National Association of Manufacturers President John Engler had a widely read op-ed on the then-pending Stoneridge v. Scientific Atlanta published in The Washington Post last July 2nd, with the conclusion:
Treasury Secretary Henry M. Paulson Jr. has said that the cost of abusive litigation is “an Achilles’ heel of our economy.” Whether the Supreme Court will make this Achilles’ heel worse is the real issue in these cases. In the name of investor protection, will the court drive even more IPOs to foreign securities exchanges and even more U.S. companies to going private? Will it damage the U.S. investment environment more than it is already, all in the name of saving it? And will the cost of additional litigation smother U.S. businesses competing in the global economy?
Saying no to the Stoneridge trial lawyers: That’s the real way for the Supreme Court — and for the administration in advising the court — to be pro-investor.
Indeed, there was great anxiety among foreign companies about a bad Stoneridge decision opening them up to increased litigation if they did business in the United States.
The Supreme Court acknowledged those concerns in the majority opinion today, authored by Justice Kennedy. (pgs 12-13)
The practical consequences of an expansion, which the Court has considered appropriate to examine in circumstances like these, see Virginia Bankshares, Inc. v. Sandberg, 501 U. S. 1083, 1104–1105 (1991); Blue Chip, 421 U. S., at 737, provide a further reason to reject petitioner’s approach. In Blue Chip, the Court noted that extensive discovery and the potential for uncertainty and Cite as: 552 U. S. ____ (2008) 13 Opinion of the Court disruption in a lawsuit allow plaintiffs with weak claims to extort settlements from innocent companies. Id., at 740–741. Adoption of petitioner’s approach would expose a new class of defendants to these risks. As noted in Central Bank, contracting parties might find it necessary to protect against these threats, raising the costs of doing business. See 511 U. S., at 189. Overseas firms with no other exposure to our securities laws could be deterred from doing business here. See Brief for Organization for International Investment et al. as Amici Curiae 17–20. This, in turn, may raise the cost of being a publicly traded company under our law and shift securities offerings away from domestic capital markets.
UPDATE (1:20 p.m.): The National Law Journal published a relevant story online today headlined,
Going Public, but Not in U.S. Markets
Foreign companies shun U.S. equity markets due to regulation, litigation
Although written pre-Stoneridge decision, the story is an excellent review of why foreign investors are suspicious of the United States. Read it here.
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