## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 98-1055

___________ Richard Symens; Joyce Symens, * * Plaintiffs - Appellees, * * v. * * SmithKline Beecham Corporation, * * Defendant - Appellant. *

___________ Appeals from the United States No. 98-1056 District Court for the

___________ District of South Dakota. Ivan Sjovall, * * Plaintiff - Appellee, * * v. * * SmithKline Beecham Corporation, * * Defendant - Appellant. *

___________ Submitted: June 8, 1998 Filed: August 27, 1998

___________The HONORABLE JOHN C. GODBOLD, United States Circuit Judge for the * Eleventh Circuit, sitting by designation. -2- Before LOKEN, GODBOLD, and HEANEY, Circuit Judges. *

___________ LOKEN, Circuit Judge.
In the last half of 1992, cattle feedlot operators Richard and Joyce Symens and Ivan Sj ovall vaccinated their cattle with “BoviShield 4" and “Ultrabac-7/Somubac, ” vaccines manufactured by SmithKline Beecham Corporation (S BC). They commenced these diversity actions, alleging that the cattle “contracted debilitating and morta l infections and diseases” from the vaccines, and asserting South Dakota common law claims for strict liability, breach of implied warranties, false advertisi ng, failure to warn, and fraud on the licensing agency. SBC moved for summary judgment, arguing that plaintif fs’ claims are preempted by the Virus-Serum-Toxin Act (VSTA), 21 U.S.C

. §§ 151-59. The district court denied the motion and certified t he issue for interlocutory appeal under 28 U.S.C. § 1292(b). We reverse in part and remand.

VSTA authorizes the United States Department of Agriculture (USDA) t o license and regulate the preparation and sale of “viruses, serums, toxins, and analogous products, for use in the tre atment of domestic animals.” 21 U.S.C. § 154. USDA has delegat ed this authority to its Animal and Plant Health Inspection Service (APHIS)

. See9 C.F.R. § 101.2. APHIS in turn has “promulgated an extensive re gulatory scheme governing the design, manufacture, distribution, testing, and labeling of anima l vaccines .” Lynnbrook Farms v. SmithKline Beecham Corp. , 79 F.3d 620, 624 (7th Cir.), cert. denied , 117 S. Ct. 178 (1996), citing 9 C.F.R. §§ 101-24.

APHI S licenses all animal vaccines and vaccine manufacturers. See 9 C.F.R

. §§ 102.1, 102.2. The application for an animal vaccine license must include an-3-

“Out lineof Production” that details the vaccine’s composition, manufacture , prep aration, testing, and packaging. See 9 C.F.R. §§ 102.3(b)(2)(i), 114.8-.9. Th e regulations detail ingredient requirements, such as the types of cell lines that must b e used to produce biologics. See 9 C.F.R. §§ 113.50-.55. APHIS-mandated testin g proced ures ensure the “purity, safety, potency, and efficacy” of the vaccine. See 9 C.F.R. §§ 102.3(b)(2)(ii), 113.25-.55, 113.64-.3 32. APHIS approves all product labels and package inserts; even minor changes in label size and color must be resubmitted for review and approval. See 9 C.F.R. §§ 101.4, 112.5. Packaging must contai n instructions, warnings, the license number, and prescribed storage temperatures. See 9 C.F.R. § 11 2.2(a). Once approved, the Outline of Production may not be change d withoutresu bmission to APHIS. See 9 C.F.R. § 114.8(d). Before marketing, th e manufacturer

must test a licensed vaccine to ensure that it is “pure, safe, potent, an d effi cacious.” 9 C.F.R. § 113.5. Any serial (lot) that does not pass the prescribe d premarket t ests may not be sold. See 9 C.F.R. § 113.6(b). The manufacturer mus t forward samples of each serial and sub serial to APHIS. See 9 C.F.R. § 113.3. APHIS may test the product for “purity, safety, potency, or efficacy ” before it is marketed. See 9 C.F.R. § 113.6(a).

Bovi Shield

4 and Ultrabac-7/Somubac are APHIS-licensed vaccines. SBC’ s records re flect that each serial of the vaccines administered to plaintiffs’ cattle wa s tested by S BC before release. The test results were “satisfactory,” and those result s were reviewed by APHIS. After the Symens’s cattle sickened, they complained t o APHIS. T he agency tested two BoviShield 4 serials and concluded they met purity standards and were not contaminated.
The Preemption Question.
Under the Supremacy Clause of the Constitution, federal l egislation may preempt state law. Congre ss may express an intent to preempt in the federal statute. An intent to preempt may also be implied, for example, when federal and state laws directly-4-

conflict, when state law sta nds as an obstacle to accomplishing the purposes of federal law, or when federal law is so pervas ive that it reflects an intent to occupy a regulatory f i eld. See Heart of Am. Grain Inspection Serv., Inc. v. Missouri Dep’t of Agric. , 123 F.3d 1098, 1103 (8th Cir. 1997). Congress may also delegate the preemption question

-- expressly or by implication -- to the agency it authorizes to administer or enforce a federal statute. When agency preemption is at issue, th e inquiry focuses on whether the agency intended to preempt state law and whether it had the statutory authority to do
so. See City of New York v. F.C.C. , 486 U.S. 57 , 63-64 (1988). This appeal raises an issue of agency preemption. VSTA does not expressly address the preemption question, but it delegates broad powers to APHI S, and the agency has expressed a clear intent to preempt inconsistent state “requirements.” We must consider whether APHIS has the power to preempt, and if so, wheth er it has preempted all or part of plaintiffs’ common law claims.
A. Is There VSTA Preemption?

Priorto 19 85, VSTA did not clearly apply to intrastate vaccines. Congres s amended VSTA in the Food Security Act of 1985. SeePub. L. No. 99-198, Title XVII, § 1768, 99 Stat. 1654-56. The 1985 amendments authorized USDA to license an d regulate intrastate vaccines, broadened the Secretary’s authority to issue regulations “to carry out” the Act, and granted the agency enhanced enforcement powers. See 2 1 U.S.C. §§ 151, 154, 159. The le gislative history observed that “[t]he need for uniform national standards has b ecome recognized widely in recent years.” H.R. Rep. No. 99- 271, pt. 2, at 339, reprinted in1985-3 U.S.C.C.A.N. 1660, 2005.
In 1990, APHIS proposed to modi fy its regulations to clarify that licensees must comply wit h state regulation “based on local disease conditions.” See 55 Fed. Reg

. 42,392 (1990), proposing to amend 9 C.F.R. § 102.5(d)(2). In promulgating the final rule, APHIS responded to comments that States should have broader authority:-5-

Seven commentators indicated that States should have the authority to add to Federal r estrictions, as appropriate . . . . APHIS, however, does no t agree . . . . The legislative history relating to the 1985 amendments . .

. clearly expresses Congressional intent that Federal regu lation of veterinary biol ogics is needed to prevent and eliminate burdens on commerce an d that t here is a need for uniform national standards regarding thes e pro ducts. Therefore, States are not free to impose requirements whic h are different from, or in addition to, those imposed by USDA regarding the safety, efficacy, potency, or purity of a product. Similarly, labeling requirem ents which are different from or in addition to those in th e re gulations under the Act may not be imposed by the States . Suc h additional or different requirements woul d thwart the Congressional intent regarding uniform national s tandards, and would usurp USDA’s authority to determine which biologics are pure, safe, potent, and efficacious.
APHIS, Final Rule Pertaining to Restrictions Which May Be Imposed by States on the Distributionand Use of Veterinary Biological Products, 57 Fed. Reg. 38,758, 38,759 (1992) (emphasis added).
Despite this clear expression of intent to preempt state law requirements, th e district court concluded that APHIS has no statutory authority to pree mpt. We disagree. The Commerce Clause grants Congress power to preempt state regulation of anima l vaccines. W hile an intent to preempt state law will not lightly be implied from a n ambiguous statute, see , e.g. , Florida Lime & Avocado Growers, Inc. v. Paul , 373 U.S. 132, 1 46-47 (1963), the question whether Congress intended to authorize a federa l agency to preempt is reviewed somewhat differently:
[M] any of the responsibilities conferred on federal agencies involve a broad grant of authority to reconcile conflicting policies. Where this i s true , the Court has cautioned that even in the area of pre-emption, if th e agency’s choice to pre-empt “represents a reasonable accommodation of conflicting policies that were committed to the agency’s care by the-6-

statute, we should not disturb it unless it appears from the statute or it s legislative history that the accommodation is not one that Congress would have sanctioned.”
City of New York , 486 U.S. at 64, quoti ng United States v. Shimer , 367 U.S. 374, 383 (1961); see also Fidelity Federal Sav. & Loan Ass’ n v. de la Cuesta , 458 U.S. 141, 154 (1982)

. The 1985 VSTA amendments granted USDA authority to license intrastat e vacc ines, enhanced the agency’s enforcement powers, and broadened its authority t o issue implementing regulations. The legislative history noted the “tru ly national markets for the live ani mals and their products” and the “need for uniform national standards.” 1985-3 U. S.C.C.A.N. at 2005. In these circumstances, we agree with the Seventh Circuit “that APHIS acted rationally and within the scope of the authority granted to it by Congress in issuing th e above statement seeking to preempt state law.” Lynnbrook Farms , 79 F.3d at 625; accord Murphy v. SmithKline Beecham Animal Health Group , 898 F. Supp. 811, 815-17 (D. Kan. 1995); Brandt v. Marshall Animal Clinic , 54 0 N.W.2d 870, 874-76 (Minn. Ct. App. 1995).

Whether state laws that add to federal regulatory requirements are inconsistent with the purp oses of the federal statute is often a complex issue. Here, for example , Con gress intended to create a regulatory regime that establishes uniform nationa l standards and has the ability to meet “an emergency condition, limited market or local situation, or other special circumstance.” 21 U.S.C. § 154a. It is re asonable to infer that Congress intended to delegate to the federal licensing agency the question of whether and to what extent preemption is necessary to furt her these policies. Therefore, APHIS made a “reasonable accommodation . . . that Congress w ould have sanctioned,” the test under City of New York , when it concluded that the 1985 amendme nts granted it power to preempt, and that additional state requirements regarding product safety, efficacy , poten cy, purity, and labeling “stand[] as an obstacle to the accomplishment an d execution of the full pur

poses and objectives of Congress.” Wisconsin Pub. Intervenor v. Mortier , 501 U.S. 597, 605 (1991).-7- B. What Is the Extent of VSTA Preemption?

Ha ving concluded that APHIS validly preempted state laws that “impos e requ irements which are different from, or in addition to, those imposed by USDA ” regarding the safety, efficacy, potency, purity, or labe ling of licensed vaccines, we must determine the effect of that preem ption on plaintiffs’ common law claims. SBC argues that “requirements” include common law remedies and therefore plaintiffs’ claims are totally preempted. Plaintiffs argue that APHIS did not intend to preempt common law remedies and

therefore their claims are entirely unaffected by federal regulation of the vaccines in question. We reject both contentions.
SBC argues for total preemption of state common law remedies. Congress does
on oc casion fashion a comprehensive scheme of federal remedies that preempt s inconsistent remedies under state law. See Ingersoll-Rand Co . v. McClendon , 498 U.S. 133, 142-45 (1990) (ERISA preempts all state law remedies). But VSTA confers no federa lright of action on those who may be injured by animal vaccines that are, fo r exampl e, unlicensed, defective, or mislabeled. Therefore, SBC’s contention woul d leave vaccine purchasers and users without any remedy, a preemptive intent we should be most reluctant to infer. See Medtronic, Inc. v. Lohr , 518 U.S. 470, 486-87 (1996) (plurality opi nion); Silkwood v. Kerr-McGee Corp. , 464 U.S. 238, 251 (1984). Here, there is strong evidence that APHIS did not intend to entirely preempt common la w remedies. When the agency implemented its preemption declaration in 1992, it left in plac e the labeling regulation that prohibits licensed manufacturers from publishin g “disclaimers of merchantability, fitness for th e purpose offered, or responsibility for the product.” 9 C.F.R. § 112.2(b). That regulation is an express recognition that common law remedies are not entirely preempted.

On th e other hand, plaintiffs’ contention -- that preemption of state la w “requirements” relating to vaccine safety, efficacy, purity, potency, and labeling leaves common law claims unaffected -- is equally misguided. Two recent Supreme CourtJustice Stevens for the Court stated, “Nothing in § 360k denies Florida the right 1 to provide a traditional damages remedy for violations of common-law duties whe n those d uties parallel federal requirements.” 518 U.S. at 495. Justice Breyer’ s concurring opinion explain ed that a state law tort suit is not preempted if its “liabilitycreating-premises” do not conflict with federal requirements. Id. at 508. Justic e O’Connor’s separate opinion declared that “the Lohrs’ claims are not pre-empted by § 360k to the extent that they seek damages for Medtronic’s alleged vi olation of federal requirements.” Id. at 513. -8- decisio ns confirm that state common law damage actions are within the scope of a feder al statute or regulation preempting state law “requirements.” In Cipollone v

. Ligge tt Group, Inc. , 505 U.S. 504, 521, 548-49 (1992), a majority of the Cour t concludedthat the federal statute preempting all state law requirements relating t o cigarette labeli ng preempted some state common law claims. Similarly, in Medtronic , five Jus tices agreed that a federal statute preempting state law requirements regarding medical devi ces applied to state common law damages actions as well as to stat e statut es and regulations. See 518 U.S. at 503-04 (Breyer, J., concurring in th e judgment), 509-12 (O’Connor, J., concurring in part and dissenting in part).

VSTA as construed by APHIS preempts inconsistent substantive state la w “requirem ents” but not state common law remedies. In this situation, common la w claims are not

preempted to the ex tent that they seek relief for alleged violations of the federal substantive standards. All the Supreme Court opinions in Medtronic agreed on tha t. It is also a logical interpretation of the APHIS preemption statement, viewed in 1 light of the regulation prohibiting the disclaimer of impli ed warranties. Indeed, we have direct evidence t

his was APHIS’s intent. When United States Senator Paul Wellstone requested clarification of the preemption statement, the agency responded:

Our intent in promulgating the rule was, and continues to be, to preempt States from imposing requirements either through statutes, regulations, or ot her means that are different from, or in addition to, those imposed b y USDA regarding the safety, efficacy, potency, or purity of a product.SBC has moved to supplement the record with the abstract of a speech by an 2 APHI S official at the annual meeting of the American Veterinary Medical La w Association on July 26, 1998. The abstract states in part: The Seventh Circuit Court of Appeals pro perly interpreted APHIS’ intent . . . when it held in Lynnbrook Farms . . . that: “. . . State tort claims are av ailable when APHIS regulatory standards are violated or disregarde d

. . . and that when APHIS regulations are heeded, state tort claim s involving the safety, efficacy, potency, or purity of anim al vaccines do not survive.” APHIS’ policy on Federal preemption attempts to strike a balance betw een maintaining uniform national standards for veterinary biologics and allowing State tort actions when t here is noncompliance with Federal standards.
David A. Espeseth, Center for Veterinary Biologics, APHIS Licensing and Polic y Dev elopment, Federal Preemption of Product Liability Litigation -- Rationale an d Result (July 26, 1998). We grant the motion to suppleme nt. We give the abstract little weight, but it is consistent with other evidence of APHIS’ intent. -9- Such requirements would include, but are not limited to productio n, testing, distribution, or lab eling requirements. We did not intend to preempt common law actions fo r damages arising from noncompliance with USDA regulatory standards.
Letter from APHIS Acting Administrator to Senator Wellstone (Dec. 22, 1995 ) (emphasis added). 2

There remains the question of how to dispose of this appeal. The district court flatly denied SBC’s motion for summary judgment, and its opinion seems to conclude th atplaintiffs’ common law claims are unaffected by the APHIS declaration o f preemption. As we have explained, this is incorre ct. Plaintiffs’ broadly pleaded claims are preempted to the extent that they rely upon “liability-creating-premises” that arePlai ntiffs argue that preemption would violate the APHIS declaration that it s 3 1992 final rule was “ not intended to have retroactive affect” because plaintiffs started using the SBCvaccines before the rule’s effective date. 57 Fed. Reg. at 38,759. We disagree. Even assuming the retroactivity comment applied to the agency’s preemption decla ration, and not simply to the amendments to 9 C.F.R. § 102.5, there is n o retroactive effect in this case because plaintiffs did not file suit until long afte r September

1992. We must apply the law now in effect to plaintiffs’ tort and implied warranty claims because plaintiffs had no vested rights in these un asserted claims at the time VSTA preemption was modified. See Landgraf v. USI Film Products , 511 U.S. 244, 269, 273 (1994); In re TMI , 89 F.3d 1106 , 1113 (3d Cir. 1996), cert. denied , 117 S. Ct. 739 (1997); Hammond v. United States , 786 F.2d 8, 12 (1st Cir. 1986). -10- different from, or in addition to, those imposed by USD A regarding the safety, efficacy, potency, purity, or labeling of SBC’s licensed vaccines. We cannot determine from the 3
re cordon appeal whether plaintiffs’ claims are entirely preempted. These kinds o f preempt ionissues “require a careful comparison between the allegedly pre-emptin g federal requirement and the allegedly pre-empted state requirement to determin e whethe r they fall within the intended pre-emptive scope” of the federal regime

. Medtronic , 518 U.S. at 500. Such an analysis may result in total or only partia l preemption. Compare Lynnbrook Farms , 7 9 F.3d at 630, with Gresham v. Boehringer Ingelheim Animal Health, Inc. , 1996 WL 751126 at *3 (N.D. Ga. Aug. 7, 1996); se e also National Bank of Commerce of El Dor ado v. Kimberly-Clark Corp. , 38 F.3d 988, 99 4 n.4 (8th Cir. 1994) (“actual [federal] agency approval eliminates any possibl e claims under state tort law for failure to comply with federal re quirements”). Therefore, we reverse in part the district court’s order of Dece mber 10, 1997, and remand the case for further proceedings not inconsistent with this opinion.
A true copy.

Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.