In this brief article, I discuss two U.S. Supreme Court cases that allowed federal labeling laws to be overturned by states applying common law fraud concepts. In other words, the safe harbor provided to businesses that complied with the labeling laws implemented by federal regulatory agencies was cast aside. Plaintiffs were allowed to base their lawsuits on local state consumer protection laws and state application of the unwritten Common Law in order to hold the businesses liable for fraudulent or misleading labeling of their respective products. Certainly, it is not new in the U.S. for state law (to rely on a state's "police powers") to be more protective of its residents than federal law. For instance, California has always had more stringent emissions control standards than the federal Environmental Protection Agency (EPA), which has meant that auto manufacturers of foreign imports (e.g., Volvo, BMW) look to California as the standard setter--not the EPA. Certainly, allowing states to overrule federal attempts to establish uniform commercial standards throughout the U.S. is harmful to not only interstate commerce, but to global commerce as well.
Should local upstarts be allowed to sabotage the fine efforts of the federal government to promote commerce by applying common law -- a holdover from the "Old Country"?
Conference Paper Pre-empting Regulators, Empowering States, Screwing Marketin...