Recent Decisions:
Court Rejects Federal Preemption of Arizona Immigration Statute
On February 7, 2008, the District Court in Arizona Contractors Association, et al. v. Candelaria, et al. upheld the constitutionality of Arizona’s immigration law, despite NCLC’s argument that the law interferes with federal law regulating the employment of undocumented workers. NCLC argued that the Arizona law imposes different liability and conflicting sanctions, including the revocation of business licenses, without an opportunity for a hearing, on employers who are deemed to have hired undocumented workers. The state also requires mandatory compliance with the E-Verify employment verification program, which is voluntary under federal law. In the Complaint, filed against 15 county attorneys in addition to the state’s attorney general, NCLC challenged the Arizona statute as unconstitutional because it ignores employers’ due process rights and is preempted by federal law -- the Immigration Reform and Control Act -- which provides a comprehensive plan prohibiting the employment of illegal immigrants in the United States. NCLC intends to appeal the decision.
Court Vacates Award and Grants New Trial in Punitive Damages Case
On January 30, 2008, in Bullock v. Philip Morris USA, the California Court of Appeals vacated the punitive damages award and remanded to the trial court for a new trial on punitive damages. The United States Supreme Court made clear in Philip Morris v. Williams that trial courts must, upon request, guard against the risk of jury confusion when evidence related to the harm inflicted on non-parties is introduced. The trial court did not accede to the defendant’s request and a new trial is therefore warranted.
Court Rejects “Rigorous Analysis” Requirements for Class Action Certifications
On January 25, 2008, the Michigan Court of Appeals affirmed the trial court’s certification of a class action alleging toxic tort claims in connection with an alleged release of Dioxin at a Dow plant. In Henry, et al. v. The Dow Chemical Co., et al., NCLC argued that inconsistent and lax certification standards encourage class action abuse and urged Michigan courts to look to the federal courts for guidance by conducting a “rigorous analysis” of the class action requirements before certifying a class.
Court Rejects Arbitration Provisions Contained in Class Action Waivers
On January 25, 2008, the North Carolina Supreme rejected NCLC’s argument in Tillman v. Commercial Credit Loans, Inc. that contracts containing arbitration provisions with class action waivers are not unconscionable under North Carolina law. In this case, though barred by their financing contracts from doing so, plaintiffs filed a putative class action complaint against their mortgagors. Relying on explicit contractual language and rejecting the notion that an arbitration requirement with a class action waiver is unconscionable, the court below dismissed the case and ordered arbitration. In addition to making clear the comparative benefits of arbitration to plaintiffs and defendants, NCLC also argued that upsetting the parties’ bargain impermissibly conflicts with the Federal Arbitration Act and therefore is preempted.
Court Issues Revised Opinion in Electronic Drug Testing Records Case
While the Ninth Circuit granted the petition for panel rehearing, it also issued a superseding opinion on January 24, 2008, which still allows the government to seize thousands of drug testing records pertaining to Major League Baseball players, as well as other athletes, who were not identified in the government’s search warrant, and who are not implicated in any criminal investigation involving steroid use. In United States v. Comprehensive Drug Testing, Inc., et al., NCLC argued that unionized employers who collectively bargain over issues of employee drug testing would be seriously undermined in their ability to negotiate drug testing arrangements if there is no promise of confidentiality or anonymity in conducting such testing. Moreover, the concern that the government can search and seize, without probable cause, vast amounts of electronic information maintained by businesses that is not the subject of a criminal investigation, is deeply troubling because thousands of innocent persons whose information is seized would have no notice of the seizure unless the businesses informed them after the fact.
Supreme Court Agrees to Review FDA Preemption of Failure to Warn Lawsuits
On January 18, 2008, the Supreme Court granted review of Wyeth v. Levine, a Vermont Supreme Court’s erroneous decision to permit the plaintiff’s failure to warn lawsuit to proceed even though the FDA had approved of the relevant drug labeling. In its brief, NCLC explained the importance of regulatory preemption to not only the pharmaceutical industry but to the entire business community, and contended that this case represented an excellent vehicle to resolve the confusion in the lower courts to the preemptive effect of agency regulations.
Court Denies Amicus Brief on Corporate Scienter and Collective Knowledge
On January 18, 2008, in Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc., et al., the Second Circuit failed to accept NCLC’s amicus brief arguing that the court should reject the collective knowledge doctrine and affirm that, for purposes of the securities laws, corporations cannot be held liable if no one employee of the company can be held liable on an individual basis. The plaintiff in this case contended that knowledge not otherwise shared by two groups of employees of the defendants should be combined so that the company could be said to retain “collective knowledge” of the fraudulent misstatements at issue. In its brief, NCLC argued that such a rule, rejected by every other court to consider it, would resurrect negligence liability for corporations, permit abusive discovery and harm the standing of our capital markets as they compete globally.
High Court Grants Review of Preemption of State Regulation of Federally-Authorized Statements
On January 18, 2008, the Supreme Court granted review to consider whether state-law challenges to FTC-authorized statements regarding tar and nicotine yields in cigarette advertising are preempted by federal law. In Philip Morris USA, et al. v. Good, et al., NCLC made clear that, if allowed to stand, the First Circuit’s approach below would balkanize cigarette labeling, advertising, and promotion into a state-by-state endeavor. Moreover, its approach would render the same results in many other facets of commercial life where a federal agency has authorized or approved the relevant rating or standard.
Court Rejects Primary Liability for Secondary Actors under the Securities Laws
On January 15, 2008, the Supreme Court affirmed the Eighth Circuit’s conclusion that Section 10(b) of the Securities Exchange Act does not authorize a private right of action against third parties for so-called “scheme liability.” In Stoneridge Investment Partner, LLP v. Scientific-Atlanta, Inc., NCLC argued that that scheme liability—which is nothing more than aiding and abetting liability in disguise and is not supported by the terms of the statute—would disadvantage American issuers of securities because they would have to price their commercial transactions to reflect the substantial added risk of liability for their business partners. To avoid litigation risk, both domestic and foreign companies would have significant incentives to do business with companies listed on foreign exchanges, or with private companies.
Court Considers Post Sale Duty to Warn of Hazards Created by Combining Asbestos with Manufacturer’s Product
On January 9, 2008, the Washington Supreme Court agreed to consider whether a product manufacturer can be held liable for failing to warn about hazardous products used by others in combination with its products. In Braaten v. Buffalo Pumps, Inc., et al., the defendant sold valves which were sold to the Navy to use on their ships. The Navy covered the valves with asbestos insulation. The court of appeals held that the defendant-manufacturer could be held liable for failing to warn about the asbestos put on the product post-sale by the Navy. If this broad duty were upheld, it would not only expand asbestos liability but could expand the duty to warn for others as well. In its brief, NCLC described the asbestos litigation environment and argued that expanding the post-sale duty to warn represented unsound public policy.
Court Declines Review of Extraterritorial Application of CERCLA
On January 7, 2008, the Supreme Court declined to review whether the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) can be applied to the foreign conduct of a Canadian company if the alleged pollutants enter the environment of the United States. In Teck Cominco Metals, Ltd. v. Pakootas, et al., NCLC argued that this conclusion is not supported by statute, violates the presumption against extraterritorial application of U.S. law, interferes with traditional diplomatic mechanisms for resolving cross-border disputes, and exposes U.S. companies to potential retaliation.
Court Declines Review of Abusive Class Action in Louisiana Case
On January 7, 2008, in Scott, et al., v. American Tobacco Co., et al., the Louisiana Supreme Court declined to grant review of the intermediate appellate court’s erroneous decision to permit certification of a class even though plaintiffs had significant individualized issues regarding reliance on the defendants’ alleged fraud which could not be resolved by class litigation. The intermediate appellate court dispensed with the commonality requirement of showing reliance by finding that the remedy sought was for a common fund. In its brief, NCLC made clear that a common fund remedy does not abrogate the commonality requirement in federal or Louisiana courts. In addition, NCLC explained that loosening class certification rules in Louisiana would serve as a magnet for the plaintiffs’ bar to overburden Louisiana courts with abusive class actions.
Court Declines to Review Availability of Removal under the Class Action Fairness Act
On January 3, 2008, the Eleventh Circuit declined en banc review of the panel decision in Lowery v. Hanna Steel Corp., et al., which improperly required defendants seeking removal from state court to federal court under the Class Action Fairness Act, to provide clear evidence that the amount in controversy satisfied the federal minimum and prohibited any jurisdictional discovery to aid in that determination. In its brief, NCLC argued that such rules would encourage plaintiffs to avoid clarity in their complaints to avoid removal of their cases to federal court, a result contrary to congressional intent.
California Court Declines Review in Secondary Exposure to Asbestos Liability Case
On January 3, 2008, in Honer v. Merck & Co., et al., the California Supreme Court declined to grant review to consider whether California law recognizes a duty on the part of premises owners for secondary exposure to asbestos. The California Court of Appeal vacated the district court’s grant of summary judgment without explicitly confronting the issue. Raising the specter of almost limitless liability, NCLC had urged the California appellate court to reject finding liability on the part of employers for secondary exposure to asbestos. Secondary exposure is the new front in the asbestos plaintiffs’ bar’s assault on American industry. In response, NCLC has filed briefs in courts across the country urging them to maintain traditional understandings of duty and foreseeability in tort law.
Court Dismisses as Moot Union Effort to Compel OSHA Rule Regarding Personal Protective Equipment
On December 18, 2007, the Court of Appeals for the District of Columbia Circuit dismissed as moot a petition for writ of mandamus filed by the AFL-CIO and UFCW compelling OSHA to issue a rule requiring employers to pay for nearly all personal protective equipment. In In re AFL- CIO and United Food and Commercial Workers International Unions, NCLC filed an amicus curiae brief outlining the serious negative consequences the proposed rule could have on employers’ existing methods of purchasing and distributing personal protective equipment (PPE), collective bargaining relationships and day-to-day management of the workplace. On November 15, 2007, OSHA issued a PPE Rule.
Court Declines Review of Suit in California Property Rights Case
On December 12, 2007, the California Supreme Court declined to review whether a local government must enforce conditions extracted for projects that have not gone forward whenever a private party files suit. In Lincoln Place Tenants Association v. City of Los Angeles, the developer agreed to stay in the rental market business if its development plan were approved by the city. Subsequently, the developer decided not to go forward with the development plan but private plaintiffs filed suit to force the developer to remain in the rental market. Under California law, a developer has the unencumbered right to leave the rental market when it chooses. In its letter brief, NCLC argued that the developer does not lose this right on the basis of an unrecorded and abandoned development plan.
New Filings:
NCLC Files Notice of Appeal and Seeks Emergency Stay of Arizona Immigration Statute
On February 8, 2008, NCLC joined a coalition of Arizona associations in appealing a District Court decision that upheld the constitutionality of an Arizona law that interferes with federal law regulating the employment of undocumented workers in Arizona Contractors Association, et al. v. Candelaria, et al. An emergency stay would prevent the law from being enforced pending a decision by the Ninth Circuit.
Notice of Appeal.
NCLC Urges High Court to Review Cost of Living Adjustments in Defined Benefit Plans under ERISA
On February 8, 2008, in Rohm and Haas Pension Plan v. Williams, NCLC urged the Supreme Court to review a Seventh Circuit decision holding that a cost-of-living adjustment (“COLA”) that a defined benefit plan has discretion to provide to participants who elect to receive monthly annuities constitutes a per se accrued benefit under ERISA, and therefore must also be provided to participants who choose to receive their benefits in a one-time lump-sum distribution. In its brief, NCLC argued that the Seventh Circuit’s decision undermines sound retirement policy by encouraging lump-sum distributions over annuity payments, and increases the risk that employers will choose not to offer COLA’s because of the new and unanticipated financial obligations on plan sponsors.
Amicus brief.
NCLC Urges Preservation of Injury Requirement under California’s Consumer Legal Remedies Act
On February 4, 2008, NCLC filed a brief on the merits before the California Supreme Court arguing that the plaintiffs’ bar is attempting to strip the Consumer Legal Remedies Act of the procedural protections that prevented it from being abused like the pre-Proposition 64 Unfair Competition Law. In Meyer, et al. v. Sprint Spectrum, L.P., the plaintiffs contend that the mere exposure to a deceptive practice presents the injury necessary to maintain an action under the CLRA. In its brief, NCLC argued that this broad extension of liability and the accompanying costs of defending against standing-free lawsuits would impede business operations in the state.
Amicus brief.
NCLC Files Complaint Challenging Oklahoma Immigration Statute as Preempted by Federal Law
On February 1, 2008, NCLC, along with other Oklahoma business groups, filed a lawsuit, Chamber of Commerce, et al. v. Henry, et al., challenging the constitutionality of an Oklahoma law that interferes with federal law regulating the employment of unauthorized workers. The Oklahoma law requires employers doing business with the state to use the “Basic Pilot Program,” the federal government’s voluntary and error riddled experimental program for verifying work eligibility. The law also requires businesses to verify the work authorization status of any individual independent contractors to avoid state tax penalties, and allows discharged employees to bring discrimination claims against their employers if they can show that the employer knew or “should have known” another employee was unauthorized. In the Complaint, NCLC challenges the Oklahoma statute as unconstitutional because it preempted by federal law—the Immigration Reform and Control Act—which provides a comprehensive plan prohibiting the employment of illegal immigrants in the United States.
Complaint.
NCLC Urges Court to Consider Pleading Standards for Officers and Directors
On February 1, 2008, NCLC filed a brief with the New York Court of Appeals as it considers the pleading requirements that govern the circumstances under which private plaintiffs may seek to hold an individual corporate officer or manager liable for allegedly fraudulent conduct committed by a corporate employee. In Pludeman, et al. v. Northern Leasing Systems, Inc., et al., NCLC pointed to well-established precedent and argued that a claimant must allege and prove that the officer or manager was personally involved in the fraudulent act, or (at a minimum) actually knew of it and approved it, if the officer or manager is to be held personally liable for harm flowing from the employee’s allegedly wrongful act.
Amicus brief.
NCLC Urges Florida Court to Uphold Workers’ Compensation Statute
On January 31, 2008, NCLC filed a brief with the Florida Supreme Court defending the state legislature’s reform of the workers’ compensation statute, which, in relevant part, set out clear criteria for the determination of legal fees under the statute. The plaintiffs’ bar has claimed that this reform violated Florida’s constitution and deprives plaintiffs of their right to access the court system. In its brief in Murray v. Mariner Health/ACA USA, NCLC described the crisis which led to the legislative reform and made clear that the limits on fees were reasonable.
Amicus brief.
NCLC Urges Reversal of Lower Court Ruling in Public Nuisance Liability Case
On January 31, 2008, NCLC filed a brief arguing that a series of legal errors by the trial court produced a jury verdict holding manufacturers of lead pigment liable for creating a public nuisance in buildings throughout the state of Rhode Island. In State of Rhode Island v. Lead Paint Industries Ass’n, NCLC maintained that the trial court’s rulings represented a vast departure from the foundational requirements of public nuisance law and create a new form of absolute liability.
Amicus brief.
NCLC Intervenes to Urge Preservation of EPA’s Revised PM Rule
On January 29, 2008, NCLC intervened in American Lung Association, et al. v. United States Environmental Protection Agency - a lawsuit by various environmentalist groups challenging the EPA’s revised National Ambient Air Quality Standards for Particulate Matter (PM Rule). Apart from the 24 hour standard, which NCLC independently challenged as impermissibly restrictive in light of the underlying science, the balance of the rule properly calibrates the competing interests at stake. Because a ruling in favor of the environmentalists would unnecessarily impose significant compliance costs and regulatory burdens on industry, NCLC has defended the revised PM Rule with the exception of the 24 hour standard.
Amicus brief.
NCLC Defends Trial Court’s Standing Order in California Asbestos Case
On January 25, 2008, NCLC filed a brief in the California Supreme Court defending 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 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 contends that the standing order reflects a sound approach to managing the asbestos docket so that meritorious complaints are considered more expeditiously.
Amicus brief.
NCLC Urges Preservation of Mandatory Arbitration Policy in Collective Bargaining Agreements
On January 23, 2008, NCLC urged the National Labor Relations Board to reject the argument that a company’s conflict resolution program, which contains a mandatory arbitration policy, violates an employee’s Section 7 rights because it could prohibit consolidation of claims and class actions. In In re: Neiman Marcus, NCLC argued that while employees have the right to discuss their grievances, seek other counsel and pursue grievances in arbitration, they do not have a Section 7 right to have their claim proceed as a class action in arbitration. The procedures governing private arbitration are determined by the contract between the employer and the employee, and the limitation on class action is a limitation by the parties on the authority of the arbitrator only.
Amicus letter.
NCLC Urges Court to Review Thompson Memorandum in Right to Counsel Case
On January 22, 2008, NCLC explained to the Second Circuit that the Thompson Memorandum’s sweeping derogation of advancement of counsel fees was entirely unwarranted and deeply detrimental to a widespread and beneficial business practice. In United States of America v. Stein, et al., the government implicitly required KPMG to forgo its customary practice of advancing attorneys fees to executives in order to demonstrate that it was not “circling the wagons”. In its prior submissions before the district court, NCLC argued that these government policies, outlined in the Thompson Memorandum, violate key criminal justice principles, including the right to counsel of choice and threaten the integrity of the employment relationship and efficient corporate operations.
Amicus brief.
NCLC Urges California Court to Limit Expansion of Post-Sale Asbestos Liability
On January 22, 2008, in Taylor v. A.W. Chesterton, et al., NCLC urged the California Court of Appeals to refuse to hold liable a product manufacturer for failing to warn about hazardous products used by others in combination with its products. Here, the trial court properly held that the defendant-manufacturer could not be held liable for failing to warn about the asbestos put on the product post-sale by the Navy. If a broad duty were upheld, it would not only expand asbestos liability but could expand the duty to warn for others as well. In its brief, NCLC described the asbestos litigation environment and argued that expanding the post-sale duty to warn represented unsound public policy.
Amicus brief.
NCLC Urges Rehearing in Gender Discrimination Class Action
NCLC urged the Ninth Circuit on January 18, 2008, to rehear its decision in Dukes, et al. v. Wal-Mart Stores, Inc., upholding the certification of a class of 1.5 million plaintiffs, the largest class action in history. Although the Court held that the class excluded 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, 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.
Amicus brief.
NCLC Urges Reversal of OSHA Egress Regulations Case
On January 17, 2008, NCLC urged the Occupational Safety and Health Review Commission to overturn an Administrative Law Judge’s interpretation of egress regulations in Secretary of Labor v. United Parcel Service, et al. In its brief, NCLC illustrated that the decision holds that nothing can be put in an aisle, passageway, or work area—even temporarily or for the briefest period of time—that diminishes the area around an employee to less than 28 inches. NCLC argued this absolute prohibition is impractical for business and does not consider workplace realities.
Amicus brief.
NCLC Urges High Court to Review Constitutionality of “Reverse Bifurcation” Practice
On January 16, 2008, NCLC filed a brief urging the Supreme Court to grant review of West Virginia’s practice of requiring juries to assess punitive damages before determining liability or compensatory damages (“reverse bifurcation”). In Phillip Morris USA, Inc., et al. v. Accord, et al., NCLC contended that this case presents this Court with a valuable opportunity to clarify and enforce the limitations placed by the Due Process Clause of the Fourteenth Amendment on the authority of state courts to abandon traditional, time-honored safeguards historically observed in the conduct of civil litigation.
Amicus brief.
NCLC Urges Reversal of Lifetime Retiree Benefits under Collective Bargaining Agreement
On January 16, 2008, NCLC urged the Sixth Circuit to reverse a decision inferring lifetime retiree benefits for employees who were actively working but retired after the collective bargaining agreement promising such benefits expired. In Winnett, et al. v. Caterpillar Inc., NCLC argued that if this decision is left in place, collective bargaining parties will be left with a judicial overlay on their agreements that is at odds with federal labor policies supporting unencumbered collective bargaining and the freedom to negotiate, interpret and apply their own agreements. The district court decision ignores the critical distinction between active employees, whose terms and conditions of employment are established and changed through mandatory collective bargaining, and retirees who may be the beneficiaries of a labor contract promise, but who are no longer represented by a union.
Amicus brief.
NCLC Urges Protection against “No Injury” Claims in Massachusetts Class Action Case
At the request of the Massachusetts high court, NCLC filed a brief on January 14, 2008 to assist the court as it considers whether unrealized “diminution in value” damages in connection with an allegedly defective product are obtainable under the Massachusetts Consumer Protection Act. In Iannacchino, et al. v. Ford Motor Co., NCLC made clear its concern that this theory, if adopted, would expose the business community to potentially unlimited class action claims for “diminution in value” damages.
Amicus brief.
NCLC Urges Reversal of Expansion of Post-Sale Duty to Warn in Asbestos Liability Case
On January 14, 2008, NCLC urged the Washington Supreme Court to decline to assign liability to a product manufacturer for failing to warn about hazardous products used by others in combination with its products. In Braaten v. Buffalo Pumps, Inc., et al., the defendant sold valves which were sold to the Navy to use on their ships. The Navy covered the valves with asbestos insulation. The court of appeals held that the defendant-manufacturer could be held liable for failing to warn about the asbestos put on the product post-sale by the Navy. If this broad duty were upheld, it would not only expand asbestos liability but could expand the duty to warn for others as well. In its brief, NCLC described the asbestos litigation environment and argued that expanding the post-sale duty to warn represented unsound public policy.
Amicus brief.
High Court Considers Federal Labor Law Preemption
On January 9, 2008, NCLC filed its merits brief in Chamber of Commerce of the United States of America v. Brown. In this case, the Supreme Court will review a 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.
Merits brief.
Share This Page