The Manufacturers in the Courts is a monthly publication that highlights significant cases affecting manufacturers. The NAM’s Manufacturing Law Center becomes involved in many of these cases to provide the judicial branch with an important perspective it might not otherwise hear. The NAM provides a voice for all manufacturers working to remain competitive amid the complexities of today’s legal system.
A Publication of the National Association of Manufacturers
|A major decision from the Supreme Court this month promises to eliminate much of the litigation that has proliferated for the past 20 years over claims under the Alien Tort Statute (ATS). Because U.S. courts will no longer entertain suits involving ATS claims and parties outside of this country unless plaintiffs can overcome the rule against extraterritorial application of U.S. law, many of these cases will be dismissed. This long battle affects many companies trying to sell products abroad that are manufactured here. While there will continue to be litigation around the edges, the result is a major victory in the battle to keep the U.S. legal system free of new assaults and unwarranted claims.
We have also appealed to the Supreme Court to review the EPA's greenhouse gas regulations. These and other new developments affecting NAM members are described more fully below.
Alien Tort Statute
Supreme Court squelches efforts to expand Alien Tort Statute. On April 17, the Supreme Court ruled in the long-awaiting Kiobel case that U.S. courts should not adjudicate cases brought under the Alien Tort Statute that involve conduct occurring solely outside of the United States. The majority ruled that U.S. laws are presumed not to apply to extraterritorial conduct unless the laws expressly say so. In this case, various foreign companies were sued by foreign nationals for acts occurring in Nigeria, and the Court threw it out. The NAM filed two amicus briefs last year urging this result. It is an important victory for manufacturers, and in particular for dozens of companies that have been sued over the past 20 years based on allegations arising entirely in foreign countries. The ruling properly limits the scope of the Alien Tort Statute while also promoting international harmony. Kiobel v. Royal Dutch Petroleum Co. (S. Ct.).
Court endorses EPA's permit revocation authority. In a disappointing decision from the U.S. Court of Appeals for the D.C. Circuit, the court ruled that the Environmental Protection Agency (EPA) may effectively revoke dredge-and-fill permits under the Clean Water Act at any time after they are in place and being fully complied with. The ruling injects further uncertainty into a wide range of critical activities, such as mining and quarrying operations, the construction of utility infrastructure, housing and commercial development, renewable energy projects such as wind farms or solar arrays, and transportation infrastructure projects, such as highways and rail lines. A small increase in the risk that EPA may alter or effectively revoke a validly issued permit substantially increases the potential costs of a project, discouraging investments and stifling job creation. The NAM had filed a brief opposing this result. Mingo Logan Coal Co. v. EPA (D.C. Cir.).
Predominance of common questions in product liability class certification. On April 1, the NAM filed an amicus brief encouraging the Supreme Court to review a Seventh Circuit decision improperly certifying a class action. The class members were linked only by their purchases of some 27 different models of the same brand of washing machine, which allegedly is more likely than other brands to allow mold to accumulate and emit odors, even though most members of the class may not have experienced any mold problems or any other injury. Improperly certified class actions hurt many manufacturers by unfairly and substantially raising the stakes in a lawsuit that should only be brought by a few plaintiffs. Sears, Roebuck and Co. v. Butler (S. Ct.).
NAM's challenge to conflict minerals regulation suffers a procedural setback. The D.C. Circuit canceled oral arguments scheduled in our challenge to the Securities & Exchange Commission (SEC) rule requiring an extensive inquiry and disclosure of information relating to a company's use of certain minerals mined in the Republic of the Congo and surrounding countries. In a similar case last week, this court held that it lacked jurisdiction over a petition to review an SEC rule and that the case should instead first be heard by a federal district court. In light of this development, on April 30 we moved to transfer our case to district court. Unfortunately, this will delay final resolution of the issue, as the case now has to be heard by the trial judge, and could then be appealed back to the D.C. Circuit after a decision is reached. The rule is quite burdensome to many U.S. manufacturers, many of whom are subject to its requirements this year. NAM v. SEC (D.C. Cir.).
NAM calls for strict limits on inaccurate consumer product reports. When a consumer product complaint report was filed with the Consumer Product Safety Commission (CPSC) for posting on its SaferProducts.gov website, it asked the manufacturer to respond, as provided in the statute authorizing the publication of such reports. The company objected, and a federal judge agreed, prohibiting the CPSC from publishing the erroneous report and sealing the name of the company to prevent harm to its reputation from the report. But then three consumer groups appealed, arguing that the company name should be disclosed. The NAM led a coalition of manufacturing associations in filing an amicus brief supporting the court's decision. We have long fought to prevent the CPSC from providing inaccurate information on its website, and having to disclose the name of a company falsely accused of product safety issues unfairly punishes the company and does nothing to further consumer safety. Company Doe v. Public Citizen (4th Cir.).
New York City's "Big Gulp" regulation is too much. Last year, New York City implemented a portion cap rule that bans certain sales of large sugary drinks. Several groups sued, and a trial judge ruled that the Board of Health did not have the authority to limit or ban a legal item, and that in any event the rule was arbitrary and capricious, with uneven enforcement and loopholes. The city appealed, and the NAM and other business groups filed an amicus brief calling the ban "a reckless, ill-conceived, top-down regulation that has little chance of meaningfully affecting the Board's purported health objectives." New York's rule has far-reaching implications and public policy consequences across the country, and rules like this are costly to businesses and consumers, balkanizing economies and disrupting finely tuned distribution chains. Instead, the Board should stick to fundamental principles of responsible regulation, including consideration of costs and benefits, and the city should consider a variety of alternatives, including voluntary public-private initiatives that more effectively and fairly improve national health and wellness. New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Dept. of Health and Mental Hygiene (N.Y. App. Div.).
NAM appeals greenhouse gas case to Supreme Court. This month the NAM asked the Supreme Court to hear our case challenging the EPA's greenhouse gas (GHG) permitting regulation for stationary sources. EPA's suite of rulemakings addressing GHG emissions represents the most sweeping expansion of its authority in the agency's history, extending its reach to potentially millions of industrial, commercial, and residential facilities across the country, at costs estimated to run into the tens of billions of dollars per year. The rule will require companies to endure expansion delays, install yet-to-be-determined control technologies, and add to the cloud of regulatory uncertainty engulfing U.S. manufactures. Along with those facilities that are impacted based on the rule as it is written today, we are extremely concerned that with time EPA will lower the threshold for applying the requirements, sweeping even relatively small manufacturers into this regulatory regime. American Chemistry Council v. EPA (S. Ct.).
NAM suits begin on EPA boiler and incinerator rules. A coalition of business organizations including the NAM has asked a federal appeals court to review a set of modified regulations from the EPA that regulate the fuels and operation of boilers, process heaters and incinerators under the Clean Air Act. While the rules are being challenged by environmental groups as too lenient, we continue to have concerns about some of the provisions, and have detailed them in a request for reconsideration by the agency. The original regulations in 2011 prompted other NAM court challenges, which have been on hold until now. The new rules, somewhat more achievable and workable than the original rules, still have burdensome requirements that are not authorized by EPA's statutory authority. JELD-WEN, Inc. v. EPA (D.C. Cir.); Portland Cement Ass'n v. EPA (D.C. Cir.); Louisiana Envtl. Action Network v. EPA (D.C. Cir.).
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