Garcia v. San Antonio Metropolitan Transit Authority

The case was argued on March 19, 1984, with William Thaddeus Coleman Jr. appearing to argue for the Transit Authority and Assistant Attorney General Theodore Olson arguing for the workers.[7] At the March 21 conference five Justices, including Justice Harry Blackmun, voted to affirm, upholding National League of Cities.[8]

Justice Blackmun had joined the Court in National League of Cities but wrote in concurrence that he was “not untroubled” by Justice William Rehnquist's majority opinion.[9] Chief Justice Warren E. Burger preferred to assign opinions to the "least persuaded" justice, so now he asked Blackmun to write for the Court.[8] Justice Blackmun's law clerk, however, convinced Blackmun that he could not write a workable opinion upholding National League of Cities.[8] On June 11 Justice Blackmun circulated a memo announcing that he was switching his vote.[8]

The case was scheduled for reargument and the Court asked for briefs on the additional question as to if National League of Cities “should be reconsidered”.[10] At reargument on October 1 former Secretary Coleman reappeared for the Transit Authority but this time the Solicitor General of the United States Rex E. Lee appeared, arguing to reverse.[7] Half of the States filed amici briefs urging affirmance, including then-Attorneys General Joe Lieberman and John Ashcroft.

In its decision, issued February 19, 1985, the Court ruled by a vote of five to four that the concept of "traditional governmental functions" was analytically unsound and that Congress had the power under the Commerce Clause to apply the FLSA to employees of state and local governments.

Writing for the majority, Justice Blackmun noted that the courts had not come up with an analytically sound distinction between traditional and non-traditional governmental operations. He noted that the Court had adopted a similar distinction decades earlier in challenges to the federal government's taxation of the operations of state governments, only to reject it as well. The Court denounced any efforts to draw this distinction, whether based on the historical record or on historical grounds, as arbitrary and likely to be suffused with the prejudices of an unelected branch of government as to which governmental functions are proper and traditional and which ones are not.

The Court also rejected the theoretical underpinnings of the National League of Cities v. Usery decision—that the Constitution's recognition of the sovereignty of the states necessarily implies limits on the power of the federal government to regulate their employment relations. In the majority's view, the constitutional grant of authority to Congress to regulate interstate commerce was not qualified by any implied limitation on the right to regulate the activities of the states when they engaged in interstate commerce; on the contrary, the Commerce Clause invalidates state regulations that interfere with commerce, while the Supremacy Clause allows Congress to preempt state laws that conflict with federal law in this area. According to the majority, the framers believed that state sovereignty could be maintained by the peculiar structure they adopted: a Senate in which each state was given equal representation, regardless of its population, an electoral college that gave the states the power to choose electors, and the indirect election of Senators by the legislature of each state prior to the adoption of the Seventeenth Amendment to the United States Constitution. Noting that the same Congress that extended the FLSA to cover government-run mass transit systems also provided substantial funding for those systems, the Court concluded that the structure created by the framers had indeed protected the states from overreaching by the federal government.

Justice Powell, joined by Chief Justice Burger, Justice Rehnquist and Justice O'Connor objected to both the Court's failure to grant stare decisis effect to its earlier decision in National League of Cities and for reducing the balancing test that the Court adopted in National League of Cities into a cruder categorical distinction between traditional and non-traditional governmental functions. Powell's opinion was even more critical of the majority's failure to recognize any limiting role of the Tenth Amendment to the United States Constitution, accusing it of negating the Court's role in mediating between the two through judicial review of the constitutionality of Congress' intrusions into areas previously left to the states. Powell wrote "The State's role in our system of government is a matter of Constitutional law, not legislative grace."

Justice Rehnquist expressed reservations as to Justice Powell's description of the standard actually adopted by the Court in National League of Cities and of the alternative standard proposed by Justice O'Connor, but reiterated his support of both dissenting opinions based on their opposition to the Court's resolution of those constitutional issues in this case.

Acknowledging that the changes in the national economy in the past two hundred years had transformed Congress' Commerce Clause power from being a marginal power that served mostly to mediate between the states by eliminating interstate tariffs and other burdens on interstate commerce into a general power that gave Congress essentially unlimited power to regulate in every area of economic life, O'Connor argued for special limitations on this power to protect the states' authority over their own employment relations. She invoked the limiting language of the most expansive interpretations of the Commerce Clause in the Court's decisions of the 1930s and 1940s to argue that the Court retained the power to decide whether a particular exercise of the Commerce Clause authority was necessary and proper to the federal purposes to be achieved. Applying that standard, she, joined by Justices Powell and Rehnquist, would find the FLSA unconstitutional as applied to employees of state and local governments.