SOUTH CENTRAL BELL TELEPHONE v. ALABAMA

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Argument of Mark L. Evans

Chief Justice Rehnquist: We'll hear argument next in No. 97-2045, South Central Bell Telephone Company v. Alabama.

Mr. Evans.

Mr. Evans: Thank you, Mr. Chief Justice, and may it please the Court:

After this Court granted certiorari in this case, respondents adopted a surprising strategy.

In their brief on the merits, they refused to address the two issues on which the Court granted review and instead offered up lengthy arguments on issues that the Court had not agreed to review and, in fact, arguments that respondents had not made or mentioned in their brief in opposition.

And then in yet another surprise about 2 weeks ago, respondents later withdrew one of those three arguments in their... in their merits brief.

Barring another surprise today, therefore, what we are left with are two arguments, neither of which can succeed unless the Court is prepared to overrule a very large number of its Eleventh Amendment and Commerce Clause precedents.

To bring the case rather briefly back to where it started, the Court granted certiorari to consider two questions: one involving Alabama's use of res judicata as a bar against a constitutional challenge to an Alabama State tax brought by taxpayers who were complete strangers to the prior judgment that was asserted as a bar, and the second involving the lawfulness of Alabama's franchise tax under this Court's Commerce Clause precedents

Now, although respondents put up a defense on both of these issues in their brief in opposition, they obviously chose not to do so again in their merits brief.

And I think I can understand why.

It's because both issues are controlled by this Court's recent and frequently unanimous precedents.

The due process in our case is a near... in our... in our judgment is a near clone of Richards against Jefferson County, which was decided less than 3 years ago by a unanimous Court in another case that came from Alabama.

And the Commerce Clause question is controlled by Fulton against Faulkner and in another recent Commerce Clause decisions of this Court that have condemned facially discriminatory taxes and that have narrowed the complementary tax doctrine.

I don't think I will belabor these points because they are not contested at this point, but as we explained in our brief, the Alabama franchise tax is unlawfully discriminatory because it taxes Alabama corporations based on the par value of their capital stock, a figure that they are utterly free to set and adjust as they wish without any effect on their business operations.

But it taxes out-of-State corporations based on the capital actually employed in the State, in other words, based on their business operations in Alabama.

In our view there's no... no need to look any further because any tax that allows in-State corporations to, in effect, determine their own tax liability and not out-of-State corporations is facially discriminatory.

In their merits brief in this Court, respondents obviously have abandoned their defense on both of these issues, and they've raised three new issues, one involving the jurisdiction of the Alabama State courts, one challenging this Court's appellate authority under the Eleventh Amendment, and one attacking the entire body of this Court's negative Commerce Clause jurisprudence.

The first of these issues need not concern the Court any longer because 2 weeks ago Mr. Cooper wrote a letter to the clerk withdrawing his jurisdiction argument and acknowledging that it was in error.

And in our view...

Justice Ginsburg: Mr. Evans, may I just...

Mr. Evans: Yes.

Justice Ginsburg: ask to... I... I take it, from what you've said so far, that... that Justice See on the Alabama Supreme Court who spoke before on the nine... that his position is essentially right.

Is that...

Mr. Evans: Yes, exactly right.

Justice See actually... just... just one minor correction... spoke for three with another who did not join the opinion but... but also dissented.

In our view, the Court need not reach any of the other issues that... either of the other issues that respondents raise here because they've waived those arguments by not presenting them in their brief in opposition.

But if the Court does reach the issues, we believe the Court should reject both of these arguments.

Both ask the Court to overrule rafts of its own precedents without any serious justification in our view.

The Eleventh Amendment theory is that in actions brought against the State in State court with the State's consent, this Court has no constitutional power at the end of the... the end of the process to review a resulting State court judgment raising Federal questions and... and deciding them in the favor of... in favor of the State.

But that issue was unanimously resolved against respondents' position just 9 years ago in McKesson, and respondents have provided no good reason to revisit it.

And in their negative Commerce Clause argument, the respondents ask the Court to nullify a principle the Court has embraced for at least a century and a half and that has engendered enormous reliance throughout the Nation's economy.

And moreover, they ask the Court to do this in the least controversial aspect of the negative Commerce Clause, one that invalidates State laws that... that facially discriminate against interstate commerce.

As we explain in our reply brief, there is simply no reason to do either of these things.

Neither of the doctrines that we're talking about were announced and splintered or badly reasoned opinions that reflected departure from established precedent.

Neither has proved unworkable.

Some members of the Court have questioned what they view as excesses in the application of the negative Commerce Clause, but even those members have regularly expressed a willingness to continue to apply the core principle of anti-discrimination.

And finally, it's not insignificant that Congress has power to alter the effects of both of these jurisprudential principles.

Under the negative Commerce Clause, they can exercise authority to permit the States to do what respondents here would like to be able to do, and even under Article III, Congress could restrict this Court's appellate authority if it felt it was appropriate to do so.

And the Court's precedents have repeatedly made clear that stare decisis has extra force where Congress can itself make changes in the Court's decisions.

Chief Justice Rehnquist: Mr. Evans, do you think the... the Congress could cut off this Court's appellate jurisdiction, say, just in Commerce Clause cases?

Mr. Evans: I... I don't know the answer to that, and it's clearly not something we need to worry about at the moment.

But I think it would raise an interesting question, and it may well be able to do that under... under its Commerce Clause authority.

It would be an interesting question I think constitutionally whether that is appropriate or not.

Justice Scalia: But it can reverse our Commerce Clause decisions.

Mr. Evans: That's for sure.

This... one of the things that I've noticed recently, in this term even, is that the Court has repeatedly refused to consider arguments raised by respondents as alternative grounds for affirmance that have not been preserved, sometimes invoking rule 15.2, sometimes not.

And the most recent was in El Al Airlines just last week where the Court declined to consider an argument that was not presented in the brief in opposition.

Earlier this term, there was a case called Knowles.

So, from the point of view of petitioners, the Court should not address either of these new arguments that have been made by respondents, but should simply decide the questions on which it granted certiorari, reject the arguments that respondents made in their brief in opposition on those grounds, reverse the judgment, and remand it for provision of appropriate relief consistent with the Court's precedents.

Justice Scalia: In any of those cases, was the new argument that we rejected an argument to the effect that we have no jurisdiction?

Mr. Evans: There are cases, Justice Scalia, in which... at least two cases in which the Court has recently said that if a State does not raise an Eleventh Amendment argument, it need not be considered.

And in one case, Patsy...

Justice Scalia: Is that because that may not be a jurisdictional argument?

Mr. Evans: Well, that's right.

It has... it has... as the Court has put it, it partakes of jurisdiction in the sense that it can be raised later in the process than at the first instance, but it is not jurisdictional in the sense that the Court must consider it on its own motion.

And in... in fact, in Patsy, where the argument was raised in a brief in opposition but not pursued in the merits brief, the Court felt no obligation to consider it.

Justice Scalia: I think you have to make that point because... I think you have to make that point because if it is strictly speaking a jurisdictional...

Mr. Evans: Yes.

Justice Scalia: point, not only do we have to entertain it if... if the respondent raises it here for the first time or the petitioner, indeed we have to entertain it on our own, even if he doesn't raise it here for the first time.

Mr. Evans: I... I fully agree.

Chief Justice Rehnquist: Well, there's some earlier Eleventh Amendment cases, aren't there, Reed Detective and that Indiana case, that say it can be raised here for the first time?

Mr. Evans: It can be raised here for the first time, and I'm not suggesting anything to the contrary, but it needs to be raised properly.

And here, where in... in these more... in Patsy where it was not raised properly in the merits brief, even though it had been raised here, the Court felt no obligation to consider it.

Here, what I think is even worse, it was not signaled to the Court in the brief in opposition, but showed up for the first time in the merits brief.

Certainly a respondent could not come here and make an argument for the first time in oral argument.

There's some requirement of propriety about when something must be presented, and this Court has every reason to disregard an argument that shows up for the very first time in the brief on the merits.

Justice Stevens: Mr. Evans, what are the two cases you were saying where we had done this before?

Mr. Evans: The case called Knowles, K-n-o-w-l-e-s, which was decided earlier this term, footnote 2, which refused to consider an alternative argument presented for the first time in the merits brief and not in the brief in opposition, and El Al Airlines, which again was not preserved in the... where the argument was not preserved in the merits brief, and that was in footnote 10 of that decision.

Justice Breyer: Well, I don't see why... why is it inappropriate to raise this?

What he's raised in the Commerce Clause is an argument he couldn't really raise before this Court.

I mean, the argument previously was whether or not the Commerce Clause jurisprudence was properly applied, and... and now he agrees that Alabama was wrong.

They didn't apply it properly.

But he's saying that the cases of this Court which set it forth are wrong and we should overturn them.

Well, I don't it's fair to ask him to have raised that before the lower court...

Mr. Evans: And I'm not... Justice Breyer, I'm not asking that they do... that the respondents have any obligation to do that.

If they want to present that argument here...

Justice Breyer: Yes.

Mr. Evans: they can.

But they do have an obligation to present it in their brief in opposition, in part, to give notice to petitioners so that we can consider briefing the issue in the opening brief, but more importantly, for this Court's control of its own docket, to know what it is buying into when it grants certiorari.

Justice Stevens: And also to give notice to the amicus.

Mr. Evans: And to the amici, absolutely.

Justice Ginsburg: And that's why we have it in our rules, that if you want to bring it up, put it in the brief in opposition and not for the first time in the respondents' brief.

Mr. Evans: That's right, Justice Ginsburg.

Unless the Court has further questions, at this point I will reserve the balance of my time.

Argument of Charles J. Cooper

Chief Justice Rehnquist: Very well, Mr. Evans.

Mr. Cooper?

Mr. Cooper: Mr. Chief Justice... excuse me... and may it please the Court:

The argument that has preceded me has crystallized, I think, two issues: one with respect to our Eleventh Amendment argument, one whether or not it is appropriate for it to be taken up and considered by the Court in light of the fact that it was not mentioned in the opposition to the certiorari; and second, if it is, whether it has merit

This Court's rule 15.2 says that we may waive an objection based upon what occurred in the proceedings below if the objection does not go to jurisdiction.

Go to jurisdiction.

We submit to the Court that the Eleventh Amendment goes to the jurisdiction of this Court.

Just a little over 2 years ago, this Court in Seminole Tribe said that the Eleventh Amendment stands for the constitutional principle that State sovereign immunity limited the Federal courts' jurisdiction under Article II.

The Court has repeatedly stated that the Eleventh Amendment, for example, in the Ford case which really is on all fours with our circumstance here, the Ford Motor case...

Justice Ginsburg: Mr. Cooper, may I interrupt you with this point to read from a unanimous opinion 9 years ago with which you are no doubt familiar.

It says, the Eleventh Amendment does not constrain the appellate jurisdiction of the Supreme Court over cases arising from State courts.

Period.

Now, that... you are asking us to overrule a unanimous 9-year-old decision.

Is that correct?

Mr. Cooper: That is accurate, Justice Ginsburg.

I have many reasons for that request that I... that I will... that I will address, but...

Justice Ginsburg: May I ask you also as an anterior question, do we take it that you are not pursuing any of the... the questions that were in... raised originally?

You are... you are not defending the res judicata point that the Alabama court relied on and you're not defending their analysis of the discriminatory tax.

Mr. Cooper: Justice Ginsburg, that is accurate.

We are saying that the Commerce Clause merits argument is that we... we're entitled to prevail on that but not because of the Alabama Supreme Court's correct application of the Commerce Clause precedents, but rather because, as three members of this Court argued not long ago, the dormant Commerce Clause cases are not well considered, and the Court should carefully reexamine those arguments that were advanced by those...

Justice Ginsburg: But so, if we don't... if we don't accept these new arguments you're presenting today, then you agree that we must reverse the... the judgment.

Mr. Cooper: Unless some member of this Court can think of a different argument, Justice Ginsburg, for upholding the Alabama Supreme Court's decision, that is accurate.

Our premise argument however, Justice Ginsburg, is that this Court cannot reach the merits of this issue because of the Eleventh Amendment.

And again, Ford Motor Company, which I think the Chief Justice was referring to earlier, the Indiana case, Your Honor, is on, we believe, all fours in terms of the ability of the Court to take the case up.

There the... the State of Indiana did not raise the Eleventh Amendment in the district court.

It didn't raise it in the Seventh Circuit.

It didn't raise it in its op cert. In fact, it raised it in its merits brief because...

Justice Stevens: Of course, we've changed our rules on what the brief in opposition has to include since the City of Tuttle... Oklahoma City against Tuttle I think.

Mr. Cooper: If... if the... if this is not a jurisdictional point, if this issue doesn't go to jurisdiction, then the Court could certainly exercise its discretion not to reach the issue.

It's our submission, Justice Stevens, that the Eleventh Amendment and this Court's consistent understanding and application of it...

Justice Breyer: I don't understand your rule actually.

I mean, this is... can you explain?

The copy I have, which may be... it says, any objection... any objection to consideration of a question presented, based on what occurred in the proceeding below, if the objection does not go to jurisdiction, may be deemed waived.

I take it yours is not an objection based on what occurred in the proceeding below.

Mr. Cooper: Not at all, Justice Breyer.

In fact...

Justice Breyer: Then this rule doesn't cover it.

Mr. Cooper: Well, this... this... the element...

Justice Breyer: Is that an argument?

I don't know.

I haven't focused on this rule.

Mr. Cooper: Oh, it's... it is absolutely our argument, Justice Breyer.

Our... our contention is not that the Alabama Supreme Court was barred by the Eleventh Amendment.

We don't have a problem with what... what took place below.

It is that what took place below, the adjudication of the merits of the issue, can't take place here.

That... that is our argument.

And the reason it can't take place... so, we have a double argument under the... under rule 15.2, Justice Breyer.

That's point number one.

But point number two is in any event, the Eleventh Amendment goes to jurisdiction.

Justice Stevens: Well, a better practice under rule 15 under the previous part of the rule, two sentences previous as to what Justice Breyer quoted, is for you to notify the Court what issues are properly before us, including jurisdictional issues.

Justice Kennedy: You don't think you can just lay back...

Mr. Cooper: No, Your Honor.

Justice Kennedy: from the standpoint of good practice and not tell us about jurisdictional issues.

Mr. Cooper: No, Your Honor.

We regret that this point was not mentioned in the opposition to certiorari.

It would have been better practice if it had been.

The part of the rule, however, that goes to and alerts counsel to the possibility of waiving an argument speaks to jurisdiction and it speaks to objections based upon what occurred below.

Justice Breyer: I understand.

Mr. Cooper: And with all due respect, we maintain that this Court actually doesn't have discretion in a jurisdictional argument that is waived... that is asserted to the Court to... to not reach the issue.

Again...

Justice Ginsburg: Mr. Cooper, this is... this is the problem, as I see it, with fair notice.

One could hardly anticipate such a question given that there was a unanimous decision 9 years ago addressing precisely that question and rejecting your position.

So, the petitioner could hardly expect that that would be an issue in this case, and that's why this is so troublesome, that you're bringing up something that one really could not have anticipated.

Mr. Cooper: Your Honor, all I can say is that the issue, again, goes to jurisdiction.

The question is whether or not... I think there are two different questions, whether it would have been better practice, and certainly it would have, to have mentioned this in the opposition to certiorari.

The issue had been spotted that in fact what we have in this case is a suit in which... that was commenced by the petitioners, none of whom are citizens of Alabama, against the State of Alabama and its Department of Revenue, State defendants.

And if this Court exercises... does reach the merits, it will be exercising the judicial power of the United States.

The case is squarely within the very letter of the Eleventh Amendment, and it is our respectful submission to the Court that the McKesson case, for a number of reasons, was simply wrong.

In fact...

Justice Scalia: If... if it is a jurisdictional objection based upon sovereign immunity, which is what you assert, right, the Eleventh Amendment being a reflection of sovereign immunity, sovereign immunity is normally waivable, isn't it, by the sovereign?

So, I mean, it may be jurisdictional, but... but maybe it's a peculiar... it has to be a peculiar kind of jurisdiction.

Mr. Cooper: Your Honor, sovereign immunity can be waived, but this Court's decisions have clearly stated that sovereign immunity must be waived in the most unequivocal way, that...

Justice Ginsburg: Not this particular situation of... of appellate review by the Supreme Court.

This was not just a offhand statement.

This is a very heavily footnoted, 5-page discussion of the issue, citing cases going back to Martin against Hunters Lessee.

Mr. Cooper: You're referring to McKesson?

Justice Ginsburg: Yes.

Mr. Cooper: Well, Justice Ginsburg, since that case was decided, the Seminole Tribe case has been decided, and four members of this Court characterized the reasoning in McKesson as being specious, particularly in light of the Seminole Tribe case.

And I would...

Justice Souter: They were also the same four who would find Federal question jurisdiction here.

Mr. Cooper: Yes, Your Honor, but if there is Federal question jurisdiction, if... if... if the Eleventh Amendment does, indeed, bar a Federal question case, that is, a case as in Seminole brought by a citizen of the State against the State, then the Court's analysis... or the dissenting Justices' analysis in Seminole Tribe, it seems to us, is precisely correct.

Justice Kennedy: Well, of course, those... those who agreed with the majority position did so on the assumption that the Supreme Court had jurisdiction.

If that assumption were to change, then those who were in the majority in McKesson might rethink the correctness of the position advanced in the dissent.

Mr. Cooper: Might as well, Your Honor, and it may well be that here my argument is focused more specifically on the five members of the Court in the... in the majority in Seminole Tribe.

But McKesson, Justice Ginsburg, while it was a unanimous decision, was premised upon... its central linchpin was the Cohens case, and it... it is simply based, we respectfully submit, on a serious misreading of the Cohens case.

That case involved...

Chief Justice Rehnquist: You don't challenge the Cohens case itself, I take it.

Mr. Cooper: No, not at all, Your Honor.

It seems that the Cohens case, Your Honor, is... is quite correct.

It simply stands for the proposition that a... when a State commences a suit against an individual, that is not a... an individual commencing a suit against the State.

And so, it's not within the language of the Eleventh Amendment, number one.

It's not within the purpose of the Eleventh Amendment.

A State doesn't need immunity to...

Justice Ginsburg: Why isn't it within the language if it's... if it's... the State brings the proceeding, but the person who's bringing it to the Supreme Court on writ of error, or whatever it is, is going against the State at that point.

I don't understand why that wouldn't...

Mr. Cooper: Your Honor...

Justice Ginsburg: You say, oh, and the language in one case... in the Cohen case, the language covers it.

In the case where the parties are on opposite sides, it doesn't?

Mr. Cooper: Your Honor, Chief Justice Marshall examined that very issue at length.

In fact, we've excerpted on page 19 of our briefing the analysis of... of the Court in Cohens that went to that issue.

And the... the central point is that a suit for purposes of the Eleventh Amendment is a judicial proceeding instituted by an individual that seeks some demand upon the State, some demand upon the State.

And that character doesn't change when a writ of error is taken to this Court to review a decision.

The... the individual is still seeking a demand upon the State.

So...

Justice Stevens: Your view of... just to kind of... your view is that any proceeding in a State court brought against the State by a citizen of another State could never be reviewed by this Court.

Mr. Cooper: If... if the State itself is the party defendant...

Justice Stevens: Right.

Mr. Cooper: as opposed to an officer of the State.

And, Your Honor, in this very case, the Commissioner of Revenue was a party until the case went to the Alabama Supreme Court.

He was dropped out at that stage, and this Court could have considered this very decision... this very case had the Commissioner remained in under this Court's decisions in the Ex parte Young.

Justice Stevens: Would the respondent have... would it be within the judicial power of this Court to grant a motion by the respondent at this stage of the proceedings to add that individual as a defendant in order to preserve the jurisdiction and review?

Mr. Cooper: I do not think it would be, Justice Stevens.

I think whether or not the Commissioner is a party to this suit as a defendant depends upon whether he was a party in the Alabama Supreme Court under this Court's rules.

And it is clear from a case called Sperau, which we cite and discuss in footnote 1 of our briefing, that... that when the Commissioner was not named in the notice of appeal from the Circuit Court of Montgomery County to the appellate courts, that the Commissioner was no longer a party.

The court there said it is settled law that a notice of appeal from a judgment in favor of two or more parties must specifically name each party whose judgment the appellant wishes to overturn.

And this...

Justice Stevens: Let me go back a second.

I understand your response to that and I think it's probably correct.

But does it... what is your view of suing individuals in their official capacity, with the Eleventh Amendment as usually taken, to bar such a suit?

Can they... could... could under your view an out-of-State plaintiff avoid the Eleventh Amendment problem, when it's thinking it may need review in this Court ultimately, by suing State officials in their official capacity?

Mr. Cooper: Yes.

Yes, Your Honor, under Ex parte Young.

And...

Justice Scalia: To get money out of the State treasury?

Mr. Cooper: No.

Justice Scalia: To get back money which they have... they claim was erroneously paid into the State treasury?

Mr. Cooper: No, Justice Scalia, but they can certainly prevent it from going forward, and that's the purpose of Ex parte Young.

The question here I guess would be...

Justice Scalia: You're trying to get it back, though, aren't you?

Are you trying to get it back or are you trying to prevent its payment?

Mr. Cooper: Oh, I'm obviously trying to prevent its payment, Your Honor.

I represent the State.

Justice Ginsburg: But they're trying to get it back.

Justice Scalia: To the extent... these... these plaintiffs here... I thought they had coughed it up already.

Mr. Cooper: Well but, Your Honor, they... they...

Justice Scalia: So, they're trying to get money back out of the State treasury.

Mr. Cooper: Not just to get it back.

They also sought injunctive relief to prevent the collection in the future of this tax, and that, Justice Stevens, would be a case that if the Commissioner were still in this...

Justice Ginsburg: But you're saying that they have nothing... nothing... no way of getting back... getting a refund.

This is a suit for a refund.

Mr. Cooper: Well, they... they... they have the Alabama court system for getting back a refund.

The question is whether or not...

Justice Ginsburg: Yes, but whatever Alabama says, this Court has no... and it's a Federal question that we're dealing with.

Alabama will be the final word on that Federal question with respect to outsiders.

Mr. Cooper: With respect to this suit, yes, Justice Ginsburg.

Justice Ginsburg: Well, all taxpayers from out-of-State.

Justice Scalia: With respect to all suits involving a claim for money.

Mr. Cooper: Well, but I... I want to hasten to note, as the Court pointed out in Seminole Tribe, that there are... there are several methods where ongoing violations of the... of the Constitution, if that's what this is, can be prevented.

The United States can bring an action.

An Ex parte Young action can be brought.

The Congress can decide to abrogate the State's sovereign immunity.

Chief Justice Rehnquist: What would be the authority for the United States to bring an action in a case like this where you're talking about the negative Commerce Clause?

Mr. Cooper: Well, Your Honor, I... I think that... I don't have a case to cite the Court that the United States would have authority on that score, but at least broadly considered, the United States can sue a State and there's no... there's no Eleventh Amendment problem to this Court's jurisdiction over that.

Chief Justice Rehnquist: Well, do you think the United States can just go around and sue a State whenever it feels like it?

Mr. Cooper: Oh, no.

No, Your Honor.

That's... that is not my submission.

But... but I think the key point here is that Ex parte Young would... would provide the taxpayers relief with respect to going forward.

But...

Justice O'Connor: But in any event, for... for you to prevail here, I guess we would have to overturn McKesson and ignore our own rule as a minimum.

Mr. Cooper: Your Honor, I think... I think that the Court need not... if you're speaking about rule 15.2, I believe the Court can apply its rule and... and reach the Eleventh Amendment.

That is our submission.

I do also believe, however, that yes, it is true that McKesson was wrongly decided.

The Court should reexamine it, and... and it should overrule it.

Your Honor, sovereign immunity... inherent, Justice Ginsburg...

Justice O'Connor: This is the kind of argument that one would certainly hope that amici would focus on and be interested in.

Nobody had a clue it was going to be raised until your remarkable brief appeared here in this Court.

Mr. Cooper: Once again, Justice O'Connor, the Eleventh Amendment argument is a constitutional one.

It is a jurisdictional one, and it is our respectful submission to the Court that the State can raise this in its... in its merits briefs.

By no means did it waive its sovereign immunity in this... in this case.

And, Justice Ginsburg, with respect to the notion that... that the petitioners here would have no Federal avenue of appellate review, inherent in the notion of sovereign immunity is... and inherent in the notion of the Eleventh Amendment is that the Federal courts are precluded from taking jurisdiction over a case brought against non-citizens against the State itself.

And this is a case against the State itself.

Justice Breyer: Once you hold that... once you say that, you know... once you treat the Eleventh Amendment as including citizens of a State against a State, which I take it we have to read into it... right?

Isn't that so?

Mr. Cooper: Well, that's the Hans case, Your Honor.

Justice Breyer: Yes, all right.

So... so then could... is it reasonable that the thing... if we accepted your view of the statute that this applies to the Supreme Court, cases coming out of the State courts, then wouldn't there have been a large subset of cases where it would have been impossible or difficult to enforce a uniform Federal law striking down unconstitutional State statutes, that power that Holmes thought was absolutely essential to create a Federal Nation?

I... I think if your... if your view had been adopted back then and we had Hans, there would have been a whole subset of potential unconstitutional State laws that it would have been impossible for the... or State laws that conflict with the Federal statute, that it would have been impossible or difficult for the Supreme Court ever to reach.

So, you would have had that.

Now, is... now, you're going to deny that, and I'm very interested in your reasoning.

Mr. Cooper: Well, Justice Breyer, I think that the point I would make to you is that if Chisolm, in Chisolm against Georgia, had advanced a Federal cause of action, I don't think that the State's reaction would have been any different.

It would have... the general alarm that swept the... the country when the Supreme Court took jurisdiction over that State law claim against the State would not have... I would submit to you would not have been different if a Federal constitutional claim had been included in it.

And, in fact, the... the Congress and the ratifiers of the Eleventh Amendment would have used exactly the same words in order to reach what happened there.

This... this Court's...

Justice Breyer: The only way it could have reached the Supreme Court would be if the States basically had waived their sovereign immunity within their own courts.

Right?

Otherwise, the issue couldn't have come up.

Mr. Cooper: Well...

Justice Breyer: And if it had come up in that form, what would have been the objection to the Supreme Court hearing it?

Mr. Cooper: Two points, Your Honor.

First, that the... this Court has recognized that a... a State's waiver of its own State sovereign immunity in its own courts doesn't... in Atascadero, the Court made clear that the waiver of sovereign... of the Eleventh Amendment must be specifically worded.

So, Alabama's waiver here does not include a waiver of its Eleventh Amendment because it doesn't mention the Federal... the Federal court.

And the... as I say, in the Chisolm case, the... if... if there had been a contract clause or... and that was an original action.

But, Your Honor...

Justice Breyer: So, your answer to me is, well, the Eleventh Amendment does create such a subset of cases.

All the State has to do is keep out of the courts.

And... and this doesn't make matters that much worse.

That's the answer.

Mr. Cooper: That's... that's... that's essentially it, Your Honor.

But... but I think the Court's focus on... on... on Chisolm is... or at least on the origins of the Eleventh Amendment is... is... is well taken.

Chief Justice Rehnquist: Well, does your... does your doctrine that you're espousing now have a Ex parte Young exception to it?

Mr. Cooper: Your Honor...

Chief Justice Rehnquist: So that you could sue... you could sue the Alabama Revenue Commissioner in... in... in State court and bring that suit here if it was decided against you on a Federal ground.

Mr. Cooper: Yes, Your Honor.

Justice Stevens: For refund?

For refund, is it?

Mr. Cooper: No.

Thank you, Justice Stevens.

I think that's an important amendment.

I think Ex parte Young only goes as far as Ex parte Young, but I think it's available to the petitioners in this case and it would... and it would allow the case to be brought to this Court as an at least...

Justice Ginsburg: How... how many years was, Mr. Cooper, this case in litigation, this refund claim?

Mr. Cooper: Your Honor, the... the refund claim I think was in the Alabama court somewhere on the order of a decade.

Justice Ginsburg: Yes, and all that time the corporation must pay the tax, and on your Ex parte Young theory, maybe there could be a prospective relief, but for all those 10 years, the Federal Court, this Court, is unable to say that the State law was unconstitutional.

And there's no remedy at all for 10 years of unconstitutional behavior on the part of the State.

Mr. Cooper: Your Honor, I think that's... I think that is the consequence, the unavoidable consequence, of sovereign immunity.

I think that is inherent in the notion of sovereign immunity.

Justice Ginsburg: And that would certainly run counter to Justice Breyer's reference to Holmes saying it wouldn't matter so much if this Court didn't have the authority to declare an act of Congress unconstitutional, but if it lost that power with respect to State laws, the Union would be something quite different from what it is.

Mr. Cooper: Your Honor, the... the language of the Eleventh Amendment, its... its very letter, does not contemplate this exception.

It says the judicial power of the United States.

When this Court reaches the merits of this case, it will be exercising the judicial power of the United States.

The Eleventh Amendment specifically and precisely enjoins this Court from construing the judicial power of the United States to extend to a suit commenced by these petitioners, non-citizens of Alabama, against Alabama.

Justice Kennedy: Well, if we're going to be fastidious about the language of the Eleventh Amendment, we'd have to redo a lot of our jurisprudence, wouldn't we?

[Laughter]

Mr. Cooper: Well, Your Honor, I think that... my answer, Justice Kennedy, is this.

Never has this Court cut back on the Eleventh Amendment.

In fact, every time it has recognized that the letter of the Eleventh Amendment doesn't exhaust the protections of the Eleventh Amendment, it has extended it, such as in Hans, to citizens of a State, such as in Monaco, to foreign nations.

How is it... how can it be that in Seminole Tribe that a case that is not within the letter of the Eleventh Amendment, brought by citizens of the State of Florida, and despite...

Justice Stevens: Mr. Cooper, the issue I suppose, even on the letter, is whether this is a suit within the meaning of the Eleventh Amendment, and that's the answer Justice Marshall gave.

The writ of error was not a suit.

And you could similarly, it would seem to me, say that a proceeding in State court is not a suit within the meaning of that provision because that's dealing primarily with original Federal actions.

Mr. Cooper: Your Honor, I think Cohen is a very difficult road for that argument.

A writ of error in that case wasn't a suit because it was... because the suit had been commenced by the State against the individual.

Justice Stevens: I understand.

Mr. Cooper: And... and...

Justice Stevens: But it's still a key to your argument that we read the word suit to refer to the State proceeding because...

Mr. Cooper: Oh, yes.

Justice Stevens: the petition for cert isn't a suit.

So... and... and it seems to me one could conceivably say they were thinking about actions originated in a Federal court, and that's the kind of suit that is referred to in that... in that provision.

That's consistent with what Chief Justice Marshall said.

And incidentally, we don't just have to overrule McKesson.

We've got overrule all the cases in the footnote he cited too.

There are about 30 of them there.

Mr. Cooper: Your Honor, I think Chief Justice Marshall in Cohens made clear that the... that... and that was a case that came up out of the State...

Justice Stevens: Correct.

Mr. Cooper: appellate system.

And... and... and if it was as easy as nothing that happens in the State constitutes a suit, then...

Justice Stevens: Within the meaning of the Eleventh Amendment.

Mr. Cooper: Within the meaning of the Eleventh Amendment, then a very short opinion.

But Justice... but Chief Justice Marshall analyzed at great length what a suit is, and he said it's any proceeding brought in a court of law, court of justice, which included, presumably, the courts of Virginia, by a non-citizen.

So, Your Honor, I think... I think it would be a very strange, with all due respect, interpretation of the word suit to suggest that the framers and the ratifiers of the Eleventh Amendment didn't contemplate at all a suit coming to the courts through the appellate route as opposed to initially instituted in the Federal court route.

In fact, presumably, the Federal courts of appeals could be authorized to review State supreme court decisions if... if... if that view is correct.

Justice Breyer: They are actually in some instances.

In the FDIC area...

Mr. Cooper: Well, this...

Justice Breyer: there were some.

In the FDIC area, there... when... a Federal takeover of a bank, there is appellate jurisdiction.

I've had them.

We had those cases.

Mr. Cooper: But surely not when the State is...

Justice Breyer: Yes, it was tried in the State court, tried in the State court, and they got their appeal over to the Federal appeals court.

Mr. Cooper: When the State itself is a defendant.

Justice Breyer: In that case.

Mr. Cooper: Yes.

Justice Breyer: I... it didn't...

Mr. Cooper: Your Honor, I... my time is about expired and obviously I have little time left to devote to our... our respectful request that the Court reexamine this Court's negative Commerce Clause jurisprudence.

We have nothing to add to the treatment that was provided by Justice Thomas in his dissenting opinion not... not long ago in the... in the Camps Newfound case on the merits of that point.

But I would like very briefly to address the issue of stare decisis and the... thank you, Your Honor.

Rebuttal of Mark L. Evans

Chief Justice Rehnquist: Thank you, Mr. Cooper.

Mr. Evans, you have 18 minutes remaining.

Mr. Evans: Just three very quick points.

Mr. Cooper has referred to Seminole's... the opinion in Seminole as suggesting that there are other routes to raise Federal issues.

The footnote I believe he is referring to is footnote 14, and the three items that are mentioned are a suit by the United States, an Ex parte Young action, and then I'd like to just quote this language.

And this Court is empowered to review a question of Federal law arising from a State court decision where a State has consented to suit.

That is this case, just to underscore Justice Kennedy's point that the assumption underlying Seminole may well have included this Court's appellate authority over a case like this.

Second, Mr. Cooper mentioned the Ford Motor case as an example of one that held that a... a waiver of State sovereign immunity does not necessarily translate into a waiver of Eleventh Amendment immunity.

True, but only with respect to actions in the district court.

That very case, which is typically cited for this proposition, says the following at page 470 at 323 U.S....

As we indicated in the Reed case, the construction given the Indiana statute leaves open the road to review in this Court on constitutional grounds after the issues have been passed on by State courts.

So, the very decision in which the Court held that a... a State sovereign immunity waiver does not convert to an Eleventh Amendment waiver also assumes that there's review available in this Court.

And finally, a lot of this we believe is entirely hypothetical because the... for purposes of Alabama law... this is a case cited at page 6 of our reply brief... in a case called State against Norman Tobacco, which was basically the reason the jurisdictional argument that Mr. Cooper had made as his first argument did not work.

The Alabama Supreme Court said that a... an action of the sort we have here... and I'm quoting again... is not a suit against the State.

Now, that doesn't necessarily bind this Court in its interpretation of the Eleventh Amendment, but that bears some relevance to the question.

Unless the Court has further questions.

Chief Justice Rehnquist: Thank you, Mr. Evans.

The case is submitted.

The honorable court is now adjourned until tomorrow at ten o'clock.

Print this transcript Transcript: 

Argument of Justice Breyer

Mr. Cooper: The second case which is not about tires is the South Central Bell Telephone Company versus The State of Alabama.

That case has to do with a franchise tax on corporations.

Alabama calculates its state tax differently depending on whether the corporation at issue is a foreign i.e. a non-Alabama corporation or domestic Alabama corporation and the basic question before us in that case is whether in light of the difference the franchise tax on the foreign corporation violates the Commerce Clause.

Our holding is it does violate the Commerce Clause.

Before we reach that question on the merit, however, we have to decide whether the Eleventh Amendment bars our consideration of the case because the Eleventh Amendment says that the federal judicial powers doesn't extend to a suit brought against the state by citizens of another state.

Now, Alabama points out that this case is a suit brought by citizens of another state against this state and it before this got to this court it was only in the State Courts.

Nonetheless this Court has previously held that the Eleventh Amendment does not prevent this Court from reviewing State Court lawsuits where the state is a party whether it is the plaintiff or it is the defendant and we reject Alabama's Eleventh Amendment claim primarily on the basis of that precedent.

We also have to decide a preliminary matter whether Alabama's courts could have ruled in favor of the state mistakes for a special reason.

There have been an earlier case, State Courts might have said it was somewhat ambivalent on this, rather elliptical that the eason that stated one because of the principles of res judicator, and we have to decide is that a proper ground.

There is an earlier case decided by this Court that goes into that matter in some detail and basically we reject that the claim on the basis of that earlier cases.

The parties in the second case were strangers to the earlier law suit and the Fourteenth Amendment prevents a state from stop a firm from using rec judicator to bar the estrangers.

So, we finally get to the merits and we note that Alabama measures its tax on domestic corporations by the power value of the corporation stock.

A number that the corporation can easily reduce if it wants, well below any actual market value.

But when it measure the tax on foreign corporations, it does so by the value of the capital the foreign corporation actually implies in Alabama as determined by certain balance sheet numbers that the corporation cannot easily reduce.

Now, that difference significantly discriminates against non Alabama corporations.

In our view it is not justified and under our case law the resulting discrimination makes the tax unconstitutional.

The state argued that we should reconsider and abandoned our earlier case law in particular our long standing negatives Commerce Clause jurisprudents.

But the state did not make clear it intended to make any such sweeping arguments when it filed it opposition to the petitions for certiorari and therefore we do not consider that far reaching claim.

For those reasons we reverse the decision of the Alabama Supreme Court.

We remand the case for further proceedings.

Justice O'Connor has filed a concurring opinion and Justice Thomas has also filed a different concurring opinion.