Gwendolyn Yvonne Alexis, Ph.D., J.D. Assistant Professor, Monmouth University

1. Pre-empting Regulators, Empowering States, Screwing Marketing:Dissecting Altria v. Good and Wyeth v. Levine Gwendolyn Yvonne Alexis, Ph.D., J.D. Assistant Professor, Monmouth University Leon Hess Business School West Long Branch, New Jersey galexis@monmouth.edu ABSTRACT: Two recent Supreme Court decisions are indicative of a trend away from according pre-emptive status to federal regulations as a means of barring consumer plaintiffs from asserting claims under state-enforced common law remedies or state-enacted consumer protection laws. This emerging trend is particularly troublesome for corporations marketing their products nationally since complying with federal standards for labeling or truth-in-advertising no longer provides these corporations with a safe harbor. Indeed, the prudent company will be forced to diligently navigate the minefield of consumer protection remedies existing at the state level in each of the various states in which they transact business. In addition to complicating the marketing task for individual corporations that distribute their products nationally, the waning stature of federal pre-emption appears to be at odds with present efforts to promote commerce and spur economic growth. Annual Meeting of Society for Marketing Advances (SMA), New Orleans, LA. Nov. 4-7, 2009

2. U.S. Supreme Court = SCOTUSAltria in December 2008Wyeth in March 2009 • Both cases call into question the Doctrine of Pre-emption in regulatory cases(i.e., cases in which federal regulatory agencies have adopted rules to govern a particular) • Altria involved marketing tobacco • Truth in Advertising under Federal Trade Commission (FTC) • Wyeth involved Pharmaceutical/Medical Devices • Regulated by Federal Drug Administration (FDA)

3. 2 Cases Indicate Trend away from Pre-emptive Status to Federal Regulations • Advantage of Federal Pre-emptive Status • Bars consumer plaintiffs from asserting claims under state-enforced remedies such as: • common law claims • claims based upon state consumer protection laws • Provides Safe Harbor for Corporations that market products nationally; they can rely on federal standards (e.g., federal standards for labeling or truth-in advertising) • Massachusetts, et al vs. EPA is an example of the burden having to comply with individual state laws can place on a corporation. • Obama has asked new EPA to examine whether each state could enact its own emissions standards (ala California)

4. Federal Pre-emption Hurts Consumers! • New research study from University of North Carolina at Chapel Hill that federal pre-emption of state anti-predatory lending (APL) laws led to more mortgage defaults. In 2004, the Bush White House decided to pre-empt state lending standards. • States that have Anti-Predatory Lending (APL) laws are associated with a lower rate of mortgage defaults than non-APL states. Typically, Anti-Predatory Lending laws require verification of borrowers’ repayment ability, as well as include limits on fees, rates and prepayment penalties. • States without these restrictions and verification requirements have higher default rates. • The report concluded that in States where the APLs “require a lender to consider a borrower’s ability to pay and ban prepayment penalties” there are “significantly lower default rates.” <http://www.ritholtz.com/blog/2009/10/pre-emption-of-state-anti-predatory-lending-laws-led-to-more-foreclosures/>

5. Does FTC Need State Help? • Adjudicative Proceedings • Antitrust & Mergers • Case List • Commission Actions • Conferences & Workshops • Consumer Complaint • Credit & Loans • Debt Collection • Do Not Call Registry • Free Credit Reports • FTC Decision Volumes • Identity Theft • Internet Fraud & Safety • Money Matters • Oil & Gas • Privacy & Data Security • Reports • RN Database • Rules FTC’s Regulatory Jurisdiction “The FTC has long depended on cooperative state regulation to achieve its mission because, although one of the smallest administrative agencies, it is charged with policing an enormous amount of activity.” ...Justice Stevens in Altria vs. Good (Note 6)

6. Is FDA also Overworked? • Regulates: Food; Drugs; Medical Devices; Vaccines, Blood and Biologics; Animal and Veterinary; Cosmetics; Radiation-Emitting Products; and Tobacco Products

7. “Manufacturers have superior access to information about their drugs, especially in the postmarketing phase as new risks emerge.” . .. Justice Stevens in Wyeth v. Levine (p. 22) • Other points made by Judge Stevens in Wyeth: • Congress decided NOT to pre-empt common-law tort suits • FDA has limited resources to monitor the 11,000 drugs on the market • FDA has traditionally regarded state law as a complementary form of drug regulation Best Friends:FDA and State!

8. Anomaly • In both cases, state law overturned federal agency decision rather than working in tandem with the federal agency!