National Foreign Trade Council v. Baker, CA No. 98-10757-JLT.

• Decision Date: 04 November 1998
• Docket Number: CA No. 98-10757-JLT.
• Citation: 26 F.Supp.2d 287
• Parties: NATIONAL FOREIGN TRADE COUNCIL, Plaintiff, v. Charles D. BAKER, in his official capacity as Secretary of Administration and Finance of the Commonwealth of Massachusetts, and, Philmore Anderson, III, in his official capacity as State Purchasing Agent for the Commonwealth of Massachusetts, Defendants.
• Court: U.S. District Court — District of Massachusetts

26 F.Supp.2d 287

NATIONAL FOREIGN TRADE COUNCIL, Plaintiff, v. Charles D. BAKER, in his official capacity as Secretary of Administration and Finance of the Commonwealth of Massachusetts, and, Philmore Anderson, III, in his official capacity as State Purchasing Agent for the Commonwealth of Massachusetts, Defendants.

CA No. 98-10757-JLT.

United States District Court, D. Massachusetts.

November 4, 1998.

Timothy B. Dyk, Robert H. Klonoff, Gregory A. Castanias, Melissa Hart, Jones, Day, Reavis & Pogue, Washington, DC, Jacqueline M. Holmes, Jones, Day, Reavis & Pogue, New York, NY, Michael A. Collora, Dwyer & Collora, Boston, MA, for National Foreign Trade Council.

Thomas A. Barnico, Attorney General's Office, Boston, MA, for Charles D. Baker, Philmore III.

Andrew N. Vollmer, John A. Trenor, Wilmer, Cutler & Pickering, Washington, DC, James D. Smeallie, Sherburne, Powers & Needham, Boston, MA, for U.S. Chamber of Commerce, Organization for International Investment.

David G. Leitch, Gil A. Abramson, Roger P. Alford, Hogan & Hartson, Washington, DC, Richard L. Weiner, Hogan & Hartson L.L.P., Washington, DC, for European Union.

Daniel J. Popeo, Washington Legal Foundation, Washington, DC, Evan Slavitt, Gadsby

& Hannah LLP, Boston, MA, David M. Young, Washington Legal Foundation Washington, DC, for Washington Legal Foundation.

MEMORANDUM

TAURO, Chief Judge.

Plaintiff National Foreign Trade Council ("NFTC") brings this action against two officials of the Commonwealth¹ seeking a declaratory judgment that the so-called "Massachusetts Burma Law"² is unconstitutional.

The Massachusetts Burma Law is a procurement statute that prohibits the Commonwealth and its agents from purchasing goods or services from anyone doing business with the Union of Myanmar (formerly known as the Nation of Burma). The statute authorizes the Operational Services Division (OSD), an agency within the Executive Office of Administration and Finance, to establish a "restricted purchase list" of companies "doing business with Burma" as defined by the statute. Once OSD makes a preliminary finding that a company does business with Myanmar, the company can submit a sworn affidavit to refute the finding. OSD then makes a final decision whether to place a company on the "restricted purchase list."

The Commonwealth is allowed to procure from a "restricted purchase list" company only when: (1) the procurement is essential and the restriction would eliminate the only bid or offer, or would result in inadequate competition, M.G.L.A. ch. 7, § 22H(b); (2) the Commonwealth is purchasing certain medical supplies, § 22I; or (3) there is no "comparable low bid or offer"³ by an unrestricted bidder, § 22H(d).

Plaintiff claims that the Burma Law is invalid because it (1) intrudes on the federal government's exclusive power to regulate foreign affairs; (2) discriminates against and burdens international trade in violation of the Foreign Commerce Clause; and (3) is preempted by a federal statute and an executive order imposing sanctions on Myanmar.

Before the court are the parties' cross motions for summary judgment. For reasons stated below, the court finds that the Massachusetts Burma Law impermissibly infringes on the federal government's power to regulate foreign affairs.

I. ANALYSIS

A. STANDING

Defendants argue that Plaintiff⁴ lacks standing to sue because its members have not been injured by the Burma Law. The Supreme Court's test for organizational standing provides that an association may sue on behalf of its members if: "(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt v. Washington Apple Adver. Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977).

Plaintiff NFTC satisfies the first prong of the Hunt test. As shown by the parties' Joint Stipulation, NFTC members on the "restricted purchase list" cannot bid on Massachusetts contracts on an equal basis.⁵ Those members could, therefore, sue on an individual basis. See Clinton v. City of New York ___ U.S. ___, ___, 118 S.Ct. 2091, 2100, 141 L.Ed.2d 393 (1998) (holding that "Probable economic injury resulting from [governmental actions] that alter competitive conditions" satisfy the `injury-in-fact' requirement of Article III and, therefore, anyone who is "likely to suffer economic injury as a result of [governmental action] that changes market conditions satisfies this part of the standing test") (quoting 3 K. Davis & R. Pierce, Administrative Law Treatise 13-14 (3d ed.1994)). See also Northeastern Florida Chapter of the Associated General Contractors of America v. City of Jacksonville, 508 U.S. 656, 666, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993) (holding that the plaintiff had standing because it was "able and ready to bid on contracts and that a discriminatory policy prevent[ed] it from doing so on an equal basis").

Plaintiff also satisfies the second prong of Hunt. The Joint Stipulation states, "Founded in 1914, the NFTC has historically represented its members' interests in the area of foreign trade." Joint Stipulation ¶ 2. See also Declaration of Frank D. Kittredge ¶ 5. The NFTC is "organized and authorized to represent the interests of its members in free international trade and commerce." The NFTC Resolution of April 21, 1998, Exhibit 2 of the Joint Stipulation. Challenging statutes like the Massachusetts Burma Law, which acts as a barrier to free trade, is "germane" to the organization's purpose.

Plaintiff seeks declaratory judgment prohibiting enforcement of the Burma Law. Neither the claims nor the relief requested in Plaintiff's Complaint requires participation by individual members. Plaintiff, therefore, satisfies the third prong of the Hunt test, and has standing to bring this action on behalf of its members.

B. CONSTITUTIONALITY OF THE MASSACHUSETTS BURMA LAW

1. The Constitution Grants Federal Government Exclusive Authority Over Foreign Affairs

Under our constitutional framework, the federal government has exclusive authority to conduct foreign affairs. Numerous constitutional provisions evidence the Framers' intent to vest plenary power over foreign affairs in the federal government. Article I, § 8, cls. 1 and 3 give Congress sole authority to provide for the common defense, and to regulate commerce with foreign nations. Article II, § 2, cl. 2 authorizes the President to make treaties and appoint ambassadors. Article I, § 10, cls. 1-3 prohibit the states from making treaties, entering into agreements with other countries, or imposing duties on imports and exports. These provisions demonstrate that "one of the main objects of the Constitution [was] to make us, as far as regarded our foreign relations, one people, and one nation." Holmes v. Jennison, 39 U.S. (14 Pet.) 540, 575, 10 L.Ed. 579 (1840).

The Supreme Court has consistently recognized the exclusive role assigned to the federal government in the area of foreign affairs. The Court has admonished, "[p]ower over external affairs is not shared by the States; it is vested in the national government exclusively." United States v. Pink, 315 U.S. 203, 233, 62 S.Ct. 552, 86 L.Ed. 796 (1942); see also United States v. Belmont, 301 U.S. 324, 331, 57 S.Ct. 758, 81 L.Ed. 1134 (1937) ("Complete power over international affairs is in the national government and is not and cannot be subject to any curtailment or interference on the part of the several states.").

The Supreme Court, in Zschernig v. Miller, 389 U.S. 429, 434-35, 88 S.Ct. 664, 19 L.Ed.2d 683 (1968), declared invalid state laws with more than "some incidental or indirect effect in foreign countries," or that have "great potential for disruption or embarrassment" of United States foreign policy. Zschernig involved a probate law that conditioned the right of a nonresident alien to inherit property from an Oregon resident on reciprocal treatment by the beneficiary's country of origin. Even though probate matters are within the traditional jurisdiction of the states, and even though the Oregon statute was facially neutral, the Supreme Court struck it down under the foreign affairs doctrine, because of its possible effect on foreign nations. Id. Zschernig teaches that states and municipalities must yield to the federal government when their actions affect significant issues of foreign policy.

2. Massachusetts Burma Law Impermissibly Burdens U.S.-Foreign Relations

The Massachusetts Burma Law has more than an "indirect or incidental effect in foreign countries," and a "great potential for disruption or embarrassment." Zschernig, 389 U.S. at 434-35, 88 S.Ct. 664, 19 L.Ed.2d 683. It, therefore, unconstitutionally impinges on the federal government's exclusive authority to regulate foreign affairs.

The Commonwealth concedes that the statute was enacted solely to sanction Myanmar for human rights violations and to change Myanmar's domestic policies. Indeed, its legislative history makes this intent clear. Representative Rushing of the Massachusetts House of Representatives stated that "if you're going to engage in foreign policy, you have to be able to identify a goal that you will know when it is realized .... [T]he identifiable goal is, free democratic elections in Burma." MA House Debate on H2833: July 19, 1995, transcript at 4-5. State Senator Hicks criticized the bill as an improper attempt to make foreign policy: "This particular body has no particular responsibility to make a statement on this ... international matter. [T]he appropriate forum ... would be the U.S. Congress." MA Senate Debate on H2833: April 10, 1996, transcript at 10.

The amicus briefs here as well as the Joint Stipulation further demonstrate the Burma Law's disruptive impact on foreign relations. The European Union (EU), as an amicus, observes that the...