Friday, October 10, 2014

Chapter 9 (Ordering Government Through Law: Constitutions, Statutes, Treaties, Regulations, Judicial Decisions, and Other Sources): From "Elements of Law" to "Introduction to the Law and Legal System of the United States"--Building an Introductory Course to the Legal Curriculum for the 21st Century

(Pix (c) Larry Catá Backer 2014)

Since 2010, I have been posting on the development of a new course I have been developing for our first year law school students, "Elements of Law." The course originally had a quite modest objective--to introduce law students to legal research and reasoning through case law, statutory interpretation, and legal history, processes, and institutions. I chose to broaden its objectives within these specific parameters and development a framing and concepts course that would provide a deep foundation to law students on the legal system they were undertaking to study.
--Elements of Law 3.0: On the Relevance of a First Year Law Course Designed to Frame the Law School Curriculum).
--Developing a New Course--"Elements of Law"
--"Elements of Law" Course 2.0: A Framework Course for the U.S. Law Curriculum,
Grounded in the principles of the sociology of law, the course has morphed into an effort to introduce students to law as a self-referencing system with its own particular structures, premises, constraints and language, with its own logic and taboos and its own means of understanding the world. That systemicity (cf. Peter Checkland, Systems Thinking, Systems Practice, Chichester : John Wiley and Sons Ltd, 1999) is then a critical element in the way in which the legal system (in this case of the United States) interacts with the world, both as a legal and as a socio-economic-political actor. The course has also expanded from its original narrow and technical focus, to a broader focus on principles and the use of language and logic to build and operate a system of law. That broadening has made it possible to offer the course not just to first year law students, but also to graduate students in the social sciences and in international affairs, as a grounding in the legal systems that are important in their respective fields.

This and the posts that follow produces some of the materials I will be presenting to the class. I offer these materials in hopes that they may prove of use and that you might share comments, perspectives and suggestions as I develop those materials on this site. Thanks.

This post includes a draft of the second Chapter of Part II-- Hierarchies of Law and Governance; Sources and Uses, Chapter 9 (Ordering Government Through Law: Constitutions, Statutes, Treaties, Regulations, Judicial Decisions and Other Sources).
Chapter 9

Ordering Government Through Law: Constitutions, Statutes, Treaties, Regulations, Judicial Decisions, and Other Sources

I. Introduction.

            In our last chapter we began to consider the relationship between law and the government.  We focused initially on the foundational issue for all legal systems—the relationship between law and government.  We were introduced to two of the more important patterns of such relationships.  The first posits a close relationship and at it limit an identity between law and the government.  The consequence is a tendency to view the legitimacy of law as a function of its production by a legislative or administrative organ of state.  There is another view that understands law as distinct from the government, and that government manages (and sometimes direct) but is not identical to law. We noted that the U.S: legal system seems to borrow a bot from both views, though it has yet to reconcile them in any meaningful way.

            Having considered the distinction between “law” systems and “government” institutions and their quite distinct “systemicity”, this chapter turns to issues of law system coherence. The object is to get the student to begin to think about what goes into the construction of a coherent system of law managed by a government, focusing not on an individual “law” but on law as a system. Issues of legal hierarchy and the systematization of law are the focus of this section of the course. For that purpose the class will consider hierarchies of law—is it possible to rank order these sources of law to determine which one is more authoritative than others; what is the relationship between constitutions, statutes, treaties, regulations, judicial decisions, other sources of law?  The student will consider how political communities rank laws—from constitution to statute, judicial decision and regulation.  She will also consider how government, principally through its courts in the United States, then develops rules for dealing with conflicts of hierarchy among legal systems when more than one appear to apply to the resolution of a dispute. That discussion serves as the basis for considering the underlying normative framework that produces these vertically arranged systems of law.  The student will understand the theories used to justify hierarchy and explain why, for example, constitutional law is superior, or of a different character, from ordinary law.

II. Chapter Readings

·      Edward S. Corwin, The “Higher Law” Background of American Constitutional Law (Cornell U. Press 1955). READ pp. 72-89
·      Charles McIlwain, Constitutionalism, Ancient and Modern (Cornell U. Press, rev. ed. 1947). READ 1-22
·      U.S. Constitution, Art. I, VI. Cl. 2, Amendments IX, X[1]
·      German Basic Law, arts.20-25; 31[2]
·      Constitution of South Africa, arts. 1, 2, 39, 146-150[3]
·      Indiana Code 1-1-2-1[4]
·      Hierarchy of Law in Georgia[5]


Hierarchy of Law in the United States

Constitution of the United States

Article, § 1
All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

Article VI, cl. 2
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.


Article IX
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Article X.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

German Basic Law

“The Basic Law is the constitution of the Federal Republic of Germany. It lays down the fundamental structure and essential values of the state. Among other things, the Basic Law defines the principles according to which the elections to the German Bundestag are conducted. It provides the basis for the status and rights of Parliament’s freely elected Members and outlines how the German Parliament should be organised and carry out its business.”[6]

The German Constitution, the Basic Law for the Federal Republic of Germany, provides for a division of legislative authority in a manner somewhat different from that of the United States.  Its legislative authority is divided between a Bundesrat, which represents the German states (Länder) with relatively constrained authority.  The Bundestag, in contrast,  

is elected by the German people and is the forum where differing opinions about the policies the country should be pursuing are formulated and discussed.

The most important tasks performed by the Bundestag are the legislative process and the parliamentary scrutiny of the government and its work.

The Members of the German Bundestag also decide on the federal budget and deployments of the Bundeswehr (Federal Armed Forces) outside Germany.

Another important function performed by the Bundestag is the election of the German Federal Chancellor.[7]

II. The Federation and the Länder
Article 20 [Constitutional principles – Right of resistance]
(1) The Federal Republic of Germany is a democratic and social federal state.
(2) All state authority is derived from the people. It shall be exercised by the people through elections and other votes and through specific legislative, executive and judicial bodies.
(3) The legislature shall be bound by the constitutional order, the executive and the judiciary by law and justice.
(4) All Germans shall have the right to resist any person seeking to abolish this constitutional order, if no other remedy is available.

Article 20a [Protection of the natural foundations of life and animals]
Mindful also of its responsibility toward future generations, the state shall protect the natural foundations of life and animals by legislation and, in accordance with law and justice, by executive and judicial action, all within the framework of the constitutional order.

Article 21 [Political parties]
(1) Political parties shall participate in the formation of the political will of the people. They may be freely established. Their internal organisation must conform to democratic principles. They must publicly account for their assets and for the sources and use of their funds.
(2) Parties that, by reason of their aims or the behaviour of their adherents, seek to undermine or abolish the free democratic basic order or to endanger the existence of the Federal Republic of Germany shall be unconstitutional. The Federal Constitutional Court shall rule on the question of
(3) Details shall be regulated by federal laws.

* * *

Article 23 [European Union – Protection of basic rights –Principle of subsidiarity]
(1) With a view to establishing a united Europe, the Federal Republic of Germany shall participate in the development of the European Union that is committed to democratic, social and federal principles, to the rule of law, and to the principle of subsidiarity, and that guarantees a level of protection of basic rights essentially comparable to that afforded by this Basic Law. To this end the Federation may transfer sovereign powers by a law with the consent of the Bundesrat. The establishment of the European Union, as well as changes in its treaty foundations and comparable regulations that amend or supplement this Basic Law, or make such amendments or supplements possible, shall be subject to paragraphs (2) and (3) of Article 79.
(1a) The Bundestag and the Bundesrat shall have the right to bring an action before the Court of Justice of the European Union to challenge a legislative act of the European Union for infringing the principle of subsidiarity. The Bundestag is obliged to initiate such an action at the request of one fourth of its Members. By a statute requiring the consent of the Bundesrat, exceptions from the first sentence of paragraph (2) of Article 42, and the first sentence of paragraph (2) of Article 52, may be authorised for the exercise of the rights granted to the Bundestag and the Bundesrat under the contractual foundations of the European Union.
(2) The Bundestag and, through the Bundesrat, the Länder shall participate in matters concerning the European Union. The Federal Government shall keep the Bundestag and the Bundesrat informed, comprehensively and at the earliest possible time.
(3) Before participating in legislative acts of the European Union, the Federal Government shall provide the Bundestag with an opportunity to state its position. The Federal Government shall take the position of the Bundestag into account during the negotiations. Details shall be regulated by a law.
(4) The Bundesrat shall participate in the decision-making process of the Federation insofar as it would have been competent to do so in a comparable domestic matter, or insofar as the subject falls within the domestic competence of the Länder.
(5) Insofar as, in an area within the exclusive competence of the Federation, interests of the Länder are affected, and in other matters, insofar as the Federation has legislative power, the Federal Government shall take the position of the Bundesrat into account. To the extent that the legislative powers of the Länder, the structure of Land authorities, or Land administrative procedures are primarily affected, the  position of the Bundesrat shall be given the greatest possible respect in determining the Federation’s position consistent with the responsibility of the Federation for the nation as a whole. In matters that may result in increased expenditures or reduced revenues for the Federation, the consent of the Federal Government shall be required.
(6) When legislative powers exclusive to the Länder concerning matters of school education, culture or broadcasting are primarily affected, the exercise of the rights belonging to the Federal Republic of Germany as a member state of the European Union shall be delegated by the Federation to a representative of the Länder designated by the Bundesrat. These rights shall be exercised with the participation of, and in coordination with, the Federal Government; their exercise shall be consistent with the responsibility of the Federation for the nation as a whole (7)
Details regarding paragraphs (4) to (6) of this Article shall be regulated by a law requiring the consent of the Bundesrat.

Article 24 [Transfer of sovereign powers – System of collective security]
(1) The Federation may by a law transfer sovereign powers to international organisations.
(1a) Insofar as the Länder are competent to exercise state powers and to perform state functions, they may, with the consent of the Federal Government, transfer sovereign powers to transfrontier institutions in neighbouring regions.
(2) With a view to maintaining peace, the Federation may enter into a system of mutual collective security; in doing so it shall consent to such limitations upon its sovereign powers as will bring about and secure a lasting peace in Europe and among the nations of the world.
(3) For the settlement of disputes between states, the Federation shall accede to agreements providing for general, comprehensive and compulsory international arbitration.

Article 25 [Primacy of international law]
The general rules of international law shall be an integral part of federal law. They shall take precedence over the laws and directly create rights and duties for the inhabitants of the federal territory.

Article 26 [Securing international peace]
(1) Acts tending to and undertaken with intent to disturb the peaceful relations between nations, especially to prepare for a war of aggression, shall be unconstitutional. They shall be made a criminal offence.
(2) Weapons designed for warfare may be manufactured, transported or marketed only with the permission of the Federal Government. Details shall be regulated by a federal law.

* * *

Article 28 [Land constitutions – Autonomy of municipalities]
(1) The constitutional order in the Länder must conform to the  principles of a republican, democratic and social state governed by the rule of law, within the meaning of this Basic  Law. In each Land, county and municipality the people shall be represented by a body chosen in general, direct, free, equal and secret elections. In county and municipal elections, persons who possess citizenship in any member state of the European Community are also eligible to vote and to be elected in accord with European Community law. In municipalities a local assembly may take the place of an elected body.
(2) Municipalities must be guaranteed the right to regulate all local affairs on their own responsibility, within the limits prescribed by the laws. Within the limits of their functions designated by a law, associations of municipalities shall also have the right of self-government according to the laws. The guarantee of self-government shall extend to the bases of financial autonomy; these bases shall include the right of municipalities to a source of tax revenues based upon economic ability and the right to establish the rates at which these sources shall be taxed.
(3) The Federation shall guarantee that the constitutional order of the Länder conforms to the basic rights and to the provisions of paragraphs (1) and (2) of this Article.

* * *

Article 30 [Sovereign powers of the Länder]
Except as otherwise provided or permitted by this Basic Law, the exercise of state powers and the discharge of state functions is a matter for the Länder
Article 31[Supremacy of federal law]
Federal law shall take precedence over Land law.


Constitution of South Africa
Arts. 1, 2, 39, 146-150

1. Republic of South Africa
The Republic of South Africa is one, sovereign, democratic state founded on the following values:
        Human dignity, the achievement of equality and the advancement of human rights and freedoms.
        Non-racialism and non-sexism.
        Supremacy of the constitution and the rule of law.
        Universal adult suffrage, a national common voters roll, regular elections and a multi-party system of democratic government, to ensure accountability, responsiveness and openness.

2.  Supremacy of Constitution
This Constitution is the supreme law of the Republic; law or conduct inconsistent with it is invalid, and the obligations imposed by it must be fulfilled.

* * *

39. Interpretation of Bill of Rights
When interpreting the Bill of Rights, a court, tribunal or forum-
        a. must promote the values that underlie an open and democratic society based on human dignity, equality and freedom;
        b. must consider international law; and
        c. may consider foreign law.
When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.
The Bill of Rights does not deny the existence of any other rights or freedoms that are recognised or conferred by common law, customary law or legislation, to the extent that they are consistent with the Bill.

* * *

Conflicting Laws (§§ 146-150)

146. Conflicts between national and provincial legislation
1. This section applies to a conflict between national legislation and provincial legislation falling within a functional area listed in Schedule 4.
2. National legislation that applies uniformly with regard to the country as a whole prevails over provincial legislation if any of the following conditions is met:
        a. The national legislation deals with a matter that cannot be regulated effectively by legislation enacted by the respective provinces individually.
        b. The national legislation deals with a matter that, to be dealt with effectively, requires uniformity across the nation, and the national legislation provides that uniformity by establishing-
            i. norms and standards;
            ii. frameworks; or
            iii. national policies.
        c. The national legislation is necessary for-
            i. the maintenance of national security;
            ii. the maintenance of economic unity;
            iii. the protection of the common market in respect of the mobility of goods, services, capital and labour;
            iv. the promotion of economic activities across provincial boundaries;
            v. the promotion of equal opportunity or equal access to government services; or
            vi. the protection of the environment.
3. National legislation prevails over provincial legislation if the national legislation is aimed at preventing unreasonable action by a province that-
        a. is prejudicial to the economic, health or security interests of another province or the country as a whole; or
        b. impedes the implementation of national economic policy.
4. When there is a dispute concerning whether national legislation is necessary for a purpose set out in subsection (2) (c) and that dispute comes before a court for resolution, the court must have due regard to the approval or the rejection of the legislation by the National Council of Provinces.
5. Provincial legislation prevails over national legislation if subsection (2) or (3) does not apply.
6. A law made in terms of an Act of Parliament or a provincial Act can prevail only if that law has been approved by the National Council of Provinces.
6. If the National Council of Provinces does not reach a decision within 30 days of its first sitting after a law was referred to it, that law must be considered for all purposes to have been approved by the Council.
7. If the National Council of Provinces does not approve a law referred to in subsection (6), it must, within 30 days of its decision, forward reasons for not approving the law to the authority that referred the law to it.

147. Other conflicts
1. If there is a conflict between national legislation and a provision of a provincial constitution with regard to-
        a. a matter concerning which this Constitution specifically requires or envisages the enactment of national legislation, the national legislation prevails over the affected provision of the provincial constitution;
        b. national legislative intervention in terms of section 44 (2), the national legislation prevails over the provision of the provincial constitution; or
        c. a matter within a functional area listed in Schedule 4, section 146 applies as if the affected provision of the provincial constitution were provincial legislation referred to in that section.
2. National legislation referred to in section 44 (2) prevails over provincial legislation in respect of matters within the functional areas listed in Schedule 5.

148. Conflicts that cannot be resolved
If a dispute concerning a conflict cannot be resolved by a court, the national legislation prevails over the provincial legislation or provincial constitution.

149. Status of legislation that does not prevail
A decision by a court that legislation prevails over other legislation does not invalidate that other legislation, but that other legislation becomes inoperative for as long as the conflict remains.

150. Interpretation of conflicts
When considering an apparent conflict between national and provincial legislation, or between national legislation and a provincial constitution, every court must prefer any reasonable interpretation of the legislation or constitution that avoids a conflict, over any alternative interpretation that results in a conflict.


Indiana Code

IC 1-1-2 Chapter 2. Laws Governing the State

IC 1-1-2-1
Hierarchy of law

Sec. 1. The law governing this state is declared to be:
    First. The Constitution of the United States and of this state.
    Second. All statutes of the general assembly of the state in force, and not inconsistent with such constitutions.
    Third. All statutes of the United States in force, and relating to subjects over which congress has power to legislate for the states, and not inconsistent with the Constitution of the United States.
    Fourth. The common law of England, and statutes of the British Parliament made in aid thereof prior to the fourth year of the reign of James the First (except the second section of the sixth chapter of forty-third Elizabeth, the eighth chapter of thirteenth Elizabeth, and the ninth chapter of thirty-seventh Henry the Eighth,) and which are of a general nature, not local to that kingdom, and not inconsistent with the first, second and third specifications of this section.


III. Ordering Government Through Law: Constitutions, Statutes, Treaties, Regulations, Judicial Decisions, and Other Sources

            We have begun to look at the relationship between law and government.  We have been introduced both to the complexities of the subject and to the ideological foundations of the modern approaches to the issue.   These foundations are, in the West at least, two strains of Enlightenment era ideologies that produced sometimes profoundly distinct notions of the value of government, the necessity of government to law and the relationship of the state to the individual.  Both are grounded in the ancient concept, now understood as infinitely malleable, of popular consent.  This is a notion we encountered first with the Institutes[8] (though its origins lie much farther back in Western ideological history and practice).

            On the one hand, consent can be understood as the expression of the popular will, made manifest through government and expressed in law enacted through this apparatus of state. In this construct law is impossible in the absence of government and government provides the incarnation of the popular will which is itself the manifestation of the best interests of the individuals now come together within a political community. Government is a source of protection and obedience to government is a first principle of active engagement with the state.  The protection of that manifestation of the general will is the highest order of systemic protection―process, legality, and a commitment to a basic set of substantive rights form the core of this approach to government and law.  This is an approach that found its most congenial home in continental Europe and Latin America. A variation of this approach underlies Marxist Leninist political theory and state organization.

            On the other hand, consent can be understood as a means of organizing a community of like interests for the protection of property and the operationalization of popular custom and traditions. In this construct, government is a consequential construct, something that is necessary to ensure protection but is not otherwise invested with any inherent power or character.  As a site for the assertion of power against individual interest it is viewed with suspicion and framed in a way that ensures the smallest interference with individual privilege (understood within the structures of custom and tradition to which the community adheres). Consent and adherence to the government is disciplined by ensuring that all are equal before the law (that in many cases remains a work in progress of course) and that the law is firmly anchored in custom as the lived set of consensual practices of the community.   Government is thus both a source of protection and the space within which joint efforts for improvement can be undertaken.  Government is understood as limited in the scope of its power and is itself constrained by law, including the higher law of the state (the subject of this class).  The government may make law but law is not attached to government nor entirely derived from it. This is an approach most notable in pre modern England and its colonies.

            In the United States, no single approach predominates.  The American federal government retains, at least in theory, a foundation in the ideology of constraint limited power―at least as against the states in our federal system.  States retain, at least in theory, an organization in which their power is also derived from and attached to popular willingness to see it exercised.  On the other hand, there is a strong strain in American political theory, one increasingly strong as our political ideology drifts more and more into a governance space primarily occupied by projects of regulatory management of behavior, that favors the idea of the union of government and law, of the idea of delegated power entirely consumed by the apparatus of state (including but not limited to its legislature) and of the primacy of the government as the ultimate reflection of the “popular” (Americans do not use the term “general”) will. Thus, in the United States ideology is ambiguous and ideological goals in tension.  As a result, pragmatism has tended, at least until recently, to prevail in American politics and ideology used only to support what expediency and political calculation required.  That may be changing.

            Today, we take up the related issue.  Whether or not law is an exclusive instrument of government or is otherwise related but not entirely constrained by it, the various forms of law we have encountered, and the needs of government to produce efficient governance structures, have since before the time of the Institutes[9] produced a need to order law in accordance with the needs and premises on which the government of a state is ordered.  While it is certainly possible to conceive of a government system either in which there exists only one type of law, or in which law, by whatever form created share the same authority, such systems are rare and in any case do not reflect current conventional political ideological premises under any governmental system of consequence. Virtually all systems require that law be ordered into a hierarchy, and that the law that touches on the organization and powers of the government assume a dignity greater than that of the law that orders the private relations among individuals. We consider the way that, within the government system of the United States, law is thus ordered, with an eye toward alternatives adopted in other leading or influential states. To that end we focus on the justification and structuring of a “higher law” of government―what most of us now understand generally as the constitutional law of a state―and through that higher law to consider the place of the other forms of law to which we have been introduced in the prior weeks within the domestic legal orders of states.   In our next class we consider the difficult issue of the relationship between the hierarchies of national legal orders and the international order, and specifically is there something to order (e.g., Carlos José Gutierrez, “Conflicts Between Domestic and International Law,”[10] American University Law Review 30:147-154 (1981).

            Our first reading sets the framework of our discussion, Edward S. Corwin, The “Higher Law” Background of American Constitutional Law (Cornell U. Press 1955). It provides the context for consideration of the question of hierarchy in law in the United States, and more specifically, the jurisprudential premises within which the idea of a hierarchy of law could emerge, and more importantly, a hierarchy of law that is related to, constrains but is also embedded in a government. For Corwin, “The Reformation superseded an infallible Pope with an infallible Bible; the American Revolution replaced the sway of a king with that of a document.  That such would be the outcome was not unforeseen from the first” (Corwin, supra, p.1). Corwin’s object is to try to distill the reasons why such a document, the federal constitution, could assume a role as the “higher” law of the United States, one in which the Constitution, much like the Institutes[11] (p.3-4) was ordained by the people and thus acquired both legality and supremacy.  “The sole difference between the Constitution of the United States and the imperial legislation justified in this famous text is that the former is assumed to have proceeded immediately from the people, while the later proceeded from a like source only mediately.” (Ibid., 4). But Corwin also suggests that while the Constitution’s supremacy and legality might be ascribed to the legitimacy of the popular approval that ordained it, its legitimacy also was ascribed to the notions of justice contained within it, that is to those natural law principles, “eternal and immutable. . . [not] an act of will but one of discovery and declaration.” (Ibid., p. 5). That is, Corwin argues, that the supremacy of the Constitution followed from the idea that it merely declared “a law superior to the will of human governors.” (ibid). He then seeks to consider these natural law origins of the Constitution and its place within the hierarchy of American law, one grounded in ancient (Roman) concepts of natural law  producing natural rights which could not be taken through the agency of any government except illegitimately.  (Ibid., 15-20; further reading essays in Richard O. Brooks editor, Cicero and Modern Law[12] (Burlington, VT: Ashgate, 2009).

            In the pages before the assigned reading (esp. pp. 57-72)  Corwin considered the development of natural law doctrine and its effects on the way Americans thought about law. He was particularly interested in the contributions of two germinal figures in that development, Grotius and Sir Isaac Newton (pp. 58). Grotius, Corwin tells us, “erected the law of nations upon a natural law basis as a basis against the current international anarchy” (ibid., 57). He also revived, as a subject of legal discourse, Cicero’s ideal of natural law, clearing it of its theological accretions acquired during the medieval period, but not with its associations with notions of the Divine order, and thus making it acceptable to those who had thrown in with the Reformation. (Ibid. 58). “Once natural law is defined as right reason and is described as at once a law of, and a law to, God.” (Ibid) it is free to serve as an autonomous premise for the construction of a law-state.  Newton  provides especially the English speaking world with an ideology of order within the natural world, one that either confirms the orderliness of the divine conception of the world or in the existence of those natural rules which reason, through science, could make manifest (Ibid., 58-50) “[i]nscrutable deity became scrutable nature.” (Ibid., 59).

            These natural law ideas, Corwin tells us, were conveyed into American constitutional theory through the work of John Locke, whose Second Treatise on Civil Government[13]you have encountered in our recent readings.   His transformation of natural rights into rights of the individual, borrowed from the debates between Royalists and Parliamentarians in the English Civil War, rights of “Life, liberty and estate” (“This is because our law is grounded upon the law of nature.  And these three things do flow from the law of nature.” Bacon, Argument in Calvin’s’ Case, Bacon, Works 176.) is made possible through his development of the idea of the “social compact” tied to the law of nature. (Ibid., 61). Locke effectively sought to transform the law of nature from a notion of mass rights to one of individual rights.  In what would become the U.S. these notions were bound up in those social and political compacts, the Mayflower Compact[14] being a principal example, that sought to re-establish a covenantal government among a community of followers that mimicked the covenantal relationships between God and his people in the Bible. “And the procedure which, under the sanction of God, was effective to produce a Church, could also be availed of under the same sanction to produce a commonwealth.” (Ibid., 65). Thus, where Locke looked to natural law as the ultimate basis of authority, American colonists in New England, at least, sought that authority in God and in the patterns of covenant based government established in the Hebrew Bible. For the colonists south of New England, though, the later writings of Locke would prove persuasive. “The two features of the Second Treatise which have impressed themselves most definitely upon American constitutional law are the limitations which it lays down for legislative power and its emphasis on property right.” (Ibid., 67).

            The influence of higher law doctrine associated with the names of Sir Edward Coke[15] and Locke was at its height in England during the period when the American colonies were being most actively settled.” (Ibid., 72).    During the time of settlement and especially before the 18th century, the colonies repeatedly tried “to secure for their constituencies for the benefits of Magna Carta[16] and particularly of the twenty-ninth chapter thereof [due process].” (Ibid., 73).  Indeed, for the colonists, Magna Carta, according to Corwin became a generic term for documents of constitutional significance.

After the Bible, Locke was the principal authority relied on by the preachers to bolster up their political teachings, although Coke, Pufendorf, Sydney, and later on some others were also cited. . . . Natural rights and the social compact, government bounded by law and incapable of imparting legality to measures contrary to law, and the right to resistance to illegal measures all fall into their proper place.” (Ibid., 74-75).

            It was during the 18th century that these ideas began to be applied through a series of judicial cases in which local courts became the sites of development for the political theories that would eventually produce the political theory of the federal constitution. “The suggestion that the local courts might be thus pitted against an usurping Parliament in defense of ‘British rights,’ served to bring the idea of judicial review to the very threshold of the first American constitutions, albeit it was destined to wait there unattended for some years.” (Ibid., 77).  These eventually formed the idea, nicely put forth in the Massachusetts Circular Letter of 1768, of the fundamental notion that governmental authority is intrinsically conditioned by a higher and fundamental law intrinsic to the condition of free individuals and subjects.  These ideas also played nicely into the development of the idea, increasingly popular in the colonies, of the fundamental character of the autonomy of each of the units of the Empire, each co-equal and tied together solely through their mutual allegiance to the person of the King. (Ibid., 80-81).  A strain of this eventually appears in the federal organization of the American Union and the perennial power of notions of “states’ rights” in contemporary American discourse. 

            But Corwin also suggests that when aggregated, these strains of political ideas eventually focused the ideological foundations of the American Revolution on the question, earlier at the heart of the English Civil War, of the fundamental character of government and the role of law, especially a “higher” or “natural” law to constrain the apparatus of state (and principally its legislative power.

Lord Acton has described the American Revolution as a contest between two ideas of legislative power.  Even as late as the Declaratory Act of 1766,[17] the American invocation of a constitution setting metes and bounds to Parliament did not fail of a certain response among the English themselves. . . .  The direction which the great weight of professional [English] opinion was now taking was shown when Lord Mansfield . . . ., arose in the House of Lords to support the Declaratory Act.  The passage of that measure by an overwhelming majority committed Parliament substantially to Milton’s conclusion of a century earlier that ‘Parliament was above all positive law, whether civil or common.’” (Ibid., 83-84).

But neither the English nor the American position was extreme.  Both incorporated aspects of the other. The English embraced Parliamentary supremacy but exercised that supremacy within a thousand years of constitutional constraints.  The Americans embraced limited government but also embraced the ideal of legislative sovereignty, which was also “added to the stock of American political ideas”. (Ibid., 87).  But legislative sovereignty of the sort that eventually dominated European systems and one that could trace its origins to the consent and delegation notions of the Institutes, was rejected as the dominant model of the American Republic.  Corwin offers two reasons, based on the emergence of a constitutional system and with it a very specific hierarchy of law that in turn served to constrain the government in the exercise of its now more limited powers.

In the first place, in the American written constitution, higher law at last attained a form which made possible the attribution to it of an entirely new sort of validity, the validity of a statute emanating from the sovereign people. . . . . But in the second place, even statutory form could hardly have saved the higher law as a recourse for individuals had it not been backed up by judicial review .” (Ibid., 89).

            With the second reading, Charles McIlwain, Constitutionalism, Ancient and Modern (Cornell U. Press, rev. ed. 1947), the student is then introduced to what this political settlement at the start of the American Republic means for the lawyer, and specifically the development of the modern notion of constitutionalism.  McIlwain starts by contrasting the new with the old concept of constitutionalism by contrasting Thomas Paine’s[18] view with that of Henry St. John, Vicount Bolingbroke.[19] For Paine, a constitution is a thing that precedes the government it forms and a government can only exist legitimately as a creature of the constitution that creates it.  (Ibid., 2).  For Bolingbroke, a constitution is the whole of the edifice of state assembled―its laws, institutions, and customs derived from the customs and usages of the people which have agreed to its government.  The government is a descriptor of this assemblage. (Ibid., 3). For Paine a government may not act legitimately contrary to the constitution; for Bolingbroke such an act is evidence of a bad government. (Ibid). In one case arbitrary government is inconceivable in the sense that such an act would destroy the fabric on which the state is built; for the other it merely suggests necessity backed by the authority of the representative of the people. (Ibid., 7).  For Paine the consequence of arbitrary government is either a lawful power of rebellion or the disciplinary power of judicial review (Ibid., 9)

            McIlwain suggests that Paine’s idea “that the only true constitution is one consciously constructed and that a nation’s government is only the creature of this constitution, conforms probably more closely than any other to the actual development in the world since the opening of the nineteenth century.” (Ibid, 14). The sort of written constitution as understood by Paine has become the norm in most parts of the world, though their construction and emphasis has varied over time.   (Ibid).  That becomes clear as we review the constitutions you have been asked to consider for this class: the U.S. Constitution,[20] Art. VI. Cl. 2; the German Basic Law,[21] arts.20-25; 31; and the Constitution of South Africa,[22] arts. 2, 39, 146-150.The U.S. constitution is a so called first generation[23] constitution, the principal focus of which is the establishment of a government (McIlwain, 20) constrained by the provisions of the constitution itself in the exercise of power.  The German Basic Law is a so called second generation constitution, one that, while concerned with the establishment of a constrained government, emphasizes the limitations of the power of the government to interfere in the enjoyment by the people of certain specified rights (articles 1-20 of the GBL).  In addition, the constitution itself limits the power of the people to themselves curtail these basic―natural and superior―rights, rights which no government may abridge, except to the extent permitted by the constitutional language itself, because they stand above and beyond the jurisdiction of state. The South African Constitution is a so called third generation constitution, one in which to the focus of the prior approaches to constitutions are added a more active engagement with and connection to international law and the law development of the constitutional traditions of other states.  

            With the establishment of a law-government order in which the government is understood to be a creature of law―that is of the higher law of the constitution―but which is also vested with the power to legislate and bind both government and individuals, within the constraints, if any, of the constitution under which it was created, the rest of the hierarchy of la, within, a state follows.  That hierarchy identified both the sources of law deemed legitimate and the precedence each is accorded in relation to the others.  Together these form the domestic legal order of a state.   The Background reading (above) and the two excerpts from state law―Indiana Code 1-1-2-1[24] and Hierarchy of Law in Georgia[25]―provide illustrations of the usual hierarchy of law in federal and state systems. The Indiana statute is especially useful for its attempt to codify that amalgam of law types within a multilayer system of governments and for its specification of the receipt of English common law in Indiana:

Sec.1. The law governing this state is declared to be:

            First. The Constitution of the United States and of this state.

            Second. All statutes of the general assembly of the state in force, and not inconsistent with such constitutions.

            Third. All statutes of the United States in force, and relating to subjects over which congress has power to legislate for the states, and not inconsistent with the Constitution of the United States.

            Fourth. The common law of England, and statutes of the British Parliament made in aid thereof prior to the fourth year of the reign of James the First (except the second section of the sixth chapter of forty-third Elizabeth, the eighth chapter of thirteenth Elizabeth, and the ninth chapter of thirty-seventh Henry the Eighth,) and which are of a general nature, not local to that kingdom, and not inconsistent with the first, second and third specifications of this section.

Most interesting is the precedence of statute over common law and of state law over federal statute except to the extent of federal power.  That would suggest a broad reading of state power and a narrow reading of the federal power to assert control in matters of concurrent jurisdiction. In reality, as law students learn in the introduction to constitutional law―that determination gas been largely left to the federal courts to decide now. Contrast to Georgia where, according to the chart created, federal statutes, administrative regulations and judicial decisions touching on federal power tale precedence over their state counterparts.

            Legal hierarchy of the sort discussed above makes for great theory but provides little guidance for managing the complex interviewing that is the legal system of the United States within its federal union.  What appears so straightforward in theory can become quite unmanageable in the working lives of lawyers.  This has become especially true over the last century, as the old “law equilibrium”—the cultural consensus about where law ought to originate and the relative roles of the distinct legal sub-systems within it (the object of our study in Chapters 1-7) has given way to two significant changes.  The first is the explosion of statute and administrative regulation that increasingly manage virtually all aspects of life within a state. The second is the move toward nationalization of law production, resulting in a greater willingness to address issues, especially relating to economic activities, at the national level. As a consequence there has been an increased tendency to displace state common law, statutes and administrative regulation by those originating in the national government.   

            That process of the growth of areas subject to legal regulation and the nationalization of law has been managed largely by the federal courts. In the United States, the courts manage legal hierarchy through the application of the doctrine of preemption. Preemption issues tend to focus on the authority of states to legislate in the face of federal power.  The following case provides an example of the approach of the courts both to the expression of the doctrine and to its application against  the law of a state. 

Altria Group v. Good
555 U.S. 70 (2008)

Justice Stevens delivered the opinion of the Court.

   Respondents, who have for over 15 years smoked “light” cigarettes manufactured by petitioners, Philip Morris USA, Inc., and its parent company, Altria Group, Inc., claim that petitioners violated the Maine Unfair Trade Practices Act (MUTPA). Specifically, they allege that petitioners’ advertising fraudulently conveyed the message that their “light” cigarettes deliver less tar and nicotine to consumers than regular brands despite petitioners’ knowledge that the message was untrue. Petitioners deny the charge, asserting that their advertisements were factually accurate. The merits of the dispute are not before us because the District Court entered summary judgment in favor of petitioners on the ground that respondents’ state-law claim is pre-empted by the Federal Cigarette Labeling and Advertising Act, as amended (Labeling Act). The Court of Appeals reversed that judgment, and we granted certiorari to review its holding that the Labeling Act neither expressly nor impliedly pre-empts respondents’ fraud claim. We affirm.


   Respondents are Maine residents and longtime smokers of Marlboro Lights and Cambridge Lights cigarettes, which are manufactured by petitioners. Invoking the diversity jurisdiction of the Federal District Court, respondents filed a complaint alleging that petitioners deliberately deceived them about the true and harmful nature of “light” cigarettes in violation of the MUTPA, Me. Rev. Stat. Ann., Tit. 5, §207 (Supp. 2008).[26] Respondents claim that petitioners fraudulently marketed their cigarettes as being “light” and containing “ ‘[l]owered [t]ar and [n]icotine’ ” to convey to consumers that they deliver less tar and nicotine and are therefore less harmful than regular cigarettes. App. 28a–29a.

   Respondents acknowledge that testing pursuant to the Cambridge Filter Method[27] indicates that tar and nicotine yields of Marlboro Lights and Cambridge Lights are lower than those of regular cigarettes. Id., at 30a. Respondents allege, however, that petitioners have known at all relevant times that human smokers unconsciously engage in compensatory behaviors not registered by Cambridge Filter Method testing that negate the effect of the tar- and nicotine-reducing features of “light” cigarettes. Id., at 30a–31a. By covering filter ventilation holes with their lips or fingers, taking larger or more frequent puffs, and holding the smoke in their lungs for a longer period of time, smokers of “light” cigarettes unknowingly inhale as much tar and nicotine as do smokers of regular cigarettes. Ibid. “Light” cigarettes are in fact more harmful because the increased ventilation that results from their unique design features produces smoke that is more mutagenic per milligram of tar than the smoke of regular cigarettes. Id., at 31a–32a. Respondents claim that petitioners violated the MUTPA by fraudulently concealing that information and by affirmatively representing, through the use of “light” and “lowered tar and nicotine” descriptors, that their cigarettes would pose fewer health risks. Id., at 32a, 33a.

   Petitioners moved for summary judgment on the ground that the Labeling Act, 15 U. S. C. §1334(b), expressly pre-empts respondents’ state-law cause of action. Relying on our decisions in Cipollone v. Liggett Group, Inc., 505 U. S. 504 (1992), and Lorillard Tobacco Co. v. Reilly, 533 U. S. 525 (2001), the District Court concluded that respondents’ MUTPA claim is pre-empted. The court recast respondents’ claim as a failure-to-warn or warning neutralization claim of the kind pre-empted in Cipollone: The claim charges petitioners with “produc[ing] a product it knew contained hidden risks … not apparent or known to the consumer”—a claim that “runs to what [petitioners] actually said about Lights and what [respondents] claim they should have said.” 436 F. Supp. 2d 132, 151 (Me. 2006). And the difference between what petitioners said and what respondents would have them say is “ ‘intertwined with the concern about cigarette smoking and health.’ ” Id., at 153 (quoting Reilly, 533 U. S., at 548). The District Court thus concluded that respondents’ claim rests on a state-law requirement based on smoking and health of precisely the kind that §1334(b) pre-empts, and it granted summary judgment for petitioners.

   Respondents appealed, and the Court of Appeals reversed. The Court of Appeals first rejected the District Court’s characterization of respondents’ claim as a warning neutralization claim akin to the pre-empted claim in Cipollone. 501 F. 3d 29, 37, 40 (CA1 2007). Instead, the court concluded that respondents’ claim is in substance a fraud claim that alleges that petitioners falsely represented their cigarettes as “light” or having “lowered tar and nicotine” even though they deliver to smokers the same quantities of those components as do regular cigarettes. Id., at 36. “The fact that these alleged misrepresentations were unaccompanied by additional statements in the nature of a warning does not transform the claimed fraud into failure to warn” or warning neutralization. Id., at 42–43. Finding respondents’ claim indistinguishable from the non-pre-empted fraud claim at issue in Cipollone, the Court of Appeals held that it is not expressly pre-empted. The court also rejected petitioners’ argument that respondents’ claim is impliedly pre-empted because their success on that claim would stand as an obstacle to the purported policy of the FTC allowing the use of descriptive terms that convey Cambridge Filter Method test results. Accordingly, it reversed the judgment of the District Court.

   In concluding that respondents’ claim is not expressly pre-empted, the Court of Appeals considered and rejected the Fifth Circuit’s reasoning in a similar case. 501 F. 3d, at 45. Unlike the court below, the Fifth Circuit likened the plaintiffs’ challenge to the use of “light” descriptors to Cipollone’s warning neutralization claim and thus found it expressly pre-empted. Brown v. Brown & Williamson Tobacco Corp., 479 F. 3d 383, 392–393 (2007). We granted the petition for certiorari to resolve this apparent conflict. 552 U. S. ___ (2008).


   Article VI, cl. 2, of the Constitution provides that the laws of the United States “shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.” Consistent with that command, we have long recognized that state laws that conflict with federal law are “without effect.” Maryland v. Louisiana, 451 U. S. 725, 746 (1981).

   Our inquiry into the scope of a statute’s pre-emptive effect is guided by the rule that “ ‘[t]he purpose of Congress is the ultimate touchstone’ in every pre-emption case.” Medtronic, Inc. v. Lohr, 518 U. S. 470, 485 (1996) (quoting Retail Clerks v. Schermerhorn, 375 U. S. 96, 103 (1963)). Congress may indicate pre-emptive intent through a statute’s express language or through its structure and purpose. See Jones v. Rath Packing Co., 430 U. S. 519, 525 (1977). If a federal law contains an express pre-emption clause, it does not immediately end the inquiry because the question of the substance and scope of Congress’ displacement of state law still remains. Pre-emptive intent may also be inferred if the scope of the statute indicates that Congress intended federal law to occupy the legislative field, or if there is an actual conflict between state and federal law. Freightliner Corp. v. Myrick, 514 U. S. 280, 287 (1995).

   When addressing questions of express or implied pre-emption, we begin our analysis “with the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). That assumption applies with particular force when Congress has legislated in a field traditionally occupied by the States. Lohr, 518 U. S., at 485; see also Reilly, 533 U. S., at 541–542 (“Because ‘federal law is said to bar state action in [a] fiel[d] of traditional state regulation,’ namely, advertising, we ‘wor[k] on the assumption that the historic police powers of the States [a]re not to be superseded by the Federal Act unless that [is] the clear and manifest purpose of Congress’ ” (citation omitted)). Thus, when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily “accept the reading that disfavors pre-emption.” Bates v. Dow Agrosciences LLC, 544 U. S. 431, 449 (2005).

   Congress enacted the Labeling Act in 1965 in response to the Surgeon General’s determination that cigarette smoking is harmful to health. The Act required that every package of cigarettes sold in the United States contain a conspicuous warning, and it pre-empted state-law positive enactments that added to the federally prescribed warning. 79 Stat. 283. Congress amended the Labeling Act a few years later by enacting the Public Health Cigarette Smoking Act of 1969.[28] The amendments strengthened the language of the prescribed warning, 84 Stat. 88, and prohibited cigarette advertising in “any medium of electronic communication subject to [FCC] jurisdiction,” id., at 89. They also broadened the Labeling Act’s pre-emption provision. See Cipollone, 505 U. S., at 520 (plurality opinion) (discussing the difference in scope of the pre-emption clauses of the 1965 and 1969 Acts). The Labeling Act has since been amended further to require cigarette manufacturers to include four more explicit warnings in their packaging and advertisements on a rotating basis.[29]

   The stated purpose of the Labeling Act is

“to establish a comprehensive Federal program to deal with cigarette labeling and advertising with respect to any relationship between smoking and health, whereby—

   “(1) the public may be adequately informed that cigarette smoking may be hazardous to health by inclusion of a warning to that effect on each package of cigarettes; and

   “(2) commerce and the national economy may be (A) protected to the maximum extent consistent with this declared policy and (B) not impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health.” 79 Stat. 282, 15 U. S. C. §1331.

The requirement that cigarette manufacturers include in their packaging and advertising the precise warnings mandated by Congress furthers the Act’s first purpose. And the Act’s pre-emption provisions promote its second purpose.

   As amended, the Labeling Act contains two express pre-emption provisions. Section 5(a) protects cigarette manufacturers from inconsistent state labeling laws by prohibiting the requirement of additional statements relating to smoking and health on cigarette packages. 15 U. S. C. §1334(a). Section 5(b), which is at issue in this case, provides that “[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.” §1334(b).

   Together, the labeling requirement and pre-emption provisions express Congress’ determination that the prescribed federal warnings are both necessary and sufficient to achieve its purpose of informing the public of the health consequences of smoking. Because Congress has decided that no additional warning statement is needed to attain that goal, States may not impede commerce in cigarettes by enforcing rules that are based on an assumption that the federal warnings are inadequate. Although both of the Act’s purposes are furthered by prohibiting States from supplementing the federally prescribed warning, neither would be served by limiting the States’ authority to prohibit deceptive statements in cigarette advertising. Petitioners acknowledge that “Congress had no intention of insulating tobacco companies from liability for inaccurate statements about the relationship between smoking and health.” Brief for Petitioners 28. But they maintain that Congress could not have intended to permit the enforcement of state fraud rules because doing so would defeat the Labeling Act’s purpose of preventing nonuniform state warning requirements. 15 U. S. C. §1331.[30] As we observed in Cipollone, however, fraud claims “rely only on a single, uniform standard: falsity.” 505 U. S., at 529 (plurality opinion).

   Although it is clear that fidelity to the Act’s purposes does not demand the pre-emption of state fraud rules, the principal question that we must decide is whether the text of §1334(b) nevertheless requires that result.


   We have construed the operative phrases of §1334(b) in two prior cases: Cipollone, 505 U. S. 504, and Reilly, 533 U. S. 525. On both occasions we recognized that the phrase “based on smoking and health” modifies the state-law rule at issue rather than a particular application of that rule.

   In Cipollone, the plurality, which consisted of Chief Justice Rehnquist and Justices White, O’Connor, and Stevens, read the pre-emption provision in the 1969 amendments to the Labeling Act to pre-empt common-law rules as well as positive enactments. Unlike Justices Blackmun, Kennedy, and Souter, the plurality concluded that the provision does not preclude all common-law claims that have some relationship to smoking and health. 505 U. S., at 521–523. To determine whether a particular common-law claim is pre-empted, the plurality inquired “whether the legal duty that is the predicate of the common-law damages action constitutes a ‘requirement or prohibition based on smoking and health … with respect to … advertising or promotion,’ giving that clause a fair but narrow reading.” Id., at 524.

   Applying this standard, the plurality held that the plaintiff’s claim that cigarette manufacturers had fraudulently misrepresented and concealed a material fact was not pre-empted. That claim alleged a violation of the manufacturers’ duty not to deceive—a duty that is not “based on” smoking and health. Id., at 528–529. Respondents in this case also allege a violation of the duty not to deceive as that duty is codified in the MUTPA. The duty codified in that state statute, like the duty imposed by the state common-law rule at issue in Cipollone, has nothing to do with smoking and health.[31]

   Petitioners endeavor to distance themselves from that holding by arguing that respondents’ claim is more analogous to the “warning neutralization” claim found to be pre-empted in Cipollone. Although the plurality understood the plaintiff to have presented that claim as a “theory of fraudulent misrepresentation,” id., at 528, the gravamen of the claim was the defendants’ failure to warn, as it was “predicated on a state-law prohibition against statements in advertising and promotional materials that tend to minimize the health hazards associated with smoking,” id., at 527. Thus understood, the Cipollone plurality’s analysis of the warning neutralization claim has no application in this case.[32]

   Petitioners nonetheless contend that respondents’ claim is like the pre-empted warning neutralization claim because it is based on statements that “might create a false impression” rather than statements that are “inherently false.” Brief for Petitioners 39. But the extent of the falsehood alleged does not alter the nature of the claim. Nothing in the Labeling Act’s text or purpose or in the plurality opinion in Cipollone suggests that whether a claim is pre-empted turns in any way on the distinction between misleading and inherently false statements. Petitioners’ misunderstanding is the same one that led the Court of Appeals for the Fifth Circuit, when confronted with a “light” descriptors claim, to reach a result at odds with the Court of Appeals’ decision in this case. See Brown,479 F. 3d, at 391–393. Certainly, the extent of the falsehood alleged may bear on whether a plaintiff can prove her fraud claim, but the merits of respondents’ claim are not before us.

   Once that erroneous distinction is set aside, it is clear that our holding in Cipollone that the common-law fraud claim was not pre-empted is directly applicable to the statutory claim at issue in this case. As was true of the claim in Cipollone, respondents’ claim that the deceptive statements “light” and “lowered tar and nicotine” induced them to purchase petitioners’ product alleges a breach of the duty not to deceive. To be sure, the presence of the federally mandated warnings may bear on the materiality of petitioners’ allegedly fraudulent statements, “but that possibility does not change [respondents’] case from one about the statements into one about the warnings.” 501 F. 3d, at 44.[33]

   Our decision in Reilly is consistent with Cipollone’s analysis. Reilly involved regulations promulgated by the Massachusetts attorney general “ ‘in order to address the incidence of cigarette smoking and smokeless tobacco use by children under legal age … [and] in order to prevent access to such products by underage customers.’ ” 533 U. S., at 533 (quoting 940 Code Mass. Regs. §21.01 (2000)). The regulations did not pertain to the content of any advertising; rather, they placed a variety of restrictions on certain cigarette sales and the location of outdoor and point-of-sale cigarette advertising. The attorney general promulgated those restrictions pursuant to his statutory authority to prevent unfair or deceptive trade practices. Mass. Gen. Laws, ch. 93A, §2 (West 1996). But although the attorney general’s authority derived from a general deceptive practices statute like the one at issue in this case, the challenged regulations targeted advertising that tended to promote tobacco use by children instead of prohibiting false or misleading statements. Thus, whereas the “prohibition” in Cipollone was the common-law fraud rule, the “prohibitions” in Reilly were the targeted regulations. Accordingly, our holding in Reilly that the regulations were pre-empted provides no support for an argument that a general prohibition of deceptive practices is “based on” the harm caused by the specific kind of deception to which the prohibition is applied in a given case.

   It is true, as petitioners argue, that the appeal of their advertising is based on the relationship between smoking and health. And although respondents have expressly repudiated any claim for damages for personal injuries, see App. 26a, their actual injuries likely encompass harms to health as well as the monetary injuries they allege. These arguments are unavailing, however, because the text of §1334(b) does not refer to harms related to smoking and health. Rather, it pre-empts only requirements and prohibitions—i.e., rules—that are based on smoking and health. The MUTPA says nothing about either “smoking” or “health.” It is a general rule that creates a duty not to deceive and is therefore unlike the regulations at issue in Reilly.[34]

   Petitioners argue in the alternative that we should reject the express pre-emption framework established by the Cipollone plurality and relied on by the Court in Reilly. In so doing, they invoke the reasons set forth in the separate opinions of Justice Blackmun (who especially criticized the plurality’s holding that the failure-to-warn claim was pre-empted) and Justice Scalia (who argued that the fraud claim also should be pre-empted). While we again acknowledge that our analysis of these claims may lack “theoretical elegance,” we remain persuaded that it represents “a fair understanding of congressional purpose.” Cipollone, 505 U. S., at 529–530, n. 27 (plurality opinion).

   Petitioners also contend that the plurality opinion is inconsistent with our decisions in American Airlines, Inc. v. Wolens, 513 U. S. 219 (1995), and Riegel v. Medtronic, Inc., 552 U. S. ___ (2008). Both cases, however, are inapposite—the first because it involved a pre-emption provision much broader than the Labeling Act’s, and the second because it involved precisely the type of state rule that Congress had intended to pre-empt.

   At issue in Wolens was the pre-emptive effect of the Airline Deregulation Act of 1978 (ADA), 49 U. S. C. App. §1305(a)(1) (1988 ed.), which prohibits States from enacting or enforcing any law “relating to rates, routes, or services of any air carrier.” The plaintiffs in that case sought to bring a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, Ill. Comp. Stat., ch. 815, §505 (West 1992). Our conclusion that the state-law claim was pre-empted turned on the unusual breadth of the ADA’s pre-emption provision. We had previously held that the meaning of the key phrase in the ADA’s pre-emption provision, “ ‘relating to rates, routes, or services,’ ” is a broad one. Morales v. Trans World Airlines, Inc., 504 U. S. 374, 383–384 (1992) (emphasis added). Relying on precedents construing the pre-emptive effect of the same phrase in the Employee Retirement Income Security Act of 1974, 29 U. S. C. §1144(a), we concluded that the phrase “relating to” indicates Congress’ intent to pre-empt a large area of state law to further its purpose of deregulating the airline industry. 504 U. S., at 383–384.[35] Unquestionably, the phrase “relating to” has a broader scope than the Labeling Act’s reference to rules “based on” smoking and health; whereas “relating to” is synonymous with “having a connection with,” id., at 384, “based on” describes a more direct relationship, see Safeco Ins. Co. of America v. Burr, 551 U. S. ___, ___ (2007) (slip op., at 13) (“In common talk, the phrase ‘based on’ indicates a but-for causal relationship and thus a necessary logical condition”).

   Petitioners’ reliance on Riegel is similarly misplaced. The plaintiffs in Riegel sought to bring common-law design, manufacturing, and labeling defect claims against the manufacturer of a faulty catheter. The case presented the question whether those claims were expressly pre-empted by the Medical Device Amendments of 1976 (MDA), 21 U. S. C. §360c et seq. The MDA’s pre-emption clause provides that no State “ ‘may establish or continue in effect with respect to a device … any requirement’ relating to safety or effectiveness that is different from, or in addition to, federal requirements.” Riegel, 552 U. S., at ___ (slip op., at 14) (quoting 21 U. S. C. §360k(a); emphasis deleted).

   The catheter at issue in Riegel had received premarket approval from the Food and Drug Administration (FDA). We concluded that premarket approval imposes “requirement[s] relating to safety [and] effectiveness” because the FDA requires a device that has received premarket approval to be made with almost no design, manufacturing, or labeling deviations from the specifications in its approved application. The plaintiffs’ products liability claims fell within the core of the MDA’s pre-emption provision because they sought to impose different requirements on precisely those aspects of the device that the FDA had approved. Unlike the Cipollone plaintiff’s fraud claim, which fell outside of the Labeling Act’s pre-emptive reach because it did not seek to impose a prohibition “based on smoking and health,” the Riegel plaintiffs’ common-law products liability claims unquestionably sought to enforce “requirement[s] relating to safety or effectiveness” under the MDA. That the “relating to” language of the MDA’s pre-emption provision is, like the ADA’s, much broader than the operative language of the Labeling Act provides an additional basis for distinguishing Riegel. Thus, contrary to petitioners’ suggestion, Riegel is entirely consistent with our holding in Cipollone.

   In sum, we conclude now, as the plurality did in Cipollone, that “the phrase ‘based on smoking and health’ fairly but narrowly construed does not encompass the more general duty not to make fraudulent statements.” 505 U. S., at 529.


   As an alternative to their express pre-emption argument, petitioners contend that respondents’ claim is impliedly pre-empted because, if allowed to proceed, it would present an obstacle to a longstanding policy of the FTC. According to petitioners, the FTC has for decades promoted the development and consumption of low tar cigarettes and has encouraged consumers to rely on representations of tar and nicotine content based on Cambridge Filter Method testing in choosing among cigarette brands. Even if such a regulatory policy could provide a basis for obstacle pre-emption, petitioners’ description of the FTC’s actions in this regard are inaccurate. The Government itself disavows any policy authorizing the use of “light” and “low tar” descriptors. Brief for United States as Amicus Curiae 16–33.

   In 1966, following the publication of the Surgeon General’s report on smoking and health, the FTC issued an industry guidance stating its view that “a factual statement of the tar and nicotine content (expressed in milligrams) of the mainstream smoke from a cigarette,” as measured by Cambridge Filter Method testing, would not violate the FTC Act. App. 478a. The Commission made clear, however, that the guidance applied only to factual assertions of tar and nicotine yields and did not invite “collateral representations … made, expressly or by implication, as to reduction or elimination of health hazards.” Id., at 479a. A year later, the FTC reiterated its position in a letter to the National Association of Broadcasters. The letter explained that, as a “general rule,” the Commission would not challenge statements of tar and nicotine content when “they are shown to be accurate and fully substantiated by tests conducted in accordance with the [Cambridge Filter Method].” Id., at 368a. In 1970, the FTC considered providing further guidance, proposing a rule that would have required manufacturers to disclose tar and nicotine yields as measured by Cambridge Filter Method testing. 35 Fed. Reg. 12671. The leading cigarette manufacturers responded by submitting a voluntary agreement under which they would disclose tar and nicotine content in their advertising, App. 899a–900a, and the FTC suspended its rulemaking, 36 Fed. Reg. 784 (1971).

   Based on these events, petitioners assert that “the FTC has required tobacco companies to disclose tar and nicotine yields in cigarette advertising using a government-mandated testing methodology and has authorized them to use descriptors as shorthand references to those numerical test results.” Brief for Petitioners 2 (emphasis in original). As the foregoing history shows, however, the FTC has in fact never required that cigarette manufacturers disclose tar and nicotine yields, nor has it condoned representations of those yields through the use of “light” or “low tar” descriptors.

   Subsequent Commission actions further undermine petitioners’ claim. After the tobacco companies agreed to report tar and nicotine yields as measured by the Cambridge Filter Method, the FTC continued to police cigarette companies’ misleading use of test results. In 1983, the FTC responded to findings that tar and nicotine yields for Barclay cigarettes obtained through Cambridge Filter Method testing were deceptive because the cigarettes in fact delivered disproportionately more tar to smokers than other cigarettes with similar Cambridge Filter Method ratings. 48 Fed. Reg. 15954. And in 1995, the FTC found that a manufacturer’s representation “that consumers will get less tar by smoking ten packs of Carlton brand cigarettes than by smoking a single pack of the other brands” was deceptive even though it was based on the results of Cambridge Filter Method testing. In re American Tobacco Co., 119 F. T. C. 3, 4. The FTC’s conclusion was based on its recognition that, “[i]n truth and in fact, consumers will not necessarily get less tar” due to “such behavior as compensatory smoking.” Ibid.[36]

   This history shows that, contrary to petitioners’ suggestion, the FTC has no longstanding policy authorizing collateral representations based on Cambridge Filter Method test results. Rather, the FTC has endeavored to inform consumers of the comparative tar and nicotine content of different cigarette brands and has in some instances prevented misleading representations of Cambridge Filter Method test results. The FTC’s failure to require petitioners to correct their allegedly misleading use of “light” descriptors is not evidence to the contrary; agency nonenforcement of a federal statute is not the same as a policy of approval. Cf. Sprietsma v. Mercury Marine, 537 U. S. 51 (2002) (holding that the Coast Guard’s decision not to regulate propeller guards did not impliedly pre-empt petitioner’s tort claims).[37]

   More telling are the FTC’s recent statements regarding the use of “light” and “low tar” descriptors. In 1997, the Commission observed that “[t]here are no official definitions for” the terms “light” and “low tar,” and it sought comments on whether “there [is] a need for official guidance with respect to the terms” and whether “the descriptors convey implied health claims.” 62 Fed. Reg. 48163. In November 2008, following public notice and comment, the Commission rescinded its 1966 guidance concerning the Cambridge Filter Method. 73 Fed. Reg. 74500. The rescission is a response to “a consensus among the public health and scientific communities that the Cambridge Filter method is sufficiently flawed that statements of tar and nicotine yields as measured by that method are not likely to help consumers make informed decisions.” Id., at 74503. The Commission’s notice of its proposal to rescind the guidance also reiterated the original limits of that guidance, noting that it “only addresse[d] simple factual statements of tar and nicotine yields. It d[id] not apply to other conduct or express or implied representations, even if they concern[ed] tar and nicotine yields.” Id., at 40351.

   In short, neither the handful of industry guidances and consent orders on which petitioners rely nor the FTC’s inaction with regard to “light” descriptors even arguably justifies the pre-emption of state deceptive practices rules like the MUTPA.


   We conclude, as we did in Cipollone, that the Labeling Act does not pre-empt state-law claims like respondents’ that are predicated on the duty not to deceive. We also hold that the FTC’s various decisions with respect to statements of tar and nicotine content do not impliedly pre-empt respondents’ claim. Respondents still must prove that petitioners’ use of “light” and “lowered tar” descriptors in fact violated the state deceptive practices statute, but neither the Labeling Act’s pre-emption provision nor the FTC’s actions in this field prevent a jury from considering that claim. Accordingly, the judgment of the Court of Appeals is affirmed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Notes and Questions.

1.  What role do states play in determining the extent of preemption? Does the federal constitution contemplate any role for states in that context?  See Art. 1, Sec. 1. Might you characterize the role of states as more political than legal—that is, that the constitutional principle of supremacy, which “hard wired” in the Constitution, can be take state interests into account only through the collective consensus of states represented in Congress subject to interpretation by the federal courts?

The issue of regulatory preemption is especially sensitive in the early 21st century with respect to the use of federal regulation as a back door means of voiding state common law tort.  This is especially the case with respect to product liability.  See  The authors note, though,
Preemption is often expressed as an issue of federalism. There may be understandable backlash from state courts who might feel that decisions made by federal agencies should not tie their hands to decide common law claims. What should not be overlooked is that regardless of preemption, state court judges (and legislators) have the ability to consider a manufacturer or other party’s compliance with government regulations as fulfilling the standard of care, or supporting a presumption that a product is not defective.

For instance, a court may find in a specific case that the level of tension between a federal regulation or objective and a state tort claim does not rise to the level that requires preemption. Such a finding, however, is not the end of the inquiry as to whether a manufacturer or other defendant that met federal safety standards, or whose product was specifically approved or certified by a federal agency, should be subject to tort liability. State common law, statutes, and public policy considerations then come into play.

Id., 1226. In this way, one can see how the horizontal dimensions of the interplay between jusge administered law (common law and equity), statute, administrative regulation, and supervisory techniques, studied in Chapters 2-7, now acquire a vertical dimension as well in the United States, where the division of authority between the federal government and states, each empowered to produce law, may produce dissonance as well as coherence in law making.  It is generally left to the U.S. courts to sort these conflicts and develop standards to make the entire system of multiple legal sub-systems coherent.

2. In the case you have just read the Supreme Court applies the standards of preemption to determine the extent of federal displacement of state law.   In Hillsborough County v. Automated Med. Labs., Inc., 471 U.S. 707 (1985) the court described the standards of displacement in this way:

It is a familiar and well-established principle that the Supremacy Clause, U.S.Const., Art. VI, cl. 2, invalidates state laws that "interfere with, or are contrary to," federal law. Gibbon v. Ogden, 9 Wheat. 1, 22 U. S. 211 (1824) (Marshall, C.J.). Under the Supremacy Clause, federal law may supersede state law in several different ways. First, when acting within constitutional limits, Congress is empowered to preempt state law by so stating in express terms. Jones v. Rath Packing Co.,430 U. S. 519, 430 U. S. 525 (1977). In the absence of express preemptive language, Congress' intent to preempt all state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress "left no room" for supplementary state regulation. Rice v. Santa Fe Elevator Corp.,331 U. S. 218, 331 U. S. 230 (1947). Preemption of a whole field also will be inferred where the field is one in which "the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject." Ibid.; see Hines v. Davidowitz,312 U. S. 52 (1941).

Even where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises when "compliance with both federal and state regulations is a physical impossibility," Florida Lime & Avocado Growers, Inc. v. Paul,373 U. S. 132, 373 U. S. 142-143 (1963), or when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," Hines v. Davidowitz, supra, at 312 U. S. 67. See generally Capital Cities Cable, Inc. v. Crisp,467 U. S. 691, 467 U. S. 698-699 (1984).

Id., 712-713.  Which of these standards did the Supreme Court apply in the Altria Group?

3.  To what extent does the principle of supremacy, operationalized through the pre-emption principle, apply to federal regulation as well as federal statute? In Fidelity Federal Savings & Loan Assn. v. De la Cuesta, 458 U. S. 141 (1982) the Sup`reme Court noted that:

"Federal regulations have no less preemptive effect than federal statutes. Where Congress has directed an administrator to exercise his discretion, his judgments are subject to judicial review only to determine whether he has exceeded his statutory authority or acted arbitrarily. When the administrator promulgates regulations intended to preempt state law, the court's inquiry is similarly limited:"

"If [h]is choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned."

Id. at 458 U. S. 153-154, quoting United States v. Shimer,367 U. S. 374, 367 U. S. 383 (1961) (and cited with approval in Capital Cities Cable, Inc. v. Crisp,467 U. S. 691 (1984)).  Is an administrative agency’s decision about the scope of thr preemptive authority of its regulations subject to Chevron deference?

4. U.S. presidents have sought to manage the way in which federal agencies apply the pre-emption principle to their own quasi-legislative and executive powers by developing parameters and standards within which the use of federal preemption is constrained.  Consider this effort by the administration of President Obama:[38]


Office of the Press Secretary
For Immediate Release                       May 20, 2009

May 20, 2009


SUBJECT: Preemption

From our Nation's founding, the American constitutional order has been a Federal system, ensuring a strong role for both the national Government and the States. The Federal Government's role in promoting the general welfare and guarding individual liberties is critical, but State law and national law often operate concurrently to provide independent safeguards for the public. Throughout our history, State and local governments have frequently protected health, safety, and the environment more aggressively than has the national Government.

An understanding of the important role of State governments in our Federal system is reflected in longstanding practices by executive departments and agencies, which have shown respect for the traditional prerogatives of the States. In recent years, however, notwithstanding Executive Order 13132 of August 4, 1999 (Federalism), executive departments and agencies have sometimes announced that their regulations preempt State law, including State common law, without explicit preemption by the Congress or an otherwise sufficient basis under applicable legal principles.

The purpose of this memorandum is to state the general policy of my Administration that preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption. Executive departments and agencies should be mindful that in our Federal system, the citizens of the several States have distinctive circumstances and values, and that in many instances it is appropriate for them to apply to themselves rules and principles that reflect these circumstances and values. As Justice Brandeis explained more than 70 years ago, "[i]t is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country."

To ensure that executive departments and agencies include statements of preemption in regulations only when such statements have a sufficient legal basis:

1. Heads of departments and agencies should not include in regulatory preambles statements that the department or agency intends to preempt State law through the regulation except where preemption provisions are also included in the codified regulation.

2. Heads of departments and agencies should not include preemption provisions in codified regulations except where such provisions would be justified under legal principles governing preemption, including the principles outlined in Executive Order 13132.

3. Heads of departments and agencies should review regulations issued within the past 10 years that contain statements in regulatory preambles or codified provisions intended by the department or agency to preempt State law, in order to decide whether such statements or provisions are justified under applicable legal principles governing preemption. Where the head of a department or agency determines that a regulatory statement of preemption or codified regulatory provision cannot be so justified, the head of that department or agency should initiate appropriate action, which may include amendment of the relevant regulation.

Executive departments and agencies shall carry out the provisions of this memorandum to the extent permitted by law and consistent with their statutory authorities. Heads of departments and agencies should consult as necessary with the Attorney General and the Office of Management and Budget's Office of Information and Regulatory Affairs to determine how the requirements of this memorandum apply to particular situations.

This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

The Director of the Office of Management and Budget is authorized and directed to publish this memorandum in the Federal Register.


Do these instructions represent a political and policy determination that may be modified at will or does it suggest a more permanent, and structurally compelled approach? To what extent must or may the Courts give this memorandum weight in considering issues of pre-emption by administrative agencies? May Congress override these instructions through subsequent legislation?

5.  May Congress limit the authority of regulatory agencies to use their regulatory authority to preempt state law? Can Congress prohibit regulatory agencies from providing the courts with guidance as to the preemptive effects fi regulation? For an attempt, see Consumer Product Safety Improvement Act of 2008, Pub. L. No. 110-314, § 231(a), 122 Stat. 3016, 3070 (codified at 15 U.S.C. § 2051 note), which prohibited the Consumer Product Safety Commission from asserting preemption or providing an interpretation of the preemptive effect of its rules or regulations, especially as these might be used to determine the preemptive effects of these rules on state common or statutory law permitting damages for conduct that might also violate CPSC regulaitons.

IV. Problem

For many years federal and state courts were hostile to any form of dispute resolution that invoked procedures or institutions other than the courts. But courts can become congested and there had been a movement to permit alternative dispute resolution mechanisms to alleviate these problems, especially in connection with commercial transactions.  To that end, the Federal Arbitration Act (FAA), “An Act To make valid and enforceable written provisions or agreements for arbitration of disputes arising out of contracts, maritime transactions, or commerce among the States or Territories or with foreign nations,” was enacted in 1925.[39]  The FAA mandates judicial facilitation of arbitration when provided by parties through contract.

Relevant portions of the FAA provide:[40]

§ 2. A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

§ 3 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

§ 4 A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose. If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.

* * *

§ 6  Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided.

The scope of the preemption of state law under the FAA was considered in Southland Corp. v. Keating, 465 U.S. 1 (1984), in which the Supreme Court held that state franchising law that voided arbitration agreement was preempted under the FAA. In American Express Co. Et Al. v. Italian Colors Restaurant et al., 133 S.Ct. 2304 (2013), a majority of the Supreme Court provided further guidance on the scope of preemption when it applied an “‘overridden by a contrary congressional command,” standard to hold that the FAA does not permit judicial invalidation of a contractual waiver of class arbitration solely because the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.  In the process it narrowed the “effective vindication exception” to FAA preemption. Excerpts of both cases follow. 

Southland Corp. v. Keating
465 U.S. 1 (1984)
(some footnotes omitted and renumbered)

CHIEF JUSTICE BURGER delivered the opinion of the Court.

This case presents the questions (a) whether the California Franchise Investment Law, which invalidates certain arbitration agreements covered by the Federal Arbitration Act, violates the Supremacy Clause and (b) whether arbitration under the federal Act is impaired when a class action structure is imposed on the process by the state courts.

Appellant Southland Corp. is the owner and franchisor of 7-Eleven convenience stores. Southland's standard franchise agreement provides each franchisee with a license to use certain registered trademarks, a lease or sublease of a convenience store owned or leased by Southland, inventory financing, and assistance in advertising and merchandising. The franchisees operate the stores, supply bookkeeping data, and pay Southland a fixed percentage of gross profits. The franchise agreement also contains the following provision requiring arbitration:

"Any controversy or claim arising out of or relating to this Agreement or the breach hereof shall be settled by arbitration in accordance with the Rules of the American Arbitration Association . . . and judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof."

Appellees are 7-Eleven franchisees. Between September, 1975, and January, 1977, several appellees filed individual actions against Southland in California Superior Court alleging, among other things, fraud, oral misrepresentation, breach of contract, breach of fiduciary duty, and violation of the disclosure requirements of the California Franchise Investment Law, Cal.Corp.Code Ann. § 31000 et seq. (West 1977). Southland's answer, in all but one of the individual actions, included the affirmative defense of failure to arbitrate.

In May 1977, appellee Keating filed a class action against Southland on behalf of a class that assertedly includes approximately 800 California franchisees. Keating's principal claims were substantially the same as those asserted by the other franchisees. After the various actions were consolidated, Southland petitioned to compel arbitration of the claims in all cases, and appellees moved for class certification.

The Superior Court granted Southland's motion to compel arbitration of all claims except those claims based on the Franchise Investment Law. The court did not pass on appellees' request for class certification. Southland appealed from the order insofar as it excluded from arbitration the claims based on the California statute. Appellees filed a petition for a writ of mandamus or prohibition in the California Court of Appeal arguing that the arbitration should proceed as a class action.

The California Court of Appeal reversed the trial court's refusal to compel arbitration of appellees' claims under the Franchise Investment Law. Keating v. Superior Court, Alameda County, 167 Cal.Rptr. 481 (1980). That court interpreted the arbitration clause to require arbitration of all claims asserted under the Franchise Investment Law, and construed the Franchise Investment Law not to invalidate such agreements to arbitrate.[41] Alternatively, the court concluded that, if the Franchise Investment Law rendered arbitration agreements involving commerce unenforceable, it would conflict with § 2 of the Federal Arbitration Act, 9 U.S.C. § 2, and therefore be invalid under the Supremacy Clause. 167 Cal.Rptr. at 493-494. The Court of Appeal also determined that there was no "insurmountable obstacle" to conducting an arbitration on a classwide basis, and issued a writ of mandate directing the trial court to conduct class certification proceedings. Id. at 492.

The California Supreme Court, by a vote of 4-2, reversed the ruling that claims asserted under the Franchise Investment Law are arbitrable. Keating v. Superior Court of Alameda County, 31 Cal.3d 584, 645 P.2d 1192 (1982). The California Supreme Court interpreted the Franchise Investment Law to require judicial consideration of claims brought under that statute, and concluded that the California statute did not contravene the federal Act. Id. at 604, 645 P.2d 1203-1204. The court also remanded the case to the trial court for consideration of appellees' request for classwide arbitration.

We postponed consideration of the question of jurisdiction pending argument on the merits. 459 U.S. 1101 (1983). We reverse in part and dismiss in part.


Jurisdiction of this Court is asserted under 28 U.S.C. § 1257(2), which provides for an appeal from a final judgment of the highest court of a state when the validity of a challenged state statute is sustained as not in conflict with federal law. Here Southland challenged the California Franchise Investment Law as it was applied to invalidate a contract for arbitration made pursuant to the Federal Arbitration Act. Appellees argue that the action of the California Supreme Court with respect to this claim is not a "final judgment or decree" within the meaning of § 1257(2).

Under Cox Broadcasting Corp. v. Cohn,420 U. S. 469, 420 U. S. 482-483 (1975), judgments of state courts that finally decide a federal issue are immediately appealable when

"the party seeking review here might prevail [in the state court] on the merits on nonfederal grounds, thus rendering unnecessary review of the federal issue by this Court, and where reversal of the state court on the federal issue would be preclusive of any further litigation on the relevant cause of action. . . ."

In these circumstances, we have resolved the federal issue "if a refusal immediately to review the state court decision might seriously erode federal policy." Id. at 420 U. S. 483.

The judgment of the California Supreme Court with respect to this claim is reviewable under Cox Broadcasting, supra. Without immediate review of the California holding by this Court, there may be no opportunity to pass on the federal issue, and as a result "there would remain in effect the unreviewed decision of the State Supreme Court" holding that the California statute does not conflict with the Federal Arbitration Act. Id. at 420 U. S. 485. On the other hand, reversal of a state court judgment in this setting will terminate litigation of the merits of this dispute.

Finally, the failure to accord immediate review of the decision of the California Supreme Court might "seriously erode federal policy." Plainly, the effect of the judgment of the California court is to nullify a valid contract made by private parties under which they agreed to submit all contract disputes to final, binding arbitration. The federal Act permits "parties to an arbitrable dispute [to move] out of court and into arbitration as quickly and easily as possible." Moses H. Cone Memorial Hospital v. Mercury Construction Corp.,460 U. S. 1, 460 U. S. 22 (1983).

Contracts to arbitrate are not to be avoided by allowing one party to ignore the contract and resort to the courts. Such a course could lead to prolonged litigation, one of the very risks the parties, by contracting for arbitration, sought to eliminate. In The Bremen v. Zapata Off-Shore Co.,407 U. S. 1, 407 U. S. 12 (1972), we noted that the contract fixing a particular forum for resolution of all disputes

"was made in an arm's-length negotiation by experienced and sophisticated businessmen, and absent some compelling and countervailing reason, it should be honored by the parties and enforced by the courts."

The Zapata Court also noted that

"the forum clause was a vital part of the agreement, and it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations."

Id. at 407 U. S. 14 (footnote omitted).

For us to delay review of a state judicial decision denying enforcement of the contract to arbitrate until the state court litigation has run its course would defeat the core purpose of a contract to arbitrate. We hold that the Court has jurisdiction to decide whether the Federal Arbitration Act preempts § 31512 of the California Franchise Investment Law.


That part of the appeal relating to the propriety of superimposing class action procedures on a contract arbitration raises other questions. Southland did not contend in the California courts that, and the state courts did not decide whether, state law imposing class action procedures was preempted by federal law. When the California Court of Appeal directed Southland to address the question whether state or federal law controlled the class action issue, Southland responded that state law did not permit arbitrations to proceed as class actions, that the Federal Rules of Civil Procedure were inapplicable, and that requiring arbitrations to proceed as class actions "could well violate the [federal] constitutional guaranty of procedural due process."[42] Southland did not claim in the Court of Appeal that, if state law required class action procedures, it would conflict with the federal Act, and thus violate the Supremacy Clause.

In the California Supreme Court, Southland argued that California law applied, but that neither the contract to arbitrate nor state law authorized class action procedures to govern arbitrations. Southland also contended that the Federal Rules were inapplicable in state proceedings. Southland pointed out that, although California law provided a basis for class action procedures, the Judicial Council of California acknowledged "the incompatibility of class actions and arbitration." Petition for Hearing 23. It does not appear that Southland opposed class procedures on federal grounds in the California Supreme Court. Nor does the record show that the California Supreme Court passed upon the question whether superimposing class action procedures on a contract arbitration was contrary to the federal Act.[43]

Since it does not affirmatively appear that the validity of the state statute was "drawn in question" on federal grounds by Southland, this Court is without jurisdiction to resolve this question as a matter of federal law under 28 U.S.C. § 1257(2). See Bailey v. Anderson, 326 U. S. 203, 326 U. S. 207 (1945)


As previously noted, the California Franchise Investment Law provides:

"Any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of this law or any rule or order hereunder is void."

Cal.Corp.Code Ann. § 31512 (West 1977). The California Supreme Court interpreted this statute to require judicial consideration of claims brought under the state statute, and accordingly refused to enforce the parties' contract to arbitrate such claims. So interpreted, the California Franchise Investment Law directly conflicts with § 2 of the Federal Arbitration Act, and violates the Supremacy Clause.

In enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration. The Federal Arbitration Act provides:

"A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

9 U.S.C. § 2. Congress has thus mandated the enforcement of arbitration agreements.

We discern only two limitations on the enforceability of arbitration provisions governed by the Federal Arbitration Act: they must be part of a written maritime contract or a contract "evidencing a transaction involving commerce,"[44] and such clauses may be revoked upon "grounds as exist at law or in equity for the revocation of any contract." We see nothing in the Act indicating that the broad principle of enforceability is subject to any additional limitations under state law.

The Federal Arbitration Act rests on the authority of Congress to enact substantive rules under the Commerce Clause. In Prima Paint Corp. v. Flood & Conklin Mfg. Co.,388 U. S. 395 (1967), the Court examined the legislative history of the Act and concluded that the statute "is based upon . . . the incontestable federal foundations of control over interstate commerce and over admiralty.'" Id. at 388 U. S. 405 (quoting H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924)). The contract in Prima Paint, as here, contained an arbitration clause. One party in that case alleged that the other had committed fraud in the inducement of the contract, although not of the arbitration clause in particular, and sought to have the claim of fraud adjudicated in federal court. The Court held that, notwithstanding a contrary state rule, consideration of a claim of fraud in the inducement of a contract "is for the arbitrators, and not for the courts," 388 U.S. at 388 U. S. 400. The Court relied for this holding on Congress' broad power to fashion substantive rules under the Commerce Clause.

At least since 1824, Congress' authority under the Commerce Clause has been held plenary. Gibbons v. Ogden, 9 Wheat. 1, 22 U. S. 196 (1824). In the words of Chief Justice Marshall, the authority of Congress is "the power to regulate; that is, to prescribe the rule by which commerce is to be governed." Ibid. The statements of the Court in Prima Paint that the Arbitration Act was an exercise of the Commerce Clause power clearly implied that the substantive rules of the Act were to apply in state as well as federal courts. As Justice Black observed in his dissent, when Congress exercises its authority to enact substantive federal law under the Commerce Clause, it normally creates rules that are enforceable in state as well as federal courts. Prima Paint, supra, at 388 U. S. 420.

In Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. at 460 U. S. 1, 460 U. S. 25, and n. 32, we reaffirmed our view that the Arbitration Act "creates a body of federal substantive law," and expressly stated what was implicit in Prima Paint, i.e., the substantive law the Act created was applicable in state and federal courts. Moses H. Cone began with a petition for an order to compel arbitration. The District Court stayed the action pending resolution of a concurrent state court suit. In holding that the District Court had abused its discretion, we found no showing of exceptional circumstances justifying the stay, and recognized "the presence of federal law issues" under the federal Act as "a major consideration weighing against surrender [of federal jurisdiction]." 460 U.S. at 460 U. S. 26. We thus read the underlying issue of arbitrability to be a question of substantive federal law: "Federal law in the terms of the Arbitration Act governs that issue in either state or federal court." Id. at 460 U. S. 24.

Although the legislative history is not without ambiguities, there are strong indications that Congress had in mind something more than making arbitration agreements enforceable only in the federal courts. The House Report plainly suggests the more comprehensive objectives:

"The purpose of this bill is to make valid and enforcible [sic] agreements for arbitration contained in contracts involving interstate commerce or within the jurisdiction or [sic] admiralty, or which may be the subject of litigation in the Federal courts."

H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924) (emphasis added).

This broader purpose can also be inferred from the reality that Congress would be less likely to address a problem whose impact was confined to federal courts than a problem of large significance in the field of commerce. The Arbitration Act sought to "overcome the rule of equity that equity will not specifically enforce an[y] arbitration agreement." Hearing on S. 4213 and S. 4214 before a Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th Sess., 6 (1923) (Senate Hearing) (remarks of Sen. Walsh). The House Report accompanying the bill stated:

"The need for the law arises from . . . the jealousy of the English courts for their own jurisdiction. . . . This jealousy survived for so lon[g] a period that the principle became firmly embedded in the English common law, and was adopted with it by the American courts. The courts have felt that the precedent was too strongly fixed to be overturned without legislative enactment. . . ."

H.R.Rep. No. 96, supra, at 1-2.

Surely this makes clear that the House Report contemplated a broad reach of the Act, unencumbered by state law constraints. As was stated in Metro Industrial Painting Corp. v. Terminal Construction Co., 287 F.2d 382, 387 (CA2 1961) (Lumbard, C.J., concurring),

"the purpose of the act was to assure those who desired arbitration and whose contracts related to interstate commerce that their expectations would not be undermined by federal judges, or . . . by state courts or legislatures."

Congress also showed its awareness of the widespread unwillingness of state courts to enforce arbitration agreements, e.g., Senate Hearing, at 8, and that such courts were bound by state laws inadequately providing for

"technical arbitration by which, if you agree to arbitrate under the method provided by the statute, you have an arbitration by statute[;] but [the statutes] ha[d] nothing to do with validating the contract to arbitrate."

Ibid. The problems Congress faced were therefore twofold: the old common law hostility toward arbitration, and the failure of state arbitration statutes to mandate enforcement of arbitration agreements. To confine the scope of the Act to arbitrations sought to be enforced in federal courts would frustrate what we believe Congress intended to be a broad enactment appropriate in scope to meet the large problems Congress was addressing.

JUSTICE O'CONNOR argues that Congress viewed the Arbitration Act "as a procedural statute, applicable only in federal courts." Post at 465 U. S. 25. If it is correct that Congress sought only to create a procedural remedy in the federal courts, there can be no explanation for the express limitation in the Arbitration Act to contracts "involving commerce." 9 U.S.C. § 2. For example, when Congress has authorized this Court to prescribe the rules of procedure in the federal courts of appeals, district courts, and bankruptcy courts, it has not limited the power of the Court to prescribe rules applicable only to causes of action involving commerce. See, e.g., 28 U.S.C. §§ 2072, 2075, 2076 (1976 ed. and Supp. V). We would expect that, if Congress, in enacting the Arbitration Act, was creating what it thought to be a procedural rule applicable only in federal courts, it would not so limit the Act to transactions involving commerce. On the other hand, Congress would need to call on the Commerce Clause if it intended the Act to apply in state courts. Yet at the same time, its reach would be limited to transactions involving interstate commerce. We therefore view the "involving commerce" requirement in § 2, not as an inexplicable limitation on the power of the federal courts, but as a necessary qualification on a statute intended to apply in state and federal courts.

Under the interpretation of the Arbitration Act urged by JUSTICE O'CONNOR, claims brought under the California Franchise Investment Law are not arbitrable when they are raised in state court. Yet it is clear beyond question that, if this suit had been brought as a diversity action in a federal district court, the arbitration clause would have been enforceable. Prima Paint, supra. The interpretation given to the Arbitration Act by the California Supreme Court would therefore encourage and reward forum shopping. We are unwilling to attribute to Congress the intent, in drawing on the comprehensive powers of the Commerce Clause, to create a right to enforce an arbitration contract and yet make the right dependent for its enforcement on the particular forum in which it is asserted. And since the overwhelming proportion of all civil litigation in this country is in the state courts,[45] we cannot believe Congress intended to limit the Arbitration Act to disputes subject only to federal court jurisdiction.[46] Such an interpretation would frustrate congressional intent to place "[a]n arbitration agreement . . . upon the same footing as other contracts, where it belongs." H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924).

In creating a substantive rule applicable in state as well as federal courts,[47] Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements.[48]  We hold that § 31512 of the California Franchise Investment Law violates the Supremacy Clause.

The judgment of the California Supreme Court denying enforcement of the arbitration agreement is reversed; as to the question whether the Federal Arbitration Act precludes a class action arbitration and any other issues not raised in the California courts, no decision by this Court would be appropriate at this time. As to the latter issues, the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.


American Express Co. Et Al. v. Italian Colors Restaurant et al.,
133 S.Ct. 2304 (2013)
(some footnotes omitted or renumbered)

Justice Scalia delivered the opinion of the Court.

We consider whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.


Respondents are merchants who accept American Express cards. Their agreement with petitioners—American Express and a wholly owned subsidiary—contains a clause that requires all disputes between the parties to be resolved by arbitration. The agreement also provides that “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.” In re American Express Merchants’ Litigation, 667 F. 3d 204, 209 (CA2 2012).

Respondents brought a class action against petitioners for violations of the federal antitrust laws. According to respondents, American Express used its monopoly power in the market for charge cards to force merchants to accept credit cards at rates approximately 30% higher than the fees for competing credit cards. This tying arrangement, respondents said, violated §1 of the Sherman Act. They sought treble damages for the class under §4 of the Clayton Act.

Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq. In resisting the motion, respondents submitted a declaration from an economist who estimated that the cost of an expert analysis necessary to prove the antitrust claims would be “at least several hundred thousand dollars, and might exceed $1 million,” while the maximum recovery for an individual plaintiff would be $12,850, or $38,549 when trebled. App. 93. The District Court granted the motion and dismissed the lawsuits. The Court of Appeals reversed and remanded for further proceedings. It held that because respondents had established that “they would incur prohibitive costs if compelled to arbitrate under the class action waiver,” the waiver was un-enforceable and the arbitration could not proceed. In re American Express Merchants’ Litigation, 554 F. 3d 300, 315–316 (CA2 2009).

We granted certiorari, vacated the judgment, and remanded for further consideration in light of Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010) , which held that a party may not be compelled to submit to class arbitration absent an agreement to do so. American Express Co. v. Italian Colors Restaurant, 559 U. S. 1103 (2010) . The Court of Appeals stood by its reversal, stating that its earlier ruling did not compel class arbitration. In re American Express Merchants’ Litigation, 634 F. 3d 187, 200 (CA2 2011). It then sua sponte reconsidered its ruling in light of AT&T Mobility LLC v. Concepcion, 563 U. S. ___ (2011), which held that the FAA pre-empted a state law barring enforcement of a class-arbitration waiver. Finding AT&T Mobility inapplicable because it addressed pre-emption, the Court of Appeals reversed for the third time. 667 F. 3d, at 213. It then denied rehearing enbanc with five judges dissenting. In re American Express Merchants’ Litigation, 681 F. 3d 139 (CA2 2012). We granted certiorari, 568 U. S. ___ (2012), to consider the question “[w]hether the Federal Arbitration Act permits courts . . . to invalidate arbitration agreements on the ground that they do not permit class arbitration of afederal-law claim,” Pet. for Cert. i.


Congress enacted the FAA in response to widespread judicial hostility to arbitration.

* * *

This text reflects the overarching principle that arbitration is a matter of contract. See Rent-A-Center, West, Inc. v. Jackson, 561 U. S. ___, ___ (2010) (slip op., at 3). And consistent with that text, courts must “rigorously enforce” arbitration agreements according to their terms, Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 221 (1985) , including terms that “specify with whom [the parties] choose to arbitrate their disputes,” Stolt-Nielsen, supra, at 683, and “the rules under which that arbitration will be conducted,” Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 479 (1989) . That holds true for claims that allege a violation of a federal statute, unless the FAA’s mandate has been “ ‘overridden by a contrary congressional command.’ ” CompuCredit Corp. v. Greenwood, 565 U. S. ___, ___ (2012) (slip op., at 2–3) (quoting Shearson/American Express Inc. v. McMahon, 482 U. S. 220, 226 (1987) ).


No contrary congressional command requires us to reject the waiver of class arbitration here. Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim. Congress has taken some measures to facilitate the litigation of antitrust claims—for example, it enacted a multiplied-damages remedy. See 15 U. S. C. §15 (treble damages). In enacting such measures, Congress has told us that it is willing to go, in certain respects, beyond the normal limits of law in advancing its goals of deterring and remedying unlawful trade practice. But to say that Congress must have intended whatever departures from those normal limits advance antitrust goals is simply irrational. “[N]o legislation pursues its purposes at all costs.” Rodriguez v. United States, 480 U. S. 522–526 (1987) (per curiam).

The antitrust laws do not “evinc[e] an intention to preclude a waiver” of class-action procedure. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 628 (1985) . The Sherman and Clayton Acts make no mention of class actions. In fact, they were enacted decades before the advent of Federal Rule of Civil Procedure 23, which was “designed to allow an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Califano v. Yamasaki, 442 U. S. 682–701 (1979). The parties here agreed to arbitrate pursuant to that “usual rule,” and it would be remarkable for a court to erase that expectation.

Nor does congressional approval of Rule 23 establish an entitlement to class proceedings for the vindication of statutory rights. To begin with, it is likely that such an entitlement, invalidating private arbitration agreements denying class adjudication, would be an “abridg[ment]” or modif[ication]” of a “substantive right” forbidden to the Rules, see 28 U. S. C. §2072(b). But there is no evidence of such an entitlement in any event. The Rule imposes stringent requirements for certification that in practice exclude most claims. And we have specifically rejected the assertion that one of those requirements (the class-notice requirement) must be dispensed with because the “prohibitively high cost” of compliance would “frustrate [plain-tiff’s] attempt to vindicate the policies underlying the antitrust” laws. Eisen v. Carlisle & Jacquelin, 417 U. S. 156–168, 175–176 (1974). One might respond, perhaps, that federal law secures a nonwaivable opportunity to vindicate federal policies by satisfying the procedural strictures of Rule 23 or invoking some other informal class mechanism in arbitration. But we have already rejected that proposition in AT&T Mobility, 563 U. S., at ___ (slip op., at 9).


Our finding of no “contrary congressional command” does not end the case. Respondents invoke a judge-made exception to the FAA which, they say, serves to harmonize competing federal policies by allowing courts to invalidate agreements that prevent the “effective vindication” of a federal statutory right. Enforcing the waiver of class arbitration bars effective vindication, respondents contend, because they have no economic incentive to pursue their antitrust claims individually in arbitration.

The “effective vindication” exception to which respondents allude originated as dictum in Mitsubishi Motors, where we expressed a willingness to invalidate, on “public policy” grounds, arbitration agreements that “operat[e] . . . as a prospective waiver of a party’s right to pursue statutory remedies.” 473 U. S., at 637, n. 19 (emphasis added). Dismissing concerns that the arbitral forum was inadequate, we said that “so long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.” Id., at 637. Subsequent cases have similarly asserted the existence of an “effective vindication” exception, see, e.g., 14 Penn Plaza LLC v. Pyett, 556 U. S. 247–274 (2009); Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 28 (1991) , but have similarly declined to apply it to invalidate the arbitration agreement at issue.[49]

And we do so again here. As we have described, the exception finds its origin in the desire to prevent “prospective waiver of a party’s right to pursue statutory remedies,” Mitsubishi Motors, supra, at 637, n. 19 (emphasis added). That would certainly cover a provision in an arbitration agreement forbidding the assertion of certain statutory rights. And it would perhaps cover filing and administrative fees attached to arbitration that are so high as to make access to the forum impracticable. See Green Tree Financial Corp.-Ala. v. Randolph, 531 U. S. 79, 90 (2000) (“It may well be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights”). But the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy. See 681 F. 3d, at 147 (Jacobs, C. J., dissenting from denial of rehearing en banc).[50] The class-action waiver merely limits arbitration to the two contracting parties. It no more eliminates those parties’ right to pursue their statutory remedy than did federal law before its adoption of the class action for legal relief in 1938, see Fed. Rule Civ. Proc. 23, 28 U. S. C., p. 864 (1938 ed., Supp V); 7A C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §1752, p. 18 (3d ed. 2005). Or, to put it differently, the individual suit that was considered adequate to assure “effective vindication” of a federal right before adoption of class-action procedures did not suddenly become “ineffective vindication” upon their adoption.[51]

A pair of our cases brings home the point. In Gilmer, supra, we had no qualms in enforcing a class waiver in an arbitration agreement even though the federal statute at issue, the Age Discrimination in Employment Act, expressly permitted collective actions. We said that statutory permission did “ ‘not mean that individual attempts at conciliation were intended to be barred.’ ” Id., at 32. And in Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U. S. 528 (1995) , we held that requiring arbitration in a foreign country was compatible with the federal Carriage of Goods by Sea Act. That legislation prohibited any agreement “ ‘relieving’ ” or “ ‘lessening’ ” the liability of a carrier for damaged goods, id., at 530, 534 (quoting 46 U. S. C. App. §1303(8) (1988 ed.))—which is close to codification of an “effective vindication” exception. The Court rejected the argument that the “inconvenience and costs of proceeding” abroad “lessen[ed]” the defendants’ liability, stating that “[i]t would be unwieldy and unsupported by the terms or policy of the statute to require courts to proceed case by case to tally the costs and burdens to particular plaintiffs in light of their means, the size of their claims, and the relative burden on the carrier.” 515 U. S., at 532, 536. Such a “tally[ing] [of] the costs and burdens” is precisely what the dissent would impose upon federal courts here. * * *

*  *  *

The regime established by the Court of Appeals’ decision would require—before a plaintiff can be held to contractually agreed bilateral arbitration—that a federal court determine (and the parties litigate) the legal requirements for success on the merits claim-by-claim and theory-by-theory, the evidence necessary to meet those requirements, the cost of developing that evidence, and the damages that would be recovered in the event of success. Such a preliminary litigating hurdle would undoubtedly destroy the prospect of speedy resolution that arbitration in general and bilateral arbitration in particular was meant to secure. The FAA does not sanction such a judicially created superstructure.

The judgment of the Court of Appeals is reversed.

It is so ordered.


You represent a local bakery, Dough Corp. (“DC”), a corporation organized under the laws of State Y.  DC delivers pizza dough to local pizzerias.  DC has entered into dough delivery agreements with each of these pizzerias.  The agreements each provides that DC will supply the pizzeria with a set minimum quantity of dough of pizza quality each week for two years. The agreement can be terminated at the end of the term of the agreement.  Each also contain the same arbitration clause.  The arbitration clause includes the following provision, “[t]here shall be no right or authority for any party to assert a defense of laches in any arbitration and neither party shall assert any claim for anticipated future lost profits.”·

Under the laws of State Y, laches may be asserted by any party to a contract dispute. State Y has also enacted a statute that provides that in any action for breach of contract, the aggrieved party shall be entitled to anticipated future lost profits.  Moreover, last year State Y enacted the “Save Our Courts Act,” which, among other things, prohibited the enforcement of arbitration agreements for contracts where any of the parties allege any equitable claims or defenses.  There is no statute of limitations for contract claims in State Y.

DC had been having trouble with one of its customers, Pizzeria. When DC delivered the first order of dough Pizzeria complained that it was of inferior quality and Pizzeria refused to pay.  DC then refused to deliver more dough. Both parties argued that each had breached their agreement. DC waited 2 years before bringing a claim against Pizzeria for breach of contract. Pizzeria has raised the defense of laches and unclean hands in the arbitration. 

Pizzeria has also asserted a claim for future lost profits based on lost sales resulting from what Pizzeria asserts was bad DC dough.  Because DC had cut off dough supplies Pizzeria lost sales until it was able to secure an alternative supplier out of state and at great additional expense. The claim was filed in the state courts of State Y.  DC has moved to dismiss the suit on the basis of the arbitration clause.   

You are the law clerk to the judge who is hearing this case.  She wants to know how she should rule on the motion to dismiss.  Please prepare a one page bench memo outlining whether the dispute between Pizzeria and DC must be arbitrated and the extent to which the FAA preempts conflicting state law. 

[6] Deutscher Bundstag, Legal Framework for the German Parliament, The Basic Law, available .
[7] Deutscher Bundestag, Function and Role, available
[26] The MUTPA provides, as relevant, that “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful.” §207. In construing that section, courts are to “be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to Section 45(a)(1) of the Federal Trade Commission Act (15 United States Code 45(a)(1)), as from time to time amended.” §207(1).
[27] The Cambridge Filter Method weighs and measures the tar and nicotine collected by a smoking machine that takes 35 milliliter puffs of two seconds’ duration every 60 seconds until the cigarette is smoked to a specified butt length. App. 294a, 668a. As discussed below, the Federal Trade Commission (FTC or Commission) signaled in 1966 that the Cambridge Filter Method was an acceptable means of measuring the tar and nicotine content of cigarettes, but it never required manufacturers to publish test results in their advertisements.
[28] Pub. L. 91–222, 84 Stat. 87. Though actually enacted in 1970, Congress directed that it be cited as a “1969 Act.”
[29] Comprehensive Smoking Education Act, Pub. L. 98–474, §4(a), 98 Stat. 2201, 15 U. S. C. §1333(a).
[30] Petitioners also urge us to find support for their claim that Congress gave the FTC exclusive authority to police deceptive health-related claims in cigarette advertising in what they refer to as the Labeling Act’s “saving clause.” The clause provides that, apart from the warning requirement, nothing in the Act “shall be construed to limit, restrict, expand, or otherwise affect the authority of the Federal Trade Commission with respect to unfair or deceptive acts or practices in the advertising of cigarettes.” §1336. A plurality of this Court has previously read this clause to “indicat[e] that Congress intended the phrase ‘relating to smoking and health’ … to be construed narrowly, so as not to proscribe the regulation of deceptive advertising.” Cipollone v. Liggett Group, Inc.,505 U. S. 504, 528–529 (1992). Nothing in the clause suggests that Congress meant to proscribe the States’ historic regulation of deceptive advertising practices. The FTC has long depended on cooperative state regulation to achieve its mission because, although one of the smallest administrative agencies, it is charged with policing an enormous amount of activity. See 1 S. Kanwit, Federal Trade Commission §§1:1, 1:2 (2004 ed. and Supp. 2008). Moreover, when the Labeling Act was amended in 1969 it was not even clear that the FTC possessed rulemaking authority, see 84 Stat. 89, making it highly unlikely that Congress would have intended to assign exclusively to the FTC the substantial task of overseeing deceptive practices in cigarette advertisements.
[31] In his dissent, Justice Thomas criticizes our reliance on the plurality opinion in Cipollone, post, at 6–8, 14–19, 22, and advocates adopting the analysis set forth by Justice Scalia in his opinion concurring in the judgment in part and dissenting in part in that case, post, at 3–6, 19–21. But Justice Scalia’s approach was rejected by seven Members of the Court, and in the almost 17 years since Cipollone was decided Congress has done nothing to indicate its approval of that approach. Moreover, Justice Thomas fails to explain why Congress would have intended the result that Justice Scalia’s approach would produce—namely, permitting cigarette manufacturers to engage in fraudulent advertising. As a majority of the Court concluded in Cipollone,nothing in the Labeling Act’s language or purpose supports that result.
[32] The Cipollone plurality further stated that the warning neutralization claim was “merely the converse of a state-law requirement that warnings be included in advertising and promotional materials,” 505 U. S., at 527, evincing the plurality’s recognition that warning neutralization and failure-to-warn claims are two sides of the same coin. Justice Thomas’ criticism of the plurality’s treatment of the failure-to-warn claim, post, at 16, is beside the point, as no such claim is at issue in this litigation.
[33] Justice Thomas contends that respondents’ fraud claim must be pre-empted because “[a] judgment in [their] favor will … result in a ‘requirement’ that petitioners represent the effects of smoking on health in a particular way in their advertising and promotion of light cigarettes.” Post, at 3. He further asserts that “respondents seek to require the cigarette manufacturers to provide additional warnings about compensatory behavior, or to prohibit them from selling these products with the ‘light’ or ‘low-tar’ descriptors.” Post, at 20. But this mischaracterizes the relief respondents seek. If respondents prevail at trial, petitioners will be prohibited from selling as “light” or “low tar” only those cigarettes that are not actually light and do not actually deliver less tar and nicotine. Barring intervening federal regulation, petitioners would remain free to make nonfraudulent use of the “light” and “low-tar” descriptors.
[34] In implementing the MUTPA, neither the state legislature nor the state attorney general has enacted a set of special rules or guidelines targeted at cigarette advertising. As we noted in Cipollone, it was the threatened enactment of new state warning requirements rather than the enforcement of pre-existing general prohibitions against deceptive practices that prompted congressional action in 1969. 505 U. S., at 515, and n. 11.
[35] Petitioners also point to Morales as evidence that our decision in Cipollone was wrong. But Morales predated Cipollone,and it is in any event even more easily distinguishable from this case than American Airlines, Inc. v. Wolens, 513 U. S.219 (1995). At issue in Morales were guidelines regarding the form and substance of airline fare advertising implemented by the National Association of Attorneys General to give content to state deceptive practices rules. 504 U. S., at 379. Like the regulations at issue in Reilly, the guidelines were industry-specific directives that targeted the subject matter made off-limits by the ADA’s express pre-emption provisions. See also Rowe v. New Hampshire Motor Transp. Assn., 552 U. S. ___ (2008) (holding that targeted ground carrier regulations were pre-empted by a statute modeled on the ADA).
[36] In a different action, the FTC charged a cigarette manufacturer with violating the FTC Act by misleadingly advertising certain brands as “low in tar” even though they had a higher-than-average tar rating. See In re American Brands, Inc., 79 F. T. C. 255 (1971). The Commission and the manufacturer entered a consent order that prevented the manufacturer from making any such representations unless they were accompanied by a clear and conspicuous disclosure of the cigarettes’ tar and nicotine content as measured by the Cambridge Filter Method. Id., at 258. Petitioners offer this consent order as evidence that the FTC authorized the use of “light” and “low tar” descriptors as long as they accurately describe Cambridge Filter Method test results. As the Government observes, however, the decree only enjoined conduct. Brief for United States as Amicus Curiae 26. And a consent order is in any event only binding on the parties to the agreement. For all of these reasons, the consent order does not support the conclusion that respondents’ claim is impliedly pre-empted.
[37] It seems particularly inappropriate to read a policy of authorization into the FTC’s inaction when that inaction is in part the result of petitioners’ failure to disclose study results showing that Cambridge Filter Method test results do not reflect the amount of tar and nicotine that consumers of “light” cigarettes actually inhale. See id., at 8–11.
[39] Pub.L. 68–401, 43 Stat. 883, 9 U.S.C. §§ 1 et seq. as amended.
[40] 9 U.S.C. §§ 1-16.  Available
[41] California Corp. Code Ann. § 31512 (West 1977) provides:
"Any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of this law or any rule or order hereunder is void."

[42] Supplemental Memorandum of Points and Authorities in Opposition to Petition for Writs of Mandate or Prohibition in Civ. No. 46162 (Ct.App.Cal., 1st App.Dist.), pp.19-26.
[43] The California Supreme Court cited "[a]nalogous authority" supporting consolidation of arbitration proceedings by federal courts. 31 Cal.3d at 611-612, 645 P.2d at 1208. E.g., Compania Espanola de Petroleo, S. A. v. Nereus Shipping, S. A., 527 F.2d 966, 975 (CA2 1975), cert. denied, 426 U.S. 936 (1976); In re Czarnikow-Rionda Co., 512 F.Supp. 1308, 1309 (SDNY 1981). This, along with support by other state courts and the California Legislature for consolidation of arbitration proceedings, permitted the court to conclude that class action proceedings were authorized:
"It is unlikely that the state Legislature in adopting the amendment to the Arbitration Act authorizing consolidation of arbitration proceedings, intended to preclude a court from ordering classwide arbitration in an appropriate case. We conclude that a court is not without authority to do so."
31 Cal.3d at 613, 645 P.2d at 1209. The California Supreme Court thus ruled that imposing a class action structure on the arbitration process was permissible as a matter of state law.

[44] We note that, in defining "commerce," Congress declared that
"nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

[45] It is estimated that 2% of all civil litigation in this country is in the federal courts. Annual Report of the Director of the Administrative Office of the U.S. Courts 3 (1982) (206,000 filings in federal district courts in 12 months ending June 30, 1982, excluding bankruptcy filings); Flango & Elsner, Advance Report, The Latest State Court Caseload Data, 7 State Court J. 18 (Winter 1983) (approximately 13,600,000 civil filings during comparable period, excluding traffic filings).
[46] While the Federal Arbitration Act creates federal substantive law requiring the parties to honor arbitration agreements, it does not create any independent federal question jurisdiction under 28 U.S.C. § 1331 or otherwise.
[47] The contention is made that the Court's interpretation of § 2 of the Act renders §§ 3 and 4 "largely superfluous." Post at 465 U. S. 31, n. 20. This misreads our holding and the Act. In holding that the Arbitration Act preempts a state law that withdraws the power to enforce arbitration agreements, we do not hold that §§ 3 and 4 of the Arbitration Act apply to proceedings in state courts. Section 4, for example, provides that the Federal Rules of Civil Procedure apply in proceedings to compel arbitration. The Federal Rules do not apply in such state court proceedings.
[48] The California Supreme Court justified its holding by reference to our conclusion in Wilko v. Swan,346 U. S. 427 (1953), that arbitration agreements are nonbinding as to claims arising under the federal Securities Act of 1933. 31 Cal.3d at 602, 645 P.2d at 1202-1203. The analogy is unpersuasive. The question in Wilko was not whether a state legislature could create an exception to § 2 of the Arbitration Act, but rather whether Congress, in subsequently enacting the Securities Act, had in fact created such an exception.

JUSTICE STEVENS dissents in part on the ground that § 2 of the Arbitration Act permits a party to nullify an agreement to arbitrate on "such grounds as exist at law or in equity for the revocation of any contract." Post at 19. We agree, of course, that a party may assert general contract defenses such as fraud to avoid enforcement of an arbitration agreement. We conclude, however, that the defense to arbitration found in the California Franchise Investment Law is not a ground that exists at law or in equity "for the revocation of any contract," but merely a ground that exists for the revocation of arbitration provisions in contracts subject to the California Franchise Investment Law. Moreover, under this dissenting view, a state policy of providing special protection for franchisees . . . can be recognized without impairing the basic purposes of the federal statute.

Post at 465 U. S. 21. If we accepted this analysis, states could wholly eviscerate congressional intent to place arbitration agreements "upon the same footing as other contracts," H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924), simply by passing statutes such as the Franchise Investment Law. We have rejected this analysis because it is in conflict with the Arbitration Act, and would permit states to override the declared policy requiring enforcement of arbitration agreements.
[49] Contrary to the dissent’s claim, post, at 8–9, and n. 3 (opinion of Kagan, J.), the Court in Mitsubishi Motors did not hold that federal statutory claims are subject to arbitration so long as the claimant may effectively vindicate his rights in the arbitral forum. The Court expressly stated that, “at this stage in the proceedings,” it had “no occasion to speculate” on whether the arbitration agreement’s potential deprivation of a claimant’s right to pursue federal remedies may render that agreement unenforceable. 473 U. S., at 637, n. 19. Even the Court of Appeals in this case recognized the relevant language in Mitsubishi Motors as dicta. In re American Express Merchants’ Litigation, 667 F. 3d 204, 214 (CA2 2012).
[50] The dissent contends that a class-action waiver may deny a party’s right to pursue statutory remedies in the same way as a clause that bars a party from presenting economic testimony. See post, at 3, 9. That is a false comparison for several reasons: To begin with, it is not a given that such a clause would constitute an impermissible waiver; we have never considered the point. But more importantly, such a clause, assuming it makes vindication of the claim impossible, makes it impossible not just as a class action but even as an individual claim.
[51] Who can disagree with the dissent’s assertion that “the effective-vindication rule asks about the world today, not the world as it might have looked when Congress passed a given statute”? Post, at 12. But time does not change the meaning of effectiveness, making ineffective vindication today what was effective vindication in the past. The dissent also says that the agreement bars other forms of cost sharing—existing before the Sherman Act—that could provide effective vindication. See post, at 11–12, and n. 5. Petitioners denied that, and that is not what the Court of Appeals decision under review here held. It held that, because other forms of cost sharing were not economically feasible (“the only economically feasible means for . . . enforcing [respondents’] statutory rights is via a class action”), the class-action waiver was unenforceable. 667 F. 3d, at 218 (emphasis added). (The dissent’s assertion to the contrary cites not the opinion on appeal here, but an earlier opinion that was vacated. See In re American Express Merchants’ Litigation, 554 F. 3d 300 (CA2 2009), vacated and remanded, 559 U. S. 1103 (2010) .) That is the conclusion we reject.

No comments: