Manufacturers In The Courts: April 2011

A Publication of the National Association of Manufacturers
April 2011

Here is our latest summary of the NAM's efforts in court to support a manufacturing agenda that seeks to minimize burdensome regulatory and legal costs and maximize flexibility, agility and competitiveness.

At press time, we are preparing litigation challenging the Environmental Protection Agency's latest round of regulations, this time focusing on emissions from industrial boilers and solid waste incineration units. This effort is part of a coordinated effort that began on April 27 with our joint industry petition to EPA for an administrative stay of the regulations. Without relief from EPA or the courts, manufacturers will soon be forced to make major investments in compliance measures that may ultimately be misdirected or rendered unnecessary. For a copy of our recent petition, click here .

Decided Cases


International Disputes

NAM supports bilateral investment treaty arbitration . In 2003, a group of Ecuadorian nationals sued Chevron and Texaco Petroleum over environmental claims from oil drilling operations of various companies in Ecuador. In 2009, the companies began an arbitration proceeding against Ecuador under the U.S.-Ecuador Bilateral Investment Treaty (BIT). Ecuador went to U.S. court to prohibit the BIT arbitration, but the trial judge allowed it to proceed. The NAM supported this ruling on appeal, arguing that BIT arbitration ensures that U.S. manufacturers have basic legal protections in their activities abroad. The Second Circuit agreed, recently holding that any challenges Ecuador wants to make to Chevron's right to arbitrate should be made before the arbitral panel. Republic of Ecuador v. Chevron Corp. (2nd Cir.).

Pending Cases

Environmental

Ozone challenge on hold. Despite efforts by a litigation group that includes the NAM to resolve our legal challenge of EPA's 2008 ozone regulation, the U.S. Court of Appeals for the District of Columbia ruled this month that the case will continue to be held in abeyance while EPA is reconsidering the regulation. The NAM filed comments last year on the new proposal, and EPA plans to act by July 29. Expect further litigation at that point on the old limit, the new limit, or both. Mississippi v. EPA (D.C. Cir.).

Commercial Speech

NAM supports commercial speech rights. The Supreme Court will decide whether a Vermont law banning the use of prescription drug information for pharmaceutical marketing, but not for other purposes, infringes commercial speech rights of pharmaceutical companies. The NAM filed an amicus brief arguing that speech restrictions that are motivated by legislative hostility to the content of the speech should be scrutinized more carefully by the courts than content-neutral restraints. Sorrell v. IMS Health Inc. (S. Ct.).

Discovery Issues

California court raises the cost of litigation. Now on appeal is a decision by a California trial judge that requires a company to bring executives in from out-of-state -- and in this case from Japan - to answer questions relating to the case. Normally such discovery occurs where the witnesses are located, helping to restrain the disruption and costs that arise from litigation. The NAM filed an amicus brief urging the appeals court to require standard procedures and to consider the impact of an exception on costs, party leverage and international relations. Toyota Motor Corp. v. Superior Court (Cal. Ct. App.).

Government access to civil discovery documents for criminal investigation. The Ninth Circuit recently ruled that a grand jury subpoena in a criminal investigation trumps a protective order that prevents disclosure of confidential information gathered in a civil suit. The NAM filed a brief on April 20 urging the Supreme Court to review the decision. We are concerned that this ruling ignores potential international consequences, and could harm American business that may be subject to retaliation in legal proceedings abroad. White and Case, LLP v. United States (S. Ct.).

Product Liability

NAM joins in expert testimony suit. Questionable science in the courtroom makes defending product liability suits more difficult for manufacturers. A case now on appeal to the Supreme Court of Pennsylvania involves testimony claiming that any exposure to asbestos on the job, no matter how small, is a "substantial factor" in causing mesothelioma. The NAM and other groups filed an amicus brief urging the court to reject testimony based on this "any exposure" theory, which contrasts sharply with normal causation testimony. The trial court called the theory junk science, as have many other courts, but an intermediate appellate court reversed because the judge did not constrain his ruling strictly to the arguments made by the defendants. Betz v. Pneumo Abex LLC (Pa.).

Speculative damages should not support liability. New York City won a $100 million judgment by suing various companies for alleged low-level ground-water contamination from MTBE, a gasoline additive mandated by federal law and for which there was no safer, feasible alternative. On appeal, the NAM filed an amicus brief warning that finding damage when MTBE levels will never exceed safe drinking water standards could potentially transform every public drinking water supply into a ready-made multi-million dollar lawsuit. Virtually any manufacturing emissions might lead to liability. We also argued against awarding current damages based on speculative claims that the city could suffer injury in the future. ExxonMobil Corp. v. New York (2d Cir.).


For details on these and other cases, visit the Manufacturing Law Center. If you know of cases where our involvement could help manufacturers, please let us know.


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

National Association of Manufacturers
1331 Pennsylvania Avenue, NW Suite 600
Washington, DC 20004-1790


Check out the NAM's Manufacturing Law Center at www.nam.org/law

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