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Statutory and contractual claims out; equitable claims proceed despite Eleventh Amendment

Here, Vivian Wang of Stanford Law School recaps the opinion handed down Tuesday in Alabama v. North Carolina (132 Original).  In January, Josh Friedman, an associate at Akin Gump, previewed and recapped the oral argument for SCOTUSblog.

On Tuesday, the Court issued its opinion in Alabama v. North Carolina, an original jurisdiction case involving a 1986 interstate compact (“the Compact”) created to develop disposal facilities for radioactive wastes. The plaintiffs – four states and an umbrella Commission created by the Compact – asserted both legal and equitable claims against North Carolina, a former member of the Compact, arising out of the state’s decision to abandon – after substantial investment by both the Commission and it – a project to develop a disposal facility.

The plaintiffs filed seven exceptions to the recommendations made by the Special Master in two reports, while North Carolina filed two.  In its opinion, the Court overruled all of the exceptions and adopted the Special Master’s recommendations, thereby terminating the plaintiffs’ statutory and contractual claims; the plaintiffs’ equitable claims, however, will proceed for further briefing and argument, with additional discovery also a possibility.

Plaintiffs’ exceptions

The Court overruled the plaintiffs’ first exception, instead agreeing with the Special Master that, as a matter of statute and contract, the Compact does not authorize the Commission to impose monetary sanctions on North Carolina.  Not only does the Compact’s use of the word “sanctions” refer only to enumerated nonmonetary sanctions, the Court explained, but the Compact also provides that it does not affect any state’s sovereign rights – the “primeval” one of which is immunity from monetary levies.  Moreover, other contemporaneous waste compacts expressly authorize monetary sanctions, making the Court reluctant to read in an implicit authorization of such in this Compact.    Because the first exception was overruled, the Court explained, the plaintiffs’ second exception – that North Carolina could not avoid monetary sanctions by withdrawing from the Compact – was moot.  And, the Court continued, the plaintiffs had appropriately abandoned their third exception – that North Carolina had forfeited its right to object to a monetary penalty when it did not participate in the sanctions hearing – because they did not argue it.

Turning to the plaintiffs’ fourth exception, the Court concluded that no deference was warranted to the Commission’s determination that North Carolina had violated the Compact.  The Court reasoned that the terms of the Compact limited the Commission’s adjudication authority to issues concerning a state’s status as a party state or Commission member.  Justice Breyer dissented from this part of the opinion.

The Court also overruled the plaintiffs’ fifth exception, which arose from the Special Master’s denial of their motion for summary judgment on their breach of contract claims.  Instead, the Court agreed with the Special Master that summary judgment in favor of North Carolina was warranted.  Under the Compact, North Carolina was required to take “appropriate steps” toward obtaining a license for the facility.  However, North Carolina properly stopped seeking a license once the Commission refused to provide additional financial assistance – to continue, the Court agreed, would have been financially imprudent and thus inappropriate.  Once again, the Court contrasted the language of the Compact with contemporaneous waste compacts that expressly require states to complete development, rather than simply take “appropriate steps.”  Because no breach of the Compact had occurred, the Court overruled plaintiffs’ sixth exception, which contended that North Carolina had repudiated the Compact.  Chief Justice Roberts and Justice Breyer dissented on these points.

In their seventh exception, the plaintiffs argued that the Compact implicitly barred North Carolina from withdrawing in bad faith.  The Court rejected this exception and agreed with the Special Master’s recommendation of summary judgment in favor of North Carolina.  Citing federalism and separation-of-powers principles, the Court declined to read an implicit duty of good faith into the Compact, and it again deemed it telling that other comparable compacts expressly codified good-faith limitations.  Three Justices – Kennedy, Sotomayor, and Breyer – dissented from this part of the opinion.

North Carolina’s exceptions

In its first exception, North Carolina challenged the Special Master’s denial of its motion for summary judgment on plaintiffs’ equitable claims, arguing that its obligations are governed exclusively by the Compact.  The Court overruled this exception and noted with approval that the Special Master had reasonably exercised his discretion in allowing further briefing, argument, and – potentially – discovery on the plaintiffs’ equitable claims.

Finally, the Court turned to the constitutional issue in the case: North Carolina’s argument – made in its second exception – that the Commission’s claims are barred by the Eleventh Amendment.  Reaffirming its holding in Arizona v. California that the Eleventh Amendment does not bar a non-state party’s suit against a state if that party joins other states as plaintiffs and asserts identical claims and seeks identical relief as the state parties, the Court overruled North Carolina’s exception.  Instead, it concluded that further proceedings are necessary to determine whether the Commission’s equitable claims and requested relief are indeed identical to those of the state plaintiffs.  Chief Justice Roberts and Justice Thomas dissented from this portion of the opinion, arguing both that Arizona v. California should be overruled and that states are immune from suit by non-states under the Eleventh Amendment, regardless of whether the claims and remedies sought in those suits coincide with those of state parties.