USOR Site PRP Group v. A & M Contractors, Inc., et ( 2018 )

Case: 17-20361 Document: 00514582065 Page: 1 Date Filed: 08/01/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 1, 2018
No. 17-20361
Lyle W. Cayce
Clerk
UNITED STATES OIL RECOVERY SITE POTENTIALLY RESPONSIBLE
PARTIES GROUP,
Plaintiff - Appellee
v.
RAILROAD COMMISSION OF TEXAS; STEPHEN F. AUSTIN STATE
UNIVERSITY; TEXAS A&M UNIVERSITY; TEXAS DEPARTMENT OF
CRIMINAL JUSTICE; TEXAS DEPARTMENT OF TRANSPORTATION;
TEXAS GENERAL LAND OFFICE; TEXAS SOUTHERN UNIVERSITY;
TEXAS STATE UNIVERSITY SYSTEM; UNIVERSITY OF HOUSTON; THE
UNIVERSITY OF TEXAS SYSTEM,
Defendants - Appellants
Appeal from the United States District Court
for the Southern District of Texas
Before CLEMENT, HIGGINSON, and HO, Circuit Judges.
JAMES C. HO, Circuit Judge:
When the states ratified the Constitution, they did not abrogate their
sovereignty, but instead created a federal government of limited, enumerated
powers. As the Supreme Court has observed, “the founding document
‘specifically recognizes the States as sovereign entities.’ ” Alden v. Maine, 527
U.S. 706, 713 (1999) (quoting Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 71
n.15 (1996)). “Any doubt regarding the constitutional role of the States as
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sovereign entities is removed by the Tenth Amendment”—reserving those
powers not delegated to the federal government to the states in their sovereign
capacity, or to the people. Id. The Eleventh Amendment similarly “confirm[s]
. . . sovereign immunity as a constitutional principle.” Id. at 728–29. So our
Constitution preserves the preexisting immunity of the states from suit. See
Hans v. Louisiana, 134 U.S. 1, 16 (1890) (“The suability of a State, without its
consent, was a thing unknown to the law. This has been so often laid down
and acknowledged by courts and jurists that it is hardly necessary to be
formally asserted.”).
Because the district court failed to heed these fundamental principles,
we reverse and remand.
I.
Plaintiff-Appellee United States Oil Recovery Potentially Responsible
Parties Group (“PRP Group”) is an association of over 100 entities cooperating
with the Environmental Protection Agency to pay the costs associated with
cleanup of a superfund site in Pasadena, Texas. As part of this action, PRP
Group sued nearly 1,200 parties they believe should be responsible for part of
the environmental remediation costs—including appellants here: the Railroad
Commission of Texas, the Texas Department of Criminal Justice, the Texas
Department of Transportation, the Texas General Land Office, Stephen F.
Austin State University, Texas A&M University, Texas Southern University,
the University of Houston, the Texas State University System, and the
University of Texas System. PRP Group asserts claims under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (CERCLA), 42 U.S.C. § 9601 et seq., and its state law counterpart, the
Texas Solid Waste Disposal Act (TSWDA), Tex. Health & Safety Code
§ 361.001 et seq.
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The state agency and university defendants filed a motion to dismiss in
the district court under Federal Rule of Civil Procedure 12(b)(1), contending
that they were immune from suit in federal court because of state sovereign
immunity. The district court erroneously denied the 12(b)(1) motion under
Rule 12(b)(6) without analysis. It subsequently corrected its order to deny the
motion under Rule 12(b)(1)—but did so again without analysis. This appeal
followed.
II.
“Whether state defendants are entitled to sovereign immunity is a
question of law, reviewed de novo on appeal.” Moore v. La. Bd. of Elementary
& Secondary Educ., 743 F.3d 959, 963 (5th Cir. 2014). While we review legal
conclusions de novo, the district court’s “factual findings are reviewed for clear
error.” Kuwait Pearls Catering Co. v. Kellogg Brown & Root Servs., Inc., 853
F.3d 173, 178 (5th Cir. 2017). “Though there is no final judgment in this case,
the collateral order doctrine provides jurisdiction to hear an interlocutory
appeal of an order denying a claim of Eleventh Amendment immunity.” Bryant
v. Tex. Dep’t of Aging & Disability Servs., 781 F.3d 764, 768 (5th Cir. 2015).
State sovereign immunity “bars an individual from suing a state in
federal court unless the state consents to suit or Congress has clearly and
validly abrogated the state’s sovereign immunity.” Perez v. Region 20 Educ.
Serv. Ctr., 307 F.3d 318, 326 (5th Cir. 2002). While state sovereign immunity
is sometimes described as “Eleventh Amendment immunity,” “the sovereign
immunity of the States neither derives from, nor is limited by, the terms of the
Eleventh Amendment.” Alden, 527 U.S. at 713. “[A]s the Constitution’s
structure, its history, and the authoritative interpretations by [the Supreme]
Court make clear, the States’ immunity from suit is a fundamental aspect of
the sovereignty which the States enjoyed before the ratification of the
Constitution, and which they retain today . . . except as altered by the plan of
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the Convention or certain constitutional Amendments.” Id. State sovereign
immunity protects not only states from suit in federal court, but also “arms of
the state.” Richardson v. S. Univ., 118 F.3d 450, 452–54 (5th Cir. 1997) (state
sovereign immunity “bars suits in federal court by citizens of a state against
their own state or a state agency or department”).
III.
As the parties agree, CERCLA does not abrogate state sovereign
immunity. See Seminole Tribe, 517 U.S. at 72–73 (legislation promulgated
under Article I of the Constitution, like CERCLA, “cannot be used to
circumvent the constitutional limitations placed upon federal jurisdiction” by
state sovereign immunity). Thus, whether the state agencies and universities
are entitled to sovereign immunity turns in large part on whether they are
arms of the state.
We have previously held that many of the state agencies at issue in this
appeal are entitled to sovereign immunity as arms of the state. See, e.g.,
Neinast v. Texas, 217 F.3d 275, 279–82 (5th Cir. 2000) (state sovereign
immunity bars suits against the Texas Department of Transportation); Aguilar
v. Tex. Dep’t of Criminal Justice, 160 F.3d 1052, 1054 (5th Cir. 1998) (state
sovereign immunity bars suits against Texas Department of Criminal Justice);
John G. & Marie Stella Kenedy Mem’l Found. v. Mauro, 21 F.3d 667, 671–73
(5th Cir. 1994) (commissioner of Texas General Land Office sued for retroactive
relief in his official capacity entitled to sovereign immunity).
So too for the universities. See, e.g., United Carolina Bank v. Bd. of
Regents of Stephen F. Austin State Univ., 665 F.2d 553, 556–61 (5th Cir. 1982)
(Stephen F. Austin State University entitled to sovereign immunity); Gay
Student Servs. v. Tex. A&M Univ., 737 F.2d 1317, 1333–34 (5th Cir. 1984)
(state sovereign immunity bars damages award against Texas A&M
University). See also Lewis v. Midwestern State Univ., 837 F.2d 197, 198–99
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(5th Cir. 1988) (Midwestern State University entitled to sovereign immunity);
Wallace v. Tex. Tech Univ., 80 F.3d 1042, 1047 n.3 (5th Cir. 1996) (“Texas Tech,
as a state institution, clearly enjoys Eleventh Amendment immunity.”); United
States v. Tex. Tech Univ., 171 F.3d 279, 289 n.14 (5th Cir. 1999) (same). We
have likewise held that state sovereign immunity applies to other universities
implicated in this appeal in unpublished decisions, including the University of
Houston, the University of Texas System, Texas State University, and Texas
Southern University. Harrell v. Univ. of Hous. Police Dep’t, 44 F.3d 1004 (5th
Cir. 1995); Olivier v. Univ. of Tex. Sys., 988 F.2d 1209 (5th Cir. 1993); Bach v.
Tex. State Univ., 614 F. App’x 789, 790–91 (5th Cir. 2015); U.S. ex rel. Mittal
v. Tex. S. Univ., 205 F.3d 1337 (5th Cir. 1999). Under our precedent, the
universities and agencies at issue here are arms of the state.
Even if this question were not answered by our precedent, we would have
little trouble concluding that the agencies and universities at issue here are
arms of the state under the test set out in Clark v. Tarrant County, 798 F.2d
736, 744–45 (5th Cir. 1986). See also Williams v. Dall. Area Rapid Transit,
242 F.3d 315, 318 (5th Cir. 2001). Each of the agencies at issue is a state
agency under state law. Tex. Gov’t Code § 325.002(1) (defining “State agency”);
Tex. Nat. Res. Code § 81.01001(a) (Railroad Commission a state agency); Tex.
Gov’t Code § 492.012 (Texas Department of Criminal Justice a state agency);
Tex. Transp. Code § 201.204 (Texas Department of Transportation a state
agency); Tex. Const. art. IV, § 1; id. art. XIV, § 1 (Texas General Land Office is
State’s sole agent for registering land titles). Each is included in the state
budget and is substantially funded by the state treasury’s general revenue,
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lacks local autonomy, has statewide regulatory power, and is subject to
oversight by state officials. The same is true of the universities. 1
PRP Group seeks to avoid this straightforward conclusion with two
arguments unsupported by our precedent. First, PRP Group contends that
sovereign immunity does not protect an arm of the state when it engages in
“proprietary functions,” citing Arroyo Otero v. Hernandez Purcell, 804 F. Supp.
418 (D.P.R. 1992). We have never held that an arm of the state is able to assert
sovereign immunity as to some claims but not others, and decline to do so here.
See Clark, 798 F.2d at 744 (“we ‘must examine the particular entity in question
and its powers and characteristics as created by state law’ ”). See also Maliandi
v. Montclair State Univ., 845 F.3d 77, 92–93 (3d Cir. 2016) (state sovereign
immunity “contemplate[s] judicial determinations of Eleventh Amendment
status for entities, not for claims”); Lujan v. Regents of Univ. of Cal., 69 F.3d
1511, 1522 (10th Cir. 1995) (rejecting argument “that sovereign immunity does
not apply . . . because the Regents acted tortiously and in a proprietary
capacity in a commercial endeavor outside the sovereign territory of
California”).
Second, PRP Group contends that the Texas Commission on
Environmental Quality has waived sovereign immunity by participating in
CERCLA cleanup with the EPA at the Pasadena superfund site. But an arm
of the state waives state sovereign immunity only if it “voluntarily invokes
federal court jurisdiction, or . . . makes a ‘clear declaration’ that it intends to
1 PRP Group seeks to take the agencies and universities to task for failing to cite Clark
in the district court, and contends that failure means they cannot argue that Clark is satisfied
here. Not so. Before the district court, PRP Group expressly declined to contest that the
agencies and universities here were arms of the state. Rather, PRP Group “assumed” they
were arms of the state. And the agencies and universities asserted their state sovereign
immunity defense in the district court from the outset. The agencies and universities have
not waived this argument, nor are they precluded from citing state statutes and cases to
support it.
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submit itself to federal court jurisdiction.” Meyers ex rel. Benzing v. Texas, 410
F.3d 236, 241 (5th Cir. 2005) (quoting Coll. Sav. Bank v. Fla. Prepaid
Postsecondary Educ. Expense Bd., 527 U.S. 666, 675–76 (1999)). A clear
declaration that an arm of the state intends to submit itself to federal
jurisdiction must “be unequivocally expressed.” Pennhurst State Sch. & Hosp.
v. Halderman, 465 U.S. 89, 99 (1984). “Such authority cannot be implied from
the circumstances.” Magnolia Venture Capital Corp. v. Prudential Sec., Inc.,
151 F.3d 439, 445 (5th Cir. 1998). No clear declaration exists here, nor does
PRP Group seriously contend one exists. 2
In sum, we conclude that the agencies and universities are entitled to
state sovereign immunity. PRP Group’s arguments to the contrary are
unavailing. The district court erred when it concluded that state sovereign
immunity did not bar PRP Group’s CERCLA claims.
IV.
We likewise reverse as to PRP Group’s state law claims. PRP Group
contends that, because the TSWDA waives Texas’s sovereign immunity in
Texas state court, the federal district court could properly exercise
supplemental jurisdiction over these claims. Yet a district court may only
exercise supplemental jurisdiction over pendent state law claims under 28
U.S.C. § 1367 where it has original jurisdiction over the federal law claims at
issue. Arena v. Graybar Elec. Co., 669 F.3d 214, 222 (5th Cir. 2012) (“Without
original jurisdiction on the federal claim, the court cannot assert jurisdiction
over state-law claims.”); Scarfo v. Ginsberg, 175 F.3d 957, 962 (11th Cir. 1999)
2 PRP Group’s citation of Bergmann v. Michigan State Transportation Commission,
665 F.3d 681 (6th Cir. 2011), is inapposite. As the state points out, the Sixth Circuit declined
to grant state sovereign immunity there only after the agency abandoned its immunity
argument in the initial proceedings, agreed to a consent decree in federal court, and abided
by that decree for over ten years until a change in law gave it grounds to mount a challenge.
Id. at 682–83.
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(“The federal courts of appeals . . . have uniformly held that once the district
court determines that subject matter jurisdiction over a plaintiff’s federal
claims does not exist, courts must dismiss a plaintiff’s state law claims.”);
Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1188 (2d Cir. 1996)
(“[S]ince a court must have original jurisdiction in order to exercise
supplemental jurisdiction, a dismissal pursuant to Rule 12(b)(1) precludes a
district court from exercising supplemental jurisdiction over related state
claims.”).
Because the district court erred when it concluded that state sovereign
immunity did not bar PRP Group’s claims against the agencies and
universities, the district court lacked jurisdiction in the first instance.
Therefore, it cannot assert supplemental jurisdiction over PRP Group’s state
law claims.
V.
The district court’s order denying the agencies and universities’ Rule
12(b)(1) motion to dismiss is reversed. The case is remanded with instructions
for the district court to dismiss the agencies and universities from the case.
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