High court’s term was rough on big business 

By Troy Shelton  

For a while now, the U.S. Supreme Court has been considered the friend of big business.  

Sometimes that characterization holds true. But other times, like in this just completed term, big business was a big loser. 

The biggest loss didn’t involve any businesses as parties. Nonetheless, in the Students for Fair Admissions v. Harvard and Students for Fair Admissions v. UNC cases, big business came out in droves to support affirmative action through amicus briefing. No businesses filed amicus briefs in opposition to affirmative action, even though popular sentiment is strongly opposed to racial discrimination in college admissions.  

The fight over racial preferences will inevitably spill over into employment law. The affirmative action cases were applying not just the U.S. Constitution, but also Title VI of the Civil Rights Act. A key statute for business is just next door — Title VII.  

Many private employers tout their diversity, equity and inclusion policies today. The next fight over racial preferences will center on these policies, asking whether they’re being applied to harm or exclude racial groups.  

The same is true of the big law firms that service big business. Shortly after the affirmative action cases were announced, U.S. Sen. Tom Cotton, R-Ark., sent letters to 50 of the country’s largest law firms. He warned the firms that their DEI programs might violate Title VII. He quoted the Supreme Court’s admonishment that “eliminating racial discrimination means eliminating all of it.” 

While the outcome of the affirmative action cases surprised almost no one once the court decided to reconsider the issue, the high court threw big business a curveball in an important case on personal jurisdiction, Mallory v. Norfolk Southern Railway. 

Harkening back to an era before International Shoe and minimum contacts, the court held that a state can force corporations doing business in the state’s borders to consent to being sued for any claims in the state’s courts. That meant a Virginia resident could sue a Virginia corporation in Pennsylvania court for claims having nothing to do with Pennsylvania. It was enough that Pennsylvania requires companies doing business in the state to consent to being sued for anything.  

Another loss for big business is probably the most important case of the term that you haven’t heard of: National Pork Producers Council v. Ross. Californians decided to ban the sale of pork from pigs housed in inhumane ways, many of which are generally used throughout the country. What’s the problem with California regulating its own pork? California doesn’t produce any pork. It’s a huge pork consumer, and it imports virtually everything it consumes. Because of California’s market power, this law effectively regulates how pork is produced in other states and raises pork prices for everyone, no matter if other states want their hogs raised humanely.  

The pork industry sued, claiming a violation of the dormant commerce clause. If California could effectively regulate pork production beyond her borders, then other large states could exert their market power in yet more novel ways.  

Not a problem, the Court held. The reasoning is complicated since the justices in the majority don’t share a coherent vision of the dormant Commerce Clause. But the bottom line is straightforward. Large states are sometimes free to project their market power beyond their borders and use that power to increase regulatory burdens on businesses that operate in other states. Businesses should expect some states to take the case as a green light for other new legislation.  

A final blow to business interests came in Groff v. DeJoy. A postal worker took a job that wouldn’t require him to work on Sundays because of his Christian beliefs. The post office then changed his duties, requiring Sunday deliveries, after the post office began delivering for Amazon. The employee sought an accommodation, but the post office said it would be a bother to reassign his duties to someone else.  

Title VII requires employers to reasonably accommodate their employees’ religious beliefs unless doing so would be an undue burden. Decades ago, the Supreme Court held that an undue burden is anything presenting “more than a de minimis cost.” Lower courts got the message, routinely denying requests for religious accommodation.  

Groff asked whether the de minimis test was right. The Supreme Court, 9-0, held that it didn’t mean what it had said. An undue burden is something that imposes a substantial, not trifling, cost on employers. The court spelled out examples of costs that aren’t legitimate excuses for denying accommodation.  

This isn’t to say the term was a complete shutout for business. Business scored a big de-regulatory win in an environmental case, Sackett v. EPA. There was also the token case favoring arbitration, Coinbase v. Bielski.  

Still, it was not a stellar record for business interests. Maybe things will go differently in the next term, which begins in October. On the docket so far are cases in which the U.S. Chamber of Commerce is asking the court to defund the Consumer Financial Protection Bureau, prohibit wealth taxes and overturn Chevron deference for agency regulations. Time will tell whether big business has a better run next year.  

Troy Shelton is an appellate partner in Raleigh at Fox Rothschild LLP. He works with trial attorneys to win on appeal in state and federal courts.