“A powerful opinion that supports the rights of businesses to comment on litigation against them.”
On Thursday, the National Association of Manufacturers (NAM) continued its fight against state attorneys general targeting manufacturers. The Manufacturers’ Center for Legal Action (MCLA) filed an amicus brief in the U.S. Supreme Court, arguing against the misguided efforts of Massachusetts Attorney General Maura Healey to silence energy manufacturers.
The NAM’s amicus brief asks the U.S. Supreme Court to consider and reverse a ruling by the Massachusetts Supreme Court that upheld the validity of the attorney general’s subpoena, which sought decades of ExxonMobil’s communications relating to climate change. ExxonMobil challenged the authority of Massachusetts courts to enforce the subpoena because ExxonMobil’s limited commercial activity in the state (licensing agreements with independent gas stations) is unrelated to the focus of the subpoena.
The Massachusetts Supreme Court upheld the subpoena despite the tenuous connection between the company’s advertising and the subpoena. That low bar threatens all manufacturers by massively expanding the range of venues through which plaintiffs or government officials may pursue claims against manufacturers. The NAM’s amicus brief argues that subpoenas like this are valid only when the nature of the company’s in-state conduct has a substantial relationship with the focus of the subpoena.
Healey’s investigation is just part of a larger effort nationwide to target energy manufacturers, purportedly over climate change. But as manufacturers have argued, and the Supreme Court has concluded, the courts are not the right venue for setting climate change policy. That work belongs in the legislative and executive branches, and the MCLA, as well as the Manufacturers’ Accountability Project, will continue to work to ensure that attorneys general, trial lawyers and activists do not succeed in their efforts to undermine our judicial system.
As a manufacturer, the possibility of being sued is an unpleasant reality of doing business. But knowing when and where you might face litigation can at least help your company evaluate risk and inform business planning. Can a fabricator in Freeport, Maine, be sued in Fairbanks, Alaska? Must a manufacturer in Milwaukee, Wisconsin, face a civil trial in Maui, Hawaii? These questions have vexed courts—and manufacturers—for decades. The National Association of Manufacturers’ (NAM) Manufacturers’ Center for Legal Action (MCLA) is working to bring some needed clarity to these issues.
Generally, a business may only be sued in a state where it is headquartered, operates a factory or conducts other business. For some large corporations, that could mean being vulnerable to suit throughout the United States. But small and medium-sized manufacturers might only operate in one region of the country or even in a single state. Courts recognize there are situations where it would be unjust to force manufacturers to face lawsuits in far-flung states where the manufacturer has no operations.
A court has jurisdiction over a defendant if that defendant has “minimum contacts” with the plaintiff’s state. If a company has a physical presence in a state, the “minimum contacts” test is easily satisfied. But determining jurisdiction becomes more challenging when a manufacturer has no operations or other physical presence in a state, but its products are ultimately sold there.
A toy manufacturer is now asking the U.S. Supreme Court to provide some much-needed clarity on these issues. The case—Align Corporation v. Boustred—involves a Taiwan-based manufacturer of toy helicopters. The manufacturer has no operations, employees or other presence in the United States. It sells to U.S.-based distributors who then sell to retailers nationwide. A Colorado man bought one of the helicopters and then sued the manufacturer in Colorado after the helicopter allegedly injured him.
The manufacturer asked the court to dismiss the case because the manufacturer has no operations in Colorado. The Colorado Supreme Court ultimately rejected that argument, reasoning that the manufacturer had placed its product in the “stream of commerce” and did not prohibit distributors from selling to Colorado retailers.
Why should manufacturers in the United States care? This “stream of commerce” theory of minimum contacts means that any manufacturer in the United States, large or small, could be sued anywhere their products end up, regardless of whether the company has any operations or other activity in the state.
Is it fair for a family-run business in Vermont to be dragged into an Oregon court? Should a manufacturer in Pittsburgh be forced to fight a frivolous lawsuit in Alaska? The NAM’s MCLA doesn’t think so, and we filed a legal brief in this case for that very reason. We are asking the U.S. Supreme Court to take the case and reverse the Colorado court’s decision. A more constrained test would significantly narrow and clarify where manufacturers can be sued.
The freedom to speak or refrain from speaking is a cherished right under the First Amendment to the U.S. Constitution. The ability of manufacturers to exercise that right is under attack, and the National Association of Manufacturers’ (NAM) Manufacturers’ Center for Legal Action (MCLA) is fighting back.
Over the past few years, some cities and even the federal government have sought to use manufacturers as ventriloquist puppets to spread political messages that could harm sales and damage company reputations. The latest example comes from San Francisco, where the city council passed an ordinance that requires warnings on certain advertisements for beverages containing added sugar. Here is how the warning would look on an actual advertisement:
Groups representing beverage manufacturers, retailers and advertisers sued in federal court to block the ordinance. They lost at the trial level but won on appeal. The city is now seeking a further appeal to the full U.S. Court of Appeals for the 9th Circuit, located in San Francisco.
The legal issues in this case, American Beverage Association v. City of San Francisco, will have far-reaching implications for manufacturers. If governments like San Francisco’s can force manufacturers to speak out against the very products they create or compel companies to spread controversial messages on their products or advertising, companies’ voices could be silenced and their business harmed.
This week, the MCLA filed an amicus brief in support of the beverage companies that argues against the city’s ordinance and the larger problem of regulation through forced speech. Our brief argues that courts should invalidate government efforts to coerce companies into spreading a political message or speaking out against their product or service. By promoting rigorous judicial review of these misguided regulatory efforts, we expect to deter other like-minded cities from enacting similar requirements. And if other cities continue to do so, the MCLA will be prepared to argue against those requirements and help strike them down as well.
“…the court ultimately sided with the MCLA and others who support the order.”
Saturday marked the last day of Philip Miscimarra’s tenure as chairman of the NLRB. While the Board was fully constituted with five members, it managed to release a passel of decisions of major importance to manufacturers. Highlighted below are the key rulings, each garnering a slim 3-2 majority and culminating long-fought struggles on fundamental questions. In the months ahead, manufacturers will better understand and comply with labor laws on a variety of topics: (1) how broadly an employee bargaining unit should be defined, (2) how much of a connection should one employer have with employees of another in order to be considered a joint employer, (3) whether workplace policies interfere with the labor rights of employees, and (4) whether annual changes in health plan costs and benefits are mandatory subjects of collective bargaining.
The NLRB’s decision in the Specialty Healthcare case in 2011 overturned 70 years of labor law regarding the standard for an appropriate size of a collective-bargaining unit. That decision has now been overruled. In PCC Structurals, Inc., the Board reinstated the traditional community-of-interest standard, throwing out a standard that allowed as few as two people to form a “micro-union” in one facility or location.
The old standard, now reversed, made it harder for a manufacturer to manage operations effectively, enabling one micro-union to shut down production and/or operations at any given time. It also made it easier for union organizers to organize, since fewer people would need to vote on any particular union.
The National Association of Manufacturers (NAM) expressed our opposition to the old standard in at least 11 amicus briefs over the past six years. We also helped lead efforts on Capitol Hill to overturn the opinion through legislation. Finally, the Board has voted to return the law to a more even-handed and rational approach that recognizes the need for bargaining units to be properly defined.
The NLRB provided a substantial victory for manufacturers on December 14 by overturning the Browning-Ferris Industries case and returning the joint-employer standard back to its original definition. It stated that to be classified a “joint employer,” jointly liable for labor violations, a business must have a direct and immediate connection to the employees in question. Browning-Ferris had said that a business could be classified a joint employer even if its relationship to the employees in question were indirect.
“We find that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations] Act, it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations,” the majority wrote in its decision.
The NAM filed amicus briefs in the original Browning-Ferris case at the NLRB, as well as in the appeal now pending in the D.C. Circuit. In addition, the Supreme Court will decide in January whether to review the DirecTV case involving the joint-employer standard. We have also recently filed amicus briefs in two other cases involving this issue.
In another 3-2 victory, the Board ruled in The Boeing Company case that the company’s no-camera rule at the workplace did not interfere with employee organizing, collective bargaining or other labor rights. The NAM’s Manufacturers’ Center for Legal Action filed an amicus brief in this case calling for this result. The ruling established a new test for determining whether a facially neutral policy, rule or handbook provision potentially interferes with the exercise of employee rights under the National Labor Relations Act (NLRA). It rejected a previous ruling that would have determined the legality of the workplace rule by considering whether employees would “reasonably construe the language to prohibit” protected activity. Instead, it delineated three categories of employment policies, rules and handbook provisions and how to analyze them for legality. For facially neutral workplace policies, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the policies. This action promises to provide far greater clarity and certainty to employees, employers and unions and to eliminate conflicting and arbitrary decisions in the future.
Health Care Benefit Changes
Also on December 15, the NLRB released its decision in Raytheon Network Centric Systems. It ruled that a company may modify employee health care costs and benefits annually without that being considered a “change” that would trigger an obligation to bargain with the union representing affected employees. The Board overruled its prior decision in the DuPont case and found that a company has the right to take the same actions it has taken in the past, even though a collective bargaining agreement has expired, without negotiating with the union. The new ruling is grounded on the “long-understood, commonsense understanding of what constitutes a ‘change’ . . . .”
The close votes on all of these cases signals a continuing difference of opinion among political appointees and management and labor over how to structure shop floors to allow U.S. manufacturing employees to achieve the best workplace terms and conditions of employment while also producing high-quality products that can profitably compete around the world. We are hopeful that these latest decisions will clarify the rules and facilitate cooperation and progress toward the shared goals of everyone who makes things in America.
La Jolla: Anatomy of a Plot
La Jolla: Anatomy of a Plot, Part I. Five years ago, at an informal gathering in an exclusive seaside community in San Diego, a small but determined group of activists hatched an ambitious plan: they would bring down some of America’s largest energy manufacturers, which also happen to be some of America’s largest employers.
Operating on hunches and guesswork, the group, comprised of activist academics, wealthy trial lawyers and public relations experts, spun a disparaging narrative about energy companies.
To prove their claims, they needed to gain access to internal energy company documents and that would mean convincing the Justice Department and state attorneys general to begin investigations.
Since that 2012 meeting in La Jolla, California, a lot has changed. What began as a series of informal discussions has evolved into a highly coordinated, far-reaching and well-funded campaign to persuade government officials to embark on taxpayer-funded fishing expeditions.
In recent years, the campaign has attracted the support of billionaires and deep-pocketed family foundations. In the coming weeks and months, Full Disclosure will chronicle the growth of this extensive web of collusion.
We’ll uncover which figures are fueling this costly effort. We’ll document how journalists whose work is funded by an explicit anti-manufacturing agenda are working to create a hostile climate for energy manufacturers and the men and women who work for them.
And we’ll expose the trial attorneys who, motivated by the prospect of colossal contingency fees, are working overtime to put American energy producers out of business and employees out of work.