Monday, June 11, 2007

On State Action and Sovereign Immunity

The courts of the United States, like those of other Western states, have been busy fashioning what appear to be two distinct areas of jurisprudence--state action and sovereign immunity.

The state action doctrine is meant to shield private parties from liability for conduct obligations imposed only on states. In the United States, state action doctrine elaborates a series of limitations on the obligation of individuals and institutions to conform their conduct to certain constitutional norms. These norms are essentially derived from the 14th Amendment to the American Constitution (which directs that "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."). The doctrine is an elaboration of the holding and discussion in United States v. Stanley; United States v. Ryan; United States v. Nichols; United States v. Singleton; Robinson et ux. v. Memphis & Charleston R.R. Co., 109 U.S. 3; 3 S. Ct. 18; 27 L. Ed. 835 (1883) (the “Civil Rights Cases”) in which a majority of the American Supreme Court determined that the 14th Amendment prohibitions did not apply to purely private acts. Since that case was decided, the determination of what sort of conduct is "public" and therefore subject to the constitutional prohibitions, and what conduct s private and not subject to such regulation has been a tortured and constant exercise. Contrast Marsh v. Alabama, 326 U.S. 501 (1846) (running a company town is a public function) with Jackson v. Metropolitan Edison Co., 419, U.S. 345 (1974) (utility company with a service monopoly owes no 14th Amendment obligations to its customers) For a classic discussion and critique, see Charles L. Black, Jr., Forward: State Action, Equal Protection and California's Proposition 14, Harvard Law Review 81:69 (1967)

The doctrine of sovereign immunity (municipal and foreign), on the other hand, is meant to protect states from liability to individuals and others, for the losses or damage caused by their conduct. In the United States, sovereign immunity is best understood as three related concepts with different foundations and unequal borders. The sovereign immunity of the United States itself is based on the English notion of sovereign prerogative. To a large extent, federal sovereign immunity has been waived by actions of the legislature over the course of the last century. State sovereign immunity is a creature of both the 11th Amendment of the American Federal Constitution and. especially since the mid 1990s, a Supreme Court jurisprudence extracting a general principle of state sovereign immunity from out of the federal constitutional framework. See, e.g., Alden v. Maine, 527 U.S. 706 (1999). This form of sovereign immunity may be waived, is ineffective against some forms of federal legislation (especially those grounded in the post Civil War Amendments) and is no defense against actions demanding that state officials do their duty (by actions in equity). Lastly, the immunity of foreign sovereigns to suit (and liability) in the United States at one point protected all activities of the foreign sovereigns within the United States (and in its courts) but has, since the last half of the 20th century insulated the regulatory or "sovereign" activities of foreign states. commercial activities, actions by a state in the market, reduce a state to a position similar to other juridical entities--like corporations. These ideas have been reduced to statute in the United States--the federal Foreign Sovereign Immunities Act, 28 U.S.C. Sections 1602 et seq.

In a traditional social order, both doctrines serve their purposes. With respect to state action, it made a certain amount of sense that documents constituting government should be limited to the state. To the extent that individuals were the object of a constitution's concern, the object might most effectively have been to protect them against the actions of states. In traditional social orders, where governmental activity was limited and the boundaries relatively well defined, the object was to preserve as the state as an entity of a character different from that of individuals and other juridical persons. State action doctrine was part of a larger jurisprudence designed to preserve distinctions between the state (and its apparatus) and others. It was meant to deepen the notion that states were different, special and superior to other persons and entities.

Likewise, as the expression of the collective will, the state apparatus ought to stand in a special relationship to the law it creates as agent of the ultimate sovereigns. In that context, the state apparatus ought not to be responsible for and required to compensate against individual wrongs unless the people themselves permit it and direct the4 state to make appropriate amends as a matter of policy (or grace). That is not to say that the state apparatus ought not to be subject to a compulsion to do its duty; but rather that this apparatus ought not to incur liability for its wrongs in a manner that might suggest it is of a character substantially the same as an individual or other juridical personality. Again, sovereign immunity was designed to separate and distinguish the state as a body corporate distinct from and superior to other persons and entities.

But as easy as the doctrines might have been applied in a traditional social order, their justification, and the perversities attendant on their application, have become more problematic in this century. Globalization and privatization, especially, have called both doctrines into question. Donald L. Doernberg, Sovereign Immunity or the Rule of Law: The New Federalism's Choice (Carolina Academic Press 2005, 260 pp.) Doernberg suggests
Particularly in a society like that of the United States, where a formal constitution creates and defines the government, its powers and its limitations, the clash between sovereign immunity and the rule of law is unavoidable. The Constitution has no function other than to define, empower, and limit the government. When the courts invoke sovereign immunity to shield government or its agents from the consequences of violation of constitutional norms, the rule of law and the basic fabric of society suffer.
Donald L. Doernberg, supra (abstract). Others have criticized the doctrine on the grounds, essentially, that it distinguishes the state, as an entity, from other persons or entities, and thus, is inimical to the rule of law (accountability is the usual expression used). See Edwin Chemerinsky, Against Sovereign Immunity, Standford Law Review 53:1201 (2001). And state action has been criticized for failing to hold individuals to the same standards as the state, especially in the exercise of power (racial, religious, ethnic, gender) over others. See Gary Peller and Mark Tushnet, State Action and a New Birth of Freedom, Georgetown Law Journal (April 2004) (concurring with Charles L. Black, Jr's "call for the abolition of the state action doctrine in equal protection because its application immunized the exercise of racial power from constitutional review" id., at 25). State action is particularly perverse in the face of governmental delegation of its programs and functions to private entities, who in turn are deemed not bound by the rule of law limits otherwise imposed on the same actions if undertaken by the state. See Robert S. Gilmour , Laura S. Jensen, Reinventing government accountability: public functions, privatization, and the meaning of "state action", Public administration Law Review 58(3):247 (1998) ("When public functions are delegated to private actors and are allowed to be transformed into "private" actions, public accountability is inevitably lost. Indeed, delegations of this sort may even shield such private actors from the mechanisms of private accountability as well, since they may be able to assert governmental immunities as instrumentalities of the state.").

Thus, sovereign immunity is criticized because it preserves a space in law where the apparatus of state is not treated like other objects of law (the common citizen or legal subject), and state action is criticized for insulating individuals and other non-state entities from obligations otherwise imposed on the state. There is a strong principle of levelling, of horizontal equity, inherent in these criticisms. The criticisms also mark a strong mutation of rule of law notions to one that suggests a substantive governance component of equal treatment and equal obligation among public and private entities. Perhaps also, the criticisms suggest the ways in which the state has ceased to be "special" and different. This last point is especially powerful in the context of the recent push to privatize traditional governmental functions either by delegation (through contract) or by leaving areas of of behavior regulation to the "market."

And it is this emerging reality--of private entities performing governmental functions, of governments participating in the market, of corporate entities that act like states and states that act like corporations--that the current sets of doctrines evidence the great distance between evolving reality and the jurisprudential foundations of current American constitutional law.

On the one hand, the courts have continued to extend the protection of state sovereign immunity. On the other hand, the courts have carved out exceptions to the application of constitutionally derived obligations when states are said to act as common people--as market participants rather than as regulators. These are said to be constitutionally mandated results. Yet, legislative will is said to underlie the extension of doctrine that strips foreign states of their immunity in broader and broader contexts--from the offering of rewards for the capture of fugitive state officials (Montecinos of Peru), to the jailing of deposed leaders of states invaded by the United States (Noriega) , to the privatization of customs services (Honduras).

Yet, the courts have refused to extend the obligations of states to governments engaged in market activities. Thus the so called dormant commerce power does not reach the market activities of states, just as it does not reach those activities of economic actors. Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (1976). The courts have also refused to extend the state action doctrine protections (and obligations) to those entities that now perform the privatized services within the United States, especially with respect to programs operated by private entities subject to extensive state regulation, for example the workers compensation system. See American Manufacturers Mutual Insurance Co v. Sullivan, 526 U.S. 40 (1999). In that case the Rehnquist Court found no state action under a law that permitted insurance companies to withhold payment for medical treatment pending utilization review. Yet most states have conceded the nature of the benefit as property. Rehnquist suggested that merely because the statute permits an action does not make the action mandatory and thus state directed for state action purposes. Thus "mere" state encouragement by enacting a law permitting such conduct is insufficient as a basis for state action. It will be necessary to find a way to distinguish that case." This reasoning reflects a line of cases in which the Court was willing to look precisely at the transaction giving rise to the cliam without considering the nature of that transaction in the context of the regulatory system in which it was made. See Moose Lodge No. 107 v. Irvis, 4067 U.S. 163 (1972) (liquor licensing system; distinguishable I think)) and CBS v. DNC, 412 U.S. 94 (1973) ((not majority position but dicta to effect that federal licensing of broadcast media not amount to state action) and Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1974) (regulation of public utilty does not create state action where pre termination of service hearing sought, but compare Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1 (1978) (government owned utility required to provide pre termination hearing)). For this reason the usual the entwinement of the entity with the state system (see Brentwood Academy v. Tennessee Secondary School Athletic Assn, 531 U.S. 288 (2001) (court used "entwinement" rather than the usual "entanglement") and Lugar v. Edmunson Oil Co., 457 U.S. 922 (1982) (use of courts to issue and sheriff to enforce writ of prejudgment attachment sufficient for state action) does not appear to carry much weight when considering the relationship between private actors operating within a system of benefits tightly constrained by state regulation. Yet it also evidences the importance of the the manifestation of the state, through its agents, in these cases. Thus, even in workers compensation cases, it might be possible to argue that private actors owe state derived obligations to citizens when an instrumentality plays a role in the private action--through judicial or administrative action, for example. On this difference rests the likely distinction between traditional denial of state benefit cases (like Goldberg v. Kelly, 397 U.S. 254 (1970)) and Sullivan. It is clear that subsequent to the Sullivan decision, the courts have distinguished Sullivan on the basis that it dealt with "purely private conduct" Thus, in Tucker v. Darien Bd of Educ., 222 F. Supp. 2d 202 (DConn, 2002) the district court suggested:
"Plaintiff also points to the U.S. Supreme Court decision in American Manufacturers Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999) where the Court recognized that medical benefits provided under state workers' compensation laws could be a recognized property interest under the Due Process Clause. Such workers' compensation benefits were viewed there by the Court to be similar to federal welfare assistance and Social Security disability benefits which meet the "extreme dependence" test set forth in its earlier decisions and followed by the Second Circuit in S & D Maintenance. 526 U.S. at 60, 119 S.Ct. 977 (citing Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) and Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976)). However, coverage of particular medical procedures and specific health benefits in private medical plans, even when those plans are incorporated into public collective bargaining agreements, do not rise to the level of "extreme dependence" so as to be subject to due process protection. See also Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 196, 121 S.Ct. 1446, 149 L.Ed.2d 391 (2001)(state court breach of contract action adequately protects subcontractor's claim to payment on public projects). Thus, in order to prevail on a due process claim alleging a deprivation of a property right, the plaintiff must demonstrate something more than an ordinary contract right and a reliance thereon."
Id., at 206.

The object appears to be to preserve the exceptionalism of states, even as the activities of state and private actors conflate, merge and interact in ever more intimate ways. For this purpose, the court continues to try to build a jurisprudence of distinctions, based on the character of actions as private and market participatory, or public and regulatory. On such distinctions rest both positive governmental obligations (state action) and privileges (sovereign immunity) on the one hand, and private benefit (freedom from the burdens of fairness imposed on the state) and obligation (liability to compensate for torts and other damage).

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