Constitutional Law Fed/State Lecture Notes Wednesday 23 Nov 2005 11th Amendment -jurisdictional limitation -state sovereign immunity in both federal and state court unless abrogated under section 5 of 14th amendment -suit may be brought against the state if it consents -individual c/a may be brought as part of a compound action (see note following case) or condition on spending power (p.499) -alternatively an individual can bring suit against the individual employees (state workers) -c/a may be brought by federal govt against states -does NOT preclude the enforcement of federal law Souter Dissent (p.478) in Seminole Tribe Case -11th amendment doesn’t mean what the majority takes it to mean here -thinks notion of sovereign immunity is mistaken -Discusses the history of sovereign immunity o comes from the CL theory of the King as the source of law Does this have any relevance to the US constitution?? • states v. federal doesn’t even fit the original theory of the king as sovereign (ex of a fit would be that President not subject to federal law) o antagonistic to the rule of law b/c the source of the law is the public/the people sovereigns are our employees at both the federal and state level -Explains why he thinks Hans reasoning is wrong o expands state sovereign immunity to federal question cases o court elected to recognize broader immunity doctrine despite the fact that was not in the text o anomaly here recognizing jurisdiction to entertain a citizen’s federal question suit but not one brought by a non-citizen Souter thinks that BOTH citizens and non-citizens may sue on a federal question amend. only meant to preclude citizens suing on non-federal questions in cases of diversity jurisdiction 11th Amend. said nothing about federal question lawsuits even when brought by noncitiizens only diversity lawsuits which by definition are brought by non-citizens argument = there was NO anomaly o majority says too late – must follow precedent -Also wrong b/c premised upon natural law/CL perception of state sovereign immunity which has been superceded by an act of Congress (Indian gaming regulatory act) -Kennedy Dissent in NV v. Hibbs o 11th amendment important b/c protects states’ fiscal integrity from federal intrusion by vesting states with immunity from private actions for damages pursuant to federal laws -There are no background principles to the constitution – what is written supercedes what is unwritten o Counterargument = historical interpretation; declaration of independence (promise and the constitution was the fulfillment) constitution can only be understood in light of its background principles otherwise doesn’t secure the conception of the rights embodied therein federalism is the security of individual rights if don’t observe this then all will end up becoming under the power of the federal govt (opinion of Majority) -Abandoned the notion that there are certain vital principles that will overrule legislative power – if enact something then it is enacted -Notes following case o Rationale Basis Test (see n.9 p.498) Garrett Case constitutional standard disability is not suspect class therefore only need to meet the rationale basis test ADA Congress says that employers must accommodate those with disabilities unless can show that undue burden to do so • difference from constitutional standard – here requires more • Question = Can Congress legislate this higher standard?? o Court in Garrett said NO o when exercise state sovereign immunity must show that states have engaged in discriminatory manner and the statute is fashioned in such a way as to be congruent and proportional btwn remedy and the discrimination Nevada Dept. of Human Resources v. Hibbs -Facts o deals with the FMLA which allows for a designated period of unpaid leave o Hibbs files individual lawsuit against state of NV to secure rights under the Act -Issue: Did congress appropriately abrogate state sovereign immunity?? Where may congress abrogate state sovereign immunity?? -What required for abrogation of state sovereign immunity o First must have clear statement of congress’ intent Court has no problem finding this here -Theory of how congruent and proportional regulation here state discrimination o theory that this act was enacted under congress’ power to enforce the equal protection clause (to protect against inappropriate gender classification) o use of gender is at least quasi-suspect difference from Garrett there the class was not suspect at all and states only need to show the law is rational/reasonable -Court o Easier to abrogate when addressing form of discrimination that is truly illicit – i.e. gender discrimination o not saying that the failure to provide leave is an equal protection violation but are saying that Congress can mandate these things in a “prophylactic” way that goes beyond what the equal protection requires congress has power to both remedy an actual violation and to deter – to cast the scope of remedy more broadly -Dissent o Improper abrogation – no showing that NV has had discrimination on the basis of gender no guilt by association – states are not an amorphous class but are individual sovereigns o Evidence supplied by Congress does not come close to an equal protection violation no showing of discrimination and no showing of a congruent and proportional remedy and therefore there is an improper abrogation o Contrast what done here with what done by the voting act (see p.509) no categorically distinction based on literacy allowed – based this on section 5 of equal protection clause need a similar nexus that shown for the voting act – not found here in this case -Seminole Tribe Can’t use an Art. I commerce authority to impose damages against the states – when the lawsuit is being brought by individuals -Bottom Line = easier to abrogate if what congress vindicating is highly suspect class (will require less evidence of congrucene and proportionality) Securities Regulations Lecture Notes Wednesday 23 Nov 2005 Safe Harbor Rule 147 -applies to the Issuer ONLY (does not apply to SH – they may not take advantage of the safe harbor) -Preliminary Note 3 (p.81 – 3d para) o talks about the concept of integration o reference to the 5 factors here there is an objective test for integration, if fail this then fall back on the 5 case law factors -Rule 147(b)(2) o similar to test under Reg. D one significant difference o have a 12 month safe harbor period 6 months before and after the sale in question (virtually identical to rule under Reg. D) o Two other Requirements/Conditions (1) during the 6 mo. window there are no other sales of securities of similar or same class • quiet period • if sell common stock then may still sell bonds, notes, etc. (2) only certain sales outside of this (12 mo.) period are permitted for the safe harbor to apply • Requirements (if not in 12 mo. period then go through this analysis – if no fit here then go through the 5 factor test) o offered under the section 3(a)(11) are intrastate sales o offered and sold under the section 4(2) exemption are private placements (implies rule 506) o offered under section 3(b) exemption (implies rule 504 and 505) ******** check this one – not sure ******** o registered public offers o Transaction Concept subsection (a) instate issuers and instate sales o Part of an Issue Concept – Integration Issue subsection (b) o Doing Business Concept subsection (c) p.82 right hand column must be resident and doing business in which all offers and sales are being made if issuer corp. then resident if incorporated in the state if partnership then principle office must be located within the state Tests Must Meet – Objective Test • 80% of gross revenues are rendered from in the state • 80% of assets must be located in the state • 80% of the proceeds must be used in the state • principle office must be in the state o Person is Resident Within Home State Concept subsection (d) principle residence must be in state (or office if not an individual) (3) can’t form an entity w/in the state just to get around this requirement o Coming to Rest Concept idea that intended only to cover intrastate sales so if purchasing for purpose of resale then the intrastate exemption shall not apply stock must come to rest in the hands of the in state purchaser subsection (e) and (f) • (f) are requirements things an Issuer MUST do -Securities Regulation 5450 (see textbook) p. 466 o see the examples given and read through carefully – show a liberal /realistic application of the 80% gross revenues test mentioned above o sales originate and terminate in the home state Section 5 -Dealer defined section 2(a)(12) o see codebook o not every D is an UW distinction found in 2(a)(11) people in dealer group are NOT underwriters o all UW are dealers but not vice versa (depending upon the extent of their interest) Section 2(a)(11) -Two Scenarios o I to UW to Public o I directly to Public UW receives the commission for making the exchange but the I is the one who makes the distribution -Definition for Issuer o the people here are NOT issuers for other than this purpose o Issuer shall include any person directly/indirectly controlled by the issuer o talks in terms of control -What does it mean to control?? o term VERY broad o Rule 405 definitional provision direct or indirect power to direct the management and policy of a person don’t have to exercise – can be passive and still be in control don’t have to own stock • majority SH would obviously have control includes any kind of executive officer or board member b/c these people have the power to control the corporation • these persons are called affiliates control may be joint and severable – can be part of the group and viewed as an affiliate individually o NEED TO READ ARTICLE p.545