Are Obama Judges ‘Less Friendly’ to Business?

Backing workers in discrimination suits. Signing off on a $1 billion class action judgment. Spurning attacks on federal regulations.

President Barack Obama’s appointees to the federal appeals courts have started to leave their mark on the business world, to the chagrin of corporate executives. Appellate lawyers say it’s too early to see major swings in the law, but individual rulings on labor, class actions and administrative law show signs of a shift to the left.

“Over the last eight years the courts of appeals have become decidedly less friendly to business overall, though the Supreme Court has served as something as a check on those courts,” said Kannon Shanmugam, who leads the appellate practice at Williams & Connolly.

Fifty-five judges have been confirmed to the federal appeals courts since 2009, with 31 of those judges replacing Republican appointees. Obama’s appointees make up just under a third of all active judges on the circuit courts, although their influence is less pronounced when senior judges are included in the tally.

Newer judges’ influence on their respective courts varies. There’s been a noticeable ideological flip on the Fourth Circuit, covering Virginia, Maryland, West Virginia, North Carolina and South Carolina, which has six Obama appointees out of 15 active judges. The majority of judges on that court, which was among the most conservative in the nation when Obama took office, are now Democratic appointees. On the Seventh Circuit, on the other hand, Obama has seated just one judge.

Rex Heinke, co-leader of the appellate practice at Akin Gump Strauss Hauer & Feld, said he hasn’t observed an overhaul in areas of law affecting business over the past eight years, although the president’s nominees to the bench “are certainly more liberal than the judiciary when he came into office.”

“There would be a dramatic shift if there were liberal justices added to the Supreme Court,” Heinke said. “For example, there have been all sorts of decisions on the Supreme Court in recent years about the use of arbitration to settle disputes, and the court has been very sympathetic to claims that agreements to arbitration be upheld. I suspect a more liberal justice on the Supreme Court might well have a different view.”

Lawyers say the change they see in the appeals courts—the last litigation stop for the majority of cases—has been incremental. Mary Helen Wimberly, an appellate litigator at Hogan Lovells, noted a few key rulings by Obama appointees siding with class action plaintiffs. She pointed to a Sixth Circuit decision in 2015 by Judge Jane Stranch that reversed the dismissal of a gender discrimination class action against Walmart Stores Inc.

Stranch, who was confirmed in 2010, ruled that female Walmart employees weren’t prohibited by time restrictions from pursuing a regionally-focused lawsuit against the mega-retailer after the U.S. Supreme Court in 2011 rejected certification of a nationwide class of plaintiffs in Wal-Mart Stores v. Dukes.

“Courts may be required to decide whether a follow-on class action or particular issues raised within it are precluded by earlier litigation, but we would eviscerate Rule 23 if we were to approve the blanket rule advocated by Wal-Mart,” Stranch wrote.

Tenth Circuit Judge Robert Bacharach, who was confirmed in 2013, wrote a decision in 2014 that upheld a $1 billion judgment against the Dow Chemical Co. in favor of purchasers of polyurethane products alleging a price-fixing conspiracy. The court rejected Dow Chemical’s challenge to the certification of a class under the tougher standard set out in Dukes.

Judges confirmed since 2009 have written decisions in employment cases hailed by the plaintiffs bar. Eleventh Circuit Judge Beverly Martin, confirmed in 2010, wrote a 2015 opinion that held that job applicants, not just current employees, could bring claims against an employer alleging that a company policy discriminated against older individuals. She was reversed by a full sitting of the court in October; Martin wrote a strong dissent.

“The Equal Employment Opportunity Commission (EEOC), the agency charged with enforcing the [Age Discrimination in Employment Act], has reasonably and consistently interpreted the statute to cover claims like Mr. Villarreal’s,” Martin wrote in the 2015 decision, referring to the plaintiff. “We must defer to that reading rather than venture our own guess about what the statute means.”

In the Fifth Circuit, Judge Gregg Costa, confirmed in 2014, wrote a decision in 2015 holding that a jury could decide if a company should have to pay employees for their lunch break if the employer imposed travel obligations during that period of time.