While the Supreme Court typically garners attention for its more glamorous opinions on the death penalty, right to bear arms, and abortion, it has gained considerable attention this week for a ruling over a pretrial motion.
The Supreme Court unanimously agreed Tuesday that investors may progress with a lawsuit against Matrixx Initiatives Inc., the manufacturer of popular cold medicines that many of us here at the University of Houston have probably taken before.
The Supreme Court has, in effect, given investors the “go-ahead,” or standing, to file suit against corporations for failing to disclose those incidents which may not necessarily be “statistically significant” in number, but which may influence (in this case, inflate) the value of a company’s stock and/or performance and should thus be disclosed.
The ruling is considered by many experts to be a significant headache for businesses with regard to US securities laws.
It is not only significant for those users of the products, the drug industry, and others dealing in securities; it will have a significant impact on the way the court is viewed as an institution and pillar of justice.
The opinion has inflamed the much larger debate over the court’s perceived conservatism and preferential treatment of corporations.
The court does seem to have undeniably ruled in favor of corporations on multiple occasions since acquiring the current Chief Justice, John Roberts, and critics often cite the ruling in Citizens United v. Federal Election Commission, granting corporations the status of ‘persons,’ as particularly disturbing evidence of favoritism.
But this recent ruling against Matrixx is a noteworthy indicator of the court’s objectivity.
While at first glance the holding may be a bit surprising (I also held the court to be a bit biased), the unanimity in the opinion is downright shocking; so intriguing in fact, that it inspired me to do some research of my own.
After tearing through case law, it turns out that the court has made what appear to be several other ‘anti-business’ rulings, at a time in which they are heavily criticized by the media for being rampantly ‘pro-business.’
In Thompson v. North American Stainless, the Court unanimously agreed that a law protecting employees who complain about discrimination from workplace retaliation also applies to their “relatives” and even “close associates,” exposing businesses to an array of new lawsuits and liabilities.
Is this the stance a radical, pro-business court would take? In Massachusetts v. EPA, the court essentially granted the EPA access to regulate every standard business practice, on the grounds that almost all human activity produces carbon dioxide — a ruling which may create immense regulatory problems and expenses for businesses in the near future.
The ruling in Matrixx may not be a definitive proof of a consumer-oriented, or even friendly, court in your mind; however, it is one factor, among others, that should be considered in your deliberations about the ideology and objectivity of the current Supreme Court, especially in the face of harsh, bandwagon criticism.
Now, it’s also important to remember that the Court did not rule in favor of any settlement for Siracusano, representing the investors; it simply dismissed Matrixx’s pretrial motion, requesting that the case be dropped on the basis of frivolousness.
In addition, if it can be argued that securities regulation culminates healthy, long-term business, did the ruling only further business objectives?
This question only leads me to another: if helping businesses helps investors (a large majority of the public considering pensions and municipal investments), where do you draw the line between a court that is ‘good’ for business and one that ‘good’ for the public?
John Costello is a political science junior.
