Manufacturers In The Courts: November 2010

A Publication of the National Association of Manufacturers
November 2010

Employment litigation and problematic state court rulings are featured prominently in this month's wrap-up of legal cases in which the NAM is involved. While we continue to await news from a federal appeals court on our motion to partially stay EPA's greenhouse gas regulations, we believe that new stricter regulations on ozone will be announced shortly. Here's a brief update on our work in the courts in support of manufacturers around the country.

Decided Cases

Product Liability

Manufacturing design defect case causes problems in Louisiana. On Nov. 3, the NAM joined with the Louisiana Association of Business and Industry in an amicus brief urging the Louisiana Supreme Court to overturn a lower court's refusal to dismiss a 15-year-old product liability lawsuit. The suit claims that the product was defectively designed, but a state tort reform statute requires that the plaintiff prove that an alternative design was available at the time of sale to prevent the alleged harm. The alternative design created by the plaintiffs' expert did not come into existence until many years after the product was sold. Our brief focused on the need to follow the legislature's guidance, read the statute in a straightforward way, and avoid absurd results. Unfortunately, the high court refused to review this appeal. See Davis v. American Home Products Corp. (La.).

Pending Cases

Alien Tort Suits

Foreign lawsuits should not be in state courts. A long-running lawsuit by Indonesian villagers against a U.S. company alleges claims under District of Columbia and Delaware law arising from alleged human rights abuses committed by Indonesian forces in the province of Aceh, Indonesia. The judge dismissed the case, based on the general rule that non-resident aliens have no standing to sue in U.S. courts. The NAM and other groups supported this result Nov. 12 in an amicus brief in the appeal. We argued that allowing this kind of litigation under a patchwork of different state laws -- for injuries perpetrated against foreign nationals by other foreign nationals in a foreign country -- causes irreparable economic harm, interferes with U.S. foreign relations, and impedes the policies designed to promote the very democratic and human-rights goals that the plaintiffs purport to advance. See Doe v. ExxonMobil Corp. (D.C. Cir.).

EPA Regulation of Ozone

Upcoming action from EPA threatens further overregulation. The last EPA regulation of ozone emissions under the Clean Air Act in 2008 resulted in lawsuits from business and environmental groups, including the NAM. The case has been held in abeyance since early in the Obama Administration, but EPA proposed revisions to the rule this year, and is expected to complete its process by the end of the year. The NAM filed comments in March, and is preparing for further litigation if needed once EPA issues its final regulation. See Mississippi v. EPA (D.C. Cir.).

Government Use of Contingent Fee Lawyers

NAM asks Supreme Court to review state litigation practice. The California Supreme Court recently ruled that local governments may use contingency fee lawyers to bring product liability cases as long as the ultimate authority for the litigation remains with those governments. This is a highly contentious issue, and manufacturers are very concerned about the misuse of government power to prosecute damaging lawsuits using outside lawyers with a financial interest in the outcome. The NAM and other groups urged the U.S. Supreme Court on Nov. 24 to review the California ruling's impact on due process rights. Government's use of contingency fee lawyers has provoked public outrage, and has so far affected many industries, including tobacco, firearms, lead paint, poultry and pharmaceuticals. See Atlantic Richfield Co. v. County of Santa Clara (S. Ct.).

Labor Law

Supreme Court considers broadening anti-retaliation remedies. The Court will hear arguments on Dec. 7 over broadening the anti-retaliation provision in Title VII of the Civil Rights Act to include "friends and family" of a worker who complains about discrimination in the workplace. On October 29, the NAM filed an amicus brief arguing that the statute is clear on its face and protects only those who personally "opposed" a discriminatory employment practice or personally "made a charge, testified, assisted, or participated" in a Title VII proceeding. A rule that permits wide-ranging third-party retaliation claims would put employers in the untenable position of having to speculate about possible relationships an employee may have that could give rise to potential liability each time they contemplate disciplinary action against that employee. See Thompson v. North American Stainless LP (S. Ct.).

NAM files amicus brief on "card check" cases at the NLRB. On November 1, the NAM filed an amicus brief on behalf of 42 manufacturing organizations with the National Labor Relations Board in response to the Board's request for advice on a pending case. The question: should employees have 45 days after their employer recognizes a union based on card-check authorizations to file a petition to decertify the union or to support an election petition from another union. Our amicus brief argues that this important 45-day window should not be eliminated. Individual free choice regarding whether to be represented at all by a third party is a necessary precondition to any collective negotiation, and card-check union certification is far inferior to a secret ballot election. See In re Rite Aid Store #6473 (NLRB).

NAM questions EEOC enforcement tactics. The NAM and other groups filed an amicus brief Nov. 10 urging the Eighth Circuit to overturn a trial court ruling that authorized the EEOC to enforce an administrative subpoena that was not based on a valid charge of discrimination, and that broadly sought information that was not relevant to the charging party's claims. A single employee's complaint about sexual harassment and retaliation does not support the EEOC's broadening of the case to a charge of class-wide discrimination, without a "clear and concise statement of the facts" constituting the alleged violation, according to our brief. Otherwise, EEOC would be able to conduct an open-ended audit of all of the company's employment practices, in violation of statutory language designed to prevent the exercise of unconstrained investigative authority. See EEOC v. Schwan's Home Service (8th Cir.).

State Taxation

NAM opposes retroactive state tax legislation. After one company successfully sued Michigan for imposing an unlawful state sales tax, the state changed the law retroactively. Another company also tried to sue, but the court rejected the claim, citing the new law. The NAM and the Council on State Taxation filed an amicus brief on Nov. 12 urging the U.S. Supreme Court to hear the appeal of this ruling, arguing that a 6- to 10-year period of a new statute's retroactivity is constitutionally excessive. We also argued that the Michigan procedure encourages races to the courthouse, fosters clogging of the court system, discourages tax compliance, and treats similar taxpayers differently See Ford Motor Credit Co. v. Michigan Dept. of Treasury (S. Ct.).

Quentin Riegel
Vice President, Litigation & Deputy General Counsel
(202) 637-3058 "¢

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