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Wednesday, June 29, 2011

Senate Judiciary Committee Hears Testimony on Supreme Court’s Corporate Slant

Today, the Senate Judiciary Committee held a hearing on the Supreme Court’s ongoing pattern of putting the financial interests of corporate litigants above the rights of everyday Americans.

Chairman Leahy called the hearing to focus on three decisions from the recently-completed Court term: Wal-Mart v. Dukes, AT&T Mobility v. Concepción, and Janus Capital Group v. First Derivative Traders. These cases are representative of how, as Chairman Leahy described it, “the most business-friendly Supreme Court in the last 75 years” is eroding the legal protections American consumers and employees rely on, particularly in tough economic times.

Among the witnesses was Betty Dukes of Pittsburg, CA, a seventeen year veteran employee of Wal-Mart and lead plaintiff in the gender discrimination case broken up by the Court last week. Dukes remains upbeat in her hope that, even without the ability to fight Wal-Mart as a unified class, women subjected to the retail giant’s discriminatory culture and practices will one day obtain justice. However, she testified that many women will give up because it’s too hard to fight the company alone, and especially difficult to fight one’s own employer.

Professor Melissa Hart of the University of Colorado Law School testified to the common threads between the Wal-Mart and AT&T decisions. In both cases, the same five-vote majority of the Supreme Court interpreted procedural rules in ways completely different from their original meaning and with hostility to the class action device. As a result, no court has reached or will be likely to reach the substance of the claims made in those cases. Questioned by Senator Franken, Professor Hart stated that the Court’s interpretation of the Federal Arbitration Act of 1925 was inconsistent with its legislative history and purpose, and that allowing corporations to write class action bans into fine print contracts incentivizes small-dollar rip-offs of hundreds of thousands of hard working people. Franken has introduced the Arbitration Fairness Act in response to AT&T, which would amend the FAA and limit binding mandatory arbitration.

Senator Franken also took to task witness Andrew Pincus, the attorney who represented AT&T before the Supreme Court. Pincus, a partner at corporate defense giant Mayer Brown LLP, wrote in the New York Times and suggested in his opening statement that only plaintiffs’ attorneys looking to rack up huge fees would be hurt by the Court’s ruling. Franken noted that the average partner at Mayer Brown is paid over $1 million per year; Pincus, he said, is in no position to criticize others for a possible financial interest in the workings of the legal system.

Professor James Cox of Duke University School of Law testified on the likely fallout in the financial industry from the Court’s decision in Janus. The narrow and inapt definition adopted by the Court of who can “make” a false or misleading statement will greatly restrict the power of investors to recover damages and enforce anti-fraud laws. Only the Securities Exchange Commission will be able to go after many offenders, and even then there may now be loopholes. But the SEC, Cox explained, has only investigated, much less taken enforcement action, in 17% of resolved securities fraud cases, and it has been hesitant to take action against the biggest Wall Street firms. Connecting back to Wal-Mart, Senator Franken observed that the Equal Employment Opportunity Commission, the government body charged with pursuing workplace discrimination claims and to which many of Dukes’s colleagues may now have to turn, has a backlog of 80,000 claims to hear.

Senator Whitehouse observed that the procedural hurdles, arcane rules, and cramped statutory interpretations that characterize recent Supreme Court decisions might be summed up in two words: “corporation wins.” In closing, he extolled the role of jury in our constitutional design, and lamented the Court’s “steady addition of trouble, toils, and snares” between everyday Americans and their right to have their cases heard by their peers.

For complete analysis of how big business has fared before the Supreme Court, see AFJ's Corporate Court webpage.

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