The DOL Seeks to Change the Tide

While local state and city governments have been working to expand the scope of workplace protections, the Federal government has begun “undoing” some of the aggressive advancements of the Obama Administration.

On June 7, the Department of Labor (DOL) announced in a brief statement that it was withdrawing two significant guidance documents – one with respect to JOINT EMPLOYERS and the other dealing with INDEPENDENT CONTRACTORS.

The Joint Employer Guidance sought to expand the circumstances under which one business could be held responsible for the employment, labor and civil rights liabilities of a separate, but related second business.  The DOL Guidance sought to expand worker protections and the ability to collect remedies from parent corporations (when liability was imposed as a result of the acts of a subsidiary) or franchisors (when liability was imposed as a result of the actions of a franchisee).  The now repealed guidance suggested that such liability could be imposed whenever the related-entity exerted “indirect” control over the labor and employment actions of the another entity even if such power was not exercised, a common claim when faced with parent-subsidiary or franchise agreements.  The DOL now returns to the previous standard that such liability can only be imposed on a business which has “direct control” other the business found to be liable.

DOL also withdrew its guidance on Independent Contractors.  Under the now withdrawn guidance, the DOL had taken the position that “most” independent contractors were really “employees” under the common law.  As a result, the DOL had taken the position that such workers were entitled to minimum wage and time-and-a-half for overtime.  The DOL did not address the impact (if any) the withdrawn guidance would have on a much-publicized Federal-State Worker Misclassification Initiative.  Under that initiative, believing that the misclassification of workers had a substantial negative impact on the collection of state and federal payroll and other taxes, 37 states partnered with DOL to share data and take steps to increase collection efforts.  The future of the initiative seems uncertain.

Given the budgetary pressure faced by state and local government, the DOL’s action may have limited immediate impact on collection efforts.  Yet, manufacturers and other employers have a better chance defending these “misclassification cases” now that the DOL appears to have taken a more traditional view.

The Year of Change continues.

Superfund Changes Afoot

Since taking over as EPA Administrator, Scott Pruitt has made it clear that he intends to focus on—and overhaul—the Superfund program. Calling the program “at the center of the Agency’s core mission”, Pruitt has put in place a couple of initiatives in an effort to streamline and improve the Superfund process and cleanups. In addition, industry groups have weighed in with their own ideas for how to improve the program. These changes and recommendations are summarized below.

Delegation of Authority for Superfund Remedies Estimated at $50 Million or More

On May 9, 2017, Administrator Pruitt issued a memorandum delegating authority for approval of Superfund remedies estimated to cost $50 million or more to the Administrator. The stated purpose of this delegation is to create efficiency and consistency for large, expensive Superfund sites. EPA employees are directed to get the Administrator’s office involved in these sites as early as possible and throughout the remedy evaluation process to ensure efficiency.

While the purpose of the delegation is efficiency, questions remain about how the delegation will work in practice. Oftentimes, a cost estimate for remediation is not developed until well into the Superfund process, so it is unclear how early the Administrator’s office will get involved on these sites. In addition, what will happen to sites with a remedy estimated at more than $50 million that were approved before the memo took effect? We can likely expect potentially responsible parties to seek the Administrator’s input on these remedies.

Task Force for Superfund Restructuring

On May 22, 2017, Administrator Pruitt convened a task force to provide recommendations on how to restructure and improve the Superfund cleanup process. The task force is directed to consider the following issues:

  • Streamlining and improving protections such as bona fide prospective purchaser status, “comfort letters”, and prospective purchaser agreements.
  • Developing non-traditional approaches for financing cleanups.
  • Reducing EPA administrative/oversight costs.
  • Streamlining and improving remedy selection at sediment sites.
  • Improve stakeholder involvement (state and local governments, public-private partnerships).

The task force’s recommendations are due by June 21, 2017. It remains to be seen what the task force will conclude, but given the issues to be addressed, we can expect some recommendations that could benefit potentially responsible parties at these sites.

Industry Requests for Regulatory Reform

A number of industry groups recently offered EPA their own suggestions for how to improve the Superfund program. Some of the suggestions include:

  • Relaxation of conservative exposure scenarios in risk assessment.
  • Consideration of future land use in developing remedial alternatives.
  • Reformation of agency oversight cost policy to incorporate a concept of reasonableness.
  • Limitations on EPA review time for documents.
  • Adoption of a third-party licensed site professional program.

Given the focus on the Superfund program and the overall goal of streamlining the process, it is certainly possible that some of these ideas could be championed by this Administration.


INTERESTING UPDATE: “Manufacturing” Law: Courts Join the States to Fill the Void

In a May 16 Blog Post, I reviewed several cases dealing with the question of whether Title VII’s ban on discrimination “because of . . . sex” included a ban on discrimination “because of sexual preferences.”  I summarized three recent decisions by the United States Courts of Appeal – the Eleventh Circuit holding Title VII did not ban such discrimination, the Second Circuit reaching the same conclusion but criticizing that view in a case called Christiansen v. Omnicom Group Inc. (March 27, 2017), and the Seventh Circuit being the first Circuit Court to reach the opposite conclusion in a case called Hively v. Ivy Tech Community College (April 4, 2017).  I also noted that a court under the Second Circuit elected to follow the Seventh Circuit’s Hively decision, rather than the Second Circuit’s Christiansen decision.  I suggested that the “speed in which these decisions were issued could herald a major shift in the law.”

Now comes word that on May 31, 2017, the Second Circuit Court of Appeals may be reconsidering its Christiansen holding, albeit in a different case.  In a case called Zarda v. Altitude Express, Inc., Docket No. 15-3775, the Second Circuit invited the Equal Employment Opportunity Commission (“EEOC”) to participate as “a friend of the court” and present its views as to whether Title VII bans discrimination on the basis of sexual orientation.  The EEOC is the primary federal agency enforcing Title VII.  You can read the Court’s order here, and view an unusual letter the Clerk of the Court sent to the Acting Solicitor General of the United States here alerting the government to the case and the deadline for filing a brief.  (While the letter has a January 14, 2016 date on it, the letter was entered on the Court docket on May 31, 2017 and, thus, the date of the letter seems to be in error.)

What position will the EEOC take on the issue?  We cannot be sure at this stage.

In the Christiansen case, the EEOC filed a friend of the court brief arguing that VII was broad enough to prohibit sexual orientation discrimination.  Yet, the Trump Administration may have an entirely new view.  We do not know at this stage because President Trump has yet to nominate a new Solicitor General or had much of an impact on EEOC policy-making.  On one hand, the U.S. Census Bureau deleted a question asking about sexual orientation from the 2020 census.  On the other hand, the White house has been otherwise silent on the issue.

If the EEOC elects to participate, its brief is due to be filed by June 26.  Many will be watching.

Patent Litigation Development for Manufacturers: U.S. Supreme Court Limits where Corporations can be Sued for Patent Infringement

This week, we are pleased to have a guest post from James Nault, a patent attorney and member of Robinson & Cole LLP’s intellectual property litigation group.

The United States Supreme Court just limited where corporations can be sued for patent infringement in a case called TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341 (U.S. May 22, 2017).  Manufacturers sued for patent infringement are now more likely to fight those fights in their home venues.

Case Background

Kraft sued TC Heartland, an Indiana-based and incorporated manufacturer of flavored drink mixes, for infringement of one of Kraft’s patents in the federal district court in Delaware.  TC Heartland moved the court to either dismiss the case or to transfer it to a federal district court in Indiana, which the Delaware court could have done.  But the court refused to do so, citing a case from the U.S. Court of Appeals for the Federal Circuit, which hears all patent appeals, which held 30 years ago that a corporation can be sued for patent infringement wherever it is subject to personal jurisdiction.

A complete discussion of all of the rules regarding personal jurisdiction is beyond the scope of this post, but basically because TC Heartland regularly shipped it products into Delaware, the court ruled that they could be sued there, which comported with the Federal Circuit’s rule.  TC Heartland appealed to the Federal Circuit, asking them to order the district court to transfer the case to Indiana, but the Federal Circuit refused.  So TC Heartland petitioned the Supreme Court to take the case, which they did.

The Supreme Court’s Opinion

The Supreme Court, in a unanimous opinion authored by Justice Clarence Thomas, reversed the Federal Circuit and held that the rule the Federal Circuit had announced 30 years ago, which greatly broadened where a corporation could be sued, is wrong.  Justice Thomas cited a 60-year-old U.S. Supreme Court case called Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which had definitively interpreted the special federal statute governing venue in patent infringement actions to mean what it says, which is that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business” [note:  a corporate defendant can also be sued in a venue if it consents to being sued there].

The Federal Circuit had held, using a separate statutory section governing venue generally, that where a corporation resides is wherever it is subject to personal jurisdiction, basing that holding on amendment to the general venue section.  But the Supreme Court has now rejected that idea, holding that where a corporation resides is only where it is incorporated.

That rejection was foreshadowed by Chief Justice Roberts at oral argument when his first question to Kraft’s counsel of record was “Is Fourco still good law?”  In other words, if Fourco is still good, then the Federal Circuit’s contrary rule could not be right.  TC Heartland’s Counsel of Record Jim Dabney had argued that Fourco is indeed still good law, and that an amendment to the general venue section could not alter the more specific patent venue section, and the Supreme Court has now agreed.

Why it Matters for Manufacturers

This case is important for manufacturers because the Federal Circuit’s expansive broadening of where a corporation could be sued for patent infringement meant that corporations were often sued far away from their headquarters state or where they were incorporated.  It also made possible the rise of the Eastern District of Texas, now the most popular venue for patent infringement actions in the country [a place where our firm has defended clients on several occasions], which has plaintiff-friendly special patent rules which make out-of-state defendants particularly vulnerable.  TC Heartland should return much patent litigation back to where a manufacturer is incorporated or where it has its major manufacturing center, i.e. on its home turf.

“Manufacturing” Law: Courts Also Move to Fill the Void

Last month, I wrote that in the absence of significant Congressional action on the labor and employment front, states and cities are increasingly willing to take steps to improve employment protections.  Some courts appear willing to join in – challenging longstanding precedent and finding protections and safeguards not previously recognized.

Four separate decisions in the span of 54 days demonstrate this trend.

The landmark Civil Rights legislation of the 1960’s, Title VII of the 1964 Civil Rights,  banned discrimination on the basis of race, color, religion, sex or national origin.  Title VII did not expressly ban discrimination on the basis of sexual orientation or trans-gender status.  While some state discrimination laws prohibited discrimination against gays and lesbians, virtually every court to look at the issue held that Federal law did not.  Typical of such decisions was the holding of the Eleventh Circuit Court of Appeals in Evans v. Georgia Regional Hospital (March 10, 2017).

Seventeen days after the Eleventh Circuit’s Evans decision, the Second Circuit Court of Appeals reached similar conclusion as “binding” precedent, but strongly criticized it.  Christiansen v. Omnicom Group Inc.  (March 27, 2017).  Eight days after Christiansen, the Seventh Circuit addressed the issue in Hively v. Ivy Tech Community College (April 4, 2017) and concluded that discrimination on the basis of sexual orientation was no less discriminatory than discrimination on the basis of gender.  Finally, a month later, a lower New York federal district court followed suit, holding that Title VII banned sexual orientation discrimination.  See Philpot v. State of New York, et al.(May 3, 2017).

The dizzying speed in which these decisions were issued could herald a major shift in the law – or not.  We likely will not know the outcome until the United States Supreme Court resolves the issue.  Until then, manufacturers seeking to stay compliant with the challenging legal landscape should conduct periodic reviews of workplace policies and err on the side of caution.

“Take-Home Toxins” Expand Duty of Care Imposed on Employers

Thank you to my colleague, Diana Neeves, for this post. Diana is an associate in our Environmental & Utilities Practice Group.

A federal district court in Pennsylvania recently found that Accuratus Corporation (“Accuratus”), a ceramics manufacturer and supplier, could be liable under New Jersey law for chemical exposure injuries to the girlfriend and roommate of an Accuratus employee.

Ms. Schwartz dated an Accuratus employee between 1978 and 1980 and lived with this employee for some time in 1980. She allegedly suffers from chronic beryllium disease, which she believes was caused by exposure to beryllium brought home by her boyfriend.

The law governing employers’ liability for injuries caused by exposure to toxins brought home by workers varies by state and has typically been limited to liability for injuries to a worker’s spouse, a “foreseeable victim.” Although state courts have been more apt to recognize the employer’s duty to prevent take-home exposures in recent years, others continue to reject this extension of liability.

Previously under New Jersey law, take-home exposure liability was construed somewhat narrowly in light of concerns about “considerations of fairness and policy” and “limitless exposure to liability.” For instance, in Olivo v. Owens-Illinois, Inc., the New Jersey Supreme Court found that Exxon Mobil Corporation owed a duty to its employee’s spouse “based on the foreseeable risk of exposure from asbestos borne home on contaminated clothing” and the typicality of a wife “laundering the work clothes worn by her husband.”

In 2016, after the initial dismissal of Ms. Schwartz’s case and her subsequent appeal, the New Jersey Supreme Court reviewed whether the employer’s duty set forth in Olivo could extend beyond the employee’s spouse. The Court held that it could, noting that, while this duty has never been extended outside the context of an employee’s household, the class of persons to which the duty may be extended need not be categorically defined. Instead, the Court called for a case-by-case analysis that considers the relationship of the parties, the opportunity for and nature of the exposure, and the employer’s knowledge of the dangerousness of exposure.

Applying this analysis on remand, the federal district court found that the nature of beryllium as a toxin “known to travel on clothes to workers’ homes [that] can remain dangerous in the home for some time, and importantly, can cause serious damage with only minimal exposure,” taken together with the relationships of the parties in this case, was sufficient to generate a duty. In so finding, the Court explained:

“As a simple fact of human life, an employer must reasonably foresee that virtually all of its employees live with or have repeated close contact with someone, unless there is good reason to believe that its employees are disproportionately hermits and loners… [And this] reality means it may be reasonably foreseeable to a Defendant employer working with a particularly insidious toxic substance that material carried home on an employee’s clothes may harm someone at that home who is a frequent overnight guest and romantic partner or roommate sharing living space and housework.”

This case serves as a reminder to manufacturers that their duty of care may extend beyond their own employees. In order to satisfy that duty of care, manufacturers undoubtedly will consider the materials used and the universe of potential exposures to those materials in developing an appropriate protocol to ensure that workers—and anyone with whom a worker may have close contact—are protected.

The case is Schwartz v. Accuratus Corporation, Civil Action No. 12-6189 (E.D. Pa., Mar. 30, 2017).

States (and Cities) Rush In Where Congress Fears to Tread

Some manufacturers may interpret the “Epic Fail” of Congress to repeal the Affordable Care Act as a sign of stability in the labor and employment landscape.  After all, one thing which the new Administration and Congressional Republicans had in common was their seven-year pledge to repeal “Obamacare.”  When compared to the divergent views on other controversial measures – minimum wage, overtime regulations, and the overhaul of the tax code – repeal of the ACA looked like “low hanging” fruit.  The failure to pick that plumb suggests reform of federal employment and labor laws will not occur anything soon.

But cities and states appear willing to act in areas where Congress may not be able.  This “patchwork” of local standards threatens to make the task of compliance by manufacturers and others a full-time job.

For example, New Jersey is considering an amendment to the state’s paid leave law to expand the scope of benefits.  Because the state pays covered employees through its insurance system, funded by employee contributions, the adoption of this amendment likely will not impact manufacturers directly.  The same cannot be said for two proposed New Jersey bills (one in the State Assembly and one in the State Senate)  which would make it unlawful to take adverse employment action against employees for their use of medical marijuana

Similarly, Texas adopted a state law prohibiting employers from considering an applicant’s credit history unless that history is substantially related to employment.

States are not the only entities taking action to expand employee protections in the absence of federal legislation.  The City of Los Angeles recently adopted new regulations restricting the use of criminal arrest and conviction records.  The Los Angeles regulations mirror the approach adopted by the Federal Equal Employment Opportunity Commission (and possibly could have been adopted in anticipation of a change in federal law).  The City of Seattle adopted the “Secure Schedule” Ordinance – a complex regulation requiring covered employers (retail establishments employing 500 or more employees anywhere and full service restaurants employing 500 or more employees and hosting 40 or more locations anywhere) to provide good faith estimates of work schedules, engage in an “interactive process” when scheduling employees, and offer additional hours to current employees before hiring others.  While less complex and burdensome, the City of San Jose adopted its own “Opportunity to Work” Ordinance.  Covering employers employing 35 or more employees within the city, the Ordinance requires employers to offer additional work hours to current employees before hiring additional persons (including subcontractors, staffing agencies or temporary services agencies).

Manufacturers should be cognizant of proposed legislation at the state and local level.  Manufacturers with operations in multiple jurisdictions need to be especially vigilant as their HR policies could get caught up in a increasing complex web of local regulation.

A Contract Provision Often Overlooked By Manufacturers

Most manufacturers scrutinize indemnification clauses in contracts to determine what liability they might be taking on if something goes wrong in a transaction or sale.  A typical indemnification clause will also provide that the party that indemnifies the other must pay that other party’s legal fees if a lawsuit is brought by a third party.

Over the past several years, however, there is a growing trend in business to business disputes that warrants attention.  Companies are starting to use these indemnification clauses (and their requirement that the other side pay fees) in direct actions against the other contracting party.  For instance, imagine that your customer alleged that you breached their supply contract and then demanded not only damages under the contract but that you have to pay their legal fees in suing you!

Unfortunately, absent some language prohibiting such an argument, the courts are split on this issue.  In New York, for instance, the courts have held that the parties are responsible to pay their own fees absent clear language in the contract to the contrary.  Other states, however, take the opposite approach and impose the requirement that the contract must limit indemnification to “third party” claims.

For that reason, we have developed specific language that we include in manufacturing contracts that provides that intra-party claims are not covered by the indemnification provision.  If you have any questions on this topic, please feel free to contact me at


Top 10 OSHA Violations of 2016

Every year, OSHA releases a list of the 10 most frequently cited violations, which, for 2016, were accumulated by reviewing the nearly 32,000 workplace inspections conducted by OSHA staff. The list for 2016 looks a whole lot like the list for 2015 and the preceding years. As OSHA notes, “it rarely changes.” The top 10 violations for 2016 were:

  1. Fall protection
  2. Hazard communication
  3. Scaffolds
  4. Respiratory protection
  5. Lockout/tagout
  6. Powered industrial trucks
  7. Ladders
  8. Machine guarding
  9. Electrical wiring
  10. Electrical, general requirements

While this list might not look new, it is a good reminder of the issues OSHA will focus on during its next inspection. As we previously reported, the fall protection standards for general industry were recently revised to allow for greater flexibility by allowing a variety of fall protection measures in different circumstances, so manufacturers may want to inform themselves of these new options.

Other violations on this list often arise out of insufficient planning, communication, and/or training. By implementing and carrying out better training and communication, manufacturers may be able to reduce the likelihood of any number of the violations on this list.

Keurig Settlement An Expensive Reminder About Product Defect Reporting Obligations

This week, we welcome a post from Jim Ray, a partner in the Hartford office of Robinson & Cole LLP.  Jim’s practice includes environmental and product liability litigation and counseling, and he has assisted a number of clients implementing voluntary corrective actions under the CPSC Fast Track recall program.

The United States Consumer Product Safety Commission (CPSC) recently announced a $5.8 million agreement with Keurig Green Mountain, Inc. settling claims that Keurig failed to report a product defect that posed an unreasonable risk of serious injury to consumers.  The CPSC alleged that Keurig’s MINI Plus Brewing Systems could spray users with hot water, coffee, and coffee grounds.

Between 2010 and 2014, Keurig received about 200 reports of hot water and coffee spraying out of the machines, more than half of which resulted in injury.  A number of users sought medical treatment for severe burns, one was seen by a plastic surgeon, two had facial scarring, and one had an eye injury.  In two instances, retailers asked Keurig to conduct a product safety investigation.

It was not until June 2014 that Keurig initiated an investigation of the brewers.  However, Keurig did not submit a full report with the CPSC until the end of November 2014.  In December 2014, Keurig and the CPSC jointly announced a recall of more than 6 million brewers.

Section 15 of the Consumer Product Safety Act (CPSA) requires manufacturers, distributors and retailers of consumer products to immediately notify the CPSC when they learn that a product, among other things, “contains a defect which could create a substantial product hazard” or “creates an unreasonable risk of serious injury or death.”  A product defect can create a substantial product hazard when it poses a substantial risk of injury to the public.  In evaluating this, the company should consider the number of products in commerce, the pattern of the defect, and the severity of the potential injuries that could result.  Section 37 of the CPSA, though not implicated in the Keurig matter, also requires reporting to CPSC when at least 3 lawsuits have settled or gone to judgment in favor of the plaintiff in a 24 month period in which allegations were made that use of a product resulted in death or grievous bodily injury.  The CPSA provides for penalties of up to $100,000 per violation for knowing violations.

The CPSC alleged that Keurig failed to notify CPSC despite having “information reasonably supporting the conclusion that the Brewers contained a defect and created an unreasonable risk of serious injury.”  The CPSC also alleged that once Keurig initiated an investigation to evaluate its reporting obligations, it took more than 4 months to complete it (considerably longer than the 10 days CPSC considers reasonable.)  Keurig denied the CPSC’s allegations, claiming that the voluntary recall was done out of an abundance of caution without the firm having concluded that the product contained a defect or posed an unreasonable risk of injury.

The Keurig case serves as reminder to those manufacturing, distributing or selling consumer products of the serious nature of product defect reporting obligations.  Those entities should also be aware of the CPSC Fast Track recall program, under which companies can quickly implement a corrective action program to remove potentially unsafe products from the marketplace.  For those companies considering such a recall, CPSC will provide significant assistance and will refrain from making a preliminary determination that the product contains a defect that creates a substantial product hazard.