Agency and Employment Relationship PDF

14 Agency and the Employment Relationship Agency Relationships An agency is created when a person or company(the agent) agrees to act for or in the plae of another person or company (the principle) Agent- real estate...

14 Agency and the Employment Relationship Agency Relationships An agency is created when a person or company(the agent) agrees to act for or in the plae of another person or company (the principle) Agent- real estate agent/employee Principle- property owner/employer Within scope of authority granted: an agent can bind the principle to contracts with third parties Types of Agencies Universal Agent General Agent Special Agent Agency coupled with an Interest Gratuition Agent Subagents ○ Universal Agent – designated to do all acts that can be legally granted to an agent. Usually has a general power of attorney (a document authorizing the agent to act on behalf of the principal) to do all business transactions on behalf of the principal. ○ General Agent – authorized to execute all transactions connected to a certain business. ○ Special Agent – authorized to represent principal in specific transactions usually for a limited time. ○ Agency coupled with an interest – where the agent pays for the right to represent a business. ○ Gratuitous Agent – the agent volunteers to act with no expectation of being paid for her services. ○ Subagents – the principal authorizes agent to delegate authority to other agents. Created by: Agreement →written or oral Ratification →action of signing or formal consent to treaty, contract, or agreement ○ Express - principle clearly signals she will be bound by agents actions ○ Implied - principle accepts the benefits of agents actions Some states… Agency by Estoppel → principle behaves in a way to make third party reasonably believe tht the agent has authority to act on behalf of the principle – Apparent Authority Types of Authority 1) Actual Authority (or Real Authority) Express Authority → based on oral or written instructions to agent Implied Authority → authority to do what is reasonable to carry out agent's purpose 2) Apparent Authority → Arises when the principle creates the appearance of authority in an agent that leads a third party to reasonably conclude the agent has authority Duties Principles Duties to Agent (real estate agent) → cooperate, compensate, reimburse, and indemnify Agents Duties to Principle (property owner) → loyalty, obedience, performance, reasonable care, accounting, and notification  Liability for Contracts Disclosed Principal is a principal whose identity is known by the third party when that party enters into a contract with an agent. The principal is bound by the contract and must honor it, and the third party can sue the principal if she fails to perform. The principal is also liable if a third party enters into a contract with an agent with apparent authority. The agent in that case, however, will be liable to the principal for any losses if the agent violated his duty of obedience. Undisclosed Principal is one whose identity is unknown to the third party and thus the agent will be liable for the nonperformance of the principal. The agent, in turn, can sue the principal for indemnification as long as the agent was acting within the scope of authority. Terminating Agency Relationships: an agency ends when one party (principal or agent) leaves the relationship, or on a date set by the parties, or when its purpose is fulfilled, or by operation of law, or when the principal withdraws authority from the agent. The principal may need to give notice of the termination to third parties to end the agent’s apparent authority. Agency and the Employment Relationship Employment Relationships Employer-Independent Contractor: an independent contractor is a person who contracts with an employer to do something, but whose performance is not controlled by the employer. Independent contractors are usually not the agents of their employers. The employer does not pay Social Security or workers’ compensation tax for independent contractors, or withhold state and federal income taxes. To determine whether someone is an independent contractor or employee, courts look at the following factors: 1. the extent of the employer’s control over the details of the work by the hired party; 2. whether the hired party is engaged in a distinct occupation; 3. whether the kind of work is usually supervised; 4. whether the work involves significant skill; 5. whether the employer provides tools or supplies for the work; 6. the length of the relationship;  7. whether compensation is by the job or by the hours worked; and 8. whether the hired party is integrated into the employer’s regular workforce. France v. Southern Equipment Co., 689 S.E.2d 1 (W. Va. Ct. App. 2010). Company not liable for injuries suffered by a 16 year-old employee of a subcontractor who fell off the company's building while working on a roof replacement. Employer-Employee: an employee is a person who works for the employer and whose work conduct is controlled by the employer. An employee can also be an agent of the employer. Employees as Agents: certain employees are also agents of the employer. They have the authority to make business decisions and enter into contracts on behalf of the employer. Employment At-Will: under the common law, an employer may dismiss an at-will employee at any time without cause. As the law has evolved, there are statutory grounds for employees to sue for improper dismissal or treatment on the job, discussed in later chapters. Other claims are possible based on: Employment Contracts 1. Express – the employee and employer can make an express contract that the employee will be employed for a certain period of time, until a project is completed, or until some other event occurs. 2. Implied – based on oral or written statements, policies and practices, such as a process to be followed before a dismissal. Employee Handbooks have been found by many courts to create implied or express contracts limiting the presumption of at-will employment. 3. Implied Covenants of Good Faith and Fair Dealing: recognized by a few states as extending to the employment relationship. Tort Liability- when someone is held responsible for a civil wrong, or tort that causes harm to another person Principal’s Liability: a principal and/or employer is liable for the torts of agents/employees if the tort was authorized or occurred within the scope of employment. If the agent or employee commits an unauthorized tort outside the scope of employment, the agent or employee is liable for the damages and (usually) the principal or employer is not. Vicarious Liability arises for a principal or employer for the intentional or negligent torts of agents/employees who were acting within the scope of employment. The liability of the principal/employer is known as respondeat superior. Negligent Hiring: an employer may be held liable for negligence in hiring an employee who is a risk to others. This is why many employers conduct background checks on potential employees. 15 EMPLOYMENT AND LABOR REGULATIONS The common law presumes employer/employee relationships are “at-will” on both sides (hire/fire and quit at will). There are exceptions: a. Contract: Parties are free to alter the at-will presumption through a contract limiting the employer's ability to fire at will. Exculpatory contracts (for example, a contract excusing the employer for liability for any injury that occurs at work) are not favored, however. Some states will uphold noncompete agreements as long as the restraints on former employees working for competitors are reasonable in time and geographic limitations. NOTE: In April, 2024, the Federal Trade Commission issued a rule banning noncompete agreements nationwide for the vast majority of workers. The rule has been challenged in a number of lawsuits currently pending in federal courts. b. Public Policy: Employers cannot fire an employee for (i) refusing to commit an illegal act; (ii) performing a public duty, such as jury duty or military service; (iii) exercising a public right, like voting or filing a claim for worker’s compensation; or (iv) whistleblowing an employer’s illegal act. If an employer fires an employee in violation of public policy, the employee can sue for wrongful discharge or retaliatory discharge. Worker Health and Safety The Occupational Safety and Health Act, 29 U.S.C. §§ 658-671, was enacted by Congress in 1970, and created the Occupational Safety and Health Administration (OSHA). Under the Act, employers must provide a workplace “free from recognized hazards,” and comply with safety and health standards issued by OSHA. OSHA inspectors visit workplaces and respond to workers’ reports of health and safety problems. Employers can be fined for violations of the Act and OSHA regulations. Worker’s Compensation Beginning in the early 1900’s, states adopted workers’ compensation laws requiring employers to pay insurance premiums for injury and death benefits for employees. Workers’ compensation provides employees a certain recovery with benefits paid regardless of fault for the cause of the work-related injury. Because of the existence of worker’s compensation laws, employers are immune from tort lawsuits for on-the-job accidents in most states. To state a workers’ comp claim, the employee must show she: (i) has an injury (ii) as a result of an accident or occupational disease (iii) that arose out of and in the course of employment. Long v. Superior Senior Care, Inc., 427 S.W. 106 (Ark. Ct. App. 2013). Certified nursing assistant (CNA) was injured moving a client from a wheelchair to a bed. Because the CNA was an independent contractor and not an employee of the defendant company, she was not eligible for worker’s compensation. In most states, including Maine, it is the exclusive remedy for injured or sick workers. Maine’s Workers’ Compensation Act is found at 39-A M.R.S. §§ 101 et. seq. Family and Medical Leave The Family and Medical Leave Act (FMLA), 29 U.S.C. §§ 2601 et seq., applies to employers with 50 or more employees and requires employers to grant workers up to 12 weeks of unpaid leave per year for childbirth or adoption; to care for a seriously ill child, spouse or parent; or for the employee’s own serious illness. FMLA leave may be denied to certain employees whose leave would cause “substantial and grievous economic injury to the operations of the employer.” An employer may lawfully terminate an employee who exhausts FMLA leave and is “unable to perform an essential function of the position because of a physical or mental condition.” General Employment Regulations Employers must hire employees who are legally permitted to work in the United States, and must collect evidence of the employee’s citizenship or legal work status. Federal, state and local minimum wage requirements must be met. Many occupations require licensing to practice (doctors, lawyers, building contractors, hair stylists, etc.), with criteria for licensure determined by state commissions (education, training, testing, fees). The Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., was passed by Congress to guarantee the expectations of retirement plan participants that benefits will be available when they retire by ensuring mandatory vesting for employees after several years of employment. Labor Relations and Unions National Labor Relations Board (NLRB) The NLRB is a federal administrative agency that oversees implementation of the federal National Labor Relations Act. It has five board members, a general counsel, regional directors, and administrative law judges. The NLRB has jurisdiction over all employers and employees in labor (union-related) disputes that affect interstate commerce. About 7% of the private sector workforce belongs to a union. The NLRA does not apply to public sector unions. Unions, employees and employers can file charges with the NLRB for unfair labor practices. NLRB investigates the claims and if the investigators find merit, the regional director will file a complaint. A hearing is then presided over by an administrative law judge (ALJ). Appeals of the ALJ’s decision are heard by a panel of NLRB board members, and appeals of the NLRB are heard by the appropriate U.S. circuit court. Unionization The NLRB also oversees the unionization process: 1. Interested employees contact a union for assistance/employees are contacted by a union organizer 2. Union starts an organization drive 3. Employee committee formed, which calls informational meetings and distributes information 4. If 30% or more of the employees sign authorization cards, the union organizer submits the cards to the NLRB and requests a representation election to determine if a majority of the employees want the union as their bargaining agent. 5. Before the election, the union and the employer hold campaigns (the union telling the workers of the benefits of union membership and the employer telling the  workers of the benefits the company provides without a union–but cannot threaten workers or promise new benefits). 6. NLRB supervises the election; if a majority of workers vote for unionization, the NLRB grants union certification. If the union wins, it becomes the exclusive bargaining agent for the employee bargaining unit and the company must bargain with the union. If, after a union has been certified, 30% or more of the employees call for an election to attempt to decertify the union, they can do so 60 to 90 days before the expiration of the latest collective bargaining agreement with the employer. Collective bargaining is the process by which the employer and the union negotiate a contract setting forth the terms and conditions of employment for a given time period. The employer and the union are required under the NLRA to bargain in good faith. 16 Employment Discrimination Title VII of the 1964 Civil Rights Act Amended in 1972, 1978 and 1991. Created and empowered the Equal Employment Opportunity Commission (EEOC) to enforce the Act, and made it illegal for employers of 15 or more workers (including employment agencies, labor unions, and both public and private sector employers) to A. Fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment; or B. Limit, segregate, or classify employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee because of such individual’s race, color, religion, sex, or national origin. Maine’s Human Rights Act (MHRA), 5 M.R.S. §§ 4551, et seq., is modeled on Title VII and additionally prohibits discrimination based on sexual orientation. Race, color, religion, sex, and national origin are protected classes under Title VII. Reverse discrimination is also illegal unless members of a protected class are underrepresented in a job category. National origin: refers to the country where a person is born or the country from which his or her ancestors came. Religion: includes all aspects of religious observances and practices, and believers as well as atheists. Employer must provide reasonable accommodation for religious practices, but does not have to provide an accommodation that imposes an undue hardship on the conduct of business. Sex: Title VII prohibits discrimination based on whether a person is male or female, or because of pregnancy, childbirth or related medical conditions. The Supreme Court held in Bostock v. Clayton County, Georgia, 140 S.Ct. 1731 (2020), that discriminating against individuals because of their sexual orientation or transgender status violates Title VII’s prohibition on discrimination because of sex. Also prohibits sexual harassment, defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when 1. Submission to such conduct is made either explicitly or implicitly a term or condition of employment; 2. Submission to or rejection of such conduct by an individual is used as a basis for employment decisions affecting such individual; or 3. Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile or offensive working environment. Two major categories of sexual harassment: (1) Quid Pro Quo (“something for something”): promise of reward for sexual favors, or threat of punishment for refusing. (2) Hostile Working Environment: sufficiently severe or pervasive enough to alter the conditions of employment and create an objectively abusive working environment, under a reasonable person standard. Bringing a Discrimination Charge/Case If an employee believes they have been discriminated against, they must first file a charge with the EEOC or the relevant state agency (in Maine, that is the Maine Human Rights Commission (MHRC)). The EEOC (or MHRC) investigates the claim. After the investigation, the EEOC (or MHRC) issues a right to sue letter, the parties settle, or the EEOC (or MHRC) sues the employer for discriminatory practices (rare). Once the employee has a right to sue letter, they can file a lawsuit in federal or state court. Categories of Discrimination Lawsuits 1. Disparate Treatment: the plaintiff must prove the employer intentionally discriminated against them. Steps under the McDonnell-Douglas Test, McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973): (a) The plaintiff establishes a prima facie case of discrimination by establishing that the plaintiff (i) belongs to a protected class, (ii) met the qualifications for the job, (iii) was subject to an adverse employment action, and (iv) the adverse action gives rise to an inference of discrimination.  (b) The burden of proof then shifts to the employer to present legitimate, nondiscriminatory, clear, and specific reasons for the employment decision. (c) Then the burden shifts back to the plaintiff to show the employer’s rationale was just a pretext (unacceptable excuse) for the disparate treatment. Employees have the right to make complaints to their employer, the EEOC (or MHRC), or the courts about discrimination, and if the employer punishes them for doing so, the employee may also sue for retaliation. Maine has a separate statute protecting employees who make complaints about retaliation, the Whistleblower Protection Act (WPA), 26 M.R.S. §§ 831 et seq. Employees also do not have to tolerate abusive behavior related to their protected class status, and if they quit because of harassment it will be considered constructive discharge. Employers should have clear, effective policies and procedures to reduce the likelihood of discriminatory behavior by managers and other employees. When they do, they will have a defense against liability if the harassed employee failed to utilize the procedures, unless the harassment results in constructive discharge. 2. Disparate Impact: the employer uses a decision-making rule that causes discrimination in some aspect of employment based on employees’ protected class status. Key issues: a. Does the employer have rules or practices that affect members of a protected group differently than other workers? b. Are the rules or practices justified by business necessity, or because they relate to valid job requirements? Business necessity is evaluated with reference to the ability of the employee to perform a certain job. Experience and skill requirements are generally acceptable, as are knowledge, strength, and/or agility requirements when a job requires them. Bona fide seniority programs and merit systems can also be legitimate affirmative defenses against disparate impact lawsuits, as well as bona fide occupational qualifications. Remedies Available in Discrimination Cases Back pay: to the date the discrimination began, either the entire pay that would have been earned or the differential between the pay received and the pay that would have been received. Front pay: if the plaintiff was unlawfully fired (or not hired), the court may order her reinstated or hired, or order the defendant to pay to compensate her for longer-term career damage.  Compensatory damages: for emotional distress, medical expenses, job-hunting costs, and loss of reputation. Punitive damages: available when the employer is found to have acted with reckless disregard for protected rights. Capped by federal law to between $50,000 to $300,000 depending on the size of the employer. Attorneys’ fees: as well as costs for filing fees, expert witness fees and transcripts. Even if successful, winning defendants rarely get attorney’s fees. Age Discrimination in Employment Act (ADEA) Prohibits discrimination in employment against persons aged over 40 by employers who have 20 or more employees. Generally mirrors Title VII, except a successful plaintiff cannot recover compensatory damages, punitive damages, or attorneys’ fees. Disability Discrimination The Americans with Disabilities Act of 1990 (ADA) prohibits discrimination against persons with disabilities in employment (as well as the right to access to public accommodations). The ADA incorporates (most) of the remedies available under Title VII and its procedures, and applies to employers with 15 or more employees. The prima facie case under the ADA for the plaintiff requires that he prove (i) he was an individual who has a disability within the meaning of the ADA; (ii) the employer had notice of his disability; (iii) he could perform the essential functions of the job with reasonable accommodations; and (iv) the employer refused to make such accommodations. A person with a disability is defined under the ADA as any person who (i) has a physical or mental impairment which substantially limits one or more such person’s major life activities; (ii) has a record of having an impairment; or (iii) is regarded as having such an impairment. Reasonable accommodations are those which an employer can provide without imposing an undue hardship on business operations. 18 Securities Regulation A security is a certificate or other financial instrument that has monetary value and can be traded. Securities are usually classified as either (a) equity securities, such as stocks and (b) debt securities, such as bonds (backed up by collateral) and debentures (no collateral). Securities and Exchange Commission v. Howey, 328 U.S. 293 (1946): an investment is a security if it (1) is an investment of money (2) in a common enterprise (3) with an expectation of a share in the profits (4) generated by the efforts of persons other than the investors. The sale of securities to investors is one of the primary ways that publicly-traded companies can raise new capital for operations, and are the main investments for pension funds. History After the stock market crash in 1929 and during the Great Depression which followed, Congress enacted a number of statutes regulating the securities markets. Among them: The Securities Act of 1933, which regulates the public offerings of securities when they are first sold and requires that issuers give investors material information. The Securities Act of 1934, which regulates trading in existing securities and imposes disclosure requirements on corporations that have issued publicly held securities. The Securities and Exchange Commission (SEC) enforces and administers federal securities laws. Registration Statements The registration statement for a new security offering has (a) detailed information required by the SEC and (b) a prospectus that is a condensed version of the detailed information, including (i) the issuer’s finances and business, (ii) the purpose of the offering, (iii) the plans for the funds collected, (iv) the risks involved, (v) the promoter’s managerial experience and financial compensation, and (vi) financial statements certified by independent public accountants.  Exemptions from the registration statement requirement include government bonds (which are exempt from securities laws altogether) and private placements (securities not offered to the public). Crowdfunding: beginning in 2016, up to $ 1 million can be raised over the course of 12 months from non-accredited investors, making equity funding more available for small businesses. Securities Fraud Rule 10b-5 states that it is unlawful for someone, in connection with the purchase or sale of any security, to (1) employ any device, scheme, or artifice to defraud; (2) make any untrue statement of a material fact or omit a material fact; or (3) engage in any act which operates as a fraud or deceit upon any person. Securities fraud lawsuits and prosecutions involving nationally traded securities must be brought exclusively in federal courts. To establish a claim of securities fraud, a plaintiff must plead and prove (1) a false statement or omission of material fact; (2) made with scienter (knowledge); (3) upon which the plaintiff relied; (4) that proximately caused plaintiff’s injury. Rule 10b-5 also prohibits insider trading, the buying or selling of stock by persons who have access to information not yet made public by a company. U.S. v. Kosinski, 976 F.3d 155 (2d Cir. 2020). Court upheld conviction of defendant, a “temporary insider,” who purchased and sold company stock based on misappropriated non-public information. Not only can a defendant face millions of dollars in liability for damages for fraud or insider trading, but the SEC also may impose fines and penalties, and recommend that the Department of Justice bring criminal charges. Brokers and dealers of securities also have professional responsibilities to clients not to churn (buy and sell an excessive amount of stock to make commission fees) or scalp (buy a stock for personal benefit and then urge clients to buy it to drive up the price). The various stock markets and exchanges, such as the NYSE and NASDAQ, regulate themselves and the professionals who deal in securities markets, with monitoring by the SEC. 19 Consumer Protection Food and Drug Administration The FDA monitors and regulates food and drug safety. Note: the U.S. Department of Agriculture (USDA) works with the FDA and has primary responsibility for the sanitation of meat, poultry and eggs. No prescription drugs (those that can be obtained only with a physician’s permission) may be marketed without FDA approval. The approval process is lengthy (14-15 years), expensive (costing more than $1 billion), and risky (only about 1 in 5,000 new drug compounds ever make it to market). The FDA also performs enforcement activities, and can force products off the market for safety reasons or for misleading claims (hundreds every year). Federal Trade Commission The FTC investigates trade practices that are claimed to be unfair and deceptive. The FTC defines deception as (i) a misrepresentation or omission of information in a communication to consumers (ii) that is likely to mislead a reasonable consumer and (iii) is material. In regulating advertising, the FTC requires that advertisements be 1) truthful and nondeceptive, 2) have evidence to back up their claims, and 3) not be unfair. POM Wonderful, LLC v. FTC, 777 F.3d 478 (D.C. Cir. 2015). Pomegranate juice company’s advertising claiming “scientifically-proven” health benefits from its products was unsubstantiated by valid research results, and therefore unprotected by the First Amendment. The court consequently upheld the FTC’s cease and desist order for the deceptive advertising. Under Section 43 of the Lanham Act, “any person who, in connection with any goods or services, … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of … another person’s goods or services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.” All states’ attorney generals are also empowered by their states to bring lawsuits against those involved in scams and fraudulent business practices. Consumer Credit Protection Congress has passed numerous laws to regulate consumer credit, and a number of different agencies oversee the regulations, including the FTC and the Federal Reserve Board. The consumer credit statutes include: Truth-in-Lending Act (TILA), which requires creditors to disclose basic information about the cost and terms of credit. Consumer Leasing Act, regulating consumer leases of personal property like cars, furniture and appliances. Fair Credit Billing Act (FCBA), requiring creditors to correct inaccurate or unauthorized charges. Fair Credit Reporting Act (FCRA), focusing on the accuracy and confidentiality of consumer credit reports. Equal Credit Opportunity Act (ECOA), to prohibit unlawful discrimination in determining creditworthiness. Fair Debt Collection Practices Act (FDCPA), to reduce abusive, deceptive and unfair debt collection practices. 20 Antitrust Law The late 19th and early 20th century saw the growth of very large corporations. The practices of a number of these companies, which worked to crush competition to the detriment of consumers, made them very unpopular. In 1890, Congress passed the Sherman Antitrust Act, largely to break up the Standard Oil Trust, which controlled about 90% of all oil sales in the U.S. The Act provides that it is a felony to monopolize or attempt to monopolize any part of the interstate trade or commerce, and that any business practice in restraint of trade is illegal. A monopoly exists where only one or a few firms dominate sales of a product or of services. In 1914, Congress passed the Clayton Act, which makes business practices that substantially lessen competition or tend to create a monopoly illegal. The Clayton Act is aimed at actions taken in an effort to eliminate competition. Congress created the FTC in 1914 to investigate and enforce violations of the antitrust laws. Violation of the Sherman Act can result in criminal conviction, fines, and treble damages. To enforce the Clayton Act, the Department of Justice (DOJ) can issue cease and desist orders prohibiting further violations. Private parties can also sue under the antitrust laws, and besides awarding monetary damages, courts can order companies or individuals to 1) refrain from certain conduct, 2) break up a company into parts, 3) to license its patents and facilities to competitors, and/or 4) cancel or modify contracts. Certain business practices that reduce competition may be considered by courts on a case-by-case basis to be per se illegal (conclusively presumed to be unreasonable and therefore illegal), while for other practices the courts will apply a rule of reason (and will look at the facts surrounding the business practice before deciding whether it hurts competition).  See U.S. v. Joyce, 895 F.3d 673 (9th Cir. 2016). A conspiracy among house flippers selecting who would win at auctions of foreclosed properties was a per se violation of Sherman Act. To prevent monopolization, firms are required to provide premerger notification to the Antitrust Division of the DOJ or the FTC at least one month before a merger of two or more firms if the transaction is valued at $70 million or more. Mergers may be challenged based on the merging firms’ market shares in both the product markets and the geographic markets. Mergers may be approved if a merger will enhance market efficiency by benefiting consumers through a better allocation of resources. Also, a merger may be approved if one of the firms is facing bankruptcy or other threat. The failing firm defense will apply if (1) the firm being acquired is not likely to survive without the merger, (2) the firm has no other prospective buyers, or the acquiring firm affects competition the least, and (3) alternatives to saving the firm have failed. Horizontal Restraint of Trade occurs when businesses at the same level of operation come together in some way to restrain trade (by merger, price fixing, exchanges of information, or territorial allocations). The Joyce case is an example of this. Vertical Restraint of Trade occurs when relationships between producers, distributors and retailers work to restrain trade (through vertical price fixing such as resale price maintenance, maximum price fixing and minimum price fixing, and exclusionary practices such as tying arrangements). The Robinson-Patman Act of 1936 specifically prohibits price discrimination (where the same product is sold to different buyers at different prices), particularly predatory pricing, where a company attempts to undercut a competitor in one geographic area by underpricing a product in one market (where the competitor operates), and charging higher prices in markets in which the competitor is absent. Courts look at the following factors to determine if a pricing strategy is predatory: (1) the defendant priced below cost, (2) the defendant’s below-cost pricing created a genuine prospect that defendant would monopolize the market, and (3) the defendant would enjoy its monopoly at least long enough to recoup its underpricing. Defenses: (1) cost justification, such as a difference in transportation costs and/or bulk sales; (2) meeting competition, by good-faith price cutting in response to a competitor's price cut. 21 Environmental Law Common Law Beginnings Nuisance and Trespass Private Nuisance – an unreasonable and substantial interference with the use and enjoyment of the land of another. Public Nuisance – an unreasonable interference with a right held in common by the public. Trespass – an unauthorized physical breach of the boundaries of another’s land that is substantial and unreasonable. Strict Liability for abnormally dangerous activities, e.g., businesses that emit or produce toxic substances. Riparian Law Holds that people who live along rivers and bodies of water have the right to use the water in reasonable amounts but must allow the water to flow downstream in usable form. Clean Air Act (CAA) Passed by Congress in 1970. Federal control of air pollution. The Environmental Protection Agency (EPA) sets pollution standards and enforces those standards through forced cooperation by the states. National Ambient Air Quality Standards (NAAQS): EPA lists major air pollutants and sets limits on how much of a pollutant is permitted in the ambient air. Based on public health effects and public welfare effects. Each state then develops its State Implementation Plan (SIP) to achieve the NAAQS. When new industrial plants are planned for construction or existing facilities renovated, the owners must apply for permits, based on the air quality in the area where the plant is located. In prevention of significant deterioration areas (PSDs), where NAAQS are met, require the owners to install best available control technology (BACT). In nonattainment areas, owners are required to install lowest achievable emission rate (LAER) technology (most stringent standard). Clean Water Act (CWA) Passed by Congress in 1972. Makes it unlawful to dump pollutants into navigable waters without a permit. States set water quality standards which must be approved by the EPA. Conventional pollutants must be controlled by the best conventional technology (BCT). EPA sets the limits for each pollutant and must consider cost-effectiveness. Unconventional or toxic pollutants are subject to best available technology control (BAT), and cost considerations are not considered as important. When a new source of pollution is created, it must meet the highest degree of pollution reduction in the entire production process. Decker v. Northwest Environmental Defense Center, 568 U.S. 597 (2013). Timber harvesters are not required to apply for National Pollution Discharge Elimination System (NPDES) permits from the EPA for stormwater run-off from logging roads. The Supreme court upheld the EPA’s interpretation of its regulations that such run-off was not a discharge “associated with industrial activity.” The CWA also protects wetlands. Builders must get permits to change wetlands, and may be required to buy or restore other wetlands in exchange for any damage or filling on the construction site. Land Pollution Several statutes empower the EPA to monitor, prevent and enforce controls over land pollution. Toxic Substances Control Act (TSCA) Requires a producer who wants to manufacture or import a new chemical substance to provide the EPA notice at least 90 days prior. The EPA must then show that the chemical poses a health hazard before restricting it. Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Requires pesticide registration with the EPA before such a product is sold. EPA examines scientific data about products’ effects, and considers the economic and environmental costs and benefits of each product. Resource Conservation and Recovery Act (RCRA) Empowers the EPA to regulate treatment, storage and disposal sites (TSD) of hazardous waste, and requires compliance with the manifest system (producer of waste must complete a manifest identifying the nature and quantity of the waste and its origin, its shipping route, and its final destination, which the transporters must also sign and provide a copy of to the TSD, who must return it to the producer). Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Also known as the Superfund, it provides authority to the EPA to clean up abandoned hazardous waste sites. The cleanup costs can run from a few million to half a billion dollars. The EPA can pursue potentially responsible parties (PRPs), and the PRPs can pursue each other, for the costs of cleanup. PRPs include the current owners of the site, prior owners at the time of the disposal, the waste generator, and any transporter who delivered to the site. PRPs are strictly and jointly and severally liable for the costs. Endangered Species Act (ESA) Under the ESA, the U.S. Fish and Wildlife Service (FWS) (part of the Department of the Interior), has primary responsibility for identifying threatened and endangered species and for protecting their habitats. Under the ESA, projects may not destroy or modify the habitat of endangered species.