Obama Limits Preemption

President Barack Obama has ordered federal agencies not to issue rules that shield companies from product liability lawsuits in state courts. The move is being cheered by trial lawyers but panned by the business community.

Obama told government department heads in a May 20 memo that federal regulations should rarely preempt often stricter state laws, many of which are designed to protect consumers' health and safety. He also called for review and possible revision of all federal rules issued over the past 10 years that may have improperly overridden state authority.

"This corrects a decade of abuse of the regulatory process and signifies a triumph both for states' rights and for the legal rights of all Americans and their families," says Les Weisbrod, president of the American Association for Justice, a trial lawyers group.

But the U.S. Chamber of Commerce warns that Obama's move will open the floodgates of litigation. "Removing federal preemption forces employers to navigate a confusing, often contradictory patchwork quilt of 50 sets of laws and regulations," says Lisa A. Rickard, head of the chamber's Institute for Legal Reform.

Frequently critical of the U.S. civil justice system and "frivolous" lawsuits, former president George W. Bush encouraged federal agencies to protect businesses that complied with federal rules from legal action in state courts and the threat of large damage awards.

Bush officials at FDA, the Department of Transportation, and other agencies inserted language into more than 50 regulations that prevented states from filing lawsuits against drug companies and other manufacturers for injuries from dangerous or defective products.

In 2006, for example, FDA issued a revised drug-labeling rule that sought to bar most state lawsuits over injury claims involving prescription drugs. But in March, the Supreme Court in Wyeth v. Levine struck down the notion of federal preemption as a shield for drugmakers (C&EN, March 9, page 8).

The Pharmaceutical Research & Manufacturers of America, which represents the brand-name drug industry, disagreed with the outcome of that case and says it believes that patient safety is best served when FDA "is the sole arbiter of the risks and benefits of medicines."