Murphy v. National Collegiate Athletic Association

New Jersey voters in 2011 voted overwhelmingly in a nonbinding referendum to create a state constitutional amendment that would permit sports gambling.[9] The next year, the New Jersey Legislature enacted the Sports Wagering Act ("2012 Act"), allowing sports wagering at New Jersey casinos and racetracks.[10] In August 2012, the NBA, NFL, NHL, MLB, as well as the NCAA - sued under PASPA to enjoin the New Jersey law; they were later joined by the United States Department of Justice; this case was colloquially known as Christie I. In court hearings, the state argued they were aware that the 2012 Act violated PASPA, but they contended that PASPA violated the Tenth Amendment's protection against anti-commandeering federal laws that stripped the power of the state to repeal their own sports gambling ban.[11] In February 2013, Judge Michael A. Shipp of the United States District Court for the District of New Jersey rejected the state's argument, and ruled for the leagues, finding that there was "an undisputed direct link between legalized gambling and harm to the Leagues" and granting an injunction against New Jersey from enforcing the 2012 law.[12] New Jersey appealed to the Third Circuit Court of Appeals, but the court, in a 2–1 split decision, upheld the District Court's ruling.[13] The Third Circuit opinion noted the distinction between "affirmative authorizations" specifically prevented in PASPA, and the act of repealing the state's law.[11] The opinion stated: "We do not read PASPA to prohibit New Jersey from repealing its ban on sports wagering."[12] The Supreme Court of the United States refused to hear the case by June 2014.[12]

Based on the repealing language from the Third Circuit's decision on Christie I, New Jersey State Senator Raymond Lesniak revised the 2012 law with the approval of the Justice Department. The revised bill, instead of authorizing sports gambling, repealed portions of existing New Jersey laws from 1977 that had banned sports gambling, citing the Third Circuit's decision, effectively making sports gambling legal within certain establishments (for example, the bill did not allow for underage gambling, and preventing gambling on teams from New Jersey).[11] While it passed the New Jersey Legislature, Gov. Christie vetoed it, believing it was an attempt to bypass the Third Circuit's ruling.[12] However, in September 2014, Gov. Christie changed his mind, and supported the legislation's attempt to grant sports betting rights in the states; within five weeks, Lesniak's new legislation was signed into law.

The five leagues sued the state again in November 2014, creating Christie II. Both the District Court[14] and Third Circuit found in favor of the leagues, that New Jersey's revised law still violated the PASPA; in both Courts, the judges saw the act of repealing only portions of previous state laws equivalent to affirmative authorizations and thus still violated PASPA.[15][12] While the Third Circuit decision was still split, the author of the original decision dissented from the new ruling, leading the state to request an en banc hearing of the full Third Circuit.[12] The full Circuit still favored the leagues, 9–3, in their August 2016 decision, stating that PAPSA does not commandeer the states because it "does not command states to take affirmative actions."[16]

The Court announced judgment in favor of the governor on May 14, 2018, reversing the Third Circuit by a vote of 7–2.[24] Justice Samuel Alito wrote the majority opinion, joined by Justices John Roberts, Anthony Kennedy, Clarence Thomas, Elena Kagan, and Neil Gorsuch, and in part by Justice Stephen Breyer.[25][26][27] The majority opinion agreed that one specific clause of PASPA, 28 U.S.C. §§ 3701(1), did commandeer power from the states to regulate their own gambling industries, following New York v. United States, and thus was unconstitutional, reversing the Third Circuit decision.[28] Alito wrote "Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not."[29] Regarding the distinction between Congress preventing the states from taking an action versus Congress requiring the states to take an action, Alito wrote, "This distinction is empty. It was a matter of happenstance that the laws challenged in New York and Printz commanded "affirmative" action as opposed to imposing a prohibition. The basic principle—that Congress cannot issue direct orders to state legislatures—applies in either event."

The court rejected the respondents' argument that the anti-authorization provision was a valid preemption of state law under the Supremacy Clause of the U.S. Constitution.[30] The Supremacy Clause, the court pointed out, "is not an independent grant of legislative power to Congress" but "[i]nstead, it simply provides a rule of decision."[31] For a federal provision to validly preempt state law, "it must represent the exercise of a power conferred on Congress by the Constitution[,] pointing to the Supremacy Clause will not do",[31] and "since the Constitution confers upon Congress the power to regulate individuals, not States, [the] provision at issue must be best read as one that regulates private actors."[32]

The court then outlined the three types of preemption, illustrated with cases. In Mutual Pharmaceutical Co. v. Bartlett, an example of conflict preemption, federal law enacted under Congress' Commerce Clause authority prohibited generic drug manufacturers from changing the composition or labeling of drugs approved by the Federal Drug Administration, thus state tort law could not force or hold liable a generic drug manufacturer for adding additional information to the FDA-approved label.[33] Express preemption "operates in essentially the same way, but this is often obscured by the language used by Congress in framing preemption provisions."[31] The court illustrated express preemption with Morales v. Trans World Airlines[34] concerning a provision of the Airline Deregulation Act that used language that seemed directed to the states and similar to the issue in Murphy:

[T]o ensure that the States would not undo federal deregulation with regulation of their own, the Act provided that 'no State or political subdivision thereof ... shall enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to rates, routes, or services of any [covered] air carrier.' This language might appear to operate directly on the States, but it is a mistake to be confused by the way in which a preemption provision is phrased. As we recently explained, we do not require Congress to employ a particular linguistic formulation when preempting state law. And if we look beyond the phrasing employed in the Airline Deregulation Act's preemption provision, it is clear that this provision operates just like any other federal law with preemptive effect. It confers on private entities (i.e., covered carriers) a federal right to engage in certain conduct subject only to certain (federal) constraints."[35]

Field preemption, the third type of preemption, occurs when federal regulation of a "'field' of regulation [is] so comprehensive[] that it has left no room for supplementary state legislation."[36] The court noted that even it used the same sort of abbreviated description as Congress has done in express preemption, such as involved in Morales, in a 2015 case where the court described field preemption: "Congress has forbidden the State to take action in the field that the federal statute pre-empts."[37] However, "in substance, field preemption does not involve congressional commands to the States", but "like all other forms of preemption, it concerns a clash between a constitutional exercise of Congress's legislative power and conflicting state law."[38] The court then explained why preemption was not applicable to the PASPA provision prohibiting states from authorizing sports betting:

In sum, regardless of the language sometimes used by Congress and this Court, every form of preemption is based on a federal law that regulates the conduct of private actors, not the States. Once this is understood, it is clear that the PASPA provision prohibiting state authorization of sports gambling is not a preemption provision because there is no way in which this provision can be understood as a regulation of private actors. It certainly does not confer any federal rights on private actors interested in conducting sports gambling operations. (It does not give them a federal right to engage in sports gambling.) Nor does it impose any federal restrictions on private actors. If a private citizen or company started a sports gambling operation, either with or without state authorization, §3702(1) would not be violated and would not provide any ground for a civil action by the Attorney General or any other party. Thus, there is simply no way to understand the provision prohibiting state authorization as anything other than a direct command to the States. And that is exactly what the anticommandeering rule does not allow.[39]

A question posed by the majority opinion was over the current severability doctrine employed by the Supreme Court at the time of this decision. Under this doctrine, if the Court finds a portion of the law passed by Congress is deemed unconstitutional, they must review all other aspects of that law based on the intent of Congress to determine if some or all of the law must be deemed unconstitutional. Alito and the five other justices that joined his opinion, excluding Breyer, believed §§ 3701(1) was unseverable from the remaining language of PASPA, and declared the law unconstitutional.

In a concurrence, Justice Thomas affirmed that the use of the severability doctrine was the right course of action in this decision, but postulated that the Court should revisit this doctrine since it often requires hypothesizing the intent of Congress.[40] Justice Breyer, in his own written opinion, disagreed with Alito's opinion related to severability, believing the rest of the law could remain. Justice Ruth Bader Ginsburg wrote the dissenting opinion, joined by Justice Sonia Sotomayor and in part by Breyer. Justice Ginsburg wrote that the decision to overturn all of PASPA was excessive, and based on the desire to legalize sports betting.[29]