Supreme Court Watch By Beate Bloch Beate Bloch is a legal writing consultant in Washington, D.C. After a slow start to the October 1995 Term, the Court has produced several decisions of importance to state and local governments. Constitutional issues concerned the Eleventh Amendment, the Commerce Clause, due process, and the census. States will also be affected by decisions concerning preemption, voting rights, and the Age Discrimination in Employment Act. Eleventh Amendment The Term's major decision, Seminole Tribe of Florida v. Florida, 64 U.S.L.W. 4167 (decided March 27), adopted an expanded view of Eleventh Amendment immunity. The Indian Gaming Regulatory Act provides that an Indian tribe may conduct gaming activities only in conformance with a valid compact between the tribe and the state of its residence. The Act requires the state to negotiate in good faith and permits suit by the tribe to compel performance of that duty. The Court held, 5 to 4, that the Eleventh Amendment precluded such a suit, absent the state's consent. The Court overruled Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989), decided less than seven years earlier, also by a 5-to-4 majority. The Union Gas case dissenters—the Chief Justice, and Justices Scalia, O'Connor, and Kennedy—were joined by Justice Thomas to form the new majority. Union Gas had held that the Commerce Clause empowered Congress to abrogate states' immunity from suit. In Seminole, the Court held that Congress' power over commerce with the Indian tribes did not include such authority. The Court also re-affirmed the vitality of Hans v. Louisiana, 134 U.S. 1 (1890), which held that a state is immune from suit by its own citizens as well as by those of other states. Dissenting opinions filed by Justice Stevens and by Justice Souter (who was joined by Justices Ginsburg and Breyer) expressed the view that neither the language of the Eleventh Amendment nor its history in the Court supported the majority's interpretation. The dissenters noted that Hans did not rest upon the Eleventh Amendment, but upon common law principles of sovereign immunity. Justice Souter also thought that, in any case, the non-immune state officer who had been joined as a defendant was subject to suit under Ex parte Young, 209 U.S. 123 (1908). Commerce Clause In Fulton Corp. v. Faulkner, 64 U.S.L.W. 4088 (decided Feb. 21), the Court, without dissent (Chief Justice Rehnquist wrote a separate concurring opinion), struck down North Carolina's "intangibles tax" of one-quarter of 1 percent on the fair market value of corporate stock owned by North Carolina residents, or having a "business, commercial, or taxable situs" within the state; a percentage deduction was allowed equal to the fraction of the corporation's income subject to tax in North Carolina. Accordingly, if a corporation did all of its business within the state and paid corporate income tax on 100 percent of its income, resident owners of that corporations's stock would be allowed a 100 percent deduction under the intangibles tax; while stock in a corporation doing no business in North Carolina would be taxable on 100 percent of its value. Justice Souter, writing for the Court, found the tax discriminated on its face against interstate commerce, and rejected the state's attempt to sustain it as a "compensating tax." The Court distinguished Darnell v. Indiana, 226 U.S. 390 (1912) (relied on by the state), which upheld a tax on the stock of foreign corporations to the extent those corporations were not subject to the state tax on in-state property. The tax in this case failed to meet the three basic requirements of a compensating tax: (1) the state must identify the interstate tax burden for which the tax is compensation; (2) the tax must be roughly approximate to, and no more than, the tax on intrastate commerce; and (3) the events on which the taxes are imposed must be "substantially equivalent." Due Process In Bennis v. Michigan, 64 U.S.L.W. 4124 (decided Mar. 4), the Court held, 5 to 4, that the state could forfeit an automobile in which a husband had engaged in sexual activity (for which he was later convicted of "gross indecency") with a prostitute, without compensating his wife for her joint ownership of the car, even though she had no knowledge of her husband's unlawful activity. A Michigan statute permitted such forfeiture as abatement of a "public nuisance," without requiring proof of knowledge by the defendant of the existence of the nuisance. The trial court, in the exercise of its "remedial discretion," ordered the forfeiture and ruled that because of the car's age (eleven years) and small value ($600), there should be no division of the proceeds to compensate the wife for her interest. The Michigan Supreme Court upheld the order, noting that the owner's interest may not be abated when a vehicle is used without the owner's consent. Chief Justice Rehnquist, writing for the Court, relied on precedent drawn from admiralty law justifying the forfeiture of vessels used in crime, and cases of other property that had been used to carry on illegal trade, notwithstanding the innocence of their owners. Concurring opinions were written by Justices Thomas and Ginsburg. Justice Stevens, joined by Justices Souter and Breyer, dissented, as did Justice Kennedy. The dissenters would have distinguished the cases relied on by the majority because the Bennis car was used for illegal activity only on a single occasion; his wife could not prevent his use of the car because of his joint ownership; she had no complicity in the car's illegal use; and there was no negligence on her part in failing to prevent such use. Justice Kennedy added that "the value of her co-ownership is [not] so insignificant as to be beneath the law's protection." Census In Wisconsin v. City of New York, 64 U.S.L.W. 4153 (decided Mar. 20), the Court unanimously upheld the refusal of the Secretary of Commerce to adjust the 1990 census by a particular statistical adjustment designed to correct an undercount in the original enumeration. The Constitution requires an "actual Enumeration" of the population every ten years. Congress has delegated its responsibility therefor to the Secretary of Commerce, who is assisted by the Bureau of the Census. The principal use of the census is for apportionment of the members of the House of Representatives among the states; it is also used in dispensing federal funds to the states, and in drawing intrastate political districts. Chief Justice Rehnquist, writing for the Court, noted that census date have never been perfect; and that errors generally are believed to result in an "undercount." There is also a "differential undercount," which affects some minorities more than the white population. In preparing for the 1990 census, the Bureau of the Census undertook measures to reduce the error rate. The director then recommended the use of a "post-enumeration survey" as the basis for adjusting the count. The secretary disagreed, believing that "distributive accuracy" was more important than correction of any undercount, in view of the census's primary purpose to apportion political representation. Preemption In Barnett Bank of Marion County v. Nelson, 64 U.S.L.W. 4161 (decided Mar. 26), the Court, unanimously, struck down a 1974 Florida statute that prohibits certain banks from selling most kinds of insurance, but permits "unaffiliated" small town banks to sell insurance in a small town. When Barnett Bank, an "affiliated" bank, bought a Florida-licensed insurance agency, the state insurance commissioner ordered the agency to stop selling the prohibited forms of insurance. Barnett filed suit for declaratory and injunctive relief, claiming that the Florida statute was preempted by a 1916 federal statute that authorized any national bank doing business in any place with a population under 5,000 to act as agent for any fire, life, or other insurance company by soliciting and selling insurance. The lower federal courts rejected the preemption claim because of the exemption in the McCarran-Ferguson Act for laws regulating the business of insurance; they ruled that the state law was enacted to regulate the business of insurance, and that the earlier federal statute did not "specifically relate" to the business of insurance within an exception to the McCarran-Ferguson exemption. The Supreme Court reversed. Justice Breyer, writing for the Court, reviewed preemption principles, noting that, normally, "Congress would not want States to forbid, or to impair significantly, the exercise of a power that Congress explicitly granted." Here, the statute "explicitly grants a national bank an authorization, permission, or power" and contains "no 'indication' that Congress intended to subject that power to local restriction." Preemption was not removed by the McCarran-Ferguson Act. "In our view, the Federal Statute in this case 'specifically relates to the business of insurance'—therefore, the McCarran-Ferguson Act's special anti-pre-emption rule does not apply." The opinion noted also that the state law regulated banks rather than the insurance business. Voting Rights In Moore v. Republican Party of Virginia, 64 U.S.L.W. 4207 (decided Mar. 26), the Court ruled, 5 to 4, that section 5 of the Voting Rights Act of 1965 required pre-clearance of a party rule that a voter wishing to participate in the nomination of the party's candidate for the U.S. Senate must pay a $35 or $45 registration fee. Justice Stevens, writing for the majority, noted that Virginia was one of the states covered by the Act. The party, the Court held, "exercised delegated state power when it certified its nominee for automatic placement on Virginia's general election ballot." Therefore, the Act and regulations required pre-clearance of the delegate filing fee. Justice Kennedy (joined by the Chief Justice) dissented, as did Justice Thomas (joined by the Chief Justice and Justices Scalia and Kennedy). ADEA In O'Connor v. Consolidated Coin Caterers Corp., 64 U.S.L.W. 4243 (decided Apr. 1), the Court held, unanimously, that under the Age Discrimination in Employment Act a plaintiff need not show that he was replaced by someone outside the protected age group. The petitioner had been fired at age fifty-six, and his replacement was forty years old. Justice Scalia, writing for the Court, noted: ". . . the fact that a replacement is substantially younger than the plaintiff is a far more reliable indicator of age discrimination than is the fact that the plaintiff was replaced by someone outside the protected class."