Federal Maritime Commission v. South Carolina State Ports Authority (05/28/2002)

By: Hannah Lobel, Medill News Service

Questions presented

May Congress by statute authorize the Federal Maritime Commission to adjudicate complaints filed by private persons against state-run ports, or is the statutory provision permitting adjudication of such complaints barred by a state's sovereign immunity, as guaranteed in the 11th Amendment?

Brief

In October 1999, South Carolina Maritime Services filed a complaint against the South Carolina State Ports Authority, alleging that one of its ships had been unfairly denied berthing space at the Charleston port in South Carolina.

The state-run ports authority justified its action as adhering to South Carolinas policy of refusing to berth ships whose primary purpose is gambling. With a destination of ""nowhere,"" the ports authority claimed that the primary purpose of the ship, the M/V Tropic Sea, was to bring passengers to international waters where they could legally gamble.

South Carolina Maritime Services, however, claimed that because the port authority had granted berthing space to a Carnival Cruise Lines ship that allegedly provided gambling services, its own ship had been unfairly discriminated against.

Seeking injunctive relief and compensation for injuries and attorneys fees, South Carolina Maritime Services filed a claim with the Federal Maritime Commission, alleging that the South Carolina State Ports Authority had violated the Shipping Act of 1984.

As the administrative agency responsible for regulating foreign ocean-borne commerce, the Federal Maritime Commission is the venue for adjudicating complaints alleging violations of the Shipping Act.

In January 2000, an administrative law judge, assigned by the Commission to conduct the complaint proceedings, granted the South Carolina State Ports Authoritys motion to dismiss on the grounds that the ports authority, as an arm of the state, was immune from suits by private individuals.

State sovereign immunity is grounded both in the federalist structure of the Constitution and in the 11th Amendments stipulation 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."" In 1890, the Supreme Court ruled in Hans v. Louisiana that sovereign immunity also protected states from suits brought by one of their own citizens.

Although neither party appealed the administrative law judges decision, the Commission invoked its power to readdress the case and ordered that the judges dismissal be reversed and remanded the case for further action. In its ruling, the Commission held that state sovereign immunity applied only before the judicial tribunals of federal and state courts, not administrative regulatory agencies operating under the executive branch.

On March 12, 2001, a 4th U.S. Circuit Court of Appeals panel unanimously reversed, holding that because ""a state's sovereign immunity is not so fleeting as to depend upon the forum in which the state is sued,"" a state's immunity prevents such a suit or proceeding.

Writing for the court, Chief Judge J. Harvie Wilkinson held that the adversarial nature of the Commissions proceedings, which are heard by an impartial officer who can issue subpoenas, authorize depositions and hear witnesses, trumps the agencys placement within the executive branch. ""The proceeding thus walks, talks and squawks very much like a lawsuit,"" Wilkinson wrote.

""Dual sovereignty posits a relationship of mutual respect between Congress and the states,"" Wilkinson continued. ""It is not consistent with that relationship for Congress to subject an unconsenting sovereign to the coercive club of private actions regardless of the forum.""

But in its petition for certiorari to the U.S. Supreme Court, the Commission denied exercising the ""Judicial power"" referred to in the 11th Amendment and quoted Justice Antonin Scalias 1991 concurring opinion in Freytag v. Commissioner of Internal Revenue to illustrate its position: ""There is nothing Ôinherently judicial about Ôadjudication. To be a federal officer and to adjudicate are necessary but not sufficient conditions for the exercise of judicial power.""

The Commission further argued that to take away the agencys ability to hear complaints by private individuals against state-run ports would remove ""an important component of its regulatory authority.""

However, the appeals court contended that the Commission could still pursue action against state-run ports by launching investigations and suits in the name of the federal government, rather than private individuals.

But according to attorney Chris Hughey, counsel of record for the Commission, with only eight investigators on its staff, the agency simply does not have the resources necessary to launch such investigations.

Calling private litigants the ""eyes and ears"" of agencies like the Commission, an amicus brief filed by two multi-employer organizations that negotiate bargaining agreements with longshoremans unions, argued that without the presence of private complaints against state-run ports, those ports would unfairly benefit from an unbalanced enforcement of federal law to the detriment of privately-run ports.

Hughey further argued that the Shipping Act compelled the Commission to hear all filed complaints. ""Once someone files a complaint with the agency, the agency has no discretion not to hear it,"" he said.

While the United States joined the Commission in its arguments before the appeals court, the U.S. Solicitor General filed a motion in opposition of granting certiorari before the Court. Although the governments motion argued that state sovereign immunity should not apply in proceedings before the Commission, it said that the appeals court had not found any provision of the Shipping Act unconstitutional and that the appeals courts ruling ""should have little practical significance for the enforcement of the Shipping Act.""

On Oct. 15, the U.S. Supreme Court granted certiorari in the case, and allowed the United States Maritime Alliance Ltd., et al., and the National Association of Waterfront Employers to file amicus briefs in the case.

On May 28, 2002, the Court held 5-4 along ideological lines that South Carolina, and other states, are immune from regulation by federal agencies under constitutionally-supported notions of federalism.

Justice Clarence Thomas wrote the majority opinion; Justice John Paul Stevens penned the dissent, for himself, Justice Stephen Breyer, David Souter, and Ruth Bader Ginsburg.