Court Opinion

ID: 2972951
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:56:19.127105+00
Date Added: 2024-06-11T15:31:29.949492
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 05a0855n.06
                           Filed: October 18, 2005

                                           No. 04-6082

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

J. S. HAREN COMPANY,                                     )
                                                         )
       Plaintiff-Appellant,                              )         ON APPEAL FROM THE
                                                         )         UNITED STATES DISTRICT
               v.                                        )         COURT FOR THE EASTERN
                                                         )         DISTRICT OF TENNESSEE
THE MACON WATER AUTHORITY,                               )
                                                         )
      Defendant-Appellee.                                )
__________________________________________

BEFORE: MOORE, GIBBONS, and GRIFFIN, Circuit Judges.

       PER CURIAM.

       J.S. Haren (“Haren”) appeals the dismissal of its bankruptcy adversary proceeding complaint

against Macon Water Authority (“MWA”) by the district court. In its order and opinion, the lower

court held that it lacked subject matter jurisdiction over the proceeding based on the Eleventh

Amendment immunity afforded to MWA. Haren contends that MWA may not raise the defense of

sovereign immunity because MWA is not a state entity, and, alternatively, the defense was waived

by MWA’s own charter, and Congress has effectively abrogated the defense of sovereign immunity

in all bankruptcy proceedings. Haren also appeals the denial of its Fed. R. Civ. P. Rule 59(e) motion

to alter or amend the judgment, contending that the district court should have granted an evidentiary

hearing and limited discovery. MWA requests that the judgment be affirmed on the basis that the
No. 04-6082
J.S. Haren Co. v. Macon Water Auth.

district court properly dismissed Haren’s complaint for the grounds stated. For the reasons that

follow, we vacate the judgment of the district court and remand for further proceedings.

        Eleventh Amendment immunity applies only against state governments and entities that can

be considered “arms of the state,” Alkire v. Irving, 330 F.3d 802, 814 (6th Cir. 2003). In its

memorandum opinion, the district court held that, because plaintiff has the burden of establishing

subject-matter jurisdiction, plaintiff J.S. Haren Co. bore the burden of proving that defendant was

not entitled to immunity under the Eleventh Amendment:

                While the state law characterization of an entity is just one of several factors
        to consider in determining whether a particular entity is an arm of the state for
        Eleventh Amendment purposes, the parties have not raised any issues with respect
        to the other factors. Since J.S. Haren bears the burden of demonstrating the Court
        has jurisdiction over the subject matter of the present action, Ohio Nat’l, 922 F.2d
        at 324, the Court must assume the other factors also weigh in favor of MWA’s
        position it is an arm of the state. Accordingly, the Court concludes MWA is an arm
        of the State of Georgia entitled to assert immunity under the Eleventh Amendment.
        (Emphasis added.)

        In the recent decision, Gragg v. Ky. Cabinet for Workforce Dev., 289 F.3d 958 (6th Cir.

2002), our Court addressed the issue, previously unresolved by this circuit, of which party bears the

burden of proof on Eleventh Amendment immunity. In resolving the question, we held “that the

entity asserting Eleventh Amendment immunity has the burden to show that it is entitled to

immunity, i.e., that it is an arm of the state.” Gragg, 289 F.3d at 964. In light of Gragg, the district

court committed an error of law regarding which party bore the burden of production and persuasion

on the issue of the Eleventh Amendment immunity. Further, in view of the sparse lower court

record, we cannot conclude that the error was harmless.

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No. 04-6082
J.S. Haren Co. v. Macon Water Auth.

       Also, plaintiff argues that the present record is inadequate to determine whether defendant

is an “arm of the state” under the factors set forth in Brotherton v. Cleveland, 173 F.3d 552, 566-67

(6th Cir. 1999). We agree and, on remand, instruct the district court, in its discretion, to permit the

parties to proceed with discovery on this issue, along with the issues of alleged waiver of sovereign

immunity, and abrogation of sovereign immunity.

       The judgment of the district court is vacated and the matter remanded for further proceedings

consistent with this opinion.

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