Corporations Granted Preemption Immunity for Defective Products and Wrongful Acts

For the past several years, the Bush administration has pursued a covert campaign to steal the rights of victims of dangerous drugs and other defective products. Contrary to the conservative Republican mantra of “personal responsibility,” federal agencies have been giving “Get Out of Jail Free” cards to irresponsible corporate wrongdoers. The goal is to deprive the injured victims of defective products of their rights to fair compensation under state law.

An in depth study just released by the American Association for Justice has documented how federal agencies have used “preemption” to try to allow corporate wrongdoers to escape justice. What is preemption? Rightly used, preemption means a federal law preempts all contrary state laws where Congress has expressed its intent to totally occupy a specific area of law.

What is the result of such language? If it is effective, consumers can be prevented from filing lawsuits in state court when the product that injured them complied with federal standards, no matter how inadequate those regulations may be. No suit may be maintained even though the product might be considered defective under state law. By this means, the federal law trumps the state law, and the corporate wrongdoer is immune from liability for the injuries its product caused.

Political appointees of the Bush administration have gutted many of the regulations that are supposed to protect us all. Compounding the wrong, they then inserted into those ineffective regulations language that purports to preempt lawsuits by victims of dangerously defective drugs, defective automobiles, and other harmful products. Since 2005, seven agencies of the United States government have issued more than 60 rules with preemption language in the preamble to the rule. These preemption provisions generally were inserted at the last minute, without notice to interested state governments, consumers or other affected groups. Often, the proposed rule stated that no preemption was intended, but the Bush bureaucrats inserted a preemption provision into the final rule after public comment had ended.

“Why,” you may ask, “would the government want to keep people injured by dangerous drugs or other defective products from asserting their legal rights?” Why, indeed. Protection of the public is the mission of many of the agencies that have tried to cheat these victims and help the corporations that harmed them. Contrary to their true mission, under the Bush administration the agencies have taken up the cause of protecting corporations at the expense of public safety. A bigger perversion of the role of federal regulators would be hard to find.

This is an extensive problem. Preemption language has been inserted into regulations promulgated by the U.S. Food and Drug Administration (FDA), the National Highway Traffic Safety Administration (NHTSA), the Consumer Product Safety Commission (CPSC), the Federal Railroad Administration (FRA), the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Department of Homeland Security (DHS), and the Transportation Safety Administration (TSA). Each agency has broken with long-standing agency policy and precedent to now claim the authority to provide immunity from state law.

As detailed in the study, part of the problem is the “revolving door” form of government employment that has occurred with the Bush administration. Key regulatory positions have gone to political appointees who work in the industry to be regulated. As the new “regulator,” these appointees then have power to help the industry in which they formerly were employed. Once the appointee has done the damage, he then returns to the private sector in the same industry he has now protected from responsibility for its wrongdoing. A prime example is the pharmaceutical industry lawyer who became in effect the head of the FDA when it inserted preemption language into several sets of regulations. Claiming he was resigning for family reasons, he then went back to work for the industry, touting what he had done as a regulator to eliminate lawsuits.

From the beginning of his presidency, one of George W. Bush’s goals was to eliminate as much liability for corporate wrongs as possible. As a result, his Office of Management and Budget (OMB) has lead the charge to insert preemption language into regulations originally intended to protect consumers. In fact, OMB drafted the preemption language that the agencies repeatedly inserted into these regulations. This shows the preemption push was a coordinated effort of the administration.

Many legal authorities are aghast at what they view as a perversion of the regulatory process. According to a law professor who authored a leading treatise on food and drug law, the administration’s perversion of the regulatory system by allowing “[t]he capture of the FDA by forces favoring judicial preemption is a travesty.” Study at 24. There is at least a chance this thievery of the rights of victims will fail because the courts have not yet passed on the preemptive effect of inserting such language into the preambles of regulations. Hopefully, the courts will decide these “Get Out of Jail Free” cards have no more value for corporate wrongdoers than Monopoly money.

At best, federal agencies are notoriously bad at effectively regulating industry and protecting the public. The recent spate of FDA failings tells that tale in glaring fashion. The industry-friendly approach of the Bush administration over the last eight years has exacerbated the ineffectiveness of the supposed regulators. If the federal agency fails to regulate corporate wrongdoing, and the preemption doctrine bars citizens from regulating corporate behavior through jury verdicts, corporate malfeasance will run rampant and unchecked. Profits will be the sole guiding light, to the detriment of safety and injured consumers.