Tuesday, May 16, 2017
The Supreme Court ruled yesterday that the federal scheme covering service-member retirement and disability pay preempts a state court divorce decree that granted the former spouse of a retired service-member a portion of his disability benefits.
The ruling in Howell v. Howell settles a split in the state courts.
The case involves the way that federal law provides for veterans' retirement and disability pay, and the way that state courts can divide that pay in a divorce. Under federal law, a qualified veteran receives taxable retirement pay. A qualified veteran can also receive nontaxable disability pay. But if a veteran opts to receive disability pay, the disability pay off-sets his or her retirement pay dollar for dollar, so that the total amount of pay remains the same. Still, most veterans who qualify for disability pay opt for disability pay, because it's not taxed.
Under the federal Uniformed Services Former Spouses' Protection Act of 1982, a state may treat a veteran's retirement pay as divisible property in a divorce. But the Act explicitly excludes disability pay from divisible retirement pay. The Supreme Court ruled in Mansell v. Mansell that a state court cannot divide disability pay in a divorce when the veteran received both retirement pay and disability pay before the divorce. (The Court held that the Act preempted a state court ruling to the contrary.) Howell tested whether the Act compelled this same result when a veteran opted for disability pay well after the divorce. (The difference matters, because the spouse in Howell would take a cut in total payments if the same rule applied when the veteran spouse opted for disability pay after the divorce.)
The unanimous Court (Justice Gorsuch recused) held that the same rule applied, whether the veteran spouse opted for disability pay before the divorce or after. The Court said that Mansell dictated the result, and that the different timing didn't matter: "the temporal difference highlights only that John's military retirement pay at the time it came to Sandra was subject to later reduction (should John exercise a waiver to receive disability benefits to which he is entitled)."
The Court also rejected the theory that the state court could "reimburse" or "indemnify" the spouse, rather than outright dividing the disability pay: "The difference is semantic and nothing more. . . . Regardless of their form, such reimbursement and indemnification orders displace the federal rule and stand as an obstacle to the accomplishment and execution of the purposes and objectives of Congress." (Justice Thomas concurred but wrote separately to disagree with this latter portion of the ruling--on "purposes and objectives" pre-emption. "As I have previously explained, '[t]hat framework is an illegitimate basis for finding the pre-emption of state law.'")
The Court recognized the "hardship" that this result may "work on divorcing spouses," and noted that state courts might take this into account when it calculates the need for spousal support.
Friday, April 21, 2017
In its opinion in CTIA - The Wireless Ass'n v. City of Berkeley, a panel of the Ninth Circuit rejected First Amendment and preemption challenges to an ordinance requiring retailers to provide notices to consumers about their cell phone purchase. The notice, to be on a poster or handout, with the seal of the city, must read:
The City of Berkeley requires that you be provided the following notice:
To assure safety, the Federal Government requires that cell phones meet radiofrequency (RF) exposure guidelines. If you carry or use your phone in a pants or shirt pocket or tucked into a bra when the phone is ON and connected to a wireless network, you may exceed the federal guidelines for exposure to RF radiation. Refer to the instructions in your phone or user manual for information about how to use your phone safely.
As the notice implies, the FCC disclosures required to be included with the phone are similar if more extensive.
Affirming the district judge, the divided Ninth Circuit panel found that the required notice did not violate the First Amendment. As a compelled disclosure in a commercial context, the choice of standards was between the commercial speech test of Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New York (1980) or the more lenient test for disclosure of Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio (1985). Writing for the majority, Judge William Fletcher found that the Zauderer test was appropriate, despite the fact that the disclosure did not involve "consumer deception." Judge Fletcher agreed with "sister circuits that under Zauderer the prevention of consumer deception is not the only governmental interest that may permissibly be furthered by compelled commercial speech," citing the D.C. Circuit's en banc opinion in American Meat Institute v. U.S. Department of Agriculture. Judge Fletcher's opinion reasoned that the Zauderer's language that the disclosure be “uncontroversial” should not be over-emphasized:
Given that the purpose of the compelled disclosure is to provide accurate factual information to the consumer, we agree that any compelled disclosure must be “purely factual.” However, “uncontroversial” in this context refers to the factual accuracy of the compelled disclosure, not to its subjective impact on the audience. This is clear from Zauderer itself.
Applying the deferential Zauderer standard, the court again confronted whether the disclosure was "purely factual" as well as being reasonably related to a substantial governmental interest. Judge Fletcher's opinion concluded the mandated notice was "literally true," based on FCC findings. The court rejected CTIA's argument that while it might be "literally true," the statement was "inflammatory and misleading." Judge Fletcher analyzed the compelled notice sentence by sentence, finding it true. For example, CTIA objected to the phrase “RF radiation,” but Judge Fletcher's opinion noted this is "precisely the phrase the FCC has used, beginning in 1996, to refer to radio-frequency emissions from cell phones," and that the city could not be faulted for using the technically correct term that the FCC itself uses.
It was on this point that the brief partial dissent by Judge Michelle Friedland differed. For Judge Friedland, consumers would not read the disclosure "sentences in isolation the way the majority does." She argues that taken as a whole,"the most natural reading of the disclosure warns that carrying a cell phone in one’s pocket is unsafe," and that "Berkeley has not attempted to argue, let alone to prove, that message is true." She accuses the city of "crying wolf" and advises the city if it "wants consumers to listen to its warnings, it should stay quiet until it is prepared to present evidence of a wolf."
In addition to the First Amendment claim, CTIA argued that the mandated disclosure was preempted by federal regulations. The court noted procedural problems regarding when the argument was advanced. Nevertheless, the court clearly concluded:
Berkeley’s compelled disclosure does no more than to alert consumers to the safety disclosures that the FCC requires, and to direct consumers to federally compelled instructions in their user manuals providing specific information about how to avoid excessive exposure. Far from conflicting with federal law and policy, the Berkeley ordinance complements and reinforces it.
But surely it is the First Amendment issues that are central to the case. The panel essentially divides on the limit to government mandated disclosures to consumers, an issue that vexed the DC Circuit not only in the American Meat Institute case mentioned above, but also in National Association of Manufacturers v. SEC (conflict minerals) and in R.J. Reynolds Tobacco Co. v. FDA (cigarette labeling), both of which held the labeling requirements violated the First Amendment. One measure of the importance of the issue is the attorneys who argued CTIA in the Ninth Circuit: Theodore Olsen for the trade association of CTIA and Lawrence Lessig for the City of Berkeley. The Ninth Circuit's majority opinion is careful and well-reasoned, but as the divided panel evinces, there are fundamental disputes about warning labels.
Thursday, March 23, 2017
The Fifth Circuit ruled this week that a medical air-evacuation company has standing and that it sufficiently alleged that state defendants had "some connection" to the enforcement of state law against it to allow the company's preemption suit, including a request for injunctive relief, to move forward. The ruling remands the case to the district court for proceedings on the merits.
The case involves Texas's workers'-compensation scheme, which caps reimbursement to Air Evac's medi-vac air ambulances from an insurance company. Under the Texas Workers' Compensation Act, the Texas Workers' Compensation Commission sets reimbursements rates for insurers to pay health-care providers directly. The Act also prohibits health-care providers from billing a patient for any amount in excess of the set rate. The upshot is that "the initial bill goes to the insurer rather than the patient," at a set rate, here 125% of the Medicare rate for the same service.
Air Evac, along with other, similar health-care providers, challenged the rate through the state administrative-dispute system, arguing that it was preempted by the federal Airline Deregulation Act. They lost, and the lead plaintiff, PHI, appealed.
While the appeal was pending, Air Evac filed this case in federal court, seeking a declaration that the ADA preempted the TWCA and an injunction against TWCA enforcement (under Ex Parte Young). But the district court dismissed the case for lack of subject-matter jurisdiction, because the state defendants weren't charged with enforcing the maximum-reimbursement scheme against Air Evac (because the rate "constraints the amount insurers can pay, rather than the amount air-ambulance companies can charge"), and because Air Evac "failed to show an enforcement proceeding concerning the balance-billing prohibition is imminent, threatened, or even intended."
The Fifth Circuit reversed. The court ruled that Air Evac had standing, because the maximum rate actually constrained the amount that Air Evac could receive, even though it operated directly on the third-party insurer (and not Air Evac). The court held that there was federal question jurisdiction, because Air Evac pleaded that the federal ADA preempted the TWCA. And the court ruled that the state defendants had "some connection" to enforcement of the maximum rate against Air Evac, again because the maximum rate actually constrained Air Evac's reimbursement, even if it operated on the insurer. The court declined to abstain while PHI's state appeal was pending, because the parties and claims were different.
The ruling sends the case back to the district court for proceedings on the merits, the preemption claim.
Friday, November 25, 2016
The Ninth Circuit ruled this week that the Interstate Commerce Commission Termination Act preempted an Oregon state environmental measure as it related to repairs on a tourist rail line.
The ruling means that the state "removal-fill law," which requires a state permit for the removal of any amount of material from waters designated as Essential Salmonid Habitat, does not apply to the repair project.
The case arose when the Port of Tillamook Bay, which owns railways in Oregon, contracted with the Oregon Coast Scenic Railroad, which operates tourist trains on a portion of the Port's tracks, to repair some of the track. But when Oregon Coast started work, the Department of State Lands sent Oregon Coast a cease and desist order, alleging that the repair work would violate the state's removal-fill law. Oregon Coast sued, arguing that the federal ICCTA preempted Oregon's removal-fill law.
The Ninth Circuit agreed. The court ruled that the ICCTA preempts if an activity is (1) "transportation" (2) "by rail carrier" and (3) "as part of the interstate rail network." The court noted that the parties agreed that the activity was "transportation" under the ICCTA. It went on to say that the work was "by rail carrier," because "the repair work performed by Oregon Coast is 'an integral part of [the Port's] provision of transportation by rail carrier.'" Finally, the court held that the work was "part of the interstate rail network," because the line, while not currently attached to an interstate rail line, once was attached to an interstate rail line, and, when the repairs were finished, would once again be attached to an interstate rail line.
The court said that under ICCTA preemption, the work falls under the exclusive jurisdiction of the federal Surface Transportation Board, and that state regulation--including environmental regulation--is preempted.
Friday, November 18, 2016
The Sixth Circuit ruled today that a local "right-to-work" ordinance was not preempted under the National Labor Relations Act, but that provisions banning hiring-hall agreements and dues-checkoff requirements are preempted.
The mixed ruling hands a partial victory to union opponents (by upholding the local "right-to-work" ordinance) and a partial victory to unions (by striking the hiring-hall and dues-checkoff bans).
Hardin County, Kentucky, enacted a so-called "right-to-work" ordinance, which prohibited employers and unions from requiring union membership or dues as a condition of employment. The ordinance also prohibited "hiring-hall" agreements (which require prospective employees to be recommended, approved, referred, or cleared by a union) and "dues-checkoff" provisions (which require employers to automatically deduct union dues and fees). Unions sued, arguing that the ordinance was preempted.
The Sixth Circuit disagreed on "right-to-work" and agreed on hiring-hall and dues-checkoff provisions.
The court ruled that the "right-to-work" provision was saved from preemption and was not field-preempted. The court looked to Section 14(b) of the NLRA:
Nothing in this Act shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.
The court held that Hardin County law is "State law" under this provision, and so saved from preemption by the plain terms of the Act. The court went on to say that it couldn't be field-preempted under the NLRA, because, well, it was saved under Section 14(b). ("It follows that Section 14(b)'s explicit exception of the state right-to-work laws from preemption trumps operation of implicit field preemption.")
As to the hiring-hall and dues-checkoff bans, the court held that these did not fall within the Section 14(b) exception. It held that the dues-checkoff ban was preempted by the Labor Management Relations Act, and that hiring-hall ban was explicitly permitted under the NLRA.
The Ninth Circuit ruled today in Atay v. County of Maui that a local initiative to ban genetically engineered crops was preempted by federal and state law. The ruling ends this effort in Maui County, Hawaii, to ban GE crops.
The citizens of Maui County voted for an ordinance that banned the cultivation and testing of GE plants. The ordinance was designed "to protect organic and non-GE farmers and the County's environment from transgenic contamination and pesticides, preserve the right of Maui County residents to reject GE agriculture, and protect the County's vulnerable ecosystems and indigenous cultural heritage."
The Ninth Circuit ruled that the ordinance was preempted. The court held that the federal Plant Protection Act expressly preempted the GE ban as to crops that the Animal and Plant Health Inspection Service has deregulated. The PPA preemption provision says that "no State or political subdivision of a State may regulate the movement in interstate commerce of any . . . plant . . . plant pest, noxious weed, or plant product in order to control . . . eradicate . . . or prevent the introduction or dissemination of a . . . plant pest, or noxious weed, if the Secretary has issued a regulation or order to prevent the dissemination of the . . . plant pest, or noxious weed within the United States." The Secretary, through the APHIS, has done just that, so the court said that Maui's ban was preempted. (As to the interstate commerce element, the court said that GE seeds and plants flow across state lines, and that Congress specifically recognized in the PPA that "all plant pests, noxious weeds, plant products, articles capable of harboring plant pests or noxious weeds regulated under this chapter are in or affect interstate commerce.")
As to those crops not regulated by the APHIS, the court said that the PPA didn't impliedly preempt the ban, but Hawaii state law did. The court looked to Hawaii preemption law, which applies a "comprehensive statutory scheme" test to determine field-preemption, and held that Hawaii's statutory scheme fit the bill. (The Ninth Circuit handed down another case today with a similar state preemption holding, that one striking Kauai County's pesticide regulations.)
The ruling ends this local effort to ban GE crops.
Thursday, September 15, 2016
The Seventh Circuit had little patience at oral arguments yesterday for Governor Mike Pence's position defending his anti-Syrian-refugee policy in Indiana. Pence sought to appeal a lower court's preliminary injunction halting his policy, but the Seventh Circuit panel was all but outright hostile to Pence's arguments. The panel's pointed questions--and the Governor's utter lack of coherent responses--only revealed that Pence's policy (and his defense of it in this case) is just raw politics.
The arguments came just days after the White House announced that it would increase the total number of all refugees admitted next year.
The case came to the court after a lower court granted a preliminary injunction against Governor Pence's order that state agencies stop using federal Refugee Act funds to resettle Syrian refugees in Indiana "pending assurances from the federal government that proper security measures have been achieved." Under the policy, "[u]nless and until the state of Indiana receives assurances that proper security measures are in place, this policy will remain in full force and effect."
One of the groups that receives federal Refugee Act funds (through the state) to help resettle Syrians brought suit, arguing that Pence's order was preempted by the federal Refugee Act and that it violated Equal Protection and Title VI. The lower court granted a preliminary injunction, finding a likelihood of success on the merits of the discrimination claims and (without specifically holding) a likelihood of success on the preemption claim.
The Seventh Circuit panel focused on preemption and, in particular, Governor Pence's (lack of) authority to take federal resettlement funds designated for resettlement of refugees, including Syrians, but to refuse to use them to resettle Syrians. According to the panel, nothing in the Refugee Act authorizes a state governor to pick and choose among refugees in this way (although a state could decline to take Refugee Act funds altogether), and nothing delegates the power to a state governor to second-guess the State Department and the President himself on judgments about the which refugees present security concerns.
The Governor pointed to congressional testimony by the FBI that, according to the Governor, said that the government couldn't guarantee that Syrian refugees wouldn't pose a security risk.
But Judge Easterbrook pointed out that it's not the FBI's call--and it's certainly not a state governor's call. Under the Refugee Act, the State Department makes that call. And nothing gives a state governor the authority to discard the judgment of the State Department and the President himself as to the security risk of any particular group of refugees.
Tuesday, September 13, 2016
The Third Circuit ruled in Associated Builders v. City of Jersey City that the City's efforts to enforce labor standards through its tax subsidies is subject to challenge under the National Labor Relations Act, ERISA, and the dormant Commerce Clause. In particular, the court said that Jersey City acted as a regulator, not a market participant, when in awarded tax subsidies to developers on the condition that they enter into certain agreements with labor unions that bind the developers to negotiate with a union and cover employees in union negotiations, even if employees aren't a members.
The ruling only says Jersey City's practice is subject to NLRA, ERISA, and dormant Commerce Clause challenge--not that the practices violates them. That's now the question on remand.
The case arose when a developer challenged Jersey City's practice of offering tax subsidies on the condition that a developer execute a project labor agreement ("PLAs"), an agreement that requires developers to abide by a pre-hire collective bargaining agreement that covers all employees during the term of the project. As such, a PLA is an agreement between the developer and a labor union, and, because it's entered into with a labor union, it requires a developer to negotiate with the union and requires that all employees be represented by that union in negotiations--even if the developer doesn't ordinarily employ unionized labor, and even if the employees are not union members.
Jersey City argued that it fell under the "market participant" exception to the NLRA, ERISA, and the dormant Commerce Clause, and that therefore those provisions didn't apply.
But the Third Circuit disagreed. The court ruled that Jersey City wasn't a market participant, because, under the circuit test, "the City lacks a proprietary interest in Tax Abated Projects." The court ruled that Camps Newfound/Owatonna, Inc. v. Town of Harrison dictated the result. In that case, the Supreme Court held that Maine wasn't acting as a market participant when it provided "general exemption from real estate and personal property taxes for 'benevolent and charitable institutions incorporated' in the state, but provided more limited or no tax benefits to charities benefiting residents of other states. The court also distinguished Dep't of Revenue v. Davis, saying that in that case Kentucky sold the bonds, whereas Jersey City isn't selling anything.
The ruling sends this case back to the district court for a ruling on the merits.
Tuesday, August 23, 2016
The Ninth Circuit ruled in American Hotel and Lodging Association v. City of Los Angeles that federal labor law did not preempt LA's ordinance requiring a minimum wage for certain hotel workers in the city.
The ruling is a win for the city and for covered hotel workers. It denies the plaintiffs' motion for a preliminary injunction, but in terms that, as a practical matter, put an end to these claims. (The court ruled that federal law did not preempt, not only that that it likely did not preempt (the usual preliminary injunction standard). So the ruling tees up a city motion to dismiss these claims on the merits. And unless the plaintiffs have other claims, this ruling tees up a city motion to dismiss the entire case.)
The case arose when LA enacted an ordinance that required large hotels in the city, and smaller hotels near LAX, to pay workers $15.37 an hour (and provide other minimum benefits), unless they were covered by a collective bargaining agreement (the "collective-bargaining exemption"), and unless this wage would drive an employer into bankruptcy (the "hardship waiver"). American Hotel and Lodging Association and the Asian American Hotel Owners Association sued, arguing that the entire wage ordinance and the collective-bargaining exemption were preempted by the National Labor Relations Act, because they interfered with labor-management relations. The plaintiffs pointed to Machinists preemption (named for Int'l Ass'n of Machinists v. Wis. Emp't Relations Comm'n) which says that the NLRA implicitly preempts state restrictions on "self-help," like a strike or lock-out--things that "regulate the mechanics of labor dispute resolution." The plaintiffs moved for a preliminary injunction on this theory.
The Ninth Circuit flatly rejected the claim. The Ninth Circuit said that "[m]inimum labor standards, such as minimum wages, are not subject to Machinists preemption":
Such minimum labor standards affect union and nonunion employees equally, neither encouraging nor discouraging the collective bargaining processes covered by the NLRA. Minimum labor standards do technically interfere with labor-management relations and may impact labor or management unequally, much in the same way that California's at-will employment may favor employers over employees. Nevertheless, these standards are not preempted, because they do not "regulate the mechanics of labor dispute resolution."
The court said that minimum standards are merely background conditions of collective bargaining, not interferences with collective bargaining.
As to the collective-bargaining exemption, the court was even more direct, merely citing Lividas v. Bradshaw and its language that says that "familiar and narrowly drawn opt-out provisions" for collective bargaining agreements are valid, because they do not impact rights to collective bargaining.
Friday, August 12, 2016
The Sixth Circuit ruled this week in State of Tennessee v. FCC that the Federal Communications Commission lacked statutory authority to preempt states' laws that restricted municipalities from providing broadband Internet service outside their boundaries.
The ruling means that the FCC can't require states to permit municipalities to provide service outside their boundaries, at least in the Sixth Circuit, and at least unless and until Congress specifically authorizes the FCC to preempt in the Telecommunications Act of 1996.
Because areas outside the boundaries of these particular municipalities are unserved or under-served areas, the ruling also means that certain regions outside the municipalities' boundaries will continue to go with inadequate Internet service.
The case arose when Tennessee and North Carolina implemented restrictions on municipalities' ability to provide Internet service outside their territorial boundaries. Two municipalities in those states complained to the FCC, because they saw benefits to providing service, and thus wanted to provide service, outside their boundaries. The municipalities appealed to the FCC to preempt state laws restricting broader service.
The FCC responded by finding that broader service would serve the interests of the Telecommunications Act of 1996 (expanded broadband access, and all the benefits that this brings to communities), and by issuing an order preempting the portions of the state laws that prohibited municipalities from providing access beyond their boarders.
The states sued, arguing that the FCC lacked authority to preempt under the Act's preemption provision, Section 706. The court agreed.
The court said that the FCC's order ran headlong into the "Clear Statement Rule" and Nixon. Under the Clear Statement Rule, the FCC can't preempt a state action that allocates state decision-making; under Nixon v. Missouri Municipal League, that rule applies when a federal government preemption action "interpos[es] federal authority between a State and its municipal subdivisions," which, the Court said, "are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them in its absolute discretion." As the Sixth Circuit said,
Any attempt by the federal government to interpose itself into this state-subdivision relationship therefore must come about by a clear directive from Congress, and the FCC can only pick the decision maker here if there exists a clear statement to do so in Section 706.
According to the court, Section 706 contains no such clear statement.
So despite the Act's ambitious goals and broad delegation to the FCC to achieve those goals, the court said that the Act stops short of authorizing the FCC to preempt state laws restricting Internet access beyond a municipality's boarders.
Nothing in the ruling requires a state to adopt this kind of restriction, however, or forbids a state from specifically authorizing a municipality to expand access. But when it does--as Tennessee and North Carolina have done--the FCC cannot preempt it, at least in the Sixth Circuit, and at least unless and until Congress gives the FCC specific authorization to do so.
(The North Carolina case was in the Fourth Circuit when that court transferred it to the Sixth Circuit for consolidation with the Tennessee case.)
Wednesday, May 18, 2016
Judge Julie A. Robinson (D. Kansas) granted a preliminary injunction and halted Kansas's requirement that motor-voter applicants provide proof of citizenship when they register to vote (along with their driver's license application) in federal elections.
The ruling halts Kansas Secretary of State Chris Kobach's latest effort to restrict voter registration in that state. It also requires the state to register about 18,000 voters whose registrations were cancelled or put on hold for failure to provide proof of citizenship. At the same time, it allows the state to use a proof-of-citizenship requirement for registration for state elections. Kobach will appeal.
The Kansas law requires applicants for a driver's license and for voter registration to submit proof of citizenship. But the National Voter Registration Act, Section 5, says that every application for a driver's license "shall serve as an application for voter registration with respect to elections for Federal office." It goes on to say that a state "may require only the minimum amount of information necessary to . . . enable State election officials to assess the eligibility of that applicant and to administer voter registration and other parts of the election process."
Judge Robinson focused on the "minimum amount" language and ruled that Kansas's requirement didn't meet it. In particular, she said that the evidence didn't support that Kansas needed proof of citizenship, because the registration form already required an applicant to attest to citizenship and to sign the form. She said that the attestation requirement was plenty sufficient for the state to ensure that an applicant was qualified. (She noted that there wasn't really a problem with noncitizens registering, anyway, and that the proof-of-citizenship requirement was applied in a pretty sloppily.)
Judge Robinson rejected the state's argument that this would lead to two different registration forms--one for state elections (which would require proof of citizenship) and another for federal elections (which would not). She said that this wouldn't result in two different sets of electors, just two different sets of requirements that would lead to the same result. And in any event it was a problem of the state's own creation.
The upshot is that Judge Robinson held that the NVRA preempted Kansas's proof-of-citizenship requirement under the Elections Clause and temporarily enjoined enforcement of the proof-of-citizenship requirement for motor-voter applicants for federal elections.
If the case sounds familiar, that's because it is--or almost is. The Supreme Court ruled in 2013 in Arizona v. Inter Tribal Council of Arizona that the state couldn't require proof of citizenship for the federal mail-in form for the same reason: the NVRA preempted state law under the Elections Clause. The NVRA provision in that case--for the mail-in registration option, not the motor-voter option--was different than the provision in this case, so Arizona didn't direct the result here. Still, the NVRA provision at issue here--the "minimum amount" language--led to the same outcome.
Friday, May 6, 2016
The Ninth Circuit ruled earlier this week that the federal Immigration Reform and Control Act did not on its face preempt Arizona's laws banning the use of a false identity to obtain employment.
The ruling reverses a lower court's preliminary injunction against the Arizona laws (allowing them to go into effect), but leaves open the possibility that they could be preempted as applied in the next round of motions.
The case involves Arizona's efforts to regulate the use of identity theft to obtain employment. The state's bans were designed in part to clamp down on unauthorized aliens' use identity theft to obtain employment. But they were also designed to clamp down on U.S. citizens' use of identity theft to obtain employment.
The plaintiffs in the case--an advocacy organization and individual unauthorized aliens--sued, arguing that the federal IRCA preempted Arizona's laws, based on the Court's analysis striking much of S.B. 1070 in Arizona. (The Court in Arizona held that the state could not criminalize an unauthorized alien for working, because the state law would pose an obstacle to the federal objective, codified in the federal act, to criminalize only the employer (and not the employee).) The plaintiffs moved for a preliminary injunction based on their facial preemption claim, and the district court granted it.
The Ninth Circuit reversed. The court held that IRCA didn't likely facially preempt Arizona's laws, because even under Arizona the laws could be applied in a constitutional way. In particular, Arizona's laws applied to U.S. citizens using identity theft to obtain employment, too--and nothing in federal law prohibits that. This constitutional application of Arizona's laws meant that they couldn't be facially preempted by IRCA, even if an application of the laws to unauthorized aliens would be preempted under Arizona.
The court noted that the Supreme Court hasn't squarely decided whether the facial-challenge standard in Salerno applied to preemption claims, or if a lower standard applied. (Salerno says that in order to succeed on a facial challenge a plaintiff has to show that "no set of circumstances exists under which the Act would be invalid." That's a high bar.) Without guidance from the Court, the Ninth Circuit applied Salerno, consistent with circuit law.
The ruling is a setback for the plaintiffs. But it apparently leaves open the possibility that a court could hold that federal law preempts Arizona's laws as applied to unauthorized aliens. More to come . . . .
Thursday, April 7, 2016
In its opinion in Arizona Dream Act Coalition v. Brewer, the Ninth Circuit has found unconstitutional an Executive Order by Arizona Governor Jan Brewer that prohibits recipients of the federal program called the “Deferred Action for Childhood Arrivals” (DACA) from obtaining driver’s licenses by using Employment Authorization Documents as proof of their authorized presence in the United States.
Recall that the Ninth Circuit had earlier reversed the denial of a preliminary injunction finding that the plaintiffs had a substantial likelihood of success on their equal protection claim. The United States Supreme denied Arizona's application for a stay. On remand, the district judge had found that the plaintiffs prevailed on their equal protection claim, applying a rational basis standard of review, and entered a permanent injunction.
In this appeal by the Arizona state defendants, the same Ninth Circuit panel of judges - - - Harry Pregerson, Marsha S. Berzon, and Morgan Christen - - - in the opinion again authored by Judge Pregerson, not surprisingly found equal protection "problems" but decided to resolve the case on the "nonconstitutional grounds" of preemption, explaining (in footnote 5),
Though preemption principles are rooted in the Supremacy Clause, this court has previously applied the principle that preemption does not implicate a constitutional question for purposes of constitutional avoidance.
Yet the panel's opinion spends more than half of its analysis on the equal protection question. The court's opinion states that the judges "remain of the view" that "Arizona's policy may well fail even rational basis review" and rejected all of Arizona's asserted government interests. Moreover, the opinion stated that it "bears noting, once again" that "the record does suggest" that Arizona's policy was motivated by "a dogged animus against DACA recipients," and as the Supreme Court has "made very clear that such animus cannot constitute a legitimate state interest, and has cautioned against sowing the seeds of prejudice," citing cases including United States v. Windsor.
The opinion continued
Given the formidable Equal Protection concerns Arizona’s policy raises, we turn to a preemption analysis as an alternative to resting our decision on the Equal Protection Clause. Doing so, we conclude that Arizona’s policy encroaches on the exclusive federal authority to create immigration classifications and so is displaced by the INA.
While the court's final opinion is of questionable precedential value concerning the equal protection conclusion, the previous opinion's equal protection conclusion remains of high precedential value, and certainly the ultimate conclusion - - - here based on the Supremacy Clause preemption - - - is definitive.
Tuesday, December 15, 2015
The Supreme Court yesterday upheld a mandatory arbitration clause in a consumer contract-of-adhesion, forcing the consumer-plaintiffs into arbitration (and out of the courts) to sue DIRECTTV over early termination fees. The ruling is yet another blow to consumers who seek to recover relatively small damages from corporations--the kinds of claims that are best suited for class action lawsuits (in courts). But yesterday's ruling all but bolts the door to the courts for these kinds of claims, as corporations increasingly include mandatory arbitration clauses in their standard-form consumer contracts.
At the same time, the opinion includes powerful federal supremacy language, and reminds us of the constitutional requirement that state court judges uphold federal law, explicitly mentioning federal civil rights. The ruling thus illustrates that the politics in preemption cases can be complicated, and that a federal-friendly ruling in one area (mandatory arbitration clauses) can have important implications in others (civil rights enforcement).
Of course, Congress can "reverse" the holding simply by changing the FAA, although that seems highly unlikely.
The case, DIRECTTV v. Imburgia, grew out of consumers' disputes with DIRECTTV over early termination fees. The plaintiffs' contracts with DIRECTTV (a standard-form contract of adhesion) included a mandatory arbitration clause and a class-arbitration waiver. In particular, the contracts said that "any Claim either of us asserts will be resolved only by binding arbitration," and that "[n]either you nor we shall be entitled to join or consolidate claims in arbitration." The contract also said that if the "law of your state" makes the waiver of class arbitration unenforceable, then the entire arbitration clause is unenforceable.
But at the time the parties contracted, California law said that a waiver of class arbitration in a consumer contract of adhesion was unconscionable and thus unenforceable. This rule came from the California Supreme Court's decision in Discover Bank v. Superior Court. This was the "law of your state," at least insofar as the parties understood it at the time of the contract, and would have rendered the entire arbitration clause unenforceable, allowing the plaintiffs' case to proceed in court (and not requiring arbitration).
An earlier Supreme Court case and the Federal Arbitration Act threw a wrench into that analysis. The Federal Arbitration Act says that a "written provision" in a contract providing for "settle[ment] by arbitration" of "a controversy . . . arising out of" that "contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." The Supreme Court ruled in AT&T Mobility v. Concepcion (2011) (after the parties contracted) that the FAA preempted California's Discover Bank rule, because that rule stood as an obstacle "to the accomplishment and execution of the full purposes and objectives of Congress."
So the plaintiffs' ability to sue in state court turned on whether the contract's reference to "law of your state" meant the Discover Bank rule absent preemption, or the Discover Bank ruled as preempted under Concepcion. If the former, then the contract provision would have made the entire arbitration clause unenforceable, and the plaintiffs could have pursued their claims in court. If the latter, then the contract provision would have left the arbitration clause in place, and forced the courts to dismiss the plaintiffs' claim (and go to arbitration instead).
The Court ruled that the latter interpretation was the better one. In other words, the Court said that "law of your state" meant valid California law--that is, the Discover Bank rule as preempted by the FAA under Concepcion--which did not render the class-arbitration waiver unenforceable. As a result, the arbitration clause in the contract stayed in place, and the plaintiffs' court case will be dismissed. (Justice Breyer wrote the opinion, joined by the Court's conservatives (minus Justice Thomas) and Justice Kagan. Justices Breyer wrote the dissent, and Justice Kagan joined him, in Concepcion.)
Justice Ginsburg dissented, joined by Justice Sotomayor. She wrote that "law of your state" should be interpreted to mean the Discover Bank rule, as the parties intended and expected at the time of the contract (because the Court had not then issued Concepcion). Justice Thomas dissented separately, arguing that the FAA has no application to state court proceedings.
The ruling adds yet more authority to FAA preemption of consumer mandatory arbitration clauses and thus deals a blow to consumer-plaintiffs who seek to sue corporations in court. (Arbitration often favors the corporation.) It tilts the scales (again) toward the corporation, and away from the consumer.
But at the same time, the ruling is strong on federal supremacy, including federal civil rights. Justice Breyer included powerful language reinforcing the supremacy of federal law and the constitutional requirement of state court judges to enforce federal law, explicitly mentioning federal civil rights law.
Tuesday, November 24, 2015
The Indiana ACLU filed suit late yesterday in federal court seeking to force Indiana to take Syrian refugees. The lawsuit argues that Governor Mike Pence's action halting state aid to refugee resettlement efforts is preempted by federal law and violates equal protection and Title VI of the Civil Rights Act of 1964.
The case started when Indiana Governor Mike Pence said that his state would not accept Syrian refugees after the Paris attacks, and ordered state agencies not to provide assistance for resettlement efforts. Indiana then turned away a Syrian family (that was subsequently placed in Connecticut).
The ACLU sued on behalf of Exodus Refugee Immigration, Inc., a private non-profit that provides nuts-and-bolts assistance to refugee families in the state. Exodus claims it incurred costs in anticipation of the federal government accepting 10,000 Syrian refugees, some of whom would come to Indiana, but did not receive reimbursement from the state (as it usually would) after Governor Pence ordered state agencies to stop supporting Syrian refugee resettlement.
The complaint argues that the INA preempts Governor Pence's order. It recognizes that the INA requires the federal government to "take into account recommendations of the State," among other considerations and to the extent possible, but correctly says that "[t]he INA does not allow a State to veto placement of a refugee within the State . . . ." In short:
Defendants' suspension of the resettlement of Syrian refugees in Indiana is preempted by the Constitution and federal law for multiple reasons, including that it impinges on the exclusively federal authority to regulate immigration and to classify non-citizens; that federal law occupies the field of refugee admission and resettlement; and that it conflicts with the Immigration and Nationality Act and other federal statutes.
The plaintiffs also argue that Governor Pence's order violates equal protection and Title VI.
Indiana is one of 31 states that have "refused" to accept Syrian refugees after the Paris attacks. (The quotes are because states don't have this authority.) But this appears to be the first federal lawsuit against a governor's order to halt state support for resettlement.
Wednesday, November 4, 2015
The Sixth Circuit ruled yesterday that the federal Clean Air Act does not preempt state common law claims.
The ruling was hardly a surprise, given the plain language of the CAA. Still, the case is a victory for those who seek to enforce clean air requirements through the higher standards of state common law. (The court emphasized several times that the CAA permits states to adopt more stringent standards than the federal standards.) The ruling also allows the plaintiffs' state common law case to move forward.
The case arose when neighbors of Diageo Americas Supply, Inc., a whiskey distiller, complained that ethanol vapors from the facility combined with condensation to propagate "whiskey fungus" on their property. The neighbors filed suit in federal court, alleging state common law caused of action. Diageo moved to dismiss, arguing that the CAA preempted these claims.
The Sixth Circuit rejected that argument. The court looked to the plain text of the Act, congressional purposes, and Supreme Court precedent--all of which pointed against preemption. But the case can be resolved on the text alone, in particular, the savings clause. As the court explained:
The states' rights savings clause of the Clean Air Act expressly preserves the state common law standards on which plaintiffs sue. The clause saves from preemption "the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution," except that the "State or political subdivision may not adopt or enforce any emission standard or limitation" that is "less stringent" than a standard or limitation under an applicable implementation plan or specified federal statute.
The court went on to say that state courts are part of the "state," and that common law requirements are "requirement[s] respecting control or abatement or air pollution."
In addition to looking at text, purpose, and precedent, the court added a federalism point:
When Congress acts to preempt state law--especially in areas of longstanding state concern--it treads on the states' customary prerogatives in ways that risk upsetting the traditional federal-state balance of authority. This is why there is a strong presumption against federal preemption of state law, one that operates with special force in cases "in which Congress has legislated . . . in a field which the States have traditionally occupied." Environmental regulation is a field that the states have traditionally occupied. Accordingly, even if the express language of the states' rights savings clause here did not preserve state common law claims, principles of federalism and respect for states' rights would likely do so in the absence of a clear expression of such preemption.
Wednesday, April 22, 2015
The Supreme Court ruled this week in Oneok, Inc. v. Learjet, Inc. that the Natural Gas Act did not preempt retail gas purchasers' antitrust lawsuits against sellers (gas pipelines) for manipulating gas indexes used to set contract rates. Our argument review of the case is here.
The case arose when retail, intrastate purchasers of gas sued gas sellers for falsely reporting gas price data to industry journals that buyers and sellers used to set their contract price for gas purchases. The false reporting resulted in higher gas prices than the true market rate, so purchasers overpaid for their gas. Purchasers sued sellers under state antitrust laws. The sellers moved to dismiss, arguing that the state antitrust suits (by then removed to federal court) were preempted by the Natural Gas Act and FERC's authority under the Act.
Under the NGA, FERC has authority to regulate interstate, wholesale gas sales (sometimes called "jurisdictional" sales), but not intrastate, retail sales. Indeed, the NGA "was drawn with meticulous regard for the continued exercise of state power [over retail sales], not to handicap or dilute it in any way."
So the question was whether the price manipulation, which affected the buyers' intrastate purchases but also affected interstate, wholesale gas prices, was preempted by the NGA.
But there was a catch: the sellers (joined by the government, as amicus) only argued field preemption. Everyone agreed that the NGA contained no express preemption provision, and the sellers did not raise a conflict preemption argument.
The Court said that the answer lies in the "target at which the state law aims." In other words, because the state antitrust suits targeted sellers for manipulation of intrastate (non-jurisdictional) rates, it didn't matter that the manipulation also affected interstate, wholesale (jurisdictional) rates (over which FERC has authority). If the state law aims at intrastate sales, there's no field preemption by the NGA.
But the Court expressly withheld judgment on conflict preemption, leaving that question to the lower courts. It also expressly withheld judgment on the question whether FERC's determination that the NGA field preempts the buyers' claim holds any sway. The Court said that neither the sellers nor the government pointed to any FERC determination, so the Court wouldn't rule on it.
The case is a clear victory for gas purchasers who paid higher-than-market prices because of price manipulation by sellers. Those cases now go back to the lower courts to proceed on the merits.
But at the same time the case also suggests a strategy for sellers in the next round of antitrust litigation: Look for a way to argue conflict preemption (if there is such a way), and ask FERC to opine on the scope of NGA's field preemption.
Wednesday, April 1, 2015
The Supreme Court ruled this week that the Supremacy Clause does not confer a private right of action for injunctive relief against state officers who are allegedly violating the Medicaid Act. The sharply divided ruling (along conventional ideological lines, except for Justices Kennedy and Breyer) is a blow to the courts' equitable powers and access to justice, and, as Justice Sotomayor wrote in dissent, "threatens the vitality of our Ex Parte Young jurisprudence."
More immediately, the Court's ruling is a blow to underpaid Medicaid providers. They now cannot seek an injunction against an under-paying state in federal court; instead, they have to petition the federal government to withhold Medicaid funds from a state that violates the Medicaid Act--a much harder way to get relief.
The case, Armstrong v. Exceptional Child Care, Inc., arose when habilitation service providers sued Idaho for paying them too little under the federal Medicaid program. The providers based their claim on Section 30(A) of the Medicaid Act and the Supremacy Clause. Section 30(A) requires Idaho (and other states) to provide payment for services sufficient "to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan . . . ." The providers argued that this requirement preempted Idaho's low payment rate and sought injunctive relief against state officers who implement Idaho's Medicaid plan.
Justice Scalia wrote for the Court, joined by Chief Justice Roberts and Justices Thomas, Breyer, and Alito. He said that the Supremacy Clause does not confer a right of action for injunctive relief, because the Clause doesn't provide for it, and because to allow it would permit private parties to enforce congressional actions, "significantly curtailing [Congress's] ability to guide the implementation of federal law."
Justice Scalia also wrote that the Court lacked equitable power to enjoin Idaho's unlawful action under the Medicaid Act, because Section 30(A) demonstrates "Congress's 'intent to foreclose' equitable relief." He said that the "sole remedy" for a state's violation of the Medicaid Act is withholding of federal funds, and he said that Section 30(A) is couched in judicially unadministrable terms and standards.
Justice Breyer concurred in all but Part IV of Justice Scalia's majority opinion. (Part IV argued that the Medicaid Act itself didn't provide an express cause of action for the plaintiffs, third-party beneficiaries to Idaho's Medicaid agreement with the federal government.) He argued that administrative agencies are better suited to applying Section 30(A) than federal courts in an action like this.
Justice Sotomayor wrote the dissent, joined by Justices Kennedy, Ginsburg, and Kagan. Justice Sotomayor wrote that there's a long history of suits for equitable protection against a preempted state law, and that "we have characterized 'the availability of prospective relief of the sort awarded in Ex Parte Young' as giving 'life to the Supremacy Clause.'" Justice Sotomayor argued that there's only a single prior decision "in which we have ever discerned . . . congressional intent to foreclose equitable enforcement of a statutory mandate" (as the majority did here), and that was in Seminole Tribe, a case easily distinguished from this one. She wrote that "the Court . . . threatens the vitality our Ex Parte Young jurisprudence."
Tuesday, January 13, 2015
The Supreme Court heard oral arguments yesterday in Oneok v. Learjet, the case testing whether the federal Natural Gas Act preempts state antitrust claims arising from a conspiracy among natural gas companies to inflate retail natural gas prices.
The dispute arose when natural gas companies reported false natural gas sales prices to industry publications used to set gas prices in retail and wholesale contracts, artificially inflating those prices, and resulting in the Energy Crisis in 2000 to 2002. Retail gas purchasers brought state antitrust cases in several states. The gas companies moved to dismiss, arguing that the Natural Gas Act preempted those claims.
Indeed, the Gas Act grants FERC authority to regulate wholesale sales of natural gas (called "jurisdictional" sales) and any practice that "directly affect[s] jurisdictional rates." So the question in the case is this: Does that authority reach, and preempt state-law claims based upon, the gas companies' false reporting of gas prices to industry publications, thus affecting retail and wholesale gas prices?
The arguments didn't reveal any significant new points (that weren't briefed), and revealed only a little about the Court's likely direction in the case.
The parties agreed that the Gas Act field-preempts state-law claims for some field, but the predictably disagreed about the scope of that field. Oneok, represented by Neal Katyal, argued that the field includes practices like false reporting of gas prices that affect retail sales, because the false reporting also affected wholesale sales (or jurisdictional sales, within FERC's bailiwick). Learjet, represented by Jeffrey Fisher, argued that the Act doesn't sweep that far, and that FERC's authority does not field-preempt the state-law claims here.
Oneok also argued that the Gas Act could conflict-preempt state-law claims (an issue, it said, that would have to be decided on remand), because state-law claims could conflict with the Act and the nationwide uniformity in reporting that FERC encourages. Learjet said that the state-law antitrust claims were congruent with a federal antitrust claim (that everyone says was available to Learjet and the other plaintiffs), so there's no conflict between the state-law claims and federal law.
Questions from the bench revealed little. The progressives on the bench were by far the most active, pressing Katyal the hardest (and seemingly least persuaded by his points), but also probing Fisher (especially Justice Breyer). Conservatives were largely silent, except that Justice Scalia seemed inclined to accept Katyal's point about how price reporting affects wholesale rates (and therefore preempts state-law claims as to retail rates), and Chief Justice Roberts seemed skeptical of Fisher's argument that a ruling for the gas companies would allow them to manipulate and transform any non-jurisdictional practice into one that "directly affect[s] jurisdictional rates."
Justice Kennedy seemed to straddle, and maybe hinted at a result. He asked Katyal whether the Gas Act would preempt a state-law claim that was "exactly the same as the Sherman Act." Katyal responded:
And I think that is complementary authority, which, Justice Kennedy, your opinion in Arizona v. United States decried. Once we're in the field, once Congress has said to a federal agency, as it is here, FERC is regulating the very practice that they are seeking to regulate three different ways, then you can't tolerate states in the area. Why? Because states will have all sort --
Justice Kennedy then asked if Katyal had a back-up conflict-preemption argument, in case his field-preemption point didn't pan out. Katyal: Yes, but for remand.
The outcome will obviously be important to the parties and anyone else worried about accountability for the Energy Crisis in 2000-2002, but probably won't be too important to anyone else. That's because Congress increased FERC's authority in 2005--prompting the government to argue against cert. in the first place.
Thursday, January 8, 2015
Judge Stephen V. Wilson (C.D. Calif.) ruled that California's ban on foie gras is preempted by the federal Poultry Products Inspection Act and permanently enjoined the state from enforcing the ban.
Judge Wilson ruled that the PPIA expressly preempts California's ban. The PPIA preempts states from imposing
[m]arketing, labeling, packaging, or ingredient requirements (or storage or handling requirements . . . [that] unduly interfere with the free flow of poultry products in commerce) in addition to, or different than, those made under [the PPIA] with respect to articles prepared at any official establishment in accordance with the requirements of this chapter[.]
Judge Wilson held that California's ban regulates only the final sale of products containing certain types of foie gras products (foie gras from force-fed birds), and not the earlier method of manufacturing foie gras (which might have escaped preemption). He also held that it didn't matter whether foie gras from force-fed birds was a different product than foie gras from non-force-fed birds, because the PPIA covers both. "Thus, Plaintiffs' [force-fed] foie gras products may comply with all federal requirements but still violate [the California ban] because their products contain a particular constitute--force-fed bird's liver. Accordingly [the California ban] imposes an ingredient requirement in addition to or different than the federal laws and regulations."