SCOTUS Business Watch: Key Decisions Impacting Businesses

While many Supreme Court cases have indirect effects on the business world, some decisions specifically address business-related issues head-on. Over the past two terms, several key rulings have emerged that carry significant consequences for businesses across various industries.

One of the most prominent cases involved the Chapter 11 bankruptcy proceedings of Purdue Pharma. In Harrington v. Purdue Pharma, the Court examined whether a bankruptcy plan could compel nondebtor claimants to release other nondebtors involved in funding the plan. The justices ruled that nondebtors could not be forced to release claims unless they consented. This ruling highlights an important limitation in how Chapter 11 plans can be structured, especially when nondebtors are involved.

In another notable case, Truck Insurance v. Kaiser Gypsum, the Supreme Court broadened the scope for parties interested in bankruptcy proceedings to participate. The ruling emphasized that anyone with a stake in a bankruptcy plan should have the right to appear and object, strengthening the role of affected parties in ensuring fair outcomes in insolvency cases. This decision reinforces the principle that bankruptcy courts exist to provide a platform where all stakeholders can be heard, enhancing transparency in the process.

With intellectual property playing an increasingly pivotal role in the American economy, the Supreme Court remains active in clarifying key legal principles that govern this space. Several recent rulings have refined the boundaries of copyright and trademark law, affecting both creators and businesses.

In Andy Warhol Foundation v. Goldsmith, the Court examined the boundaries of “fair use” in copyright law. At issue was Warhol’s adaptation of a photograph of Prince, taken by the plaintiff. The Court ultimately decided that Warhol’s use did not qualify as fair use, particularly in a commercial context. This ruling casts doubt on how far fair use extends, especially beyond situations where the use is noncommercial and truly transformative.

In another copyright case, Warner Chappell Music v. Neely, the Court allowed plaintiffs to recover damages from before the statute of limitations period, marking a significant shift in copyright litigation. This decision increases the potential financial liability for those accused of copyright infringement by broadening the timeframe for damages.

Trademark law has also seen notable developments. In Jack Daniels Properties v. VIP Products, the Court ruled that parody alone does not shield a product from trademark infringement or dilution claims. The case centered on a dog toy resembling a Jack Daniels bottle with humorous elements, but the Court made it clear that humor or parody does not automatically offer legal protection under the Lanham Act. This decision signals that even satirical use of trademarks can still lead to liability.

Finally, in Vidal v. Elster, the Court upheld the Patent and Trademark Office’s rejection of the trademark application for “Trump Too Small.” The ruling emphasized that the Lanham Act’s provision against registering the name of a living person is constitutional, and it doesn’t violate free speech. The applicant was still free to use the phrase but could not secure federal trademark protection for it.

The Court also took a look at Securities regulations. In Slack Technologies v. Pirani, the Court ruled that claims under § 11 of the Securities Act of 1933 can only be brought by investors who purchased securities that were specifically sold under a registration statement. This case arose in the context of a direct listing, and the decision limits the scope of potential plaintiffs in such situations. Essentially, the ruling ensures that only those who can trace their securities directly to the registration statement can pursue § 11 claims, tightening the pool of potential claimants.

Another important securities law case, Macquarie Infrastructure v. MOAB Partners, focused on claims under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Court ruled that securities fraud claims cannot be based solely on omissions of information; there must be an actual statement that is misleading for a plaintiff to sue. This ruling raises the bar for plaintiffs, making it clear that failing to disclose information, by itself, does not necessarily constitute securities fraud—there must be a false or misleading statement involved.

The Supreme Court has also addressed several important issues in employment law, clarifying legal standards that affect both employers and employees. These rulings provide clearer guidance on discrimination, whistleblower protection, and arbitration in the workplace.

In Groff v. DeJoy, the Court tackled religious discrimination under Title VII of the Civil Rights Act. The justices ruled that an employer can avoid liability for religious discrimination by demonstrating that a “reasonable accommodation” would result in significant, not minimal, costs. This decision raises the threshold for employers to defeat claims, requiring them to show more than just trivial costs when accommodating religious practices.

The Court also weighed in on employment transfers in Muldrow v. City of St. Louis. In this case, the Court held that a Title VII plaintiff challenging a job transfer needs to show only some harm—regardless of whether that harm is “significant.” This ruling makes it easier for employees to bring claims related to discriminatory transfers, as they no longer have to prove substantial harm.

For whistleblowers, the Court made a key ruling in Murray v. UBS Securities. The decision established that under the Sarbanes-Oxley Act, plaintiffs seeking whistleblower protections must only prove that their protected activity was a contributing factor in their employer’s adverse job action. There is no need to demonstrate retaliatory intent, making it easier for whistleblowers to prevail in their claims.

Arbitration, a common topic in business disputes, also featured prominently in the Court’s docket. In Smith v. Spizziri, the justices clarified that when a court finds a dispute is subject to arbitration, the case must be stayed rather than dismissed. This means that litigation pauses but doesn’t end while arbitration proceeds. In Coinbase v. Bielski, the Court ruled that when a lower court holds that a case is not subject to arbitration, the case is stayed during any appeal process, preventing discovery from moving forward while the arbitration issue is unresolved.

In Coinbase v. Suski, the Court delivered an important opinion that should be headed by corporate/transactional attorneys drafting contracts for their clients. When a contract contains conflicting provisions on dispute resolution—one calling for arbitration and another for litigation—the Court ruled that it is up to the courts, not arbitrators, to determine which provision governs. The key issue here is whether there was an agreement to arbitrate at all, and courts are the appropriate forum to resolve such questions.

Finally, the Supreme Court addressed significant cases involving the Commerce Clause, clarifying its application in new and impactful ways. These rulings touch on state regulations and their interplay with both the dormant Commerce Clause and due process rights.

In National Pork Producers v. Ross, the Court ruled that California’s requirement for humane pork-raising conditions did not violate the dormant Commerce Clause. California mandates that any pork sold within the state must come from pigs raised under specific humane conditions, even though the vast majority of pork is produced outside California. The Court upheld California’s right to set such standards, reinforcing the idea that states can regulate products sold within their borders, even if those regulations affect industries primarily operating elsewhere.

Another notable case, Mallory v. Norfolk Southern, dealt with personal jurisdiction. The Court upheld a Pennsylvania law requiring any corporation registering to do business in the state to consent to personal jurisdiction for all purposes. Although the decision survived a due process challenge, the Court left open the question of whether such laws would withstand scrutiny under the Commerce Clause, leaving that issue unresolved for future litigation.

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