The Center News: January 2017

A Publication of the National Association of ManufacturerstheCenter for Legal Action

Center Perspectives

The Manufacturers’ Center for Legal Action (MCLA) brought suit against more than a dozen Obama administration regulations, and the incoming administration will affect the fate of each case. Regulations that were finalized some time ago cannot be overturned under the Congressional Review Act, which permits Congress to reject regulations with the president’s consent. Moreover, a federal agency that wrote a rule cannot reverse course without undertaking a long process of reissuing the rule and substantially justifying the change in direction.

How will President Obama’s regulations now in court fare in the months ahead? The courts may issue final rulings on the merits, or they could suspend the litigation while the agencies reconsider portions of the rules. Another possibility is that the parties agree to a negotiated settlement, a tactic sometimes used by environmental groups working with a friendly administration.

Below are some of the most significant active challenges:  

  • Clean Power Plan: A nationwide stay remains in effect as this challenge to new Environmental Protection Agency (EPA) regulations of greenhouse gases emitted from electric power plants awaits a decision from a federal appeals court. Regardless of the outcome, appeals to the Supreme Court are likely. Changing the rule administratively would require a new rulemaking process.
  • Waters of the United States: A nationwide stay is also in effect for this rule, which defines the scope of federal jurisdiction over water permitting. The government’s brief was filed in January, but oral arguments have not been scheduled. Unless the executive branch seeks reconsideration, this case is likely to be appealed to the Supreme Court. A fundamental procedural question —which court should hear the case—will be resolved by the Supreme Court by July. Details about that case follow below.
  • Ozone: The EPA’s tightening of the nationwide ozone standard is fully briefed in a federal appeals court. Oral arguments are scheduled for February.
  • Silica: The general-industry compliance deadline for the Occupational Safety and Health Administration’s (OSHA) new rule cutting in half permissible exposure limits for silica and requiring expensive engineering controls is June 2018. Our legal challenge is currently pending in a federal appeals court. Manufacturers are disputing the agency’s reliance on out-of-date economic data and its underestimation of the costs on manufacturers and the entire economy.
  • Overtime: A nationwide injunction is in place preventing the implementation of this rule, which doubles the trigger for minimum salary requirements for some employees. The Department of Labor (DOL) has appealed the injunction, and the litigation will continue unless the new Administration reconsiders the rule.
  • Injury and illness prevention programs: The National Association of Manufacturers (NAM) is challenging OSHA’s prohibitions and limits on employer safety incentive and drug testing programs. The government is due to respond to our complaint this month, and any further briefing will carry well into the new Administration.
MCLA in the Courts

Supreme Court to hear dispute over class waivers in arbitration clauses: The Supreme Court will decide whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration rather than through class actions is valid under the Federal Arbitration Act. The NAM supports arbitration as faster and less expensive for resolving disputes.

More Information: Epic Systems Corp. v. Lewis (U.S. Supreme Court)

Manufacturers push for fair discovery standards: The Georgia Supreme Court is examining the duty-of-care standard that applies to plaintiffs with respect to the preservation of evidence for a lawsuit. The MCLA filed a brief supporting review of this case and argued that objective spoliation standards should be applied equally to plaintiffs and defendants.

More Information: Cooper Tire & Rubber Co. v. Koch (Georgia Supreme Court)

Supreme Court to review key procedural issue in “waters of the U.S.” case: The Supreme Court agreed to hear the MCLA’s appeal in the case challenging the EPA’s “waters of the United States” regulation. The Court will review a splintered appeals court decision to resolve whether challenges to the rule should be heard first in the district courts or in the appeals courts.

More Information: National Ass’n of Mfrs. v. United States Dep’t of Def. (U.S. Supreme Court)

Court expands liability for Clean Water Act discharge permit holders: A federal appeals court ruled that a permit to discharge into streams incorporates into it general water quality standards that become enforceable effluent limits. The NAM argued that courts should not apply new conditions to an existing permit when the regulatory agency has already considered those conditions and did not require them in the permit. The ruling eliminates the permit shield and subjects manufacturers to numerous citizen suits under the Clean Water Act.

More Information: Ohio Valley Env’l Coalition, Inc. v. Fola Coal Co. (U.S. Court of Appeals for the Fourth Circuit)

NAM files answer in public trust greenhouse gas case in Oregon: The NAM, American Petroleum Institute and American Fuel & Petrochemical Manufacturers joined together to intervene in a case brought by teenagers seeking further government action to reduce greenhouse gases. The judge has accepted the theory that the public trust may have been violated because of the impact of climate change, and the government will answer the complaint in January. Our answer raises many affirmative defenses to the litigation, which will be heard later this year.

More Information: Juliana v. United States (U.S. District Court for the District of Oregon)
False Claims Act

Manufacturer prevaisl after 18-year nightmare: For 18 years, Moving Waters Industries Corp. (MWI), a family-owned manufacturer of heavy-duty water pumps, has fought a government charge over an alleged “false claim” on an Export-Import Bank document. The dispute centered on whether market-based commissions paid to agents in Nigeria were “regular” or not. Ultimately, an appeals court, supported by an MCLA brief, ruled that the ambiguous term “regular commission” has never been defined in regulations or guidance, and a jury verdict against the company was overturned. On January 9, the Supreme Court denied review of the case, marking the end of MWI’s long legal battle. The resolve of MWI’s leadership and legal team has yielded a great benefit to all in clarifying the law and protecting due process, and the MCLA was proud to play a role in securing this victory.

More Information: U.S. ex rel. Purcell v. MWI Corp. (U.S. Court of Appeals for the D.C. Circuit)

Supreme Court to hear appeal of Montana’s expansive view of jurisdiction: This case involves the power of a Montana court to exercise general jurisdiction over companies that are neither incorporated in the state nor have their principal place of business in the state. In a brief, the NAM urged the Supreme Court to apply its recent rulings on extraterritorial jurisdiction to state court disputes as well.

More Information: BNSF Ry. Co. v. Tyrell (U.S. Supreme Court)

DOL persuader rule case put on hold: A federal judge in Texas issued a final summary judgment ruling after previously ordering a permanent injunction with nationwide application. In order to prevent any unfavorable rulings, we asked the judge in our challenge to this rule, which is pending in an Arkansas federal court, to put our case on hold pending the outcome of the Texas case. The Arkansas judge granted a motion staying further proceedings and directing the parties to file updates in March.

More Information: Associated Builders & Contractors v. Perez (U.S. District Court for the Eastern District of Arkansas)
Product Liability

NAM supports GM bankruptcy appeal:The NAM filed a brief urging the Supreme Court to review a lower court’s ruling that makes a company that bought various GM assets liable for the liabilities that it did not agree to assume. The bankruptcy code allows the sale of assets “free and clear,” and the lower court upset fundamental expectations by holding the innocent purchaser liable for old product liability claims. Our brief argues that this ruling will make it harder for companies to get value for assets in bankruptcy, harm creditors and unfairly put the liability on parties that are not at fault.

More Information: General Motors LLC v. Elliott (U.S. Supreme Court)

Ohio issues favorable ruling on post-sale duty to warn: The Ohio Supreme Court ruled that manufacturers do not have a post-sale duty to warn about risks associated with a product that are not discovered until after the product has been sold and are unlikely to pose a risk. The outcome helps push back on claims that warnings are needed when manufacturers make improvements to their products. A different outcome would have resulted in a so-called “innovation tax.”

More Information: Linert v. Ford Motor Co. (Ohio Supreme Court)

NAM opposes perpetual innovator liability:This case involves whether the brand-name manufacturer of a pharmaceutical that divested all ownership interest in that drug can be held liable for injuries caused years later by another manufacturer's generic version of that drug. The NAM filed a brief with the California Supreme Court opposing innovator liability and arguing that tort theories do not allow courts to circumvent fundamental principles of liability law against product manufacturers.

More Information: T.H., a Minor v. Novartis Pharmaceuticals (California Supreme Court)

MCLA supports challenge to Michigan’s business tax law: The MCLA filed briefs in five cases on appeal to the Supreme Court challenging Michigan’s repeal of a tax provision that had allowed multistate companies to use a standard three-factor formula to compute taxes. The formula is part of a binding agreement under the Multistate Tax Compact and is a common structure designed to prevent double taxation and foster tax reliability. The cases also challenges Michigan’s retroactive changes to the tax law that cause multistate companies to owe more than $1 billion in extra taxes.

More Information: Sonoco Prods. Co. v. Dep’t of Treasury, Michigan (U.S. Supreme Court)
Questions or Comments?

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

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