Waterfront Commission of NY v. Governor of New Jersey ( 2020 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 19-2458
_____________
WATERFRONT COMMISSION OF NEW YORK
HARBOR
v.
GOVERNOR OF NEW JERSEY,
Appellant
PRESIDENT OF THE NEW JERSEY STATE
SENATE; SPEAKER OF THE NEW JERSEY
GENERAL ASSEMBLY;
NEW JERSEY SENATE;
GENERAL ASSEMBLY OF
THE STATE OF NEW JERSEY,
Intervenors
_____________
No. 19-2459
_____________
WATERFRONT COMMISSION OF NEW YORK
HARBOR
v.
GOVERNOR OF NEW JERSEY
GENERAL ASSEMBLY OF THE STATE OF NEW
JERSEY; SPEAKER OF THE NEW JERSEY
GENERAL ASSEMBLY;
NEW JERSEY SENATE;
PRESIDENT OF THE NEW JERSEY STATE SENATE,
Intervenor-Defendants/Appellants
_____________
On Appeal from the United States District Court
for the District of New Jersey
District Court No. 2-18-cv-00650
District Judge: The Honorable Susan D. Wigenton
_____________
Argued March 3, 2020
Before: SMITH, Chief Judge, HARDIMAN, and
KRAUSE, Circuit Judges
(Filed: June 5, 2020)
2
Alychia L. Buchan
Proskauer Rose
One Newark Center
18th Floor
Newark, NJ 07102
Sean R. Kelly [ARGUED]
Catherine Soliman
Saiber
18 Columbia Turnpike
Suite 200
Florham Park, NJ 07932
Lawrence R. Sandak
Proskauer Rose
11 Times Square
17th Floor
New York, NY 10036
Counsel for Waterfront Commission of New York
Harbor
Aaron A. Love [ARGUED]
Gurbir S. Grewal
Melissa H. Raksa
Christopher Edwards
Office of Attorney General
of New Jersey
Division of Law
25 Market Street
3
Richard J. Hughes Justice Complex
Trenton, NJ 08625
Counsel for Governor of New Jersey
Leon J. Sokol [ARGUED]
Steven Siegel
Cullen & Dykman
433 Hackensack Avenue
Hackensack, NJ 07601
Counsel for President of the New Jersey State
Senate; Speaker of the New Jersey General
Assembly; New Jersey Senate; and General
Assembly of the State of New Jersey
A. Matthew Boxer
Joseph A. Fischetti
Rebecca J. Ryan
Lowenstein Sandler
One Lowenstein Drive
Roseland, NJ 07068
Counsel for Amicus New York Shipping
Association, Inc.
Jeffrey B. Litwak
Columbia River Gorge Commission
57 N.E. Wauna Avenue
P.O. Box 730
White Salmon, WA 98672
Counsel for Amicus Columbia River Gorge
4
Commission
________________
OPINION OF THE COURT
________________
SMITH, Chief Judge.
The States of New Jersey and New York agreed
more than half a century ago to enter into the Waterfront
Commission Compact. More recently, New Jersey
enacted legislation to withdraw from the Compact. To
prevent this unilateral termination, the Waterfront
Commission sued the Governor of New Jersey in federal
court. But because New Jersey is the real, substantial
party in interest, its immunity should have barred the
District Court from exercising subject-matter jurisdiction.
Accordingly, this case must be dismissed.
I
A
By the mid-twentieth century, New York Harbor
was rife with corruption, particularly in waterfront hiring
practices. See De Veau v. Braisted, 363 U.S. 144, 147–48
(1960) (plurality opinion); N.Y. Shipping Ass’n v.
Waterfront Comm’n of N.Y. Harbor, 835 F.3d 344, 348–
5
49 (3d Cir. 2016). After studying the problems created by
corrupt practices, representatives of New Jersey and New
York prepared remedial legislation, which each State
enacted in 1953. See N.J. Stat. Ann. § 32:23-1 et seq.
(repealed 2018); N.Y. Unconsol. Law § 9801 et seq.
Because the reciprocal statutes collectively function as an
agreement between the States, Congress consented to the
formation of the Waterfront Commission Compact,
consistent with the Compacts Clause in Article I, § 10, of
the U.S. Constitution.1 Act of Aug. 12, 1953, Pub. L. No.
83-252, 67 Stat. 541, 541.
The Compact reformed waterfront hiring practices
by, inter alia, introducing registration and licensing
requirements and channeling hiring through designated
centers. E.g., N.Y. Unconsol. Law §§ 9812, 9827, 9853.
To implement such reforms, the Compact also established
the Waterfront Commission of New York Harbor,
§§ 9807, 9810, and authorized the Commission to fund its
operations by levying assessments on employers, § 9858.2
1
Article I, § 10, cl. 3, provides in pertinent part that “[n]o
State shall, without the Consent of Congress, . . . enter into
any Agreement or Compact with another State.”
2
Although the States could designate funding for the
Commission (and the Commission may receive financial
support from “federal grants or otherwise”), the Compact
contemplates that the bulk of the budget would come from
6
B
As the decades passed, most of the Harbor
workforce shifted from New York to New Jersey, where
deepwater berths better accommodated the modern trend
toward containerized shipping. Such developments
redounded to the benefit of New Jersey’s economy.
Eventually, the New Jersey legislature came to see the
Commission as “over-regulat[ing] the businesses at the
port in an effort to justify its existence,” which made the
Commission “an impediment to future job growth and
prosperity at the port.” N.J. Stat. Ann. § 32:23-229.
New Jersey repeatedly tried to cabin the
Commission’s powers, and even to withdraw from the
Compact entirely. Those efforts came to fruition at the end
of Governor Chris Christie’s term in office, when he
signed into law Chapter 324. Act of Jan. 16, 2018, 2017
N.J. Sess. Law Serv. ch. 324 (codified at, e.g., N.J. Stat.
Ann. §§ 32:23-229 to -230). That chapter immediately
repealed the New Jersey legislation that had contributed to
the formation of the Compact. Ch. 324, §§ 33–34 (citing
N.J. Stat. Ann. § 32:23-1 et seq.).
employer assessments. N.Y. Unconsol. Law §§ 9856,
9858. In fact, the Commission’s funding allegedly
consists entirely of such assessments.
7
But Chapter 324 set out additional steps intended to
further the State’s withdrawal from the Compact. It
required the New Jersey Governor to notify Congress, the
Governor of New York, and the Commission of the
“intention to withdraw.” § 2.a. That notification would
initiate a ninety-day countdown to the “transfer date”
when the Compact and the Commission would be
“dissolved.” §§ 3, 31. Thereafter, the New Jersey
Division of State Police would assume the Commission’s
law enforcement functions on the New Jersey side of the
Harbor. See §§ 1.d, 4.b, 34.
C
The day after the outgoing Governor signed Chapter
324, the Commission filed suit in federal district court
against New Jersey Governor Philip Murphy in his official
capacity.3 The one-count Complaint sought two forms of
relief: a declaration that Chapter 324 violated the Compact
and the Supremacy Clause of the U.S. Constitution, and an
injunction against its enforcement. The District Court
permitted the New Jersey Senate, Senate President,
General Assembly, and Assembly Speaker (collectively,
the “Legislature”) to intervene in defense of Chapter 324.
3
The parties disagree as to whether this suit was properly
filed in the Commission’s name. We need not resolve that
dispute.
8
The Commission filed a motion for a preliminary
injunction to prevent the Governor from effectuating
withdrawal, while the Governor and Legislature moved
for dismissal. The District Court denied dismissal and
granted the injunction. Nearly a year later, the Court
granted the Commission’s motion for summary judgment
and denied the separate motions of the Governor and the
Legislature.
In these consolidated appeals, the Governor and
Legislature challenge the District Court’s orders denying
dismissal, granting an injunction, denying them summary
judgment, and granting summary judgment to the
Commission.4 Briefing included amicus curiae filings by
the New York Shipping Association (NYSA) in support of
the Governor and Legislature, and the Columbia River
Gorge Commission in support of the Waterfront
Commission.
II
4
We do not reach issues implicated in challenges by the
Governor and Legislature to “all other orders and rulings
adverse to” them. J.A. 2, 4.
9
The District Court had federal-question jurisdiction
over this dispute because the Complaint invoked the
Supremacy Clause and the Compact. See 28 U.S.C.
§ 1331; Waterfront Comm’n of N.Y. Harbor v. Elizabeth-
Newark Shipping, Inc., 164 F.3d 177, 180 (3d Cir. 1998)
(observing that Congressional consent enshrined the
Compact in federal law). But that jurisdiction does not
extend to any claim barred by state sovereign immunity.
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,
98, 119–21 (1984).
In denying the Governor’s motion to dismiss, the
District Court rejected the “suggest[ion]” that sovereign
immunity applied to the Governor in this case. Waterfront
Comm’n of N.Y. Harbor v. Murphy, No. 18-650 (SDW)
(LDW), 2018 WL 2455927, at *4 (D.N.J. June 1, 2018).
We have plenary authority to determine whether sovereign
immunity deprived the District Court of jurisdiction.5 28
5
Although the District Court did not revisit the sovereign
immunity issue at summary judgment, the Legislature and
amicus NYSA pursue that issue on appeal as a
jurisdictional matter. We have jurisdiction over an appeal
of an order granting summary judgment to address an
underlying issue going to the District Court’s jurisdiction.
See MCI Telecomm. Corp. v. Bell Atl.–Pa., 271 F.3d 491,
502–03 (3d Cir. 2001) (examining denial of sovereign
immunity on appeal of summary judgment); cf. Edelman
v. Jordan, 415 U.S. 651, 677–78 (1974) (observing “the
10
U.S.C. § 1291; In re PennEast Pipeline Co., 938 F.3d 96,
103 (3d Cir. 2019), petition for cert. filed, No. 19-1039
(Feb. 18, 2020).
III
State sovereign immunity dates back to our
Nation’s Founding, and is deeply rooted in English law.
See Franchise Tax Bd. of Cal. v. Hyatt, 139 S. Ct. 1485,
1493–94 (2019); 1 William Blackstone, Commentaries on
the Laws of England 234–35 (1765). Assurances that
States would remain immune from federal suit—absent
their consent—were instrumental in securing sufficient
support for the Constitution’s adoption. Edelman v.
Jordan, 415 U.S. 651, 660 & n.9 (1974). Although the
Eleventh Amendment expressly protects a State from
federal suits by citizens of another State or country,6 case
law recognizes that the actual scope of immunity extends
beyond the Amendment’s text. Alden v. Maine, 527 U.S.
706, 727–28 (1999). As a rule, “federal courts may not
Eleventh Amendment defense sufficiently partakes of the
nature of a jurisdictional bar so that it need not be raised
in the trial court”).
6
“The Judicial power of the United States shall not be
construed to extend to any suit in law or equity,
commenced or prosecuted against one of the United States
by Citizens of another State, or by Citizens or Subjects of
any Foreign State.” U.S. Const. amend. XI.
11
entertain a private person’s suit against a State” unless the
State has waived its immunity or Congress has permissibly
abrogated it. Va. Office for Prot. & Advocacy v. Stewart,
563 U.S. 247, 253–54 (2011) [hereinafter VOPA].
An “important limit” to that rule allows federal suits
against state officials in certain circumstances. Id. at 254–
55. Under the Ex parte Young doctrine, a state official is
“stripped of his official or representative character” and
thereby deprived of the State’s immunity, Ex parte Young,
209 U.S. 123, 159–60 (1908), when he commits an
“ongoing violation of federal law.” VOPA, 563 U.S. at254–55 (quoting Verizon Md. Inc. v. Pub. Serv. Comm’n
of Md., 535 U.S. 635, 645 (2002)). A person who is
aggrieved may therefore seek prospective relief by suing
him in his official capacity. See id. But Ex parte Young’s
“authority-stripping theory . . . is a fiction that has been
narrowly construed.” Pennhurst, 465 U.S. at 114 n.25. Ex
parte Young applies only to the “precise situation” of “a
federal court command[ing] a state official to do nothing
more than refrain from violating federal law.” VOPA, 563
U.S. at 255.
Consistent with this narrow construction of Ex parte
Young, the doctrine “does not apply ‘when the state is the
real, substantial party in interest.’” Id. (quoting
Pennhurst, 465 U.S. at 101). Courts determine whether
“relief sought nominally against an officer is in fact
against the sovereign” based on whether the relief would
12
“operate against” the sovereign. Pennhurst, 465 U.S. at
101 (quoting Hawaii v. Gordon, 373 U.S. 57, 58 (1963)
(per curiam)). In other words, we examine “the effect of
the relief sought.” Id. at 107. If such relief would operate
against the State, then we forego the fiction of Ex parte
Young in favor of the bedrock principle of state sovereign
immunity.
The Supreme Court has been “willing to police
abuses of the [Ex parte Young] doctrine that threaten to
evade sovereign immunity” because the relief would
operate against the State. VOPA, 563 U.S. at 256. A State
is generally the real, substantial party in interest if the
“judgment sought would expend itself on the public
treasury or domain, or interfere with public
administration,” id. at 255 (quoting Pennhurst, 465 U.S. at101 n.11) (internal quotation marks omitted), or if relief
consists of “an injunction requiring the payment of funds
from the State’s treasury, or an order for specific
performance of a State’s contract,” id. at 256–57 (citation
omitted) (citing Edelman, 415 U.S. at 666–67; In re Ayers,
123 U.S. 443 (1887)).7
7
Even if the relief would affect the State’s treasury, the
State may not be the real, substantial party in interest if the
effect on the public fisc is merely “ancillary” to
permissible prospective relief, as was the case in Ex parte
Young. Edelman, 415 U.S. at 667–68.
13
The Court has concluded that the sovereign was the
real, substantial party in interest in suits nominally against
officials where relief would effectively force the
restructuring of state mental health care at the State’s
expense, see Pennhurst, 465 U.S. at 93, 101 & n.11, 107;
confer money damages for a State’s disability benefit
processing deficiencies, see Edelman, 415 U.S. at 655–56,
668–69; enjoin activity that would breach a State’s
contract, see In re Ayers, 123 U.S. at 502–03, 507; require
substantial, unbudgeted expansion of a federal water
project, see Dugan v. Rank, 372 U.S. 609, 610–11, 616,
620–21 (1963);8 or quiet title to, and preclude state control
of, territory within the State’s regulatory jurisdiction, see
Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 281–
82, 287–88 (1997) (permitting suit would be “as intrusive
8
Dugan reached this conclusion as to claims against
federal officials, but Pennhurst imported Dugan’s
principles into an Ex parte Young suit against state
officials. See Pennhurst, 465 U.S. at 101 n.11 (citing
Dugan, 372 U.S. at 620); see also Gordon, 373 U.S. at 58(suit against federal official was effectively against United
States because prospective relief would, inter alia, “affect
the public administration of government agencies”
impacted by official’s action).
14
as almost any conceivable retroactive levy upon funds in
its Treasury”).9
IV
Here, the Commission does not directly challenge
the general rule of state sovereign immunity. It simply
chose not to name the State of New Jersey as a defendant
in its Complaint. By naming the Governor instead, the
Commission attempts to bring this case within the reach of
Ex parte Young. That attempt is unavailing. Because the
relief nominally sought from the Governor in this case
would operate against the State itself, New Jersey is the
real, substantial party in interest.10
9
By contrast, the sovereign was not the real, substantial
party in interest in suits against state officials to prevent
enforcement of a State’s railroad rate regulation, see Ex
parte Young, 209 U.S. at 129–31, 159–60; secure access
to a State’s mental hospital records, see VOPA, 563 U.S.
at 252, 256–57; or, as this Court decided, alter a state-
approved agreement between competitors, see MCI
Telecomm., 271 F.3d at 514–15.
10
Although we agree with the Legislature on this
conclusion, we do not embrace the grounds upon which it
argues for such an outcome. The Legislature contends that
the Governor’s enforcement duty was not sufficiently
specific to permit an Ex parte Young action against him.
15
A
The Commission seeks a judgment that “would
expend itself on the public treasury or domain.” VOPA,
563 U.S. at 255 (quoting Pennhurst, 465 U.S. at 101 n.11).
Indeed, Ex parte Young suggests that we consider the
nature of the state officer’s duty to enforce a challenged
law. See 209 U.S. at 157, 161. But we think the Governor
has sufficiently specific statutory obligations that an Ex
parte Young claim cannot be precluded on that basis.
Chapter 324 expressly requires the Governor to
notify Congress, the New York Governor, and the
Commission of New Jersey’s impending withdrawal—
which triggers the ninety-day countdown to
consummation—and then tell the Legislature’s presiding
officers that he did so. §§ 2, 31. The Complaint objects
to the Governor’s “taking any action to implement or
enforce” Chapter 324 and identifies the portion of the
Governor’s obligations that triggers the withdrawal
countdown. J.A. 55–56, 67–68. For this reason, we are
not persuaded we should dismiss on grounds that the suit
alleges insufficiently specific obligations to make out an
Ex parte Young claim. Cf. Constitution Party of Pa. v.
Cortes, 824 F.3d 386, 396 (3d Cir. 2016) (recognizing
ministerial duties are amenable to Ex parte Young claims).
16
The Complaint is frank in its recitation of the
expected financial effects of Chapter 324 on the
Commission:
[Chapter 324] would take away the
Commission’s primary revenue stream. . . .
[T]he Commission is not funded with tax
dollars, and its budget derives entirely from
the assessments that it collects from Port
employers. Inasmuch as the vast majority of
commercial Port operations occurs on the
New Jersey side, [Chapter 324] – which
purports to remove the Commission’s
authority to assess fees on New Jersey
employers – will virtually eliminate the
Commission’s budget.
J.A. 69–70.
The Commission’s dim prognosis is consistent with
the text of Chapter 324. Whereas the Commission has
been collecting assessments on work within New Jersey,
Chapter 324 tabs those assessments for the budget of the
New Jersey Division of State Police. See § 25.b. The
result will be that those assessments will now flow into
New Jersey’s coffers: “Each employer shall pay to the
State Treasurer, for placement within the General Fund, an
assessment . . . .” Id.; see also § 26.a(10) (“All funds of
the division received as payment of any assessment or
penalty under this section shall be deposited with the State
17
Treasurer.”). The same goes for the Commission’s current
liquid assets. Chapter 324 requires the Commission to
deposit “the funds of the commission applicable to this
State . . . into the custody of the State Treasurer.” § 4.b(2).
At bottom, Chapter 324 redirects the Commission’s
present and anticipated future funding from New Jersey
employers into New Jersey’s treasury.
This suit is no mere attempt to compel or forestall a
state official’s actions consistent with Ex parte Young’s
holding. Rather, when we compare the Commission’s
allegations about Chapter 324 with the chapter’s text, we
observe that the Commission attempts to pry back its
authority to assess employers, in direct conflict with
Chapter 324’s provisions. On these facts, where a
judgment for the Commission would divert state treasury
funding and thereby operate against the State,11 we
11
Even if the effect on New Jersey’s treasury can be
deemed ancillary to permissible prospective relief, see
supra note 7, this suit falls beyond Ex parte Young’s
bounds for the independent reason that it effectively seeks
specific performance of the Compact.
Separately, we do not view our fact-specific holding
to create tension with cases allowing suits to enjoin future
taxation to proceed under Ex parte Young. E.g., CSX
Transp., Inc. v. Bd. of Pub. Works of W. Va., 138 F.3d 537,
541–43 (4th Cir. 1998) (determining whether relief sought
was prospective or retrospective, without commenting on
18
conclude that New Jersey is the real, substantial party in
interest.
B
We reach the same outcome when considering this
suit from a different angle: the Commission effectively
seeks “specific performance of a State’s contract.” VOPA,
563 U.S. at 257.
Like other interstate compacts, the Waterfront
Commission Compact is a contract subject to our
construction. Tarrant Reg’l Water Dist. v. Herrmann, 569
U.S. 614, 628 (2013). Our inquiry begins with the
Compact’s express terms, id., and we need go no further.
Each State “deemed” the Compact’s regulation of the
waterfront “an exercise of the police power of the two
states for the protection of the public safety, welfare,
prosperity, health, peace and living conditions of the
people of the two states.” N.Y. Unconsol. Law § 9805.
And the Commission is empowered to “administer and
enforce” the Compact’s regulations. § 9810. New
whether State was real, substantial party in interest). We
have no occasion to take a position on that issue. Here we
are faced with a suit seeking prospective relief that
unquestionably operates against the State itself: The
Commission has no quibble with the assessments
continuing but wants to keep the revenue coming to its
own account instead of New Jersey’s.
19
Jersey’s contractual performance therefore consists
primarily of permitting the Commission to carry out
regulation of hiring on the New Jersey side of the Harbor
that otherwise falls within the State’s police powers.
By enacting Chapter 324, the State of New Jersey
has chosen to discontinue its performance of the Compact
and to resume the full exercise of its police powers on its
own side of the Harbor. Yet the Complaint seeks
invalidation of Chapter 324. Granting this relief would
compel New Jersey to continue to abide by the terms of an
agreement it has decided to renounce. Such relief
tantamount to specific performance would operate against
the State itself, demonstrating that New Jersey is the real,
substantial party in interest.
***
We are convinced that this suit seeks relief beyond
the Ex parte Young doctrine’s narrow confines by asking
that we invalidate Chapter 324. Invalidation would
necessarily have an adverse impact on the State of New
Jersey’s treasury and compel the State to perform
consistent with the Compact.12 Because such relief would
12
Cf. MSA Realty Corp. v. Illinois, 990 F.2d 288, 289–90,
295 (7th Cir. 1993) (rejecting Ex parte Young claim that
would effectively compel State to comply with its program
20
operate against New Jersey as the real, substantial party in
interest, the State is entitled to the protection of sovereign
immunity.13 Accordingly, we lack jurisdiction to address
the other threshold concerns raised by the Governor and
Legislature, nor can we reach the merits of New Jersey’s
anticipated withdrawal from the Compact.
V
Because this suit impinges on the State of New
Jersey’s sovereignty, thereby depriving the District Court
of jurisdiction, we will vacate the order granting summary
judgment to the Commission, reverse the order denying
the Governor’s motion to dismiss, and vacate that order in
all other respects. The case will be remanded for
dismissal.
promising return of state sales taxes to participating
municipalities).
13
New Jersey has not waived its immunity from this suit,
nor has Congress abrogated it. See VOPA, 563 U.S. at253–54.
21