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1. The state court should
A man is the owner of a mountain resort in the Shaley Mountains, whose customers usually arrived on vehicles operated by the interstate bus company. After exhausting all available federal administrative remedies, the man filed suit against the interstate bus company in the trial court of the state in which the Shaley Mountains are located to enjoin the discontinuance by the interstate bus company of its service to that area. The man alleged that the discontinuance of service by the interstate bus company would violate a statute of that state prohibiting common carriers of persons from abandoning service to communities having no alternate form of public transportation.
An interstate bus company operates in a five-state area. A federal statute authorizes the Interstate Commerce Commission (ICC) to permit interstate carriers to discontinue entirely any unprofitable route. The interstate bus company applied to the ICC for permission to drop a very unprofitable route through the sparsely populated Shaley Mountains. The ICC granted that permission even though the interstate bus company provided the only public transportation into the region.
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When both a state and the federal government pass legislation in an area, the question of preemption arises. State laws can be preempted directly, such as when a federal law specifies that states may not pass laws in that area (called «express» preemption). State laws can also be preempted through implication, such as when: (i) Congress has legislated so significantly in that area that it preempts state law («field» preemption); (ii) state laws conflict with federal laws; or (iii) state laws interfere too significantly with federal goals.
The Supreme Court will not decide a challenge to a government or private action unless the person who is challenging the action has «standing» to raise the issue. A person has standing only if she can demonstrate a concrete stake in the outcome of the controversy. A plaintiff will be able to show a sufficient stake in the controversy only if she can show an injury in fact, caused by the defendant, that will be remedied by a decision in her favor (i.e., causation and redressability).
State courts generally have concurrent jurisdiction with federal courts over cases arising under federal law.
D is correct. The state court should hear the case on its merits and find for the bus company because, pursuant to the Supremacy Clause, a state law that conflicts with a valid federal law will be preempted and the federal law will prevail. Here, the state law prohibiting carriers from abandoning service where there is no alternate form of public transportation conflicts with the federal law authorizing the Interstate Commerce Commission (ICC) to allow interstate carriers (such as the bus company) to discontinue unprofitable routes.
A is incorrect. The man does not lack standing to sue because he has suffered an injury from the bus company's discontinuing of the route, which inhibits the profitability of his business. This amounts to a stake in the controversy. And if the man were to prevail, his injury would be remedied.
B is incorrect. The state court may properly hear this case because of the doctrine of concurrent jurisdiction, which allows state courts to decide federal questions under their scope of general jurisdiction.
C is incorrect. This answer is only partially correct. Although the state court should hear the case on the merits, it should find for the bus company, not the man. The federal agency is acting properly under the authority of the federal statute, which preempts the state law giving rise to the man's action. Moreover, the regulation of common carriers that operate interstate is not considered an essential state function, but falls directly within the purviews of federal powers.