Commercial Litigation Update

On April 26, 2022 the Supreme Court of New Jersey heard arguments about whether New Jersey should retain the judicially created “new business rule”. Since 1936 the rule has held that in the context of calculating damages “prospective profits of a new business are considered too remote and speculative to meet the legal standard of reasonable certainty.” RSB Lab. Servs., Inc. v. BSI, Corp. This case is interesting for aggrieved business litigants as well as interested observers of the appellate process.

Further evidencing an ongoing shift from more absolutist thinking about the intersection between the First Amendment's Establishment Clause and an individual's or group's right of free speech, we find this morning's unanimous decision in Shurtleff v. Boston in which the Court, reversing the First Circuit, held that the city of Boston violated the free speech clause of the First Amendment when it refused to let a group fly a Christian flag outside city hall. As Justice Breyer explained, in what will be among the last of his opinions:

Cummings v. Premier Rehab Keller, P.L.L.C. is a very important case for employment and benefits practitioners. The Court, divided 6-3 along conservative/liberal lines, has held that emotional distress damages are not recoverable in a private action to enforce either the Rehabilitation Act of 1973 or the Affordable Care Act. In fact, the case affects potential results under four statutes that Congress has enacted pursuant to its Spending Clause authority that prohibit recipients of federal funds from discriminating with respect to matters including race, color, national origin, sex, disability, or age. See Civil Rights Act of 1964, Title VI, 42 U. S. C. §2000d; Education Amendments Act of 1972, Title IX, 20 U. S. C. §1681; Rehabilitation Act of 1973, §504, 29 U. S. C. §794; Patient Protection and Affordable Care Act (ACA), §1557, 42 U. S. C. §18116. The Court previously held that victims of intentional violations of these statutes may bring private lawsuits seeking to recover, among other things, compensatory damages. Franklin v. Gwinnett County Public Schools, 503 U. S. 60, 76 (1992). Today, the Court holds that the damages available under these statutes cannot include compensation for emotional suffering.

Auguring a flood of opinions in the remaining weeks of the term, the Supreme Court decided five cases today. Some of them offer support for the media/popular equation of a political party background with jurisprudential outcomes, but others clearly do not. Interestingly, several cases decided by wide margins also, through concurrences and dissents, lay down markers that could affect the outcomes of future cases.

There has been a good deal of recent attention given to the Supreme Court's so-called "shadow docket," a term that refers generally to the Court's (conservative majority's) issuing brief orders and unsigned opinions resolving procedural motions in a way that effectively disposes of cases, but without their having been fully briefed and argued.

In many cases, the payment of restitution by a party in a lawsuit involving the government or a governmental entity creates a tax-deductible business expense under Title 26, United States Code, Section 162(f) (hereinafter, “Section 162”). When it comes to violations of the False Claims Act, the Anti-Kickback Statute, Stark Law, or even common law fraud claims and contract disputes, understanding how this statute operates can offer substantial short- and long-term tax-benefits to entities facing stiff financial recoupments.  While it is unlikely that the costs of an investigation or restitution order will ever generate a financial net-gain for the entity footing the bill, it is important to appreciate that restitution and proactive remediation costs are viewed differently by both government enforcers (i.e. prosecutors) and tax-collectors, compared with other types of remuneration. Recognizing that there is a difference can, in some cases, help mitigate significant financial burdens.

I write this from London on the eve of the announcement that the nomination of Judge Ketanji Brown Jackson to succeed Justice Breyer is about to go to the full Senate for confirmation. Those who follow my writings will know that I am among a group of right-of-center former public officials in Republican administrations who are on record as supporting this nomination of an experienced and well-qualified federal judge.

The Court has decided the latest in a series of important cases interpreting the reach of the Federal Arbitration Act (FAA), 9 U. S. C. §§ 1 et seq.

On March 31, in Badgerow v. Walters, by an 8-1 majority (opinion written by Justice Kagan, and a lone dissent by Justice Breyer), the Court reversed an order of the Fifth Circuit and held that the federal courts do not have authority to “look through” an arbitration dispute for a federal question that would establish jurisdiction to confirm or deny an arbitral award.

The Court issued opinions in two cases today, both interesting in their particular factual circumstances, but neither controversial, with one unanimously decided and the other with a lone dissent.

In an unsigned per curiam order, the Court today reversed a decision of the Supreme Court of Wisconsin that, in a dispute about the assignment of the number of so-called minority-majority districts, chose an electoral map drawn by the governor over several other such proposals. Wisconsin Legislature v. Wisconsin Election Commission.