Supreme Court's Rulings Rankle Business Lawyers : Law: The conservative-dominated bench is not the friendly forum the attorneys hoped for. The justices tend to be pro-government.


Three years ago when conservatives took control of the Supreme Court, business lawyers hoped to have a friendly forum for resolving their most pressing legal problems.

But to their dismay, the unquestionably conservative court has proven to be anything but friendly to business.

"It's been generally horrible for us," said Stephen Bokat, chief counsel for the U.S. Chamber of Commerce litigation team. "This may be a conservative court, but it is not a pro-business court."

Indeed, under Chief Justice William H. Rehnquist, the Supreme Court has been, if anything, pro-government.

Repeatedly, corporate attorneys have challenged an assortment of laws under which business executives have been labeled "racketeers," prosecuted as criminals for workplace safety violations and punished with huge damage verdicts.

And on each occasion, the Supreme Court has rejected the challenge and upheld the law. Conservative legal theoreticians have also lost hope that the Rehnquist court will strike down rent control laws or zoning measures that limit developers.

In case after case, the court has delivered the same message: If you do not like a law, take your complaint to the state Legislature or Congress, not to the federal courts.

"This court tends to defer to political decisions. It is not necessarily anti-business, but rather it supports government decisions," University of Chicago Law Professor Geoffrey P. Miller said.

As President, Ronald Reagan promised to appoint judges who believed in "judicial restraint." Some conservatives cheered because these judges would be less willing to strike down abortion restrictions, the death penalty or voluntary prayers in schools. But these same judges have also been less willing to strike down laws that punish businesses.

On Monday, Reagan's last two appointees--Justices Antonin Scalia and Anthony M. Kennedy--took the strongest stand in upholding huge punitive damage verdicts, which are often levied against big business. Since juries throughout American history have awarded punitive damages in extreme cases, they said, the high court has no business declaring them unconstitutional now.

Only Justice Sandra Day O'Connor, a more traditional and less doctrinaire conservative, said punitive damage verdicts should be restrained. Multimillion-dollar damage awards are a weekly phenomenon, she said, and they are no more predictable than "a flip of the coin."

A system of punishment that depends on the "whim" of a jury violates a defendant's guarantee of the "due process of law," O'Connor said in a solo dissent Monday.

Ironically, many business attorneys are bemoaning the loss of Justice Lewis F. Powell Jr. It was Powell's retirement in 1987 and his replacement eight months later with Reagan appointee Kennedy that cemented a conservative majority.

Although Powell sometimes voted with the court's liberals, he had been a corporate attorney and sat on a number of boards of directors before coming to the court in 1972. As a justice, he often championed the cause of business.

None of the nine justices on the court has a business background. Most worked in government or academia before becoming judges.

"There is no one up there now who is particularly sensitive or knowledgeable about business," Washington attorney Carter Phillips said. "None of them has the day-to-day experience of seeing how these legal issues affect a business or a corporate board."

Perhaps for this reason, in addition to the court's general pro-government philosophy, business groups have compiled an unenviable record of defeats and disappointments. For example, over the past three years, the court has:

* Allowed business executives to be sued as "racketeers" and forced to pay triple damages for sending out a mailing containing fraudulent information. Their attorneys contended that the 1970 anti-racketeering law--the Racketeer Influenced and Corrupt Organizations Act--was intended to combat organized crime, not business fraud. The court disagreed and upheld a broad, literal reading of the law.

* Permitted prosecutors to bring criminal charges against factory managers for endangering the health and safety of their workers, even though their plants complied with federal safety standards. Business groups argued that the federal Occupational Safety and Health Act preempted separate state prosecutions, but the justices disagreed.

* Upheld as constitutional a series of state taxes on business, even when the affected firms did most of their business outside the state. Two weeks ago, for example, the court upheld a Michigan "unitary tax" that was applied to about 10% of one Ohio firm's payroll, even though only 1% of its operations were in Michigan.

* Refused to block local zoning authorities from imposing limits on builders and developers. Ruling in two Southern California cases four years ago, the court said government agencies could be forced to pay damages for infringing on the use of private property. But the second of the 5-4 rulings, involving a Ventura beachfront home, was announced on June 26, 1987, the day Powell resigned. Since then, the court has refused repeatedly to hear challenges to local zoning powers, leaving attorneys for developers to wonder whether the two 1987 rulings will have any long-term significance.

* Refused Monday to impose constitutional limits on punitive damage verdicts. For businesses, punitive awards can be the distressing wild card in any court case; a lawsuit involving a few thousand dollars can result in a multimillion-dollar verdict. Over five years and several cases, the court considered putting limits on such awards but finally refused to do so.

"The sky's the limit for juries. They are free to award any amount they wish without concern for the consequences," said a despairing Quentin Riegel, a counsel for the National Assn. of Manufacturers.

Along with many business attorneys, Riegel had filed brief after brief urging the justices to limit the discretion of juries. But Monday's decision virtually foreclosed that possibility.

"The Supreme Court has declared open season for trial lawyers to go after companies for punitive damages in civil litigation," he said.

"All we got out of it," said Bokat of the Chamber of Commerce, "was the same old refrain: Go tell the states about your problem."

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