Opinion ID: 599255
Heading Depth: 1
Heading Rank: 1

Heading: Preemption and the Rehabilitation Act4

Text: 4 Section 503 of the Rehabilitation Act of 1973, 29 U.S.C. § 793, requires any contract with the federal government in excess of $2,500 to include a provision obligating the federal contractor to take affirmative action to employ and advance in employment qualified individuals with handicaps. 29 U.S.C. § 793(a). Any handicapped individual who believes a contractor has failed to comply with this provision may file a complaint with the Department of Labor, which must conduct an investigation and take appropriate action. 29 U.S.C. § 793(b). Regulations promulgated pursuant to § 503 specify a detailed administrative enforcement mechanism for its breach. See 41 C.F.R. §§ 60-741.1-741.32 (1991). The Department's Office of Federal Contract Compliance Programs (OFCCP) is empowered, for example, to seek injunctive relief in court, terminate or cancel a contract, or bar a contractor from receiving future contracts. 41 C.F.R. § 60-741.28(b)-(e) (1991). It also may seek such remedies as back pay and reinstatement for affected employees. See Dep't of Labor v. Texas Indus., Inc., 47 Fair Empl.Prac.Cas. (BNA) 18, 28 (Dep't Labor 1988). See Howard v. Uniroyal, Inc., 719 F.2d 1552, 1559 (11th Cir.1983) (detailing enforcement procedures). 5 In a motion for summary judgment, Exxon, which is a federal contractor, argued that § 503 preempts virtually all of Ellenwood's state law claims, 5 and that Ellenwood's only recourse on matters related to his alcohol treatment is the claim he has filed with the OFCCP. The district court rejected this contention, finding no evidence that Congress intended the provision to eliminate conventional state law claims such as breach of contract, misrepresentation, defamation or infliction of emotional distress, because these claims are in no way related to the federal Rehabilitation Act, any affirmative action clause in a government contract, or handicap discrimination. See Memorandum of Decision, Oct. 15, 1991, at 3. The court also ruled, however, that § 503 did preempt Count V's direct claim of discrimination on the basis of handicap in violation of various state statutes, and Count IV's common law claim that Ellenwood's discharge violated a public policy promoting responsible treatment of alcoholism. 6 Neither party is satisfied with this Solomonic division of the claims. Accordingly, on appeal, we are asked to consider both Ellenwood's claim that the district court erred in ruling that § 503 preempts Counts IV and V and Exxon's contrary assertion that the district court erred in finding that the federal statute does not preempt the contract and promissory estoppel claims on which Ellenwood received a jury verdict. The State of Maine joins Ellenwood in arguing that § 503 does not preempt a claim of handicap discrimination brought under its Human Rights Act, 2A Me.Rev.Stat.Ann. tit. 5, §§ 4571-72 (Supp.1992). We take up each plea for reversal in turn, following a brief review of the well established contours of preemption law.
7 The preemption doctrine is rooted in the Supremacy Clause, which invalidates state laws that interfere with, or are contrary to, the laws of congress. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211, 6 L.Ed. 23 (1824). See also Cipollone v. Liggett Group, Inc., --- U.S. ----, ----, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992). A court's sole task in determining whether a state statute is preempted is to ascertain whether Congress intended the federal law to have such effect. California Federal Savings & Loan Ass'n v. Guerra, 479 U.S. 272, 280, 107 S.Ct. 683, 689, 93 L.Ed.2d 613 (1987); Massachusetts Medical Society v. Dukakis, 815 F.2d 790, 791 (1st Cir.1987). Although Congress may articulate its intent explicitly, see, e.g., Jones v. Rath Packing Co., 430 U.S. 519, 532, 97 S.Ct. 1305, 1313, 51 L.Ed.2d 604 (1977), it does not always do so, and the challenge of preemption law is to identify occurrences of implied preemption. Preemption by implication may take place in different ways. 8 First, congressional intent to preempt state law may be inferred when the scheme of federal regulation in a particular area is sufficiently pervasive and complex to make reasonable the inference that Congress 'left no room' for supplementary state regulation, California Federal Savings & Loan Ass'n, 479 U.S. at 281, 107 S.Ct. at 689 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947)); see also Dukakis, 815 F.2d at 791. Second, in areas where Congress has not entirely displaced state regulation, state law will be deemed preempted to the extent it actually conflicts with federal law. Such a conflict occurs either because  'compliance with both federal and state regulations is a physical impossibility,' ..., or because the state law stands 'as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'  California Federal Savings & Loan Ass'n, 479 U.S. at 281, 107 S.Ct. at 689 (quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963) and Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941)). See also O'Brien v. Consolidated Rail Corp., 972 F.2d 1, 3 (1st Cir.1992). 9 These alternative avenues to preemption do not mean that either route is to be chosen lightly. The Supreme Court recently reiterated the longstanding principle that  'the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [course is] the clear and manifest purpose of Congress.'  Cipollone, --- U.S. at ----, 112 S.Ct. at 2617 (quoting Rice, 331 U.S. at 230, 67 S.Ct. at 1152). Thus, the presumption is against preemption. Id. --- U.S. at ----, 112 S.Ct. at 2618.
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11 Section 503 contains no express language regarding preemption. Our task, therefore, is to determine whether there are other indicia of Congressional intent to render state discrimination laws ineffectual against federal contractors. Exxon essentially makes a two-pronged argument. First, it cites legislative history suggesting that Congress sought a uniform federal remedy for violations of § 503, which would be frustrated if contractors additionally were subject to varying state laws. Thus, according to Exxon, Congress must have intended to preempt state provisions. 12 Second, Exxon suggests that the detailed nature of the administrative scheme promulgated under § 503 demonstrates Congress's intent to foreclose other types of remedies against federal contractors. Exxon maintains that, while Congress has not fully occupied the field of handicap discrimination, with respect to federal contractors, it has  'left no room' for supplementary state regulation, California Federal Savings & Loan Ass'n, 479 U.S. at 281, 107 S.Ct. at 689. 13 In our view, what Exxon offers as proof of an intent to preempt falls short of the mark. The legislative history on which the company relies is a single passage in a Senate Committee Report relating to amendments to the Rehabilitation Act that were enacted a year after the Act itself. The amendments made no change in either sections 503 or 504 of the Act, 6 but the Senate Report commented:It is intended that sections 503 and 504 be administered in such a manner that a consistent, uniform, and effective Federal approach to discrimination against handicapped persons would result. Thus, Federal agencies and departments should cooperate in developing standards and policies so that there is a uniform, consistent Federal approach to these sections. 14 S.Rep. No. 1297, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 6373, 6391. 15 Exxon claims this passage demonstrates that Congress was seeking an exclusive approach to handicap discrimination by federal contractors, and that, consequently, it must have intended § 503 to displace parallel state laws governing the same conduct. Even without regard for the lesser weight accorded this subsequent history than would be accorded contemporaneous legislative comments, see Heckler v. Turner, 470 U.S. 184, 209, 105 S.Ct. 1138, 1151, 84 L.Ed.2d 138 (1985), we believe Exxon has read far too much into the quoted remarks. 16 We are persuaded that the passage in no way implicates state law but instead reflects Congress's concern about the lack of coordination on the federal level between the two agencies responsible for implementing sections 503 and 504. The Senate Report continues from the portion quoted above to elaborate on the agencies' relationship: 17 The Secretary of the Department of Health, Education, and Welfare, because of that Department's experience in dealing with handicapped persons and with the elimination of discrimination in other areas, should assume responsibility for coordinating the section 504 enforcement effort and for establishing a coordinating mechanism with the Secretary of the Department of Labor to ensure a consistent approach to the implementation of sections 503 and 504. 18 S.Rep. No. 1297, 93rd Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 6373, 6391. In our view, Congress was calling for a more uniform and consistent Federal approach to discrimination against handicapped persons, id. (emphasis added); nothing in the passage indicates that it was seeking to eliminate any role for state law. See D'Amato v. Wisconsin Gas Co., 760 F.2d 1474, 1482 (7th Cir.1985) (by insisting on coordination, Congress was directing that the two responsible agencies were not to work at cross purposes or to duplicate each other's efforts) (citation omitted). 19 Exxon's second basis for inferring an intent to preempt--the comprehensive and detailed regulations promulgated under § 503--is equally unavailing. The fact that Congress has implemented an extensive regulatory scheme in a particular area does not lead necessarily to the conclusion that it intended to displace parallel state remedies. As the Supreme Court stated in Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 716-18, 105 S.Ct. 2371, 2377, 85 L.Ed.2d 714 (1985): 20 To infer pre-emption whenever [a federal agency] deals with a problem comprehensively is virtually tantamount to saying that whenever a federal agency decides to step into a field, its regulations will be exclusive. Such a rule ... would be inconsistent with the federal-state balance embodied in our Supremacy Clause jurisprudence. 21 See also R.J. Reynolds Tobacco Co. v. Durham County, 479 U.S. 130, 149, 107 S.Ct. 499, 511, 93 L.Ed.2d 449 (1986) (preemption should not be inferred simply because federal agency's regulations are comprehensive). Exxon cites nothing in the state provisions that would make compliance with both state law and the detailed § 503 scheme a physical impossibility, Florida Avocado & Lime Growers, 373 U.S. at 143, 83 S.Ct. at 1217, and, in the absence of other evidence of preemptive intent, there is no basis for displacing the state law. 22 In accepting Exxon's argument that Congress intended to preempt state anti-discrimination remedies against federal contractors, the district court relied entirely on the analysis of the Eleventh Circuit in Howard v. Uniroyal, Inc., 719 F.2d 1552 (1983). In Howard, the plaintiff had alleged a claim under Alabama law as a third party beneficiary of the § 503 affirmative action clause contained in contracts between his employer and the federal government. 23 The Eleventh Circuit rejected this claim. It held that state contract remedies could not be used to enforce § 503 essentially for the reasons Exxon has offered to us in support of its preemption argument. Emphasizing the Senate Report's reference to federal uniformity and the comprehensiveness of the § 503 administrative scheme, the Howard court found it reasonable to infer that Congress left no room in section 503(b) for state contract actions to supplement it, id. at 1559. The court concluded that allowing the plaintiff to broaden enforcement of the affirmative action clause by means of state law could frustrate directly the specific scheme designed by Congress, allowing a private claim through the back door that couldn't come through the front door. 24 An inference of preemption was further warranted, the court held, because Congress's substantial interest in enforcing the affirmative action clause--determining appropriate terms, conditions and remedies--was more substantial than the state's interest in providing a remedy for third party beneficiaries seeking to enforce the same clause. Id. at 1561. 25 We believe Exxon and the district court have relied unwisely on Howard, which differs from this case in a crucial respect. There, the plaintiff sought to use state law to enforce § 503 itself; the court ruled that Congress intended the federal administrative remedy to be the plaintiff's sole means of enforcing the affirmative action clause. Here, however, Ellenwood is seeking to enforce not § 503, but independent obligations created by state anti-discrimination statutes. 26 The claim in this case does not threaten the uniformity of the § 503 system. Rather, the issue here is one of compatibility, specifically, whether there is any basis for inferring that Congress believed an independent state remedy could not co-exist with the § 503 system. Howard is not helpful in this context. In the employment discrimination field, Congressional enactments have long evinced a general intent to accord parallel or overlapping remedies against discrimination. Alexander v. Gardner-Denver Co., 415 U.S. 36, 47, 94 S.Ct. 1011, 1019, 39 L.Ed.2d 147 (1974). See also California Federal Savings & Loan, 479 U.S. at 282-83, 107 S.Ct. at 690-91; Kremer v. Chemical Construction Corp., 456 U.S. 461, 468-69, 102 S.Ct. 1883, 1890, 72 L.Ed.2d 262 (1982); Muncy v. Norfolk and Western Railway Co., 650 F.Supp. 641, 644 (S.D.W.Va.1986) (ruling that § 503 does not preempt state human rights act). Nothing in § 503, which is focused narrowly on the contractual requirement for an affirmative action clause, provides a basis to infer a departure from that traditional approach. 27 In addition, several references in § 503's legislative history suggest that, rather than seeking to preempt state law through comprehensive legislation, Congressional leaders recognized that the federal statute was a modest one: 28 We are just beginning to do too little as the dimension of the problem grows in geometric proportion. Congressman Vanik, Congressional Record--House 18137 (June 5, 1973); [W]e have only begun to scratch the surface in meeting the needs of our disabled fellow citizens. Congressman Brademus [sic], Congressional Record--House 30149 (September 18, 1973); I do not consider [this bill] to be a perfect bill, or in all honesty, even an adequate bill. Senator Randolph, Congressional Record--Senate 34586 (July 18, 1973). 7 29 Raytheon Co. v. Fair Employment and Hous. Comm'n, 46 Fair Empl.Prac.Cas. (BNA) 1089, 1099 (Cal.Sup.Ct.1988), aff'd, 212 Cal.App.3d 1242, 261 Cal.Rptr. 197 (2d Dist.1989). 30 A year later, in the Rehabilitation Act Amendments of 1974, Congress added a provision requiring state agencies that administer programs funded under the Act to take affirmative action to employ and advance qualified handicapped individuals who are covered under § 503. See Senate Report No. 1297, reprinted in 1974 U.S.C.C.A.N., at 6391-92. The Senate Committee Report noted that these agencies are expected to adopt strong affirmative action programs which are at least equivalent to those now being developed for Federal agencies. Id. at 6392 (emphasis added). These comments, although referring to administering agencies rather than federal contractors, nevertheless suggest that Congress both acknowledged the role played by states in the area of handicap discrimination and assumed that states might choose to provide different--greater--protection than that afforded by the federal government. See Raytheon, 46 Fair Empl.Prac.Cas., at 1099. 8 31 Finally, we note that, in the recent Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101-12213, which amended the Rehabilitation Act and extended remedies for handicap discrimination against many more private employers, Congress stated explicitly that the legislation did not limit the remedies, rights, and procedures of any ... law of any State ... or jurisdiction that provides greater or equal protection for the rights of individuals with disabilities than are afforded by this chapter. 42 U.S.C. § 12201(b). While this provision obviously can have no effect on our view of Congressional intent in 1973, it is a particularly pertinent example of Congress's historical practice of allowing overlapping remedies for employment discrimination. 9 32 Exxon attempts to distance this case from the tradition of overlapping remedies in two ways. First, it asserts that Congress has a unique interest in regulating federal contractors and, second, it claims that the area of handicap discrimination requires an extraordinary balancing of competing interests that distinguishes it from other types of employment discrimination, such as those involving race, gender or age. In the handicap discrimination field, Exxon maintains, the possibility of conflicting judgments is much greater because courts in different jurisdictions could reach widely disparate conclusions on such basic questions as what constitutes a handicap and which handicapped persons are qualified to hold particular positions. Restricting individuals to their § 503 remedy would ensure that a federal contractor doing business in more than one state would face uniform obligations nationwide. 33 We think it unlikely that Congress has a special interest in immunizing federal contractors from obligations otherwise applicable to them under state handicap discrimination statutes. These companies may do only $2,500 in business with the federal government, with the bulk of their enterprise devoted to commerce within a single state. This division gives the state a substantial interest in protecting the employment interests of its handicapped citizens. The developing nature of the issues raised in the field of handicap discrimination strikes us as insufficient justification for excusing these employers from obligations imposed on others who differ only in that the federal government is not one of their customers. 34 Moreover, Exxon's obligation is not simply to identify reasons why Congress might have departed from its usual practice, but to demonstrate a reasonable basis for inferring that Congress did, in fact, intend to make the federal remedy exclusive in this single area of employment discrimination law. Exxon has offered nothing from which we can discern such an intent. 35 In sum, we find no clear and manifest intent on the part of Congress to preempt state handicap discrimination claims against federal contractors. Indeed, we find no signals of such an intent. 10 36
37 In its appeal, Exxon contends that the district court should have extended its § 503 preemption ruling to Ellenwood's contract and promissory estoppel claims as well. Exxon points out that these claims allege that the company breached an agreement or promise not to discriminate on the basis of Ellenwood's handicap of alcohol abuse. Again relying solely on the uniformity rationale, Exxon argues that all state claims based on the same assertedly discriminatory conduct are foreclosed by § 503. 38 Our ruling on the statutory claims also is dispositive here. We note, however, one instance in which a contract claim based on statements in a company policy manual may be preempted by § 503. Regulations promulgated under the statute require employers to post notices of their Rehabilitation Act obligations and of employee rights under § 503 in conspicuous places. See 41 C.F.R. § 60-741.4(d). If an employer included such a notice in its policy manual solely to comply with this regulation, a state contract claim based on a breach of the manual provision arguably would be preempted by the federal law. See Arellano v. Amax Coal Co., 56 Fair Empl.Prac.Cas. (BNA) 1519, 1524-25, 1991 WL 286174 (D.Wy.1991). Such a claim, though in the guise of a contract claim based on the manual, would seem no different from one directly asserting a breach of § 503. A direct claim under § 503 unquestionably would be preempted for the reasons set out in Howard. 39 Exxon does not contend that the statements at issue here were required by § 503. Indeed, such a contention would be patently unsupportable. Ellenwood's contract and estoppel claims are not premised on a general notice of Exxon's affirmative action obligations toward handicapped individuals, but on a very specific written assurance from the company that it would not disadvantage employees for seeking treatment for alcoholism. 40 We therefore hold that the district court correctly determined that Ellenwood's contract and estoppel claims were not preempted by § 503.