November 9, 2010
The question of federal preemption of state products liability causes of action arises frequently because preemption can be a complete defense to state tort liability. In the arena of prescription drugs, the U.S. Supreme Court, in Wyeth v. Levine, 129 S. Ct. 1187 (2009), held that a state products liability lawsuit was not preempted by the Federal Food, Drug, and Cosmetic Act ("FDCA") on the theory that under the Act, the Food and Drug Administration ("FDA") approves and controls the content of prescription drug labeling. Part of the Court's reasoning was that throughout its history, the FDCA has required drug manufacturers to remain responsible for the contents of their labels at all times. Accordingly, pursuant to the FDCA, a drug manufacturer must both create an adequate label and ensure that the warnings remain adequate for as long as a drug is on the market. The Court found no conflict between these federal requirements and state tort law that imposes a stronger warning requirement.
While the absence of federal preemption may thus assist a products liability plaintiff in maintaining an affirmative claim against a drug manufacturer, in an interesting twist, the court in Yocham v. Novartis Pharm. Corp., Civ. No. 07-1810 (JBS/AMD), 2010 WL 3502670 (D.N.J. Aug. 31, 2010), recently addressed the issue of whether a state statute providing a defense to liability in failure-to-warn cases against drug manufacturers, specifically an exception to the defense, was preempted by the FDCA. The court held that it was not and, on that basis, denied in part the defendant manufacturer's motion for summary judgment.
At the threshold, the Yocham court was tasked with determining which state's law would apply to the plaintiff's claims. Both the law of New Jersey and that of Texas were potentially applicable. The court noted that there was an actual conflict between the law of these two states because, while both New Jersey and Texas have statutes codifying a presumption that a warning approved by the FDA is adequate, in Texas the methods by which the presumption can be overcome are enumerated in the statute, while in New Jersey they are not.
In the case at hand, the sole method by which the presumption of an adequate warning could be overcome under the Texas statute was by showing that the manufacturer withheld from or misrepresented to the FDA required information that was material and relevant to the performance of the product. In addition, the Texas statute does not permit a design defect claim for prescription drugs with otherwise adequate warnings, while, in New Jersey, common-law breach of implied warranty and fraud claims is subsumed within the Products Liability Act, which creates a single, statutory cause of action for such claims. Applying the New Jersey governmental interest test, the court held that the law of Texas governed the plaintiff's claims.
The defendant manufacturer argued that under Texas law, it was entitled to the statutory defense based upon the FDA's approval of its warnings, without the exception applicable when the FDA has been misled. As the basis for its assertion that it was protected by the favorable portion of the statute without the unfavorable exception, the manufacturer argued that the exception was preempted by federal law.
The court held that a tort based exclusively on fraud against the FDA is preempted by federal law but that the exception in the Texas statute is not. The court began its analysis by noting that the Supreme Court, in Buckman v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), had held that a state cause of action for injuries caused by misrepresentations made to the FDA is impliedly preempted by the FDCA because permitting such a state cause of action would interfere with the federal scheme of regulation. The Yocham court observed that the federal courts of appeals are split over whether the "middle case"—a traditional tort that is not exclusively based on fraud against the FDA but requires proof of such fraud as part of the tort—is preempted. Addressing the presumption against federal preemption, the court held that such a "middle case" and the Texas statute were not preempted.
The court noted that the finding of preemption in Buckman was based upon the fact that the state was not regulating in a field which states have traditionally occupied by providing for a fraud on the FDA tort. Here, by contrast, Texas imposes a duty to warn only when the injury is likely to result from the manufacturer's failure to warn, a more limited liability distinct from that in which any insufficient or incorrect information is furnished to the FDA. According to the court, the Texas statute does not regulate a drug manufacturer's interaction with the FDA but defers to FDA findings in all but exceptional circumstances in order to narrow the manufacturer's traditional tort duties. In a "stand alone" fraud on the FDA claim, the only conduct being regulated is a manufacturer's interaction with the FDA—in which a state has no traditional interest—while, when a state decides that it will defer to the FDA's findings that coincide with findings related to an overlapping but preexisting common-law duty, the matter falls at least somewhat within the sphere of traditional state interests.
This distinction between "stand alone" fraud on the FDA claims and a state statute setting forth a traditional tort with an exception to an affirmative defense affects both the applicability of the presumption against preemption, which requires at least some state interest in order to apply, and the extent of a state law's conflict with the scheme of federal regulation. According to the court, the risk that drug manufacturers will avoid submitting drugs for approval because they might be found liable for violating reporting requirements and the related risk that manufacturers will overwhelm the FDA with information for those drugs that they do choose to submit are substantially diminished when state law also requires the violation of an independent and narrower state duty to warn.
Yocham thus exemplifies the distinction in a preemption analysis between a fraud on the FDA claim and an exception to an affirmative defense arising from fraud on the FDA. In making this distinction, the Yocham court's analysis draws from many of the important, and often subtle, components of federal preemption jurisprudence in the environment of prescription drug litigation.