The Power Of Agreements: Preempting Law

The preemption doctrine refers to the idea that a higher authority of law will displace a lower authority of law when the two conflict. Preemption can occur between federal and state laws, state and local laws, or in the context of contracts, where certain clauses may seek to preempt judicial discretion. In the US, the preemption doctrine is often applied when state law conflicts with federal law, such as in the case of the Voting Rights Act, which preempts state constitutions. However, determining preemption is not always straightforward, and various exceptions and exclusions exist, particularly in the case of ERISA's preemption of state laws relating to employee benefit plans.

Characteristics of Preemption

ERISA preemption of state laws

In the United States, the preemption doctrine refers to the idea that a higher authority of law will displace the law of a lower authority when the two conflict. When state law and federal law conflict, federal law takes precedence and displaces, or preempts, state law, as per the Supremacy Clause of the Constitution.

The Employee Retirement Security Act of 1974 (ERISA) is a complex federal law that regulates employee health care benefit and pension plans. ERISA has a higher priority than similar or directly conflicting state laws, and so it takes the place of those laws, even if they were written after ERISA. ERISA (29 US Code § 1144) generally preempts "any and all state laws" to the extent that they "relate to" employee benefit plans. However, determining whether ERISA preempts a particular state law is not always straightforward, and federal courts are responsible for making the final decision on whether ERISA preemption applies.

ERISA preemption plays a major role in considering the scope of a state benefit or insurance law and its applicability to employee benefit plans. For example, ERISA preempts state laws in the case of employer-sponsored prescription drug coverage, which has imposed requirements on employers that don't offer certain benefits. There are some exceptions to ERISA preemption, including worker's compensation benefits, pension, health, disability, and unemployment benefits that were not purchased as part of a plan, and health and pension plans run by a government agency or religious organization.

Since 1995, the courts have significantly narrowed preemption protections. For example, in 1995, the Supreme Court ruled that ERISA did not preempt a state law that imposed cost burdens on a health plan, and in 1997, the high court held that ERISA did not preempt a New York State tax imposed on the gross patient receipts of operators of medical facilities.

Federal law superseding state law

The preemption doctrine in US law refers to the idea that a higher authority of law will displace the law of a lower authority when the two conflict. When state law and federal law conflict, federal law supersedes state law due to the Supremacy Clause of the US Constitution. This is the case regardless of whether the conflicting laws come from legislatures, courts, administrative agencies, or constitutions.

For example, the Voting Rights Act, an act of Congress, preempts state constitutions, and FDA regulations may preempt state court judgments in cases involving prescription drugs. In some cases, such as with medical devices, Congress has preempted all state regulation. In other cases, such as with prescription drug labels, federal regulatory agencies are allowed to set national minimum standards, but state regulations are not preempted and can impose more stringent standards.

The Supremacy Clause was a response to problems with the Articles of Confederation, which lacked a provision declaring federal law superior to state law. As a result, during the Confederation era, federal statutes did not bind state courts without state legislation implementing them.

There are three types of conflicts regarding preemption: outright conflict, express preemption, and implied preemption. Outright conflict occurs when an ordinance directly opposes a state law. Express preemption is when a state law directly opposes a local power. Implied preemption occurs when one of three things happen: when a local ordinance prohibits an act permitted by the state legislature, when a local ordinance permits an act prohibited by the state legislature, or when there is clear legislative intent that the "field" is preempted by state law. Implied preemption is controversial because it may be significantly harder to prevent than outright or express preemption, so some states have outlawed it.

Determining whether federal law preempts state law is not always straightforward, and courts often have to decide whether a particular federal statute should be understood to preempt a particular aspect of state law.

Implied preemption

The preemption doctrine refers to the idea that a higher authority of law will displace the law of a lower authority when the two come into conflict. For instance, when state law and federal law conflict, federal law takes precedence over state law.

• When a local ordinance prohibits an act permitted by the state legislature.
• When a local ordinance permits an act prohibited by the state legislature.
• When there is clear legislative intent that the "field" is preempted by state law.

The "field" is usually defined as when there is an extensive scope of state regulation that reflects a state intent to preempt all local regulations in a particular area. Occupation of the field is likely to be found when state law addresses an area that has traditionally been a matter of the state. For example, the mortgage foreclosure process.

Some states have outlawed implied preemption. If a state specifically authorizes an action, the local government typically cannot restrict the action. Courts have found various ways to determine when a state legislature has preempted a particular field.

Judicial rules of interpretation

In the legal context, the term preemption refers to the displacement of a lower authority of law by a higher authority when a conflict arises between the two. This is based on the preemption doctrine, which is derived from the Supremacy Clause of the Constitution. For instance, when there is a conflict between state law and federal law, the federal law takes precedence and displaces the state law.

Agreements, in the form of contracts, can attempt to preempt judicial discretion by including specific rules for interpreting the contract. Drafters of contracts may employ techniques such as stating that a judicial rule of interpretation does not apply, or by choosing a governing law for the contract. These strategies aim to guide the court towards a desired interpretation. However, critics argue that certain rules of interpretation, such as the rule of the last antecedent, may have shortcomings.

In cases where rules or regulations do not explicitly state whether preemption applies, the Supreme Court attempts to follow the lawmakers' intent and tends to favour interpretations that avoid preempting state laws. This preference for state laws over local laws in conflicts is also observed in situations where local ordinances come into conflict with state laws. Courts employ various tests, such as the seven-part test from Allied Vending Co. v Bowie (1993), to determine whether a state legislature has preempted a particular field.

Contract preemption

The preemption doctrine refers to the displacement of a lower authority of law by a higher authority when the two are in conflict. In the United States, federal law supersedes state law in the event of a conflict, as outlined in the Supremacy Clause of the Constitution. This preemption applies to conflicting laws from legislatures, courts, administrative agencies, or constitutions.

The preemption doctrine also applies to local and state laws, with state laws typically prevailing in the case of a conflict. However, there are situations where local ordinances may preempt state law. For example, in the case of City of Riverside v. Island Empire Patients Health and Wellness Center Inc. (2013), the court ruled that local ordinances should be favoured over state preemption when significant interests for a particular issue vary across localities, unless expressly forbidden by state statute.

The concept of preemption also extends to specific areas of law, such as copyright and contract law. In the context of copyright, Section 301(a) of the Copyright Act of 1976 expressly preempts any state law deemed "equivalent" to copyright. This has led to debates about whether breach of contract claims are preempted by federal copyright law, with some circuits, like the Second Circuit, favouring preemption and others, like the Seventh Circuit, disagreeing.

When determining whether a contract claim is preempted by copyright law, courts may consider the potential conflicts between state law and copyright. If a state law aims to protect unique state-based interests, such as privacy or trade secrets, it is less likely to be preempted by federal copyright policy.

Frequently asked questions