467 F.3d 85 (2nd Cir. 2006), 05-1705, Desiano v. Warner-Lambert & Co.

Docket Nº:05-1705-cv(L), 05-1743-cv(CON), 05-1745-cv(CON).
Citation:467 F.3d 85
Party Name:Caesar DESIANO et al., Plaintiffs-Appellants, v. WARNER-LAMBERT & CO., et al, Defendants-Appellees.
Case Date:October 05, 2006
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 85

467 F.3d 85 (2nd Cir. 2006)

Caesar DESIANO et al., Plaintiffs-Appellants,


WARNER-LAMBERT & CO., et al, Defendants-Appellees.

Nos. 05-1705-cv(L), 05-1743-cv(CON), 05-1745-cv(CON).

United States Court of Appeals, Second Circuit

October 5, 2006

Argued: November 8, 2005

Page 86

David B. Rodes, Goldberg, Persky & White, P.C., Pittsburg, PA (Vincent J. Carter, Girardi Keese, Los Angeles, CA; David R. Parker, Charfoos & Christensen, PC, Detroit, MI; Jerome D. Goldberg, Varjabedian Attorneys, Southfield, MI, on the brief), for Plaintiffs-Appellants.

David Klingsberg, Kaye Scholer LLP (Wendy S. Dowse, on the brief), New York, NY, for Defendants-Respondents.

Before: FEINBERG, CALABRESI, and B.D. PARKER, Circuit Judges.

CALABRESI, Circuit Judge:

It has long fallen within the province of states to safeguard the health and safety of their citizens. See Medtronic v. Lohr, 518 U.S. 470, 475, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). Consonant with the "historic primacy of state regulation" of these matters, see Medtronic, 518 U.S. at 485, 116 S.Ct. 2240, the power of states to govern in this field is considerable and undisputed. See Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) ("The States traditionally have had great latitude under their police powers to legislate as 'to the protection of the lives, limbs, health, comfort, and quiet of all persons.' " (quoting Slaughter-House Cases,, 83 U.S. 36, 16 Wall. 36, 62, 21 L.Ed. 394 (1873); Thorpe v. Rutland & Burlington R. Co., 27 Vt. 140, 149 (1855)). Historically, common law liability has formed the bedrock of state regulation, and common law tort claims have been described as "a critical component of the States' traditional ability to protect the health and safety of their citizens." Cipollone v. Liggett Group, Inc., 505 U.S. 504, 544, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (Blackmun, J., concurring in part and dissenting in part). In recent years, some states, in exercising their traditional authority with respect to the pharmaceutical industry, have narrowed common law liability in order to insulate drug companies from burdensome litigation. See generally david G. Owen, Special Defenses in Modern Products Liability Law, 70 Mo. L. Rev. 1, 22-23 (2005). The case before us concerns a supposed conflict between federal law and the products liability regime of one such state.

In 1995, the State of Michigan enacted legislation immunizing drugmakers from products liability claims so long as the

Page 87

Food and Drug Administration ("FDA") approved the pharmaceutical product at issue. See mich. Comp. Laws § 600.2946(5) (hereinafter "M.C.L. § 2946(5)"). Michigan's immunity scheme contains an exception that preserves liability if the pharmaceutical company withheld or misrepresented information that would have altered the FDA's decision to approve the drug. In 2001, in a case dealing with different legal rules and a different jurisdiction, the Supreme Court held that state "fraud-on-the-FDA" claims were impliedly preempted by federal law. Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 348, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001). The question presented by this appeal is whether, under the rationale of Buckman, federal law also preempts traditional common law claims that survive a state's legislative narrowing of common law liability through a fraud exception to that statutory limitation. For the reasons below, we conclude that federal law does not preempt these state claims. We therefore vacate the District Court's grant of judgment on the pleadings and remand the case for further proceedings consistent with this opinion.


A. Michigan's Immunity Statute

Prior to its amendment in 1995, Michigan's products liability statute provided that "evidence showing compliance with governmental or industry standards was a dmissible in a products liability action in determining if the standard of care had been met." Taylor v. Smithkline Beecham Corp., 468 Mich. 1, 658 N.W.2d 127, 130 (Mich. 2003). In describing the pre-amendment law, the Supreme Court of Michigan emphasized the limits on the probative value of this sort of evidence of compliance:

We note that our Legislature has recently enacted a statute which provides that industrial and governmental standards are admissible in products liability actions [citing earlier version of M.C.L. § 600.2946]. The statute does not provide that such standards are conclusive. [We affirm the position] that compliance with governmental and industrial standards is admissible as evidence but is not conclusive as to whether the defendant was negligent or the product was defective.

Owens v. Allis-Chalmers Corp., 414 Mich. 413, 326 N.W.2d 372, 375-76 (1982).

In 1995, Michigan's legislature amended the law in order to confer immunity upon drugmakers in product liability suits where the FDA had approved the drug in question. See Taylor, 658 N.W.2d at 130 ("The 1995 amendment of the statute . . . provided that compliance with federal governmental standards (established by the FDA) is conclusive on the issue of due care for drugs.").

The relevant provision states:

In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States food and drug administration, and the drug and its labeling were in compliance with the United States food and drug administration's approval at the time the drug left the control of the manufacturer or seller.

M.C.L. § 2946(5). In addition to several qualifications not relevant to the case before us, 1 the immunity provision contains an important exception:

Page 88

This subsection does not apply if the defendant at any time before the event that allegedly caused the injury does any of the following:

(a) Intentionally withholds from or misrepresents to the United States food and drug administration information concerning the drug that is required to be submitted under the federal food, drug, and cosmetic act and the drug would not have been approved, or the United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted.

M.C.L. § 2946(5)(a) (internal citations omitted). Hence, under these provisions, so long as a drug company did not withhold or misrepresent information that would have affected the FDA's approval of a putatively harmful drug, the company can successfully defend itself against products liability litigation by establishing that its product received the FDA's approval and complied with the FDA's labeling and substantive requirements.

B. Procedural History

Appellants in this case are all Michigan residents alleging injuries caused by Rezulin, a drug marketed and sold by Appellees for the treatment of Type-2 diabetes. The FDA originally approved Rezulin in 1997. After adverse liver-related effects were documented in patients taking Rezulin, Appellees agreed to a series of label changes, which were authorized by the FDA on four occasions between November 1997 and June 1999. In March 2000, apparently at the FDA's request, see Desiano v. Warner-Lambert Co., 326 F.3d 339, 344 (2d Cir. 2003), Appellees withdrew Rezulin from the United States market.

The instant litigation began in state courts in Michigan and California. Appellants asserted various common law claims including, inter alia, breach of implied and express warranties, negligence, negligent misrepresentation, negligence per se, fraud, defective design, defective manufacturing, and loss of consortium. The drug companies removed the actions to federal court, and all of the claims were subsequently consolidated and transferred by the Judicial Panel on Multidistrict Litigation to Judge Lewis A. Kaplan in the Southern District of New York.

In the District Court, Appellees moved for judgment on the pleadings on the ground that liability was foreclosed under Michigan state law. To support their motion, Appellees emphasized Buckman and the Sixth Circuit's decision in Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004), which held (on the basis of Buckman) that the "fraud" exception in Michigan's statute was impliedly preempted by two federal laws — the Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. § 301, et seq., and the Medical Device Act ("MDA"), 21 U.S.C. §§ 360e(b)(1)(A)-(B) — and therefore had to be severed from the rest of the Michigan law.

The District Court agreed with Appellees, concluding that the immunity exception should be severed because under the reasoning of Buckman, it was preempted by federal law.2 The court gave two reasons

Page 89

for its decision. First, the District Court believed that, although it was not "absolutely bound" by Garcia, the Sixth Circuit's reasoning was owed "quite substantial deference" under Factors Etc., Inc. v. Pro Arts, Inc., 652 F.2d 278 (2d Cir. 1981), a decision by a panel of this circuit which stated that conclusive deference should be given to a federal court of appeals' interpretation of the law of a state within its circuit. Second, "apart from Factors," the District Court reasoned that "[i]f plaintiffs covered by the Michigan statute were able to litigate claims of fraud on the FDA in individual personal injury suits, whether in state courts or in federal courts, the potential would exist for the FDA's personnel to be drawn into those controversies on a case-by-case basis over and over again." Concluding that this would generate "a wholly impractical situation," the court held "that the exception in the Michigan statute is preempted, except where the plaintiff relies on a...

To continue reading