Opinion ID: 2511318
Heading Depth: 1
Heading Rank: 2

Heading: Identifying the Correct Analytical Approach

Text: The Supreme Court has articulated various protocol[s] for dormant Commerce Clause analysis, Dep't of Revenue of Ky. v. Davis, 553 U.S. 328, 338, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008), none of which seems fully apt here. This is plainly not an instance of discriminatory purpose or treatment in which the statute should be deemed per se invalid because it favors in-state over out-of-state interests. See, e.g., Alliance of Auto. Mfrs. v. Gwadoosky, 430 F.3d 30, 35-36 (1st Cir.2005) (noting that the core purpose of the dormant Commerce Clause is to prevent states and their political subdivisions from promulgating protectionist policies (quotation marks and citation omitted)). The law imposes the same burden on every competitor, and out-of-state entities would gain no advantage by relocating to Maine. [50] Plaintiffs, unsurprisingly, have relied primarily on the extraterritoriality doctrine, and the proposition that a statute may be deemed per se invalid if it directly controls commerce occurring wholly outside the boundaries of a State. Healy v. Beer Inst., Inc. 491 U.S. 324, 336, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989); see also Wine & Spirits Retailers, Inc. v. Rhode Island [ Wine & Spirits II ], 481 F.3d 1, 15 (1st Cir.2007); Pharm. Research & Mfrs. of Am. v. Concannon [ PhRMA ], 249 F.3d 66, 79-80 (1st Cir.2001), aff'd sub nom. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). Such laws may subject activities to more than one state's regulations, leading to the possibility of conflicting obligations. See, e.g., Healy, 491 U.S. at 336-37, 109 S.Ct. 2491; CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 88-89, 107 S.Ct. 1637, 95 L.Ed.2d 67 (1987); Peter C. Felmly, Comment, Beyond the Reach of States: The Dormant Commerce Clause, Extraterritorial State Regulation, and the Concerns of Federalism, 55 Me. L.Rev. 467, 509 (2003) (observing that the extraterritoriality principle ensures that a state will not overstep its bounds and unreasonably trample upon the authority of another sovereign). Plaintiffs also invoke the so-called Pike balancing test, which is applied to laws that regulate evenhandedly and have only incidental effects on interstate commerce. See Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970); [51] see also United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 346, 127 S.Ct. 1786, 167 L.Ed.2d 655 (2007). [52] Neither of these latter alternatives is a good fit for the present circumstances. The per se extraterritoriality analysis may appear literally applicable, given that the statute's red flag has a direct impact almost exclusively on out-of-state commerce. Yet, as I observed in Ayotte, whether extraterritoriality is impermissible in every instance, or whether it transgresses the dormant Commerce Clause only when the challenged statute is discriminatory or protectionist in nature, appears to be [a] relevant consideration. 550 F.3d at 105 (citing Felmly, supra, at 491). The Maine law does not by its terms impose restraints on non-domestic businesses, and the imbalance between in-state and out-of-state effect is a matter of happenstance not design. The statute does not seek to achieve conformity between in-state and out-of-state commerce. [53] Additionally, there is no risk of conflict with other states' regimes. No other State has a stake in the use of prescriber-identifiable data in Maine or any obvious interest in the use of Maine prescriber information in their own locales. Indeed, it is arguable that, despite the statute's impact on commercial transactions that occur almost entirely out of state, the commerce it controls is not wholly outside [Maine's] boundaries. Healy, 491 U.S. at 336, 109 S.Ct. 2491. The subject matter of the law is data that both originates in Maine and is intended for marketing use in Maine. Maine's aim is to regulate on a matter of public welfare only within Maine. Cf. Midwest Title Loans, Inc. v. Mills, 593 F.3d 660, 667-68 (7th Cir.2010) (invalidating Indiana statute that sought to protect Indiana residents from predatory lending practices by businesses located in other states). On the other hand, it is difficult to characterize the statute's effect on out-of-state commerce as incidental when its prohibition in fact has its primary impact outside the State. See, e.g., Healy, 491 U.S. at 336, 109 S.Ct. 2491 (The critical inquiry is whether the practical effect of the regulation is to control conduct beyond the boundaries of the State.). The various labels ordinarily are invoked because they are associated with different levels of scrutiny. We have observed that a statute that regulates evenhandedly engenders a lower level of scrutiny, Wine and Spirits II, 481 F.3d at 11 (quotation marks and citation omitted), while [a] statute is per se invalid if it regulates commerce wholly outside the state's borders, id. at 15. Identifying the appropriate label should not distract us, however, or bog us down at the threshold of analysis. Despite the different protocols for dormant Commerce Clause inquiry, the Supreme Court has observed that there is no clear line separating the various types of state regulation and that the same critical consideration applies to each category: the overall effect of the statute on both local and interstate activity. Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986) (referring to regulations that are virtually per se invalid under the Commerce Clause, and the category subject to the Pike v. Bruce Church balancing approach); see also Healy, 491 U.S. at 337 n. 14, 109 S.Ct. 2491 (noting the same critical consideration in determining whether the extraterritorial reach of a statute violates the Commerce Clause); Am. Booksellers Found. v. Dean, 342 F.3d 96, 102 (2d Cir.2003). This dual concern is an inevitable byproduct of our system of federalism. The Court has often remarked in its dormant Commerce Clause cases that States retain authority under their general police powers to regulate matters of legitimate local concern, even though interstate commerce may be affected. Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986) (quotation marks and citation omitted); see also, e.g., Davis, 553 U.S. at 338, 128 S.Ct. 1801; cf. Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 546, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). Hence, in reviewing a statute challenged under the dormant Commerce Clause, we are always guided by the Constitution's special concern both with the maintenance of a national economic union unfettered by state-imposed limitations on interstate commerce and with the autonomy of the individual States within their respective spheres. Healy, 491 U.S. at 335-36, 109 S.Ct. 2491 (footnote omitted). Indeed, even the rigorous form of review applicable to discriminatory legislation allows exemption for a statute that furthers a legitimate local objective that cannot be served by reasonable non-discriminatory means. Wine and Spirits II, 481 F.3d at 11. Local needs also must qualify the near-fatal rule of per se invalidity for statutes that regulate extraterritorially. See Felmly, supra, at 492; id. at 488 (observing that [o]ne may infer from language in CTS Corp., 481 U.S. at 93, 107 S.Ct. 1637, that where a state has a significant interest in regulating a particular aspect of interstate commerce, it may do so, regardless of the extraterritorial effect of the legislation, if the regulation also affects a substantial number of in-state residents). I thus see the most relevant and appropriate question as simply whether Maine's interests are sufficiently weighty to justify any burdens its law imposes on interstate commerce. Whatever the label and however we describe the level of scrutiny, the outcome here is the same.