By Michael A. Carvin & Yaakov M. Roth
Over the past weeks, the COVID-19 pandemic has ravaged the national economy, and Congress has stepped in with a host of stimulus and relief measures to stabilize and rehabilitate it. In that context, some legislators have proposed enacting federal limits on lawsuits—which have already begun, and are expected to proliferate—that seek to hold businesses (including essential businesses in the food, manufacturing, and health care industries) liable for COVID-19 exposure. These proposals would not establish federal immunity or otherwise eliminate state tort law claims relating to COVID-19 exposure, but instead would generally limit claims alleging such exposure in the course of the provision of lawful business services to situations of gross negligence, willful misconduct, intentional criminal misconduct, or intentional infliction of harm. The objective of the proposals is to facilitate the prompt but safe resumption of lawful business activity without fear of crushing liability from COVID-19 lawsuits, and to ensure that the vast sums of federal money expended to shore up the economy are not redirected to opportunistic lawyers or litigation.
This article considers whether Congress has the authority under Article I of the U.S. Constitution to enact such a law. As explained below, there can be no serious question that under long-established law Congress is fully empowered to do so, pursuant to its power to regulate interstate commerce. Indeed, Congress has enacted limitations on state tort liability countless times to address threats to certain industries or the economy and the Supreme Court has sustained far more attenuated federal regulations under the Commerce Clause. Although the Court has properly rejected congressional efforts to regulate non-economic activities based on their supposed, aggregated, indirect effects on commerce, the proposals here focus directly on commercial activities, and are plainly driven by an interest in stabilizing the faltering national economy by removing obstructions created by state tort law. Such measures fall easily within the scope of the Clause.
I. Article I Empowers Congress To Protect the National Economy From State-Law Burdens and Obstructions, Including Tort Liability.
The Commerce Clause empowers Congress to “regulate Commerce with foreign Nations, and among the several States.” U.S. Const. Art. I, § 8, cl. 3. That Clause was designed to allow Congress to override the types of “commercial restrictions” that states had imposed under the Articles of Confederation—“iniquitous laws and impolitic measures, ... destructive to the harmony of the states, and fatal to their commercial interests abroad.” Gibbons v. Ogden, 22 U.S. 1, 224 (1824) (Johnson, J., concurring). “If there was any one object riding over every other in the adoption of the constitution, it was to keep the commercial intercourse among the States free from all invidious and partial restraints.” Id. at 231.
Consistent with that understanding, the Supreme Court has long recognized that the power to regulate interstate commerce “include[s] the authority to deal with obstructions to interstate commerce.” United States v. Ferger, 250 U.S. 199, 203 (1919); see also United States v. Coombs, 37 U.S. 72, 78 (1838) (Congress may prohibit acts “which interfere with, obstruct, or prevent the due exercise of the power to regulate commerce”). Of course, that rule easily encompasses physical obstructions, such as the closure of interstate highways. E.g., In re Debs, 158 U.S. 564, 581 (1895). But it also captures economic obstructions. For example, in Stafford v. Wallace, 258 U.S. 495 (1922), the Court upheld a law regulating the business of stockyards, on the ground that “exorbitant or unreasonable” prices would create “an undue burden on the commerce which the stockyards are intended to facilitate” and would result in an “unjust obstruction to that commerce.” Id. at 515. That is, Congress was entitled to liberate businesses who relied on stockyards from the burden of monopolistic prices. Similarly, the Court repeatedly upheld applications of federal antitrust law because the restraints of trade, although they “did not consist in a physical obstruction of interstate commerce,” would nonetheless result in “obstruction” of interstate markets. Loewe v. Lawlor, 208 U.S. 274, 300 (1908); see also, e.g., Montague & Co. v. Lowry, 193 U.S. 38 (1904); Addyston Pipe & Steel Co. v. United States, 175 U.S. 211 (1899). Financial burdens imposed on businesses by state law are another common example of “obstructions” to interstate commerce. Thus, in Clark v. Poor, 274 U.S. 554 (1927), the Court rejected a dormant Commerce Clause challenge to a state tax only because the tax was not “so large as to obstruct interstate commerce.” Id. at 557. By contrast, the Court held in a series of cases that it “unreasonably obstruct[ed]” interstate commerce for states to require railroads to submit to personal jurisdiction for tort suits arising out of accidents that occurred in remote locations. Michigan Central R. Co. v. Mix, 278 U.S. 492, 494 (1929); see also Davis v. Farmers Co-operative Equity Co., 262 U.S. 312, 315-16 (1923) (explaining that the burden posed by these personal injury suits was “heavy” and caused a “serious” “obstruction to commerce”). More recently, the Court upheld the federal Tax Reform Act of 1976, which invalidated a state tax on electricity, because the tax “interfered with interstate commerce.” Ariz. Pub. Serv. Co. v. Snead, 441 U.S. 141, 150 (1979).
Of course, modern Commerce Clause jurisprudence is even more sweeping and authorizes federal regulation beyond the removal of state obstructions to interstate commerce. Since the New Deal, the Supreme Court has held that Congress may regulate any activities that “substantially affect interstate commerce.” Gonzalez v. Raich, 545 U.S. 1, 17 (2005) (citing Perez v. United States, 402 U.S. 146, 150 (1971)). To be sure, that principle has been taken to extremes, used to justify regulations that are multiple steps removed from interstate commerce. See, e.g., Wickard v. Filburn, 317 U.S. 111, 120 (1942) (upholding prohibition on purely local farming of wheat for personal use). But see Nat’l Fed’n of Indep. Business v. Sebelius, 132 S. Ct. 2566, 2585-91 (2012) (“NFIB”) (making clear there are still limits on Commerce Clause).
But even the Justices who have disagreed with overly lax applications of the “substantial effects” test have not questioned the core congressional power to protect interstate commerce itself against burdens or threats, including those posed by state law or local conditions. For example, Justice Thomas wrote, in a recent dissent, that Congress would be authorized to criminalize local robberies that affected interstate commerce, as such a law would “allow commerce to flow between States unobstructed.” Taylor v. United States, 136 S. Ct. 2074, 2085 (2016) (Thomas, J., dissenting). He also wrote a unanimous decision that upheld a provision prohibiting the discovery or use, in state tort lawsuits, of information about hazardous road conditions gathered by state and local governments. Pierce Cty. v. Guillen, 537 U.S. 129 (2003). Justice Thomas explained that the Commerce Clause empowers Congress to regulate interstate highways, and that federal efforts to “reduc[e] hazardous conditions” on those highways by requiring the collection of data were “impeded” by the fear that compliance would make state and local governments easier targets for negligence actions. Id. at 131. Anticipated state tort litigation, in other words, was obstructing federal regulation of interstate highways. Accordingly, the Clause empowered Congress to “eliminat[e]” that obstruction by restricting the evidentiary use of the collected data in state-court lawsuits. Id. at 131-32
Indeed, lawsuits under state common law are no different in kind from state taxes, tariffs, or regulations. In the preemption context, the Court has consistently held that there is no distinction “between positive enactments and common-law rules of liability.” Norfolk & W. R. Co. v. Nat’l Train Dispatchers Ass’n, 499 U.S. 117, 128 (1991); see also Riegel v. Medtronic, Inc., 552 U.S. 312 (2008). Accordingly, courts have routinely sustained congressional efforts to protect interstate commerce against the obstructive threat posed by state tort liability. For example, the Second Circuit upheld the Protection of Lawful Commerce in Arms Act, which prohibits tort claims against gun manufacturers for injuries resulting from unlawful misuse of firearms, because the tort suits “are a direct threat to the firearms industry, whose interstate character is not questioned.” New York v. Beretta U.S.A. Corp., 524 F.3d 384, 394 (2d Cir. 2008). Similarly, the Eleventh Circuit upheld the “Graves Amendment,” a law shielding rental car companies from state tort suits alleging vicarious liability for drivers’ accidents, because “it has long been understood that the commerce power includes not only the ability to regulate interstate markets, but the ability to facilitate interstate commerce by removing intrastate burdens and obstructions to it,” including those posed by “state tort law.” Garcia v. Vanguard Car Rental, 540 F.3d 1242, 1252 (11th Cir. 2008). Cf. Davis, 262 U.S. at 315 (highlighting that personal injury suits “are numerous,” “the amounts demanded are large,” and litigating them diverts employees and thereby “impairs efficiency in operation”).
Countless examples of congressional limits on state tort liability—for particular industries, types of claims, or both—span the U.S. Code. In addition to the Protection of Lawful Commerce in Arms Act and the Graves Amendment, a few other notable examples include the Public Readiness and Emergency Preparedness (PREP) Act, 42 U.S.C. § 247d-6d (granting immunity for use of “countermeasures” approved by HHS in the case of a declared public health emergency); the Biomaterials Access Assurance Act, 21 U.S.C. § 1601 et seq. (limiting liability for suppliers of certain medical devices and components); and the Y2K Act, 15 U.S.C. § 6601 et seq. (limiting liability and damages for claims arising out of Y2K computer failures). See also Alexandra B. Klass, Tort Experiments in the Laboratories of Democracy, 50 Wm. & Mary L. Rev. 1501, 1537-38 (2009) (collecting additional examples, including the Federal Drivers Act of 1961, Swine Flu Act of 1976, Atomic Testing Liability Act of 1984, National Childhood Vaccine Act of 1986, General Aviation Revitalization Act of 1994, Bill Emerson Good Samaritan Food Donation Act of 1996, and Volunteer Protection Act of 1997, each of which eliminated or supplanted liability for state tort claims).
Beyond the Commerce Clause, Article I’s Necessary and Proper Clause ensures that Congress “possesses every power needed to make that regulation [of interstate commerce] effective.” United States v. Wrightwood Dairy Co., 315 U.S. 110, 118-19 (1942); see also McCulloch v. Maryland, 17 U.S. 316, 421 (1819) (law is necessary and proper when it is “plainly adapted” to carrying into execution one of Congress’s other powers). Using this authority, Congress may regulate even “intrastate activities” if they “interfere with or obstruct” a federal program regulating interstate commerce. Wrightwood Dairy, 315 U.S. at 119; see also Raich, 545 U.S. at 62 (Thomas, J., dissenting) (agreeing with that principle but not its application to medical marijuana).
II. Limiting COVID-19 Exposure Liability Is an Appropriate Means of Stabilizing and Rehabilitating Interstate Commerce.
Under the above principles, liability limits for COVID-19 exposure claims easily fall within Article I power. The pandemic has caused an unprecedented contraction of commercial activity nationwide. Congress has enacted a series of laws to protect the economy, stabilize it against further destruction, and facilitate its speedy growth once conditions become safe enough to reopen. See Coronavirus Preparedness and Response Supplemental Appropriations Act, H.R. 6074, 116th Cong. (2020); Families First Coronavirus Response Act, H.R. 6201, 116th Cong. (2020); Coronavirus Aid, Relief, and Economic Security Act, H.R. 748, 116th Cong. (2020). Mass tort liability presents a clear and substantial threat to those objectives. Businesses afraid of facing lawsuits alleging coronavirus exposure may choose to keep facilities closed longer, or limit their operations, or forego reopening entirely. This could cause further damage to supply chains—including for essential services like food production and manufacturing of protective equipment—and interfere with provision of health care services. Wide-scale litigation will also divert funds, including trillions of dollars in federal stimulus, from their intended economic purpose.
In this context, limiting businesses’ liability for COVID-19 exposure operates to protect interstate commerce. Like the “commercial restrictions” that led to the ratification of the Commerce Clause, a web of state tort suits for coronavirus liability threatens to pose an “invidious and partial restraint” on “the commercial intercourse among the States.” Gibbons, 22 U.S. at 224, 231 (Johnson, J., concurring). Like the state laws that compelled railroads to submit to personal injury tort suits in remote locales, tort liability for coronavirus exposure “imposes upon interstate commerce a serious and unreasonable burden” and “the resulting obstruction to commerce must be serious.” Davis, 262 U.S. at 315-16; see also, e.g., Ariz. Pub. Serv. Co., 441 U.S. at 150 (Congress validly prohibited state tax that restrained flow of commerce). Like tort claims against gun manufacturers, rental car companies, or medical device suppliers, coronavirus exposure claims “are a direct threat” to the interstate economy. Beretta U.S.A., 524 F.3d at 394; Vanguard Car Rental, 540 F.3d at 1252. Indeed, coronavirus exposure suits pose a much more serious threat, because the virus reaches virtually every person interacting with every industry at every level of the economy, justifying an equally broad legislative remedy. In short, limiting COVID- 19 liability is a quintessential exercise of the Commerce Power to protect interstate commerce.
To be sure, an alleged COVID-19 exposure may occur solely in a single state, and may arise from a purely intrastate transaction. But that makes no difference, as a matter of common sense or law, because the deleterious effect on interstate commerce is the same regardless. If a business is held liable for exposure, even based on an intrastate interaction, that liability threatens the entire interstate market in which the business engages. It does not matter to the business owner whether it faces bankruptcy from litigation arising from an intrastate or an interstate encounter; if the risk exists, all of the business’s operations are in jeopardy. And so the threat of liability poses a danger to interstate commerce—a danger that Congress could identify in findings in the legislation, see Raich, 545 U.S. at 20-21 (congressional findings explained “why Congress deemed it appropriate to encompass local activities within the scope of the [Controlled Substances Act]”); United States v. Morrison, 529 U.S. 598, 612 (2000) (“findings may enable us to evaluate the legislative judgment that the activity in question substantially affects interstate commerce, even though no such substantial effect is visible to the naked eye”)—and is empowered to address. At least three lines of constitutional doctrine manifest that common sense proposition.
First, if intrastate business activities “have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control.” NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37 (1937); see also Ferger, 250 U.S. at 203 (Congress may regulate “a host of other acts which, because of their relation to and influence upon interstate commerce, come within the power of Congress to regulate”). Second, “[w]here the class of activities is regulated and that class is within the reach of federal power, the courts have no power ‘to excise, as trivial, individual instances’ of the class.” Perez, 402 U.S. at 154 (quoting Maryland v. Wirtz, 392 U.S. 183, 193 (1968)). Third, under the Necessary and Proper Clause, Congress may regulate intrastate activities that “so affect interstate commerce ... as to make regulation of them appropriate means to the attainment of a legitimate end.” Wrightwood Dairy, 315 U.S. at 119.
Here, limiting liability is “essential or appropriate” to protect interstate commerce “from burdens and obstructions,” Jones & Laughlin, 301 U.S. at 37, and there is no basis to excise even “trivial, individual instances,” Perez, 402 U.S. at 154. Moreover, the overall scheme of reviving the national, interstate economy requires protecting against coronavirus liability—even for intrastate activities—because carving out those activities would allow massive liability that could sink entire industries and ripple through the interstate economy. That liability further threatens to divert the trillions of dollars that Congress has appropriated in its recent relief legislation, from their intended, “legitimate end” of helping the economy, Wrightwood Dairy, 315 U.S. at 119, toward litigation costs and settlements.
As an example, consider a hair salon. Salons as a class undeniably engage in interstate commerce on a regular basis, such as by buying goods shipped interstate, using credit card processing services, internet booking services, telephone equipment, and the like. Coronavirus exposure suits that threaten the viability of the hair-salon industry will pose a potent obstacle to interstate commerce, and to the efficacy of the vast sums that Congress is spending to shore up the economy. Under the Commerce Clause and/or the Necessary and Proper Clause, Congress is thus authorized to limit such liability, even if it arises from an intrastate haircut for which a customer pays in cash.1
1 It also bears noting that, even if there did exist some hypothetical transaction or activity so far removed from interstate commerce that none of these principles would cover it, that still would not cast any doubt on the facial constitutionality of the scheme. It would, at most, allow for an as-applied challenge on those extreme, hypothetical facts. E.g., Raich, 545 U.S. at 61 (Thomas, J., dissenting) (conceding that Congress’ marijuana ban was valid “[o]n its face,” but arguing that it exceeded federal power “as applied to medical marijuana users”).
III. There Are No Plausible Constitutional Concerns with the Proposed Federal Limits on COVID-19 Exposure Liability.
For the reasons explained above, Congress has the power to stabilize and protect the interstate economy in the face of an historical crisis by shielding lawful business activity from the threat of potentially fatal mass-tort liability. Neither any original understanding of the Framers’ allocation of power between federal and state governments nor any of the Supreme Court’s cases setting limits on federal legislative power raise any concern about the constitutionality of the proposed law.
Some opponents of federal tort reform, in general, have argued that it offends the principles of federalism to override state tort law, which is a matter of traditional state concern and part of the states’ police power. Yet the whole point of the Commerce Clause is to allow Congress to override state rules—even rules that ordinarily fall within the state police power—that interfere with interstate commerce. Indeed, a core reason for adoption of the Clause was to enable Congress to eliminate “invidious” state tax laws. Gibbons, 22 U.S. at 224 (Johnson, J., concurring); e.g., Ariz. Pub. Serv. Co., 441 U.S. at 150. And, as discussed above, courts have consistently upheld federal limits on state tort liability for over a century. See, e.g., Second Employers’ Liability Cases, 223 U.S. 1, 49-52 (1912) (Employers’ Liability Act displaced certain tort rules for injuries to railway employees); Beretta U.S.A. Corp., 524 F.3d at 394 (Protection of Lawful Commerce in Arms Act prohibits state tort claims for against gun manufacturers for injuries resulting from unlawful misuse of firearms); Vanguard Car Rental, 540 F.3d at 1252 (statute shielding rental car companies from state tort suits alleging vicarious liability). Indeed, under the so- called “dormant Commerce Clause,” courts often invalidate state laws that burden commerce even absent congressional action—and Congress’s power to affirmatively override state-law burdens is obviously greater. Cf. United States v. Lopez, 514 U.S. 549, 579 (1995) (Kennedy, J., concurring) (contrasting “the explicit text of the Commerce Clause” with “the dormant Commerce Clause, which we have but inferred from the constitutional structure as a limitation on the power of the States”).
The Supreme Court has pushed back on invocation of the Commerce Clause in three high-profile cases, but none bears any resemblance to the proposed legislation. To start, two of the cases involved congressional attempts to regulate purely non-economic activities based on tenuous links to their supposed economic effects. See Lopez, 514 U.S. at 561 (“possession of a gun in a school zone” “has nothing to do with ‘commerce’ or any sort of economic enterprise”); Morrison, 529 U.S. at 613 (“Gender- motivated crimes of violence are not, in any sense of the phrase, economic activity.”). Those cases are inapposite to a proposal to shield businesses from liability arising in the course of business activities. This is a classic protection of commerce itself, not an effort to regulate non-economic conduct under the pretense of some attenuated downstream effect on the economy.
The Supreme Court, in NFIB, also rejected the notion that the Commerce Clause empowered Congress “to compel individuals not engaged in commerce to purchase an unwanted product.” 132 S. Ct. at 2586. As the Court recognized, the Article I power to regulate interstate commerce “presupposes the existence of commercial activity to be regulated,” and the Clause therefore cannot authorize federal directives requiring individuals “to become active in commerce by purchasing a product.” Id. at 2586-87. That rule has nothing to do with the proposed legislation either. In limiting the reach of COVID-19 tort liability, Congress would not be forcing anyone to engage in commerce. Congress would, rather, be extending a protection of existing commerce from disruptive burdens that otherwise may be imposed by state law.
The Court has also invalidated laws that “commandeer” state governments, as inconsistent with the Tenth Amendment. Printz v. United States, 521 U.S. 898 (1997); New York v. United States, 505 U.S. 144 (1992). Those cases stand for the principle that the federal government “may not compel the States to implement, by legislation or executive action, federal regulatory programs.” Printz, 521 U.S. at 925; see also New York, 505 U.S. at 175. That principle, too, is inapposite here. The proposed legislation does not purport to require state governments to enact legislation or take any action to implement federal programs. It merely preempts inconsistent state tort law as a substantive matter, which Congress is undeniably entitled to do. As the Court clarified in New York, “[t]he Constitution enables the Federal Government to pre-empt state regulation contrary to federal interests.” Id. at 188.
Finally, nor is the proposed preemption of state law overbroad. Cf. Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936, 947 (2016) (Thomas, J., concurring) (raising constitutional concerns about ERISA’s preemption provision because it “may be the most expansive express pre-emption provision in any federal statute,” covering all generally applicable state laws that “relate to any employee benefit plan”). The provision here does not bar any and all state law claims related to COVID-19. Instead, the preemption provision is focused on state laws that are inconsistent with the new limits on coronavirus exposure liability—a narrow, discrete set of cases.
Carvin and Roth are partners at Jones Day.