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The Stealth Corporate Takeover of the Supreme Court

Three cases under consideration show how Big Business is using the court to tilt the law in its favor.

Philippe Huguen/AFP/Getty Images

In August 1971, a prominent corporate lawyer from Richmond, Virginia, named Lewis F. Powell Jr. authored a “Confidential Memorandum” to the United States Chamber of Commerce. Powell observed that “with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic, and political change.” He urged the Chamber to replicate game-changing litigation victories by “[l]abor unions, civil rights groups,” and “public interest law firms,” which often came “at business’s expense.” Six years later, with Powell himself having been appointed to the Supreme Court by President Richard Nixon, the Chamber created a “voice of business in the courts,” the National Chamber Litigation Center.

Over the past month, the Supreme Court heard three cases that show how radically Powell’s strategy has tilted the law business’s way—more so than he could have imagined, or even favored. Indeed, until he retired in 1987, Justice Powell embraced the Chamber’s position in only 53 percent of its cases he heard, whereas the Chamber has won 69 percent of its cases since John G. Roberts became chief justice in 2005. More significantly, as the Constitutional Accountability Center has reported, in ideologically polarized cases, the five-justice conservative bloc has awarded the Chamber a whopping 80 percent win tally.

This blow-out record has emboldened business advocates to shoot for the moon, throwing precedent and caution aside. In recent years, and specifically in the cases the Court is now mulling, the Chamber and its allies have worked toward carving out what amounts to a law-free zone, effectively immunizing corporations from private lawsuits when they violate virtually any law, state or federal, enacted to protect consumers, employees, minorities, women, retirees, small investors, or small business suppliers. 

“[O]ftentimes,” as Senator Patrick Leahy has observed, the conservative bloc has “turn[ed] these laws on their heads, making them protections for big business rather than ordinary citizens.” In doing so, the conservatives have fashioned doctrines that marginalize Congress and aggrandize the Court’s policy-making power. “The exercise of power is largely a zero-sum game,” Linda Greenhouse has warned, “and the court, defining the rules of engagement, … is winning at the expense of Congress.”

The three cases now awaiting decision will test how far the Court’s conservative bloc is willing to ride the Chamber’s campaign to restore, via a new but functionally equivalent suite of rules, the early 20th century constitutional regime that empowered an arch-conservative federal judiciary to trump statutory protections for consumers, workers, and other constituencies. Of the three pending cases, the most audacious, Spokeo, Inc. v. Robins, is a constitutional challenge to a Fair Credit Reporting Act provision, added to the original 1970 Act in 1996 after extensive hearings on the industry’s uneven fact-checking practices. This law authorizes consumers to sue credit reporting agencies, including internet-era data aggregators like defendant Spokeo, for damages up to $1,000, when such an agency disseminates false information about them. Given the importance of a strong credit rating for procuring everything from an apartment to a cell phone to a job, empowering individuals in this way is crucially important.

Spokeo’s legal theory for nullifying this remedy is that the Constitution bars Congress from giving individuals “standing” to seek court redress for violations of federal laws, unless the complainant can show specific injurious consequences flowing from the company’s violation. In other words, Congress could prescribe redress for plaintiff Robins—about whom Spokeo posted a financial profile that, as Justice Elena Kagan put it during the November 2 oral argument, “basically got everything wrong about him”—only if he or she can show something like rejection for a job or a loan, and prove that this rejection was caused by the credit rating agency’s inaccuracy. As Kagan acidly observed, this is transparently a sham Catch-22 remedy, “the quintessential kind of injury that you will never be able to detect,” let alone prove.

No doubt few Americans could have ever imagined a world in which their elected representatives are powerless to assure justice for falsely profiled individuals like Robins. After all, Congress could have reasonably determined that the dissemination of a false financial profile is itself a real-world injury meriting a remedy. It could have also determined that an individual right-of-action would strengthen otherwise weak incentives for industry compliance with accuracy requirements, thereby preventing the sort of consequential harms that, industry argues, can only be remedied after they have occurred.

In fact, Congress has not imagined such a world for many decades. It has enacted similar individual rights of action to enforce at least 17 major federal laws, including Truth in Lending, the Employee Retirement Income Security Act, the Americans with Disabilities Act, and the Equal Credit Opportunity Act—all of which could be jeopardized if the Court lets Spokeo off the hook.

Spokeo’s “no-injury” rationale is actually a tactic ubiquitously deployed by the Chamber and its allies, to bar individuals like Robins from getting into court to challenge illegal corporate mistreatment. In particular, the no-injury banner flies over initiatives targeting business advocates’ top current priority: extinguishing or crippling class actions and other remedies for corporate misconduct that require many victims to join a suit. Without effective avenues for class relief, there is no practical way to redress, hence deter, illegal practices that cost individuals at levels insufficient to make stand-alone legal action worthwhile. As Judge Richard Posner noted in a 2004 opinion, “[O]nly a lunatic or a fanatic sues for $30.”

Hence, big players like banks and phone companies have powerful incentives to sneak into customers’ bills unexplained new charges here, or pare benefits there, that jack up total revenue by tens or hundreds of millions of dollars. In Spokeo, the “no injury” meme appears in business advocates’ briefs as a warning that greedy plaintiffs’ lawyers are trying to target technical, trivial infractions by a corporate defendant, amass hundreds or thousands of claimants, allege massive aggregate damages, and then effectively blackmail such defendants into settling without trial, even though few or no class members have “actually” been harmed.

In a similar vein, the no-injury line is put to work in another of the Chamber-backed pending cases, Tyson Foods, Inc. v. Bouaphkeo. Here the nation’s largest food-packer appealed a $5.8 million jury award to 3,000 slaughterhouse workers not paid overtime for time spent “donning and doffing” required protective clothing and equipment. Since Tyson failed to keep donning and doffing time records, the plaintiffs used standard statistical sampling techniques to produce an average of lost wages across the plaintiff class. Tyson asks the Court to dismiss their case, on the ground that some class members may not have actually worked more than 40 hours a week, and hence suffered “no injury.” 

Justice Stephen Breyer retorted that judicial reliance on sound statistical sampling techniques is “the most common thing in the world”—in particular, to preliminarily assess a claim to determine whether the case can proceed as a class action at all. But if Breyer’s conservative colleagues take business advocates’ “no-injury” mantra as a cue to strip trial judges of that tool, would-be class action plaintiffs will have to prove actual damages for every class member, at the outset, before they have a chance to collect the necessary evidence—most or all of which is typically in the files of the defendant company.

That will indeed be a new world. For individuals wronged by big businesses, getting rectification will go from very hard to well-nigh impossible.

Will the Court go there? Already, the Roberts Court has erected formidable new procedural protections for corporate defendants. As detailed in a recent three-part New York Times investigative series, it has authorized companies to unilaterally bar consumers, employees, and the like from going to court at all, or otherwise seeking any form of class relief, through fine-print contract requirements to shunt all disputes into private, one-at-a-time, binding arbitration.

This term’s three attacks on class actions are part and parcel of the “far-reaching power play orchestrated by American corporations” spotlighted by the Times. In the third, Campbell-Ewald v. Gomez, argued October 14, the Chamber and its allies seek authority to unilaterally extinguish any class action as to all class members, simply by offering to settle the lead plaintiff’s claimed damage, even if the offer is not accepted. 

But in this past month’s oral arguments, signs surfaced that there may not be five votes for business’s more extreme demands. There was also annoyance, from Justice Anthony Kennedy in particular, at business lawyers for asking their presumed judicial friends to overlook shifting rationales and other procedural gaffes.

Thus, openings may remain to limit and even repair the damage wrought by the Court’s recent pro-corporate binge. But progressive advocates and constituencies will need to mobilize the strategic and political resources to wage a concerted, long-term campaign to secure the rights of American workers and consumers. To chart a course for building on efforts already underway is an enterprise far too ambitious to attempt here. But two quick observations are worth sketching.

First, the drive to shelter business from individual legal redress can only be stopped or reversed if the battle ceases to be almost entirely an insiders’ game. The general public must come to see the Supreme Court’s threat to pocket-book protection laws like the Fair Credit Reporting Act as serious, and legally illegitimate, threats to their interests. The good news is that recent history shows that this is not an insuperable challenge.  Campaigns to eviscerate particular workplace and consumer legal protections have been aborted, at least temporarily, when progressive advocates spurred public outrage over Supreme Court cases pitting sympathetic victims against implausible business claims to defeat liability. Though spotty, such successes demonstrate that some Court conservatives are sensitive to public opinion, when it is mobilized.

Second, class action advocates need to address, and credibly counter, the narratives their adversaries put forth to gain sympathy from judges and policy-makers. In particular, business advocates have gained traction with their complaint that, in the words of District Judge Jed Rakoff, “[T]he huge financial incentive [that class actions create for plaintiffs’] lawyers ... easily leads to abuses.”  

Advocates cannot ignore such complaints; Rakoff is widely perceived as a capable—and liberal—judge. They need to produce sound answers and develop legal solutions that minimize abuse without gutting class remedies.