FEMA Trailer MDL Decision on Preemption

The federal court overseeing the MDL involving trailers issued by the U.S. government following Hurricane Katrina has dismissed some of the plaintiffs' state law claims against mobile home manufacturer defendants, on the basis of the federal preemption doctrine. In Re: FEMA Trailer Formaldehyde Products Liability Litigation, MDL No. 1873 (E.D. La.)

As readers of MassTort Defense know, Hurricane Katrina impacted much of the Gulf Coast in August 2005, and Hurricane Rita followed in September 2005, causing extensive damage along the Louisiana and Texas coasts. In the wake of the hurricanes, many individuals whose homes were lost or damaged moved into temporary housing provided by FEMA. Plaintiffs allege that these trailers exposed residents to high levels of the chemical formaldehyde, about which they were not warned. The Judicial Panel on Multidistrict Litigation consolidated a number of suits against defendants, including the federal government and several trailer manufacturers, over the alleged formaldehyde exposure in 2007.

Judge Kurt Engelhardt of the U.S. District Court for the Eastern District of Louisiana last week granted the manufacturer defendants' motion to dismiss certain state law claims. The defendants asserted that the construction of these mobile homes was regulated by the Manufactured Home Construction and Safety Standards Act, 42 U.S.C. § 5401 et seq., (“the MHA”) and the regulations promulgated by the United States Department of Housing and Urban Development (“HUD”), pursuant to 24 C.F.R. § 3280 and § 3282 (“the HUD Code”). Pursuant to the MHA, HUD established the Manufactured Home Construction and Safety Standards (“MHCSS”), 24 C.F.R § 3208 et seq., which govern the standards for formaldehyde emissions from materials used in manufactured homes. This regulation expressly and specifically dictates the maximum level of formaldehyde gas that component products in mobile homes can emit. The regulations also specify that a health notice on formaldehyde emissions shall be temporarily displayed in the kitchen of each manufactured home.Accordingly, the defendants asserted that the federal statutes and regulation in the MHA and the HUD Code explicitly and impliedly preempt plaintiffs’ state law claims against them.

As several courts have previously noted, the MHA does not explicitly preempt state causes of action. Turning to implied preemption, the court noted that implied preemption exists when state law regulates conduct in a field Congress intended the Federal Government to occupy exclusively (also referred to as “field preemption”), or when state law actually conflicts with federal law (also referred to as “conflict preemption”). Conflict preemption exists in two scenarios: (1) when compliance with both a state and federal law is impossible, and/or (2) when the state law conflicts with the federal law such that it stands as an obstacle to the achievement of the federal law’s purposes and objectives.

After analyzing the statute and regulations, the MDL court concluded that if plaintiffs in the instant case were allowed to go forward with their state product liability claims raising the ambient air standard, then defendants in the mobile home industry would essentially be required to deviate (in ways variable from state to state) from those federal standards so carefully and thoroughly crafted by HUD. The MHA clearly states that if states want to regulate safety matters that federal law already covers (like formaldehyde emissions), those regulations must be “identical.” 42 U.S.C. § 5403(d). Furthermore, it was noteworthy that the plaintiffs contend that the moving defendants should have adhered to the ambient air standard, which differs from the HUD-accepted component products standard. Thus, cases that present situations where the plaintiffs are not arguing that the defendants should have adhered to a standard higher than, or different from what the MHA imposes, are inapplicable.

The court concluded similarly that any such claims relating to inadequate warnings of exposure
to purportedly high levels of formaldehyde contained in the units, that require more than the federal
label standards, should be dismissed. However, any of plaintiffs’ state law claims that advance non-compliance with federal formaldehyde regulations (to the extent that such claims exist) are considered to be parallel claims, are not preempted and, thus, are not dismissed. See Riegel v. Medtronic, Inc., 128 S.Ct 999, 1011 (2008).

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