Opinion ID: 1707932
Heading Depth: 1
Heading Rank: 3

Heading: State Action Decisions under the United States Constitution

Text: The federal and state due process guarantees are stated in virtually identical language. In determining the existence of state action, Louisiana courts have routinely turned to federal cases. Historically, the federal jurisprudence generally subdivided the determination of state action into two basic categories of analysis: (1) public function concept and (2) nexus concept. Under the public function concept, state action was present when a private party engaged in certain governmental functions which were state-like enough to implicate the constitutional guarantees. Under the nexus concept, the state action determination turned on the relationship between the state and the activities of the alleged private wrongdoer. A subcategory of the nexus test was the state encouragement theory, under which the private party was said to have been encouraged by the state. [1] John E. Nowak, et al., Constitutional Law 502-513 (2d. ed.1983). The nexus concept was a fluid one for which the courts declined to articulate a formal test, often stating that [o]nly by sifting facts and weighing circumstances can the non-obvious involvement of the State in private conduct be attributed its true significance. Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). After the Burton case, the Supreme Court in a series of cases addressed the issue of procedural due process in situations in which a creditor sought to deprive a debtor of a significant property interest. However, in the first three cases discussed below, state action was not at issue because a state official participated in the seizure of the property. In Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), the Court struck down a Wisconsin statute that authorized prejudgment garnishment of wages as violative of due process rights generally to notice and hearing prior to seizure of property. The Court noted that prejudgment garnishment of wages may impose a tremendous hardship on wage earners with families to support. In Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), the Court declared unconstitutional Florida and Pennsylvania statutes that permitted creditors under conditional sales contracts to repossess property, without notice to the debtor or a hearing, by obtaining a prejudgment writ of replevin from the clerk based on conclusory claims of ownership. The decision was written narrowly, noting that a state statute might, under appropriate circumstances, authorize seizure of property before final judgment. In Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974), the Court upheld a Louisiana statute authorizing prejudgment seizure of property by mortgage or lien holders, without notice to the debtor or hearing, under limited circumstances when it was necessary to forestall wasting or alienation of the encumbered property. Because the statute required the creditor to present to the judge a verified affidavit establishing the special circumstances before issuance of the writ, the Court noted that the debtor was not at the unsupervised mercy of the creditor and court functionaries. Id. at 616, 94 S.Ct. 1895. The Court also referred to the raging debate in conferences and commissions over summary creditor remedies. This raging debate gave rise to a conflict in the federal circuits. See, e.g., Adams v. Southern California First Nat'l Bank, 492 F.2d 324 (9th Cir.1973), [2] and Brooks v. Flagg Bros., Inc., 553 F.2d 764, 771 (2d Cir.1977). The Supreme Court granted certiorari in the latter case to resolve this conflict. In Flagg Bros. v. Brooks., 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978), which is the primary basis for defendants' argument that state action is lacking in the present case, the city marshal evicted Brooks and her family from their New York apartment, arranging for their possessions to be stored in a private warehouse operated by Flagg Brothers. With little practical choice, Brooks agreed to the storage arrangement. A dispute later arose over the storage charges. Utilizing the private repossession and sale procedure authorized under the New York's counterpart to U.C.C. § 7-210 (providing for the private enforcement of a warehouseman's lien for unpaid storage charges), Flagg Brothers demanded in writing that Brooks' account be brought up to date within ten days of the notice, in default of which the property would be sold. Brooks responded by bringing a class action challenging, on federal constitutional grounds, the threatened self-help repossession procedures. The district court, concluding that Brooks failed to show sufficient state involvement in the warehouseman's lien enforcement process, dismissed her complaint based on the lack of state action. 404 F.Supp. 1059 (S.D.N.Y.1975). The court of appeals reversed, reasoning that the New York statute delegated to the warehouseman a portion of its sovereign monopoly power over binding conflict resolution... [and] also let him, by selling stored goods, execute a lien and thus perform a function which has traditionally been that of the sheriff. Brooks v. Flagg Bros., Inc., 553 F.2d 764, 771 (2d Cir.1977). In so holding, the court of appeals summarized the factors on which appellate courts have focused in varying degrees to analyze the state action issue in the creditor-debtor context, as follows: [W]hether the state has delegated one of its unique powers to a private person; whether the common law rights of the creditor were expanded or merely codified; whether the creditor's power amounts to a roving commission or exists only over particular chattels that are closely connected with the debt; whether the creditor's remedy was authorized by contract as well as statute; whether the creditor's resort to the remedy was mandatory or optional; whether the state extensively regulates the creditor's industry; and even whether title rests in the debtor or creditor.... 553 F.2d at 770. Applying these factors to Brooks' situation, the court of appeals concluded that state action was involved, observing that the combination of New York's statutory delegation of distinctly governmental power to the warehouseman and its corresponding expansion of his common law remedies suffices to thrust the state's involvement in the challenged activity over the threshold of state action. Id. at 771. The court found significant both the creditor's unilateral right to resolve the dispute over the storage charges without any judicial oversight and the creditor's right to sell the stored goods in order to execute the lien, a function traditionally reserved to the sheriff. On certiorari, the Supreme Court framed the issue as whether Flagg Brothers' action may fairly be attributed to the State of New York in the absence of any overt official state involvement. 436 U.S. at 157, 98 S.Ct. 1729. In its state action analysis, the Court addressed both the public function doctrine and the state encouragement theory under the nexus concept. Noting the intermediate court's reference to dispute resolution and execution of a lien as powers traditionally reserved to the state, the Court commented that very few functions have been exclusively reserved to the state. [3] The Court then adopted a narrowly tailored public function doctrine confined to those few functions, which did not include private dispute resolution. The Court noted that the proposed sale was not the exclusive means of resolving this purely private dispute in that the parties could have privately contracted to waive the right of private sale or could have invoked the state law remedy of replevin. [4] Acknowledging that it was not removing the field of creditor-debtor transactions from constitutional constraints, the Court emphasized that this particular statute merely codified a procedure that the parties would traditionally have done by private arrangements. The Court stated that the New York's statute has done nothing more than authorize (and indeed limit)without participation by any public officialwhat Flagg Brothers would tend to do, even in the absence of such authorization, i.e., dispose of respondents' property in order to free up its valuable storage space. Id. at 163 n. 12, 98 S.Ct. 1729. However, the Court further observed that a review of the historical antecedents of the creditor's remedy was unwarranted since [t]o rely upon the historical antecedents of a particular practice would result in the constitutional condemnation in one State of a remedy found perfectly permissible in another. Id. at 163, 98 S.Ct. 1729. As to the state encouragement theory, the Court cited its jurisprudence that state action exists when a state, by its law, compels or orders the private action. [5] Noting that the New York statute merely permits, but does not compel, the private sale and characterizing the State's conduct as a refusal to interfere with the private sale (i.e., an inaction), the Court concluded it was immaterial that New York had embodied in statutory form its decision not to act and analogized this inaction to imposing a statue of limitations whereby the State declines to provide a remedy for private deprivations of property after the passage of a given period of time. Id. at 166, 98 S.Ct. 1729. Justice Marshall's dissent focused on the five-person majority's cavalier treatment of historical factors in the state action inquiry, asserting that while the test adopted by the Court itself requires us to decide what functions have been `traditionally exclusively reserved to the State,' this test cannot be applied in a historical vacuum. Id. at 167, 98 S.Ct. 1729. The dissent stated, By ignoring this history, the Court approaches the question before us as if it can be decided without reference to the role that the State has always played in lien execution by forced sale. Id. at 168, 98 S.Ct. 1729. Likewise, Justice Stevens in his dissent noted that some reference to history and well-settled practice is necessary to determine whether a particular action is a `traditional state function.' [6] Id. at 172 n. 7, 98 S.Ct. 1729. After Flagg Brothers, the debate over extending creditors' remedies continued, and scholarly commentaries noted the incongruity of the Flagg Brothers decision. See Christine A. Bartlett, Note, The Constitutionality of New York's Garageman's Lien: A Flexible State Action Concept Under the State Due Process Clause, 43 Alb. L.Rev. 121, 131-32 n. 64 (1978)(The lack of state control over the due process procedures of notice and hearing, which rendered the statutes in Fuentes and North Georgia unconstitutional, is the very factor which can preclude a finding of state action in the first place, since there would be no `significant' state involvement.); Bruce Schewe, Comment, Civilian Thoughts on U.C.C. Section 9-503, Self-Help Repossession: Reasoning in a Historical Vacuum, 42 La. L.Rev. 239, 255 n. 110 (1981)(noting that while the majority in Flagg Brothers may have viewed the prior cases as decided incorrectly and were perhaps [u]nwilling to overrule North Georgia, Fuentes, and Sniadach, the Flagg Brothers Court achieves the same result in refusing to find state action); Laurence H. Tribe, American Constitutional Law § 18-6 (2d ed. 1988)(Since what was wrong in prior due process cases was that the state had not reserved enough control over the use of coercive force, it would be perverse for the Court to conclude that the scheme in Flagg Brothers was less constitutionally infirm because the state withdrew even its clerical rubber stamp and freed creditors to dispose of debtors' property without any mediation or intervention by public authorities.). Nevertheless, the holding in Flagg Brothers as to state action has sounded the death knell in several jurisdictions for federal constitutional due process challenges to similar self-help repossession provisions, and we conclude the Act does not violate the federal constitution. Due process challenges under state constitutions, however, have not been foreclosed. Indeed, state judges have been encouraged not to apply Supreme Court decisions mechanically to state law issues, even when the state and federal constitutions are similarly or identically worded, but rather to use such decisions as guideposts and to use them only if they are found to be logically persuasive and well-reasoned, paying due regard to precedent and the policies underlying specific constitutional guarantees. William J. Brennan, Jr., State Constitutions and Protections of Individual Rights, 90 Harv. L.Rev. 489, 502 (1977). See also State v. Hernandez, 410 So.2d 1381, 1385 (La.1982)(noting that this court cannot and should not allow [the United States Supreme Court's] decisions to replace our independent judgment in construing the constitution adopted by the people of Louisiana).