WATERFRONT COMMISSION OF NEW YORK HARBOR v. GOVERNOR OF NEW JERSEY; PRESIDENT OF THE NEW JERSEY STATE SENATE; SPEAKER OF THE NEW JERSEY
Nos. 19-2458, 19-2459
United States Court of Appeals for the Third Circuit
June 5, 2020
PRECEDENTIAL. Argued March 3, 2020. On Appeal from the United States District Court for the District of New Jersey (District Court No. 2-18-cv-00650). District Judge: The Honorable Susan D. Wigenton.
Alychia L. Buchan, Proskauer Rose, One Newark Center, 18th Floor, Newark, NJ 07102
Sean R. Kelly [ARGUED], Catherine Soliman, Saiber, 18 Columbia Turnpike, Suite 200, Florham Park, NJ 07932
Lawrence R. Sandak, Proskauer Rose, 11 Times Square, 17th Floor, New York, NY 10036
Counsel for Waterfront Commission of New York Harbor
Aaron A. Love [ARGUED], Gurbir S. Grewal, Melissa H. Raksa, Christopher Edwards, Office of Attorney General of New Jersey, Division of Law, 25 Market Street, Richard J. Hughes Justice Complex, Trenton, NJ 08625
Counsel for Governor of New Jersey
Leon J. Sokol [ARGUED], Steven Siegel, Cullen & Dykman, 433 Hackensack Avenue, Hackensack, NJ 07601
Counsel for President of the New Jersey State Senate; Speaker of the New Jersey General Assembly; New Jersey Senate; and General Assembly of the State of New Jersey
A. Matthew Boxer, Joseph A. Fischetti, Rebecca J. Ryan, Lowenstein Sandler, One Lowenstein Drive, Roseland, NJ 07068
Counsel for Amicus New York Shipping Association, Inc.
Jeffrey B. Litwak, Columbia River Gorge Commission, 57 N.E. Wauna Avenue, P.O. Box 730, White Salmon, WA 98672
Counsel for Amicus Columbia River Gorge Commission
OPINION OF THE COURT
SMITH, Chief Judge.
The States of New Jersey and New York agreed more than half a century ago to enter into the Waterfront Commission Compact. More recently, New Jersey enacted legislation to withdraw from the Compact. To prevent this unilateral termination, the Waterfront Commission sued the Governor of New Jersey in federal court. But because New Jersey is the real, substantial party in interest, its immunity should have barred the District Court from exercising subject-matter jurisdiction. Accordingly, this case must be dismissed.
I
A
By the mid-twentieth century, New York Harbor was rife with corruption, particularly in waterfront hiring practices. See De Veau v. Braisted, 363 U.S. 144, 147–48 (1960) (plurality opinion); N.Y. Shipping Ass‘n v. Waterfront Comm‘n of N.Y. Harbor, 835 F.3d 344, 348–49 (3d Cir. 2016). After studying the problems created by corrupt practices, representatives of New Jersey and New York prepared remedial legislation, which each State enacted in 1953. See
The Compact reformed waterfront hiring practices by, inter alia, introducing registration and licensing requirements and channeling hiring through designated centers. E.g.,
B
As the decades passed, most of the Harbor workforce shifted from New York to New Jersey, where deepwater berths better accommodated the modern trend toward containerized shipping. Such developments redounded to the benefit of New Jersey‘s economy. Eventually, the New Jersey legislature came to see the Commission as “over-regulat[ing] the businesses at the port in an effort to justify its existence,” which made the Commission “an impediment to future job growth and prosperity at the port.”
New Jersey repeatedly tried to cabin the Commission‘s powers, and even to withdraw from the Compact entirely. Those efforts came to fruition at the end of
But Chapter 324 set out additional steps intended to further the State‘s withdrawal from the Compact. It required the New Jersey Governor to notify Congress, the Governor of New York, and the Commission of the “intention to withdraw.” § 2.a. That notification would initiate a ninety-day countdown to the “transfer date” when the Compact and the Commission would be “dissolved.” §§ 3, 31. Thereafter, the New Jersey Division of State Police would assume the Commission‘s law enforcement functions on the New Jersey side of the Harbor. See §§ 1.d, 4.b, 34.
C
The day after the outgoing Governor signed Chapter 324, the Commission filed suit in federal district court against New Jersey Governor Philip Murphy in his official capacity.3 The one-count Complaint sought two forms of relief: a declaration that Chapter 324 violated the Compact and the Supremacy Clause of the U.S. Constitution, and an injunction against its enforcement. The District Court permitted the New Jersey Senate, Senate President, General Assembly, and Assembly Speaker (collectively, the “Legislature“) to intervene in defense of Chapter 324.
The Commission filed a motion for a preliminary injunction to prevent the Governor from effectuating withdrawal, while the Governor and Legislature moved for dismissal. The District Court denied dismissal and granted the injunction. Nearly a year later, the Court granted the Commission‘s motion for summary judgment and denied the separate motions of the Governor and the Legislature.
In these consolidated appeals, the Governor and Legislature challenge the District Court‘s orders denying dismissal, granting an injunction, denying them summary judgment, and granting summary judgment to the Commission.4 Briefing included amicus curiae filings by the New York Shipping Association (NYSA) in support of the Governor and Legislature, and the Columbia River Gorge Commission in support of the Waterfront Commission.
II
The District Court had federal-question jurisdiction over this dispute because the Complaint invoked the Supremacy Clause and the Compact. See
In denying the Governor‘s motion to dismiss, the District Court rejected the “suggest[ion]” that sovereign immunity applied to the Governor in this case. Waterfront Comm‘n of N.Y. Harbor v. Murphy, No. 18-650 (SDW) (LDW), 2018 WL 2455927, at *4 (D.N.J. June 1, 2018). We have plenary authority to determine whether sovereign immunity deprived the District Court of jurisdiction.5
III
State sovereign immunity dates back to our Nation‘s Founding, and is deeply rooted in English law. See Franchise Tax Bd. of Cal. v. Hyatt, 139 S. Ct. 1485, 1493–94 (2019); 1 William Blackstone, Commentaries on the Laws of England 234–35 (1765). Assurances that States would remain immune from federal suit—absent their consent—were instrumental in securing sufficient support for the Constitution‘s adoption. Edelman v. Jordan, 415 U.S. 651, 660 & n.9 (1974). Although the
An “important limit” to that rule allows federal suits against state officials in certain circumstances. Id. at 254–55. Under the Ex parte Young doctrine, a state official is “stripped of his official or representative character” and thereby deprived of the State‘s immunity, Ex parte Young, 209 U.S. 123, 159–60 (1908), when he commits an “ongoing violation of federal law.” VOPA, 563 U.S. at 254–55 (quoting Verizon Md. Inc. v. Pub. Serv. Comm‘n of Md., 535 U.S. 635, 645 (2002)). A person who is aggrieved may therefore seek prospective relief by suing him in his official capacity. See id. But Ex parte Young‘s “authority-stripping theory . . . is a fiction that has been narrowly construed.” Pennhurst, 465 U.S. at 114 n.25. Ex parte Young applies only to the “precise situation” of “a federal court command[ing] a state official to do nothing more than refrain from violating federal law.” VOPA, 563 U.S. at 255.
Consistent with this narrow construction of Ex parte Young, the doctrine “does not apply ‘when the state is the real, substantial party in interest.‘” Id. (quoting Pennhurst, 465 U.S. at 101). Courts determine whether “relief sought nominally against an officer is in fact
The Supreme Court has been “willing to police abuses of the [Ex parte Young] doctrine that threaten to evade sovereign immunity” because the relief would operate against the State. VOPA, 563 U.S. at 256. A State is generally the real, substantial party in interest if the “judgment sought would expend itself on the public treasury or domain, or interfere with public administration,” id. at 255 (quoting Pennhurst, 465 U.S. at 101 n.11) (internal quotation marks omitted), or if relief consists of “an injunction requiring the payment of funds from the State‘s treasury, or an order for specific performance of a State‘s contract,” id. at 256–57 (citation omitted) (citing Edelman, 415 U.S. at 666–67; In re Ayers, 123 U.S. 443 (1887)).7
The Court has concluded that the sovereign was the real, substantial party in interest in suits nominally against officials where relief would effectively force the restructuring of state mental health care at the State‘s expense, see Pennhurst, 465 U.S. at 93, 101 & n.11, 107; confer money damages for a State‘s disability benefit processing deficiencies, see Edelman, 415 U.S. at 655–56, 668–69; enjoin activity that would breach a State‘s contract, see In re Ayers, 123 U.S. at 502–03, 507; require substantial, unbudgeted expansion of a federal water project, see Dugan v. Rank, 372 U.S. 609, 610–11, 616, 620–21 (1963);8 or quiet title to, and preclude state control of, territory within the State‘s regulatory jurisdiction, see Idaho v. Coeur d‘Alene Tribe of Idaho, 521 U.S. 261, 281–82, 287–88 (1997) (permitting suit would be “as intrusive as almost any conceivable retroactive levy upon funds in its Treasury“).9
IV
Here, the Commission does not directly challenge the general rule of state sovereign immunity. It simply chose not to
A
The Commission seeks a judgment that “would expend itself on the public treasury or domain.” VOPA, 563 U.S. at 255 (quoting Pennhurst, 465 U.S. at 101 n.11). Indeed, Ex parte Young suggests that we consider the nature of the state officer‘s duty to enforce a challenged law. See 209 U.S. at 157, 161. But we think the Governor has sufficiently specific statutory obligations that an Ex parte Young claim cannot be precluded on that basis.
Chapter 324 expressly requires the Governor to notify Congress, the New York Governor, and the Commission of New Jersey‘s impending withdrawal—which triggers the ninety-day countdown to consummation—and then tell the Legislature‘s presiding officers that he did so. §§ 2, 31. The Complaint objects to the Governor‘s “taking any action to implement or enforce” Chapter 324 and identifies the portion of the Governor‘s obligations that triggers the withdrawal countdown. J.A. 55–56, 67–68. For this reason, we are not persuaded we should dismiss on grounds that the suit alleges insufficiently specific obligations to make out an Ex parte Young claim. Cf. Constitution Party of Pa. v. Cortes, 824 F.3d 386, 396 (3d Cir. 2016) (recognizing ministerial duties are amenable to Ex parte Young claims).
The Complaint is frank in its recitation of the expected financial effects of Chapter 324 on the Commission:
[Chapter 324] would take away the Commission‘s primary revenue stream. . . . [T]he Commission is not funded with tax dollars, and its budget derives entirely from the assessments that it collects from Port employers. Inasmuch as the vast majority of commercial Port operations occurs on the New Jersey side, [Chapter 324] – which purports to remove the Commission‘s authority to assess fees on New Jersey employers – will virtually eliminate the Commission‘s budget.
J.A. 69–70.
The Commission‘s dim prognosis is consistent with the text of Chapter 324. Whereas the Commission has been collecting assessments on work within New Jersey, Chapter 324 tabs those assessments for the budget of the New Jersey Division of State Police. See § 25.b. The result will be that those assessments will now flow into New Jersey‘s coffers: “Each employer shall pay to the State Treasurer, for placement within the General Fund, an assessment . . . .” Id.; see also § 26.a(10) (“All funds of the division received as payment of any assessment or penalty under this section shall be deposited with the State Treasurer.“). The same goes for the Commission‘s current liquid assets. Chapter 324 requires the Commission to deposit “the funds of the commission applicable to this State . . . into the custody of the State Treasurer.” § 4.b(2). At bottom, Chapter 324 redirects the Commission‘s present and anticipated future funding from New Jersey employers into New Jersey‘s treasury.
This suit is no mere attempt to compel or forestall a state official‘s actions consistent with Ex parte Young‘s holding. Rather, when we compare the Commission‘s
B
We reach the same outcome when considering this suit from a different angle: the Commission effectively seeks “specific performance of a State‘s contract.” VOPA, 563 U.S. at 257.
Like other interstate compacts, the Waterfront Commission Compact is a contract subject to our construction. Tarrant Reg‘l Water Dist. v. Herrmann, 569 U.S. 614, 628 (2013). Our inquiry begins with the Compact‘s express terms, id., and we need go no further. Each State “deemed” the Compact‘s regulation of the waterfront “an exercise of the police power of the two states for the protection of the public safety, welfare, prosperity, health, peace and living conditions of the people of the two states.”
By enacting Chapter 324, the State of New Jersey has chosen to discontinue its performance of the Compact and to resume the full exercise of its police powers on its own side of the Harbor. Yet the Complaint seeks invalidation of Chapter 324. Granting this relief would compel New Jersey to continue to abide by the terms of an agreement it has decided to renounce. Such relief tantamount to specific performance would operate against the State itself, demonstrating that New Jersey is the real, substantial party in interest.
***
We are convinced that this suit seeks relief beyond the Ex parte Young doctrine‘s narrow confines by asking that we invalidate Chapter 324. Invalidation would necessarily have an adverse impact on the State of New Jersey‘s treasury and compel the State to perform consistent with the Compact.12 Because such relief would operate against New Jersey as the real, substantial party in interest, the State is entitled to the protection of sovereign immunity.13
V
Because this suit impinges on the State of New Jersey‘s sovereignty, thereby depriving the District Court of jurisdiction, we will vacate the order granting summary judgment to the Commission, reverse the order denying the Governor‘s motion to dismiss, and vacate that order in all other respects. The case will be remanded for dismissal.