Manufacturers In The Courts: February 2012

A Publication of the National Association of Manufacturers
Manufacturers In The Courts

February, 2012

Arguments by the NAM in two pending cases could result in major favorable precedents that would reduce the regulatory and litigation burden facing many manufacturers.

The first involves our challenge to EPA’s efforts to regulate greenhouse gas emissions from manufacturing facilities and power plants. This case, which is actually a set of consolidated cases involving 94 different petitions, is now under final review by three judges on the U.S. Court of Appeals for the D.C. Circuit.  Briefing was completed last year, and oral arguments were held on Feb. 28 and 29. The NAM provided the court with a solution that would avoid EPA’s convoluted process and results that even EPA calls absurd. Under a reasonable reading of the Clean Air Act, EPA would be unable to regulate most stationary sources of greenhouse gases without congressional approval. A decision is expected by this summer.

The second involves Supreme Court deliberations over the Alien Tort Statute (ATS), which allows suits by foreign nationals in U.S. federal courts against companies alleged to have assisted foreign governments in human rights violations. About 150 of such cases have been brought over the past 30 years, and the Supreme Court is expected to issue a landmark decision that could throw all existing claims against manufacturing companies out of court entirely. The NAM has been active in asking the courts to keep the ATS within very strict boundaries, and we are hopeful that the decision in the Kiobel case, expected before July, will end these claims.

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Decided Cases

Environmental Law

Environmental groups continue to pressure the EPA to lower existing ozone standards, which are already the subject of an NAM challenge, even further.  Last year, President Obama called on the agency to defer reconsideration of the existing rules, which it did.  Subsequently, various groups sued. The Ozone NAAQS Litigation Group, of which the NAM is a member, moved to intervene in this litigation to support EPA’s decision not to change the existing ozone limits at this time.  On February 17, the Court dismissed the American Lung Association’s petition for review, saying that it “lacks jurisdiction over the agency’s non-final decision to defer action on the 2008 voluntary revision of the national ambient air quality standards for ozone.” The 2008 rules are still being litigated (see below).

Environmental groups are also attempting to sue U.S. companies in U.S. courts for activities that occur completely in foreign countries.  In one case, the NAM supported Chevron in its long-running battle with Ecuadorian natives and their American lawyers and consultants over a legal claim for pollution from oil drilling operations in Ecuador many years ago. The issue in the most recent round of litigation was whether an American court may prevent alleged fraud by barring enforcement in other countries of an $18 billion judgment from an Ecuador court. The NAM filed an amicus brief last year supporting Chevron’s request to stop enforcement of the judgment, but the Second Circuit ruled on January 26 that New York law does not help. Chevron has to wait until the Ecuadorian plaintiffs try to enforce their damages award in New York.

Product Liability

Federal preemption of litigation under state law is an important protection for manufacturers in many industries. Manufacturers of equipment for railroads received a favorable ruling from the Supreme Court on February 29 when it found that asbestos claims under state law are pre-empted by the federal Locomotive Inspection Act. That Act grants the Secretary of Transportation broad authority to regulate the design, construction and material of every part of a locomotive, and various design defect and failure-to-warn claims under state law were pre-empted. The NAM had filed an amicus brief last October favoring pre-emption and warning against expanding tort litigation in the states. The NAM will continue to press for federal pre-emption where appropriate to limit often conflicting legal requirements that arise under state law or tort litigation like this.

The California Supreme Court provided additional protection for manufacturers in a recent decision . The court ruled that a manufacturer cannot be held liable for injuries caused by asbestos that was added to the product by another party.  The NAM had filed briefs opposing a lower court ruling that required manufacturers to warn about risks from products made by others. We have participated in cases raising this same issue in several states, as plaintiffs seek to find jurisdictions that are sympathetic to this aggressive theory of liability.

Court procedures can also provide an unfair advantage to plaintiffs in complex litigation. The NAM recently submitted comments on procedures of the Complex Litigation Center in Philadelphia, and on February 15 that court suspended the practice of consolidating dissimilar claims and of using “reverse bifurcation,” whereby juries determine damages before determining whether a defendant was liable for them.  These procedures prejudiced manufacturers and helped make Philadelphia a magnet jurisdiction for plaintiffs’ attorneys and the American Tort Reform Association’s #1 Judicial Hellhole for two years. The court also addressed the problem of out-of-state lawyers rushing to Philadelphia to litigate. They are now limited to appearing in no more than two trials per year. More details are here .

One of our most difficult problems is getting the U.S. Supreme Court to hear appeals of important issues affecting manufacturers.  Two cases in which we sought review were recently denied – one involving the role of judges as gatekeepers to prevent junk science in the courtroom, and the other involving pre-emption of suits against owners and lessors of aircraft

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Pending Cases

Environmental Law

In addition to the greenhouse gas cases awaiting decision, the NAM filed our main brief on February 8 challenging EPA’s decision to take over various state enforcement activities with respect to greenhouse gas regulation. The agency acted rapidly at the end of 2010 to short-circuit the normal three-year period that states have to submit State Implementation Plans. Our litigation challenges EPA’s action as ignoring Clean Air Act notice-and-comment requirements as well as its own rules. The agency sought to coerce states to consent to greenhouse gas regulation through the threat of a construction moratorium.

EPA’s 2008 ozone regulation is also still being challenged in court.  Although the litigation was on hold while the rule was under reconsideration, that process is over, and the litigation has been revived.  The court recently issued a briefing schedule that will conclude in August, and oral arguments will likely be scheduled for the fall. The NAM will be filing a brief on April 17.

We are also supporting manufacturers in their efforts to explore for oil in the Beaufort Sea in Alaska. A recent amicus brief emphasized that the Outer Continental Shelf Lands Act was designed to encourage expeditious exploration and production activities.

Government Mandated Speech

We are currently challenging two government-ordered poster requirements.  One is our suit against the National Labor Relations Board (NLRB) for its requirement that all employers post a notice of employee organizing rights in the workplace. The role of the NLRB is to resolve disputes, not to mandate information requirements without statutory authorization. Our case has been argued before a federal judge in D.C., and we are awaiting the decision, expected shortly.

The other involves a requirement by San Francisco that retailers of cell phones put up posters in their stores to advise consumers about the supposed risks and steps consumers can take to avoid them.  We filed an amicus brief in support of a suit challenging the requirement, arguing that mandated speech on controversial topics can only be justified by a compelling governmental interest and a regulation that is narrowly drawn to serve that interest. Strict scrutiny by the courts is the appropriate standard of review, and no merchants should have to convey a controversial message with which they disagree and which is not factual. The city has less restrictive alternatives to get its message out, such as putting up its own posters in public places. The NAM opposes efforts by government to restrict or mandate certain types of commercial speech.

Pending Cases

To learn more about any of the cases described above, search either for cases decided in 2012 or active cases in the NAM's Law Center Search Engine . Or, just let me know what you're interested in, and I'll direct you right to the information you need. Your comments and perspectives are encouraged.

 

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Questions or comments? Please contact Quentin Riegel at qriegel@nam.org .

           

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