The Center News: April 2017

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives

By Linda Kelly, General Counsel and Corporate Secretary

On Monday, April 17th, newly-minted Associate Justice Neil Gorsuch took his seat as the ninth justice of the United States Supreme Court.  Following a highly partisan and divisive Senate confirmation process, Justice Gorsuch likely found relief in the more cordial and genteel atmosphere of the court.  With no time to spare on first-day jitters, the newest justice heard oral arguments on day one, waiting only eleven minutes before diving into questioning the advocates. 

Justice Gorsuch is joining the court near the end of the October, 2016 term, with 13 arguments packed into the final weeks of April.  Among the cases to be heard yet this term are two in which the MCLA has played a role: BNSF v. Tyrrell and Bristol-Myers Squibb v. Superior Court of California. Both cases involve the issue of jurisdiction in state court when companies are based outside of that state and have no particular connection to the jurisdiction.  The cases provide an opportunity for the court to clarify the reach of its 2014 holding in Daimler AG v. Bauman and to further rein in the problem of plaintiff forum shopping among state courts. 

In addition to participating in oral arguments on these jurisdictional cases, Justice Gorsuch will also help to decide whether review will be granted in three cases which the MCLA has supported with briefs advocating certiorari.  These involve 1) whether states can alter their obligations under the Multistate Tax Compact; 2) whether courts may disrupt the “free and clear” provisions of bankruptcy law to allow claims against the bankrupt entity; and 3) whether due process is violated when jail time is imposed on corporate officers based on strict criminal liability in the absence of criminal intent.

Looking further ahead, three important manufacturing cases are already lined up for argument in the fall when the October, 2017 term begins. Justice Gorsuch’s textualist approach will no doubt be felt in all three.  These cases deal with the issues of 1) which court has jurisdiction for challenges to EPA definitions of bodies of water subject to the Clean Water Act; 2) the permissibility of class waivers in employment arbitration agreements, and 3) the scope of private rights of action under SEC disclosure rules.

The outcomes of all of these cases will benefit from consideration by a fully staffed panel of justices.  While the court has done its best to keep cases moving over the past 14 months since the death of Justice Scalia, the business of the court has no doubt been hampered by the prospect of producing 4-4 ties that diminish the role of the Supreme Court by simply affirming the lower court’s holding while failing to make new law on issues important enough to have reached the court.  At a time when political rancor and divisiveness are at a high point, it is a good thing for American democracy to have a full complement of justices and a fully functioning Supreme Court.  Welcome Justice Gorsuch!

MCLA in the Courts
Class Actions

NAM seeks to revisit certification in G.E. class-action case: A federal judge in New York certified a large class-action suit against General Electric over alleged misrepresentations involving microwave ovens whose glass doors broke after nine years. The National Association of Manufacturers (NAM) filed a brief arguing that the court improperly certified the class because it includes consumers who have never had a problem with the microwaves and thus suffered no injury.

More Information: Grayson v. General Electric Co. (U.S. Court of Appeals for the Second Circuit)

“Water of the U.S.” case ready for Supreme Court: Despite plans by the Trump administration to rescind or revise a rule expanding jurisdiction over “waters of the United States,” the Supreme Court will proceed in the NAM’s case seeking to determine which court is the proper forum for challenges to the rule. The case is expected to be argued in the fall.

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

Court agrees to suspend Risk Management Program litigation: The NAM and its association allies are working with the Environmental Protection Agency (EPA) on changes to the Obama administration's Risk Management Programs rule under the Clean Air Act. A federal appeals court agreed to suspend litigation over the rule, paving the way for negotiations that address security concerns about the disclosure of hazardous material vulnerabilities, as well as an audit requirement and considerations relating to costs and benefits.

More Information: American Chemistry Council v. EPA (U.S. Court of Appeals for the District of Columbia Circuit)

Appeals court upholds California cap-and-trade auctions: A California appeals court rejected a challenge to that state’s greenhouse gas (GHG) auction system. The NAM had fought the program, arguing that the sale of allowances in the auction constituted a tax that must be approved by the legislature. With this program in place, companies operating in California will be under increasing pressure to reduce greenhouse gas emissions, or else pay for a shrinking number of allowances to continue to emit GHGs.

More Information: California Chamber of Commerce v. California Air Resources Board (California Court of Appeals)

Ozone litigation is put on hold: In response to EPA and industry motions, the D.C. Circuit has halted oral arguments in the major case challenging the Obama Administration’s ozone standard. The case is fully briefed, but the Trump Administration is reviewing the rule. If the rule ultimately remains in place, further consideration of the legal challenges could resume.

More Information: Murray Energy Corp. v. EPA (U.S. Court of Appeals for the District of Columbia Circuit)
Labor Law

Manufacturers challenge NLRB decision undermining confidentiality of investigatory interviews: After the National Labor Relations Board (NLRB) ruled that a company violated federal law by asking employees not to discuss their complaints about co-workers with others while an investigation was ongoing, the NAM filed a brief challenging that decision. A federal appeals court recently agreed with manufacturers and reversed the NLRB’s ruling.

More Information: Banner Health Sys. v. NLRB (U.S. Court of Appeals for the District of Columbia Circuit)
Patents, Copywrights, and Trademarks

U.S.-Canada investment ruling ignores core IP questions: An international arbitration panel recently issued a misguided decision in a pharmaceutical patent case by avoiding the core investment and intellectual property (IP) issues at the heart of the case. In so doing, the panel failed to provide relief from Canada’s actions that undermine innovation and IP protection to the detriment of manufacturing and jobs in the United States. The NAM is continuing to examine other avenues to address this significant setback.

More Information: Eli Lilly v. Canada (International Centre for the Settlement of Investment Disputes)
Securities and Regulations

Supreme Court to hear securities fraud liability case: Under federal law, public companies face possible liability for securities fraud based on a failure to disclose adverse “trends” and “uncertainties.” Plaintiffs are attempting to widen the scope of this law, and the NAM asked the Supreme Court to review the case, arguing that the ruling could subject manufacturers to private suits for securities fraud for failing to disclose information that may not be material.

More Information: Leidos, Inc. v. Indiana Pub. Retirement Sys. (United States Supreme Court)
Settlement Agreements

NAM stands up for IP rights in Illinois: The NAM recently submitted a brief in support of a small manufacturer after a court invalidated a non-compete agreement with a former employee. That employee opened a business that directly competed with the small manufacturer. An Illinois court refused to enforce the agreement because it did not meet a unique-to-Illinois timing rule. As a result, Illinois is a more expensive and less attractive place for manufacturers to do business.

More Information: Plano Chamber of Commerce v. Perez (U.S. District Court for the Eastern District of Texas)
Questions or Comments?

Contact Senior Vice President & General Counsel Linda Kelly at [email protected].

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