Seth Berenzweig, managing partner of Berenzweig Leonard, discusses the breaking news of the D.C. federal court’s decision to reject the Justice Department’s attempt to block the AT&T – Time Warner deal.
On 14 May 2018, the Supreme Court decided Murphy, et al. v. NCAA, et al., ___ U.S. ___, No. 16-476, striking down the Professional and Amateur Sports Protection Act (PASPA).
PASPA made it unlawful for a state or its subdivisions to sponsor, operate, advertise, promote, license, or authorize by law or compact betting on competitive sporting events. 28 USC §3702(1). PASPA did not make sports gambling a federal crime. Instead, it allowed the Attorney General and professional and amateur sports organizations to bring civil actions to enjoin violations. It is important to note that PASPA operated directly on States. Its provision at issue restricted the law-making power of a State’s legislature and political subdivisions from enacting laws authorizing sports betting or authorizing (licensing) private persons to operate sports betting. PASPA was a command from Congress forbidding States and their subdivisions from enacting a certain type of legislation, namely, legislation authorizing or licensing sports betting.
The question was whether PASPA’s prohibition on a State authorizing or licensing sports gambling was unconstitutional under the anticommandeering doctrine enunciated in New York v. United States, 505 U.S. 144 (1992) and Printz v. United States, 521 U.S. 898 (1997). In New York, the Court held that a federal law unconstitutionally ordered States to regulate in accordance with federal standards, and in Printz the Court held that a federal statute unconstitutionally compelled State officers to enforce federal law.
For many years, sports gambling was illegal in New Jersey. Over time attitudes changed, and in 2012 New Jersey’s legislature enacted a law authorizing (legalizing) sports gambling in Atlantic City and at horseracing tracks. The NCAA and three major professional sports leagues sued New Jersey in federal court to enjoin New Jersey’s law on the ground that it violated PASPA’s provision prohibiting a state from authorizing or licensing sports gambling. The district court granted the injunction and the 3rd Circuit affirmed. The 3rd Circuit thought it significant that PASPA did not impose an affirmative command on States. It did not require States to “lift a finger.” It simply prohibited States from authorizing sports betting. The 3rd Circuit opined that the mere repeal of an existing State law banning sports gambling might not be an authorization to gamble on sporting events and might fall outside PASPA’s prohibition on authorizing sports gambling. The Supreme Court did not review the 3rd Circuit’s decision.
Picking up on the suggestion that a repeal would be allowed, in 2014 New Jersey’s legislature enacted a new law framed as a repeal of New Jersey’s existing prohibition on sports gambling, insofar as the occurred at horseracing tracks, casinos and gambling houses in Atlantic City. As expected, the NCAA, et al., filed a new action in federal court; and they won in the district court, and the 3rd Circuit affirmed, abandoning its previous suggestion that a mere repeal might not violate PASPA and holding that 2014 law also violated PASPA.
The Supreme Court reversed and held that PASPA’s prohibition against a state authorizing sports betting violates the anticommandeering principle set forth in New York and Printz. The Court said that the provision of PASPA prohibiting state authorization of sports gambling “unequivocally dictates what a state may or may not do. The Court noted that the NCAA, et al., did not contend that Congress can compel a state to enact legislation, but they argued that prohibiting a state from enacting new laws is different. Commandeering occurs, they contended, only when Congress goes beyond precluding state action and affirmatively commands it. The Supreme Court said that “distinction is empty.” Under the anticommandeering principle, it is unconstitutional for Congress to command that a state shall take an action and to command that a state may not take an action. The Court rejected a distinction between affirmative and negative commands. Thou shall and thou shall not are both direct commands.
The Court said that the anticommandeering doctrine is the expression of a fundamental structural decision to withhold from Congress the power to issue orders directly to the States. The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved to the States, as the 10th Amendment confirms. Conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States. (It should be noted that the anticommandeering doctrine does not apply when Congress evenhandedly regulates an activity in which both States and private parties engage. Reno v. Condon, 528 U.S. 141 (2000))
The NCAA, et al., contended that PASPA is Constitutional because it preempts State laws under the Supremacy Clause. The Court rejected that argument because the Supremacy Clause is not an independent grant of legislative power to Congress. It is a “rule of decision,” Armstrong v. Exceptional Child Care, Inc., 575 U.S. ___, ___ (2015), that specifies federal law is supreme in case of a conflict with State law. In order for PASPA to preempt State law, PASPA must represent the exercise of a power conferred on Congress by the Constitution, which it does not because the Constitution confers upon Congress the power to regulate individuals, not States, New York, 505 U.S. at 116.
Having concluded that Congress lacks the power to order a State legislature to refrain from enacting a law authorizing or licensing sports gambling, the Court turned to the question of whether PASPA’s other prohibitions against a State sponsoring, operating or advertising sports gambling, or authorizing private persons to do so, could survive; and the Court held that they cannot. The Court said that in order for PASPA’s other provisions to fall it must be evident that Congress would not have enacted those provisions which are within its power, independently of those which are not within Congress’ power. Alaska Airlines v. Brock, 480 U.S. 678, 684 (1987). In conducting that inquiry, the Court asks whether the law could remain fully operative without the invalid provisions. Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477, 509 (2010). The Court held that under these standards the other provisions cannot survive.
Justice Thomas concurred and added his opinion that the federal government cannot regulate wholly intrastate gambling. Justices Breyer, Ginsburg and Sotomayor dissented in part because they believe that PASPA’s other provisions could survive the demise of the prohibition on authorization and licensing sports gambling.