Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-08-15245/USCOURTS-ca9-08-15245-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL CAVINESS, 

Plaintiff-Appellant, No. 08-15245

v. D.C. No. 

HORIZON COMMUNITY LEARNING CV-07-00635-FJM

CENTER, INC.; LAWRENCE PIERATT, OPINION

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Arizona

Frederick J. Martone, District Judge, Presiding

Argued and Submitted

June 9, 2009—San Francisco, California

Filed January 4, 2010

Before: Stephen S. Trott, M. Margaret McKeown, and

Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Ikuta

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COUNSEL

David C. Larkin, David. C. Larkin P.C., Tempe, Arizona, for

the appellant.

Sally A. Odegard and Larry J. Wulkan, Holloway, Odegard,

Forrest & Kally, P.C., Phoenix, Arizona, for the appellees.

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OPINION

IKUTA, Circuit Judge:

This appeal requires us to decide whether a private nonprofit corporation that runs a charter school1

 in Arizona was

a state actor under 42 U.S.C. § 1983 when it took certain

employment-related actions with respect to a former teacher,

Michael Caviness. The district court held that Horizon Community Learning Center (“Horizon”) and its executive director, Lawrence Pieratt, were not functioning as state actors in

these circumstances.2 Because the allegations in Caviness’s

complaint are insufficient to raise a reasonable inference that

Horizon was a state actor and thus acted under color of state

law in taking the alleged actions after Caviness was terminated, we affirm the judgment of the district court.

I

Horizon is a private, non-profit corporation that operates a

charter school in Arizona. Because Caviness’s argument is

primarily based on the Arizona statutes and regulations that

authorize and regulate charter schools, we provide a brief

description of the relevant provisions.

A

In Arizona, charter schools are “public school[s] established by contract with a district governing board, the state

board of education, or the state board for charter schools . . .

1Section 15-101(3) of the Arizona Revised Statutes provides: 

“Charter school” means a public school established by contract

with a district governing board, the state board of education or

the state board for charter schools pursuant to article 8 of this

chapter to provide learning that will improve pupil achievement.

2We refer to Pieratt by name when appropriate, and otherwise refer to

defendants collectively as “Horizon.” 

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to provide learning that will improve pupil achievement.”

Ariz. Rev. Stat. § 15-101(3) (footnote omitted). Charter

schools “serve as alternatives to traditional public schools” by

“provid[ing] additional academic choices for parents and

pupils,” and they are intended “to provide a learning environment that will improve pupil achievement.” Id. § 15-181(A).

By contrast, Arizona defines a “private school” as a “nonpublic institution where instruction is imparted.” Id. § 15-

101(19). Charter schools are publicly funded, although they

are authorized to accept private grants and gifts. Id. § 15-

185(D). 

A private or public entity seeking to create a charter school

must submit an application and be “sponsored” by either “a

school district governing board, the state board of education

or the state board for charter schools.” Id. § 15-183(C).3 In

turn, “[t]he sponsor of a charter school may contract with a

public body, private person or private organization for the

purpose of establishing a charter school . . . .” Id. § 15-

183(B). The sponsoring entity of a charter school has “oversight and administrative responsibility for the charter schools

that it sponsors.” Id. § 15-183(R). 

Each charter school must develop a plan for running the

school on a largely autonomous basis. A school’s charter must

specify “a governing body for the charter school that is

3The statute describes the application process as follows: 

The application shall include a detailed business plan for the

charter school and may include a mission statement for the charter school, a description of the charter school’s organizational

structure and the governing body, a financial plan for the first

three years of operation of the charter school, a description of the

charter school’s hiring policy, the name of the charter school’s

applicant or applicants and requested sponsor, a description of the

charter school’s facility and the location of the school, a description of the grades being served and an outline of criteria designed

to measure the effectiveness of the school. 

Ariz. Rev. Stat. § 15-183(A). 

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responsible for the policy decisions of the charter school.” Id.

§ 15-183(E)(8). The charter must “include a description of the

charter school’s personnel policies, personnel qualifications

and method of school governance and the specific role and

duties of the sponsor of the charter school.” Id. § 15-183(F).

Charter schools are subject to certain state regulations. The

state’s Department of Education promulgates a list notifying

charter schools of their obligations to comply with specified

federal, state, and local statutes and rules relating to health,

safety, civil rights, and insurance. Id. § 15-183(E)(1). Charter

schools are required to display a United States flag in each

classroom and, for grades 7 through 12, purchase copies of

the Constitution and Bill of Rights. Id. § 15-506. According

to Arizona’s Attorney General, charter schools are deemed to

be “political subdivisions” of the state for purposes of complying with Arizona’s Open Meetings Act. See Ariz. Op. Atty

Gen. No. 195-10, 1995 WL 870820 at *4 (1995). But see Salt

River Pima-Maricopa Indian Cmty. Sch. v. Arizona, 23 P.3d

103, 108 (Ariz. 2001) (holding that the Attorney General’s

conclusion that charter schools were political subdivisions of

the state for purposes of open meeting laws did not influence

the court’s determination that charter schools were not political subdivisions of the state for purposes of a federal statute

that limited the amount of federal funds such schools could

receive). 

Several Arizona statutes are applicable to charter school

employees. Charter school employees must undergo fingerprinting and background checks, and charter schools may not

employ teachers who have been convicted of certain crimes.

Ariz. Rev. Stat. § 15-183(C)(4). Teachers at charter schools

are also afforded certain benefits. Among other things, “[a]

charter school that is sponsored by a school district governing

board, the state board of education or the state board for charter schools is eligible to participate in the Arizona state retirement system . . . .” Id. § 15-187(C). State retirement benefits

are available to “any person in the employ of . . . a political

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subdivision” of Arizona, id. § 38-701(2), and charter schools

are “a political subdivision of th[e] state for purposes of

[employee retirement eligibility definitions in] title 38, chapter 5, article 2,” id. § 15-187(C). 

Except as otherwise specified in Arizona statutes regulating

charter schools, or in the school’s own charter, a charter

school “is exempt from all statutes and rules relating to

schools, governing boards and school districts.” Id. § 15-

183(E)(5). Charter schools are therefore exempt from state

teacher-certification requirements, as well as the statutes governing dismissal of certified teachers. See id. § 15-531 et seq.

B

Caviness was employed as a high school physical education

teacher, health teacher, and track coach at Horizon for six years.

4

In February 2006, a female student filed a grievance against

Caviness alleging that “the student-teacher boundary had been

crossed.” Horizon immediately put Caviness on paid administrative leave and thereafter initiated an investigation. In

March 2006, the Horizon Board held a hearing regarding the

student’s allegations, at which Horizon, but not Caviness,

questioned the student.

Evidence elicited at the hearing indicated that the female

student and Caviness had been communicating via telephone,

and that “the student had a crush on him.” When the student

learned that Caviness had an adult girlfriend, the student

became upset and retaliated against Caviness by filing the

grievance. The Horizon Board determined that Caviness had

exercised questionable judgment regarding the extent of his

personal communications with the student, and therefore

decided not to renew Caviness’s teaching and coaching con4The underlying facts are taken from Caviness’s complaint, and are presumed true for purposes of reviewing a Rule 12(b)(6) motion to dismiss.

See, e.g., Marder v. Lopez, 450 F.3d 445, 447 n.1 (9th Cir. 2006). 

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tract. The Board decided to keep Caviness on paid administrative leave until the end of his employment term, which was

in June 2006. 

In April 2006, Pieratt wrote a letter to Caviness and sent

copies to the Horizon Board members and the Arizona

Department of Education. Caviness alleges that the letter

“contained numerous false and defamatory statements and

private information which Pieratt misused to purposely place

. . . Caviness in a bad light.” In May 2006, Caviness asked

Pieratt for permission to attend the Arizona state high school

track championship to watch several Horizon students compete, but Pieratt refused to consent. 

In July 2006, after the end of his employment term with

Horizon, Caviness applied for a position as a teacher and

coach with Mesa School District. Mesa decided not to hire

him after it asked Pieratt to rate Caviness’s ability and knowledge as a teacher, and Pieratt “declined to rate him since the

[Horizon] Board had taken the action of non-renewing his

contract.” Caviness alleges that Pieratt’s statement to Mesa

was “purposely false and incomplete and was intended to

harm” Caviness, since Pieratt “knew that Caviness had an

excellent 6-year record as a teacher and coach and it was reasonable and appropriate for [Pieratt] to respond accordingly

rather than decline to provide information.” 

In August 2006, Caviness’s attorney sent a letter to Horizon

informing it that a Horizon employee had called Caviness a

pedophile. The letter demanded “written representations from

Horizon that it had instructed all of its agents and employees

to cease and desist from making any further false and defamatory statements to anyone.” In his reply to this letter, Pieratt

did not address these demands, and Caviness claims that

another Horizon teacher subsequently defamed him by also

calling him a pedophile. 

On December 21, 2006, Caviness sent a request to Pieratt

for a name-clearing hearing “arising from defendant’s conCAVINESS v. HORIZON COMMUNITY LEARNING 69

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duct and/or failure to act subsequent to the March 24, 2006

hearing, and his right [to freedom of] association.” Horizon

did not respond to this request. 

C

In March 2007, Caviness filed a complaint under 42 U.S.C.

§ 1983 in district court against Horizon. Caviness alleged that

Horizon, acting under color of state law, deprived Caviness of

his liberty interest in finding and obtaining work without due

process by making “several false statements about” him “in

connection with his employment, which . . . cause[d] serious

damage to Caviness’s standing and associations in [the] community or, alternatively, imposed on Caviness a stigma . . .

that has . . . interfered with his freedom to take advantage of

other employment opportunities,” without providing Caviness

with notice or a name-clearing hearing. Caviness also alleged

that Horizon violated his First Amendment right to freedom

of association “by ordering him not to freely associate at certain public events.”

5

In an order issued August 31, 2007, the district court sua

sponte raised the question whether Horizon was a state actor

for purposes of § 1983, and directed the parties to submit

memoranda in support of federal subject matter jurisdiction.

The district court subsequently granted Horizon’s motion

requesting that this briefing be treated as a motion to dismiss

under Federal Rule of Civil Procedure 12(b)(6). 

On December 17, 2007, the district court granted Horizon’s

motion to dismiss. In its order, the district court rejected Caviness’s arguments that Horizon was a state actor because of its

statutory characterization as a “public school,” and because it

performed a public function in providing public education.

Because there was “no evidence, with respect to [Caviness’s]

5Caviness additionally alleged certain state-law causes of action that are

not at issue in this appeal. 

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specific employment claims, that Horizon acted in concert or

conspired with state actors, was subject to government coercion or encouragement, or was otherwise entwined or controlled by an agency of the State,” the district court held that

Horizon was not functioning as a state actor in executing its

employment decisions regarding Caviness.

Caviness brought this timely appeal from the district

court’s order granting Horizon’s motion to dismiss.

II

We review de novo the district court’s conclusion that a

party is not a state actor. Lee v. Katz, 276 F.3d 550, 553 (9th

Cir. 2002). We also review de novo the district court’s dismissal of Caviness’s complaint under Rule 12(b)(6) for failure

to state a claim. Winn v. Ariz. Christian Sch. Tuition Org., 562

F.3d 1002, 1007 (9th Cir. 2009). “To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on

its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)

(internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Id. at 1949 (internal quotation marks omitted). Although “we must take all of the factual

allegations in the complaint as true, we are not bound to

accept as true a legal conclusion couched as a factual allegation.” Id. at 1949-50. “[C]onclusory allegations of law and

unwarranted inferences are insufficient to defeat a motion to

dismiss for failure to state a claim.” Epstein v. Wash. Energy

Co., 83 F.3d 1136, 1140 (9th Cir. 1996).

III

[1] Section 1983 “provides remedies for deprivations of

rights under the Constitution and laws of the United States

when the deprivation takes place under color of any statute,

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ordinance, regulation, custom, or usage, of any State or Territory.” Gorenc v. Salt River Project Agric. Improvement &

Power Dist., 869 F.2d 503, 505 (9th Cir. 1989) (internal quotation marks omitted). In order to recover under § 1983 for

conduct by the defendant, a plaintiff must show “that the conduct allegedly causing the deprivation of a federal right be

fairly attributable to the State.” Lugar v. Edmonson Oil Co.,

457 U.S. 922, 937 (1982); see also Rendell-Baker v. Kohn,

457 U.S. 830, 838 (1982). The state-action element in § 1983

“excludes from its reach merely private conduct, no matter

how discriminatory or wrongful.” Am. Mfrs. Mut. Ins. Co. v.

Sullivan, 526 U.S. 40, 50 (1999) (internal quotation marks

omitted). 

[2] As we have explained, “[s]tate action may be found if,

though only if, there is such a close nexus between the State

and the challenged action that seemingly private behavior

may be fairly treated as that of the State itself.” Villegas v.

Gilroy Garlic Festival Ass’n, 541 F.3d 950, 955 (9th Cir.

2008) (en banc) (citing Brentwood Acad. v. Tenn. Secondary

Sch. Athletic Ass’n, 531 U.S. 288, 295 (2001)). “[C]ourts have

developed a variety of approaches” for determining whether

such a close nexus is present. Lee, 276 F.3d at 554 (noting

that the Supreme Court in Brentwood “list[ed] seven

approaches to the issue”); see id. at 554 n.3; see also Kirtley

v. Rainey, 326 F.3d 1088, 1092 (9th Cir. 2003).

This case presents the special situation of a private nonprofit corporation running a charter school that is defined as

a “public school” by state law. We therefore begin with the

recognition that Arizona has statutorily defined a charter

school as a “public school.” Ariz. Rev. Stat. § 15-101(3).

However, because the conduct of a private corporation is at

issue, our inquiry does not end there. Rather, in answering the

question whether there is a close nexus between the State and

the challenged action, our inquiry “begins by identifying the

specific conduct of which the plaintiff complains.” Sullivan,

526 U.S. at 51 (internal quotation marks omitted); see also

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Blum, 457 U.S. at 1003 (“Faithful adherence to the ‘state

action’ requirement . . . requires careful attention to the gravamen of the plaintiff ’s complaint.”). “It is important to identify

the function at issue because an entity may be a State actor for

some purposes but not for others.” Lee, 276 F.3d at 555 n.5

(internal quotation marks and alteration omitted). 

Thus, in George v. Pacific-CSC Work Furlough, we considered the complaint by a custodial staff employee of a private entity, Pacific, which had contracted with California to

operate a correctional facility. 91 F.3d 1227, 1230 (9th Cir.

1996). After the custodial employee was terminated, he sued

the private company under § 1983, alleging that his First

Amendment rights were violated because he was terminated

for speaking out about safety and security problems. In rejecting the employee’s theory that Pacific was a state actor

because it was “performing and fulfilling a traditional state

and government function, i.e., operating a correctional detention facility,” we explained that “[t]he relevant inquiry is

whether [Pacific’s] role as an employer was state action” in

the employee’s case, and noted that “[a]n entity may be a state

actor for some purposes but not for others.” Id. (emphasis in

original). We concluded that while “Pacific ha[d] been

granted certain powers and privileges under the law to allow

it to function adequately as a prison,” the plaintiff failed to

show state action because the “complaint offer[ed] no indication Pacific ha[d] become the government for employment

purposes.” Id. (internal citation, quotation marks, and alterations omitted); see also Cornish v. Corr. Servs. Corp., 402

F.3d 545, 550 (5th Cir. 2005) (in suit by terminated employee

of private prison contractor, question in determining state

action “is whether [defendant] acted under color of state law

in terminating [plaintiff ’s] employment, not whether its providing juvenile correctional services was state action”).

[3] In this case, Caviness’s complaint objects to Horizon’s

failure to instruct its employees to cease making statements

about Caviness’s performance as a teacher, and its refusal to

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provide him with a name-clearing hearing. The complaint also

objects to Horizon’s order forbidding Caviness from having

contact with students during the paid administrative leave

period. All these actions were taken by Horizon in connection

with its role as Caviness’s employer, and therefore the relevant inquiry in this case is whether Horizon’s role as an

employer was state action. George, 91 F.3d at 1230. 

[4] In determining whether Caviness’s factual allegations

“plausibly give rise to an entitlement to relief,” Iqbal, 129 S.

Ct. at 1950, we are limited to the pleadings in the complaint.

With respect to Caviness’s claim that Horizon’s actions in its

role as his employer constituted state action, Caviness’s complaint alleges only that Horizon is a non-profit corporation,

“an Arizona charter school[,] and [an] Arizona public school

operating in Maricopa County,” and that Pieratt was acting as

president, CEO, or executive director of Horizon. Caviness

does not argue that the facts alleged in his complaint render

Horizon a state actor. Rather, he argues that under Arizona’s

statutory scheme, all charter schools are, as a matter of law,

state actors. Therefore, Caviness’s appeal must fail unless

being an Arizona charter school is, by that fact alone, sufficient to make Horizon the government for employment purposes.

A

Caviness first argues that under the statutory and regulatory

structure in Arizona, a charter school is a state actor for all

purposes, including employment purposes, as a matter of law.

Caviness first relies on the fact that Arizona statutes designate

charter schools as “public schools,” Ariz. Rev. Stat. § 15-

101(3), to argue that they provide “public educational services” as a matter of law. Further, he notes that the Arizona

Attorney General has concluded that charter school board

meetings are subject to Arizona’s Open Meetings Act. See

Ariz. Op. Atty Gen. No. 195-10, 1995 WL 870820, at *4. 

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[5] We disagree. Under § 1983, a state’s statutory characterization of a private entity as a public actor for some purposes is not necessarily dispositive with respect to all of that

entity’s conduct. See Jackson v. Met. Edison Co., 419 U.S.

345, 350 & n.7 (1974) (statutory designation of utility as

“public utility” insufficient to make utility a state actor).

Rather, a private entity may be designated a state actor for

some purposes but still function as a private actor in other

respects. See Gorenc, 889 F.2d at 507 (holding that an entity

designated as a “political subdivision” in the state constitution

was not a state actor where the entity, “in the hiring and firing

of its employees . . . acts as a private company, that is, in a

proprietary manner not in a governmental manner”). Accordingly, Caviness’s reliance on Arizona’s statutory characterization of charter schools as “public schools” does not itself avail

him in the employment context. For the same reason, the

opinion of the Attorney General that charter school boards are

“political subdivisions” for purposes of Arizona’s Open Meetings Act does not help Caviness here. See id.; see also Salt

River, 23 P.3d at 108 (holding that Arizona charter schools

were not political subdivisions for certain federal funding purposes). Caviness raises the similar argument that a charter

school is a state actor under § 1983 because, in Greater

Heights Academy v. Zelman, 522 F.3d 678 (6th Cir. 2008), the

Sixth Circuit held, “[a]fter considering Ohio’s statutory and

case law,” that Ohio charter schools are a political subdivision

of Ohio for purposes of determining whether the schools

could sue the state under the Fourteenth Amendment. Id. at

680. This conclusion tells us nothing about Arizona’s charter

school system, however, and so it does not support Caviness’s

position. Moreover, even if we had determined that an Arizona charter school was a political subdivision of Arizona for

purposes of suits under the Fourteenth Amendment, such a

determination would not resolve the question whether the

state “was sufficiently involved in causing the harm to plaintiff” such that we should treat Horizon as acting under color

of state law. Gorenc, 869 F.2d at 506.

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B

[6] Second, Caviness argues that Horizon is a state actor

because it provides a public education, a function that is “traditionally and exclusively the prerogative of the state.” Courts

have “found state action present in the exercise by a private

entity of powers traditionally exclusively reserved to the

State.” Jackson, 419 U.S. at 352. In these cases, “private individuals or groups are endowed by the State with powers or

functions governmental in nature” such that “they become

agencies or instrumentalities of the State.” Lee, 276 F.3d at

554-55 (quoting Evans v. Newton, 382 U.S. 296, 299 (1966)).

The challenged “function at issue must be both traditionally

and exclusively governmental.” Id. at 555; see also Johnson

v. Knowles, 113 F.3d 1114, 1118 (9th Cir. 1997) (discussing

as state action the exercise of those powers that have been

“recognized as traditionally exclusively sovereign”).

Caviness argues that since charter schools are “public

schools” under Arizona law, they therefore engage in the provision of “public educational services,” which he distinguishes from the provision of the “educational services” that

the Supreme Court held is not the exclusive and traditional

province of the state. Rendell-Baker, 457 U.S. at 842. Caviness reasons that “education in general” can be provided by

anyone, while “public educational services” are traditionally

and exclusively the province of the state. 

This argument is foreclosed by Rendell-Baker. In that case,

the Supreme Court addressed the question whether a private

school that was almost wholly state-funded could be considered a state actor for purposes of § 1983. See id. A Massachusetts statute provided that the state could “enter into an

agreement with any public or private school, agency, or institution to provide the necessary special education” to identified

students. Id. at 832 n.1. The school, a non-profit organization

which specialized “in dealing with students who have experienced difficulty completing public high schools,” was

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“founded as a private institution” and operated by a board of

directors who were neither public officials nor chosen by public officials. Id. at 832. Nearly all of the students in the school

had been referred to the school by the state, and the school’s

diplomas were publicly certified. Id. The tuition of statereferred students was publicly funded, and public funds

accounted for 90 to 99 percent of the school’s operating budget. Id. 

[7] A former teacher sued the school under § 1983 alleging

deprivations of her First, Fifth, and Fourteenth Amendment

rights when her employment was terminated after a dispute

with the school’s board of directors. Id. at 835. In evaluating

“whether the school’s action in discharging [plaintiff] can

fairly be seen as state action,” id. at 838, the Court considered

whether the school was performing a public function that has

“been ‘traditionally the exclusive prerogative of the State,’ ”

id. at 842 (emphasis in original) (quoting Jackson, 419 U.S.

at 353). Although the school provided a public function by

educating “students who could not be served by traditional

public schools,” the Court held that the “legislative policy

choice” to provide those services at public expense “in no

way” made their provision “the exclusive province of the

State.” Id.

[8] Like the private organization running the school in

Rendell-Baker, Horizon is a private entity that contracted with

the state to provide students with educational services that are

funded by the state. The Arizona statute, like the Massachusetts statute in Rendell-Baker, provides that the sponsor “may

contract with a public body, private person or private organization for establishing a charter school,” Ariz. Rev. Stat. § 15-

183(B), to “provide additional academic choices for parents

and pupils . . . [and] serve as alternatives to traditional public

schools,” id. § 15-181(A). The Arizona legislature chose to

provide alternative learning environments at public expense,

but, as in Rendell-Baker, that “legislative policy choice in no

way makes these services the exclusive province of the State.”

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457 U.S. at 842. Merely because Horizon is “a private entity

perform[ing] a function which serves the public does not

make its acts state action.” Id.; see also Johnson v. Pinkerton

Acad., 861 F.2d 335, 338 (1st Cir. 1988) (“Granted that the

state requires that its children, to a certain age, be educated,

even to the extent of assuming full tuition cost of all who do

not voluntarily pay their own way, it does not follow that the

mechanics of furnishing the education is exclusively a state

function.”). 

[9] Caviness’s argument that Rendell-Baker does not control this case since the school there was private, whereas here

Horizon is a public school as a matter of Arizona law, merely

restates his erroneous argument that the state’s statutory characterization is necessarily controlling.6

 Accordingly, we conclude that Horizon’s provision of educational services is not

a function that is traditionally and exclusively the prerogative

of the state, and therefore is not a basis for holding that Horizon acted under color of state law in taking the alleged actions

relating to Caviness’s employment.

C

Caviness alternatively argues that Horizon is a state actor

because Arizona regulates the personnel matters of charter

schools. 

[10] This argument also fails. A state may be responsible

for a private entity’s actions if “it has exercised coercive

power or has provided such significant encouragement, either

overt or covert, that the choice must in law be deemed to be

6Caviness does not expressly argue that Horizon is a state actor by virtue of “public entwinement in the management and control of ostensibly

separate trusts or corporations.” Brentwood Acad., 531 U.S. at 296. Such

an argument in this case would fail, as the complaint is devoid of allegations that any state actors were involved in Horizon’s governing board, or

that Horizon’s sponsor played any role in the employment decisions of the

school. 

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that of the State.” Blum v. Yaretsky, 457 U.S. 991, 1004

(1982) (citing cases). The Supreme Court has repeatedly held

that “the mere fact that a business is subject to state regulation

does not by itself convert its action into that of the State.” Sullivan, 526 U.S. at 52 (alteration omitted) (quoting Jackson,

419 U.S. at 350). Even extensive government regulation of a

private business is insufficient to make that business a state

actor if the challenged conduct was “not compelled or even

influenced by any state regulation.” Rendell-Baker, 457 U.S.

at 841-42; see also Morse v. N. Coast Opportunities, Inc., 118

F.3d 1338, 1342 (9th Cir. 1997) (extensive federal regulation

specifying who had responsibility for school’s employment

decisions insufficient to create state action because the regulations included “no substantive standard” or “procedural

guidelines” that could have guided, compelled, or influenced

employment decisions).

Citing section 15-187 of the Arizona Revised Statutes,

Caviness contends that charter schools are state actors

because charter school teachers have the same legal rights in,

and to, their teaching jobs as teachers in the public school districts. See Ariz. Rev. Stat. § 15-531 et seq.7

 This argument is

7For the first time on appeal, Caviness alleges that he was a tenured certified teacher entitled to the due process rights set forth in Arizona’s statutes. See Ariz. Rev. Stat. § 15-531 et seq.; id. § 15-539, 540, 541.

Although his complaint does not include such an allegation, Caviness

argues that we should infer that he held this status from the allegations in

the complaint stating that he had an employment contract with a specified

term, he was given a hearing by Horizon, and he was placed on paid

administrative leave after the hearing—requirements that are also mandated under Arizona law for tenured certificated teachers. See id. §§ 15-

539–541. Although Caviness’s argument is not entirely clear, he appears

to argue that once we draw the factual inference that he was a certified

tenured teacher, we must also draw the legal conclusion that Horizon was

a state actor with statutory and constitutional due process obligations. The

fact that Horizon implemented certain employment procedures in Caviness’s case does not, without more, give rise to the inference that Caviness

had a state-recognized status that gave him legal and constitutional entitlements to such procedures, or to further the inference that Horizon was

legally obligated to provide them. Accordingly, we decline to make such

inferences here. Iqbal, 129 S.Ct. at 1949 (holding that “mere conclusory

statements” are not enough to survive a motion to dismiss). 

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erroneous and appears to be based on a misreading of section

15-187(A), which provides those rights only to a school district teacher who was previously a charter school teacher “on

th[at] teacher’s return to the school district.”

8

[11] Specifically, section 15-187(B)9 gives hiring priority to

teachers who have moved from a public school district to a

charter school and who seek to return to the same public

school district. Therefore, sections 15-187(A) and (B) ensure

that the teacher receives preference when reapplying to his or

her prior public school district without a reduction in seniority, certification, or benefits provided to employees by the

public school district. This in no way suggests that the government controls or influences post-termination decisions

made by Horizon. In fact, Horizon is expressly “exempt from

all statutes and rules relating to schools, governing boards and

school districts,” id. § 15-183(E)(5), which include the right

to a hearing after dismissal provided by section 15-541. The

absence of any reference to charter schools in the statutory

sections governing certified teachers’ employment rights further supports our conclusion. See id. § 15-501 et seq.

[12] Caviness also argues that Horizon is a state actor

because, under Arizona law, charter schools (but not traditional private schools) are permitted to participate in the

8Section 15-187(A) states in full: 

A teacher who is employed by or teaching at a charter school and

who was previously employed as a teacher at a school district

shall not lose any right of certification, retirement or salary status

or any other benefit provided by law, by the rules of the governing board of the school district or by the rules of the board of

directors of the charter school due to teaching at a charter school

on the teacher’s return to the school district. 

9Section 15-187(B) provides in pertinent part that “[a] teacher who is

employed by or teaching at a charter school and who submits an employment application to the school district where the teacher was employed

immediately before employment by or at a charter school shall be given

employment preference by the school district.” 

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state’s retirement system. See id. § 15-187(C). We are not

persuaded. Permitting charter schools to participate in the

state’s retirement plan provides additional compensation to

entities that operate charter schools by relieving them from

pension or retirement obligations they might otherwise face.

The Supreme Court, as well as case law in this and our sister

circuits, permits the state to “subsidize[ ] the operating and

capital costs” of a private entity without converting its acts

into those of the state. Rendell-Baker, 457 U.S. at 840; see

also, e.g., Morse, 118 F.3d at 1342; Pinkerton Acad., 861

F.2d at 339 (state’s act of permitting private school to participate in public retirement program “would be no more than the

equivalent of additional compensation to defendant for its

teaching services by relieving defendant of pension obligations”). 

[13] Nor does the fact that Horizon’s sponsor has the

authority to approve and review the school’s charter, which

includes Horizon’s self-created personnel policies and method

of governance, change our decision. This type of regulation

does not constitute state action because “[a]ction taken by private entities with the mere approval or acquiescence of the

State is not state action.” Sullivan, 526 U.S. at 52; see also

Jackson, 419 U.S. at 357; Morse, 118 F.3d at 1342 (citing

cases). Even when the state has the power “initially to review

the qualifications of a[n employee] selected by the school,”

such regulation is not sufficient to make the school’s

employment-related actions those of the state. Rendell-Baker,

457 U.S. at 838 n.6, 841-42; see also George, 91 F.3d at 1231

(holding that termination was not state action even though the

state “retain[ed] the right to dismiss” the employee, because

the state had “neither legally regulated nor contractually specified the manner in which [the private actor] disciplines or terminates its own employees”).

Caviness does not argue, nor does the complaint allege, that

the state was involved in the contested employment actions,

or that it showed any “interest in the school’s personnel matCAVINESS v. HORIZON COMMUNITY LEARNING 81

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ters.” Rendell-Baker, 457 U.S. at 841. None of the regulations

cited by Caviness contains substantive standards or procedural guidelines that “could have compelled or influenced”

Horizon’s actions. Morse, 118 F.3d at 1342. Ultimately, Horizon’s actions and personnel decisions were “made by concededly private parties, and turn[ed] on judgments made by

private parties without standards established by the State.”

Sullivan, 526 U.S. at 53 (internal quotation marks and alterations omitted).

IV

[14] Because the allegations in Caviness’s complaint are

insufficient to raise a reasonable inference that Horizon was

a state actor and thus acted under color of state law in taking

the alleged actions after Caviness was terminated, we affirm

the judgment of the district court. Caviness’s motion for attorneys’ fees under 42 U.S.C. § 1988 is denied.

AFFIRMED.

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