Court Opinion

ID: 3133569
Source: CourtListenerOpinion
Date Created: 2015-10-21 19:01:07.893067+00
Date Added: 2024-06-11T07:38:28.523259
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                             No. 14-2202

LEE PELE,

                 Plaintiff - Appellant,

            v.

PENNSYLVANIA HIGHER EDUCATION      ASSISTANCE     AGENCY,   d/b/a
American Education Services,

                 Defendant – Appellee.

------------------------------

JON H. OBERG,

                 Amicus Supporting Appellant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (1:13-cv-01531-JCC-TRJ)

Argued:   May 12, 2015                     Decided:   October 21, 2015

Before TRAXLER, Chief Judge, and GREGORY and KEENAN, Circuit
Judges.

Vacated and remanded by unpublished per curiam opinion.

ARGUED: Scott Matthew Michelman, PUBLIC CITIZEN LITIGATION
GROUP, Washington, D.C., for Appellant.     Paul D. Clement,
BANCROFT PLLC, Washington, D.C., for Appellee.  ON BRIEF: A.
Hugo Blankingship, III, Thomas B. Christiano, BLANKINGSHIP &
CHRISTIANO, P.C., Reston, Virginia; Allison M. Zieve, PUBLIC
CITIZEN LITIGATION GROUP, Washington, D.C., for Appellant. Jill
M. deGraffenreid, McLean, Virginia, Joseph P. Esposito, William
E. Potts, Jr., HUNTON & WILLIAMS LLP, Washington, D.C.; George
W. Hicks, Jr., Raymond P. Tolentino, BANCROFT PLLC, Washington,
D.C., for Appellee. Bert W. Rein, Michael L. Sturm, Christopher
M. Mills, Brendan J. Morrissey, Stephen J. Obermeier, WILEY REIN
LLP, Washington, D.C., for Amicus Curiae.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

     Plaintiff         Lee     Pele    filed       suit    against          the    Pennsylvania

Higher    Education       Assistance         Agency       (“PHEAA”)          under       the    Fair

Credit Reporting Act, 15 U.S.C. § 1681 et seq.                               Concluding that

PHEAA was an arm of the Commonwealth of Pennsylvania entitled to

share    in    the     Commonwealth’s         Eleventh-Amendment                  immunity      from

suit,    the    district       court    granted       PHEAA’s          motion       for    summary

judgment       and    dismissed       the    action.           We    vacate        the    district

court’s judgment and remand.

                                              I.

     Absent          consent     by    the     state           or    valid        Congressional

abrogation, the Eleventh Amendment bars an action in federal

court seeking money damages against a state.                                See, e.g., Bland

v. Roberts, 730 F.3d 368, 389-90 (4th Cir. 2013); Lee-Thomas v.

Prince George’s Cty. Pub. Sch., 666 F.3d 244, 248 (4th Cir.

2012).        “This    immunity       also    protects          state    agents          and    state

instrumentalities, meaning that it protects arms of the State

and State officials.”             Bland, 730 F.3d at 389-90 (citations and

internal quotation marks omitted)).

     PHEAA was created by the Commonwealth in 1963 as a “body

corporate       and    politic    constituting            a     public       corporation         and

government         instrumentality,”         24     Pa.        Stat.    §    5101,        for    the

purpose       of      “improv[ing]          access        to        higher        education        by

originating, financing, and guaranteeing student loans,” United

                                               3
States    ex   rel.    Oberg    v.    Pa.     Higher    Educ.     Assistance     Agency

(“Oberg    II”),      745 F.3d 131,     135    (4th    Cir.    2014).          After

discovery focusing on the nature of PHEAA’s relationship to the

Commonwealth, PHEAA moved for summary judgment, arguing that it

is an “arm” of the Commonwealth and therefore protected from

Pele’s lawsuit by the Eleventh Amendment.

      Considering      the     evidence      developed      through      discovery     in

light of the factors this court has identified as relevant to

the   arm-of-state      question,          see,   e.g.,     Md.   Stadium      Auth.    v.

Ellerbe Becket Inc., 407 F.3d 255, 261 (4th Cir. 2005), the

district court concluded that PHEAA had carried its burden of

proving that it is an arm of the Commonwealth, see Hutto v. S.C.

Ret. Sys., 773 F.3d 536, 543 (4th Cir. 2014) (holding that in

the Eleventh-Amendment context, whether a state-created entity

is an arm of its creating state is an affirmative defense that

must be proven by the entity asserting immunity).

      Pele appeals.          Pele argues that the evidence and relevant

state statutes do not support the district court’s conclusion

but   instead      establish        that     PHEAA     is   not     an   arm    of     the

Commonwealth.

                                            II.

      Whether a state-created entity is an arm of its creating

state and therefore entitled to assert the state’s sovereign

                                             4
immunity is a question of law reviewed de novo.                         Hutto, 773 F.3d

at 542.

      In an opinion also filed today, we addressed PHEAA’s status

as an arm of the Commonwealth in connection with claims asserted

against PHEAA under the False Claims Act (“FCA”), 31 U.S.C. §§

3729-33.     See United States ex rel. Oberg v. Pa. Higher Educ.

Assistance Agency (“Oberg III”), No. 15-1093 (4th Cir. filed

Oct. 21, 2015).          In Oberg III, we concluded that PHEAA is not an

arm   of    the     Commonwealth          because:           PHEAA    is      financially

independent       from    the     Commonwealth         and    supports        itself     with

revenues generated through PHEAA’s commercial financial-services

activities;       PHEAA    is     statutorily         vested     with      and    in     fact

exercises     control      over     its     commercially        generated        revenues,

notwithstanding          the      deposit        of    these     revenues         in     the

Pennsylvania       Treasury;        and     PHEAA,          through     its      board    of

directors,    sets       policy    and    makes       the    substantive       fiscal     and

operational decisions for the corporation.

      Although there are some procedural differences between this

case and Oberg, the arm-of-state question in Oberg was governed

by the same factors applicable here and was otherwise materially

identical to the arm-of-state question presented in this case. *

      *The FCA imposes civil liability on “any person” who makes
or presents a false claim for payment to the federal government,
31 U.S.C. § 3729(a)(1), a term that does not include states or
(Continued)
                                             5
Because the district court’s analysis is inconsistent with our

decision in Oberg III, we hereby vacate the district court’s

order and remand for further proceedings on the merits of Pele’s

claims against PHEAA.

                                            VACATED AND REMANDED

state agencies, see Vt. Agency of Nat. Res. v. United States ex
rel. Stevens, 529 U.S. 765, 787-88 (2000). In Oberg II, we held
that because “personhood” is an element of an FCA plaintiff’s
case, the FCA plaintiff bears the burden of proving that a
state-created entity is not an arm of the state. See Oberg II,
745 F.3d at 136.

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