J.S. Haren Co v. Macon Water Auth , 145 F. App'x 997 ( 2005 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0855n.06
Filed: October 18, 2005
No. 04-6082
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
J. S. HAREN COMPANY, )
)
Plaintiff-Appellant, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE EASTERN
) DISTRICT OF TENNESSEE
THE MACON WATER AUTHORITY, )
)
Defendant-Appellee. )
__________________________________________
BEFORE: MOORE, GIBBONS, and GRIFFIN, Circuit Judges.
PER CURIAM.
J.S. Haren (“Haren”) appeals the dismissal of its bankruptcy adversary proceeding complaint
against Macon Water Authority (“MWA”) by the district court. In its order and opinion, the lower
court held that it lacked subject matter jurisdiction over the proceeding based on the Eleventh
Amendment immunity afforded to MWA. Haren contends that MWA may not raise the defense of
sovereign immunity because MWA is not a state entity, and, alternatively, the defense was waived
by MWA’s own charter, and Congress has effectively abrogated the defense of sovereign immunity
in all bankruptcy proceedings. Haren also appeals the denial of its Fed. R. Civ. P. Rule 59(e) motion
to alter or amend the judgment, contending that the district court should have granted an evidentiary
hearing and limited discovery. MWA requests that the judgment be affirmed on the basis that the
No. 04-6082
J.S. Haren Co. v. Macon Water Auth.
district court properly dismissed Haren’s complaint for the grounds stated. For the reasons that
follow, we vacate the judgment of the district court and remand for further proceedings.
Eleventh Amendment immunity applies only against state governments and entities that can
be considered “arms of the state,” Alkire v. Irving, 330 F.3d 802, 814 (6th Cir. 2003). In its
memorandum opinion, the district court held that, because plaintiff has the burden of establishing
subject-matter jurisdiction, plaintiff J.S. Haren Co. bore the burden of proving that defendant was
not entitled to immunity under the Eleventh Amendment:
While the state law characterization of an entity is just one of several factors
to consider in determining whether a particular entity is an arm of the state for
Eleventh Amendment purposes, the parties have not raised any issues with respect
to the other factors. Since J.S. Haren bears the burden of demonstrating the Court
has jurisdiction over the subject matter of the present action, Ohio Nat’l, 922 F.2d
at 324, the Court must assume the other factors also weigh in favor of MWA’s
position it is an arm of the state. Accordingly, the Court concludes MWA is an arm
of the State of Georgia entitled to assert immunity under the Eleventh Amendment.
(Emphasis added.)
In the recent decision, Gragg v. Ky. Cabinet for Workforce Dev., 289 F.3d 958 (6th Cir.
2002), our Court addressed the issue, previously unresolved by this circuit, of which party bears the
burden of proof on Eleventh Amendment immunity. In resolving the question, we held “that the
entity asserting Eleventh Amendment immunity has the burden to show that it is entitled to
immunity, i.e., that it is an arm of the state.” Gragg, 289 F.3d at 964. In light of Gragg, the district
court committed an error of law regarding which party bore the burden of production and persuasion
on the issue of the Eleventh Amendment immunity. Further, in view of the sparse lower court
record, we cannot conclude that the error was harmless.
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No. 04-6082
J.S. Haren Co. v. Macon Water Auth.
Also, plaintiff argues that the present record is inadequate to determine whether defendant
is an “arm of the state” under the factors set forth in Brotherton v. Cleveland, 173 F.3d 552, 566-67
(6th Cir. 1999). We agree and, on remand, instruct the district court, in its discretion, to permit the
parties to proceed with discovery on this issue, along with the issues of alleged waiver of sovereign
immunity, and abrogation of sovereign immunity.
The judgment of the district court is vacated and the matter remanded for further proceedings
consistent with this opinion.
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