Paula Maliandi v. Montclair State University

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 14-3812

_____________

PAULA MALIANDI

v.

MONTCLAIR STATE UNIVERSITY,

Appellant

_____________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 2-14-cv-01398)

District Judge: Honorable Stanley R. Chesler

_____________

Argued: April 4, 2016

Before: AMBRO, KRAUSE, Circuit Judges, and

THOMPSON, ∗ District Judge

(Opinion filed: December 27, 2016)

∗

The Honorable Anne E. Thompson, District Judge

for the United States District Court for the District of New

Jersey, sitting by designation.

_____________

Jennifer J. McGruther, Esq. (Argued)

Office of Attorney General of New Jersey

Department of Law & Public Safety

Division of Law

Richard J. Hughes Justice Complex

25 Market Street, P.O. Box 112

Trenton, NJ 08625

Counsel for Appellant

Michael R. DiChiara, Esq. (Argued)

Krakower DiChiara

77 Market Street

Suite 2

Park Ridge, NJ 07656

Counsel for Appellee

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OPINION OF THE COURT

_____________

KRAUSE, Circuit Judge.

Our federalist system of government accords respect

for the sovereignty of the States in a variety of ways,

including the Eleventh Amendment to the United States

Constitution, which immunizes States from suits brought in

federal court by both their own citizens and citizens of other

States. The Eleventh Amendment’s protection, however, is

not limited to the States alone, but rather extends to entities

2

that function as “arms of the State.” In this case, we are

asked to resolve a split among the district courts in our Circuit

as to whether Montclair State University (“MSU”) is an arm

of the State of New Jersey, which would render it immune

from the discrimination suit brought by Appellee Paula

Maliandi. Applying the balancing test we have developed to

make such determinations, we conclude that, while a close

case, MSU is an arm of the State, thus affording it access to

the refuge of the Eleventh Amendment. Accordingly, we will

reverse the decision of the District Court and remand for

proceedings consistent with this opinion.

I. Background

According to her complaint, Paula Maliandi began

working for MSU in November 2007 and took medical leave

for breast cancer treatment in early 2013. Despite having

complied with all pertinent policies and procedures for taking

such leave, Maliandi allegedly was denied her original

position when she returned and instead was offered an

inferior position, which she declined. She was subsequently

terminated. Maliandi then filed suit against MSU for

wrongful termination, seeking money damages and equitable

relief under both federal and state law. Maliandi’s federal

claim arises under the Family Medical Leave Act (“FMLA”)

for termination on account of a “serious [health] condition.”

While she does not cite a specific provision in her complaint,

it would appear her claim is rooted in the so-called “self-care

provision,” 29 U.S.C. § 2612(a)(1)(D), and its corresponding

retaliation provision, 29 U.S.C. § 2614(a). Together, these

provisions entitle a qualifying employee to twelve weeks of

leave for a “serious health condition” and require an employer

to restore an employee who took leave under § 2612 to her

prior position or an equivalent one upon her return.

3

Maliandi’s state law claim arises under the New Jersey Law

Against Discrimination (“NJLAD”), N.J. Stat. Ann. §§ 10:5-1

to -49, which, among other things, prohibits discrimination on

account of a disability or handicap.

MSU moved to dismiss Maliandi’s complaint under

Federal Rule of Civil Procedure 12(b)(1) for lack of subject

matter jurisdiction based on its contention that, as an arm of

the State, it is owed Eleventh Amendment immunity from suit

in federal court. 1 The District Court denied the motion,

determining that MSU is not the State’s alter ego and, in turn,

concluding that MSU is subject to suit in federal court for

both the federal and state law claims. 2 MSU appeals.

1

In both the District Court and on appeal, MSU has

been represented by the Attorney General of the State of New

Jersey.

2

Because neither party raises an argument on appeal

as to whether Congress has, pursuant to its authority under

Section Five of the Fourteenth Amendment, abrogated

Eleventh Amendment immunity for claims brought under the

FMLA, we do not address that question today. Assuming

Maliandi is seeking to state a claim under § 2612(a)(1)(D) of

the FMLA, however, such an argument would be unavailing.

Coleman v. Court of Appeals of Md., 132 S. Ct. 1327, 1334-

38 (2012) (plurality opinion) (concluding § 2612(a)(1)(D)

does not abrogate Eleventh Amendment immunity); id. at

1338-39 (Scalia, J., concurring in judgment) (same); see also

Hale v. Mann, 219 F.3d 61, 69 (2d Cir. 2000) (concluding

that “29 U.S.C. § 2612(a)(1)(D), and the related retaliation

section, see id. § 2614(a)(1)” do not abrogate Eleventh

Amendment immunity).

4

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

§ 1331 to adjudicate Maliandi’s FMLA claim and under 28

U.S.C. § 1367 to consider her associated state law claim. The

District Court’s order denying MSU’s 12(b)(1) motion to

dismiss on Eleventh Amendment immunity grounds is

immediately appealable under the collateral order doctrine,

imbuing us with jurisdiction under 28 U.S.C. § 1291. Cooper

v. Se. Pa. Transp. Auth., 548 F.3d 296, 298 (3d Cir. 2008)

(citing P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc.,

506 U.S. 139, 144-45 (1993)). We consider whether MSU is

owed Eleventh Amendment immunity de novo; as “the party

asserting immunity,” MSU “bears the burden of production

Similarly, because the issues were not raised before us,

we do not address whether New Jersey has waived its

Eleventh Amendment immunity from suit in federal court

with regard to Maliandi’s NJLAD claim or the consequences

for the District Court’s exercise of supplemental jurisdiction

on remand. See Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381,

391-93 (1998) (implying that a federal court can retain

jurisdiction over state law claims after federal claims are

dismissed on Eleventh Amendment grounds); Rudolph v.

Adamar of N.J., Inc., 153 F. Supp. 2d 528, 540-44 (D.N.J.

2001) (discussing differing applicability of the Eleventh

Amendment to NJLAD claims brought in federal court

against New Jersey in its capacity as an employer compared

to those brought against the State in its legislative or

executive capacity); see also Heine v. Comm’r of Dep’t of

Cmty. Affairs, C.A. No. 2:11-5347, 2014 WL 4199203, at *5

(D.N.J. Aug. 22, 2014) (not published) (discussing district

court decisions regarding New Jersey’s immunity from suit in

federal court for NJLAD claims).

5

and persuasion.” Febres v. Camden Bd. of Educ., 445 F.3d

227, 228-29 (3d Cir. 2006).

II. Discussion

Our Eleventh Amendment jurisprudence has wound its

way through a number of variations—both subtle and

significant—over the past decades. To distill the principles

that govern our analysis today, we first review the

constitutional underpinnings and precedent relevant to the

arm of the State inquiry, and we then apply those principles to

determine whether MSU qualifies as an arm of the State

entitled to immunity.

A. History and Precedent

The Eleventh Amendment began as a simple rebuke of

the Supreme Court’s decision in Chisolm v. Georgia, 2 U.S.

419 (1793), that would have subjected States to suits in

federal court and saddled them with the weight of the

burgeoning republic’s Revolutionary War debts. Hans v.

Louisiana, 134 U.S. 1, 10-11 (1890); see also Hess v. Port

Auth. Trans-Hudson Corp., 513 U.S. 30, 39 (1994). More

than two centuries later, however, it has evolved into a potent

tool for States to ensure that States retain their sovereignty

and integrity as constituent polities of our national

government. Hess, 513 U.S. at 39-40. Thus, the Supreme

Court has recognized that the Amendment does not merely

shield state treasuries. Instead, it advances two fundamental

goals: safeguarding States’ dignity and protecting their

financial solvency. Id. at 52. And although, by its terms, the

Eleventh Amendment only withholds from the federal

judiciary the power to decide cases brought against a State by

a citizen of another State or a foreign government, U.S.

6

Const. amend. XI, the Court has interpreted it to bar suits

against a State by its own citizens—not just those from other

jurisdictions. Hans, 134 U.S. at 10-15; see also Seminole

Tribe of Fla. v. Florida, 517 U.S. 44, 54 (1996).

Importantly for this case, the Court also has read the

Amendment to bar not only suits against States themselves,

but also suits for damages against “arms of the State”—

entities that, by their very nature, are so intertwined with the

State that any suit against them renders the State the “real,

substantial party in interest.” Edelman v. Jordan, 415 U.S.

651, 663 (1974) (quoting Ford Motor Co. v. Dep’t of

Treasury, 323 U.S. 459, 464 (1945)); see also Mt. Healthy

City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280

(1977) (using the term “arm of the State”); Febres, 445 F.3d

at 229.

Because the Eleventh Amendment provides the States

with sweeping immunity from suit, we have been careful to

ensure that its reach does not extend beyond proper bounds.

Accordingly, we employ a fact-intensive, three-step balancing

test to ascertain whether a state-affiliated entity is an “arm of

the State” that falls within the ambit of the Eleventh

Amendment. Our initial recitation of the test came in Urbano

v. Board of Managers, 415 F.2d 247, 250-51 (3d Cir. 1969),

cert. denied, 397 U.S. 948 (1970), where we identified nine

factors to consider. Two decades later in Fitchik v. New

Jersey Transit Rail Operations, Inc., 873 F.2d 655, 659 (3d

Cir. 1989) (en banc), we attempted to consolidate those

Urbano factors into a more manageable three-factor test that

still governs today.

As explained in more detail below, the Fitchik factors

are (1) the funding factor: whether the state treasury is legally

7

responsible for an adverse judgment entered against the

alleged arm of the State; (2) the status under state law factor:

whether the entity is treated as an arm of the State under state

case law and statutes; and (3) the autonomy factor: whether,

based largely on the structure of its internal governance, the

entity retains significant autonomy from state control. Id.

Because, for the most part, we did not disagree with the

Urbano factors, 3 but rather organized them under the

headings of Fitchik’s three factors, the layers of factors,

subfactors, and considerations that inform those subfactors

can still make an analysis seem dense, if not impenetrable.

Moreover, each step of that analysis is a “fact-intensive”

undertaking that requires a fresh analysis and “individualized

3

Although Urbano identified as a factor whether an

entity performed a governmental or proprietary function, this

factor was jettisoned in Fitchik in light of intervening

Supreme Court precedent. Fitchik, 873 F.2d at 659 n.2

(citing Garcia v. San Antonio Metro. Transit Auth., 469 U.S.

528, 546-47 (1985)). While the Supreme Court has since

made reference to a “function” inquiry for Eleventh

Amendment purposes, see Hess, 513 U.S. at 44-45

(comparing the function of the entity at issue with that of an

entity from a pre-Garcia case and concluding the function

was not “readily classified as typically state or

unquestionably local”), and other Circuits still employ one in

the Eleventh Amendment context, e.g., Ernst v. Rising, 427

F.3d 351, 359 (6th Cir. 2005); Fresenius Med. Care

Cardiovascular Res., Inc. v. P.R. & Caribbean

Cardiovascular Ctr. Corp., 322 F.3d 56, 65 & n.7 (1st Cir.

2003), we are bound by our Court’s Eleventh Amendment

test that now eschews this inquiry, Fitchik, 873 F.2d at 659

n.2.

8

determinations” for each entity claiming Eleventh

Amendment immunity. See Bowers v. Nat’l Collegiate

Athletic Ass’n, 475 F.3d 524, 546 (3d Cir. 2007).

After identifying the direction in which each factor

points, we balance them to determine whether an entity

amounts to an arm of the State. Fitchik, 873 F.2d at 664; see

also Cooper, 548 F.3d at 311. While our jurisprudence had

long afforded the first factor—state funding—more weight

than the others, see Fitchik, 655 F.2d at 664, we recalibrated

the factors in light of the Supreme Court’s observation in

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

431 (1997), that an Eleventh Amendment inquiry should not

be a “formalistic question of ultimate financial liability.” We

now treat all three Fitchik factors as co-equals, Benn v. First

Judicial Dist. of Pa., 426 F.3d 233, 239-40 (3d Cir. 2005),

with the funding factor breaking the tie in a close case, see

Febres, 445 F.3d at 229-30 (citing Hess, 513 U.S. at 47-48,

52).

We have had many occasions to apply the Fitchik

(and, earlier, Urbano) factors, ruling on the Eleventh

Amendment status of entities ranging from school boards to

public transit authorities to state-affiliated institutions of

higher learning. Of particular relevance to this case are our

decisions concerning the Pennsylvania State College System,

Rutgers University, and the University of Iowa. In 1976, we

ruled en banc that Pennsylvania’s Bloomsburg State College

was an arm of the State, Skehan v. Bd. of Trs. of Bloomsburg

State Coll., 538 F.2d 53, 62 (3d Cir.) (en banc) (Skehan I),

cert. denied, 429 U.S. 979 (1976), though our opinion there

never mentioned, much less applied, Urbano. We later

concluded, under the Urbano rubric, that the Eleventh

Amendment also shields Pennsylvania’s State System of

9

Higher Education. Skehan v. State Sys. of Higher Educ., 815

F.2d 244, 249 (3d Cir. 1987) (Skehan II). That same year, we

concluded in Kovats v. Rutgers, The State University, 822

F.2d 1303 (3d Cir. 1987), that Rutgers—a New Jersey public

university that was initially chartered as a private

institution—was not an arm of the State under our Urbano

framework. Then in 2007, we considered the status of the

University of Iowa in Bowers and determined that, under

Fitchik, it was an arm of the State on account of two of the

three factors supporting immunity. See Bowers, 475 F.3d at

549.

These cases provide guidance as we consider MSU

and are “helpful in terms of analytic models,” but they

ultimately do not “govern our decision as to [MSU] because

‘each state university exists in a unique governmental context,

and each must be considered on the basis of its own peculiar

circumstances’”—including the specific statutes at play and

the practical reality of the institution’s autonomy. Kovats,

822 F.2d at 1312 (quoting Soni v. Bd. of Trs. of the Univ. of

Tenn., 513 F.2d 347, 352 (6th Cir. 1975)). 4

4

Indeed, all three of our past cases addressing

institutions of higher learning are distinguishable in their own

right. Skehan I, which predates our modern Fitchik test, was

based on the laws of Pennsylvania rather than New Jersey,

and relied almost exclusively on a state court case that

characterized the college as an arm of the State, Skehan I, 538

F.2d at 62 (calling state court jurisprudence “dispositive of

the sovereign immunity issue”)—a myopic analysis that is out

of step with our multi-factor test and that we have since held

en banc should not be read to obviate the need to undertake a

full Fitchik analysis, Bolden v. Se. Pa. Transp. Auth., 953

10

The case law from our Sister Circuits is also

illuminating. As MSU points out, they have almost uniformly

concluded that state-affiliated universities are arms of their

respective States. See, e.g., Kreipke v. Wayne State Univ.,

807 F.3d 768 (6th Cir. 2015), cert. docketed, No. 15-1419

(May 23, 2016); Irizarry-Mora v. Univ. of P.R., 647 F.3d 9

(1st Cir. 2011); Md. Stadium Auth. v. Ellerbe Becket Inc., 407

F.3d 255, 262 (4th Cir. 2005) (collecting cases for proposition

that state universities are “[a]lmost universally” found to be

arms of the State); Watson v. Univ. of Utah Med. Ctr., 75

F.3d 569, 575 (10th Cir. 1996) (collecting cases for the

proposition that the Tenth Circuit has “consistently found

state universities are arms of the state”); Kashani v. Purdue

Univ., 813 F.2d 843, 845 (7th Cir.), cert. denied, 484 U.S.

846 (1987) (“The vast majority of cases considering the issue

have found state universities to be forfended by the Eleventh

Amendment.”); id. (“[While] [t]here are district court

F.2d 807, 815 n.8 (3d Cir. 1991) (en banc) (stating that it

would be an “error” to read Skehan I to mean that “state law

characterization is the only relevant consideration in

determining if an agency is entitled to raise the Eleventh

Amendment defense”). While Kovats dealt with a New

Jersey institution, Rutgers is distinguishable from MSU both

because of its unique origins as a private institution and the

fact that it is governed by a different set of state laws. See

822 F.2d at 1310-12; compare N.J. Stat. Ann. §§ 18A:64-1 to

-93 (laws governing state colleges like MSU), with id.

§§ 18A:65-1 to -102 (Rutgers provisions). And Bowers

similarly dealt with a different State’s university system,

which established the University of Iowa in the state

constitution—a trait not shared with New Jersey state

colleges like MSU. 475 F.3d at 548.

11

opinions to the contrary[,] . . . it would be an usual state

university that would not receive immunity.”); Hall v. Med.

Coll. of Ohio at Toledo, 742 F.2d 299, 301-02 (6th Cir. 1984),

cert. denied, 469 U.S. 1113 (1985) (collecting cases for the

proposition that “[t]he great majority of cases addressing the

question of Eleventh Amendment immunity for public

colleges and universities have found such institutions to be

arms of their respective state governments and thus immune

from suit”).

As we proceed with our own analysis, we are mindful

of the near unanimity among the Courts of Appeals that the

factors relevant to an Eleventh Amendment inquiry typically

favor immunity in the state college setting. However,

because the particulars of our Fitchik test differ from

analogous tests in other Circuits and because each entity

seeking immunity warrants an individualized analysis, these

cases do not dictate the answer to the question of first

impression with which we are presented today.

That question has bedeviled district judges in our

Circuit, who are divided in their application of the Fitchik test

to MSU. Compare Maliandi v. Montclair State Univ., C.A.

No. 14-01398 (SRC), 2014 WL 3778259 (D.N.J. July 31,

2014) (not published) (concluding MSU is not an arm of the

State), and Ventura v. Montclair State Univ., C.A. No. 08-

5792 (SRC), 2011 WL 550720 (D.N.J. Feb. 9, 2011) (not

published) (same), with Sarmiento v. Montclair State Univ.,

C.A. No. 04-cv-4176, letter op. (D.N.J. Mar. 31, 2005)

(concluding MSU is an arm of the State). 5 We now resolve

5

It is not just MSU sowing dissention among the

district courts. Courts applying our Urbano and Fitchik

rubrics to other New Jersey state colleges also have reached

12

this dispute by concluding that MSU is an arm of the State,

and in the process, we seek to synthesize our jurisprudence

regarding the Fitchik factors for the benefit of district courts

in future Eleventh Amendment cases.

B. Fitchik Analysis for MSU

After undertaking our own analysis of MSU’s

Eleventh Amendment immunity, we cannot agree with the

District Court’s determination that all three Fitchik factors

counsel against immunity. For the reasons set forth below,

we conclude that the funding factor counsels against

immunity, but that the status under state law and autonomy

factors—while close—tilt in favor of extending MSU

immunity from suit. On balance, because two of the three co-

inconsistent conclusions, in part because of the evolving

nature of our case law and in part because the issue presents

“a very close question,” N.J. Dep’t of Envtl. Prot. v.

Glouchester Envtl. Mgmt. Servs., Inc., 923 F. Supp. 651, 655

(D.N.J. 1995). Compare Bostanci v. N.J. City Univ., C.A.

No. 08-4339 (SRC), 2010 WL 4961621 (D.N.J. Dec. 1, 2010)

(not published) (denying immunity to New Jersey City

University), and N.J. Dep’t of Envtl. Prot., 923 F. Supp. at

665 (same to Glassboro State College and Trenton State

College), with Nannay v. Rowan Coll., 101 F. Supp. 2d 272

(D.N.J. 2000) (granting immunity to Rowan College), and

Rehberg v. Glassboro State Coll., 745 F. Supp. 1113 (E.D.

Pa. 1990) (same to Glassboro State College). We note that

Glassboro State College was later named Rowan College, and

then renamed Rowan University. Thus, a number of these

cases rehashed the Eleventh Amendment immunity question

for the same institution.

13

equal factors support MSU’s claim for immunity, we hold

that MSU is an arm of the State that enjoys the protections

afforded by the Eleventh Amendment.

1. The Funding Factor

The funding factor, also called the “state-treasury

criterion,” Febres, 445 F.3d at 232 & n.4, hinges on

“[w]hether the money that would pay [a] judgment [against

the entity] would come from the state,” Fitchik, 873 F.2d at

659. We consider three subfactors: (1) a State’s legal

obligation to pay a money judgment entered against the

alleged arm of the State; (2) alternative sources of funding

(i.e., monies not appropriated by the State) from which the

entity could pay such judgments; and (3) specific statutory

provisions that immunize the State from liability for money

judgments. Id.; see also Cooper, 548 F.3d at 302-06.

i. The State’s Legal Obligation to Pay

Money Judgments

The Supreme Court has made clear in the years since

Fitchik that we must focus our Eleventh Amendment inquiry

not on a mechanical analysis of whether a State will

ultimately pay a judgment, but rather “the crux of the state-

treasury criterion [is] whether the state treasury is legally

responsible for the payment of a judgment against the

[alleged arm of the State].” Febres, 445 F.3d at 233; id. at

236 (“The absence of any legal obligation on the part of New

Jersey to provide funds in response to an adverse

judgment . . . is a compelling indicator that the state-treasury

criterion . . . weighs against immunity.”); accord Bowers, 475

F.3d at 546-47 (citing Doe, 519 U.S. at 431). Specifically,

the Supreme Court has characterized the operative question as

14

“whether a money judgment against a state instrumentality or

official would be enforceable against the State,” Doe, 519

U.S. at 430, meaning that if a State only voluntarily

indemnifies an entity, the funding factor is unlikely to tip in

favor of immunity, despite the practical reality that the State

foots the bill for a money judgment, Bowers, 475 F.3d at

547. 6

Rather than identify a legally enforceable obligation on

the part of the State to pay money judgments entered against

it, MSU relies largely on the argument that such money

judgments would indirectly affect the state treasury because

“the University financial statements are included in the

State’s annual financial accounting.” Appellant’s Br. 27-28.

MSU’s primary argument thus appears to be that this

reporting requirement would cause New Jersey to increase

appropriations to cover losses that result from money

judgments entered against the university. Maliandi, 2014 WL

3778259, at *2.

We have consistently rejected the argument that a

State’s voluntary choice to pay a state-affiliated entity’s

liabilities—even if that choice might be a foregone

conclusion because of the State’s desire to keep the entity

afloat—favors Eleventh Amendment immunity. E.g.,

Bowers, 475 F.3d at 547; Febres, 445 F.3d at 236; Bolden v.

Se. Pa. Transp. Auth., 953 F.2d 807, 819 (3d Cir. 1991) (en

6

Conversely, the fact that a State is legally obligated

to pay may be enough to satisfy this factor even if another

entity—e.g., the federal government—will later indemnify the

State, causing the outlay by the State to have no actual impact

on the state treasury. Doe, 519 U.S. at 431.

15

banc); Fitchik, 873 F.2d at 661; Kovats, 822 F.2d at 1309.

Instead, in conformance with Doe, we have made clear that

“practical or indirect financial effects of a judgment may

enter a court’s calculus, but rarely have significant bearing on

a determination of an entity’s status as an arm of the state”;

rather, “[a] state’s legal liability (or lack thereof) for an

entity’s debts merits far greater weight, and is therefore the

key factor in our assessment of” the funding factor. 7 Febres,

445 F.3d at 236. MSU’s indirect effects argument is

therefore unavailing.

MSU does not argue that judgments against it would

have a direct effect on the state treasury—and with good

reason. We have identified only two exceptions to the rule

that New Jersey law imposes no all-encompassing legal

obligation on the part of the State to pay judgments entered

against MSU. First, N.J. Stat. Ann. § 18A:3B-6(h) allows

state colleges to elect to have the Attorney General represent

them in suits brought under the New Jersey Tort Claims Act

7

We have recognized two instances in which the

“practical effect” of a judgment is tantamount to a legal

obligation such that the entity may be entitled to Eleventh

Amendment immunity. Cooper, 548 F.3d at 305 (discussing,

but not applying, such scenarios); Febres, 445 F.3d at 235 n.9

(citing Hess, 513 U.S. at 50) (same). Both exceptions involve

instances where Congress has put a proverbial “gun to the

head” of the State to sustain the entity even without a legal

obligation. See Alaska Cargo Transp., Inc. v. Alaska R.R.

Corp., 5 F.3d 378 (9th Cir. 1993); Morris v. Wash. Metro

Area Transit Auth., 781 F.2d 218 (D.C. Cir. 1986). Neither

pertains to MSU.

16

(the “Tort Claims Act”), id. §§ 59:1-1 to :12-3, in which case

the State is obligated to indemnify a college (or its

employees) for any resulting judgment. See also id.

8

§§ 59:10-1 to -10. Second, the New Jersey Contractual

Liability Act (the “Contractual Liability Act”), id. §§ 59:13-1

to -10, expressly waives the State’s sovereign immunity for

breach of contract claims arising from contracts entered into

by “State” entities, id. §§ 59:13-2, -3.

Even assuming that New Jersey would have the legal

obligation to pay judgments against MSU under the Tort

Claims Act and the Contractual Liability Act, however, the

exceptions embodied in those statutes only prove the rule,

confirming the absence of an overarching legal obligation on

the part of the State. Absent such obligation, this subfactor

counsels against treating MSU as an arm of the State.

Bowers, 475 F.3d at 546-47; Febres, 455 F.3d at 236.

ii. Alternative Sources of Funding

The second subfactor under the funding inquiry—

“whether the agency has the money to satisfy the judgment

8

Conversely, if a college opts not to use the Attorney

General to represent and indemnify it in tort actions, the

college may retain counsel of its choosing and has the legal

obligation to pay money judgments entered against it, N.J.

Stat. Ann. § 18A:3B-6(h), counseling against immunity under

the funding factor. A college’s ability to decide whether to

impose a legal obligation on the State for tort claims

obviously also bears on the other two Fitchik factors: status

under state law and autonomy. See infra Parts II.B.2 &

II.B.3.

17

[itself],” Fitchik, 873 F.2d at 659, 662 9—is more

straightforward: we look to see if the entity has sources of

funding aside from state appropriations and whether those

funds could cover an adverse judgment. This necessarily

involves a review of the percentage of funds a given entity

receives from the State, but there is no hard-and-fast rule

about how much funding from the State is enough to trigger

immunity, and, in the wake of the Supreme Court’s decision

in Doe, the question of legal liability (i.e., subfactor one, see

supra Part II.B.1.i) remains paramount. See Cooper, 548

F.3d at 303; accord Fitchik, 873 F.2d at 660 (“[T]he fact that

an entity derives some of its income from the state does not

mean that it is entitled to partake of the state’s

immunity. . . . What is significant is whether the money that

pays the fine will come from the state treasury rather than the

agency’s funds . . . .”). Beyond budgetary percentages, we

also consider under this subfactor the extent to which the

State retains ownership over the funds it appropriates

and whether the entity is insured against money judgments.

Fitchik, 873 F.2d at 660-62.

When reviewing the percentage of an entity’s funds

that come from non-state sources, we have regularly

determined that alternative sources of funding—even where

only a small part of the entity’s overall budget—counsel

against immunity. For example, we have concluded that an

entity has the capacity to pay money judgments out of its own

funds even where the State appropriates 85-90% of the

entity’s operating budget. Febres, 445 F.3d at 232-34 (noting

9

“[A]gency” here—and elsewhere in our case law—is

used to describe an entity that has argued it is owed Eleventh

Amendment immunity.

18

that even where the State was the “principal source” of the

entity’s revenue, legal liability is the most important

consideration post-Doe); accord Cooper, 548 F.3d at 303-06

(35-52% of the entity’s funds coming from the State);

Bowers, 475 F.3d at 547 (21% of funds from the State);

Bolden, 953 F.2d at 818-19 (27% of funds from the State);

Fitchik, 873 F.2d at 660-62 (less than 33% of funds from the

State); Kovats, 822 F.2d at 1308-09 (50-70% of funds in the

general operating account from the State). In many of these

cases, we noted that the entity in question had the power to

raise revenue itself, such as via fare increases for public

transportation entities, or to dip into investments it had made

in order to pay money judgments. See Cooper, 548 F.3d at

303-06; Christy v. Pa. Tpk. Comm’n, 54 F.3d 1140, 1146 &

n.7 (3d Cir. 1995); Bolden, 953 F.2d at 818-19; Fitchik, 873

F.2d at 661.

MSU directs us to its own 2013 and 2014 financial

statements to show that it is “fiscally dependent” on the State,

Appellant’s Br. 26-28. These reports indicate that, in the

years 2012-2014, only 18.8-21.8% of MSU’s annual revenues

came from state appropriations. 10 Meanwhile, MSU derives

10

See O’Connor Davies, LLP, Montclair State

University (A Component Unit of the State of New Jersey):

Basic Financial Statements and Management’s Discussion

and Analysis, June 30, 2014 and 2013 (“2013-2014 MSU

Financial Statements”) 9-10 (2014), available at

http://www.montclair.edu/media/montclairedu/financetreasur

er/controller/2014-MSU-Audit.pdf (last visited June 13,

2016); O’Connor Davies, LLP, Montclair State University (A

Component Unit of The State of New Jersey): Basic Financial

Statements and Management’s Discussion and Analysis and

19

49.2-50.8% percent of its revenues from sources over which it

has considerable control: e.g., tuition, fees, and room and

board, 11 see N.J. Stat. Ann. §§ 18A:64-6(n), (o), -13, -18, and

is permitted to invest funds and retain the earnings on such

investments, creating another source of funding separate from

the state coffers, id. § 18A:64-18.2.

In addition to the mere existence of alternative sources

of funding, we consider the degree to which funds

appropriated by the State are owned by the State after being

deposited into the entity’s bank account. 12 Fitchik, 873 F.2d

Schedules of Expenditures of Federal and State of New Jersey

Awards, June 30, 2013 and 2012 (“2012-2013 MSU

Financial Statements”) 8-9, available at

http://www.montclair.edu/media/montclairedu/financetreasur

er/controller/FY13-A-133-(Awards).pdf (last visited June 13,

2016). Although these documents were not part of the record

before the District Court, we may take judicial notice of them

because they are “public documents,” N.J. Stat. Ann.

§ 18A:3B-6(l); see also id. § 18A:3B-51, and because

Maliandi does not object to their consideration. See Oran v.

Stafford, 226 F.3d 275, 289 (3d Cir. 2000) (citing to Federal

Rule of Evidence 201(b)(2) and allowing, where the appellee

does not object, an appellate court to take notice of the

appellant’s properly authenticated public documents that were

required by law to be filed).

11

2013-2014 MSU Financial Statements 8-10; 2012-

2013 MSU Financial Statements 8-9.

12

While Fitchik considered the State’s retention of

ownership over appropriate funds in the second subfactor

20

at 661-62 (“[C]ontrol is . . . significant to the funding factor if

it indicates ownership.”); see also Christy, 54 F.3d at 1145-46

(noting that a State lacks financial interest in the diminution

of funds it no longer controls). Indeed, “[t]he magnitude of

the state’s contribution” is of little relevance if “once

deposited . . . the[] funds belong to the [entity]” because if

state-appropriated funds are “used to pay a judgment, we can

say only that the judgment was satisfied with the [entity’s]

monies.” Febres, 445 F.3d at 234; see also Kovats, 822 F.2d

at 1308-09 (noting that state contributions to Rutgers’s budget

were comingled with the University’s tuition and other

revenues into a discretionary pot of money over which

Rutgers retained sole control).

Here, although MSU must abide by the “minimal”

constraint that it spend its funds within the general parameters

of the State’s overall budget appropriations, Kovats, 822 F.2d

at 1311 (discussing Rutgers’s ability to spend freely in the

context of autonomy), it otherwise may spend state-

appropriated funds as it sees fit, N.J. Stat. Ann. § 18A:64-

6(e), (f). Further, leftover state funds are retained by MSU

rather than returned to New Jersey’s treasury. Id. § 18A:64-

18.1(b). Thus, it cannot be said that the State retains

ownership over the funds once they have been allocated to

MSU.

under the funding inquiry, 873 F.2d at 660-62, as we do here,

later cases have considered it under the first subfactor, legal

liability, discussed in Part II.B.1.i, Christy, 54 F.3d at 1146.

Regardless, ownership is relevant to the funding factor and, in

addition, it bears on the third Fitchik factor: autonomy. See

infra Part II.B.3.

21

Another point we routinely consider in connection

with alternative funding is whether a state-affiliated agency

has the authority to purchase liability insurance to prevent

shortfalls that could arise in the wake of large money

judgments, so that the State is inoculated from any effect on

its treasury. Bolden, 952 F.2d at 819; Fitchik, 873 F.2d at

661. That sheds little light here, however, as New Jersey

authorizes state colleges to obtain liability insurance for tort,

contract, and workers’ compensation claims brought against

them, N.J. Stat. Ann. § 18A:64-87, but does not authorize

insurance across the board, cf. id. § 27:25-5(r) (authorizing

the New Jersey Transit Corporation at issue in Fitchik to

obtain “any type of insurance and indemnify against loss or

damage to property from any cause”).

On balance, MSU’s alternative sources of funding also

tip against immunity.

iii. Statutory Immunity from Liability

The third subfactor stands for the simple proposition

that where the State has expressly immunized itself from the

entity’s liabilities, it thereby indicates the entity is not an arm

of the State and hence not entitled to protection under the

Eleventh Amendment. 13 Here, New Jersey has immunized

itself from the liability of its state colleges in two

13

We have been far from vigilant about separating this

subfactor from the first, with some of our cases combining the

consideration of statutory immunity with the legal liability

inquiry discussed in Part II.B.1.i. E.g., Cooper, 548 F.3d at

304. Here, we consider it separately in line with Fitchik’s

recitation of the three subfactors. 873 F.2d at 659.

22

circumstances: (1) for loans taken out by a state college upon

which the college later defaults, N.J. Stat. Ann. § 18A:64-6(t),

i.e., an exception to the State’s assumption of liability for

contractual debts under the Contractual Liability Act; and (2)

for a state college’s violation of the requirements of the State

College Contracts Law, 14 id. § 18A:64-6(k), an immunity of

little significance to our analysis given that this law also

immunizes the state colleges themselves, id. § 18A:64-81.

Those isolated instances stand in stark contrast to the

sweeping statutory immunity “from liability on judgments

entered against Rutgers” that we said counseled against

Eleventh Amendment immunity in Kovats. 822 F.2d at 1310-

11 (citing N.J. Stat. Ann. § 18A:65-8); accord Cooper, 548

F.3d at 304; Bolden, 953 F.2d at 819; Fitchik, 873 F.2d at

661. 15

14

The State College Contracts Law imposes

requirements and limitations on state colleges’ contractual

authority, such as mandating that a college engage in

competitive bidding for projects exceeding $26,200. See,

e.g., N.J. Stat. Ann. § 18A:64-55.

15

We reject the argument that the State’s statutory

immunity from liability in these two areas gives rise to a

negative inference that the State is liable for judgments

against MSU in all others. Particularly in the absence of any

affirmative indication that the State has general responsibility

for judgments against MSU, e.g., N.J. Stat. Ann. § 18A:3B-

6(h), we will not infer from two narrow statutory

provisions—one of which is an exception to an express

waiver of the State’s immunity and the other of which simply

makes clear that the statute does not serve as a waiver of

23

* * *

In sum, while the third subfactor tends to favor treating

MSU as an arm of the State, the other funding subfactors tip

decisively the other way. We therefore conclude that the

funding factor counsels against Eleventh Amendment

immunity.

2. The Status Under State Law Factor

The second Fitchik factor requires us to ascertain the

“status of the agency under state law,” which includes such

considerations as “how state law treats the agency generally,

whether the entity is separately incorporated, whether the

agency can sue or be sued in its own right, and whether it is

immune from state taxation.” Fitchik, 873 F.2d at 659. In

addition to these subfactors explicitly listed in Fitchik, we

have also considered the entity’s authority to exercise the

power of eminent domain, application of state administrative

procedure and civil service laws to the entity, the entity’s

ability to enter contracts and make purchases on its own

behalf, and whether the entity owns its own real estate. See,

e.g., Bowers, 475 F.3d at 548; Bolden, 953 F.2d at 820;

Fitchik, 873 F.2d at 662-63; Kovats, 822 F.2d at 1310.

immunity—a sub silentio authorization of a raid on the state

treasury. Springer v. Gov’t of Philippine Islands, 277 U.S.

189, 206 (1928) (explaining that courts do not draw negative

inferences when “a contrary intention on the part of the

lawmaker is apparent”); Reilly v. Ozzard, 166 A.2d 360, 365

(N.J. 1960) (rejecting negative inferences when context

indicates such inferences are improper).

24

We have recognized that the multifaceted nature of the

status under state law factor can make it so hopelessly

“checkered” that it does not “significantly help in determining

whether [the entity] is entitled to immunity from suit in

federal court,” and thus effectively drops out of our overall

Fitchik analysis. Fitchik, 873 F.2d at 662 (citing Kovats, 822

F.2d at 1310). That is not the case here, however. We

address each consideration below and conclude that, while

MSU certainly has attributes that point both ways, on the

whole its status under state law counsels in favor of extending

Eleventh Amendment immunity.

Treatment Under State Law Generally. In determining

“how state law treats the agency generally,” id. at 659, we

look to (1) explicit statutory indications about how an entity

should be regarded; (2) case law from the state courts—

especially the state supreme court—regarding an entity’s

immunity or status as an arm of the State; and (3) whether the

entity is subject to laws for which the State itself has waived

its own immunity (such as state tort claims acts). E.g.,

Christy, 54 F.3d at 1148-49; Fitchik, 873 F.2d at 662-63;

Skehan I, 538 F.2d at 62. Those indicators point both ways

here, leading us to conclude that MSU’s general treatment

under state law is simply inconclusive.

As for explicit statutory indicators, MSU argues that

New Jersey law squarely locates state colleges in the

Department of State, thus indicating they exist as agencies—

and therefore “arms”—of the State. But the statute MSU

cites is a double-edged sword. True, N.J. Stat. Ann.

§ 18A:3B-27 provides that “any State institution of higher

education . . . shall be allocated to the Department of State,”

but the statute continues: “[n]otwithstanding this allocation,

any such institution shall be independent of any supervision

25

or control of the Department of State or any board,

commission or officer thereof and the allocation shall not in

any way affect the . . . institutional autonomy” of the

college. 16 MSU’s statutory “allocation” to the State thus

offers little guidance. 17

16

In a related argument directed at Fitchik’s third

factor, autonomy, MSU urges that New Jersey’s abolishment

in 2011 of the Commission on Higher Education—an entity

that was designed to be a liaison between the colleges and the

Governor’s office and to engage in some administrative

oversight of the colleges, N.J. Stat. Ann. § 18A:3B-13—and

its transfer of those duties to the Secretary of Higher

Education, 43 N.J. Reg. § 1625(a), reflects a deliberate

consolidation of power in a cabinet-level official that strips

the colleges of autonomy. As observed by the District Court,

however, MSU’s characterization of this change is misplaced,

for the implementing regulation expressly states that it was

designed not only to “improve the effectiveness of the State’s

oversight of higher education” but also to “improv[e] the

strength and independence of boards of trustees,” id.; thus it

does not represent some sea change in the institutions’

autonomy under state law.

17

State colleges also are described with reference to

the “State” or as “state agenc[ies]” in other statutory

provisions. E.g., N.J. Stat. Ann. §§ 18A:3B-6(h) (referring to

state colleges as “State entities”), 52:14B-2 (referring to

entities subject to the New Jersey Administrative Procedure

Act as “state agenc[ies]”), 59:1-3 (referring to certain entities

subject to the Tort Claims Act as part of the “State”), 59:13-2

(same for the Contractual Liability Act). We attach only

26

MSU’s treatment under New Jersey case law is

likewise inconclusive. In Fuchilla v. Layman, 537 A.2d 652,

655-67 (N.J.), cert. denied, 488 U.S. 826 (1988), the New

Jersey Supreme Court invoked Urbano to determine that the

University of Medicine and Dentistry of New Jersey would

not qualify as an alter ego of the State for purposes of

Eleventh Amendment immunity and hence qualified as a

“person” subject to liability for discrimination claims brought

under 42 U.S.C. § 1983 and the NJLAD. Just three years

later, however, the same Court explained that New Jersey

City University (then known as Jersey City State College)— a

college very similar to MSU—is a “State agency” for some

purposes, suggesting that it would be immune from local

regulations and property taxes, even though it might not be

for discrimination claims. N.J. Educ. Facilities Auth. v.

Gruzen P’ship, 592 A.2d 559, 563 (N.J. 1991). 18 Thus, the

limited significance to a State’s denomination of an entity as

an arm of the State, however, for blind deference to a

legislature’s description would abdicate the courts’

responsibility to conduct individualized determinations and

would bestow upon States the unfettered ability to immunize

the activities of any number of entities. See Christy, 52 F.3d

at 1149 n.9 (citing Bolden, 953 F.2d at 815 n.8, 817).

18

We disagree with MSU that Fuchilla is not relevant

to MSU because the college at issue in that case was then

governed by a different set of statutes than those governing

state colleges like MSU. While that is true as far as it goes,

New Jersey Educational Facilities Authority then cited to

Fuchilla to suggest that New Jersey City University—a state

college that is governed by the same statutes as MSU—might

not be immune from discrimination claims. 592 A.2d at 563.

27

New Jersey Supreme Court—purporting to adhere to our

Urbano/Fitchik framework—appears to have adopted a

claim-specific approach to immunity that turns on “the

fundamental purposes of the relevant laws or doctrines and

the reasons [the court] believe[s] would best accord with the

measure of independence the Legislature would intend to give

to the State-university system.” Id.

In Fitchik, we cited Fuchilla favorably and

characterized it as “evinc[ing] some reluctance on the part of

the New Jersey courts to accord immunity to agencies whose

status under New Jersey statutes is ambiguous.” 873 F.2d at

663. Given the New Jersey Supreme Court’s subsequent

decision in New Jersey Educational Facilities Authority,

however, its jurisprudence is of limited use to our analysis

because, to the extent it assumed our Urbano/Fitchik test

would authorize courts to parse claim-specific Eleventh

Amendment immunity, it was mistaken. We view that

approach as untenable—both practically and in principle.

Fitchik contemplated judicial determinations of Eleventh

Amendment status for entities, not for claims, and carving

discrimination claims out for special treatment does not

square with that categorical model. 19 Moreover, because

19

Of course, Congress may abrogate Eleventh

Amendment immunity for specific claims pursuant to its

authority under the Fourteenth Amendment, and States may

waive their immunity to suit in federal court at their

discretion if done unequivocally. Pennhurst State Sch. &

Hosp. v. Halderman, 465 U.S. 89, 99 (1984); see also Pa.

Fed’n of Sportsmen’s Clubs v. Hess, 297 F.3d 310, 323 (3d

Cir. 2002).

28

Fuchilla was decided before Fitchik condensed Urbano into

three factors and before Benn rendered the funding factor co-

equal, the propriety of Fuchilla’s Eleventh Amendment

analysis is suspect in light of those changes to our

jurisprudence. See, e.g., Endl v. New Jersey, 5 F. Supp. 3d

689, 699-700 (D.N.J. 2014) (questioning the continued

vitality of Fuchilla in a post-Fitchik world); Overton v.

Shrager, C.A. No. 09-6299 (MLC), 2011 WL 2937363, at *4-

5 (D.N.J. 2011) (same). 20

20

MSU directs us to two additional state cases that do

specifically address MSU, but neither purports to apply

Fitchik, and both give only mixed signals. In Chasin v.

Montclair State University, the New Jersey Supreme Court

implicitly recognized that MSU professors are state

employees for purposes of the Tort Claims Act, thus entitling

them to representation and indemnification by the State to the

extent allowed by the Tort Claims Act, but that case also

recognized that state colleges and their faculty retain

significant autonomy regarding the defense of tort claims not

afforded to other state entities and employees. See 732 A.2d

457, 469 (N.J. 1999); but cf. N.J. Educ. Facilities Auth., 592

A.2d at 563 (noting that state university employees may not

be considered state employees in conflict-of-interest cases).

And in Batkay v. Montclair State University, New Jersey’s

intermediate appellate court called MSU “a state agency,” but

it simultaneously recognized that, while MSU may be housed

in the Department of State, it is deemed by statute to be

autonomous. See Dkt. No. A-3806-02T2, slip op. at 4-6 (N.J.

Super. Ct. App. Div. Jan. 27, 2004) (per curiam) (citing N.J.

Stat. Ann. § 18A:3B-27).

29

The third indicator of treatment under state law—

whether the entity is subject to laws for which the State has

waived its own immunity—also does little to tip the scales

here. On the one hand, MSU is subject to the Tort Claims

Act, which typically counsels in favor of immunity because it

implies that, like the State itself, MSU would be immune

from tort claims absent the Act. On the other hand, this Tort

Claims Act—in contrast to the one we observed favored

immunity for the University of Iowa in Bowers, 475 F.3d at

548 (citing Iowa Code ch. 699, 670)—also applies to

municipalities and counties, which do not benefit from

Eleventh Amendment immunity, Lake Country Estates, Inc.

v. Tahoe Reg’l Planning Agency, 440 U.S. 391, 401 (1979),

thus undercutting the inference that entities subject to this Act

are otherwise immune from suit, Fitchik, 873 F.2d at 663

(discounting the pertinence to the immunity inquiry of New

Jersey’s Tort Claims Act because it applies to political

subdivisions as well).

Separate Incorporation. Separate incorporation

disassociates an entity from its State and thus weakens its

claim to Eleventh Amendment immunity. See Fitchik, 873

F.2d at 663. This consideration has little bearing on MSU,

however, for while New Jersey law provides that state

colleges “have the power and duty to . . . [a]dopt and use a

corporate seal,” N.J. Stat. Ann. § 18A:64-6(a), there is no

indication that MSU has ever invoked this authority to

actually incorporate. Cf. id. § 18A:65-2 and -11 (expressly

preserving Rutgers’s corporate seal and independent

corporate status from its time as a private institution).

Ability to Sue and Be Sued. An entity is more likely

to be an arm of the State and partake of Eleventh Amendment

immunity if it lacks the ability to sue and be sued in its own

30

name. See Fitchik, 873 F.2d at 663. State colleges like MSU

enjoy no explicit grant of such authority, and state case law

indicates that, in the absence of an affirmative grant of such

power, a state college cannot sue and be sued in its own right.

Frank Briscoe Co. v. Rutgers, the State University, 327 A.2d

687, 693 (N.J. Super. Ct. Law Div. 1974). 21

Not only does the absence of an affirmative grant of

the power to sue and be sued indicate MSU lacks such

authority, but provisions of the New Jersey code that govern

MSU support that conclusion as well. For example, the Tort

Claims Act and the Contractual Liability Act, which do not

apply to entities that can sue and be sued, N.J. Stat. Ann.

§§ 59:1-3, :13-2, do apply to state colleges like MSU, see id.

§ 18A:3B-6(h) (authorizing state colleges to use the Attorney

General to represent them in Tort Claims Act suits); id. §

59:13-2 (providing that entities that can sue and be sued are

not subject to the Contractual Liability Act); Stony Brook

Constr. Co. v. Coll. of N.J., 2008 N.J. Super. Unpub. LEXIS

799, at *38-39 (N.J. Super. Ct. App. Div. June 16, 2008)

(unpublished) (concluding that because a state college

governed by the same statutes as MSU cannot sue and be

sued, it is subject to the Contractual Liability Act).

21

The New Jersey Superior Court deemed Rutgers an

exception to this rule because it had the power to sue and be

sued in its capacity as a private institution and, in the absence

of contrary legislative intent, thereby retained that power

when it became a public university, notwithstanding the

absence of any affirmative grant of such authority by the

legislature. Frank Briscoe Co., 327 A.2d at 693.

31

In addition, although state colleges like MSU were

authorized by statute to make a binding election within a

certain window of time to retain private counsel (instead of

being represented by the Attorney General) to defend against

tort claims, which might indicate an ability to sue and be sued

generally, the same statute specifies that opting for private

representation renders the college “a sue and be sued entity

for the purposes of the ‘New Jersey Tort claims Act’ only.”

N.J. Stat. Ann. § 18A:3B-6(h). The statute also provides that,

should a college opt for private representation, it must

provide its employees with the “defense and indemnification”

that they, as state employees, would “otherwise . . . be

entitled to from the Attorney General pursuant to [the Tort

Claims Act].” Id. These provisions make clear that, in the

normal course, colleges like MSU are treated for litigation

purposes like any state agency and thus may not sue and be

sued under New Jersey law.

Indeed, the only indication that MSU can sue and be

sued in its own name is that it hired a private law firm to

bring a civil suit in 2012. See Montclair State Univ. v. Oracle

USA, Inc., C.A. No. 11-2867 (FLW), 2012 WL 3647427

(D.N.J. Aug. 23, 2012). In supplemental briefing, MSU

argued that this suit was not evidence of any general statutory

authorization to sue and be sued because MSU was

specifically permitted to bring that suit under N.J. Stat. Ann.

§§ 18A:3B-6(h) and 18A:64-7. But neither statute supports

that assertion. While § 18A:3B-6(h) authorizes state colleges

“[t]o retain counsel of the institution’s choosing,” for the

reasons explained above, the same provision indicates that

state colleges are authorized to sue and be sued only in the

limited context of Tort Claims Act claims. Setting aside the

myriad reasons a college may have to retain counsel other

32

than to pursue litigation, the lawsuit in Oracle proceeded on

contractual claims—after all tortious claims had been

dismissed—in apparent defiance of the limited, torts-only

scope of sue and be sued authority afforded to state colleges

by statute. 2012 WL 3647427, at *12. And § 18A:64-7

authorizes colleges to “exercise the powers, rights and

privileges that are incident to the proper government, conduct

and management of the college . . .,” but it does not reference

litigation at all. That this appears to be the sole instance in

which MSU has brought suit in its own name, and given its

lack of authority to sue and be sued outside the Tort Claims

Act context, we suspect MSU acted outside of its authority

when it filed suit in Oracle, and we will not abrogate

Eleventh Amendment immunity on the basis of an apparent

aberration. In sum, MSU’s inability to sue and be sued favors

immunity.

Immunity from State Taxes. It is undisputed that MSU

and other state colleges are immune from state taxes and from

municipal and county ordinances. O’Connell v. State, 795

A.2d 857, 863 (N.J. 2002) (“Montclair [State University] is

exempt from federal and state taxation.”); see also N.J. Educ.

Facilities Auth., 592 A.2d at 563 (indicating that New Jersey

City University, which is governed by the same statutory

scheme as MSU, would be immune from local land-use

regulations). This fact clearly weighs in favor of immunity.

See Fitchik, 873 F.2d at 663.

Eminent Domain. State colleges have the power of

eminent domain. N.J. Stat. Ann. § 18A:64-6(l). Because this

is a sovereign power, it tips slightly in favor of immunity, but,

just as with the Tort Claims Act, we take this fact with a grain

of salt because New Jersey’s political subdivisions also have

this authority. Fitchik, 873 F.2d at 663.

33

Administrative Procedure and Civil Service Laws. An

entity’s claim to immunity is stronger if it is subject to a

State’s administrative procedure and civil service laws.

Kovats, 822 F.2d at 1310 (noting that Rutgers’s claim to

immunity was weakened by the fact that, “unlike other state

agencies, [Rutgers is] not subject to civil service laws . . . or

administrative procedure requirements”). State colleges like

MSU are subject to the strictures of the New Jersey

Administrative Procedure Act, N.J. Stat. Ann. §§ 52:14B-1 to

-31, when carrying out certain disciplinary or employment

proceedings, and the decisions rendered by the colleges in

those instances are subject to judicial review. Id. § 18A:3B-

6(f). Moreover, for a significant subset of employees, state

colleges are subject to New Jersey’s civil service laws, id.

§ 18:64-6(i)—a fact that, according to MSU, is unique among

the States. MSU also notes that it should be viewed more like

a state agency because its employees benefit from the state

health care and pension programs, N.J. Stat. Ann. § 18A:66-

170, and we agree this trait is relevant. These attributes

counsel in favor of immunity.

Power to Enter Contracts. We also consider whether

an entity may enter contracts on its own accord, which cuts

against immunity, see Kovats, 822 F.2d at 1310 (noting that

Rutgers is not subject to New Jersey’s competitive bidding

statutes), and whether its contractual authority is subject to

state-imposed limits, which cuts in favor, see Bowers, 475

F.3d at 548 (noting that the University of Iowa “is unable to

buy or transfer real estate without the express permission of”

another state agency). Unhelpfully, for New Jersey state

colleges, the answer is “yes” to both questions, see N.J. Stat.

Ann. § 18A:64-6(k) (authorizing state colleges to enter

contracts subject to the provisions of the State College

34

Contracts Law, N.J. Stat. Ann. §§ 18A:65-52 to -93),

rendering this consideration of little relevance.

Ownership of Land. Finally, we take note of whether

a state-affiliated institution of higher learning retains title of

the land on which it sits, with state ownership tipping in favor

of immunity. Bowers, 475 F.3d at 548 (noting that, per the

state constitution, Iowa owned the University of Iowa’s land);

Kovats, 822 F.2d at 1309 (noting that Rutgers retained title to

the land on which it sits). Here this consideration slightly

disfavors arm of the State status, as MSU appears to retain

title to at least some of its land. New Jersey state colleges are

authorized to purchase and own property without seeking

state permission, implying that, in such instances, the

property is titled under the college’s name. N.J. Stat. Ann.

§ 18A:64-6(k), (q). And although state law provides that

parcels “titled in the name of the State Board of Higher

Education or the State Department of Higher Education,

which are occupied by a public institution of higher

education[,] shall be titled in the name of the State of New

Jersey,” id. § 18A:72A-29, it also describes certain land as

being “owned by [a] university or by [a] particular college,”

id. § 18A:72A-26, and contemplates land conveyances

“executed and delivered in the name of the college,” id.

§ 18A:72A-29.

* * *

We emerge from this analysis with subfactors on both

sides of the scale as to MSU’s “status under state law.” One

of them—ownership of land—points against immunity, and

three others—treatment under state law generally, separate

incorporation, and power to enter contracts—are

inconclusive. But considering that MSU cannot sue and be

35

sued in its own name, is immune from state taxes, can

exercise the power of eminent domain, and generally is

subject to New Jersey administrative procedure and civil

service laws, the balance of considerations defining MSU’s

“status under state law” cuts in favor of immunity. The

second Fitchik factor thus tips in MSU’s favor.

3. The Autonomy Factor

Although an entity’s treatment under state law has

obvious repercussions for the autonomy of its operations,

Fitchik directs that autonomy be analyzed as a distinct factor,

focusing on the entity’s governing structure and the oversight

and control exerted by a State’s governor and legislature.

See, e.g., Febres, 445 F.3d at 231-32; Fitchik, 873 F.2d at

663-64. The lesser the autonomy of the entity and greater the

control by the State, the greater the likelihood the entity will

share in the State’s Eleventh Amendment immunity. While

the New Jersey code again gives some inconsistent signals,

we conclude it imposes sufficient constraints on MSU’s

autonomy to favor immunity.

Our benchmarks, at the opposite ends of the spectrum,

are Rutgers and the University of Iowa. In Kovats, we

concluded Rutgers was “largely autonomous.” 822 F.2d at

1311. It had two governing boards: the eleven-member

Board of Governors, of which six were appointed by the

Governor of New Jersey, and the Board of Trustees, a

minority of which were appointed by the Governor. Id.

Because of the institution’s history as a private institution, the

trustees held significant power, further insulating

decisionmaking from the Governor’s control. Id. By statute,

both boards were “given a high degree of self-government”

and were empowered to act “without recourse or reference to

36

any department or agency of the state, except as otherwise

expressly provided.” Id. (quoting N.J. Stat. Ann. §§ 18A:65-

27(I)(a), -28). The boards were encumbered by only two

state-imposed limitations, the effect of which we deemed

“minimal”: the Board of Governors had to comply with the

State’s budget appropriations and abide by state laws and

regulations. Id. Moreover, Rutgers was not required to

manage its funds as public monies, could establish accounts

and invest or withdraw funds as desired, could make

unregulated spending decisions within the broad contours of

the State’s appropriations, only had to report its financial

choices to the State (rather than obtain approval from the

State), and did not have to comply with civil service,

competitive bidding, or administrative procedure

requirements. Id. at 1311-12. In short, the Governor and

state legislature had little power over the inner workings of

Rutgers aside from a small number of appointments and

overall spending parameters for state funds.

Contrast the University of Iowa, where we concluded

the entity was not autonomous. The Board of Trustees, we

determined, was “tightly constrained by state authority”

because all nine members of the Board were appointed by the

Governor for six-year terms and were removable by the

Governor for cause (with state senate approval); the Board’s

expenses were reimbursed by the State and reported to the

Governor; various state statutes constrained the Board’s

procurement capabilities, ability to accept and administer

trusts, and the number and location of meetings allowed; the

Board could not acquire or transfer real estate without

permission from a council that included the Governor and

members of his cabinet; the Board had to turn over ownership

of all patents and copyrights to the State; the Board was

37

required to file biennial budget reports to the Governor and

legislature; and the Board had to hire a budget analyst to

prepare its budget. Bowers, 475 F.3d at 548-49.

While MSU shares characteristics of both of these

schools, it is, on the whole, more akin to the University of

Iowa, and hence, we conclude, not autonomous. The

Governor looms large in the affairs of New Jersey state

colleges. All members of the Board of Trustees are appointed

by the Governor and confirmed by the state senate for six-

year terms, from which they are removable for cause. N.J.

Stat. Ann. § 18A:64-3. In addition, the Governor is

statutorily designated as the public “employer” of all college

employees, which vests him with the sole power to

collectively bargain on their behalf. Id. § 18A:64-21.1.

Although the Governor possesses no apparent veto

authority over state college decisions, 22 the Secretary of

Higher Education, a member of the Governor’s cabinet, has

authority to issue master plans for higher education in the

22

We did not consider the relevance of a gubernatorial

veto in Kovats or Bowers, but we did in Fitchik, where we

determined the entity’s board was “significantly

autonomous,” but the Governor could subsequently veto the

board’s actions. 873 F.2d at 663-64; see also Febres, 445

F.3d at 230-31 (considering the effect of the Governor’s

“constrained” veto power on autonomy). Our conclusion in

Fitchik that the particular combination of significant

autonomy and gubernatorial control counseled “slightly” in

favor of immunity, 873 F.2d at 664, has little bearing here

where MSU’s board cannot be described as “significantly

autonomous.”

38

State, license and accredit the institutions, impose ethics rules

for them, approve certain new academic programs, review

budget requests, and issue regulations relating to licensure,

outside employment, tuition, personnel, tenure, and

retirement programs. Id. §§ 18A:3B-14, -15; see also 43 N.J.

Reg. § 1625(a). The Secretary may also, “with the

concurrence of the Governor,” visit a school at any time to

review its financials and compliance with all appropriate laws

and regulations and may issue subpoenas to investigate

suspected wrongdoing. N.J. Stat. Ann. § 18A:3B-34. The

colleges also are required to spend their budgets in

accordance with the general provisions of the state budget and

appropriations, and may be subject to audit at any time to

ensure such conformance. Id. § 18A:64-6(f).

New Jersey law further constrains state colleges like

MSU by subjecting them to the Administrative Procedure

Act, the State College Contracts Law, and the civil service

laws. 23 Id. §§ 18A:3B-6(f), :64-6(h), (k), (w), (x), :64-52 to -

93. In addition, they must comply with certain limitations on

their ability to make deposits in financial institutions absent

security from the institution, id. § 18A:64-18.5; restrict their

government relations and lobbying activities according to

statutory bounds, id. § 18A:3B-54; and have their contractual

obligations tied to the state coffers under the Contractual

23

Academic faculty are excepted from the civil service

laws, giving colleges considerable autonomy to set salaries

for those individuals and to hire or fire them without being

subject to review by the Vacancy Review Board. N.J. Stat.

Ann. §§ 18A:64-21.2, -21.3.

39

Liability Act, id. § 59:13-1 to -10; Stony Brook Constr. Co.,

2008 N.J. Super. Unpub. LEXIS, at *38-39 .

These colleges are also subject to significant reporting

requirements and rules for internal governance. For example,

they must hire an independent auditor and prepare a publicly

available audit, prepare an annual report on their general

operations, prepare a long-range facilities plan that includes a

description of the source of non-state funds, and present the

Governor and legislature with an annual budget report. N.J.

Stat. Ann. §§ 18A:3B-6(l), -35, -39, -48 to -51, :64-6(d).

Moreover, each college’s board of trustees is required to hold

a September meeting every year, and the presidents of each

college (who are, themselves, selected by the gubernatorial-

appointed board, id. § 18A:64-6(g)) are required by law to sit

on the Presidents’ Council. Id. §§ 18A:3B-7, :64-4.

At the same time, we recognize MSU bears some

hallmarks of an autonomous entity. For example, the New

Jersey legislature has on many occasions declared its

intention for state colleges to have “institutional autonomy.”

Id. § 18A:3B-27. 24 While trustees are appointed by the

24

See also N.J. Stat. Ann. § 18A:64-7 (characterizing

the boards’ powers as being “exercised without recourse or

reference to any department or agency of the State”); id.

§ 18A:3B-2 (seeking “the elimination of unnecessary State

oversight” and providing “greater decision making and

accountability . . . at the institutional level”); id. § 18A:64-1

(offering state colleges “a high degree of self-government”).

Although we view skeptically a state legislature’s

denomination of an entity as an arm of the State, we do so to

prevent States from sweeping too many entities into the ambit

of the Eleventh Amendment, see supra n.17; that concern is

40

Governor, they receive no compensation and can only be

removed from their six-year terms for cause, according them

considerable decisional independence once appointed. Id.

§ 18A:64-3, -5; accord Univ. of R.I. v. A.W. Chesterton Co., 2

F.3d 1200, 1208 (1st Cir. 1993). But cf. Bowers, 475 F.3d at

549 (noting that the University of Iowa was not autonomous

in part because the Governor could remove board members

for cause). And the Board of Trustees does retain some

degree of self-governance and significant authority to manage

MSU. 25 But we are not persuaded that these attributes of

absent when a legislature indicates an entity is not an arm of

the State by describing it as autonomous, and we thus may

give more weight to such pronouncements. Here, however, in

the broader context of the colleges’ reporting obligations,

government oversight, and statutory placement in the

Department of State, we take these pronouncements to reflect

the legislature’s effort to navigate between granting colleges

the autonomy necessary for academic independence and

competitiveness on the one hand, and providing significant

oversight over their internal governance on the other.

25

For example, it retains power to choose its own size

(between seven and fifteen members) and to set the number

and dates of its meetings (aside from the required September

meeting). N.J. Stat. Ann. § 18A:64-3, -4. In addition, it is

authorized, among other things, to set, raise, and keep tuition

and fees, id. §§ 18A:3B-6(c), :64-6(n), (o), -13, -18, to settle

disputes (under the Administrative Procedure Act rules), id.

§ 18A:3B-6(f), to invest and reinvest funds (and save its

earnings), id. §§ 18A:3B-6(g), :64-18.2, to purchase real

estate and other property without preapproval (but subject to

limits), id. § 18A:64-6(k), (q), to set its own educational

41

independence, when weighed against the indicia of state

control, make MSU autonomous.

* * *

In sum, notwithstanding that it retains some modicum

of autonomy and that the indicia of state control are not as

“tight[]” as in Bowers, 475 F.3d at 549, we conclude that

MSU’s autonomy is constrained enough to tip this factor in

favor of immunity.

4. Balancing

The upshot of our review is that Fitchik’s funding

factor weighs against immunity, but its status under state law

and autonomy factors both favor immunity. Thus, on

balance, the Fitchik factors favor MSU’s claim to Eleventh

Amendment protection. See Bowers, 475 F.3d at 549-50. We

recognize that, absent recourse to the federal courts, Maliandi

may have limited and unsatisfying avenues to obtain relief for

the alleged discrimination she suffered. Yet, comity and state

sovereignty are constitutional precepts and lynchpins of our

federalist system of government, and where, as here, the State

creates an entity that functions on balance as an arm of the

State, the Eleventh Amendment’s protection must carry the

day. Accordingly, the constitutional right of the State of New

Jersey to be free from private suit in federal court must be

curriculum and internal policies, id. § 18A:64-6(b), (c), to

form, along with other state institutions, 501(c) organizations,

id. § 18A:3B-6.1, to purchase some types of insurance, id.

§ 18A:64-87, and to control its own grounds, buildings, and

other property, id. § 18A:64-19.

42

respected, and, unless the District Court determines on

remand that New Jersey has waived its immunity for

Maliandi’s NJLAD claim, the suit against MSU must be

dismissed.

III. Conclusion

For the foregoing reasons, we will reverse and remand

the case for proceedings consistent with this opinion.

43