When States Call The Shots

Article VI of the U.S. Constitution states federal law “shall be the supreme Law of the Land,” regardless of what state courts have to say about the matter. Yet the U.S. Supreme Court has repeatedly allowed state courts to adjudicate matters that seem to fall directly under federal control, whether it’s the safety of FDA-approved medicines or liability for accidents involving federally regulated vehicles.

The latest blow came in January, when the Supreme Court allowed a lawsuit against the oil industry to proceed in state court in Hawaii. ExxonMobil and others argued the federal Clean Air Act controls any claim based on air pollution, which climate-change activists say includes greenhouse gases like CO2. But the Supreme Court refused to reverse a Hawaii Supreme Court decision holding that the state-court claim—that oil companies misled consumers into burning fossil fuels by downplaying concerns about global warming—should be heard by a Hawaii courtroom.

Courting State Sympathy

Few things could be more federal in nature than a lawsuit over global greenhouse gas emissions. Yet plaintiff lawyers, most working under contingency-fee agreements with local government, have cleverly written their claims to hinge on state consumer-protection and fraud statutes, not the CAA. It’s an obvious attempt to keep in front of presumably more sympathetic state-court judges, yet the Supreme Court seems to be playing along for now. It routinely rejects certiorari appeals by businesses trying to avoid potentially devastating verdicts over matters they say involve federal law.

“I don’t think this court is particularly interested in policing state tort-law claims,” says Jonathan Adler, professor of environmental law at Case Western Reserve Law School. “Thus it rarely accepts certiorari in cases challenging massive tort judgments.”

The obstacle is comity, or mutual respect, a core principle under the federalist system of government. Even when cases appear to involve uniquely federal questions, such as whether a drug the FDA found safe and effective caused someone’s injury, the Supreme Court has found ways to avoid interfering with state court judgments.

Siding with States

The court delivered one of its most distressing verdicts—for business, anyway—in 2009 when it upheld, in Wyeth v. Levine, a $6.7 million Vermont judgment over claims the FDA-approved label on a drug didn’t contain sufficient warnings. Wyeth argued it couldn’t comply with federal law and a Vermont jury’s idea of what should have been on the label. But conservative Justice Clarence Thomas joined the liberals in upholding the judgment, saying preemption doctrine too often is based on “generalized notions of congressional purposes that are not embodied within the text of federal law.”

Since then, the conservative majority has overturned the so-called Chevron doctrine that ordered federal courts to defer to agency interpretations of the law, further undermining preemption.

Climate litigation presents a similar challenge for the oil companies. The Supreme Court has so far declined to answer the central question of whether the CAA leaves room for lawsuits based entirely on state consumer fraud statutes.

“Ultimately, the question of federal preemption under the CAA has got to be resolved, and probably by the Supreme Court,” says Patrick Parenteau, an emeritus professor at Vermont Law School who studies climate litigation. But it may be a painful wait, he cautions. The oil industry has won dismissals in Delaware, New York and Maryland but could get hit with a blockbuster verdict in another state. At that point the defendant company would have to decide whether to settle or risk an appeal to a federalist-inclined, unfriendly U.S. Supreme Court.