The Center News: May 2015

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives

By Quentin Riegel, Vice President and Deputy General Counsel

Government Mandated Speech Increasingly Hits Manufacturers
It’s reasonable to expect government regulators like the Federal Trade Commission or the Food and Drug Administration to require reasonable warnings about product hazards while also prohibiting false and deceptive advertising. Consumers need product information to make informed decisions about what they’re buying, and fraudulent statements have no place in the marketplace. The same goes for financial information about companies that are publicly traded.

But lately, federal, state and local governments are demanding that companies say much more than what is in their products. They are doing so in order to achieve social goals that go beyond the information needed to understand the products, services or stocks being bought and sold. The Manufacturers’ Center for Legal Action (MCLA) is pushing back on this disturbing trend of government-mandated speech on controversial subjects.

Several such cases are worth noting, including:

  • a Securities and Exchange Commission rule that requires manufacturers to report whether trace amounts of certain elements derived from parts of central Africa are in their products,
  • a new Vermont law that requires labeling of foods containing genetically engineered ingredients,
  • a Department of Agriculture rule requiring labels showing the countries where meat products are grown, raised or processed,
  • a U.S. Department of Labor rule requiring that federal contractors post labor rights on their bulletin boards, and
  • a new Berkeley ordinance requiring retailers to warn customers about potential health risks from cell phones.

This month a federal judge declined to overturn the posting requirement for federal contractors. According to this egregious ruling, mandates are acceptable because it’s “clear” that the poster is from the government and because employers can post notices stating their own views about worker rights. Employers, however, have fared better when their ability to respond in kind to a government mandate is more limited.

Drawing the line between legitimate requirements and those that violate the First Amendment’s prohibition against government-mandated speech will be up to the courts. The MCLA argues that the courts should follow a guiding principle: The government has greater leeway when the mandated speech relates to factual and noncontroversial information. The MCLA is involved in all the issues above, and we will continue to urge the courts to restrain controversial compelled speech and to hold the line on unnecessary and expensive compliance programs.

MCLA in the Courts
Ambush Elections

Employers Harmed by “Ambush Elections” Rule: The NAM and coalition associations filed an amicus brief supporting three construction employees from Baker LLC, which joined a federal lawsuit challenging the National Labor Relations Board’s (NLRB) ”ambush elections” rule. Baker requested a temporary restraining order against implementation of the rule due to suffering irreparable harm on a variety of grounds, including a strong objection to the rule’s requirement that employers turn over employees’ personal information to organizing officials. However, the court found no showing of irreparable harm. The Baker case has been consolidated with NAM’s challenge to the rule in U.S. District Court for the District of Columbia. That hearing occurred May 15.

More Information: Baker DC, LLC v. NLRB (U.S. District Court for the District of Columbia)

NAM Supports Antitrust Appeal: On April 16, The NAM filed an amicus brief supporting a Motorola Mobility appeal of an adverse Seventh Circuit decision that prevents it from suing foreign manufacturers for fixing the price of LCD screens on cell phones. The lower court found that because the company used a wholly-owned subsidiary abroad to do the actual manufacturing of the phones, there was an insufficient effect on U.S. commerce to satisfy the requirements of the Foreign Trade Antitrust Improvement Act. The courts of appeals are split on the extent to which U.S. antitrust law applies to this foreign activity, and we asked the U.S. Supreme Court to clarify the law.

More Information: Motorola Mobility v. AU Optronics Corp. (U.S. Supreme Court)
Class Actions

Eighth Circuit Allows Uninsured Members to Join Class: On April 20, the NAM and coalition partners filed an amicus brief in support of the petition for cert. with the U.S. Supreme Court. The brief informed the Court that in this matter, the Eighth Circuit—and in other matters, other federal circuits—continue to accept creative theories for both liability and damages in contradiction to previous Supreme Court opinions. Courts could use guidance on how to approach the novel modeling theories put forth in the case at bar. There may be legitimate uses for statistical models in litigation—but not as a substitute for having to satisfy the plaintiffs’ key substantive and procedural elements of a class action. If the Court denies the petition, businesses will undoubtedly face an increasing number of highly speculative, creative class actions.

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

Colorado Court Rejects "Lone Pine" Orders: Despite an NAM amicus last year, the Colorado Supreme Court has decided that trial judges may not expedite cases by allowing discovery only on a clearly dispositive issue early in the case. Rather, the court decided that the Colorado rules of procedure require allowing plaintiffs to conduct full and wide-ranging discovery on all the issues in the case. This will prolong litigation and make it more expensive, putting greater pressure on defendants to settle.

More Information: Antero Resources Corp. v. Strudley (Colorado Supreme Court)

Challenging Department of Energy Efficiency Standards for Walk-In Coolers and Freezers: The Fifth Circuit granted the NAM and the U.S. Chamber of Commerce an opportunity to file an amicus brief in this case, which challenges new energy-efficiency standards from the Department of Energy for walk-in coolers and freezers. We filed a brief focusing on the department's use of a calculation of the "social cost of carbon" when aggregating purported benefits of the rules.

More Information: Lennox Int’l, Inc. v. Department of Energy (Fifth Circuit)

Clean Water Act Civil Penalties: Our April 23 amicus brief supports Anadarko's and BP's appeals of adverse decisions involving the civil penalty provisions of the Clean Water Act. These adverse decisions stemmed from the Deepwater Horizon accident. The appeals court decision was confusing, overly broad and inconsistent, and the penalty provision involving the definition of a "discharge" should have been construed more leniently.

More Information: Anadarko and BP v. United States (U.S. Supreme Court)

Greenhouse Gas Case Argued: The D.C. Circuit heard arguments on April 16 in this challenge to the Environmental Protection Agency’s (EPA) proposed rule on existing utilities' greenhouse gas emissions. We filed an amicus brief supporting the challenge in December. There is a serious question of whether the court will reach the merits of the challenge because the suit was filed prior to the finalization of the rule.

More Information: Murray Energy Corp. v. EPA (D.C. Circuit)

Definition of Solid Waste Litigation: On May 11, we moved to intervene in a challenge brought by various environmental groups to the new EPA regulation of recycling hazardous materials. Our own litigation against the EPA is pending while we discuss our concerns with the agency.

More Information: NAM v. EPA (D.C. Circuit)

Time Limit on Suit against ERISA Fiduciary Investment Decisions: The NAM, along with other business organizations, filed an amicus brief in a case focusing on whether retirement plan participants can challenge investment decisions by plan fiduciaries made more than six years before the suit was filed—if the decisions could have been reconsidered during the six-year window. On May 18, the Court vacated the judgment of the Ninth Circuit and remanded the case for further proceedings on the question of whether respondents had violated their fiduciary duty to monitor plan investments within the six-year time limitation set by ERISA § 1113.

More Information: Tibble v. Edison International (U.S. Supreme Court)
Insurance Coverage

Texas Court Should Rehear Insurance Case: On April 22, the NAM filed an amicus brief in the Texas Supreme Court. We asked the court to rehear a BP appeal  of an insurance coverage dispute relating to the Deepwater Horizon accident. The brief argues that the court’s earlier decision in the case was a departure from well-established principles governing the interpretation of insurance policies and will introduce uncertainty into the law.

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

Court limits on NLRB’s Subpoena Authority: On April 14, the NAM filed an amicus brief with the Third Circuit Court of Appeals in UPMC Presbyterian Shadyside v. NLRB. The case concerns a court’s ability to limit the NLRB’s subpoena authority. The NAM brief argues that the NLRB lacks the authority to compel an employer to produce information, such as documents demanded by an administrative subpoena. Instead, that authority, which necessarily requires impartial evaluation of an employer’s objections to the subpoena, is vested exclusively in Article III courts. This structural limitation on the NLRB’s authority, emanating from the Constitution’s separation of powers and due process requirements, protects against abuse of subpoena power.

More Information: UPMC Presbyterian Shadyside v. NLRB (Third Circuit)

Fifth Circuit case to reverse micro-unit determination: The NAM and coalition associations joined together April 27 to file an amicus brief with the Fifth Circuit in Macy’s Incorporated v. NLRB. The brief argues that the NLRB’s decision in Specialty Healthcare is erroneous. As applied by a majority of the NLRB in Macy’s, the new standard provides that where the employees in the petitioned-for unit are a readily identifiable group who share a community of interest, they constitute a statutorily appropriate unit. The standard applies unless it can be demonstrated that other excluded employees share an “overwhelming community of interest” with the petitioned-for group. The decision in Macy’s further encourages unions to engage in incremental organizing in the smallest units possible. The NLRB’s new standards mean that unions will organize in units as small as possible. It will be virtually impossible for an employer to oppose the organizing effect either by campaign persuasion or through NLRB litigation. Because of these reasons, the NAM brief asks the Court to grant the petition for review and deny enforcement of the Board’s Order in Macy’s.

More Information: Macy’s Inc. v. NLRB (5th Circuit)
Labeling Law

Vermont Labeling Law for Genetically Engineered Products: The NAM and other plaintiffs filed an appeal in the Second Circuit of various parts of the trial judge's ruling, which dismissed some of our claims and failed to find that the law causes irreparable injury to food manufacturers. We are seeking prompt review of the judge’s denial of our request for a preliminary injunction.

More Information: Grocery Manufacturers Ass’n v. Sorrell (D. Vt.)
Product Liability

Considerations of Wealth of Defendant When Assessing Punitive Damages: The NAM filed an amicus brief April 17 in the Tenth Circuit arguing that --

  • courts should not use evidence of wealth to increase the constitutional limit of a jury's punitive damages award,
  • evidence of wealth does not provide a consistent or meaningful measure for evaluating the constitutionality of a punitive damages award, and
  • if wealth is relevant, it is a mitigating factor or limited to cases where the defendant's wealth stems from the conduct that harmed the plaintiff.
More Information: Lompe v. Sunridge Partners, LLC (Tenth Circuit)
Questions or Comments?

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

Related Tags: