The Center News: September 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 plaintiffs’ bar is at it again, shopping lawsuits to State Attorneys General in an effort to expand theories of liability and reap a financial windfall. 

A bedrock principle of tort law in this country is that the party who causes the damage is the one who should be liable for fixing the damage.  A lawsuit recently filed in Rhode Island, led by the state’s Attorney General and staffed by hired-gun private plaintiff’s lawyers from the law firms Baron & Budd and Weitz & Luxenberg, familiar to any company targeted by asbestos litigation, seeks to break from this foundational principle.  That should be of concern to any manufacturer that could become the target of creative plaintiffs’ lawyer lawsuits—which is to say, every manufacturer.

The lawsuit involves the gasoline oxygenate MTBE, which was for a time blended with motor fuel in order to meet federal emissions standards.  The problem with MTBE is that it is highly water soluble, and if underground storage tanks containing gasoline leak, the MTBE stored in them can contaminate groundwater.  Of course, the owners of these tanks, if they can be identified, have always been, and continue to be, responsible for cleaning up such leaks. On top of that, Congress created a special trust fund to pay for cleanups when the owner or cause is unknown, or where the owner may not have the wherewithal to pay.  The fund, which has been around since the mid-1980’s, is paid for by a tax levied on the very defendants named in this case.

Unfortunately, many of the states where MTBE was most heavily used are also states that have suffered poor economic growth and have faced major budget challenges in recent years.  This has led many of these states, including Rhode Island, to raid their cleanup funds for other state budget priorities, thus creating the need to find alternative sources of funds to handle these cleanups.  Cue the trial bar, who have shopped MTBE lawsuits to several State Attorneys General and have found fertile hunting ground in the cash-strapped northeastern states.

The Rhode Island legal filing includes a smorgasbord of legal theories intended to bypass the inconvenient need to show that the defendants in the case actually caused the damage the lawsuit seeks to remedy.  The case seeks to pin liability on any company that sold reformulated fuel in the state—regardless of whose actions or whose storage tanks actually caused contamination.  It is, remarkably, a sanction based on simply doing business in the state of Rhode Island, which the state seeks to allocate according to the market share held by industry participants during the relevant time period. 

Manufacturers should watch this case closely.  If the plaintiffs bar’s business plan is successful in this case, surely they will take aim at other industries in a similar fashion.

MCLA in the Courts
Environment

NAM raises “waters of the U.S.” issue in Supreme Court: The National Association of Manufacturers (NAM) asked the U.S. Supreme Court to review a split appeals court decision that threatens to needlessly prolong resolution of our fundamental challenge to the Environmental Protection Agency’s (EPA) “waters of the United States" rule. Our appeal seeks to resolve which court—trial or appellate—is the right court to hear direct challenges to the rule. Meanwhile, a nationwide stay of the rule is still in effect, and our substantive challenge to it continues.

More Information: National Association of Manufacturers v. U.S. Dep't of Defense (U.S. Supreme Court)

NAM files reply in ozone litigation: The NAM filed its reply brief in the case reviewing the EPA’s final rule lowering the ozone standard from 75 to 70 parts per billion. We reaffirmed arguments made earlier in this case, focusing on the EPA’s failure to account for the impact of background ozone on the ability of states to meet the requirements of the standard, its failure to consider the overall impact of the standard in the context of the public’s risk tolerance, and its failure to provide adequate explanations for changing some of its conclusions regarding acceptable levels of ozone.

More Information: Murray Energy Corp. v. EPA (United States Court of Appeals for the D.C. Circuit)
Free Speech

NAM supports Microsoft’s fight against erosion of First and Fourth Amendment rights: NAM filed a brief in support of Microsoft’s lawsuit challenging the DOJ’s authority to seize customer data without allowing Microsoft to inform customers that such a search has taken place.  Our brief supported Microsoft’s argument that manufacturers have a fundamental, Fourth Amendment right to know when the government is accessing their data, and Microsoft has a First Amendment right to communicate to its customers that the government has accessed the data, absent exigent circumstances.

More Information: Microsoft v. U.S. Dep't. of Justice (U.S. District Court for the Western District of Washington)

Vermont GMO case settled: The state of Vermont, the NAM and its industry allies agreed to dismiss our long-running litigation against the state’s genetically modified organism (GMO) labeling law. This result came after passage of a federal law prohibiting states from adopting their own GMO laws.

More Information: Grocery Manufacturers Ass'n. v. Sorrell (U.S. District Court for the District of Vermont)
Labor

Challenging DOL's new overtime rule: The NAM filed a complaint on September 20, 2016 challenging the Department of Labor’s (DOL) new overtime rule. The new rule, which doubles the salary level for the current white collar overtime exemption, exceeds the authority of the DOL under the Fair Labor Standards Act. This unprecedented rule will impair employers’ rights to treat as exempt from overtime millions of formerly exempt employees. The new rule is set to go into effect on December 1, 2016, causing economic harm to both employers and many of the employees who will be subject to the new overtime requirements.

More Information: Plano Chamber of Commerce v. Perez (Eastern District of Texas)

Manufacturers challenge NLRB ruling that racist statements are not grounds for firing: The NAM filed a brief supporting Cooper Tire & Rubber Company’s appeal of a National Labor Relations Board (NLRB) decision finding that the dismissal of an employee for using racial epithets on the picket line was unlawful.

More Information: Cooper Tire & Rubber Co. v. NLRB (U.S. Court of Appeals for the 8th Circuit)
OSHA

NAM continues fight against OSHA injury and illness reporting rule: The NAM filed a reply to the government’s opposition to a preliminary injunction of the Occupational Safety and Health Administration’s (OSHA) new injury and illness rule, arguing that manufacturers and the public will be irreparably harmed by implementation of the rule, which will make workplaces less safe.

More Information: Texo ABC/AGC, Inc. v. Perez (U.S. District Court for the Northern District of Texas)
Product Liability

NAM supports preemption in drug-labeling case: The NAM filed a brief in a case involving the adequacy of warnings on the drug Clomid. The NAM argues that the Food, Drug & Cosmetic Act has strict requirements for changes to Food and Drug Administration-approved labels, and the law preempts any state-law requirement that would require a company to change a label without complying with federal law. The resolution of this case will affect all brand pharmaceutical manufacturers that are subjected to product labeling litigation.

More Information: Cerveny v. Aventis, Inc. (U.S. Court of Appeals for the 10th Circuit))
Settlement Agreements

Court rejects GM bankruptcy appeal: A federal appeals court rejected General Motors’ (GM) appeal of a bankruptcy ruling that makes it potentially responsible for liability claims arising from Old GM. The NAM filed a brief in the case in August. This decision harms innocent purchasers of a bankrupt seller’s assets by undermining the “free and clear" sale provision of bankruptcy law.

More Information: Elliott v. General Motors, LLC (U.S. Court of Appeals for the 2nd Circuit)
Questions or Comments?

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

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