Sharkey on Preemption

Catherine Sharkey (NYU) has just posted an article on SSRN titled “The Fraud Caveat to Agency Preemption.”  The article, which looks very interesting and timely, can be downloaded here.  Here is the abstract

The “fraud caveat” is ubiquitous in keydebates on the regulatory role of tort law: Even the most ardentsupporters of either the state-based regulatory compliance defense totort claims against product manufacturers, or the more powerfulwholesale federal preemption of state tort law by administrativeregulations, concede that fraud changes the equation. Statelegislatures that have adopted regulatory compliance provisionsimmunizing prescription drug manufacturers whose drugs were approved bythe FDA from liability for damages (either entirely or just forpunitive damages) have, without exception, included the fraud caveat.And courts interpreting these immunity statutes echo the caveat mantra.The fraud caveat remains an undertheorized but highly revealing andconsequential aspect of regulatory preemption debates.

InWarner-Lambert Co. LLC v. Kent (No.06-1498), the U.S. Supreme Court ispoised to answer the question whether Buckman Co. v. Plaintiffs’ LegalCommittee preempts statutory fraud exceptions to drug manufacturerimmunity statutes. The question raises a narrow doctrinal issue, butone that hits a raw federalism nerve, with correspondingly widereverberations in products liability preemption jurisprudence. Asatisfactory resolution of the doctrinal issue – relying upon the FDAto police fraud in the first instance, but enlisting private litigantson the remedial and enforcement end – provides the seeds of a moregeneralizable model of agency-court cooperation for the regulation ofnationally regulated products, such as medical devices andpharmaceuticals. This institutional approach gives primacy to theagency to decide, in the first instance, the extent to which state lawrequirements would encroach upon its regulatory scheme, but reservesroom for private litigant enforcement of federally determined standards.

ADL