Alabama v. North Carolina (132, Original)
Oral argument: Jan. 11, 2010
Original Jurisdiction: On Motion of North Carolina to Dismiss Claims of the Southeast Interstate Low-Level Radioactive Waste Management Commission
FEDERAL LAW, ORIGINAL JURISDICTION, INTERSTATE COMPACT INTERPRETATION, CONTRACT LAW, ELEVENTH AMENDMENT, STATE SOVEREIGNTY
This case involves a lawsuit brought by several states and the Southeast Interstate Low-Level Radioactive Waste Management Commission against the State of North Carolina for its alleged breach of contract under the Southeast Interstate Low-Level Radioactive Waste Management Compact to license a waste disposal facility. In June 2002, the member states of the Compact and the Commission filed a Bill of Complaint, which the Supreme Court granted. The Special Master then filed his Preliminary and Second Reports with this Court on April 2, 2009. The Supreme Court subsequently received these Reports and ordered them filed. This case is now before the Supreme Court as both an original and exclusive jurisdiction case; it also addresses issues of contract law. The Supreme Court’s decision in Alabama v. North Carolina may have significant effects on constitutional law, most notably on the extent of the Court’s original and exclusive jurisdiction over a judicial case or controversy between States.
Plaintiffs except to the following conclusions of the Special Master:
1. Article 79F) of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the “Compact”), which states that the Commission may “sanction” “[a]ny party state which fails to comply with the provisions . . . or . . . fulfill the obligations” of “this compact,” does not give the Commission the authority to level monetary sanctions against a party State when it fails to comply with the Compact. Preliminary Report 15–25.
2. Even if North Carolina violated the Compact, it was not subject to the sanctions authority of the Commission because it withdrew from the Compact before sanctions were imposed. Preliminary Report 25–29.
3. North Carolina did not waive its right to contest the legality of the sanctions proceedings even though it attended and refused to participate in the hearing. Preliminary Report 29–30.
4. Even though the Compact expressly provides that the Commission is “the judge of the [party States’] compliance with the conditions and requirements of this compact,” Art. 7(C), the Commission’s determination that North Carolina breached the Compact is neither conclusive nor entitled to any deference from the Court. Second Report 19?20.
5. While it is undisputed that North Carolina ceased taking any steps to license a facility in December 1997, more than 18 months before it withdrew from the Compact, North Carolina, as a matter of law, did not breach its duty under the Compact to “take appropriate steps to ensure that an application for a license to construct and operate a facility . . . is filed.” Art. 5 (C). Second Report 10?24.
6. The implied duty of good faith and fair dealing does not apply to interstate compacts and North Carolina did not withdraw from the Compact in bad faith. Second Report 29–35.
7. North Carolina did not repudiate the Compact when it informed the Commission that it would take no further steps to license a facility. Second Report 24–28.
The State of North Carolina takes exception to the following conclusions of the Special Master:
1. The recommended denial of North Carolina’s motion to dismiss all claims brought by plaintiff Southeast Interstate Low-Level Radioactive Waste Management Commission. Under both the Eleventh Amendment and common-law sovereign immunity principles, only the United States or a sister State may sue a non-consenting State in federal court, absent a valid congressional abrogation of the State’s sovereign immunity. Because North Carolina has not waived, and Congress has not abrogated, North Carolina’s sovereign immunity from suit by the Commission, the Commission’s claims cannot proceed in this Court. In this case, this Court has jurisdiction to the Special Master’s recommendation, North Carolina’s motion to dismiss the Commission’s claims should be granted.
2. The failure to recommend granting North Carolina’s motion for summary judgment on the quasi-contract claims asserted in Counts III, IV, and V of the Bill of Complaint. It is a settled common-law rule that where the parties’ relationship concerning a given subject matter is governed by the terms of an express contract, no equitable claim will lie in addition to a claim for breach of contract. The Special Master declined to address North Carolina’s motion at this stage in the proceedings, but the motion is legally and factually ripe for adjudication, and should be granted.
Whether the Eleventh Amendment bars the Southeast Interstate Low-Level Radioactive Waste Management Commission, jointly with four compacting States, from asserting claims in a Supreme Court original action, that North Carolina has violated the Southeast Interstate Low-Level Radioactive Waste Management Compact and is subject to the Commission’s sanctions order.
This is an original jurisdiction case brought by the States of Alabama, Florida, Tennessee, and Virginia, joined by the Southeast Interstate Low-Level Radioactive Waste Management Commission (the "Commission") (collectively "petitioners") seeking remedy for the State of North Carolina's alleged breach of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the "Compact").
In 1980, Congress enacted the Low-Level Radioactive Waste Policy Act (the "Act"). See Pub. L. No. 96-573, 94 Stat. 3347 (1980); Pub. L. No. 99-240, tit. II, 99 Stat. 1859 (1986). In passing the Act, Congress declared that it was the States' responsibility to dispose of low-level radioactive waste and encouraged the States to form a regional interstate compact. See Brief for Exceptions by Plaintiffs to the Preliminary and Second Reports of the Special Master and Brief in Support of Exceptions (“Brief for Exceptions”) at 4.
In 1986, the States of Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia formed a Compact, with the purpose of providing facilities, through a cooperative effort, to manage the region’s low-level radioactive waste. See Second Report of the Special Master at 1. This was done by rotating responsibility among the member States for the region’s low-level radioactive waste. See Southeast Compact Commission for Low-Level Radioactive Waste Management.
In September 1986, the Commission selected North Carolina as a host State. See Second Report of the Special Master at 2. North Carolina, in turn, accepted its obligation under the Compact to “construct and operate a new regional facility for the purpose of containing the region's low-level radioactive waste. See id. The Commission provided approximately $80 million to North Carolina in furtherance of the waste facility project, but though it spent part of the money, North Carolina did not obtain a license to build a site. See id. at 2?3.
North Carolina subsequently withdrew from the Compact. See Second Report of the Special Master at 3. The Commission then held a Sanctions Hearing where it determined that North Carolina had failed to comply with the provisions of the Compact and failed to fulfill its obligations, and ordered the State to repay almost all of the money that it had received from the Commission. See id. North Carolina did not take part in the Commission’s hearing, nor did it comply with its order. See id.
In 2002, four member States and the Commission filed a Bill of Complaint with the Supreme Court. See Second Report of the Special Master at 4. North Carolina filed a motion to dismiss the Commission as a party, arguing that the Commission's claims were barred because of the Eleventh Amendment and North Carolina’s sovereign immunity; the Commission, as a non-state party, made sanctions that could not be enforced, as the Compact did not authorize it to impose sanctions. See id. at 5-6. The Eleventh Amendment protects state sovereign immunity by preventing suits against states by citizens of another state. The Supreme Court referred this issue and the breach of contract claims to the Special Master. See id. at 4.
In June 2006, the Special Master issued a Preliminary Report recommending that North Carolina's motion to dismiss the Commission be denied, that plaintiff's motion for summary judgment also be denied, and that North Carolina's motion to dismiss the Complaint be granted in part and denied in part. See Second Report of the Special Master at 4. In its Second Report, the Special Master recommended that North Carolina did not breach the Compact, based on the terms of the Compact itself and the fact that the only sanction it expressly authorized is revocation of membership. See id. at 11-12. After the parties filed Exceptions, the issue is now before the Supreme Court for adjudication on the question of jurisdiction and whether a non-state party can join other states as plaintiff in bringing an action against a defendant state.
The crux of this case is whether sovereign immunity principles bar the Southeast Low-Level Radioactive Waste Management Commission (the “Commission”) as a plaintiff in this original action brought jointly by the Commission and four States against the State of North Carolina (collectively, “petitioners”). The Eleventh Amendment protects state sovereign immunity by preventing suits against states by individual citizens of another state. Because the Commission in this case is a non-state party in the suit against North Carolina for breach of contract claims, among others, North Carolina asserts that the case should be analyzed as if the Commission were the only party initiating the suit and that. therefore, North Carolina should be protected by the Eleventh Amendment. See Brief in Reply to North’s Carolina’s Exceptions to the Preliminary and Secondary Reports of the Special Master at 2. Petitioners argue that sovereign immunity does not apply when a non-state plaintiff joins states in suing another state. See id.
Amicus curiae supporting the Petitioners also make this point. See Brief of Amicus Curiae United States. The United States argues that North Carolina’s motion to dismiss the Commission should be denied because a state’s immunity is not violated when a non-state party joins an original action brought by a state. See id. at 7. In making this argument, the United States turns to the Eleventh Amendment, which it believes does not necessarily bar a non-state party from participating in a suit. See id. at 11. The United States also cites Arizona v. California, 375 U.S. 546, 551, 595 (1963), and notes that the Supreme Court in that case held that states may not assert sovereign immunity. See id. Moreover, the United States asserts that the Commission’s participation in the suit does not even implicate North Carolina’s sovereign immunity since the Commission is not bringing additional claims against North Carolina. See id. at 16.
However, there is considerable historical debate over the proper interpretation of the Eleventh Amendment as it relates to state sovereign immunity. One view of the Eleventh Amendment is that Article III grants of federal jurisdiction do not extend to suits against states. See e.g., Employees of the Dep’t of Public Health and Welfare v. Department of Public Health and Welfare, 411 U.S. 279, 291–92 (1973) (Justice Marshall concurring); Nevada v. Hall, 440 U.S. 410, 420–21 (1979); Patsy v. Florida Board of Regents, 457 U.S. 496, 520 (1982) (Justice Powell dissenting). Under this view, because there is no Article III jurisdiction of suits against states, states cannot consent to suit since it is not possible to grant jurisdiction where there is none through the consent of the parties. See id. at 528 n.13.
A different view is that the Eleventh Amendment recognizes principles of sovereign immunity and that, therefore, a state is not subject to suit without its consent. See e.g., Kawananakoa v. Polyblank, 205 U.S. 349, 353 (1907). Viewing the Eleventh Amendment in this way provides a consistent rationale of the consent to suit as a waiver. See e.g., United States v. Sherwood, 312 U.S. 584, 586 (1941).
Finally, still another view of the Eleventh Amendment is that it embodies the state sovereignty principle limiting the power of the federal government. See e.g., Fitzpatrick v. Bitzer, 427 U.S. 445, 456 (1976). Under this interpretation, federal courts may not act without congressional guidance in subjecting states to suit. See Hutto v. Finney, 437 U.S. 678 (1978). Hence, these varying interpretations suggest that the Supreme Court’s Eleventh Amendment jurisprudence is open to considerable debate.
Aside from the sovereign immunity question, another issue in this case is whether the Court should uphold North Carolina’s request for the enforcement of the Commission’s sanctions order. As to this issue, the United States argues that the Court should deny plaintiff’s request for the enforcement of the Commission’s sanctions order. See Brief of United States at 8. According to the United States, the Compact does not authorize the Commission to impose sanctions against a party state. See id. To support this argument, the United States turns to Article 7(F) and notes that because the Compact is silent on the sanctions issue, the Commission should not be allowed, in the United States’ view, to impose a monetary penalty. See id. The United States believes that a presumption against the imposition of monetary sanctions against a state—absent clear language—is beneficial, because it would encourage states to resolve their differences through mutual agreement. See id. at 25. Under such a rule, the United States argues that states could confidently enter into an interstate compact without exposing themselves to uncertain monetary liability. See id. The United States also asserts that the Court should reject plaintiffs’ argument that the Commission had unbridled discretion in imposing sanctioning authority and that North Carolina violated its obligations under the Compact. See id.
The Eleventh Amendment protects state sovereign immunity by preventing suits against states by individual citizens of another state. At issue in this case is whether sovereign immunity principles bar a non-state party – here, the Southeast Low-Level Radioactive Waste Management Commission (the “Commission”) – as a plaintiff in an original action brought jointly with other states (collectively, “Petitioners”) against a defendant state – here, North Carolina. Also disputed here are principles of contract law, for alleged violations of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the "Compact"). The Supreme Court referred this issue to a Special Master, who, in two reports, recommended denying Alabama’s motion for summary judgment and granted North Carolina’s motion for summary judgment.
At publication, Petitioners’ and Respondent’s merit briefs were unavailable. The information set forth herein may differ from the arguments the parties may make.
Contract Law: Language of the Compact
The plaintiffs, the states of Alabama, Florida, Tennessee, Virginia, and the Southeast Interstate Low-Level Radioactive Waste Management Commission (“Alabama”), filed a list of exceptions and argue that the commission’s monetary sanctions against North Carolina should be enforced in accordance with Article 7(F) of the Compact. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 18. This provision subjects parties to sanctions “including suspension of its rights under this compact and revocation of its status as a party state for failure to comply with terms of the...[C]ompact.” Id. Alabama urges the Court to reject the Special Master’s reading of this provision limiting the sanctions to suspension and expulsion and instead allow monetary sanctions to be enforced. See id. Alabama claims that the Special Master’s interpretation is too narrow, and in practice, strips the Compact of its sanctioning ability, effectively allowing North Carolina, or any party in its position, to avoid its responsibilities to the Commission. See id. Alabama contends that there would be no incentive to abide by the terms of the compact if a state could avoid penalty by simply withdrawing from the commission. See id. at 25.
In addition to this pragmatic argument, Alabama offers a textualist argument, arguing that “include” is a word of enlargement, not limitation, and court precedent has often read “sanction” to mean monetary penalty. See id. at 19. Alabama also refutes the Special Master’s finding that North Carolina could avoid sanctions by withdrawing from the commission on the eve of the sanction hearing. See id. at 23. To support its argument Alabama points to the text of Article 7(F), which provides that a party state to the Compact continues its rights and obligations under the Compact until the date of the sanction. See id. at 23-24.
Alabama also argues that the Special Master failed to relate the Commission’s authority to sanction party states to its ability to conclusively determine a member’s breach. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 28. According to Alabama, the Commission’s authority to make this determination inherently gives it the authority to impose proper sanctions. See id. Article 7(C) makes the Commission the ultimate arbiter of compliance with the Compact, and following the logic that such authority includes an authority to sanction, Alabama argues that a finding be entitled to deference from a reviewing court; a court should only overturn the Commission’s decision if it finds that the Commission acted arbitrarily. See id. at 29.
Addressing the Commission’s decision, Alabama claims that the Commission correctly found that North Carolina breached its obligations under Article 5(C) to take appropriate steps to ensure that an application for a license to construct and operate a waste management facility was filed with and issued by the appropriate authority. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 30-31. Additionally, Alabama argues that North Carolina breached the implied covenant of good faith and fair dealing by accepting $80 million dollars for the development of a waste management facility and then withdrawing, in what Alabama says was bad faith, from the Commission on the eve of sanctions being handed down. See id. at 41-44. Alabama also cites to contract law and suggests that North Carolina repudiated the Compact, which acts as a contract, by shutting down development of the project and refusing to perform the contract. See id. at 48. Alabama argues that it is entitled to restitution in light of North Carolina’s breaches. See id. at 53.
In response to these arguments, North Carolina argues that the unjust enrichment, promissory estoppel, and money had-and-received claims should be dismissed as a matter of law. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 25-26. North Carolina insists that these equitable claims are not applicable because there is a contract between the parties, and the Compact is the sole source of liability between the parties. See id. at 26.
The Eleventh Amendment and Sovereign Immunity
Principally, North Carolina argues that the Eleventh Amendment bars the Commission from suing the state of North Carolina and therefore the Court should not hear this case, because of the Amendment’s bar on suits by individual citizens of other states. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 2. North Carolina suggests that the addition of each new plaintiff creates a distinct “claim” for Eleventh Amendment purposes, and so the Commission acts as a private individual bringing a claim. See id. at 21. As evidence of this, North Carolina asserts that the claims of the Commission and the claims of the party states are not identical. See Preliminary Report of the Special Master at 4. North Carolina asserts that according to the language of the Compact, only the Commission, not the states, can ask recovery for the $80 million sanction. See id. at 9. Therefore, according to North Carolina, the Commission asserts claims independent from the party states and thus the Eleventh Amendment is implicated. See id. North Carolina argues that the Commission is independent from the party states, not merely an agent of the states. See Petitioner’s Reply Brief at 2. In fact, North Carolina implies that the states do not have a direct interest in North Carolina’s breach whereas the Commission does; the states are merely nominal parties. See id. Furthermore, North Carolina argues that a Compact Clause entity is not a State for Eleventh Amendment purposes. See id. at 2-3. Therefore, the Eleventh Amendment is not implicated because the “States” involved in this case are just entities from the Compact Clause.
Alabama counters this argument by stating that the Compact acts as a contract, and both contracting parties here are sovereigns; as such, when two sovereign parties have entered a contract, they have both waived their immunity from suit. See Brief for Exceptions of the State of Alabama to Preliminary and Second Report of The Special Master at 37.
Alternatively, North Carolina urges the Court to refuse to exercise its power of original jurisdiction. North Carolina contents that this dispute is merely about damages and does not require the Supreme Court’s attention. See Petitioner’s Reply Brief at 5. In addition, North Carolina argues that this case does not warrant the Court’s attention, because “it does not implicate federal questions of importance to states as sovereigns.” See id.
As an original jurisdiction case, the litigation between Alabama and North Carolina comes to the Supreme Court with recommendations from a special master and exceptions to his findings from both parties. The Court’s decision in this case may provide further guidance on the extent of the Supreme Court’s original jurisdiction over a judicial case or controversy between states. North Carolina claims that sovereign immunity, under the Eleventh Amendment, bars the Supreme Court from hearing this case. Alabama argues that the Court does, indeed, have jurisdiction and should find that North Carolina breached its obligations under the Southeast Interstate Low-Level Radioactive Waste Management Commission’s Compact and that the commission was entitled to impose monetary sanctions.
Edited by: Lara Haddad