Preemption and Commerce Clause Issues

• Pages: 369-393

CHAPTER XIV

PREEMPTION AND COMMERCE CLAUSE ISSUES

As demonstrated in the preceding chapters, much

commercial conduct is subject to overlapping federal and state

regulatory schemes. In many instances, such as the case of the

federal and state antitrust laws, those schemes are largely

complimentary. In other cases, however, federal and state law

may serve different policy goals, if not actually conflict.

Relatedly, state laws may impact interstate commerce in a way

that raises constitutional concerns. This chapter addresses

issues that commonly arise in antitrust and business tort

litigation under the Supremacy and Commerce Clauses of the

U.S. Constitution. – Eds.

A. Introduction

For constitutional purposes, the business activities that give rise to

antitrust and business tort disputes commonly involve interstate

commerce. Examining the scope of Congress’ 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” 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 law3 and interstate commerce

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

does federal antitrust law, which regulates interstate and foreign

1. U.S. CONST. art. I, § 8, cl. 3.

2. Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 276-77

(1981); Wickard v. Filburn, 317 U.S. 111, 127-28 (1942).

3. See generally ABA SECTION OF ANTITRUST LAW, STAT E ANTITRUST

PRACTICE AND STATUTES (3d ed. 2004).

370 Business Tort Law

commerce,4 preempt state tort law in restraint of trade and unfair

competition cases? Second, under what circumstances does the

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 Clause5 does not create any rights; instead, it secures the

existence of federal rights by ensuring that they take priority over

conflicting state law.6 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.7

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;

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

U.S.C. § 18.

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

6. Dennis v. Higgins, 498 U.S. 439, 447-50 (1991).

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

the Dormant 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 rule, Congress may

choose to delegate regulatory responsibility over interstate commerce to

the states. Complete delegation negates any judicial role under the

dormant Commerce Clause. Congress 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.”).