Preemption Beyond Drugs and Medical Devices

The plaintiffs in both cases claimed that cell phones emit an unsafe level of radio frequency (RF) radiation and that the defendants had hidden this fact from the consumers. Farino alleged that there are over 190 million cell phone users in the United States. The Federal Communication Commission (FCC) grants licenses to service providers that broadcast wireless signals on specific frequency bands. This license determines the specifications for cell phones sold for each provider. Farina contends that for every incoming and outgoing call, a cell phone user is exposed to RF emissions as a result of holding the cell phone in the customary manner, with the phone's antenna next to the user's head.

Both Pinney and Farina contended that the proper utilization of a head set eliminated exposure to the cell phone user's head. These headsets have been on the market during the period in question, but the defendants marketed them only as an accessory of convenience.

The plaintiffs contended that the defendants knew, or should have known, of these studies, which date to the 1920s, as well as research in the 1960s, showing that RF emissions are absorbed by human tissue and can harm the body. Additionally, studies have shown that an antenna is an especially efficient device used to deposit RF emissions into the human body, particularly the ultra-sensitive temporal lobe of the brain.

Causes of Action

The Pinney plaintiffs asserted seven claims:

1. Strict liability for placing a defectively designed product into the stream of commerce;
2. Strict liability for failure-to-warn about the adverse health risks associated with wireless telephones;
3. Liability for violating various state consumer protection statutes (Maryland, New York, and Pennsylvania);
4. Breach of implied warranty of merchantability by selling and distributing unreasonably dangerous wireless telephone;
5. Negligence in: a) failing to conduct adequate and appropriate scientific research on the adverse health effects of exposure to RF radiation from wireless telephones; b) misrepresenting to the public that wireless telephones are safe; c) suppressing any scientific evidence suggesting that wireless telephones are not safe; d) failing to provide warnings about the potential health risks from failing to use a headset; and e) failing to provide headsets and instructions encouraging their use.
6. Fraud by misinforming and misleading the public as to the safety of wireless telephones; and
7. Civil conspiracy to market unsafe wireless telephones by improper and wrongful means.

In Farina, the allegations were the following:

1. Civil conspiracy, asserting that defendants acted together to suppress the knowledge of risks associated with RF emissions from cell phone use and to sell and market defective cell phones, which can adversely affect users, with intent to deceive the public by failing to warn of potential hazards;
2. Breach of implied warranty based upon the facts that the cell phones did not come with headsets; the user manuals indicated they would be safe to use without a headset, and warranties contained promises that the products were “free of defects”;
3. Breach of express warranty based on the allegation that the cell phones sold by defendants failed the express promise of safe operation;
4. A claim for violation of the Magnuson Moss Warranty Improvement Act; and
5. A claim under the Pennsylvania Declaratory Judgment Act alleging that the class is entitled to a declaration that defendants' conduct constitutes violations of Pennsylvania statutory and common law and declaratory relief requiring defendants to supply headsets for cell phones purchased by plaintiff in the class.

The thrust of the claims in both actions was that the defendants violated various state laws by manufacturing and selling a product that they knew, or should have known, was dangerous, and by not adequately warning of the dangers.

Preemption Analysis

Both courts acknowledged that the U.S. Supreme Court has identified three major situations where federal preemption applies: 1) “Express” Preemption, which is applicable when Congress expressly states its intent to preempt state law; 2) “Field” Preemption, which is applicable when “Congress' intent to pre-empt all state law in a particular area may be inferred [because] the scheme of federal regulation is sufficiently comprehensive,” or “the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject”; and 3) “Conflict” preemption, which is applicable when “state law is nullified to the extent that it actually conflicts with federal law,” even though Congress has not displaced all state law in a given area.

Express Preemption

Both the Pinney and Farina courts rejected defendants' express preemption argument based on the specific sections of the Federal Communications Act (FCA). Both courts agreed that nothing in the FCA expressly preempted state common law designed to ensure the health and safety of cell phone users. Both courts undertook an analysis of the statute and found that, relying on the medical device analysis in Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996), there is a strong presumption against preemption when the federal government regulates an area that is traditionally left to the states, such as health and safety.

Implied Preemption

Here is where the courts diverged. Pinney found no preemption while Farina dismissed the plaintiffs' claims on the grounds of implied conflict preemption.

The Third Circuit first analyzed the application of any presumption against preemption by making a distinction between traditional and non-traditional state law interests. The Farina court held that the regulation of health risks associated with cell phone use arguably falls within the traditional areas of state law interests. It went further than Pinney, however, by concluding that Congress, through its establishment of the FCC and its grant to that agency of plenary jurisdiction of the technical standards for radio communications, has impliedly preempted contrary state laws regarding RF emissions. It agreed with the defense argument that the telecommunications industry is not merely a product of commerce like industries such as the maritime industry, but rather, it is an instrumentality of commerce that has been subject to consistent national regulation.

Pinney, on the other hand, pointed out that the FCC's RF radiation standards for cell phones were not promulgated pursuant to a mandate contained in the FCA, but rather pursuant to the National Environmental Policy Act (NEPA) mandate that all agencies assess the environmental impact of their actions. It held that the complete absence of any provision addressing wireless telephones counseled against a finding that the FCA evidenced a congressional goal of achieving preemptive national RF radiation standards for cell phones.

In Farina, the Third Circuit recognized that state common law tort actions based on federally regulated manufacturers' failure-to-warn can present defendants with particular difficulties. The court cited Colacicco v. Apotex Inc., 521 F.3d 253, 267-68 (3rd Cir. 2008), the Third Circuit case addressing FDA preemption, explaining that this is because state standards of care differ from state to state, and the absence of any consistent federal warning requirement may subject such manufacturers “to considerable liability based on varying standards, with no benchmark that they should follow.” The Third Circuit also followed the teaching of Colacicco that in determining whether a federal regulation or the failure to regulate as extensively as the plaintiff seeks has preemptive force, requires a review of the record of the agency's treatment of the desired warning at issue. With this structure in place, the Third Circuit came to the conclusion that Congress has given the FCC exclusive authority over every technical aspect of radio communication, and the FCC has also assumed specific responsibility for creating safety standards for cell phone RF emissions (not just cellular infrastructure). Interestingly, where the Fourth Circuit held the involvement of the NEPA as militating against preemption, the Third Circuit acknowledges the role of the NEPA and cited to the FCC's determination that it had the responsibility to address safety concerns raised by RF emissions. Accordingly, the Third Circuit stated that the FCC evaluated the potential biological effects of FCC-licensed devices and adopted as its standard for RF exposure from wireless service facilities the standard published by the American National Standards Institute (ANSI).

Finally, the Third Circuit placed weight on the fact that the FCC has argued in amicus curiae briefs that the Pinney decision was incorrectly decided and that common law claims alleging injury from RF radiation emitted by cell phones are, in fact, preempted.

The Third Circuit in Farina took issue with the Pinney analysis on the grounds that Pinney's focus on the specific language of Section 332 in finding no preemption by the FCA was too narrow. Farina agreed that an analysis of the language used by Congress is significant when examining express preemption, but that implied preemption presumes that Congress has not displaced all state law, and requires that courts examine whether state laws that “fall within the gaps” conflict with the accomplishment and execution of Congress' purposes and objectives. The Third Circuit found no justification for ignoring the FCC's clear authority under NEPA when analyzing conflict preemption.

The Farina court went on to find that the comprehensiveness of the federal regulatory scheme in place and the FCC's own determination that its RF emission standards are preemptive, distinguishes this situation from that of Medtronic.

The Farina court held that the FCC recognized its mandatory obligation to issue RF emission standards for cell phones, and provided specific requirements for cell phone RF emissions through its adoption of the revised ANSI maximum. It also continued the practice of the Third Circuit, as in Colacicco, where the court stated that it did not need to speculate on the FCC's rationale for adopting the revised ANSI standards for RF emissions from cell phones. The court gave deference to the agency's rule making decisions, as well as its rationale for adopting the original and revised ANSI standards, and later, for finding no basis to alter them. The Third Circuit characterization of plaintiffs' allegations as unquestionably “trampling” upon the FCC's authority to determine the maximum for RF emissions and that the plaintiffs in Farina sought to hold the manufacturers and providers liable, even though the plaintiffs did not allege they failed to meet the required FCC standards, is language that will hearten manufacturers.

Conclusion

It therefore appears that unless the anxiously awaited Supreme Court decision, as it relates to pharmaceutical preemption, sets forth a clear, brightline test, the implied Preemption Doctrine will be alive and well when it is invoked in product liability cases where there is a history of regulatory activity.

Daniel J. Herling, a member of this newsletter's Board of Editors, is a partner at San Francisco's Keller and Heckman LLP.

Although the issue of Federal Preemption has grabbed the headlines in medical device and pharmaceutical cases, those analyzing preemption's impact on plaintiff's failure-to-warn claims on other types of products that are subject to federal regulation are significant for their varied results.

For example, the Third and Fourth Circuits have addressed similar, if not identical, claims reaching very different conclusions. Pinney v. Nokia, Inc. , 402 F.3d 430 (4th Cir. 2005) and Farina v. Nokia, et al., ____ F.3d _______ (3rd Cir. Sept. 2, 2008) both involved putative class actions brought against various manufacturers, suppliers, lenders, and lessors of wireless hand-held telephones (cell phones), those that provide wireless services for such devices, and two trade associations that represented that such devices were safe to use. The complicated and lengthy procedural history of the cases (the complaint that led to the two separate appellate opinions was first filed on April 19, 2001) raised several issues for both courts to consider, including personal jurisdiction, law of the case, and federal preemption.

Plaintiffs' Claims

The plaintiffs in both cases claimed that cell phones emit an unsafe level of radio frequency (RF) radiation and that the defendants had hidden this fact from the consumers. Farino alleged that there are over 190 million cell phone users in the United States. The Federal Communication Commission (FCC) grants licenses to service providers that broadcast wireless signals on specific frequency bands. This license determines the specifications for cell phones sold for each provider. Farina contends that for every incoming and outgoing call, a cell phone user is exposed to RF emissions as a result of holding the cell phone in the customary manner, with the phone's antenna next to the user's head.

Both Pinney and Farina contended that the proper utilization of a head set eliminated exposure to the cell phone user's head. These headsets have been on the market during the period in question, but the defendants marketed them only as an accessory of convenience.

The plaintiffs contended that the defendants knew, or should have known, of these studies, which date to the 1920s, as well as research in the 1960s, showing that RF emissions are absorbed by human tissue and can harm the body. Additionally, studies have shown that an antenna is an especially efficient device used to deposit RF emissions into the human body, particularly the ultra-sensitive temporal lobe of the brain.

Causes of Action

The Pinney plaintiffs asserted seven claims:

1. Strict liability for placing a defectively designed product into the stream of commerce;
2. Strict liability for failure-to-warn about the adverse health risks associated with wireless telephones;
3. Liability for violating various state consumer protection statutes (Maryland, New York, and Pennsylvania);
4. Breach of implied warranty of merchantability by selling and distributing unreasonably dangerous wireless telephone;
5. Negligence in: a) failing to conduct adequate and appropriate scientific research on the adverse health effects of exposure to RF radiation from wireless telephones; b) misrepresenting to the public that wireless telephones are safe; c) suppressing any scientific evidence suggesting that wireless telephones are not safe; d) failing to provide warnings about the potential health risks from failing to use a headset; and e) failing to provide headsets and instructions encouraging their use.
6. Fraud by misinforming and misleading the public as to the safety of wireless telephones; and
7. Civil conspiracy to market unsafe wireless telephones by improper and wrongful means.

In Farina, the allegations were the following:

1. Civil conspiracy, asserting that defendants acted together to suppress the knowledge of risks associated with RF emissions from cell phone use and to sell and market defective cell phones, which can adversely affect users, with intent to deceive the public by failing to warn of potential hazards;
2. Breach of implied warranty based upon the facts that the cell phones did not come with headsets; the user manuals indicated they would be safe to use without a headset, and warranties contained promises that the products were “free of defects”;
3. Breach of express warranty based on the allegation that the cell phones sold by defendants failed the express promise of safe operation;
4. A claim for violation of the Magnuson Moss Warranty Improvement Act; and
5. A claim under the Pennsylvania Declaratory Judgment Act alleging that the class is entitled to a declaration that defendants' conduct constitutes violations of Pennsylvania statutory and common law and declaratory relief requiring defendants to supply headsets for cell phones purchased by plaintiff in the class.

The thrust of the claims in both actions was that the defendants violated various state laws by manufacturing and selling a product that they knew, or should have known, was dangerous, and by not adequately warning of the dangers.

Preemption Analysis

Both courts acknowledged that the U.S. Supreme Court has identified three major situations where federal preemption applies: 1) “Express” Preemption, which is applicable when Congress expressly states its intent to preempt state law; 2) “Field” Preemption, which is applicable when “Congress' intent to pre-empt all state law in a particular area may be inferred [because] the scheme of federal regulation is sufficiently comprehensive,” or “the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject”; and 3) “Conflict” preemption, which is applicable when “state law is nullified to the extent that it actually conflicts with federal law,” even though Congress has not displaced all state law in a given area.

Express Preemption

Both the Pinney and Farina courts rejected defendants' express preemption argument based on the specific sections of the Federal Communications Act (FCA). Both courts agreed that nothing in the FCA expressly preempted state common law designed to ensure the health and safety of cell phone users. Both courts undertook an analysis of the statute and found that, relying on the medical device analysis in Medtronic, Inc. v. Lohr , 518 U.S. 470, 485 (1996), there is a strong presumption against preemption when the federal government regulates an area that is traditionally left to the states, such as health and safety.

Implied Preemption

Here is where the courts diverged. Pinney found no preemption while Farina dismissed the plaintiffs' claims on the grounds of implied conflict preemption.

The Third Circuit first analyzed the application of any presumption against preemption by making a distinction between traditional and non-traditional state law interests. The Farina court held that the regulation of health risks associated with cell phone use arguably falls within the traditional areas of state law interests. It went further than Pinney, however, by concluding that Congress, through its establishment of the FCC and its grant to that agency of plenary jurisdiction of the technical standards for radio communications, has impliedly preempted contrary state laws regarding RF emissions. It agreed with the defense argument that the telecommunications industry is not merely a product of commerce like industries such as the maritime industry, but rather, it is an instrumentality of commerce that has been subject to consistent national regulation.

Pinney, on the other hand, pointed out that the FCC's RF radiation standards for cell phones were not promulgated pursuant to a mandate contained in the FCA, but rather pursuant to the National Environmental Policy Act (NEPA) mandate that all agencies assess the environmental impact of their actions. It held that the complete absence of any provision addressing wireless telephones counseled against a finding that the FCA evidenced a congressional goal of achieving preemptive national RF radiation standards for cell phones.

In Farina, the Third Circuit recognized that state common law tort actions based on federally regulated manufacturers' failure-to-warn can present defendants with particular difficulties. The court cited Colacicco v. Apotex Inc. , 521 F.3d 253, 267-68 (3rd Cir. 2008), the Third Circuit case addressing FDA preemption, explaining that this is because state standards of care differ from state to state, and the absence of any consistent federal warning requirement may subject such manufacturers “to considerable liability based on varying standards, with no benchmark that they should follow.” The Third Circuit also followed the teaching of Colacicco that in determining whether a federal regulation or the failure to regulate as extensively as the plaintiff seeks has preemptive force, requires a review of the record of the agency's treatment of the desired warning at issue. With this structure in place, the Third Circuit came to the conclusion that Congress has given the FCC exclusive authority over every technical aspect of radio communication, and the FCC has also assumed specific responsibility for creating safety standards for cell phone RF emissions (not just cellular infrastructure). Interestingly, where the Fourth Circuit held the involvement of the NEPA as militating against preemption, the Third Circuit acknowledges the role of the NEPA and cited to the FCC's determination that it had the responsibility to address safety concerns raised by RF emissions. Accordingly, the Third Circuit stated that the FCC evaluated the potential biological effects of FCC-licensed devices and adopted as its standard for RF exposure from wireless service facilities the standard published by the American National Standards Institute (ANSI).

Finally, the Third Circuit placed weight on the fact that the FCC has argued in amicus curiae briefs that the Pinney decision was incorrectly decided and that common law claims alleging injury from RF radiation emitted by cell phones are, in fact, preempted.

The Third Circuit in Farina took issue with the Pinney analysis on the grounds that Pinney's focus on the specific language of Section 332 in finding no preemption by the FCA was too narrow. Farina agreed that an analysis of the language used by Congress is significant when examining express preemption, but that implied preemption presumes that Congress has not displaced all state law, and requires that courts examine whether state laws that “fall within the gaps” conflict with the accomplishment and execution of Congress' purposes and objectives. The Third Circuit found no justification for ignoring the FCC's clear authority under NEPA when analyzing conflict preemption.

The Farina court went on to find that the comprehensiveness of the federal regulatory scheme in place and the FCC's own determination that its RF emission standards are preemptive, distinguishes this situation from that of Medtronic.

The Farina court held that the FCC recognized its mandatory obligation to issue RF emission standards for cell phones, and provided specific requirements for cell phone RF emissions through its adoption of the revised ANSI maximum. It also continued the practice of the Third Circuit, as in Colacicco, where the court stated that it did not need to speculate on the FCC's rationale for adopting the revised ANSI standards for RF emissions from cell phones. The court gave deference to the agency's rule making decisions, as well as its rationale for adopting the original and revised ANSI standards, and later, for finding no basis to alter them. The Third Circuit characterization of plaintiffs' allegations as unquestionably “trampling” upon the FCC's authority to determine the maximum for RF emissions and that the plaintiffs in Farina sought to hold the manufacturers and providers liable, even though the plaintiffs did not allege they failed to meet the required FCC standards, is language that will hearten manufacturers.

Conclusion

It therefore appears that unless the anxiously awaited Supreme Court decision, as it relates to pharmaceutical preemption, sets forth a clear, brightline test, the implied Preemption Doctrine will be alive and well when it is invoked in product liability cases where there is a history of regulatory activity.

Daniel J. Herling, a member of this newsletter's Board of Editors, is a partner at San Francisco's Keller and Heckman LLP.