Arizona Court of Appeals Division One Holds Federal Law Does Not Preempt Arizona from Requiring Foreign Companies to Comply with Workers’ Compensation Statutes

Adan Valenzuela, a truck driver and citizen of Mexico, was injured in a work-related crash in Arizona.  He received benefits from Mexican social insurance, but his treatments at hospitals in Nogales and Tucson were not covered because the U.S. hospitals were out of network.  Valenzuela filed an injury report with the Industrial Commission of Arizona (“ICA”), which was referred to the Special Fund because Porteadores was not covered by Arizona workers’ compensation insurance.  The claim came before an administrative law judge, who declined to accept the argument advanced by Porteadores that the North American Free Trade Agreement (“NAFTA”) and North American Agreement on Labor Cooperatin (“NAALC”) blocked the ICA from asserting personal and subject matter jurisdiction over the Mexican company.  After review of the decision, Porteadores filed a statutory special action.

In a unanimous decision, the Court of Appeals held that the NAFTA Implementation Act, 19 U.S.C. §3301 et seq., bars private causes of action and only the United States may challenge a state law on the grounds that it conflicts with NAFTA or NAALC.  Porteadores also argued that Arizona may not require Mexican companies to participate in the workers’ compensation system because the Foreign Commerce Clause, U.S. Const. art. I, § 8, cl. 3, reserves to Congress the power to regulate foreign commerce.  The Court recognized the need for the United States to speak with “one voice” on matters of foreign commerce, but rejected Porteadores’ argument because there is no evidence that Congress has neither adopted a uniform policy regarding the applicability of workers’ compensation to foreign companies doing business in the United States nor expressly barred application of state workers’ compensation laws to foreign companies.  The Court affirmed the award.

Judge Brown authored the opinion; Judges Thumma and Johnsen concurred.