Ninth Circuit - Jones Act is Constitutional

The Ninth Circuit struck down a challenge to the constitutionality of the Jones Act or Merchant Marine Act of 1920.  The case was Novak v. United States and the opinion can be found here.

The litigated component of the Jones Act (rest easy merchant mariners, you didn't lose your worker compensation causes of action) was the requirement that any ship carrying cargo between two points in the United States - say Long Beach and Honolulu - be "built in the United States."  

Per the Court:

Plaintiffs’ theory is that, by excluding foreign competition, the cabotage provisions have created “an essentially monopolistic Hawaiian ocean shipping market” that has resulted in “high prices” and “a de facto duopoly” of two established firms in the Hawaii-mainland shipping market. Plaintiffs contend that all Hawaii residents and businesses, including themselves, have been harmed not only by the increased shipping costs, but also by the resultant inflated cost of doing business in Hawaii because higher shipping costs lead to higher prices for imported goods. Plaintiffs assert that interstate trade between Hawaii and the rest of the United States has been significantly stifled to such an extent that the effect of the Jones Act’s restrictions amounts to “an unlawful restraint of trade and interstate commerce, thereby violating the Commerce Clause of the United States Constitution.” Plaintiffs filed this action against the United States, asserting a single cause of action under the Commerce Clause.

The basic issue on appeal is the Standing doctrine which requires you to be the right plaintiff with an injury caused by some conduct and that injury can be redressed by a favorable decision.

The Ninth Circuit rejected this challenge to the Jones Act because the harm alleged by plaintiffs - increased prices for goods purchased in Hawaii - was not caused by the Jones Act itself, but was rather based on the prices set by the shipping companies carrying the cargo.  As such, absent showing that BUT FOR the Jones Act, the prices would have assuredly been less, the Plaintiffs did not have standing to bring the challenge.

Classically, amendment of a complaint could cure a standing problem, so the Ninth Circuit analyzed whether amendment could cure the problem.  Under the federal rules, amendment of complaints should be allowed, unless it would be futile.  Or, if the amended complaint would fail for any reason, the court won't allow you to amend it.

In this case, the Ninth Circuit found the Jones Act to be a valid exercise of Congress' commerce clause powers.