LEGAL
Justice Neil Gorsuch's recent ascension to the U.S. Supreme Court represents a definite shift in the potential outcomes for a number of cases currently on the Court's docket. For corporate counsel, what are some of the most significant ones where his impact will be most strongly felt?
Epic Systems Corp. v. Lewis
First up is Epic Systems Corp. v. Lewis, one of the most significant cases on the Supreme Court's docket for employers.
The case is about clauses compelling arbitration in employment contracts – specifically, their enforceability vis-à-vis section 7 of the National Labor Relations Act (NLRA).
Section 7, or 29 U.S.C. § 157, protects employees' right to engage in "concerted activities for the purpose of collective bargaining." In Epic Systems, employer Epic Systems Corporation has an arbitration agreement with its employees requiring that they waive "the right to participate in or receive money or any other relief from any class, collective, or representative proceeding."
Former employee Jacob Lewis sued Epic in a class-action suit, claiming that Epic's employees had been denied overtime wages in violation of the 1938 Fair Labor Standards Act (FLSA).
Epic moved to dismiss on the grounds that the arbitration agreement was binding, requiring the employees to resolve the dispute through arbitration.
The U.S. District Court for the District of Wisconsin denied the motion, finding that the arbitration agreement ran afoul of NLRA's section 7. The Seventh Circuit affirmed.
Epic sought certiorari with the Supreme Court on September 2, but the Court didn't agree to review the case until January 13, 2017, scheduling oral arguments for next term – and thus ensuring Justice Gorsuch's participation in the case.
How will this participation affect the outcome?
In short, assuming that he will decide in Epic's favor (which seems likely, given his history on the Tenth Circuit), his vote will change the outcome from one in which Epic was almost certain to lose, to one where it's only possible that it will lose.
Here's why: The four liberal justices are almost certainly going to vote against Epic in the case. With only eight justices on the bench, that would, at best, lead to a 4-to-4 split, in which case, the ruling of the appeals court stands (i.e., Epic loses, although not in the sweeping "every employer is now barred from using employment arbitration agreements" way).
If a fifth justice (likely Justice Kennedy) joins the liberals, Epic does lose the case in the spectacular fashion described above. But in such a scenario, Gorsuch's hypothetical vote wouldn't matter. That is, a 5-to-3 loss is just as much a loss as a 5-to-4 loss.
If Justice Kennedy votes with the rest of the conservatives, however, Gorsuch's presence on the court will certainly have a major impact.
Jesner v. Arab Bank
Jesner v. Arab Bank comes down to the question, "May corporations be sued for violations of international law under the Alien Tort Statute?"
That question was almost answered by the Court four years ago in Kiobel v. Royal Dutch Petroleum Co., but instead of answering it, the Court simply ruled that the statute at issue, 1789's Alien Tort Statute (ATS), did not rebut the "presumption against extraterritoriality" – that is, the theory that Congress means for the legislation that it passes to apply only within the territorial jurisdiction of the U.S., unless Congress specifies otherwise.
In Kiobel, the Court held that claims under the ATS may only be brought where they "touch and concern the territory of the United States" with enough strength "to displace the presumption against extraterritorial application."
The Court further ruled that a foreign defendant's "[m]ere corporate presence" in the U.S., by itself, is insufficient.
Viewed under this lens, the facts of Jesner don't bode well for the case's outcome. The plaintiffs are surviving family members of victims of terrorist attacks overseas. They are suing Arab Bank for allegedly financing and facilitating a number of terrorist organizations involved in the attacks.
Arab Bank is based in Jordan with offices in New York.
Under Kiobel's line of jurisprudence, the plaintiffs in Jesner don't have any legal standing to sue, since there is little connection with U.S. territory at issue beyond Arab Bank happening to have offices in New York.
It's worth noting, however, that the four liberal justices wrote concurrences rejecting the majority's reasoning regarding the presumption against extraterritoriality – namely, that it doesn't apply to the ATS.
If the Supreme Court had remained an eight justice body when it had heard this case next term, it would have been entirely possible that a different result may have been reached. This is especially true if the liberal justices were able to persuade Justice Kennedy, who wrote a separate concurrence expressing some ambivalence with the majority's presumption argument, to their point of view.
But the Court now has its ninth member, and if Justice Gorsuch's history is any indication, he's unlikely to want to extend corporate liability in this circumstance, especially if such an extension could lead to corporate liability abroad for other acts, such as environmental destruction or other human rights violations.
Thus, Justice Gorsuch's presence may have saved corporations from facing an onslaught of litigation seeking to assign such liability.
Of course, there will undoubtedly be additional cases next term and beyond on which Gorsuch will have a significant impact, and with it being so early in his tenure on the Supreme Court, we have yet to see exactly what his role on the Court will be.
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