State Not Required to Respond to Federal Maritime Commission Complaint
Federal Maritime Commission v. South Carolina State Ports Authority, 122 S.Ct. 1864 (2002).

Magnolia Bravo, M.S., J.D.
Kristen M. Fletcher, J.D., LL.M.

The U.S. Supreme Court recently extended the doctrine of state sovereign immunity to protect a state from having to answer a complaint in front of federal administrative agencies without its consent. The Court found that though administrative adjudications were virtually nonexistent at the time the Constitution was written, the intent of the Framers of the Constitution was to apply immunity to states from a challenge in front of an agency such as the Federal Maritime Commission.

Background
Various passenger cruise lines run regularly-scheduled cruise departures from the Port of Charleston in South Carolina. South Carolina Maritime Services (Maritime Services) intended to berth a cruise ship, the M/V Tropic Sea at the port, offering both cruises to the Bahamas and cruises that merely traveled in international waters without any ports of call. Both cruise itineraries offered gambling activities while on board.1

On five separate occasions, Maritime Services asked the South Carolina State Ports Authority (SCSPA) for permission to berth its cruise ship, but was denied. SCSPA contended that its policy was to deny berth to any ships whose main purpose was to promote gambling. Maritime Services then filed a complaint with the Federal Maritime Commission (Commission) against SCSPA for a violation of the Shipping Act2 alleging that SCSPA enforced its anti-gambling policy in a discriminatory manner by denying Maritime Services’ requests, but allowing Carnival Cruise Lines to berth cruise ships offering gambling activities. Maritime Services asked for reparations, attorneys fees, and an order forcing SCSPA to cease its discriminatory behavior. The Administrative Law Judge (an impartial officer designated to hear the case) dismissed the suit finding that the state was immune from the complaint under the Eleventh Amendment which protects states from private lawsuits without their consent.3

Unhappy with the findings, the Commission then provided its own review of the Administrative Law Judge’s dismissal and found that the doctrine of state sovereign immunity applies to judicial tribunals but not to administrative agencies like the Commission. The Commission reversed the findings and claimed adequate authority over the complaint. Reviewing SCSPA’s appeal, the Fourth Circuit Court of Appeals found immunity for the state and the Ports Authority, concluding that “the [Commission’s] proceeding walks, talks, and squawks very much like a lawsuit and . . . its placement within the Executive Branch cannot blind us to the fact that the proceeding is truly an adjudication.”4

The Eleventh Amendment and Original Intent
On appeal, the Supreme Court began its analysis of state sovereign immunity by stating that “[d]ual sovereign immunity is a defining feature of our Nation’s constitutional blueprint.”5 At the time the Constitution was written, the original Framers purposely designed our government with the central principle that states were sovereign entities and were not simply facets of the federal government. While states did consent to suits brought by sister states or the federal government, they explicitly retained their right to be immune from private suit.
The issue at bar in this case was whether the framers intended states to be immune from suit brought by private individuals in a federal administrative adjudication with an agency like the Federal Maritime Commission. To resolve this issue, the Court used a presumption first explicitly expressed in Hans v. Louisiana which stated that States are immune from suits arising in any proceedings that were “anomalous or unheard of when the Constitution was adopted.”6 To decide whether the Hans presumption applied in this case, the Court examined the nature of Federal Maritime Commission adjudications to determine whether they were the type of proceedings from which the Framers would have assumed the states to have immunity.

The Court found numerous similarities between Commission administrative proceedings and civil litigation including the fact that the Commission’s Rules governing practice and procedure are very similar to the Federal Rules of Civil Procedure, discovery procedures are “virtually indistinguishable” and that the role of the Administrative Law Judge is similar to that of a judge. Because Commission proceedings are akin in structure to federal proceedings and therefore fulfill the Hans presumption, and because the “preeminent purpose of state sovereign immunity is to accord States the dignity that is consistent with their status as sovereign entities,” the Court ruled that “state sovereign immunity bars the Commission from adjudicating complaints filed by a private party against a nonconsenting State.”7

The Commission attempted to distinguish its adjudications from those of a court by showing that it cannot enforce its own orders. While the Court recognized that the Commission’s orders can only be enforced by a federal district court, it found this distinction to be of little merit. Once a Commission order reaches a district court, the sanctioned party can no longer litigate the merits of its position in that court. In addition, once the Commission “issues an order assessing a civil penalty, a sanctioned party may not later contest the merits of that order in an enforcement action brought by the Attorney General in federal district court.”8

The United States also argued that sovereign immunity should not be extended to Commission adjudications because they do not “present the same threat to the financial integrity of States as do private judicial suits.”9 The Court dismissed this argument stating that it “reflects a fundamental misunderstanding of the purposes of sovereign immunity” which are not only to shield state treasuries but also to provide an overall immunity to suit.10 Lastly, the Commission’s argument that “the constitutional necessity of uniformity in the regulation of maritime commerce” should limit state sovereignty was dismissed because the Federal government “retains ample means of ensuring that state-run ports comply with the Shipping Act and other valid federal rules governing ocean-borne commerce.”11

Four Justices Dissent
As is becoming typical for Supreme Court decisions defining the scope of states’ rights, the Supreme Court decision was supported by five justices while four dissented to the decision. Justice Breyer, who wrote the primary dissent, stated that he could not find the principle of law that the majority pronounces “in any text, in any tradition, or in any relevant purpose.”12 Breyer, joined by Justices Stevens, Souter and Ginsberg, explained that the Federal Maritime Commission should be considered as part of the Executive Branch of government and that the Eleventh Amendment only protects the states from judicial proceedings. The dissenting justices would have overruled the Fourth Circuit’s decisions based on fundamental differences between Commission adjudications and judicial proceedings and the unwillingness to extend the Eleventh Amendment beyond strict judicial proceedings. Practically speaking, according to the dissent, even if a party attempted to enforce a Commission order against the state in a federal district court, the state could then claim sovereign immunity.

The Majority’s Conclusion
Though the United States and Federal Maritime Commission raised various arguments in opposition to the Court’s ruling, the majority opinion found them without merit, affirming the ruling of the U.S. Fourth Circuit Court of Appeals dismissing Maritime Services’ case against the SCSPA.

ENDNOTES
1. Federal Maritime Commission v. South Carolina State Ports Authority et al., 122 S.Ct. 1864, 1868 (2002).
2. 46 U.S.C. App. § 1709(d)(4) (2002).
3. U.S. Const. amend. XI. The Eleventh Amendment states that “The Judicial power of the United States cannot 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.”
4. 122 S.Ct. at 1870, citing South Carolina State Ports Auth. v. FMC, 243 F.3d 165, 174 (4th Cir. 2001).
5. Id. at 1870, citing Gregory v. Ashcroft, 501 U.S. 452, 457 (1991).
6. Id. at 1872, citing Hans v. Louisiana, 134 U.S. 1 (1890).
7. Id. at 1874.
8. Id. at 1876.
9. Id. at 1877.
10. Id.
11. Id. at 1879.
12. Id. at 1881.