U.S. Supreme Court foils Perdue’s ‘business-friendly’ idea?
March 4, 2009 at 7:19 pm by Thomas Wheatley in News
In January, Gov. Sonny Perdue told a banquet room filled with business folk that he had a grand plan to make Georgia more attractive for biotech companies.
The plan: He’d direct his floor leaders to introduce legislation that would grant legal immunity to drug companies whose products were approved by the U.S. Food and Drug Administration.
Wrench, meet plans. The U.S. Supreme Court today ruled the FDA’s stamp of approval doesn’t exempt drug companies from product-negligence lawsuits.
In one of the most important business cases in years, the Supreme Court on Wednesday ruled that a drug company is not protected from injury claims in state court merely because the federal government had approved the product and its labeling.
The 6-to-3 ruling went in favor of a Vermont musician, Diana Levine, who was awarded more than $6 million after losing much of her arm following a botched injection of an anti-nausea drug. It was a defeat for the Wyeth pharmaceutical company, which had asked the justices to throw out the award, and by extension other companies that might have pursued Wyeth’s line of argument in similar cases.
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The key issue before the justices was whether the Food and Drug Administration’s approval of drug labels should pre-empt lawsuits in state courts contending, as Ms. Levine’s did, that the labels did not contain adequate warnings.
UPDATE: Johnny Legal points out in the comments that Perdue could still pursue his plan. After the jump, another opinion from an anonymous friend familiar with legalese.
As to your blog post…I just want to clarify that this SCOUTS decision does not prevent Georgia or any other state from passing legislation essentially granting immunity from tort lawsuits. (However, this decision might open up such legislation, were it to be enacted, to various constitutional and legal challenges.) I could explain this in detail, but the gist is that individual states can sometimes grant certain protections to their corporations that federal law does not recognize, as long as it does not impede another individual or entity’s constitutional rights. Sonny could still try to pass his immunity and it would only apply here in Georgia courts to claims brought under Georgia law, with the rest of the country still having such lawsuits proceed. Other states have done this with other industries, though there is no evidence that these sorts of statutes actually attract businesses to the state–the justification Perdue gave for the proposal.
(Photo by Joeff Davis)
March 4th, 2009 at 10:12 pm
Not quite right.
The Wyeth v. Levine decision is about preemption of state law product liability claims by federal law. Today, the court held that in the case of pharmaceuticals product liability lawsuits under state law are not preempted (with a few exceptions).
What Governor Perdue is suggesting is that Georgia law be changed to prohibit pharmaceutical product liability actions under state law. Any potential litigant would be forced to sue a Georgia based pharmaceutical company in federal court, which is typically more defendant friendly.
March 4th, 2009 at 10:18 pm
cont. from above
Today’s ruling has absolutely no effect on the ability of states to change their laws to prohibit product liability lawsuits against pharmaceutical companies who had their products approved by the FDA, or for that matter to eliminate product liability suits altogether
March 4th, 2009 at 11:32 pm
You the man, Johnny Legal.
March 5th, 2009 at 12:32 pm
“Any potential litigant would be forced to sue a Georgia based pharmaceutical company in federal court, which is typically more defendant friendly.”
Not quite, its not the federal court itself that’s important, but rather federal question jurisdiction, a legal action based on federal law. Yes, that usually means federal court, but state courts can hear federal question suits as well (in either place, federal and not state law would apply).
Federal courts also hear diversity jurisdiction cases– when citizens of different state are involved in a lawsuit worth over $75,000, the case can be removed from state court to federal court. However, in Erie Railroad Co. v. Tompkins (1938) the Supreme Court held that in diversity cases, the federal court would apply state law to decide the case. So a federal court, in that situation, would have to apply Georgia law after all.
March 5th, 2009 at 2:20 pm
Fun with law students!
The immunity Perdue proposes would be for pharmaceutical manufacturers that are Georgia resident corporations. So, there would be no diversity of citizenship if a Georgia corporation were sued in Georgia state or federal court. Since there is almost never a federal question presented in a products liabliity lawsuit(now that preemption is gone), there would be no basis to either remove the case to federal court or to file it in a Georgia federal court to begin with. If such a case were to end up in a Georgia federal court, however, as Callahan noted the court would still be applying Georgia state products liability law so the statute would still apply.
March 5th, 2009 at 6:58 pm
Also note, that Wyeth v. Levine does not totally eliminate the preemption argument. There is still a good argument for preemption if a drug co. were to go to the FDA, argue for strengthing a drug label, have the label change rejected by the FDA, and then be sued for an injury related to whatever the label change request was for. In such a case, preemption would probably still apply. See Slip Op. @ 15.