The Fraud Caveat to Agency Preemption

29 Pages Posted: 11 Oct 2007 Last revised: 12 Nov 2008


The fraud caveat is ubiquitous in key debates on the regulatory role of tort law: Even the most ardent supporters of either the state-based regulatory compliance defense to tort claims against product manufacturers, or the more powerful wholesale federal preemption of state tort law by administrative regulations, concede that fraud changes the equation. State legislatures that have adopted regulatory compliance provisions immunizing prescription drug manufacturers whose drugs were approved by the FDA from liability for damages (either entirely or just for punitive damages) have, without exception, included the fraud caveat. And courts interpreting these immunity statutes echo the caveat mantra. The fraud caveat remains an undertheorized but highly revealing and consequential aspect of regulatory preemption debates.

In Warner-Lambert Co. v. Kent, the U.S. Supreme Court left for another day the resolution of the question whether Buckman preempts statutory fraud exceptions to drug manufacturer immunity statutes. The question raises a narrow doctrinal issue, but one that hits a raw federalism nerve, with correspondingly wide reverberations in products liability preemption jurisprudence. A satisfactory resolution of the doctrinal issue - relying upon the FDA to police fraud in the first instance, but enlisting private litigants on the remedial and enforcement end - provides the seeds of a more generalizable model of agency-court cooperation for the regulation of nationally regulated products, such as medical devices and pharmaceuticals. This institutional approach gives primacy to the agency to decide, in the first instance, the extent to which state law requirements would encroach upon its regulatory scheme, but reserves room for private litigant enforcement of federally determined standards.

Keywords: fraud, immunity, regulatory compliance, preemption, FDA, drugs, pharmaceutical

JEL Classification: K13, K41

Suggested Citation

Sharkey, Catherine M., The Fraud Caveat to Agency Preemption. Northwestern University Law Review, Vol. 102, No. 2, 2008, NYU Law and Economics Research Paper No. 08-20, NYU School of Law, Public Law Research Paper No. 08-37, Available at SSRN:

Catherine M. Sharkey (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6729 (Phone)

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