By the Commission: Commissioners Joseph E. Brennan and Harold J. Creel, Jr.; with Commissioner Rebecca F. Dye, dissenting.
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.
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.
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. MDOT, MPC and MPA are not named as parties.
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 Start Printed Page 34018liable 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
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.
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.
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 Start Printed Page 34019private 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);  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:
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 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. 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.
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 Start Printed Page 34020reasonable 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 § 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.
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.Start Signature
By the Commission.
Karen V. Gregory,
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.Back to Citation
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).Back to Citation
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.Back to Citation
[FR Doc. E8-13489 Filed 6-13-08; 8:45 am]
BILLING CODE 6730-01-P