Preemption and Choice-of-Law Coordination

Abstract

The scope of federal preemption of state law has been plagued by uncertainty and confusion. Part of the problem is that the courts purport to interpret Congressional intent when often Congress never considered the particular preemption question at issue. This article suggests that courts deciding preemption cases should take seriously a commonly articulated rationale for the federalization of law: the need to coordinate applicable legal standards in order to facilitate a national market or to otherwise provide clear guidance to parties regarding the laws that apply to their conduct. In situations where a federal law can serve a coordinating function but Congressional intent regarding preemption is unclear, we propose that courts consider whether the states have effectively allocated sovereign authority among themselves through choice-of-law rules. Where states have achieved such "horizontal coordination," Congress often has little need to usurp the states' role as laboratories for experimenting with potentially diverse substantive laws. Our approach would help to promote a “healthy federalism” in that it encourages courts to preserve the benefits of local and state sovereignty while simultaneously enabling federal statutes to coordinate US law where necessary. We apply our proposed approach to several areas where the courts have struggled with their poorly constructed preemption analyses to show how our approach might improve preemption decisions. Although our approach provides a conceptually obvious, and therefore elegant, solution to many preemption problems, to date it has been entirely unexplored.

Available at SSRN: http://ssrn.com/abstract=1926199 or http://dx.doi.org/10.2139/ssrn.1926199

Keywords: preemption, choice of law, federalism, coordination

JEL Classification: K20, K22, K23, K32, K40