The Center News: May 2016

A Publication of the National Association of ManufacturerstheCenter for Legal Action

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

The tortured, roundabout, drawn-out process that led last fall to the final disapproval of TransCanada Corporation’s proposed Keystone XL pipeline project was equal parts astonishing and frustrating. After a seven-year process, in the wake of determinations clearly to the contrary by the State Department and in the face of unambiguous congressional support, the Obama administration concluded it was not in the national interest to approve the project. Supporters of the pipeline wondered how the executive branch could have such sweeping authority to kill a private commercial project that enjoyed strong bipartisan support and that the administration had previously supported. The decision clearly appeared to be political, but was it also one based on legitimate constitutional authority? In a brief recently filed by the Manufacturers’ Center for Legal Action in the Southern District of Texas, we join TransCanada in arguing that it was not.

In our amicus brief in TransCanada Keystone XL Pipeline, LP v. Kerry, we argue that the State Department’s prohibition of the pipeline violated the constitutional separation of powers. The Constitution explicitly grants Congress the authority to regulate foreign commerce, and a cross-border pipeline clearly falls in that domain. While the executive branch possesses the implied authority to regulate foreign affairs—and that is the authority the president has relied upon in this case—it does not have the authority to usurp the power of Congress to regulate commerce, particularly when Congress has clearly and repeatedly acted to demonstrate its support for construction of the pipeline.

While the president has noted that the pipeline crosses an international border, thereby implicating foreign affairs interests that fall within the realm of his executive power, the justification offered for regulating the pipeline has nothing to do with border crossing, relations with Canada or national security. Rather, the president encroached on congressional authority to regulate commerce to create a helpful bargaining chip in the unrelated Paris Climate Change talks. While this may be a legitimate political concern, it is not a permissible exercise of the foreign affairs power.

Stay tuned as this case progresses through the courts. Not only are the specifics of the case very important, but also in this era of heightened executive branch power, the underlying separation of powers principles are equally so.

MCLA in the Courts
Civil Procedure

High court upholds industry position on requisite harm to initiate litigation: The Supreme Court ruled in favor of the National Association of Manufacturers’ (NAM) position in a case arising from an alleged violation of the Fair Credit Reporting Act. The Supreme Court found a lower court had failed to consider whether the plaintiff had suffered a concrete and particularized harm sufficient to articulate standing and sent the case back to an appeals court to consider this issue.

More Information: Spokeo, Inc. v. Robins (U.S. Supreme Court)
Class Actions

Manufacturers defend due process: The NAM filed a brief arguing that a lower court violated a defendant’s due process rights when the court discarded the longstanding principle that preclusion is only acceptable when identical issues have been actually and necessarily decided. A federal appeals court agreed, finding that state law-based strict liability and negligence claims are preempted because, in effect, to apply strict liability and negligence doctrines would mean manufacturer liability for every product sold in the state.

More Information: Graham v. R.J. Tobacco (U.S. Court of Appeals for the 11th Circuit)

NAM begins ozone litigation: The NAM filed its opening brief in a case involving the Environmental Protection Agency (EPA)’s ozone standard. We made numerous arguments that the rule is unlawful; those arguments can be found in the link below.

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

Top Texas court strikes city air regulation: The Texas Supreme Court agreed with manufacturers that Houston may not subject companies to criminal penalties that conflict with the requirements of the Texas Clean Air Act. This significant victory will help prevent inconsistent enforcement requirements and multiple permit systems at the local level.

More Information: BCCA Appeal Group, Inc. v. City of Houston (Texas Supreme Court)

NAM objects to magistrate judge’s decision to move forward with public trust greenhouse gas case: After a federal magistrate judge recommended that the NAM’s motion to dismiss be denied, we filed an objection, arguing that the public trust doctrine does not apply to the federal government, the case raises political questions not appropriate for the courts and the plaintiffs have not alleged imminent and particularized injury.

More Information: Juliana v. United States (U.S. District Court for the District of Oregon)

NAM joins ally to fight OSHA’s silica rule: The NAM joined the American Foundry Society to challenge the Occupational Safety and Health Administration’s (OSHA) new silica rule. This regulation raises serious and significant legal questions; lacks economic and technical feasibility and justification; and will cost billions of dollars.

More Information: North America’s Bldg. Trades Unions v. OSHA (U.S. Court of Appeals for the D.C. Circuit)

NAM pushing to keep water case in Texas: A federal appeals court believes it has jurisdiction to hear arguments challenging the EPA’s and the Army Corps of Engineers' assertion of jurisdiction over large amounts of land that affect "waters of the United States." The NAM disagrees and is pushing back against the effort to dismiss the case from a federal district court in Texas.

More Information: American Farm Bureau Federation v. EPA (U.S. District Court for the Southern District of Texas)
Government Regulation

Court declines to scrutinize agency legal interpretations: The Supreme Court declined to review a case involving the validity of legal interpretations made by administrative agencies about their own regulations. The NAM supported review in an effort to rein in agencies from being both the regulators and judges of their regulations.

More Information: United Student Aid Funds, Inc. v. Bible (United States Supreme Court)
Labor Law

NAM steps in to stop “persuader rule”: The NAM continues its case against the Department of Labor’s persuader rule. In a recent reply brief, we argued that the plaintiffs are likely to succeed on the merits of their claims that the new rule is unlawful. Accordingly, the NAM supports a preliminary injunction of the rule.

More Information: Associated Builders and Contractors v. Perez (U.S. District Court for the Eastern District of Arkansas)

NAM urges court to allow flexibility in patent settlements: A federal appeals court is considering whether an interim settlement agreement in a patent dispute is anticompetitive. The NAM filed an amicus brief supporting flexible arrangements that allow early market entry of competitors and that avoid costly and complex litigation.

More Information: In re Wellbutrin XL Antitrust Litigation (U.S. Court of Appeals for the Third Circuit
Product Liability

Manufacturers challenge “any exposure” theory: The NAM filed a brief in the California Supreme Court urging that legal rules applied to asbestos and other toxic tort cases are consistent with well-established tort law, sound science and good policy. A lower court violated these principles by permitting liability based on flimsy “any exposure” causation testimony that is being rejected by an increasing number of courts.

More Information: Davis v. Honeywell Int’l, Inc. (California Supreme Court)

NAM supports medical device manufacturers in duty to warn case: In a matter before a Washington state court, plaintiffs want medical manufacturers to warn both physicians and hospitals and are seeking liability against a manufacturer when a doctor makes a mistake while using that manufacturer’s medical device. The NAM filed a brief arguing that this theory is out of line with the rest of the courts and that there are strong policy reasons to reject it.

More Information: Taylor v. Intuitive Surgical, Inc. (Washington State Supreme Court)
Questions or Comments?

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

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