The Eleventh Amendment and the Contracts Clause

In holding with the spirit of the Declaration of Independence, the Northwest Ordinance, and the Constitution there can be only one purposeful enforcement of the Eleventh Amendment. The true purpose of the Eleventh Amendment is to protect States from being sued by citizens for enforcing constitutional State and federal laws or from States being sued by citizens for failing to enforce unconstitutional State or federal laws. This follows Shiras’s equality principle. Let’s evaluate a few examples:

A good example of the Court allowing a State to use sovereign immunity was Griffin v. School Board of Prince Edward County (1964). In this case, the Court held that a State government could not be sued for educational reasons. This case was about citizens suing a State for higher tax rates to improve education. A State is not violating any Constitutional clause or amendment for appropriating taxes for education. Using this logic, it can be argued that States could use sovereign immunity to prevent the federal government from integrating school systems during the 1960s. This is true. Later, this text will discuss in more detail why government mandates forcing the integration of schools during this era were wrong. In short, citizens should be able to choose the school they want for their children’s education. Citizens should not be forced to attend schools they do not want for the sole purpose of obtaining the integration results the government desires. Desegregation is a natural process whereas integration is a forced process.

The Eleventh Amendment would not face another landmark case until Seminole Tribe v. Florida (1996). This is good example of a case where States should not be able to hide behind the Eleventh Amendment to avoid a federal law. Congress passed the Indian Gaming Regulatory Act (IGRA) under the commerce clause. The Act imposed upon the States a duty to negotiate in good faith with Indian Tribes to generate a contract for gamming privileges. Congress certainly has the power granted under the commerce clause to pass this regulatory act since it applies to “Indian Tribes”. When the State of Florida refused to negotiate with the Seminole Tribe, they brought a suit against the State. But the conservative sect of the Court incorrectly asserted precedent set by Hans to deny Citizens the right to sue their State because Florida had Sovereign immunity granted by the Eleventh Amendment. In the majority opinion they thought Hans restricted the application of the commerce clause. Sure, this decision provides States more power over the federal Government, but it also restricts the power and sovereignty of its citizens. Since the IGRA was a federal law, States could only hide behind the Eleventh Amendment if 1. The IGRA was unconstitutional or 2. The IGRA was outside the scope of Congress’s constitutional authority. Since neither of the above conditions were met, the Eleventh Amendment should not apply.

Justice Souter wrote the dissent to Seminole Tribe which was joined by Justice Ginsberg, Stevens and Breyer. Souter rightly remarks “Because the plaintiffs in today’s case are citizens of the State they are suing, the Eleventh Amendment simply does not apply to them.” For this reason, he also believes Hans was also wrongly decided. Souter also points out in Federalist Paper 32 that States have no sovereignty over the regulation of commerce with Indian Tribes. Souter further acknowledges a proposed amendment by Massachusetts Representative Theodore Sedgwick after the Chisholm decision, but it was never ratified. The Sedgwick amendment would have denied “Any Citizen” the right to sue “any State”. Souter asks why this proposal was denied in favor of the one ratified in the Eleventh Amendment? Souter certainly pokes holes in the Hans holding. Finally, Souter admits “The American development of divided sovereign powers was made possible only by a recognition that the ultimate sovereignty rests in the people themselves.” This is certainly consistent with the Chisholm decision and Marshall’s remarks about Chisholm in Fisher. A year later, in Alden v. Maine (1997), the Court made similar arguments and came to a similar decision as in Seminole Tribe. Souter is correct, since the IGRA did not violate the Constitution then a State cannot hide behind sovereign immunity.

Why was the Eleventh Amendment passed? At constitutional ratifying conventions at least five States made serious objections that citizens of other States could sue States (Virginia, Massachusetts, New York, North Carolina, and Rhode Island). Rhode Island did not even attend the Constitutional Convention so their objections should be taken with a grain of salt. There are three main reasons for the passage of the Eleventh Amendment. The first reason was debt. All of these States had large sums of paper currency in circulation that the State was obligated to honor following the Revolutionary War. The second reason was to limit the federal judiciary power over disputes between citizens with other States. The final reason was small compared to the first two but there was some concern putting citizens on equal footing with the States. Therefore, the Eleventh Amendment was passed to protect State rights and immunity from federal judiciary interference, concerns over debt, and to hold State sovereignty at a higher hierarchical status than popular sovereignty.

Several obscure contract cases made their way to the Supreme Court around the time of the Chisholm decision and that was of great concern to States. Grayson v. Virginia (1796) was a land dispute between Virginia and an Indiana fur company. If Virginia lost the suit they would have been forced to pay a sum of between 1 and 2 million dollars (a huge sum in those days). In Vassall v. Massachusetts, Vassell was a Loyalist during the Revolutionary war. He fled to England during the war to avoid prosecution (and persecution). In this case, the State of Massachusetts confiscated his property during the war and Vassall wanted his property refunded after the war. In Cutting v. South Carolina, the Prince of Luxemburg wanted to recover debt on a vessel purchased by the State of South Carolina. And Huger v. Georgia involved a land dispute between a South Carolina company and Georgia. The South Carolina company held that Georgia breached on its contract conditions by later claiming it would only accept coined money instead of paper notes to pay for the land. James Jackson (future Georgia governor) wrote that Georgia had no authority to sell state lands. Jackson argued that such decisions are “retained by the people” of Georgia to act in a collective manner. Georgia was already outraged by the Chisholm ruling: its lower House passed a bill calling it a felony, subject to death, for anyone helping to enforce the Chisholm ruling. States began to fear that suits brought forward against States would include much more than contract disputes such as civil liabilities like in Vassell. States feared everyone would be going to the High Court demanding some form of restitution. The above cases were either settled or the suit was dropped following the adoption of the Eleventh Amendment.

Clyde Jacobs, disagrees with the premise States passed the Eleventh Amendment to seek shelter from debts since the federal treasury (under Alexander Hamilton) introduced a policy of “assumption”. Assumption allowed the federal government to take over “most” State debt incurred by the war effort (about 85%). Thus, in Jacobs view, State debt was minimal and most of it was being honored. Most cases where debts were not being honored were generally disputes over the confiscation of Loyalist property. Jacobs may be right, but without recourse, it is hard to imagine that the rights of some citizens were not violated by the passage of the Eleventh Amendment. In fact, in Cohens v. Virginia, Chief Justice Marshall explains the reason for the adoption of the Eleventh Amendment was for the sole purpose of denying out of State citizens any recourse from recovering their debts.

The Eleventh Amendment set a bad precedent by allowing States to default on contract obligations. Only six years following the passage of the Constitution the sovereignty of “We the People”, the rights “retained by the people” in the Ninth Amendment, and the rights “to the people” in the Tenth Amendments would be diminished forever. Did our Founders want the federal and State governments to have immunity powers similar to the King of England? Of course not, that is why Americans fought the Revolutionary War: To break away from this tyranny style of English rule. If taxation without representation caused friction between the King and colonies, it is hard to imagine that the colonies would be happy if England hid behind sovereign immunity to breach on contract obligations similar to how States were breaking their contract obligations. The objective of the Declaration of Independence and the Constitution was to provide ultimate sovereignty with the people with State and federal sovereignty to follow (in that order).

What is sometimes lost in the debate over the Eleventh Amendment is that, although it passed Congress overwhelmingly, the Senate asked for a textual change to the Amendment that the House rejected. That change read “where such State shall have previously made provision in their own courts, whereby such suit may be prosecuted to effect”. The rejection of this statement eliminated any chance that suits by citizen and foreign subjects against other States would ever be resolved in State courts. Hence, there was no recourse for citizens whose property rights or contractual rights had been violated at any level in the court system.

In sum, individual or popular sovereignty over State and federal government sovereignty is an important issue that will change for the worse over the course of United States history. When individual sovereignty is diminished at the expense of State and federal government power, it is without question, one of many things, that has led to the mitigation of contract rights and all rights in general. The Eleventh Amendment was the first step in the process of diminishing individual contract rights at the expense of the federal and State governments. The correct application of the Eleventh Amendment was described by Justice George Shiras in Prout. By applying his principles, the Eleventh Amendment would protect both individual citizens from State and federal encroachment (unconstitutional acts or laws) and collective citizens (States) from federal encroachment (unconstitutional acts or laws). Finally, it is important to note that Justice Bradley and Miller in their Slaughter House dissents correctly point out that the right of citizens to use the contracts clause or to sue a State were both fundamental rights.