Gwendolyn Daniel v. Univ of TX SW Health Systems

Case: 19-10834 Document: 00515437079 Page: 1 Date Filed: 06/02/2020

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

FILED

No. 19-10834 June 2, 2020

Lyle W. Cayce

GWENDOLYN M. DANIEL, Clerk

Plaintiff - Appellant

v.

UNIVERSITY OF TEXAS SOUTHWESTERN MEDICAL CENTER,

Defendant - Appellee

Appeal from the United States District Court

for the Northern District of Texas

Before WIENER, STEWART, and WILLETT, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Plaintiff-Appellant Gwendolyn M. Daniel filed an Americans with

Disabilities Act (ADA) action against Appellee-Defendant University of Texas

Southwestern Medical Center (UTSMC). She is seeking recovery for UTSMC’s

alleged discrimination and retaliation against her in connection with her

employment as a UTSMC nurse.

The district court granted UTSMC’s Federal Rule of Civil Procedure

(Rule) 12(b)(1) motion to dismiss because UTSMC is an arm of the State of

Texas and therefore entitled to Eleventh Amendment immunity. We AFFIRM.

Case: 19-10834 Document: 00515437079 Page: 2 Date Filed: 06/02/2020

No. 19-10834

I.

UTSMC is a public medical institution within the University of Texas

System (UT System) 1 and the largest medical center in the Dallas metropolitan

area. UTSMC is comprised of UT Southwestern Medical School, UT

Southwestern Graduate School of Biomedical Sciences, and UT Southwestern

School of Health Professions. UTSMC is also affiliated with several healthcare

facilities, including but not limited to Parkland Memorial Hospital, William P.

Clements Jr. University Hospital, and, as relevant in this case, Saint Paul

University Hospital. 2

Plaintiff was employed at Saint Paul as a contract registered nurse and

subsequently elevated to a full-time nurse. Plaintiff alleges that due to her

ADA-qualified disability, UTSMC subjected her to continual harassment,

discipline, discrimination, retaliation, and constructive discharge.

In July 2018, Plaintiff initiated this action against UTSMC seeking

economic and equitable relief for ADA retaliation and discrimination. 3

UTSMC moved for Rule 12(b)(1) dismissal, claiming Eleventh Amendment

sovereign immunity. The district court granted the motion for lack of subject

matter jurisdiction because “it is well settled that UTSMC is an arm of the

state of Texas.” The court entered judgment in UTSMC’s favor thereafter.

The Texas Legislature has established both the University of Texas and the UT

1

System. See TEX. EDUC. CODE §§ 65.01–65.461, 67.01–67.62.

In 2015, UTSMC carried out the demolition of Saint Paul University Hospital. See

2

Matt Goodman, So Long, Saint Paul: UT Southwestern Demolishes Historic Hospital, D

MAGAZINE (Nov. 23. 2015), https://www.dmagazine.com/healthcare-business/2015/11/so-

long-saint-paul-ut-southwestern-demolishes-historic-hospital/.

3 Title I of the ADA prohibits discrimination by employers against qualified

individuals with disabilities “in regard to job application procedures, the hiring,

advancement, or discharge of employees, employee compensation, job training, and other

terms, conditions, and privileges of employment.” 42 U.S.C. § 12112(a). And Title V of the

ADA prohibits retaliation against individuals with disabilities who oppose an unlawful

practice under the ADA. See 42 U.S.C. § 12203(a).

2

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Plaintiff subsequently moved for reconsideration which the district court

denied.

Plaintiff now appeals the dismissal order granting UTSMC’s 12(b)(1)

motion and the entry of final judgment. Plaintiff’s appeal centers entirely

around whether her lawsuit is considered a suit against an arm of the State of

Texas for the purpose of Eleventh Amendment protection.

II.

We review questions of subject matter jurisdiction, including sovereign

immunity determinations, de novo. See Machete Prods., LLC v. Page, 809 F.3d

281, 287 (5th Cir. 2015).

“[P]laintiff bears the burden of proof that jurisdiction does in fact exist.”

Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). In evaluating a

Rule 12(b)(1) motion, “we must take all of the factual allegations in the

complaint as true, but we are not bound to accept as true a legal conclusion

couched as a factual allegation . . . . [A] district court is empowered to find facts

as necessary to determine whether it has jurisdiction.” Machete, 809 F.3d at

287 (internal quotation marks and citation omitted).

III.

Pursuant to the Eleventh Amendment, a state’s sovereign immunity in

federal court extends to private suits against state agencies, state

departments, and other arms of the state. See P.R. Aqueduct & Sewer Auth. v.

Metcalf & Eddy, Inc., 506 U.S. 139, 146 (1993); Richardson v. S. Univ., 118

F.3d 450, 452–54 (5th Cir. 1997) (stating that sovereign immunity protects

“arms of the state”). “While instrumentalities of the state enjoy sovereign

immunity, ‘the Eleventh Amendment does not extend its immunity to units of

local government.’” Providence Behavioral Health v. Grant Rd. Pub. Util. Dist.,

902 F.3d 448, 456 (5th Cir. 2018) (quoting Bd. of Trustees of Univ. of Ala. v.

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Garrett, 531 U.S. 356, 369 (2001)). Said differently, not all units of a state

government are immunized from federal action.

To determine whether a unit qualifies as an arm of the state as a matter

of law, 4 “we employ the six-factor test developed in Clark v. Tarrant County,

Tex., 798 F.2d 736 (5th Cir. 1986).” Providence, 902 F.3d at 456. The six Clark

factors are:

(1) Whether the state statutes and case law view the agency as an

arm of the state;

(2) The source of the entity’s funding;

(3) The entity’s degree of local autonomy;

(4) Whether the entity is concerned primarily with local as opposed

to statewide, problems;

(5) Whether the entity has the authority to sue and be sued in its

own name; and

(6) Whether the entity has the right to hold and use property.

See Hudson v. City of New Orleans, 174 F.3d 677, 681 (5th Cir. 1999) (citing

Clark, 798 F.2d at 744−45). An underlying goal of this six-factor test is to

protect state funding; in turn, the second factor is the most important. Id. at

682. Each factor need not be present for state immunity to be extended. See

id.

In employing the Clark factors, 5 we conclude that UTSMC is entitled to

arm-of-the-state status; therefore, it has sovereign immunity from Plaintiff’s

ADA discrimination and retaliation claims.

Factor 1 (Statutory and Legal Authorities). UTSMC is part of the UT

System. See TEX. EDUC. CODE § 65.02 (a)(7).

4 See Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429 n.5 (1997) (“[T]he question

whether a particular state agency has the same kind of independent status as a county or is

instead an arm of the State . . . within the meaning of the Eleventh Amendment, is a question

of federal law.”).

5 The district court order did not include the Clark analysis, so we discuss these factors

for the first time.

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A public university system is considered a state agency. See TEX. GOV’T.

CODE § 572.002(10)(B). Texas Government Code § 572.002(10)(B) defines

“state agency” as, among other things, “a university system or an institution of

higher education as defined by Section 61.003, Education Code.” Texas

Education Code Section 61.003(8)’s definition of “institution of higher

education” includes “any . . . medical or dental unit . . . as defined in this

section.” The definition of “medical or dental unit” includes UTSMC. See TEX.

EDUC. CODE § 63.003(5).

We have held that public universities are entitled to sovereign immunity

as arms of the state. See U.S. Oil Recovery Site PRP Grp. v. R.R. Comm’n of

Tex., 898 F.3d 497, 501–02 (5th Cir. 2018) (collecting cases). In several

unpublished opinions, we have likewise consistently treated health

institutions of the UT System, including UTSMC, as instrumentalities of the

State of Texas. See, e.g., Elhaj-Chehade v. Office of Chief Admin. Hearing

Officer, 235 F.3d 1339 (Table), 2000 WL 1672679, at *1 (5th Cir. 2000) (holding

that UTSMC “is an arm of the State”); U.S. ex rel. King v. Univ. of Tex. Health

Sci. Ctr. at Hous., 544 F. App’x 490, 495–98 (5th Cir. 2013) (per curiam)

(holding that the medical institution is an arm of state); Sullivan v. Univ. of

Tex. Health Sci. Ctr. at Hous. Dental Branch, 217 F. App’x 391, 392 (5th Cir.

2007) (per curiam) (“It is undisputed that UTHSC, as an arm of the state, is

entitled to Eleventh Amendment immunity.”); Scott v. Pfizer Inc., 182 F. App’x

312, 315−16 (5th Cir. 2006) (per curiam) (same with regard to University of

Texas Medical Branch).

These statutes and legal authorities favor treating UTSMC as an arm of

Texas.

Factor 2 (Source of State Funding). In evaluating the second and most

significant factor, we analyze “whether a judgment against [UTSMC] will be

paid with state funds.” Richardson, 118 F.3d at 455.

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Texas law authorizes state treasury funds to be allocated to UTSMC

from the permanent health fund for higher education. See TEX. EDUC. CODE

§ 63.002(c)(3). Here, Plaintiff recognizes that UTSMC receives state funding

but maintains that UTSMC is not dependent on state funding. She points to

an “August 2018 Legislative Appropriations Request Fiscal Years 2020 and

2021” report that states: UTSMC “receives no State dollars to construct or

operate clinical facilities.” 6 Because she was employed at Saint Paul, a

UTSMC medical facility that predominately relied on private funding, Plaintiff

urges us to infer that public funds would not be used to pay any resulting

judgment from this action. We disagree.

A similar contention was posed to us in United Carolina Bank v. Board

of Regents of Stephen F. Austin State University, 665 F.2d 553, 560 (5th Cir.

Unit A 1982). There, the district court held that the university was not entitled

to Eleventh Amendment protection because a judgment award did not

implicate general revenues of the state, as there were identifiable revenue

bonds available for a judgment payout. Id. (The entity “could itself pay such

an award because it had substantial unappropriated, separately held, locally

generated funds.”). But “[t]he key is not the ability to identify segregated

funds”; rather, it “is whether use of these unappropriated funds to pay a

damage award against [the university] would interfere with the fiscal

autonomy and political sovereignty of Texas.” Id. at 560−61. Because the

university also held funds in the state treasury and the funds were otherwise

restricted from use, we reversed the district court’s holding, refrained from

segregating identifiable funds, and extended sovereign immunity to the

6 Ironically, the exhibit containing the Legislative Appropriations Request is

UTSMC’s formal solicitation seeking more state funding for the forthcoming fiscal years.

This same exhibit also proclaims that “state support” is “the bedrock on which UTSMC’s

education and research missions are built.”

6

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university. Id. at 561 (stating that “any award from those funds would directly

interfere with the state’s fiscal autonomy”).

We see no reason to veer from United Carolina Bank’s reasoning, and in

turn, we reject Plaintiff’s segregation argument. Furthermore, Plaintiff’s

record support—which essentially relies on an isolated sentence that UTSMC

clinical facilities are privately funded—does not verify whether a judgment

against UTSMC would be satisfied with private or state-allocated funds. To

be clear, we do not draw a bright-line rule as to the amount of private funding

necessary to hold an entity financially independent from the state. Plaintiff’s

burden is to demonstrate (via evidentiary support) that UTSMC will be

responsible for its judgment and debts, not the state. Cf. U.S. ex rel. Barron v.

Deloitte & Touche, L.L.P., 381 F.3d 438, 440 (5th Cir. 2004) (noting that the

contractual terms dictate that the state not be responsible for any of the

entity’s debts and that the state be indemnified from any liability). She failed

to satisfy her burden in that respect. Thus, we conclude that a subsequent

judgment against UTSMC would interfere with Texas’s fiscal autonomy.

Accordingly, this factor—which is the “most significant”—supports a

finding that UTSMC is an arm of the State of Texas.

Factor 3 (Local Autonomy). As a component institution of the UT

System, UTSMC is governed by a board of regents “appointed by the governor

with the advice and consent of the senate.” TEX. EDUC. CODE §§ 65.11,

65.31(a) (“The board is authorized and directed to govern, operate, support,

and maintain each of the component institutions that are now or may hereafter

be included in a part of The University System.”). Plaintiff points to the

UTSMC website’s personnel page— which states that UTSMC is led by

physicians and scientists, with no mention of the Board of Regents—to assert

that Texas has minimal involvement in this entity’s day-to-day operations.

Assuming arguendo that this assertion were true, Texas still mandates that

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UTSMC follows statutory accounting and financial reporting requirements

because it receives state appropriated funds. See TEX. GOV’T. CODE §

2101.011(b) (requiring each “state agency” 7 to submit annual financial reports

to the Texas Governor and other public officials); cf. TEX. EDUC. CODE §

63.002(c)(3).

Considering the state oversight and financial regulation, UTSMC does

not operate with a level of “local autonomy” to consider it independent from

Texas. This factor supports UTSMC receiving arm-of-the-state recognition.

Factor 4 (Concerned with Local or State Issues). Plaintiff’s position is

that because UTSMC’s facilities are only in Dallas, UTSMC’s concerns should

be considered local. By Plaintiff’s logic, an entity’s concerns are limited to the

location of its office. This line of reasoning is flawed.

In King, an identical “lack of statewide presence” argument was

presented regarding a medical unit of the UT System, but we refrained from

isolating the institution from the UT System in our Clark analysis. 544 F.

App’x at 498. Instead, we evaluated the UT System as a whole. Id. (stating

that the UT System’s “locations throughout the state of Texas,” “[e]ducation

and research” were statewide concerns) (quoting TEX. EDUC. CODE § 61.002

(Texas Higher Education Board created to “benefit the citizens of the state in

terms of the realization of the benefits of an educated populace”)). Given the

similarity in arguments in King and the case at bar, we dismiss the “contention

that [UTSMC] is primarily concerned with local issues because it . . . [does not]

have a statewide presence.” Id. Because of UT System’s statewide presence,

components of the UT System shall not be confined to specific geographical

areas.

7 Cf., supra, Sect.III (stating, under Factor 1, that state agency includes university

systems which cover medical units like UTSMC) (citing TEX. GOV’T. CODE § 572.002(10)(B);

cf. TEX. EDUC. CODE §§ 63.003(5), (8)).

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Clark’s fourth factor therefore supports UTSMC as an arm of the state.

Factor 5 (Ability to be Sued or Sue). This factor bears a different result

than the previous factors. Here, we evaluate whether the entity may sue and

be sued in its own name. Texas law gives the UT System the authority to sue

on its own behalf and/or UTSMC’s behalf. See TEX. EDUC. CODE § 65.42 (“A

suit by The University of Texas System on its own behalf or on behalf of a

component institution of The University of Texas System to recover [debts]

owed to The University of Texas System or a component institution of The

University of Texas System must be brought in Travis County.”). However,

there are a number of cases (including one that reached the Supreme Court)

where UTSMC was sued or made an independent decision to sue on its own

behalf. See, e.g., Univ. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S. 338 (2013);

Walker v. Univ. of Tex. Sw. Med. Ctr., 638 F. App’x 394 (5th Cir. 2016) (per

curiam); Shah, 54 F. Supp. 3d at 681. Thus, this factor weighs against finding

UTSMC to be an arm of the state.

Factor 6 (Use of Property). Lastly, Plaintiff claims that UTSMC operates

its two hospitals without state control over its property management. Id. at

20. We disagree.

“The board of regents of the University of Texas System has the sole and

exclusive management and control of the lands set aside and appropriated to,

or acquired by, The University of Texas System.” TEX. EDUC. CODE § 65.39.

The components making up the UT System are subject to state eminent

domain to acquire or condemn land “that may be necessary and proper for

carrying out” the use of the state. Id. at § 65.33 (“The board has the power of

eminent domain to acquire for the use of the university system any land that

may be necessary and proper for carrying out its purposes. . . . The taking of

the property is declared to be for the use of the state.”). Put straightforwardly,

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the UT System has the power of eminent domain, and the land it acquires

becomes property of the state.

These characteristics evince UTSMC does not exclusively manage the

use of its property. Consequently, this Clark factor supports a finding of

UTSMC as an arm of the state.

IV.

In sum, five out of the six Clark factors, including the most important

source-of-funding factor, counsel in favor of a finding that UTSMC is an

instrumentality of the State of Texas. Accordingly, we hold that UTSMC is

entitled to Eleventh Amendment protection, 8 precluding our jurisdiction.

For the foregoing reasons, we AFFIRM the district court’s dismissal of

this action for lack of subject matter jurisdiction.

8 Of note, Plaintiff has not set forth any argument that an exception to sovereign

immunity applies here. Cf. Coleman v. Court of Appeals of Md., 132 S. Ct. 1327, 1333 (2012)

(“A foundational premise of the federal system is that States, as sovereigns, are immune from

suits for damages, save as they elect to waive that defense” or Congress has clearly abrogated

immunity via legislation). Thus, all arguments pertaining to the Eleventh Amendment

exceptions are forfeited. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994) (“A party

who inadequately briefs an issue is considered to have abandoned the claim.”).

10