Holz v. Nenana City Public School Dist.

Decision Date30 October 2003
Docket NumberNo. 02-35179.,02-35179.
Citation347 F.3d 1176
PartiesSusan HOLZ, Plaintiff-Appellant, v. NENANA CITY PUBLIC SCHOOL DISTRICT; Terry Bentley; Joanne Romero; Endil Moore, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Michael J. Walleri, Law Offices of Michael J. Walleri, Fairbanks, Alaska, attorney for the plaintiff-appellant.

Howard S. Trickey, Jermain, Dunnagan & Owens, P.C., Anchorage, Alaska, attorneys for the defendants-appellees.

Appeal from the United States District Court for the District of Alaska; James K. Singleton, Chief Judge, Presiding. D.C. No. CV-00-00023-F-JKS.

Before: Harry PREGERSON, William C. CANBY, Jr., and M. Margaret McKEOWN, Circuit Judges.

OPINION

PREGERSON, Circuit Judge.

Plaintiff/Appellant Susan Holz, an Alaskan Native, filed suit against Defendants/Appellees Nenana City Public School District ("School District") and School District officials. Holz alleged that the defendants violated federal and state civil rights laws by failing to hire her for various positions with the School District. The district court concluded that the School District is an "arm of the state" and thereby immune from suit under the Eleventh Amendment. The district court granted summary judgment in favor of the defendants. Holz now appeals the district court's ruling. Holz contends that the School District is not an "arm of the state" entitled to Eleventh Amendment immunity. Holz argues that the School District is not a state agency, but rather is akin to a local or county agency, most importantly because Alaska is not legally required to satisfy any possible judgment against the School District. And thus Holz argues the district court erred in its ruling. We agree and reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1998, Holz, an Alaskan Native and life-long resident of Nenana, applied for a classroom aide position at the Nenana City Public School. The position was partly funded by an Indian Education grant that included an Indian employment preference requirement. William Black, the classroom teacher, believed that Holz was the best qualified applicant. But the classroom aide position went to Debbie Moore, the wife of the School Board President and a non-Native. When Black asked the school principal Joanne Romero why she recommended Moore for the job, and not Holz, the principal responded that Holz "did not interview very well."

On August 4, 2000, Holz filed an action in the United States District Court for the District of Alaska against the School District and School District officials. Holz alleges that the defendants violated the federal Indian Self Determination and Education Assistance Act1 and federal and state civil rights laws2 by failing to hire her for several positions with the school district.3

On October 29, 2001, the district court granted the School District's motion for summary judgment. Applying the five factor test articulated by this court in Mitchell v. Los Angeles Community College District, 861 F.2d 198, 201 (9th Cir. 1988), the district court held that the School District is an arm of the state and thus immune from suit under the Eleventh Amendment. The district court noted that the United States District Court for the District of Alaska previously applied the Mitchell factors in Straabe v. Yupiit School District, 1999 WL 33456490 (D.Alaska 1999). In Straabe, the court found that a regional education attendance area ("REAA") is an arm of the state. Straabe, 1999 WL 33456490, at *4. While the district court recognized that Straabe was not binding precedent, it was "nonetheless... convinced by [its reasoning]" — even though there are substantial differences between a REAA, a school district that exists outside an organized borough or city, and a school district associated with a city, such as Nenana. The district court determined that the "distinction [between a REAA and a city school district] does not change the result in the final analysis," and thus "[l]ike REAAs, Nenana is an arm of the state and immune from suit under the Eleventh Amendment."

The district court found that the first of the Mitchell factors — whether a money judgment would be satisfied out of state funds — pointed in favor of finding that the School District was an arm of the state. In 2001, the state provided approximately ninety-eight percent of the School District's operating budget. The court noted that, unlike REAAs, the School District is "associated with a city that has the power to tax and raise bonds enabling the city to make a local contribution." And the court further noted that in Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977), the "Supreme Court found that the power to issue bonds and levy taxes made a school district less like an arm of the state for purposes of Eleventh Amendment analysis." But given the scant local contribution, the district court concluded that any "judgment against Nenana will impact the state treasury." The district court rejected Holz's argument that because the state was not liable for a judgment against the School District there would be no impact on the state treasury. But see Kenai Peninsula Borough v. State, 532 P.2d 1019 (Alaska 1975) (finding that state is not liable for a school district because the school district is not an agent of the state). Citing Belanger v. Madera Unified School District, 963 F.2d 248, 250-51 (9th Cir.1992), the district court declared that "[n]either liability [n]or agency are determinative factors in the Eleventh Amendment analysis."

Regarding the second Mitchell factor — whether the entity performs central governmental functions — the district court held that "[b]ased on Alaska state law it is clear that education is an essential state function." The Alaska Constitution provides that "[t]he legislature shall by general law establish and maintain a system of public schools open to all children of the State." Alaska Const. art. VII, § 1. In determining that education was a central governmental function, the district court, like the court in Straabe, relied heavily upon the Alaska Supreme Court's statement that:

This constitutional mandate for pervasive state authority in the field of education could not be more clear. First, the language is mandatory, not permissive. Second, the section not only requires that the legislature `establish' a school system, but also gives to that body the continuing obligation to `maintain' the system. Finally, the provision is unqualified; no other unit of government shares responsibility or authority. That the legislature has seen fit to delegate certain educational functions to local school boards in order that Alaska schools might be adapted to meet the varying conditions of different localities does not diminish this constitutionally mandated state control over education.

Macauley v. Hildebrand, 491 P.2d 120, 122 (Alaska 1971) (footnote omitted).

The district court further held that "[i]t is undisputed that the last three factors — whether the entity may sue or be sued; whether the entity has the power to take property in its own name or only [in] the name of the state; and the corporate status of the entity — weigh against finding that Nenana is an arm of the state." The court, however, concluded that the School District is an arm of the state entitled to Eleventh Amendment immunity because "approximately 98% of[] Nenana's $6 million operating budget is funded by the state, the impact of a judgment against `Nenana to the Alaska state treasury is certain,' and `Nenana carries out an essential state function.'"

On October 30, 2001, the district court filed its order granting summary judgment in favor of the School District. The order, however, made no mention of the Alaska Supreme Court's decision in Municipality of Anchorage v. Repasky, 34 P.3d 302 (Alaska 2001), issued four days earlier on October 26, 2001. The Repasky case concerned, in part, the relationship between a school district and the municipality in which it is located. See id.

On December 4, 2001, the district court ordered the parties to file supplemental briefing on whether the Alaska Supreme Court's decision in Repasky should have affected the district court's ruling that the School District was an arm of the state entitled to Eleventh Amendment immunity.

The parties submitted supplemental briefing, and on January 16, 2002, the district court issued an order concluding that the Alaska Supreme Court's decision in Repasky did not require the district court to alter its holding that the School District was immune to suit under the Eleventh Amendment. The court stated that its holding was premised on its findings that education is an essential function of the state and that the satisfaction of a judgment against Nenana would impact the state treasury: "The decision in Repasky d[id] not effect [sic] th[o]se findings." The court stated, however, that "[i]t is worth noting that after Repasky, it is a closer question whether a school district associated with a municipality (which does not enjoy Eleventh Amendment immunity) is distinct from the municipality for purposes of Eleventh Amendment immunity." Nonetheless, the court concluded that:

The [Mitchell test,] however, is not affected. Education is an essential state function in Alaska and the negligible amount of local contribution from Nenana does not defray the impact to the state treasury a judgment against Nenana would have. For these reasons, the [summary judgment] order ... will remained unchanged.

See Mitchell, 861 F.2d at 201. The district court then entered final judgment in the case and granted summary judgment in favor of the School District and School District officials.

Holz now appeals the district court's final judgment.

II. STANDARD OF REVIEW

We review de novo the district court's grant of summary judgment. See ...

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