The Center Legal - July 23, 2014

The Center News is a monthly publication that highlights significant cases affecting manufacturers. The NAM's Manufacturers' Center for Legal Action 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
theCenter for Legal Action  
July 23, 2014
  Center Perspectives
By Linda Kelly, Senior Vice President and General Counsel  

I am pleased to provide this update on the progress of building the Manufacturers' Center for Legal Action (MCLA) . As part of the National Association of Manufacturers' (NAM) expanded organizational focus on legal engagement, the MCLA began the rollout of six Legal Issue Advisory Groups this spring. With oversight from our General Counsel Steering Committee, the Legal Issue Advisory Groups will increasingly set the MCLA's agenda by identifying priorities, vetting cases and sharing intelligence on litigation trends and challenges manufacturers face. These groups are structured around the six focus areas for the MCLA and are intended to help guide our work in these priority areas:

  • Energy and environment
  • Labor and employment
  • Products liability and civil justice
  • International trade
  • Intellectual property
  • Corporate governance and shareholder activism

The enhanced engagement of manufacturing in-house counsel in the MCLA's work will strengthen the effectiveness of our legal engagements, improve our understanding of the legal challenges and trends facing the manufacturing industry and provide a valuable networking and informational platform for our members.

The work of the Legal Issue Advisory Groups has already begun, with the energy and environment, labor, products liability, and corporate governance groups all having met thus far. The international trade group will hold its first conference call later this month with the intellectual property group soon to follow. We are also forming partnerships with leading law firms with expertise in these areas to help keep us apprised of key cases and developments. In addition, we are excited to announce that we will soon launch an online meeting space exclusively for advisory group members.

Participation in these groups is open to in-house counsel of member companies. A contribution to support the MCLA's work is required. If you are interested in participating or for more information on the work of the Legal Issue Advisory Groups, please contact me at .

  MCLA in the Courts

Attorney-Client Privilege  

Appeals Court Saves Important Attorney-Client Privilege Protection: The D.C. Circuit found that communications made to in-house lawyers or their agents during the course of an internal investigation are protected by the attorney - client privilege from disclosure to the government.

More Information:
In re Kellogg Brown & Root, Inc.
(U.S. Court of Appeals for the D.C. Circuit)

Civil Procedure  

Manufacturers Push for Streamlined Discovery:  The NAM and our association allies filed a brief urging the Colorado Supreme Court to allow trial judges to short-circuit long and expensive discovery processes by issuing "Lone Pine" orders, which allow discovery on issues critical to a case early in the process. Manufacturers defending lawsuits in Colorado will benefit from such orders.

More Information:
Antero Resources Corp. v. Strudley
(Colorado Supreme Court)

Class Actions  

Stockholder Suits Continue after High Court Decision: While the Supreme Court recently decided to maintain the presumption of reliance under the "fraud on the market" theory, it has allowed companies to present evidence during the initial stage of shareholder class-action litigation that shows that alleged misrepresentations did not actually affect the stock price. The NAM filed a brief in the case, and the outcome is a partial win for manufacturers.

More Information:
Halliburton Co. v. Erica P. John Fund, Inc.
(U.S. Supreme Court)

Corporate Governance  

NAM Resists DOJ Overreach: The NAM filed a brief in a case in which the Department of Justice (DOJ) is seeking to expand the scope of activities that would fall under the definition of "criminal destruction of records" in the Sarbanes-Oxley law. A DOJ victory could potentially sweep a variety of innocent inventory management practices into the definition of criminal destruction of records.  

More Information:
Yates v. United States
(U.S. Supreme Court)


High Court Strikes Down Key Provision of Emissions Rule: A June Supreme Court decision allowed the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions from stationary sources while limiting the breadth of the regulation and striking down the agency's "tailoring rule," which would have eventually allowed the EPA to capture many manufacturers in its regulatory scheme. The NAM led a coalition of manufacturing associations challenging these rules in court for four years.

More Information:
Utility Air Regulatory Group v. EPA
(U.S. Supreme Court)


EPA Prevails in Clean Water Act Case: The D.C. Circuit delivered another win to the EPA when it ruled that the agency did not have to go through notice-and-comment rulemaking when it established an "enhanced coordination process" and final guidance for Clean Water Act permit decisions, such as those for surface-mining operations.

More Information:
National Mining Association v. McCarthy
(U.S. Court of Appeals for the D.C. Circuit)


Environmental Activists Seek to Remove Legal Defense for Manufacturers: The NAM joined with 13 other associations to intervene in a case brought by the Sierra Club to force the EPA to remove beneficial legal defense language from nine regulations.

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


Supreme Court Lowers Liability Threshold for Company Stock Fiduciaries: The Supreme Court brushed aside a "presumption of prudence" doctrine that limits a company fiduciary's liability when the company stock dips. The NAM filed a brief explaining that abandoning this presumption will deter manufacturers from offering employee stock ownership plans due to increased risk of liability.

More Information:
Fifth Third Bancorp v. Dudenhoeffer
(U.S. Supreme Court)

Executive Power  

Supreme Court Reins in Recess Appointment Power: The Supreme Court held that the recess appointment clause only empowers the President to fill existing vacancies during a recess of sufficient length. The decision invalidates several recess appointments President Obama made. The Coalition for a Democratic Workplace, of which the NAM is a member, filed a brief in the matter.

More Information:
National Labor Relations Board (NLRB)
v. Noel Canning

(U.S. Supreme Court)

Government Regulation  

No "Big Gulp" Ban in New York City: New York's high court overturned the ban on large sugary drinks in New York City, finding that the Board of Health was legislating without authorization. The NAM filed briefs at three different stages of the litigation seeking this final result.

More Information:
New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Dept. of Health and Mental Hygiene
(New York Court of Appeals)


Appeals Court Upholds Validity of Class-Action Waivers in Employment Agreements: The Fifth Circuit rejected the NLRB's conclusion that mandatory arbitration agreements barring worker class actions violate federal labor law. The NLRB failed to appeal this decision, meaning the decision stands.

More Information:
D.R. Horton, Inc. v. NLRB
(U.S. Court of Appeals for the Fifth Circuit)


NAM Pushes Back Against NLRB's Attempt to Redefine "Joint Employer": The NAM led a coalition of associations on a brief arguing against the NLRB's proposal to expand a 30-year-old definition of what constitutes a "joint employer"""a change that could facilitate unionization of temporary workers.

More Information:
In re Browning-Ferris

Product Liability  

Texas Rejects "Any Exposure" Liability: The Texas Supreme Court ruled that any exposure to asbestos is insufficient to prove that the exposure caused mesothelioma and that the substantiality of exposure is important. The NAM filed a brief last year supporting this result, which helps keep tort liability within reasonable bounds.

More Information:
Bostic v. Georgia-Pacific Corp.
(Texas Supreme Court)

Punitive Damages  

California Jury Awards Punitive Damages for Unforeseeable Asbestos Claims: A California jury awarded a plaintiff $11 million in punitive damages for exposure to asbestos that occurred during the 1950s. That decision runs counter to the prevailing trend that corporations did not have a duty to warn because science and medical experts at that time were not aware of the risks associated with asbestos. The NAM's brief argues that the harm of asbestos exposure was unforeseeable at that time.
More Information:
Grigg v. Owens-Illinois, Inc.
(California Court of Appeals)

Settlement Agreements  

Court Upholds EPA Enforcement of Consent Decree: After the EPA claimed that Volvo Powertrain violated a consent decree, a trial judge imposed a $72 million penalty. The NAM filed a brief highlighting the importance of clear settlement agreements and opposing expanding them beyond their terms, which Volvo argued the penalty did. The D.C. Circuit upheld the lower court.

More Information:
United States v. Volvo Powertrain Corp.
(U.S. Court of Appeals for the D.C. Circuit)

  Other News
Florida Jury Delivers Massive Judgment Against Tobacco Company:  

A Florida jury awarded more than $23 billion in punitive damages to the family of a lifelong smoker who died of lung cancer in 1996.

Sleeping Baseball "Fan" Alleges Commentators Defamed Him, Sues:  
He wants $10 million.

    Connect with the Manufacturers
  Questions or comments?
Contact Senior Vice President & General Counsel Linda Kelly at .