Federalism Limits on Article Iii Jurisdiction

• Publication year: 2021
• Citation: Vol. 88

88 Nebraska L. Rev. 288. Federalism Limits on Article III Jurisdiction

Federalism Limits on Article III Jurisdiction

Jason Wojciechowski(fn*)

Law clerk to the Honorable John D. Rainey, District Judge, Southern District of Texas, Victoria Division.

TABLE OF CONTENTS

I. Introduction.......................................... 288

II. Federalism Limits Apply to the Federal Courts........ 291
A. Erie............................................... 291
B. Statutory Interpretation........................... 296
C. Additional Support................................ 299
1. Admiralty..................................... 299
2. Political Safeguards ........................... 300
3. Congressional Override........................ 302

III. Structural Limitations are Jurisdictional.............. 303
A. Jurisdiction and Merits............................ 304
B. The Prevailing Opinion on Jurisdictional Elements.......................................... 308
C. Why Jurisdictional Elements Should Be Jurisdictional..................................... 311

IV. Counterarguments.................................... 313
A. Arbaugh.......................................... 313
B. Floodgates........................................ 314
C. State Courts vs. Federal Courts ................... 315

V. Conclusion............................................ 315

I. INTRODUCTION

The Supreme Court has paid a significant amount of attention to federal subject matter jurisdiction in the last few terms.(fn1) Commentators have followed the Court's lead with a flood of articles discussing the merits of the Court's jurisdictional rulings and extending the law

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to areas the Court has not (yet) reached.(fn2) The debate has touched on fairness, history, and the institutional roles of the courts and the legislature.

Oddly missing from the entire discussion has been the Constitution. This is understandable because jurisdictional issues are usually presented as statutory questions: Congress has the power to determine how much jurisdiction to actually grant to the federal courts, up to the jurisdictional ceiling created by Article III. So whether a federal court has jurisdiction is often a question of whether Congress has granted jurisdiction, rather than whether the Constitution permits Congress to do so. The constitutional ceiling lurks in the background of jurisdictional questions, yet it has been ignored in the recent debates about subject-matter jurisdiction.(fn3)

This Article aims to fill this gap in the debate by re-examining the constitutional constraints. I argue that structural limitations on the extent of congressional power should be treated as limitations on the scope of the federal courts' jurisdiction under the clause of Article III that grants courts the power to hear cases "arising under . . . the Laws of the United States."(fn4) In other words, I show that the powers exercised by these coequal branches of government are coextensive. While this thesis may sound quite natural, the federal courts have apparently not thought it to be true.

An instructive case is United States v. Reasorfi The defendant was accused of forging securities in violation of 18 U.S.C. §513(a).(fn6) That

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statute contains a requirement that the forged security be of "a legal entity . . . which operates in or the activities of which affect interstate or foreign commerce."(fn7) The defendant urged that because the commerce requirement was not met in her case, the district court did not have subject matter jurisdiction.(fn8) The United States Court of Appeals for the Fifth Circut rejected this argument, stating that jurisdiction was granted by 18 U.S.C. §3231 -the general federal criminal jurisdiction statute-and thus the court had jurisdiction.(fn9) The court of appeals then made what I argue here was a key misstep: "[T]he Commerce Clause, found in Article I of the United States Constitution, implies limits on the power of Congress to regulate, not on the Article III federal courts' power to adjudicate."(fn10)

This understanding of the Constitution's federalism limitations on Congress is incorrect. Article I and Article III are intimately related, in particular through the statutory portion of the "arising under" power mentioned above; the federal courts' power under this clause is parasitic on Congress's power. That is, the courts cannot act under this grant of jurisdiction where Congress has not legislated.(fn11) Further, Erie Railroad Co. v. Tompkins (fn12) says that courts cannot act where Congress cannot legislate.(fn13) Erie relied on an understanding of federalism that belies the Reasor court's statement that federalism limits do not apply to the federal courts. Part II of this Article is the main argument: Erie was, and still is, based on federalism concerns and that those concerns apply to rein in the power of not just Congress but also the federal courts.

Having established that federalism limits apply to the federal courts, the Article turns to practicalities: what real effect on the legal system should this understanding have? I argue in Part III that to best effectuate federalism limits on the federal courts, issues raising federalism questions must be treated as jurisdictional. That is, courts should treat these challenges as limits on their subject matter jurisdiction, and thus accord those challenges the treatment given other jurisdictional issues: challenges to jurisdiction cannot be waived, they can be raised at any time in the judicial process, and the federal courts themselves can and must raise jurisdictional issues sua sponte.

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Finally, Part IV disposes of what seem to be the most likely counterarguments to this position.

II. FEDERALISM LIMITS APPLY TO THE FEDERAL COURTS

The basic contention in this Part is that federalism-based limitations on congressional power also act as limitations on the power of the federal courts. In other words, Article I of the Constitution is coex-tensive with Article Ill's "arising under" power. If Congress can regulate in an area, then it can give the courts the power to decide cases in that area; but if Congress cannot regulate in that area, then the courts cannot exercise jurisdiction over those cases.

The first section will show how Erie demands that the federal courts respect the Constitution's federalism constraints. Of course, Erie was a case about federal common law. The paradigmatic case for the issues addressed here, however, is one based on a federal statutory cause of action.(fn14) Thus, section II.B explicitly shows why relying on Erie is valid even in this statutory context.

Finally, section II.C gives three additional reasons why my thesis holds: the Supreme Court's holistic reading of the admiralty power; the lack of political safeguards of federalism in the judiciary; and the implausibility of obviating congressional overrides of federal court lawmaking.

A. Erie

The Supreme Court's decision in Erie provides the main support for my argument. The case involved a tort suit in federal court because of diversity of the parties.(fn15) The plaintiff had been injured by a passing train while walking alongside a railroad right of way.(fn16) Whether the plaintiff could recover depended on whether he was determined to be a trespasser or a licensee.(fn17) This classification, in turn, depended on which law applied: Pennsylvania court-created law(fn18) or the "general law" of torts as understood by the federal courts.(fn19) The Rules of Decision Act(fn20) called for federal courts to apply

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the laws of the states in diversity cases, but Swift v. Tyson(fn21) had interpreted "laws" in the Act to mean only statutes, not decisions of state courts.(fn22)

Justice Brandeis, writing for the Court, overruled Swift, writing "[t]here is no federal general common law."(fn23) The Erie Court (relying on the research of "a competent scholar" to determine that the Rules of Decision Act had been misread by the Swift Court)(fn24) seemed to feel uncomfortable overruling a nearly hundred-year-old precedent on this basis alone. The holding in Erie thus expressly relies on the Constitution, though the Court's language on this point does not specify exactly what part of the Constitution to which it was referring. (fn25) Commentators have struggled ever since with the exact constitutional basis for Erie's holding, but some consensus seems to have emerged that general principles of federalism underlie the case.(fn26)

The language of the decision strongly suggests that federalism is in fact the constitutional basis of the opinion. Justice Brandeis identi-fied the key problem created by the regime of Swift v. Tyson as follows: "The federal courts assumed . . . power to declare rules of decision which Congress was confessedly without power to enact as statutes."(fn27) This points quite clearly to federalism as the constitutional rationale

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for the decision. That is, Brandeis's point here was not that federal courts had enacted laws instead of Congress doing so. Rather, it was that federal courts were entering jurisdictional territory that Congress had no ability to enter. The reason that Congress had no such ability was, of course, the federalism restraints of the Constitution.(fn28)

Brandeis also quoted Justice Field's argument in Baltimore & Ohio R. Co. v. Baugh that "[supervision over either the legislative or the judicial...