This morning President Obama nominated Sonia Sotomayor to replace David Souter on the U.S. Supreme Court. Although it's hard to tell exactly where on the judicial political spectrum Sotomayor will fall, for several reasons, I believe Obama's choice is good for business.
Let me start by saying that I'm no judicial scholar. I follow the Supreme Court as an interested observer and took several law courses in college. But I won't be delving too deeply into legal theory.
1. She's a non-intellectual centrist.
An article by Jeffrey Rosen in the New Republic paints Sotomayor as one of the less intellectual, more centrist options that Obama could have picked. Both of these characteristics have interesting implications.
Sotomayor went to Princeton undergrad and Yale Law School. I doubt her intellect is too insufficient. Instead, I take this criticism to mean that she did not try to shape law in an over-the-top fashion to match some intellectual tradition she follows.
But is she an activist judge? It would seem so through her saying, the "court of appeals is where policy is made." The jury is still out on how much of an activist she will be. If you believe Rosen's article, however, actions might speak louder than words. My suspicion would be that she believes in judicial activism where the contrary would defy modern logic, but activism is probably not needed most of the time.
That analysis seems to make sense in light of her being characterized as "centrist." There's little doubt that she leans towards the liberal side of constitutional interpretation. Obama would never nominate someone right-leaning to the court. However, she probably does not lean so far left that she falls over.
This is all great news for business. Unpredictability is almost as grave a problem for business as rulings that would consistently favor its opposition. The more activist a court, the more unpredictable business will find it. From the above analysis, it seems likely that Sotomayor will be approximately as activist a judge as Souter was. Business loves the status quo.
2. Her record is not pro-business, but not anti-business either.
While I don't pretend to have an extensive knowledge of her judicial career, I did a little research. According to Judgepedia (I didn't know it existed until today, either) and a pretty good piece from CNN, Sotomayor ruled on several notable cases where business came into play:
U.S. v. Falcone: This was a case where she ruled that securities fraud did not need to include the purchase of securities under the misappropriation theory of insider trading. While it might seem business would be annoyed that she would extend the law in this case, I find that doubtful. Despite what you see in the movies, no legitimate banker or trader on Wall Street likes the idea that people could be manipulating markets or taking advantage of non-public information illegally. This should be seen as a welcome extension of current law.
Tasini vs. New York Times: Here, some freelance journalists sued the New York Times for putting their writing on databases and archives (including Lexis/Nexis), without permission. Sotomayor sided with the Times based on the 1976 Copyright Act. The appellate court and Supreme Court both disagreed, so the ruling was overturned. But it seems that big business would prefer Sotomayor's verdict. Instead of ruling for the writer/artist continent (the little guys), she instead took the side of big business (the "man"). Others, however, may argue that business should favor strong intellectual property rights. So this one is kind of a mixed-bag.
Major League Baseball Strike: This is perhaps her most famous decision, where she ruled against owners and in favor of the players union to end the strike. The owners tried to end free agency and salary arbitration. In other words, they wanted to be able to pay players less. I think it's a little premature to see this case and say she is pro-union. She may, in fact, be. But given that the minimum salary in 2008 for major league baseball was $390,000, she hardly sided with the little guy scrounging to get by.
To me, none of these cases seem to indicate that she is particularly anti-business, but again, pretty center of the road.
3. Republicans won't block it.
If anything, Republicans probably have an "it could have been worse" attitude towards the pick. It would also be political suicide to attempt to crucify a woman who is also the court's first Latino nominee. They may threaten to block it, but ultimately, they won't.
Many liberals are disappointed that Sotomayor does not have a more distinguished record of turning the constitution on its head. In this case, it looks like Obama went more for the sentimental pick, balancing quotas on the court instead of finding a fiery liberal judge. Republicans' acquiescence means that business will not have to wait long for certainty when it comes to who the new justice will be on the Supreme Court.
4. Obama is acting predictably.
Another thing to consider: her actually being named to the Supreme Court by Obama, after being the obvious front runner. Business should like that because it was wholly predictable. I don't think anyone is really surprised by this pick. The president acting in such a predictable manner is something that the market loves. This lessens political risk, and lets businesses focus on business instead of politics.
5. She's a Yankees fan.
Business leaders should also cheer that she's a Yankees fan. That means she must have a soft spot in her heart for the rich and powerful. So much for her empathy!
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