Question
Is a US state's revocation of a business license not being federally
appealable codified somewhere, or is there simply no law saying it can
be?
Answer
Overview
The way that the federal court system and the state court system interact in the United States is intricate and complicated. There is a legal basis for the bottom line conclusion that litigants in the case referenced in the question can't appeal to federal court and that it would be hard to challenge this particular kind of business regulation even prior to it becoming part of the court process if that had happened. But it isn't all laid out in one place.
But some of the answer comes from the federal case law of civil procedure, some of the answer comes from multiple federal statutes, and some of the answer comes from more than one provision of the U.S. Constitution.
State court decisions can't be reviewed by federal trial courts
The principle that a state court decision can't be appealed in federal trial court is called the Rooker-Feldman doctrine, which is part of the federal common law of civil procedure.
State court decisions can't be reviewed by the U.S. Courts of Appeal
The U.S. Courts of Appeal are creatures of statute, and there is not a statutory grant of jurisdiction that allows them to review the decisions of state courts. The relevant statutes are 28 U.S.C. §§ 1291, 1292, 1294. 1295 and 1296.
SCOTUS review is limited to federal questions
In a case in which all state court appeals have been exhausted, there can be an appeal to the U.S. Supreme Court, but Article III, Section 2, Clauses 1 and 2 of the U.S. Constitution limits these appeals to federal law issues only, with certain select exceptions. It states:
The judicial Power shall extend to all Cases, in Law and Equity,
arising under this Constitution, the Laws of the United States, and
Treaties made, or which shall be made, under their Authority;—to all
Cases affecting Ambassadors, other public Ministers and Consuls;—to
all Cases of admiralty and maritime Jurisdiction;—to Controversies to
which the United States shall be a Party;—to Controversies between two
or more States;—between a State and Citizens of another State,—between
Citizens of different States,—between Citizens of the same State
claiming Lands under Grants of different States, and between a State,
or the Citizens thereof, and foreign States, Citizens or Subjects.
In all Cases affecting Ambassadors, other public Ministers and
Consuls, and those in which a State shall be Party, the supreme Court
shall have original Jurisdiction. In all the other Cases before
mentioned, the supreme Court shall have appellate Jurisdiction, both
as to Law and Fact, with such Exceptions, and under such Regulations
as the Congress shall make.
First instance review of state non-judicial decisions in federal courts
Sometimes a state and local government decision, that is not made by a state or local court, can be challenged in federal court, if the challenge is based upon a federal law in what is called federal question jurisdiction. 28 U.S.C. § 1331 which states:
The district courts shall have original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties of the
United States.
But, a federal law defense to a legal action is not a basis for a case to be tried in federal court at the trial court level, pursuant to a federal common law civil procedure doctrine known as the Well Pleaded Complaint Rule.
For example, an argument that a state's regulation of business entities violates the U.S. Constitution's "dormant commerce clause" doctrine would be a defense to an action to revoke a business entity's license to operate under state law, and so it would not be provide a basis to remove a case to federal court.
A facial challenge of such a state statute, rather than a defense to a state effort to enforce it, probably could be brought in federal court if an actual case and controversy were identified and the federal lawsuit were brought by a person with standing to raise the issue against a state official charged with enforcing the law.
The impact of the Eleventh Amendment
A case brought by a state government, however, can't be removed to federal court, and a case against a state government can't be brought in federal court, due to the Eleventh Amendment to the U.S. Constitution. The text of the Eleventh Amendment states:
The Judicial power of the United States shall not be construed to
extend to any suit in law or equity, commenced or prosecuted against
one of the United States by Citizens of another State, or by Citizens
or Subjects of any Foreign State.
But it has been interpreted in a manner broader than its literal meaning to hold that state governments, as entities, are immune from suit in the federal court, unless their sovereign immunity is waived in a permissible manner (apart from lawsuits involving states over which the U.S. Supreme Court has original jurisdiction).
Local governments are not protected by the Eleventh Amendment and are treated as corporations instead for Eleventh Amendment purposes. This is why lawsuits in federal courts related to state governments are brought against a responsible government official in the state government, and not against the state itself.
The Tenth Amendment is not directly relevant
The Tenth Amendment to the U.S. Constitution states:
The powers not delegated to the United States by the Constitution, nor
prohibited by it to the States, are reserved to the States
respectively, or to the people.
The Tenth Amendment is commonly viewed as an interpretive principle rather than an independent source of legal rights, although some efforts to bring lawsuits based upon the Tenth Amendment, usually invoking some notion of natural rights, have been attempted (mostly unsuccessfully).
To the extent that the Tenth Amendment is considered, however, its emphasis that the scope of federal power is limited and not the default rule favors not permitting federal court to have jurisdiction to consider the rulings of state courts.
Footnote
In the October 3, 2023 Amanpour and Company video Journalist on
Trump’s Civil Fraud Trial: “His Whole Life Has Been a Facade” (cued at
09:51) "David Cay Johnston... a Pulitzer Prize-winning economics
reporter" says:
"And there is no appeal -- should be no appeal to federal court
because there is no federal issue here this is entirely a New York
State issue. States decide who gets to run a business under our
system, not the federal government, because the founding fathers never
thought about corporations and regulation when they wrote the
Constitution."
For what it is worth, the bottom line conclusion is correct, and the fact this legal issue arises under state and not federal law is an important part of that analysis.
But the sentence in bold, even if it is an accurate statement of 18th century constitutional law, is misleading.
The federal government can and routinely does regulate corporations and who gets to run a business. Federal securities laws, federal banking laws, and federal broadcasting laws, for example, do just that. Those federal regulations of corporations and who gets to run a business just so happen to not be at issue in Trump's New York State civil fraud enforcement case (unsurprisingly, because it was brought by the New York State Attorney General and not by a federal regulatory official).
The issue is what court has authority over litigation of which particular laws, not that Congress couldn't have enacted federal legislation of the kind at issue in the business license part of Trump's New York State civil fraud enforcement case.
