The Center News: October 2016

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives

Supreme Court to Rule on Manufacturing Cases
By Quentin Riegel, Vice President and Deputy General Counsel

The Supreme Court’s current term began this month, and the docket includes 10 significant cases affecting manufacturers. Key among these are Microsoft v. Baker, which involves whether class action plaintiffs can dismiss their case and then appeal, and NLRB v. SW General, which involves the validity of thousands of charges authorized by the general counsel of the National Labor Relations Board (NLRB). The Manufacturers’ Center for Legal Action (MCLA) filed two amicus briefs in the Microsoft case—one in support of the appeal and one on the merits after the Supreme Court granted review.

The MCLA is most effective when we draw the Court’s attention to issues that have a broad impact on all kinds of manufacturers. The Court grants review to only about one percent of all petitions, making this difficult initial step critical to companies seeking help. Getting the Court to agree to hear a particular case means showing how that case could affect many other cases, as well as companies, sectors, administrative agencies, state laws or the economy at large. In the past few months, we have filed briefs supporting Supreme Court review in four other key cases:

  • NAM v. U.S. Dep’t of Defense: Dozens of cases around the country are awaiting the answer to a simple question: Which court has jurisdiction to hear a challenge to Environmental Protection Agency’s (EPA) new rule defining “waters of the United States”?
  • Gillette v. California Franchise Tax Board: The Supreme Court denied this challenge to California’s discriminatory tax system. The result will be higher taxes, less uniformity and less predictability in corporate taxation by states that follow California’s lead.
  • Deere & Co. v. New Hampshire: The New Hampshire Supreme Court upheld a state law that rewrote provisions of contracts between product manufacturers and dealers. The statute expanded motor vehicle dealer franchise law to other products solely to benefit in-state dealers. Unfortunately, this case was denied review in early October.
  • SmithKline Beecham Corp. v. King Drug Co.: This case involves patent litigation settlement agreements in the pharmaceutical industry. The MCLA opposes antitrust liability when patent owners reach reasonable agreements with competitors to settle their disputes.

The chances of success increase when organizations like the MCLA support an appeal. By presenting a broad, unified perspective and using distinguished and credible appellate counsel, we will continue to provide the Court with a respected voice for manufacturers.

MCLA in the Courts

Manufacturing innovation wins in appeals court: A federal appeals ruled that the manufacturer of Doryx, an acne drug, is not liable for anticompetitive conduct from changing the dosage and dosage form of its product. The National Association of Manufacturers (NAM) filed a brief in late 2015 cautioning against courts interfering with product innovation and patent rights, and the appeals court agreed.

More Information: Mylan Pharm. Inc. v. Warner Chilcott Pub. Ltd. Co. (United States Court of Appeals for the Third Circuit)
Class Actions

NAM supports pharmaceutical companies in packaging dispute: A class action suit was filed against a manufacturer of glaucoma medication alleging that the eye-droppers were dispensing more liquid than was required for treatment. On appeal after a lower court dismissed the case, the NAM argued that federal law prohibits changing the packaging without approval from the Food and Drug Administration, and that the company could have priced its medication based on number of doses without changing the total price to the consumer. Such speculative class actions impose substantial costs, particularly on small businesses.

More Information: Cottrell v. Alcon Laboratories, Inc. (United States Court of Appeals for the Third Circuit

Clean Power Plan litigation argued in key appeals court: The NAM and other coalition members challenging the EPA’s latest rules targeting greenhouse gas emissions by electric utilities argued their case in late September. The session lasted nearly seven hours, with most of the judges questioning both the challengers and the EPA. The principal legal issues include: (1) whether the EPA has statutory authority to assert such a broad and novel regulatory power; (2) whether the Clean Air Act allows the EPA to force owners to subsidize competitors; (3) whether the EPA has commandeered state authority; (4) whether the EPA notified the public of its plans; and (5) whether the requirements of the rule are achievable. A decision is expected in 2017, perhaps in the early spring.

More Information: West Virginia v. EPA (U.S Court of Appeals for the D.C. Circuit)

NAM supports manufacturer in overtime calculation case: The NAM filed a brief supporting Dart Container Corporation in a case concerning the proper method for calculating overtime pay when an employee receives a “flat sum” bonus. Dart Container gave employees a flat bonus then used the federal formula for calculating overtime pay due as a result of the bonus. A former employee sued, arguing that the company should have instead used the California method for computing overtime. Employers must be able to rely on fixed, published regulations for determining overtime and should not be penalized for ambiguities in state laws.

More Information: Alvarado v. Dart Container Corp. (California Supreme Court)
Punitive Damages

Statutory limits on punitive damages upheld in Tennessee: The NAM filed a brief urging the Tennessee Supreme Court to uphold a statutory limit on excessive punitive damages awards. The court opted not to decide the constitutionality of the statute and returned the case to a federal district court, which then found that the law is consistent with the Tennessee Constitution.

More Information: Lindenberg v. Jackson Nat’l Life Ins. Co. (Tennessee Supreme Court)
State Legislation

Manufacturers continue to challenge protectionist state legislation: The NAM asked the Supreme Court to hear a case concerning the expansion of protectionist state auto dealer laws to include equipment dealers. This unjustified and anticompetitive legislation upends constitutionally protected contracting rights and damages manufacturer-dealer relationships. Unfortunately, the Supreme Court declined to hear the case.

More Information: Deere & Co. v. New Hampshire (U.S. Supreme Court)
Questions or Comments?

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

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