Constitutionalizing Interstate Relations: The Temptation of the Dark Side.

• Author: Baude, William
• Position: Thirty-Ninth Annual National Student Symposium

I.

What does the Constitution have to say about interstate relations? Well, it depends on how you ask.

One of the main topics in interstate relations is the question of what is called choice of law, which sounds very technical but fundamentally is the question of who governs--that is, which state gets to govern any given transaction.

The same kind of question comes up at the federal level--federal law versus state law--but it is dealt with by the Supremacy Clause of the Constitution, which makes clear that if a federal law is constitutional, it is controlling. (1) But there is no Supremacy Clause for state law, which has forced people who worry about this question to look harder and elsewhere for some sort of hint about which state is supposed to govern which transaction.

Now, the Supreme Court has largely abdicated any control of the topic of choice of law. And just to give a concrete example: in 1981, the Supreme Court decided a case called Allstate Insurance v. Hague. (2) A friend and learned scholar has described this case to me as one of the most indefensible Supreme Court opinions on any topic ever. It is a case that comes from the Minnesota Supreme Court, where a man named Ralph Hague was riding a motorcycle in Wisconsin and crashed. (3)

Now, once upon a time, it was well-settled that accidents in Wisconsin were always going to be governed by Wisconsin law. Classically, states followed the rule of lex loci delicti, (4) meaning the law of the place of the wrong. Many states have changed that rule over the course of the twentieth century, depending on whether the people were from other states, and so on. (5) But even under most of these modern approaches, this should still have been an easy case. Mr. Hague was in Wisconsin. He was from Wisconsin. The other driver was from Wisconsin. Pretty much everything about the trip and the accident involved Wisconsin. (6)

But the lawsuit was brought in Minnesota, which had a law that was much more favorable to Mr. Hague, and the Minnesota Supreme Court seized on basically one fact, which is that Mr. Hague worked in Minnesota. (7) Now, he was not on his way to work. The accident had nothing to do with work. But he had been to Minnesota pretty regularly, and that, plus the Minnesota Supreme Court's conclusion that their own law was just better than Wisconsin's, caused them to think that they should apply their own law. (8) This isn't something that Minnesota made up. It reflected the influence of Professor Robert A. Leflar, who wrote an influential article advocating this approach. (9)

The case went to the U.S. Supreme Court to decide whether anything in the Constitution stops the State of Minnesota and the Minnesota Supreme Court from deciding that their law is just better than everyone else's and applies even to things that have almost nothing to do with their state. But the Supreme Court turned down the opportunity to say that this was madness. Instead, the plurality opinion by Justice Brennan demonstrated uncharacteristic judicial restraint:

It is not for this Court to say whether the choice-of-law analysis suggested by Professor Leflar is to be preferred or whether we would make the same choice-of-law decision if sitting as the Minnesota Supreme Court. Our sole function is to determine whether the Minnesota Supreme Court's choice of its own substantive law in this case exceeded federal constitutional limitations. (10)

And they concluded nothing in the federal Constitution did.

This is pretty much where things stand today. When it comes to one of the most fundamental questions of interstate relations, if a state supreme court wants to apply their own law to almost anything, then as long as there is some connection, the U.S. Supreme Court will let them. (11)

But not all issues in interstate relations are left to the states. Last year, in a case called Franchise Tax Board v. Hyatt, (12) the Supreme Court had a very different question of interstate relations--or, at least, what they thought was a very different question--which is whether or not one state, in this case the State of California, ought to be able to claim sovereign immunity in another state's court, in that case, the State of Nevada. (13)

This too is a question of interstate relations. One might even call it a question of choice of law. The Nevada Supreme Court sits over here deciding whether or not it can hear a case against the Franchise Tax Board of California. They conclude that the answer is yes. (14) California thinks that Nevada's choice is constitutionally out of bounds, so they go to the U.S. Supreme Court. If we were applying the same kind of deference the Court applies on choice of law, you would expect the U.S. Supreme Court to say, "It is not for us to decide whose theory of sovereign immunity controls." (15) But that is not what the Supreme Court said.

Instead, the Supreme Court stepped in-in what we could call Laycockian fashion (16)--to say this is an area where the Constitution controls. There is nothing in the text about this. There is nothing in the text that says which state's law applies in a multi-state conflict.

But the Supreme Court said, "Each State's equal dignity and sovereignty under the Constitution implies certain constitutional 'limitations on the sovereignty of all of its sister States.'" (17) The Constitution "divests the States of the traditional diplomatic and military tools that foreign sovereigns possess" and "deprives them of the independent power to lay imposts or duties on imports and exports," and thus, the Court concluded, it "embeds interstate sovereign immunity within the constitutional design." (18) Nevada's choice to breach sovereign immunity violates a preconstitutional norm, and California no longer has all of the pre-constitutional tools to retaliate. And therefore, the Court...