Preemptive strike

In a trio of recent decisions, the U.S. Supreme Court held that federal statutes preempt state laws, regulations and tort actions.
And even though at least one lawmaker hinted at a legislative response, experts say that historically Congress has been wary of rewriting the law in response to Supreme Court decisions, so the battle between state law and federal regulation will likely continue to be fought before the court rather than under the Capitol dome.
“On this particular front, the Supreme Court, I think, will remain the biggest game in town,” said Michael S. Greve, director of the Federalism Project at the American Enterprise Institute for Public Policy Research, during a panel on federal preemption hosted just days after the court handed down the latest decisions.
The case that made the biggest splash was Riegel v. Medtronic, No. 06-179, which had been closely watched by business organizations, trial lawyers’ groups and federal authorities since the court agreed to decide it last year.
In a decision authored by Justice Antonin Scalia, the court ruled that state law tort claims against a catheter manufacturer for a device that won pre-market approval from the Food and Drug Administration were preempted by the Medical Device Amendments of 1976,
a section of the Federal Food, Drug, and Cosmetic Act establishing the scheme for federal regulation of medical devices.
Further, the plaintiffs’ tort claims constituted differing state “requirements” under the Act.
“[C]ommon-law causes of action for negligence and strict liability do impose ‘requirements’ and would be preempted by federal requirements specific to a medical device,” Scalia wrote. “State tort law that requires a manufacturer’s catheters to be safer, but hence less effective, than the model the FDA has approved disrupts the federal scheme no less than state regulatory law to the same effect.”
The opinion was based on the rationale that the FDA and federal laws covering pre-market approval create a carefully-crafted system for ensuring that only safe products are on the market, while making needed devices available.
Federal regulators – not state authorities, and certainly not juries seated in state court trials – are in the best position to weigh risks and benefits in this scheme, Scalia said.
More from the court
Riegel was one of three federal preemption decisions handed down on the same day.
In Preston v. Ferrer, No. 06-1463, the court held that the Federal Arbitration Act precluded an attempt by television’s “Judge Alex” Ferrer to go to state court seeking a ruling that his contract with his former manager was void, rendering the contract’s arbitration clause void as well. He sought to have the case heard before a state labor commission, claiming it held exclusive jurisdiction.
The opinion by Justice Ruth Bader Ginsburg said that once parties agree to arbitrate all disputes arising out of a contract, as Ferrer and his manager did, the Federal Arbitration Act preempts appeals to state administrative agencies, and the parties must arbitrate the dispute.
Allowing parties to go to state courts first “would likely [create] long delays, and Congress enacted the FAA to avoid delays,” Ginsburg reasoned.
The court also ruled in favor of federal preemption in Rowe v. New Hampshire Motor Transport Association, No. 06-457, holding that a state law requiring delivery companies to verify that the recipients of tobacco products are of legal age was preempted by a federal law forbidding states from regulating motor carriers.
Mixed reaction
The ruling in Riegel drew sharp and mixed reaction from trial lawyers, lawmakers and other legal experts.
Jon Haber, chief executive officer of the American Association for Justice, a trial lawyers’ organization, said in a statement that Riegel “limits the rights of people to receive justice through the legal system when they are injured by the negligence or misconduct of others.”
Haber tried to limit the ruling’s applicability, stating that it “should be narrowly viewed as applying only to certain medical device cases and should not serve as precedent for cases involving drugs and other consumer products.”
“We believe this ruling seriously misconstrues Congressional intent,” he added.
Sen. Edward M. Kennedy, D-Mass., who chairs the Senate Health, Education, Labor and Pensions Committee, hinted that Congressional action could follow.
“In enacting legislation on medical devices, Congress never intended that FDA approval would give blanket immunity to manufacturers from liability for injuries caused by faulty devices,” Kennedy said in a statement. “Congress obviously needs to correct the court’s decision. Otherwise, FDA approval will become a green light for shoddy practices by manufacturers.”
Brian Wolfman, director of Public Citizen Litigation Group, criticized the decision’s conclusion that state tort law could interfere with the federal regulatory process.
“To me, it is a huge leap [from saying] the state tort system has a regulatory effect to saying it is the equivalent of regulation,” Wolfman said.
He suggested tort suits serve an important role not accomplished by the federal regulatory scheme.
“The tort system has an important non-regulatory component – which is compensation,” Wolfman said. “[Agencies] that regulate rarely compensate. And there is very little reference to that compensatory component in these cases.”
But Daniel E. Troy of Sidley Austin Washington, D.C., and former chief counsel of the FDA, said the court got it right by focusing on the careful balance the agency tries to strike.
“The FDA has written that FDA regulation is both the floor and the ceiling” of safety regulation, Troy said. “Why? Because the FDA has balanced both the benefits and the risks, and they are trying to come to a happy medium.”
He said by gaining pre-market approval, medical device makers by definition have shown that they have been prudent in ensuring a product is as safe as possible – eliminating an essential element of tort liability.
“Our current tort system is based on wrongs,” Troy said. “[So] there is a conflict because a company hasn’t done anything wrong if they disclose all information to the FDA and the FDA approves it.”
He argued there is such a thing as “over warning,” and fear of liability can stifle innovation.
“Every company lives in fear and terror of product liability,” Troy asserted.