A watershed term for federalism.

The Supreme Court's slim 5-4 majority continues to side with the cause of state authority even when it comes into direct conflict with federal authority.

This was the year of the states in the Supreme Court. In a remarkable trio of rulings in late June, the justices proclaimed the states had a "sovereign status" that shields them from private lawsuits seeking to enforce most federal laws. Congress cannot waive a state's legal immunity, the Court said, nor can state agencies be forced to pay damages for allegedly violating federal laws.

Constitutional scholars and state lawyers called it a watershed term for federalism. Led by Chief Justice William H. Rehnquist, the high court in recent years has championed the cause of federalism and regularly sided with the states. But this year, the justices went further in setting out their broad view of the states' sovereign authority, even when it comes into direct conflict with federal authority.

"Congress has vast power, but not all power," wrote Justice Anthony M. Kennedy for the 5-4 majority. "When Congress legislates in matters affecting the states, it may not treat these sovereign entities as mere prefectures or corporations. [The states] are joint participants in a federal system, one beginning with the premise of sovereignty in both the central government and the separate states."

At issue this year was not whether Congress had the power to pass a particular law affecting the states. Instead, the key question was whether or not private parties can bring suit against state agencies to enforce a federal law.

IMMUNITY FROM PRIVATE SUITS

The first ruling, in Alden vs. Maine, threw out a lawsuit brought by a group of state probation officers who were seeking overtime wages as required by the federal Fair Labor Standards Act. At first, the probation officers brought their claim in federal court in Portland, Maine. But in the 1996 case of Seminole Tribe vs. Florida, the Supreme Court said the 11th Amendment shields states from being sued in federal court. The probation officers then turned to the state courts in Maine, but they were turned away there too.

On a 5-4 vote, the high court agreed Maine's sovereign immunity protected it from this lawsuit. "The states' immunity from a suit is a fundamental aspect of the sovereignty which the states enjoyed before the ratification of the Constitution and which they retain today," Kennedy said. "We hold that the states retain immunity from private suits in their own courts, an immunity beyond the congressional power to abrogate by Article I legislation." Kennedy referred to Congress's power in Article I of the Constitution to regulate commerce among the states.

As a practical matter, the ruling appears to strip the 4.7 million state workers of their federal guarantees of minimum wages and overtime pay. The decision also casts doubt on whether federal environmental laws can be enforced in private suits against state agencies. In the fall, the Court will consider whether to shield the states from the federal antidiscrimination laws on age and disability. (See page 19.)

In the second case, the justices shielded the state of Florida from a patent infringement suit filed by a New Jersey bank. The College Savings Bank, based in Princeton, developed a prepaid tuition plan that it had marketed widely. When Florida and several other states adopted similar plans, the bank sued.

Its lawyers relied on the Patent Remedy Act of 1992 in which Congress made clear states could be sued for a patent infringement. But in the case of College Savings Bank vs. Florida Prepaid Postsecondary Education Expense, the high court struck down the laws and said Congress did not have the authority to waive the state's shield of immunity.

The third ruling came to the same conclusion for trademark violations and allegations of false advertising, both of which are covered by the federal Lanham Act. The College Savings Bank had also sued the Florida agency for false advertising under the Lanham Act, but the Court said the state was immune from such claims (College Savings vs. Florida Prepaid). Since the Copyright Act is nearly identical to the patent laws, most legal experts said the June rulings appear to shield state universitites and other state agencies from copyright infringement suits from publishers or software makers.

POWER IS SHIFTING BACK

The sweep of the rulings caught the attention of many constitutional experts.

"The trend toward recognizing vibrant states' rights is here to stay," said University of South Carolina Law Professor Richard H. Seamon, who coauthored a friend-of-thecourt brief for NCSL and other state groups in the Alden case. "Before, some saw Seminole Tribe and Lopez (a 1995 federalism ruling) as just blips. But you can't say that any more, considering the consistency of these decisions. The cumulative effect is to shift a lot of power back to the states."

But other legal academics faulted the Court for shielding states when they were properly liable. "This is a radical change. It means the states can violate federal laws with impunity, and nowhere can they be sued for damages," said Professor Erwin Chemerinsky of the University of Southern California in Los Angeles. "Imagine the situation where a state lab dumps toxic waste into someone's backyard in violation of the environment laws. This means the homeowners can't sue the state for their damages in federal court or in state court."

However, Richard Ruda, chief counsel for the State and Local Legal Center in Washington, D.C., said these criticisms are exaggerated. "The states are still bound by federal law, and, as the Court pointed out, there is no evidence states are willfully violating the patent laws or flouting the wage and hour laws."

The Court left open the possibility that the federal government lawyers could bring enforcement actions, Ruda said. The U.S. Department of Labor, for example, could sue Maine in a state court on behalf of the probation officers. Moreover, state officials can still be sued by someone seeking an injunction.

For instance, if a state agency director told all staff members to copy a particular software product into their computers, the software maker could go to court seeking a "cease and desist" order. Since 1908, the Court has said state officials are subject to such orders if they are violating federal laws. However, under the ruling in the College Savings Bank case, the software maker probably could not seek damages for the copies that were already made.

Ruda also pointed out that some states allow damage suits against state agencies in their own courts.

HOW CONGRESS MAY RESPOND

It is too early to tell how Congress will respond to the rulings. One possibility that has been discussed in Washington is to require states to waive their immunity in exchange for federal funds. In the past, Congress has forced states to follow federal mandates by making compliance a condition of receiving federal aid.

The states, for example, were required to raise the drinking age to 21 in exchange for federal highway funds. The Supreme Court upheld this mandate because the states could turn down the money and go their own way.

But state legal experts note that this mandate - the higher drinking age - was linked to highway safety. They doubt the Rehnquist Court would allow Congress to boldly force states to give up their sovereign immunity in exchange for federal funds.

Still, the Court's future course on federalism remains in doubt, too. Despite the sweep of this year's rulings, the majority's margin in each case was one vote. The pro-federalism rulings brought together Rehnquist and Kennedy, along with Justices Sandra Day O'Connor, Antonin Scalia and Clarence Thomas. The four dissenters - Justices John Paul Stevens, David H. Souter, Stephen G. Breyer and Ruth Bader Ginsberg - insisted the notion of "state sovereign immunity" was invented out of thin air by the majority. The Constitution itself does not mention the term and instead says federal statutes are the "supreme law of the land," they said.

The close, but bitter, division within the Court means the future of federalism probably turns on the next presidential election. Chief Justice Rehnquist, the leader of the states' rights bloc, will be 75 in October. Justice Stevens, who leads the nationalist side, is 79. The president elected next year will probably appoint their successors and can either strengthen the pro-federalism side or create a new majority on the nationalist side.

SOME SETBACKS FOR THE STATES

The just completed term of the Supreme Court also saw some notable setbacks for the states.

On a 7-2 vote, the justices said the states cannot discriminate against new residents by paying them lower welfare benefits. The ruling in the case of Saenz vs. Roe struck down California's plan to pay newcomers for one year the benefits they would have received in their former state. Former Governor Pete Wilson proposed the plan in 1992 to end that state's attraction as a "welfare magnet."

Because California's benefits were among the nation's highest, the disparity for some new residents would be substantial. For example, a mother with two children who moved from Louisiana would receive just $190 per month for her first year in California, rather than the state's standard benefit of $641 per month.

Because of court challenges, the law never went into effect. In 1996, Congress endorsed the idea as part of its welfare reform law, and 12 other states enacted similar plans. Nonetheless, the high court concluded the two-tiered benefits scheme was unconstitutional because states cannot favor one group of legitimate residents over another. Once the newcomers took up residence in California, they cannot be discriminated against, the Court said. "Citizens of the United States, whether rich or poor, have the right to choose to be citizens of the state wherein they reside. The states, however, do not have any right to select their citizens," Stevens wrote for the Court. Only Rehnquist and Thomas dissented.

The Court also further limited the power of states to regulate ballot initiatives. The process of putting proposals before the voters is "core political speech" and protected from most regulation by the First Amendment, the Court said.

In 1988, the justices struck down a Colorado law that barred the use of paid signature gatherers. This year, the Court went further and struck down a new set of Colorado regulations that said signature gatherers must be registered state voters and must identify themselves with name badges. The justices also invalidated a requirement that sponsors file disclosure reports on their signature gatherers.

Some political experts said the ruling will encourage the trend toward the commercialization of the initiative process. Though ballot initiatives began as a form of grass roots democracy, the process in many states is now driven by for-profit firms that specialize in gathering signatures. Only Chief Justice Rehnquist dissented in the Colorado case, known as Buckley vs. American Constitutional Law Foundation, and he noted that at least 20 states had required signature gatherers to be state residents or registered voters.

The Court also limited the authority of state officials to keep mental patients in large state hospitals. On a 6-3 vote, the justices concluded that the Americans with Disabilities Act forbids the "unnecessary segregation" of mental patients. Instead, it gives patients a right to be integrated into the community when possible by caring for them in special homes or small community centers, the Court said.

Georgia's director of human resources, Tommy Olmstead, had appealed a federal court order won by two mentally retarded women in Atlanta. The two, identified as L.C. and E.W., had been confined to a state hospital, even though the state's doctors agreed that they could be cared for in a community home. Olmstead maintained that the decision on where to place them should be in the hands of state officials. But the high court disagreed in Olmstead vs. L.C.

"Unjustified isolation, we hold, is properly regarded as discrimination based on disability," said Justice Ginsburg for the Court. Her opinion took a moderate approach, however, and made clear that costs and the practicalities of finding placements can figure in the decisions on whether or when to move patients from hospitals to community centers. The dissenters - Thomas, Rehnquist and Scalia - disputed that hospital care was a form of discrimination.

Finally, the Court appeared to give state lawmakers more leeway in drawing new electoral districts after the next census. In a series of rulings since 1993, the Court's conservative majority has condemned "racial gerrymandering" and insisted race must not be the "predominant factor" in a district's design.

But in a North Carolina case decided in May, the justices recognized that race and political affiliation often overlap. For example, a district drawn to encompass black voters could be seen as racially motivated, but it could also be seen as an effort to create a strong Democratic district. "A jurisdiction may engage in constitutional political gerrymandering," wrote Justice Clarence Thomas, "even if it so happens that the most loyal Democrats happen to be black Democrats and even if the state was conscious of the fact."

On a 9-0 vote, the Court revived the much disputed congressional district in central North Carolina and told a panel of judges to reconsider whether the district's boundaries were motivated by racial concerns alone. The three judges had struck down the district in 1998 as unconstitutional. Without directly reversing course on the issue of racial gerrymandering, the Supreme Court's opinion in Hunt vs. Cromartie appears to give lawmakers far more discretion to consider the racial makeup of communities when drawing new districts.

RELATED ARTICLE: COMING UP IN THE FALL COURT SESSION

The Supreme Court will pick up in October where it left off in the summer by focusing on whether to shield the states from federal discrimination suits by their employees. Up in the air are the legal rights of 4.7 million workers in state agencies and public colleges and universities.

When Congress outlawed job discrimination based on an employee's age or disability, it included the states and their subdivisions among the employers who were covered. But because of recent rulings establishing the state's "sovereign immunity," it is no longer clear that these employees can sue their agencies for such discrimination.

The case that will be heard by the high court began when physics professor J. Daniel Kimel and 32 other faculty members sued Florida State University, contending its policy of giving higher starting salaries to newcomers amounted to age discrimination against older teachers.

In another case, a Florida corrections officer, Wellington Dickson, had sued the state prison system after he suffered a heart attack and was assigned to work in the high towers. He also claimed he had been passed over for promotions that went to younger, less qualified employees.

When the two cases reached the U.S. court of appeals in Atlanta, they were combined. Relying on the Supreme Court's 1996 ruling in the Seminole Tribe case, the appeals court said that the state university could not be sued in federal court, and it threw out the claims by the professors and the correction officer.

But Clinton administration lawyers appealed, arguing that the antidiscrimination laws are civil rights measures grounded in the 14th Amendment. The Supreme Court is expected to hear the case of U.S. and Kimel vs. Florida Board of Regents in October and issue a ruling in the first half of next year.

If the justices rule for Florida, their decision will likely shield all the states from most federal claims of job discrimination. One exception, however, will be claims of racial bias. The 14th Amendment was enacted to prevent racial discrimination by the states, and the Supreme Court has made clear the states are not shielded from federal laws designed to enforce the prohibition against racial bias.

The Court will also consider during the fall whether to shield the states from whistleblower lawsuits under the federal False Claims Act.

Jonathan Stevens, a staff lawyer for a state environmental agency in Vermont, contended federal grants were being misused. He filed a suit against the state under the federal law that encourages whistleblowers.

But Vermont, joined by 38 other states, appealed the case to the Supreme Court, arguing that states should be shielded from costly and troublesome private lawsuits (Vermont Agency of Natural Resources vs. U.S. and Stevens).

The third test of state sovereignty concerns the Driver's Privacy Protection Act of 1994, a federal measure that bars the disclosure of "personal information" from driver records, such as name, address and phone number. Congress acted in response to the murder of a Los Angeles actress who was attacked by a stalker who obtained her home address from the state Department of Motor Vehicles.

South Carolina's attorney general, Charlie Condon, challenged the law for trampling on the state's turf. The U.S. court of appeals in Richmond, Va., struck it down as unconstitutional under the 10th Amendment. Once again, the Clinton administration appealed, and the court will hear the case of Reno vs. Condon.

The Court will also revisit the campaign finance laws and decide whether Missouri can limit contributions to its statewide candidates to $1,075 per election cycle.

Most states have some limits on how much money can be given to candidates, and these laws had been assumed to be constitutional under the Supreme Court's 1976 ruling in Buckley vs. Valeo. In that still controversial decision, the Court struck down the federal spending limits on free speech grounds, but it upheld the $1,000 limit on contributions to candidates, although the amount is adjusted for inflation. An unsuccessful contender for the Republican nomination for state auditor challenged the restriction on First Amendment grounds, and the U.S. appeals court in St. Louis struck it down. Applying a strict First Amendment test, the judges said state lawmakers did not show a link between contributions and political corruption.

The state's attorney general, Jay Nixon, appealed. The high court will hear the case of Nixon vs. Shrink Missouri Government PAC. If the justices reject the state's defense and strike down the law, it will cast doubt on all restrictions on campaign funding.

David G. Savage covers the U.S. Supreme Court for the Los Angeles Times. He is a frequent contributor to State Legislatures magazine.