All Things in Moderation

Warning! Technical legal content ahead. But everything will be fine.

The Supreme Court under Chief Justice John Roberts is routinely accused from the left of being in the pocket of big business and slavishly devoted to the unprincipled advancement of political interests of the Republican Party. Chief Justice Roberts and Justice Samuel Alito are depicted as rigid political ideologues in this narrative, and Justices Antonin Scalia and Clarence Thomas, on the Court for 20 and 25 years respectively, are not only depicted as ideologues but are casually accused of corruption and cronyism.

These accusations reached a crescendo with the Court’s decision in Citizens United v. Federal Election Commission, in which the Court held that the federal prohibition against independent corporate expenditures in connection with political campaigns violated the First Amendement (the case is also routinely mischaracterized as having legalized unlimited corporate contributions to political candidates, which in fact remain banned). It has been almost an article of faith among liberals since that decision that the Roberts Court is the pawn of big business interests committed to destroying representative government. The narrative incorporates not only distortions and falsehoods about cases they have decided but allegations that individual Justices have corrupt associations and motives.

These sorts of smears are of a kind hard to refute, of course, which is part of why they are attractive to many. How exactly does one refute the accusation or innuendo that a Justice who speaks at a conference of organizers and activists or hunts ducks with a business leader voted in a particular way in a particular case because of improper influence? One can’t, of course. The entanglements of liberal justices can be pointed out to show that none of this is unique to conservatives, but that sort of back and forth provides little satisfaction to anyone.

A different way to answer these smears is to look at some decisions by the Court, because the false narrative of a Court sold out to big business and Republican politics depends just as much on cherry picking as on distortions and lies. Here are some cases from the past several terms of the Court that challenge the liberal narrative.

In Erica P. John Fund v. Halliburton Co., the Court unanimously held that a plaintiff suing under Section 10(b) of the Securities Exchange Act of 1934 need not prove loss causation as a prerequisite to class certification. Now, this may be an inscrutable holding to nonlawyers, but it is a big deal in the world of securities lawsuits against large corporations. It means, in simple terms, that a plaintiff need not prove that the losses investors incurred as a result of a decline in the stock price in fact were caused by the alleged fraud before the court can certify a class of all investors on whose behalf the plaintiff can sue. Certification of a class is a huge milestone in litigation against corporations and immediately places a defendant under extraordinary pressure to settle the case. And, while it isn’t practical to get into a detailed discussion of the legal issues in the case, there was a way for the Court rule the other way. Plaintiffs in these cases often try to meet a different requirement for class certification (invoking a presumption of reliance through “fraud on the market”) by showing that the stock price declined when the alleged fraud was later exposed. In effect, that is, they try to meet the class-wide reliance requirement by demonstrating loss causation, even though they need not separately prove the latter for class certification, and the plaintiffs in this case made precisely this argument. The Court could, therefore, have accepted the defendant’s argument that the Fifth Circuit’s decision was about reliance and fraud on the market and not loss causation. But it did not.

And did you notice that this is a lawsuit against Halliburton, Corporate Public Enemy Number 1 in the liberal mythos? The company at the center of years of supposed corrupt activities of Dick Cheney and his alleged cronies like Antonin Scalia? Did I mention that the opinion reversing the Fifth Circuit’s decision favorable to Halliburton was unanimous (i.e., joined by all the conservatives) and written by Chief Justice Roberts?

Then there was Matrixx Essentials, Inc. v. Siracusano. The issue in this case was whether a securities fraud claim could be based on failure to disclose adverse events reported in connection with a drug although the adverse events were not statistically significant. A unanimous Court held that it could be and affirmed the Ninth Circuit’s decision reversing dismissal of the securities fraud class action against Matrixx Essentials, The unanimous opinion was written by Justice Sotomayor and joined by all the conservatives, voting against big business.

In Shady Grove Orthopedic Assocs. v. Allstate Ins., the Court shocked much of the legal world by holding that a plaintiff who sues in federal court for alleged violations of state statutes can bring his or her lawsuit as a class action even though the state statute itself forbids class actions. This was another blow to big companies, who are often the targets of such class actions. In Shady Grove, the Court was split along nonideological lines, with Roberts, Scalia, and Thomas joining Sotomayor, along with Stevens in concurrence, siding with the plaintiff, and Alito, Kennedy, Breyer and Ginsburg with Matrixx Essentials. Three of the Court’s four conservatives thus again voted aainst big business.

The Court held in Chamber of Commerce of the United States v. Whiting that an Arizona law requiring businesses to verify employees’ eligibility to work, and revoking business licenses of businesses who knowingly employee illegal aliens, was not preempted by federal law. All of the Court’s conservatives rejected the Chamber of Commerce’s challenge to the Arizona law (and all the liberals except Justice Kagan, who recused herself, voted to hold the law preempted).

In Boyle v. United States, the Court held that an “association in fact,” that is, a loose affiliation of people or organizations, can constitute an “enterprise” for purposes of RICO. That was a criminal case, but the implications for big business are significant and threatening, because corporations are often sued under RICO, and Boyle means that corporations can not only be criminally prosecuted but sued by civil plaintiffs under RICO based on the alleged conduct of affairs of an “association-in-fact” enterprise through a pattern of racketeering activity. All of the Court’s conservatives again voted in favor of this broad interpretation of RICO, which the business community strongly opposed.

These are just a few cases that contradict the liberal narrative of Supreme Court conservatives dutifully protecting business and Republican interests. They also happen to be significant cases, and the language in them is often strong and far-reaching against the interests of corporate defendants and business interests. Of course, liberal activists point to Citizens United and other cases in which the conservatives on the court “sided with business,” and even conduct pseudo-scientific numerical studies to show that … conservative justices tend to vote more conservatively than liberals. If this is really a conspiracy against American representative government, however, doesn’t it seem like a very poor one? If the Koch brothers are are pulling their strings, why all these slip ups? The business community has been battling against the “association in fact” theory for years. Using federal court to circumvent state law class action bars could lead to disastrous consequences for big business. Securities class actions are a bane of corporate America and its “oligarchical” rulers. Don’t the Court conservatives get it? Or is the liberal narrative itself mythology?

What intelligent and reasonable people should conclude from Supreme Court decisions and opinions is that Justices on “both” sides have views — call them legal, philosophical, political, or a mix — and tend to apply and follow them. These people have the best legal job in the world, for life. They have reached the top. They don’t need to curry anyone’s favor. The groups to whom they speak might or might not reflect things they believe; the people with whom they associate might or might not be like minded. But they don’t vote the way they do because of these things. If their associations reflect something about their beliefs, it is the beliefs that came first.

Filed under: law, Supreme Court | Tagged: Halliburton | 26 Comments »