Arizona Students' Ass'n v. Arizona Board of Regents

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ARIZONA STUDENTS’ No. 13-16639

ASSOCIATION,

Plaintiff-Appellant, D.C. No.

2:13-cv-00306-JWS

v.

ARIZONA BOARD OF REGENTS, OPINION

Defendant-Appellee.

Appeal from the United States District Court

for the District of Arizona

John W. Sedwick, District Judge, Presiding

Argued and Submitted November 17, 2015

San Francisco, California

Filed June 1, 2016

Before: John T. Noonan, Kim McLane Wardlaw,

and Richard A. Paez, Circuit Judges.

Opinion by Judge Paez

2 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

SUMMARY*

Civil Rights

The panel affirmed in part and reversed in part the

dismissal of a complaint brought pursuant to 42 U.S.C.

§ 1983 by the Arizona Students’ Association against the

Arizona Board of Regents alleging First Amendment

retaliation in connection with the Regents’ decision to

suspend its collection and remittance of the Arizona Students’

Association fees and then to modify its fee collection

policies.

The panel agreed with the district court that the Eleventh

Amendment barred any claim by the Students’ Association

for retrospective relief, including money damages, against the

Board of Regents. The panel held, however, that the

Students’ Association’s claim for prospective injunctive relief

and related declaratory relief was not barred by sovereign

immunity, provided such relief was sought against individual

members of the Board. The panel held that the district court

abused its discretion when it failed to grant the Students’

Association leave to amend its complaint to conform with the

requirements of Ex Parte Young, 209 U.S. 123 (1908). The

panel directed the district court, on remand, to afford the

Students’ Association a reasonable opportunity to file an

amended complaint.

The panel held that the Students’ Association adequately

alleged that it had engaged in the kinds of core political

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 3

speech that trigger the First Amendment’s highest levels of

protection. The panel stated that the Board of Regents had no

affirmative obligation to collect or remit the Students’

Association fees, but having done so for fifteen years at no

cost, the Board of Regents could not deprive the Students’

Association of the benefit of its fee collection and remittance

services in retaliation for the Students’ Association’s exercise

of its First Amendment rights. The panel held that the

collection and remittance of funds is a valuable government

benefit, and a change in policy undertaken for retaliatory

purposes that results in the deprivation of those funds

implicates the First Amendment.

COUNSEL

Stephen Montoya (argued), Montoya Jiminez, P.A., Phoenix,

Arizona, for Plaintiff-Appellant.

Joseph Andrew Kanefield (argued) and Craig Carson

Hoffman, Ballard Spahr LLP, Phoenix, Arizona, for

Defendant-Appellee.

4 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

OPINION

PAEZ, Circuit Judge:

The Arizona Students’ Association (“ASA”) brought this

First Amendment retaliation case against the Arizona Board

of Regents (“ABOR” or “the Board”). The district court

dismissed the ASA’s complaint without leave to amend,

concluding that the ASA’s claims were barred by sovereign

immunity, and in the alternative failed to state a claim upon

which relief could be granted. Reviewing de novo, we

conclude that the complaint states a plausible claim for First

Amendment retaliation. See Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009); O’Brien v. Welty, No. 13-16279, 2016 WL

1382240, at *11 (9th Cir. Apr. 7, 2016). We further conclude

that the district court erred when it declined to grant the ASA

leave to amend its complaint to comply with the requirements

set forth in Ex Parte Young, 209 U.S. 123 (1908). We

therefore reverse and remand for further proceedings

consistent with this opinion.

I.

The ASA is an Arizona non-profit corporation that

represents students enrolled at the state’s three public

universities. Its primary purpose is to advocate for the

affordability, accessibility, and quality of public higher

education in Arizona, and the ASA frequently engages in

political activity related to financial aid, public funding of

higher education, and tuition policy.

From 1974 through 1998, ABOR, a state board whose

members are appointed by the Governor and confirmed by

the Arizona State Senate, directly funded the ASA. In 1998,

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 5

students at Arizona’s three public universities voted to

impose a semesterly one-dollar fee per student to fund the

ASA. In 2008, students voted to increase the fee to two

dollars per semester.1 From 1998 through 2013, ABOR

collected the student fee on the ASA’s behalf and remitted

proceeds to the ASA at no cost.

Throughout 2012, the ASA advocated for the passage of

Proposition 204, a state ballot initiative that would increase

funding for public education. In preparation for the

November 2012 election, the ASA co-drafted the text of the

initiative; collected over 20,000 petition signatures to qualify

the initiative for the election; co-drafted the ballot argument

that appeared in the state’s official Publicity Pamphlet

(voter’s guide); participated in media events in support of the

initiative; hosted information sessions and distributed

literature explaining the initiative; engaged in social media

campaigning; phone-banked and canvassed neighborhoods to

encourage voter turnout in support of the initiative; and

contributed $120,000 of its student-fee income to the Yes on

Proposition 204 campaign. All of the ASA’s activities

complied with campaign disclosure and reporting laws and

regulations.

Janice Brewer, the former Governor of Arizona and an

ex-officio member of ABOR, opposed Proposition 204.

Additionally, during the campaign and after the election,

several Regents criticized the ASA for supporting Proposition

204. Within weeks of the November election, ABOR called

1

Although ABOR collected the ASA fee in conjunction with the

collection of tuition payments, the ASA fee was not mandatory, and

students could request a fee refund consistent with the ASA’s published

procedures.

6 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

a special meeting to discuss the ASA fee. At the special

meeting, ABOR voted to suspend collection of the ASA fee,

and it withheld the fee income it already had collected for the

Spring 2013 semester. Several Regents commented that the

suspension was “political” in nature and was undertaken in

response to the ASA’s Proposition 204 advocacy. ABOR

held a second special meeting in January 2013, in which it

proposed changing the Board’s policies to collect the ASA

fee only from students who “opted-in” and to require that the

ASA reimburse the universities for the administrative costs of

collecting the ASA fee. On February 7, 2013, ABOR adopted

the policy revisions proposed at the January 2013 meeting.

The ASA alleged that it lost “its only source of income” when

ABOR suspended fee collection and then modified its

policies to an opt-in model, and it argued to this court that

since November 26, 2012, the Board has not remitted to the

ASA the fees ABOR collected for Spring 2013.

The ASA filed suit pursuant to 42 U.S.C. § 1983, alleging

that ABOR had modified its policies to retaliate against the

ASA’s exercise of its First Amendment free speech rights.2

The ASA alleged that ABOR’s retaliatory policy change

caused it harm by chilling students’ political speech and

depriving the ASA of its income. ABOR moved to dismiss

the complaint on sovereign immunity grounds and, in the

alternative, for failure to state a claim upon which relief could

be granted. Fed. R. Civ. P. 12(b)(1), 12(b)(6). In opposing

2

After the ASA filed its lawsuit, the Arizona Legislature enacted

Arizona Revised Statutes section 15-1626.01, which proscribes the

transfer of student fees or the use of “any university student billing

process to collect monies on behalf of an organization not under the

jurisdiction of the Arizona board of regents and not recognized as a

university student organization.” Because that statute does not affect our

analysis, we do not address it.

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 7

the motion, the ASA emphasized that it had pleaded a claim

of First Amendment retaliation, and it argued that in addition

to chilling the ASA’s ability to exercise its free speech rights,

ABOR had harmed the ASA by depriving it of a valuable

government benefit. The district court granted ABOR’s

motion with prejudice, concluding that sovereign immunity

barred all of the ASA’s claims and, in the alternative, that the

ASA had failed to allege a plausible claim for relief.

Additionally, the district court denied the ASA’s request for

leave to amend to name individual regents, concluding that

such amendment would be futile.

II.

We review de novo a dismissal on the basis of sovereign

immunity or for failure to state a claim upon which relief can

be granted. O’Brien, 2016 WL 1382240, at *7; Kahle v.

Gonzales, 487 F.3d 697, 699 (9th Cir. 2007). We limit our

review to the complaint, accept the complaint’s well-pleaded

factual allegations as true, and construe all inferences in the

plaintiff’s favor for the purposes of evaluating a motion to

dismiss under Federal Rule of Civil Procedure 12(b)(6).

Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006);

Zimmerman v. City of Oakland, 255 F.3d 734, 737 (9th Cir.

2001).

III.

The district court concluded that sovereign immunity

barred the ASA from suing ABOR, and accordingly, the court

determined that it lacked subject matter jurisdiction over the

ASA’s complaint. U.S. Const., amend XI; Fed. R. Civ. P.

12(b)(1). Alternatively, the district court concluded that if

sovereign immunity did not bar the ASA’s lawsuit, then the

8 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

ASA’s complaint failed to state a claim upon which relief

could be granted under Rule 12(b)(6). We first analyze the

district court’s sovereign immunity determination, and we

conclude that although the district court did not err in

determining that ABOR is an arm, division, or instrumentality

of the State of Arizona entitled to sovereign immunity, it

erred when it failed to apply the Young doctrine to the ASA’s

claims.

A.

Sovereign immunity provides that an individual may not

sue a state, a division of a state, or an instrumentality/arm of

a state without the state’s consent. Frew v. Hawkins,

540 U.S. 431, 437 (2004); Seminole Tribe of Fla. v. Florida,

517 U.S. 44, 54 (1996); Edelman v. Jordan, 415 U.S. 651,

662–63 (1974). As a result, the Eleventh Amendment bars

individuals from bringing lawsuits against a state for money

damages or other retrospective relief, Frew, 540 U.S. at 437,

so long as the “state is the real, substantial party in interest,”

Regents of the University of California v. Doe, 519 U.S. 425,

429 (1997) (citation omitted).

We have previously held that ABOR is an arm of the

State of Arizona for Eleventh Amendment purposes. See

Rutledge v. Ariz. Bd. of Regents, 660 F.2d 1345, 1349 (9th

Cir. 1981), abrogated on other grounds by Haygood v.

Younger, 769 F.2d 1350, 1356 (9th Cir. 1985) (en banc);

Ronwin v. Shapiro, 657 F.2d 1071, 1073 (9th Cir. 1981)

(“[W]e conclude that the [Arizona] Board of Regents is

protected by the eleventh amendment.”). In our prior

analyses, we have also held that the State of Arizona treats

ABOR as a division of the State under Arizona law. See

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 9

Rutledge, 660 F.2d at 1349 (citing Ariz. Bd. of Regents v.

Ariz. York Refrigeration Co., 115 Ariz. 338 (1977)).

We are bound by the holdings of prior three-judge panels

so long as those holdings and their reasoning have not been

superseded by later or intervening authority. See Rodriguez

v. Robbins, 804 F.3d 1060, 1080 (9th Cir. 2015); Lair v.

Bullock, 798 F.3d 736, 745 (9th Cir. 2015); Miller v.

Gammie, 335 F.3d 889, 892–93 (9th Cir. 2003) (en banc).

We have not revisited or abrogated our determination that

ABOR is a division of the State of Arizona entitled to

sovereign immunity. Accordingly, the Eleventh Amendment

bars any claim by the ASA for retrospective relief, including

money damages, against ABOR. As discussed below,

however, the ASA’s claim for prospective injunctive relief

and related declaratory relief is not barred by sovereign

immunity, provided such relief is sought against individual

members of the Board.

B.

Although sovereign immunity bars money damages and

other retrospective relief against a state or instrumentality of

a state, it does not bar claims seeking prospective injunctive

relief against state officials to remedy a state’s ongoing

violation of federal law. Ex Parte Young, 209 U.S. 123,

149–56 (1908); see also Quern v. Jordan, 440 U.S. 332, 337

(1979); Agua Caliente Band of Cahuilla Indians v. Hardin,

223 F.3d 1041, 1045 (9th Cir. 2000). The Young doctrine

allows individuals to pursue claims against a state for

prospective equitable relief, including any measures ancillary

to that relief. Green v. Mansour, 474 U.S. 64, 68–71 (1985);

Hutto v. Finney, 437 U.S. 678, 689–92 (1978) (allowing the

recovery of attorney’s fees and costs). To bring such a claim,

10 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

the plaintiff must identify a practice, policy, or procedure that

animates the constitutional violation at issue. Hafer v. Melo,

502 U.S. 21, 25 (1991); Monnell v. N.Y.C. Dep’t of Soc.

Servs., 436 U.S. 658, 690 & n.55 (1978).

The district court erred when it failed to apply Young to

the ASA’s claim of ongoing First Amendment retaliation, and

its request for prospective injunctive and declaratory relief.

As explained below, the ASA properly alleged a First

Amendment retaliation claim, and it identified ABOR’s

changes to its fee-collection policies as the sources of

ongoing violations of federal law within the meaning of

Young and its progeny. The ASA’s error was in naming

ABOR as the defendant instead of naming either the

President, Chair, or other members of ABOR in their official

capacities.3

The district court failed to distinguish between the ASA’s

request for prospective equitable relief and its request for

money damages. As noted above, although the Eleventh

Amendment bars the ASA’s requests for money damages and

other retrospective relief, it does not preclude the ASA’s

requests for prospective injunctive and declaratory relief.

Edelman, 415 U.S. at 662–63. Thus, the district court erred

in dismissing the ASA’s entire complaint instead of

dismissing only those portions of the complaint that sought

relief barred by Eleventh Amendment sovereign

immunity—i.e. money damages and other retrospective relief.

Had the district court allowed the ASA to amend its

3

We previously have noted that, “[t]he Young doctrine is premised on

the fiction that such a suit [against an official-capacity defendant] is not

an action against a ‘State’ and is therefore not subject to the sovereign

immunity bar.” Agua Caliente, 223 F.3d at 1045.

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 11

complaint to conform to the Young doctrine, as it requested,

sovereign immunity would not have barred the ASA’s suit.

Because the Young doctrine provides that the ASA’s claims,

when properly crafted, would not violate the Eleventh

Amendment, the district court had subject matter jurisdiction.

IV.

The district court held in the alternative that amendment

would be futile because the ASA’s complaint failed to state

a claim upon which relief could be granted pursuant to

Federal Rule of Civil Procedure 12(b)(6). As we discuss

further, the district court erred when it dismissed the suit with

prejudice on futility grounds.

A.

In evaluating whether the ASA’s complaint stated a claim

upon which relief could be granted, the district court focused

on the fee-collection agreement between the parties, as well

as ABOR’s policies regarding collection of the ASA fee. The

district court analogized collection of the ASA fee to cases

involving payroll deductions of public-employee union dues.

Viewing ASA’s complaint in this manner, the court rejected

the ASA’s argument that its cause of action sounded in First

Amendment retaliation. The district court instead construed

the ASA’s claim as challenging ABOR’s decision to refrain

from facilitating the ASA’s exercise of its free speech rights.

The district court relied on two cases to support its

interpretation of the ASA’s complaint. First, it turned to

Davenport v. Washington Education Association, 551 U.S.

177 (2007), noting that there the Supreme Court upheld a

state statute that required public-sector unions to obtain

12 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

affirmative consent from nonmembers before expending

nonmembers’ agency-shop fees on election-related activities.

Id. at 184. Davenport held that the statute did not restrict

speech, but rather, allowed the state to decline to facilitate a

union’s political speech. Id. at 187–90. That is, a union

could theoretically still engage in political speech activities

and receive dues, but the state had no obligation to allow the

union to piggyback on the state’s payroll deduction system to

obtain those dues.

Next, the court pointed to Ysura v. Pocatello Education

Association, 555 U.S. 353 (2009), where the Supreme Court

upheld a statute prohibiting payroll deductions for public-

employee union dues used for political activities (“political

fees”). Applying the more lenient standard of review for

claims related to a state’s facilitation of speech, the Ysura

Court held that public-employee unions had no affirmative

right to receive money for expressive activities through

government payroll mechanisms. Id. at 355.

The district court reasoned that the ASA was similar to a

public-employee union that sought to collect dues through a

payroll deduction system. The district court considered

ABOR’s modification of its fee-collection policies similar to

a statutory change in union dues collection; therefore, ABOR

“ha[d] no obligation to continue to subsidize [ASA’s]

speech.” Although the district court briefly acknowledged

that the ASA had attempted to allege a First Amendment

retaliation claim in which ABOR’s motive would be a

necessary element of the claim, the district court held that the

policy change, like the passage of a statute, was a non-

content-based, neutral, procedural modification. It reasoned

that in cases involving neutral changes to policy, an inquiry

into ABOR’s motive would be irrelevant because, when the

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 13

allegation of improper motive was excluded, the policy

modifications would have been constitutional.

The district court also rejected the ASA’s argument that

ABOR had retaliated against the ASA for its political speech

by terminating a valuable government benefit. Drawing on

Perry v. Sindermann, 408 U.S. 593, 597 (1972), the district

court explained that a “valuable government benefit”

included the termination of public employment, denial or

revocation of tax exemption, and deprivation of

unemployment or welfare benefits. The court explained that

ABOR’s original “opt-out” policy for collecting the ASA fee

was “not an equivalent benefit” to the kinds of benefits set

forth in Sindermann. The district court also reasoned that a

benefit only qualified as a valuable government benefit if it

were a “benefit available to the general public based on

objective criteria.” Because ABOR did not collect fees for

other student organizations or members of the public, the

court reasoned that the ASA-fee collection was a voluntary

benefit, which it could revoke at any time. Viewed in this

context, the court concluded that changing a policy from an

opt-out to an opt-in model was “not the type of benefit

deprivation that could support a First Amendment retaliation

case.”

The ASA argues that the district court misconstrued its

complaint, as the only claim it seeks to pursue is one for First

Amendment retaliation and not to compel the facilitation of

speech. We thus turn to whether the ASA’s complaint states

a plausible claim for retaliation in violation of the First

Amendment. We conclude below that it does.

14 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

B.

A plaintiff may bring a Section 1983 claim alleging that

public officials, acting in their official capacity, took action

with the intent to retaliate against, obstruct, or chill the

plaintiff’s First Amendment rights. Gibson v. United States,

781 F.2d 1334, 1338 (9th Cir. 1986). To bring a First

Amendment retaliation claim, the plaintiff must allege that

(1) it engaged in constitutionally protected activity; (2) the

defendant’s actions would “chill a person of ordinary

firmness” from continuing to engage in the protected activity;

and (3) the protected activity was a substantial motivating

factor in the defendant’s conduct—i.e., that there was a nexus

between the defendant’s actions and an intent to chill speech.

O’Brien, 2016 WL 1382240, at *11 (citing Pinard v.

Clatskanie Sch. Dist. 6J, 467 F.3d 755, 770 (9th Cir. 2006);

Mendocino Envt’l Ctr. v. Mendocino County, 192 F.3d 1283,

1300 (9th Cir. 1999)); see also Blair v. Bethel Sch. Dist.,

608 F.3d 540, 543 (9th Cir. 2010). Further, to prevail on such

a claim, a plaintiff need only show that the defendant

“intended to interfere” with the plaintiff’s First Amendment

rights and that it suffered some injury as a result; the plaintiff

is not required to demonstrate that its speech was actually

suppressed or inhibited. Mendocino Envt’l Ctr., 192 F.3d at

1300.

1.

“The First Amendment affords the broadest protection to

. . . political expression in order ‘to assure unfettered

interchange of ideas for the bringing about of political and

social changes desired by the people.’” Buckley v. Valeo,

424 U.S. 1, 14 (1976) (per curiam) (quoting Roth v. United

States, 354 U.S. 476, 484 (1957)). A person’s First

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 15

Amendment free speech right is at its highest when that

person engages in “core political speech,” which includes

issue-based advocacy related to ballot initiatives. McIntyre

v. Ohio Elections Comm’n, 514 U.S. 334, 347, 351 (1995).

In the context of ballot-initiative advocacy, the Supreme

Court has recognized a wide array of protected speech

activities. Those activities include, and are not limited to,

donating money to an initiative campaign, First Nat’l Bank of

Boston v. Bellotti, 435 U.S. 765, 775 (1978); circulating a

petition and gathering signatures to qualify an initiative for

the ballot, Meyer v. Grant, 486 U.S. 414, 421–22 (1988);

Buckley v. Am. Con. Law Found., Inc., 525 U.S. 182, 186–87

(1999); and electioneering and distributing elections material,

Int’l Soc’y for Krishna Consciousness, Inc. v. Lee, 505 U.S.

672, 677 (1992). Both natural persons and corporations enjoy

those free-speech rights. Citizens United v. Fed. Election

Comm’n, 558 U.S. 310, 355 (2010); Fed. Election Comm’n v.

Wisc. Right to Life, Inc., 551 U.S. 449, 480 (2007); Bellotti,

435 U.S. at 777.

According to the complaint’s factual allegations, the ASA

engaged in multiple forms of constitutionally protected, core

political speech. Those activities included co-drafting

Proposition 204’s text and statement of support in the State’s

official voter’s guide, gathering petition signatures to qualify

Proposition 204 for the ballot, donating to the proposition’s

campaign, producing and circulating electioneering

communications and materials, and engaging in face-to-face

advocacy with prospective voters. Thus, the ASA adequately

alleged that it had engaged in the kinds of core political

speech that trigger the First Amendment’s highest levels of

protection.

16 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

2.

The ASA additionally alleged that ABOR’s retaliatory

policy modification chilled its exercise of its free speech

rights by terminating a valuable government benefit.

Specifically, the ASA alleged that ABOR engaged in conduct

that would chill a person of ordinary firmness from engaging

in protected First Amendment speech when it suspended

collection and remittance of the ASA fee and modified its

fee-collection policies. The ASA also alleged that it suffered

and continues to suffer direct harm that has limited its ability

to participate in the kind of core political speech activities

that it undertook prior to ABOR’s alleged retaliation.

Both the Supreme Court and we have recognized a wide

variety of conduct that impermissibly interferes with speech.

For example, the government may chill speech by threatening

or causing pecuniary harm, Bd. of Cty. Comm’rs v. Umbehr,

518 U.S. 668, 674 (1996); withholding a license, right, or

benefit, Baird v. State Bar of Ariz., 401 U.S. 1, 7 (1971);

prohibiting the solicitation of charitable donations, Vill. of

Schaumburg v. Citizens for a Better Env’t, 444 U.S. 620, 633

(1980); detaining or intercepting mail, Blount v. Rizzi,

400 U.S. 410, 417–18 (1971); or conducting covert

surveillance of church services, The Presbyterian Church v.

United States, 870 F.2d 518, 522–23 (9th Cir. 1989).

Importantly, the test for determining whether the alleged

retaliatory conduct chills free speech is objective; it asks

whether the retaliatory acts “‘would lead ordinary student[s]

. . . in the plaintiffs’ position’ to refrain from protected

speech.” O’Brien, 2016 WL 1382240, at *11 (quoting

Pinard, 467 F.3d at 770).

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 17

The ASA also alleged that ABOR’s retaliatory acts

directly undermined the ASA’s ability to pursue its core

purpose—to advocate for policies that improve the

affordability, accessibility, and quality of public higher

education. The ASA’s complaint asserts that ABOR’s

conduct is more than a threat to encumber speech; the

Board’s actions have actually limited the ASA’s speech by

eliminating the ASA’s primary source of income.

Although the district court viewed the ASA’s claim as

seeking to compel ABOR to facilitate speech, it briefly

addressed the ASA’s allegations of retaliation and concluded

that the collection and remittance of the ASA fee did not

constitute a valuable government benefit for the purposes of

a First Amendment retaliation claim. The district court cast

ABOR’s fee collection as a “simply voluntary” activity that

it could terminate at any time, and consequently, the court

held that the ASA had not demonstrated that ABOR had an

affirmative obligation to collect the ASA fee. As discussed

below, the district court erred when it restricted the category

of activities that constitute a valuable government benefit. It

additionally erred when it failed to evaluate ABOR’s

suspension of those activities as a deprivation of a valuable

government benefit.

Significantly, the ASA and ABOR’s dispute is more than

a disagreement between similarly situated political rivals.

ABOR represents the State’s most powerful authority in

determining the policies, delivery, governance, management,

and accessibility of Arizona’s public higher education. The

ASA is composed entirely of public university students, and

it represents the collective voice of those students. The

disparity in power between ABOR and Arizona’s public

university students is vast. According to the ASA, ABOR

18 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

leveraged that power to punish the ASA for participating in

core political speech and, further, to attempt to bankrupt the

ASA to prevent it from exercising its free-speech rights in the

future. Given the inherent power asymmetry between the

Board and students, as well as the severe impact of ABOR’s

actions on the ASA, it is highly likely that the Board’s alleged

retaliation would chill and discourage a student or student

organization of similar fortitude and conviction from

exercising its free-speech rights.

As we have noted, “Otherwise lawful government action

may nonetheless be unlawful if motivated by retaliation for

having engaged in activity protected under the First

Amendment.” O’Brien, 2016 WL 1382240, at *10. A state,

division of the state, or state official may not retaliate against

a person by depriving him of a valuable government benefit

that that person previously enjoyed, conditioning receipt of a

government benefit on a promise to limit speech, or refusing

to grant a benefit on the basis of speech. Those limitations

apply even if the aggrieved party has no independent or

affirmative right to that government benefit:

[E]ven though a person has no “right” to a

valuable governmental benefit and even

though the government may deny him the

benefit for any number of reasons,

there are some reasons upon which the

government may not rely. It may not deny a

benefit to a person on a basis that

infringes his constitutionally protected

interests—especially, his interest in freedom

of speech. . . . Such interference with

constitutional rights is impermissible.

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 19

Outdoor Media Grp., Inc. v. City of Beaumont, 506 F.3d 895,

903 (9th Cir. 2007) (quoting Rutan v. Republican Party of Ill.,

497 U.S. 62, 72 (1990)); see also Vignolo v. Miller, 120 F.3d

1075, 1077 (9th Cir. 1997).

In considering whether a benefit constitutes a valuable

government benefit, we ask whether the opportunity to access

the benefit or privilege at issue is the type of benefit that can

trigger First Amendment scrutiny, not whether the benefit is

available to the public. See Hyland v. Wonder, 972 F.2d

1129, 1135 (9th Cir. 1992). Importantly, the deprivation of

a valuable government benefit for the purpose of

discouraging the exercise of First Amendment rights “need

not be particularly great in order to find that rights have been

violated.” Id. (quoting Elrod v. Burns, 427 U.S. 347, 359

n.13 (1976)). Although the “prototypical” First Amendment

retaliation case arises from the termination of public

employment, see Blair, 608 F.3d at 544, we have recognized

claims for First Amendment retaliation in several non-

employment contexts.

“The injury to position or privilege necessary to activate

the First Amendment . . . need not rise to the level of lost

employment. Retaliatory actions with less momentous

consequences . . . are equally egregious in the eyes of the

Constitution.” Hyland, 972 F.2d at 11135. Indeed, we have

held that a plaintiff was deprived of a valuable government

benefit when a state rejected an application to exhibit

commercial and noncommercial speech, Outdoor Media

Group, 506 F.3d at 906; terminated a prisoner from his prison

job, Vignolo, 120 F.3d at 1078; suspended a previously

authorized environmental use permits, Soranno’s Gasco, Inc.

v. Morgan, 874 F.2d 1310, 1314 (9th Cir. 1989); revoked a

business license, CarePartners LLC v. Lashway, 545 F.3d

20 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

867, 871, 877–78 (9th Cir. 2008); or removed a volunteer

from his unpaid position, Hyland, 972 F.2d at 1135.

ABOR had no affirmative obligation to collect or remit

the ASA fee, but having done so for fifteen years at no cost,

ABOR could not deprive the ASA of the benefit of its fee

collection and remittance services in retaliation for the ASA’s

exercise of its First Amendment rights. ABOR’s fee

collection falls within the range of government benefits we

have previously recognized as sufficiently valuable to give

rise to a retaliation claim. Indeed, the ASA alleged that its

student fees were allocated to its efforts to exercise core

political speech. As we have previously held in other First

Amendment retaliation cases, and as we now hold in this

case, the collection and remittance of funds is a valuable

government benefit, and a change in policy undertaken for

retaliatory purposes that results in the deprivation of those

funds implicates the First Amendment.

3.

A plaintiff may establish motive using direct or

circumstantial evidence. Ulrich v. City & County of San

Francisco, 308 F.3d 968, 979 (9th Cir. 2002) (citing Allen v.

Iranon, 283 F.3d 1070, 1074 (9th Cir. 2002)). In cases

involving First Amendment retaliation in the employment

context, we have held that a plaintiff may rely on evidence of

temporal proximity between the protected activity and alleged

retaliatory conduct to demonstrate that the defendant’s

purported reasons for its conduct are pretextual or false. Id.

at 980. At the pleading stage, a plaintiff adequately asserts

First Amendment retaliation if the complaint alleges plausible

circumstances connecting the defendant’s retaliatory intent to

ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS 21

the suppressive conduct. O’Brien, 2016 WL 1382240, at *11,

*13.

The ASA offers several plausible factual allegations to

support its contention that ABOR changed its policies to

retaliate against the ASA for its support of Proposition 204.

As direct evidence of ABOR’s retaliatory intent, the ASA

alleges that several Regents publicly acknowledged that the

Board’s decision to suspend collection of the ASA student fee

was “political in nature and resulted from ASA’s advocacy in

support of Proposition 204.” As circumstantial evidence of

ABOR’s retaliatory intent, the ASA notes that “[s]everal

members of [ABOR] criticized ASA for supporting

Proposition 204,” and that the Board’s allegedly retaliatory

conduct was temporally proximate to ASA’s exercise of its

free-speech rights. Taken together, those allegations

sufficiently identify ABOR’s retaliatory intent and the nexus

between the Board’s intent and its later suspension and

amendment of its policies.

The ASA adequately and plainly pleaded a plausible

claim for First Amendment retaliation on the basis that

ABOR deprived it of a valuable government benefit. We

therefore reverse the district court’s dismissal of the ASA’s

retaliation claim and remand for further proceedings

consistent with this opinion.

V.

When justice requires, a district court should “freely give

leave” to amend a complaint. Fed. R. Civ. P. 15(a)(2). A

district court’s decision to deny a party leave to amend its

complaint is reviewed for an abuse of discretion. Cervantes

v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th

22 ARIZ. STUDENTS’ ASS’N V. ARIZ. BD. OF REGENTS

Cir. 2011). Dismissal of a complaint without leave to amend

is only proper when, upon de novo review, it is clear that the

complaint could not be saved by any amendment. Thinket Ink

Info. Res., Inc. v. Sun Microsys., Inc., 368 F.3d 1053, 1061

(9th Cir. 2004). As discussed above, the amendment of the

ASA’s complaint would not have been futile.

The district court abused its discretion when it failed to

grant the ASA leave to amend its complaint to conform with

the requirements of Young. On remand, the district court

shall afford the ASA a reasonable opportunity to file an

amended complaint.

* * *

For the reasons set forth above, we affirm in part and

reverse in part the dismissal of the ASA’s complaint, and we

remand for further proceedings consistent with this opinion.

The ASA shall recover its costs on appeal.

AFFIRMED in part, REVERSED in part, and

REMANDED.