United States ex rel. Fields v. Bi-State Dev. Agency of the Missouri-Illinois Metro. Dist.

• Decision Date: 01 August 2017
• Docket Number: No. 16-3783.,16-3783.
• Citation: 872 F.3d 872
• Parties: UNITED STATES EX REL. Eric FIELDS, Plaintiff–Appellee v. BI–STATE DEVELOPMENT AGENCY OF the MISSOURI–ILLINOIS METROPOLITAN DISTRICT, doing business as Metro, Defendant–Appellant Eager Road and Associates, LLC, Defendant United States of America, Movant
• Court: U.S. Court of Appeals — Eighth Circuit

872 F.3d 872

UNITED STATES EX REL. Eric FIELDS, Plaintiff–Appellee

v.BI–STATE DEVELOPMENT AGENCY OF the MISSOURI–ILLINOIS METROPOLITAN DISTRICT, doing business as Metro, Defendant–Appellant

Eager Road and Associates, LLC, Defendant

United States of America, Movant

No. 16-3783.

United States Court of Appeals, Eighth Circuit.

Submitted: April 5, 2017

Filed: August 1, 2017

Counsel who presented argument on behalf of the appellant was David P. Frenzia, of Clayton, MO. The following attorney also appeared on the appellant brief; Christopher M. Sanders, of Clayton, MO.

Counsel who presented argument on behalf of the appellee was Christopher B. Hunter, of Godfrey, IL. The following attorney also appeared on the appellee brief; Ronald Anthony Roth, of Granite City, IL.

Before GRUENDER, MURPHY, and KELLY, Circuit Judges.

KELLY, Circuit Judge.

Bi–State Development Agency (Bi–State) appeals the denial of its motion for summary judgment. It argues that the district court¹ erred in holding that Bi–State was not an arm of the state and therefore not entitled to Eleventh Amendment immunity in this False Claims Act (FCA) action brought by a private actor. Having jurisdiction pursuant to 28 U.S.C. § 1292(a), see P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993) (appeal from the denial of summary judgment based on sovereign immunity falls within a narrow subset of permissible interlocutory appeals), we affirm.

I. Background

Bi–State is an interstate compact entity that owns and operates public transportation services in the City of St. Louis, Missouri; St. Louis, Charles, and Jefferson Counties in Missouri; and Madison, St. Clair, and Monroe Counties in Illinois. Bi–State was created by a compact between Illinois and Missouri, which was then ratified by Congress. Mo. Rev. Stat. § 70.370 ; 45 Ill. Comp. Stat. 100/1 ; 64 Stat. 568.

From 2003 to 2012, Eric Fields was employed by Bi–State and Eager Road and Associates, LLC (Eager Road), as an engineer. On July 28, 2014, Fields filed the instant lawsuit against Bi–State and Eager Road² pursuant to the qui tam provisions of the FCA. See 31 U.S.C. § 3730(b). The FCA mandates that "any person" who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" to the government "is liable to the United States government for a civil penalty" and treble damages. 31 U.S.C. § 3729(a). Fields alleged that, when submitting claims to the federal government, Bi–State falsely certified that it was in compliance with the Hatch Act and Missouri law. Specifically, Fields claimed that Bi–State raised funds for a St. Louis county executive's re-election campaign and ordered its employees to volunteer for the campaign, despite federal and state prohibitions on employee participation in political activity. The government declined to intervene, and Fields proceeded with the case independently. See 31 U.S.C. § 3730(b)(4)(B) (private actor may proceed with FCA claim where government declines to intervene).

On March 27, 2015, Bi–State moved for summary judgment, arguing that it did not qualify as a "person" under the FCA. The district court denied Bi–State's motion and Bi–State appealed. In that appeal, Bi–State argued that it did not meet the FCA's definition of "person," and that it was entitled to Eleventh Amendment immunity. Because the decision below addressed only the FCA—not the Eleventh Amendment—we dismissed the interlocutory appeal for lack of jurisdiction. United States ex rel. Fields v. Bi–State Dev. Agency of the Mo.-Ill. Metro. Dist., 829 F.3d 598, 600 (8th Cir. 2016). On remand, Bi–State moved for summary judgment on Eleventh Amendment immunity grounds. The district court denied Bi–State's motion, finding that Bi–State is akin to a local governmental entity and therefore not entitled to Eleventh Amendment immunity. Bi–State now appeals that decision.

II. Discussion

Bi–State "bears the burden of showing that it is an arm of the state."

Wojcik v. Mass. State Lottery Comm'n, 300 F.3d 92, 99 (1st Cir. 2002) ; see Fields, 829 F.3d at 600 ("[A]ll of our sister circuits to address the issue have recognized that an entity asserting Eleventh Amendment immunity bears the burden of showing its entitlement to such immunity."). "We cannot extend the Eleventh Amendment's protection to a bistate agency unless we have ‘good reason to believe that the [compacting] [s]tates structured the new agency to enable it to enjoy the special constitutional protection of the [s]tates themselves.’ " Barket, Levy & Fine, Inc. v. St. Louis Thermal Energy, 948 F.2d 1084, 1086 (8th Cir. 1991) (alteration in original) (quoting Lake Country Estates, Inc. v. Tahoe Reg'l Planning Agency, 440 U.S. 391, 401, 99 S.Ct. 1171, 59 L.Ed.2d 401 (1979) ). We review denials of summary judgment on sovereign immunity grounds de novo, "considering the evidence and all reasonable inferences from the evidence in the light most favorable to the nonmoving" party. Van Whye v. Reisch, 581 F.3d 639, 648 (8th Cir. 2009).

The Eleventh Amendment reads: "The 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, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. "The Eleventh Amendment protects a bistate agency if the agency is an arm of the compacting states, but not if the agency is comparable to a local governmental entity like a county or municipality." Barket, 948 F.2d at 1086.

In Barket, we addressed the very issue now before us: whether Bi–State is akin to an arm of the state or a local entity for purposes of Eleventh Amendment immunity. There, we explained that "[t]here is no litmus test to determine whether a bistate agency is more like an arm of the compacting states or more like a local governmental entity." Id. Instead, this determination requires us to examine the "nature of the entity created by state law," id. (internal quotation omitted), by considering the following factors:

(1) whether the compacting states characterize the agency as an arm of the compacting states or as a local governmental entity; (2) whether the compacting states fund the agency; (3) whether the compacting states are financially responsible for the liabilities and obligations the agency incurs; (4) whether the agency's commissioners are appointed by the compacting states or by local governments; (5) whether the functions the agency performs are traditionally state or municipal; and (6) whether the compacting states can veto the agency's actions.

Id. We concluded that Bi–State was "more like a local governmental entity than an arm of Missouri and Illinois." Id. at 1088.

Here, Bi–State does not dispute that Barket decided this issue. Instead, it argues that the law Barket relied on has changed, rendering Barket outdated and justifying our reconsideration of the Barket factors as applied to Bi–State. We address each of the six factors, first addressing those related to Bi–State's level of operational independence from the Missouri and Illinois and then addressing those related to Bi–State's financial relationship with the states. We then consider the overarching interests protected by the Eleventh Amendment.

1. Missouri and Illinois' Characterization of Bi–State

We first consider the states' characterizations of Bi–State. After judicial abrogation of sovereign immunity in 1977, the Missouri legislature reinstated sovereign immunity in 1978 through the enactment of Missouri Statute § 537.600. See State ex rel. Trimble v. Ryan, 745 S.W.2d 672, 673 (Mo. banc 1988). Section 537.600 reinstated " ‘[s]uch sovereign or governmental tort immunity as existed at common law prior to September 12, 1977, except to the extent waived, abrogated or modified by statutes in effect prior to that date’ " or contained in the statute's listed exceptions. Id.

When Barket was decided, § 537.600.4 provided that, "prior to September 12, 1977, there was no sovereign or governmental immunity for the proprietary functions of multi-state compact agencies ... including functions such as the operation of motor vehicles and the maintenance of property, involved in the operation of a public transit or public transportation system." Mo. Rev. Stat. § 537.600(4) (1988). Barket relied in part on this provision to find that Illinois and Missouri law "treat[ed] Bi–State like a county or municipality," and that the first factor therefore weighed in favor of finding that Bi–State was more like a local entity. Barket, 948 F.2d at 1087.

In 2005, the Missouri legislature deleted various statutory waivers of sovereign immunity, including § 537.600.4's clarification that Missouri did not understand multi-state compact entities to have sovereign immunity prior to 1977. Absent § 537.600.4, there is no applicable "prescribed exception" to Missouri's general rule that all public entities are entitled to sovereign immunity from suit in state court. Trimble, 745 S.W.2d at 673 (internal quotation omitted). Bi–State argues that the Missouri legislature's 2005 deletion of the statutory waiver of sovereign immunity for multistate compact agencies indicates that this factor should now weigh in favor of finding that Bi–State is an arm of the state.

However, Missouri's characterization of Bi–State for purposes of common law tort immunity was not the sole basis for Barket's conclusion that Illinois and Missouri treat Bi–State more like a municipality than an arm of the state. Barket also noted that the compact creating Bi–State characterizes it as "a body corporate and politic," provides that "Bi–State's property possesses the same status as property belonging to cities for the purpose of state taxation," and empowers Bi–State to "collect fees and issue revenue bonds." Barket, 948 F.2d at 1087 (citing Mo. Rev. Stat. §§ 70.370, 70.375 ). Each of these facts supports the conclusion that...