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Federal Appeals Court Tosses Case by the Waterfront Commission Against the New Jersey Governor

Federal caselaw has long made it clear that states may not be sued in federal court unless they have consented to such suit or unless Congress has narrowly subjected a state to such suit through legislation. Otherwise, federal courts lack subject matter jurisdiction over lawsuits brought against the various states.

This immunity afforded the states was a key enticement for the original ratification of the Constitution in the first place. It was important at that time that the states generally be immune from the reach of our federal courts. It’s still important today as evidenced by the just decided case called Waterfront Commission of New York Harbor versus Governor of New Jersey. That case was decided by the federal Court of Appeals in June of this year.

The Waterfront Commission was created by both states and approved by Congress as an interstate compact in the early 1950s. Its purpose was to combat corruption at the waterfront shared by both states. As the opinion explains, over the past few decades much of the marine traffic has moved over to New Jersey because New Jersey has deeper waters and has devoted resources to enable this commerce to thrive in New Jersey. According to the decision, New Jersey believed that because much of the work had moved over to New Jersey, the dual state function of the Commission became less important, increasingly becoming an impediment to New Jersey’s growth.

In response, the New Jersey Legislature adopted a statute that was signed by then-Governor Christie which withdrew our participation from the compact. New Jersey’s withdrawal would lilely starve the Commission of the funding it needed to function.

Not wanting to go down without a fight, the Waterfront Commission filed suit in federal court seeking to block the state legislation. However instead of filing suit against the State of New Jersey, it filed suit against the New Jersey Governor. In doing so, the Commission apparently hoped that the case would survive in federal court under a narrow exception that allows some cases to continue against government officials rather than the state.

The federal District Court denied New Jersey’s motion to dismiss the complaint and granted the Commission’s request for an injunction precluding the legislation from going into effect.

But the Third Circuit Court of Appeals had a completely different outlook with regard to this case. It found that even though the case was one filed against the New Jersey Governor, in reality it was a case filed against the State of New Jersey because it involves New Jersey State action and New Jersey State funding. The appeals court recognized that naming the Governor as the defendant was simply an attempt to avoid dismissal based on the grounds that one cannot sue a state in federal court. The court of appeals held the trial court lacked subject matter jurisdiction and should not have allowed the case to go forward in the first place.

The Third Circuit concluded that the lawsuit impinged upon New Jersey’s sovereign immunity and as a result the trial court did not have jurisdiction over the litigation. For that reason, the Third Circuit took the fairly unusual action of vacating the trial court’s order granting summary judgment to the Commission and reversed the Order denying the Governor’s Motion to Dismiss. In addition, the lawsuit was remanded to the trial court for dismissal of the litigation.

This lawsuit is rather significant because it boldly reaffirms the applicability of sovereign immunity, the concept that as a general rule, with very few narrow exceptions, states cannot be sued in federal court. This appeals court decision makes it clear that federal courts will jealously guard their subject matter jurisdiction and will reject the efforts of those who seek to improperly invoke federal court jurisdiction in a case that really involves the state.

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