Court decisions may place higher costs on business

The Supreme Court issued two opinions Thursday siding with employees over the private sector, continuing a recent trend that runs counter to the court's generally pro-business record.

The rulings could make it easier for employees to win age discrimination cases, and also may encourage workers to challenge health and disability insurance claims in court that have been denied, business groups said.

The cases "may lack sex appeal, but they have a huge impact on the national economy," said Robin Conrad, executive vice president of the U.S. Chamber of Commerce's litigation arm.

Some legal experts said the Chamber's concerns are a bit overblown, but the rulings do follow at least three other cases earlier this year in which the court has decided in favor of employees in workplace law disputes. The court has taken an unusually large number of workplace cases this year, and has surprised some observers by ruling in favor of workers. The court's rulings last term overwhelmingly favored the private sector.

The Chamber did notch a win in a third case Thursday, when the court struck down a California state law that prohibited companies from using government funds to influence union-organizing efforts.

Still, Justice David Souter, in his majority opinion in the age discrimination case, acknowledged that the decision "makes it harder and costlier to defend" such lawsuits. But Souter said the court had to follow the law "the way Congress wrote it."

That case, Meacham v. Knolls Atomic Power Laboratory, began when Knolls laid off 31 workers, 30 of whom were over age 40. Twenty-six of those employees sued Knolls, claiming the layoffs violated the federal Age Discrimination in Employment Act.

The justices, in a 7-1 ruling, said when older workers are disproportionately affected by an employment decision, the employer bears the burden of explaining whether there was a reasonable explanation _ other than age _ for the company's action.

Knolls argued that the burden of proof should rest with the employees. Knolls, a joint project by the Department of Energy and U.S. Navy based in upstate New York, is owned by KAPL Inc., a subsidiary of Lockheed Martin Corp.

Justice Stephen Breyer did not take part in the case. He owns shares of State Street Corp., according to a financial disclosure report. State Street owns more than 18 percent of Lockheed Martin.

Placing the burden of proof on employers will prolong costly litigation in age-discrimination lawsuits, the Chamber said in friend of the court brief.

Companies also could face more lawsuits by laid-off workers as a result of the slowing economy. Citing Labor Department statistics, the Chamber said there were 3,110 layoffs of 50 or more employees that affected 321,485 workers in the first two months of this year. That's up from 2,606 such layoffs affecting 272,060 workers in the first two months of 2007.

In the employee benefits case, MetLife v. Glenn, the court ruled that insurance companies have a conflict of interest when they both administer health and disability benefit plans, and decide claims filed under the plans.

Courts should consider that conflict when employees challenge decisions by plan administrators, the justices ruled.

The case began when Wanda Glenn, a 14-year employee of Sears Holding Corp. in Columbus, Ohio, sued MetLife after the company denied her claim for long-term disability benefits. MetLife administered Sears' disability plan. Sears wasn't a party to the case.

An appeals court ordered her benefits be reinstated, and the justices upheld that ruling 6-3.

MetLife said in court papers that a ruling in favor of Glenn would "encourage participants with dubious claims to file suit," which would raise the costs of benefit plans to both companies and employees.

It also is more efficient to have a single company perform both functions, MetLife said, and the resulting cost savings allows employers to offer better benefit plans.

MetLife said in a statement Thursday that it would pay benefits to Glenn "promptly."

Legal experts said the impact of the court's rulings on businesses will be limited.

Paul Secunda, a professor at Marquette University Law School, said the two rulings wouldn't result in the flood of litigation feared by the Chamber. Age discrimination cases, for example, are still hard to prove.

"The courts are not going to be overwhelmed with claims," he said.