by John F. Savarese, Kevin S. Schwartz, Adam L. Goodman, and David P.T. Webb
From left to right: John F. Savarese, Kevin S. Schwartz, Adam L. Goodman, and David P.T. Webb. Photos courtesy of Wachtell, Lipton, Rosen & Katz.
The Supreme Court’s October Term 2025 was one of the most consequential in years. While the Court grappled with contentious, blockbuster cases concerning birthright citizenship, voting rights, and transgender rights, the Term ultimately was dominated by disputes testing — and, in several respects, redefining — the extent of executive power.
The Court’s focus on executive power often played out in the context of the business docket and had significant implications for the business community. Early in the Term, the Court invalidated the global-tariff centerpiece of the Administration’s economic agenda, holding that the President’s tariff regime exceeded his authority under the International Emergency Economic Powers Act. The end of the Term was no less explosive, with the Court striking down statutory-removal protections for a broad array of independent agency commissioners. In between, the Court issued a string of commercially significant decisions affecting agency adjudications, securities law, white-collar law, arbitration, and government contracting.
We summarize below the key business decisions from this Term and flag cases to watch in the coming Term.
The Term saw three landmark decisions redefining the limits of executive power.
In what was arguably the most economically pivotal decision of the Term, the Court in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.) held that the International Emergency Economic Powers Act of 1977 (IEEPA) does not authorize the President to impose tariffs. Writing for a six-Justice majority, Chief Justice Roberts found that the statutory text of IEEPA could not bear the weight the President had placed on it in asserting an “independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” While IEEPA delegates to the President a “lengthy list” of emergency economic authorities, it nowhere mentions tariffs or duties — a conspicuous omission given Congress’s long-standing practice of addressing tariff authority expressly and one found to be material under the Court’s recent jurisprudence for statutory construction. For businesses dependent on imports or global supply chains, the decision substantially limits the prospect of large-scale tariff initiatives being imposed through executive action absent clear statutory authorization, underscoring the Court’s continuing skepticism of broad assertions of executive economic power untethered from statutory text.
In Trump v. Slaughter, the Court took the final step in its multi-decade march toward overruling Humphrey’s Executor, a 1935 landmark case that held Congress may constitutionally limit the President’s power to remove commissioners of regulatory agencies to causes specified by statute, rather than at the President’s will. In March 2025, the President removed the two then-sitting Democratic FTC Commissioners pursuant to his “authority under Article II of the Constitution” — i.e., not for any statutorily authorized cause of removal — spurring immediate litigation over the continued validity of Humphrey’s Executor. The Court held, in another 6–3 decision, that the FTC’s statutory “for-cause” removal protections violate the Constitution’s separation of powers.
Writing for the conservative majority, the Chief Justice concluded that separation-of-powers principles and the Constitution’s Take Care Clause require that officials who exercise executive power must be subject to at-will removal by the President. As Justice Sotomayor — joined by Justices Kagan and Jackson — observed in dissent, the decision removes a cornerstone of the modern administrative state. Because the decision’s rationale extends to all officials who exercise presidential power, Slaughter suggests that the commissioners of more than a dozen other agencies that had previously been considered “independent,” for instance, the SEC, CFTC, and the NLRB, may now serve only at the President’s pleasure. As a result, regulated entities should expect greater volatility in agency policies and enforcement priorities across presidential administrations — and, in particular, an FTC that is more tightly aligned with a given administration’s political priorities. The Court in Slaughter was clear, however, that “not all offices created by Congress necessarily come with executive or even sovereign power attached.” And it expressly reserved its judgment on whether institutions with unique historical independence from executive control would be subject to the President’s at-will removal right.
The carveouts announced in Slaughter presaged the decision in its companion case, Trump v. Cook. In August 2025, the President purported to fire Lisa Cook, a member of the Board of Governors of the Federal Reserve System. The district court issued a preliminary injunction preventing Cook’s removal, finding that it was not “for cause,” as required by statute; the Court of Appeals declined to stay the injunction. Writing for a bare majority (joined by Justices Sotomayor, Kagan, Kavanaugh, and Jackson), the Chief Justice found that (i) the Federal Reserve Board’s unique statutory structure, non-appropriated funding, and historic insulation from executive control rendered its “for cause” removal standard consistent with the Constitution (and the Court’s decision in Slaughter); (ii) the President’s determination of cause was judicially reviewable, citing Loper Bright; and (iii) Cook had not been afforded the procedural protections to which she was entitled by statute: “notice and some opportunity to respond prior to her termination.” Cook illustrates the possibility that the Court’s increasingly robust conception of presidential authority may nonetheless accommodate a narrow class of institutions whose independence is viewed as essential to financial stability and market confidence.
In FCC v. AT&T, Inc., an eight-Justice majority held that the FCC’s administrative forfeiture process under the Communications Act of 1934 does not violate the Seventh Amendment’s jury trial right because FCC forfeiture orders neither conclusively establish liability nor compel payment; collection ultimately requires a de novo proceeding in an Article III court. The decision cabins the potential reach of the Court’s recent decision in SEC v. Jarkesy, distinguishing between agency actions that impose binding monetary liability and those that function as initial determinations subject to independent judicial enforcement. (Our prior memo discussing Jarkesy is available here.) In doing so, it reinvigorates an administrative enforcement structure widely thought to be in peril.
The Term featured a pair of preemption decisions that delivered mixed results for the business community.
In Monsanto Co. v. Durnell, the Court issued one of its most consequential preemption decisions in years, holding that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) expressly preempts state-law claims predicated on Monsanto’s alleged failure to include cancer warnings regarding its Roundup pesticide product. Writing for a 7–2 majority, Justice Kavanaugh found that FIFRA’s text and structure made clear that the EPA possesses “comprehensive and exclusive” authority in registering pesticides and approving their labels; because the cancer warnings at issue would violate the statute’s prohibition on requirements “in addition to or different from” EPA labels, the state-law claims were preempted. The decision provides welcome clarity to a decisional landscape pockmarked by inconsistent judicial opinions and jury verdicts.
A unanimous Court came out the other way in Montgomery v. Caribe Transport II, LLC, holding that the Federal Aviation Administration Authorization Act (FAAAA) does not preempt state-law negligent-hiring claims against freight brokers. Writing for the Court, Justice Barrett relied on a textual analysis of the FAAAA to conclude that such claims fall within an exception to the statute’s preemption provision, which expressly preserves the States’ “safety regulatory authority . . . with respect to motor vehicles.” The decision strips freight brokers of a preemption defense that many had successfully invoked to avoid facing negligent-hiring claims. As Justice Kavanaugh observed in his concurrence, the resulting increase in claims and insurance costs may prove substantial even for brokers that ultimately prevail in litigation.
Despite reaching facially opposite outcomes, the decisions in Monsanto and Montgomery are complementary and continue the Court’s recent trend of shaping commercial law through close statutory interpretation.
In FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., the Court held that Section 47(b) of the Investment Company Act of 1940 does not create an implied private right of action to rescind contracts that allegedly violate the Act. Writing for a six-Justice majority, Justice Barrett concluded that the Act’s statutory text and structure assign primary enforcement responsibility to the Securities and Exchange Commission and do not reflect congressional authorization of private suits for rescission. The decision delivers a major victory for the registered fund industry and forecloses an important litigation strategy that activist investors had deployed in conjunction with proxy campaigns to challenge governance structures and to pressure funds into substantial operational or strategic changes. It also reflects the Court’s sustained skepticism of efforts to read private rights of action into congressional statutes that do not expressly provide them.
In Sripetch v. SEC, for the third time in a decade, the Court addressed the SEC’s disgorgement powers. A unanimous Court held that the SEC need not establish investor pecuniary loss to obtain disgorgement, preserving one of the agency’s most important remedial tools. (Our prior memo on Sripetch is here.) The decision removes what had become a significant obstacle to obtaining disgorgement in insider-trading and accounting-fraud cases, where legally protected investor interests may be harmed but monetary losses are diffuse or difficult to quantify. Justice Thomas’s concurrence, however, suggests that the issue of SEC disgorgement may return to the Court soon. In his view, disgorgement under Section 78u(d)(7) is now a legal, rather than an equitable, remedy. If disgorgement is properly characterized as a legal remedy, the Seventh Amendment would require a jury trial — an issue that Justice Thomas noted has already created a Circuit split.
The Court maintained its longstanding focus on arbitration this Term, issuing two unanimous decisions, one resolving a question of federal courts’ jurisdiction, the other concerning the Federal Arbitration Act’s (FAA) exemption for transportation workers “engaged in interstate commerce.”
In Jules v. Andrew Balazs Properties, the Court held that a federal court that has stayed claims in a pending action under Section 3 of the FAA has jurisdiction to later confirm or vacate the resulting arbitral award on those claims pursuant to Sections 9 and 10 of the FAA. The decision, in combination with the recently issued Smith v. Spizzirri (which we covered in a prior memo), creates continuity for parties involved in arbitration and provides businesses greater certainty that awards can be confirmed in the same federal court that originally compelled arbitration.
In Flowers Foods, Inc. v. Brock, the Court followed its recent trend of rejecting attempts to cabin the reach of the FAA’s transportation-work exemption. Writing for the unanimous Court, Justice Gorsuch examined both cases and the statute’s text, as well as treatises from the time of its enactment, to determine that a worker may be “engaged in . . . interstate commerce” — as required to qualify for the transportation-work exemption — even where the worker neither crosses state lines nor interacts with vehicles that do. Rather, it is sufficient that the worker be “involved” with or “take part in” the process of transporting products “between points in one state and points in another state.” The decision has significant implications for employers in logistics, delivery, transportation, and distribution businesses, as so-called “last-mile” delivery workers may now fall outside the FAA, making class and collective actions on their behalf substantially more likely going forward.
The Term featured two important decisions narrowing the circumstances under which companies can be held liable for misconduct by customers using their services.
In Cox Communications Inc. v. Sony Music Entertainment, the Court imposed significant limitations on contributory liability claims against internet service providers (ISPs) under the Copyright Act. Writing for a seven-Justice majority, Justice Thomas held that an ISP is liable for a user’s infringement only if it intended that the provided service be used for infringement — and such intent can only be shown if the party either induced the infringement or the provided service is tailored to the infringement. Merely supplying a product with knowledge that it would be used to infringe copyrights, Justice Thomas explained, is not sufficient to establish contributory infringement. Previewing a theme that would be repeated in FS Credit Opportunities (above) and Cisco (below), the Court emphasized that it was “loath to expand” secondary liability beyond its existing precedents where Congress has not expressly created such liability by statute. The decision materially reduces risk to ISPs, platforms, and other intermediaries that generalized knowledge of user misconduct will be successfully leveraged by plaintiffs seeking potentially crippling secondary liability.
In a 6–3 decision authored by Justice Barrett, Cisco Systems, Inc. v. Doe, the Court rejected the validity of aiding-and-abetting liability under both the Alien Tort Statute (ATS) and the Torture Victim Protection Act of 1991 (TVPA). Closing a door left open in Sosa v. Alvarez-Machain (2004), Justice Barrett held that courts may not create new causes of action for violations of international norms under the ATS. Nor does the TVPA, which contains an express cause of action against someone who “subjects” another to torture, authorize aiding-and-abetting claims. Cisco substantially reduces the attractiveness of U.S. courts as forums for broad human-rights litigation based on overseas governmental conduct and embodies one of the overarching themes of the Term: Congress, not courts, creates causes of action, and judicially created causes of action “offend the separation of powers in almost every circumstance.”
The Court’s jurisprudence concerning government contractors proved a mixed bag for corporations this Term.
In Chevron USA Inc. v. Plaquemines Parish, Louisiana, the Court clarified the circumstances under which companies performing work pursuant to federal contracts may remove lawsuits to federal court under the federal-officer removal statute. Writing for a unanimous eight-Justice Court (Justice Alito recused), Justice Thomas held that the “relating to” requirement of the federal-officer removal statute “sweeps broadly,” and a removing defendant need not show that his federal duties were specifically required or strictly caused the challenged conduct to invoke it. While the connection between the alleged misconduct and federal duties must be more than “tenuous, remote, or peripheral,” a removing defendant likewise is not required to demonstrate that the duties specifically invited the challenged conduct. The decision strengthens companies’ ability to invoke the federal-officer removal statute where federal wartime programs, military contracts, or other federally directed activities are implicated and thereby likely increases companies’ access to federal courts, which are generally considered to provide a more favorable forum for companies than state courts in the context of mass tort actions.
The Court’s other two government-contractor cases narrowed the procedural and substantive protections that contractors often rely upon when performing work for the federal government. In GEO Group, Inc. v. Menocal, the Court held that so-called “derivative sovereign immunity” under Yearsley — the doctrine that a federal contractor cannot be held liable for conduct that the government lawfully authorized and directed — is not an immunity from suit at all, but rather a merits defense to liability. As a result, a denial of a Yearsley defense is not immediately appealable under the Court’s collateral order doctrine. The decision will increase costs for federal contractors as it will require them to litigate to final judgment with greater frequency.
In Hencely v. Fluor Corp., the Court held that military contractors cannot automatically invoke federal preemption to defeat state-law tort claims arising from wartime operations. Writing for a six-Justice majority, Justice Thomas rejected the so-called “battlefield preemption” doctrine embraced by several Circuits, pursuant to which state-law claims against military contractors engaged in combatant activities under military command were held universally preempted. Because the conduct at issue (negligent supervision) was neither ordered nor authorized by the government, state-law claims based on the conduct were not preempted. Fluor increases litigation risk for contractors in military and national-security settings. To help preserve preemption defenses, contractors would be well-served to seek explicit contractual directives from the government and to document their compliance therewith.
* * * * *
The Court has already granted certiorari in several cases to be decided during the upcoming October Term 2026 with potentially important implications for commercial litigation and the business community.
Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County will address whether state-law climate-change lawsuits against energy companies are preempted by federal law — a question that this Term’s decision in Monsanto may play an important role in resolving. Salazar v. Paramount Global will clarify who qualifies as a protected “consumer” under the Video Privacy Protection Act, a statute increasingly wielded in class action litigation involving streaming platforms, mobile applications, and online advertising technologies. Anderson v. Intel Corporation Investment Policy Committee presents the question whether ERISA plaintiffs alleging imprudent investment decisions based on fund underperformance must plead a “meaningful benchmark” at the pleadings stage of litigation. And RiseandShine Corporation v. PepsiCo, Inc. will determine whether trademark strength is a factual or legal issue when courts analyze the likelihood of consumer confusion, which will have significant implications for companies seeking to defeat trademark claims prior to trial.
We will continue to closely monitor developments when the Court returns from its summer recess and, as the Court’s next Term progresses, will note decisions that warrant careful attention from the business community.
John F. Savarese is Of Counsel, Kevin S. Schwartz and Adam L. Goodman, are Partners, and David P.T. Webb is Counsel at Wachtell, Lipton, Rosen & Katz. This post first appeared as a memo from the firm.
The views, opinions and positions expressed within all posts are those of the author(s) alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of the New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this site and will not be liable any errors, omissions or representations. The copyright of this content belongs to the author(s) and any liability with regards to infringement of intellectual property rights remains with the author(s).
by John F. Savarese, Kevin S. Schwartz, Adam L. Goodman, and David P.T. Webb
From left to right: John F. Savarese, Kevin S. Schwartz, Adam L. Goodman, and David P.T. Webb. Photos courtesy of Wachtell, Lipton, Rosen & Katz.
The Supreme Court’s October Term 2025 was one of the most consequential in years. While the Court grappled with contentious, blockbuster cases concerning birthright citizenship, voting rights, and transgender rights, the Term ultimately was dominated by disputes testing — and, in several respects, redefining — the extent of executive power.
The Court’s focus on executive power often played out in the context of the business docket and had significant implications for the business community. Early in the Term, the Court invalidated the global-tariff centerpiece of the Administration’s economic agenda, holding that the President’s tariff regime exceeded his authority under the International Emergency Economic Powers Act. The end of the Term was no less explosive, with the Court striking down statutory-removal protections for a broad array of independent agency commissioners. In between, the Court issued a string of commercially significant decisions affecting agency adjudications, securities law, white-collar law, arbitration, and government contracting.
We summarize below the key business decisions from this Term and flag cases to watch in the coming Term.
The Term saw three landmark decisions redefining the limits of executive power.
In what was arguably the most economically pivotal decision of the Term, the Court in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.) held that the International Emergency Economic Powers Act of 1977 (IEEPA) does not authorize the President to impose tariffs. Writing for a six-Justice majority, Chief Justice Roberts found that the statutory text of IEEPA could not bear the weight the President had placed on it in asserting an “independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” While IEEPA delegates to the President a “lengthy list” of emergency economic authorities, it nowhere mentions tariffs or duties — a conspicuous omission given Congress’s long-standing practice of addressing tariff authority expressly and one found to be material under the Court’s recent jurisprudence for statutory construction. For businesses dependent on imports or global supply chains, the decision substantially limits the prospect of large-scale tariff initiatives being imposed through executive action absent clear statutory authorization, underscoring the Court’s continuing skepticism of broad assertions of executive economic power untethered from statutory text.
In Trump v. Slaughter, the Court took the final step in its multi-decade march toward overruling Humphrey’s Executor, a 1935 landmark case that held Congress may constitutionally limit the President’s power to remove commissioners of regulatory agencies to causes specified by statute, rather than at the President’s will. In March 2025, the President removed the two then-sitting Democratic FTC Commissioners pursuant to his “authority under Article II of the Constitution” — i.e., not for any statutorily authorized cause of removal — spurring immediate litigation over the continued validity of Humphrey’s Executor. The Court held, in another 6–3 decision, that the FTC’s statutory “for-cause” removal protections violate the Constitution’s separation of powers.
Writing for the conservative majority, the Chief Justice concluded that separation-of-powers principles and the Constitution’s Take Care Clause require that officials who exercise executive power must be subject to at-will removal by the President. As Justice Sotomayor — joined by Justices Kagan and Jackson — observed in dissent, the decision removes a cornerstone of the modern administrative state. Because the decision’s rationale extends to all officials who exercise presidential power, Slaughter suggests that the commissioners of more than a dozen other agencies that had previously been considered “independent,” for instance, the SEC, CFTC, and the NLRB, may now serve only at the President’s pleasure. As a result, regulated entities should expect greater volatility in agency policies and enforcement priorities across presidential administrations — and, in particular, an FTC that is more tightly aligned with a given administration’s political priorities. The Court in Slaughter was clear, however, that “not all offices created by Congress necessarily come with executive or even sovereign power attached.” And it expressly reserved its judgment on whether institutions with unique historical independence from executive control would be subject to the President’s at-will removal right.
The carveouts announced in Slaughter presaged the decision in its companion case, Trump v. Cook. In August 2025, the President purported to fire Lisa Cook, a member of the Board of Governors of the Federal Reserve System. The district court issued a preliminary injunction preventing Cook’s removal, finding that it was not “for cause,” as required by statute; the Court of Appeals declined to stay the injunction. Writing for a bare majority (joined by Justices Sotomayor, Kagan, Kavanaugh, and Jackson), the Chief Justice found that (i) the Federal Reserve Board’s unique statutory structure, non-appropriated funding, and historic insulation from executive control rendered its “for cause” removal standard consistent with the Constitution (and the Court’s decision in Slaughter); (ii) the President’s determination of cause was judicially reviewable, citing Loper Bright; and (iii) Cook had not been afforded the procedural protections to which she was entitled by statute: “notice and some opportunity to respond prior to her termination.” Cook illustrates the possibility that the Court’s increasingly robust conception of presidential authority may nonetheless accommodate a narrow class of institutions whose independence is viewed as essential to financial stability and market confidence.
In FCC v. AT&T, Inc., an eight-Justice majority held that the FCC’s administrative forfeiture process under the Communications Act of 1934 does not violate the Seventh Amendment’s jury trial right because FCC forfeiture orders neither conclusively establish liability nor compel payment; collection ultimately requires a de novo proceeding in an Article III court. The decision cabins the potential reach of the Court’s recent decision in SEC v. Jarkesy, distinguishing between agency actions that impose binding monetary liability and those that function as initial determinations subject to independent judicial enforcement. (Our prior memo discussing Jarkesy is available here.) In doing so, it reinvigorates an administrative enforcement structure widely thought to be in peril.
The Term featured a pair of preemption decisions that delivered mixed results for the business community.
In Monsanto Co. v. Durnell, the Court issued one of its most consequential preemption decisions in years, holding that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) expressly preempts state-law claims predicated on Monsanto’s alleged failure to include cancer warnings regarding its Roundup pesticide product. Writing for a 7–2 majority, Justice Kavanaugh found that FIFRA’s text and structure made clear that the EPA possesses “comprehensive and exclusive” authority in registering pesticides and approving their labels; because the cancer warnings at issue would violate the statute’s prohibition on requirements “in addition to or different from” EPA labels, the state-law claims were preempted. The decision provides welcome clarity to a decisional landscape pockmarked by inconsistent judicial opinions and jury verdicts.
A unanimous Court came out the other way in Montgomery v. Caribe Transport II, LLC, holding that the Federal Aviation Administration Authorization Act (FAAAA) does not preempt state-law negligent-hiring claims against freight brokers. Writing for the Court, Justice Barrett relied on a textual analysis of the FAAAA to conclude that such claims fall within an exception to the statute’s preemption provision, which expressly preserves the States’ “safety regulatory authority . . . with respect to motor vehicles.” The decision strips freight brokers of a preemption defense that many had successfully invoked to avoid facing negligent-hiring claims. As Justice Kavanaugh observed in his concurrence, the resulting increase in claims and insurance costs may prove substantial even for brokers that ultimately prevail in litigation.
Despite reaching facially opposite outcomes, the decisions in Monsanto and Montgomery are complementary and continue the Court’s recent trend of shaping commercial law through close statutory interpretation.
In FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., the Court held that Section 47(b) of the Investment Company Act of 1940 does not create an implied private right of action to rescind contracts that allegedly violate the Act. Writing for a six-Justice majority, Justice Barrett concluded that the Act’s statutory text and structure assign primary enforcement responsibility to the Securities and Exchange Commission and do not reflect congressional authorization of private suits for rescission. The decision delivers a major victory for the registered fund industry and forecloses an important litigation strategy that activist investors had deployed in conjunction with proxy campaigns to challenge governance structures and to pressure funds into substantial operational or strategic changes. It also reflects the Court’s sustained skepticism of efforts to read private rights of action into congressional statutes that do not expressly provide them.
In Sripetch v. SEC, for the third time in a decade, the Court addressed the SEC’s disgorgement powers. A unanimous Court held that the SEC need not establish investor pecuniary loss to obtain disgorgement, preserving one of the agency’s most important remedial tools. (Our prior memo on Sripetch is here.) The decision removes what had become a significant obstacle to obtaining disgorgement in insider-trading and accounting-fraud cases, where legally protected investor interests may be harmed but monetary losses are diffuse or difficult to quantify. Justice Thomas’s concurrence, however, suggests that the issue of SEC disgorgement may return to the Court soon. In his view, disgorgement under Section 78u(d)(7) is now a legal, rather than an equitable, remedy. If disgorgement is properly characterized as a legal remedy, the Seventh Amendment would require a jury trial — an issue that Justice Thomas noted has already created a Circuit split.
The Court maintained its longstanding focus on arbitration this Term, issuing two unanimous decisions, one resolving a question of federal courts’ jurisdiction, the other concerning the Federal Arbitration Act’s (FAA) exemption for transportation workers “engaged in interstate commerce.”
In Jules v. Andrew Balazs Properties, the Court held that a federal court that has stayed claims in a pending action under Section 3 of the FAA has jurisdiction to later confirm or vacate the resulting arbitral award on those claims pursuant to Sections 9 and 10 of the FAA. The decision, in combination with the recently issued Smith v. Spizzirri (which we covered in a prior memo), creates continuity for parties involved in arbitration and provides businesses greater certainty that awards can be confirmed in the same federal court that originally compelled arbitration.
In Flowers Foods, Inc. v. Brock, the Court followed its recent trend of rejecting attempts to cabin the reach of the FAA’s transportation-work exemption. Writing for the unanimous Court, Justice Gorsuch examined both cases and the statute’s text, as well as treatises from the time of its enactment, to determine that a worker may be “engaged in . . . interstate commerce” — as required to qualify for the transportation-work exemption — even where the worker neither crosses state lines nor interacts with vehicles that do. Rather, it is sufficient that the worker be “involved” with or “take part in” the process of transporting products “between points in one state and points in another state.” The decision has significant implications for employers in logistics, delivery, transportation, and distribution businesses, as so-called “last-mile” delivery workers may now fall outside the FAA, making class and collective actions on their behalf substantially more likely going forward.
The Term featured two important decisions narrowing the circumstances under which companies can be held liable for misconduct by customers using their services.
In Cox Communications Inc. v. Sony Music Entertainment, the Court imposed significant limitations on contributory liability claims against internet service providers (ISPs) under the Copyright Act. Writing for a seven-Justice majority, Justice Thomas held that an ISP is liable for a user’s infringement only if it intended that the provided service be used for infringement — and such intent can only be shown if the party either induced the infringement or the provided service is tailored to the infringement. Merely supplying a product with knowledge that it would be used to infringe copyrights, Justice Thomas explained, is not sufficient to establish contributory infringement. Previewing a theme that would be repeated in FS Credit Opportunities (above) and Cisco (below), the Court emphasized that it was “loath to expand” secondary liability beyond its existing precedents where Congress has not expressly created such liability by statute. The decision materially reduces risk to ISPs, platforms, and other intermediaries that generalized knowledge of user misconduct will be successfully leveraged by plaintiffs seeking potentially crippling secondary liability.
In a 6–3 decision authored by Justice Barrett, Cisco Systems, Inc. v. Doe, the Court rejected the validity of aiding-and-abetting liability under both the Alien Tort Statute (ATS) and the Torture Victim Protection Act of 1991 (TVPA). Closing a door left open in Sosa v. Alvarez-Machain (2004), Justice Barrett held that courts may not create new causes of action for violations of international norms under the ATS. Nor does the TVPA, which contains an express cause of action against someone who “subjects” another to torture, authorize aiding-and-abetting claims. Cisco substantially reduces the attractiveness of U.S. courts as forums for broad human-rights litigation based on overseas governmental conduct and embodies one of the overarching themes of the Term: Congress, not courts, creates causes of action, and judicially created causes of action “offend the separation of powers in almost every circumstance.”
The Court’s jurisprudence concerning government contractors proved a mixed bag for corporations this Term.
In Chevron USA Inc. v. Plaquemines Parish, Louisiana, the Court clarified the circumstances under which companies performing work pursuant to federal contracts may remove lawsuits to federal court under the federal-officer removal statute. Writing for a unanimous eight-Justice Court (Justice Alito recused), Justice Thomas held that the “relating to” requirement of the federal-officer removal statute “sweeps broadly,” and a removing defendant need not show that his federal duties were specifically required or strictly caused the challenged conduct to invoke it. While the connection between the alleged misconduct and federal duties must be more than “tenuous, remote, or peripheral,” a removing defendant likewise is not required to demonstrate that the duties specifically invited the challenged conduct. The decision strengthens companies’ ability to invoke the federal-officer removal statute where federal wartime programs, military contracts, or other federally directed activities are implicated and thereby likely increases companies’ access to federal courts, which are generally considered to provide a more favorable forum for companies than state courts in the context of mass tort actions.
The Court’s other two government-contractor cases narrowed the procedural and substantive protections that contractors often rely upon when performing work for the federal government. In GEO Group, Inc. v. Menocal, the Court held that so-called “derivative sovereign immunity” under Yearsley — the doctrine that a federal contractor cannot be held liable for conduct that the government lawfully authorized and directed — is not an immunity from suit at all, but rather a merits defense to liability. As a result, a denial of a Yearsley defense is not immediately appealable under the Court’s collateral order doctrine. The decision will increase costs for federal contractors as it will require them to litigate to final judgment with greater frequency.
In Hencely v. Fluor Corp., the Court held that military contractors cannot automatically invoke federal preemption to defeat state-law tort claims arising from wartime operations. Writing for a six-Justice majority, Justice Thomas rejected the so-called “battlefield preemption” doctrine embraced by several Circuits, pursuant to which state-law claims against military contractors engaged in combatant activities under military command were held universally preempted. Because the conduct at issue (negligent supervision) was neither ordered nor authorized by the government, state-law claims based on the conduct were not preempted. Fluor increases litigation risk for contractors in military and national-security settings. To help preserve preemption defenses, contractors would be well-served to seek explicit contractual directives from the government and to document their compliance therewith.
* * * * *
The Court has already granted certiorari in several cases to be decided during the upcoming October Term 2026 with potentially important implications for commercial litigation and the business community.
Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County will address whether state-law climate-change lawsuits against energy companies are preempted by federal law — a question that this Term’s decision in Monsanto may play an important role in resolving. Salazar v. Paramount Global will clarify who qualifies as a protected “consumer” under the Video Privacy Protection Act, a statute increasingly wielded in class action litigation involving streaming platforms, mobile applications, and online advertising technologies. Anderson v. Intel Corporation Investment Policy Committee presents the question whether ERISA plaintiffs alleging imprudent investment decisions based on fund underperformance must plead a “meaningful benchmark” at the pleadings stage of litigation. And RiseandShine Corporation v. PepsiCo, Inc. will determine whether trademark strength is a factual or legal issue when courts analyze the likelihood of consumer confusion, which will have significant implications for companies seeking to defeat trademark claims prior to trial.
We will continue to closely monitor developments when the Court returns from its summer recess and, as the Court’s next Term progresses, will note decisions that warrant careful attention from the business community.
John F. Savarese is Of Counsel, Kevin S. Schwartz and Adam L. Goodman, are Partners, and David P.T. Webb is Counsel at Wachtell, Lipton, Rosen & Katz. This post first appeared as a memo from the firm.
The views, opinions and positions expressed within all posts are those of the author(s) alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of the New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this site and will not be liable any errors, omissions or representations. The copyright of this content belongs to the author(s) and any liability with regards to infringement of intellectual property rights remains with the author(s).
