Supreme Court Report
Trumping the States
Business is finding success in federal pre-emption cases
Posted May 1, 2008 7:00 AM CST
By David G. Savage
In a stream-of-consciousness question during U.S. Supreme Court arguments, Justice Stephen G. Breyer framed—and seemingly decided—key issues in a suit involving federal pre-emption over state tort law.
“It’s a terrible thing if the drugs hurt people,” Breyer said during February arguments in Warner-Lambert Co. v. Kent, 128 S. Ct. 1168. But, he added, “there’s a risk on the other side if new drugs are not available for people who are sick or dying.”
So, who should decide “whether this drug is, on balance, going to save people or, on balance, going to hurt people? An expert [federal] agency, on the one hand, or 12 people pulled randomly for a jury role? Now, it seems to me ... Congress has opted for the agency.”
There was an awkward pause. The case before the court involved drugs, but it turned on a Michigan law. Justice Ruth Bader Ginsburg came to the rescue. “We are going to hear that case next term,” she said.
Indeed, those issues will be raised in next term’s Wyeth v. Levine, No. 06-1249, in which Vermont musician Diana Levine claims she lost a hand and forearm to complications from an “IV push” of a popular anti-nausea drug. But if this term is any indication, the court has signaled the direction in which it likely will go.
HIGH COURT SUCCESS
While corporations and business lawyers have been mostly unsuccessful in persuading Congress or state legislatures to shield them from lawsuits and jury verdicts, they have found success before the Supreme Court. And they have done so by arguing that the federal regulatory laws already on the books pre-empt lawsuits under state common law.
Georgetown University law professor David C. Vladeck says the trend toward pre-empting the right to sue in state courts is one of the most important developments in recent years.
“We are talking about a dramatic, wholesale shift in the common law. This is definitely the year of pre-emption,” says Vladeck, former director of the Washington, D.C.-based Public Citizen Litigation Group, a public interest law firm.
But while Vladeck says the court has been overreaching, U.S. Chamber of Commerce lawyer Robin S. Conrad welcomes the rulings for recognizing the conflict faced by businesses that operate nationally. “They want one set of national regulations, not a patchwork of inconsistent state and local requirements,” says Conrad, executive vice president of the National Chamber Litigation Center.
This is particularly so for products such as medical devices or prescription drugs, she says. “These are federally regulated products. An expert agency says a drug or a medical device is safe and effective to be on the market,” Conrad says. But in a lawsuit, a jury may conclude the same product is not safe and should not be on the market, she says.
The court adopted the pro-business and pro-pre-emption view in Riegel v. Medtronic Inc., 128 S. Ct. 999, handed down Feb. 20. The plaintiff, Charles Riegel, had a balloon catheter inserted into a heart artery in 1996 but it burst, causing serious injuries. He sued in a New York state court, contending the catheter was defectively designed. (Riegel died in December 2004, but the U.S. Supreme Court allowed the case to continue.)
In an 8-1 vote, the high court threw out Riegel’s suit, as well as most other claims against medical devices that the Food and Drug Administration approved for sale.
Tort suits may offer “solicitude for those injured by FDA-approved devices,” wrote Justice Antonin Scalia for the majority. But Congress also had “solicitude for those who would suffer without new medical devices if juries were allowed to apply the tort law of 50 states to all innovations.”
The outcome turned on the meaning of the words any requirement in the 1976 Medical Device Amendments Act, passed in the wake of the Dalkon Shield disaster. The intrauterine device, introduced in 1970, led to serious infections in thousands of women, as well as several deaths. As a result, many states required makers of medical devices to obtain the state’s approval before they could be sold.
SCOPE OF INTENT AT ISSUE
The new federal law said no state “may establish or continue in effect with respect to a device intended for human use any requirement” that differs from those of the FDA. Congress intended to pre-empt state laws if they set extra requirements for device makers.
But did lawmakers also intend to pre-empt lawsuits and jury trials? Beginning in 1992, the Supreme Court has answered yes. In Cipollone v. Liggett Group, 505 U.S. 504, the justices shielded cigarette makers from lawsuits from smokers who claimed they were not truly warned of the dangers. The federal cigarette warning label act required tobacco companies to put warnings on each pack of cigarettes, but it also said “no requirement or prohibition” may be added by the states. A jury’s verdict saying the warning label did not go far enough would, in effect, constitute an extra state requirement, the justices said.
Now nearly all the justices have adopted this view of what Congress said—even if it may come as a surprise to members of Congress who passed the 1976 law.
“Absent other indication, reference to a state’s ‘requirements’ includes its common-law duties,” Scalia said.
In her dissent, Ginsburg said there was no “sign of a legislative design to pre-empt state common-law tort actions.” Congress sought to give consumers extra protection through federal oversight, not take away the protection of lawsuits and jury verdicts, she concluded.
Nevertheless, Alan Untereiner, a D.C. lawyer who represents business, predicted Scalia’s opinion will have a wide impact. “The Riegel decision is a resounding victory for the pre-emption defense and for the business community,” he says.
The pre-emption defense has proven to be a winner for business on other fronts this year. In Rowe v. New Hampshire Motor Transport Association, 128 S. Ct. 989, also decided Feb. 20, the court shielded delivery services, such as FedEx and UPS, from state laws requiring they check with an adult before dropping off cigarettes at a residence.
In the era of Internet commerce, all manner of products can be bought online and shipped home. The states said the carriers must check before delivering goods such as cigarettes, alcohol or pornography, but the court said these state laws are pre-empted by the federal law deregulating the trucking industry.
Even TV’s Judge Alex was handed the same message. Alex Ferrer, a former Florida state judge, arbitrates disputes on TV and hands down a binding decision in minutes. But he refused to arbitrate a fee dispute with his manager, Arnold Preston, even though he signed a contract calling for arbitration. He won in the California courts by citing a state law that entrusted a state agency to review contract disputes between actors and talent agents.
It took more than a few minutes, but less than five weeks, for the Supreme Court to reject his claim. Preston v. Ferrer, 128 S. Ct. 978. The Federal Arbitration Act pre-empts conflicting state laws, the justices said, and those who sign contracts calling for binding arbitration must go to arbitration.
RECUSAL LEADS TO TIE
The other case this term, Warner-Lambert, ended in a 4-4 split, upholding an appellate court ruling that allowed a tort claim over the drug Rezulin to proceed. Chief Justice John G. Roberts Jr. stepped aside because he owned stock in Pfizer, the parent company of Warner-Lambert.
The next major test will come in the fall when the court hears cases testing whether makers of prescription drugs and “light” cigarettes should be shielded from lawsuits.
In Wyeth v. Levine, the court will reconsider a $6.8 million jury award to Levine for the loss of her right hand and forearm after an injection of Wyeth’s anti-nausea drug, Phenergan. Levine had gone to a medical clinic where they injected the drug deep in her arm. As a result of the so-called IV push an artery was punctured, resulting in gangrene and amputation. She sued, contending the drug maker failed to warn against a deep injection of the drug.
In its defense, Wyeth said the warning label included cautions against puncturing an artery. “Prescription drug labeling is precisely the type of complex and technical regulatory regime that warrants deference to the expertise” of the FDA, said Washington attorney Bert W. Rein for Wyeth. There are “tens of thousands of cases in our nation’s courts” where the same conflict is at issue, he noted.
Also next term, in Altria Group Inc. v. Good, No. 07-562, the court will decide whether the tobacco companies should be shielded from suits that contend they deceived smokers by advertising “light” or “low tar” cigarettes. These claims ask a jury to decide whether the warning label was adequate, and that is a new state law requirement, says former U.S. Solicitor General Ted Olson, representing Philip Morris.