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As The U.S. Supreme Court begins a new season, ALM asked a handful of practitioners to look back at the decisions from the prior term. The following articles examine the cases that are likely to have the most significant impact on the business community. Versions of these articles originally appeared in The National Law Journal, a sibling publication of Corporate Counsel. Looking at the cases decided by the high court during the 2004 � 2005 term reveals no single, overriding theme for businesses. However, the Court’s controversial interpretation of the public use clause in a high-profile takings case represents good news for big companies, and two other cases were particularly significant for corporations. Corporate America dodged a bullet when the Court overturned Arthur Andersen LLP’s conviction and rejected a decision by the U.S. Court of Appeals for the Fifth Circuit that questioned the legality of many document retention policies. In perhaps the most significant case for business, the Court narrowly interpreted a federal statute’s preemption clause, increasing corporations’ exposure to a patchwork of state laws. The business community breathed a collective sigh of relief when, in Arthur Andersen LLP v. U.S., the Court unanimously overturned the conviction for witness tampering. The Fifth Circuit’s affirmation had threatened to criminalize the routine practice of discarding documents under corporate document retention policies. The high court allayed fears and gave its blessing to document retention policies. Arthur Andersen’s tale is well-known. As Enron Corp.’s woes mounted in 2000, officials at Arthur Andersen, Enron’s auditor, encouraged employees to “comply” with the firm’s document retention policy. The result was widespread destruction of documents that would have been relevant to the Securities and Exchange Commission investigation that was announced shortly afterward. The company was convicted of witness tampering for “knowingly . . . corruptly persuad[ing]” another person with intent to cause that person to “ withhold” documents from, or “alter” documents for use in, an “official proceeding.” The Fifth Circuit affirmed on appeal, upholding jury instructions that allowed jurors to convict even if Arthur Andersen was not aware of any government proceeding when the documents were destroyed and even if it “honestly and sincerely believed that its conduct was lawful.” Chief Justice William Rehnquist’s opinion noted two fundamental problems with the jury instructions. First, they eliminated the statutory requirements that the defendant act both knowingly and corruptly. The jury was told that it should convict if Arthur Andersen intended to “subvert, undermine, or impede” governmental fact-finding. The Court concluded that, by omitting the knowledge requirement, the instructions “failed to convey the requisite consciousness of wrongdoing.”And they permitted a conviction based on any impediment put before the government’s fact-finding inquiry. Because of these two omissions, the Court concluded, wholly innocent conduct was criminalized. Persuading someone to withhold evidence, by itself, is innocuous. The purpose of a document retention policy is to deny others � including the government � access to corporate documents. The Court expressly approved compliance with document retention policies, explaining: “It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances.” The Court’s second concern over the instructions was that they failed to require the jury to find that the defendant’s efforts to persuade others to destroy documents were related to a particular government proceeding. One does not violate the witness tampering statute, the Court held, unless the persuader acts in contemplation of a “particular official proceeding in which those documents might be material.” Corporate counsel can rest a little easier after Arthur Andersen. It also held that corporate officials are not at risk of prosecution when, before they become aware of an investigation, they urge employees to comply with otherwise valid document retention policies. Criminal exposure arises only when they act with knowledge that their conduct is wrongful and will impede a specific government proceeding, the Court said. Businesses that operate in multiple states typically prefer to be subject to a uniform federal standard, not 50 state tort law regimes. Corporate defendants frequently argue that state tort law has been preempted by federal statutes or regulations. The Court’s decision in Bates v. Dow Agrosciences LLC represents a considerable setback for them. The petitioners in Bates were Texas peanut farmers who alleged their crops were damaged by Dow’s weed killer, Strongarm, which had been registered with the Environmental Protection Agency under the Federal Insecticide, Fungicide, and Rodenticide Act. Strongarm’s label initially stated without qualification, and allegedly inaccurately, that “Strongarm is recommended in all areas where peanuts are grown.” In the ensuing litigation, the farmers asserted state tort claims, including defective design and manufacture, negligent testing, breach of express warranty, fraud, negligent failure to warn, and violation of the Texas Deceptive Trade Practices � Consumer Protection Act. Dow responded by asserting that these state law claims were barred by FIFRA’s preemption provision, which provides that states “shall not impose or continue in effect any requirements for labeling or packaging in addition to or different from those required under this subchapter.” Consistent with the great weight of authority in the federal and state courts, the Fifth Circuit found the farmers’ claims to be preempted, holding that FIFRA preempts “any state law claim in which a judgment against Dow would induce it to alter its product label.” In an opinion by John Paul Stevens, the Court reversed the Fifth Circuit. The justices agreed that the term “requirements” in FIFRA’s preemption clause extended beyond state statutes and regulations to state common law. Thus, the Court held, state tort claims are subject to FIFRA preemption. In an analysis joined by seven justices, however, the Court adopted a constrained view of the preemptive scope of federal law. First, disagreeing with the Fifth Circuit, the Court held that FIFRA’s labeling standard did not preempt a state tort claim even if a jury verdict on such a claim would induce a pesticide manufacturer to change its label. Instead, a state claim is a “requirement” subject to the preemption analysis only if one of the elements of the cause of action expressly involved “labeling or packaging.” Because the state law claims for defective design and manufacture, negligent testing and breach of express warranty did not require particular labeling or packaging, the Court determined that those claims were not preempted. Second, even if state law does involve a requirement for labeling and packaging, the Court held that state law need not use language identical to that in the federal statute to survive preemption. State law is not “in addition to or different from” FIFRA so long as it is “equivalent” to the federal standard. Indeed, the Court expressly approved state law remedies that enforce federal misbranding requirements, and it emphatically rejected Dow’s prediction that subjecting manufacturers to the varying tort law of the 50 states would create hardships for them. And � perhaps most significantly for future cases � the Court applied a presumption against preemption, explaining that it would find pre-emption only when Congress’s intent to preempt was “clear and manifest.” Adam H. Charnes is a partner in the Winston-Salem office of Kilpatrick Stockton. Laura A. Greer is an associate in that office.

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