Oklahoma’s Indian arts & crafts consumer protection law preempted by federal law

Fontenot v. Hunter, No. CIV-16-1339-G  (W.D. Okla. Mar. 28, 2019)
Oklahoma’s American Indian Arts and Crafts Sales Act of 1974
was amended in 2016 to exclude from its definition of “American Indian” all
persons but citizens or enrolled members of a federally recognized tribe.  Fontenot, a member of the Patawomeck Indian
Tribe of Virginia, a tribe recognized by the State of Virginia but not by the
United States, sued under a variety of theories including a general right to
engage in her trade; she lost on all of them except the Supremacy
Clause/federal preemption argument based on the Indian Arts & Crafts Act.
Oklahoma’s law is a specific false advertising statute whose
purpose “is to protect the public, under the police powers of the state, from
false representation in the sale of authentic and imitation American Indian
arts and crafts.”  The law makes it
“unlawful to distribute, trade, sell or offer for sale or trade within th[e]
[S]tate [of Oklahoma] any article represented as being made by American Indians
unless the article actually is made or assembled by American Indian labor or
workmanship.”
Fontenot is an artist who’s made her heritage part of her
art and her marketing for decades. Before 2000, Plaintiff marketed herself “as
a Cherokee artist” even though she is not a member of the Cherokee Nation and
the Cherokee Nation had not certified her as a tribal artisan. After 2000, Fontenot
changed statements on her event signs and business cards from “Cherokee artist”
to “Cherokee descent,” since she is “not certified by that tribe, and Cherokee
artist implied that [she] was.”  In 2006,
she became a tribal member of the Patawomeck Indian Tribe of Virginia, which
requires descent from a tribal member for membership.  Her current advertising describes her artwork
as “Native American” and she uses the designations “Patawomeck,” “Potawatomi,”
and “Cherokee Descent.”
Fontenot challenged the law as a violation of her Fourteenth
Amendment due process rights, “irrationally burden[ing] . . . [her] right to
earn a living,” and “protect[ing] artists who are members of federally
recognized tribes from economic competition,” without a legitimate government
interest. The state law was an economic regulation that didn’t affect
fundamental rights. It passed rational basis review: Consumer protection is a
traditional area of state concern and the law here was rationally related to a
legitimate government purpose. “[N]otwithstanding Plaintiff’s disagreement with
the definition of American Indian reflected in the State Act, there is no
reasonable dispute that the Oklahoma legislature could rationally have
concluded that, to meet the purpose of the State Act, some definition must be
drawn and the definition it adopted was a reasonable one.”
Equal protection: Fontenot argued that the law “creat[ed] an
irrational and arbitrary distinction among American Indian artists.”  Again, this passed rational-basis
review.  “As the State has argued, that
distinction ‘prevents consumers from being misled as to the status of the
artist as “American Indian,” given the rigorous process associated with federal
tribal recognition and membership.’” Rational basis review is especially forgiving
when linedrawing is necessary, and defining “American Indian” for the purpose
of a consumer-protection statute must “‘inevitably require[] that some persons
who have an almost equally strong claim to favored treatment be placed on
different sides of the line.’” That’s a matter for the legislature.
Dormant Commerce Clause: Fontenot argued that the law “discriminates
against and excessively burdens interstate commerce in American Indian art by
favoring in-state American Indian artists at the expense of out-of-state
artists.”  She failed to show
discrimination between in-state artists and out-of-state artists, either on the
law’s face or in its direct effects. Nor was there an undue burden. Undue
burden analysis requires balancing (1) the nature of the putative local
benefits advanced by the [statute]; (2) the burden the [statute] imposes on
interstate commerce; (3) whether the burden is “clearly excessive in relation
to” the local benefits; and (4) whether the local interests can be promoted as
well with a lesser impact on interstate commerce.  There was no genuine issue of material fact that
could avoid summary judgment here. “The State Act does not prohibit an artist
from offering his or her art and crafts for sale in Oklahoma; it restricts the
manner of how these goods are marketed,” and it did so equally for
in-state and out-of-state artists. There was no evidence
that the burden on out-of-state artists was clearly excessive in relation to
the local benefit of protecting the public from improperly identified goods.
First Amendment: Fontenot argued that this law constituted
impermissible content-based and identity-based discrimination.  Although Central
Hudson
excludes false/misleading commercial speech from any First Amendment
protection, the court nonetheless ran through the remaining three part test for
nonmisleading commercial speech. First, there’s substantial interest in
“protect[ing] the public . . . from false representation in the sale of
authentic and imitation American Indian arts and crafts.” Second, there’s “a
reasonable fit” between the law and the state’s “consumer protection
interests,” meaning that the law “directly advances those interests and is narrowly
tailored.”  The fact that there were
other reasonable definitions of “American Indian” didn’t change that, as long
as this definition was reasonable,
which it was. Central Hudson requires
a reasonable fit between the legislature’s ends and its means, not a perfect
fit.
But all is not lost! 
Under the Supremacy Clause, IACA had to control. Congress passed IACA “to
protect Indian artists from unfair competition from counterfeits.” It provides
for liability for any “person who, directly or indirectly, offers or displays
for sale or sells a good . . . in a manner that falsely suggests it is Indian
produced, an Indian product, or the product of a particular Indian or Indian
tribe or Indian arts and crafts organization.” For purposes of this prohibition,
IACA expressly includes in its definition of “Indian tribe” any Indian group
that has been formally recognized as an Indian tribe by “a State legislature; a
State commission; or another similar organization vested with State legislative
tribal recognition authority.”
Although there was no express preemption provision, and no
field preemption (“Congress expressly contemplated continuing state regulation”),
the court found conflict preemption.
What constitutes a sufficient obstacle to the federal
objectives depends on Congress’s intent, which itself is primarily evidenced by
its statutory language.  The statutory
language and legislative history of IACA reflect a struggle with the definition
of “Indian.”  The initial draft was
narrow and included only federally recognized tribes and their members, but
even then the drafters noted their belief that these definitions would “have to
be broadened.”
By excluding from the state definition of “American Indian”
members (or certified artisans) of tribes that are recognized by a state but
not the federal government, the state law constituted “an obstacle to the
accomplishment and execution of the full purposes and objectives of” IACA,
whose express purpose was “to promote the economic welfare of the Indian tribes
and Indian individuals through the development of Indian arts and crafts and
the expansion of the market for the products of Indian art and craftsmanship.” The
state’s narrower definition prohibited the marketing and sale of works by some
artists that would otherwise be protected by IACA, harming the market IACA was
supposed to promote and develop. The state’s definitions weren’t unreasonable
or unconstitutional in the abstract; they just conflicted with the federal law.

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