No Slacking Off

Marcia Coyle

Corporate Counsel

2012-12-01 00:00:00.0

With its blockbuster health care, immigration and other high-profile decisions, the U.S. Supreme Court's last term would seem hard to rival. But the new term may do just that.

"The Supreme Court has a series of cases on the docket and potentially more to come that promise to make this another high-profile, landmark year," says Adam Winkler of the University of California at Los Angeles School of Law.

The justices already have agreed to revisit affirmative action in a case involving the University of Texas. They also are being asked to restrict one of the most important tools of human rights activists, and (in one of several important business cases) they may erect new obstacles to class actions.

The court's internal temperature may rise a few degrees if, as expected, the justices agree to review one or more challenges on same-sex marriage. Also waiting in the wings are cases questioning the constitutionality of section 5 of the Voting Rights Act—the crown jewel of the civil rights movement.

Inside the court building, ­however, there was a feeling of business as usual during the week before the official October 1 start of the new term. By mid-October the justices had added 17 cases to their argument docket, bringing the total grants for the term at press time to 49. During a panel discussion at American University Washington College of Law, Supreme Court scholar Stephen Wermiel noted that the pace of grants has been very slow. The docket, he added, is declining both in the number of petitions filed and the number of cases decided.

The justices last term decided 64 cases after briefing and argument—the fewest in 22 years. It's too early to tell whether they will surpass last term's tally; they usually continue to add cases to the docket until mid-January.

For now at least, the docket is heavy with business-related cases. "After a term overshadowed by health care and immigration, we're pleased to see the Supreme Court is once again back to business," says Robin Conrad, executive vice president of the National Chamber Litigation Center, adding that 48 percent are business cases and "well within the range we've come to expect from a court that continues to be concerned about lawyer-driven litigation and the high cost of litigation abuses."

Class actions dominate that list. "It is such a change from 10 years ago," notes Lisa Blatt, head of Arnold & Porter's appellate and Supreme Court practice. Blatt suggests that the court's 2011 decision in Wal-Mart v. Dukes brought about a "sea change" similar to the court's ruling in Bell Atlantic v. Twombly in 2007.

In the Wal-Mart decision, a 5-to-4 court held that the thousands of women in a gender bias class action could not meet the requirement of a common legal claim for class certification. In Twombly , the justices raised the bar for plaintiffs pleading an antitrust conspiracy.

"Everyone assumed [ Twombly ] was limited to antitrust, and then along came Iqbal [ v. Ashcroft ]," says Blatt, referring to Iqbal's broader application of Twombly . "The question now is: Does Wal-Mart apply outside the employment context?"

That question plays out in Comcast Corp. v. Behrend , which asks whether an antitrust class can be certified before a district court determines whether the plaintiffs' expert testimony on the method for calculating damages is admissible. It also is raised in Amgen Inc. v. Connecticut Retirement Plans, asking whether plaintiffs in a securities class action must prove reliance on alleged misrepresentation and the falsity of the misrepresentations before certification.

"What is going on here is recognition that the whole war is won or lost at the certification stage," Blatt says. "Very few companies can risk ruinous loss if they take a class action to trial."

Standard Fire Insurance Co. v. Knowles is the first case to present an issue under the Class Action Fairness Act, says Archis Parasharami of Mayer Brown. Under the 2005 law, defendants can remove class actions to federal court when the amount in controversy exceeds $5 million. Standard Fire asks whether a stipulation limiting the amount sought to less than $5 million binds absent class members.

"For practitioners, Standard Fire is going to be very important, because it will determine at a very early stage whether and how you remove a case to federal court," Parasharami says. And Comcast is important, he says, "because battles over expert testimony have become de rigueur in many class actions, and that fight can be outcome-determinative in class certification, which determines whether a case may settle or not."

Human rights groups and businesses are closely watching Kiobel v. Royal Dutch Petroleum , the first case to be heard in the new term. The justices ordered reargument after hearing arguments last term on whether corporations could be held liable under the 1789 Alien Tort Statute for international law violations. That issue is still in the case, but the court added a broader question: whether the law applies extraterritorially.

The highest-profile case of the term thus far is Fisher v. University of Texas at Austin because it draws the justices into an area of the law that remains controversial and has closely divided them in the past—affirmative action. Under Texas law, the university is required to admit all Texas students who graduate in the top 10 percent of their high school class. The law was intended to promote diversity in the undergraduate institution. Although the plan succeeded in increasing the number of minority students, the university discovered that it still had whole departments and classrooms that were not diverse.

After the Supreme Court's decision in Grutter v. Bollinger in 2003, which held that race could be a factor in individualized consideration of student applicants in order to create a critical mass of underrepresented racial minorities, the University of Texas added that factor to its admissions policy. Abigail Fisher, a white student denied admission, claims that policy violates the equal protection clause of the Fourteenth Amendment and suggests overruling Grutter if necessary to reach that result.

"The premise of the 'whole person' analysis is that the university looks at every relevant factor to determine who should be admitted," says Elise Boddie, acting director of litigation for the NAACP Legal Defense and Educational Fund. "The idea that the University of Texas would not be allowed to consider race is counter­intuitive."

The court may decide to "dodge a bullet" by neither overruling Grutter nor expanding affirmative action, adds Ilya Shapiro of the Cato Institute. "Probably the chief justice will say, 'Because the University of Texas is already employing a diversity plan, there is no need to further take race into account.' "

A version of this story appeared in The National Law Journal, a sibling publication of Corporate Counsel.