In a 5-4 decision, the U.S. Supreme Court rejected the notion that a manufacturer’s option to stop selling its product resolves preemption concerns raised by conflicting state and federal laws. In Mutual Pharmaceutical Co., Inc. v. Bartlett, the Court overturned a $21 million jury award to a plaintiff who alleged that a generic drug she had taken was unreasonably dangerous.

This significant opinion provides additional clarity to the Court’s 2011 ruling in a similar case, PLIVA, Inc. v. Mensing, but its holding is not limited to pharmaceutical litigation. To the contrary, the Court’s unequivocal rejection of the “stop-selling rationale” applies to any relevant conflict preemption analysis involving regulated goods.

In Mutual Pharmaceutical, although claiming a design defect, the plaintiff focused on the drug’s label and its allegedly inadequate warning regarding a rare side effect. FDA regulations, however, required the defendant to use the very label that the jury found defective. In light of that conflict with federal law, the manufacturer argued that the state tort claim was preempted.

The U.S. Court of Appeals for the First Circuit affirmed the jury’s award, holding that there was no true conflict between state and federal law because it was not “impossible” for the manufacturer to comply with both the FDA regulations and state law. Specifically, because the manufacturer could have stopped selling its product, the First Circuit reasoned that the manufacturer was not being asked to comply with two conflicting mandates.

The Supreme Court soundly rejected what it called the “stop-selling rationale” as incompatible with the Court’s preemption jurisprudence, stating “[o]ur preemption cases presume that an actor seeking to satisfy both his federal- and state-law obligations is not required to cease acting altogether in order to avoid liability.” The Court stated that a ruling to the contrary would render impossibility preemption “all but meaningless.” In every one of its impossibility preemption cases, the Court noted, the conflict “could have been avoided if the regulated actor had simply ceased acting,” but that was irrelevant to the Court’s analysis.