WASHINGTON — The Supreme Court sided with business in two cases Wednesday that limit state lawsuits against medical device manufacturers and invalidate Maine's regulations of package delivery companies.
The court denied business groups a third victory, however, in ruling that retirement-plan participants could sue to recover losses.
The two favorable outcomes for business relied on federal laws that the court said pre-empt state action.
Meir Feder, a New York appeals court specialist, says the decisions are part of a trend that generally has limited the ability of individuals to sue businesses.
"There is a lot of skepticism by the court about the benefit of allowing private civil lawsuits against companies and a lot of concern about the downsides of litigation — deterring investment and raising costs," Feder said.
In an 8-1 decision, the court made it harder for consumers to sue makers of federally approved medical devices.
The case has significant implications for the $75 billion-a-year health-care technology industry, whose products range from heart valves to toothbrushes. In a recent three-month span, federal regulators responded to over 100 safety problems regarding medical devices.
The justices ruled against the estate of a patient who suffered serious injuries when a catheter burst during a medical procedure.
At issue was whether the estate could use a state law to sue Medtronic Inc. of Fridley, Minn., over a device previously approved for sale by regulators.
Under federal law, a company must provide evidence of the safety and effectiveness of a medical device before the Food and Drug Administration will approve it for the marketplace.
State suits are barred to the extent they would impose requirements that are different from federal requirements, according to the opinion by Justice Antonin Scalia.
Justice Ruth Bader Ginsburg, in dissent, said Congress did not intend such drastic limits on state court suits.
Rep. Henry Waxman, D-Calif., said the decision strips consumers of rights they have had for decades. "We'll pass legislation as quickly as possible to fix this nonsensical situation," said Waxman, chairman of the House Oversight and Government Reform Committee.
Chicago lawyer Mark Herrmann, who defends drug and medical device companies in suits, sees the ruling as a favorable sign for the pharmaceutical industry in a pending Supreme Court case on a similar issue. In that case, drugmaker Wyeth contends it should not have been subjected to a suit because the company had FDA approval for the warning label that accompanied the drug.
The case the court ruled on Wednesday is Riegel v. Medtronic, 06-179.
The package delivery case could provide the impetus for the transportation industry to get out from under state laws regulating cigarette deliveries in the Internet age.
The court unanimously invalidated parts of a Maine law that bars Internet tobacco sales to minors.
The justices said the state cannot impose a regulatory scheme on transportation companies delivering tobacco products directly to consumers. The justices said federal transportation law prevents state-by-state regulation.
"Despite the importance of the public health objective, we cannot agree" with Maine's approach, Justice Stephen Breyer wrote. He said federal law "says nothing about a public health exception" enabling state regulation.
Federal law bars states from regulating prices, routes or services of shipping companies.
Thirty-one states besides Maine have cigarette delivery laws targeting the problem of underage smokers.
Maine's law requires delivery companies to intercept packages from unlicensed tobacco sellers and to verify the age of buyers. This requirement hits delivery companies with huge additional costs, the industry said.
Wednesday's ruling could enable the industry to argue that similar laws in other states are invalid. The decision could clear the way for companies to challenge an aggressive campaign by New York that led the industry's biggest players to stop shipping cigarettes directly to consumers from illegal Internet sellers.
The case is Rowe v. New Hampshire Motor Transport Association, 06-457.
Business groups were on the losing end of another unanimous ruling, allowing individual participants in the most common type of retirement plan to sue under a pension protection law to recover their losses.
The decision has implications for 50 million workers with $2.7 trillion invested in 401(k) retirement plans.
James LaRue of Southlake, Texas, said the value of his stock market holdings plunged $150,000 when administrators at his retirement plan failed to follow his instructions to switch to safer investments.
The issue in the LaRue case was whether the Employee Retirement Income Security Act permits an individual account holder to sue plan administrators for breaching their fiduciary duties.
The language of the law refers to recovering money for the "plan" rather than for an individual, raising the question of whether a participant can sue solely for himself.
Business groups argued that ERISA is aimed at encouraging employers to set up pension plans, while guarding against administrative abuses involving the plan as a whole.
But Justice John Paul Stevens, in his opinion for the court, said such suits are allowed. "Fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive," Stevens said.
Jeff Russell, a trial lawyer who defends company sponsors of 401(k) plans, called the ruling "a return to the common sense notion that a participant can sue for mistakes made in the handling of their account."
Given the Bush administration's position in support of the right by plan participants to sue, the Supreme Court ruling was not a surprise, said Russell.
The case is LaRue v. DeWolff, 06-856.