Tuesday, November 28, 2006

Federal Courts Should Remember Federalism

A couple of recent federal appeals decisions in the prescription drug area, while substantively unrelated, raise the same question of the scope of federal predictions of state law in cases brought under diversity jurisdiction – whether a federal court has any business making novel interpretations of state law that purport to expand state-law liability.


The first of these, Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), interpreted the fraud on the FDA exception to a Michigan immunity statute, Mich. Comp. Laws §600.2946(5), so that it survived federal preemption under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001). 467 F.3d at 97-98. In allowing a Rezulin suit brought by a Michigan plaintiff to continue, the Second Circuit interpreted the Michigan act in a way diametrically opposed to the reading given the statute by the Sixth Circuit – the circuit responsible for Michigan. 467 F.3d at 97 (rejecting Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961 (6th Cir. 2004)). It also gave no weight to the Michigan Supreme Court’s determination that the statute, which was intended to restrict liability, was severable and allowed for partial Buckman preemption. 467 F.3d at 96 (minimizing Taylor v. Smithkline Beecham Corp., 658 N.W.2d 127, 130 (Mich. 2003)).


The second of these decisions, Tingey v. Radionics, 2006 WL 2258872 (10th Cir. Aug. 8, 2006) (unpublished), emasculated another state tort reform statute, Utah Code Ann. § 78-15-6, that provided a rebuttable presumption of non-defectiveness for products “in conformity with government standards.” At a stroke, Tingey exempted over 95% of medical devices from the statute by ruling that FDA approval of so-called §510k devices meant nothing – that there were no applicable “government standards” applicable to devices approved in this fashion. 2006 WL 2258872, at *6.


In both of these decisions, novel questions of state law, involving state statutes intended to reduce tort liability, were answered so as to expand liability in ways that no state court had endorsed. Under established principles of federalism, that should not have happened. The Supreme Court made clear in Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3 (1975), that “[a] federal court in diversity is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.” Id. at 4.


Similar precedent to this effect exists in every Court of Appeals. E.g., Joy v. Bell Helicopter Textron, Inc., 999 F.2d 549, 567 (D.C. Cir. 1993); Wilson v. Bradlees of New England, Inc., 250 F.3d 10, 16 (1st Cir. 2001); Travelers Insurance Co. v. Carpenter, 411 F.3d 323, 329 (2d Cir. 2005); City of Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415, 421 (3d Cir. 2002); Wade v. Danek Medical, Inc., 182 F.3d 281, 286 (4th Cir. 1999); Holden v. Connex-Metalna Management Consulting GmbH, 302 F.3d 358, 365 (5th Cir. 2002); Kurczi v. Eli Lilly & Co., 113 F.3d 1426, 1429 (6th Cir. 1997); Hollander v. Brown, 457 F.3d 688, 692 (7th Cir. 2006); Karas v. American Family Insurance Co., 33 F.3d 995, 1000 (8th Cir. 1994); Hemmings v. Tidyman’s Inc., 285 F.3d 1174, 1203 (9th Cir. 2002); Taylor v. Phelan, 9 F.3d 882, 887 (10th Cir. 1993); Seaboard Surety Co. v. Garrison, Webb & Stanaland, P.A., 823 F.2d 434, 438 (11th Cir. 1987).


No less of a jurist than Learned Hand cautioned against “embrac[ing] the exhilarating opportunity of anticipating a doctrine which may be in the womb of time, but whose birth is distant.” Spector Motor Service v. Walsh, 139 F.2d 809, 823 (2d Cir. 1943) (dissent), vacated, 323 U.S. 101 (1944) (quoted and followed in Garland v. Herrin, 724 F.2d 16, 17 (2d Cir. 1983)). Defendants, when faced with novel liability claims or other unprecedented state-law arguments being asserted in diversity actions in federal courts, need to assert strongly the principle of conservative prediction of state law. When a state-law action proceeds in federal court, the jurisprudential thumb is planted firmly on the scale to weigh against novel expansions of state law. In such situations, the federal courts can bear being reminded of what “federal” means.

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