a website for classes taught by William H. Widen

FALL 2017

    --Last Modified: Tuesday, 08-Aug-2017 08:49:42 EDT

Lecture Topic 1: Federalism

This lecture is designed to build upon, and provide additional details for, the discussion about the dual structure of laws in the United States which we began to consider in the Introductory Remarks and related reading.

Federalism is a system of government in which the same territory is controlled by two levels of government. Generally, in a federal system, an overarching national government sets policy and administers issues that affect the entire country; smaller government subdivisions set policy and administer issues of local concern. In a federal system, both the national government and the smaller political subdivisions have the power to make laws and both have a certain level of autonomy from each other. The United States has a federal system of government consisting of the national or federal government, and the various governments of the individual states. [Read INTRO TEXT, Chapter 6, The Legislative System, at pp. 69-80.]

Due to federalism, both the United States federal government and each of the state governments have their own court systems, legislatures and executive branches. [Read INTRO TEXT, Chapter 4, The Judicial System, A Dual System of Courts, State Courts and Federal Courts, at pp. 43-47.]

The President of the United States is the chief executive officer of the United States. Each state government has its own chief executive officer known as a “Governor.”

The legislative branch of the United States consists of two elected bodies: the Senate and the House of Representatives. These two bodies are referred to collectively as the “Congress.” The structure of the legislative branches of the several states varies, but often is composed of two elected bodies as well.

The judicial branch of the United States will be described in greater detail elsewhere in these materials. In general outline, the federal judicial system is comprised of district courts (at which trials are conducted), intermediate appellate courts known as “Circuit Courts of Appeal”, and a single Supreme Court. In addition to the basic three tiered structure of the federal courts, the judicial system of the United States also includes a number of specialty courts handling matters such as bankruptcy, patents and taxes. The several states typically have a similar three-tiered court system, with trial courts, intermediate appellate courts and a supreme court, as well as specialty courts to handle matters such as probate and family disputes. Students should take care, however, to note that some states assign different names to their courts. In New York state, for example, the trial court is referred to as a “supreme court,” while the highest appellate court is referred to as the “Court of Appeals.”

The U.S. Constitution is the organic and foundational document which sets up the federal system of government in the United States pursuant to which power is shared between the federal government and the various state governments within the territory of the United States. The U.S. Constitution is the supreme law of the land in the United States. Even though power is shared between the federal government and the several states, in the event of a conflict between a federal law and a state law, federal law controls--the Supremacy Clause principal which was introduced to you in the Introductory Remarks. Moreover, the U.S. Constitution is supreme over laws passed by the federal legislature. No federal law may alter the structure of government set forth in the U.S. Constitution or infringe on any rights conferred on persons as granted by the U.S. Constitution. Many of the basic rights granted to U.S. Citizens are contained in the first ten amendments to the U.S. Constitution known as the “Bill of Rights”. Additionally, no law may be passed by a state legislature which infringes on any rights conferred on persons as granted by the U.S. Constitution. The restrictions on actions by the federal government against its citizens contained in the Bill of Rights has been extended to limit actions that may be taken by state governments.

Individual states have their own state constitutions which create the structure of the individual state governments. Though often overlooked in introductory legal studies, the state constitutions also grant rights to their citizens which may not be infringed by action of the state legislatures. These protections often mirror those found in the U.S. Constitution but they may afford greater protections (or language in a state constitution that is similar to language in the U.S. Constitution may be given a more expansive reading by the supreme court of a state).

Though the structure of both the U.S. government and the several state governments are established by organic documents known as “constitutions” it bears noting that the nature of these constitutions may differ radically in their character and level of detail. The U.S. Constitution is a relatively short document drafted in general language. In operation, to function it relies heavily on interpretations of this general language by the U.S. Supreme Court. As the U.S. Constitution is notoriously difficult to amend, there is little practical way for the electorate to change an outcome if the Supreme Court finds that a law conflicts with the Constitution. In contrast, many state constitutions may be amended by a simple ballot initiative in a state. The difference in the amendment process has two outcomes. The electorate may more easily change an outcome mandated by the state supreme court and it allows for a type of direct legislation by the electorate. Many state constitutions are riddled with very detailed provisions governing small details such as the proper housing that may be used to raise certain types of livestock. Though state constitutions also provide for the general structure of state government, provisions containing such details might surprise those who have not looked.

The U.S. Constitution grants the federal government power over issues of national concern, while the state governments, generally, have jurisdiction over issues of domestic concern. While the federal government can enact laws governing the entire country, its powers are enumerated, or limited; it only has the specific powers allotted to it in the Constitution. For example, Article I, Section 8 of the Constitution grants Congress the power to levy taxes, mint money, declare war, establish post offices, and punish piracies on the high seas, as well as the power to regulate interstate commerce. Any action by the federal government must fall within one of the powers enumerated in the Constitution. For example, the federal government can regulate interstate commerce pursuant to the Commerce Clause of the Constitution but has no power to regulate commerce that occurs only within a single state--at least that is the theory--a proposition severely tested by interpretations such as those found in Gonzales v. Raich, which we considered in the Introductory Remarks.

The amount of power exercised by the federal government is dependent on how the U.S. Supreme Court interprets the various provisions of the Constitution. For example, the U.S. Supreme Court expanded the powers of the federal government when it construed federal powers to include those “necessary and proper” to effect the legislation passed by Congress. McCulloch v. Maryland, 17 U.S. 316 (1819). This construction allows the federal government to exercise power ancillary to those specifically listed in the Constitution, provided the exercise of those powers does not conflict with another Constitutional provision.   And, in our earlier consideration of Gonzales v. Raich, you have seen how the Supreme Court has given a broad interpretation to the scope of certain enumerated powers, such as those found in the Commerce Clause. In contrast, state power is not limited to express grants of power. Under the Tenth Amendment of the Constitution, States have all powers that are not specifically granted to the federal government, or forbidden to them under the Constitution. For example, although the Constitution grants the federal government the power to tax, state governments are also able to levy taxes to support themselves, because that power is not forbidden to them by the Constitution. State governments manage matters of local concern, such as child protective services, public schools, and road maintenance and repair.

Some Practical Issues Raised by a Complex Federal System

The practice of law

As a profession, the practice of law is regulated. A person must pass a “bar exam” to be admitted to the practice of law. Admission to the bar is, primarily, a matter of state law and regulation. A person takes the bar exam of a particular state to be admitted to the practice of law in that state. The bar exam varies by state because the laws in each state differ from one another in certain respects (though it is typical for a portion of the bar exam to include a “multi-state” portion which is common throughout the United States). The need for examination and regulation of the legal profession to take place at the state level is a function of the system of federalism in which each state passes its own laws and administers its own courts. Once a person has passed the bar exam and gained admission to the practice of law in a particular state, gaining admission to practice law in a federal court is largely a formality. [Read INTRO TEXT, Chapter 3, Legal Profession, The Bar, at pp. 27-30.]

Choice of law and forum

Lawyers around the world undoubtedly seek certainty for their clients. However, in a system of particularly complex federalism as found in the United States, with a very large number of jurisdictions, court systems and potentially conflicting laws, these concerns can be particularly acute. How is a party to know which of many potentially conflicting laws might apply to a transaction and in how many different courts might a party be subject to a law suit?

Under the laws of the various states, perhaps responding to these concerns over certainty and the need to advise clients, parties engaging in voluntary contract transactions have, as a general matter, the power both to choose the law which will govern their transactions and the forum in which disputes may be heard. Students should compare the Florida Choice of Law Statute with the New York Choice of Law Statute [for NY, go to Laws, GOB General Obligations, Title 14, Article 5-1401] and the Florida Choice of Forum Statute with the New York Choice of Forum Statute [for NY, go to Laws, GOB General Obligations Title 14, Article 5-1402]. These types of statutes should be familiar to any lawyer who practices business law in the United States. In reviewing these laws, however, you might note that the statutory choice of law and choice of forum provisions do not apply to every transaction. That is to say, a lawyer may not always rely on a statute to determine whether a choice of law elected in an agreement will be enforceable under the law of a particular state. In those cases, a more involved legal analysis will be needed to assess the potential enforceability of a choice of law clause. See the discussion of choice of law opinions in the extensive report on opinion practice prepared by the Business Section of the Florida Bar https://www.americanbar.org/content/dam/aba/administrative/business_law/buslaw/tribar/materials/20111203_florida_third_customary_practice.authcheckdam.pdf (go to page 169 where the discussion starts).

Another feature of law practice in the United States that is impacted by having a federal system is the impact of the distinction between procedural law and substantive law. In any case heard in a state court, the court will apply its own procedural rules to administer the handling of the case. The rules of procedure in state courts varies state by state. That is to say, the rules of procedure in a Florida court will vary from those in a New York court, for example. Though the rules of Florida procedure will govern the administration of a case brought in a Florida court, this does not mean that Florida substantive law will be applied to decide the issue. It is possible that the laws of another state will govern the substantive issues presented for decision. This could happen, for example, if the the Florida court were hearing a contract law dispute in which the parties had selected the substantive law of another state, such as New York or Virginia, to govern their contract. This could determine the outcome of the case. For example, the statute of limitations within which a contract law action might be brought differ from state to state. A Florida court might be called upon to apply the substantive law of New York or Virginia to decide the question. Thus, a lawsuit brought in a Florida court which was commenced in a timely fashion under Florida substantive law might need to be dismissed for being commenced too late if the court applied the statute of limitations of Virginia to the dispute because Virginia has a shorter statute of limitations for contract actions. See Capital One Bank USA NA v. Gregorich. For a slightly difference analysis of the same type of problem (with the same result) consider Capital One Bank v. McGurk. Choice of law provisions, among other types of sections, are often included in standard form contract language which often receives little attention from the parties in a particular transaction. As you can see, this was a mistake for Capital One. Capital One's lawyer's simply chose Virginia law to apply to all their credit card agreements nationwide probably because Capital One is headquartered in Virginia and the lawyers who drafted the agreement form were admitted to practice law in the State of Virginia. As a matter of vocabulary, in the United States standard form contract language, which often appears in pre-printed forms, is referred to as “boilerplate” or “boilerplate language.”

Long-arm jurisdiction and its limits

People also wonder whether they might be called into court in a far away or inconvenient forum to answer for alleged harms they may have caused to others in cases where they have not contracted (for example, if they are alleged to have injured another party) or where they might sue another party who is alleged to have injured them. Consider, for example, a resident of California who is injured in a hotel in Florida. Can the California resident return home to Los Angeles and sue the Florida hotel in a court located in Southern California? Suits that attempt to bring a person from one state to answer in the court of another state are generically called “long-arm statutes.” This possibility creates a great deal of uncertainty which can not be managed by contract because there may be no contract between the parties (or, at least, no contract which settles these issues). Here, the U. S. Supreme Court has stepped in to specify, on “due process” grounds, the limits on the ability of a party to be forced to answer in the court of another state. Please read the case at this link about the long-arm statute in Florida in the age of the internet. For an attempt at an extreme use of long-arm jurisdiction, consider Daimler AG v. Bauman (we will look at this case in more detail later in the semester so simply look at briefly to get an idea for the type of problem that long-arm jurisdiction can create—here on an international level). A Harvard Law Review analysis of Bauman appears here.

Forum Shopping and Federalism

The presence of multiple court systems and multiple variations in law from state to state, create the possibility of forum shopping--that is, the practice in which a plaintiff will attempt to determine which procedural and substantive laws thoughout the United States are most favorable to its case, and then follow up by filing suit in a court in that state.  Moreover, there is the possibility that a plaintiff might determine that it is better off from a litigation standpoint in a Federal court than in a state court.  If it satisfies the jurisdictional requirements to file suit in Federal court, it may do so.  We will pay additional attention to problems associated with forum shopping in a later class, but it bears mentioning because the practice of forum shopping thrives in a federal system like that found in the United States (though one finds similar problems in trans national litigation.  You may skim the article Forum Shopping and the Infrastructure of Federalism for a brief overview of the issues involved.

For a brief comparison of differences between the federal courts and the state courts, read the following link:

[ http://www.uscourts.gov/about-federal-courts/court-role-and-structure/comparing-federal-state-courts ]

Last Modified: Tuesday, 08-Aug-2017 08:49:42 EDT