Litigation Over the Clean Power Plan: The Big Picture

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

The entire bench of the federal appeals court in the District of Columbia is hearing nearly 4 hours of arguments tomorrow in 39 lawsuits challenging the Obama Administration’s Clean Power Plan regulation. The challengers represent a broad swath of industries, including mining, transportation, electric utilities, manufacturers, and consumers of energy, as well as 27 states.

The Manufacturers’ Center for Legal Action, joined by a manufacturing coalition of more than a dozen other national trade groups, is involved in this case because we are very concerned that the Environmental Protection Agency has imposed a set of regulations on electric utility companies that is not authorized by, and contradicts specific provisions of, the Clean Air Act. The rule’s goal is to restructure the power sector by imposing emissions limits that are unachievable without switching fuel inputs. This could undermine the reliability of the electric grid and cause higher energy rates for consumers, including manufacturers in the United States. A ruling in favor of the rule would set EPA up to impose greenhouse gas regulations on many other sectors of manufacturing.

This case has all the earmarks of a major case that will wind up in the Supreme Court, probably in the fall of 2017. Normally only 3 judges would hear this first round of arguments, but the appellate court decided to go straight to the full panel of 10 (not counting Chief Judge Garland, who is not participating). This unusual step signals that the judges consider this case extraordinary, and the court has set aside its largest courtroom and two overflow rooms for the large anticipated attendance from litigants and the public.

This regulation is of existential importance for certain sectors, and will put substantial upward pressure on energy costs for many manufacturers and other consumers. But beyond raising legal issues of statutory construction, administrative procedure and constitutional compliance, the Clean Power Plan is a prototype for the kind of regulation that tests the limits of the Executive Branch. Whoever wins the upcoming election, the next Administration will have to live within the contours of decisions like the one in this case. The power to regulate comes from the Constitution and the laws enacted in compliance with it, and the courts stand as the final judge on how far that authority goes.

NAM Challenges DOL’s New Overtime Rule

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

The Manufacturers’ Center for Legal Action filed a complaint with a coalition of other associations on September 20, 2016, to challenge the Department of Labor’s (DOL) new overtime rule, asserting the new rule exceeds the authority of the DOL under the Fair Labor Standards Act (FLSA). Unless a court stops it, this unprecedented rule will impair employers’ ability to classify as exempt from overtime executive, administrative, professional, and computer employees. The new rule will go into effect on December 1, 2016, causing economic harm to both employers and the employees who will be subject to the new overtime requirements.

The new overtime rule drastically alters DOL’s minimum salary requirements—increasing the minimum by 100%, from $23,660 to $47,476 annually—so as to impose new overtime payment requirements on businesses of all sizes. This directly effects those individuals who have historically been considered exempt from overtime pay. Due to the drastic rise in the salary threshold, employees will have to be reclassified and will inevitably lose many of the benefits and flexibilities that go along with being an exempt employee, such as flexible work schedules that permit employees to sometimes work outside of the normal business hours due to personal obligations.\

In addition, DOL’s new rule permits employers for the first time to count nondiscretionary bonuses, incentives and commissions toward up to 10 percent of the minimum salary level for exemption; however, this provision is so restricted by the DOL as to be meaningless. It also establishes an unprecedented automatic “escalator” provision that will dramatically increase the minimum salary every three years without a rulemaking. Congress has provided for automatic increases in other areas, such as the cost of living for Social Security benefits, but Congress has never provided for automatic increases of the minimum wage. The escalator provision exacerbates the detrimental impact on businesses, both large and small, by automatically updating the minimum salary requirements to even higher levels every three years.

DOL has failed to recognize the infeasibility, costs and real-world impacts of the new overtime rule. As noted in our press release, manufacturers of all sizes will bear the burden of this costly regulation that will force many employers to cut critical programming, staffing and services to the public. Many of these employers will lose the ability to effectively manage their workforces and provide flexibility to valued employees on the pathway to the middle class. This new rule will injure employers and employees across many industries, job categories and geographic areas by denying them opportunities for advancement and hindering performance of their jobs. We are hopeful that the court will understand the importance of this issue and overturn DOL’s new overtime rule.

Rhode Island Lawsuit Targets Deep Pockets, Not Justice

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

A bedrock principle of tort law in this country is that the party who causes the damage is the one who should be liable for fixing the damage.  Even under a standard of “strict liability” where a defendant is liable without a finding of fault, courts require a showing that the damage in question was actually caused by the defendant at the table.

A lawsuit recently filed in Rhode Island, led by the state’s Attorney General and staffed by hired-gun private plaintiff’s lawyers who stand to make a mint if the lawsuit is successful, seeks to break from this foundational principle.  That should be of concern to any manufacturer that could become the target of creative plaintiffs’ lawyer lawsuits—which is to say, to every manufacturer.

The lawsuit involves the gasoline oxygenate MTBE, which was for a time blended with motor fuel in order to meet federal emissions standards.  The problem with MTBE is that it is highly water soluble, and if underground storage tanks containing gasoline leak, the MTBE stored in them can contaminate groundwater.  Of course, the owners of these tanks, if they can be identified, have always been, and continue to be, responsible for cleaning up such leaks. On top of that, Congress created a special trust fund to pay for cleanups when the owner or cause is unknown, or where the owner may not have the wherewithal to pay.  The fund, which has been around since the mid-1980’s, is paid for by a tax levied on the petroleum industry on every gallon of fuel sold.

Unfortunately, many of the states where MTBE was most heavily used are also states that have suffered poor economic growth and have faced major budget challenges in recent years.  This has led many of these states, including Rhode Island, to raid their cleanup funds for other state budget priorities, thus creating the need to find alternative sources of funds to handle these cleanups.  Cue the trial bar, who have shopped MTBE lawsuits to several state Attorneys General and have found fertile hunting ground in the cash-strapped northeastern states.

The Rhode Island legal filing includes a smorgasbord of legal theories intended to bypass the inconvenient need to show that the defendants in the case actually caused the damage the lawsuit seeks to remedy.  The case seeks to pin liability on any company that sold reformulated fuel in the state—regardless of whose actions or whose storage tanks actually caused contamination.  It is, remarkably, a sanction based on simply doing business in the state of Rhode Island, which the state seeks to allocate according to the market share held by industry participants during the relevant time period.  Beyond the tort law implications of this case, it is remarkable that a state so badly in need of economic investment would target an industry simply for doing business there.

No matter how much money the defendants have paid into the state fund to cover such cleanups and regardless of the extensive efforts they may have already gone through to prevent leaks and to remediate those that occurred under their watch, the companies are targeted in this lawsuit because they are perceived as most able to pay.  This is a case about targeting deep pockets, not about remedying past wrongs, and certainly not about justice.

Unequal Justice Under Law: NAM Files Brief Challenging NLRB’s Permissive Discrimination

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

On September 2, 2016, the Manufacturers’ Center for Legal Action filed an amicus brief in the U.S. Court of Appeals for the Eight Circuit challenging a National Labor Relations Board (NLRB) decision forcing Cooper Tire & Rubber Company (Cooper) to reinstate an employee who used racial epithets toward a replacement worker while the employee was on the picket line. The NLRB’s decision overturned an arbitration decision finding that Cooper dismissed its employee for good cause. This decision does not align with existing federal law, forces manufacturers to execute a policy that leaves them open to civil liability and requires businesses to tolerate behavior antithetical to American values.

The NLRB’s decision to reinstate an employee who used racist speech does not follow federal law by violating Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. These laws prohibit discrimination and harassment on grounds such as race and allow for an employer to fire an employee in violation. The work environment should encourage openness and understanding of all employee backgrounds. Forcing a company to condone racist behavior violates other workers’ rights to a hostile-free workplace. Ultimately, this decision by the NLRB significantly diminishes an employer’s ability to cultivate an inclusive work environment which hurts workers, productivity, and profit.

Not only does this decision negatively impact the working environment, it forces manufacturers to accept conduct which leaves them open to liability. Under federal law, when a racial statement is made directly to an employee, an employer can be liable if they know about the statement and fail to take proper action. If the NLRB’s erroneous decision is upheld, employers in many instances will be forced to allow discrimination to continue, instead of firing employees for racial harassment. This would therefore require employers to follow a pro-discriminatory policy, exposing them to possible litigation and allegations of cultivating a hostile workplace environment.

This NLRB decision challenges American progress on issues of race and diversity in both business and culture. Employers should not be required to condone racism in the workplace. We are hopeful that the Eight Circuit will understand the importance of overturning this discriminatory NLRB decision which not only negatively impacts the way we conduct business but the way we conduct ourselves.

Administration Shoehorns Modern Problems into Antiquated Laws

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

The federal government is now routinely using laws passed before the invention of the fax machine to control dynamic information systems like cloud computing and broadband access. These efforts to regulate and police the innovation economy will loosen constitutional privacy protections and chill technological innovation.

For example, relying on the Electronic Communications Privacy Act of 1986, the Department of Justice has recently sought to search Microsoft customers’ e-mails. Microsoft has pushed back, alleging that the Justice Department’s orders violate its customers’ privacy and infringe on its right to free speech. Many of these demands prohibit Microsoft from informing customers that their information is being investigated.

Most laws governing government searches were written before the widespread use of digital communications. At that time, if the government wanted to execute a search warrant to look through one’s files, notice was necessary since a search would require entering a home or office to access documents. Now that many Internet users store their information in the cloud, rather than locally on their computers, the government can bypass notification of the customer by directly contacting providers such as Microsoft. Therefore, simply because the location of information has changed, users now experience different legal protections. Microsoft argues this is unconstitutional because Fourth Amendment protections on the reasonableness of searches should not discriminate based on how a citizen stores his or her information.

The privacy and free speech implications of the government’s actions have significant consequences for the greater business community and the innovation economy. When the government treats those who store their information at home differently than those who use the cloud, individuals are less inclined to use this potentially transformative new technology to protect their privacy. When individuals forgo cloud-computing services, innovative manufacturers will lose customers.

The National Association of Manufacturers will continue its fight to uphold proper constitutional protections and promote balanced and reasonable resolution through the courts.

Canada in Crosshairs for Promise Utility Doctrine at Investor Dispute Hearing

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

Co-authored by Linda Dempsey, Vice President of International Economic Affairs

Canada’s attempts to defend a questionable intellectual property approach have taken a hit in recent weeks as government experts faced scrutiny from a team of neutral international arbitrators, based on the official hearing transcripts released on August 3. These hearings are vitally important for a wide range of innovative manufacturing companies using patents or investing internationally.

During two weeks of International Court of Settlement for Investment Disputes (ICSID) hearings in late May and early June, Canadian officials and experts faced crossfire for attempts to defend Canada’s “promise utility doctrine.” This rule, which constitutes a “revolution” in Canadian patent law, was invented by their courts and rests on the concept that patents that do not fulfill their “promise”as arbitrarily construed by the courts often years after the patent was filedcan be ruled invalid, even if they meet all of the internationally accepted criteria for patentability. Canadian courts began freely applying the rule in 2005 and have since revoked 25 patents that were invented to help millions of people suffering from cancer, osteoporosis, diabetic nerve pain and other serious conditions. Read More

Good News in Case Against “Legal Fraud of the Century”

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There’s some good news today from the U.S. Court of Appeals for the Second Circuit in Chevron’s long-running battle over a court ruling in Ecuador that was obtained through a fraudulent scheme. The court affirmed the lower court’s decision, ruling that Chevron does not have to pay billions of dollars in damages because the original verdict was the product of fraud and racketeering activity.

If you’re a regular Shopfloor reader, you will recall many of the details of this case against Chevron, which has been referred to as the legal fraud of the century.” You can read more about the Second Circuit’s verdict and the long, drawn-out court battle here.

The case involves an American plaintiffs’ lawyer drumming up a lawsuit against Chevron for environmental damage in Ecuador, even though Chevron has never operated in Ecuador. As the case unraveled in a very public battle, it turned into a saga of fabricated evidence, intimidation and bribery—or unscrupulous lawyers and corrupt government officials conspiring to make billions they did not deserve.

In short, this case is a reminder that bad actors do try to pervert the justice system for their own financial gain—and that we must remain vigilant against such fraud and corruption. The Second Circuit’s ruling is a victory for Chevron and the people they employ, but more importantly for the rule of the law.

Court Ruling Pushes EPA Toward More Regulation

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Government agencies have a tremendous advantage when it comes to defending new regulations in court. Judges start with a legal presumption that not only gives the benefit of the doubt to the agency, but sets a very high bar for reversing rules that most people might not have issued. As long as an agency’s rules are authorized by statute and not clearly erroneous or otherwise an abuse of discretion, courts will accept them.

That’s what the D.C. Circuit did today when it largely upheld the Environmental Protection Agency’s (EPA) rules on boilers and incinerators. All of the challenges to the rules by the Manufacturers’ Center for Legal Action and other business organizations were rejected by the appellate court. The court upheld one EPA requirement that could not be met by any small, remote incinerator or heavy oil-fired boiler in use today. It similarly rejected industry complaints about new energy assessment and recordkeeping requirements, as well as concerns about compliance with the rules when equipment malfunctions despite full compliance with regulations and due diligence by operators.

What is unusual is that the court agreed with several arguments made by environmental groups. It ordered the EPA to issue a regulation for cyclonic burn barrels and to decide whether certain other incinerators must be regulated under the Clean Air Act. The court also ordered the agency to provide further explanations about the decisions it made not to regulate emissions of a certain hazardous pollutant (non-dioxin/furan organic pollutant), about why certain exemptions should be allowed and about why it declined to regulate certain non-mercury emissions.

The bottom line is the court upheld all of the EPA’s regulations and ordered the agency to cover even more than it did, or at least give a full explanation of why it won’t.

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 (NAM), 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 is 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. “Furthermore, 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. Furthermore, explosive growth in shale gas requires the construction of new pipeline capacity. Amici thus have a strong interest in the effectuation of Congress’ 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 policymakers, 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.

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