As the Supreme Court’s term nears its end, several pivotal decisions loom that could significantly impact corporate America. The justices are poised to rule on cases that could redefine the powers of social media companies, federal regulatory agencies, and bankruptcy courts.
One of the most closely watched issues involves the control social media giants have over their platforms. The Supreme Court is set to decide on two cases, Moody v. NetChoice and NetChoice v. Paxton, which challenge laws from Florida and Texas. These laws restrict social media companies from banning political candidates and large publishers and from moderating user content based on political views.
If upheld, these laws would curtail the freedom of platforms like Facebook, Instagram, TikTok, and X to manage content independently. This could increase their operational costs due to the need for more comprehensive content moderation reporting.
The tech advocacy group NetChoice, representing major social media companies, argues that these laws violate the First Amendment rights of the platforms. They assert that these companies should be allowed to decide which users and content to host. The companies have historically defended their editorial control by invoking Section 230 of the Communications Decency Act, which protects them from liability for user-generated content.
However, during oral arguments, justices expressed concerns about the consistency of these First Amendment claims with past defenses under Section 230. The Court’s decision could therefore redefine the boundaries of free speech and regulatory oversight in the digital age.
Regulatory Power and Agency Authority
Another crucial issue before the Supreme Court involves the authority of federal agencies to interpret and enforce their own rules. The cases of Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo challenge regulations imposed by the Commerce Department on the fishing industry, specifically the requirement for fishing companies to pay for onboard monitors.
These cases test the doctrine of Chevron deference, established by the Supreme Court in 1984, which mandates judicial deference to reasonable agency interpretations of ambiguous laws. A decision to limit or overturn Chevron deference could reduce the power of federal agencies, affecting industries ranging from finance to pharmaceuticals.
The Court’s recent decision to uphold the Consumer Financial Protection Bureau’s (CFPB) authority, despite challenges to its funding structure, indicates a complex stance on agency power. This decision, by a 7-2 margin, affirmed the constitutionality of the CFPB’s funding, providing a potential precedent for the upcoming rulings.
Bankruptcy and Liability Shields
The Supreme Court will also address whether corporate entities can use bankruptcy proceedings to shield themselves from liability. The case of Harrington v. Purdue Pharma centers on whether the Sackler family, which controlled the opioid manufacturer Purdue Pharma, can use the company’s bankruptcy to protect themselves from personal liability for opioid-related claims.
Purdue Pharma’s bankruptcy in 2019 was a strategic move amidst numerous lawsuits alleging its role in the opioid crisis. The Sacklers agreed to a $6 billion settlement to compensate victims and fund addiction programs, contingent on their release from personal liability. However, not all plaintiffs support this settlement, arguing it unjustly shields the Sacklers from accountability.
The Court’s decision could redefine the scope of bankruptcy protections and third-party liability, marking one of the most significant bankruptcy rulings in recent years.
These upcoming Supreme Court decisions will likely have far-reaching consequences for corporate regulation, the balance of power between federal agencies and industries, and the integrity of bankruptcy protections. Businesses, regulators, and legal experts are closely monitoring the outcomes, which could reshape the legal landscape for corporate America.
