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Siemens Corp. bought a power plant from Westinghouse Corp., hiring all of the plant's then-active employees and providing them with retirement benefits that were substantially the same as had been provided under Westinghouse's pension plan. That plan offered permanent job separation (PJS) benefits until 1998. The plant was closed in 2002, and 227 former employees sued Siemens for termination benefits.

The trial court agreed, ruling that Sections 204(g) and 208 of the ERISA prevent the company from cutting back on early retirement benefits. This decision is likely to impose substantial new burdens on sponsors of employee retirement plans when a company acquires a facility and retains the workforce.

The NAM, the American Benefits Council, and the U.S. Chamber of Commerce filed an amicus brief arguing that ERISA's "spin-off" rule should not apply in this context because ERISA encourages plan sponsors to adopt employee benefit plans voluntarily and with flexibility. In addition, ERISA's Section 204(g) anti-cutback rule should not apply because the Siemens plan never included PJS benefits and compelling a purchaser to provide a seller's contingent benefit subsidy when the former employees remain ineligible for that benefit will discourage employers from entering into business transactions. We asked the court to reverse a decision in which the trial court rewrote the terms of a business transaction and circumvented the clear and express terms of an ERISA plan.

On Feb. 29, 2012, the Third Circuit ruled unanimously that the plaintiffs were not entitled to PJS benefits under any circumstance. The plaintiffs were not able to satisfy the conditions for receiving PJS benefits under the Westinghouse plan, the omission of those benefits did not diminish the plaintiffs' benefits, and the company did not undertake any obligation to provide those benefits to legacy employees.

The complexity and extensive litigation over federal law relating to employee benefit plans continues to dog manufacturers who need flexibility to weather changing economic circumstances. The lower court's unwarranted extensions of ERISA's complex rules could have encouraged protracted litigation over similar business transactions or could have discouraged employers from entering into such transactions at a time when American companies need maximum flexibility to face the challenges of global competition and rapid change. This kind of class-action litigation creates high stakes for manufacturers, and this victory is an important one for reining in such claims.

This is a class action suit alleging warranty, design and failure-to-warn claims involving washing machines. The trial court certified a class despite evidence from the defendant showing the absence of uniformity among machine designs, consumer usage practices, company disclosures and consumer damages. Cases should not be certified as class actions unless the court conducts a rigorous analysis of disputed facts to determine if all the members of the class have common injuries and common issues. A panel of appellate judges affirmed the trial court even though most of the consumers suffered no harm, as long as one plaintiff alleges a defect that potentially could manifest itself in other purchasers' products.

The NAM filed an amicus brief in support of Whirlpool's request for rehearing by all the judges on the Sixth Circuit. We argued that the trial court improperly reviewed only the plaintiffs' theories and did not address the facts or evidence offered by Whirlpool. The appellate court conducted its own review of the facts to find evidence supporting the plaintiff and disregarding contrary evidence. This process violated the Supreme Court's requirement in Wal-Mart v. Dukes to conduct a "rigorous analysis" to determine that the requirements of Rule 23 for class certification are satisfied. Without such an analysis, the ruling should be reversed and sent back to the trial court for reconsideration.

Our brief also outlined a variety of other errors in the appellate court's opinion, including defining the class to include consumers without injuries, adopting a new "premium price" theory of injury, and calling for the recognition of sub-classes of plaintiffs even though there are no individuals who represent such sub-classes.

Class action certification is a critical step in many cases, as the decision to certify a case has a substantial effect on the magnitude of the potential liability. Such decisions should be based on solid evidence that a problem is shared by a class of plaintiffs that all have the same claims and injuries.

On June 1, 2012, the Sixth Circuit took the unusual step of denying our request, along with those of several other amicus parties, to file our brief. Whirlpool moved for reconsideration of that unusual order, because the briefs were timely, involve the nation's leading business organizations, no reasons for the denial were given, the briefs will be helpful to the court, and the court should not convey an unfavorable impression about openness. On 6/12/12, the court granted this motion to reconsider, and granted our motion to file our amicus brief. Unfortunately, on June 18, the Sixth Circuit declined en banc review in this case.

The NAM and 16 other business associations filed 4 petitions for review in the U.S. Court of Appeals for the D.C. Circuit, challenging EPA regulations from 1978, 1980 and 2002 that are a part of EPA's effort to regulate greenhouse gases from stationary sources of emissions. No one anticipated that these previously issued rules would be used to mandate greenhouse gas permit requirements, but that is the interpretation EPA has adopted. Our legal challenge was consolidated under the case captioned American Chemistry Council v. EPA.

We also filed an administrative petition for reconsideration with EPA on the same rules. Our lawsuits and the administrative petition challenged each of the four older rules to the extent that EPA considers them to allow the regulation of pollutants such as greenhouse gases that are not subject to a National Ambient Air Quality Standard (NAAQS). Our administrative petition went into great detail regarding the grounds for our request (see Related Documents below). The petitions below also contain the text of the regulations that were challenged.

Our main brief on the merits was filed May 10, 2011, focusing primarily on the timeliness of the lawsuits and on the fact that EPA’s interpretation of the Clean Air Act is unreasonable and creates absurd results.

Oral arguments were held Feb. 29, 2012.

We argued that Congress intended for EPA to require PSD permits only for facilities that can financially bear the substantial regulatory costs and which, as a group, are primarily responsible for deleterious emissions. The number of permits needed by facilities that meet these criteria was about 280 per year, a number consistent with congressional intent to limit the permit program to a manageable number. The greenhouse gas regulations, however, would require more than 81,000 PSD permits per year, according to the EPA, crushing EPA, state agencies and the economy.

EPA’s reading of the Clean Air Act is unlawful because it severs the link between the PSD permit program and the attainment of national ambient air quality standards (NAAQS). We argued that PSD permits are only required for emissions of a “criteria” pollutant, such as sulfur dioxide, nitrogen oxides or lead, and then only if the emissions occur in an area that has attained compliance with national standards.

EPA’s interpretation also is flawed because it leads to requiring an absurd number of permits. Its interpretation was announced three decades ago, and this is the first time a court has been asked to scrutinize its lawfulness. Only now do sources emitting major amounts of GHGs have to get PSD permits, and now their complaints about EPA’s interpretation are ripe for judicial review.

The purpose of the PSD permitting program is to maintain air quality in areas of the country that have attained satisfactory levels of quality, hence the name "Prevention of Significant Deterioration". EPA sets ceilings for each of a number of specific pollutants, and requires permits for new facilities that might emit more of those pollutants into areas in attainment. Our brief argued that EPA is now forcibly making the PSD permit program an all-purpose regulatory program. However, to do so, we argued that EPA must first define greenhouse gases as criteria pollutants, and specify the maximum levels at which they may be present in attainment areas. It has not done so, and it is arguably impossible to set meaningful NAAQS levels for greenhouse gases.

On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.

On August 10, 2012, the NAM coalition filed a petition for rehearing en banc, asking that all the judges on the D.C. Circuit review the 3-judge panel's ruling. We argued that the panel relied on an unreasonable interpretation of the Clean Air Act to approve "the most sweeping expansion of EPA authority in the agency's history, for the first time covering a broad swatch of mobile and stationary sources of greenhouse gases and granting itself discretion to determine and revise the scope of the statute’s coverage, previously fixed by the statute’s explicit terms, for the indefinite future." The panel's ruling conflicts with Supreme Court decisions, produces absurd results, and could lead to annual cost increases of more than $20 billion upon full implementation.

On December 20, 2012, the D.C. Circuit denied our petition. Judges Brown and Kavanaugh filed separate dissenting opinions that supported our arguments. Such dissents are rare, sending a clear signal that significant legal issues remain to be addressed.

On April 18, 2013, the NAM filed a Petition for Writ of Certiorari wth the U.S. Supreme Court and awaiting the Court's determination whether to hear the case. The NAM's involvement in thisw case is critical because no other petitioners have been found to have standing to challeng the PSD regulations and NAM members are adversely affected by EPA's overly burdensome requirements.

An environmental group in California spearheaded litigation and administrative proceedings in all fifty states, as well as this lawsuit in federal court against the EPA and the Departments of the Interior, Defense, Agriculture, Energy and Commerce, to try to force government to impose further greenhouse gas emissions reduction policies under a "public trust" theory. The federal suit was brought by WildEarth Guardians, Kids vs. Global Warming and five individuals who sought to preempt the federal legislative and regulatory processes by getting a federal judge to compel massive societal changes that they believe are necessary to address climate change.

On Oct. 31, 2011, the NAM moved to intervene in this litigation, because the law suit, if successful, would have a dramatic effect on manufacturing processes and investments, increasing production and transportation costs, decreasing global competitiveness and driving jobs and businesses abroad. The litigation, which seeks a minimum 6% reduction in carbon dioxide emissions every year, would be devastating to the entire U.S. economy.

Along with our motion to intervene, we asked the court to dismiss the law suit for various reasons: (1) the case presents political questions that the courts are not able to resolve, (2) the plaintiffs lack standing because their injuries are too speculative and not likely to be reduced by the relief sought, (3) the public trust doctrine does not exist under federal law and the claims have been displaced by federal regulation in this area, and (4) the doctrine does not apply to the atmosphere or require a duty to regulate greenhouse gas emissions.

A hearing was held before Judge Edward Chen on November 30, 2011 to determine whether to grant the government's request that the case be transferred from a federal court in northern California to one in the District of Columbia. The NAM supported this request. On December 6, the court agreed, ordering the case transferred. A hearing was held on April 2, and the judge granted our motion to intervene. A hearing was held on May 11 to consider our motion to dismiss the case.

On May 31, Judge Wilkins granted our motion to dismiss. He ruled that public trust claims are grounded in state, not federal, law, and the allegations in this suit represent "a significant departure" from the public trust doctrine as it has been traditionally applied to water-related activities. Federal courts may exercise jurisdiction in a case if it raises a federal question, but the public trust doctrine is a matter of state law. The judge also ruled that even if the doctrine had been a federal common law claim at one time, it has been displaced by federal regulation under the Clean Air Act. Citing the American Electric Power case from the Supreme Court, he found that federal judges may not set limits on greenhouse gas emissions "in the face of a law empowering EPA to set the same limits, subject to judicial review only to ensure against action arbitrary, capricious, . . . or otherwise not in accordance with the law."

The court closed with a suggestion that the parties need not "stop talking to each other once this Order hits the docket. All of the parties seem to agree that protecting and preserving the environment is a more than laudable goal, and the Court urges everyone involved to seek (and perhaps even seize) as much common ground as courage, goodwill and wisdom might allow to be discovered."

That is certainly a laudable suggestion, as the plaintiffs have filed administrative petitions in 39 states and the District of Columbia to seek similar relief at the state level, and 31 of those have already been denied. Suits were brought in 10 other states, and were dismissed in 9 of them, many with appeals or amended complaints in the works.

However, the plaintiffs filed a motion for reconsideration of the court's ruling, and the NAM filed an opposition on 7/16/12. The motion was denied on 5/22/13.

The EPA has been reconsidering whether to lower the limits on ozone emissions from stationary sources since early in 2010, and engaged in a lengthy reconsideration process. Finally, President Obama called on EPA to put aside their reconsideration of the existing standard. OIRA Administrator Cass Sunstein sent a letter to EPA explaining the reasons that he was sending the proposal back to EPA for reconsideration, including that "a new standard now is not mandatory" and new scientific work is underway and will be based on the best available science. EPA then withdrew its proposed regulation and terminated reconsideration of the March 2008 standards.

The American Lung Association, Environmental Defense Fund, Natural Resources Defense Council and Appalachian Mountain Club sought court review of this decision. The Ozone NAAQS Litigation Group, of which the NAM is a member, moved to intervene in this litigation to support EPA's decision not to change the existing ozone limits at this time. Our participation is needed because EPA represents the "general public interest" and the agency may not adequately represent the interests of manufacturers in avoiding costly and burdensome emissions limitations. On Dec. 1, we filed an opposition to the ALA's motion to coordinate or consolidate this case with Mississippi v. EPA, involving the 2008 ozone standard. We argued that ALA's motion is premature, since EPA is considering filing a motion to dismiss, which, if granted, would moot other issues in the case.

On Feb. 17, 2012, the Court dismissed ALA's petition for review, saying that it "lacks jurisdiction over the agency's non-final decision to defer action on the 2008 voluntary revision of the national ambient air quality standards for ozone." This decision mooted all the other issues in the case. The court also adopted a briefing schedule for separate litigation challenging the 2008 standard.

On October 12, 2010, the Secretary of the Interior lifted the moratorium on deepwater drilling in the Gulf of Mexico, after extensive consultations with the Bureau of Ocean Energy Management. When the Bureau approved Shell's exploration plan (EP), some environmental groups sued to halt the exploration. They sought to overturn the Bureau's "Finding of No Significant Impact," claiming that erroneous assumptions led the agency to understate the risk of an oil spill.

The court reviewed the issues whether Shell’s EP violated the environmental assessment provisions of the National Environmental Policy Act (NEPA) or the interagency consultation provisions of the Endangered Species Act (ESA). On June 22, 2012, the court denied the petition for review, refusing to overturn the Bureau's approval of Shell’s EP to conduct deepwater drilling in the Gulf of Mexico because the environmental group petitioners failed to overcome the extremely deferential “arbitrary and capricious” standard of review for the Bureau's actions.

On Nov. 23, 2011, the NAM joined with other business organizations in an amicus brief in support of the Bureau's decision. Reimposing a moratorium would do little to protect the environment and would stall America's economic recovery and compromise our energy security. The toll would be particularly high for communities in the Gulf States that have faced more than their fair share of disasters and are still recovering from losses caused by Hurricanes Katrina and Rita, the Macondo oil spill, the drilling moratorium and the current slowdown in regulatory approvals. Slow approvals also affect the overall U.S. economy, meaning fewer jobs, less oil and gas production, foregone tax revenue and royalties, and increased dependence on foreign oil.

Our argument focused on the Bureau's statutory obligation to balance economic and energy-policy interests with environmental effects. Jobs and energy security must be taken into account under the law, and exploration of the Outer Continental Shelf involves billions of dollars in investments and hundreds of thousands of jobs. This lawsuit threatened to require extensive Environmental Impact Statements (EIS) for every exploration plan. However, the court explained that it is within the Bureau's discretion to not require a separate EIS for every exploration and that it could rely on prior EISs to approve future EPs. In addition, the court held that when interagency consultation is reinitiated, the prior consultations remain valid until the new process is completed.

Ultimately, the court deferred to the Bureau's balancing of environmental concerns with the expeditious and orderly exploration of resources in the Gulf of Mexico and denied the environmental groups petition for review of the Bureau’s action.

See Center for Biological Diversity v. Salazar for a summary of this case. All the challenges to the polar bear regulations were consolidated in one case.

Mingo Logan Coal Co. challenged an EPA decision that it argued retroactively changed a Clean Water Act permit issued by the U.S. Army Corps of Engineers four years earlier. This change withdrew certain creeks as disposal sites for dredged material, affecting the validity of a permit that EPA had previously reviewed and assented to, and even though the permit holder was in full compliance with it.

The NAM and 11 other business groups filed an amicus brief urging the trial court judge to rule that EPA does not have the authority to modify previously issued permits under Section 404 of the Clean Water Act. The section 404 permitting program authorizes roughly 60,000 permits representing about $220 billion in economic investment every year, and EPA's assertion of authority to revise existing permits creates tremendous investment uncertainty for all permit holders and potential project proponents. Inevitably, that uncertainty will translate into higher risks in borrowing, less investment, lost jobs and slower growth throughout the U.S. economy.

Our brief highlighted the dramatic change that EPA's action represents. Section 404 permits are required for the discharge of fill material into waters of the United States (including wetlands), and affects construction of utility infrastructure, housing and commercial development, renewable energy projects like wind farms or solar arrays, and transportation infrastructure projects such as highways and rail lines. While EPA has occasionally exercised its authority and often uses the threat of such action to obtain concessions during the permitting process, it has never before used Section 404(c) authority to review a previously permitted project.

We also highlighted a study by Dr. David Sunding, a professor at UC Berkeley, showing that the threat that EPA may modify existing permits distorts the cost-benefit ratio of new investment projects. Existing permits are already subject to the Army Corps of Engineers' regulations governing suspension, revocation and modification, and now EPA's interference will delay or deter investment in new projects. For example, a 2% chance that EPA would act adversely decreases a project's cost-benefit ratio by an astounding 30%. Also detailed are effects on bank financing and interest rates, bond ratings, rationed credit, land prices, and other harms throughout the economy.

On Sept. 23, the government moved to strike the Sunding report from consideration, as it was not part of the record considered by EPA. We opposed this motion, arguing that EPA was repackaging their efforts to exclude us from the case, efforts that were rejected by the court in August. We also argued that the report did not add to the administrative record, but provided context for the court to interpret Section 404(c) and to understand the broad consequences that flow from the government's theory of liability.

On March 23, 2012, Judge Amy Berman Jackson ruled that EPA does not have the authority to render a permit invalid once it has been issued by the Army Corps of Engineers. The ruling found that Section 404(c) does not expressly give EPA that power, and even if it did have some power to interpret that section, its interpretation was unreasonable. The Corps is the only permitting agency identified in the statute, and the judge said, "This is a stunning power for an agency to arrogate to itself when there is absolutely no mention of it in the statute." It has the power to block the initial issuance of permits by refusing to allow the Corps to specify certain areas as disposal sites. But even if it had the power to subsequently remove the designation of certain sites, that does not affect the validity of the existing permit, which only the Corps can issue. Mingo Logan need only comply with the terms of the original permit.

The court described as "magical thinking" EPA's position that withdrawing a specification of a disposal site revokes the permit that affects that site. "It posit[ed] a scenario involving the automatic self-destuction of a written permit issued by an entirely separate federal agency after years of study and consideration. Poof!" Thus, even if the agency were accorded some deference under administrative law procedures, the agency's interpretation was unreasonable and could not stand. The judge also cited the NAM's amicus brief to show that eliminating finality from the permitting process would have a significant economic impact on industry, in turn making EPA's assertion of power less reasonable.

EPA appealed this ruling to the D.C. Circuit and won. Click here for details.

In February, 2010, the NAM and other business groups filed a petition in federal appeals court challenging the U.S. Environmental Protection Agency’s (EPA) decision to regulate greenhouse gas (GHG) emissions from stationary sources through the Clean Air Act. Joining the NAM on the petition were the American Petroleum Institute, the National Petrochemical & Refiners Association, the National Association of Home Builders, the Corn Refiners Association, the Brick Industry Association, the Western States Petroleum Association and the National Oilseed Processors Association.

On March 18, 2010, a group of 21 industry associations and chambers of commerce filed a motion to intervene in the NAM suit in support of our position. This group represents a wide cross-section of sectors around the country that will be severely affected by EPA's effort to regulate stationary sources of greenhouse gases under the Clean Air Act.

A variety of other business groups and some states also challenged the endangerment finding. Some of these groups asked the EPA directly to reconsider its finding, but the agency turned down the request in July, 2010. In the endangerment case, industry's opening brief was filed on May 20, 2011. Because the court required that all non-state petitioners and intervenors file only one brief, the views of 80 parties were consolidated, and the resulting brief includes disparate arguments from a variety of interests.

The brief explains that EPA does not say what constitutes a “safe climate,” acceptable global temperature ranges, or “safe” levels of GHGs in the atmosphere, nor will anyone be able to judge whether or when EPA has ever achieved a congressionally defined goal. EPA will not be able to say that its action will reduce global temperatures or that a temperature reduction will avoid an actual danger to public health and welfare.

The brief focused on, among other things, key EPA errors relating to (1) construing its authority to produce absurd results, (2) failing to provide a rational basis for determining whether GHG regulations will mitigate a defined public health or welfare risk, (3) lumping together six pollutants without making separate determinations about the effects of each, (4) failing to consider future mitigation and adaptation steps that impact whether health and welfare are endangered, and (5) failing to follow statutory procedures, including consultation with its own Science Advisory Board.

Congress did not intend for EPA’s endangerment finding to produce absurd results, yet that is the effect of EPA’s finding. The EPA should not have used the endangerment finding to cause PSD permitting requirements, since those requirements apply to emissions whose harm is concentrated in a particular geographic area. It should have adopted a more restricted reading of the statute, instead of a broad reading that would be narrowed by the absurd results doctrine.

We also argued that EPA has no rational basis for treating all six GHGs from motor vehicle emissions as a single air pollutant. Automobiles do not emit 2 of the six pollutants, and each of the pollutants that are emitted has radically different heat-trapping properties. In addition, EPA’s use of a “CO2 equivalent” as a proxy for regulation of each gas individually unlawfully avoids having to make endangerment findings for five of the six GHG air pollutants it seeks to regulate.

EPA also refused to consider “whether any harms from the regulated emissions will be independently averted or mitigated.” The agency also ignored emissions reductions that will occur from implementation of the Energy Independence and Security Act of 2007.

EPA's response was filed on Aug. 18, 2011. The agency argued that the administrative record was sufficient, that it reasonably classified six gases on one pollutant, and that it did not need to consider costs, administrative burdens, benefits or mitigation when making its endangerment finding. It also argued that it was not required to submit the proposed finding to the Science Advisory Board for review, and that complaints that it did not do so came too late in the process.

This litigation is one of many suits by the NAM and our coalition partners against EPA's attempt to regulate GHGs. In one, we challenged the agency’s interpretation of the so-called “Johnson Memo,” where EPA stated for the first time that it would apply controls on greenhouse gas emissions on a wide range of manufacturing and other stationary sources. See our summary in NAM v. EPA described as "Challenging EPA's STR interpretation". We subsequently filed additional suits challenging EPA's tailoring rule, tailpipe rule, and other rules being used to regulate stationary sources of greenhouse gases.

On September 26, 2011, the EPA's Inspector General issued a report in part finding that EPA did not make an independent assessment of key scientific evidence that it relied on in issuing its endangerment finding. We then asked the court to take judicial notice of the report. Public documents that are not already in the record of a case may be considered by a court, and we brought this development to the court's attention because it is directly relevant to EPA's claim in court that it exercised independent judgment when reviewing the scientific evidence.

Oral arguments were held on Feb. 28, 2012.

On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.

On June 1, 2010, the NAM and other business organizations filed suit against EPA's latest interpretation of the so-called “Johnson Memo,” where the Agency stated for the first time that it will apply controls on greenhouse gas emissions on a wide range of manufacturing and other stationary sources beginning on January 2, 2011. This is the second piece of litigation against the EPA, which has issued 4 rules and interpretations that all combine to set limits on stationary sources of greenhouse gas emissions. Manufacturing facilities are among many sources of such emissions, and legal challenges must be filed now even though enforcement against many of these sources will not occur immediately.

This case is related to our challenge to EPA's endangerment finding. See our summary in NAM v. EPA described as "Challenging EPA's endangerment finding".

On Sept. 15, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December, 2010 and we spent 2011 filing briefs in all the greenhouse cases on the merits. Oral argument was held in the D.C. Circuit on February 29, 2012.

On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.

On August 2, 2010, the NAM and 16 other business associations filed a petition for review in the D.C. Circuit challenging the EPA's final regulation that sets out its schedule for enforcing regulatory controls on greenhouse gas (GHG) emissions from stationary sources. The agency has previously announced that greenhouse gas emissions are subject to regulation beginning January 2, 2011, and the usual permit requirements of the PSD program (Prevention of Significant Deterioration) kick in. Because there are millions of facilities that fall under EPA's regulatory requirements, the agency has adopted the tailoring rule to focus its initial enforcement only on facilities with the largest amounts of GHG emissions.

This is the last of eight petitions filed by the NAM coalition of business organizations challenging EPA's efforts to regulate stationary sources of greenhouse gases.

Our lawsuit is the third in a series of suits challenging four EPA rules that together implement the greenhouse gas regulatory program. Our fundamental concern is over EPA's decision to automatically trigger PSD regulation of all stationary sources.

On Sept. 15, 2010, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December.

On June 20, 2011, the NAM and several other industry associations filed the fourth major legal brief challenging the EPA’s regulation of greenhouse gas emissions. This brief argued, in part, that the EPA’s tailoring rule essentially rewrote parts of the Clean Air Act by changing clear, congressionally established numerical thresholds for pollutants that are subject to regulation. The brief reiterated that the Clean Air Act was never meant to regulate GHGs. As a result, the rules should be vacated and remanded.

Oral arguments in the case were held on Feb. 29, 2012.

On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.

On August 10, 2012, the NAM coalition filed a petition for rehearing en banc, asking that all the judges on the D.C. Circuit review the 3-judge panel's ruling. We argued that the panel relied on an unreasonable interpretation of the Clean Air Act to approve "the most sweeping expansion of EPA authority in the agency's history, for the first time covering a broad swatch of mobile and stationary sources of greenhouse gases and granting itself discretion to determine and revise the scope of the statute’s coverage, previously fixed by the statute’s explicit terms, for the indefinite future." The panel's ruling conflicts with Supreme Court decisions, produces absurd results, and could lead to annual cost increases of more than $20 billion upon full implementation.

On December 20, 2012, the D.C. Circuit denied our petition. Judges Brown and Kavanaugh filed separate dissenting opinions that supported our arguments. Such dissents are rare, sending a clear signal that significant legal issues remain to be addressed.

On April 18, 2013, the NAM filed a Petition for Writ of Certiorari with the U.S. Supreme Court and awaiting the Court's determination whether to hear the case.

The NAM and 5 other business associations have asked the U.S. Court of Appeals for the Fifth Circuit to review EPA's decision published July 15 to disapprove revisions to a Texas Clean Air Act implementation plan that relates to the state’s Flexible Permits Program. The Texas plan was submitted to EPA for approval in 1994 and revised several times since then. After a recent notice-and-comment period, EPA decided that the Texas plan did not meet its requirements for a minor plan revision ("Minor NSR SIP revision") for various reasons described in its decision. Alternatively, it ruled that the plan did not meet its requirements for a substitute Major NSR SIP revision.

This petition for review is the first step in a proceeding that will eventually present the court with detailed legal issues to be resolved. The Texas flexible permits program allows operators of facilities that generate air emissions flexibility in managing their operations. While one flexible permit is allowed per plant site or account, the applicant can choose which facilities and pollutants to include. The permits allow plants to exceed pollution limits from individual emission sources as long as the facility as a whole remains below an overall emissions cap. EPA's action highlights a serious struggle between national and state environmental authorities in regulating air emissions.

Click here for further developments in this case, which has been consolidated with Texas v. EPA.

On July 6, 2010, the NAM and 15 other business associations filed a petition for review in the D.C. Circuit challenging the EPA's final regulation of light-duty motor vehicles, also known as the Section 202 motor vehicle rule or the tailpipe rule. EPA has announced that this rule, which regulates greenhouse gases from certain motor vehicles, was effective on January 2, 2011. The rule thus established the first EPA regulation of greenhouse gas emissions, and the agency previously announced that once a pollutant is regulated, the usual permit requirements of the PSD program (Prevention of Significant Deterioration) kick in. As a result of this combination of interpretations, EPA has begun to regulate stationary sources of greenhouse gas emissions such as manufacturing facilities around the country.

Our lawsuit was the third in a series of suits challenging four EPA rules that together implement the greenhouse gas regulatory program. Our fundamental concern was over EPA's decision to automatically trigger PSD regulation of all stationary sources.

On Sept. 15, 2010, the NAM coalition filed a motion for a partial stay of the regulation of greenhouse gases from stationary sources of emissions. The court denied this motion in December.

On June 3, 2011, the NAM and 66 other parties filed a combined brief, as required by court order, detailing all the key arguments arising from the motor vehicle rule. Section 202 of the Clean Air Act requires EPA to justify the level of emissions controls imposed by explaining why those controls represent a rational choice in light of the identified endangerment risk. However, EPA said that it had no obligation to show that its regulations would be effective or reduce harm. It failed to justify its interpretation that the light-duty motor vehicle rule triggers stationary source regulations, and failed to address the enormous burdens and costs imposed on stationary sources.

The motor vehicle regulation arises under Title II of the Clean Air Act, while the regulation of stationary sources of emissions is governed by Title I, which focused on local emissions in defined geographical areas causing elevated ground-level exposures to a pollutant. EPA failed to exercise its discretion to limit the scope of the pollutants subject to the Title I, Part C PSD program, as it has done in another context -- the visibility program under the state part of the Clean Air Act.

We also argued that EPA failed to address the “absurd consequences” that the motor vehicle rule produces for stationary sources of greenhouse gas emissions. Had it done so, EPA could have avoided those consequences by adopting a more reasonable interpretation of the Clean Air Act. Instead, it told the regulated community to address the stationary-source consequences of its regulation of greenhouse gases in the tailoring rule proceeding, but then refused to address the stationary source impacts in the tailoring rule, because that rule provided only relief and did not impose costs. This failure to consider the stationary-source impacts violates Section 202 of the Clean Air Act and is inconsistent with multiple mandates from Congress and the President.

The brief itemized several statutes and orders mandating that EPA consider economic effects: (1) Section 317 of the Clean Air Act, which requires an economic impact assessment, (2) the Regulatory Flexibility Act, which requires an analysis of effects on small businesses, (3) the Unfunded Mandates Reform Act, which requires an assessment of the impact on state and local governments, (4) the Paperwork Reduction Act, which requires OMB approval for significant information-collection obligations, (5) Executive Order 12898, which requires addressing disproportionate effects on minority and low-income populations, and (6) Executive Order 13211, which requires an assessment of a rule’s impact on energy supply, distribution and use.

The brief also argued that EPA has not demonstrated that the final rule will meaningfully and substantially reduce any endangerment to public health or welfare. It adds virtually no additional benefits to already existing fuel economy standards issued by the National Highway Transportation Safety Administration (NHTSA).

Oral arguments were held on February 28, 2012.

On June 26, 2012, the 3-judge panel upheld all of the primary greenhouse gas regulations. It upheld the EPA’s endangerment finding as within its discretionary power and procedurally sufficient, it upheld the tailpipe rule as being required by law once the endangerment finding is made, it found that the business community lacked standing to challenge the timing and tailoring rules because those rules helped rather than hurt, and, while it found our challenge to earlier rules in 1978, 1980 and 2002 to be timely, it rejected our legal arguments and found EPA’s interpretation compelled by the statute.

A native village in Alaska sued various energy companies, alleging that greenhouse gas emissions cause climate change and made them relocate their village because of flooding. The trial court dismissed the case because it involves political questions that are not for courts to decide. It also said the plaintiffs did not have standing because they were unable to establish that their injuries are fairly traceable to the named defendants.

The issue was appealed to the Ninth Circuit. The NAM filed an amicus brief July 7, 2010, arguing that the case represents an unprecedented attempt by environmental lawyers to recast public nuisance as a "super tort", in an effort to bypass 4 time-honored elements of fundamental public nuisance law. Their theory is unfounded in federal or state law, and they cannot establish direct causation between the defendants' energy activities and the plaintiffs' injuries. In addition, to determine whether the elements of proving public nuisance were met, a court would have to address complex political questions and establish nationwide emissions standards.

Even the plaintiffs admitted the case was born out of their frustration with the legislative process. Allowing this kind of suit would give rise to endless claims of liability in highly speculative mass tort cases after every harsh weather event.

On September 21, 2012, the Ninth Circuit dismissed the case, finding that the plaintiffs' claims were displaced by federal law. Because EPA is regulating greenhouse gases, federal common law cannot be the basis for public nuisance claims in this area. This is another in a series of cases involving public nuisance claims arising from greenhouse gas emissions, including the Comer, American Electric Power, and Tennessee Valley Authority cases, all of which the NAM has participated by filing amicus briefs. The AEP case largely rejected this kind of wasteful litigation, but left open the possibility of nuisance claims under state law.

The development of Alaska offshore oil resources is the center of legal disputes involving exploration permits issued by the Department of the Interior. Environmental groups have filed multiple lawsuits to impair the permitting process, and this one alleged violations of the National Environmental Policy Act (NEPA) and the Outer Continental Shelf Lands Act (OCSLA). At issue was a revised exploration plan prepared by Shell following an extensive environmental assessment and approved by the Department. The Government’s latest estimates show that the Beaufort Sea contains a staggering 6.3 billion barrels of undiscovered oil that is economically recoverable at roughly current market prices, and a recent economic analysis estimates that the development of these resources, including the Chukchi Sea, will create an annual average of over 54,000 new jobs over the next 45 years, generating $145 billion in employee payroll.

The NAM and other business groups filed an amicus brief Feb. 3, 2012, arguing that the OCSLA was adopted with the specific goal of encouraging the expeditious exploration and production of the Outer Continental Shelf. Thousands of exploration plans have already been approved under quick timetables, including 31 exploratory wells in the Beaufort Sea. The Department should be able to use its scientific and technical expertise to approve the exploration plans without undue court interference.

The first lawsuit was filed challenging an offshore exploration plan in the Beaufort sea, and a second was filed challenging a similar plan in the Chukchi Sea. These cases were consolidated in March, and on April 3, the NAM and other business groups filed a supplemental amicus brief raising the same concerns we had expressed before.

On May 25, the Ninth Circuit rejected the environmental challenges to the exploratory permits. It found that one part of the challenge was made moot by a subsequent filing of documentation, and that the agency was not arbitrary and capricious in issuing the company's plan with the documentation provided. Also, an agency can approve applications that have inconsistent statements, because the statements were not made by the agency and the statements reflected changing circumstances. Other evidence in the record need not be fully reconciled by the agency as long as the agency's conclusion is supported by substantial evidence on the record considered as a whole. The agency complied with the law's requirements to ensure that the exploration plan would not probably cause serious harm or damage to life, property or the environment, and its decision is entitle to deference when supported by the record.

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

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

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

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

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

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

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

The NAM and other groups moved to intervene in a law suit brought by the Sierra Club against EPA over the agency's decision to delay the effective date of new regulations on boilers and incinerators. The rules, issued on March 21, 2011, concern major source industrial boilers and commercial and industrial solid waste incinerators. When it published the rules, EPA announced that it would initiate administrative reconsideration of them, and later delayed the effective dates during the reconsideration period. Our intervention in this case was intended to support the EPA's decision to delay implementation.

At the same time, the NAM challenged the boiler MACT and incinerator rules themselves. The rules have the potential to dramatically impact the U.S. economy and impose enormous costs on key industrial sectors, and they force companies to make compliance investment decisions well in advance of their effective dates.

This suit by the Sierra Club was voluntarily dismissed on March 29, 2012. A similar suit brought in federal district court ended when the court invalidated EPA's delay notice.

On December 3, 2010, the NAM and others filed a joint brief arguing that states have substantial discretion under federal law to adopt flexible requirements the apply to minor changes in plant operations as long as air quality is protected. We also argued that the Texas program meets all the federal Clean Air Act (CAA) standards, is in some cases years ahead of schedule, and the EPA’s action more than 15 years after the adoption of the Texas program has no legal support. EPA has also failed to defer to Texas’ interpretation of its own regulatory laws, as required by federal law. This litigation is intended to eliminate the ambiguity of EPA’s latest actions and to restore predictable air pollution control regulation in Texas.

On Aug. 13, 2012, the Fifth Circuit agreed, throwing out EPA's action. The court found that EPA's demands for language and program features in the state's implementation plan had no basis in the Clean Air Act or its implementing regulations. Instead, the Act sets goals and basic requirements, and gives the states broad authority to determine the methods and particular control strategies they will use to achieve the statutory goals. Environmental regulation is a shared responsibility of the federal and state governments, and EPA must approve state plans that meet the requirements of the Clean Air Act within 18 months of a state's submitting them for approval.

The Court rejected an EPA effort to require the state to adopt express language prohibiting major sources from evading statutory major new source review regulations. It found no requirement in the statute compelling such a statement, and even EPA's prior views accepted wide variations in state enforcement program language. Thus, EPA's attempt to require specific language in a state's implementation plan violated principles of federalism embodied in the Clean Air Act, as well as the Administrative Procedure Act.

The Court also rejected EPA's criticism of the flexible permit program's monitoring, recordkeeping and recording provisions. Texas allows its enforcement director discretion to write monitoring and recordkeeping requirements into each permit, based on the size, needs, and type of facility applying for a permit. The Court found that there was no authority in the law to allow EPA to limit the director's discretion, and EPA provided no evidence that the Texas program interferes with attaining Clean Air Act requirements. In fact, EPA approved similar director discretion in previous state plan amendments.

Finally, the Court rejected similar EPA arguments about the methodology allowed for calculating each emissions cap at a permitted facility. The agency's objections "rely on standards not found in the CAA or its implementing regulations."

The NAM and other major energy and business trade associations sought to intervene on the side of the Department of Interior, defending a lawsuit brought by 15 environmental groups against the agency’s expedited siting of transmission lines under the Energy Policy Act of 2005. Led by the Wilderness Society, the environmentalists sued in U.S. District Court, Northern District of California, to stop the designation of energy corridors in the western United States, specifically the West-wide Energy Corridors (WWEC). The groups had previously challenged the Department of Energy’s designation of corridors through the administrative process.

On Dec. 17, 2009, the NAM filed a motion to intervene as an intervenor/defendant in the litigation, joined by the Edison Electric Institute, American Public Power Association, National Rural Electric Cooperative Association, American Gas Association, and U.S. Chamber of Commerce. The Environmental Protection Act includes many provisions necessary to expedite development of a modernized electricity grid to meet increased demand, and the NAM endorses policies that will expedite development of a "smart grid," which will save manufacturers money. The NAM supports the identification and designation of corridors across federal lands, and this lawsuit threatened to block or impose additional delays or regulatory constraints on the WWEC.

Our motion to intervene was granted on March 9, 2011. A settlement was reached in this case, and a joint motion to dismiss was granted on 7/11/12. It called for periodic interagency reviews, agency guidance, training and a corridor study to assess whether the corridors are efficient and environmentally sensitive.

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

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

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

A California trial judge dismissed a suit by 25 plaintiffs from Peru against Occidental Petroleum for alleged environmental damage in Peru, finding that California was not the most convenient forum to hear the case. The Ninth Circuit reversed, holding that since Amazon Watch, based in California, later joined the suit as a plaintiff, nearly conclusive weight should be given to the forum chosen by that group. That group joined in the litigation after Occidental announced its intention to file a forum non conveniens motion.

The NAM and other business organizations filed an amicus brief urging review of this decision en banc, by a larger group of judges in the Ninth Circuit. Unless reversed, the ruling will allow foreign plaintiffs to bring their suits in U.S. courts simply by enlisting a U.S. advocacy group with a humanitarian interest in the suit's subject matter to serve as a nominal plaintiff. We argued that federal law already requires that no one factor be given decisive emphasis when balancing the factors that govern where a case should be decided. The presumption in favor of a plaintiff's choice of forum applies with less force when the plaintiffs or real parties in interest are foreign. Moreover, the decision in this case is of exceptional importance since foreign plaintiffs can be expected to bring many more cases into courts in the Ninth Circuit's region.

The NAM continues to oppose efforts by foreign nationals to use U.S. courts to sue U.S. companies for activities that took place in foreign countries. U.S. courts are extremely attractive to foreign plaintiffs, offering such plaintiff-friendly features as extensive discovery, jury trials and contingency fees, but foreign jurisdictions are where the evidence and witnesses are located.

On June 1, 2011, the 3-judge panel reversed itself in part, revising its opinion to conclude that Peru is an adequate forum after all. The court continued to defer to Amazon Watch's choice of a U.S. forum, but sent the case back to the trial court to determine if that group has standing. The petition for en banc review was denied May 31, 2012.

The NAM filed an amicus brief in support of this challenge to a San Francisco ordinance that requires retailers of cell phones to put up posters in their stores, attach stickers to cell phone displays, and distribute “factsheets”, all designed to advise consumers about the supposed risks and steps consumers can take to avoid them. We argued that the government bears a very high burden to overcome the First Amendment right not to have to engage in speech that is compelled by the government. Strict scrutiny by the courts is the appropriate standard of review, and no merchants should have to convey a controversial message with which they disagree and which is not factual. The government may not order a private citizen to convey the government’s message, unless the message is purely factual, uncontroversial and directed at preventing consumer deception. Government-compelled speech must be justified by a compelling government interest and narrowly drawn to serve that interest, according to our brief, citing numerous Supreme Court precedents. The city has less restrictive alternatives to get its message out, such as putting up its own posters in public places.

On 9/10/12, the court said that it could not find that the fact sheet was both "purely factual and uncontroversial," since there is debate about the health effects of cell phones and there is no evidence of cancer caused by cell phones. The Supreme Court has already ruled that the government may not compel disclosures to consumers unless they are purely factual and uncontroversial, and this mandate did not meet that test.

This is another case involving attempts by various governments to restrict, or mandate, certain types of commercial speech. It has appeared in various incarnations, such as mandatory “Live Free or Die” language on license plates.

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

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

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

This case is part of the long-running story about the efforts by Ecuadorian natives and their American lawyers and consultants to win billions of dollars for pollution from oil drilling operations in Ecuador many years ago. The issue is whether an American court may bar enforcement of an $18 billion judgment from an Ecuador court to prevent fraud. The NAM and the National Foreign Trade Council filed an amicus brief on June 30, 2011, arguing that the preliminary injunction issued by the trial judge is entirely consistent with principles of international comity and should be affirmed. The United States has the authority to halt a campaign of apparent fraud and alleged corruption orchestrated by U.S. citizens and designed to benefit foreign citizens with significant contacts in the United States. In addition, we argued that U.S. courts can conduct parallel proceedings using concurrent prescriptive jurisdiction, and can prevent the enforcement of an improper judgment in other jurisdictions that do not have prescriptive jurisdiction.

On September 19, the appeals court vacated the trial court's injunction, put those proceedings on hold, and received assurances from the plaintiffs that they would not seek to enforce the Ecuadoran judgment while it is being appealed in Ecuador.

On Jan. 26, 2012, the Second Circuit issued an opinion that the New York Uniform Foreign Country Money-Judgments Recognition Act does not allow pre-enforcement challenges of foreign judgments. Chevron has to wait until the Ecuadorian plaintiffs try to enforce their damages award in New York before it can challenge the award. Other issues in the case were therefore moot. The court's decision is based on an interpretation of state law that does not address the company's claims of fraud in the underlying litigation.

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

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

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

The NAM and 9 other associations and companies filed an amicus brief 8/18/2009 urging the California Supreme Court to uphold a lower court ruling that an employer's duty to "provide" meal periods is a duty to make meal periods available, not a duty to ensure meal periods are actually taken, and that statistical evidence concerning actual breaks is irrelevant to determining whether an employer afforded the opportunity to take a break. The statute is clear on its face that employers need to "provide" a lunch break, meaning to make it available.

Our brief warned that reversing this ruling would have negative consequences for employees: (1) employees nearing the end of a 6-hour shift would have to take a 30-minute meal period before returning to work for a few more minutes, (2) employees would be subject to discipline if they are late to clock out for a meal or early to clock in, and (3) employees would be unable to work through a meal period to end the workday 30 minutes earlier. The brief expanded upon adverse consequences in the restaurant, retail, waste management, construction, agricultural, temporary staffing and hospitality industries.

On 4/12/2012, the California Supreme Court generally upheld the lower court, ruling that (1) an employer need only provide a reasonable opportunity to take the 30-minute lunch break, not ensure that employees use it, (2) meal periods must start after no more than five hours of work, (3) rest breaks are required according to a clarified formula, and (4) a class of employees making off-the-clock claims could not be certified as a class action because there was no substantial evidence of a uniform company policy pressuring employees to work off the clock. This California law has been the basis for thousands of class action suits involving lunch breaks, rest breaks and off-the-clock work. The court's decision is a very important new ruling to help manufacturers with employees in California to understand the requirements and to establish compliant workplace policies.

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

The NAM filed this suit challenging a regulation issued by the National Labor Relations Board that requires employers to post in their workplaces a notice of the right of employees to organize into unions, bargain collectively, discuss wages, benefits and working conditions, jointly complain, strike and picket, or choose not to do any of these activities. The required notice also lists all the things an employer or a union may not do under the law.

The regulation requires posting in "conspicuous places" as well as where other notices to employees are customarily posted, and on electronic sites if the employer customarily communicates with its employees about personnel rules or policies by such means. In addition, if 20% or more of an employer's workforce is not proficient in English and speaks a language other than English, the employer must post the notice in the language employees speak. Special requirements apply to different segments of the workforce that speak different languages. The NLRB listed this rule as "major," estimating a total compliance cost of $386.4 million for some 6 million employers nationwide.

The NAM raised 4 issues in our complaint. First, we alleged that the National Labor Relations Act (NLRA) does not expressly grant the Board the authority to promulgate a rule requiring employers to post a notification of employee rights under the NLRA. Second, the Board's authority under the NLRA is triggered when a representation petition or an unfair labor charge is filed, not before. Third, the rule purports to establish a new unfair labor practice -- i.e., failing to post the required notice -- without the statutory authority to do so. And fourth, the new regulation authorizes the Board to allow any employee to file unfair labor practice charges long after the 6-month statute of limitations has expired. We argued that the NLRA does not authorize the Board to waive the statute of limitations except for members of the armed forces whose service interferes with their ability to file charges on time.

The NAM asked the court to declare the notice posting requirement null and void. Failure to post the notice could result in the Board finding that an employer engaged in an unfair labor practice by interfering with, restraining or coercing employees in the exercise of their rights. It could also result in waiver of the statute of limitations for employee complaints about other unfair labor practices, or could be used as evidence against an employer in any case in which unlawful motive is an issue.

On Sept. 28, the NAM and co-plaintiff Coalition for a Democratic Workplace, filed a motion for a preliminary injunction and an expedited hearing. We hoped to have the court rule before the effective date of the regulation, or enjoin NLRB implementation and enforcement of the rule indefinitely. We hoped to avoid a situation where companies needed to implement the rule by November 14, its original effective date, only to find that the rule was issued unlawfully.

On Oct. 5, the NLRB announced that it would voluntarily delay implementation of the posting requirement until January 31, 2012., and after oral arguments on December 19 in which the judge sought a further extension, the Board postponed the effective date again, until April 30, 2012.

On March 2, Judge Amy Jackson ruled that the NLRB has broad authority to issue rules, and the notice posting provision was valid. However, the Board did not have the authority to impose the penalties for noncompliance, namely making failure to post an unfair labor practice and suspending the statute of limitations for employees that want to file suit for unfair labor practices years after they occur. However, the NLRB may find the failure to post the required notices to be an unfair labor practice, or to toll the statute of limitations, in case-by-case decisions. Failure to post the notices could in some cases result in findings that an employer intended to improperly influence employees from exercising their rights, or could make it easier for the Board to allow an employee to file charges after the statute of limitations has run out.

The court rejected the NAM's First Amendment arguments, and found that the enforcement provisions were severable from the posting requirement, thus allowing the posting requirement to continue to stand even though a portion of the regulation was found to be invalid.

On March 5, the NAM and others filed a notice of appeal. All are challenging the adverse decisions on the posting requirement, and all but the NAM are challenging the validity of the recess appointment of some of the current Board members who were appointed by President Obama while the Senate was still meeting regularly in pro forma sessions.

The NAM, the American Meat Institute and the Society for Human Resource Management filed a joint brief in a federal appeals court arguing that courts should respect collective bargaining decisions relating to whether clothes-changing activities are excluded from the compensable workday.

The case involves whether to compensate time spent walking from a locker room to a work station. In some industries, this is a substantial issue. Here, an employer and union agreed that the activities of donning, doffing and washing (clothes-changing activities) were to be excluded from the work day. The company argued these same activities are not “principal activities” that start or end the continuous workday, and thus no additional compensation, including overtime, is required. Various union-represented employees sued to have this travel time compensated, and the trial court held open the possibility.

Our amicus brief argued that courts should defer to the collective bargaining process. Congress has repeatedly emphasized the need for courts and governmental entities to defer to the sanctity of the collective bargaining process to protect the interests of both employees and employers, by giving them the flexibility to resolve the challenges of their specific industry as they deem best. The Portal-to-Portal Act was adopted to rein in litigation that was forcing employers to pay for unbargained-for wages relating to clothes-changing activities. Moreover, until last year, the Department of Labor has long advocated that where a collective bargaining agreement excludes clothes-changing activities from the start of the workday, travel time would be non-compensable.

The trial court wrongly left open the possibility that clothes changing could be a principal activity that starts the work day, but that decision undermines the collective bargaining process and deprives employers and employees of the latitude that Congress intended. Unions negotiate other benefits, such as higher rates of pay for time actually worked, in exchange for not counting travel time as compensable. Paying for travel time rewards employees who are inefficient when using it, at the expense of those who are more efficient. The law was enacted to avoid situations where courts could override collective bargaining terms through litigation, and was designed to keep the Department of Labor from stepping in and changing expectations, potentially resulting in the award of many years of back pay. Instead, in a time of economic crisis, we should be focusing on strengthening relationships between employers and their unions, not making it more expensive for employers to maintain their present workforces.

On 5/8/12, the Seventh Circuit ruled that the workers here changed into "clothes" as defined in the Fair Labor Standards Act (FLSA), and that activity was covered by the collective bargaining agreement and not subject to compensation under the FLSA. In addition, the court found that if the union and employer agree that such activity is not compensable, then it cannot be a "principal activity" under the statute that would start the clock for the workday. According to the court, "Not all requirements imposed on employees constitute employment." The court also refused to defer to the position of the Department of Labor in this case, because the Department's position has shifted from one administration to another, and they did not offer any useful knowledge that might help the court decide the case. The opinion is filled with straightforward, common-sense, practical and economic-based reasons why clothes-changing provisions in collective bargaining agreements should be enforced as written.

Interesting note: The court denied our request to file this amicus brief, so we filed an additional motion urging reconsideration, which was also denied. The Seventh Circuit has recently taken a more restrictive attitude toward briefs from groups that are affected by litigation but that are not parties to the litigation. At the same time, it used the fact that no union filed an amicus brief to support its view that the employee claims in this case would not help unions.

This lawsuit challenged the NLRB's ambush election rule, issued in December, 2011, which effectively shortened the amount of time in which union certification elections take place and could allow votes to occur in as little as 20 days. The Coalition for a Democratic Workplace, of which the NAM is a leading member, immediately filed a legal challenge to this rule in federal court in Washington, D.C.

The final rule, effective April 30, 2012, is harmful to employers. Specifically, it alters what types of pre-election hearings can be held (such as who is even eligible to vote in the election) and what types of appeals can be filed prior to an election. If certain matters can be discussed only after an election is held, these matters will often become moot, leaving the employer with no voice to be heard prior to the election. The rule also appears to shorten the time between a petition for certification being filed and the election being held. If most pre-election matters will be deferred until after the election, the election itself could take place very quickly.

The complaint sought to enjoin the NLRB from enforcing the final rule. It charged that the rule violates the statutory requirement that the NLRB must hold pre-election evidentiary hearings if there are questions concerning whether representation exists. The rule also eliminates a party's right to seek Board review of a regional director's pre-election rulings until after an election, thus depriving employees of the fullest freedom in exercising their rights as required by the law. Other claims raised fundamental concerns that the Board's action impinges on the freedom of speech by employers, that it did not provide an adequate opportunity for comments, and violated the Regulatory Flexibility Act.

On Feb. 3, 2012, the CDW filed a motion for summary judgment, arguing that employees need at least 30 days to decide how to vote in NLRB elections. Even former Senator and President John F. Kennedy emphasized the need for this time to "safeguard against rushing employees into an election where they are unfamiliar with the issues."

On April 27, the Chamber and CDW filed a motion for a temporary stay of NLRB action pending judicial review to allow the court time to decide the issues in the case before the rule goes into effect. The next day, the judge denied the motion, saying that the plaintiffs will not suffer irreparable injury because the court will issue its opinion on the merits by May 15, "which date will precede any potential election under the new rule."

True to his word, Judge Boasberg ruled on May 14, denying the NLRB's motion for summary judgment and granting the plaintiffs'. He ruled that the vote to adopt the rule did not have a quorum. The vote was 2-0, with the third member of the NRLB not voting, and the judge found that the vote of two members in an online voting situation is "simply not enough." The third member "need not necessarily have voted, but he had to at least show up." More is required than just being a member of the Board in order to establish a 3-person quorum. He must "participate" in the decision, although he need not vote to be counted in determining a quorum. In the context of electronic voting, he had to affirmatively express an intent to abstain, or acknowledge receipt of the notification about the vote, but that did not happen. It was as if he had failed to attend the vote at all.

The ruling leaves open the possibility that members of the NLRB could simply not participate in votes in order to prevent the Board from having a quorum. This could slow down the rulemaking and adjudicatory process at the agency. The court did not reach any of the other procedural and substantive challenges to the ambush election rule, and those issues may have to be litigated later, if the Board reissues the rule with a proper quorum.

On June 11, 2012, the NLRB filed a motion to alter or amend the judgment, arguing that Member Hayes was in fact present in the Board's electronic voting room. This motion was denied on July 27.

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

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

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

This is an appeal of the first asbestos personal injury claim in Michigan to go to verdict in more than ten years, involving alleged due process violations and gamesmanship in Michigan asbestos litigation. The trial court bundled different asbestos cases together in violation of an administrative order from the Michigan Supreme Court, and selected a non-malignant case from a trial group of 95 cases to hastily proceed to trial without an opportunity for meaningful discovery.

The defendant opted not to settle, in part, because it had strong reasons to believe that the diagnosis of plaintiff’s asbestos expert, Dr. Jeffrey Parker, was unreliable; a fact confirmed by a blind study of independent medical examiners. Also, the plaintiff did not specifically allege exposure to the defendant’s asbestos products and never maintained, until the eve of trial, that asbestos-related injuries forced him to retire early. The trial court rejected these challenges and proceeded to trial, giving the defendant only six days to prepare a case involving 95 possible cases and over 30,000 pages of information. The case resulted in a verdict for the plaintiff totaling nearly a half-million dollars.

The NAM filed an amicus brief on 12/29/10 supporting the appeal, arguing that the trial court routinely appeared to violate the spirit, if not the letter, of the Michigan Supreme Court's asbestos anti-bundling order, which was designed to restore fairness and rationality to that state's asbestos litigation. In this case, the trial court allowed bundling of cases with highly suspect and dissimilar injuries into larger trial groups, and forced the defendant to enter the trial effectively blindfolded, without vital, case-dispositive information needed for its defense. Because Dr. Parker's testimony was not excluded, such unreliable screening testimony encourages false claims, harms manufacturers who create jobs, and threatens payments to palintiffs with reliable claims.

The case was settled without a ruling from the court.

Questionable science in the courtroom makes defending product liability suits more difficult for manufacturers. A case now on appeal to the Supreme Court of Pennsylvania involves testimony claiming that any exposure to asbestos on the job, no matter how small, is a “substantial factor” in causing mesothelioma. The NAM and other groups filed an amicus brief urging the court to reject testimony based on this “any exposure” theory, which contrasts sharply with normal causation testimony. The trial court called the theory junk science, as have many other courts, but an intermediate appellate court reversed because the judge did not constrain his ruling strictly to the arguments made by the defendants.

Our brief noted that the judge properly exercised his authority and independent judgment to identify logical and scientific errors in the "any exposure" theory. The theory shuns the bedrock principle of toxicology that "the dose makes the poison," and ignores the fact that small doses of even toxic substances may cause no harm. The "any exposure" theory could subject companies that handle any products with any degree of toxicity to expansive liability. The theory is inconsistent with asbestos science and epidemiology and runs counter to the vast majority of other court opinions.

On 5/23/2012, the Court ruled that trial judges normally should allow expert testimony, but that a hearing on the validity of the expert's testimony "is warranted when a trial judge has articulable grounds to believe that an expert witness has not applied accepted scientific methodology in a conventional fashion in reaching his or her conclusions." The judge was right to question the validity of the any-exposure opinion, particularly since it would eliminate the need for plaintiffs to pursue the more conventional route of establishing specific causation. Because the expert's opinion conflicted with itself (arguing that any exposure is a substantial cause of injury while also conceding that a disease is dose responsive), the judge did not abuse his discretion by disallowing the testimony.

The Complex Litigation Center in Philadelphia, Pa., has terminated the practice of consolidating mass tort cases without agreement of all parties, and also of using "reverse bifurcation," whereby juries determine damages before determining whether a defendant was liable for them. These procedures prejudice manufacturers, and the NAM joined with other business groups to support making the Center's changes permanent. These procedures have helped make Philadelphia a magnet jurisdiction for plaintiffs' attorneys. The NAM's comments also urged the Center not to reintroduce punitive damages claims into asbestos litigation, both to prevent further bankruptcies and to preserve resources for future asbestos claimants.

On February 15, 2012, the court adopted the protocols above, with the exception of special rules for asbestos cases. In addtiion, out-of-state attorneys appearing in cases before the Complex Litigation Center are limited to no more than two trials per year. The court's protocol also states that "All punitive damages in mass tort claims shall be deferred." Unfortunately, on May 3, 2012, it notified the mass tort bar that it was inviting comments on this last protocol, suggesting the possibility that it was reconsidering the procedure.

Consequently, the NAM and others filed comments on 6/1/12 supporting the continued deferral of all punitive damage claims for mass tort litigation. While the focus of the litigation is on asbestos and pharmacological claims, the letter applies to all mass tort claims. We noted that the need to punish defendants in asbestos cases is unnecessary to prevent repeated acts, because the large number of bankrupt companies clearly established the deterrence. Furthermore, awarding large sums to early plaintiffs would prevent other injured parties from gaining just compensation. Finally, the letter noted that regulations in the medical field were comprehensive, and to allow punitive damages would create a potential disincentive for investing in life-enhancing and life-saving products. Having met these regulations and working to advance these products and customers’ lives, these companies should not be punished with repeated sanctions.

The court issued an order 6/18/12 continuing to prohibit reverse bifurcation of mass tort cases unless agreed upon by all counsel. It also will allow punitive damages claims in pharmaceutical mass tort cases provided there is enough proof to support such a claim, and will allow expedited trials for plaintiffs facing imminent death. It also will allow out-of-state lawyers to participate in up to 4 cases every year.

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

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

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

A respirator manufacturer was sued by a party alleging that the company had a duty to warn individuals who clean or otherwise handle the equipment about asbestos hazards from products made, sold or supplied by third parties. The trial court rejected the claim, and the NAM filed an amicus brief in this appeal supporting that result. We argued that liability only applies to companies that are in the chain of distribution of a product, where they have some measure of control and responsibility. There is no claim in this case that the respirators had any design defect or manufacturing flaw.

They should not be held liable for warning about the hazards of others’ products, even if those hazards are foreseeable. The courts have not and should not extend negligence liability law without limit, and a manufacturer of protective equipment should not have to warn about the risks of the products of others from which their own products provide protection. Fox example, it is one thing to require manufacturers of rubber gloves to warn about the potential for latex allergies associated with their own products; it is quite another to require them to warn of the dangers of numerous chemicals and cleansers made by others that the gloves provide a barrier against. We cited a variety of other examples as well. Imposing such a duty to warn about other products would place a significant burden that the companies are not in the best position to bear.

In addition, there should be no liability when a non-defective product functions as it is designed to.

Our brief also explained the adverse impact that expanding liability rules would have on companies already being sued as part of the wave of asbestos litigation. More than 10,000 companies have already been named as asbestos defendants, and nontraditional asbestos defendants now account for more than half of asbestos expenditures. Moreover, targeting respirator manufacturers with these kinds of claims threatens to have a broader adverse effect on health and safety by creating strong disincentives to continue to produce the devices for sale in the United States.

On 8/12/12, the court reversed, holding that the “duty at issue is to warn of the danger of asbestos exposure inherent in the use and maintenance of the defendant manufacturers’ own products, the respirators.” (emphasis in original) By establishing this duty, the court requires that all manufacturers who produce equipment (even those not involved in the production of asbestos containing products) that might expose the user to asbestos from other users or products, to warn of hazards and take safety precautions. A strong disseting opinion warned that requiring a manufacturer to list all the possible consequences that can result from using its product would lead it to warnings against everything, reducing the effectiveness of all of them.

On November 12, 2009, the NAM and seven other companies filed an amicus letter urging review of this case. An emerging liability theory is that makers of non-defective products should be held liable for harms allegedly caused by asbestos-containing products made by others and attached post-sale. We supported review to resolve a clear conflict between two California Courts of Appeal. Earlier in 2009, The First District held that various parts supplied to the Navy had no duty to warn of the dangers in asbestos-containing products supplied by other manufacturers. In a separate decision, the Second District created a broad new duty rule that requires manufacturers to warn about risks in products made by others. The court's review may help secure uniformity of decision and reverse the broad new duty rule created by the Second District's decision. The new duty rule would also worsen asbestos litigation, causing a potentially substantial burden on California's judicial system.

The court agreed to hear this appeal, and the NAM filed an additional brief on March 9, 2010. On January 12, 2012, the court unanimously decided there would be no liability for harm caused by another company's products unless the defendant's own product contributed substantially to the harm or the defendant participated substantially in creating a harmful combined use of the products. This is an important victory in California to keep normal duty-of-care principles intact. Just because harm from the use of another company's products might be foreseeable doesn't mean that it is sufficient by itself to impose strict liability on the manufacturer of a nondefective product, or one whose arguably defective product does not actually cause harm. It is excessive and unrealistic to impose the burden on manufacturers to investigate the potential risks of all other products and replacements parts that might foreseeably be used with their own product and warn about all of those risks. Such a duty would also undermine consumer safety by inundating users with excessive warnings, according to the court.

The NAM joined with 11 other organizations urging the Illinois Supreme Court to affirm a trial court ruling that landowners have no duty to protect against off-site injuries that could result from secondhand exposures to asbestos and other substances emitted in the workplace. Such a duty has recently been imposed in only a few states, but only after it became clear that a danger existed. This case arose from alleged exposure by an employee on the job from 1958 to 1964.

Whether one person owes a legal duty, as opposed to a moral or ethical obligation, is a policy judgment that must balance providing a remedy with extending exposure to tort liability almost without limit.

On March 22, 2012, the court found that the allegations in the complaint were insufficient to establish that the defendant owed a duty of care to the plaintiff, and it allowed the plaintiff to amend the complaint. It held that Presumably, there are some facts that could be alleged that would lead to the conclusion that everyone owes "a duty of ordinary care to all others to guard against injuries which naturally flow as a reasonably probable and foreseeable consequence of an act . . . ." If a risk was created, a manufacturer might be liable depending on (1) the foreseeability of the injury, (2) the likelihood of the injury, (3) the magnitude of the burden of guarding against the injury, and (4) the consequences of placing that burden on the defendant. It found that a manufacturer could have a legal duty to third parties in circumstances like these, and that the plaintiff should be given a chance to allege that the defendant would have been able to foresee the plaintiff's injuries if it had known of the dangers of secondhand asbestos exposure.

Our brief, which focused on the issue of secondhand exposure liability, not product liability, argued that most states considering this issue have rejected such liability. This new duty for landowners would bring about countless new lawsuits, potentially involving asbestos and other substances and involving a wide variety of people who might come in contact with an exposed worker. Illinois has experienced asbestos litigation for decades, often serving as a magnet jurisdiction for claimants from around the country, and a new duty requirement would exacerbate the current asbestos litigation and augment other toxic tort claims.

The Illinois Supreme Court had earlier denied all motions to file amicus briefs, and decided the case without the views of interested organizations.

On 8/3/10, the NAM filed an amicus brief in the North Carolina Supreme Court challenging a ruling that removed a standard product-alteration defense in a product liability case. The defense protects manufacturers against liability when their products are altered by someone else, yet the lower court in this case said the defense is not available unless the alteration was done by a party to the litigation. We argued that the “party” can be any party, not just one involved in the lawsuit. Otherwise, North Carolina plaintiffs can game the system and the state’s courts will become inefficient and unfair jurisdictions for manufacturers.

The Court granted review in the case, and the NAM and others filed an additional brief on March 4, 2011. We noted that the state legislature approved the principle that manufacturers or sellers are not liable for harms caused by product misuse. At the core of this determination is the general principle that a manufacturer of a product may be held responsible for foreseeble harms caused by a defect existing at the time of sale, but should not be held liable for harms caused by others beyond the manufacturer's control. Expanding liability beyond this principle would harm manufacturers, who would have no way to safeguard the ultimate consumer, no way to modify their own behavior to minimize the risk, and no way to determine the extent of the potential risk.

On April 13, 2012, the court reversed the lower court, ruling that the product alteration defense is available to a manufacturer regardless of whether the person making the alteration is a party to the lawsuit. The North Carolina statute does not limit the availability of the defense depending on who is suing, and there was sufficient evidence in the case that the product was altered after delivery, i.e., the seatbeat was placed in an improper position before the car accident. Only a few exceptions to the defense are available, generally involving alterations that have been approved by the manufacturer. This is a clear victory in our attempt to prevent trial lawyers from expanding liability to manufacturers in situations where the manufacturer is not responsible for the injury.

The NAM and other associations on June 1, 2012, urged the California Supreme Court to review a decision involving the application of punitive damages. In this asbestos personal injury case, the lower court approved a punitive damages award of $4.5 million against a company with a net worth of negative $1.023 billion. The company argues on appeal that the damages are excessive in light of its net worth, and that the punitive damages are unconstitutional because they are far in excess of comparable civil or criminal penalties for similar conduct.

The NAM supported review of both issues, requesting that the court provide a more sophisticated approach where a company has a negative net worth, to prevent harm to preexisting creditors. Those creditors are the ones who effectively end up paying the punitive damages. Moreover, the court should step in to ensure that punitive damages are assessed at a level that is comparable to statutory penalties for similar misconduct. The lower court called consideration of this factor irrelevant, despite its approval by the U.S. Supreme Court.

On 7/11/12, the court declined to review this appeal.

A federal tax court judge has thrown a monkey wrench into determining what costs may be included as “qualified research expenses” eligible for the R&D tax credit when companies undertake manufacturing process improvements. Normally, all costs related to research into process innovations, including plant-scale research costs such as raw materials also used in ordinary production runs, are qualified expenses. However, the judge ruled that the supplies costs are “ordinary production costs” and that the company did not prove that the costs qualified for the credit.

On appeal, the NAM filed an amicus brief warning that the judge’s ruling establishes an unreasonable dichotomy between research into new products and research into new processes, to the detriment of process research. But both kinds of research advance the congressional purpose of the R&D tax credit. Process research often involves difficult issues relating to scaling up from small to large production runs, and supplies are a necessary part of this research, even if the supplies ultimately end up in salable products. We urged the court to recognize the importance of process research as a whole toward improved productivity, reduced energy consumption, reduced use of hazardous and non-hazardous materials as inputs in production, reduced emissions and enhanced safety and health. Including the costs of supplies in process research recognizes that such supplies are a critical element of plant-based process research, and denying the costs would discourage experimentation and encourage economic waste.

On 9/7/12, the court upheld the Tax Court’s decision and ruled against the company. It held that the company could not claim the research credit for all the supplies it used in the production process even though research was performed. It could only claim the credit for additional supplies that were used to perform the research. All the other supplies were used to produce a product that was sold, and the credit is only for costs that the manufacturer would not otherwise incur but for the research.