Hypothetical Statutory Jurisdiction and the Limits of Federal Judicial Power

When federal courts exercise hypothetical jurisdiction, they bypass tough questions of subject-matter jurisdiction to dismiss cases on easy merits grounds. Because exercising hypothetical jurisdiction often appears to be more efficient, lower federal courts widely adopted the practice prior to 1998. But the Supreme Court rejected at least some, and perhaps all instances of hypothetical jurisdiction in Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998), since it violated the well-established duty to confirm subject-matter jurisdiction prior to reaching the merits. Soon after, in order to preserve maximum flexibility for themselves, most lower courts read Steel Co. narrowly. They reasoned that the often-ambiguous Steel Co. opinion banned bypassing only constitutional — and not statutory — issues of subject-matter jurisdiction. Today, the practice of assuming “hypothetical statutory jurisdiction” is widespread in the lower federal courts — though it is also the subject of a circuit split. This Article challenges this consensus, and argues that assuming hypothetical statutory jurisdiction violates Article III as interpreted by Steel Co. and its progeny. Hypothetical statutory jurisdiction’s basic premise — that statutory subject-matter jurisdiction limitations are less inviolable than their constitutional counterparts — is faulty. The constitutional scheme itself dictates that statutory subject-matter jurisdiction is equally necessary to reach the merits, vitally important for promoting separation-of-powers and federalism values, and often instrumental in protecting the federal courts’ limited judicial resources. Moreover, the principal doctrinal argument for hypothetical statutory jurisdiction, which depended on characterizing issues of statutory standing as jurisdictional, has been undermined by recent Supreme Court precedent holding that such issues are not jurisdictional. Furthermore, subsequent Supreme Court cases elaborating on Steel Co. have tacitly assumed that hypothetical statutory jurisdiction is unconstitutional, and have emphasized that subject-matter jurisdiction — without qualification — is necessary for a federal court to reach the merits of a case. This Article also argues that constitutional avoidance and efficiency concerns do not justify retaining the unconstitutional doctrine of hypothetical statutory jurisdiction. Even in the case of potentially-unconstitutional jurisdiction-stripping statutes, constitutional avoidance values are far more ably served by the applicable clear-statement rules, which avoid serious constitutional issues without trenching on fundamental separation-of-powers principles. Moreover, the efficiency case for hypothetical statutory jurisdiction is overstated. Abandoning hypothetical statutory jurisdiction under current law will be far less costly than it must have seemed in Steel Co.’s immediate aftermath. Hypothetical statutory jurisdiction can also create inefficiencies of its own, both by causing courts to reach merits issues unnecessarily, and by incentivizing collateral attacks on subject-matter jurisdiction in follow-on litigation. More fundamentally, even if hypothetical statutory jurisdiction might lead to immediate efficiency gains for the litigants and the judge, it is not an effective way to dispose of a case expeditiously while simultaneously respecting the interests of Congress, state judiciaries, and fundamental separation-of-powers and federalism values.