Federal preemption of state law claims has the potential to affect many businesses across a myriad of industries. Because of the wide range of businesses potentially impacted by federal preemption, it is important that all federally regulated entities keep abreast of the changes in federal preemption jurisprudence. The U.S. Supreme Court, in its 2010-2011 term, decided three federal preemption cases. Although these cases were decided in the context of product liability claims, these decisions have potentially important implications to many regulated entities outside of the product liability context.

Most notable is Williamson v. Mazda Motor of America, Inc., in which the Court unanimously determined that the Federal Motor Vehicle Safety Standard (FMVSS) 208, which allows a car manufacturer to decide whether to use lap and shoulder seatbelts or just lap belts for a vehicle's inner rear seats, does not preempt state law design-defect claims. 131 S. Ct. 1131 (2011). The plaintiff in Williamson, an estate of an individual who died in an automobile accident, alleged that the decedent died because the inner rear seat of the car in which she was riding had a lap belt rather than a lap-and-shoulder belt. Id. at 1134. The defendant relied heavily on Geier v. American Honda Motor Co., 529 U.S. 861 (2000), an earlier U.S. Supreme Court decision which held that a state law design-defect claim was preempted by an earlier version of the FMVSS, which provided car manufacturers a choice of which passive restraint system to install in its cars. Mazda argued that it relied on FMVSS 208 in exercising its choice to install a lap-only belt and, therefore, state law claims alleging it made an incorrect choice should be preempted.

The Court explained that while in Geier it held that a design-defect claim based on the notion that the manufacturer made the "wrong choice" was preempted, the fact that a manufacturer is given a choice in design by federal regulation does not lead to automatic preemption of state law design-defect claims. Williamson, 131 S. Ct. at 1137-38. The Court made clear that the holding in Geier was premised on the fact that the regulation at issue was specifically intended to provide a mix of passive restraint systems in the market in hopes that the different restraint systems would lead to the development of alternative and less expensive restraint systems. Id. at 1137. In contrast, providing a design choice was not a significant regulatory objective of the FMVSS at issue in Williamson; instead, the choice between restraint systems stemmed from cost concerns. Id. at 1138. Therefore, the Court held that the mere fact that a regulation provides a manufacturer with multiple design options does not result in automatic preemption of state law design-defect claims. Only where the choice is a significant regulatory objective will state law design-defect claims be considered an obstacle to federal law and result in preemption of the state tort claims. Id. at 1139-40.

In Bruesewitz v. Wyeth, a 6-2 decision, the U.S. Supreme Court held that the National Childhood Vaccine Injury Act (NCVIA) preempts all design-defect claims against vaccine manufacturers. 131 S. Ct. 1068 (2011). The Court interpreted the statutory preemption provision at issue to mean that so long as a vaccine was properly manufactured and contained a proper warning, all remaining side effects were unavoidable, and therefore vaccine manufacturers were immune from state law design-defect claims. Id.

Lastly, in PLIVA, Inc. v. Mensing, the U.S. Supreme Court held that the federal Food, Drug and Cosmetic Act (FDCA) preempts state law failure-to-warn claims based on an alleged inadequate warning on a generic drug label. 131 S. Ct. 2567 (2011). The Court, in a 5-4 decision, explained that because the FDCA prohibits manufacturers of generic drugs from altering its labeling from that of the generic drug's name-brand counterpart, it would be impossible for generic drug manufacturers to comply with both federal law and a state law requirement that called for a warning different than that of the name-brand counterpart.

Impact on Regulated Entities

These recent U.S. Supreme Court cases demonstrate the Court's case-by-case approach to deciding federal preemption issues. While Bruesewitz v. Wyeth may not have great significance for manufacturers of products other than vaccines, it does demonstrate the Court's willingness to read express preemption provisions broadly. Williamson v. Mazda Motor of America, Inc., however, will have far-reaching implications for manufacturers outside of the automobile industry. In Williamson, the Court makes clear that lower courts have been misreading frequently cited Geier v. American Honda Motor Co., and clarifies that where federal law provides manufacturers with choices in the design of its product, preemption is not automatic. Rather, the court will look closely at the federal agency record and the rulemaking process to determine whether providing manufacturers with a choice was a primary regulatory objective. PLIVA, Inc. v. Mensing is an important victory for generic drug manufacturers and could suggest that the Court will require something less than an "absolute physical impossibility" before finding implied preemption due to impossibility of complying with both state and federal law.

Issues of federal preemption will likely continue to be heavily litigated and it is therefore important for federally regulated businesses to be aware of the significance of the preemption issue. .