The 9th Circuit had a wealth of pre-emption cases to guide it, including Medtronic Inc. v. Lohr, 518 U.S. 470 (1996), decided by the U.S. Supreme Court in a related context. Somewhat surprisingly, however, while the 9th Circuit premised its decision on older pre-emption cases like Lohr, it did not cite or discuss a more recent and seemingly more factually apposite pre-emption decision, Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001).
Kimmel sued in state court for the tort of intentional interference with prospective economic advantage. The lawsuit claimed DowElanco intentionally submitted false information to the Environmental Protection Agency in support of a requested label change for DowElanco's fumigation protective bags. Kimmel wanted to compete in the fumigation-bag market and claimed to have been shut out by DowElanco's false submission.
Specifically, Kimmel charged that in an effort to protect its share of the fumigation-bag market, DowElanco asked the EPA to change a pesticide label to require the exclusive use of DowElanco's trademarked protective bag, claiming that its protective bag "had proven to be the most reliable" and was "proven to be best suited for this use." The EPA approved the label change, thereby prohibiting the use of Kimmel's competing bag.
According to Kimmel, however, earlier tests informed DowElanco that its trademarked bag actually offered the least protection from fumigation of all the protective bags available, and DowElanco kept this information from the EPA. Kimmel said that this conduct supported its claim for intentional interference with a prospective economic advantage.
In response, DowElanco argued that the Federal Insecticide, Fungicide, and Rodenticide Act controls the use, sale and labeling of pesticides by the federal government and contains a clause that expressly pre-empts any state law — including a tort claim for intentional interference with prospective economic advantage — that is "different from, or in addition to" federal law on the issue.
Moreover, since the EPA has the power to impose civil and criminal penalties against individuals and companies who submit false information, DowElanco contended that the act should pre-empt Kimmel's claim and preclude it from seeking common-law damages.
Despite DowElanco's arguments, the 9th Circuit held that the act does not pre-empt state-law tort claims premised on the allegation that a manufacturer submitted false information to the EPA in a labeling application. The 9th Circuit reasoned that the state-law tort claim that imposed a duty to refrain from submitting falsehoods to a federal agency simply duplicated the pre-existing federal requirement in the act barring the submission of false evidence to the EPA and would not be pre-empted because it was not a requirement that was different from or in addition to the federal law.
In reaching the decision that the state-law claim was not pre-empted, the 9th Circuit reviewed earlier pre-emption cases from other contexts. The cases included a product-labeling case arising from the 1969 Cigarette Act, Cipollone v. Liggett Group Inc., 505 U.S. 504 (1992); a defoliant labeling case, Taylor AG Indus. v. PureGro, 54 F.3d 555 (9th Cir. 1995); and a medical-device product-liability case, Lohr. The 9th Circuit relied most heavily on Lohr to conclude that a state-law duty that parallels a federal requirement is not pre-empted.
The 9th Circuit also looked to the EPA for guidance. In a Federal Insecticide, Fungicide and Rodenticide Act pre-emption case decided last year, Etcheverry v. TriAg Service Inc., 22 Cal. 4th 316 (2000), the EPA filed an amicus curiae brief and argued that Congress did not intend to pre-empt any state common-law damages actions under the act. Etcheverry was a personal-injury case, and the EPA contended that:
- Congress did not establish a federal damages remedy to replace state damages remedies, and pre-emption was inappropriate where it would leave individuals without a remedy.
- In the act, Congress only intended to prevent states from imposing labeling requirements that interfere with the federal plan.
- Common-law damages for false or inadequate statements regarding pesticides have been available since 1884.
- The legislative history makes clear that Congress exclusively sought to prevent conflicting state regulations of pesticide labeling and that no member of Congress mentioned an intent to pre-empt state damages actions.
Although the 9th Circuit relied on older pre-emption cases like Lohr and the EPA's argument in Etcheverry last year, Kimmel does not cite to or discuss the U.S. Supreme Court's most recent pronouncement on pre-emption, the Buckman case, when it appears to be the most similar factually. In Buckman, the plaintiffs' state-law claim — like the state-law claim in Kimmel — was based on an allegation that the defendant provided false information to a federal agency to get approval of its product.
In Buckman, the plaintiffs' theory was that the defendant had made misrepresentations to the FDA when it filed applications and obtained approval for its client, a manufacturer, to market and sell its bone screws. The plaintiffs claimed that but for Buckman's alleged misrepresentations, the FDA never would have approved the marketing and sale of bone screws, and without FDA approval, the bone screws would not have been implanted or caused the alleged injuries.
The court found for the defendant, however, and said that the claim actually was an attempt by the states to police fraud against a federal agency. Thus, it was not an activity traditionally carried out by the states.
As a result, the court did not presume that pre-emption would not apply but instead assumed that Buckman's dealings with the FDA were solely a product of the federal scheme for medical devices and, thus, fell in an area that was uniquely federal in nature.
Next, the court took note of the comprehensive nature of the federal regulatory scheme for medical devices. The court observed that federal law already vested the FDA with the power to investigate whether representations made to it were true, accurate and complete and also vested the FDA with the power to punish and deter fraud.
Moreover, to carry out its duties, the FDA must use its regulatory expertise to decide how best to ensure the safety of the public at large and the availability of medically important products for sick and injured patients. But the FDA's delicate balancing of competing statutory objectives would be upset if liability resulting from state-law fraud claims forced manufacturers to comply with reporting requirements different from those that the FDA imposes.
Moreover, the failure to find pre-emption can have unfortunate consequences for the development of scientific advances for chemicals, drugs and medical devices and, as the Supreme Court explained in Buckman, complying with a detailed regulatory regime imposed by the federal government in the shadow of 50 states' tort regimes would increase dramatically the burdens facing regulated manufacturers.
But while the Supreme Court in Buckman found the state claim to be pre-empted, the Kimmel court reached the opposite conclusion.
Although Buckman and Kimmel did involve different causes of action and different federal agencies — a fraud claim and the Food and Drug Administration in Buckman and an intentional interference with prospective economic advantage claim and the EPA in Kimmel — the core allegations in both cases are exceedingly similar.
As a result, practitioners in the 9th Circuit may find it hard to harmonize Buckman with Kimmel when faced with the question of whether a state-law tort claim, based on an allegation of fraud on a federal agency, is pre-empted.