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Thursday, February 21, 2008, 3:35 PM

"Preemption, Preemption, Preemption" Says The Supreme Court

As previously mentioned in this blog, there are several high profile preemption cases pending before the Supreme Court this term. Yesterday, the Supreme Court decided three of them -- all in favor of federal preemption of state laws.

In Rowe v. New Hampshire Motor Transport Association, the Court held that Maine's Tobacco Delivery Law (which required carriers to verify that the recipients of tobacco shipments were not minors) was preempted by the Federal Aviation Administration Authorization Act (which prohibits states from regulating prices, routes or services of shipping companies).

In Preston v. Ferrer, the Court held that the Federal Arbitration Act preempted a California law that required an administrative hearing prior to arbitration.

And in Riegel v. Medtronic, the Court found that the Medical Devices Amendment (MDA) preempted state common law tort claims that would impose different or additional requirements than those approved by the FDA.

The following is an excerpt from Womble Carlyle Client Alert explaining the significance of the Riegel decision:
The United States Supreme Court, in Riegel v. Medtronic, sided with the
majority of the federal circuit courts today, holding that federal law
regulating medical devices preempts common law tort actions that would impose
different or additional requirements than those approved by the federal Food and
Drug Administration (“FDA”). This ruling puts to rest a long running dispute
over whether there is federal preemption for medical device product liability
lawsuits, but may have opened the way for an even longer dispute on the scope of
that preemption.


Justice Scalia, who delivered the opinion of the Court, broadly confirmed
federal preemption for any state law requirements different from or additional
to those imposed by the FDA on approved medical devices. The Court specifically
declined to adopt a more narrow view (once espoused by the FDA but now
abandoned) that the statute only preempted requirements specific to medical
devices, not requirements of general applicability to all types of products. The
Court’s opinion even suggests that preemption might extend to unfair trade
practice or UCC-based claims, which the FDA had previously declined to say were
preempted. Only one Justice, Justice Ruth Bader Ginsberg disagreed and in her
dissenting opinion accused the majority of "a radical curtailment of state
common-law lawsuits seeking compensation for injuries caused by defectively
designed or labeled medical devices" that was never intended by the Congress.

The opinion leaves open many questions about the scope of federal
preemption of state law claims for FDA-approved medical devices and will likely
be the subject of much debate and litigation.

These case will likely have an impact on preemption analysis far beyond medical devices, tobacco sales, and arbitration. Several preemption cases remain to be decided this term.

Tuesday, February 12, 2008, 1:04 PM

Unintended Consequences Of Leegin: No Antitrust Exemption For Baseball?

FTC Commissioner Pamela Jones Harbour wrote an interesting article about the collateral fallout of the Supreme Court's decision in Leegin. As explained here and (in more depth) here, the Leegin Court held that minimum vertical price fixing is not per se illegal, thus reversing the long-standing decision in Dr. Miles.

Commissioner Jones Harbour suggests Leegin may have the following unintended consequences:
First, Leegin potentially revitalizes the state action and Twenty-First
Amendment defenses to price fixing that had been rejected in the Midcal case;
and second, Leegin seems to remove any foundation for Justice Holmes's
exemption of major league baseball from the reach of the antitrust laws.

The Commissioner's first point is that in Midcal the Supreme Court balanced competing state and federal interests. In this particular case, the Court determined that California's interests in producer-controlled vertical minimum price fixing was less substantial than the federal policy of per se prohibition of vertical minimum price fixing. Commissioner Jones Harbour suggests that this balancing test might tip in the other direction now that there is no federal per se rule against vertical minimum price fixing:

When balancing federal verses state sovereign interests, the balance
materially shifts in favor of the states when the rule of reason, rather than a
per se standard, is applied. As state regulators and the industries they
regulate begin to appreciate the implications of Leegin, we may see a new round
of state action and constitutional issues percolating up to the Court.

The Commissioner's second point is that, given the Leegin Court's "loose regard" for stare decisis and its willingness to discard outdated antitrust cases, baseball's antitrust exemption may be the next case to be overruled. In the 1992 decision Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, Justice Holmes famously found professional baseball games to be "purely state affairs" not within the jurisdictional of the Sherman Act. Since then the Court's jurisprudence has changed such that, if decided today, the Court would not exempt professional baseball from federal antitrust laws. Although the Court has criticized the baseball exemption and called it an "aberration," the Court has twice reaffirmed Federal Baseball based on stare decisis -- leaving the issue to Congress.

(Coincidentally, lawmakers have argued that the baseball antitrust exemption gives them the right to meddle in the game and, for example, hold hearings on steroid use in baseball).

Commissioner Jones Harbour believes that Leegin may portend a successful assault on the baseball exemption: "If the Court has as loose a regard for the reliance interests of baseball club owners as it had for discount merchant investors in Leegin, stare decisis should not constrain the Court."

Although there is much to debate, both of these points are very interesting. I suspect the second issue is more likely to materialize than the first. Litigants who want to avoid outdated (but still binding) precedent will surely use Leegin to support their arguments.

Thursday, February 07, 2008, 4:19 PM

Regulatory Preemption And The Supreme Court

There was an interesting article (State, Federal Powers Collide) in the Wall Street Journal last week about federal agencies enacting new rules that preempt state law. The article explained: "These new initiatives, largely applauded by business interests, affect products including drugs, autos and passenger railcars." Generally speaking, companies prefer a single federal standard to a "patchwork" of differing state guidelines. Additionally, federal preemption can be a defense against state law tort claims.

The article references the following federal agency actions:

--An effort by the EPA to block California and other states from regulating carbon-dioxide emissions.

--A decision by the Consumer Product Safety Commission that its rules on mattress flammability preempt state laws.

--A rule by the FDA regarding warning labels on drugs.

--A Federal Railroad Administration rule that would strengthen safety standards for commuter trains and includes language that preempts efforts by states.

The article failed to mention the preemption issue surrounding the federal Do-Not-Call registry, which I wrote about here.

The article also notes that "the[se] regulatory moves may be trumped by the Supreme Court, which is set to rule on a series of cases related to preemption in the next year or two."

Presumably, the article is referring to Reigel v. Medtronic, Wyeth v. Levine, and Phillip Morris v. Good. The Supreme Court heard oral argument in Reigel on December 4, 2007. This issue is whether the Medical Devices Act preempts state tort claims involving PMA devices. In Wyeth, the Supreme Court is reviewing a Vermont Supreme Court decision involving preemption of state law failure-to-warn claims for prescription drugs. And Phillip Morris involves the interaction of federal and state laws governing the labeling and advertising of cigarettes.

Over the last several years, the Supreme Court heard and decided many important antitrust cases (which were discussed and followed on this blog). Perhaps this will be a big year for preemption jurisprudence.

Wednesday, February 06, 2008, 10:24 AM

Do Not Call Improvement Act

Identical versions of the Do Not Call Improvement Act have passed both the House (H.R. 3541) and Senate (S. 2096). The Act eliminates the need for consumers to re-register their numbers on the Do Not Call registry. When the Do Not Call program was first established in 2003, consumers could list their phone numbers for a five-year period after which they were required to re-register. In October, the FTC suspended the deletion of expired numbers pending Congressional action.

To read about a tricky preemption issue involving the Telephone Consumer Protection Act and the Do Not Call program, click here.
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