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Business and the Sotomayor Pick:

Many observers (myself included) expected President Obama to nominate someone to the Court who was not particularly threatening to the business community. In short, they expected a nominee like Justice Souter, or perhaps Justice Breyer. As the WSJ reported:

As conservatives gear up to oppose President Barack Obama's eventual choice for the Supreme Court, the Republican Party's traditional heart — the business community — is laying low.

That is because both business advocates and their counterparts in the consumer and labor camps say the potential candidates most frequently mentioned seem likely to share retiring Justice David Souter's interest in providing what business wants most from courts: clear, narrow and predictable rules.

While concerned that "empathy" is code for placing a thumb on the scales to the benefit of favored groups (and against business interests), many in the business community were hopeful that the President would select someone who would fit into the Roberts' Court's overall approach to business cases. That is someone who is not overtly pro-business, but recognizes the importance of narrow rulings that reinforce settled expectations. (See also here).

Does the Sotomayor nomination conform to the business community's expectations? It's not so clear. As Overlawyered's Walter Olson notes in the Forbes column to which Eugene linked above, a handful of her rulings in business cases could be cause for concern.

Two 2006 cases present more problems for Sotomayor advocates, but they're on subject matter that could come off to the public as dry and remote: Merrill Lynch v. Dabit, where she held that state courts could entertain certain securities lawsuits notwithstanding the preemptive effect of federal law (reversed 8-0 by the high court), and Knight v. Commissioner, on the deductibility of certain trust fees, in which the court upheld her result but unanimously rejected her approach as one that (per Roberts) "flies in the face of the statutory language."

Issues of business law don't come across as Sotomayor's great passion one way or the other, so it's hard to know what all this portends for the high court's direction on business issues should she be confirmed. . . .

Some of her backers say they expect that Sotomayor will emerge as a liberal in the less than fiery, relatively "legalistic" Ginsburg/Breyer mold. Even assuming that happens, some outcomes will soon change in a direction most businesses will find adverse.

AEI's Michael Greve expresses greater concern on NRO's Bench Memos.
Any Obama nominee was sure to be reliably liberal on high-salience "social" issues. Judge Sotomayor adds another qualification: She is among the most aggressively pro-plaintiff, anti-business appellate judges in the country. Her rulings in class actions, preemption cases, and other commercial matters are of a piece with her contempt for property rights (noted by Richard Epstein) and her anti-employer bias in discrimination cases (a matter of notoriety).
In addition to Knight and Dabit, another case that supports this view, and in which Sotomayor's approach was rejected by the Supreme Court, was Malesko v. Correctional Services, in which Judge Sotomayor adopted an expansive view of Bivens actions to find an implied cause of action for damages against a private company operating a halfway house under a contract with the federal Bureau of Prisons. Another case in which she was reversed for adopting a "anti-business" position was Entergy Corp. v. Riverkeeper, in which she had held that the EPA impermissibly considered cost-benefit analysis when setting a standard under the Clean Water Act.

It is difficult to draw definitive conclusions based upon a handful of cases. As one would expect, most of Judge Sotomayor's opinions are unremarkable and involve clear applications of applicable law and precedent; only a small fraction are even potentially controversial. Few of her decisions have been reviewed by the Supreme Court. Her record of reversal in such cases seems high, but is that significant? The Supreme Court reverses appellate courts more often than not, so the reversal rate, by itself, may nor mean all that much. Still, it is interesting that Judge Sotomayor has been reversed more than once for adopting an excessively permissive standard for suits by anti-corporate plaintiffs.

Does this mean a Justice Sotomayor would be "anti-business"? Not necessarily. This handful of cases is not necessarily representative of her overall approach. On the other hand, as a justice she will be less constrained by precedent and existing legal interpretations than as an appellate judge. So if Dabit and Malesko are indicative of her overall approach, she would be more free to advance this view once confirmed to the Supreme Court — and that would be something that would cause the business community some concern.

UPDATE: The ClassActionBlawg has two informative posts on Judge Sotomayor's record in class actions here and here.

Related Posts (on one page):

  1. What Should a Judge's Reversal Rate Be?
  2. Business and the Sotomayor Pick:
Steve:
Dabit was a circuit split case in which Sotomayor interpreted the statute according to its text. The Supreme Court, in resolving the circuit split, upheld a broad reading of the statute that may well have comported with what Congress truly intended - but there's still a reasonable argument that they went beyond the statute's text to do so.

It's one thing if a judge's overall body of work evidences a hostility to certain interest groups, but it's quite another to pick out one or two cases as cause for concern when the issue may well be nothing more than a theory of jurisprudence.
5.27.2009 10:29am
Joseph Slater (mail):
I read somewhere that of her decisions appealed to the Supreme Court, 3 of 6 had been overturned, which is actually a better batting average than most appellate justices have.
5.27.2009 10:44am
rick.felt:
Say what you will about Kelo, but it's certainly pro-business.
5.27.2009 10:53am
Linus:
In all honesty, i would be more than happy to have a more balanced approach to business cases in the SCOTUS... there is way too much of a singular pro-business approach since Roberts and Alito's arrival.
5.27.2009 10:57am
Brett Marston:

Her record of reversal in such cases seems high


What's your baseline, Jonathan? Since this is becoming one of the explicit lines of attack on this nominee, I think that it's worth examining it a little more critically. I heard one talker yesterday say that "ninety percent" of her opinions had been overturned by the Supreme Court.

Here, it looks like two of her circuit court opinions were affirmed, two were reversed (one by a deeply divided Court that is explicitly hostile to Bivens, the underlying precedent). Those aren't bad odds, really, since the Court reverses more often than it affirms.

In both Dabit and Malesko, there was no dissent from her opinion below. Is that relevant? Seems so to me, at least if you're trying to make the argument that she's somehow not in the mainstream.
5.27.2009 11:08am
Benjamin Davis (mail):
Oh Yeah - Empathy. Here is a great piece on conservative empathy conservative empathy
5.27.2009 11:15am
Javert:

Say what you will about Kelo, but it's certainly pro-business.
Not if by "pro-business" one means laissez-faire capitalism, inalienable private property, and a respect for the rule of contract.
5.27.2009 11:21am
Oren:

I read somewhere that of her decisions appealed to the Supreme Court, 3 of 6 had been overturned, which is actually a better batting average than most appellate justices have.

Indeed, the SCOTUS reverses 2/3 of the cases granted cert.
5.27.2009 11:29am
byomtov (mail):
Not if by "pro-business" one means laissez-faire capitalism, inalienable private property, and a respect for the rule of contract.

Yes, but that's like calling a horse's tail a leg.
5.27.2009 11:48am
Steve:
The business lobby, almost by definition, does not pursue laissez-faire capitalism.
5.27.2009 11:55am
RPT (mail):
"I have followed this man's career for some time," said President George H.W. Bush of Clarence Thomas in July 1991. "He is a delightful and warm, intelligent person who has great empathy and a wonderful sense of humor."

Interesting comment. IOIYRAR.
5.27.2009 12:14pm
AnthonyJ (mail):
Well, no, it pursues laissez-faire to the extent that it's beneficial for them to do so. Professional lobbies are generally results-oriented, not philosophical.
5.27.2009 12:14pm
Lior:
"Reversal rate" should mean the fraction of her written opinions that have been reversed, not the fraction of granted certs from her opinions that led to reversal. Otherwise the data has a serious selection bias.
5.27.2009 12:15pm
Oren:
Lior, if you compare how many of her cert-granted-opinions are reverse versus the average cert-granted-reversal rate, that's fair since the bias (cert-grants) is canceled out left and right.

The average reversal rate at the SCOTUS (obviously, for cert-granted opinions) is 2/3rds. She's batting 0.500, which is better than the average. Of course, N=6, casting the significance into question.
5.27.2009 12:21pm
Barry Loberfeld (mail) (www):
5.27.2009 12:27pm
levisbaby:

While concerned that "empathy" is code for placing a thumb on the scales to the benefit of favored groups (and against business interests),

Yowsa, them black folks and mexicans sho is "favored" ain't they? We need to take pity on the rich white folks.
5.27.2009 12:28pm
Jonathan H. Adler (mail) (www):
Oren, et al. --

I note the importance of comparing her reversal rate to the overall reversal rate in my post.

As for what her rate is, it depends on how one judges the cases. So, for instance, the outcome she reached in Knight was affirmed, but as I note above the Court explicitly rejected her reasoning in fairly blunt terms. If that counts as a reversal, then she's at the 2/3 rate. And, if we include Ricci v. DeStefano, then whether she's above or below the norm hinges on the outcome of that case. Either way, her opinions in accepted cases would be rejected more often than not, but this would not tell us all that much.

Insofar as we can draw any relevant inferences, I think we need to look at the specifics of the cases, and should also consider any district court cases that made their way up (like Tasini), as well as decisions deciding questions that were subsequently addressed by the Supreme Court in other cases. An example of the latter would be the permissibility of strip searches of students. She had a strip search case that is fairly similar to the case currently pending before the Supreme Court. This won't give us anything definitive, but I do think it will shed some light on what we could expect from a Justice Sotomayor.

JHA
5.27.2009 12:32pm
Steve:
In terms of methodology, I would find it far more interesting to know how many of her district court decisions were reversed by the Circuit. When you get reversed at the circuit level, more often than not it means that you misapplied the law. But the Supreme Court takes so few cases that are clearcut - indeed, even the existence of clear legal error is not enough for a cert grant unless the case has broader implications - you really can't divine much from reversals at that level. Even a 9-0 decision doesn't have to mean much.
5.27.2009 12:39pm
martinned (mail) (www):

Even a 9-0 decision doesn't have to mean much.

OTOH, sometimes convicting someone who bought cocain of facilitating the sale of cocaine as well is just stupid, deserving a unanimous bitch slap.
5.27.2009 12:44pm
martinned (mail) (www):
P.S. Not that that case has anything to do with Judge Sotomayor. It just annoyed me when it came out yesterday. (Or rather, the lower court ruling annoyed me.)
5.27.2009 12:46pm
Anynonyno:
Malesko was a common-sense ruling by Sotomayor, and its overruling by the Supreme Court was an instance of conservative judicial activism.

If there's a cause of action against the federal government for constitutional torts, then of course it should apply equally to private contractors acting on the government's behalf.
5.27.2009 12:49pm
Cityduck (mail):
There sure seem to be a lot of snap judgments being made about Sotomayor. Ironically, over on DailyKos someone trashed her for being pro-business in voting to reverse the grant of class certification in the In re IPO Securities Litigation. I suspect that there is a lot of picking and choosing going on. It's not the most honest discourse.
5.27.2009 12:52pm
martinned (mail) (www):
@Anynonyno: Well, I don't know about "of course". The precedent was distinguishable, but the more common sensical thing to do would be to follow Sotomayor's approach, that's true.

@Cityduck: True. And yet I'd prefer this kind of discussion over post regarding the nominee's ethnicity and/or whether diversity is a good thing. Better to parse her opinions than to keep talking about that speech.
5.27.2009 1:01pm
Andrew J. Lazarus (mail):
Why aren't the conspirators discussing really important stuff, such as how she pronounces her surname.
5.27.2009 1:05pm
Jim Miller (mail) (www):
"Many observers (myself included) expected President Obama to nominate someone to the Court who was not particularly threatening to the business community."

And you expected that because . . . ?

Hoping that Obama would nominate someone who did not threaten the business community I can understand. But expecting?
5.27.2009 1:08pm
byomtov (mail):
Entergy Corp. v. Riverkeeper, in which she had held that the EPA impermissibly considered cost-benefit analysis when setting a standard under the Clean Water Act.

I think this is an exaggeration of the Circyuit Court's decision.

From the decision:

The Second Circuit took "best technology" to mean the technology that achieves the greatest reduction in adverse environmental impacts at a reasonable cost to the industry,

That doesn't sound like the Circuit Court didn't think cost was important. It goes on:

[best technology] may also describe the technology that most efficiently produces a good, even if it produces a lesser quantity of that good than other available technologies.

That doesn't sound right to me. It might lead to very little reduction.

Further:

This reading is not precluded by the phrase "for minimizing adverse environmental impact." Minimizing admits of degree and is not necessarily used to refer exclusively to the "greatest possible reduction." Other Clean Water Act provisions show that when Congress wished to mandate the greatest feasible reduction in water pollution, it used plain language, e.g., "elimination of discharges of all pollutants,"

This confuses minimizing with absolute elimination, which may not be possible. The Circuit Court apparently did not require absolute elimination, or even minimization (hardly a matter of degree). It required the lowest emissions possible at reasonable cost.

I would say she was reversed because the Supreme Court stretched to make a pro-business ruling, not that she was overturned for being anti-buisness.
5.27.2009 1:13pm
Brett Marston:
Add Entergy and she's 2 for 5 with respect to her circuit court opinions. Entergy was also unanimous below, and most of the opinion's numerous grounds for remanding to the EPA were left untouched by the Supreme Court.

Looks like judge Diane Wood is 0 for 2 in the Supreme Court where the Court reviews a written opinion or takes note of a written dissent. Is that reversal rate high?

Based on a quick look of my own, it appears that Judge Posner is 1 for 3 when his majority opinion is reviewed, but better when the Court cites a written dissent or a dissent from denial of review en banc (then his record of success is 5 for 11). Still, on direct review, the Court disagrees with him more often than not.

I can see the rhetorical advantage of this kind of argument. Given the rightward tilt of the current Court, judges who are to the right of center will likely be reversed less often than judges who are to the left of center. I gather that Alito dissents were successful on occasion even though his panel opinion in Rompilla was not.

The important issue is substance, though, and I doubt that a fair-minded observer can fault her - as a legal matter - for her opinions in Malesko, Knight, Dabit or Entergy.
5.27.2009 1:15pm
Jonathan H. Adler (mail) (www):
Jim Miller --

I thought the Clinton precedent (especially with the Breyer pick), and the constellation of names that seemed highest on the short list, suggested a pick that would be moderate or centrist on business questions. As the WSJ story I linked to suggests, I was not alone in this regard.

byomtov --

Consideration of cost and consideration of cost-benefit analysis are not the same thing. Her opinion said the EPA could not do the latter; the Supreme Court reversed her on this ground, 6-3. FWIW, I think this was a very close case on the merits, and I do not think her opinion was unreasonable. It was, however, not the position favored by the business commmunity, which is why I put "anti-business" in quotes.

Brett Marston --

In Knight the Supreme Court unanimously held that her opinion's rationale "flie[d] in the face of the statutory language." I think this conclusion, and the Court's unanimous reversal of her opinion in Dabit are legitimate grounds for "fair-minded" criticism of her opinions. Does any of this disqualify for the Court? Of course not. Is this nonetheless of interest and perhaps concern to the business community and others? Certainly. Hence my post. I think it's worthwhile to discuss her opinions and record while also believing that she will and should be confirmed (barring the unlikely event of some last-minute bombshell -- and it would have to be something quite extreme to convince me to oppose her confirmation).

As for the alleged "rightward tilt" of the Court, as I've blogged before (see, e.g., here and here), the current Court it not particularly "conservative. Indeed, the current court, if anything, is at the center or slightly to the left of popular opinion on most of the major issues. This says nothing about the merits of the Court's decisions -- if the Court got everything right (as in correct) it would often deviate from popular opinion in one direction or another.

That's enough for now. I have exams to finish grading.

JHA
5.27.2009 1:37pm
John T. (mail):
There are a handful of cases where Sotomayor ruled for "big business" at the expense of small business or the free agent.

Notably Tasini v. New York Times, where she ruled that the New York Times could sell the works of freelancers to be archived on the Internet without individual permission, even if web archival rights were not in the original contracts. Of course, some people who are against copyrights may hail this decision. She was the original judge; her decision was overturned on appeal and the SCOTUS confirmed the overrule 7-2.

The other case is the Didden v. Port Chester decision, where she ruled for the politically connected developer using his monopoly zoning rights to extort money from the owner of land.

Either one could be spun as "pro-business" by big business, but anti small business at the same time.
5.27.2009 1:49pm
Steve:
Looks like judge Diane Wood is 0 for 2 in the Supreme Court where the Court reviews a written opinion or takes note of a written dissent. Is that reversal rate high?

Well, being reversed 100% of the time is of course high, if you want to look at it that way, but being reversed only twice over a span of however many years is a pretty good record. If you want to focus purely on numbers rather than the merits of the rulings, I think it makes a lot more sense to look at it the latter way.

For what it's worth, the overall reversal rate for cases that go from a Circuit Court of Appeals to the Supreme Court is 77%. That's not particularly surprising, because if the Court's first glance suggests that a case is correctly decided, there's often no reason for them to waste time taking the case merely to affirm.
5.27.2009 1:58pm
alkali (mail):
I would say that In re Initial Public Offerings Sec. Litig., 471 F.3d 24 (2d Cir. 2006) -- opinion by Newman, joined by Sotomayor and Hall -- is probably the most important of Sotomayor's business cases. That case shut down a lot of class actiion litigation.
5.27.2009 2:44pm
Brett Marston:
Jonathan:

The Knight issue is a red-herring, if you actually look at the opinion, and the government eventually adopted the Sotomayor interpretation of the statute in a rulemaking, so no, I don't think that saying that the opinion poses a "problem" for her defenders is a fair-minded criticism. Her opinion actually makes a workable standard out of an ambiguously-worded section of the IRC. And the difference was really over whether the court could read "would" as "could," something that makes some sense in the statutory context. But I'm sure we'll hear those words from Roberts quoted ad nauseum over the next few weeks, and be left to imagine all sorts of horribles, without hearing about the substance of the dispute in Knight.

For "rightward tilt" read, if you prefer, "outcomes on a variety of issues that tend to divide right and left." Malesko is a great example. Whether to extend Bivens is something that you'd expect the left and right to divide on; there is some play in the available precedent at any given time, and a judge that seeks to expand Bivens will get shot down by the Court. Repeat over other issues.
5.27.2009 2:51pm
byomtov (mail):
JHA,

I'll accept "anti-business" if you'll agree that the Court's decision can be characterized as "pro-business," rather than as some neutral application of clear law.

As for cost-benefit analysis as described vs. just considering cost or "cost-effectiveness" my own perhaps unsurprising opinion is that the Circuit Court's standard makes more sense and more nearly reflects "best technology available" than the Supreme Court's.

I confess that I was not aware of the precise definition of cost-benefit analysis being used here. I suspect that is not uncommon, and there is a tendency to believe that if someone says "cost-benefit analysis cannot be used," that means costs cannot be considered, rather than they cannot be considered in a specific framework.
5.27.2009 3:02pm
Steve H (mail):

Still, it is interesting that Judge Sotomayor has been reversed more than once for adopting an excessively permissive standard for suits by anti-corporate plaintiffs.


Or was she reversed more than once by a Court that adopted an excessively hostile standard for suits by anti-corporate plaintiffs?
5.27.2009 5:27pm
AHoffmanCJD (mail):
What's terrifying and fascinating about the Sotomayor nomination is that when you look at what the various pundits are saying (at least with respect to her business views) http://tinyurl.com/lpgzqa there really is no coherent through line. Then again, perhaps she's a person of principle (and therefore less easy to pigeon-hole because she really considers each case on its merits). Here's hoping...
5.29.2009 9:05pm

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