William H. Rehnquist: We'll hear argument next in Number 95-1694... the spectators are admonished not to talk until you get out of the courtroom. The Court remains in session. We'll hear argument next in Number 95-1694, Regents of the University of California v. John Doe. Mr. Miller, you may proceed.
Charles A. Miller: Thank you, Mr. Chief Justice, and may it please the Court: The issue presented for review in this case is whether the Eleventh Amendment immunity is lost if the State or a State entity has a claim for indemnification or reimbursement for any judgment entered against it. Here, the potential indemnitor is the United States Department of Energy. The issue arises in the context of a breach of contract action brought in Federal court on diversity grounds where the plaintiff is a citizen of New York and, thus, the issue does not implicate the question of the scope of the Eleventh Amendment that the Court has focused on in a number of cases, most recently in the Seminole Tribe case of last year, for even under the most narrow view of the scope of the amendment the question presented in this case would need to be addressed. The Ninth Circuit court held that the university lost its immunity in this case because in this particular case it had a claim for indemnification against the United States Department of Energy. The core error of the court below was its premise that in each case involving a State entity the court can consider, and parties can litigate, the question of the payment source that would be used to satisfy a judgment that might be entered in that particular case. Nothing in the Court's Eleventh Amendment cases supports that view, and we believe it is inconsistent with the terms, the meaning, and the purpose of the Eleventh Amendment. The core purpose of the Eleventh Amendment is to withhold jurisdiction from Federal courts and to withhold the exercise of Federal judicial power against a State in respect of that State's sovereignty. Under the Ninth Circuit approach, Federal judicial power is potentially exercised against the State or its entity in virtually every case, or any case in which the plaintiff alleges that there is some payment source for the judgment that might be entered in the case that would satisfy the judgment and that would avoid payment of that judgment directly from the State treasury.
David H. Souter: Mr. Miller, I want to make sure I understand one thing. I take it that it's your position that this reference to a source of indemnity is simply irrelevant as a matter of law, that there is no circumstance in which that should be taken into consideration in order to determine the Eleventh Amendment status of some supposed arm of the Government.
Charles A. Miller: Yes, Your Honor, with this one qualification. We acknowledge that at some point any entity, not the State itself, may have to be subject to a determination as to whether it is a State entity--
David H. Souter: Right.
Charles A. Miller: --for Eleventh Amendment purposes, and it would be looked at with its overall character. If in some case there were an agency of the State which was entirely supported by indemnification from an outside source like the Federal Government, in that hypothetical situation conceivably the factor of indemnification would be relevant.
David H. Souter: Well, are you assuming in the hypothetical that you raise, are you assuming in that case that the State treasury or "State funds" could never be reached, and that the only funds that could be reached would be those of the third party nongovernmental indemnitor?
Charles A. Miller: In fact, Your Honor, yes, and beyond that, that the entity was established on the premise--
David H. Souter: Okay.
Charles A. Miller: --that its... the State funds would never be reached.
David H. Souter: So that... in other words, that doesn't really qualify, I take it, your answer, because your answer is, on the assumption that State funds are reachable at least in theory, the existence of a third party indemnitor is irrelevant as a matter of law to the Eleventh Amendment determination.
Charles A. Miller: Yes, Your Honor.
David H. Souter: Okay.
Charles A. Miller: That's the position. Whether it's an indemnification, insurance claim, a possible claim over or against a third party, a possible joint tortfeasor, anything of the sort. None of those possibilities we say should be relevant, and yet the Ninth Circuit court decision would seem to make any one of those possibilities relevant to a determination in a particular case as to whether a State entity would be entitled to Eleventh Amendment immunity.
Anthony M. Kennedy: There was discussion in the Hess case of the potential for judgments to reach or not reach the State treasury. We seemed to think that was important in the Hess case. Why is that not important here?
Charles A. Miller: Two reasons, Your Honor. First, in the Hess case the inquiry that the Court made was whether that bi-State entity there, the path, had been established by the two States involved, New York and New Jersey, with an intention that those States be responsible for its various debts, and in that case the Court looked at that overall structure and concluded that the States did not intend their treasuries to be responsible.
Anthony M. Kennedy: So you're saying that the discussion there simply was a way for us to inquire or measure the connection between the bi-State entity and the State?
Charles A. Miller: Yes, Your Honor. In fact, that was the standard that the Court announced when it made that... when it took those factors into account. The Court asked--
Ruth Bader Ginsburg: Mr. Miller, was an antecedent to getting to that in the Hess case that we were dealing with an entity that had not simply two States as creators, but the Federal Government as well, and then said, there is a presumption that such an entity founded by three sovereigns does not wear the mantle of a State, and maybe that presumption is undone if the States are legally obligated to pick up the tab for it, but--
Charles A. Miller: --That is absolutely right, Your Honor. That was going to be my second point, that the Court in the Hess case adopted a standard which started with a presumption against cloaking that particular entity with Eleventh Amendment immunity and required a demonstration that not only the States involved intended for the agency to have their sovereign power, but that the Congress agreed with it. That's not the standard that would apply in judging whether an arm of the State is entitled to Eleventh Amendment immunity, but even under that approach there have been situations where a bi-State entity has been found to have Eleventh Amendment immunity. I think of the case in the D.C. Circuit of the Washington Metropolitan Area Transit Authority, which Justice Ginsburg's opinion cited in the Hess case, I think, but that was again an application of a special standard for the bi-State entity situation.
Ruth Bader Ginsburg: --But in any event, here there is no legal... there's no release of the university from legal liability. As there was in the Hess case there was no legal liability.
Charles A. Miller: That's unquestionably true, Your Honor, and were a judgment to be entered on this breach of contract case, claim against the university, the university would be legally liable, and all of the consequences that would flow from having had a court make a legal determination of a violation of someone's rights would apply in the case. The university, to be sure, under the contract here would look to the Department of Energy to satisfy the monetary judgment awarded by the court, and it would hope, in the unlikely event that this occurs, that the Department would respond, but if it didn't, the university would be on the hook to pay the judgment.
Anthony M. Kennedy: In these cases involving universities, is it important for us to inquire whether, as a matter of State law, there is sovereign immunity that attaches to the institution, or is it not important, because sovereign immunity can always be waived?
Charles A. Miller: I think it's an element, Your Honor, of the inquiry, the ultimate inquiry which this Court announced in the Mount Healthy case, and I think it's been repeated again in the Hess case and others, was what is the intention of the State in establishing the entity? Did the State intend this entity to exercise State sovereign powers? Whether that particular entity has State sovereign immunity could be relevant to that inquiry. In this particular case, there is a general State statute that explains just exactly how, and to what extent, the State waives its sovereign immunity for itself and its entities, and the Regents of the University of California are explicitly named as one of the entities covered by that provision.
Anthony M. Kennedy: Do those statutes, do you think, supersede the California supreme court's decision, the 1899 decision where they... in the Royer case where the California supreme court said that the university, while a governmental institution, is not clothed with the sovereignty of the State and it's not a sovereign? Do we just ignore that sentence, or has it been superseded by statute, or--
Charles A. Miller: I think that sentence has to be read for precisely what it said. The Court pursued it by saying the State is an instrument... I mean, the Regents is an instrumentality of the State. It is not, however, the State itself, and I think that's what the State, what the supreme court was saying, and for that reason, it said, it can be subjected to legislative enactments. In that case, it was enactments relating to the probate--
William H. Rehnquist: --Haven't we held in one of our decisions that even though the State may... State law may say it's... an entity is suable in State court, that does not conclude the Eleventh Amendment inquiry in Federal court?
Charles A. Miller: --Yes, Your Honor. This Court has made clear that a waiver of Federal court Eleventh Amendment sovereign immunity must be explicit, and is not accomplished simply by a general waiver.
Antonin Scalia: What about the converse proposition, not waiver, but could a State... let's take a cement plant as an example... go into the cement business and create the cement administration entity as an arm of the State and say it shall not be immune... it shall be immune from all suit in Federal court and also in State court?
Charles A. Miller: Yes, Your Honor. I mean, it could. It would have to make a decision that it wants the cement operation to be part of the State government, to be clothed with the rights and attributes of State sovereignty.
John Paul Stevens: Is there any Federal limit on the extent to which a State can create subdivisions that will be entitled to Eleventh Amendment immunity?
Charles A. Miller: I don't think there are any Federal limits, Your Honor, because the whole point here of the Eleventh Amendment is to respect State sovereignty and the State's decision as to how to organize itself to carry out its governmental functions, and if the State decides hypothetically that the... operating a cement plant is a sovereign function it wants to undertake, that decision should be respected.
Antonin Scalia: Well, it is not respected in international law any more. There is an exception to international sovereign immunity with respect to commercial activities of Governments, and that may well be ex... I mean, it isn't out of the question that that could be extended to the Eleventh Amendment as well, but that's not involved here anyway, is it? I mean, this is not a commercial--
Charles A. Miller: It's not involved in this case but I'm happy to--
Speaker: --Yes.
Charles A. Miller: --comment on it, Justice Scalia. I mean, this Court has looked at the commercial versus governmental distinction in a number of contexts and has tended to find it wanting in every case. The most prominent one I'm thinking of is the Garcia case, where it rejected that basis for distinguishing between functions of governmental entities that would be beyond Federal regulation.
John Paul Stevens: And of course, if you applied that distinction here you'd be on the proprietary side of the distinction, wouldn't you?
Charles A. Miller: I don't think so, Your Honor, because I think what you'd be looking at would be the university as a whole, and the whole point of this case is that you've got to look at the university as a whole and examine its overall character. And the fact that it happens to have a particular operation that someone might say looks more commercial in nature, just as one might say providing parking lots for the faculty is a little more commercial in nature than a governmental... one could break this down and in every case perhaps find some basis for arguing that there is an exception to the immunity, and under such an approach I think in the end there would be no immunity, because the university and every other State entity would have to defend itself in every case against the contention that in that particular case its functions are not protected by the immunity, and instead of having an immunity suit, which is what was intended by the Eleventh Amendment, what you'd have would be--
John Paul Stevens: I don't understand that argument. There are clearly some things that the Government would do that are purely governmental... I mean, carrying out Government policy in one way or another. You're saying there is no... you're just saying there is no valid distinction between the two kinds of function, and there's a lot of support for that, of course.
Charles A. Miller: --Yes, Your Honor, and I would say, Justice Stevens, that in the context that we're talking about here, which is how does the State organize itself to carry out functions, I don't think there's any evidence that States elect their form of organization or their activities based upon whether the Eleventh Amendment applies, and no one would make such a suggestion, so if a State, to take your hypothetical, decides--
John Paul Stevens: I don't know why they wouldn't. If they go into the cement business, as Colorado did, why, they might take that into account. It seems to me perfectly legitimate.
Charles A. Miller: --I don't know of any evidence that any State in fact takes that kind of consideration into account. At least until that evidence was present it would seem to me not worth distorting the purposes of the Eleventh Amendment simply to protect against that somewhat unlikely scenario.
Ruth Bader Ginsburg: In any event, Mr. Miller, in this case you're saying that we have to deal with the University of California as an entity and not whatever Livermore Laboratory might be if it were a discrete entity.
Charles A. Miller: That's correct, Your Honor, and you may ask why is that the case, and my response would be because the minute you start breaking down the activity of an entity function by function, activity by activity, you are inviting in every case an opportunity for litigation in the Federal court as to whether or not that particular entity is entitled to immunity in that particular case. And that series of events has as its ultimate consequence the evisceration of the immunity that the Eleventh Amendment was intended to present, and it makes no difference whether it's a Federal question case or a diversity case like this case, where the issue involved is one of State law, and it seems to us in that situation the cases of this Court are clear that the entity needs to be viewed as a whole. If I may reserve the balance of my time, Mr. Chief Justice--
William H. Rehnquist: Very well, Mr. Miller. Ms. Blatt, we'll hear from you.
Lisa Schiavo Blatt: Mr. Chief Justice, and may it please the Court: We believe that the court of appeals erred for two reasons. First, regardless of whether a State entity has a potential right of indemnity from a third party, the State's sovereign interests are implicated whenever the State has been sued. Second, the court of appeals approach creates an unworkable approach to resolving the immunity question. As to our first point, this Court has repeatedly held that the Eleventh Amendment does not exist simply to protect a State against damages that must be paid out of the State's treasury. It also exists to protect the State's dignitary interest in not being sued by private parties without the State's consent, and it applies regardless of the relief sought. Here, respondent seeks both damages and injunctive relief from the State. The fact that the Federal Government might be contractually obligated to pay the cost of any judgment in this case does not change the fact that the university has been sued and legally will be responsible for any judgment. Secondly, this case illustrates the problems created by the court of appeals decision. The Department of Energy has not determined whether the cost of any judgment in this case would be indemnified under its contract. The court of appeals opinion that the Department of Energy must pay those costs is merely advisory as to the Department, which is not a party to the case. A binding determination on the indemnity issue will be made by the Department of Energy's contracting officer after he or she reviews the relevant facts in the contract. Thus--
Antonin Scalia: You say binding? Is that not... that will be reviewable in court, certainly.
Lisa Schiavo Blatt: --Yes. Under the contract there's an issue resolution process, and then it would be appealable to the Energy Board of Contract Appeals or the Court of Federal Claims, and then--
Ruth Bader Ginsburg: Ms. Blatt, you mentioned with respect to the Department of Energy's... what it assumes, what liabilities it will assume, that that is now undergoing revision. What is the status of the revision that you described in your brief?
Lisa Schiavo Blatt: --The final rule has not been issued yet, but the Department of Energy hopes to have it out in the near future. It's just in the form of a notice, and they're assembling responses to the public comments.
Ruth Bader Ginsburg: What would be the principal change from the indemnity as it now exists and as it will exist if this rulemaking is final?
Lisa Schiavo Blatt: There's a very significant change in the third party liability clause. It will now be... the burden of proof will be on the contractor to persuade the contracting officer that damages were not caused by lack of prudent business judgment by the contractor's managerial personnel. It's both a widening of the scope of the potential contractor's officers that can commit misconduct or, if you will, conduct that would result in unallowable costs, as well as it's a heightening of the standard. It's no longer wilful misconduct or lack of good faith. It's simply lack of prudent business judgment, and the Department and the University of California are currently negotiating their contract to begin in the fall of '97, so we'll know then what that clause looks like.
Ruth Bader Ginsburg: Thank you. Ms. Blatt, does the United States have a position on the question of whether the University of... the Regents of the University of California are an arm of the State?
Lisa Schiavo Blatt: No, other than to assume that they are, based on the way the question presented is worded, that if they're otherwise immune, then as a State entity the Department of Energy's contractual obligation to indemnify them doesn't change anything because it is the university who is subject to the coercive enforcement powers of the court and in any event may turn around to the Department of Energy and the Department may not pay.
Ruth Bader Ginsburg: Ms. Blatt, that was the way the question presented was worded, but the Ninth Circuit decision was more diffuse, wasn't it? They said, this is one of... they have five factor tests, and we're reviewing that determination, so how could we just pick out the neat question presented and say that's what's before us, when we're reviewing a Ninth Circuit decision that says there are these five factors, add them all up, and we come out with not an arm of the State?
Lisa Schiavo Blatt: I think it's a fair characterization of the Ninth Circuit's opinion that what distinguished the university in this situation was the court of appeals view of the Department of Energy's contractual obligations, and our position is not to dispute any of the factors the Ninth Circuit looked at except for what they relied on, this payment factor that an indemnity allegation is solely a matter between the university and the Department of Energy. It doesn't affect the fact that the university is the party against whom judgment is sought.
David H. Souter: And you take the position also, I understand, that in making the determination of the university's status for Eleventh Amendment purposes that the existence of an indemnification agreement as such is simply an irrelevant consideration.
Lisa Schiavo Blatt: That's correct, and you have here what certainly we did not dispute, was that the State of California is legally obligated to satisfy the university's debts based on both the Constitution and the fact it appropriates significant amounts of money to the university each year.
David H. Souter: Given that fact, that's where you stop, on your view.
Lisa Schiavo Blatt: Yes. Given those facts, if there's a legal connection, a legal liability to the State entity in question the existence of an indemnity agreement with a third party does not alter that entity's status under the Eleventh Amendment, and that's again because the university is on the hook for the judgment and that third party may or not... may or may not be forthcoming, and in any event, that doesn't change the relationship between the plaintiff, the university as a defendant, and the court, who can enforce the court's enforcement powers against the university. And this case could... illustrates what could happen is, the court of appeals opinion that the university will have the Department of Energy pay its judgment, the university might find itself compelled to pay damages in this case, yet ultimately unable to shift those costs to the Department of Energy, and in our view that would be impermissible under the Eleventh Amendment, and again that's because judgment is sought against a State entity. I don't have any more points to make, so if there are no questions--
William H. Rehnquist: I don't believe my colleagues do, either.
Lisa Schiavo Blatt: --Okay. [Laughter]
William H. Rehnquist: Thank you, Ms. Blatt. Mr. Gayer, we'll hear from you.
Richard Gayer: Mr. Chief Justice... excuse me... and may it please the Court: This is a Federal case involving 100 percent Federal money at a Federal facility, the Lawrence Livermore National Laboratory, which executes a Federal program for an exclusively Federal interest: nuclear weapons research. The Regents here, Regents' corporation is not managing a university. It's not even running its hospital. What it's doing is managing the Lawrence Livermore National Laboratory as a public service to the Nation, for no loss or gain. That's on page 1 of the contract, which is not part of the joint appendix.
Antonin Scalia: But I didn't think we had taken this case to go into whether, absent the indemnification provision, there is sovereign immunity or not. You know, there are a million different entities, and each one of them have different considerations, and we normally don't take up each case to decide whether the court of appeals got it right that applying the normal factors this was the State or this wasn't the State. I thought the only issue before us here was whether, assuming it is otherwise the State, the indemnification feature makes a change. That's a point of law I think we can grapple with that has, you know, permanent significance Nationwide.
Richard Gayer: Focusing on that narrow issue, which I personally believe that the broader issue is subsumed within the question presented--
Antonin Scalia: Well, let's read--
Richard Gayer: --Focusing on the--
Antonin Scalia: --Let's read the question presented. What--
Richard Gayer: --Well, I agree with Your Honor's statement of the question presented so--
William H. Rehnquist: --Well--
Richard Gayer: --I'd like to focus on that. Here we have something where the university is really some sort of facade or name between the outside world and the Federal Government. The Federal Government has made a solemn, written promise to pay directly... not to indemnify, not to reimburse, but to pay directly any judgment awarded against the name of the university.
William H. Rehnquist: --Well, if the university is just a facade, Mr. Gayer, perhaps you should sue only the Federal Government, not the university.
Richard Gayer: The problem is we have no jurisdiction in the Federal District Court over the Department of Energy until... ever, and we don't have any jurisdiction in the Federal District Court over the Department of Energy until and unless such time as the plaintiff in this case gets a judgment against the name of the university, so step one is to sue the university here in U.S. district court and get a judgment. At that point, we would have a claim against--
William H. Rehnquist: But the university says the court has no jurisdiction over it either, because of the Eleventh Amendment.
Richard Gayer: --Obviously, we contend that the university is wrong, because there can be no impact on the State treasury. That was the point of the--
Sandra Day O'Connor: Well, what if the university just had a big insurance policy to cover any liability. Same question?
Richard Gayer: --Different answer. There, the university paid for the insurance, therefore that has an impact on the university's treasury, which happens to be separate and distinct from the State treasury, but that's a different situation.
Antonin Scalia: They paid for the Government's indemnification promise as well. I mean, you don't think that promise is made for free.
Richard Gayer: Yes, it is.
Antonin Scalia: The contract would... you know, the university would have demanded a lot more money for the contract if that indemnification provision weren't in it, so the payment isn't the difference between the two.
Richard Gayer: Your Honor, I would respectfully disagree, because here the university is doing this as a public service. The contract says so. It's true they get a $20 million annual fee for using the name of the university, but this is not a case where there's any connection between this nominal fee and any indemnity or judgmental risk.
Antonin Scalia: Do you deny that they would have demanded much more reimbursement from the Federal Government if they did not have the Federal Government's indemnification guarantee?
Richard Gayer: Well, this calls for my--
Antonin Scalia: If they had to be either self-insurers, or had to buy insurance from an insurance company?
Richard Gayer: --Well, we can only... Your Honor, we can only speculate on that.
Antonin Scalia: I know. How would you speculate about that?
Richard Gayer: I would speculate that the-- [Laughter] I would speculate that the university would never sign such a contract. They would tell the Department of Energy to get lost.
Antonin Scalia: Because the cost is too high.
Richard Gayer: There's too much risk. It's not worth the risk. The Department of Energy wants to use the good and prestigious name of the University of California to attract talented scientists, technical professionals to work on Government projects, and the DOE has determined that it's to its advantage to get a prestigious name, and the DOE is willing to pay for it.
Antonin Scalia: Aside from the fact that the university would pay for a private insurance policy, is there any other feature that would distinguish Justice O'Connor's question from the case before us?
Richard Gayer: Thank you, Justice Scalia, yes, there's an important distinction here, I think, that in general an indemnitor such as an insurance company is quite separate from the contract, say, between the Government and the Regents corporation. It would be some outside insurance company that would be agreeing to indemnify. Here, it's the Department of Energy itself, for which the Regents is doing the work, that is saying, you do this work for us, you run our labcratory, and we'll pay directly any judgment, so there is no outside insurers. I think that--
Sandra Day O'Connor: I thought they didn't pay just any judgment no matter what. Isn't there some provision in the contract for reimbursement that if it's willful misconduct they won't reimburse?
Richard Gayer: --Well, that's true. I assume that means we're talking about something wherein perhaps an employee of the laboratory engaged in some sort of assault and battery, or embezzlement, or what-have-you, something approaching on the criminal, but that's neither alleged here, and there's no hint of it here. In the joint appendix near the end at page... let's see if I can find this. I believe it's 82a--we have a letter from the Department of Energy directly to the plaintiff dated November 23, 1993, where they make a technical reservation regarding Justice O'Connor's mention of bad faith and willful misconduct. But if you read this in context, knowing that the event sued upon in this case occurred in June of 1991, and this letter was issued approximately 2-1/2 years later, we have a statement that, you know, while we still reserve this business about bad faith, which never occurs, the Department is saying we'll bear the cost of defending the university, and of any monetary judgment in your favor. I submit there has been no hint of willful misconduct or bad faith. It's not alleged, it didn't happen, it's not going to happen, and this is something that in any event the Solicitor General in its brief says these exceptions are rarely, if ever, applied... not to worry. I think with regard to any arm of the State question, if... the Regents corporation first of all has never been established as an arm of the State in any decision by this Court, and according to the Solicitor General the... this Court has never determined whether any State university or college is an arm of the State for purposes of the Eleventh Amendment, so I don't think we can just sort of assume that. And what the Ninth Circuit did, it says, let's look at the facts. We look at the facts, and we assume that a promise made by the Federal Government in writing is a solemn promise, that the Department of Energy, when it says it's going to pay directly, will pay directly. Why not assume that the Government is going to act in bad faith? I think that's a fair presumption. I think it would unduly expand the immunity provided by the Eleventh Amendment if you could let States structure entities as they pleased which would be totally commercial, and for which they would have no risk at all financially, and still give them immunity. I think that--
Ruth Bader Ginsburg: Mr. Gayer, I'd like to know how far your position about a State university goes with respect to insulating the State against any monetary liability for that piece of the university. Let's take an athletic department, where they sell tickets to the games and there's a big profit-making center for the university, and a spectator at such an event slips and falls, says it's because the stairs were in disrepair, and sues the University of California in Federal court, a diversity case, and the State says, we're the State university. Under your theory, could the plaintiff prevail by saying, not in this instance, because we've got a money-making venture, and any money that's going to be paid will come out of the profits of that entity?
Richard Gayer: --Well, it depends on how the entity is structured. I don't know if this is going beyond Justice Ginsburg's question, but in this particular case we assume the athletic endeavor has no contract with the Department of Energy, and there's no pay directly provision there.
Ruth Bader Ginsburg: It's just that the State budget is never going to be touched because this is such a profitable department that it pays all its own bills.
Richard Gayer: Oh, I think that's what happened in Hess, that initially the bi-State entity was receiving something like $100,000 a year from each State, but that was years and years ago and--
Antonin Scalia: It was not an entity of any single State. I mean, it was a totally different situation.
Richard Gayer: --But according to the dissent in Hess the same test applies.
Antonin Scalia: But, Mr.-- --You stand squarely with the dissent in Hess.
Richard Gayer: I stand squarely with the entire decision in Hess.
Ruth Bader Ginsburg: But it is--
Richard Gayer: I'm trying to harmonize--
Ruth Bader Ginsburg: --You must admit it's rather peculiar to do what you did in your brief. That is, to take the essence of what the majority held from a statement in the dissenting opinion.
Richard Gayer: --No, I'm trying to harmonize--
Ruth Bader Ginsburg: It is rather unusual.
Richard Gayer: --Because we... in our proposed test the first thing you look at is the impact on the S-t-a-t-e treasury.
Ruth Bader Ginsburg: You don't agree that, in general, to find out what the majority opinion says one looks to the majority opinion rather than the dissent?
Richard Gayer: It sounds like a good idea, Your Honor. [Laughter]
Speaker: Occasionally.
Richard Gayer: And that's why in our proposed test we say first you look to the State treasury factor as the majority did in Hess. If that's dispositive of the case, that's the end of the inquiry.
Ruth Bader Ginsburg: The majority did not do that first. The first thing the majority said is, this is a creature of three sovereigns. One of them is the U.S. Government.
Richard Gayer: In any event, as Your Honor pointed out, the respondents do rely on Hess, where it said that the twin reasons for being of the Eleventh Amendment are State treasury and dignity, and we take the State treasury factor, very important here. That's why we're here. If the State treasury factor wasn't here we couldn't argue about the pay directly provision.
Ruth Bader Ginsburg: You say, but you don't take the dignity factor.
Richard Gayer: Well, yes, we do, because here we claim that the attorneys for the Regents corporation in submitting for 1 year to discovery, taking depositions, submitting to depositions, answering interrogatories, responding to requests for production of evidence, has diluted its dignitary interest, has said, in effect--
Ruth Bader Ginsburg: Oh, so dignitary interest is one that's... that you waive. Without waiving the... you can sort of back into waiving the Eleventh Amendment?
Richard Gayer: --No. Well, you weaken your Eleventh Amendment claim if you act as though you don't mind being coerced by the discovery power of the court not--
William H. Rehnquist: But you don't have any ready appeal from a discovery order pretrial. I mean, a discovery order isn't appealable as a matter of right.
Richard Gayer: --Mr. Chief Justice, that's true, but here the petitioners cooperated with discovery. They didn't say, we have an Eleventh Amendment dignitary interest and therefore we're not going to respond to your discovery on the merits. They just went along as if it were ordinary litigation.
William H. Rehnquist: Isn't that just one form of good lawyering? You don't have any right to appeal the... either your order to discover, or the discovery order makes... the discovery request is reasonable. You raise what you can at a different time.
Richard Gayer: With due respect, Your Honor, it's our position that if a purported Eleventh Amendment entity takes its Eleventh Amendment immunity seriously, especially its dignitary interest, that the first thing it will do is move to dismiss based on the Eleventh Amendment. It won't play around with litigation for a year. The... it's also our position that each case, especially since the Eleventh Amendment immunity issue can be raised sua sponte by any court at any time, that any time a court, especially the Supreme Court, considers an Eleventh Amendment case, it will look at the whole picture, and so whether or not, of course, the university has been held to be an arm of the State in other contexts in other cases that were not in this Court doesn't really matter. It's certainly not determinative or dispositive or anything. I think that each case, as the Ninth Circuit did, looks at the facts, looks at the law as presented by the plaintiffs. In our proposed procedure, we suggest that the plaintiff had the burden of inducing facts and law that shows that the purported... that the State entity is not a State agency, that is to say, is not an arm, therefore doesn't deserve Eleventh Amendment protection. Otherwise, you run the risk of undue expansion of Eleventh Amendment immunity, and anything that says "of California" is immune, and that's the end of it. Now, Justice Ginsburg, I was thinking of something about insulating treasuries, and in this case the State law of California does insulate the State treasury from the Regents. Under State of California law, a judgment against the Regents can be executed only against the treasury of the Regents. There is no claim against the very separate and probably larger State treasury. That applies under all circumstances. So it's our position that even absent the pay directly provision in the contract, that the State treasury... as opposed to the Regents' treasury, the State treasury has no risk at all in any case, and that's--
Ruth Bader Ginsburg: So a State university is not an arm of any State if that university has a budget that's discrete and pays all its expenses out of that. That's the end of a State university being an arm of the State.
Richard Gayer: --A State... a treasury, a treasury that's independent and wherein the university or college has no claim against the treasury of the State itself. In other words, here, the Regents' treasury has a lot of money in it. I think according to a footnote in the reply brief something... in one particular year, $10 billion. Now, in that year, $2.2 billion came in the form of a block grant from the State. The legislature made an appropriation to give the money to the Regents to use for any lawful purpose. After that, the State lets go. The legislature lets go, and the Regents must make do with whatever money they can get, and most of their money comes from outside the State, but the point is that a judgment creditor of the Regents has no claim against the State treasury, ever, and that's why I think this case--
Ruth Bader Ginsburg: Well, do I understand that the question that's before us is, even if the university would otherwise be a State agency, it isn't when this particular liability is covered in full by a third party?
Richard Gayer: --Yes. I think we've addressed that fully in the briefs, and perhaps this morning. That's true, but I think in order to do a thorough, complete, and meaningful job this Court might consider the general question, otherwise the courts below are still having to wonder about this fundamental issue, and one can assume arguendo so many things that there's nothing left to argue about.
Ruth Bader Ginsburg: Well, perhaps there would be a problem of parties who are not before us. There must be many State universities that are patterned the same way, intended to have a large budget and to pay their expenses out of that.
Richard Gayer: My research, although not complete, says the answer to that question, Your Honor, is no, that those cases I have read... for instance, the Rutledge case, Rutledge v. the Regents of the University of Arizona, another Ninth Circuit case, held that there, there is control by the legislature.
Ruth Bader Ginsburg: But now, you haven't been talking about control. You've been talking about does... the university has to operate out of a special budget for it with no call on other State funds.
Richard Gayer: Well, the point I'm trying to make is that in the Rutledge case the Ninth Circuit held that the Regents there were very different, and they were not separate and independent and autonomous, whereas in the instant case the Regents are very separate, very independent, and very autonomous of any control by the elected branches of State government.
John Paul Stevens: May I... I'd like to make sure I understand one part of your argument. The court of appeals applied this five-factor test, the first factor whether this money judgment would be satisfied out of State funds, and they said it would not be because of the indemnity agreement. You are arguing, if I understand you correctly, that even without the indemnity agreement, the judgment would not have been satisfied out of State funds.
Richard Gayer: That's correct, Your Honor. It says I could have done a better job in the Ninth Circuit.
John Paul Stevens: And... but... so we're not... what's... we're only addressing the indemnity question, or are we supposed to decide the whole case? I'm still a little puzzled about that.
Richard Gayer: Well--
John Paul Stevens: Because this focuses on... everything focuses on point 1 in their five-factor test.
Richard Gayer: --That's correct.
John Paul Stevens: Does your opponent agree that it would not be satisfied out of State funds even without the indemnity agreement?
Richard Gayer: I don't think so.
John Paul Stevens: Oh.
Richard Gayer: I don't think so, but Your Honor, to respond to your question, I'm not an expert on this Court's Rule 14.1, but I believe that the general question of the Regents' overall immunity is subsumed within the question presented. If I'm wrong, I'm sure Your Honors will tell me.
William H. Rehnquist: Well, subsumed generally means a smaller question included in a larger question. What you're saying is that a larger question is included in a smaller question, which is quite different. [Laughter]
Richard Gayer: Well, as I say, I'm here to please the Court-- [Laughter] --and if that doesn't do so, I'll just move on. I think the point made by the Ninth Circuit in its conclusion is really important. Certainly under its decision the Regents corporation would lose very little. They would still retain all the immunity they have in Justice Ginsburg's athletic event question, and any... certainly anything related to their universities which provide higher education. They... the only thing they would lose, so to speak, is immunity if they're sued in the operation of the laboratory, wherein the owner of the laboratory will pay directly any judgment. That's really no loss, because it's not the university's operation. It's really the Department of Energy's operation. It's their facilities, their building, their ground, everything, and so that there is really no impact at all.
John Paul Stevens: Excuse me for being so slow to grasp this, but in the dissenting opinion the judge... dissenting judge said, no one has disputed that a judgment against the University of California is a legal obligation of the State of California. Is that a correct statement of the case?
Richard Gayer: Well, as, of course, it wasn't disputed, it wasn't even mentioned. There was no... no argument.
John Paul Stevens: But did you argue in the court below that even without the indemnity agreement the judgment could not have been satisfied out of State funds?
Richard Gayer: Unfortunately, no. I was, shall we say... I won't use the dirty word, but that was an omission on my part.
Antonin Scalia: Well, you... it wasn't such a... I mean, it was an understandable omission, inasmuch as the Ninth Circuit had held in a number of cases that the State universities were, indeed, the State for purposes of sovereign immunity, haven't they?
Richard Gayer: But those cases are built, I submit, on a foundation of sand. In those--
Antonin Scalia: I understand, but you didn't want to antagonize the district court and the court of appeals. You were there to please them, just as you're here to please us-- [Laughter] --and they wouldn't have been pleased at your calling their whole circuit law into question.
Richard Gayer: --Well, the point is there the issue wasn't fully litigated, and one of the cases, the Jackson v. Hayakawa, the Regents corporation was not even a party. The other cases, BV Engineering, Armstrong v. Meyers, and the Mascheroni case out of the Tenth Circuit, all those cases simply cited either Jackson v. Hayakawa, where the--
John Paul Stevens: Yes, but Mr. Gayer, if you did not call into question... I don't think your job is to please the court. Your job is to represent your client, and if, on behalf of your client, you did not challenge a line of authority in the Ninth Circuit, I'm not sure you can challenge it for the first time up here, despite everybody else's saying how important it is to be friendly to the Court.
Richard Gayer: --Well, I... if I'm wrong, Your Honor, I apologize, but I don't think this Court is bound by any decision of the Ninth Circuit or the Tenth Circuit, and if they were wrong, they were wrong. They can't be reversed, I guess, without--
Ruth Bader Ginsburg: Mr. Gayer, this is the point, that we review rulings that have been made by a court below. We don't make rulings here in the first place, and you are asking us to decide something as though we were a... the court getting this in the first instance, and that is not what we do.
Richard Gayer: --Well, that being the case, Your Honor, then I think the safest and most appropriate thing to do is simply affirm the judgment of the Ninth Circuit and let us proceed. That... because that does apply the five factor test. It's not contrary to anything in Hess, since it focused almost entirely on the impact of the State treasury, and it has minimal policy impact on the immunity generally of the Regents corporation.
Ruth Bader Ginsburg: Are you suggesting that if we are of the view that whatever this arm is or is not should not be affected by whether they've got insurance from the Government or somebody else that covers this particular risk, this particular liability, as even if we think that we should nonetheless affirm because the Ninth Circuit used a five-factor test and we have nothing to say about those other factors?
Richard Gayer: Oh, sure, this Court has everything to say about the other factors, but it's my position that the Ninth Circuit applied the factors correctly and did nothing contrary to this Court's decision in Hess or any other decision of this Court. The Ninth Circuit properly distinguished these other opinions, of which I disapprove, and said on the facts of this case there's no possible, conceivable impact on a State treasury, and Justice Canby in his dissent got it wrong. He assumed something that had not been argued at all. Neither side said anything about who would actually bear the burden of the judgment, and he just assumed that the State would do it. That was incorrect--
Ruth Bader Ginsburg: Are you saying--
Richard Gayer: --and once you assume that it's all over.
Ruth Bader Ginsburg: --Are you saying it would be irrelevant to the Ninth Circuit where we would say, we think you were wrong, we are telling you you were wrong in one particular, it's not relevant whether there was indemnity for this liability, what's relevant is who has the legal liability? If we were to say that, do you think that would be... wouldn't make any difference in how the Ninth Circuit came out?
Richard Gayer: If I understand the question, Your Honor, it's my position that since the State of California has no legal liability in this case, that the result would be the same. Now, I've also... I've been lectured by Mr. Chief Justice that that may not be within the question presented, and I'll have to accept that, but it's still our position, as I stated, that Judge Canby is wrong when he said the State is legally liable. That's simply wrong as a matter of California State law.
Ruth Bader Ginsburg: Which is a determination you're asking us to make in the first instance.
Richard Gayer: Excuse me, Your Honor?
Ruth Bader Ginsburg: You're asking us to make that determination in the first instance, because it certainly wasn't made by the Ninth Circuit or the district court.
Richard Gayer: Yes. I think the answer is yes, because I think that would be the best way to give guidance to the courts below and to attorneys who might bring a suit against some purported, or... some purported arm of the State.
Anthony M. Kennedy: Of course, you say--
Richard Gayer: It would be very helpful.
Anthony M. Kennedy: --You say it's wrong as a matter of State law. That's... that makes the further assumption that the treasury of the Regents of the University of California is not part of the State, and I'm sure the counsel for the appellants are going to tell us that the whole purpose of the very substantial separation that the California constitution decrees for the university is to clothe it with attributes of sovereignty and to make sure that it is an instrumentality of the State, actually separate from the legislative and executive branches.
Richard Gayer: But if--
Anthony M. Kennedy: So to say that it's not part of the State's liability in a way elides the question, because the treasury of the University of California are State funds in one sense--
Richard Gayer: --Well--
Anthony M. Kennedy: --and in a very important sense.
Richard Gayer: --Well, Justice Kennedy, my reading of State law is that the Regents funds are not State funds in that they're not under the control of the legislature or the Governor or any other part of the executive branch.
Anthony M. Kennedy: But they're in control of another State entity which has to... which happens to be the Regents of the University of California.
Richard Gayer: And that State entity is not an arm of the State. It's a separate and independent public corporation established to manage the University of California and free to engage in other businesses, such as running a hospital for which it charges the market rates for services, and for managing the Lawrence Livermore National Laboratory. Of course it's a State entity, but it's very independent, and it's treasury is separate and apart from the State treasury, and the Regents have no claims at all to anything in the State treasury. They get a block grant from the State, from the State legislature once a year, and that's it. If there are no further questions, thank you very much.
William H. Rehnquist: Thank you, Mr. Gayer. Mr. Miller, you have 4 minutes remaining.
Richard Gayer: Thank you, Mr. Chief Justice. I'd like to begin by referring to this... I don't mean to be... try to inject too much levity, but the foundation of sand. The foundation of sand starts here, because the ultimate foundation is the Hamilton v. Board of Regents case in 293 U.S., where this Court determined, based upon a study of the California constitution and statutes, that the university and its Regents were the State, and in fact that its orders, the orders of the Board of Regents, were equivalent to state statutes, would be deemed the same for purposes of that case. Now, that wasn't an Eleventh Amendment case, but I do think it's an important decision that was built upon in the decisions of the district courts and in the Ninth Circuit court that have held repeatedly that the university is an arm of the State. The decision in the Vaughn case which is cited in our brief, a district court case, is the case in which the factors were reviewed and then, in the various Ninth Circuit cases, Vaughn and other cases subsequent to Vaughn were referred to and relied upon as precedent. The fact that the university is an arm of the State is now beyond serious debate as far as the Ninth Circuit's concerned as a general proposition, and it ultimately rests on the decision of this Court in Hamilton. That leads me to the next point, which is the contention that the university is separate from the State because the State is not responsible for its debts. Justice Kennedy, you anticipated our point on this. The treasury of the Regents is very much a State fund, and all of the attributes of sovereignty that are given to the Regents in the California constitution and statutes are designed to assure that the Regents would be treated as a branch of State government, albeit independent of political control, for the very important reasons of academic freedom and independence of education that animated the founders of the State back in the middle 19th Century. Notwithstanding that, the constitution of California, Article XVI, section 8, provides a very special provision for any obligations of State universities. It states as follows, that all... from all State revenues there shall first be set apart the moneys to be applied by the State for the support of the public school system and public institutions of higher education. We referred to that in our brief, and pointed out that that gives in effect a first charge on the revenues of the State to satisfy the obligations of the university. The manner in which that is done is the same manner in which the Congress funds Federal agencies, by appropriation, and no doubt until the appropriation is made a debt can't be paid if the Regents don't have otherwise sufficient funds, but in the end, the legislature is responsible, by constitutional provision, to meet the obligations of the university, and in that additional way ties the university tightly to the State of which it is a part and an arm, if not a branch. I want to make just one other point, and that is that the relief in this case seeks not only damages against the university, but also hiring of the plaintiff. He calls it reinstatement. He never was instated in the first place, so it's really instatement. One of the... he asks for specific performance of the alleged contract, and he asks that in any event that he be hired by the university, or at the very least that his application for employment be reconsidered. Each of those forms of relief, if granted, would work--
William H. Rehnquist: Thank you, Mr. Miller. The case is submitted.


Warren E. Burger: We will hear arguments next in 76-260, Lefkowitz, Attorney General, against Cunningham. Mr. Galt.
Irving Galt: Mr. Chief Justice, and may it please the Court, this is an appeal by the Attorney General of New York. A Defendant below was also charged, of course, with the responsibility of defending the constitutionality of state statutes from a judgment of a three-judge court in the Southern District of New York. The judgment below declared Section 22 of the State’s election law unconstitutional and joined its enforcement against the Appellee as being violative of the Federal Constitution under the Fifth Amendment. In relevant part and in essence, the statute in dispute provides that the refusal of a political-party officer to waive immunity from criminal prosecution, when called before a grand jury to testify with respect to the conduct of his political office, thereupon affects a termination of tenure of the office and also invokes a disqualification, beginning then and there, from holding for a period of five years thereafter any party or public office; and parenthetically, I might note that the type of immunity which is mandated by the New York statutes, the New York Criminal Procedure Law, when a witness testifies under immunity before a grand jury, it's not simply use immunity, but full transactional immunity. Now, the salient facts of the case are few and, I think, undisputed.
Byron R. White: What these people will be requested to do is not just waive transactional immunity, but to waive use immunity or any kind of immunity.
Irving Galt: No. They're being asked to waive immunity of any kind; they would get transactional --
Byron R. White: That’s what I said.
Irving Galt: I'm sorry, I misunderstood you, Justice White; but they would get -- if they did receive immunity they would get full transactional immunity, not merely use immunity.
Byron R. White: I know; but the State didn’t say to him, "And by the way, we would be satisfied to leave you with use immunity."
Irving Galt: The Federal Constitution merely requires, of course --
Byron R. White: Well, I know; but the State didn’t say to them, the State said whatever, "We demand that you waive immunity broadly ... "
Irving Galt: That’s right.
Byron R. White: "We would not be satisfied to have you retain use immunity."
Irving Galt: Well, I don’t know whether it’s spelled out in so many words, Mr. Justice White; it was not here. But of course, that would be clear and, in fact, as I think I will have occasion to --
Byron R. White: The waiver demanded waive use immunity, as well as anything else.
Irving Galt: That’s right, waives all immunity; waives the immunity which he would have, which would be transactional immunity, if he got the immunity.
Byron R. White: Yes.
Irving Galt: Now, of course, it’s relevant to let the Court know that at the time this action was begun under 42 U.S.C. §1983, the Appellee held, and the action arose out of his holding of, four party offices defined and recognized as such under New York law. First of all, I was going to say he is; but very recently this changed. He was State Chairman of the State Democratic Party in New York and a member of its Executive Committee. He was and is also Chairman of the Bronx County Democratic Executive Committee and a member of that Committee, also. And it was only after the briefs were filed in this case, may I note, that Mr. Cunningham stepped down from one of these offices, that of State Chairman of the State Democratic Party. But important in this connection it would be to note that party officers, and even high party officers like Mr. Cunningham, are not elected either by the elector at large or the Democratic electorate, but by a relative handful -- in fact, the real handful -- of other party officers. Now, as State Chairman, and this is true of the State Committee itself, there are many formal functions which New York law attaches to those offices, connected, of course, principally with the electoral process. But informally and aside from that, I need hardly remind this Court of the great power, the great influence, the tremendous prestige, which the Chairman of a state political party has. And in this instance, the Democratic Party rules in the State of New York explicitly denominate the Chairman of the state party as the top leader of the Democratic Party in New York. And there are, I think at ages three to four of our briefs, we have outlined these functions; and the same with respect to his Chairmanship of the Bronx County Democratic Executive Committee, also a very powerful office and one which exerts considerable influence and one which will make its influence felt, I think, too, as a great county organization in the upcoming nominations for the mayoralty campaign, which will take place in 1977 in the City of New York. But in tandem, the holding of these two offices, these two party offices, represents a great deal of power on the part of the holder of the office, or of these offices, and I need hardly elaborate on that. I do wish to point out to the Court that in none of these party offices was Mr. Cunningham salaried or is he salaried. There is no monument of any kind, no consideration of any kind, which he received from any of his party offices. And --
Thurgood Marshall: If you prevailed, Mr. Galt, would a person in the position of Mr. Cunningham be barred from being a delegate to the national convention of his party in the five-year period?
Irving Galt: That’s not holding party office; at least I'm quite sure it is not. As a matter of fact, if Your Honor is touching upon -- and you may be at this point touching upon the freedom-of-association argument, in that respect there would be no play for the argument, because he would be free to do anything he wishes other than being barred in the office itself or from party office. He can counsel as much as he wants, advise, do anything he wishes with respect to his fellow Democrats. The statute doesn’t bar him from that, and I'm sure he could be elected a delegate. That’s not defined as a party office in New York.
Thurgood Marshall: No. I had no particular scope in mind. I just wanted to know how far was the reach of the statute, but you think it would not bar him from being a delegate.
Irving Galt: I'm quite sure it would not. I would almost be positive in that respect. Now, I do think it pertinent to mention before going on that at all times and all of these times, Mr. Cunningham was and is an attorney in active practice in the City of New York. Now, when in December 1975 a subpoena was first served upon Mr. Cunningham by the then Special Prosecutor in charge of investigating the criminal justice system in New York, that subpoena was resisted. An action was brought immediately in the state courts to quash the subpoena on various grounds, including the Fifth Amendment, First Amendment, Fifth Amendment and Fourteenth Amendment grounds urged here, went all the way through the state courts to the highest appellate level in the state, and Mr. Cunningham was unsuccessful. And so, as it happened, he finally appeared before the grand jury on April 12th of last year, at which time presented with a waiver of immunity to sign he refused to sign it and did not testify. And of course, the operation of that statute would be automatic, and he would have been barred immediately from his party offices and from holding the other offices I have mentioned for five years; but immediately brought this action in the Southern District of New York and on the very same afternoon, April 13th, before a single district judge, we argued the matter on the question of a TRO. A TRO was issued. There were greatly expedited proceedings before the three-judge court, and in a matter of almost days the case had been argued and the decision rendered below. And that decision, as I have indicated, was to strike down the statute, Section 22, as unconstitutional on Fifth Amendment grounds without the Court having reached, however, the First Amendment claim and, in so doing, the Court specifically said that Section 22 of the New York Election Law is similar in operation to the statute struck down in the aforementioned cases, being, of course -- and I'm intercalating this -- the Garrity againts New Jersey in 385 U.S. and continuing on through this Court’s 1973 decision in Lefkowitz againts Turley in 414 U.S. And going back to what they said, "The statute struck down in the aforementioned cases, in that it", meaning Section 22, "conditions tenure in office upon the forfeiture of the privilege against self-incrimination. As such, it would appear to fail to measure up to constitutionally accepted standards."
Thurgood Marshall: Is there anything in the record that shows what they were investigating?
Irving Galt: No, but it’s undisputed. I think there is in the ... I think it’s indicated in the Petition that was brought. We filed no papers, Mr. Justice Marshall; there wasn’t time. We merely submitted a brief and argued, but I don’t think it will be disputed that this was what the grand jury was investigating. That’s never been a bone of contention. The propriety of its investigation is not in question.
Thurgood Marshall: Shouldn’t it be? Suppose that I don’t like you and I just give you subpoena.
Irving Galt: Well, of course, Justice Marshal --
Thurgood Marshall: Well, how under the New York procedure in the New York courts could he try this on the merits?
Irving Galt: He brought a Motion to Quash that subpoena on the same grounds as here, and including many others, I know; but if that were the case, it would have been raised and disposed of there. But there is no such question here. We are raising, I think, a non-realistic issue in that regard, if I may say so, Justice Marshall, because that is not in dispute in this case. There is no question here --
Thurgood Marshall: What do you mean, it's not in dispute? If it's not in dispute, then there is no reason to bring him before the grand jury.
Irving Galt: No, no, it’s not in dispute that he was brought before this grand jury to inquire into the conduct of this party office. There's absolutely no dispute about that.
Thurgood Marshall: That’s all. That's all.
Irving Galt: Well, that would be the ballgame. That’s right. Now, the question presented is whether New York’s interest in maintaining the integrity of its political process and in preventing corruption, or even the appearance of corruption, in its political system entitles it, with respect particularly to the Appellee, a very prominent, non-salaried party official, to yield his party offices if he fails to waive immunity in connection with a grand-jury inquiry into the conduct of his party office. And that question, I submit, is a very vital one, not only to the State of New York and its citizens, but to this Court and be really to the nation at large, because we are in ...
Thurgood Marshall: There is also an (inaudible), isn't it?
Irving Galt: Very much so. One would not dispute that. But the very grave interests here at play, Mr. Justice Marshall, I think, cannot be overlooked, and in the course of argument, without any denigration of Mr. Cunningham’s rights, I will try to indicate, if possible, that the State of New York acted with perfect propriety here; and as we go on, I think, Your Honor -- and I hope I may have the benefit of your consideration in this regard -- we will show that the State of New York has a perfectly constitutional statute in Section 22, because as everyone knows, we have just been through an era, and we may not have emerged from it yet, in which the nation witnessed the spectacle -- and that’s not an exaggerated word, spectacle -- of very high party officers abandoning their office in the midst of scandal and corruption and scenes of scandal and corruption that I think have been on parallel. And not only that, on parallel, too, has been the growth of public cynicism, public distrust, of politicians in a political office in political parties. In fact, it’s an everyday thing, commonplace. You can speak to any man in the street, and he will tell you that all politicians are not to be trusted. Now, New York was quick to respond to that situation, just as did the Federal Government in 1974, when it enacted the Federal Campaign Contributions Act, which this Court upheld in very large part in Buckley against Valeo in 324 U.S. last year. So New York enacted a Campaign Finance Reform Law and Contributions Law with a new State Board of Election designed to see to it that the political process would be responsive to the needs and demands of the citizenry. It also enacted in 1974, the same year, a Public Information Law, and in 1976 it enacted an Open Meetings Law, which would extend to every public agency in the state, even down to and including the smallest buyer or special service district.
John Paul Stevens: Mr. Galt, was this Section 22 a part of that series of enactments?
Irving Galt: No, Section 72 was enacted, I think in 1953 or somewhere around that time. And I must say, Justice Stevens, that we must have regard to the fact that it was enacted by whom? The Legislature, which of course has representatives of political parties; its members are representatives of political parties, and the political parties knowingly enacted this statute. And while it predated these reform measurements, Section 22 has the same aim and endeavor, and that is to maintain the confidence of the people in the political process and in representative government. And I think that it’s fair to say that Section 22 is patently designed to avoid the spectacle of high officials and high party officers refusing to account for their activities in party office under oath, and doing that with impunity, because they feel that they need not waive immunity; and they can then, if they testify under immunity, no matter what they testify to, no matter how the acts may violate the criminal law and then, of course, they are forever immune from prosecution on the transaction unless testimony of an entirely different nature of a new situation should arise.
Thurgood Marshall: Couldn't they be subpoenaed before the Legislature to testify of all this corruption?
Irving Galt: Perhaps he could be subpoenaed --
Thurgood Marshall: (Inaudible) against the law.
Irving Galt: Yes, he could, I'm pretty sure, be subpoenaed before a Legislative inquiry; but Justice Marshall --
Thurgood Marshall: And if he failed to (inaudible), the charges are kept?
Irving Galt: Yes.
Thurgood Marshall: (Inaudible) the grand jury?
Irving Galt: Because the grand jury is authorized to inquire into criminal acts, number one; and the grand jury is the only body of citizens, of regular ordinary citizens, before whom the party officer can be brought. Legislative Committees are not ordinary citizens.
Thurgood Marshall: But you and I know the grand jury didn't subpoena this man.
Byron R. White: Pardon?
Thurgood Marshall: You and I know that, quote, “the grand gury”, end quote, didn’t subpoena him. The Special Prosecutor subpoenaed him. Am I right?
Irving Galt: Well, I think the Special Prosecutor did subpoena him; but there is no question before the grand jury.
Speaker: (Inaudible) a new place.
Irving Galt: That’s correct. There is another Special Prosecutor there now, and of a different political party, for that matter.
Speaker: Mr. Galt, let me just get myself straight. Now, you say he could have been called before a Legislative Committee; but could he have not taken the Fifth Amendment, had he done so?
Irving Galt: Oh, yes, because the statute --
Speaker: So they couldn’t have compelled him to testify, either.
Irving Galt: Well, they could have required him to waive immunity.
Speaker: Under the statute. I mean ... in other words, what’s the distinction between the grand jury and the Legislative Committee? I don’t understand that. They're both referred under statute.
Irving Galt: The Legislative Committee merely, if it wishes to -- and I don’t know of any legislative inquiry into this sort of situation, certainly not recently; there may have been, but I don’t know of any. But a Legislative Committee undertakes such studies, theoretically at least and validly at least, for the purpose of determining whether there needs to be amendment to legislation. If there is going to be anything of criminal consequence involved in the situation --
Speaker: No, I don’t understand that; but I don’t understand why it would make any difference whether this case had arisen before a Legislative Committee instead of the grand jury. We'd get precisely the same issue, wouldn’t it?
Irving Galt: It doesn’t make any difference except that --
Speaker: In Section 22 --
Irving Galt: Pardon.
Speaker: Section 22 explicitly applies to an inquiry by a Legislative Committee, it says so.
Irving Galt: That’s right. But the only difference it might make is one of degree, because I think withthe grand jury constituting a body of citizens and performing one of its traditional and most important historical functions, that of acting as surrogate for the people, the matter assumes a great deal more seriousness and is of greater consequence to the proper operation of the political system in New York. Now, we have spoken of use immunity before, and it’s Mr. Cunningham’s or one of Mr. Cunningham’s answers in this argument before the Court, that were he to be granted simply use immunity that he would be willing to do -- he would testify under use rather than transactional immunity; that’s how I understand his brief to argue. Aside from the fact that there is serious question as to whether use immunity could be had in a grand jury proceeding under New York law, I pass to the more important thing. If that was so, if he could have use immunity and not relinquish his party offices and testify under use immunity, and unless other evidence were to be forthcoming from other sources going beyond the scope of the use immunity, the public distrust would only be greatly enhanced, greatly exacerbated, because to them this would be --
Speaker: Use immunity would only be abused in a criminal prosecution ...
Irving Galt: That’s right.
Speaker: … not in any removal proceedings from the public office.
Irving Galt: No, no. I was saying that if he would give the use immunity, he would do that in exchange for not being removed from public office, he would testify under use immunity. He might ultimately be removed in public office if he were ever to be indicted and convicted of a crime, but if he --
Warren E. Burger: We will resume at that point, Mr. Galt. We will resume at that point in the morning.