May 2018

The Supreme Court’s May 14, 2018, decision in Murphy v. NCAA was focused on sports betting, however, the case at its core served as a stress test on the Tenth Amendment and state sovereignty. No. 16-476, 2018 WL 2186168 (U.S. May 14, 2018). Constitutional law prohibits the federal government from “commandeering,” or compelling the states to take regulatory action that the Tenth Amendment would otherwise reserve to them. In Murphy v. NCAA, consolidated with its companion case, New Jersey Thoroughbred Horsemen’s Association, Inc. v. NCAA (referred to herein collectively as “Murphy”), the Supreme Court held that the Professional and Amateur Sports Protection Act (PASPA) violates the anti-commandeering doctrine. Id. at *20. Its decision not only allows states to legalize sports betting, but if applied broadly, could be construed as conferring substantially more power on states, in general, on issues ranging from gun control to legalization of marijuana.

Anti-Commandeering Doctrine

When the original states declared their independence from England, they did so with an aim toward dual sovereignty — granting sovereign powers to both the federal government and the states. Consistent with dual sovereignty, the framers etched into the Constitution that Congress cannot issue orders directly to the states. The addition of the Tenth Amendment solidified this basic premise by declaring, “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The anti-commandeering doctrine represents the recognition of this limit on congressional authority.

Before 2018, the anti-commandeering doctrine had only been addressed twice by the Supreme Court. New York v. United States, 505 U.S. 144, 166 (1992); Printz v. United States, 521 U.S. 898 (1997).  In New York, the Supreme Court struck down a federal law that ordered the state to regulate in accordance with federal standards. Similarly, in Printz, the Supreme Court struck down a federal law that compelled state officers to enforce federal law.

In both opinions, the Supreme Court explained that the Constitution “confers upon Congress the power to regulate individuals, not States.” New York v. United States, 505 U.S. 144, 166 (1992). “No Member of the Court ha[d] ever suggested” that even “a particularly strong federal interest” “would enable Congress to command a state government to enact state regulation.” Id. at 178 (emphasis in original). “We have always understood that even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.” Id. at 166.

Professional and Amateur Sports Protection Act

In 1992, Congress passed the Professional and Amateur Sports Protection Act (“PASPA”).  PASPA makes it illegal for states to “authorize” “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based” “on one or more competitive games in which amateur or professional athletes participate.” 28 U.S.C. § 3701 et seq. PASPA grandfathered in four states – Delaware, Montana, Nevada
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The overwhelming majority of courts (including all seven federal circuits that considered the issue) have rejected the so-called “innovator liability” doctrine.[1]  In 2017, however, the California Supreme Court in T.H. v. Novartis Pharm. Corp.[2] unanimously recognized the doctrine holding that brand-name prescription drug manufacturers owe a duty to warn to consumers who use generic drugs.[3]  In March of 2018, the Massachusetts Supreme Judicial Court (SJC) considered the issue, and took a middle ground.  Specifically, in Rafferty v. Merck & Co., Inc.,[4] the SJC held that plaintiffs who ingest the generic form of a drug may bring failure to warn claims against the brand-name manufacturer of the drug if the brand-name defendant acted recklessly by “intentionally fail[ing] to update the label on its drug while knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.”[5]  In so doing, the SJC reasoned that a plaintiff is, in fact, injured by a brand-name product’s label despite never having used said product because statutes require identical labeling of the generically manufactured version.[6]

The Facts

In 2010, a physician prescribed Finasteride, the generic version of the brand name drug Proscar, to treat Rafferty’s enlarged prostate.[7]  Rafferty experienced anticipated temporary side effects from the drug, causing him to stop taking the medication.[8]  Rafferty, however, continued to experience these side effects and his physician informed him that they could actually continue “indefinitely.”[9]  The potential lifelong side effects of this drug were not disclosed within the brand-name manufacturer’s nor the mirrored generic manufacturer’s warning label.[10]  Rafferty presented evidence that the brand-name manufacturer became aware of these potential long-term side effects by 2008, when it updated Proscar’s warning label in select European markets to include this risk.[11]

Rafferty filed suit against the brand-name manufacturer in 2013, asserting a claim of negligence for, inter alia, failure to warn and for violation of the Commonwealth’s Consumer Protection Statute, G.L. c. 93A.[12]  The Superior Court dismissed Rafferty’s claims, “ruling that [the brand-name defendant] owed no duty of care to [him].”[13]  The SJC took over the case by its own motion from the Appeals Court.[14]

The SJC Weighs In

Traditionally, Massachusetts has not recognized liability for products manufactured by others.[15]  However, the SJC noted that The Restatement (Third) of Torts allows a modification to this general rule in exceptional cases.[16] The SJC considered innovator liability to require such a modification given the certainty that a user of a generic drug will rely on the label fashioned by the brand-name manufacturer and as state law shields failure to warn claims from generic manufacturers, leaving plaintiffs without recourse for their injuries.[17] However, the SJC also recognized that imposing innovator liability could impact the public policy of encouraging innovation in the drug market and a potential increase in drug pricing.[18]

Balancing these competing interests, the court held that, “a brand-name manufacturer
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