LUCERO, Circuit Judge.
The Oklahoma Taxpayer and Citizen Protection Act of 2007 (the "Act" or the "Oklahoma Act") is one of a multitude of recent state enactments that regulate illegal immigration and verification of employment eligibility. This case implicates three provisions of the Act. Section 7(B) forces businesses to utilize the Basic Pilot Program to verify the work authorization status of their employees on pain of debarment from contracting with Oklahoma public employers. Section 7(C) makes it a discriminatory practice for an employer to terminate an authorized worker while retaining an employee that the employer knows or reasonably should know is unauthorized to work. Section 9 requires contracting entities either to verify the work eligibility of their individual independent contractors or withhold certain taxes from those contractors. Otherwise, the contracting entity is liable to the State for the money not withheld.
Plaintiffs, various chambers of commerce and trade associations ("plaintiffs" or the "Chambers"), challenged Sections 7(B), 7(C), and 9 of the Act. They claimed that all three sections were expressly and impliedly preempted by federal law and moved for a preliminary injunction to bar Oklahoma's Governor, Attorney General, Human Rights Commission, and Tax Commission (collectively "defendants" or "Oklahoma") from enforcing the challenged provisions. Defendants opposed a preliminary injunction and moved to dismiss. Oklahoma argued that the Chambers lacked standing, that certain defendants were immune from suit under the Eleventh Amendment, and that the Tax Injunction Act, 28 U.S.C. § 1341, deprived the district court of jurisdiction to enjoin Section 9. The district court denied the motions to dismiss and granted the preliminary injunction. All defendants, save the Governor, appeal.
Faced with the same issues that were before the district court, we conclude: (1) the Chambers have standing; (2) that the Eleventh Amendment precludes the case only insofar as the Attorney General is named as a defendant in the challenge to Sections 7(C) and 9; and (3) the district court properly exercised jurisdiction over the Chambers' challenge to Section 9. We further hold that the Chambers are likely to succeed on the merits of their claims that Section 7(C) is expressly preempted and that Section 9 is impliedly preempted. Moreover, the remaining considerations favor issuance of a preliminary injunction.
Although their reasoning differs, my colleagues conclude the district court erred in its determination that Section 7(B) is preempted, and thus the panel reverses the district court's grant of a preliminary injunction against the enforcement of Section 7(B). I dissent from the judgment of the court on this issue and would hold that Section 7(B) is impliedly preempted and that the issuance of a preliminary injunction was appropriate. Accordingly, this opinion is that of the court except with respect to sections V.B.2 and V.B.4.
We have jurisdiction under the collateral order doctrine to consider the district court's denial of Eleventh Amendment immunity, P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993), and under 28 U.S.C. § 1292(a)(1) to review the grant of a preliminary injunction. The panel dismisses in part, reverses in part, and affirms in part.
This case requires us to consider the interplay between the federal employment
Enacted in 1986, the Immigration Reform and Control Act ("IRCA") created "a comprehensive scheme prohibiting the employment of illegal aliens in the United States." Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 147, 122 S.Ct. 1275, 152 L.Ed.2d 271 (2002). Section 101(a)(1) of IRCA makes it "unlawful for a person or other entity . . . to hire . . . for employment in the United States an alien knowing the alien is an unauthorized alien." 8 U.S.C. § 1324a(a)(1), (a)(1)(A). An "unauthorized alien" is defined as an "alien [who] is not at that time either (A). . . lawfully admitted for permanent residence, or (B) authorized to be so employed by [IRCA] or by the Attorney General." § 1324a(h)(3).
Federal law exhaustively details a specialized administrative scheme for determining whether an employer has knowingly employed an unauthorized alien.
IRCA also establishes an "extensive `employment verification system,' designed to deny employment to aliens who (a) are not lawfully present in the United States, or (b) are not lawfully authorized to work in the United States." Hoffman Plastic, 535 U.S. at 147, 122 S.Ct. 1275 (citations omitted). Known as the I-9 system, employers are required to verify the identity of their employees and ensure they are eligible to work in the United States by examining certain specified documents. 8 C.F.R. § 274a.2(b). IRCA establishes a list of permissible verification documents, enabling employees to prove eligibility by supplying any document on the list. 8 U.S.C. § 1324a(b)(1)(A)-(b)(1)(D). An employee who submits verification documents that "reasonably appear on [their] face to be genuine" may not be required to produce different or additional documents if such requests by employers are made for the purpose or with the intent of discriminating. §§ 1324a(b)(1)(A)(ii), 1324b(a)(6). Federal law further defines the class of individuals who must verify employment eligibility, requiring verification for employees but not for independent contractors. See § 1324a(a)(1)(A); 8 C.F.R. § 274a.1(f) (excluding "independent contractor" from the definition of "employee"); § 274a.1(g) (employers not responsible for verifying work authorization of independent contractors).
Congress opted to create a substantial safe harbor for employers that comply with the I-9 system. 8 U.S.C. § 1324a(b)(6)(A). Unless an employer persists in violating IRCA after being put on notice of its noncompliance or engages in a pattern or practice of violations, § 1324a(b)(6)(B), (C), employers who attempt to comply in good faith are protected from civil and criminal penalties under federal law, § 1324a(b)(6)(A).
Unlike the I-9 paper verification process, Basic Pilot is an internet-based system of employment authorization verification. Chicanos Por La Causa, 558 F.3d at 862. An employer seeking to participate in Basic Pilot must enter a Memorandum of Understanding with the federal government. E-Verify Memorandum of Understanding, available at http://www.uscis. gov/files/nativedocuments/MOU.pdf. Under the program, an employer submits employee information electronically to the federal government, which then checks the information against a database containing citizenship and work authorization information. If the information submitted by the employer matches the Social Security database and the employee is a U.S. citizen, the employer is immediately notified that the employee is eligible to work in the United States. For noncitizens, the submitted information is checked against U.S. Citizenship and Immigration Services ("USCIS") records.
By contrast, when employee information is inconsistent with either the Social Security or USCIS databases, the employer receives a tentative nonconfirmation. "A tentative nonconfirmation . . . does not mean that the employee is not authorized to work, and employers may not interpret it as such." Pilot Programs for Employment Eligibility Confirmation, 62 Fed.Reg. 48,309, 48,312 (Sep. 15, 1997) [hereinafter Pilot Programs]. Rather, because federal records may be inaccurate, the employee is notified of the tentative nonconfirmation and has eight federal workdays to contest the result.
Basic Pilot is a voluntary alternative to the I-9 system for most employers. Expansion of the Basic Pilot Program to All 50 States and the District of Columbia; Providing Web-Based Access, 69 Fed.Reg. 75,997, 75,998 (Dec. 20, 2004). IIRIRA explains that "any person or other entity that conducts any hiring . . . may elect to participate in that pilot program. Except as specifically provided in subsection (e),
The record indicates that Basic Pilot is far from perfect. A 2007 report to the Department of Homeland Security ("DHS") found that "the database used for verification is still not sufficiently up to date to meet the IIRIRA requirement for accurate verification." Westat, Findings of the Web Basic Pilot Evaluation xxi (2007). That report documented an error rate of approximately 10% for naturalized citizens, and calculated that foreign-born individuals who are eligible to work in the United States were 30 times as likely to receive an erroneous tentative nonconfirmation as U.S.-born employees. Id. at xxv. It concluded further that "improvements are needed, especially if the Web Basic Pilot becomes a mandated national program," id. at xxi, but that correcting the problems "will take considerable time and will require better data collection and data sharing between [Social Security], USCIS, and the U.S. Department of State than is currently the case," id. at xxvi.
Through several extensions of Basic Pilot, Congress has opted to retain the program's voluntary character. E.g., Omnibus Appropriations Act of 2009, div. J, § 101; Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, Pub.L. No. 110-329, § 143, 122 Stat. 3574, 3580 (2008); Basic Pilot Extension Act of 2001, Pub.L. No. 107-128, § 2, 115 Stat. 2407, 2407 (2002).
With this federal law in mind, we turn to the Oklahoma Taxpayer and Citizen Protection Act of 2007. The Act reflects Oklahoma's judgment that "illegal immigration is causing economic hardship and lawlessness in this state." Oklahoma Taxpayer and Citizen Protection Act of 2007, 2007 Okla. Sess. Law. Serv., Ch. 112, § 2 (West). The Act states that unauthorized aliens have been "harbored and sheltered" in Oklahoma and issued "identification cards . . . without verifying immigration status." Id. These actions "impede and obstruct the enforcement of federal immigration law, undermine the security of our borders, and impermissibly restrict the privileges and immunities of the citizens of Oklahoma." Id. "Discourag[ing] illegal immigration" and preventing employment of illegal aliens are avowed purposes of the three provisions at issue in this case. Id.
Section 7(B) of the Act, Okla. Stat. tit. 25, § 1313(B)(2), provides that no contractor or subcontractor may contract or subcontract with a public employer unless it utilizes the Status Verification System ("SVS")
Section 7(C) of the Act makes it a "discriminatory practice" for any employer to "discharge an employee working in Oklahoma who is a United States citizen or permanent resident alien while retaining an employee who the employing entity knows, or reasonably should have known, is an unauthorized alien." § 1313(C)(1).
Section 9 of the Act, unlike federal verification law, requires all businesses to obtain "documentation to verify . . . independent contractor[s'] employment authorization." Okla. Stat. tit. 68, § 2385.32.
Plaintiffs are various national, state, and local chambers of commerce and trade associations that represent businesses in Oklahoma. The Chambers filed a complaint in U.S. District Court for the Western District of Oklahoma alleging that Sections 7(B), 7(C), and 9 of the Oklahoma Act were expressly and impliedly preempted by federal law and thus unconstitutional under the Supremacy Clause. See U.S. Const. art. VI, cl. 2; 8 U.S.C. § 1324a(h)(2). They sought both declaratory and injunctive relief from defendants, Oklahoma Governor Brad Henry, Oklahoma Attorney General W.A. Drew Edmondson, the members of the Oklahoma HRC, and the members of the Oklahoma Tax Commission, all sued in their official capacities.
The Chambers immediately moved for a preliminary injunction, and defendants moved to dismiss.
We begin, as we must, by considering jurisdictional issues, turning first to the Chambers' standing to challenge Sections 7(B), 7(C), and 9 of the Oklahoma Act.
In the case at bar, plaintiffs allege associational standing to raise claims of their members. See Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 342, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). An association has such standing only 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." Id. at 343, 97 S.Ct. 2434. Defendants challenge only the first prong of the Chambers' associational standing, and the record reveals the latter two prongs have been met.
As to the Section 7(B) claim, Oklahoma contends that the Chambers' members lack an injury-in-fact and that they have not demonstrated redressability. We disagree on both counts.
Both compliance and non-compliance with Section 7(B) injure the Chambers' members. As noted above, Section 7(B) effectively forces employers to use Basic Pilot. See Part I.B., supra. Adopting Basic Pilot imposes significant economic injuries in the form of implementation and training expenses, which the Chambers allege may total well more than a thousand dollars per business per year. By the same token, the Chambers' membership would also be harmed by non-compliance. Their membership includes companies that currently have contracts with public employers in Oklahoma and hope to enter into such contracts in the future but will be ineligible under the terms of Section 7(B) unless they adopt
Redressability presents a more difficult question. Although plaintiffs seek an injunction against the Attorney General,
In deciding this issue, we are mindful that the Chambers need not show "that a favorable decision will relieve [their] every injury." Larson v. Valente, 456 U.S. 228, 243 n. 15, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982). Rather, they need only show "an injury . . . that is likely to be redressed by a favorable decision." Id. (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). In Larson, for example, the Court concluded that the plaintiff could challenge the constitutionality of a state statute applicable to religious organizations even though it was unclear whether the plaintiff qualified as a religious organization. Id. at 241-44, 102 S.Ct. 1673. Whether an injunction would benefit the plaintiff was unclear, yet the Court concluded that the plaintiff's injury was likely redressable. Id. at 242-43, 102 S.Ct. 1673. Similarly, in Massachusetts v. EPA, 549 U.S. 497, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007), the Court held that Massachusetts had standing to contest EPA's refusal to regulate greenhouse gas emissions from new motor vehicles. Id. at 526, 127 S.Ct. 1438. Although a continued rise in sea levels on the shores of Massachusetts was contingent upon a number of variables beyond the control of EPA, the state's injury was nonetheless deemed redressable because the risk of harm "would be reduced to some extent if petitioners received the relief they seek." Id. at 526, 127 S.Ct. 1438 (emphasis added); see also id. at 525, 127 S.Ct. 1438 ("While it may be true that regulating motor-vehicle emissions will not by itself reverse global warming, it by no means follows that we lack jurisdiction to decide whether EPA has a duty to take steps to slow or reduce it." (citing Larson, 456 U.S. at 244 n. 15, 102 S.Ct. 1673)).
We conclude that the harms alleged by the Chambers will likely be "reduced to some extent" by an injunction running against the Attorney General.
We reach the same conclusion regarding the Chambers' Section 7(C) claim. That section prohibits employers from firing an authorized worker while retaining an employee the employer knows or reasonably should know is unauthorized, Okla. Stat. tit. 25, § 1313(C)(1), but exempts employers from liability if they use Basic Pilot, § 1313(C)(2). Oklahoma argues that the Chambers lack standing to contest Section 7(C) because they have not sufficiently alleged injury-in-fact. Again, we do not agree.
To obtain the benefit of the Section 7(C) safe harbor, an employer must use Basic Pilot. As we explained, see Part II.A, supra, Basic Pilot imposes substantial costs that constitute injury-in-fact. Alternatively, an employer who opts not to take advantage of the state safe harbor and instead embraces the federal safe harbor for I-9 users also suffers a cognizable injury. Such an employer is potentially exposed to Section 7(C) penalties including financial levies and injunctive action whenever it terminates an authorized employee. For instance, Section 7(C) exposure would be substantial for highway construction companies whose workforce fluctuates greatly throughout the year with every termination potentially leading to a lawsuit. (Webb Decl. 4, ¶ 18). It is hardly controversial that exposure to liability constitutes injury-in-fact. See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128-29, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007); Protocols, LLC v. Leavitt, 549 F.3d 1294, 1299-1301 (10th Cir.2008).
Oklahoma responds that in order to have standing to contest Section 7(C), an employer "would have to `knowingly' hire illegal workers and then terminate the employment of a legal Oklahoma worker."
Lastly, we dispose of Oklahoma's argument that the Chambers lack standing to challenge Section 9 because they have failed to allege injury-in-fact. To comply with that section, a contracting entity must either verify the work eligibility of its individual independent contractors
Having concluded that the Chambers possess standing to mount their challenge, we turn to the second alleged jurisdictional defect. According to the defendants, the Attorney General is immune from suit under the Eleventh Amendment as to all three challenged sections of the Oklahoma Act.
For the same reasons we concluded that the claimed Section 7(B) injury is redressable, Part II.A, supra, we conclude that the Attorney General has a particular duty to enforce that section, see Okla. Stat. tit. 74, § 18b(A)(3), (7), and a demonstrated willingness to exercise that duty, see, e.g., Colclazier, 951 P.2d at 624; Cemetery Co., 122 P.3d at 481-82. He is therefore a proper defendant for the Chambers' Section 7(B) claim. See Wagnon, 476 F.3d at 828.
We reach the opposite conclusion with regard to Section 7(C) because the Chambers do not cite to any Oklahoma law authorizing the Attorney General to enforce that provision. A violation of Section 7(C) constitutes a "discriminatory practice" under Oklahoma's Anti-Discrimination Act. Okla. Stat. tit. 25, § 1313(C)(1). But the sole provision of the Oklahoma Anti-Discrimination Act the Chambers cite requires only that the attorney general sue on behalf of a victim of discrimination in a housing context. § 1502.15(A); see also Collier v. Insignia Fin. Group, 981 P.2d 321, 325 (Okla.1999). Because the Chambers have not shown us that the Attorney General has a particular duty to enforce Section 7(C), see Wagnon, 476 F.3d at 828, the Chambers' claim under that provision falls outside the scope of the Ex parte Young exception. The Attorney General is thus entitled to immunity as to that challenge. See Shell Oil Co. v. Noel, 608 F.2d 208, 211 (1st Cir.1979) (merely because "an attorney general has a duty to prosecute all actions in which the state is interested [is not] enough to make him a proper defendant in every such action" (citation omitted)).
Oklahoma raises yet another jurisdictional challenge: It claims that the Tax Injunction Act (the "TIA"), 28 U.S.C. § 1341, deprived the district court of jurisdiction to enjoin Section 9. Because the
In its entirety, the TIA provides: "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." § 1341. There is no dispute that a sufficient remedy exists in Oklahoma state court. Accordingly, we need only decide if the assessment imposed by Section 9 is a tax within the meaning of § 1341. Marcus, 170 F.3d at 1312 n. 4. The answer to that question is a matter of federal law; whether the state labels the assessment a tax is not dispositive. Id. at 1311.
The purpose of the TIA is straightforward: It serves to protect the "federal balance" by permitting states to "define and elaborate their own laws through their own courts and administrative processes ... without undue interference from the Federal Judiciary." Arkansas v. Farm Credit Servs. Of Cent. Ark., 520 U.S. 821, 826, 117 S.Ct. 1776, 138 L.Ed.2d 34 (1997). To that end, the TIA erects a broad barrier to the jurisdiction of federal courts. Id. at 825, 117 S.Ct. 1776. "[C]ourts must guard against interpretations of the Tax Injunction Act which might defeat its purpose and text." Id. at 827, 117 S.Ct. 1776. Nevertheless, the Supreme Court has recently cautioned that the TIA is not a "sweeping congressional direction to prevent federal-court interference with all aspects of state tax administration." Hibbs v. Winn, 542 U.S. 88, 105, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004) (quotation omitted).
It can generally be said that an assessment is a tax when its purpose is to raise revenue, "while levies assessed for regulatory or punitive purposes, even though they may also raise revenues, are generally not `taxes.'" Travelers Ins. Co. v. Cuomo, 14 F.3d 708, 713 (2d Cir.1994) (quotation omitted), rev'd on other grounds, N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). In deciding whether Section 9 imposes a tax, the touchstone of our inquiry is the purpose of the assessment. See Hill v. Kemp, 478 F.3d 1236, 1244-45 (10th Cir.2007). In judging purpose, we consider, among other things, the ultimate use of the funds. Id. at 1245; Marcus, 170 F.3d at 1311 (citing Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800 (4th Cir.1997); Hager v. City of W. Peoria, 84 F.3d 865, 870-71 (7th Cir. 1996); San Juan Cellular Tel. Co. v. Pub. Serv. Comm'n of P.R., 967 F.2d 683, 685 (1st Cir.1992)). Yet, other evidence of purpose, such as the statute's avowed purpose as stated in its text as well as the incentive structure created by a levy, are also relevant. RTC Commercial Assets Trust 1995-NP3-1 v. Phoenix Bond & Indem. Co., 169 F.3d 448, 457 (7th Cir.1999); Hager, 84 F.3d at 870-71.
Two of our principal cases in this area have looked to the ultimate use of funds generated by a levy as evidence of its purpose. Hill, 478 F.3d at 1244-46; Marcus, 170 F.3d at 1311-12. In Marcus, Kansas charged drivers $5.25 to obtain a disabled parking placard. Id. at 1307. A portion of that fee was deposited in a
In Hill, we employed a similar analysis in reaching the opposite conclusion. 478 F.3d at 1244-46. At issue in that case were charges imposed by Oklahoma for specialty license plates bearing messages such as "Adoption Creates Families" and "Choose Life." Id. at 1239. We emphasized the ultimate use of the funds in determining that the "primary purpose of the special license plate scheme is revenue[-raising] rather than regulation and thus ... it qualifies as a tax." Id. at 1244-45. In particular, only $8.00 of a $35.00 charge was earmarked for administrative costs while the balance of the revenue was spread among a variety of programs, including those supporting the causes espoused by the license plates. Id. at 1245. Because the entire public benefited from the variety of state initiatives funded by the license plate scheme, we held that the assessments were taxes under the TIA. Id.
But use is not always conclusive evidence of purpose. Just as "[t]he label given by a state for an assessment or charge is not dispositive" of its character, Marcus, 170 F.3d at 1311, neither is the ultimate use of funds dispositive of an assessment's purpose, Hager, 84 F.3d at 870-71. As our sibling circuit has explained, regardless of the ultimate use of funds, a non-tax assessment "may [also] serve regulatory purposes directly by ... deliberately discouraging particular conduct by making it more expensive." San Juan, 967 F.2d at 685 (citing South Carolina ex rel. Tindal v. Block, 717 F.2d 874, 887 (4th Cir.1983)). Our decisions recognize as much. The license plate charges at issue in Hill, for example, did not "purport to `regulate' anyone by incentivizing or disincentivizing certain forms of conduct." 478 F.3d at 1246; see also Marcus, 170 F.3d at 1311 (citing Hager, 84 F.3d at 870-71). Thus, "[r]ather than a question solely of where the money goes, the issue is why the money is taken." Hager, 84 F.3d at 870-71. In Marcus and Hill, where the money went was strong evidence of why the money was taken. Hill, 478 F.3d at 1244-46; Marcus, 170 F.3d at 1311-12. In other cases, however, a statute's incentive structure and avowed purpose more clearly elucidate its goal.
In RTC Commercial, for example, the court examined whether interest and penalties associated with nonpayment of taxes constituted taxes for purposes of the TIA. 169 F.3d at 457. Our sibling circuit concluded that the penalties were not taxes because they were assessed "so that delinquent tax debtors will be deterred the next time around from ignoring their legal obligations." Id. The incentive structure created by the penalties revealed their regulatory character: Penalties are designed to incentivize compliance with law, not to raise revenue. Id. Conversely, interest was logically a part of the tax itself because it was meant solely to account for
Similarly, in Hager, the Seventh Circuit addressed an assessment that was earmarked for a general city fund, a fact superficially suggesting that the levy's ultimate purpose was to raise revenue. 84 F.3d at 870. But the court looked beyond the use of the funds, concluding instead that the fee was, as the ordinances at issue avowedly proclaimed, designed to regulate the weight of trucks using city streets. Id. at 871. The court's analysis turned on the stated purpose of the assessment as articulated in the text of the ordinance, admissions by the city's mayor about implementation, and the operation of the levy in the context of the state's motor vehicle laws. Id. Although the revenue raised ended up in a general fund, the Seventh Circuit concluded that the assessment was a fee rather than a tax. Id. at 870-72. "That the ordinances generate a permit fee which goes to the general city fund is only incidental to its regulatory nature." Id. at 871.
Applying these principles, we conclude that Section 9 of the Oklahoma Act constitutes a regulatory penalty, not a tax, because its purpose is to regulate behavior rather than to raise revenue. See Hill, 478 F.3d at 1244-46; Marcus, 170 F.3d at 1311-12; RTC Commercial, 169 F.3d at 457-58; Hager, 84 F.3d at 870-72; San Juan, 967 F.2d at 685-86. By its plain terms, Section 9 was enacted "pursuant to the prohibition against the use of unauthorized alien labor." Okla. Stat. tit. 68, § 2385.32(A). Section 9 creates an incentive structure that, on pain of financial assessment, encourages employers to verify the employment authorization of their independent contractors. It imposes a penalty on contracting entities that do not verify eligibility or withhold taxes from their independent contractors, § 2385.32(B), thereby "deliberately discouraging particular conduct by making it more expensive," San Juan, 967 F.2d at 685; see RTC Commercial, 169 F.3d at 457 ("States do not assess penalties for the purpose of raising revenue...."). As in RTC Commercial, Oklahoma imposes a penalty "so that delinquent [contracting entities] will be deterred the next time around from ignoring their legal obligations." 169 F.3d at 457.
Moreover, the expressed primary goal of the Oklahoma Act is to regulate behavior.
In response, the Attorney General retreats to the generalized assertion that "the statute's ultimate goal is to ensure that taxes are collected, not to regulate the employment of illegal aliens." (Attorney General's Br. 23). Notwithstanding that the Attorney General was of a different mind in the court below, (Attorney General's Mot. to Dismiss 24), the primary purpose of Section 9 is not to ensure that taxes are collected. To the contrary, if a contracting entity complies with Section 9 by verifying the employment authorization of its independent contractors, Oklahoma does not receive any revenue. Okla. Stat. tit. 68, § 2385.32(A).
Satisfied of our jurisdiction, we turn at last to the main course. In order to obtain a preliminary injunction, the Chambers must show "(1) a likelihood of success on the merits; (2) a likelihood that the movant will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in the movant's favor; and (4) that the injunction is in the public interest." Attorney Gen. of Okla. v. Tyson Foods, Inc., 565 F.3d 769, 776 (10th Cir.2009) (quotation omitted). We review the district court's grant of a preliminary injunction for abuse of discretion. Pac. Frontier v. Pleasant Grove City, 414 F.3d 1221, 1230-31 (10th Cir.2005). "A district court abuses its discretion when it commits an error of law or makes clearly erroneous factual findings." Beltronics USA, Inc. v. Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th Cir.2009).
The Supremacy Clause provides that the laws of the United States "shall be the supreme Law of the Land[,]... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. Pursuant to this provision, it has long been recognized that federal law preempts contrary state enactments. See M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 405-06, 4 L.Ed. 579 (1819). Preemption can be either express or implied. Hillsborough County v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985). State laws are expressly preempted when they fall within the scope of a federal provision explicitly precluding state action. See id. Alternatively, state laws may be impliedly preempted either as a result of conflict or field preemption. See id. We conclude that plaintiffs have demonstrated a strong likelihood that Section 7(C) is expressly preempted and that Section 9 is conflict preempted. Although my colleagues disagree, I would also hold that Section 7(B) is conflict preempted.
In considering express preemption, our inquiry is whether the state law at issue falls within the scope of a federal preemption provision. See Emerson v. Kan. City S. Ry. Co., 503 F.3d 1126, 1129 (10th Cir.2007). We apply ordinary principles of statutory interpretation, looking initially to the plain language of the federal statute. Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002).
IRCA preempts "any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens."
IRCA does not define "sanction," but by its ordinary meaning, a sanction is "a restrictive measure used to punish a specific action or to prevent some future activity." Webster's Third New Int'l Dictionary 2009 (1993). Moreover, the statutory context does not evince an intent to narrowly define "sanction" as requiring a punitive component. Title 8, Section 1324a(e)(4)(A) outlines a series of "penalties" for employers hiring unauthorized aliens, ranging from $250 to $10,000. Penalties are ordinarily understood as serving punitive purposes. Yet, in § 1324a(h)(2) Congress used the term "sanctions" rather than "penalty" as it did in § 1324a(e)(4)(A). Had Congress intended to preempt only those state laws that are punitive, we would have expected it to use "penalties" in § 1324a(h)(2). Had it used "sanctions" in § 1324a(e)(4), we might reach a similar conclusion. It did neither.
Section 7(C) subjects employers to cease and desist orders, reinstatement, back pay, costs, and attorneys' fees. Okla. Stat. tit. 25, § 1505(B), (C). Such impositions are "restrictive measures" that fall within the meaning of "sanctions" as used in § 1324a(h)(2). This conclusion is consistent with use of the term "sanction" in other provisions of federal law. An attorney,
Additionally, we conclude that Section 7(C) sanctions are imposed "upon those who employ ... unauthorized aliens," 8 U.S.C. § 1324a(h)(2). An employer is subject to sanction under Section 7(C) if it terminates a legal worker while retaining a worker the employer knows, or should reasonably know, is an unauthorized alien. Okla. Stat. tit. 25, § 1313(C)(1). Sanctions are therefore contingent on the employment of an unauthorized alien. See id. We are not persuaded by Oklahoma's contention that Section 7(C) merely creates a cause of action for the termination of legal residents. While that is a necessary prerequisite, an employer is subject to sanction only if the employer retains an unauthorized alien. Id. The Chambers are thus likely to succeed on the merits of this portion of their express preemption claim.
In contrast, neither Section 7(B) nor Section 9 "impos[e] civil or criminal sanctions ... upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens." Id. (emphasis added). Even assuming that Sections 7(B) and 9 impose "sanctions" as that term is used in § 1324a(h)(2), imposition of such sanctions is divorced from the employment of unauthorized aliens. Section 7(B) forces contractors to use Basic Pilot if they seek to contract with public employers. Okla. Stat. tit. 25, § 1313(B)(2). Thus Section 7(B) is violated not when an unauthorized alien is employed, but when an employer fails to utilize the Basic Pilot Program. Id.; § 1312(1)(a). The actual employment of an unauthorized alien is irrelevant in determining whether an employer has violated Section 7(B). § 1313(B)(2).
Similarly, Section 9 applies to contracting entities that do not verify the work authorization status of their individual independent contractors and that fail to withhold from the independent contractor an amount equal to "the top marginal income tax rate" allowed under Oklahoma law. Okla. Stat. tit. 68, § 2385.32(A). Whether an independent contractor is an unauthorized alien is of no significance under this regime. As with Section 7(B), a contracting entity can violate Section 9 even if its independent contractors are fully authorized to work in the United States. Accordingly, neither Section 7(B) nor Section 9 "impos[es] civil or criminal sanctions... upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens." 8 U.S.C. § 1324a(h)(2). The Chambers, therefore, are unlikely to succeed on the merits of their claims that Sections 7(B) and 9 are expressly preempted by IRCA.
In addition to express preemption, the Supremacy Clause prohibits states from enacting laws that make compliance with both federal and state law a physical impossibility or that "stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."
Congress sought to balance a number of competing goals when it enacted IRCA—a balance it determined was best served by requiring employers to verify the work authorization status of their employees by using the I-9 system. "IRCA is a carefully crafted political compromise which at every level balances specifically chosen measures discouraging illegal employment with measures to protect those who might be adversely affected." Nat'l Ctr. For Immigrants' Rights, Inc. v. INS, 913 F.2d 1350, 1366 (9th Cir.1990), rev'd on other grounds, 502 U.S. 183, 112 S.Ct. 551, 116 L.Ed.2d 546 (1991).
Among these goals were preventing the hiring of unauthorized aliens, lessening the disruption of American business, and minimizing the possibility of employment discrimination. H.R.Rep. No. 99-682(I), at 56 (1986), as reprinted in 1986 U.S.C.C.A.N. 5649, 5660. IRCA forbids the hiring of unauthorized aliens, but to lessen the burden on employers, it limits penalties to those who "knowingly" violate the prohibition. 8 U.S.C. § 1324a(a)(1)(A). The federal statute provides a defense to employers who comply with the I-9 requirements in good faith. § 1324a(a)(3). Employers are not required to verify the work eligibility of independent contractors, which would increase the burdens on business and could lead to increased employment discrimination. 8 C.F.R. § 274a.1(f), (g); see also H.R.Rep. No. 99-682(I), at 57, 68. By making the I-9 system a uniform national requirement, Congress limited the compliance burden on interstate corporations while facilitating uniform enforcement. Finally, by forbidding employers from requesting "more or different documents" than § 1324a requires or "refusing to honor documents tendered that on their face reasonably appear to be genuine," § 1324b(a)(6), Congress sought to limit employment discrimination, a goal which is also served by a uniform system of employment authorization verification, H.R.Rep. No. 99-682(I), at 68. IRCA thus
Against this backdrop, Congress enacted IIRIRA, directing the Attorney General (later the Secretary of Homeland Security) to establish the Basic Pilot Program as a voluntary supplement to, not a replacement for, the I-9 system. Basic Pilot Program Extension and Expansion Act of 2003 §§ 3-4; IIRIRA § 401(a). Section 402 of IIRIRA stresses the voluntary nature of the program. See IIRIRA § 402(a) ("Voluntary Election."); id. ("[A]ny person ... that conducts any hiring... in a State in which a pilot program is operating may elect to participate ...." (emphasis added)); § 402(d)(2) ("The [Secretary of Homeland Security] shall widely publicize the election process and pilot programs, including the voluntary nature of pilot programs...." (emphasis added)); § 402(d)(3), (3)(A) ("The [Secretary of Homeland Security] shall designate one or more individuals ... to inform persons and other entities that seek information about pilot programs of the voluntary nature of such programs ...." (emphasis added)). Further, Congress withheld from the Secretary of Homeland Security authority to require private employers to utilize Basic Pilot. § 402(a) ("Except as specifically provided in subsection (e), the [Secretary of Homeland Security] may not require any person or other entity to participate in a pilot program."); § 402(e) (listing particular federal government entities required to utilize Basic Pilot and authorizing the Secretary of Homeland Security to order certain violators of the Immigration and Nationality Act to use the program). Although Basic Pilot is now available in all fifty states, Congress continues to decline to make it mandatory. E.g., Omnibus Appropriations Act of 2009 div. J, § 101; Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 § 143; Basic Pilot Extension Act of 2001 § 2.
I would hold that Section 7(B) disturbs the balance between these conflicting goals deliberately crafted by Congress.
Yet, Section 7(B) would make Basic Pilot effectively mandatory for many employers, on pain of debarment from public contracts. Because Oklahoma has mandated Basic Pilot despite Congress' determination that employer participation should be voluntary, the Chambers can likely succeed in showing that Oklahoma has undermined Congress' judgment that voluntary participation best serves the relevant competing considerations.
We conclude that Section 9 similarly upsets Congress' carefully constructed balance by interfering with its chosen methods. That provision would require contracting entities, on pain of burdensome withholding requirements or penalties, to verify the work authorization status of independent contractors. Congress, by contrast, intentionally excluded independent contractors from verification obligations. See 8 U.S.C. § 1324a(a)(1)(A); 8 C.F.R. § 274a.1(f), (g); H.R.Rep. No. 99-682(I), at 57. By requiring verification of independent contractors, Oklahoma risks exposing contracting entities to liability under federal law. See 8 U.S.C. § 1324b(a)(6), (b). Although a business must act with the specific intent to discriminate to be liable under federal law, § 1324b(a)(6), it is likely that a contracting entity will face increased claims of unfair employment practices as a result of the enhanced obligations Section 9 would impose.
Oklahoma's principal argument in opposition to our conflict preemption holding is its assertion that "Oklahoma's goals in implementing these statutes are consistent with federal goals in reducing illegal immigration." (Attorney General's Br. 50). But "[i]n determining whether [state] law `stands as an obstacle' to the full implementation of [federal law], it is not enough to say that the ultimate goal of both federal and state law is [the same]." Int'l Paper Co., 479 U.S. at 494, 107 S.Ct. 805. "A state law also is pre-empted if it interferes with the methods by which the federal statute was designed to reach this goal." Id.
The Supreme Court's decision in Geier v. American Honda Motor Co., 529 U.S. 861, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000), is particularly instructive. In that case, plaintiffs sued Honda after Alexis Geier was seriously injured in a car crash. Id. at 865, 120 S.Ct. 1913. They claimed that the car Alexis was driving was negligently and defectively designed because it lacked a driver's side airbag. Id. At the time of the accident, federal safety standards provided car manufacturers with a range of options for passive restraint devices. Id. at 874-75, 120 S.Ct. 1913. Geier's lawsuit, by contrast, would have required auto manufacturers to install an airbag. Id. at 881, 120 S.Ct. 1913. Because that outcome would undermine Congress' decision to permit a variety of devices, the state tort suit was impliedly preempted; it "would have stood as an obstacle to the accomplishment and execution of the important means-related federal objectives." Id. (quotation omitted); see also de la Cuesta, 458 U.S. at 156, 102 S.Ct. 3014 (state law that limited the availability of an option considered essential to a federal scheme was conflict preempted).
The situation in Geier strongly parallels the interaction between Section 7(B) and IRCA. Federal law provides employers
Geier's reasoning implicates Section 9 as well. Whereas Section 7(B) would restrict the range of choices Congress offered employers, Section 9 would create obligations on contracting entities that Congress expressly chose not to impose. See 8 U.S.C. § 1324a(a)(1)(A); 8 C.F.R. § 274a.1(f), (g); H.R.Rep. No. 99-682(I), at 57; cf. Geier, 529 U.S. at 881, 120 S.Ct. 1913. Just as state tort law could not require airbag installation when the federal government had balanced competing interests and decided against such a requirement, Geier, 529 U.S. at 877-78, 120 S.Ct. 1913, neither can Oklahoma's statutory law require verification of independent contractors when Congress plainly chose not to do so.
Finally, Oklahoma's reliance on Chicanos Por La Causa is misplaced. In that case, the Ninth Circuit concluded that an Arizona law requiring employers to use Basic Pilot was not expressly preempted because it fell within 8 U.S.C. § 1324a(h)(2)'s savings clause, 558 F.3d at 866, and that the state law was not impliedly preempted, id. at 866-67. Its implied preemption holding was based in large part on the initial conclusion that the Arizona law fell within the savings clause. Id. at 867. The court stated:
Id. (quotation omitted). This is problematic because it implies that the presence of an express preemption provision precludes the possibility of implied preemption. But that is emphatically not the case. Geier, 529 U.S. at 869, 120 S.Ct. 1913 ("We now conclude that the saving clause (like the express pre-emption provision) does not bar the ordinary working of conflict pre-emption principles."). On the one hand, because Oklahoma has waived any argument that its Act is a licensing or other similar law, 8 U.S.C. § 1324a(h)(1); supra note 23, the Ninth Circuit's opinion is distinguishable. On the other, we are unpersuaded by its reasoning.
Having concluded that the Chambers have shown a strong likelihood of succeeding on the merits of their preemption challenges to Sections 7(C) and 9, we turn to the remaining preliminary injunction factors. To obtain a preliminary injunction, the Chambers must also demonstrate a likelihood that they will suffer irreparable harm absent preliminary relief, that the balance of equities tips in their favor, and that the injunction is in the public interest. Tyson Foods, Inc., 565 F.3d at 776.
We conclude that the Chambers will likely suffer irreparable harm absent a preliminary injunction. Imposition
Moreover, the balance of equities tips in the Chambers' favor, and the public interest is served by an injunction. Oklahoma does not have an interest in enforcing a law that is likely constitutionally infirm. Moreover, "the public interest will perforce be served by enjoining the enforcement of the invalid provisions of state law." Bank One v. Guttau, 190 F.3d 844, 848 (8th Cir.1999); see also Utah Licensed Beverage Ass'n v. Leavitt, 256 F.3d 1061, 1076 (10th Cir.2001) (public interest favors preliminarily enjoining state statutes likely to be held unconstitutional). We are unpersuaded by the argument that the Oklahoma Act vindicates the public interest because it serves a purpose consistent with federal law: deterrence of illegal immigration and the hiring of unauthorized workers. Even assuming federal law singlemindedly pursues this goal, it does not follow that simply because the two serve the same goal, enforcing the state law is in the public interest. "The fact of a common end hardly neutralizes conflicting means." Crosby, 530 U.S. at 379, 120 S.Ct. 2288. Ultimately, we conclude that the district court did not abuse its discretion in granting a preliminary injunction.
For the reasons stated, we
KELLY, Circuit Judge, concurring in part.
I concur in Judge Lucero's opinion with the exception of parts V(B)(2) and (4) concluding that Section 7(B) is conflict preempted. As noted by Judge Lucero, the panel majority, albeit for different reasons, reverses the district court's grant of a preliminary injunction against the enforcement of Section 7(B). My reasoning
HARTZ, Circuit Judge, concurring and dissenting:
My thoughts with respect to Plaintiffs' challenges to Sections 7(B), 7(C), and 9 of H.B. 1804 are somewhat different from those of the others on this panel. In my view, Plaintiffs lack standing to seek an injunction against the Attorney General with respect to Section 7(B), and their claim with respect to Section 9 is barred by the Tax Injunction Act. I concur with the other members of the panel in affirming the injunction against enforcement of Section 7(C), but my grounds are narrower than theirs.
I. SECTION 7(B)
I respectfully dissent from the majority opinion's holding that the district court had jurisdiction to enjoin the Attorney General from enforcing Okla. Stat. tit. 25, § 1313(B) (Section 7(B) of H.B. 1804). In my view, the Plaintiffs did not have standing to bring their claim against the Attorney General.
As recently stated by the Supreme Court,
Summers v. Earth Island Inst., ___ U.S. ___, 129 S.Ct. 1142, 1149, 173 L.Ed.2d 1 (2009). What is missing in this case is that the Plaintiffs have not shown that they face an actual and imminent threat of injury traceable to actions of the Attorney General with regard to § 1313(B).
Section 1313(B) states as follows:
This statute does not require or provide for any enforcement by the Attorney General. (The Attorney General may have duties as a "public employer," but the Plaintiffs are not seeking relief from him in that role.) The Plaintiffs' sole claim is that the Attorney General may have a role under § 1313(B) because of his duties in reviewing and approving state contracts and his duty to enforce state law (presumably by bringing suit to make sure that public employers comply with the statute). As for the alleged duty to review and approve state contracts, the Plaintiffs have presented no evidence that such review and approval is part of the work of the Attorney General. The statutes cited by the Plaintiffs do no more than authorize state agencies to request assistance from the Attorney General in preparing contracts, see Okla. Stat. tit. 74, § 18b(A)(7) (2001), and authorize the Attorney General to enforce state law, see id. §§ 18b(A)(3), (9), (10), (16). And the Attorney General represents to this court that review of state-agency contracts by the Attorney General does not "occur as a matter of practice in Oklahoma." Att'y Gen. Suppl. Br. at 3 (May 22, 2009). Consequently, the substance of an injunction against the Attorney General would be solely to enjoin him from bringing suit to require other public officials to comply with § 1313(B).
The Plaintiffs' standing thus depends on their showing an actual and imminent threat that the Attorney General will bring or threaten suit to require public employers to comply with § 1313(B). I am aware of no such showing. Even if one could assume that the Attorney General has a particular interest in that statute and would be willing if not eager to take action against public employers who fail to comply with it, there is nothing in the record to suggest that any public employer is recalcitrant. It is pure speculation to believe that action by the Attorney General with respect to § 1313(B) is imminent, or that any imminent injury to be suffered by the Plaintiffs' members from enforcement of § 1313(B) is fairly traceable to the Attorney General.
This is not a case in which the Attorney General is sued to make sure that all the bases are covered. For example, someone fearful of being improperly prosecuted under a criminal statute may sue the Attorney General as well as the district attorney, because the Attorney General may step in if the district attorney is precluded from doing so. In the circumstances before us in this case, however, if a public employer were enjoined from enforcing § 1313(B) because it is invalid, I would not expect the Attorney General to bring suit against the public employer to enforce that section.
We have previously held that a plaintiff lacked standing to bring a claim because the wrong defendant was selected. In Nova Health Systems v. Gandy, 416 F.3d 1149, 1154 (10th Cir.2005), the plaintiffs challenged an Oklahoma statute providing that "[a]ny person who performs an abortion on a minor without parental consent or knowledge shall be liable for the cost of any subsequent medical treatment such minor might require because of the abortion." Okla. Stat. tit. 63, § 1-740. Under that law, suit to recoup such medical costs could be brought by minors or by "medical facilities that incur certain treatment costs that their patients fail to reimburse." Nova Health, 416 F.3d at 1156. The plaintiff was an abortion provider, and the defendants were officials of state-run medical institutions who, in theory, could bring suit under the law to recoup treatment costs. The plaintiff, we said, had shown an injury
A decision by the Third Circuit is also instructive. 1st Westco Corporation v. School District of Philadelphia, 6 F.3d 108 (3d Cir.1993), concerned a Pennsylvania statute "mandat[ing] that only Pennsylvania residents may work on public school construction projects." Id. at 111. An individual school district could "refuse payment of [a] contract price to [a] contractor'" who employed out-of-state labor. Id. at 113 (internal quotation marks omitted). A Pennsylvania school district invoked the law against Westco, a construction company that had employed New Jersey workers to renovate three of the district's buildings. See id. at 111-12. Westco challenged the constitutionality of the residency requirement in federal court and obtained a favorable judgment against the school district, the Secretary of Education, and the Attorney General. See id. On appeal the Third Circuit ruled that there was "no case or controversy" between the Attorney General and Westco. Id. at 116. The court reasoned that the residency law charged the Pennsylvania school districts, not the Attorney General, with enforcing it. See id. at 113. The court acknowledged that the Attorney General had a "general duty to enforce the laws of the Commonwealth of Pennsylvania," and that it was "theoretically possible" that he could "initiate suit against Westco's interests." Id. at 114. But because the record did not establish a "realistic likelihood" of such action, id., the court concluded that Westco lacked standing to sue the Attorney General, see id. at 114-16.
Following this authority, I would hold that the Plaintiffs lacked standing to bring their claim against the Attorney General. The record fails to show that the prospect of the Attorney General taking action to enforce Section 1313(B) is more than speculative. Because the district court lacked jurisdiction over that claim, we should reverse and remand for dismissal. I therefore concur in the reversal of the district court's preliminary injunction against the enforcement of Section 1313(B).
II. SECTION 9
I respectfully dissent from the majority opinion's holding that the district court had jurisdiction to enjoin the enforcement of Okla. Stat. tit. 25, § 2385.32 (§ 9 of H.B. 1804). In my view, such injunctive relief is barred by the Tax Injunction Act (the "TIA"), 28 U.S.C. § 1341. Federal law is clear that the TIA forbids injunctions against tax-withholding statutes. And § 2385.32 is such a statute; it requires withholding of income taxes from payments made to certain independent contractors and provides for enforcement of the requirement.
Okla. Stat. tit. 25, § 2385.32(A) states:
In other words, if one who hires an independent contractor cannot obtain verification of the contractor's authorization to work in this country, the hirer must withhold income taxes from its payments to the contractor. Section 2385.32(B) makes the hirer liable for taxes that should have been withheld.
Although it may be rare for a government to require tax withholding from payments to independent contractors, it is not uncommon to require that taxes be withheld from payments other than wages to employees. For example, Oklahoma requires income-tax withholding from royalty payments to nonresidents. See Okla. Stat. tit. 25, § 2385.26. Royalty withholding serves the purpose of ensuring that nonresidents pay required Oklahoma income taxes. If Oklahoma is concerned that independent contractors, or certain subsets of independent contractors, are likely to evade payment of required state income tax, it can similarly require withholding of payments to those independent contractors to ensure that their income-tax obligations will be satisfied.
The TIA forbids injunctions against such withholding statutes. The TIA states:
28 U.S.C. § 1341 (emphasis added). Withholding is a method for collection of taxes, and it cannot be enjoined even if the tax might be collected by other means. In United States v. American Friends Service Committee (AFSC), 419 U.S. 7, 95 S.Ct. 13, 42 L.Ed.2d 7 (1974) (per curiam), a district court had enjoined the government from enforcing the statute requiring the withholding of income taxes from the salaries of AFSC's employees. (The employees wished to express their opposition to war by refusing to pay taxes.) The Supreme Court held that the district court's injunction was barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a). The Anti-Injunction Act is the equivalent of the TIA for federal taxes. It states:
26 U.S.C. § 7421(a). The Supreme Court explained:
Am. Friends, 419 U.S. at 10, 95 S.Ct. 13.
The two published circuit-court opinions that have addressed state withholding statutes have held that the TIA likewise forbids injunctions against such statutes. See Int'l Lotto Fund v. Virginia State Lottery Dep't, 20 F.3d 589, 591 (4th Cir.1994); Sipe v. Amerada Hess Corp., 689 F.2d 396, 402-03 (3d Cir.1982) (unemployment and disability withholding). I would follow the above authority and hold that the district court was deprived by the TIA of jurisdiction to enjoin the enforcement of Okla. Stat. tit. 25, § 2385.32. This is not to say that the statute can escape judicial scrutiny. The TIA does not bar a federal court from granting relief to one who has already paid a challenged state tax; and, as far as the TIA is concerned, a state court could enjoin enforcement of a state-court statute. The point is only that the district court lacked jurisdiction to consider the relief sought at this time.
The majority opinion makes what I believe to be two errors in its analysis. First, it ignores that what is collected under § 2385.32 is not some special assessment but income tax, pure and simple. Thus, if the withheld amount is greater than what the independent contractor actually owes in income taxes, the independent contractor can file an Oklahoma tax return and obtain a refund of the excess payment.
Second, the majority opinion improperly focuses on the motive for enactment of § 2385.32. The TIA is not concerned with why a state chooses to collect its taxes in a particular manner. After all, even if the tax itself is unconstitutional (because, say, of an improper purpose), the TIA forbids federal courts from enjoining collection of the tax. In any event, I question the majority opinion's analysis of that motive. The opinion quotes selectively from § 2 of H.B. 104, which is in essence the preamble to the statute. Section 2 states in full:
(emphases added). As I read this section, the general comments regarding illegal immigration expressed in the first two sentences are to support the proposition in the third sentence that state agencies should cooperate with federal authorities to enforce federal immigration law. The sentence relevant to the withholding statute, however, is the final sentence, which states that "other measures are necessary to ensure the integrity of various governmental programs and services." It is
III. SECTION 7(C)
I agree with the majority opinion in affirming the injunction against the Human Rights Commission with respect to enforcement of § 7(C). The Plaintiffs have standing to seek the injunction; and § 7(C) is preempted by the IRCA because it provides for the imposition of civil sanctions for employing unauthorized aliens. I would not go as far as the majority opinion, however, in saying that reinstatement, back pay, costs, and attorney fees are civil sanctions within the meaning of that term in the IRCA. I would be inclined to agree with the Second Circuit opinion in Madeira v. Affordable Housing Foundation, Inc., 469 F.3d 219, 239-40 (2d Cir.2006), which held that compensatory relief does not come within the IRCA's meaning of civil sanctions. Nevertheless, among the types of relief provided by Oklahoma for discriminatory practices (which include violations of § 7(C)) are civil penalties of up to $50,000 for a first violation and $100,000 for a second. See Okla. Stat. tit. 25, § 1506.6(B)(3). Perhaps some of § 7(C) could be saved by excluding those civil-penalty provisions from its reach; but the Defendants have not argued for such a result.
a. the electronic verification of work authorization program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996, P.L. 104-208, Division C, Section 403(a); 8 U.S.C., Section 1324a, and operated by the United States Department of Homeland Security, known as the Basic Pilot Program,
b. any equivalent federal program designated by the United States Department of Homeland Security or any other federal agency authorized to verify the work eligibility status of newly hired employees, pursuant to the Immigration Reform and Control Act of 1986 (IRCA), D.L. 99-603,
c. any other independent, third-party system with an equal or higher degree of reliability as the programs, systems, or processes described in this paragraph, or
d. the Social Security Number Verification Service, or such similar online verification process implemented by the United States Social Security Administration[.]
1. After July 1, 2008, no public employer shall enter into a contract for the physical performance of services within this state unless the contractor registers and participates in the Status Verification System to verify the work eligibility status of all new employees.
2. After July 1, 2008, no contractor or subcontractor who enters into a contract with a public employer shall enter into such a contract or subcontract in connection with the physical performance of services within this state unless the contractor or subcontractor registers and participates in the Status Verification System to verify information of all new employees.
3. The provisions of this subsection shall not apply to any contracts entered into prior to the effective date of this section even though such contracts may involve the physical performance of services within this state after July 1, 2008.
§ 1313(B) (footnote omitted).
1. It shall be a discriminatory practice for an employing entity to discharge an employee working in Oklahoma who is a United States citizen or permanent resident alien while retaining an employee who the employing entity knows, or reasonably should have known, is an unauthorized alien hired after July 1, 2008, and who is working in Oklahoma in a job category that requires equal skill, effort, and responsibility, and which is performed under similar working conditions, as defined by 29 U.S.C. § 206(d)(1), as the job category held by the discharged employee.
2. An employing entity which, on the date of the discharge in question, was currently enrolled in and used a Status Verification System to verify the employment eligibility of its employees in Oklahoma hired after July 1, 2008, shall be exempt from liability, investigation, or suit arising from any action under this section.
3. No cause of action for a violation of this subsection shall arise anywhere in Oklahoma law but from the provisions of this subsection.
A. If an individual independent contractor, contracting for the physical performance of services in this state, fails to provide to the contracting entity documentation to verify the independent contractor's employment authorization, pursuant to the prohibition against the use of unauthorized alien labor through contract set forth in 8 U.S.C. § 1324a(a)(4), the contracting entity shall be required to withhold state income tax at the top marginal income tax rate as provided in Section 2355 of Title 68 of the Oklahoma Statutes as applied to compensation paid to such individual for the performance of such services within this state which exceeds the minimum amount of compensation the contracting entity is required to report as income on United States Internal Revenue Service Form 1099.
B. Any contracting entity who fails to comply with the withholding requirements of this subsection shall be liable for the taxes required to have been withheld unless such contracting entity is exempt from federal withholding with respect to such individual pursuant to a properly filed Internal Revenue Service Form 8233 or its equivalent.
C. Nothing in this section is intended to create, or should be construed as creating, an employer-employee relationship between a contracting entity and an individual independent contractor.