The issue before the First Circuit was whether Massachusetts can prohibit companies that do business in Burma from contracting with the state.The NAM filed an amicus brief on 3/8/99 asserting that this state action imposes a secondary boycott on companies engaged in commerce with Burma that disrupts the flow of interstate and foreign commerce. Companies should not be forced to forfeit either international markets or state and local government procurement opportunities.
On 6/22/99, the court agreed. It ruled that the Massachusetts law interferes with the foreign affairs power of the federal government and violates the Foreign Commerce Clause and the Supremacy Clause. The court noted that Massachusetts law has more than an incidental or indirect effect on foreign relations, since it was designed to affect foreign relations, the state’s $2 billion in purchasing power gives it the power to have an effect, its decision could be copied by other states, and other countries have protested. The state also "crossed over the line from market participant to market regulator," and could not justify its restrictions simply by saying it could choose who to do business with.
This is an important precedent to prevent states and local governments from imposing restrictions that affect the ability of companies to do business in foreign countries. It will go a long way toward preventing this kind of regulation in the future. To see the opinion, click here. This case was appealed to the Supreme Court of the United States, where the NAM filed another amicus brief. Read the Supreme Court of the United States summary here.