It is impossible to understate how awesome this is:
In a bold and sweeping policy memorandum issued today, President Obama reaffirmed the critical role that state and local governments play in our constitutional system. The President’s memorandum directs executive branch officials to review every regulation adopted in the past ten years to scrub them of inappropriate preemption language.
In an assault on federalism and our Constitution, the Bush Administration quietly inserted preemptive language into a number of important regulations in an attempt to favor corporate interests at the expense of state laws protecting their citizens. Today the Obama Administration recognized that states serve as “laboratories of democracy” and often are the most aggressive defenders of public health, safety, and the environment.
Today’s action follows yesterday’s decision to adopt California’s automobile emissions standards at the national level—a perfect example of how our country benefits when states act as policy innovators. The states led, the nation followed, and the broad coalition of industry leaders, state officials, and environmental advocates assembled at the White House yesterday showed our country at its best.
UPDATE: Ok, I should probably explain why this is so cool.
The Bush Administration not only stripped away federal regulations protecting ordinary Americans, they used their power under the Supremacy Clause of the Constitution to prohibit states from enforcing their own laws that protect consumers, workers, the underprivileged and the elderly. In truth, however, this is a project that began in the Clinton Administration; driven partially by Democrats who were still stuck in a 1960s way of thinking that says that universal federal standards are always superior to the big, bad states. President Obama’s policy memorandum shows that he understands that the federal government cannot be an obstacle to states who want to protect their citizens in a manner that goes above-and-beyond bare federal standards. For constitutional geeks like me, this is an historic moment.
Just as importantly, it shows that President Obama will not make the same mistakes President Clinton made in appointing judges and justices who eagerly sign on to the corporate “tort reform” agenda. Justice Breyer, in particular, has voted to strip states of their authority to regulate automobile safety, he has declared medical device manufacuters to be immune from accountability when their defective products injure or kill a patient, and he was the weakest of the six justice who recently held that drug companies do not enjoy similar immunity. In Justice Breyer’s America, George W. Bush would have had the power to grant such immunity if he only jumped through a couple of hoops.
After this news, I’m really excited to see who the next justice is going to be.
Writing in Mother Jones, Stephanie Mencimer notes how Bank of America has turned many senior’s Social Security benefits into their own private cash cow:
Bank of America, like many banks, processes checks so they bounce more often, using software that changes the order in which checks clear. The result: Instead of one big check bouncing, lots of little checks will. This maximizes the number of penalties the bank can levy on its customers. When collecting these sorts of fees, banks don’t have to abide by any of the debt-collection laws that apply to other businesses. Because they’ve already got your money, they just take it. But the accounts in the Miller case contained Social Security and federal disability benefits automatically deposited by the government. California state law prohibits banks from seizing money from these protected funds, and the California class action threatened to put the brakes on some of these practices.
But nickel-and-diming customers like this is a $17.5 billion a year business for the nation’s banks. That’s why the industry has fought the California verdict tooth and nail. To that end, in 2004, BoA sought help from its friends in the Bush administration, primarily in the Office of the Comptroller of the Currency, a banking regulator funded by banks themselves. The OCC is notorious for its long legacy of helping big banks squash state efforts to crack down on predatory lending over the past decade—efforts that could have helped head off the current financial meltdown. Not surprisingly, the agency was happy to help BoA fend off the class action. On behalf of the OCC, the Justice Department filed a brief in support of BoA’s appeal arguing that federal bank regulations enforced by the OCC preempted California’s consumer protection laws.
Of course, everyone knows that George Bush is a snake, so it’s not like his Administration’s position in this case is surprising. Here’s the twist:
Now, the Miller case is headed to the California Supreme Court for oral arguments on April 7. But this time, it will be the Obama Justice Department carrying water for the bank, and not just in a brief. The Justice Department’s civil division filed an application last week to present oral arguments in the case during time allotted to the bank.
On March 19, the plaintiffs’ lawyer, James Sturdevant, wrote Sen. Patrick Leahy (D-Vt.) asking him to hold a hearing on the Justice Department’s appearance in the case. He told Leahy that he suspects the administration is essentially on autopilot and simply proceeding along with Bush administration litigation positions largely because it has not installed key personnel at Justice or the OCC. Sturdevant believes that the Obama administration in general does not support the previous administration’s stance on preempting state consumer protection laws. Indeed, in testimony before the Senate banking committee last week, FDIC chair Sheila Bair said, “Abrogating sound state laws, particularly regarding consumer protection, created an opportunity for regulatory arbitrage that frankly resulted in a ‘race-to-the-bottom’ mentality” in the banking industry.
In his letter to Leahy (PDF), Sturdevant noted, “It seems unlikely that the position of the Bush Administration advanced in the Miller amicus briefs, supporting the Bank of America’s predatory banking practices, would be adopted by the Obama Administration at the expense of millions of elderly and disabled Americans who subsist on their monthly social security and other public benefits.”
The problem, as I understand it, is that the Obama Administration has not fully staffed itself, so many jobs, like the Deputy Assistant Attorneys General who would normally supervise career attorneys and make sure they don’t maintain Bush-era positions which are not in the American people’s interest, aren’t filled. As a result, no one is watching to make sure that DOJ abandons many of the most abhorrent positions it adopted in the Bush era.
Diana Levine was a successful musician, until a toxic drug took away her right hand. The drug, an anti-nausea medicine made by the company Wyeth, causes irreversible gangrene if injected into a patient’s artery. Because Wyeth failed to adequately warn doctors of this poisonous effect, however, a physician’s assistant used an unsafe method to inject the drug into Levine. Her hand and her livelihood were the casualties.
After a Vermont jury found that Wyeth was liable for failing to warn doctors of the dangers presented by its drug, Wyeth claimed that it was immune to accountability for its failure, and that Diana Levine was entitled to nothing as a result. Specifically, Wyeth argued that, because the FDA has to approve new drugs before they enter the market, FDA approval of a drug or its labeling “preempts” any state law which also effects drugs or labels. Needless to say, if Wyeth had won today, it would have been a massive giveaway for the drug companies—total lawsuit immunity.
Since the 1930s, the federal government and the states have worked together to protect American consumers from unsafe drugs and fraudulent marketing by drug companies. The federal Food and Drug Administration screens new drugs before they enter the market, and the states have always protected consumers by holding drug companies accountable when an FDA approved drug nevertheless injures a patient. As Justice Stevens explained for the Court, the FDA alone cannot adequately protect American consumers from dangerous drugs, state tort claims play an essential role in preserving public health:
In keeping with Congress’ decision not to pre-empt common-law tort suits, it appears that the FDA tradition-ally regarded state law as a complementary form of drug regulation. The FDA has limited resources to monitor the 11,000 drugs on the market, and manufacturers have superior access to information about their drugs, especially in the postmarketing phase as new risks emerge. State tort suits uncover unknown drug hazards and pro-vide incentives for drug manufacturers to disclose safety risks promptly. They also serve a distinct compensatory function that may motivate injured persons to come for-ward with information.
In other words, the FDA can’t catch everything, and they frequently do approve a drug or a drug label despite as-yet-undiscovered dangers to the American consumer. State tort law is the mechanism to protect American consumers when such a danger results in tragedy. Had the Justices sided with Wyeth, they would have destroyed this protection for consumers, and many more Americans would have wound up like Diana Levine.
Unsurprisingly, the Bush Administration took the drug company’s side in this case, but their arguments to the Justices on Wyeth’s behalf was only a small part of their efforts to shield drug companies from accountability under the law. In 2006, the Bush Administration sneaked, without warning to the public, language into the preamble to a regulation which said that FDA approval of a drug establishes both a “ceiling” and a “floor” for regulation of drug companies. In other words, the Bush Administration tried to make Wyeth’s self-serving argument into the law—establishing that so long as a drug company complies with FDA regulations, they are free to ignore state law.
Today’s decision smacked down that effort. As a general rule, agencies cannot create new regulations without first giving notice of their intent to the public, and then allowing the public a chance to comment on the proposed regulation. Because the Bush Administration tried to sneak the drug company’s fondest desires into a regulatory preemble, the Court said it was free to ignore this preamble. And it did. So one that’s one less George W. Bush giveaway to the corporate interests that we need to worry about.
I’ll probably write more about this case in the days to come, but my initial impression is that it is an earthquake, completely eviscerating many of the drug industry’s efforts over the past several years to immunize itself against the law. I take no small amount of glee in the thoughts offered by Drug and Device Law, a blog written by drug industry lawyers for drug industry lawyers: “Levine isn’t good news for our side by any means . . . .”
Chief Justice Roberts has a bit of an ethical dilemma. Arguably the most important case this Supreme Court term is Wyeth v. Levine, which asks whether a drug company is immune from accountability under state law so long as it complied with federal drug laws and FDA regulations. Should the Court rule in favor of the drug company, it could leave patients who are poisoned by a defective drug completely powerless to hold the manufacturer accountable; drug companies could have total lawsuit immunity.
Roberts’ ethical dilemma is that, although he doesn’t own any stock in Wyeth, the defendant in this case, he does own stock in Pfizer, which just announced that it plans to acquire Wyeth. Thus, the Court’s decision in Wyeth could have a direct impact on the value of Roberts’ Pfizer stock.
Because Roberts is one of the most, if not the most, pro-corporate members of the Supreme Court, Wyeth very much does not want him to recuse himself. So their attorney recently sent a letter suggesting that, because Wyeth likely won’t be acquired until after the Court hands down a decision, there’s nothing to see here and the justices can just go about their business.
The Chief Justice, to his credit, has recused himself from cases involving Pfizer in the past. Hopefully he’ll have the good sense to do so in Wyeth.