NCLC Business Alert

January 8, 2008

Visit NCLC for a complete look at the news.

In This Edition

News:

NCLC would like to congratulate longtime friend and supporter Willis J. Goldsmith on his appointment as Partner-In-Charge of the Jones Day's New York Office. Goldsmith, a Partner at the Firm since 1983, has represented management in all phases of labor and employment law for nearly four decades. He has served as Chair of Jones Day's Labor & Employment Practice for more than 15 years. Goldsmith is a member of NCLC's Labor & Employment Law Advisory Committee and represents NCLC in its Supreme Court case, Chamber v. Brown.

NCLC's Moot Court Program
NCLC hosted two moot courts for Supreme Court advocates in November. On November 26th, NCLC hosted a moot court in Rowe v. New Hampshire Motor Transport Association, a case involving federal preemption of a local regulation of motor carriers. On November 30th, NCLC hosted a moot court in Sprint/United Management Co. v. Mendelsohn, a case involving admission of non party evidence in age discrimination cases.

Recent Decisions:

Court Vacates Decision Misinterpreting Business Necessity Defense under the ADA
On December 28, 2007, the Ninth Circuit agreed with NCLC and vacated and remanded a panel decision holding that UPS violated the Americans with Disabilities Act (ADA) when it refused to consider deaf workers for jobs driving smaller vehicles that are not covered by a Department of Transportation hearing standard that applies to larger vehicles. In Bates v. United Parcel Service, Inc., the Ninth Circuit panel erroneously applied a more stringent test for evaluating business necessity under the ADA that unreasonably ignores legitimate safety concerns. NCLC argued that public policy calls for balancing the ADA's goals of promoting qualified individuals with disabilities in the workplace against employers' legitimate need to protect the safety of their employees, customers and the general public.

Court Refuses to Accept Motion in Venue Case
On December 26, 2007, the Louisiana Supreme Court refused to accept NCLC's motion in support of review in Waxler Transportation Co., Inc., et al. v. Trinity Marine Products, Inc., et al., a case addressing whether plaintiffs must prove the defendants are joint tortfeasors to establish that venue is appropriate as to all defendants. In this case, one of the multiple defendants, Valspar Corporation, filed a venue exception challenging jurisdiction and introduced evidence proving that it could not be a joint tortfeasor with any defendant against whom venue was proper. The trial court and the appellate court refused to consider that evidence, allowing the plaintiff to rest on its initial allegations.

Court Upholds Constitutionality of Ohio Tort Reform Act
On December 27, 2007, agreeing with NCLC, the Ohio Supreme Court affirmed the constitutionality of Ohio's tort reform law in Arbino v. Johnson & Johnson, et al.
Plaintiff charged that Ohio's legislature violated the separation of powers by intruding on the judiciary's historic province to articulate the common law of torts. In its brief, NCLC countered that this judicial power was delegated to it by the legislature at Ohio's founding and that the legislature continues to have the power to enact tort law.

Court Grants Review of Retroactive Application of Judicial Precedent
On December 27, 2007, agreeing with NCLC, the Ohio Supreme Court granted review in Dicenzo v. A-Best Products Co., Inc. to consider whether its 1966 decision providing for strict liability for asbestos manufacturers applied—at that point, without development or precedent—to suppliers of asbestos as well. The Ohio Supreme Court formally extended strict liability to suppliers in 1977. NCLC argued that 1977, not 1966, should be considered the starting point for such liability. The intermediate appellate court disagreed and thereby placed small and medium sized businesses in Ohio in jeopardy of being sued for conduct that occurred over thirty years ago.

Court Restricts Asbestos Litigation in California
On December 18, 2007, the California Court of Appeal agreed with NCLC and upheld a trial court's standing order which requires asbestos plaintiffs, within eight months of filing their complaints, to provide some basic information connecting the plaintiffs' asbestos-related condition to the defendants' conduct. In its brief in Snyder v. Superior Court, NCLC described the "asbestos litigation crisis" which has led to multiple bankruptcies among asbestos manufacturers and to lawsuits against peripheral industries and actors and contended that the standing order reflects a sound approach to managing the asbestos docket so that meritorious complaints are considered more expeditiously.

NLRB Limits Employee Use of Company's E-Mail System to Conduct Union Activity
On December 16, 2007, the National Labor Relations Board agreed with NCLC in The Guard Publishing Company and Eugene Newspaper Guild, and ruled that the employer did not violate Section 8(a)(1) by maintaining a policy that prohibited employees from using the employer's e-mail system for any "non-job-related solicitations." In its brief, NCLC urged the National Labor Relations Board to recognize and fashion email rules that protect an employer's reasonable efforts to maintain its capital investments. NCLC argued that employers must be allowed to set restrictions and limitations on e-mail use that preserve the business purpose of their system, and ensure the system's security and integrity.

Court Declines to Publish Appellate Decision on Expert Testimony
Rejecting NCLC's request, on December 12, 2007, the California Supreme Court declined to publish the California Court of Appeal's decision in Lockheed Litigation Cases [Aguilar, et al. v. ExxonMobil Corp., et al.], which clarified the trial court's duty to exclude expert testimony which lacked a proper foundation. California does not allow litigants to cite unpublished opinions in state courts. When it granted review, the California Supreme Court automatically depublished the Court of Appeal's beneficial decision. NCLC had filed a brief on the merits pressing the California Supreme Court to uphold the lower court decision by ensuring the reliability of expert witness testimony (in cases involving non-novel scientific methods) by applying the rigorous evidentiary standard announced by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, but the California Supreme Court dismissed the case on conflicts of interest grounds.

Court Revises Decision in Wal-Mart Abusive Class Action Case
On December 11, 2007, the Ninth Circuit issued a revised decision in Dukes, et al. v. Wal-Mart Stores, Inc., excluding women who left the company before the nationwide Title VII gender discrimination case was filed and consequently could not benefit from changes to the company's pay and promotion rules from the class of 1.5 million plaintiffs, the largest class action in history. Upholding the initial class certification, the court subsequently denied Wal-Mart's petition for panel rehearing as moot, but allowed the company to file another rehearing en banc petition. Filing in support of the company's appeal of class certification, NCLC argued that the trial court made serious errors in certifying the case as a class action by permitting the use of statistical evidence of discrimination, ignoring the requirements of proof of individual discrimination, and allowing the plaintiffs to bring their class claim based on a "common" allegation that Wal-Mart decentralized its hiring and promotion practices. NCLC warned that class certifications based on these types of decisions would lead to an avalanche of similarly unmanageable and impossible to defend nationwide class actions.

Court Dismisses Challenge of Arizona Immigration Statute
On December 7, 2007, the District Court dismissed without prejudice the Chamber and other Arizona businesses' lawsuit challenging Arizona's immigration law in Arizona Contractors Association, et al. v. Napolitano. The judge did not uphold the constitutionality of the law. While the judge ruled that the mandatory E-Verify provisions of Arizona's immigration law were likely unconstitutional, the judge believed that the parties sued the wrong defendants. The judge believed that the proper defendants to the suit were the fifteen county attorneys charged with enforcing the law, instead of the Governor and Attorney General. The parties appealed the decision on December 13, 2007, and refiled the lawsuit challenging the constitutionality of the Arizona law because it interferes with federal law regulating the employment of undocumented workers.

Court Agrees to Review Narrow Interpretation of California Labor Code's Administrative Exemption From Overtime Pay
On November 28, 2007, as urged by NCLC, the California Supreme Court agreed to the review of Harris v. Superior Court (Liberty Mutual Insurance), a court of appeal ruling that drastically narrowed the administrative exemption under California law and allowed a class action of claims adjusters to move forward with claims for overtime pay. In a dramatic departure from federal law, the California appeal court held that the claims adjusters are primarily production workers and therefore not exempt from overtime requirements. In its letter brief, NCLC argued that allowing the court of appeal decision to stand would substantially disrupt California businesses and invite massive litigation.

High Court Declines to Consider Whether Judicial Review is Required for Compensatory Damages Awards
On November 26, 2007, the Supreme Court declined to consider whether the Due Process Clause requires some minimal judicial review of a compensatory damages award. In Daniel Measurement Services, Inc. v. Eagle Research Corp., the trial court conceded the lack of facts supporting the damages award, but indicated that it would not grant summary judgment or judgment notwithstanding the verdict as a matter of course. The West Virginia Supreme Court of Appeals declined review. In its brief, NCLC argued that this lack of judicial review posed an unacceptable risk that the defendant would be deprived of its property without due process of law.

US Supreme Court Agrees to Review Federal Labor Law Preemption Case
The Supreme Court granted the Chamber's petition for a writ of certiorari on November 20, 2007, in Chamber of Commerce of the United States of America v. Brown. The Court agreed to review the Ninth Circuit decision holding that the California law prohibiting employers that annually receive more than $10,000 in state funds from using those funds "to assist, promote, or deter union organizing" was not preempted by the National Labor Relations Act (NLRA). A federal district court ruled in September 2002 that certain provisions of the California law were preempted by the NLRA; a three judge appeals court panel unanimously agreed in April 2004; the panel again supported preemption in a 2-1 ruling in September 2005, but was reversed by the full Ninth Circuit in September 2006.

Court Reverses Personal Protective Equipment Citation Case in Michigan
On November 15, 2007, in United Parcel Service v. Bureau of Safety and Regulation, General Industry Safety Division, the Michigan Court of Appeals reversed Safety Board citations issued against United Parcel Service for failing to conduct a hazard assessment in every workplace—even where no hazards requiring personal protective equipment could possibly be present (i.e., in an office setting). In a brief filed jointly with NFIB, NCLC argued that the Safety Board overstepped its bounds by requiring employers to assess their workplace at every location to determine if hazards that necessitate the use of personal protective equipment (i.e., goggles, work gloves, etc.) are present or likely to be present. NCLC cautioned the court that the requirement of having to perform assessments at every single location will be costly to Michigan businesses, and will unnecessarily expose them to penalties and fines under MIOSHA, where such penalties would not exist under federal law.

Court Declines Review Case of Reverse Bifurcation Punitive Damages Ruling
On November 15, 2007, the West Virginia Supreme Court of Appeals declined to review and vacate the trial court's plan to have the jury determine the punitive damages multiplier before determining the amount of non-punitive recovery. In Chemtall, Inc. v. Madden, et al., the plaintiffs sought medical monitoring for exposure to chemicals during work at a coal preparation plant. NCLC argued that the trial court's plan turned the State Farm v. Campbell decision on its head because a jury could not properly decide—consistent with Campbell's one to one ratio requirement where the non-punitive recovery is large—the level of punitive damages without first knowing the amount of non-punitive recovery.

New Filings:

NCLC Urges Supreme Court Review of Mandatory Arbitration
On December 28, 2007, NCLC urged the Supreme Court to review a Seventh Circuit decision that judicially imposes "interest arbitration" into most collective bargaining agreements where issues not resolved by the parties through bargaining could be imposed by an arbitrator. In Illinois Bell Telephone Co. v. International Brotherhood of Electrical Workers, Local 21, NCLC argued that federal policy favors arbitration. In the collective bargaining agreement setting, however, without the benefit of contractually bargained for arbitration limitations, every action of an employer could be challenged. At the very core of labor grievance arbitration provisions is the parties' desire to obtain some stability and predictability in industrial operations. If left in place, the Seventh Circuit decision jeopardizes the careful balance necessary to maintain industrial peace and economic stability.