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supreme court inc. March 23, 2008

Posted by KG in 2008 Elections, econ, legal, news, politics.
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The origins of the business community’s campaign to transform the Supreme Court can be traced back precisely to Aug. 23, 1971. That was the day when Lewis F. Powell Jr., a corporate lawyer in Richmond, Va., wrote a memo to his friend Eugene B. Snydor, then the head of the education committee of the U.S. Chamber of Commerce. In the memo, Powell expressed his concern that the American economic system was “under broad attack.” He identified several aggressors: the New Left, the liberal media, rebellious students on college campuses and, most important, Ralph Nader. Earlier that year, Nader founded Public Citizen to advocate for consumer rights, bring antitrust actions when the Justice Department did not and sue federal agencies when they failed to adopt health and safety regulations.

If there is an anti-Nader — a crusading lawyer passionately devoted to the pro-business cause — it is Theodore Olson. One of the most influential Supreme Court advocates and a former solicitor general under President George W. Bush, Olson is best known for his winning argument before the Supreme Court in Bush v. Gore in 2000. But Olson has devoted most of his energies in private practice to changing the legal and political climate for American business. According to his peers in the elite Supreme Court bar, he more than anyone else is responsible for transforming the approach to one of the most important legal concerns of the American business community: punitive damages awarded to the victims of corporate negligence.

Punitive damages — money awarded by civil juries on top of any awarded for actual harm that victims have suffered — are designed to penalize especially egregious acts of corporate misconduct resulting from malice or greed, and to deter similar wrongdoing in the future. In the 19th century, courts generally demanded a clear assignment of fault in cases where victims sued for injuries caused by malfunctioning products. It was hard for plaintiffs to recover in personal-injury cases unless the corporation was obviously at fault. But in the 20th century, in liability cases involving a rapidly expanding class of potentially dangerous products like cars, drugs and medical devices, courts increasingly applied a standard of “strict liability,” which held that manufacturers should pay whether or not they were directly at fault.

The animating idea was that manufacturers were in the best position to prevent accidents by improving their products with better design and testing. They and their insurance companies (rather than society as a whole) would shoulder the costs of accidents, thus giving them an incentive to make their products safer. Encouraged by Ralph Nader’s book, “Unsafe at Any Speed,” published in 1965, courts began to see car accidents as predictable events that better car design could have prevented. In 1968, for example, a federal court held that car manufacturers could be sued for failing to make cars safe enough for drivers to survive crashes, even if the driver was at fault for the crash.

In a Supreme Court case Olson argued in December, he stood before the justices and argued that the manufacturers of defective medical devices — like heart valves, breast implants and defibrillators — should be immune from personal-liability suits because the federal Food and Drug Administration had approved the devices before they were marketed and the manufacturers had complied with all federal requirements. The case involved Charles Riegel, who had an angioplasty in 1996 during which the catheter used to dilate his coronary artery burst. Riegel, who needed advanced life support and emergency bypass surgery, eventually sued the manufacturer of the catheter, Medtronic. The company is colloquially referred to in the business community as “the pre-emption company” because of its practice of arguing that the Food and Drug Administration’s “premarket approval” of its products pre-empts product-liability suits in state courts.

The lawyer representing Riegel’s estate before the Supreme Court, Allison Zieve of Public Citizen, countered that Congress never intended to ban state product-liability suits when Senator Edward Kennedy sponsored a bill regulating medical devices in 1976. (Kennedy himself filed a brief in the case noting that he indeed intended no such thing.) “Lawyers think this is a close issue, but any time I talk to a nonlawyer about it, they’re shocked,” Zieve told me after the argument. “People think: of course, if somebody makes a defective product you can sue.”

It’s one thing to argue that the federal government’s “premarket approval” of food, drugs and medical devices should pre-empt clearly inconsistent state laws and regulations. After all, if states imposed safety requirements that conflicted with the federal standard, the resulting regulatory confusion would make a national (and global) market impossible. But Olson’s claim that federal regulation of medical devices and drugs should also pre-empt product-liability suits under state tort law is one of the more creative and far-reaching legal arguments of the business groups that litigate before the Supreme Court.

In a decision in 1992, the Supreme Court endorsed part of the companies’ argument. The decision unleashed a torrent of similar “pre-emption” claims by the manufacturers of dangerous drugs, defective medical devices and cars without air bags. And after the election of President Bush in 2000, the business community’s crusade was aggressively supported by the White House. At the same time that the White House was scaling back on federal health-and-safety enforcement, it insisted that consumers should not be able to sue federally regulated industries in state court. Bush appointed as the general counsel of the Food and Drug Administration a former drug- and tobacco-company lawyer named Daniel Troy. With Troy’s support, the F.D.A. reversed its position, held for 25 years, and argued for the first time that its premarket approval of medical devices should prevent injured consumers from bringing product-liability suits in state court.

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