506 U.S. 139 (1992), 91-1010, Puerto Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc.

Docket Nº:No. 91-1010
Citation:506 U.S. 139, 113 S.Ct. 684, 121 L.Ed.2d 605, 61 U.S.L.W. 4045
Party Name:Puerto Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc.
Case Date:January 12, 1993
Court:United States Supreme Court
 
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Page 139

506 U.S. 139 (1992)

113 S.Ct. 684, 121 L.Ed.2d 605, 61 U.S.L.W. 4045

Puerto Rico Aqueduct and Sewer Authority

v.

Metcalf & Eddy, Inc.

No. 91-1010

United States Supreme Court

Jan. 12, 1993

Argued Nov. 9, 1992

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

Petitioner, an autonomous Puerto Rico government instrumentality, moved to dismiss the diversity action brought against it by respondent, a private firm, on the grounds that it was an "arm of the State," and that the Eleventh Amendment therefore prohibited the suit. After the District Court denied the motion, the Court of Appeals dismissed petitioner's appeal for want of jurisdiction, concluding that Circuit precedent barred both States and their agencies fro taking an immediate appeal on a claim of Eleventh Amendment immunity.

Held: States and state entities that claim to be "arms of the State" may take advantage of the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, to appeal a district court order denying a claim of Eleventh Amendment immunity from suit in federal court. Although 28 U.S.C. § 1291 requires that appeals be taken from "final decisions of the district courts," Cohen, supra, at 546, provides that a "small class" of judgments that are not complete and final will be immediately appealable. Once it is acknowledged that a State and its "arms" are, in effect, immune from federal court suit under the Amendment, see, e.g., Welch v. Texas Dept. of Highways and Public Transportation, 483 U.S. 468, 480, it follows that the elements of the collateral order doctrine necessary to bring an order within Cohen's "small class," see Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, are satisfied. First, denials of Eleventh Amendment immunity claims purport to be conclusive determinations that States and their entities have no right not to be sued in federal court. Second, a motion to dismiss on Eleventh Amendment grounds involves a claim to a fundamental constitutional protection whose resolution generally will have no bearing on the merits of the underlying action. Third, the value to the States of their constitutional immunity -- like the benefits conferred by qualified immunity to individual officials, see Mitchell v. Forsyth, 472 U.S. 511, 526 -- is for the most part lost as litigation proceeds past motion practice, such that the denial order will be effectively unreviewable on appeal from a final judgment. Respondent's claim that the Amendment does not confer immunity from suit, but merely a defense to liability, misunderstands the role of the Amendment in our system of federalism, and is rejected.

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Moreover, there is little basis for respondent's alternative argument that a distinction should be drawn between cases in which the determination of an Eleventh Amendment claim is bound up with factual complexities whose resolution requires trial and cases in which it is not. In any event, the determination of petitioner's Eleventh Amendment status does not appear to implicate any extraordinary factual difficulty, [113 S.Ct. 686] and can be fully explored on remand. Pp. 142-147.

945 F.2d 10, (CA1 1991) reversed and remanded.

WHITE, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BLACKMUN, O'CONNOR, SCALIA, KENNEDY, SOUTER, and THOMAS, JJ., joined. BLACKMUN, J., filed a concurring opinion, post, p. 147. STEVENS, J., filed a dissenting opinion, post, p. 148.

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WHITE, J., lead opinion

JUSTICE WHITE delivered the opinion of the Court.

The question before the Court is whether a district court order denying a claim by a State or a state entity to Eleventh Amendment immunity from suit in federal court may be appealed under the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). We conclude that it may.

I

Petitioner, the Puerto Rico Aqueduct and Sewer Authority (PRASA), is "an autonomous government instrumentality" which functions to

provide to the inhabitants of Puerto Rico an adequate drinking water, sanitary sewage service and any other service or facility proper or incidental thereto.

P.R.Laws.Ann., Tit. 22, §§ 142, 144 (1987). In 1985, PRASA entered into a consent decree with the federal Environmental Protection Agency under which it agreed to upgrade many of its wastewater treatment plants to ensure compliance with the Federal Clean Water Act. PRASA subsequently contracted with respondent, a private engineering firm incorporated in Delaware, to assist it with this task. In 1990, PRASA withheld payments on the contract in light of alleged overcharging by respondent. Respondent brought a diversity action in the United States District Court for the District of Puerto Rico, alleging breach of contract and damage to its business reputation.

PRASA moved to dismiss on the grounds that it was an "arm of the State," and that the Eleventh Amendment therefore prohibited the suit.[1] The District Court found that

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petitioner did not qualify for immunity "because of its ability to raise funds for payment of its contractual obligations which do not affect the Commonwealth's funds," and denied the motion. App. to Pet. for Cert. A-9. PRASA filed a timely notice of appeal to the Court of Appeals for the First Circuit, and sought to stay proceedings while the appeal was pending. The court denied the stay and subsequently dismissed the appeal for want of jurisdiction, 945 F.2d 10, 14 (1991), concluding that First Circuit precedent barred both States and their agencies from taking an immediate appeal on a claim of Eleventh Amendment immunity. Id. at 12 (discussing Libby v. Marshall, 833 F.2d 402 (CA1 1987)).

In light of the conflict between the decision below and those of the other Courts of Appeals that have considered the issue, we granted certiorari.[2] 503 U.S. 918 (1992).

II

Title 28 U.S.C. § 1291 provides for appeal from "final decisions of the district courts." Appeal is thereby precluded "from any decision which is tentative, informal or incomplete," as well as from any "fully consummated decisions, where they are but steps towards final judgment in which they will merge." Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546. Nevertheless, a judgment that is

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not the complete and final judgment in a case will be immediately appealable if it:

fall[s] in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.

Ibid. Thus, in Cohen itself, the Court held that appeal could be taken from a district court order denying the defendant's motion to compel the plaintiffs in a shareholder derivative suit to post a bond. The Court found the order appealable because it "did not make any step toward final disposition of the merits of the case, and [would] not be merged in final judgment," and because, after final judgment, it would

be too late effectively to review the present order, and the rights conferred by the [bond] statute, if it is applicable, will have been lost.

Ibid.

The Court has held that orders denying individual officials' claims of absolute and qualified immunity are among those that fall within the ambit of Cohen. See Nixon v. Fitzgerald, 457 U.S. 731 (1982); Mitchell v. Forsyth, 472 U.S. 511 (1985). Mitchell bears particularly on the present case. There, the Attorney General of the United States appealed from a district court order denying his motion to dismiss on grounds of qualified immunity.[3] The Court of Appeals held that the order was not appealable, and remanded the case for trial. We reversed, holding that the order denying qualified immunity was a collateral order immediately appealable under Cohen. We found that, absent immediate appeal, the central benefits of qualified immunity -- avoiding the costs and general consequences of subjecting public officials to the

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risks of discovery and trial -- would be forfeited, much as the benefit of the bond requirement would have been forfeited in Cohen.

The entitlement is an immunity from suit, rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial.

Mitchell, supra, at 526 (emphasis in original).

Petitioner maintains, and we agree, that the same rationale ought to apply to claims of Eleventh Amendment immunity made by States and state entities possessing a claim to share in that immunity. Under the terms of the Amendment,

[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. . . .

U.S.Const., Amdt. 11. This withdrawal of jurisdiction effectively confers an immunity from suit. Thus,

this Court has consistently held that an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another State.

Edelman v. Jordan, 415 U.S. 651, 662-663 (1974). Absent waiver, neither a State nor agencies [113 S.Ct. 688] acting under its control may "be subject to suit in federal court." Welch v. Texas Dept. of Highways and Public Transportation, 483 U.S. 468, 480 (1987) (plurality opinion); see also Will v. Michigan Dept. of State Police, 491 U.S. 58, 66 (1989); Cory v. White, 457 U.S. 85, 90-91 (1982); Alabama v. Pugh, 438 U.S. 781 (1978) (per curiam); Mt. Healthy City School Dist. Bd. of Ed. v. Doyle, 429 U.S. 274, 280 (1977).

Once it is established that a State and its "arms" are,...

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