Legal Perspectives
By Linda Kelly, SVP, General Counsel and Corporate Secretary
There have been so many outrageous claims and novel theories of liability against manufacturers over the years that it is unusual to see a more straightforward, run-of-the-mill contract case make it to the Supreme Court for decision. But that happened in 2015 when the Supreme Court decided that retirees are entitled to lifetime vesting of health care benefits under a collective bargaining agreement only when the agreement can be viewed that way using standard contract interpretation principles.
The case was M&G Polymers USA, LLC v. Tackett, and the devil is in the implementation of this ruling. It seems that one federal court of appeals—the 6th Circuit—has been struggling mightily to understand how to apply this decision to health care claims under other collective bargaining agreements. In one recent case, that court found that the parties did not agree to provide the benefits, and in another, the court found that they did. Both cases are now on appeal to the Supreme Court.
The National Association of Manufacturers’ (NAM) Manufacturers’ Center for Legal Action (MCLA) filed an amicus brief supporting review of one of those cases—CNH Industrial N.V. v. Reese, listed below—in which the lower court ruled against the company, threatening to saddle it with a huge future liability for benefits it never intended to guarantee. The MCLA is concerned this ruling will encourage lawyers to flock to the 6th Circuit, the only court to have opened the door to this liability. A third case, involving Whirlpool, is already wending its way up to that court with the same issue. It is hoped the Supreme Court will once again affirm the notion that contracts require a meeting of the minds. Unless the parties come to terms, especially when hundreds of millions of dollars are at stake, courts should not force liability upon them.
Launch of New MCLA Project This week, the MCLA launched the Manufacturers’ Accountability Project (MAP) with an op-ed in Investor’s Business Daily. The purpose of this project is to expose the coordinated efforts of the plaintiffs’ bar, public officials and deep-pocketed activists to launch legal attacks targeting manufacturers. In keeping with the MCLA’s role of identifying and informing our members of key legal trends affecting manufacturers, MAP will seek to educate the manufacturing community, the legal community and the general public about these legal attacks, the political and financial motives behind them and the key players driving them. To learn more, visit mfgaccountabilityproject.org.
MCLA in the Courts
| Class Actions |
Amicus Brief Filed Defending Due Process: The NAM and other groups filed a brief urging the Supreme Court to review this case and reverse a lower court ruling that was unfair to defendants in design defect cases. We argued that the original decision was so broad and general that it would be unfair to hold companies liable for design defects without looking at each individual product. That decision created the possibility of enormous liability by stripping away normal due process requirements that a plaintiff prove each of the elements of his or her claims. More broadly, the decision poses a grave risk of similarly unjustified liability being sought against other product manufacturers.
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| More Information: R.J. Reynolds Tobacco Co. v. Graham (U.S. Supreme Court) |
| Environmental |
NAM Files Amicus Brief in a California Superfund Case: For more than three-and-a-half decades, California businesses have been able to rely on state agency direction and expertise in remediating contaminated sites with the goal of eventually obtaining “no further action” letters signifying that their sites are safe for productive economic use. Lower court decisions undermined this cooperative relationship between businesses and expert government regulators. Those decisions granted a private right of action to seek to impose liability for remediation irrespective of prior remediation and regulatory action. The NAM filed an amicus brief urging the California Supreme Court to review this series of cases that erroneously expanded California superfund liability.
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| More Information: Orange Cty. Water Dist. v. Sabic Innovative Plastics US, LLC (California Supreme Court) |
| Product Liability |
Court Allows Pharmaceutical Packaging Case to Proceed: In 2016, a class action was brought against Alcon Laboratories (a Novartis subsidiary), claiming that Alcon’s medicated eyedroppers caused the plaintiff class financial harm because the eyedroppers dispensed more liquid than required for treatment. The lower court dismissed the claim with the opinion that the presented facts showed no legal harm. On appeal, the NAM joined a coalition supporting the dismissal arguing that allowing this kind of no-injury class action would encourage a variety of speculative and novel injury claims and impose substantial costs on all parties involved. The 3rd Circuit reversed the lower court’s dismissal of the case, finding that the plaintiff had stated facts that led to a legal harm. In doing so, the 3rd Circuit substituted its own harm analysis for the lower court’s and sent the case back for further deliberation.
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| More Information: Cottrell v. Alcon Laboratories, Inc. (3rd Circuit) |
MCLA Files Brief on Asbestos Issue in Maryland Court of Appeals: The NAM and other groups filed an amicus brief concerning the application of the statute of repose to those involved with improvements to real property and the constitutionality of applying a 1991 exception for “manufacturers” of asbestos-containing products, exempting them from the protection of repose. Statutes of repose for improvements to real property, such as the law at issue, represent an important component of a balanced liability system. They provide stability and predictability in the law, fostering construction and economic development. Maryland’s tort system should reflect sound public policy and not add indefinite burdens to manufacturers.
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| More Information: Duffy v. CBS Corp. (Maryland Court of Appeals) |
| Taxation |
NAM Supports Appeal in Natural Gas Tax Case: On October 19, the NAM filed a brief asking the Supreme Court to review a lower court’s decision in ETC Marketing, Ltd. v. Harris County Appraisal Dist. The lower court ruled that it was permissible for states and municipalities to levy taxes on natural gas while it remains in transit. This decision is a clear departure from the binding “in transit” principle of the Commerce Clause previously defined by Supreme Court cases. Allowing this departure would be unconstitutional and improperly allow local authorities to impose higher costs on end users thousands of miles away.
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| More Information: ETC Marketing, Ltd. v. Harris County Appraisal Dist. (U.S. Supreme Court) |
Questions or Comments?
Contact Senior Vice President & General Counsel Linda Kelly at [email protected].