Preemption and Commerce Clause Issues

• Pages: 409-434

409

CHAPTER XIV

PREEMPTION AND COMMERCE CLAUSE ISSUES

As demonstrated in the preceding cha pters, much

commercial conduct is subject to overlapping federal and state

regulator y schemes. In many instances, including those

involving federal and state antitrust laws, those schemes a re

largely complimentary. In other cases, however, federal and

state la ws may serve different policy goals, if not actua lly

conflict. Relatedly, state laws may impact interstate commerce

in a way that r aises constitutional concer ns. This chapter

addresses issues tha t commonly arise in antitrust and business

tort litigation under the Supremacy a nd Commerce Cla uses of

the U.S. Constitution. – Eds.

A. Introduction

The business activities that give rise to antitrust and business tort

disputes commonly involve interstate commerce. Examining the scope of

Congress’s power under the Commerce Clause, which provides that

“[t]he Congress shall have Power . . . [t]o regulate Commerce . . . among

the several States,”

1

the Supreme Court has held that Congress may

regulate not only activities “in” interstate commerce – i.e., those that take

place across state boundaries – but also activities “affecting” such

commerce. Thus, even commercial transactions of a purely intrastate

character may be regulated under the Commerce Clause if they

substantially affect interstate commerce.

2

The intersection of state business tort law and interstate commerce

raises two distinct, but related, constitutional issues. First, to what extent

does federal antitrust law, which regulates interstate and foreign

commerce,

3

preempt state tort law in restraint of trade and unfair

competition cases? Second, under what circumstances does the

1

. U.S. CONST. art. I, § 8, cl. 3.

2

. See Gonzales v. Raich, 545 U.S. 1, 17 (2005); Hodel v. Virginia Surface

Mining & Recla mation Ass’n, 452 U.S. 264, 276-77 (1981); Wickard v.

Filburn, 317 U.S. 111, 128-29 (1942).

3

. See, e.g., Sherman Act, §§ 1, 2, 15 U.S.C. §§ 1, 2; Clayton Act, § 7, 15

U.S.C. § 18.

410 Business Torts and Unfair Competition Hand book

application of state tort law to activities affecting interstate commerce

exceed the states’ powers of regulation under the “dormant” aspect of the

Commerce Clause, which, under longstanding Supreme Court precedent,

impliedly limits the permissible scope of state regulation affecting

interstate commerce?

Preemption and the Commerce Clause are often analyzed together,

but courts and commentators struggle to articulate the link between the

two doctrines. The Court has distinguished between these clauses in the

Constitution, noting that while the dormant Commerce Clause creates a

right “to engage in interstate trade free from restrictive state regulation,”

the Supremacy Clause

4

does not create any rights; instead, it secures the

existence of federal rights by ensuring that they take priority over

conflicting state law.

5

Some commentators analyze both doctrines as

virtually interchangeable tools that Congress and the courts can use to

allocate responsibilities among Congress and the states to regulate

interstate commerce.

6

B. Preemption

The Supremacy Clause provides for the supremacy of federal law

over the law of the individual states:

This Constitution, and the Laws of the United States which shall be

made in Pursuance thereof . . . shall be the supreme Law of the Land;

and the J udges in every State shall be bound thereby, any Thing in the

Constitution or Laws of any State to the Contrary notwithstanding.

7

The Supreme Court has established three circumstances under which

it will consider state law to have been preempted by federal law. First,

4

. U.S. CONST. art. VI, cl. 2.

5

. Dennis v. Higgins, 498 U.S. 439, 448, 450 (1991).

6

. See Jim Chen, A Vision Softly Creeping: Congressional Acquiescence

and the Dor mant Commerce Clause, 88 MINN. L. REV. 1764, 1782 (2004)

(“Congress enjoys virtually unfettered discretion to reassign

responsibility over an aspect of interstate commerce. As a general r ule,

Congress may choose to delegate regulatory responsibility over interstate

commerce to the states. Complete delegation negates any j udicial role

under the dormant Commerce Clause. Con gress may also elect to craft a

more nuanced approach to ‘cooperative federalism’ by adopting a careful

mix of expressly preemptive statutory provisions and savings clauses.”).

7

. U.S. CONST. art. VI, cl. 2.