Once again, with a substantial backlog of cases—some of them potentially controversial—argued and pending decision, the Court continues to sail in relatively calm waters.

In its sole opinion of the day, a unanimous Court, per Justice Kavanaugh, has held that the State of New Jersey may withdraw unilaterally from a 1953 compact with the State of New York that was intended to address rampant corruption at the Port of New York and New Jersey. Subject to the approval of Congress, states have the authority to enter such agreements under Article I, §10, of the Constitution.

In 2018, New Jersey sought to withdraw from what was known as the Waterfront Commission Compact (“Compact”), but New York opposed the withdrawal and sued. What perhaps is most interesting, at least to most of this blog’s readers who are unlikely ever to advise with respect to a lawsuit between states, is that this kind of case falls within what remains of the Supreme Court’s original jurisdiction. Thus, in this case, the Supreme Court acted as a trial court, albeit with a final say in the matter, and today’s decision resolves cross-motions for judgment on the pleadings. And the Court’s opinion calls to mind any routine dissection of a case in a law school’s first-year contracts class. Indeed, on the determinative point, the Court relies upon the very text of which my contracts professor, the late Walter H.E. (“Doc”) Jaeger, was the editor and reviser.

With the United States having acted as an amicus curiae in support of New Jersey, the unanimous Court ruled in that state’s favor, applying what has become for the Court normative textual analysis (though often not unanimously so) in the context of general contract law. The Court begins its holding by reiterating that disputes of this kind present federal questions that begin with an examination of “the express terms of the Compact.” The contract at issue here is silent as to withdrawal, unilateral or otherwise. Hence, what is material with respect to text is the absence of it. Because of that silence, the Court looks to background principles of law that would have informed the parties’ understanding when they entered the Compact. Under the default contract-law rule at the time of the Compact’s formation, a contract that contemplates “continuing performance for an indefinite time is to be interpreted as stipulating only for performance terminable at the will of either party.” 1 R. Lord, Williston on Contracts §4:23, p. 570.

Because the states delegated their sovereign authority to the Waterfront Commission of New York Harbor on an ongoing and indefinite basis, the default contract-law rule therefore “speaks in the silence of the Compact” and allows either state unilaterally to withdraw. See New Jersey v. New York, 523 U. S. 767, 784 (1998), another original case in which the Court resolved a dispute between these very states, upholding New Jersey’s claim of jurisdiction over submerged land surrounding Ellis Island. The importance of state sovereignty also informs the Court’s decision, holding that the power and responsibility of a state to protect its people, property, and intrastate economic activity implies that a state unilaterally can withdraw from a compact. The Court is careful to note, however, that this right does not apply to other forms of compact that do not exclusively call for ongoing performance on an indefinite basis—such as compacts setting boundaries, apportioning water rights, or otherwise conveying property interests. 

The Garden State is thus on a two-case winning streak in disputes with New York, and we continue to await less placid matters at the Court.

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