Richard A. Allen

Alden and College Savings Bank both involved the question of the immunity of states and state agencies from suits seeking monetary remedies for state violations of federal law. To frame the background of this issue, a brief historical detour is in order.

In 1793, shortly after the Constitution was ratified, the Supreme Court ruled in Chisholm v. Georgia, 2 Dall. 419 (1793), that Article III of the Constitution gave federal courts jurisdiction over suits by individuals (in that case, citizens of South Carolina) seeking monetary relief against states (in that case, the State of Georgia) that had not consented to such suits. According to one historian, the Chisholm decision "fell upon the country with a profound shock." Congress and the states responded to it promptly by adopting the Eleventh Amendment to the Constitution, which provides: "The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commended or prosecuted against one of the United States by citizens of another State, or by citizens or subjects of any Foreign State."

Since the adoption of the Eleventh Amendment, the Supreme Court has created a number of important exceptions to its broad ban on federal court jurisdiction over suits against states. Perhaps most notably, the Court held in Ex Parte Young, 209 U.S. 123 (1908) that the Eleventh Amendment does not prohibit federal court suits against state officials for prospective injunctive relief against violations of federal law. The Court also held that states could be sued in federal court for monetary relief where the state had consented, either expressly or constructively, to such suit. In its leading "constructive" consent case, Parden v. Terminal Railroad Company, 377 U.S. 184 (1964), the Court held that a state that undertook to operate a railroad when a federal law, the Federal Employer’s Liability Act (FELA), subjected all railroads to its scheme of liability would be deemed to have waived its Eleventh Amendment immunity from FELA suits for damages by its railroad employees. As a third exception, the Court held that the Fourteenth Amendment gave Congress power to override the states’ Eleventh Amendment immunity from damage suits when it enacted statutes to enforce the guarantees of the Fourteenth Amendment to equal protection of the laws and due process of law. Fitzpatrick v. Bitzer, 427 U.S. 445 (1976). Apart from these important exceptions, however, the Court has fairly consistently upheld the Eleventh Amendment immunity of states from suits in federal court for monetary relief.

Until the Court’s most recent decisions, however, many people (including this author) had assumed that the Eleventh Amendment is only a bar to suits in federal courts, since by its terms it only limits federal court jurisdiction. They assumed that individuals are entitled to obtain any monetary or other relief they may be due under federal law through suits in state courts, and that state courts would be obliged as a matter of federal law to provide such relief under the well settled principle that federal law is as binding on state courts as it is on federal courts. See, e.g., Yellow Freight System, Inc. v. Donnelly, 494 U.S. 820, 823 (1990) (requiring state court enforcement of 42 U.S.C. § 2000e et seq.) Statements to that effect in several Supreme Court opinions reinforced this assumption. For example, if a state collected a tax or fee from an interstate trucking company or railroad or bus company in violation of a federal statute (see, e.g. 49 U.S.C. § § 11501 and 14502 prohibiting property tax discrimination against interstate railroads and motor carriers, and 49 U.S.C. § 14505 and 40116 prohibiting state sales taxes on sales of bus and airline tickets), it was widely assumed that the payor could sue for a refund in state court and would be entitled to it as a matter of federal law regardless of the state’s consent.

That assumption was shown to be wrong, or at least highly doubtful, by the Court’s decision in Alden v. Maine. That case involved a suit in a Maine state court by a group of state employees against the State of Maine for damages based on the State’s violation of the overtime provisions of the federal Fair Labor Standards Act, 29 U.S.C. § 210 et seq (FLSA). The Maine courts dismissed the suit on the basis of the State’s sovereign immunity from suits without its consent, and the Supreme Court affirmed in a 5-4 decision. The Court held that the sovereign immunity of states from suit without their consent in any court was universally recognized when the Constitution was adopted. The majority opinion by Justice Kennedy cited at great length from the history preceding and surrounding the adoption of the Constitution and the Eleventh Amendment, and it concluded the Framers did not intend that Constitution would in any way abrogate the historic immunity of states from suits in any courts, including their own, without their consent.

The Eleventh Amendment, Justice Kennedy explained, was adopted merely to overrule Chisholm v. Georgia and to reaffirm what its nearly unanimous supporters understood to be the original intent of the Constitution not to abrogate the historic immunity of states from suits in any courts. The text of the Eleventh Amendment expressly limits the power of federal courts only because it was federal court power that the Supreme Court had considered and asserted in Chisholm. That the Eleventh Amendment makes no reference to the immunity of states from suits in state courts, Justice Kennedy wrote, "is best explained by the simple fact that no one, not even the Constitution’s most ardent opponents, suggested the document might strip the States of the immunity. In light of the overriding concern regarding the States’ war-time debts, together with the well known creativity, foresight and vivid imagination of the Constitution’s opponents, the silence is most instructive. It suggests the sovereign’s right to assert immunity in its own courts was so well established that no one conceived it would be altered by the new Constitution."

Justice Kennedy dismissed the statements in earlier opinions suggesting that states could be sued in state courts for monetary relief on federal causes of actions essentially as obiter dicta and not controlling precedent.

Justice Souter wrote a dissent in which Justices Stevens, Ginsburg and Breyer joined. Among other things, the dissent correctly pointed out that "if the Court’s current reasoning is correct, the Eleventh Amendment was unnecessary."

Although Alden shuts the state courthouse door on potential plaintiffs seeking relief against states in a significant class of cases – i.e., those where the established exceptions to state immunity do not apply -- the majority opinion purports not to disturb the established exceptions. In fact, Justice Kennedy’s opinion cites those exceptions to support his contention that the decision will not enable states freely to disregard federal law and the Constitution.

However, the second federalism decision issued on June 23, College Savings Bank, greatly limits one of the most important of those exceptions by overruling Parden v. Terminal R. Co. and its doctrine of "constructive waiver" of sovereign immunity. Alden and College Savings Bank together have substantially narrowed the ability of the federal government to make federal laws enforceable against the states.

Parden, decided in 1964, held that states that choose to operate interstate railroads knowing that Congress had subjected all interstate railroads to FELA "must be taken to have accepted that condition [i.e., FELA’s application to railroad’s] and thus to have consented to suit [in federal court under FELA]." Parden’s notion of "constructive waiver" (or "constructive consent") at least potentially created a huge exception to the State’s Eleventh Amendment immunity from federal court damage suits. That is so because almost any time a state undertakes an activity that would, if undertaken by other entities, be subject to federal laws, it could plausibly be argued that the state "must have accepted" the application of federal law to that activity and "to have consented to suit" in federal court based on that law. Several decisions after Parden limited the reach of the constructive waiver principle, but the basic principle remained.

In College Savings Bank, the Court, in a 5-4 opinion by Justice Scalia, squarely overruled Parden and the doctrine of constructive waiver. The Court ruled that a state’s consent to suit and its waiver of immunity must be "unequivocally expressed" and must be a "clear declaration." College Savings Bank was a suit in federal court by a private bank alleging that a Florida state agency, which competed with the plaintiff, had engaged in false and misleading advertising in violation of the federal Lanham Act, 15, U.S.C. §  1125(a). Although the Trademark Remedy Clarification Act, 106 Stat. 3567 (TRCA), had expressly subjected states to suits under the Lanham Act, the Supreme Court ruled, first, that TRCA was enacted pursuant to Congress’s Article I power to regulate interstate commerce, not pursuant to its authority to enforce the 14^th Amendment; accordingly, its attempt to subject states to suit violated the Eleventh Amendment. Second, the Court held that Florida had not expressly waived its immunity from suit and, overruling Parden, would not be deemed to have waived it constructively. The four justices who dissented in Alden also dissented in College Savings Bank.

So, where does Alden and College Savings Bank leave state immunity from federal law, and what are the implications of these cases for transportation? Some conclusions seem fairly clear (at least as long as the present 5-4 majority holds), while other issues are not so clear. I outline these below.

What Seems Fairly Clear: the General Rule.

From Alden, College Savings Bank and other cases in recent years the general rule seems fairly clear that states and state agencies cannot be sued for money damages in federal or state courts unless they have expressly and unequivocally consented to such suits. This immunity from suit applies to claims based both on federal and state law.

It also seems clear that this general rule immunizes state railroads, commuter lines and other transportation entities from damage liability based on, among other laws, FELA, FLSA, the Social Security Act, the Railway Labor Act and other health, safety and welfare laws enacted pursuant to Congress’ Article I powers. It would also immunize them from general tort liability, except that it seems probable that most, if not all, states have enacted statutory waivers of immunity from general tort claims, at least for suits brought in state courts. Those waivers, however, may require the initial filing of administrative claims or contain other conditions.

What Seems Fairly Clear: the Exceptions

Alden, College Savings Bank and other cases do not disturb the established exceptions to the general rule of immunity, and at least the general contours of these exceptions also seem reasonably clear. The five principal exceptions are:

1. Injunctive Suits Against State Officials. In Ex Parte Young, the Supreme Court held that state sovereign immunity does not bar suits in federal court against state officials for prospective injunctive relief against violations of federal law or Constitutional provisions. Accordingly, a state official may be enjoined from enforcing or applying state laws that conflict with federal laws or constitutional provisions. Since an injunctive action against a state official seeking to enforce state law is effectively a suit in equity against the state itself, the Ex Parte Young exception is difficult to reconcile with the text of the Eleventh Amendment, which proscribes "any suit in law or equity" against a state. The Supreme Court has recognized the anomaly, but has simply rationalized the Ex Parte Young exception as necessary "if the Constitution is to remain the supreme law of the land." Alden, 1999 Lexis 4374 at &71.

A majority of the present Court, however, seems disposed to construe the exception narrowly. In Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), the Court (in another 5-4 decision) found that a provision of the Indian Regulatory Gaming Act expressly subjected states to suit in federal court to enforce provisions of that Act, but that that provision exceeded Congress’s power and conflicted with the Eleventh Amendment (overruling its decision five years earlier in Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989), which held that the Interstate Commerce Clause gave Congress power to abrogate the sovereign immunity of states from suits to enforce federal laws enacted pursuant to that Clause). The Court also rejected the plaintiff’s claim that Ex Parte Young authorized its claim for injunctive relief against Florida officials. The Court reasoned that Congress had not intended in the Indian Regulatory Gaming Act to authorize injunctive suits against state officials because the Act contained detailed remedial provisions -- the very ones the Court found invalid -- that the Court felt were inconsistent with general injunctive relief.

2. Suits Where Immunity Has Been Waived. It is well established that states can waive their immunity from suit, and they commonly do so in statutes permitting certain tort suits against states, suits for refunds of taxes and other kinds of suits. As noted earlier, College Savings Bank held that such waivers must be "clearly declared" and "unequivocally expressed," and may not merely be inferred from the state’s actions.

3. Suits Where Congress Has Abrogated State Immunity Through Its Power to Enforce the 14^th Amendment. In Fitzpatrick v. Bitzer, 427 U.S. 445 (1976), the Supreme Court held that Section 5 of the Fourteenth Amendment, which gives Congress the "power to enforce, by appropriate legislation, the provisions of this article," authorizes Congress to abrogate the sovereign immunity of states from suits based on the Fourteenth Amendment itself or on federal laws enacted pursuant to the Fourteenth Amendment." The Court reasoned that the Fourteenth Amendment, adopted well after the Eleventh Amendment, intended to alter the pre-existing balance of federal and state power with respect to the guarantees of the Fourteenth Amendment. More recently, as noted, the Court in Seminole Tribe of Florida held that Congress has no such power when legislating pursuant to the Interstate Commerce Clause or other powers enumerated in Article 1 of the Constitution. The Court has also held that, in legislating pursuant to Section 5 of the Fourteenth Amendment, Congress must "unequivocally express" its intent to abrogate state immunity in order for courts to find state immunity abrogated. Green v. Mansour, 474 U.S. 64, 68 (1985).

4. Suits by the Federal Government or By Other States. The Eleventh Amendment and the principle of sovereign immunity it reflects only bars suits by private individuals. As the Court stated in Alden: "In ratifying the Constitution, the States consented to suits brought by other States or by the Federal Government." 1999 U.S.Lexis 4374 at *85. The ability of the Federal Government to sue states to enforce federal laws provides, of course, a significant check on the ability of states to disregard federal law.

5. Suits Against Municipalities, School Boards and other Non-State Entities. In Alden the Court also noted that the immunity of states from suit "does not extend to suits prosecuted against a municipal corporation or other governmental entity which is not an arm of the State." 1999 U.S. Lexis 4374 at *87.

What Is Uncertain

Although clarifying some things, Alden, College Savings Bank and other recent cases also create some uncertainty on points that had previously seemed clear. One major area of uncertainty (at least to this writer) is where a state has taken money from an individual by force and in violation of a federal law or of a Constitutional provision, and the individual sues the state, either in federal or state court, to get it back. Probably the most common situation of this kind is where a state imposes a tax or fee that contravenes a federal statute or violates the Commerce Clause of the Constitution and requires the tax or fee to be paid before its validity can be challenged (for example, by imposing penalties for failure to make timely payment of a tax or by refusing to allow an activity, such as use of the highways, until a fee is paid). As noted earlier, a number of federal statutes enacted pursuant to Article I prohibit certain kinds of state taxes or fees that, in Congress’s judgment, discriminate or unduly burden interstate commerce (e.g. 49 U.S.C. § § 11501, 14502, 14505, 40116), and some of these expressly give federal courts jurisdiction to enforce their terms (e.g., 49 U.S.C. § 11501(c)). In addition, the Commerce Clause itself prohibits states from imposing taxes that discriminate against interstate commerce. See, e.g., American Trucking Associations, Inc. v. Scheiner, 483 U.S. 266 (1987).

If a state has collected a tax or fee that violates federal statutory or constitutional provisions, can a taxpayer sue the state to recover the amounts paid if the state has not consented to such a suit? Alden indicates that the answer is no, at least if the state tax only violates federal laws enacted pursuant to Article I or constitutional provisions that existed before adoption of the Eleventh Amendment. On the other hand, McKesson Corp. v. Florida Alcohol & Tobacco Division, 496 U.S. 18 (1990) held that states have an obligation under the Due Process Clause of the Fourteenth Amendment to return taxes or other monies exacted from persons under laws that require payment of the exaction prior to litigating its validity. If, under such a law, a person pays a tax that is later determined in a court action to violate the Commerce Clause or one of the federal laws noted earlier, would a suit against the State for a refund of the taxes qualify under the Fitzpatrick v. Bitzer exception to state immunity on the theory that the state’s failure to refund the taxes constitutes a Fourteenth Amendment violation? If so, could suit be brought in either federal or state court? Would such a suit be viable only if the plaintiff could identify and invoke a separate federal statute "unequivocally expressing" Congress’ intent to abrogate the sovereign immunity of the state from such a refund suit? The answers to all of these questions are far from clear.

In many cases, these questions will be academic, because most states have enacted statutes authorizing suits for refunds of most types of taxes and fees if they are determined to be invalid, and the question of immunity will not arise if suit is filed in compliance with the pertinent statute. But the statutes may not cover all the taxes or fees imposed by the state; nor may they cover all of the other situations in which states exact money or property in violation of federal laws or constitutional rights. Or they may require suit to be filed in certain courts or within certain brief time periods, or they may impose pre-conditions (such as the filing of administrative claims and the exhaustion of lengthy administrative processes) not required by, or even inconsistent with, the federal law invoked by the refund seeker. If the refund seeker attempts to secure relief by other means that those prescribed by state statutes, the questions about immunity and the allowable ways to proceed will arise, and the answers to them are not clear.

In sum, Alden and College Savings Bank have significantly limited the effective application of federal law to the states, and the decisions are likely to have important implications for the regulation and taxation of transportation enterprises. The decisions make clear, for example, the state-owned railroads and other transportation systems cannot, without their express consent, be sued for monetary damages in federal or state courts by their employees, their customers or their competitors for violating a wide range of federal statutes enacted pursuant to Congress’s power to regulate interstate commerce, including FELA, FLSA, the Railway Labor Act, and the Interstate Commerce Commission Termination Act. The decisions also raise considerable doubt whether individuals can sue states, without their consent, for the recovery of taxes or other monies or properties exacted by states in violation of federal laws or constitutional provisions.

Footnotes:

1 __ U.S. __ ; 119 S.Ct. 2240; 1999 U.S. Lexis 4374 (1999).

2 __ U.S. __; 119 S. Ct. 2219; 1999 Lexis 4375 (1999).

3 1 C. Warren, The Supreme Court in United States History 96 (rev. ed. 1926).

4 See, e.g., Hilton v. South Carolina Public Railways Comm’n, 502 U.S. 197, 2040205 (1991); Will v. Michigan Dept. of State Police, 491 U.S. 58, 63 (1989); Maine v. Thiboutot, 448 U.S. 1, 9, n. 7 (1980); Nevada v. Hall, 440 U.S. 410, 418-421 (1979).

5 Indeed, in Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 122 (1984), the Supreme Court specifically stated that, because of the limitations that the Tax Injunction Act and the Eleventh Amendment impose of federal courts in state tax matters, "[c]hallenges to the validity of state tax systems under 42 U.S.C. §  1983 must be brought in state court."

6 1999 U.S. Lexis 2374 at *61.

7 Other examples of situations where states might exact money or property from individuals in violation of federal laws or constitutional provisions include state regulations that so restrict one’s use of property as to amount to a taking of it.