South Carolina State Ports Authority v. Federal Maritime CommissionSouth Carolina State Ports Authority v. Federal Maritime Commission
Reversed and remanded with directions to dismiss by published opinion. Chief Judge Wilkinson wrote the opinion, in which Judge Niemeyer and Judge Howard joined.
OPINION
WILKINSON, Chief Judge:
This case requires us to decide whether a state‘s sovereign immunity protects it from being brought before a federal administrative tribunal by a private party. We hold that the state‘s immunity prevents such a suit or proceeding.
South Carolina Maritime Services, Inc. (Maritime Services), a cruise ship company, filed a complaint with the Federal Maritime Commission (FMC) against the South Carolina State Ports Authority (SCSPA). The suit sought reparations and injunctive relief for alleged violations of the
I.
Maritime Services operates a cruise ship, the M/V TROPIC SEA. Passengers may gamble on board the ship while it is in international waters. The South Carolina State Ports Authority has a policy of refusing to berth ships whose primary purpose is gambling. The SCSPA allows some ships that permit gambling to berth, but only so long as gambling is not their primary purpose. The SCSPA refused to give the M/V TROPIC SEA a berthing space at the port of Charleston because it claimed the ship‘s primary purpose was to facilitate gambling.
Maritime Services, believing that it was being singled out for unfair treatment, filed a complaint with the FMC under the
The SCSPA‘s response raised, inter alia, the argument that South Carolina‘s sovereign immunity prohibits private parties from suing the SCSPA before a federal agency. In support, the SCSPA noted that in Ristow v. South Carolina Ports Authority, 58 F.3d 1051 (4th Cir. 1995), this court held that the SCSPA is protected by South Carolina‘s sovereign immunity because it is an arm of the state. The ALJ agreed and dismissed the suit on sovereign immunity grounds. The FMC then reviewed the case on its own motion. In reversing the ALJ, the FMC held that sovereign immunity does not bar private suits against the states before federal agencies. The SCSPA now appeals.
II.
The doctrine of sovereign immunity predates the founding of our nation. See W. Blackstone, Commentaries on the Laws of England 234-35 (1765). And “[a]lthough the American people had rejected other aspects of English political theory, the doctrine that a sovereign could not be sued without its consent was universal in the States when the Constitution was drafted and ratified.” Alden v. Maine, 527 U.S. 706, 715-16 (1999) (citing Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 434-35 (1793) (Iredell, J., dissenting)).
Notwithstanding the presumed universality of this doctrine, the Supreme Court held in 1793 that a private citizen of South Carolina could in fact sue the State of Georgia without its consent. Chisholm, 2 U.S. at 420. Justice Iredell dissented, contending that both before and after the adoption of the Constitution, the states maintained their sovereign right to be protected from suit without consent. Id. at 435-36, 448, 449-50 (Iredell, J., dissenting). The decision in Chisholm “fell upon the country with a profound shock” and was quickly overruled by the
The
A.
The Seminole Tribe case involved the
The Supreme Court affirmed the dismissal of the Tribe‘s suit, holding that Congress could not, in the exercise of its
In reaching its decision, the Supreme Court held that the sovereign immunity principle is sufficiently strong that it transcends the literal text of the
With respect to the type of relief sought, Seminole Tribe held that the doctrine of sovereign immunity applies even if the suit against the state seeks no damages but only requests injunctive relief. According to the Court, “the type of relief sought is irrelevant to whether Congress has power to abrogate States’ immunity.” Id. at 58. This is because the “Eleventh Amendment does not exist solely in order to preven[t] federal-court judgments that must be paid out of a State‘s treasury, it also serves to avoid the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties.” Id. (alteration in original) (internal quotations and citations omitted). Accordingly, the fact that the
B.
Alden v. Maine is the other recent sovereign immunity decision that informs our inquiry. A group of probation officers filed suit in federal court against the State of Maine. The officers alleged that the state had violated the
Just as Seminole Tribe held that state sovereign immunity transcends the type of relief sought, Alden held that the sovereign immunity of the states transcends the forum in which the state is sued. Thus, the Court held that sovereign immunity bars suits in state courts just as it does in federal courts. According to the Supreme Court, “the powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts.” Id.
Alden explained clearly why state sovereign immunity applies regardless of the forum in which the private action is prosecuted. According to the Court, “[p]rivate suits against nonconsenting States . . . present the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties, regardless of the forum.” Id. at 749 (internal quotations and citations omitted). Compounding the harm is the fact that “[n]ot only must a State defend or default but also it must face the prospect of being thrust, by federal fiat and against its will, into the disfavored status of a debtor, subject to the power of private citizens to levy on its treasury or perhaps even government buildings or property which the State administers on the public‘s behalf.” Id. Accordingly, Alden recognized that whether a state is entitled to sovereign immunity “does not turn on the forum in which the suits [are] prosecuted.” Id. at 733. Rather, sovereign immunity applies whenever a private individual attempts to sue a nonconsenting state. Id.
In explicating this holding, Alden also reaffirmed the Seminole Tribe principle that state sovereign immunity extends beyond the text of the
Instead of focusing on the literal terms of the
Moreover, it is equally well established that sovereign immunity bars not just lawsuits filed in courts of law, but rather all proceedings against a non-consenting sovereign. Thus, the Court noted the “`presumption that no anomalous and unheard-of proceedings or suits were intended to be raised up by the Constitution — anomalous and unheard of when the constitution was adopted.\‘” Alden, 527 U.S. at 727 (quoting Hans, 134 U.S. at 18). This language, referring to “proceedings or suits,” makes it clear that certain proceedings, while not suits, are nevertheless barred by the doctrine of sovereign immunity. Alden cautioned, however, that the defense of sovereign immunity “does not confer upon the State a concomitant right to disregard the Constitution or valid federal law.” Id. at 754-55. Rather, the “States and their officers are bound by obligations imposed by the Constitution and by federal statutes that comport with the constitutional design.” Id. at 755.
Alden outlined six exceptions to the doctrine of sovereign immunity. First, sovereign immunity does not bar a suit where the state has given consent. Second, states remain subject to suits brought by the Federal Government or by other states. Third, Congress retains the power to abrogate the sovereign immunity of the states pursuant to the
C.
Seminole Tribe and Alden make clear that state sovereign immunity, while not absolute, is among the Constitution‘s foremost principles. This constitutional commitment to dual sovereignty is no radical idea. As the Supreme Court has repeatedly explained, embedded in the structure of the Constitution is the principle that a private party may not file a complaint against an unconsenting state. With these lessons firmly in mind, we turn to the merits of the claim before us.
III.
The FMC and the United States argue that despite Seminole Tribe and Alden, sovereign immunity for the South Carolina State Ports Authority is inappropriate in this case. They posit two primary reasons for the SCSPA‘s lack of sovereign immunity. First, they contend that the FMC is not a court and thus does not exercise the judicial power of the United States. Second, they argue that the proceeding in front of the FMC is not a lawsuit. We address each contention in turn.
A.
The respondents FMC and the United States first assert that sovereign immunity does not apply in agency actions because agencies do not exercise the judicial power of the United States. See
The FMC and the United States contrast the powers exercised by the FMC here with the authority exercised by the Tax Court in Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991). In Freytag, the Supreme Court held that the Tax Court, an
The FMC and the United States argue that the differences between the Tax Court and the adjudicative authority of the FMC make it clear that only the former is a court. The Tax Court, unlike the FMC, can enforce its orders.
Whether the FMC is exercising the judicial power as outlined in Freytag, however, is irrelevant to the disposition of this case. The central lesson from Freytag is that adjudication by adversarial proceedings can exist outside the context of
If
No “compelling evidence” exists. To the contrary, Alden demonstrates that the founding generation understood the Constitution “to preserve the States’ traditional immunity from private suits.” 527 U.S. at 724. It was the spectre of private suits against the states that mattered to the founders, not the forums in which those suits might happen to be brought. At the time of ratification, the states were concerned about private citizens filing complaints against them without their consent. They understood that being subjected to such proceedings would affront a “fundamental aspect of[their] sovereignty.” Id. at 713.
More practically, the states “`were heavily indebted as a result of the Revolutionary War. They were vitally interested in the question whether the creation of a new federal sovereign, with courts of its own, would automatically subject them, like lower English lords, to suits in the courts of the “higher” sovereign.\‘” Id. at 716 (quoting Nevada v. Hall, 440 U.S. 410, 418 (1979)). “It is indisputable that, at the time of the founding, many of the States could have been forced into insolvency but for their immunity from private suits for money damages.” Alden, 527 U.S. at 750. In order to ensure passage of the Constitution, “[t]he leading advocates of the Constitution assured the people in no uncertain terms that the Constitution would not strip the States of sovereign immunity.” Id. at 716; accord id. at 716-18 (citing founders such as Hamilton, Madison, and Marshall). The lesson from “the Constitution‘s structure, its history, and the authoritative interpretations” by the Supreme Court is unmistakable — an adversarial proceeding against a non-consenting state by a private party triggers sovereign immunity. Id. at 713.
The United States nevertheless asserts that the federal government can create
Alden makes clear that any proceeding where a federal officer adjudicates disputes between private parties and unconsenting states would not have passed muster at the time of the Constitution‘s passage nor after the ratification of the
B.
The FMC and the United States also insist that sovereign immunity does not apply because the
It is important to examine the precise nature of this proceeding, and to describe what it is really like. The
The Act also provides that in “investigations and adjudicatory proceedings,” any party may utilize “depositions, written interrogatories, and discovery procedures.”
When a party files a formal complaint under
The proceeding thus walks, talks, and squawks very much like a lawsuit. Its placement within the Executive Branch cannot blind us to the fact that the proceeding is truly an adjudication. The FMC and the United States argue, however, that despite the fact that the ALJ adjudicates the “case,”
The adjudication, however, is just that — an adjudication. An impartial officer presides in an adversarial proceeding to determine the rights and responsibilities of different parties. It is true that the commissioners may review the ALJ‘s decision. Nevertheless, this review is still impartial. See
Indeed, the Supreme Court has recognized that ALJs are judges who decide cases. In Butz v. Economou, 438 U.S. 478, 511-14 (1978), the Court extended absolute judicial immunity to ALJs precisely because ALJs perform judicial acts. The Court held that “adjudication within a federal administrative agency shares enough of the characteristics of the judicial process that those who participate in such adjudication should also be immune from suits for damages.” Butz, 438 U.S. at 512-13. So as to leave no doubt, the Court noted that the “conflicts which federal hearing examiners seek to resolve are every bit as fractious as those which come to court.” Id. at 513. It did not matter that the ALJs were “employees of the Executive Branch.” Id. at 511. “Judges have absolute immunity not because of their particular location within the Government but because of the special nature of their responsibilities.” Id.
The ALJ is thus not merely an alternate means of policy implementation. Rather, “the role of the modern federal hearing examiner or administrative law judge . . . is `functionally comparable\’ to that of a judge.” Id. at 513. Like the situation in Butz, the judges and commissioners in the FMC independently judge the evidence before them. As the Butz Court stated, “the process of agency adjudication is currently structured so as to assure that the hearing examiner exercises his independent judgment on the evidence before him, free from pressures by the parties or other officials within the agency.” Id. Although
The FMC and the United States maintain, however, that the agency adjudication is merely an empty shell because the agency itself has no enforcement power. Only the Attorney General, they emphasize, has the discretion to enforce the FMC‘s non-reparation orders in district court.
It is true that under the Act, a state may choose to ignore a subpoena, an order, or a judgment.
Furthermore, the idea that a state would explicitly ignore any order of the federal government does not do justice to our system of federalism. State officers, no less than federal ones, take an oath to support and defend the Constitution and the laws of the United States. Id. at 715. The Supremacy Clause, of course, makes it clear that state officials have a duty to obey and enforce those same laws. See, e.g., Testa v. Katt, 330 U.S. 386, 391 (1947) (“[T]he Constitution and the laws passed pursuant to it are the supreme laws of the land, binding alike upon states, courts, and the people.“). In short, we cannot base our opinion on the lack of FMC enforcement power because doing so would assume that state officers are unwilling on their own to obey an order of the United States. While enforcement power may be relevant to deciding whether a legislative court possesses the “judicial power” under
IV.
A.
Our holding that state sovereign immunity applies to agency adjudications does not end the inquiry. The Supreme Court has identified six exceptions to the doctrine of state sovereign immunity. See supra Section II.B. We address each in turn.
1.
The first exception to sovereign immunity is when the state gives its consent to suit. See, e.g., Alden, 527 U.S. at 755. This exception, of course, permits a state to redress the grievances of the complainant. However, it does so in a way that allows states to decide whether they want to be subject to a particular suit or class of suits. South Carolina has not given its consent to this lawsuit. It has not passed any law evincing an intent to be sued by a private party in these cases. Nor has it acquiesced to being sued in this particular case. Consequently, the consent exception does not apply to the case at bar.
2.
The second exception is for cases brought against a state by the United States or by other states. See, e.g., id. at 755-56; Principality of Monaco, 292 U.S. at 328. A suit “commenced and prosecuted against a State in the name of the United States . .. differs in kind from the suit of an individual” in that the former was specifically contemplated in the design and framework of the Constitution. Alden, 527 U.S. at 755. Suits brought by the United States require the exercise of political responsibility. Id. at 756. They are less prone to be carried out solely to advance the agenda of a single individual. Id. Purely private suits, by contrast, lack this political constraint. The FMC and the United States argue that the discretion exercised by the Attorney General in deciding to enforce a Commission order transforms a proceeding by a private party into a discretionary action by the government. We disagree.
As previously discussed, the agency must hear all claims filed under
3.
The third exception to state sovereign immunity is for cases brought pursuant to Congress’ enforcement power under
4.
The fourth exception is for suits brought against lesser entities like municipal corporations that are not an arm of the state. See Alden, 527 U.S. at 756. The South Carolina State Ports Authority is indisputably an arm of the state itself. Ristow, 58 F.3d at 1053 (“[T]he Ports Authority, from an Eleventh Amendment perspective, is the alter ego of the State of South Carolina.“). Consequently, this exception is inapplicable.
5.
The fifth exception to sovereign immunity is that in certain circumstances a private party may sue state officers in their official capacity to prevent ongoing violations of the law. See Ex parte Young, 209 U.S. at 123; see also Seminole Tribe, 517 U.S. at 73. This exception is irrelevant to the case at bar, as the private party brought the complaint for both legal and equitable relief against the State Ports Authority itself.
6.
Finally, sovereign immunity does not prevent an individual from suing state officers in their individual capacity for ultra vires conduct fairly attributable to the officers themselves. Alden, 527 U.S. at 757. This exception is likewise inapplicable to the instant case.
B.
The FMC and its amicus urge us to create another exception to sovereign immunity, however. They argue that the federal interest in uniform regulation of maritime matters is sufficient reason to deny the states sovereign immunity over matters in front of the FMC. They argue that the Constitution itself, as well as Supreme Court cases, recognize the important federal interest in maintaining “a uniformity of regulation for maritime commerce.” United States v. Locke, 529 U.S. 89, 108 (2000). In effect, the FMC and its amicus would have us hold that South Carolina consented to suits in matters affecting maritime commerce when it ratified the Constitution.
The Supreme Court in Seminole Tribe made clear that a strong federal interest in a particular subject matter cannot determine the application of sovereign immunity to a lawsuit. Indeed, the Seminole Tribe Court declared that “the background principle of state sovereign immunity embodied in the Eleventh Amendment is not so ephemeral as to dissipate when the subject of the suit is an area . . . that is under the exclusive control of the Federal Government.” Seminole Tribe, 517 U.S. at 72. Seminole Tribe itself involved just such a matter — the Constitution gives Congress exclusive control over the regulation of Indian commerce. Id. Nevertheless, “[e]ven when the Constitution vests in Congress complete lawmaking authority over a particular area, the Eleventh Amendment prevents congressional authorization of suits by private parties against unconsenting states.” Id. Likewise, the fact that the Constitution assigns the federal government a primary role in the regulation of maritime commerce does not mean that Congress can authorize a private party to bring a complaint against an unconsenting state. Once sovereign immunity applies, the only exceptions are those recognized in Alden.
The federal government of course retains broad powers to regulate maritime matters. The FMC can bring a complaint in its own name.
These and other methods show that disallowing private suits against unconsenting states will not vitiate the strong federal interest in regulating maritime commerce. The fact that sovereign immunity applies to private proceedings means only that the federal government, not a private party, must vindicate the federal interest when a state is involved. If the FMC needs more resources to ensure compliance by state agencies, Congress may of course authorize additional funds. This process ensures that any federal interest is protected in a politically accountable manner.
The FMC nevertheless argues that exempting states from having to respond to private complaints would give public maritime operators a competitive advantage over private maritime facilities. But we are not deciding this case based on maritime efficiencies or economic advantage. Rather, it is the structure of the Constitution that we are enforcing. If sovereign immunity confers upon state ports authorities some advantages that private ports authorities do not have, it is for the fundamental reason that the Constitution treats states differently. States are not just “mere prefectures or corporations.” Alden, 527 U.S. at 758. They are sovereign entities which by definition have certain advantages that private actors do not have. Any competitive advantage that a state might have is not enough to justify treating states in a different manner than the Constitution specifies. Moreover, in this case it is unclear whether the states will be at a competitive advantage. The federal government retains numerous enforcement powers and under the Supremacy Clause state officers must follow the Constitution and laws of the United States.
In short, the federal government itself may “deem the case of sufficient importance to take action against the State.” Alden, 527 U.S. at 759-60. “Congress has ample means to ensure compliance with valid federal laws, but it must respect the sovereignty of the States.” Id. at 758. What Congress simply cannot do under its Article I power is subject an unconsenting state to an adversarial proceeding brought by a private party.
V.
Sovereign immunity is not some outdated concept, an ancient appendage to the Constitution itself. Rather, respect for state sovereignty enables the states to best fulfill their continuing roles and responsibilities within our federal system. Sovereign immunity applies to proceedings brought in any forum by a private party against a non-consenting state. The history, the text, and the structure of the Constitution confirm that under its Article I powers, Congress cannot authorize private parties to haul unconsenting states before the adjudicative apparatus of federal agencies and commissions.
“The founding generation thought it `neither becoming nor convenient that the several States of the Union, invested with that large residuum of sovereignty which had not been delegated to the United States, should be summoned as defendants to answer the complaints of private persons.\‘” Alden, 527 U.S. at 748 (quoting In re Ayers, 123 U.S. 443, 505 (1887)). To hold otherwise would destroy the delicate equilibrium that is dual sovereignty.
For the foregoing reasons, the judgment of the Federal Maritime Commission is reversed and the case is remanded with directions to dismiss it.
REVERSED AND REMANDED WITH DIRECTIONS TO DISMISS