Facts
- An automobile dealer in Providence, Rhode Island sold a car to purchasers for $1,100, allegedly $210 above the federal ceiling price set under the Emergency Price Control Act of 1942 (EPCA).
- The buyers sued the dealer in a Rhode Island state district court under EPCA § 205(e), which authorized recovery of up to treble damages, plus costs and a reasonable attorney’s fee, in “any court of competent jurisdiction.”
- The state district court awarded treble damages and costs.
- On de novo appeal, the Rhode Island Superior Court entered judgment only for the overcharge plus attorney’s fees.
- The Rhode Island Supreme Court reversed, concluding the EPCA remedy was “penal” and that Rhode Island courts could decline to enforce a “penal” law of a “foreign” sovereign.
- The U.S. Supreme Court granted review.
Issues
- Whether a state court of competent jurisdiction may refuse to entertain a federal cause of action authorized for state-court enforcement on the ground that the federal statute is “penal.”
- Whether, consistent with the Supremacy Clause, a state court may decline to enforce a federal right because the state disagrees with the federal policy reflected in the statute.
Decision
- The Supreme Court reversed the Rhode Island Supreme Court and remanded.
- Assuming without deciding that EPCA § 205(e) is “penal,” the Court held that state courts were not free under Article VI to refuse enforcement of the federal claim.
- Because Rhode Island courts otherwise had jurisdiction to hear comparable actions, they were required to adjudicate the federal claim and could not close their courts to it based on its federal character or asserted conflict with state policy.
Legal Principles
- Under the Supremacy Clause, state judges are bound to apply federal law; a state court with competent jurisdiction must enforce federal rights.
- A state court cannot refuse to enforce a federal cause of action because it views the federal remedy as “penal” or treats the United States as “foreign” for conflicts purposes.
- State “public policy” disagreement with Congress’s choices is not a valid basis to deny a federal cause of action a forum in state court when Congress has authorized state-court enforcement.
- Where Congress provides concurrent jurisdiction and the state court has ordinary jurisdiction over analogous claims, the state court must entertain the federal action on equal terms.
Conclusion
The Court held that Rhode Island courts were constitutionally obligated to hear the EPCA overcharge action and could not reject it as a “penal” law of a “foreign” sovereign or as contrary to state policy, reaffirming that federal law is enforceable in state courts that have competent jurisdiction.