Opinion ID: 1824254
Heading Depth: 1
Heading Rank: 1

Heading: Preemption under FIFRA

Text: The threshold issue on review is whether the circuit court properly concluded that FIFRA does not preempt Gorton Farms' state common law tort claims. American Cyanamid asserts that all of Gorton Farms' claims are predicated on a theory of failure to warn and, as such, are preempted by sec. 136v(b) of FIFRA. Gorton Farms responds that FIFRA does not preempt common law damage liability based on negligent and outrageous conduct and testing and in misrepresenting SCEPTER's safety to follow corn, which conduct was part of [American Cyanamid's] marketing and sales activity and not based on SCEPTER's labeling or packaging. [2] Federal preemption of state law implicates issues of governmental authority that go to the very heart of our federal system. The potential for conflict between federal enactments and state law is a persistent reminder of the tensions inherent in our governmental structure. Although the federal Constitution envisions a substantial role for state governments, it also commands that federal law shall be the supreme law of the land. U.S. CONST. art. VI, cl. 2. [3] Further, while states are treasured for their roles as laborator[ies] . . . [to] try novel social and economic experiments, see New York State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932), there is also the recognition of the importance of national control and uniformity. Recently, preemption principles have been the center of many hard-fought legal battles involving important societal issues. Examples of these disputes range from challenges as to the validity of state statutes designed to limit corporate takeovers, CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987), to challenges as to whether a state statute requiring payment of surcharges based on the status of the underlying insurance provider is preempted by ERISA, New York Conference of Blue Cross Plans v. Travelers Ins. Co., 115 S. Ct. 1671 (1995). An interesting example of the controversy surrounding the use of federal preemption is an executive order promulgated by former President Ronald Reagan in 1987 designed to dissuade executive departments and agencies from interpreting federal statutes in ways that would displace state law. [4] [1] When considering the federal preemption doctrine an important benchmark is a definition of both federal and state law. Obviously, federal law includes the United States Constitution and all of the federal statutes and treaties promulgated by Congress. Federal law also includes federal regulations promulgated by the various federal agencies. In Fidelity Federal Savings and Loan Assoc. v. De La Cuesta, 458 U.S. 141, 153 (1982), the Supreme Court stated that federal regulations have no less pre-emptive [sic] effect than federal statutes. Thus, federal law is broadly defined and includes regulations made by federal agencies under their congressionally granted authority. [2] On the state side, it is apparent that state constitutions, state statutes, and state regulations will all be encompassed within the definition of state law. Also falling within the heading of state law, and of great importance to the issue at hand, is the concept of state common law tort actions. As noted by one commentator, [t]he regulatory effect of tort law has long been recognized. Penning Parker Landen, Federal Preemption and the Drug Industry: Can Courts Co-Regulate?, 43 Food Drug Cosm. L.J. 85, 86 (1988). Further, In San Diego Building Trades Council v. Garmon, 359 U.S. 236, 247 (1959), the Supreme Court stated that [t]he obligation to pay compensation can be, indeed is designed to be, a potent method of governing and controlling policy. Accordingly, the Court held that federal preemption of state action may occur where that action seeks to redress private wrongs or grant compensation for past harm. Id. [3-5] Federal preemption may occur under several different scenarios. Express preemption occurs where Congress has seen fit to speak directly to the preemptive effect of a particular statute. The major question in cases arising under this scenario is the scope of the express preemption provision. [5] The more typical preemption case involves a statute that is either silent, or at least ambiguous, with respect to its preemptive effect. Where a statute is silent or ambiguous, courts generally have required clear evidence of legislative intent to preempt state law. For example, in Hillsborough County, Fla., v. Automated Medical La., Inc., 471 U.S. 707, 715 (1985), the Court noted that there is a basic assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. Courts have, however, on occasion determined that a congressional enactment impliedly preempts state law. This implied preemption is most often separated into three categories: occupation of the field preemption, obstacle preemption, and administrative preemption. See Jose L. Fernandez, Dynamic Statutory Interpretation: Occupational Safety and Health Act Preemption and State Environmental Regulation, 22 FLA ST. U.L. REV. 75, 81-86 (1994). Turning to the statute at hand, FIFRA was originally enacted in 1947 as a pesticide licensing and labeling statute and was designed to work in harmony with the uniform state insecticide, fungicide and rodenticide act which was adopted in many States. S. REP. No. 838, 92nd Cong., 2d Sess. (1972), reprinted in 1972 U.S.C.C.A.N. 3993, 3999. In 1972, the Act was amended such that FIFRA was transformed from a labeling law into a comprehensive regulatory statute. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 991 (1984). As noted by the Supreme Court: As amended, FIFRA regulated the use, as well as the sale and labeling, of pesticides; regulated pesticides produced and sold in both intrastate and interstate commerce; provided for review, cancellation, and suspension of registration; and gave EPA greater enforcement authority. Id. at 991-92. Within FIFRA, Congress provided a detailed scheme for regulating the content of a pesticide's label. All pesticides sold in the United States must be registered for use by the EPA. 7 U.S.C. sec. 136a(a). The EPA has promulgated specific labeling requirements governing the scope, content, wording, and format of pesticide labeling. See 40 C.F.R. sec. 156 (1992). While the manufacturer designs and formulates the content of the label, it must file with the EPA a statement which includes the name of the pesticide, a complete copy of the labeling of the pesticide, a statement of all claims to be made for it, and any directions for its use; and a full description of the tests made and the results thereof upon which the claims are based. 7 U.S.C. sec 136a(c)(1)(B)-(D). [6] [6] FIFRA also contains a section relating to state's rights in relation to the statute. Section 136v of FIFRA, titled Authority of States, provides: (a) In General A State may regulate the sale or use of any federally registered pesticide or device in the State, but only if and to the extent the regulation does not permit any sale or use prohibited by this Act. (b) Uniformity Such State shall not impose or continue in effect any requirements for labelling or packaging in addition to or different from those required under this Act. A plain reading of this provision reveals sec. 136v(a) expressly prohibits a state from permitting a sale or use of a pesticide that is prohibited by FIFRA, and sec. 136v(b) expressly prohibits any state labeling requirement in addition to or different from that imposed by FIFRA. However, in considering whether Congress intended to occupy the entire field of pesticide regulation through sec. 136v, we find no language to that effect, nor does the legislative history of the statute suggest it. See Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 609-10 & n.4 (1991). As noted by the Supreme Court: While the 1972 amendments turned FIFRA into a comprehensive regulatory statute, the resulting scheme was not so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.: To the contrary, the statute leaves ample room for States and localities to supplement federal efforts even absent the express regulatory authorization of sec. 136v(a) . . . . FIFRA . . . leaves substantial portions of the field vacant . . .. Id. at 613 (citations omitted). [7,8] For more guidance on the preemption issue, both parties direct this court to Cipollone v. Liggett Group, Inc., 112 S. Ct. 2608 (1992). Cipollone involved similar preemption provisions relating to the federal statutes governing cigarette labeling and advertising. Id. at 2616-17. The Court concluded that sec. 5(b) of the Public Health Cigarette Smoking Act of 1969 preempted the plaintiff's state law tort claims based on the defendant's failure to warn of the hazards of cigarette smoking. Id. at 2621. [7] The Court cautioned, however, that sec. 5 did not preempt all common law. For example, the Court stated that although the statute preempted state labeling requirements, it did not preempt state law obligations to avoid marketing a product with a manufacturing defect or with a design defect. Id. The Court then set forth its test to determine whether preemption was appropriate for plaintiff's common law claims: [W]e must fairly butin light of the strong presumption against pre-emptionnarrowly construe the precise language of sec. 5(b) and we must look to each of petitioner's common law claims to determine whether it is in fact pre-empted. The central inquiry in each case is straightforward: we ask whether the legal duty that is the predicate of the common law damages action constitutes a requirement or prohibition based on smoking and health . . . imposed under State law with respect to .. . advertising or promotion, giving that clause a fair but narrow reading. Id. Thus, the teaching of Cipollone is that courts must compare the particular language of a statute's preemption provision with each common law claim asserted to determine whether the common law claim is in fact preempted. Further, only if the legal duty that is the predicate of the common law damages action constitutes a requirement for labeling or packaging that is in addition to or different from those required by FIFRA will the asserted claims be preempted. In the present case, Gorton Farms brought claims based on defective product, breach of warranty, and negligent misrepresentation. There is no dispute that each claim is a viable action under Wisconsin state law. American Cyanamid, however, asserts that each of these claims is derivative to the labeling and packaging of SCEPTER and, therefore, should be preempted by FIFRA. Gorton Farms counters that its proof at trial never touched on or attacked SCEPTER's labeling or packaging; rather, it centered on American Cyanamid's field tests, lack of scientific testing, and false and misleading statements in the promotion of SCEPTER. In its amended complaint, under the heading of CLAIM II, Gorton Farms alleges the following: 13. SCEPTER as labeled for use in Wisconsin is a defective product since its application interferes with the normal crop rotation and causes a loss in crop yield. 14. American Cyanamid Company failed to adequately warn Gorton Farms of the dangerous nature of the product and provided defective instructions for use. 15. As a result of American Cyanamid Company's manufacture and sale of this defective product and its defective warnings and instructions in use Gorton Farms suffered pecuniary losses in its corn yield in 1988 and 1989. These allegations provide two distinct claims: (1) strict liabilitydefective design or manufacture, and (2) strict liabilityfailure to warn. [8] In the special verdict, the jury was simply asked whether SCEPTER was unreasonably dangerous to Gorton Farms' follow corn crops. The jury answered the question No. Gorton Farms did not cross-appeal from this finding, and, therefore, the issue of preemption of Gorton Farms' strict liability claim under FIFRA is not properly before this court. In its amended complaint, Gorton Farms also alleges a breach of warranty claim. It appears, however, that this cause of action was abandoned at trial because the special verdict makes no reference to American Cyanamid's having a breached a warranty, whether express or implied. Consequently, we do not consider whether a breach of warranty claim is preempted under FIFRA. [9] Gorton Farms' third and final cause of action asserts a claim for negligent misrepresentation: 17. American Cyanamid Company formulated or manufactured and sold its product known as SCEPTER and negligently held out and represented to Wisconsin Farmers that the product was a safe and effective means of controlling weeds in soybean crops . . . without harm to subsequent crops. 18. As a result of such negligence, the use of this product by Gorton Farms, Gorton Farms suffered reduction in yield of corn in 1988 and 1989. . . .. 19. The foregoing conduct of the defendant's agents or employees were willful and in reckless disregard of the plaintiffs' rights and such conduct proximately caused the plaintiffs' actual damages. The elements of a claim for negligent misrepresentation in Wisconsin are: (1) a duty of care or voluntary assumption of a duty on the part of the defendant; (2) a breach of that duty, i.e., failure to exercise ordinary care in making the representation or in ascertaining the facts; (3) a causal link between the conduct and the injury; and (4) actual loss or damage as a result of the injury. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 319, 401 N.W.2d 816, 822 (1987). In Cipollone, the petitioner alleged two theories of misrepresentation. First, petitioner argued that the respondents, through its advertising, neutralized the effect of federally mandated warning labels. Cipollone, 112 S. Ct. at 2623. The Court noted that this claim was predicated on a state-law prohibition against statements downplaying the effects of smoking. Id. The Court concluded that because this claim is merely the converse of a state law requirement that warnings be included in advertising and promotional materials, it is prohibited by sec. 5(b) of the 1969 Act which preempts both requirements and prohibitions. Id. Second, petitioner alleged fraud and misrepresentation both by `false representation of a material fact [and by] conceal[ment of] a material fact.' Id. (citing trial transcript). The Court noted that the state law duty of such a claimnot making false statements of material fact or concealing such factswas not the sort of requirement or prohibition proscribed by sec. 5(b). Id. The Court explained: State law prohibitions on false statements of material fact do not create diverse, nonuniform, and confusing standards. Unlike state law obligations concerning the warning necessary to render a product reasonably safe, state law proscriptions on intentional fraud rely only on a single, uniform standard: falsity. Thus, we conclude that the phrase based on smoking and health fairly but narrowly construed does not encompass the more general duty not to make fraudulent statements. Accordingly, petitioner's claim based on allegedly fraudulent statements made in respondents' advertisements are not pre-empted by sec. 5(b) of the 1969 Act. Id. at 2624. [10] We follow the Cipollone reasoning on this point and hold that Gorton Farms' claim based on misrepresentation survives preemption under FIFRA. [9] We see nothing in FIFRA that seeks to overturn the longstanding rules governing misrepresentation. On the contrary, FIFRA simply seeks uniformity in labeling and packaging and mandates that states shall not impose labeling or packaging requirements other than those prescribed by the statute itself. Further, our reading of sec. 136v(b) leads us to conclude that its preemptive effect does not encompass the general duty not to make false statements. Quite simply, claims based on misrepresentations of fact do not challenge the labeling of a manufacturer's product. Here, Gorton Farms presented evidence that American Cyanamid made representations that SCEPTER was safe to follow corn. These representations were made through written product such as promotional materials, advertisements, technical reports, as well as through oral statements made by American Cyanamid's technical service representatives. All of the statements assuring that SCEPTER was safe and extremely safe had no relation to the labeling or packaging of the herbicide. Gorton Farms also presented evidence that American Cyanamid internal documents unequivocally showed that SCEPTER caused damage to follow corn crops in a variety of circumstances and yet, the company failed to disclose any information other than assertions that SCEPTER was safe to follow corn. As noted by Gorton Farms in its brief to this court: Having heard rumors of SCEPTER carry over to follow corn in the fall of 1987, John Gorton asked an [American Cyanamid] technical service representative about it in February 1988, and [American Cyanamid's] representative assured him it was safe to plant corn following soybeans treated with SCEPTER. Thereafter, Gorton Farms again purchased SCEPTER for use in 1988. [11-13] We conclude that not only does the Gorton Farms' misrepresentation claim survive preemption under FIFRA, the evidence adduced at trial was credible and sufficient to sustain the jury's finding that American Cyanamid made negligent misrepresentations of facts as to the safety of SCEPTER and that this conduct was outrageous. As this court previously has noted, the proper test to be applied in determining whether a jury's answer should be sustained is whether there is any credible evidence to support the jury's answer. Giese v. Montgomery Ward, Inc., 111 Wis. 2d 392, 408, 331 N.W.2d 585, 593 (1983); D'Huyvetter v. A.O. Smith Harvestore Products, 164 Wis. 2d 306, 320, 475 N.W.2d 587, 592 (Ct. App. 1991). There is credible evidence which, when reasonably viewed, fairly admits an inference supporting the jury's findings. That being true, neither the trial court nor this court has authority to change the jury's findings. Giese, 111 Wis. 2d at 408, 331 N.W.2d at 593. Where, as here, the jury verdict has the approval of the circuit court, the scope of review is even more limited. See Fehring v. Republic Ins. Co, 118 Wis. 2d 299, 305, 347 N.W.2d 595, 598 (1984). Our review of the evidence adduced at trial leads us to conclude that there is credible evidence to support the jury's findings. Gorton Farms presented evidence that: American Cyanamid voluntarily assumed a duty; breached that duty by failing to exercise ordinary care in making the representations concerning SCEPTER; that the injury was caused by the conduct of American Cyanamid; and, that Gorton Farms sustained actual loss and damage as a result of the injury to its follow corn crops. [10]