West Virginia Univ. Bd. of Governors v. Rodriguez

• Decision Date: 11 February 2008
• Docket Number: Civil Action No. 1:08-CV-41.
• Citation: 543 F.Supp.2d 526
• Court: U.S. District Court — Northern District of West Virginia
• Parties: WEST VIRGINIA UNIVERSITY BOARD OF GOVERNORS for and on behalf of WEST VIRGINIA UNIVERSITY, Plaintiff, v. Richard RODRIGUEZ, Defendant.

543 F.Supp.2d 526

WEST VIRGINIA UNIVERSITY BOARD OF GOVERNORS for and on behalf of WEST VIRGINIA UNIVERSITY, Plaintiff, v. Richard RODRIGUEZ, Defendant.

Civil Action No. 1:08-CV-41.

United States District Court, N.D. West Virginia, at Clarksburg.

February 11, 2008.

COPYRIGHT MATERIAL OMITTED

Jaclyn Ann Bryk, Jeffrey M. Wakefield, Thomas V. Flaherty, Flaherty, Sensabaugh & Bonasso, PLLC, Charleston, WV, Robert P. Fitzsimmons, Fitzsimmons Law Offices, Wheeling, WV, for Plaintiff.

Marvin A. Robon, R. Ethan Davis, Barkan & Robon Ltd., Maumee, OH, Sean P. McGinley, Ditrapano, Barrett & Dipiero, PLLC, Charleston, WV, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO REMAND

JOHN PRESTON BAILEY, District Judge.

Pending before this Court is Plaintiff West Virginia University Board of Governors' Motion to Remand and Motion for Costs, Expenses, and Attorney Fees (Doc. 7). Also pending is Plaintiff West Virginia University Board of Governors' Motion for Jurisdictional Discovery (Doc. 13). This Court, having reviewed the motions and the memoranda submitted with regard thereto, finds that the Motion to Remand should be granted and that the Motion for Discovery should be denied as moot.

Procedural Background

Richard Rodriguez was the head football coach at West Virginia University. On December 19, 2007, Coach Rodriguez resigned his position to take the head coaching job at the University of Michigan. On December 27, 2007, the plaintiff (WVU or the University) filed this action in the Circuit Court of Monongalia County, West Virginia, seeking a declaration that the employment contract between WVU and Coach Rodriguez is a valid and enforceable contract and that Coach Rodriguez is required to pay WVU liquidated damages arising out of the employment agreement.

On January 16, 2008, Coach Rodriguez removed this action to this Court, asserting jurisdiction under the diversity statute, 28 U.S.C. § 1332.

The University has filed a motion to remand on two grounds. First, that the University is an arm or alter ego of the State of West Virginia, thereby precluding diversity jurisdiction, and second, that Coach Rodriguez was a citizen of the State of West Virginia on the date that the suit was filed, again precluding diversity jurisdiction. The University has also filed a motion seeking permission to conduct jurisdictional discovery on the issue of whether Coach Rodriguez was a citizen of West Virginia on the date of filing this action.

Legal Standard

When an action is removed from state court, a federal district court is required to first determine whether it has original jurisdiction over the plaintiffs claims. In this case, that issue depends on whether there is complete diversity of citizenship between the parties.¹

"The burden of demonstrating jurisdiction resides with `the party seeking removal.'" Maryland Stadium Authority v. Ellerbe Becket Incorporated, 407 F.3d 255, 260 (4th Cir.2005), citing Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir.1994). Because removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).

If federal jurisdiction is doubtful, a remand to state court is required. Maryland Stadium, 407 F.3d at 260. On the other hand, if this Court has jurisdiction, it is required to exercise it. Gum v. General Electric Co., 5 F.Supp.2d 412, 415 (S.D.W.Va.1998) ("It is well-established federal courts have a `virtually unflagging obligation ... to exercise the jurisdiction given them.'").

It is beyond dispute that a state is not a citizen for purposes of diversity jurisdiction. Moor v. County of Alameda, 411 U.S. 693, 717, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482, 487, 15 S.Ct. 192, 39 L.Ed. 231 (1894); Maryland Stadium, supra at 260; 13B Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3602 (1984). An action between a state and a citizen of another state is not a suit between citizens of different states, and diversity jurisdiction does not exist. Postal Telegraph, supra at 487, 15 S.Ct. 192.

"In addition, public entities and political subdivisions, such as municipalities, are also not `citizens of a state' if they are an `arm or alter ego of a state.'" Maryland Stadium, supra at 260, citing Moor, supra at 717-18, 93 S.Ct. 1785; State Highway Comm'n of Wyoming v. Utah Constr. Co., 278 U.S. 194, 199, 49 S.Ct. 104, 73 L.Ed. 262 (1929).

"For a suit to be `between citizens of different states,' § 1332(a), `each distinct interest should be represented by persons, all of whom are entitled to sue, or may be sued, in the federal courts.' Strawbridge v. Curtiss, 3 Cranch 267, 7 U.S. 267, 2 L.Ed. 435 (1806). `That is, ... each of the persons concerned ... must be competent to sue, or liable to be sued, in [federal court].' Id." Maryland Stadium, supra, at 260.

Accordingly, if the University is an "arm or alter ego" of the State of West Virginia this Court lacks jurisdiction to hear this case.

"In determining whether a public entity is an alter ego of the state, and therefore, not a `citizen' under § 1332, courts have generally looked to the standards announced in cases addressing whether governmental entities are entitled to Eleventh Amendment immunity as an arm of the state." Maryland Stadium, supra at 260, citing Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 412 (11th Cir.1999) and Univ. Of R.I. v. A.W. Chesterton Co., 2 F.3d 1200, 1202 n. 4, 1203 (1st Cir.1993).

In making such an analysis, the Fourth Circuit typically applies the four factor test first announced in Ram Ditta v. Md. National Capital Park & Planning Comm'n, 822 F.2d 456 (4th Cir.1987), to determine whether a governmental entity is an "arm of the state" under either the Eleventh Amendment or for purposes of citizenship under § 1332. Maryland Stadium, supra at 261.

The four factors adopted in Ram Ditta are (1) whether the judgment will have an effect on the state treasury; (2) whether the entity exercises a significant degree of autonomy from the state; (3) whether the entity is involved in local versus statewide concerns; and (4) how the entity is treated as a matter of state law. 822 F.2d at 457-58.

The first factor, effect on the treasury, is often treated as a controlling factor for Eleventh Amendment immunity analysis. See Ram Ditta at 457; Gray v. Laws, 51 F.3d 426, 433 (4th Cir.1995). In the diversity analysis, however, effect on the treasury lacks the same level of importance. Maryland Stadium, supra at 262.

"[W]hile the impact of the litigation on the state treasury remains the most salient factor in determining whether the University is an alter ego of the state for purposes of § 1332, the inquiry is reversed: that is, while we usually look to whether the state will be liable for a judgment against the entity in question, in cases in which the state entity is plaintiff, we will look to whether any recovery by the entity will inure to the benefit of the state." Id.

The second factor, autonomy, is not a "free-wheeling" inquiry but rather is analyzed by considering whether the state retains a veto power over the entity's actions, the origins of the entity's funding, and who appoints the entity's directors. Id.

With respect to the fourth factor, state law, "the question whether a particular state agency has the same kind of independent status as a county or is instead an arm of the state, and therefore `one of the United States' within the meaning of the Eleventh Amendment, is a question of federal law. But that federal question can be answered only after considering the provisions of state law that define the agency's character." Regents of the Univ. of California v. Doe, 519 U.S. 425 n. 5, 429, 117 S.Ct. 900, 137 L.Ed.2d 55 (1997).

Persuasive Authority

It is also instructive to review how other courts have viewed the West Virginia higher education system and other universities and higher education entities.

In Hughes-Bechtol, Inc. v. West Virginia Board of Regents, 737 F.2d 540 (6th Cir.1984), the Sixth Circuit held that the West Virginia Board of Regents² was, in fact, an arm of the State of West Virginia. The Sixth Circuit stated that the "question whether the Board is and was a citizen of the State for purposes of diversity jurisdiction is purely a question of federal law. In this case, however, we hold that it is governed by the law of West Virginia." 737 F.2d at 543.

Kondos v. West Virginia Board of Regents, 318 F.Supp. 394 (S.D.W.Va.1970), aff'd, 441 F.2d 1172 (4th Cir.1971), was an action by a former football coach at Marshall University for breach of contract and libel and slander. The district court dismissed the action under West Virginia's sovereign immunity provision in Article VI, Section 35 of the West Virginia Constitution. In doing so, the district court found that West Virginia case law finding the Board of Regents to be an arm of the state were binding on it. This decision was affirmed by the Fourth Circuit.

In its discussion, the district court stated that "it is elemental that education, which is [the Board of Regents'] business, is a governmental function of the state and, of course, the carrying on of an athletic program is an important and necessary element in the educational process, especially at institutions of higher learning." 318 F.Supp. at 396, citing Glover v. Sims, 121 W.Va. 407, 3 S.E.2d 612 (1939); State ex rel. Board of Governors of West Virginia University v. Sims, 134 W.Va. 428, 59 S.E.2d 705 (1950).

With respect to other universities, "almost universally" courts have found that public state universities are "arms of the state."³ Maryland Stadium Authority v Ellerbe Becket Incorporated, 407 F.3d 255, 262 (4th Cir.2005).

In some circuits, the issue was not even disputed. For instance, in University of South Alabama, the...