Here is a preplexing piece from the L.A. Times editorial page on the recent U.S. Supreme Court argument in Philip Morris v. Williams.  The Times editorial writers refer to the Oregon Supreme Court’s decision resting on “spurious state-law grounds.” Full disclosure: I represent amici in the case, so I am not impartial.

While they link to and quote from the transcript of hearing, the Times writers quote selectively from it. For example, they omit Justice Breyer’s description of 28 published appellate court opinions in which Oregon courts have cited the operative state-law rule. (Tr. 14-unofficial transcript). They ignored Philip Morris’ concession at oral argument that Philip Morris does not question the good faith of the Oregon Supreme Court, or Justice Stevens’ observation that it the Oregon Supreme Court was acting in good faith. (Tr. 20).  So how, exactly, did the L.A. Times editorial board determine that the state law grounds were “spurious?”

It’s easy to turn a phrase. Tempting, too. But by its words, the Times has done a grave disservice to the Oregon Supreme Court and the rule of law.

One other thing: The editorial suggests that the Court should place limits on punitive damages through this case. What the Times and all advocates of absolute limits cannot explain is why it would be wise to tell miscreants exactly how much they will pay for their misconduct.

Here is what I mean.  The single best illustration comes from the Ford exploding  Pinto gas tank case many years ago. There, Ford employees figured out that they could make a lot of money by not spending a very small amount on safety measures that would prevent gas tank fires. They did a cost-benefit analysis, and a California jury properly punished them many times over their profit for their outrageous misconduct.

If the Court puts an absolute limit on punitive damage amounts, it will allow every bean counter with a calculator to precisely calculate how much profit it will make by engaging in misconduct. It simply eliminates the deterrent effect of punitive damages.  That’s a bad outcome for this case, and bad policy for the cases that come after.

David Sugerman

I grew up on Mad magazine, and one of my favorite features was “What they say…What they really mean.” And I’m reminded of that feature with this L.A. Times report on the Food and Drug Administration staff’s opposition to preemption.

Digression, first off, to credit reader JW on the pithy term “Kleptocracy” to describe the current regime’s fondness for allowing all its friends to gather at the trough. JDub says that he got it from wiki. Even so, his reverb is worthy of thanks and recognition.

And then some legal geek background on preemption. It’s a federal legal doctrine–based in the U.S. Constitution’s supremacy clause–that allows federal law to preempt or displace or block all state laws in a particular field. “State laws” is read broadly to include even a claim that might be based on state law. What it means for purposes of the kleptocracy is that a corporate wrongdoer who injures a citizen need not answer in court if the claim is preempted by federal law.

So one more little piece of foundation for this forehead smacker. Next week, the U.S. Supreme Court hears argument in the case of Wyeth v. Levine, Case No. 06-1249. In that case, the Bush Administration and FDA counsel are arguing that federal Food and Drug Act should preempt state law claims.  That’s to say, if you’re injured by a dangerous drug regulated by the FDA, our kleptocrats believe that you shouldn’t be able to sue.

The LA Times article demonstrates the inane basis of the argument. FDA staff knows full well that the agency does not and cannot protect consumers from drug company mistakes and misconduct. So it’s folly to assert that preemption should limit these claims. Back to Mad. They say: “Preemption is the best way to protect consumers because the FDA rigorously monitors drug safety.” What they really mean: “These consumer lawsuits from unsafe products are eating at our profits. We don’t like them.”

David Sugerman