NJ Law Review Update

Dear Colleagues:

ISSUE: Is a Passenger of a Stolen Vehicle Entitled to Personal Injury Protection Benefits?

The New Jersey Supreme Court has recently ruled in the matter Hardy v. Abdul-Matin, that a passenger of a stolen vehicle is not necessarily entitled to Personal Injury Protection (“PIP”) benefits.

Plaintiff Hardy was a passenger in a car which unbeknownst to him was stolen. The car was involved in a collision with a Public Service Electric and Gas truck. At the time of the accident, Hardy, then 14 years-old, resided with his grandmother.

Hardy’s grandmother had automobile insurance coverage with Liberty Mutual Insurance Company, and sought PIP benefits for Hardy’s injuries. Her claim was denied by Liberty Mutual Insurance because Hardy was riding in the vehicle without the owner’s consent. The Liberty Mutual Insurance policy contained exclusion for PIP benefits for injuries suffered by individuals operating or occupying the vehicle without the owner’s permission.

The New Jersey Supreme Court held that PIP benefits need not be given to individuals who do not have the owner’s permission to be in the vehicle. The Court further found that the Liberty Mutual Insurance policy exclusion tracks the language of N.J.S.A. 39:6A-7(b)(2), which authorizes insurers to deny benefits to an individual who “was occupying or operating an automobile without the permission of the owner or other named insured.” The language of the policy was deemed clear and unambiguous, and therefore, Hardy was properly denied PIP benefits.

ISSUE: Is a State Law Failure-to-Warn Tort Claim Pre-empted by United States Labeling Law?

The United States Supreme Court in Wyeth v. Levine, held that federal law does not pre-empt Levine’s claim that the pharmaceutical’s label did not contain adequate warnings.

In Wyeth v. Levine, Wyeth was the manufacturer of the anti-nausea drug Phenergan. Levine was injected with Phenergan by the “IV-push” method (the drug was injected directly into her vein and entered her artery). Thereafter, Levine developed gangrene, and her forearm was amputated. Levine brought a state-law damages action in Vermont in which she alleged that Wyeth failed to provide adequate warnings about the significant risks of administering Phenergan by the “IV-push” method. A jury found for Levine and awarded her damages. The Vermont Supreme Court affirmed the verdict.

Wyeth appealed to the United States Supreme Court and raised the following arguments:

1. Levine’s state-law claims are pre-empted because it is impossible for Wyeth to comply with both the state-law duties and federal labeling duties. 2. Requiring Wyeth to comply with state-law duty to provide a stronger warning would interfere with Congress’ purpose of entrusting the FDA with drug labeling decisions.

Both of these arguments were rejected by the Supreme Court.

Pursuant to the FDA’s “changes being effected” regulation, Wyeth could have unilaterally added a stronger warning about “IV-push” administration of the drug. There was no evidence that the FDA would have rejected such a change in labeling. The Court noted that Wyeth’s argument was based on a fundamental misunderstanding that the FDA, not the manufacturer, bears primary responsibility for drug labeling. The Court further notes that it is a central premise of the Food, Drug, and Cosmetic Act and FDA regulations that the manufacturer bears responsibility for the label content at all times.

Further, Wyeth relied on the preamble to the 2006 FDA regulation declaring that state-law failure-to-warn claims were a threat to the FDA’s statutorily prescribed role. The Supreme Court held that this preamble does not merit deference as it is at odds with congressional purpose, and reverses the FDA’s own longstanding position that state law is a complementary form of drug regulation without providing reasoned explanation.