Congurrent Federal and State Jurisdiction

Clause 3. The Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.

Annotations

In Gibbons v. Ogden,¹¹⁵⁷ the Court, speaking by Chief Justice Marshall, held that New York legislation that excluded from the navigable waters of that state steam vessels enrolled and licensed under an act of Congress to engage in the coasting trade was in conflict with the federal law and hence void.¹¹⁵⁸ The result, said the Chief Justice, was required by the Supremacy Clause, which proclaims that statutes and treaties as well as the Constitution itself supersede state laws that “interfere with, or are contrary to” their dictates. “In every such case, the act of congress, or the treaty, is supreme; and the law of the state, though enacted in the exercise of powers not controverted, must yield to it.”¹¹⁵⁹

Since the turn of the 20th century, federal legislation, primarily but not exclusively under the Commerce Clause, has penetrated deeper and deeper into areas once occupied by the regulatory power of the states. One result is that state laws on subjects about which Congress has legislated have been more and more frequently attacked as being incompatible with the acts of Congress and hence invalid under the supremacy clause.¹¹⁶⁰

“The constitutional principles of preemption, in whatever particular field of law they operate, are designed with a common end in view: to avoid conflicting regulation of conduct by various official bodies which might have some authority over the subject matter.”¹¹⁶¹ As Justice Black once explained in a much quoted exposition of the matter: “There is not—and from the very nature of the problem there cannot be—any rigid formula or rule which can be used as a universal pattern to determine the meaning and purpose of every act of Congress. This Court, in considering the validity of state laws in the light of treaties or federal laws touching the same subject, has made use of the following expressions: conflicting; contrary to; occupying the field; repugnance; difference; irreconcilability; inconsistency; violation; curtailment; and interference. But none of these expressions provides an infallible constitutional test or an exclusive constitutional yardstick. In the final analysis, there can be no one crystal clear distinctly marked formula. Our primary function is to determine whether, under the circumstances of this particular case, Pennsylvania’s law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”¹¹⁶²

Before setting out in their various forms the standards and canons to which the Court formally adheres, one must still recognize the highly subjective nature of their application. As an astute observer long ago observed, “the use or non-use of particular tests, as well as their content, is influenced more by judicial reaction to the desirability of the state legislation brought into question than by metaphorical sign-language of ‘occupation of the field.’ And it would seem that this is largely unavoidable. The Court, in order to determine an unexpressed congressional intent, has undertaken the task of making the independent judgment of social values that Congress has failed to make. In making this determination, the Court’s evaluation of the desirability of overlapping regulatory schemes or overlapping criminal sanctions cannot but be a substantial factor.”¹¹⁶³

Preemption Standards.—Until roughly the New Deal, as recited above, the Supreme Court applied a doctrine of “dual federalism,” under which the Federal Government and the states were separate sovereigns, each preeminent in its own fields but lacking authority in the other’s. This conception affected preemption cases, with the Court taking the view, largely, that any congressional regulation of a subject effectively preempted the field and ousted the states.¹¹⁶⁴ Thus, when Congress entered the field of railroad regulation, the result was invalidation of many previously enacted state measures. Even here, however, safety measures tended to survive, and health and safety legislation in other areas was protected from the effects of federal regulatory actions.

In the 1940s, the Court began to develop modern standards, still recited and relied on, for determining when preemption occurred.¹¹⁶⁵ All modern cases recite some variation of the basic standards. “[T]he question whether a certain state action is preempted by federal law is one of congressional intent. The purpose of Congress is the ultimate touchstone. To discern Congress’s intent we examine the explicit statutory language and the structure and purpose of the statute.”¹¹⁶⁶ Congress’s intent to supplant state authority in a particular field may be “explicitly stated in the statute’s language or implicitly contained in its structure and purpose.”¹¹⁶⁷ Because preemption cases, when the statute contains no express provision, theoretically turn on statutory construction, generalizations about them can carry one only so far. Each case must construe a different federal statute with a distinct legislative history. If the statute and the legislative history are silent or unclear, the Supreme Court has developed general criteria which it purports to use in determining the preemptive reach.

“Absent explicit preemptive language, we have recognized at least two types of implied preemption: field preemption, where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, . . . and conflict preemption, where compliance with both federal and state regulations is a physical impossibility, . . . or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”¹¹⁶⁸ However, “federal regulation of a field of commerce should not be deemed preemptive of state regulatory power in the absence of persuasive reasons—either that the nature of the regulated subject matters permits no other conclusion, or that the Congress has unmistakably so ordained.”¹¹⁶⁹ At the same time, “[t]he relative importance to the State of its own law is not material when there is a conflict with a valid federal law, for the Framers of our Constitution provided that the federal law must prevail.”¹¹⁷⁰

In the final analysis, “the generalities” that may be drawn from the cases do not decide them. Rather, “the fate of state legislation in these cases has not been determined by these generalities but by the weight of the circumstances and the practical and experienced judgment in applying these generalities to the particular instances.”¹¹⁷¹

The Standards Applied.—As might be expected from the caveat just quoted, any overview of the Court’s preemption decisions can only make the field seem tangled, and to some extent it is. But some threads may be extracted.

Express Preemption. Of course, it is possible for Congress to write preemptive language that clearly and cleanly prescribes or does not prescribe displacement of state laws in an area.¹¹⁷² Provisions governing preemption can be relatively interpretation free,¹¹⁷³ and the Court has recognized that certain statutory language can guide the interpretation.¹¹⁷⁴ For example, a prohibition of state taxes on carriage of air passengers “or on the gross receipts derived therefrom” was held to preempt a state tax on airlines, described by the state as a personal property tax, but based on a percentage of the airline’s gross income. “The manner in which the state legislature has described and categorized [the tax] cannot mask the fact that the purpose and effect of the provision are to impose a levy upon the gross receipts of airlines.”¹¹⁷⁵

But, more often than not, express preemptive language may be ambiguous or at least not free from conflicting interpretation. Thus, the Court was divided with respect to whether a provision of the Airline Deregulation Act proscribing the states from having and enforcing laws “relating to rates, routes, or services of any air carrier” applied to displace state consumer-protection laws regulating airline fare advertising.¹¹⁷⁶ Delimiting the scope of an exception in an express preemption provision can also present challenges. For example, the Immigration Control and Reform Act of 1986 (IRCA), which imposed the first comprehensive federal sanctions against employing aliens not authorized to work in the United States, preempted “any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ unauthorized aliens.”¹¹⁷⁷ In Chamber of Commerce of the United States v. Whiting, a majority of the Court adopted a straightforward “plain meaning” approach to uphold a 2007 Arizona law that called for the suspension or revocation of the business licenses (including articles of incorporation and like documents) of Arizona employers found to have knowingly hired an unauthorized alien.¹¹⁷⁸ By contrast, two dissenting opinions were troubled that the Arizona sanction was far more severe than that authorized for similar violations under either federal law or state laws in force prior to IRCA. The dissents interpreted IRCA’s “licensing and similar laws” language narrowly to cover only businesses that primarily recruit or refer workers for employment, or businesses that have been found by federal authorities to have violated federal sanctions, respectively.¹¹⁷⁹

At issue in AT&T Mobility, LLC v. Concepcion¹¹⁸⁰ was a savings provision of the Federal Arbitration Act (FAA) that made arbitration provisions in contracts “valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”¹¹⁸¹ An arbitration provision in their cellular telephone contract forbade plaintiffs from seeking arbitration of an allegedly fraudulent practice by AT&T on a class basis. The Court closely divided over whether the FAA saving clause made this anti-class arbitration provision attackable under California law against class action waivers in consumer contracts, or whether the savings clause looked solely to grounds for revoking the cellular contract that had nothing to do with the arbitration provision.¹¹⁸² Another case focused on a preemption clause that preempted certain laws of “a State [or] political subdivision of a State” regulating motor carriers, but excepted “[State] safely regulatory authority.” The Court interpreted the exception to allow a safety regulation adopted by a city: “[a]bsent a clear statement to the contrary, Congress’s reference to the ‘regulatory authority of a State’ should be read to preserve, not preempt, the traditional prerogative of the States to delegate their authority to their constituent parts.”¹¹⁸³

Perhaps the broadest preemption section ever enacted, § 514 of the Employment Retirement Income Security Act of 1974 (ERISA), is so constructed that the Court has been moved to comment that the provisions “are not a model of legislative drafting.”¹¹⁸⁴ The section declares that the statute shall “supersede any and all State laws insofar as they now or hereafter relate to any employee benefit plan,” but saves to the States the power to enforce “any law . . . which regulates insurance, banking, or securities,” except that an employee benefit plan governed by ERISA shall not be “deemed” an insurance company, an insurer, or engaged in the business of insurance for purposes of state laws “purporting to regulate” insurance companies or insurance contracts.¹¹⁸⁵ Interpretation of the provisions has resulted in contentious and divided Court opinions.¹¹⁸⁶

Also illustrative of the judicial difficulty with ambiguous preemption language are the fractured opinions in Cipollone, in which the Court had to decide whether sections of the Federal Cigarette Labeling and Advertising Act, enacted in 1965 and 1969, preempted state common-law actions against a cigarette company for the alleged harm visited on a smoker.¹¹⁸⁷ The 1965 provision barred the requirement of any “statement” relating to smoking health, other than what the federal law imposed, and the 1969 provision barred the imposition of any “requirement or prohibition based on smoking and health” by any “State law.” It was, thus, a fair question whether common-law claims, based on design defect, failure to warn, breach of express warranty, fraudulent misrepresentation, and conspiracy to defraud, were preempted or whether only positive state enactments came within the scope of the clauses. Two groups of Justices concluded that the 1965 section reached only positive state law and did not preempt common-law actions;¹¹⁸⁸ different alignments of Justices concluded that the 1969 provisions did reach common-law claims, as well as positive enactments, and did preempt some of the claims insofar as they in fact constituted a requirement or prohibition based on smoking health.¹¹⁸⁹

Little clarification of the confusing Cipollone decision and opinions resulted in the cases following, although it does seem evident that the attempted distinction limiting courts to the particular language of preemption when Congress has spoken has not prevailed. At issue in Medtronic, Inc. v. Lohr¹¹⁹⁰ was the Medical Device Amendments (MDA) of 1976, which prohibited states from adopting or continuing in effect “with respect to a [medical] device” any “requirement” that is “different from, or in addition to” the applicable federal requirement and that relates to the safety or effectiveness of the device.¹¹⁹¹ The issue was whether a common-law tort obligation imposed a “requirement” that was different from or in addition to any federal requirement. The device, a pacemaker lead, had come on the market not pursuant to the rigorous FDA test but rather as determined by the FDA to be “substantially equivalent” to a device previously on the market, a situation of some import to at least some of the Justices.

Unanimously, the Court determined that a defective design claim was not preempted and that the MDA did not prevent states from providing a damages remedy for violation of common-law duties that paralleled federal requirements. But the Justices split 4–1–4 with respect to preemption of various claims relating to manufacturing and labeling. FDA regulations, which a majority deferred to, limited preemption to situations in which a particular state requirement threatens to interfere with a specific federal interest. Moreover, the common-law standards were not specifically developed to govern medical devices and their generality removed them from the category of requirements “with respect to” specific devices. However, five Justices did agree that common-law requirements could be, just as statutory provisions, “requirements” that were preempted, though they did not agree on the application of that view.¹¹⁹²

Following Cipollone, the Court observed that, although it “need not go beyond” the statutory preemption language, it did need to “identify the domain expressly preempted” by the language, so that “our interpretation of that language does not occur in a contextual vacuum.” That is, it must be informed by two presumptions about the nature of preemption: the presumption that Congress does not cavalierly preempt common-law causes of action and the principle that Congress’s purpose is the ultimate touchstone.¹¹⁹³

The Court continued to struggle with application of express preemption language to state common-law tort actions in Geier v. American Honda Motor Co.¹¹⁹⁴ The National Traffic and Motor Vehicle Safety Act contained both a preemption clause, prohibiting states from applying “any safety standard” different from an applicable federal standard, and a “saving clause,” providing that “compliance with” a federal safety standard “does not exempt any person from any liability under common law.” The Court determined that the express preemption clause was inapplicable, because the saving clause implied that some number of state common law actions would be saved. However, despite the saving clause, the Court ruled that a common law tort action seeking damages for failure to equip a car with a front seat airbag, in addition to a seat belt, was preempted. According to the Court, allowing the suit would frustrate the purpose of a Federal Motor Vehicle Safety Standard that specifically had intended to give manufacturers a choice among a variety of “passive restraint” systems for the applicable model year.¹¹⁹⁵ The Court’s holding makes clear, contrary to the suggestion in Cipollone, that existence of express preemption language does not foreclose the alternative operation of conflict (in this case “frustration of purpose”) preemption.¹¹⁹⁶

Field Preemption. Where the scheme of federal regulation is “so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,”¹¹⁹⁷ states are ousted from the field. Still a paradigmatic example of field preemption is Hines v. Davidowitz,¹¹⁹⁸ in which the Court held that a new federal law requiring the registration of all aliens in the country precluded enforcement of a pre-existing state law mandating registration of aliens within the state.¹¹⁹⁹ Adverting to the supremacy of national power in foreign relations and the sensitivity of the relationship between the regulation of aliens and the conduct of foreign affairs, the Court had little difficulty declaring the entire field to have been occupied by federal law.¹²⁰⁰ Similarly, in Pennsylvania v. Nelson,¹²⁰¹ the Court invalidated as preempted a state law punishing sedition against the National Government. The Court enunciated a three-part test: (1) the pervasiveness of federal regulation, (2) federal occupation of the field as necessitated by the need for national uniformity, and (3) the danger of conflict between state and federal administration.¹²⁰²

Rice itself held that a federal system of regulating the operations of warehouses and the rates they charged completely occupied the field and ousted state regulation.¹²⁰³

Field preemption analysis often involves delimiting the subject of federal regulation and determining whether a federal law has regulated part of the field, however defined, or the whole area, so that state law cannot even supplement the federal.¹²⁰⁴ Illustrative of this point is the Court’s holding that the Atomic Energy Act’s preemption of the safety aspects of nuclear power did not invalidate a state law conditioning construction of nuclear power plants on a finding by a state agency that adequate storage and disposal facilities were available to treat nuclear wastes, because “economic” regulation of power generation has traditionally been left to the states—an arrangement maintained by the Act—and because the state law could be justified as an economic rather than a safety regulation.¹²⁰⁵

A city’s effort to enforce stiff penalties for ship pollution that resulted from boilers approved by the Federal Government was held not preempted, the field of boiler safety, but not boiler pollution, having been occupied by federal regulation.¹²⁰⁶ A state liability scheme imposing cleanup costs and strict, no-fault liability on shore facilities and ships for any oil-spill damage was held to complement a federal law concerned solely with recovery of actual cleanup costs incurred by the Federal Government and which textually presupposed federal-state cooperation.¹²⁰⁷ On the other hand, a comprehensive regulation of the design, size, and movement of oil tankers in Puget Sound was found, save in one respect, to be either expressly or implicitly preempted by federal law and regulations. Critical to the determination was the Court’s conclusion that Congress, without actually saying so, had intended to mandate exclusive standards and a single federal decisionmaker for safety purposes in vessel regulation.¹²⁰⁸ Also, a closely divided Court voided a city ordinance placing an 11 p. m. to 7 a. m. curfew on jet flights from the city airport where, despite the absence of preemptive language in federal law, federal regulation of aircraft noise was of such a pervasive nature as to leave no room for state or local regulation.¹²⁰⁹

The Court has, however, recognized that when a federal statute preempts a narrow field, leaving states to regulate outside of that field, state laws whose “target” is beyond the field of federal regulation are not necessarily displaced by field preemption principles,¹²¹⁰ and such state laws may “incidentally” affect the preempted field.¹²¹¹ In Oneok v. Learjet, gas pipeline companies and the federal government asserted that state antitrust claims against the pipeline companies for alleged manipulation of certain indices used in setting natural gas prices were field preempted because the Natural Gas Act (NGA) regulates wholesale prices of natural gas.¹²¹² The Court disagreed. In so doing, the Court noted that the alleged manipulation of the price indices also affected retail prices, the regulation of which is left to the states by the NGA.¹²¹³ Because the Court viewed Congress as having struck a “careful balance” between federal and state regulation when enacting the NGA, it took the view that,¹²¹⁴ “where (as here) a state law can be applied” both to sales regulated by the federal government and to other sales, “we must proceed cautiously, finding preemption only where detailed examination convinces us that a matter falls within the preempted field as defined by our precedents.”¹²¹⁵ The Court found no such preemption here, in part because the “target at which the state law aims” was practices affecting retail prices, something which the Court viewed as “firmly on the States’ side of th[e] dividing line.”¹²¹⁶ The Court also noted that the “broad applicability” of state antitrust laws supported a finding of no preemption here,¹²¹⁷ as does the states’ historic role in providing common law and statutory remedies against monopolies and unfair business practices.¹²¹⁸ However, while declining to find field preemption, the Court left open the possibility of conflict preemption, which had not been raised by the parties.¹²¹⁹

Congress may preempt state regulation without itself prescribing a federal standard; it may deregulate a field and thus occupy it by opting for market regulation and precluding state or local regulation.¹²²⁰

Conflict Preemption. Several possible situations will lead to a holding that a state law is preempted as in conflict with federal law. First, it may be that the two laws, federal and state, will actually conflict. Thus, in Rose v. Arkansas State Police,¹²²¹ federal law provided for death benefits for state law enforcement officers “in addition to” any other compensation, while the state law required a reduction in state benefits by the amount received from other sources. The Court, in a brief, per curiam opinion, had no difficulty finding the state provision preempted.¹²²²

Second, conflict preemption may occur when it is practically impossible to comply with the terms of both laws. Thus, where a federal agency had authorized federal savings and loan associations to include “due-on-sale” clauses in their loan instruments and where the state had largely prevented inclusion of such clauses, while it was literally possible for lenders to comply with both rules, the federal rule being permissive, the state regulation prevented the exercise of the flexibility the federal agency had conferred and was preempted.¹²²³ More problematic are circumstances in which a party has an administrative avenue for seeking removal of impediments to dual compliance. In Pliva, Inc. v. Mensing,¹²²⁴ federal law required generic drugs to be labeled the same as the brand name counterpart, while state tort law required drug labels to contain adequate warnings to render use of the drug reasonably safe. There had been accumulating evidence that long-term use of the drug metoclopramide carried a significant risk of severe neurological damage, but manufacturers of generic metoclopramide neither amended their warning labels nor sought to have the Food and Drug Administration require the brand name manufacturer to include stronger label warnings, which consequently would have led to stronger labeling of the generic. Five Justices held that state tort law was preempted.¹²²⁵ It was impossible to comply both with the state law duty to change the label and the federal law duty to keep the label the same.¹²²⁶ The four dissenting Justices argued that inability to change the labels unilaterally was insufficient, standing alone, to establish a defense based on impossibility.¹²²⁷ Emphasizing the federal duty to monitor the safety of their drugs, the dissenters would require that the generic manufacturers also show some effort to effectuate a labeling change through the FDA.

The Court reached a similar result in Mutual Pharmaceutical Co. v. Bartlett.¹²²⁸ There, the Court again faced the question of whether FDA labeling requirements preempted state tort law in a case involving sales by a generic drug manufacturer. The lower court had held that it was not impossible for the manufacturer to comply with both the FDA’s labeling requirements and state law that required stronger warnings regarding the drug’s safety because the manufacturer could simply stop selling the drug. The Supreme Court rejected the “stop-selling rationale” because it “would render impossibility preemption a dead letter and work a revolution in . . . preemption case law.”¹²²⁹

In contrast to Pliva, Inc. v. Mensing and Mutual Pharmaceutical Co. v. Bartlett, the Court found no preemption in Wyeth v. Levine,¹²³⁰ a state tort action against a brand-name drug manufacturer based on inadequate labeling. A brand-name drug manufacturer, unlike makers of generic drugs, could unilaterally strengthen labeling under federal regulations, subject to subsequent FDA override, and thereby independently meet state tort law requirements. In another case of alleged impossibility, it was held possible for an employer to comply both with a state law mandating leave and reinstatement to pregnant employees and with a federal law prohibiting employment discrimination on the basis of pregnancy.¹²³¹ Similarly, when faced with both federal and state standards on the ripeness of avocados, the Court discerned that the federal standard was a “minimum” one rather than a “uniform” one and decided that growers could comply with both.¹²³²

Third, a fruitful source of preemption is found when it is determined that the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress.¹²³³ Thus, despite the inclusion of a saving clause preserving liability under common law, the National Traffic and Motor Vehicle Safety Act nevertheless was found to have preempted a state common law tort action based on the failure of a car manufacturer to install front seat airbags: Giving car manufacturers some leeway in developing and introducing passive safety restraint devices was, according to the Court, a key congressional objective under the Act, one that would frustrated should a tort action be allowed to proceed.¹²³⁴ The Court also has voided a state requirement that the average net weight of a package of flour in a lot could not be less than the net weight stated on the package. While applicable federal law permitted variations from stated weight caused by distribution losses, such as through partial dehydration, the state allowed no such deviation. Although it was possible for a producer to satisfy the federal standard while satisfying the tougher state standard, the Court discerned that to do so defeated one purpose of the federal requirement—the facilitating of value comparisons by shoppers. Because different producers in different situations in order to comply with the state standard may have to overpack flour to make up for dehydration loss, consumers would not be comparing packages containing identical amounts of flour solids.¹²³⁵ In Felder v. Casey,¹²³⁶ a state notice-of-claim statute was found to frustrate the remedial objectives of civil rights laws as applied to actions brought in state court under 42 U. S. C. § 1983. A state law recognizing the validity of an unrecorded oral sale of an aircraft was held preempted by the Federal Aviation Act’s provision that unrecorded “instruments” of transfer are invalid, since the congressional purpose evidenced in the legislative history was to make information about an aircraft’s title readily available by requiring that all transfers be documented and recorded.¹²³⁷

In Boggs v. Boggs,¹²³⁸ the Court, 5-to-4, applied the “stands as an obstacle” test for conflict even though the statute (ERISA) contains an express preemption section. The dispute arose in a community-property state, in which heirs of a deceased wife claimed property that involved pension-benefit assets that was left to them by testamentary disposition, as against a surviving second wife. Two ERISA provisions operated to prevent the descent of the property to the heirs, but under community-property rules the property could have been left to the heirs by their deceased mother. The Court did not pause to analyze whether the ERISA preemption provision operated to preclude the descent of the property, either because state law “relate[d] to” a covered pension plan or because state law had an impermissible “connection with” a plan, but it instead decided that the operation of the state law insofar as it conflicted with the purposes Congress had intended to achieve by ERISA and insofar as it ran into the two noted provisions of ERISA stood as an obstacle to the effectuation of the ERISA law. “We can begin, and in this case end, the analysis by simply asking if state law conflicts with the provisions of ERISA or operates to frustrate its objects. We hold that there is a conflict, which suffices to resolve the case. We need not inquire whether the statutory phrase ‘relate to’ provides further and additional support for the preemption claim. Nor need we consider the applicability of field preemption.”¹²³⁹

Similarly, the Court found it unnecessary to consider field preemption due to its holding that a Massachusetts law barring state agencies from purchasing goods or services from companies doing business with Burma imposed obstacles to the accomplishment of Congress’s full objectives under the federal Burma sanctions law.¹²⁴⁰ The state law was said to undermine the federal law in several respects that could have implicated field preemption—by limiting the President’s effective discretion to control sanctions, and by frustrating the President’s ability to engage in effective diplomacy in developing a comprehensive multilateral strategy—but the Court “decline[d] to speak to field preemption as a separate issue.”¹²⁴¹

Also, a state law making agricultural producers’ associations the exclusive bargaining agents and requiring payment of service fees by nonmember producers was held to counter a strong federal policy protecting the right of farmers to join or not join such associations.¹²⁴² And a state assertion of the right to set minimum streamflow requirements different from those established by FERC in its licensing capacity was denied as being preempted under the Federal Power Act, despite language requiring deference to state laws “relating to the control, appropriation, use, or distribution of water.”¹²⁴³

Contrarily, a comprehensive federal regulation of insecticides and other such chemicals was held not to preempt a town ordinance that required a permit for the spraying of pesticides, there being no conflict between requirements.¹²⁴⁴ The application of state antitrust laws to authorize indirect purchasers to recover for all overcharges passed on to them by direct purchasers was held to implicate no preemption concerns, because the federal antitrust laws had been interpreted to not permit indirect purchasers to recover under federal law; the state law may have been inconsistent with federal law but in no way did it frustrate federal objectives and policies.¹²⁴⁵ The effect of federal policy was not strong enough to warrant a holding of preemption when a state authorized condemnation of abandoned railroad property after conclusion of an ICC proceeding permitting abandonment, although the railroad’s opportunity costs in the property had been considered in the decision on abandonment.¹²⁴⁶

Federal Versus State Labor Laws.—One group of cases, which has caused the Court much difficulty over the years, concerns the effect of federal labor laws on state power to govern labor-management relations. Although the Court some time ago reached a settled rule, changes in membership on the Court re-opened the issue and modified the rules.

With the enactment of the National Labor Relations Act and subsequent amendments, Congress declared a national policy in labor-management relations and established the NLRB to carry out that policy.¹²⁴⁷ It became the Supreme Court’s responsibility to determine what role state law on labor-management relations was to play. At first, the Court applied a test of determination whether the state regulation was in direct conflict with the national regulatory scheme. Thus, in one early case, the Court held that an order by a state board which commanded a union to desist from mass picketing of a factory and from assorted personal threats was not in conflict with the national law that had not been invoked and that did not touch on some of the union conduct in question.¹²⁴⁸ A cease-and-desist order of a state board implementing a state provision making it an unfair labor practice for employees to conduct a slowdown or to otherwise interfere with production while on the job was found not to conflict with federal law,¹²⁴⁹ and another order of the board was also sustained in its prohibition of the discharge of an employee under a maintenance-of-membership clause inserted in a contract under pressure from the War Labor Board and which violated state law.¹²⁵⁰

By contrast, a state statute requiring business agents of unions operating in the state to file annual reports and to pay an annual fee of one dollar was voided as in conflict with federal law.¹²⁵¹ And state statutes providing for mediation and outlawing public utility strikes were similarly voided as being in specific conflict with federal law.¹²⁵² A somewhat different approach was noted in several cases in which the Court held that the federal act had so occupied the field in certain areas as to preclude state regulation.¹²⁵³ The latter approach was predominant through the 1950s, as the Court voided state court action in enjoining¹²⁵⁴ or awarding damages¹²⁵⁵ for peaceful picketing, in awarding of relief by damages or otherwise for conduct that constituted an unfair labor practice under federal law,¹²⁵⁶ or in enforcing state antitrust laws so as to affect collective bargaining agreements¹²⁵⁷ or to bar a strike as a restraint of trade,¹²⁵⁸ even with regard to disputes over which the NLRB declined to assert jurisdiction because of the degree of effect on interstate commerce.

In San Diego Building Trades Council v. Garmon,¹²⁵⁹ the Court enunciated the rule, based on its previous decade of adjudication. “When an activity is arguably subject to § 7 or § 8 of the Act, the States . . . must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted.”¹²⁶⁰

For much of the period since Garmon, the dispute in the Court concerned the scope of the few exceptions permitted in the Garmon principle. First, when picketing is not wholly peaceful but is attended by intimidation, violence, and obstruction of the roads affording access to the struck establishment, state police powers have been held not disabled to deal with the conduct and narrowly drawn injunctions directed against violence and mass picketing have been permitted¹²⁶¹ as well as damages to compensate for harm growing out of such activities.¹²⁶²

A 1958 case permitted a successful state court suit for reinstatement and damages for lost pay because of a wrongful expulsion, leading to discharge from employment, based on a theory that the union constitution and by-laws constitute a contract between the union and the members the terms of which can be enforced by state courts without the danger of a conflict between state and federal law.¹²⁶³ The Court subsequently narrowed the interpretation of this ruling by holding in two cases that members who alleged union interference with their existing or prospective employment relations could not sue for damages but must file unfair labor practice charges with the NLRB.¹²⁶⁴ Gonzales was said to be limited to “purely internal union matters.”¹²⁶⁵ Finally, Gonzales, was abandoned in a fivetofour decision in which the Court held that a person who alleged that his union had misinterpreted its constitution and its collective bargaining agreement with the individual’s employer in expelling him from the union and causing him to be discharged from his employment because he was late paying his dues had to pursue his federal remedies.¹²⁶⁶ Justice Harlan wrote for the Court that, although it was not likely that, in Gonzales, a state court resolution of the scope of duty owed the member by the union would implicate principles of federal law, state court resolution in this case involved an interpretation of the contract’s union security clause, a matter on which federal regulation is extensive.¹²⁶⁷

One other exception has been based, like the violence cases, on the assumption that it concerns areas traditionally left to local law into which Congress would not want to intrude. In Linn v. Plant Guard Workers,¹²⁶⁸ the Court permitted a state court adjudication of a defamation action arising out of a labor dispute. And, in Letter Carriers v. Austin,¹²⁶⁹ the Court held that federal law preempts state defamation laws in the context of labor disputes to the extent that the state seeks to make actionable defamatory statements in labor disputes published without knowledge of their falsity or in reckless disregard of truth or falsity.

However, a state tort action for the intentional infliction of emotional distress occasioned through an alleged campaign of personal abuse and harassment of a member of the union by the union and its officials was held not preempted by federal labor law. Federal law was not directed to the “outrageous conduct” alleged, and NLRB resolution of the dispute would neither touch upon the claim of emotional distress and physical injury nor award the plaintiff any compensation. But state court jurisdiction, in order that there not be interference with the federal scheme, must be premised on tortuous conduct either unrelated to employment discrimination or a function of the particularly abusive manner in which the discrimination is accomplished or threatened rather than a function of the actual or threatened discrimination itself.¹²⁷⁰

A significant retrenchment of Garmon occurred in Sears, Roebuck & Co. v. Carpenters,¹²⁷¹ in the context of state court assertion of jurisdiction over trespassory picketing. Objecting to the company’s use of nonunion work in one of its departments, the union picketed the store, using the company’s property, the lot area surrounding the store, instead of the public sidewalks, to walk on. After the union refused to move its pickets to the sidewalk, the company sought and obtained a state court order enjoining the picketing on company property. Depending upon the union motivation for the picketing, it was either arguably prohibited or arguably protected by federal law, the trespassory nature of the picketing being one factor the NLRB would have looked to in determining at least the protected nature of the conduct. The Court held, however, that under the circumstances, neither the arguably prohibited nor the arguably protected rationale of Garmon was sufficient to deprive the state court of jurisdiction.

First, as to conduct arguably prohibited by NLRA, the Court seemingly expanded the Garmon exception recognizing state court jurisdiction for conduct that touches interests “deeply rooted in local feeling”¹²⁷² in holding that where there exists “a significant state interest in protecting the citizens from the challenged conduct” and there exists “little risk of interference with the regulatory jurisdiction” of the NLRB, state law is not preempted. Here, there was obviously a significant state interest in protecting the company from trespass; the second, “critical inquiry” was whether the controversy presented to the state court was identical to or different from that which could have been presented to the Board. The Court concluded that the controversy was different. The Board would have been presented with determining the motivation of the picketing and the location of the picketing would have been irrelevant; the motivation was irrelevant to the state court and the situs of the picketing was the sole inquiry. Thus, there was deemed to be no realistic risk of state interference with Board jurisdiction.¹²⁷³

Second, in determining whether the picketing was protected, the Board would have been concerned with the situs of the picketing, since under federal labor laws the employer has no absolute right to prohibit union activity on his property. Preemption of state court jurisdiction was denied, nonetheless, in this case on two joined bases. One, preemption is not required in those cases in which the party who could have presented the protection issue to the Board has not done so and the other party to the dispute has no acceptable means of doing so. In this case, the union could have filed with the Board when the company demanded removal of the pickets, but did not, and the company could not file with the Board at all. Two, even if the matter is not presented to the Board, preemption is called for if there is a risk of erroneous state court adjudication of the protection issue that is unacceptable, so that one must look to the strength of the argument that the activity is protected. While the state court had to make an initial determination that the trespass was not protected under federal law, the same determination the Board would have made, in the instance of trespassory conduct, the risk of erroneous determination is small, because experience shows that a trespass is far more likely to be unprotected than protected.¹²⁷⁴

Introduction of these two balancing tests into the Garmon rationale substantially complicates determining when state courts do not have jurisdiction, and will no doubt occasion much more litigation in state courts than has previously existed.

Another series of cases involves not a Court-created exception to the Garmon rule but the applicability and interpretation of § 301 of the Taft-Hartley Act,¹²⁷⁵ which authorizes suits in federal, and state,¹²⁷⁶ courts to enforce collective bargaining agreements. The Court has held that in enacting § 301, Congress authorized actions based on conduct arguably subject to the NLRA, so that the Garmon preemption doctrine does not preclude judicial enforcement of duties and obligations which would otherwise be within the exclusive jurisdiction of the NLRB so long as those duties and obligations are embodied in a collective-bargaining agreement, perhaps as interpreted in an arbitration proceeding.¹²⁷⁷

Here, too, the permissible role of state tort actions has been in great dispute. Generally, a state tort action as an alternative to a § 301 arbitration or enforcement action is preempted if it is substantially dependent upon analysis of the terms of a collective-bargaining agreement.¹²⁷⁸ Thus, a state damage action for the bad-faith handling of an insurance claim under a disability plan that was part of a collective-bargaining agreement was preempted because it involved interpretation of that agreement and because state enforcement would frustrate the policies of § 301 favoring uniform federal-law interpretation of collective-bargaining agreements and favoring arbitration as a predicate to adjudication.¹²⁷⁹

Finally, the Court has indicated that, with regard to some situations, Congress has intended to leave the parties to a labor dispute free to engage in “self-help,” so that conduct not subject to federal law is nonetheless withdrawn from state control.¹²⁸⁰ However, the NLRA is concerned primarily “with establishing an equitable process for determining terms and conditions of employment, and not with particular substantive terms of the bargain that is struck when the parties are negotiating from relatively equal positions,” so states are free to impose minimum labor standards.¹²⁸¹