Opinion ID: 6323764
Heading Depth: 2
Heading Rank: 1

Heading: Sovereign Immunity and Injunctive Relief

Text: Before we analyze Springfield’s Section 525(a) claim, we must briefly address whether there is a threshold question of federal sovereign immunity, relating to the availability of injunctive relief in this case, that we must first consider before reaching the merits of the case. Issues of federal sovereign immunity implicate a court’s subject-matter jurisdiction, see Hamm v. United States, 483 F.3d 135, 137 (2d Cir. 2007), and, as such, are usually threshold issues that must be decided before proceeding to the merits of a given case, see Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–02 (1998). However, as we have frequently held, there is a distinct difference between jurisdictional questions of a statutory nature and jurisdictional questions of a constitutional nature. See, e.g., Butcher v. Wendt, 975 F.3d 236, 242 (2d Cir. 2020) (describing Steel Co.’s differentiation between constitutional and statutory jurisdiction and explaining that “[t]he bar on hypothetical jurisdiction, we have held, applies only to questions of Article III jurisdiction” (internal quotation marks omitted)). When a jurisdictional issue is statutory in nature, we are not required to follow a strict order of operations but instead may proceed to dismiss the case on the merits rather than engage with the jurisdictional question, particularly 22 when the jurisdictional issue is complex and the merits are straightforward. See, e.g., id. (collecting cases); Conyers v. Rossides, 558 F.3d 137, 150 (2d Cir. 2009) (declining to decide a question of federal sovereign immunity where “the question [was] one of statutory rather than constitutional jurisdiction” and instead, “assum[ing] hypothetical jurisdiction” and “proceed[ing] to address the alternative argument for dismissal offered”); Ivanishvili v. U.S. Dep’t of Just., 433 F.3d 332, 338 n.2 (2d Cir. 2006) (“Our assumption of jurisdiction to consider first the merits is not barred where the jurisdictional constraints are imposed by statute, not the Constitution, and where the jurisdictional issues are complex and the substance of the claim is, as here, plainly without merit.”). Moreover, federal sovereign immunity differs from standard threshold matters of Article III jurisdiction in that it can be consented to or waived. See F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) (“Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.” (emphasis added)); cf. Wisconsin Dep’t of Corr. v. Schacht, 524 U.S. 381, 389 (1998) (“[T]he Eleventh Amendment grants the State a legal power to assert a sovereign immunity defense should it choose to do so. The State can waive the defense. Nor need a court raise the defect on its own. Unless the State raises the matter, a court can ignore it.” 23 (internal citations omitted)). Other circuits have held that a court is not required to decide the issue of federal sovereign immunity before reaching the merits. See, e.g., In re Gateway Radiology Consultants, P.A., 983 F.3d 1239, 1255 n.7 (11th Cir. 2020); In re Sealed Case No. 99-3091, 192 F.3d 995, 1000–01 (D.C. Cir. 1999). But see In re Hidalgo Cty. Emergency Serv. Found., 962 F.3d at 840–41 (concluding that the bankruptcy court “exceeded its authority” under “well-established Fifth Circuit law,” and vacating the preliminary injunction against the SBA). Here, we similarly conclude that the question of the SBA’s sovereign immunity under Section 634(b)(1), related to the issue of the availability of injunctive relief, is not a threshold question we must decide before holding that the Section 525(a) claim fails on the merits. First, it is clear to us that we have jurisdiction over the merits of the underlying dispute. Section 106 of the Bankruptcy Code—entitled “Waiver of sovereign immunity”—expressly abrogates sovereign immunity with respect to Section 525, among other provisions, and provides that a “court may hear and determine any issue arising with respect to the application of such sections to governmental units.” 11 U.S.C. § 106(a)(1)–(2); see F.A.A. v. Cooper, 566 U.S. 284, 290 (2012) (“[A] waiver of sovereign immunity must be unequivocally expressed in statutory text.” (internal 24 quotation marks omitted)). Further, Section 634(b)(1)’s own text provides that “[t]he [SBA] may . . . sue and be sued . . . in any United States district court.” 15 U.S.C. § 634(b)(1). Thus, the SBA has not asserted immunity from suit. Instead, the SBA concedes that the Bankruptcy Code waives its sovereign immunity, albeit in a limited fashion, and agrees that the question of its immunity from injunctive relief under Section 634(b)(1) is not a threshold issue that we must decide before we reach the merits. In other words, the SBA is not asserting sovereign immunity as a defense against suit—it is merely raising sovereign immunity as a defense against one particular form of relief. 17 As such, we do not view the Section 634(b)(1) 17 The SBA’s litigation position appears to be what some circuits have termed a “conditional” assertion of sovereign immunity—essentially, when a state or federal governmental unit waives sovereign immunity as to the greater lawsuit but reserves the right to raise immunity as a defense if it loses on the merits. See McClendon v. Ga. Dep’t of Comm. Health, 261 F.3d 1252, 1258 (11th Cir. 2001). Conditional assertions of immunity, essentially a jurisdictional argument in the alternative, have led some courts to conclude that there is no need to decide the jurisdictional question before reaching the merits. See, e.g., Silberman v. Miami Dade Transit, 927 F.3d 1123, 1137 (11th Cir. 2019) (“Because sovereign immunity can be waived, our precedent allows us to ‘bypass’ the threshold question whether an entity is entitled to sovereign immunity where it only conditionally asserts the defense.” (internal quotation marks and alterations omitted)); Floyd v. Thompson, 227 F.3d 1029, 1035 (7th Cir. 2000) (concluding the court could bypass a complex Eleventh Amendment issue because “the Eleventh Amendment occupies its own unique territory” and “[u]nlike basic subject matter jurisdiction, which can never be stipulated or waived, a state is entitled to waive its Eleventh Amendment immunity from suit if it so desires”); cf. Parella v. Ret. Bd. of R.I. Emps.’ Ret. Sys., 173 F.3d 46, 55 (1st Cir. 1999) (“[B]ecause Eleventh Amendment immunity can be waived, the presence of an Eleventh Amendment issue does not threaten the 25 question of whether an injunction can be issued against the SBA as a threshold question that we must decide before we even determine whether an injunction should be issued against the SBA. This is especially true where, as here, the plaintiffs seek other forms of relief, such as damages and declaratory relief, as to which no sovereign immunity issue exists. To hold otherwise would require a court to decide a statutory jurisdictional issue related only to one particular form of relief being sought even before deciding whether the party is entitled to any relief at all. We see no legal basis to impose such a stringent requirement here and, accordingly, proceed to discuss the merits of the Section 525(a) claim. 18 court’s underlying power to declare the law.”). But see United States v. Tx. Tech Univ., 171 F.3d 279, 285–86 (5th Cir. 1999) (“It is the Eleventh Amendment’s restraint on ‘Judicial power’ that requires us to confront the Eleventh Amendment before employing our power to interpret statutory text.”). 18Moreover, in the near-analogous Eleventh Amendment context, we have similarly declined to engage in a complex jurisdictional analysis when a straightforward basis of decision was available, thereby avoiding unnecessary issues. See, e.g., Donohue v. Cuomo, 980 F.3d 53, 77 n.15 (2d Cir. 2020); Nat’l R.R. Passenger Corp. v. McDonald, 779 F.3d 97, 100 (2d Cir. 2015); Ret. Sys. of Ala. v. J.P. Morgan Chase & Co., 386 F.3d 419, 431 (2d Cir. 2004); Tyler v. Douglas, 280 F.3d 116, 121 (2d Cir. 2001). To be sure, on at least one other occasion, we insisted upon examining the immunity question before reaching the merits of the claim. See Hale v. Mann, 219 F.3d 61, 66–67 (2d Cir. 2000). However, in that instance, the state entity in question asserted sovereign immunity from suit entirely, contending that Congress had not validly abrogated the state’s sovereign immunity with the Family Medical Leave Act. Id. at 66–69. Here, in contrast, the SBA does not contend that it is immune in general, merely that it is immune from injunctive relief. 26