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5. In this suit, the court should
The interstate carrier's truck was involved in an accident in the state of Pink. The accident was entirely a product of the negligence of the interstate carrier's driver. The shipper's household goods were totally destroyed. In accordance with the contract, the interstate carrier reimbursed the shipper for less than the full value of the goods. The shipper then brought suit against the interstate carrier under the tort law of the state of Pink claiming that he was entitled to be reimbursed for the full value of the goods. The interstate carrier filed a motion to dismiss.
A shipper contracted with an interstate carrier to ship household goods from the state of Green to his new home in the state of Pink. A federal statute provides that all liability of an interstate mover to a shipper for loss of or damage to the shipper's goods in transit is governed exclusively by the contract between them. The statute also requires the interstate carrier to offer a shipper at least two contracts with different levels of liability. In full compliance with that federal statute, the interstate carrier offered the shipper a choice between two shipping agreements that provided different levels of liability on the part of the interstate carrier. The less expensive contract limited the interstate carrier's liability in case of loss or damage to less than full value. The shipper voluntarily signed the less expensive contract with the interstate carrier, fixing the interstate carrier's liability at less than the full value of the shipment.
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Article I, Section 8, Clause 3 empowers Congress to «regulate commerce with foreign nations and among the several states, and with the Indian tribes.» Commerce is defined as «every species of commercial intercourse. .. which concerns more states than one» and including virtually every form of activity involving or affecting two or more states. Gibbons v. Ogden, 22 U.S. 1 (1824).
The Contract Clause under Article I, Section 10 states: «No State shall. .. pass any. .. Law impairing the Obligation of Contracts. . .» This Clause prevents only substantial impairments of contract (i.e., destruction of most or all of a party's rights under a contract). However, not all substantial impairments are invalid. The three-part test under the Contract Clause is to determine whether the legislation: (i) substantially impairs a party's rights under an existing contract; (ii) serves an important and legitimate public interest; and (iii) is a reasonable and narrowly tailored means of protecting that interest.
The Full Faith and Credit Clause, Article IV, Section 1 requires states to honor (or give «full faith» and «credit» to) any rulings, decisions, and public records from other states. This Clause requires federal courts to only give full faith and credit to state laws that don't conflict with federal laws. It does not require a state to accept an action by the federal government that would not comport with its laws as long as those laws are not superseded by the Supremacy Clause or otherwise constitutionally invalid.
A is correct. Under the Supremacy Clause, an applicable federal law that is constitutionally valid will preempt any conflicting state law. Here, the tort law of the state of Pink is preempted by the federal statute, which provides that the liability claims are only to be governed by the agreement between the parties. This federal statute falls within the plenary congressional power to regulate interstate commerce.
B is incorrect. This answer reaches the correct answer with the wrong reasoning. Although the court should dismiss the case, it is not because the Contracts Clause is the governing authority of the claim brought by the shipper. A proper claim under the Contracts Clause requires that a state is substantially impairing one's rights under a contract, whereas here, the shipper is claiming state law should apply over federal law. The case should be dismissed because the applicable federal statute is the supreme law of the land and preempts any otherwise applicable state law, as explained above.
C is incorrect. The Full Faith and Credit Clause ensures that federal courts honor state laws, but only if such laws do not conflict with federal laws. It also provides that states must give full faith and credit to rulings and decisions of other states. The issue here does not fall within either of these categories because it involves a state law that conflicts with federal law.
D is incorrect. This is a misstatement of the law. There is no constitutional provision that would prohibit Congress from allowing the interstate carrier to contract out of liability for its own negligence. In fact, the Commerce Clause gives Congress that very power.