Ever since the Supreme Court granted certiorari in Warner Lambert v. Kent the other day, we’ve been thinking about what’s at stake. We’ve seen the case described by Bloomberg as a “chance to extend a victory [defendants] won in 2001, when the Supreme Court said patients can’t sue companies for defrauding the U.S. Food and Drug Administration during the approval process.” We disagree with that because we don’t see Kent as in any way an “extension” of Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001) – but rather a chance to keep the plaintiffs from reducing the Buckman decision to a meaningless formality.
Rather, the chief opportunity we see for defendants is that the Supreme Court might finally address how the “presumption against preemption” applies – if at all – in a situation involving implied conflict preemption.
To understand what’s at issue in Kent first requires review of what was decided in Buckman itself. The first thing that must be said about Buckman is that the Court was unanimous. Not a single justice thought that state courts could hear allegations of “fraud on the FDA.” In Buckman, the Court addressed charges that a defendant had “made fraudulent representations to [the FDA] in the course of obtaining approval” to market a medical device and that “such representations were at least a ‘but for’ cause” of the plaintiffs’ injuries. 531 U.S. at 343. The Court held that such state-law claims were preempted because states may not reexamine federal regulatory decisions. The claims that Buckman held preempted alleged that a medical device manufacturer – assisted by the defendant in the case (Pamela Buckman was an FDA regulatory consultant) – withheld from the FDA the actual indication for which the defendant intended to market a product. That allegedly constituted a misrepresentation of the product’s “intended use” on the approval application. Id. at 347.
All nine justices in Buckman said “no go.” What the plaintiffs claimed was that FDA approval was fraudulently obtained and thus state-law juries could ignore it. More broadly, state-law claims challenging the adequacy and veracity of submissions to the FDA failed the test of federal conflict (implied – not express) preemption for several reasons:
- “Policing fraud against federal agencies” is not a “traditional” state function. Id.
- Existing federal law “amply empowers the FDA to punish and deter fraud.” Id. at 348.
- State fraud-on-the-FDA claims would “skew” the Agency’s “balance of statutory objectives.” Id.
- Exposing applicants to “unpredictable civil liability” would “discourage” submission of “potentially beneficial” products. Id. at 350.
- Fraud-on-the-FDA claims would create “an incentive to submit a deluge of information that [FDA] neither wants nor needs, resulting in additional [administrative] burdens.” Id. at 351.
- “Congress intended that the [Act] be enforced exclusively by the Federal Government.” Id. at 352 (citing 21 U.S.C. §337(a)).
The Court’s preemption conclusion was thus driven by concern over numerous practical effects of state-law litigation of claims questioning the veracity of grounds for FDA decisions would have on the FDA. Could state juries, in effect, ignore FDA decisions that they concluded were fraudulently induced – even where the FDA itself had reached no such conclusion?
The first of the Court’s points – about states not having any “traditional” role in preventing federal agencies from being defrauded – was key to another part of the Buckman decision. For the same reason, the Court held that there could be no presumption against preemption in Buckman:
Policing fraud against federal agencies is hardly a field which the States have traditionally occupied, such as to warrant a presumption against finding federal pre-emption of a state-law cause of action. To the contrary, the relationship between a federal agency and the entity it regulates is inherently federal in character. . . . Here, petitioner’s dealings with the FDA were prompted by the MDA, and the very subject matter of petitioner’s statements were dictated by that statute’s provisions. Accordingly-and in contrast to situations implicating federalism concerns and the historic primacy of state regulation of matters of health and safety, no presumption against pre-emption obtains in this case.
Id. at 347-48 (emphasis added). Note that it was the nature of the defendant’s alleged “dealings” with the federal agency – not the nature or elements of any cause of action being asserted – that caused the Court in Buckman to reject any presumption against preemption.
Plaintiffs tried the same tack again on the merits, and once again the Court rejected all contentions that state-law-based allegations attacking the adequacy and honesty of FDA submissions were only “traditional,” unpreempted “violation” claims. 531 U.S. at 352-53. The court observed that, without the FDCA requiring submissions to the FDA, there could be no basis for any fraud claim at all. Id. Thus, “existence of these federal enactments is a critical element in [plaintiffs’] case,” and “this sort of litigation would exert an extraneous pull on the scheme established by Congress, and  is therefore pre-empted.” Id. at 353.
Again, the focus of the Court was not on how the fraud on the FDA claim was framed but on whether, substantively, the allegations of agency fraud were a “critical element” in the plaintiff’s “case.” The Supreme Court in Buckman looked at the substance of the claim, not its form.
Two justices in Buckman were willing to allow a little leeway for state tort law to prosecute fraud claims grounded in submissions to federal agencies – but only after the agency itself definitively concluded that it was defrauded and concluded that the fraud was serious enough to require a product recall:
This would be a different case if, prior to the instant litigation, the FDA had determined that petitioner had committed fraud. . .and had then taken the necessary steps to remove the harm-causing product from the market. Under those circumstances, respondent’s state-law fraud claim would not depend upon speculation as to the FDA’s behavior in a counterfactual situation. . .[and] a plaintiff would be able to establish causation without second-guessing the FDA’s decisionmaking or overburdening its personnel. . . . If the FDA determines both that fraud has occurred and that such fraud requires the removal of a product from the market, state damages remedies would not encroach upon, but rather would supplement and facilitate, the federal enforcement scheme.
531 U.S. at 354 (emphasis added). This was a two-justice concurrence. That means that the seven other justices were unwilling to sanction a state-court fraud-on-the-FDA action even where the FDA had found fraud and pulled the offending product from the market.
Given the Court’s unanimity and the breadth of its holding, for years Buckman was read to prohibit any state-law fraud allegations against any federal agency. E.g., Nathan Kimmel, Inc. v. DowElanco, 275 F.3d 1199, 1204-06 (9th Cir. 2002) (fraud on the EPA preempted). Agency fraud claims were held preempted even if “disguised” as something else. Cupek v. Medtronic, Inc., 405 F.3d 421, 424 (6th Cir. 2005); Baker v. St. Jude Medical, S.C., Inc., 178 S.W.3d 127, 138-39 (Tex. App. 2005) (“common-law cause of action for fraud” preempted as “essentially a ‘fraud-on-the-FDA’ claim”); Alfred v. Mentor Corp., 2007 WL 708631, at *7 (W.D. Ky. Mar. 5, 2007) (fraud claim “construed” as fraud on the FDA preempted). “[P]laintiffs cannot bootstrap their arguments regarding defendant’s failure to report and investigate adverse incidents to the FDA into a defective warning case.” Webster v. Pacesetter, Inc., 259 F. Supp.2d 27, 36 (D.D.C. 2003).
After Buckman, there was never any serious dispute that its rationale extended to prescription drugs as well as medical devices. Both, after all, are regulated by the FDA. E.g., Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961, 963-64 (6th Cir. 2004); Flynn v. American Home Products Corp., 627 N.W.2d 342, 349 (Minn. App. 2001); Weiss v. Fujisawa Pharmaceutical Co., 464 F. Supp.2d 666, 675 (E.D. Ky. 2006); Kobar v. Novartis Corp., 378 F. Supp.2d 1166, 1172-73 (D. Ariz. 2005); Dusek v. Pfizer, Inc., 2004 WL 2191804, *4 & n.4 (S.D. Tex. Feb. 20, 2004); Ledbetter v. Merck & Co., slip op. at 10, 2007 WL 1181991 (Tex. Dist. Harris Co. Apr. 20, 2007).
The real Buckman battleground turned out to be those states (about eight of them to date) that have product liability tort reform statutes concerning prescription medical products that include exceptions based upon fraud on the FDA. Indeed, plaintiffs’ counsel in Buckman told one of us, shortly after we’d won that case, that we “would be sorry” because plaintiffs would use Buckman to attack these state statutes. Two states, Michigan and (later) Texas, apply the exception to a presumption of non-defectiveness based upon FDA compliance. So does the federal Vaccine Act. The other states (Arizona, New Jersey, Ohio, Oregon, North Dakota, and Utah) use fraud on the FDA as an exception to compliance-based bars on punitive damages. We’ve discussed these before, here, and here.
Plaintiffs were as good as their word – but for a number of years they enjoyed little success. The first target was Michigan, whose tort reform statute was the most restrictive. In Garcia, 385 F.3d at 963-64, the Sixth Circuit analyzed Michigan’s fraud on the FDA exception to an otherwise conclusive presumption of non-defectiveness based upon FDA compliance. Id. at 964 (citing Mich. Comp. Laws §600.2946(5)(a) & (b)).
Garcia concluded that “Buckman teaches that state tort remedies requiring proof of fraud committed against the FDA are foreclosed since federal law preempts such claims.” 385 F.3d at 966. Since the practical effects of allowing state-law litigation of this exception were indistinguishable from Buckman, “[t]his difference, [between an exception and a cause of action] however, is immaterial in light of Buckman.” Garcia, 385 F.3d at 965-66. In either case, “a plaintiff asks a state court to find bribery or fraud on the FDA,” id. at 967, and plaintiff can only go forward “on the basis of state court findings of fraud on the FDA.” Id. at 966 (emphasis original). Since the mode of proof was identical, “[s]uch a state court proceeding would raise the same inter-branch-meddling concerns that animated Buckman.” Id. at 966.
Actually, the Sixth Circuit was conservative in its holding. Like the two concurring justices in Buckman, it recognized that “the same concerns do not arise when the FDA itself determines that a fraud has been committed” and thus, should the FDA find fraud, the state statutory exception would not be preempted. Garcia, 385 F.3d at 966 (emphasis original).
Just as the original threat by plaintiffs’ counsel in Buckman had indicated, the plaintiffs in Garcia were not interested in proving fraud, but rather sought to use Buckman to argue that the entire Michigan statute should be held unconstitutional as incapable of being severed from the plainly invalid fraud-on-the-FDA exception. In that, as well, they failed in Garcia. See 385 F.3d at 966-67 (finding statute severable, given purpose of legislature to reduce liability exposure of manufacturers of FDA-approved products). See also Taylor v. Smithkline Beecham Corp., 658 N.W.2d 127, 136 (Mich. 2003) (also rejecting constitutional challenge – delegation – to Michigan statute).
To this day, other courts applying Michigan mostly find all fraud-on-the-FDA-related claims preempted. Duronio v. Merck & Co., 2006 WL 1628516, at *5 (Mich. App. June 13, 2006); Zammit v. Shire US, Inc., 415 F. Supp.2d 760 (E.D. Mich. 2006); Henderson v. Merck & Co., 2005 WL 2600220, at *7 (E.D. Pa. Oct. 11, 2005), reconsideration denied, 2005 WL 2864752 (E.D. Pa. Oct. 31, 2005). Other courts have adopted the same rationale with respect to other state fraud-on-the-FDA exceptions. In re Aredia & Zometa Products Liability Litigation, 2007 WL 649266, at *8-9 (M.D. Tenn. Feb. 27, 2007) (New Jersey punitive damages exception); Kobar, 378 F. Supp.2d at 1172-73 (Arizona punitive damages exception); Ledbetter, slip op. at 8, 2007 WL 1181991 (Texas presumption exception).
This was the state of play when the Court of Appeals in Desiano v. Warner-Lambert & Co., 467 F.3d 85, (2d Cir. 2006) – from which the Kent appeal was taken (Desiano involved identical claims brought by a group of Michigan plaintiffs in a coordinated MDL action; Kent is the name of another plaintiff in that group) – disagreed with Garcia. Desiano held that, because the Michigan statute “d[id] not create a new cause of action for misleading the FDA,” Buckman was inapplicable. 467 F.3d at 92, 98. According to Desiano, the Michigan exception merely preserved “traditional,” “pre-existing” tort causes of action. Because those preserved claims were not an “attempt to police fraud on the FDA,” id. at 94, the court concluded that Buckman did not mandate preemption. 467 F.3d at 94-97.
Desiano looked to the form of the cause of action of action in Buckman. It relied upon the Supreme Court’s factual statement that, in the case before it, the plaintiffs did not “rely on traditional state tort law which had predated the federal enactments in question,” but rather, “the existence of these federal enactments [was] a critical element in their case.” Buckman, 531 U.S. at 353. Desiano, 467 F.3d at 95-96. To support a narrow reading of Buckman, Desiano resorted to Buckman oral argument transcript, id. at 96, rather than rely upon the Buckman opinion itself, to hold that Buckman did not address fraud on the FDA in the context of a case where the plaintiff actually alleged that the product at issue was “defective” – and thus Buckman was not controlling in that situation (which encompasses the vast majority of tort claims. 467 F.3d at 96. Use of an oral argument transcript in this fashion is, shall we say, highly unusual.
Thus, what Desiano did was create a pleader’s exception to Buckman that would inevitably swallow the preemption rule that the Supreme Court laid down in that case. Desiano restricted Buckman preemption only to a cause of action denominated “fraud on the FDA” or something similar, that raised a “newly-concocted duty between a manufacturer and a federal agency.” 467 F.3d at 95. As long as allegations that the FDA was deceived are pleaded as part of some traditional cause of action or exception to a cause of action, then anything goes:
[T]he plaintiffs’ complaints allege a wide range of putative violations of common law duties long-recognized by Michigan’s tort regime. These pre-existing common law claims survive. . .because there is also evidence of fraud in FDA disclosures. But, unlike the claims in Buckman, they are anything but based solely on the wrong of defrauding the FDA. . . .Buckman cannot be read as precluding such preexisting common law liability based on other wrongs, even when such liability survives only because there was also evidence of fraud against the FDA.
467 F.3d at 95 (emphasis added). Further, because the fraud-on-the-FDA statutory exception is an affirmative defense, the defendant can “choose” not to raise it. Id. at 96. Since fraud on the FDA is thus not an “element” of the plaintiff’s claim (even though essential to the survival of the case) it is not preempted under Buckman. Id. The Desiano court’s view that it had merely “traditional” tort claims before it also gave it the excuse to apply the presumption against preemption to the entire case – including the fraud-on-the-FDA exception – in direct opposition to the unanimous Supreme Court’s determination (quoted and discussed above) in Buckman that no such presumption was appropriate where fraud on the FDA was concerned:
First, the presumption against federal preemption of state law obtains in the case before us. . . . In the case before us, instead, the cause of action. . .cannot reasonably be characterized as a state’s attempt to police fraud against the FDA. . . . [The Michigan statute] did not invent new causes of action premised on fraud against the FDA. The object of the legislative scheme was rather to regulate and restrict when victims could continue to recover under preexisting state products liability law.
467 F.3d at 94 (emphasis added).
None of this reasoning ever made much sense to us. Nine justices said that the presumption against preemption doesn’t apply to fraud on the FDA. No amount of sophisticated argument can hide the fact that the Second Circuit presumed just what the Supreme Court held it should not. The Supreme Court raised a litany of practical reasons why fraud on the FDA had to be preempted because of the adverse effects that such claims would have on the ability of the FDA to do its job. Desiano dismissed those practicalities almost contemptuously, claiming (without any empirical data) that fraud on the FDA allegations under the Michigan statute created “no greater. . .incentive” to “deluge” the FDA with superfluous material than the incentive that already “exists” in “any product liability suit brought against a drugmaker.” 467 F.3d at 97. Don’t take our word for it – read what Desiano actually said:
So long as a court or jury is allowed to consider evidence of fraud against the FDA in an ordinary common law tort suit, and so long as juries are likely to react to such evidence, there will be substantial inducements on the pharmaceutical industry to provide the federal agency with just the kind of information that troubled the Buckman and Garcia Courts. Requiring such evidence when a plaintiff seeks to counter a statutory defense from liability would not significantly alter that incentive.
Id. (emphasis added). In other words, everything the FDA said in its amicus briefs in Buckman was wrong – and the unanimous Supreme Court was equally misguided and could not possibly have meant what it said. 467 F.3d at 97 (“[w]e do not believe Buckman meant to go anywhere near so far”).
We hope the Supreme Court will reaffirm that, when it stated that preemption was “inevitable” in this situation, 531 U.S. at 350, it meant it.
Equally fundamental, the practical effect of Desiano’s reasoning would have been to nullify Buckman by making preemption absurdly easy to avoid. Any pleader worth his salt can allege something more than “solely” fraud on the FDA – so any claim not denominated “fraud on the FDA” would survive Buckman preemption. That exalts form over substance – the same allegations, pleaded as a stand-alone cause of action, threaten to skew the “delicate balance of [the FDA’s] statutory objectives,” 531 U.S. at 348, whereas identical allegations, included in as part of some other “traditional” state-law count, would not. Desiano, 467 F.3d at 98 (preemption only when “the cause of action. . . assign[s] liability solely on the basis of fraud against the FDA”). Somehow, we don’t think a unanimous Supreme Court decision should be tossed aside so easily. Rather, we believe take the Buckman Court at its word that, however much a state might regulate a federally regulated company’s interactions with the public, no state can presume to regulate how such companies interact with their federal regulators – such as the FDA.
Nor do we think that the fundamental, inherent conflict between fraud-on-the-FDA allegations and FDA regulatory activity can be glossed over. Fraud-on-the-FDA allegations – however couched – are an invitation (express or implied) for state-law juries to ignore whatever FDA regulatory decisions (be they initial product approvals, labeling decisions, or anything else) they conclude were fraudulently obtained. At least where the FDA has not drawn a similar conclusion, there is an absolute and unavoidable conflict between an in-force FDA administrative action and a state-law-based jury conclusion that this same action was fraudulently induced (and thus can be ignored).
At bottom, the only function of fraud-on-the-FDA allegations, whether brought as a cause of action or something else, is to denigrate the FDA’s regulatory activity in a jury’s eyes. Thus, “[s]tate-law fraud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the Agency’s judgment and objectives.” Buckman, 531 U.S. at 350. Whatever their state-law trappings – as an exception or as a cause of action – the “inevitable” fate of fraud-on-the-FDA assertions should be preemption.
Because Desiano effectively ignored the express language of the statute it construed, conditioning survival of the suit on “intentional” “withhold[ing]” from or “misrepresent[ation]” to the “Food and Drug Administration,” its strained limitation upon Buckman had been criticized well before the Supreme Court granted certiorari.. Whether a particular fraud-on-the-FDA claim is a “cause of action” or an “exception,” it still has the same adverse effects on FDA’s regulatory process:
[We] respectfully disagree with the Second Circuit. . . . [T]he Michigan statute. . .provides drug manufacturers, not with an affirmative defense, but with absolutely immunity. . .absent a showing that the drug manufacturer secured FDA approval through fraud. For the reasons clearly outlined above. . .the FDA itself must make this finding of fraud.
Aredia & Zometa, 2007 WL 649266, at *9 n.17. Distinguishing between non-traditional fraud-on-the-FDA claims and “traditional” suits with a fraud-on-the-FDA predicate “is a distinction without a difference.” Ledbetter, 2007 WL 1181991, slip op. at 8.
So what’s at stake in the Warner Lambert v. Kent appeal? Well, at minimum, the Court is going to have to decide, once again, whether to let the fraud on the FDA genii out of the bottle. It decided unanimously not to allow that
only a few years ago in Buckman, and we are skeptical that it’s going to let the same thing happen by means of a pleading subterfuge here. We expect to see the usual plaintiff criticism of the FDA as they attempt to overturn Buckman, but recent congressional action to strengthen the Agency should go a long way to deflating their argument that state tort law should be allowed to step in instead.
We think Kent goes beyond just a reaffirmation of Buckman, though. We hope the Court will react to how some lower courts have misused the presumption against preemption to try to nullify its preemption decisions. For instance, there’s nothing in Buckman, or any other Supreme Court case that we know of, that construes the presumption against preemption as turning on how a state’s intent in passing a statute (or allowing a common-law tort, for that matter) can be “characterized.” 467 F.3d at 94. As we discussed above, the Court in Buckman looked instead to the practical effects of allowing fraud-on-the-FDA causes of action to proliferate. To us anyway (we’re defense lawyers, after all, and proud of it), it seems like the Second Circuit applied its presumption in direct defiance of the Supreme Court. We hope that the Justices see things the same way.
Indeed, with the presumption against preemption on the table, we can allow ourselves to hope that the Court will also consider whether that presumption should apply at all in conflict case where preemption arises, not by virtue of statutory interpretation, but rather by direct operation of the Supremacy Clause. We’re not going to extend what’s rapidly becoming another of our overly long posts by getting up on that soapbox again. Rather, any reader who wants a detailed discussion of the paucity of Supreme Court precedent for applying the presumption against preemption in conflict preemption can read our inaugural post, here.
We’d also invite the Court to consider the effect of fraud on the FDA claims in the context of those state statutes that use it as an exception to a prohibition against punitive damages where the drug or medical device complies with FDA warnings, design requirements, etc. Punitive damages in a number of ways are even scarier than the compensatory claim at issue in Buckman. Punitive damages can be several times the amount of compensatory damages in a given case. Their only purpose is to punish and deter. Not only that, most jurisdictions prohibit insurance from covering punitive damages. For these reasons, all of the adverse incentives that the Buckman court cited in support of preemption are even more strongly present where claims of fraud on the FDA serve as the only avenue by which a manufacturer can be exposed to punitive damages.
Finally, for reasons we have yet to fathom, Desiano chose to drop a footnote that cast aspersions on the FDA’s 2006 Final Rule endorsing preemption. 467 F.3d at 97 n.9. The Second Circuit apparently received no briefing on that subject, id. (the Final Rule was adopted “[s]ince we heard oral argument in this case”), so that footnote was really a stretch. (For you laypeople, federal courts are not permitted to issue advisory opinions, but can only decide issues properly put before them by the parties). Be that as it may, the footnote exists. Interestingly, Desiano tied its skeptical view of administrative deference expressly to its position that “a presumption against federal preemption does apply.” Id. Perhaps the Supreme Court might view this this footnote as an engraved invite to say something nice about the Final Rule in connection with a favorable ruling overturning the Second Circuit’s expansive view of the presumption against preemption. Ordinarily, we’d expect the Supreme Court to stick to fraud on the FDA, but given that Desiano chose to reach out in this fashion…, well, we’re allowed to hope. Thus, we will be looking with interest at the upcoming briefs of the parties and their amici to see what they might be saying about the Final Rule.