IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-50120

MACHETE PRODUCTIONS, L.L.C., 

 Plaintiff - Appellant

v.

HEATHER PAGE, in her official capacity as the current Director of the Texas 

Film Commission; DAVID MORALES, in his individual capacity, 

 Defendants - Appellees

Appeal from the United States District Court

for the Western District of Texas

Before JOLLY, HAYNES, and COSTA, Circuit Judges.

HAYNES, Circuit Judge:

Machete Productions, L.L.C., (“Machete”) appeals the district court’s 

dismissal on the pleadings of Machete’s claims that a Texas film incentive 

program was unconstitutional under the First Amendment, Fourteenth 

Amendment, and Texas Constitution. For the reasons that follow, we AFFIRM 

the district court’s judgment. 

I. Background

The Moving Image Industry Incentive Program (the “Incentive 

Program”) is a grant program established by the Texas legislature for 

production companies that produce movies in Texas. See TEX. GOV’T CODE 

ANN. § 485.022(a) (West 2012). The Incentive Program is administered by the 

United States Court of Appeals

Fifth Circuit

FILED

December 28, 2015

Lyle W. Cayce

Clerk

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Music, Film, Television and Multimedia Office (the “Office”) in order to 

“promote the development of the film, television, and multimedia industries in 

[Texas].” Id. §§ 485.002, 485.004(b). The purpose of the Incentive Program is 

to “increase employment opportunities for Texas industry professionals, 

tourism and to boost economic activity in Texas cities and the overall Texas

economy.” 13 TEX. ADMIN. CODE § 121.1(b)(1). 

To qualify for a grant, a production company must meet certain statutory 

requirements. TEX. GOV’T CODE ANN. § 485.023 (West 2012). Even if a 

production company meets these requirements,

[t]he [O]ffice is not required to act on any grant 

application and may deny an application because of 

inappropriate content or content that portrays Texas 

or Texans in a negative fashion, as determined by the 

[O]ffice, in a moving image project. In determining 

whether to act on or deny a grant application, the 

[O]ffice shall consider general standards of decency 

and respect for the diverse beliefs and values of the 

citizens of Texas.

Id. § 485.022(e). The Office assigned administration of the Incentive Program, 

including development of appropriate procedures, to one of its divisions, the 

Texas Film Commission (the “Commission”). The Commission implemented 

the Incentive Program under Chapter 121 of the Texas Administrative Code,

which essentially parrots the enabling statute by noting that the Commission 

may deny an application based on “inappropriate content or content that 

portrays Texas or Texans in a negative fashion.”1 13 TEX. ADMIN. CODE

 

1 The regulation states: “Not every project will qualify for a grant. The Texas Film 

Commission (Commission) is not required to act on any application and may deny an 

application or eventual payment on an application because of inappropriate content or 

content that portrays Texas or Texans in a negative fashion, as determined by the 

Commission, in a project. In determining whether to act on or deny an application, the 

Commission shall consider general standards of decency and respect for the diverse beliefs 

and values of the citizens of Texas.” 13 TEX. ADMIN. CODE § 121.4(b). 

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§ 121.4(b). The regulations also permit the Commission to disqualify a grant 

application “at any time if a project does not meet the necessary requirements” 

or if an application is “incomplete.” Id. § 121.10(a). 

According to Machete, the Incentive Program’s former Commissioner,

Bob Hudgins, found the standards described in the statute and administrative

regulations too difficult to apply, and thus instituted a policy by which a grant 

would only be denied if a film purported to portray historical events, but did so 

inaccurately. Machete asserts that few, if any, films were denied funding 

under this standard. 

Machete is a film production company that produced the film at issue, 

Machete Kills. Machete Kills is the sequel to Machete, a film produced by a

separate entity, Machete ChopShop (“ChopShop”). In 2009, ChopShop 

received preliminary approval for a grant under the Incentive Program for 

Machete. However, after a political controversy over the film broke out in the 

summer of 2010, the Commission denied ChopShop’s application for a grant 

due to “inappropriate content or content that portrays Texas or Texans in a 

negative fashion.” 

Despite this denial, Machete later decided to apply for a grant for

Machete Kills. Before Machete submitted its application, Governor Rick 

Perry’s general counsel, David Morales, communicated to a producer of 

Machete Kills that the film would never receive an Incentive Program grant

due to the perceived political nature and content of the film. Nevertheless, 

Machete filed an application that projected to meet the spending and 

employment criteria for a project as outlined by the Incentive Program. 

Morales, then acting as the designated director of the Commission, denied the 

application in June of 2012 because of “inappropriate content.” 

Machete sued the current and former directors of the Commission in 

their official and individual capacities in Texas state court. The directors of 

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the Commission then removed to the U.S. District Court for the Western 

District of Texas. Machete filed an amended complaint suing Morales in his 

official and individual capacity under 42 U.S.C. § 1983 for allegedly violating 

the First and Fourteenth Amendments of the U.S. Constitution. Machete 

sought prospective injunctive relief enjoining the Commission from enforcing 

the Incentive Program in the future, as well as retrospective injunctive relief

ordering the Commission to provide Machete with an Incentive Program grant. 

It also sought a declaratory judgment pursuant to Chapter 37 of the Texas 

Civil Practice & Remedies Code that the Incentive Program violated the First 

Amendment, Fourteenth Amendment, and Article I, Section 8 of the Texas 

Constitution both facially and as applied to Machete. Additionally, Machete 

sought economic damages resulting from the unlawful denial of an Incentive 

Program grant. 

Heather Page subsequently replaced Morales as director of the 

Commission and was substituted as the named defendant in her official 

capacity, while Morales remained a party in his individual capacity. Both Page 

and Morales moved to dismiss Machete’s claims for lack of subject matter 

jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to 

state a cognizable claim under Rule 12(b)(6).2 In its response in opposition of 

the motion to dismiss, Machete requested leave to amend and conduct limited 

discovery if the district court were to find its complaint deficient in any respect. 

A magistrate judge reviewed the motion to dismiss and issued a report 

and recommendation, which was adopted by the district court and resulted in 

the dismissal of all of Machete’s claims. Machete timely appealed. 

 

2 As Morales had previously filed an answer to the matter on behalf of the 

Commission, the magistrate judge assessed the Rule 12(b)(6) motion under Rule 12(c), as a 

motion for judgment on the pleadings. 

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II. Standard of Review

We review de novo a district court’s dispositions under Rule 12(b)(1) and 

12(c). Bryant v. Military Dep’t of Miss., 597 F.3d 678, 684 (5th Cir. 2010). 

“A motion brought pursuant to [Rule] 12(c) is designed to dispose of cases 

where the material facts are not in dispute and a judgment on the merits can 

be rendered by looking to the substance of the pleadings and any judicially 

noticed facts.” Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 

F.3d 305, 312 (5th Cir. 2002) (citation omitted). In reviewing these motions, 

we accept all well-pleaded facts in the complaint as true and view them in the 

light most favorable to the nonmovant. Bass v. Stryker Corp., 669 F.3d 501, 

506 (5th Cir. 2012). 

Although Federal Rule of Civil Procedure 8 mandates only that a 

pleading contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief,” this standard demands more than “labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will 

not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations 

omitted). Rather, a complaint must contain sufficient factual matter, accepted 

as true, to “state a claim to relief that is plausible on its face.” Id. at 570. While 

this plausibility standard is not a “probability requirement,” it requires a 

showing of more than “a sheer possibility that a defendant has acted 

unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). For the purposes of a 

motion to dismiss, we must take all of the factual allegations in the complaint 

as true, but we are not “bound to accept as true a legal conclusion couched as 

a factual allegation.” Id. (quoting Twombly, 550 U.S. at 555). However, in

examining a Rule 12(b)(1) motion, a district court is empowered to find facts 

as necessary to determine whether it has jurisdiction. See Williamson v. 

Tucker, 645 F.2d 404, 412–13 (5th Cir. 1981). 

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We review a district court’s denial of leave to amend for an abuse of 

discretion. Simmons v. Sabine River Auth. La., 732 F.3d 469, 478 (5th Cir. 

2013), cert. denied, 134 S. Ct. 1876 (2014). We review a district court’s decision 

on whether to permit limited discovery on qualified immunity issues for an 

abuse of discretion. See Backe v. LeBlanc, 691 F.3d 645, 649 (5th Cir. 2012). 

We review de novo whether a state is entitled to sovereign immunity. Hale v. 

King, 642 F.3d 492, 497 (5th Cir. 2011).

III. Discussion

A. Machete’s federal claims against Page in her official capacity 

Acting in her official capacity for the state of Texas as the director of the 

Commission, Page concedes that the removal of the case from state to federal 

court was a voluntary waiver of sovereign immunity. See Meyers ex rel. 

Benzing v. Texas, 410 F.3d 236, 250 (5th Cir. 2005). However, even if a state 

waives its sovereign immunity, claims seeking monetary relief under 

“§ 1983 . . . do not lie against a [s]tate.” Arizonans for Official English v. 

Arizona, 520 U.S. 43, 68 (1997) (citing Will v. Mich. Dep’t of State Police, 491 

U.S. 58, 71 (1989)). As a result, Machete’s claims against Page in her official 

capacity seeking economic damages and retrospective injunctive relief for an 

Incentive Program grant are barred. 

Machete’s claims against Page in her official capacity are thus limited to 

prospective injunctive and declaratory relief. See Will, 491 U.S. at 71 n.10 (“[A] 

state official in his or her official capacity, when sued for injunctive relief, 

would be a person under § 1983 because official-capacity actions for prospective 

relief are not treated as actions against the [s]tate.” (citation omitted)). 

Machete contends that the district court erred in holding that Machete lacked 

standing to prevent Page and the Commission from continuing to enforce the 

Incentive Program’s statute and regulations. In the context of prospective 

injunctive and declaratory relief, past exposure to illegal conduct, by itself, 

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does not evince a present case or controversy and thus cannot establish 

standing. See O’Shea v. Littleton, 414 U.S. 488, 495–96 (1974). “[T]o obtain 

injunctive relief, the plaintiff must establish a real and immediate threat that 

[it] w[ill] again suffer similar injury in the future.” In re Stewart, 647 F.3d 553, 

557 (5th Cir. 2011) (citation omitted). “[E]specially where governmental action 

is involved, courts should not intervene unless the need for equitable relief is 

clear, not remote or speculative.” Henschen v. City of Houston, 959 F.2d 584, 

588 (5th Cir. 1992) (quoting Eccles v. Peoples Bank, 333 U.S. 426, 431 (1948)). 

Machete argues that due to the success of the first Machete film and 

because the director of Machete Kills has a reputation for bringing film projects 

to Texas, the district court erred in dismissing as too speculative Machete’s 

claim that it would be subject to an allegedly unlawful denial of an Incentive 

Program grant in the future. Machete’s argument is unpersuasive; it has not 

met its burden to establish a need for prospective injunctive or declaratory 

relief. Machete failed to show any imminent plans to produce another film in 

the Machete franchise. It also failed to show that such a project had any

outstanding grant applications with the Commission or that such a project

would be denied for allegedly unlawful reasons. By failing to show any 

concrete and imminent plans for such a film, it failed to establish a “real and 

immediate threat” that it would be denied an Incentive Program grant in an 

allegedly unlawful way. See Stewart, 647 F.3d at 557 (citation omitted).

Machete’s lack of standing to pursue prospective injunctive relief further 

prevents us from granting declaratory relief against Page. “Because there is 

no ongoing injury . . . and any threat of future injury is neither imminent or 

likely, there is not a live case or controversy for this court to resolve and a 

declaratory judgment would therefore be inappropriate.” Bauer v. Texas, 341 

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F.3d 352, 358 (5th Cir. 2003). Accordingly, Machete lacked standing to pursue 

his only available federal claims against Page in her official capacity.3 

B. Machete’s claims against Morales in his individual capacity

Machete maintains that the district court erred in determining that 

qualified immunity barred Machete’s claims against Morales in his individual 

capacity.4 To overcome an official’s qualified immunity, a plaintiff must plead 

facts demonstrating “(1) that the official violated a statutory or constitutional 

right, and (2) that the right was clearly established at the time of the 

challenged conduct.” Ashcroft v. al-Kidd, 131 S. Ct. 2074, 2080 (2011) (quoting 

Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)). 

1. Machete’s First Amendment claim

Machete argues that Morales applied the Incentive Program to it in a 

way that discriminated against it on the basis of viewpoint, thus violating its 

First Amendment rights. Machete’s factual allegations are insufficient to

support a claim that Morales violated a clearly established right in this regard. 

 

3 Machete further contends that the district court abused its discretion by failing to 

grant Machete leave to amend its complaint. We have affirmed a district court’s denial of 

leave to amend due to a plaintiff’s failure to “show[] on appeal . . . any additional facts that 

would have precluded the district court from reaching its conclusion.” Rogers v. Boatright, 

709 F.3d 403, 411 (5th Cir. 2013). The additional facts that Machete attempts to assert on 

appeal are limited to abstract plans for future filmmaking in Texas and thus fail to remedy 

the speculative nature of its claim for prospective injunctive relief. Coupled with the fact 

that the district court permitted Machete to amend its complaint once before, this leads us to 

conclude that the district court did not abuse its discretion in denying Machete leave to 

amend its complaint. 

4 Any prospective relief against Morales would fail for the same reasons discussed 

regarding Page and for the additional reason that Morales is no longer in a position to affect 

the outcome of future Incentive Program applications. Machete’s claims for past relief 

against Morales are subject to a qualified immunity analysis because he seeks economic 

damages. All other past relief, including a declaration that a grant should have been 

awarded, is meaningless as to Morales in his individual capacity, as he is not individually in 

a position to award a grant. See Okpalobi v. Foster, 244 F.3d 405, 426–27 (5th Cir. 2001) (en 

banc) (noting that for a plaintiff to satisfy standing, the defendant must have the power to 

redress the asserted injuries). 

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“The [g]overnment can, without violating the Constitution, selectively fund a 

program to encourage certain activities it believes to be in the public interest, 

without at the same time funding an alternative program which seeks to deal 

with the problem in another way. In so doing, the [g]overnment has not 

discriminated on the basis of viewpoint; it has merely chosen to fund one 

activity to the exclusion of the other.” Rust v. Sullivan, 500 U.S. 173, 193, 196

(1991) (upholding regulations that limited the abortion-related speech of 

clinics receiving federal funds because they did “not force the . . . grantee to 

give up abortion-related speech; they merely required that the grantee keep 

such activities separate and distinct” from activities that received government 

funding). To hold otherwise “would render numerous [g]overnment programs 

constitutionally suspect.” Id. at 194. 

A government funding provision will not compromise First Amendment 

values as long as it “[does] not silence speakers by expressly threaten[ing] 

censorship of ideas,” or “introduce considerations that, in practice, would 

effectively preclude or punish the expression of particular views.” Nat’l

Endowment for the Arts v. Finley, 524 U.S. 569, 572, 583 (1998) (upholding a 

federal grant program requiring the responsible agency to fund artistic pieces 

only after “taking into consideration general standards of decency and respect 

for the diverse beliefs and values of the American public”). “[A]lthough the 

First Amendment certainly has application in the subsidy context . . . the 

[g]overnment may allocate competitive funding according to criteria that 

would be impermissible were direct regulation of speech or a criminal penalty 

stake.” Id. at 587–88. Government funding provisions can become 

unconstitutional conditions if they “effectively prohibit[] the recipient from 

engaging in the protected conduct outside the scope of the [government] funded 

program,” Rust, 500 U.S. at 197, or if the subsidy is “manipulated to have a 

coercive effect,” Finley, 524 U.S. at 587 (citation omitted). 

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Machete has not shown that Morales’s denial of an Incentive Program 

grant “effectively preclude[d] or punish[ed]” Machete from or for holding 

particular viewpoints in Machete Kills. Id. at 583. Nor does it appear that the 

grant denial effectively prohibited Machete from engaging in protected First 

Amendment activity “outside the scope” of the Incentive Program. Rust, 500 

U.S. at 197. Despite the denial of an Incentive Program grant, Machete Kills

was still filmed in Texas, produced, and released. Machete does not dispute 

that it was free to engage in protected First Amendment activity without the 

benefit of an Incentive Program grant, and in fact did engage in such activity 

by making the film.5 Machete has not shown that it is clearly established that 

the First Amendment requires a state which has an incentive program like this 

one to fund films casting the state in a negative light. As such, it cannot show 

that Morales violated Machete’s clearly established rights in this context. See 

Ashcroft, 131 S. Ct. at 2080. 

2. Machete’s Due Process Clause claims

Similarly unavailing is Machete’s argument that it can recover against 

Morales individually because it had a property interest in an Incentive 

Program grant that triggered the protections of the Fourteenth Amendment’s 

Due Process Clause. “In a section 1983 cause of action asserting a due process 

violation, a plaintiff must first identify a life, liberty, or property interest 

protected by the Fourteenth Amendment and then identify a state action that 

resulted in a deprivation of that interest.” Blackburn v. City of Marshall, 42 

F.3d 925, 935 (5th Cir. 1995). “Property interests are not created by the 

Constitution,” but from “independent sources such as state statutes, local 

 

5 The facial challenge does not fare any better for the reason that “[a] facial challenge 

to a legislative act is . . . the most difficult challenge to mount successfully, since the 

challenger must establish that no set of circumstances exists under which the [a]ct would be 

valid.” United States v. Salerno, 481 U.S. 739, 745 (1987). Machete has not met this legal 

burden.

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ordinances, existing rules, contractual provisions, or mutually explicit 

understandings.” Id. at 936–37. However, “[d]iscretionary statutes do not give 

rise to constitutionally protectable interests.” Baldwin v. Daniels, 250 F.3d 

943, 946 (5th Cir. 2001). “A constitutional entitlement cannot be created—as 

if by estoppel—merely because a wholly and expressly discretionary state 

privilege has been granted generously in the past.” Conn. Bd. of Pardons v. 

Dumschat, 452 U.S. 458, 465 (1981) (emphasis omitted). 

Here, the Incentive Program’s statutes and regulations make clear that 

grants were discretionary. The statute goes beyond merely giving the 

Commission discretion to reject grant applications: it also specifies that the 

Commission “is not required to act on any grant application.” TEX. GOV’T CODE 

ANN § 485.022(e) (West 2012). The discretionary nature of the Incentive 

Program is emphasized in its promulgated rules that stipulate that “[n]ot every 

project will qualify for a grant.” 13 TEX. ADMIN. CODE § 121.4(b). What is 

more, the Commission also has the discretion to revoke an applicant’s 

eligibility for funds or require that an applicant refund the distribution of 

grants if the Commission later determines that an applicant failed to meet the

Incentive Program’s requirements. See id. § 121.14. Even viewing the facts in 

the light most favorable to Machete and assuming that few, if any, Incentive 

Program grants were previously denied, a property interest is not created 

merely because funds were “granted generously in the past.” Dumschat, 452 

U.S. at 465. Accordingly, Machete cannot establish that it had a clearly

established right to these funds that Morales violated. See Ashcroft, 131 S. Ct. 

at 2080. 

Machete also unsuccessfully asserts that its due process rights were 

violated due to the vagueness of the Incentive Program’s statute and 

regulations. The Due Process Clause does protect speakers “from arbitrary 

and discriminatory enforcement of vague standards,” but “when the 

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[g]overnment is acting as a patron rather than as sovereign, the consequences 

of imprecision are not constitutionally severe.” Finley, 524 U.S. at 588–89. 

Here, the Incentive Program’s funding criteria are not any more imprecise 

than the criteria found to pass constitutional muster in Finley.6 

Even after viewing the facts in the light most favorable to Machete, we 

conclude that Morales did not violate Machete’s clearly established rights 

under the First Amendment or Fourteenth Amendment.7

C. Machete’s claims under the Texas Constitution

Machete also argues that Morales applied the Incentive Program in a 

way that violated the Texas Constitution’s free-speech provision and as a 

result, is due relief from Morales individually and Page in her official capacity. 

Machete unsuccessfully claims that the denial of an Incentive Program grant 

was akin to a prior restraint. The Texas Supreme Court has recognized that 

the Texas Constitution’s free speech provision “provides greater rights of free 

expression than its federal equivalent” in the context of prior restraints. 

Davenport v. Garcia, 834 S.W.2d 4, 10 (Tex. 1992). However, “[t]he term prior 

restraint is used to describe administrative and judicial orders forbidding

certain communications when issued in advance of the time that such 

communications are to occur.” Alexander v. United States, 509 U.S. 544, 550 

 

6 Both provisions require that the relevant agency consider the “general standards of 

decency and respect for the diverse beliefs and values” of citizens. TEX GOV’T CODE ANN. 

§ 485.022(e) (West 2012); Finley, 524 U.S. at 572 (quoting 20 U.S.C. § 954(d)(1)). The 

Incentive Program’s statute, however, adds that the Commission may also deny an 

application due to “inappropriate content or content that portrays Texas or Texans in a 

negative fashion.” TEX GOV’T CODE ANN. § 485.022(e) (West 2012). 

7 Machete also contends that the district court abused its discretion in denying 

Machete leave to conduct limited discovery on the issue of qualified immunity. A district 

court may defer a ruling on qualified immunity and issue a discovery order only after it 

initially determines that the plaintiff alleges facts that, if true, would overcome the defense 

of qualified immunity. See Backe, 691 F.3d at 648. As the district court properly concluded 

that Machete’s pleadings could not overcome Morales’s qualified immunity, it did not abuse 

its discretion in denying Machete leave to conduct limited discovery. 

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(1993) (citation omitted). Here, Morales did not forbid Machete from filming, 

producing, or releasing Machete Kills, but merely opted not to subsidize the 

film with Texas taxpayer funds. Accordingly, the district court did not err in 

dismissing this claim on the pleadings.8 

IV. Conclusion

For the reasons set forth above, we AFFIRM the district court’s dismissal 

of Machete’s claims against Page in her official capacity. We further AFFIRM 

the district court’s dismissal of Machete’s claims against Morales in his 

individual capacity. 

 

8 We note the inapplicability of the principle outlined in Pennhurst State Sch. & Hosp. 

v. Halderman, 465 U.S. 89, 121 (1984), which barred federal courts from exercising pendent 

jurisdiction over claims alleging that state officials violated state law in carrying out their 

official responsibilities. See Meyers, 410 F.3d at 252 (noting that Pennhurst is inapplicable 

when a state voluntarily waives its sovereign immunity by removing from state to federal 

court). 

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