Pro-Business Decision Hews To Pattern of Roberts Court
Friday, June 22, 2007
The Supreme Court set down strict guidelines yesterday for investors who want to sue company officials for fraud, another victory for business in what has been a resoundingly successful year before the nation's highest court.
Yesterday's decision in favor of a high-tech company being sued by shareholders is part of a pattern by which the justices have made it more difficult for plaintiffs to sue corporations or win substantial damage awards.
The reconstituted court, headed by Chief Justice John G. Roberts Jr., has devoted more of its docket to business cases. And, for the most part, the justices have embraced industry's viewpoint without the deep ideological divisions that split them on social issues.
"I always thought that the Rehnquist court was really quite a good forum for business," said Maureen E. Mahoney, a Washington lawyer, referring to the previous court, under Chief Justice William H. Rehnquist. "But I think we now know that the Roberts court is even better."
Robin S. Conrad, executive vice president of the legal arm of the U.S. Chamber of Commerce, declared it "our best Supreme Court term ever." Her organization has prevailed in 12 of 14 cases in which it took a position, with one still to be decided before the court finishes its work next week.
During the term that began in October, the court has thrown out an $80 million punitive-damages verdict for a widow who had sued cigarette manufacturer Philip Morris; found that the Civil Rights Act doesn't allow lawsuits by women and minorities alleging past discrimination; and ruled that the mortgage-lending subsidiaries of national banks cannot be regulated by states.
It has taken a keen interest in patent law, where there was "virtual unanimity," in the words of Supreme Court practitioner Beth S. Brinkmann, that the lower courts had made it too easy to obtain patents.
Mahoney, who argued more cases before the court this year than any other private attorney, said the court has moved to "update" antitrust jurisprudence "to conform with more modern understanding of economic principles."
In most of those cases, the court's conservative-liberal split was missing. "While I think there's more division this term, it's not in the business area," Brinkmann said.
For example, liberal Justice Stephen G. Breyer wrote Monday's majority opinion in Credit Suisse Securities v. Billing, in which the court refused to allow a private antitrust case over Wall Street initial public offering practices. Justice David H. Souter wrote for a seven-member majority in Bell Atlantic v. Twombly, which raised the bar for plaintiffs in pursuing an alleged antitrust conspiracy.
The chamber, the chief trade organization for the securities industry and lawyers who defend companies against investor lawsuits, praised Justice Ruth Bader Ginsburg's opinion yesterday in Tellabs v. Makor Issues & Rights as a significant affirmation of a 1995 law that Congress passed to weed out frivolous cases.
At issue in the case, which centered on optimistic statements made by executives of Illinois equipment maker Tellabs, was the law's requirement that shareholders show a "strong inference" of wrongdoing during the early stages of a securities-fraud lawsuit in order to survive motions to dismiss it.