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This suit by Indonesian villagers against ExxonMobil alleges claims under District of Columbia and Delaware law arising from alleged human rights abuses committed by Indonesian forces in the province of Aceh. The judge dismissed the case, based on the general rule that non-resident aliens have no standing to sue in U.S. courts.

The case was appealed to the D.C. Circuit, and the NAM joined with the National Foreign Trade Council, USA*Engage and the U.S. Council for International Business in an amicus brief supporting this result. We argued that federal suits under the Alien Tort Statute (ATS), and now state suits under state law, cause irreparable economic harm, interfere with U.S. foreign relations, and impede the policies designed to promote the very democratic and human-rights goals that the plaintiffs purport to advance. Allowing this kind of litigation under a patchwork of different state laws -- for injuries perpetrated against foreign nationals by other foreign nationals in a foreign country -- threatens U.S. economic and political relations. The federal government alone is assigned the constitutional responsibility for foreign relations, and federal law displaces state laws that threaten the effective exercise of the nation's foreign policy. In addition, there is no indication that the state laws at issue here were ever intended to apply to the extraterritorial claims at issue.

Unfortunately, the court ruled 7/8/2011 that aiding-and-abetting liability “is well established under the ATS” and that “the district court erred in ruling that appellants lack prudential standing to bring their non-federal tort claims and in the choice of law determination.” Thus, the case was sent back to the district court for further proceedings.

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 California court had to decide whether it could order a corporation to produce out-of-state employees for deposition in California. The trial court required a Japanese parent company, Toyota, to produce Japanese residents for depositions in California, although the issue could apply to a non-California manufacturer anywhere in the United States or elsewhere. This practice would raise the costs of litigation even further, providing additional leverage for plaintiffs. A California law prevents out-of-state residents from being required to appear for depositions, but the court's decision created exceptions.

The NAM joined with the International Association of Defense Counsel in an amicus brief on March 31, 2011. Our brief recounted the historical basis for taking depositions of witnesses outside a country where the case is being tried. Traditionally, the courts have allowed depositions in foreign counties when the witnesses are there, and have not required travel to the court’s jurisdiction. In addition, the California statute itself does not grant the court authority to compel such travel. Even if the court had discretion to compel attendance, it should only exercise it after taking into account principles of international comity that include reciprocal courtesy when applying laws outside of territorial limits.

On July 27, 2011, the California Court of Appeal overturned the lower court's order, concluding that California law protects nonresidents from having to appear either as a witness during trial or during the discovery phase of litigation. Depositions may still occur in the states or countries where the required witnesses are located.

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.

As part of our continuing efforts to make sure that EPA does not exceed its authority in the regulation of greenhouse gases from stationary sources of emissions, the NAM and 15 other business organizations in our coalition has moved to intervene in a lawsuit brought by an environmental group challenging EPA's power to focus on the largest emitters first. If the environmental group is successful, EPA and various states may be required to apply much more stringent criteria to permitting programs, which could impose enormous costs from foregoing operations or installing emission-control technology. Our motion to intervene does not concede that EPA's decision to regulate greenhouse gases is legally permissible.

The Center for Biological Diversity (CBD) sought a court order holding this case in abeyance pending resolution of other challenges to the tailoring rule, but the court rejected that request on June 15, 2011. The next day, CBD voluntarily moved to dismiss this case.

The NAM and other organizations have also filed a separate petition to review the EPA's tailoring rule. For a complete listing of NAM cases against EPA, click here.

The NAM and other business organizations moved to intervene in a case brought in California by three environmental organizations which challenged the Department of the Interior's rule relating to naming the polar bear a threatened species under the Endangered Species Act (ESA). Our involvement did not challenge or support that designation, but supported the Department's conclusion not to require special permits for companies that conduct greenhouse gas-emitting activities. Any activity that harms a threatened species may constitute an "incidental taking" and may require a special Fish & Wildlife Service (FWS) permit. Under the new rule, the government provided an exception for greenhouse gas emissions, since their effect on global warming cannot be traced to any particular activities in particular locations.

In a separate case, we challenged a particular provision that did not exempt the state of Alaska from the greenhouse gas exception. See American Petroleum Institute v. Salazar. After we filed that case, EPA amended the rule to eliminate the "Alaska gap" carve-out provision, but left in greenhouse gas requirements for operations within the current range of the polar bear. We continued to challenge that limited ruling (see Amended Complaint below).

On 12/3/08, our motions to transfer and consolidate this case with others filed in federal court in the District of Columbia were granted. This case was consolidated with Defenders of Wildlife v. Dep't of the Interior, which challenged the Department's Section 4(d) rule as having been promulgated without conducting an environmental impact analysis and as not providing for the conservation of the polar bear. Since these cases have been consolidated, our summary is consolidated here as well.

In 2010, we filed a memorandum and reply brief supporting the decision not to extend liability for affecting polar bears to activity occurring outside the current range of the bear. This will allow energy and industrial activity permitted under the Clean Air Act, the application of pesticides allowed under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), and other economic activities. The Endangered Species Act is not the proper mechanism for controlling carbon emissions. The U.S. Fish and Wildlife Service's decision is reasonable and supported by the statute.

On Nov. 4, 2010, the district court judge rejected the Service's view that only species that are in imminent danger of extinction are "endangered" under the law, and ordered the Service to reconsider its rule in light of the ambiguity of that term. The statute mandates consideration of 5 factors and the best available science to determine whether a species is endangered, and the agency should consider them and issue a new interpretation for court review. The existing rule will remain in effect while this new interpretation is under review.

After a hearing on April 13, 2011, the judge ordered the parties to submit briefs asking whether it needs to decide all the issues in the case if it remands the case to the FWS to comply with NEPA or ESA. The NAM's brief, filed June 3, 2011, supported the Fish & Wildlife Service's view that the rule complies with all relevant statutes, but if not, the appropriate remedy is to send the case back to the agency for further action without throwing out the current version. Otherwise, thousands of otherwise lawful activities outside the polar bear's current range would be called into question and possibly generate lawsuits, unnecessary administrative actions and delays, and potential liability. There are many actions that FWS could take that would address judicial concerns about its actions, such as providing further reasons or further NEPA analysis.

On June 30, District Judge Sullivan affirmed the legality of FWS's listing of the polar bear as a "threatened species" under the ESA.

On Oct. 17 and Nov. 18, the judge upheld the final rule under the Endangered Species Act, vacated the final rule and reinstated the Interim Final 4(d) Rule. He remanded the rule to FWS to conduct its NEPA review and to publish a final Environmental Assessment by December 6, 2012. The court ruled that the ESA does not require FWS to regulate greenhouse gases, and that the Service had a rational basis for its decision, despite the fact that it may limit the ability of environmental groups to sue greenhouse gas emitters under the ESA.

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.

On January 5, 2010, EPA published guidance to the states that allowed them to waive fees under Section 185 of the Clean Air Act relating to compliance with ozone emissions regulations. The guidance assisted states in preparing their own State Implementation Plans. It allowed states to either use the Section 185 fee program or "an equivalent alternative program" that is "consistent with the principles of section 172(e)" of the Clean Air Act.

NRDC sued EPA in March to argue that EPA's action allowing an equivalent, alternative program was arbitrary and capricious, and that allowing fee waivers if an ozone nonattainment area meets an 8-hour testing standard instead of a 1-hour standard was also improper. An 8-hour standard is more protective of the environment than a 1-hour standard.

In April, the NAM and 4 other business groups moved to intervene in this suit in support of EPA. That motion was granted. The case affects fees that were then set at $8,766 per ton of volatile organic compounds and nitrogen oxides emitted above a baseline amount from major stationary sources within areas of the country that are classified as severe or extreme nonattainment areas.

The NAM and other intervenors filed a brief on Jan. 31, 2011, arguing that EPA's interpretation is reasonable and consistent with congressional intent. It is important that states have the flexibility to design equivalent alternative programs that do not unfairly and inappropriately penalize well-controlled major stationary sources of ozone. Companies that have already dramatically reduced ozone emissions are unable to make further reductions without a harmful drop in productivity, and states should be able to develop alternative programs that focus on sources that are better able to achieve further reductions.

On July 1, the court rejected EPA's arguments that the plaintiffs lacked standing, that the Guidance did not qualify as final agency action, and the plaintiffs' claims were unripe for judicial review. It then ruled that the Guidance qualified as a legislative rule that EPA was required to issue through notice-and-comment rulemaking, and that one of its features -- the "attainment alternative" -- violated the plain language of the Clean Air Act. The court vacated the EPA's guidance and ruled that it could not offer an alternative that allows violations of the old 1-hour standard to continue. The law does not allow EPA to retreat from requirements it sets that prove to be too stringent and unnecessary to protect public health, and EPA must go back to Congress if it wants to do so.

The NAM is part of the SSM Coalition, named for EPA's new Clean Air Act regulations governing special circumstances often present during startup, shutdown or malfunction (SSM) of process equipment or pollution control equipment. On Jan. 4, 2011, the Coalition moved to file an amicus brief in litigation brought by the Portland Cement Association which challenges 2 EPA regulations governing Portland Cement plants. Our particular interest is the rule which establishes national emission standards for hazardous air pollutants (NESHAPs) under Section 112 of the Act.

EPA's new approach to establishing NESHAPs and its novel interpretations of Section 112 apply not only to the portland cement case, but it plans to adopt similar requirements for a variety of other sectors, including chemical plants, pulp and paper mills, steel pickling operations and wood furniture manufacturing.

The court granted permission to file an amicus brief, and we did so on May 23, 2011. The brief argued that EPA's MACT standard cannot be met by any existing facility and that EPA's standard does not satisfy the statutory requirement that it be achievable.

We also argued that EPA did not justify its decision to no longer recognize the special circumstances that arise during equipment malfunctions. Reasonable performance standards should recognize that sudden, unexpected failures of a manufacturing process or pollution control technology are not part of a source's normal operating mode, and should not be subject to harsh EPA penalties when they occur. EPA could have considered alternatives, such as work practice standards, that would address deviations from normally achievable emissions standards that may occur during periods of malfunction.

Finally, we argued that EPA should have recognized that differences in the source of raw materials makes compliance with a uniform national MACT standard difficult or impossible. It was arbitrary and capricious for EPA fail to make allowances for emissions based on the sources of supply.

On Dec. 9, 2011, the court remanded the NESHAP rule to EPA for reconsideration, but rejected all other issues that challenged EPA's actions.

For many government projects involving manufacturers, the National Environmental Policy Act requires federal agencies to evaluate the environmental impact of their actions, and these evaluations are increasingly challenged in court by environmental groups. In such litigation, courts usually allow manufacturers to intervene in the suits to help defend the agency’s actions and to help the court understand the impact of the case on their business. If environmental analyses are deficient, the projects cannot proceed.

This case involves a Ninth Circuit procedure that generally bars such intervention. The practice, informally known as the “federal defendant rule,” is based on the premise that only the federal government can be held liable for failing to perform environmental assessments, and that private parties do not have a significant protectable interest in the litigation.

The NAM and other groups filed an amicus brief 10/21/2010 arguing that the rule should be abandoned. Private parties clearly have a substantial interest in defending agency actions under NEPA, and Federal Rules of Civil Procedure 24(a) allows such a party to intervene. We cited many examples where private parties have such interests, including development projects that involve work in wetlands, the construction of natural gas pipelines or nuclear power plants, and the development of genetically engineered crops.

Our concern is not just about the application of the federal defendant rule to projects subject to NEPA, but also to the fact that it has been extended to other statutes, including the Endangered Species Act, the National Forest Management Act, and the Plant Protection Act. Intervention should be allowed to parties with significant interests in the outcome of such litigation. Often, private parties have massive investments at stake.

On 1/14/2011, the Ninth Circuit rejected the federal defendant rule and said that lower courts should not automatically reject non-federal parties from intervening in litigation at the merits stage, or liability phase, of a law suit. Instead, courts should consider whether the party has a legally protectable interest in the litigation and a connection between that interest and the claims in the case. The decision was en banc, involving 11 of the judges in the Ninth Circuit, and provides great assurance that the federal defendant rule will no longer be used in that circuit. Thirty-seven amicus groups urged this result, and only one other federal circuit court of appeals hangs on to the federal defendant rule.

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.

In 2003, a group of Ecuadorian nationals sued Chevron and Texaco Petroleum over environmental claims from oil drilling operations of various companies in Ecuador. In 2009, the companies began an arbitration against Ecuador under the U.S.-Ecuador Bilateral Investment Treaty (BIT), citing Ecuador's failure to provide fair and equitable treatment to an investor of the United States as required by the BIT, in part because of alleged government collusion in the litigation, breach of a previous settlement agreement, and the improper use of the judicial system to generate sham criminal charges against attorneys for the companies and other acts in disregard of Ecuadorean law. Ecuador went to U.S. court to prohibit the BIT arbitration, but the trial judge allowed it to proceed. That ruling was appealed to the U.S. Court of Appeals for the Second Circuit.

The NAM and the Emergency Committee for American Trade filed an amicus brief 7/1/2010 arguing that the BIT arbitration procedure should proceed, and a U.S. court should not interfere with it. U.S. courts lack the legal authority to prevent such arbitration under an international treaty, and such interference would subvert the purpose and viability of the U.S. BIT program, which is very important to promote U.S. foreign-policy objectives. Such treaties ensure that U.S. foreign investors have basic international protections in their activities abroad, including access to a neutral and objective forum for the resolution of disputes, in order to promote investment, economic growth, development, stability and other important foreign-policy goals.

On March 17, 2011, the Second Circuit affirmed the lower court's ruling, holding that any challenges Ecuador wants to make to Chevron's right to arbitrate should be made before the arbitral panel. The court concluded that Chevron could initiate BIT arbitration without undermining the district court's earlier dismissal of the case on grounds of forum non conveniens. The BIT constitutes a standing offer to arbitrate disputes covered by the Treaty, and Chevron's written demand for arbitration constituted an agreement in writing to submit the dispute to arbitration. Once in arbitration, the dispute is subject to UNCITRAL rules that leave questions about arbitrability to the arbitral panel. Chevron's dispute with the government of Ecuador can proceed to arbitration, while the lawsuit by the Ecuadorian nationals can continue as well, without conflicting. One of Chevron's claims in arbitration is that Ecuador must honor its contractual obligation to indemnify it for environmental claims, since that obligation was transferred to Ecuador years before.

There are over 2,500 BITs around the world, including 40 involving the United States, along with seven U.S. free-trade agreements with 13 countries that contain substantially similar provisions. The parties to a bilateral investment treaty each consent to the submission of any investment dispute for settlement by binding arbitration. Such dispute resolution is quite fair, and foreign governments win those disputes more often than not. By promoting investment abroad, BITs have important benefits for the U.S. economy, U.S. companies and U.S. workers.

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.

The NAM joined with the Equal Employment Advisory Council and the U.S. Chamber of Commerce in an amicus brief urging the Eighth Circuit to overturn a trial court ruling that authorized the EEOC to enforce an administrative subpoena that is not based on a valid charge of discrimination, and that broadly seeks information through a subpoena enforcement action that is not relevant to the charging party’s claims.

A single employee complained to the EEOC about alleged sexual harassment and retaliation under Title VII of the Civil Rights Act of 1964, but the company says she did not meet the performance requirements of the general manager position she sought. The EEOC sought a variety of information and documents from the company based on amended allegations that included a charge of class-wide discrimination.

Our brief argued that the new allegations fail to provide a “clear and concise statement of the facts” constituting the alleged violation and would authorize an open-ended audit of all of the company’s employment practices, in violation of statutory language designed to prevent the exercise of unconstrained investigative authority.

We also argued that the individual did not herself claim to be aggrieved by class-wide hiring discrimination, an essential element to an EEOC investigation in this case. The EEOC’s subpoena must be limited to the charges made and supported with facts by the complaining party.

On July 13, 2011, the Eight Circuit affirmed the district court's order enforcing the EEOC's broad subpoena. It found that the charging party had complied with all the statutory requirements, and the charge did not need more than an unsubstantiated belief that discrimination had occurred. It also found that the subpoena generally related to the charge of potential systemic gender discrimination. The ruling validates broad subpoena power at the EEOC, based on unsubstantiated claims.

The NAM filed an amicus letter urging the California Supreme Court to review a lower court ruling that throws into question whether employers can classify many different kinds of employees as exempt from the minimum wage and overtime provisions of California law under the "administrative" exemption. Administrative personnel are exempt from the wage and hour laws, but defining who is administrative is the heart of this case.

Our letter points out that the lower court's ruling will affect many more jobs than just the insurance claims adjusters that are the plaintiffs, and that the California Supreme Court should try to help ensure that state and federal interpretations are consistent and predictable.

Also, the test used by the court of appeal ignores the fact that employees do not necessarily need to “participate in the formulation of management policies or in the operation of the business as a whole” to be doing work “directly related to management policies or general business operations” and thus be covered by the administrative exemption. Employees need only affect policy or have the responsibility to carry out policy to be doing work “directly related” to management policies or to general business operations.

On Dec. 29, 2011, the California Supreme Court reversed the lower court and sent the case back to them to apply a legal standard outlined in its decision. According to the court, "The essence of our holding is that, in resolving whether work qualifies as administrative, courts must consider the particular facts before them and apply the language of the statutes and wage orders at issue."

This case involves how to define a bargaining unit at a company. The United Steelworkers attempted to organize and represent a group of certified nursing assistants at a nursing home, while the employer contended that the appropriate unit includes all nonprofessional service and maintenance employees. The NLRB’s regional director ruled for the union. When issues like this are appealed, the NLRB decides them on a case-by-case basis, and it asked for input on how to determine the appropriate employees to include in each bargaining unit. In nursing homes and other nonacute health care facilities, the Board considers “community of interests” factors and background information about the workplace in determining the bargaining unit, and it asked for the views of interested parties on this question, not only for nursing homes but also for all industries. It planned to issue rules governing appropriate units via this litigation, rather than by a rulemaking process.

The Coalition for a Democratic Workplace, of which the NAM is a member, filed an amicus brief March 8, 2011, focusing on the Board’s broader question of whether employees performing the “same job at a single facility is presumptively appropriate” as the bargaining unit. Our brief urged the Board not to tackle this question in the context of the nursing home case, but if it did, to continue to use the “community of interest” test that has guided employers and labor organizations for decades. If the Board were to adopt a standard that allows very small bargaining units, employers would be burdened with negotiating and administering a number of different contracts covering only a few of its employees. The Board should not attempt to establish a comprehensive approach to bargaining unit designations by adjudicating a nursing home dispute; rather, it should use the rulemaking process with public hearings.

In addition, the proliferation of units limits the rights of employees by creating barriers in the workplace, creating the risk of balkanizing the workforce and making employee advancement more difficult. A bargaining unit should include employees who have a community of interest that is sufficiently distinct from those excluded from the unit.

On August 30, 2011, the Board released a 3-1 ruling that the group of certified nursing assistants was the appropriate bargaining unit, and did not need to include all other nonprofessional service and maintenance employees of the workplace. It did so by applying a community-of-interest approach, adding that the burden is on the employer to prove that employees not included in the group seeking recognition "share an overwhelming community of interest with the included employees." This means that the factors used in determining whether members of groups share a community of interest must "overlap almost completely." The majority adopted this formulation to provide employers and employees with a clear standard to reduce litigation and produce more predictable and consistent results.

The National Labor Relations Act creates a set of presumptively appropriate bargaining units encompassing "the employer unit, craft unit, plant unit, or subdivision thereof." If the employees choose to define a bargaining unit in a way that is "appropriate," their decision will be upheld by the Board. This means that small bargaining units will be allowed as long as members in that unit share a community of interest, and the majority even stated that a unit is not "inappropriate simply because it is small."

NLRB Member Hayes dissented, arguing that the decision "fundamentally changes the standard for determining whether a petitioned-for unit is appropriate in any industry subject to the Board's jurisdiction," and warning about proliferation of bargaining units. He said that the majority's community-of-interest test effectively gives controlling weight to whatever unit a union has been able to organize. Rather, he would require a showing that a group's interests "are sufficiently distinct from those of other employees to warrant the establishment of a separate unit." Thus, the decision "encourages unions to engage in incremental organizing in the smallest units possible." He concluded by saying that the majority's opinion in this case and their proposed snap elections and limited Board review means that unions will organize in units as small as possible and it will be "virtually impossible for an employer to oppose the organizing effect either by campaign persuasion or through Board litigation."

The rule created in this case was overturned in December 2017 in a case called PCC Structurals, Inc.

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.

Forty-one associations joined the NAM in an amicus brief submitted to the National Labor Relations Board in response to the Board's request for advice on its 2007 decision in the Dana Corp. case. There, the Board ruled 3 to 2 that employees must have 45 days after their employer recognizes a union based on card-check authorizations to file a petition to decertify the union or to support an election petition from another union. The Board underscored the preferred method of having a secret election to determine the majority status of a union. The majority found that card-check procedures are much less reliable as indicators of employee free choice on union representation than secret elections.

The current Board reversed that ruling. On August 30, it ruled 3-1 that only a small percentage of card-signing union authorizations are ultimately overturned with a secret ballot, calling those cases "buyer's remorse." It also held that requiring employers to post a notice informing employees of their right to seek a decertification election after a card-check procedure "actually placed the Board's thumb decidedly on one side of what should be a neutral scale" by requiring a notice of only two of their many rights under the law.

Our amicus brief argued that Dana should not be overruled. Individual free choice regarding whether to be represented at all by a third party is a necessary precondition to any collective negotiation. "In nearly 25 percent of the 54 Dana elections conducted by the Board, employees exercising free choice voted to reject the employer’s initial, voluntary recognition."

We also argued that without a card-check review process in the form of a secret election, "employees are left . . . with the likelihood of peer pressure and/or coercion, lack of information, no measurement of unit-wide employee sentiment at the same point in time, and no assurance that the alleged, resulting majority is an accurate reflection of free choice."

One member of the NLRB dissented from the Lamons Gasket ruling. He said that the majority's decision was "a purely ideological policy choice, lacking any real empirical support and uninformed by agency expertise." He said that the law only imposes an election bar after a valid Board election, not after a voluntary recognition of a union by an employer. He also pointed out that there is no doubt but that a Board-supervised election "provides a more reliable basis for determining employee sentiment than an informal card designation procedure where group pressures may induce an otherwise recalcitrant employee, to go along with his fellow workers." A reversal rate of 25% against the incumbent recognized union is "substantial and supports the need for retention of a notice requirement and brief open period."

The NAM is also a member of the Coalition for a Democratic Workplace, which filed a separate brief.

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.

The NAM and the Rubber Manufacturers Association asked the Arkansas Supreme Court to allow them to file an amicus brief supporting Cooper Tire's request to review a trial court order that required the company to give technical and proprietary documents to a plaintiff's lawyer without a protective order. The documents to be disclosed contain valuable trade secrets and commercially sensitive information, and disclosure would cause irreparable harm to the company's competitive position.

We argued that the trial court should first consider the content or nature of the documents to determine if they are needed by the plaintiffs. Even if they are necessary to prove a claim in the litigation, an appropriate protective order should be entered. American companies sustain billions of dollars in losses from the theft of their proprietary information, and there are numerous reports of companies being forced out of business when competitors obtain their know-how and trade secrets.

On 4/28/11, the Supreme Court of Arkansas overturned the circuit court. It held that Cooper properly raised an objection to discovery and the lower court should have considered it. The Arkansas Supreme Court vacated the lower court’s order, and found that it "clearly failed to apply" an exception where a defendant applies for a protective order. This is a victory for companies that face litigation pertaining to trade secrets, as it requires court review prior to disclosure.

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 NAM and seven other business groups filed a joint brief on 8/12/09 urging the Florida Supreme Court to declare Florida’s Asbestos and Silica Compensation Fairness Act to be constitutional. Enacted in June 2005 to preserve funds for individuals actually impaired by asbestos, this Act requires dismissal of claims by individuals who show no such impairment. As a result, claimants who cannot presently demonstrate impairment may only bring their cases after they develop a physical impairment that satisfies the minimum requirements of the law. We argued that this Act should be upheld as constitutional.

Our brief described the asbestos litigation crisis that led Florida to change its law and the need for courts to dismiss cases where no injury has yet been found. We focused on mass filings by non-sick individuals threatening the truly sick, unreliable medical screenings, and the effect of these claims on solvency and peripheral defendants.

On 7/8/2011, the court held that the Florida law constituted an unconstitutional violation of a vested property interest, namely, the plaintiffs' accrued cause of action that was pending on the effective date of the law. It also held that the retroactive provision was not severable from the rest of the law, and that "the Act as a whole must fail as applied to the Appellees." Two judges dissented, arguing that there was no settled law in Florida establishing a right of recovery without a showing of impairment of health. The plaintiffs will still need to show that the defendants caused injuries and prove the extent of the injuries.

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 NAM and 8 other organizations filed an amicus brief urging the Sixth Circuit to uphold a trial court ruling that a company should not be held liable to pay for medical monitoring for individuals who lived near the site of a train derailment, and who failed to establish that they were exposed to a hazardous substance in an amount warranting a reasonable physician to order medical monitoring. We argued that a one-in-a-million risk is too speculative to justify imposing expensive medical monitoring requirements (here, costing hundreds of millions of dollars) on any defendant.

Allowing medical monitoring claims based on remote hypothetical risks would invite frivolous or speculative litigation, subject defendants to enormous costs with little or no corresponding public benefit, threaten payment to sick claimants now and in the future, and impose a huge administrative burden on the courts as a result of having to fashion and supervise medical monitoring programs for years on end.

On Sept. 8, 2011, the Sixth Circuit agreed, holding that one-in-a-million risk is too small and speculative to lead a reasonable doctor to prescribe medical monitoring. To recover, plaintiffs must have a discernable injury, and an increased risk of disease is not enough unless a reasonable physician would order medical monitoring. The court left open the door for ordering medical monitoring in a case where plaintiffs could show that they faced a one-in-a-million increased risk of getting cancer.

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.

A trial court decision in Nevada threatens to substantially expand claims against manufacturers for defective product design. The court ruled that, under strict liability principles, a product is designed unreasonably if it poses a risk of injury beyond what would be expected by the product user's own subjective expectations.

The NAM and other groups filed an amicus brief in the Nevada Supreme Court arguing that the test must be objective: a design is unreasonable only if it poses a risk of injury beyond what would be expected by "the ordinary user having the ordinary knowledge available in the community." A subjective test is prone to bias and would effectively establish absolute liability. An objective test, on the other hand, would allow expert evidence of the statistical rarity of the kinds of injuries experienced in this case, evidence of compliance with applicable government regulations, and evidence from other persons in a position similar to the plaintiff in this case. In addition, every other state that applies the consumer expectations test uses an objective evidence standard.

The case arose from burns suffered by a motocross biker in an accident. He sued the clothing manufacturer because the shirt was not fire-retardant. In February, 2011, the case was settled and no decision was issued.

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.

Two hedge funds sought to take control of CSX without making the required disclosures mandated by the Williams Act. But what is the remedy for the violation? The trial court felt it was not legally empowered to enjoin the hedge funds from voting the stock they had acquired. Consequently, an election of directors was held under the cloud of this litigation.

The NAM, the Washington Legal Foundation and the Business Roundtable filed an amicus brief arguing that prohibiting the voting of shares in an ongoing proxy fight is an appropriate remedy. Shareholders should be protected from corporate raiders who schemed to evade the reporting requirements and concealed their agreement to work together in order to gain an advantage in their efforts to put their own slate of directors on the board. Other shareholders were thus unaware of this hidden effort to change the direction of the company.

Our brief underscored the power of federal courts to redress violations of the securities laws, including the power to grant relief that deters wrongdoing and protects shareholders. The hedge funds might not have been able to gain as large a portion of shares had others known their intentions, since the price of the stock could have been affected. Consequently, other shareholders' ability to influence the outcome was diminished. Appropriate relief could include barring the hedge funds from voting their shares at the annual meeting.

The brief also highlighted the increasing frequency with which hedge funds have been mounting challenges to the incumbent board and management of publicly traded companies, and the relatively short-term investment horizons of those fund managers. Courts should have the tools needed to prevent hedge funds from gaining an unfair advantage over shareholders.

On 7/18/2011, the court sent the case back to the trial court for further proceedings, including reconsideration of the appropriateness and scope of injunctive relief. An open question is whether "total-return equity swaps" should be considered an ownership interest that would trigger the Williams Act disclosure requirements. The court also ruled that whether separate entities should be considered a "group" for determining reporting obligations depends on the definition of a group, and it overturned the trial court's broad interpretation of that word. Instead, it limited the term to groups whose actions are intended to acquire stock in a target corporation.

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.

Because North Dakota has one of the nation's longest statutes of limitations, plaintiffs increasingly go there to file product liability suits that otherwise time-barred. In this case, the state's Supreme Court looked at whether the substantive law that applies is the law of North Dakota, or the state with the most significant connection to the claims.

The NAM joined with other business associations in an amicus brief arguing that North Dakota should adopt the traditional position that applies the statute of limitations of the state in which the plaintiff's claims arose, and that allowing long-stale claims under state law would inundate its courts with stale claims from other states. There is no reason for the state to tarnish its good legal reputation by endorsing "blatant forum shopping and saddling North Dakota courts, taxpayers, and jurors with the heavy burden of hosting out-of-state litigation 'tourists.'"

The Uniform Conflict of Laws-Limitations Act (UCLLA) is designed to prevent this kind of gamesmanship and abuse. In addition, this is an asbestos liability case, and the history of asbestos litigation clearly demonstrates that nonresident claims flow to jurisdictions that develop reputations for favorable procedures and a willingness to accept nonresident claims. Then North Dakota can be expected to be a dumping ground for stale cases from other states.

On Feb. 18, 2011, the court agreed, ruling that the UCLLA placed the burden of proof on the plaintiff to show that the other state did not provide a fair opportunity to sue. Allocating the burden of proof in this way is appropriate since only the plaintiffs know what limitations there might be on the facts or their claims in the other state. This is a positive development that will help to prevent inappropriate litigation in states with plaintiff-friendly statutes.

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.

The IRS assessed a tax deficiency against a company that had entered into a swap-and-assign transaction to help repatriate funds into the United States. The company had relied on a long-standing IRS interpretation, but the IRS, and subsequently a federal court, said that the transaction should have been taxed as lump-sum income rather than income taxable over a period of years. That decision was appealed to the Third Circuit.

The NAM filed an amicus brief on 9/7/2010 urging the Third Circuit to reverse. We focused on the need to determine whether assets such as a swap receivable are "United States property" under Section 956 of the Internal Revenue Code. If they are not, a separate IRS notice (Notice 89-21) requires that the income be amortized and taxes paid over the life of the contract. We also argued that Section 956 is a provision that reflects Congress' judgment about which types of assets had sufficient nexus, or connection, to the United States to merit taxing the U.S. shareholders of the foreign corporation that owned the assets. A court should not substitute its own policy judgment about what should constitute U.S. property for the judgment of Congress. The complicated provisions of the Internal Revenue Code attempt to balance conflicting congressional goals, and it is not the role of the courts to attempt to discern an overarching policy that might help them override the language enacted by Congress.

On June 20, 2011, the Third Circuit affirmed the trial court's judgment. It found that the transaction was properly characterized as a loan and that the IRS does not have to treat similarly-situated taxpayers consistently. Although another company engaged in a similar transaction and the IRS issued a Field Service Advice declining to tax it, that advice was merely guidance for the IRS auditors, and not an assurance for the taxpayer.