United States Court of Appeals

for the Fifth Circuit

No. 20-60072

The Lamar Company, L.L.C., 

Plaintiff—Appellant,

versus

The Mississippi Transportation Commission, 

Defendant—Appellee.

Appeal from the United States District Court 

for the Southern District of Mississippi

USDC No. 1:17-CV-149

Before King, Stewart, and Southwick, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

The argument on this appeal, until recently, centered on a Mississippi 

statute governing the height of roadside billboards. An interstate sign 

company has insisted the district court erred in holding that the state statute 

was unambiguous. Belatedly, the state argued that the needed diversity 

jurisdiction does not exist because the defendant agency is the alter ego of the 

state and, under established doctrine, cannot be a citizen for diversity 

purposes. The state is correct, even if late. We VACATE the district 

court’s judgment, REMAND for proceedings regarding attorneys’ fees and 

costs, and also order that the case be REMANDED to state court.

United States Court of Appeals

Fifth Circuit

FILED

September 22, 2020

Lyle W. Cayce

Clerk

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FACTUAL AND PROCEDURAL BACKGROUND

The relevant Mississippi state statute regulates the height of 

billboards. Miss. Code Ann. § 49-23-9(2)(b). The supposed ambiguity 

is whether the statute exceptsfrom its height restrictions those roadside signs 

that predated a statutory change.

Until July 1, 2003, the statute governed only billboard size, not height. 

Effective on that date were several revisions adopted by the Mississippi 

Legislature, including this sentence: “The height of any sign structure shall 

not exceed forty (40) feet.” 2002 Miss. Laws Ch. 518, § 1. Then in 2008, in 

what the plaintiff has sought to persuade was a minor error that can be 

judicially overcome, the legislature revised in a confusing manner. It left the

unqualified height limit from the 2002 legislation but added language that 

signs erected after a certain date were limited to that height:

The height of any sign structure shall not exceed forty (40) 

feet. The height of sign structures erected on or after April 15, 

2008, shall not exceed forty (40) feet above the level of the road 

grade unless the grade of the land adjacent to the road is higher 

than the level of the road grade, then the height of the sign 

structure . . . shall not exceed forty (40) feet above the grade of 

the site where the sign is placed.

2008 Miss. Laws ch. 517, §4 (codified at MISS. CODE ANN. § 49-23-

9(2)(b)). Is the first, unqualified height limitation the ignorable remnant of 

the previous statute or is it a command that overwhelms the prospective force 

of the second limitation?

Shedding light on the reason for the 2008 legislation is an affidavit

executed by the current mayor of Gulfport, Billy Hewes, which Lamar 

introduced in district court. At the time of the adoption of the 2008 

amendment, Hewes was president pro tempore of the state senate. The 2008 

amendment was based on a bill he sponsored. Mayor Hewes indicated that 

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the legislative purpose was to “grandfather” older signs by making 

prospective the height limit imposed in 2003.

1

 There is no reason to doubt 

the former senator’s explanation of the purpose he had for introducing this 

legislation in 2008. Of some importance, though, the state supreme court 

has held that legislators’ post hoc explanations of what a statute was intended 

to mean, no matter how persuasive, are simply irrelevant. See Mississippi

Gaming Comm’n v. Imperial Palace of Miss., 751 So. 2d 1025, 1028–29 (Miss. 

1999) (rejecting testimony from two legislators). 

The background for this litigation is as follows. The Lamar Company, 

L.L.C., is an outdoor advertiser with billboards and related structures across 

the country. It sought to change the height of a sign located in Gulfport, 

Mississippi, erected in 1986. Lamar sent its proposal to the Mississippi 

Transportation Commission (“MTC”) in May 2015. The MTC notified 

Lamar that it disapproved of this modification because the sign already 

exceeded the limits on height and would continue to do so after the 

modification. Lamar, though, insisted that this older sign was exempt from 

the height limits.

The parties continued discussions from 2015 to 2017, but no 

resolution occurred. The MTC asserts that Lamar and the MTC joined 

forces to get a legislative revision. Bills failed in both the 2016 and 2017 

sessions to make the height limit prospective only. In April 2017, abandoning 

pursuit of a solution in the legislative branch, Lamar turned to the judicial by 

filing suit in the Chancery Court of Harrison County. The MTC removed

1 As the saying goes, if you like laws and sausages, you should never watch either 

being made. Senator Hewes’s bill had clear language that the height limit was prospective

in its effect, but that language was not adopted; the difficult final wording reflects the input 

and purposes of others. Compare S.B. 2955, 2008 Reg. Sess. § 4 (Miss.), as introduced, 

http://billstatus.ls.state.ms.us/documents/2008/pdf/SB/2900-2999/SB2955IN.pdf, 

with 2008 Miss. Laws Ch. 517, § 4.

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the case to federal court based on federal-question jurisdiction. After 

removal, the district court required briefing on jurisdiction and particularly 

on the MTC’s assertion of federal-question jurisdiction. The MTC’s brief 

argued that the complaint presented a tacit but unavoidable federal question,

or, alternatively, the parties were diverse and the requisite amount in 

controversy was satisfied. 

Lamar’s supplemental brief took the position that no federal question 

existed at the time of removal. The district court indicated diversity 

jurisdiction was a possibility by ordering additional briefing to determine the 

citizenship of each member of the Lamar limited liability company.

Without identifying applicable jurisdiction, the district court 

dismissed the suit because of Lamar’s failure to exhaust administrative 

remedies. This court reversed “because no adequate administrative remedy 

existed.” Lamar Co., L.L.C. v. Miss. Transp. Comm’n, 786 F. App’x 457, 461 

(5th Cir. 2019). On remand, the district court granted partial summary 

judgment, holding that Section 49-23-9(2)(b) was unambiguous in its 

restriction of all billboards to forty feet.2 The parties then agreed to dismiss

Lamar’s remaining claims with prejudice, and the district court entered final 

judgment.

On appeal, the first time a party questioned the court’s jurisdiction 

was eleven days before oral arguments when the MTC moved to remand to 

state court. The MTC argued that it is an alter ego of the state and cannot 

be considered a citizen for purposes of diversity jurisdiction. Lamar 

responded by arguing, first, that the MTC waived its objection to subjectmatter jurisdiction when it removed the case, and second, that the MTC is 

2 We did not discover a statement by the district court as to the jurisdictional basis

for its partial judgment, but diversity jurisdiction is implied.

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not an alter ego of the state. If we find subject-matter jurisdiction is lacking, 

Lamar requests costs, fees, and expenses. 

The timing of the appearance of this jurisdictional issue is 

inopportune but not unique in our experience. Further, the MTC had been 

successful so far in this litigation. Since most district court judgments are 

affirmed, the odds favored the MTC’s success here — though there was no 

guarantee. Thus, for the MTC to suggest the need to start over, though tardy

and unfortunate if correct, is commendable. For Lamar to be annoyed, in a 

professional manner, by this late issue would be understandable.

DISCUSSION

I. Subject-matter jurisdiction

Subject-matter jurisdiction is essential for the federal judiciary to hear 

a case. It “can never be waived or forfeited.” Gonzalez v. Thaler, 565 U.S. 

134, 141 (2012). Every federal court should, on its own, ensure that subjectmatter jurisdiction is present. See id. We examine both possibilities, federal 

question under 28 U.S.C. § 1331 and diversity under 28 U.S.C. § 1332.

A. Federal-question jurisdiction

The MTC’s basis for removal was the presence of a federal question. 

Generally, a federal question has to appear on the face of a complaint; it is 

not enough, for example, that a defense based on federal law exists. Elam v. 

Kan. City S. Ry. Co., 635 F.3d 796, 803 (5th Cir. 2011). There are a few

circumstances in which federal-question jurisdiction has been recognized 

despite the silence of the complaint. See, e.g., id. (Holding complete 

preemption converts a state-law claim into one under federal law). We will 

explain the MTC’s jurisdictional argument in a moment, but it started with 

the fact that Lamar made claims under the Mississippi constitution’s takings 

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clause. MISS. CONST. art. 3, § 17. If the MTC’s arguments were correct, 

then the takings claim could be considered under the district court’s original 

jurisdiction; that court then would have discretion to consider the state-law 

claims on the basis of supplemental jurisdiction if the other claims were 

sufficiently related to the federal issue. See Carlsbad Tech., Inc. v. HIF Bio, 

Inc., 556 U.S. 635, 639 (2009) (citing 28 U.S.C. §§ 1367(a), (c)).

Eventually, the takings claim was withdrawn. Nonetheless, the 

existence of federal-question jurisdiction at the time the suit was removed

would allow the case to proceed on the state-law claims under the court’s 

discretionary supplemental-jurisdiction authority. Seeid. at 639–40. It is true 

that the “general rule is that a court should decline to exercise jurisdiction 

over remaining state-law claims when all federal-law claims are eliminated 

before trial, but this rule is neither mandatory nor absolute.” Brookshire Bros. 

Holding, Inc. v. Dayco Prods., Inc., 554 F.3d 595, 602 (5th Cir. 2009). Here, 

there would be significant reasons for the district court to exercise its 

discretion and thereby sustain its actions in this suit if it became clear, only

at the end of the litigation, that was the only jurisdictional option. The 

district court never had that question presented to it. In light of what we will 

explain as to the absence of diversity jurisdiction, we will assume 

supplemental jurisdiction would have been invoked. Therefore, we analyze 

whether there was a federal question at the time the suit was removed.

The well-pleaded-complaint rule generally controls whether there is a 

federal question in a suit. Gutierrez v. Flores, 543 F.3d 248, 251–52 (5th Cir. 

2008). The MTC argued that the claims concerning a taking violative of state 

law “necessarily raise a stated federal issue, actually disputed and 

substantial,” which is appropriate for the federal court to resolve, quoting

Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 

(2005). We have expressed the elements of the doctrine on which the MTC 

relies in this way: “(1) resolving a federal issue is necessary to resolution of 

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the state-law claim; (2) the federal issue is actually disputed; (3) the federal

issue is substantial; and (4) federal jurisdiction will not disturb the balance of 

federal and state judicial responsibilities.” Bd. of Comm’rs of S.E. La. Flood 

Prot. Auth.-E. v. Tenn. Gas Pipeline Co., 850 F.3d 714, 721–22 (5th Cir. 2017) 

(quoting Singh v. Duane Morris LLP, 538 F.3d 334, 338 (5th Cir. 2008)). 

The district court considered this same argument in litigation 

involving Lamar, a school district, and a billboard. Lamar Co., L.L.C. v. 

Harrison Cnty. Sch. Dist., No. 1:17CV206, 2017 WL 11318991, *2–4 (S.D. 

Miss. Sept. 12, 2017). The court determined these difficult-to-satisfy 

conditions were not satisfied. That conclusion does not control here, but the

court’s analysis is instructive.

The supposed federal issue embedded in the state-law claims was 

described in the MTC’s district court briefing this way: 

Even though Plaintiff asserts in its complaint that the parties 

have differing interpretations of Miss. Code Ann. § 49-23-9, 

the Highway Beautification Act is at the heart of the 

controversy. [23 U.S.C. § 131 (control of outdoor 

advertising).] Plaintiff’s takings claim is indisputably 

controlled by the interpretation of 23 C.F.R. § 750.707(b) and 

the Highway Beautification Act.

The MTC argued that this federal law “requires states to enact laws 

regulating outdoor advertising or, in the alternative, suffer a loss of federal 

highway funds.” A federal regulation required the states to provide that even 

if a sign complied with “state law or state regulations” at the time it was 

erected, it had to be considered nonconforming if the statutes or regulations 

changed. 23 C.F.R. § 750.707(b). The state statute is the one we have been 

discussing, Section 49-23-9(2)(b), while the state regulation on billboard 

height is 37 Miss. Admin. Code, Pt. 1, Subpt. 5901, Ch. 09002, 

§ 1000.1c. The MTC’s position was that the statute and implementing 

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regulations on highway signs were adopted by the state in order to comply 

with federal law, thus presenting a sufficiently intertwined federal question.

We summarize. The merits issue is the meaning of a 2008 state 

statute. Whatever it means, that is the existing state law to which Lamar’s 

sign must conform. If the state statute results in a taking because it requires 

old signs to be updated, perhaps expensively, the fact that the statute was 

written to comply with federal law does not alter the fact that the state caused 

the injury. The MTC also argued that the federal statutory scheme provides 

for the federal government to bear 75 percent of the liability for any taking. 

See 23 U.S.C. § 131(g). On that point, we cannot get beyond the doctrinal 

requirement that the federal issue must be significant “to the federal system 

as a whole.” Bd. of Comm’rs of S.E. La., 850 F.3d at 723. The fact that a state 

court might conclude that a taking occurred, and even if there were a draw 

on the federal treasury as compensation for a billboard, nothing of national

consequence would have occurred.

There was no federal-question jurisdiction arising from Lamar’s 

complaint at the time of removal.

B. Diversity jurisdiction

Diversity jurisdiction requires complete diversity — no plaintiff can 

be a citizen of the same state as any defendant. Lincoln Prop. Co. v. Roche, 546 

U.S. 81, 89 (2005). The amount in controversy must exceed $75,000. 28 

U.S.C. § 1332(a). The nuance here is that a state is not a citizen of itself for 

purposes of diversity. Moor v. Alameda Cnty., 411 U.S. 693, 717 (1973). The 

question is whether the MTC should be considered the equivalent of the state 

of Mississippi for these purposes.

First, some background on the MTC. It is a state commission created 

in 1930; its original name wasthe Mississippi Highway Commission, changed 

to the current name in 1992. See 1930 Miss. Laws ch. 47, § 1 (created); 1992 

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Miss. Laws ch. 496, § 3 (name changed to the Mississippi Transportation 

Commission). The Mississippi Department of Transportation is significant 

in our evaluation as well. It has been referred to by the state supreme court 

as the MTC’s “subordinate agency.” Hill Bros. Constr. & Eng’g Co., Inc. v. 

Miss. Transp. Comm’n, 909 So. 2d 58, 61 (Miss. 2005). It appears that the 

Department functions as the operating agency for the MTC.3

 

Our analysis of whether the MTC can be considered a citizen of its 

home state relies on Chief Judge Charles Clark’s seminal explanation for our 

circuit of the relevant doctrine, which evaluated whether another Mississippi 

agency was an “alter ego” of the state. Tradigrain, Inc. v. Miss. State Port 

Auth., 701 F.2d 1131, 1132 (5th Cir. 1983). A governmental agency must be 

sufficiently independent of the state for it to be a citizen. Id. The court stated 

that “the essential question is whether the state is the real party in interest in 

the lawsuit.” Id. That opinion then identified a variety of considerations for 

alter ego status, though it did not create a single, comprehensive list. 

Its first discussion contained these factors:

3 We use that terminology in part because the title to the legislation creating the 

Department explained that among the purposes of the Act were “to create a Mississippi 

Department of Transportation governed by elected Transportation Commissioners; to 

provide that the present State Highway Commissioners shall be the Transportation 

Commissioners; [and] to transfer the duties and responsibilities of the State Highway 

Department to the Transportation Department.” 1992 Miss. Laws ch. 496 (title). That 

understanding of the legislation is confirmed by its conferring on the Department the 

MTC’s “powers, duties and responsibilities . . . [for] the construction and maintenance of 

the state highway system,” Miss. Code Ann. § 65-1-2(4); the requirement that the 

Department implement the rules, regulations and orders of the MTC, id. § 65-1-47; the 

Department’s duty to “receive and expend any funds” granted by the federal government 

for transportation purposes, id. § 65-1-2(3); the Department’s responsibility to “carry out 

all contracts and agreements” that the MTC has entered with any county, id. § 65-1-59; 

and the Department’s authority, at the MTC’s direction, to “locate, construct, 

reconstruct, and maintain” any state highway within a municipality, id. § 65-1-75.

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whether the agency has been granted the right to hold and use 

property, whether it has the express authority to sue and be 

sued in its corporate name, the extent of its independent 

management authority, and “a factor that subsumes all 

others,” the treatment of the agency by the state courts.

Id. at 1332 (quoting Huber, Hunt & Nichols v. Architectural Stone Co., 625 F.2d 

22, 24–25 (5th Cir. 1980)). As to state-court treatment, Tradigrain said it 

was relevant whether “the state has sued the agency in its own courts” and 

whether “a state court [has held] that the statute of limitations, which did 

not normally run against the state itself, ran against the agency.” Id. We find 

no caselaw on those two points but will discuss other state-court treatment. 

Other factors favoring a finding of an agency’s independence from the 

state are its ability to hire its own employees, to enter into its own contracts, 

and to hire its own counsel. Id. Another grouping in the same opinion is this: 

“(1) whether the state is responsible for the agency’s debt; (2) whether the 

agency is primarily concerned with local, as opposed to statewide problems; 

and (3) the degree of general financial autonomy of the agency.” Id. 

Because these factors often indicate different conclusions, we must 

“balance these against each other.” Id. at 1333. We start with whether the 

MTC has a right “to hold and use property.” One statute indicates that the 

MTC is authorized to bring condemnation actions. Miss. Code Ann. § 

65-1-47. Another statute gives more detail. Title gained from eminent 

domain for highway construction is taken in the name of the MTC, not in the 

name of the state. Id. § 65-1-305(1). Certainly, the MTC can hold and use 

real property. Compensation for the taking is paid out of the State Highway 

Fund. Id. § 65-1-47. We do not hazard a detailed explanation of that fund, 

but various statutes indicate that funds from any designated source, 

presumably including gasoline sales taxes and the like, are placed in the 

Highway Fund and there maintained as a separate account by the State 

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Treasurer (another one of the many statewide elected officials). Id. § 65-1-

111. The MTC decides what bonds or notes are needed for highway purposes 

and requests issuance by the state bond commission. Id. When funds are 

received from sources such as the federal government for highway purposes, 

the MTC is notified of the deposit into the Highway Fund. Id. § 65-1-117. In 

summary, there is a pot of money that the MTC draws upon, filled at least in 

part from sources other than general state tax revenues. Id. § 65-1-115. 

Further, the MTC is “a body corporate and as such may sue and be 

sued, plead and be impleaded, in any court of justice having jurisdiction of 

the subject matter of any such suit.” Id. § 65-1-5. As for independent 

management as well as contracting authority, the MTC is authorized to carry 

out all contracts in relation to state highways by delegating such duties to the 

Department. Id. § 65-1-59. The Department’s executive director signs all 

contracts in the name of the state and “receive[s] and assume[s] control” of 

state highways “for the benefit of the state.” Id. § 65-1-10(k). The executive 

director can award contracts after a bidding and advertisement process 

described in the code. Id. § 65-1-85. Implicitly, the MTC is responsible 

through the Department of Transportation for hiring and firing employees, a 

finding implied by the fact the executive director sets the compensation for 

all employees. Id. § 65-1-10(f).

Two factors in Tradigrain weigh against independence or are unclear.

This court once held that any liability imposed in a suit for damages against 

the MTC, at that time the State Highway Commission, “would be paid by 

funds from the state treasury.” Karpovs v. Mississippi, 663 F.2d 640, 644 (5th

Cir. Unit A 1981). Another factor is whether the agency can employ its own 

counsel. The state attorney general represents the MTC in this litigation, 

but a Mississippi Department of Transportation staff attorney is also shown 

on the MTC briefs. We give no weight to the question of hiring counsel as 

we are unsure of the MTC’s authority.

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Thus, the following Tradigrain factors supporting independence are 

met: holding and using property, right to sue and be sued, independent 

management authority, ability to hire its own employees, authority to enter 

into its own contracts, statewide and not simply local authority, and a fair 

amount of financial autonomy. Cutting the other way is that the MTC may 

not be financially responsible for certain liabilities.

Despite the number of factors supporting independence, we have not 

yet examined the factor Tradigrain identified as subsuming — how state 

courts have discussed the agency. We examine a Mississippi federal district 

court opinion first, as it described that caselaw. See Brady v. Michelin 

Reifenwerke, 613 F. Supp. 1076, 1079 (S.D. Miss. 1985). The federal court’s

analysis is quite helpful, but it does not have the weight of a state supreme 

court decision. The federal court was considering state sovereign immunity, 

but its analysis is quite similar to that of our diversity issue. Id. at 1078 n.1

(citing Tradigrain, 701 F.2d at 1132). The district court held that the MTC 

was the alter ego of the state. Id. at 1079.

The state court opinion relied upon in Brady was from just three years 

after the Mississippi Highway Commission, now the MTC, was created in 

1930. See State Highway Comm’n v. Gulley, 145 So. 351 (Miss. 1933). The 

Mississippi Supreme Court held that “[i]t is too well settled to require the 

citation of authority that the state highway commission, which is an agency 

of the state, is not subject to suit unless made so by statute.” Id. at 354. That 

this principle could be so well-settled about so new an agency would be

surprising, but likely what needed no citation was the more general principle 

that a state agency is not subject to suit. That well-settled principle concerns 

state sovereign immunity, but it is applicable here too.

The one concern we have about Gulley is whether it was using the term 

“agency of the state” in the manner relevant for our analysis, i.e., that the 

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Highway Commission was Mississippi’s alter ego. An agency as narrowly 

focused as one to celebrate the state’s centennial in 1917 had sovereign 

immunity except as altered by the statute creating it. Mississippi Centennial 

Exposition Co. v. Luderbach, 86 So. 517, 519 (Miss. 1920). Because immunity 

for state-created agencies seemed universal at the time of Gulley, we take a 

closer look at the 1930 Highway Commission.

Confirmation of the significance of the structure of and authority

given to the Commission is provided by the state supreme court’s contrasting

the 1930 Commission with earlier, less empowering statutory schemes:

A State Highway Commission was created by chapter 

168, Laws of 1916[;] and by chapter 278, Laws of 1924, the said 

act of 1916 was repealed, and a state highway department was 

created consisting of eight commissioners, with power to act in 

a supervisory and advisory capacity to boards of supervisors in 

constructing state highways, and with power to maintain the 

same.[4]

 But it was not until the passage of chapter 47, Laws of 

1930, that the State Highway Commission was created a body 

corporate, with power to sue and be sued, and with power to 

acquire by purchase, gift, or otherwise rights of way and lands 

containing building material, or lands necessary for other 

purposes incident to the construction of a system of state 

highways, and also with the power of eminent domain to secure 

lands for any of these purposes.

State Highway Comm’n v. Flint, 172 So. 299, 299 (Miss. 1937). In part relying 

on Flint, we accept that the state supreme court’s use of the phrase “state 

agency” for the forerunner of the MTC had the meaning relevant for us.

4 Though not affecting the applicability of the supreme court’s analysis, our review 

of these statutes reveals that what the court stated was accomplished by 1924 legislative 

changes actually was the result of 1920 Miss. Laws ch. 203.

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Finally, we discuss where on the scale to place the fact that from the 

start in 1930, the Commission has consisted of three members, each elected 

for a four-year term from a separate district, the three together comprising

the entire state. 1930 Miss. Laws ch. 47, § 1; MISS. CODE ANN. § 65-1-3. 

Election gives independence from some controls — no hiring or firing of 

commissioners by the governor, for example. Mississippi splinters executive 

power by electing eight statewide officials and three commissioners each for 

the Transportation and Public Service commissions.5 The big picture is that 

the three elected officials at the head of the MTC exercise that portion of the 

state’s executive power involving highways and certain other transportation

matters, power granted and subject to withdrawal by voters. 

The goal of this analysis is to see if Mississippi is the real party in 

interest. From that perspective, each of the elected officials is the leader of 

his or her piece of the executive branch, including three in charge of 

transportation. Substantial independence certainly exists between the MTC 

and other parts of the Mississippi government, but with that independence, 

the MTC has been awarded state leadership for its area of responsibility.

We stated earlier that the test we are using is similar to the analysis for 

sovereign immunity. Tradigrain, 701 F.2d at 1132. In 2019, we affirmed a 

dismissal involving the MTC based on sovereign immunity. Bay Point Props., 

Inc. v. Miss. Transp. Comm’n, 937 F.3d 454, 456-57 (5th Cir. 2019).6

Mississippi state courts reached a similar conclusion, holding that the 

Highway Commission enjoysimmunity unless a suit is statutorily authorized. 

5 Delbert Hosemann, Mississippi Official & Statistical

Register 2016-2020, at 77–93 (2017).

6 Two district court opinions found sovereign immunity to protect the MTC. See 

Stuckey v. Miss. Transp. Comm’n, No. 3:07CV639, 2009 WL 230032, at *1–2 (S.D. Miss. 

Jan. 29, 2009); Brady, 613 F. Supp. at 1081–82. 

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See, e.g., State Highway Comm’n v. Knight, 154 So. 263, 263–64 (Miss. 1934)7; 

Stewart v. State Highway Comm’n, 148 So. 218, 218 (Miss. 1933). 

We have applied the Tradigrain analysis with some care. Certainly, 

there is much to support that the MTC is independent. Still, the less 

numerous but weightier items on the scale favor holding that the MTC is an 

alter ego of the state. We conclude the MTC is not a citizen of Mississippi 

for diversity-jurisdiction purposes. Therefore, this court has no subjectmatter jurisdiction unless Lamar is right that the MTC has waived its status 

as a non-citizen. Lamar relies on a decision in which a state defendant 

removed the case to federal court based on a federal question. Meyers ex rel.

Benzing v. Texas, 410 F.3d 236, 239–40 (5th Cir. 2005). In accordance with 

Supreme Court precedent, we held that the removal waived the state’s 

immunity from suit. Id. at 250 (relying on Lapides v. Bd. of Regents, 535 U.S. 

613 (2002)). That does not assist Lamar. Though determining whether a 

defendant has sovereign immunity and whether it is the alter ego of the state

for diversity purposes have similar analyses, the effect of the determinations 

differ. A state can at times waive its immunity but can never concede subjectmatter jurisdiction: “No consent by the state to submit itself to suit could 

7 Lamar cites to Knight for the proposition that Mississippi state courts allow suit. 

That is true, but Knight was explaining how the state can renounce existing immunity. “In 

the absence of a statute so providing, a public corporation created in invitum and supported by 

taxation is not liable for damages caused by the negligent acts of its officers and agents; their 

negligent failure to discharge a duty imposed on the corporation by law.” Knight, 154 So. 

at 263–64 (emphasis added). That is a recognition both that immunity exists and that its 

protections for the state itself and its agencies can be voluntarily withdrawn. We do not 

need to plumb the depths of Mississippi law on this point, but the supreme court also has 

recognized that the Highway Commission could be sued for a taking without compensation 

because the state constitution’s prohibition of that was “self-executing.” Parker v. State 

Highway Comm’n, 162 So. 162, 164 (Miss. 1935); accord Flint, 172 So. at 300. Our issue is 

not whether the MTC has across-the-board immunity, but whether the MTC is in the 

category, along with the state itself, of having sovereign immunity unless altered by statute, 

the state constitution, or something else. 

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affect the question of diverse citizenship.” State Highway Comm’n of Wy. v. 

Utah Constr. Co., 278 U.S. 194, 199–200 (1929). 

The MTC is not seeking dismissal because of sovereign immunity. In 

fact, the MTC explicitly admitted at oral argument that it has waived any 

immunity argument. Instead, the MTC correctly identifies that subjectmatter jurisdiction is not present.

II. Lamar’s motion for fees, costs, and expenses

Lamar requests costs, expenses, and fees in compensation for the 

MTC’s late acknowledgement of error. Lamar provides three avenues to 

grant this request: (1) 28 U.S.C. § 1447(c); (2) Federal Rule of Civil 

Procedure 11(c); and (3) the Mississippi Litigation Accountability Act. Our 

maps do not show any of these three avenues reaching the Fifth Circuit.

A. 28 U.S.C. § 1447(c)

First, Lamar asks for “just costs and any actual expenses, including 

attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). The 

removing party must have “lacked an objectively reasonable basis” at the 

time it sought removal to be subject to the imposition of costs and expenses. 

Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). If no objectively 

reasonable basis was present, costs and fees are proper, but not otherwise. Id.

The Court explained that the financial burden for improper removal 

serves important deterrence purposes, but removal has its own importance:

Assessing costs and fees on remand reduces the attractiveness 

of removal as a method for delaying litigation and imposing 

costs on the plaintiff. The appropriate test for awarding fees 

under § 1447(c) should recognize the desire to deter removals 

sought for the purpose of prolonging litigation and imposing 

costs on the opposing party, while not undermining Congress’

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basic decision to afford defendants a right to remove as a 

general matter, when the statutory criteria are satisfied.

Id. at 140. Consequently, when to impose Section 1447(c) sanctions is a 

discretionary decision. Id. at 141.

We have already analyzed whether a federal question was lurking 

within Lamar’s complaint. We spent even more words explaining that two 

significant principles of diversity jurisdiction were presented in this case, i.e.,

the state itself is not a citizen for Section 1332 purposes, and an agency of the 

state may also be lacking citizenship. Neither party nor the experienced and 

able district judge seemed to have thought of those principles. We will never 

know if this court would have noted them on its own either — though it was 

vital for us to do so since jurisdiction is the sine qua non for a ruling — because 

the MTC did finally inject the jurisdictional issue into the case. 

The foregoing details some of the events and legal arguments 

presented. In order for the district court to exercise its discretion on whether 

to impose costs and attorneys’ fees for an improvident removal, some fact

finding may well be needed. See Miranti v. Lee, 3 F.3d 925, 928 (5th Cir. 

1993). On remand, the district court shall proceed as it considers appropriate 

in addressing the award of costs or fees under Section 1447(c).

B. Rule 11 Sanctions

Second, Lamar seeks sanctions pursuant to Rule 11. Fed. R. Civ. 

P. 11(c). Rule 11(b) governs the representations that parties make to the 

court, and Rule 11(c) provides the procedure necessary to request sanctions

when an attorney or party violates the above. Those rules, though, “govern 

the procedure in all civil actions and proceedings in the United States district 

courts.” Fed. R. Civ. P. 1. Thus, Rule 11 is not applicable here. The 

district court should add Rule 11 to its evaluations on remand.

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C. Mississippi Litigation Accountability Act

Third, Lamar argues that relief is appropriate under the Mississippi 

Litigation Accountability Act. Miss. Code Ann. § 11-55-5. Generally, 

that Act provides for costs and fees in cases brought without “substantial 

justification.” Id. The Mississippi Supreme Court has upheld use of this Act 

to award costs in cases of frivolous removal to federal court. See In re 

Guardianship of O.D. v. Dillard, 177 So. 3d 175, 182–83 (Miss. 2015). This

argument is one for the state court to consider at some point during the 

litigation there.

We VACATE and REMAND to the district court, and order that 

court to REMAND to the Harrison County Chancery Court. The district

court should consider any motions for attorneys’ fees and costs under 

Section 1447(c) or Rule 11. Whether proceedings on those issues occur 

before or after the case is remanded to state court should be considered 

carefully to assure there is jurisdiction over those matters.

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