Supreme Court uncertainty shakes up litigation

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The vacancy on the Supreme Court left by the death of Justice Antonin Scalia is shaking up the legal system and forcing some attorneys to rethink their litigation strategy.

A dramatic example came Friday, when Dow Chemical Co. settled a class-action lawsuit for $835 million. The company cited uncertainties on the Supreme Court in announcing its decision.

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“Growing political uncertainties due to recent events within the Supreme Court and increased likelihood for unfavorable outcomes for business involved in class-action suits have changed Dow’s risk assessment of the situation,” the company said in a statement.

“Dow believes this settlement is the right decision for the company and our shareholders.”

Dow, which is in the midst of merging with Dupont, had appealed to the Supreme Court after a federal jury found it guilty of conspiring to inflate polyurethane prices. A judge issued a $1.06 billion judgment against the company.

In its petition, the company cited multiple violations of class-action law and asked the high court to set aside the judgment.

With Scalia’s death, the Supreme Court lost its leading conservative and a member known for pro-business rulings. His death has created an even split between liberal and conservative justices that legal experts predict will lead to a slew of 4-4 ties in the months ahead.

“Between 20 to 30 percent of all cases over the last few years have been divided 5-4,” said Jake Faleschini, director of the Courts Program for Legal Progress at the Center for American Progress. “And in 20 to 30 percent of all cases this term and next term, the court will not be able to come to a consensus.” 

The possibility of deadlock on the Supreme Court is likely to change the way some attorneys litigate, because in the case of a 4-4 tie, the lower court ruling stands.

“It will certainly lead to much more jurisdiction picking, where attorneys pick the circuit where they think they’re going to win,” Faleschini said.

But that strategy could prove difficult, with a number of lower circuit courts stacked with Democratic appointments seen as less friendly to business.

“The courts have been the backstop to the executive overreach and regulatory overreach over the last seven years to a greater extent, and there are very few circuits left that, generally speaking, are favorable from a management perspective,” said Michael Lotito, who co-chairs the Workplace Policy Institute at Littler Mendelson P.C.

“The last hope was to go to the Supreme Court, and that’s being put into serious question.”

Cases that could now face a tougher climb, Lotito said, include a challenge to the National Labor Relation Board’s “ambush election” rule that’s now before the 5th Circuit Court of Appeals and a petition before the Supreme Court asking the justices to weigh the legality of the Obama administration’s decision to make homecare providers eligible for minimum wages and overtime pay.

“I think the appointment, or the inability to appoint someone and the significance of this election, is so incredibly important and far-reaching,” Lotito said. “I don’t think the country has completely grasped what’s at stake here.”

While some court watchers accept the Dow Chemical litigation as a casualty of Scalia’s vacancy, others are skeptical of the company’s explanation.

To settle a case of that size, Paul Bland, executive director of Public Justice, said Dow would have had to hammer out the vast majority of the settlement terms before Scalia died on Feb. 13.

“I think they are looking for a way to spin it politically,” he said. “I don’t think they are sincere.”

Dow’s case before the Supreme Court was pending a decision in Tyson Foods, Inc. v. Peg Bouaphakeo, et al. In that case, the justices were asked to weigh new limits on class-action lawsuits.

In oral arguments in November, the justices seemed skeptical of requiring that all members of a class-action lawsuit show injuries to have a legal right to damages. Justice Anthony Kennedy, who is known as the court’s swing voter, appeared to side with the court’s more liberal wing. Kennedy said he couldn’t understand the company’s argument.

Though an opinion is still pending in the Tyson case, Bland predicts the company will lose — and a loss for Tyson is a loss for Dow. 

Though Dow did not admit to any wrongdoing in its settlement, Bland believes it cited Scalia to distract the public from a violation of anti-trust laws.

“Dow would have lost regardless,” he said.