Federal law shields car dealer in courtesy-car accident

CC0 by Open Grid Scheduler via Flickr

A car dealership could not be held vicariously liable to a pedestrian struck by a courtesy vehicle, the Massachusetts Supreme Judicial Court ruled in June.

A New Jersey Mercedes Benz dealer lent a customer, defendant Oke, a courtesy car while Oke's car was being repaired. After traveling to Boston (an apparent excess of the radius permitted by the courtesy-car contract), Oke left the key in the ignition, engine running, and his wife, Steele (no relation), in the passenger seat, while he attended to business. When a parking official demanded that the car be moved, Steele's attempt to do so resulted in collision with, and serious injury to, the pedestrian-plaintiff.

The laws of many states permit an injured person to pursue the owner of a vehicle in vicarious liability, regardless of the owner's fault. In a 2005 federal highway bill, Congress preempted and disallowed no-fault vicarious liability when the vehicle owner is a rental company. According to FindLaw, Congress was troubled by the likes of a $21m vicarious liability award against Budget in New York. The statutory language, "the Graves Amendment," was named for Rep. Sam Graves (R-Mo.), who estimated that vicarious liability awards cost car rental companies some $100m annually, a cost passed on to consumers.

The Supreme Judicial Court ruled that the Graves Amendment protected the New Jersey car dealer. The courtesy-car arrangement was part of the transaction for car service, the court reasoned, so akin to a rental agreement.

The court thus dismissed claims against the car dealer. However, reversing, the court remanded the plaintiff's claim against Oke for negligent entrustment. The trial court must resolve a question of fact, the court opined, before the negligent entrustment claim can be adjudicated. The plaintiff plausibly alleged that Oke had, under the circumstances, implicitly authorized Steele to move the car if necessary.

The surviving claim based on negligent entrustment provides a worthwhile reminder that, upon other facts, the Graves Amendment does not let car rental companies off the hook for liability theories in negligence, such as negligent entrustment and negligent maintenance.

The case is Garcia v. Steele, No. SJC-13378 (Mass. June 27, 2023) (FindLaw). Justice Dalila Argaez Wendlandt wrote the court's unanimous opinion.

Publishers crush state effort to ensure that public libraries have reasonable access to e-books

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A Maryland law requiring the licensing of electronic books to public libraries on reasonable terms is preempted by federal copyright law, a federal court ruled in June.

A Maryland statute enacted in 2021 provided that e-book publishers "shall offer to license the electronic literary product to public libraries in the State on reasonable terms that would enable public libraries to provide library users with access to the electronic literary product."

The law meant to answer publishers who have been employing oppressive tactics to milk money from public libraries trying to meet patron demand for electronic books. I wrote some about this problem in April 2021.

Alas, the federal court ruled that federal copyright law occupies the field to the exclusion of Maryland legislators' worthy intentions. The court found it unnecessary, therefore, to consider publisher complainants' further claims, such as dormant Commerce Clause.

I'll add this to my list of lost causes in a corporate-captured Congress.

The case is Association of American Publishers, Inc. v. Frosh (D. Md. June 13, 2022), Judge Deborah L. Boardman presiding.

Judge delays decision again on Mass. right to repair, cites need to study SCOTUS climate change ruling

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Last week, in West Virginia v. Environmental Protection Agency, the U.S. Supreme Court dealt a major blow to federal regulators on the climate change front, and the case has stalled, again, release of the trial court decision over the right-to-repair law in Massachusetts.

First, a word on West Virginia, in which the Court struck down climate change-combative regulations for being born of a breadth not sufficiently specifically authorized by Congress. Others will comment more ably than I on the constitutional law of it all, but from where I sit, the case was correctly decided. Before you throw your rotten tomatoes at me for composting, at least absorb my two cents on the matter: 

We have too long been under the rule of administrative fiat in the United States, rather than democratic lawmaking, because our dysfunctional Congress long ago abdicated its role as a co-equal branch of government. Early in the 20th century, the Court unwisely allowed the non-delegation doctrine to slip away, and with it went the checks and balances of the constitutional separation of powers itself. So we're overdue for a correction.

You don't want to hear it from me, but the same problem pertains in the Roe/Dobbs debacle, where the administrative fiats on privacy have been coming from the Court rather than the administrative state, but certainly not from Congress: same difference. People, especially people ill schooled in the separation of powers—wherefore the sorry state of K12?—look to monolithic government for answers to their problems. They don't much care which public office provides the answer. So they fail to distinguish a Supreme Court decision—West Virginia or Dobbs—that says not our job from one that says simply not. Protestors picketing the Supreme Court building in recent weeks were on the wrong side of the street.

Abdication is a win-win for lawmakers, who can rake in the dough from corporations for the small price of doing nothing while blaming other branches of government for failing to offer a fix. Lawmakers sat on their hands on privacy and women's rights for decades in the wake of Griswold and Roe, content to let the Court struggle to map fine lines. Now they pantomime outrage and aspersion when Roe goes away and there is no statutory civil rights framework to replace it, nor even a framework to protect interstate travel rights, which is well within congressional authority.

Anyway, the angle on West Virginia that interests me is that on July 1, the U.S. District Judge Douglas P. Woodlock again delayed his decision in automakers' challenge to the Massachusetts right-to-repair initiative, saying that he would have to study the impact, if any, of West Virginia on his rationale. (E.g., Repair Driven News.)

Issuance of the decision in the case has been delayed time and again this calendar year, and the case has spurred occasional fireworks. Chris Villani for Law 360 wrote in February how "[a]n exasperated federal judge said ... he was close to a verdict in a suit challenging Massachusetts' revised 'right to repair' law, yet he pressed attorneys for a group of manufacturers about why they didn't tell him that new Subaru and Kia vehicles complied with rules they claimed are impossible to follow."

It was not clear, later, whether Subaru and Kia had actually complied, or just turned off the offending telematic features in new cars to be sold in Massachusetts. Turning off an otherwise functional mechanism does not, Massachusetts AG Maura Healey opined, and I agree, comply with the consumer data access law.

Though the omission that aggravated the judge was explainable, the incident is demonstrative nonetheless of automakers' obfuscating foot-dragging in their conduct of the case overall. They threw every kitchen-sink theory and procedural roadblock at the Massachusetts law, because every day of noncompliance is money in the bank, never mind the merits, nor the defense cost to taxpayers.

Automakers' problem is less with telematics regulation and more with being regulated state by state, rather than by federal standards. Federal regulation, rather than state regulation, has two powerful advantages for industry. First, federal regulations are universal, rather than 50+ in number, which vastly reduces compliance costs. More efficiency in compliance costs is good for consumers, too. So that's fair.

Second, federal regulations come from a grinding rule-making process that is almost irretrievably contaminated by the mostly lawful if deeply lamentable corruption of the industry-state complex. So manufacturers can lobby their way free of meaningful burdens that would benefit consumers and protect social and economic rights. Less fair.

It is not clear why Judge Woodlock thinks that West Virginia might affect his ruling. I might be able to say if I followed the Massachusetts case more closely. Absent a study, my guess is that the issue has to do with preemption. One of the automakers' kitchen-sink challenges alleged that Massachusetts could not regulate telematics because federal regulation of the auto industry impliedly preempts state right-to-repair regulation. If the judge thought that the vitality of that theory depended on the breadth of the federal regulations, and the permissible breadth of federal regulations, when ambiguous, is necessarily narrowed by West Virginia, then maybe it's less likely that the federal regulations can be said impliedly to preclude state regulation.

I'm now piling supposition upon supposition, but if I'm right, the likelihood is that the trial court was going to rule in favor of industry, and it's possible but unlikely that West Virginia would change that. I put money on industry on this one back in the winter, too, in part because I supposed that the judge's exasperation was evoked by a seeming deception on the part of the soon-to-be-announced prevailing side, and in part because I'm a pessimist. Or, I like to think, a realist.

My will for public policy, though, if not my bet, is on the side of AG Healey. Previously, I've written favorably about right to repair as a bulwark of consumer protection, and I support the Massachusetts initiative.

The Massachusetts case is Alliance for Automotive Innovation v. Healey (D. Mass. filed Nov. 20, 2020).

FDA reg doesn't preempt state medical device liability, but plaintiff must plead 'plausible' theory, Court says

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Medical-device liability claims in state courts are not preempted by federal law, the Massachusetts Supreme Judicial Court confirmed Friday, but the plaintiff before the Court failed to meet the pleading standard.

Seeking relief from the pain of osteoarthritis, Plaintiff Dunn received in her knees two injections of "Synvisc-One," a product of defendant Genzyme Corp. and an FDA-approved "Class III medical device," the Court retold.  Subsequently, she "experienced severe side effects, including 'pain and swelling in her knees, difficulty walking, hip bursitis and systemic pseudoseptic acute arthritis," resulting in falls and injuries, including a torn meniscus and broken neck.

The plaintiff sued Genzyme in negligence and product liability and under Massachusetts consumer protection law.  Commonly called "93A," after its codification, the latter theory of unfair or deceptive practices is favored by plaintiffs' lawyers for its allowance of punitive damages upon an up-to-treble multiplier.  Massachusetts allows punitive damages only upon statutory authorization, and 93A is generous, tracking tort liability theories, including product liability, that would not be thought of as statutory consumer protection in other states.

The U.S. Supreme Court ruled in 2008 that state law claims are not necessarily preempted by regulatory approval under the 1976 Medical Device Regulation Act (MDA).  To survive preemption, a plaintiff's claim must parallel, and not exceed, federal regulatory requirements.

Justice Gaziano

Applying the Supreme Court standard, the SJC determined that the plaintiff's claims met the standard.  Specifically, "negligent failure to warn, breach of warranty, negligent manufacture, products liability, and violations of [chapter] 93A—all can be interpreted as coextensive with the comprehensive Federal requirements."

Contrary to implication by the defense, the SJC held that a plaintiff asserting medical-device liability in parallel with the MDA is not required to plead with the high level of particularity (Rule 9(b)) required in fraud.  Rather, the requisite pleading standard is "plausibility": "plaintiffs asserting parallel State-law claims based upon a violation of FDA regulations must articulate only "factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief" (quoting SJC precedent).

Nevertheless, the plaintiff failed to meet that standard.  The complaint alleged foreseeability of "significant dangers," known or reasonably knowable "dangerous propensities," and, as an alternative theory, adulteration or defect of the product.  But the plaintiff alleged no factual support for causation linking the injection to the injury other than "temporal proximity."  Evidence of other complaints about the product would have helped, the Court suggested.  But deficiency of pleading does not entitle a plaintiff to discovery.

Accordingly, the Court reversed the trial court's denial of the defense motion to dismiss.

The case is Dunn v. Genzyme Corp., No. SJC-12904 (Mass. Jan. 29, 2021).  Justice Frank M. Gaziano authored the opinion of the unanimous Court.

State DA cannot shield FBI records from public disclosure under federal FOIA exemption

The federal Freedom of Information Act cannot be used to block public access to FBI records in the hands of state law enforcement, the Massachusetts Supreme Judicial Court ruled on New Year's Eve.

Rahim in a yearbook photo obtained by CNN from the Brookline library.

In 2015, an agent of the Federal Bureau of Investigation (FBI) and a Boston police detective shot and killed Usaamah Rahim when he approached officers and refused to drop a 13-inch knife.  Rahim was under investigation by a Joint Terrorism Task Force for suspected ties to the Islamic State of Iraq and the Levant (ISIL, or ISIS).  The officers were cleared in the shooting.

In 2017, under the Massachusetts public records law (PRL), the district attorney (DA) gave Rahim's mother access to more than 1,100 documents in the investigation.  However, she was denied access to documents that the FBI had loaned to the DA and designated as confidential.

That denial was in error, the Court ruled.  In conjunction with the federal district attorney and the FBI, the DA argued in court that the loaned records could not be disclosed under state law because the records are owned by the federal government, or, alternatively, that the incorporation of "other laws" as disclosure exemptions in the Massachusetts PRL required the operation of disclosure exemptions in the federal Freedom of Information Act (FOIA) and federal Privacy Act.

The Court rejected both arguments.  First, the Massachusetts PRL turns expressly on the receipt (or creation) of records by public officials, not ownership.  "If every public records request also required the requestor to conduct something akin to a title search," the Court reasoned, "then the public would necessarily be stymied in its quest for greater government transparency."

Second, the Court opined that the federal FOIA and Privacy Act both, on their own terms, apply to federal agencies, so are not compulsory on state officials.

Both holdings are consistent with nationwide norms in freedom of information law.  Ownership is sometimes invoked as a useful concept when a state court struggles to discern the difference between, for example, a family photo on the desk of a state employee from the employee's work product.  But as the Massachusetts Court recognized, that analysis breaks down quickly in practice; ownership of records as property is a red herring in access analysis.  The better analysis anchors application of public records law in the laudable statutory purposes of transparency and accountability.  There is no doubt that transparency in law enforcement investigatory records serves the interest of public accountability.

Likewise, the use of the federal law to bind state officials would have been a perversion of the accountability mechanisms in the federal FOIA and Privacy Act, and could be construed even as a violation of the Tenth Amendment.  States have recognized instances when federal laws, such as the Health Insurance Portability and Accountability Act (HIPAA), arguably count as "other law" exemptions in state freedom of information law, insofar as the laws may preempt state disclosure requirements under the Supremacy Clause of the U.S. Constitution.  But binding state officials to federal law by way of the information at issue, rather than an enumerated governmental power, would be a bridge too far.

At the same time, the Court recognized that some of the FBI records, based on their index descriptions, qualified for exemption from disclosure under the state PRL as justifiably confidential law enforcement records, for example, records related to an ongoing investigation, confidential sources, or emergency response strategies.  The Court ordered the withholding of those records and remanded the case to the Superior Court to analyze application of the state exemption to other records.

The case is Rahim v. District Attorney, No. SJC-12884 (Mass. Dec. 31, 2020) (Justia).  Justice David Lowy wrote the unanimous opinion.

Arkansas defense of healthcare law invites Supreme Court justices to weigh in on federal preemption

The State of Arkansas defended a state healthcare law in the U.S. Supreme Court Tuesday.

The state argued against federal ERISA and Medicare part D preemption of state regulation of pharmacy benefits managers, the companies that manage most Americans' prescription drug benefits.  The case affords an opportunity to see what newer justices have to say about preemption.

Preemption is a curious area of law.  Ostensibly statutory interpretation, it has overtones of federalism, as judges are called on to chart the scope of congressional intent as exercised in a power domain shared with state legislatures.  Confounding theories of interpretation, textualism is often insufficient to resolve preemption problems, because statutory schemes, such as the framework for employment-benefit regulation, may be left ambiguous as to what the scheme does not regulate, yet can be undermined by state laws with incompatible purposes.  As a result, preemption cases in the U.S. Supreme Court have been known to render splintered decisions and odd-bedfellow pairings of justices.  More than once, preemption precedent has been criticized as inconsistent and messy.

In an op-ed in The Arkansas Democrat-Gazette (ADG) in 2015, I wrote that Arkansas Act 900 raised serious and compelling questions of federalism.  I didn't pick sides—indeed, each side claims to be on the side of consumers—but I did describe the Arkansas Attorney General's dismissive response to challenge of the statute as glib.  The Eighth Circuit subsequently held the law preempted.  Forty-five states, D.C., and the Trump Administration have sided with the appellant AG, according to the ADG.

The case is Rutledge v. Pharmaceutical Care Management Association, No. 18-540 (argued U.S. Oct. 6, 2020).  Ronald Mann wrote an excellent analysis of the case, on the merits and implications, at SCOTUSblog.

Mass. Superior Court dismisses nuisance claim over airport skydiving concession on Cape Cod

Chatham Municipal Airport approach (CC BY 2.0 woodleywonderworks)

The Superior Court in Barnstable, Massachusetts, ruled in favor of the Town of Chatham against a citizen group earlier this month over the town's award of a skydiving concession at the Chatham Municipal Airport, the Cape Cod Times reported.  Arguing for summary judgment, the town relied on preemption by FAA regulations in asserting that it had no choice but to award the concession for a lawful activity.  The court agreed, according to the newspaper.  The trial court arguments were detailed by Tim Wood in a story for The Cape Cod Chronicle in May.  According to Wood's reporting, the citizens argued "that skydiving is not safe and is a nuisance, with multiple flights and screaming and yelling by tandem jumpers interfering with the 'quiet enjoyment' of their property. They point to a 2012 crash of a skydiving plane into Lovers Lake after it ran out of fuel and the severe injuries suffered by a tandem jumper as evidence of the safety concerns."

Chatham Municipal Airport on Cape Cod

'FERPA Close-Up: When Video Captures Violence and Injury'

With Kitty Cone, Esq., I've published FERPA Close-Up: When Video Captures Violence and Injury, 70:4 Okla. L. Rev. 839 (2018), available to download from SSRN and elsewhere.  We are grateful to the staff of the Oklahoma Law Review, who were meticulous and a pleasure to work with.  Here is the abstract.

Federal privacy law is all too often misconstrued or perverted to preclude the disclosure of video recordings that capture students victimized by violent crime or tortious injury. This misuse of federal law impedes transparency and accountability and, in many cases, even jeopardizes the health, safety, and lives of children. When properly construed, however, federal law is no bar to disclosure and, at least in public schools, works in tandem with freedom of information laws to ensure disclosure. This Article posits that without unequivocal guidance from federal administrative authorities, uncertainty regarding the disclosure of such recordings will continue to linger, jeopardizing the ability of plaintiffs to access needed information.

Mass. high court allows generic-drug consumer to sue Big Pharma for reckless labeling

Just more than a week ago, the Massachusetts Supreme Judicial Court (SJC) issued an adroit and important decision on drug manufacturer liability.  In a decision worthy of other states’ attention, the SJC allowed a common law recklessness claim for failure to warn, unobstructed by federal preemption.  The case is Rafferty v. Merck & Co., No. SJC-12347 (Mar. 16, 2018) (PDF), per Chief Justice Ralph Gants.

It was in the last season of Boston Legal in 2008 (s5e02) that Alan Shore (James Spader), maybe my favorite TV lawyer, took on Big Pharma, right on the heels of victory over Big Tobacco.  In real life, Big Pharma has long been about the business of avoiding tort liability.  When labeling defects have been alleged, the Big Pharma defense has found traction in federal preemption, owing to the FDA’s close supervision of labeling under the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301, et seq.

One thread of this debate involves the relative responsibilities of brand-name and generic manufacturers.  In 2011, in PLIVA, Inc. v. Mensing, 564 U.S. 604, the U.S. Supreme Court, 5-4, rejected liability for a generic drug maker accused of failure to warn of side effects when the label matched that of the brand-name equivalent.

In the SJC last week, the plaintiff also was injured taking a generic drug, but sought to hold the brand-name maker accountable in negligence and consumer protection, accusing the maker of failure to warn on the label that the generic provider copied.  The plaintiff took the generic drug finasteride, in lieu of defendant Merck’s brand-name drug Proscar, to treat an enlarged prostate.  The label warned of sexual dysfunction as a temporary side effect, but the plaintiff experienced persistent dysfunction.  The plaintiff alleged that Merck was aware of the risk from several studies and had changed the warning label accordingly in some foreign markets, including Italy, Sweden, and the United Kingdom.

Significantly, then, the plaintiff admittedly complained against a defendant whose drug he did not take.  But the plaintiff traced causation to Merck, because FDA regulation of generic drugs compelled the generic maker to copy the Merck label, and PLIVA precluded liability for the generic maker.  The trial court dismissed, holding that brand-name-maker liability to a patient who did not take the maker’s drug also would “disturb the balance struck” by statute and regulation for the approval of generic drugs.

The SJC regarded the problem as one of duty.  Typically, the court explained, a manufacturer owes a duty of care only to consumers of the manufacturer’s own products.  The First Circuit upheld that logic in a 1983 case under Massachusetts law, Carrier v. Riddell, Inc., 721 F.2d 867.  The court, per then-Circuit Judge Stephen Breyer, denied recovery to a high school football player who blamed a helmet defect for his severe spinal injury.  He had not used the defendant-manufacturer’s helmet, but teammates had.  He alleged that had the defendant properly labeled its helmets, he would have been informed properly about his own.  The SJC further analogized the problem to the effort to hold responsible for a shooting an earlier-in-time actor accused of failing to secure the firearm.  The key to this duty analysis, the court explained, is the foreseeability of a plaintiff-victim—reminiscent of Judge Cardozo’s classic “orbit of duty” analysis in Palsgraf.

Duty in the drug liability problem, the SJC reasoned, is not the same as the product liability analysis in Carrier.  Rather, consistently with the federal regulatory scheme, Merck knows that generic manufacturers will be compelled to rely on its labeling.  Merck therefore has control over the generic label, and duty follows control.  One might say that the consumers of the generic drug are therefore foreseeable victims, for duty purposes, or that the chain of proximate causation runs intact through the intermediary generic maker, because the intermediary lacks control over the label.  Like Palsgraf itself, the case demonstrates the fluid interchangeability of duty and causation.

However, the court further reasoned, negligence, like strict liability, might be too low a liability threshold.  Shifting the liability of generic consumers on to brand-name makers adds to the cost of drug research and development in a way that might interfere with the legislative-regulatory scheme.  Under PLIVA, the brand-name maker could not share joint liability with the generic maker.  At the same time, allowing the brand-name maker wholly to escape liability would allow an injured plaintiff no recovery under any circumstances.  A balance may be struck, the court concluded, when the plaintiff can prove recklessness, or more, intent, on the part of the brand-name maker.

The court wrote: “We have nevertheless consistently recognized that there is a certain core duty—a certain irreducible minimum duty of care, owed to all persons—that as a matter of public policy cannot be abrogated: that is, the duty not to intentionally or recklessly cause harm to others.”  The court analogized to the duty of care owed by defendants in other exceptional areas of Massachusetts tort law: landowner to trespasser, defamation defendant to public figure, bailee to bailor, and athletes and coaches to competitors.

Otherwise put, the court maintained the essential balance of tort law upon its four fundamental elements, duty, breach, proximate cause, and injury.  The extension of liability to a defendant-manufacturer who did not actually make the injurious product depressed the thresholds for duty and causation.  To maintain balance, the requisite standard of breach is amplified to recklessness or intent.  Physical injury remains constant. 

Chief Justice Gants’s opinion in Rafferty is insightful and masterful.  It takes account of the greater endeavor of tort law to define civil wrongs, while balancing the corrective role of the judiciary with the policy-making role of the legislative and executive branches, and also striking a balance in federalism between tort accountability in the states and market regulation under the Commerce Clause.  At the same time, the decision recognizes how these balances are struck across the body of tort law in areas that usually seem only distantly related, from premises liability to reputational harm to sports.  This would be one for the casebooks, if casebooks were still a thing.

Decedent's reps fight Yahoo! for email access, beat federal preemption argument in state high court

The Massachusetts Supreme Judicial Court has rendered a thought-provoking judgment about postmortem access to a decedent's Yahoo! e-mail account.  The case is Ajemian v. Yahoo!, Inc., No. SJC-12237, Oct. 16, 2017, per Justice Lenk.  The SJC nabbed the case sua sponte from Mass. App.  The case will be available soon from Mass.gov new slip opinions.

Yahoo! denied access to the personal representatives of the decedent's estate on two grounds: (1) that access was prohibited by the preemptive, federal Stored Communications Act (SCA) (1986), essentially a sectoral privacy statute, and (2) that the representatives' common law property interest in digital assets was superseded by Yahoo! terms of service (ToS).

The trial court ruled in favor of Yahoo! on the SCA grounds and opined only indeterminately on the ToS argument.  The SJC reversed and remanded.  The Court employed a presumption against implied preemption to find the representatives outside the "lawful consent" terms of statutory exemption in the SCA, which would require actual owner consent.  The SCA therefore provided no barrier to access under state law on these facts. This is an important precedent in state construction of federal law to limit the reach of the SCA.

Tantalizingly on the ToS front, the trial court held that it could not opine definitively on Yahoo!'s position because of unresolved questions about the formation and enforceability of the ToS as contract.  The SJC reiterated that the trial judge had not established whether a "meeting of the minds" had occurred as purported prerequisite to contract.  That's a compelling observation in our world, awash as it is with click-wrap adhesion agreements being held enforceable by the courts without serious scrutiny.  "Meeting of the minds," however much a staple of 1L Contracts, has been pretty much read out of the analysis in today's boilerplate world.

The case will be one to watch if it generates another appeal, but I'll be surprised if on these facts, Yahoo! goes to the mat if that means risking the ToS on the record.