A decision on state sovereign immunity involving copyrights allowed the Supreme Court to explain the rationale underlying Central Virginia Community College v. Katz, 546 U.S. 356 (2006), the high court’s authority largely abrogating states’ sovereign immunity in bankruptcy cases.
Scholars will argue whether the Supreme Court’s March 23 copyright decision modified Katz. The answer is, “Probably not much, if at all.” However, the Court’s discussion of stare decisis suggests that the justices are not likely to revisit Katz.
Seminole Tribe
The Court’s seminal decision on state sovereign immunity is Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996). There, the justices laid down two hurdles for congressional abrogation of sovereign immunity.
First, Congress must abrogate sovereign immunity using “unequivocal statutory language.” Id. at 56. Second, the Constitution must have a provision allowing Congress to encroach on the state’s sovereign immunity.
Seminole Tribe was a 5/4 decision, with justices divided along ideological lines. It led to a concern that sovereign immunity would preclude bankruptcy courts from disallowing claims filed by states or allow states to disregard the discharge of claims.
Katz largely laid those concerns to rest. The high court held that proceedings to set aside a preference were not barred by sovereign immunity because bankruptcy proceedings are essentially in rem.
The Copyright Case
This term, the Supreme Court granted certiorari in Allen v. Cooper because the Fourth Circuit held that a federal statute was invalid.
Allen involved a photographer who had taken pictures of an early 18th century shipwreck that belonged to the State of North Carolina. The photographer copyrighted the pictures.
Years later, the state published photos, and the photographer sued for copyright infringement. The district court allowed the suit to go forward, ruling that Congress abrogated sovereign immunity for copyright infringement in the Copyright Remedy Clarification Act of 1990, or CRCA.
The Fourth Circuit reversed on an interlocutory appeal, holding that the CRCA was invalid as to copyrights.
The Supreme Court Decision
The result was largely a foregone conclusion. In Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U.S. 627 (1999), the Supreme Court ruled that the CRCA did not validly extinguish sovereign immunity with regard to patents.
In her March 23 opinion for the Court, Justice Elena Kagan surveyed the rationale behind Seminole Tribe and the limits on the power of Congress to abrogate sovereign immunity.
Because Florida Prepaid had invalidated the CRCA as to patents, it was a short hop for Justice Kagan to hold that the CRCA’s abrogation of sovereign immunity was also invalid as to copyrights.
The Discussion of Katz
Opposing the conclusion reached by Justice Kagan, the photographer based much of his argument on Katz, another 5/4 decision, but with the more liberal justices in the majority this time. In short, Justice Kagan said that Katz was inapplicable to copyrights.
Florida Prepaid said that Congress could not use the power of Congress over patents in Article I to end sovereign immunity. Given that the Bankruptcy Clause of the Constitution is also in Article I, how does it follow that the Court reached a contrary conclusion in Katz?
Katz, Justice Kagan said, “held that Article I’s Bankruptcy Clause enables Congress to subject nonconsenting States to bankruptcy proceedings (there, to recover a preferential transfer). We thus exempted the Bankruptcy Clause from Seminole Tribe’s general rule that Article I cannot justify haling a State into federal court.”
“In bankruptcy, we decided, sovereign immunity has no place,” Justice Kagan said bluntly.
Everything in Katz “is about and limited to the Bankruptcy Clause; the opinion reflects what might be called bankruptcy exceptionalism. In part, Katz rested on the ‘singular nature’ of bankruptcy jurisdiction. That jurisdiction is, and was at the Founding, ‘principally in rem’ . . . ,” Justice Kagan said. [Citation omitted.]
Justice Kagan continued, saying that “Katz focused on the Bankruptcy Clause’s ‘unique history.’ The [Bankruptcy] Clause emerged from a felt need to curb the States’ authority.” [Citation omitted.] The Bankruptcy Clause, she said, “was sui generis . . . among Article I’s grants of authority.”
Justice Kagan went on to say that the Bankruptcy Clause “had a yet more striking aspect . . . . [T]he Court . . . went further [in Katz and] found that the Bankruptcy Clause itself did the abrogating . . . . Or stated another way, we decided that no congressional abrogation was needed because the States had already ‘agreed in the plan of the Convention not to assert any sovereign immunity defense’ in bankruptcy proceedings.” [Emphasis in original; citations omitted.]
In other words, the states waived sovereign immunity in bankruptcies by having adopted the Constitution. In Justice Kagan’s terms, sovereign immunity in bankruptcy is “governed by principles all of its own.”
Stare Decisis
Writing about Allen, we would be remiss if we did not mention Justice Kagan’s discussion of stare decisis and the dissent by Justice Clarence Thomas.
Finding no difference between patents and copyrights, Justice Kagan said that the Court could have no other result in view of Florida Prepaid and the principle of stare decisis.
To reverse one of the Court’s own precedents, Justice Kagan said there must be special justification over and above a belief that the precedent was wrongly decided.
Justice Thomas concurred in the judgment because he saw Florida Prepaid to be “binding precedent.” However, he disagreed with Justice Kagan’s discussion of stare decisis.
Requiring “‘special justification . . . does not comport with our judicial duty under Article III,’” Justice Thomas said, quoting one of his prior concurring decisions.
In a footnote, Justice Thomas said he continues to believe that Katz was “wrongly decided.”
Finally, we note how the justices remain split on the larger questions regarding sovereign immunity.
In Allen, Justices Stephen G. Breyer and Ruth Bader Ginsburg concurred in the judgment. They believe that Seminole Tribe was wrongly decided. They concurred in the judgment because their “longstanding view has not carried the day.”
A decision on state sovereign immunity involving copyrights allowed the Supreme Court to explain the rationale underlying Central Virginia Community College v. Katz, 546 U.S. 356 (2006), the high court’s authority largely abrogating states’ sovereign immunity in bankruptcy cases.
Scholars will argue whether the Supreme Court’s March 23 copyright decision modified Katz. The answer is, “Probably not much, if at all.” However, the Court’s discussion of stare decisis suggests that the justices are not likely to revisit Katz.
Seminole Tribe
The Court’s seminal decision on state sovereign immunity is Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996). There, the justices laid down two hurdles for congressional abrogation of sovereign immunity.