The Supreme Court’s business docket
By Adam Liptak
The Supreme Court’s new term, which started Monday, is studded with momentous cases on affirmative action, voting, religion and gay rights. Those highly charged disputes can overshadow other aspects of the court’s work, notably the significant cases on its business docket, which could influence how companies are regulated, conduct diversity hiring and more.
Chipping away at the administrative state
The Supreme Court has in recent years become increasingly skeptical of the power of administrative agencies. In its last term, it restricted the Environmental Protection Agency’s ability to tackle climate change and the Occupational Safety and Health Administration’s power to limit the spread of the coronavirus in the workplace.
On Nov. 7, the court will hear a pair of arguments that could make it easier to challenge the constitutionality of two other agencies, the Federal Trade Commission and the Securities and Exchange Commission. The cases are both about timing, asking the justices to decide how long people and businesses must litigate with agencies that seek to regulate their conduct before they can go to federal court.
The first case, Axon Enterprise v. Federal Trade Commission, concerns a firm that makes body cameras for law enforcement and was investigated by the FTC as part of a merger review. Rather than waiting for the conclusion of the proceedings before the agency, the company tried to sue in a federal trial court, arguing that the agency’s structure was unconstitutional and that it did not have the authority to review the merger.
Even as it rejected that attempt, a divided three-judge panel of the 9th U.S. Circuit Court of Appeals said Axon’s argument had force.
The second case, Securities and Exchange Commission v. Cochran, concerns an accountant accused of misconduct by the SEC and involves a similar issue. The accountant, Michelle Cochran, sought to challenge the agency’s structure in federal court before administrative procedures were completed. The 5th Circuit agreed that she should be able to bring her claims, creating the sort of conflict between federal appeals courts that often prompts Supreme Court review.
Where injured workers and consumers can sue
On Nov. 8, the justices will consider whether states can require corporations to agree to be sued in those states’ courts as a condition of doing business in the states.
The case, Mallory v. Norfolk Southern Railway, concerns Robert Mallory, a Virginia man who says he developed colon cancer from exposure to toxic chemicals while working in Virginia and Ohio for the Norfolk Southern Railway Co., which was based and incorporated in Virginia. The question in the case is whether he can sue in a third state — Pennsylvania.
The Supreme Court has long said that corporations may be sued where they are incorporated or where their headquarters are. And they may be sued in particular cases if the plaintiff’s claims are related to the defendant’s contacts with the state.
Mallory relies on none of those bases for jurisdiction. Rather, he points to a Pennsylvania law that requires companies that do business in the state to consent to being sued there. The railroad says the law is unconstitutional.
Lawyers for Mallory say the law is a sort of mirror image of the take-it-or-leave-it contracts that many businesses use to force consumers and workers into arbitration or require them to sue far from their homes.
In a brief supporting the railroad, the Biden administration said the Pennsylvania law “subverts interstate federalism by reaching beyond Pennsylvania’s borders and allowing state courts to hear cases in which Pennsylvania has no legitimate interest.”
Pigs, cruelty and interstate commerce
On Oct. 11, the court will hear National Pork Producers Council v. Ross, a challenge to a California law that seeks to reduce cruelty to animals by requiring that pork sold in the state come from breeding pigs housed in spaces that allow them to move around freely.
The law forbids the sale of most pork in California unless the pig it comes from was born to a sow that was housed with 24 square feet of space. But most sows around the nation are kept in much smaller enclosures.
“These pens,” the groups challenging the California law wrote in a Supreme Court brief, “provide around 14 square feet of space and — for hygiene, safety and animal welfare and husbandry reasons — do not allow the sow to turn around.”
Given the size of California’s market, pork producers say, the state effectively seeks to regulate businesses outside its territory in violation the Constitution.
A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals, in San Francisco, rejected the argument that the law’s out-of-state effects made it invalid. “State laws that regulate only conduct in the state, including the sale of products in the state, do not have impermissible extraterritorial effects,” Judge Sandra S. Ikuta wrote for the panel.
The Supreme Court’s ruling could have implications for many other laws, including state laws addressing climate change and out-of-state travel to obtain abortions.
The business impact of two marquee cases
Two cases on social controversies that have gotten a lot of attention also have big business implications. In a major challenge to affirmative action programs, the court may strike down the race-conscious admissions programs at Harvard and the University of North Carolina. There may well be spillover effects for employers seeking to assemble diverse workforces.
The pipeline of highly credentialed minority candidates would tighten, defenders of the programs argued, and, depending on the logic of the ruling, employers’ diversity efforts could be challenged under a federal law prohibiting workplace discrimination.
A brief supporting the universities filed by scores of companies, including Apple, General Motors, Google, Meta Platforms and Starbucks, said that they relied on leading colleges and universities to train diverse leaders and that “racial and ethnic diversity enhance business performance.”
The court is also considering whether a Colorado web designer may refuse to create websites celebrating same-sex marriages despite a state law barring businesses open to the public from discriminating based on sexual orientation and other identity categories. As a legal matter, the case concerns free speech, and a ruling in favor of the designer could allow other businesses engaged in expressive conduct to discriminate against groups of which they disapprove.