United States ex rel. Lesinski v. S. Fla. Water Mgmt. Dist.

• Decision Date: 02 January 2014
• Docket Number: No. 12–16082.,12–16082.
• Citation: 739 F.3d 598
• Parties: UNITED STATES of America, Ex rel. Michael LESINSKI, Plaintiff–Appellant, v. SOUTH FLORIDA WATER MANAGEMENT DISTRICT, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

739 F.3d 598

UNITED STATES of America, Ex rel. Michael LESINSKI, Plaintiff–Appellant,

v.SOUTH FLORIDA WATER MANAGEMENT DISTRICT, Defendant–Appellee.

No. 12–16082.

United States Court of Appeals,Eleventh Circuit.

Jan. 2, 2014.

Christopher J. Rush, Christopher J. Rush & Associates, PA, Boynton Beach, FL, Kelley C. Hauser, U.S. Department of Justice, Washington, DC, Christopher Macchiaroli, Anne Ruth Schultz, U.S. Attorney's Office, Miami, FL, for Plaintiff–Appellant.

James Edward Nutt, SFWM District, West Palm Beach, FL, for Defendant–Appellee.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 9:10–cv–81017–JIC.

Before CARNES, Chief Judge, WILSON, Circuit Judge, and DALTON, ^* District Judge.

DALTON, District Judge:

In 1863, Congress enacted the False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733, in response to the massive frauds perpetrated upon the U.S. Government by private contractors during the Civil War. See Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 781, 120 S.Ct. 1858, 1867, 146 L.Ed.2d 836 (2000). The FCA is designed to protect the Government from fraud by imposing civil liability and penalties upon those who seek federal funds under false pretenses. Significantly, to enforce the FCA, the Government relies in part upon private citizens, whom it empowers to bring suit on its behalf by acting as relators in qui tam actions. A statutory limitation that parallels the scope of the Eleventh Amendment precludes qui tam relators from bringing suit to redress fraud perpetrated upon the federal government if the alleged fraudster is a sovereign state. See31 U.S.C. § 3729(a); Stevens, 529 U.S. at 787–88, 120 S.Ct. at 1870–71 (holding that the term “person,” as used in the FCA, does not include States or state agencies for purposes of qui tam liability).

This FCA action, brought by a qui tam relator against a state instrumentality, presents a question familiar to federal district courts in Florida ¹: is the South Florida Water Management District an arm of the State of Florida such that a suit against it amounts to a suit against the State itself? For the reasons discussed below, we hold that it is and therefore cannot be sued by an FCA qui tam relator.

I²

In 2004 and 2005, a barrage of hurricanes struck the southern coast of Florida, damaging the region's flood control works. In response, the South Florida Water Management District (“District”), a state instrumentality tasked with maintaining the area's canals and levees, set about making repairs. To offset the substantial repair costs, the District solicited reimbursements from the Federal Emergency Management Agency (“FEMA”).

Appellant, a former employee of the District who managed the canal repairs, advisedthe District's senior management officials that he believed that the District's permanent flood control repairs were ineligible for FEMA reimbursements. The District ignored Appellant's objections, continued to solicit the FEMA reimbursements, and ultimately terminated Appellant's employment.

Thereafter, Appellant, acting as relator for the U.S. Government, brought this qui tam action against the District in the U.S. District Court for the Southern District of Florida.³ Appellant alleges that the District violated the FCA by fraudulently claiming FEMA reimbursements for the ineligible canal repairs. The District moved to dismiss the suit, arguing that it is an arm of the State of Florida and therefore not a “person” who could be sued under the FCA. The District Court granted the District's motion and dismissed Appellant's claim with prejudice.⁴ This appeal follows.

II

To reach its conclusion that the District constitutes an “arm and instrumentality of the State of Florida” and not a “person” within the meaning of the FCA, the District Court applied the arm of the state analysis used to determine Eleventh Amendment immunity. Thus, the threshold question is whether the arm of the state analysis under the Eleventh Amendment parallels the personhood analysis under the FCA, an issue of first impression in this Circuit.

“The Eleventh Amendment largely shields states from suit in federal courts 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). The Eleventh Amendment's protection extends not only to the state itself, but also to state officers and entities when they act as an “arm of the state.” Manders v. Lee, 338 F.3d 1304, 1308 (11th Cir.2003) (en banc). Under the traditional Eleventh Amendment paradigm, states are extended immunity, counties and similar municipal corporations are not, and entities that share characteristics of both require a case-by-case analysis. See Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977).

By comparison, the FCA imposes liability upon “any person” who, inter alia, “knowingly presents, or causes to be presented, a false claim or fraudulent claim for payment.” 31 U.S.C. § 3729(a). Although the FCA does not define the term “person,” the U.S. Supreme Court has held that the term cannot include states or state agencies, at least for qui tam purposes. See Stevens, 529 U.S. at 780, 120 S.Ct. at 1866 (applying the Court's “longstanding interpretive presumption that ‘person’ does not include the sovereign”). In reaching this conclusion, the Court observed that there is a “virtual coincidence of scope” between the “statutory inquiry [into] whether States can be sued under [the FCA]” and “the Eleventh Amendment inquiry [into] whether unconsenting States can be sued [under the FCA].” Id. at 779–80, 120 S.Ct. at 1866. The Court subsequently held in Cook County v. United States ex rel. Chandler that, in contrast to states and state agencies, the term “person” under the FCA includes local governments and municipalities. 538 U.S. 119, 134, 123 S.Ct. 1239, 1249, 155 L.Ed.2d 247 (2003). Thus, corresponding to Eleventh Amendment immunity, qui tam relators can bring FCA claims against local governments and municipalities, but not against states and agencies acting as arms of the state.

In light of this significant “coincidence of scope,” and guided by Stevens and Chandler, we join our sister circuits in concluding that courts should employ the Eleventh Amendment arm of the state analysis to determine whether a state entity is a “person” subject to FCA liability. See United States. ex rel. Oberg v. Ky. Higher Educ. Student Loan Corp., 681 F.3d 575, 579–80 (4th Cir.2012); Stoner v. Santa Clara Cnty. Office of Educ., 502 F.3d 1116, 1121–22 (9th Cir.2007); United States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 718 (10th Cir.2006); United States ex rel. Adrian v. Regents of Univ. of Cal., 363 F.3d 398, 401–02 (5th Cir.2004).

III

“We review the grant of a motion to dismiss under Rule 12(b)(6) ⁵ for failure to state a claim de novo, accepting the allegations in the complaint as true and construing them in the light most favorable to the plaintiff.” Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir.2009). Likewise, whether an entity constitutes an arm of the state under Eleventh Amendment immunity analysis is a question of law subject to de novo review. See Abusaid v. Hillsborough Cnty. Bd. of Cnty. Comm'rs, 405 F.3d 1298, 1303 (11th Cir.2005); Garrett v. Univ. of Ala. at Birmingham Bd. of Trs., 344 F.3d 1288, 1290 (11th Cir.2003) (per curium).

IV

To determine whether an entity is acting as an “arm of the state” when carrying out a particular function, this Court looks to four factors: “(1) how state law defines the entity; (2) what degree of control the State maintains over the entity; (3) where the entity derives its funds; and (4) who is responsible for judgments against the entity.” Manders, 338 F.3d at 1309. “[W]hether an entity is an ‘arm of the State’ for Eleventh Amendment purposes is ultimately a question of federal law. But the federal question can be answered only after considering provisions of state law.” Id.

A

As to the first factor, there is little dispute that Florida law defines the District as an arm of the State. By mandate of the Florida Constitution, the Florida Legislature must protect and conserve the State's natural resources, including its waters. See Fla. Const. art. II, § 7; see also Askew v. Cross Key Waterways, 372 So.2d 913, 914 (Fla.1978). Florida water management districts are creatures of statute created and defined in the Florida Water Resources Act to implement a “comprehensive statewide plan for the conservation, protection, management, and control of state waters.” St. Johns River Water Mgmt. Dist. v. Deseret Ranches of Fla., 421 So.2d 1067, 1068 (Fla.1982) (citing Fla. Stat. § 373.016).

Structurally, the districts are designed to perform a state function—water management and protection—with regional flexibility and discretion. SeeFla. Stat. § 373.016(5); see also Deseret Ranches, 421 So.2d at 1069 (holding that the “statewide water management plan created and implemented by chapter 373 is primarily a state function serving the state's interest in protecting and managing a vital natural resource”). The State's five water management districts have boundaries drawn along hydrological lines and represent an attempt to reconcile Floridians' common, statewide interest in protecting Florida's waters with the reality that “the water resource problems of the state vary from region to region, both in magnitude and complexity.” Fla. Stat. § 373.016(5).

Ultimately, the District's power to manage South Florida's waters stems solely from, and is limited by, the State; the District is not autonomous, and no county, municipality, or other local government delegates to it any authority. Cf. Abusaid, 405 F.3d at 1309 (observing that Florida sheriffs derive power from...