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.