Jerry Bird v. Oregon Comm'n for the Blind

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JERRY BIRD, No. 20-36066
Petitioner-Appellee,
D.C. No.
v. 3:18-cv-01856-
YY
OREGON COMMISSION FOR THE
BLIND, an agency of the State of
Oregon, OPINION
Respondent-Appellant,
v.
U.S. DEPARTMENT OF EDUCATION,
Rehabilitation Services
Administration,
Respondent-Appellee.
Appeal from the United States District Court
for the District of Oregon
Marco A. Hernández, Chief District Judge, Presiding
Argued and Submitted November 8, 2021
Portland, Oregon
January 7, 2022
2 BIRD V. OREGON COMM’N FOR THE BLIND
Before: Susan P. Graber and Morgan Christen, Circuit
Judges, and Raner C. Collins,* District Judge.
Opinion by Judge Collins
SUMMARY **
Sovereign Immunity
The panel reversed the district court’s denial of
sovereign immunity to Oregon Commission for the Blind
(“OCB”) in a case in which the district court affirmed an
arbitration panel’s award of compensatory relief, attorney’s
fees, and costs in favor of petitioner Jerry Bird.
Bird and other blind vendors filed a formal complaint
with OCB seeking arbitration, prospective relief, and
attorney’s fees as a consequence of OCB’s alleged
mishandling of vending contracts and representation of blind
vendors’ interests. The arbitration panel denied relief, and
Bird filed a petition for federal review in Oregon District
Court. The district court relied on Premo v. Martin, 119 F.3d
764 (9th Cir. 1997) (holding that Eleventh Amendment
sovereign immunity did not apply to an arbitration panel’s
decision under the Randolph-Sheppard Act (“RSA”)), and
held that the Eleventh Amendment did not protect OCB from
liability for compensatory damages.
*
The Honorable Raner C. Collins, United States District Judge for
the District of Arizona, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
BIRD V. OREGON COMM’N FOR THE BLIND 3
The panel held that neither the RSA nor the parties’
operating agreements unequivocally waived a state’s
sovereign immunity from liability for monetary damages,
attorney’s fees, or costs. The panel joined the Sixth and
Tenth Circuits, and concluded that the holding in Premo was
no longer binding. Subsequent to Premo, the Supreme Court
decided Sossamon v. Texas, 563 U.S. 277 (2011) (analyzing
whether a state waives sovereign immunity from
compensatory relief through acceptance of federal funding
under the Religious Land Use and Institutionalized Persons
Act of 2000). The panel held that Sossamon’s declaration
that a waiver of sovereign immunity must be explicit within
the text of the statute left no room for Premo’s reliance on
constructive waiver. An agreement to arbitrate all disputes
simply did not unequivocally waive sovereign immunity
from liability for monetary damages. The panel concluded
that OCB did not waive immunity from compensatory
damages, and the district court’s decision to the contrary was
in error. Insofar as Bird argued that the operating
agreements constituted waiver, those agreements, too,
incorporated the text of the RSA and contained no express
waiver of immunity from money damages.
The panel held that because no provision of the RSA or
the operating agreements provided for attorney’s fees, Bird
was not entitled to attorney’s fees.
COUNSEL
Christopher A. Perdue (argued), Assistant Attorney General;
Benjamin Gutman, Solicitor General; Ellen F. Rosenblum,
Attorney General; Oregon Department of Justice, Salem,
Oregon; for Respondent-Appellant.
4 BIRD V. OREGON COMM’N FOR THE BLIND
Kristian Roggendorf (argued), The Zalkin Law Firm, P.C.,
San Diego, California; Roger K. Harris, Harris Berne
Christensen LLP, Portland, Oregon; for Petitioner-Appellee.
No appearance for Respondent-Appellee.
OPINION
R. COLLINS, District Judge:
Respondent Oregon Commission for the Blind (“OCB”)
appeals the district court’s affirmation of an arbitration
panel’s award of compensatory relief, attorney’s fees, and
costs in favor of Petitioner Jerry Bird. We have jurisdiction
pursuant to 28 U.S.C. § 1291. Reviewing the denial of
sovereign immunity de novo, Ray v. County of Los Angeles,
935 F.3d 703, 708 (9th Cir. 2019), we reverse. Neither the
Randolph-Sheppard Act (“RSA”) nor the parties’ operating
agreements unequivocally waive a state’s sovereign
immunity from liability for monetary damages, attorney’s
fees, or costs. In coming to this conclusion, we join the Sixth
and Tenth Circuits and conclude that our holding in Premo
v. Martin, 119 F.3d 764 (9th Cir. 1997), is no longer binding.
I. Factual and Procedural History
The RSA creates a cooperative federal-state program
that gives preference to blind applicants for vending licenses
at federal facilities. 20 U.S.C. §§ 107–107f. At the federal
level, the Secretary of Education is responsible for
administering the Act. 20 U.S.C. §§ 107(b), 107a(a). At the
state level, state licensing agencies designated by the
Secretary of Education implement the program. 20 U.S.C.
§ 107a(a)(5). Under the RSA, a blind licensee who is
dissatisfied with “any action arising from the operation or
BIRD V. OREGON COMM’N FOR THE BLIND 5
administration of the vending facility program” may request
an evidentiary hearing before the licensing agency. 20
U.S.C.§ 107d-1(a). If the licensee disagrees with the
hearing’s result, he or she may file a complaint with the
Secretary of Education, who will summon an arbitration
panel to resolve the dispute. Id. The arbitration panel’s
decision is “final and binding on the parties” and is
reviewable by the district court as a final agency decision
under the Administrative Procedures Act. Id. §§ 107d-1,
107d-2(a).
Oregon’s mini-RSA is the state equivalent of the RSA,
applied to licenses at state buildings. See Or. Rev. Stat.
§§ 346.510–346.570. OCB is a state licensing agency that
executes the state’s version of the RSA by obtaining vending
permits in state buildings, licensing blind vendors, and
assigning blind vendors to vending sites. See id. §§ 346.120,
346.540. “State participation in the program is voluntary,
and a state agency seeking to be designated as a[n RSA
licensing agency] must apply to the Secretary of Education
and agree to a number of conditions.” Premo, 119 F.3d at
767. Oregon agreed to have the OCB “[s]ubmit to an
arbitration panel (upon its being convened by the Secretary
[of Education]) those grievances of any vendor which the
vendor believes to be unresolved after a full evidentiary
hearing.”
Bird is a blind vendor who gave up his vending contract
at the Oregon Lottery building in 2005 in response to OCB’s
promise to assign him to the vending contracts at Chemeketa
Community College (“CCC”) and Santiam Correctional
Facility. Despite its promise, OCB did not assign Bird to
those locations, choosing instead to contract with another
vendor.
6 BIRD V. OREGON COMM’N FOR THE BLIND
In 2006, Bird filed a grievance alleging that he should
have been assigned the vending contract at CCC. In 2009, an
arbitration panel reviewed Bird’s grievance and determined
that OCB had violated the RSA. The arbitration panel
ordered OCB to: (1) “pay Bird an amount equal to the net
revenues from vending at CCC”; (2) “award Bird the
vending contract at CCC”; and (3) consult with an elected
committee of blind vendors regarding any further actions for
additional vending that might become available at CCC.
OCB did not appeal that decision.
Bird later realized that OCB did not control all the
vending contracts at CCC. Consequently, Bird asked OCB
to commence “whatever action” was necessary to enforce
CCC’s compliance with state and federal laws. In March
2011, OCB filed a lawsuit against CCC. In response, CCC
cancelled all vending contracts and voided the agreement
with OCB in May 2011. CCC then opened up its vending
opportunities for proposals. OCB submitted a response, but
CCC selected a private vending company that offered CCC
a percentage of the revenues.
In July 2011, Bird and six other blind vendors filed a
formal complaint with OCB seeking arbitration, prospective
relief, and attorney’s fees as a consequence of OCB’s alleged
mishandling of vending contracts and representation of blind
vendors’ interests. The arbitration panel denied relief, and
Bird filed a petition for review in the Oregon District Court.
The district court concluded that the Eleventh Amendment
did not protect OCB from liability for compensatory
damages. Bird v. U.S. Dep’t of Educ., No. 3:14-CV-00843-
YY, 2017 WL 2365110, at *6 (D. Or. May 31, 2017). The
district court’s decision relied primarily upon the Ninth
Circuit holding in Premo.
BIRD V. OREGON COMM’N FOR THE BLIND 7
In Premo, we concluded that Eleventh Amendment
sovereign immunity did not apply to an arbitration panel’s
decision under the RSA, reasoning “[i]t has been widely
recognized” that the RSA allows for “arbitration panels to
award compensatory relief” because, when the arbitration
provision was formulated, it was intended to resolve blind
vendors’ disputes, which necessarily included “back pay and
other forms of compensatory relief.” 119 F.3d at 769–70
(first citing Tenn. Dep’t of Hum. Servs. v. U.S. Dep’t of
Educ., 979 F.2d 1162, 1165 (6th Cir. 1992); then citing Del.
Dep’t of Health & Soc. Servs. v. U.S. Dep’t of Educ., 772
F.2d 1123, 1136–37 (3rd Cir. 1985)). We permitted judicial
enforcement of the arbitration decisions granting
compensatory relief because the RSA provided that any
dispute could be arbitrated and that the arbitration panel’s
decision would be binding on the parties. Id. Therefore,
although waiver of sovereign immunity from compensatory
relief was not expressly contained within the statutory text,
we concluded a constructive waiver was sufficient given the
“overwhelming implication of the statute.” Id. at 770–71.
After we issued Premo, however, the Supreme Court
decided Sossamon v. Texas, 563 U.S. 277 (2011). In
Sossamon, the Court analyzed whether a state waives
sovereign immunity from compensatory relief through
acceptance of federal funding under the Religious Land Use
and Institutionalized Persons Act of 2000 (“RLUIPA”), 114
Stat. 803, 42 U.S.C. § 2000cc, et seq. Id. at 280. Although
RLUIPA provides for “appropriate relief against a
government” for violations of that statute, the Court held that
a state’s waiver of sovereign immunity “must be
‘unequivocally expressed’ in the text of the relevant statute”
and cannot be inferred from context. Id. at 282, 284 (quoting
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,
99 (1984)). In addition, the Court ruled that a state’s waiver
8 BIRD V. OREGON COMM’N FOR THE BLIND
of sovereign immunity from compensatory relief must be
unambiguous, regardless of the waiver of sovereign
immunity from any other form of relief. Id. at 285.
Therefore, the Court concluded, RLUIPA’s reference to
“appropriate relief” did not waive the state’s sovereign
immunity as to damages because the reference was
ambiguous. Id. at 286.
The district court here considered Sossaman but
ultimately distinguished the binding-arbitration text in the
RSA from the text found in Sossamon. Bird, 2017 WL
2365110, at *6. The court concluded that the Eleventh
Amendment did not preclude liability because states
participating in the RSA grant “explicit consent” to binding
arbitration of all disputes. Id. The district court considered
Oregon’s consent to be explicit because of Premo’s
observation that arbitration is commonly understood to
permit compensatory relief. Id. Dismissing Sossamon as
inapposite, the court remanded the matter to the arbitration
panel for a determination of compensatory relief and
attorney’s fees and costs, if appropriate. Id. at *8. The
arbitration panel, in turn, granted Bird both compensatory
relief and attorney’s fees and costs.
Bird petitioned for review of the arbitration panel’s
second decision, and OCB filed a cross-petition arguing that
OCB had not waived sovereign immunity from liability by
participating in the RSA. The matter was referred to a
magistrate judge, who issued Findings and a
Recommendation that the district court reaffirm its original
analysis about sovereign immunity from liability. Expanding
upon the district court’s previous order, the magistrate judge
stated that the decision in Premo was binding and its
reasoning “unequivocal.” The magistrate judge noted that
the Ninth Circuit was not alone in reaching this conclusion;
BIRD V. OREGON COMM’N FOR THE BLIND 9
the Third Circuit came to the same conclusion in Delaware
Department of Health and Social Services, 772 F.2d at 1138.
In so reasoning, the magistrate judge dismissed OCB’s
argument that the Supreme Court’s decision in Federal
Maritime Commission v. South Carolina State Ports
Authority, 535 U.S. 743 (2002) (FMC), was irreconcilable
with Premo. In FMC, the Supreme Court determined that
state sovereign immunity prevented an individual from
forcing South Carolina to adjudicate a dispute in front of the
Federal Maritime Commission for violations of the Shipping
Act of 1984. 535 U.S. at 753. The magistrate judge
concluded that FMC did not concern a state that voluntarily
participated in a statutory scheme such as the RSA, and
therefore FMC was not relevant to the analysis in this case.
In addition, the magistrate judge reiterated that
Sossamon considered the ambiguity of the phrase
“appropriate relief” in RLUIPA, not the RSA’s commitment
to binding arbitration of all disputes. The magistrate judge
observed that it was well known at the time of Premo that a
waiver cannot be inferred but must be explicitly stated or
overwhelmingly implied. Still, the Premo court concluded
that the implications of the RSA’s text overwhelmingly
demonstrate a participating state’s waiver of sovereign
immunity from liability. Thus, the magistrate judge decided
that Premo remained binding precedent. The district court
adopted the magistrate judge’s Findings and
Recommendation.
On appeal, OCB challenges the arbitration panel’s award
and seeks review of the district court’s determination that
participating in the RSA constitutes a waiver of sovereign
immunity from compensatory relief and attorney’s fees and
costs.
10 BIRD V. OREGON COMM’N FOR THE BLIND
II. Discussion
A state cannot be sued without its consent. See Seminole
Tribe v. Florida, 517 U.S. 44, 54 (1996); U.S. Const. amend.
XI. In general, constructive waiver is an insufficient
indication of waiver of a state’s sovereign immunity. Coll.
Savs. Bank v. Fla. Prepaid Postsecondary Educ. Expense
Bd., 527 U.S. 666, 680–86 (1999). Waiver of sovereign
immunity must be unequivocally stated within the relevant
statute and must be specific as to the type of relief waived.
Sossamon, 563 U.S. at 284–85. If ambiguous, “a waiver of
the Government’s sovereign immunity will be strictly
construed, in terms of its scope, in favor of the sovereign.”
Lane v. Pena, 518 U.S. 187, 192 (1996) (citations omitted).
In light of the Supreme Court’s holding in Sossamon, we are
faced with the question whether Premo remains good law.
We hold that it does not.
A circuit court may revisit controlling decisions only
when a subsequent circuit or Supreme Court decision makes
the two “clearly irreconcilable.” Miller v. Gammie, 335 F.3d
889, 900 (9th Cir. 2003) (en banc). “It is not enough for there
to be ‘some tension’ between the intervening higher
authority and prior circuit precedent, or for the intervening
higher authority to ‘cast doubt’ on the prior circuit precedent.
The intervening higher precedent must be ‘clearly
inconsistent’ with the prior circuit precedent.” Lair v.
Bullock, 697 F.3d 1200, 1207 (9th Cir. 2012) (citations
omitted).
In Premo, we found constructive waiver of sovereign
immunity, and held that it was common knowledge that
arbitration included compensatory relief at the time the
arbitration provision was added to the RSA. 119 F.3d at 769–
770. But Sossamon’s declaration that a waiver must be
BIRD V. OREGON COMM’N FOR THE BLIND 11
explicit within the text of the statute leaves no room for
Premo’s reliance on constructive waiver.
Although Premo found support in decisions from the
Third and Sixth Circuits, Premo, 119 F.3d at 768, Sossamon
changed this analysis. Those pre-Sossamon cases are also
premised upon constructive waiver. See Del. Dep’t of Health
& Soc. Servs., 772 F.2d at 1137–38; Tenn. Dep’t of Hum.
Servs., 979 F.2d at 1166–68. In Delaware, for example, the
Third Circuit concluded that the legislative history of the
RSA and common meaning of the term “arbitration”
unambiguously demonstrated that a state participating in the
RSA agreed to waive sovereign immunity from monetary
damages. 772 F.2d at 1136. But the Sixth Circuit
subsequently reversed its decision on sovereign immunity
from monetary damages and determined that, although Ohio
voluntarily participated in the RSA program, “[t]he RSA
does not mention any type of available remedy.” Ohio v. U.S.
Dep’t of Educ., 986 F.3d 618, 630 (6th Cir. 2021). The Sixth
Circuit noted that the text of the RSA was even more
ambiguous than the term “appropriate relief,” which was
found to be an insufficient expression of waiver in
Sossamon. Id. at 629. As a result, the Sixth Circuit held that
Ohio had not waived immunity from monetary damages. Id.
at 630; see also Tyler v. United States Dep’t of Educ. Rehab.
Servs. Admin., 904 F.3d 1167, 1172 (10th Cir. 2018)
(holding “state sovereign immunity bars RSA arbitration
panels from adjudicating complaints filed by a private party
against a nonconsenting State). Thus, the cases upon which
Premo relied are no longer controlling.
In conclusion, Premo’s analysis is clearly irreconcilable
with Sossamon’s conclusion that sovereign immunity from
monetary relief may not be waived through context and must
be “‘unequivocally expressed’ in the text of the relevant
12 BIRD V. OREGON COMM’N FOR THE BLIND
statute.” 563 U.S. at 284. After Sossamon, we can no longer
assume waiver from contextual clues such as congressional
intent or from a common understanding of the meaning of
arbitration. We are bound by the holding in Sossamon and
must conclude that Premo’s irreconcilable analysis is
precluded. An agreement to arbitrate all disputes simply
does not unequivocally waive sovereign immunity from
liability for monetary damages. As a result, OCB did not
waive immunity from compensatory damages, and the
district court’s decision to the contrary was in error.
Insofar as Bird argues that the operating agreements
constituted waiver, those agreements, too, incorporated the
text of the RSA and contained no express waiver of
immunity from money damages. The agreements are,
therefore, not proof that the state intended to permit
compensatory relief. We now turn to the remaining question
of attorney’s fees.
III. Attorney’s Fees and Costs
The American Rule is the “bedrock principle” applied to
the award of attorney’s fees. Hardt v. Reliance Standard Life
Ins. Co., 560 U.S. 242, 252–53 (2010). Under the American
Rule, “[e]ach litigant pays his own attorney’s fees, win or
lose, unless a statute or contract provides otherwise.” Id. at
253 (citations omitted) (emphasis added). Whether a statute
“limits the availability of attorney’s fees to a ‘prevailing
party’ is a question of statutory construction.” Id. at 251.
Federal courts “will not deviate from the American rule
‘absent explicit statutory authority.’” Baker Botts L.L.P. v.
ASARCO LLC, 576 U.S. 121, 126 (2015) (quoting
Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of
Health & Hum. Res., 532 U.S. 598, 602 (2001)).
BIRD V. OREGON COMM’N FOR THE BLIND 13
Because no provision of the RSA or the operating
agreements provides for attorney’s fees, Bird is not entitled
to attorney’s fees.
REVERSED and REMANDED.