Williams v. Dallas Area Rapid

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

m 00-10361

_______________

CHARLES ETTA WILLIAMS,

Plaintiff-Appellant,

VERSUS

DALLAS AREA RAPID TRANSIT,

Defendant-Appellee.

_________________________

Appeal from the United States District Court

for the Northern District of Texas

_________________________

February 22, 2001

Before POLITZ, SMITH, and PARKER, DART otherwise were entitled to such

Circuit Judges. immunity, it effectively waived it. Because we

agree that DART is not an arm of the state, we

JERRY E. SMITH, Circuit Judge: do not reach waiver. We reverse the dismissal

and remand for further proceedings.

Charles Etta Williams appeals the dismissal

of her suit against Dallas Area Rapid Transit I.

(“DART”) under the Age Discrimination in DART is a regional transportation authority

Employment Act (“ADEA”), 29 U.S.C. § 621 organized under TEX. TRANSP. CODE ANN. ch.

et seq., arguing that the district court erred in 452. Williams, a former DART employee, was

finding DART immune from suit under the released as part of a reduction-in-force

Eleventh Amendment. She contends both that program. Although DART allegedly found al-

DART is not an arm of the state for purposes ternative employment positions for younger,

of the Eleventh Amendment and that, even if lesser-qualified employees, it offered no such

position to Williams, who sued, asserting a (5th Cir. 1996) (quotation marks omitted).

claim for wrongful termination in violation of Moreover, “a plaintiff cannot avoid the

the ADEA. After the parties conducted sovereign immunity bar by suing a state agency

discovery, the Supreme Court issued Kimel v. or an arm of the State rather than the State

Fla. Bd. of Regents, 528 U.S. 62, 82-83 itself.” Id.

(2000), holding that, because the ADEA is not

a proper exercise of Congress’s power under When confronted with a governmental en-

the Fourteenth Amendment, the statute cannot tity asserting Eleventh Amendment immunity

abrogate a state’s sovereign immunity without as an arm of the state, we apply the test

an express waiver by the state. established in Clark v. Tarrant County, 798

F.2d 736 (5th Cir. 1986). The district court

Shortly thereafter, DART moved for failed to analyze DART’s asserted immunity

dismissal under FED. R. CIV. P. 12(b)(6), or al- under the Clark framework, instead relying on

ternatively, for judgment on the pleadings un- three cases1 for the proposition that DART is

der rule 12(c). Concluding that judgment was

not proper under either rule, the court

1

nonetheless dismissed sua sponte under rule Anderson v. DART, Civ. Ac. No. 3:97-CV-

12(h)(3) for lack of subject matter jurisdiction, 1834-BC, 1998 WL 686782 (N.D. Tex. Sept. 29,

holding that DART, because it had not waived 1998), aff’d, 180 F.3d 265 (5th Cir. 1999) (per

its sovereign immunity, was not amenable to curiam) (unpublished), cert. denied, 528 U.S. 1062

suit in federal court under the ADEA. (1999); Tolbert v. Vasquez, Civ. Ac. No. 3:93-CV-

1468-X, 1998 U.S. Dist. LEXIS 17616 (N.D. Tex.

Mar. 27, 1998), aff’d, 163 F.3d 1355 (5th Cir.

II.

1998) (per curiam) (unpublished); Davis v. Mathis,

The district court held, as a matter of law, 846 S.W.2d 84 (Tex. AppSSDallas 1992, writ

that because “DART is a governmental unit or denied). These cases are neither binding nor

instrumentality of the state of Texas, . . . it is persuasive, because none properly examined the

entitled to assert Eleventh Amendment immu- issue of Eleventh Amendment immunity. See

nity” and that because DART had not waived Young v. DART, Civ. Ac. No. 3:95-CV-2596-X,

that immunity, Williams’s ADEA claim failed 1999 U.S. Dist. LEXIS 4470, at *3 (N.D. Tex.

for lack of subject matter jurisdiction. Mar. 24, 1999) (declining to follow Anderson and

Williams contests both that DART is entitled Tolbert because “neither case delivers a thoughtful

to Eleventh Amendment immunity and that it and/or detailed argument” with respect to Eleventh

did not effectively waive immunity. When Amendment immunity, and ordering the parties to

addressing a dismissal for lack of subject brief the issue under the Clark framework).

matter jurisdiction, we review application of

law de novo and disputed findings of fact for Davis, 846 S.W.2d at 87, held merely that

DART “[a]s a governmental unit,” was entitled to

clear error. See Williamson v. Tucker, 645

the protections of the Texas Tort Claims Act

F.2d 404, 413 (5th Cir. May 1981). (“TTCA”), Tex. CIV. PRAC. & REM. CODE ch.

101. T hat holding is not probative for our

“The Eleventh Amendment . . . bars suits in purposes, because the TTCA defines

federal court by citizens of a state against their “governmental unit” as

own state or a state agency or department.”

Richardson v. S. Univ., 118 F.3d 450, 452 A) this state and all the several agencies of

(continued...)

2

indeed a state agency and therefore is entitled

to sovereign immunity. Although all three

1

(...continued) cases upheld DART’s immunity from suit, they

government that collectively constitute are neither binding nor persuasive in this

the government of this state, including context. The court erred in failing properly to

other agencies bearing different analyze, under Clark, DART’s amenability to

designations, and all departments, suit.

bureaus, boards, commissions, offices,

agencies, councils, and courts;

A proper inquiry under Clark considers six

factors:

(B) a political subdivision of this state,

including any city, county, school dis-

trict, junior college district, levee im- (1) whether the state statutes and case

provement district, drainage district, ir- law characterize the agency as an

rigation district, water improvement arm of the state;

district, water control and improvement

district, water control and preservation (2) the source of funds for the entity;

district, freshwater supply district,

navigation district, conservation and (3) the degree of local autonomy the

reclamation district, soil conservation entity enjoys;

district, communication district, public

health district, and river authority; (4) whether the entity is concerned pri-

marily with local, as opposed to

(C) an emergency service organization; and

statewide, problems;

(D) any other institution, agency, or organ

of government the status and authority

1

of which are derived from the (...continued)

Constitution of Texas or from laws Anderson and Tolbert held that DART, as a

passed by the legislature under the “political subdivision of the state” is not a “person”

constitution. within the meaning of 42 U.S.C. §§ 1981, 1983.

See Anderson v. DART, 1998 WL 686782 at *7;

TEX. CIV. P RAC. & REM. CODE § 101.001. The Tolbert, 1998 LEXIS 17616, at *19-20. Although

TTCA’s definition of “governmental unit” is un- it is not at all certain that “political subdivision,”

questionably broader than the term “arm of the as used by those courts, is coextensive with “arm

state,” as used for purposes of the Eleventh of the state,” as used in analyzing Eleventh Amend-

Amendment, in that it includes cities, counties, ment immunity, to the extent that the two terms are

school boards, and other governmental entities that interchangeable, the district courts in Anderson v.

are not entitled to Eleventh Amendment immunity. DART and Tolbert erred in failing to analyze

See, e.g., Mt. Healthy City Sch. Dist. Bd. of Educ. DART under the Clark framework, relying instead

v. Doyle, 429 U.S. 274, 280-81 (1977) (“[A] local on the Davis court’s characterization of DART.

school board such as petitioner is more like a Moreover, while the district court in Anderson v.

county or city than it is like an arm of the State. DART did find DART immune from suit under the

We therefore hold that it was not entitled to assert Eleventh Amendment, that finding is merely an

any Eleventh Amendment immunity from suit in erroneous dictum, because the court already had

the federal courts.”). decided the case on the § 1983 issue. See

(continued...) Anderson v. DART, 1998 WL 686782, at *7.

3

(5) whether the entity has authority to DART as a “governmental unit” is not

sue and be sued in its own name; probative of DART’s status for Eleventh

and Amendment purposes, however. See supra

note 1.

(6) whether the entity has the right to

hold and use property. On the other hand, Texas statute defines

“state government” as “an agency, board,

Anderson v. Red Riv. Waterway Comm’n, 231 commission, department, or office . . . that:

F.3d 211, 214 (5th Cir. 2000). Although none (A) was created by the constitution or a

of the six factors is dispositive,2 some are more statute of this state; and (B) has statewide

important than others: The secondSSthe jurisdiction.” TEX. CIV. PRAC. & REM. CODE

source of fundsSSis the most important, while § 101.001(5).3 Thus, the controlling factor in

the fifth and sixthSSwhether the agency has analyzing DART's status as a “state agency”

authority to enter into litigation and hold prop- under the TTCA is whether it has statewide

ertySSare less so. See Hudson, 174 F.3d at jurisdiction.

681-82. “Rather than forming a precise test,

[the Clark] factors help us balance the equities In its answer, DART conceded that “all of

and determine as a general matter ‘whether the

suit is in reality a suit against the state itself.’”

3

Id. (quoting Laje v. R.E. Thomason Gen. DART contends that the characterization of §

Hosp., 665 F.2d 724, 727 (5th Cir. 1982)). 101.001(5) is not applicable in the Eleventh

Amendment context, because § 101.001’s

definitions are limited by their terms to chapter

A proper Clark analysis compels the

101, which codified the TTCA, which DART

conclusion that DART is not an arm of the argues, deals only with governmental entities’

state for purposes of the Eleventh amenability to suit in state courts, ignoring any

Amendment. The first factorSS“whether the federal immunity. Section 101.025(a) states that

state statutes and case law characterize the “[s]overeign immunity to suit is waived and

agency as an arm of the state”SSweighs abolished to the extent of liability created by this

against immunity, if anything. Neither party chapter,” however, plainly contemplatingSSand by

can point to definitive authority establishing implication, leaving intactSSthe state’s immunity

DART’s status under Texas law. As DART under the Eleventh Amendment.

points out, it is an “authority” under Texas

law, and as such, is a “governmental unit under To the extent the statute can be considered am-

Chapter 101, Civil Practice and Remedies biguous, the Revisor’s Note to that section is in-

Code . . . .” TEX. TRANSP. CODE ANN. structive: “Only the state and its agencies have

§ 452.052. The statutory characterization of sovereign immunity. The revised law omits the

phrase ‘with reference to units of government’ to

avoid the implication that sovereign immunity

applies to local governmental units.” Moreover,

2

Importantly, neither the state’s approach to the DART’s abandonment of the TTCA strikes us as

issue of sovereign immunity nor the state’s peculiar, given its reliance on Anderson v. DART,

characterization of the entity in question controls Tolbert, and Davis, all of which (improperly) con-

our inquiry. See Hudson v. City of New Orleans, str ued the TTCA in finding DART immune from

174 F.3d 677, 684-85 (5th Cir.), cert. denied, 528 federal suit as a “governmental unit.” See supra

U.S. 1004 (1999). note 1.

4

its operations and actions take place within the registered by the state comptroller,5

counties encompassed in the Northern District but SSimportantlySSthe state does not

of Texas.” Nowhere does DART assert that it guarantee the bonds. Moreover, although

does have statewide jurisdiction. Thus, at DART is authorized to pledge its tax and

least for purposes of the TTCA, DART is not operating revenues or mortgage its assets to

a state agency. Admittedly, Texas law is not secure the bonds,6 DART can point to no

unambiguous with respect to DART’s status, statute indicating that the state would back the

but to the extent it favors either party, the first bonds with its full faith and credit. We find

factor weighs against characterizing DART as nothing that we can interpret as indicating that

an arm of the state. the State of Texas funds or guarantees

DART’s bond obligations.

The second factor in the Clark inquirySSthe

source of the funds for the governmental DART also argues that the characteristics

entitySSis the most important one. See of its sales and use tax render the tax a source

Hudson, 174 F.3d at 687. Although we also of state funding. This argument proves too

consider the source of general operating funds much, however. While it is true that DART’s

for the entity, “because an important goal of sales and use tax is administered by the state

the eleventh amendment is the protection of comptroller and passes through the state treas-

states’ treasuries, the most significant factor in ury before being rebated to DART, municipal

assessing an entity’s status is whether a taxes in Texas are administered in the same

judgment against it will be paid with state way.7 Nonetheless, it is undisputed that

funds.” Richardson, 118 F.3d at 455 (quoting municipalities are not arms of the state for

McDonald v. Bd. of Miss. Levee Comm’rs, purposes of the Eleventh Amendment. No.

832 F.2d 901, 907 (5th Cir. 1987)). It is 99-41444, Evans v. City of Bishop, 2000 U.S.

undisputed that DART receives funding from App. LEXIS 34479, at *5-*7 (5th Cir. Dec.

several sources, including passenger fares, 11, 2000) (per curiam). Moreover, except for

bond revenues, and local sales and use tax the mere administration of the tax by the state,

revenues,4 but DART concedes on appeal that there is nothing to suggest that DART’s sales

it receives no appropriated funds from the and use tax is anything other than the

state of Texas. It does contend, however, that collection of local funds authorized by a local

its authorized use of bond and tax revenues election to accomplish a local objective.

constitutes state funding. We disagree.

Finally, DART argues that, if it were unable

DART is authorized by state statute to is-

sue bonds for capital improvement projects;

5

we cannot, however, infer merely from such See id. § 452.355.

authorization that the state actually provides 6

See id. § 452.357.

funding to DART. The bonds must be

approved by the state attorney general and 7

Compare TEX. TAX CODE ANN. §§ 321.301-

.302, 321.306, 321.501-.505 (administration pro-

visions for municipal sales and use tax), with id. §§

4

See TEX. TRANSP. CODE ANN. §§ 452.055 322.201-.203, 322.301-.305 (administration

(grants), 452.061 (fares), 452.352 (bonds), 452.- provisions for special purpose sales and use tax).

401 (sales and use tax).

5

to pay a judgment from its own funds, it could executive committee,9 which consists of

seek additional funding from the legislature. members appointed by the municipalities

DART does not contend that the legislature served by DART. See id. §§ 452.502, 452.-

would be obligated to provide the additional 562, 452.572. Thus, the day-to-day

funding, however, and we do not consider “a operations of DART fall under purely local

state’s voluntary, after-the-fact payment” of a control. Moreover, any municipality served by

judgment to be a liability against the state’s DART may hold an election to withdraw from

treasury. Hudson, 174 F.3d at 689. There is DART if it chooses to do so. See id. §

nothingSSeither in the record or of which we 452.651. In this way, the localities also

can take judicial noticeSSindicating either that control DART’s ultimate disposition. While

DART receives state funding as a general there is some state oversight of DART’s

matter or that a judgment against it would be operations, it enjoys considerable local

satisfied out of the state treasury. autonomy; this factor therefore weighs slightly

against Eleventh Amendment immunity, if

The third factor is the degree of local au- anything.

tonomy. DART argues that this factor weighs

in its favor, because it is subject to the Texas The fourth factor looks at whether DART

Sunset Act, TEX. GOV’T CODE. ANN. ch. 325. is concerned primarily with local or statewide

That fact alone does not dispose of the issue: problems. DART concedes that its authority

The Sunset Act deals with the orderly closure is limited to the Dallas-Forth Worth region.

of obsolete state agencies, not the oversight of Although there is some authority for viewing

agencies’ daily operations. See id. § 325.008 regional entities merely as local solutions to

(detailing the duties of the Sunset Advisory statewide problems,10 the fourth factor

Commission). Moreover, DART must report properly centers on “whether the entity acts

to the Sunset Advisory Commission only once for the benefit and welfare of the state as a

every twelve years. See TEX. TRANSP. CODE whole or for the special advantage of local

ANN. § 452.453. inhabitants.” Pendergrass v. Greater New

DART argues further that, because it is

subject to fiscal audits every year and 9

See id. § 452.053; see also id. §§ 452.101-13

performance audits every fourth year,8 it falls (empowering the executive committee, inter alia,

under state control. Like the Sunset Act, the to create a budget, invest funds, establish a security

audit requirements are some evidence of state force, and appoint auditors and attorneys).

oversight, but they are not dispositive with 10

respect to the issue of local control. Cf. Clark, 798 F.2d at 745. Clark addressed

the state probation system, concluding that the

relevant statute “was enacted to address a

On the other side of the scale, the

statewide problem and to put control of

responsibility for the “management, operation, probationers in the hands of state officers.

and control” of DART is vested in an Dividing the responsibilities into judicial districts

is merely an administr ative tool for handling a

statewide, state program.” Id. (citation omitted).

In contrast, DART is not an administrative division

8

See TEX. T RANSP. CODE ANN. §§ 452.451, of a statewide transportation systemSSit is an

452.454. entity unto itself.

6

Orleans Expressway Comm’n, 144 F.3d 342,

347 (5th Cir. 1998) (citing Jacintoport Corp.

v. Greater Baton Rouge Port Comm’n, 762

F.2d 435, 443 (5th Cir. 1985)). DART plainly

acts for the benefit of the residents of Dallas,

Fort Worth, and the surrounding communities,

as distinguished from that of the state as a

whole; thus, the fourth factor also cuts against

DART.

The fifth and sixth factors weigh in favor of

Williams’s contention that DART is not an

arm of the state. DART has statutory

authority both to hold and use property and to

sue and be sued. See TEX. TRANSP. CODE.

ANN. §§ 452.054(b) & (d). Such abilities

favor categorization of DART as an

independent entity, not an arm of the state.

See Hudson, 174 F.3d at 691.

Taken as a whole, the Clark analysis

compel the conclusion that DART is not

immune from Williams’s claim. Though some

of the factors may be indeterminate, none

weighs strongly in DART’s favor. Moreover,

the most important second factor weighs

against considering DART an arm of the state.

The district court therefore erred in finding

DART immune from suit under the ADEA.

We REVERSE the dismissal and REMAND

for further proceedings.

7