Opinion ID: 749312
Heading Depth: 2
Heading Rank: 3

Heading: Constructive Waiver of Eleventh Amendment Immunity

Text: 38 CSB also contends that Florida Prepaid has constructively waived its Eleventh Amendment immunity on two different grounds: the Parden doctrine and the conduct of Florida Prepaid in this litigation. We reject each of these arguments.
39 The high point of Supreme Court jurisprudence of the doctrine of constructive consent was Parden v. Terminal Ry. of Ala. State Docks Dep't, 377 U.S. 184, 84 S.Ct. 1207, 12 L.Ed.2d 233. See Erwin Chemerinsky, Federal Jurisdiction 408 (2d ed.1994). In Parden, railroad workers sued a railroad, wholly owned and operated by the State of Alabama, to recover damages under the Federal Employers' Liability Act (FELA). See 377 U.S. at 184-85, 84 S.Ct. at 1209. Alabama defended the suit on the basis of the Eleventh Amendment. The Court focused on two questions: whether Congress intended the FELA to apply to the states, and whether it had the power to do so. First, by its language, the FELA applied to every common carrier. Id. at 187, 84 S.Ct. at 1210. The Court held that because Congress did not distinguish between state and privately operated common carriers, Congress must have intended the Act to apply to state operated common carriers. Turning to the second question, the Court held that the constitutional basis for the enactment of FELA was the Interstate Commerce Clause. See id. at 190-91, 84 S.Ct. at 1211-12. The Court then reasoned that because the States surrendered a portion of their sovereignty when they granted Congress the power to regulate commerce, the clause could be used as a basis to waive a state's Eleventh Amendment immunity. Id. at 191, 84 S.Ct. at 1212. Because Alabama voluntarily had operated the railroad after the enactment of FELA, the Court held that the state had consented to the suit in federal court under the Act. See id. at 192, 84 S.Ct. at 1213. Therefore, Alabama was deemed to have waived its Eleventh Amendment immunity in Parden. 40 In the years following Parden, the Court has modified and partially overruled it. The first significant modification occurred in Employees of the Dep't of Pub. Health & Welfare v. Dep't of Pub. Health & Welfare, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973). That case involved a suit by state hospital and training school employees for overtime compensation under the Fair Labor Standards Act (FLSA). See id. at 280-81, 93 S.Ct. at 1616. The State of Missouri defended the suit on Eleventh Amendment grounds, and the Court applied the same two-part test found in Parden. First, it found that Congress clearly intended to bring employees of hospitals and related institutions under the Act. Id. at 283, 93 S.Ct. at 1617. Second, the Court recognized that the basis for the enactment of the FLSA was the Interstate Commerce Clause. See id. at 282, 93 S.Ct. at 1617. However, the Court distinguished Parden from Employees. The Court explained that the State of Alabama in Parden was involved in an area where private persons and corporations normally ran the enterprise. Id. at 284, 93 S.Ct. at 1617. In Employees the institutions were state hospitals and training schools which were not operated for profit, and instead were of an integral state concern. See id. Because of their importance to the state government, the Court found that Congress could not abrogate Missouri's Eleventh Amendment immunity under the FLSA in that case. In Employees, therefore, the Court created the important government function exception to Parden. Under this exception, a state cannot be deemed to have waived its immunity if it is engaged in an important or core government function. 41 The Court restricted the scope of Parden further in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). In challenging Illinois' administration of the Aid to the Aged, Blind, and Disabled (AABD) welfare program, the plaintiffs in that class action asserted that officials from the State of Illinois had waived the state's Eleventh Amendment immunity in welfare suits by participating in and receiving funds from the federal welfare program. Stressing that [c]onstructive consent is not a doctrine commonly associated with the surrender of constitutional rights, the Court held that [t]he mere fact that a State participates in a program through which the Federal Government provides assistance for the operation by the State of a system of public aid is not sufficient to establish consent on the part of the State to be sued in the federal courts. Id. at 673, 94 S.Ct. at 1360-61. Thus, the Court rejected the waiver argument in that case. 42 In 1987, the Court again pared back Parden in Welch v. Texas Dep't of Highways and Pub. Transp., 483 U.S. 468, 107 S.Ct. 2941, 97 L.Ed.2d 389. In Welch, an employee of the Texas Department of Highways and Public Transportation filed suit under the Jones Act against the state and the department to recover damages for injuries she incurred while working on a ferry dock. See id. at 470-71, 107 S.Ct. at 2944. The Jones Act remedies were available to [a]ny seaman who shall suffer personal injury in the course of his employment. The employee argued that the State of Texas was an employer within this section. Id. at 475, 107 S.Ct. at 2947. In considering whether Congress intended to apply the Act to the states, the Court found that the line of cases it had decided since Parden required an unequivocal expression that Congress intended to override Eleventh Amendment immunity. Accordingly, to the extent that Parden v. Terminal Railway, ... is inconsistent with the requirement that an abrogation of Eleventh Amendment immunity by Congress must be expressed in unmistakably clear language, it is overruled. Id. at 478, 107 S.Ct. at 2948 (citations omitted). Thus, the Court changed the first prong of the Parden test to require a clear statement of congressional intent. Because it found no such intent in the Jones Act, the Court declined to hold that Texas had waived its immunity. 43 Therefore, the Parden doctrine holds that a state's Eleventh Amendment immunity can be constructively waived if: (1) Congress enacts a law providing that a state will be deemed to have waived its Eleventh Amendment immunity if it engages in the activity covered by the federal legislation; (2) the law does so through a clear statement that gives notice to the states; (3) a state then engages in that activity covered by the federal legislation; and (4) the activity in question is not an important or core government function. 44 In the present case, at least assuming that CSB can establish the elements of its case, the first three requirements of the Parden doctrine clearly have been or will be met. Although the TRCA does not mention specifically prepaid tuition programs, the Act declares that if a state or its instrumentality chooses to engage in a proprietary activity that potentially falls under the Lanham Act, it can be held liable in federal court for violations of that Act. See 15 U.S.C. § 1122. Moreover, Florida Prepaid continued its operations after the enactment of the TRCA. However, even though the first three requirements may be met, if the important government function exception applies to the present case, Florida Prepaid's activities would not waive its Eleventh Amendment immunity. 45 The district court determined that Florida Prepaid served a role traditionally undertaken by state governments--making available education opportunities, and thus the Parden doctrine could not be applied as a basis for a conclusion that Florida Prepaid's activities waived its Eleventh Amendment immunity. College Sav. Bank, 948 F.Supp. at 416. The district court recognized that Florida Prepaid does compete with private businesses, such as CSB, to provide prepaid tuition plans, but found that factor not to be dispositive. Instead, the district court focused on the benefits that Florida Prepaid provides to the education of Florida citizens. See id. at 417. Because Florida Prepaid directly furthers the goal of education by providing a system of financing for college and university education, the district court found that Florida Prepaid serves an important government function. We agree with the district court's determination and conclude that Florida Prepaid is engaged in an important governmental function; therefore, the Parden doctrine of waiver does not apply to the present case. 46 Education is a core function of a state government. See Brown v. Board of Educ., 347 U.S. 483, 493, 74 S.Ct. 686, 691, 98 L.Ed. 873 (1954) (Today, education is perhaps the most important function of state and local governments.). The Appellants do not dispute that education is an important government function. Instead, they seek to distinguish the goal of education from the function that Florida Prepaid performs. They argue that Florida Prepaid does not provide education directly; instead, it provides a means through which individuals can save for the costs of college tuition with an investment program. According to the Appellants, individuals traditionally have used a variety of investments to fulfill this purpose, and Florida Prepaid can be seen as merely an additional, competing means to meet the costs of college. 47 We reject the Appellants' narrow conception of education as a core government function. Education encompasses more than classroom teaching; instead, the core function of education can include the provision of education-related services as well as direct classroom teaching. See, e.g., Skehan v. State Sys. of Higher Educ., 815 F.2d 244, 249 (3d Cir.1987) (holding that the Pennsylvania State System of Higher Education is a state agency entitled to Eleventh Amendment immunity). Furthermore, in addition to states providing elementary and secondary schools for their citizens, they also long have provided facilities for college and graduate levels of education. In providing these higher levels of education, states routinely have charged discounted tuition fees to their own citizens. Yet even with such discounts, the cost of education can be prohibitive. The sole purpose of Florida Prepaid is to help individuals meet this expense of higher education. See Fla. Stat. ch. 240.551(1) (1997). As the statute creating the Florida Prepaid Postsecondary Education Expense Program states: 48 The Legislature recognizes that education opportunity at the postsecondary level is a critical state interest. It further recognizes that educational opportunity is best ensured through the provision of postsecondary institutions that are geographically and financially accessible. Accordingly, it is the intent of the Legislature that a program be established through which many of the costs associated with postsecondary attendance may be paid in advance.... 49 Id. 50 Although private businesses such as CSB operate similar programs, Florida Prepaid nevertheless serves the goal of ensuring that higher education is affordable to all of its citizens. Merely because the state competes with private enterprises does not mean that it is not performing a core government function. For instance, even in the context of classroom education, private schools operate on a competitive basis with public schools on all levels: elementary, high school, and university. 51 The Florida legislature specifically authorized and created Florida Prepaid to facilitate the education of its citizens. The core government function of education does not necessarily only embody the actual teaching of individuals; it is a broader function which can incorporate actions that involve related aspects to this overall goal. 5 Florida Prepaid serves the important government interest of education by making it affordable to its citizens; therefore, the Parden doctrine does not apply to the present case and does not supply a basis for a conclusion that Florida Prepaid has waived its Eleventh Amendment immunity. 52 As we have indicated, Florida Prepaid has argued and the district court has held that Seminole Tribe implicitly overruled Parden. See College Sav. Bank, 948 F.Supp. at 420. We, however, do not reach this difficult question because we have no need to do so. In our view, a court of appeals should be reluctant to hold that the Supreme Court implicitly has overruled its own decision when the Court had an opportunity to overrule the decision explicitly and did not do so. Thus, we view our methodology as in keeping with the respect which we must pay to the Supreme Court. 53
54 Finally, CSB contends that Florida Prepaid has waived its Eleventh Amendment immunity through its appearance in this litigation, by filing a counterclaim, and by failing initially to raise its Eleventh Amendment immunity defense. The district court rejected this argument and found that Florida Prepaid did not waive its immunity defense. See College Sav. Bank, 948 F.Supp. at 414. We will affirm the district court's determination of this matter and hold that Florida Prepaid raised its defense in a timely manner. 55 A state can waive an Eleventh Amendment immunity defense through a voluntary appearance in litigation against it in federal court. See Clark v. Barnard, 108 U.S. 436, 447-48, 2 S.Ct. 878, 883, 27 L.Ed. 780 (1883). In determining whether there has been a waiver, courts have examined the extent to which a state has participated in the lawsuit and whether it has defended the case on its merits. See Fordyce v. Seattle, 55 F.3d 436, 441 (9th Cir.1995) (holding that a state could waive immunity by a voluntary appearance and defense on the merits); Hankins v. Finnel, 964 F.2d 853, 856 (8th Cir.1992) (recognizing the possibility of waiver through an appearance and defense on the merits); 995 Fifth Ave. Assoc., L.P. v. New York State Dep't of Taxation and Fin., 963 F.2d 503, 507-08 (2d Cir.1992) (holding New York's immunity to be waived through its participation in the lawsuit); Paul N. Howard Co. v. Puerto Rico Aqueduct Sewer Auth., 744 F.2d 880, 886 (1st Cir.1984) (finding a waiver of immunity by a party's appearance and filing of a counterclaim and a third-party complaint); Vecchione v. Wohlgemuth, 558 F.2d 150, 158-59 (3d Cir.1977) (holding a state to have waived immunity by not raising the issue until after the final judgment). 56 Florida Prepaid's participation in this litigation did not waive its Eleventh Amendment immunity. Because the immunity issue sufficiently partakes of the nature of a jurisdictional bar, Edelman v. Jordan, 415 U.S. at 678, 94 S.Ct. at 1363, it is an issue that may be raised at any time during the pendency of the case. See Florida Dep't Of State v. Treasure Salvors, Inc., 458 U.S. 670, 683 n. 18, 102 S.Ct. 3304, 3314 n. 18, 73 L.Ed.2d 1057 (1982). Merely because a state appears and offers defenses on the merits of the case, it does not automatically waive Eleventh Amendment immunity. See id.; see also Ford Motor Co. v. Dep't of Treasury of State of Ind., 323 U.S. 459, 466-67, 65 S.Ct. 347, 351-52, 89 L.Ed. 389 (1945) (considering Eleventh Amendment immunity for the first time on appeal); Mascheroni v. Board of Regents of the Univ. of Cal., 28 F.3d 1554, 1560 (10th Cir.1994) (holding that a state does not waive immunity merely by its appearance in a suit). 57 The critical reason behind Florida Prepaid's delay in asserting an Eleventh Amendment defense was the timing of the Supreme Court's decision in Seminole Tribe. At the beginning of the litigation, the abrogation rule of Union Gas precluded an Eleventh Amendment immunity defense by Florida Prepaid. 6 However, with Seminole Tribe, the successful assertion by Florida Prepaid of an immunity defense became a reasonable possibility. Therefore, following that decision, Florida Prepaid asserted its Eleventh Amendment immunity. 7 Given this change in the law and the precedent for allowing participation in lawsuits without waiving the immunity, we determine that Florida Prepaid did not waive its Eleventh Amendment immunity through its participation in this litigation.