Symens v. SmithKline Beecham Corp., s. 98-1055

• Decision Date: 27 August 1998
• Docket Number: Nos. 98-1055,98-1056,s. 98-1055
• Citation: 152 F.3d 1050
• Parties: Prod.Liab.Rep. (CCH) P 15,330 Richard SYMENS; Joyce Symens, Plaintiffs--Appellees, v. SMITHKLINE BEECHAM CORPORATION, Defendant--Appellant. Ivan SJOVALL, Plaintiff--Appellee, v. SMITHKLINE BEECHAM CORPORATION, Defendant--Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1050

152 F.3d 1050

Prod.Liab.Rep. (CCH) P 15,330

Richard SYMENS; Joyce Symens, Plaintiffs--Appellees, v. SMITHKLINE BEECHAM CORPORATION, Defendant--Appellant.

Ivan SJOVALL, Plaintiff--Appellee, v. SMITHKLINE BEECHAM CORPORATION, Defendant--Appellant.

Nos. 98-1055, 98-1056.

United States Court of Appeals Eighth Circuit.

Submitted June 8, 1998.

Decided Aug. 27, 1998.

Scott A. Smith, Minneapolis, MN, argued (Patrick A. Reinken and Duana J. Grage, Minneapolis, MN, and William F. Day, Jr. and R. Alan Peterson, Sioux Falls, SD, on the brief), for defendant-appellant.

James A. Davis, Fremont, NE, argued (Michael Dowd, Omaha, NE, and Danny R. Smeins, Britton, SD, on the brief), for plaintiffs-appellees.

Before LOKEN, GODBOLD, ^* and HEANEY, Circuit Judges.

LOKEN, Circuit Judge.

In the last half of 1992, cattle feedlot operators Richard and Joyce Symens and Ivan Sjovall vaccinated their cattle with "BoviShield 4" and "Ultrabac-7/Somubac," vaccines manufactured by SmithKline Beecham Corporation (SBC). They commenced these diversity actions, alleging that the cattle "contracted debilitating and mortal infections and diseases" from the vaccines, and asserting South Dakota common law claims for strict liability, breach of implied warranties, false advertising, failure to warn, and fraud on the licensing agency. SBC moved for summary judgment, arguing that plaintiffs' claims are preempted by the Virus-Serum-Toxin Act (VSTA), 21 U.S.C. §§ 151-59. The district court denied the motion and certified the issue for interlocutory appeal under 28 U.S.C. § 1292(b). We reverse in part and remand.

VSTA authorizes the United States Department of Agriculture (USDA) to license and regulate the preparation and sale of "viruses, serums, toxins, and analogous products, for use in the treatment of domestic animals." 21 U.S.C. § 154. USDA has delegated this authority to its Animal and Plant Health Inspection Service (APHIS). See 9 C.F.R. § 101.2. APHIS in turn has "promulgated an extensive regulatory scheme governing the design, manufacture, distribution, testing, and labeling of animal vaccines." Lynnbrook Farms v. SmithKline Beecham Corp., 79 F.3d 620, 624 (7th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 178, 136 L.Ed.2d 118 (1996), citing 9 C.F.R. §§ 101-24.

APHIS licenses all animal vaccines and vaccine manufacturers. See 9 C.F.R. §§ 102.1, 102.2. The application for an animal vaccine license must include an"Outline of Production" that details the vaccine's composition, manufacture, preparation, testing, and packaging. See 9 C.F.R. §§ 102.3(b)(2)(i), 114.8-.9. The regulations detail ingredient requirements, such as the types of cell lines that must be used to produce biologics. See 9 C.F.R. §§ 113.50-.55. APHIS-mandated testing procedures ensure the "purity, safety, potency, and efficacy" of the vaccine. See 9 C.F.R. §§ 102.3(b)(2)(ii), 113.25-.55, 113.64-.332. APHIS approves all product labels and package inserts; even minor changes in label size and color must be resubmitted for review and approval. See 9 C.F.R. §§ 101.4, 112.5. Packaging must contain instructions, warnings, the license number, and prescribed storage temperatures. See 9 C.F.R. § 112.2(a). Once approved, the Outline of Production may not be changed without resubmission to APHIS. See 9 C.F.R. § 114.8(d). Before marketing, the manufacturer must test a licensed vaccine to ensure that it is "pure, safe, potent, and efficacious." 9 C.F.R. § 113.5. Any serial (lot) that does not pass the prescribed premarket tests may not be sold. See 9 C.F.R. § 113.6(b). The manufacturer must forward samples of each serial and subserial to APHIS. See 9 C.F.R. § 113.3. APHIS may test the product for "purity, safety, potency, or efficacy" before it is marketed. See 9 C.F.R. § 113.6(a).

BoviShield 4 and Ultrabac-7/Somubac are APHIS-licensed vaccines. SBC's records reflect that each serial of the vaccines administered to plaintiffs' cattle was tested by SBC before release. The test results were "satisfactory," and those results were reviewed by APHIS. After the Symens's cattle sickened, they complained to APHIS. The agency tested two BoviShield 4 serials and concluded they met purity standards and were not contaminated.

The Preemption Question.

Under the Supremacy Clause of the Constitution, federal legislation may preempt state law. Congress may express an intent to preempt in the federal statute. An intent to preempt may also be implied, for example, when federal and state laws directly conflict, when state law stands as an obstacle to accomplishing the purposes of federal law, or when federal law is so pervasive that it reflects an intent to occupy a regulatory field. See Heart of Am. Grain Inspection Serv., Inc. v. Missouri Dep't of Agric., 123 F.3d 1098, 1103 (8th Cir.1997). Congress may also delegate the preemption question--expressly or by implication--to the agency it authorizes to administer or enforce a federal statute. When agency preemption is at issue, the inquiry focuses on whether the agency intended to preempt state law and whether it had the statutory authority to do so. See City of New York v. F.C.C., 486 U.S. 57, 63-64, 108 S.Ct. 1637, 100 L.Ed.2d 48 (1988). This appeal raises an issue of agency preemption. VSTA does not expressly address the preemption question, but it delegates broad powers to APHIS, and the agency has expressed a clear intent to preempt inconsistent state "requirements." We must consider whether APHIS has the power to preempt, and if so, whether it has preempted all or part of plaintiffs' common law claims.

A. Is There VSTA Preemption?

Prior to 1985, VSTA did not clearly apply to intrastate vaccines. Congress amended VSTA in the Food Security Act of 1985. See Pub.L. No. 99-198, Title XVII, § 1768, 99 Stat. 1654-56. The 1985 amendments authorized USDA to license and regulate intrastate vaccines, broadened the Secretary's authority to issue regulations "to carry out" the Act, and granted the agency enhanced enforcement powers. See 21 U.S.C. §§ 151, 154, 159. The legislative history observed that "[t]he need for uniform national standards has become recognized widely in recent years." H.R.Rep. No. 99-271, pt. 2, at 339, reprinted in 1985-3 U.S.C.C.A.N. 1660, 2005.

In 1990, APHIS proposed to modify its regulations to clarify that licensees must comply with state regulation "based on local disease conditions." See 55 Fed.Reg. 42,392 (1990), proposing to amend 9 C.F.R. § 102.5(d)(2). In promulgating the final rule, APHIS responded to comments that States should have broader authority:

Seven commentators indicated that States should have the authority to add to Federal restrictions, as appropriate.... APHIS, however, does not agree.... The legislative history relating to the 1985 amendments ... clearly expresses Congressional intent that Federal regulation of veterinary biologics is needed to prevent and eliminate burdens on commerce and that there is a need for uniform national standards regarding these products. Therefore, States are not free to impose requirements which are different from, or in addition to, those imposed by USDA regarding the safety, efficacy, potency, or purity of a product. Similarly, labeling requirements which are different from or in addition to those in the regulations under the Act may not be imposed by the States. Such additional or different requirements would thwart the Congressional intent regarding uniform national standards, and would usurp USDA's authority to determine which biologics are pure, safe, potent, and efficacious.

APHIS, Final Rule Pertaining to Restrictions Which May Be Imposed by States on

the Distribution and Use of Veterinary Biological Products, 57 Fed.Reg. 38,758, 38,759 (1992) (emphasis added).

Despite this clear expression of intent to preempt state law requirements, the district court concluded that APHIS has no statutory authority to preempt. We disagree. The Commerce Clause grants Congress power to preempt state regulation of animal vaccines. While an intent to preempt state law will not lightly be implied from an ambiguous statute, see, e.g., Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 146-47, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963), the question whether Congress intended to authorize a federal agency to preempt is reviewed somewhat differently:

[M]any of the responsibilities conferred on federal agencies involve a broad grant of authority to reconcile conflicting policies. Where this is true, the Court has cautioned that even in the area of pre-emption, if the agency's choice to pre-empt "represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned."

City of New York, 486 U.S. at 64, 108 S.Ct. 1637, quoting United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 6 L.Ed.2d 908 (1961); see also Fidelity Federal Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 154, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). The 1985 VSTA amendments granted USDA authority to license intrastate vaccines, enhanced the agency's enforcement powers, and broadened its authority to issue implementing regulations. The legislative history noted the "truly national markets for the live animals and their products" and the "need for uniform national standards." 1985-3 U.S.C.C.A.N. at 2005. In these circumstances, we agree with the Seventh Circuit "that APHIS acted rationally and within the scope of the authority granted to it by Congress in issuing the above statement seeking to preempt state law." Lynnbrook Farms, 79 F.3d at 625; accord Murphy v. SmithKline Beecham Animal Health Group, 898 F.Supp. 811, 815-17 (D.Kan.1995); Brandt v. Marshall Animal Clinic, 540 N.W.2d 870, 874-76 (Minn.Ct.App.1995).

Whether state laws that add to federal regulatory requirements are inconsistent...