If You’ve Touched Asbestos or a Similar Hazard, Can You Sue?

By | Manufacturers’ Center for Legal Action, Shopfloor Legal | No Comments

How much exposure to a hazardous substance gives you the right to sue the manufacturer? Now that scientific analysis of genes and atoms is so widespread, are manufacturers obligated to warn of infinitesimal risks? If not, where do you draw the line? How much exposure is enough to require a company to take action to warn everyone who might be exposed?

State courts around the country are now answering these questions. Earlier this month, the Georgia Supreme Court ruled that proving that a substance caused an injury requires reliable expert testimony, and not an expert who simply concludes that any exposure to asbestos at work – regardless of the extent of the exposure – was a cause of the worker’s mesothelioma. The expert’s testimony must be based on sufficient facts or data, using reliable scientific principles and methods. The Manufacturers’ Center for Legal Action argued for this result in an amicus brief filed with the court.

Courts in at least eight other states have recently ruled likewise, concluding that the theory that any exposure to a hazard causes an injury is not a scientifically proven proposition that is accepted in epidemiology, pulmonology or other medical fields. Nevertheless, it is still possible for plaintiffs with sufficient evidence of “frequency, regularity, and proximity” of exposure to make a case.

Scientific discovery is therefore the keystone for future litigation. Manufacturers will need to keep up with the latest scientific findings relating to their products. Courts will need to assess whether a product is hazardous enough to actually cause harm, taking into account the latest information about dosage and response.  It is critical that courts be gatekeepers who allow only valid scientific principles and sufficient evidence of exposure. Less demanding standards would essentially result in absolute liability for any company that makes hazardous materials if those products cross the path of the client of an aggressive trial lawyer. The Georgia court’s decision upholding strict evidentiary standards will help manufacturers focus on what they do best: improving products and creating jobs.

Manufacturers File Brief Supporting Energy Access

By | Energy, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Main, Shopfloor Policy | No Comments

Yesterday, the Manufacturers’ Center for Legal Action (MCLA), the legal arm of the National Association of Manufacturers, along with eight other business and manufacturing trade groups, filed an amicus brief supporting Constitution Pipeline in the U.S. Court of Appeals for the Second Circuit. After extensive environmental, safety and economic review, the Federal Energy Regulatory Commission (FERC) had approved the critical energy infrastructure project. However, the state of New York attempted to block the project, undermining the collaborative approval process. Constitution is challenging New York’s denial of its Section 401 water permit for construction of the new natural gas pipeline.

For manufacturers, who use one-third of our nation’s energy, access to abundant and reliable energy sources are essential to our continued growth and ability to compete globally. While states play an important role under the Clean Water Act, they should not be allowed to use their permitting processes, including the issuance of water quality certificates, to unreasonably delay, exact concessions from, or scuttle federally approved projects.

“As some of the largest producers, transporters, and users of natural gas in the country, many of amici’s members are directly affected by the decision under review, which denied a certification necessary for the construction of an important interstate pipeline,” said parties in the brief.  “Further, amici are concerned by the broader impacts of certification denials like this one on the development of much-needed natural gas infrastructure.  Total natural gas demand, driven in particular by manufacturing and power generation, is poised to increase by 40 percent over the next decade, and the U.S. supply is expected to increase by 48 percent over the same period. Further, explosive growth in shale gas requires the construction of new pipeline capacity.  Amici thus have a strong interest in the effectuation of Congress’s policy for the efficient, transparent, and predictable approval of natural gas pipelines.”

Earlier this year, the NAM released a new comprehensive study that reveals how natural gas has strengthened manufacturing and encouraged U.S. manufacturing growth and employment. This study underscores the need for critical energy infrastructure.

“Over the next decade our nation’s demand for natural gas is only going to grow, and much of that growth is from manufacturing,” said NAM President and CEO Jay Timmons. “Our study unequivocally shows that if our growing demand is not taken seriously by policy makers, we will have a serious lack of infrastructure that will jeopardize our growth. Natural gas is responsible for millions of jobs, tens of thousands in manufacturing alone. We can’t afford to let misguided policies rob us of this valuable domestic resource.”

The MCLA serves as the leading voice of manufacturers in the courts, representing the more than 12 million men and women who make things in the United States. The MCLA strategically engages in litigation as a direct party, intervenes in litigation important to manufacturers, and weighs in as amicus curiae on important cases. To learn more about the MCLA, visit our website.

NAM Files Lawsuit to Protect Workplace Safety

By | Human Resources, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Policy | No Comments

The Manufacturers’ Center for Legal Action filed a lawsuit on Friday, July 8, 2016, to challenge the Labor Department’s Occupational Safety and Health Administration (OSHA) workplace injury and illness New Rule. The New Rule places unreasonable restrictions on employer programs to increase workplace safety. As noted in our press release, not only does OSHA lack statutory authority to enforce this rule, but the agency has also failed to recognize the infeasibility, costs and real-world impacts of what it preposterously suggests is just a mere tweak to a major regulation.

The NAM’s complaint challenges the New Rule’s prohibitions and limits on employer safety incentive programs and drug testing programs. Incident-based safety incentive programs and post-accident drug testing programs help employers promote workplace safety, which is supposed to be OSHA’s primary mission. Instead, out of a misguided zeal to improve accuracy of reporting on workplace injuries, OSHA has lost sight of the importance of reducing the number and severity of injuries themselves. Properly designed incident-based employer safety incentive programs are the most effective tool to get employees and supervisors immediately invested in workplace safety. Through these programs, employees are continuously motivated to improve their environment and to look out for their safety and the safety of others, and to eliminate unsafe behaviors. The result is a dramatic decrease in accident frequency and severity.

By encouraging all employees, including supervisors, to improve workplace safety, incident-based safety incentive programs jump start a change in culture that results in a prompt and sustained decrease in accident frequency and severity. Without these incident-based safety incentive programs, instituting a culture of safety in the workplace is much more slow and difficult and seldom leads to the same dramatic reductions in serious accidents. The New Rule is unlawful and must be vacated because it exceeds OSHA’s statutory authority; was adopted without observance of the procedures required by law; and because the challenged provisions, and their underlying findings and conclusions, are arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law.

In addition, on July 12, 2016, the NAM filed a memorandum and emergency motion for a preliminary injunction seeking to prohibit OSHA from implementing the New Rule, which will otherwise take effect on August 10, 2016, causing irreparable harm to many thousands of employers across the country. The New Rule irreparably harms employers and employees by making their workplaces less safe and increasing the likelihood of workplace injuries and fatalities. If OSHA’s rule is not struck down, manufacturers will have to make a “Hobson’s choice” between eliminating or drastically restricting highly effective incident-based safety programs and/or drug testing programs, thereby increasing the number of employee injuries and even fatalities in the workplace; or else risking exposure to increased OSHA citations, inspections and penalties if the safety programs are not removed. OSHA’s main goal is to eliminate or minimize the frequency and severity of workplace injuries, illnesses and deaths—this misguided New Rule does not accomplish that goal.

Four Ways the Supreme Court Helped Your Business This Year

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The U.S. Supreme Court issued its final opinions of the term this week, and various hot-button social issues caught much of the media’s attention. But what about the cases that directly affect manufacturers? How did the Supreme Court rule on issues that affect your ability to compete and create jobs, such as the burden of government regulations and aggressive litigation against you?

There is good news to report. First, the Supreme Court issued a rare decision ordering the Environmental Protection Agency (EPA) to halt enforcement of the Clean Power Plan while the rule’s legality is sorted out in a lower court. The Manufacturers’ Center for Legal Action (MCLA) sought this order because of the dramatic way in which the EPA decided to regulate the electric generation sector.

Second, the Supreme Court was quite willing this year to allow manufacturers to challenge other agency decisions in court. The Hawkes Co. case allows immediate judicial review of the Army Corps of Engineers’ decisions about their jurisdiction. The Encino Motorcars case shows how companies can challenge significant changes in agency interpretations that are insufficiently justified. At the same time, the Supreme Court made it clear that parties that sue companies must meet rigorous standing requirements to be in court. However, it allowed the certification of a class of plaintiffs through statistical evidence of injury rather than actual injury, making class-action cases against manufacturers easier to file.

Third, a couple of aggressive theories of liability have been tamped down. In particular, litigation from foreign parties against manufacturers in the United States continued to be scaled back when the Supreme Court ruled that the European community cannot use our Racketeer Influenced and Corrupt Organizations Act to litigate claims arising from acts occurring abroad unless there is a clear injury in the United States. In addition, claims by third parties against manufacturers under the False Claims Act for regulatory violations were substantially limited to claims for actual fraud.

Fourth, the Supreme Court continues a longstanding policy of enforcing arbitration agreements that states have tried to undermine with consumer protection laws allowing for burdensome class-action procedures. The DIRECTV case threw out a California statute that would have eliminated class-action waivers in consumer contracts.

Most of these decisions stand the test of time, making it even more important for the Supreme Court to hear from manufacturers about the substantial effect that litigation has on their ability to survive and thrive. The MCLA made your voice heard in the Supreme Court this year, with important and beneficial results.

Unanimous Supreme Court Ruling Offers Some Relief

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Responsible government contractors can breathe a short sigh of relief as a result of a surprisingly helpful opinion, albeit one that does not entirely relieve companies of liability under the broadly worded and highly punitive False Claims Act. At a time when consensus is hard to come by in other branches of government, a unanimous Supreme Court decision today cracked down on an expansive litigation tactic that would have subjected manufacturers across the country to potential treble damages liability for a wide range of regulatory or contractual violations.

The ruling affects companies that sell goods or services to the federal government. If you submit a bill to the government, someone may claim that you are trying to defraud the government if you are not in full compliance with your contract or with statutory or regulatory requirements under it. Fortunately, the Supreme Court scaled back the types of claims that third parties can make about your billing. It reversed an appeals court ruling that would have made every bill an implied representation of compliance with all relevant regulations and would have made any undisclosed violation of a precondition of payment grounds for a lawsuit for fraud.

Instead, courts will recognize fraud claims only if they involve violations of material statutory, regulatory or contractual requirements. The FCA does not apply to insignificant regulatory or contractual violations. However, the court will allow implied false certification claims in limited circumstances, where your claim for payment makes specific representations about the goods or services provided and where your failure to disclose noncompliance with material requirements “makes those representations half-truths.” This means that future lawsuits will require courts to conduct a “rigorous” and “demanding” inquiry into what you told the government about your deliverables, what part of your performance of the contract was deficient and how important that deficiency was to the government. Much leeway remains for third parties to make claims arising from a company’s lack of compliance with its obligations, but the legal standards are much clearer and eliminate FCA liability for insignificant violations of thousands of complex statutory and regulatory provisions that are not material to the contract.

The case is Universal Health Services, Inc. v. United States ex rel. Escobar, and the Manufacturers’ Center for Legal Action filed an amicus brief supporting this result.

Appeals Court Errs on Net Neutrality; NAM Will Press for Legal Fight in Higher Court

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By Patrick Forrest, vice president and deputy general counsel and Cedrick Dalluge, legal fellow, National Association of Manufacturers

On June 14, 2016, a federal appeals court ruled to uphold new Federal Communications Commission (FCC) regulatory action on “net neutrality” classifying broadband providers not as an information service, but as a telecommunications provider.

The FCC heavily relied on a Great Depressionera statute enacted long before the internet was created to create its rule. Congress in 1934 never intended its Communications Act to govern 21st-century internet operations. Rather than substantively analyzing the FCC’s rule, the court insulated itself by deferring to the agency.

The court also rejected the business communities’ argument that reclassification will undermine investment in broadband infrastructure. Ironically, the court relied on the FCC assertion that “major infrastructure providers have indicated that they will, in fact, continue to invest under the framework. Those same parties later walked away from those statements, but the court emphasized that the FCC’s conclusions don’t have to be “the ones that we would reach on our own,” they only have to be “reasonable, and the majority concluded they were.

Consequently, the court failed to conduct a reasonable analysis regarding the operational business impact this rule would have on broadband providers, creating an opening for the possible deterioration of services. Overregulation risks providers diverting money from the development of new networks and technologies, stifling investment in U.S. broadband.

In dissent, Judge Williams correctly found the FCC’s order violates basic principles of agency rule-making. Regarding reclassifying broadband services on the basis of the 1934 statute, Judge Williams writes that the FCC’s justification “fails for want of reasoned decision making.” Beyond that, in crafting its rule, the FCC relied on changed factual circumstances and weak policy decisions. Judge Williams’ grave concerns regarding this ruling, shared by the National Association of Manufacturers (NAM), demand greater consideration.

By handing down this ruling, the U.S. Court of Appeals for the D.C. Circuit dictated the future of internet use. In effect, the court allowed the FCC to usurp the legislative process to pursue an inefficient quick fix to a complicated issue.

The NAM, as a leader on this issue, will continue this fight. Likely the ultimate decision-making body will be the Supreme Court, and the NAM is committed to seeing this issue through to the end.

The National Economy Gets a Boost from a Federal Appeals Court

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State legislators continue to try to impose their particular requirements and policy preferences on out-of-state manufacturers. Today, a federal appeals court issued a long-awaited ruling striking down an attempt by Minnesota to ban the use of electricity generated by large energy facilities in other states that use disfavored fossil fuels. The decision makes clear that states are limited by national laws like the Federal Power Act and the Clean Air Act, and one judge went even further to find the state’s restrictions to be an unconstitutional interference with interstate commerce. The Manufacturers’ Center for Legal Action supported this outcome with an amicus brief in the case, and the ruling is an important judicial restraint on local restrictions with interstate and national effects.

Unfortunately, states continue to adopt laws that purport to protect their own interests but that can cause dramatic effects on manufacturers outside their borders. Unique state labeling requirements, such as those for genetically engineered products, force companies to find national solutions for a single-state requirement. Trucking regulations in one state affect any manufacturer whose products move in interstate commerce.

Now under consideration are permit conditions for an export facility in Longview, Washington, that would prevent a manufacturer from simply transporting its product through the state because it is a disfavored fossil fuel. While it’s not a state law that is under consideration, it’s another way that state and local authorities are trying use their regulatory power to impede manufacturing, transportation and exports and the jobs that come with them. We will continue to remind them, even if we have to enlist the support of federal judges, that we must work together to develop national strategies to attain all of our economic and environmental goals.

Court Expedites Land Use Jurisdictional Challenges

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If you are injured, the Supreme Court usually finds a way to allow you into a courtroom to air your grievances. Then it’s up to you to convince a judge or jury that the law provides a remedy.

Today’s unanimous decision from the Supreme Court in the Hawkes Co. case is an important reminder that the courts are open if your legal rights are impaired by the government. The courts serve a critical role in our tripartite system of democracy, providing checks and balances that are essential to prevent overreach by Congress and the executive branch. The decision gives a property owner the right to go to court after an agencyin this case the U.S. Army Corps of Engineers (Corps)decides that your property is under its regulatory authority. Corps or Environmental Protection Agency (EPA) decisions that your property is within their jurisdiction subject you to liability under the Clean Water Act, and you now have the right to challenge those decisions in court.

This ruling is important to ensure that such agency decisions are not arbitrary and capricious, or do not otherwise exceed an agency’s statutory authority. But legal challenges themselves are very expensive and time-consuming. It is far better that the agency get its jurisdictional determinations right from the beginning, under clear direction from Congress and with the proper application of its delegated authority.

Unfortunately, the Clean Water Act is anything but clear about the Corps’ jurisdiction, and the Manufacturers’ Center for Legal Action is in the middle of a long legal battle to clarify the meaning of the statute. That fight is over the administration’s latest interpretation of federal jurisdiction over “waters of the United States,” and we hope to provide further arguments to property owners when they think the government has reached too far. At the end of the day, we look forward to a final decision from the Supreme Court on how far the Corps’ and EPA’s jurisdiction goes, so that everyone, including individual landowners like the Hawkes Co., will better know where permits are required and whether they need to head back to the courtroom to vindicate their rights.

Permit Traps—Proceed at Your Own Risk

By | Energy, Infrastructure, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Policy | No Comments

Government decisions derailing permits for infrastructure projects raise serious questions about future access and the cost of energy in this country. Affordable energy supplies are critical to the viability and competitiveness of manufacturers in the United States, but equally important is the ability to obtain a wide variety of other permits to carry on routine manufacturing operations. After successfully navigating federal, state and local government requirements, as well as opposition from national environmental groups during the permit approval process, a company is authorized to do business as long as it follows the permit.

When a Clean Water Act permit is approved and the individual is in compliance, the act provides a shield against arbitrary enforcement actions and citizen suits. The permit sets those limits. Unfortunately, a company can be forced to defend itself in court when someone tries to claim that the permit requires more than it does. If undermined, the permit shield can be no shield at all, or at least a very expensive one to maintain.

That’s the situation in a case now before the U.S. Court of Appeals for the Fourth Circuit in Richmond. A citizen’s group wants the court to insert new limits in a permit that the government had considered and decided not to include. In an amicus brief, the Manufacturers’ Center for Legal Action argued that suits like this upend the process for setting and implementing water quality standards by second-guessing the interpretations of those responsible permitting authorities. They also create serious after-the-fact liability without fair notice.

This kind of regulation by litigation threatens to add another layer of government control, activated by special interest groups, on regulatory decisions. Enforcing permit requirements is appropriate, but changing the terms of a permit in the middle of production is an entirely new problem that increases uncertainty, saps the life from productive investments and dampens our ability to create and sustain jobs.

Pipeline Permitting and the Limits of Executive Power

By | Energy, Manufacturers’ Center for Legal Action, Shopfloor Legal, Shopfloor Main | No Comments

The tortured, roundabout, drawn-out process that led last fall to the final disapproval of the Keystone XL pipeline project was equal parts astonishing and frustrating.  After a seven-year process, in the wake of determinations clearly to the contrary by the State Department, and in the face of unambiguous Congressional support, the Administration finally disapproved of the pipeline, finding that it was not in the national interest to approve the project.  Supporters of the pipeline wondered how it could be possible that the Executive branch could have such sweeping authority to kill a private commercial project that enjoyed strong bipartisan Congressional support and which the Administration had previously supported.  The decision clearly appeared to be one based on politics, but was it also one based on legitimate Constitutional authority?   In a brief recently filed by the Manufacturers’ Center for Legal Action in the US District Court for the Southern District of Texas, we join TransCanada in arguing that it was not.

In our amicus brief in TransCanada v. Kerry, we argue that the State Department’s prohibition of the pipeline violated the Constitutional separation of powers.  The Constitution explicitly grants to Congress the authority to regulate foreign commerce.  A cross-border pipeline clearly falls in the domain of foreign commerce.  While the Executive branch possesses the implied authority to regulate foreign affairs, which is oftentimes exercised collaboratively with Congress, and has relied upon that authority in this case, it does not have the authority to usurp the power of Congress to regulate commerce, particularly when Congress has clearly and repeatedly acted to demonstrate its support for construction of the pipeline.

While the President has noted that the pipeline crosses an international border, thereby implicating foreign affairs interests that fall within the realm of the implied power of the Executive, the justification offered for regulating the pipeline has nothing to do with border crossing, relations with Canada, or national security.  Rather, the President encroached on Congressional authority to regulate commerce in this case to create a helpful bargaining chip in the unrelated matter of the Paris Climate Change talks.  While this may be a legitimate political concern, it is not a permissible exercise of the foreign affairs power.

Stay tuned as this case progresses through the courts.  Not only are the specifics of the case very important, but in this era of heightened Executive branch power, the underlying separation of powers principles are equally so.

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