It is not every day that the Supreme Court issues an opinion that combines the fate of Anna Nicole Smith’s estate with a constitutional ruling limiting the power of both Congress and of federal bankruptcy judges. And that ruling on Thursday was not even the most important in terms of its impact. We’ll come back to Anna Nicole later, as we discuss three of yesterday’s opinions in Plain English.
In terms of potential impact, the case of Sorrell v. IMS Health Inc. may carry more weight. The case put one aspect of state regulation of prescription drug sales in the ring against the principles of freedom of speech protected by the First Amendment. Freedom of speech came out on top. [Disclosure:Â Goldstein, Howe & Russell, the firm that sponsors this blog, represents a group of the respondents in this case.]
This heavyweight match was fought over a Vermont law, but it could have implications for many other states as well. A few years ago, Vermont passed a law that prevented pharmacies from sharing details about what drugs particular doctors are prescribing with companies that would, in turn, help brand-name drug manufacturers target their sales to those doctors. Vermont did this, it explained, to protect doctors from intrusive marketing, which could drive up health-care costs if doctors prescribe more expensive brand-name drugs. A few other states have passed similar laws, and many other states have been considering legislation like Vermont’s.
There is a chance you have seen what this case is about. Have you ever been in the doctor’s office or waiting room and heard the staff announce that someone from one of the big drug companies was waiting to see the doctor? Or had the drug rep just head on back to the doctor’s office without being announced? That drug salesman might well be targeting that doctor based on access to information about prescribing practices.
Companies that collect the prescription information, called data-miners, and brand-name drug companies challenged the Vermont law as violating their rights to freedom of speech under the First Amendment. In an opinion by Justice Anthony Kennedy, the Court agreed that the Vermont law did restrictthe companies’ freedom of speech. The majority said that the law did two things wrong: it restricted free speech based on the content of the speech and based on the identity of the speaker. Under the Court’s interpretation of the First Amendment, these flaws are not necessarily fatal, but they require the state to have very good reasons for restricting speech. Vermont’s real fear, according to the majority, was that the speech works – that is, that the drug marketing based on information about how doctors prescribe drugs is successful. The Court explained that a fear that truthful information might influence the doctors’ decision making cannot justify restrictions on free speech.
For the majority, it did not matter that the speech involved is “commercial†speech – instead of, for example, speech by an individual about politics – even though the Court in other cases has said that the government can impose more regulations on speech about commercial matters because it receives less protection under the First Amendment. In Sorrell, the Court reasoned, Vermont’s restrictions on speech would not survive whether the Court viewed them under its most stringent standards or under a less skeptical approach.
Justice Stephen Breyer filed a dissenting opinion, which was joined by Justices Ruth Bader Ginsburg and Elena Kagan. He described Vermont’s regulation as a reasonable effort to regulate commercial activity, one that does not impose any significant burden on free speech. And he wondered whether the majority might be returning to an early twentieth-century era in which the Court substituted its judgment for that of state legislators.
In another case involving drug manufacturers, the Court on Thursday rejected lawsuits filed under state laws by individuals who took a generic drug for digestive disorders and then developed severe neurological problems. As in many of its cases (including Wal-Mart, for example), the Court wasn’t weighing in on the merits of the individuals’ claims – here, whether the generic drug can cause the neurological disorder called tartive dyskinesia, as the lawsuits contended. Instead, the question was whether the individuals could bring the lawsuits at all. In an opinion written by Justice Clarence Thomas, the Court ruled that they could not: because federal regulations cover what gets put on drug labels for generic drugs, the manufacturers of generic drugs cannot be sued for damages under state laws for failing to warn of possible risks.
In the Court’s view, allowing the individuals to sue the generic drug manufacturers for failure to warn of risks would put them in an impossible situation: they would have to comply with state-law requirements, but they couldn’t because they are following federal law. The technical term for this is preemption – that federal law preempts state law when it is impossible to comply with both. The origin of this rule is in the Constitution, where Article VI establishes federal law as “the supreme law of the land†if there is a conflict with state laws.
Justice Sonia Sotomayor wrote a dissenting opinion, joined by Justices Ginsburg, Breyer and Kagan. She argued that the generic drug manufacturers in the case had only established that it might not be possible to warn of risks required by state law, not that it was actually impossible to comply with state law.
And finally back to the case of the late Anna Nicole Smith, former model and Playboy Playmate whose real name was Vickie Lynn Marshall. The case is the latest, and perhaps the last, chapter in a dispute over the estate of the late J. Howard Marshall II, whom Anna Nicole married a little over a year before his death. Anna Nicole and her late husband’s son, E. Pierce Marshall, were locked in a fight over J. Howard’s estate; although both Anna Nicole and Pierce have died, their estates have carried on the litigation.
At one practical level, the Court’s ruling had the effect of ending Anna Nicole Smith’s suit for millions of dollars on the ground that the son, Pierce, engaged in fraudulent practices to oppose her claims.
At a much broader practical level, the Supreme Court, in an opinion written by Chief Justice John Roberts, ruled that Congress did not have the authority under the Constitution to give bankruptcy judges the power to decide legal claims that are based entirely on state law, and have nothing to do with federal law. The Court explained that federal bankruptcy judges do not have life tenure or the same authority that regular federal judges enjoy, and Congress went too far in giving bankruptcy courts extra jurisdiction.
Justice Breyer, in a dissenting opinion joined by Justices Ginsburg, Sotomayor and Kagan, agreed with the rest of the Court that the bankruptcy court had the authority, under a 1984 law, to decide Anna Nicole’s claims. But he and the other dissenters found nothing unconstitutional about what Congress had done; in their view, giving bankruptcy courts the power to decide claims like hers would promote efficient operation of the bankrtupcy courts, which are often overrun with cases.
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