Commentary - Federal Preemption & Complete Immunity for Negligent Corporations

Supreme Court of the United States, Washington D.C.

About Federal Preemption

The term Federal Preemption is broadly used to describe the Supremacy Clause (Article VI, Clause 2) of the United States Constitution, which gives the federal government legal authority over the States and establishes federal law as the “supreme Law of the land:”

“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the authority of the United States, shall be the supreme Law of the land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

This makes sense to the layperson; federal preemption of state laws has obvious benefits where state and federal laws are in conflict, or where the states have no business making law (such as in treaties with other nations).

But to what extent is this power to be exercised, and how? Does this power give the government the ability to nullify the right of citizens to trial by a jury of their peers? The Bill of Rights, in the Seventh Amendment to the United States Constitution, firmly emphasizes the importance and sanctity of our right to civil trial by jury:

“In Suits at common law… the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.”

On the whole, federal preemption is a broad and complicated area of law, and years of intense study would be required to fully grasp its complexities. In the past decade, however, a new era of federal preemption has held the attention of the legal profession, thanks in large part to the industry-friendly Bush Administration’s efforts to extend the federal powers of preemption to private enterprise.

Exercising federal preemption of state tort law (under which product liability suits are usually brought) through the power of regulatory agencies has become arguably the most powerful weapon in the corporate-sponsored “tort reform” lobby’s arsenal. In the last decade, their strategy has been to co-opt federal regulatory agencies such as the FDA, the CPSC, the NHTSA, the FRA, and the FCC into helping the private sector obtain immunity from state tort law through federal preemption, and they are finding success with the help of their Washington allies.

Of special concern to InjuryBoard members and the consumers we serve is the crisis of justice arising from the federal government’s preemption of state laws and manipulation of legal decisions, effectively disabling Americans’ rights to seek redress through civil trial. Lawsuits for injuries and deaths caused by dangerous and defective products, whether pharmaceuticals, toys, or automobiles, are systematically being preempted and prevented thanks to the activist policies of the Bush administration in this area.

In spite of the enormous implications for public safety and the civil justice system, the subject of federal preemption gets very little media coverage and doesn’t appear on the average person’s radar until he finds himself or a family member the unfortunate victim of a company’s defective or dangerous product.

A Policy Briefing on Federal Preemption

In an effort to learn more about the dangerous implications of federal preemption of state tort laws, InjuryBoard recently attended a policy briefing on federal preemption in Washington, D.C.

The policy briefing was hosted by the Alliance for Justice and the National Conference of State Legislatures at AFJ’s D.C. headquarters. It was well attended by representatives from the American Association for Justice, AARP, the ACLU, Public Citizen, and other consumer advocacy and interest groups. The briefing featured a panel of experts who helped shed light on this highly complex, but incredibly important issue.

The briefing’s panelists included professor David Vladeck from Georgetown Law School; Jeffrey Teitz , Senator Kennedy’s Chief Counsel for Policy; Bobby Frederick of Republican congressman Tim Johnson’s office; Nan Aaron, President and Founder of Alliance for Justice, Susan Frederick from the National Conference of State Legislatures, and Geoffrey Garin, President of Peter D. Hart Research Associates.

Vladeck has written extensively on the subject of federal preemption and provided important insights into the history of preemption, and the failure of federal regulatory agencies to sufficiently protect American consumers from unreasonable harm. He explained the differences between “express” and “implied” preemption, and highlighted the recent trend of corporations seeking to “hide behind” creative interpretations of preemption by arguing that compliance with weak federal standards (such as the NHTSA’s “roof-crush” safety standard) exempts them from liability under state tort laws in cases where unsafe products have caused injury or death. This argument effectively immunizes companies from liability, and prevents people injured by their products from having any recourse in court.

Historically, federal agencies have viewed the right to sue as an added protection for the consumer, in spite of, or possibly in response to, the heavy pressure exerted by corporate interests to influence regulatory policies and processes in their favor.

In recent years, however, the Bush administration has undermined this position by pressuring federal agencies to use their regulatory power to protect corporations from liability under state law. Predictably, these agencies have succumbed to political pressure and become more sympathetic to the objectives of the corporate lobby. Currently, federal agencies are avidly supporting the concept that basic regulatory approval for products should be used as a blanket defense against liability. Some agencies have gone as far as to submit legal briefs on behalf of corporate defendants of lawsuits, arguing that citizens don’t have the right to sue the corporation for injuries or death caused by faulty or dangerous products.

The Argument Against Federal Preemption

The obvious question is whether federal agencies such as the FDA, CPSC, NHTSA, and FCC should be the protection of last resort for Americans, and are they truly capable of succeeding? A serious and obvious problem with this idea of “corporate immunity” is the lack of resources, ability, or incentive for the federal government and its agencies to protect consumers from dangerous products.

Recent history has repeatedly demonstrated that meeting federal regulations alone provides insufficient protection for the consumer. Consider Merck’s marketing of Vioxx as safe despite known dangers, the criminal misrepresentation of the risks of Oxycontin by Purdue Pharma, children’s toys sold with dangerously high levels of lead paint, peanut butter contaminated with salmonella, human and pet food contaminated with melamine, defective automobile airbags, defective seatbelts, etc.

The list of defective and dangerous products that neither regulations nor regulatory agencies succeeded in protecting Americans from is far too long to detail here. Just this week, Pfizer settled $894M worth of product liability suits for the drugs Celebrex and for Bextra, which were approved by the FDA and heavily marketed to consumers (Bextra was withdrawn from the market earlier this year).

Pharmaceutical safety is of particular concern due to the potential risks posed by new drugs. Many groups have expressed concern over the manner and speed in which drugs are submitted for regulatory approval. Sample sizes in human pharmaceutical trials, are statistically tiny when compared to the potentially large population of patients who will be prescribed the drug, and the amount of time allowed to ascertain potentially harmful effects, some of which may not come to light until years after approval, is woefully insufficient.

Is a budget of $739M sufficient to regulate a $250B pharmaceutical industry that spends tens of billions of dollars on marketing alone? Recent history suggests otherwise; in an informal meeting with a former FDA employee, it was confided to InjuryBoard that her fellow FDA employees, while both competent and ethical, were desperately overworked and constantly subjected to conflicts of interest caused by political and industry pressure to “speed up” the drug approval process.

In February of this year, the Supreme Court affirmed a lower court ruling in Riegel v. Medtronic, finding that the preemption clause of the Medical Device Amendments of 1976 bars common-law claims challenging the safety of an FDA-approved medical device. Charles and Donna Riegel had sued Medtronic when one of their balloon catheter devices burst during angioplasty, requiring advanced life support and emergency coronary bypass surgery. The Supreme Court set important precedent by siding with the medical device industry in this case.

Later this month, the Supreme Court will hear oral arguments of preemption of a drug product liability claim in Wyeth v. Levine. Diana Levine, a professional musician, sued Wyeth after losing her arm to amputation following an injection of Phenergan, an anti-nausea drug, into her arm. In a decision upheld by the Vermont Supreme Court, a Vermont jury ruled in Levine’s favor, awarding Levine $6.8M in damages. Wyeth (the company that also brought us Fen-phen) appealed on the basis that the FDA’s approval of Phenergan preempted any product liability claims brought under state law. This Supreme Court case will be the bellwether decision in the fight to preserve consumers’ rights to seek redress for injuries caused by dangerous or defective drugs.

Based on the Court’s ruling in Reigel v. Medtronic, this case may be a harbinger of future actions to undermine the power of our civil justice system.

The Fight to Preserve the Civil Justice System

Consumer rights groups, safety advocates, the Alliance for Justice, the American Association for Justice, and dedicated InjuryBoard members have been working tirelessly to raise the visibility of the federal preemption issue and the threat it poses to the civil justice system, not only for current victims of dangerous or defective products, but to ensure the safety of future patients and consumers.

Together with support from legislators on both sides of the aisle, these groups have worked to urge the passage of H.R. 6381, the Medical Device Safety Act of 2008, which will enable Congress to restore the powers of the civil justice system by amending the Federal Food, Drug and Cosmetic Act with respect to liability for harm under State and local law.

InjuryBoard urges you to learn more about the wide-reaching implications of federal preemption of state law. If you believe in that the federal government should not extend Complete Corporate Immunity to private industry through preemption, please ask your congressional representatives to support the Medical Device Safety Act of 2008.