Manufacturers In The Courts: February 2011

A Publication of the National Association of Manufacturers
February 2011

Last month, we featured a complete summary of major litigation in which the NAM has participated over the past year. Our role is to bring to the courts, both state and federal, the unique perspective of manufacturers. Often our participation reminds the courts that single cases can have far-reaching implications throughout the economy. While a substantial portion of the cases involve traditional conflicts over statutory language or the reach of state legislation, we see more cases involving activities with an international scope, such as foreign suits in U.S. courts or litigation over the Environmental Protection Agency's regulation of greenhouse gases.

Outlined below are the latest developments from January and February in cases in which we have participated that have a significant impact on U.S. manufacturers.

Decided Cases

Class Actions

Certification decisions. On Jan. 18, the Supreme Court declined to review an appeal involving a judge's decision to certify a product liability case as a class action. An NAM amicus brief had argued that it was improper to certify some but not all issues in the case for class action treatment, impairing the defendant's defenses relating to proof of reliance, causation and injury. For example, defect claims relating to windows depend in part on how they were installed, a factor often out of the control of the manufacturer. Pella Corp. v. Saltzman (S. Ct.). Certification decisions are critical, and often outcome-determinative in class action cases. The Court is currently considering another major certification case, the Wal-Mart case.

Environmental

Ninth Circuit allows manufacturers to be heard . A federal appeals court, in accordance with an NAM amicus brief, recently decided that business groups should not automatically be excluded from intervening in litigation between environmental groups and federal agencies. Before this decision, the court's "federal defendant rule" kept third parties out of such lawsuits. Now, the court allows private companies that would be adversely affected by challenges to an agency's environmental impact assessments to help defend the agencies' actions. Wilderness Society v. U.S. Forest Service (9th Cir.).

Labor Law

Supreme Court broadens retaliation suits. In January, the Supreme Court allowed a retaliation suit to proceed against a company that allegedly fired the fiancé of an employee who had complained about sex discrimination at the company. Title VII of the Civil Rights Act now allows suits by individuals that are not themselves complaining about discrimination or participating in an investigation. The NAM's brief warned that employers will have great difficulty determining risk when making decisions that affect the friends or family of other employees involved in discrimination complaints. Thompson v. North American Stainless, LP (S. Ct.).

Preemption of state wage law on donning and doffing. The Supreme Court declined to review a ruling that requires a company to pay for time that employees spend changing clothes, even though that time was specifically excluded from working time by a collective-bargaining agreement. A Wisconsin law prohibited the exclusion, and the Court found that law was not preempted. An NAM amicus brief had argued otherwise. The issue is important to industries with collective bargaining agreements and the custom of excluding clothes-changing time from working time. Kraft Foods Global, Inc. v. Spoerle (S. Ct.).

Product Liability

Civil death penalty for discovery problems. Over NAM objections, the Nevada Supreme Court allowed a trial court to eliminate all of a manufacturer's legal defenses in a lawsuit where some discovery errors, called "fairly minor" by a dissenting judge, occurred. Eliminating all defenses is a death penalty in civil litigation, and Nevada's rule promises to make it a magnet jurisdiction for product liability litigation. Bahena v. Goodyear Tire & Rubber Co. (Nev.).

Statute of limitations for out-of-state claims. A decision from the North Dakota Supreme Court agreed with NAM arguments that out-of-state plaintiffs should not be using that state's courts and liberal statute of limitations to litigate claims that arose in other states. The decision restrains opportunistic forum shopping that might have inundated the state with litigation tourists. Vicknair v. Phelps Dodge Inds. (N. Dak.).

State hiring of contingent-fee lawyers. The Supreme Court declined to review a decision from California allowing local governments to use contingency fee lawyers to bring product liability cases. Manufacturers are very concerned about the misuse of government power to prosecute lawsuits using outside lawyers with a financial interest in the outcome. Atlantic Richfield Co. v. County of Santa Clara (S. Ct.).

Fraud in asbestos mass screening cases . The Fourth Circuit reinstated a CSX lawsuit that is trying to counter fraudulent asbestos lawsuits. The company charged that a law firm and radiologist had conspired with a union organizer and ex-railroad employees to fake asbestos screenings in order to win cash settlements from the company. An NAM amicus brief provided a history of rampant, coordinated asbestos fraud, and supported the CSX suit. CSX Transportation, Inc. v. Gilkison (4th Cir.)

Preemption arguments becoming more difficult . The Supreme Court ruled February 23 that federal regulations allowing either lap-only or lap-and-shoulder seatbelt configurations in certain vehicle seats were not intended to preempt lawsuits that would hold manufacturers liable for using the lap-only option. An NAM amicus brief had urged a broad preemption analysis, but the Court ruled that state-law suits for seatbelt decisions are only preempted if a "significant objective" of the federal regulation was to promote varied seatbelt configurations. Thus, for suits to be preempted, federal regulators should specify why alternative methods of complying with regulations are important. Williamson v. Mazda Motor of America, Inc. (S. Ct.).


Pending Cases

Environmental

Challenging EPA's partial takeover of PSD permit authority in Texas. The NAM filed a brief supporting a Texas lawsuit to block EPA from taking over the state's permitting powers with respect to the construction or modification of large stationary sources that emit greenhouse gases. Texas v. EPA (D.C. Cir.).

Challenging EPA's regulation of emissions during Startups, Shutdowns and Malfunctions. The NAM moved to support a challenge to two new EPA regulations governing emissions that occur during the startup, shutdown or malfunction of process equipment or pollution control equipment at Portland cement plants. EPA plans to apply its novel interpretations to a variety of other sectors, and the case is expected to focus on EPA's requirements for installing "maximum achievable control technology" (MACT) at manufacturing facilities. Portland Cement Ass'n, Inc. v. EPA (D.C. Cir.).

NAM supports EPA's flexible ozone fees. EPA allows states to either use penalty fees or "an equivalent alternative program" to enforce compliance with ozone emissions regulations. The NAM filed a brief saying that EPA's interpretation is reasonable and consistent with congressional intent, and that companies that have already dramatically reduced ozone emissions are unable to make further reductions without a harmful drop in productivity. NRDC v. EPA (D.C. Cir.).

NAM opposes greenhouse gas nuisance cases. Oral arguments in a major greenhouse gas public nuisance case are now scheduled for April 19 in the Supreme Court. The NAM urged the Court to overturn an extreme ruling that would allow suits against companies that emit carbon dioxide and other greenhouse gases. Only the political branches of government are equipped to resolve the complex issues relating to climate change regulation. American Electric Power Co. v. Connecticut (S. Ct.).

NAM pushes back on latest EPA greenhouse gas action. The NAM and others filed petitions on Feb. 11 in two federal courts to review EPA's decision to call in 13 state Clean Air Act implementation plans (SIPs) with respect to greenhouse gas permits. Rejecting comments filed by the NAM earlier, EPA decided that these state plans were "substantially inadequate" to regulate greenhouse gases, because they do not immediately incorporate the new federal requirements. Until they do, EPA will impose its own Federal Implementation Plan (FIP). This new challenge is necessary to prevent EPA from using multiple regulatory initiatives to implement restrictions on stationary sources of greenhouse gas emissions. SIP/FIP Advocacy Group v. EPA (D.C.and 5th Cirs.).

Labor Law

Right to exclude nonemployee union handbillers from company property. The NAM and many other organizations joined in a brief at the NLRB involving access by nonemployee union members to private property for purposes of handbilling. We argue that a company may allow some handbillers, such as charitable solicitors, but may exclude those who advocate boycotts or other harmful acts. Roundy's Inc. (NLRB).

Miscellaneous

NAM opposes foreign litigation in domestic courts. On Jan. 20, the NAM filed an amicus brief urging the Ninth Circuit to reconsider a decision that gives Amazon Watch, an advocacy group, great power to bring foreign environmental suits in California courts. This suit, brought originally by 25 Peruvian plaintiffs against a company for environmental damage in Peru, should be dismissed in California because the forum is not appropriate. The evidence and witnesses are in Peru, and U.S. manufacturers suffer when foreign lawsuits take advantage of plaintiff-friendly features of U.S. courts, such as extensive discovery, jury trials and contingency fees. Carijano v. Occidental Petroleum Corp. (9th Cir.).

Product Liability

Procedural issues in asbestos litigation. The NAM supported an appeal of the first asbestos personal injury claim in Michigan to go to verdict in more than 10 years, arguing that the trial court improperly bundled together dissimilar cases, allowed unreliable screening testimony, and hastily selected one of 95 cases to proceed to trial without an opportunity for meaningful discovery. Avram v. McMaster-Carr Supply Co. (Mich. Ct. App.).

Aggressive asbestos claims are still active. The NAM filed an amicus brief urging Illinois not to impose new liabilities on manufacturers regarding possible off-site injuries from workplace dust that is not known at the time to be hazardous. The case is an attempt to create a retroactive duty to warn about the hazards of second-hand exposure to asbestos many years after the alleged exposure occurred. We continue to ask courts not to legislate new liabilities from the bench. Simpkins v. CSX Transportation, Inc. (Ill.).


Quentin Riegel
Vice President, Litigation & Deputy General Counsel
(202) 637-3058 • qriegel@nam.org

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Washington, DC 20004-1790


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