A Choice-of-Law Alternative to Federal Preemption of State Privacy Law

A prominent theme in debates about US national privacy legislation is whether federal law should preempt state law. A federal statute could create one standard for markets that are obviously national in scope. Another approach is to allow states to be 'laboratories of democracy' that adopt different laws so they can discover the best ones. We propose a federal statute requiring states to recognize contractual choice-of-law provisions, so companies and consumers can choose what state privacy law to adopt. Privacy would continue to be regulated at the state level. However, the federal government would provide for jurisdictional competition among states, such that companies operating nationally could comply with the privacy laws of any one state. Our proposed approach would foster a double competition aimed at discerning and delivering on consumers' true privacy interests: market competition to deliver privacy policies that consumers prefer and competition among states to develop the best privacy laws. Unlike a single federal privacy law, this approach would provide 50 competing privacy regimes for national firms. The choice-of-law approach can trigger competition and innovation in privacy practices while preserving a role for meaningful state privacy regulation.
The question of preemption of state law by the federal government has bedeviled debates about privacy regulation in the United States. A prominent theme is to propose a national privacy [...]