The Center News: October 2017

NAM Impact
Legal Perspectives
By Linda Kelly, SVP, General Counsel and Corporate Secretary

Last week, the National Association of Manufacturers (NAM) found itself at the U.S. Supreme Court in the case National Association of Manufacturers v. Department of Defense. Though it is always thrilling to climb the marble steps to the highest court in the land, the issue put before the justices on Wednesday, October 11, is a murky, procedural matter that only a lawyer could love—whether, as the NAM argues, the challenge to the Obama-era Waters of the U.S." (WOTUS) regulation is rightly heard first at the federal district court level or at the federal court of appeals level. But wait—isnt the WOTUS rule, like so many others, headed for the dustbin of history, thanks to the Trump administration's deregulatory efforts? Why on earth did the court take the time to hear our case when the administration has announced its intention to withdraw the rule?

The simple answer lies in the procedural requirements set out in the Administrative Procedure Act, which governs the process for rulemaking by administrative agencies. With WOTUS and the many other regulations that the Trump administration is seeking to reverse, the administration cannot simply wave a magic wand—or a magic pen—and undo a regulation. The agency must engage in a new rulemaking, setting forth a well-supported rationale for changing course. This includes publishing a notice of proposed rulemaking and seeking and considering public comments before issuing a final, revised rule. This process makes the new rulemaking subject to legal challenge from environmental nongovernmental organizations and others who object to the rollback of the rule. Thus, just as the NAM and other industry groups challenged the original WOTUS rule, the new rule will almost certainly be challenged. For this reason, the question of which court is the right one to hear a challenge to the rule will remain a relevant issue. And it is important to understand that each rule the administration seeks to alter—other than those rescinded by Congress under the Congressional Review Act—will be vulnerable to legal attack. To learn more about the WOTUS Supreme Court case, visit the SCOTUSblog here and see the NAM’s press release.

MCLA in the Courts
Civil Procedures

NAM Supports Appeal of Asbestos Case Management Order in New York City: In 2017, an administrative judge in a trial court in New York City issued a case management order (CMO) governing certain procedures for handling complex asbestos litigation there. Several companies that are defendants in asbestos cases filed appeals relating to this order, and the NAM joined with other associations on October 10 in an amicus brief supporting the appeals. We argued that the CMO should be rejected, or at a minimum modified, to continue the longstanding practice of deferring punitive damage claims. The court should also modify the CMO to require plaintiffs to file all eligible asbestos trust claims early in the discovery process and specify that trust claims materials are admissible in asbestos cases. This would help prevent manipulation and abuse of the trust claim and litigation process.

More Information: In re New York City Asbestos Litigation (New York Supreme Court)
Class Actions

Court Declines Class-Action Appeal: On October 10, the Supreme Court declined to hear the ConAgra case involving whether to certify a class action when it is extremely difficult to identify who should be in the class. The NAM filed an amicus brief earlier this year supporting ConAgra, arguing that certification—the most critical question in such lawsuits—should not turn on where the case is litigated. Because the courts are split on this issue, we expect additional cases to be appealed in the future to resolve it.

More Information: ConAgra Brands, Inc. v. Briseño (U.S. Supreme Court)

TSCA Inventory Reset Intervention Lawsuit: The NAM and a group of other associations filed a motion to intervene in the Toxic Substances Control Act (TSCA) lawsuit filed by the Environmental Defense Fund. The inventory reset rule at issue here sorts the master list of chemicals, called the TSCA Chemical Substances Inventory, based on whether the chemicals are active or inactive in commerce. If a chemical is not identified as active, it will be listed as inactive. After the reset, it will be illegal to manufacture, import or process chemicals designated on the inventory as inactive. An adverse decision in this litigation would adversely impact companies that manufacture or use chemicals that will be classified, prioritized and evaluated under the TSCA.

More Information: Environmental Defense Fund v. EPA (D.C. Circuit)

NAM Argues Waters Case: The Supreme Court heard arguments October 11 in our case seeking to determine which court is the proper forum for challenges to the WOTUS rule. We argued that the Clean Water Act requires challenges to regulations in the courts of appeals in limited circumstances, and our challenge to the WOTUS rule is not one of them. This is the first time the NAM has been the named petitioner in a Supreme Court case.

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

Court Keeps Dakota Access Pipeline Open: The NAM and other industry associations filed a brief in the D.C. District Court arguing that vacating the U.S. Army Corps of Engineers’ approvals for the Dakota Access Pipeline (DAPL) and ordering DAPL to cease operations would be incredibly harmful and would not lead additional benefits in safety. Stopping DAPL operations would seriously harm businesses in the energy industry, states benefiting from DAPL operations and individuals employed through DAPL. The court agreed and, on October 11, chose to allow the pipeline to continue to operate while the Corps completes the additional environmental review. This is only a partial victory, and the court is scheduling an additional briefing.

More Information: Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers (D.D.C.)
False Claims Act

Trinity Industries Wins False Claims Act Appeal: The 5th Circuit threw out a False Claims Act suit against Trinity Industries on September 27, finding that continued government use and installation of the guardrails at issue in the case meant that any design changes or certification issues were not material to the performance of the government contract. The NAM and other groups filed an amicus brief supporting this result, and the court overturned a trial court decision imposing $663 million in liability against a company that was in full compliance with government technical requirements. We are pleased that this private “relator” suit was overturned, since the government had already decided that it was not defrauded by the company. This is an important decision that will help restrain further False Claims Act litigation over paperwork issues or immaterial product changes.

More Information: United States ex rel. Harman v. Trinity Industries, Inc. (5th Circuit)

D.C. Circuit Invalidates NLRB Joint-Employer Ruling: In August, the U.S. Court of Appeals for the D.C. Circuit ordered the National Labor Relations Board (NLRB) to explain why it found that CNN was a “joint employer.” The NLRB did not explain adequately why it departed from normal precedent. The NAM had filed an amicus brief last year urging this result. This is an important decision that could help prevent extensive liability for companies charged with labor violations for workers who are not their employees.

More Information: NLRB v. CNN America, Inc. (D.C. Circuit)

NAM Weighs in on Key NLRB Decision: On October 10, the NAM joined in an amicus brief in Communication Workers v. NLRB (9th Circuit) involving company email systems. The case arises from a 2014 NLRB decision that if a company allows employees to use their email system, the employees have a statutory right to use the system on nonworking time for a wide range of messages. That decision, known as the Purple Communications case, has spawned additional litigation against other companies. The NAM joined with the HR Policy Association, National Federation of Independent Business and the Coalition for a Democratic Workplace in an amicus brief arguing that the ruling creates legal and practical problems for employers of all sizes, is unnecessary in today’s world of social media and free email accounts and infringes First Amendment speech and Fifth Amendment property rights.

More Information: Communication Workers v. NLRB (9th Circuit)

California Court Accepts NAM Interpretation of Workweek Law: The NAM recently learned that the California Supreme Court ruled in May that a state law requiring one day off every seven days should be interpreted to allow using the employer’s seven-day work block rather than any seven-day period. The ruling also allows employees’ voluntary decisions to work more than six days in a week. The NAM had filed an amicus brief to support flexible work schedules.

More Information: Mendoza v. Nordstrom, Inc. (California Supreme Court)

Second Brief Filed in Cooper Tire Case: In September 2016, the NAM filed a brief in support of Cooper Tire & Rubber Company in its employment termination appeal before the U.S. Court of Appeals for the 8th Circuit. In August, the court upheld an NLRB decision reinstating a Cooper employee who used racial epithets toward replacement workers on the picket line. The dissenting judge cited our amicus brief, finding that the right to picket, even in a rough and tumble manner, does not permit outright racial insults and bigotry. The court then decided to rehear the case before all of the judges, and we filed an additional brief in support of Cooper Tire on September 29.

More Information: Cooper Tire & Rubber Co. v. NLRB (8th Circuit)
Product Litigation

Nevada Supreme Court Rejects Risk-Utility Test: The Nevada Supreme Court rejected arguments from Ford Motor Co., supported by an NAM brief, that would have allowed consideration of whether alternative designs were available to prevent or reduce injuries in a product liability case. The court stuck with the older consumer-expectations test that has been used in Nevada for years and refused to adopt the more recent view in the Third Restatement of Torts. This outcome makes it easier for consumers to sue manufacturers, particularly those that create complex products with many safety factors to consider when making design and manufacturing decisions.

More Information: Ford Motor Co. v. Trejo (Nevada Supreme Court)
RICO Litigation

Court Nixes RICO Suit for Off-Label Marketing: On October 12, the 7th Circuit threw out a Racketeer Influenced and Corrupt Organizations (RICO) suit against Abbott Laboratories, ruling that any connection between misrepresentations to doctors and claims for damages by third-party payors is too remote to prove causation—an essential element in a RICO case. Too many other factors may have affected the ultimate decision to use a particular drug as well as purported damages attributable to the cost of the drug or alternatives that a patient might have used. The NAM filed an amicus brief supporting this result in June.

More Information: Sidney Hillman Health Ctr. v. Abbott Labs., Inc. (7th Circuit)
Questions or Comments?

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