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The Potentially Far-Reaching Implications of Murphy v. NCAA Outside of Sports Betting

Posted in Litigation Trends

The Supreme Court’s May 14, 2018, decision in Murphy v. NCAA was focused on sports betting, however, the case at its core served as a stress test on the Tenth Amendment and state sovereignty. No. 16-476, 2018 WL 2186168 (U.S. May 14, 2018). Constitutional law prohibits the federal government from “commandeering,” or compelling the states to take regulatory action that the Tenth Amendment would otherwise reserve to them. In Murphy v. NCAA, consolidated with its companion case, New Jersey Thoroughbred Horsemen’s Association, Inc. v. NCAA (referred to herein collectively as “Murphy”), the Supreme Court held that the Professional and Amateur Sports Protection Act (PASPA) violates the anti-commandeering doctrine. Id. at *20. Its decision not only allows states to legalize sports betting, but if applied broadly, could be construed as conferring substantially more power on states, in general, on issues ranging from gun control to legalization of marijuana.

Anti-Commandeering Doctrine

When the original states declared their independence from England, they did so with an aim toward dual sovereignty — granting sovereign powers to both the federal government and the states. Consistent with dual sovereignty, the framers etched into the Constitution that Congress cannot issue orders directly to the states. The addition of the Tenth Amendment solidified this basic premise by declaring, “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The anti-commandeering doctrine represents the recognition of this limit on congressional authority.

Before 2018, the anti-commandeering doctrine had only been addressed twice by the Supreme Court. New York v. United States, 505 U.S. 144, 166 (1992); Printz v. United States, 521 U.S. 898 (1997).  In New York, the Supreme Court struck down a federal law that ordered the state to regulate in accordance with federal standards. Similarly, in Printz, the Supreme Court struck down a federal law that compelled state officers to enforce federal law.

In both opinions, the Supreme Court explained that the Constitution “confers upon Congress the power to regulate individuals, not States.” New York v. United States, 505 U.S. 144, 166 (1992). “No Member of the Court ha[d] ever suggested” that even “a particularly strong federal interest” “would enable Congress to command a state government to enact state regulation.” Id. at 178 (emphasis in original). “We have always understood that even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.” Id. at 166.

Professional and Amateur Sports Protection Act

In 1992, Congress passed the Professional and Amateur Sports Protection Act (“PASPA”).  PASPA makes it illegal for states to “authorize” “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based” “on one or more competitive games in which amateur or professional athletes participate.” 28 U.S.C. § 3701 et seq. PASPA grandfathered in four states – Delaware, Montana, Nevada and Oregon – that already had sports gambling, and it also carved out an exception for New Jersey that would have allowed sports betting at the state’s casinos, as long as the state set up the scheme within one year after PASPA went into effect. Id. New Jersey chose not to legalize sports gambling within the statutory time constraint. Notably, PASPA does not make sports gambling a federal crime, but instead, allows the Attorney General, as well as professional and amateur sports organizations, to bring civil actions to enjoin violations. Id.

Murphy v. NCAA

In 2014, New Jersey passed a law to repeal its ban on sports gambling with the intent of legalizing sports gambling at casinos and horseracing tracks. In response, the NCAA and professional sports leagues filed suit in federal district court to strike down the New Jersey law arguing that it unlawfully “authorized” sports betting, in violation of PASPA. Murphy, No. 16-476, at *6. The NCAA and professional sports leagues contended that the Tenth Amendment does not apply to PASPA for two reasons: (1) PASPA does not require states to take any action, and therefore no commandeering is taking place; and (2) there is a distinction between banning the states from legalizing sports gambling and banning the “affirmative authorization” of sports gambling. Id. at *8.

The U.S. District Court and the Third Circuit sided with the NCAA and professional sports leagues. Id. at *7. Ultimately, the case went before the Supreme Court to decide if PASPA violates the anti-commandeering doctrine. Id. A question before the Court was whether the federal law unconstitutionally regulated New Jersey’s exercise of its lawmaking power by prohibiting it from modifying or repealing laws prohibiting sports gambling. Id. at *8. As explained by the Supreme Court, contrary to the federal laws analyzed in New York and Printz, PASPA prohibits a state from enacting new laws, rather than compels a state to enact a federal law. Id. at *13.

The Supreme Court reversed the Third Circuit, finding that PASPA “unequivocally dictates what a state legislature may and may not do.” Id. In doing so, it declared PASPA unconstitutional, illustrating the nefariousness of the law:  “It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.” Id. As explained by the Murphy Court, under the anti-commandeering doctrine, there is no distinction between a federal law that commands state legislatures to enact federal law as opposed to refrain from enacting state law. Id.

The Murphy Court cited three key reasons for the anti-commandeering principle. Id. at *12. First, the rule provides a balance of power between the states and the federal government, thereby minimizing the risk of tyranny and abuse from either side. Second, it promotes “political accountability.” Id. When Congress regulates its own laws, it must account for the benefits and burdens of the regulation. Id. Voters who favor or disfavor the effects of the regulation know who to credit or blame. Id. Such accountability is distorted if the state is forced to impose the federal government’s regulations. Id. Third, the anti-commandeering principle precludes the federal government from forcing states to pay for the costs of regulating federal governmental laws. Id. In light of this, the Court expressed that Congress must assess the costs and benefits of certain programs prior to enacting them. Id.

In its decision to strike down PASPA, the Supreme Court emphasized that part of the anti-commandeering analysis is whether the federal law regulates private actors. Id. at *15. If the federal law regulates private actors, the anti-commandeering doctrine is not implicated and is likely constitutional, but if it regulates the states, then it is implicated and is likely unconstitutional. Id. PASPA is neither a regulation of private actors nor a federal restriction on private actors. Id. at *16. As such, the Supreme Court found that PASPA “leaves in place a state law that the state does not want, so the citizens of the state . . . are bound to obey a law that the state does not want but that the federal government compels the state to have.”[1]

Murphy’s Potential Impact Outside of Sports Gambling

As stated by the Supreme Court in striking down PASPA, “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.” Id. at *20.  The Murphy decision makes it clear that Congress cannot dictate policy outcomes in states without ever having to legislate on the issue directly. Had the Court found PASPA constitutional, the federal government would be able to block any state effort to legalize activities previously forbidden under state law. Accordingly, the Supreme Court’s holding may allow the states to regulate, without the threat of federal government intervention, a host of issues that are the subjects of intense public debate, including gun control, marijuana legalization, and sanctuary cities.

Going forward, the Murphy Court explains that to enact successfully federal regulations, Congress must: (1) incentivize states to adopt federal policies, or (2) prohibit certain conduct directly. Id. at *13–16.  However, if it opts for prohibition, Congress must bear the cost of enforcing the regulation. Id. at *12.  By way of example, marijuana is illegal under federal law. However, a growing number of states are decriminalizing the drug.[2]  Based on the federal government’s lack of intervention, it can be argued that it has concluded it is not in its best interest to expend money and resources to enforce law that is in conflict with state laws.  It would logically follow that, under Murphy, such states would likely not have an expectation that the federal government will compel them to apprehend their own citizens for the violation of violating federal marijuana law while in compliance with state law.

Gun regulation may exemplify another potential scenario in which states and the federal government may have opposing views.  Under Murphy, a state’s decision to institute gun reform, may also escape an effort by the federal government to pass a law that makes it illegal for states to “authorize” certain gun control measures.

The Murphy ruling could also have an impact on sanctuary cities – cities that refuse to cooperate with federal immigration officials to enforce immigration laws – and the federal government’s ability to apply conditions on money grants for state and local law enforcement. Specifically, the federal government has relied on the following statute to enjoin and penalize sanctuary cities:  “Notwithstanding any other provision of Federal, State, or local law, a Federal, State, or local government entity or official may not prohibit, or in any way restrict, any government entity or official from sending to, or receiving from, the Immigration and Naturalization Service information regarding the citizenship or immigration status, lawful or unlawful, of any individual.” 8 U.S.C. § 1373. This statute is similar in nature to PASPA and, under Murphy, may also be construed as a violation of the anti-commandeering doctrine if it is challenged.

 

Conclusion

The Murphy decision makes clear that Congress cannot transfer the regulatory burden to the states on polarizing matters. However, the federal government is far from powerless in its ability regulate, as it may regulate certain areas authorized by the Constitution or it may use its spending power to provide incentives to states to adopt more restrictive schemes. Nevertheless, the Supreme Court’s holding will likely have a significant impact on future state regulatory activities and legislation.

 

[1] Justice Anthony Kennedy during Murphy oral argument.

[2] The following states have passed laws decriminalizing certain marijuana possession offenses:  Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, North Carolina, Ohio, Oregon, Rhode Island, and Vermont.