Manufacturers In The Courts: March 2012

A Publication of the National Association of Manufacturers
Manufacturers In The Courts

March 2012

Criticism of the EPA may seem repetitious, but the Supreme Court and a federal district court this month added the strength of the judicial branch’s voice to our chorus of complaints. In the Sackett case, a unanimous Supreme Court ruled that anyone slapped with environmental compliance orders under the Clean Water Act may challenge such orders in court.  The Act was not designed “to enable the strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review.”  In the Mingo Logan case, a district court judge ruled that EPA does not have the power to “arrogate to itself” a power not in the Clean Water Act. Both cases illustrate the extent to which the EPA has been aggressively exceeding the boundaries imposed on them by law.

We await decisions on NAM challenges to other EPA regulations, such as the greenhouse gas and ozone regulations. Outlined below are the latest developments in cases in which the NAM has participated in March.

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Decided Cases

Benefits Law:

The sale of a business raises numerous issues about whether the buyer assumes obligations of the previous owner, such as union agreements or employee benefits. We won a significant victory when the Third Circuit ruled that a manufacturer did not have an obligation to provide permanent job separation benefits to employees who lost their jobs several years after their company was acquired by that company.  The NAM had filed an amicus brief urging the court to recognize that the Employee Retirement Income Security Act (ERISA) encourages plan sponsors to adopt employee benefit plans voluntarily and with flexibility, and to uphold the express terms of a plan that did not include the benefits claimed.  The court’s ruling will help restrain this kind of high-stakes litigation.

Environmental Law:

Until this month, an Environmental Protection Agency (EPA) order to a company – or in this case, a husband and wife – to remediate alleged violations of the Clean Water Act provided no right to review the order in court. One either had to comply with the order, or violate it and defend subsequent judicial proceedings. Fortunately, the Supreme Court unanimously ruled that EPA environmental compliance orders are “final agency action” that can be reviewed under the Administrative Procedure Act in court. The NAM filed an amicus brief last year urging the Court to reach this result. Manufacturers now have a new weapon in the ongoing battle to prevent the EPA from abusing its power, and the decision affects similar orders under other environmental statutes. Sackett v. EPA (S. Ct.).

On March 23, a federal judge agreed with NAM arguments and overruled an EPA attempt to modify a previously issued dredge-disposal permit under Section 404 of the Clean Water Act. The court noted that the Army Corps of Engineers issues and revokes permits, and said, “This is a stunning power for [EPA] to arrogate to itself when there is absolutely no mention of it in the statute.” Until EPA tried to step in, we had always thought that a permit was valid and could not be revoked as long as a company complied with its requirements. Our brief last year highlighted the dramatic change that the EPA’s action would have made, citing a study showing that the threat that the EPA may modify existing permits distorts the cost-benefit ratio of new investment projects, and affects bank financing and interest rates, bond ratings, rationed credit, and land prices throughout the economy. The judge cited our brief as providing further evidence that EPA’s interpretation of its power was unreasonable. Mingo Logan Coal Co. v. EPA (D.D.C).

Product Liability:

Whether a company is liable for secondhand exposure to hazardous substances like asbestos brought home from work has been a continuing issue for manufacturers in state courts over the years.Last year, we filed an amicus brief urging Illinois not to impose new liabilities on manufacturers regarding possible off-site injuries from workplace dust that was not known at the time to be hazardous. Our brief focused on the issue of secondhand exposure liability, not product liability, and argued that most states considering this issue have rejected such liability. The case was an attempt to create a retroactive duty to warn about such hazards many years after the alleged exposure occurred. This month, the Illinois Supreme Court gave plaintiffs a way to prove liability, if they can show that a manufacturer would have been able to foresee the plaintiff’s injuries if it had known of the dangers of secondhand asbestos exposure. Simpkins v. CSX Transportation, Inc. (Ill.).

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Pending Cases


An environmental group from California has been seeking to force state and federal agencies to force 6 percent across-the-board reductions in carbon dioxide emissions every year starting in 2013. Last fall, the NAM moved to intervene in this case, which has since been transferred to a federal court in the District of Columbia. We also offered compelling reasons for the court to dismiss the suit: 1) the case presents political questions that courts are not able to resolve; 2) the plaintiffs lack standing because their injuries are too speculative and not likely to be reduced by the relief sought; 3) the public trust doctrine under which the suit was brought does not exist under federal law and the claims have been displaced by federal regulation in this area; and 4) the doctrine does not apply to the atmosphere or impose a duty to regulate greenhouse gas emissions. Our motion highlights the dramatic and devastating effects that this kind of public trust litigation would have on manufacturing processes and investments, production and transportation costs, global competitiveness, domestic job creation and the U.S. economy. The judge will consider our motion to intervene and other motions shortly. Alec L. v. Jackson (D.D.C.).

NLRB's Employee Rights Posting Requirement:

The NAM’s suit challenging the National Labor Relations Board’s (NLRB) regulation requiring employers to post signs about union organizing brought partial relief on March 2, when a federal district court judge ruled that the Board did not have the authority to impose penalties for noncompliance. Such penalties would have included making failure to post the signs an unfair labor practice and suspending the statute of limitations for employees that want to file suit for unfair labor practices years after they occur. However, the court found that the NLRB has broad authority to issue rules. The notice posting provision was upheld, and the Board said that the failure to post the required notices could be an unfair labor practice, or toll the statute of limitations, in case-by-case decisions.

The court rejected the NAM's First Amendment arguments, and found that the enforcement provisions were severable from the posting requirement, thus allowing the posting requirement to continue to stand even though a portion of the regulation was found to be invalid.

We promptly filed a notice of appeal and a motion for an injunction to prevent the rule from going into effect on April 30. That motion is pending.

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To learn up-to-date information about any of the cases described above, search either for cases decided in 2012 or active cases in the NAM's Law Center Search Engine . Or, just let me know what you're interested in, and I'll direct you right to the information you need. Your comments and perspectives are encouraged.

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Questions or comments? Please contact Quentin Riegel at .

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