June 26, 2013

In Bartlett, Supreme Court Holds Plaintiff’s Design-Defect Claim Preempted by Federal Drug Laws

The Supreme Court on Monday reversed the First Circuit decision in the case of Mutual Pharmaceutical Co. v. Bartlett. The case involves the question of whether federal law governing FDA approval of generic drugs preempted the design-defect theory on which the plaintiff won a $21 million jury verdict. In a victory for the generic drug manufacturing industry, the Court, in a 5-4 decision, held that the plaintiff’s design-defect claim was preempted. Notably for all defendants asserting a defense of federal preemption, the Court rejected the theory that a party can avoid a conflict between state and federal laws by refraining from engaging in commerce in a particular state.

The Supreme Court on Monday held that state-law design-defect claims that turn on the adequacy of a generic drug’s warnings are preempted by federal law. Justice Samuel Alito authored the 5-4 decision in Mutual Pharmaceutical Company v. Bartlett, in which the Court reversed a First Circuit opinion that had affirmed a $21 million jury verdict against the generic drug manufacturer. In doing so, the Court rejected the plaintiff’s attempt to circumvent the Court’s ruling in PLIVA, Inc. v. Mensing, in which the Court held that state-law tort claims that challenge a generic drug’s warnings are preempted by federal law. Goodwin Procter attorneys Richard Oetheimer and Jonathan Price were counsel for Petitioner Teva Pharmaceuticals USA, Inc., in PLIVA.

Design-Defect Theory of Liability

Bartlett was tried in federal district court in New Hampshire on a design-defect theory of liability, after the plaintiff’s failure-to-warn claims were dismissed on summary judgment. Still, at trial, the plaintiff challenged the adequacy of generic sulindac’s warnings of the risk of Stevens-Johnson Syndrome, and the trial judge instructed the jury that it could find the drug unreasonably dangerous in design if the warning was inadequate and that it should find (in accord with New Hampshire law) the drug was not defective if it was accompanied by an adequate warning.

Federal law prohibits generic drug manufacturers from changing either the design or the labeling of their products, but the First Circuit found no conflict between that law and a state-law duty to change the warning, because it held that Mutual could have avoided the conflict by withdrawing its product from the market.

Bartlett Settles Issues Involving the Defense of Federal Preemption

The Supreme Court’s decision in Bartlett settled several issues applicable both to generic drug manufacturers and, more broadly, to other defendants asserting a defense of federal preemption.

First, the Court rejected the argument that a defendant does not really face an impossible conflict when state law penalizes compliance with federal law, because the defendant can satisfy both laws by paying tort judgments or refraining from selling its product in that particular state. The Supreme Court held that the plaintiff’s “stop selling” theory is “incompatible” with its preemption jurisprudence, which “presume[s] that an actor seeking to satisfy both his federal- and state-law obligations is not required to cease acting altogether in order to avoid liability.”  Adopting the plaintiff’s rationale, the Court held, “would mean that not only PLIVA, but also the vast majority – if not all – of the cases in which the Court has found impossibility pre-emption, were wrongly decided.”

Second, the Court reaffirmed that state common law, just like state statutory law, is preempted when it creates an impossible conflict with federal law:  “[T]he distinction between common law and statutory law is irrelevant to the argument at hand:  In violating a common-law duty, as surely as by violating a statutory duty, a party contravenes the law.” 

Third, the court held that state-law strict-liability regimes are subject to preemption to the same extent as negligence claims. Under New Hampshire’s “‘strict-liability’ regime,” liability “still signals the breach of a duty.” In other words, the state common law seeks to change manufacturers’ behavior – in a way inconsistent with federal law – and so is preempted.

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Goodwin Procter’s Richard OetheimerWilliam Jay and Sarah K. Frederick, with assistance from Goodwin’s Jonathan Price, authored an amicus brief on behalf of DRI – The Voice of the Defense Bar in support of Mutual’s arguments. DRI’s brief explained that the experiences of its members in pharmaceutical liability cases and trials across the country reveal that prescription drug cases are invariably about the warnings, consistent with the adoption of comment k to the Second Restatement of Torts in the overwhelming majority of American jurisdictions. The Court’s opinion made the same point, noting that the fact that Mutual’s trial “turned on the adequacy of [the generic drug’s] warnings is not unusual,” and citing comment k and its widespread adoption by the States.

For additional information about the decision and its implications, please contact any of the following members of Goodwin Procter’s Products Liability & Mass Torts PracticeRichard OetheimerJonathan Price or Sarah Frederick.