Substantive Law Study Support

Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707 (1985)

In 1980, Appellant Hillsborough County adopted ordinances and promulgated implementing regulations governing blood plasma centers within the county. One ordinance required that blood donors be tested for hepatitis, that they donate at only one center, and that they be given a breath-analysis test for alcohol content before each donation. Pursuant to 351 of the Public Health Service Act, the Food and Drug Administration (FDA) promulgated federal regulations establishing minimum standards for the collection of blood plasma. Appellee operator of a blood plasma center located in appellant county filed suit in federal district court challenging the constitutionality of the ordinances and implementing regulations on the ground, inter alia, that they violated the Supremacy Clause and sought declaratory and injunctive relief. The district court upheld the ordinances and regulations, except the requirement that the donor be subject to a breath-analysis test. The court of appeals affirmed in part and reversed in part, holding that the FDA’s regulations preempted all provisions of the ordinances and implementing regulations.

Held: Appellant county’s ordinances and implementing regulations are not preempted by the federal regulations.
Geier v. American Honda Motor Co., 529 U.S. 861 (2000)

The plaintiff was injured in an auto accident and alleged that the car had a defective design because it was not equipped with an airbag. He brought suit against the manufacturer of the car who was in compliance with federal safety standards. The issue was whether the Federal Motor Vehicle Safety Standard, promulgated by the under the authority of the National Traffic and Motor Vehicle Safety Act of 1966, preempted a state common law tort action.

Held: The Court found that the Act, taken together with the Federal Motor Vehicle Safety Standard, preempted the lawsuit.

Williamson v. Mazda Motor of America, 562 U.S. (2011)

The Williamson family and the estate of the decedent, Thanh Williamson, brought suit against Mazda Motor of America claiming that Thanh died in an accident because the rear aisle seat of the Mazda minivan in which she was riding had a lap belt instead of lap- and-shoulder belts. The trial and appellate courts relied on Geier and dismissed their claim on the proceedings.

Held: The Federal Motor Vehicle Safety Standard 208 does not preempt state tort suits claiming that manufacturers should have installed lap-and-shoulder belts, instead of lap belts, on rear inner seats.

(a) Because this case involves (1) the same statute as Geier, (2) a later version of the same regulation, and (3) a somewhat similar claim that a state tort action conflicts with the federal regulation, the answers to two of the subsidiary questions posed in Geier apply directly here. Thus, the statute’s express preemption clause cannot preempt the common-law tort action here; but neither can its saving clause foreclose or limit the operation of ordinary conflict preemption principles. The Court consequently turned to Geier’s third subsidiary question: whether, in fact, the state tort action conflicts with the federal regulation

(b) Under ordinary conflict preemption principles, a state law that “stands as an obstacle to the accomplishment” of a federal law is preempted. Hines v. Davidowitz, 312 U.S. 52, 67. In Geier, the state law stood as an obstacle to the accomplishment of a significant federal regulatory objective, namely, giving manufacturers a choice among different kinds of passive restraint systems. This conclusion was supported by the regulation’s history, the agency’s contemporaneous explanation, and the government’s current understanding of the regulation. The history showed that the Department of Transportation (DOT) had long thought it important to leave manufacturers with a choice of systems. DOT’s contemporaneous explanation of the regulation made clear that manufacturer choice was an important means for achieving DOT’s basic objectives. It phased in passive restraint requirements to give manufacturers time to improve airbag technology and develop better systems; it worried that requiring airbags would cause a public backlash; and it was concerned about airbag safety and cost. Finally, the government’s current understanding was that a tort suit insisting upon airbag use would “stand as an obstacle to the accomplishment and execution of these objectives.” 529 U.S., at 883.

(c) Like the regulation in Geier, the instant regulation leaves the manufacturer with a choice, and the tort suit here would restrict that choice. But in contrast to Geier, the choice here is not a significant regulatory objective. The regulation’s history resembles the history of airbags to some degree. DOT rejected a regulation requiring lap-and- shoulder belts in rear seats in 1984. But by 1989, changed circumstances led DOT to require manufacturers to install lap-and-shoulder belts for rear outer seats but to retain a manufacturer choice for rear inner seats. Its reasons for doing so differed considerably from its 1984 reasons for permitting a choice of passive restraint. It was not concerned about consumer acceptance; it thought that lap-and-shoulder belts would increase safety and did not pose additional safety risks; it was not seeking to use the regulation to spur the development of alternative safety devices. Instead, DOT thought that the requirement would not be cost-effective. That fact alone cannot show that DOT sought to forbid common-law tort suits. For one thing, DOT did not believe that costs would remain frozen. For another, many federal safety regulations embody a cost-effectiveness judgment. To infer preemptive intent from the mere existence of such a cost-effectiveness judgment would eliminate the possibility that the agency seeks only to set forth a minimum standard. Finally, the solicitor general represents that DOT’s regulation does not preempt this tort suit. As in Geier, “the agency’s own views should make a difference,” 529 U.S., at 883, and DOT has not expressed inconsistent views on this subject.

Cooley v. Board of Wardens, 53 U.S. 299 (1851)

A law of the State of Pennsylvania, that a vessel which neglects or refuses to take a pilot shall forfeit and pay to the master warden of the pilots, for the use of the Society for the relief of Distressed and Decayed Pilots, their widows and children, one half the regular amount of pilotage, is an appropriate part of a general system of regulations on the subject of pilotage, and cannot be considered as a covert attempt to legislate upon another subject, under the appearance of legislating on this one. It is true that the power to regulate commerce includes the regulation of navigation, and that pilot-laws are regulations of navigation, and, therefore, of commerce, within the grant to Congress of the commercial power. Although Congress may legislate upon the subject of pilotage throughout the United States, yet they have manifested an intention not to overrule the

State laws, except in one instance. The law of Pennsylvania, not being overruled, is not repugnant to the Constitution of the United States.

Held: States may regulate aspects of interstate commerce that are local in character; the Commerce Clause doesn’t remove from a state all power to regulate interstate commerce, including the regulation of pilots. Judgment for the Board of Wardens was affirmed.

Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945)

State power to regulate the length of railroad trains is not curtailed or superseded by §1 of the Interstate Commerce Act (paragraphs 10–17) of itself, and in the absence of administrative implementation by the Interstate Commerce Commission; nor by provisions of the Safety Appliance Act for brakes on trains; nor by the provision of §25 of Part I of the Interstate Commerce Act permitting the Commission to order the installation of train stop and control devices.
In enacting legislation within its constitutional authority over interstate commerce, Congress will not be deemed to have intended to strike down a state statute designed to protect the health and safety of the public unless its purpose to do so is clearly manifested; or unless the state law, in terms or in its practical administration, conflicts with the Act of Congress or plainly and palpably infringes its policy.

Held: A state law that places a significant burden on interstate commerce, but provides no real improvement in safety, will be found to violate the Commerce Clause. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977)
A Mississippi tax on the privilege of doing business in the state held not to violate the Commerce Clause when it is applied to an interstate activity (here the transportation by motor carriers in Mississippi to Mississippi dealers of cars manufactured outside the state) with a substantial nexus with the taxing state, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the state. Spector Motor Service v. O’Connor, 340 U.S. 602, overruled.
Held: The Court affirmed the judgment and established a four-prong test for constitutionality of a tax under the Commerce Clause. 1) There must be a substantial nexus between a state and a potential taxpayer; 2) It must be nondiscriminatory; 3) There must be fair apportionment, and 4) There must be a fair extension of services, such as police protection, to the company by the state.

Quill v. North Dakota, 504 U.S. 298 (1992)

The issue is whether North Dakota can tax the Quill Corporation for licensed computer software that is used by North Dakota customers for checking inventory and placing orders, when the Quill Corporation has no physical presence in North Dakota. North Dakota argued that under due process, Quill had set up a presence in the state as the floppy disks used for the software were physically located in North Dakota. The North Dakota Supreme Court agreed.
The Supreme Court of the United States used the Commerce Clause, rather than due process, for its analysis.

Held: 1. The Due Process Clause does not bar enforcement of the state's use tax against Quill. This Court’s due process jurisprudence has evolved substantially since Bellas Hess, abandoning formalistic tests focused on a defendant’s presence within a state in favor of a more flexible inquiry into whether a defendant’s contacts with the forum made it reasonable, in the context of the federal system of government, to require it to defend the suit in that state. See Shaffer v. Heitner, 433 U.S. 186, 212. Thus, to the extent that this Court’s decisions have indicated that the clause requires a physical presence in a state, they are overruled. In this case, Quill has purposefully directed its activities at North Dakota residents, the magnitude of those contacts are more than sufficient for due process purposes, and the tax is related to the benefits Quill receives from access to the state.

2. The state’s enforcement of the use tax against Quill places an unconstitutional burden on interstate commerce.
(a) Bellas Hess was not rendered obsolete by this Court’s subsequent decision in Complete Auto, supra, which set forth the four-part test that continues to govern the validity of state taxes under the Commerce Clause. Although Complete Auto renounced an analytical approach that looked to a statute’s formal language rather than its practical effect in determining a state tax statute’s validity, the Bellas Hess decision did not rely on such formalism. Nor is Bellas Hess inconsistent with Complete Auto. It concerns the first part of the Complete Auto test and stands for the proposition that a vendor whose only contacts with the taxing state are by mail or common carrier lacks the “substantial nexus” required by the Commerce Clause.
(b) Contrary to the state’s argument, a mail-order house may have the “minimum contacts” with a taxing state as required by the Due Process Clause, and yet lack the “substantial nexus” with the state required by the Commerce Clause. These requirements are not identical and are animated by different constitutional concerns and policies. Due process concerns the fundamental fairness of governmental activity, and the touchstone of due process nexus analysis is often identified as “notice” or “fair warning.” In contrast, the Commerce Clause and its nexus requirement are informed by structural concerns about the effects of state regulation on the national economy. Pp. 12–13.
(c) The evolution of this Court’s Commerce Clause jurisprudence does not indicate repudiation of the Bellas Hess rule. While cases subsequent to Bellas Hess and concerning other types of taxes have not adopted a bright-line, physical-presence requirement similar to that in Bellas Hess, (see, e. g., Standard Pressed Steel Co. v. Department of Revenue of Wash., 419 U.S. 560), their reasoning does not compel rejection of the Bellas Hess rule regarding sales and use taxes. To the contrary, the continuing value of a bright-line rule in this area and the doctrine and principles of stare decisis indicate that the rule remains good law.
(d) The underlying issue here is one that Congress may be better qualified to resolve and one that it has the ultimate power to resolve.
Reversed and remanded.

Chamber of Commerce of the United States of America v. Whiting, 563 U.S. (2011) The Legal Arizona Workers Act imposed sanctions on employers who hired unauthorized aliens. The issue is whether the Legal Arizona Workers Act is invalid under federal statutes, most notably the Immigration Reform and Control Act that makes it “unlawful for a person or other entity … to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien.” 8 U.S.C. §1324a(a)(1)(A). The lower courts found that the federal statute did not invalidate Arizona law, nor was the state law preempted because Congress had expressed no intent to prevent states from mandating participation with the program.

Held: The Supreme Court affirmed. Arizona’s licensing law falls well within the confines of the authority Congress chose to leave to the states and therefore is not expressly preempted. While IRCA prohibits states from imposing “civil or criminal sanctions” on those who employ unauthorized aliens, it preserves state authority to impose sanctions “through licensing and similar laws.” §1324a(h)(2). That is what the Arizona law does. It instructs courts to suspend or revoke the business licenses of in-state employers that employ unauthorized aliens. The definition of “license” contained in the Arizona statute largely parrots the definition of “license” that Congress codified in the Administrative Procedure Act (APA).

The Arizona licensing law is not impliedly preempted by federal law. At its broadest, the Chamber’s argument is that Congress intended the federal system to be exclusive. But Arizona’s procedures simply implement the sanctions that Congress expressly allowed the states to pursue through licensing laws. Given that Congress specifically preserved such authority for the states, it stands to reason that Congress did not intend to prevent the states from using appropriate tools to exercise that authority.

Arizona’s requirement that employers use E-Verify is not impliedly preempted. The IIRIRA provision setting up E-Verify contains no language circumscribing state action. Moreover, Arizona’s use of E-Verify does not conflict with the federal scheme. The state law requires no more than that an employer, after hiring an employee, “verify the employment eligibility of the employee” through E-Verify. Ariz. Rev. Stat. Ann. §23–214(A). And the consequences of not using E-Verify are the same under the state and federal law—an employer forfeits an otherwise available rebutable presumption of Arizona’s requirement that employers use E-Verify in no way obstructs achieving the aims of the federal program. In fact, the government has consistently expanded and encouraged the use of E-Verify, and Congress has directed that E-Verify be made available in all fifty states.

Something to Consider

Cooley was decided more than 150 years ago. Do you think that it still applies in today’s commercial climate? (Follows Cooley v. Board of Wardens)

Based on the principles discussed in this case, under what circumstances do you think a state could impose a tax on goods sold over the Internet? (Follows Complete Auto Transit, Inc. v. Brady)