Summary: This post discusses the question of whether a state instrumentality or subdivision can sue the state of which it is a part, and if so, under what circumstances.  The answer is a complicated one involving four distinct sets of sub-questions.

The idea for this blogpost came from Tweed-New Haven Airport Authority v. Tong, — F.3d —, 2019 WL 2932588 (2d Cir. 2019).  There, the Second Circuit held that the Federal Aviation Act, codified at 49 U.S.C. § 40101-49101, preempted a Connecticut statute limiting the length of the New Haven airport’s main runway.  The state statute’s invalidity was clear, Tweed-New Haven Airport, at *5-*7; what made the case difficult was the parties’ identities.  The plaintiff was the Tweed-New Haven Airport Authority, a state instrumentality, supported by the City of New Haven, a state subdivision, as intervenor; the defendant was Connecticut’s Attorney General.  The parties’ identities raised a question of state instrumentalities’ and subdivisions’ power to sue the state in federal court.[1]

As it turns out, the answer to whether such internecine quarrels are justiciable is unclear and the subject of a Circuit split, albeit a somewhat one-sided one.[2]  Early U.S. Supreme Court precedents were interpreted as suggesting that such lawsuits were impermissible.  E.g., Hunter v. City of Pittsburgh, 207 U.S. 161, (1907); accord, Williams v. Mayor of Baltimore, 289 U.S. 36 (1933); City of Trenton v. New Jersey, 262 U.S. 182 (1923).[3]  But in Gomillion v. Lightfoot, 364 U.S. 339 (1960), Justice Frankfurter, writing for the Court, reevaluated those precedents and interpreted them more narrowly.  And since that time the Supreme Court’s sub silento assumption of jurisdiction in such cases suggests that such suits are permissible.  See, Tweed-New Haven Airport, at *5 (listing cases).[4]

The Ninth Circuit has staked out the position that federal courts cannot entertain litigation between state instrumentalities and subdivisions and the state itself.  Burbank-Glendale-Pasadena Airport Authority v. City of Burbank, 136 F.3d 1360 (9th Cir.), cert. denied, 525 U.S. 873 (1998); South Lake Tahoe v. California Tahoe Regional Planning Agency, 625 F.2d 231 (9th Cir.1980), cert. denied, 449 U.S. 1039 (1980).  All the other Circuits that have addressed the issue take the position that such suits are permissible, at least in some circumstances.  Branson Sch. Dist. RE-82 v. Romer, 161 F.3d 619 (10th Cir. 1998); United States v. State of Alabama, 791 F.2d 1450, 1455 (11th Cir. 1986); South Macomb Disposal Authority v. Township of Washington, 790 F.2d 500, 504 (6th Cir. 1986); Rogers v. Brockette, 588 F.2d 1057 (5th Cir.), cert. denied, 444 U.S. 827 (1979).

An analogous issue occasionally arises in cases involving squabbles between officials or entities within the executive branch of the federal government.  Most prominently, the issue arose in Nixon v. U.S., 418 U.S. 683 (1974), the “Watergate tapes” case.  President Nixon asserted that the Special Prosecutor, as an Executive Branch official, could not proceed against him because one part of the Executive Branch could not sue another.  The Court unanimously rejected the argument, noting “[t]he mere assertion of a claim of an ‘intra-branch dispute,’ without more, has never operated to defeat federal jurisdiction; . . . rather ‘courts must look behind names that symbolize the parties to determine whether a justiciable case or controversy is presented.’ Id. at 692-97 (quoting U.S. v. ICC, 337 U.S. 426, 430 (1949)).[5]

Internecine lawsuits raise four different sets of questions.  First, there are a set of questions concerning substantive constitutional law.  Do state instrumentalities and subdivisions have federal constitutional rights vis-à-vis the state government that gives them life?  Second, can the courts be satisfied that there is a sufficient adversity between the parties to recognize the right of one element of state government to sue another?  Third, there are a set of question involving the efficacy of furthering structural constitutional values.  In particular, should such suits be allow in preemption cases because they are the most efficacious way in which to further federal interests?  Fourth, there are a set of federalism questions.  In particular, does entertaining such cases interfere with the relationship between the states and its departments, instrumentalities, and subdivisions in a way that should raise federalism concerns?

I will discuss each of these sets of questions in turn.

1. Substantive Constitutional Law

Do state instrumentalities and subdivisions have constitutional rights or constitutionally-protected prerogatives separate from those of the state of which it is a part?  Generally, government entities do not have “rights” under the federal constitution.  Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. 247, 265 (2011); accord, San Diego Unified Port Dist. v. Gianturco 457 F. Supp. 283, 290 (S.D.Cal.1978) (“Gianturco”), affd, 651 F.2d 1306 (1981), cert denied, 455 U.S. 1000 (1982).  The U.S. Constitution is designed to restrain government actions against non-governmental entities, most particularly natural persons.  Granted, to that end, the Constitution does protect sovereign prerogatives.[6]  But the Constitution views federalism as a duopoly, involving the federal government and state governments.[7]  The limitations on federal power were clearly designed to preserve a sphere for state prerogatives.  See National Federation of Independent Businesses v. Sibelius, 567 U.S. 519, 533 (2012).  And a few provisions of the Constitution certainly grant each state rights vis-à-vis sister states.  U.S. Const’n, art. IV, §§1, 2. (Similarly, on the federal level each branch is granted its own prerogatives, which suggests that at least the executive and legislative branches could appeal to the courts to resolve at least some disputes between them regarding those prerogatives.)  But nothing in the federal Constitution refers to any smaller unit of state government.  And indeed, presumably a state, like the federal government, has plenary power to create and organize its departments, instrumentalities or subdivisions.[8]

Like municipalities and state instrumentalities, business corporations are “artificial persons” created by state governments.  Some have argued that such entities cannot be constitutional rights bearers because, unlike natural persons, they are solely creations of the state. However, courts have recognized that business corporations are at the very least an “aggregation of the natural person who contracted with each other to create the corporation for their mutual benefit” and that rights afforded a corporation “are in reality the rights of the natural persons who compose it.”[9]  Thus, for example, a government action that deprives a corporation of its property really deprives its corporators (the natural persons who are shareholders) of that property.[10]

The Supreme Court recognized business corporations as possessing some constitutional rights as early as 1886. Santa Clara County v. Southern Pacific R. Co., 118 U.S. 394 (1886)(Fourteenth Amendment);[11] accord, Santa Clara in Gulf, Colorado & Santa Fe RR Co. v. Ellis, 165 US. 150 (1897)(reaffirming Santa Clara).  But it has also held that corporations lack some others, such as such as the Fifth Amendment privilege against compulsory self-incrimination and the entitlements guaranteed by the Privileges & Immunities Clause of Article IV.  Hale v. Henkel, 201 U.S. 43, 70, 74-75 (1906)(right against self-incrimination); Paul v. Virginia, 75 U.S. 168, 177 (1868)(privileges and immunities clause).  In First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), involving corporations’ invocation of the Free Speech Clause, the Court sought to bring order to the “corporate personhood” doctrine.  It explained that even though corporations were not considered “persons” for purposes of some constitutional rights, this was “not because the States are free to define the rights of their creatures without constitutional limit.”  Id. at 778 n.14.  Under such an approach, corporations would be accorded no Constitutional rights.  Id.  Rather,

Certain “purely personal” guarantees such as the privilege against compulsory self-incrimination, are unavailable to corporations and other organizations because the “historic function” of the particular guarantee has been limited to the protection of individuals.  Whether or not a particular guarantee is “purely personal” or is unavailable to corporations for some other reason depends on the nature, history, and purpose of the particular constitutional provision.  Id.

Municipalities and state instrumentalities certainly differ from corporations, and thus the law regarding corporations should not merely be transplanted in that different context without further analysis.  Nevertheless, certainly municipalities reflect an aggregation of its citizens, a set of natural persons that differ from the citizenry of the state as a whole.  Similarly, state instrumentalities may have bondholders, such that a refusal to accord the instrumentality “personhood” for purposes of the Constitution could impact them directly.

Thus, the corporate “personhood” cases may be suggestive in terms of the rights state subdivisions and instrumentalities possess.[12]

In any event, questions regarding whether state subdivisions and instrumentalities are rights bearers, i.e., people for purposes of particular constitutional rights are ones of substantive constitutional law, not ones of justiciability (i.e. whether there is a sufficient “case” or “controversy”).[13]

2. Ensuring Sufficient Adversity Between the Parties and Executive Branch Responsibility

Ordinarily a party cannot sue itself.  U.S. v. ICC, 337 U.S. 426, 430 (1949).  Courts do not engage in the “academic pastime” of resolving a party’s inner turmoil.  Id.  So the second set of issues that arises when internecine governmental disputes reach courts concerns the genuineness of the conflict between the contestants.[14]  If each contestant is accountable to the same higher level official, will there be sufficient adversity between the parties or is the case in effect a feigned case?[15]  See, TVA v. U.S., 51 Fed. Cl. 284 (Ct. Fed. Claims 2001); Indiana Protection and Advocacy Services v. Indiana Family and Social Services Admin., 603 F.3d 365, 373 (7th Cir. 2010).  Indeed, the contestants’ very appeal to the courts might be viewed as an instance of a federal or state executive branch’s abdication of its responsibility to supervise, and resolve disputes between, members of the same government.[16] Courts should not allow themselves to serve as a substitute for internal resolution of issues within the executive branch of the state.  Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. at 275-76 (Roberts, C.J., dissenting).

Concluding that sufficient adversity exists between the parties is less problematic when the state subdivision and the state have different constituencies.  The people of the City of New Haven may well have clashing views of matters with the people of the state of Connecticut.  See, Emily Badger, Blue Cities Want to Make Their Own Rules. Red States Won’t Let Them., N.Y. TIMES A1 (July 6, 2017).  Financial independence might also support a view that there is sufficient adversity between the parties.  See, Rogers v. Brockette, 588 F.2d at 1066;[17] TVA v. United States, 13 Cl.Ct. 692, 699 (1987).  On the other hand, some of the cases involving the TVA, which is financially independent, may raise doubts on this score because of the existence of a mechanism to resolve conflicts between federal agencies within the executive branch.  See, TVA v. U.S., 51 Fed. Cl. at 287 (citing Executive Order No. 12,146 (1979), which directs two executive agencies, whose heads serve at the President’s pleasure, to submit legal disputes between them to the Attorney General for resolution).

3.  Furthering Constitutional Values and Federal Interests

States should not be free to adopt and enforce laws that are preempted under the Supremacy Clause or otherwise violate the U.S. Constitution.  Permitting state subdivisions and instrumentalities to sue states in federal courts may be a particularly efficacious means of ensuring that such invalid state laws are promptly overturned.[18]  As the Second Circuit opined in Tweed-New Haven Airport:

Hundreds of federal laws apply nationwide to states and their political subdivisions. They impose various responsibilities and prohibitions on states and political subdivisions that are intended by Congress to apply nationwide. If the Supremacy Clause means anything, it means that a state is not free to enforce within its boundaries laws preempted by federal law. Lawsuits invoking the Supremacy Clause are one of the main ways of ensuring that this does not occur.  Id. at *5.

Accord, Gianturco, supra, 457 F. Supp. at 290 (“[i]f the Supremacy Clause is to be effective in achieving its purpose, its dictates must be enforceable by political subdivisions of states as well as by individuals.”).[19]  The California Supreme Court extended such reasoning to dormant Commerce Clause challenges.  Star-Kist Foods, Inc. v. County of Los Angeles, 42 Cal.3d 1, 9, 719 P.2d 987, 992 (1986), cert. denied, 480 U.S. 930 (1987).[20]

Congress could, of course, more explicitly preempt state laws that interfere with its goals or infringe upon a field Congress seeks to entirely preempt.  But as observed long ago, Congress lacks the time to engage in such policing of states.[21]  Administrative agencies could also presumably more explicitly preempt state statutes.  But are federal agencies’ limited resources, in terms of time, budget, and personnel, best expended on specific addressing state laws that federal statutes clearly preempt?  Private persons could sue.  In Tweed-New Haven Airport, those who frequently travel to and from New Haven or airlines interested in serving New Haven could have brought suit.  But such private potential litigants could face standing problems.  There would be a concern about establishing causation — even if the state law were invalidated, would the airport authority and the municipality have lengthened the runway?  Prudential standing doctrines could conceivably pose obstacles.  Actual and potential passengers’ claims might be considered “generalized grievances” or outside the “zone of interest” of the federal statute.[22]

So suits by instrumentalities and subdivisions may be most efficacious in keeping states within proper bounds.  Indeed, several courts of appeal have, for this reason, suggested that any general rule limiting such intramural suits should not apply to claims that state law is preempted.  Tweed-New Haven Airport, at *5.

4. Interference With Governmental Hierarchy

One jurist has expressed concern that entertaining such internecine suits can be viewed as commandeering state instrumentalities and subdivisions to enforce federal law by suing states.  Burbank-Glendale-Pasadena Airport Authority v. City of Burbank, 136 F.3d 1360, 1365 (1998)(Kozinski, J., concurring).  Such a view seems extreme.[23]  For instance, in Tweed-New Haven Airport neither the federal courts nor Congress forced the airport authority to assert a claim.  Rather, making the claim appears to have been the airport authority’s choice, as a means for fulfilling its mission — providing adequate air service to the more than one million people the airport serves.  The Supreme Court has said, per Justice Scalia, that when a state agency is explicitly given the authority to sue the state, there is no federalism problem with the federal government adjudicating the case.  Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. 247, 257-58 (2011).

States could prohibit their instrumentalities and subdivisions from suing them.  Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. at 264 (Kennedy, J., concurring).  Should they choose not to do so, why should the federal government do so, particularly on a rationale that doing so would respect the state’s chosen organization of the state, its subdivisions, and instrumentalities?  Indeed, accepting the state’s apparent choices as to subdivisions’ and instrumentalities’ powers to sue state government and state officials would appear to be more respectful of state choices.  The Court adopted similar reasoning with respect to internecine quarrels between two officials of the Executive Branch of the federal government in U.S. v. Nixon.  In particular, while the Attorney General could revoke a Special Counsel’s power to contest an assertion of executive privilege, so long as his delegation according the Special Prosecutor such power remained in force, all three branch of the federal government were “bound to respect and to enforce it.”  U.S. v. Nixon, 418 U.S. at 696.  Accordingly, the Court had to recognize the Special Counsel’s authority to sue the President of his assertion of executive privilege.

Moreover, there can be real conflicts between a state and its instrumentalities and subdivisions.  City electorates may have different views from state electorates.  The same is true for school boards.  Different electorates may mean different views. Often fights may be about commercial issues that are not significantly different from the issues that would be raised if a private entity engaged in the same activity (like the TVA or privately-run airport).[24]  TVA v. US.  51 Fed. Cl. at 285 (seventeen or more power companies with nuclear plants could sue U.S. Department of Energy for its delay in opening Yucca Flats storage facility, and the question was whether the ban on intra-executive branch suits should prevent TVA from receiving the same monetary compensation); U.S. v. ICC, 337 U.S. 426, 430 (1949) (“[t]he basic question is whether railroads have illegally exacted sums of money from the United States . . . the Government is not less entitled than any other shipper to invoke administrative and judicial protection”); see, Indiana Protection and Advocacy Services v. Indiana Family and Social Services Admin., 603 F.3d 365, 373 (7th Cir. 2010)(asserting that Indiana’s choice to use an independent state agency rather than a private not-for-profit entity to execute functions required under the Federal Protection and Advocacy for Individuals with Mental Illness Act of 1986 should be irrelevant in terms of standing to sue the state)

Conclusion

I offer only a tentative conclusion.  So long as the government entity is making a substantively cognizable claim of a constitutional or statutory right and there is no substantial concern about feigned cases or government abdication of authority, there seems little reason to prevent state subdivision and instrumentalities from suing the state of which it is nominally a part.  There is all the more reason to permit such suits when they provide a significant means of furthering a federal interest.

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[1] The suit was brought against the Attorney General to satisfy the requirements of Ex Parte Young, 209 U.S. 123 (1908).

[2] This blogpost is generally not addressing state instrumentalities and subdivisions power to sue the state in state court.

[3] For a criticism of the Hunter line of cases, see, Kathleen S. Morris, THE CASE FOR LOCAL CONSTITUTIONAL ENFORCEMENT, 47 HARV. C.R.-C.L. L. REV. 1 (2012)(arguing that the doctrine was overruled by Erie Railroad v. Tompkins, 304 U.S. 64 (1938)).

[4] Such sub silentio assertions of jurisdiction do not constitute binding holdings.  See, e.g., Arizona Christian School Tuition Org. v. Winn, 563 U.S. 125, 144 (2011); Hagans v. Lavine, 415 U.S. 528, 535 n.5 (1974).

[5] There is an analogy in tort law.  Traditionally spouses could not sue each other in tort, on the theory that the legal identities of the spouses merged upon their marriage.  RESTATEMENT (SECOND) OF TORTS §895F, com. b.  Even after such a justification was no longer tenable, courts continued to adhere to the doctrine on the theory that “personal tort actions between husband and wife would disrupt and destroy the peace and harmony of the home.” Id., at comm. d.

[6] “The federal system established by our Constitution preserves the sovereign status of the States.” Alden v. Maine, 527 U.S. 706, 714 (1999).

[7] The Federalist, No. 51 at 270 (James Madison)  As Madison explained the vision of the Constitution’s framers: “the power surrendered by the people, is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other; at the same time that each will be controled by itself.”

Though many state government also followed separation of powers theory and thus divided executive, legislative, and judicial powers between three distinct branches of government, the subdivisions in states were surely not as extensive as they are now.

[8] Local officeholders may have standing to challenge state mandates that require them to violate the rights of those under their jurisdiction.  For instance, in Board of Education v. Allen, 392 U.S. 236 (1968), the Court held that of a local school board members could challenge the constitutionality of a state statute that required them to lend books to parochial school students.  That doctrine is beyond the scope of this blogpost.

[9] See, Susanna K. Ripken, Corporations are People Too:  A Multi-Dimensional Approach to the Corporate Personhood Puzzle, 15 FORDHAM J. CORP. & FIN. L. 97, 109 (2009).

[10] Railroad Tax Cases, 13 F. 722, 747 (C.C.D. Cal. 1882), appeal dismissed as moot sub nom., San Mateo v. S. Pac. R.R. Co., 116 U.S. 138 (1885).  Under a competing theory, the real/natural entity theory, corporate legal status is distinct from the state and from its shareholders.  The separation of corporate ownership and control in a large corporation requires viewing the corporation as distinct from its shareholders, with a corporate “will” that exists, in the form of management decisions. See, Ripken, supra, at 112-118.

[11] Oddly, the question was neither raised by counsel nor analyzed in the Courts opinion.  Rather, the official reports note that the Chief Justice opened oral argument by asserting:  “The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to Corporations. We are all of the opinion that it does.”  The prime proponent of corporate “personhood,” Justice Stephen Field, laid out his views in Railroad Tax Cases,, 13 F. 722 (C.C.D. Cal. 1882), appeal dismissed, San Mateo v. S. Pac. R.R. Co., 116 U.S. 138 (1885).

[12] Recognition of broad third-party standing rights could significantly expand the limitations on state instrumentalities’ and subdivisions’ power to sue the state.  For instance, the Essex County Executive sought to sue the Chief Justice of the New Jersey Supreme Court alleging that in denying use of the Essex County Courthouse for filming Bonfire of the Vanities, the Court was engaging in making unlawful content-based limitations on speech.  The County’s federal constitutional rights had not been infringed, but the filmmakers had. The County Executive cited as harm loss of revenues that would have been paid to the County had the filming been permitted, to raise the filmmakers rights as a third party.  The Third Circuit held the case non-justiciable.  Amato v. Wilentz, 952 F.2d 742, 754–55 (3d Cir. 1991).

[13] Rogers v. Brockette, 588 F.2d 1057, 1068-71 (5th Cir. 1979)(Hunter, Trenton, and allied cases “are substantive interpretations of the constitutional provisions involved; . . . correctly interpreted, these cases do not deal with “standing”).

[14] There is a similar concern in the spousal immunity and parental immunity areas.  PROSSER & KEETON ON TORTS at 901-904, 905-908 (5th ed. 1971).

[15] Rogers v. Brockette, 588 F.2d 1057 (5th Cir. 1979)(“[s]ome state agencies may well be so closely identified with the state government, and so thoroughly controlled by the body they are suing that the litigation amounts to a suit by the state against itself; such a suit lacks the live adversariness we must find before we can entertain a case”).

[16] Though involving a dispute between state subdivisions and instrumentalities, as opposed to intra-Executive-Branch disputes, City of New Bedford v. Woodhole, 2003 WL 21282212 (D. Mass. 2003), provides an example of the state legislature resolving an internecine dispute.

[17] The Court explained: “[L]local boards have their own funds. They can levy and collect taxes . . . and funds disbursed by the state to the districts become the property of the local board of trustees, which holds them in trust for the district; they cannot be taken away by the state.”    Indeed, many of the Supreme Court’s sub silentio assertions of jurisdiction over internecine suits involve local boards of education.  E.g., Lawrence Cty. v. Lead-Deadwood Sch. Dist., 469 U.S. 256, 258, (1985), Washington v. Seattle Sch. Dist. No. 1, 458 U.S. 457, 487, (1982), Bd. of Educ. v. Allen, 392 U.S. 236, (1968).

[18] As Judge Kozinski explained in Burbank-Glendale-Pasadena Airport Authority:

Supremacy Clause claims do differ from other constitutional claims in this respect: Most constitutional claims pit the individual against the power of the government, while Supremacy Clause claims protect the interests of the federal government against encroachment by the states. Appellants argue that even if state instrumentalities do not have personal rights, like those protected by the Bill of Rights, they are surely able to promote federal interests by litigating federal preemption claims against the state.

Burbank-Glendale-Pasadena Airport Authority v. City of Burbank, 136 F.3d 1360, 1364-65 (1998)(Kozinski, J., concurring).

[19] Gianturco also involved state limitations on an airport.  In particular, the Port Authority, which operated an airport, challenged the curfew imposed upon airports by state regulation as preempted by federal law.

[20] As the Court explained: “State action cannot be so insulated from scrutiny that encroachments on the federal government’s constitutional powers go unredressed.  . . .there is a real possibility that the constitutionality of the Legislature’s scheme of differential taxation of business inventories would have gone unchecked absent challenge by those entities charged with administration of the program.”  Star-Kist, 42 Cal.3d at 9, 719 P.2d at 992.

[21] Ernest J. Brown, The Open Economy: Mr. Justice Frankfurter and the Position of the Judiciary, 67 YALE L.J. 219, 220-22 (1957), cited by, Bernard W. Bell, Marbury v. Madison and the Madisonian Vision, 72 GEO. WASH. L. REV. 197, 234 n. 229 (2003).

[22] A member of the governing board could perhaps establish standing in some circumstances using a Board of Education v. Allen, 392 U.S. 236 (1968) argument, see note 8 supra, but such an argument could not be employed  in Tweed-New Haven Airport; the state statute did not require officeholders in charge of the airport authority to violate constitutional rights.  Moreover, it is not clear that such suits should be preferred, suits which may be brought by dissident members of the governing board, over suits by the state instrumentality or subdivision itself.

[23] The issue was lurking In Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. at 260, but a six-Justice majority found it unnecessary to address the issue.  However, Justice Kennedy warned: “The Court should be most cautious before deciding cases that might later lead to a general principle that the National Government can condition receipt of funds on the State’s agreement to make far-reaching changes with respect to its governmental structure or its basic policies of governance in matters within its special competence.”  Id. at 265

[24] Though historically some commercial airports were privately run, Robert W. Poole Jr. and Chris Edwards, Privatizing U.S. Airports, Tax & Budget Bulletin No. 76 (Cato Institute November 21, 2016), currently the only commercial airport privately run is the Branson, Missouri Airport (Wikipedia “Branson Airport”).