Gershwain Sprauve v. West Indian Company Limited

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 13-4371

_____________

GERSHWAIN SPRAUVE,

Appellant

v.

THE WEST INDIAN COMPANY LIMITED;

JOSEPH BOSCHULTE;

BOARD OF DIRECTORS OF THE WEST INDIAN

COMPANY LIMITED

_____________

No. 14-1151

_____________

ANDREA V. SMITH,

Appellant

v.

THE WEST INDIAN COMPANY LIMITED;

JOSEPH BOSCHULTE, in his personal capacity;

THE BOARD OF DIRECTORS OF THE WEST INDIAN

COMPANY LIMITED;

JOSEPH BOSCHULTE, as President and Chief Executive

Officer of the West Indian Company Limited

_____________

On Appeal from the District Court

of the Virgin Islands

(Civil Action Nos. 3:13-cv-00008 and 3:13-cv-00030)

District Judge: Hon. Susan D. Wigenton

_________________

Argued: December 8, 2014

Before: CHAGARES, JORDAN and SHWARTZ,

Circuit Judges

(Opinion Filed: August 25, 2015)

Karin A. Bentz, Esq. (Argued)

Julita K. De León, Esq.

The Law Offices of Karin A. Bentz, P.C.

5332 Raadets Gade, Suite 3

St. Thomas, VI 00802

Attorneys for Appellants Gershwain Sprauve and

Andrea Smith

Micol L. Morgan, Esq. (Argued)

Bailey A. Calhoun, Esq.

Ogletree, Deakins, Nash, Smoak & Stewart, LLC

The Tunick Bldg., Suite 201

1336 Beltjen Rd.

St. Thomas, VI 00802

Attorneys for Appellee Joseph Boschulte in his

individual capacity

Mark D. Hodge, Esq. (Argued)

Hodge & Hodge

1340 Taarneberg

St. Thomas, VI 00802

Adriane J. Dudley, Esq.

Dudley Rich Davis LLP

5194 Dronningens Gade, Suite 3

Hibiscus Alley

St. Thomas, VI 00802

Attorney for Appellees The West Indian Company

Limited; Board of Directors of the West Indian

Company Limited; and Joseph Boschulte, as President

and Chief Executive Officer of the West Indian

Company

2

__________________

OPINION

__________________

CHAGARES, Circuit Judge

Gershwain Sprauve and Andrea Smith appeal the

District Court’s dismissal of their cases for the failure to state

a claim. The District Court found that Sprauve’s and Smith’s

claims under the First and Fourteenth Amendments and 42

U.S.C. § 1983 failed because defendant West Indian

Company, Limited (“WICO”), their former employer, is not a

government entity. Applying the United States Supreme

Court’s decision in Lebron v. National Railroad Passenger

Corporation, 513 U.S. 374 (1995), we hold that WICO must

be considered a government entity for the purposes of

Sprauve’s and Smith’s constitutional claims. For the reasons

that follow, we will affirm in part, reverse in part, vacate in

part, and remand for further consideration of Sprauve’s and

Smith’s claims.

I.

We take most of the following facts from the

plaintiffs’ complaints, which we assume to be true for the

purposes of a motion to dismiss. Phillips v. Cnty. of

Allegheny, 515 F.3d 224, 231 (3d Cir. 2008). WICO was

founded in 1912, prior to the United States’ acquisition of the

Virgin Islands from Denmark in 1917. WICO began as a coal

bunkering business and later grew to serve as the “Port

Agent” for the cruise lines that visit the port of Charlotte

Amalie in St. Thomas. Joint Appendix (“J.A.”) 3, 33. WICO

also manages the Havensight Mall at that port. Id. In 1986,

WICO began dredging activities in the St. Thomas harbor.

Sprauve & Smith Br. 4. This led to public opposition and

litigation regarding the scope of these activities. Id.

In 1993, the Government of the Virgin Islands

purchased 100% of the shares of WICO through a Stock

Purchase Agreement. The purchase was approved by the

Legislature of the Virgin Islands in a special session in Act

No. 5826 (the “Act”). J.A. 421. The Act explains that “the

Government of the Virgin Islands . . . has been engaged for a

3

number of years in proceedings, including litigation,

regarding those certain rights of [WICO]” and that

“acquisition of ownership of the Company by the

Government would permit the final conclusion of all such

proceedings and related disputes, and ensure that the

development rights of the Company conferred by . . .

agreements and treaties would be subject in all respects to the

control of the Government.” Id. The Act further explains

that acquisition of WICO would “transfer to public ownership

and control substantial real estate, including certain areas that

may be suitable for development for public use.” Id. Section

8(b) of the Act provides:

Upon acquisition of the Facilities and all of the

issued and outstanding shares of common stock

of the Company by the Government, the

Company is hereby granted the status and

authority of a public corporation and

governmental instrumentality of the

Government of the Virgin Islands of the United

States and shall be deemed to be a public entity

operating on behalf of the Government, rather

than a private corporation . . . .

J.A. 424.

Following this acquisition, it is undisputed that 100%

of WICO shares were transferred to the Virgin Islands Public

Finance Authority (“PFA”), a public corporation and

governmental instrumentality created by the Government of

the Virgin Islands. J.A. 229–30. The PFA is run by a board

of directors appointed by the Governor of the Virgin Islands,

with the advice and consent of the Virgin Islands Legislature.

J.A. 33. WICO is run by its own board of directors,

appointed by the PFA. Id.

Plaintiff Gershwain Sprauve began working at WICO

in 1997 as the Manager of Mall Operations. In 2009, WICO

President and Chief Executive Officer (“CEO”) Edward

Thomas indicated to the WICO Board of Directors (the

“Board”) that he planned to retire. Sprauve submitted his

application for the position and Thomas verbally

recommended Sprauve for the job to the Board. In March

4

2010, the Board offered the CEO position to Sprauve, but it

later reneged on this offer. In December 2010, the Board

extended Thomas’s contract. In 2011, Thomas again

recommended Sprauve to the Board as his replacement. The

Board instead convened a search committee and eventually

hired defendant Joseph Boschulte as the new CEO and

President of WICO. Boschulte began his tenure in that

position on May 1, 2012.

Sprauve alleges that Boschulte was hostile toward him

and falsely accused him of making various mistakes in the

workplace. Sprauve eventually wrote a letter to the Board

complaining about Boschulte’s behavior. The Board

launched an investigation. Shortly after this investigation,

Boschulte terminated Sprauve, alleging he failed to attend a

hearing before the Legislature’s Finance Committee to

discuss WICO’s budget. Sprauve asserts that this allegation

was pretext.

Plaintiff Andrea Smith began working at WICO in

1981, before the company was purchased by the Virgin

Islands. In 2012, she was promoted to Chief Financial

Officer. When Edward Thomas retired, she served as the

Interim President and CEO of WICO until Boschulte was

hired. Smith alleges that Boschulte knew that she had been

interviewed by the Board as part of its investigation into

Sprauve’s claim and that Boschulte became angry with her.

She alleges that he then took various retaliatory actions

against her. On January 11, 2013, Boschulte terminated

Smith for what he called “failure to execute.” J.A. 38.

On January 28, 2013, Sprauve filed a complaint

against WICO and Boschulte in the District Court of the

Virgin Islands. He alleged violations of his First and

Fourteenth Amendment rights under the United States

Constitution, a claim under 42 U.S.C. § 1983 against

Boschulte, and a number of claims under Virgin Islands law.

WICO and Boschulte moved to dismiss Sprauve’s complaint

under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

The Court granted the motion. J.A. 398.

Smith filed her own complaint against WICO and

Boschulte alleging violations of the First and Fourteenth

5

Amendments, a claim under 42 U.S.C. § 1983 against

Boschulte, and a number of claims under Virgin Islands law.

WICO and Boschulte filed a motion to dismiss under Rules

12(b)(1) and 12(b)(6) and Boschulte filed a motion to dismiss

under Rule 12(b)(6). The District Court granted the motions.

J.A. 393; Supplemental Appendix (“S.A.”) 2.

The District Court conducted the same analysis in

granting both WICO’s and Boschulte’s motions to dismiss. It

explained that “[t]he first and central issue raised . . . is

whether WICO is a public corporation with public employees

versus a private entity with private employees.” J.A. 405;

S.A. 9. To make this determination, the District Court first

looked to decisions of the Virgin Islands Public Employees

Relations Board (“PERB”), which found that WICO

employees are not public employees. J.A. 405–07; S.A. 9–

10. Next, the District Court examined the language of the

Act. J.A. 407; S.A. 10–11. The District Court ultimately

concluded that “WICO cannot be considered a purely public

entity,” that its employees are not public employees, and that

it is not a public corporation. J.A. 407–08; S.A. 11–12. The

District Court then found that because WICO is not a public

entity, its alleged conduct could not be considered to have

been “under color of state law” for purposes of liability under

section 1983, J.A. 409; S.A. 13, and that Smith and Sprauve’s

direct constitutional claims fail because WICO and Boschulte

are private actors. J.A. 411; S.A. 14–17. Finally, the District

Court declined to exercise supplemental jurisdiction over the

remaining claims under Virgin Islands law. J.A. 412; S.A.

18.

Both Sprauve and Smith timely appealed.1

1

In both Sprauve’s and Smith’s cases the defendants also

moved to quash service of process to the WICO Board and to

dismiss all claims against the Board. The District Court

granted these motions and the plaintiffs have not appealed

these portions of the District Court opinions. In addition,

plainti ff Smith conceded that her claims for negligent

misrepresentation and fraud (Count XIII) and false light

(Count XIV) should be dismissed. App. 370. The District

Court also dismissed Smith’s free association claim (Count

XVIII) on the merits, and Smith has not appealed that ruling.

6

II.

The District Court had jurisdiction under 28 U.S.C. §

1331, 42 U.S.C. § 1983, and 28 U.S.C. § 1343(a)(3). We

have appellate jurisdiction pursuant to 28 U.S.C. § 1291. Our

standard of review for a dismissal under Federal Rule of Civil

Procedure 12(b)(6) is de novo. Phillips, 515 F.3d at 230.2

III.

Sprauve and Smith bring claims under the First and

Fourteenth Amendments and under 42 U.S.C. § 1983. To

state a section 1983 claim, Sprauve and Smith must allege

facts demonstrating, inter alia, that the misconduct they

complain of was “under color of state law.” Groman v. Twp.

of Manalapan, 47 F.3d 628, 638 (3d Cir. 1995). To state a

constitutional claim, they must allege facts showing, inter

alia, that the misconduct involved “state action.” Lugar v.

Edmondson Oil Co., Inc., 457 U.S. 922, 937 (1982). The

“under color of state law” analysis is equivalent to the “state

action” analysis. Leshko v. Servis, 423 F.3d 337, 339 (3d

Cir. 2005).

The Supreme Court has acknowledged that “[i]t is fair

to say that ‘our cases deciding when private action might be

deemed that of the state have not been a model of

consistency.’” Lebron, 513 U.S. at 378 (quoting Edmonson

v. Leesville Concrete Co., 500 U.S. 614, 632 (1991)

(O’Connor, J., dissenting)). Armed with that body of law, we

have endeavored to determine whether state action exists in

circumstances including where an activity is significantly

encouraged by the state, where the state acts as a joint

participant, and where an actor “performs a function

2

The defendants filed motions to dismiss under both Rules

12(b)(1) and 12(b)(6). The District Court purported to grant

defendants’ motions under 12(b)(1), but did so using a Rule

12(b)(6) analysis. Thus, we will treat the order as having

been issued under Rule 12(b)(6). See, e.g., Kehr Packages,

Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1408–09 (3d Cir. 1991).

7

designated by the state, or is entwined with government

policies or management.” Leshko, 423 F.3d at 340. We have

described this process as “labyrinthine,” id. at 338, “murky,”

Fitzgerald v. Mountain Laurel Racing, Inc., 607 F.2d 589,

591 (3d Cir. 1979), and a “protean concept,” Magill v.

Avonworth Baseball Conference, 516 F.2d 1328, 1331 (3d

Cir. 1975) (quotation marks omitted).

However, we may avoid this determination of whether

private party conduct constitutes state action when the actor is

the government. See Lebron, 513 U.S. at 378 (noting that

“[i]t may be unnecessary to traverse [the] difficult terrain [of

private party state action analysis] in the present case, since

Lebron’s first argument is that Amtrak is not a private entity

but Government itself”). 3 The Supreme Court’s decision in

Lebron sets forth guideposts for resolving whether a

corporate entity may be considered the government for

purposes of constitutional claims. The plaintiffs argue that

WICO is a governmental entity and is therefore subject to

claims under the United States Constitution and under section

1983. Applying Lebron, we agree.

A.

In Lebron, the petitioner filed a lawsuit against the

National Railroad Passenger Corporation (also known as

Amtrak) claiming that it had violated his First and Fifth

Amendment rights. Id. at 377. Amtrak was established in

1970 by Congress, inter alia, “in order to avert the threatened

extinction of passenger trains in the United States,” id. at 383,

and was to operate, to the extent consistent with federal law,

subject to the District of Columbia Business Corporation Act,

see 45 U.S.C. § 541 (1970). Amtrak later incorporated under

that statute. See Lebron, 513 U.S. at 385. See also 45 U.S.C.

§ 541 (1970) (authorizing incorporation of Amtrak). A

majority of Amtrak’s governing board is appointed by the

Government and Amtrak is required to submit three separate

3

To repeat, we are only examining whether WICO is a

government entity for the purpose of determining whether

constitutional claims can be lodged directly against it. This

Opinion does not address, for example, whether WICO is

entitled to governmental immunities. We leave that issue for

another day.

8

annual reports to the Government. Lebron, 513 U.S. at 385.

Nonetheless, Congress provided that Amtrak “shall not be an

agency, instrumentality, authority, or entity, or establishment

of the United States Government.” 45 U.S.C. § 541 (1970).

To give some context to its analysis, the Lebron Court

first engaged in a detailed recitation of “the long history of

corporations created and participated in by the United States”

with a particular focus on level of control by the Government.

Lebron, 513 U.S. at 386. The first such corporation was the

Bank of the United States, created in 1791, but the

Government’s participation in that corporation was limited to

holding twenty percent of the Bank’s stock. Id. at 386–87.

The Government first participated in a corporation in which it

appointed a majority of the corporation’s directors – thus

controlling the corporation – in 1902. Id. at 387. Congress

that year authorized the President to acquire the assets of the

New Panama Canal Company of France, including its

holdings in the Panama Railroad Company – much like Act

No. 5826 authorized the Government of the Virgin Islands to

acquire WICO. See id. The purpose of the purchase was “to

facilitate construction of the Panama Canal.” Id. The

Government “became the sole shareholder of the Panama

Railroad, and continued to operate it under its original

charter, with the Secretary of War, as the holder of the stock,

electing the Railroad’s 13 directors.” Id. By the end of

World War II, the number of Government corporations had

grown to fifty-eight, and immediately after that war, many of

those corporations were dissolved because of Congress’s

perception that “Government-created and -controlled

corporations had gotten out of hand in both their number and

their lack of accountability.” Id. at 389. A new wave of

Government corporations began again in the 1960s and,

starting in 1962, these corporations were largely designated

not to be Government agencies. Id. at 390. Congress

intended that these new Government corporations (such as the

Communications Satellite Corporation (Comsat)) would

compete in the private sector, “unhindered by the restraints of

bureaucracy and politics.” Id. at 391. Despite being labeled

as not Government entities, governance structures varied in

these new Government corporations. While Comsat’s board

was controlled by twelve privately-appointed directors (and

three appointed by the President), other Government

9

corporations such as the Corporation for Public Broadcasting,

the Legal Services Corporation, and Amtrak, gave voting

control to Government appointees. Id.

Amtrak’s first argument to the Court in Lebron was

that Congress’s disclaimer of Amtrak’s Government agency

status was dispositive of Lebron’s constitutional claims. The

Court acknowledged that this disclaimer of status was

controlling for matters within Congress’s control. Id. at 392.

The Court noted that such matters include waivers of

sovereign immunity and whether statutes such as the

Administrative Procedure Act and laws regarding

Government procurement apply to the entity. However, the

Court held that Congress could not determine whether

Amtrak was a Government entity for purposes of

constitutional claims. Id. The Court reasoned that “[i]f

Amtrak is, by its very nature, what the Constitution regards as

the Government, congressional pronouncement that it is not

such can no more relieve it of its First Amendment

restrictions than a similar pronouncement could exempt the

Federal Bureau of Investigation from the Fourth

Amendment.” Id. As a result, the Court rejected Amtrak’s

first argument.4

The Lebron Court acknowledged that the question of

whether Amtrak could be considered a Government agency or

instrumentality for the purpose of constitutional claims

against it was not answered by a statute or by prior caselaw.

Id. at 394. So, the Court analyzed two factors to answer this

question. First, the Court noted that Amtrak was established

by a special statute for the purpose of furthering

governmental goals. Id. at 397. Second, consistent with

other parts of the opinion, the Court focused heavily on

4

Our Court has similarly observed that labels alone are not

dispositive of the state actor issue and emphasized that we

look to the “reality over the form” of the nature of the state

actor’s relationship with the state. Leshko, 423 F.3d at 342

(concluding foster parents are not state actors despite a

Pennsylvania law that designates them public employees).

Thus, we consider facts, rather than labels to determine

whether an entity or person is a state actor for section 1983

purposes.

10

control of the corporation. Id. at 397–98. An important

measure of control to the Court was whether a majority of the

governing body of the corporation was appointed by the

federal or state government. Id. For instance, the Court

noted that in Pennsylvania v. Board of Directors of City

Trusts of Philadelphia, 353 U.S. 230 (1957) (per curiam):

we held that Girard College, which has been

built and maintained pursuant to a privately

erected trust, was nevertheless a governmental

actor for constitutional purposes because it was

operated and controlled by a board of state

appointees, which was itself a state agency.

Amtrak seems to us an a fortiori case.

Lebron, 513 U.S. at 397 (citation omitted). Another measure

of control was its duration. The Court recognized that six of

Amtrak’s eight externally-named directors were appointed by

the Government and that this control was not merely

temporary. Id. at 397–98. As a result, the Court held “that

where, as here, the Government creates a corporation by

special law, for the furtherance of governmental objectives,

and retains for itself permanent authority to appoint a

majority of the directors of that corporation, the corporation is

part of the Government for purposes of the First

Amendment.” Id. at 400.

B.

1.

Applying the Lebron decision to the facts of this case,

we note first that WICO was established as “a public

corporation and governmental instrumentality of the

Government of the Virgin Islands of the United States,”5 J.A.

5

It is immaterial to our analysis that WICO existed as a

private corporation before it became a public corporation of

the Virgin Islands. See Hall v. Am. Nat’l Red Cross, 86 F.3d

919, 921 (9th Cir. 1996) (holding that “[t]he first part of the

Lebron test is satisfied” where “[t]he Red Cross originated as

a private corporation, organized under the laws of the District

of Columbia in 1881 [and] Congress reincorporated the Red

Cross in 1905 . . . .”); Becker v. Gallaudet Univ., 66 F. Supp.

11

61, in a special session of the Twentieth Legislature of the

Virgin Islands in 1993. J.A. 58–63 (Act No. 5826).6 The

government of the Virgin Islands took this action to further

several government objectives. See Horvath v. Westport

Library Ass’n, 362 F.3d 147, 153 (2d Cir. 2004) (determining

that “the Library was created by a special act of the

Connecticut State legislature and there is no doubt that the

provision of library services is a legitimate statutory

objective” and holding that “the Lebron standard has been

satisfied.”); Hack v. President & Fellows of Yale Coll., 237

F.3d 81, 84 (2d Cir. 2000) (holding that the first part of

Lebron was “easily satisfied [because] the State of

Connecticut created the corporate entity by special law, and

higher education is a governmental objective (although not

the exclusive province of government)”), abrogated on other

grounds, Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002).

See generally Clark v. Cnty. of Placer, 923 F. Supp. 1278,

1284 (E.D. Cal. 1996) (“[A]ll that is required for the purpose

of § 1983 liability under Lebron is that the corporation have a

‘public statutory mission.’”) (citation omitted).7

2d 16, 18, 20 (D.D.C. 1999) (determining that the first Lebron

factor was satisfied although the institution was founded

privately in 1856 and incorporated by Congress in 1857);

Clark v. Cnty. of Placer, 923 F. Supp. 1278, 1283 n.8 (E.D.

Cal. 1996) (“The court does not regard the fact that at one

time the PCFA operated free of the county as a significant

distinction between the matter at bar and Lebron.”) (citation

omitted). See also Lebron, 513 U.S. at 397 (noting a prior

case where Girard College, which was founded and

maintained through a privately erected trust, was held to be a

governmental actor (citing Bd. of Dirs. of City Trusts of

Phila., 353 U.S. at 231)).

6

We have recognized “that in deciding a motion to dismiss,

courts generally may consider only the allegations contained

in the complaint, exhibits attached thereto, and matters of

public record.” Beverly Enters., Inc. v. Trump, 182 F.3d 183,

190 n.3 (3d Cir. 1999). The materials cited herein fit within

those parameters.

7

By way of background, Denmark granted WICO land

“located in the Long Bay area of the St. Thomas Harbor and

12

One government objective of Act No. 5826 was to

resolve all disputes – including litigation – between the

Virgin Islands and WICO. J.A. 58. Another government

objective of the Act was to ensure WICO’s development

rights were “subject in all respects to the control of the

Government.” Id. Still another government objective was to

“transfer to public ownership and control substantial real

estate, including certain areas that may be suitable for

development for public use, as well as areas that may produce

income . . .” Id. See J.A. 61 (“It is hereby resolved and

declared that the purchase of the Facilities pursuant to this

Act, and the operation and maintenance of the Facilities, and

the collection of the revenues derived from the operation of

the Facilities . . . constitute public purposes.”).

Second, the Virgin Islands government clearly has

permanent8 and complete control over WICO as a result of

other areas in Charlotte Amalie in the United States Virgin

Islands,” J.A. 64, along with buildings and improvements on

the land, as well as “rights to reclaim and develop certain

submerged lands in the St. Thomas Harbor,” id., and that

grant was preserved when Denmark ceded the Virgin Islands

to the United States in 1917. West Indian Co, Ltd. v. Gov’t

of V.I., 643 F. Supp. 869, 870 (D.V.I. 1986). See J.A. 68

(noting WICO’s rights over “wharves, docks, piers, slips,

[and] retaining walls.”). WICO and the Virgin Islands had

many disputes between them over the course of time. See

Alexander A. Farrelly, Governor of the United States Virgin

Islands, State of the Territory Address at the Senate

Chambers, 12 (Jan. 14, 1993) (noting WICO’s “controlling

rights of Charlotte Amalie’s harbor . . . has been a source of

great concern to all of us. Repeatedly, various attempts by

this government to exercise some degree of regulation and

regain control over this strategic port of entry have been

thwarted by the treaty stipulations and the courts.”). For

instance, as discussed earlier, WICO’s dredging operations

were hotly contested between the parties. See West Indian

Co., 643 F. Supp. at 870–84.

8

The Lebron Court noted that temporary Government control

would not satisfy the second, or control, factor. See 513 U.S.

at 395. Accordingly, the requisite control of a corporation

13

the Act. Specifically, the Board is composed of nine

directors. West Indian Co. Ltd. Fiscal Year 2015 Budget

Hearings Post Audit Div., Comm. on Fin., 30th Legis. 2

(2014) (Report of Jose L. George, Post Auditor). The parties

do not dispute that all of these directors are appointed by the

PFA. See id. (noting that the Act directed the Governor of

the Virgin Islands to transfer all of the WICO’s stock to the

PFA); J.A. 60 (same). See generally Hack, 237 F.3d at 84

(holding that the Lebron control factor was not met and

noting “[t]wo of nineteen board members is . . . a long way

from control”); Hall v. Am. Nat’l Red Cross, 86 F.3d 919,

921–22 (9th Cir. 1996) (applying Lebron and holding that the

Government did not control the Red Cross because the

Government appoints only eight of fifty-three on the

governing board); Barrios-Velazquez v. Asociacion de

Empleados del Estado Libre Asociado de P.R., 84 F.3d 487,

492 (1st Cir. 1996) (determining that Lebron control factor

not met because “the government of Puerto Rico does not

retain the power to appoint any of [the corporation’s]

directors”); Am. Bankers Mortg. Corp. v. Fed. Home Loan

Mortg. Corp., 75 F.3d 1401, 1407 (9th Cir. 1996) (applying

Lebron and holding that the Government’s control over

Freddie Mac was missing because the “government is entitled

to appoint fewer than one-third of Freddie Mac’s directors”);

Wilkinson v. Legal Servs. Corp., 27 F. Supp. 2d 32, 45

(D.D.C. 1998) (holding that Lebron control factor was met

does not exist where “the Government exerts its control [] as

a creditor,” id., where “a provision exists that will

automatically terminate control upon termination of a

temporary financial interest,” id., or where the Government is

acting as a conservator, Garcia v. Fed. Nat’l Mortg. Corp.,

782 F.3d 736, 744 (6th Cir. 2015) (Donald, J., concurring)

(noting holdings in Lebron and Mik v. Fed. Home Loan

Mortg. Corp., 743 F.3d 149 (6th Cir. 2014) that “a necessary

condition precedent to consider a once-private entity a state

actor is that the government has ‘permanent’ control over the

entity,” and concluding that “FHFA’s conservatorship of

Freddie Mac . . . is, by definition, temporary”). It is

undisputed that the Virgin Islands’ control of WICO is

permanent.

14

because “LSC’s Board is composed entirely of political

appointees”).9

Accordingly, the factors set forth in Lebron are met

and, therefore, WICO is an agency or instrumentality of the

Virgin Islands and subject to the constraints of the

Constitution.

2.

The defendants argue that WICO should not be

considered a government entity because WICO employees,

unlike other government employees, “are not beneficiaries of

the Government Employees’ Retirement System, are not

covered by the Personnel Merit System, are not subject to the

jurisdiction of the Public Employees Relations Board, and are

not hired through the Division of Personnel.” WICO Br. 17.

We are not persuaded by this argument. The Lebron decision

counsels that while statutes may be dispositive of matters

within government control, “such as the Administrative

Procedure Act . . . and the laws governing Government

procurement,” 513 U.S. at 392, reliance on such statutes to

determine the constitutional rights of citizens is “misplaced.”

Id.10 Indeed, a comparison of the facts of Lebron with the

9

We note that several courts have held the Lebron factor of

control was met in the absence of the government having the

right to appoint a majority of a corporate entity’s governing

board where there exist other indicia of government control.

See, e.g., Horvath, 362 F.3d at 153 (holding that although “it

is correct that only one-half, and not a majority, of the

Library’s trustees are appointed by the Town . . . [t]he

additional fact that [almost nine tenths] of the Library’s

funding comes from . . . the Town convinces us that the Town

maintains sufficient control over the Library”); Becker, 66 F.

Supp. 2d at 21 n.6 (holding that the composition of the

governing board was not the “sole factor” determining

government control).

10

The appellees’ statement that WICO employees “are not

subject to the jurisdiction of the Public Employees Relations

Board [‘PERB’],” WICO Br. 17, refers to two decisions by

the PERB regarding its limited jurisdiction. Insofar as neither

PERB decision considered claims under the Constitution, we

15

present case shows why the appellees’ argument must be

rejected. While the appellees here ask us to assume the

Virgin Islands intended that WICO be considered a private

entity because WICO employees are treated differently than

other government employees in several respects and ask us

essentially to ignore the clear language of the Act providing

that WICO is “a public corporation and governmental

instrumentality of the Government of the Virgin Islands of the

United States,” Congress explicitly provided that Amtrak was

not a government entity. Despite Congress’s clear direction,

the Court in Lebron held that Amtrak was to be considered a

Government entity for purposes of claims under the

Constitution. Id. at 400. See Wilkinson, 27 F. Supp. 2d at

44, 45 (holding that where Congress provided that the Legal

Services Corporation in all but several respects “should be

treated as a private, non-profit corporation,” it is outside

Congress’s authority “to make the final determination of

LSC’s status as a government entity for purposes of

determining the constitutional rights of citizens affected by its

actions.”) (citing Lebron, 513 U.S. at 392). WICO is

similarly a government entity for purposes of plaintiffs’

constitutional claims.

The defendants also seize upon language in the Act

providing that WICO is empowered to take action “under the

general business corporation laws of the Virgin Islands,” J.A.

60, unless such laws are inconsistent with the Act. J.A. 61.

This, they contend, means that WICO operates as a private

company and should be treated as such. WICO Br. 23. This

argument is also foreclosed by the Supreme Court’s decision

in Lebron. In Lebron, the Court explained that Amtrak “is

subject to the provisions of [the District of Columbia

Business Corporation] Act only insofar as the [Act creating

need not consider them. See Richards v. City of Lowell, 472

F. Supp. 2d 51, 71 n.9 (D. Mass. 2007) (conducting an

analysis under Lebron and noting “[t]he City has cited a

number of cases to support its argument that the GLWIB was

not a municipal agency and [the plaintiff] was not a City

employee. None of these cases addresses the question of

whether, for constitutional purposes, actions taken by

employees of a workforce investment board may be fairly

attributable to the City.”) (citation omitted).

16

Amtrak] does not provide to the contrary.” 513 U.S. at 385.

The Court in Lebron was not persuaded by this feature of

Amtrak’s corporate structure and, indeed, the Court

admonished that “[i]t surely cannot be that government, state

or federal, is able to evade the most solemn obligations

imposed in the Constitution by simply resorting to the

corporate form.” Id. at 397. We therefore reject the

defendants’ argument.

* * * * *

Because WICO was established as a government

corporation pursuant to a special Act of the Virgin Islands

Legislature to further government objectives, and WICO is

permanently and completely controlled by government

appointees, it is part of the government for purposes of the

constitutional claims and section 1983 claims brought by

Sprauve and Smith.11

11

Because our decision reverses the basis on which the

District Court declined to exercise supplemental jurisdiction

over Sprauve’s and Smith’s state law claims, we will also

vacate that portion of the order and remand to the District

Court to give it an opportunity to consider exercising its

jurisdiction over those claims. See Trinity Indus. v. Chicago

Bridge Co., 735 F.3d 131, 141 (3d Cir. 2013).

We express no opinion as to the merits of the

remaining claims in this case, except as to the appellants’

direct constitutional claims against Boschulte in his personal

capacity. These claims are duplicative of their section 1983

claims against him. They arise from the same basic events—

Sprauve’s and Smith’s respective terminations—and raise

substantially the same allegations. See, e.g., J.A. 40, 45

(Smith alleging in Count VII, under section 1983, that her due

process rights were violated when her employment was

terminated by Boschulte “without affording [her] notice or

opportunity to be heard” and Count II, alleging that under the

Fourteenth Amendment that WICO, the Board, and

Boschulte, in both his personal and professional capacities

“engaged in a continuing course of conduct” that deprived her

of her due process rights “by not affording [her] [notice] and

opportunity to be heard before terminating her employment.”)

17

IV.

For the foregoing reasons, we will affirm the District

Court’s orders in part, reverse in part, vacate in part, and

remand for further consideration of Sprauve’s and Smith’s

claims consistent with this opinion.

As we held in Capogrosso v. Supreme Court of New Jersey,

“[i]nasmuch as § 1983 affords a remedy for infringement of

one’s constitutional rights, identical claims raised under the

Fourteenth Amendment are redundant, rendering the outcome

of the § 1983 claims dispositive of the independent

constitutional claims.” 588 F.3d 180, 185 (3d Cir. 2009); see

also Rogin v. Bensalem Twp., 616 F.2d 680. 686 (3d Cir.

1980) (in the context of the Fourteenth Amendment, “it

would be a redundant and wasteful use of judicial resources

to permit the adjudication of both direct constitutional and §

1983 claims where the latter wholly subsume the former.”).

Because section 1983 affords the appellants a remedy against

Boschulte in his personal capacity for the due process and

equal protection claims they have brought under the

Fourteenth Amendment, we will affirm the dismissal of these

direct constitutional claims against him as redundant.

Applying the same reasoning, because section 1983 similarly

affords the appellants a remedy against him in his personal

capacity for the free speech and free association claims they

brought under the First Amendment, we will also affirm the

dismissal of these direct constitutional claims against

Boschulte.

18