This happened in TX. At the time I had thought about seeing if there was something I could do to fight it, but ultimately felt that a) didn't want to expend the energy on a legal fight, b) I probably would not want to work for such a company anyway, and c) it took me only like 1-2 weeks to find a different job.
This is a real problem. My anecdote:
Several years ago I interviewed for a job with a software company that specialized in analytics. At the time I had almost ten years of enterprise java development experience. I sailed through all the interviews and was told I was by far the strongest candidate and they were about to make me a job offer. At final phase, HR director calls and says they want to send me an offer, they just want to know what my degree was in. I told them that while I went to school for computer science, I dropped out before completing (dot com bubble era) so I never finished my degree. After hearing that HR lady was like, "oh... lemme call you back"
So, while it may not be that my job was directly taken by an H1-B worker (I don't know for sure if this was the case), my job went to someone less qualified because of H1-B bureaucracy.
After Goliath's defeat, giants ceased to command respect. - Freeman Dyson