Brandt v. Marshall Animal Clinic, C5-95-1178

• Citation: 540 N.W.2d 870
• Decision Date: 28 November 1995
• Docket Number: No. C5-95-1178,C5-95-1178
• Parties: Prod.Liab.Rep. (CCH) P 14,438 Randy and Patricia BRANDT, husband and wife, Respondents, v. The MARSHALL ANIMAL CLINIC, et al., etc., Respondents, and SmithKline Beecham Corporation, a Pennsylvania corporation, Appellant.
• Court: Court of Appeals of Minnesota

Page 870

540 N.W.2d 870

Prod.Liab.Rep. (CCH) P 14,438

Randy and Patricia BRANDT, husband and wife, Respondents, v. The MARSHALL ANIMAL CLINIC, et al., etc., Respondents, and SmithKline Beecham Corporation, a Pennsylvania corporation, Appellant.

No. C5-95-1178.

Court of Appeals of Minnesota.

Nov. 28, 1995.

Review Denied Feb. 9, 1996.

Syllabus by the Court

State common law claims against a cattle vaccine manufacturer are preempted where the pertinent federal regulatory agency declares that states may not regulate the safety and labeling of animal vaccines, and where the agency's authority derives from a broad Congressional delegation of authority to (a) promulgate rules and regulations needed to carry out the Act in question (b) create a national, uniform system or standard and (c) eliminate undue burdens on commerce.

David R. Marshall, Terri A. Georgen, Fredrikson & Byron, P.A., Minneapolis, James A. Davis, Davis & Associates, P.A., Fremont, for Randy and Patricia Brandt.

John R. Rodenberg, Berens, Rodenberg & O'Connor, New Ulm, for Marshall Animal Clinic, et al., etc.

Scott A. Smith, Janell M. Gabor, Popham, Haik, Schnobrich & Kaufman, Ltd., Minneapolis, for SmithKline Beecham Corporation.

Considered and decided by CRIPPEN, P.J., and LANSING and HARTEN, JJ.

OPINION

CRIPPEN, Judge.

We must determine on this appeal whether federal regulation of the preparation and sale of animal vaccines preempts use by the Minnesota courts of common law remedies otherwise available to farm operators alleging economic loss suffered as a result of defective vaccines. Acknowledging that federal agency authority may preempt state regulation of the preparation and sale of animal vaccines, respondents Randy and Patricia Brandt argue that the agency authority does not preempt state courts from deciding common law liability disputes. The trial court refused a summary judgment motion of appellant SmithKline Beecham Corporation, determining that most of the Brandts' common law claims were not preempted and certifying for appellate review the question of whether respondents state law claims were preempted. We answer the certified question in the affirmative, reversing the trial court and remanding for entry of summary judgment for appellant on respondents' state law claims.

FACTS

In the final version of their complaint, respondents, who own a dairy herd in Lyon County, assert that on two separate occasions in 1989 and 1991 their cattle were vaccinated by a Marshall Animal Clinic veterinarian with animal vaccines manufactured and sold by appellant SmithKline, and that their cattle subsequently became ill, produced less milk, and lost weight. Most of the cattle ultimately died.

Respondents stated separate theories of recovery against SmithKline, including strict liability, defective design, negligence, misrepresentation, fraud in false advertising, fraudulent concealment of known defects, and breach of implied warranties of merchantability and fitness. Each of three vaccines at issue was licensed by the United States Department of Agriculture, a federal regulatory agency, through its Animal and Plant Health Inspection Service, pursuant to the authority delegated by Congress under the Virus-Serum-Toxin Act, 21 U.S.C. §§ 151-159 (1988). ¹

SmithKline's summary judgment motion was presented to the trial court on the ground that the Brandts' state law claims were preempted in their entirety by an express Inspection Service declaration of preemption of state law regarding the safety, efficacy, purity, potency or labeling of the animal vaccines it licenses. Although the trial court denied summary judgment on most claims, the court dismissed with prejudice respondents' "failure to warn" claims. ² The Marshall Animal Clinic joined in the Brandts' opposition to SmithKline's preemption claim.

ISSUE

Does federal law preempt respondents' state law claims for harm to animals purportedly caused by federally licensed animal vaccines?

ANALYSIS

I. Standards of Review

Because the issues before the trial court were solely legal, this court decides the case de novo and need not give deference to the trial court's conclusions. McCarthy & Assoc. v. Jackpot Junction Bingo Hall, 490 N.W.2d 156, 157-158 (Minn.App.1992), review denied (Minn. Nov. 17, 1992) (citing Frost- Benco Elec. Ass'n v. Minnesota Pub. Util. Comm'n, 358 N.W.2d 639, 642 (Minn.1984)).

Where a federal agency expressly construes the statute it administers as a grant of authority to preempt state law, the agency's decision is "subject to judicial review only to determine whether [it] has exceeded [its] statutory authority or acted arbitrarily". Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153-154, 102 S.Ct. 3014, 3022-3023, 73 L.Ed.2d 664 (1982) (citing United States v. Shimer, 367 U.S. 374, 381-382, 81 S.Ct. 1554, 1559-1560, 6 L.Ed.2d 908 (1961)). The sole question before us is whether the Inspection Service exceeded its scope of authority; there are no allegations that the Inspection Service otherwise acted arbitrarily.

II. Preemption Doctrine

The preemption doctrine stems from the Supremacy Clause of the United States Constitution, which provides that the laws of the United States "shall be the supreme Law of the Land; * * * any thing in the Constitution or Laws of any state to the Contrary notwithstanding." U.S. Const., art. VI, cl. 2. The burden of demonstrating preemption rests with the defendant. Silkwood v. Kerr-McGee, Corp., 464 U.S. 238, 255, 104 S.Ct. 615, 625, 78 L.Ed.2d 443 (1984).

According to the preemption doctrine, conflicts between federal and state law are to be resolved in favor of federal law. de la Cuesta, 458 U.S. at 152-153, 102 S.Ct. at 3022. Federal regulations, as well as federal statutes, may give rise to preemption. Hillsborough County Fla. v. Automated Medical Lab., 471 U.S. 707, 713, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714 (1985). A federal agency, therefore, acting within the scope of its congressionally delegated authority, may preempt state law. Louisiana Pub. Serv. Comm'n. v. FCC, 476 U.S. 355, 369, 106 S.Ct. 1890, 1898-1899, 90 L.Ed.2d 369 (1986).

The preemption doctrine is limited by a presumption that Congress did not intend to displace state law. Buzzard v. Roadrunner Trucking, 966 F.2d 777, 780 (3rd Cir.1992) (citing Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2128-2129, 68 L.Ed.2d 576 (1981)). But a regulation's preemptive effect is not dependent on express congressional authorization to displace state law, and in agency preemption cases a narrow focus on congressional intent to preempt is misdirected. de la Cuesta, 458 U.S. at 154, 102 S.Ct. at 3022-3023.

We must engage in a three part analysis to determine whether respondents' claims are preempted by federal law. First, did Congress grant the Inspection Service the authority to preempt state law? Second, if the Inspection Service had the proper scope of authority, did it act to preempt state law? Finally, if the Inspection Service's scope of preemption included state law claims, did it specifically preempt the causes of action asserted by respondents?

III. Scope of Authority

Section 154 of the Virus-Serum-Toxin Act states the authority of the Secretary of Agriculture to "promulgate from time to time such rules and regulations as may be necessary" to prevent preparation or sale of any "worthless, contaminated, dangerous, or harmful" virus, serum or toxin for use in the treatment of domestic animals. 21 U.S.C. § 154 (1988). Section 159 of the Act declares the need to "effectively regulate" and to prevent and eliminate "burdens" on interstate and foreign commerce. Id. at § 159.

The United States Supreme Court has held that congressional grants of authority similar to those contained in this Act confer upon federal agencies the authority to preempt state law. In City of New York, the Court held that Congress's mandate to the Federal Communications Commission that it from time to time "[m]ake such rules and regulations and prescribe such restrictions and conditions * * * as may be necessary to carry out the provisions" of the communications laws authorized the agency to preempt state television quality standards. City of New York v. FCC, 486 U.S. 57, 67, 108 S.Ct. 1637, 1643-1644, 100 L.Ed.2d 48 (1988) (quoting 47 U.S.C. § 303(r)).

In support of its decision, the City of New York Court cited Congress' statement that it intended to "establish a national policy concerning cable communications" and to "minimize unnecessary regulation that would impose an undue economic burden on cable systems." Id., 486 U.S. at 61, 108 S.Ct. at 1640-1641 (quoting 47 U.S.C. §§ 521(1), (6) (1982 ed., Supp. IV). See also de la Cuesta, 458 U.S. at 160, 170, 102 S.Ct. at 3026-3031 (finding preemption authority of the Federal Home Loan Bank Board in laws enabling it "under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation" of savings and loan banks) (quoting 12 U.S.C. § 1464(a)(1) (1976 ed., Supp. IV). The preemptive language at issue in this case is no less broad than the language in City of New York and de la Cuesta.

Respondents assert that Congress intended to preserve state law claims by providing only minimum standards in the Virus-Serum-Toxin Act ³ and by excluding an express preemption provision from the Inspection Service's governing statute. The trial court was persuaded by this argument. As noted above, the Supreme Court has held that authority for agency preemption does not depend on express congressional authorization. City of New York, 486 U.S. at 64, 108 S.Ct. at 1642 (quoting de la Cuesta, 458 U.S. at 154, 102 S.Ct. at 3022-3023). Moreover, if policy objections to preemption are advanced, we find no authority for the proposition that these concerns can be employed to limit the breadth of preemption that is rooted in broad regulatory powers granted by Congress.

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