Argument Preview

Six years ago, in Buckman v. Plaintiffs' Legal Committee, the Supreme Court held that the federal Food, Drug, and Cosmetic Act ("FDCA") impliedly preempted state-law claims alleging that the manufacturer of orthopedic bone screws made fraudulent representations to the Food and Drug Administration ("FDA"). On February 25, 2008, the Court will seek to clarify the scope of Buckman when it hears argument in No. 06-1498, Warner-Lambert Co. v. Kent, which presents the question whether federal law preempts state law to the extent that state law requires a trier of fact to determine whether a drug manufacturer committed fraud on the FDA and whether "“ but for that fraud "“ the FDA would have denied or withdrawn approval of a drug.

Background

Michigan law generally bars product liability and negligence actions against a drug manufacturer for a drug the FDA approved. This safe harbor does not apply, however, if two conditions are met: (1) the manufacturer intentionally withheld from or misrepresented to the FDA information that it was required to submit under the FDCA; and (2) if the manufacturer had properly submitted the information, the FDA would not have approved the drug or would have withdrawn its approval.The respondents "“ all Michigan citizens "“ filed suit in Michigan state court, alleging that they were injured by Rezulin, a diabetes drug approved by the FDA but later withdrawn from the market by Warner-Lambert. The case was removed to federal district court in Michigan and then subsequently transferred to the Southern District of New York by the Judicial Panel on Multidistrict Litigation. Warner-Lambert moved for judgment on the pleadings, arguing that under Buckman the claims were impliedly preempted, and the district court agreed. On appeal, the Second Circuit reversed. It held that Buckman applied only to claims based solely on fraud and did not extend to statutes, such as the Michigan one at issue here, in which the fraud on the FDA was merely part of the exception to a product liability claim rather than an element of the claim.

Petition for Certiorari

Warner-Lambert petitioned for certiorari. It warned the Court that the Second Circuit's decision not only conflicted with the Court's decision in Buckman, but also "threaten[ed] to upset the basic understanding of preemption law that has informed this Court's decisions since Rice v. Santa Fe Elevator Corp." in 1947. Certiorari was also warranted, the petition argued, because the courts of appeals were divided on the issue: in contrast with the Second Circuit's narrow reading of Buckman, three other circuits have adopted a more "functional" approach that deems state law preempted if it requires a plaintiff to establish fraud on a federal agency. Finally, Warner-Lambert asserted that if the Second Circuit's decision were allowed to stand, it would interfere with the FDA's "ability to perform its critical functions, which is precisely what this Court sought to avoid in Buckman."

Opposing certiorari, respondents argued that the effect of the Second Circuit's decision was much more limited than Warner-Lambert would have the Court believe: it applies only to cases brought in the Second Circuit under Michigan law and in which the plaintiffs can prevail on their contention that fraud was committed during the FDA approval process. Moreover, respondents emphasized, the Michigan legislature was considering a repeal of the product liability statute. In any event, they explained, the burdens on the FDA from the law were in fact minimal "“ because the FDA can simply decline to allow its employees to testify in any court proceedings "“ and there is no conflict with Buckman, which "“ in contrast to the state tort law scheme at issue here "“ did not implicate the presumption against preemption because it involved only the use of state law to police fraud.

Merits Briefing

Petitioners argue that Buckman mandates a finding that the Michigan law in question is preempted. They claim the Michigan provision impermissibly requires the trier of fact to speculate as to whether a drug manufacturer had a federal duty to disclose particular information, whether it then violated its disclosure duty, and finally whether "“ but for the misinformation "“ the FDA would have approved the drug. These three questions are inevitably federal in nature, and Congress entrusted only the FDA with authority to regulate and police compliance with FDA disclosure requirements. Petitioners argue that because this state law competes with the FDA's ability to regulate, it is preempted.

The petitioners also suggest that Michigan's law, should it stand, would lead to several undesirable practical consequences. First, it would upset the FDA's ability to determine whether there has been fraud and if so, what the consequences of the fraud should be. Second, complying with possibly inconsistent state laws would overly burden drug manufacturers, who already face difficulty complying with technical FDA regulations. Third, it would disrupt drug manufacturers' relationships with the FDA and alter manufacturers' incentives regarding what information to submit to the FDA. Fearing state suits, the drug companies would submit too much information to the FDA, compromising the FDA's ability to investigate and approve possibly life-saving drugs.

Petitioners also argue that the distinctions the Second Circuit drew between this case and Buckman are immaterial. Petitioners suggest that the Court find Michigan's exception preempted, reverse the Second Circuit's opinion, and reinstate the district court's opinion, thereby allowing petitioners to benefit from Michigan's safe harbor protections.

Respondents argue that the Michigan statute at issue does not police conduct before the FDA. Instead, it addresses duties of care owed by manufacturers to Michigan consumers, a traditional concern of state tort law. Because the state is merely exercising this historic authority, it is entitled to a presumption against preemption.

Further, respondents argue, Buckman does not apply because fraud on the FDA is not an element of their claims; instead, they merely seek damages under traditional state tort law. Respondents contend that states commonly look to compliance with federal law, in cases ranging from negligence per se to criminal actions. In this respect, Michigan's law is unremarkable and not preempted. Respondents further suggest that the exception's third requirement, that the FDA would have acted differently with correct information, does not police conduct before the FDA, but instead merely relates to the state's decision to withhold the safe harbor defense and subject manufacturers to the same tort principles that they face in other states without such a safe harbor.

Finally, respondents argue, even if the Court determines that federal law preempts the exception to the safe harbor, the Court should remand the case to the Second Circuit so that it can consider the statute's severability "“ viz., whether, if the exception to the safe harbor defense is preempted, the safe harbor defense itself is necessarily preempted.

The United States submitted an amicus brief supporting petitioners in which it argued that the Michigan law should be preempted under Buckman because it requires as a predicate to liability a finding that petitioners committed fraud on the FDA and that the FDA would have reacted differently but for that fraud. The United States argued that it was immaterial whether fraud on the FDA was an element of respondents' tort claims or rather negated a defense under tort law. In either case, it upsets the FDA's ability to regulate drugs as Congress intended and forces FDA's personnel into state court battles. Because the concerns underlying Buckman apply forcefully here, federal law preempts the Michigan provision.

Petitioners also received amicus support from the Product Liability Advisory Council, the General Pharmaceutical Association, the U.S. Chamber of Commerce, the Washington Legal Foundation, and the Pharmaceutical Research and Manufacturers of America.

Posted in Warner-Lambert v. Kent, Everything Else