- The Washington Times - Thursday, February 21, 2008

ASSOCIATED PRESS

WASHINGTON — The Supreme Court sided with business in two cases yesterday 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, said 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,” Mr. 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 the Food and Drug Administration.

The package-delivery case could provide the impetus for the transportation industry to evade 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 G. 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.

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.


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