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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
SOUTH CAROLINA STATE PORTS
AUTHORITY,
Petitioner,
v.
FEDERAL MARITIME COMMISSION;
UNITED STATESOF AMERICA,
Respondents.
STATE OF MARYLAND; STATEOF
ALABAMA; STATEOF ARKANSAS;
STATEOF CONNECTICUT; STATE OF
No. 00-1481
DELAWARE; STATEOF FLORIDA;
STATEOF GEORGIA; STATEOF IOWA;
STATEOF LOUISIANA; STATEOF
MAINE; STATEOF MISSISSIPPI;
STATEOF MONTANA; STATEOF
NEVADA; STATEOF NORTH CAROLINA;
STATEOF NORTH DAKOTA; STATEOF
OKLAHOMA; STATEOF OREGON;
STATEOF SOUTH CAROLINA;
STATEOF SOUTH DAKOTA; STATEOF
VIRGINIA; STATEOF WEST VIRGINIA;
NATIONAL ASSOCIATIONOF
WATERFRONT EMPLOYERS,
Amici Curiae.
On Petition for Review of an Order of the
Federal Maritime Commission.
(No. 99-21)
Argued: January 22, 2001
Decided: March 12, 2001
Before WILKINSON, Chief Judge, NIEMEYER, Circuit Judge, and
Malcolm J. HOWARD, United States District Judge for the
Eastern District of North Carolina, sitting by designation.
_________________________________________________________________
Reversed and remanded with directions to dismiss by published
opin-
ion. Chief Judge Wilkinson wrote the opinion, in which Judge
Nie-
meyer and Judge Howard joined.
_________________________________________________________________
COUNSEL
ARGUED: Warren LaForest Dean, Jr., THOMPSON COBURN,
L.L.P., Washington, D.C., for Petitioner. Andrew Howard Baida,
Assistant Attorney General, Baltimore, Maryland, for Amici Curiae.
Phillip Christopher Hughey, FEDERAL MARITIME COMMIS-
SION, Washington, D.C.; Alisa Beth Klein, Appellate Staff, Civil
Division, UNITED STATES DEPARTMENT OF JUSTICE, Wash-
ington, D.C., for Respondents. ON BRIEF: Susan Taylor Wall, Eliz-
abeth Herlong Campbell, NEXSEN, PRUET, JACOBS, POLLARD
& ROBINSON, L.L.P., Charleston, South Carolina, for Petitioner.
J.
Joseph Curran, Jr., Attorney General of Maryland, Baltimore,
Mary-
land, for Amici Curiae States. Thomas Panebianco, General Counsel,
FEDERAL MARITIME COMMISSION, Washington, D.C., for
Respondent Commission. David W. Ogden, Assistant Attorney Gen-
eral, J. Rene Josey, United States Attorney, Mark B. Stern, Appellate
Staff, Civil Division, UNITED STATES DEPARTMENT OF JUS-
TICE, Washington, D.C., for Respondent United States. Charles
T.
Carroll, Jr., Carl Larsen Taylor, Washington, D.C., for Amicus
Curiae
Association.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
This case requires us to decide whether a state's sovereign immu-
nity protects it from being brought before a federal administrative
tri-
2
bunal 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 Shipping Act of 1984, 46 U.S.C. app. S 1701
et seq.
(1994). The FMC held that state sovereign immunity does not extend
to private complaints filed before a federal agency. Because
a state's
sovereign immunity is not so fleeting as to depend upon the forum
in
which the state is sued, the judgment of the FMC is reversed
and the
case is remanded with directions to dismiss it.
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 Charles-
ton 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 Shipping
Act of 1984. The Shipping Act regulates the oceanborne foreign
com-
merce of the United States. The Act prohibits discrimination
by carri-
ers and terminal operators and allows the FMC to regulate any
agreement involving oceanborne foreign commerce. Id. SS 1701(1),
1703(a) & (b). Maritime Services alleged that the SCSPA,
as a termi-
nal operator, had violated the Shipping Act by unreasonably refusing
to deal and by unreasonably preferring other cruise ship companies
to
the disadvantage of Maritime Services. Id.S 1709(b)(11) &
(d)(3).
The complaint asked for a cease and desist order, actual damages,
interest, and attorney's fees.
The SCSPA's response raised, inter alia, the argument that South
Carolina's sovereign immunity prohibits private parties from
suing
3
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 Caroli-
na'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 over-
ruled by the Eleventh Amendment. Alden, 527 U.S. at 720, 722
(inter-
nal quotations omitted).
The Eleventh Amendment provides that: "The Judicial power
of
the United States shall not be construed to extend to any suit
in law
or equity, commenced or prosecuted against one of the United
States
by Citizens of another State, or by Citizens or Subjects of any
Foreign
State." U.S. Const. amend. XI. Although the literal text
of the Amend-
ment speaks only to suits filed by citizens of one state against
another
state, the Supreme Court held in Hans v. Louisiana, 134 U.S.
1, 21
(1890), that sovereign immunity barred a citizen from suing his
own
state without consent. This is because the principle of sovereign
4
immunity derives not just from the Eleventh Amendment, but from
the structure and background principles of the Constitution.
Hans,
134 U.S. at 11-12. It is with these background principles in
mind that
the Supreme Court decided two recent cases concerning state sover-
eign immunity: Seminole Tribe of Florida v. Florida, 517 U.S.
44
(1996), and Alden v. Maine, 527 U.S. 706 (1999). These two deci-
sions provide significant guidance on how to resolve the underlying
dispute.
A.
The Seminole Tribe case involved the Indian Gaming Regulation
Act (IGRA), 25 U.S.C. S 2710(d), enacted under the Indian Com-
merce Clause. U.S. Const. art. I, S 8, cl. 3. Pursuant to the
IGRA, the
Seminole Tribe of Florida asked a federal district court to order
the
State of Florida to negotiate with the Tribe in good faith.
The Supreme Court affirmed the dismissal of the Tribe's suit,
hold-
ing that Congress could not, in the exercise of its Article I
powers,
abrogate a state's sovereign immunity in federal court. 517 U.S.
at 73.
According to the Court, "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. Moreover, "[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. Noting
that "[t]he
Eleventh Amendment restricts the judicial power under Article
III,"
the Supreme Court explained that "Article I cannot be used
to circum-
vent the constitutional limitations placed upon federal jurisdiction."
Id. at 72-73.
In reaching its decision, the Supreme Court held that the sovereign
immunity principle is sufficiently strong that it transcends
the literal
text of the Eleventh Amendment and applies regardless of the
type of
relief sought. The Court noted that the Eleventh Amendment does
not
stand "`so much for what it says, but for the presupposition
. . . which
it confirms.'" Id. at 54. (quoting Blatchford v. Native
Village of
Noatak, 501 U.S. 775, 779 (1991)). The presupposition is that
"each
5
State is a sovereign entity in our federal system" and that
"`it is inher-
ent in the nature of sovereignty not to be amenable to the suit
of an
individual'" without consent. Id. (quoting The Federalist
No. 81, p.
487 (C. Rossiter ed. 1961) (A. Hamilton)). Thus the Eleventh
Amend-
ment merely confirmed, rather than established, the structural
princi-
ple of state sovereign immunity. Accordingly, the Court concluded
that the "`States of the Union, still possessing attributes
of sover-
eignty, shall be immune from suits, without their consent, save
where
there has been a surrender of this immunity in the plan of the
conven-
tion.'" Id. at 68 (quoting Principality of Monaco v. Mississippi,
292
U.S. 313, 322-23 (1934)).
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 Con-
gress 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 par-
ties." Id. (alteration in original) (internal quotations
and citations
omitted). Accordingly, the fact that the IGRA only authorized
pro-
spective injunctive relief was of no moment in determining the
scope
of Congress' abrogation authority.
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 Fair Labor Standards Act of 1938 (FLSA). Alden,
527 U.S. at 711. While that suit was pending, Seminole Tribe
was
decided and the federal complaint was dismissed. Id. at 712.
The pro-
bation officers then filed the same action in state court because
the
FLSA authorized private state court actions against the states,
regard-
less of consent. Id.
Just as Seminole Tribe held that state sovereign immunity tran-
scends the type of relief sought, Alden held that the sovereign
immu-
6
nity 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).
Com-
pounding 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 immu-
nity applies whenever a private individual attempts to sue a
noncon-
senting state. Id.
In explicating this holding, Alden also reaffirmed the Seminole
Tribe principle that state sovereign immunity extends beyond
the text
of the Eleventh Amendment. According to the Court,"[t]o
rest on the
words of the Amendment alone would be to engage in the type of
ahi-
storical literalism" that has been rejected "since
the discredited deci-
sion in Chisholm." Id. at 730 (citing Seminole Tribe, 517
U.S. at 68).
In determining that sovereign immunity protected states from
suits in
their own courts, the Court found it irrelevant"that the
Eleventh
Amendment by its terms limits only `t]he Judicial power of the
United States.'" Id. (alteration in original). Rather, Alden
recognized
that state sovereign immunity is an overarching principle of
the Con-
stitution. Id. at 713.
Instead of focusing on the literal terms of the Eleventh Amend-
ment, the Court looked at the historical underpinnings of the
doctrine
of sovereign immunity. This historical inquiry yielded Alden's
con-
7
clusion that sovereign immunity bars any private suit against
a non-
consenting sovereign. "The generation that designed and
adopted our
federal system considered immunity from private suits central
to sov-
ereign dignity." Id. at 715. As Alexander Hamilton explained:
"`It is
inherent in the nature of sovereignty not to be amenable to the
suit of
an individual without its consent. This is the general sense
and the
general practice of mankind; and the exemption, as one of the
attri-
butes of sovereignty, is now enjoyed by the government of every
State in the Union.'" Id. at 716-17 (quoting The Federalist
No. 81).
Indeed, the antiquity of the doctrine is such that the Supreme
Court
found it "so often laid down and acknowledged by courts
and jurists
that it is hardly necessary to be formally asserted." Hans,
134 U.S. at
16.
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
"`pre-
sumption 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 "pro-
ceedings 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 Constitu-
tion and by federal statutes that comport with the constitutional
design." Id. at 755.
Alden outlined six exceptions to the doctrine of sovereign immu-
nity. 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 Fourteenth Amendment's Section 5 enforcement power. Fourth,
sovereign immunity does not bar private suits against municipal
cor-
porations or other lesser governmental entities. Fifth is the
Ex parte
Young exception, 209 U.S. 123 (1908), which allows certain private
suits against state officers if the suit seeks only injunctive
or declara-
8
tory relief to remedy an ongoing violation of law. Sixth, state
officers
may be sued for money damages in their individual capacity, so
long
as the relief is sought from the officer personally. Alden, 527
U.S. at
755-57.
C.
Seminole Tribe and Alden make clear that state sovereign immu-
nity, while not absolute, is among the Constitution's foremost
princi-
ples. 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
rea-
sons 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 sover-
eign immunity does not apply in agency actions because agencies
do
not exercise the judicial power of the United States. See U.S.
Const.
amend. XI ("The Judicial power of the United States shall
not be con-
strued . . . ."). Since the FMC is an agency operating under
the Execu-
tive Branch, and not a court, they argue that sovereign immunity
is
inapplicable in this case. They point out that the agency has
no inde-
pendent enforcement power.
The FMC and the United States contrast the powers exercised by
the FMC here with the authority exercised by the Tax Court in
Frey-
tag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991).
In
9
Freytag, the Supreme Court held that the Tax Court, an Article
I
entity, "exercises its judicial power in much the same way
as the fed-
eral district courts exercise theirs." Id. at 891.
Because the Tax Court
is "an adjudicative body" that can, inter alia, subpoena
witnesses,
order production of documents, administer oaths, grant certain
injunc-
tive relief, order the Secretary of the Treasury to refund an
overpay-
ment, and punish contempts by fine or imprisonment, the Tax Court
is a Court of Law despite being part of the Executive Branch.
Id.
Thus, "[b]y resolving those disputes" between taxpayers
and the Gov-
ernment, "the court exercises a portion of the judicial
power of the
United States." Id.
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. 46 U.S.C. app. S 1713(c) (Attorney General
may
seek enforcement by the district court of a subpoena issued by
the
FMC); id. S 1712(e) (Attorney General may seek recovery in district
court of civil penalties assessed by the FMC). Moreover, the
Tax
Court only decides cases, whereas the FMC also exercises executive,
legislative, and administrative responsibilities. Finally, respondents
point out that while the Tax Court does not make political decisions,
the FMC does.
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
pro-
ceedings can exist outside the context of Article III. Freytag,
501
U.S. at 889; accord id. (Congress has "wide discretion to
assign the
task of adjudication in cases arising under federal law to legislative
tribunals"); id. at 910 (Scalia, J., concurring) ("It
is true that Congress
may commit the sorts of matters administrative law judges and
other
executive adjudicators now handle to Article III courts -- just
as
some of the matters now in Article III courts could instead be
com-
mitted to executive adjudicators."). The precise limits
of what does or
does not constitute a court under Freytag are less important
than the
overarching principle Freytag establishes-- Article I tribunals
may
exercise the judicial power of the United States.
If Article I courts can indeed exercise the judicial power, it
would
seem anomalous to limit state sovereign immunity strictly to
an Arti-
10
cle III proceeding. Alden in fact confirms that state sovereign
immu-
nity "is not directly related to the scope of the judicial
power
established by Article III." Alden, 527 U.S. at 730. Rather,
it is a "sep-
arate and distinct structural principle" that"inheres
in the system of
federalism established by the Constitution." Id. And the
Court has
held that Congress can abrogate a state's sovereign immunity
"only
if there is `compelling evidence' that the States were required
to sur-
render this power to Congress pursuant to the constitutional
design."
Id. at 731 (quoting Blatchford, 501 U.S. at 781).
No "compelling evidence" exists. To the contrary, Alden
demon-
strates 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 mat-
tered to the founders, not the forums in which those suits might
hap-
pen to be brought. At the time of ratification, the states were
concerned about private citizens filing complaints against them
with-
out their consent. They understood that being subjected to such
pro-
ceedings 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
inter-
pretations" 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 Article I tribunals by which it can subject unconsenting
11
states to proceedings by private parties. But would the founders
have
countenanced a system by which Congress could have avoided all
the
strictures of sovereign immunity by creating different tribunals
where
state sovereign immunity was completely inapplicable? To ask
the
question is to answer it. The states' concerns with affronts
to their
dignity and to the possibility of having to answer for their
war debts
would not disappear because the forum magically changed from
an
Article III court to an Article I tribunal. And while the coordinate
branches of the federal government have the broadest latitude
in orga-
nizing themselves as they see fit, they cannot employ an administra-
tive structure that allows an end-run around the Constitution.
Sovereign immunity is not so hollow a concept as to prohibit
proceed-
ings in certain fora like a federal or state court while at the
same time
permitting a similar proceeding to take place under the auspices
of a
legislative court or an agency adjudication. Dual sovereignty
posits a
relationship of mutual respect between Congress and the states.
It is
not consistent with that relationship for Congress to subject
an uncon-
senting sovereign to the coercive club of private actions regardless
of
the forum. See id. at 733 ("The logic" of sovereign
immunity deci-
sions like Seminole Tribe "does not turn on the forum in
which the
suits were prosecuted.").
Alden makes clear that any proceeding where a federal officer
adju-
dicates disputes between private parties and unconsenting states
would not have passed muster at the time of the Constitution's
pas-
sage nor after the ratification of the Eleventh Amendment. Such
an
adjudication is equally as invalid today, whether the forum be
a state
court, a federal court, or a federal administrative agency.
B.
The FMC and the United States also insist that sovereign immunity
does not apply because the Article I proceeding in this case
is not a
"suit in law or equity." U.S. Const. amend. XI. Rather,
they argue that
the administrative adjudication is merely a form of regulation,
in
which political appointees attempt to effectuate the intent of
a statute.
The structure of the administrative proceeding, however, belies
this
point. Whether the proceeding is formally called an administrative
action, a lawsuit, or an adjudication does not matter. The fundamental
fact, which respondents cannot escape, is that this proceeding
requires
12
an impartial federal officer to adjudicate a dispute brought
by a pri-
vate party against an unconsenting state.
It is important to examine the precise nature of this proceeding,
and
to describe what it is really like. The Shipping Act sets forth
a regime
by which "any person" may bring a formal "complaint
alleging a vio-
lation" of the Act. 46 U.S.C. app. S 1710(a). The complaint
may ask
for "reparation for any injury caused to the complainant."
Id. The
party named in the complaint must either "satisfy[it] or
answer it in
writing." Id. S 1710(b). The Act then mandates that if the
complaint
is not satisfied (i.e., settled), "the Commission shall
investigate it in
an appropriate manner and make an appropriate order." Id.
(emphasis
added). The Commission, "upon complaint or upon its own
motion,
may" also investigate "any conduct or agreement that
it believes may
be in violation of" the Act. Id. S 1710(c).
The Act also provides that in "investigations and adjudicatory
pro-
ceedings," any party may utilize "depositions, written
interrogatories,
and discovery procedures." Id. S 1711(a). To the extent
practicable,
the rules for these proceedings "shall be in conformity
with the rules
applicable in civil proceedings in the district courts of the
United
States." Id. The FMC may also use the subpoena power to
"compel
the attendance of witnesses and the production of books, papers,
doc-
uments, and other evidence." Id. If a party does not comply
with a
nonreparation order or with a subpoena, the Attorney General
of the
United States "may seek enforcement by a United States district
court
having jurisdiction over the parties." Id. S 1713(c).
If the Commission
orders reparation, "the person to whom the award was made
may seek
enforcement of the order in a United States district court having
juris-
diction over the parties." Id. S 1713(d)(1).
When a party files a formal complaint under 46 U.S.C. app.
S 1710(a), the investigation takes the form of an adjudication.
See 46
C.F.R. S 502.61 (2000). ALJs are the presiding officers for the
initial
adjudication. Id. S 502.223. The ALJ"designated to hear
a case shall
have authority" to, inter alia, "sign and issue subpenas
[sic]", "take
or cause depositions to be taken," "delineate the scope
of a proceed-
ing," "hear and rule upon motions," "administer
oaths and affirma-
tions," "examine witnesses," "rule upon offers
of proof," "act upon
petitions to intervene," "hear oral argument at the
close of testimony,"
13
"fix the time for filing briefs, motions, and other documents,"
and
"dispose of any other matter that normally and properly
arises in the
course of the proceedings." Id. S 502.147. Parties may,
inter alia,
depose witnesses, id. S 502.203; submit interrogatories, id.
S 502.205;
and submit requests for admission from opposing parties, id.
S 502.207. The FMC reviews the ALJ's decision if a party requests
an appeal or on the Commission's own initiative. Id. S 502.227.
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 adju-
dicates the "case," id. S 502.147, and that the filing
of a complaint
necessarily "commence[s]" a "proceeding,"
id. S 502.61, the adjudica-
tion is in reality merely a form of regulation. The FMC and the
United
States contend that the agency simply uses adjudication as a
means
of implementing policy. The proceeding in their view is nothing
more
than an investigation of the merits of the claim. Indeed, they
point out
that the statute itself speaks in terms of "investigation."
46 U.S.C.
app. S 1710(b). The FMC and the United States further maintain
that
the fact that only three commissioners of the FMC may come from
the same party confirms that the agency's judicial function is
only a
means to implement its legislative objectives.
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 5 U.S.C.S 554(d) (requiring separation
of functions between adjudication and prosecution in administrative
hearings); 46 C.F.R. S 502.224 ("The separation of functions
as
required by 5 U.S.C. S 554(d) shall be observed in proceedings"
under the Shipping Act). Moreover, the ALJ issues subpoenas,
autho-
rizes depositions, hears witnesses, and otherwise conducts the
pro-
ceedings in a judicious manner. Administrative law judges are
what
the name says they are -- judges.
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
14
because ALJs perform judicial acts. The Court held that "adjudication
within a federal administrative agency shares enough of the character-
istics of the judicial process that those who participate in
such adjudi-
cation 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 frac-
tious 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
loca-
tion within the Government but because of the special nature
of their
responsibilities." Id.
The ALJ is thus not merely an alternate means of policy implemen-
tation. 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 com-
missioners in the FMC independently judge the evidence before
them.
As the Butz Court stated, "the process of agency adjudication
is cur-
rently structured so as to assure that the hearing examiner exercises
his independent judgment on the evidence before him, free from
pres-
sures by the parties or other officials within the agency."
Id. Although
Article I adjudication undoubtedly differs from Article III adjudica-
tion, "federal administrative law requires that agency adjudication
contain many of the same safeguards as are available in the judicial
process." Id. (citing certain requirements of the Administrative
Proce-
dure Act, 5 U.S.C. SS 554-557).
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. 46 U.S.C. app. S 1713(c). This argument, however, downplays
the significance of the agency's own proceeding. The FMC and
the
United States ignore the fact that the Commission must hear all
com-
plaints filed with it. Id. S 1710(b). The Attorney General's
discretion
at the back end of the process simply does not help the unconsenting
state up front. See Seminole Tribe, 517 U.S. at 58. Moreover,
it is dif-
ficult to believe that the agency adjudication is so meaningless
as to
permit a private party to subject an unconsenting state to agency
pro-
ceedings because of the adjudication's very emptiness.
15
It is true that under the Act, a state may choose to ignore a
sub-
poena, an order, or a judgment. 46 U.S.C. app. S 1713(c). Yet
a judg-
ment or a subpoena against a state is a powerful thing, if not
legally,
then certainly politically. All parties, and certainly political
entities
such as states, have an interest in avoiding the stigma that
attaches
even to an unenforceable default judgment. Moreover, a state
offends
an agency that has plenary jurisdiction over its ports at its
own peril.
Indeed, the FMC may fine a state up to $25,000 per day for failure
to comply with a Commission order. Id. S 1712(a). And the United
States, through the Attorney General, can enforce these penalties
in
federal district court. Id. S 1712(e) (district court shall enforce
the
order unless it is "not regularly made or duly entered").
Furthermore,
the ALJ could order (although not force) the state to be available
for
depositions, to answer interrogatories, and to produce documents.
That the state may choose not to comply with the order does not
change the fact that the state has already suffered an indignity
to its
sovereignty. See Alden, 527 U.S. at 713. The proverbial egg has
already been broken.
Furthermore, the idea that a state would explicitly ignore any
order
of the federal government does not do justice to our system of
federal-
ism. 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
offi-
cials 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
rele-
vant to deciding whether a legislative court possesses the "judicial
power" under Article III and Freytag, the question of whether
sover-
eign immunity applies depends only on whether a private party
can
subject an unconsenting state to an adversarial proceeding. The
Ship-
ping Act, as well as Supreme Court decisions interpreting the
role of
administrative judges, underscores the fact that sovereign immunity
applies to this agency adjudication.*
_________________________________________________________________
*The United States also contends that the Supreme Court's "public
rights" doctrine negates the suggestion that an agency adjudication
is a
16
IV.
A.
Our holding that state sovereign immunity applies to agency adju-
dications 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.
_________________________________________________________________
judicial action. Invoking the public rights doctrine, however,
does not
change the fact that a private party simply cannot commence an
adver-
sarial proceeding against an unconsenting state. Moreover, even
in the
public rights context the Supreme Court has been skeptical of
allowing
Article I tribunals to exceed the constitutional jurisdiction
of Article III
courts. See Thomas v. Union Carbide Agric. Prod. Co., 473 U.S.
568
(1985); Northern Pipeline Constr. Co. v. Marathon Pipe Line Co.,
458
U.S. 50 (1982) (plurality opinion); Glidden v. Zdanok, 370 U.S.
530,
544-52 (1962); Crowell v. Benson, 285 U.S. 22 (1932); Murray's
Lessee
v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272
(1856);
American Ins. Co. v. Canter, 26 U.S. (1 Pet.) 511 (1828). Because
an
Article III court would not have jurisdiction due to state sovereign
immu-
nity, these and other cases suggest that sovereign immunity would
also
bar Congress from permitting a federal agency to force a state
to defend
a claim against a private party. Thus, even in the absence of
Alden, sov-
ereign immunity would likely bar the FMC from adjudicating Maritime
Service's complaint against the SCSPA.
17
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
con-
templated in the design and framework of the Constitution. Alden,
527 U.S. at 755. Suits brought by the United States require the
exer-
cise 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 trans-
forms 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 46 U.S.C. app. S 1710(a). It also has the ability to investigate
cases upon its own motion, or upon the filing of a complaint.
Id.
S 1710(c). Indeed, under the Shipping Act and many other acts,
the
federal government may investigate a claim and simply bring a
com-
plaint in its own name. See, e.g., Kimel v. Florida Board of
Regents,
528 U.S. 62, 78 (2000) (an agency can bring an action against
a state
under the ADEA even though a private individual cannot do so);
see
also EEOC v. Wyoming, 460 U.S. 226, 243 (1983) (agency brings
suit
against state under the ADEA); EEOC v. State of Illinois, 69
F.3d
167, 168 (7th Cir. 1995) (agency brings action against state
on behalf
of school teachers); Reich v. Alabama Dep't of Cons. & Nat.
Resources, 28 F.3d 1076, 1078 (11th Cir. 1994) (Secretary of
Labor
brings action against state agency under the FLSA). In those
cases,
however, the named party would be the federal government, not
a pri-
vate party. This is not such a case. Here, a private party filed
a com-
plaint against an unconsenting state. The FMC had no choice but
to
adjudicate this dispute. The federal government must exercise
"politi-
cal responsibility for each suit prosecuted against a State."
Alden, 527
U.S. at 756 (emphasis added). This responsibility was lacking
in the
case at bar. Consequently, the complaint was not brought by the
fed-
eral government.
18
3.
The third exception to state sovereign immunity is for cases
brought pursuant to Congress' enforcement power under Section
Five
of the Fourteenth Amendment. See Fitzpatrick v. Bitzer, 427 U.S.
445, 453 (1976); see also Board of Tr. of the Univ. of Alabama
v.
Garrett, 531 U.S. ___, No. 99-1240 slip op. at 6 (Feb. 21, 2001).
The
Fourteenth Amendment "required the States to surrender a
portion of
the sovereignty that had been preserved to them by the original
Con-
stitution" and "fundamentally altered the balance of
state and federal
power." Alden, 527 U.S. at 756 (internal quotation marks
omitted).
Respondents do not contest that the Shipping Act was enacted
pursu-
ant to Congress' Article I powers, as opposed to Congress' Section
Five power. Thus, this exception does not apply to the case at
bar.
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
circum-
stances 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 com-
plaint 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
19
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
sov-
ereign immunity, however. They argue that the federal interest
in uni-
form 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, rec-
ognize 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
fed-
eral interest in a particular subject matter cannot determine
the appli-
cation 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
Con-
gress can authorize a private party to bring a complaint against
an
unconsenting state. Once sovereign immunity applies, the only
excep-
tions 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.
46 U.S.C. app. S 1710(c). The FMC can, inter alia, bring suit
in dis-
trict court to enjoin conduct in violation of the Act. Id. S
1710(h). The
FMC can investigate alleged violations of the Act upon its own
initia-
20
tive or upon information supplied by a private party. Id. S 1710(c).
The FMC may issue a cease and desist order if its investigation
uncovers a violation of the Act. Id. S 1713. "Whoever"
violates the
Act or an FMC order "is liable to the United States for
a civil pen-
alty." Id. S 1712(a). Marine terminal operators like the
South Carolina
State Ports Authority must "establish, observe, and enforce
just and
reasonable regulations and practices . . . ." Id. S 1709(d)(1).
The FMC
can issue rules and regulations necessary to carry out the provisions
of the Act. Id. S 1716. Indeed, if Congress so chose it could
regulate
all matters affecting ocean-borne commerce. U.S. Const. art.
I., S 8,
cl. 3; United States v. Lopez, 514 U.S. 549, 558 (1995) (Commerce
Clause allows direct regulation of the channels of interstate
com-
merce).
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 govern-
ment, not a private party, must vindicate the federal interest
when a
state is involved. If the FMC needs more resources to ensure
compli-
ance 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 advan-
tage 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
advan-
tage. The federal government retains numerous enforcement powers
21
and under the Supremacy Clause state officers must follow the
Con-
stitution and laws of the United States.
In short, the federal government itself may "deem the case
of suffi-
cient 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
sover-
eignty 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 adjudi-
cative apparatus of federal agencies and commissions.
"The founding generation thought it `neither becoming nor
conve-
nient 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 |
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