Brian Wolfman

Federal Preemption And Tort Law: Industry’s Basic Justification For Preemption Is Wrong

The basic idea of the federal preemption doctrine is easily stated: It is a constitutionally mandated choice-of-law principle that demands that federal law trumps state law when the two conflict or in the rare instance when the comprehensiveness of federal law on a topic demands no role for state law on that topic. But application of that principle can be terribly difficult. It requires that one master its basic tenets – the Supreme Court’s jurisprudence interpreting the constitution’s Supremacy Clause from which the preemption requirement flows. It requires an understanding of the fundamentals of statutory construction, because, generally, preemption turns on whether legislation enacted by Congress expressly or impliedly ousts state law. And, because present-day preemption issues tend to involve policing the borderline between a federal regulatory scheme and state law-making authority, familiarity with administrative law is often a must. Beyond these basics, one must also fully understand the details of both the particular federal statutory and regulatory structure at issue, that is, the federal legal landscape said to have preemptive effect, and the state-law regime said to be preempted.

For a plaintiff’s lawyer handling products cases, preemption is an ever-present worry. Whenever the product that caused the plaintiff’s injury is regulated in some fashion by federal law, the defendant likely will argue that the plaintiff’s state-law claim for damages is preempted. That means when the plaintiff has been injured by a defective car, truck, medical device, boat, tobacco product, or pesticide, or by a mislabeled drug or hazardous household cleaner, or has been victimized by a bank or other lending institution, the defendant will likely claim that federal law preempts any state-law damages claim seeking to recover for those injuries. The defendant often will advance these preemption arguments no matter how weak the federal regulatory scheme or how attenuated the connection between that scheme and the harms suffered by the plaintiff or the state-law duties under which the plaintiff seeks a remedy. Before addressing the nitty-gritty of a particular preemption claim, it is important to understand and be able to repudiate the basic theoretical justification offered by defendants for preemption of state tort law.

Defendants seek to equate the effect of tort law – of state-law damages actions – with positive state regulation.
This point is best illustrated by an example. Let’s assume that a federal agency has approved the marketing of a particular medical device as it is currently designed, manufactured, and labeled. And, though there may be powerful arguments to the contrary, let’s further assume that a state’s ban on the marketing of this federally approved device in that state would be preempted on the ground that the ban would conflict with federal law. The question, then, is whether a state-law tort suit seeking damages on the ground that the plaintiff’s injuries were caused by the device’s defective design or inadequate labeling is also preempted. In other words, is the effect of positive law (in this case, a state’s positive law requirement that a product not be marketed) the same as a jury’s damages verdict (in this case, a state’s award of damages based on a design defect)? This is an important question because defendants have relied heavily, and sometimes quite successfully, on the argument that positive law and common-law damages exert the same regulatory effect, and, thus, when positive law is preempted, common law should be as well.

But does the equation make sense? As I now explain, the answer is no.

As a matter of regulatory impact, it is a huge leap from the proposition that tort law is meant to and does to some degree have a regulatory effect, to the proposition that its impact is equivalent to direct, positive-law regulation. When the FDA, for instance, wants to get a food, drug, or device off the market, it can do so swiftly. It can actually seize products, like David Kessler did with misbranded orange juice when he first became FDA commissioner. It can deny regulatory approval; it can effectively impose advertising restrictions; it can demand data. The Food, Drug, and Cosmetic Act gives industry various procedural rights in opposing agency action, but, as a practical matter, the agency generally can exert its positive law priorities with great force. I recognized that agencies often do not exercise their full regulatory authority because of indifference, insufficient resources, lack of political will, or “capture” by the regulated industry. My point here, however, is that federal agencies generally have the legal authority to quickly alter the conduct of the regulated industry.

Contrast that direct regulatory power with the tort system. Large industry players generally react very slowly, and sometimes not at all, to liability pressures. By that I mean that most instances of liability are absorbed without any change in manufacturer conduct of the kind that can effectively be obtained swiftly by a regulator. As the Supreme Court has recognized in a number of cases, after the imposition of damages liability, the defendant is never legally compelled to alter its future conduct. To the extent that tort law exerts regulatory effect against a drug manufacturer, it occurs only after repeated suits, settlements, and findings of liability, and even then the cause and effect relationship is rarely clear. In many instances, even where there is an onslaught of lawsuits, the manufacturer holds out forever or acts only after years of liability pressure. The Supreme Court put this well in one important preemption case when it said that “the effects of direct state regulation on the operation of federal government are significantly more intrusive than the incidental regulatory effects of state [compensation] law.”

Of course, there is some symbiosis between the regulatory system and the common-law courts, as the former exerts pressures on the tort system and vice versa, and as both exert financial and political pressure on politicians and industry, and both are capable of making public information that would otherwise stay locked away in corporate file cabinets. But that doesn’t alter the basic truth: There is no reason to build a body of judicial doctrine on the equivalency between tort and direct regulation when that equivalency is not remotely accurate.

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Posted at 9:45 AM, Feb 27, 2007 in
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