When we posted the first part of our Supreme Court term review–all the way back on June 26–it was a simpler time in the history of our country. It was one day before Justice Kennedy announced his decision to step down from the bench. It was before reporters accurately characterized the looming confirmation battle as a “Super Bowl of Politics” that will overshadow even the all-important midterm elections. And it was before Justice Kennedy’s replacement, Brett Kavanaugh, was announced on a special edition of The Apprentice.
While the future of the Republic hangs in the balance, let’s revisit that simpler time when Justice Kennedy was still a sitting justice. Not just for the peace of mind, but because it’s necessary to complete our round-up of last term’s most significant business cases.
Last time around, we discussed the results in the big SEC case (Lucia v. SEC), the internet sales tax case (South Dakota v. Wayfair), and the settlement clawback case (Merit v. FTI). Now, here’s part two of our review:
Epic Systems Corp. v. Lewis
What we said in February: “Here, the justices are taking on an issue that could potentially end employee class actions against employers.”
How SCOTUS ruled: An opinion from Justice Gorsuch held that employer-employee arbitration agreements that require employees to take any disputes to individual arbitration are enforceable.
Bottom line: This 5-4 ruling officially blesses the tens of millions of employment contracts demanding that employees take their cases to individual arbitration as opposed to asserting them in class actions. If this ruling didn’t kill employee class actions entirely, it certainly put them on the endangered species list.
United States v. Microsoft Corp.
What we said in February: This appeal will “determin[e] whether a business must obey a warrant for electronic data stored outside the United States.”
How SCOTUS ruled: No decision.
Bottom line: At oral argument, the justices all but cried out for Congress to weigh in on this dispute. Apparently, someone was listening. The CLOUD (Clarifying Lawful Overseas Use of Data) Act clarifies that in response to a warrant, U.S.-based companies must turn over electronic data regardless of where it is stored. The parties agreed that the CLOUD Act rendered their appeal moot.
Digital Realty Trust v. Somers
What we said in February: “At issue is whether the anti-retaliation provision for ‘whistleblowers’ in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (which shields those who make disclosures required by Sarbanes Oxley) extends to internal whistleblowers, or whether it only protects individuals who report to the Securities and Exchange Commission.”
How SCOTUS ruled: In a 9-0 decision, the court ruled that the anti-retaliation provision of Dodd-Frank only protects those who have taken their claims to the SEC.
Bottom line: On the surface, this looks like a big victory for businesses. But as we noted on this blog, the ruling may “work a little too well for corporate America’s comfort” by giving employees a big incentive to go directly to the SEC with knowledge of securities violations.
Cyan v. Beaver County Employees Retirement Fund
What we said in February: “The question here is simple: Did the Securities Litigation Uniform Standards Act of 1998 remove state courts’ jurisdiction to hear class action lawsuits brought under the Securities Act of 1933?”
How SCOTUS ruled: In a 9-0 ruling, it answered no.
Bottom line: To the dismay of public companies, plaintiffs can still avail themselves of plaintiff-friendly venues like California’s state courts for their ‘33 Act class actions.