The Center News: June 2015

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives

By Linda Kelly, Senior Vice President and General Counsel

Restore our Courts: Bringing Fairness and Balance Back to the American Tort System
The U.S. legal system is widely acknowledged as the most costly in the world—more than twice as expensive as the legal systems of our major competitors, such as Japan, France, Canada and the United Kingdom. Tort claims and related litigation cost more than $250 billion per year, draining untold resources from the productive economy and resulting in lost jobs and growth opportunities for manufacturers.

Critics of the American tort system often point to particular state courts that attract lawsuits because of their seemingly plaintiff-friendly nature. Sometimes called “magnet jurisdictions,” these state and local courts are seen as so unfavorable to out-of-state manufacturers that plaintiffs’ lawyers go to great lengths to bring their cases in those jurisdictions. For example, approximately one-third of all asbestos injury suits in the United States are brought in a single rural county in Illinois. Potential remedies to this trend of “litigation tourism” have largely focused on state-by-state initiatives to reform tort laws in the most problematic jurisdictions, but these hard-fought efforts have been frequently overturned by state supreme courts.

The Founding Fathers anticipated the potential for bias against out-of-state defendants in state courts and provided for a simple and fair remedy: access to federal courts for cases involving plaintiffs and defendants from different states—known as diversity jurisdiction. Manufacturers support a legal system that encourages a fair, consistent and commonsense approach. That’s why this week the Manufacturers’ Center for Legal Action is announcing the launch of the Restore our Courts initiative, which advocates a return to the Founding Fathers’ original intent by restoring the standard of minimal diversity. This simple process reform would go a long way toward enhancing fairness in our civil justice system by discouraging speculative litigation and removing the black eye on our tort system. For more information on this issue, join us for a lunch on June 19th where we will release a new study examining the impact of this reform.

MCLA in the Courts
Alien Tort Statute

Federal Appeals Court Declines to Revisit Harmful Decision: A federal appeals court declined to rehear an adverse decision involving aiding-and-abetting liability for corporations under the Alien Tort Statute. The National Association of Manufacturers (NAM) filed a brief last fall urging the court to review its decision that creates a loose standard for liability and opens U.S. courts to lawsuits for activities occurring entirely abroad.

More Information: Doe v. Nestle USA, Inc. (U.S. Court of Appeals for the 9th Circuit
Civil Procedure

Business and Industry Oppose Attempt to Extend Jurisdiction: The NAM filed brief with the California Supreme Court in a case involving the extension of California courts’ jurisdiction to a non-resident corporate defendant and a non-resident class of plaintiffs. The NAM and its allies believe that a lower court used an unreasonable standard in finding that jurisdiction did exist and that this case will greatly increase businesses’ exposure to liability in California.

More Information: Bristol-Myers Squibb v. Superior Court for the County of San Francisco (California Supreme Court)
Class Actions

Supreme Court to Hear Class Action Case: The Supreme Court has agreed to review a case that opens the door to misguided wage and hour class action suits. The NAM had filed a brief urging review of efforts by plaintiffs’ attorneys to circumvent key requirements needed to establish standing and certify a class.

More Information: Tyson Foods, Inc. v. Bouaphakeo (U.S. Supreme Court)

Business Allies Seek to Safeguard Arbitration Agreements: The NAM joined other business associations to weigh in with the California Supreme Court on a case involving arbitration agreements. A lower court issued a ruling that discriminates against arbitration agreements and violates the rule of deciding ambiguities in arbitration provisions in favor of arbitration.

More Information: DIRECTV, Inc. v. Imburgia (California Supreme Court

Appeals Court Rejects NAM Challenge to EPA Rule: The D.C. Circuit dismissed challenges by business and environmental groups to the Environmental Protection Agency’s (EPA) changes to rules regarding non-hazardous secondary materials. The rules make it harder to use certain solid wastes as fuels and could lead to an increase in landfill disposals.

More Information: Solvay USA v. EPA (U.S Court of Appeals for D.C. Circuit)

Appeals Court Rejects as Premature Challenge to Upcoming GHG Rule: The D.C. Circuit dismissed challenges by the private sector and various states to the EPA’s upcoming rule governing greenhouse gas emissions (GHG) from electric utilities. The court dismissed the matter because the EPA has not taken final agency action that would allow judicial review—even though some companies may currently be incurring costs in anticipation of the final rule. There will be a future opportunity to challenge the regulation.

More Information: Murray Energy v. EPA (U.S. Court of Appeals for the D.C. Circuit)

NAM Looks to Rein in Judicial Overreach: The NAM filed a brief supporting BP’s challenge to a district court’s improper findings regarding punitive damages arising from the Deepwater Horizon accident. The brief argues that the trial judge wrongly opined on the availability of punitive damages in other circuits and must focus only on the law of the circuit in which the judge sits.

More Information: In re Deepwater Horizon (U.S. Court of Appeals for the 5th Circuit)
Labor Law

California Prosecutor Piles Penalties on Manufacturer: The NAM filed a brief in a case involving a California district attorney’s attempt to use the state’s Unfair Competition Law to increase penalties relating to workplace safety. Our brief argues that federal law subjects employers and employees to one set of workplace safety regulations, and the district attorney’s actions are inconsistent with California’s federally approved regulatory regime for workplace safety.

More Information: American Cyanamid Co. v. Gibson (U.S. Supreme Court)
Product Liability

Overly Broad Liability Standard Remains in Place: The Supreme Court declined to review an appeal of a lower court’s ruling that adopted a standard that holds a manufacturer liable for injuries if it “may have provided the product which caused the injury” and therefore “contributed to the risk of injury.” The NAM filed a brief in February urging the Supreme Court to review this decision, which sets a dangerous precedent for manufacturers.

More Information: In re Deepwater Horizon (Texas Supreme Court)

Manufacturers Continue Campaign Against “Any Exposure” Theory: The NAM weighed in on a Georgia asbestos case and urged judges to exclude expert testimony that any exposure to a hazardous substance is a substantial contributing factor in the development of a disease.

More Information: Scapa Dryer Fabrics, Inc. v. Knight (Georgia Supreme Court)

NAM Pushes for Reasonable “Duty to Warn” Standard: The NAM joined its business community allies on a brief urging Maryland’s highest court to adopt the rule that manufacturers are not liable for failing to warn about products made by other manufacturers that might be used in conjunction with their own products.

More Information: May v. Air & Liquid Systems, Inc. (Maryland Court of Appeals)
Questions or Comments?

Contact Senior Vice President & General Counsel Linda Kelly at lkelly@nam.

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