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Barnett Bank, N.A. v. Nelson - 517 U.S. 25, 116 S. Ct. 1103 (1996)

Rule:

If explicit preemption language does not appear in a federal statute, or does not directly answer the question, courts must consider whether the federal statute's "structure and purpose," or nonspecific statutory language, nonetheless reveal a clear, but implicit, pre-emptive intent. A federal statute, for example, may create a scheme of federal regulation so pervasive as to make reasonable the inference that Congress left no room for the states to supplement it. Alternatively, federal law may be in irreconcilable conflict with state law. Compliance with both statutes, for example, may be a "physical impossibility;" or, the state law may stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Facts:

A 1916 federal law (Federal Statute) permitted national banks to sell insurance in small towns, but a Florida law (Florida Statute) prohibited such banks from selling most types of insurance. When petitioner Barnett Bank of Marion County, N.A. ("Barnett Bank"), a national bank doing business in a small Florida town, bought a state licensed insurance agency, respondent Bill Nelson, Florida Insurance Commissioner ("Commissioner"), ordered the agency to stop selling the prohibited forms of insurance. Barnett Bank filed an action for declaratory and injunctive relief against the Commissioner in federal district court. The court held that the Federal Statute did not pre-empt the Florida statute, as: (1) the Florida statute was a law enacted for the purpose of regulating the business of insurance within the meaning of 2(b) of the McCarran-Ferguson Act, 15 U.S.C.S. § 1012(b), and; (2) the Federal Statute did not fall within § 2(b)'s anti-pre-emption rule because the Federal Statute did not specifically relate to the business of insurance. On appeal, the court of appeals affirmed. Barnett Bank was granted a writ of certiorari.

Issue:

Did the court of appeals err in ruling that Barnett Bank was prohibited from selling insurance by the Florida Statute?

Answer:

Yes.

Conclusion:

On certiorari, the Supreme Court of the United States reversed the appellate court's judgment. The Court held that the McCarran-Ferguson Act, 15 U.S.C.S. § 1012(b), was inapplicable because the Federal Statute specifically related to the business of insurance. The Court further held that because the Federal Statute authorized Barnett Bank to engage in activities prohibited under the State Statute, the two statutes were in direct conflict, and under ordinary legal principles of preemption, the federal law preempted the state law.

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