Business issues feature prominently on Supreme Court's docket

By Amanda Becker
Monday, October 4, 2010

The Supreme Court begins its new term Oct. 4 and several business cases feature prominently on its docket, with broad implications for government contractors, telecommunications companies and others. Here are some of the key cases to watch:

National Aeronautics and Space Administration v. Nelson, 09-530 -- Oct. 5 One of the first cases the justices will hear this fall will affect federal contractors. It was brought by employees at NASA's Jet Propulsion Lab at the California Institute of Technology, who objected to new NASA background investigations that included questions about treatment for illegal drug use and quizzed references for any unfavorable information about applicants. The U.S. Court of Appeals in Pasadena (9th Circuit) largely sided with the employees, prompting the government to appeal. Though many experts believe the court will almost certainly preserve the government's ability to ask potential employees about past drug use, it could require that the questions be more narrowly tailored and put an end to open-ended questioning.

"A victory for the employees would likely have broad ramifications for the collection of information from employees of the state and federal government in addition to government contractors seeking access to facilities," said Latham & Watkins attorney Maureen E. Mahoney.

Staub v. Proctor Hospital, 09-400 -- Nov. 2 A case brought by a hospital technician who felt he was fired for his membership in the U.S. Army Reserve could clarify when employers can be held liable for the discriminatory acts of employees, attorneys say. Vincent Staub claims alleges that his department head and immediate supervisor disapproved of his membership in the reserve and deliberately scheduled him for shifts they knew he could not complete. When Staub sued the hospital, the trial court ruled in his favor, but an appellate court reversed that decision.

"When you have a biased supervisor, when is the company held responsible for it?" said Thomas C. Goldstein, a partner at Akin Gump Strauss Hauer & Feld. "Any company of any size should watch this case carefully."

AT&T Mobility v. Concepcion, 09-893 -- Nov. 9

This case brought over sales tax levied on free cell phones could affect the fine print at the bottom of hundreds of thousands of phone, credit card and other consumer contracts. After a California appellate court invalidated an AT&T Mobility contract that barred customers from pursuing large-scale arbitration, the phone company appealed, arguing that federal law allows companies to enforce the terms of arbitration. If the justices rule that states can invalidate contracts prohibiting class arbitration it would "throw the whole way companies do business on a grand scale up in the air," said Robin S. Conrad, executive vice president of the Chamber of Commerce's litigation center.

Consumer advocates say entering arbitration on a case-by-case basis is often more trouble than it is worth, so if companies can block such coordinated efforts the "practical effect is that the average consumer really can't vindicate their rights in any meaningful way," said attorney Cyrus Mehri of Mehri & Skalet.

Chamber of Commerce v. Whiting, 09-115 -- Dec. 8 This is a battle over an Arizona statute that both requires employers to participate in a voluntary federal program that verifies legal status and imposes a so-called corporate death penalty if they employ undocumented workers. Legal experts say the case likely will be decided as a matter of the supremacy of federal versus state legislation. Several major business groups, civil liberties organizations and labor unions have all joined together to oppose the Arizona law, making for some strange bedfellows.

"The Chamber of Commerce, the ACLU and the Solicitor General are all saying, 'Look, given the important policies and the primacy of the federal government's control over border security and immigration matters generally, Arizona's law concerning employment is preempted,' " said Georgetown University law professor Brian Wolfman.

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