[Federal Register: June 16, 2008 (Volume 73, Number 116)]
[Notices]
[Page 34017-34020]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jn08-62]
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FEDERAL MARITIME COMMISSION
[Docket No. 06-03]
Premier Automotive Services, Inc. v. Robert L. Flanagan and F.
Brooks Royster, III
Served: June 11, 2008.
By the Commission: Commissioners Joseph E. Brennan and Harold J.
Creel, Jr.; with Commissioner Rebecca F. Dye, dissenting.
Order
On January 27, 2006, Premier Automotive Services, Inc. (``Premier''
or ``Complainant'') filed a complaint against Robert L. Flanagan and F.
Brooks Royster, III (collectively ``Respondents'' or the ``Maryland
State Officials'') alleging that Respondents' marine terminal leasing
practices violate sections 10(b)(10), 10(d)(1) and 10(d)(4) of the
Shipping Act of 1984 (``Shipping Act''), 46 U.S.C. 41102, 41104 and
41106. This proceeding is before the Commission on exceptions from an
order of the Administrative Law Judge granting the Respondents' motion
to dismiss.
The issue before the Commission is whether the complaint against
certain named officials of the State of Maryland is within the bounds
of Ex parte Young, 209 U.S. 123 (1908), a judicially-created exception
to state sovereign immunity from suit by private parties. For the
reasons set forth below, the Commission holds that this proceeding is
barred by the sovereign immunity interests of the State of Maryland.
Accordingly, Complainant's exceptions are denied.
I. Background
A. Parties
1. Complainant
Premier is a marine terminal operator involved in the business of
providing marine terminal services to common carriers engaged in U.S.
foreign commerce. Premier is an import/export vehicle processor and is
a tenant at the Dundalk Marine Terminal (``Dundalk Terminal'') in
Baltimore, MD. Premier's facilities are owned and operated by the
Maryland Port Authority (``MPA''), an arm of the State of Maryland.
2. Respondents
At the time the complaint was filed, Respondent Robert L. Flanagan
was the Secretary of the Maryland Department of Transportation
(``MDOT'') and the Chairman of the Maryland Port Commission (``MPC'').
The complaint was brought against Flanagan in his official capacity.
Respondent F. Brooks Royster, III was the Executive Director of the
Maryland Port Authority (``MPA'') at the time of the complaint. The
complaint names Royster in his official capacity.\1\ MDOT, MPC and MPA
are not named as parties.
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\1\ Pursuant to Rule 25(d) of the Federal Rules of Civil
Procedure, whenever a respondent named in an official capacity no
longer holds the position for which he was named in the action, the
official's successor is automatically substituted as a party.
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B. Summary of Proceedings
This proceeding was initiated by the Complainant on January 27,
2006. On February 21, 2006, Respondents filed a Motion to Dismiss and
Response to Request for Commission Investigation arguing that (1) The
case is barred by Constitutional principles of state sovereign
immunity; (2) the Shipping Act does not authorize private complaints
for injunctive relief, and (3) that the Respondents should not be held
[[Page 34018]]
liable as individuals under provisions of the Shipping Act which are
specifically applicable to common carriers, ocean transportation
intermediaries and marine terminal operators.
Complainant responded, in part, that the action is allowable under
Ex parte Young, which provides an exception to state sovereign
immunity, and that the Shipping Act provides generally for prospective
injunctive relief, an essential component of the relief sought under Ex
parte Young.
The Administrative Law Judge (``ALJ'') granted the motion to
dismiss on March 31, 2006, finding that the complaint was barred by
sovereign immunity since Ex parte Young did not apply. Premier filed
exceptions to the ALJ's decision and Respondents filed a reply brief.
The Commission heard oral argument on June 13, 2007.
Pursuant to section 11(h) of the Shipping Act, Premier filed a
concurrent action in the United States District Court for the District
of Maryland seeking injunctive relief pursuant to its Shipping Act
claims at the Commission. The District Court ruled that the complaint
was not barred by sovereign immunity under the Young doctrine; however,
the Court denied injunctive relief finding that relief on the merits of
the Shipping Act claim was not likely. See Premier Automotive Services,
Inc. v. Robert L. Flanagan, et al., No. 06-1761, slip op. at 33 (D. Md.
Oct. 31, 2006). Premier then appealed the District Court's decision to
the United States Court of Appeals for the Fourth Circuit. The Fourth
Circuit affirmed the lower court's decision. Premier Automotive
Services, Inc. v. Flanagan, 492 F.3d 274 (4th Cir. 2007).
II. Positions of the Parties
A. Premier
Premier is an import/export vehicle processor which occupies
facilities at the Dundalk Terminal in Baltimore, MD. Premier's
facilities are owned and operated by the MPA, an arm of the State of
Maryland. Ceres Marine Terminals, Inc. v. Maryland Port Admin., 30
S.R.R. 358, 366 (2004).
Premier's long-term lease of Lot 90 at the Dundalk Terminal ended
in 2002. Since that time, Premier has been operating as a month-to-
month tenant of MPA. Premier's processing facilities on Lot 90 provide
a range of services to vehicle and heavy equipment manufacturers,
importers and exporters, including vehicle and equipment receipt,
release and assembly, accessory installation, body, paint and warranty
work, and storage and other pier-side services. According to Premier,
it has invested heavily in Lot 90, including the construction of a
27,500 square foot specialty building containing a body shop, paint
shop, offices and wash line (the ``Building''), which it owns and on
which it pays real estate taxes. This Building is alleged to be an
important component of Premier's ability to service its customers.
However, under the terms of Premier's long-term lease, improvements to
the leasehold revert to the Port upon termination of the lease.
Premier alleges that the Respondent's marine terminal leasing
practices violate sections 10(b)(10), 10(d)(1), and 10(d)(4) of the
Shipping Act. Premier claims that MPA has no regulations governing the
conduct or course of lease negotiations or the terms of MPA leases.
According to Premier, upon expiration of its long-term lease with
Premier, MPA repeatedly offered new leases that were commercially
irrational and confiscatory in three related material respects. First,
the proffered lease holds Premier to an unreasonable quota for
processing vehicles through the leased premises; second, the lease
proposals allow MPA to relocate Premier to facilities not comparable to
Lot 90; and, third, in the event of such forced relocation, Premier
would not have the right to terminate the lease while remaining subject
to the same objectionable minimum volume processing quota. In
combination, Premier alleges that these three provisions rendered MPA's
lease offers commercially meaningless, if not confiscatory.
Premier filed exceptions to the ALJ's finding that the action was
barred by state sovereign immunity on the grounds that the ALJ
misapplied the Ex parte Young doctrine. Premier argues that the
distinctions drawn by the ALJ between ``ministerial'' and
``discretionary'' administrative decisions are misapplied, and that the
analysis is therefore in error. Appeal of Premier from Order Dismissing
Complaint at 2. Premier argues that while the initial administrative
decision whether to lease property may be discretionary, once a state
port authority determines to lease property, it is bound by the
strictures of federal law, including the Shipping Act. Id. at 2-3.
Accordingly, Premier argues that if the facts demonstrate a violation
of the Shipping Act, then the actions of the Maryland State Officials
in seeking to lease property in violation of federal law would not be
shielded by state sovereign immunity under the Court's holding in Ex
parte Young.
B. Respondents
Respondents filed a motion to dismiss asserting that state
sovereign immunity bars the complaint, and arguing that Ex parte Young
does not apply since the Complainant seeks injunctive relief related to
a specific piece of real property in which the state claims an
interest. Respondents cite Idaho v. Coeur d' Alene Tribe, 521 U.S. 261
(1997), for the proposition that state interests in land to which
Maryland claims title are ``special sovereignty interests'' upon which
a state remains entitled to sovereign immunity from claims in a federal
forum. Respondents argue that the rationale of Couer d'Alene should be
extended to include not only actions involving title and regulatory
control over state lands, but also to actions related to leasing of
state lands.
The ALJ granted the Maryland State Officials' motion to dismiss
based upon: (1) The discretionary nature of MPA's leasing decisions;
(2) the complexity of discretionary state government processes
involved, including the leasing process the Commission is asked to
supervise; and (3) the degree of intervention required by the
Commission to police any subsequent negotiation process.
On appeal, Respondents argue that the ALJ properly held that Ex
parte Young does not authorize Premier's private complaint. Respondents
reiterate the argument that the potential relief can overcome an
otherwise legitimate Ex parte Young claim where the relief sought
implicates special sovereignty interests, i.e., the infringement upon
property interests of a state.
III. Discussion
As explained by the Supreme Court in Federal Maritime Comm'n v.
South Carolina State Ports Authority, 535 U.S. 743 (2002):
The preeminent purpose of state sovereign immunity is to accord
States the dignity that is consistent with their status as sovereign
entities. See In re Ayers, 123 U.S. 443, 505 (1887). ``The founding
generation thought it `neither becoming nor convenient that the
several States of the Union, invested with that large residuum of
sovereignty which had not been delegated to the United States,
should be summoned as defendants to answer the complaints of private
citizens.' '' Alden [v. Maine], 527 U.S. at 748 (quoting In re
Ayers, supra, at 505).
535 U.S. at 760. The Commission is now called to determine whether,
through the legal fiction of allowing suit against state officials
under the Court's doctrine announced in Ex parte Young, 209 U.S. 123
(1908), the Commission may summon officials of the State of Maryland to
answer the complaint of a
[[Page 34019]]
private company, Premier. In resolving questions of the proper scope
and application of Ex parte Young, we are instructed of the need ``to
ensure that the doctrine of sovereign immunity remains meaningful,
while also giving recognition to the need to prevent violations of
federal law,'' Idaho v. Coeur d'Alene Tribe, 521 U.S. at 269.
The Ex Parte Young Exception To Sovereign Immunity
The Court's decisions firmly establish that ``an unconsenting State
is immune from suits brought in federal courts by her own citizens as
well as by citizens of another state.'' Employees v. Missouri Dept. of
Public Health and Welfare, 411 U.S. 279, 280 (1973). Through its
holding in Federal Maritime Comm'n v. South Carolina State Ports
Authority, supra, the Court concluded that the Constitutional reach of
state sovereign immunity similarly bars administrative tribunals from
adjudicating complaints filed by a private party against a
nonconsenting State. Premier's suit accordingly is barred by the State
of Maryland's Eleventh Amendment immunity unless it falls within the
exception recognized by the courts for certain suits seeking
declaratory or injunctive relief against state officers in their
official capacity. See Ex parte Young, 209 U.S. 123 (1908).
The Ex parte Young exception has application in circumstances where
an action, otherwise barred in federal court, is brought against a
state official seeking prospective equitable relief for a violation of
the Constitution or federal law. Marie O. v. Edgar, 131 F.3d 610, 615
(7th Cir. 1997) (``[S]uits against state officials seeking prospective
equitable relief for ongoing violations of federal law are not barred
by the Eleventh Amendment under the Ex parte Young doctrine.'');
Antrican v. Odom, 290 F.3d 178, 184 (4th Cir. 2002) (Ex parte Young
exception allows private citizens ``to enjoin state officials in their
official capacities from engaging in future conduct that would violate
the Constitution or a federal statute.'')
Actions under Ex parte Young have long been constrained by the
courts. Such restraints include judicial review of the nature of the
activities undertaken, i.e., whether involving discretionary or
ministerial actions of the state official, Ponca Tribe of Oklahoma v.
State of Oklahoma, 37 F.3d 1422 (10th Cir. 1994); whether the complaint
addresses ``special sovereignty interests'' of the state, Idaho v.
Coeur d'Alene Tribe, supra; whether the suit is in actuality an action
against the state, Pennhurst State School & Hosp. v. Halderman, 465
U.S. 89, 101 (1984); \2\ and the nature of the statutory scheme under
which relief is sought, Seminole Tribe of Fla. v. Florida, 517 U.S. 44,
72 (1996). In Idaho v. Coeur d'Alene Tribe, supra, the Court voiced
concern lest the Ex parte Young exception swallow the Eleventh
Amendment rule of law:
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\2\ In Pennhurst, the Court explained that a suit is against the
sovereign if ``the judgment sought would expend itself on the public
treasury or domain, or interfere with the public administration,''
or if the effect of the judgment would be ``to restrain the
Government from acting, or to compel it to act.'', citing Dugan v.
Rank, 372 U.S. 609, 620 (1963).
To interpret Young to permit a federal-court action to proceed
in every case where prospective declaratory and injunctive relief is
sought against an officer, named in his individual capacity, would
be to adhere to an empty formalism and to undermine the principle,
reaffirmed just last Term in Seminole Tribe, that Eleventh Amendment
immunity represents a real limitation on a federal court's federal-
question jurisdiction. The real interests served by the Eleventh
Amendment are not to be sacrificed to elementary mechanics of
captions and pleading. Application of the Young exception must
reflect a proper understanding of its role in our federal system and
respect for state courts instead of a reflexive reliance on an
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obvious fiction.
521 U.S. at 270. For purposes of the instant exceptions, we address
only two of those factors limiting application of the Ex parte Young
doctrine.
Discretionary versus Ministerial Activities
Premier's appeal of the ALJ's decision is based in part upon the
ALJ's analysis of the discretionary versus ministerial acts of the
Respondents. The ALJ observes Young's distinction between
``ministerial'' actions, which are amenable to affirmative injunctive
relief, and ``discretionary'' actions which are not.
Premier argues that the ALJ misapplied Young by finding the actions
under review were discretionary. Premier reasons that since state
officials have no administrative discretion to violate the federal
rights at issue, the actions of the state officials must, of necessity,
be ministerial. In support of this argument, Premier notes that
although the state's decision to lease lands may be discretionary, the
state has no discretion regarding whether to comply with federal law,
i.e., the Shipping Act, and thus the actions of the state officials are
ministerial in nature. We disagree.
In establishing the doctrine, Ex parte Young reviewed the nature of
the state official's actions, and whether such actions are
discretionary or ministerial in nature. The Young court stated:
There is no doubt that the court cannot control the exercise of
the discretion of an officer [of the state]. It can only direct
affirmative action where the officer having some duty to perform not
involving discretion, but merely ministerial in its nature, refuses
or neglects to take such an action.
209 U.S. at 158-59. Ex parte Young's explicit distinction between
discretionary and ministerial conduct of state officials is a critical
limitation on the parameters of the doctrine. Ponca Tribe of Oklahoma
v. State of Oklahoma, 37 F.3d 1422, 1436 (10th Cir, 1994) aff'd on
other grounds, State of Oklahoma v. Ponca Tribe of Oklahoma, 116 S.Ct.
1410 (1996).
Premier's action challenges whether the leasing practices of the
Maryland Port Authority were reasonable under section 10(d) of the
Shipping Act of 1984. Such claim merely begs the question whether
negotiations of lease terms are a discretionary or ministerial act.\3\
Leaving aside the nature of the negotiation process under review for
the moment, it is self-evident, that what may be ``reasonable'' to MPA
is not necessarily ``reasonable'' to Premier. Thus, without casting
doubt upon the intent or motivations of either party, the Commission
can easily envision a scenario where, after offering what seems like an
eminently reasonable lease, MPA's offer is rejected by Premier
nonetheless.
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\3\ In the Seventh Circuit, a ministerial act has been defined
as an act ``in which a person performs in a given statement of
facts, in a prescribed manner, in obedience to the mandate of legal
authority, without regard to, or the exercise of his own judgment
upon the propriety of acts being done.'' Adden v. Middlebrooks, 688
F.2d 1147, (7th Cir 1982). Further, courts in the Ninth Circuit have
defined a discretionary act as that ``which requires the exercise of
personal deliberation, decision and judgment.'' White v. Conlon,
2006 WL 1663574 (D.Nev. 2006). A ministerial act is ``an act
performed by an individual in a prescribed legal manner in
accordance with the law, without regard to, or the exercise of, the
judgment of the individual.'' Id.
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It was this dichotomy that appears to have most impressed both the
ALJ and the District Court. As noted by Administrative Law Judge
Krantz:
In this case we have only the almost infinitely elastic term
``commercially reasonable'' to define what state officials are
required to do. In seeking to require MPA to proffer a
``commercially reasonable'' lease, Premier has cited provisions it
finds undesirable in the three rejected lease offers, and others
that it finds desirable in the leases of six other tenants of the
MPA.
A decision for Premier would require the MPA to offer a new
lease. If that proposal were unacceptable to Premier the Commission
(or the Administrative Law Judge) would presumably need to determine
whether that offer was commercially
[[Page 34020]]
reasonable and, if it were not, to require MPA to make a new, more
favorable lease offer.
Ruling on Motion to Dismiss, at 5. Rather more tersely, the District
Court concluded:
In fact, the Court finds no evidence to undermine the conclusion
that, in negotiating with Premier, MPA was acting in a reasonable
manner to advance legitimate goals, consistent with its legislated
purpose.
Memorandum in Civil Action WMN-06-1733 (October 31, 2006), at 24, 25-
26.
In the instant case, the Commission concludes that negotiation of a
leasehold interest is inherently a discretionary process. See, Ponca
Tribe of Oklahoma v. State of Oklahoma, 37 F.3d at 1436 ``[t]he act of
negotiating * * * is the epitome of a discretionary act. How the state
negotiates; what it perceives to be its interests that must be
preserved; where, if anywhere, that it can compromise its interests--
these all involve acts of discretion.''; Seminole Tribe of Fla. v.
State of Florida, 11 F.3d 1016 (11th Cir. 1994) (rejecting application
of Ex parte Young); Poarch Band of Creek Indians v. State of Alabama,
784 F.Supp. 1549 (S.D. Ala. 1992) (rejecting Ex parte Young claim where
relief would require ordering the governor to exercise his discretion
in negotiating with the Plaintiff). But see, Spokane Tribe of Indians
v. State of Washington, 790 F.Supp 1057 (E.D. Wash. 1991); Elephant
Butte Irrigation Dist. v. Dept of Interior, 160 F.3d 602 (10th Cir.
1998). Accordingly, the Commission finds that Premier's action falls
outside the scope of Ex parte Young.
Adequacy of Relief under the Shipping Act
In any event, we believe that in enacting the Shipping Act of 1984,
the Congress created a remedial scheme which provides adequately for
relief to be extended to complainants, such as Premier, without resort
to extraordinary procedures made available under Ex parte Young. See
Schweiker v. Chilicky, 487 U.S. 412, 423 (1988) (``When the design of a
Government program suggests that Congress has provided what it
considers adequate remedial mechanisms for constitutional violations
that may occur in the course of its administration, we have not created
additional * * * remedies.'') Under authority conferred through the
Shipping Act, as amended, the Commission has long administered programs
which directly regulate government-owned and operated ports as well as
the practices and operations of government-controlled carriers.
In Federal Maritime Comm'n v. South Carolina State Ports Authority,
supra, the Court was called upon to determine whether state sovereign
immunity would preclude the Federal Maritime Commission from
adjudicating a private party's complaint that a state-run port violated
the Shipping Act of 1984. Although commenting favorably that the ``FMC
administrative proceedings bear a remarkably strong resemblance to
civil litigation in federal courts,'' 535 U.S. at 757, the Court
stated:
* * * we hold that state sovereign immunity bars the FMC from
adjudicating complaints filed by a private party against a
nonconsenting State. Simply put, if the Framers thought it an
impermissible affront to a State's dignity to be required to answer
the complaints of private parties in federal courts, we cannot
imagine that they would have found it acceptable to compel a State
to do exactly the same thing before the administrative tribunal of
an agency, such as the FMC.
535 U.S. at 760. Responding to the argument that federal regulation of
maritime commerce limits sovereign immunity, the Court replied:
``[e]ven when the Constitution vests in the Congress complete
lawmaking authority over a particular area, the Eleventh Amendment
prevents congressional authorization of suits by private parties
against nonconsenting States.'' Ibid. Of course, the Federal
Government retains ample means of ensuring that state-run ports
comply with the Shipping Act and other valid federal rules governing
ocean-borne commerce. The FMC, for example, remains free to
investigate alleged violations of the Shipping Act, either upon its
own initiative or upon information supplied by a private party, see,
e.g. 46 CFR 502.282 (2001). Additionally, the Commission ``may bring
suit in a district court of the United States to enjoin conduct in
violation of [the Act].'' 46 U.S.C. App Sec. 1710(h)(1). Indeed,
the United States has advised us that the Court of Appeals' ruling
below ``should have little practical effect on the FMC's enforcement
of the Shipping Act,'' Brief for United States * * *
535 U.S. at 767-68, citing Seminole Tribe of Fla. v. Florida, supra
(footnote omitted).
Inasmuch as Congress has prescribed remedial measures to address
violations of statutorily created rights, the courts should hesitate
before casting aside such measures in favor of the judicially-
prescribed protections of Ex parte Young. Id. at 74, citing Schweiker
v. Chilicky, 487 U.S. 412, 423 (``where Congress had created a remedial
scheme for the enforcement of a particular federal right, we have, in
suits against federal officers, refused to supplement that scheme with
one created by the judiciary.''). Accordingly, as the private parties
herein remain free to complain to the Commission about unlawful state
activity and the agency has authority adequate to the cause of
investigating and taking action thereon, the fundamental justifications
for the creation of Ex parte Young are not implicated. We see no sound
reason to supplement the existing statutory remedies (Commission
enforcement of the Shipping Act directly against state related
entities) by extending Ex parte Young to privately-filed Shipping Act
complaints. Schweiker v. Chilicky, supra; Seminole Tribe of Fla. v.
Florida, supra, 517 U.S. at 74. Interpreting Ex parte Young as applying
in every case where injunctive relief is sought constitutes the sort of
``empty formalism'' that undermines sovereign immunity. Coeur d'Alene,
supra, 521 U.S. at 270.
IV. Conclusion
For the foregoing reasons, the Commission denies the exceptions of
Premier Automotive Services, Inc. from the Order dismissing the
verified complaint; and affirms the Administrative Law Judge's initial
decision to the extent consistent with this order.
Wherefore, it is ordered, that the above captioned proceeding is
dismissed.
By the Commission.
Karen V. Gregory,
Assistant Secretary.
[FR Doc. E8-13489 Filed 6-13-08; 8:45 am]
BILLING CODE 6730-01-P