Supreme Court: Federal law might not shield companies from state lawsuits

The Supreme Court ruled this week that a woman who lost her arm because of the way medication was administered could sue Wyeth (WYE) in state court.

This may not seem like a big story, but companies try to shield themselves from negligence lawsuits filed in state courts if their product meets standards set by federal agencies, through laws and regulations. While the Bush Administration tried to help their cause and pushed to shield industries from negligence lawsuits brought in state courts, the Supreme Court ruled loud and clear in a six-to-three ruling yesterday -- don't count on our help.

In the past three rulings on the issue of federal law versus state tort law, the Supreme Court has ruled once in favor of the manufacturer of medical devices (Riegel v. Medtronic (MDT), February 2008) that federal medical device regulations preempted state product liability lawsuits and twice in favor of allowing cases to be tried based on state product liability law (Altria Group, Inc. (MO) v. Good, December 2008, and Wyeth (WYE) v. Levine, March, 2009).

Essentially, going forward the Supreme Court has made it clear that whether or not federal law preempts state law will be decided on a case by case basis, depending on the interpretation of the federal statute involved.

Either In a direct slap to recently implemented Bush Administration policies, Justice Stevens writes in the majority decision, "Congress has repeatedly declined to pre-empt state law and the FDA's recently adopted position that state tort suits interfere with its statutory mandate is entitled to no weight." Stevens does leave the door open to possible conflicts by writing, "Although we recognize that some state-law claims might well frustrate the achievement of congressional objectives, this is not such a case." You can read the full decision at FindLaw.com.

Justice Alito supported the Bush Administration policies and wrote for the three justices in dissent, "The FDA told Wyeth that Phenergan's label renders its use 'safe.' But the State of Vermont, through its tort law, said: 'Not so.' The state-law rule at issue here is squarely pre-empted. Therefore, I would reverse the judgment of the Supreme Court of Vermont." The other two Bush appointees that joined Justice Alito were Chief Justice Roberts and Justice Scalia.

The majority disagreed with the dissent and wrote that, "Wyeth suggests that the FDA, rather than the manufacturer, bears responsibility for drug labeling...it has remained a central premise of federal drug regulation that the manufacturer bears responsibility for the content of its labels. It is charged both with crafting an adequate label and with ensuring that its warnings remain adequate as long as the drug is on the market."

Just to give you a quick synopsis of the Wyeth v. Levine lawsuit, a women sued Wyeth in Vermont state court after the incorrect administration of a drug caused her to develop gangrene in her arm. Her arm had to be amputated. She argued that the warnings on the label from Wyeth did not adequately address the risks of administering the drug intravenously.

This ruling could impact more than just the drug industry. While companies have long sought to shield themselves from state product liability law, and they made some headway with the support of the Bush Administration, the Supreme Court just made if very clear that it will look at cases individually. A company won't necessarily get a free pass to avoid costly state product liability lawsuits under the protection of federal laws and regulations.

Lita Epstein has written more than 25 books, including the Complete Idiot's Guide to the Supreme Court.


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