Elam Construction, Inc. v. Regional Transportation District , 129 F.3d 1343 ( 1997 )

UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk
October 31, 1997
TO: ALL RECIPIENTS OF THE CAPTIONED OPINION
RE: 97-1312 Elam Construction v. RTD
Filed October 28,1997, Per Curiam
Please be advised of the following correction to the captioned decision:
The district court number on the cover of the published opinion is incorrect. The
correct number is 97-K-1909.
Please make the appropriate correction to your copy.
Very truly yours,
Patrick Fisher, Clerk
Beth Morris
Deputy Clerk
F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
OCT 28 1997
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
ELAM CONSTRUCTION, INC.,
a Colorado corporation; JOHN T.
DOOLITTLE & ASSOCIATES, INC., a
Connecticut corporation;
TRANSIT ‘97, INC., a Colorado No. 97-1312
corporation and issue committee,
Plaintiffs-Appellees,
v.
REGIONAL TRANSPORTATION
DISTRICT, a statutory special district and
political subdivision of the State of
Colorado,
Defendant-Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 97-K-1909)
Submitted on the briefs:
Edward T. Ramey and Stephanie Y. O’Malley, of Isaacson, Rosenbaum, Woods & Levy,
P.C., and Mark Silverstein, American Civil Liberties Union of Colorado, Denver,
Colorado, for Plaintiffs-Appellees.
Walter Gerash, of Gerash, Robinson & Miranda, P.C., and John S. Pfeiffer and Meghan
W. Martinez, of Fairfield and Woods, P.C., Denver, Colorado, for Defendant-Appellant.
Before EBEL, KELLY, and BRISCOE, Circuit Judges.
PER CURIAM.
Defendant-Appellant Regional Transportation District (RTD) appeals from the
district court’s order granting preliminary injunctive relief to plaintiffs. This court
previously denied RTD’s motion for stay pending appeal and ordered expedited briefing
on the merits. We now affirm the order of the district court.1
RTD is a statutory special district which provides public transportation services in
the Denver regional area. See generally Colo. Rev. Stat. §§ 32-9-101-164. RTD is
funded in part by sales taxes paid within its District. See id. § 119(2)(a). During the
1997 legislative session, the Colorado legislature authorized RTD to submit to the voters
a referendum increasing the current RTD sales tax rate from the current six-tenths of one
percent to a total of one percent, for the purpose of financing certain construction and
improvement projects commonly referred to as the “Guide the Ride” plan. See id. §
119.3. RTD submitted the referendum to the voters for approval in the ballot issue
election to be held on November 4, 1997.
1
After examining the expedited briefs filed, and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted
without oral argument.
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At its regular meeting on August 19, 1997, RTD’s board of directors adopted
Resolution No. 15, Series of 1997, entitled “‘Guide the Ride’ is Not for Sale.” Resolution
No. 15's stated purpose was to avoid “the influence of special interests and financially
concerned forces” on the referendum election. The resolution provided that in the event
the sales tax referendum was successful, RTD would not enter into any financial or
contractual relationship, until the year 2015, with any individual or entity which had
donated more than $100.00 to any campaign seeking to affect the outcome of the
referendum. Existing contracts were exempted, as were donations made on or prior to
August 1, 1997.
Plaintiffs Elam Construction, Inc. and John T. Doolittle & Associates, Inc., claim
that Resolution No. 15 has chilled the exercise of their First Amendment rights of
political speech and association by preventing them, at the cost of losing contracts with
RTD, from contributing funds in excess of $100.00 to a campaign in connection with the
referendum. Plaintiff Transit ‘97, Inc., a principal campaign advocate of the “Guide the
Ride” referendum, asserts that Resolution No. 15 has resulted in substantial constriction
and official muzzling of its ability to engage in political speech and association and to
communicate its political message concerning the referendum issue. Plaintiffs sued RTD
pursuant to 42 U.S.C. § 1983 and the Declaratory Judgment Act, 28 U.S.C. § 2201,
contending that Resolution No. 15 violated their First Amendment rights. The district
court, finding that Resolution No. 15 had created an impermissible chilling effect on
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plaintiffs’ First Amendment rights, preliminarily enjoined RTD from enforcing the
resolution. It also required RTD to provide notice of the injunction to parties previously
notified of the resolution. RTD appealed to this court from the district court’s order. See
28 U.S.C. § 1292(a).
In its opening brief in this court, RTD argued that it was an arm of the state of
Colorado, and therefore not a “person” subject to suit under § 1983. See, e.g., Will v.
Michigan Dep’t of State Police, 491 U.S. 58, 71 (1989). Because the Declaratory
Judgment Act does not itself confer jurisdiction on the federal courts, RTD’s argument, if
successful, could have meant that the district court lacked jurisdiction to entertain this
action. See, e.g., Cardtoons, L.C. v. Major League Baseball Players Ass’n, 95 F.3d 959,
964 (10th Cir. 1996). Moreover, although RTD did not argue that it possessed Eleventh
Amendment immunity, its contention that it was an “arm of the state” caused us to raise
sua sponte the issue of whether this action was barred by the Eleventh Amendment. See
Flores v. Long, 110 F.3d 730, 732-33 (10th Cir. 1997). After further jurisdictional
briefing, we now conclude that RTD is a political subdivision of the state of Colorado, is
not an arm of the state of Colorado, does not participate in Colorado’s Eleventh
Amendment immunity, and is a “person” within the meaning of § 1983. The district court
therefore had jurisdiction to entertain this action.
The Eleventh Amendment immunizes states from suits in law or equity, including
injunctive actions. See Cory v. White, 457 U.S. 85, 90-91 (1982). Under the arm-of-the-
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state doctrine, this immunity extends to entities created by state governments which
operate as their alter egos or instrumentalities. See Mascheroni v. Board of Regents, 28
F.3d 1554, 1559 (10th Cir. 1994). It does not, however, extend to political subdivisions
of the state, such as counties or municipalities. See Lake Country Estates, Inc. v. Tahoe
Regional Planning Agency, 440 U.S. 391, 401 (1979).
In determining whether a particular entity such as RTD is an “arm of the state” or a
“political subdivision” of Colorado, we examine such elements as “the state law
characterization of the entity, the guidance and control that the state exercises over the
entity, the degree of state funding the entity receives, and whether the state has
empowered the entity to issue bonds and levy taxes.” Mascheroni, 28 F.3d at 1559.
Historically, the most important consideration is whether a judgment against the entity
would be paid from the state treasury. See Hess v. Port Authority Trans-Hudson Corp.,
513 U.S. 30, 48 (1994). The state’s potential legal liability is of central importance. See
Regents of the University of Cal. v. Doe, 117 S. Ct. 900, 904 (1997). For our most
current and comprehensive discussion of the various Eleventh Amendment factors that
should be considered in deciding whether an entity is an “arm of the state” or a “political
subdivision of the state,” see Duke v. Grady Municipal Schools, ___F.3d___, No. 96-
2135 (10th Cir. Oct. 20, 1997) (concluding that a local school district in New Mexico was
not an “arm of the state” of New Mexico, and therefore not entitled to Eleventh
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Amendment immunity, and overturning our previous decision of Martinez v. Board of
Education, 748 F.2d 1393 (10th Cir. 1984) pursuant to unanimous en banc authority).
The Colorado Statutes provide that RTD shall have “the duties, privileges,
immunities, rights, liabilities and disabilities of a public body politic and corporate,” and
that it “shall be a political subdivision of the state.” Colo. Rev. Stat. § 32-9-119(1)(a).
RTD’s statutory powers include the ability to “sue and be sued,” id. § 32-9-119(1)(d), to “
borrow money and to issue district securities evidencing same,” id. § 32-9-119(1)(f), to
“levy and cause to be collected taxes on all taxable property within the district,” id. § 32-
9-119(1)(i), to “fix and from time to time increase or decrease the revenues for services
and facilities provided by the district,” id. § 32-9-119(1)(m), and to “levy uniformly
throughout the district a sales tax” creating “revenue to finance the operations of the
district, to defray the cost of construction of capital improvements and acquisition of
capital equipment, and to pay the interest and principal on securities of the district,” id.
§ 32-9-119(2)(a). RTD is also granted “all rights and powers necessary or incidental to
implied from the specific powers granted in this article,” id. § 32-9-119(1)(x).
The state of Colorado exercises very little oversight over the day-to-day operations
of RTD. RTD is required to make recommendations to the state highway legislative
review committee, see id. § 32-9-119.7(5), (7), and to present a copy of its annual budget
to the transportation legislative review committee for review of statutory budgeting
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criteria, see id. § 32-9-119.7(4). The state auditor may, upon affirmative vote of the
legislature, be required to audit RTD. See id. § 32-9-115(3).
By statute, RTD is required to pay all judgments recoverable against it from its
own reserves, appropriated or unappropriated funds, or to levy its own tax for that
purpose. See id. § 24-10-113. Bonds issued by RTD “shall not in any way create or
constitute any indebtedness, liability, or obligation of the state or of any political
subdivision thereof, except the district.” Id. § 32-9-145.
Applying the factors outlined above, we conclude (1) that the state of Colorado has
explicitly characterized RTD as a “body . . . corporate” and a “political subdivision” of
the state; (2) that the guidance and control exercised by the state over RTD’s operations
are minimal in comparison with the operational powers conferred upon the district by
statute; (3) that RTD has been vested with nearly total responsibility for its own funding;
and (4) that the public fisc of the state of Colorado is not responsible for judgments
entered against RTD. RTD, then, is a “political subdivision” of the state of Colorado, and
not an “arm of the state.” As such it does not participate in Colorado’s Eleventh
Amendment immunity.
RTD’s argument that it is not a “person” under § 1983 also fails. In Monell v.
Department of Social Services, 436 U.S. 658, 690 n.54 (1978), the Supreme Court held
that “local government units which are not considered part of the State for Eleventh
Amendment purposes” are “persons” within the meaning of § 1983. As RTD indicates,
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the Supreme Court later held that states and their officials acting in their official
capacities are not “persons” for § 1983 purposes. See Will, 491 U.S. at 71. The Supreme
Court specifically stated, however, that this holding did not affect its previous decision in
Monell. See id. at 70 (“Conversely, our holding here does not cast any doubt on Monell,
and applies only to States or governmental entities that are considered ‘arms of the state’
for Eleventh Amendment purposes.”). RTD, which is not an “arm of the state,” but is
rather a local governmental entity, is a “person” for purposes of § 1983.
Having concluded that the district court had jurisdiction over this action, we turn to
the merits. We review the district court’s order granting a preliminary injunction for
abuse of discretion. See Walmer v. United States Dep’t of Defense, 52 F.3d 851, 854
(10th Cir.), cert. denied, 116 S. Ct. 474 (1995). In order to establish their entitlement to
preliminary injunctive relief, plaintiffs must show that they will suffer irreparable injury
unless the injunction issues; that the threatened injury to them outweighs the damage the
injunction may cause to the opposing party; that the injunction, if issued, would not be
adverse to the public interest; and that there is a substantial likelihood that plaintiffs will
succeed on the merits. See id. We consider plaintiffs’ likelihood of success on the merits
first, as that element requires the most detailed analysis.
In Citizens Against Rent Control/Coalition for Fair Housing v. City of Berkeley,
454 U.S. 290 (1981), the Supreme Court considered the constitutionality of a municipal
ordinance placing a dollar limitation on contributions to committees formed to support or
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oppose ballot referenda. The California Supreme Court had found the ordinance
constitutional “because it ensured that special interest groups could not ‘corrupt’ the
initiative process by spending large amounts to support or oppose a ballot measure.” Id.
at 293. The Supreme Court reversed. It drew a distinction between limitations on
contributions to candidates for political office and their committees, which are permitted
in order to avoid corruption, see Buckley v. Valeo, 424 U.S. 1 (1976), and limitations on
contributions to committees seeking to support or oppose a ballot measure. In contrast
with the restrictions permitted for contributions to candidates, the Court held, “there is no
significant state or public interest in curtailing debate and discussion of a ballot measure.”
Citizens Against Rent Control/Coalition for Fair Housing, 454 U.S. at 299; see also First
Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 790 (1978) (“Referenda are held on
issues, not candidates for public office. The risk of corruption perceived in cases
involving candidate elections . . . simply is not present in a popular vote on a public
issue.”).
RTD concedes the force of these precedents, but asserts that they are inapplicable
here. This referendum election, RTD argues, is more like a “candidate” election than a
typical “ballot issue” election. RTD contends that after the election, its board will
function like a successful political candidate, distributing revenue in response to requests
for proposals and bids, and contracts for projects purchased with the additional sales tax
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revenues. Therefore, it argues, this election presents a very real danger of corruption, or
perceived corruption, not ordinarily present in a referendum election.
We cannot accept RTD’s contention that monies spent advocating or opposing the
increased sales tax is the equivalent of a “contribution” to the RTD board. The effect of
contributions here differs radically from that of the typical contribution designed to
further the election of a political candidate. At its most basic, the outcome of the
referendum will not directly affect the composition of the RTD board, or the
compensation of its members, which is fixed by statute. See Colo. Rev. Stat. § 32-9-117.
Moreover, even assuming that the RTD board can be likened to a “candidate” in the
referendum election, there has been no showing that contributions to organizations
advocating passage of the referendum are “coordinated” in any way with RTD’s own
“campaign” efforts on behalf of the referendum. Rather, such contributions are better
analogized to “independent” expenditures on behalf of a candidate, which cannot be
limited without running afoul of basic First Amendment protections. See Buckley,
424 U.S. at 46-51; see also Colorado Republican Fed. Campaign Comm. v. FEC, 116 S.
Ct. 2309, 2315-17 (1996) (plurality opinion).
We conclude that plaintiffs have amply shown that they are likely to succeed on
the merits of their challenge to Resolution No. 15. We also agree with the district court
that allowing Resolution No. 15 to remain in effect will result in a chilling effect on
plaintiffs’ First Amendment rights, constituting an irreparable harm to their interests.
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RTD’s asserted interest in preventing corruption, in light of its use of an impermissible
restriction on speech, does not outweigh the harm asserted by plaintiffs. The public
interest also favors plaintiffs’ assertion of their First Amendment rights. For the
foregoing reasons, the district court did not abuse its discretion, either in enjoining
enforcement of Resolution No. 15, or in requiring RTD to provide notice of the injunction
to persons whose First Amendment rights may have been chilled by previous notice of its
provisions.2
The order of the United States District Court for the District of Colorado granting
a preliminary injunction to plaintiffs, entered October 16, 1997, nunc pro tunc, September
5, 1997, is AFFIRMED.
2
RTD has presented additional materials to this court which it did not present to
the district court. RTD argues that the district court should have granted its requested
continuance of the preliminary injunction hearing so that it could present these materials and
other, unspecified evidence or argument against the injunction. We do not consider materials
submitted to us for the first time on appeal. See John Hancock Mutual Life Ins. Co. v. Weisman,
27 F.3d 500, 506 (10th Cir. 1994) (summary judgment case). RTD fails to show that the district
court abused its discretion by denying the requested continuance.
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