NCLC Business Alert

March 13, 2008

Visit NCLC for a complete look at the news.

In This Edition

NCLC News:

NCLC congratulates Dan Kaufman on his promotion to NCLC Director of Operations and Development.  Dan joined NCLC in 2005 as Manager of Member Relations.  He was promoted to Director of Member Relations in 2006.  Dan will continue to direct NCLC’s fundraising activities in addition to acting as liaison to NCLC’s Board of Directors and assisting in preparing NCLC’s budget.

NCLC welcomes Sheldon Gilbert to the Chamber as NCLC’s Director of Legal Communications, and Senior Writer.  Sheldon will graduate from The George Washington University Law School in May.

NCLC’s Moot Court Program:

NCLC hosted two moot courts for Willis J. Goldsmith of Jones Day in preparation for its own Supreme Court argument in Chamber of Commerce of the United States of America v. Brown.  At issue in the case, which will be argued March 19, is whether California’s regulation of non-coercive employer speech about union organizing is preempted by federal labor law. Participants in the March 5th moot court included Donald Verrilli (Jenner & Block), Irv Gornstein (O’Melveny & Myers), Daniel Troy (Sidley) and Marshall Babson (Hughes Hubbard & Reed).  Participants in the March 11th moot court included Andrew McBride (Wiley, Rein), Paul Smith (Jenner & Block), Richard Taranto (Farr & Taranto) and Maurice Baskin (Venable).  Willis Goldsmith will be sharing 10 minutes of argument time with Deputy Solicitor General Thomas G. Hungar.

Recent Decisions:

California Court Refuses New Trial on Issue of Excessive Punitive Damages
On March 10, 2008 the California Court of Appeal disagreed with NCLC that the United States Supreme Court’s decision in Philip Morris v. Williams requires a new trial for Ford Motor Co. v. Buell-Wilson. The court held that Ford forfeited its right to assert that the previous jury instructions were inadequate to ensure that Ford would not be punished for harm that may have been caused to non-parties.  As a result of this latest decision, the court approved an outrageous $55 million punitive damage award against Ford.

In a prior series of briefs, NCLC opposed the imposition of any punitive damages liability where the relevant federal agency had approved the allegedly defective design.

Supreme Court Rejects Opportunity to Clarify Federal Preemption of State Efforts to Police Fraud on Federal Agencies
On March 3, 2008, an equally-divided Supreme Court in Warner-Lambert Co. LLC, v. Kent, affirmed the decision below that federal law does not preempt a Michigan statute that affords a pharmaceutical manufacturer complete immunity against a product liability action if it can demonstrate that the allegedly defective product at issue received the Food and Drug Administration’s approval, unless the approval was obtained by fraud.  NCLC argued that according to the Court’s precedent in Buckman Co. v. Plaintiffs’ Legal Committee, the Michigan exception was preempted by federal law because states are not permitted to police fraud on a federal agency. NCLC also urged the Supreme Court to clarify once and for all that the presumption against preemption simply does not apply to the analysis of whether state law conflicts with federal law.  The court below applied the presumption against preemption, finding that the Michigan statute did not conflict with federal law.  Because the Supreme Court decision was equally split, the Court’s opinion has no precedential value and confusion persists among the lower courts.  

New Filings:

NCLC Urges Court to Reject Class Certification of Fair and Accurate Credit Transactions Act (FACTA) Claims With Potential for Staggering Damages
In Soualian v. International Coffee & Tea, LLC, NCLC filed an amicus brief on March 6 urging the Ninth Circuit to uphold a District Court decision denying certification of a class of consumers who claim that retailers violated FACTA by printing more than the last 5 digits of a credit or debit card and/or the expiration date of the card.  After International Coffee and Tea (Coffee Bean) printed a customer’s credit card expiration date on a single receipt, the customer sued and sought to certify a class of similar customers.  NCLC argued that individual treatment of FACTA claims is superior to class certification because class litigation exposes businesses to staggering class-wide damages far out of proportion to any harm suffered by potential class members.  NCLC also argued that certification would be inappropriate because there is no indication that the individual violations of FACTA actually harmed the potential class members.

Amicus brief

NCLC Solicits Supreme Court Review to Clarify the FLSA Meaning of Compensable “Work” in the New Economy
On March 4, 2008, NCLC urged the Supreme Court to review the Third Circuit decision Tyson Foods, Inc. v. DeAsencio addressing the definition of “work” within the meaning of the Fair Labor Standards Act (FLSA).  The litigation over the “donning and doffing” policies of meat processing plants highlights an unresolved issue at the center of myriad other lawsuits affecting the “new economy” – what constitutes compensable “work” under the FLSA.  In its brief, NCLC argued that the Supreme Court should clarify that the definition of “work” does not encompass pre-schedule, non-exertive activities, such as booting up a computer.

Amicus brief

NCLC Seeks Supreme Court Reversal of Troublesome “Conflict of Interest” Standard for ERISA Plan Administrators
On March 3, 2008, NCLC urged the Supreme Court to reverse a Sixth Circuit decision that ERISA benefits decisions made by a plan administrator plan administrator that both evaluates and pays claims operates under a conflict of interest that is subject to a searching judicial review. In Metropolitan Life Insurance Company v. Glenn, Glenn sued MetLife, who both funded and paid the benefits plan, for making a determination that she was not eligible for long-term disability payments under the ERISA plan.  In its brief, NCLC argued that market pressures and regulatory constraints on plan administrators operate to ensure that fiduciary claim determinations are not driven by improper considerations, but are made with an eye toward the best interests of the plan as a whole.  Moreover, heightened judicial review of discretionary determinations would frustrate ERISA’s purpose of achieving uniformity and predictability in the oversight of benefit plans, and would increase the litigation costs by encouraging every individual whose claim is denied to seek a second opinion in court.

Amicus brief

NCLC Petitions Georgia Supreme Court to Reject a Duty to Disfavor Express Preemption
NCLC urged the Georgia Supreme Court to reject the lower court’s application of an unrebuttable “presumption against preemption” wherever there is a “plausible” interpretation disfavoring preemption.  On March 3, 2008 NCLC filed an amicus brief in American Home Products v. Ferrari, arguing that the lower court misread the Supreme Court’s decision in Bates v. Dow Agrosciences, LLC to justify ignoring the legislative history of the National Childhood Vaccine Injury Compensation Act showing that Congress intended there to be an “unavoidably unsafe product” defense in all cases involving covered vaccines.  NCLC argued that Bates does not require courts to disfavor preemption.  NCLC also argued that the Supreme Court’s decision in Riegel v. Medtronic demonstrates that Bates does not require that a federal preemption provision must explicitly refer to common-law claims or duties in order to preempt them.

Amicus brief

NCLC Seeks High Court Review of State Court’s Refusal to Enforce Arbitration Agreement
NCLC filed an amicus brief on March 3, 2008 requesting that the Court review Circuit City v. Gentry, a Ninth Circuit decision refusing to enforce a pre-employment arbitration agreement that included a class action waiver.  After Robert Gentry ignored an arbitration agreement by filing a class action lawsuit against Circuit City, the court below refused to enforce the arbitration agreement.  The court’s refusal to enforce the agreement is in direct conflict with the language of the Federal Arbitration Act and the Supreme Court’s decision in Perry v. Thomas.  NCLC also argued that the court’s unconscionability analysis is hostile toward arbitration and conflicts with prior Supreme Court precedent.

Amicus brief

NCLC Files Reply Brief in Supreme Court Challenge to California Law Banning Employers’ Union-Related Speech
NCLC filed its reply brief on March 3, 2008 in the Chamber’s appeal challenging a Ninth Circuit decision holding that the California law that banned union-related speech by employers.  NCLC argued that the 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 preempted by the National Labor Relations Act (NLRA).  NCLC’s reply brief in Chamber of Commerce of the United States of America v. Brown (formerly Lockyer) argued that the state law is in conflict with the NLRA because the law works an absolute ban on union-related speech by employers, and because California conceded that the state law is not motivated by a fiscal interest.

Oral argument before the Supreme Court is scheduled for 3/19/08.

Reply brief