Commercial and Business Law
Judge Sotomayor’s record on business matters reflects her practical, non-ideological approach to judging. As in all areas of the law, she decides business cases with careful attention to law and precedent, the particular facts of the case, and the real world implications of her rulings.
Judge Sotomayor will come to the Supreme Court with extensive experience with business law issues, both as a practicing attorney and as a judge. In private practice, Judge Sotomayor gained invaluable experience as an associate and then a partner at Pavia & Harcourt, a Manhattan firm that specialized in commercial law. Judge Sotomayor handled dozens of complex commercial cases including intellectual property, real estate, employment, banking, contract, distribution and agency law. In addition, as a judge on courts located in the world’s financial capital with two of the most business-heavy dockets in the nation, she has heard cases on a variety of business law topics.
Her record in this area has garnered praise. For example, in a recent interview on NPR, Professor Joseph Grundfest of Stanford Law School, a securities law expert, described her practical, non-ideological approach, saying, “I think she’s calling these shots fairly as she sees them, with no proclivity towards plaintiffs or defendants. . . . I don’t think that she’s approaching these questions with any thumb on the scale whatsoever.”
Judge Sotomayor’s most famous business law case involved a settling the 1995 Major League Baseball strike. In Silverman v. Major League Baseball Player Relations Committee, Inc., 880 F. Supp. 246 (S.D.N.Y. 1995), she issued an injunction after finding that the National Labor Relations Board had reasonable cause to believe that baseball owners engaged in unfair labor practices that resulted in the 1994-1995 players strike. Absent a good faith impasse, the owners had revoked the salary arbitration clause and the free agency anticollusive provision in their most recent agreement with the players, and Judge Sotomayor ordered the owners to restore the terms and conditions of employment provided under their most recent agreement with the players. She found that the injunction was just and proper based due to the possible harm to the public, the players, and the NLRB. Her opinion was affirmed by the Second Circuit.
In addition, Judge Sotomayor has an extensive record on other commercial and business law topics. For example, she has enforced antitrust protections in order to foster competition, as the laws require. In Ross v. Bank of America, N.A., 524 F.3d 217 (2d Cir. 2008), Judge Sotomayor joined an opinion reversing the dismissal of antitrust claims for lack of standing. The plaintiffs alleged a conspiracy by credit card issuers to require arbitration in disputes with cardholders. The district court dismissed the case, ruling that there was no live dispute because the plaintiffs were not seeking to pursue specific claims outside arbitration. The Second Circuit panel, including Judge Sotomayor, held that the injury from the alleged absence of competition in the industry over the means of dispute resolution was sufficient to establish standing. She has also recognized that antitrust law contains exemptions. In Clarett v. National Football League, 369 F.3d 124 (2d Cir. 2004), a football player sued the NFL, arguing that a rule that limited eligibility for the NFL entry draft to players who were three full college football seasons removed from high school graduation constituted an unreasonable restraint of trade in violation of the Sherman Antitrust Act and the Clayton Act. Judge Sotomayor wrote a unanimous opinion in favor of the NFL, holding that the NFL’s eligibility rules are immune from antitrust scrutiny under the non-statutory labor exemption, a long-recognized rule that, in order to accommodate the collective bargaining process, certain concerted activity among and between labor and employers must be held to be beyond the reach of the antitrust laws.
Judge Sotomayor follows the law in cases concerning protection for consumers and investors. For example, in In re NYSE Specialists Securities Litigation, 503 F.3d 89 (2d Cir. 2007), investors filed class action suits under federal securities laws, alleging that the New York Stock Exchange (NYSE) failed to adequately monitor and police trading by its floor-trading firms, and made misrepresentations about the market’s integrity. Judge Sotomayor, writing for a unanimous panel, held that the NYSE was entitled to absolute immunity from liability based on its alleged regulatory failure to take action against the firms’ conduct. In addition, the court held that the district court had incorrectly found that the plaintiffs lacked standing to pursue their claims concerning the NYSE’s alleged misrepresentations, and remanded to the district court to consider the NYSE’s other theories on why the case should be dismissed. In In re American Express Merchants’ Litigation, 554 F.3d 300 (2d Cir 2008), Judge Sotomayor joined an opinion that held that a provision in American Express’s merchant agreements forbidding class-wide arbitration of antitrust claims was invalid because it was unconscionable. The plaintiffs presented an expert affidavit that the costs of presenting antitrust claims were prohibitive for any individual merchant, so that enforcement of the contractual class arbitration prohibition would nullify enforcement of the antitrust laws.
However, Judge Sotomayor does not hesitate to rule in favor of business entities when the law so requires. For example, in Moore v. Painewebber, 306 F.3d 1247 (2d Cir. 2002), Judge Sotomayor wrote a unanimous opinion affirming the district court’s rejection of class certification for clients of a financial services company who claimed that they had been defrauded in the purchase of investment and insurance products. Her opinion held that the alleged fraud was not the appropriate subject of a class action lawsuit because the claims could not “be established by proof of a central, coordinated scheme.” In Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004), Judge Sotomayor joined a unanimous panel opinion holding that Federal Rule of Civil Procedure 9(b)’s heightened pleading requirement applies to certain types of securities fraud cases. In addition, the panel affirmed the dismissal of claims concerning the actions of individual defendants because complaint did not meet the pleading requirements of the Private Securities Litigation Reform Act of 1995.
Further, Judge Sotomayor’s record reflects her commitment to following the law, even when it means that positions of sympathetic parties do not carry the day. In In re: Air Crash Off Long Island, 209 F.3d 200 (2d Cir. 2000), she disagreed with her colleagues’ interpretation of a law concerning wrongful deaths on the high seas in a lawsuit against an airline and manufacturers for damages following a plane crash. Judge Sotomayor recognized that while her colleagues would allow the lawsuit to proceed in an “understandable desire to provide the relatives and estate representatives of the 213 victims of the TWA Flight 800 crash with a ‘more generous’ recovery,” she would not join them in doing so because the law simply did not permit it. In Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002), Judge Sotomayor joined a unanimous opinion affirming the dismissal of a class action lawsuit brought by citizens of Peru and Ecuador alleging that Texaco’s operation of an oil pipeline polluted rain forests and rivers in Peru and Ecuador. The panel held that the district court had not improperly found that an American court was not the proper forum for the case, Ecuadorian courts were an adequate alternative, and the balance of private and public interest factors tilted in favor of dismissal.
In sum, Judge Sotomayor’s record indicates that she approaches business law cases on a case-by-case basis. In antitrust, securities, and other business law areas, she follows precedent without an ideological approach.