Corporate Accountability and Tort Reform
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Williamson v. Mazda: Sound and Clear Preemption Decision

The Supreme Court today issued its much-awaited ruling in Williamson v. Mazda. Could an injured or deceased plaintiff sue under common law for damages allegedly attributable to the lack of a rear inner seat seatbelt, when the Department of Transportation (DOT) had declined to require such belts while requiring other seat belts?   The case on its face appeared much like the Court’s earlier Geier v. American Honda Motor Co decision, issued in 2000, in which the Court held that a common law injury claim for the lack of an airbag was preempted due to DOT’s decision to allow manufacturers to choose among safety devices.   Many lower courts had read Geier expansively, thus preempting claims like those now presented in Williamson. But the reach of that ruling was always in question since the Geier case could also be read in a narrow way, limited to the particular DOT regulatory action, and also because the National Traffic and Motor Vehicle Safety Act actually contained a “savings clause” that explicitly stated that compliance with a “federal safety standard does not exempt any person from liability under common law.” The Geier Court sidestepped that language by concluding that DOT’s regulatory allowance of manufacturer choice precluded a jury concluding under a common law claim that the manufacturer should earlier have put an airbag in place. Such a claim in Geier was held preempted under so-called conflict or “obstacle” preemption doctrine.

The Supreme Court today in Williamson soundly rejected the lower court’s ruling and issued a decision that limits Geier and shows greater respect for Congress’s actual statutory language.   The ruling contains several critical building blocks that will now be much-used in future injury and preemption litigation. First, the Court looked closely at the actual underlying regulatory action to see if the federal agency really had meant to preclude common law claims, as well as whether a common law injury claim would actually clash with the agency’s choice and that choice’s underlying rationale.   DOT here had not expressed a pro-preemption view, and in issuing its standard about seat belts had basically said it wouldn’t require them in rear center seats but hoped manufacturers would find ways to install them and enhance safety. If a safety standard is to be the source of a preemption claim, Williamson as precedent will call for close attention to what the agency really did. The mere existence of a related safety standard will not suffice. And the mere fact that the DOT assessed costs and benefits in rejecting such a mandate did not preclude the Williamsons’ lawsuit. “[T]hat negative judgment about cost effectiveness . . . cannot by itself show that DOT sought to forbid common-law tort suits in which a judge or jury might reach a different conclusion.” To hold to the contrary would turn regulatory floors, or minimum standards, into “maximum standards.” Such a conclusion could not “be reconciled” with the law’s “statutory savings clause.”

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In Williamson v. Mazda, SCOTUS Has Chance to Right Preemption Wrongs

Cross-posted from ACSblog.

The Supreme Court will hear arguments on November 3 in a potentially important preemption case, Williamson v. Mazda Motor of America. In Williamson, a child was fatally injured in a collision when she was sitting in the center rear seat of a Mazda van, secured by a lap belt. The two other passengers in the vehicle, both wearing lap-shoulder belts, survived with minor injuries. The young Williamson, however, suffered severe abdominal injuries and internal bleeding because her body jackknifed around the lap belt. The Williamsons sued Mazda asserting that the van was defectively designed by providing only a lap belt in the center rear seat. When the van was built, the National Highway Transportation Safety Administration's Federal Motor Vehicle Standard (FMVSS) 208 only required lap belts in the center seat, even while it required lap-shoulder belts in all other seats. Mazda moved to dismiss the case on the grounds that the common law tort claim was preempted by the federal standard. The California trial court granted the motion and the appellate court affirmed. The Supreme Court granted certiorari to consider that decision.

This is not the first time that the Supreme Court has considered the relation between FMVSS 208 and state tort law. In Geier v. American Honda Motor Co. (2000), the Court held that FMVSS 208 at the time of that case preempted a state tort law claim that the failure to provide for an airbag was a design defect. Since that case, virtually every tort claim based on an alleged design defect regarding seat belts or airbags has been dismissed as preempted in light of the Geier decision. Thus, the outcome in Williamson in the lower courts is not surprising. What is surprising is that the Supreme Court granted certiorari to hear the case.

There are two possible explanations. First, unlike Geier, in which the United States filed an amicus brief in favor of preemption, here the United States filed an amicus brief in favor of granting certiorari, arguing that the lower courts had misread Geier and applied it much more broadly than appropriate. Second, on the merits, the United States is absolutely correct; Geier was a very fact-specific case, which subsequent courts have misread.

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Don't Blame Tony Hayward: Why We Need Laws and Regulations That Specifically Hold Parties Liable for the Harm They Cause

BP CEO Tony Hayward has been careful to say his company will pay for the "clean-up" from the oil spill -- meaning, not the damages. But if past disasters are any guide, the clean-up will be just a small fraction of the damages from the spill (the deaths, the damage of the oil to natural resources and the humans that depend on them, and more). Many media have commented that Hawyard is a “jerk”, but the who-pays-for-the-damages problem isn't really about Hayward and BP. Rather, it points out a weakness with our health and safety laws not unique to this case – they do not always demand and require that industry pay for the harm it causes society.

Hayward, in fact, has been answering in the only way that he legally can while still representing the shareholders of the corporation. Why? The law (specifically the Oil Pollution Act, passed after Exxon-Valdez) requires BP to “clean up” the oil spill itself, but caps economic damages at $75 million.   What if BP decided it wanted to pay all of the damages, though? Corporate law, which defines the fiduciary responsibility of a Corporate Board as maximizing shareholder profit, would forbid the managers of BP from voluntarily offering to pay more than the law required (unless they could show that their public image would be so improved as to justify the cost). Doing so would risk shareholder derivative suits (which the company will likely face in any event).

I'd be happy to change the rules governing corporate responsibility, but a far easier solution would be to stop subsidizing the private interest at cost to the public. Because that is what liability caps and myriad other federal and state laws do.

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New CPR White Paper Critiques Supreme Court’s Heightened Pleading Standard for Getting Complaints into Federal Court

Cross-posted from ACSblog.

The Center for Progressive Reform (CPR) today released a white paper examining "plausibility pleading"-the Supreme Court's heightened pleading standard that plaintiffs must satisfy in order to bring their claims in federal court. The paper, Plausibility Pleading: Barring the Courthouse Door to Deserving Claimants, comes after the Court's decision one year ago this week in Ashcroft v. Iqbal that this standard applies to all types of federal cases. The Court first created this standard in Twombly v. Bell Atlantic, three years ago.

Iqbal and Twombly will lead to the dismissal of meritorious cases, thereby weakening the civil justice system and making it more difficult to hold businesses or the government accountable for wrongful actions. Increased dismissals will also deprive federal regulators of vital information needed for improving the regulations that protect people and the environment. Our paper therefore calls on Congress to pass legislation to reverse these decisions.

The pleading standard plays an important role in civil litigation. Would-be plaintiffs unable to draft a complaint that satisfies the pleading standard aren't able to bring their case before a judge or jury in federal court. If the pleading standard is too lenient, too many non-meritorious cases will be able get into court, clogging up the federal judiciary. But if the standard is too high, meritorious cases will be terminated early, denying justice to deserving plaintiffs.

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Why You Can't Get Your Day in Court After a Train Disaster and What the Federal Railroad Administration Needs to Do About It

Cross-posted from ACSblog.

The citizens of Minot, North Dakota suffered a grave injustice on January 18, 2002 when a train derailment bathed much of that small town in a toxic cloud of poisonous gas that killed one person and injured almost 1,500 others. A detailed investigation by the National Transportation Safety Board concluded that the derailment was most likely caused by fractures in temporary joints that the railroad had installed to repair the track.

When the victims sued the railroad for damages caused by its negligent maintenance, they found the courthouse doors locked. A federal district court held that their claims were preempted by the Federal Railroad Safety Act (FRSA) of 1970, which contained a "preemption" clause that Congress enacted to prevent states and localities from enacting regulations that were inconsistent with the regulations issued by the Federal Railroad Administration (FRA), the federal agency that Congress created to protect citizens from irresponsible railroads.

The court held that because Congress empowered the FRA to regulate railroad safety, injured citizens could not sue the railroads when they operated their trains unsafely -- whether or not they complied with FRA requirements. Other courts have issued similar decisions in cases involving train collisions, derailments and grade-crossing accidents.

During the Bush Administration, the FRA aggressively asserted its newfound power to protect railroads by preempting state common law. A new white paper issued by the Center for Progressive Reform (which I co-authored) explores the injustice inherent in this interpretation of the statute.

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The Future of US Elections and the Environment after Citizens United? Look at Texas and Its Politicized Agencies

The Supreme Court’s decision in Citizens United was not entirely unexpected, but it is appropriately seen as a breathtaking change in the way elections work in this country. The Supreme Court struck down federal campaign finance rules that limit corporate (and general organizational) spending on campaign finance ads to help or defeat candidates.

What can we expect now? One need look no further than Texas, which has no campaign restrictions in any statewide races. In Texas, large corporations and individuals have given millions of dollars to candidates and ads supporting them in one election cycle.

While this can be hugely influential on state legislation, at least legislation remains ostensibly open and in the public eye. Texas does have laws that may be seen as more favorable to corporations (such as low limits on medical malpractice compensation and a conservative tax structure), but all in all, the Texas legislative code doesn’t look all that different from other states. That's in part because many laws important to progressives, such as environmental laws, are mandated by the federal-state joint programs such as the Clean Air Act. But this doesn’t mean that unlimited contributions don’t affect the state of the environment.

So what's the hidden danger from Citizens United? The influence on the administrative state.

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Of the Corporations, By the Corporations, For the Corporations? The Meaning of the Citizens United Decision

Today’s decision in Citizens United was something of a foregone conclusion. Still, it was a bit breathtaking. The Court was obviously poised to strike down the latest Congressional restrictions on corporate political expenditures. But the Court went further and struck down even restrictions that had been upheld thirty years ago. Seldom has a majority been so eager to reach out, address a question that wasn’t presented by the parties and overrule a bevy of prior decisions. The term “judicial activism” is overused but seems entirely appropriate here.

In the end, the Court just doesn’t see any real reason for campaign finance restrictions. It may be willing to tolerate some token restrictions in the name of precedent, but basically, it views economic influence over the political process as altogether natural and appropriate.

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CPSC's First Year Under Obama: An Agency Still Finding Its Feet

This post is second in a series on the new CPR report Obama’s Regulators: A First-Year Report Card.

It’s only fair to note that when President Obama assumed office in January of 2009, he inherited a slate of dysfunctional protector agencies. Perhaps none were more dysfunctional than the Consumer Product Safety Commission (CPSC)—the tiny agency charged with protecting all Americans from literally tens of thousands of different kinds of dangerous products, everything from backyard barbecues and electric drills to swimming pool slides and baby dolls. The Obama Administration had a lot of work to do if it was to make good on the president's promise of whipping agencies like CPSC into shape so that they could effectively protect public health and safety. As CPR found in its new report, CPSC’s performance fell short of achieving this goal, however.

Given the difficult challenges CPSC faced, we should not be surprised that the agency’s actual performance was mixed. Indeed, the odds were heavily stacked against CPSC: its budget and staff has been constantly shrinking for decades; until recently, it has had little real legal authority to ensure the safety of consumer products (the Consumer Product Safety Improvement Act of 2008 gave the agency more authority to hold manufacturers accountable for their dangerous products, but it is far from perfect); and its regulatory mission is always becoming more difficult (e.g., more consumers, more products, more imports from countries with no or only lax regulatory standards, etc.). President Obama didn’t do enough to help either. While he gave the agency a badly needed injection of committed leadership, he failed to request more than a nominal increase in budgetary resources. If President Obama wants CPSC to behave more vigorously, he will clearly need to do more to reinvigorate the struggling agency, and providing greater resources is an essential component of doing just that.

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Good News, Bad News in Solis' Regulatory Agenda

The below item is written by Celeste Monforton and cross-posted from The Pump Handle.

The first regulatory agenda under OIRA chief Cass Sunstein was published [Monday] in the Federal Register (link to its 237 pages.)  The document includes a narrative of Labor Secretary Solis’ vision for worker health and safety, mentioning these specific hazards: crystalline silica, beryllium, coal dust, airborne infectious agents, diacetyl, cranes and dams for mine waste.   The document purports to “demonstrate a renewed commitment to worker health,” yet the meat of the agenda tells a different story for particular long-recognized occupational health hazards.

Take, for example, MSHA’s entry on respirable coal mine dust, a pervasive hazard associated with reduced lung function, chronic bronchitis, emphysema, progressive massive fibrosis, and more.  Despite an announcement last week by Labor Secretary Solis and MSHA Asst. Secretary Joe Main saying they want to “end new cases of black lung among the nation’s coal miners,” they aren’t planning to PROPOSE any regulatory changes for 10 months.   That’s a ”renewed commitment to worker health”?   Hardly.

Since 1995, public health science tells us that reducing miners’ risk of coal dust-related lung disease and impairment will REQUIRE a substantially lower respirable coal mine dust limit.  Period.   Why then will it take MSHA 10 months to merely propose such a change? 

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Amendment on Consumer Financial Protection Could Block Citizens From Taking Banks to Court

The debate over whether Congress should create a Consumer Financial Protection Agency, as recommended by President Obama, has recently taken a disturbing turn. Apparently, some congressional Democrats have been receptive to complaints from the big national banks that the current bill does not preempt state laws and regulations that are more stringent than the regulations that the new agency will promulgate.

National banks have traditionally been protected from state regulation by virtue of express preemption clauses in the federal statutes under which federal agencies like the Office of the Comptroller of the Currency provide their charters. This has arguably been a disaster for consumers. For example, when New York Attorney General Andrew Cuomo launched an investigation into discriminatory banking practices, the federal agencies literally cut off the investigation in mid-stride by filing a lawsuit in federal court for injunctive relief, and the Supreme Court agreed with the agencies.

This week the House Financial Services Committee may vote on an amendment offered by Rep. Melissa Bean (D-Ill,) that would similarly preempt more stringent state regulation once the new agency is up and running.

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