Richard Symens v. Smithkline Beecham ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 98-1055
___________
Richard Symens; Joyce Symens, *
*
Plaintiffs - Appellees, *
*
v. *
*
SmithKline Beecham Corporation, *
*
Defendant - Appellant. *
___________
Appeals from the United States
No. 98-1056 District Court for the
___________ District of South Dakota.
Ivan Sjovall, *
*
Plaintiff - Appellee, *
*
v. *
*
SmithKline Beecham Corporation, *
*
Defendant - Appellant. *
___________
Submitted: June 8, 1998
Filed: August 27, 1998
___________
Before LOKEN, GODBOLD,* and HEANEY, Circuit Judges.
___________
LOKEN, Circuit Judge.
In the last half of 1992, cattle feedlot operators Richard and Joyce Symens and
Ivan Sjovall vaccinated their cattle with “BoviShield 4" and “Ultrabac-7/Somubac,”
vaccines manufactured by SmithKline Beecham Corporation (SBC). They commenced
these diversity actions, alleging that the cattle “contracted debilitating and mortal
infections and diseases” from the vaccines, and asserting South Dakota common law
claims for strict liability, breach of implied warranties, false advertising, failure to warn,
and fraud on the licensing agency. SBC moved for summary judgment, arguing that
plaintiffs’ claims are preempted by the Virus-Serum-Toxin Act (VSTA), 21 U.S.C.
§§ 151-59. The district court denied the motion and certified the issue for interlocutory
appeal under 28 U.S.C. § 1292(b). We reverse in part and remand.
VSTA authorizes the United States Department of Agriculture (USDA) to
license and regulate the preparation and sale of “viruses, serums, toxins, and analogous
products, for use in the treatment of domestic animals.” 21 U.S.C. § 154. USDA has
delegated this authority to its Animal and Plant Health Inspection Service (APHIS).
See 9 C.F.R. § 101.2. APHIS in turn has “promulgated an extensive regulatory scheme
governing the design, manufacture, distribution, testing, and labeling of animal
vaccines.” Lynnbrook Farms v. SmithKline Beecham Corp., 79 F.3d 620, 624 (7th
Cir.), cert. denied, 117 S. Ct. 178 (1996), citing 9 C.F.R. §§ 101-24.
APHIS licenses all animal vaccines and vaccine manufacturers. See 9 C.F.R.
§§ 102.1, 102.2. The application for an animal vaccine license must include an
*
The HONORABLE JOHN C. GODBOLD, United States Circuit Judge for the
Eleventh Circuit, sitting by designation.
-2-
“Outline of Production” that details the vaccine’s composition, manufacture,
preparation, testing, and packaging. See 9 C.F.R. §§ 102.3(b)(2)(i), 114.8-.9. The
regulations detail ingredient requirements, such as the types of cell lines that must be
used to produce biologics. See 9 C.F.R. §§ 113.50-.55. APHIS-mandated testing
procedures ensure the “purity, safety, potency, and efficacy” of the vaccine. See 9
C.F.R. §§ 102.3(b)(2)(ii), 113.25-.55, 113.64-.332. APHIS approves all product labels
and package inserts; even minor changes in label size and color must be resubmitted for
review and approval. See 9 C.F.R. §§ 101.4, 112.5. Packaging must contain
instructions, warnings, the license number, and prescribed storage temperatures. See
9 C.F.R. § 112.2(a). Once approved, the Outline of Production may not be changed
without resubmission to APHIS. See 9 C.F.R. § 114.8(d). Before marketing, the
manufacturer must test a licensed vaccine to ensure that it is “pure, safe, potent, and
efficacious.” 9 C.F.R. § 113.5. Any serial (lot) that does not pass the prescribed
premarket tests may not be sold. See 9 C.F.R. § 113.6(b). The manufacturer must
forward samples of each serial and subserial to APHIS. See 9 C.F.R. § 113.3. APHIS
may test the product for “purity, safety, potency, or efficacy” before it is marketed. See
9 C.F.R. § 113.6(a).
BoviShield 4 and Ultrabac-7/Somubac are APHIS-licensed vaccines. SBC’s
records reflect that each serial of the vaccines administered to plaintiffs’ cattle was
tested by SBC before release. The test results were “satisfactory,” and those results
were reviewed by APHIS. After the Symens’s cattle sickened, they complained to
APHIS. The agency tested two BoviShield 4 serials and concluded they met purity
standards and were not contaminated.
The Preemption Question.
Under the Supremacy Clause of the Constitution, federal legislation may preempt
state law. Congress may express an intent to preempt in the federal statute. An intent
to preempt may also be implied, for example, when federal and state laws directly
-3-
conflict, when state law stands as an obstacle to accomplishing the purposes of federal
law, or when federal law is so pervasive that it reflects an intent to occupy a regulatory
field. See Heart of Am. Grain Inspection Serv., Inc. v. Missouri Dep’t of Agric., 123
F.3d 1098, 1103 (8th Cir. 1997). Congress may also delegate the preemption question
-- expressly or by implication -- to the agency it authorizes to administer or enforce a
federal statute. When agency preemption is at issue, the inquiry focuses on whether the
agency intended to preempt state law and whether it had the statutory authority to do
so. See City of New York v. F.C.C., 486 U.S. 57, 63-64 (1988). This appeal raises an
issue of agency preemption. VSTA does not expressly address the preemption question,
but it delegates broad powers to APHIS, and the agency has expressed a clear intent to
preempt inconsistent state “requirements.” We must consider whether APHIS has the
power to preempt, and if so, whether it has preempted all or part of plaintiffs’ common
law claims.
A. Is There VSTA Preemption?
Prior to 1985, VSTA did not clearly apply to intrastate vaccines. Congress
amended VSTA in the Food Security Act of 1985. See Pub. L. No. 99-198, Title XVII,
§ 1768, 99 Stat. 1654-56. The 1985 amendments authorized USDA to license and
regulate intrastate vaccines, broadened the Secretary’s authority to issue regulations “to
carry out” the Act, and granted the agency enhanced enforcement powers. See 21
U.S.C. §§ 151, 154, 159. The legislative history observed that “[t]he need for uniform
national standards has become recognized widely in recent years.” H.R. Rep. No. 99-
271, pt. 2, at 339, reprinted in 1985-3 U.S.C.C.A.N. 1660, 2005.
In 1990, APHIS proposed to modify its regulations to clarify that licensees must
comply with state regulation “based on local disease conditions.” See 55 Fed. Reg.
42,392 (1990), proposing to amend 9 C.F.R. § 102.5(d)(2). In promulgating the final
rule, APHIS responded to comments that States should have broader authority:
-4-
Seven commentators indicated that States should have the authority to add
to Federal restrictions, as appropriate . . . . APHIS, however, does not
agree . . . . The legislative history relating to the 1985 amendments . . .
clearly expresses Congressional intent that Federal regulation of veterinary
biologics is needed to prevent and eliminate burdens on commerce and
that there is a need for uniform national standards regarding these
products. Therefore, States are not free to impose requirements which
are different from, or in addition to, those imposed by USDA regarding
the safety, efficacy, potency, or purity of a product. Similarly, labeling
requirements which are different from or in addition to those in the
regulations under the Act may not be imposed by the States. Such
additional or different requirements would thwart the Congressional intent
regarding uniform national standards, and would usurp USDA’s authority
to determine which biologics are pure, safe, potent, and efficacious.
APHIS, Final Rule Pertaining to Restrictions Which May Be Imposed by States on the
Distribution and Use of Veterinary Biological Products, 57 Fed. Reg. 38,758, 38,759
(1992) (emphasis added).
Despite this clear expression of intent to preempt state law requirements, the
district court concluded that APHIS has no statutory authority to preempt. We disagree.
The Commerce Clause grants Congress power to preempt state regulation of animal
vaccines. While an intent to preempt state law will not lightly be implied from an
ambiguous statute, see, e.g., Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S.
132, 146-47 (1963), the question whether Congress intended to authorize a federal
agency to preempt is reviewed somewhat differently:
[M]any of the responsibilities conferred on federal agencies involve a
broad grant of authority to reconcile conflicting policies. Where this is
true, the Court has cautioned that even in the area of pre-emption, if the
agency’s choice to pre-empt “represents a reasonable accommodation of
conflicting policies that were committed to the agency’s care by the
-5-
statute, we should not disturb it unless it appears from the statute or its
legislative history that the accommodation is not one that Congress would
have sanctioned.”
City of New York, 486 U.S. at 64, quoting United States v. Shimer, 367 U.S. 374, 383
(1961); see also Fidelity Federal Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 154
(1982). The 1985 VSTA amendments granted USDA authority to license intrastate
vaccines, enhanced the agency’s enforcement powers, and broadened its authority to
issue implementing regulations. The legislative history noted the “truly national markets
for the live animals and their products” and the “need for uniform national standards.”
1985-3 U.S.C.C.A.N. at 2005. In these circumstances, we agree with the Seventh
Circuit “that APHIS acted rationally and within the scope of the authority granted to it
by Congress in issuing the above statement seeking to preempt state law.” Lynnbrook
Farms, 79 F.3d at 625; accord Murphy v. SmithKline Beecham Animal Health Group,
898 F. Supp. 811, 815-17 (D. Kan. 1995); Brandt v. Marshall Animal Clinic, 540
N.W.2d 870, 874-76 (Minn. Ct. App. 1995).
Whether state laws that add to federal regulatory requirements are inconsistent
with the purposes of the federal statute is often a complex issue. Here, for example,
Congress intended to create a regulatory regime that establishes uniform national
standards and has the ability to meet “an emergency condition, limited market or local
situation, or other special circumstance.” 21 U.S.C. § 154a. It is reasonable to infer that
Congress intended to delegate to the federal licensing agency the question of whether
and to what extent preemption is necessary to further these policies. Therefore, APHIS
made a “reasonable accommodation . . . that Congress would have sanctioned,” the test
under City of New York, when it concluded that the 1985 amendments granted it power
to preempt, and that additional state requirements regarding product safety, efficacy,
potency, purity, and labeling “stand[] as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.” Wisconsin Pub. Intervenor
v. Mortier, 501 U.S. 597, 605 (1991).
-6-
B. What Is the Extent of VSTA Preemption?
Having concluded that APHIS validly preempted state laws that “impose
requirements which are different from, or in addition to, those imposed by USDA”
regarding the safety, efficacy, potency, purity, or labeling of licensed vaccines, we must
determine the effect of that preemption on plaintiffs’ common law claims. SBC argues
that “requirements” include common law remedies and therefore plaintiffs’ claims are
totally preempted. Plaintiffs argue that APHIS did not intend to preempt common law
remedies and therefore their claims are entirely unaffected by federal regulation of the
vaccines in question. We reject both contentions.
SBC argues for total preemption of state common law remedies. Congress does
on occasion fashion a comprehensive scheme of federal remedies that preempts
inconsistent remedies under state law. See Ingersoll-Rand Co. v. McClendon, 498 U.S.
133, 142-45 (1990) (ERISA preempts all state law remedies). But VSTA confers no
federal right of action on those who may be injured by animal vaccines that are, for
example, unlicensed, defective, or mislabeled. Therefore, SBC’s contention would
leave vaccine purchasers and users without any remedy, a preemptive intent we should
be most reluctant to infer. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 486-87 (1996)
(plurality opinion); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 251 (1984). Here,
there is strong evidence that APHIS did not intend to entirely preempt common law
remedies. When the agency implemented its preemption declaration in 1992, it left in
place the labeling regulation that prohibits licensed manufacturers from publishing
“disclaimers of merchantability, fitness for the purpose offered, or responsibility for the
product.” 9 C.F.R. § 112.2(b). That regulation is an express recognition that common
law remedies are not entirely preempted.
On the other hand, plaintiffs’ contention -- that preemption of state law
“requirements” relating to vaccine safety, efficacy, purity, potency, and labeling leaves
common law claims unaffected -- is equally misguided. Two recent Supreme Court
-7-
decisions confirm that state common law damage actions are within the scope of a
federal statute or regulation preempting state law “requirements.” In Cipollone v.
Liggett Group, Inc., 505 U.S. 504, 521, 548-49 (1992), a majority of the Court
concluded that the federal statute preempting all state law requirements relating to
cigarette labeling preempted some state common law claims. Similarly, in Medtronic,
five Justices agreed that a federal statute preempting state law requirements regarding
medical devices applied to state common law damages actions as well as to state
statutes and regulations. See 518 U.S. at 503-04 (Breyer, J., concurring in the
judgment), 509-12 (O’Connor, J., concurring in part and dissenting in part).
VSTA as construed by APHIS preempts inconsistent substantive state law
“requirements” but not state common law remedies. In this situation, common law
claims are not preempted to the extent that they seek relief for alleged violations of the
federal substantive standards. All the Supreme Court opinions in Medtronic agreed on
that.1 It is also a logical interpretation of the APHIS preemption statement, viewed in
light of the regulation prohibiting the disclaimer of implied warranties. Indeed, we have
direct evidence this was APHIS’s intent. When United States Senator Paul Wellstone
requested clarification of the preemption statement, the agency responded:
Our intent in promulgating the rule was, and continues to be, to preempt
States from imposing requirements either through statutes, regulations, or
other means that are different from, or in addition to, those imposed by
USDA regarding the safety, efficacy, potency, or purity of a product.
1
Justice Stevens for the Court stated, “Nothing in § 360k denies Florida the right
to provide a traditional damages remedy for violations of common-law duties when
those duties parallel federal requirements.” 518 U.S. at 495. Justice Breyer’s
concurring opinion explained that a state law tort suit is not preempted if its “liability-
creating-premises” do not conflict with federal requirements. Id. at 508. Justice
O’Connor’s separate opinion declared that “the Lohrs’ claims are not pre-empted by
§ 360k to the extent that they seek damages for Medtronic’s alleged violation of federal
requirements.” Id. at 513.
-8-
Such requirements would include, but are not limited to production, testing, distribution,
or labeling requirements. We did not intend to preempt common law actions for
damages arising from noncompliance with USDA regulatory standards.
Letter from APHIS Acting Administrator to Senator Wellstone (Dec. 22, 1995)
(emphasis added).2
There remains the question of how to dispose of this appeal. The district court
flatly denied SBC’s motion for summary judgment, and its opinion seems to conclude
that plaintiffs’ common law claims are unaffected by the APHIS declaration of
preemption. As we have explained, this is incorrect. Plaintiffs’ broadly pleaded claims
are preempted to the extent that they rely upon “liability-creating-premises” that are
2
SBC has moved to supplement the record with the abstract of a speech by an
APHIS official at the annual meeting of the American Veterinary Medical Law
Association on July 26, 1998. The abstract states in part:
The Seventh Circuit Court of Appeals properly interpreted APHIS’ intent
. . . when it held in Lynnbrook Farms . . . that: “. . . State tort claims are
available when APHIS regulatory standards are violated or disregarded
. . . and that when APHIS regulations are heeded, state tort claims
involving the safety, efficacy, potency, or purity of animal vaccines do not
survive.”
APHIS’ policy on Federal preemption attempts to strike a balance
between maintaining uniform national standards for veterinary biologics
and allowing State tort actions when there is noncompliance with Federal
standards.
David A. Espeseth, Center for Veterinary Biologics, APHIS Licensing and Policy
Development, Federal Preemption of Product Liability Litigation -- Rationale and
Result (July 26, 1998). We grant the motion to supplement. We give the abstract little
weight, but it is consistent with other evidence of APHIS’ intent.
-9-
different from, or in addition to, those imposed by USDA regarding the safety, efficacy,
potency, purity, or labeling of SBC’s licensed vaccines.3 We cannot determine from the
record on appeal whether plaintiffs’ claims are entirely preempted. These kinds of
preemption issues “require a careful comparison between the allegedly pre-empting
federal requirement and the allegedly pre-empted state requirement to determine
whether they fall within the intended pre-emptive scope” of the federal regime.
Medtronic, 518 U.S. at 500. Such an analysis may result in total or only partial
preemption. Compare Lynnbrook Farms, 79 F.3d at 630, with Gresham v. Boehringer
Ingelheim Animal Health, Inc., 1996 WL 751126 at *3 (N.D. Ga. Aug. 7, 1996); see
also National Bank of Commerce of El Dorado v. Kimberly-Clark Corp., 38 F.3d 988,
994 n.4 (8th Cir. 1994) (“actual [federal] agency approval eliminates any possible
claims under state tort law for failure to comply with federal requirements”). Therefore,
we reverse in part the district court’s order of December 10, 1997, and remand the case
for further proceedings not inconsistent with this opinion.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
3
Plaintiffs argue that preemption would violate the APHIS declaration that its
1992 final rule was “not intended to have retroactive affect” because plaintiffs started
using the SBC vaccines before the rule’s effective date. 57 Fed. Reg. at 38,759. We
disagree. Even assuming the retroactivity comment applied to the agency’s preemption
declaration, and not simply to the amendments to 9 C.F.R. § 102.5, there is no
retroactive effect in this case because plaintiffs did not file suit until long after
September 1992. We must apply the law now in effect to plaintiffs’ tort and implied
warranty claims because plaintiffs had no vested rights in these unasserted claims at the
time VSTA preemption was modified. See Landgraf v. USI Film Products, 511 U.S.
244, 269, 273 (1994); In re TMI, 89 F.3d 1106, 1113 (3d Cir. 1996), cert. denied, 117
S. Ct. 739 (1997); Hammond v. United States, 786 F.2d 8, 12 (1st Cir. 1986).
-10-