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Sotomayor Is Bad for Business
The Supreme Court nominee's track record reveals an antagonism toward private industry.


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Phil Kerpen

Supreme Court nomination battles tend to focus on the more emotional, hot-button constitutional issues of the day. But the most sweeping — and frightening — implications of a Sotomayor tenure on the Supreme Court may be in the realm of business.

Business cases make up a large and growing portion of the Roberts Court’s docket. They represent a third of the total cases and a majority of the civil cases the Court hears. In short, business is big business for the Supreme Court, a fact that makes Sonia Sototmayor’s anti-business track record extremely troubling.

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That track record begins with Sotomayor’s undergraduate years. It should arouse suspicion that Sotomayor had socialist — and predictably anti-business — leanings at Princeton, a situation the White House decided to face head-on by releasing a photo of the nominee from her 1976 Princeton yearbook. The photo sits beside this quote from socialist Norman Thomas: “I am not a champion of lost causes, but of causes not yet won.” In a thesis for Princeton, Sotomayor identified Luis Muñoz Marín, the governor of Puerto Rico and a one-time socialist, as a hero.

What Sotomayor believed in the 1970s is interesting. But what she believes now is much more important. Unfortunately, her judicial philosophy and track record on the bench suggest that she is frighteningly hostile to business.

In a 1996 article for the Suffolk University Law Review, Judge Sotomayor argued that legal theorist Jerome Frank was correct that the “law must be more or less impermanent, experimental, and not nicely calculable.” That’s very bad news for business, since predictability is the mother of business confidence, and every important decision a company makes is much more difficult without a reasonably predictable legal system. In light of today’s breakneck political intrusion into the economy through bailouts and government-coerced bankruptcy cramdowns, the predictable enforcement of the laws by the courts is more essential than ever.

So far, Sotomayor’s philosophy of judicial experimentation has yielded a slew of questionable decisions in business cases. In Dabit v. Merrill Lynch, she ignored the clear language of the Securities Litigation Uniform Standards Act of 1998, the purpose of which is to establish a set of uniform national standards for security litigation in order to avoid the unpredictable application of varying state laws. In her ruling, she allowed a contracts claim under state law that the legislation had specifically pre-empted, an “experimental” decision that was unanimously overturned by the U.S. Supreme Court.

Sotomayor’s philosophy of unpredictability is even more starkly on display in a pair of class-action cases. In the 2001 case In re Visa Check/MasterMoney, Judge Sotomayor wrote the majority opinion holding that “a motion for class certification is not an occasion for examination of the merits of the case.” In other words, businesses must spend money defending against class actions even if the suits are completely without merit. That decision stood until 2006, when the Second Circuit sensibly reversed itself in In re IPO — with Sotomayor joining the majority. She got it right the second time, but these incidents only underscore how serious Sotomayor is about the law not being calculable.

Judge Sotomayor’s taste for impermanence also applies to contracts. In 1994, in Bolt Electric v. City of New York, she allowed the city government to throw out its contract with a private construction vendor because some aspects of the contract violated the state’s administrative code — even though compliance is not a requirement of a valid contract. She was overruled by the Second Circuit.

In another disturbing district-court case, Judge Sotomayor ruled in Tasini v. New York Times that publications are permitted to sell the works of freelance authors to electronic databases like Lexis/Nexis without permission, a frightening concept for anyone who writes for a living. The Second Circuit reversed this decision, too, and the Supreme Court agreed, with only Justices Stevens and Breyer standing by Sotomayor’s position.

Even the New York Times seems to agree that there is a randomness to Judge Sotomayor’s rulings in business cases. It recently ran a story under the headline, “Sotomayor’s Appellate Opinions Are Unpredictable, Lawyers and Scholars Say.”

The bottom line is that Sonia Sotomayor has a lengthy history of being hostile to one of the foundations of a prosperous economy and thriving business sector: a stable and predictable rule of law. With all the unpredictability emanating from Congress and the White House these days, the last thing our economy needs is a Supreme Court that is inclined to make up the rules as it goes along.

– Phil Kerpen is director of policy for Americans for Prosperity. He can be reached through www.philkerpen.com and his free daily podcast is available here.



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