v. American Cyanamid—Wisconsin has adopted a risk-contribution theory of liability that shifts the burden to a defendant to show that it did not cause the harm the plaintiff alleges. In short, once a plaintiff establishes harm caused by a particular kind of product (here, lead-based paint pigment) and sues all of the solvent companies that made that kind of product, the plaintiff is off the hook for saying which defendant – or even whether any of the defendants in the case – actually caused the harm. This sloppy burden-shifting offends due process to the core.

7. Dean Foods Co. v. Food Lion, LLC—This antitrust case involved an alleged conspiracy between Dean Foods and one of its milk suppliers. The district court granted summary judgment to the defendants, but the Sixth Circuit reversed, essentially deciding that the plaintiffs did not have to prove that the alleged conduct caused the alleged anticompetitive harm they suffered for purposes of precluding summary judgment. Presuming causation (or drawing a 'factual’ inference of causation) in favor of plaintiffs stacks the deck against defendants.

8. U.S. Legal v. Atalese—Put this case in the category of policing the Court’s precedents. The specific issue here was whether the Federal Arbitration Act preempts a state-law rule requiring arbitration agreements to affirmatively explain that the contracting party is waiving the right to sue in court. The Court has cracked down on several similar state-law attempts to undermine the FAA in the past. When it comes to the FAA, no doubt the Court wonders whether the statute can’t just stay saved. Since the answer from the lower courts is no, however, the Court has a job to do.

9. Purdue Pharma v. U.S. ex rel. May—Although two of the questions presented by this False Claims Act case were answered by the Court in KBR, Inc. v. U.S. ex rel. Carter, the remaining public-disclosure bar issue still deserved the Court’s attention. The Fourth Circuit has misconstrued the public-disclosure bar in a way that 10 other circuit courts reject and that Congress fixed prospectively via statute. However, there are many FCA cases still in the pipeline that the Fourth Circuit’s erroneous rule will affect.

10. Take your pick: How about an extraterritorial application of EPA fines ($72 million) case like Volvo Powertrain? Or another FCA case like Gosselin World Wide Moving, where a technical question about whether statutory penalties apply to every invoice submitted has wide application, and the absurd statutory penalty (over $50 million) vastly exceeded the amount in dispute? Or the Ford Motor v. U.S. case, where the IRS refused to disgorge $475 million dollars' worth of interest on Ford’s tax overpayment? Or even the second BP case where a record $13 billion Clean Water Act penalty rested on a disputable and novel statutory interpretation?

In the end, however, Chenoweth softens his stance, perhaps knowing the Foundation does not want to find itself on the Court’s bad side. “No doubt,” he writes, “litigants seek cert in fewer significant business cases in some years as compared to others. If there is a natural ebb and flow to what cases come to the Court, apparently we’re in the ebb for business. As other commenters have noted, next term may be shaping up better, though it is far too soon to tell for certain. In any event, the cases cited above and many others denied certiorari would have been well worth the Court’s time this year.”