Federalism, Private Rights, and Article III Adjudication

*John M. Golden is the Edward S. Knight Chair in Law, Entrepreneurialism and Innovation at the University of Texas School of Law. While working on this Article, Professor Golden was supported by a fellowship at the Notre Dame Institute for Advanced Study and the Notre Dame Technology Ethics Center. Thomas H. Lee is the Leitner Family Professor of International Law at the Fordham University School of Law. For helpful feedback, the authors thank Gregory Ablavsky, Martin Flaherty, Henry Monaghan, James Pfander, Patrick Woolley, and participants in colloquia at the Fordham University School of Law, Notre Dame Law School, and the University of Texas School of Law. The authors previously drafted an amicus brief on the constitutionality of non-Article III adjudication in Oil States Energy Services, LLC v. Green’s Energy Group, LLC, 138 S. Ct. 1365 (2018).Show More

This Article sheds new light on the private rights/public rights distinction used by the Supreme Court to assess the extent to which the United States Constitution permits adjudication by a non-Article III federal tribunal. State courts have traditionally been the primary deciders of lawsuits over private rights—historically defined as suits regarding “the liability of one individual to another under the law as defined.” If Congress could limitlessly assign adjudication of private rights cases to federal officials lacking the life tenure and salary protections of Article III judges, the political branches of the federal government would enjoy vastly expanded authority to encroach on state courts’ traditional authority to decide common law and equity cases between individuals. We argue that such vast congressional power is inconsistent with the limits on federal authority in a constitutional scheme in which state courts have traditionally dominated the adjudication of ordinary private disputes and in which Congress’s power of direct taxation and ability to create lower federal courts were hard-won concessions when the Constitution was adopted. Article III’s implicit constraints on congressional power to confer private rights cases on non-Article III federal tribunals effectively checks federal power to supplant state court adjudication by requiring that adjudicative power over such cases go substantially to Article III courts, bodies constitutionally insulated from congressional control. The private rights/public rights distinction thus operationalizes a principle of constitutional federalism through the mechanism of federal-level separation of powers. Article III’s federalism underlay explains the Supreme Court’s special concern with non-Article III adjudication of state law claims and of questions of “jurisdictional” fact—two doctrinal positions that have puzzled commentators focused on the threat that proliferation of non-Article III tribunals poses to the power of Article III courts, rather than to the power of state courts and local juries. By showing how federalism is an important part of the non-Article III adjudication puzzle, this Article complements prior accounts that focus solely on concerns with the separation of powers and individual liberty to explain constitutional constraints on congressional power to vest adjudicatory authority in federal officials lacking lifetime tenure and salary protections.

Introduction

Congress’s power to entrust adjudication to non-Article III judges or tribunals is an enduring enigma. Article III provides that: “The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”¹ 1.Id. § 2.Show More If this Vesting Clause and the Article III, Section 2 enumeration of nine “Cases” and “Controversies” to which the “judicial Power shall extend”² 2.See infra Part I.Show More are to mean something, there must be some limit to Congress’s power to assign final determinations in Article III-listed cases and controversies outside the judicial branch. But the nature of this limit remains one of the thorniest problems in modern constitutional and administrative law. The Supreme Court has developed a controversial “public rights doctrine” to define the constitutional scope of non-Article III adjudication: Congress has broad discretion to use non-Article III adjudicators in “public rights” cases and lacks similar discretion in “private rights” cases.

Concerns with individual liberty and federal-level separation of powers provide the two dominant themes in judicial opinions and scholarship relating to the public rights doctrine.³ 3.Cf. Badgerow v. Walters, 142 S. Ct. 1310, 1322 (2022) (declining to uphold federal jurisdiction under the Federal Arbitration Act over a suit to vacate an arbitration award because “‘[e]nforcement of the Act,’ we have understood, ‘is left in large part to the state courts’” (citation omitted)).Show More What has been overlooked in prior accounts is a third concern that was critical at the time of Article III’s adoption: protecting the general primacy of state courts in deciding traditional categories of disputes between private parties outside the maritime context. In the wake of post-1930 federal legislation that has greatly expanded the scope of federally created rights and obligations, concern with the public rights doctrine has commonly focused on questions of separation of powers between the Article III courts and Congress’s administrative creations. We highlight here, however, how the private rights side of the doctrine has operated to preserve pre-existing state judicial power by limiting federal tribunals for adjudicating cases and controversies between private parties.⁴ 4.See infra text accompanying notes 143–45.Show More

That state courts should handle ordinary private disputes outside the maritime context was axiomatic when the Constitution was adopted. This basic presumption of preserving state adjudicative power was strongly reflected in discussion and practice both at the Founding and in subsequent decades. It was, for example, the imperative of preserving state court decisional primacy over traditional private disputes that made Article III’s provision for interstate diversity jurisdiction a point of peak controversy during ratification debates. At a time when interstate (and even long-distance intrastate) travel could be forbiddingly time-consuming and inconvenient, this constitutional federalism concern reflected very practical interests in ensuring that state citizens retained access to relatively proximate, local courts and juries to resolve ordinary private disputes.⁵ 5.See infra text accompanying notes 139–60.Show More

Preserving state court decisional primacy in private rights cases could not only spare citizens the expense of travel to distant federal forums, but, more fundamentally, could also safeguard local governance and individual liberty by ensuring the centrality of local judges and juries in private dispute resolution.⁶ 6.See infra text accompanying note 184.Show More Article III permitted some encroachment on such traditional work of state courts through its provisions for diversity jurisdiction, but the requirement of diversity itself ensured that this encroachment was limited, as was the mechanism—the Article III judiciary, through which such inroads could be made. If Congress could sidestep such limits by assigning adjudication of private rights cases to federal officials lacking the life tenure and salary protections of Article III judges, the political branches of the federal government would enjoy vastly expanded authority to encroach on state courts’ traditional authority to decide common law and equity cases among private parties.

The Judiciary Act of 1789 and relevant Supreme Court decisions from the nineteenth through the twentieth centuries, and even today, are consistent with recognition of the presumptive primacy of state court settlement of ordinary private disputes outside the admiralty and maritime contexts. Indeed, the provisions for federal court jurisdiction in the Judiciary Act of 1789 were notably parsimonious, prominently featuring, for example, a then-significant five-hundred-dollar amount-in-controversy requirement and only twice-a-year circuit courts for diversity jurisdiction—limitations that helped ensure that only a severely restricted subset of diversity cases would make their way to federal, rather than state, courts.⁷ 7.See, e.g., Martin H. Redish, Legislative Courts, Administrative Agencies, and the Northern Pipeline Decision, 1983 Duke L.J. 197, 208 (“Use of the [public-versus-private rights] dichotomy to determine the proper article III-article I division contravenes the policies and language of article III.”).Show More The substantially unchallenged status of state court primacy in resolving private disputes—partly a natural product of the limited resources and personnel of the federal government for much of United States history—helps explain the federalism dimension of Article III that was so prominent in ratification debates.

Appreciation of the federalism dimension of Article III casts the public rights doctrine into a different light. Some who have approached the doctrine strictly from a separation of powers perspective have dismissed its applications as incoherent or even mystifying.⁸ 8.See, e.g., Kent Barnett, Due Process for Article III—Rethinking Murray’s Lessee, 26 Geo. Mason L. Rev. 677, 691–92 (2019) (“[W]hen private parties have a dispute (usually concerning matters of state law), Article III offers its most robust protection. Of course, it is in these cases that the political branches would usually have the least interest.”); James E. Pfander & Andrew G. Borrasso, Public Rights and Article III: Judicial Oversight of Agency Action, 82 Ohio State L.J. 493, 496 (2021) (“Some think it odd that Article III operates more insistently to ensure review of private matters of state law than of claims based on federal statutes.”).Show More In comparison to federal law matters, state law matters seem less likely to be subject to abusive allocation by a Congress presumptively more removed from specifically state concerns; yet Supreme Court Justices have repeatedly suggested that the state law status of a dispute between private parties makes its assignment to a non-Article III tribunal especially suspect.⁹ 9.285 U.S. 22 (1932).Show More Under a federalism perspective, this seeming anomaly dissolves: by restricting federal resolution of state law claims by non-Article III tribunals, the Court’s decisions have been faithful to Article III’s federalism underlay by helping ensure that state courts (with state judges and juries) remain the primary deciders of such matters. The federalism concern also helps explain the Supreme Court’s evident caution, in the landmark case of Crowell v. Benson,¹⁰ 10.Id. at 54–55, 63 (holding that findings of fact “as to the circumstances, nature, extent and consequences of the injuries” sustained by a maritime employee may be entrusted to a deputy commissioner subject to judicial review of law but that a “different question is presented where the determinations of fact are fundamental or ‘jurisdictional,’ in the sense that their existence is a condition precedent to the operation of the statutory scheme” and so must be determined by an Article III court). The Crowell Court’s mandate that an Article III district court ought to “determine for itself the existence of these fundamental or jurisdictional facts,” id. at 63, has perplexed some commentators. See, e.g., Paul M. Bator, The Constitution as Architecture: Legislative and Administrative Courts Under Article III, 65 Ind. L.J. 233, 268–69 (1990) (“[I]f there is one thing plain about the structure of article III, it is that the question whether it is expedient and wise to have a case litigated in an article III federal trial court is not a matter of constitutional principle at all.”).Show More in assessing the proper allocation of decisional power between an administrative agency and the Article III courts—particularly as to so-called “jurisdictional facts”¹¹ 11.See infra text accompanying notes 254–55.Show More prominent in that literally borderline maritime case.¹² 12.The protection is imperfect, of course: Congress can extend the reach of federal law—and, consequently, the Article III courts’ federal question jurisdiction—through exercise of its Article I powers, which the Article III courts have recognized to be vast. Indeed, Diego Zambrano has argued that in the 1980s and 1990s, “the federal government began to aggressively appropriate state-court litigation[] . . . leading to negative distributional consequences for small-stakes litigants.” Diego A. Zambrano, Federal Expansion and the Decay of State Courts, 86 U. Chi. L. Rev. 2101, 2101 (2019). To remedy the situation, he advocates “federal funding for state judiciaries and a push for more state complex litigation courts.” Id. at 2102. To the extent Congress seeks to deploy non-Article III adjudicators to displace traditional state court litigation, however, congressional efforts are cabined by the public rights doctrine. See infra text accompanying notes 112–34.Show More

In short, we rehabilitate the private rights/public rights distinction in the face of critiques by explaining the doctrine’s central role in safeguarding constitutional federalism. Article III’s listing of nine forms of “Cases” and “Controversies” to which federal judicial power extended was, like the Constitution’s earlier enumeration of legislative powers, a limiting measure as well as an enabling one. Specifically, Article III’s limited enumeration acted to protect pre-existing state and local governance in the form of state courts and juries. Congress’s constitutional obligation to vest federal power over private rights cases in Article III courts prevents the national government from undermining state court primacy in such cases simply by proliferating non-Article III tribunals to decide them. In this respect, horizontal separation of powers between the federal branches of government not only establishes a balance of powers at the federal level, but also helps protect traditional state prerogatives from federal government intrusion.¹³ 13.John M. Golden & Thomas H. Lee, Congressional Power, Public Rights, and Non-Article III Adjudication, 98 Notre Dame L. Rev. (forthcoming 2023).Show More In contrast, this constitutional federalism concern is severely muted, if not entirely absent, in cases where displacement of state courts is not an issue—as in the territories or, because of longstanding consensus on the desirability of exclusively national adjudication, in admiralty and maritime cases. The concern is similarly muted or absent in public rights cases, which generally do not arise without the involvement, either as a party or as lawmaker, of the federal government. This Article concentrates on the private rights dimension of our account of the public rights doctrine and Article III; another article examines our account’s implications for non-Article III adjudication in public rights cases.¹⁴ 14.See infra text accompanying notes 38–40, 104, 230–43.Show More

Our insight that federalism is an important factor on the private rights side of the public rights doctrine has significant consequences for modern constitutional and administrative law. While the federalism rationale for the private rights side of public rights doctrine supports the Supreme Court’s special hesitancy with respect to the non-Article III adjudication of state law claims, the centrality of the state court displacement concern—and its established circumvention in the circumstances of territorial courts—also suggests that the private rights category is properly viewed as substantially bounded by history. There is a fair amount of sense in the indications from multiple Supreme Court Justices—as well as the precedentially established relationship between demands for Article III adjudication and Seventh Amendment jury rights—that, for purposes of the public rights doctrine, “private rights” are historically tied to rights recognized by common law, equity, or admiralty at the time of the Constitution’s ratification.¹⁵ 15.See Golden & Lee, supra note 14.Show More As a consequence, although the reference to constitutional text and ratification debates in our arguments may draw sympathy from originalists, our approach to understanding Article III and the Court’s public rights doctrine is compatible with an expansive domain for constitutionally permissible non-Article III adjudication, an aspect of our understanding that our companion article emphasizes.¹⁶ 16.See Samuel L. Bray, Equity, Law, and the Seventh Amendment, 100 Tex. L. Rev. 467, 468–69 (2022) (discussing the Supreme Court’s historical approach to determining the scope of Seventh Amendment jury rights).Show More

Ultimately, as with Seventh Amendment jury rights, much depends on how strictly one defines the category of relevant modern analogues for traditionally recognized private rights.¹⁷ 17.Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1373 (2018) (holding that “reconsideration of the Government’s decision to grant a public franchise” is a matter of public right).Show More We do not assert that we have provided a definitive formulation of the private rights category. But we do believe that our account of federalism’s place within the understanding of public rights doctrine should help define the framework for future debates about when non-Article III adjudication is permissible under Article III. More immediately, our account illuminates current controversies regarding the role of Article III courts in our constitutional system. The Supreme Court has recently made the private rights/public rights distinction a centerpiece of decision making. In 2018, the Court, by a 7–2 vote, upheld Congress’s power to assign initial adjudication of patent validity challenges to administrative tribunals whose members lack the life tenure and salary protections of Article III judges because such challenges implicated “public rights.”¹⁸ 18.Id. at 1385 (Gorsuch, J., dissenting).Show More The two dissenters contended that patents had been historically treated like “other instruments creating private property rights”¹⁹ 19.Id. at 1386 (“Today’s decision may not represent a rout but it at least signals a retreat from Article III’s guarantees.”).Show More and thus that the role entrusted by Congress to non-Article III adjudicators was unconstitutional.²⁰ 20.See Georgina Yeomans, Ordering Conduct Yet Evading Review: A Simple Step Toward Preserving Federal Supremacy, 131 Yale L.J.F. 513, 513–14 (2021) (“[S.B. 8’s] delegation of enforcement [to private parties] was meant to prevent the law from being challenged in court before it was enforced.”).Show More

This attention to the private rights/public rights distinction is part of a larger trend of re-emphasis on distinctions between private and public concerns in U.S. constitutional law. State actors have begun consciously exploiting the federalism dimension of the private rights/public rights distinction. In 2021, Texas enacted S.B. 8, a law specifically designed to evade injunction by Article III courts by packaging enforcement against abortion providers or assisters as a matter of private right²¹ 21.Crowell v. Benson, 285 U.S. 22, 50–52 (1932).Show More involving “the liability of one individual to another under the law as defined.”²² 22.See, e.g., Gordon S. Wood, Power and Liberty: Constitutionalism in the American Revolution 173 (2021); Louis Michael Seidman, State Action and the Constitution’s Middle Band, 117 Mich. L. Rev. 1, 10 (2018) (“Before the New Deal revolution, standard constitutional theory identified a public zone of police power and a private zone of individual freedom.”).Show More More generally, scholars such as Gordon Wood have newly highlighted the extent to which distinctions between the public and the private have been critical in the development of U.S. constitutional law.²³ 23.Wood, supra note 23, at 173.Show More Wood in particular has shown how such distinctions have helped delineate the bounds of proper government action while also reinforcing the courts’ role as mediators between “the conflicting claims of public authority and [individuals’] private rights.”footnote_id_25_24 Hence, understanding the proper scope of private/public classifications and their relation to structural concerns such as federalism and separation of powers, as well as to concerns of individual liberty, is a crucial problem in modern constitutional law. More specifically, understanding the application of the construct in the context of non-Article III adjudication provides a powerful lens to illuminate fundamental questions about the role of U.S. national courts in a constitutional democracy.

This Article proceeds as follows. Part I describes and distinguishes prior literature. Part II explains and supports our federalism-oriented approach to understanding Article III and the private rights/public rights distinction. It begins with an examination of pertinent constitutional text and continues with an account of the public rights doctrine. Part II then shows how the ratification debates and subsequent congressional practice support our federalism account of Article III and the private rights/public rights distinction. Part III details and analyzes the Supreme Court’s treatment of questions of law, of questions of fact and jury rights, and of party consent to non-Article III adjudication. Part III contends that the outcomes in the Supreme Court’s private rights cases have generally been correct, but that, in important respects, the Court’s reasoning and doctrinal formulations can be improved. Significantly, Part III endorses the notion that, through consent to non-Article III adjudication, parties may waive otherwise applicable rights to Article III proceedings. After all, the structural protections themselves are designed, in substantial part, to protect individual liberty from tyrannical or otherwise excessive government interference. Consequently, individuals are generally free to give up their rights to adjudication in a government forum. Nonetheless, Part III emphasizes that such waivers are subject to backstopping checks to confirm that party consent does not substantially undermine state courts’ traditional prerogatives or federal-level separation of powers—thereby illustrating the complicated ways in which the concerns of federalism, separation of powers, and individual liberty intertwine. The Conclusion summarizes main points and arguments, re-emphasizing how the federalism dimension of Article III helps bring greater clarity to the private rights/public rights picture.

1. U.S. Const. art. III, § 1. ↑
2. Id. § 2. ↑
3. See infra Part I. ↑
4. Cf. Badgerow v. Walters, 142 S. Ct. 1310, 1322 (2022) (declining to uphold federal jurisdiction under the Federal Arbitration Act over a suit to vacate an arbitration award because “‘[e]nforcement of the Act,’ we have understood, ‘is left in large part to the state courts’” (citation omitted)). ↑
5. See infra text accompanying notes 143–45. ↑
6. See infra text accompanying notes 139–60. ↑
7. See infra text accompanying note 184. ↑
8. See, e.g., Martin H. Redish, Legislative Courts, Administrative Agencies, and the Northern Pipeline Decision, 1983 Duke L.J. 197, 208 (“Use of the [public-versus-private rights] dichotomy to determine the proper article III-article I division contravenes the policies and language of article III.”). ↑
9. See, e.g., Kent Barnett, Due Process for Article III—Rethinking Murray’s Lessee, 26 Geo. Mason L. Rev. 677, 691–92 (2019) (“[W]hen private parties have a dispute (usually concerning matters of state law), Article III offers its most robust protection. Of course, it is in these cases that the political branches would usually have the least interest.”); James E. Pfander & Andrew G. Borrasso, Public Rights and Article III: Judicial Oversight of Agency Action, 82 Ohio State L.J. 493, 496 (2021) (“Some think it odd that Article III operates more insistently to ensure review of private matters of state law than of claims based on federal statutes.”). ↑
10. 285 U.S. 22 (1932). ↑
11. Id. at 54–55, 63 (holding that findings of fact “as to the circumstances, nature, extent and consequences of the injuries” sustained by a maritime employee may be entrusted to a deputy commissioner subject to judicial review of law but that a “different question is presented where the determinations of fact are fundamental or ‘jurisdictional,’ in the sense that their existence is a condition precedent to the operation of the statutory scheme” and so must be determined by an Article III court). The Crowell Court’s mandate that an Article III district court ought to “determine for itself the existence of these fundamental or jurisdictional facts,” id. at 63, has perplexed some commentators. See, e.g., Paul M. Bator, The Constitution as Architecture: Legislative and Administrative Courts Under Article III, 65 Ind. L.J. 233, 268–69 (1990) (“[I]f there is one thing plain about the structure of article III, it is that the question whether it is expedient and wise to have a case litigated in an article III federal trial court is not a matter of constitutional principle at all.”). ↑
12. See infra text accompanying notes 254–55. ↑
13. The protection is imperfect, of course: Congress can extend the reach of federal law—and, consequently, the Article III courts’ federal question jurisdiction—through exercise of its Article I powers, which the Article III courts have recognized to be vast. Indeed, Diego Zambrano has argued that in the 1980s and 1990s, “the federal government began to aggressively appropriate state-court litigation[] . . . leading to negative distributional consequences for small-stakes litigants.” Diego A. Zambrano, Federal Expansion and the Decay of State Courts, 86 U. Chi. L. Rev. 2101, 2101 (2019). To remedy the situation, he advocates “federal funding for state judiciaries and a push for more state complex litigation courts.” Id. at 2102. To the extent Congress seeks to deploy non-Article III adjudicators to displace traditional state court litigation, however, congressional efforts are cabined by the public rights doctrine. See infra text accompanying notes 112–34. ↑
14. John M. Golden & Thomas H. Lee, Congressional Power, Public Rights, and Non-Article III Adjudication, 98 Notre Dame L. Rev. (forthcoming 2023). ↑
15. See infra text accompanying notes 38–40, 104, 230–43. ↑
16. See Golden & Lee, supra note 14. ↑
17. See Samuel L. Bray, Equity, Law, and the Seventh Amendment, 100 Tex. L. Rev. 467, 468–69 (2022) (discussing the Supreme Court’s historical approach to determining the scope of Seventh Amendment jury rights). ↑
18.  Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1373 (2018) (holding that “reconsideration of the Government’s decision to grant a public franchise” is a matter of public right). ↑
19. Id. at 1385 (Gorsuch, J., dissenting). ↑
20. Id. at 1386 (“Today’s decision may not represent a rout but it at least signals a retreat from Article III’s guarantees.”). ↑
21. See Georgina Yeomans, Ordering Conduct Yet Evading Review: A Simple Step Toward Preserving Federal Supremacy, 131 Yale L.J.F. 513, 513–14 (2021) (“[S.B. 8’s] delegation of enforcement [to private parties] was meant to prevent the law from being challenged in court before it was enforced.”). ↑
22. Crowell v. Benson, 285 U.S. 22, 50–52 (1932). ↑
23. See, e.g., Gordon S. Wood, Power and Liberty: Constitutionalism in the American Revolution 173 (2021); Louis Michael Seidman, State Action and the Constitution’s Middle Band, 117 Mich. L. Rev. 1, 10 (2018) (“Before the New Deal revolution, standard constitutional theory identified a public zone of police power and a private zone of individual freedom.”). ↑

24. Wood, supra note 23, at 173. ↑