Febres v. Camden Bd. of Educ., 05-1178.

• Decision Date: 18 April 2006
• Docket Number: No. 05-1178.,05-1178.
• Citation: 445 F.3d 227
• Parties: Herminio FEBRES; Larry Williams; David Sims; Derek Copeland; Robert Hawkins; Charles E. Smith; Juan A. Diaz; Nelson Alexander; The Estate of Robert Hawking; Estate Angel Pagan v. THE CAMDEN BOARD OF EDUCATION Herminio Febres, Larry Williams, David Sims, Derek Copeland, Robert Hawkins, Charles E. Smith, Juan A. Diaz, Nelson Alexander, Appellants.
• Court: U.S. Court of Appeals — Third Circuit

Page 227

445 F.3d 227

Herminio FEBRES; Larry Williams; David Sims; Derek Copeland; Robert Hawkins; Charles E. Smith; Juan A. Diaz; Nelson Alexander; The Estate of Robert Hawking; Estate Angel Pagan v. THE CAMDEN BOARD OF EDUCATION Herminio Febres, Larry Williams, David Sims, Derek Copeland, Robert Hawkins, Charles E. Smith, Juan A. Diaz, Nelson Alexander, Appellants.

No. 05-1178.

United States Court of Appeals, Third Circuit.

Argued November 16, 2005.

April 18, 2006.

Rosemarie Cipparulo, (Argued), Weissman & Mintz LLC, Somerset, NJ, for Appellants.

Louis Lessig, (Argued), William M. Tambussi, Brown & Connery, LLP, Westmont, NJ, for Appellee.

Before BARRY and AMBRO, Circuit Judges, and POLLAK,^* District Judge.

OPINION OF THE COURT

POLLAK, District Judge.

Appellants Herminio Febres, Larry Williams, David Sims, Derek Copeland, Charles Smith, Juan Diaz, Nelson Alexander, and now-deceased Angel Pagan and Robert Hawkins were employed by the appellee Camden Board of Education ("Board") as custodians and mechanics. On or about June 26, 2000, they were fired for excessive absenteeism. Appellants brought this suit in the United States District Court for the District of New Jersey, invoking the self-care provision of the Family and Medical Leave Act of 1993 ("FMLA"), 29 U.S.C. § 2612(a)(1)(D), to contest their terminations. The District Court granted appellee's motion to dismiss on Eleventh Amendment jurisdictional grounds, holding that the Board is an "arm of the state." Cf. Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977). The District Court concurrently denied appellants' motion for leave to amend their complaint to add claims under 42 U.S.C. § 1983 against various school district administrators and officials of the Board.

Appellants now appeal the District Court's order. Appellants' primary target is the Eleventh Amendment ruling: if we reverse the District Court's jurisdictional ruling, then we are not asked to address the denial of appellants' motion for leave to amend.

We have appellate jurisdiction under 28 U.S.C. § 1291. Our review is plenary. See Farley v. Phila. Housing Auth., 102 F.3d 697 (3d Cir.1996). Because we conclude that the Board has not established it is an arm of the state, we will reverse.

I.

The Eleventh Amendment provides unconsenting states with immunity from suits brought in federal courts by private parties. See Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). The Supreme Court has long held that counties, municipalities and political subdivisions of a state are not protected by the Eleventh Amendment. See Mt. Healthy, 429 U.S. at 280, 97 S.Ct. 568; see also Bolden v. Se. Pa. Transp. Auth., 953 F.2d 807, 814 (3d Cir.1991) (en banc). School boards and school districts are typically considered political subdivisions of a state, not entitled to immunity. See, e.g., Mt. Healthy, 429 U.S. at 280-281, 97 S.Ct. 568; Lester H. v. Gilhool, 916 F.2d 865, 870-71 (3d Cir.1990). In some cases, however, such entities may be viewed as "arm[s] of the State partaking of the State's Eleventh Amendment immunity . . . ." Mt. Healthy, 429 U.S. at 280, 97 S.Ct. 568; see Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (holding that the Eleventh Amendment bars actions in federal court whenever "the state is the real, substantial party in interest"). The party asserting immunity bears the burden of production and persuasion. See Christy v. Pa. Turnpike Comm'n, 54 F.3d 1140, 1144 (3d Cir.1995).

More than thirty-five years ago the Third Circuit identified nine factors to be considered when determining whether an entity is an arm or alter ego of the state for Eleventh Amendment purposes. Urbano v. Bd. of Managers, 415 F.2d 247, 250-51 (3d Cir.1969). The numerous factors articulated in Urbano were subsequently condensed into three major criteria: (1) whether the payment of the judgment would come from the state, (2) what status the entity has under state law, and (3) what degree of autonomy the entity has. Fitchik v. N.J. Transit Rail Operations, Inc., 873 F.2d 655, 659 (3d Cir.1989) (en banc).¹ The three-part test — sometimes referred to as the Fitchik test — has been reiterated and applied many times since. See, e.g., Carter v. City of Phila., 181 F.3d 339, 347 (3d Cir. 1999); Christy, 54 F.3d at 1144-45; Peters v. Del. River Port Auth., 16 F.3d 1346, 1350-52 (3d Cir.1994); Bolden, 953 F.2d at 816.

We now accord equal consideration to all three prongs of the analysis — payment from the state treasury, status under state law, and autonomy. Benn v. First Judicial Dist. of Pa., 426 F.3d 233, 239-40 (3d Cir.2005).² However, in Hess v. Port Authority Trans-Hudson Corp., the Supreme Court instructed that in close cases, where "indicators of immunity point in different directions," 513 U.S. 30, 47, 115 S.Ct. 394 130 L.Ed.2d 245 (1994), the principal rationale behind the Eleventh Amendment — protection of the sovereignty of states through "the prevention of federal-court judgments that must be paid out of a State's treasury," id. at 48, 115 S.Ct. 394 — should "remain our prime guide." Id. at 47, 115 S.Ct. 394; see id. at 52, 115 S.Ct. 394 (identifying states' solvency and dignity as the concerns underpinning the Eleventh Amendment).

II.

The controversy over classification of the Camden Board of Education centers around the first and third criteria of the Fitchik test. The Board's legal status under state law, the second criterion, clearly militates against immunity.

A. The Status of the Board Under State Law

Four sub-factors are relevant to assessing the Board's legal status under state law: how state law treats the Board generally, whether the Board can sue or be sued in its own right, whether the Board is separately incorporated, and whether it is immune from state taxation. See, e.g., Carter, 181 F.3d at 347 n. 22; Fitchik, 873 F.2d at 662-63. As the District Court noted in its oral opinion, the Board can sue or be sued under state law, is separately incorporated, and is not immune from state taxation. See N.J. Stat. Ann. §§ 18A:10-1, 11-2. Moreover, New Jersey state law generally treats school boards as separate political subdivisions. See id. § 18A:10-1; see, e.g., Otchy v. Elizabeth Bd. of Educ., 325 N.J.Super. 98, 737 A.2d 1151 (1999) (noting that under state law a school board is a distinct legal entity, which, for example, may hold property in its name).

In 2002, the New Jersey legislature enacted the Municipal Rehabilitation and Economic Recovery Act ("MRERA"), N.J. Stat. Ann. §§ 52:27BBB-1 to -65, which provides that a municipality fulfilling specified criteria³ will be designated a "qualified municipality" and subjected to a series of measures to try to alleviate its ongoing fiscal distress. See N.J. Stat. Ann. §§ 52:27BBB-1 to -3, -7 to -30. Camden has been so designated. See Camden City Bd. of Educ. v. McGreevey, 369 N.J.Super. 592, 850 A.2d 505 (2004) (upholding the MRERA). The MRERA also provides for "limited school district oversight" in these qualified municipalities. N.J. Stat. Ann. § 52:27BBB-2.1(c)-(d); see id. §§ 52:27BBB-63 to -64 (regarding appointment of school board members and gubernatorial veto power).

The District Court suggested that the Governor's power, under the MRERA, to veto actions taken at school board meetings abrogated the Board's status as a separate political entity. Cf. id. § 52:27BBB-64. This, however, conflates the second and third criteria of the Fitchik test; the gubernatorial veto is better addressed with regard to the Board's autonomy. See discussion infra; Fitchik, 873 F.2d at 660, 663-64 (addressing gubernatorial veto power under the autonomy prong of the arm-of-the-state analysis).

In sum, the various factors relating to the Board's "status under state law" support appellants' contention that the Board is not an arm of the state and therefore not entitled to immunity.

B. The Board's Degree of Autonomy

The District Court concluded that the "autonomy factor" weighed heavily in favor of immunity based on the MRERA's grant of veto and appointment powers to the Governor. We find that this factor weighs only slightly in favor of the Board's immunity.

According to the MRERA, the minutes of any meeting of the Board must be delivered to the Governor. Further, according to the Act, the actions taken by the Board at a meeting become effective fifteen days after delivery, unless during the fifteen-day period the Governor (1) approves the minutes, in which case the Board's actions become effective upon that approval, or (2) vetoes any action taken by the Board at that meeting, in which case the vetoed action does not take effect. See N.J. Stat. Ann. § 52:27BBB-64(b).

We note that the Governor's veto power is constrained, in accord with the "limited school district oversight" the MRERA describes, since the Governor has a limited period to respond to the Board's actions, and the default remains that the Board's actions have force or effect after approximately two weeks. Moreover, the Board continues to control its agenda, pursuant to its powers to act under N.J. Stat. Ann. § 18A:11-1.

The MRERA also grants the Governor the power to appoint members of the Board: the Act provides for a temporary increase in the size of the school board from nine members to twelve, to allow the Governor to appoint three members. See N.J. Stat. Ann. § 52:27BBB-63(h). The MRERA states that "to ensure substantial local representation on any such board, in no case shall the number of the positions appointed by the [municipality's] mayor and elected by the voters, combined, constitute less than a majority of the total positions on the board." Id. § 52:27BBB-63(a).

The Board argues, by way of comparison, that it is significantly less autonomous than entities which have been held not to be arms of the state, and cites Kovats v. Rutgers, 822 F.2d 1303, 1312 (3d...