The costs of the American legal system are the highest in the world. As a percentage of GDP, the United States spends on average nearly twice as much as other industrialized nations on tort costs. Aggressive trial lawyers and their advocates view industry as a revenue source and are constantly working to find novel ways to increase the profits of litigation.
To ensure the competitiveness of American manufacturing, common sense and fairness must be restored to the legal system. Legal reform must be pursued at the federal and state level to restore balance between plaintiffs and defendants, apply reason and sound science, discourage frivolous claims, and place appropriate limits on liability and damages.
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2.01. Mandatory Statement of Terms and Conditions of Sale
Industry stands fully in accord with the objectives of local, state and federal regulations protecting the consumer from false, deceptive or misleading representations as to the price, quality or conditions of sale of any product or service. Individual business firms, trade associations and industry-supported organizations have amply demonstrated respect for and responsibility to the consuming public.
The voluntary furnishing of information as to the terms and conditions of sale of any product or service is a basic element of good supplier-customer relationships. It is a function that is self-regulating in a free market and does not require government regulation for mandatory disclosure.
Before fraud in advertising or misrepresentation can be alleged, there must be a showing of reliance on the fraudulent information.
2.02. Consumer Representation in Government
Industry believes that any effort to superimpose new governmental bureaus and departments seeking to represent citizens solely as consumers is unnecessary and undesirable.
It is fundamental that, in a free economy, the interest of the consumer is best protected by the market power inherent in the exercise of free choice. Industry believes that the established departments and agencies of government are fully representative of all members of the public and are aware of their interests as consumers. The protection of the public interest is synonymous with the protection of the consumer interest.
Packaging is an integral part of the ultimate product and adds to the satisfaction of consumer wants and needs. Accordingly, the NAM supports packaging and labeling principles that are conducive to fair and equitable trade practice and contribute to the health, safety and convenience of the consumer. It endorses packaging practices that provide for information regarding contents when it will be meaningful to consumers. It opposes packaging regulation that restricts the opportunity to create and innovate. It upholds the consumer's right to be informed and to have free choice of quality and function as well as price.
The NAM opposes regulatory policies that add to the cost of packaging, thereby increasing retail prices without commensurate benefit to the consumer. The NAM believes that interstate commerce in packaged goods will be severely hampered, and costs and retail prices increased, if laws affecting packaging and labeling are not uniform nationwide.
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Product safety is of vital concern to industry not only for public-spirited reasons but also because it is essential to retention of customer confidence and long-term business success. Industry accepts its responsibility to protect the users and consumers of articles of manufacture against hazards which are incompatible with the public interest.
Industry believes that government and private programs for the reduction of product-related injuries must consider and be based upon the following factors:
• No article found in nature or manufactured is totally immune from the possibility of harmful interaction with individuals under all conceivable circumstances of human behavior.
• Product-related injuries resulting from an unreasonable safety risk because of design, material, workmanship or instructions are a small fraction of the total and are the only injuries over which the manufacturer has any form of control.
• Achieving effective safety standards without depriving consumers of useful products requires analysis and balancing of each product's usefulness, safety factors, size, design, versatility, convenience, cost and other public needs. Consumer interests are not unified and any federal standards must take due account of the interests of different consumer groups.
The NAM endorses and encourages the following particular actions by and within the industrial community:
• Continuing attention to product safety from basic design through finished product.
• Emphasis by manufacturers and their associations on all forms of information regarding the installation, safe use, maintenance and disposal of products at all marketing levels and to the consumer.
• Establishment of voluntary safety standards where there is reasonable basis to believe that they will serve the public interest.
• Industry-wide acceptance of government and public participation in a contribution to voluntary standards setting.
• Industry cooperation with the education efforts of public and private institutions, including the school system, to correct those behavioral patterns that are factors in product-related injuries.
Industry recognizes the legitimate interest of the federal government in the safety of products in national markets. In the development of national policy, the NAM believes that the following principles should apply:
• Federal safety standards are appropriate only where unreasonable safety risks are demonstrated to exist or be imminent and where voluntary standards have not been shown to be effective.
• Governmental process should act to encourage, not discourage, the vigorous voluntary mechanisms working for improved safety. Emphasis should be on voluntary action and informal procedures rather than on punitive action.
• Governmental agencies responsible for safety standards should comply with the procedural requirements of the Administrative Procedure Act and their organic statutes in promulgating standards or imposing sanctions.
• Authority of the agencies should not be extended to prescribe, monitor or to approve or disapprove the in-plant facilities, processes or procedures used by manufacturers for achieving compliance with the law.
• Safety standards should prescribe safety performance criteria as opposed to prescribing the means of achieving compliance.
• Safety standards should ordinarily apply on a product-by-product basis rather than to broad product categories.
• Criminal enforcement of product safety violations should be limited to circumstances where there is knowing and willful intent to violate the laws.
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The NAM supports the principle that balanced tort reform should be developed to address the present inequities that exist in the law. To this end, the NAM supports comprehensive and specific federal and state tort reform efforts that will provide clear standards for liability and true justice for all parties:
• A specific statute of limitations beyond which suit cannot be brought.
• A statute of repose commencing from the date on which a product enters the stream of commerce and ending on a date certain in the future that bars recovery in product liability actions.
• The safety of a manufacturer's products should be judged by the state of the art that was technically, operationally and economically feasible and readily available to the manufacturer at the time the product entered the stream of commerce.
• Evidence of post-accident modifications should be inadmissible as evidence of a defect in any product liability action.
• The manufacturer of a product should not be held liable for injuries insofar as they are caused or occasioned by unauthorized alteration made to the product by others.
• The manufacturer of a product should not be held liable for injuries insofar as they are caused or occasioned by misuse of the product.
• The manufacturer of a product should have a duty to warn of hazards associated with use of a product only when they are clearly foreseeable but not so apparent that injury could be avoided by the exercise of reasonable care without such a warning.
• Evidence of plaintiff's collateral sources of recovery should be admissible in product liability actions.
• Constitutional limits on excessive punitive damages should be enforced by effective statutory requirements and judicial review. Since punitive damages are intended to punish and deter conduct they should be imposed only where there is actual malice, intentional infliction of harm or a knowing and reckless disregard of safety, and after compensatory damages have been determined. Multiple punitive damages should be eliminated, including the prohibition of one state assessing damages for conduct that occurs solely outside the state. Punitive damages are inappropriate when a defendant utilizes good-faith product design or risk-utility analysis or conforms to reasonable government or industry standards.. Punitive damages should be proportionate to comparable state civil penalties, and should not be imposed as a substitute for legislation or regulation. Where punitive damages exist, legislative caps on punitive damages should be enacted and are constitutional. The wealth of the defendant is an inappropriate factor to consider when assessing punitive damages. All punitive damages awards should be reviewable de novo by appellate courts.
• Limits on class action and case consolidation should be enforced by effective statutory boundaries and judicial review.
• Sanctions for filing frivolous claims should be mandatory and not discretionary. Attorneys should not have the ability to knowingly file a frivolous claim and face no penalty if it is withdrawn. Defendants should be allowed to recover some of their legal costs in particularly egregious cases.
• Lawsuits should only be brought forth in jurisdictions where there is a significant nexus to the case.
• Alternative dispute resolution should be encouraged. The effectiveness of pre-dispute binding arbitration provisions in contracts should not be limited.
• Damages should be apportioned according to the actual responsibility of a defendant and not shared jointly.
• Litigation should not be the vehicle for the imposition of regulatory regimes on industries or companies. Regulation should be the result of legislative enactment or notice and comment rulemaking by an administrative agency.
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2.06. Business Size and the Public Interest
American business has grown to meet the needs and desires of the public and to reflect the growth of mass markets. Companies have grown as a result of having successfully met these needs and desires.
The public interest in fostering a free and competitive economy is best served where factors determining the logical and efficient size and rate of growth of a business unit are permitted to operate without undue and arbitrary interference.
Small businesses continue to play an extremely important role in the economy. Our dynamic, complex business structure is competitive and ever-changing in nature and small businesses enhance the competitive market system.
Industry supports reasonable laws against monopoly and restraints of trade, and their fair and effective enforcement. However, business size, whether achieved by internal growth, acquisition or merger, is not in itself a criterion of undue concentration or a lack of competition. Mergers, acquisitions and joint ventures may well perform a valuable and needed function in our growing and changing economy, and they demonstrate the dynamics of our free-enterprise system.
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Laws regulating business conduct must be clear and explicit and be administered in a fair and consistent manner. The agencies charged with their enforcement should attempt to clarify their interpretation of these laws to avoid vagueness and ambiguities in enforcement of the laws. Where appropriate, an effort should be made to obtain voluntary industry compliance with the Federal Trade Commission Act and the antitrust laws in preference to time-consuming investigation, formal changes and rulemaking. Using the antitrust laws as tools of social experimentation through novel regulatory theories is a disservice to the free enterprise system.
2.08. Administering Federal Antitrust Laws
Because effective and fair administration of the antitrust laws is important to the public and to industry, it is essential that those who administer these laws be highly qualified and experienced and exhibit fair and balanced judgment. In addition, they should work with their state and international counterparts to help ensure consistency in applicable statutes and administration.
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2.09a. Political Action Committees
The NAM strongly supports the concept and role of political action committees (PACs). The association recognizes their contribution to an open campaign system and to the promotion of greater citizen involvement in politics and the development of public policy. PACs are only one part of a broad set of citizen activities to encourage understanding and participation in the political process.
Specifically:
• People have a basic constitutional right to band together, and organizations have been held by the courts to enjoy first amendment rights in the manner accorded to individuals. PACs provide a vehicle for citizens sharing common views to join together voluntarily in support of candidates for public office.
• Citizen involvement in the political arena is essential to make our system function properly. Through PACs and other participatory actions, corporations are enhancing the democratic process. Through PACs, thousands of individual citizens have recently been brought into the political process.
• Today's PACs, with full disclosures of receipts, recipients and expenditures, are the result of far-reaching reforms in the campaign financing system.
• Adequate campaign financing is essential to an informed voter electorate. PACs help provide the campaign funds to increase the exposure of candidates to public scrutiny.
• The NAM opposes legislative or regulatory efforts that unduly or unfairly infringe on the right of individuals freely to associate within the political process. It will oppose any efforts to discourage people from contributing to a PAC or candidates from accepting PAC donations to their campaigns.
• The NAM believes enhanced political awareness and involvement through individual political contributions is in the public interest and should not be prohibited. Additionally, full public disclosure is in the public interest and should apply to all contributions, including "bundled contributions."
• The NAM does recognize the obligation of organizations that sponsor PACs to ensure that they are designed and operated in a manner consistent with the spirit as well as the letter of the law.
2.09b. Regulation of Lobbying
The NAM supports simplification and clarification of the reporting requirements that apply to individuals and organizations discussing policy issues with the legislative branch. Disclosure and financial accounting provisions should be structured to encourage rather than discourage citizens—either individually or through associations or coalitions—to discuss their views on issues of importance with elected government officials.
Moreover, constitutional protections guarantee the freedom to associate and to petition the government for redress of grievances, including the right to form coalitions and associations that hire experts to assert those rights before the government. Disclosure of constituent members of such groups seems to infringe on these rights and could compromise the ability of the groups to deliver their message, particularly where a particular point of view could subject its proponents to threats or boycotts of intimidation from opposing groups.
Grassroots lobbying and activities to inform the public about important policy issues should have maximum protection against disclosure, regulation or any efforts to suppress these basic constitutional rights to petition the government. The Supreme Court has repeatedly noted that robust public discussion was the intent and purpose of the First Amendment.
Communications with executive branch officials on policy issues should be excluded from lobbying disclosure legislation. Such communications are not "lobbying" because executive branch officials do not vote on legislative issues and congressionally mandated disclosures would interfere with the free flow of information to the executive branch.
The NAM and its members support ethical standards of conduct in their own activities and in those dealing with government. Any requirement to disclose lobbying activities should not include the preparation and distribution of materials that inform individuals or organizations about legislative or executive branch developments. Such information, even when accompanied by calls for lobbying, is not actually lobbying and only true lobbying contacts with Congress should be considered lobbying.
Laws regulating lobbying should treat enterprises that are owned in whole or in part by foreign parties, including domestic subsidiaries of foreign-owned enterprises, no less favorably than they treat domestic enterprises.
Broad definitions of lobbying must be carefully limited to registration and reporting and must not affect requirements relating to the extent of lobbying allowed by certain tax-exempt organizations.
Service as a registered lobbyist should not be a bar to government service subject to reasonable government regulation.
2.09c. Government Financing of Congressional Campaigns
The NAM strongly favors the existing system of voluntary citizen campaign financing and is completely opposed to total or partial government financing of congressional campaigns. The NAM believes that our representative form of government functions best when candidates seek voluntary contributions from citizens or citizen groups.
Government funding through tax dollars of candidates for the U.S. Senate and House of Representatives would constitute a costly and drastic change in our election process. This unwarranted federal intrusion into the election process would also reverse the present healthy trend toward the reduction of many pervasive levels of bureaucracy in the federal government.
In keeping with our representative form of government, public policy efforts should be directed toward encouraging greater citizen understanding of, and participation in, the political process.
2.09d. Competition in Campaigns
The NAM supports fair competition in campaigns for elective office. Federal reforms should be implemented to equalize, to the extent possible, the standing between incumbents and challengers.
Adopted Winter 2012 Effective until Winter 2016
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