Chamber of Commerce of the United States v. Whiting (09-115)

Oral argument: Dec. 8, 2010

Appealed from: United States Court of Appeals for the Ninth Circuit (Sept. 17, 2008)

PREEMPTION, EMPLOYMENT DISCRIMINATION, IRCA, LEGAL ARIZONA WORKERS ACT

The state of Arizona passed the Legal Arizona Workers Act in 2007 (“LAWA”). The law authorizes the Arizona Attorney General and county attorneys to sue employers who knowingly or intentionally employed unauthorized workers such as illegal aliens as a means of combating illegal immigration. Congress, however, previously enacted the Immigration Reform and Control Act, which imposes different sanctions on employers for hiring illegal immigrants. The Chamber of Commerce of the United States, along with various business and civil rights organizations, claimed that federal law preempts LAWA, thus making it invalid. In addition, the Chamber of Commerce argued that LAWA fostered employment discrimination against “foreign-looking” individuals and unduly harmed businesses. However, those in support of LAWA claimed that the state has the authority under its “police powers” to enforce the statute and that it was not preempted by federal law. The Supreme Court’s decision in this case will shed light on the extent to which a state may enforce its own laws in an area that is also covered by federal law. Additionally, the Court’s ruling will affect the ability of states to use certain measures to deter employers from hiring illegal immigrants.

Questions Presented

1. Whether an Arizona statute that imposes sanctions on employers who hire unauthorized workers is invalid under a federal statute that expressly “preempt[s] any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized workers.” 8 U.S.C. § 1324a(h)(2).

2. Whether the Arizona statute, which requires all employers to participate in a federal electronic employment verification system, is preempted by a federal law that specifically makes that system voluntary. 8 U.S.C. § 1324a note.

3. Whether the Arizona statute is impliedly preempted because it undermines the “comprehensive scheme” that Congress created to regulate the employment of workers. Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 147 (2002).

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Issue

Whether federal immigration law preempts Arizona’s statute that both sanctions employers who hire unauthorized workers by rescinding their business licenses, and mandates employer participation in E-Verify, a federal pilot program that verifies a prospective employee’s employment eligibility.

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Facts

Congress first imposed sanctions for hiring unauthorized workers when it passed the Immigration Reform and Control Act of 1986 (“IRCA”), which criminalized the knowing or intentional hiring or continued employment of “unauthorized aliens” in the United States. See Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976, 980 (9th Cir. 2008). IRCA defines “unauthorized aliens” as being either not lawfully admitted for permanent residence or not authorized for employment according to IRCA or the U.S. Attorney General. See id. The U.S. Attorney General enforces violations of IRCA, which expressly preempts all state or local laws that impose sanctions upon individuals who employ unauthorized workers, as well as those who recruit or refer them for employment. See id. One of the three pilot programs that the Attorney General established to verify a new employee’s eligibility for employment is the Basic Pilot Program, which is now known as E-Verify. See id. This program is available in all fifty states, and allows employers to verify an employee’s work-authorization status through the Internet. See id. at 980–81. The program is optional for most businesses. See U.S. Citizenship and Immigration Services, What is E-Verify?

Believing that the current federal law failed to adequately address the issue of illegal immigration, the state of Arizona enacted the Legal Arizona Workers Act in 2007 (“LAWA”), giving the Arizona Attorney General and county attorneys the authority to bring an action against employers who knowingly or intentionally employ unauthorized workers. See Chicanos Por La Causa, Inc., 544 F.3d at 979, 981. If an Arizona superior court finds the employer responsible, it can suspend or revoke that employer’s business license. See id. at 981. LAWA also uses IRCA’s definition of “unauthorized alien,” mandates that all employers use E-Verify, and requires the courts to use the federal government’s determination of an employee’s legal status. See id.

For those in violation of LAWA, the law requires the employer to fire all unauthorized workers, submit quarterly reports of all new hires for a probationary period, and file an affidavit with the court verifying that it has terminated all unauthorized workers and pledging that it will not intentionally or knowingly hire any more such individuals. See Chicanos Por La Causa, Inc., 544 F.3d at 981. If an employer violates LAWA for a second time during the probationary period, courts will permanently revoke the employer’s business license. See id.

Less than one month after Arizona enacted LAWA, which was to be effective on January 1, 2008, the Chamber of Commerce of the United States and various businesses and civil rights organizations (collectively “Chamber of Commerce”) sued the Governor of Arizona, the Arizona Attorney General, and other state agencies (“Arizona”). See Chicanos Por La Causa, Inc., 544 F.3d at 979, 981. The United States District Court for the District of Arizona dismissed the Chamber of Commerce’s initial action for lack of subject matter jurisdiction because it did not name any of Arizona’s county attorneys, who were responsible for enforcing LAWA. See id. at 981. The Chamber of Commerce subsequently filed a second action in December 2007 that corrected this problem. See id.

In the second action, the Arizona court held that the challenged provisions of LAWA were constitutional. See Chicanos Por La Causa, Inc., 544 F.3d at 982. On September 17, 2008, the Ninth Circuit Court of Appeals affirmed the district court’s findings. See id. at 988. Specifically, the Ninth Circuit found that LAWA was a licensing law and not strictly an immigration law, and that neither the sanction regime nor the E-Verify requirement was inconsistent with federal goals. See id. The Supreme Court of the United States subsequently granted certiorari on June 28, 2010. See Chamber of Commerce of U.S. v. Candelaria, 130 S. Ct. 3498 (2010).

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Discussion

The Chamber of Commerce of the United States and numerous business organizations and civil rights organizations (collectively “Chamber of Commerce”) argue that federal law expressly preempts state laws that regulate the employment of unauthorized workers. See Brief for Petitioners, Chamber of Commerce of the United States, et al. at 2. Specifically, according to the Chamber of Commerce, the Legal Arizona Workers Act (“LAWA”) allows the state of Arizona to regulate and enforce employment status verification by authorizing state officials to decide employment eligibility issues and impose sanctions that are more severe than those delineated in federal law. See id. at 3. Furthermore, by requiring employers to participate in E-Verify and then punishing those who do not, LAWA allegedly created a separate system of regulation and enforcement that undermined Congress’s objectives in establishing a voluntary verification program. See id.

However, county attorneys of the State of Arizona (“Arizona”) contend that LAWA is simply addressing the inadequacy of IRCA’s employer verification system and sanctions in effectively deterring the illegal entry of unauthorized workers. See Brief for Respondents, Michael B. Whiting, et al. at 6. Arizona argues that as a result of IRCA’s shortcomings, the employment of unauthorized workers may have deprived work-authorized citizens and noncitizens of jobs and reduced wages and working conditions. See id. at 21.

The National Immigrant Justice Center, the American Immigration Lawyers Association, and the American Immigration Council (collectively “NIJC”) note that Congress specifically prohibits state intrusion into its uniform and comprehensive regulatory schemes. See Brief of Amici Curiae National Immigration Justice Center, et al. in Support of Petitioners at 1. According to NIJC, the ability of states to adopt their own statutory schemes such as LAWA places an impermissible burden on employees, employers, and practitioners because they have to reconcile competing regulatory schemes among the states and the federal government. See id. This contention is supported by a national coalition of business groups (collectively “Business Organizations”), which argue that LAWA not only burdens businesses that operate across state borders, but also those operating in Arizona. See Brief of Amicus Curiae Business Organizations in Support of Petitioners at 4. Additionally, they argue that LAWA places even greater burdens because it imposes sanctions on certain employers that go beyond the penalties under federal law, such as forfeiture of their business license, and mandates that employers use E-Verify. See id. As a result, the Business Organizations contend that LAWA allegedly frustrates Congress’s intent of establishing a uniform system that limits burdens on businesses while helping to further the goals of federal immigration policy. See id. at 4–5.

In addition, the Asian American Justice Center (“AAJC”) argues that LAWA undermines Congress’s goal of striking a balance between the need to deter the employment of unauthorized workers and the importance of preventing discrimination because it effectively encourages employment discrimination in violation of federal law. See Brief of Amici Curiae Asian American Justice Center, et al. in Support of Petitioners at 9–10. According to AAJC, LAWA’s sanctions are so severe that they incentivize employers to not hire individuals who appear foreign for fear that such individuals will either be unable to prove their work-authorization status, or have great difficulty in doing so. See id. at 10.

On other hand, Arizona State Senator Russell Pearce contends that by challenging LAWA, the Chamber of Commerce is attempting to protect employers in violation of the law and to the detriment of the authorized workers in Arizona. See Brief of Amicus Curiae State Senator Russell Pearce in Support of Respondents at 3. According to Pearce, LAWA was designed to ensure that it did not hinder the regulatory interests of the federal government or undermine federal authority, since both federal and state enforcement measures have identical purposes. See id. at 5. In addition, Pearce compares the situation in Arizona to that in California in the 1970s; in De Canas v. Bica, the Supreme Court affirmed a California law that regulated the employment of foreign, unauthorized workers to protect workers native to the state. See id. at 6; 424 U.S. 351 (1976). Pearce notes that Arizona is suffering from the same problems that California faced—high unemployment rates and widespread illegal immigration. See Brief of Pearce at 6.

The Eagle Forum Education & Legal Defense Fund (“Eagle Forum”) advances a different argument, asserting that the Chamber of Commerce lacks standing to challenge LAWA because it does not face an “imminent” injury under Article III. See Brief of Amicus Curiae Eagle Forum Education & Legal Defense Fund in Support of Respondents at 5. In other words, work-authorized individuals, or anyone who appears to be foreign, according to Eagle Forum, have not experienced imminent, actual harm. See id. at 8–9. Eagle Forum also rejects the accusation that LAWA is discriminatory, arguing that LAWA incorporates IRCA’s antidiscrimination provisions. See id. at 13. According to Eagle Forum, Arizona does not have the authority to subvert any federal laws against employment discrimination, and LAWA does not in any way require Arizona employers to discriminate. See id. at 14. Finally, Eagle Forum notes that where a state law does not discriminate against illegal immigrants, it remains constitutional. See id. at 17.

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Analysis

The Chamber of Commerce of the United States along with a collection of business and civil-right organizations (collectively “Chamber of Commerce”), filed suit against fifteen county attorneys of the State of Arizona (“Arizona”) arguing that the federal Immigration Reform and Control Act of 1986 (“IRCA”) preempts the Legal Arizona Workers Act (“LAWA”). See Chicanos Por La Causa, Inc. v. Napolitano, 558 F.3d 856, 860 (9th Cir. 2009). Both the district court and the Ninth Circuit disagreed, holding that IRCA did not preempt LAWA. See id. at 860, 864, 866. The Supreme Court will specifically address whether IRCA expressly or impliedly preempts LAWA’s Unauthorized Workers provision and whether federal law impliedly preempts LAWA’s E-Verify Mandate.

Is LAWA’s Unauthorized Workers Provision Expressly Preempted?

Traditionally, regulating unauthorized workers' employment fell within the states’ police powers. See Brief for Respondents, Michael B. Whiting, et al. at 3. Congress changed this, however, by passing IRCA in 1986. See Brief for Petitioners, Chamber of Commerce of the United States of America, et al. at 34. IRCA expressly preempts the states’ power, but also creates a "savings clause," which allows states to use "licensing and similar laws" to sanction anyone who employs unauthorized workers. See id. at 4, 2122.

Arizona posits that LAWA’s Unauthorized Workers provision falls within the savings clause, thus escaping preemption. See Brief for Respondents at 23. The states argues that, under Arizona law, a "license" is defined to include permission forms required to operate a business such as articles of incorporation, certificates of partnership, and authority for foreign entities to conduct business in the State ("business licenses"). See id. Because LAWA's penalties are to suspend and revoke these "business licenses," Arizona asserts that LAWA falls within IRCA's savings clause. See id.

The Chamber of Commerce disagrees. It contends that "license" has the meaning Congress intended, not what Arizona defines it as. See Brief for Petitioners at 24. It argues that Arizona exploited a loophole in LAWA by defining its way around preemption. See id. at 16. The Chamber of Commerce argues that Congress intended that the word "license" apply narrowly to "fitness to do business laws." See id. at 2526. It asserts that Congress was focused on this type of law, specifically farm labor contractor laws, where states required labor-contracting businesses to have a license. See id. The states only grant this license, however, if the contractor demonstrated it was fit to lawfully conduct business, and they revoke the license if the contractor failed to maintain a record of immigration law compliance. See id. Further, the Chamber posits that this type of licensing correlates with the dictionary definition of license: "a right or permission granted in accordance with law by a competent authority to engage in some business or occupation." See id. 27. It argues that LAWA, in contrast, creates an entirely new regulatory scheme that departs from the traditional meaning of licensing laws Congress intended. See id. at 34.

Arizona counters, however, that Congress's purpose is ambiguous at best. See Brief for Respondents at 34. Arizona indicates that when Congress intended "license" to apply narrowly in the past, it did so expressly by referencing, for example, professional, occupational, or driver's licenses. See id. at 33. Arizona also points to the statute's phrase, "licensing and similar laws," as indicative of an intent broader than the Chamber of Commerce's interpretation. See id. at 3334. Because Congress's intent is ambiguous, Arizona argues that a presumption exists against preemption. See id. at 34. Arizona also asserts that their "business licenses" fit the Chamber of Commerce's dictionary definition of "license" because they are rights and permissions granted by the State to do business, thus making it irrelevant whether Arizona's definition or the Chamber of Commerce's definition applies. See id. at 23. Thus, by sanctioning employers using these "business licenses," Arizona argues that LAWA is within the savings clause. See id. 23.

The Chamber of Commerce also argues that the savings clause explicitly applies to sanctions only. See Brief for Petitioners at 29. Therefore, according to the Chamber's view, it does not apply to state adjudication, authorized by LAWA, to determine who is an unauthorized worker, or to determine whether an employer knowingly hired an unauthorized worker. See id. Thus, because these adjudications do not fall within the savings clause, the Chamber of Commerce asserts that they are preempted. See id.

Arizona claims that this interpretation is not what Congress intended. See Brief for Respondents at 29, 42. Specifically, Arizona posits that nothing explicitly grants the federal courts exclusive jurisdiction over these adjudications; in fact, Arizona argues that IRCA's legislative history actually reveals that Congress intended state adjudications. See id. at 42. Arizona further contends that because Congress explicitly left power to the states to sanction via licensing, Congress also intended that the states have power to enforce these sanctions through state adjudications. See id. at 43.

Is LAWA’s Unauthorized Workers Provision Impliedly Preempted?

Alternatively, the Chamber of Commerce argues that IRCA impliedly preempts LAWA’s Unauthorized Workers provision because the rights and obligations under LAWA conflict with IRCA's structure and operation. See Brief for Petitioners at 37. It reasons that IRCA constructed a comprehensive regulatory scheme to investigate and adjudicate work-authorization status, authorized federal officers to perform these investigations, and established the federal courts as the judicial bodies where employers can seek relief. See id. at 3739. Arizona's separate investigatory and adjudicatory processes, the Chamber of Commerce argues, simply do not fit within this framework. See id. at 39. Furthermore, it argues that Arizona would improperly supersede federal law by relegating federal determinations of work-authorization status to a rebuttable presumption. See id. at 40.

Arizona counters by noting that IRCA only mentions federal procedures—it is silent regarding the states. See Brief for Respondents at 4647. While IRCA did establish a comprehensive regulatory matrix, Arizona argues that this alone fails to imply preemption. See id. at 47. Indeed, Arizona attests that a presumption exists that anything left unaddressed by Congress remains subject to state law. See id. Arizona also argues that the rebuttable presumption for federal determinations actually parallels IRCA's intentions. See id. at 49. It states that LAWA specifically requires state officials to rely on federal work-authorization determinations, and only allows employers the opportunity to rebut these determinations in court—just as IRCA enables employers to rebut the determinations at the federal level. See id. Thus, Arizona argues that the rebuttable presumption merely parallels IRCA's requirements, and does not conflict with them. See id. at 4950.

The Chamber of Commerce also argues that IRCA impliedly preempts LAWA's Unauthorized Workers provision because it meddles with the federal regulatory scheme, disturbing the balance Congress struck between numerous policy objectives. See Brief for Petitioners at 37. The Chamber of Commerce states that besides preventing unlawful immigration, Congress also sought to prevent employer discrimination, to minimize burdens on employers, and to protect potential employee's privacy. See id. at 4344. It argues that Arizona's separate regulatory scheme, unique adjudicatory standards, and different penalties, have completely rebalanced these interests in favor of furthering just one goal: preventing unlawful immigration. See id. at 45.

Nevertheless, Arizona contends that to avoid preemption, LAWA must only avoid a direct conflict with federal requirements, and need not advance every one of Congress's purposes. See Brief for Respondents at 53. Besides, Arizona argues, LAWA does further many of Congress's objectives. See id. at 54. For example, Arizona points out that LAWA seeks to prevent discrimination by including a clause preventing an interpretation of LAWA that requires an employer to violate federal law. See id. It also proscribes investigations based on race, color, or national origin. See id. Additionally, Arizona states that LAWA seeks to protect employers by mandating adjudicatory proceedings before imposing sanctions. See id. at 5455. Furthermore, Arizona argues that LAWA advances IRCA's mandate for "vigorous and uniform" enforcement because it applies sanctions via licensing laws, which is part of Congress's balancing act. See id. at 55.

Is LAWA's E-Verify Mandate Impliedly Preempted?

The Chamber of Commerce contends that federal law impliedly preempts LAWA's E-Verify requirement. See Brief for Petitioners at 47. It argues that when LAWA forces employers to use E-Verify, it directly conflicts with Congress's wishes because E-Verify was intended as a temporary and experimental "pilot program," which Congress has kept strictly voluntary. See id. at 47, 50.

Arizona asserts, however, that no conflict exists because employers do not face the dilemma of deciding between contrary state and federal requirements—participating in E-Verify does not violate any federal law. See Brief for Respondents at 5859. Arizona further argues that the requirement actually furthers Congress's wishes because Congress ultimately intended to create an effective verification system, not a voluntary one. See id. at 60. Arizona contends that by making E-Verify mandatory, LAWA advances this goal because it helps eliminate lack of employer use, a barrier to E-Verify's effectiveness. See id. Finally, Arizona indicates that if employers do not use E-Verify, the penalty is only loss of a favorable presumption, which is precisely what happens under federal law when an employer fails to voluntarily participate in E-Verify. See id. at 6364. Thus, Arizona argues, LAWA only supplements federal law, and does not conflict with it. See id. at 64.

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Conclusion

In this case, the Supreme Court will determine whether the Immigration Reform and Control Act of 1986 preempts the Legal Arizona Workers Act. If the Court agrees with the United States Chamber of Commerce and finds that federal law does preempt Arizona's law, it will become more difficult for states to independently regulate illegal immigration. On the other hand, if the Court agrees with Arizona, businesses will have to deal with a potentially non-uniform regulatory scheme. The Chamber of Commerce worries that Arizona's law, with its stricter penalties, may force businesses to shut down and may possibly lead to employment discrimination, while Arizona feels that current federal enforcement is inadequate to address the problem of illegal immigration.

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Authors

Prepared by: Teresa Lewi and Benjamin Rhode

Edited by: Catherine Suh

Additional Sources

· Immigration Impact, Beth Werlin: Supreme Court to Hear Two Cases Affecting Immigrants, Including a Case Challenging a Recent Anti-Immigrant Law (Oct. 7, 2010)

· ABA Journal, Debra Cassens Weiss: Supreme Court Docket Has a 9th Circuit ‘Flavor’ (Oct. 5, 2010)

· Fordham Law Review, Maria Marulanda: Preemption, Patchwork Immigration Laws, and the Potential for Brown Sundown Towns

· U.S. Citizenship and Immigration Services: E-Verify—History and Milestones

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Edited by: