Complex Litigation Update: Eleventh Circuit Holds Engle-progeny State-law Claims Preempted by Federal Law

May 07, 2015   

May 7th, 2015

On April 8, 2015, the United States Court of Appeals for the Eleventh Circuit issued its opinion inGraham v. R.J. Reynolds Tobacco Co., holding that Engle-progeny based strict-liability and negligence claims, i.e. those claims premised solely on the facts found in the landmark Florida class action case R.J. Reynolds Tobacco Co. v. Engle and its clarifying progeny, are preempted by Federal law. In so holding, however, the Court emphasized that it expressed no opinion as to the validity of other Engle based claims and that injured plaintiffs could still pursue strict-liability and negligence claims so long as they do not rely on the Engle jury findings to do so.

Although limited to the facts of Engle, the decision serves as a primer on the concept of preemption, especially for those who may otherwise not face such issues in their practices. The decision also serves as a guidepost to possible preemption issues which may arise for businesses in industries which are subject to both federal and state regulations. A copy of the opinion can be read here.

  1. The Engle Cases

In order to fully understand the Court’s rationale in Graham, some background information is necessary. The Graham case was born out of the remnants of a 1994 class-action lawsuit in which 700,000 Floridians brought state-law damages claims against multiple tobacco companies for various medical conditions allegedly caused by the plaintiffs’ addiction to cigarettes. R.J. Reynolds Tobacco Co. v. Engle, 672 So. 2d 39 (Fla. 3d DCA 1996). Ultimately, a class-wide trial was held on the issue of liability and the jury rendered a verdict for the class plaintiffs on all counts, including strict liability and negligence claims. After trial on liability, the Florida Supreme Court decertified the class but allowed the former class members to pursue causes of action individually. These new individual cases by former Engle class action plaintiffs are known as “Engle-progeny cases.”

However, when decertifying the class, the Florida Supreme Court held that jury findings would have a “res judicata effect” in future cases brought by decertified class members against the tobacco companies. Among the findings in Engle which could be applied going forward was that the defendant tobacco companies “placed cigarettes on the market that were defective and unreasonably dangerous” and that “all Engle defendants were negligent.”

  1. The Graham Case: A Factual Overview.

The Graham case is an Engle-progeny case. In Graham, Plaintiff, the personal representative of his wife’s estate, brought a wrongful-death action against R.J. Reynolds Tobacco and Phillip Morris USA, Inc. alleging that the decedent was addicted to cigarettes and this addition caused her death. Included in the Plaintiff’s multi-count complaint were claims for strict liability based on the fact that “the cigarettes sold and placed on the market by the defendants were defective and unreasonably dangerous,” and a negligence claim based on the fact that the defendants were negligent “with respect to smoking and health and the manufacture, marketing and sale of their cigarettes.”

At trial, the tobacco companies objected to the use of the Engle findings regarding defective products and negligence. Ultimately, the jury found in favor of the Plaintiff. Following the jury’s verdict, the Defendants filed a renewed motion for judgment as a matter of law claiming that federal law preempted the jury’s finding of tort liability based on the Engle jury findings. The District Court denied the motion and the Defendants appealed.

  • A Primer on Preemption

As explained by the Court in Graham:

Federal law may preempt state law in three ways. First, Congress has the authority to expressly preempt state law by statute. Second, even in the absence of an express preemption provision, the scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it. Third, federal and state law may impermissibly conflict, for example where it is impossible for a private party to comply with both state and federal law, or where the state law at issue stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Graham, — F.3d –, 2015 WL 1546522, *11 (11th Cir. April 8, 2015). These broad categories are known as express preemption, field preemption, and conflict/obstacle preemption, respectively.

In Graham, the Court was faced with a conflict preemption issue: whether the legal duties imposed by an adoption of the Engle findings regarding defective products and negligence which underpin the strict-liability and negligence claims stand as an obstacle to the accomplishment of federal objectives in the regulation of, but not the outright banning of, cigarettes.

As explained by the Court in Graham, a party alleging that state law is preempted under the theory of conflict preemption faces “a high threshold” because of the “presumption against preemption – namely, that ‘we start with the assumption that the historic police powers of the States were not to be superseded by [federal law] unless that was the clear and manifest purpose of Congress.’”Graham, 2015 WL 1546522 at 12 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)).

When faced with conflict preemption challenges, especially those based on frustration of objective, courts look to congressional intent. As explained in Graham:

In assessing the extent to which state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, what constitutes a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects. To begin then we must first ascertain the nature of the federal interest.

2015 WL 1546522 at 12 (internal quotations and citations omitted).

  1. The Court’s Rationale

In ruling that the wholesale adoption of Engle findings to individual plaintiff claims for strict liability and negligence was preempted and therefore barred, the Court first looked to Congress’s intent in tobacco regulation. The Court noted that Congress had passed at least seven statutes regarding the regulation of tobacco in the fifty years since it had evidence that cigarettes adversely effected health. The Court noted that while Congress knew such information and possessed the power to ban tobacco, Congress chose not to. Instead, Congress focused on reforms to labeling, marketing, and advertising in an effort to fully inform users of cigarettes danger and “thereby permit[] free but informed choice.” Id. at 13.

The Court concluded that Congress made such decisions to balance the competing interests of protecting public health while acknowledging the important role tobacco production and manufacturing plays in the national economy. An example of this balance noted by the Court was Congress’s expansion of authority to the FDA to regulate tobacco products, while expressly prohibiting the FDA from banning all cigarettes or requiring the reduction of nicotine yields of a tobacco product to zero. Thus, the Court found “Congress has never intended to prohibit consumers from purchasing cigarettes. To the contrary, it has designed a ‘distinct regulatory scheme’ to govern the product’s advertising, labelling, and – most importantly – sale.” Id. at 14; citing FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 155 (2000).

In turning to how the strict liability and negligence claims in Engle-progeny cases based on theEngle jury’s findings frustrate the congressional objectives, the Court found that the Engle court’s findings imposed a duty on all cigarette manufacturers that was breached every time the manufacturers placed a cigarette on the market.

As explained by the Court:

In sum, brand-specific defects were not determined during Phase I; they do not need to be determined during Engle-progeny trials, either. And the class definition is of no help, because it does not distinguish among plaintiffs who smoked different brands at different times—all addicted smokers are the same; so, too, are all cigarettes. Thus, as a result of the interplay between the Florida Supreme Court’s interpretations of the Engle findings and the strictures of due process, the necessary basis for Graham’s Engle-progeny strict-liability and negligence claims is that all cigarettes sold during the class period were defective as a matter of law. This, in turn, imposed a common-law duty on cigarette manufacturers that they necessarily breached every time they placed a cigarette on the market. Such a duty operates, in essence, as a ban on cigarettes. Accordingly, it conflicts with Congress’s clear purpose and objective of regulating—not banning—cigarettes, thereby leaving to adult consumers the choice whether to smoke cigarettes or to abstain. We therefore hold that Graham’s claims are preempted by federal law.

Graham, 2015 WL 1546522 at 18.

  1. Analysis of Graham

In essence, the Court held that the express absence of prohibition of a product in a heavily regulated area of law is evidence of congressional intent not to prohibit the product and, as such, can serve as the basis for a preemption challenge to state and common law duties which would require a product’s banning. While this logic may seem expansive, it is consistent with the existing tobacco related case law.

In FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), the Supreme Court addressed the issue of whether the FDA had the authority to regulate tobacco products. In determining that Congress had not intended the FDA to regulate tobacco, the Supreme Court looked to both the existing regulatory scheme in cigarette regulation and the statutory mandate of the FDA. Similar to the court in Graham, the Supreme Court concluded that Congress had established a comprehensive regulatory scheme for tobacco products that existed outside of the Food, Drug, and Cosmetic Act. This scheme regulated, rather than prohibited tobacco product use. Id. at 139.

However, the Supreme Court concluded that if tobacco could be properly classified as a product that falls under FDA authority, the agency would have no choice but to ban tobacco as a misbranded product due to the unreasonable health risks associated with its use. Id. at 137. This, the Supreme Court concluded, would go against congressional intent and objectives in regulating the tobacco industry. Id. at 139. Thus, the Supreme Court ultimately concluded that the FDA lacked jurisdiction to regulate tobacco products. (Note, subsequent to this decision, Congress granted the FDA the authority to regulate but not ban cigarette products. See generally 21 U.S.C. § 387g.).

  1. Preemption Quagmires In Other Regulated Industries

The issue of preemption often arises in industries which are regulated at both the state and federal levels or in those areas, where traditional state common law duties may conflict with a robust federal scheme. Of note, these areas include food & drug law and the budding cannabis marketplace.

In the context of food & drug law, the preemption issue has arisen in a series of cases regarding whether state common law duties associated with theories of negligence (similar to those in theGraham case above) can coexist with duties imposed on drug and medical device manufacturers under the Federal Food, Drug, and Cosmetic Act (FD&C Act). Though the results of those cases were mixed, and a comprehensive analysis of each is beyond the scope of this article, the essence of the issue is best capsulated in the dissent of Wyeth v. Levine, 129 S. Ct. 1187 (2009). As painstaking detailed in the dissent, the issue in such cases is whether Congress intended the federal regulatory agency to be the exclusive means of regulation. If so, state common law duties will be preempted. Compare, Wyeth, 129 S. Ct. 1187 (2009)(holding that the FD&C Act did not preempt state common law causes of action for negligence and strict product liability against a brand name drug manufacturer for failure to warn of dangers of its drug products because of Congress’s long standing view that traditionally regarded state law as a complementary form of drug regulation) with Pliva, Inc. v. Mensing, 131 S.Ct 2567 (2011) (holding that because of the unique requirements placed upon generic drug manufacturers under the FD&C Act which prohibit them from unilaterally modifying their labels, state tort law claims were preempted).

Another area where preemption may come into play is the burgeoning cannabis industry. Although twenty-three states and the District of Columbia currently have laws legalizing marijuana in some form, (either medicinal or recreational), marijuana remains a Schedule I controlled substance under the Controlled Substances Act (“CSA”). Thus, under federal law, the use, possession, sale, cultivation and transportation of marijuana in the United States remains illegal. Recently, Colorado’s recreational use laws have become the subject of litigation based on the ideas of express and conflict preemption.

In two separate cases, one brought in the United States District Court for the District of Colorado by a group of Sheriffs from Colorado and neighboring states, and the other brought directly in the Supreme Court by Nebraska and Oklahoma, the plaintiffs have argued that Colorado’s recreational use laws are preempted by federal law. More specifically, in each case the plaintiffs argue that Colorado’s recreational use laws are expressly preempted by the CSA. In addition, the plaintiffs argue that even if the CSA does not expressly preempt Colorado law, Colorado’s recreational use laws stand as an obstacle to the overarching federal regulatory scheme regarding cannabis, which not only includes the CSA but also several international treaties. The courts have yet to decide these cases and it remains to be seen whether preemption arguments become the new arrow in the quiver of the anti-cannabis contingency.

The attorneys at Fuerst Ittleman David & Joseph have extensive experience in the areas of complex civil and administrative litigation at both the state and federal levels. In addition, Fuerst Ittleman David & Joseph provides comprehensive representation to highly regulated businesses, including clients operating in the financial services, biotechnology, and international trade industries, and frequently lectures on these subjects for industry trade groups. The firm has more recently been called upon to combine its Food and Drug and Anti-Money Laundering practice areas in assisting marijuana-related businesses achieve financial compliance. Please contact us by email at or telephone at 305.350.5690 with any questions.