242 F.3d 219 (4th Cir. 2001), 00-1496, Cash v. Granville County Bd. of Education

Docket Nº:00-1496.
Citation:242 F.3d 219
Party Name:MARY CASH, Plaintiff-Appellant, v. GRANVILLE COUNTY BOARD OF EDUCATION, Defendant-Appellee NORTH CAROLINA ASSOCIATION OF EDUCATORS; AMERICAN CIVIL LIBERTIES UNION OF NORTH CAROLINA LEGAL FOUNDATION, INCORPORATED; NORTH CAROLINA ACADEMY OF TRIAL LAWYERS; NORTH CAROLINA SCHOOL BOARDS ASSOCIATION, Amici Curiae.
Case Date:March 01, 2001
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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242 F.3d 219 (4th Cir. 2001)

MARY CASH, Plaintiff-Appellant,

v.

GRANVILLE COUNTY BOARD OF EDUCATION, Defendant-Appellee

NORTH CAROLINA ASSOCIATION OF EDUCATORS; AMERICAN CIVIL LIBERTIES UNION OF NORTH CAROLINA LEGAL FOUNDATION, INCORPORATED; NORTH CAROLINA ACADEMY OF TRIAL LAWYERS; NORTH CAROLINA SCHOOL BOARDS ASSOCIATION, Amici Curiae.

No. 00-1496.

United States Court of Appeals, Fourth Circuit

March 1, 2001

Argued: December 6, 2000.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh.

W. Earl Britt, Senior District Judge. (CA-99-408)

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COUNSEL: ARGUED: Susan Ashley Osment, MCSURELY & OSMENT, Chapel Hill, North Carolina, for Appellant. Kenneth Alexander Soo, THARRINGTON SMITH, L.L.P., Raleigh, North Carolina, for Appellee. ON BRIEF: Lisa Lukasik, THARRINGTON SMITH, L.L.P., Raleigh, North Carolina, for Appellee. S. Luke Largess, FERGUSON, STEIN, WALLAS, ADKINS, GRESHAM & SUMTER, P.A., Charlotte, North Carolina, for Amicus Curiae Educators. Martha A. Geer, PATTERSON, HARKAVY & LAWRENCE, L.L.P., Raleigh, North Carolina, for Amici Curiae ACLU and Trial Lawyers. Allison B. Schafer, NORTH CAROLINA SCHOOL BOARDS ASSOCIATION, Raleigh, North Carolina; Christopher Zemp Campbell, ROBERTS & STEVENS, P.A., Asheville, North Carolina, for Amicus Curiae School Boards.

Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.

Reversed and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge Michael and Judge Motz joined.

OPINION

NIEMEYER, Circuit Judge:

We are required to determine in this case whether the Granville County (North Carolina) Board of Education enjoys Eleventh Amendment immunity in a suit brought by an employee against it under the Fair Labor Standards Act for overtime pay. The district court, finding that the Board was "an arm of the State" and that any monetary award "would affect the State," held the Board immune. Because we conclude, for the reasons that follow, that the Board is more like a county than an arm of the State, we reverse.

I

Mary Cash has, since 1975, been employed as a "Lead Secretary/Bookkeeper (Secretary V)" at J. F. Webb High School in Oxford, North Carolina. She alleges that during the period between 1996 and 1999 she often worked more than 40 hours per week and was not compensated with overtime pay. She commenced this action against the Granville County Board of Education (sometimes"School Board") under the Fair Labor Standards Act, 29 U.S.C. SS 201-219, to recover compensatory and liquidated damages, interest, costs, and attorneys fees.

The School Board asserted a defense of sovereign immunity under the Eleventh Amendment. On the School Board's motion for summary judgment, the district court dismissed the action. In doing so, the court assumed that Harter v. Vernon, 101 F.3d 334 (4th Cir. 1996), our most recent opinion on whether particular governmental entities are "arms of the State" for Eleventh Amendment purposes, "is no longer salient and [was] effectively overruled" by McMillian v. Monroe County, 520 U.S. 781 (1997), and Regents of the University of California v. Doe, 519 U.S. 425 (1997). The district court read Regents' requirement that an analysis of Eleventh Amendment immunity consider "the provisions of State law that define the agency's character" to be in conflict with Harter's holding that the "most important consideration is whether the State treasury will be affected." Similarly, it noted that the McMillian Court relied on "the character of the [sheriff's] office, rather than the impact of the judgment on the State treasury."1 The district court then concluded:

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Thus, while the question of funding and who would pay for any monetary award is not the central question to be answered in evaluating immunity, it must be evaluated. It is clear that local school boards receive funds from the state and local governments. However, the ability of local boards to use those funds remains controlled by the state. Thus, it appears that any monetary award to plaintiff would affect the state.

Therefore, combining an analysis of the organizational and financial structure of the local school boards, in light of relevant case and statutory law, defendant is an arm of the state of North Carolina for purposes of this suit seeking FLSA damages. As such, it is entitled to sovereign immunity from a suit for monetary relief.

From the district court's judgment dismissing her claim, Cash noticed this appeal.

II

Even though the language of the Eleventh Amendment preserves sovereign immunity of only the States of the Union,2 it is settled that this protection extends also to "state agents and state instrumentalities," Regents, 519 U.S. at 429, or stated otherwise, to "arm[s] of the State" and State officials, Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280 (1977). But Eleventh Amendment immunity "does not extend to counties and similar municipal corporations." Id. This is so, even if the counties and municipalities exercise a "slice of State power." Lake Country Estates, Inc. v. Tahoe Reg'l Planning Agency, 440 U.S. 391, 401 (1979) (citing Mt. Healthy). In Mt. Healthy, the Supreme Court held that a local school board, as constituted by Ohio law, is "more like a county or city than it is like an arm of the State." 429 U.S. at 280. Accordingly, the Court denied the local school board Eleventh Amendment immunity.

The issue before us, as articulated by the Supreme Court, therefore turns on whether the Granville County Board of Education "is to be treated as an arm of the State partaking of the State's Eleventh Amendment immunity, or is instead to be treated as a municipal corporation or other political subdivision to which the Eleventh Amendment does not extend." Mt. Healthy, 429 U.S. at 280. Stated otherwise, we must determine whether a North Carolina county school board "has the same kind of independent status as a county or is instead an arm of the State, and therefore `one of the United States' within the meaning of the Eleventh Amendment." Regents, 519 U.S. at 429 n.5. Because this question requires interpretation of the Eleventh Amendment, it is a federal question that we decide de novo, even though State law must be considered in defining the School Board's "character." See id.

Before elucidating the factors necessary to resolve this question, it is worthwhile to recognize that the immunity in question derives from the original sovereignty of the states and not from the Eleventh Amendment. "The Eleventh Amendment confirmed, rather than established, sovereign immunity as a constitutional principle." Alden v. Maine, 527 U.S. 706, 728-29 (1999). And,"it follows that the scope of the States' immunity from suit is demarcated not by the text of the Amendment

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alone but by fundamental postulates implicit in the constitutional design." Id. at 729. That design reserves to States "a substantial portion of the Nation's primary sovereignty, together with the dignity and essential attributes inhering in that status," id. at 714, and preserves "a system in which the State and Federal Governments would exercise concurrent authority over the people," id. (quoting Printz v. United States, 521 U.S. 898, 919-20 (1997)). The States thus "retain the dignity, though not the full authority, of sovereignty." Id. at 715. Central to the dignity of a State's sovereignty is the proposition that the State not be amenable to suit without its consent. At the time the federal Constitution was proposed, the fear expressed during the debates was that adoption of the new Constitution would strip States of their sovereign immunity, thereby exposing them to lawsuits for collection of Revolutionary War debts. Id . at 716-17.

Even with a clear understanding of the source and nature of a State's sovereign immunity, no bright line of demarcation can be drawn separating "state agents and state instrumentalities," which partake of the State's Eleventh Amendment immunity, from local governmental entities, which do not. But when the factors for resolving whether a governmental entity is an arm of the State or more like a county or municipality point in different directions, our inquiry seeks guidance in the "twin reasons" for the Eleventh Amendment: (1) "the States' fears that `federal courts would force them to pay their Revolutionary War debts, leading to their financial ruin,'" and (2) "the integrity retained by each State in our federal system," including the States' sovereign immunity from suit. Hess v. Port Auth. TransHudson Corp., 513 U.S. 30, 39 (1994) (quoting Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 151 (1984)). Indeed, these twin reasons must "dominate" any analysis of whether a governmental entity is to be accorded Eleventh Amendment immunity. See Gray v. Laws, 51 F.3d 426, 432 (4th Cir. 1995).

Consistent with the twin purposes of the Eleventh Amendment, when we have asked the question of whether a governmental entity within a State is an arm of the State, various factors have been identified for consideration. The principal factor, upon which courts have virtually always relied, is whether a judgment against the governmental entity would have to be paid from the State's treasury. See Regents, 519 U.S. at 430 (pointing out that"whether a...

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