Some Observations On The Impact Of Justice Scalia's Death On Pending Business Cases

Justice Antonin Scalia's recent passing leaves the United States Supreme Court with eight active members. The timetable for the nomination and confirmation of his successor is unknown and currently the subject of a political dispute and intensive media coverage. There has been extensive reporting on the potential impact of Justice Scalia's death on major cases involving social issues, but less discussion of the potential impact of his death on business cases. In at least one recent case, however, a corporate defendant cited the uncertainty following Justice Scalia's death in connection with a decision to settle. Speculation about what the Supreme Court might do in a particular case is inherently unreliable (and perhaps even more so in business cases than in cases involving social issues or criminal law). We thought it would be useful, however, to identify business cases of potential interest to our business clients and offer some analysis of potential impact.

The Relevant Procedure

In any case that has been argued but not decided, Justice Scalia's vote in the Court's pre-opinion conference is void. If Justice Scalia was a member of a five-justice majority, then the Court may either: (a) affirm the lower court ruling by an equally divided Court, without opinion, creating no national precedent; or (b) direct that the case be reargued when a new justice is in place. Any opinions already assigned to Justice Scalia will be reassigned. As for cases scheduled to be argued after Justice Scalia's death, some may be set for reargument in the 2016 or 2017 Terms.

The Potential Impact of Justice Scalia's Absence and the Current Status of the Court

Historic voting patterns, over all types of cases, show that the remaining active justices tend to vote in two groups. Chief Justice John G. Roberts, Jr., and Justices Clarence Thomas and Samuel Alito, Jr. vote together often. Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan also tend to vote together. Justice Kennedy, now Senior Associate Justice, votes with the Chief Justice and Justices Thomas and Alito marginally more often than with Justices Ginsburg, Breyer, Sotomayor and Kagan. But such patterns are not necessarily valid predictors of how the justices may vote in specific business cases concerning diverse legal issues. We provide below thoughts regarding the potential impact of Justice Scalia's death, and the Court's current status, on some major pending business cases of interest, in various key legal areas.

Insider Trading: Salman v. United States

In Salman v. United States, the Court will consider "[w]hether the personal benefit to the insider that is necessary to establish insider trading under Dirks v. SEC requires proof of 'an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature' as the Second Circuit held in United States v. Newmanor whether it is enough that the insider and the tippee shared a close family relationship, as the Ninth Circuit held in this case." Justice Scalia could have been a vote in favor of the Newman approach. In a short opinion regarding the Court's denial of certiorari in Whitman v. United States, an insider trading case, Justice Scalia (joined by Justice Thomas) noted that "[a] court owes no deference to the prosecution's interpretation of a criminal law," and that "[t]he rule of lenity requires interpreters to resolve ambiguity in criminal laws in favor of defendants." Furthermore, one study has observed that, in securities cases...