College Savings v Fl Prepaid Postsecondary Educ.

Decision Date23 June 1999
Docket Number98149
CourtU.S. Supreme Court

Justice Scalia delivered the opinion of the Court.

The Trademark Remedy Clarification Act (TRCA), 106 Stat. 3567, subjects the States to suits brought under §43(a) of the Trademark Act of 1946 (Lanham Act) for false and misleading advertising, 60 Stat. 441, 15 U.S.C. § 1125(a). The question presented in this case is whether that provision is effective to permit suit against a State for its alleged misrepresentation of its own product either because the TRCA effects a constitutionally permissible abrogation of state sovereign immunity, or because the TRCA operates as an invitation to waiver of such immunity which is automatically accepted by a State's engaging in the activities regulated by the Lanham Act.


In Chisholm v. Georgia, 2 Dall. 419 (1793), we asserted jurisdiction over an action in assumpsit brought by a South Carolina citizen against the State of Georgia. In so doing, we reasoned that Georgia's sovereign immunity was qualified by the general jurisdictional provisions of Article III, and, most specifically, by the provision extending the federal judicial power to controversies "between a State and Citizens of another State." U.S. Const., Art. III, §2, cl. 1. The "shock of surprise" created by this decision, Principality of Monaco v. Mississippi, 292 U.S. 313, 325 (1934), prompted the immediate adoption of the Eleventh Amendment, which provides:

"The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."

Though its precise terms bar only federal jurisdiction over suits brought against one State by citizens of another State or foreign state, we have long recognized that the Eleventh Amendment accomplished much more: It repudiated the central premise of Chisholm that the jurisdictional heads of Article III superseded the sovereign immunity that the States possessed before entering the Union. This has been our understanding of the Amendment since the landmark case of Hans v. Louisiana, 134 U.S. 1 (1890). See also Ex parte New York, 256 U.S. 490, 497 498 (1921); Principality of Monaco, supra at 320 328, Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 97 98 (1984); Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 66 68 (1996).

While this immunity from suit is not absolute, we have recognized only two circumstances in which an individual may sue a State. First, Congress may authorize such a suit in the exercise of its power to enforce the Fourteenth Amendment an Amendment enacted after the Eleventh Amendment and specifically designed to alter the federal-state balance. Fitzpatrick v. Bitzer, 427 U.S. 445 (1976). Second, a State may waive its sovereign immunity by consenting to suit. Clark v. Barnard, 108 U.S. 436, 447 448 (1883). This case turns on whether either of these two circumstances is present.


Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), enacted in 1946, created a private right of action against "[a]ny person" who uses false descriptions or makes false representations in commerce. The TRCA amends §43(a) by defining "any person" to include "any State, instrumentality of a State or employee of a State or instrumentality of a State acting in his or her official capacity." §3(c), 106 Stat. 3568. The TRCA further amends the Lanham Act to provide that such state entities "shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person, including any governmental or nongovernmental entity for any violation under this Act," and that remedies shall be available against such state entities "to the same extent as such remedies are available . . . in a suit against" a nonstate entity. §3(b) (codified in 15 U.S.C. § 1122).

Petitioner College Savings Bank is a New Jersey chartered bank located in Princeton, New Jersey. Since 1987, it has marketed and sold CollegeSure certificates of deposit designed to finance the costs of college education. College Savings holds a patent upon the methodology of administering its CollegeSure certificates. Respondent Florida Prepaid Postsecondary Education Expense Board (Florida Prepaid) is an arm of the State of Florida. Since 1988, it has administered a tuition prepayment program designed to provide individuals with sufficient funds to cover future college expenses. College Savings brought a patent infringement action against Florida Prepaid in United States District Court in New Jersey. That action is the subject of today's decision in Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, ante, p. ___. In addition, and in the same court, College Savings filed the instant action alleging that Florida Prepaid violated §43(a) of the Lanham Act by making misstatements about its own tuition savings plans in its brochures and annual reports.

Florida Prepaid moved to dismiss this action on the ground that it was barred by sovereign immunity. It argued that Congress had not abrogated sovereign immunity in this case because the TRCA was enacted pursuant to Congress's powers under Article I of the Constitution and, under our decisions in Seminole Tribe, supra, and Fitzpatrick, supra, Congress can abrogate state sovereign immunity only when it legislates to enforce the Fourteenth Amendment. The United States intervened to defend the constitutionality of the TRCA. Both it and College Savings argued that, under the doctrine of constructive waiver articulated in Parden v. Terminal R. Co. of Ala. Docks Dept., 377 U.S. 184 (1964), Florida Prepaid had waived its immunity from Lanham Act suits by engaging in the interstate marketing and administration of its program after the TRCA made clear that such activity would subject Florida Prepaid to suit. College Savings also argued that Congress's purported abrogation of Florida Prepaid's sovereign immunity in the TRCA was effective, since it was enacted not merely pursuant to Article I but also to enforce the Due Process Clause of the Fourteenth Amendment. The District Court rejected both of these arguments and granted Florida Prepaid's motion to dismiss. 948 F. Supp. 400 (N. J. 1996). The Court of Appeals affirmed. 131 F.3d 353 (CA3 1997). We granted certiorari. 525 U.S. ___ (1999).


We turn first to the contention that Florida's sovereign immunity was validly abrogated. Our decision three Terms ago in Seminole Tribe, supra, held that the power "to regulate Commerce" conferred by Article I of the Constitution gives Congress no authority to abrogate state sovereign immunity. As authority for the abrogation in the present case, petitioner relies upon §5 of the Fourteenth Amendment, which we held in Fitzpatrick v. Bitzer, 427 U.S. 445 (1976), and reaffirmed in Seminole Tribe, see 517 U.S., at 72 73, could be used for that purpose.

Section 1 of the Fourteenth Amendment provides that no State shall "deprive any person of property without due process of law." Section 5 provides that "[t]he Congress shall have power to enforce, by appropriate legislation, the provisions of this article." We made clear in City of Boerne v. Flores, 521 U.S. 507, ___, ___ (1997), that the term "enforce" is to be taken seriously that the object of valid §5 legislation must be the carefully delimited remediation or prevention of constitutional violations. Petitioner claims that, with respect to §43(a) of the Lanham Act, Congress enacted the TRCA to remedy and prevent state deprivations without due process of two species of "property" rights: (1) a right to be free from a business competitor's false advertising about its own product, and (2) a more generalized right to be secure in one's business interests. Neither of these qualifies as a property right protected by the Due Process Clause.

As to the first: The hallmark of a protected property interest is the right to exclude others. That is "one of the most essential sticks in the bundle of rights that are commonly characterized as property." Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979). That is why the right that we all possess to use the public lands is not the "property" right of anyone hence the sardonic maxim, explaining what economists call the "tragedy of the commons,"1 res publica, res nullius. The Lanham Act may well contain provisions that protect constitutionally cognizable property interests notably, its provisions dealing with infringement of trademarks, which are the "property" of the owner because he can exclude others from using them. See, e.g., K mart Corp. v. Cartier, Inc., 485 U.S. 176, 185 186 (1988) ("Trademark law, like contract law, confers private rights, which are themselves rights of exclusion. It grants the trademark owner a bundle of such rights"). The Lanham Act's false-advertising provisions, however, bear no relationship to any right to exclude; and Florida Prepaid's alleged misrepresentations concerning its own products intruded upon no interest over which petitioner had exclusive dominion.

Unsurprisingly, petitioner points to no decision of this Court (or of any other court, for that matter) recognizing a property right in freedom from a competitor's false advertising about its own products. The closest petitioner comes is dicta in International News Service v. Associated Press, 248 U.S. 215, 236 (1918), where the Court found equity jurisdiction over an unfair-competition claim because "[t]he rule that a court of equity concerns itself only in the protection of property rights treats any civil right of a...

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