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.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).
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.
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."AEI's Michael Greve expresses greater concern on NRO's Bench Memos.
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.
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.