WASHINGTON — Federal pre-emption — a widely used and often effective defense by big business against state tort lawsuits — will be a much harder argument to win because of a recent U.S. Supreme Court ruling, and not just in suits against the pharmaceutical industry, but in a broad swath of suits involving regulated industries — from railroad cars to pesticides to consumer products, according to plaintiffs’ and defense attorneys.

And remember those pre-emption provisions inserted by a number of federal agencies into preambles to federal regulations during the final years of the Bush administration? If the agency failed to give notice and an opportunity for public comment on the pre-emption proposal, federal courts likely will be under no obligation to give them any deference — another impact of the Supreme Court ruling.

“This is a sea shift,” said plaintiffs’ counsel Sol Weiss, a shareholder at Philadelphia’s Anapol Schwartz. “Pre-emption as a defense is going to be much more difficult without express written language in the congressional act.”

“Every regulatory program is different and you’re always dealing with a different statute, so it’s a little difficult to try to draw conclusions from one industry to another,” said Richard Samp of the pro-business Washington Legal Foundation. “But to the extent you can draw any conclusions, this does seem to be a shift.”

For the pharmaceutical industry, however, defense lawyer Will Sachse, a partner in the Philadelphia office of Dechert, said, “One things that is clear is this is not the end of pre-emption. Really this is a case where the court rejected a broad argument that mere approval of a drug necessarily means all state law tort claims are pre-empted. Drug companies will probably continue to raise pre-emption defenses in those cases where the record supports such a defense.”

“The court has not given up on the guiding principles on which we relied,” said Bert Rein, name partner in Washington’s Wiley Rein, counsel to Wyeth. “The court recognizes there are situations in which a company may find it impossible to comply with both state and federal requirements, but the court said, `You haven’t shown it here.’ Going forward, the question is: How does one provide that, how does one interact with the [regulatory] agency to establish that?”

The high court on March 4 ruled, 6-3, in an opinion by Justice John Paul Stevens, that the federal drug labeling law governing warnings about the administration and effects of drugs does not pre-empt state failure-to-warn claims. Wyeth v. Levine, No. 06-1249.

Diana Levine had brought a state-law damages suit against Wyeth alleging that the drug company had failed to provide an adequate warning about the significant risks of administering an anti-nausea drug by the IV-push method. After a clinician administered the drug by that method — which is to inject the drug into the vein — the drug entered Levine’s artery. She developed gangrene, and doctors amputated her arm. A jury found that the label’s warning was inadequate and awarded damages to Levine. The Vermont
Supreme Court affirmed.

The majority rejected Wyeth’s argument that it was impossible for it to comply both with the state-law duties underlying Levine’s claim and its federal labeling duties.

Although a drug manufacturer generally may change a label only after the FDA approves a new application, Stevens said there was a federal regulation that would have allowed Wyeth to strengthen its warning label pre-approval by the Food and Drug Administration (FDA) approval. Wyeth, he said, could have strengthened the warning after it became aware of a number of amputations caused by maladministration of the drug.

The majority said Wyeth’s “cramped reading” of that regulation and its “broad reading” of other federal labeling requirements were based on a “fundamental misunderstanding” that the FDA, not the manufacturer, bears primary responsibility for drug labeling.

The court also rejected Wyeth’s arguments that making it comply with state law here would interfere with Congress’ purpose of entrusting labeling decisions to an expert agency. Stevens analyzed the lengthy history of the Food, Drug and Cosmetic Act and concluded that the history shows that Congress did not intend to pre-empt state failure-to-warn actions, and in, fact, Congress, and until recently, the FDA, saw state law remedies as consistent with the federal regulatory scheme.

Wyeth also relied on pre-emption language inserted into the preamble of a 2006 regulation by the FDA. Stevens said that language conflicted with what the agency said in first proposing the regulation in 2000 — that it would not pre-empt state actions — and it was adopted without notice or opportunity for public comment — making it inherently suspect.

He ultimately concluded that the FDA’s recently position was entitled to no weight. Justice Samuel A. Alito Jr. wrote a dissenting opinion joined by Chief Justice John G. Roberts Jr. and Justice Antonin Scalia. He said the case was an example of tragic facts making bad law. He wrote that the FDA’s 40-year long effort to regulate the safety and efficacy of phenergan compelled the conclusion that Levine’s state tort suit is pre-empted.

Implied pre-emption is used as a defense by business in a broader category of cases than express pre-emption, said Jeffrey White of the Center for Constitutional Litigation, which filed an amicus brief supporting Levine on behalf of the trial lawyers’ American Association of Justice. “I do think conservative courts have been abusing the notion to get rid of state tort claims where they really didn’t threaten the federal scheme,” he said. “I’m hoping Justice Stevens has ended it.”

If Stevens hasn’t ended it, he has made the defense much more difficult, said the Washington Legal Foundation’s Samp.

“I believe this is going to have an impact on all implied pre-emption cases,” said Samp. “I would have thought prior to today’s decision, if a defendant could show the requirements imposed by a state were different from those imposed by the federal government, one would naturally infer that was a conflict and the state’s requirements were pre-empted. The court seemed to be suggesting today there has to be something more affirmative.”

The decision, he added, seems to be adopting a stricter “impossibility” defense by businesses. “You can’t assume simply because a state tells a company to do something different from what it is told by the federal government that that is pre-emption.”

Elizabeth Wydra, an attorney with the Constitutional Accountability Center, which supported Levine in the case, noted that the Wyeth decision, combined with the court’s earlier pre-emption ruling this term in Altria Group v. Good, No. 07-562, indicates that there is now a majority unwilling to pre-empt state law absent a clear mandate in the applicable federal law.

“I think it’s an important development in the trend to cut back on implied pre-emption doctrine,” she said. And the Wyeth majority’s rejection of the pre-emption provision in the FDA regulation’s preamble, she added, is a “pointed rejection of the Bush administration’s attempt to pre-empt state law through regulatory tricks.”

Anapol’s Weiss also suggested that, going forward, federal agencies will face closer scrutiny by the Supreme Court when they attempt to pre-empt state actions through regulations, as happened here.

“If the agencies don’t have full evidentiary hearings with public comment — which is key — state courts are going to be able to hear and decide cases in areas under the common law of the states,” he said.

Bijan Esfandiari of Los Angeles’ Baum, Hedlund, Aristel & Goldman, who authored an amicus brief supporting Levine, agreed, noting that the pre-emption issue came to a head during the Bush administration. Pre-emption provisions, he said, were inserted in regulations primarily involving the FDA and the Department of Transportation.

With respect to the FDA, he added, “For a period of eight years, we had mixed decisions in district courts about what is pre-empted, and a lot of courts went with what the FDA said. The Supreme Court said this contradicts the intent of Congress and the whole purpose of the FDA. Going forward, the court is going to look to the intent of Congress and not care what the federal agency thinks the law should be.”

Pre-emption scholar Catherine Sharkey of New York University School of Law said the decision changes the focus of implied pre-emption cases to greater scrutiny of an agency’s record and away from deference.

In the end, the Washington Legal Foundation’s Samp said that the Wyeth case was “as good a case as a drug company could have” for pre-emption.

“The plaintiff had no case on the merits, but a lot of sympathetic facts,” he insisted. “If Wyeth couldn’t win here, I’m not sure where they can win.”