Paula Maliandi v. Montclair State University

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 14-3812
_____________
PAULA MALIANDI
v.
MONTCLAIR STATE UNIVERSITY,
Appellant
_____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2-14-cv-01398)
District Judge: Honorable Stanley R. Chesler
_____________
Argued: April 4, 2016
Before: AMBRO, KRAUSE, Circuit Judges, and
THOMPSON, ∗ District Judge
(Opinion filed: December 27, 2016)
∗
The Honorable Anne E. Thompson, District Judge
for the United States District Court for the District of New
Jersey, sitting by designation.
_____________
Jennifer J. McGruther, Esq. (Argued)
Office of Attorney General of New Jersey
Department of Law & Public Safety
Division of Law
Richard J. Hughes Justice Complex
25 Market Street, P.O. Box 112
Trenton, NJ 08625
Counsel for Appellant
Michael R. DiChiara, Esq. (Argued)
Krakower DiChiara
77 Market Street
Suite 2
Park Ridge, NJ 07656
Counsel for Appellee
_____________
OPINION OF THE COURT
_____________
KRAUSE, Circuit Judge.
Our federalist system of government accords respect
for the sovereignty of the States in a variety of ways,
including the Eleventh Amendment to the United States
Constitution, which immunizes States from suits brought in
federal court by both their own citizens and citizens of other
States. The Eleventh Amendment’s protection, however, is
not limited to the States alone, but rather extends to entities
2
that function as “arms of the State.” In this case, we are
asked to resolve a split among the district courts in our Circuit
as to whether Montclair State University (“MSU”) is an arm
of the State of New Jersey, which would render it immune
from the discrimination suit brought by Appellee Paula
Maliandi. Applying the balancing test we have developed to
make such determinations, we conclude that, while a close
case, MSU is an arm of the State, thus affording it access to
the refuge of the Eleventh Amendment. Accordingly, we will
reverse the decision of the District Court and remand for
proceedings consistent with this opinion.
I. Background
According to her complaint, Paula Maliandi began
working for MSU in November 2007 and took medical leave
for breast cancer treatment in early 2013. Despite having
complied with all pertinent policies and procedures for taking
such leave, Maliandi allegedly was denied her original
position when she returned and instead was offered an
inferior position, which she declined. She was subsequently
terminated. Maliandi then filed suit against MSU for
wrongful termination, seeking money damages and equitable
relief under both federal and state law. Maliandi’s federal
claim arises under the Family Medical Leave Act (“FMLA”)
for termination on account of a “serious [health] condition.”
While she does not cite a specific provision in her complaint,
it would appear her claim is rooted in the so-called “self-care
provision,” 29 U.S.C. § 2612(a)(1)(D), and its corresponding
retaliation provision, 29 U.S.C. § 2614(a). Together, these
provisions entitle a qualifying employee to twelve weeks of
leave for a “serious health condition” and require an employer
to restore an employee who took leave under § 2612 to her
prior position or an equivalent one upon her return.
3
Maliandi’s state law claim arises under the New Jersey Law
Against Discrimination (“NJLAD”), N.J. Stat. Ann. §§ 10:5-1
to -49, which, among other things, prohibits discrimination on
account of a disability or handicap.
MSU moved to dismiss Maliandi’s complaint under
Federal Rule of Civil Procedure 12(b)(1) for lack of subject
matter jurisdiction based on its contention that, as an arm of
the State, it is owed Eleventh Amendment immunity from suit
in federal court. 1 The District Court denied the motion,
determining that MSU is not the State’s alter ego and, in turn,
concluding that MSU is subject to suit in federal court for
both the federal and state law claims. 2 MSU appeals.
1
In both the District Court and on appeal, MSU has
been represented by the Attorney General of the State of New
Jersey.
2
Because neither party raises an argument on appeal
as to whether Congress has, pursuant to its authority under
Section Five of the Fourteenth Amendment, abrogated
Eleventh Amendment immunity for claims brought under the
FMLA, we do not address that question today. Assuming
Maliandi is seeking to state a claim under § 2612(a)(1)(D) of
the FMLA, however, such an argument would be unavailing.
Coleman v. Court of Appeals of Md., 132 S. Ct. 1327, 1334-
38 (2012) (plurality opinion) (concluding § 2612(a)(1)(D)
does not abrogate Eleventh Amendment immunity); id. at
1338-39 (Scalia, J., concurring in judgment) (same); see also
Hale v. Mann, 219 F.3d 61, 69 (2d Cir. 2000) (concluding
that “29 U.S.C. § 2612(a)(1)(D), and the related retaliation
section, see id. § 2614(a)(1)” do not abrogate Eleventh
Amendment immunity).
4
The District Court had jurisdiction under 28 U.S.C.
§ 1331 to adjudicate Maliandi’s FMLA claim and under 28
U.S.C. § 1367 to consider her associated state law claim. The
District Court’s order denying MSU’s 12(b)(1) motion to
dismiss on Eleventh Amendment immunity grounds is
immediately appealable under the collateral order doctrine,
imbuing us with jurisdiction under 28 U.S.C. § 1291. Cooper
v. Se. Pa. Transp. Auth., 548 F.3d 296, 298 (3d Cir. 2008)
(citing P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc.,
506 U.S. 139, 144-45 (1993)). We consider whether MSU is
owed Eleventh Amendment immunity de novo; as “the party
asserting immunity,” MSU “bears the burden of production
Similarly, because the issues were not raised before us,
we do not address whether New Jersey has waived its
Eleventh Amendment immunity from suit in federal court
with regard to Maliandi’s NJLAD claim or the consequences
for the District Court’s exercise of supplemental jurisdiction
on remand. See Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381,
391-93 (1998) (implying that a federal court can retain
jurisdiction over state law claims after federal claims are
dismissed on Eleventh Amendment grounds); Rudolph v.
Adamar of N.J., Inc., 153 F. Supp. 2d 528, 540-44 (D.N.J.
2001) (discussing differing applicability of the Eleventh
Amendment to NJLAD claims brought in federal court
against New Jersey in its capacity as an employer compared
to those brought against the State in its legislative or
executive capacity); see also Heine v. Comm’r of Dep’t of
Cmty. Affairs, C.A. No. 2:11-5347, 2014 WL 4199203, at *5
(D.N.J. Aug. 22, 2014) (not published) (discussing district
court decisions regarding New Jersey’s immunity from suit in
federal court for NJLAD claims).
5
and persuasion.” Febres v. Camden Bd. of Educ., 445 F.3d
227, 228-29 (3d Cir. 2006).
II. Discussion
Our Eleventh Amendment jurisprudence has wound its
way through a number of variations—both subtle and
significant—over the past decades. To distill the principles
that govern our analysis today, we first review the
constitutional underpinnings and precedent relevant to the
arm of the State inquiry, and we then apply those principles to
determine whether MSU qualifies as an arm of the State
entitled to immunity.
A. History and Precedent
The Eleventh Amendment began as a simple rebuke of
the Supreme Court’s decision in Chisolm v. Georgia, 2 U.S.
419 (1793), that would have subjected States to suits in
federal court and saddled them with the weight of the
burgeoning republic’s Revolutionary War debts. Hans v.
Louisiana, 134 U.S. 1, 10-11 (1890); see also Hess v. Port
Auth. Trans-Hudson Corp., 513 U.S. 30, 39 (1994). More
than two centuries later, however, it has evolved into a potent
tool for States to ensure that States retain their sovereignty
and integrity as constituent polities of our national
government. Hess, 513 U.S. at 39-40. Thus, the Supreme
Court has recognized that the Amendment does not merely
shield state treasuries. Instead, it advances two fundamental
goals: safeguarding States’ dignity and protecting their
financial solvency. Id. at 52. And although, by its terms, the
Eleventh Amendment only withholds from the federal
judiciary the power to decide cases brought against a State by
a citizen of another State or a foreign government, U.S.
6
Const. amend. XI, the Court has interpreted it to bar suits
against a State by its own citizens—not just those from other
jurisdictions. Hans, 134 U.S. at 10-15; see also Seminole
Tribe of Fla. v. Florida, 517 U.S. 44, 54 (1996).
Importantly for this case, the Court also has read the
Amendment to bar not only suits against States themselves,
but also suits for damages against “arms of the State”—
entities that, by their very nature, are so intertwined with the
State that any suit against them renders the State the “real,
substantial party in interest.” Edelman v. Jordan, 415 U.S.
651, 663 (1974) (quoting Ford Motor Co. v. Dep’t of
Treasury, 323 U.S. 459, 464 (1945)); see also Mt. Healthy
City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280
(1977) (using the term “arm of the State”); Febres, 445 F.3d
at 229.
Because the Eleventh Amendment provides the States
with sweeping immunity from suit, we have been careful to
ensure that its reach does not extend beyond proper bounds.
Accordingly, we employ a fact-intensive, three-step balancing
test to ascertain whether a state-affiliated entity is an “arm of
the State” that falls within the ambit of the Eleventh
Amendment. Our initial recitation of the test came in Urbano
v. Board of Managers, 415 F.2d 247, 250-51 (3d Cir. 1969),
cert. denied, 397 U.S. 948 (1970), where we identified nine
factors to consider. Two decades later in Fitchik v. New
Jersey Transit Rail Operations, Inc., 873 F.2d 655, 659 (3d
Cir. 1989) (en banc), we attempted to consolidate those
Urbano factors into a more manageable three-factor test that
still governs today.
As explained in more detail below, the Fitchik factors
are (1) the funding factor: whether the state treasury is legally
7
responsible for an adverse judgment entered against the
alleged arm of the State; (2) the status under state law factor:
whether the entity is treated as an arm of the State under state
case law and statutes; and (3) the autonomy factor: whether,
based largely on the structure of its internal governance, the
entity retains significant autonomy from state control. Id.
Because, for the most part, we did not disagree with the
Urbano factors, 3 but rather organized them under the
headings of Fitchik’s three factors, the layers of factors,
subfactors, and considerations that inform those subfactors
can still make an analysis seem dense, if not impenetrable.
Moreover, each step of that analysis is a “fact-intensive”
undertaking that requires a fresh analysis and “individualized
3
Although Urbano identified as a factor whether an
entity performed a governmental or proprietary function, this
factor was jettisoned in Fitchik in light of intervening
Supreme Court precedent. Fitchik, 873 F.2d at 659 n.2
(citing Garcia v. San Antonio Metro. Transit Auth., 469 U.S.
528, 546-47 (1985)). While the Supreme Court has since
made reference to a “function” inquiry for Eleventh
Amendment purposes, see Hess, 513 U.S. at 44-45
(comparing the function of the entity at issue with that of an
entity from a pre-Garcia case and concluding the function
was not “readily classified as typically state or
unquestionably local”), and other Circuits still employ one in
the Eleventh Amendment context, e.g., Ernst v. Rising, 427
F.3d 351, 359 (6th Cir. 2005); Fresenius Med. Care
Cardiovascular Res., Inc. v. P.R. & Caribbean
Cardiovascular Ctr. Corp., 322 F.3d 56, 65 & n.7 (1st Cir.
2003), we are bound by our Court’s Eleventh Amendment
test that now eschews this inquiry, Fitchik, 873 F.2d at 659
n.2.
8
determinations” for each entity claiming Eleventh
Amendment immunity. See Bowers v. Nat’l Collegiate
Athletic Ass’n, 475 F.3d 524, 546 (3d Cir. 2007).
After identifying the direction in which each factor
points, we balance them to determine whether an entity
amounts to an arm of the State. Fitchik, 873 F.2d at 664; see
also Cooper, 548 F.3d at 311. While our jurisprudence had
long afforded the first factor—state funding—more weight
than the others, see Fitchik, 655 F.2d at 664, we recalibrated
the factors in light of the Supreme Court’s observation in
Regents of the University of California v. Doe, 519 U.S. 425,
431 (1997), that an Eleventh Amendment inquiry should not
be a “formalistic question of ultimate financial liability.” We
now treat all three Fitchik factors as co-equals, Benn v. First
Judicial Dist. of Pa., 426 F.3d 233, 239-40 (3d Cir. 2005),
with the funding factor breaking the tie in a close case, see
Febres, 445 F.3d at 229-30 (citing Hess, 513 U.S. at 47-48,
52).
We have had many occasions to apply the Fitchik
(and, earlier, Urbano) factors, ruling on the Eleventh
Amendment status of entities ranging from school boards to
public transit authorities to state-affiliated institutions of
higher learning. Of particular relevance to this case are our
decisions concerning the Pennsylvania State College System,
Rutgers University, and the University of Iowa. In 1976, we
ruled en banc that Pennsylvania’s Bloomsburg State College
was an arm of the State, Skehan v. Bd. of Trs. of Bloomsburg
State Coll., 538 F.2d 53, 62 (3d Cir.) (en banc) (Skehan I),
cert. denied, 429 U.S. 979 (1976), though our opinion there
never mentioned, much less applied, Urbano. We later
concluded, under the Urbano rubric, that the Eleventh
Amendment also shields Pennsylvania’s State System of
9
Higher Education. Skehan v. State Sys. of Higher Educ., 815
F.2d 244, 249 (3d Cir. 1987) (Skehan II). That same year, we
concluded in Kovats v. Rutgers, The State University, 822
F.2d 1303 (3d Cir. 1987), that Rutgers—a New Jersey public
university that was initially chartered as a private
institution—was not an arm of the State under our Urbano
framework. Then in 2007, we considered the status of the
University of Iowa in Bowers and determined that, under
Fitchik, it was an arm of the State on account of two of the
three factors supporting immunity. See Bowers, 475 F.3d at
549.
These cases provide guidance as we consider MSU
and are “helpful in terms of analytic models,” but they
ultimately do not “govern our decision as to [MSU] because
‘each state university exists in a unique governmental context,
and each must be considered on the basis of its own peculiar
circumstances’”—including the specific statutes at play and
the practical reality of the institution’s autonomy. Kovats,
822 F.2d at 1312 (quoting Soni v. Bd. of Trs. of the Univ. of
Tenn., 513 F.2d 347, 352 (6th Cir. 1975)). 4
4
Indeed, all three of our past cases addressing
institutions of higher learning are distinguishable in their own
right. Skehan I, which predates our modern Fitchik test, was
based on the laws of Pennsylvania rather than New Jersey,
and relied almost exclusively on a state court case that
characterized the college as an arm of the State, Skehan I, 538
F.2d at 62 (calling state court jurisprudence “dispositive of
the sovereign immunity issue”)—a myopic analysis that is out
of step with our multi-factor test and that we have since held
en banc should not be read to obviate the need to undertake a
full Fitchik analysis, Bolden v. Se. Pa. Transp. Auth., 953
10
The case law from our Sister Circuits is also
illuminating. As MSU points out, they have almost uniformly
concluded that state-affiliated universities are arms of their
respective States. See, e.g., Kreipke v. Wayne State Univ.,
807 F.3d 768 (6th Cir. 2015), cert. docketed, No. 15-1419
(May 23, 2016); Irizarry-Mora v. Univ. of P.R., 647 F.3d 9
(1st Cir. 2011); Md. Stadium Auth. v. Ellerbe Becket Inc., 407
F.3d 255, 262 (4th Cir. 2005) (collecting cases for proposition
that state universities are “[a]lmost universally” found to be
arms of the State); Watson v. Univ. of Utah Med. Ctr., 75
F.3d 569, 575 (10th Cir. 1996) (collecting cases for the
proposition that the Tenth Circuit has “consistently found
state universities are arms of the state”); Kashani v. Purdue
Univ., 813 F.2d 843, 845 (7th Cir.), cert. denied, 484 U.S.
846 (1987) (“The vast majority of cases considering the issue
have found state universities to be forfended by the Eleventh
Amendment.”); id. (“[While] [t]here are district court
F.2d 807, 815 n.8 (3d Cir. 1991) (en banc) (stating that it
would be an “error” to read Skehan I to mean that “state law
characterization is the only relevant consideration in
determining if an agency is entitled to raise the Eleventh
Amendment defense”). While Kovats dealt with a New
Jersey institution, Rutgers is distinguishable from MSU both
because of its unique origins as a private institution and the
fact that it is governed by a different set of state laws. See
822 F.2d at 1310-12; compare N.J. Stat. Ann. §§ 18A:64-1 to
-93 (laws governing state colleges like MSU), with id.
§§ 18A:65-1 to -102 (Rutgers provisions). And Bowers
similarly dealt with a different State’s university system,
which established the University of Iowa in the state
constitution—a trait not shared with New Jersey state
colleges like MSU. 475 F.3d at 548.
11
opinions to the contrary[,] . . . it would be an usual state
university that would not receive immunity.”); Hall v. Med.
Coll. of Ohio at Toledo, 742 F.2d 299, 301-02 (6th Cir. 1984),
cert. denied, 469 U.S. 1113 (1985) (collecting cases for the
proposition that “[t]he great majority of cases addressing the
question of Eleventh Amendment immunity for public
colleges and universities have found such institutions to be
arms of their respective state governments and thus immune
from suit”).
As we proceed with our own analysis, we are mindful
of the near unanimity among the Courts of Appeals that the
factors relevant to an Eleventh Amendment inquiry typically
favor immunity in the state college setting. However,
because the particulars of our Fitchik test differ from
analogous tests in other Circuits and because each entity
seeking immunity warrants an individualized analysis, these
cases do not dictate the answer to the question of first
impression with which we are presented today.
That question has bedeviled district judges in our
Circuit, who are divided in their application of the Fitchik test
to MSU. Compare Maliandi v. Montclair State Univ., C.A.
No. 14-01398 (SRC), 2014 WL 3778259 (D.N.J. July 31,
2014) (not published) (concluding MSU is not an arm of the
State), and Ventura v. Montclair State Univ., C.A. No. 08-
5792 (SRC), 2011 WL 550720 (D.N.J. Feb. 9, 2011) (not
published) (same), with Sarmiento v. Montclair State Univ.,
C.A. No. 04-cv-4176, letter op. (D.N.J. Mar. 31, 2005)
(concluding MSU is an arm of the State). 5 We now resolve
5
It is not just MSU sowing dissention among the
district courts. Courts applying our Urbano and Fitchik
rubrics to other New Jersey state colleges also have reached
12
this dispute by concluding that MSU is an arm of the State,
and in the process, we seek to synthesize our jurisprudence
regarding the Fitchik factors for the benefit of district courts
in future Eleventh Amendment cases.
B. Fitchik Analysis for MSU
After undertaking our own analysis of MSU’s
Eleventh Amendment immunity, we cannot agree with the
District Court’s determination that all three Fitchik factors
counsel against immunity. For the reasons set forth below,
we conclude that the funding factor counsels against
immunity, but that the status under state law and autonomy
factors—while close—tilt in favor of extending MSU
immunity from suit. On balance, because two of the three co-
inconsistent conclusions, in part because of the evolving
nature of our case law and in part because the issue presents
“a very close question,” N.J. Dep’t of Envtl. Prot. v.
Glouchester Envtl. Mgmt. Servs., Inc., 923 F. Supp. 651, 655
(D.N.J. 1995). Compare Bostanci v. N.J. City Univ., C.A.
No. 08-4339 (SRC), 2010 WL 4961621 (D.N.J. Dec. 1, 2010)
(not published) (denying immunity to New Jersey City
University), and N.J. Dep’t of Envtl. Prot., 923 F. Supp. at
665 (same to Glassboro State College and Trenton State
College), with Nannay v. Rowan Coll., 101 F. Supp. 2d 272
(D.N.J. 2000) (granting immunity to Rowan College), and
Rehberg v. Glassboro State Coll., 745 F. Supp. 1113 (E.D.
Pa. 1990) (same to Glassboro State College). We note that
Glassboro State College was later named Rowan College, and
then renamed Rowan University. Thus, a number of these
cases rehashed the Eleventh Amendment immunity question
for the same institution.
13
equal factors support MSU’s claim for immunity, we hold
that MSU is an arm of the State that enjoys the protections
afforded by the Eleventh Amendment.
1. The Funding Factor
The funding factor, also called the “state-treasury
criterion,” Febres, 445 F.3d at 232 & n.4, hinges on
“[w]hether the money that would pay [a] judgment [against
the entity] would come from the state,” Fitchik, 873 F.2d at
659. We consider three subfactors: (1) a State’s legal
obligation to pay a money judgment entered against the
alleged arm of the State; (2) alternative sources of funding
(i.e., monies not appropriated by the State) from which the
entity could pay such judgments; and (3) specific statutory
provisions that immunize the State from liability for money
judgments. Id.; see also Cooper, 548 F.3d at 302-06.
i. The State’s Legal Obligation to Pay
Money Judgments
The Supreme Court has made clear in the years since
Fitchik that we must focus our Eleventh Amendment inquiry
not on a mechanical analysis of whether a State will
ultimately pay a judgment, but rather “the crux of the state-
treasury criterion [is] whether the state treasury is legally
responsible for the payment of a judgment against the
[alleged arm of the State].” Febres, 445 F.3d at 233; id. at
236 (“The absence of any legal obligation on the part of New
Jersey to provide funds in response to an adverse
judgment . . . is a compelling indicator that the state-treasury
criterion . . . weighs against immunity.”); accord Bowers, 475
F.3d at 546-47 (citing Doe, 519 U.S. at 431). Specifically,
the Supreme Court has characterized the operative question as
14
“whether a money judgment against a state instrumentality or
official would be enforceable against the State,” Doe, 519
U.S. at 430, meaning that if a State only voluntarily
indemnifies an entity, the funding factor is unlikely to tip in
favor of immunity, despite the practical reality that the State
foots the bill for a money judgment, Bowers, 475 F.3d at
547. 6
Rather than identify a legally enforceable obligation on
the part of the State to pay money judgments entered against
it, MSU relies largely on the argument that such money
judgments would indirectly affect the state treasury because
“the University financial statements are included in the
State’s annual financial accounting.” Appellant’s Br. 27-28.
MSU’s primary argument thus appears to be that this
reporting requirement would cause New Jersey to increase
appropriations to cover losses that result from money
judgments entered against the university. Maliandi, 2014 WL
3778259, at *2.
We have consistently rejected the argument that a
State’s voluntary choice to pay a state-affiliated entity’s
liabilities—even if that choice might be a foregone
conclusion because of the State’s desire to keep the entity
afloat—favors Eleventh Amendment immunity. E.g.,
Bowers, 475 F.3d at 547; Febres, 445 F.3d at 236; Bolden v.
Se. Pa. Transp. Auth., 953 F.2d 807, 819 (3d Cir. 1991) (en
6
Conversely, the fact that a State is legally obligated
to pay may be enough to satisfy this factor even if another
entity—e.g., the federal government—will later indemnify the
State, causing the outlay by the State to have no actual impact
on the state treasury. Doe, 519 U.S. at 431.
15
banc); Fitchik, 873 F.2d at 661; Kovats, 822 F.2d at 1309.
Instead, in conformance with Doe, we have made clear that
“practical or indirect financial effects of a judgment may
enter a court’s calculus, but rarely have significant bearing on
a determination of an entity’s status as an arm of the state”;
rather, “[a] state’s legal liability (or lack thereof) for an
entity’s debts merits far greater weight, and is therefore the
key factor in our assessment of” the funding factor. 7 Febres,
445 F.3d at 236. MSU’s indirect effects argument is
therefore unavailing.
MSU does not argue that judgments against it would
have a direct effect on the state treasury—and with good
reason. We have identified only two exceptions to the rule
that New Jersey law imposes no all-encompassing legal
obligation on the part of the State to pay judgments entered
against MSU. First, N.J. Stat. Ann. § 18A:3B-6(h) allows
state colleges to elect to have the Attorney General represent
them in suits brought under the New Jersey Tort Claims Act
7
We have recognized two instances in which the
“practical effect” of a judgment is tantamount to a legal
obligation such that the entity may be entitled to Eleventh
Amendment immunity. Cooper, 548 F.3d at 305 (discussing,
but not applying, such scenarios); Febres, 445 F.3d at 235 n.9
(citing Hess, 513 U.S. at 50) (same). Both exceptions involve
instances where Congress has put a proverbial “gun to the
head” of the State to sustain the entity even without a legal
obligation. See Alaska Cargo Transp., Inc. v. Alaska R.R.
Corp., 5 F.3d 378 (9th Cir. 1993); Morris v. Wash. Metro
Area Transit Auth., 781 F.2d 218 (D.C. Cir. 1986). Neither
pertains to MSU.
16
(the “Tort Claims Act”), id. §§ 59:1-1 to :12-3, in which case
the State is obligated to indemnify a college (or its
employees) for any resulting judgment. See also id.
8
§§ 59:10-1 to -10. Second, the New Jersey Contractual
Liability Act (the “Contractual Liability Act”), id. §§ 59:13-1
to -10, expressly waives the State’s sovereign immunity for
breach of contract claims arising from contracts entered into
by “State” entities, id. §§ 59:13-2, -3.
Even assuming that New Jersey would have the legal
obligation to pay judgments against MSU under the Tort
Claims Act and the Contractual Liability Act, however, the
exceptions embodied in those statutes only prove the rule,
confirming the absence of an overarching legal obligation on
the part of the State. Absent such obligation, this subfactor
counsels against treating MSU as an arm of the State.
Bowers, 475 F.3d at 546-47; Febres, 455 F.3d at 236.
ii. Alternative Sources of Funding
The second subfactor under the funding inquiry—
“whether the agency has the money to satisfy the judgment
8
Conversely, if a college opts not to use the Attorney
General to represent and indemnify it in tort actions, the
college may retain counsel of its choosing and has the legal
obligation to pay money judgments entered against it, N.J.
Stat. Ann. § 18A:3B-6(h), counseling against immunity under
the funding factor. A college’s ability to decide whether to
impose a legal obligation on the State for tort claims
obviously also bears on the other two Fitchik factors: status
under state law and autonomy. See infra Parts II.B.2 &
II.B.3.
17
[itself],” Fitchik, 873 F.2d at 659, 662 9—is more
straightforward: we look to see if the entity has sources of
funding aside from state appropriations and whether those
funds could cover an adverse judgment. This necessarily
involves a review of the percentage of funds a given entity
receives from the State, but there is no hard-and-fast rule
about how much funding from the State is enough to trigger
immunity, and, in the wake of the Supreme Court’s decision
in Doe, the question of legal liability (i.e., subfactor one, see
supra Part II.B.1.i) remains paramount. See Cooper, 548
F.3d at 303; accord Fitchik, 873 F.2d at 660 (“[T]he fact that
an entity derives some of its income from the state does not
mean that it is entitled to partake of the state’s
immunity. . . . What is significant is whether the money that
pays the fine will come from the state treasury rather than the
agency’s funds . . . .”). Beyond budgetary percentages, we
also consider under this subfactor the extent to which the
State retains ownership over the funds it appropriates
and whether the entity is insured against money judgments.
Fitchik, 873 F.2d at 660-62.
When reviewing the percentage of an entity’s funds
that come from non-state sources, we have regularly
determined that alternative sources of funding—even where
only a small part of the entity’s overall budget—counsel
against immunity. For example, we have concluded that an
entity has the capacity to pay money judgments out of its own
funds even where the State appropriates 85-90% of the
entity’s operating budget. Febres, 445 F.3d at 232-34 (noting
9
“[A]gency” here—and elsewhere in our case law—is
used to describe an entity that has argued it is owed Eleventh
Amendment immunity.
18
that even where the State was the “principal source” of the
entity’s revenue, legal liability is the most important
consideration post-Doe); accord Cooper, 548 F.3d at 303-06
(35-52% of the entity’s funds coming from the State);
Bowers, 475 F.3d at 547 (21% of funds from the State);
Bolden, 953 F.2d at 818-19 (27% of funds from the State);
Fitchik, 873 F.2d at 660-62 (less than 33% of funds from the
State); Kovats, 822 F.2d at 1308-09 (50-70% of funds in the
general operating account from the State). In many of these
cases, we noted that the entity in question had the power to
raise revenue itself, such as via fare increases for public
transportation entities, or to dip into investments it had made
in order to pay money judgments. See Cooper, 548 F.3d at
303-06; Christy v. Pa. Tpk. Comm’n, 54 F.3d 1140, 1146 &
n.7 (3d Cir. 1995); Bolden, 953 F.2d at 818-19; Fitchik, 873
F.2d at 661.
MSU directs us to its own 2013 and 2014 financial
statements to show that it is “fiscally dependent” on the State,
Appellant’s Br. 26-28. These reports indicate that, in the
years 2012-2014, only 18.8-21.8% of MSU’s annual revenues
came from state appropriations. 10 Meanwhile, MSU derives
10
See O’Connor Davies, LLP, Montclair State
University (A Component Unit of the State of New Jersey):
Basic Financial Statements and Management’s Discussion
and Analysis, June 30, 2014 and 2013 (“2013-2014 MSU
Financial Statements”) 9-10 (2014), available at
http://www.montclair.edu/media/montclairedu/financetreasur
er/controller/2014-MSU-Audit.pdf (last visited June 13,
2016); O’Connor Davies, LLP, Montclair State University (A
Component Unit of The State of New Jersey): Basic Financial
Statements and Management’s Discussion and Analysis and
19
49.2-50.8% percent of its revenues from sources over which it
has considerable control: e.g., tuition, fees, and room and
board, 11 see N.J. Stat. Ann. §§ 18A:64-6(n), (o), -13, -18, and
is permitted to invest funds and retain the earnings on such
investments, creating another source of funding separate from
the state coffers, id. § 18A:64-18.2.
In addition to the mere existence of alternative sources
of funding, we consider the degree to which funds
appropriated by the State are owned by the State after being
deposited into the entity’s bank account. 12 Fitchik, 873 F.2d
Schedules of Expenditures of Federal and State of New Jersey
Awards, June 30, 2013 and 2012 (“2012-2013 MSU
Financial Statements”) 8-9, available at
http://www.montclair.edu/media/montclairedu/financetreasur
er/controller/FY13-A-133-(Awards).pdf (last visited June 13,
2016). Although these documents were not part of the record
before the District Court, we may take judicial notice of them
because they are “public documents,” N.J. Stat. Ann.
§ 18A:3B-6(l); see also id. § 18A:3B-51, and because
Maliandi does not object to their consideration. See Oran v.
Stafford, 226 F.3d 275, 289 (3d Cir. 2000) (citing to Federal
Rule of Evidence 201(b)(2) and allowing, where the appellee
does not object, an appellate court to take notice of the
appellant’s properly authenticated public documents that were
required by law to be filed).
11
2013-2014 MSU Financial Statements 8-10; 2012-
2013 MSU Financial Statements 8-9.
12
While Fitchik considered the State’s retention of
ownership over appropriate funds in the second subfactor
20
at 661-62 (“[C]ontrol is . . . significant to the funding factor if
it indicates ownership.”); see also Christy, 54 F.3d at 1145-46
(noting that a State lacks financial interest in the diminution
of funds it no longer controls). Indeed, “[t]he magnitude of
the state’s contribution” is of little relevance if “once
deposited . . . the[] funds belong to the [entity]” because if
state-appropriated funds are “used to pay a judgment, we can
say only that the judgment was satisfied with the [entity’s]
monies.” Febres, 445 F.3d at 234; see also Kovats, 822 F.2d
at 1308-09 (noting that state contributions to Rutgers’s budget
were comingled with the University’s tuition and other
revenues into a discretionary pot of money over which
Rutgers retained sole control).
Here, although MSU must abide by the “minimal”
constraint that it spend its funds within the general parameters
of the State’s overall budget appropriations, Kovats, 822 F.2d
at 1311 (discussing Rutgers’s ability to spend freely in the
context of autonomy), it otherwise may spend state-
appropriated funds as it sees fit, N.J. Stat. Ann. § 18A:64-
6(e), (f). Further, leftover state funds are retained by MSU
rather than returned to New Jersey’s treasury. Id. § 18A:64-
18.1(b). Thus, it cannot be said that the State retains
ownership over the funds once they have been allocated to
MSU.
under the funding inquiry, 873 F.2d at 660-62, as we do here,
later cases have considered it under the first subfactor, legal
liability, discussed in Part II.B.1.i, Christy, 54 F.3d at 1146.
Regardless, ownership is relevant to the funding factor and, in
addition, it bears on the third Fitchik factor: autonomy. See
infra Part II.B.3.
21
Another point we routinely consider in connection
with alternative funding is whether a state-affiliated agency
has the authority to purchase liability insurance to prevent
shortfalls that could arise in the wake of large money
judgments, so that the State is inoculated from any effect on
its treasury. Bolden, 952 F.2d at 819; Fitchik, 873 F.2d at
661. That sheds little light here, however, as New Jersey
authorizes state colleges to obtain liability insurance for tort,
contract, and workers’ compensation claims brought against
them, N.J. Stat. Ann. § 18A:64-87, but does not authorize
insurance across the board, cf. id. § 27:25-5(r) (authorizing
the New Jersey Transit Corporation at issue in Fitchik to
obtain “any type of insurance and indemnify against loss or
damage to property from any cause”).
On balance, MSU’s alternative sources of funding also
tip against immunity.
iii. Statutory Immunity from Liability
The third subfactor stands for the simple proposition
that where the State has expressly immunized itself from the
entity’s liabilities, it thereby indicates the entity is not an arm
of the State and hence not entitled to protection under the
Eleventh Amendment. 13 Here, New Jersey has immunized
itself from the liability of its state colleges in two
13
We have been far from vigilant about separating this
subfactor from the first, with some of our cases combining the
consideration of statutory immunity with the legal liability
inquiry discussed in Part II.B.1.i. E.g., Cooper, 548 F.3d at
304. Here, we consider it separately in line with Fitchik’s
recitation of the three subfactors. 873 F.2d at 659.
22
circumstances: (1) for loans taken out by a state college upon
which the college later defaults, N.J. Stat. Ann. § 18A:64-6(t),
i.e., an exception to the State’s assumption of liability for
contractual debts under the Contractual Liability Act; and (2)
for a state college’s violation of the requirements of the State
College Contracts Law, 14 id. § 18A:64-6(k), an immunity of
little significance to our analysis given that this law also
immunizes the state colleges themselves, id. § 18A:64-81.
Those isolated instances stand in stark contrast to the
sweeping statutory immunity “from liability on judgments
entered against Rutgers” that we said counseled against
Eleventh Amendment immunity in Kovats. 822 F.2d at 1310-
11 (citing N.J. Stat. Ann. § 18A:65-8); accord Cooper, 548
F.3d at 304; Bolden, 953 F.2d at 819; Fitchik, 873 F.2d at
661. 15
14
The State College Contracts Law imposes
requirements and limitations on state colleges’ contractual
authority, such as mandating that a college engage in
competitive bidding for projects exceeding $26,200. See,
e.g., N.J. Stat. Ann. § 18A:64-55.
15
We reject the argument that the State’s statutory
immunity from liability in these two areas gives rise to a
negative inference that the State is liable for judgments
against MSU in all others. Particularly in the absence of any
affirmative indication that the State has general responsibility
for judgments against MSU, e.g., N.J. Stat. Ann. § 18A:3B-
6(h), we will not infer from two narrow statutory
provisions—one of which is an exception to an express
waiver of the State’s immunity and the other of which simply
makes clear that the statute does not serve as a waiver of
23
* * *
In sum, while the third subfactor tends to favor treating
MSU as an arm of the State, the other funding subfactors tip
decisively the other way. We therefore conclude that the
funding factor counsels against Eleventh Amendment
immunity.
2. The Status Under State Law Factor
The second Fitchik factor requires us to ascertain the
“status of the agency under state law,” which includes such
considerations as “how state law treats the agency generally,
whether the entity is separately incorporated, whether the
agency can sue or be sued in its own right, and whether it is
immune from state taxation.” Fitchik, 873 F.2d at 659. In
addition to these subfactors explicitly listed in Fitchik, we
have also considered the entity’s authority to exercise the
power of eminent domain, application of state administrative
procedure and civil service laws to the entity, the entity’s
ability to enter contracts and make purchases on its own
behalf, and whether the entity owns its own real estate. See,
e.g., Bowers, 475 F.3d at 548; Bolden, 953 F.2d at 820;
Fitchik, 873 F.2d at 662-63; Kovats, 822 F.2d at 1310.
immunity—a sub silentio authorization of a raid on the state
treasury. Springer v. Gov’t of Philippine Islands, 277 U.S.
189, 206 (1928) (explaining that courts do not draw negative
inferences when “a contrary intention on the part of the
lawmaker is apparent”); Reilly v. Ozzard, 166 A.2d 360, 365
(N.J. 1960) (rejecting negative inferences when context
indicates such inferences are improper).
24
We have recognized that the multifaceted nature of the
status under state law factor can make it so hopelessly
“checkered” that it does not “significantly help in determining
whether [the entity] is entitled to immunity from suit in
federal court,” and thus effectively drops out of our overall
Fitchik analysis. Fitchik, 873 F.2d at 662 (citing Kovats, 822
F.2d at 1310). That is not the case here, however. We
address each consideration below and conclude that, while
MSU certainly has attributes that point both ways, on the
whole its status under state law counsels in favor of extending
Eleventh Amendment immunity.
Treatment Under State Law Generally. In determining
“how state law treats the agency generally,” id. at 659, we
look to (1) explicit statutory indications about how an entity
should be regarded; (2) case law from the state courts—
especially the state supreme court—regarding an entity’s
immunity or status as an arm of the State; and (3) whether the
entity is subject to laws for which the State itself has waived
its own immunity (such as state tort claims acts). E.g.,
Christy, 54 F.3d at 1148-49; Fitchik, 873 F.2d at 662-63;
Skehan I, 538 F.2d at 62. Those indicators point both ways
here, leading us to conclude that MSU’s general treatment
under state law is simply inconclusive.
As for explicit statutory indicators, MSU argues that
New Jersey law squarely locates state colleges in the
Department of State, thus indicating they exist as agencies—
and therefore “arms”—of the State. But the statute MSU
cites is a double-edged sword. True, N.J. Stat. Ann.
§ 18A:3B-27 provides that “any State institution of higher
education . . . shall be allocated to the Department of State,”
but the statute continues: “[n]otwithstanding this allocation,
any such institution shall be independent of any supervision
25
or control of the Department of State or any board,
commission or officer thereof and the allocation shall not in
any way affect the . . . institutional autonomy” of the
college. 16 MSU’s statutory “allocation” to the State thus
offers little guidance. 17
16
In a related argument directed at Fitchik’s third
factor, autonomy, MSU urges that New Jersey’s abolishment
in 2011 of the Commission on Higher Education—an entity
that was designed to be a liaison between the colleges and the
Governor’s office and to engage in some administrative
oversight of the colleges, N.J. Stat. Ann. § 18A:3B-13—and
its transfer of those duties to the Secretary of Higher
Education, 43 N.J. Reg. § 1625(a), reflects a deliberate
consolidation of power in a cabinet-level official that strips
the colleges of autonomy. As observed by the District Court,
however, MSU’s characterization of this change is misplaced,
for the implementing regulation expressly states that it was
designed not only to “improve the effectiveness of the State’s
oversight of higher education” but also to “improv[e] the
strength and independence of boards of trustees,” id.; thus it
does not represent some sea change in the institutions’
autonomy under state law.
17
State colleges also are described with reference to
the “State” or as “state agenc[ies]” in other statutory
provisions. E.g., N.J. Stat. Ann. §§ 18A:3B-6(h) (referring to
state colleges as “State entities”), 52:14B-2 (referring to
entities subject to the New Jersey Administrative Procedure
Act as “state agenc[ies]”), 59:1-3 (referring to certain entities
subject to the Tort Claims Act as part of the “State”), 59:13-2
(same for the Contractual Liability Act). We attach only
26
MSU’s treatment under New Jersey case law is
likewise inconclusive. In Fuchilla v. Layman, 537 A.2d 652,
655-67 (N.J.), cert. denied, 488 U.S. 826 (1988), the New
Jersey Supreme Court invoked Urbano to determine that the
University of Medicine and Dentistry of New Jersey would
not qualify as an alter ego of the State for purposes of
Eleventh Amendment immunity and hence qualified as a
“person” subject to liability for discrimination claims brought
under 42 U.S.C. § 1983 and the NJLAD. Just three years
later, however, the same Court explained that New Jersey
City University (then known as Jersey City State College)— a
college very similar to MSU—is a “State agency” for some
purposes, suggesting that it would be immune from local
regulations and property taxes, even though it might not be
for discrimination claims. N.J. Educ. Facilities Auth. v.
Gruzen P’ship, 592 A.2d 559, 563 (N.J. 1991). 18 Thus, the
limited significance to a State’s denomination of an entity as
an arm of the State, however, for blind deference to a
legislature’s description would abdicate the courts’
responsibility to conduct individualized determinations and
would bestow upon States the unfettered ability to immunize
the activities of any number of entities. See Christy, 52 F.3d
at 1149 n.9 (citing Bolden, 953 F.2d at 815 n.8, 817).
18
We disagree with MSU that Fuchilla is not relevant
to MSU because the college at issue in that case was then
governed by a different set of statutes than those governing
state colleges like MSU. While that is true as far as it goes,
New Jersey Educational Facilities Authority then cited to
Fuchilla to suggest that New Jersey City University—a state
college that is governed by the same statutes as MSU—might
not be immune from discrimination claims. 592 A.2d at 563.
27
New Jersey Supreme Court—purporting to adhere to our
Urbano/Fitchik framework—appears to have adopted a
claim-specific approach to immunity that turns on “the
fundamental purposes of the relevant laws or doctrines and
the reasons [the court] believe[s] would best accord with the
measure of independence the Legislature would intend to give
to the State-university system.” Id.
In Fitchik, we cited Fuchilla favorably and
characterized it as “evinc[ing] some reluctance on the part of
the New Jersey courts to accord immunity to agencies whose
status under New Jersey statutes is ambiguous.” 873 F.2d at
663. Given the New Jersey Supreme Court’s subsequent
decision in New Jersey Educational Facilities Authority,
however, its jurisprudence is of limited use to our analysis
because, to the extent it assumed our Urbano/Fitchik test
would authorize courts to parse claim-specific Eleventh
Amendment immunity, it was mistaken. We view that
approach as untenable—both practically and in principle.
Fitchik contemplated judicial determinations of Eleventh
Amendment status for entities, not for claims, and carving
discrimination claims out for special treatment does not
square with that categorical model. 19 Moreover, because
19
Of course, Congress may abrogate Eleventh
Amendment immunity for specific claims pursuant to its
authority under the Fourteenth Amendment, and States may
waive their immunity to suit in federal court at their
discretion if done unequivocally. Pennhurst State Sch. &
Hosp. v. Halderman, 465 U.S. 89, 99 (1984); see also Pa.
Fed’n of Sportsmen’s Clubs v. Hess, 297 F.3d 310, 323 (3d
Cir. 2002).
28
Fuchilla was decided before Fitchik condensed Urbano into
three factors and before Benn rendered the funding factor co-
equal, the propriety of Fuchilla’s Eleventh Amendment
analysis is suspect in light of those changes to our
jurisprudence. See, e.g., Endl v. New Jersey, 5 F. Supp. 3d
689, 699-700 (D.N.J. 2014) (questioning the continued
vitality of Fuchilla in a post-Fitchik world); Overton v.
Shrager, C.A. No. 09-6299 (MLC), 2011 WL 2937363, at *4-
5 (D.N.J. 2011) (same). 20
20
MSU directs us to two additional state cases that do
specifically address MSU, but neither purports to apply
Fitchik, and both give only mixed signals. In Chasin v.
Montclair State University, the New Jersey Supreme Court
implicitly recognized that MSU professors are state
employees for purposes of the Tort Claims Act, thus entitling
them to representation and indemnification by the State to the
extent allowed by the Tort Claims Act, but that case also
recognized that state colleges and their faculty retain
significant autonomy regarding the defense of tort claims not
afforded to other state entities and employees. See 732 A.2d
457, 469 (N.J. 1999); but cf. N.J. Educ. Facilities Auth., 592
A.2d at 563 (noting that state university employees may not
be considered state employees in conflict-of-interest cases).
And in Batkay v. Montclair State University, New Jersey’s
intermediate appellate court called MSU “a state agency,” but
it simultaneously recognized that, while MSU may be housed
in the Department of State, it is deemed by statute to be
autonomous. See Dkt. No. A-3806-02T2, slip op. at 4-6 (N.J.
Super. Ct. App. Div. Jan. 27, 2004) (per curiam) (citing N.J.
Stat. Ann. § 18A:3B-27).
29
The third indicator of treatment under state law—
whether the entity is subject to laws for which the State has
waived its own immunity—also does little to tip the scales
here. On the one hand, MSU is subject to the Tort Claims
Act, which typically counsels in favor of immunity because it
implies that, like the State itself, MSU would be immune
from tort claims absent the Act. On the other hand, this Tort
Claims Act—in contrast to the one we observed favored
immunity for the University of Iowa in Bowers, 475 F.3d at
548 (citing Iowa Code ch. 699, 670)—also applies to
municipalities and counties, which do not benefit from
Eleventh Amendment immunity, Lake Country Estates, Inc.
v. Tahoe Reg’l Planning Agency, 440 U.S. 391, 401 (1979),
thus undercutting the inference that entities subject to this Act
are otherwise immune from suit, Fitchik, 873 F.2d at 663
(discounting the pertinence to the immunity inquiry of New
Jersey’s Tort Claims Act because it applies to political
subdivisions as well).
Separate Incorporation. Separate incorporation
disassociates an entity from its State and thus weakens its
claim to Eleventh Amendment immunity. See Fitchik, 873
F.2d at 663. This consideration has little bearing on MSU,
however, for while New Jersey law provides that state
colleges “have the power and duty to . . . [a]dopt and use a
corporate seal,” N.J. Stat. Ann. § 18A:64-6(a), there is no
indication that MSU has ever invoked this authority to
actually incorporate. Cf. id. § 18A:65-2 and -11 (expressly
preserving Rutgers’s corporate seal and independent
corporate status from its time as a private institution).
Ability to Sue and Be Sued. An entity is more likely
to be an arm of the State and partake of Eleventh Amendment
immunity if it lacks the ability to sue and be sued in its own
30
name. See Fitchik, 873 F.2d at 663. State colleges like MSU
enjoy no explicit grant of such authority, and state case law
indicates that, in the absence of an affirmative grant of such
power, a state college cannot sue and be sued in its own right.
Frank Briscoe Co. v. Rutgers, the State University, 327 A.2d
687, 693 (N.J. Super. Ct. Law Div. 1974). 21
Not only does the absence of an affirmative grant of
the power to sue and be sued indicate MSU lacks such
authority, but provisions of the New Jersey code that govern
MSU support that conclusion as well. For example, the Tort
Claims Act and the Contractual Liability Act, which do not
apply to entities that can sue and be sued, N.J. Stat. Ann.
§§ 59:1-3, :13-2, do apply to state colleges like MSU, see id.
§ 18A:3B-6(h) (authorizing state colleges to use the Attorney
General to represent them in Tort Claims Act suits); id. §
59:13-2 (providing that entities that can sue and be sued are
not subject to the Contractual Liability Act); Stony Brook
Constr. Co. v. Coll. of N.J., 2008 N.J. Super. Unpub. LEXIS
799, at *38-39 (N.J. Super. Ct. App. Div. June 16, 2008)
(unpublished) (concluding that because a state college
governed by the same statutes as MSU cannot sue and be
sued, it is subject to the Contractual Liability Act).
21
The New Jersey Superior Court deemed Rutgers an
exception to this rule because it had the power to sue and be
sued in its capacity as a private institution and, in the absence
of contrary legislative intent, thereby retained that power
when it became a public university, notwithstanding the
absence of any affirmative grant of such authority by the
legislature. Frank Briscoe Co., 327 A.2d at 693.
31
In addition, although state colleges like MSU were
authorized by statute to make a binding election within a
certain window of time to retain private counsel (instead of
being represented by the Attorney General) to defend against
tort claims, which might indicate an ability to sue and be sued
generally, the same statute specifies that opting for private
representation renders the college “a sue and be sued entity
for the purposes of the ‘New Jersey Tort claims Act’ only.”
N.J. Stat. Ann. § 18A:3B-6(h). The statute also provides that,
should a college opt for private representation, it must
provide its employees with the “defense and indemnification”
that they, as state employees, would “otherwise . . . be
entitled to from the Attorney General pursuant to [the Tort
Claims Act].” Id. These provisions make clear that, in the
normal course, colleges like MSU are treated for litigation
purposes like any state agency and thus may not sue and be
sued under New Jersey law.
Indeed, the only indication that MSU can sue and be
sued in its own name is that it hired a private law firm to
bring a civil suit in 2012. See Montclair State Univ. v. Oracle
USA, Inc., C.A. No. 11-2867 (FLW), 2012 WL 3647427
(D.N.J. Aug. 23, 2012). In supplemental briefing, MSU
argued that this suit was not evidence of any general statutory
authorization to sue and be sued because MSU was
specifically permitted to bring that suit under N.J. Stat. Ann.
§§ 18A:3B-6(h) and 18A:64-7. But neither statute supports
that assertion. While § 18A:3B-6(h) authorizes state colleges
“[t]o retain counsel of the institution’s choosing,” for the
reasons explained above, the same provision indicates that
state colleges are authorized to sue and be sued only in the
limited context of Tort Claims Act claims. Setting aside the
myriad reasons a college may have to retain counsel other
32
than to pursue litigation, the lawsuit in Oracle proceeded on
contractual claims—after all tortious claims had been
dismissed—in apparent defiance of the limited, torts-only
scope of sue and be sued authority afforded to state colleges
by statute. 2012 WL 3647427, at *12. And § 18A:64-7
authorizes colleges to “exercise the powers, rights and
privileges that are incident to the proper government, conduct
and management of the college . . .,” but it does not reference
litigation at all. That this appears to be the sole instance in
which MSU has brought suit in its own name, and given its
lack of authority to sue and be sued outside the Tort Claims
Act context, we suspect MSU acted outside of its authority
when it filed suit in Oracle, and we will not abrogate
Eleventh Amendment immunity on the basis of an apparent
aberration. In sum, MSU’s inability to sue and be sued favors
immunity.
Immunity from State Taxes. It is undisputed that MSU
and other state colleges are immune from state taxes and from
municipal and county ordinances. O’Connell v. State, 795
A.2d 857, 863 (N.J. 2002) (“Montclair [State University] is
exempt from federal and state taxation.”); see also N.J. Educ.
Facilities Auth., 592 A.2d at 563 (indicating that New Jersey
City University, which is governed by the same statutory
scheme as MSU, would be immune from local land-use
regulations). This fact clearly weighs in favor of immunity.
See Fitchik, 873 F.2d at 663.
Eminent Domain. State colleges have the power of
eminent domain. N.J. Stat. Ann. § 18A:64-6(l). Because this
is a sovereign power, it tips slightly in favor of immunity, but,
just as with the Tort Claims Act, we take this fact with a grain
of salt because New Jersey’s political subdivisions also have
this authority. Fitchik, 873 F.2d at 663.
33
Administrative Procedure and Civil Service Laws. An
entity’s claim to immunity is stronger if it is subject to a
State’s administrative procedure and civil service laws.
Kovats, 822 F.2d at 1310 (noting that Rutgers’s claim to
immunity was weakened by the fact that, “unlike other state
agencies, [Rutgers is] not subject to civil service laws . . . or
administrative procedure requirements”). State colleges like
MSU are subject to the strictures of the New Jersey
Administrative Procedure Act, N.J. Stat. Ann. §§ 52:14B-1 to
-31, when carrying out certain disciplinary or employment
proceedings, and the decisions rendered by the colleges in
those instances are subject to judicial review. Id. § 18A:3B-
6(f). Moreover, for a significant subset of employees, state
colleges are subject to New Jersey’s civil service laws, id.
§ 18:64-6(i)—a fact that, according to MSU, is unique among
the States. MSU also notes that it should be viewed more like
a state agency because its employees benefit from the state
health care and pension programs, N.J. Stat. Ann. § 18A:66-
170, and we agree this trait is relevant. These attributes
counsel in favor of immunity.
Power to Enter Contracts. We also consider whether
an entity may enter contracts on its own accord, which cuts
against immunity, see Kovats, 822 F.2d at 1310 (noting that
Rutgers is not subject to New Jersey’s competitive bidding
statutes), and whether its contractual authority is subject to
state-imposed limits, which cuts in favor, see Bowers, 475
F.3d at 548 (noting that the University of Iowa “is unable to
buy or transfer real estate without the express permission of”
another state agency). Unhelpfully, for New Jersey state
colleges, the answer is “yes” to both questions, see N.J. Stat.
Ann. § 18A:64-6(k) (authorizing state colleges to enter
contracts subject to the provisions of the State College
34
Contracts Law, N.J. Stat. Ann. §§ 18A:65-52 to -93),
rendering this consideration of little relevance.
Ownership of Land. Finally, we take note of whether
a state-affiliated institution of higher learning retains title of
the land on which it sits, with state ownership tipping in favor
of immunity. Bowers, 475 F.3d at 548 (noting that, per the
state constitution, Iowa owned the University of Iowa’s land);
Kovats, 822 F.2d at 1309 (noting that Rutgers retained title to
the land on which it sits). Here this consideration slightly
disfavors arm of the State status, as MSU appears to retain
title to at least some of its land. New Jersey state colleges are
authorized to purchase and own property without seeking
state permission, implying that, in such instances, the
property is titled under the college’s name. N.J. Stat. Ann.
§ 18A:64-6(k), (q). And although state law provides that
parcels “titled in the name of the State Board of Higher
Education or the State Department of Higher Education,
which are occupied by a public institution of higher
education[,] shall be titled in the name of the State of New
Jersey,” id. § 18A:72A-29, it also describes certain land as
being “owned by [a] university or by [a] particular college,”
id. § 18A:72A-26, and contemplates land conveyances
“executed and delivered in the name of the college,” id.
§ 18A:72A-29.
* * *
We emerge from this analysis with subfactors on both
sides of the scale as to MSU’s “status under state law.” One
of them—ownership of land—points against immunity, and
three others—treatment under state law generally, separate
incorporation, and power to enter contracts—are
inconclusive. But considering that MSU cannot sue and be
35
sued in its own name, is immune from state taxes, can
exercise the power of eminent domain, and generally is
subject to New Jersey administrative procedure and civil
service laws, the balance of considerations defining MSU’s
“status under state law” cuts in favor of immunity. The
second Fitchik factor thus tips in MSU’s favor.
3. The Autonomy Factor
Although an entity’s treatment under state law has
obvious repercussions for the autonomy of its operations,
Fitchik directs that autonomy be analyzed as a distinct factor,
focusing on the entity’s governing structure and the oversight
and control exerted by a State’s governor and legislature.
See, e.g., Febres, 445 F.3d at 231-32; Fitchik, 873 F.2d at
663-64. The lesser the autonomy of the entity and greater the
control by the State, the greater the likelihood the entity will
share in the State’s Eleventh Amendment immunity. While
the New Jersey code again gives some inconsistent signals,
we conclude it imposes sufficient constraints on MSU’s
autonomy to favor immunity.
Our benchmarks, at the opposite ends of the spectrum,
are Rutgers and the University of Iowa. In Kovats, we
concluded Rutgers was “largely autonomous.” 822 F.2d at
1311. It had two governing boards: the eleven-member
Board of Governors, of which six were appointed by the
Governor of New Jersey, and the Board of Trustees, a
minority of which were appointed by the Governor. Id.
Because of the institution’s history as a private institution, the
trustees held significant power, further insulating
decisionmaking from the Governor’s control. Id. By statute,
both boards were “given a high degree of self-government”
and were empowered to act “without recourse or reference to
36
any department or agency of the state, except as otherwise
expressly provided.” Id. (quoting N.J. Stat. Ann. §§ 18A:65-
27(I)(a), -28). The boards were encumbered by only two
state-imposed limitations, the effect of which we deemed
“minimal”: the Board of Governors had to comply with the
State’s budget appropriations and abide by state laws and
regulations. Id. Moreover, Rutgers was not required to
manage its funds as public monies, could establish accounts
and invest or withdraw funds as desired, could make
unregulated spending decisions within the broad contours of
the State’s appropriations, only had to report its financial
choices to the State (rather than obtain approval from the
State), and did not have to comply with civil service,
competitive bidding, or administrative procedure
requirements. Id. at 1311-12. In short, the Governor and
state legislature had little power over the inner workings of
Rutgers aside from a small number of appointments and
overall spending parameters for state funds.
Contrast the University of Iowa, where we concluded
the entity was not autonomous. The Board of Trustees, we
determined, was “tightly constrained by state authority”
because all nine members of the Board were appointed by the
Governor for six-year terms and were removable by the
Governor for cause (with state senate approval); the Board’s
expenses were reimbursed by the State and reported to the
Governor; various state statutes constrained the Board’s
procurement capabilities, ability to accept and administer
trusts, and the number and location of meetings allowed; the
Board could not acquire or transfer real estate without
permission from a council that included the Governor and
members of his cabinet; the Board had to turn over ownership
of all patents and copyrights to the State; the Board was
37
required to file biennial budget reports to the Governor and
legislature; and the Board had to hire a budget analyst to
prepare its budget. Bowers, 475 F.3d at 548-49.
While MSU shares characteristics of both of these
schools, it is, on the whole, more akin to the University of
Iowa, and hence, we conclude, not autonomous. The
Governor looms large in the affairs of New Jersey state
colleges. All members of the Board of Trustees are appointed
by the Governor and confirmed by the state senate for six-
year terms, from which they are removable for cause. N.J.
Stat. Ann. § 18A:64-3. In addition, the Governor is
statutorily designated as the public “employer” of all college
employees, which vests him with the sole power to
collectively bargain on their behalf. Id. § 18A:64-21.1.
Although the Governor possesses no apparent veto
authority over state college decisions, 22 the Secretary of
Higher Education, a member of the Governor’s cabinet, has
authority to issue master plans for higher education in the
22
We did not consider the relevance of a gubernatorial
veto in Kovats or Bowers, but we did in Fitchik, where we
determined the entity’s board was “significantly
autonomous,” but the Governor could subsequently veto the
board’s actions. 873 F.2d at 663-64; see also Febres, 445
F.3d at 230-31 (considering the effect of the Governor’s
“constrained” veto power on autonomy). Our conclusion in
Fitchik that the particular combination of significant
autonomy and gubernatorial control counseled “slightly” in
favor of immunity, 873 F.2d at 664, has little bearing here
where MSU’s board cannot be described as “significantly
autonomous.”
38
State, license and accredit the institutions, impose ethics rules
for them, approve certain new academic programs, review
budget requests, and issue regulations relating to licensure,
outside employment, tuition, personnel, tenure, and
retirement programs. Id. §§ 18A:3B-14, -15; see also 43 N.J.
Reg. § 1625(a). The Secretary may also, “with the
concurrence of the Governor,” visit a school at any time to
review its financials and compliance with all appropriate laws
and regulations and may issue subpoenas to investigate
suspected wrongdoing. N.J. Stat. Ann. § 18A:3B-34. The
colleges also are required to spend their budgets in
accordance with the general provisions of the state budget and
appropriations, and may be subject to audit at any time to
ensure such conformance. Id. § 18A:64-6(f).
New Jersey law further constrains state colleges like
MSU by subjecting them to the Administrative Procedure
Act, the State College Contracts Law, and the civil service
laws. 23 Id. §§ 18A:3B-6(f), :64-6(h), (k), (w), (x), :64-52 to -
93. In addition, they must comply with certain limitations on
their ability to make deposits in financial institutions absent
security from the institution, id. § 18A:64-18.5; restrict their
government relations and lobbying activities according to
statutory bounds, id. § 18A:3B-54; and have their contractual
obligations tied to the state coffers under the Contractual
23
Academic faculty are excepted from the civil service
laws, giving colleges considerable autonomy to set salaries
for those individuals and to hire or fire them without being
subject to review by the Vacancy Review Board. N.J. Stat.
Ann. §§ 18A:64-21.2, -21.3.
39
Liability Act, id. § 59:13-1 to -10; Stony Brook Constr. Co.,
2008 N.J. Super. Unpub. LEXIS, at *38-39 .
These colleges are also subject to significant reporting
requirements and rules for internal governance. For example,
they must hire an independent auditor and prepare a publicly
available audit, prepare an annual report on their general
operations, prepare a long-range facilities plan that includes a
description of the source of non-state funds, and present the
Governor and legislature with an annual budget report. N.J.
Stat. Ann. §§ 18A:3B-6(l), -35, -39, -48 to -51, :64-6(d).
Moreover, each college’s board of trustees is required to hold
a September meeting every year, and the presidents of each
college (who are, themselves, selected by the gubernatorial-
appointed board, id. § 18A:64-6(g)) are required by law to sit
on the Presidents’ Council. Id. §§ 18A:3B-7, :64-4.
At the same time, we recognize MSU bears some
hallmarks of an autonomous entity. For example, the New
Jersey legislature has on many occasions declared its
intention for state colleges to have “institutional autonomy.”
Id. § 18A:3B-27. 24 While trustees are appointed by the
24
See also N.J. Stat. Ann. § 18A:64-7 (characterizing
the boards’ powers as being “exercised without recourse or
reference to any department or agency of the State”); id.
§ 18A:3B-2 (seeking “the elimination of unnecessary State
oversight” and providing “greater decision making and
accountability . . . at the institutional level”); id. § 18A:64-1
(offering state colleges “a high degree of self-government”).
Although we view skeptically a state legislature’s
denomination of an entity as an arm of the State, we do so to
prevent States from sweeping too many entities into the ambit
of the Eleventh Amendment, see supra n.17; that concern is
40
Governor, they receive no compensation and can only be
removed from their six-year terms for cause, according them
considerable decisional independence once appointed. Id.
§ 18A:64-3, -5; accord Univ. of R.I. v. A.W. Chesterton Co., 2
F.3d 1200, 1208 (1st Cir. 1993). But cf. Bowers, 475 F.3d at
549 (noting that the University of Iowa was not autonomous
in part because the Governor could remove board members
for cause). And the Board of Trustees does retain some
degree of self-governance and significant authority to manage
MSU. 25 But we are not persuaded that these attributes of
absent when a legislature indicates an entity is not an arm of
the State by describing it as autonomous, and we thus may
give more weight to such pronouncements. Here, however, in
the broader context of the colleges’ reporting obligations,
government oversight, and statutory placement in the
Department of State, we take these pronouncements to reflect
the legislature’s effort to navigate between granting colleges
the autonomy necessary for academic independence and
competitiveness on the one hand, and providing significant
oversight over their internal governance on the other.
25
For example, it retains power to choose its own size
(between seven and fifteen members) and to set the number
and dates of its meetings (aside from the required September
meeting). N.J. Stat. Ann. § 18A:64-3, -4. In addition, it is
authorized, among other things, to set, raise, and keep tuition
and fees, id. §§ 18A:3B-6(c), :64-6(n), (o), -13, -18, to settle
disputes (under the Administrative Procedure Act rules), id.
§ 18A:3B-6(f), to invest and reinvest funds (and save its
earnings), id. §§ 18A:3B-6(g), :64-18.2, to purchase real
estate and other property without preapproval (but subject to
limits), id. § 18A:64-6(k), (q), to set its own educational
41
independence, when weighed against the indicia of state
control, make MSU autonomous.
* * *
In sum, notwithstanding that it retains some modicum
of autonomy and that the indicia of state control are not as
“tight[]” as in Bowers, 475 F.3d at 549, we conclude that
MSU’s autonomy is constrained enough to tip this factor in
favor of immunity.
4. Balancing
The upshot of our review is that Fitchik’s funding
factor weighs against immunity, but its status under state law
and autonomy factors both favor immunity. Thus, on
balance, the Fitchik factors favor MSU’s claim to Eleventh
Amendment protection. See Bowers, 475 F.3d at 549-50. We
recognize that, absent recourse to the federal courts, Maliandi
may have limited and unsatisfying avenues to obtain relief for
the alleged discrimination she suffered. Yet, comity and state
sovereignty are constitutional precepts and lynchpins of our
federalist system of government, and where, as here, the State
creates an entity that functions on balance as an arm of the
State, the Eleventh Amendment’s protection must carry the
day. Accordingly, the constitutional right of the State of New
Jersey to be free from private suit in federal court must be
curriculum and internal policies, id. § 18A:64-6(b), (c), to
form, along with other state institutions, 501(c) organizations,
id. § 18A:3B-6.1, to purchase some types of insurance, id.
§ 18A:64-87, and to control its own grounds, buildings, and
other property, id. § 18A:64-19.
42
respected, and, unless the District Court determines on
remand that New Jersey has waived its immunity for
Maliandi’s NJLAD claim, the suit against MSU must be
dismissed.
III. Conclusion
For the foregoing reasons, we will reverse and remand
the case for proceedings consistent with this opinion.
43