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Supreme Court Business File

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The Supreme Court’s new term, which begins Monday, is packed with landmark cases on affirmative action, voting, religion and gay rights. Those highly charged disputes can overshadow other aspects of the court’s work, particularly important cases on its business docket, potentially influencing how companies regulate themselves, conduct diversity hiring and more.

In recent years, the Supreme Court has become increasingly skeptical about the power of administrative agencies. In his last term, he restricted the ability of the Environmental Protection Agency to address climate change and the power of the Occupational Safety and Health Administration to limit the spread of coronavirus in the workplace.

On November 7, the court will hear a couple of arguments that could facilitate constitutional challenges from two other agencies, the Federal Trade Commission and the Securities and Exchange Commission. Both cases are about time, as judges are being asked to decide how long individuals and businesses must litigate with agencies seeking to regulate their conduct before they can go to federal court.

the first case Axon Company v. Federal Trade Commission, refers to a company that manufactures body cameras for law enforcement and was investigated by the FTC as part of a merger review. Rather than wait for the agency’s proceedings to conclude, the company tried to sue in federal trial court, arguing that the agency’s structure was unconstitutional and that it did not have the authority to review the merger.

Even as he rejected that attempt, a divided three-judge panel of the U.S. Ninth Circuit Court of Appeals said Axon’s argument was strong.

the second case, Securities and Exchange Commission v. cochran, concerns of an accountant accused of misconduct by the SEC and involves a similar issue. The accountant, Michelle Cochran, tried to challenge the agency’s structure in federal court before administrative proceedings were completed. The Fifth Circuit agreed that she should be able to bring her claims, creating the kind of conflict between the federal appeals courts that Supreme Court review often provokes.

On November 8, judges will consider whether states can require corporations to agree to be sued in that state’s courts as a condition of doing business in the state.

the cases Mallory v. Norfolk Southern Railway, refers to Robert Mallory, a Virginia man who says he developed colon cancer from exposure to toxic chemicals while working in Virginia and Ohio for the Norfolk Southern Railway Company, which was based and incorporated in Virginia. The question in the case is whether he can sue in a third state: Pennsylvania.

The Supreme Court has long said that corporations can be south of where they are incorporated or headquartered. And they can be sued in particular cases if the plaintiff’s claims are related to the defendant’s contacts with the State.

Mr. Mallory relies on neither of those bases for jurisdiction. Rather, he points to a Pennsylvania law that requires companies doing business in the state to consent to being down there. The railroad says the law is unconstitutional.

Lawyers for Mr. Mallory say the law is a kind of mirror image of the take-it-or-leave-it contracts that many companies use to force consumers and workers into arbitration or require them to sue far from home.

In a letter of support for the railway, the Biden administration said the Pennsylvania law “subverts interstate federalism by going beyond Pennsylvania’s borders and allowing state courts to hear cases in which Pennsylvania has no legitimate interest.”

on October 10, 11, the court will hear National Council of Pork Producers v. Horsea challenge to a California law that seeks to reduce cruelty to animals by requiring pork sold in the state to come from breeding pigs housed in spaces that allow them to move freely.

The law prohibits the sale of most pork in California unless the pig it came from was born to a sow that was housed with 24 square feet of space. But most sows across the country are kept in much smaller enclosures.

“These pens,” wrote the groups that challenged the California law in a brief from the Supreme Court“Provide about 14 square feet of space and, for hygiene, safety and animal welfare and husbandry reasons, do not allow the sow to turn around.”

Given the size of California’s market, pork producers say, the state seeks to regulate businesses outside its territory in violation of the Constitution.

A unanimous three-judge panel of the United States Court of Appeals for the Ninth Circuit, in San Francisco, rejected the argument that the effects outside the state of the law invalidated it. “State laws that regulate only conduct in the state, including the sale of products in the state, do not have impermissible extraterritorial effects,” Justice Sandra S. Ikuta wrote for the panel.

The Supreme Court ruling could have implications for many other laws, including state laws addressing climate change and out-of-state travel to obtain abortions.

Two cases involving social controversies that have drawn a lot of attention also have big commercial implications. In a major challenge to affirmative action programs, the court may strike down race-conscious admissions programs at Harvard and the University of North Carolina. There may well be spillover effects for employers looking to bring together diverse workforces.

The pipeline of highly credentialed minority candidates would be narrowed, proponents of the programs argued, and, depending on the ruling’s logic, employers’ diversity efforts could be called into question under a federal law that prohibits workplace discrimination.

A brief support for universities Submitted by dozens of companies, including Apple, General Motors, Google, Meta Platforms and Starbucks, they said they trusted leading colleges and universities to train diverse leaders and that “racial and ethnic diversity improves business performance.”

The court is also considering whether a Colorado web designer can refuse to create websites that celebrate same-sex marriages despite a state law that prohibits businesses open to the public from discriminating based on sexual orientation and other categories of identity. As a legal matter, the case concerns freedom of expression, and a ruling in favor of the designer could allow other companies involved in expressive conduct to discriminate against groups they disapprove of.

What do you think? Which of the court’s decisions could have the biggest impact on your business? Let us know:


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