513 U.S. 30 (1994), 93-1197, Hess v. Port Authority Trans-Hudson Corporation

Docket Nº:No. 93-1197
Citation:513 U.S. 30, 115 S.Ct. 394, 130 L.Ed.2d 245, 63 U.S.L.W. 4009
Party Name:HESS et al. v. PORT AUTHORITY TRANS-HUDSON CORPORATION
Case Date:November 14, 1994
Court:United States Supreme Court
 
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513 U.S. 30 (1994)

115 S.Ct. 394, 130 L.Ed.2d 245, 63 U.S.L.W. 4009

HESS et al.

v.

PORT AUTHORITY TRANS-HUDSON CORPORATION

No. 93-1197

United States Supreme Court

November 14, 1994

Argued October 3, 1994

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Syllabus

Petitioners, two railroad workers, were injured in unrelated incidents while employed by respondent bistate railway, the Port Authority Trans-Hudson Corporation (PATH). PATH is a wholly owned subsidiary of the Port Authority of New York and New Jersey (Port Authority or Authority), an entity created when Congress, pursuant to the Constitution's Interstate Compact Clause, consented to a compact between the Authority's parent States. Petitioners filed separate personal injury actions under the Federal Employers' Liability Act (FELA). The District Court dismissed the suits under Third Circuit precedent, Port Authority Police Benevolent Assn., Inc. v. Port Authority of New York and New Jersey, 819 F.2d 413 (CA3) (Port Authority PBA), which declared PATH a state agency entitled to Eleventh Amendment immunity from suit in federal court. The Third Circuit consolidated the cases and summarily affirmed. That court's assessment of PATH's immunity conflicts with the Second Circuit's decision in Feeney v. Port Authority Trans-Hudson Corporation, 873 F.2d 628.

Held:

PATH is not entitled to Eleventh Amendment immunity from suit in federal court. Pp. 39-53.

(a) The Court presumes that an entity created pursuant to the Compact Clause does not qualify for Eleventh Amendment immunity unless there is good reason to believe that the States structured the entity to arm it with the States' own immunity, and that Congress concurred in that purpose. Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 401. The Port Authority emphasizes that certain indicators of immunity are present in this case, particularly provisions in the interstate compact and its implementing legislation establishing state control over Authority commissioners, acts, powers, and responsibilities, and state-court decisions typing the Authority as an agency of its parent States. Other indicators, however, point away from immunity, particularly the States' lack of financial responsibility for the Authority. Pp. 39-46.

(b) When indicators of immunity point in different directions, the Court is guided primarily by the Eleventh Amendment's twin reasons

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for being: the States' dignity and their financial solvency. Neither is implicated here. First, there is no genuine threat to the dignity of New York or New Jersey in allowing petitioners to pursue FELA claims against PATH in federal court. The Port Authority is a discrete entity created by compact among three sovereigns, the two States and the Federal Government. Federal courts are not alien to such an entity, for they are ordained by one of its founders. Nor is it disrespectful to one State to call upon the entity to answer complaints in federal court, for the States agreed to the power sharing, coordination, and unified action that typify Compact Clause creations. Second, most Federal Courts of Appeals have identified the "state treasury" criterion—whether a judgment against the entity must be satisfied out of a State's treasury—as the most important consideration in determining whether a state-created entity qualifies for Eleventh Amendment immunity. The Port Authority, however, is financially self-sufficient: it generates its own revenues and pays its own debts. Where, as here, the States are neither legally nor practically obligated to pay the entity's debts, the Eleventh Amendment's core concern is not implicated. Pp. 47-51.

(c) The conflict between the Second and Third Circuits no longer concerns the correct legal theory, for the Third Circuit, as shown in two post-Port Authority PBA decisions, now accepts the prevailing "state treasury" view. A narrow intercircuit split persists only because the Circuits differ on whether the Port Authority's debts are those of its parent States. In resolving that issue, the Port Authority PBA court relied primarily on a compact provision calling for modest state contributions, capped at $100,000 annually from each State, unless Port Authority revenues were "adequate to meet all expenditures," but the court drew from that provision far more than its text warrants. Pp. 51-52.

8 F.3d 811, reversed and remanded.

Ginsburg, J., delivered the opinion of the Court, in which Stevens, Kennedy, Souter, and Breyer, JJ., joined. Stevens, J., filed a concurring opinion, post, p. 53. O'Connor, J., filed a dissenting opinion, in which Rehnquist, C. J., and Scalia and Thomas, JJ., joined, post, p. 55.

Lawrence A. Katz argued the cause for petitioners. With him on the briefs were Joseph A. Coffey, Jr., and David J. Bederman.

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Hugh H. Welsh argued the cause for respondent. With him on the brief were Arthur P. Berg, Donald F. Burke, and Anne M. Tannenbaum.[*]

Justice Ginsburg delivered the opinion of the Court.

These paired cases arise out of work-related accidents in which a locomotive engineer and a train conductor, employees of a bistate railway authorized by interstate compact, sustained personal injuries. The courts below—the United States District Court for the District of New Jersey, and the United States Court of Appeals for the Third Circuit— rejected both complaints on the ground that the Eleventh Amendment sheltered respondent railway from suit in federal court. We granted certiorari to resolve an intercircuit conflict on this issue. 510 U.S. 1190 (1994). Concluding that respondent bistate railway, the Port Authority Trans-Hudson Corporation (PATH), is not cloaked with the Eleventh

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Amendment immunity that a State enjoys, we reverse the judgment of the Third Circuit.

I

A

Petitioners Albert Hess and Charles F. Walsh, both railroad workers, were injured in unrelated incidents in the course of their employment by PATH. PATH, a wholly owned subsidiary of the Port Authority of New York and New Jersey (Port Authority or Authority), operates a commuter railroad connecting New York City to northern New Jersey. In separate personal injury actions commenced in the United States District Court for the District of New Jersey, petitioners sought to recover damages for PATH's alleged negligence; both claimed a right to compensation under the federal law governing injuries to railroad workers, the Federal Employers' Liability Act (FELA), 35 Stat. 65, as amended, 45 U.S.C. § 51 et seq.[1] Hess and Walsh filed their complaints within the 3-year time limit set by the FELA, see 35 Stat. 66, as amended, 45 U.S.C. § 56, but neither petitioner met the 1-year limit specified in the States' statutory consent to sue the Port Authority. See N. J. Stat. Ann. §§ 32:1-157, 32:1-163 (West 1990); N. Y. Unconsol. Laws §§ 7101, 7107 (McKinney 1979).

PATH moved to dismiss each action, asserting (1) PATH's qualification as a state agency entitled to the Eleventh Amendment immunity from suit in federal court enjoyed by New York and New Jersey,[2] and (2) petitioners' failure to

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commence court proceedings within the 1-year limit prescribed by New York and New Jersey. Third Circuit precedent concerning the Port Authority supported PATH's plea. In Port Authority Police Benevolent Assn., Inc. v. Port Authority of New York and New Jersey, 819 F.2d 413 (Port Authority PBA), cert. denied, 484 U.S. 953 (1987), the Court of Appeals for the Third Circuit held that the Port Authority is "an agency of the state and is thus entitled to Eleventh Amendment immunity." 819 F.2d, at 418. In reaching this decision, the Court of Appeals acknowledged that "[g]iven the solvency and size of the [Port Authority's] General Reserve Fund, it is unlikely that the Authority would have to go to the state to get payment for any liabilities issued against it." Id., at 416.[3] But the Third Circuit considered "crystal clear" the intentions of New York and New Jersey: "[I]f the Authority is ever in need of financial support, the states will be there to provide it." Ibid.

In line with Port Authority PBA, the District Court held in the Hess and Walsh actions that PATH enjoys Eleventh Amendment immunity, and could be sued in federal court only within the 1-year time frame New York and New Jersey allowed. See Walsh, 813 F.Supp. 1095, 1096-1097 (NJ 1993); Hess, 809 F.Supp. 1172, 1178-1182 (NJ 1992). Accordingly, both actions were dismissed.

The District Court in Hess noted an anomaly: Had Hess sued in a New Jersey or New York state court the FELA's 3-year limitation period, not the States' 1-year prescription, would have applied. See id., at 1183-1185, and n. 16. This followed from our reaffirmation in Hilton v. South Carolina Public Railways Comm'n, 502 U.S. 197 (1991), that the entire federal scheme of railroad regulation—including all FELA terms—applies to all railroads, even those wholly

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owned by one State. Time-bar rejection by a federal court of a federal statutory claim that federal prescription would have rendered timely, had the case been brought in state court, becomes comprehensible, the District Court explained, once it is recognized that " 'the Eleventh Amendment does not apply in state courts.' " Hess, 809 F. Supp., at 1183-1184 (quoting Hilton, 502 U.S., at 205); see 809 F. Supp., at 1185, n. 16.

Consolidating Hess and Walsh on appeal, the Third Circuit summarily affirmed the District Court's judgments. 8 F.3d 811 (1993) (table).

B

The Port Authority, whose Eleventh Amendment immunity is at issue in these cases, was created in 1921, when Congress, pursuant to the Constitution's Interstate Compact Clause,[4] consented to a compact between the Authority's parent States. 42 Stat. 174. Through the bistate compact, New York and New Jersey sought to achieve "a better coordination of the terminal,...

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