Shell extracted much of its oil from the outer continental shelf, which is all the land beneath the first three miles of coastal waters. Iowa imposed an income tax on Shell for the business it did in Iowa, but Shell contended that it was partially immune from the tax due to the oil it sold there from the continental shelf. Shell said that the Outer Continental Shelf Lands Act (OCSLA) exempted all oil and gas extracted from state taxation laws.
The Supreme Court unanimously ruled that Iowa’s tax was not preempted by OCSLA. Marshall said that when the text of OCSLA is carefully parsed, it only bans taxation by states adjacent to the continental shelf itself. Marshall showed that this was the correct interpretation through recourse to legislative history. While a state like California could not tax the business activity of extracting oil just off its coast, all states remained free to tax the refined oil and gas that was eventually sold within state lines. Thus, Iowa’s income tax on all the oil and gas sold by Shell within the state was just fine.
While this ruling was pretty trivial, the day it was announced was momentous. That evening, Bush slaughtered Dukakis in the Electoral College. Reportedly, Brennan, Marshall, and Blackmun watched stonily as the election results rolled in. They had all stubbornly stayed on the Court throughout the eight Reagan years, but now they faced either four or eight years from the Bush-Quayle team. The future of the liberal bloc looked grim indeed.
This was probably the most brutal case I’ve ever confronted. Quite honesty, I couldn’t even read the whole thing because I was so lost, and I had to rely on the syllabus to get the gist. Apologies.
Basically, FERC, a federal energy agency told a Mississippi power company how much electricity it needed to buy, and at what rate. A Mississippi agency then set retail rates based on what would enable the company to recover its expenditures. But it was argued that the company had imprudently wasted money building a nuclear power plant, and that only prudent expenditures could be passed on to consumers. The question was whether FERC’s setting of wholesale rates preempted state agencies from considering whether the expenditures of power companies were prudent, and adjusting retail rates accordingly.
The Court ruled 6-3 that there was preemption. Stevens said that the case was pretty much controlled by a precedent called Nantahala, which generally disallowed state agencies from setting retail rates that wouldn’t allow power companies to recoup the investment made in buying the set quota of energy at rates set by FERC. Stevens said that any differences between that case and the instant case were negligible. He thought that FERC was entitled to take the prudence of a power company’s projects and expenditures into account when setting wholesale rates, and that states could not attack FERC’s final judgment by re-litigating the question of prudence after the fact, and monkeying with the retail rates to relieve consumers.
Scalia concurred in judgment. To him, it was a simple Chevron case. FERC had asserted the power to review the prudence of the decisions of power companies when setting wholesale rates, and since this was not flatly inconsistent with the underlying statutes, FERC deserved the Court’s deference. Brennan, joined by Marshall and Blackmun, did not find any statutory authority for FERC to deal with questions of prudence, and contended that it was still the domain of states, at least as it related to setting retail rates. It was simply beyond agency purview, and thus not entitled to Chevron deference. Furthermore, the central question of prudence served as an adequate basis to distinguish Nantahala, which did not squarely address that precise issue.
Wisconsin law said that any suit against government officials in state court had to wait until a notice process was gone through first. The plaintiff had 120 to describe the injury and damages sought to the officials, then the officials had 120 days to make it right, and then there were six months to file charges. A victim of police beating who wanted to bring a 1983 case in state court said that this law was pre-empted by 1983 itself. The state responded that it was just a state procedural rule that did not affect the principal substance of 1983.
The Supreme Court ruled 7-2 that the Wisconsin law could not stop 1983 suits. Brennan said that the law frustrated several purposes and goals of 1983. It required a sort of state exhaustion first, by requiring the state to have an opportunity to correct the complaint prior to a suit. It acted as a too-short statute of limitations, by effectively giving victims only four months to initiate the action. And it was too deferential to the interests of state officials, giving them a kind of extended notice that no other potential defendants could receive. That the law only applied to state court suits did not matter to Brennan, because the outcome of a 1983 suit should not turn on whether it was filed in state or federal court – indeed, for there to be such a difference in notice requirements went against Erie principles.
White concurred to note that the Court had recently established the definitive statute of limitations for 1983 suits, and that the Wisconsin law, with an effective four month limit, violated it. O’Connor, joined by Rehnquist, dissented. Invoking nebulous purposes or goals of 1983 was not enough – there had to be some definitive facet of 1983 violated by the Wisconsin law, and none existed. Because litigants could always file a suit in federal court, it was of no concern that one extra procedural hurdle existed for state courts. She further contended that giving notice was easy, and was not a de facto statute of limitations.
O’Connor’s dissent may or may not be correct. I’m not entirely sure. But I do think that if the majority opinion was activism, it was one of those rare cases where it was at least good activism. The policy reasons articulated by Brennan for holding the Wisconsin law inapplicable to 1983 suits were pretty solid.
A contract dispute from Alabama went to federal court. The contract said that venue would be in New York, but Alabama had a state policy against putting binding venue selection in contracts. The question was whether Alabama’s federal court had to follow the state policy, or if it could consider it preempted by federal jurisdiction rules. The dispute centered on Section 1404(a). It said “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”
The Supreme Court ruled 8-1 that 1404(a) governed the situation. Marshall identified the key issue as whether or not 1404(a) was meant to cover the general topic of forum selection clauses. He said it was, because forum selection clauses bear heavily on any possible transfers, and the interests of justice in ordering them. Marshall thought 1404(a) was a perfectly reasonable housekeeping rule, and allowed it to preempt any Alabama policies on the topic. He stressed that the federal courts would still weigh the equities of transfer – they would make neither state policies nor forum selection clauses dispositive, but would consider both along with other factors.
Kennedy, joined by O’Connor, concurred to say that federal courts should almost always follow venue selection clauses, unless there was a really strong reason not to. Scalia dissented. He felt the wording of 1404(a) was too vague to conclude that it covered forum selection clauses, especially given that other federal jurisdiction rules covered arbitration clauses far more specifically. Scalia also felt that the majority’s interpretation was inconsistent with the policy goals of the Erie doctrine. It wouldn’t, he contented, stop forum shopping, and it could produce inequitable administration of the law.
I really hate lawyers who will fight to the death over every single stupid little jurisdictional thing. These meta-lawsuits – lawsuits about lawsuits – clog up way too much of the Supreme Court’s valuable time. After I read this case’s first sentence (“This case presents the issue whether a federal court sitting in diversity should apply state or federal law in adjudicating a motion to transfer a case to a venue provided in a contractual forum-selection clause.”) I actually said aloud “Oh, for crap’s sake.” The Court did, at least, make the right decision. When you agree to a venue selection clause in a contract, pacta sunt servanda should prevail.
Creditors tried to obtain money by garnishing an ERISA employee welfare plan. A Georgia law banned garnishing ERISA plans, but this law was said to be pre-empted by ERISA itself. Additionally, the debtors argued that even without the Georgia law, the suits for garnishing were also pre-empted by ERISA. ERISA did openly say that state laws about ERISA were pre-empted, and it did prohibit any garnishment of employee pension plans, but it was murkier about employee welfare plans.
The Court unanimously ruled that the Georgia law was pre-empted, but split 5-4 about the garnishment. White said the Georgia law was flatly banned by the text of ERISA, and that was that. With respect to the garnishment question, White observed that the law did seem to tacitly assume in a few places that employee welfare plans might be sued. He also emphasized that the part of the law explicitly protecting pension plans from garnishment would be surplusage if all plans were meant to be implicitly protected from garnishment. Finally, White rejected the argument that Congress seemed to reject the possibility of welfare plan garnishment when they amended ERISA in 1984. He contended that the intent of the original drafters was what mattered, and not latter amending legislators.
Kennedy, joined by Blackmun, O’Connor, and Scalia, dissented. He argued that some of the law’s features that implicitly pointed to allowing garnishment suits were being wrongly construed. He stressed that garnishment was extremely disruptive to ERISA plans. ERISA pre-empted state laws relating to plans, and if garnishment was so disruptive, then Kennedy felt that state laws allowing the procedure qualified. While the text specifically exempting pension plans was mildly redundant, Kennedy said that the majority’s refusal to come to grips with the 1984 amendments constituted far worse violence against the statutory text. The intent behind the amendment could not be ignored or dismissed on the argument that only the original drafters were relevant.
I’m all in favor of debts being paid, but Kennedy really is right about the effect of the 1984 amendments. The majority’s treatment of that argument is clearly cavalier, and I’m surprised that White got five votes for it.
A union worker was fired, ostensibly for filing a worker’s compensation claim. An Illinois law allowed the worker to receive extensive damages if the firing truly was retaliation for requesting worker’s compensation. The company responded that this state law was pre-empted by the Labor Management Relations Act (LMRA). The LMRA, as per Court precedent, preempts all state laws that require the interpretation of a collective bargaining agreement. Because the collective bargaining agreement defined “just cause” for firing, the company argued that the Illinois law must be preempted.
The Supreme Court unanimously disagreed. Stevens said that the Illinois courts were not required to refer to the collective bargaining agreement when considering the case. Because the Illinois courts could potentially find that the firing was unjust purely as a matter of state law, there was no need for preemption. Stevens emphasized that a few different precedents counseled strongly against finding preemption too easily. The Court’s legal holding was correct, but as always, I very much dislike as a public policy the federal regime of pampering unions.
At a federal government owned nuclear power plant, an employee got injured due to an unsafe scaffolding that violated Ohio regulations. Although established preemption law exempted federally owned power plants from all state regulations, the employee wanted a worker’s compensation bonus that Ohio provided when the injury was directly caused by violation of a state regulation. The question was whether this bonus payment was preempted too.
The Court ruled 6-2 that this bonus was not preempted (Kennedy did not participate). Marshall first brushed aside a stupid justiciability challenge which questioned whether the lower court ruling was final. Turning to the merits, Marshall admitted that all state regulation whatsoever was preempted unless Congress gave “clear and unambiguous” blessing to extra state regulation. In this case, Congress did, in the form of a law that allowed all worker’s compensation schemes to continue unabated. Marshall stressed that different states had all kinds of zany and strange worker’s compensation rules at the time this law was passed. Ohio’s bonus for a workplace violating a regulation certainly qualified, even if the underlying safety regulation itself could not be imposed against the power plant.
White, joined by O’Connor, dissented. He saw the Ohio bonus rule as essentially a backdoor to the state imposing all its power plant regulations. He did not want the states doing indirectly what they could not do directly. Although there was the federal statute which allowed worker’s compensation schemes to operate on federal property, White did not think it unambiguously extended to weird rules like the Ohio bonus one. Far more illustrative of Congressional intent, he thought, was that body’s continuing reluctance to subject federally owned plants to direct state safety regulation.
Cases like this are the reason why being a Supreme Court Justice is hard. There’s really no one good answer here. Both Marshall and White have perfectly reasonable and defensible arguments. I’m at a loss to say which is more right, and which is more wrong.
For many years, the FCC had put forth technical specifications about broadcast signal quality for cable providers, and these regulations had pre-empted any state law imposing other technical specifications (even ones that were more stringent). When Congress passed a new law in 1984 about cable regulation that did not specifically mention pre-empting more stringent technical specifications, the City of New York charged that the FCC no longer retained the authority to continue their regulatory pre-emption.
The Supreme Court unanimously disagreed. White said that nothing in the text of the 1984, or its legislative history, suggested any intent to prohibit a regulatory practice that the FCC had already been going about for a decade. To the contrary, the law seemed to give the FCC the green light to continue all it had previously been doing. That pre-emption of more stringent standards was not specifically mentioned did not matter.
Based on regulatory precedent, this case seems clear enough. But it’s another troubling instance where the overall rule-making power of unelected agencies exceeds all reasonable bounds. In this case, and countless others, the non-delegation principle is a complete joke. I can still remember the elegant solution I heard Michael Farris propose back in 2005: simply require that all agency regulations be passed into law by an ordinary vote of Congress before they become effective.
An employee union wanted to use the University of California’s postage-free internal mail system. The union claimed that a California law gave them this right, but the University responded that federal law against postage-free delivery trumped this. There were some statutory exceptions to the federal law against private mail delivery, such as the ‘letters-of-the-carrier’ and the ‘private-hands’ ones. The postal service itself said that these exceptions did not apply, but the union pressed forth its challenge undaunted.
The Court ruled 6-2 that the University should not carry the union mail (Kennedy did not participate). O’Connor first looked at the ‘letters-of-the-carrier’ exception, which said that entirely internal mail was exempt from the US postal service. Because the union was not in fact a part of the University, the mail was not entirely internal and the exception did not apply. Then there was the ‘private-hands’ exception, which said that mail could be delivered outside the postal service if there was no compensation for it. O’Connor said that non-monetary compensation such as business quid-pro-quos qualified as ‘compensation’ for this exception. Because carrying union letters could be seen as a way of currying the goodwill of the employee union, this exception did not apply either.
White, concurring in judgment, did not think the precise reach of the statutory exceptions was as clear as O’Connor thought, but was willing to give the harmonious interpretations of postal service Chevron deference. Stevens, joined by Marshall, dissented, and argued that the ‘private-hands’ exception applied. Looking through legislative history, and some earlier court cases, he concluded that the majority’s expansion of the term ‘compensation’ to include non-monetary goodwill could not be justified. Thus, the University was required to follow California law and carry union mail.
This is one of those preemption cases where the parties are caught between two crappy laws. The postal service’s ruthless attempt at monopoly is pretty silly, but California’s demand that universities deliver union mail free of charge is even worse. In any event, White had the most legally persuasive opinion. This was a simple Chevron case that the majority and dissent both made much harder than it needed to be.
Congress passed price and allocation controls on oil in response to the oil crisis of 1973. This legislation clearly preempted any state legislation in the area. Some years later, when the oil market went back to normal, Congress took away basically all the regulation, apparently leaving things to the free market. Puerto Rico then tried to put some price controls into law, and it was disputed whether the preemption from the now repealed federal legislation still stood.
With Scalia writing, the Court ruled 8-0 that Puerto Rico could regulate (O’Connor did not participate). Scalia said that the Court wants to see specific textual evidence of preemption before finding such. Because there was no positive indication that state legislation would be preempted even after repeal, the Court was loath to find it. Statements by some in Congress indicating that unregulated free markets were intended by the repeal were not deemed clear enough. In short, “repeal of [oil] regulation did not leave behind a pre-emptive grin without a statutory cat.”