The opinion
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 26, 2011
No. 10-14282
JOHN LEY
CLERK
D. C. Docket No. 2:10-cv-01850-WMA
NATALIE VERSIGLIO,
Plaintiff-Appellee,
versus
BOARD OF DENTAL EXAMINERS OF ALABAMA,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Alabama
(August 26, 2011)
Before DUBINA, Chief Judge, EDMONDSON and WILSON, Circuit Judges.
DUBINA, Chief Judge:
Appellant Board of Dental Examiners of Alabama (the “Board”) appeals the
district court’s judgment denying it sovereign immunity protection as an arm of
the state of Alabama. Appellee Natalie Versiglio contends that the Board is
sufficiently independent from the state of Alabama, that it is not entitled to
Eleventh Amendment immunity, and that her claim under the Fair Labor Standards
Act should be allowed to continue. The Supreme Court in Alden v. Maine settled
the matter of state employees suing under the FLSA, writing, “We hold that the
powers delegated to Congress under Article I of the United States Constitution do
not include the power to subject nonconsenting States to private suits for damages
in state courts. We decide as well that the State of Maine has not consented to suits
for overtime pay and liquidated damages under the FLSA.” 527 U.S. 706, 712,
119 S. Ct. 2240, 2246 (1999). Thus, the question before this court is whether the
Board is an arm of the state. For the reasons stated below, we conclude that at this
time it is not and affirm the judgment of the district court.1
I.
In Manders v. Lee, the Eleventh Circuit noted that “[i]t is also well-settled
that Eleventh Amendment immunity bars suits brought in federal court when the
1
“The grant or denial of a state’s sovereign immunity defense is an issue of law subject to
de novo review by this court.” Garrett v. Univ. of Ala. at Birmingham Bd. of Trs., 344 F.3d
1288, 1290 (11th Cir. 2003).
2
State itself is sued and when an ‘arm of the State’ is sued.” 338 F.3d 1304, 1308
(11th Cir. 2003). Whether an agency qualifies as an arm of the state is a federal
question with a federal standard, but whether that standard is met is determined by
carefully reviewing how the agency is defined by state law. Regents of the Univ.
of Cal. v. Doe, 519 U.S. 425, 429 n.5, 117 S. Ct. 900, 904 n.5 (1997) (“Ultimately,
of course, the question whether a particular state agency has the same kind of
independent status as a county or is instead an arm of the State, and therefore ‘one
of the United States’ within the meaning of the Eleventh Amendment, is a
question of federal law. But that federal question can be answered only after
considering the provisions of state law that define the agency’s character.”);
Tuveson v. Fla. Governor’s Council on Indian Affairs, Inc., 734 F.2d 730, 732
(11th Cir. 1984) (“The state law provides assistance in ascertaining whether the
state intended to create an entity comparable to a county or municipality or one
designed to take advantage of the state’s Eleventh Amendment immunity.”).
States have “extremely wide latitude in determining their forms of government and
how state functions are performed.” Abusaid v. Hillsborough Cnty. Bd. of Cnty.
Comm’rs, 405 F.3d 1298, 1303 (11th Cir. 2005) (quotation marks omitted). But if
a state creates an institution in such a way that gives it independence, “[w]hatever
may have been the state’s reason for doing it [that] way, it must live with the
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consequences. It cannot claim an immunity based on a condition which it itself
sought to avoid.” Williams v. Eastside Mental Health Ctr., Inc., 669 F.2d 671,
678 (11th Cir. 1982). In conducting our analysis, this court “has stated the most
important factor is how the entity has been treated by the state courts.” Tuveson,
734 F.2d at 732 (citing Huber, Hunt & Nichols, Inc. v. Architectural Stone Co.,
625 F.2d 22, 25 (5th Cir.1980)).2
II.
In Miccosukee Tribe of Indians v. Florida State Athletic Commission, this
court set forth a four part test to guide our analysis of whether state law establishes
an agency as an arm of the state. 226 F.3d 1226 (11th Cir. 2000). Miccosukee
explains, “In determining whether the Eleventh Amendment provides immunity to
a particular entity, this court examines the following factors: (1) how state law
defines the entity; (2) what degree of control the state maintains over the entity;
(3) where the entity derives its funds; and (4) who is responsible for judgments
against the entity.” Id. at 1231. Applying this test, the court in Miccosukee
determined that the Florida State Athletic Commission constituted an arm of the
state and was entitled to Eleventh Amendment immunity.
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), the
Eleventh Circuit adopted as binding precedent the decisions of the Fifth Circuit rendered prior to
October 1, 1981.
4
Initially, the Board appears to have a viable argument that it is an arm of the
state under the Miccosukee test. First, Alabama law suggests that the Board is an
arm of the state. In creating the Board, the legislature made specific findings that
“the practice of dentistry affects the public health, safety and welfare and should
be subject to regulation.” ALA. CODE § 34-9-2(a). These findings indicate that the
legislature saw the Board as an arm of the state, noting, “The licensure by this
state of nonresident dentists who engage in dental practice within this state is
within the public interest.” Id. § 34-9-2(c) (emphasis added). A regulatory body is
defined under the state’s immunity provision as “[a] state agency which issues
regulations in accordance with the Alabama Administrative Procedure Act or a
state, county, or municipal department, agency, board, or commission which
controls, according to rule or regulation, the activities, business licensure, or
functions of any group, person, or persons.” Id. § 6-5-340(a)(7). The Alabama
Administrative Procedure Act governs “[e]very state agency having express
statutory authority to promulgate rules and regulations.” Id. § 41-22-2(d). The
Board is granted the authority to make such rules and regulations in Section
34-9-43 of the Alabama Code.
Moreover, while the Board has a degree of independence, the statutory
scheme that created it allows the state to maintain control over its operations.
5
Miccosukee recognizes that the regulatory abilities inherent in a licensing
agency—including quasi-legislative and quasi-judicial functions—does not render
it independent of the state. In Miccosukee, the court noted that the Commission’s
rule-making functions were constrained by legislative guidelines. 226 F.3d at
1232. The Board is similarly designed. Section 34-9-43 grants the Board power
to promulgate regulations, but only as provided by Chapter 9 of the Alabama
Code. For example, the Code, and not the Board, sets forth application categories,
Section 34-9-10, registration procedures and deadlines, Section 34-9-15, a range
of fees the Board may charge, Section 34-9-16, and examination requirements,
Section 34-9-26, among others.
In Miccosukee, the court noted that the Athletic Commission was not
permitted unfettered discretion to suspend or revoke licenses, but rather “the state
allows the Commission to suspend or revoke a license for a limited number of
grounds.” 226 F.3d at 1232. Similarly, the Board may only invoke disciplinary
action against a licensee subject to Section 34-9-18, which sets forth seventeen
grounds for Board action and nine different sanctions the Board may proscribe
based on those grounds. Section 34-9-18(d) requires a hearing before any
disciplinary action can be taken, and Section 34-9-25 allows for appeal to the
circuit courts on the grounds that Board action is either illegal or arbitrary. The
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Board is allowed to “request assistance from the Attorney General” in enforcing
its duties, and all “prosecuting attorneys throughout the state shall assist the board,
upon request of either, in any action for injunction or prosecution without charge
or additional compensation.” ALA. CODE § 34-9-43.1(a).
One area in which the Board is more independent than the Commission in
Miccosukee is the composition of the Board itself. In Miccosukee, the
Commission was appointed by the Governor, subject to confirmation by the
Senate. 226 F.3d at 1232–33. We noted that “[s]tate authority over the
appointment of agency members lends support to finding that the agency is an arm
of the state,” but we did not find the appointment procedure to be definitive. Id.
Here, while the state does not select the Board, it has established detailed
guidelines for how the members are to be selected. See ALA. CODE § 34-9-40
(“The board shall consist of six dentists who shall be selected in the method set
forth herein all of whom having been actively engaged in the practice of dentistry
in the State of Alabama for at least five years next preceding the date of their
election and one dental hygienist elected at-large and as provided in subsection
(b). Each member of the board shall be a citizen of this state.”).
III.
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Appellee argues that a strong point in favor of the Board’s independence
from the state is the fact that it derives its funds from licensing fees and can spend
its money pursuant to its own discretion. This position was largely rejected in
Miccosukee where this court found that it is the amount of control over the
agency’s fiscal life, not the source of its funding, that is most pertinent. 226 F.3d
at 1233; Fouche v. Jekyll Island-State Park Auth., 713 F.2d 1518, 1520–21 (11th
Cir. 1983) (“Even though the Park Authority can raise money through the issuance
of bonds and from the operation of Jekyll Island State Park, its fiscal life is
controlled by the state.”). Furthermore, while the licensing fees paid to the Board
never enter the state treasury, this appears to be little more than an accounting
decision by the state. The Board’s enabling legislation recognizes that the fees
paid to the Board are controlled by the state, specifically authorizing, “All money,
including license fees, annual renewal license certificate fees, examination fees
and any and all other fees and receipts . . . are hereby appropriated to the Board of
Dental Examiners to be used as herein provided.” ALA. CODE § 34-9-41. Finally,
the Board is only able to collect licensing fees because it is imbued with the power
of the state. Without its authorizing legislation and enforcement powers granted
therein, the Board would have no ability to collect licensing fees at all.
8
The Board does not have unfettered discretion to spend its funds. Rather,
the Board is only “authorized to expend such funds as shall be necessary to
enforce the provisions of this chapter; to pay salaries, expenses and other costs
herein provided; to promote the arts and science of dentistry; and for such other
purposes as the board shall consider to be in the best interest of dentistry in this
state.” Id. § 34-9-41. To ensure compliance with this requirement, “[t]he
secretary-treasurer of the board shall compile an annual report which shall contain
an itemized statement of all money received and disbursed and a summary of the
official acts of the board during the preceding year, and the report shall have
attached thereto a certified report and audit made by a certified public accountant
of the State of Alabama.” Id. § 34-9-42. In Fouche, this court discussed the
significance of such an audit, writing, “[The Park Authority’s] budget is submitted
to the General Assembly. All of its financial records must be submitted annually
to the state auditor for inspection.” 713 F.2d at 1520–21. Finally, the funds raised
by the Board are held in trust. In the event that the state legislature decides to
terminate the Board—a power which itself provides strong evidence that the
Board is an arm of the state—“all unexpended funds revert[] back to the state fund
from which its appropriation was made.” ALA. CODE § 41-20-12. Since the fees
9
were simply appropriated to the Board and did not come from a specific state fund,
presumably they would return to the state treasury.
In the past, the court has described the extent to which a lawsuit implicates
the State treasury as nearly dispositive. Shands Teaching Hosp. & Clinics, Inc. v.
Beech St. Corp., 208 F.3d 1308, 1311 (11th Cir. 2000); Fouche, 713 F.2d at 1521
(“The Eleventh Amendment protects the sovereignty of the state by prohibiting
suits when recovery would be paid from state funds.”). Appellee paints this as the
strongest factor in her favor, arguing, “There is no evidence that the State of
Alabama risks losing any money from this litigation.” (Appellee’s Brief at 7.)
This statement is not correct.
First, the Board’s funds are state funds. As noted above, while the fees
collected by the Board are not derived directly from the state, they are held in trust
and can only be used in ways authorized by state statute. More importantly, we
need not speculate about the ultimate responsibility for the Board’s debts. The
state code provides that when a state agency such as the Board is terminated, “The
state Comptroller is authorized to draw warrants on the State Treasury for any
outstanding accounts which are legally owed but unsettled by any agency which
has ceased functioning pursuant to this chapter. Such claims must be presented
and paid in the same manner as required by law for any claim for the payment of
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state funds.” ALA. CODE § 41-20-14. Thus, if this lawsuit were allowed to
continue, it appears the state of Alabama would be ultimately responsible for any
judgment entered therein.
IV.
Despite the strength of the Board’s claim of sovereign immunity under the
Miccosukee test, one factor weighs heavily against it. On April 1, 2011, the Court
of Civil Appeals of Alabama released its opinion in Wilkinson v. Board of Dental
Examiners of Alabama, 2011 WL 1205669, 2011 Ala. Civ. App. LEXIS 88 (Ala.
Civ. App. April 1, 2011).3 In its opinion, the state appeals court conducted the
first substantial analysis by a state court of the Board’s status as a state agency.4
The Board argued that it was immune from suit in state court pursuant to Article 1,
Section 14 of the Alabama Constitution. That section provides that “the State of
Alabama shall never be made a defendant in any court of law or equity.” Alabama
courts have construed this immunity to extend to arms of the state. Armory
Comm’n v. Staudt, 388 So. 2d 991, 993 (Ala. 1980). The test for entities seeking
3
We note that although the attorneys of record in Wilkinson are the same as in our present
case, no party saw fit to inform us of the state court’s decision.
4
Prior to this decision, the two state courts to address the issue had seemingly found, if
only in passing, that the Board was an arm of the state. Vining v. Bd. of Dental Exam’rs, 492 So.
2d 607, 610 (Ala. Civ. App. 1985) (“The Dental Board is a state agency. Hence, the Pinkerton
agents were agents of the state.”); Delavan v. Bd. of Dental Exam’rs, 620 So. 2d 13, 18 (Ala.
Civ. App. 1992) (citing Vining).
11
immunity is much like this court’s test: whether “a lawsuit against a body created
by legislative enactment is a suit against the state depends on the character of
power delegated to the body, the relation of the body to the state, and the nature of
the function performed by the body.” Id. Applying this test, the Court of Civil
Appeals examined many of the provisions discussed above, concluding that the
Board is not an arm of the state and thus “is not entitled to § 14 immunity.”
Wilkinson, 2011 Ala. Civ. App. Lexis 88 at *16, 2011 WL 1205669 at *5.
This court gives great deference to how state courts characterize the entity
in question. This practice is in keeping with the ordinary deference granted state
courts when they interpret matters of state concern. See Silverberg v. Paine,
Webber, Jackson & Curtis, Inc., 710 F.2d 678, 690 (11th Cir. 1983) (“A federal
court applying state law is bound to adhere to decisions of the state’s intermediate
appellate courts absent some persuasive indication that the state’s highest court
would decide the issue otherwise.”). Federal courts are often more skeptical of
state court decisions involving issues of sovereign immunity, as otherwise “[a]
state would have too much self-interest in extending sovereign immunity to as
many of its agencies and corporate creations as possible.” Miller-Davis Co. v.
Illinois State Toll Highway Auth., 567 F.2d 323, 330 (7th Cir. 1977). However,
that concern is obviated when, as here, the state court finds that an entity is not an
12
arm of the state. Id. (“Especially when a state supreme court does not extend
immunity but, rather, holds that an entity is not to be deemed the state for purposes
of sovereign immunity, we think the federal courts must pay careful attention to
the state opinion.”).
Finding that the Board is entitled to sovereign immunity would require this
court to interpret Alabama law in a way that is diametrically opposed to the
findings of the highest state court to consider the issue. Such a ruling would also
create the incongruous result of having a “state agency” that is immune from suit
under federal law but not under state law. Cf. Alden, 527 U.S. at 793 n.29, 119 S.
Ct. at 2285 n.29 (noting in a different context that the Framers of the Eleventh
Amendment “would have considered it absurd that States immune in federal court
could be subjected to suit in their own courts”). As such, we believe that a
holding by this court that the Board is an arm of the state for purposes of
sovereign immunity would be inappropriate.
V.
For the aforementioned reasons, we affirm the district court’s finding that
the Board is not entitled to sovereign immunity protection as an arm of the state of
Alabama.
AFFIRMED.
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