Editor's note: In a series of powerful decisions, the U.S. Supreme Court has used the term to dramatically reshape the relationship between corporations and the executive branch of the federal government, rolling back a revolution that began under the Roosevelt administration in the 1930s.
In the following cases: SEC vs. Jahkessy and Roper Bright vs. Raimondo (This overturned the so-called “Chevron deference” to government expertise.) Ohio v. EPA (By blocking the agency's “good neighbor” air pollution rule) the court rejected the decades-old idea that government agencies like the EPA or SEC have the final say on whether companies have crossed a line. Going forward, the court appears to be saying that Congress will write the rules more clearly and, in some cases, it will be up to the courts to decide when those rules have been broken.
But business leaders excited about these changes are warning that it may be wise to temper their jubilation. chief executive officer Daniel Fisher, a longtime legal columnist. Several decisions (including Harrington v. Purdue Pharma, which brought about major changes in how bankruptcy law applies to settling lawsuits against companies) could lead the Supreme Court to upend many of the tried-and-true legal strategies corporate lawyers use to navigate complex litigation. “It's certainly like the dog catching the car,” Fisher says.
I reached out to Fisher on Friday to ask for his immediate thoughts on the Supreme Court's decision and its practical impact on business. Below are excerpts from Fisher's remarks, edited for length and clarity: — Dan Bigman, Editor
Overall, what should business leaders learn from these decisions?
A big theme is the proper role of government institutions. This is a big project of the New Civil Liberties Union and the business community to reduce the power of the administrative state, decisions made by agencies that nobody elected, and to bring accountability back to elected officials. This is a decades-long project that is basically rolling back the Roosevelt revolution and saying, “No, we're the ones who make the policy.”
Let's talk about Purdue In that case, the court ruled that bankruptcy law could not protect the Sackler family from further civil lawsuits related to the opioid crisis. What are the consequences for business?
It's essentially Defcon One. The world as we know it is gone. Johnson & Johnson and 3M were playing with what was called the Texas Two-Step, which is a special purpose subsidiary that was set up to go bankrupt and soak up the debt. I think that's gone.
The real upshot is that now you have to negotiate a settlement with everybody. The balance in bankruptcy law is designed to prevent a few dissenters. It's designed to prevent class action problems where a few dissenters can ruin everything, take assets unfairly, or squander a viable operating company. It's designed for the courts to step in and say, “Here's your share. Here's your share. Now everyone is equal.” This resets things in a way.
It's just going to be a huge mess. Companies that want to stay solvent have just lost the option of bankruptcy to end all the lawsuits against them in exchange for paying money. This is very questionable. I don't know how they're going to proceed from here. This is a huge negotiation.
The good thing for corporations is that the plaintiffs' attorneys only want their fees, which means you can buy them out with your fees. But buying out everyone is a little harder; you'd have to buy out the pending attorneys as well, and you can't buy them out with the help of the bankruptcy court unless the whole company goes bankrupt.
The court also overturned the so-called “Chevron deference,” which states that in the absence of a clear interpretation of federal regulations, courts will defer to the administrative agency’s interpretation. What do you think the impact of this case will be for businesses?
This is ironic. Former Justice Anton Scalia ChevronFederal judges probably Chevron Because they don't want to be the court of appeals for every executive branch decision that someone doesn't like. Chevron Deference allowed the courts to defer to what agencies thought the law meant when Congress wrote an ambiguous law, and even conservatives like Scalia thought it was a pretty good idea to let agencies do what they wanted.
The court fought back, saying, “Congress, if you want clean air, if you want national ozone regulation, it has to be reasonable, it has to make sense, and it probably has to be cost-effective. Congress, you have to be specific about what you want.”
Again, this is all good for lawyers – it’s a recipe for even more litigation.
Still, curbing executive power seems like a good thing for business. So why do we warn that this could potentially be problematic? Because it would change a lot of precedent?
Yes. I think business wants certainty. Of course, nobody wants unaccountable institutions making decisions. But in the modern administrative state, institutions are often shaped, I would say not instruments, by the people they regulate. And now, especially Purdue and Chevronthat will change.
The federal judge ChevronPerhaps a corporate lawyer ChevronThey knew how the agencies would interpret things. And now all the courts, all the judges are going to have the power to step in and say, “No, I think Congress said this.” And the agencies are going to step in and say, “No, no, no.” It's going to be a big fight. So I think uncertainty is not good for business.
Purdue This is another example in the field of using bankruptcy to solve the unsolvable problem of TV ad class actions. In class actions, a judge can step in and hand down harsh judgments, but when there are thousands of individual plaintiffs, there is simply no way to do this.
So, in business, is this a bit of “be careful what you wish for”?
Yes, indeed, there is a scene here where a dog catches a car.