Big Business’s Bonanza Week in the Supreme Court

A flag adorned with corporate logos and fake money flies in front of the U.S. Supreme Court in Washington, D.C., October 2013.

Large corporations and special interests often target the legal rights of consumers and workers in an effort to increase their profits. Now, with the confirmation of Judge Brett Kavanaugh to the U.S. Supreme Court, a 5-4 conservative majority is even more likely to rule in favor of big business.

This week, the Supreme Court began its November sitting, hearing oral arguments in six cases. Four of these cases threaten to undermine consumer and labor rights; issues include forced arbitration, class-action lawsuits, and overseas liability. Over the past four decades, corporate interests have spent tens of millions of dollars supporting conservative nominees to the Supreme Court. Corporate interests primarily spend this money on ad campaigns for nominees that are targeted at the senators who will vote on these nominees’ confirmations. This trend accelerated over the past two years, as dark money organizations funded by pro-corporate sponsors spent more than $15 million to help ensure the confirmations of Justices Neil Gorsuch and Brett Kavanaugh.

This week’s cases could therefore offer the payout for which big business has long been waiting. The pro-corporate conservative wing of the court will likely rule to protect businesses by overturning or limiting existing laws that regulate businesses’ accountability and transparency. Barring a shift in the ideological makeup of the court, this week offers just a sample of the types of cases expected in the months and years ahead.

Forced arbitration

On Monday, the Supreme Court heard two forced arbitration cases: Henry Schein Inc. v. Archer & White Sales Inc. and Lamps Plus Inc. v. Varela. Both cases were brought under the Federal Arbitration Act (FAA). If the Supreme Court decides in favor of the employers, these cases will make it easier to force all employees and consumers into arbitration—where the more powerful party often has the upper hand. Arbitration is a process by which parties can resolve disputes outside the public courts and thus avoid judges and juries, but the decision is still binding and enforceable in the courts. Research shows that in arbitration cases, arbitrators often rule in favor of businesses over employees, compensation is usually smaller, and businesses are often able to avoid public scrutiny.

Schein would give arbitrators the unilateral and unappealable power to determine whether particular cases belong in arbitration. Varela, meanwhile, could expand on the Supreme Court’s decision earlier this year in Epic Systems Corp. v. Lewis to further preclude class arbitration, which allows plaintiffs with similar claims against the same entity to join together in their arbitration. Many claims are for such low dollar amounts that plaintiffs simply will not bring them if they do not have the ability to do it as a class—an outcome that often favors powerful corporations. If the Supreme Court rules for corporate interests in these two cases, it could limit the ability of workers and consumers to bring disputes with corporations to court.

Class-action lawsuits

On Wednesday, the Supreme Court heard oral arguments in Frank v. Gaos, a class-action settlement case that questions the appropriate boundaries for “cy pres” settlements. Class-action lawsuits, like class-action arbitration, allow plaintiffs with similar claims against the same entity to file their lawsuit together. Cy pres settlements are awarded when a court determines that a sum divided among a large class of plaintiffs is too trivial to pay and the costs of identifying and distributing the payments are too high, making direct relief impractical. In Frank v. Gaos, for example, the payout came to roughly 7 cents per class member, less than the stamp it would cost to send the check to each class member. In such unusual circumstances, the settlement amount is often given to institutions that are determined to serve interests parallel to those of the plaintiffs. Although no law, federal rule, or Supreme Court decision prohibits cy pres settlements, the Supreme Court could decide to strike them down as a matter of public, not legal, policy.

International organization immunity

On Wednesday, the Supreme Court also heard Jam v. International Finance Corp., a case brought by a group of Indian farmers and fishermen against the International Finance Corporation (IFC). The plaintiffs argued that the construction of the IFC’s power plant negatively affected the ecosystem in Gujarat, India, eliminating access to fresh water and killing marine life that local residents rely on for food and income. The lower courts dismissed the case on the grounds that the IFC is immune from lawsuits under the International Organizations Immunities Act (IOIA). The question before the Supreme Court, then, is whether international organizations have the same immunity that foreign governments enjoyed when the law was passed in 1945 or the weaker immunity that foreign governments have at present, as enacted in the Foreign Sovereign Immunities Act of 1976.

If the justices uphold the lower court decision, they will essentially grant complete immunity in perpetuity to international organizations, placing their interests above those of local communities. If the Supreme Court grants immunity to international organizations for actions on foreign soil, it will only further cement the immunity that corporations now enjoy for their global actions.

Conclusion

While former Justice Anthony Kennedy often ruled in favor of corporations and against the working class, he was somewhat reluctant to push the law too far in any one direction. The new conservative majority on the Supreme Court, however, is likely to loosen regulations as well as overturn and limit laws that hold corporations accountable and protect vulnerable communities. The cases heard this week could expand forced arbitration agreements, limit class-action settlements, and shield international organizations from accountability—and they are just the start of the types of cases Americans should expect to see more of in this new, business-friendly Supreme Court.

Devon Schmidt is an intern on the Legal Progress team at the Center for American Progress. Jake Faleschini is the director of the Federal Courts Program at the Center.