## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08
- 1142 F RE DD IE B URRUS, et al., P la intif fs-A pp ellees , v . S TATE L O TTERY C OM MIS S ION OF I NDI ANA, d /b/a T HE H O O SIER L O TTERY, D ef endant-Appellant. Appeal from the United States District Court fo r the S outhernDi stricto f Indian a, Indian apolisDiv isi on. No . 05 C1263

— Sarah EvansBarker, Judge .
A RG UE D J UNE 6, 2008

— D ECI DE D O CT OB ER 6, 2008

Befo re B AUER, R IPPLE, a nd M A NI ON, C ircu it Judges. M A NI ON, C ircu it Judge. Pl ai nti ff s, se ven f or m erem plo yees o fthe St ate Lott er y Com m i ssi on o fI nd i ana, wh i ch do es bus i ne ss unde r th e na m e H o o si er Lo tt er y ( he rei nafter“Lott er y”), sued the i r f or m erem plo yerunder 42 U
. S. C. § 1 981 an d T itle VI Io fthe Civi l Ri ghts A ct o f 19 64 . Th ey cla im ed th at th ey w er e f i r e d b ec au se of th eir ra ce. The Lott er y m ove d to dism i ss the pl ainti ffs’ § 1981 claim s on th e b asis th at it w as a state a gen cy an d therefore2 N o. 08
- 1142 enti tl ed to so ver ei gn i m m unity p ursuant to the El eve nth A m en d m en t . T he district cou rt de nied the L ottery’s mo t i o n, a n d w e a ffi r m.
I. T h e In d ian a G en er al A ss em b ly c re at ed th e L ot te ry in 19 89 to op er at e lot te ry ga m es “a s a se p ar at e b od y p olit ic and cor pora te f ro m state governm ent. ” I nd
. C ode § 4- 30- 1- 2( 1)
. I t intended the Lott er y t o function “ as m uch as po ss ibl e as a n e nt r epr en eu r i alb us i ne ss e nt er pr i se , ” an d m an d ated “[t] ha t the l ottery gam es be op erated as a self

supp or ti ngr e v e nu e r ai si ng o perat i on. ” Id
. § 4-30-1- 2(1), ( 3). Over the year s, the Lotte ryh as m or e than prove d i ts abi l i ty t o r a i s e r e v e nu e : fr o m i t s i nc e pt i o n, the Lo t t e r y h a s ma de ov er $3 billion in p ro fits , in c lu d in g o v e r $2 10 m illion in fi sc aly ea r 20 07 al o ne . I nd. S ta te Budg etAge nc y, Di st r ibuti o n o fB u i l d I n d i a n a F u n d a n d L o t t e r y a n d G a m i ng R even ue s 3 (2007), http ://w w w . in.gov/sba/fi les/LG S_ D istribu tion_R ep ort_ 2007
. p d f (l ast vi sited Sep t. 23, 2008). To e nabl e th e Lo tt er y t o c o m m en ce o per at i ons, the In d ian a G en er al A ss em b ly a u th or ize d u p to $1 8 m illion in st ar t- u p ap p ro p ria tio n s. A s ittu rn ed ou t, th e L ot te ry d id no t ne ed th atmuch mone y t o g etup an d r unning . The Lotte ry ’ s a u ditst ate m ent o fcas h fl ows f ori ts fi rs t fi scalye arsho w s that the m on ey a ctual l y a pp ro pri ate d f r o m the S ta te dur i ngtha t per i o d was j us t o ve r $ 6 m i l l i o n, an d tha t su m was pr o m ptly r ep aid w i thi nt er es t dur i ng th e sa m e fi sc aly ea r . The p artie s ha ve s ti pul at ed th atthe Lo tt er y ’ s fi na nc i alr epo r ts s ho w no o th era ppr o pr i at i o ns f r o m t h e s t a t e o th e r t h a n t h a ti n i t i a l, p r o mp t l y r e p a i d s u m.N o. 08
- 1142 3 T h e g o v e r n o r o fI n d i a n a a pp o i n t s a fi v e - me mb e r c o mm is si o n t o o per at e th e Lo tt er y a s wel l a s a di r ec to r, who i s char ged with “m axi m i z[ i ng] r eve nues i n a m anner consi ste nt with the di gni ty ofthe sta te a n d the welf ar e o f i ts ci ti zens. ” I nd
. Code §§ 4- 30- 5- 1,

- 3. The Lotte ry is “a body poli ti c and corpor ate separat e fr om the sta te. ” Id
. § 4- 3 0
- 3

- 1
. I th a s the a u th o r i t y t o s u e a n d b e s u e d i n i t s o wn n a m e. Id
. W he n the Lo tt er y i s su ed, the di r ec to r o fthe Lo tt er y make s th e fi na l de ci si o n abo utwhethe r the Lo tt er y wi l l a g r ee to a s et tl ementa nd ho w m uchthe L ottery w il l p ay. W he n t h e L ottery p ays a m one tary set tl em ent o r any othe r l ega l o bl i gat i on, the m oneyco m es f ro m the Lo t t e r y ’ s a dmi ni s t r a t i v e t r us tfun d a s a g e ne r al oper at in g expense. S houl d the Lott er y def aul t o n any of its m one tary obligati ons , the Ind iana A ttorn ey G en eral’s offi ci alposi ti on i s t h at the s tat e would notbe l i abl e. 19 91 I nd
. OA G N o. 10
. The Lo tt er y de po si ts a l l o fi ts r ev en ue , whi chi s “c o nt i nually appropri ate d” to the Lot ter y, i n an adm i ni str ati ve tr u st fu n d t h at is s ep ar at e fro m th e s ta te ’s g en er al fu n d
. See I nd
. Co de § § 4

- 3 0
- 1 5
- 1 , 4- 8. 1- 1

- 3
. T he mo ne y i n the a dm i ni st r at i ve t rus t fund i s us ed to pa y the pr i ze s an d the Lo tt er y ’ s ex pen ses, suc h a s th e co sto fs uppl i es a nd a ny leg al set tle m en t or m on et ar y ju d g m en t. Id
. § 4- 30- 16- 1. Aft erthe pa y m en t o fpr i ze s an d e xpe ns es , the s ur p lus re venue fro m the adm i ni str ati ve tr ust fund i s di sburs ed as f ol l ows: $7
. 5 m i l l i on each q uart ergoes to the st ate tr eas urer f o r de pos i ti n the I nd i a na s t a t e t e a c he r s ’ r e t i r e men tfun d; $7. 5 m i ll i on e ach quart ergo es to the s tat e t re asur erf or deposi t in the pensi on r el i effun d ; a nd any surpl us r em ai ni ng i n the Lotte ryfund o n the l astday o fJ anuary,4 N o. 08
- 1142 A pri l, Ju ly, and Octoberafterthe tr ansfer s t o the pensi on fu n d s g oe s t o t h e s t a t e tre as u re r for d ep os it in th e “ b u ild I nd i ana fund
. ” Id
. § 4

- 3 0 -16 -3. T h e b u ild Ind ian a fu n d is used f orst ate o r l oca l capi talp roj ects , tho ugh pri orto u sin g t h e fu n d s fo r th at p u rp os e t h e s ta te tre as u re r is r equi r ed to t r an sfer$ 19 , 68 4, 37 0 ea chmonth from the bui l d I nd i ana fund to wh at i s e xhausti vel y t i tl ed the “ sta te gener alfund m oto r vehi cl e exci se tax r epl acem ent a ccount. ” Id
. § 4

- 3 0
- 1 7
- 3
. 5 ( a )
. I n the e v e nttha tthe fun ds i n th e bui l d I ndi an a fund a r e i ns uffi ci en t to meetthe re quir ed tr ansferam ount, the “audit oro fst ate ” i s r equi re d t o mak e up the di ffe r e nc e f r o m the s t a t e g e nera l fun d. Id
. § 4-30-17-3. 5(b). Fo r th e m o st p ar t, th e L ot te ry op er at es ind ep en d en tly fro m t h e st at e. It es ta b lish es its ow n an n u al b u d ge t a n d is not re quir ed to subm i t i ts budget t o the Ind i ana Gener al A ssem bly f or app roval. I t d e t erm ines th e typ e of lottery gam es i t co nd ucts a nd the m anner i n w hi ch i t con du cts th em . See id . § 4 -30 -3-7. I t selects its ow n inte rna l au d itor. It h as th e p ow er to p u rc h as e it s o w n ins u ra n c e; ow n, sell, an d l ea se r ea l a nd pe r so na l pr o per ty ; a nd o wn an d en for c e c op yr igh ts , tra d em ar ks , a n d se rv ice m ar ks
. Id
. §§ 4- 30- 3- 10 to
- 12. I t has t h e p ower t o enteri nto contr acts for th e p u rc h as e o r lea se of go od s a n d se rv ice s. Id
. §§ 4- 30- 3- 16 to -17 . A nd i t e stabl i shes and m ai ntai ns i ts own per sonnelpro gr am f ori ts em plo yee s. Thoug h t h e Lot ter y has subst anti alo perat i onali nd epen den ce , i t i s st i l l he av i l y r egul at ed bythe st ate. The L otte r y i s requ ired to m aintain w eekly record s of lottery t r a n s a c tio n s. Id . § 4-3 0-3 -4. It is s u b j ec t t o a n an n u al a u d it by the stat e bo ar d ofacc ounts and the s tat e budgetag ency.N o. 08
- 1142 5

W e ha v e jurisd iction ov er this ap p eal pu rsu an t t o th e collat- 1 er a l o rd er d o ct ri n e. P u er to R ic o A q u ed u c t & S ew erA u th . v . M et c a lf & Eddy, Inc. , 50 6 U. S. 13 9, 14 7 ( 19 93 ) ( hol di ng that“ Sta tes an d s t at e en t i t i es thatc l ai m t o be ‘ ar m s ofthe St at e’ m ay t ake adv antage ofthe col lat eral order doctri ne t o app eal a dis tr ic t c our tor der den yi ng a c lai m ofEl eve nth Am en dm en ti m m un ity ” ). Id
. §§ 4-3 0-1 9-1 to -2. It m u st su b m it re ve n u e a n d ex p en d iture r epor ts to the s tat e budgetag ency and each l egi sl ativ e m em b er of th e b u d ge t c om m itt ee u p on req u es t. Id
. § 4- 30- 19- 4. 2. Ital so has t o subm i t m onthl y a nd annual r epor ts to the g o v e r no r di s c l o s i ngr e v e nu e , e xp e ns e s , a nd p r i ze p ay ou ts . Id
. § 4- 30- 3- 3. I n additi on, the Lotte ry, l i ke othe r p u b l i c e n t i t i e s , i s s u b j ec t t o th e I n d i a n a O p e n D o o r L a w, see id
. § 5
- 1 4

- 1
. 5
- 2 ( a ) ( 3 ) ( B) , a nd the I nd i a na P ub l i c R e c o r ds A c t, id
. § 5-14-3- 2(m )( 8). This acti on was br ought aft er ea ch ofthe pla i nti ff s’ em p loym ent a t the Lott er y was te rm i nated be tw een Janu ary an d M ay 2005
. A ll b u t o n e of th e plaintiff s bro ught thei r em plo ym ent di scr i m i nati on cl ai m s a gainst the Lot ter y so lelyunder § 1981
. The Lott er y m ove d to d ism iss the p lai nt iffs’ § 1 9 8 1 clai m s on th e basis of soverei g n i m m uni ty . T he di st r i ctc o ur t den i ed th e m o ti o n, a nd the Lot ter y a pp eal s. 1

II. T his ap p eal presen ts only one issu e: w he th er th e L ottery i s en ti tl ed to a ss er t st ate sov er ei g n i m m uni tyunde r the Ele venth Am endm ent t o defe at the pl ain tiffs’ § 19816 N o. 08
- 1142

c laim s. O u r re vie w of th at iss u e is d e n ov o. Wi s co ns i n v . HoChunk N at i on , 51 2 F
. 3d 921, 92 9 ( 7th Ci r. 20 08) ( noti ng tha t a g ra nt o r denia l o fso ver ei gn im m unity i s r evi ew ed d e nov o). The Ele venth Am endm en tp ro vi des: “The J ud i ci alpow er o fthe Uni te d S ta te s sh al l no t be c o ns tr ue d t o e xt en d t o a ny sui t in l aw o r equi ty, co m m enced orpro secut ed aga i nst one ofthe U ni ted Stat es by Citi zens ofano therS tat e, o r by Citi zens orS ub j ec ts o fany For ei gn S tat e. ” U.S
. Const. A m end. XI
. “A l though the A m endm ent speaks of su its fi l ed b y ci ti zens ofano therst ate , the Suprem e Cour t ‘ has co ns i st en tly he l d tha t anunc o ns en tingSta te i s i m m une f r o m s ui ts b roug hti n fede r alc o ur ts b y he r o wn ci ti ze ns as w el l as by c i ti zens ofano therS tat e. ’ ” P e i r i c kv . I UP UI A thle ti cs D ep’t, 51 0 F
. 3d 68 1, 69 4- 95 ( 7th Ci r . 2 00 7) ( quo ting Edel m an v. Jordan , 41 5 U.S
. 65 1, 66 2- 63 ( 1974 ) ( i nter nal ci tat i ons o m i tte d))
. I n additi on, the Suprem e Cour t has he ld th at stat e agen cies, as arm s of th e state, are im m u n e fro m s u i t u n d er th e E lev en th A m en d m en t. See Edel m an , 415 U .S. at 6 63 ; se e also Joseph v. Bd. of R ege nts o f U niv . of Wis. Sys. , 432 F.3d 746 , 748 (7th C ir. 2005). T he Lot tery claim s t ha t it is a state agen cy; the p lai nt iffs ass er t that i t i s no t. To deter m i ne ifa parti cul arenti ty i s a n ar m o fthe s ta te , c o ur ts l o o kpr i m ar i l y attwo f ac to r s: ( 1) the extent of the e nti ty’ s fi nanci alauto nom y fro m the sta te; an d ( 2 ) th e “ ge n er al leg al s ta tu s” of th e e n tit y. Kash aniv. Pur dueU ni v. , 8 1 3 F
. 2 d 8 4 3 , 8 4 5
- 4 7( 7 th Ci r. 198 7 )
. Of the tw o, the enti ty’ s fi nanci alauto nom y i s the “m ost im port ant f acto r. ” P ei ri ck, 510 F.3d at69 5; s ee also Edel m an , 4 1 5 U. S
. a t6 6 3
. I n e v a l u a t i n gth a t f a c t o r, weN o. 08
- 1142 7
co ns i d er the e xt en t o fs ta te fundi ng, the s ta te ’ s o ve r si g ht an d cont rol of the ent ity’s fi scal aff airs, the en tit y ’s abi l i ty to ra ise fund s ind ependentl y, wh etherthe sta te t a x e s th e e n t i t y, a n d wh e th e r a j u d g me n t a g a i ns t th e enti ty w oul d r esul t i n the sta te i ncre asi ng i ts appropri atio n s t o t h e e n tit y. Kashani, 813 F.2d at84 5; see al s o Hes s v. PortA uth . Tr ans - H uds on Corp
. , 51 3 U.S
. 30 , 48 ( 1994 ) ( r ec o g ni zing“ th e vu l ne r ab i li ty ofthe S ta te ’ s pur se a s th e m ostsa l i ent f acto r in E l eve nth A m endm ent det er m i nations”). Taki ng i nto acco unt t hese consi derat i ons, we fi nd that th e first fact or c ut s hea vil y against find ing tha t the Lot tery i s an ar m of the sta te of I nd i ana. The Lotte ry ’ s com ple te lack of fi scal reli an ce up on th e s tate is p lai n. T he Lot tery’s funds a r e k epti n an admi ni st r at i ve t r us t fund s epa r at e an d apartfro m the st at e’s ge nera l fund
. True to the s tat e legi slature ’s inte nt th at th e L ottery “be op erated a s a self

supp or ti ng r eve nue ra i si ng o perat i on, ” Ind
. C ode § 4- 30- 1- 2( 3) , the Lotte ryfund s al l o fi ts own o perat i ons w i th th e r ev en ue g en er at ed f r o m the g ames i t o per at es . The re ve n u e t h e L ot te ry ge n er at es from th e g am es is enor mou s , t o t a l i ngb i l l i o ns o fdo l l a r s i n pr o fi t s a l o ne. G ive n tha t l ar g e st r ea m o fr ev en ue , the Lo tt er y ha s no need f orr eco urse to the sta te tr eas ury. The L ott er y has not received an y funds fr o m the s ta te t r ea su r y s i nc e th e $6 m i l l ion gi ven upon i ts i ncepti on, and that m oneywas quick l y pai d back w i th i nter est . M osti m port antl y, the Lotte rypays any l eg al obl i gat i on f r o m i ts o wn admi nist r at i ve t r us t fund. The I ndi an a A tto rneyGenera l has exp re ss l y di scl ai m ed l i abi l i ty f or an y of t h e L ot te ry ’s m on et ar y ob lig a tio n s. See 1 9 9 1 I nd
.8 N o. 08
- 1142 O A G N o. 10. U nd er that offi cial op inion, th e state trea su ry i s no t ex p osed sh o ul d the r e be a mone ta r y j udg m en t agains t the Lot t e r y in th is case. B ecau se th e L ottery r a i s e s r e v e nu e o n i t s o wn a c c o un t, c o nt r o l s a nd fun ds its ow n o p erations, and doe s not ex p ose stat e coffers wh e n mo n e t a r y j u d g e me n t s a r e r e n d e r e d a g a i n sti t, we concl ud e that i t i s a n enti ty fi nanci al l y ind ependent fro m th e s ta te . Cf

. M i l l e r - D avi s Co. v. Il l
. St at eTol l H ighway Auth. , 56 7 F
. 2d 32 3, 3 27( 7th Ci r . 1 97 7) ( ho l d ing tha t th e El ev en th Am en dm en t di d no t ba r su i t ag ains t the Ill i noi s S tat e Tol l H i ghw ay A uthor i ty w here the hi ghw ay au th or ity rais ed its ow n rev en u e t h ro u gh bo n d s a n d to lls an d th e state ex p ressly disclaim ed l iabil ity for the bon d s). The Lo tt er y ’ s pr o te st s t o the c o nt r ar y a r e una va i l i ng . The Lotte ryar gues that i t m ai ntai ns si gni fi cant fi nanci alti es to the s tat e be cause i ts pri m ar y pu rp os e is to r ai se r e v e nu e f o r the s t a t e . Ac c o r di ngt o the Lo t t e r y, sho ul d a m onet ar y j ud gm ent de p riv e ito fthe abi l i ty to m eeti ts re venue goal s, the sta te w oul d have l ess r eve nue, ther eby i m pacti ng the st ate tr eas ury. I t i s undis pu ted thata gr eat port ion o f Lott er y r eve nues

— the m oneyl eft o verafter th e Lot ter y’ s o perat i ng co sts ar e co ver ed

— i s t r a ns fer re d to the I ndi an a s ta te te ac he r s’ r et i r ementfund, the I ndi an a p en sio n re l i ef fund , and the bui l d Ind i ana fund
. A nd i t is als o u n d isp u te d th at, ac c or d in g t o s ta tu te , i f t h e b u ild I nd i ana fund has i nsuffi ci ent fund s t o m eeti ts tr ansfer re q u ire m en ts to th e s ta te ge n er al fu n d m ot or ve h i c le ex ci se t ax r epl ac ementa cc o unt, the s ta te h as to t ap th e ge n er al fu n d to m ak e u p th e d iffer en c e. See I nd
. C ode § 4- 3 0
- 1 7
- 3
. 5 ( b )
. ( Al th o u g h n o tme n t i o n e d i n th e r e c o r d , we wi l l e v e n a s s u me th a tth e s a me i s t r u e o fth e o th e r t wo fu n d s.)N o. 08
- 1142 9 N eve rthel ess , thati s no t the ty pe ofeffect on the st ate fi sctha t o urpr i o r c as es ha ve c o ns i der ed th e m ark of a sta te age ncy. W e hav e be en co ncer ned w i th the effect of m o ne ta r y j udg m en ts o n the s ta te t r ea su r y o nl y whenthe e nt i t y a g a i ns t whi c h the j ud g men t i s r e nd e r e d i s dep e nd

en t o n s ta te ap p ro p ria tio n s. Se e, e . g. , Kash ani, 81 3 F
. 2d at 84 6 ( “I fa j udg m en t wer e awar ded ag ains t Pur due , the st at e t re as u r y w ou ld n otw rit e o u t a ch ec k t o K as h an i. Buti n v i ew o fthe f ac t tha t Pur due i s byde si g n de pen den t o n s ta te ap p ro p ria tio n s, w h ich are ev id en tly ca re fu lly g ea r ed th r o ug h cl o se o ve r si g ht to m ee t th e ch an g i ng fi na nc i alne eds o fthe un iversity, i t i s appa r en t th atthe p ay m en t w ou ld d ire c tly affe c t t h e s ta te tre as u ry .”). In contr ast, the L ot ter y i s no t dependent on s tat e fund s f or i ts oper ati ons. There ar e there f or e no fungibl e fund s fro m th e st at e tr easu ry tha t woul d ha ve t o b e r epl ac ed i n the eve nt o fa j ud gm ent a w ar d. The sta te m ay be depri ved of so m e o fi ts a ntici p ated ( an d ho ped- f o r ) r ev en ue , b ut“ th e Suprem e Cour t has r ej ecte d th e s tat e-benefi t theor y o f sov er ei gn i m m unity. ” Takle v. U niv. of Wis
. Hosp. & Clinics Aut h. , 4 02 F
. 3d 76 8, 7 70 ( 7th C ir. 2 005 )
. Acco r di ngt o the Su p re m e C ou rt, The properf ocus i s no t o n the use ofpro fi ts orsur plus, but r atheri s o n l oss es and de b ts. I fthe expend i ture s o f the e nt e r pr i s e e xc e e d r e c e i pt s , i s the S t a t e i n f act obl i gat ed to bear and pay the re sul ti ng ind eb tedness ofthe enter pri se? W hen the answ eri s “ N o”

—both leg all y a n d p ra c tic ally

— the n the El e v e nth Am e nd

m en t’s co re co n c er n is n otim p lica te d
. . . . It w ou ld ind eed h eighten a “m yster[y] ofl egal evolution” w ere w e t o sprea d an Ele venth Am endm ent c ove r ove r an10 N o. 08
- 1142 age ncy that co nsum es no s tat e r eve nues bu t co ntribut es t o the S ta te ’ s wea l th
. Hess , 513 U .S. at 5 1 a n d n .21 . Th e L ot te ry is a p u re p ro fit producer f orthe sta te, with n o potenti alf orthe sta te to incu r deb t. T he f act th at a j ud gm en t agains t the L ottery m a y “ a ffe c t ” the s t a t e t r e a s ur y i n the s e ns e tha t the st ate tr eas ury w i l l not b e qu i te as fl ush abse nt the m oney pai d the pl aint i ff s by th e L o tt er y i s no t per tine ntt o the Ele venth Am endm ent a nal ysi s. I n ar gui ng tha t i t i s fi nanci al l y dependent on the sta te, th e Lo tt er y a lso po i nt s to a s ta tu te tha t st at es tha t th e m on ey in t h e L ot t er y’s ad m in ist ra tiv e t ru st fu n d is “c o nt i nua l l y a ppr o pr i at ed to the c o m m i ss i o n f o r the pu rpos es speci fied i n thi s a rt i cl e. ” Ind
. Code § 4- 30- 15- 1. T h e m on ey in t h e L ot te ry ’s a d m in ist ra tiv e t ru st fu n d is c o mpl e t e l y g e ne r a t e d b y the Lo t t e r y . T he Lo t t er y i s a sour ce forst ate r eve nue, not a s i phon. The type of“a pp ro pr i a t i o n” r e fe r r e d t o i n § 4

- 3 0
- 1 5- 1 ofthe I nd i a na Co de i s there f or e no t a n appropri ati on fro m the state tr eas ury. Thus , i t i s o fa di ffer en t k i nd tha n the a ppr o pr i at ion s w e hav e found to b e the m ar k o fa sta te age ncy, nam el y, th os e a p p ro p ria tio n s t h at co m e “ d ire c tly from th e s ta te .” Kash ani, 81 3 F
. 2d at 845. M oving on to the seco nd f acto r

— th e g en er all eg als ta tu s ofthe enti ty

— it too su p p orts a con clusion th at th e L ottery is n otan a rm of th e s ta te . Th e L ot te ry ge n er ally co n tr ols its ow n op erations. Lik e a p rivate ent erp rise, the L ottery m ai ntai ns co ntro l o veri ts own o perat ing budgetand has the pow er to enter i nto contr acts ; own and e nforc e t ra dem ar ks and ser vi ce m ar ks ; s el l, o w n, and l eas e pr oper ty; an d s ue a nd b e su ed in its o wn na m e. F ur th er m o r e, theN o. 08
- 1142 11 sta t ut e c r e a t i ng the Lo t t e r y s t a t e s tha t the Lo t t e r y i s “ a bod y poli ti c and co rpor ate separate from t he s tate, ” I nd
. Code § 4- 30- 3- 1 (em p hasi s a dd ed), and shoul d “functi on as m uc h as p ossible as an en trep r e n eu rialbu siness ente rpri se. ” Id . § 4-3 0-1 -2(1 ). Th e In d ian a A tt or n ey G en er al, i nt er pr etingtha t st atut o r y l an g ua g e, de te r m i ne d tha t th e st at e wi l l no t be l iable f o r a ny fi na nc i alo bl i g at i o ns o fthe L o t t e r y . 1 9 9 1 I n d
. O AG No
. 1 0
. A n d th e I n d i a n a S u p r e me C ou rt, in ap p lyin g t h a t st at u to ry lan gu ag e, h as h eld that empl o y ee s o fthe Lo tt er y a r e no t empl o y ee s o fthe st at e o f Ind ian a. N ob l e s v. Car t wright, 659 N
. E.2 d 1064, 10 72 ( I nd
. C t. A pp . 1995)
. I n shor t, the sta te acts l ike the L ottery i s a separ ate enti ty. W hi l e the questi on of s overe i gn im m un ity i s a m atter of fed eral l aw , th e state of I nd iana’s ow n vie w o f th e e n tit y it c re at ed is sig n ifica n t. SeePeir ick, 510 F. 3d at 696. A nd the m anner i n w hi ch I nd ian a la w tr ea ts the Lo tt er y c ut s he av i l y a g ains t findi ngtha t th e Lotte ryi s a n ar m o fthe sta te. The Lotte ry, unsurpri si ngl y, takes a differ ent v i ew o f i ts s ta tu s vi s à vi s th e st at e. The Lo tt er y poi nt s to the f a c tth a tth e g o v e r n o r a p p o i nt s th e me mb e r s o fth e c o mm i ssi on that oper ate s the Lotte ry i n an att em pt to sho w that i t i s a m er e a pp en d ag e of the s tat e. But “the pow er to appoint i s not the pow er to co n tr ol
. ” Takle, 40 2 F
. 3d at 77 0; s e eal s o Aue rv. Rob b i ns , 51 9 U.S . 4 52 , 4 56 n. 1 ( 1997 ) ( no tingtha t al th o ugh th e g o ve r no r a ppo i nt ed f o uro fthe fi ve-m em ber board of p oli ce com m issi one rs, th e “b oard [ was ] no t su bj ec t to the S ta te ’ s di r ec ti o n o r c o nt r o l i n a ny o th err es pec t” ). A s w e ha ve e xpl aine d abo ve , de spi te the govern or’s app ointm en t o f its c om m issi one rs, th e L ottery set s i ts own budget, co ntro l s i ts day- to- day o perat i ons, sues i n i ts own nam e, and br i n gs i n i ts own r eve nue.12 N o. 08
- 1142 I nde ed, wi thr es pec t to l i ti gation, the di r ec to r o fthe L ot te ry , an d n ota s t a t e o ffice r like th e a tt or n ey ge n er al, m ak es th e fi n al d ec isio n ab ou t w h et h er th e L ot te ry w ill agr ee to a s ett l em ent a nd how m uch the Lot ter y wil l pay. M oreov e r, the gove rnor’s p ow er to app oint th e L ottery co m m i ss i o ne r s i s o ve r sh ado wed b y the Lo tt er y ’ s fi na nc ial in d ep en d en c e fro m th e s ta te . “[W ]h er e t h e e vid en c e is that the s tat e d id n ot str ucture the e nti ty to pu t the st ate tr eas ury at ri sk ofpayi ng t h e j ud gm ent, then the f act that the s tat e a pp oi nts the m aj or i ty ofthe gov er ni ng bo ar d of th e ag en cydo es no t i ts el fl ea d t o the c o nc l us i o n tha t th e enti ty i s a n ar m o fthe sta te .” Fresen ius M ed. C a re C a rdio va scu l arR e s . , Inc
. v. P
. R. & C ar i b b e an Card i ovas cu l arCt r . Corp. , 32 2 F
. 3d 56 , 6 8 ( 1s t Ci r . 2 00 3)
. “ M o r eo ve r, ren d erin g[ th e con trol th at com es t h roug h th e exe rcise of a govern or’s appo i nt m en t po we r] d ispo si ti ve do es no t ho m e i n o n the i m petus f orthe Ele ven th A m endm ent: the preve nti on o f fede ral- cou rt j ud gm en ts th at m us t b e pa id ou t of a State’s tr eas ury. ” Hess , 51 3 U.S
. at48
. H er e, the r e i s no que st i o n tha t the s ta te o fI ndi an a i nt en ded to p ro te cti ts s ta te pur se fr o m a j udg m en t ag ains t th e Lo tt er y . The s ev er al pr o vi si o ns fr o m the I nd i ana Code ci ted abo ve cl ear l y e stabl i sh the Lott er y a s an enti ty se p arate f ro m the sta te. A nd the offi ci alo pini on of the I nd iana A ttorn ey G en eral veri fi es th at th e L ottery is not an agen cy of th e s tate. A ccord ingly, th at th e L ottery op er at es ind ep en d en tly fr o m In d ian a’s st at e t re as u ry is th e det er m i na ti ve facto r i n the El ev en thAm en dm en t an aly si s . T h at fac to r gr ea tly ou tw eig h s t h e fa c t t h at Ind ian a’s gov er n or ap p oin ts th e L ot te ry co m m i s s i on er s. See id . at 4 7-4 8; Takle, 40 2 F
. 2d at 770- 71.N o. 08
- 1142 13 W e a re si m i l ar l y unpers uaded bythe Lotte ry ’ s r efer ence to th e st at e r egul at i o ns to whi ch i t i s su bj ected
. The r egul at i o ns d em o ns tr at e th atthe pub l i c ta k es a he al th y i nt er es t i n i ts o per at i o n, l i k e the pub l i c do es wi tha u tili ty orany othe r quasi
- pu bl i c ent i ty. Beyo nd that, how ever, th e regu lations for E levent h A m en d m e n t pu rposes ar e no t s i gni fi cant. S i m i l arr egul ati ons did not ch an g e o urc o nc l us i o n in Ta k le th at the Unive rs i ty of W i sco nsi n H ospi taland Clini cs Au thor i ty was not an ar m of th e s t a t e o f W isc on sin
. See Takle, 40 2 F
. 3d at 771 (re f e r r i n g t o t h e fa c t t h at th e U n ive rs ity of W isc on sin H o spi ta l a nd Cl i ni cs A ut hori tywas s ubj ec te d t o W i sc o nsin ’s o p en -m ee tin g la w s a s “ m in or st rin gs ”); see also Dur n i n g v. Ci t i b an k, N. A. , 950 F.2d 141 9, 1427( 9th Cir. 1991 ) ( “A dm i tte dly, the A uthor i ty i s m or e cl ose l y t i ed to th e st at e th ana n ord in ar y c o r po r at i o n. The g o ve r no r a nd s t a t e t r e a s u r e r s e r v e o n i t s b o a r d , a n d i t i s s u b j ec t to t he sta te’ s o pen m eet i ngs l aw . N onethel ess , its se parat e co r po r at e st atus i s cl ea r l y e st ab l i sh ed. ”)
. Li k ewi se , the ex i st en ce o fs uchr egul at i o ns d oes no t al te r o urc o nc l usi o n h er e. The Lo tt er y i s no t en ti tl ed to i nv o k e th e Ele venth Am endm ent.
III
. The Lo tt ery i s no t e nti tl ed to so ver ei gn i m m unity because i t i s n ot an a rm o fthe sta te. W e there f or e A FFIRM th e d ecision of th e d istri ct cou rt de ny ing the Lot tery i m m unity fro m the pla i nti ff s’ 42 U
. S. C. § 1 981 cl ai m s.

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