Trial lawyers, who have had success in suing product manufacturers for all kinds of safety defects, have a new obstacle to overcome: Embedded in proposed federal regulations are provisions that would preempt lawsuits the Bush administration says conflict with federal standards.
It is no secret that the Bush administration wants broad reform of the legal system. It's less obvious how the administration has begun using the regulatory system at the National Highway Traffic Safety Administration, the Food and Drug Administration, banking agencies and potentially other agencies to achieve its objectives.
"The Bush administration realizes it's impossible to get the broad-based tort reform the business community would love. There has been a conscious effort to take small steps," said Glenn G. Lammi, chief counsel of the Washington Legal Foundation, a pro-business public-interest group.
On Aug. 19, NHTSA issued a long-awaited proposal to improve the strength of vehicle roofs, which have been known to cave in during rollovers, causing serious injuries and fatalities. Auto-safety groups denounced the proposal as weak and predicted it would do little to save lives. The proposal is an update of a 1971 standard.
More troubling to safety groups was a provision that would, in effect, make it more difficult for consumers to sue auto companies for defective roofs -- currently an area of great legal contention.
The proposal said that, if adopted, "it would preempt all conflicting State common law requirements, including rules of tort law." The agency said it had struck a delicate balance in the proposal between increasing the strength of the roof to protect occupants and making sure cars were not more top-heavy and prone to roll over. It said it did not want conflicting state law and judicial interpretations to interfere with safety.
The recent developments at NHTSA have re-ignited a long debate over pre-emption: When do federal law and rules trump state actions? Questions like this have been examined over the years by the Supreme Court, federal agencies, Congress, the business community, consumer groups and the states.
Kenneth M. Suggs, president of the Association of Trial Lawyers of America, said that many products do meet safety standards set by the government but that they aren't as safe as they could be, prompting lawsuits against manufacturers.
"The fact that manufacturers and drug companies want unconstitutional protection is nothing new," Suggs said. "The fact that this administration is complicit with it is a new development and a scary one."
Jeffrey A. Rosen, general counsel for the Department of Transportation and a former attorney who represented General Motors Corp., said federal preemption of state authority is nothing new. "DOT agencies do that [preempt] when they think state law would be contradictory to what the rule is trying to accomplish," Rosen said, adding that "it would helpful to the courts to know if a rule has a preemptive effect or not."
The auto industry supports giving NHTSA the upper hand.
"Why should personal injury lawyers be able to ask juries around the country to second-guess that overall safety policy?" asked Erika Jones, a former NHTSA general counsel who now represents the auto industry.
Paula Lawlor, a legal consultant on roof-crush accidents, said there are an estimated 1,000 cases filed annually involving roofs that collapse in rollovers, resulting in 27,000 injuries or fatalities. A number of those cases are for vehicle damage alone, but some are cases where juries called for substantial awards to plaintiffs.
For example, a jury in 2003 awarded $19.6 million to a passenger in a Chevy S-10 Blazer that rolled over, leaving the plaintiff a quadriplegic. GM is appealing.
Another NHTSA proposal issued June 22 also would preempt some lawsuits as part of a measure stipulating the number of seatbelts auto manufacturers would have to install in the rear of vehicles.
NHTSA's recent proposal to change fuel-economy standards, meanwhile, includes language that prohibits states from setting fuel-economy rules. California issued standards limiting greenhouse gases from vehicles, saying the state has authority to set air-pollution standards. The auto industry has sued, claiming the state is interfering with federal fuel-economy rules.
The FDA has taken a different approach. The agency has intervened in cases brought by individuals against drug and medical-device manufacturers that involve differing interpretations of FDA rules.
The trend became noticeable under the tenure of former FDA general counsel Daniel E. Troy, now a partner at Sidley Austin Brown and Wood. "I was in this to fight FDA's battles, and everything we did was with [support of] career folks, politicals at FDA and Health and Human Services, and Justice," Troy said. "It's highly problematic for a state court to come along and say, 'No, no, no. You should have done something else.' "
The Office of the Comptroller of the Currency issued a broad rule in 2004 determining that state law protecting consumers from abusive lenders was preempted by the National Bank Act. It also eliminated the authority of state attorneys general to enforce state laws over national banks and their subsidiaries, such as mortgage companies.
The OCC and a coalition of banks that it regulates filed suit in June against New York Attorney General Eliot L. Spitzer, who asked in April to review the records of a number of banks regarding interest rates on home mortgage loans.
"OCC has become the kingpin regulator for national and state banks," said Edmund Mierzwinski, consumer program director for U.S. PIRG.
Legal experts predict more controversy when Congress realizes the impact of the provisions and more cases come up against the preemptions.
"I think the plaintiff's bar will fight a holy war over this," said Lammi of the Washington Legal Foundation. "And Congress jealously guards its preemption authority."
Douglas A. Kysar, a law professor at Cornell University and a scholar with the Center for Progressive Reform, said these moves are "back-door tort reform."
He said preemption overlooks one benefit of tort law: "Tort law is not just about trying to change standards; it's to compensate people for their injuries," he said.