Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-07-17272/USCOURTS-ca9-07-17272-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHICANOS POR LA CAUSA, INC.; 

SOMOS AMERICA,

Plaintiffs-Appellants,

and

ARIZONA EMPLOYERS FOR

IMMIGRATION REFORM INC.;

CHAMBER OF COMMERCE OF THE

UNITED STATES; ARIZONA

CHAMBER OF COMMERCE; ARIZONA

HISPANIC CHAMBER OF COMMERCE;

ARIZONA FARM BUREAU

FEDERATION; ARIZONA No. 07-17272

RESTAURANT AND HOSPITALITY D.C. No. ASSOCIATION; ASSOCIATED MINORITY  CV-07-01355-NVW CONTRACTORS OF AMERICA; ARIZONA

ROOFING CONTRACTORS

ASSOCIATION; NATIONAL ROOFING

CONTRACTORS ASSOCIATION; WAKE

UP ARIZONA! INC.; ARIZONA

LANDSCAPE CONTRACTORS’

ASSOCIATION; ARIZONA

CONTRACTORS ASSOCIATION,

Plaintiffs,

v.

JANET NAPOLITANO; TERRY GODDARD; 

GALE GARRIOTT,

Defendants-Appellees. 

13055

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CHICANOS POR LA CAUSA, INC.; 

SOMOS AMERICA,

Plaintiffs,

and

ARIZONA EMPLOYERS FOR

IMMIGRATION REFORM INC.;

CHAMBER OF COMMERCE OF THE

UNITED STATES; ARIZONA

CHAMBER OF COMMERCE; ARIZONA

HISPANIC CHAMBER OF COMMERCE;

ARIZONA FARM BUREAU

FEDERATION; ARIZONA No. 07-17274

RESTAURANT AND HOSPITALITY D.C. No. ASSOCIATION; ASSOCIATED MINORITY  CV-07-01355-NVW CONTRACTORS OF AMERICA; ARIZONA

ROOFING CONTRACTORS

ASSOCIATION; NATIONAL ROOFING

CONTRACTORS ASSOCIATION; WAKE

UP ARIZONA! INC.; ARIZONA

LANDSCAPE CONTRACTORS’

ASSOCIATION; ARIZONA

CONTRACTORS ASSOCIATION,

Plaintiffs-Appellants,

v.

JANET NAPOLITANO; TERRY GODDARD; 

GALE GARRIOTT,

Defendants-Appellees. 

13056 CPLC v. NAPOLITANO

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ARIZONA CONTRACTORS 

ASSOCIATION, INC.; ARIZONA

EMPLOYERS FOR IMMIGRATION

REFORM INC.; CHAMBER OF

COMMERCE OF THE UNITED STATES;

ARIZONA CHAMBER OF COMMERCE;

ARIZONA HISPANIC CHAMBER OF

COMMERCE INC.; ARIZONA FARM

BUREAU FEDERATION; ARIZONA

RESTAURANT AND HOSPITALITY

ASSOCIATION; ASSOCIATED MINORITY

CONTRACTORS OF AMERICA; ARIZONA  ROOFING CONTRACTORS

ASSOCIATION; NATIONAL ROOFING

CONTRACTORS ASSOCIATION;

ARIZONA LANDSCAPE CONTRACTORS’

ASSOCIATION,

Plaintiffs-Appellants,

and

WAKE UP ARIZONA! INC.; VALLE

DEL SOL INC.; CHICANOS POR LA

CAUSA, INC.; SOMOS AMERICA,

Plaintiffs, 

CPLC v. NAPOLITANO 13057

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v. 

CRISS CANDELARIA; ED

RHEINHEIMER; TERRENCE HANER;

DAISY FLORES; KENNY ANGLE; No. 08-15357 DEREK D. RAPIER; MARTIN

BRANNAN D.C. Nos. ; ANDREW P. THOMAS;

MATTHEW J. SMITH; JAMES CURRIER;  CV-07-02496-NVW

BARBARA LAWALL JAMES P. WALSH; CV-07-02518-NVW

GEORGE SILVA; SHEILA POLK; JON

SMITH; TERRY GODDARD; FIDELIS V.

GARCIA; GALE GARRIOTT; MELVIN

R. BOWERS Jr.,

Defendants-Appellees. 

13058 CPLC v. NAPOLITANO

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ARIZONA CONTRACTORS 

ASSOCIATION, INC.; ARIZONA

EMPLOYERS FOR IMMIGRATION

REFORM INC.; CHAMBER OF

COMMERCE OF THE UNITED STATES;

ARIZONA CHAMBER OF COMMERCE;

ARIZONA HISPANIC CHAMBER OF

COMMERCE INC.; ARIZONA FARM

BUREAU FEDERATION; ARIZONA

RESTAURANT AND HOSPITALITY

ASSOCIATION; ASSOCIATED MINORITY

CONTRACTORS OF AMERICA; ARIZONA

ROOFING CONTRACTORS 

ASSOCIATION; NATIONAL ROOFING

CONTRACTORS ASSOCIATION;

ARIZONA LANDSCAPE CONTRACTORS’

ASSOCIATION,

Plaintiffs,

and,

WAKE UP ARIZONA! INC.; VALLE

DEL SOL INC.; CHICANOS POR LA

CAUSA, INC.; SOMOS AMERICA,

Plaintiffs-Appellants,

v. 

CPLC v. NAPOLITANO 13059

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CRISS CANDELARIA; ED 

RHEINHEIMER; TERRENCE HANER;

DAISY FLORES; KENNY ANGLE;

DEREK D. RAPIER; MARTIN No. 08-15359

BRANNAN; ANDREW P. THOMAS;

D.C. Nos. MATTHEW J. SMITH; JAMES CURRIER;

 CV-07-02496-NVW BARBARA LAWALL JAMES P. WALSH;

CV-07-02518-NVW GEORGE SILVA; SHEILA POLK; JON

SMITH; TERRY GODDARD; FIDELIS V.

GARCIA; GALE GARRIOTT; MELVIN

R. BOWERS Jr.,

Defendants-Appellees. 

13060 CPLC v. NAPOLITANO

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ARIZONA CONTRACTORS 

ASSOCIATION, INC.; ARIZONA

EMPLOYERS FOR IMMIGRATION

REFORM INC.; CHAMBER OF

COMMERCE OF THE UNITED STATES;

ARIZONA CHAMBER OF COMMERCE;

ARIZONA HISPANIC CHAMBER OF

COMMERCE INC.; ARIZONA FARM

BUREAU FEDERATION; ARIZONA

RESTAURANT AND HOSPITALITY

ASSOCIATION; ASSOCIATED MINORITY

CONTRACTORS OF AMERICA; ARIZONA

ROOFING CONTRACTORS

ASSOCIATION; NATIONAL ROOFING 

CONTRACTORS ASSOCIATION;

ARIZONA LANDSCAPE CONTRACTORS’

ASSOCIATION,

Plaintiffs,

VALLE DEL SOL INC.; CHICANOS

POR LA CAUSA, INC.; SOMOS

AMERICA,

Plaintiffs,

and

WAKE UP ARIZONA! INC.,

Plaintiff-Appellant,

v. 

CPLC v. NAPOLITANO 13061

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CRISS CANDELARIA; ED 

RHEINHEIMER; TERRENCE HANER;

DAISY FLORES; KENNY ANGLE;

DEREK D. RAPIER; MARTIN No. 08-15360

BRANNAN; ANDREW P. THOMAS;

D.C. Nos. MATTHEW J. SMITH; JAMES CURRIER;

 CV-07-02496-NVW BARBARA LAWALL JAMES P. WALSH;

CV-07-02518-NVW GEORGE SILVA; SHEILA POLK; JON

SMITH; TERRY GODDARD; FIDELIS V. OPINION

GARCIA; GALE GARRIOTT; MELVIN

R. BOWERS Jr.,

Defendant-Appellant. 

Appeal from the United States District Court

for the District of Arizona

Neil V. Wake, District Judge, Presiding

Argued and Submitted

June 12, 2008—San Francisco, California

Filed September 17, 2008

Before: Mary M. Schroeder, John M. Walker, Jr.,* and

N. Randy Smith, Circuit Judges.

Opinion by Judge Schroeder

*The Honorable John M. Walker, Jr., Senior United States Circuit

Judge for the Second Circuit, sitting by designation. 

13062 CPLC v. NAPOLITANO

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COUNSEL

Jonathan Weissglass, San Francisco, California, attorney for

plaintiffs/appellants. 

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Mary O’Grady, Phoenix, Arizona, for the State defendants/appellees. 

Buckley King, Phoenix, Arizona, for defendant/appellees,

Apache, Cochise, Gila, Graham, Greenlee, La Paz, Navajo,

Santa Cruz, and Yavapai Counties. 

Daniel Jurkowitz, Tucson, Arizona, for defendant/appellee,

Pima County. 

OPINION

SCHROEDER, Circuit Judge: 

This case is a facial challenge to an Arizona state law,

enacted in 2007 and aimed at illegal immigration, that reflects

rising frustration with the United States Congress’s failure to

enact comprehensive immigration reform. The Arizona law,

called the Legal Arizona Workers Act, targets employers who

hire illegal aliens, and its principal sanction is the revocation

of state licenses to do business in Arizona. It has yet to be

enforced against any employer. 

Various business and civil-rights organizations (collectively, “plaintiffs”) brought these actions against the fifteen

county attorneys of the state of Arizona, the Governor of Arizona, the Arizona Attorney General, the Arizona Registrar of

Contractors, and the Director of the Department of Revenue

of Arizona (collectively, “defendants”). Plaintiffs allege that

the Legal Arizona Workers Act (“the Act”), Ariz. Rev. Stat.

§§ 23-211 to 23-216, is expressly and impliedly preempted by

the federal Immigration Reform and Control Act of 1986

(“IRCA”), 8 U.S.C. §§ 1324a-1324b, and the Illegal Immigration Reform and Immigrant Responsibility Act of 1996

(“IIRIRA”), Pub. L. No. 104-208, 110 Stat. 3009 (1996), codified in various sections of 8 U.S.C. and 18 U.S.C. They also

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allege that the Act violates employers’ rights to due process

by denying them an opportunity to challenge the federal

determination of the work-authorization status of their

employees before sanctions are imposed. 

The district court held that the law was not preempted. The

main argument on appeal is that the law is expressly preempted by the federal immigration law provision preempting

state regulation “other than through licensing and similar

laws.” 8 U.S.C. § 1324a(h)(2). The district court correctly

determined that the Act was a “licensing” law within the

meaning of the federal provision and therefore was not

expressly preempted. 

There is also a secondary, implied preemption issue that

principally relates to the provision requiring employers to use

the electronic verification system now being refined by the

federal government as a tool to check the work-authorization

status of employees through federal records. It is known as EVerify. Under current federal immigration law, use of the system is voluntary, and the Arizona law makes it mandatory.

We hold that such a requirement to use the federal verification

tool, for which there is no substitute under development in

either the state, federal, or private sectors, is not expressly or

impliedly preempted by federal policy. 

Plaintiffs also contend that the statute does not guarantee

employers an opportunity to be heard before their business

licenses may be revoked. The statute can and should be reasonably interpreted to allow employers, before any license

can be adversely affected, to present evidence to rebut the

presumption that an employee is unauthorized. 

We uphold the statute in all respects against this facial challenge, but we must observe that it is brought against a blank

factual background of enforcement and outside the context of

any particular case. If and when the statute is enforced, and

the factual background is developed, other challenges to the

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Act as applied in any particular instance or manner will not

be controlled by our decision. See Crawford v. Marion

County Election Bd., ___ U.S. ___, 128 S. Ct. 1610, 1621

(2008) (describing heavy burden of persuasion to sustain a

broad attack on the facial validity of a statute in all its applications). 

Background

Sanctions for hiring unauthorized aliens were first created

at the federal level when Congress passed IRCA in 1986. See

Pub. L. No. 99-603, 100 Stat. 3359 (1986). IRCA prohibits

knowingly or intentionally hiring or continuing to employ an

unauthorized alien, 8 U.S.C. § 1324a(a), which it defines as

an alien either not lawfully admitted for permanent residence

or not authorized to be employed by IRCA or the U.S. Attorney General, 8 U.S.C. § 1324a(h)(3).

IRCA also sets out the method of demonstrating an

employer’s compliance with the law through a paper-based

method of verifying an employee’s eligibility, known as the

I-9 system. Id. § 1324a(b). It requires employees to attest to

their eligibility to work and to present one of the specified

identity documents. Id. § 1324a(b)(1), (2). IRCA then requires

employers to examine the identity document the employee

presents and attest that it appears to be genuine. Id.

§ 1324a(b)(1)(A). The employer is entitled to a defense to

sanctions if the employer shows good-faith compliance with

the I-9 system, unless the employer has engaged in a pattern

or practice of violations. Id. § 1324a(b)(6). 

The Attorney General is charged with enforcing violations

of IRCA. Id. § 1324a(e). Hearings are held before selected

administrative law judges (“ALJs”), and the ALJs’ decisions

are reviewable by the federal courts. Id. § 1324a(e)(3). 

IRCA contains an express preemption provision, which

states: “The provisions of this section preempt any State or

CPLC v. NAPOLITANO 13067

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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

aliens.” Id. § 1324a(h)(2). The scope of the savings clause,

which permits state “licensing and similar laws,” is a critical

issue in this appeal. 

IIRIRA directed the Attorney General to establish three

pilot programs to ensure efficient and accurate verification of

any new employee’s eligibility for employment. Pub. L. No.

104-208, §§ 401-405, 110 Stat. 3009, 3009-655 to 3009-666.

One of these programs, the Basic Pilot Program, was to be

made available in at least five of the seven states with the

highest estimated populations of aliens not lawfully present in

the United States. Id. § 401(c), 110 Stat. at 3009-656. Congress amended IIRIRA in 2002 by extending the four-year

period for the pilot programs to a six-year period, see Basic

Pilot Extension Act of 2001, Pub. L. No. 107-128, § 2, 115

Stat. 2407, 2407 (2002), and again in 2003 by extending the

six-year period to an eleven-year period, see Basic Pilot Program Extension and Expansion Act of 2003 (“Expansion

Act”), Pub. L. No. 108-156, § 2, 117 Stat. 1944, 1944 (2003).

The Basic Pilot Program has thus been extended until November 2008. The Expansion Act also expanded the availability

of the Basic Pilot Program to all fifty states. See id. § 3. 

The Basic Pilot Program, now known as E-Verify, is an

internet-based system that allows an employer to verify an

employee’s work-authorization status. It is an alternative to

the I-9 system. After an employer submits a verification

request for an employee, E-Verify either issues a confirmation

or a tentative nonconfirmation of work-authorization status. If

a tentative nonconfirmation is issued, the employer must

notify the employee, who has eight days to challenge the finding. The employer cannot take any adverse action against the

employee during that time. If an employee does challenge the

tentative nonconfirmation, the employer will be informed of

the employee’s final work-authorization status. Any employee

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who either does not challenge a tentative nonconfirmation or

is unsuccessful in challenging a tentative nonconfirmation

must be terminated, or the employer must notify the Department of Homeland Security (“DHS”) that it will continue to

employ that person. An employer who fails to notify DHS of

the continued employment of a person who received a final

nonconfirmation is subject to a civil money penalty. An

employer who continues to employ a person after receiving a

final nonconfirmation is subject to a rebuttable presumption

that it knowingly employed an unauthorized alien. 

Against this federal backdrop, we turn to the state law at

issue here. Arizona enacted the Legal Arizona Workers Act

on July 2, 2007, with an effective date of January 1, 2008.

2007 Ariz. Sess. Laws Ch. 279. The Act allows the superior

courts of Arizona to suspend or revoke the business licenses

of employers who knowingly or intentionally hire unauthorized aliens. Ariz. Rev. Stat. § 23-212. Any person may submit a complaint to the Arizona Attorney General or a county

attorney. Id. § 23-212(B). After determining a complaint is

not false or frivolous, the appropriate county attorney is

charged with bringing an action against the employer in superior court. Id. § 23-212(C), (D). The Act uses IRCA’s definition of “unauthorized alien.” See id. § 23-211(11).

Additionally, the Act requires that the court use the federal

government’s determination of the employee’s lawful status.

Id. § 23-212(H). 

The Act makes participation in E-Verify mandatory for all

employers, although it provides no penalty for violation of the

requirement. See id. § 23-214(A). The Act also includes an

affirmative defense for good-faith compliance, explicitly

incorporating IRCA. See id. § 23-212(J). 

The Act mandates a graduated series of sanctions for violations. A first violation requires the employer to terminate the

employment of all unauthorized aliens, file quarterly reports

of all new hires for a probationary period, and file an affidavit

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stating that it terminated all unauthorized aliens and will not

intentionally or knowingly hire any others. Id. §§ 23-212(F)-

212.01(F). A second violation during the probationary period

results in the permanent revocation of the employer’s business

license. Id. §§ 23-212(F)(2), (3), 23-212.01(F)(2), (3). 

Plaintiffs originally filed an action challenging the Act on

July 13, 2007, less than one month after the Act’s enactment.

The district court dismissed the first action for lack of subject

matter jurisdiction because it did not name as defendants any

of Arizona’s county attorneys, who have the responsibility of

enforcing the Act. 

In December 2007, plaintiffs filed a second complaint, this

time including the Arizona county attorneys as defendants.

The principal contentions were that the Act was expressly

preempted by federal law because the Act was not a “licensing” or “similar” law within the meaning of the savings clause

of IRCA’s preemption provision; that, even if the Act was not

expressly preempted, it was impliedly preempted because its

sanctions provisions and E-Verify requirement conflict with

federal law; and that the Act violated employers’ due process

rights because it did not allow them an adequate opportunity

to dispute the federal government’s response that an employee

was not authorized to work. 

The matter proceeded to hearing, and the district court dismissed the Arizona Attorney General for lack of subject matter jurisdiction, because he lacks the authority to bring

enforcement actions. The court ruled in favor of the remaining

defendants on the merits. It held that the Act is not expressly

preempted by IRCA because the Act is a licensing law within

the meaning of the savings clause. It held that neither the

Act’s sanctions provisions, nor the provision mandating use

of E-Verify, was inconsistent with federal policy, and thus

they were not impliedly preempted. Finally, the court held

that the Act did not, on its face, violate due process because

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employers’ due process rights were adequately protected.

Plaintiffs now appeal. 

Discussion

I. Preemption

Federal preemption can be either express or implied. See

Fid. Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141,

152-53 (1982). When a federal statute contains an explicit

preemption provision, we are to “ ‘identify the domain

expressly pre-empted’ by that language.” Medtronic, Inc. v.

Lohr, 518 U.S. 470, 484 (1996) (quoting Cipollone v. Liggett

Group, Inc., 505 U.S. 504, 517 (1992)). IRCA contains an

express preemption clause in its provision creating sanctions

for hiring unauthorized aliens. It preempts all state sanctions

“other than through licensing and similar laws.” 8 U.S.C.

§ 1324a(h)(2). Plaintiffs contend that the Act is expressly preempted. 

Implied preemption has two subcategories. See Lorillard

Tobacco Co. v. Reilly, 533 U.S. 525, 541 (2001). The first is

field preemption, where “the depth and breadth of a congressional scheme . . . occupies the legislative field.” Id. (citing

Fid. Fed. Sav., 458 U.S. at 153). The second is conflict preemption, which occurs when either “ ‘compliance with both

federal and state regulations is a physical impossibility,’ ”

Fid. Fed. Sav., 458 U.S. at 152 (quoting Fla. Lime & Avocado

Growers, Inc., 373 U.S. 132, 142-43 (1963)), or where “state

law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” id.

(internal quotation marks omitted) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). For conflict preemption to

apply, the conflict must be an actual conflict, not merely a

hypothetical or potential conflict. See English v. Gen. Elec.

Co., 496 U.S. 72, 89 (1990). Plaintiffs contend that even if the

entire Act is not expressly preempted, the mandatory requireCPLC v. NAPOLITANO 13071

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ment to use E-Verify is impliedly preempted because it conflicts with the voluntary program in IIRIRA. 

A. The Act is not expressly preempted because it falls

within IRCA’s savings clause. 

[1] The explicit preemption provision in IRCA states: “The

provisions of this section preempt 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 aliens.” 8

U.S.C. § 1324a(h)(2). The parties agree that the Act is

expressly preempted by IRCA unless it falls within the savings clause of IRCA’s express preemption provision. Plaintiffs argue that the Act does not fall within the savings clause

because they contend the Act is not a “licensing law” within

the ordinary meaning of the phrase, and that the savings

clause was not intended to permit a state to create an adjudication and enforcement system independent of federal

enforcement of IRCA violations. 

The district court held that the plain language of section

1324a(h)(2) does not facially preempt the Act because it does

no more than impose conditions on state licenses to do business and thus falls within the savings clause. Ariz. Contractors Ass’n v. Candelaria, 534 F. Supp. 2d 1036, 1046-47 (D.

Ariz. 2008). The court rejected plaintiffs’ argument that section 1324a(h)(2) permits only licensing sanctions that are preceded by a federal adjudication of employer liability,

reasoning that neither the plain language of section

1324a(h)(2) nor the legislative history supports plaintiffs’

position. Id. at 1046-48. 

[2] The district court also rejected plaintiffs’ argument that

the savings clause should be interpreted narrowly, holding

that because regulation in the employment field is traditionally an area of state concern, there is a presumption against

preemption. Id. at 1050-52. An issue central to our preemp13072 CPLC v. NAPOLITANO

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tion analysis is thus whether the subject matter of the state

law is in an area of traditionally state or federal presence.

When Congress legislates “in a field which the States have

traditionally occupied . . . . we start with the assumption that

the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” United States v. Locke, 529 U.S.

89, 108 (2000) (internal quotation marks omitted) (quoting

Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)).

Conversely, we do not assume non-preemption “when the

State regulates in an area where there has been a history of

significant federal presence.” Id.

[3] A leading case involving the employment of illegal

aliens is De Canas v. Bica, 424 U.S. 351 (1976). The

Supreme Court there upheld a state law prohibiting the

employment of unauthorized aliens against a preemption challenge because it concluded that the authority to regulate the

employment of unauthorized workers is “within the mainstream” of the state’s police powers. Id. at 356, 365. The

Court reasoned that “the fact that aliens are the subject of a

state statute does not render it a regulation of immigration,

which is essentially a determination of who should or should

not be admitted into the country, and the conditions under

which a legal entrant may remain.” Id. at 355. 

[4] Plaintiffs argue that reliance on De Canas is now misplaced because IRCA, passed after De Canas, brought the

regulation of unauthorized employees within the scope of federal immigration law. They rely on language in a later case

where the Court said that IRCA made the employment of

unauthorized workers “central to ‘[t]he policy of immigration

law.’ ” Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S.

137, 147 (2002) (quoting INS v. Nat’l Ctr. for Immigrants’

Rights, Inc., 502 U.S. 183, 194 & n.8 (1991)) (alteration in

original). That case, however, did not involve preemption, or

indeed any state regulation. It considered whether the

National Labor Relations Board (“NLRB”) could award backCPLC v. NAPOLITANO 13073

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pay to an unauthorized worker, and the Court held it could

not. The Court said that the NLRB had impermissibly

“trench[ed] upon federal statutes and policies unrelated to the

[National Labor Relations Act]” by awarding backpay to an

unauthorized alien worker who was improperly terminated

from his employment for participating in union-related activities. Id. at 140, 141, 144. Because it did not concern state law

or the issue of preemption, Hoffman did not affect the continuing vitality of De Canas. We conclude that, because the

power to regulate the employment of unauthorized aliens

remains within the states’ historic police powers, an assumption of non-preemption applies here. 

Plaintiffs contend that the term “license” was intended to

encompass only licenses to engage in specific professions,

such as medicine or law, and not licenses to conduct business.

There is no support for such an interpretation. “Licensing”

generally refers to “[a] governmental body’s process of issuing a license,” Black’s Law Dictionary 940 (8th ed. 2004),

and a “license” is “a permission, usually revocable, to commit

some act that would otherwise be unlawful,” id. at 938. The

Act provides for the suspension of employers’ licenses to do

business in the state. See Ariz. Rev. Stat. § 23-212(F). Such

licenses are defined as “any agency permit, certificate,

approval, registration, charter or similar form of authorization

that is required by law and that is issued by any agency for

the purposes of operating a business in this state.” Id. § 23-

211(9)(a). The statute’s broad definition of “license” is in line

with the terms traditionally used and falls within the savings

clause. The language of the savings clause therefore exempts

such state licensing regulation from express preemption. A

recent district court case that considered the same issue

reached the same conclusion. See Gray v. City of Valley Park,

No. 4:07CV00881 ERW, 2008 WL 294294, at *8, 10, 12

(E.D. Mo. Jan. 31, 2008) (holding that city ordinance governing issuance and denial of business permits fell within meaning of savings clause). But see Lozano v. City of Hazleton,

496 F. Supp. 2d 477, 519-21 (M.D. Pa. 2007) (concluding that

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state law prohibiting employment of illegal aliens was

expressly preempted by IRCA). 

Plaintiffs nevertheless contend that the legislative history

demonstrates that Congress intended the savings clause to

permit states to impose a state sanction only after there had

been a federal determination of an alien’s unauthorized status.

Plaintiffs rely on the second sentence in a paragraph from Part

I of House Report 99-682, which as a whole states: 

The penalties contained in this legislation are

intended to specifically preempt any state or local

laws providing civil fines and/or criminal sanctions

on the hiring, recruitment or referral of undocumented aliens. They are not intended to preempt or

prevent lawful state or local processes concerning

the suspension, revocation or refusal to reissue a

license to any person who has been found to have

violated the sanctions provisions in this legislation.

Further, the Committee does not intend to preempt

licensing or “fitness to do business laws,” such as

state farm labor contractor laws or forestry laws,

which specifically require such licensee or contractor

to refrain from hiring, recruiting or referring undocumented aliens. 

H.R. Rep. No. 99-682(i), at 58 (1986) as reprinted in 1986

U.S.C.C.A.N. 5649, 5662. As the district court found, however, this paragraph as a whole does not support plaintiffs’

argument. The paragraph describes the federal law as preempting “civil fines and/or criminal sanctions,” neither of

which the Act imposes. The paragraph does not suggest that

the federal law would preempt local laws that suspend or

revoke licenses on the basis of IRCA violations, or state

licensing laws that require employers not to hire unauthorized

workers. As the district court concluded, plaintiffs’ reading of

the second sentence, as permitting enforcement only of state

licensing regulations conditioned on federally adjudicated

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violations, is contradicted by the third sentence, which recognizes states can condition an employer’s “fitness to do business” on hiring documented workers. That is what the

Arizona Act does. 

[5] In sum, the Act does not attempt to define who is eligible or ineligible to work under our immigration laws. It is

premised on enforcement of federal standards as embodied in

federal immigration law. The district court therefore correctly

held that the Act is a “licensing” measure that falls within the

savings clause of IRCA’s preemption provision. 

Plaintiffs finally contend that this kind of state regulation

must be preempted because there is a potential for conflict in

the practical operation of the state and federal law. They point

to a hypothetical situation in which an employer may be subject to conflicting rulings from state and federal tribunals on

the basis of the same hiring situation. Whether principles of

comity or issue preclusion would allow such a result are questions not addressed by the parties. In any event, a speculative,

hypothetical possibility does not provide an adequate basis to

sustain a facial challenge. See Crawford, 128 S. Ct. at 1621.

B. The Act’s provision mandating the use of E-Verify is

not impliedly preempted by federal law. 

Plaintiffs argue that the Arizona provision mandating the

use of E-Verify is impliedly preempted because it conflicts

with Congressional intent to keep the use voluntary. They

contend that Congress wanted to develop a reliable and nonburdensome system of work-authorization verification, and

that mandatory use of E-Verify impedes that purpose. They

rely on the Supreme Court’s decision in Geier v. Am. Honda

Motor Co., 529 U.S. 861 (2000). Geier recognized that state

laws that fall within a savings clause and are therefore not

expressly preempted are still subject to the “ordinary working

of conflict pre-emption principles.” Id. at 869. A state law is

preempted through conflict preemption when it “ ‘stands as an

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obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” Id. at 873 (quoting

Hines, 312 U.S. at 67). Geier involved a Department of

Transportation regulation that was designed to encourage

competition among automobile manufacturers to design effective and convenient passive-restraint systems. The regulation

required only 10% of a car manufacturer’s production to

include airbags. The Court in Geier held that state tort law,

permitting liability to be imposed for failure to provide airbags, conflicted with the federal policy to encourage development of different restraint systems. Id. at 886. 

[6] The district court here held that Arizona’s requirement

that employers use E-Verify was not preempted because,

while Congress made participation in E-Verify voluntary at

the national level, that did not in and of itself indicate that

Congress intended to prevent states from making participation

mandatory. Ariz. Contractors, 534 F. Supp. 2d at 1055-56.

We agree with that holding. Congress could have, but did not,

expressly forbid state laws from requiring E-Verify participation. It certainly knew how to do so because, at the same time,

it did expressly forbid “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 aliens.” 8 U.S.C. § 1324a(h)(2). 

[7] Furthermore, this case is unlike Geier, where the

Supreme Court found strong evidence of Congress’s intent to

promote competition and balance federal goals in a competitive environment encouraging alternative systems. Here, EVerify is a federal government service that Congress has

implicitly strongly encouraged by expanding its duration and

its availability (to all fifty states). See Basic Pilot Program

Extension and Expansion Act of 2003, Pub. L. No. 108-156,

117 Stat. 1944, 1944; Basic Pilot Extension Act of 2001, Pub.

L. No. 107-128, sec. 2, 115 Stat. 2407, 2407. Though Congress did not mandate E-Verify, Congress plainly envisioned

and endorsed an increase in its usage. The Act’s requirement

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that employers participate in E-Verify is consistent with and

furthers this purpose, and thus does not raise conflict preemption concerns. 

Appellants contend that conflict preemption is a concern

here also because of the Act’s potentially discriminatory

effects. Their argument is that E-Verify increases discrimination against workers who look or sound “foreign,” and that

mandatory E-Verify usage thus upsets the enforcement/

discrimination balance that Congress has maintained by keeping E-Verify optional. This argument fails because Congress

requires employers to use either E-Verify or I-9, and appellants have not shown that E-Verify results in any greater discrimination than I-9. 

II. Due Process

The deprivation of a property interest must “ ‘be preceded

by notice and opportunity for hearing appropriate to the

nature of the case.’ ” Cleveland Bd. of Educ. v. Loudermill,

470 U.S. 532, 542 (1985) (quoting Mullane v. Cent. Hanover

Bank & Trust Co., 339 U.S. 306, 313 (1950)). An Arizona

business license is a property interest. See, e.g., Comeau v.

Ariz. State Bd. of Dental Exam’rs, 993 P.2d 1066, 1070 (Ariz.

Ct. App. 1999). An opportunity to be heard must be “ ‘at a

meaningful time and in a meaningful manner.’ ” Mathews v.

Eldridge, 424 U.S. 319, 333 (1976) (quoting Armstrong v.

Manzo, 380 U.S. 545, 552 (1965)). Employers thus should be

given an opportunity to be heard before their business licenses

are suspended or revoked under the Act. 

The Act sets forth the procedures to be followed in bringing

an enforcement action. Any person may submit a complaint

about a suspected violation to either the Arizona Attorney

General or a county attorney. Ariz. Rev. Stat. § 23-212(B).

The Attorney General or county attorney investigating a complaint must verify the alleged unauthorized alien’s workauthorization status with the federal government pursuant to

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8 U.S.C. § 1373; the state official is prohibited from attempting to make an independent determination of the alien’s status. Id. After a complaint is investigated and found not to be

false or frivolous, a county attorney must bring an enforcement action against the employer in state court in the county

in which the alien was employed. Id. § 23-212(C), (D). The

court is to expedite the action, which includes scheduling the

hearing as quickly as is practicable. Id. § 23-212(E). 

Subsection (H) of section 212 describes the state court’s

procedures to obtain information from the federal government

on whether an alien was unauthorized to work:

On [sic] determining whether an employee is an

unauthorized alien, the court shall consider only the

federal government’s determination pursuant to 8

United States Code § 1373(c). The federal government’s determination creates a rebuttable presumption of the employee’s lawful status. The court may

take judicial notice of the federal government’s

determination and may request the federal government to provide automated or testimonial verification pursuant to 8 United States Code § 1373(c). Id.

§ 23-212(H). Section 1373(c) of title 8 of the U.S.

Code provides that the Immigration and Naturalization Service “shall respond to an inquiry by a Federal, State, or local government agency, seeking to

verify or ascertain the citizenship or immigration status of any individual within the jurisdiction of the

agency for any purpose authorized by law, by providing the requested verification or status information.” 8 U.S.C. § 1373(c). 

Plaintiffs contend, in this facial challenge, that the Act violates due process because it deprives employers of their business licenses without providing them an adequate opportunity

to dispute whether an employee was authorized to work.

Plaintiffs rely on the first sentence of subsection (H) to argue

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that the Act prohibits employers at the state-court hearing

from presenting any evidence to rebut the federal government’s § 1373 response on the issue of the employee’s work

status. Defendants, however, point to the second sentence of

subsection (H), which provides that the federal response

creates only a rebuttable presumption. They contend that the

employer can rebut the federal response with other evidence

during a hearing. 

[8] Plaintiffs’ interpretation of subsection (H) is flawed

because it gives no meaning to the second sentence of the provision. That sentence at least implicitly contemplates a hearing to rebut the presumption created by the federal

determination of an employee’s unauthorized status. See Ariz.

Rev. Stat. § 23-212(H). Arizona law, consistent with ordinary

principles of statutory interpretation, requires that “ ‘[e]ach

word, phrase, clause, and sentence [of a statute] must be given

meaning so that no part will be void, inert, redundant, or trivial.’ ” Williams v. Thude, 934 P.2d 1349, 1351 (Ariz. 1997)

(second alteration in original) (emphasis omitted) (quoting

City of Phoenix v. Yates, 208 P.2d 1147, 1149 (Ariz. 1949)).

We conclude that the statute provides an employer the opportunity, during the state court proceeding, to present rebuttal

evidence. 

Furthermore, defendants explain any apparent incongruity

between the first two sentences of subsection (H) by pointing

to parallel language found in an earlier subsection, subsection

(B), which relates to the initial investigation of a complaint:

When investigating a complaint, the attorney general

or county attorney shall verify the work authorization of the alleged unauthorized alien with the federal government pursuant to 8 United States Code

§ 1373(c). A state, county or local official shall not

attempt to independently make a final determination

on whether an alien is authorized to work in the

United States. 

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Ariz. Rev. Stat. § 23-212(B). Defendants explain that this section, like the first sentence of subsection (H), provides, somewhat inartfully, that the initial investigation and the basis for

bringing an enforcement action must be limited to the federal

response, thereby precluding independent state investigation.

The employer would then have the opportunity to present evidence. The district court agreed. The district court persuasively reasoned that requiring the state or county to obtain a

federal determination of an employee’s work status before

bringing proceedings may be intended to protect employees

from direct investigation by the state. 

[9] We therefore conclude that the district court correctly

determined that the Act provides sufficient process to survive

this facial challenge. More importantly, the district court also

found that the statute does not preclude the presentation of

counterevidence when an employer’s liability is at issue, Ariz.

Contractors, 534 F. Supp. 2d at 1058, and we agree with this

interpretation. An employer’s opportunity to present evidence

at a hearing in superior court, in order to rebut the presumption of the employee’s unauthorized status, provides the

employer a meaningful opportunity to be heard before sanctions are imposed. We conclude that subsection (H) is facially

constitutional. 

The district court’s judgment is AFFIRMED. 

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