Back in the early days of the blog, when it was a Bexis/Herrmann operation, we wrote about the California Supreme Court decision that opened the floodgates to all that food litigation that now plagues that state − Farm Raised Salmon Cases, 175 P.3d 1170 (Cal. 2008). We explained how the court In Farm Raised Salmon, created a roundabout way for California state-court plaintiffs to enforce the food provisions of the FDCA:
What it’s wound up with, with respect to food violation claims, is rather Rube Goldbergian . . .: (1) the FDCA allows state “little FDCA statutes” that incorporate identical food rules, but doesn’t otherwise authorize state-law (much less, private) enforcement; (2) California enacted a little FDCA statute, the Sherman Act, but that didn’t allow private enforcement either, (3) later, California enacted consumer protection statutes that did allow private enforcement, but did not specifically address food, so (4) California courts decided to incorporate globally into the consumer protection statutes any number of other statutes (such as the Sherman Act on food) that did not themselves contemplate private enforcement.
So, in California, “the Sherman Law incorporates all food labeling regulations . . . adopted pursuant to the FDCA.” 175 P.3d at 1175 (citation and quotation marks omitted). In turn, the “unlawful prong” of the California UCL (“unfair competition law”) incorporates the “provisions of the Sherman” Act. Id. at 1173-74.
As we discussed in the prior post, while 21 U.S.C. §337(a) is “clear evidence that Congress intended that the [FDCA] be enforced exclusively by the Federal Government,” Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341, 352 (2001), California got around that using the “negative implication” of the food-specific 21 U.S.C. §343-1(a) allowing establishment of “identical state requirements. 175 P.3d at 1175.
Note – unlike §337(a), §343-1(a) did not address private enforcement, only actions by a “State or political subdivision of a State.”
After that, it being California, it was off to the races.
But should it be?
As we are fond of telling our readers, Buckman was unanimous in its preemption holding. Well, another unanimous Supreme Court decision might just have something to say about the California food fight.
In Astra USA, Inc. v. Santa Clara County, California, 563 U.S. 110 (2011), the Court unanimously held that another federal statute that precluded private enforcement could not be evaded by a supposed “common law” that simply incorporated the federal requirements wholesale.
Astra involved a California County – a Medicaid “covered entity” – trying to get into the act of enforcing Medicaid “ceilings on prices drug manufacturers may charge.” Id. at 113. The plaintiff “conceded that Congress authorized no private right of action under [the Medicaid Act] for covered entities who claim” they were overcharged. Id. That’s the same as the FDCA.
But the Supreme Court takes private rights of action more seriously than the California Supreme Court did in Farm Raised Salmon.
[C]overed entities have no right of action under [the statute] itself. Recognition of any private right of action for violating a federal statute . . . must ultimately rest on congressional intent to provide a private remedy. Congress vested authority to oversee compliance with the [Medicaid] Program in HHS and assigned no auxiliary enforcement role to covered entities.
Id. at 117 (citations and quotation marks omitted).
So the plaintiff county claimed that, oh no, it was not asserting a statutory claim, but only a cause of action for third-party beneficiary contract, based on form Pharmaceutical Pricing Agreements (“PPAs”) that it conveniently interpreted as mirroring all of the federal requirements that Congress had precluded private parties from enforcing directly. Id. at 117-18. The Court wasn’t buying that end run around the private enforcement ban.
First, statutory provisions forbidding private enforcement cannot be evaded by elevating form over substance. Just as the plaintiff county, and other covered entities, “ had no right to sue for overcharges under the statute itself,” it was “incompatible with the statutory regime” to allow them to sue “to enforce ceiling-price contracts running between drug manufacturers and the Secretary.” Id. at 113.
Congress placed the Secretary . . . in control of [the Medicaid statute’s] drug-price prescriptions. That control could not be maintained were potentially thousands of covered entities permitted to bring suits alleging errors in manufacturers’ price calculations. If [covered] entities may not sue under the statute, it would make scant sense to allow them to sue on a form contract implementing the statute, setting out terms identical to those contained in the statute. Though labeled differently, suits to enforce [the statute] and suits to enforce PPAs are in substance one and the same. Their treatment, therefore, must be the same, no matter the clothing in which [covered entities] dress their claims.
Id. at 114 (citations and quotation marks omitted) (emphasis added).
The PPAs merely “incorporate statutory obligations” and “contain no negotiable terms.” Id. at 118.
A third-party suit to enforce an HHS-drug manufacturer agreement, therefore, is in essence a suit to enforce the statute itself. The absence of a private right to enforce the statutory ceiling-price obligations would be rendered meaningless if [covered] entities could overcome that obstacle by suing to enforce the contract’s ceiling-price obligations instead. The statutory and contractual obligations, in short, are one and the same.
Id. at 118 (emphasis added). We see no difference between what the unanimous Supreme Court thereby forbade in Astra and the dodge allowed in Farm Raised Salmon.
Second, in Astra the court below had found this jerry-rigged form of private enforcement, once removed, “compatible” with statutory obligations because it “would spread the enforcement burden instead of placing it entirely on the government.” Id. at 119 (quotation marks from reversed decision omitted). The Supreme Court disagreed, because that was not what Congress had provided. Rather, “spreading the enforcement burden . . . is hardly what Congress contemplated when it centralized enforcement in the government.” Id. (citation and quotation marks omitted).
Nor could criticisms of federal “oversight” change the result. Unless and until Congress amended the Medicaid statute, it conferred no enforceable rights on covered entities to sue over alleged overcharges themselves.
Congress did not respond to the reports of inadequate [federal] enforcement by inviting [covered] entities to launch lawsuits in district courts across the country. Instead, . . . Congress directed [the regulatory agency] to create a formal dispute resolution procedure, institute refund and civil penalty systems, and perform audits of manufacturers.
Id. at 121 (citation omitted).
We note that, nowhere in the Astra opinion does the word “preemption” appear, except in footnote 5. There, the Court expressly “t[ook] no position on this issue.” Id. at 120 n.5. Thus, Astra was decided solely on the plaintiff attempting private enforcement having no enforceable interest, which seems akin to standing, although that word wasn’t used either. That’s fine with us, since we’ve argued previously that the no-private-right-of-action language in §337(a) can also be enforced as a limitation on standing.
The usurpation of FDCA enforcement by private plaintiffs in California based on Farm Raised Salmon seems to us to be no different in substance, just a little more complicated, than the similar usurpation that the Supreme Court unanimously struck down in Astra. In both situations, non-governmental plaintiffs seek to enforce “identical” federal standards under some other guise notwithstanding the statute’s express ban on private enforcement. We don’t see “negative implication” from an FDCA provision expressly limited to “states” and “subdivisions” of states as any more persuasive than the third-party-beneficiary rationale that persuaded nobody in Astra.
In preemption cases, when the Supreme Court drops “we’re not deciding” footnotes like the one in Astra reserving issues, plaintiffs flock to them. But the pro-preemption footnote in Astra?
For some reason, perhaps due to the difficulty of teeing up this defense in nominally “state law” litigation, we haven’t seen any cases making the analogy that we draw in this post. Astra is now ten years old, and only one case has cited it in an FDCA context. That was a footnote in City & County of San Francisco v. Purdue Pharma L.P., 491 F. Supp.3d 610 (N.D. Cal. 2020), stating only:
Nor does Astra USA, Inc. v. Santa Clara County, . . . which did not deal with state law claims that exist separately and independently of the subject federal statute.
Id. at 665 (footnote appended to “Buckman does not apply”). So we’re not even exactly sure what argument CCSF apparently rejected.
In the past decade, Astra seems to have sunk out of sight. At least, we weren’t aware of it until recently, when we ran across it by accident. We invite our defense-minded colleagues to give Astra another look.