We offer a different take on preemption today. We have discussed on any number of occasions how the FDA’s regulation of drug warnings preempts (or should preempt) state-law tort claims purporting to impose different or additional warnings. But what if the alleged state-law duty is based on a public referendum or statute? Does that make any difference?
It turns out that it makes no difference at all, and it came up recently in a lawsuit under California’s Proposition 65, the notorious voter-enacted law that requires businesses to warn Californians about significant exposures to chemicals that cause cancer or birth defects. See Cal. H&S Code § 25249.5 et seq. Sounds good in concept, but in practice Prop 65 has resulted in boilerplate warnings being posted most everywhere in connection with most everything. We doubt that anyone pays any attention anymore, making it highly questionable whether Prop 65 has advanced public health in any significant way. We have read anecdotal reports of manufacturers reformulating products to remove or reduce chemicals on California’s list, so we guess that’s something. The warning requirement, however, has become a poster child for ineffective and counterproductive over-warning.
One group that pays attention is plaintiffs’ lawyers, who file lawsuits in serial fashion to recover generous statutory penalties from businesses who do not provide Prop 65 warnings. The plaintiffs’ lawyers tried that tack in Center for Environmental Health v. Perrigo Co., 2021 WL 1960333 (Cal. Super. May 7, 2021), where they sued over the alleged presence of N-nitrosodimethylamine—known as NDMA—in certain over-the-counter (or “OTC”) drugs. According to the attorneys, the failure to include a Prop 65 warning in the product labeling and advertising entitled them to substantial remedies, including injunctive relief, penalties, and especially attorneys’ fees.
You can see straightway the problem with this strategy—federal law already regulates drug labeling, which led a California trial court to rule that federal law preempted all of the plaintiff’s claims. We are talking here about implied preemption. The Food Drug and Cosmetic Act does include an express preemption provision for OTC drugs, but that carves out state public initiatives or referendums enacted before September 1, 1997. Prop 65 falls within that carve out. Id. at *3. In fact, Prop 65 is the only state enactment that falls within the carve out, which suggests that California plaintiffs’ lawyers had something to say about the drafting of that particular clause.
So implied preemption it is, and more specifically implied impossibility preemption, under which federal law preempts state law when federal and state requirements conflict in a way that makes it impossible to comply with both. Id. at *4. Prop. 65 has an added feature: The act’s compliance and liability provisions “shall not apply to . . . [a]n exposure for which federal law governs warning in a manner that preempts state authority.” Id. at *3 (quoting Cal. H&S Code § 25249.10(a)). In other words, where federal law preempts Prop 65’s warning mandate, there is no liability of any kind under the act, i.e., Prop 65 itself amplifies the impact of federal preemption. Id.
The court discussed the innovator (or “brand name”) manufacturers first. A defendant can comply with Prop 65 and avoid liability by either providing a warning or ensuring that its products have chemical exposure below the “no significant risk” level. Id. at *2. The FDCA, however, requires that OTC manufacturers provide only those warnings in OTC labeling that the FDA has approved. Id. at *4. The plaintiff argued that the brand name manufacturers could have used the FDA’s Changes Being Effected (or “CBE”) process unilaterally to add a Prop 65 warning, but the CBE process permits adding a warning only for a “clinically significant hazard” for which there is “reasonable evidence of a causal association” with the drug. Id.
This is where implied preemption kicked in. The complaint alleged exposure above the level that mandated a Prop 65 warning, but not a “clinically significant hazard” sufficient to allow a CBE. It was thus impossible for the brand-name manufacturers to comply with both state and federal requirements. Id. at *5. The plaintiff argued that the brand name manufacturers could comply with both state and federal requirements by including the Prop 65 warning in advertising, as opposed to labeling. Id. at *5-*6. The court, however, ruled that a warning mandated by Prop 65 would be a “warning” under the FDCA and would be considered part of the “labeling” whenever transmitted to the person who makes the drug use decision. Id. at *6-*8. In the OTC context, that would be the consumer. Id at *8.
In the final analysis, “advertising” is no longer advertising when it is involuntary in nature. Id. at *9-*10. A mandatory obligation to warn “is more properly categorized as ‘labeling’ . . . [and] [i]f it is ‘labeling,’ then impossibility preemption applies.” Id. at *10. Or, as the trial court also observed, “[T]he federal labeling for OTC drugs is not a labeling ‘floor’ and instead determines the content and the means for transmission [of] warnings about OTC drugs.” Id. at *11. The court allowed leave to amend “if possible” against the brand-name manufacturers, so we will see if the plaintiff can come up with allegations to bridge the preemption gap.
The generic manufacturers also prevailed, but without leave to amend. The difference, of course, is Pliva v. Mensing and the generic manufacturers’ “duty of sameness,” which requires “that the warning labels of a brand-name drug and its generic copy must always be the same.” Id. at *11 (quoting Pliva v. Mensing, 564 U.S. 604, 613 (2011)). Generic manufacturers cannot use the CBE process unilaterally to amend their labeling. Id. Thus, because the generic manufacturers could not use the CBE process to add a Prop 65 warning under any alleged circumstances, federal law preempted state law, and the court denied leave to amend.
The court also dismissed all claims against retailer defendants without leave to amend. Even though retailers are not required to gain FDA approval to sell OTC drugs, any mandated warning—including a Prop 65 warning—is drug “labeling” under the FDCA. Remember the Prop 65 provision stating that the act’s compliance and liability provisions “shall not apply to . . . [a]n exposure for which federal law governs warning in a manner that preempts state authority”? See Cal. H&S Code § 25249.10(a). The provision cut off liability for all defendants, including the retailers. Id. at *13.
This order shows that even attorney-friendly laws like Prop 65 have their limits. The law enacted a warnings-based regime. But regulation of drugs is largely based on warnings, too. When those worlds collide, the federal requirements rule. That was the result here. We have a feeling there is an appeal in the future.