New Albany Main Street Props. v. Watco Co., LLC ( 2023 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 23a0158p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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NEW ALBANY MAIN STREET PROPERTIES, dba Port of
│
Louisville,
│
Plaintiff-Appellee, │
> No. 22-5351
│
v. │
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WATCO COMPANIES, LLC, │
Defendant, │
│
│
MARIA BOUVETTE, │
Defendant-Appellant. │
┘
Appeal from the United States District Court
for the Western District of Kentucky at Louisville.
No. 3:20-cv-00343—Rebecca Grady Jennings, District Judge.
Argued: June 14, 2023
Decided and Filed: July 27, 2023
Before: SUTTON, Chief Judge; LARSEN and MURPHY, Circuit Judges.
_________________
COUNSEL
ARGUED: Amy D. Cubbage, TACHAU MEEK PLC, Louisville, Kentucky, for Appellant. J.
Kent Wicker, WICKER / BRAMMELL, Louisville, Kentucky, for Appellee. ON BRIEF:
Donald L. Cox, LYNCH, COX, GILMAN & GOODMAN, PSC, Louisville, Kentucky, for
Appellant. J. Kent Wicker, William H. Brammell, Jr., DRESSMAN BENZINGER LA VELLE
PSC, Louisville, Kentucky, for Appellee.
No. 22-5351 New Albany Main Street Props. v. Watco Companies, LLC, et al. Page 2
_________________
OPINION
_________________
MURPHY, Circuit Judge. It is well known that the U.S. Constitution incorporates the
“sovereign immunity” from private lawsuits that the states possessed before the founding. This
federal constitutional immunity covers claims filed against the states in federal court, see
Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 57–73 (1996), claims filed against them in their
own courts under federal law, see Alden v. Maine, 527 U.S. 706, 730–54 (1999), and claims filed
against them in another state’s courts, see Franchise Tax Bd. of Cal. v. Hyatt, 139 S. Ct. 1485,
1493–99 (2019).
But a state’s sovereign immunity does not end with the federal Constitution. When a
plaintiff pursues state claims against state defendants, these defendants may also invoke the
state’s own common-law or constitutional rules of sovereign immunity. In this case, we must
consider Kentucky’s sovereign-immunity law, which grants “pure” immunity to some state
actors and “governmental” immunity to others. To help develop ports, Kentucky gives its
localities the power to create riverport authorities. The plaintiff in this case brought state claims
against a riverport authority’s executive director. The district court held that Kentucky would
not grant sovereign immunity to this director when sued in her official capacity. We reverse
because she is entitled to Kentucky’s “governmental” form of sovereign immunity.
I
A
The term “port” comes from the Latin word “porta,” which means “gate or gateway.”
Marvin L. Fair, Port Authorities in the United States, 26 L. & Contemp. Probs. 703, 703 (1961).
Ports thus have long been described as the “gates of the realm” or the “gateways to commerce”
because they allow ships to load and unload large amounts of foreign and domestic goods
intended for sale at their final destinations. Id.; 1 William Blackstone, Commentaries on the
Laws of England 264 (1765). Although public port authorities have long existed outside the
United States, private parties (especially railroads) constructed most port facilities in this country
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during the 1800s. See Fair, supra, at 704–05; Hermann P. Bretsch, Institutional Aspects of Port
Development in Mid-America, 19 Transp. Rsch. F. 481, 483 (1978); cf. Comm’r of Internal
Revenue v. Ten Eyck, 76 F.2d 515, 518 (2d Cir. 1935). Only a handful of public port authorities
existed at that time, including those managing the San Francisco and New York docks. See Fair,
supra, at 705.
In America, the “modern port administration movement” instead developed in the early
1900s out of a concern that private interests had not sufficiently invested in America’s public
ports. Id. at 705–06; see, e.g., Visina v. Freeman, 89 N.W.2d 635, 643–44, 646–47 (Minn.
1958). Reformers urged governments to assert ownership over privately constructed port
facilities and to build new public terminals. See Marc J. Hershman & Robin Scott Bittner, Ports
Over Time: Historical Perspectives on the Public Port, in Urban Ports and Harbor Management:
Responding to Change along U.S. Waterfronts 39–40 (Marc J. Hershman ed., 1988). After
World War I, Congress also expressed its “policy” to treat “water terminals” as “essential” and to
incentivize cities with navigable waterways to make available “at least one public terminal” that
all could use “on equal terms.” Rivers and Harbors Appropriation Act of 1919, Pub. L. No. 65-
323, 40 Stat. 1275, 1286 (codified at 33 U.S.C. § 551). Over the next few decades, many states
began to authorize their localities to create public seaport and riverport authorities. See Bretsch,
supra, at 483. By the end of the 1900s, public entities owned most general cargo port facilities,
and about half of all “deep-draft marine berthing facilities.” Hershman & Bittner, supra, at 40.
Kentucky entered this field in 1964. That year, its legislature passed the Riverport
Authority Act to facilitate shipping and transportation along Kentucky’s rivers. 1964 Ky. Acts
194, 194–200 (codified as amended at Ky. Rev. Stat. §§ 65.510 to 65.650). This Act permits a
city, a county, or both to create a “riverport authority” with the permission of Kentucky’s
Transportation Cabinet, a state-level agency. Ky. Rev. Stat. § 65.520(1); see id. § 65.510(3).
The Act describes a riverport authority as a “body politic and corporate with the usual corporate
attributes,” including the ability to “sue and be sued,” to enter contracts, to borrow money, and to
acquire property. Id. §§ 65.520(2), 65.530(4), 65.590. A local government that creates a
riverport authority gets to choose its “members” (who serve a term of years) and its “executive
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director” (who serves at the local government’s pleasure). Id. §§ 65.540(1), 65.570(4). This
government also may use tax revenue to help the authority operate. Id. § 65.580.
At bottom, a riverport authority exists “to establish, maintain, operate, and expand
necessary and proper riverport and river navigation facilities” and to develop the industrial
property around these port facilities. Id. § 65.530(1). Once it constructs public port facilities, a
riverport authority may “fix reasonable rates” for their use. Id. § 65.530(2). It may also contract
with private parties to operate the facilities and with “commercial vendors” and
“concessionaires” to provide services on the property. Id. §§ 65.530(3), 65.610(1). The
authority must first reinvest any “surplus revenue” that these activities generate into maintaining
the facilities. Id. § 65.610(2).
The Act makes clear that riverport authorities exist to perform a “public function” for a
“public purpose” and “as a matter of public necessity[.]” Id. § 65.630. So it gives them several
traditional government attributes. A riverport authority may acquire property through eminent
domain if it obtains the consent of the government with jurisdiction over the property. Id.
§ 65.530(4)–(5). Like other government actors, a riverport authority may also issue “revenue
bonds” to help pay for the large up-front costs of obtaining property. Id. § 65.600. And a
riverport authority need not pay taxes on its property or its revenue. Id. § 65.620.
B
The Ohio River runs hundreds of miles from its source in western Pennsylvania to its
mouth on the Mississippi River. The Ohio forms Kentucky’s northern border. Each year,
companies ship substantial cargo on the river. In 1965, the City of Louisville and Jefferson
County sought to promote this commerce by jointly establishing the Louisville and Jefferson
County Riverport Authority (which we will call the “Authority” for short). Appellant’s Br. 7
n.3. When these two governments later merged into the Louisville and Jefferson County
Metropolitan Government (or “Louisville Metro”), it became the Authority’s “adoptive parent.”
New Albany Main St. Props. v. Watco Cos., 2022 WL 901504, at *3 (E.D. Ky. Mar. 28, 2022);
see Ky. Rev. Stat. § 65.550(1). The Authority constructed and owns a 300-acre port facility in
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Louisville at which shippers can load and unload much of the cargo hauled along the Ohio River.
Compl., R.1, PageID 2–3.
In 2009, following a public bidding process, the Authority leased its port facility to New
Albany Main Street Properties, which does business as “Port of Louisville.” Id., PageID 3. In
August 2016, the parties modified their lease agreement. Id., PageID 4. This amended lease had
the potential to last for nearly 20 years until 2035. Id. Through 2018, Port of Louisville alleges
that the Authority never complained about its performance operating the port facility. Id.
In late 2018, however, Maria Bouvette, the Authority’s executive director at the time,
allegedly started secret negotiations to replace Port of Louisville with a competitor, Watco
Companies, LLC. Id. By February 2019, the Authority had entered into a “Memorandum of
Understanding” with Watco to operate the facility. Id.
But these parties faced a problem: the Authority’s lease agreement with Port of Louisville
remained in effect. According to Port of Louisville, Director Bouvette and Watco needed to find
a pretextual reason to terminate this agreement. Id., PageID 5. Coordinating with Watco, the
Authority hired outside advisors to inspect the port facility. Id. These allegedly biased advisors
found the facility “mismanaged, unsafe, and in disrepair.” Id.
In mid-2019, the Authority formally asserted that Port of Louisville had breached the
lease agreement. Id., PageID 6. It filed several suits against Port of Louisville to remove it from
the port facility. Id. Around the same time, Port of Louisville alleges, the Authority ran a public
bidding process to find a replacement. Id., PageID 7. The Authority awarded a lease to Watco
contingent on Port of Louisville’s successful removal from the site. Id.
One of the Authority’s suits against Port of Louisville eventually made its way to
arbitration. Id. The arbitrator ruled for Port of Louisville, upending the Authority’s plans. Id.
He held that Port of Louisville had an enforceable agreement with the Authority and that it had
not materially breached this agreement. Id. The Kentucky courts rejected the Authority’s
challenges to this arbitration decision. See Louisville & Jefferson Cnty. Riverport Auth. v. New
Albany Main St. Props., LLC, 2022 WL 496003, at *6 (Ky. Ct. App. Feb. 18, 2022).
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The arbitrator continues to oversee Port of Louisville’s counterclaims against the Authority.
Compl., R.1, PageID 7.
This case, though, does not involve Port of Louisville’s claims against the Authority.
Rather, Port of Louisville separately sued Watco and Director Bouvette. The company alleged
that these defendants had harmed its relationships with its customers when they were pressuring
it to vacate the port facility. Id., PageID 8–9. As one example, Port of Louisville has a contract
to regularly load a customer’s steel scrap at the port facility and to ship it upstream. Id., PageID
8. Watco and Bouvette allegedly renegotiated this contract without Port of Louisville’s consent,
in violation of the lease agreement. Id. As another example, Watco and Bouvette attempted to
get Port of Louisville’s customers to shift their business to Watco by convincing them that Port
of Louisville had breached the lease agreement and would soon be evicted. Id., PageID 9.
Port of Louisville sued Watco and Bouvette in federal court on the basis of diversity
jurisdiction under 28 U.S.C. § 1332(a). Id., PageID 2. The company alleged state claims of
tortious interference with contractual and business relationships, civil conspiracy, and
defamation. Id., PageID 10–13. It sought both damages and an injunction. Id., PageID 13–14.
Bouvette moved to dismiss Port of Louisville’s complaint. She argued that she was
immune from Port of Louisville’s state claims under three state-law doctrines: sovereign
immunity, governmental immunity, and immunity under Kentucky’s Claims Against Local
Governments Act. See New Albany, 2022 WL 901504, at *2. The district court disagreed. It
held that the Authority (and so Bouvette) could not invoke Kentucky’s sovereign immunity
because of its status as a corporation, not a government. Id. The court next held that the
Authority (and so Bouvette) could not seek governmental immunity because it performed a
proprietary (not a governmental) function. Id. at *3–4. The court lastly read the Claims Against
Local Governments Act merely to codify the preexisting immunity principles that did not apply
to Bouvette. Id. at *4.
II. Appellate Jurisdiction
Bouvette immediately appealed the decision denying her claims to immunity. We
typically have appellate jurisdiction only over the “final decisions” of district courts. 28 U.S.C.
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§ 1291. This language ostensibly poses a problem for Bouvette because Port of Louisville’s suit
remains pending in the district court. The Supreme Court, however, has flexibly interpreted the
word “final” in § 1291. See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S.
139, 142–43 (1993). Under the “collateral order doctrine,” a party may appeal an interlocutory
order that conclusively resolves an issue if the issue is “collateral to” the main litigation and if
the issue would be effectively unreviewable at the end of the case. Id. at 143–44 (citation
omitted). The Court has long treated the denial of a government actor’s request for federal
sovereign immunity or qualified immunity as falling with this collateral-order doctrine. See id.
at 147; Mitchell v. Forsyth, 472 U.S. 511, 530 (1985). It has reasoned that these immunities
provide a right not to participate in the suit at all, not just a defense against paying a money
judgment. See Mitchell, 472 U.S. at 526–27. Practically speaking, then, defendants would
forfeit the immunities if the defendants could not appeal a denial until after they litigated a case
to completion. See id.Here, by contrast, Bouvette immediately appealed a decision denying her claims to state-
law immunities. Whether these immunities satisfy the Court’s collateral-order doctrine raises a
federal question about the meaning of § 1291. But that question turns on the nature of the
immunities—a predicate state-law question. See 15A Charles A. Wright et al., Federal Practice
and Procedure § 3914.10.9, at 878 (3d ed. 2022). Some immunities provide a broad right to
avoid litigation altogether; others provide a narrow defense to monetary liability. The collateral-
order doctrine permits the immediate appeal of defenses that fall within the first (but not the
second) of these camps. See Town of Smyrna v. Muni. Gas. Auth. of Ga., 723 F.3d 640, 645 (6th
Cir. 2013); see also Browning v. Edmonson County, 18 F.4th 516, 529 (6th Cir. 2021).
How does this framework apply to the immunities that Bouvette seeks? Kentucky law
leaves no doubt that sovereign and governmental immunity grant a right to state actors not to
participate in a suit at all. See Maggard v. Kinney, 576 S.W.3d 559, 566 & n.8 (Ky. 2019)
(collecting cases); see also, e.g., Breathitt Cnty. Bd. of Educ. v. Prater, 292 S.W.3d 883, 886–87
(Ky. 2009). The Supreme Court’s collateral-order doctrine thus gives us appellate jurisdiction
over the district court’s denial of these immunities. See Mitchell, 472 U.S. at 526–27.
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Bouvette’s defense under the Claims Against Local Governments Act is another matter.
Some cases have assumed that this Act also grants the kind of immunity that permits an early
appeal. See Queen v. City of Bowling Green, 956 F.3d 893, 899 (6th Cir. 2020). But others have
read the Act—in particular, its text noting that a government shall not be “liable” except as the
Act specifies, Ky. Rev. Stat. § 65.2003—to grant only a defense against a damages claim.
S. Woodford Water Dist. v. Byrd, 352 S.W.3d 340, 343 (Ky. Ct. App. 2011), overruled on other
grounds by N. Ky. Water Dist. v. Carucci, 600 S.W.3d 240, 241 (Ky. 2019); see also N. Ky. Area
Plan. Comm’n v. Jefferies, 2016 WL 4490583, at *4 (Ky. Ct. App. Aug. 26, 2016). Under this
view, the Act may not trigger the collateral-order doctrine. But we need not reconcile these
cases here. All agree that we have jurisdiction over the district court’s denial of Bouvette’s
requests for sovereign and governmental immunity. Reviewing the denial of those immunities
de novo at this stage, see Jackson v. City of Cleveland, 64 F.4th 736, 743 (6th Cir. 2023), we
conclude that she is entitled to governmental immunity. That holding eliminates any need to
decide whether she can separately appeal the denial of her request for immunity under the
Claims Against Local Governments Act.
III. Kentucky’s Doctrine of Sovereign Immunity
A. Background
Before the founding, it was a universally recognized attribute of a state’s “sovereignty”
that the state was not “amenable to the suit of an individual without its consent.” The Federalist
No. 81, at 486 (James Madison) (Clinton Rossiter ed., 1961). In recent decades, the Supreme
Court has repeatedly held that our founders turned this common-law doctrine into a federal
constitutional command when they enacted the U.S. Constitution. See Hyatt, 139 S. Ct. at 1493–
96. The people quickly confirmed this reading too by amending the Constitution to overrule an
early decision that had refused to grant immunity to a state. See U.S. Const. amend. XI
(overruling Chisholm v. Georgia, 2 U.S. 419 (1793)). The Eleventh Amendment indicates that
“one of the United States” (such as Kentucky) cannot be sued in federal court by “Citizens of
another State” (such as Port of Louisville). Id. Some Justices have also suggested that, unlike
the structural sovereign immunity that a state may waive, the Eleventh Amendment’s language
imposes a nonwaivable limit on a federal court’s jurisdiction over suits that fall within its text.
No. 22-5351 New Albany Main Street Props. v. Watco Companies, LLC, et al. Page 9
See PennEast Pipeline Co. v. New Jersey, 141 S. Ct. 2244, 2264–65 (2021) (Gorsuch, J.,
dissenting).
Yet Bouvette has not asserted any federal immunity or Eleventh Amendment defense
here. That is perhaps because these federal doctrines typically cover only a state and its arms,
not a county and its agencies. See N. Ins. Co. of N.Y. v. Chatham County, 547 U.S. 189, 193–94
(2006). Ultimately, though, we need not answer any federal immunity questions in this case,
even if some impose absolute jurisdictional limits. Courts have “leeway” to choose among non-
merits grounds for dismissing a suit. Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S.
422, 431 (2007). So we may resolve Bouvette’s appeal solely on the basis of state sovereign
immunity. When a case involves state (rather than federal) claims, Kentucky courts may grant
broader sovereign-immunity protections to state officials than those officials would receive
under the U.S. Constitution. See Ferri v. Ackerman, 444 U.S. 193, 198 (1979); cf. Howlett ex
rel. Howlett v. Rose, 496 U.S. 356, 375–83 (1990). And a federal court sitting in diversity must
respect these state immunities. See Butler v. Gualtieri, 41 F.4th 1329, 1336 (11th Cir. 2022);
PYCA Indus., Inc. v. Harrison Cnty. Waste Water Mgmt. Dist., 81 F.3d 1412, 1417–20 & n.4
(5th Cir. 1996).
In Kentucky, sovereign immunity has both common-law and constitutional dimensions.
Start with Kentucky’s common law. Kentucky courts originally granted sovereign immunity to
the commonwealth by incorporating this “elementary principle” into its common law. Zoeller v.
State Bd. of Agric., 173 S.W. 1143, 1144 (Ky. 1915). For centuries, these courts have held that
Kentucky has an “[a]bsolute immunity from suit” barring private parties from pursuing state
claims against it. Ky. State Park Comm’n v. Wilder, 84 S.W.2d 38, 39 (Ky. 1935); see Downing
v. Mason County, 8 S.W. 264, 265–66 (Ky. 1888); Divine v. Harvie, 23 Ky. 439, 441 (1828).
Turn to Kentucky’s constitution. Nothing in this document directly incorporates the
state’s sovereign immunity. See Yanero v. Davis, 65 S.W.3d 510, 524 (Ky. 2001); Ky. Ctr. for
the Arts Corp. v. Berns, 801 S.W.2d 327, 329 (Ky. 1990). But two provisions “indirectly”
recognize the doctrine’s existence. Comair, Inc. v. Lexington-Fayette Urban Cnty. Airport
Corp., 295 S.W.3d 91, 94 (Ky. 2009) (quoting Wilder, 84 S.W.2d at 39). The first bars
Kentucky from spending money without its legislature’s approval: “No money shall be drawn
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from the State Treasury, except in pursuance of appropriations made by law[.]” Ky. Const.
§ 230. The second allows the legislature to permit suits against Kentucky: “The General
Assembly may, by law, direct in what manner and in what courts suits may be brought against
the Commonwealth.” Id. § 231.
These two provisions have a narrow reach. They give Kentucky’s legislature the power
to waive sovereign immunity; they do not give it the power to create that immunity. See Yanero,
65 S.W.3d at 523–24; Reyes v. Hardin County, 55 S.W.3d 337, 338–39 (Ky. 2001); Withers v.
Univ. of Ky., 939 S.W.2d 340, 344 (Ky. 1997). In other words, although § 231 of Kentucky’s
constitution allows its legislature to decide when parties may sue the “Commonwealth,”
Kentucky’s courts get to decide whether a suit against a particular actor triggers sovereign
immunity because it qualifies as a suit against the “Commonwealth” within the meaning of
§ 231. Withers, 939 S.W.2d at 342–43. So the Kentucky legislature lacks free rein to grant
sovereign immunity to entities that would not have received it under its common-law origins.
See Berns, 801 S.W.2d at 329–30. Indeed, other constitutional provisions—for example, one
that bars the legislature from limiting the amount that a plaintiff may recover for injuries, Ky.
Const. § 54—restrict the legislature’s power to enlarge immunity in this way. See Yanero, 65
S.W.3d at 525; see also Caneyville Volunteer Fire Dep’t v. Green’s Motorcycle Salvage, Inc.,
286 S.W.3d 790, 797–802 (Ky. 2009).
Applying this mix of common-law and constitutional rules, a court considering whether a
specific state actor should receive sovereign immunity under Kentucky law must proceed in two
stages by asking two questions. First: Would sovereign immunity have covered this actor at
common law? See Yanero, 65 S.W.3d at 523–24; Berns, 801 S.W.2d at 329. Second: If an actor
is otherwise eligible, has the legislature passed a statute waiving this immunity? Compare Univ.
of Louisville v. Rothstein, 532 S.W.3d 644, 647–48 (Ky. 2017), with Furtula v. Univ. of Ky., 438
S.W.3d 303, 305–06 (Ky. 2014). If not, the entity should receive immunity. See, e.g., Jefferson
Cnty. Pub. Schs. v. Tudor ex rel. J.T., 664 S.W.3d 600, 604 (Ky. 2023).
Stage One: A court must first ask whether a state actor is even eligible for the sovereign
immunity that the legislature may waive. The answer turns on the background “common law”
rules of immunity, presumably as they existed when Kentucky enacted its current constitution in
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1891. Yanero, 65 S.W.3d at 523; cf. William Baude, Sovereign Immunity and the Constitutional
Text, 103 Va. L. Rev. 1, 8 (2017). Over the years, the Kentucky Supreme Court has recognized
that its cases applying these principles have not been a model of clarity or consistency. See
Bryant v. Louisville Metro Hous. Auth., 568 S.W.3d 839, 845 (Ky. 2019); Yanero, 65 S.W.3d at
521. Today, the court has settled on a test that divides sovereign immunity into two parts: “pure”
immunity and “governmental” immunity. Comair, 295 S.W.3d at 94; Bryant, 568 S.W.3d at
845.
The “pure” version of sovereign immunity applies to a narrow set of state entities that
qualify for immunity without the need to prove anything else. Bryant, 568 S.W.3d at 845. This
version unsurprisingly covers Kentucky itself. See id. It also covers Kentucky’s counties.
Downing, 8 S.W. at 265; see Yanero, 65 S.W.3d at 526 (citing cases). And it covers employees
of these two governments when sued “in their official capacities”—meaning that the funds from
a money judgment will come from public coffers. Schwindel v. Meade County, 113 S.W.3d 159,
169 (Ky. 2003). This rule of pure immunity does not apply, by contrast, to most entities that
these governments create, including state agencies. See Bryant, 568 S.W.3d at 845. It also does
not apply to cities, which the Kentucky Supreme Court treats as “municipal corporations” rather
than arms of the government. Comair, 295 S.W.3d at 95. And it does not apply to state or
county employees sued in their “individual capacities.” Yanero, 65 S.W.3d at 522. These
employees must instead rely on the distinct doctrine of “qualified” immunity. Id.
The “governmental” version of sovereign immunity covers a broader set of entities. It
can reach even “non-governmental or quasi-governmental bodies” (or their employees sued in
their official capacities). Howard v. Big Sandy Area Dev. Dist., Inc., 626 S.W.3d 466, 470 (Ky.
2020); see Comair, 295 S.W.3d at 103. Yet these entities must meet two additional
requirements. See Coppage Constr. Co. v. Sanitation Dist. No. 1, 459 S.W.3d 855, 859 (Ky.
2015). An entity seeking governmental immunity must have been created by (and be under the
control of) a government that itself qualifies for immunity—that is, the entity must have an
immune “parent[.]” See Howard, 626 S.W.3d at 470. Dating back to the time of Kentucky’s
current constitution, Kentucky courts have also held that the entity must undertake “an ‘integral’
function of state government.” Id.; compare Williams v. Louisville Ind. Sch. of Reform, 24 S.W.
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1065, 1066 (Ky. 1894), with Gross v. Ky. Bd. of Managers of World’s Columbian Exposition,
49 S.W. 458, 459 (Ky. 1899).
Stage Two: If an entity is eligible for sovereign immunity, a court must next ask whether
the Kentucky legislature has waived this immunity. For years, the legislature enacted no
generally applicable waivers. See Reyes, 55 S.W.3d at 339; Paul Oberst, The Board of Claims
Act of 1950, 39 Ky. L.J. 35, 36 (1950). Each legislative session, the legislature would instead
pass individual waivers on a plaintiff-by-plaintiff basis. See, e.g., Pennington’s Adm’r v.
Commonwealth, 46 S.W.2d 1079, 1079–80 (Ky. 1932). Eventually, in the middle of the
twentieth century, the legislature enacted the Board of Claims Act to “expressly” waive the
state’s immunity in several recurring circumstances. Ky. Rev. Stat. § 49.060; id. §§ 49.040,
49.070; Reyes, 55 S.W.3d at 339.
Except for the specifically identified waivers, however, this Act otherwise “preserve[d]”
the state’s immunity. Ky. Rev. Stat. § 49.060. Not only that, Kentucky’s legislature later
amended the Act to broadly suggest that private parties could not maintain an “action for
damages” against Kentucky or “any of its cabinets, departments, bureaus, or agencies or any of
its officers, agents, or employees while acting within their official capacity and scope of their
employment[.]” Id. § 49.070(12) (emphases added). As written, then, the Act grants immunity
not just to Kentucky itself but also to its “agencies” and “employees.” Id. But this broad grant
of immunity put the Act on a collision course with the Kentucky Supreme Court’s repeated
admonition that not all entities or employees with a connection to the state qualify for immunity
as a common-law matter. See Yanero, 65 S.W.3d at 519–21. The court thus narrowly read the
Act’s broad ban on suits against state agencies or employees “as applying only to” the subset of
agencies and employees that would receive immunity under the court’s tests for “pure” and
“governmental” immunity. Id. at 525; see also Univ. of Louisville v. O’Bannon, 770 S.W.2d
215, 217 (Ky. 1989).
B. Application
These background principles clarify the nature of the parties’ debate. To begin with, we
need not consider the immunity inquiry’s second stage. Port of Louisville does not argue that the
No. 22-5351 New Albany Main Street Props. v. Watco Companies, LLC, et al. Page 13
Kentucky legislature has passed a law that waives the sovereign immunity that would otherwise
cover Bouvette if she were eligible for it. This case instead concerns only stage one: Port of
Louisville argues that the common-law immunity rules do not reach its claims against Bouvette.
We thus must consider whether Bouvette—in her capacity as the Authority’s executive
director—is entitled either to “pure” or to “governmental” sovereign immunity.
1. “Pure” Sovereign Immunity
Bouvette initially argues that she should receive immunity without having to establish
any additional requirements under the “pure” form of sovereign immunity. Comair, 295 S.W.3d
at 94. We can make short work of this claim. The Kentucky Supreme Court has held that this
form of immunity applies only to suits against Kentucky and its counties (or the employees of
these governments when sued in their official capacities). See Bryant, 568 S.W.3d at 845;
Yanero, 65 S.W.3d at 526; Downing, 8 S.W. at 265. So a “state agency” like the Riverport
Authority cannot receive this automatic immunity. Bryant, 568 S.W.3d at 845. That fact means
that Bouvette cannot seek its protections either. See Schwindel, 113 S.W.3d at 169.
In response, Bouvette cites the subsections in the Board of Claims Act that ostensibly
grant “sovereign immunity” to Kentucky’s agencies and employees, including the agencies and
employees of a consolidated local government like Louisville Metro. Ky. Rev. Stat.
§§ 49.070(11)–(12); 67C.101(2)(e). By doing so, Bouvette mistakes the immunity inquiry’s first
stage for its second one. As we have explained, the Kentucky Supreme Court has interpreted
these broad subsections to cover “only” those agencies and employees that received sovereign
immunity under the common law. Yanero, 65 S.W.3d at 525; see O’Bannon, 770 S.W.2d at 217.
The Board of Claims Act is thus beside the point now because Bouvette must first show her
entitlement to common-law sovereign immunity (at stage one) before she can rely on the
Kentucky legislature’s refusal to waive the immunity (at stage two).
2. “Governmental” Sovereign Immunity
Bouvette is on stronger ground when she invokes the “governmental” version of
sovereign immunity. This immunity can apply to a “corporate” “body” like the Authority if it
can show two things. Ky. Rev. Stat. § 65.520(2); see Comair, 295 S.W.3d at 96, 99. The
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Authority must have an immune “parent,” and it must carry out an “integral” function of state
government. See Howard, 626 S.W.3d at 470. As long as Port of Louisville has sued Bouvette
in her official capacity, moreover, she can rely on this immunity too. See Comair, 295 S.W.3d at
103.
a. Is the Authority under the control of an immune “parent”?
The Authority may well meet the first of these two requirements. To begin with, there is
no dispute that it has an immune “adoptive parent”: Louisville Metro. New Albany, 2022 WL
901504, at *3; see Comair, 295 S.W.3d at 100. The pure sovereign-immunity rules that protect
counties also shield consolidated local governments. See Bryant, 568 S.W.3d at 844 n.3.
Next, the Authority is under the substantial “control” of Louisville Metro and other
governmental actors. See id. at 846. For example, Louisville Metro appoints the Authority’s
members and its executive director, and it may terminate the members for cause and the
executive director at will. See Ky. Rev. Stat. §§ 65.540(1), (3), 65.570(4); Comair, 95 S.W.3d at
100. Louisville Metro next may audit the Authority’s books at any time, and the Authority must
provide a “detailed report” of its conduct to Louisville Metro each year. See Ky. Rev. Stat.
§ 65.570(3); Comair, 295 S.W.3d at 100. Apart from Louisville Metro’s control, the
Transportation Cabinet, a state-level agency, also must “provide oversight” of the Authority’s
“development activities[.]” Ky. Rev. Stat. § 65.520(3). In addition, Kentucky’s constitution and
its legislature impose further controls. They require the Authority to follow a competitive
bidding process when leasing its property to private parties and to ensure that these contracts do
not hamper the public’s access to its port. See E.M. Bailey Distr. Co. v. Conagra, Inc., 676
S.W.2d 770, 771–74 (Ky. 1984); Ky. Rev. Stat. § 65.610(1); cf. Bryant, 568 S.W.3d at 847.
In the end, though, we need not conclusively resolve this issue. Port of Louisville
expressly conceded that the Authority satisfies this first requirement. Appellee’s Br. 26. So we
may rely on its concession alone to find that Bouvette meets this first governmental-immunity
factor.
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b. Does the Authority perform an integral function of state government?
i. This case instead rests on the second governmental-immunity factor, which asks
whether a corporate entity performs a “function integral to state government.” Comair, 295
S.W.3d at 99 (quoting Berns, 801 S.W.2d at 332). To meet this test, an entity’s “function” must
possess two traits: it must be governmental (not proprietary) and it must be statewide (not
regional). See Bd. of Trs. of Ky. Sch. Bds. Ins. Trust v. Pope, 528 S.W.3d 901, 909 (Ky. 2017).
Kentucky courts have struggled to apply both elements of this “complex” test. Bryant, 568
S.W.3d at 848.
First, an entity’s activities must qualify as “governmental” tasks typically performed by
public entities rather than “proprietary” tasks typically performed by private businesses. Bryant,
568 S.W.3d at 847; see Howard, 626 S.W.3d at 472. When discussing this element, the
Kentucky Supreme Court has sometimes suggested that it follows a function-by-function
approach turning on the specific activity at issue—such that the same entity can be both immune
(when performing a governmental function) and not immune (when performing a proprietary
one). See, e.g., Grayson Cnty. Bd. of Educ. v. Casey, 157 S.W.3d 201, 202–03 (Ky. 2005).
More recently, however, the court has clarified that it follows an entity-by-entity approach that
categorically grants (or denies) immunity based on “the sum of” an entity’s “discrete functions,”
Howard, 626 S.W.3d at 472, or its “overall nature,” Comair, 295 S.W.3d at 101. We will follow
that latter path here.
Nevertheless, a fuzzy line divides government functions from proprietary ones because
the government often performs tasks that private entities also undertake. Consider two
examples. The Kentucky Supreme Court treats the provision of “education” as a paradigmatic
government function. Id. at 99. But private entities have been educating this country’s children
for just as long as (if not longer than) their public counterparts. Conversely, the Kentucky
Supreme Court treats the provision of water and sewage services as proprietary because private
companies can supply them. See N. Ky. Water Dist., 600 S.W.3d at 241, 244–45; Coppage, 459
S.W.3d at 862–64. But public entities have long provided these critical services too.
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Why is one of these functions governmental and the other proprietary? Does this divide
turn on a normative judgment about what the government should do? So a libertarian might
believe that the test should cover only functions designed to protect against private force and
fraud, whereas a socialist might believe that it should cover the operation of all the means of
production. Or does the divide turn on an objective judgment about what the government has
traditionally done? So the test should cover only functions performed by government from time
immemorial but not functions that it has recently taken on. Cf. Caneyville, 286 S.W.3d at 799.
Or should some other criterion help catalogue functions into government and proprietary
buckets? The existing caselaw offers little guidance on how to answer these basic questions,
leading the Kentucky Supreme Court to caution that this part of its test does not facilitate
“consistent results.” Yanero, 65 S.W.3d at 521.
Second, an entity must undertake a statewide—not a regional—function. Howard, 626
S.W.3d at 471–74. This element has proved equally troublesome because it does not require an
entity to have statewide jurisdiction. See Bryant, 568 S.W.3d at 850. Rather, a local entity can
satisfy the element if the “concern” that it seeks to address arises throughout Kentucky. See id.
The need to alleviate poverty, for example, exists across the commonwealth. See id. So the
Kentucky Supreme Court has held that a local housing authority supplying affordable housing to
low-income individuals performed a statewide function even though it offered housing in just
one county. See id. at 844, 848–50. At the same time, one would think that the need for
adequate sewage services exists across Kentucky too. But the Kentucky Supreme Court held
that an entity supplying this service in just three counties met only “the needs of a discrete,
localized geographic region.” Coppage, 459 S.W.3d at 864. Because both concerns seemingly
existed statewide, what factor or factors showed that one function served a statewide purpose
while the other one served only a local one? The existing caselaw again offers little guidance in
how to answer this question.
The difficulty of both inquiries has led the Kentucky Supreme Court to fall back on a
“case by case analysis” that considers the totality of the circumstances. Comair, 295 S.W.3d at
99. The test’s fact-specific nature is shown by the divergent outcomes that it has produced.
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On the one hand, the Kentucky Supreme Court has identified many functions as integral
to state government. Because education counts, the court has often granted immunity to local
school boards and state universities. See Tudor, 664 S.W.3d at 604; Prater, 292 S.W.3d at 887–
88; Autry v. W. Ky. Univ., 219 S.W.3d 713, 718 (Ky. 2007); Yanero, 65 S.W.3d at 527; Withers,
939 S.W.2d at 343–44. Unsurprisingly, the court has also held that “firefighting” qualifies as a
statewide government function. Caneyville, 286 S.W.3d at 799, 804–05. Perhaps more
surprisingly, it has held that entities that help the needy perform government functions even
though private groups have long conducted this charitable work. As noted, the court granted
immunity to a local housing authority that supplied affordable housing. See Bryant, 568 S.W.3d
at 846–51. It also granted immunity to public defenders that served the indigent. See Jacobi v.
Holbert, 553 S.W.3d 246, 255–56 (Ky. 2018). And it granted immunity to public institutions
that helped the mentally ill and neglected children. See Leavell v. W. Ky. Asylum for the Insane,
91 S.W. 671, 671–72 (Ky. 1906); Williams, 24 S.W. at 1066. In addition, while private
investment companies have long managed retirement accounts, the court held that a state
retirement system performed a government function because it served only public employees.
Commonwealth v. Ky. Ret. Sys., 396 S.W.3d 833, 837 (Ky. 2013). Lastly, the court found that an
entity that operated the “Kentucky State Fair” conducted a government function, even though
many private entities hold fairs. See Zoeller, 173 S.W. at 1144–45.
On the other hand, the Kentucky Supreme Court has held that similar functions are not
integral to state government. The court does not grant blanket immunity to all entities that serve
those in need. It denied immunity to an entity whose responsibilities included providing
homecare aides to the elderly, see Howard, 626 S.W.3d at 472–74, and one that treated substance
abuse, see Ky. River Foothills Dev. Council, Inc. v. Phirman, 504 S.W.3d 11, 16–17 (Ky. 2016).
Unlike local schools or fire departments, it also held that water and sanitation districts performed
proprietary tasks. See N. Ky. Water Dist., 600 S.W.3d at 241, 244–45; Coppage, 459 S.W.3d at
864. Similarly, unlike its grant of immunity to the retirement system that served only public
employees, it denied immunity to an entity that provided insurance only to public schools. Pope,
528 S.W.3d at 908–09. And unlike its grant of immunity to the entity that ran the State Fair, it
denied immunity to an entity that operated a Kentucky display at the World’s Fair, see Gross,
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49 S.W. at 458–59, and one that managed the Kentucky Center for the Arts, Berns, 801 S.W.2d
at 330–31.
ii. How should this caselaw play out here? Given the doctrine’s fact-specific nature, the
Kentucky Supreme Court would likely rely on the case with the most analogous facts. And there
can be no doubt which case that is: Comair. There, the court addressed a public airport board
that operated a Lexington airport. See 295 S.W.3d at 93, 100. After a terrible plane crash at this
airport, the estates of deceased passengers sued the responsible airline, which, in turn, sued the
airport board. Id. at 93. The Kentucky Supreme Court granted governmental immunity to this
board. See id. at 100–02. The court reasoned that the board performed a function integral to
state government by managing part of Kentucky’s “transportation infrastructure”: the airport. Id.
at 101. The court viewed this duty as analogous to the duty to maintain public highways, which
it regarded as a paradigmatic example of a government function. Id. To confirm its conclusion,
the court added that the board, like other government actors, could issue revenue bonds and
receive tax dollars. Id. at 102. And the board did not act with a profit motive because it could
impose only “reasonable” fees for the use of its airport and must reinvest any profit into the
airport. Id.
The Riverport Authority in this case is like the airport board in Comair in every way that
counts. Most importantly, Comair holds that the development of “transportation infrastructure”
qualifies as a government (not a proprietary) task. Id. This transportation infrastructure includes
not just the airports that planes use or the roads that cars use but also the “docks and wharves”
that ships use. E.M. Bailey, 676 S.W.2d at 772. Like an airport, a public port has often been
compared to “a public highway.” Fair, supra, at 703; cf. Comair, 295 S.W.3d at 101. So the
Kentucky Supreme Court has already held that the “construction” and “operation of a port”—the
Authority’s primary responsibilities—qualify as “governmental functions” for purposes of
another provision in Kentucky’s constitution. E.M. Bailey, 676 S.W.2d at 772; see Ky. Rev.
Stat. § 65.530(1).
Many courts have reached similar conclusions in various contexts. See Visina,
89 N.W.2d at 643–47 (collecting cases). Courts have held that the taking of property to build a
public port qualifies as a public use. See id. at 645–46; 11 McQuillin: The Law of Municipal
No. 22-5351 New Albany Main Street Props. v. Watco Companies, LLC, et al. Page 19
Corporations § 32:79.1 (3d ed.), Westlaw (database updated June 2023). They have held that
the expenditure of taxpayer dollars to construct a public port qualifies as a public purpose. See,
e.g., Visina, 89 N.W.2d at 643–47; cf. Dysart v. City of St. Louis, 11 S.W.2d 1045, 1049 (Mo.
1928). And they have held that the employees of public port authorities performed government
functions under the now-defunct doctrine that treated such employees as immune from federal
taxation. See Ten Eyck, 76 F.2d at 518–19; but cf. Helvering v. Gerhardt, 304 U.S. 405, 422–24
(1938). Dating back to England, these courts reasoned, the construction of ports fell within “the
royal prerogative” and required government permission. Ten Eyck, 76 F.2d at 518; see
Blackstone, supra, at 264. That is because the government owned the land underneath the
navigable waters on which ports were (at least partially) built. See Shively v. Bowlby, 152 U.S.
1, 11–14 (1894). So it had the authority to preserve “the use of navigable waters from”
interference by private ports and to develop a system of public “wharves, docks, and piers” to
facilitate commerce. Ill. Cent. R.R. Co. v. Illinois, 146 U.S. 387, 436, 452 (1892). In our
country, this authority fell to the states, which took title to the lands underneath their navigable
waters “in trust for the public.” Id. at 455; see Shively, 152 U.S. at 14–31. Even when states
allowed private interests like railroads to develop ports, they retained the ability “to regulate uses
of these lands, in the public interest[.]” James A. Fawcett, Port Governance and Privatization in
the United States: Public Ownership and Private Operation, in Devolution, Port Governance and
Port Performance 211 (Mary R. Brooks & Kevin Cullinane eds., 2007).
Apart from the governmental nature of the Authority’s main duty to develop a public port
facility, the remaining factors on which Comair relied show that its holding extends to this case.
Like the airport board, the Authority does not act with a “profit” motive. See Comair, 295
S.W.3d at 102; see also Bryant, 568 S.W.3d at 847–48; Jacobi, 553 S.W.3d at 255; Autry, 219
S.W.3d at 718. Rather, it may charge only “reasonable rates” for the use of its port facility and
must devote any “surplus revenue” to maintaining the facility. Ky. Rev. Stat.
§§ 65.530(2), 65.610(2); Comair, 295 S.W.3d at 102. And like the airport board, the Authority
is eligible to rely on revenue bonds and taxpayer funds to subsidize its activities. Ky. Rev. Stat.
§§ 65.580, 65.600; Comair, 295 S.W.3d at 102; see also Jacobi, 553 S.W.3d at 256; Zoeller, 173
S.W. at 1144–45.
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Like the law governing the airport board, moreover, the Riverport Authority Act treats all
of the activities that the Authority may undertake as “public” functions performed to meet a
“public necessity[.]” Ky. Rev. Stat. § 65.630; see Comair, 295 S.W.3d at 101. Although the
Kentucky Supreme Court has cautioned that a legislative declaration of a public purpose does not
automatically compel a judicial determination of immunity, this type of legislative
pronouncement equating an entity’s duties with a “public necessity” at least “informs” our
conclusion that the Authority performs an “integral” part of government. Bryant, 568 S.W.3d at
848–50.
Lastly, the Authority performs a “statewide” function because it alleviates a statewide
concern. See id. To be sure, the Authority has a limited jurisdiction near the Louisville area.
See Ky. Rev. Stat. §§ 65.510(6), 65.530(1). But so did the local housing authority that the
Kentucky Supreme Court found immune. See Bryant, 568 S.W.3d at 850. And the need to
ensure that individuals living in, say, eastern Kentucky have adequate means to ship their cargo
to the other side of the commonwealth represents a classic governmental problem that extends
beyond any one region. See Comair, 295 S.W.3d at 101. If anything, a local entity that develops
transportation infrastructure more directly serves all Kentuckians than does a local housing
authority, which primarily meets the needs of only those who live in the locality.
Port of Louisville’s responses do not change things. Citing a state trial court’s decision
denying immunity to the Authority, Port of Louisville argues that the Authority merely engages
in a “commercial shipping operation.” Appellee’s Br. 28 (citation omitted). But Comair
rejected an identical claim. It distinguished transportation services (which private airlines
provide) from transportation infrastructure (which the airport board provided). See Comair, 295
S.W.3d at 101–02. Even if private airlines commonly sell trips to other destinations, the court
reasoned, the development of the airport is a “quintessential state concern and function[.]” Id. at
102. The same logic applies here. Like the airport board in Comair, the Authority does not own
the ships that haul cargo; it owns the port facility (the transportation infrastructure) that these
shippers use.
This reasoning also distinguishes the main case on which Port of Louisville relies:
Transit Authority of River City v. Bibelhauser, 432 S.W.3d 171 (Ky. Ct. App. 2013). Unlike the
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Authority, the public entity in Bibelhauser provided the types of “transportation services” in the
Louisville area that a taxi company or private bus line might sell. Id. at 174–75. Because this
entity did not develop any “transportation infrastructure,” the Kentucky court of appeals held that
it performed a non-immune proprietary task. Id. at 175. The opposite is true for the Authority.
Port of Louisville next attempts to distinguish Comair. As far as the record showed in
that case, the airport board operated the airport itself. 295 S.W.3d at 101. But the Authority has
leased the port facility to a private party, so Port of Louisville says it merely acts as a “property
developer and landlord[.]” Appellee’s Br. 27, 30. We fail to see why this factual distinction
matters. For starters, the Riverport Authority Act makes clear that any lease that a riverport
authority enters “shall not prevent, restrict or hamper the general use of the riverport by the
public.” Ky. Rev. Stat. § 65.610(1). The Authority also does not act like any other Louisville
property developer. Cf. N. Ky. Area Plan. Comm’n v. Cloyd, 332 S.W.3d 91, 96 (Ky. Ct. App.
2010) (citing Comair, 295 S.W.3d at 98–99). It enters into lease contracts to “establish,
maintain, operate, and expand” riverport facilities. Ky. Rev. Stat. § 65.530(1). Just as the local
housing authority in Bryant leased housing property for a public purpose (to help low-income
individuals), see 568 S.W.3d at 848, so too the Authority leases industrial property for a “public
purpose” (to develop ports), Ky. Rev. Stat. § 65.630. The “sum” of the Authority’s “discrete
functions” renders it immune because its main reason for being qualifies as a statewide
government function. Howard, 626 S.W.3d at 472.
Even if the Authority performs a function that entitles it to governmental immunity, Port
of Louisville lastly argues, Bouvette may not rely on that immunity here because it sued her in
her personal capacity. We disagree. When a complaint is ambiguous over whether a plaintiff
has sued state defendants in their personal or official capacities, we will construe it as raising
official-capacity claims unless the “course of proceedings” has clarified that the plaintiff seeks to
hold the defendants personally liable. See Moore v. City of Harriman, 272 F.3d 769, 772 (6th
Cir. 2001) (en banc); see also Moore v. Hiram Township, 988 F.3d 353, 359 (6th Cir. 2021);
Vittetoe v. Blount County, 861 F. App’x 843, 852 (6th Cir. 2021). Kentucky courts arguably
follow rules more favorable to Port of Louisville. See McCollum v. Garrett, 880 S.W.2d 530,
533 (Ky. 1994). But Port of Louisville makes no claim that these state rules should apply in this
No. 22-5351 New Albany Main Street Props. v. Watco Companies, LLC, et al. Page 22
federal suit under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). We thus need not
consider that issue.
Under this test, Port of Louisville has sued Bouvette in her official capacity. As an initial
matter, Port of Louisville generically cites the entire complaint when it argues that it has sued
Bouvette in her personal capacity. It identifies nothing specific that would have given her notice
of this claim. But the complaint is, at best, ambiguous. It merely identifies Bouvette as
“Executive Director of Louisville/Jefferson County Riverport Authority” and never alleges that it
seeks money damages from her in her individual capacity. Compl., R.1, PageID 2; cf. Shepherd
v. Wellman, 313 F.3d 963, 968 (6th Cir. 2002). Nor does Port of Louisville even attempt to
argue that anything in the “course of proceedings” would have put Bouvette on notice that it sued
her in her personal capacity. Moore, 272 F.3d at 772. Indeed, it did not even raise the argument
that Bouvette, as an individual, cannot rely on governmental immunity until this appeal. It thus
may have forfeited the argument. Cf. Bannister v. Knox Cnty. Bd. of Educ., 49 F.4th 1000,
1011–12 (6th Cir. 2022). All of this said, we will leave it for the district court on remand to
decide whether Port of Louisville may amend its complaint to add an individual-capacity claim.
Cf. Moore, 272 F.3d at 774–75.
One final point. Port of Louisville did not just seek damages; it also sought an injunction.
Compl., R.1, PageID 13. The Kentucky Supreme Court has suggested that sovereign and
governmental immunity would not bar a plaintiff from seeking prospective injunctive relief
against a state officer. See Univ. of Ky. v. Moore, 599 S.W.3d 798, 811 (Ky. 2019). But Port of
Louisville did not rely on this remedy, so we need not decide whether Bouvette’s immunity
would cover it.
We reverse and remand for proceedings consistent with this opinion.