July 5 (Bloomberg) -- Social conservatives see an opening in Sandra Day O'Connor's retirement from the U.S. Supreme Court. Business conservatives see danger.

O'Connor, who plans to step down after 24 years, was the most business-friendly justice on the nine-member court. She voted to cut punitive damages, curb class-action lawsuits and enforce arbitration agreements against consumers.

``As somebody who stands at the podium regularly on behalf of business, I always thought I had a sympathetic ear in Justice O'Connor,'' says Carter G. Phillips, a Washington lawyer with Sidley Austin Brown & Wood who has 45 Supreme Court arguments to his credit.

That may not hold true for O'Connor's replacement. Social conservatives, focused on such issues as abortion and gay marriage, want President George W. Bush to appoint a justice along the lines of Clarence Thomas and Antonin Scalia. Their rule- oriented approach to the law often leads them to dismiss the more pragmatic concerns of businesses.

In business cases that divided the court over the past six terms, Scalia and Thomas opposed the views of the U.S. Chamber of Commerce twice as often as O'Connor did. In the 2002-03 term alone, Scalia and Thomas rejected business positions in cases involving Norfolk Southern Corp., Nike Inc., State Farm Mutual Automobile Insurance Co., the pharmaceutical industry and the insurance industry.

``Just because you're a conservative doesn't mean that your position will be a pro-business position,'' says Stan Anderson, the Washington-based Chamber's chief legal officer.

Conservative Split

The differences between O'Connor on one hand, and Scalia and Thomas on the other, mirror longstanding fault lines within the Republican Party. O'Connor, like fellow swing vote Justice Anthony Kennedy, tended to vote as an economic conservative, Scalia and Thomas as social conservatives.

Both Scalia and Thomas read the U.S. Constitution as conferring only those rights contemplated by its authors. They say the Constitution doesn't protect abortion and gay rights --and likewise doesn't bar excessive damage awards.

O'Connor, by contrast, took a less doctrinal view of the Constitution, letting her pro-business leanings take over.

``Social conservatives admire Justices Scalia and Thomas, but Justices O'Connor and Kennedy have been much better for business interests,'' says Walter Dellinger, a Washington lawyer and Duke University law professor who was the Clinton administration's top Supreme Court lawyer. ``Pragmatism works well for business. Ideology often does not.''

Five Votes Sought

Of the nine justices, O'Connor was the most likely to conclude that a damage award was so large it violated the constitutional right to due process, Phillips says. She was in the majority, with Scalia and Thomas dissenting, in 1996 when the court struck down a $2 million punitive damage award against Bayerische Motoren Werke AG in dispute over a paint flaw on a new BMW.

Unless Bush fills O'Connor's seat with a like-minded justice, the court will have only five members who accept the concept of constitutional limits on damage awards.

``If he were to replace O'Connor with somebody who is like Scalia and Thomas on due process, then we're basically needing to get all five of the rest of them, and that's going to be tough,'' says Evan Tager, a Washington appellate lawyer at Mayer, Brown, Rowe & Maw who has written several articles on punitive damages. Over the next several years, the next justice's stance on punitive damages may affect the outcome of cases worth billions of dollars involving Philip Morris Cos., Exxon Mobil Corp., Ford Motor Co., Wyeth and dozens of other companies.

Hewing to the Words

Scalia and Thomas also take a ``strict interpretation'' approach toward federal statutes, hewing to the words of the law and leaving it to Congress to address any adverse consequences. Using that school of reasoning, Scalia and Thomas voted to allow job-discrimination suits that O'Connor would have forbidden.

In addition, Scalia and Thomas at times voted to permit state-court product-liability lawsuits when O'Connor would have imposed a single, national standard limiting suits.

``If 50 different regulations in 50 different states hamstring business, pragmatic justices are more likely to find that federal law pre-empts state regulations,'' Dellinger says. ``Justices with a stronger doctrinal approach, a devotion to states' rights, are more likely to rule against business in favor of state regulations.''

Pre-emption questions ```will be recurring issues'' at the court, decided on a ``statute-by-statute'' basis, Dellinger says.

Affirmative Action

Scalia and Thomas also disagree with O'Connor -- and many businesses -- on affirmative action. The two justices in 2003 voted to bar universities from using race in admissions, rejecting arguments from companies that said they depend on colleges to help supply a racially diverse workforce.

Thomas also rejects any application of the so-called dormant commerce clause, which the court has used to strike down state laws that discriminate against out-of-state businesses. In the most recent term, the court used that doctrine to bar state protectionism in the wine industry.

Like Scalia and Thomas, several prospective nominees being pushed by social conservatives are only lukewarm in their support for business. That list includes Emilio Garza, a San Antonio-based judge on the 5th U.S. Circuit Court of Appeals, who in 1997 indicated he would overturn the constitutional protection for abortion.

Garza and Luttig

In 2002 the law journal Judicature found Garza to be the least conservative of six potential nominees on economic and labor-regulation issues, siding with business only 54 percent of the time. Another favorite of hard-line conservatives, 4th Circuit Judge Michael Luttig of Alexandria, Virginia, was just behind, ruling for business 59 percent of the time.

By contrast, the candidate who may have the clearest pro- business sympathies is also the one facing the most vocal opposition from social conservatives: Attorney General Alberto Gonzales.

As a justice on the Texas Supreme Court in 1999, Gonzales wrote a decision limiting class-action lawsuits in mass-disaster cases. The ruling also made it easier for companies to appeal decisions by trial judges who certify class actions and permit large groups of plaintiffs to sue as a group.

``As a business lawyer, it would hearten me greatly if he were appointed,'' Tager says.

Limited Lobbying Role

Another candidate who might be a boon for business is Judge Edith Brown Clement of the 5th U.S. Circuit Court of Appeals in New Orleans. A civil litigator for 16 years before becoming a judge, Clement wrote a majority opinion in 2003 slashing $370,000 from an award over a fatal car crash.

Business groups, aiming to limit lawsuits, say they plan to take a more active role in the nomination and confirmation process than in the past. Lawyers for the Chamber of Commerce's Institute for Legal Reform are combing through potential candidates' opinions and intend to present dossiers to the White House.

Still, business advocates don't pretend to have the unyielding passion of their social-conservative counterparts. The Chamber of Commerce won't make recommendations for or against particular candidates, Anderson says.

``We don't give the White House a list saying, `these are good guys and these are bad guys,''' Anderson says. ``It's the president's decision.''

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: July 5, 2005 00:08 EDT