127 F.3d 972 (10th Cir. 1997), 96-2135, Duke v. Grady Mun. Schools

Docket Nº:96-2135.
Citation:127 F.3d 972
Party Name:Bonnie DUKE, Plaintiff--Appellant, v. GRADY MUNICIPAL SCHOOLS; Grady School Board; George York, Superintendent of the Grady Municipal Schools; Pat Woods, Jerry Powell, Alan Sumrall, Phil Berry, Brent Armstrong, Individually and in their official capacities as Members of the Grady Municipal School Board, Defendants--Appellees. New Mexico Trial Lawye
Case Date:October 20, 1997
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 972

127 F.3d 972 (10th Cir. 1997)

Bonnie DUKE, Plaintiff--Appellant,

v.

GRADY MUNICIPAL SCHOOLS; Grady School Board; George York,

Superintendent of the Grady Municipal Schools; Pat Woods,

Jerry Powell, Alan Sumrall, Phil Berry, Brent Armstrong,

Individually and in their official capacities as Members of

the Grady Municipal School Board, Defendants--Appellees.

New Mexico Trial Lawyers Association, New Mexico School

Boards Association, Amici Curiae.

No. 96-2135.

United States Court of Appeals, Tenth Circuit

October 20, 1997

Page 973

Warren F. Frost, Warren F. Frost, P.C., Clovis, NM, for Plaintiff-Appellant.

David F. Richards, Van Soelen, Greig & Richards, P.A., Clovis, NM, for Defendants-Appellees.

Michael B. Browde, Albuquerque, NM; William H. Carpenter, Carpenter & Chavez, Albuquerque, NM; and Valerie A. Chang, Pasternack & Blake, P.C., Albuquerque, NM, on brief for Amicus Curiae New Mexico Trial Lawyers Association.

Robert D. Castille, Simons, Cuddy & Friedman, LLP, Santa Fe, NM, on brief for Amicus Curiae New Mexico School Boards Association.

Before PORFILIO, ANDERSON, and BALDOCK, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

This is an interlocutory appeal, pursuant to 28 U.S.C. § 1292(b), from an order of the district court in New Mexico, dismissing the 42 U.S.C. § 1983 claims of plaintiff, Bonnie Duke, against the Grady Public Schools, the Grady School Board, and the individual school board members in their official capacities. 1 The sole issue presented in this appeal is whether local school boards and districts in New Mexico are arms of the state and therefore entitled to Eleventh Amendment immunity, or whether they are political subdivisions or some other form of local entity subject to liability under § 1983. We hold that local school boards and districts in New Mexico are not arms of the state and are therefore not entitled to Eleventh Amendment immunity. We therefore reverse and remand. 2

BACKGROUND

Ms. Duke commenced this § 1983 action against the members of the Grady School Board in their individual capacities, alleging that they had deprived her of a protectable property interest in her employment without due process of law. While her action was pending in the district court, the New Mexico Supreme Court issued its decision in Daddow v. Carlsbad Mun. Sch. Dist., 120 N.M. 97, 898 P.2d 1235 (1995), cert. denied, --- U.S. ----, 116 S.Ct. 753, 133 L.Ed.2d 700 (1996). Daddow held that a local school board is not an arm of the state entitled to Eleventh Amendment immunity and that such a board is a "person" under 42 U.S.C. § 1983. Id., 898 P.2d at 1241-44. This decision directly conflicts with our decision in Martinez v. Board of Educ., 748 F.2d 1393 (10th Cir.1984), in which we held that school boards in New Mexico are arms of the state and as such are entitled to Eleventh Amendment immunity. Id. at 1396. Martinez has been followed in published and unpublished decisions. See, e.g., Gonzales v. Mountainaire Pub. Schs., 39 F.3d 1191 (10th Cir.1994); Garcia v. Board of Educ., 777 F.2d 1403, 1407 (10th Cir.1985); Maestas v. Board of Educ., 749 F.2d 591, 592 (10th Cir.1984).

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With the district court's permission, Ms. Duke, relying on Daddow, thereafter amended her complaint to include the school district, the school board and the individual defendants in their official capacities as school board members. The defendants, in their official capacities, relying on Martinez, filed a motion to dismiss Ms. Duke's complaint. Recognizing the conflict between Daddow and Martinez, the district court felt obligated to follow Martinez, and therefore entered an order dismissing Ms. Duke's amended complaint naming the school district, the school board and its members in their official capacities. This interlocutory appeal from that order followed, in which Ms. Duke asks us to overrule Martinez and hold, as did the New Mexico Supreme Court in Daddow, that local school boards and districts are not arms of the state shielded from § 1983 liability in their official capacities by the Eleventh Amendment.

DISCUSSION

The Eleventh Amendment provides that "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. It thus "largely shields States from suit in federal court without their consent, leaving parties with claims against a State to present them, if the State permits, in the State's own tribunals." Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 39, 115 S.Ct. 394, 400, 130 L.Ed.2d 245 (1994). Eleventh Amendment immunity, however, "extends only to the states and governmental entities that are 'arms of the state.' " Watson v. University of Utah Med. Ctr., 75 F.3d 569, 574 (10th Cir.1996) (quoting Ambus v. Granite Bd. of Educ., 995 F.2d 992, 994 (10th Cir.1993) (en banc)).

We described in Watson the inquiry necessary to determine whether an entity is an arm of the state:

[W]e engage in two general inquiries. "[T]he court first examines the degree of autonomy given to the agency, as determined by the characterization of the agency by state law and the extent of guidance and control exercised by the state. Second, the court examines the extent of financing the agency receives independent of the state treasury and its ability to provide for its own financing." "The governmental entity is immune from suit if the money judgment sought is to be satisfied out of the state treasury."

Watson, 75 F.3d at 574-75 (citation omitted) (quoting Haldeman v. Wyo. Farm Loan Bd., 32 F.3d 469, 473 (10th Cir.1994)); see also Mount Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572-73, 50 L.Ed.2d 471 (1977); Ambus, 995 F.2d at 994. 3 The Supreme Court has indicated more recently that "the vulnerability of the State's purse [i]s the most salient factor in Eleventh Amendment determinations." Hess, 513 U.S. at 48, 115 S.Ct. at 404; see also Regents of the Univ. of Calif. v. Doe, --- U.S. ----, ----, 117 S.Ct. 900, 904, 137 L.Ed.2d 55 (1997); Sonnenfeld, 100 F.3d at 749. 4

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Whether a local entity is an arm of the state under the Eleventh Amendment "is a question of federal law." Doe, --- U.S. at ---- n. 5, 117 S.Ct. at 904 n. 5; see Howlett v. Rose, 496 U.S. 356, 376, 110 S.Ct. 2430, 2443, 110 L.Ed.2d 332 (1990); Ambus, 995 F.2d at 995. However, "that federal question can be answered only after considering the provisions of state law that define the agency's character." Doe, --- U.S. at ---- n. 5, 117 S.Ct. at 904 n. 5. And while we have noted that most courts considering the issue since Mount Healthy have held that local school districts or boards are not entitled to Eleventh Amendment immunity, the question must nonetheless "be determined in each case on the basis of the individual state laws involved." Ambus, 995 F.2d at 994.

A. Martinez Decision

In Martinez, we held that "New Mexico from the outset has taken an extreme position on the responsibility of state government for the local school systems both as to administration and finances." Martinez, 748 F.2d at 1394. Citing the New Mexico Constitutional provision that the State Board of Education "shall have control, management and direction ... for all public schools," N.M. Const. art. XII, § 6, and relying on the statute setting out the State Board's powers, we concluded that the state exercised pervasive control over local school systems. Id. at 1394-95. 5

We also observed that there was "a separate system of pervasive financial control over all school districts." Id. at 1395. In reaching that conclusion, we noted that under New Mexico law, the New Mexico Department of Finance and Administration has complete budget-making authority over school district budgets, that the Department must include, in school district budgets, a fund from which to satisfy civil rights judgments, and that, at that time, approximately 96% of school funds statewide were provided by the state. Id. We thus concluded:

Considering that the New Mexico State Board of Education has the "control," the "management" and "direction" of all public schools; that this authority has been implemented by the legislature in detail; that the fiscal-budgetary matters for the districts are fully controlled by the state; that the state taxing method for schools is a statewide system of state taxes; that the funds so generated for the schools are applied on a formula to equalize funding among the districts and basically on school attendance, we must hold that the local boards are indeed arms of the state system

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of education as provided in the state constitution.

Id. at 1396.

B. Daddow Decision

In Daddow, the New Mexico Supreme Court specifically disagreed with our analysis in Martinez, concluding "that the Tenth Circuit decision is erroneous." Daddow, 898 P.2d at 1238. 6 It began by observing that the Martinez decision erroneously relied upon the broad language of N.M. Const. art. XII, § 6, and that the section "is not self-executing," but rather, the State Board's powers are limited to the powers provided by statute, and the New Mexico Legislature has "given local boards exclusive power over employment and discharge of school employees." Daddow, 898 P.2d at 1240.

The Daddow court further held that Martinez "did not consider all of the Mt. Healthy factors." Id. at 1241. With respect to the first factor--how the entity is characterized under state law--the New Mexico Supreme Court concluded that a local school board is a "local public body" under N.M. Stat. Ann. § 41-4-3(C) (part of the New Mexico Tort Claims...

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