NACS advocates for the retail sector of the convenience industry in every government forum it can. Most of this work is directed toward policies set by the legislative (Congress) and executive branches of the federal government, though at times NACS deals with a number of interstate organizations including those representing governors, attorneys general, state legislators and even mayors.
One area of NACS’ advocacy that may not be as apparent is the work done in the courts—the third branch of government. Some policy problems are best addressed through litigation and, at other times, litigation can be part of a joint strategy. NACS regularly uses litigation to press the best interests of the industry.
Employee Mandate
One of NACS’ most significant accomplishments on behalf of the industry was litigation to block the proposed federal mandate for all employees in companies with 100 or more employees to receive a COVID vaccine. There was significant concern within the industry that this would cause large numbers of employees to quit their jobs—a concern at any time, but one that was heightened by the historic labor crisis during the pandemic.
The vaccine was proposed late in 2021. NACS worked with a coalition of business organizations to come up with a legal strategy and file suit in federal court to block the mandate. That case, National Federation of Independent Business v. U.S. Department of Labor, along with a similar case filed by a group of states, went all the way to the U.S. Supreme Court. In January 2022, the Supreme Court ruled in NACS’ favor. Some of the central information cited by the lawyers in the case at oral argument was generated by NACS’ research team through a survey of NACS members.
The case not only blocked the mandate, it is one of the few key cases reinvigorating the “major questions” doctrine, which holds that federal agencies cannot discover new legal authority to take sweeping actions years after a long-established law was passed and that Congress needs to be clear when it delegates major new authority to federal agencies. That doctrine is likely to be key in many future cases challenging agency actions.
Transportation Energy
NACS has a multifaceted strategy regarding transportation energy. On the one hand, NACS wants to ensure its members can sell any transportation energy that customers want to buy, including any liquid fuels and electricity, on a level playing field. On the other hand, NACS wants to ensure that those can be market choices and not be forced by government mandate. If both of those things happen, the retail convenience industry will continue to grow and thrive.
Creating a level playing field for the sale of energy is primarily a project of legislative and regulatory work at this time. Congress has passed and is considering provisions to push the states toward that goal. NACS is also part of a coalition to work with state lawmakers and regulators to make that happen.
NACS wants to ensure its members can sell any transportation energy that customers want to buy. ”
But, mandates of certain energy and bans on internal combustion engine vehicles threaten to dramatically disrupt the market. To deal with those policies, NACS has turned to the courts in a series of cases. Currently, NACS is a plaintiff in three such litigation cases and may join more as federal and state policies develop. First, NACS is challenging the U.S. Environmental Protection Agency’s decision to grant the state of California a waiver to impose its so-called “zero emission vehicle” mandate on light-duty vehicles. That case is pending before the U.S. Circuit Court of Appeals for the DC Circuit. Second, NACS is challenging the legal ability of Minnesota to adopt California’s light-duty “zero emission vehicle” mandate in the U.S. District Court for the District of Minnesota. Third, NACS is fighting California’s heavy-duty “zero emission vehicle” mandate and the waiver EPA granted allowing California to impose it. That case is pending in the DC Circuit.
By bringing all of these cases, NACS is trying to ensure that government policy avoids technology-specific mandates. While technology-neutral performance goals and incentives can operate with the market, forcing specific technologies will harm the nation’s economics as well as its environmental goals. Government policy simply cannot predict the course of innovation and market forces in the future, so it should not force a particular technology solution while cutting off other avenues that may better improve environmental and economic results.
Payment Card Swipe Fees
Since 2005, NACS has been a lead plaintiff in litigation challenging the way that credit and debit card swipe fees are set and the rules imposed on such transactions by Visa and Mastercard. When the class action case in that litigation reached a proposed settlement in 2012 that would have provided funds to merchants but locked in the Visa/Mastercard rules without much change, NACS led a large group of organizations that challenged the settlement. That challenge was successful and invalidated the inadequate 2012 settlement.
Following the court throwing out the 2012 settlement, NACS joined the largest group of individual litigants in order to have new counsel press for the best possible outcomes for the industry as a whole. We have been working with new counsel for the class representing merchants seeking to change Visa’s and Mastercard’s rules. That is the key, ultimate objective of the litigation. At this point, dueling motions for summary judgment have been fully briefed and we are awaiting a decision from the court on those motions. Once those motions have been decided, NACS expects that the court will set a date for a trial in the case.
Since 2005, NACS has been a lead plaintiff in litigation challenging the way that credit and debit card swipe fees are set and the rules imposed on such transactions by Visa and Mastercard.
In 2019, the lawyers representing the class of merchants seeking monetary relief for past swipe fee charges reached a new settlement. Because the monetary part of the case had been separated from questions regarding the credit card companies’ rules, NACS did not object to that settlement. Other appeals of that settlement have been rejected to date and NACS is awaiting word from the court regarding how the claims process will work for members of the industry to seek some funds for their past swipe fees paid.
NACS also tries to help other litigants in cases that matter to its priorities. This can be done through filing amicus (friend of the court) briefs. In these cases, NACS isn’t actually a party to the case, but writes a brief to let the court know its perspective on the legal issues at stake. For example, NACS was part of an amicus brief in the case of Pulse v. Visa. In that case, the debit network Pulse sued Visa for using its market dominance to block competition in the debit network market. The case was initially thrown out by the trial court, but on appeal, NACS and other retail groups helped Pulse get the 5th Circuit Court of Appeals to reverse the trial court. In fact, in a very rare move, the 5th Circuit ordered that the trial court judge be removed from the case and replaced by another judge. That resounding win last year for Pulse did not decide the outcome of the case, but it allowed the litigation to proceed, and Pulse can now try to prove that Visa in fact violated the antitrust laws.
Tobacco
The U.S. Department of Justice sued tobacco manufacturers in the 1990s on a range of issues and won a decision in 2006. One provision of the court’s decision ordered the manufacturers to place signage at retail points of sale making so-called remedial statements regarding the case. NACS filed an amicus brief supporting the tobacco manufacturers’ appeal of the decision and specifically arguing that an order requiring signage at retail violated retailers’ property and due process rights. The DC Circuit Court of Appeals agreed with NACS and ordered the trial court to reconsider the signage requirement. The result was more than ten years of sparring before the District Court in DC. The case went on long enough that the original judge in the case retired and was replaced.
Unfortunately, the new judge was determined to have some type of retail signage requirement. Given that reality, the tobacco manufacturers, with NACS’ participation, negotiated a less stringent signage requirement than the Department of Justice sought. That requirement is just taking effect now. While it is burdensome and unfair for retailers, the long-term advocacy against it moderated some of the most troubling aspects of the requirement that had been sought in the case.
The result was more than ten years of sparring before the District Court in DC.
Last year, NACS also filed a friend of the court brief supporting JUUL’s lawsuit objecting to FDA’s decision to ban all JUUL products. That decision was challenged as arbitrary and without factual or scientific foundation. When challenged, the FDA asked the court for time to reevaluate its decision. As of this writing, the FDA is still considering what to do about JUUL products and what to say to the court.
Broad Climate Liability
Another subject with active litigation is climate liability. Some municipalities and environmental groups have a strategy to bring multiple cases against the major oil companies to try to get large monetary awards against them for causing climate change. One of the major points of contention in these cases is whether they must be brought in federal courts (as the oil companies contend) or whether the plaintiffs in the cases can selectively choose state courts in which to pursue these cases. NACS has weighed in with amicus briefs in some of the leading cases arguing that these issues must be decided by federal courts. The decisions to date in these cases have been mixed, and NACS is still awaiting the outcome of some of these challenges. The viability of the environmental groups’ strategy to impose massive liability could turn to a large degree on the outcome of these jurisdictional questions.
Unfair Liability for Employees
In a West Virginia case, Speedway was sued for a traffic accident involving an employee who was driving home from work. The potential extension of employers’ liability to what employees do when they are not working could have dramatically expanded legal risks for virtually all employers. NACS worked with a number of groups to file an amicus brief supporting Speedway’s appeal and pointing out the extent of national liability that could result from a ruling against Speedway. The appeal was successful and established a strong rule in West Virginia that employers are not legally responsible for what their employees due when they are not working.
Point of Obligation
A group of refiners has long struggled against the regulatory requirements they face in order to comply with the renewable fuels standard. Unfortunately, this has at times led them to try to move their compliance responsibilities onto other businesses in the fuel distribution chain—some of those responsibilities could then fall on the shoulders of NACS members. In order to protect against that potential outcome, when refiners and their trade association sued EPA to try to legally change compliance responsibilities, NACS filed an amicus brief pointing out the many problems that could result from such a shift. NACS was successful and compliance responsibilities were not shifted through litigation.
Confidential Business Data
When a newspaper tried to use the Freedom of Information Act to secure confidential business information regarding food stamp usage at specific store locations, NACS and a group of other associations representing stores in the food stamp program sued. The case went all the way to the U.S. Supreme Court. At that point, the case was led by FMI, which represents the grocery industry. NACS filed an amicus brief. NACS’ position prevailed and the Supreme Court for the first time imposed its view of confidential business information that was protected from disclosure under the Freedom of Information Act.
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NACS’ extensive use of litigation as a tool to advocate for the industry will remain an important part of its strategy. That doesn’t mean that NACS will win every time. In fact, a perfect track record would likely mean that NACS was not pushing hard enough on the industry’s behalf. Thankfully, there have been significant wins that have vindicated the industry’s position on some key issues. By using the courts in conjunction with its work before the legislative and executive branches of government, NACS hopes to shape policies to make them as advantageous as possible for the continued health and vibrancy of the convenience store industry.