## IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________



### m 00-10361

_______________



### C HARLES 

### E TTA 

### W ILLIAMS



### ,

Plaintiff-Appellant,

VERSUS



### D ALLAS 

### A REA 

### R APID 

### T RANSIT



### ,

Defendant-Appellee.

_________________________

Appeal from the United States District Court

for the Northern District of Texas

_________________________

February 22, 2001

Before POLITZ, SMITH, and PARKER,

Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Charles Etta Williams appeals the dismissal

of her suit against Dall as Area Rapid Transit

(“DART”) under the Age Discrimination in

Employment Act (“ADEA”), 29 U.S.C. § 621

et seq ., arguing that the district court erred in

finding DART i mmune from suit under the

Eleventh Amendment. She contends both that

DART is not an arm of the state for purposes

of t he Eleventh Amendment and that, even if DART otherwise were entitle d to such

immunit y, it effectively waived it. Because we

agree that DART is not an arm of the state, we

do not reach waiver. We reverse the dismissal

and remand for further proceedings.

I.

DART is a re g ional transportati on authority

organized under T EX

. T RANSP

. C ODE A NN

. ch.

452. Williams, a former DART employee, was

released as part of a red u ction-in-force

program. Although DART allegedly found alternat i ve employment positions for younger,

l esser-qualified employees, it offered no su c h2

po sition to Williams, who sued, asserting a

claim for wrongful termination in violation of

the ADEA. After the parties conducted

discovery, the Supreme Court issued Kimel v.

Fla. Bd. of Regents

, 528 U.S. 62, 82-83

(2000), holding that, because the ADEA is not

a proper exe rcise of Congress’s power under

the Fourteenth Amendment, the statute cannot

abrogate a state’s sovereign immunit y without

an express waiver by the state.

Shortly thereafter, DART moved for

dismissal under F ED

. R. C IV

. P. 12(b)(6), or alternatively, for judgment on the pleadings under rule 12(c). Concluding that judgment was

not proper under either rule, the court

no netheless dismissed s ua sponte under rule

12(h)(3) for lack of subject matter jurisdiction,

holding that DART, because it had not waived

its s o vereign immunit y, was not amenable to

suit in federal court under the ADEA.

II.

The district court held, as a matter of law,

that because “DART is a governmental unit or

instrumentality of the state of Texas, . . . it is

entitled to assert Eleventh Amendment immunit y” and that because DART had not waived

that immunit y, Williams’s ADEA claim failed

fo r lack of subject matter jurisdiction.

Williams contests both that DART is entitled

to Eleventh Amendment immunit y and that it

did not effectively waive immunit y . When

addressing a dismissal for lack o f subject

mat ter jurisdiction, we review application o f

law de novo and disputed findings of fact for

clear error. S ee W

illiamson v. Tucker , 645

F.2d 404, 413 (5th Cir. May 1981).

“The Eleventh Amendment

. . . bars suits in

federal court by citizens of a state against their

own state or a st ate agency or department.”

Richardso n v. S. Univ. , 118 F.3d 450, 452 (5th Cir. 1996) ( quotation marks omitted).

M o reover, “a plaint iff cannot avoid the

sovereign immunit

y bar by suing a state agency

or an arm of the State rat her than the State

itself.” Id.

When confronted with a governmental entity asserting Eleventh Amendment immunit y

as an arm of the state, we apply the t est

established in Clark v. Tarrant Cou nty , 798

F.2d 736 (5th Cir. 1986). The district court

failed to analyze DART’s asserted im munity

under the Clark framework, instead relying on

three cases 1 for the proposition that DART is

1 Anderson v. D

ART , Civ. Ac. No. 3:97-CV1834-BC, 1998 WL 686782 (N.D. Tex. Sept. 29,

1998), aff’d

, 180 F.3d

265 (5th Cir. 1999) (per

curi am ) (unpublished), c ert. denied

, 528 U.S. 1062

(1999); Tolbert v. Vasquez

, Civ. Ac. No. 3:93-CV1468-X, 1998 U.S. Dist. LEXIS 17616 (N.D. Tex.

Mar. 27, 1998), aff’d

, 16 3 F.3d 1355 (5th Cir.

1998) (per curiam) (unpu blished); D avis v. Mathis

, 846 S.W.2d 84 (Tex. App SS Dallas 1992, writ

denied). These cases are neither binding nor

persuasive, because none properly examined the

issue of E leventh Amendment immunity. S ee

Young v. DART

, Civ. Ac. No. 3:95-CV-2596-X,

1999 U.S. Dist. LEXIS 4470, at * 3 (N.D. Tex.

Mar. 24, 1999) (declining to follow Anderson and

Tolbert because “neither case delivers a thoughtful

and/or detailed argument” with respect to Eleventh

Amendment immunity, and ordering the parties to

brief the issue under the Clark framework).

Davis

, 8 46 S.W.2d at 87, held merely that

DART “[a]s a governmental unit,” was entitled to

the protections of th e Texas Tort Claims Act

(“TTCA”), Tex. C IV

. P RAC

. & R EM

. C ODE ch.

101 . T hat holding is not probative for our

purposes, because the TTCA defines

“governmental unit” as

A) this state and all the several agencies of

(continued...)3 indeed a state agency and therefore is entitled

to sovereign immunit y. Although all three

cases upheld DART’s immunit y from suit, they

are neither binding nor pe rsuasive in this

context. The court erred in failing properly to

analyze, under Clark, DART’s amenability to

suit.

A proper inquiry under Clark considers six

factors:

(1) whether the state statutes and case

law characterize the agency as an

arm of the state;

(2) the source of funds for the entity;

(3) the degree o f local autonomy the

entity enjoys;

(4) whether the entity is concerned primarily with lo cal, as opposed to

statewide, problems; 1 (...continued)

government that collectively constitute

the government of this state, including

other agencies bearing different

designations , and all departments,

bureaus, boards, commissions, offices,

agencies, councils, and courts;

(B) a political subdivision of this state,

including any city, county, school district, junior college distric t

, levee improveme nt district, drainage district, irrigation district, water improvement

district, water control and im provement

district, water control and preservation

district, freshwater supply district,

navigation district, conservation and

reclamation dist rict, soil conservation

district, communication district, public

health district, and river authority;

(C) an emergency servic e organization; and

(D) any other institution, agency, or organ

of government the status and authority

of which are derived from t h e

C onstitution of Texas or from la w s

passed by the legis lature under the

constitution.

T EX

. C IV

. P R AC

. & R EM

. C ODE § 101.001. The

TTCA’s definition of “gov er nmental unit” is unquestionably broader than the term “arm of the

state,” as used for purpose s of the Eleventh

Amendment, in that it includes cities, cou nties,

school boards, and other governmental entities that

are not entitled to Eleventh Amendment immunity.

See, e.g.

, Mt. Healthy City Sch. Dist. Bd. of Educ.

v. Doyle

, 429 U.S. 274, 280-81 (1977) (“[A] local

school boar d such as petitioner is more like a

county or city than it is like an arm of the State.

We therefore hold that it was not entitled to assert

any Eleventh Amendment immunity from suit in

the federal courts.”).

(continued...) 1 (...continued)

Ander son and Tolbert held that DART, as a

“political subdivision of the state” is not a “person”

within the meaning of 42 U.S.C. §§ 1981, 1983.

See Anderson v. DART, 1998 WL 686782 at *7;

Tolbert

, 1998 LEXIS 17616, at *19-20. Although

it is not at all certain that “political subdivision,”

as used by those courts, is coextensive with “ arm

of the state,” as used in analyzing Eleventh Amendment immunity, to the extent that the two terms are

interchangeable, the district courts in Anderson v.

DART and T

olbert erred in failing to analyze

DART under the Clark framework, relying instead

on the Davis court’s characterization of DART.

Moreover, while the district court in Anderson v.

DART did find DART immune from suit under the

Eleventh Amendment, that finding is merely an

erroneous dictum

, because the court already had

decided the case on t he § 1983 issue. S ee

Anderson v. DART

, 1998 WL 686782, at *7.4

(5) whether the entit y has authority to

sue and be sued in its o wn name;

and

(6) whether t he entity has the right to

hold and use property.

Anderson v. Red Riv. Waterway Comm’n

, 231

F.3d 211, 214 (5th Cir. 2000). Although none

of the six factors is dispositive, 2 some are more

important than others: The second 

### S S the

source of funds 

### SS

is the most important, while

the fift h and sixth 

### SS

w het her the agency has

authority to enter into litigation and hold property 

### SS are l ess so. S ee Hudson

, 174 F.3d at

681-82. “Rather than forming a precise test,

[the Clark ] factors help us balance the equities

and determine as a general matter ‘whether the

suit is in reality a suit against the state itself.’”

Id. (quoting Laje v. R.E. Thomason Gen.

Hosp. , 665 F.2d 724, 727 (5th Cir. 1982)).

A proper Clark analy sis compels the

c onclusion that DART is not an arm o f the

state for purposes of the Elevent h

Amendment. The first factor 

### S S “whether the

state statutes and case l aw characterize the

a gency as an arm of the state” 

### SS weig h s

agai nst immunity, if anything. Neither party

can point to definitive authority establishing

DART’s status under Texas law. As DART

points out, it is an “authority” under Texas

law, and as such, is a “governmental unit under

Chapter 101, Civil Practice and Re medies

Code

. . . .” T E X

. T RANSP

. C O DE A NN

. § 452.052. The statutory characterization of DART as a “governmental unit” is not

probative of DART’s status for Eleventh

Amendment purposes, h owever. S ee supra

note 1.

On the other hand, Texas statute defines

“state gove rnment” as “an agency, board,

co mmission, department, or office . . . t hat :

(A) was c reated by the consti tuti on or a

statute of this state; and ( B) has statewi de

jurisdiction.” T EX

. C IV

. P RAC

. & R EM

. C ODE

§ 101.001(5). 3 Thus, the controlling factor in

analyzing DART's status as a “state agency”

under the TTCA is whether it has statewi de

jurisdiction.

In its answer, DART conceded that “all of

2 Importantly, neither the state’s approach to the

issue of sovereign immunity nor the state’s

characteri za tion of the entity in question controls

our inquiry. See Hudson v. City of New Orleans

, 174 F.3d 677, 684-85 (5th Cir.), cert. denied

, 528

U.S. 1004 (1999). 3 DART contends that the characterization of §

101.001(5) is not applicable in the Eleventh

Amendment context, because § 101.001’s

definitions are limited by th eir terms to chapter

101, which codified the

TTCA, which DART

a rgues, deals only with governmental entiti es’

amenability to suit in state courts, ignoring any

fede ral immunity. Section 101.025(a) states that

“[s]overeign immuni t y to suit is waived and

abolished to the extent of liability created by this

chapter,” however, plainly contemplating SS and by

implication, leaving intact S S the state’s immunity

under the Eleventh Amendment.

To the extent the statute can be considered ambiguous, the Revisor’s Note t o that section is instructive : “Only the state and its agencies have

sovereign imm

unity. The revised law omits the

phrase ‘with referenc e to units of government’ to

avoid the implication th a t sovereign immunity

applies to local governmental units.” Moreover,

DART’s abandonment of the TTCA strikes us as

peculiar, given its reliance on Anderson v. DART

, Tolbert

, and Davis

, all of which (improperly) constr ued the TTCA in finding DART immune fr om

federal suit a s a “governmental unit.” S ee supra

note 1.5

its operations and actions take place within the

counties encompassed in the Northern District

of Texas.” Nowhere does DART assert that it

does ha v e statewide jurisdiction. Thus, at

least for purposes of the TTCA, DART is not

a state agency. Admittedly, Texas law is no t

unambiguous with respect to DART’s status,

but to the extent it favors either party, the first

factor weighs against characterizing DART as

an arm of the state.

The second factor in the Clark inquiry 

### SS the

source of the funds for the governm ental

entity 

### SS is t he most important one. S ee

Hud son , 174 F.3d at 687. Although we also

consider the source of general operating funds

for the entity, “because an important goal of

the eleventh ame n dment is the protecti on of

states’ treasuries, the most significant factor in

asses s ing an entity’s status is whether a

judgment against it w ill be paid with state

funds.” R ichardson

, 118 F.3d at 455 (quoting

McDonald v. Bd. of Miss. Levee Com m ’rs

, 832 F.2d 901, 907 (5th Cir. 19 87)). It i s

undisputed that DART receives funding from

several sources , including passenger fares,

bond revenues, and local sales and use tax

revenues, 4 but DART concedes on appeal that

it receives no appropriated fun ds from the

state of Texas. It does contend, however, that

its autho rized use of bond and tax revenues

constitutes state funding. We disagree.

DART is authorized by state stat ute to i ssue bonds for capital improvem e nt projects;

we cannot, however, infe r merely from such

authorization that the state actually provides

funding to DART. The bonds must be

approved by the state attorney ge neral and registered by the state comptroller, 5

but 

### SS importantly 

### SS

the state does not

guarantee the bonds. Moreover, although

D ART is authorized to pledge its t ax and

operating revenues or mortgage its assets to

sec ure the bonds, 6 DART can point to no

statute indicating that the state would back the

bonds with its full faith and credit. We find

nothing that we can interpret as indicating that

the State of Texas funds or guarantees

DART’s bond obligations.

DART also argues that the c haracteristics

of its sales and use tax render the tax a source

of state funding. This argument proves too

much, however. While it is true that DART’s

sales and use tax i s administered by the state

comptroller and passes through the state treasury before being rebated to DART, municipal

taxes in Texas are admi n istered in the same

way. 7 Nonetheless, it is undisputed that

municipalit ies are not arms of t h e state for

purposes of the Eleventh Amendment. No.

99-41444, Evans v. City of Bishop

, 2000 U.S.

App. LEXIS 34479, at *5-*7 (5th Cir. Dec.

11, 2000) (per curiam). Moreover, except for

the mere administration of the tax by the state,

there is nothing to suggest that DART’s sales

and use tax is anything other than the

collection of local funds authorized by a local

election to accomplish a local objective.

Finally, DART argues that, if it were unable

4 See T EX

. T RANSP

. C ODE A NN

. §§ 452.055

(grants), 452.061 (fares), 452.352 (bonds), 452.-

401 (sales and use tax). 5 See id. § 452.355.

6 See id. § 452.357.

7 Compare T EX

. T AX C ODE A NN

. §§ 321.301-

.302, 321.306, 321.501-.505 (administration provisions for municipal sales and use tax), with id. §§

322.201- .203, 322.301-.305 (administration

provisions for special purpos e sales and use tax).6

to pay a judgment from its own funds, it could

seek additional funding from the legislature.

DART does not contend that the legislature

would be obligated to provide th e additional

funding, however, and we do not consider “a

state’s voluntary, after-the-fact payment” of a

judgment to be a liabilit

y against the state’s

treasury. H

udson

, 174 F.3d at 689. There is

nothing 

### SS

either in t he record or of which we

can take judicial notice 

### SS

indicating either that

DART receives state funding as a general

matter or that a judgment against it would be

satisfied out of the state treasury.

The third f

a ctor is the degree of local autonomy. DART argues that this factor weighs

in its favor, because it is subject to the Texas

Sunset Act, T EX

. G OV ’ T C ODE

. A NN

. ch. 325.

That fact alone does not dispose of the issue:

The Sunset Act deals with the orderly closure

of obsolete state agencies, not the oversight of

agencies’ daily operations. See id. § 325.008

(detailin g t he duties of the Sunset Advisory

Commission). Moreover, DART must report

to the Sunset Advisory Commission only once

every twelve years. S ee T EX

. T RANSP

. C ODE

A NN . § 452.453.

DART argues further that, because it is

subject to fiscal

audits every year and

performance audits every fourth year, 8 it falls

under state control. Like the Sunset Act, the

audit requirements are some evidence of state

o versight, but they are not dispositive wit h

respect to the issue of local control.

On the o t her side of the scale, the

responsibility for the “management, operation,

and contr o l” of DART is vested in an executive committee, 9 which consists of

m embers appointed by the municipalities

served by DART. S ee id. §§ 452.502, 452.-

562, 452.572. Thus, t he day -to-day

o perations of DART fall under purely local

control. Moreover, any municipality served by

DART may hold an election to withdraw from

DART if it chooses to do so. S ee id. §

452.651. In this way, the lo calities also

control DART’s ultimate disposition

. While

there is some state overs ight of DART’s

operations, it enjoys cons i derable local

autonomy; this factor therefore weighs slightly

against Eleventh Amendment immunit y, if

anything.

The fourth factor looks at whether DART

is concerned primarily with local or statewide

problem s. DART concedes that its authority

is limited to the Dallas-Forth Worth region.

Although there is so me authority for viewing

regional entities merely as local solu tions to

statewide problems, 10 the fourt h factor

properly centers o n “whether the entity acts

for the benefit and welfare of the state as a

whole or for the special advantag e of local

inhabitants.” P endergrass v. Gre ater New

8 See T EX

. T RANSP

. C ODE A NN

. §§ 452.451,

452.454. 9 See id. § 452.053; s ee also id. §§ 452.101-13

(empowering t h e executive committee, inter alia

,

to create a budget, invest funds, establish a security

force, and appoint auditors and attorneys).

10 Cf. Clark

, 798 F.2d at 745. Clark addressed

the state probation system, concluding that the

relevant statute “was enacted to address a

statewide problem and to pu t control of

probationers in the hands of state officers.

Dividing the responsibilities into ju d icial districts

is merely an admini str ative tool for handling a

statewide, state program.” I d. (citatio n omitted).

In contrast, DART is not an administrative division

of a statewide transportation system SS i t is an

entity unto itself.7

Orleans Expressw ay Comm’n

, 144 F.3d 342,

347 (5th Cir. 1998) (citing Jacintoport Corp.

v. Greater Baton Rouge P ort Comm’n , 762

F.2d 435, 443 (5th Cir. 1985)). DART plainly

acts for the benefi

t o f the residents of Dallas,

Fort Worth, and the surrounding communities,

as distinguished from that of the state as a

whole; thus, the fourth factor also cuts against

DART.

The fift h and sixth factors weigh in favor of

Williams’s contention tha t DART i s not an

arm of the state. DART has statutory

authority both to hold and use property and to

sue and be sued. S ee T EX

. T RANSP

. C ODE

. A NN

. §§ 452.054 (b) & (d). Such abilities

favor categorization of DAR T as an

independent entity, no t an arm of the state.

See Hudson , 174 F.3d at 691.

Taken as a whole, the Clark analysis

compel the conclusion th at DART is not

immune from Williams’s claim. Though some

of the factors may be indeterminate, none

weighs strongly in DART’s favor. Moreover,

the most importa n t second factor weighs

against considering DART an arm of the state.

The district court therefore erred in finding

DART immune from suit under the ADEA.

We REVERSE the dismissal and REMAND

for further proceedings.