The Center News: February 2016

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives
By Linda Kelly, Senior Vice President and General Counsel

Supreme Court Puts Hold on Implementation of Clean Power Plan
A highly unusual and surprising decision from the Supreme Court has vindicated the efforts of the Manufacturers’ Center for Legal Action (MCLA). On February 9, the Court granted an application filed by the MCLA, other industry groups and dozens of states to stay the Environmental Protection Agency’s (EPA) Clean Power Plan while a federal appeals court reviews multiple challenges to the regulation’s legality. The NAM and a coalition of other business groups asked the Supreme Court to place a hold on the implementation of the regulation two weeks ago, citing numerous legal problems with the plan and the substantial and immediate harm the rule would cause while its review proceeds through the courts. The EPA has claimed, and we made clear to the Court, that the required measures would lead to the complete restructuring of the energy sector.

The Supreme Court has never blocked a regulation before a lower court has reviewed it. The 5-to-4 decision signals that the challengers to the regulation have a substantial likelihood of prevailing on the merits. Moreover, the ruling indicates that the Court is becoming more skeptical of the EPA’s recent regulations, which many groups, including the National Association of Manufacturers (NAM), believe far exceed the agency’s statutory authority.

This victory saves electric utilities and the manufacturers that buy electricity from billions of dollars in unjustly incurred regulatory costs. Manufacturers will continue to lead the way in efforts to reduce greenhouse gas emissions, but the EPA’s aggressive agenda undercuts pro-growth, pro-manufacturing policies.

The MCLA was instrumental in getting this stay and will continue to fight this legally questionable regulation in the courts. The decision means the regulation will not be in effect until all court proceedings in the U.S. Court of Appeals for the D.C. Circuit or the Supreme Court conclude. The case is proceeding on an expedited basis in the D.C. Circuit, with briefing to conclude in April and oral arguments on June 2. If the Supreme Court ultimately reviews the merits of this challenge, that review would likely occur in 2017. The case is West Virginia v. EPA.

MCLA in the Courts

NAM stands up for IP rights: The NAM filed a brief in December in defense of intellectual property (IP) rights for pharmaceutical formulations, arguing that a robust IP regime is critical to creative activity. Incremental innovation is the predominant mechanism for improving products, and court interference with when and how to innovate would harm patent rights and stifle the incentive to innovate.

More Information: Mylan Pharm. Inc. v. Warner Chilcott Pub. Ltd. Co. (U.S. Court of Appeals for the Third Circuit)

NAM urges clarification of legal standards for exclusive dealing agreements: Exclusive-dealing agreements with distributors are sometimes challenged as restraints of trade under the Sherman Act. The NAM filed a brief recently asking the Supreme Court to revisit the law in this area since such arrangements are often pro-competitive. We underscored the importance of exclusive-dealing agreements and urged the Court to clarify how to weigh factors such as market power, the duration of the arrangement, pro-competitive and consumer effects and allocation of legal burdens of proof.

More Information: McWane, Inc. v. FTC (U.S. Supreme Court)

NAM challenges ozone standard: The NAM and other associations filed a petition to review the EPA’s final rule lowering the already stringent ozone National Ambient Air Quality Standard from 75 to 70 parts per billion. The rule could be one of the most expensive in history. Moreover, it is overly burdensome for manufacturers since further incremental improvements in ozone levels in many areas will be very difficult and costly to achieve.

More Information: Chamber of Commerce v. EPA (U.S. Court of Appeals for the D.C. Circuit)
False Claims Act

NAM stands strong on attempts to expand False Claims Act liability: The Supreme Court will soon decide whether government contractors can be liable for making false claims for failing to comply with every statutory, regulatory and contractual requirement. The NAM filed a brief urging the Court to reject suits under the False Claims Act for so-called “implied false certifications,” in which a contractor has no intent to defraud the government.

More Information: Universal Health Services, Inc. v. United States (United States Supreme Court)
Government Regulation

NAM seeks Court scrutiny of agency legal interpretations: For nearly 20 years, courts have deferred to administrative agencies regarding the legal interpretation of their own regulations, thus empowering agencies to be both the regulators and judges of their regulations. The NAM filed a brief urging the Supreme Court to review a case directly challenging this policy of deference.

More Information: United Student Aid Funds, Inc. v. Bible (United States Supreme Court)
Intellectual Property Rights

MCLA crosses the ocean to defend manufacturers in the European Court of Justice: On February 4, 2016, MCLA counsel appeared on behalf of U.S. manufacturers before the European Court of Justice (ECJ) to oppose the public disclosure of confidential business information. In 2015, the ECJ granted the NAM intervenor status. This is significant because intervenor status is more difficult to obtain in the European system since it grants the intervenor the ability to argue before the court and have its issues addressed on the merits. Further, by allowing our intervention, the Court recognized the interest of U.S. industry in this case. It is very unusual that U.S. trade associations appear before the EU courts, and it was far from certain that we would succeed in being admitted.

More Information: European Comm’n v. Stichting Greenpeace (European Court of Justice)
Labor Law

NAM pushes back against attempt to create “micro” bargaining unit: The United Auto Workers brought a complaint against Volkswagen for refusing to bargain with a group of maintenance workers at the automaker’s plant in Tennessee. The NAM filed a brief explaining the substantial impact this case would have on employers, particularly those in the manufacturing industry, and urging the National Labor Relations Board (NLRB) to use this case as an opportunity to re-examine the Specialty Healthcare standard, which allows employees to create a bargaining unit that is small and under inclusive.

More Information: Volkswagen Group of Am., Inc. and United Auto Workers, Local 42 (NLRB)

Manufacturers continue to fight misguided “micro-union” rule: The NAM filed a brief in case in which NLRB determined that 46 cellar employees within a completely integrated production facility constituted an appropriate bargaining unit because they were “readily identifiable as a group” that “shared a community of interest.” The NLRB rejected the employer’s argument that similarly situated production and maintenance employees who worked alongside the cellar employees shared common interests and should be included in the unit.

More Information: Constellation Brands U.S. Operations, Inc. v. NLRB (U.S. Court of Appeals for the Second Circuit)

Manufacturers seek to preserve confidentiality of investigatory interviews: The NAM submitted a brief challenging the NLRB’s decision undermining the confidentiality of investigatory interviews. We urged the court to reject the NLRB’s novel and impractical standard narrowing the business reasons for requesting confidentiality in workplace investigations.

More Information: Banner Health Sys. v. NLRB (U.S. Court of Appeals for the D.C. Circuit)

NAM looks to stop new NLRB policy on joint employers: The NLRB created new “indirect” control factors in determining whether a company will be responsible under a joint employer rationale for charges filed on behalf of employees of another separate and independent company. The NAM filed a brief arguing that the decision has in effect created a new, but unacknowledged, standard that threatens many other businesses and industries with significant burdens and uncertainties and is contrary to the intent of Congress.

More Information: NLRB v. CNN America, Inc. (U.S. Court of Appeals for the D.C. Circuit)
Product Liability

Maryland recognizes limited duty to warn about others’ products: Late last year, the highest court in Maryland ruled 7–2 that a manufacturer has a duty to warn about a product made by another manufacturer that contains hazardous material. The ruling requires a company to include warnings in its manuals about third-party products that may pose a danger to users.

More Information: May v. Air & Liquid Systems, Inc. (Maryland Court of Appeals

Forever liability for improvements to real estate: The Texas Supreme Court unanimously affirmed the arguments presented by the NAM and overturned a lower court’s ruling holding a previous property owner liable for improvements he made to the property. Our brief argued that the lower court’s decision breaks from clearly established Texas law and sets a dangerous precedent that weakens Texas’s robust manufacturing economy. Manufacturers across Texas were facing unforeseeable and expensive liability if the lower court decision stood.

More Information: Occidental Chemical Corporation v. Jenkins (Texas Supreme Court)
Get Involved

Product Liability

A reminder that, if you are an in-house counsel at an NAM member company, please consider joining one of our six Legal Issue Advisory Groups.  The groups meet quarterly by teleconference.  These discussions help the MCLA identify and vet opportunities for court engagements, while also providing legal and regulatory updates and allowing member in-house counsel to network and identify best practices with your peers.

However, for those who wish to see what the groups are about, we are opening up participation in the calls to in-house counsel from NAM member companies who would like to give them a try.  Here is the schedule for the Q1 calls.  All times listed are Eastern Standard Time. Please click below to email and let us know if you would like to receive invitations to join any or all of them:

MCLA LinkedIn Group

We have launched a new closed LinkedIn group to facilitate discussion among members on legal issue affecting manufacturers.  If you would like to receive an invitation to join the MCLA LinkedIn group, please click here.

Questions or Comments?

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

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