The Supreme Court, Judge Roberts and Business

   There is quiet relief in the business community over the President's nomination of Judge John Roberts for a position on the United States Supreme Court.  His position as an appellate lawyer in a top-flight Washington law firm (he argued cases that had been appealed from trail courts in the federal court system), exposed him to the leaders of the business community and their legal concerns and problems.  He will appreciate the business community's need for clear legal rules that facilitate planning, for some operating freedom in which businesses can compete, and for judge's who can anticipate the problematic secondary impacts of even well-intentioned rules.  He also apparently has an ear for arguments that favor international and interstate trade.  His predecessor on the Court is not Chief Justice William H. Rehnquist, for whom Roberts clerked, but Justice Lewis Powell, a corporate lawyer from Virginia who served on the court in the 70s and 80s.  President Nixon appointed Justice Powell directly from the bar after a term and President of the American Bar Association.  During Powell's tenure on the Supreme Court the Court took more business cases than was its custom and after Powell left the court in 1986, the Court took decidely fewer business related cases -- a trend that continues today.  Powell led the Court through a series of cases designed to narrow Rule 10b-5 litigation, countering federal circuit courts, and he convinced the Court to take a hands off approach (and thereby sanction) state anti-takeover regulation. 

  The business community's stake in the decisions of the Court is slight relative to the stake of those participating in the country's cultural and social conflicts.  The Supreme Court rules infrequently on anti-trust cases and securities law cases, interpretating open-ended statutes and agency rules.  The heavy work in these areas is now done in the federal circuit courts.  The Court does periodically rule on definitions of the Commerce Clause that affect the regulation of American business -- at issue is whether the federal government or the state governments have supreme authority to pass the type of rule in issue.  But the business community is now split on their preference for a victor -- while historically business has preferred state regulation (it is local and easier for local business to influence) many in business, particularly those with national operations, now prefer to comply with one rule rather than fifty and therefore prefer federal rule-making.  So the Gonzales v Raich case (federal statute outlawing marijuana use applies in California despite the state's medical use law) of the last term is, to some, not a problem.  Similarly on property rights issues the business community can split.  The Kelo v City of New London case, allowing local governments to take private land and turn it over to private developers, an attack on a robust version of private property, aids businesses seeking development help from local authorities (which is most all of them).  And the Supreme Court's rulings on class actions and damage awards are also infrequent and limited by the Court's narrow room for discretion in these areas.

The business community should be much more concerned over the Presidental appointments to the governing boards, particularly the chairs, of selected federal agencies and departments -- the Securities and Exchange Commission,  the antitrust division of the Department of Justice, the Federal Communications Commission, the Federal Trade Commission, the Departments of Treasury, Commerce and Justice.    These individuals have much more power over the day to day operations of business in the United States than do Justices of the Supreme Court.  For a case study, consider the rule-making initiatives of William Donnaldson, the just departed Chairman of the SEC.  In his short tenure he changed industry governance structure for mutual funds, he changed the struture of the American securities trading markets, he changed the internal control system of all American corporations, he changed how investment banks can offer securities to the markets, just to name a few of his initiatives.  There can be no doubt, the real power over American business operations now rests in hands of those who run our federal agencies.