Eleventh Circuit finds Tobacco Suits Preempted: Trouble for Future Public Health Regulations?

by Micah Berman — Sunday, Apr. 19, 2015

In a surprising ruling, a three-judge panel of the Eleventh Circuit ruled last week in Graham v. R.J. Reynolds Tobacco Company that strict liability claims and negligence claims in the long running Engle-progeny litigation are preempted by federal law.

The decision, written by Judge Tjoflat, applied a broad reading of the implied preemption doctrine, concluding that the jury’s verdict—which awarded $825,000 to the widower of a Florida smoker who died at the age of 58—would stand as an obstacle to the accomplishment of federal objectives.

This case will likely have a minimal impact on the ongoing Engle-progeny suits, but it may serve as a storm cloud on the horizon for future efforts to limit tobacco sales and protect public health.

The Engle-progeny cases derive from a massive class action on behalf of Florida smokers that was decertified by the Florida Supreme Court after a trial on the merits, but with a ruling that class members would be able to use the jury’s factual findings in future individual litigation against the tobacco industry. Since 2009, more than 8,000 such cases have been filed, primarily in Florida state courts. A smaller number, like the Graham case, were either brought in or removed to federal court. For more on the Engle suits, see here .

After a lengthy analysis of Engle and the related suits, the court concluded that the jury’s verdict in Graham necessarily rested on the conclusion that all cigarettes were defectively designed and that it was negligent for the tobacco company defendants (in this case, R.J. Reynolds and Phillip Morris) to have sold any cigarettes. This, Judge Tjoflat concluded, amounted a state law determination that cigarettes should be banned. (He added that “we must . . . assum[e] that R.J. Reynolds and Philip Morris will comply with whatever state-law duties Florida may impose”—which ironically implies that, if the tobacco companies agreed with him regarding Florida law, they would stop selling any cigarettes in Florida. Needless to say, that is unlikely to happen anytime soon.) A state ban on the sales of cigarettes, the court then reasoned, would conflict with a determination by Congress that cigarettes should be regulated but not banned, and therefore the suit was preempted under the doctrine of “obstacle” preemption (i.e., the state law ruling stood as obstacle to the accomplishment of federal objectives). In other words, the congressional objective that conflicted with the jury’s verdict was Congress’s intent to keep cigarettes on the market as a legal product. Notably, the court’s identification of this congressional objective was not derived from (or solely from) any particular law, but from a broad overview of the way that Congress has sought to regulate tobacco over the decades.

Does this reasoning sound familiar? If you’re an Ad Law wonk – and I know you are, since you’re reading this blog – it likely reminds you of the Supreme Court’s 2000 decision in FDA v. Brown & Williamson. In that case, the Supreme Court ruled that the FDA lacked the authority to regulate tobacco, even though tobacco seemed to meet the literal definition of a drug or drug-delivery device, which the FDA has authority to regulate. In a 5-4 decision, the Court reasoned that if the FDA were to regulate cigarettes, the FDA’s regulatory scheme would require a ban on all cigarette sales (even though the FDA read its governing statute differently). The Court then concluded that a ban on cigarettes would run contrary to Congress’s intent. By the creation of its own, separate regulatory scheme for tobacco, it held, Congress had expressed its expectation that tobacco would be regulated but not banned. As in Graham, this conclusion was not derived form any one law, but by surveying Congress’s tobacco regulatory activities since 1965. (More of my analysis of FDA v. Brown & Williamson here.)

Put aside the debatable question of whether the Eleventh Circuit was correct in concluding that Engleverdicts were equivalent to a state ban on cigarettes. Assuming this premise, was the Eleventh Circuit’s conclusion correct? I would argue that it was not, because the analogy to FDA v. Brown & Williamsonfalls apart once one realizes that Brown & Williamson was a case about administrative authority, not about federal preemption. The question in Brown & Williamson was whether Congress had intended for FDA regulation of tobacco to coexist alongside a scheme of congressional tobacco regulation. In determining that it had not, the Court wrote: “in addressing the subject, Congress consistently evidenced its intent to preclude any federal agency from exercising significant policymaking authority in the area.” (Congress later overruled this decision by granting the FDA the authority to regulate tobacco in the 2009 Family Smoking Prevention and Tobacco Control Act.) In short, the congressional scheme assumed that tobacco would be regulated and not banned by any federal agency. But whether Congress intended to preempt state action to regulate tobacco is an entirely different question. To find in FDA v. Brown & Williamson a conclusion by the Supreme Court that Congress intended to preempt state tobacco regulation is to push its reasoning too far.

In concluding that Congress intended to preempt states from banning tobacco, the Eleventh Circuit relied heavily on language from the 1965 Federal Cigarette Labeling and Advertising Act (FCLAA). In the Act’s “Declaration of Policy,” Congress stated that its intent was to ensure that “commerce and the national economy may be (A) protected to the maximum extent consistent with [the objective of adequately informing smokers of the risks of smoking] and (B) not impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health.” In support of these goals, it required warning labels on cigarettes, but barred states and localities from imposing labeling requirements on cigarette packages or advertisements.

Congress clearly preempted some state regulation of tobacco in the FCLAA—but only in the specific area of product labeling and advertising. The FCLAA was enacted at time when states—in the wake of the 1964 Surgeon General’s Report linking smoking to cancer—were in the process of developing their own smoking-related warnings. The tobacco companies asked for preemptive federal regulation, because such a multitude of warning requirements would be nearly impossible to comply with and would therefore “impede commerce.” As another federal court summarized:

[W]hile in the FCLAA, Congress expressed an intent to protect commerce and the economy, it enacted the statute in the context of a potential plethora of state and federal regulations relating to cigarette advertising. Thus, Congress clearly intended to “protect the national economy from the burden imposed by diverse, nonuniform, and confusing cigarette labeling and advertising regulations,” but did not clearly intend to extend broad immunity from common law liability to cigarette manufacturers. (Richardson v. R.J. Reynolds Tobacco Co., 578 F. Supp. 2d 1073, 1076-77 (E.D. Wis. 2008).)

Nor was there any indication in the FCLAA that Congress intended to more broadly interfere with the traditional police powers of states to regulate the sales of tobacco products.

In case there was any question about this, Congress made it crystal clear when it enacted the Family Smoking Prevention and Tobacco Control Act (TCA) in 2009. In that law, Congress expressly preempted states from engaging in certain types of regulation (such as product labeling and manufacturing standards), but stated broadly that:

Except as provided in [the express preemption provision], nothing in this chapter . . . shall be construed to limit the authority of . . . a State or political subdivision of a State . . . to enact, adopt, promulgate, and enforce any law, rule, regulation, or other measure with respect to tobacco products that is in addition to, or more stringent than, requirements established under this chapter, including a law, rule, regulation, or other measure relating to or prohibiting the sale, distribution, possession, exposure to, access to, advertising and promotion of, or use of tobacco products by individuals of any age . . . . (Sec. 916).

Thus, the law is quite clear that Congress, in its most recent statement on the matter, believes that states still maintain their traditional authority to regulate tobacco sales—up to and including prohibitions on such sales. This is also consistent with the way the FCLAA’s preemption provision has been interpreted over the decades (before it was significantly revised by the TCA)—state laws (including state tort law decisions; see Cipollone ) that regulating labeling and advertising were preempted, but laws (or court decisions) that restrict sales or distribution of cigarettes were not. The Eleventh Circuit ignored this crucial distinction, concluding that Congress had “designed ‘a distinct regulatory scheme’ to govern the product’s advertising, labelling [sic], and—most importantly—sale.”)

The Eleventh Circuit decision, oddly, does not even mention the anti-preemption prevision of the TCA. It does, however, note that the TCA bars the FDA from banning all cigarettes, and it uses this portion of the TCA to reinforce its conclusion that “Congress has never intended to prohibit consumers from purchasing cigarettes.” Again, the Eleventh Circuit’s reasoning conflates the regulatory authority question with the preemption question. Congress made the determination to prevent the FDA from imposing a national ban on the sale of cigarettes, instead reserving a decision of such significance to itself. But this does not mean that Congress meant to ban states and localities from enacting local bans or restrictions on cigarettes sales—indeed, the plain text of the TCA clearly indicates otherwise.

To be sure, as the decision notes, the Supreme Court has stated that “obstacle” preemption can potentially operate alongside—and can be broader than—express preemption provisions. But for the Eleventh Circuit to reach its ruling without even analyzing the language of the relevant express preemption provisions is bizarre and flies in the face of the Supreme Court’s preemption jurisprudence (see, e.g., Williamson v. Mazda Motor ). (Note that the TCA states that it does not “affect any action” pending in court as of its effective date, so perhaps this caveat is the court’s reason for ignoring its preemption provision­­—but then the Eleventh Circuit does rely on the TCA to support its interpretation of Congress’s regulatory purpose.)

So what might be the impact of this decision?

Because most of the Engle-progeny cases pending in federal court recently settled, the impact of this decision on tobacco-related litigation is likely to be minimal. The Florida state courts—where the vast majority of the Engle-progeny cases are pending—are not bound to accept the Eleventh Circuit’s analysis and it is unlikely that they will. (Being state courts, they are likely to be more protective of state authority.) Thus, in some senses, the ruling is a rather hollow win for the tobacco industry. As one article’s headline summarized, “Big Tobacco Wins Big Ruling Too Late.”

The impact on state and local tobacco control policy—and public health law more generally—may be much more significant. The tobacco industry now has a decision it can point to in order to threaten litigation any time a state or locality tries to limit (or even ban ) cigarette sales. At a time when the Surgeon General has recently endorsed the idea of “greater restrictions on sales, particularly at the local level, including bans on entire categories of tobacco products,” as a means of moving toward the “overall goal of a society free of tobacco-related death and disease,” this decision is particularly disturbing. While very few communities are contemplating a complete ban on cigarette sales (and I’m not endorsing that approach), the Graham decision may be used to threaten litigation against communities that even consider taking incremental steps towards that goal.

More broadly, the decision seems to suggest that if Congress has regulated a product, states and localities cannot ban its sale. This is dangerous doctrine for public health. States and communities almost always lead the way in banning dangerous substances (with the federal government often lagging behind). For example, communities around the country have banned trans-fats. The federal government has not banned them, but has instead regulated them with labeling requirements. Using Graham’s logic, the federal regulation of trans-fats could be read to presume their legal sale and therefore preempt local bans. This is an incredibly broad reading of the implied preemption doctrine that turns the traditional “presumption against preemption” on its head. I suspect other courts will reject the Eleventh Circuit’s approach, but in the meantime, I have no doubt that industries trying to avoid state and local regulation will squeeze as much mileage out of this decision as they can.

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