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LEGAL ISSUES

5 Supreme Court Cases Entrepreneurs Should Watch

These five cases put businesses on the stand. Here's what's at stake, and how it could affect the way you do business.

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The Supreme Court opened its doors earlier this week to begin hearing cases for the upcoming 2011 to 2012 term. So far, a healthy percentage of the 51 cases posted to the court's docket involve business and entrepreneurial issues. Some might even affect the way you do business.  Here's a roundup of a few important cases to look out for, and what's at stake.

When can you sue the government for intrusion?

The case: Sackett v. Environmental Protection Agency

The issue: In 2007, Mike and Chantell Sackett were building a home in Northern Idaho when three officials from the Environmental Protection Agency showed up at their door and told them to immediately cease construction. The EPA argued that their 0.63 acre lot was part of a natural preserve wetland protected by the Clean Water Act. The Sacketts knew that that EPA was mistaken (they had independently verified that the land was not a wetland) but if they decided to delay payment of the violation fee to take the EPA to court, they could face criminal charges. "That left the Sacketts in limbo," noted Businessweek in August.

What's at stake: At the core of the issue is whether or not a business or individual has the right to take a government agency to court to determine the validity of a claim before a violation fee is due. Shay Dvoretzky, a partner at the law firm Jones Day law firm, tells The Wall Street Journal that the case "could be a blow to the business community if the court decides that parties must first comply with an administrative agency's order before they have the right to protest the order in court."

Can anyone file a class-action lawsuit?

The case: First American Financial Corp. v. Edwards 

The issue: A lawsuit involving a relatively mundane dispute over real estate title insurance escalated into a much larger discussion about class-action lawsuits. Namely, can lawyers file a class-action lawsuit on behalf of customers that were never actually injured?

What's at stake: Donald Falk, a lawyer with Mayer Brown in Palo Alto who filed a brief on behalf of the Global  Automakers, tells Forbes.com that if the high court upholds the Ninth Circuit decision, "it would basically mean that any violation of law, regardless of injury, regardless of harm, could subject defendants to class certification." Clearly, that's a scary thought for many businesses, and plenty of  companies have voiced their support—with legal briefs—for the petitioner. Even Facebook threw its hat in the ring, filing an amicus brief in support of the petitioner, noting: "This Court should reaffirm that…businesses are not forced to settle meritless claims to avoid even the remote possibility of enormous damages awards."

Do federal safety standard trump others?

The case: Kurns v. Railroad Friction Products Corp. 

The issue: A long-time railroad worker died as a result of allegedly contracting malignant mesolthelioma while working for the railroad. After his death, his daughter sued Railroad Friction Products Corp., that company that manufactured products that contained the harmful asbestos that led to the man's death. At issue is the fact that federal laws about locomotive safety make no mention of products that include asbestos, so the manufacturers believe they should be off the hook, even if state laws would seem to indicate that they'd be at fault. So far, the lower courts have asserted the manufacturer's claim. 

What's at stake: If Kurns wins, there could be a precedent for businesses to be to subject to more rigorous safety requirements, regulated at both the state and federal level. But if the Supreme Court upholds the lower courts' decision, labor advocates believe employee's rights may suffer. "It will prevent injured citizens from holding railroad manufacturers responsible for violating state safety regulations, many of which speak to local safety hazards and provide more stringent protections which are not afforded by federal laws," notes the Alliance for Justice, a national association of advocacy organizations that focus on civil, student, and non-profit rights.

How do we determine disability payments?

The case: Roberts v. Sea-Land Services

The issue: Dana Roberts was working as a gatehouse dispatcher in Dutch Harbor, Alaska, when he slipped on ice and injured his neck and shoulder. Three years later, it was determined that Roberts was eligible for full worker's compensation, and was entitled to receive the national weekly compensation for someone in his position. But the court decided to award him the national average from 2005—not from the year in which the injury took place, which was substantially less money.

What's at stake: For businesses, the decision could potentially affect how disability payments are disbursed to employees. "The question before the justices is limited to whether a claimant's compensation is to be based on the national average wage for the year during which a permanent injury is suffered or the year during which disability payments were ordered," the Business Law Daily explained.

When does affirmative action apply?

The case: Fisher v. Texas

The issue: Abigail Fisher contends that when she applied to the University of Texas at Austin in 2008, she was rejected on the basis of race—that she was white. Up until now, federal courts have upheld a school's right to deny admission based on race, most recently in 2003 with Grutter v. Bollinger, a case which arose from a similar situation at the University of Michigan Law School. There, the court found that the constitution "does not prohibit the law school's narrowly tailored use of race in admissions decisions to further a compelling interest in obtaining the educational benefits that flow from a diverse student body." Though Fisher v. Texas does not seek to overrule Grutter v. Bollinger, Fisher wants UT to "properly apply the Supreme Court's principles that require using race-neutral alternatives first."

What's at stake: Though the case is limited to the application of affirmative action within academia, it could set a precedent for business's hiring practices as well.

IMAGE: Wikimedia Commons
Last updated: Oct 7, 2011




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