Court Opinion

ID: 4182912
Source: CourtListenerOpinion
Date Created: 2017-06-30 21:01:26.859318+00
Date Added: 2024-06-11T14:39:22.415474
License: Public Domain

Case: 16-11341       Date Filed: 06/30/2017       Page: 1 of 11

                                                                                  [PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                              ________________________

                                     No. 16-11341
                               ________________________

                       D.C. Docket No. 8:15-cv-01544-EAK-AEP

UNIVERSITY OF SOUTH FLORIDA BOARD OF TRUSTEES,
a public body corporate of the State of Florida,

                                                                    Plaintiff-Appellant,

                                            versus

COMENTIS, INC.,
a Delaware corporation,

                                                                    Defendant-Appellee.

                               ________________________

                      Appeal from the United States District Court
                          for the Middle District of Florida
                            ________________________

                                       (June 30, 2017)

Before HULL, MARCUS, and ROGERS, * Circuit Judges.

ROGERS, Circuit Judge:
*
 Honorable John M. Rogers, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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         The board of trustees of the University of South Florida sued CoMentis, Inc.,

in federal court, asserting jurisdiction based on diversity of citizenship under 28

U.S.C. § 1332(a). The district court dismissed the complaint on the merits, and the

university appeals. However, because the plaintiff state university is an arm of the

state, it is not a “citizen” of the state for diversity jurisdiction purposes. As the

plaintiff now concedes on appeal, the district court should therefore have dismissed

the suit for lack of jurisdiction. This conclusion is required by the same analysis

that would give the university Eleventh Amendment immunity if sued in federal

court.

         While Congress has authorized diversity jurisdiction over suits between

“citizens of different States,” 28 U.S.C. § 1332(a)(1), that authorization does not

extend to suits between a state and a citizen of another state because “a state is not

a citizen of a state for the purpose of diversity jurisdiction under 28 U.S.C.

§ 1332,” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 412 (11th Cir. 1999)

(citing Moor v. Alameda Cty., 411 U.S. 693, 717 (1973)). Similarly, the statutory

authorization does not extend to suits between “[a] public entity or political

subdivision of a state” and a citizen of another state, if the entity or division is

“simply an ‘arm or alter ego of the State.’” Univ. of S. Ala., 168 F.3d at 412 (citing

Moor, 411 U.S. at 717–18). “Therefore, if a party is deemed to be ‘an arm or alter

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ego of the State,’ then diversity jurisdiction must fail” under 28 U.S.C.

§ 1332(a)(1). Univ. of S. Ala., 168 F.3d at 412.

      The USF Board is an “arm or alter ego of the State” for diversity jurisdiction

because it meets the same test that applies to determining whether the USF Board

is entitled to Eleventh Amendment immunity. We have held that the Eleventh

Amendment immunity analysis applies to determinations of citizenship for

diversity jurisdiction purposes. Id.; see also Coastal Petroleum Co. v. U.S.S. Agri–

Chems., 695 F.2d 1314, 1318 (11th Cir. 1983).

      The USF Board is an “arm” of Florida because the State of Florida defines

the USF Board to be a part of its government, exercises great control over it, funds

it, and pays judgments entered against it. We have repeatedly applied this test in

determining whether a state entity is entitled to Eleventh Amendment immunity.

See Tuveson v. Fla. Governor’s Council on Indian Affairs, Inc., 734 F.2d 730, 732

(11th Cir. 1984) (stating the four-factor test); see also, e.g., Williams v. District Bd.

of Trs. of Edison Cmty. Coll., Fla., 421 F.3d 1190, 1192 (11th Cir. 2005) (per

curiam); Manders v. Lee, 338 F.3d 1304, 1309 (11th Cir. 2003) (en banc).

      First, Florida defines the USF Board to be a part of the state government.

Florida lists USF as a “[s]tate university.” Fla. Stat. § 1000.21(6)(d). Florida

declares that the “boards of trustees [of state universities] are a part of the

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executive branch of state government.” Id. § 1001.71(3). The state therefore

clearly defines the USF Board to be a part of its government.

      This conclusion is strongly supported by our decision in Williams, in which

we held that a Florida community college was entitled to Eleventh Amendment

immunity. We concluded that “[a] community college is a creature of state law,”

Williams, 421 F.3d at 1194–95, and stated that that conclusion “favor[ed] a

determination that a community college is an arm of the state,” id. at 1193. In

doing so we relied on Florida’s statutory provisions that empower the state

government to supervise the community colleges, id. at 1192–93, although we also

noted that “[t]he board of a community college is not an agent of the executive

branch of state government under Florida law,” id. at 1193. Florida law empowers

the state government to control community colleges and state universities

similarly, compare Fla. Stat. § 1004.21–32 (state universities), with id. § 1004.65–

726 (community colleges), and while we indicated in Williams that a Florida

community college is not an agent of the state’s executive branch, Florida

explicitly defines the board of trustees of a state university to be a part of the state

government’s executive branch. Id. § 1001.71(3).

      Second, the State of Florida exercises great control over the USF Board by

defining the USF Board’s powers and by appointing its members. The USF Board

is not only subject to control by a statewide Board of Governors, but the USF

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Board itself is appointed mostly by the state Governor or the Board of Governors.

Of the USF Board’s thirteen members, six are appointed by the Governor of

Florida, and five by the Board of Governors. Fla. Const. art. IX, § 7(c).

       The Florida Constitution states that “[t]here shall be a single state university

system,” that “[a] board of trustees shall administer each public university,” and

that “a board of governors shall govern the state university system.” Fla. Const.

art. IX, § 7(b). The Board of Governors is almost entirely appointed by the

Governor of Florida.1 That Board of Governors “establish[es] the powers and

duties of the boards of trustees” of state universities. Fla. Const. art. IX, § 7(c).

The Board of Governors also closely scrutinizes the USF Board’s activities, as it

“oversee[s] the enforcement of all state university laws and rules and regulations

and the timely provision of direction, resources, assistance, intervention when

needed, and strong incentives and disincentives to force accountability for results.”

Fla. Stat. § 1000.03(2)(c).

       Third, the State of Florida funds USF. While the USF Board initially

prepares the budget, Fla. Bd. of Governors Reg. 1.001(6)(a), the Board of

Governors must approve the proposed budget, id., and submits the approved

1
  “[T]he Board of Governors is established as a body corporate comprised of 17 members as
follows: 14 citizen members appointed by the Governor subject to confirmation by the Senate;
the Commissioner of Education; the chair of the advisory council of faculty senates or the
equivalent; and the president of the Florida student association or the equivalent.” Fla. Stat.
§ 1001.70(1); see also Fla. Const. art. IX, § 7(d).

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budget, along with the approved budgets of all other state universities, to the state

legislature, Fla. Stat. § 1001.705(2)(f). The Board of Governors sets rules for any

independent fundraising by the USF Board through tuition and fees. Fla. Bd. of

Governors Reg. 1.001(6)(b). The Board of Governors also annually audits the

USF Board’s finances. Id. at 1.001(6)(g).

       Finally, Florida ultimately pays the judgments entered against the USF

Board. While each state university board of trustees is “a public body corporate”

that can enter into contracts, sue and be sued, implead and be impleaded, and

therefore hold property and have judgments entered against them, Fla. Stat.

§ 1001.72(1), (3), Florida ultimately pays such judgments. Not only does the state

legislature fund the USF’s budget as determined under the executive branch’s

control, the Board of Governors secures a comprehensive general liability

insurance for state universities, id. § 1001.706(4)(d), and the boards of trustees

must maintain coverage under the State Risk Management Trust Fund, id.

§ 1001.72(2). Florida ultimately pays any judgments entered against the USF

Board by funding the USF’s activities in general, and by mandating the USF’s

enrolling in risk-management insurance. Examining a similar insurance scheme

for community colleges, we reasoned in Williams that the state “laws [that] ensure

that community colleges are able to satisfy their liabilities . . . reflect that the state

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is ultimately responsible for those liabilities.” Williams, 421 F.3d at 1194. The

same is true here.

      Unsurprisingly given how tightly Florida’s government controls its public

education system, we have concluded, for Eleventh Amendment purposes, that

boards of trustees of Florida’s community colleges are “arms” of the state, id. at

1195, and also in unpublished opinions that the boards of trustees of Florida’s state

universities are “arms” of the state, Crisman v. Fla. Atl. Univ. Bd. of Trs., 572 F.

App’x 946 (11th Cir. 2014) (per curiam); Luna v. Larkin, 563 F. App’x 739 (11th

Cir. 2014) (per curiam); Hillemann v. Univ. of Cent. Fla., 167 F. App’x 747, 748

(11th Cir. 2006) (per curiam); see also Irwin v. Miami-Dade Cty. Pub. Schs., 398

F. App’x 503, 507 (11th Cir. 2010) (per curiam). District courts have reached the

same result, in some cases with respect to the USF Board in particular. See, e.g.,

Debose v. Univ. of S. Fla., No: 8:15-cv-2787, 2016 WL 1367173 (M.D. Fla. April

5, 2016); Schultz v. Bd. of Trs. of Univ. of W. Fla., No. 3:06cv442, 2007 WL

1490714 (N.D. Fla. May 21, 2007); Dismuke v. Univ. S. Fla. Bd. of Trs., No. 8:05-

CV-340, 2006 WL 166547 (M.D. Fla. Jan. 23, 2006).

      To resist that analysis and to avoid those authorities, CoMentis argues that a

different test applies to determine whether the USF Board is an “arm” of the state

for diversity jurisdiction. Instead of the above four-factor Eleventh Amendment

test from Tuveson, CoMentis argues, a five-factor test from Coastal Petroleum

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controls for diversity jurisdiction, a test that focuses on whether the entity has

corporate powers such as the power to sue, to contract, and to plead in court. See

Coastal Petroleum, 695 F.2d at 1318. 2 To accept the possibility of some daylight

between the two tests would mean that some state entity might be entitled to

Eleventh Amendment immunity, but still be able to bring a federal suit alleging

diversity jurisdiction.

       Having different tests would not be entirely anomalous. The purposes of

diversity jurisdiction are somewhat different from those of the Eleventh

Amendment. A federal court in Hawaii has pointed out the “divergent rationales

for Eleventh Amendment immunity and diversity jurisdiction,” with the former

“aim[ing] to protect states from lawsuits,” and the latter “meant to limit states’

appearances in federal court,” suggesting that emphasizing the inquiry into the

ultimate payer of judgments therefore makes sense in the Eleventh Amendment

context, but not so much in the jurisdictional context. Befitel v. Glob. Horizons,

Inc., 461 F. Supp. 2d 1218, 1222 (D. Haw. 2006); see also Univ. of R.I. v. A.W.

2
 “These factors have been approved by this circuit and are as follows: (1) whether the agency
can be sued in its own name; (2) whether the agency can implead and be impleaded in any
competent court; (3) whether the agency can contract in its own name; (4) whether the agency
can acquire, hold title to, and dispose of property in its own name; and (5) whether the agency
can be considered a “body corporate” having the rights, powers and immunities incident to
corporations.” Id. (citing C.H. Leavall & Co. v. Bd. of Comm’ns of Port of New Orleans, 424
F.2d 764 (5th Cir.1970), and Centraal Stikstof Verkoopkantor, N.V. v. Ala. State Docks Dep’t,
415 F.2d 452 (5th Cir.1969)).

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Chesterton Co., 2 F.3d 1200, 1202 n.4 (1st Cir. 1993). In addition, a district court

opinion that our predecessor Fifth Circuit referred to as “very scholarly and well

reasoned,” Centraal Stikstof Verkoopkantoor, 415 F.2d at 457 n.3, conspicuously

left open whether being an arm of the state for Eleventh Amendment purposes

means that an entity is not a citizen for diversity purposes, while explicitly holding

the reverse, i.e., that not being an arm of the state for Eleventh Amendment

purposes means that a public entity is a citizen for diversity purposes, S.J. Groves

& Sons Co. v. New Jersey Turnpike Auth., 268 F. Supp. 568, 573 (D.N.J. 1967).

Moreover, tying the two doctrines means for instance that a state arm cannot agree

to resolve its contract suits with out-of-state vendors in federal court even if it

wants to, because even though a state can waive its Eleventh Amendment

immunity, e.g., Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,

527 U.S. 666, 670 (1999), it cannot waive limits on diversity jurisdiction.

      Nevertheless, CoMentis’s argument fails for the following reasons.

      First, we have already held that the Eleventh Amendment test controls the

diversity jurisdiction analysis, while recognizing that the two contexts are

different. In 1983, in the very case on which CoMentis relies to argue for a

different test, we stated: “Although the determination made by the court in Aerojet

concerned eleventh amendment immunity, we conclude that the analysis for

determining the Board’s status as a ‘citizen’ for the purposes of diversity is the

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same.” Coastal Petroleum, 695 F.2d at 1318 (citing Aerojet-Gen. Corp. v. Askew,

453 F.2d 819 (5th Cir. 1971)). In 1998, we stated again: “Although the question of

diversity jurisdiction is distinct from that of immunity, we have also held that the

Eleventh Amendment immunity analysis is applicable to determinations of

citizenship for the purpose of diversity jurisdiction.” Univ. of S. Ala., 168 F.3d at

412 (citing Coastal Petroleum, 695 F.2d at 1318) (internal citation omitted). Other

circuits as well have embraced Eleventh Amendment tests like Tuveson’s to

determine whether an entity is an “arm” of a state for diversity jurisdiction. See,

e.g., Pub. Sch. Ret. Sys. v. State St. Bank & Trust Co., 640 F.3d 821, 826–27 (8th

Cir. 2011); Md. Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255, 260–61 (4th

Cir. 2005); A.W. Chesterton, 2 F.3d at 1202 n.4, 1203 (1st Cir. 1995); Blake v.

Kline, 612 F.2d 718, 726 (3d Cir. 1979).

      Second, while in Coastal Petroleum we held that an entity was a citizen of

the state for diversity jurisdiction, we did so first and foremost because controlling

Fifth Circuit precedent, Aerojet-General, had held that the same entity was not

entitled to Eleventh Amendment immunity, in particular because “the appropriate

Florida statutes had vested title to the land in question with the” entity. 695 F.2d

at 1317–18. It is true that we added a three-sentence paragraph identifying the

five-factor analysis used by the district court in that case, noting that the factors

“have been approved by this circuit.” Id. at 1318. We did not proceed to apply the

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factors, however, but instead cited two Fifth Circuit cases that themselves did not

apply the five factors. The final sentence of the paragraph referred back to Aerojet

and summarily stated our conclusion: “Because the state has vested title of the

land in the Trustees and because the Trustees have acted and continue to act as a

separate and distinct entity from the state, we hold that the trustees are a citizen

within the meaning of diversity jurisdiction under 28 U.S.C. § 1332 (1976).” Id.

This paragraph hardly amounts to an application of a new and different standard

for the determination of whether an entity is an arm of the state for diversity

jurisdiction purposes.

      Because the USF Board is an arm of the Florida state government, the

district court lacked diversity jurisdiction over the suit between it and CoMentis, a

citizen of another state. We therefore vacate the order below, and remand the case

to the district court with instructions to dismiss the complaint for lack of subject

matter jurisdiction.

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