Watson v. State
| Decision Date | 07 August 2001 |
| Docket Number | No. 00-41269,00-41269 |
| Parties | (5th Cir. 2001) BOBBY WATSON, On Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant, v. STATE OF TEXAS, Defendant-Appellee |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted] George M. Fleming, Sylvia Gerald Davidow, Andres Christian Pereira (argued), Fleming & Associates, Houston, TX, for Plaintiff-Appellant.
Brent Alan Benoit, Sp. Asst. Atty. Gen., Gregory Scott Coleman (argued), Julie Caruthers Parsley, Austin, TX, for Defendant-Appellee.
Appeal from the United States District Court for the Eastern District of Texas
Before HIGGINBOTHAM and BENAVIDES, Circuit Judges, and LITTLE,* District Judge.
Texas smokers, suffering smoking-related illnesses treated with Medicaid assistance, filed this suit asserting a right to share in the settlement that resolved the lawsuit filed by the State of Texas against members of the tobacco industry. The district court dismissed the smokers' complaint in the suit now before us for failure to state a claim upon which relief can be granted. It accepted the state's contention that Texas sought and is to be paid only for its own damages; that Texas did not sue as an assignee of Medicaid recipients. The district court rejected the state's plea that the Eleventh Amendment deprived the district court of jurisdiction. We agree with the district court and AFFIRM.
The facts are simple. The State of Texas and numerous other states sued various tobacco companies. In 1998, these states and defendants from the tobacco industry reached an agreement termed a Comprehensive Settlement Agreement. Pursuant to the Agreement the tobacco companies agreed to pay Texas an amount in excess of $17,000,000,000.00, payable to the state over an extended period.
Bobby Watson seeks a share of the settlement for himself and the class he represents. Watson and his class members are smokers who have been treated for smoking-related illnesses and whose medical expenses were covered in part under the Texas Medicaid program.
The class argued before the district court that it was entitled to a share of the settlement proceeds pursuant to 42 U.S.C. § 1396k. That statutory provision, entitled "Assignment, enforcement, and collection of rights of payments for medical care; establishment of procedures pursuant to State plan; amounts retained by State," provides in pertinent part that:
(a) For the purpose of assisting in the collection of medical support payments and other payments for medical care owed to recipients of medical assistance under the State plan approved under this subchapter, a State plan for medical assistance shall-
(1) provide that, as a condition of eligibility for medical assistance under the State plan to an individual who has the legal capacity to execute an assignment for himself, the individual is required-
(A) to assign the State any rights, of the individual or of any other person who is eligible for medical assistance under this subchapter and on whose behalf the individual has the legal authority to execute an assignment of such rights, to support (specified as support for the purpose of medical care by a court or administrative order) and to payment for medical care from any third party.
* * *
(b) Such part of any amount collected by the State under an assignment made under the provisions of this section shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual with respect to whom such assignment was executed (with appropriate reimbursement of the Federal Government to the extent of its participation in the financing of such medical assistance), and the remainder of such amount collected shall be paid to such individual.1
According to plaintiffs, they comprise the class of "such individual[s]" to whom "the remainder of such amount collected shall be paid."
The district court was not convinced. It first held that it had jurisdiction under the Settlement Agreement, and that Texas's limited waiver of Eleventh Amendment immunity included this dispute. It then held that Texas's claims against the tobacco industry were made directly and not as an assignee of Medicaid recipients. It concluded that section 1396k therefore did not apply, and dismissed the case under Rule 12(b)(6) as failing to state a claim upon which relief can be granted.
Watson appeals, asking that we reverse the 12(b)(6) dismissal. The State of Texas urges that we affirm, preferably on Eleventh Amendment immunity grounds. We are persuaded that the waiver of Eleventh Amendment immunity contained in the Comprehensive Settlement Agreement reached this suit, narrow though the waiver is. We are also persuaded that Texas proceeded directly and not as an assignee, and we therefore AFFIRM the judgment of the district court.
In reviewing a dismissal under Rule 12(b)(6), we accept as true all well-pleaded facts and view them in the light most favorable to the plaintiff, asking whether it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."2 We first examine the State of Texas's Eleventh Amendment immunity defense.
We begin with the black letter, or to borrow a student phrase, the "red eye law." "[T]he Constitution does not provide for federal jurisdiction over suits against nonconsenting States."3 Texas's Eleventh Amendment immunity4 will bar this suit unless it has been validly abrogated or waived. No party here argues abrogation, so the question is whether Texas's waiver of immunity included this dispute.5 We find that it did.
While Eleventh Amendment immunity "partakes of the nature of a jurisdictional bar,"6 unlike any other issue of federal subject matter jurisdiction, it can be waived by the state.7 A state's waiver must be unequivocal, but it can be either express or implied.8 Where waiver is by express statement, the intent to waive immunity from suit in federal court must be "stated by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction."9 We will find waiver by implication from conduct only under narrow circumstances: we require that the state employ the power of the federal court in such a way that its intent to forego its acceptance of immunity be unequivocal.10
The Comprehensive Settlement Agreement was signed by the attorney general of Texas, on behalf of the State of Texas.11 Two clauses of the Agreement in combination unequivocally waive Texas's Eleventh Amendment immunity for a limited class of disputes. They acknowledge the parties' acceptance of federal jurisdiction and the retention by the court of jurisdiction to enforce the settlement and recite their agreement to present all disputes over the settlement agreement to the court.
[The parties] acknowledge that this Court has jurisdiction over the subject matter of this action and over each of the parties hereto, and that this court shall retain jurisdiction for the purposes of implementing and enforcing this Settlement Agreement.
The second clause is the disputes clause, which states that the parties:
agree to present any disputes under this Settlement Agreement, including without limitation any claims for breach or enforcement of this Settlement Agreement, exclusively to this Court.
It is undisputed that these two clauses waive immunity for the class of cases they cover.
The phrase "this Court" refers to the United States District Court for the Eastern District of Texas, Texarkana Division, the court suit was brought in and from which this appeal was taken. The court referred to in the Agreement is a federal court.12
The enforcement clause acknowledged that the federal court had subject matter13 and personal jurisdiction over the State of Texas. While vesting of jurisdiction alone is not sufficient to overcome the Eleventh Amendment,14 the state consented to the vesting of jurisdiction "for the purposes of implementing and enforcing" the Agreement. Ordinary usage suggests that "enforcing" the Agreement might entail one party suing the other, which would be impossible unless Texas's consent to jurisdiction embodied a waiver of its Eleventh Amendment immunity.
By the disputes clause, the parties (including Texas) agreed to present to the court below "any disputes" under the agreement. "Any disputes" encompasses not only disputes initiated by Texas, but also disputes initiated by the tobacco industry. The clause goes on to say "including without limitation any claims for breach or enforcement." This phrase encompasses all claims, including claims brought by tobacco companies against the sovereign State of Texas. By its plain language, then, the disputes clause expresses Texas's consent that covered claims are to be presented exclusively to the United States District Court for the Eastern District of Texas. That is an express and unequivocal waiver of Texas's Eleventh Amendment immunity.
Watson contends that the State of Texas of necessity sued the tobacco companies under an assignment of rights from himself and the class he represents. Texas, according to Watson, stood in the class's shoes when it signed the Agreement, and thus Watson and the class are not strangers to the Agreement. Rather, Watson and the class, while not named parties, were real parties in interest in the underlying tobacco litigation. This highlights the fact that the claim here is to the proceeds of a settlement fund assertedly created by settlement of a claimed breach of duty owed both to Texas and the Watson class.
This is not a case where the plaintiff seeks to recover money from the state for breach of some duty owed only by the state, and tries to bootstrap his way into an Eleventh Amendment waiver by demanding the proceeds of the Settlement Agreement. Here, the basis for...
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