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‹ FEATURED DISCUSSION

July 21, 2004

The states' commerce claws

By Walter Olson

I share your frustration with the difficulties in ascertaining the exact scope of the Commerce Clause: it’s the kind of constitutional provision that can give accordions a bad name (though I’m not one to share the usual musical prejudice against that fine instrument). At the high point of New Deal expansion, the clause was thought to empower Washington to regulate a farmer’s growing of grain to feed his own animals. At the other extreme, some libertarians seem to envision a Skinny Minnie sort of Commerce Clause that would amount to little more than a sort of domestic GATT arrangement, empowering Congress to step in if Maryland erects a tariff against Delaware or that sort of thing.

As we all know, in recent years the U.S. Supreme Court has let a bit of air out of the hyper-extended New Deal view of the clause. But the Rehnquist Court is still a lot closer to the “covers nearly everything” interpretation of the clause than to its “covers hardly anything” opposite. True, the present Court may call foul when Congress tries to federalize, say, domestic violence law on little more than an assertion that crime of that sort has an impact on commerce. But when the nexus with actual commerce is not so strained, today’s Court nearly always concedes Congress’ authority to regulate. And there simply is no doubt based on the record -- even diehard foes of tort reform would scarcely bother to dispute it -- that product liability has a direct and substantial effect on interstate commerce, and on the gun trade in particular.

If I read your argument rightly, however, I don’t think you’re actually predicting that the presently constituted Supreme Court would find the gun pre-emption bill anything but a proper exercise of Commerce Clause power. (If I err on that, let me know, and I’ll go back to arguing the point.) Instead, I interpret your comments as proceeding from either a prudential sort of federalism -- the Court might not deem the pre-emption bill unconstitutional, but we still would be wise to refrain from passing it -- or perhaps a loyalty to what you perceive as earlier and more legitimate readings of the Commerce Clause.

In a draft paper available at his Federalism Project, Michael Greve of the American Enterprise Institute has offered what strikes me as a powerful riposte to both of those ideas. He argues that the tradition of a strong Commerce Clause, affording a wide-ranging charter for Congress to displace state law in areas relating to interstate commerce, has roots that go much deeper than the New Deal, extending back not only to the controversial Lochner era but indeed to the earliest years of the Republic and Chief Justice Marshall’s opinion in Gibbons v. Ogden (1824). The battles back then did not involve federal oversight of products liability, for the very good reason that that kind of liability scarcely existed at the time (besides which, most products were made locally). Since the 1950s, however, product liability has developed into a huge body of litigation which in the typical case invites a state to second-guess design or marketing decisions made in a faraway company headquarters. If liability is found, one of the state’s own voter/citizens will normally reap the financial benefits, while shareholders and others in distant states will pay the price. Do states respond to these incentives by tilting the playing field in favor of plaintiffs? You bet they do. You write that each state should be left to make laws in its own foolish way “so long as [it] internalizes the costs of its behavior”. But in products liability that doesn’t happen (PDF).

Let me return to my observation from the previous round about the Framers’ views and intentions. As the Constitution’s text shows, they were well aware of state governments’ tendency to engage in beggar-thy-neighbor games, nor were they the least bit shy about ousting state courts from wide sectors of commercial litigation that might tempt them into such game-playing. They chose to kick the state courts out of bankruptcy, maritime and (at Congress’s discretion) diversity-of-citizenship cases, even though the predictable result was to involve the federal courts from the start in hearing many disputes that are both very small and very local. If a séance were to be conducted to summon the opinion of the reincarnated Framers today, you may be quite right that they’d want to leave most of tort law on the “local” side of the line; car crashes, slip-falls and medical errors are usually primarily intrastate in their legal implications. But I’m equally confident that they’d assign today’s product liability to the “national/commercial” side of the line.

Okay, I’ve talked the Commerce Clause into the ground, which leaves little time this round to examine the other enumerated powers on which Congress might rely in intervening against the gun suits. You mention, for example, the Full Faith and Credit Clause and the authority it gives Congress to prescribe “choice-of-law” rules (and perhaps other decisional rules) to state courts. I’ll defer discussion of that one because I sense a lurking danger we’ll wind up agreeing, and you know how dull readers find it when that happens. The other is the Second Amendment itself, which you agree might be implicated (in conjunction with the Fourteenth Amendment’s Due Process clause) in extremity should gun rights become endangered. In fact the pre-emption bill in Congress does cite the Second Amendment as well as the Commerce Clause as a source of authority.

Before I turn over the mike, though, I want to take issue with the notion that the firearms litigation, because it’s proved so far to be mostly a dud with the courts, has not seriously threatened anyone’s rights. Yes, it’s true, judges have thrown out most of the municipal cases. But some have been allowed to go forward, and the antigun lawyers made it a conscious part of their strategy from day one to shoot off a large number of arrows knowing that most would fail of their target. They don’t have to land many: these are often “bet your company” cases. And in fact, as I note in my recent book The Rule of Lawyers (just out in paperback!), the lawsuit campaign even without a durable court victory has inflicted serious hardship on the gun-making and -selling trade nationwide. It’s interfered with the availability of credit and insurance for those in the trade. It’s led to the discontinuance of existing lawful product lines desired by consumers and to the abandonment of contemplated ones. It’s pushed family businesses to the wall. Most striking as a policy matter, it led directly to the abortive settlement that the Smith & Wesson company tried to enter into, its chief executive announcing at the time that he saw capitulation as the only alternative to being ruined by litigation costs. The S&W deal starkly revealed the lawsuits’ agenda: the company agreed to extensive controls on gun-selling by which the freedom of action of its buyers and dealers would have been significantly curtailed. As it happens, we got lucky: the deal collapsed. Must we count on getting lucky every time?

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Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.