Its hour come round at last? State sovereign immunity and the great state debt crisis of the early twenty-first century.

AuthorYoung, Ernest A.
PositionAge of Austerity

This is a story of austerity's influence on constitutional doctrine. Outside the narrow community of federal jurisdiction aficionados, people seem to pay attention to state sovereign immunity about every hundred years. In 1793, the Supreme Court decided Chisholm v. Georgia, (1) holding that a state could be sued by an individual in federal court for nonpayment of a debt. This made people so angry that Congress proposed and the States ratified the Eleventh Amendment two years later, overruling Chisholm and enshrining some degree of state sovereign immunity (exactly how much is disputed) in the Constitution itself. (2) In the 1880s and 1890s, the Court decided a series of important immunity cases, chief among them Hans v. Louisiana, (3) generally expanding the States' immunity beyond the confines of the Amendment's text. And in the late 1990s and early 2000s, the Rehnquist Court issued a string of expansive state sovereign immunity decisions, holding, among other things, that Congress could not override the States' immunity by statute. (4) These decisions arguably formed the keystone of that Court's "federalist revival" (5)--a broader movement to reinvigorate constitutional limitations on national power generally. (6) But whatever the relation of those cases to broader trends in federalism jurisprudence, state sovereign immunity is a sort of constitutional comet, streaking across the sky once a century to the amazement and consternation of legal commentators.

The comet's first two appearances coincided with potentially catastrophic state debt crises. The first involved the States' Revolutionary War debts, while the second involved a mass of Southern debts as well as the political fallout from Reconstruction. In both eras, sovereign immunity blocked serious, perhaps existential, threats to the public fisc. This history highlights the fact that, as John Orth observed, the Eleventh Amendment has always been "a dollars-and-cents proposition." (7) When the Rehnquist Court set out to expand sovereign immunity in the 1990s, however, no comparable financial threat to the states was looming. Rather, the Court argued for state sovereign immunity as a matter of constitutional fidelity--a way to assert the sovereignty of state governments in an age of expansive national supremacy.

The current Court's state sovereign immunity jurisprudence suffers from significant internal confusions and a barrage of external criticism. (9) I argue in this Essay that much of the problem arises from the Court's effort to decouple the doctrine of state sovereign immunity from the practical imperatives that have historically enjoined recourse to it. Sovereign immunity is one of the Constitution's austerity mechanisms: It rarely allows governments to avoid their obligations entirely, but it does confer a degree of discretion on government officials as to how and when they will comply with those obligations. (10) But our constitutional culture does not easily tolerate departures from the principle that rights require remedies, (11) and the strong medicine of sovereign immunity generally will lack legitimacy in the absence of compelling public need.

Ironically, the Rehnquist Court's revival of state sovereign immunity might simply have come fifteen years too soon. As a result of both the "Great Recession" of the last several years and, perhaps more importantly, long term mismanagement of pension and healthcare obligations, the states are once more in crisis. According to Michael Greve, "Deficits for the current budget cycle are estimated at $175 billion. In some states (Texas, California, Nevada, and Illinois), the shortfall exceeds 30 percent of projected budgets." (12) The long term picture is considerably worse: "Unfunded pension obligations are estimated at upwards of $1 trillion and are probably three or four times that amount. Unfunded health care commitments clock in at upwards of a half trillion. Bond debt issued by state and local governments comes in around $2.8 trillion." (13) These developments raise an obvious question: What role will state sovereign immunity play in this new crisis?

Part I of this Essay traces the history of sovereign immunity and state debt, demonstrating that, historically, legal actors have tied state sovereign immunity closely to protecting the fiscal health of the States while relaxing immunity rules where necessary to permit the enforcement of federal law in contexts that do not threaten the public fisc. I offer this account as a stab at understanding the overall shape of the Supreme Court's immunity doctrine, but I cannot hope to run that claim to ground in this brief Essay. It will be enough if I can point the way toward a more fruitful understanding. Part II addresses the disjuncture between sovereign immunity and fiscal crisis in the Rehnquist Court's state sovereign immunity jurisprudence and speculates that this disconnect has undermined both the coherence and the legitimacy of the Court's doctrine. In Part III, I speculate as to how state sovereign immunity will help shape the law's response to the States' current fiscal crisis.


    Sovereign immunity seems anomalous in a democratic republic. Lawyers of a certain age grew up singing along with Schoolhouse Rock's infectious account of the Revolution: No More Kings! (14) A century earlier in United States v. Lee, (15) Justice Miller emphasized this essential difference between American government and our English forbears: "Under our system the people, who are there called subjects, are the sovereign.... The citizen here knows no person, however near to those in power, or however powerful himself, to whom he need yield the rights which the law secures to him...." (16) Lee did not reject the very idea of sovereign immunity, however; it simply held that the government's immunity might be avoided in certain actions brought against the government's officers. (17) To this day, both national and state governments in our system continue to enjoy robust immunity protections from private lawsuits. (18)

    Sovereign immunity has survived in this country not out of nostalgia for merry olde England, but rather because it serves practical public values. Dissenting in Lee, Justice Gray insisted: "That maxim is not limited to a monarchy, but is of equal force in a republic" because it protects public property that might be "essential to the common defence and general welfare...." (19) When a private plaintiff recovers a large damage award against a state government, the money inevitably comes out of funds that otherwise would be available for public use. It is one thing to compensate a plaintiff for grievous injuries; it is quite another to take money from the K-12 education budget to do so. Unsurprisingly, the ebb and flow of immunity doctrine has tended to follow practical necessity; the more dire the financial straits that government confronts, the more that zero-sum realities compel protection of the state's coffers. The first two eras of expansive state sovereign immunity thus correspond to serious state debt crises that threatened the States' very financial existence.

    When Alexander Chisholm filed his initial lawsuit against the State of Georgia in 1790, the States had millions of dollars of outstanding debts from the Revolutionary War. Under those circumstances, Chisholm's holding that a state could be hauled into federal court and made to pay up would have posed an existential threat to state finances. As Charles Warren put it,

    In the crucial condition of the finances of most of the States at that time, only disaster was to be expected if suits could be successfully maintained by holders of State issues of paper and other credits, or by Loyalist refugees to recover property confiscated or sequestered by the States; and that this was no theoretical danger was shown by the immediate institution of such suits against the States in South Carolina, Georgia, Virginia and Massachusetts. (20) John Marshall gave a similar account, writing nearly three decades after the Eleventh Amendment's ratification in Cohens v. Virginia (21): "It is a part of our history," he said, "that, at the adoption of the constitution, all the States were greatly indebted; and the apprehension that these debts might be prosecuted in the federal Courts, formed a very serious objection to that instrument." (22) When the Court in Chisholm suggested that states might be sued on these debts in federal courts, "[t]he alarm was general; and, to quiet the apprehensions that were so extensively entertained, this amendment was proposed in Congress, and adopted by the State legislatures." (23) Chief Justice Marshall rejected the explanation that the Amendment was meant simply to protect "the dignity of a State"; after all, a state might still be hauled into federal court by another state or a foreign state. Instead, "[t]hose who were inhibited from commencing a suit against a State ... were persons who might probably be its creditors." (24)

    This standard account requires some qualification. Although the States certainly feared being forced to pay their debts during the drafting and ratification of the original Constitution, Clyde Jacobs points out that "[m]uch had transpired between 1787 and 1794." (25) By the time the Supreme Court rendered its decision in Chishohn, Alexander Hamilton had persuaded the U.S. Congress to assume much of the outstanding state debt. (26) And as Congress and the state legislatures deliberated on the Eleventh Amendment, the States were generally paying off their remaining obligations. (27) That hardly refutes the basic proposition that protecting the States from large-scale financial liability was a central motivation behind the Eleventh Amendment, however. The States had other liabilities that may have caused them to value immunity even after federal assumption of their Revolutionary War debts. (28) More importantly...

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