Law Center Search Results

On March 13, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a 9th Circuit decision recognizing aiding and abetting liability under the Alien Tort Statute and Torture Victim Protection Act. In this case, the plaintiffs, practitioners of the Falun Gon religion, allege that Cisco’s technology enabled the Chinese government to commit human rights abuses against them in China and seek to hold Cisco liable for those abuses. The plaintiffs argue that Cisco aided and abetted or conspired with Chinese officials in the human rights abuses in violation of the ATS and TVPA. After the 9th Circuit reversed a trial court dismissal and allowed the claims to proceed, Cisco appealed.

We argue that allowing the 9th Circuit’s decision to stand will harm U.S. businesses’ competitive advantage by subjecting them to sprawling, resource-draining litigation for conduct they had no control over while their foreign competitors are not subject to such claims. Expanded ATS litigation would chill direct foreign investment by U.S. businesses in foreign markets, which enables sales to customers that U.S. manufacturers could not otherwise reach and generates revenues that can be re-invested domestically.

On February 10, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to address an important issue concerning federal court diversity jurisdiction. After the plaintiff brought this product liability suit in Texas state court, Hain removed the case to the Southern District of Texas asserting diversity jurisdiction as the basis for federal court jurisdiction. Hain maintained that its co-defendant (Whole Foods) should be dismissed from the case because the plaintiffs failed to state a claim against Whole Foods and only joined Whole Foods to prevent a federal court from hearing the case. The plaintiffs then amended their complaint against Whole Foods to defeat diversity and moved to remand the case to state court. The district court, however, held that the plaintiffs could not defeat federal diversity jurisdiction by adding new allegations to their complaint following removal, and that their amended claims still did not state a viable claim against Whole Foods. The district court also ruled for Hain on the merits. Following trial and judgment in Hain’s favor, the 5th Circuit reversed the district court’s decision on appeal and held that the case should be remanded to state court because the district court lacked jurisdiction to resolve the plaintiffs’ claims on the merits.

We argue that the 5th Circuit’s decision threatens to force businesses to expend significant resources litigating a case in federal court only to have a federal court of appeals reverse a favorable judgment and return the case to state court for a plaintiff to have a second bite at the apple. Manufacturers have a strong interest in preserving the finality of court judgments.

Happily, on April 28, 2025, the U.S. Supreme Court granted the petition for certiorari.

On March 24, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to address a circuit split concerning federal officer removal jurisdiction. This case is one of over 40 cases filed by a group of Louisiana parishes in state court seeking relief for alleged damage to Louisiana’s coastal environment. The plaintiffs assert that the defendants—energy manufacturers—violated state environmental laws by violating or failing to obtain a use permit for oil production activities on the Louisiana coast. Importantly, the defendants were acting, in part, pursuant to contracts with the government to refine crude oil into high-octane aviation gasoline to support the Allies in WWII. Because federal courts have jurisdiction over civil actions against “any person acting under [an] officer” of the United States “for or relating to any act under color of such office,” the defendants removed the case to federal court. Although a 5th Circuit panel agreed that the defendants acted under a federal officer, it split on whether the defendants’ production of crude oil “relat[ed] to” their government contracts. The majority held that a removing party must identify a “relevant federal directive” for a federal court to exercise federal officer removal jurisdiction and the defendants’ oil production lacked a sufficient connection with directives in their federal refinery contracts. The defendants have petitioned the U.S. Supreme Court to review the case.

In our amicus brief, we argue that the Court should hear the case to resolve a circuit split on this important issue. Most circuits have read the phrase “relating to” as requiring only a connection or association between an act taken under a federal officer and the subject matter of a suit, not strict causation, like the 5th Circuit. Federal contractors may cease performing work for the federal government that is nationally important but locally unpopular if the 5th Circuit’s decision stands.

Happily, on June 16, 2025, the Court granted the petition for certiorari.

On September 11, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to preserve federal officer removal jurisdiction for federal contractors who are sued for actions related to their contracts with the federal government. In this case, the defendant oil companies refined oil during WWII pursuant to contracts with the federal government. Decades later, they were sued in state court by a number of Louisiana municipalities seeking damages for the impacts to Louisiana’s coastal environment from the defendants’ oil drilling. After the case was removed to federal court and appealed on the issue of removal, the Fifth Circuit wrongly held that in order for the federal officer removal statute to apply, federal contracts must contain an explicit “directive” from a federal officer, such that parties to the contract are “acting under” the officer. After a series of appeals to and remands by the 5th Circuit, the defendants sought Supreme Court review. The Court granted certiorari in June.

In our fifth brief filed in this litigation, the NAM argues that federal contractors have long relied on the protection of the federal officer removal statute when transacting with the government, and that a “contractual directive” requirement unduly narrows the text of the statute, which broadly applies to all claims “relating to” work under a federal officer. Without federal officer removal, the NAM argues, federal contractors would be hesitant to take on work that is nationally important but locally unpopular.

On January 29, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a troubling 8th Circuit decision allowing foreign plaintiffs to bring claims in U.S. courts based on alleged injuries that occurred abroad. When U.S. companies invest in foreign industrial or commercial activities, they reasonably expect that litigation involving environmental harms—or similar mass tort claims focused on overseas operations and overseas injuries—will occur in the courts of the foreign jurisdiction at issue, absent an agreement stating otherwise or some other fact-specific reason why U.S. courts would be the logical, efficient, and expected forum. In this case, however, the 8th Circuit blessed an end-run around such expectations and created a playbook for mass-tort plaintiffs alleging foreign harms to proceed in the United States. The case arose after Peruvian citizens sued the defendants in Missouri state court asserting negligence claims stemming from defendants’ mining operations in Peru. The defendants moved to dismiss the case on the ground that it was improperly brought in a U.S. court, but the trial court denied the defendants’ motion and the 8th Circuit affirmed on appeal.

We explain in our brief that if the 8th Circuit’s decision stands, it threatens to invite a wave of foreign torts into U.S. courts, seeking to impose state-law standards on the overseas operations of foreign entities with U.S. parent companies. This approach would undermine the regulatory certainty U.S. manufacturers need to invest in overseas operations and weaken the supply chains that are critical to manufacturers’ ability thrive.

Unfortunately, on March 3, 2025, the U.S. Supreme Court denied the petition for certiorari.

On February 18, 2022, the NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a 9th Circuit decision which sanctions a patchwork system of local regulation of healthcare and retirement benefits in square conflict with ERISA’s expansive preemption provision. This case, ERISA Industry Committee (ERIC) v. City of Seattle, involves a challenge to a Seattle ordinance requiring certain employers to make monthly healthcare expenditures to employees at Seattle-specific thresholds. The 9th Circuit rejected the challenge even though Congress intended for federal law—the Employee Retirement Income Security Act of 1974 (ERISA)—to provide a single uniform national scheme for the administration of healthcare and retirement plans without interference from states or municipalities. Indeed, the 1st and 4th Circuits have held that similar laws are preempted under well-established ERISA preemption principles.

The NAM filed an amicus brief in support of Supreme Court review explaining that ERISA preemption plays a critical role in making benefits possible for employees, and state and local rules that conflict with ERISA’s national uniformity must be struck down. As a practical matter, state and local mandates like this one harm workers, forcing employers to divert resources away from providing quality health coverage, and instead spend money to comply with a complex and mismatched patchwork of state and local rules. Already, localities across the country have begun to adopt similar ordinances with varied minimum benefit rates, timelines, definitions, and recordkeeping requirements—a completely unworkable, fragmented regulatory regime. Supreme Court intervention is sorely needed.

Unfortunately, on November 21, 2022, the Supreme Court denied cert.

The NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a deeply flawed Eighth Circuit opinion applying an erroneous standard to the admissibility of expert testimony and usurping the gatekeeping role of the trial court. This multidistrict litigation involves allegations that 3M’s Bair Hugger patient warming device causes surgical site infections. After conducting a thoughtful and thorough review of plaintiffs’ general causation experts’ opinions—a faithful application of Fed. Rule of Evidence 702—the district court found that the opinions included large analytical gaps and were not generally accepted, and, accordingly, granted summary judgment in favor of 3M.

The Eighth Circuit reversed, applying a pre-Daubert standard. Under that standard, it is an abuse of discretion to exclude expert testimony unless the experts’ opinions are “so fundamentally unsupported” that they’re of no help to a jury. This obsolete standard essentially abrogates any discretion a district court has to exclude expert testimony.

The NAM filed an amicus brief urging the Court to grant 3M’s cert petition to resolve the widespread confusion in the courts on applying Rule 702 and safeguard the scientific underpinnings of the American health care system. The Eighth Circuit’s liberal admissibility standard threatens to adversely affect those who rely on the benefits of a medical device or drug—approximately 50,000 people per day. Such critical products, which are subject to substantial scientific analysis and review by the federal government, should not be deemed defective by juries applying an erroneous, overly permissive admissibility standard.

Unfortunately, on May 16, 2022, the Supreme Court denied cert.

On December 20, 2024, the NAM filed an amicus brief requesting the U.S. Supreme Court to address whether the admissibility of expert testimony should be considered at the class certification stage of a case. In this case,pPetitioners Nutramax Laboratories, Inc. and Nutramax Laboratories Veterinary Sciences, Inc. (collectively, “Nutramax”) research, develop, and sell supplements for household pets. Respondents—two individuals who purchased a Nurtamax product for their elderly dogs—brought a putative class action asserting damages claims against Nutramax. Respondents allege that various statements used on different versions of product labels were deceptive. The Central District of California granted Respondents’ motion for class certification and denied Nutramax’s motion to exclude Respondents’ expert testimony. The district court held that “[a]t the class certification state, admissibility must not be dispositive. Instead, an inquiry into the evidence’s ultimate admissibility should go to the weight that evidence is given.” In a split decision, the 9th Circuit affirmed. Nutramax filed a petition for certiorari with the U.S. Supreme Court.

We argued in our amicus brief that Federal Rule of Evidence 702 requires the admissibility of expert testimony to be considered at the class certification stage. The U.S. Supreme Court should grant certiorari because circuit courts are split on this issue. Moreover, this issue is important because class certification carries huge stakes: the multiplying effect of certification creates a risk of “devastating loss” that in turn leads to “in terrorem” class settlements even for “questionable claims.”

The NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse the lower courts’ dismissal of a challenge to a California ballot initiative that regulates the conduct of farmers, manufacturers, and producers nationwide. Proposition 12 bans the sale of imported pork and veal in California unless farmers and producers outside of California meet strict animal confinement standards set by California voters. The NAM argued in the brief that Proposition 12 violates the Commerce Clause by regulating conduct beyond California’s borders, impinging on other states’ sovereign authority to legislate within their own jurisdictions, and, substantially burdening out-of-state pork producers absent a sufficient and legitimate local interest.

On May 28, 2022, the Supreme Court granted the cert. petition. On June 17, the NAM filed an amicus brief asserting the same arguments included in its amicus brief filed in support of the U.S. Supreme Court granting review. This litigation is important to all manufacturers because if upheld, Proposition 12 may embolden other states to regulate out-of-state conduct, resulting in a complex web of inconsistent and competing extraterritorial regulations in the agriculture and food industries, and beyond.

Unfortunately, on May 11, 2023, the Supreme Court affirmed the 9th Circuit's decision affirming the lower court's dismissal of the case.

On September 21, 2023, the NAM filed an amicus brief in support of energy manufacturers’ petition seeking U.S. Supreme Court review of a lower court’s remand order in a case asserting state liability claims related to climate change. This is a case seeking to hold oil and gas companies liable for the impacts of climate change in Minnesota. The 8th Circuit upheld the federal district court’s decision to remand the case to state court for lack of subject matter jurisdiction. In our brief, we argue that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. This case has important implications for all manufacturers because of the growing trend among plaintiffs’ lawyers of using public nuisance and consumer deception claims to seek monetary damages from manufacturers for broad, societal issues that are ill-suited for consideration by a patchwork of state court determinations and should be addressed in the policy process.

Unfortunately, on January 8, 2024, the U.S. Supreme Court denied the energy manufacturers' petition.

On Wednesday, December 28, the NAM filed an amicus brief in support of energy manufacturers’ petition seeking U.S. Supreme Court review of the lower courts’ remand order in a case asserting “public nuisance” claims related to climate change. This case, Chevron Corporation, et al. v. San Mateo County, California, et al., is one of over two dozen public nuisance cases seeking to drive national energy policy on climate change. The 9th Circuit upheld the district court’s decision to remand the case to state court for lack of subject matter jurisdiction.

In our brief, the NAM argues that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. This case has important implications for all manufacturers because of the growing trend among plaintiffs’ lawyers of using public nuisance and consumer deception claims to seek monetary damages from manufacturers for broad, societal issues that are ill-suited for consideration by a patchwork of state court determinations and should be addressed in the policy process.

Unfortunately, on April 24, 2023, the Court denied the energy manufacturers' petition.

On January 5, 2023, the NAM filed an amicus brief in support of energy manufacturers’ petition seeking U.S. Supreme Court review of the lower courts’ remand order in a case asserting “public nuisance” claims related to climate change. This case is one of over two dozen public nuisance cases seeking to drive national energy policy on climate change. The 1st Circuit upheld the district court’s decision to remand the case to state court for lack of subject matter jurisdiction.

In our brief, the NAM argues that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. This case has important implications for all manufacturers because of the growing trend among plaintiffs’ lawyers of using public nuisance and consumer deception claims to seek monetary damages from manufacturers for broad, societal issues that are ill-suited for consideration by a patchwork of state court determinations and should be addressed in the policy process.

Unfortunately, on April 24, 2023, the Court denied the energy manufacturers' petition.

On January 5, 2023, the NAM filed an amicus brief in support of energy manufacturers’ petition seeking U.S. Supreme Court review of the lower courts’ remand order in a case asserting “public nuisance” claims related to climate change. This case is one of over two dozen public nuisance cases seeking to drive national energy policy on climate change. The 9th Circuit upheld the district court’s decision to remand the case to state court for lack of subject matter jurisdiction.

In our brief, the NAM argues that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. The NAM also argues that the petitioners plainly satisfy the requirements for federal officer removal by asserting they are “person[s]” in a “civil action” “for or relating to” acts performed while “acting under” federal officers and “raise[d] a colorable federal defense”—which are the only requirements Congress and the Court have established for when the statute provides a right of removal. This case has important implications for all manufacturers because of the growing trend among plaintiffs’ lawyers of using public nuisance and consumer deception claims to seek monetary damages from manufacturers for broad, societal issues that are ill-suited for consideration by a patchwork of state court determinations and should be addressed in the policy process.

Unfortunately, on April 24, 2023, the Court denied the energy manufacturers' petition.

On April 1, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to resolve a circuit split regarding the proper legal framework to apply for determining whether time spent putting on and taking off personal protective equipment (“donning and doffing” time) is compensable under the Fair Labor Standards Act. In this case, the plaintiff oil rig workers sued their employer under the FLSA for failure to compensate them for time spent donning and doffing generic PPE—fire retardant overalls, steal-toe boots, hard hats and safety glasses—at the beginning or end of their workday. The district court held that the time is not compensable, but the 3rd Circuit reversed on appeal. The 3rd Circuit rejected the test applied by the lower court—also adopted by the 2nd Circuit—and embraced a different, more plaintiff-friendly test to govern compensability determinations.

We argue that review is necessary to resolve the circuit split and provide certainty to manufacturers regarding their compensability determinations. If the U.S. Supreme Court does not agree to hear the case, manufacturers will be harmed by the 3rd Circuit’s test which not only calls standard compensation practices into question, but potentially expands the workday to include activities commonly completed at home and could spur a flood of litigation.

Unfortunately, on June 3, 2024, the Court denied the petition for certiorari.

On November 6, 2023, the NAM filed an amicus brief urging the U.S. Supreme Court to review a lower court decision granting preliminary relief in favor of a union—including forcing the employer to reinstate terminated employees—while the Board’s adjudication process remains ongoing. Under the National Labor Relations Act, federal district courts are empowered to grant preliminary relief at the NLRB’s request while an NLRB adjudication remains pending. In this case, the 6th Circuit affirmed a district court’s grant of preliminary relief—which is considered an extraordinary remedy reserved for extreme cases—under an unduly permissive standard. Specifically, the 6th Circuit, along with the 3rd, 5th, 10th and 11th Circuits, has held that the NLRB is entitled to preliminary relief upon a showing of reasonable cause to believe that the unfair labor practice alleged has occurred and that preliminary relief is just and proper. By contrast, other circuit courts have applied the traditional, and more stringent, four factor test to determine whether the NLRB is entitled to preliminary relief. Under that test, the NLRB must establish that (1) that it is likely to succeed on the merits of its claim, (2) that it is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in its favor, and (4) that an injunction is in the public interest.

We argued in our amicus brief that the Court should grant Starbuck’s petition to resolve the circuit split and that the 6th Circuit’s lenient standard places unreasonable burdens on employers subject to unfair labor practice proceedings. Happily, on January 12, 2024, the Court granted the petition.

We filed another amicus brief on February 28, 2024, urging the Court to reverse the 6th Circuit's unsupported watered-down injunction standard that the Board has leveraged to interfere with American business. On June 13, 2024, the Court reversed the 6th Circuit's decision and made clear that the traditional, and more stringent, four-factor test used for determining a party’s entitlement to a preliminary injunction applies to the NLRB.

On January 10, 2025, the NAM filed an amicus brief requesting the U.S. Supreme Court to address an issue of first impression under U.S. patent law, as amended by the Leahy-Smith America Invents Act of 2011 (AIA)—whether a company’s sale of an unpatented product made by a secrete patent process is a bar to patentability of that process under the AIA. In this case, Celanese sought to enforce its patent for the secret process used to create artificial sweetener Ace-K (which itself is not patented) against Chinese-based companies that were unlawfully using that patent process. The International Trade Commission concluded that Celanese’s sale of Ace-K before obtaining a patent for its secret manufacturing process invalidated the patent under the AIA’s on-sale bar. The Federal Circuit affirmed on appeal.

We argue in our brief that the AIA and its legislative history suggest that Congress intended to require disclosure of the claimed invention (here, the secret manufacturing process) for the on-sale bar to apply to a process. Certiorari is warranted to clarify the on-sale bar’s application to process patents—a critical issue to the manufacturing community, considering protecting innovative processes is critical to maintaining global competitiveness of American manufacturers.

Unfortunately, on April 28, 2025, the U.S. Supreme Court denied the petition for certiorari.

The NAM filed an amicus brief urging the U.S. Supreme Court to grant cert to reinforce the preemptive authority of the federal government to regulate pharmaceutical drug labeling. Federal law bars drug manufacturers from unilaterally changing drug labels to include warnings for off-label uses; in fact, manufacturers can face potential criminal liability for “misbranding” a drug if the label includes information about unapproved uses. Yet in this case, Janssen Pharm., et al. v. A.Y., et al., a Philadelphia jury awarded plaintiffs $70 million in damages because the manufacturer did not include a warning about an off-label use of the drug Risperdal. There are over 10,000 nearly identical cases still pending against the company in Pennsylvania state court. Manufacturers across federally regulated industries are subject to carefully calibrated federal labeling regimes that provide the certainty and predictability needed to operate. As the NAM’s brief argues, the use of state tort law to undermine federal labeling requirements will, if allowed to continue, create a confusing and ultimately destructive “dual track” system where federal agencies and state tort law will conflict and ultimately undermine the federal goal of targeting labeling to a specific audience.

Unfortunately, on May 17, 2021, the Supreme Court denied cert.

On July 7, 2025, the NAM filed an amicus brief in support of C.H. Robinson in a case involving the trial bar’s attempt to hold CHR liable for a motorist’s injuries following a trucking accident under a negligent hiring theory. For many years, the trial bar has targeted such claims against freight brokers and shippers despite the 1994 Federal Aviation Administration Authorization Act which prevents states from undermining federal deregulation of interstate commerce through a patchwork of state laws, including state tort suits. Although most circuit courts to consider the issue have agreed that the FAAAA preempts state tort suits, the 9th Circuit has split and allowed such suits to proceed. Our brief urges the U.S. Supreme Court to decide the issue definitively, emphasizing the need for efficient domestic supply chains to support President Trump's agenda.

On April 1, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to review a Hawaii Supreme Court decision allowing plaintiffs to pursue claims under state law that seek to hold energy companies liable for climate change. In this case, the trial court denied the defendants’ motion to dismiss the plaintiffs’ state law claims, arguing that the claims are preempted by federal common law or the Clean Air Act. The Hawaii Supreme Court affirmed that decision, reasoning that neither federal common law nor the CAA preempt the plaintiffs’ state law claims.

Our brief urges the Court to grant the petition because the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature—such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws.

Unfortunately, on January 13, 2025, the United States Supreme Court denied the petition for certiorari.

On July 23, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to hear 19 Republican State Attorneys General’s complaint seeking to block five states—California, Connecticut, Minnesota, New Jersey and Rhode Island—from pursuing climate change litigation against energy manufacturers. The Constitution authorizes the Court to hear disputes between states. In this case, the 19 State AGs contend that the States that have brought climate change litigation are attempting to regulate interstate GHG emissions through tort actions against energy producers—actions that violate the “horizontal separation of powers, usurp federal authority over a federal issue, and violate the prohibition on extraterritorial regulation embodied in the Commerce Clause.”

We argue in our brief that review is necessary because the subject matter and remedies sought in the climate change lawsuits are inherently national, as well as legislative and regulatory in nature—such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. Further, state courts have thus far been split on whether a state can sue energy manufacturers for emissions that occur outside their borders. The Court’s review is needed now to provide guidance.

Unfortunately, on March 10, 2025, the U.S. Supreme Court denied the State Ags motion for leave to file a bill of complaint.

The NAM filed an amicus brief urging the U.S. Supreme Court to review California’s imposition of over $300 million in civil penalties under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) without providing fair notice of the conduct that gave rise to those penalties and the scope of the potential punishment. In this case, the trial court imposed $344 million in civil penalties under the UCL and FAL—an amount 50 times greater than the largest penalties previously awarded under those statutes and larger than all other reported UCL and FAL awards combined—based on communications about FDA-approved pelvic mesh products. A California court of appeal reduced the civil penalty award to approximately $302 million but rejected the defendants-appellants’ argument that the trial court’s imposition of over $300 million in penalties violated their Fourteenth Amendment due process rights. The Supreme Court of California denied review.

We argue in our amicus brief that California’s—as well as many other states’—unfair, deceptive, and abusive practices statutes have failed to provide fair notice of the conduct that gives rise to civil penalties and the scope of the potential punishment. We urge the Supreme Court to grant the defendants-appellants’ petition for certiorari to (1) articulate the constitutional bounds for civil penalties; (2) establish principles states can use to ensure their civil penalties are objective and rational; and (3) draw from the principles the Court applies in the punitive damages and civil forfeiture contexts to place similar bounds on the aggregation of “per violation” civil penalties.

Unfortunately, on February 22, 2023, the Supreme Court denied the petition for certiorari.

On May 22, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to review a 1st Circuit decision allowing Mexico to proceed on claims attempting to hold firearms manufacturers liable for cartel violence in Mexico. In this case, the 1st Circuit reversed a District of Massachusetts decision dismissing Mexico’s tort claims against firearm manufacturers under the Protection of Lawful Commerce in Arms Act’s general prohibition of tort suits against firearms manufacturers. The 1st Circuit reversed, however, after finding Mexico’s claims exempt from the PLCAA because Mexico alleged that the defendants proximately caused it harm (expenditure of money to combat cartel violence).

We argue that the PLCAA’s proximate cause requirement incorporates traditional notions of proximate cause that have served to protect manufacturers engaged in lawful commerce of products with inherent risks from unprincipled liability. U.S. Supreme Court review of the 1st Circuit’s decision is necessary to (1) resolve the circuit split created by the 1st Circuit’s erroneous conclusion that foreseeability alone could satisfy proximate cause; (2) reaffirm that foreseeability is insufficient to establish proximate cause; and (3) ensure that no government—foreign or domestic—can use the civil justice system to regulate lawful products by imposing untenable liability costs on their continued production and sale.

Happily, on October 4, 2024, the Court agreed to hear the case.

On July 8, the NAM filed an amicus brief asking the U.S. Supreme Court to grant cert in one of over two dozen public nuisance cases seeking to drive national energy policy on climate change. The case, Suncor Energy Inc., et al v. Board of Cnty. Commissioners of Boulder Cnty., et al., is part of a coordinated, national litigation campaign filed in carefully chosen states and federal circuits by agenda-driven lawyers and activists. The issue presented is whether putative state-law tort claims alleging harm from global climate change are removable to federal court because they arise under federal law. On the few occasions where federal courts have reached the substance of these claims, the courts have concluded that the claims arise under federal common law and are displaced by the Clean Air Act.

Earlier this year, the 10th Circuit agreed with the plaintiffs’ novel argument that their claims became viable under state law and could not be removed because Congress exercised its authority and displaced the federal common law by enacting the Clean Air Act—a theory that the Second Circuit referred to in a related case as “too strange to seriously contemplate.” Further, the 10th Circuit concluded that under the well-pleaded complaint rule, federal courts are not permitted to look behind the veneer of the claims’ state law labels even when the labels are clearly masking federal law claims. In support of Supreme Court review, the NAM filed an amicus brief arguing that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws.

Unfortunately, on April 24, 2023, the Court denied the petition for cert.

On April 5, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to enforce the robust pleading standards required by the Private Securities Litigation Reform Act to assert a securities fraud claim. Public companies, including many NAM members, are often the targets of frivolous securities litigation. The PSLRA created a heightened pleading standard for bringing securities fraud suits. Nevertheless, a 9th Circuit panel allowed the plaintiffs in this case to rely on an expert’s post hoc analysis to support their securities fraud claim without alleging with particularity the contents of any internal report or data source that would have put the defendant’s executives on notice that their public statements about who was purchasing the company’s gaming processing units were false or misleading when made.

We argue in our amicus brief that Supreme Court review is needed to resolve a circuit split on the pleading standards under the PSLRA. The panel’s decision will also create a playbook for securities plaintiffs to evade the PSLRA’s stringent pleading requirements by pointing to post-hoc, made-for-litigation expert opinions resting on unreliable assumptions and devoid of any basis in internal company data. Happily, on June 17, 2024, the Court granted the petition for certiorari.

On August 20, 2024, the NAM filed an amicus brief urging the Supreme Court to reverse the 9th Circuit's decision. We argue that affirming the 9th Circuit’s decision would undermine the PSLRA’s pleading standard by allowing plaintiffs to point to post-hoc, made-for-litigation expert opinions instead of particularized factual allegations. Affirming would also hamper the economic competitiveness of domestic industry by creating excessive litigation risk.

On April 17, 2023, the NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a North Carolina Supreme Court decision disregarding precedent that precludes a state from taxing the sale of goods that occurs outside its borders. Quad Graphics is a Wisconsin-based commercial printer that prints books, magazines, catalogs, and direct-mail items for customers throughout the United States, including in North Carolina. The North Carolina Department of Revenue imposed a sales tax on Quad for sales to North Carolina residents even though those sales were consummated in Wisconsin by passing title to the merchandise (and risk of loss) when the merchandise arrived at a common carrier’s shipping dock outside of North Carolina for shipping. The North Carolina Supreme Court upheld the tax, concluding that subsequent U.S. Supreme Court precedent implicitly overruled McLeod v. J.E. Dilworth Co., 322 U.S. 327 (1944), which precludes taxing out-of-state sales.

We argued in our amicus brief that review is necessary for manufacturers to have clear rules about where and when taxes will be imposed. Further, the U.S. Supreme Court should grant the petition because the Commerce Clause precludes a state regulating conduct outside its borders. All manufacturers have an interest in limiting a state’s ability to regulate conduct occurring outside its borders as well as reducing the untenable risk of double taxation.

Unfortunately, on June 20, 2023, the Court denied the petition for certiorari.

On February 12, 2024, the NAM filed an amicus brief asking the U.S. Supreme Court to address whether the Clean Water Act allows the EPA to include generic (and vague) prohibitions in National Pollutant Discharge Elimination System permits that subject permitholders to enforcement for exceedances of water quality standards. A NPDES permit is required to discharge a pollutant through a “point source” into “a water of the United States.” In this case, the 9th Circuit affirmed EPA’s use of a generic prohibition in San Francisco’s NPDES permit for a water treatment facility—stating that water discharge “shall not cause or contribute to the violation of any applicable water quality standard.” This ruling directly conflicts with 2nd Circuit precedent deeming generic prohibitions impermissible and could impact manufacturers’ ability to assert the permit shield defense—a defense that provides protection from liability if a manufacturer is operating under a valid permit and its facility discharges waste in accordance with the permit. Permit operators need specific guidance as to allowable discharges in accordance with the permit.

Our brief urges the Supreme Court to review this case to resolve the circuit split and highlights the key role of the permit shield defense in guarding against citizen suits and unforeseen enforcement actions. Happily, on May 20, 2024, the Court granted the petition for certorari.

On July 26, 2024, the NAM filed an amicus brief emphasizing the practical importance of clear and predictable CWA compliance and enforcement and demonstrating that generic prohibitions are inconsistent with the text and design of the CWA.

Happily, on March 4, 2025, the U.S. Supreme Court reversed the 9th Circuit's decision. The Court held that the CWA "does not does not authorize the EPA to include 'end-result' provisions in NPDES permits."

On April 16, 2025, the NAM filed an amicus brief urging the U.S. Supreme Court to review a lower court decision imposing $14.25M in penalties in a Clean Air Act citizen suit. In this case, the 5th Circuit affirmed the lower court’s decision imposing penalties for 3,651 days of CAA violations, despite the plaintiffs only showing that they experienced injuries caused by approximately 40 days of violations.

We argue that review is necessary to enforce the constitutional limits of citizen suits: penalties can only be assessed for CAA violations that cause harm to a plaintiff. Ensuring that courts exercise appropriate discretion in imposing civil penalties, consistent with environmental protection and sound governance, is critical for all manufacturers.

Unfortunately, the Supreme Court denied review on June 30, 2025.

On October 28, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to address whether the Clean Water Act’s citizen-suit provision allows private citizens to bring lawsuits to enforce state-law permit conditions that are beyond the scope of the CWA. In this citizen suit, an environmental group alleges that when rain falls on portions of a terminal in Tacoma, Washington, referred to as “the Wharf,” it runs into a body of water carrying with it metals and other materials. Even though federal regulations issued by the EPA do not regulate this stormwater discharge, the group maintains that the discharge is subject to regulation under permits issued under state law by Washington. The 9th Circuit agreed and, splitting from the 2nd Circuit, held that state permits are enforceable in a citizen suit even if they exceed the requirements of federal regulations.

We argue in our brief that the 9th Circuit falls on the wrong side of the split by permitting private plaintiffs to bring an action in federal court for alleged violations of state law. The 9th Circuit’s misreading of the citizen-suit provision exposes permit-holders, including governmental and non-governmental organizations, municipalities, and private companies, to costly citizen-suit litigation in federal court based on state regulatory regimes. Unfortunately, the Court denied cert on June 30, 2025.

On September 4, 2024, the NAM filed an amicus brief urging the U.S. Supreme Court to rein in the scope of agency review under the National Environmental Policy Act. NEPA requires federal agencies to assess the environmental impacts of their proposed actions—i.e. making decisions on permit applications or constructing highways—prior to making decisions. Even though NEPA’s text does not require an agency to study the environmental impacts of a project beyond the immediate effects of the project over which the agency has regulatory authority, some courts have required agencies to do so. In this case, a local government and environmental groups challenged the Surface Transportation Board’s approval of a rail line in Utah’s Uinta Basin which would primarily carry waxy crude oil to refinery markets along the Gulf Coast. The D.C. Circuit concluded that the Board’s NEPA analysis was deficient because it failed to consider the rail line's potential effects on increased oil drilling (upstream and downstream impacts), even though the Board has no direct authority to prevent or mitigate those indirect effects of railroad development.

We argue in our brief that consideration of environmental effects over which an agency has no regulatory authority strays from NEPA’s purpose to promote informed decisions by an agency. Expanding the scope of NEPA results in increased litigation risks and permitting delays that hamper economic growth.

Happily, on May 29, 2025, the U.S. Supreme Court reversed the D.C. Circuit's decision.

On January 3, 2025, the NAM filed an amicus brief asking the U.S. Supreme Court to reject the petitioners’ proposed water-down pleading standard for prohibited transaction claims brought under ERISA. The plaintiffs alleged in this putative class action that the defendants’ engagement of ERISA plan recordkeepers—which is a standard contractual arrangement necessary for the operation of a plan—was a prohibited transaction. However, ERISA does not consider “[c]ontracting or making reasonable arrangements with a party in interest . . . for services necessary for the . . . operation of [a] plan” a prohibited transaction so long as “no more than reasonable compensation is paid[.]” Accordingly, the Southern District of New York dismissed the plaintiffs’ complaint, and the 2nd Circuit affirmed on appeal. The U.S. Supreme Court agreed to address a split among circuit courts over the pleading standard for prohibited transaction claims brought under ERISA.

We argue in our brief that the U.S. Supreme Court should reject the petitioners’ position that to state a viable prohibited transaction claim, all a plaintiff must do is plead the existence of an enumerated transaction, and courts must ignore whether an exemption applies. We further argue that the plaintiffs’ position would upend benefit plans if plan fiduciaries faced the daunting prospect of expensive and asymmetrical discovery merely because they contracted with a service provider—which the nation’s millions of benefit plans do every day.

Unfortunately, on April 17, 2025, the U.S. Supreme Court reversed the 2d Circuit's decision. The Court held that "plaintiffs seeking to state [a prohibited transaction] claim must plausibly allege that a plan fiduciary engaged in a transaction proscribed therein, no more, no less."

On October 27, 2023, the NAM filed an amicus brief asking the U.S. Supreme Court to uphold bankruptcy courts’ broad equitable authority to issue third-party releases to ensure the success of a corporate reorganization plan. In this case, Purdue Pharma sought to resolve mass civil claims alleging that the company contributed to the opioid epidemic through the bankruptcy system. The Sackler family, owners of Purdue, agreed to personally contribute billions of dollars to the bankruptcy provided that all civil claims against them were released. A trial court ruled that the bankruptcy court lacked authority under the Bankruptcy Code to approve a reorganization plan that included nonconsensual releases for third parties (like the Sacklers), a decision the 2nd Circuit later reversed. The U.S. Supreme Court granted certiorari to consider whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.

We argue in our amicus brief that nonconsensual third-party releases are important tools for addressing mass tort claims efficiently and fairly. Bankruptcy courts can confirm reorganization plans containing nonconsensual third-party releases consistent with due process requirements by giving claimants notice of the releases and an opportunity to be heard.

Unfortunately, on June 27, 2024, the Court reversed the 2nd Circuit's decision.

On February 3, 2023,the NAM filed an amicus brief urging the U.S. Supreme Court to reverse the 9th Circuit’s decision allowing a plaintiff to pursue his securities class action under Section 11 of the Securities Act of 1933--which imposes strict liability for any misstatements or omissions, even innocent ones, in a registration statement or prospectus--based on their purchase of unregistered shares. Consistent with the statutory text and 60 years of case law, plaintiffs are required to “trace” their securities to shares registered under the allegedly misleading registration statement on which they base their Section 11 claim. In this case, however, the 9th Circuit eliminated the tracing requirement and conferred standing on a shareholder who purchased shares through a direct listing, meaning he could not prove whether he purchased registered or unregistered shares.

We argue that the 9th Circuit’s policy concerns—that all companies will forego IPOs in favor of a direct listing to avoid any risk of Section 11 liability—reflect a fundamental misunderstanding of capital markets. In reality, companies choose a method of going public to fit their business needs and standing in the market. Each of those methods offers tradeoffs when it comes to things like a company’s ability to raise capital and find buyers for its shares, as well as relative cost, complexity, and risk of loss. Eliminating the requirement that plaintiffs trace their securities to shares registered under the statement on which they base their Section 11 claim would undermine the certainty that capital markets require. All publicly traded manufacturers have an interest in curbing unauthorized securities actions which are prevalent anytime stock price goes down.

Happily, on June 1, 2023, the U.S. Supreme Court reversed the 9th Circuit's decision.

On March 28, 2023, the NAM filed an amicus brief asking the U.S. Supreme Court to affirm that to prove liability under the False Claims Act where ambiguous laws are at issue, a plaintiff must establish that the defendant’s interpretation of the requirements for submitting a claim to the government was not objectively reasonable. A person is subject to liability under the FCA if the person “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval. In this case, the 7th Circuit held that when allegations of false claims are premised on violations of ambiguous laws or regulations, a defendant’s subjective awareness of the laws or regulations are irrelevant to establishing that a defendant acted "knowingly." Rather, the 7th Circuit concluded that a plaintiff must establish that a defendant’s interpretation of the requirements for submitting a claim was not objectively reasonable. In other words, a defendant cannot be held liable if it can show that "(a) it has an objectively reasonable reading of the statute or regulation and (b) there was no authoritative guidance warning against its erroneous view." Although the 8th and D.C. Circuits have also applied the objective standard, the 6th, 9th, 10th, and 11th Circuits look to whether a defendant "actually knew or should have known that its conduct violated a regulation in light of any ambiguity at the time of the alleged violation." Here, the petitioners (FCA relators) urge the Court to hold that a violation of the FCA can rest on a defendant’s subjective understanding of ambiguous laws or regulations.

We argue in our brief that the objectively reasonable standard is important to cabining expansive FCA liability, which can often include crippling treble damages and statutory penalties after lengthy and costly litigation. Manufacturers routinely face complex contractual and regulatory schemes that contain ambiguous or unsettled provisions when they are serving as government contractors or otherwise implementing government programs.

Unfortunately, on June 1, 2023, the reversed the 7th Circuit's decision.

On August 4, 2023, the NAM filed its response to the Washington Alliance of Technology Workers’ petition for certiorari seeking Supreme Court review of the D.C. Circuit’s decision upholding the validity of the STEM occupational practical training (OPT) program. The NAM intervened in this case to protect the Department of Homeland Security’s STEM OPT program—a program that allows foreign-born students to continue their educational training by working in the United States for up to three years after completing college or a graduate program. We argued in our response that the Supreme Court should deny the petition requesting review of the D.C. Circuit’s decision upholding the validity of that program because the D.C. Circuit’s decision is correct and there is no circuit conflict on the issues involved in the case.

Happily, on October 2, 2023, the Supreme Court denied the petition.

On September 2, NAM filed an amicus brief urging the U.S. Supreme Court to affirm the Pennsylvania Supreme Court’s decision in Mallory v. Norfolk Southern Railway Company, which held that Pennsylvania statutes that condition the privilege of doing business in the State on an out-of-state corporation’s submission to general personal jurisdiction is inconsistent with the Fourteenth Amendment. Mallory is a lawsuit filed by a Virginia resident against Norfolk Southern Railway—a Virginia-based corporation—in the Philadelphia County Court of Common Pleas. The plaintiff alleges that exposure to harmful chemicals while employed by Norfolk Southern in Ohio entitled him to relief under the Federal Employer’s Liability Act. This case raises significant concerns regarding states’ ability to subject manufacturers to the jurisdiction of state courts that have little or no connection to a lawsuit, potentially subjecting manufacturers to greater liability then in their home state—generally their state of incorporation and principal place of business.

The trial court dismissed the case for lack of personal jurisdiction and the Pennsylvania Supreme Court affirmed. Our amicus brief urges the U.S. Supreme Court to likewise affirm. First, as a practical matter, ambiguous state statutes requiring registration to do or transact business have led to manufacturers registering in all states in which they have employees or operations—but registration alone is not indicative of a manufacturer’s consent to suit or sufficient to protect manufacturer’s liberty interests under the Due Process Clause. Further, the Supreme Court has explained that the Due Process Clause prescribes the circumstances under which a state can assert general jurisdiction over a manufacturer and focuses on a manufacturer’s “continuous and systematic” conduct in a forum state, not simply its registration with the state to do business. Finally, permitting states to expand general personal jurisdiction by statute would encourage forum shopping to plaintiff-friendly jurisdictions, which in turn would unnecessarily burden courts and juries with claims in which they have no meaningful stake.

Unfortunately, on June 27, 2023, the U.S. Supreme Court reversed the Pennsylvania Supreme Court's decision.

On January 18, 2023, the NAM filed an amicus brief urging the U.S. Supreme Court to reverse the 9th Circuit’s holding that VIP Products LLC’’s “Bad Spaniels Silly Squeaker” dog toy—which is the shape of a Jack Daniel’s bottle and contains a label that resembles the label on Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey with dog-related humorous alterations—is an expressive work entitled to First Amendment protection from the trademark infringement and dilution claims asserted by Jack Daniel’s under the Lanham Act. In this case, the 9th Circuit reversed the lower court’s judgment entered in Jack Daniel’s favor, holding that the Lanham Act’s protections for trademarks only apply to expressive works if a plaintiff shows that a defendant’s use of the “mark is either (1) ‘not artistically relevant to the underlying work’ or (2) ‘explicitly misleads consumers as to the source of content of the work.’” According to the 9th Circuit, the district court erred in not considering whether Jack Daniel’s satisfied at least one of these prongs. The 9th Circuit further discounted Jack Daniel’s dilution by tarnishment claim, holding that VIP’s use of Jack Daniel’s mark was noncommercial because it was used to convey a humorous message protected by the First Amendment. On remand, the district court granted VIP’s motion for summary judgment, a decision the 9th Circuit affirmed on appeal.

We argued in our amicus brief that the First Amendment does not apply to protect speech that confuses or misleads consumers of products, and that the Court should reject the 9th Circuit’s holding that any “humorous” use automatically qualifies as “noncommercial,” and is therefore immune from trademark dilution claims. As trademark owners who have devoted substantial resources to building and protecting the goodwill and reputation associated with their products and trademarks, manufacturers have a strong interest in ensuring robust federal protections for those marks.

Happily, on June 8, 2023, the Court reversed the 9th Circuit's decision.

The NAM filed an amicus brief in support of an application to the U.S. Supreme Court to stay a remand order transferring litigation involving “public nuisance” claims related to climate change to state court. Twenty-six energy company defendants in the case filed the stay request to allow appeals to progress on the question of which court has proper jurisdiction over the claims. The case is part of a coordinated, national litigation campaign involving over two dozen public nuisance cases filed in carefully chosen states and federal circuits by agenda-driven lawyers and activists. This issue is important to energy producers and all manufacturers because public nuisance claims involving climate change implicate federal questions and the preemption of federal laws that are appropriately heard by federal courts rather than state courts. The NAM’s amicus brief explained to the court the broader context of the plaintiffs’ legal strategy and that these suits implicate federal issues and therefore should be in federal court. Unfortunately, Chief Justice Roberts denied the stay petition. Thereafter, following the Fourth Circuit's decision to remand the case to state court, the NAM filed an amicus brief in support of BP's petition for cert. pressing the high court to resolve the circuit split regarding the scope of appellate review of remand orders involving the federal officer removal statute. Happily, on October 2, 2020, the Court granted review.

On November 23, the NAM filed an amicus brief on the merits in support of removal jurisdiction in this case, asking the Court to ensure that lower courts evaluate all grounds for removal prior to issuing remand orders.

On May 17, 2021, in a 7-1 decision with Justice Gorsuch writing for the majority, the Court reversed the Fourth Circuit’s denial of full federal appellate review of the important jurisdictional issues raised by this case and remanded the case for the Fourth Circuit to consider those issues in the first instance. Unfortunately, on April 7, 2022, the Fourth Circuit affirmed the district court's remand order, holding that none of the asserted basis for removal permit the Court to exercise jurisdiction.

On November 17, 2022, the NAM filed an amicus brief in support of the petitioners' petition to the U.S. Supreme Court for cert. The NAM's brief again argues that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws.

Unfortunately, on April 24, 2023, the Court denied the petition.

On January 31, 2022, the NAM filed an amicus brief urging the U.S. Supreme Court to reverse a Seventh Circuit decision by holding that the Federal Arbitration Act (FAA)—a national policy favoring arbitration—covers the arbitration agreement of an airport worker who never crosses state or international borders. The FAA contains an exemption for the “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” There is a deep circuit split over the scope of the residual clause—the “transportation worker exemption”—and the High Court has not yet defined who qualifies as a transportation worker.

As the NAM’s brief explains, the Seventh Circuit’s approach threatens substantial litigation costs both from future disputes over the FAA’s application and from judicial decisions that deprive businesses and workers of the benefits of the FAA. Arbitration is important to manufacturers because it encourages efficient employment practices by providing lower costs to the parties and faster results in a dispute, thus avoiding drawn-out and costly litigation. Both the plain meaning and historical context of the FAA demonstrate that only workers that engage in actual transportation across state or national borders as a central part of the workers’ job description are exempt.

Unfortunately, on June 6, 2022, the Supreme Court affirmed the Seventh Circuit's decision.

The NAM filed an amicus brief in the U.S. Supreme Court in support of the Spire STL pipeline’s petition for review seeking to overturn the D.C. Circuit’s vacatur of Spire’s operational authority which threatens drastic and unpredictable disruptions in natural gas service for residential and commercial customers alike. This case began as a challenge to the Spire STL’s legal authority. Rather than remanding the case to the district court for further proceedings, the D.C. Circuit took the extreme step of vacating Spire’s certificate to operate from the Federal Energy Regulatory Commission (FERC)—risking the reliable supply of natural gas to the entire St. Louis region—without fully considering the potential ramifications of its actions.

The NAM’s brief explains that millions of Americans depend on the predictable, disruption-free supply of natural gas from interstate pipelines. When supply is unexpectedly interrupted, so too are the critical industrial and manufacturing processes that depend directly on natural gas or indirectly on the electricity that generators supply. The D.C. Circuit’s flawed approach in this case eliminates disruption as a factor weighing against vacatur of an operational pipeline’s FERC certificate. Review is especially imperative here because the D.C. Circuit hears an outsized majority of administrative law cases, including challenges to FERC actions. Unfortunately, on April 18, 2022, the Court denied cert.

The NAM filed an amicus brief in support of the California Trucking Associations’ cert petition to the U.S. Supreme Court, asking the Court to hold that California’s Assembly Bill 5 (AB-5)—which radically changed worker classification in the State and effectively requires all independent contractor drivers of motor carriers operating in California to be classified as employees—is preempted by federal law. Passed in 2019, AB-5 adopted the so-called "ABC test" for determining whether a given worker is an independent contractor or statutory employee under the California Labor Code. By design, the ABC test results in many more workers being reclassified as employees for wage and hour laws and other purposes.

Under the Federal Aviation Administration Authorization Act (FAAAA), however, state laws “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property,” are preempted. A federal district accordingly enjoined enforcement of AB-5 against motor carriers, but the Ninth Circuit reversed, deeming AB-5 a "generally applicable labor law," not subject to FAAAA preemption.

The NAM joined a coalition of manufacturers, distributors, wholesalers, retailers, and receivers of goods shipped through interstate commerce in filing an amicus brief in support of Supreme Court review, highlighting the significant burden AB-5 places on interstate commerce and the American economy. Our brief argues that AB-5 will harm the competitive, efficient, and flexible trucking services that Congress afforded U.S. businesses by limiting state interference in the trucking market. The ripple effect from this disruption will harm consumers and the national economy, which are already grappling with delivery delays, product shortages, and empty store shelves caused by the pandemic.

Unfortunately, on June 30, 2022, after calling for the views of the Solicitor General, the Court denied cert.

The NAM filed an amicus brief urging the U.S. Supreme Court to grant cert to reverse a Ninth Circuit decision subjecting freight brokers to tort liability for their selection of carrier, despite the preemptive authority of federal trucking laws as applied to brokers. In this case, the plaintiff was injured in a traffic collision involving a trucking company. He alleged that the broker was negligent in selecting the trucking company because it knew or should have known about the company’s prior regulatory infractions. However, the Federal Aviation Administration Authorization Act (“FAAAA”) regulates shipping by commercial trucks as well as the brokerage services necessary to facilitate that shipping. To that end, the FAAAA preempts certain state laws as they apply to brokers, including state common law claims for negligence, unless they implicate “the safety regulatory authority of the State with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2)(A). The district court dismissed the case after finding the plaintiff’s claims preempted, but the Ninth Circuit reversed, significantly narrowing the federal preemption of state laws that regulate trucking.

The NAM filed an amicus brief in support of Supreme Court review explaining the careful balance that Congress struck in regulating drivers under the FAAAA, and why the plaintiffs’ theory of liability is unworkable in practice. By increasing liability risk in the form of inconsistent state common law tort claims against brokers, which they have almost no ability to manage or control for, the Ninth Circuit’s decision threatens a huge swath of the nation’s economy and offers little or no prospect of improved public safety. Unfortunately, on June 27, 2022, the Court denied cert.

The NAM filed an amicus brief urging the U.S. Supreme Court to review and reverse a 6th Circuit decision that flouted valid Treasury Department regulations relied upon by manufacturers in running their global operations for nearly 60 years. This case involves a complex international tax issue—foreign base company sales income (FBCSI). The Internal Revenue Code prohibits a U.S. parent company from using sales of finished goods between foreign subsidiaries to generate income in a “tax haven” country—that income is known as FBCSI. Despite an express statutory delegation of authority to Treasury to write the regulations that determine when income qualifies as FBCSI, the 6th Circuit ignored the applicable regulations—which had been around for decades—and held that under the statutory text alone the defendant taxpayer’s subsidiary in Mexico generated FBCSI.

  The NAM’s brief argues that the 6th Circuit’s novel interpretation of the Internal Revenue Code conflicts with nearly 60 years of tax law. If allowed to stand, the court’s decision could result in hundreds of millions of dollars of unexpected and unjustified taxes, disrupt efficient global business operations, and confuse taxpayers (and the government) concerning how to apply the tax laws. All manufacturers have an interest in the consistent and predictable application of regulations, especially where the administration of tax laws is concerned.

  Unfortunately, on November 21, 2022, the U.S. Supreme Court denied cert.

The NAM filed amicus briefs urging the U.S. Supreme Court to review and reverse a 9th Circuit decision that imposed overbroad civil liability on food producers under the U.S. Alien Tort Statute. The ATS is an 18th century law that allows non-U.S. citizens to file lawsuits in U.S. federal courts for certain violations of international law connected to U.S.-based conduct. In recent years, human rights roups have used the statute as a tool to bring attention to their causes by targeting name brand companies doing business in developing countries who have taken no part in the targeted practices.

In this case, plaintiffs alleged that the food producers violated the Alien Tort Statute by purchasing cocoa from African farmers alleged to have mistreated their workers. The U.S. Court of Appeals for the Ninth Circuit held that the plaintiffs should be allowed to pursue their claims against the food producers for “aiding and abetting” the alleged violations. The Ninth Circuit’s interpretation of the ATS would open the floodgates to potential claims against manufacturers doing business with foreign suppliers in troubled regions of the globe.

The NAM’s amicus briefs—filed in support of certiorari and later on the merits—highlighted how the Ninth Circuit’s decision deepens a circuit split on the scope of the Alien Tort Statute and discourages U.S. business operations and investment in developing countries. The NAM also urged the Court to adopt a bright-line rule that would bar ATS claims unless the conduct that occurred in the U.S. is itself a tort “committed in violation of the law of nations,” not a routine, lawful activity such as operational and financial decision-making. On June 17, 2021, while declining to adopt a bright-line rule, the Court ruled 8-1 that general corporate activity is insufficient to support a domestic application of the ATS.

The NAM filed amicus briefs urging the U.S. Supreme Court to review and reverse a 9th Circuit decision that imposed overbroad civil liability on food producers under the U.S. Alien Tort Statute. The ATS is an 18th century law that allows non-U.S. citizens to file lawsuits in U.S. federal courts for certain violations of international law connected to U.S.-based conduct. In recent years, human rights roups have used the statute as a tool to bring attention to their causes by targeting name brand companies doing business in developing countries who have taken no part in the targeted practices. In this case, plaintiffs alleged that the food producers violated the Alien Tort Statute by purchasing cocoa from African farmers alleged to have mistreated their workers. The U.S. Court of Appeals for the Ninth Circuit held that the plaintiffs should be allowed to pursue their claims against the food producers for “aiding and abetting” the alleged violations. The Ninth Circuit’s interpretation of the ATS would open the floodgates to potential claims against manufacturers doing business with foreign suppliers in troubled regions of the globe. The NAM’s amicus briefs—filed in support of certiorari and later on the merits—highlighted how the Ninth Circuit’s decision deepens a circuit split on the scope of the Alien Tort Statute and discourages U.S. business operations and investment in developing countries. The NAM also urged the Court to adopt a bright-line rule that would bar ATS claims unless the conduct that occurred in the U.S. is itself a tort “committed in violation of the law of nations,” not a routine, lawful activity such as operational and financial decision-making. On June 17, 2021, while declining to adopt a bright-line rule, the Court ruled 8-1 that general corporate activity is insufficient to support a domestic application of the ATS.

The NAM filed an amicus brief asking the U.S. Supreme Court to grant cert to define the due process limits on the joinder of claims in civil trials. In this case, a Missouri trial court consolidated 22 personal injury plaintiffs’ claims arising under 12 different states’ laws for a single trial; the result was a staggering $2B verdict, with the jury awarding an identical $25M in compensatory damages to each of the 22 plaintiffs—despite widely varying injuries—and $1.6B in punitive damages. The court erroneously concluded, and the appellate court affirmed, that any prejudice to the defendant was adequately mitigated by hours-long instructions to the jury that it decide each plaintiff’s claim on its own merits.

The NAM’s brief explains that improper joinder of civil cases for trial favors plaintiffs through the repetition of fact patterns and claims, compromises the defendant’s ability to present individual issues, and allows plaintiffs to present a composite picture that obscures weaknesses in individual claims. The Supreme Court’s intervention is needed to prevent further abuses of this procedural device by the plaintiffs’ bar. Unfortunately, on June 1, 2021, the Court denied review.

The NAM filed an amicus brief urging the U.S. Supreme Court to stem the rising tide of no-injury class action cases—those where plaintiffs’ attorneys leverage a sympathetic plaintiff to be the face of a class that may in fact contain thousands of unharmed individuals. These actions have become a favorite of the plaintiffs’ bar, in part, because of the myriad federal consumer protection statutes authorizing individuals to sue to vindicate statutory rights. In this case, the lead plaintiff suffered injuries—inability to purchase a car and embarrassment in front of family members—related to an alleged violation of a federal credit reporting statute. Rather than sue for his injuries alone, however, the plaintiff filed a class action seeking to represent 8,000+ people, over 6,000 of whom had never had their information shared with a third-party let alone been denied credit. In other words, although all individuals in the class may have suffered a statutory violation, the majority were not concretely harmed. After a trial focused entirely on the lead plaintiff’s idiosyncratic injury, the jury awarded significant damages to the entire class.

The NAM, joined by the Alliance for Automotive Innovation, American Tort Reform Association, and International Association of Defense Counsel, filed an amicus brief urging the Court to issue a clear ruling outlining the scope and factors a trial court must consider in conducting a rigorous, evidence-based analysis of typicality under Rule 23(a)(3). As manufacturers are acutely aware, the presence of thousands of plaintiffs in a class can increase litigation risk and settlement pressure to the point at which defending against the claims becomes unrealistic. Without a strong ruling from the Court, these cases would continue to proliferate across a wide range of federal and state laws, including in emerging and amorphous areas like privacy and cyber security. On June 25, 2021, in a 5-4 decision, the Court reversed the Ninth Circuit by holding that only plaintiffs concretely harmed by a defendant’s statutory violation—here, the roughly 1,800 out of 8,000 plaintiffs in the class who had their credit reports shared with third parties--have standing to sue. By focusing on Article III standing, the Court avoided diving into difficult questions of typicality and instead went to bedrock principles of jurisprudence, with Justice Kavanaugh writing that “under Article III, an injury in law is not an injury in fact.”

The NAM filed an amicus brief to support a petition for certiorari to the U.S. Supreme Court that seeks to overturn a requirement by the California Attorney General that compels public charities to report to the state the names of their contributors. Beginning in 2010, the California Attorney General began demanding that thousands of registered charities annually disclose to the state the individual names and addresses of major donors. A federal district court and the 9th Circuit upheld the requirement. The full 9th Circuit denied en banc review over a five-judge dissent that recognized the requirement “eviscerates the First Amendment protections long established” by the First Amendment to the U.S. Constitution. This issue is important to manufacturers because many of them contribute to charities and belong to associations like the NAM that do not disclose their members but could be compelled to do so based on the 9th Circuit’s reasoning. In support of a petition for certiorari to review and reverse the 9th Circuit holding, the NAM filed an amicus brief that explains the important first amendment principles at stake and how the lower courts failed to appropriately protect those rights. On January 8, 2021 the Court granted cert. The NAM filed a brief on the merits arguing that anonymity is essential for people and companies to freely and effectively speak and associate, and that the Ninth Circuit’s decision invites states to chill disfavored speech by opening trade and advocacy association members to retaliation, including boycotts, harassment, or even threatened or actual violence. Happily, on July 1, 2021, the Court rule in a 6-3 opinion that California’s donor disclosure mandate is facially unconstitutional.

The NAM filed an amicus brief in support of Montana and Wyoming's Motion for Leave to File a Bill of Complaint in an Original Action in the U.S. Supreme Court involving the state of Washington’s authority to prohibit certain exports from Washington’s coastal ports. Washington state denied several environmental permits necessary to construct a new coal export terminal near Longview, Washington. The denials were improperly based on climate concerns about the use of coal for electricity generation in foreign countries. The state’s actions have dangerous implications for the power of individual states to interfere with interstate and international trade. The NAM filed amicus briefs both at the district court and Ninth Circuit stages arguing that this interference is unconstitutional and harms the national economy. Unfortunately, the courts rejected the plaintiffs' claims. The plaintiffs are now asking the Supreme Court to correct this problem through the exercise of its original jurisdiction to hear disputes between states. NAM once again filed an amicus brief explaining that Washington's action threaten to hurt American workers, inhibit American economic growth, and violate the Constitution’s command that the federal government serve as the sole representative of the United States in foreign trade and foreign affairs. Unfortunately, on June 28, 2021, over the dissent of Justices Thomas and Alito, the Court denied the motion.

The NAM filed an amicus brief to support Ford Motor Co.’s petition for certiorari to the U.S. Supreme Court to clarify the circumstances under which an out-of-state defendant can be sued in state court. A plaintiff sued Ford in Minnesota state court for injuries he sustained while driving in Minnesota. The plaintiff alleged design defect claims and failure to warn claims. Ford defended against jurisdiction in Minnesota state court because all of the alleged wrongful conduct occurred in Michigan, where the car was designed. A Minnesota trial court and the Minnesota Supreme Court affirmed personal jurisdiction over Ford, concluding that the lawsuit related to Ford’s in-state activity in Minnesota. This case is important for manufacturers because a broad interpretation of personal jurisdiction—like that by the Minnesota courts here—would subject manufacturers to litigation in jurisdictions throughout the country. The NAM’s amicus brief explained why such a broad conception of personal jurisdiction is inconsistent with U.S. Supreme Court precedent and why it should be reversed. On January 17, 2020, the Court granted review, combining this case with Ford v. Montana Eighth Judicial District Ct. The NAM filed a brief on the merits on Mar. 6, 2020. Unfortunately, on March 25, 2021, the Court ruled in a 8-0 opinion that "when a company like Ford serves a market for a product in a State and that product causes injury in the State to one of its residents, the State’s courts may entertain the resulting suit."

The NAM filed an amicus brief urging the U.S. Supreme Court to determine whether putative state-law tort claims alleging harm from global climate change are removable because they arise under federal law. This case is part of a broader campaign by well-funded activists, private law firms, public relations groups, and academics to influence municipalities and others to bring climate tort litigation against energy manufacturers. Here, the city of Oakland, California, sued several energy companies to seek damages for local impacts of climate change, arguing that the defendants’ sale of fossil fuels is a public nuisance that entitles the city to financial compensation. After the defendants removed the case to federal court, a federal district court dismissed the lawsuit. The Ninth Circuit later reversed and remanded the case for further proceedings. The NAM filed an amicus brief in support of the manufacturers' petition for review to the U.S. Supreme Court. The NAM's brief argues that the subject matter and remedies sought through this litigation are inherently national, as well as legislative and regulatory in nature, and that such complex policy matters should not be driven by individual state judges in individual state courtrooms applying (or misapplying) various state liability laws. Unfortunately, on June 14, 2021, the Court denied review.

The NAM filed an amicus brief to support Ford Motor Co.’s petition for certiorari to the U.S. Supreme Court to clarify the circumstances under which an out-of-state defendant can be sued in state court. A plaintiff sued Ford in Montana state court for injuries he sustained while driving in Montana. The plaintiff alleged design defect claims and failure to warn claims. Ford defended against jurisdiction in Montana state court because all of the alleged wrongful conduct occurred in Michigan, where the car was designed. A Montana trial court and the Montana Supreme Court affirmed personal jurisdiction over Ford, concluding that the lawsuit related to Ford’s in-state activity in Minnesota. This case is important for manufacturers because a broad interpretation of personal jurisdiction—like that by the Montana courts here—would subject manufacturers to litigation in jurisdictions throughout the country. The NAM’s amicus brief explained why such a broad conception of personal jurisdiction is inconsistent with U.S. Supreme Court precedent and why it should be reversed. On January 17, 2020, the Court granted review, combining this case with Ford v. Bandemer. On March 6, 2020, the NAM filed an amicus brief on the merits. Unfortunately, on March 25, 2021, the Court ruled in a 8-0 opinion that "when a company like Ford serves a market for a product in a State and that product causes injury in the State to one of its residents, the State’s courts may entertain the resulting suit."

The MCLA filed amicus briefs in the U.S. Supreme Court at both the petition and merits stages supporting the enforceability of international arbitration agreements. The case involved the cross-border implications of the Federal Arbitration Act (FAA), which established a national policy favoring arbitration by placing arbitration agreements on equal footing with all other contracts. Manufacturers regularly rely on arbitration agreements to ensure predictability and reliability in resolving international trade and investment disputes. The plaintiff in the case sued GE Energy, a subcontractor, over a dispute regarding the construction of a steel plant in Alabama and sought to create a loophole to avoid arbitration, arguing that GE was not a signatory to the main contracts which contained the operative arbitration clauses. In turn, GE argued that it was entitled to enforce the arbitration agreements under the doctrine of equitable estoppel. The district court granted GE’s motion to compel arbitration, but the Eleventh Circuit reversed, holding that under international law, an arbitration agreement can be enforced only by the parties that actually signed the agreement. The NAM’s briefs argued that manufacturers need certainty that international arbitration agreements—just like domestic arbitration agreements— can be enforced through basic principles of contract law. And on June 1, 2020, the Supreme Court unanimously agreed, holding that domestic contract law allows non-signatories to an arbitration agreement to arbitrate disputes arising under that agreement.

The NAM filed an amicus brief in support of AT&T and Comcast's petition for certiorari to reverse two 9th Circuit rulings in related cases that would eviscerate arbitration agreements in California. The cases implicate the question of whether consumer arbitration agreements in California are enforceable if they waive a plaintiff’s right to seek a “public injunction” against the defendant company. California’s consumer protection laws generally allow a consumer to seek a public injunction that compels the defendant company to take public action to remedy the alleged consumer protection violation. In this case, for example, the plaintiffs sought public injunctions compelling AT&T and Comcast, respectively, to change their disclosures regarding certain fees. Successful public injunction claims can force companies to undertake major and disruptive changes to their business, products or services. The 9th Circuit affirmed lower court rulings invalidating the arbitration agreements because they contained a public injunction waiver. After filing in the Ninth Circuit, NAM filed an amicus brief in support of review that argues that the Federal Arbitration Act preempts California law and that requiring arbitration of public injunction claims frustrates and undermines the purpose and benefits of individualized arbitration. On June 1, 2020, the Supreme Court declined to hear the case.

The NAM filed an amicus brief in support of U.S. Supreme Court review of an overbroad discovery order requiring corporate defendants in a sprawling antitrust multidistrict litigation to produce millions of documents without review for relevance or responsiveness in violation of the Federal Rules of Civil Procedure. The NAM's brief, filed February 28, 2020, argued that the interests of justice are undermined by unnecessarily burdensome discovery order that creates undue pressure to settle. All NAM members have a substantial interest in safeguarding the ability to maintain the confidentiality of corporate files except as required for the just and speedy resolution of litigation on its merits. Unfortunately, on June 15, 2020, the Court denied review.

The NAM filed an amicus brief in support of a petition for certiorari seeking U.S. Supreme Court review and reversal of a 4th Circuit holding that invalidated a federal permit for a major natural gas transmission pipeline that crosses U.S. Forest Service lands. An environmental group sued the U.S. Forest Service to invalidate its permit allowing the Atlantic Coast Pipeline to cross beneath the Appalachian Trail hiking route. A panel of the Fourth Circuit held that the Mineral Leasing Act does not allow agencies to grant rights-of-way for pipelines to cross any stretch of the Appalachian Trail; rather, such approvals must come from a majority vote of the U.S. congress. This holding effectively converts the Appalachian Trail into a 2,200-mile barrier to pipeline construction from Maine to Georgia. The court’s reasoning could also be applied to any one of the dozens of pipelines that currently cross beneath the trail because such pipelines require periodic permit renewals. In support of the pipeline’s petition for Supreme Court review, the NAM filed an amicus brief that explained the legal flaws in the panel’s reasoning and highlighted the important benefits that pipelines provide for manufacturers and the national economy. On October 4, 2019, the court granted review for the 2019-2020 term, and on December 9, 2019, the NAM filed a coalition amicus brief on the merits in support of the pipeline. On June 15, 2020, the Court agreed, reversing the Fourth Circuit and upholding the longstanding precedent allowing infrastructure crossings of the Appalachian Trail.

In May of 2018, the NAM filed an amicus brief to urge the U.S. Supreme Court to review and reverse a Montana Supreme Court decision that undermines the predictability of EPA’s environmental remediation orders. The case arises under the federal Comprehensive Environmental Response, Compensation, and Liability Act (known as “CERCLA” or “Superfund”). Under CERCLA, EPA has the authority to order comprehensive clean up orders for sites containing hazardous wastes. Those orders preempt state and individual efforts to impose remediation requirements. The Montana Supreme Court nonetheless allowed nearby landowners to seek compensation for a remediation plan that conflicts with the EPA’s cleanup order. If not overturned, that decision will undermine the certainty and predictability for manufacturers that own Superfund sites. In support of a petition for review by the U.S. Supreme Court, the NAM filed an amicus brief that explains how the Montana Supreme Court’s decision frustrates environmental remediation. On June 10, 2019, the Court granted review of the case for the Court’s 2019-2020 term. On August 28, 2019, the NAM filed an amicus brief on the merits that supports Atlantic Richfield's arguments on the merits. And on April 20, 2020, the Court held that the landowners needed EPA approval to take remedial action to ensure “a single EPA-led cleanup effort rather than tens of thousands of competing individual ones.” Although the opinion leaves open future state lawsuits related to Superfund sites, the need to obtain prior EPA approval presents a significant obstacle to such challenges—and provides meaningful certainty for manufacturers.

The U.S. Supreme Court should rule that the federal Clean Water Act does not regulate groundwater because the Act by its terms applies only to surface waters and would conflict with other environmental laws specifically tailored to protect groundwater. The U.S. Court of Appeals for the Ninth Circuit held in 2018 that groundwater is jurisdictional under the Clean Water Act, reasoning that groundwater can serve as a conduit to jurisdictional surface waters. Under this "conduit theory" of jurisdiction, certain industrial activities on dry land could give rise to lawsuits alleging such activities polluted nearby surface waters through groundwater connections. On appeal to the U.S. Supreme Court, the NAM’s amicus brief argued that this broad interpretation goes far beyond the scope and intent of the Clean Water Act, interferes with other environmental statutes focused on groundwater protection, would be impossible to implement, and would impose incalculable liability risk on manufacturers and other regulated industries. Unfortunately, in a 6-3 decision, the Court held on April 23, 2020 that the CWA does regulate groundwater "if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters."

The NAM filed an amicus brief supporting a petition for certiorari that asks the Supreme Court to reverse an appellate decision that will expose companies to class-action lawsuits targeting their employee retirement plan offerings. A group of former employees sued their former employer under the Employee Retirement Income Security Act of 1974, claiming the company violated its fiduciary duty under ERISA by offering actively managed mutual funds in the company’s 401(k) plan that ultimately underperformed certain index funds. The U.S. Court of Appeals for the 1st Circuit concluded that the burden of proof rested on the company to disprove loss causation under ERISA, reasoning that a company “can easily insulate itself” from liability by selecting index funds rather than active funds in its 401(k) plan. This holding will encourage class-action plaintiffs to target companies that offer 401(k) plans and will make it more difficult for companies to defend against such litigation. In support of a petition for certiorari to the U.S. Supreme Court, the NAM’s amicus brief identifies the deluge of ERISA litigation already facing companies and explains how the 1st Circuit’s decision will harm plan sponsors and their participants. On January 13, 2020, the Court denied certiorari.

In March of 2019, the NAM filed an amicus brief seeking U.S. Supreme Court review of an appellate decision that improperly expands the statute of limitations period for employee lawsuits against their employers under the Employee Retirement Income Security Act. The case arose with a class action claim by a former Intel employee alleging that Intel violated its fiduciary duty under ERISA by investing in risky assets that lost value. A district court dismissed the case because the plaintiff brought his claim after ERISA’s three-year statute of limitations period expired. On appeal to the 9th Circuit, the plaintiff argued that even though he received information about the investments more than three years before the lawsuit, he did not recall reading the documents and therefore lacked “actual knowledge” of the investments necessary to trigger the statute of limitations period. That reasoning somehow persuaded the 9th Circuit to reverse the district court’s dismissal and reinstate the case. The Ninth Circuit’s decision inappropriately expands exposure to potential litigation for manufacturers that sponsor retirement plans. In support of Intel’s petition for Supreme Court review, the NAM filed an amicus brief that explains the harmful implications of the decision on manufacturers and why the Court should grant review. On June 10, 2019, the Court granted review of the case for the Court’s 2019-2020 term, and on August 28, 2019, the NAM filed its amicus brief on the merits. Unfortunately, on February 26, 2020, the Court unanimously affirmed the Ninth Circuit’s interpretation of the three-year statute of limitations provision.

The NAM filed an amicus brief to support the Deferred Action for Childhood Arrivals program (DACA) against efforts to end the program and remove 800,000 individuals from the American workforce. Established by the Obama administration in 2012, DACA allows undocumented immigrants who had been brought to the United States as children to apply for protection from deportation and permission to work in the United States. In 2017, the Trump administration announced plans to terminate DACA. In January of 2018, a federal judge in California blocked that termination and the 9th Circuit affirmed. The government petitioned the U.S. Supreme Court for review, which the court granted for its October 2019 term. This issue has a significant impact to NAM members, many of whom face workforce challenges that would be made far worse if 800,000 individuals suddenly lose their work authorization. The NAM joined a multi-industry and multi-employer amicus brief to highlight valuable the contributions that individuals with DACA status provide to manufacturers and to the entire U.S. economy and society. On June 18, 2020, the Court agreed, holding that the Administration's decision to rescind DACA was arbitrary and capricious under the Administrative Procedure Act and that the program would continue.

The NAM filed an amicus brief in the U.S. Supreme Court urging review of a lower court opinion that a jury may hold Avco liable under state law for alleged defects in 1969 Federal Aviation Administration (FAA)-approved designs of part of a plane engine. The question before the Court is whether the FAA preempts state-law design-defect claims in the aviation industry, which is what Congress intended. This is important for manufacturers because a consistent safety standard is vital for regulation of critical modes of transportation. The NAM’s brief argued that the FAA’s requirement of prior approval of any aircraft or aircraft component design preempts state law that requires a design change because simultaneous compliance with state and federal law is impossible. On January 13, 2020, the Court denied review.

The NAM filed an amicus brief in support of a petition for certiorari to review a Ninth Circuit ruling that threatens to expand the use of civil RICO claims.

The case arose as a putative class action brought by Actos patients and third-party payors (TPP) alleging that they would not have purchased Actos had they known about the increased risk of bladder cancer. Specifically, they allege that Takeda, which manufactures Actos, and Lilly, which previously co-marketed it, conspired to commit mail and wire fraud under RICO by intentionally misleading physicians, consumers, and TPPs to believe that Actos did not increase a person’s risk of developing bladder cancer. Notably, both the patient plaintiffs and the TPP’s insureds used Actos safely and without any adverse side effects.

Relying on Seventh Circuit precedent, the district court dismissed the RICO claims with prejudice based on lack of proximate cause, as well as the state law claims for similar reasons. The Ninth Circuit reversed, fully acknowledging the “apparent circuit split among four of [its] sister circuits” regarding the proximate cause issue but concluded that no matter the roles of independent actors in causing each plaintiff’s claimed injury, it was “foreseeable” that the conduct alleged would increase drug sales overall. On the standing issue, the Ninth Circuit, following its own established circuit precedent, by holding that anyone who pays for a product has standing to sue for a full refund merely by alleging that the payment would not have been made if a risk or defect had been disclosed. The NAM and ATRA filed an amicus brief arguing that the pharmaceutical industry, and manufacturing in general, should not be subjected to abusive litigation that hampers their ability to innovate and grow and that a sound and fair legal system requires remedies to be focused on persons with direct, actual harms, particularly the RICO statute because of its powerful and potentially crippling treble damages remedy. Unfortunately, on June 8, 2020, the Court denied cert.

The NAM filed an amicus brief in support of Altera Corporations' petition for certiorari to reverse the Ninth Circuit and uphold the Internal Revenue Service’s (IRS) “arm’s-length transaction standard.” The Commissioner of the IRS departed from this longstanding approach in a policy shift, thus destroying the established precedent and reducing its effectiveness. Under the arm’s-length standard, a transaction was judged by looking at how the parties priced it as if they were two independent entities, not parts of the same group of related entities. The Ninth Circuit held that the Commissioner did not exceed his rule-making authority and that his rule was entitled to deference. On March 6, 2020, the NAM filed a coalition amicus brief in support of Altera's writ petition arguing that the decision below raises unsettling questions about the tax treatment of countless international transactions.Unfortunately, on June 22, 2020, the Supreme Court denied cert.

The NAM filed an amicus brief in support of Ford's petition for certiorari to reverse a decision that will generate uncertainty for tariff determinations for imported products, including imported automobiles. The case arose from Ford Motor Co.’s imports of the Transit Connect van. After importing the vans as passenger vehicles, Ford reconfigured the vans to allow their use as cargo vans. The U.S. Customs and Border protection applied a 25% tariff on the vehicles, concluding that the vans are properly classified as trucks subject to a 25% tariff rather than a passenger vehicle subject to a much lower 2.5% tariff. Ford challenged the tariff determination in the U.S. Court of International Trade and prevailed. On appeal, however, the Federal Circuit reversed, concluding that the ultimate intended use of the vehicles as cargo vans supported the higher tariff rate. After also filing at the federal circuit en banc level, the NAM filed an amicus brief in support to identify the uncertainty that manufacturers will face if tariffs are imposed based on possible subsequent reconfigurations of goods rather than their actual condition as imported. Unfortunately, on June 29, 2020, the Court denied review.

The NAM filed an amicus brief in support of certiorari to the U.S. Supreme Court in a case involving judicial deference to administrative agencies’ interpretations of their own regulations. The case arose from a veteran’s lawsuit against the Veterans’ Administration over his post-service benefits. The sole legal question before the Supreme Court is whether the landmark case of Auer v. Robbins (S. Ct. 1997) should be overturned. Auer held that reviewing courts should give “extreme deference” to administrative agencies’ interpretations of their own regulations. This so-called “Auer deference” allows agencies to promulgate vague regulations then enjoy broad judicial deference to their own interpretation of their regulation. This case has important implications for manufacturers because a favorable ruling by the Supreme Court would discourage agencies from promulgating vague regulations and would give more certainty to manufacturers that their own reasonable interpretations of regulations will be upheld in response to a government enforcement proceeding or other regulatory action. The NAM’s brief in support of certiorari explained how extreme judicial deference to agencies harms manufacturers. On December 10, 2018, the Court granted certiorari to hear the case. The NAM then submitted an amicus brief on the merits that reinforced our arguments for why the doctrine should be abolished. On June 26, 2019, the Court declined to overrule the doctrine but substantially narrowed its application. This ruling will result in more regulatory certainty and clarity for manufacturers.

The NAM filed an amicus in support of a petition to certiorari to the U.S. Supreme Court to ask the court to reverse an appellate ruling that would expose manufacturers to overbroad class action lawsuits. The case involves class action litigation arising from alleged groundwater contamination by manufacturers in Dayton, Ohio. The Sixth Circuit court of appeals found that the proposed class of plaintiffs lacked the requirements for class certification but nonetheless certified seven legal issues for class treatment. This overbroad interpretation of class certification threatens manufacturers by allowing a far broader range of claims to be brought against manufacturers than federal law allows. The NAM's amicus brief asks the Supreme Court to take the case and reverse the appellate holding. On March 18, 2019, the Court denied certiorari.

The NAM filed an amicus brief to oppose class action standing where there is no harm. A class of plaintiffs allege that Jeep infotainment systems have cyber-security “vulnerabilities” that render the subject vehicles “more” susceptible to hacking than other vehicles, though no FCA US vehicle has ever been hacked in real world conditions. This case raises important and unsettled questions regarding standing and class certification standards, which threaten to open the floodgates to class action lawsuits over every connected product in which consumers could allege that the product they own is “defective” because it is more “vulnerable” to a hack than other similar products even if no hack has ever occurred in real world conditions. The NAM’s brief explains why certifying a class for a mere risk of a “hack” is not a violation of a manufacturers’ standard of care, is not compensable harm and circumvents clear precedent. The Supreme Court declined to hear the case.

The NAM filed an amicus brief asking the U.S. Supreme Court to review cases on the constitutional due process limits on class-action litigation involving R.J. Reynolds and Philip Morris. The lower courts allowed a jury determination on general liability in one case to prevent a defense in another case as to whether each of a manufacturer’s products was defective. If allowed to stand, these decisions have the potential to improperly expose manufacturers to burdensome litigation without the proper opportunity to defend themselves. The NAM has previously filed amicus briefs in related cases, also arguing that class-action defendants have a due process right to a judicial determination of every element of a claim. The Supreme Court denied the petition for certiorari.

The NAM filed an amicus brief asking the U.S. Supreme Court to review cases on the constitutional due process limits on class-action litigation involving R.J. Reynolds and Philip Morris. The lower courts allowed a jury determination on general liability in one case to prevent a defense in another case as to whether each of a manufacturer’s products was defective. If allowed to stand, these decisions have the potential to improperly expose manufacturers to burdensome litigation without the proper opportunity to defend themselves. The NAM has previously filed amicus briefs in related cases, also arguing that class-action defendants have a due process right to a judicial determination of every element of a claim. The Supreme Court denied the petition for certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court urging a limited time frame for private relators to bring False Claims Act (FCA) cases. The FCA establishes two distinct statute-of-limitations periods: six years for relators’ claims and up to ten years for claims brought by a government official or with the knowledge of a government official. The U.S. Supreme Court considered the issue of whether the “government knowledge” period of ten years applies only when the government intervenes in the case or whether that period also applies to relators even when the government has chosen not to pursue the claim. The shorter statute of limitations would reduce the number of very old claims that manufacturers would be forced to defend—at significant expense and with the disadvantage of faded memories. The NAM’s brief argued that a relator in an FCA action is limited to the six-year statute of limitations, but the Court held that the longer limit of up to ten years applies.

The NAM filed an amicus brief in support of a petition for certiorari to overturn a city ordinance that compels commercial speech in violation of the First Amendment to the U.S. Constitution. The City of Berkeley, California, required mobile phone retailers to post in-store warnings about alleged risks of cellular phone radiation. The wireless industry’s trade association sued to challenge the ordinance, arguing it violated the store owners’ free speech rights. The U.S. Court of Appeals for the Ninth Circuit upheld the standard, reasoning that commercial speech is subject to the least rigorous level of judicial review. The U.S. Supreme Court granted review and summarily reversed, ordering the 9th Circuit to reconsider its decision in light of intervening Supreme Court caselaw governing compelled speech. The 9th Circuit again upheld the ordinance by applying a relaxed standard of review that requires only that the compelled speech is reasonably related to any “more than trivial” governmental interest. In support of the association’s second petition for certiorari to the U.S. Supreme Court, the NAM filed an amicus brief seeking review and reversal of the 9th Circuit’s overly permissive review standard for compelled commercial speech. Our brief explained how the 9th Circuit’s lax standard will inflict significant harm on businesses and why the ordinance is unconstitutional. On December 9, 2019, the court denied certiorari.

The NAM filed an amicus brief in support of a petition for certiorari to the U.S. Supreme Court to oppose Oregon’s economic discrimination against transportation fuels manufactured outside of Oregon, and to defend the free trade of fuels and other manufactured products within the United States. The case involves Oregon’s “Clean Fuel Program,” which ascribes a “carbon intensity” score to all fuels and requires higher-scoring fuels to pay a financial penalty to sell those fuels in Oregon. Oregon officials responsible for the program acknowledged that one purpose of the program was to discriminate against fuels manufactured outside of Oregon. A federal district court and the U.S. Court of Appeals for the Ninth Circuit upheld the program. An association representing the oil refining industry petitioned the U.S. Supreme Court to review the case. The NAM’s amicus brief in support of certiorari argues that the Oregon law improperly seeks to regulate energy production in other states, and that the lower courts failed to properly scrutinize the program and find that it violates the U.S. Constitution’s prohibition against a state’s economic discrimination against products made out-of-state. Our brief also highlights the problematic consequences for manufacturers if states may enact a patchwork of similar economic restrictions on the free trade of transportation fuels and other manufactured products. On May 13, 2019, the Court denied certiorari.

The NAM filed an amicus brief to oppose the power of state attorneys general to subpoena out-of-state corporations over issues that are unrelated to the company’s activity in the state. The Massachusetts attorney general issued a subpoena to ExxonMobil that sought decades of communications related to climate change.The company challenged the subpoena, arguing that its in-state activity was not sufficiently related to the scope of the subpoena. The Massachusetts Supreme Court upheld the subpoena despite the tenuous connection between the focus of the subpoena (climate change) and the company’s limited in-state activity (licensing agreements with independently-owned gas stations). That low bar for jurisdiction over out-of-state defendants threatens all manufacturers by massively expanding the range of courts through which plaintiffs or government officials may pursue claims against manufacturers. The NAM’s amicus brief in support of the company's petition for certiorari to the U.S. Supreme Court 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. On January 7, 2019, the Court denied certiorari.

The NAM filed an amicus brief with the U.S. Supreme Court urging the court to reject expansion the scope of the Americans with Disabilities Act (ADA) “regarded as” prong of the definition of “disability.” This litigation arises from an Equal Employment Opportunity Commission (EEOC) charge after BNSF withdrew a conditional offer of employment because the company lacked enough information to determine whether an applicant suffered from an impairment that could limit his ability to perform the essential functions of the position. If allowed to stand, the decision would impose significant costs and expose employers to uncontrolled liability. A Supreme Court decision in this case would resolve a circuit split between the Ninth Circuit and other circuits that have considered this question. The NAM’s brief argued that 1) under the Ninth Circuit’s reasoning, an employer that requires an employee to undergo an individualized medical examination “for the purposes of determining whether he has an impairment” will be deemed to per se perceive the employee as having such an impairment and “regard” the employee as disabled; 2) other circuits have rejected this logic; and 3) that the Ninth Circuit’s holding improperly imposes the costs of medical examinations on employers. On November 13, 2019, the Court denied certiorari.

The NAM filed an amicus brief with the U.S. Supreme Court urging review of a lower court decision that Nevada and Arizona employers were obligated to compensate warehouse workers for time spent going through security screenings at the end of the day. That decision identified a federal standard for compensable “work” under the Fair Labor Standards Act independent of the Portal to Portal Act; the court held that Nevada and Arizona did not have to take the Portal to Portal Act into account because neither state adopted the Act. If allowed to stand, that decision would have adverse consequences for businesses who would incur significant liability from the opportunistic plaintiffs’ bar or significant costs in revamping their procedures to try to avoid liability. The NAM’s brief argued that the decision undermines Supreme Court precedent and that it will invite significant financial implications for employers across the country. On October 7, 2019, the court denied certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court to overturn an appellate court ruling that workers on offshore drilling platforms may bring state-law labor and employment claims. An employee located on an offshore drilling platform in federal waters on the Outer Continental Shelf sued his employer—an offshore drilling services company—alleging the employer failed to pay the employee for his non-working “standby” time on the platform. The employee argued that California’s labor laws entitled him to payment for the standby time. The drilling company countered that federal labor laws applied because the platform is located on the Outer Continental shelf. A district court ruled that federal law applies, but the U.S. Court of Appeals for the 9th Circuit reversed. The drilling company petitioned the U.S. Supreme Court for review. The NAM filed an amicus brief in support of review. The Court granted review, and on June 10, 2019, concluded that federal labor law applies because the Outer Continental Shelf Lands Act broadly preempts state labor and employment laws. This decision restores certainty for offshore platform owners and operators and removes the specter of hundreds of millions of dollars in unwarranted wage-and-hour liability.

The NAM filed an amicus brief in support of a petition for certiorari seeking U.S. Supreme Court review and reversal of an appellate decision that undermines the efficient resolution of “mass action” lawsuits under the Class Action Fairness Act (CAFA). The case involves claims by over 4,000 plaintiffs alleging that Lipitor caused them to develop Type II diabetes. The plaintiffs brought the claims in state court. The state court judge proposed to remove the case to federal court under a CAFA provision that allows removal of such “mass actions” when claims for monetary relief by more than 100 people “are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. 1332(d)(11)(B)(i). A federal judge rejected the proposed removal, however, finding that that statutory language allows only plaintiffs -- not state court judges -- to propose to remove mass actions to federal court. On appeal, the U.S. Court of Appeals for the Ninth Circuit affirmed. In support of the defendant’s petition for Supreme Court review, the NAM filed a coalition amicus brief that identifies the problematic consequences of the Ninth Circuit’s decision for manufacturers that face mass action claims. On October 7, 2019, the court denied certiorari.

The NAM filed an amicus brief on behalf of a metal parts manufacturer to argue against overbroad asbestos liability for companies whose products do not contain asbestos. Individual plaintiffs who worked on ocean vessels sued manufacturers of metal parts used in the vessels. The defendant’s parts did not contain asbestos but were later combined with other third-party parts that did, which the plaintiffs claimed caused them to develop lung disease.

The U.S. Court of Appeals for the Third Circuit found the metal component manufacturers liable for the plaintiffs' injuries, concluding that it was "reasonably foreseeable" that the metal components would be integrated with asbestos components on the ship. If not reversed, that liability standard could impose limitless potential liability on manufacturers whose products do not even contain asbestos. That same theory could also be used to hold manufacturers liable for third-party products beyond the asbestos context. The U.S. Supreme Court granted review. The NAM filed an amicus brief in support of the company to argue against this overbroad scope of liability that could hurt manufacturers by making them liable for asbestos exposure for manufacturing products that do not even contain asbestos.

On March 19, 2019, the Court rejected the 3rd Circuit's overbroad holding that would have imposed liability on manufacturers whenever it is "foreseeable" that their products might be integrated with other third-party products that could cause harm. Instead, the Supreme Court ruled that a manufacturer only has a duty to warn when the manufacturer's product requires incorporation of another part (such as asbestos) that the manufacturer knows or has reason to know is likely to make the integrated product dangerous.

The NAM filed an amicus brief in support of a petition for certiorari to the U.S. Supreme Court to review and reverse a California state court ruling that allowed nonresident plaintiffs to sue a pharmaceutical company despite a lack of personal jurisdiction. In response to thousands of lawsuits against Pfizer involving its drug Lipitor, Pfizer sought to remove the cases to federal court. That effort was ultimately unsuccessful, at which point Pfizer sought to dismiss the case for lack of personal jurisdiction. The state court ruled that Pfizer filed its motion to dismiss too late and therefore waived its personal jurisdiction defense. Such a ruling unfairly penalizes defendants for raising legitimate defenses at appropriate times in litigation. In complicated and multi-year litigation, defendants should not be compelled to exercise all defenses at the outset. The NAM’s amicus brief argued that the Court should grant the petition and reverse the California court’s ruling. On November 25, 2019, the court denied certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court urging it to review a case on securities losses from alleged fraud. The lower court’s ruling set forth a broad loss-causation standard under which there is no need to establish that any alleged fraud was ever disclosed to the market, which directly conflicts with other decisions that have required a plaintiff show that the market became aware of the existence of fraud or, at least, of the facts that the defendant allegedly misrepresented. Courts should require proof that an act or omission of the defendant caused the loss for which the plaintiff seeks to recover damages. If successful, this argument could lead to even more federal securities class actions. The NAM’s brief explains why the law and precedent does not support this theory of liability and highlights the need to promote fair markets that support capital for business growth. On June 24, 2019, the Court denied certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court urging it to review a lower court decision accusing Pfizer of making an illegal reverse payment to keep a generic version of the cholesterol drug Lipitor off the market. Antitrust scrutiny should apply only to “large” and “unjustified” reverse payments made to a patent challenger in an effort to persuade the challenger to stay out of the market, and the lower court's decision extended antitrust scrutiny to “commonplace” and “traditional” settlements by focusing on just one aspect of the agreement. The ability of the pharmaceutical companies to efficiently settle disputes is highly beneficial to the public, and speculative antitrust challenges will needlessly chill such settlements. The NAM's brief urged the Supreme Court to provide greater guidance on what qualifies as an impermissible reverse payment and what facts plaintiffs must include in a complaint to plausibly allege anticompetitive conduct in order to subject a pharmaceutical patent settlement to antitrust scrutiny. Providing such direction would be helpful to manufacturers so that they can protect their intellectual property rights in ways consistent with the antitrust laws and avoid improper antitrust challenges to their patent settlements.The U.S. Supreme Court issued a brief order declining to review.

The NAM filed two amicus briefs in the U.S. Supreme Court regarding the permissibility of class-action waivers and mandatory arbitration provisions in employment contracts. Class-action waiver and arbitration provisions are permissible under the Federal Arbitration Act (FAA), and arbitration encourages efficient employment practices by providing lower costs to the parties and faster results in a dispute, thus avoiding drawn-out and costly litigation. The NAM’s briefs argued that arbitration provisions are valuable to employers and employees, that arbitration agreements are governed under the FAA and that courts should not defer to incorrect interpretations of the law. The Court upheld the enforceability of arbitration agreements that waive an employee’s right to participate in class action lawsuits against the employer.

The NAM filed two amicus briefs in the U.S. Supreme Court regarding the permissibility of class-action waivers and mandatory arbitration provisions in employment contracts. Class-action waiver and arbitration provisions are permissible under the Federal Arbitration Act (FAA), and arbitration encourages efficient employment practices by providing lower costs to the parties and faster results in a dispute, thus avoiding drawn-out and costly litigation. The NAM’s briefs argued that arbitration provisions are valuable to employers and employees, that arbitration agreements are governed under the FAA and that courts should not defer to incorrect interpretations of the law. The Court upheld the enforceability of arbitration agreements that waive an employee’s right to participate in class action lawsuits against the employer.

The NAM filed an amicus brief asking the U.S. Supreme Court to review and reject California’s rule prohibiting arbitration of Private Attorneys General Act (PAGA) claims. The California Supreme Court held that California public policy precludes enforcement of an agreement that requires PAGA claims to be submitted to arbitration and that California’s policy is not preempted by the Federal Arbitration Act (FAA). This holding means representative PAGA claims will likely become even more common, resulting in the effective invalidation of millions of arbitration agreements that are governed by the FAA. The NAM’s brief argued that arbitration agreements allow disputes to be resolved promptly and efficiently while avoiding the costs associated with traditional litigation. Such arbitration is speedy, fair, inexpensive and less adversarial than litigation in court. Unfortunately, the U.S. Supreme Court denied review.

The NAM filed an amicus brief supporting CNH Industrial’s appeal to the Supreme Court of an adverse decision involving its obligation to provide lifetime healthcare benefits for retirees. The issue in the case is whether a collective bargaining agreement that does not expressly provide for lifetime vesting of such benefits can be interpreted to include them. The NAM’s brief argued that while the Supreme Court has already addressed this issue in the Tackett case in 2015, the U.S. Court of Appeals for the Sixth Circuit struggled to properly implement that ruling and improperly tipped the scales in favor of employees. The case is important for companies with similar provisions in their collective bargaining agreements. The U.S. Supreme Court granted the petition for certiorari and issued a per curiam decision reversing the Sixth Circuit and rendering judgment in CNH’s favor.

The NAM filed an amicus brief in support of GlaxoSmithKline’s (GSK) petition for certiorari to the U.S. Supreme Court seeking review of an appellate court’s decision that allowed the state of Louisiana to sue GSK after the state received benefits from a class action settlement involving the same claims. At issue was whether the state can be bound by the settlement agreement when it claimed sovereign immunity from litigation under the Eleventh Amendment. Certainty and fairness in class actions settlements are important to manufacturers who seek litigation closure. The NAM’s brief explained why the Supreme Court should have reviewed the case to resolve the conflict between the appellate decision and numerous other decisions holding that sovereign immunity does not extend beyond claims filed against a state. GSK agreed to a favorable settlement with the state, and as a result of the settlement, the U.S. Supreme Court dismissed the petition for review.

The NAM filed an amicus brief urging the U.S. Supreme Court to reverse a lower court ruling that allowed individual plaintiffs to rely on a jury finding of design defect from the preliminary stage of a prior class action case. A jury found that some cigarettes made by many companies over four decades were defectively designed, which is an essential element of the case. However, the class was later decertified, and individual suits began. A company should not be barred from contesting a design defect issue in a subsequent case unless that issue was specifically decided as to that company and its products beforehand. Otherwise, plaintiffs can avoid proving essential elements of their claim on facts specific to them and can rely on previous judicial determinations based on facts which do not clearly apply to their individual case. The NAM’s brief argued that preventing defendants from contesting the core basis of their liability violates due process and that the original jury determination was so broad and general that it would be unfair to hold a company liable for design defects without looking at each individual product. The Supreme Court denied the petition for certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court in support of Constitution Pipeline Company’s authority to construct a new natural gas pipeline from Pennsylvania to New York State. New York rejected the proposed pipeline because the state disagreed with the pipeline’s proposed route. Because routing decisions for natural gas pipelines are within the power of the Federal Energy Regulatory Commission, New York’s denial improperly encroached on FERC’s siting authority. The NAM’s brief argued that the Supreme Court should hear this case because New York’s rejection violates the law and would harm manufacturers and other users of natural gas. Unfortunately, the Court denied certiorari.

The MCLA secured a 9–0 victory in the U.S. Supreme Court that resolved a procedural obstacle that had delayed the appropriate federal court from considering legal challenges to the Environmental Protection Agency’s (EPA) 2015 “Waters of the United States” (WOTUS) Rule. This legal win cleared the path for the MCLA’s lawsuit to invalidate the rule to proceed in federal district court, where the U.S. District Court for the Southern District of Texas ultimately invalidated the rule and remanded it back to the EPA for reproposal.

The NAM filed an amicus brief in the U.S. Supreme Court to oppose government overreach under the Endangered Species Act (ESA) that restricts land use in the name of helping an endangered species that does not even live on the land. The U.S. Fish and Wildlife Service (FWS) declared 1,544 acres of private property in Louisiana as “critical habitat” for the dusky gopher frog, which does not live on that property and could not even survive there under current conditions. Such designations can significantly harm manufacturers and other landowners by severely restricting land use activities and driving up permitting costs and delays. The NAM’s brief in support of the landowner argued that FWS exceeded its statutory authority under the ESA and highlighted how FWS’s actions imposed significant harm and business uncertainty on manufacturers. The Supreme Court issued a largely favorable decision for manufacturers and remanded to the lower court the question of whether the property at issue even qualifies as habitat for the frog (a question that suggests the answer is “no”) and ruled that an agency’s critical habitat designation is subject to judicial review.

The NAM filed an amicus brief in a U.S. Supreme Court case that involved a Berkeley, California, city ordinance that required mobile phone retailers to post warnings about alleged risks of cellular phone radiation. An association sued to challenge the ordinance, arguing it violated the store owners’ free speech rights; however, the U.S. Court of Appeals for the Ninth Circuit ruled against the owners, concluding that government-compelled commercial speech is subject to the least rigorous level of judicial review. If left to stand, that precedent could harm manufacturers by allowing the government to dictate how manufacturers speak about their own products. The NAM’s brief argued that compelled speech should be subject to strict judicial scrutiny. The Supreme Court summarily reversed the Ninth Circuit and ordered it to reconsider its decision. On remand, the Ninth Circuit declined to stop enforcement of the ordinance.

The NAM filed an amicus brief in the U.S. Supreme Court supporting Microsoft in its litigation against the Department of Justice (DOJ) stemming from a U.S. government warrant for access to e-mail stored by Microsoft on a server in Ireland. The U.S. Court of Appeals for the Second Circuit previously held that the Stored Communications Act does not authorize courts to enforce the warrant and that the government should follow the Mutual Legal Assistance Treaty adopted by Ireland the United States in 2001, but that ruling was appealed to the Supreme Court. Protection of confidential information is important to all businesses, including manufacturers. The NAM’s brief argued that enforcement of the warrant would harm economic and security interests and that the warrant, issued under the Stored Communications Act, could not compel Microsoft to produce information stored outside of the United States. In 2018, after the passage of the Clarifying Lawful Overseas Use of Data Act, the Supreme Court declared the case moot with a direction for the district court to vacate the ruling against Microsoft.

The NAM filed an amicus brief in the U.S. Supreme Court in a case involving the question of whether a manufacturer may be sued in a state in which the manufacturer has no operations or business presence. A foreign toy manufacturer sold its products to a U.S.-based distributor, who then sold the toys to retailers throughout the United States. The Colorado Supreme Court ruled that the foreign manufacturer could be sued in Colorado state court despite the manufacturer having no business presence in the state. The NAM’s brief argued against court jurisdiction over out-of-state defendants that have no business presence in the state other than third parties simply selling their products in the state. The U.S. Supreme Court denied certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court addressing the question of how federal courts should interpret split decisions from the Supreme Court where fewer than five justices agree on a common rationale for deciding a case. One example of such a decision of importance to manufacturers is the Court’s 4-1-4 decision in Rapanos v. United States, which involves the scope of federal jurisdiction over “waters of the United States” under the Clean Water Act. Lower courts have taken divergent approaches to interpreting such split decisions, which has caused confusion and chaos. Clarity in this case would help make any new “waters of the United States” rule less susceptible to legal challenge and provide needed clarity for other laws and regulations, thereby fostering certainty for manufacturers. The NAM’s brief highlighted Rapanos as the poster child for why the Court must resolve this judicial confusion and supplied the Court with arguments to protect the validity of the “waters of the United States” rule. The Court resolved the merits of the case without addressing the interpretive questions, which is a missed opportunity that will result in continued confusion among the lower courts in interpreting split decisions from the Supreme Court.

The NAM filed an amicus brief urging the U.S. Supreme Court to review a case addressing standards applicable to joint employment liability under the Fair Labor Standards Act (FLSA). The U.S. Court of Appeals for the Fourth Circuit’s ruling would treat any business as an FLSA joint-employer if the business is “not completely disassociated” from a worker’s direct employer and applies even if a business has no direct relationship with the employee, or if the business has only a limited relationship. That ruling unreasonably expands the scope of companies deemed to be an individual’s employer and imposes employment obligations and liabilities on those employers. The NAM’s brief explained that the Supreme Court should hear the case to bring uniformity to joint employment liability standards and avoid the potential imposition of extensive unanticipated liability on the many employers impacted by this new rule. Although the Supreme Court denied certiorari, the National Labor Relations Board overturned the Browning-Ferris case that initially broadened the definition of a joint employer.

The NAM filed an amicus brief in the U.S. Supreme Court supporting Emerson Electric Co.’s request for review of the California Supreme Court’s decision that enforcement actions under California’s Unfair Competition Law (UCL) are not preempted by the federal Occupational Safety and Health Act (OSH Act). The OSH Act subjects employers and employees to one set of workplace safety regulations and imposes uniform health and safety requirements. States may regulate and enforce additional workplace safety only pursuant to a federally approved plan that avoids duplicative and counterproductive regulation. One California county sidestepped an approved state plan to seek additional penalties against Emerson for an alleged workplace violation. That circumvention could set a dangerous precedent for manufacturers by allowing counties to impose duplicative and conflicting workplace requirements on manufacturers. The NAM’s amicus brief argued that the federal OSH Act preempts such conflicting requirements and asked the U.S. Supreme Court to hear and reverse the decision, but the U.S. Supreme Court declined review.

The NAM filed an amicus brief in support of General Motors in a case involving the standards a court must apply to require a new trial when the previous trial ended in a “compromise verdict.” Compromise verdicts arise when a jury cannot agree on the defendant’s liability but, out of sympathy for the plaintiff, the jury awards the plaintiff a small monetary damages award. In this case, a jury rendered a compromise verdict in a product liability case against GM, and the court ordered a new trial but only on the question of damages (rather than liability). A damages-only retrial by a new jury could result in a massive and improper damages award. The NAM’s amicus brief argues against damages-only retrials in circumstances such as this. The Supreme Court denied certiorari.

The NAM filed an amicus brief in the U.S. Supreme Court on behalf of paint manufacturers to oppose an overbroad “public nuisance” theory of product liability. The case involves lawsuits by several California counties against companies that previously sold lead paint. A California court concluded that the plaintiffs could establish over $1 billion in liability against the companies under a “public nuisance” theory of tort liability. That theory is dangerous for manufacturers because it does not require plaintiffs to prove reliance or causation and could lead to crushing damage awards in other lawsuits against manufacturers. The NAM’s brief supported the companies’ request for review by the Supreme Court. Unfortunately, the Court declined to review the case.

The NAM filed an amicus brief in the U.S. Supreme Court in a class action lawsuit against manufacturers of eye droppers that dispense glaucoma medication. The suit alleged that the droppers dispense droplets that are too big for the average human eye to absorb, and therefore the “wasted” medication defrauds consumers. The plaintiffs’ logic could extend to various other items that plaintiffs could allege over-dispense or under-dispense a product. To help protect manufacturers against having to face these baseless claims, the NAM’s brief supported the defendant manufacturers in support of a petition for certiorari. Our brief argued that the plaintiffs failed to establish any real injury, their claims are preempted by federal law and that allowing cases like this to move forward would invite abusive class-action litigation. The Court denied certiorari.

The NAM filed an amicus brief urging the U.S. Supreme Court to grant review of a class action certification case that could remedy a circuit split and defend fair class action standards for all class members. The litigation involved whether a class of plaintiffs, which includes purchasers over ten years and across eleven states, can be certified if there is no reliable way to find class members, short of an unmanageable series of mini-trials. Many NAM members are defendants in class actions and are therefore interested in ensuring that courts rigorously analyze whether a plaintiff has satisfied the requirements for class certification before certifying a class. The NAM’s brief argued that the circuit split encourages plaintiffs to circumvent ascertainability requirements adopted in four circuits by filing nationwide or multi-state class actions in the U.S. Court of Appeals for the Ninth Circuit and that the decision imposes a burden on businesses without benefiting absent class members. Unfortunately, the Supreme Court denied certiorari, leaving the issue unresolved.

The NAM filed an amicus brief in the U.S. Supreme Court urging it to consider a class certification approved by the U.S. Court of Appeals for the Seventh Circuit. In the proceedings below, the district court applied, and the Seventh Circuit approved, a presumption of class-wide antitrust injury based on alleged price increases that occurred in an unrepresentative price index despite extensive evidence showing that the index price did not reflect the prices that individual class members actually paid. This case raises concerns that manufacturers in industries which feature price indexes will be exposed to expansive class action antitrust liability. The NAM’s brief explained that the Seventh Circuit departed from Supreme Court precedent when it approved a presumption of class-wide injury to avoid individualized inquiries that would otherwise preclude class certification. Unfortunately, the Supreme Court declined to hear the case.

The NAM filed two amicus briefs urging the U.S. Supreme Court to affirm its precedent limiting review of class action certification decisions. After the named plaintiffs voluntarily dismissed their defective design claims with prejudice, they appealed the district court ruling that denied class certification. This litigation is important to manufacturers because piecemeal appeals from a single district court proceeding can prolong litigation, thereby increasing litigation costs. The NAM’s brief argued that 1) the case was moot after the parties agreed to dismiss the action with prejudice, 2) the district court’s holding ignored Supreme Court precedent regarding piecemeal appeals and 3) the holding was at odds with proper interpretation of the statue. In a win for manufacturers, the Supreme Court agreed with the NAM’s arguments.

The NAM filed a brief with the U.S. Supreme Court in support of two corporate officers who were subject to criminal liability solely as a result of their position. Jack and Peter DeCoster, respectively the owner and Chief Operating Officer of Quality Egg LLC, pled guilty as Responsible Corporate Officers to violating the Food, Drug, and Cosmetic Act (FDCA) by unknowingly introducing eggs containing salmonella into interstate commerce. This standard imposes strict liability on C-level executives and holds executives liable for every unwitting decision by employees. The NAM’s brief argued that the Court should reconsider the Park standard, which imposes criminal liability on managerial officers regardless of their knowledge or participation in the FDCA violation. Unfortunately, the Supreme Court declined to review the case.

The NAM filed an amicus brief in the U.S. Supreme Court urging the court to review an appellate ruling that upheld a high penalty imposed on a company for alleged misconduct by their lawyers during the discovery phase of a lawsuit. The Ninth Circuit upheld a $2.7 million award imposed against Goodyear as sanctions for failing to turn over a document in discovery. If upheld, this decision could have subjected manufacturers, who generate large amounts of data, to considerable sanctions if an error occurs during a discovery request. The NAM’s brief argued that that failure to require a direct causal link between a litigant’s alleged discovery violations and compensatory damages to other parties will lead to abusive sanctions, particularly for manufacturers. The court overturned the $2.7 million award and remanded the case to the lower courts for determination of the appropriate sanction.

The NAM filed an amicus brief in the U.S. Supreme Court urging the Court to consider a case from the U.S. Court of Appeals for the Third Circuit involving False Claims Act (FCA) qui tam pleading standards. The issue arises from a circuit split where eleven court of appeals have adopted conflicting tests to evaluate the sufficiency of a relator’s complaint. The pleading standard applies to manufacturers who contract, either directly or indirectly, with the federal government, thus subjecting them to increased litigation. The NAM’s brief explained that the Third Circuit’s qui tam pleading standards for alleging an FCA claim is the most lenient of those adopted by any circuit and would therefore require the pleading party to show nothing more than an opportunity for fraud by a business. Unfortunately, the Supreme Court denied the petition for certiorari, declining to resolve the circuit split.

The NAM filed an amicus brief urging the U.S. Supreme Court to safeguard manufacturers’ due process rights by affirming that a company was not “at-home” for jurisdictional purposes where the company is not incorporated or has not established its principal place of business. The appeal stems from two separate workplace injury claims against BNSF in Montana under the Federal Employers’ Liability Act (FELA) where the Montana Supreme Court held that the “at home” requirement applies only to foreign (outside the United States) defendants and that FELA’s venue provision supersedes constitutional due process limits on jurisdiction. As manufacturers continue to expand their distribution chains, jurisdiction and venue are important to manufacturers who can become subject to burdensome lawsuits in states where they do not have continuous and systematic contact. The NAM’s brief argued that Montana’s application of jurisdiction violates the “at home standard” and that expanding jurisdiction encourages forum shopping. In a win for manufacturers, the U.S. Supreme Court held that simply transporting trains through a state, without any other connection, is insufficient under the due process clause of the 14th Amendment to allow a court to exercise jurisdiction over a defendant.

The NAM filed two amicus briefs in the U.S. Supreme Court in this case concerning the U.S. Court of Appeals for the Second Circuit’s ruling on liability for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 based on a failure to disclose adverse “trends” and “uncertainties” in the “Management Discussion & Analysis” section of Item 303. The Second Circuit extended the private right of action to omissions of material fact that do not render a statement misleading. Many manufacturers are publicly traded companies and this ruling could expose manufacturers to increasing liability. The NAM’s brief argued that manufacturers may be subject to private suits for securities fraud for failing to disclose information that may not be material and could be exposed to “fraud-by-hindsight” litigation if shrewd plaintiffs allege that an event was known to management as being reasonably likely to occur. The Supreme Court did not hear the case because the parties settled.

The NAM filed an amicus brief in the U.S. Supreme Court supporting manufacturers’ rights in a bankruptcy suit that attempted to hold General Motors liable for pre-bankruptcy claims. A lower court held GM liable for product liability claims arising from an ignition switch defect five years before the sale of the company’s assets in bankruptcy. This ruling will make it difficult for companies to receive value for assets in bankruptcy and unfairly places liability on parties without fault. The NAM’s brief argued that disallowing the “free and clear” sale provision undermines the integrity of asset sales in bankruptcy, negatively impacts debtors, creditors and buyers, and that the decision below also violates a technical provision in bankruptcy law that requires the issuance of a stay prior to revoking the “free and clear” finding in a sale order. Unfortunately, the Supreme Court declined to hear the appeal.

The NAM filed a brief urging the U.S. Supreme Court to review a circuit court split over whether it is permissible for states and municipalities to levy taxes on natural gas while the gas remains in transit. This litigation stems from a Supreme Court of Texas holding which levied taxes on large quantities of temporarily stored natural gas while in interstate transit. This issue is important because imposing new state and local taxes on natural gas will harm both interstate commerce and natural gas consumers. The NAM’s brief argued that taxes on natural gas while it is in transit violate the “in-transit” principle of the Commerce Clause which mandates that goods that remain in the transit process cannot be locally taxed. Unfortunately, the Supreme Court denied the petition for certiorari leaving consumers to bear the burden of high costs.

The NAM filed an amicus brief in the U.S. Supreme Court urging the Court to hear an appeal challenging Michigan’s repeal of a tax provision that had allowed multistate companies to use a standard three-factor formula to compute taxes. The appeal arises from a lower court ruling that allowed Michigan to renege on its obligations under the Multistate Tax Compact, which was designed to prevent double taxation. Multistate companies could now be liable for more than $1 billion in extra taxes. The NAM’s brief argued that the compact was a binding contract and that imposing retroactive tax liability could have detrimental implications for businesses that reasonably relied on the tax scheme. Unfortunately, the Supreme Court declined to review the case.

The NAM filed an amicus brief supporting Nestle USA and urging the U.S. Supreme Court to clarify the reach of the Alien Tort Statute. This appeal followed a U.S. Court of Appeals for the Ninth Circuit decision that split with other federal courts of appeals on three legal issues: whether U.S. courts should entertain extraterritorial litigation, whether there is a well-defined consensus that corporations can be sued for violations of the Law of Nations; and the extent of knowledge or intent that a business must have to be liable for the acts of others. The NAM’s brief argued that the decision below 1) ignores a prior Supreme Court ruling; 2) invites international friction by expanding the scope of the Alien Tort Statue; and 3) is inconsistent with generally accepted principles of international law on intentional wrongdoing and corporate liability. Unfortunately, the Court denied the petition for review.

The NAM filed an amicus brief urging the U.S. Supreme Court to provide guidance on exclusive dealing arrangements between distributors. The Federal Trade Commission brought an enforcement action against a ductile pipe fittings manufacturer alleging that the manufacturer violated antitrust laws because it monopolized the domestic pipe fittings market by announcing that it might temporarily suspend its traditional rebate to any distributors who sold products from other manufacturers and cease providing its domestic pipe fittings to distributors who purchased domestic pipe fittings from competitors. This litigation is important to manufacturers because lack of clarity regarding the legality of exclusive-dealing arrangements discourages manufacturers and suppliers from entering into those arrangements, which in turn chills pro-competitive conduct. The NAM’s brief highlighted the importance of exclusive dealing arrangements and their pro-competitive traits. Unfortunately, the Court declined to hear this appeal.

The NAM filed an amicus brief urging the U.S. Supreme Court to reverse a U.S. Court of Appeals for the Ninth Circuit decision that erroneously conflated injury-in-law with injury-in-fact for purposes of Article III standing in an alleged violation of the Fair Credit Reporting Act (FCRA). In this case, Robins alleged that Spokeo violated the FCRA when it published inaccurate information on its website about Robins’ education and income. This decision might invite abusive class action litigation in which plaintiffs’ attorneys could amass huge classes of plaintiffs, most or none of whom would have actually suffered any negative consequences as a result of the alleged FCRA violation. The NAM’s brief argued that statutory injury-in-law is not a substitute for Article III injury-in-fact because Congress does not have the ability to abrogate the constitutional standing requirements. The Supreme Court remanded the case back to the Ninth Circuit, which then found that Robins had alleged a sufficient concrete harm to establish an injury-in-fact.

The NAM filed an amicus brief urging the U.S. Supreme Court to review a class action certification in an antitrust conspiracy certified solely based on presumptions of class-wide injury. This appeal came after a lower court denied the defendant the opportunity to rebut a presumption that all plaintiffs, purchasers of urethane foam, suffered the same damages as a result of the antitrust conspiracy even though each purchaser negotiated an individual price with the manufacturers. This case threatened to expose businesses to the risk of staggering class judgments and even for those who manage to defeat liability, substantially higher litigation costs. The NAM’s brief argued that 1) in class actions, parties have the right to raise any claim or defense specific to the individual class member; and 2) the lower court’s decision impeded due process and threatened to permit any conspiracy to be certified as a class action, thus potentially expanding the scope of class liability. This case settled on February 26, 2016.

The EPA has exerted control over land uses in the Chesapeake Bay watershed by dictating the minute details of what can be discharged into it and reserving to itself authority to approve any future changes necessary to allow for state and local adjustments to the mix of land uses within their jurisdictions. Congress neither envisioned nor authorized this expansion of EPA’s authority in the Clean Water Act.

This micromanagement upends the model Congress intended for the Clean Water Act. Local businesses throughout the Chesapeake Bay watershed must now comply with a regulatory scheme that imposes new federal burdens on businesses and industry formerly regulated by the states, impedes state programs to address state water quality issues, and limits opportunities for growth and innovation. Allowing the EPA’s control to stand would provide the EPA nearly unchecked power over land use decisions affecting local businesses throughout the nation.

The NAM filed an amicus brief urging the Supreme Court to review an adverse decision from the Third Circuit that allows such micromanagement by the EPA. Our brief argued that this overreach is not authorized by the Clean Water Act because it makes individual permit holders responsible for excess effluents from others. It severely constrains companies with discharge permits and delays revisions and approvals, disfavoring innovation and growth and curtailing development.

On Feb. 29, the Court declined to review this appeal.

The NAM filed an amicus brief urging the U.S. Supreme Court to support manufacturers’ rights to respond to jurisdictional decisions that impose additional costs and reduce the feasibility of constructing infrastructure. Under the Clean Water Act (CWA), a manufacturer must obtain a permit from the U.S. Army Corps of Engineers before discharging any dredged or fill material into waters of the United States that are subject to federal regulatory jurisdiction; however, the Corps has broadly construed the CWA to prohibit any productive use, improvement, alteration or repair of property without first obtaining a permit. This case provided the opportunity for manufacturers to request judicial review of Army Corps or Environmental Protection Agency decisions that may exceed those agencies' jurisdiction. The NAM’s brief argued that the regulated community must be afforded an early opportunity to respond to overly aggressive jurisdictional determinations and requested that the court resolve uncertainty over the scope of the CWA. In a win for manufacturers, the Court agreed with the NAM.

The NAM filed an application for an immediate stay of the final rule for existing electric utility generating units pending litigation over the rule in the U.S. Court of Appeals for the District of Columbia Circuit. The Environmental Protection Agency’s (EPA) Clean Power Plan attempted to aggressively transform the domestic energy generation industry in violation of the Clean Air Act. If upheld, this rule would have imposed significant regulatory costs on manufacturers, thereby threatening global competitiveness. The NAM’s brief argued that the rule is far in excess of EPA’s statutory authority under the Clean Air Act and would cause irreparable harms to NAM members if a stay was not granted. In a win for manufacturers, the Supreme Court granted the stay.

The NAM filed an amicus brief urging the U.S. Supreme Court to review a water pollution decision that upended well-settled due process principles. The appeal followed after the trial court departed from longstanding legal principles when it permitted the state of New Hampshire to hold Exxon liable for contamination involving the gasoline additive MTBE in private wells across the state, including non-existent potential future wells, based only on evidence from a small sample of wells and some statistical extrapolation by an expert witness. All manufacturers have a right to receive due process protection at trial and not be subjected to results-oriented shortcuts at trial such as “trial by formula.” The NAM’s brief argued that 1) the lower court’s decision cannot be reconciled with principles of due process that protect defendants at trial; 2) the case provides an opportunity for the Court to clarify that the due process clause forbids “trial by formula”; and 3) “trial by formula” distorts outcomes and encourages speculative litigation. The Supreme Court declined to hear this appeal.

The NAM filed an amicus brief supporting AT&T Inc. in its petition to the U.S. Supreme Court seeking review of an alleged False Claims Act (FCA) violation where the relator’s pleading did not include facts about any express or implied false claims, nor alleged any personal knowledge of the supposed improper conduct. The issue is whether relators filing FCA claims must include specific allegations of false claims in their pleadings. Unwarranted and excessive FCA claims increase the expense and disruption of burdensome discovery and protracted litigation for manufacturers. The NAM’s brief argued that that a circuit split encourages speculative claims and forum shopping and urged the Court to step in to resolve the split and clarify that FCA claims must, at a minimum, include an allegation of a specific false claim. Unfortunately, the Supreme Court declined review.

The NAM filed an amicus brief urging the U.S. Supreme Court to reject suits under the “implied false certification” theory, which allows False Claims Act (FCA) lawsuits without intent to defraud the government. This is an appeal from a U.S. Court of Appeals for the First Circuit ruling that took a broad view of what may constitute a “false or fraudulent” claim, after the respondent filed a qui tam lawsuit alleging that Universal Health had violated the FCA. This case raised concerns for manufacturers that the rapid rise in qui tam claims would subject them to increased litigation. The NAM’s brief argued that Congress did not intend for regulatory or contractual violations to be deemed false or fraudulent claims under the FCA, thus the broad interpretation of the FCA is at odds with congressional intent, and that the FCA’s intent is to hold those who knowingly intend to defraud the government accountable. In a win for government contractors, the Court held that the First Circuit’s interpretation was too broad.

In 2013, New Hampshire enacted amended legislation to redefine “motor vehicle” as including “equipment,” which “means farm and utility tractors, forestry equipment, industrial equipment, construction equipment, farm implements, farm machinery, yard and garden equipment, attachments, accessories, and repair parts.” This subjected equipment manufacturers to New Hampshire’s protectionist state automobile dealer legislation that imposes artificially high costs on out-of-state manufacturers and consumers, solely for the benefit of in-state dealers, and bars recovery of those costs in New Hampshire. The legislation also retroactively voids conflicting provisions of existing contracts between manufacturers and their dealers.

Equipment manufacturers appealed New Hampshire’s protectionist state legislation all the way to the U.S. Supreme Court. The NAM filed a brief urging the U.S. Supreme Court to hear this case concerning the expansion of protectionist state auto dealer laws to include equipment dealers. This unjustified legislation upends constitutionally protected contracting rights and damages manufacturer-dealer relationships. Protectionist state legislation is anti-competitive and harms consumers. This case presents the Court an opportunity to ensure that statutes voiding private contracts are meaningfully reviewed to assess the merits of a purported public benefit against the harms of the economic restriction.

The NAM filed an amicus brief urging the U.S. Supreme Court to review a case where a lower court afforded deference to an agency interpretation of a rule that was offered for the first time in an amicus curiae brief during litigation. If courts defer to agency interpretations of their own opinions offered for the first-time during litigation, agencies will be disincentivized to provide regulatory clarity and predictability in rulemaking necessary for business planning. The NAM’s brief argued that: the Administrative Procedure Act allocates interpretive authority to the courts; and; deferring to agency interpretations is inconsistent with the allocation of powers in the Constitution and undermines an important check on the excesses of the legislative and executive branches of government. Unfortunately, the Supreme Court denied the review.

The NAM filed an amicus brief with the U.S. Supreme Court in a class action litigation urging the Court to determine whether a certified class may include uninjured claimants. The plaintiffs sued Tyson foods alleging injury and damages under the Fair Labor Standards Act (FLSA) and seeking overtime wages for time spent dressing and removing protective gear; however, the plaintiffs used statistical modeling to create a fictional plaintiff as the basis of class certification. The rise of no injury class plaintiffs is troublesome to manufacturers because it subjects them to increased litigation from plaintiffs who can hide the deficiencies of individual class member claims. The NAM’s brief urged the Supreme Court to set a bright-line rule against the inclusion of uninjured class members and argued that individuals without injuries do not have a claim. The Supreme Court affirmed the lower court’s ruling but did so on narrow grounds and did not reach the issue that was central to the NAM’s amicus brief.

The NAM filed an amicus brief in a pharmaceutical patent litigation settlement dispute urging the U.S. Supreme Court to resolve uncertainty regarding the kinds of settlements that can trigger lawsuits. The plaintiffs appealed a settlement between a brand pharmaceutical manufacturer and a generic pharmaceutical manufacturer after the parties settled patent litigation using a procompetitive licensing arrangement. This case is important because manufacturers rely on settlements to avoid unnecessary litigation. The NAM’s brief argued that 1) patent owners should be allowed to reach reasonable agreements with competitors to settle their disputes; 2) third parties should not be allowed to appeal the settlement by merely alleging that the settlement contains a specific licensing arrangement; and 3) parties must not be forced to choose between lengthy and expensive patent litigation if they do not settle a patent challenge and lengthy and expensive antitrust litigation if they do. The Court declined to hear this appeal.

The NAM filed an amicus brief urging the U.S. Supreme Court to reverse the U.S. Court of Appeals for the Second Circuit’s affirmation of the dismissal of claims against Connecticut’s protectionist automobile dealer state legislation. The issue in this litigation is whether Connecticut’s prohibition on manufacturers from raising prices in Connecticut to account for added costs imposed by the state violates the Dormant Commerce Clause. This litigation is important because protectionism is anticompetitive, inconsistent with innovation and advancement, and harmful to consumers. The NAM’s brief argued that Connecticut’s legislation is protectionist and therefore anticompetitive, harms consumers and is implemented solely for the benefit of in-state dealers. Unfortunately, the Supreme Court declined review.

The NAM filed a brief urging the U.S. Supreme Court to review a case involving Racketeer Influenced and Corrupt Organizations Act (RICO) claims by third-party payors seeking damages reimbursement of monies spent for prescriptions. The plaintiffs’ lawsuit sought damages, even though the product worked and no physical injuries occurred, and argued that they overpaid for the drug in comparison to other alternatives because certain risks were not disclosed. If courts allow RICO claims against pharmaceutical manufacturers, the potential liability could chill the development of new medications and cause manufacturers uncertainty about the proper standard for causation under RICO. The NAM’s brief argued that further guidance is needed because of the uncertainty about the proper standard for causation under RICO, which incentivizes abusive, speculative and burdensome litigation against manufacturers of all kinds. Unfortunately, the Supreme Court declined to review the case.

The NAM filed an amicus brief urging the U.S. Supreme Court to review the state of California’s decision to partially withdraw from the Multistate Tax Compact. The Compact creates a uniform system of taxation for companies with business in multiple states. The decision to withdraw from the pact harms manufacturers who chose to expand into California based on the predictable and uniform system of taxation by states that have agreed to the Multistate Tax Compact. The NAM’s brief argued that the Compact does not allow partial withdrawal from the Compact’s obligations and that manufacturers have relied on the Compact as a source of predictable taxation rules. Unfortunately, the Court declined to hear the review.

The NAM filed an amicus brief urging the U.S. Supreme Court to review the state of Minnesota’s decision to repudiate some of the Multistate Tax Compact’s provisions. That decision is at odds with the Compact’s language, which sets forth that a state may withdraw only by repealing the Compact in its entirety. The lower court held that Minnesota’s decision to repudiate some of the Compact’s provisions was permissible because when a state becomes a member of the Compact, it makes no “unmistakable promise” to abide by all of the Compact’s terms. That decision seriously undermines the predictability and uniformity of state taxation. The NAM’s brief argued that 1) long-term tax predictability is of immense business importance; 2) the Multistate Tax Compact offers such predictability and uniformity; and 3) that Minnesota should honor the agreement it joined. Unfortunately, the Court declined to hear the case.

The NAM and coalition associations filed a Supreme Court brief in Perez v. Mortgage Bankers Association. On March 9, 2015 the Court issued a decision in this case with a wide ranging impact on administrative law by significantly expanding the authority of regulatory agencies. The case concerned whether a federal government agency must get the public’s reaction before it changes a rule that interprets one of its own existing regulations. As a general rule a federal agency must engage in notice-and-comment rulemaking pursuant to the Administrative Procedure Act (APA) before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation.

Unfortunately, agencies are able to take advantage of a variety of exceptions to this rule and avoid meaningful public participation by promulgating vague legislative rules and then interpreting those rules to reach the potentially controversial regulatory outcomes that the agencies seek. This strategy is purposefully designed to avoid public input. Further, agencies know they are shielded from legal challenges because the court must accept an agency interpretation as long as they are not patently incompatible with the statutory or regulatory text. The result of this process is ambiguity and uncertainty on how to comply with the law by public. This opinion from the Court allows agencies to reverse their definitive, relied-upon interpretations without notice and comment making the situation even worse.

The NAM brief argued that agencies should be required to follow the requirements of notice and comment before reversing their definitive, relied-upon interpretations because in such situations the agency has effectively amended a legislative rule. Business should be allowed to rely upon the interpretive rules that increasingly affect its day-to-day operations but this decision adds further ambiguity.

This case involves a private antitrust suit against foreign manufacturers of LCD display screens for mobile phones. The Seventh Circuit rejected a claim by Motorola Mobility for against foreign manufacturers alleged to have fixed the prices of the screens before selling them to Motorola through its foreign subsidiaries, who then included the components in the phones destined for the U.S. market. The court thought that because the subsidiaries were incorporated abroad and the work was done abroad, there was an insufficient connection to U.S. commerce under the provisions of the Foreign Trade Antitrust Improvement Act of 1982.

The NAM filed an amicus brief supporting an appeal of this decision to the Supreme Court. Our brief simply calls for clarification from the Court on the extent to which U.S. antitrust law allows a right of action against price fixing in this kind of situation, which for many reasons is not an uncommon way for U.S. manufacturers to structure their manufacturing operations when buying from foreign suppliers. A similar case in the Ninth Circuit, involving criminal charges for the same conspiracy, resulted in that court allowing U.S. jurisdiction because of the significant effects on U.S. commerce.

On June 15, 2015, the U.S. Supreme Court denied cert in this case.

The NAM and Chamber filed a brief in support this appeal to the Supreme Court. Our brief argued that the Sixth Circuit improperly relaxed the requirements for class certification in at least two respects. First, the Sixth Circuit affirmed the district court’s certification decision, even though the certified class included a non-de minimis number of individuals who were not injured by any defendant’s conduct and, therefore, did not have standing under Article III of the U.S. Constitution. Second, the Sixth Circuit approved class certification on the theory that an aggregate damages model—one that calculates average damages for the class as a whole—satisfies Rule 23’s predominance requirement.

The lower courts' decisions in this case not only violate this Court’s precedents, including its recent decision in Comcast, but they also deepen entrenched divisions in lower court authority over the requirements for class certification. The class certification requirements of Federal Rule of Civil Procedure 23 are not mere conveniences for streamlining litigation, but crucial safeguards grounded in fundamental notions of due process, and U.S. manufacturing needs reliable and transparent application of this legal principle.

Unfortunately, the Supreme Court declined to hear this appeal on 3/2/2015.

On June 5th, the NAM filed a joint amicus brief with the Chamber of Commerce of the U.S. and the Retail Litigation Center in the Supreme Court in DIRECTV, Inc. v. Imburgia. The issue is whether the California Court of Appeal erred by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act (FAA) requires the application of a state law preempted by the FAA.

This is a class action suit against DIRECTV under the Consumers Legal Remedies Act (CLRA) in California. The trial court and Court of Appeal refused to compel arbitration by applying state law. The agreement prohibits arbitration on a classwide basis and provides that the entire section on arbitration will be void if state law nullifies such a prohibition. The CLRA expressly prevents waiver of the right to bring a CLRA class action. The FAA requires that state law must not discriminate against arbitration or be applied in a manner that disfavors arbitration agreements. States are not allowed to single out arbitration agreements for suspect status. Additionally, the FAA mandates, and the Supreme Court has routinely held, that any ambiguity in the terms of an arbitration agreement must be resolved in favor of arbitration. Under the Court of Appeal’s reading, the arbitration agreement in this case actually favors class action litigation over arbitration.

The NAM brief argued that the California Court of Appeal’s decision impermissibly discriminates against arbitration and that the decision violates the rule of deciding ambiguities in arbitration provisions in favor of arbitration. The court found that the provision could be interpreted two different ways, yet it decided the alleged ambiguity in a way that disfavored arbitration by applying common law contract principles rather than the explicit direction of the FAA. The NAM asked the Court to reverse the California Court of Appeal’s decision.

The U.S. Supreme Court ruled on December 14, 2015 that an arbitration clause containing a class action waiver was valid even when the contract incorporated state law standards that might have voided the waiver. The decision reflects the Court’s continued adherence to enforcing arbitration clauses. It’s also a significant victory for arbitration advocates and shows the Court’s willingness to police attempts by lower courts to try to sidestep the force of its prior pro-arbitration rulings.

This case involves the allocation of responsibility under the Clean Water Act's civil penalties provision between various parties related to the Deepwater Horizon accident in the Gulf of Mexico in 2010. Two defendant companies have asked the Supreme Court to review the Fifth Circuit's interpretation of the term "discharge" in the context of interconnected vessels and facilities through which the discharged oil passed. They argue that the Supreme Court has interpreted the word as "flowing or issuing out," but that the Fifth Circuit adopted a new interpretation of discharge as a "loss" or "absence" of controlled confinement. A petition for rehearing by the full court was denied by a vote of 7 to 6.

The NAM and other groups filed an amicus brief urging the Supreme Court to review this case. We argued that the appeals court ruling was confusing, overbroad, and internally inconsistent, and that ambiguous statutory terms should be interpreted leniently to defendants. Billions of dollars of potential penalties in this case depend on a proper interpretation of the statutory term.

The NAM brief was filed in both the Anadarko case and a similar appeal by BP Exploration and Production Inc. On 6/29/15, the Court declined to hear these appeals.

The NAM filed an amicus brief in the Supreme Court supporting a challenge to EPA’s decision not to consider costs in determining whether regulation of hazardous air pollutant (HAP) emissions from electric generating units was appropriate and necessary under Sec. 112 of the Clean Air Act. EPA’s regulation, known as the Utility MATS Rule, will cost more than $9.6 billion annually, according to EPA’s own analysis, and is one of the most expensive regulations ever for power plants. (The NAM’s estimate is $12 billion annually). These costs are passed on to manufacturers and other consumers of electricity, and could endanger the reliability of electricity.

We argued that the regulatory record compiled by EPA reflects little or no public health benefit from the reduction in HAP emissions. A federal appeals court ruled that EPA was allowed to refuse to consider the costs of the rule, despite a statutory requirement that the regulation be “appropriate.” Our brief argues that a rulemaking procedure that does not consider the rule’s substantial cost burden on the regulated community violates the express and intended meaning of this statute, particularly because energy regulation affects all sectors of society and the economy. “A determination of whether regulation is ‘appropriate’ inherently involves a balancing of costs and benefits,” we argued.

We also argued that the regulation is not necessary because other EPA regulations already impose restrictions on hazardous air pollutants, and EPA improperly tried to justify its new HAP regulation by touting the potential for reduction in emissions not regulated under the HAP rules, namely further reductions in particulate matter emissions that EPA would be unable to require directly.

On 6/29/15, by a vote of 5 to 4, the Court rejected EPA's failure to consider costs when determining whether the regulation was "appropriate and necessary." Even though EPA is entitled to considerable deference in its rulemaking powers under the Chevron case, the Court found that the agency's interpretation was not reasonable or even rational. According to the majority, "an agency may not 'entirely fai[l] to consider an important aspect of the problem' when deciding whether regulation is appropriate." The phrase is very broad, and a natural reading of it requires some attention to cost. Considering costs avoids the problem of spending too much on one problem and not having enough to spend on other -- perhaps more serious -- problems. The majority also rejected EPA's argument that it could consider costs when deciding how much to regulate power plants, rather than as a threshold issue in deciding whether to regulate them. The statute requires cost considerations at the first step. But it left it to EPA to decide how to account for cost in making its initial determination, without requiring "a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value." The Court did not address EPA's claim that the regulation provides ancillary benefits that make it cost-effective.

The issue in the case focused on whether retirement plan participants can challenge investment decisions by plan fiduciaries made more than six years before the suit was filed, if the decisions could have been reconsidered during the six-year window.

The petitioners, former and current participants in an Employee Retirement Income Security Act (ERISA) 401(k) plan sponsored by Edison International, brought suit in 2007 to challenge the prudence of three investment options that had initially been selected in 1999. Both of the lower courts said that such a claim was time-barred by ERISA for being brought more than six years after the fiduciary act occurred.

The petitioners argue that the fiduciaries' decision to not remove the three plans constitutes an on-going breach of duty and is thus not time-barred. This argument undermines the intent of ERISA Section 413(1) and could subject plan fiduciaries to the never-ending threat of litigation.

The NAM, along with other business and trade groups, filed an amicus brief in the case. We argued that the purpose of imposing a time-bar on claims against fiduciaries of ERISA plans was to give them closure and reduce the burden of litigation. ERISA specifically cuts off liability for breaches of fiduciary duty six years after they occur in an effort to cut down on the volume of litigation faced by ERISA plan sponsors. ERISA is designed to encourage employers to offer employee benefit plans by easing their regulatory burden. To accept the petitioner’s argument would mean to transform the statute of repose into a rolling statute of limitations, effectively undermining congressional efforts to lift some of the threat of litigation off of fiduciaries.

On May 18, 2015, the Supreme Court issued a 9-0 opinion in the case. They held that because a fiduciary normally has a continuing duty to monitor investments and remove imprudent ones, a plaintiff may allege that a fiduciary breached a duty of prudence by failing to properly monitor investments and remove imprudent ones. Such a claim is timely as long as it is filed within six years of the alleged breach of continuing duty.

This is an appeal to the Supreme Court of a 4th Circuit decision concerning the applicability of the Wartime Statute of Limitations Act (WSLA), The WSLA is a 72-year-old criminal code provision that suspends the statute of limitations for “any offense” involving fraud or attempted fraud against the government when the United States is at war. The Department of Justice has argued, and some courts have agreed, that the statute now applies to civil violations as well, including qui tam claims brought by private relators. In addition to the impact on defense contractors, this expansive theory is increasingly being applied to other industries subject to qui tam claims. This expansive reading of the statute paired with the argument that the U.S. has been at war since September 11, 2001, leads to a tremendous expansion of potential liability for never-ending claims about which evidence may be long gone. This case presented the opportunity for the Supreme Court to prevent an unwarranted judicial expansion of the WSLA far beyond the plain text of the statute and contrary to congressional intent.

In its joint amicus brief with the National Defense Industrial Association and the Coalition for Government Procurement, the NAM argued that ample legislative history demonstrates that Congress never intended the WSLA to apply outside of the criminal context. To the contrary, the lack of direct language including civil claims in the WSLA – a Title 18 Criminal Code provision with suspension periods that mirror the length of the criminal statute of limitations – is evidence that Congress did not intend it to apply in the civil context.

In a May 26, 2015, decision (9-0), the Supreme Court agreed that the WSLA applies only to criminal offenses. The Court held that the WSLA’s text, structure and history are clear that the Act does not apply to civil claims. The earliest version of the WSLA was explicitly applicable only to criminal charges, and each subsequent iteration has been consistent with that original scope. Any ambiguity regarding the Act’s use of the term “offense” must be resolved in favor of the more narrow definition.

On May 26, 2015, the Supreme Court rendered its opinion. As shown by the Wartime Suspension of Limitations Act’s text, structure, and history, the Act applies only to criminal offenses, not to civil claims like those in this case. Moreover, the False Claims Act’s “first to file” bar keeps new claims out of court only while related claims are still alive, not in perpetuity.

The NAM together with the U.S. Chamber filed an amicus brief urging the Supreme Court to review an Eleventh Circuit decision that broadly construed the Sarbanes-Oxley Act. In this case, the petitioner, Yates, was a commercial fishing boat captain who was convicted of destroying business records in a government investigation. After suspecting that Yates was catching undersized fish, federal officers instructed Yates to retain 72 fish. When the officers boarded the boat, they discovered that several of the fish had been thrown overboard. Yates was prosecuted under the Sarbanes-Oxley Act, which imposes criminal penalties against a person who knowingly destroys records, documents or tangible objects with intent to impede or obstruct and investigation. The Eleventh Circuit upheld the conviction, holding that the Sarbanes-Oxley Act applied to all forms of tangible evidence in any government investigation.

The NAM challenged the lower court’s ruling by explaining that Congress never intended the Sarbanes-Oxley act to apply to cases like this. Congress passed the act in response to an outbreak in corporate investment scandals such as Enron and WorldCom, hoping to prevent the destruction of corporate financial records during a government investigation. This objective arose from a compelling and narrow intention to protect investors. The NAM brief argues that a basic understanding of statutory interpretation indicates that the phrase “tangible object” refers in context to corporate record keeping devices such as papers, hard drives, or discs. The statute itself and Congress’ intent both illustrate that the Sarbanes-Oxley act was never intended to apply to activities beyond corporate record keeping.

Expanding the application of the Sarbanes-Oxley Act to cases like this will greatly broaden the reach of the Act beyond the intent of Congress. Further, it would potentially criminalize innocent and routine practices such as inventory management. Therefore, the consequences of the Eleventh Circuit’s ruling are far-reaching and potentially impact manufacturers of all kinds.

The Supreme agreed to hear the appeal, and on Feb. 25, 2015, overturned the lower court ruling 5-4. In a divided decision, a majority thought that the law should not be read to so broadly by prosecutors. Instead, it should be interpreted to criminalize only tangible objects that are used to record or store information, and not all tangible objects in the world.

On July 24, 2014, the NAM filed an amicus brief urging the Supreme Court to reverse a Sixth Circuit decision ruling that retiree health-care benefits, resulting from silence in collective bargaining agreements, are presumed to be indefinite. This decision undermines Congress’ intent regarding employee retirement health benefits and disrupts judicial precedent in other circuits. NAM’s brief clarified that when Congress passed the Employee Retirement Income Security Act (ERISA), it in no way intended retiree health care benefits to be indefinite. Furthermore, other federal circuits have effectuated Congress’ intent by requiring clear and express language in order for retiree health benefits to be provided indefinitely. Accordingly, the NAM encouraged the Supreme Court to adopt a clear and express rule affirming ERISA and precluding a presumption of indefinite health-care benefits.

On January 26th, 2015, the Supreme Court rendered its opinion in this case holding that to determine whether retiree health-care benefits survive the expiration of a collective bargaining agreement, courts should apply ordinary contract principles. Those principles do not include the Sixth Circuit’s inference that parties to collective bargaining would intend retiree benefits to vest for life.

172 plaintiffs in Wisconsin sued a variety of companies that at one time or another produced while lead carbonate pigments for paint. The plaintiffs cannot prove which company produced the pigments that are alleged to have injured them, but a federal appeals court allowed them to use a novel tort theory called "risk contribution," which holds a manufacturer liable if it "may have provided the product which caused the injury" and therefore "contributed to the risk of injury." The lower court's decision makes companies subject to severe, retroactive, unanticipated and disproportionate liability. For one defendant, liability may reach back to its activities between 1917 and 1924.

The NAM filed an amicus brief 2/13/15 supporting Supreme Court review of this ruling. We argued to keep in place fundamental liberty and property rights, along with the due process guarantee encompassed by the bedrock principle that proof of causation is required for tort liability. We emphasized that the collective liability theory endorsed in this case is only one example of a broader attack against the requirement of proving causation. These theories include market share liability, alternative liability, enterprise liability, commingled product liability, and risk contribution, all holding a defendant individually liable for injuries that may have been caused by other defendants who sold similar products or engaged in similar operations. Public nuisance claims have also been raised to avoid traditional product liability proof.

We urged the Court to review and overturn the Seventh Circuit's decision, which is a stark example of how far the courts can depart from settled causation requirements.

On May 18, 2015, the Court declined to review this appeal, so the Seventh Circuit's decision stands.

A company negotiated a consent decree with EPA over Clean Air Act requirements applicable to diesel engines, and later a subsidiary not involved in the consent decree sought and received EPA approval to import diesel engines. A few years later, EPA sued that company, claiming the engines, most of which were never imported into the United States, violated the consent decree.

A federal judge ordered $72 million in penalties, even though it imposed a penalty beyond what the Clean Air Act authorizes, and the D.C. Circuit affirmed.

The NAM filed an amicus brief arguing that courts should not be able to broaden the terms of the settlement to impose penalties beyond those in the consent decree for actions not subject to the EPA regulations at issue. Our brief and the appeals court decision are summarized here.

This case is now on appeal to the Supreme Court. The NAM, along with the American Petroleum Institute, the American Coatings Association, the Organizatio for International Investment, and the Metals Service Center Institute, filed another brief 3/9/15 urging the Court to review the decision. The brief, submitted by our counsel, Laurence H. Tribe of Harvard, argued that the case presents an important question whether an agency may reinterpret a consent decree to expand its authority beyond its statutory limits and beyond the territorial jurisdiction of the United States. Federal agencies are parties to thousands of consent decrees, and regulated parties often have little choice but to resolve a matter this way rather than to contest it on the merits. Agencies like EPA should not be allowed to operate beyond statutory limits imposed by Congress.

On June 15, 2015, the U.S. Supreme Court denied cert in this case.

This case presents the fundamental question whether the President’s recess-appointment power may be exercised during a recess that occurs within a session of the Senate, or is instead limited to recesses that occur between enumerated sessions of the Senate. A second question involves when a vacancy occurs that may be filled by a recess appointment -- must the vacancy first arise during a recess, or may it be filled if it exists at any time during a recess? Closely related to these questions is whether the President's recess-appointment power may be exercised when the Senate is convening every three days in pro forma sessions.

These issues are critical to the validity of dozens of recess appointments that have been made by recent presidents. This case involves appointees to the National Labor Relations Board.

On May 23, 2013, the Coalition for a Democratic Workplace, of which the NAM is a member, filed an amicus brief urging the Court to settle the rules for recess appointments. The Court agreed to hear the case, and on June 26, 2014, invalidated the appointments. It held that the Recess Appointment Clause only empowers the President to fill existing vacancies during a recess of sufficient length. Furthermore, the recess appointment power applies to both pre-existing vacancies that continue to exist during the recess period and vacancies that occur during a recess period. Several hundred cases decided by the improperly appointed NLRB were affected and could be revisited.

The NAM filed an amicus brief petitioning the Supreme Court to review the Sixth Circuit Court of Appeals' decision in Dean Foods Co. v. Food Lion, LLC. The decision, if left to stand, could substantially limit the usefulness of summary judgment as a tool to dispose of meritless claims in antitrust and other complex civil cases. This would as a consequence significantly raise the likelihood and risk of unnecessary trials. The Sixth Circuit held that this putative class action challenging petitioners’ conduct under Section 1 of the Sherman Act could proceed to trial even though respondents offered no evidence that the alleged conspiracy actually caused any injury to them.

For “proof” of causation, respondents relied solely on their expert, who admitted that he could not say whether the price increase he observed was caused by conspiracy, by effects of an unchallenged merger-related shift in the structure of the market, or by other lawful, unilateral conduct. In the absence of any evidence showing the requisite causal link, the court of appeals merely presumed causation.

Summary judgment’s utility as a mechanism for the efficient resolution of disputes would be undermined seriously if unsubstantiated assertions were sufficient to compel a trial merely because they were factually or legally complex. Yet, that is what the Sixth Circuit found and that is the inevitable result of failing to stem the flow of cases that treat summary judgment as a disfavored procedure in antitrust cases.

The petition for certiorari was denied on November 14, 2014 by the Supreme Court.

Although this suit involves investor claims against a company for losses allegedly suffered from company statements about asbestos litigation, this kind of suit arises in a variety of contexts where investors feel a stock price may have been affected by statements from company management. The issue on appeal is whether the Supreme Court's 1988 holding in Basic Inv. v. Levinson should be revisited (and reversed). The decision in that case established the fraud-on-the-market theory of reliance, whereby plaintiffs such as the investors in this case need not show that they individually relied on alleged misrepresentations by the company, but that the entire investor community relied on the misstatements, even if no one plaintiff in this case actually did. It's an easy way for plaintiffs to avoid having to show they were misled in any way.

The NAM filed an amicus brief supporting Supreme Court review of a 5th Circuit decision that applied the fraud-on-the-market presumption of reliance. We asked the Court to reconsider the theory, and also to prevent a case from being prosecuted as a class action when the alleged misrepresentation did not impact the market price of the stock at issue. The presumption in the Basic case has generated confusion in the courts, led to easy class certification, excessive litigation, and unfair settlement pressures. As a result, U.S. public companies and their investors have paid high litigation and settlement costs, resulting in merely a shifting of money from one set of investors to another, and their lawyers.

On Nov. 15, 2013, the Court agreed to hear this appeal.

On January 6, 2014, the NAM and other groups filed an amicus brief on the merits of the issue, arguing that the Court should overrule or modify the presumption of reliance, since the presumption undermines the requirement that plaintiffs prove actual reliance. It is based on an erroneous premise that investors rely on the integrity of market prices, while "many (if not most) investors buy or sell a security precisely because they believe the market price is wrong -- buying when they assess the market has undervalued the stock and selling when the stock is overvalued in their estimation." Such value investing is a recognized strategy. In addition, we argued that eliminating the presumption of reliance will not undermine fraud deterrence or investor compensation in cases of actual fraud.

On June 23, 2014, the Court rejected NAM’s argument and decided to uphold the Basic presumption of reliance, stating that requiring each plaintiff to prove direct reliance “would place an unnecessarily unrealistic evidentiary burden on the . . . Plaintiff who has traded on an impersonal market.” The Court reiterated that the plaintiff need only prove that the misrepresentation applied to “stock traded in a generally efficient market” and that the plaintiff purchased the stock at market price during the relevant period. Satisfying these two elements also enables the plaintiffs to proceed in a class action suit, instead of demonstrating individual reliance. The Court did reverse the circuit court’s ruling that prevented the company from raising a defense during the class certification stage. The company may defend against the presumption of reliance by demonstrating that the misrepresentation did not impact the stock price. This decision gives a company another way to prevent the certification of class action shareholder litigation.

The Attorney General of Mississippi brought a parens patriae action in state court on behalf of numerous citizens of the state against 22 out-of-state companies for alleged price-fixing in the LCD screen industry. The appeals court ruled that this suit was in effect a mass action, like a class action, that is removable under the provisions of the federal Class Action Fairness Act (CAFA), and that the case should be heard in federal court. CAFA was enacted to allow large cases involving numerous plaintiffs against out-of-state defendants to be transferred, or removed, to a federal court. Federal courts are often viewed as a more neutral judicial forum than some state courts.

The NAM joined with the Access to Courts Initiative, Inc. in an amicus brief urging the Court to recognize that the Constitution established federal courts in part to hear cases between one state and citizens of another (including companies located in other states). There should be no presumption against transferring a mass action case out of state court, and in fact, there should be a presumption in favor of removal under the constitutional structure. An unduly constrained view of federal jurisdiction has helped fuel the litigation explosion of the last fifty years, contributing to the imposition of billions of dollars of costs on American consumers and the loss of hundreds of thousands of American jobs.

The Supreme Court ruled unanimously 1/14/14 that a case like this cannot be removed to federal court because Mississippi was the only plaintiff and the case was therefore not a mass action under CAFA. CAFA allows removal of cases with 100 or more persons, but a state filing suit in a representative capacity is only one plaintiff, even through it represents hundreds of unidentified persons with an interest in the outcome. The Court refused to look behind the pleadings by the state to find out if it was gaming the system, because Congress did not intend for such an inquiry in mass action cases.

On April 18, 2013, the NAM and 23 other business organizations appealed to the Supreme Court to review an adverse decision on greenhouse gas regulation from the D.C. Circuit. We asked the Court to review EPA's first-ever regulations of greenhouse gases emitted by stationary sources, such as power plants and factories. The lower court rejected lawsuits from hundreds of organizations who question EPA's authority to issue the rules under the Clean Air Act, as well as the procedures it used in doing so. Our petition was granted and consolidated into Utility Air Regulatory Group v. EPA. On June 23, 2014, the Supreme Court agreed with the NAM and ruled that EPA's regulation went too far. Click here for a more detailed summary of this case.

This case involves the deadline for filing damage suits under CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act. The Supreme Court agreed to review a decision from the Fourth Circuit involving a suit for alleged contamination of the ground and water near an old North Carolina manufacturing plant site once owned by CTS Corporation. The site is subject to clean-up obligations under CERCLA, but this case involves a private suit alleging nuisance under state law. CTS argued that the nuisance claim was barred by North Carolina’s 10-year statute of repose.

CERCLA provides liberal deadlines for filing suit that supersede state statutes of limitations, but says nothing about statutes of repose.

The NAM filed an amicus brief focusing on the history of statutes of repose and the beneficial purposes they serve—particularly in the efforts of states to create, enhance, and protect economic opportunities for their citizens through job growth. We stressed that states across the country have enacted statutes of repose as part of broader efforts to strengthen their economies—an effort that in the current economic environment is all the more important. These statutes simply put an end to perpetual liability that can remain unknown for years and years, after witnesses are gone and memories fade. They provide certainty and finality in commercial transactions, promote judicial economy, and help keep insurance rates down.

On 6/9/2014, the Court ruled 7 to 2 that CERCLA does not preempt state statutes of repose. Such statutes differ from statutes of limitations in that they are designed to put an absolute time limit on a defendant's liability, while statutes of limitations are designed to require plaintiffs to file suit promptly when their claims accrue. Courts may grant exceptions when plaintiffs miss statute of limitations deadlines for various reasons, but not for statutes of repose. Because Congress knew of the differences and did not include statutes of repose in the law at issue, it did not intend to preempt them.

The decision limits long-term liability under CERCLA for pollution that occurred many years ago.

This is a Clean Air Act preemption case. Some private property owners sued a power company under common law tort claiming damages for nuisance, trespass, negligence and strict liability arising from emissions and particulates from the operation of a coal-fired power plant in Allegheny County, Pennsylvania. The plant had permits from EPA for the emissions, and the lawsuit did not allege any violations of the Clean Air Act. The trial court threw the case out, finding it preempted by the Clean Air Act, but the Third Circuit Court of Appeals reversed, holding that a provision of the Act saves this kind of state lawsuit. The company sought Supreme Court review.

The NAM led a group of 11 other industry associations in filing an amicus brief supporting review. We argued that state common law remedies such as those sought here are irreconcilably inconsistent with the comprehensive system of air pollution control provided by the Clean Air Act. Permits, which are subject to public notice and comment, specify clear emission and operating standards that guarantee certainty, predictability, and evenhandedness to the regulated community. They provide an informed assessment of competing interests. By contrast, common law suits view the issues from a narrower perspective, using vague standards of liability, uneven application between states or even within states, with no guarantee of consistent results even between similar facilities.

Companies must be able to rely on permits for stable business operations, and these kinds of suits are a growing concern. Their effect is to add additional liability for activities that fully comply with federal permit obligations, raising the cost of doing business and threatening jobs and competitiveness.

The Supreme Court denied our appeal on June 2, 2014.

The Iowa Supreme Court ruled that a group of Iowa residents could sue a local corn milling plant for trespass, nuisance and negligence from pollutants and odors emanating from the plant, in spite of the fact that the emissions are regulated by the EPA and the company is in full compliance with its permits. That decision was appealed to the U.S. Supreme Court. This case represents a serious emerging problem for manufacturers. The appeal in a similar case was declined by the Court earlier this year.

Our brief, joined by 6 other national associations, urged the Supreme Court to hear this appeal. We argued that this case presents an ideal opportunity to resolve whether public nuisance claims under state law are preempted by the Clean Air Act. There are serious conflicts between the federal courts of appeals and within state courts concerning this preemption issue. The issue is important because public nuisance litigation threatens one of the Clean Air Act's most important methods of pollution control -- permitting. Permits specify clear standards that guarantee certainty, predictability, and evenhandedness to the regulated community, and allowing public nuisance litigation threatens to substitute ad hoc decisions for considered regulatory policy, a result completely at odds with the goals and purposes of the Clean Air Act.

On December 1, 2014, the Court declined to review this appeal.

The NAM and a group of 18 other national business organizations filed an amicus brief urging the Supreme Court to review a ruling that would give EPA the power to revoke a valid discharge permit issued under the Clean Water Act. The ruling, reversing a trial judge's decision that struck down EPA's attempt to interfere with valid permits, prompted widespread concern in the business community that EPA was arrogating to itself the power to upset long-settled reliance on thousands of permits issued by the U.S. Army Corps of Engineers.

The NAM hoped to convince the Supreme Court of the importance of this case. Our brief focused on the impact of the decision on investment expectations and infrastructure projects. About 60,000 discharge permits are issued every year, representing $220 billion of investment in the U.S. economy, and a 2% risk that EPA could revoke a permit decreases the benefit-cost ratio of a project by 30%. We highlighted a study by Professor David Sunding that even small changes in the possibility of such EPA action "can lead to dramatic redutions in private investment." EPA's move also threatens public sector projects for water, transportation, energy and public infrastructure.

The issue is also critical to state governments, with 27 states filing their own amicus brief supporting Supreme Court review of the case.

Here are links for our summaries of action in this case in the trial court and the appeals court.

On March 25, 2014, the Court declined to hear this appeal.

The NAM and other groups asked the Supreme Court to review a lower court decision that allows the EPA to take over 14 state enforcement plans under the Clean Air Act with respect to regional haze, and impose Federal Implementation Plans (FIPs). Oklahoma and North Dakota objected to this EPA action, saying that the agency overstepped its statutory authority and the result will be billions of dollars in power plant upgrades that will needlessly boost electric rates by as much as 20 percent.

Our amicus brief supports review, focusing on the fact that the Clean Air Act limits EPA's authority with respect to state implementation plans, instead giving the states primary responsibility for making air quality decisions and limiting EPA's role to the secondary function of determining whether those state plans are "based on a reasoned analysis." This is particularly important regarding state regional haze decisions, which involve aesthetic concerns such as visibility in parks. EPA wanted to impose a control technology that is too costly, and conducted a visibility analysis differently. However, Congress gave the states significant latitute by allowing them to choose the mix of sources that must install controls to attain the national standards.

This litigation reflects a growing pattern of disregard by EPA for the statutory limits on its authority, undermining the balance in the Clean Air Act between federal and state enforcement. Allowing this will only make matters worse -- empowering EPA to take unilateral action without engaging with states to help craft workable standards.

On May 27, 2014, the Court declined to hear this appeal.

On April 18, 2013, the NAM and 23 other business organizations appealed to the Supreme Court to review an adverse decision on greenhouse gas regulation from the D.C. Circuit. We asked the Supreme Court to review EPA's first-ever regulations of greenhouse gases emitted by stationary sources, such as power plants and factories. The lower court rejected lawsuits from hundreds of organizations who questioned EPA's authority to issue the rules under the Clean Air Act, as well as the procedures it used in doing so.

Greenhouse gas regulation is one of the most costly, complex and encompassing energy regulatory issues facing manufacturers and damaging our global competitiveness. EPA’s regulations could eventually force new permitting requirements for more than 6 million stationary sources, including 200,000 manufacturing facilities, 37,000 farms and millions of other sources, such as universities, schools and hospitals – impacting every aspect of our economy.

EPA’s regulatory decisions produced what it concedes were absurd results. We argued that this was not Congress’s intent when it enacted the Clean Air Act, and that courts must avoid agency interpretations that undermine the purpose of the law.

Moreover, EPA tried to avoid these absurd results by modifying the express statutory thresholds defining who is regulated. Only Congress can make those kinds of changes, and had the agency properly interpreted the statutory requirements from the beginning, it would not be in the position of having to alter the statutory requirements.

The effects of this regulation are immediate, concrete and massive, and will require the installation of “best available control technology”, with total costs estimated by EPA to increase to more than $50 billion per year. This case is of critical importance to manufacturers and our economy.

The Supreme Court agreed to hear our appeal, along with petitions from 5 other groups, limited to the following question: "Whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases."

On June 23, 2014, the Court decided that EPA's regulation went too far. A majority concluded that, while greenhouse gases are within the class of emissions that are included within the broad reach of the Clean Air Act, specific sections of that law limit the EPA's regulatory power. Five Justices found that EPA neither was compelled nor permitted to require PSD (Prevention of Significant Deterioration) permits of companies solely because of their greenhouse gas emissions. They also ruled that EPA did not have the statutory authority to rewrite the unambiguous statutory thresholds, and even if EPA would not enforce its greenhouse gas requirements on smaller emitters, those companies would have remained subject to citizen suits to enjoin construction, modification or operation and to impose civil penalties of up to $37,500 per day of violation.

Seven Justices agreed with the NAM's argument that only companies already subject to permitting under the PSD program will be subject to any permitting requirements relating to greenhouse gases. They agreed that the PSD program was intended for the largest emitters that are already subject to PSD permitting. By limiting EPA's authority in this way, the decision provides substantial regulatory relief for the owners of millions of buildings and plants across the country.

The NAM and other coalition associations filed an amicus brief on February 3, 2014, in a case on appeal from the Sixth Circuit. We asked the Supreme Court to consider when the managers (fiduciaries) of an Employee Stock Ownership Plan (ESOP) have a legal duty to stop investing in the company’s own stock as it relates to perceived risk. Our brief explains that ESOPs are unique vehicles designed to invest primarily in company stock, and are unable to go through the same evaluation standards utilized by managers of other types of investments. Therefore, investments in employer stock should be presumed to be prudent, and should only be deemed imprudent when the company is at risk of financial collapse.

Seven circuit courts have held that fiduciaries that offer employer stock funds are entitled to a “presumption of prudence” since the typical tools available to fiduciaries to evaluate investment options are not applicable in the case of Employee Stock Ownership Plans. Nearly every circuit to address the question has ruled that this presumption— which, in substance, is a standard for adjudicating a fiduciary’s liability—can be rebutted only upon a showing of dire financial circumstances that would undermine the congressional purpose in encouraging employer stock ownership.

The Sixth Circuit diverged from the “dire circumstances” test, holding that the presumption of prudence can be overcome whenever a plaintiff proves that “a prudent fiduciary acting under similar circumstances would have made a different investment decision.” The Sixth Circuit also held that the presumption of prudence is an evidentiary, rather than a substantive, standard and therefore refused to apply it on a motion to dismiss.

The NAM believes that attempts to weaken the presumption of prudence will deter manufacturers from offering employer stock funds in the future.

The Supreme Court ruling removed the presumption of prudence for employer managers offering company stock as a retirement option. The decision leaves employers stuck “between a rock and a hard place”, the Court acknowledged, in a unanimous decision penned by Justice Stephen Breyer. If an employer offers company stock and the price dips they might be sued for violating the duty of prudence under the federal Employee Retirement Income Security Act. But if they dump the stock on behalf of their employees because they know the company’s in trouble, they might violate insider-trading laws. These questions were left to the lower courts to decide.

The National Association of Manufacturers filed an amicus curiae brief on April 21, 2014 encouraging the United States Supreme Court to review an important decision by the Fifth Circuit admitting unreliable testimony from an expert witness without adequately assessing its admissibility based upon reliability and factual basis.

The Federal Rules of Evidence were revised in 2000 to reflect recent Supreme Court decisions imposing a gatekeeper duty on trial courts to assess the reliability and helpfulness of proffered expert testimony. However, some federal circuits have still not changed their practices. Courts are required to scrutinize the factual underpinnings of any expert’s testimony before it is allowed before the jury. Unlike ordinary witnesses, experts are permitted wide latitude to offer opinions, which have an outsized influence on juries, based upon an assumption that the expert’s opinion will have a reliable basis in the knowledge and experience of his discipline. Once admitted, faulty testimony is incurable.

In this case, a software expert testified on issues far beyond his expertise, including corporate valuations and whether a trade secret existed. Some of the testimony was based upon a review of the wrong software. The testimony was the sole basis for a $100 million jury award. The Fifth Circuit upheld the trial court's abdication of its gatekeeper role, improperly relying on cross-examination and presentation of contrary evidence to cure the effects of the defective testimony. This deviation weakens the Court’s protection against factually unfounded expert testimony and we urged the Supreme Court to review the case. Unfortunately, on 6/9/14, it declined.

The National Association of Manufacturers, along with a coalition of industry groups, submitted an amicus brief supporting U.S. Supreme Court review in the case, focusing on a court’s responsibility to act as a “gatekeeper” and properly exclude unreliable expert testimony under the standard articulated by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals. The issue represents a split among the federal Circuit courts, which subjects litigants in different jurisdictions to unequal standards of justice.

In the years since the Daubert test was enunciated in a series of cases, courts have strayed from the original interpretation to a far more permissive and open standard. Under the Supreme Court’s holding in Daubert, the trial judge is to act as the “gatekeeper” in weighing whether evidence is sufficiently reliable to be admitted into evidence. However, as is evidenced in cases such as SQM North America, judges have increasingly allowed for ever more unfounded expert testimony on the premise that “vigorous expert testimony” at trial will sort the good from the bad. We argued that the Ninth Circuit’s “methodology-only” approach is an irresponsible abdication of the judge’s responsibility and contradicts the approach taken by other Circuits. Indeed, in the original Daubert case the Court said that the federal rules require close scrutiny of the factual foundation of expert testimony.

Unfortunately, on December 15, 2014, the Court declined to review this appeal.

On April 3, 2014, the NAM filed an amicus brief in the Supreme Court advocating the necessity of contract enforcement with sovereign nations in emerging markets. On April 21, the Supreme Court heard oral arguments over whether post-judgment discovery in aid of enforcing a judgment against a foreign state can be ordered with respect to all assets of a foreign state regardless of their location or use, as held by the Second Circuit, or is limited to assets located in the United States that are potentially subject to execution under the Foreign Sovereign Immunities Act of 1976 (FSIA). The NAM brief argues that limiting discovery against foreign states would undermine the enforcement of valid commercial contracts. Further, extending FSIA immunity to post-judgment discovery against foreign states would necessarily impede discovery against state-run companies. This would hurt all U.S. manufacturers attempting to enforce contracts with foreign sovereign nations.

The Court ruled that no provision of the FSIA immunizes a foreign-sovereign judgment debtor from post-judgment discovery or information concerning its extraterritorial assets. The FSIA only provides two types of immunity: the first is jurisdictional immunity, which Argentina waived, and the second prohibits the seizure of assets, but says nothing about discovering what they are. The Court clearly stated that there is no prohibition of post-judgment discovery. Although Argentina and the United States raised concerns that affirming the discovery order would strain foreign relations, the Court determined that such concerns should be addressed by the legislative branch and not the judicial branch.

On June 4th the NAM filed an amicus brief in the Supreme Court in Integrity Staffing v. Busk. This case presents the question of whether routine post shift security screenings of employees are compensable under the FLSA. Such screenings are conducted by many employers, as in this case, to help prevent theft. The resolution of this case could also have an effect on the compensability of the entire broad range of pre and post-shift screenings, conducted by employers to ensure the security of employers’ property and the safety of employees and the public. Until the 9th Circuit’s decision, employers have been able to rely on a uniform body of case law holding that security screenings are not compensable under the Portal-to-Portal Act of 1947, 29 U.S.C. §§ 251-262, as applied by this Court and regulations adopted by the Department of Labor.

The Ninth Circuit’s decision undermines the decades-old understanding of the Portal-to-Portal Act as interpreted by the Supreme Court in Steiner and Alvarez and by the Department of Labor. In holding time spent in post-shift security screenings to be compensable, the Ninth Circuit incorrectly applied the well-established “integral and indispensable” test and instead developed a new approach based on its view that the screenings were compulsory and done for the employer’s benefit. In so ruling, the court did away with the requirement under the Portal-to-Portal Act of a close and intertwined relationship between the productive work for which an employee is hired and the activity for which the employee seeks additional compensation. The court’s rule would disrupt established workplace practices imposing an unwieldy test that has already increased litigation. The Solicitor General has also filed an amicus brief in the case supporting the legal arguments raised by Petitioner and the NAM brief.

On December 9, 2014 the U.S. Supreme Court ruled unanimously that the Fair Labor Standards Act (FLSA) does not require employers to compensate employees for the time spent in security checks before and after the work day. The ruling reversed a decision by the U.S. Court of Appeals for the Ninth Circuit and reinforces arguments asserted in the amicus brief filed by the NAM and a coalition of industry groups.

On 8/27/14 the NAM supported review of this case in the Supreme Court. The issue presented revolved around whether the “nature of the work” at Waupaca’s foundries required employees to don, doff and shower on-site. Plaintiffs contended that foundry dust containing silica and other chemicals made the work so hazardous that on-site clothes changing and showering was required by the nature of the work. The district court disagreed and granted summary judgment. The Seventh Circuit reversed, finding that there was a factual dispute over whether the nature of the work required on-site donning, doffing and showering.

This case is very important to manufacturers. The Seventh Circuit’s position takes the determination of health and safety out of the hands of the legislature and places it in the hands of each district court judge across the country. This is not the role the courts should play, and such a perspective creates instability and unpredictability, and increases costs on business and ultimately harms the employees.

The NAM’s brief argued that OSHA had promulgated standards for foundries which do not require on-site clothes changing and showering after work. This bright-line rule has been referenced in the donning and doffing space since roughly 1968. It provides a clear and easily administrable criterion for determining whether time spent changing clothes and showering is compensable under the Fair Labor Standards Act (FLSA). If these activities can be performed offsite, at home or elsewhere, they are not compensable. If courts are going to be allowed to order them to pay for time spent changing clothes and showering when, as here, no federal or state agency requires that this conduct be performed on-site, and no rule of the employer requires that these activities be performed on-site, the impact of such a finding could be devastating. A flood of lawsuits would be filed in the foundry and other manufacturing industries, exposing these employers to huge potential payouts from overtime and require payment for additional hours of work at time and one-half. It is further likely that two to three years of back-pay would be in issue in every case, and all employees during this time period would potentially have a claim under the FLSA or Rule 23, the financial consequences would be staggering.

On November 3, 2014, the Court declined to hear this appeal.

New York City sued various companies for alleged low-level ground-water contamination from MTBE, a gasoline additive mandated by federal law and for which there was no safer, feasible alternative. The trial court awarded a judgment of more than $100 million, which was affirmed by the U.S. Court of Appeals for the Second Circuit. ExxonMobil appealed to the Supreme Court, asking the Court to decide (1) whether a claim is ripe when it is predicated on a potential future injury and a mere good faith intent to use the water in 15 to 20 years, and (2) whether the federal oxygenate mandate preempts a state-law tort award that imposes retroactive liability on a manufacturer for using the safest feasible means available at the time for complying with that mandate.

The NAM and other business groups filed an amicus brief 2/14/14 supporting Supreme Court review of this case. We argued that the lower court allowed a suit based on a speculative chain of possibilities, in violation of existing standing requirements that litigants have an injury in fact. Allowing suits in such a case would open the floodgates to similar litigation alleging damage from the use and potential use of safe drinking water at water supply systems around the country. The lower court's ruling effectively redefines the term "drinking water" to mean "pristine water," so that the presence of any foreign substance constitutes a concrete injury.

We also underscored our concern about holding a company liable under state tort law for complying with a federal mandate with the safest feasible means available. The lower court came to this conclusion despite the fact that the jury in this case rejected the City's argument that there was a safer, feasible alternative to MTBE.

The Supreme Court declined to review this appeal on April 21, 2014.

Lawyers for a few purchasers of front-loading washing machines have been trying for several years to get final approval to represent a large class of people who they claim should be able to sue Whirlpool and Sears for making and selling machines that may have mold and odor problems. Two federal appeals courts certified classes even though most members of the class may not have experienced such problems or any other injury. In 2013, the Supreme Court threw out those decisions and sent the cases back for reconsideration in light of another recent decision on class certification.

The lower courts again certified the classes, and Sears and Whirlpool appealed to the Supreme Court again. The NAM filed an amicus brief stating our view that those courts took too expansive a view about certification. The vast majority of class members in both cases have suffered no injury at all, and the different washing machine models have undergone several design changes that undermine the argument that there are issues common to all class members. The courts should not promote efficiency of litigation to certify large classes where common issues among class members do not predominate, as required by court rules.

Class certification in meritless circumstances where consumers have suffered no cognizable injury encourages class action abuse. Ultimately, consumers are harmed by these class certifications because businesses have little choice but to incorporate the cost of frivolous product liability litigation and litigation avoidance into the prices paid by their consumers.

On Feb. 24, 2014, the Court declined to review this appeal.

This is an appeal to the Supreme Court concerning the validity of claims against BP arising from a settlement agreement relating to the oil spill from the Deepwater Horizon in the Gulf of Mexico. The NAM and other business groups filed an amicus brief urging the Court to review the lower court’s ruling because it ignored fundamental principles of constitutional law by certifying a plaintiffs’ class even though a large proportion of the class lacked any valid claims under applicable state law. Our brief warned against certifying either litigation classes or settlement classes without rigorous analysis of the common claims of the class members – and plaintiffs cannot demonstrate that the class members have the same injury, let alone any injury at all caused by the defendants.

The lower court found that class members who suffered no injury at the hands of the defendant could recover from a class action settlement. Yet casting aside an injury requirement violates Rule 23 of the Federal Rules of Civil Procedure. In addition, Article III of the Constitution requires that all plaintiffs in court present a live and true “case or controversy,” and a class action where members of the class have suffered no injury caused by the defendants violates that requirement.

The result of the lower court’s ruling will be to allow improper settlements and distributions, discouraging future settlements, increasing litigation costs, and flooding the courts with complex, time-consuming and expensive cases. We urged the Court to review the decision and reverse it, but on 12/8/2014, it declined to hear the appeal.

On April 17, 2013, the Supreme Court issued a ruling that dramatically constrains efforts to expand the application of a 1789 statute, the Alien Tort Statute, beyond our borders. The law merely provides a forum in federal courts in the United States for allegations involving violations of the "law of nations," but often such cases involve foreign plaintiffs alleging acts occurring outside of the United States. This suit was brought by 12 Nigerian nationals claiming human rights violations by three oil companies.

The Court ruled that the presumption against extraterritoriality applies to suits under the Alien Tort Statute. That presumption means that a statute does not apply to activities occuring outside of the United States unless it says it does. The presumption helps prevent conflicts between our laws and those of other nations. The Court found it particularly important to apply in this context because ATS law is determined by the courts, not by Congress.

The NAM filed an amicus brief urging exactly what the Court concluded. Many foreign governments have protested the extraterritorial application of U.S. law by means of the ATS. We argued that properly applying the law of the place where the act occurred avoids the conflict that would otherwise result from applying U.S. law to conduct occurring in other countries, and promotes international harmony.

In addition, we countered an argument by the plaintiffs that relied on the "transitory torts" doctrine, i.e., that purports to allow lawsuits against a person regardless of where the injury occurs, as long as personal jurisdiction is satisfied. Our brief explained that transitory tort cases apply the law of the country where the challenged act occurred, rather than -- as the plaintiffs wanted -- the law of the United States, or international law as interpreted by U.S. courts. Such interpretations are complicated and lead to conflicting results, not only on the precise content of the law but also on jurisdictional issues. The Court rejected the plaintiffs' transitory torts argument.

This is a very important victory for American manufacturers, many of whom have been sued under the ATS for alleged activities that occur entirely in other countries. The NAM has filed amicus briefs in many of these cases to provide guidance on issues such as (1) whether the law of nations recognizes claims for aiding and abetting liability, (2) whether activities encouraged by U.S. foreign policy can lead to liability, and (3) whether the law of nations imposes liability on corporations as well as individuals.

When it was originally argued before the Supreme Court, this case involved whether the ATS applies to corporations, or only to individuals. The Second Circuit ruled that individual corporate executives can be sued, but not corporations. No corporation has ever been subject to any form of liability under the customary international law of human rights. The NAM filed an amicus brief supporting the view that there is no specific and universal view that corporations are subject to liability for the claims in this case, as is required in determining whether the law of nations has been breached. But we spent most of our brief supporting an alternative ground for dismissing this case -- that aiding and abetting liability under international law requires that the defendant acted with a purpose to facilitate the violations, not something less like mere knowledge of the conduct. That "purpose to facilitate" was not alleged by the plaintiffs. The purpose requirement is found in nearly every leading source for determining the content of customary international law, from the Rome Statute of the International Criminal Court, to a United Nations statute and study, to case law from the International Military Tribunal at Nuremberg, to opinions of foreign international-law experts. Moreover, courts should approach any expansion of ATS liability very cautiously to avoid intruding into matters of foreign relations and to respect the ability of foreign judicial systems to address matters like this that arise abroad.

After the first round of arguments in 2012, the Court sought briefing on the extraterritoriality issue and decided the case on that basis. Thus, in a future ATS case that does not have extraterritoriality problems, there still remain open questions about whether the law applies to corporations and whether they can be sued for aiding-and-abetting liability.

This case involves the validity of an arbitration provision in contracts with American Express and its credit card network. The provision precluded class action arbitration, and instead required individual proceedings to resolve disputes.

The case was appealed to the Supreme Court in 2009, with the NAM supporting the appeal, and the Court vacated the Second Circuit's ruling and sent the case back for reconsideration in light of its recent decision in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp. See our summary of the case here.

Then, the Second Circuit refused to enforce the parties' agreements to arbitrate on an individual basis and allowed the plaintiffs' federal antitrust claims to proceed as a class action. That decision was appealed to the Supreme Court.

The NAM filed an amicus brief 8/29/2012 urging the Supreme Court to hear this latest appeal, which it did. We objected to the lower court's view that the arbitration clause may not be enforced if it would not be "economically feasible" for the plaintiffs to vindicate their federal rights in an individual arbitration. In other words, if the cost of arbitration and the potential reward did not make it feasible, a court could refuse to enforce an otherwise valid arbitration agreement. Our brief urged the Supreme Court to review this decision, because it is the product of an intense effort by the plaintiffs' bar to undermine the Court's decision in the Concepcion case underscoring the validity of arbitration. Such a result would call into question literally millions of arbitration agreements nationwide.

We also argued that the lower court misread the Concepcion case. Nothing in the Federal Arbitration Act makes a distinction based on whether a claim being arbitrated arises under state or federal law. The Supreme Court has already ruled that federal antitrust claims such as those in this case may be resolved through arbitration.

On June 20, 2013, the Court ruled 5 to 3 to overturn the Second Circuit's decision, thus validating arbitration provisions that prohibit class action arbitration. It found nothing in the Federal Arbitration Act that allows courts to invalidate waivers of class action arbitration on the ground that the cost of individual arbitrations exceed the potential recovery. Arbitration is a matter of contract, and neither the antitrust laws nor the rules of civil procedure guarantee an affordable procedural path to the vindication of every claim.

The NAM is committed to supporting arbitration as an effective way to resolve disputes without having to suffer the formalities, cost and delays of litigation in court. When plaintiffs ask the courts to allow class action arbitrations, the costs and risks multiply, often forcing manufacturers to needlessly devote excessive resources to resolving the claims. Instead, the courts should enforce voluntary agreements between manufacturers and their customers to arbitrate their differences individually.

An employer’s health plan paid the medical bills of an employee who was involved in a car accident. When the employee sued a third party for damages, the company plan sought reimbursement of the medical expenses from that judgment. The issue in this case is whether the employee is bound by the contract language in the company health care plan or whether a court can rewrite that language under equitable principles of law. The original plan terms gave absolute right of full reimbursement of those expenses to the plan. This issue -- whether a court can revise the terms of a health benefits contract –is critical to keeping employer health care costs under control. The Third Circuit’s decision in this case departs from similar cases in several other federal appeals courts.

On 4/16/13, the Court unanimously ruled that the health plan's clear contract terms govern, and the employee must pay back the conmpany's health plan. However, because the plan did not clearly specify how to handle the employee's attorney's fees, a 5-4 majority applied the "common-fund doctrine" as the best indication of the parties' intent, making the plan share the cost of the attorney needed to recover for the injuries to the employee. This is a victory for enforcing the terms of employee benefit plans according to the intentions of the parties.

On February 27, 2013 the Supreme Court resolved a split in authority between the federal circuits and held that proof of materiality is not required for class certification in a securities fraud class action, where materiality is a critical element to the violation. The defendant corporation sought to require the plaintiff to provide evidence of materiality at the class certification stage. The Court acknowledged that materiality ultimately must be proven to win the case, but that such proof is not required to certify the class. Materiality is established by an objective standard, which is common to the class as a whole. The plaintiff class was found to be “entirely cohesive: it would prevail or fall in unison.” At the class certification stage, the issue is whether common questions predominate, and the Court held that materiality does not bear on that inquiry. The class certification stage is meant to select the best method to resolve the dispute, not to adjudicate the merits of the case.

Because certification of class actions exerts substantial pressure on defendants to settle such cases, this decision will increase the defense costs of manufacturers, even when they have done nothing wrong.

In another important precedent for defending class actions, on March 27, 2013 the Supreme Court ruled that trial courts must apply a rigorous analysis to the prerequisites for class certification, particularly the commonality of the harm, even if the analysis overlaps with the merits of the case. In this case, class certification was inappropriate because damages could not be shown on a class-wide basis. This decision raises the bar for plaintiff class certification and lessens the burden on companies that are forced to defend or settle class actions that should not be certified in the first place.

In this antitrust class action, subscribers to Comcast’s cable television services alleged that Comcast’s clustering of operations eliminated competition and led to supra-competitive prices in the Philadelphia market and sought certification of a 2 million member class. Rule 23(b)(3) of the Federal Rules of Civil Procedure requires that "questions of law or fact common to class members predominate over any questions affecting only individual members." The plaintiffs put forward multiple theories of harm, but the trial court accepted only one theory. However, the plaintiffs' damages expert testified based on a model that assumed the validity of all theories and did not isolate the harms arising from only the theory accepted by the trial court. The plaintiffs argued that examination of the expert’s methodology was looking at the merits and not appropriate at the class certification stage, but the court disagreed. This case builds on recent Supreme Court cases imposing restrictions on class action plaintiffs, particularly Wal-Mart Stores Inc. v. Dukes, by explaining that the “predominance” standard in damages class actions is even more demanding than in other types of class actions, even if the analysis involves an inquiry into the merits.

The Class Action Fairness Act of 2005 (CAFA) was designed to reduce abuse by allowing federal courts to hear class action cases of national importance. In this case, the plaintiffs promised they would not seek damages in excess of the $5,000,000 amount that is required for a case to be heard by a federal court, and the federal court allowed the case to be heard in state court instead. The lower court held that the plaintiff's voluntary limit on damages was binding on all members of the class, even though that plaintiff had never been authorized to represent the class as a whole.

On March 19, 2013, the Supreme Court decided that the single plaintiff's stipulation limiting the damages sought is not binding on the class as a whole, and that the case could be moved to federal court. This is a favorable outcome to prevent class representatives from artificially limiting the amount in controversy as a way to avoid federal jurisdiction.

While the parties argued over this point, the NAM filed a unique amicus brief drawing the Court's attention to the express language of the removal provision of CAFA, which allows federal courts broader authority to remove a case than to exercise jurisdiction over a case first filed there. If a case is filed in federal court, CAFA includes the $5,000,000 requirement, but that limitation is not included in the statute authorizing a case to be transferred from state to federal court. We argued that lower courts have incorrectly assumed that the criteria for bringing a class action in federal court should be transposed onto discussions of removal jurisdiction. Those courts have not explained why they have abandoned the express language of the statute to read into it provisions that do not apply when cases are being removed from state court.

In its decision, the Court did not mention the NAM's argument, but did not foreclose it either. If a court should agree with it, the argument will make it much easier for defendant manufacturers to move class actions from state to federal court, thus accomplishing the goals of Congress when it enacted CAFA.

This is a class action suit alleging warranty, design and failure-to-warn claims involving washing machines. Click here for a summary of the proceedings in the Sixth Circuit.

The NAM filed an amicus brief 9/28/2012 supporting review of the Sixth Circuit's ruling by the Supreme Court. The ruling affirmed certification of a class of some 200,000 Ohio consumers, notwithstanding that many had no injury and their experiences with the machines were vastly different. We argued that the decision misapplied legal requirements that there be common claims among the parties, and that common questions predominate over any questions affecting only individual members. The result of this error threatens to subject manufacturers to product liability class actions with huge numbers of consumers who have suffered no injury, exposing them to liability far out of proportion to any actual underlying defect.

On April 1, 2013 the Supreme Court remanded this case back to the Sixth Circuit in light of the Court’s ruling on March 27 in Comcast Corp. v. Behrend, where the Court held that class certification was inappropriate where damages could not be shown on a class-wide basis.

An environmental group sued some logging companies alleging violations of the Clean Water Act arising from rainwater runoff in logging areas. A statute requires that suits challenging EPA actions be filed within 120 days of the action. On March 20, 2013, the Supreme Court decided that that limitation does not apply to citizen suits seeking to apply permit requirements to forest roads, since another statutory provision allows such suits. The NAM had filed an amicus brief challenging the citizen suit.

Also at issue in the case is the Ninth Circuit’s decision that storm water from logging roads is industrial storm water, in spite of an EPA determination to the contrary. The Court ruled that it was reasonable for EPA to conclude that the water runoff was directly related only to the harvesting of raw materials, rather than to "manufacturing, processing, or raw materials storage areas at an idustrial plant" as defined in the regulation. Thus, the regulation extends only to traditional industrial buildings and not foresting operations.

The decision means that citizen suits can continue to be filed well after regulations are finalized, as long as the suits challenge not the rules themselves, but seek to enforce them under a proper interpretation. The decision also means that EPA's interpretation of a regulation will continue to be given deference by the courts unless it is plainly erroneous or inconsistent with the regulation. This is particularly true where a federal regulation would be duplicative or counterproductive in light of state regulation of the practices at issue.

Two environmental groups sued a municipality for discharging water that allegedly exceeded water quality standards. However, the discharge was from a concrete flood control system used simply to reroute a river. The Supreme Court decided that water coming from such a source does not constitute a “discharge” under the Clean Water Act (CWA). Limiting the breadth of obligations that might be required of municipalities trying to control floods and stormwater helps keep down costs for everyone within their jurisdictions.

This case involves an effort by EPA to impose greater Clean Air Act requirements on manufacturers and fuel users. The NAM joined with other groups supporting an appeal by Luminant Generation Co. of an adverse decision from the Fifth Circuit.

The case involves the balance of power between EPA and state environmental enforcement agencies when regulating emissions from industrial process or emission control equipment during startups, shutdowns or malfunctions. During these periods, states commonly allow more lenient treatment of excess emissions from such equipment, but EPA decided to disapprove part of a Texas State Implementation Plan (SIP) that potentially excuses excess emissions during planned equipment maintenance. Companies will not be able to argue affirmative defenses to citations, making them subject to civil penalties and fines.

The dispute centers on whether Section 113 of the Clean Air Act articulates a requirement that provides a basis for EPA to disapprove the Texas plan. Our brief argued that another Section of the Act (Sec. 110) gives EPA the power to disapprove state plans that interfere with any applicable requirement of the Clean Air Act, and the lower court’s decision should be reversed on this point. We also argued that EPA’s action violates the Eighth Amendment by imposing a penalty grossly disproportionate to the offense, as well as the Fifth Amendment’s due process principles, since certain emissions during planned startups and shutdowns are unavoidable. The Texas SIP would have allowed a company to demonstrate that the offense was actually unavoidable, but the EPA action took away that defense.

On 10/7/2013, the Supreme Court declined to review this appeal.

In March, 2013 the Supreme Court agreed to review a case in which an environmental group challenged the U.S. Forest Service analysis of the environmental impacts of a revision to its forest plan. The forest plan is a policy that by itself is not an agency action, but is used to inform project-specific decision making, which is agency action. The Forest Service prepared an Environmental Impact Statement (EIS) at the time of the revision as required by the National Environmental Policy Act (NEPA). The environmental group alleged that the EIS for the revised forest plan failed to consider the impact of the plan on fish and amphibians in affected aquatic habitat. The court of appeals rejected the environmental group’s allegation that the EIS analysis of effects on amphibians was inadequate, but held that the EIS ultimately did not satisfy NEPA because it contained no discussion of the effects on particular fish species. The court of appeals went on to explain that NEPA requires programmatic and project-specific EISs as soon as it is reasonably possible to do so.

This case presented ripeness and standing issues for the Court to consider. The case may not be ripe because the forest plan by itself was not an agency action. If the Court ruled on the ripeness doctrine, it could have required that the environmental group challenge only project-specific agency actions that present a controversy ripe for judicial resolution, meaning that only the actions informed by the forest plan could be challenged, not the entire forest plan. Such individual project challenges would require significant additional litigation resources from the groups. As for standing, the Court could have considered whether the environmental groups make use of the resources sufficiently to have standing to challenge the forest plan, or alternatively the project-specific actions pursuant to the plan.

The case also raised the question of whether it is possible to evaluate every potential environmental impact from the revision of the forest service plan at the time the amendments were adopted. The relevance of whether all such impacts are reasonably foreseeable at the time of the revision is lessened because any action pursuant to the plan is subject to an EIS before any individual project is allowed to go forward. However, environmental groups are likely to claim “death by a thousand cuts” to the environment if they cannot challenge programs or policies like the forest plan, on the grounds that individual actions may cumulatively have an impact outside of the scope of narrow challenges to project-specific actions.

This case was important for manufacturers and other businesses that rely on permits or licenses from government agencies to pursue their endeavors efficiently and with legal certainty.

On 6/17/13, the Court dismissed the case as moot. No decision on the merits of the appeal was issued.

This case is about determining when the clock runs out on an employee's deadline for suing his employer over employee benefits. The dispute involves the relationship between the contractual language in the employee's benefit plan and state law which provides the statute of limitations for filing suit. The Supreme Court agreed to hear the appeal on April 15, 2013.

In the case, an employee was prevented from filing a legal challenge to an adverse long-term disability benefits determination by the ERISA plan administrator, since the parties agreed to a contractual provision limiting the time period when such a challenge could be made. ERISA does not contain a statute of limitations and federal courts normally borrow provisions from analogous state laws. In addition, plan administrators, like the one in this case, often include contractual provisions that limit the time to file a legal action to challenge an adverse benefits determination.

Here, the employee applied for long-term disability benefits and was required to provide written proof of loss. The administrator found that the proof that the employee submitted was insufficient, the employee submitted additional documentation, an administrative appeal ensued, and finally the claim was denied about 2 years later. The contract provided that legal action could not be taken 3 years after the time written proof of loss was required to be furnished. The employee filed a claim before 3 years after the final determination, but about 5 years after the original benefits claim. Here, the 3-year period for filing a legal challenge under the contract began to run well before the time specified by state law, and the lower court rejected the suit. Essentially, the employee was still pursuing an administration appeal while the time period was running from the time the written proof was required, but this was envisioned by the agreed upon contract.

The Supreme Court unanimously enforced the plan's limits. An employee benefit plan and its participants can contractually agree to use a shorter time period for litigation, as long as that period is reasonable and there is no conflicting statute. The effect of this decision may reach beyond ERISA plans to other federal statutes, particularly where the federal statute does not provide a statute of limitations and where the parties contract for shorter periods.

This case involves a suit by an individual for back pay. She sued her employer on her own behalf and on behalf of other similarly situated individuals. The employer offered to settle her claim for the full amount, and asked that the case be dismissed because it no longer was a “case or controversy” subject to resolution in court. On 4/16/13, the Supreme Court decided that this kind of suit, often called a collective action under the Fair Labor Standards Act, should be dismissed. The plaintiff had no personal interest in representing other unnamed plaintiffs, and was made completely whole for her own complaint. The case is important for reigning in litigation driven more by lawyers and the parties, and this ruling will help prevent excessive litigation by plaintiffs that lack a personal interest in the outcome.

Companies are liable when their supervisors engage in sexual harassment. On June 24, 2013, the Supreme Court decided that supervisors includes only those employees who are empowered by their employer to take tangible employment actions against the victim, such as controling employment, discipline and advancement. Co-workers or other employees who are not supervisors but who may control the day-to-day activities of other employees are not supervisors such that the employer would be strictly liable for their actions. However, an employer may be still be liable for such discrimination if it is negligent.

This case arose in the pharmaceutical industry, but has implications for patents and other intellectual property in other industries as well. The Federal Trade Commission sued companies that settled pharmaceutical patent litigation, claiming that the settlement, which involved “reverse payments” from the patent owner to the generic drug manufacturer, was anticompetitive because it required the generic manufacturer to stay out of the market for a time.

The Supreme Court ruled 5-3 on 6/17/13 that the lower court erred in dismissing the FTC's case, so the case will go back down to determine whether the reverse-payment agreement was in fact anticompetitive under the antitrust laws. The Court declined to rule that such settlement agreements are presumptively unlawful, and that they should be analyzed under the "rule of reason," allowing the parties to argue that there were legitimate business justifications for the agreements.

The NAM had filed an amicus brief arguing that the settlement of bona fide patent litigation involving a patent that was not procured by fraud should not be considered presumptively unlawful, and the Court agreed. Such patents are legal monopolies for their owners, and any settlement of related litigation that does not extend the life of the patent beyond its legitimate term should be valid, we argued. The FTC’s approach completely disregards the traditional analysis of the legality of a patent settlement, and throws uncertainty into the process of settling complex cases efficiently. Proving the ultimate validity of a patent is complex and expensive, burdening the courts and the parties, and ultimately chilling innovation and harming the competitiveness of U.S. manufacturers.

The NAM filed an amicus brief with the Supreme Court encouraging the Court to review the Seventh Circuit’s decision in Butler v. Sears, Roebuck and Co. That decision deepened a split of authority among the federal circuits over the proper approach to analyzing class actions when the proposed class includes customers who have suffered no injury. Although the Supreme Court has recently raised the bar for class certification in antitrust and securities cases, this case presented aunique opportunity for the Court to resolve the considerable uncertainty surrounding consumer class actions involving alleged product defects and uninjured class members.

In this case, the Seventh Circuit certified a class action where class members are linked only by their purchases since 2001 of some 27 different models of the same brand of washing machine, which allegedly is more likely than other brands to allow mold to accumulate and emit odors. According to the court, even though most members of the class may not have experienced any mold problems or any other injury, the class should be certified and whether individual class members were actually harmed can be addressed at a later stage of proceedings. Class certification requirements are not mere conveniences for streamlining litigation, but crucial safeguards grounded in fundamental notions of constitutional due process. For a class to be properly certified, common questions must predominate over individual ones, and if adjudicated on a class basis, each one of the claims will be resolved in one stroke. The Seventh Circuit’s decision replaced the Supreme Court’s predominance test with a malleable question of efficiency.

Class certification in meritless circumstances where consumers have suffered no cognizable injury encourages class action abuse. Ultimately, consumers are harmed by these class certifications because businesses have little choice but to incorporate the cost of frivolous product liability litigation and litigation avoidance into the prices paid by their consumers.

On June 3, the Supreme Court vacated the 7th Circuit's decision and remanded the case back to them for further consideration in light of its decision on certifying class actions in Comcast Corp. v. Behrend.

States often do what they can, and sometimes exceed their authority, to tax companies doing business in many states and around the world. The Due Process and Commerce Clauses of the Constitution are designed in part to prevent state interference with interstate commerce, and the Supreme Court has applied the "unitary-business principle" to allow multiple states to tax a portion of a multistate corporation's business.

This case arose when Alabama tried to tax the full value of the proceeds of the disposal of timberland and a pulp mill located in that state, even though the assets were part of a vertically integrated business in many states. An Alabama court approved the tax, but other states may still tax their share of the transaction, since it is part of the unitary business that is subject to tax in those states. This will mean multiple taxation of the same transaction.

The company appealed to the Supreme Court, and the NAM filed an amicus brief 11/1/2012 urging the Court to review the Alabama decision. The ruling ignores the long-standing rules governing the apportionment of unitary income, which allow a state to tax activities that occur outside the state as long as the tax is properly apportioned by the taxing state. We argued that the issue in this case is of national significance, and the Supreme Court must step in to ensure compliance with its precedents regarding apportionable income.

The Court denied the petition on Jan. 14, 2013.

This case involves what costs may be included as “qualified research expenses” eligible for the R&D tax credit when companies undertake manufacturing process improvements. Normally, all costs related to research into process innovations, including plant-scale research costs such as raw materials also used in ordinary production runs, are qualified expenses. However, the judge ruled, and the Second Circuit affirmed, that supply costs are “ordinary production costs” and that the company did not prove that the costs qualified for the credit. Click here for details on our involvement in the Second Circuit in this case.

This ruling was appealed to the U.S. Supreme Court, but on March 18, 2013, it declined to hear the appeal. The NAM and others had filed an amicus brief arguing that this ruling undermines the fair and effective implementation of the research credit and undermines tax certainty. Taxpayers should be able to rely on the plain language of tax laws and regulations, and a position taken by the IRS during the course of litigation should not be accorded significant deference by the courts. We also argued that the lower courts failed to acknowledge the nature and importance of research into process innovations that is conducted on the full scale of an operational production plant.

On 2/22/2012, the Supreme Court reversed a Montana decision that found that the state held title to riverbeds under various dams and reservoirs long being used for hydroelectric power, and that PPL Montana must pay $41 million in back rent and millions more in future rent. The Court ruled on the definition of navigability for purposes of determining ownership of the riverbed. Had the state owned the land, the case could have affected electric power rates for customers in many areas.

The Court ruled unanimously that states could only assert ownership in land under rivers that were navigable at the time the state gained statehood. Current river conditions are not binding in this determination. Areas of rivers that could only be reached by portaging around obstacles are generally not navigable.

A couple who graded a small lot to build a house was ordered by EPA under the Clean Water Act to fill in the lot, replace vegetation and monitor the land for 3 years, or face a $32,500 penalty for each day of violation. They sought court review of the order, but were denied.

On March 21, 2012, the Supreme Court decided that they have a right to go to court to get pre-enforcement review of the order. They do not have to wait for EPA to sue them for violating the order in order to raise their claims. The unanimous Court held that the Administrative Procedure Act allows aggrieved parties to sue an agency after it takes "final agency action," and EPA's order qualified. Although the majority did not limit the claims that could be raised in such a challenge, Justice Ginsburg's concurring opinion argued that a challenge could only involve EPA's jurisdiction over the land in question. It remains to be seen whether the Court's opinion is ultimately interpreted in such a limited manner.

The NAM filed an amicus brief in 2011 supporting this result.

The case has implications beyond the Clean Water Act to similar orders under the Solid Waste Disposal Act (Resource Conservation and Recovery Act) and the Safe Drinking Water Act. EPA orders such as this one essentially coerce alleged violators into compliance, denying due process. Pre-enforcement review by the courts is a critical check on agency abuse. Otherwise, persons subject to such orders risk substantial financial penalties for violating an order even if they did not violate the Clean Water Act itself.

One of the claims the landowners hope to raise is whether their property is even subject to EPA jurisdiction in the first place. This question involves defining "waters of the United States," and, as Justice Alito mentioned in his concurring opinion, neither Congress nor EPA has provided a clear answer to this question. The NAM supports efforts to prevent EPA and the U.S. Army Corps of Engineers from expanding the federal government's regulation of private and public lands under the Clean Water Act, since such expansion would create significant regulatory barriers to economic growth in an already struggling economy. In 2011, we filed extensive comments on this proposed agency action.

The U.S. Court of Appeals for the First Circuit reversed a judge's ruling that excluded an expert who had concluded, based on his judgment, that the "weight of the evidence" supported a conclusion that a particular cancer could be caused by exposure to benzene. The appeals court held that such an opinion satisfies requirements designed to exclude junk science from court.

The NAM filed an amicus brief urging the Supreme Court to review this decision. We argued that scientific expert testimony must be based upon reliable scientific methodology, subject to testing and validation, and not on a witness transforming disparate pieces of scientifically unreliable evidence into a scientifically reliable whole based on the expert witness' claimed weighing of the evidence. Judges serve an important gatekeeping role to counter an aggressive and well-financed plaintiffs' bar that has threatened every segment of the business community with massive liabilities premised on often shaky science. Our brief analyzes in some detail the link between the First Circuit's opinion and doctrinal errors from presentations made at the Coronado Conference in 2003, a symposium weighted heavily toward the interests of the plaintiffs' bar.

On Jan. 9, 2012, the Supreme Court declined to hear this appeal. As this is not a formal opinion on the merits of the case, the issue can come before the Court in another case if the Court agrees to review it.

The Tenth Circuit upheld a broad discovery order that requires a member of a trade association to disclose information about internal policy and strategy deliberations involving the measurement of gasoline volume. On appeal is whether an association can obtain appellate review of such an order, and the appeals court decisions on this issue conflict. In addition, the court imposed a difficult evidentiary burden by saying that unsworn testimony that is the equivalent of affidavits expressly held to be sufficient in other similar cases was inadequate as a matter of law to establish that the discovery order here implicated associational rights. It appeared to require a member company to file an affidavit saying that it would be deterred from communication freely within the association if it knew that such communications might one day be publicly disclosed.

The NAM filed an amicus brief 10/20 urging the Supreme Court to review this case. We argued that an association’s members need assurance that internal communication between members and the association will not be subject to public disclosure. Individuals have a right to privacy of belief and association that lies at the very heart of the First Amendment freedoms of association and petition, rights that are undeniably enhanced by participation in associations. We sought avenues for a non-party association to appeal such a broad discovery order. We argued that the First Amendment’s protections have never been limited to simply protecting the identity of the rank-and-file members, but rather extends to internal deliberations over strategy and messaging. As many cases have already shown, there is a presumption that associations and their members are protected by a First Amendment privilege where the potential for chilling associational activities and speech is self-evident, as it is here.

On January 9, 2012, the Court declined to review the lower court's ruling.

The Second Circuit ruled that the New York Uniform Foreign Country Money-Judgments Recognition Act does not allow pre-enforcement challenges of foreign judgments. If Chevron wants to prevent enforcement of an $18 billion judgment from an Ecuadorian court, it must wait until the Ecuadorian plaintiffs try to enforce their damages award in New York. The court's decision is based on an interpretation of state law that does not address the company's claims of fraud in the underlying litigation.

Chevron appealed to the U.S. Supreme Court, and the NAM filed an amicus brief supporting the appeal. A summary of the lower court's proceeding is linked below. Our amicus brief told the Supreme Court the importance of the case, since the Second Circuit's ruling could inflict significant injury on manufacturers that do business in foreign states. The brief argued that principles of international comity support Chevron's request for an injunction that helps to ensure that the international legal system is not tainted and burdened by alleged fraud occurring in part in the United States. We argued that U.S. courts have jurisdiction over the alleged fraud, and that the trial court's injunction was an appropriate exercise of the power to enforce substantive legal norms as long as there is no direct conflict with another nation that has similar authority over the conduct. Only Ecuador has such an interest, and the injunction here did not interfere with their jurisdiction.

On Oct. 9, the Court declined to review the case.

The Supreme Court held July 18, 2012, that pharmaceutical “detailers” (as they are known in the industry) qualify as outside salesmen when they act to promote drugs to doctors, and are therefore exempt from requirements for overtime pay. The Department of Labor argued that the detailers were not actually salesmen (and therefore entitled to overtime pay) because they did not transfer title of the property, in this case the prescription drugs. The Court rejected this argument and found that the law at issue allowed transfers of title to be considered in qualifying salesmen, but it did not require it. The majority found unpersuasive the Department’s attempt to adopt its policy through a series of amicus briefs rather than using a more deliberate process involving public comment. Using the traditional tools for determining who is an outside salesman, the Court found considerable language in the Department’s regulations supporting its conclusion that these were outside salesmen.

This suit was brought by the estate of an individual who was killed when a small plane in which he was riding crashed. The Florida Supreme Court ruled that the suit could be filed against the lessor of the plane, despite a federal law, 49 U.S.C. Sec. 44112, that preempts state tort suits against the lessor or owner of an aircraft that is not in their actual possession or control.

The NAM joined with other business organizations to urge the U.S. Supreme Court to review this holding. Our brief challenged the Florida court's decision to absurdly narrow the broad preemption afforded by the federal statute, and we pointed out that its ruling will encourage airplane accident litigation in Florida or any other jurisdiction that follows that state's lead. In another case with similar facts, a federal appeals court reached the opposite conclusion. The Florida decision creates uncertainty in an industry that depends on lessors and secured parties who are not in possession or control of an aircraft. Preemption is required so that such parties are not subject to conflicting state-law based liability claims. The Florida decision would preempt only suits for injuries caused to people that are underneath falling aircraft, a result that would make the preemption provision extremely narrow. Such a result will lead to forum-shopping by plaintiffs, increased transactional costs of litigation throughout the industry, increased insurance costs and increased risk and uncertainty.

On Feb. 21, 2012, the Court declined to review Florida court's decision.

On February 29, 2012, the Supreme Court affirmed a lower court ruling that the Locomotive Inspection Act preempts a lawsuit under state law brought by the estate of a man who died from mesothelioma. The suit alleged he was exposed to asbestos while working on locomotives in the mid-twentieth century. The defendant companies won a motion to dismiss the suit, with the court ruling that federal law preempted design defect and failure-to-warn lawsuits against companies that supplied asbestos-containing equipment to the railroads.

The Supreme Court ruled that Congress long ago intended that federal law occupy the entire field of law regulating locomotive equipment. The court rejected an attempt to replace this field preemption analysis with a different express preemption or conflict preemption analysis. The Secretary of Transportation is charged with the responsibility to regulate the design, construction and material of every part of a locomotive, and claims involving repair and maintenance fall within the purview of the Secretary’s authority and outside of the reach of tort claims under state law. The decision is critical to thousands of asbestos cases in the railroad industry and helps to insure national uniformity of federal regulation of the industry.

The NAM filed an amicus brief putting this case in the context of current asbestos litigation, and explaining how the plaintiffs were trying to expand asbestos litigation to locomotive equipment manufacturers and distributors despite nearly a century of precedent holding that such claims are preempted. The suit tried to distinguish state statute and regulations from state tort litigation for purposes of preemption, claiming that litigation is not preempted, even though it imposes legal obligations that are equivalent to state "positive" law like statutes. The Supreme Court has already recognized the correctness of preempting tort claims in the context of litigation under the same principles that apply to state statutes and regulations. It did so again in its 6-3 ruling in this case.

When a company switched from a defined benefit pension plan to a cash balance plan, it was sued by employees alleging it failed to provide the required notice that benefit accruals would be significantly decreased under the new plan, as well as other disclosure claims. The trial court felt that the company made misleading statements about the plan in order to ease the transition to a less favorable retirement program.

On May 16, 2011, the Supreme Court decided that it is enough for the employees to show actual harm from the improper disclosure in the summary plan description, and they need not show more proof of detrimental reliance to receive monetary compensation. If they can show reliance, additional compensation may be afforded, but such a showing is not required. The Court sent the case back to the trial court to determine what remedies might be available to the plaintiffs under normal equitable principles.

The decision is important in that it affirms that companies may be sued by employees who feel the disclosures of benefit plan changes are not adequate. Plan administrators will need to be especialy careful when describing plan changes and benefits to empoyees.

Suits against companies for misleading or fraudulent statements (or withholding signification information) that affect the price of the company's stock require proof of causation, that is, that the statements actually had an effect on the market. This case involves whether such proof must be provided at the stage of the case when the judge is deciding whether to certify the case as a class action, or whether that proof can wait until the trial phase. Whether to certify a lawsuit as a class action is often case-dispositive, since certification puts tremendous pressure on companies to settle questionable suits to avoid potentially excessive liability.

The Fifth Circuit ruled that plaintiffs must show evidence of causation prior to certification of the class. Unless the alleged fraud actually caused the loss, a court cannot assume that all the proposed members of the class relied on the fraud when buying their stock. The Supreme Court's reversed on June 6, 2011, holding that plaintiffs need not prove loss causation in order to obtain class certification. It found that loss causation is different from reliance on a misrepresentation or omission, and requires a plaintiff to show that the misrepresentation caused a subsequent economic loss.

As a result, it will be easier for shareholders to file class action lawsuits alleging misrepresentations or omissions by company management.

The NAM filed an amicus brief urging the Supreme Court to review a Seventh Circuit decision that makes it easier for trial lawyers to sue manufacturers using an unwieldy and unfair class action procedure. The lower court significantly relaxed the standards for class certification, especially in product defect and consumer fraud cases, undermining procedural and substantive rights of manufacturers and encouraging a dramatic increase in class action exposure of American businesses.

Rule 23(b)(3) of the Rules of Civil Procedure allow class actions only where common questions predominate over individual ones. The lower court here allowed a class to be certified as to a few common issues, disregarding individual liability issues relating to causation and injury. The case arose from allegations that certain windows had moisture-related problems, and that the failure to notify customers of the alleged defect violated various state consumer-fraud laws. The court allowed class certification on individual components of the class claims, but not all the elements necessary to prove liability.

Our amicus brief argued that the decision to certify a class representing plaintiffs in 50 different states, without analyzing the differences in state law or the need for individualized findings under each law, denies the defendant an opportunity to present valid individual defenses. For example, the company might be able to show that a particular plaintiff's problem with its windows was caused by improper installation or other factors -- evidence that might also be helpful to raise doubt about whether the windows were defective at all. If these defenses are not available in the first phase of the class action litigation, manufacturers could face settlement pressure that effectively denies them the opportunity ever to present their defenses. We also raised several questions about how the court's separate "issue" judgments would be used in subsequent proceedings.

On Jan. 18, 2011, the Court declined to review this appeal.

The Supreme Court decided that a class action suit that has been rejected in federal court, in part because the plaintiffs did not prove sufficient injury, can be relitigated in state court using state rules. The Court ruled that the federal Anti-Injunction Act generally prohibits federal courts from enjoining state court proceedings, and an exception for re-litigating cases is to be narrowly construed. A state court proceeding may continue if the issue previously decided by the federal court is not the same as the one before the state court, and The Court ruled that West Virginia rules on class certification are a bit different from federal rules and may be relitigated under state law. In addition, the plaintiff was not a party in the earlier case. The case involves alleged economic loss by plaintiffs who bought the cholesterol-lowering medication Baycol.

This very large class action against Wal-Mart was brought on behalf of 1.5 million female employees around the country for alleged discrimination in pay and promotions. Although the district court certified the class and the Ninth Circuit narrowly agreed, the Supreme Court reversed, deciding that there must be common questions of law or fact, and the critical question here involved whether Wal-Mart engaged in a pattern or practice of discrimination. Answering that question involves scrutinizing millions of employment decisions at once, and unless there is some "glue" holding together the reasons for the discrimination, a class action is not appropriate. There was no proof of a general policy of discrimination in this case. The only corporate policy clearly established was a company policy of giving local supervisors discretion over employment matters, making it unlikely that all managers would exercise their discretion in a common way without some common direction.

In addition, the Court ruled that claims for individualized monetary relief like backpay may not be included in class actions under Rule 23(b)(2), but rather should be brought under Rule 23(b)(3).

Class certification issues are of critical importance to manufacturers caught up in mass tort or mass discrimination claims. Often individual issues relating to particular workplaces, consumers and damages predominate a case, yet some judges certify them for class action status anyway. Such certifications often force companies into expensive settlements in cases of questionable merit. The result in this case is helpful to prevent "Trial by Formula," as described in the Court's opinion.

An exemption in the Freedom of Information Act (FOIA) applies to records or information compiled for law enforcement purposes, "but only to the extent that the production of such law enforcement records or information . . . could reasonably be expected to constitute an unwarranted invasion of personal privacy." AT&T turned over records to the FCC in connection with an investigation of some bills, and a trade association representing some of its competitors sought all the records. In this suit to prevent the FCC from releasing the records, the Third Circuit held that a corporation is included in the statute's definition of a "person" and thus has personal privacy interests protected from disclosure by Exemption 7(C) of FOIA.

The NAM filed an amicus brief 12/15/10 arguing that corporations enjoy easily recognizable privacy interests other than those involving financial or trade secrets, and the government's investigative powers should not be used to serve private ends, or to cause harm or embarrassment unrelated to proper investigative purposes. Billions of private messages should not become available for public display merely because a business entity is swept up in a government investigation, either as a target, a victim, or a source of information. A wide range of in-house communications, in the hands of a competitor or a third party, including the press or trial lawyers, could be deployed to harm the company, its shareholders and employees. It is improper and abusive for the government's broad investigative power to be used to serve private ends and cause private injury.

On March 1, 2011, the Supreme Court unanimously decided that "personal privacy" is a term that is not defined in the statute, and its ordinary meaning does not include the privacy interests of corporations. Chief Justice Roberts issued the Court's opinion, citing other sections of FOIA where personal privacy has been interpreted to include only an individual's privacy interests. As a result of the decision, companies that provide information to the government will only be able to argue that it should not be publicly disclosed because it falls within Exemption 4 of FOIA, relating to "trade secrets and commercial or financial information obtained from a person and privileged or confidential."

A government antitrust criminal investigation into the LCD flat-screen industry prompted numerous follow-on private civil suits which proceeded at the same time. This case concerns whether the government may subpoena lawyers handling the civil suits to provide documents originating outside of the United States, rather than using the standard processes governing the collection of information from foreign parties. Normally in criminal cases, such information must be obtained through (1) letters rogatory, (2) international treaties, or (3) diplomatic channels. Obtaining such information from civil litigants puts the defendants in the untenable position of having to decide whether to decline to provide such information under the Fifth Amendment and facing negative consequences in the civil litigation, or providing the information and running the risk of self-incrimination in the criminal case.

The NAM filed an amicus brief on April 20, 2011, urging the Supreme Court to review a Ninth Circuit decision that the government has a right to discover the evidence from the civil proceeding. The Ninth Circuit ruled that a grand jury subpoena in the criminal investigation trumps a protective order that exists in the civil proceeding. The NAM brief counters that the Ninth Circuit's rule enables the Department of Justice to circumvent well-established methods for seeking foreign-based discovery, and exploits the wide-ranging system of discovery allowed in this country. We raised a concern that this ruling ignores potential international complications and consequences, and could harm American businesses that may be subject to retaliation in legal proceedings abroad. Hostility to American discovery practices has been well documented. There are other methods that the Justice Department can use to obtain foreign evidence, including 2 international agreements between the countries involved in this case.

The petition was denied on June 27, 2011.

The Supreme Court reversed a very troubling decision by the U.S. Court of Appeals for the 2nd Circuit that allowed 8 states to sue 6 major electric utility companies under a public nuisance theory. The theory is that each state is adversely affected by climate change caused in part by the utilities’ electricity-generating plants, and the courts should impose emissions limits.

The NAM and other business groups filed an amicus brief urging review of the case. We argued that only the political branches of government are equipped to resolve the complex and dynamic issues relating to climate change regulation, that the plaintiffs’ legal claims exceed the boundaries of public nuisance litigation, and that judges and juries are not empowered or competent to exercise extraordinary regulatory powers without clear boundaries and guiding principles.

Our brief argued that this case is far from the "ordinary tort suit" that the lower court thought it was. Instead, it is quite extraordinary, and the judiciary "has no experience dealing with public nuisance litigation created by a global phenomenon resulting from the release of greenhouse gases by millions, if not billions, of sources (including natural events) worldwide -- very few of which are subject to the jurisdiction of American courts or under the control of these defendants." It is inappropriate for courts to entertain standardless public nuisance litigation in an area that should be addressed by the political branches of government.

Click here for a summary of the Second Circuit's decision and the NAM brief in that court.

The Supreme Court's decision to review this case was announced on Dec. 6, 2010.

On 2/7/11, we filed a brief on the merits, arguing that courts cannot resolve political questions like this because there are no judicially discoverable and manageable standards to handle them, and courts have neither the expertise nor the authority to make those judgments. Public nuisance claims have been limited by geographical boundaries and defined circumstances, and courts should not step into legislative and executive branch issues to try to address public nuisance cases of global dimensions. A public nuisance is "the right thing in the wrong place, like a pig in the parlor instead of the barnyard." But were courts to impose judicial limits on electricity generating plants, they would be removing the geographic limitation and would be acting without a standard. In addition, public nuisance cases involve defined circumstances where the controversy can actually be resolved by an abatement order. Such an order in this case cannot be designed with any standard that would project or evaluate its efficacy. This litigation is not an "ordinary tort suit," but rather involves wholly new claims that are unbounded by any rational constraints, and courts should leave their resolution to the legislative and executive branches.

On June 20, 2011, the Court ruled that EPA action to regulate greenhouse gases displaces any federal common-law right to seek abatement of GHG emissions. There is no need for the courts to develop federal common law when Congress addresses a question of national concern, such as the regulation of air and water. It does not matter whether EPA actually exercises its authority to regulate GHGs; as long as the field of GHG regulation has been delegated to EPA, federal common law is displaced.

The NAM had urged the Court to overturn the lower court’s extreme ruling, and the Court agreed, up to a point. While it rejected the federal common-law claims, it left open the possibility that such a suit could be brought under state nuisance law. It sent the case back for the lower court to consider whether the Clean Air Act preempts state-law suits as well.

When the EPA unilaterally revoked a pesticide tolerance under the Federal Food, Drug and Cosmetic Act (FFDCA), it arguably violated the right of pesticide manufacturers to an adjudicatory hearing. The action effectively banned the pesticide, and whether there is a right to a hearing in such circumstances has ramifications for pharmaceuticals, medical devices, food and beverages and certain consumer products as well.

Hearings are required whenever there are material issues of fact that are disputed between the government and the manufacturer. Despite four decades of safe product use in this case, EPA made changes in its risk assessment assumptions without providing a hearing. The D.C. Circuit deferred to EPA's decision, and the case was appealed to the Supreme Court.

The NAM and other groups filed an amicus brief 3/18/11 urging the Supreme Court to review this case. We argued that administrative agency hearings before a neutral factfinder are essential to due process, and that the lower court's ruling contravenes the FFDCA's hearing requirements. American industry relies on hearing rights, and the ruling in this case could affect not only rights under this statute, but also under statutes and regulations such as those covering packaging (Fair Packaging and Labeling Act), seabed mining (National Oceanic and Atmospheric Administration regulations), the importation or exportation of natural gas (Department of Energy regulations), tax levies on property (IRS regulations), and air carrier agreements (Department of Transportation rules).

On May 31, 2011, the Court declined to hear the appeal, leaving the lower court's decision in place.

Private parties may sue government contractors for billing fraud using the qui tam provisions of the False Claims Act, and recover up to 30% of the amount in controversy. However, the information they use to bring their claims must not generally be information that is disclosed in an administrative report or investigation. This case involves a private party that received his information through a Freedom of Information Act request, and the issue before the Supreme Court is whether that FOIA disclosure is an administrative report or investigation under the False Claims Act that would bar the suit. Federal courts have split on the issue.

On May 16, 2011, the Court decided 5-3 that the FOIA response is a report consistent with the public disclosure bar. It sent the case back to the lower court to determine whether the qui tam suit was based on allegations or transactions disclosed in the FOIA report.

The case is important, since allowing suits based on FOIA information would have allowed anyone to search through government contract documents to determine whether any of a variety of statutory or regulatory requirements were fully satisfied. The financial incentives to bring qui tam suits are enormous, and the False Claims Act is designed to ensure that those rewards are available only to plaintiffs with firsthand knowledge of an alleged wrongdoing. Allowing opportunistic suits in this situation would have encouraged litigation and undermined the judgment of contracting agencies in handling issues relating to compliance with government contracts.

Prescription information, without patient names but with prescribing doctor information, is collected by pharmacies and aggregated. The information is ultimately sold to pharmaceutical companies, who in turn use it to target their marketing efforts. While this information is widely used for other purposes, Vermont prohibits its use in marketing prescription drugs. The information publishers and the Pharmaceutical Research and Manufacturers of America (PhRMA) challenged the law as violating their commercial speech rights, because it restricts the right to convey truthful information to others based on its content.

The NAM joined with the Washington Legal Foundation in an amicus brief arguing that courts should not give deference to legislative fact-finding, predictions and judgments relating to speech restrictions that are not content-neutral, but should independently assess those legislative justifications. Where speech restrictions are motivated by legislative hostility to the content of the speech, courts should not automatically defer to the legislature’s rationale. In addition, the legislature’s findings were last-minute additions that were not developed as a result of any fact-finding studies.

We also supported the view that the privacy interests in the prescribing practices of doctors should be balanced with the First Amendment rights of others. Since courts have not given as much weight to business privacy interests, particularly in the closely regulated affairs of doctors, there must be a compelling government interest to justify restrictions on the First Amendment rights of others. We argued that the law was not intended, nor does it, protect the privacy interests of doctors, since it allows a variety of other uses of the data by insurance companies, government employees, drug companies and others.

The Supreme Court ruled 6 to 3 on June 23 that the law is a restriction on speech that is based on the content of the message or the identity of the speaker, and is therefor subject to more rigorous judicial scrutiny than restrictions that are not. The creation and dissemination of information are speech covered by the First Amendment. The majority also ruled that the law infringes commercial speech rights of pharmaceutical companies because it was not narrowly drawn to advance the state’s interest in protecting physicians’ confidentiality. The majority agreed with the NAM's view, finding that the state may not burden protected speech in order to tilt public debate in a preferred direction.

The Supreme Court decided that medical providers may not sue drug manufacturers to enforce a price cap imposed by the Public Health Service Act on Medicaid-covered outpatient drugs. That law requires drug manufacturers to provide discounted prices to specified healthcare providers, but did not expressly provide the providers with a right to sue to enforce the requirement. The Court decided that such a right is not implied in the statute. A different result could have affected whether third-party beneficiaries of other federal contracting statutes may also have the right to sue manufacturers.

An employee orally complained about the placement of a time clock during a period of months in which he was receiving increasing discipline for time-clock violations. When he was terminated after the fourth offense, he sued his employer, alleging a violation of the anti-retaliation provision in the Fair Labor Standards Act. That provision makes it unlawful for an employer to terminate an employee because such employee has "filed any complaint . . . ." under the Act.

The Seventh Circuit, along with a majority of other federal appeals courts, ruled that this law covers employees who have filed written complaints, not just made oral statements. On March 22, 2011, the Supreme Court reversed, deciding that the statute also covers employees who do not put their claims in writing. It interpreted "filing" a complaint broadly to encourage "those who would find it difficult to reduce their complaints to writing, particularly the illiterate, less educated, or overworked workers who were most in need of the Act's help at the time of passage[.]"

This interpretation could open up a tremendous volume of lawsuits following termination decisions. In August, 2010, the NAM joined with the Equal Employment Advisory Council and the NFIB in an amicus brief arguing that the Fair Labor Standards Act provision is clear and narrower than similar provisions under other federal civil rights statutes which prohibit retaliation based on an individual's mere opposition to an employment practice. Extending the FLSA to verbal complaints would undermine the ability of employers to effectively manage their workforces and enforce legitimate workplace rules.

Requiring written complaints of potential violations "not only would facilitate swift resolution of the dispute, but also would discourage employees from making false or frivolous complaints that stem more from idle 'grumblings' than from legitimate workplace concerns." Written complaints are fully protected against retaliation and can be properly addressed by management.

The Court's new interpretation providing special status to employees making oral complaints makes employers face more difficult problems when addressing poor performance or disciplinary situations. It can be difficult to tell when an employee is making a statement that constitutes "filing a complaint," but the Court adopted the following test to make that decision: "To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection. This standard can be met, however, by oral complaints, as well as by written ones." This issue is likely to be one of those raised in future cases fleshing out this decision.

This law suit is about compensation for time spent putting on and taking off steel-toed boots, hard hats, smocks and hair nets when working at a meat processing plant. In collective bargaining, the union agreed to exclude such "donning and doffing" time from hours worked in return for a higher wage rate. Federal law allows such a tradeoff. Wisconsin law does not.

The Seventh Circuit ruled that a collective bargaining agreement cannot override the state law, and the company must pay for the donning and doffing time at the higher compensation rate. This decision was appealed to the Supreme Court. The NAM filed an amicus brief urging review, arguing that the decision was of national significance and interfered with long-standing collective bargaining agreements and customs and practices in various industries. In addition, the provision at issue was specifically addressed by Congress, and federal law should preempt inconsistent state laws in this area. Unfortunately, on Jan. 10, 2011, the Court declined to review it.

The Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), prohibits discrimination based on an employee’s membership in the armed services. This case involves an employee who was discharged allegedly because of his association with the military. Normally an employer is liable when an employment decision is made with an animus against the protected employee. But in this case the decisionmaker had no such animus, and the Seventh Circuit ruled that the animus of another employee could not be imputed to the employer if the employer conducts a separate investigation into the facts relevant to the decision.

On March 1, 2011, the Supreme Court decided that an employer will be held liable for the discriminatory animus of an employee who affects an employment decision, even if that employee did not make the ultimate employment decision. The case involves the "cat's paw" theory of liability, where the company's decisionmaker is overly influenced by an employee with an improper motive. The term is derived from a fable about a monkey who persuaded a cat to pull chestnuts out of the fire, burning the cat's paw and giving the monkey the chestnuts.

Here, the Court found that where a management official expresses a discriminatory animus against an employee, and that employee is ultimately fired by another company official partially on the basis of that animus, the company may be liable for discrimination. According to the Court, "[I]f a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA." The Supreme Court sent the case back to the lower courts to determine whether the jury instruction given constituted an error big enough to retry the case.

The decision poses particular difficulties for employers who wish to overcome the impact of a rogue supervisor's discriminatory actions. An employer must take steps to ensure that such actions are not the proximate cause of any adverse employment action against an employee.

Title VII of the Civil Rights Act of 1964 protects employees from retaliation by their employers after complaining about discrimination in the workplace. This case involves not the employee who complained, but her fiance, who was terminated from his job. He claimed the termination was in retaliation for his fiancee's complaint, while the company cites performance-related problems. The company also argued that the plain language of the statute provides claims only to those who make a charge or otherwise participate in an investigation, proceeding or hearing.

A 3-judge panel of the Sixth Circuit ruled that a fiance or other person that is closely related or associated with those who are directly involved in protected activity may sue if there is a "causal connection between the protected activity and adverse employment action." The trial judge had ruled that the plaintiff had presented no evidence that he had participated in any protected activity.

The NAM filed an amicus brief in the Sixth Circuit (see summary here) and in the Supreme Court. We argued that the statute is clear on its face and protects only those who personally “opposed” a discriminatory employment practice or personally “made a charge, testified, assisted, or participated” in a Title VII proceeding.

A rule that permits third-party retaliation claims would increase even more dramatically retaliation charges, which are the fastest-growing category of charges filed under Title VII, and would put employers in the untenable position of having to speculate about possible relationships an employee may have that could give rise to potential liability each time they contemplate disciplinary or other action against that employee.

On Jan. 24, 2011, the Supreme Court unanimously reversed the lower court (Justice Kagan did not participate), ruling that the antiretaliation provision in Title VII must be construed to cover a broad range of employer conduct. It prohibits an employer from action that might dissuade a reasonable worker from making or support a discrimination charge. The test must be applied in an objective fashion, and in this case, a reasonable worker might be dissuaded from engaging in a protected activity if she knew that her fiance would be fired. The Court refused to identify a fixed class of relationships that are protected against reprisals, instead ruling that the standard for judging harm must be "objective."

In addition, the Court slightly narrowed the universe of potential plaintiffs -- it is not enough that a plaintiff have some injury caused by the company and remediable by a court. Instead, a plaintiff must be within the "zone of interests" sought to be protected by the statutory provision. Thus, a statute protecting employees covers an employee who is the fiance of another employee intended to be harmed by the employer. The fiance was not an accidental victim of the retaliation, but rather a person with the zone of interests protected by the statute, and he therefore had standing to sue. This result will be difficult to apply in many situations, and more litigation over the breadth of third-party retaliation rights can be expected.

The NAM is a member of the Human Resource Initiative for a Legal Workforce, which filed an amicus brief on 8/27/2009 urging the Supreme Court to review an adverse decision from the Ninth Circuit in a case involving the Legal Arizona Workers Act. That state law requires businesses to use a particular employment verification program, E-Verify, that Congress decided should be voluntary, not mandatory. It also imposes penalties beyond those prescribed by federal law.

The problem is that Arizona is one of a large number of states and municipalities that have recently passed or are considering such laws, but their enforcement schemes are different, making it increasingly difficult for an employer doing business in multiple states to navigate the conflicting requirements. The laws impose a wide variety of inconsistent verification requirements, squarely conflicting with the intent of Congress to create a nationally uniform and comprehensive federal system that limits the imposition of undue burdens on businesses.

Our amicus brief enumerated the serious flaws that exist with the federal verification system. Studies have pointed out the errors in the system, including 17.8 million records that contain discrepancies related to name, date of birth or citizenship status. We also provided compelling evidence about the different penalties and enforcement schemes embodied in various laws around the country, and the burdensome and costly effect these will have on business.

On May 26, 2011, the Supreme Court, over dissents from Justices Breyer, Ginsburg & Sotomayor, affirmed the lower court's decision. It found that the Arizona law falls well within the confines of the authority Congress chose to leave to the states and is not expressly preempted. Federal law does not prohibit state licensing law restrictions, but it does prohibit civil or criminal sanctions.

A plurality of the Court found that the Arizona law is not impliedly preempted by federal law, because Congress expressly allowed the states to pursue sanctions through licensing laws, and because the state law uses federal definitions and verification information.

The Court also found that mandating the use of the federal E-Verify program is not preempted. Federal law limits what the federal government can do with E-Verify, but does not prevent states from participating in it. The Court found that the consequences to an employer that does not use the E-Verify system to verify the employment eligibility of an employee are simply that the employer forfeits an otherwise available rebuttable presumption of compliance with the state law.

Global-Tech developed a deep fryer after studying features of a competitor's product, then sold it through customers. It was not aware that the competitor's fryer was patented. The competitor sued the customers for infringement of its patent, and sued Global-Tech for actively inducing the infringement, as specified in 35 U.S.C. Sec. 271(b). The U.S. Court of Appeals for the Federal Circuit ruled that it is legally sufficient to prove active-inducement infringement if the company showed "deliberate indifference" about patent infringement.

The Supreme Court decided that a stricter test requiring actual knowledge of the patent being infringed is necessary to prove induced infringement. Thus, deliberate indifference to a known risk that a patent exists does not satisfy the knowledge requirement. However, in this case, the Court affirmed the lower court's conclusion that there was infringement of the patent, under the doctrine of willful blindness. To be liable, the infringer must subjectively believe that a fact exists (such as the existence of a patent), and he must take deliberate actions to avoid learning of that fact. The Court's decision requiring actual knowledge, or willful blindness, will make it harder for patent holders to prove infringement. However, it is helpful for the Court to clarify these kinds of state-of-mind issues (intent), which are regularly at issue in litigation affecting manufacturers.

Most civil cases require a plaintiff to prove a claim by a preponderance of the evidence, that is, where the evidence shows the claim is more likely than not to be valid. In patent cases, the Federal Circuit has adopted a "clear and convincing evidence" requirement, a higher standard of proof making challenges to the validity of a patent somewhat more difficult. The Supreme Court agreed, finding that Congress prescribed the governing standard of proof. A patent that is "presumed valid" under the statute requires clear and convincing evidence that it is not valid in an infringement action.

The case involved a challenge by Microsoft of a patent award for $290 million in a case involving its popular Word program.

The California Supreme Court ruled in July, 2010, that local governments may use contingency fee lawyers to bring product liability cases as long as the ultimate authority for the litigation remained with the governments. Using a balancing of interests test, it found that neither a liberty interest (such as in a criminal case) nor the right of an existing business to continued operation is threatened by the government's litigation, as long as the contingent-fee lawyers act under a "heightened standard of neutrality."

The NAM joined with the American Chemistry Council, American Coatings Ass'n, National Petrochemical and Refiners Ass'n, Property Casualty Insurers Ass'n of America, and Pubilc Nuisance Fairness Coalition in an amicus brief in support of the appeal. We argued that the neutrality requirement for government lawyers is of national importance, involving fundamental due process rights. Government attorneys must not have personal, financial or other extraneous influences that might bias their ability to be impartial or to elevate their own interest over a just outcome in any case. The public expects public officials not to tolerate the "appearance of impropriety," particularly in public nuisance cases, which are quasi-criminal proceedings that seek to vindicate rights owed to the population generally.

We argued that contingency fee agreements distort the decision-making of both private attorneys and the government attorneys who retain and oversee them. The agreements create improper financial incentives for both parties to the contract, fostering opportunistic attitudes that distort the government's duty to exercise independent and unbiased judgment. And as a practical matter, there is no way for the public to verify that a government supervisor is in fact neutral and controlling the acts of the contingent-fee lawyer. Government's use of contingency fee lawyers has provoked public outrage, and has so far affected many industries, including tobacco, firearms, lead paint, poultry and pharmaceuticals.

Unfortunately, the Court on Jan. 10, 2011, declined to hear this appeal.

The Supreme ruled 6 to 2 on Feb. 22, 2011, that language in the National Childhood Vaccine Injury Act of 1986 preempts all design-defect claims made under state product liability laws. The Court ruled that the statute immunizes manufacturers from liability as long as the vaccine was properly prepared and was accompanied by proper directions and warnings. It established a compensation program that allows those parties that are injured by unavoidable vaccine side effects to receive compensation from a no-fault compensation fund, or reject such compensation and sue for damages in court. The Court's ruling means that the suit in court cannot be for defective design of the vaccine, but rather must entail defective manufacture or warnings.

This case involved whether a foreign corporation is subject to general personal jurisdiction in a product liability case in North Carolina for an accident that occurred outside of Paris, France, merely because other entities distributed in North Carolina other products made by the defendant company. The tire that allegedly failed was manufactured by Goodyear Turkey and was never shipped into the United States.

The lower court arguably confused specific jurisdiction (where a state has jurisdiction over a company in a lawsuit involving a specific product that it distributed in the state) with general jurisdiction (where the state tries to exercise jurisdiction over a company for activities that do not arise out of that company’s activities in the state).

The Supreme Court ruled that the foreign company is not amenable to suit in North Carolina on claims unrelated to any of their activity in the state. This is an important decision for manufacturers that could be threatened by lawsuits in jurisdictions where other entities distribute their products. The Fourteenth Amendment's Due Process Clause requires that a company have minimal contacts with a state before that state can exercise personal jurisdiction over it. There must be continuous and systematic general business contacts for a company to be subject to general jurisdiction in a state. Merely putting a product into the stream of commerce could subject a company to "specific" jurisdiction in a case involving that product, but not to any case involving other activities of the company.

This is an important decision that reduces the chances of forum shopping by plaintiffs, and helps foster international trade in the United States and our international relations abroad.

This case was argued in tandem with J. McIntyre Machinery Ltd. V. Nicastro.

The Supreme Court decided that a state may not exercise personal (in personam) jurisdiction over a foreign manufacturer merely because it targeted the U.S. market for sale of its product and that product is bought by a consumer in the forum state. As a result, a state will not be able to exercise worldwide personal jurisdiction over any company that sells its products in the United States.

The decision was splintered, with 4 Justices deciding one way, two others agreeing with the result for different reasons, and the last three dissenting. Justice Kennedy and 3 others concluded that because the company never engaged in any activities that revealed an intent to invoke or benefit from the protection of New Jersey's laws, the state court is without power over the company. Critical is whether the company's activities manifest an intention to submit to the power of the sovereign.

Justices Breyer and Alito agreed that New Jersey does not have jurisdiction in this case because the company did not engage in a regular course of sales in the state, but they did not want to announce a broad rule about jurisdiction without more fully considering the consequences in light of modern changes in commerce and communication.

The dissenting Justices warned that foreign manufacturers can avoid American product liability laws simply by hiring independent distributors to market their products in the United States. They would find that the foreign company could be sued here for an injury involving its product.

The case involved a complaint against the manufacturer of a shear machine made in England, shipped to its unaffiliated distributor in Ohio, and delivered to the customer in New Jersey. The New Jersey Supreme Court ruled that the English company was subject to personal jurisdiction even though it did not have any of the traditional minimum contacts with New Jersey and was not involved in the sale of the product. Instead, jurisdiction was based on the company's distribution scheme targeting the entire U.S. economy.

The case revisited the Supreme Court's opinion in the 1987 Asahi case, in which a plurality of judges ruled that personal jurisdiction may be based on a test that has come to be known as "stream-of-commerce plus." Under that test, actions of the defendant must be purposefully directed toward the forum state.

Because there was no clear rule of law announced, this issue promises to be revisited by the Supreme Court in the years ahead.

In Wyeth v. Levine, the Supreme Court ruled that state-law failure-to-warn claims against name-brand drug manufacturers are not preempted by federal labeling requirements under the Food, Drug, and Cosmetic Act. This case involved whether similar claims are preempted when generic drug manufacturers are sued. These manufacturers must undergo an approval process that requires them to use labels that are identical to those used by the name-brand manufacturers.

Three cases were consolidated, involving rulings from different federal appeals courts. The Eighth Circuit held that a manufacturer should propose a labeling change to the FDA or propose that a warning letter be sent to doctors. The Fifth Circuit went one step further and held that a manufacturer may also unilaterally alter its labeling after receiving federal approval. Since either of these procedures are available, according to the courts, federal law does not preempt state claims that would have been satisfied if the manufacturer had taken action.

The Supreme Court reversed. The majority found that federal drug regulations applicable to generic drug manufacturers directly conflict with, and thus preempt, state tort claims. It is impossible for a manufacturer to comply with both the federal regulations and additional state labeling requirements, and the law does not require a manufacturer to try to obtain federal labeling changes to avoid potential liability under state law. It could not independently publish different labels without violating federal law.

State laws that conflict with federal law are usually preempted under the Constitution's Supremacy Clause. By the same token, litigation raising product liability claims under state law is preempted if the suits demand action that conflicts with federal regulation. This case involves whether an automobile manufacturer may be sued in state court for installing lap-only seatbelts in certain rear seating positions when the National Highway Traffic Safety Administration (NHTSA) specifically rejected such a requirement and gave manufacturers the freedom to choose either a lap-only or a lap/shoulder seatbelt configuration. The agency was delegated the authority to establish a coordinated national safety program, by issuing standards that take into account safety as well as the availability of technology and economic costs. It chose to offer manufacturers two design options, but this lawsuit was over whether a jury may re-examine the same safety, technological feasibility and cost-effectiveness issues that NHTSA balanced under its rulemaking authority.

The NAM and other groups filed an amicus brief on Sept. 28, 2010, arguing that traditional preemption analysis is a settled and vital component of our nationwide system of health, safety and economic regulation, rooted in the Constitution's structure and the understanding of the Founders. We noted that the 1824 case of Gibbons v. Ogden recognized the validity of preemption when state requirements conflict with federal, and "denounced in the strongest possible terms the essential argument that now recurs almost two centuries later -- the proposition that "the original powers of the States" should be retained "if any possible construction will retain them[.]" We predicted that Congress will never speak distinctly and in adequate detail as to when federal law should and should not displace state law, and it is therefore necessary for the courts to interpret conflict preemption expansively.

On Feb. 23, 2011, the Supreme Court ruled 8-0 that the law suit under state law was not preempted by the federal regulation. The decision was based on conflict preemption, that is, whether allowing a state law suit conflicts with and stands as an obstacle to the accomplishment of a federal law or regulatory decision. In the Geier case in 2000, the Department of Transportation wanted car companies to try different kinds of restraints, and suits that would have required airbags were preempted because they would have interfered with that objective. In this case, the manufacturer could use either lap belts or lap-and-shoulder belts, but, according to the Supreme Court, this choice is not a “significant objective of the federal regulation” that would be interfered with by a state lawsuit that would punish lapbelt-only configurations. The agency's decision not to require lap-and-shoulder belts was based on its thought that the requirement would not be cost effective, an insufficient justification to preempt state lawsuits.

Thus, the Court's opinion requires that certain preemption decisions be made by analyzing whether federal regulators felt strongly enough to foreclose lawsuits under state law that might force manufacturers to use only one of several options allowed by federal regulations. To establish a foundation for showing preemption in future regulations, it will be important for federal regulators to state on the record their "significant objective" to preempt more restrictive requirements that might arise from state law or litigation.

The Ninth Circuit ruled that a company can be held liable to its shareholders for a drop in the company's stock price after two analyst reports downgraded the stock. The reports included an evaluation of various factors, including recent corrective disclosures from the company published in the Wall Street Journal, the Arizona Republic and the Chicago Tribune. The court found that the jury could have found that the reports were "corrective disclosures" under the law.

The Supreme Court is being asked to review the case, and the company argues that analyst reports several days after a company makes corrective disclosures should not subject the company to additional liability when they affect the stock price. The efficient market theory in securities litigation allows plaintiffs to sue without having to prove that they relied on false or deceptive actions by the company, since courts assume that the securities markets are efficient and assimilate company statements rapidly into the price of the stock. The company argues that the same efficient market principle should prevent a plaintiff from benefiting from third-party analyst reports published well after corrective disclosures about previous false or deceptive actions have been made.

The NAM filed an amicus brief 12/17 supporting Supreme Court review. We argued that defendants should get the benefit of the efficient market theory after corrective disclosures occur. Plaintiffs get the benefit of the theory by not having to prove reliance, and there is no rational basis for applying different standards of market efficiency for false statements and true statements. According to one appeals court, "An efficient market for good news is an efficient market for bad news."

We supported Supreme Court review of this case to help eliminate the uncertainty and unpredictability of securities litigation, and the resulting heavy costs of defending fraud claims. On March 7, 2011, the Court declined to review this appeal.

This suit by investors in Matrixx sued the company for failing to disclose that Zicam Cold Remedy might cause "anosmia," or loss of the sense of smell. Their suit was based on a small number of adverse event reports during the period between 1999 and 2004, and the trial court dismissed the case because the reports did not provide "reliable statistically significant information that a drug is unsafe," and that therefore the nondisclosure was not a material omission.

This ruling was reversed on appeal, and the Supreme Court agreed. It unanimously decided on March 22, 2011, that this case could go to trial. It found that the failure to disclose a few adverse events does involve "material" information, i.e., information that would be viewed by a reasonable investor as having significantly altered the total mix of information made available. The Court found that experts and the FDA rely on evidence that is not statistically significant to establish an inference of causation, and investors can also be expected to find such evidence significant. Evidence introduced at trial will be considered to determine whether it actually rises to the level of materiality required, but the allegations in the complaint are adequate to survive a motion to dismiss.

The Court also agreed that the plaintiffs' had pled sufficient evidence of "deliberate recklessness" to constitute "scienter," or a mental state embracing intent to deceive, manipulate, or defraud." It found that a statistically significant number of complaints about a product are not necessary, as long as some of the complaints "taken collectively," give rise to a "cogent and compelling" inference that the company intended to prevent significant information from affecting the stock's price.

This is an important case that will make it harder for manufacturers to defend themselves in securities litigation if they consider a statistically insignificant number of complaints not to be material information. Consequently, manufacturers will have to disclose adverse effects based on statistically insignficant information, confusing investors and consumers alike.

The Government imposes a tax on the sale of exported coal, determined by the weight and value of the coal at sale, rather than at the time of its extraction. A coal company challenged the tax because the Export Clause of the Constitution prohibits federal taxation of goods in export transit. The Federal Circuit, however, ruled that the tax was imposed on extraction, not sale, because it was based on weight rather than sales price.

The NAM filed an amicus brief on March 16, 2011, supporting the company’s bid for Supreme Court review. We argued that the Federal Circuit’s decision undermines the protections of the Export Clause by adopting a more lenient policy that allows some taxation of exports. If not reviewed and reversed, the decision will encourage administrative agencies and Congress to impose excise taxes on currently exempt articles for export. Such a result threatens the national economic recovery plan and the survival of thousands of small and medium-sized businesses that together comprise 97% of all exporters and account for 31% of total export value.

Our brief warned that a tax’s label, rather than its substance, will dictate whether it is an impermissible tax on exports. Congress has whittled away at export tax exemptions in a variety of ways, and IRS regulations have narrowed them further. These actions have affected not only coal and crude oil, but also automobiles, trucks and trailers, tires, vaccines, sporting goods, and motor and aviation fuels.

The petition was denied on June 13, 2011.

States are increasingly passing tax legislation with retroactive periods that are longer than those periods that have been allowed by prior court rulings. This case is about such a tax in Michigan.

When DaimlerChrysler won a refund in state court for an unlawful state sales tax, the legislature changed the law for all other taxpayers. When Ford tried to get a similar refund, the court refused, citing the new law.

The NAM and the Council on State Taxation filed an amicus brief on 11/12/2010 urging the U.S. Supreme Court to review that ruling. First, the new law has a retroactive period of 6 to 10 years, which is significantly longer than the 1- to 2-year periods permitted in prior cases. Second, Michigan essentially induced taxpayers to wait in line and rely on remedies to be determined in the first litigation for a tax refund, then changed the rules for all other taxpayers after that case’s resolution. This bait-and-switch tactic encourages races to the courthouse, fosters clogging of the court system, discourages tax compliance, and treats similar taxpayers differently.

We argued that retroactive legislation must have a rational legislative purpose that does not deprive taxpayers of their Due Process rights to challenge illegal taxes already imposed. In addition, the period of retroactivity must be “modest” in length, and the Supreme Court should review the case to set some constitutional limits on aggressive state court rulings that allow retroactive periods as long as 9 years.

The petition was denied on January 18, 2011.

The NAM and the Council on State Taxation urged the Supreme Court to review a Washington Supreme Court ruling that is the latest in a long string of cases upholding the ability of a state to impose taxes based on the “economic presence” of a company. Typically, the law has required that a company must have some physical presence in the state before that state has tax jurisdiction, but this case involves an attempt to impose a business and occupation tax using an expanded standard of jurisdiction. We urged the Court to review the case because laws like these are often ambiguous, vary widely from state to state, and are highly burdensome for taxpayers doing business in multiple jurisdictions. Businesses that cannot predict their tax liabilities cannot make meaningful disclosures in required financial statements for investors.

On October 3, 2011, the Court declined to review this appeal.

Merchants participating in American Express’s credit card network agree to an arbitration provision that precludes class action arbitration; each dispute must be resolved individually. The Second Circuit ruled that such waivers are invalid because they keep disputes small and less likely to be litigated, thus conferring “de facto immunity from antitrust liability” on American Express. This ruling was appealed to the Supreme Court.

The NAM joined Verizon Communications Inc. in an amicus brief urging the Supreme Court to hear this appeal. We argued that it is a well-established rule that parties are free to waive their constitutional and statutory rights – indeed, arbitration agreements waive the right to proceed in a judicial forum. In limited circumstances waivers are inappropriate, and the lower court considered the effects of class action waivers on antitrust remedies. However, it critically omitted consideration of the negative effects that class actions have on antitrust objectives, including extorted settlements in cases where the legal standards of liability (tying arrangements) are so uncertain.

In addition, we support the important role that class action waivers play in assuring the viability of arbitration as an alternative forum for the resolution of small disputes. Allowing class action arbitration raises costs and diminishes the value of arbitration.

In May, the Supreme Court granted the petition, vacated the ruling, and sent the case back to the Second Circuit to reconsider its decision in light of a recent decision in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.

An employment contract provided for arbitration of disputes, including any questions involving the "interpretation, applicability, enforceability or formation" of the agreement. The Ninth Circuit ruled that unconscionability of a contract provision relating to arbitrability is for a court to decide, not an arbitrator.

The Supreme Court 6/21/10 further clarified its general policy upholding the Federal Arbitration Act and enforcing agreements to arbitrate. It found that there are two types of challenges to the validity of an agreement to arbitrate: (1) a challenge to the arbitration clause itself and (2) a challenge to the contract as a whole. Challenges to the arbitration clause are resolved in court; challenges to the entire contract are resolved by an arbitrator, where the contract so provides.

In an antitrust dispute, the parties agreed to arbitration, but did not specify whether the arbitration could include class arbitration. When arbitration is conducted on behalf of a class, the value of the claims is affected by the size of the class, and as a practical matter, the pressure on the defendant to settle is enormous. In this case, the Supreme Court decided that an arbitrator may not impose class arbitration when the parties did not expressly allow it under their agreement. A federal court had rejected class arbitration because it is not customary in the maritime industry, but an appeals court reversed, saying the law in this area is not so clear.

In its decision on April 27, 2010, the Court ruled 5-3 that imposing class arbitration on parties that have not agreed to it is inconsistent with the Federal Arbitration Act. The central purpose of that Act is to ensure that private agreements to arbitrate are enforced according to their terms. If the parties did not agree to arbitrate class action claims, arbitrators may not infer such an agreement solely from the fact that the parties agreed to arbitrate. According to the Court, "The differences between simple bilateral and complex class action arbitration are too great for such a presumption."

New York state law imposes a 2% monthly interest penalty on overdue payments of insurance benefits. In this case, plaintiffs filed a class action lawsuit in federal court based on diversity of citizenship claiming that Allstate failed to pay this penalty on overdue payments. Under the well-known Erie Doctrine, federal courts exercising diversity jurisdiction (as in this case) apply state substantive law and federal procedural law. If the source of the federal procedure is the Federal Rules of Civil Procedure (FRCP), federal rules trump state law if they conflict with one another.

Allstate moved to dismiss, arguing that the federal class action was barred by Section 901(b) of the New York Civil Practice Law and Rules (CPLR), which prohibits a class action for recovery of a New York statutory penalty. The trial court granted Allstate’s motion.

The Second Circuit affirmed after applying the Erie Doctrine. It held that the New York rule is substantive and does not conflict with the federal rule governing class actions. Additionally, allowing this case to proceed as a class action in federal court would circumvent state policy and lead to forum shopping, both of which go against the aims of the Erie Doctrine.

On 3/31/10, the Supreme Court reversed, holding that Federal Rule 23 allows class actions like this. The splintered decision can be expected to generate additional litigation. The ruling provides an incentive to plaintiffs to bring class actions in federal court where state procedures limit such suits.

Jeffrey Skilling, former CEO of Enron Corporation, was prosecuted for, among other things, engaging in a scheme to deceive investors about Enron's true financial performance by manipulating its publicly reported financial results and making false and misleading statements. He was prosecuted for committing "honest services" wire fraud, by depriving Enron and its shareholders of the intangible right of his honest services.

The Supreme Court decided, in order to avoid declaring the statute unconstitutionally vague, to construe the honest services provision to apply only to bribes and kickbacks, which Skilling did not take. It reversed his conviction on that count and sent the case back to the lower court to determine if any of the other convictions for money or property wire fraud or securities fraud would be affected by this narrow interpretation of the statute.

Genetically engineered crops are subject to approval by the Animal and Plant Inspection Service of the U.S. Department of Agriculture, which must prepare an Environmental Assessment to be approved for commercial use. Environmental groups brought suit under the National Environmental Policy Act (NEPA) arguing that the assessment was inadequate, and the trial court issued a permanent injunction against the use of the genetically engineered product (alfalfa) until a more extensive environmental impact statement could be prepared.

The Supreme Court decided that environmental plaintiffs are required to show irreparable harm to obtain the injunction. A permissive ruling would have made it much easier for environmental plaintiffs to stop the sale of certain products that are subject to government approval.

In 2009, the NAM, the Chamber of Commerce and the Business Roundtable asked the Supreme Court to overturn a Second Circuit decision that interfered with administrative decisions by those who run company pension plans. The case on appeal involved how a Xerox Corp. administrator should account for lump-sum retirement payments made to employees who retired, but who later returned to work for the company. The trial court refused to allow the administrator to take into account the time value of the previous distribution.

We argued, and on 4/21/2010 the Supreme Court agreed, that this kind of decision, which involves an interpretation of benefit plan language, should be made the way courts normally make benefit decisions -- by deferring to the judgment of the plan administrator. The Second Circuit’s ruling drew an improper distinction between a formal benefits determination and decisions that relate to the plan but that are not actual claims. The Supreme Court held that courts should normally not interfere with reasonable interpretations by plan administrators, even if those administrators have made occasional mistakes in the past.

The Court's ruling is an important principle that will help manufacturers that want to offer retirement and other benefits to employees. Our brief argued that acceptance of the lower court's unorthodox test would call into question a variety of decisions routinely made by benefit plan administrators, such as (1) how to invest plan assets, (2) setting minimum annual funding levels, (3) deciding whether to seek subrogation and reimbursement from plan participants, (4) selecting an insurance underwriter for the plan and (5) determining when valuations and contributions of employer stock must be made.

ERISA class actions lead all other forms of workplace litigation, yet one of the primary objectives of enactment of the law was to encourage employee-benefits plans. The Supreme Court's 5-3 decision in this case returns certainty and predictability, and helps to minimize litigation expenses, administrative costs, and exposure to unanticipated benefits obligations.

Effective January 1, 2008, San Francisco enacted an ordinance that requires private employers with twenty or more employees to make minimum health-care expenditures on behalf of their employees, such as paying employees’ health insurance premiums and contributing to their health savings accounts. The Golden Gate Restaurant Association challenged the ordinance in federal court on the basis that the employer mandates are preempted by the Employee Retirement Income Security Act (ERISA). The federal district court granted an injunction, holding that San Francisco’s ordinance is preempted because it has an impermissible connection with employee benefit plans and its expenditure requirements make unlawful reference to employee benefit plans.

The Ninth Circuit granted a stay, allowing the city to enforce its ordinance while the issue was on appeal. The NAM filed an amicus brief arguing that the minimum health-care spending requirement conflicts with long-settled federal law that governs employee benefits, but the Ninth Circuit reversed. See our summary here.

The case was appealed to the Supreme Court, and the NAM supported the appeal on 7/7/09 with an amicus brief. We argued that (1) the ordinance required an employer to establish or maintain an employee welfare benefit plan within the meaning of ERISA and is therefore preempted, (2) the Ninth Circuit's decision directly conflicted with the Fourth Circuit's ruling in a similar Maryland health payments case and the conflict should be resolved, and (3) resolving this issue was particularly urgent in light of the impending comprehensive health care reform that was being debated in Congress.

The Court declined to hear this appeal on June 28, 2010. It is expected that there will be additional litigation over similar state and local health care mandates in the future, and that the Supreme Court will address the conflict in the circuits sooner or later.

In a suit against an employer under ERISA, a plaintiff may seek an award of attorneys' fees if she is a prevailing party, and the Fourth Circuit ruled that a plaintiff must receive "at least some relief on the merits" of a claim to be a prevailing party. In this case, a woman claimed disability benefits for carpal-tunnel syndrome, but was denied. She filed a complaint, and the court, while not providing a benefits award or an enforceable judgment, found that the denial was not based on substantial evidence, and ordered the insurance company to reconsider the claim. It did, and eventually paid the benefits.

The Supreme Court decided 5/24/10 that the statute does not require a party to be a prevailing party to be entitled to attorneys' fees. This statute is different from others in that it allows a court to award fees to either party in its discretion. This discretion is guided by the Court's ruling that the party must have obtained "some degree of success on the merits." The plaintiff did so in this case and was awarded attorneys' fees. The case is significant for manufacturers, who pay for ERISA benefits, because awards of attorneys' fees increase the cost of providing benefits.

The NAM and the Washington Legal Foundation filed an amicus brief on 3/22/10 urging the Supreme Court to hear an appeal of an adverse ruling against Philip Morris under the Racketeer Influenced and Corrupt Organizations Act (RICO) for speech relating to the sale of "light" cigarettes. The Government used federal fraud statutes to target the speech of industry members made during decades-long public debates over the health and safety of smoking. It did so without any showing that the speaker had fraudulent intent or that the speech was material to consumers, and the appeals court failed to independently review the trial court's finding, eliminating a key safeguard for First Amendment protections.

The NAM and WLF brief highlighted the importance of First Amendment speech protections for the particular modes of speech principally at issue in this case -- newspaper articles, op-eds, congressional testimony, press releases, and television appearances. Speech in these forums about the health and safety effects of cigarettes are matters of public concern, and all parties with a viewpoint should be equally protected by the First Amendment, even if those parties have an economic motive.

Appellate court review is an important safeguard against an unwarranted holding that the challenged speech merits no constitutional protection. The Supreme Court agreed to review this issue in 2003 in the Nike case, but never did. Unfortunately, on 6/28/10, it declined to hear this appeal as well.

On January 21, 2010, the Supreme Court overturned part of the Bipartisan Campaign Reform Act of 2002 (BCRA), better known as “McCain-Feingold.” The provision in question prohibits the use of general corporate funds, including those of nonprofit issue advocacy groups, to pay for an “electioneering communication” within 60 days before a general election or 30 days before a primary election. The case arose when a conservative advocacy group wanted to distribute “Hillary: The Movie,” a film critical of Senator Hillary Clinton, and run ads for it, within the restricted time periods in 2008.

A lower court had said that the movie was an “electioneering communication” with the aim of urging viewers to vote against Senator Clinton. The panel also required that ads for the film include disclosures, such as the following: “Citizens United is responsible for the content of this advertising.”

The Supreme Court ruled 5 to 4 that the law improperly prohibits the use of corporate funds for independent expenditures in political campaigns. The Supreme Court made clear that corporations may advocate the election or defeat of political candidates, overruling prior case law and portions of BCRA. Four Justices dissented. The ruling allows companies and labor unions to make independent expenditures freely in support of or in opposition to candidates, and is not limited to federal elections.

The majority rejected various arguments trying to distinguish this communication from the prohibitions of BCRA. Instead, it considered the validity of the statute on its face under the First Amendment. The law acts as the functional equivalent of a prior restraint on speech, since those who want to avoid criminal liability and defense costs must ask a government agency for permission to speak about candidates.

The Court overruled Austin, which had limited corporate independent expenditures for campaigns. The Act imposes an outright ban on speech, backed by criminal sanctions, and the government may not impose restrictions on certain disfavored speakers like corporations, which are protected by the First Amendment. First Amendment protections do not depend on the speaker’s financial ability to engage in public discussion. All speakers use money amassed from the economic marketplace to fund their speech. In addition, independent expenditures by corporations do not give rise to corruption or the appearance of corruption, and increased influence over or access to politicians does not mean those politicians are corrupt. “No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.”

Eight Justices upheld Sections 201 and 311, which impose disclaimer and disclosure requirements. Citizens United offered no evidence that its members face the type of threats, harassment or reprisals that might make the disclosure provision unconstitutional.

Justice Stevens’ dissent, joined by three others, warned that this decision would do damage to the Court and threatens to undermine the integrity of elected institutions across the Nation. He argued that there are other avenues left open for corporations to be involved in elections, such as through PACs, and that this law is just a source restriction or a time, place, and manner restriction.

Goods shipped from China are regulated by the Carriage of Goods by Sea Act (COGSA) for the ocean leg of the shipment, and by the Carmack Amendment to the Interstate Commerce Act for the inland leg. In this case, one bill of lading was used for both legs, and an accident occurred on the inland leg, damaging the cargo.

The Supreme Court ruled 6/21/10 that the stricter requirements of the Carmack Amendment do not apply to the inland portion of a shipment originating overseas under a single through bill of lading. The Carmack Amendment imposes stricter venue requirements (where suit may be brought) and a more burdensome standard of liability (strict liability as opposed to negligence). In this case, the parties agreed that the entire shipment from China to its ultimate inland destination here would be governed by Japanese law and must be brought in Tokyo District Court. The Supreme Court upheld that contractual arrangement.

Federal law allows certain claims under state law to be heard in federal court if the claims involve plaintiffs and defendants that are citizens of different states. Having a case heard in federal court is often beneficial to out-of-state corporations who may not enjoy a fair hearing in certain state courts. This case involves how to define the state of citizenship of a corporation.

On February 23, 2010, the Supreme Court ruled that a corporation's principal place of business means the place where the corporation's high level officers direct, control, and coordinate the corporation's activities, i.e., its "nerve center," which will typically be found at its corporate headquarters. This conclusion may be difficult to apply in a few cases, but it will avoid overly complicated jurisdictional questions in most cases and will make for a more uniform legal system.

After Granite Rock reached an agreement with the union representing one of its facilities, and the workers ratified the agreement, the union sought an additional contract provision that would absolve the international union of any liability for damages arising from its activities at other Granite Rock facilities. The company refused to make the additional concession, and the union went on strike. When Granite Rock sued for breach of the no-strike clause, two issues wound up on appeal to the Supreme Court.

The first involved whether a court or an arbitrator should decide whether there was in fact a valid contract. The NAM filed an amicus brief May 1, 2009, urging the Supreme Court to hear the appeal and apply existing law that federal courts have the authority to determine the existence of a collective bargaining agreement. In its ruling on June 24, 2010, the Court agreed. Whether a collective barganing agreement has been created is an issue to be decided by a court, not an arbitrator, according to the 7-2 majority.

Also at issue in the case was whether there is any remedy under Section 301 of the Labor Management Relations Act against the international union for allegedly interfering in the contractual obligations of the local. The NAM supported review of the Ninth Circuit decision, which said the international union was immune from suit even if it compelled its affiliated union to refuse to honor its previous commitment to Granite Rock. We argued that many unionized employers will face the prospect of internationally sanctioned strikes that violate local bargaining agreements but that cannot be remedied. It is very common for international unions to retain control over the bargaining process even though they do not sign the final agreement, and the Ninth Circuit's narrow interpretation conflicted with other federal court rulings and ignored the realities of the relationship between local unions and their international controllers. On this issue, the Supreme Court ruled unanimously that the Ninth Circuit did not err in rejecting Granite Rocks' request for a remedy under Section 301, but 7 Justices left the door open to such a claim if further proceedings in this case fail to provide relief under a different statute. It is possible that the Court could recognize a claim under Section 301 if no other remedies are available.

Before an employee may file a suit against an employer for discrimination, the employee must file a charge with the EEOC "within 300 days after the unlawful employment practice occurred." This case, brought under Title VII of the Civil Rights Act, involved whether the 300-day period begins when the employer announced the results of a discriminatory hiring test, or whether it begins again each time the employer makes a hiring decision based on the results of the test. On 5/24/10, the Court ruled unanimously that the employment practice that allegedly was discriminatory was the selection of firefighter hires on the basis of an old test. Thus, each new decision based on old test results constitutes a new employment practice that starts the 300-day time limit for filing suit.

This outcome could substantially lengthen the time during which employers are exposed to liability from tests or other employment practices that are nondiscriminatory of their face but that may have a discriminatory impact.

The National Labor Relations Board had only 2 members beginning on December 31, 2007, even though 5 were authorized and the Board allows 2 members to decide cases when a quorum of 3 exists. The Seventh Circuit upheld a decision by the 2-member board, but the D.C. Circuit, on the same day, ruled that the Board must have at least 3 sitting members. Several hundred decisions by the 2-member Board were affected. This dilemma was caused when President Bush's recess appointments were blocked by Senate Democrats.

On 5/24/10, the Supreme Court ruled 5 to 4 that the National Labor Relations Act requires that there be at least 3 members on the Board in order to exercise the delegated authority of the Board. Section 3(b) requires delegation to at least 3 members. Their membership must be maintained for this delegation to continue to be valid. Since the decision, the NLRB has been revisiting many of the decisions that were thrown into doubt.

This case involves the patentability of business processes. The U.S. Court of Appeals for the Federal Circuit adopted a standard that makes it harder for business processes to be patented. It decided that only methods that are "tied to a specific machine or apparatus" or transform "a particular article into a different state or thing" qualify for a patent. Previously, the standard did not require the use of a particular machine as one alternative, and the U.S. Patent and Trademark Office has been much more restrictive in approving patents. The case attracted nearly 40 amicus briefs in the Federal Circuit, and the Supreme Court's decision will have an important effect not only on business process patents, but potentially on computer software and financial instruments as well.

On 6/28/10, the Court affirmed the Federal Circuit Court. It did not, however, agree that a patent-eligible process must be tied to a machine or the transformation of an article. It found that the machine-or-transformation test is not the sole test for patent eligibility, and business methods might be used to secure a "process" patent. Nevertheless, it rejected the attempt to patent both the concept of hedging risk and the application of that concept to energy markets, since they are nonpatentable abstract ideas.

The NAM and the International Association of Defense Counsel filed an amicus brief 9/28/10 urging the Supreme Court to review an Oklahoma state court decision that imposed a $53 million punitive damage award on top of an award of $750,000 in a breach of contract dispute. The punitive damages portion is far greater than the Court has found acceptable in other rulings that compare the ratio of the punitive damages to the actual damages in the case, along with other factors, such as the reprehensibility of the conduct at issue. The lower court added pre-judgment interest (at a special 12% compounded rate over a period from 1973 through 1985) to the actual contract damages, thus making the final punitive damages ratio (4 to 1) smaller and easier to affirm on appeal than a ratio based on the actual contract damages award (70 to 1).

Our brief urged the Supreme Court to review how courts are adding extra amounts to actual damages to inflate compensatory damages, and consequently punitive damages derived from them. Different state courts categorize different types of damages as “compensatory,” leading to wide variations and unpredictability. This unconstitutionally skews the punitive damages ratio, depending on the state rather than the extent of the injury to the plaintiff. We urged the Court to adopt a rule that encourages settlements by giving all sides consistent case valuation parameters, thus conserving judicial resources while preserving legislative flexibility. Examples of controversial claims that are sometimes counted as compensatory damages include emotional distress with a partially punitive aspect, lost profits and attorneys’ fees. State legislatures can cause further mischief by enacting language changes, such as removing the word “penalty” from an interest statute, that lead to excessive punitive damage awards. Uncertainty in this area leads to substantial problems when manufactures and their insurers cannot reasonably estimate exposure limits. We urged the Court to provide guidance that focuses on the actual harm inflicted on a plaintiff when calculating any punitive damages that might also be awarded.

Unfortunately, the Court declined to hear the appeal on 12/13/2010.

In order to claim "fraud, deceipt, manipulation or contrivance" under federal securities law, a plaintiff must bring the suit "not later than the earlier of . . . 2 years after the discovery of the facts constituting the violation[] or . . . 5 years after such violation." Some courts start the 2-year statute-of-limitations clock when the plaintiff receives sufficient notice of those facts, some require that the facts show the defendant acted with sufficient intent, and others allow additional time for a plaintiff to conduct an investigation. The Third Circuit ruled in this case that Merck shareholders alleging misrepresentations could sue the company more than 2 years after FDA issued a warning letter on one of the company's drugs.

On April 27, 2010, the Supreme Court clarified how much evidence of misrepresentation is enough to start the clock on the statute of limitations. It ruled unanimously that the statute of limitations period begins to run once the plaintiff "actually discovered or a reasonably diligent plaintiff would have 'discover[ed] the facts constituting the violation' -- whichever comes first." The results of a study about Vioxx, an FDA warning letter, and various lawsuits being filed may be useful in identifying a time when a reasonably diligent plaintiff might begin investigation, but the plaintiff would still need to discover the fact that the defendant had the requisite "scienter," or "mental state embracing intent to deceive, manipulate, or defraud." Because neither the FDA warning nor subsequent litigation revealed facts indicating that the defendant acted with scienter concerning Vioxx, the statute of limitations did not begin to run, and the plaintiff's law suit was filed in a timely manner.

As a result, it will be more difficult for companies to have securities fraud cases under Section 10(b) of the Securities Exchange Act of 1934 dismissed on statute-of-limitations grounds.

In 2003 and 2004, New York City sued several online cigarette retailers for failing to pay city taxes on cigarettes that were shipped to city residents. The city had been unsuccessful in getting the online cigarette retailers to turn over information about their customers to state officials for tax-collection purposes, and thus based its claim on an alleged violation of federal racketeering law, better known as RICO.

Defendants asserted that the city did not have standing to invoke RICO, arguing that New York City’s loss of tax revenue was not an injury that was incurred as a party to a commercial transaction.

After a district judge dismissed the city’s RICO complaint, the Second Circuit reversed, holding that lost taxes are property under the mail and wire fraud statutes and therefore meet the RICO standing requirement.

On January 25, 2010, the Supreme Court reversed, with 4 Justices holding that the connection between the alleged fraud by the defendant and the injury to the city was too remote. There must be a proximate cause between fraud and injury. Justice Ginsburg supplied the fifth vote to reverse the lower court, but found that the city could not compel the defendant, a New Mexico corporation, to collect city taxes, and could not broaden the remedies available to it under the relevant statute.

Manufacturers are very concerned about this effort by state and local jurisdictions to skirt constitutional limits on the extraterritorial reach of their laws. If New York can have asserted jurisdiction over a company that has no physical presence in the city, and then claim a RICO violation for failure to collect sales taxes, along with treble damages, this case could have revolutionized tax enforcement around the country. It is another example of efforts by states to greatly expand the traditional requirement that it may only exercise jurisdiction over persons or companies with a physical presence, or nexus, in the state.

Natural gas suppliers sued Ohio, claiming its tax system benefits local gas distributors unfairly, interfering with interstate commerce and violating the Equal Protection Clause of the Constitution. The Sixth Circuit ruled that the Tax Injunction Act (TIA), a federal law designed to keep federal courts out of many of these kinds of cases, does not prevent a federal court from deciding this one, nor does the principle of "comity," which encourages federal courts to defer to state courts. Several other federal appeals court agreed with this interpretation of the TIA, but one did not.

On June 1, 2010, the Supreme Court ruled that the comity doctrine applies and this case must proceed in state court. The Court ruled that both the comity doctrine and the Tax Injunction Act operate to constrain federal courts from interfering in the states' ability to impose taxes to fund their governments' operations. Even where a state tax law discriminates, the Court said that it generally defers to state courts to fashion a remedy that provides for equal treatment. State courts are in a better position to know what their state legislative preferences are, and the state enjoys wide regulatory latitude when it comes to commercial matters. Manufacturers prefer to go to federal court when challenging a state's laws, but discriminatory tax laws will be particularly difficult to challenge in federal court after this ruling.

In a lawsuit filed by an Iowa executive who alleged that his employer violated the Age Discrimination in Employment Act (ADEA) by demoting him because of his age, a jury returned a verdict in his favor. His employer appealed, claiming that the jury instructions were improper. The Eight Circuit reversed, finding error in giving a mixed-motive jury instruction.

Employment discrimination lawsuits typically involve “mixed motives,” in which evidence shows that a combination of lawful and unlawful motives led to the employment decision giving rise to the lawsuit. Who prevails in these cases often depends on whether the plaintiff or the defendant bears the burden of persuasion.

In Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003), the Supreme Court held that a plaintiff in a Title VII employment discrimination case does not have to present direct evidence of discrimination to obtain a mixed-motive jury instruction that, helpfully to the plaintiff, shifts the burden of persuasion to the defendant.

The Supreme Court decided 6/18/09 that this burden-shifting principle under Title VII does not apply to disparate-treatment cases brought under the ADEA. Employers need not bear the burden of proving that the would have taken the adverse employment action even if age were not a factor in their decision. Instead, the employee bears the burden of proving not just that age discrimination was a motivating factor, but that the adverse employment action would not have occurred but for the employer discriminating on the basis of age.

The 5-4 decision was based on the majority's reading of the specific words of the statute, which prohibits age discrimination "because of" the employee's age. By comparison, Title VII includes language that makes an employment action unlawful if race, color, religion, sex, or national origin was "a motivating factor" for the action.

On Nov. 15, the NAM and Verizon Communications Inc. filed an amicus brief urging the Supreme Court to review a Ninth Circuit decision that affirms the “price squeeze doctrine” of antitrust law. This doctrine is recognized when companies that sell at both wholesale and retail levels, and have large wholesale market shares, set their retail prices too low for their wholesale customers to stay in business. However, this doctrine is an exception to consumers-first antitrust law, which has generally held that low prices anywhere are good for consumers and that if a less efficient competitor cannot keep up, courts need not intervene to fix the problem.

In this case, linkLine Communications, an internet service provider (ISP), bought DSL transport services from SBC, combined them with ISP services and sold the package to subscribers. SBC (Pacific Bell) does the same thing for its internet access customers, but for a price with which linkLine had an increasingly difficult time competing. Thus, because it could not compete, linkLine sought a remedy in antitrust litigation.

Our brief argued that the allegation that a vertically-integrated monopolist’s wholesale and retail prices create a “price squeeze,” at least where the monopolist has no antitrust duty to deal, fails to state a claim under Section 2 of the Sherman Act.

First, we argued that the Ninth Circuit’s ruling conflicts with four other Circuit Court decisions, which expressly held that a dominant firm does not violate Section 2 by failing to sell goods to a competitor at a wholesale price that ensures that competitor makes a profit at the retail level.

Next, we asserted that the Ninth Circuit’s ruling conflicts with the Supreme Court’s precedents and is inconsistent with settled antitrust principles. For example, in Brooke Group, the Supreme Court ruled that a price discount is not predatory unless it is below cost and poses a dangerous risk of subsequent monopoly pricing. The same rule should be applied here, since a “price squeeze” typically reflects the decision of a vertically-integrated firm to voluntarily offer a good to a competitor at wholesale and to compete vigorously over price at retail, both of which are beneficial practices that should be encouraged.

Finally, we argued that the Ninth Circuit’s rule creates uncertainty where clarity is needed. Unlike the objective test adopted in Brooke Group to determine when price is used as a predatory weapon to ensure the application of the law in a predictable manner, the Ninth Circuit’s decision forces juries, antitrust counselors, and managers to decide what wholesale and retail prices leave a rival with the opportunity to secure a “reasonable” profit.

On Sept. 4, the NAM and Verizon filed another amicus brief on the merits in this case. Our brief argued that a price-squeeze theory of antitrust liability should be rejected categorically because the potential competitive gain from recognizing a price-squeeze inquiry is hard and costly to identify, particularly for courts, and worse, any price-squeeze duty would present grave risks of deterring conduct encouraged by the antitrust laws. In addition, from a policy perspective, expanding Section 2 to recognize price-squeeze claims is particularly inadvisable when a regulatory authority like the FCC already oversees the conduct. Even without regulation at the retail level, regulatory authority at the upstream-input level can readily address any true competition issues.

Additionally, we argued that regulators are better positioned than judges or juries in antitrust cases to make the inherently uncertain determinations about pricing and the effects on investment and innovation that are necessary in a price-squeeze analysis.

On February 25, 2009, the Court rejected the price-squeeze theory of antitrust liability. As a result, a company operating at both the wholesale and retail levels need not price its products or services in a way that preserves the profit margins of companies that buy from it and sell at retail in competition with it. This is true as long as the seller has no duty to sell to competitors at the wholesale level and is not engaging in predatory pricing at the retail level. Indeed, selling at a lower retail price is the essence of competition, according to Chief Justice Roberts, author of the opinion. The case was sent back to determine whether there might be a predatory pricing claim that satisfies the specific pleading requirements of the 2007 Twombly decision.

This case involves whether federal courts have jurisdiction in a lawsuit seeking to enforce an arbitration agreement under state law.

Discover Bank sued a customer in Maryland state court when she failed to make payments on her credit card balance. She filed a counterclaim for herself and on behalf of a class, alleging that the bank had imposed unlawful fees, finance charges, and interest and had breached its contract under state law. In response, the bank filed a motion to compel arbitration of the cardholder’s counterclaims under the Federal Arbitration Act (FAA) in federal court in Maryland.

Although the court granted the motion, it did not address whether it had jurisdiction to hear the case. In June 2007, the Fourth Circuit held that the district court had the requisite jurisdiction, since the underlying dispute involved the Federal Deposit Insurance Act and thus presented a federal question.

On March 9, the Supreme Court ruled that a federal court may not exercise jurisdiction to mandate arbitration under the FAA where the actual controversy between the parties is based on state law. A company seeking to compel arbitration may not recharacterize a state-law controversy to try to find some federal law aspect to the case, including an argument that the claims are preempted by federal law. In this case, even though federal courts may not compel arbitration, the company may still be able to get the state court to do so under the contract.

When the Pregnancy Discrimination Act of 1978 became effective, companies began to count pregnancy time off when calculating the length of service of an employee for purposes of pension and other benefits. But some companies do not count time off that was taken prior to the enactment of the PDA. On 5/18/2009, the Supreme Court decided that such time off need not be counted when companies are now calculating retiree benefits based on length of service. The company did not intend to discriminate at the time by using the legal benefit accrual method that excluded pregnancy time off in calculating retirement benefits. Without such intent, federal law does not prohibit the differential calculation.

In addition, the PDA is presumed not to apply retroactively unless Congress clearly wanted to impose that potential unfairness to achieve countervailing benefits, which it did not in this instance. The PDA is prospective only for most purposes, as evidenced by its language and legislative history.

The Court also rejected an argument that the Ledbetter Fair Pay Act of 2009 makes each retirement check a new discriminatory act. Since the disallowance of pregnancy time in the calculation of benefits was legal prior to enactment of the PDA, pension checks today do not effectuate a discriminatory practice that gives rise to a right to sue.

The NAM and 6 corporations have supported a petition asking the Supreme Court to review a Ninth Circuit decision that allows plaintiffs to break a large mass action case into seven smaller cases, each with fewer than 100 plaintiffs, to avoid the restraints imposed by the Class Action Fairness Act of 2005 (CAFA).

Under CAFA, class action and mass action litigation involving 100 or more plaintiffs and more than $5,000,000 in damages may be filed in state courts, but defendants, often manufacturers, are allowed to transfer the cases to federal courts, which are often viewed as more fair and balanced.

In this case, trial lawyers divided a single lawsuit involving 664 plaintiffs into seven different lawsuits, all making the same claim. The Ninth Circuit accepted this chicanery and rejected the defendant’s attempt to have the case heard in federal court. Our amicus brief highlights how this decision conflicts with that of another federal appeals court, and asks the Supreme Court to review the case and allow a federal court to hear it. If the Ninth Circuit’s ruling is allowed to stand, that would present a serious problem for manufacturers, since many plaintiffs would file mass actions in courts within that jurisdiction, and would further shop around for the friendliest county courthouses. Avoiding the overwhelming pressure to settle cases that wind up in such “magnet jurisdictions” was one of the primary reasons that Congress passed CAFA.

The NAM joined with Centerpoint Energy, Eli Lilly, ExxonMobil, General Electric, Occidental Petroleum and Owens-Illinois in the amicus brief.

Cert denied on October 6, 2009.

This case was consolidated on appeal with Shell Oil Co. v. United States. Click here for a summary of the two cases. The NAM filed two amicus briefs in these cases.

The Second Circuit ruled that EPA could not use cost-benefit analysis when implementing certain provisions of the Clean Water Act. The regulations at issue address existing power plants, but the court's ruling directly jeopardized favorable regulations governing all other users of cooling water, such as in the steel, chemical, paper and petroleum industries. Indeed, all consumers of electric power are likely to be impacted by an increase in the cost of electricity.

The NAM joined with four other organizations in an amicus brief urging the Supreme Court to hear this appeal. The issue involves Section 316(b) of the Clean Water Act, which establishes requirements for cooling water intake structures at electric power plants, in order to minimize the impact of such structures on fish. The Second Circuit ruled that EPA choose the most effective technologies for minimizing the impact of these structures that the affected companies as a whole "can reasonably bear," without any consideration of the costs and benefits of that technology, unless two different technologies "produce essentially the same benefits."

The Second Circuit's ruling conflicted with that of another federal circuit as well as EPA's own interpretation of the statute. Our brief argued that this interpretation may affect thousands of industrial, commercial and institutional facilities that use cooling water. We also argued that the EPA acted within its authority to take into account "restoration measures" that enhance the numbers and conditions of the affected fish, but the Second Circuit rejected that as an acceptable method of minimizing the adverse impact of water intake structures on aquatic life. The operative statutory language is unclear and the EPA's interpretation is entitled to judicial deference.

Third, we argued that the Second Circuit's decision was based in part on its interpretation of Section 301 of the Clean Water Act, which governs wastewater treatment requirements. This erroneous interpretation had the potential to affect many more facilities than just the electric generating plants that were the subject of this case, and even many more than plants that have cooling water intake structures.

After the Supreme Court agreed to hear this appeal, along with Entergy Corp. v. EPA (No. 07-588) and Utility Water Act Group v. Riverkeeper (No. 07-597). We filed a brief on the merits of the legal issues on appeal on July 21, 2008.

On April 1 in a 6-3 decision, the Supreme Court held that EPA permissibly relied on cost-benefit analysis in setting the national performance standards and in providing for cost-benefit variances from those standards. Even though the legislation did not expressly provide for consideration of costs, it was within the EPA’s discretionary authority to do so, and the courts will uphold a reasonable exercise of that discretion.

The Ninth Circuit decided that a manufacturer of a hazardous substance is jointly and severally liable under CERCLA for any spill or misuse of the product by a third party after the substance has left the custody and control of the manufacturer. However, the product in question was sold as a useful commercial product to a third party, and not as hazardous waste. The seller relinquished control at the point of delivery, and the material subsequently leaked and contaminated some soil. The Ninth Circuit’s ruling means that a seller of a useful product that may be hazardous has actually “arranged for the disposal” of the product within the meaning of CERCLA, and is thus liable for the cleanup costs.

The Supreme Court reversed, on May 4, 2009. The plain meaning of the statute requires that a company should have had an intent to arrange for the disposal of a hazardous material to be found liable as an "arranger." The NAM's amicus brief urging the Court to review the case had made this same argument, as opposed to the Ninth Circuit's much looser test that imposed liability if disposal was merely a foreseeable byproduct of the transaction.

The Shell case was consolidated with Burlington N. & Santa Fe R.R. Co. v. United States, which raised an issue relating to the apportionment of responsibility to various parties under CERCLA. The Ninth Circuit ruled that it is possible to divide liability among various parties that may have contributed to the contamination, but that there was insufficient evidence to do so here; thus, both the railroad and Shell were held to be jointly and severally liable. The Supreme Court reversed this ruling as well, saying that the trial court correctly found that liability could be apportioned, and that the railroad was liable for 9% of the cleanup costs. It ruled that apportionment is appropriate when the evidence is sufficient to provide a reasonable basis to do so.

The NAM argued that the heightened evidentiary standards established by the Ninth Circuit for demonstrating that there is a basis for apportioning harm are inconsistent with the standards set forth in the Restatement (Second) of Torts and with the approach adopted by other circuit courts, which have applied the Restatement approach in the CERCLA context. Additionally, we contended that apportionment in this case would be consistent with the policies underlying CERCLA, especially when one considers that concerns about the potentially harsh impacts of joint and several liability led Congress to delete any specific reference to joint and several liability in the statute.

In 2002, as part of President Bush’s Healthy Forest Initiative, the U.S. Forest Service issued regulations that excluded small timber-clearing projects from the requirements of public notice, comment, and administrative appeal under both the National Environmental Policy Act (NEPA) and the agency’s internal administrative appeal process. In September 2003, the Forest Service decided to allow salvage logging of 238 acres which had been destroyed in a fire the previous summer in California’s Sequoia National Forest. Under its new regulations, the Forest Service did not conduct a NEPA environmental review before making its decision and did not allow any administrative appeals of the decision.

Several environmental groups brought suit under the Administrative Procedure Act (APA), arguing that the Forest Service’s new regulations were facially invalid and that the decision to allow salvage logging was improper. Shortly after the suit was filed, the Forest Service withdrew its decision to allow the salvage logging project. In July 2004, the parties entered into a partial settlement agreement in which the Forest Service agreed not to reauthorize the sale without first preparing a NEPA environmental review for the project. On their part, the environmental groups agreed to “dismiss with prejudice” their claims related to the salvage logging project, although they continued pursuing the suit as a direct facial challenge to the Forest Service regulations.

In July 2005, a federal district court in California issued a nationwide injunction against the new Forest Service regulations, which the 9th Circuit upheld in August 2006.

On March 3, 2009, a sharply divided Supreme Court reversed, holding that the environmental groups lacked standing to challenge the Forest Service regulations. The Court reasoned that after the controversy regarding the salvage logging project had been settled, there was no longer any concrete and particularized injury to the groups. An organization like this must show an “imminent and concrete harm” to its members’ interests at the time the suit is filed.

A DuPont employee originally designated his wife as the alternative beneficiary for his pension benefit plan. When the couple later divorced, the wife waived her right to the employee’s pension benefits as part of the divorce settlement, but did not file a Qualified Domestic Relations Order (QDRO) with the employer.

After the employee died, DuPont paid the employee’s pension benefits to his ex-wife pursuant to her designation as beneficiary. The employee’s estate sued DuPont to collect the pension benefits, with DuPont suing the ex-wife to recover the money it had paid her.

The district court awarded the employee’s pension benefits to his estate. The Fifth Circuit reversed, holding that the wife’s rights as a beneficiary under ERISA can only be waived when a QDRO is filed. Other circuits had recognized divorce settlements without requiring a QDRO in these circumstances. The Supreme Court agreed 2/19/08 to decide whether the plan administrator may rely on a divorce settlement or only on a valid QDRO.

The NAM filed an amicus brief 7/15/08, arguing that requiring a QDRO is important for ease of plan administration, since administrators will not need to look beyond the plan documents and QDROs to pay claims, will have lower investigation costs, and will incur less litigation from beneficiaries. Congress provided a comprehensive, specific administrative regime regarding spousal rights and beneficiary designations under ERISA plans, and it did not intend for courts to fashion common law rules that require plan administrators to find and honor waivers in other ways.

On 1/26/09, the Supreme Court unanimously ruled that a plan administrator may only rely on a valid QDRO to change the beneficiary of an ERISA pension benefit plan. The Court held that "ERISA forecloses any justification for enquiries into nice expressions of intent, in favor of the virtues of adhering to an uncomplicated rule: 'simple administration, avoid[ing] double liability, and ensur[ing] that beneficiaries get what's coming quickly.'''

Under U.S. international trade law, 19 U.S.C. § 1673, the Commerce Department may levy antidumping duties when “a class or kind of foreign merchandise is . . . Sold in the United States at less than its fair value.” The purpose of this statute is to protect domestic industry against unfair foreign competition.

In this case, a U.S. utility provided raw materials (unenriched uranium) to foreign uranium enrichers which, in turn, processed those materials for a fee and delivered them in their new form (low-enriched uranium) back to the U.S. utility. After an investigation, the Commerce Department determined that the foreign companies were selling low-enriched uranium, a component in nuclear power generation, at a price below fair value. However, this was material that had been supplied by the U.S. utility merely to be transformed.

The Federal Circuit rejected the Commerce Department’s view, holding that this transaction equated to the sale of a service, not the sale of goods. Thus, because the antidumping law does not cover the sale of services, no antidumping duties could be levied on these imports.

On 1/26/09, the Supreme Court reversed, unanimously holding that the Commerce Department acted within its authority in considering the business practice of having material toll manufactured overseas and repatriated to be the sale of foreign goods against which antidumping duties can be imposed. The Court ratified the Commerce Department's "eminently reasonable" approach under the principles of Chevron U.S. A. Inc. v. Natural Resource Defense Counsel, Inc., 467 U.S. 837 (1984), since its determination neither contradicted unambiguous statutory language nor represented an unreasonable resolution of ambiguous language.

We believe that imposition of antidumping duties in this case will discourage American companies from sending goods abroad for further processing or transformation, but will protect other domestic manufacturers who can perform processing functions at home.

During his successful campaign for a spot on the West Virginia Supreme Court, Justice Benjamin received $3 million in campaign contributions from the CEO of Massey Coal Co. This represented more than 60% of the total contributions Justice Benjamin received.

A few years later, Massey Coal Co. petitioned the West Virginia Supreme Court to review a jury award of $50 million to a mining company that claimed it was forced into bankruptcy because of allegedly fraudulent conduct by Massey in securing coal-supply contracts at a steel plant. The owner of the mining company, Hugh Caperton, requested that Justice Benjamin recuse himself from the case. Justice Benjamin declined, arguing that Caperton had failed to present any evidence that Benjamin had a pecuniary interest in the matter or had exhibited an actual bias against Caperton’s company. The West Virginia Supreme Court ultimately decided to overturn the jury verdict, 3 to 2, with Justice Benjamin in the majority.

Caperton appealed the decision to the U.S. Supreme Court, arguing that Justice Benjamin’s failure to recuse himself violated Caperton’s Due Process rights, because the Massey CEO’s support for Benjamin during his campaign created an appearance of bias.

On June 8, 2009, the Court ruled 5 to 4 that the Due Process Clause requires a judge to recuse himself when an officer of a company involved in litigation before the court was the principal contributor to the judge’s campaign. It is not necessary to show that a judge has an actual bias, and the Court did not question Justice Benjamin’s subjective findings of impartiality and propriety. Rather, if a judge’s interest in a case poses “a risk of actual bias or prejudgment” using a “realistic appraisal of psychological tendencies and human weakness.” Because one party had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge’s election campaign when the case was pending or imminent, Due Process requires that the judge recuse himself. The closeness in time between the election and the case was also a critical factor. The Court also thought that most recusal disputes would be resolved under state codes of judicial conduct, and would rarely need to be decided under constitutional Due Process safeguards.

Members of the Service Employees International Union who had worked as night security guards for 14 Penn Plaza were replaced in August 2003, when 14 Penn Plaza contracted with another firm to provide security for the building. Claiming that they were the building’s only employees over 50 years old, the union members filed an age discrimination suit against 14 Penn Plaza under the Age Discrimination in Employment Act (ADEA). 14 Penn Plaza filed a motion to compel arbitration under the union members’ collective bargaining agreement, which clearly required that discrimination claims be resolved via arbitration.

The district court denied 14 Penn Plaza’s motion to compel arbitration and the Second Circuit affirmed, holding that a “mandatory arbitration agreement purporting to waive a covered worker’s right to a federal forum with respect to statutory rights is unenforceable,” even when such an agreement had been freely negotiated by a union.

On April 1, the Supreme Court held that an arbitration clause contained in a collective bargaining agreement is enforceable. The Court reasoned that because the arbitration clause was freely negotiated and “clearly and unmistakably” required that ADEA claims be resolved by arbitration, it had no legal basis to strike down the provision. An earlier decision allowed arbitration of ADEA rights for individuals, and the Supreme Court has now applied this principle to collective bargaining agreements, as long as the waiver of the right to sue for ADEA violations is clearly expressed. The decision is important because it applies the right to arbitrate ADEA disputes broadly to employer agreements with individuals and unions alike.

In 2002, local Tennessee school officials conducted an internal investigation into charges of sexual misconduct by the school district’s employee relations director, Gene Hughes. During the investigation, Vicky Crawford, a payroll supervisor, reported that she witnessed and had been the victim of sexual harassment by Hughes. The investigation did not result in any disciplinary action or EEOC charge against Hughes. Six months later, Crawford was fired for alleged embezzlement and drug use, along with two other employees who had participated in the investigation.

Crawford filed a charge of discrimination with the EEOC, alleging that she had been fired in retaliation for what she told investigators about Hughes. Crawford later brought her suit in federal court, asserting that her employer’s actions violated Title VII of the Civil Rights Act, which forbids retaliation against an employee because the employee has participated in an investigation, proceeding, or hearing “under this subchapter” (known as the “participation clause”).

The district court granted summary judgment for the employer, holding that employees are not protected under Title VII’s anti-retaliation provision when participating in an employer’s internal investigation. The Sixth Circuit affirmed, holding that “participation in an internal investigation” initiated by the employer, “in the absence of any pending EEOC charge,” is not a “protected activity” under Title VII’s participation clause. The court also reasoned that extending Title VII’s protections to internal investigations may deter employers from undertaking such investigations.

The Supreme Court will now decide whether Title VII’s anti-retaliation provision protects employees from being terminated when they allege misconduct by another employee during their employer’s internal investigation of discrimination. This is a tricky situation because allowing retaliation suits prior to formal charges at the EEOC will increase litigation, but not allowing them will encourage employees to file charges under the EEOC’s procedures.

On 1/26/09, the Supreme Court unanimously reversed, holding that Title VII's anti-retaliation provision protects employees from being terminated when they allege misconduct by another employee during their employer's internal investigation of discrimination. The Court stated that when "an employee communicates to her employer a belief that the employer has engaged in … a form of employment discrimination, that communication virtually always constitutes the employee's opposition to the activity." In his concurring opinion, Justice Alito remarked that this holding did not address "opinions" that were not communicated directly to the employer but instead were informally communicated to co-workers, thereby suggesting that such opinions would not be protected by the anti-retaliation provision.

The Supreme Court has held that unions can collect service fees from nonmembers to cover expenses for collective bargaining and contract administration, but cannot collect service fees from nonmembers to support political or ideological expression. In this case, the Maine State Employees Association (MSEA), the exclusive bargaining agent for certain state employees, paid a portion of the service fees collected from nonmembers to its national affiliate, the Service Employees International Union (SEIU), who in turn used part of it to pay for litigation activities undertaken by SEIU throughout the country.

The nonmembers challenged on First Amendment grounds the portion of the service fee attributable to SEIU's litigation costs. The federal district court held that collecting the service fee was not unconstitutional, because the union adequately explained the basis for the fee, provided the employees an opportunity to challenge the fee in impartial arbitration, and provided for escrow of disputed amounts.

The First Circuit held that MSEA may lawfully collect service fees from nonmembers for this "extra-unit litigation" because it is related to the union's collective bargaining duties. The Supreme Court agreed to decide whether a union serving as the exclusive bargaining agent for state employees can charge nonmembers for litigation expenses incurred by its national affiliate.

On Jan. 21, 2009, the Court allowed the union's charge for national litigation expenses as long as (1) the litigation is of a kind that would be chargeable if it were local (appropriately related to collective bargaining rather than political activities), and (2) the charge is reciprocal (other locals contribute similarly).

This controversial 5 to 4 decision involves whether New Haven could properly discard promotion test results that they believed could have led to a racial discrimination suit by blacks. The majority ruled that the city could not reject the test results unless it could demonstrate a strong basis in evidence that it would have been liable under the disparate impact provisions of Title VII of the Civil Rights Act. The Court found that if it had certified the test results, black plaintiffs may have been able to show a prima facie case of disparate impact, but the city could have rebutted that case by showing that the test was job-related and consistent with business necessity and there was no alternative with a less disparate impact.

For the third time, the Supreme Court was poised to review a $79.5 million punitive damages award imposed by an Oregon jury allegedly to punish Philip Morris for fraud. The case’s previous journey to the Supreme Court resulted in an order that the Oregon Supreme Court apply a newly articulated standard that juries cannot award punitive damages to the plaintiff arising from injuries that may have been inflicted on people not party to the litigation.

The Oregon Supreme Court, however, reaffirmed the punitive damages award without determining whether it had been based on improper consideration of third-party injuries. It ruled that the company had procedurally defaulted under state law and forfeited its federal constitutional claims. State procedural rulings are normally not reviewable by the U.S. Supreme Court.

The issue initially accepted for review was whether a state court may ignore the Supreme Court’s order relating to the federal constitutional claim, and raise – for the first time in this case -- a state procedural issue to dispose of the appeal. The decision in this case will affect many more cases than punitive damages appeals – it will affect any case that is overturned on appeal with instructions to correct a constitutional problem. It is a fundamental constitutional conflict between the U.S. Supreme Court and state supreme courts over how far the states can go to avoid federal requirements. In a similar case years ago, Alabama tried to interpose procedural objections to a Supreme Court ruling prohibiting the disclosure of the membership of the NAACP in 1959, but the Court rejected that state’s ploy.

The NAM filed an amicus brief arguing that Oregon's decision based on the jury instruction ignored a variety of other trial practices that might improperly allow consideration of nonparty harm. For example, defense counsel can raise objections to the admission and use of evidence or arguments relating to nonparty harm. In addition, Oregon's denial of relief misinterpreted the Supreme Court's earlier decision and did not provide an independent and adequate ground for upholding the damages award.

Even though the Supreme Court had received briefs and heard oral arguments for this appeal, on March 31 it dismissed the writ of certiorari as having been improvidently granted. Unfortunately, as a consequence, the Oregon Supreme Court’s decision stands.

On 3/16/09 the NAM filed an amicus brief urging the U.S. Supreme Court to overturn a ruling by the Tennessee Court of Appeals that could lead to a surge in expensive, unwarranted asbestos lawsuits against manufacturers. The Tennessee court ruled that asbestos plaintiffs no longer need to demonstrate that their fear about incurring injury or illness from asbestos exposure is “genuine and serious,” contradicting previous Supreme Court rulings. In this particular case, the state court awarded the claimant $5 million in pain and suffering based on thin evidence of any genuine fear.

Our brief urged the Court to preserve its carefully constructed guidelines related to asbestos litigation and to avoid exposing defendants to “unlimited and unpredictable liability.” The core issue in this case is the flood of specious claims of injury from asbestos exposure filed by individuals who have no physical evidence of such injury. The sheer volume of these claims has created backlogs in many courts and exhausted the resources of defendants, thus inhibiting those with actual injury from receiving timely and appropriate compensation.

On June 1, 2009, the Court ruled 7 to 2 that the jury should have been given an instruction to find liability only if the plaintiff's fear of getting cancer was genuine and serious. Juries, especially in emotional cases, should be given clear guidance on the law to provide the proper balance between plaintiffs and defendants. This is an important decision that prevents state courts from neglecting the rights of business to fair trials.

In this case, Diana Levine received Wyeth’s antinausea drug Phenergan during treatment for a migraine headache. The hospital administered the drug using the “IV push” method, involving injection of the drug into a vein, which the FDA-approved label did not mention as a valid method of administration. After the drug made contact with her arteries and led to gangrene, doctors were forced to amputate her right arm.

In her state-law tort claim against Wyeth, Levine alleged injury as a result of Wyeth’s failure to provide adequate warning of the drug’s dangers. In awarding her $6.7 million, a Vermont jury concluded that Wyeth had failed to warn of the risks associated with the “IV push” method of administering Phenergan.

The Vermont Supreme Court ruled that the state-law failure-to-warn claim was not preempted by the FDA’s approval of the Phenergan label, reasoning that Wyeth could have provided the FDA-approved label and an additional warning against IV push administration.

The Supreme Court agreed. On March 4, 2009, the Court ruled 6 to 3 that FDA approval of a prescription drug label does not preempt state-law failure-to-warn claims. It found that Wyeth could have unilaterally provided a stronger warning while also seeking FDA approval of the new warning. The manufacturer bears primary labeling responsibility, despite the requirement that labels be approved by the FDA. The Court rejected language in the preamble of the drug labeling rule saying that state failure-to-warn actions threaten the FDA's role, calling the statement inherently suspect because it was announced without notice and comment, conflicts with congressional intent, and reverses long-standing FDA policy.

In its 2005 decision in Dura Pharmaceuticals v. Broudo, 544 U.S. 336 (2005), the Supreme Court held that allegation and proof of an inflated stock price at the time of the stock purchase are insufficient to plead and prove loss causation in a securities fraud action. Rather, plaintiffs must allege and show that they suffered an actual loss and that the defendant’s misrepresentations caused that loss. Although “ordinary pleading rules are not meant to impose a great burden upon a plaintiff,” a complaint must “provide a defendant with some indication of the loss and the causal connection that the plaintiff has in mind.” Despite this 2005 precedent, the Ninth Circuit adopted a much more lenient standard in Gilead Sciences, Inc. v. St. Clare, requiring only that the plaintiff state facts that make a theory of loss causation not “per se implausible.”

On 3/17/09, the NAM joined in an amicus brief urging the Supreme Court to overturn the Ninth Circuit’s ruling because it conflicts with the loss causation requirement that was clearly articulated in the Court’s 2005 decision. The Ninth Circuit’s decision is too lenient, and allows cases to proceed with factual allegations that do not raise the claim above the speculative level. Our brief also pointed out that amid the current economic crisis, where falling stock prices are commonplace, the standard for pleading loss causation takes on particular importance.

The Supreme Court declined to hear this appeal on April 20, 2009. Until this issue is revisited in another case, opportunistic shareholders will be permitted to simply state various conclusions without offering any corroborating details in securities class action lawsuits, thereby leaving publicly traded companies much more susceptible to strike suits.

On April 20, the NAM joined with the Council on State Taxation and the National Marine Manufacturers Association in support of an appeal to the Supreme Court of a Massachusetts decision that would allow extensive taxation of out-of-state businesses.

Historically, the Commerce Clause has protected interstate markets from impermissible state tax burdens through the rule that a state may not impose a tax on an out-of-state business unless it has more than a de minimis “physical presence” in the state. However, many states are aggressively seeking to expand their tax revenues by asserting the power to tax the corporate income of out-of-state businesses that have no physical presence in the taxing state.

In this case, Massachusetts has adopted an elastic substantial nexus test which would permit the state to tax the income of any business with customers in the taxing state, even if it lacks any real property, employees or other contacts there.

Our brief provided many examples of difficult and complicated tax situations that will face multi-state businesses should Massachusetts’ system be allowed. The effects will be particularly severe on small and mid-sized businesses because compliance costs are proportionately higher for them.

On June 22, 2009, the Supreme Court declined to hear this appeal. We expect this action will lead more states to adopt business activity taxes (BAT) on companies with no physical presence in those states. The NAM is active in the BAT Coalition and supports BAT legislation that would establish limits on state taxation of interstate commerce.

Delaware imposes a gross receipts tax on all money received from wholesale goods delivered in the state, regardless of whether the bulk of the actual sales activity attributable to such sales occur outside the state. For an automobile manufacturer like Ford, in many cases only a small portion of the activities related to the sale of a vehicle occurs in the state. The Delaware Supreme Court rejected Ford’s argument that the tax unfairly discriminates against interstate commerce.

That ruling is now being appealed to the U.S. Supreme Court, and the NAM joined with the Council on State Taxation in an amicus brief June 16 urging the Court to hear the case. Lower courts like Delaware’s are confused over apportionment rules that apply to gross receipts taxes. A gross receipts tax is akin to an income tax that must be apportioned to reflect the location of the various interstate activities by which it was earned. States and cities around the country are divided on how to properly apportion a variety of alternative tax regimes that differ greatly from traditional income taxes. In light of the overwhelming revenue shortfalls that state and local governments now face, it is more important than ever for the Supreme Court to clearly state how to administer such taxes constitutionally. Last year, the Court declined to hear a similar case in which the NAM participated, but we are hopeful that our continued efforts to bring this issue to the Court’s attention will ultimately lead to a successful result.

Cert denied on 10/6/2009.

Alabama's add-back tax statute imposes a discriminatory and extraterritorial restriction on a taxpayer's ability to deduct ordinary business expenses, and threatens to lead other states to approve similar laws. In a joint brief filed 2/23/2009, the Council on State Taxation and the NAM supported the appeal of this case to the Supreme Court, arguing that Alabama's add-back tax statute is unconstitutional.

The provision essentially restricts the ability of a taxpayer to deduct as expenses certain intangible and interest payments made to related companies. Our brief focuses on an exception to the law that makes the Alabama tax dependent on how well other states tax the transactions, which unconstitutionally varies a state tax liability based entirely on activities and tax policy shifts outside of Alabama. The issue of extraterritorial taxation from such add-back statutes arises in about 18 other states with similar legislation, and Supreme Court review is needed.

Unfortunately, the Court declined to review this appeal on April 27, 2009.

The Age Discrimination in Employment Act (ADEA) requires that charges be filed with the EEOC before a lawsuit may be filed. In this case, the Second Circuit ruled that filing an EEOC Intake Questionnaire, and not a different "Charge" form, satisfies the requirement.

Since the term "charge" is not defined in the statute, some courts say all that is needed is a minimal writing that "generally describes the alleged discriminatory acts," and that the individual exhibit some intent to have the EEOC initiate an investigation.

On February 27, 2008, the Supreme Court agreed, ruling that an allegation of age discrimination against an employer is considered a valid "charge" if it must be reasonably construed as a request for the agency to take remedial action to protect the employee's rights or otherwise settle a dispute between the employer and the employee. The ruling means that formalistic charging documents are not required as long as they are reasonably viewed as a request for action by the agency. The Court generally deferred to the EEOC's interpretation of its request-to-act requirements, even though the agency did not follow up on the charge in this case. The bottom line: more documents filed at the EEOC will be considered charges that enable plaintiffs to eventually file suit against their employers.

In this case, a deputy sheriff for Jefferson County, Kentucky, became disabled and, under his employer’s retirement plan, was denied disability retirement benefits because he was old enough to qualify for normal retirement benefits. The Equal Employment Opportunity Commission (EEOC) sued Kentucky on his behalf, arguing that Kentucky’s disability retirement plan for public employees is facially discriminatory under the Age Discrimination in Employment Act (ADEA) in two ways: 1) it disqualifies currently working employees from receiving disability retirement benefits if they have reached normal retirement-benefit age by the time they become disabled; and 2) it provides less disability benefits to older disabled employees than to younger disabled employees based only on the factor of age. Kentucky argued that because disability retirement benefits serve the purpose of providing disabled employees with a replacement for the normal retirement benefits that they are no longer able to earn, denying those benefits to employees who already qualify for normal retirement benefits does not constitute “arbitrary” age discrimination in violation of the ADEA.

The Supreme Court ruled 5 to 4 on 6/19/08 that Kentucky's plan was not facially discriminatory because no discriminatory intent was shown. The differences in treatment of older workers in this case were not "actually motivated" by age, but rather stemmed from systemwide rules involving pensions, which the ADEA treats more flexibly and leniently in respect to age. Social Security is calculated using a formula that takes age into account, and employers may adopt retirement rules based on age. The plan did not involve age-related stereotypes.

In a unanimous decision on 2/26/08, the Supreme Court held that there is no per se rule requiring a court either to admit or exclude testimony about discriminatory acts by company supervisors who played no role in the alleged age discrimination against the plaintiff. Rather, admissibility questions should be determined by the trial court. This case involved an employee who lost her job in a reduction in force (RIF), with the normal rule in disparate treatment cases being that acts by other company supervisors are not relevant. However, the appeals court made an exception where the lawsuit is over a company-wide RIF, and ruled that evidence of the company's treatment of other older workers in the RIF is relevant to the issue whether the company had a discriminatory animus, or attitude, toward older workers. The Supreme Court found that this second-guessing of the trial court’s discretion to exclude evidence was improper in this disparate treatment case, and sent the case back so that the trial court could clarify that it did not exclude the evidence without good reason. This decision is important because it allows a trial court to determine whether evidence of discrimination not directly related to a case may be admitted.

The NAM joined with 5 other business groups 2/11/08 urging the Supreme Court to review a Second Circuit decision that allows a lawsuit against dozens of American companies under the Alien Tort Statute (ATS). That statute allows foreign nationals to use U.S. courts to sue for violations of international law, but there is no clear statement of what international law is. It is up to the courts to try to divine the scope of ATS suits. This case arose when individuals from South Africa sued American companies that simply did business with the South African government, contending that such activity constituted "aiding and abetting."

Our brief urged the Supreme Court to step in and rule that this issue should not be decided by U.S. courts. First, the U.S. Government had a policy that encouraged American companies to engage in commerce in South Africa in accord with the Sullivan Principles that promoted racial integration and social justice. Were our courts to impose liability on companies for doing so, that action would directly conflict with the international relations policy of our government. The Executive Branch is responsible for U.S. foreign policy, and litigation under the ATS interferes with that function.

Second, the lower courts have not adopted a consistent position on whether and to what extent international law punishes activity that might be considered "aiding and abetting." Supreme Court review is essential to sort out this potentially wide-ranging inquiry into the international trade activity of domestic companies.

The lower court's ruling in this case seriously threatens the ability of the Executive Branch to carry out foreign relations policies that rely on the cooperation of the private sector. Courts that refuse even to consider the views of the Executive Branch at an early stage of ATS litigation raise the risk of liability for American companies trying to do business in countries approved by the Executive Branch for commerce and trade.

On May 12, four Justices of the Court recused themselves from the case, and since a quorum of 6 was lacking, the lower court decision was affirmed as if by an equally divided court. The case will now go back to the trial court for continued proceedings. The issue of aiding and abetting liability under the Alien Tort Statute remains unresolved.

The Supreme Court decided on 3/25/08 that parties may not contract for more expansive judicial review of an arbitration award than is generally provided for under the Federal Arbitration Act. That Act provides very limited grounds for federal court review of arbitration awards.

In this case, the parties agreed in advance that a court should be able to review the validity of an arbitrator’s conclusions of law. The Ninth Circuit, however, ruled that the parties do not have the power to alter the FAA’s requirements by agreement. The Supreme Court agreed, saying that the FAA addresses extreme arbitral conduct, not just any legal error, as a basis for judicial review. The case underscores the importance of an arbitrator's decision, although it suggested that certain awards might be challenged under state statutory or common law. The ruling clarifies that companies that employ arbitration may not contractually expand the scope of judicial review of the arbitrator's decision.

In a contract dispute where Judge Alex Ferrer, star of the “Judge Alex” television show, refused to pay his manager certain commissions, Ferrer’s manager initiated arbitration proceedings pursuant to the arbitration clause included in their management contract. Even though the Federal Arbitration Act (FAA) requires enforcement of arbitration agreements in contracts involving interstate commerce and the Supreme Court has consistently held that the FAA preempts state laws which prohibit arbitration of certain claims, the California Court of Appeal affirmed a trial court’s injunction against the arbitration proceedings, holding that the injunction was valid under California law. Specifically, under the California Talent Agencies Act, disputes of this sort must be resolved by the state labor commissioner (subject to judicial review) and thus cannot be arbitrated in the manner agreed to by contract.

On 2/20/08, the Supreme Court disagreed. It ruled that Congress clearly indicated its intention to allow parties to move conflicts quickly and easily into arbitration, and arbitrators have the power to decide whether a contract is valid. Thus, the parties need not go through state judicial or administrative proceedings, but should go directly to arbitration, to determine the validity of the contract.

Retirees are typically given a choice of either a lump sum retirement payout or an annuity, paid over their lifetime. Annuities often have a cost-of-living adjustment that is made every year in the future, but lump sum payments do not. In this case, the plaintiff took the lump sum payout, then sued the pension plan administrator, claiming that a cost-of-living adjustment for those choosing an annuity is an "accrued benefit" and must be paid to all retirees, including those taking the lump sum. The Seventh Circuit agreed, ruling that COLAs are accrued benefits for those taking both annuities and lump sum payments, even though the plan provides otherwise.

The NAM filed an amicus brief supporting review by the Supreme Court. We warned that mandatory inclusion of a cost-of-living adjustment in lump-sum payouts would have substantial negative impacts on other defined benefit plans, and would encourage lump sum withdrawals of pension funds. The courts should enforce clear language in pension plans that limits COLAs to those who choose annuities instead of lump sum payouts. Failing to do so would cause many plans to be rewritten or eliminated. The lower court decision interferes with the autonomy of the contracting parties to define their relationship, could lead to more prevalent underfunding of pension plans, and could encourage more retirees to choose lump sum payments, which is becoming a risky trend.

On March 17, 2008, the Supreme Court refused to hear this appeal.

How far can prosecutors go when charging corporate officials with the release of hazardous air pollutants? This case involves a criminal prosecution that used a definition of asbestos that is far broader than the long-standing definition in EPA's regulations, subjecting the defendants to potential jail time without due process. The NAM, American Chemistry Council and National Association of Criminal Defense Lawyers filed an amicus brief asking the Supreme Court to hear this appeal from a Ninth Circuit decision that had overturned the trial court's decision to exclude evidence about forms of asbestos that do not fall within EPA's definition.

The Ninth Circuit ruling threatens to treat defendants there more harshly than those elsewhere, using broad interpretations of hazardous materials, and refusing to recognize the rule of lenity, which requires that criminal statutes be clear and provide fair warning. It also undermines the requirement of mens rea, or guilty mind, when assessing blame, which will cause businesses to over-invest in regulatory compliance.

Companies and individuals who transgress an environmental statute -- even unknowingly -- may be guilty of a felony punishable by years of imprisonment. The increasing trend toward criminal prosecutions, coupled with loose interpretations of mens rea, create immense pressure on defendants to accept plea bargains. We argue that due process requires that defendants have fair warning of the conduct that can give rise to criminal liability, particularly in light of the thousands of criminal statutes and regulations that continue to proliferate. While a defendant's professional background may have some bearing on whether he should have known that a particular substance was a pollutant subject to regulation, it is irrelevant to a statute's or regulation's definition of what a pollutant is. Defendants without clear notice of what the law covers should be given the benefit of the doubt under the rule of lenity.

Regulatory crimes are wrongful not because of their intrinsic nature -- like murder, arson, or rape -- but rather because the law says they are. Acts are wrongful only by virtue of legislative or agency determinations. As a result, individuals are less likely to realize when their actions cross the line from permissible to criminal, particularly when laws are incredibly technical and complex. And now the requirement that a violation be "knowing" is eroding -- no longer must the defendant know he is breaking the law; it is enough that he had purposefully done the act, even if he had a permit. Moreover, even things like hot water, rock and sand are pollutants for which criminal liability may be imposed. We urged the Supreme Court to review this case and clarify the standards under which manufacturers may be prosecuted.

On June 23, 2008, the Court declined to review this case.

During an energy crisis in the Western U.S. in late 2000 and early 2001, several utility companies who had decided they could no longer afford to buy electricity from their normal suppliers and had an immediate need to secure power for their customers negotiated long-term contracts to buy electricity from alternate suppliers. After the energy crisis passed and energy prices dropped, the utility companies asked FERC to allow them to modify their contracts to enable them to pay lower prices for wholesale energy and subsequently lower their customer rates. In refusing their request, FERC explained that the Supreme Court’s Mobile-Sierra doctrine establishes a presumption that contracts negotiated by sophisticated parties like public utilities are “just and reasonable” in accord with the Federal Power Act and thus cannot be revised. The Court carved out an exception for cases where the contracts are against the “public interest” (for example, when not permitting modification would jeopardize the supply of power to retail users).

The Ninth Circuit reversed FERC’s decision, holding that the Mobile-Sierra doctrine only applies in “limited circumstances” and that, by failing to consider the market conditions in which the contracts at issue were formed, FERC had failed to determine whether such “limited circumstances” were present here. The Ninth Circuit also held that even if the Mobile-Sierra doctrine applied, its public interest exception would permit contract modification because the high electricity rates excessively burdened consumers.

The Supreme Court ruled 6/26/08 that FERC was required to follow the Mobile-Sierra presumption of reasonableness, and the validity of a contract is not affected by an environment of electric power market "dysfunction." The Court rejected the Ninth Circuit's "zone of reasonableness" test, and underscored the need to honor contracts unless they seriously harm the public interest. There must be "unequivocal public necessity" to set aside a contract rate. However, the Court affirmed the Ninth Circuit's ruling on other grounds: FERC's defective analysis of the market effects needs to consider longer-term burdens, and FERC needs to more carefully consider whether there was unlawful market manipulation that disrupted fair, arms-length contract negotiations.

After the Environmental Protection Agency issued a Unilateral Administrative Order to a Canadian company to conduct a study on contamination of the Columbia River in this country from its smelter in Canada, an Indian tribe sued to enforce the order. The company argued that the EPA does not have jurisdiction under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the U.S. federal district court ruled otherwise. The company appealed, and the Ninth Circuit affirmed, ruling 7/3/06 that the EPA’s order only applied to a “facility,” as it’s defined in CERCLA, within the territorial boundaries of the United States. Even though the smelter was located in Canada, the definition of a facility under CERCLA is an area where a hazardous substance has been deposited or otherwise comes to be located. This is a very broad definition of facility that subjects foreign companies to liability for pollution in the United States.

The court also ruled that the slag located in the United States was leaching hazardous substances, thus satisfying the legal requirement for liability that there be a “release” from the facility into the environment. EPA’s jurisdiction did not extend to the smelter across the border, but does cover the underwater facility and hazardous releases in the United States.

The NAM joined with the National Mining Association in 2 briefs supporting Teck Cominco’s appeal and petition for rehearing in 2005 and 2006. We argued that CERCLA applies only within this country unless Congress clearly expresses an intent to apply it extraterritorially, which it did not. These kinds of disputes are quintessentially an international concern, not for unilateral action by one country's EPA. Private litigation upsets the resolution of such disputes through diplomatic means, or through the long-standing model of an arbitration group that was specifically established for the smelter in the 1930s. Allowing such litigation in U.S. courts opens them up to worldwide claims, particularly as environmental science improves, and could subject U.S. firms to retaliatory litigation abroad, imposing multiple and conflicting standards on environmental behavior.

The case was appealed to the Supreme Court. On May 2, 2007, the NAM and the National Mining Association filed an amicus brief urging the Court to take the case. We argued that the lower court's decision invites retaliation against American businesses and fosters uncertainty and discord for many industries with respect to the definition of "arranger liability." We argued that arranger liability under CERCLA applies when a company owns hazardous material and arranges with a third party for its disposal or treatment, not when the company does it itself.

On Jan. 7, 2008, the Supreme Court declined to review this appeal. The United States Government had earlier filed a brief opposing the appeal.

James LaRue, an employee with retirement benefits under his company's 401(k) plan, sued the plan administrator alleging the administrator failed to carry out LaRue's investment instructions, resulting in a loss of $150,000 to his account. The lower courts ruled that LaRue's suit was invalid because the Employee Retirement Income Security Act (ERISA) only allows suits on behalf of the plan and not for individual recoveries.

The Supreme Court ruled 2/20/08 that ERISA does allow individuals to sue plan administrators even though the only damage alleged is to the individual's own account. The statute provides a remedy for individuals to sue administrators of defined benefit plans (pensions) for fiduciary breaches that affect the ability of the plan to pay out defined benefits, and now this ruling holds that the statute provides a remedy for individuals to sue for breaches that affect the payment of their individual benefits in defined contribution plans. The Court did not address the issue whether ERISA allows suits for money damages under a provision that limits remedies to "equitable relief."

This decision means that 401(k) plan administrators must exercise reasonable care as fiduciaries when carrying out their obligations on behalf of plan beneficiaries. They will still be protected against suits arising from investment decisions made by beneficiaries, but they have to carry out those investment directions according to the provisions in the plan.

After taking medical leave from her job, Wanda Glenn submitted a disability claim under her ERISA plan. Although MetLife approved her claim, it urged her to seek Social Security benefits, which she did. After reviewing information from Glenn’s physician indicating her improved condition and ability to do sedentary work, MetLife concluded that she was no longer eligible for disability benefits and denied her claim for long-term disability benefits.

Glenn challenged the decision in federal court, with the district court upholding MetLife’s denial of long-term disability benefits.

The Sixth Circuit reversed, holding that MetLife's dual role in both administering and funding the plan created an “apparent conflict of interest.” Based on this conflict of interest, the court concluded that MetLife’s decision “was not the product of a principled and deliberative reasoning process” and ordered MetLife to reinstate Glenn’s benefits. The Circuit Courts were split on this issue, with some Circuits not requiring courts to consider an administrator’s dual role when reviewing benefit determinations.

The Supreme Court ruled on 6/19/08 that it is proper for a court to consider a conflict of interest as a factor in reviewing the validity of a plan administrator's decisions regarding benefits. The circumstances of each case should be reviewed, and the fact that a company acts both to fund and administer a benefit plan may cause the administrator to act contrary to the interests of the beneficiaries of the plan. Normal fiduciary trust principles apply.

This case is very important to all businesses offering employee benefit plans subject to ERISA, as jointly funded and administered plans are common. The ruling means that the costs of funding and administering ERISA-regulated benefit plans are likely to increase.

Former employees of a government subcontractor sued the company (and others) under the False Claims Act, which allows private parties to bring actions to enforce the Act. They claimed that the companies defrauded the federal government by submitting false claims for payment to the prime contractor.

The False Claims Act specifies that liability arises when any person presents or causes to be presented a false or fraudulent claim "to an officer or employee of the United States Government." The Sixth Circuit ruled that actual presentment to an officer or employee is not actually required as long as the bill is ultimately paid from money from the federal government.

The Supreme Court resolved a split in the Circuits and reversed. It ruled unanimously that merely using funds from a government contract to pay a fraudulent claim is insufficient to win a False Claims Act suit. Rather, a plaintiff must prove that the defendant intended that the false statement be material to the Government's decision to pay or approve the false claim. This ruling will make it harder to bring qui tam suits where it is not clear that the Government relied on a false claim to pay a bill.

To avoid sales to minors, a Maine state law required retailers to insure that tobacco products were delivered by a carrier that would verify the age and identity of the buyer. Another law prohibited a carrier from delivering tobacco products if they were purchased from an unlicensed retailer.

UPS stopped deliveries, and several associations convinced the First Circuit to hold that the state laws were preempted by the Federal Aviation Administration Authorization Act of 1994, which prohibits a state from enforcing a law "related to a price, route, or service of any motor carrier," with respect to the transportation of property.

On 2/20/08, the Supreme Court agreed. It ruled that Maine's law was preempted because it directly affected motor carrier services and had a significant adverse impact on the objectives of the federal law. The state law would regulate a significant aspect of a motor carrier's business, creating the kind of state-mandated regulations that the federal law was intended to preempt. The fact that the state law is designed to protect health and safety is unavailing, because there is no such federal exception and there are alternatives that do not interfere with carriers that the state can adopt to try to achieve its safety and health purposes.

Cases in federal court may only be brought by persons who have suffered an actual injury. But may an injured person sell his or her constitutional standing to another person, so that that person many file suit based on a contractual right?

In this case, the D.C. Circuit ruled that intermediaries under contract with payphone service providers may bring suit on their behalf against a telecommunications carrier that owed compensation to the payphone service providers. The Supreme Court agreed, 5 to 4. At issue was whether the assignment of the claim to the intermediaries, who themselves have no personal stake in the case other than their right to litigate it on behalf of others, is sufficient to confer standing. The defendants argued that the intermediaries had no real stake in the case because their contract provides that any proceeds would go straight to the payphone companies.

The Court ruled that assignees of legal claims have for centuries been able to sue on behalf of those who assigned their legal rights to them. Because the injury will be redressed by paying the assignee of the legal claim, it doesn't matter what the assignee does with the award. He may give it back to the original claim holder and receive a fee for his service without undermining his standing in the litigation. This decision will make it easier to aggregate small claims for purposes of litigation.

The Civil Rights Act of 1991 prohibits discrimination in the making and enforcement of contracts. The Supreme Court ruled 5/27/08 that that law allows retaliation claims by employees who allege that discrimination led to their termination. Here, a restaurant manager claimed he was fired in retaliation for complaining about racially discriminatory treatment of another employee, but his employer claimed he was fired for leaving the restaurant safe open.

The Supreme Court held that although the Act does not specifically provide for race retaliation claims, employer conduct after the formation of a contract is subject to Section 1981 because Congress amended the law in 1991. Courts have interpreted Section 1982 to allow suits for retaliation, and Sections 1981 and 1982 have long been interpreted alike.

Employers will face a somewhat expanded scope of potential liability in discrimination cases, both from the ruling that retaliation is actionable and from the additional benefits that plaintiffs have under Sec. 1981 compared to Title VII of the Civil Rights Act, namely a longer statute of limitations, no requirement that EEOC administrative remedies be pursued, and no damages caps.

Seventeen years after it was passed, the Americans With Disabilities Act continues to generate litigation over fundamental questions it left unresolved. One involves the requirements for providing a reasonable accommodation to a disabled worker. In this case, the plaintiff became disabled and could no longer perform the essential elements of her job. She sought another vacant job, and her employer considered her application equally with other candidates. Since others were better qualified, she did not get the transfer, but instead was given a less favorable job.

The Eighth Circuit ruled that the employer's procedure treated candidates equally, and that the plaintiff was not entitled to the vacant job when that reassignment would violate a legitimate nondiscriminatory policy of the employer to hire the most qualified candidate.

The company provided a reasonable accommodation to the plaintiff by finding her another job. It may not have been the best alternative for her, but the law only requires a reasonable accommodation.

The Supreme Court initially agreed to hear this appeal, but the parties settled and the case was dismissed without a ruling.

This case arises from a dispute between AT&T's subsidiary, Illinois Bell Telephone Co., and its union, the IBEW, which sought to compel arbitration concerning new "performance guidelines" the company implemented for sales staff. The applicable collective bargaining agreement limits arbitration to matters involving the interpretation and application of the agreement's terms or provisions, and it says nothing about the arbitrability of performance guidelines. The Seventh Circuit nevertheless ruled that the guidelines were arbitrable, basing its decision solely on the fact that the agreement contained a recognition clause, i.e., standard language found in virtually every labor agreement in the country which says that the union is recognized as the exclusive bargaining agent for the defined bargaining unit of employees.

The NAM joined with the Council on Labor Law Equality to support Illinois Bell's appeal of this case to the Supreme Court. We urged the Court to take the case, arguing that the lower court's decision converts virtually any company action that is contrary to a union's interests into a violation of a boilerplate recognition clause. Arbitration should only be required where the parties have agreed to it, and courts should decide whether the parties have done so.

On March 17, the Court refused to hear this appeal. This precedent improperly introduces a judicially imposed form of 'interest arbitration' over a limitless set of issues arising under labor agreements that do not authorize such arbitration.

Under the Age Discrimination in Employment Act (ADEA), employers may not discriminate against employees 40 years of age or older based on age. However, employers may “take any action otherwise prohibited where the differentiation is based on reasonable factors other than age.” In the mid-90s, Knolls Atomic Power Lab instituted an involuntary workforce reduction, determining which employees to dismiss based primarily on three factors — performance, flexibility, and criticality of skills. Even though years of service also factored into the determination, 30 of the 31 employees terminated were over the age of 40. Subsequently, 26 of the dismissed workers filed suit, alleging age discrimination in violation of the ADEA.

At trial, a jury rendered a verdict in favor of the former employees, based on the employer’s failure to monitor the discretionary process in deciding who should be terminated, which resulted in an unlawful disparate impact on older workers. Although the Second Circuit initially affirmed the verdict, its decision was vacated and remanded as a result of the Supreme Court’s decision in Smith v. City of Jackson, 544 U.S. 228 (2005). In that case, the Court held that in disparate impact suits filed under the ADEA, employers must be given the opportunity to show that their actions were reasonable. On remand, the Second Circuit reversed its earlier ruling, concluding that the employees had the burden of demonstrating the employer’s discretionary termination process was unreasonable and that they failed to carry this burden.

The Supreme Court ruled on 6/19/08 that the employer bears the burden of production and the burden of persuasion under the ADEA in establishing that it acted in reliance on “reasonable factors other than age” in a disparate impact case. This is an affirmative defense that, like other affirmative defenses, the employer must prove. Because this is a disparate impact case, involving alleged discrimination that results in a workplace disparity based on statistical evidence, plaintiffs must still point to a specific employment practice that caused the disparity. The case was sent back to the lower courts to determine whether the employer proved its defense.

The Supreme Court ruled 6/19/2008 that a California law that prohibits employers who receive more than $10,000 in state funds annually from using those funds to “assist, promote, or deter union organizing” is preempted by the National Labor Relations Act (NLRA). The NRLA provides that companies’ anti-labor speech cannot be considered evidence of an unfair labor practice so long as it does not threaten or coerce workers. The Chamber argued that California’s law violated the NLRA’s safe harbor for anti-union speech, and is therefore preempted. The Court agreed, finding that noncoercive speech is fully protected by the NLRA. Congress intended to leave unregulated uninhibited, robust and wide-open debate on labor disputes.

The impact of the Supreme Court’s decision in this case could be significant for state government contractors, as more than a dozen states were considering adopting laws similar to California’s.

Under the patent exhaustion doctrine, the first authorized sale of a patented product “exhausts” the patent owner’s right to control the buyer’s subsequent use of the product. As a result, patent owners were traditionally precluded from collecting royalties on subsequent sales of their products. In this case, LG Electronics (LGE) sold Intel the unrestricted right to use its patent in making Intel computer chips, but attempted to circumvent the patent exhaustion doctrine by requiring Intel to notify its customers that they were not authorized to combine the Intel chips with any non-Intel products. After some of Intel’s customers disregarded this notice and combined Intel chips with computer memory made by other companies, LGE sued those customers for patent infringement. In ruling in favor of the defendant customers, the district court held that, under the patent exhaustion doctrine, LGE’s rights in its patent were exhausted by Intel’s authorized sale of the chips to its customers. The Federal Circuit reversed, holding that the patent exhaustion doctrine only applies to “unconditional” sales and does not preclude a patent owner from selling its patent rights in a limited manner and imposing conditions on subsequent buyers that allow the patent owner to collect a separate royalty each time that the patented item changes hands.

The Supreme Court ruled unanimously on 6/9/2008 that patent owners can not extend their patent rights beyond the first authorized sale of a patented item. This principle applies to method claims as well as other patent claims. Once a product embodying a patent is sold, its buyer may resell it without being restrained by the patent laws.

In this case, some smokers sued the makers of Marlboro Lights and Cambridge Lights under Maine’s Unfair Trade Practices Act, alleging that the manufacturer’s advertising the cigarettes as “light” and having “lowered tar and nicotine” was deceptive. They claimed that smokers might compensate for the lowered tar and nicotine by increasing their smoking, thus making the products just as unhealthy as non-light cigarettes.

The federal district court held that the state law claims were preempted by the Federal Cigarette Labeling and Advertising Act, which expressly prohibits states from imposing any requirements “based on smoking and health . . . With respect to the advertising or promotion of any cigarettes,” and gives the Federal Trade Commission exclusive authority to regulate all cigarette labeling and advertising involving the health impact of smoking. The First Circuit reversed, holding that the state law claims were not preempted because they were not based on “smoking and health” but instead on a more general duty not to deceive and thus did not fall within the scope of the Federal Cigarette Labeling and Advertising Act.

The NAM filed an amicus brief urging the Court to reverse the First Circuit. We argued that one of the principal reasons for the FTC is to provide regulatory guidance to businesses in order to comply with laws prohibiting deceptive practices. If plaintiffs can file lawsuits in state court with respect to labeling for which the FTC provides guidance, this would undermine the ability of manufacturers in a variety of industries from relying on guidance from the FTC. Congress empowered the FTC to issue guidance with respect to deceptive acts and practices. Allowing this state lawsuit to proceed would not supplement the FTC's role in the area of labeling -- it would be wholly at odds with federal law.

On Dec. 15, 2008, the Supreme Court upheld the lower court, 5 to 4. The majority held that the federal law is narrowly written and bars claims based on the effect of smoking on health, not claims based on fraudulent statements. It ruled that the FTC's approval of the words "light" and "low tar" was not clear enough specific authorization to impliedly conflict with the state fraud claim. When a preemption law is unclear, the benefit of the doubt goes to the plaintiff asserting a state-law claim.

The dissenting Justices oppose this presumption against preemption, and warned that the test adopted by the majority for determining whether state law is preempted is unworkable and has frustrated many courts. Instead, the dissenters argued that claims such as "American-made," or "the official cigarette of Major League Baseball," would not be preempted, since they do not relate to the effect of smoking on health, but that claims such as "Light" or "lowered tar and nicotine" would be. If a fraudulent advertising claim is preempted, federal regulators rather than juries in every state would decide whether the advertising is fraudulent.

The NAM had joined with other groups in August 2007 urging the West Virginia Supreme Court to strike down a trial court plan that requires a determination of punitive damages liability and a punitive damages multiplier before certification of a medical monitoring class, before a full determination of the defendants' liability for medical monitoring, and before any medical monitoring damages have been determined.

The case involves alleged exposure to polyacrylamide, which is used in to treat coal wash water at coal preparation plants. We argued that punitive damages must be based on actual damages, and cannot be determined in a vacuum before actual damages are determined. The trial court had not yet determined who should be in the class of plaintiffs, let alone whether any of them were actually harmed by the plaintiffs or how reprehensible the challenged conduct was to those plaintiffs. Setting punitive damages without making such determinations biases the jury, arbitrarily imposes punishment, and jeopardizes the right to receive a fair trial in West Virginia.

On Nov. 15, the West Virginia Supreme Court denied the appeal. It ruled that determining the constitutionality of punitive damages requires that it wait until the lower court actually enters a judgment awarding punitive damages. It also indicated its reluctance to intervene in pre-trial issues.

After the West Virginia Supreme Court refused to strike down this plan, the NAM filed a brief in the U.S. Supreme Court urging that the decision be reviewed and overturned. On 3/31/08, the Court declined to hear this appeal.

See also earlier cases decided in West Virginia in 2004 and 2007, Chemtall Inc. v. Madden.

A medical device was granted pre-market approval by the Food and Drug Administration (FDA), which studied the device's design, method of manufacture and proposed label. Manufacturers may not change these characteristics after approval is obtained, without further proceedings. However, this case involves whether a private lawsuit in state court may challenge the design, manufacture or labeling of the device, or whether such a suit is preempted by § 360k(a) of the Medical Device Amendments to the Food, Drug and Cosmetic Act. That section preempts any state "requirement" that "relates to the safety or effectiveness" of a medical device and "is different from, or in addition to, any requirement applicable under" the MDA.

The plaintiff alleged injuries from the malfunction of a balloon catheter, and the defendant argued that the FDA's grant of pre-market approval established federal requirements that preempted state tort liability, since such liability would be a state requirement different from or in addition to the federal requirements.

The Supreme Court ruled 2/21/08 that FDA premarket approval does establish a requirement under federal law, and it preempts the suit under state law. It found that the New York law suit raised claims that rely on requirements that are "different from, or in addition to" the federal requirements and that relate to the safety or effectiveness of the approved device. State common-law liability is premised on the existence of a legal duty, and constitutes a "requirement." Justice Scalia's opinion notes that a "State tort law that requires a manufacturer's catheters to be safer, but hence less effective, than a model the FDA has approved disrupts the federal scheme no less than state regulatory law to the same effect." He suggested that tort law, applied by juries, is "less deserving of preservation" than statutory law or regulations, because juries, unlike federal or state officials, do not take into account the benefits of a particular product design along with its risks.

It is clear that Congress can decide to preempt litigation under state common law in order to promote the development and marketing of products whose risks and benefits must be assessed. Allowing such assessment to be made every time there's a new lawsuit would overturn the considered judgment of the federal government.

In a class-action lawsuit filed by plaintiffs who were allegedly injured by a drug that had obtained Food and Drug Administration (FDA) approval, the defendant manufacturer would normally be shielded from liability by Michigan’s product liability statute because its drug had been approved by the FDA. Such immunity is lost under the statute’s “fraud exception,” however, if the manufacturer intentionally withheld from or misrepresented to the FDA information about the drug that would have caused the FDA to disapprove it. Plaintiffs attempted to preserve their claim against Warner-Lambert’s FDA-approved diabetes drug, Rezulin, by alleging such fraud.

In a similar case, Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), the Supreme Court held that the Food, Drug and Cosmetic Act (federal law) preempts state “fraud-on-the-FDA” claims (claims in which the FDA would not have approved the product but for the fraud), as such claims “conflict with the FDA's responsibility to police fraud.” Although the federal district court held that the preemption found in Buckman applied to the claims in this case, the Second Circuit reversed, holding that plaintiffs’ claims were not preempted because they were traditional state tort law claims (such as claims of defective design and defective manufacturing), not claims based on “fraud-on-the-FDA.”

When it accepted the case for review, the Supreme Court agreed to decide two key issues: 1) whether a state court is preempted from finding fraud when a federal agency has found no fraud, as such a finding would interfere with the agency’s critical functions; and 2) whether a state court can step into the shoes of a federal agency and determine that the agency would not have approved a product if fraud had not occurred.

However, on March 3, 2008, just one week after the oral arguments in the case, the Supreme Court split 4 to 4 on these issues, resulting in a simple affirmance, without opinion, of the Second Circuit's decision.

In June of 2007, the NAM opposed congressional proposals that would eliminate FDA preemption relating to warnings and clinical trial requirements for drugs and medical devices. The proposals would permit states to hold manufacturers liable under a patchwork of state laws for failing to adopt warnings that the FDA specifically rejected. They will also allow judges and juries to substitute unscientific reasoning for the FDA’s expert scientific determinations, with a huge potential for conflicting results. This case, relating to assessing the adequacy and accuracy of FDA regulatory proceedings, could similarly lead to conflicting results on a state-by-state basis.

The NAM joined the American Chemistry Council in an amicus brief urging the Supreme Court to overturn an award of $17.5 million in punitive damages against a manufacturing plant in Phenix City, Alabama. This case involves the release of “carbon black” in the neighborhood of the plant which caused property damage but no harm to individuals. Our brief argued that the large punitive damages award is unconstitutionally excessive because, under established Supreme Court precedent, it is so much larger than other state penalties that might realistically be imposed for comparable misconduct.

Not only did the Alabama Department of Environmental Management (ADEM) impose no civil penalties on the company for the release of carbon black, but the most it could have fined the company was $250,000 for every group of ten violations. To reach an unrealistic multi-million civil penalty the Eleventh Circuit believes ADEM could have imposed, ADEM would have had to issue at least eight separate orders (based on a total of at least eighty separate violations). Neither the record nor common sense supports the court’s unstated assumption that the company would have continued to engage in violations and to incur successive $250,000 penalties after receiving the maximum punishment from ADEM. That assumption ignores the duties owed by the company to its shareholders and is refuted by the record evidence showing that the company took various steps to identify and remedy the causes of the carbon black emissions.

On June 27, 2008, the Supreme Court declined to hear this appeal.

The NAM joined other groups in an amicus brief 9/20/07 supporting an appeal of the largest punitive damages award ever affirmed on appeal, $2.5 billion, and larger than the total of all punitive damages awards affirmed by all federal appellate courts in U.S. history. At issue is whether the absolute size of the punitive award against Exxon is excessive in relation to the State’s legitimate interests in retribution and deterrence for the Exxon Valdez oil spill in 1989.

On Oct. 29, the Court agreed to review the case, but limited the issues to whether punitive damages may be awarded at all under maritime law, and if so, whether the damages awarded in this case were constitutionally legitimate. The NAM and others filed another brief on Dec. 26, this time trying to outline for the Court the factors that should be considered when deciding on punitive damages.

The Supreme Court has identified three guideposts for courts to use in determining when a punitive award is unconstitutionally excessive: (1) the degree of reprehensibility of the misconduct; (2) the ratio of the punitive to the compensatory damages; and (3) the difference between the punitive damages and the legislative and/or administrative penalties for comparable misconduct.

Under the first guidepost, our first brief argued that not only was Exxon’s conduct unintentional and not profit-motivated, but it promptly took steps to ameliorate the harm its oil spill caused. This is hardly reprehensible conduct.

Under the second guidepost, the $3.6 billion in compensatory damages, fines, and remediation expenses incurred by Exxon as a result of its conduct already serves to punish and deter; thus, record-breaking punitive damages of $2.5 billion would only add insult to injury. Our brief likened this case to the “ink on the rug” example: if a person ruins a $10,000 rug by spilling a $5 bottle of ink, he would be exceedingly careful never to spill ink on the rug again, even if it cost him “only” $10,005 and he was not otherwise punished.

Under the third guidepost, our brief pointed out that the punitive award in this case is twenty times the amount of the combined federal and state criminal fines imposed against Exxon and over thirty times the maximum amount of civil penalties that could have been imposed, with such a disparity suggesting that Exxon could not have had fair notice of the punishment’s magnitude.

The Ninth Circuit’s treatment of punitive damages is symptomatic of a growing misperception among reviewing courts that the Constitution never requires a punitive award to be less than the compensatory damages, no matter how high the compensatory damages may be. Our brief outlined the continual failure by courts to recognize that large compensatory damages (and other costs borne by the defendant as a result of its tort) can and often do punish and deter in their own right and that the ultimate question in any constitutional inquiry must be whether the absolute amount of the penalty is excessive.

In our merits brief, we outlined 8 considerations that lead to the conclusion that the award in this case was constitutionally excessive. The factors are:

· What is the conduct that is being punished?
· How wrongful was the conduct?
· Who committed the conduct?
· To what extent do compensatory damages, fines and other costs borne by the defendant as a result of its conduct already serve the goals of deterrence and retribution?
· What amount of fines have the expert regulatory agencies determined to be appropriate to punish and deter the same or similar conduct?
· How does the punitive award compare to prior punitive awards for comparable or more egregious conduct?
· Is the punitive award disproportionate to the harm to the plaintiff(s)?
· If the tortfeasor is an individual, what is his or her financial condition?

On 6/25/2008, the Court failed to reach agreement on whether maritime law imposes liability on a corporation for the acts of managerial agents, and the Ninth Circuit approval of such liability was upheld. The Court also ruled that the Clean Water Act does not preempt suits under maritime law for damages from oil spills under maritime jurisdiction.

Finally, the Court ruled 5-3 to declare that federal maritime law imposes certain common law limits on excessive punitive damages, and that a ratio of more than 1 to 1 between punitive damages and compensatory damages is excessive, at least in cases where the defendant company did not act in a way that exhibited "earmarks of exceptional blameworthiness." Reckless conduct, for example, is less blameworthy than intentional or malicious conduct, nor is it "necessarily callous toward the risk of harming others." Action taken or omitted to augment profit is more blameworthy as well. In cases like this, without intentional or malicious conduct, without behavior driven primarily by desire for gain, and without modest economic harm or low odds of detection, a ratio of 0.65 to 1 is a reasonable median ratio, and a 1 to 1 ratio is a "fair upper limit."

The decision is a determination under federal common law applicable in maritime cases, but some of the language will be used to support further arguments raising constitutional limits in future cases of all kinds.

The Racketeer Influenced and Corrupt Organizations Act (RICO) is a sweeping statute that allows individuals to sue any person associated with an enterprise that engages in a pattern of racketeering activity, which includes mail or wire fraud. This case involves whether a plaintiff must prove that he or she relied on an allegedly fraudulent act in order to sue.

The defendants were alleged to have submitted false information to Cook County, Illinois, in connection with county tax lien auctions, but the plaintiffs who sued them never saw or relied on that information. The Seventh Circuit allowed the suit to proceed anyway. Other circuits have required a showing a reliance on a material misrepresentation.

The Supreme Court ruled unanimously on 6/9/2008 that RICO does not require proof of reliance. All that is required is proof that the plaintiff's business or property was injured by an act prohibited by RICO. Congress made mail fraud a violation, but did not incorporate the usual state common law requirement that someone rely on the fraud to their detriment. The decision will encourage further RICO-based litigation.

The Supreme Court on 1/15/08 affirmed 5 to 3 an 8th Circuit decision that relieved two third-party vendors from liability under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 for deceptive conduct. The Court ruled that the equipment vendors, who agreed with the corporation to engage in a rebate scheme that allegedly had no legitimate business or economic purpose except to artificially inflate the corporation's financial statements, issued no statements to the public that investors relied upon. The Court also reaffirmed that the defendants may not be sued in a private suit for aiding and abetting the corporation's violations; only the SEC or certain state prosecutors may bring such suits.

This was a high profile case in which the Court was being asked to substantially expand the universe of companies that can be sued when a company deceives its own investors. The NAM filed a brief 8/15/07 arguing that expanded liability is not provided for in the statute, and that such expansion would chill legitimate commerce, harm the economy, encourage frivolous claims, increase the costs of litigation, and encourage coercive settlements.

Manufacturers are relieved that the Court stepped in to prevent "creeping liability," where plaintiffs attempt to expand primary responsibility for one's acts to third parties who were not involved in making any misleading statements. The Court properly recognized that Congress did not create a broadened right to sue in this situation, and underscored the need for plaintiffs to show that they relied on fraudulent or misleading statements.

In this case, a shareholder who received funds from his corporation and failed to report them as income was convicted of tax evasion. As his defense, the shareholder argued that the funds should be treated as the non-taxable return of the capital he had invested, since there were no other means of returning his capital in light of the corporation’s inability to distribute dividends because it had made no earnings or profits.

On 03/03/08, the Supreme Court unanimously held that a shareholder receiving funds in this manner and accused of criminal tax evasion may claim return-of-capital treatment without producing evidence that, when the distribution occurred, either he or the corporation intended a return of capital. The lower court must now decide on remand whether the diversions in this case were actually non-taxable returns of capital.

Seattle and Tacoma, Washington, impose a business activity tax on companies doing business there. In this case, the cities tax wholesalers on all receipts received from wholesale goods delivered in the cities, even though only a small portion of the activities related to those sales are done within those cities. The Washington Supreme Court ruled 5 to 4 that the taxes do not discriminate against interstate commerce.

The NAM joined with the Council on State Taxation and the U.S. Chamber of Commerce in an amicus brief urging the Supreme Court to review this decision. Lower courts are confused over how to treat business activity taxes with respect to apportionment rules between various taxing jurisdictions. State and local authorities are deceptively labeling taxes as either specific to transactions or specific to activities in order to avoid long-standing legal principles that may apply in one instance but not the other.

On Feb. 19, 2008, the Court declined to review this appeal. The case would have been an important vehicle for the Court to clarify the rules by which state and local governments may impose taxes on interstate business. Our brief cited business activity taxes in Kansas City, Missouri, and Bristol, Tennessee, as well as conflicting court decisions over this issue in many states. Because an increasing number of the more than 1,000 local jurisdictions rely on business activities taxes on gross receipts as a major source of revenue, this issue will continue to be a problem for manufacturers until the Supreme Court agrees to decide it.

On Nov. 13, 2007, the NAM joined with the Council on State Taxation (“COST”) in an amicus brief urging the Supreme Court to overturn an Illinois decision that would subject businesses to unfair and duplicative taxation by multiple states on the same income.

MeadWestvaco’s predecessor, Mead (headquartered in Ohio), acquired the company now known as LexisNexis (another Ohio corporation) for $6 million in 1968, although it allowed LexisNexis to run as an independent business for 26 years, providing cash infusions, profit investment, and oversight rather than hands-on management. After selling Lexis-Nexis for approximately $1.5 billion in 1994, Mead reported the sales gain on its Illinois corporate tax return as non-business investment income. The Illinois Department of Revenue believed Mead should have classified the LexisNexis sale as business income “apportionable” to Illinois and found that Mead owed approximately $3.1 million in Illinois income tax and $1 million in interest. Although a state is not permitted under the Constitution to tax corporate earnings made in other jurisdictions, a state may tax a portion of earnings made within its boundaries. To meet this constitutional requirement, Illinois employs an “apportionment” method to tax the portion of a company’s earnings that can be attributed to Illinois transactions. States generally cannot tax companies incorporated in another state for capital transactions like the sale of an asset, because such transactions do not have the required connection to the state, unless the asset sold served an “operational” rather than an “investment” function.

Mead sought injunctive and declaratory relief in Illinois state court, based on its belief that LexisNexis was a company “investment,” not an “operational” part of its business that would be subject to Illinois taxes. The trial court held, and was affirmed on appeal, that Mead failed to satisfy its burden of proving LexisNexis was not an “operational” asset and thus should have classified the sale as apportionable business income.

Our brief argues that Illinois’ attempt to tax the gain from the sale of LexisNexis, which had functioned as an independent business, conflicts with the decision in Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768 (1992), where the Court established that an asset was “operational” only if it was utilized directly in the selling company’s business or was a short-term investment designed to raise cash for daily operating expenses.

Our brief warns that if this decision is affirmed by the Supreme Court, companies are more likely to face out-of-state taxation when they sell assets that might be characterized as serving an operational function, as opposed to simply being an investment.

On April 15, 2008, the Court reversed and remanded the case. It ruled that the lower court erred in considering whether Lexis served an operational purpose in Mead's business after determining that Lexis and Mead were not a unitary business. Instead, the lower court should recognize that a corporate asset could be part of a unitary business if it serves an operational rather than an investment function, and could be taxed by various states as part of the company's unitary business. An asset can be a part of a unitary business even without a payor-to-payee relationship between the owner of the asset and the company that the state wants to tax. The trial court found that Lexis was not a unitary part of Mead's business, but the appeals court reserved that question, so the Supreme Court sent the case back for reconsideration in light of its new guidance.

This decision purports to clarify how to determine whether an asset should be considered part of a unitary business and therefore subject to apportioned taxation by any state where the unitary business does business.

One federal statute, the Tucker Act, provides a 6-year statute of limitations to sue the government for claims "founded . . . Upon the Constitution." Another statute, the Internal Revenue Code, requires that claims for refund of tax overpayments be filed within 3 years of filing the relevant tax return. The Supreme Court decided 4/15/08 that the longer Tucker Act statute of limitations may not be used for a claim for the recovery of taxes assessed in violation of the Export Clause of the Constitution.

The taxes had been imposed on coal mined in the United States, but those taxes were later found to be unconstitutional. The taxpayers sued the government and won both their back taxes and interest in the lower courts. The Supreme Court found the tax refund statute to be clear on its face, and saw no reason to give taxes imposed in violation of the Export Clause any different treatment from taxes challenged on some other grounds.

The NAM joined with DuPont in an amicus brief urging the Supreme Court to hear an appeal by Bell Atlantic of this consumer class action alleging, with merely conclusory allegations, that four Bell companies had conspired to prevent new entry in their respective territories and to refrain from entering each other's territories. The theory of the complaint was that the companies acted in a similar fashion, and that this parallel conduct must have been the result of a conspiracy.

However, antitrust law recognizes that mere parallel conduct, by itself, does not imply collusion or conspiracy, because it is often in a company's own independent self-interest to conduct business that way. Our brief argued that courts should not allow antitrust claims based on parallel conduct, without any allegation of facts relating to actual collusion. If such claims get past an early motion to dismiss, defendant companies will suffer enormous costs during the discovery phase of the litigation, and will be under great financial pressure to settle meritless claims. A lowered pleading standard will encourage plaintiffs to file questionable cases.

On Aug. 25, 2006, the NAM joined with 7 other business organizations in an amicus brief on the merits. We argued that a conspiracy case under the antitrust laws requires evidence that there was a contract, combination or conspiracy, and pleadings filed in the case must allege facts sufficient to show, if proven, that a law was broken. It is perfectly legal for companies to engage in parallel behavior that is arrived at independently of their competitors and that has a business rationale. If such “conscious parallelism” is legal, then it is inappropriate for a court, at any stage of a case, to allow the case to proceed on the inference that parallel behavior between competitors is illegal, unless there is some allegation of facts showing that the parallel behavior was brought about by a conspiracy.

In addition, we argued that courts should consider the risk of abusive litigation and enormous discovery costs when determining whether pleadings provide a sufficient basis for a lawsuit. Courts must use the tools they have to prevent class-action harassment of defendants, and are obligated to ensure a speedy and inexpensive determination of every case. Preventing abusive litigation is critical, especially in a case where virtually every person and business in the United States is part of the plaintiff class and where virtually the entire telephone and high-speed internet industry is alleged to have participated in an antitrust conspiracy.

The Supreme Court agreed. It ruled 5/21/07 that an allegation of parallel conduct and a bare assertion of conspiracy without enough factual matter to suggest that an agreement was made is insufficient to state a claim under Section 1 of the Sherman Act. It ruled that a complaint of this kind must not only be conceivable, it must be plausible. Justice Souter characterized a long-misunderstood statement in a 1957 case as having "earned its retirement." The statement, from Conley v. Gibson, was that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." What this actually means, according to the Court, is that once a claim has first been adequately stated, it may be supported by any set of facts, no matter how inventive, consistent with the allegations in the complaint. Since the claim in this case did not overcome the initial hurdle of plausibility, the lower court decision was reversed. This is an important ruling that will help judges control trial lawyers who overreach with questionable claims.

Labor agreements are statutorily exempt from the antitrust laws, but are investment banks and institutional investors during initial public offerings? In this case, investors sued 16 investment banks and institutional investors claiming that they conspired to require investors to pay certain "anticompetitive charges". The challenged practices include claims that underwriters and institutional investors were bribed, that purchasers had to buy unrelated securities, and others. The district court dismissed the complaint, finding that the securities laws permit much of the challenged conduct, and that the defendants have implied immunity. The SEC and Solicitor General agreed, but the Second Circuit did not.

The Supreme Court ruled 6/18/07 that the securities laws implicitly preclude the use of the antitrust laws for such conduct. The SEC already regulates the conduct at issue, and private parties can bring suit under the securities laws. Applying antitrust laws to this conduct is simply incompatible with the regulation of securities by the SEC. Any other ruling would interfere with the process of capital formation.

The NAM filed an amicus brief urging the Supreme Court to revisit whether resale price maintenance should always be considered a violation of the antitrust laws subject to treble damages, or whether there are sometimes legitimate business and procompetitive justifications that a court should take into account.

This case arose when a manufacturer of women's leather goods and accessories, selling through boutiques offering personal service and attention, suspended sales to a store that was not respecting its suggested retail price policy. The manufacturer, Leegin Leather, had announced that it would not deal with retailers that discounted its products, in order to promote sales through retailers that provided more service, and to foster an "everyday fair price" approach that prevents customers from feeling cheated if they see the merchandise on sale after they have already bought it.

The company's pricing policy was successful, but the trial court refused to allow the company to introduce evidence of the procompetive justifications for the policy, relying on the 1911 Supreme Court decision in the Dr. Miles case that resale price maintenance is per se illegal.

On 6/28/07, the Supreme Court ruled 5 to 4 to overturn Dr. Miles. It ruled that resale price maintenance can have procompetitive justifications, and that a per se rule against it is inappropriate. Although the plaintiff won a jury verdict of nearly $4 million, the manufacturer may now introduce evidence that its pricing policy has procompetitive justifications.

The NAM has participated in several Supreme Court cases in which we argued in favor of a rational approach in this area. Giving manufacturers the flexibility to establish the price at which their products may be sold can provide a variety of procompetitive benefits, and can help prevent discount dealers from "free riding" on the efforts of their competitors. Often products, such as complex electronic equipment, require retailers that are willing to invest in sales education and advertising.

Our brief in this case argued that the artificial rule in Dr. Miles has forced courts to distort ordinary principles of contract law, and to treat non-price restraints differently, even though they are as important to competition and can have a greater effect on prices than minimum resale prices.

The NAM and the Business Roundtable filed an amicus brief urging the Supreme Court to review a Ninth Circuit decision that allows certain manufacturers to be sued if they pay too much for inputs to their manufacturing process. This is an antitrust case where a competitor claimed that Weyerhaeuser paid more than was “necessary” for hardwood logs in the Pacific Northwest in order to drive its competitors out of business.

The Ninth Circuit held that a jury could regard paying higher prices than necessary as an anticompetitive act, and the jury awarded a judgment for nearly $79 million against Weyerhaeuser. Our brief to the Supreme Court argued that the Ninth Circuit’s standard is dangerous and unworkable, and will subject purchasing decisions to judicial oversight, deterring companies from making efficient purchasing decisions to adjust to rapidly-evolving market conditions, fostering inefficiencies that ultimately harm consumers. Instead, a company should not be liable if it continues to make a profit and does not have any chance of succeeding in its alleged predatory scheme. The antitrust laws should not be used to punish efficient competitors.

On February 20, 2007, the Supreme Court unanimously agreed. It applied the standard of Brooke Group Ltd. V. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), which governs predatory selling claims. A plaintiff must now show, in cases where a defendant is alleged to have bid up the price of inputs to manufacturing, that the defendant lost money and that there was a dangerous probability that the defendant would recoup its losses after its scheme to shut out competitors succeeded.

The NAM and the Business Roundtable filed an amicus brief supporting this result. Our latest amicus brief argued that the antitrust laws are designed to protect competition, not competitors. Whether a price paid for an input to manufacturing is “necessary,” or the volume of inputs purchased is “more than is needed,” is irrelevant to allegations of predatory conduct. Rather, what is important is whether the company can continue to sell its products at a profit. If so, it is operating efficiently, and companies that cannot profit should try to become more efficient, not sue. Even if a company pays higher prices for inputs to manufacturing, as long as it is making money, its success is what competition is all about.

Moreover, many legitimate business reasons exist for a company to pay more for raw materials than others might consider “necessary.” There may be limited supplies available, and both market conditions and consumer demand may change rapidly. A manufacturer must have the flexibility to make buying and selling decisions without being second-guessed by judges applying vague standards of liability, particularly when treble damages and attorneys’ fees can be imposed for the wrong choice. Business needs rules that can be implemented on a day-to-day basis by ordinary business people – not by industrial organization economists or lawyers – so that they can continue to improve productivity and efficiency and compete in today’s marketplace.

A federal law (42 U.S.C. § 1983) allows individuals and companies to sue the government for deprivation of any rights, privileges or immunities, and a prevailing party can recover attorneys' fees. The issue in this case is whether a party can obtain attorneys' fees for winning a preliminary injunction, even though the government ultimately won the case on the merits.

The 11th Circuit awarded attorneys' fees to a group of peace protestors who obtained a preliminary injunction to allow them to create a nude peace symbol on a Florida beach, even though the state's regulations ultimately were upheld.

Although federal courts had been split on the attorney’s fees issue, the Supreme Court clarified the issue on June 4, ruling unanimously that plaintiffs who gain a preliminary injunction do not qualify for an award of attorney’s fees if the merits of the case are ultimately decided against them.

The courts of West Virginia have earned the American Tort Reform Association's designation as being the nation's #1 Judicial Hellhole^®. This case exemplifies the problems that manufacturers face in that state. A jury awarded $10.5 million for an alleged breach of a confidentiality agreement, even though there was no evidence of injury to the plaintiff. When the defendant appealed to the West Virginia Supreme Court of Appeals, the state's only appellate court, the court declined to hear the appeal.

Daniel Measurement Services appealed to the U.S. Supreme Court, arguing that the Due Process clause requires both evidence of harm and adequate judicial review of a jury award.

The NAM was joined by 3 other business groups in an amicus brief supporting the appeal. We explained our concern that the trial court had adopted a blanket policy against summary judgment even when it had concern that the facts accepted in the light most favorably to the plaintiff might not support a claim. According to the judge, ". . . This ain't Texas, this ain't Kansas, this is West Virginia, and we don't give summary judgment." We also argued that the Due Process Clause requires some meaningful level of pre- and post-trial review as a safeguard against arbitrary or excessive compensatory damage awards.

Unfortunately, the Supreme Court declined to hear the appeal on 11/26/2007.

The Supreme Court held 3/27/2007 that whistleblowers who pursue claims under the False Claims Act (FCA) where allegations of fraud upon the federal government have already been disclosed to the public can only do so if they have personal knowledge of the fraud. Under the FCA, to collect a bounty, which can be as high as 30% of the government’s recovery, the whistleblower must be an “original source” of the information that resulted in the claims that were tried to the jury. The Court held that the whistleblower in this case was not an “original source,” as the government did not rely on the whistleblower’s theory related to defects in the piping system, but instead relied on an unrelated theory. Additionally, none of the witnesses he had identified as having relevant knowledge testified and none of the documents he provided was introduced at trial.

This decision is a victory for government contractors, who can face protracted and expensive litigation as a result of opportunistic whistleblower claims. It establishes the public disclosure bar as a mechanism to keep whistleblower litigation focused on only those claims where the whistleblower has the requisite personal knowledge of an alleged scheme to defraud the United States.

The NAM joined other groups 12/27/06 in an amicus brief urging the Supreme Court to hear an appeal by DuPont involving the costs of cleaning up contaminated Superfund sites. The right to collect a fair share of the cleanup costs from other parties, including governments, who are responsible for contributing to the hazardous wastes in Superfund sites, is critically important to manufacturers and to the cleanup process. Our brief urges the Court to review a Third Circuit decision that denied the right of a manufacturer to seek contributions from other parties that helped create the problem.

We argue that CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, was enacted to facilitate prompt and effective cleanup of contaminated sites, and a right of contribution is integral to achieving this goal. The Third Circuit's decision will impede the national effort to clean up sites, will unfairly burden a few private parties, and will discourage or delay the redevelopment of many of our nation's cities. The court's decision is also in direct conflict with decisions by unanimous panels of the Second and Eighth Circuits.

The brief describes four important categories of cleanups that will be discouraged and/or delayed by the Third Circuit's ruling: (1) thousands of sites polluted by the federal government, (2) thousands of sites subject to corrective action under Subtitle C of the Resource Conservation and Recovery Act (RCRA), (3) Superfund sites, and (4) thousands of brownfields sites whose only realistic potential for cleanup is voluntary action by responsible parties.

The NAM joined with the Superfund Settlements Project, the American Chemistry Council, the American Petroleum Institute and the United States Conference of Mayors in the brief.

On 6/18/07, the Court granted the petition, vacated the lower court's decision and sent the case back for reconsideration in light of its recent decision in United States v. Atlantic Research Corp. The lower court is expected to rule in favor of Dupont.

On April 2, 2007, the Supreme Court ruled unanimously that the definition of the word “modification” can be interpreted in different ways by the EPA under separate Clean Air Act enforcement regulations with different ways of implementation. It overturned a Fourth Circuit ruling that required EPA to conform the interpretation of “modification” in regulations for the Prevention of Significant Deterioration (PSD) to the interpretation of that word under the New Source Performance Standards (NSPS) regulations.

The NSPS regulations apply when a stationary source is modified so that its hourly emissions rate increases. The PSD regulations require a permit when a modification of a stationary source is a major one and only when it would increase the actual annual emission of a pollutant above the actual average for the two prior years.

The Supreme Court upheld EPA’s decision to impose permit requirements under the 1980 PSD regulations that may apply even though a change to a major stationary source does not increase an emitting unit's hourly emissions rate. It ruled that an enforcement court may not implicitly invalidate the 1980 PSD regulations unless it is shown that review of the underlying issue could not have been obtained in accordance with the normal Clean Air Act judicial review procedures.

In terms of impact, this ruling is limited to an interpretation of the 1980 PSD rules, which have since been amended in 2002. In the rule amendments, EPA clearly indicated that it would use for the future an annual emissions test for PSD and provided specific standards that govern application of that test. Thus, the potential scope of impact for this ruling is limited to enforcement for actions that may have occurred under the prior version of EPA's rules.

The NSR Manufacturers Roundtable, including the NAM, participated in this case in the Fourth Circuit and in the Supreme Court.

In a major 5-4 ruling, the Supreme Court decided 4/2/2007 that the EPA must reconsider its decision not to issue new motor vehicle emission standards under its authority under section 202(a)(1) of the Clean Air Act, relating to the regulation of air pollutants associated with global climate change. Under that section, the EPA Administrator must regulate air pollutants when, “in his judgment,” such pollutants “may reasonably be anticipated to endanger public health or welfare.” 42 U.S.C. § 7521(a)(1). Several parties petitioned the EPA to set regulatory standards for air pollutants associated with climate change. The EPA denied the petition, concluding that it lacked authority to do so, and that, even if it had authority, it would deny the petition based on various policy considerations not expressly addressed in the statute, including scientific uncertainties, the inefficiency of piecemeal approaches to the climate change issue, and foreign policy concerns.

The D.C. Circuit upheld the EPA’s decision, but the Supreme Court reversed. The majority ruled that the 11 states that filed suit had standing to sue because the standing requirements for challenging agency action unlawfully withheld are not as strict as regular standing requirements. The states need only show that they have suffered a "concrete and particularized injury," but not that the injury is immediate or that a favorable decision will redress that injury. Because the states have a procedural right to protect their interests, they have standing "if there is some possibility that the requested relief will prompt the injury-causing party to reconsider the decision that allegedly harmed the litigant." It also ruled that states are entitled to special treatment because they have given up some of their sovereign powers to the federal government.

It ruled that Massachusetts will suffer injury to coastal land that it owns, and since EPA did not dispute the existence of a causal connection between man-made greenhouse gas emissions and global warming, EPA's refusal to regulate such emissions contributes to that state's injuries. EPA cannot refuse to regulate just because auto emissions are such a small part of overall greenhouse gas emissions, since many regulations legitimately take incremental steps in addressing massive problems.

The Court held that an agency's denial of a petition for rulemaking is susceptible to "extremely limited" and "highly deferential" judicial review. It found that the plain language of the Clean Air Act defines "air pollutant" to include all airborne compounds of any kind, and regulating the quality of the air does not conflict with the Department of Transportation's authority to regulate automobile efficiency.

Finally, the Court ruled that the Clean Air Act requires EPA to form a judgment on whether greenhouse gases contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. Once it has found such endangerment, it has "significant latitude as to the manner, timing, content, and coordination of its regulations with those of other agencies." To avoid having to impose some regulations, it must either determine that greenhouse gases do not contribute to climate change, or provide some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do. Thus, the Court left open the possibility that EPA could withhold regulation, but only if it grounds its reasons for inaction in the Clean Air Act.

Justices Roberts, Scalia, Thomas and Alito dissented in part because they felt the states did not have standing, and that the Court's new rule giving states preferential treatment has no basis in existing case law. The majority cited a 1907 case that did not involve standing and that neither the states nor any of the supporting briefs mentioned. The dissent argues that a particularized injury to Massachusetts has not been shown, since the affidavits in support of that claim suggest that land subsidence, a non-global-warming cause, is affecting Boston's rising sea level. Injury is not imminent or certainly impending, and a computer model's conceded average error rate is greater than or equal to the projected sea level rise. The alleged connection between the fractional amount of global emissions that might be limited with EPA standards and the loss of Massachusetts coastal land is far too speculative to establish causation. Furthermore, a regulation is not likely to redress Massachusetts' injury, since it will have no proven effect on the voluminous amount of greenhouse gases emitted elsewhere in the world. Referring to a 1973 decision in United States v. Students Challenging Regulatory Agency Procedures (SCRAP), Chief Justice Roberts wrote, "Today's decision is SCRAP for a new generation."

A separate dissent written by Justice Scalia says there is no language in the Clean Air Act that requires EPA to make a judgment on greenhouse gases, and that the Act governs only air pollution, which EPA reasonably decided does not include carbon dioxide high in the atmosphere.

The NAM is part of the CO2 Coalition, which participated in this case in the D.C. Circuit and the Supreme Court. The decision granting standing to states to challenge federal agency action, or inaction, without the same restrictions as other plaintiffs could lead to increased litigation by the states against a variety of federal agency decisions.

On June 25, 2007, the Supreme Court ruled 5-4 that the Endangered Species Act does not prevent the EPA from transferring its authority to issue Clean Water Act permits to a state pollution control agency. Transferring such authority is non-discretionary, and the Clean Water Act does not require consideration of statutes not specifically mentioned in that Act when doing so.

Had the Clean Air Act been read to include requirements from other statutes, EPA might have been similarly required to incorporate various other statutory requirements into a variety of laws. This could have affected Section 404 permits, federal flood insurance issued by FEMA, and permits for federal projects that might be required to consider terrorism risk during environmental impact studies under the National Environmental Policy Act.

The Supreme Court considered 3 cases in 2007 about whether parties that voluntarily undertake to clean up Superfund hazardous waste sites can sue, under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) other parties that contributed to the wastes. On June 11, 2007, the Court ruled unanimously in Atlantic Research that they can. The NAM filed an amicus brief in another, DuPont v. United States, which was sent back to the lower court for reconsideration in light of the decision in this case.

The Court ruled that § 107(a) makes potentially responsible parties (PRPs) liable for any costs of response incurred by any person consistent with the national contingency plan. It reaffirmed that a private party may bring suit under § 113(f) to obtain contribution from other liable parties only after having been sued themselves. It concluded that a private party may sue under § 107(a) even if it has not been sued by some one else.

The right to collect a fair share of the cleanup costs from other parties, including governments, who are responsible for contributing to the hazardous wastes in Superfund sites, is critically important to manufacturers and to the cleanup process. CERCLA was enacted to facilitate prompt and effective cleanup of contaminated sites, and a right to sue for cleanup costs is integral to achieving this goal.

This is the second time this case has been appealed to the Supreme Court. This time around, the NAM joined with the National Solid Waste Management Association and the American Trucking Associations to urge the Court to review an adverse ruling by the Second Circuit that would allow a municipality, county or state to impose flow-control restrictions on the interstate transportation of solid waste. Flow-control laws allow local jurisdictions to prop up their disposal facilities by preventing waste generated in the locality from being taken anywhere else. The 1994 Supreme Court decision in the Carbone case held that a town's law flow-control ordinance discriminated against interstate commerce. The Second Circuit in this case provided a blueprint for local governments to avoid the Carbone decision by vesting part of the ownership of private waste disposal facilities in a public entity.

Our amicus brief argued that this ruling would seriously disrupt the interstate market in solid waste disposal services, including recyclables, and it ignored the practical economic effect of the ordinance, which is the key determinant when analyzing issues of discrimination against interstate commerce.

On April 30, 2007, the Court affirmed the Second Circuit's ruling, 6 to 3. It held that the county's restrictions treat in-state and out-of-state private business interests equally, and the government has an interest different from and superior to that of private businesses, since government is responsible for protecting the health, safety and welfare of its citizens. The Court was reluctant to interfere with numerous state and local government initiatives undertaken in furtherance of their police power. In addition, most of the burden of the regulation falls on those who voted for the laws, and they can change them through the normal political process.

The decision gives state and local governments vast power to control the disposal of all wastes within their jurisdictions, even though it may be more expensive.

Suits against company health and pension plan administrators are becoming more common as companies are forced to rein in excess potential liabilities from defined benefit plans. The Supreme Court agreed to review a Ninth Circuit decision that imposes fiduciary obligations on a company's decision to convert a defined benefit pension plan into annuities pursuant to ERISA requirements.

The Ninth Circuit ruled that the company could violate its fiduciary obligation if it doesn't undertake an "intensive and scrupulous investigation" into the possibility of merging the retirement assets into a multi-employer pension plan.

On 6/11/07, the Supreme Court unanimously disagreed. It deferred to an interpretation by the Pension Benefit Guaranty Corporation (PBGC) that the statute does not permit merger as a method of termination. Indeed, such an action could have detrimental consequences for the participants and beneficiaries of a single-employer plan as well as for the plan's sponsors. If a company chose this route instead of liquidating the fund and buying annuities, it would lose the ability to recover any residual assets that remain in the fund after it has satisfied its obligations to employees and retirees. There may also be additional funding requirements attributable to the multi-employer fund down the road.

The Court's decision will make it easier for companies to remove potentially large contingent liabilities from their benefits packages.

This case came to the Supreme Court in 2006, and it held that, even though the Bipartisan Campaign Reform Act (BCRA) had been upheld on initial challenge, its application in specific factual situations can still be challenged on a case-by-case basis. Wisconsin Right to Life did so, challenging the Section 203 bar on corporations using general corporate funds to pay for targeted broadcast communications that reference a federal candidate within thirty days of a primary election or within sixty days of a general election. A D.C. district court ruled that the law unconstitutionally interferes with First Amendment rights to engage in grassroots advertising campaigns, whereby candidates are mentioned but the focus of the ads is on issues pending in Congress.

The Supreme Court decided 5 to 4 on June 25, 2007 that that section of the law infringes on this group's right to tell the public about their senators' positions on filibustering judicial nominations. Issue advocacy, or expressing a position on an issue, as opposed to express advocacy of the election or defeat of a particular candidate for federal office, is protected by the First Amendment. Chief Justice Roberts' opinion held that issue advocacy may include the mention of a candidate's name, as long as the advocacy doesn't cross over to becoming express advocacy or its "functional equivalent." Ads that urge the listener to call Senator X about legislation are protected, since they involve political speech that may only be restricted to further a compelling interest and in a way that is narrowly tailored to achieve that interest. An ad would be equivalent to express advocacy, and subject to regulation, only if the ad "is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate." Although this test generated some debate among the Justices, future cases will determine whether it will be workable.

This case is important for any business that engages in issue advocacy. The NAM supports the result. Over the years, the line between permissible issue advocacy and impermissible express election advocacy has been reasonably clear, but the BCRA provision at issue prohibited what had been permissible issue advocacy. This is important to organizations like the NAM whose objectives in part are to inform citizens about the impact of legislative proposals on manufacturing, jobs and the economy, even during campaign season.

Private suits in state court against federal officers, or "any person acting under that officer," can be removed to federal court under the Federal Officer Removal Statute. The issue in this case is whether a highly regulated company qualifies as a person acting under a federal officer. The Supreme Court ruled 6/11/07 that it does not.

This class action was filed against Philip Morris alleging that "light" or "lower tar" cigarette advertisements were deceptive, but the company convinced the Eighth Circuit to remove the case to federal court because its ads were subject to the FTC's comprehensive regulations. The Supreme Court unanimously ruled that simply complying with federal regulations does not mean that a company is "acting under" the direction of a federal officer or agency. Rather, for removal to be appropriate, the company must actually be involved in assisting or helping to carry out the agency's work.

Thus, companies in highly regulated industries cannot use this removal statute to avoid state court systems that are sometimes hostile to them.

Employers can protect themselves against liability for unlawful discrimination by their representatives if they have procedures in place, and use them, to provide employees with procedural protections. This case involves a supervisor's discriminatory act that led to a subordinate's termination, carried out by the human resources department.

The issue on appeal was whether the employer is automatically liable for discrimination if the supervisor exerted some influence over the formal decision to take a discriminatory employment action, or whether the supervisor must be shown to have been the one principally responsible for the adverse action. The Tenth Circuit here took a middle ground approach, finding liability if the supervisor was part of the causal link to the termination, but allowing the company to absolve itself of liability if it conducted an independent investigation of the allegations against the terminated employee and came to the same conclusion.

This case involves what is being called "cat's paw" liability, where one person (the supervisor) uses another (a human resources manager) to achieve an end. The decision would have helped flesh out the procedures that employers should implement to avoid unintended discriminatory acts, but the Court dismissed the case on 4/12/07 without a decision.

The Supreme Court issued a 5 to 4 decision on 5/29/2007 addressing the time for filing a claim alleging discrimination in pay under Title VII of the 1964 Civil Rights Act. It ruled that even though the unequal pay may be received with each new paycheck, the statute of limitations on filing a claim begins to run when the alleged illegal pay discrimination first occurred.

Lilly Ledbetter, a female tire plant employee, sued her employer, Goodyear, for allegedly paying her a smaller salary than it paid her male co-workers. In accordance with the statute of limitations, Ledbetter filed her charge with the Equal Employment Opportunity Commission (EEOC) within 180 days of her most recent allegedly discriminatory annual employee evaluation. But at trial she was permitted to introduce evidence of many years’ worth of annual employee evaluations and respective raises to show that she had been continually subject to disparate pay because of her sex. The Eleventh Circuit held that this was improper because “in the search for an improperly motivated, affirmative decision directly affecting the employee’s pay, the employee may reach outside the limitations period created by her EEOC charge no further [than] the last such decision immediately preceding the start of the limitations period.”

The Supreme Court ruled that an employee must file a charge with the EEOC within 180 days after the alleged unlawful employment practice occurred. The majority differentiated between acts that are intentionally discriminatory, such as pay decisions, and acts that are nondiscriminatory and that entail adverse effects resulting from the past discrimination. Even if a past discriminatory act has current effects, a charge must be filed within 180 days of the discriminatory act, not its effects.

The majority also differentiated this case from cases where an employer uses a discriminatory pay structure. In that circumstance, each paycheck constitutes a new discriminatory act, but there is no general rule that a regular paycheck triggers a new period in which to charge discrimination for conduct that occurred long ago.

This is a significant decision that helps insure that complaints about workplace discrimination are handled promptly, as Congress intended.

How powerful are government departments when it comes to interpreting the laws they are charged with administering? Typically, courts defer to departmental interpretations that are issued through notice and comment rulemaking, or that are based on particular expertise that the department has because it deals with the subject so extensively. In this case, however, the Department of Labor's interpretation of minimum wage and overtime requirements for "companion services" provided by an agency were not entitled to deference, according to the Second Circuit, because it was inconsistent with some congressional purposes in the law, with other regulations, with past interpretations, and was not sufficiently explained.

On June 11, 2007, the Supreme Court unanimously reversed. It ruled that Congress expressly left several unanswered issues for the Department of Labor to resolve, and the Department did so with notice-and-comment rulemaking. Because the Department's interpretation was reasonable and the final regulation was the "logical outgrowth" of the proposed regulation, the Court accepted it.

The Supreme Court granted certiorari 5/15/06 to determine whether the causation standard for employee contributory negligence under the Federal Employers Liability Act (“FELA”) differs from the causation standard for railroad negligence. Under FELA, 45 U.S.C. §§ 51-60, state courts have jurisdiction over personal injury claims brought by railroad employees against their employer, but those courts must apply the common law “as established and applied in the federal courts.” The trial court in the case below applied the jury instructions approved by the Missouri Supreme Court, which provide different substantive standards of causation for determining a defendant-railroad’s negligence than a plaintiff-employee’s contributory negligence. The Missouri Court of Appeals affirmed solely on the ground that the jury instructions approved by the Missouri Supreme Court were binding. In contrast, the Third, Fifth, and Sixth Circuits and the Oregon Supreme Court all have held that FELA’s causation standards for negligence and contributory negligence are the same. Likewise, the model jury instructions in the Fifth, Eighth, Ninth, and Eleventh Circuits also employ the same standard for negligence and contributory negligence. This case is important to any individual or business that may be subject to litigation under FELA.

On Jan. 10, 2007, the Court unanimously decided that FELA requires Missouri to use the same causation standards for negligence and contributory negligence. Since there is no express statutory basis for applying different standards, the common law rule of a uniform causation standard applies. What that standard is has been left to further litigation.

The Supreme Court 4/30/07 gave guidance on when an invention should be considered “obvious,” and thus unpatentable under 35 U.S.C. § 103(a). The unanimous ruling said, "a combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results." A court's analysis of a patent claim "need not seek out precise teachings directed to the challenged claim's specific subject matter, for a court can consider the inferences and creative steps a person of ordinary skill in the art would employ."

The winning party was supported by amicus briefs filed by twenty-four intellectual property law professors and by a consortium of major corporations, including Microsoft and Cisco. Amici contended that not only was the Federal Circuit’s test inconsistent with the statutory language and Supreme Court precedent, but that it had the unfortunate effect of creating incentives for seeking patent rights on obvious extensions of existing technologies.

This case represents the first time in 30 years that the Supreme Court has focused on the obviousness standard for patentability. It is important for every individual or company that seeks or holds a U.S. patent, as the Court has provided an expansive and flexible approach to the obviousness question.

The NAM joined with the Washington Legal Foundation in an amicus brief 6/1/07 supporting Supreme Court review of an adverse decision by the 10th Circuit in a counterfeit product case. The 10th Circuit refused to follow numerous other judicial decisions holding that trademark infringement is itself sufficient to show irreparable harm. The manufacturer, Lorillard, sought an injunction against a store that was selling counterfeit goods (Newport cigarettes), and one of the requirements to obtain an injunction is to show that irreparable harm would occur without one.

Our amicus brief argues that counterfeiting is a high-profit activity that poses a serious risk to public health and safety, and has attracted considerable interest from organized crime and terrorist organizations. In many cases the only means to control counterfeiting is to target those who engage in retail sales of counterfeit goods to the public. Products that bear a fake trademark unquestionably cause irreparable harm to the trademark owner. If an injunction against further sales is not available in a case like this, it is hard to imagine when an injunction could ever be obtained against a retailer shown to have sold a small quantity of counterfeit goods.

On 6/25/07, the Court declined to hear this appeal. The lower court's ruling will make it harder for the federal government to convince foreign governments to protect intellectual property rights abroad. It we are unable to provide an effective system of injunctions and penalties for violations on our own soil, it will be difficult to convince others to do so on theirs.

The Supreme Court ruled 4/30/07 that Microsoft did not infringe components of AT&T's patented speech-processing computer. The Court interpreted specific statutory language that prohibits someone from supplying from the United States, for combination abroad, a patented invention's components. Because Microsoft does not export from the United States the actual copies installed on foreign computers, but rather the copies are made abroad from a master version, the Court ruled that it does not "supply" from the United States the "components" under 35 U.S.C. § 271(f).

As long as the copies of the software are made abroad, they fall outside the American patent prohibition. However, AT&T can pursue patent remedies for that conduct in the jurisdiction in which it occurred. The Court suggested that any change in the result should be made by Congress.

The California Court of Appeal affirmed a $55 million punitive damages award against Ford in a product liability case resulting from a rollover of its Explorer SUV. California law allows punitive damages to be awarded upon a showing of malice, and the court held that Ford acted with malice in choosing its design for the Ford Explorer. Ford had argued that there were several objective factors relevant to whether punitive damages were proper, including its conformity with industry customs, compliance with stringent federal regulations, and the fact that the design resulted from a good-faith debate among engineers during the design process. Nonetheless, the Court of Appeal decided that those objective indicators were “irrelevant” to the question of whether punitive damages were permissible, approving the award.

The NAM joined with the Alliance of Automobile Manufacturers in seeking U.S. Supreme Court review, arguing that the Court of Appeal’s application of California punitive damages law violates due process because it deprives Ford of fair notice sufficient to allow it to design its products to avoid punishment. Ford’s good-faith design choice was objectively reasonable because it was consistent with industry standards and federal regulations. We are concerned that manufacturers will simply have no way of knowing whether their reasonable design decisions may be subject to punishment years later. Every product will inevitably fail in certain circumstances, regardless of how high a manufacturer sets the design safety standard. Yet, without clear and objective standards to determine whether a manufacturer acted with the requisite degree of reprehensibility, juries will be left with standardless discretion to award punitive damages in product liability cases.

On May 14, 2007, the Court accepted the case for review, then immediately vacated the lower court's decision and sent the case back for reconsideration in light of the Supreme Court's February decision in Philip Morris USA v. Williams.

The Supreme Court reviewed this case to answer questions concerning the due process limitations on punitive awards recognized in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003). The Oregon Supreme Court affirmed a punitive award to a deceased smoker’s widow in the amount of approximately $80 million, which was 97 times the amount of compensatory damages awarded. In reviewing the punitive award, the U.S. Supreme Court was to consider two issues: first, whether the high reprehensibility of a defendant’s conduct can authorize a punitive award of 10 or more times the amount of compensatory damages, and, second, whether a jury may consider effects on third parties not only to determine the appropriate punishment for the plaintiff’s injuries but also to punish the defendant for the third-party harms.

The NAM joined with the Pharmaceutical Research and Manufacturers of American (PhRMA), the American Chemistry Council and the Business Roundtable in an amicus brief describing 21 examples where plaintiffs' lawyers try to multiply punitive damages by citing harm to individuals who are not parties to the case, or by seeking to regulate the conduct of a company or of an entire industry. We oppose juries being asked to substitute their judgment for that of legislatures and regulatory agencies.

On February 20, 2007, the Supreme Court ruled 5 to 4 to overturn the lower court ruling. It held that a jury may not punish a defendant for harming persons who are not before the court. In a nuanced opinion, it ruled that a jury may consider actual or potential harm to others in deciding how reprehensible the conduct was, but may not punish for the harm caused others. Punishment should be assessed based on the claim of the plaintiff before the court. States have some flexibility to determine the rules that will help minimize jury confusion over this standard.

The ruling is an important milestone in the Court's recent willingness to try to insure that punitive damages are properly limited and fair under the Due Process Clause. Key to the decision were votes by Justices Roberts and Alito, whose views on punitive damages were unknown until now.

The court declined to decide what multiplier of actual damages is constitutionally acceptable for determining punitive damages in this case.

The NAM filed an amicus brief on 8/13/07, asking the Supreme Court to decide once and for all whether an “enterprise,” as defined under the Racketeer Influenced and Corrupt Organizations Act (RICO), may consist solely of a corporate defendant and its subsidiaries and agents. The NAM is greatly concerned about current RICO pleading standards that encourage strike suits against its members and stifle the ability of American businesses to operate efficiently across multiple jurisdictions through subsidiaries and agents. There is a circuit split over whether a corporation conducts or participates in the affairs of a distinct “enterprise,” within the meaning of the RICO statute, when the only members of the alleged enterprise are the corporation itself and third parties paid by the corporation to conduct business on its behalf.  The Supreme Court has previously established that a RICO defendant must have participated in or conducted the affairs of a distinct enterprise, and not simply the defendant’s own affairs, in order to be found liable under RICO.  In this case, the Ninth Circuit held that the “enterprise” consisted of NDS Group, its wholly-owned subsidiary, NDS Americas, and the agents of NDS Group.

While the Ninth Circuit’s definition of a RICO enterprise accords with that of the Sixth and Eleventh Circuits, it conflicts with that of the Second, Third, and Seventh Circuits, which correctly recognize that an enterprise consisting solely of a corporation and its subsidiaries and agents fails to meet RICO’s well-established “distinctiveness requirement.” This issue continues to be important to every business that relies on third parties to perform corporate functions.

The Supreme Court declined to hear this appeal on Oct. 1, 2007.

Intentional wrongdoing is hard to prove. A plaintiff must allege facts that imply that the defendant acted with intent, since few defendants admit that they meant to engage in a tort or an illegal act. This case is about how much a plaintiff must allege in his complaint to satisfy the statutory requirement in the Private Securities Litigation Reform Act of 1995 (PSLRA) that he plead facts giving rise to a "strong inference" of intent.

Tellabs is the defendant, a telecommunications equipment manufacturer. Its stock price dropped dramatically in the early 2000's, and shareholders sued, claiming various improper or fraudulent acts. The court of appeals found that the complaint contained sufficient factual allegations for a jury to infer intent, even though, according to Tellabs, the facts are also consistent with innocent behavior.

The Supreme Court ruled on 6/21/07 that "an inference of scienter must be more than merely plausible or reasonable -- it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent." This decision is based on specific statutory language that provides a pleading standard that is higher than usual. The Court also ruled that this heightened standard does not violate a plaintiff's Seventh Amendment right to a jury trial.

This is an important recognition by the Court that the heightened pleading requirements of the PSLRA were properly designed to dismiss frivolous securities claims at an early stage.

This case is about the statute of limitations that applies to claims against carriers that are alleged to have lost or damaged goods shipped between a place in the United States and a place in a territory or possession of the United States, such as Puerto Rico. When cigars were lost on the inland leg of the shipment, the shipper sued the carrier, but was denied his day in court because he missed the one-year deadline for bringing suit.

The shipper appealed, and the Supreme Court agreed on January 5, 2007, to hear the case. The issue on appeal was whether a federal law, namely the Carmack Amendment, which extends the statute of limitations to at least 2 years, applies when the carrier did not issue a separate bill of lading for the inland leg. Instead, the carrier issued a "through" bill of lading for both the sea and land portion of the shipment. There is a conflict in the federal courts on this issue, and the case would have determined how quickly claims must be filed and whether shippers should secure separate bills of lading for separate legs of a shipment. However, the Court dismissed the case on a stipulation in February.

The NAM filed amicus briefs on Jan. 12, 2007, in a pair of cases on appeal to the Supreme Court involving the economic substance doctrine. In order to claim tax deductions or credits for business transactions, companies must meet the technical requirements of the tax code provision and also show that the transaction serves a real economic purpose and is not entered into solely for the tax benefits.

In this case, the NAM and the U.S. Chamber of Commerce urged the Court to review a Federal Circuit decision that overturned a judge's ruling that Coltec's plan to manage future asbestos liabilities satisfied the economic substance doctrine. The appeals court used a de novo standard of review, meaning that they ignored the findings of the trial court and drew their own conclusions from the evidence. Our brief argued that appeals courts should review trial decisions using a "clearly erroneous" standard of review.

In addition, we argued that the appellate court's approach jeopardizes important principles of judicial deference to business judgment. Historically, the business judgment rule has meant that courts should not second-guess business decisions. Excessive governmental intrusion into business affairs chills commercial activity, increases costs and makes decisions more risky. The appeals court's decision sows confusion into the availability of a variety of deductions and credits under the Internal Revenue Code, and calls into doubt a variety of familiar, beneficial activities previously approved by the courts. Several of these common activities are described in the brief.

On Feb. 20, 2007, the Court declined to review this appeal.

The NAM filed amicus briefs on Jan. 12, 2007, in a pair of cases on appeal to the Supreme Court involving the economic substance doctrine. In order to claim tax deductions or credits for business transactions, companies must meet the technical requirements of the tax code provision and also show that the transaction serves a real economic purpose and is not entered into solely for the tax benefits.

In this case, the NAM joined with the American Chemistry Council and the U.S. Chamber of Commerce in a brief urging the Court to review a Sixth Circuit decision that overturned a judge's ruling that Dow's long-term plan to fund corporate-owned life insurance policies satisfied the economic substance doctrine. The appeals court used a de novo standard of review, meaning that they ignored the findings of the trial court and drew their own conclusions from the evidence. Our brief argued that appeals courts should review trial decisions using a "clearly erroneous" standard of review.

In addition, we argued that a transaction must be considered in its entirety, even if it depends on optional future capital infusions that "seriously depart" from the taxpayer's past conduct. There are a variety of widely used, well accepted and economically sound corporate finance structures that rely precisely on discretionary future capital infusions by the taxpayer, many of which are described in the brief.

On February 20, 2007, the Court declined to hear this appeal.

The NAM joined with the Council on State Taxation and the National Marine Manufacturers Association in support of an appeal to the Supreme Court of a West Virginia decision that would allow extensive taxation of out-of-state businesses. On 6/18/07, the Court declined to review the appeal.

Historically, the Commerce Clause has protected interstate markets from impermissible state tax burdens through the rule that a state may not impose a tax on an out-of-state business unless it has more than a de minimis "physical presence" in the state. However, many states are aggressively seeking to expand their tax revenues by asserting the power to tax the corporate income of out-of-state businesses that have no physical presence in the taxing state. In this case, West Virginia had adopted a "significant economic presence test" which would permit a state to tax the income of any business with customers in the taxing state, even if it lacked any real property, employees or other contacts there.

The brief fills many pages with examples of difficult and complicated tax situations that will face companies should West Virginia's system be allowed. The effects will be particularly severe on small and mid-sized businesses.

On Jan. 12, 2007, the Supreme Court agreed to determine whether disputes with the IRS over abatement of interest on income tax deficiencies may be brought in any federal district court, or only in the Tax Court. A 1996 law expressly authorized the Tax Court to handle these cases, but Congress did not alter another law that gives other federal courts jurisdiction over the erroneous imposition of taxes.

On May 21, 2007, the Court decided that the Tax Court provides exclusive jurisdiction for judicial review of a failure to abate interest under § 6404(e)(1). Congress clearly set the forum and other requirements for such challenges. The Court found it appropriate that the Tax Court review abatement issues, which involve an evaluation of the internal processes of the IRS, while allowing other courts to handle issues relating to substantive tax law. Even though it may not be as efficient, there is nothing "tellingly awkward" about it.

The Supreme Court held 3/1/06 that, because a patent does not necessarily confer market power on the patentee, a plaintiff challenging a tying arrangement under Section 1 of the Sherman Act must prove that the defendant has economic power in the market for the tying product. In his opinion for the Court, Justice Stevens noted that the Court’s past disapproval of tying arrangements was based on a now-discredited belief that such arrangements “serve hardly any purpose beyond the suppression of competition,” and that the Court had more recently moved from relying on presumptions to requiring a showing of actual economic power in the market for the tying product. The Court explained that Congress, antitrust enforcement agencies, and most economists had all rejected the conclusion that a patent necessarily confers market power. Indeed, the presumption that holding a patent creates market power arose in “patent misuse” cases but was rejected in that context by Congress in the 1988 amendments to the patent laws. The Court today likewise eliminated any presumption in the antitrust context that a patent necessarily confers market power on the patent holder. Jones Day lawyers drafted amicus curiae briefs on behalf of the American Bar Association at the petition and merits stages. This case has important implications for any business buying or selling a product that arguably is tied to a patented or copyrighted product.

Decision Below: 396 F.3d 1342 (Fed. Cir. 2005)

The Supreme Court held 2/28/06 that it is not per se illegal under Section 1 of the Sherman Act, 15 U.S.C. § 1, for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products. The joint venture’s formation, which was not challenged, effectively merged Texaco’s and Shell’s domestic gasoline refining and marketing operations, thereby ending competition between the two companies in these lines of business. The Court concluded that although the joint venture’s “pricing policy may be price fixing in a literal sense, it is not price fixing in the antitrust sense,” because the policy was “little more than price setting by a single entity—albeit within the context of a joint venture—and not a pricing agreement between competing entities with respect to their competing products.” This decision is important to any business that is or may become part of a joint venture. Jones Day filed briefs on behalf of Texaco and presented oral argument on behalf of both successful petitioners.

The NAM and the U.S. Chamber of Commerce filed a joint brief 1/14/05 supporting review of this case. We urged the Supreme Court to rule that joint venture pricing is not per se illegal, but rather that it should be analyzed under the rule of reason, which takes into account efficiencies and other valid justifications for the joint venture. The Ninth Circuit’s strict rule would have had a severe chilling effect on the creation and operation of joint ventures, and is at odds with the purpose of the antitrust laws to promote pro-competitive economic activity.

Decision Below: 369 F.3d 1108 (9th Cir. 2004). See also case # 04-805, Texaco Inc. v. Dagher.

The Supreme Court held 2/28/06 that it is not per se illegal under Section 1 of the Sherman Act, 15 U.S.C. § 1, for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products. The joint venture’s formation, which was not challenged, effectively merged Texaco’s and Shell’s domestic gasoline refining and marketing operations, thereby ending competition between the two companies in these lines of business. The Court concluded that although the joint venture’s “pricing policy may be price fixing in a literal sense, it is not price fixing in the antitrust sense,” because the policy was “little more than price setting by a single entity—albeit within the context of a joint venture—and not a pricing agreement between competing entities with respect to their competing products.” This decision is important to any business that is or may become part of a joint venture. Jones Day filed briefs on behalf of Texaco and presented oral argument on behalf of both successful petitioners.

The NAM and the U.S. Chamber of Commerce filed a joint brief 1/14/05 supporting review of this case. We urged the Supreme Court to rule that joint venture pricing is not per se illegal, but rather that it should be analyzed under the rule of reason, which takes into account efficiencies and other valid justifications for the joint venture. The Ninth Circuit’s strict rule would have had a severe chilling effect on the creation and operation of joint ventures, and is at odds with the purpose of the antitrust laws to promote pro-competitive economic activity.

Decision Below: 369 F.3d 1108 (9th Cir. 2004). See also case # 04-814, Shell Oil Co. v. Dagher.

The Supreme Court held 1/10/06 that a manufacturer that offers its dealers different wholesale prices may not be held liable for price discrimination under the Robinson-Patman Act, absent any evidence that the manufacturer offered differing prices to dealers that were competing to resell to the same retail customer at the same time. In this case, manufacturer Volvo Trucks North America gave Reeder-Simco GMC and other Volvo dealerships “concessions” that the dealers used in bidding for sales to retail customers. Reeder presented evidence that the concessions from Volvo that other dealers used in successful bids for certain sales were more favorable than (1) the concessions that Volvo gave Reeder for use in successful bids for other sales (“purchase-to-purchase comparisons”), and (2) the concessions that Volvo offered Reeder for use in several unsuccessful bids for other sales (“offer-to-purchase comparisons”).

Reversing the Eighth Circuit, the Supreme Court held that the purchase-to-purchase and offer-to-purchase comparisons could not form the basis for liability under the Robinson-Patman Act because in none of these instances did Reeder compete with other Volvo dealers for a sale to the same customer. In the rare instances that Reeder did compete head-to-head with other Volvo dealerships for the same sale, the Court held that if any price discrimination existed between the concessions offered the dealerships, it was not of sufficient magnitude so as to substantially affect competition between them. The Court emphasized that its interpretation of the statute was more consistent with the broader policies of the antitrust laws, which are geared more to the stimulation of interbrand competition than to the protection of existing competitors. The disposition of this case is relevant to businesses whose decisions are affected by the Robinson-Patman Act.

NAM comment: The NAM 2/2/05 joined with the Truck Manufacturers Association, the Farm Equipment Manufacturers Association, the Association of Equipment Manufacturers and the Business and Institutional Furniture Manufacturer’s Association in an amicus brief urging the Supreme Court to review this decision. On May 20, we filed a second brief, this time on the merits of the issue on appeal.

The Supreme Court’s ruling recognizes the need for flexibility of manufacturers’ pricing decisions when offering quotes on custom purchases like large trucks and farm equipment. Our brief argued that, in the context where dealers are responding to request for bids from potential purchasers, manufacturers may offer their products at prices that vary depending on a variety of competitive factors, all of which can be taken into account to promote interbrand competition. It is normal for manufacturers to choose a price level for made-to-order products on a case-by-case basis that depends on many factors, including the volume the customer is buying or has bought, whether the customer has historically purchased another brand, how busy the assembly plant is, and how high current demand is.

The Supreme Court 2/21/06 reaffirmed that a challenge to the validity of a contract as a whole, and not specifically to an arbitration provision within the contract, must be decided by the arbitrator. Respondents sued Petitioner, a provider of check-cashing services, in state court, alleging that the interest rate charged by Petitioner is usurious under Florida law. Petitioner moved to enforce the arbitration clause in its contracts with Respondents, and the Florida Supreme Court held that state contract law and public policy precluded enforcement of an arbitration agreement in a contract challenged as unlawful. In an opinion by Justice Scalia, the Supreme Court reversed. Stressing its prior holdings in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), and Southland Corp. v. Keating, 465 U.S. 1 (1984), the Supreme Court explained that: (1) as a matter of federal arbitration law, an arbitration provision is severable from the remainder of the contract; (2) unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance; and (3) these principles apply in state as well as federal courts. This case is important to any individual or business that may be a party to a contract containing an arbitration clause. Decision below: 894 So. 2d 860 (Fla. 2005)

Decision Below: 894 So. 2d 860 (Fla. 2005)

The NAM and other business groups filed an amicus brief urging the U.S. Supreme Court to review an adverse decision from the California Supreme Court on an issue involving the internal affairs of a corporation. Normally internal affairs, such as the requirements that apply when a shareholder wants to bring a derivative suit on behalf of the corporation against the officers or directors, are governed by the state in which the company is incorporated. In this case, the lower court ruled that a California statute applies to the relationship between the corporation and its directors and officers, including a provision for treble damages liability. The corporation is incorporated in Delaware, which does not allow a treble damages remedy.

The issue on appeal is whether the Commerce Clause and Due Process Clause prohibit one state from substituting its own substantive law for that of the state of incorporation. Our brief argues that only one state should have the authority to regulate a corporation's internal affairs, to avoid conflicting demands. Directors must be able to understand the rules and not have to guess as to which states might assert authority. Our free market system depends on uniform and predictable legal requirements. In addition, due process requires that directors be able to know in advance what law applies to their activities.

This conflict can also arise in cases involving whether a former stockholder has standing to bring suit, whether corporate restructuring must be voted on by shareholders as a single class, whether cumulative voting is allowed, whether shareholders may inspect corporate records, and other internal corporate issues. The issue is important because both California and New York, two of the nation's most important economic powerhouses, purport to regulate out-of-state corporations' internal affairs. Since half of all U.S. publicly traded corporations are incorporated in Delaware, conflicts are bound to arise, and the Supreme Court must resolve this dilemma.

The NAM joined with Technology Network, the Chamber of Commerce, the California Chamber of Commerce, the California Manufacturers and Technology Assn., and the California Business Roundtable in this brief. The Court declined to hear the appeal on October 2, 2006.

The issue in this case is whether federal courts have the authority, under the Separation of Powers doctrine, to enjoin federal prosecutors from breaching a binding contractual obligation "not to bring any criminal prosecution" against a company and its executives. It is important for companies that give up their constitutional rights in return for immunity, particularly in the context of the Antitrust Division’s Corporate Leniency Policy. The lower court found that the company had complied with its agreement, yet the Court of Appeals said courts cannot interfere with prosecutorial discretion to indict.

The NAM joined with the Washington Legal Foundation in an amicus brief urging the Supreme Court to hear this case on appeal. On Oct. 30, the Court declined to hear this appeal.

The NAM and five other associations filed an amicus brief 10/14/05 supporting an appeal of a Ninth Circuit ruling that allows California to demand detailed information from manufacturers about energy efficiency.  We argue that the California regulations are preempted by the Energy Policy and Conservation Act of 1975, which sets energy and water-use efficiency standards for appliances and expressly preempts any state regulation that “provides at any time for the disclosure of information with respect to any measure of energy consumption or water use” that differ from federal requirements.  California argues that the law only applies to disclosure of information to consumers and not to the state government itself.  Our brief argues that there is a split in the circuit courts, that there should be no presumption against preemption here, and that the issue is an important and recurring one appropriate for the Supreme Court to resolve.

On 6/19/06, the Court declined to hear this appeal.

A divided Supreme Court ruled 6/19/06 that the Army Corps of Engineers may have impermissibly exercised jurisdiction under the Clean Water Act over wetlands connected to tributaries of “navigable waters” only by man-made drains and ditches. To constitute a “navigable water” under the Act, a water or wetland must have a “significant nexus” to waters that are or were navigable in fact or that could reasonably be made so. The Sixth Circuit ruled that even a transitory “hydrological connection” to a tributary of a “navigable water” constituted a “significant nexus,” a test satisfied by the drains and ditches. The Supreme Court reversed and remanded, but no opinion garnered a majority “on precisely how to read Congress’ limits on the reach of the Clean Water Act.”

In the plurality opinion joined by Chief Justice Roberts and Justices Thomas and Alito, Justice Scalia set forth a two-part test for whether wetlands are subject to the Act: “First, that the adjacent channel contains a ‘water of the United States,’ (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” The plurality concluded that “ecological considerations” warrant treating a wetland as part of an adjacent navigable water only where there is a continuous surface connection—and, thus, a “boundary-drawing problem”—between the wetland and the adjacent navigable water. The plurality remanded the case for consideration of whether the drains and ditches contained a permanent flow of water, and whether they possessed a surface connection sufficient to sustain the Corps’ jurisdiction.

Justice Kennedy, concurring only in the judgment, took issue primarily with the plurality’s rejection of “ecological considerations.” Noting that the “absence of an interchange of waters [may make] protection of the wetlands critical to the statutory scheme,” Justice Kennedy concluded that “wetlands possess the requisite nexus … if the wetlands … significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” The concurrence also contested the plurality’s permanence requirement. Justice Kennedy did recognize, however, that the wetlands’ proximity to navigable-in-fact waters should be considered “on a case-by-case basis” to avoid “the potential overbreadth of the Corps’ regulations[.]” Justice Kennedy concurred in the remand because the lower courts had not adequately considered “whether the specific wetlands at issue possess a significant nexus with navigable waters.”

This decision is significant to any business involved in the development of property in or around wetlands.

A divided Supreme Court ruled 6/19/06 that the Army Corps of Engineers may have impermissibly exercised jurisdiction under the Clean Water Act over wetlands connected to tributaries of “navigable waters” only by man-made drains and ditches. To constitute a “navigable water” under the Act, a water or wetland must have a “significant nexus” to waters that are or were navigable in fact or that could reasonably be made so. The Sixth Circuit ruled that even a transitory “hydrological connection” to a tributary of a “navigable water” constituted a “significant nexus,” a test satisfied by the drains and ditches. The Supreme Court reversed and remanded, but no opinion garnered a majority “on precisely how to read Congress’ limits on the reach of the Clean Water Act.”

In the plurality opinion joined by Chief Justice Roberts and Justices Thomas and Alito, Justice Scalia set forth a two-part test for whether wetlands are subject to the Act: “First, that the adjacent channel contains a ‘water of the United States,’ (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” The plurality concluded that “ecological considerations” warrant treating a wetland as part of an adjacent navigable water only where there is a continuous surface connection—and, thus, a “boundary-drawing problem”—between the wetland and the adjacent navigable water. The plurality remanded the case for consideration of whether the drains and ditches contained a permanent flow of water, and whether they possessed a surface connection sufficient to sustain the Corps’ jurisdiction.

Justice Kennedy, concurring only in the judgment, took issue primarily with the plurality’s rejection of “ecological considerations.” Noting that the “absence of an interchange of waters [may make] protection of the wetlands critical to the statutory scheme,” Justice Kennedy concluded that “wetlands possess the requisite nexus … if the wetlands … significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” The concurrence also contested the plurality’s permanence requirement. Justice Kennedy did recognize, however, that the wetlands’ proximity to navigable-in-fact waters should be considered “on a case-by-case basis” to avoid “the potential overbreadth of the Corps’ regulations[.]” Justice Kennedy concurred in the remand because the lower courts had not adequately considered “whether the specific wetlands at issue possess a significant nexus with navigable waters.” This decision is significant to any business involved in the development of property in or around wetlands.

The Supreme Court 5/15/06 decided that river water utilized by private dams is “discharge” within the meaning of Section 401 of the Clean Water Act, 33 U.S.C. § 1341 (a)(1), after the water’s hydroelectric use in the dam. Section 401 requires that if an activity “may result in any discharge into the [Nation’s] navigable water[s],” an applicant for a federal license or permit must obtain a certification that the activity will not violate state water quality standards. The Act does not define the term “discharge,” apart from providing that “[t]he term ‘discharge’ when used without qualification includes a discharge of a pollutant, and a discharge of pollutants.” 33 U.S.C. § 1362(16). The Court unanimously concluded that because the term is not further defined in the statute and is not a term of art, it is to be construed “in accordance with its ordinary and natural meaning”—a “flowing or issuing out.” The Court rejected arguments that a different meaning is dictated by the surrounding language of Section 401, by the meaning of Section 402 of the Act, or by legislative history. This decision is important to any business that may be subject to regulation under the Clean Water Act.

Decision Below: 868 A.2d 210 (Me. 2005)

The trial court and the Sixth Circuit ruled that retirees and surviving spouses were entitled to lifetime health care coverage pursuant to contracts negotiated between their employer and the UAW. The court recognized that there is no statutory right to lifetime health care benefits, but that life and health insurance benefits carry with them an inference that the parties intended them to continue for life. The NAM filed an amicus brief urging the Court to review the case and describing how different federal court rulings frustrate the efforts of companies to adopt consistent national retiree health benefit programs. The lower court's inference that health benefits vest for life imposes an immense and unexpected burden on employers while providing retirees with an unbargained-for windfall. The Supreme Court declined to review this case.