U.S. Supreme Court Justice Anthony Kennedy made waves this week when he announced that he would be retiring from the High Court at the end of July. President Trump is now expected to appoint a new, most likely conservative justice in his stead, a move that could cement decisions in a series of cases that carry real implications for entrepreneurs.
“Conservative justices have been good for business, and if there’s another conservative justice, that will only increase the likelihood of pro-business decisions next term,” says Ari Ginsberg, a professor of entrepreneurship and management at New York University’s Stern School of Business, who follows the judiciary and its impact on startups. Indeed, according to recently published data from the Minnesota Law Review, the Supreme Court under Chief Justice John Roberts–a conservative Bush-era appointee–has decided in favor of business litigants more than 60 percent of the time, up from around 44 percent when the court was headed by Reagan appointee William Rehnquist.
And while startups, to be sure, are unlikely to find themselves at the center of the judiciary’s largest forum, companies of all sizes stand to benefit from the shifting tide. “To the extent that what’s good for big business overflows to smaller ones, entrepreneurs will gain as corporations do,” adds Ginsberg.
In particular, Ginsberg expects that an upcoming class-action, Apple v. Pepper, is likely to be decided in favor of the world’s largest tech company. The case revolves around whether consumers can sue anyone who delivers goods to them (i.e., Apple) for antitrust damages, even as third parties set the actual prices. At issue is whether Apple, through charging app developers a 30 percent commission to house their service in the App Store, has inflated the price of those apps in a monopolistic fashion. Apple argues that consumers don’t have the right to sue the company under current antitrust laws, inasmuch as they are not purchasing directly from it (they purchase from the developer, who may hike the price because of Apple’s commission.) The Supreme Court agreed to hear the case in the October 2018 term.
Analysts argue that a more conservative judiciary is likely to swat down class action lawsuits, more generally, which could set a positive precedent for businesses in the near term. “The stance of a more conservative court will tend to be pro-business, and therefore try to minimize the power of class action lawsuits, so it’s likely that the court will rule in favor of Apple in this case,” says Ginsberg.
Still, the precedent may be more applicable to established companies. “Large corporations like Apple are more likely to be sued because they have deep pockets,” he continues. “If an elephant steps on your toe, it causes a lot of damage. Startups are not likely at a stage where they would gain directly [from a pro-Apple ruling.]”
What could hurt? If the Supreme Court takes up cases–its full caseload for the upcoming session is not yet known–having to do with patents and privacy.
“Tech startups may be vulnerable where there are patents involved,” notes Ginsberg. “The court has a record of not protecting patent holders, which obviously is not a great thing for inventors.” To his point, in April of this year, the Supreme Court ruled to uphold a new mechanism for resolving patent disputes, called the inter partes review, which critics argue adds millions of dollars and years of time to the whole process of settling cases, including with so-called ‘patent trolls.’ The case, Oil States Energy Services LLC v. Greene’s Energy Group LLC, was decide in a 7-2 vote.
There’s also the issue of privacy, that likely will come up as the U.S. considers its own GDPR-like rules. General Data Protection Regulation, which was authorized in Europe in May, limits the power of tech companies to store and distribute users’ personal information. Consumers are much more alert about privacy issues–particularly in the wake of the Cambridge Analytica Scandal, in which Facebook had a hand in exposing the personal information of some 87 million users of the social network–and the High Court may want to weigh in.
“Privacy is a very, very American value,” Ginsberg continues. “So I think that both parties would tend to agree” it needs to be protected, he adds.