What Will Conservative Justices Mean For Business?

The U.S. Supreme Court’s fall term is sprinkled with business cases—none as momentous as the Obamacare lawsuit of 2012—but a useful window into how the court’s two newest justices, Neil Gorsuch and Brett Kavanaugh, will treat matters such as employment discrimination and environmental law.

The good news for business is both justices are solid conservatives likely to join decisions limiting the scope of clean-water regulations and racial discrimination claims. The bad news is that like the other conservatives on the court, Gorsuch and Kavanaugh are likely to split with business on fundamental issues of law, including whether federal regulations preempt jury trials in state court.

The court’s conservatives may also split with big business on one of the highest-profile cases of the session: whether Title VII prohibiting employment discrimination on the basis of “sex” includes “gender.” Corporate America is in virtual lockstep in favor of the plaintiffs, with organizations from Altria Group to the American Independent Business Alliance saying a broader definition will make it easier to hire and retain gay and transgender employees.

Opponents are mostly religious organizations that believe Congress meant biological sex when it passed Title VII in 1964. Justice Gorsuch, as an appellate judge, joined a 2009 appellate decision allowing a transgender person to state a claim under Title VII, but he also voted in favor of Hobby Lobby’s religious rights in another decision that the Supreme Court upheld in 2014. Kavanaugh is known more for his work in administrative law than religion and could be a wild card on the definition of “sex.”

The court’s conservatives are more likely to deliver a victory for business in Comcast v. National Association of African American-Owned Media, in which a black-owned media company accuses the cable giant of engaging in a conspiracy with diverse characters, including Rev. Al Sharpton and the NAACP, to deny it carriage on Comcast’s systems. The oft-overturned Ninth Circuit Court of Appeals allowed the plaintiff’s case to proceed by dramatically loosening the standard for racial discrimination claims. The Supreme Court will probably overturn that decision, reinforcing the traditional legal requirement that plaintiffs show discrimination was a “but-for” cause—if not for the action, the result would not have happened—of a company’s decision, not merely one factor among many.

Comcast could represent “the new court majority’s push deeper into employment law as a way to tighten standards for proving discrimination,” said Thomas Saunders, an appellate partner with WilmerHale.

Business may also win big in County of Maui v. Hawaii Wildlife Fund, challenging another Ninth Circuit decision interpreting the Clean Water Act to govern the release of any pollutant that reaches groundwater that ultimately flows into “navigable waters” covered by the CWA. The Trump administration opposes the Ninth Circuit decision, which more closely aligns with the Obama administration’s expansive view of federal power to regulate the environment.

Justice Kavanaugh largely made his reputation by opposing regulatory overreach with decisions urging Congress to state more precisely what it wants federal administrative agencies to do. Lawmakers hate that, of course, since it’s easier to blame onerous regulations on unelected bureaucrats than themselves. But by reducing the scope of bureaucratic authority, the Supreme Court could make regulations more predictable.

“If you’re trying to make an investment decision but you don’t have a lot of certainty because the next election can flip the rule, you don’t have consistency,” says James Copland, a senior fellow at the Manhattan Institute. “Even a bad rule can be tolerable if you can price it into your products.”