Appendix — Hughes-Bechtol, Inc. v. West Virginia Board of Regents

Supreme Court brief1984

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64-413 FILED

oP it 84

nh Oe ER L. STEVAS,

es CLERK

In The

Supreme Court of the United States

October Term, 1984

HUGHES-BECHTOL, INCORPORATED,

Petitioner,

vs.

‘

WEST VIRGINIA BOARD OF REGENTS,

A Statutory Corporation,

Respondent.

APPENDIX TO PETITION FOR

A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

JoHN O. HENRY,

CouNSEL OF RECORD

AND

E. GLENN ROBINSON JONATHAN HOLLINGSWORTH

RoBINSON AND McELWEE PorTEeR, WRIGHT, Morris & ARTHUR

600 KB&T Center 2100 First National Bank Building

Charleston, West Virginia Dayton, Ohio 45402

Telephone: (304) 344-5800 Telephone: (513) 228-2411

Attorneys for Petitioner

APPENDIX

WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

TO PETITION FOR A

INDEX

CONSTITUTIONAL PROVISIONS,

TREATIES,

STATUTES, ORDINANCES,

AND REGULATIONS

Federal Provisions

(i)

(ii)

United States Constitution

(a)

(b)

(c)

Amendment V. ..

Amendment XI...

Amendment XIV. .

United States Code

(a)

(b)

(c)

Declaratory

Judgment Statute

28 U.S.C. §2201.

Federal Question

Jurisdiction Statute

26 U.S.C. $1331.

Diversity of

Citizenship

Statute,

28 U.S.C. $1332.

(d) Civil Action For

Deprivation of

Rights Statute

Sa Weems MEPOee « ct

(e) United States

Arbitration Act

9 U8. Gi. .

9 U.S.C. §2. .

9 U.8.0.. $4...

9 U.6.C. 99. -.

2. West Virginia Provisions

(i) West Virginia Constitution

MEGGLO Vaux Bae « « 6 6 ew

(ii) West Virginia Code

lee 2 ee

(b) §18-12B-1 et seg

B. OPINIONS, ORDERS, FINDINGS

OF FACT AND CONCLUSIONS

OF LAW

District Court Decision and

Entry (December 4, 1981) ......

District Court Decision and

Entry (February 17, 19862)......

Sixth Circuit Decision

Affirming District Court

Judgment (June 18, 1984) ......

C. OTHER OPINIONS, ORDERS, FINDINGS

OF FACT AND CONCLUSIONS OF LAW

RENDERED BY COURTS OR ADMINIS-

TRATIVE AGENCIES

Arbitrator's Decision on

Arbitrability of Case

eR ee ee ee ee ee ee

Arbitration Award (First)

eats c6 & «¢ & @ se 6 © 6

162

168

18¢€

189

Arbitration Award (Second)

February 22, 1983

West Virginia Court of

Claims Opinion

(July 26, 1982).

West Virginia Senate

Finance Committee Report

(January 31, 1983)

JUDGMENT OR DECREE SOUGHT TO BE

REVIEWED

District Court Judgment Entry

(December 4,

Sixth Circuit Judgment Entry

(June 18,

OTHER APPENDED MATERIAL

Construction Contract

(March 14,

Official Statement

(August l,

194

197

205

215

217

219

258

CONSTITUTIONAL PROVISIONS, TREATIES,

STATUTES, ORDINANCES -AND REGULATIONS

UNITED STATES CONSTITUTIONAL PROVISIONS,

TREATIES, STATUTES, ORDINANCES AND REGULATIONS

CONSTITUTION OF THE UNITED STATES

AMENDMENT V.

No person shall be held to answer for a

Capital, or otherwise infamous crime, unless

on a presentment or indictment of a Grand

Jury, except in cases arising in the land or

naval forces, or in the Militia, when in

actual service in time of War or public

danger; nor shall any person be subject for

the same offence to be twice put in jeopardy

of life or limb; nor shall be compelled in any

criminal case to be a witness against himself,

nor be deprived of life, liberty, or property,

without due process of law; nor shall private

property be taken for public use, without just

compensation.

AMENDMENT XI.

The Judicial power of the United States

shall not be construed to extend to any suit

in law or equity, commenced or prosecuted

against one on the United States by Citizens

of another State, or by Citizens or Subjects

of any Foreign State.

AMENDMENT XIV.

SECTION lL. All persons born or

naturalized in the United States and subject

to the jurisdiction thereof, are citizens of

the United States and of the State wherein

they reside. No State shall make or enforce

any law which shall abridge the privileges or

immunities of citizens of the United States;

or shall any State deprive any person of life,

liberty, or property, without due process of

law; nor deny to any person within its

jurisdiction the equal protection of the laws.

SECTION 2. Representatives shall be

apportioned among the several States according

to their respective numbers, counting the

whole number of persons in each State,

so amy

excluding Indians not taxed. But when the

right to vote at any election for the choice

of electors for President and Vice President

of the United States, Representatives in

Congress, the Executive and Judicial officers

of a State, or the members of the Legislature

thereof, is denied to any of the male

inhabitants of such State, being twenty-one

years of age, and citizens of the United

States, or in any way abridged, except for

participation in rebellion, or other crime,

the basis of representation therein shall be

reduced in the proportio.: which the number of

such male citizens shall bear to the whole

number of male citizens twenty-one years of

age in such State.

SECTION 3. No person shall be a Senator

or Represertative in Congress, or elector of

President and Vice President, or hold any

office, civil or military, under the United

States, or any State, who, having previously

taken an oath, as a member of Congress, or as

an officer of the United States, or as a

member of any State legislature, or as an

executive or judicial officer of any State, to

support the Constitution of the United States,

shall have engaged in insurrection or

rebellion against the same, or given aid or

comfort to the enemies thereof. But Congress

may by a vote of two-thirds of each House,

remove such disability.

SECTION 4. The validity of the public

debt of the United States, authorized by law,

including debts incurred for payment of

pensions and bounties for services in

suppressing insurrection or rebellion, shall

not be questioned. But neither the United

States nor any State shall assume or pay any

debt or obligation incurred in aid of

insurrection or rebellion against the United

States, or any claim for the loss or

emancipation of any slave; but all such debts,

obligations and claims shall be held illegal

and void.

PE EE AEA Dit

SECTION 5. The Congress shall have power

to enforce, by appropriate legislation, the

provisions cf this article.

UNITED STATES CODE DECLARATORY JUDGMENT

STATUTE, 28 U.S.C. §2201

§2201. Creation of remedy

In a case of actual controversy within

its jurisdiction, except with respect to

Federal taxes other than actions brought under

section 7428 of the Internal Revenue Code of

1954 or a proceeding under section 505 or 1146

of Title 1l, any court of the United States,

| upon the filing of an appropriace pleading,

may declare the rights and other legal

relations of any interested party seeking such

declaration, whether or not further relief is

or could be sought. Any such declaration

Shall have the force and effect of a final

judgment or decree and shall be reviewable as

such.

(As amended Oct. 4, 13976, Pub.L. 94-455, Title

XIII, §1306(b) (8), 90 Stat. 1719; Nov. 6, 1978

Pub.L. 95-598, Title II, §249, 92 Stat. 2672.)

UNITED STATES CODE FEDERAL QUESTION

JURISDICTION STATUTE, 28 U.S.C. §1331

§1331. Federal question

The district courts shall have original

jurisdiction of all civil actions arising

under the Constitution, laws, or treaties of

the United States.

(As amended Oct. 21, 1976, Pub.L. 94-574, §2,

90 Stat. 2721; Dec. 1, 1980, Pub.L. 96-486, §

2(a) 94 Stat. 2369).

UNITED STATES CODE DIVERSITY OF CITIZENSHIP

STATUTE, 28 U.S.C. §1332

§1332. Diversity of citizenship; amount in

controversy, costs

(a) The district courts shall have

Original jurisdiction of all civil actions

where the matter in controversy exceeds the

ASE oN ene *

sum or value of $10,000, exclusive of interest

and costs, and is between-

(1) citizens of different States;

(2) citizens of a State and

citizens or subjects of a foreign state;

(3) citizens of different States

and in which citizens or subjects of a foreign

state are additional parties; and

(4) a foreign state, defined in

section 1603(a) of this title, as plaintiff

and citizens of a State or of different

States.

(b) Except when express provision

therefor is otherwise made in a statute of the

United States, where the plaintiff who files

the case originally in the Federal courts is

finally adjudged to be entitled to recover

less than the sum or value of $10,000,

computed without regard to any setoff or

counterclaim to which the defendant may be

adjudged to be entitled, and exclusive of

interest and costs, the district court may

deny costs to the plaintiff and, in addition,

may impose costs on the plaintiff.

“(c) For the purposes of this section and

section 1441 of this title, a corporation

shall be deemed a citizen of any State by

which it has been incorporated and of the

State where it has its principal piace of

business: Provided further, That in any

direct action against the insurer of a policy

or contract of liability insurance, whether

incorporated or unincorporated, to which

action the insured is not joined as a

party-defendant, such insurer shall be deemed

a citizen of the State of which the insurer is

a citizen, as well as of any State by which

the insurer has been incorporated and of the

State where it has its principal place of

business.

(d) The word "States", as used in this

section, includes the Territories, the

District of Columbia, and the Commonwealth of

Puerto Rico.

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CIVIL ACTION FOR DEPRIVATION OF _- RIGHTS

STATUTE, 42 U.S.C. §1983

§1983. Civil action for deprivation of rights

Every person who, under color of any

statute, ordinance, regulation, custom, or

usage, of any State or Territory or the

District of Columbia, subjects, or causes to

be subjected, any citizen of the United States

or other person within the jurisdiction

thereof to the deprivation of any rights,

privileges, or immunities secured by the

Constitution and laws, shall be liable to the

party injured in an action at law, suit in

equity, or other proper proceeding ' for

redress. For the purposes of this section,

any Act of Congress applicable exclusively to

the District of Columbia shall be considered

to be a statute of the District of Columbia.

R.S. §1979; Pub.L. 96-170, §1, Dec. 29, 1979,

93 Stat. 1284.

UNITED STATES ARBITRATION ACT, 9 U.S.C. §§l,

2, 4&9

§l. "Maritime transactions" and "commerce"

defined; exceptions to operation of title

“Maritime transactions", as herein

defined, means charter parties, bills of

lading of water carriers, agreements relating

to wharfage, supplies furnished vessels or

repairs to vessels, collisions, or any other

matters in foreign commerce which, if the

subject of controversy, would be embraced

within admiralty jurisdiction; “commerce”, as

herein defined, means commerce among the

several States or with foreign nations, or in

any Territory of the United States or in the

District of Columbia, or between any such

Territory and another, or between any such

Territory and any State or foreign nation, or

between the District of Columbia and any State

or Territory or foreign nation, but nothing

herein contained shall apply to contracts of

employment of seamen, railroad employees, or

any other class of workers engaged in foreign

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or interstate commerce. July 30, 1947, c.

392, 61 Stat. 670.

§2. Validity, irrevocability, and enforcement

of agreements to arbitrate

A written provision in any maritime

transaction or a contract evidencing a

transaction involving commerce to settle by

arbitration a controversy thereafter arising

out of such contract or transaction, or the

refusal to perform the whole or any part

thereof, or an agreement in writing to submit

to arbitration an existing controversy arising

out of such a contract, transaction, or

refusal, shall be valid, irrevocable, and

enforceable, save upon such grounds as exist

at law or in equity for the revocation of any

contract.

July 30, 1947, c. 392, 61 Stat. 670.

§4. Failure to arbitrate under agreement;

petition to United States court having

jurisdiction for order to compel arbitration;

notice and service thereof; hearing and

determination

A party aggrieved by the alleged failure,

neglect, or refusal of another to arbitrate

under a written agreement for arbitration may

petition any United States district court

which, save for such agreement, would have

jurisdiction under Title 28, in a civil action

or in admiralty of the subject matter of a

Suit arising out of the controversy between

the parties, for an order directing that such

arbitration proceed in the manner provided for

in such agreement. Five days' notice in

writing of such application shall be served

upon the party in default. Service thereof

shall be made in the manner provided by the

Federal Rules of Civil Procedure. The court

shall hear the parties, and upon being

satisfied that the making of the agreement for

arbitration or the failure to comply therewith

is not in issue, the court shall make an order

directing the parties to proceed to

arbitration in accordance with the terms of

the agreement. The hearing and proceedings,

under such agreement, shall be within the

district in which the petition for an order

Girecting such arbitration is filed. If the

making of the arbitration agreement or the

failure, neglect, or refusal to perform the

same be in issue the court shall proceed

summarily to the trial thereof. If no jury

trial be demanded by the party alleged to be

in default, or if the matter in dispute is

within admiralty jurisdiction, the court shall

hear and determine such issue. Where such an

issue is raised, the party alleged to be in

default may, except in cases of admiralty, on

or before the return day of the notice of

application, demand a jury trial of such

issue, and upon such demand the court shall

make an order referring the issue or issues to

a jury in the manner provided by the Federal

Rules of Civil Procedure, or may specifically

call a jury for that purpose. If the jury

find that no agreement in writing for

arbitration was made or that there is no

default in proceeding thereunder, the

proceeding shall be dismissed. If the jury

find that an agreement for arbitration was

made in writing and that there is a default in

proceeding thereunder, the court shall make an

order summarily directing the parties to

proceed with the arbitration in accordance

with the terms thereof.

July 30, 1947, c. 392, 61 Stat. 671; Sept. 3,

1954, c. 1263, §19, 68 Stat. 1233.

§9. Award of arbitrators; confirmation;

jurisdiction; procedure

If the parties in their agreement have

agreed that a judgment of the court shall be

entered upon the award made pursuant to the

arbitration, and shall specify the court, then

at any time within one year after the award is

made any party to the arbitration may apply to

the court so specified for an order confirming

the award, and thereupon the court must grant

such an order unless the award is vacated,

modified, or corrected as prescribed in

sections 10 and 1l of this title. If no court

is specified in the agreement of the parties,

then such application may be made to the

United States court in and for the district

within which such award was made. Notice of

the application shall be served upon the

adverse party, and thereupon the court shall

have jurisdiction of such party as though he

had appeared generally in the proceeding. If

the adverse party is a resident of the

district within which the award was made, such

service shall be made upon the adverse party

or his attorney as prescribed by law for

service of notice of motion in an action in

the same court. If the adverse party shall be

a nonresident, then the notice of the

application shall be served by the marshal of

any district within which the adverse party

may be found in like manner as other process

of the court.

July 30, 1947, c. 392, 61 Stat. 672.

WEST VIRGINIA CONSTITUTIONAL PROVISIONS,

TREATIES, ORDINANCES AND REGULATIONS

CONSTITUTION OF WEST VIRGINIA

Art. VI, § 35 State Not to Be Made Defendant

in Any Court

§ 35. The State of West Virginia shall

never be made defendant in any court of law or

equity, except the State of West Virginia,

including any subdivision thereof, or any

municipality therein or any officer, agent, or

employee thereof, may be made defendant in any

garnishment or attachment proceeding, as

garnishee or suggestee.

WEST VIRGINIA CODE § 18-26-3

§ 18-26-3. West Virginia board of regents

created.

There is hereby created a state agency to

be known as the West Virginia board of

regents, which shall be a corporation and as

such may contract and be contracted with,

plead and be impleaded, sue and be sued, and

have and use a common seal. (1969, c. 130.)

WEST VIRGINIA CODE § i8-12B

§ 18-12B-1. Board of regents authorized to

issue revenue bonds for certain

Capital improvements; payment of

relocation costs.

The West Virginia board of regents shall

have authority, as provided in this article,

to issue revenue bonds of the State from time

to time, either to finance the cost of major

renovations, repairs and safety upgrading and

providing new capital improvements consisting

of facilities, buildings and structures, for

those state institutions of higher education

as determined by resolution of the board of

regents, including any college, university or

community college under its supervision,

management and control, or to refund, at the

discretion of the board of regents, bonds

issued and outstanding under and pursuant to

the provisions of this article or article

eleven-B [§ 18-11B-1 et seq.] of this chapter,

Or both. Such major renovations, repairs and

safety upgrading and capital improvements may,

in each case, include land for current or

future use in connection therewith and

equipment and machinery and other similar

items essential or convenient in connection

with the foregoing but shall not include such

items as books, fuel, supplies or other items

which are cus_omarily deemed to result in a

current operating charge. The princival of,

interest and redemption premium, if anv, on

such bonds shall be payable solely from the

special fund herein provided for such payment.

The costs of any such major renovations,

repairs and safety upgrading and capital

improvements shall include the cost of

acquisition of land, the construction and

acquisition of any such major renovations,

repairs and safety upgrading and capital

improvements and equipment and machinery

therefor, and the provision of roads.

utilities, and other services necessary,

appurtenant or incidental to the foregoing;

and shall also include all other charges or

expenses necessary, appurtenant or incidental

to the construction, acquisition, and

financing including, but not limited to, debt

service reserve requirements and capitalized

interest, and placing in operation of any such

major renovations, repairs and safety

upgrading and capital improvements: Provided,

that from time to time but not later than the

first day of March, one thousand nine hundred

seventy-eight, the board shall issue and sell

bonds pursuant to this article in an amount

which, when combined with cash available under

the provisions of section two [§ 18-12B-2] of

this article, will be sufficient to finance

the costs of the following purposes and

projects:

(1) Refunding of all bonds issued and

outstanding under and pursuant to the

provisions of article eleven-B [§ 18-11B-1 et

seq.] of this chapter;

(2) A building to house the music, arts

and theatre programs at Shepherd College, at a

cost not to exceed two million five hundred

thousand dollars;

(3) A field house at West Liberty State

College at a cost not to exceed two million

seven hundred thousand dollars;

(4) A shop and laboratory building at

West Virginia State College at a cost not to

exceed two million six hundred thousand

dollars;

(5) A multipurpose physical education

facility at Marshall University, at a cost not

to exceed eighteen million dollars;

(6) A new football stadium at West

Virginia University (at a different location

than the existing stadium) at a cost not to

exceed twenty million dollars; and

(7) An all-purpose shell building for

sports and physical education at West Virginia

University, at a cost not to exceed four

million five hundred thousand dollars.

In the event that private real property

is acquired in connection with the above

enumerated projects, the board shall reimburse

individuals, families and business concerns

for relocation costs incurred as a consequence

of being displaced by such acquisition. With

respect to payment of such relocation costs,

the board shall follow the sare procedure and

be subject to the same limitations as required

for the commissioner of highways under section

twenty [§ 17-2A-20] article two-A, chapter

seventeen of this Code and _ regulations

promulgated pursuant thereto, but in no event

shall such payments exceed the sum of three

hundred dollars for individuals and families

and two thousand five hundred dollars for

business concerns. (1977, c. 90.)

§ 18-12B-2. State system tuition fee special

Capital improvements fund in

state treasury; collections to be

paid intc special fund; authority

of board of regents to pledge

such collections as security for

revenue bonds; authority of board

to finance projects on a cash

basis.

There is created in the state treasury a

State system tuition fee special capital

improvements fund to be expended by the board

of regents for the benefit of the. state

institutions of higher education, whch shall

include any college, university or community

college under its supervision, management and

control.

On and after the first day of July, one

thousand nine hundred seventy-seven, the board

of regents may periodically transfer from the

special nonrevolving West Virginia University

Capital improvements fund created in the state

treasury pursuant to the provisions of article

eleven-B [§ 18-11B-1 et seq.] of this chapter,

and from the special non revolving Marshall

University capital improvements fund created

in the state treasury pursuant to the

provisions of article twelve-A [§18-12A-1 et

seq.] of this Chapter, into the state system

tuition fee special capital improvements fund

moneys in excess of the amount pledged for the

payment of the principal of, interest and

redemption premium, if any, on any revenue

bonds or revenue refunding bonds issued

pursuant to such article eleven-B or twelve-A

[§ 18-11B-1 et seq. or § 18-12A-1 et seq.]

prior to the first day of July, one thousand

nine hundred seventy-seven. Said Marshall

hia SIRS le

University capital improvements fund is hereby

continued notwithstanding the retirement of

outstanding bonds issued pursuant to_ such

article twelve-A [§ 18-12A-1 et seq.], but on

and after the first day cof July, one thousand

nine hundred seventy-seven, no bonds shall be

issued pursuant to article twelve-A [§

18-12A-1 et seq.], nor shall any moneys be

expended (unless the board of regents shall by

board action have made a commitment with

respect thereto) pursuant to such article

twelve-A [§ 18-12A-1 et seq.]. On and after

the first day of July, one thousand nine

hundred seventy-seven there shall be paid

directly into such state system tuition fee

special capital improvements fund subject to

the prior lien and pledge, if any, of

outstanding bonds issued pursuant to the

provisions of articles eleven-B and twelve-A

[§§ 18-11B-1 et seq. and 18-12A-1 et seq.] of

this chapter all tuition fees collected under

the provisions of section one [§ 18-24-1],

article twenty-four, chapter eighteen of this

tuition fee special capital improvements fund

as may be needed to meet the requirements of

any revenue bond issue or issues authorized by

this article, including the payment of

principal of, interest and redemption premium

if any, on such revenue bonds, the

establishing and maintaining of a reserve fund

or funds for the payment of the principal of,

interest and redemption premium, if any, on

such revenue bond issue or issues when other

moneys pledged may be insufficient therefor

and including such additional protective

pledge of revenues and fees as the board of

regents in its discretion may provide by

resolution authorizing the issue of such bonds

and in any trust agreement made in connection

therewith, and the board of regents may

further provide in such resolution and in such

trust agreement, for such priorities on the

revenues and fees paid into such state system

tuition fee special capital improvements fund

as may be necessary for the protection of the

prior rights of the holders of bonds issued at

different times under the provisions of this

article.

Any balance remaining in the state system

tuition fee special capital improvements fund

after the board of regents has issued bonds

authorized by this article, and after the

requirements of all funds including reserve

funds established in connection with the bonds

issued pursuant to this article have been

satisfied, may be ont (i) for the redemption

of any of the outstanding bonds’ issued

hereunder which by their terms are _ then

redeemable, or for the purchase of such bonds

at the market price, but at not exceeding the

price, if any, at which such bonds shall in

the same year be redeemable, and all bonds

redeemed or purchased shall forthwith be

canceled and shall not again be issued or (ii)

for any lawful purpose for which the board of

regents may expend funds.

The board of regents, in its discretion,

may use the moneys in such state system

tuition fee special capital improvements fund

to finance the cost of projects and purposes

on a cash basis. Any pledge of moneys in such

fund for revenue bonds shall be a prior and

superior charge on such fund over the use of

any of the moneys in such fund to pay for the

cost of any project or purpose on a cash

basis: Provided, that except for the projects

and purposes expressly enumerated in section

one [§ 18-12B-1] of this article, any

expenditures from such fund, other than for

the retirement of revenue bonds, may only be

made by the board to meet the cost of a

predetermined capital improvements program for

one or more of the state institutions of

higher education, in such order or priority as

shall have been agreed upon by the board of

regents and presented to the governor for

inclusion in the annual budget bill, and only

with the approval of the legislature as

indicated by direct appropriation for the

purpose. (1977, c. 90.)

§ 18-12B-3. Board of regents to fix and

collect fees.

The board of regents shall fix,

establish, maintain and collect the tuition

fees provided for in section one [§ 18-24-1],

article twenty-four, chapter eighteen of this

Code, from students at all state institutions

of higher education other than (unless the

board of regents shall otherwise determine by

resolution) tuition fees from students

attending community colleges, in amounts at

least sufficient, at all times, after

depositing (subject to, or until termination

of, the lien and pledge referred to in section

two [§ 18-12B-2] of this article) in the

special nonrevolving Marshall University

Capital improvements fund, and the _ special

nonrevolving West Virginia University capital

improvements fund referred to in section two

[§ 18-12B-2] of this article such tuition fees

as are now required to be deposited therein

pursuant to section one [§ 18-24-1], article

twenty-four, chapter eighteen of this Code, to

provide revenues for deposit in the _ state

system tuition fee special capital

improvements fund which are adequate to pay

the principal of, interest and redemption

premium, if any, on the bonds authorized to be

issued pursuant to this article as the same

mature and become due and to make all reserve

and other payments to be required by the

proceedings which authorize such bonds, and to

provide any additional protective pledge of

revenues and fees and reserve or other

payments as the board of regents may in its

discretion require by the resolution

authorizing any issue of bonds pursuant to

this article and any trust agreement made in

connection therewith, and to make all other

payments required by this article or any such

proceedings, resolutions or trust agreements.

(1977, c. 90.)

§ 18-12B-4. Issuance of revenue bonds; use of

proceeds; bonds exempt from

taxation.

The issuance of revenue bonds under the

provisions of this article shall be authorized

from time to time by resolution or resolutions

of the board of regents, which shall set forth

the proposed major renovations, repairs and

safety upgrading and capital improvements

authorized by section one [§ 18-12B-1] of this

article; and shall provide for the issuance of

bonds in amounts sufficient, when sold as

hereinafter provided, to provide moneys deemed

by the board of regents sufficient to pay such

costs, less the amounts of any other funds

available for said costs from any other moneys

of the board of regents available therefor or

from any appropriation, grant or gift

therefor. Such resolution shall prescribe the

rights and duties of the bondholders and the

board of regents, and for such purpose may

prescribe the form of the trust agreement

hereinafter referred to. The bonds may be

issued from time to time, in such amounts,

shall be of such series, bear such date or

dates, mature at such time or times not

exceeding forty years from their respective

dates, bear interest at such rate or rates; be

in such denominations; be in such form, either

coupon or registered, carrying such

registration, exchangeability and

interchangeability privileges be payable in

such medium of payment and at such place or

places within or without the State; be subject

to such terms of redemption at such prices not

exceeding one hundred five percent of the

principal amount thereof; and be entitled to

such priorities on the revenues and fees paid

into the state system tuition fee special

Capital improvements fund as may be provided

in the resolution authorizing the issuance of

the bonds or in any trust agreement made in

connection therewith. The bonds’ shall be

signed by the governor, and by the president

or vice president of the board of regents,

under the great seal of the State, attested by

the secretary of State, and the coupons

attached thereto shall bear the facsimile

Signature of the president or vice president

of the board of regents. In case any of the

officers whose signatures appear on the bonds

or coupons cease to be such officers before

the delivery of such bonds, such signatures

shall nevertheless be valid and sufficient for

all purposes the same as if such officers had

remained in office until such delivery. Such

revenue bonds shall be sold in such manner as

the board of regents may determine to be for

the best interests of the State.

Any pledge of funds and fees for such

revenue bonds made by the board of regents

shall be valid and binding between the parties

from the time the pledge is made; and the

funds so pledged shall immediately be subject

to the lien of such pledge without any further

physical delivery thereof or further act. The

lien of such pledge shall be valid and binding

against all parties having claims of any kind

in tort, contract or otherwise, irrespective

of whether such parties have notice of the

lien of such pledge, and such pledge shall be

a prior and superior charge over any other use

of such funds so pledged.

The proceeds of- such bonds shall be used

solely for the payment of the cost of those

major renovations, repairs and safety

upgrading and capital improvements as

generally and specifically set forth in

section one [§ 18=-]12B-1] of this article, and

shall be deposited in the state treasury in a

special fund to be disbursed as provided by

law for the disbursement of any other state

funds. If the proceeds of such bonds, by

error in calculations or otherwise, shall be

less than the cost of such major renovations,

repairs and safety upgrading and capital

improvements, additional bonds may in like

manner be issued to provide the amount of the

deficiency; and unless otherwise provided for

in the resolution or trust agreement

hereinafter mentioned, such additional bonds

shall be deemed to be of the same issue, and

shall be entitled to payment from the same

fund, without preference or priority, as the

bonds before issued for major renovations,

repairs and safety upgrading and capital

improvements. If the proceeds of bonds issued

for such major renovations, repairs and safety

upgrading and capital improvements_ shall

exceed the cost thereof, the surplus may be

used for such other capital improvements as

the board of regents may determine or in such

other manner as the resolution authorizing

such bonds may provide. Prior to the

preparation of definitive bonds, the board

may, under like restrictions, issue temporary

bonds with or without coupons, exchangeable

for definitive bonds upon the issuance of such

definitive bonds. The term "cost," as used in

this section, shall be deemed to include all

of the items contemplated by the use of that

term in section one [§ 18=-12B-1] of this

article.

After the issuance of any of such revenue

bonds, the tuition fees at the_- state

institutions of higher education pledged

therefor shall not be reduced as long as any

of such revenue bonds are outstanding and

unpaid except under such terms, provisions and

conditions as shall be contained in the

resolution, trust agreement or other

proceedings under which such revenue bonds

were issued.

Such revenue bonds and the revenue

refunding bonds, and bonds issued for combined

purposes shall, together with the interest

thereon, be exempt from all taxation by the

State of West Virginia, or by any county,

school district, municipality or political

subdivision thereof. (1977, c. 90.)

§ 18-125-5. Issuance of revenue refunding

bonds; use of moneys; power to

enter into escrow agreements;

call for redemption.

The issuance of revenue refunding bonds

under the provisions of this article shall be

authorized by resolution of the board of

regents and shall otherwise be subject to the

limitations, conditions and provisions of

section four [§ 18-12B-4]) of this article.

Such revenue refunding bonds may be issued in

an amount at the option of the board of

regents sufficient to pay either in full or

together with interest earned on the

investment of the proceeds thereof, whether or

not at the time of the issuance of the revenue

refunding bonds the hereafter mentioned bonds

are payable or callable for optional

redemption, (1) the principal of any

outstanding bonds heretofore issued pursuant

to the provisions of article eleven-B

[§ 18-11B-1 et seq.] of this chapter or this

article (hereinafter referred to as_ the

"outstanding bonds"); (2) the redemption

premium, if any, on such outstanding bonds or

the prior redemption thereof; (3) the interest

due and payable on such outstanding bonds to

and including the first day upon which said

outstanding bonds are callable prior to

maturity, not exceeding, however, ten years

from the date of issuance of such revenue

refunding bonds, or the dates upon which the

principal of said outstanding bonds mature

before such first date on which the same are

callable prior to maturity, including any

interest theretofore accrued and unpaid; and

(4) all expenses of the issuance and sale of

said revenue refunding bonds, including all

necessary financial and legal expenses, and

also including the creation of initial debt

service reserve funds. Any moneys in funds

pledged with respect to the outstanding bonds

may be used for any or all of the purposes

stated in (1), (2), (3) and (4) above or may

be deposited in a sinking fund or reserve fund

or other funds for the issuance of bonds which

have been issued wholly or in part for the

purpose of such refunding. Such amount of the

proceeds of the revenue refunding bonds as

shall be sufficient for the payment of the

principal of, interest and redemption premium,

if any, on’ such outstanding bonds which will

not be immediately due and payable shall be

deposited in trust, for the sole purpose of

making such payments, with the treasurer of

the State of West Virginia or the _ state

Sinking fund commission. Any of the moneys so

deposited in trust may, prior to the date on

which such moneys will be needed for the

payment of principal of, interest and

redemption premium, if any; on such

outstanding bonds, be invested and reinvested

as determined by the board of regents, in

whole or in part: (a) in direct obligations

issued by the United States of America or one

of its agencies or in direct obligations

of the State of West Virginia, (b) in

obligations unconditionally guaranteed by the

United States of America as to principal and

interest, or (c) in certificates of deposit of

a banking corporation or association which is

a member of the federal deposit insurance

corporation, or successor; but any such

certificates of deposit must be fully secured

as to both principal and interest by pledged

collateral consisting of direct obligations of

or obligations guaranteed by the United States

of America, or direct obligations of the State

of West Virginia, having a market value,

excluding accrued interest, at all times at

least equal to the amount of the principal of

and accrued interest on such certificates of

deposit. Any such investments must mature, or

be payable in advance of maturity at the

option of the holder, and must bear interest

in such manner as to provide funds which,

together with uninvested money, will be

sufficient to pay when due or called for

redemption the bonds refunded, together with

interest accrued and to accrue thereon and

redemption premiums, if any, and such

refunding bonds proceeds or obligations so

purchased therewith shall be deposited in

escrow and held in trust for the payment and

redemption of the bonds refunded: Provided,

that if interest earned by any investment in

such escrow is shown to be in excess of the

amounts required from time to time for the

payment of interest on and principal of the

refunded bonds, including applicable

redemption premium, then such excess may be

withdrawn from escrow and disbursed in such

Manner as the board of regents’ shall by

resolution determine, subject to the

provisions of section two [§ 18-12B-2] of this

article. Any moneys in the sinking or reserve

funds or other funds maintained for. the

outstanding bonds to be refunded may be

applied in the same manner and for the same

purpose as are the net proceeds of refunding

bonds or may be deposited in the special fund

or any reserve funds established for account

of the refunding bonds.

The authority to issue revenue refunding

bonds shall be in addition to any other

authority to refund bonds conferred hy law.

The board of regents shall have power to

enter into such escrow agreements and to

insert therein such protective and other

covenants and provisions as it may consider

necessary to permit the carrying out of the

provisions of this article and to insure the

prompt payment of principal of anc interest

and redemption premiums on the revenue bonds

refunded.

Where any revenue bonds to be refunded

are not to be surrendered for exchange or

payment and are not to be paid at maturity

with escrowed obligations, but are to be paid

from such source prior to maturity pursuant to

call for redemption exercised under a right of

redemption reserved in such revenue bonds, the

board of regents shall, prior to the issuance

of the refunding bonds, determine which

redemption date or dates shall be used, call

such revenue bonds for redemption and provide

for the giving of the notice of redemption

required by the proceedings authorizing such

revenue bonds. Where such notice is to be

given at a time subsequent to the issuance of

the refunding bonds, the necessary notices may

be deposited with the state sinking fund

commission or the bank acting as escrow agent

of the refunding bond proceeds and the escrow

agent appropriately instructed and authorized

to give the required notices at the prescribed

time or times. If any officer of the public

body signing any such notice shall no longer

be in office at the time of the utilization of

the notice, the notice shall nevertheless be

valid and effective for its intended purpose.

(1977, C. 90.)

§ 18-12B-6. Bonds may be issued for combined

purposes.

The board of regents may authorize by one

or more resolutions a single issue or bonds

for the combined purposes of refunding the

outstanding bonds as herein authorized and

financing one or more of the major

renovations, repairs and safety upgrading and

capital improvements herein authorized.

(1977, c. 90.)

§ 18-12B-7. Bonds shall be negotiable

instruments.

The revenue bonds, revenue’ refunding

bonds and bonds issued for combined purposes

under the provisions of this article shall,

independently of the requirements of any other

provision of law and solely by virtue of the

provisions of this section, be and have all

the qualities and incident of negotiable

instruments. 2977, Cs. 96.)

§ 18-12B-8. Trust agreements for holders of

bonds.

The board of regents may enter into an

agreement or agreements with any trust

company, or with any bank having the powers of

a trust company, either within or outside the

State, to act as trustee for the holders of

bonds issued hereunder, setting forth therein

such duties and containing such legally

binding covenants of the board of regents with

the holders of the bonds in respect to the

payment of the bonds, the fixing, establishing

and collecting of the fees hereinbefore

referred to; the acquisition, construction,

improvement, maintenance, operation, repair

and insurance of authorized major renovations,

repairs and safety upgrading and capital

improvements; the custody, safeguarding and

disposition of the proceeds of the bonds, and

the moneys in such special funds, sinking

funds, reserve funds, or any other moneys or

funds, notwithstanding provisions of this

article to the contrary; the security for

moneys on hand or on deposit, and the rights

and remedies of the trustee and the holders of

the bonds, as may be agreed upon with the

purchasers of such bonds; provisions

restricting the individual right of action of

bondholders as is customary in trust

agreements respecting bonds and debentures of

municipal corporations, protecting and

enforcing the rights and remedies of the

trustee and the bondholders; and the

provisions as to any other matters which are

deemed necessary and advisable by the board of

regents in the best interests of the State and

to enhance the marketability of the bonds.

Any such agreement entered into by the board

of regents shall be binding in all respects on

such board and its successors from time to

time in accordance with the terms thereof; and

all the provisions thereof shall be

enforceable by appropriate proceedings at law

or in equity, or otherwise. (1977, c. 90.)

§ 18.12B-9. Sinking fund for payment of

bonds.

From the state system tuition fee special

capital improvements fund the board of regents

shall make periodic payments to the _ state

sinking fund commission in an amount

sufficient to meet the requirements of any

issue of bonds sold under the provisions of

this article, as may be specified in the

resolution of the board authorizing the issue

thereof and in any trust agreement entered

into in connection therewith. The payments so

made shall be placed by the commission in a

special sinking fund which is hereby pledged

to and charged with the payment of the

principal of the bonds of such issue and the

interest thereon, and to the redemption or

repurchase of such bonds, such sinking fund tc

be a fund for all bonds of such issue without

distinction or priority of one over another,

except as may be provided in the resolution

authorizing such issue of bonds. The moneys

in the special sinking fund, less such reserve

for payment of principal and interest and

redemption premiums, if any, aS may be

required by the resolution of the board of

regents, authorizing the issue and any trust

agreement made in connection therewith, may be

used for the redemption of any of the

outstanding bonds payable from such fund which

by their terms are then redeemable, or for the

purchase of bonds at the market price, but at

not exceeding the price if any, at which such

bonds shall in the same year be redeemable;

and all bonds redeemed or purchased shall

forthwith be canceled and shall not again be

issued. (1977, c. 90.)

§ 18-12B-10. Credit of State not pledged.

No provisions of this article shall be

construed to authorize the board of regents at

any time or in any manner to pledge the credit

or taxing power of the State, nor shall any of

the obligations or debts created by the board

under the authority herein granted be deemed

to be obligations of the State. (1977, c.

90.)

§ 18-12B-11. Attorney general or his duly

appointed legal representative

to serve as bond counsel.

The attorney general, or his- duly

appointed legal representative, shall serve as

bond counsel and shall be responsible for the

issuance of a final approving opinion

regarding the legality of the sale of bonds

under this article. (1977, c. 90.)

§ 18-12B-12. Powers of board are

supplemental; conflicting laws

superseded.

The powers conferred by this article

shall be in addition and supplemental to the

existing powers of the board of regents. The

provisions of any other law or laws

conflicting with the provisions of this

article shall be and the same are hereby

superseded to the extent of any such conflict.

(1977, c. 90.)

WEST VIRGINIA CODE § 18-11E-1 ET SEQ.

§ 18-l1lE-1. Definition of board; cost of

construction, reconstructing,

remodeling, repairing, improving,

extending, equipping or

furnishing the football stadium

or other athletic facilities of

Marshall University to be

financed by revenue bonds or

notes.

(a) Notwithstanding the provisions of

section one [§ 18-l=-1], article one of this

chapter, the word “board,” when used in this

article means the West Virginia board of

regents.

(b) For the purpose of financing the

cost of any or all of the = following:

Constructing, reconstructing, remodeling,

repairing, improving, extending, equipping or

furnishing the football stadium or other

athletic facilities of Marshall University,

the board periodically may issue negotiable

bonds or notes of the State in a principal

amount, not in excess of fifteen million

doliars, which, in the opinion of the board,

shall be necessary to finance said cost. Such

cost shall include, but not limited to, the

following: The cost of such construction,

reconstruction, remodeling, repair,

improvement, extension, equipment or

furnishings; studies and surveys; plans,

specifications, architecturas and engineering

services; legal, organizational, marketing or

other special services; interest and carrying

charges prior to, during and for six months

after completion of such construction,

reconstruction, remodeling, repair,

improvements, extension, equipment or

furnishing; the costs of issuing the bonds or

notes; and a reasonable reserve for payment of

the principal of and interest on the bonds or

notes.

renewal notes of the State, may issue revenue

bonds of the State to pay notes and, if it

considers refunding expedient may refund or

refund in advance bonds issued by the board by

the issuance of new bonds of the State,

pursuant to the requirements of section six

[§ 18-11E-6] of this article.

(d) Except as may otherwise be expressly

provided by the board, every issue of bonds or

notes by it shall be special obligations of

the State, payable solely from the revenues or

other moneys pledged therefor.

(e) The bonds and the notes shall be

authorized by resolution of the board, shall

bear such date and shall mature at such time

or times, in the case of any such note or any

renewals thereof not exceeding five years from

the date of issue of such original note, and

in the case of any such bond not exceeding

forty years from the date of issue, as such

resolution may provide. The bonds and notes

shall bear interest at such rate or rates, be

in such denominations, be in such form, either

coupon or registered, carry such registration

privileges, be payable in such medium of

payment and at such place or places and be

subject to such terms of redemption as the

board may authorize. The bonds and notes may

be sold by the board in the manner and at or

not less than the price the board determines.

The bonds and notes shall be executed by the

governor and the president of the board, both

of whom may use facsimile signatures. The

great seal of the State or a facsimile thereof

shall be affixed thereto or printed thereon

and attested, manually oor by facsimile

Signature, by the secretary of state, and any

coupons attached thereto shall bear the manual

or facsimile signature of the president of the

board. ta case any officer whose signature,

or a facsimile of whose signature, appears on

any bonds, notes or coupons ceases to be such

officer before delivery of such bonds or

notes, such Signature oor facsimile is

nevertheless sufficient for all purposes the

same as if he had remained in office until

such delivery; and, in case the seal of the

State has been changed after a facsimile has

been imprinted on such bonds or notes, such

facsimile seal will continue to be sufficient

for all purposes.

(f) A resolution authorizing bonds or

notes or an issue of bonds or notes under this

article may contain provisions, which shall be

a part of the contract with the holders of the

bonds or notes, as to any or all of the

following:

(1) With the written approval of the

director of athletics at Marshall University,

which approval shall be specific as to such

moneys pledged, pledging and creating a lien

on all or any portion of the moneys derived

from admission fees to athletic contests at

Marshall University to secure the payment of

the bonds or notes or of any issue of bonds or

notes, subject to those agreements with

bondholders or noteholders which then exist;

(2) Pledging and creating a lien on any

loan, grant or contribution to be received

from the federal, state or local government or

other source;

(3) Setting aside of reserves or sinking

funds and the regulation and disposition

thereof;

(4) Limitations on the purpose to which

the proceeds of sale of bonds or notes may be

applied and pledging the proceeds to secure

the payment of the bonds or notes or of any

issue of the bonds or notes;

(5) Limitations on the issuance of

additional bonds or notes and the terms upon

which additional bonds or notes may be issued

and secured;

(6) The procedure by which the terms of

a contract with the bondholders or noteholders

may be amended or abrogated, the amount of

bonds or notes the holders of which must

consent thereto and the manner in which the

consent may be given; and

(7) Vesting in a trustee or trustees the

property, rights, powers, remedies and duties

which the board considers necessary or

convenient.

(g) Prior to the preparation of

definitive bonds or notes, the board may under

like restrictions, issue temporary bonds or

notes, with or without coupons, exchangeable

for definitive bonds or notes, as the case may

be, upon the issuance of the latter. (1984,

c. 66.)

§ 18-ilE-2. Trustee for bondholders or

noteholders; contents of trust

agreement.

In the discretion of the board, any

bonds, refunding bonds or notes issued by the

board may be secured by a trust agreement

between the board and a corporate trustee,

which trustee may be any trust company or

banking institution having the powers of a

trust company within or without the State.

Any such trust agreement may contain

provisions as set forth in section. one

[§ 18-11E-1] of this article with respect to

the resolution. All expenses incurred in

Carrying out such agreement may be treated as

a part oof the cost oof constructing,

reconstructing, remodeling, repairing,

improving, extending, equipping or furnishing

the football stadium or other athletic

facility at Marshall University affected by

such agreement. (1984, c. 66.)

§ 18-11E-3. Payment of principal of and

premium, if any, and interest on

bonds and notes from all or any

portion of the moneys derived

from admission fees to athletic

contests at Marshall University;

approval of director of

athletics.

Whenever bonds or notes are issued for

financing the cost of any or all of the

following: Constructing, reconstructing,

remodeling, repairing, improving, extending,

equipping or furnishing the football stadium

or other athletic facilities of Marshall

University, the board may, with the written

approval of the director of the athletics at

Marshall University, pledge to the payment of

the principal of and premium, if any, and

interest on said bonds or notes all or any

portion of the moneys derived from adinission

fees to athletic contests and deposited into

the athletic accounts at Marshall University:

Provided, that said approval of the director

of athletics must specify all or any said

portions of the moneys to be pledged:

Provided, however, that no fees paid by

students other than the regular student

activity fee may be so pledged. (1984, c.

66.)

§ 18-11E-4. Enforcement of payment and

validity of bonds and notes.

(a) The provisions of this article and

any resolution or trust agreement’ shall

continue in effect until the principal of and

interest on the bonds or notes of the State

issued by the board have been fully paid, and

the duties of the board under this article and

any resolution or trust agreement shall be

enforceable by any bondholder or noteholder by

mandamus or other appropriate action in any

court of competent jurisdiction.

(b) The resolution authorizing the bonds

or notes shall provide that such bonds or

notes shall contain a recital that they are

issued pursuant to this article, which recitai

shall be conclusive evidence of their validity

and or the regularity of their issuance.

(1984, c. 66.)

§ 18-11E-5. Pledges; time; liens;

recordation.

Any pledge made by the board shall be

valid and binding from the time the pledge is

made: Provided, that the pledge by the board

of all or any portion of the moneys derived

from admission fees to athletic contests and

deposited into the athletic accounts at

Marshall University shall be subject to the

written approval of the director of athletics

at Marshall University. The moneys so pledged

and thereafter received by the board shall

immediately be subject to the lien of such

pledge without any physical delivery thereof

or further act. The lien of any such pledge

shall be valid and binding as against all

parties having claims of any kind in tort,

contract or otherwise against the board

irrespective of whether such parties have

notice thereof. (1984, c. 66.)

§ 18-11E-6. Refunding bonds.

Any bonds issued under the provisions of

this article and at any time outstanding may

at any time and from time to time be refunded

by the board by the issuance of refunding

bonds of the State in such amount as it may

deem necessary to refund the principal of the

bonds so to be refunded, together with any

unpaid interest thereon; to provide additional

funds for the purposes authorized by this

article; and tO pay any = premiums and

commissions necessary to be paid in connection

therewith. Any such refunding may be effected

whether the bonds to be refunded shall have

then matured or shall thereafter mature,

either by sale of the refunding bonds and the

application of the proceeds thereof for the

redemption of the bonds to be refunded

thereby, or, together with the interest on

such proceeds, for the payment of the bonds to

be refunded thereby and the interest thereon

as the same come due, or by exchange of the

refunding bonds for the bonds to be refunded

thereby: Provided, that the holders of any

bonds to be refunded shall not be compelled

without their consent to surrender their bonds

for payment or exchange prior to the date on

which they are payable or, if they are called

for redemption, prior to the date on which

they are by their terms subject to redemption.

Any refunding bonds issued under the authority

of this section shall - payable from the

revenues out of which the bonds to be refunded

thereby were payable, from other moneys or

from the principal of and interest on or other

investment yield from investments or proceeds

of bonds or other applicable funds and moneys,

including investments of proceeds of any

refunding bonds, and shall be subject to the

provisions contained in and shall be secured

in accordance with this article. (1984, c.

66.)

§ 18-11E-7. Purchase and cancellation of

bonds or notes.

The board, subject to such agreements

with bondholders or noteholders as may then

exist, shall have the power, out of any funds

available therefor, to purchase bonds,

including refunding bonds or notes of the

State issued by the board. If the bonds or

notes are then redeemable, the price of such

purchase shall not exceed the redemption price

then applicable plus accrued interest to the

next interest payment date thereon. If the

bonds or notes are not then redeemable, the

price of such purchase shall not exceed the

redemption price applicable on the first date

after such purchase upon which the bonds or

notes become subject to redemption plus

accrued © interest to such date.. Upon such

purchase, such bonds or notes’ shall _ be

canceled. (1984, c. 66.)

§ 18-11E-8. Federal and private assistance.

The board is authorized and empowered to

accept loans or grants or temporary advances

for the purposes of paying part or all of the

cost of constructing, reconstructing,

remodeling, repairing, improving, extending,

equipping or furnishing the football stadium

or other athletic facilities of Marshall

University and the other purposes herein

authorized from the United States of America

or such federal or public agency or department

of the United States or any private agency,

corporation or individual, which loans or

temporary advances may be repaid out of the

proceeds of the bonds authorized to be issued

under the provisions of this article, and to

enter into the necessary contracts and

agreements to carry out the purposes hereof

with the United States of America or such

federal or public agency or department of the

United States or with any private agency,

corporation or individual. (1984, c. 66.)

§ 18-11E-9. Vested rights; impairment.

The State pledges and agrees with the

holders of any bonds or notes issued under

this article that the State will not limit or

alter the rights vested in the board to

fulfill the terms of any agreements made with

the holders thereof, or in any way impair the

rights and remedies of the holders, until the

bonds or notes, together with the interest

thereon, and all costs and expenses. in

connection with any action or proceeding by or

on behalf of such holders, are fully met and

discharged. The board is authorized to

include its pledge and agreement of the State

in any agreement with the holders of such

bonds or notes. (1984, c. 66.)

§ 18-11E-10. Bonds and notes not debt of

State, county, municipality or

any political subdivision;

expenses incurred pursuant to

article.

Bonds, refunding bonds and notes issued

under the authority of this article and any

coupons in connection therewith shall not

constitute a debt or a pledge of the faith and

credit or taxing power of the State or of any

county, municipality or any other political

subdivision of the State, and the holders and

owners thereof shall have no right to have

taxes levied by the legislature or the taxing

authority of any county, municipality or any

other political subdivision of the State for

the payment of the principal thereof or

interest thereon, but such bonds and notes

shall be payable solely from the revenues and

funds pledged for their payment as authorized

by this article: Provided, that notes issued

in anticipation of the issuance of bonds or

bonds being refunded may be paid from the

proceeds of bonds which are payable solely

from revenues and funds pledged for their

payment as authorized by this article. All

such bonds and notes shall contain on the fact

thereof a statement to the effect that the

bonds or notes, as to both principal and

interest, are not debts of the State or any

county, municipality or political subdivision

thereof, but are payable solely from revenues

and funds pledged for their payment.

All expenses incurred in carrying out the

provisions of this article shall be payable

solely from funds provided under the authority

of this article. This articles does not

authorize the board to incur indebtedness or

liability on behalf of or payable by the State

or any county, municipality or any other

political subdivision. (1984, c. 66.)

§ 18-11E-11. Negotiability of bonds and

notes.

Other provisions of this Code to the

contrary notwithstanding, the bonds or notes

authorized to be issued by this article are

negotiable instruments within the meaning of

and for all purposes of the Uniform Commercial

Code, subject only to the provisions of the

bonds or notes for registration. (1984, c.

66.)

§ 18-11E-12. Bonds and notes legal

investments.

The provisions of sections nine and ten

([§$§ 12-6-9 and 12-6-10], article six, chapter

twelve of this Code to the contrary

notwithstanding, the bonds and notes of the

State issued by the board are securities in

which all public officers and bodies of the

State, including the West Virginia state board

of investments, all municipalities and other

political subdivisions of the State, all

insurance companies and associations and other

persons carrying on an insurance business,

including domestic for life and domestic not

for life insurance companies, all banks, trust

companies, societies for savings, building and

loan associations, savings and loan

associations, deposit guarantee associations

and investment companies, all administrators,

guardians, executors, trustees and other

fiduciaries and all other persons whatsoever

who are authorized to invest in bonds or other

obligations of the state may properly and

legally invest funds, including capital, in

their control or belonging to them. (1984, c.

66.)

§ 18-11E-13. Exemption from taxation.

The exercise of the powers granted to the

board by this article will be in all respects

for the benefit of the students and the

faculty and other employees at Marshall

University and the other people of the State,

for the improvement of their safety,

convenience and welfare, and is a public

purpose. As the operation and maintenance of

the football stadium oor other athletic

facilities at Marshall University constitutes

the performance of essential governmental

functions, the board shall not be required to

pay any taxes or assessments upon any property

acquired or used by the board or upon the

income therefrom. Any bonds and notes of the

State issued by the board, and all interest

and income thereon, shall be exempt from all

taxation by the State and any county,

municipality, political subdivision or agency

thereof, except inheritance taxes. (1984, c.

66.)

§ 18-11E-14. Article regarded as

supplementary.

This article shall be deemed to provide

an additional and alternative method for the

doing of the things authorized hereby and

shall be regarded as supplementary and

additional to powers conferred by other laws.

(1984, c. 66.)

§ 18-11E-15. Liberal construction.

This article, being necessary for the

safety, convenience and welfare of the

students and the faculty and other employees

at Marshall University and the other people of

the State, shall be liberally construed to

effectuate the purposes hereof. (1984, c. 66.)

B. OPINIONS, ORDERS, FINDINGS OF FACT

AND CONCLUSIONS OF LAW

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

HUGHES-BECHTOL, INC. *

CASE No. C-3-81-038

Plaintiff *

(Filed December 4, 1981)

vs. *

WEST VIRGINIA BOARD *

OF REGENTS

Defendant *

DECISION AND ENTRY OVERRULING PLAINTIFF'S

REQUEST FOR A PRELIMINARY INJUNCTION;

FINDINGS OF FACT AND CONCLUSIONS OF LAW;

DECISION AND ENTRY SUSTAINING DEFENDANT'S

MOTION TO DISMISS; JUDGMENT TO DEFENDANT;

ENTRY OF JUDGMENT; PLAINTIFF'S MOTION TO

COMPEL DISCOVERY AND SEEKING STATEMENT

OF COURT'S DISINCLINATION TO SUSTAIN

DEFENDANT'S MOTION TO DISMISS DEEMED MOOT;

TERMINATION ENTRY

I. Introduction

On February 9, 1981, Hughes-Bechtol, Inc.,

filed the within action against the West

Virginia Board of Regents (hereinafter Board),

requesting that the Court both declare the

arbitration clause in a contract between the

Plaintiff and Defendant to be binding on the

parties, and that it award damages in the

amount established by the arbitrator. The

facts before this Court indicate that on

April 5, 1979, Hughes-Bechtol and the Board

entered into a standard American Institute of

Architects (AIA) agreement, which provided

that Hughes-Bechtol would perform mechanical

work on the Multi-Purpose Physical Education

Facility (gymnasium) to be constructed at

Marshall University in Huntington, West

Virginia. The contract between the parties

also provided for arbitration in the event of

contractual disputes. Problems arose during

construction, and Hughes-Bechtol requested

arbitration. The Board refused to partici-

pate in arbitration proceedings, claiming

that the arbitration clause was of no effect,

since the Board had no authority to obligate

the State of West Virginia for amounts beyond

those which had been appropriated by the

state legislature. Moreover, since the Board

was immune from suit under principles of

sovereign immunity, the Board contended that

Hughes-Bechtol's only, and proper remedy lay

in the West Virginia Court of Claims, where

suits against the state were allowed to be

brought. Hughes-Bechtol proceeded through

arbitration anyway, and just prior to the

granting of the arbitration award, filed the

present action. The Board then filed a Motion

to Dismiss, requesting that the suit be dis-

missed, inter alia, for the aforementioned

reasons. However, before the Court issued a

ruling on Defendant's Motion to Dismiss,

Hughes-Bechtol filed a Motion for a Preliminary

Injunction on August 4, 1981, requesting that

the Court enjoin the Board from interfering

with its (Hughes-Bechtol's) contractual rights,

and from its performing the work left unfin-

ished under the contract entered into by the

parties. Appropriate Opposing and Reply

Memoranda were filed by the parties, and on

August 11, 1981, Plaintiff's Motion for a

Preliminary Injunction came on for hearing

before the Court, at which time the Court

received testimony on behalf of the Plaintiff,

from Philip Thompson, the Regional Director of

the Cincinnati Office of the American Arbitra-

tion Association, and from D. R. Hughes, Jr.,

the President of Hughes-Bechtol, Inc. Plain-

tiff also offered nine exhibits, which were

admitted into evidence. Defendant offered

testimony from Karl Egnatoff, the Vice-Presi-

dent of Administration for Marshall University,

and from Kenneth E. Grose, the Vice-Chancellor

for Administrative Affairs for the West

Virginia Board of Regents. Defendant addi-

tionally has filed with the Court, in conjunc-

tion with its Motion to Dismiss, the Affidavit

of Dr. Robert Ramsey, Jr., the Chancellor and

Chief Administrative Officer for the West

Virginia Board of Regents, to which is attached

the purchase order issued to Hughes-Bechtol by

the Commissioner of Finance and Administration

for the West Virginia Board of Regents.

After consideration of the above materials,

the Court indicated to the parties on August

13, 1981, that it would overrule the Plaintiff's

Motion for a Preliminary Injunction, and would

thereafter file a decision more fully out-

lining its reasoning. The Court also stated

that a decision would be forthcoming at the

same time with regard to the Motion to Dismiss

previously filed by the Defendant. After an

analysis of the facts and legal authority

pertinent to the matters under consideration,

the Court has concluded that: (1) Under the

balancing test followed by the Sixth Circuit

in Roth v. Bank of the Commonwealth, 583 F.2d

527 (6th Cir. 1978), cert. dism'd., 442 U.S.

925 (1979) (Roth), for ruling upon a motion for

preliminary injunction, the Plaintiff has not

demonstrated either a likelihood of success on

the merits, or that it will suffer irreparable

harm; (2) Defendant's Motion to Dismiss should

be granted, since the Court does not have

jurisdiction over the subject matter involved

in this action. Because Fed. R. Civ. P. 52(a)

requires specific findings of fact and

conclusions of law by the Court upon refusal

of interlocutory injunctions, the Court will

first set forth its determinations with

respect to the injunction request, and will

then follow with an analysis of the other

Matters brought forth in the Defendant's mo-

tion to dismiss.

II. Preliminary Injunction

A. Findings of Fact

Based on the testimony adduced at the

hearing held on August 1ll, 1981, and the

Exhibits, affidavit, and the pleadings pre-

sented herein, the Court makes the following

findings of fact:

Re Hughes-Bechtol, Inc. (also “contractor")

is a corporation organized under the laws of

the State of Ohio, with a principal place of

business in Ohio, and an annual volume of

business of approximately thirty-million

dollars ($30,000,000).

ae Marshall University is a state university

located in Huntington, West Virginia. Marshall

University has an enrollment of approximately

twelve thousand students, and participates in

Division I athletics.

3. In 1979, the West Virginia Board of

Regents (also “owner") solicited bids in con-

nection with the construction at Marshall

University of Henderson Center, which was

intended to be a multipurpose physical educa-

tion facility including a basketball arena

seating ten thousand persons, classrooms for

the department of health and physical educa-

tion, and offices for the athletic department.

Also included in this project was the renova-

tion of an existing building, Gullickson Hall.

4. Hughes-Bechtol was awarded a contract in

the amount of three million, one hundred sixty

two thousand, one hundred and seventy-three

dollars ($3,162,173.00) for the mechanical work

for the Multi-Purpose Physical Education

Facility. According to the terms of the

contract, the work to be performed was to be

commenced upon the date specified in the

"Notice to Proceed" given by the Board to

Hughes-Bechtol. From the time specified,

Hughes-Bechtol would have eight hundred and

fifty (850) consecutive calendar days to fully

complete the project.

S- On April 5, 1979, a purchase order was

issued by the State of West Virginia, Depart-

ment of Finance and Administration for the

above contract price.

6. The original anticipated completion date

for the Henderson Center Project was April 6,

1981, but at the time of the injunction hearing,

the physical activities center was scheduled

for occupancy on October 15, 1981, due to

delays in the project. At the time of the

hearing herein, the project was ninety percent

(90%) finished.

Ve During the first year of the contract,

little progress was made on the construction

project. Hughes-Bechtol requested an exten-

sion of time and payments for the increased

costs due to the delay, but the Board refused,

and instead directed that Hughes-Bechtol per-

form the unfinished work in the time remaining

under the contract.

8. Paragraph 7.9.1 of the contract between

the Board and Hughes-Bechtol provided that all

disputes arising between the owner and the

contractor would "be decided by arbitration in

accordance with the Construction Industry

Arbitration Rules of the American Arbitration

Association,” that the agreement to arbitrate

"shall be specifically enforceable under the

prevailing arbitration law," and that "the

award entered by the arbitrators shall be

final; and judgment may be entered upon it in

accordance with applicable law in any court

having jurisdiction thereof."

9. On December 11, 1980, Hughes~Bechtol

filed a demand for arbitration with the

Cincinnati office of the American Arbitration

Association. The arbitration inquiry was

bifurcated, with consideration being first

given to whether the issue was one subject to

arbitration. On February 20, 1981, the

arbitrator ruled that the matter was arbitrable,

and notified the parties of his decision. A

hearing on the claims of Hughes-Bechtol was

held, and on June 9, 1981, after the filing of

the within lawsuit, the arbitrator issued his

decision, finding that Hughes-Bechtol was

entitled to an additional sum of five hundred

twenty-one thousand three hundred twenty-six

dollars and forty-eight cents ($521,326.48).

10. The Board did not participate directly

in the arbitration hearings, but did have a

legal representative present. On various

occasions, the Board and the West Virginia

Attorney General's Office advised Hughes-

Bechtol and the American Arbitration Associa-

tion that the Board of Regents was not

authorized to engage in binding arbitration.

ll. Paragraph 9.7 of the contract provided

that if an amount awarded through arbitration

was not paid by the owner, the contractor was

permitted to stop work. After the Board

refused payment of the arbitration award,

Hughes-Bechtol removed its work forces from

the Henderson Center construction site on

July 20, 1981.

12. The other contractors on the Henderson

Center project have agreed to pursue remedies

for contractual claims against the Board in

the West Virginia Court of Claims.

13. Vandalism at the University is minimal.

The only incidents testified to involved minor

tampering with fire equipment in the dormitories

on two occasions. In addition, Henderson

Center was evacuated once due to a bomb scare.

Bomr scares, however, occur with some frequency

at the University, because of the erroneous

belief by students that such a scare will

result in the cancellation of clases.

14. The Board and Hughes-Bechtol continued

to attempt to negotiate, but on August 3, or

4, 1981, Hughes-Bechtol was advised that it

would not be possible for Marshall University

to pay seven or eight hundred thousand dollars

in additional claims on the Henderson Center

project.

15. On Tuesday, August 4, 1981, Hughes-

Bechtol removed approximately two hundred

thousand dollars ($200,000.00) worth of equip-

ment from the Henderson Center job site, and

from warehouses in Huntington, West Virginia.

Between July 20, 1981, and the date of the

equipment removal, Hughes-Bechtol had employed

a project manager on the job site. Although

the equipment had been at the job site or in

warehouses for at least one year, Hughes-

Bechtol was concerned about the safety of the

equipment, based on the bomb scares at the job

site and the possibility of vandalism at both

the job site and the warehouses. Hiring a

twenty-four guard for the property may have

been less expensive than moving the equipment

to Dayton. Hughes-Bechtol did not attempt to

find other warehouses in the Huntington area

to accommodate the property.

26. Hughes-Bechtol's sole claimed damage

justifying a preliminary injunction is that,

on future bids, it will be required to dis-

close on the bidding qualification statement

that it had failed to finish work awarded to

it. This would preclude Hughes-Bechtol from

being considered for a bid by some employers.

The bidding qualification statement also pro-

vides for an explanation of why the work

awarded was not finished.

17. If a preliminary injunction should be

granted, the University would be unable to

start its basketball season and intramural

programs as scheduled. Approximately five

thousand tickets have already been sold for

the first game of the season. In addition, an

injunction would have an effect on the academic

program of the University. Since the new

facility is constructed so as to "wrap around"

an existing structure, classrooms already in

existence will be unavailable because of poor

ventilation. Finally, an injunction would

cause the loss of the jobs of the approximately

oe - a ee

one hundred and thirty other construction

employees presently working at the Henderson

Center site.

18. Payments for the Henderson Center project

come from the State treasury of West Virginia.

The project was financed by a public bond sale,

with student revenues for future years obli-

gated to pay for the project. All funds

expended by the Board of Regents are state

funds from the state treasury and may only be

spent pursuant to an appropriation by the West

Virginia legislature. All funds received by

the Board from all other sources such as

federal funds or gifts must be deposited in the

state treasury and may be expended only for

their specified purposes, and after appropria-

tion by the West Virginia legislature.

19. If Hughes-Bechtol does not complete its

contractual obligations, the Board intends

to secure other contractors to perform the

work.

20. The State of West Virginia has authorized

suit to be brought against the State in the

West Virginia Court of Claims.

B. Conclusions of Law

In Roth, 583 F.2d 527 (6th Cir. 1978),

cert. dism'd., 442 U.S. 925 (1979), the Sixth

Circuit indicated that the following approach

should be utilized in determining whether

injunction relief should be granted:

In addition to assessing the like-

lihood of success on the merits, the

Court must consider the irreparability

of any harm to the plaintiff, the

balance of injury as between the

parties, and the impact of the ruling

on the public interest.

Id. at 537-538, quoting with approval from,

Metropolitan Detroit Plumbing & Mechanical

Contractors Ass'n. vs. H.E.W., 418 F.Supp. 585,

586 (E.D. Mich. 1976) (Detroit Plumbing v.

H.E.W.). While there has been an ostensible

conflict in the Sixth Circuit's interpretation

of precisely what degree of likelihood of

success is required, compare: Ohio v. Callaway,

497 F.2d 1235, 1240 (6th Cir. 1974)

(requiring possibility of success on the

merits), with Mason County Medical Ass'n v.

Knebel, 563 F.2d 256, 261, n.4 (6th Cir.

1977) (requiring strong or substantial likeli-

hood or probability of success on the merits),

the Roth Court approved the following explana-

tion, again quoting Detroit Plumbing v. H.E.W.,

418 F. Supp. 585, 586 (E.D. Mich. 1976):

This apparent disparity in the

wording of the standard merely

reflects the circumstance that

no single factor is determinative

as to the appropriateness of

equitable relief ... In general,

the iikelihood of success that need

be shown will vary inversely with the

degree of injury the plaintiff will

suffer absent an injunction...

[i.e., the greater the potential

harm to the plaintiff, absent an

injunction, the less likelihood of

success on the merits which need be

shown, and vice-versa). It thus

appears that the precise wording of

the standard for the likelihood of

success on the merits is not as

important as a realistic appraisal

of all the traditional factors

weighed by a Court of equity. A

balancing is required, and not the

mechanical application of a certain

‘form of words.

Roth, 583 F.2d at 3537-538. (Bracketed material

added ).

EI ae a

Balancing the above factors then, as

required, this Court finds that injunctive

oo 2 ep

aii,

relief is not appropriate under the circumstances _

involved herein. First, there appears to be

Slight likelihood that Plaintiff will be able

to mrevail on the merits in this Court. In

reaching such a determination, the Court has

carefully avoided any prediction with regard |

to the eventual outcome of the controversy

between Hughes-Bechtol and the Board, but

instead has premised its decision on the fact

that this Court has no jurisdiction over the

subject matter of the present dispute. Conse-

quently, Plaintiff will never be able to

succeed in obtaining a judgment on the merits

in this jurisdiction. Second, assuming that

Plaintiff could somehow "prevail" herein, it

has not demonstrated that it will sustain

irreparable harm without the issuance of an

injunction. Although Plaintiff has indicated

that it will be harmed in its ability to bid

on future construction contracts if it does

not finish the Marshall University contract,

an examination of the kidding qualification

statement relied upon by Plaintiff indicates

that an opportunity is provided thereon for an

explanation of the circumstances surrounding

any failure to complete a contract. Thus,

should Plaintiff eventually receive an award

from the West Virginia Court of Claims, which

would vindicate its refusal to complete the

contract, that fact alone should provide ample

justification for future employers. Therefore,

Plaintiff does have an adequate remedy at law.

Moreover, even at the present incomplete stage

of the proceedings, Hughes-Bechtol does have a

favorable arbitral decision which may be used

an an explanation for the work stoppage at

Marshall University, or for a refusal to finish

the contract.

Third, the balance of injury in the

event of issuance of an injunction, clearly

rests with the Board rather than with Hughes-

Bechtol. Since the Board is charged by law

with the supervision and management of the

educational policies and affairs of the

universities of West Virginia, W. Va. Code

§18-26-1 (1969), an interference with the

intramural, athletic, and educational programs

at Marshall University would negatively affect

the Board's ability to perform its legisla-

tively-mandated functions. Finally, assuming

arguendo that all the above considerations

militated in favor of Hughes-Bechtol, the

impact of a ruling permitting an injunction

would adversely serve the public interest of

the people of West Virginia, who would be

deprived indefinitely of their ability to

utilize the Henderson Center Facility, and

would be subjected to a disruption in educa-

tional opportunities.

Therefore, based on the foregoing

analysis, the Court makes the following

conclusions of law:

1. Plaintiff has little or no likeli-

hood of succeeding on the merits in

the present action;

2. Plaintiff has not demonstrated that

it does not have an adequate remedy

at law, or that it would suffer

irreparable harm absent an injunc-

tion;

3. The balance of harm in the event of

an injunction is in favor of the

Board of Regents rather than

Plaintiff;

4. Plaintiff has not established that

the issuance of a preliminary order

restraining construction at Hender-

son Center, or enjoining Defendant

from employing another mechanical

contractor, will not injure the

public interest.

Accordingly, Plaintiff's request for a pre-

liminary injunction must be, in all respects,

denied.

IIIT. Motion to Dismiss.

As was previously indicated, Defendant

filed a Motion to Dismiss on April 2, 1981,

requesting that the within action be dismissed

under Fed. R. of Civ. P. 12(b) (1), (2), (3),

(5), (6), and (7). While Defendant has raised

several grounds for dismissal such as

insufficiency of process, failure to join an

indispensable party, sovereign immunity, and

lack of subject matter jurisdiction, only two

grounds for Defendant's Motion need be address-

ed, as those matters provide more than ample

justification for dismissing this action.

Therefore, the Court will discuss only those

issues contained in branches I and II of

Defendant's Motion to Dismiss, that is, those

matters pertinent to subject matter jurisdic-

tion and sovereign immunity. For procedural

Clarity, this Court will first consider the

jurisdictional questions presented in Branch II

of Defendant's Motion. With these points in

mind, the Court now turns to an analysis of:

(1) whether diversity jurisdiction exists

between the Plaintiff and Defendant, and if

not, whether an alternate source of federal

jurisdiction is present; and (2) whether in any

event, suit against the Board of Regents is

prohibited under the doctrine of sovereign

immunity.

A. Jurisdiction

l. Diversity of Citizenship

Ne NEIDIO AI

Pegler nals

The complaint filed in this action states

that the Plaintiff, Hughes-Bechtol, Inc., is a

corporation organized under the laws of Ohio,

that the Defendant, the West Virginia Board of

Regents, is a citizen of the State of West

Virginia, that the amount in controversy

exceeds ten thousand dollars, and that jurisdic-

tion exists pursuant to 28 U.S.C. §1332 (1970).

§1332 provides that:

The district courts shall have original

jurisdiction of all civil actions

where the matter in controversy

exceeds the sum or value of $10,000,

exclusive of interest and costs, and

is between -- (1) citizens of

different states.

Although the parties herein are

technically "residents" of different states

and would thus seem to satisfy diversity re-

quirements, Defendant has maintained that the

Board is merely the arm, or alter ego, of the

State of West Virginia and cannot therefore be

considered a citizen for diversity purposes.

Plaintiff has replied to this contention by

pointing out that under West Virginia law, the

Board is a corporation, and was subjected to

diversity jurisdiction in Kondos v. West

Virginia Board of Regents, 318 F. Supp. 394

(S.D. W.Va. 1970), aff'd, 441 F.2d 1172 (4th

Cir. 1972) (Kondos).

The principle is well settled that a

weeks may not be considered a citizen in order

to establish diversity jurisdiction. In

Postal Telegraph Cable Co. v. Alabama, 155

U.S. 482 (1894) (Postal Telegraph), the State

of Alabama had initiated suit in an Alabama

state court against a New York corporation in

order to recover taxes owed to the State. Id.

at 482, 483. The Defendant removed the case

to federal court, but the Supreme Court ruled

that removal was improper, since neither

diversity nor federal jurisdiction was present.

Id. at 487. With respect to diversity, the

Court stated that:

A state is not a citizen. And,

under the Judiciary Acts of the

United States, it is well settled

that a suit between a State and a

citizen or a corporation of another

State is not between citizens of

different States; and that the Circuit

Court of the United States has no

jurisdiction of it unless it arises

under the Construction, laws or

treaties of the United States.

Id. (citations omitted).

In State Highway Comm'n of Wyoming v.

Utah Constr. Co., 278 U.S. 194 (1929) (Wyoming

Highway Comm'n), a Utah citizen filed a breach

of contract action against the Wyoming State

Highway Commission in a Wyoming district court,

alleging jurisdiction on the basis of diversity

of citizenship. id. at 198. Although the

State of Wyoming had not been named as a party

to the action, the Court held that since the

Suit was in effect against the State,

diversity of citizenship could not exist. Id.

at 199-200. The Court appeared to premise its

determination that the State was the real party

in interest on the following factors: (1) the

highway commission was merely an arm or alter

ego of the state, "with no funds or ability to

respond in damages,” id. at 199; and (2)

neither the Highway Commission nor its members

had assumed any direct or personal responsi-

bility by entering into the contract in

question. Id. Significantly, the Court found

it unnecessary to consider the effect of the

State's grant to the Highway Commission of the

power to sue or be sued, or its later with-

drawal of that power. Id. The Court indicated

that since the State was not considered to be

a citizen for purposes of diversity, "[N]o con-

sent by the State to submit itself to suit

could affect the question of diverse citizen-

ship.” Id. at 199-200. Thus, even should a

state consent to suit in federal court, that

act itself cannot create diversity jurisdic-

tion.

Like the Highway Commission in the

previously cited case, the Board of Regents is

a statutorily-created creature. W. Va. Code

§18-26-1 (1969) specifically provides that:

The purpose of the legislature in

the enactment of this article is

to establish a state agency to be

known as the West Wirctate Board

of Regents which will have the

general determination, control,

supervision and management of the

financial, business and educational

policies and affairs of all State

Colleges and Universities.

(emphasis added). Moreover, an examination of

West Virginia law reveals that the board has no

funds or ability to respond in damages but is

merely a conduit through which budget requests

from the state universities, and corresponding

appropriations from the West Virginia legis-

lature, flow. For example, W. Va. Code §18-26-8

(1981) lists certain duties of the Board, which

involve, inter alia,: (1) directing the prepara-

tion of budget requests for state universities;

(2) the submission of budget requests and

analysis of requests to the legislature; (3)

compilation of an annual report indicating the

fiscal performance of the state system of

higher education. Although some of these

duties were more specifically delineated by

the amendment of §18-26-8 in 1981, the essential

nature of the Board's function has not changed

from former practice. See former W. Va Code

§18-26-8 (1969).

Plaintiff has indicated, in a memorandum

filed after the injunction hearing (Doc. #20),

that the source of a state agency's funds is

often determinative of that agency's entitle-

ment to immunity from suit. Plaintiff argues

therefore that since the project in question

was financed by a self-liquidating bond issue

secured by student tuition fees, rather than by

general state revenues, the Board may not

claim immunity as an arm of the State. The

case cited by Plaintiff, Hope Natural Gas Co.

v. West Vir. Turnpike Comm'n, 143 W. Va. 913,

105 S.E. 2d 630 (1958) (Hope Natural Gas),

considered whether the West Virginia Turnpike

Commission was immune from suit as the alter

egoof the State of West Virginia. Id. at 926,

105 S.E. 2d 638. The Court analyzed the

statutory provisions creating the Commission,

which was authorized to collect tolls without

supervision by other State agencies, id. at

919, 105 S.&.2d 634; was permitted to con-

struct projects and to issue revenue bonds

payable solely from commission revenues, id.

at 918, 105 S.E. 2d 633; and was required under

§15 of its enabling statute to pay compensation

from Commission funds for all damages caused

to private property. Id. at 920-921, 930, 105

S.E. 2d 634, 639. The Court noted that pre-

vious state and federal decisions had denied

immunity to the Commission, id., and further

found that in any event, §15 operated as a

waiver of the Commission’s immunity. Id. at

930, 105 S.E. 2d 639-640. While the Court did

place emphasis on the factor of an agency's

independent financial existence, even where

that agency performed a governmental function,

id. at 924-925, 105 S.E. 2d 636-637, the Court

also stated that:

In determining whether a commission

or other body or entity created by

the state is in truth and effect a

part of the state, all of the features

or characteristics must be considered

and consequently each case must rest

upon the provisions of the entity's

own creation.

Id. at 928-929, 105 S.E.2d 639.

The case upon which Plaintiff has relied,

however, is not controlling upon this action,

due to the subsequent decision of the same court

in City of Morgantown v. Ducker, 153 W.Va. 121,

168 S.E. 24 298 (1969) (Morgantown). In Morgan-

town, West Virginia’s highest court considered

whether to issue a writ of mandamus requiring

the West Virginia Court of Claims to assume

jurisdiction of an action for the collection of

fire protection fees, brought against the

Board of Governors of West Virginia University.

Id. at 122, 168 S.E. 2d 299-300. The Court

determined that the Board was a state agency,

and an arm of the State, and ordered that the

writ be issued. Id. at 131-132, 168 S.E. 2d 304.

In so ruling, the Court distinguished Hope

Natural Gas as follows:

ell ts i i

The rights and powers conferred and

the duties imposed by the respective

statutes upon the board of Governors

of West Virginia University and the

West Virginia Turnpike Commission

differ materially and in many respects,

particularly with reference to funds

and moneys used and administere’ by

the board and by the commission. The

moneys accepted and received by the

board of governors and on which it

depends for its financial support are

paid into the State treasury, whereas

the moneys accepted and received by

the commission are not required to be

deposited in the State treasury but

are administered under the supervision

of the commission.

Id. at 131, 168 S.E. 2d 304.

After the Morgantown decision, the West

Virginia legislature amended the West Virginia

Code to create the West Virginia Board of

Regents, which was vested with the powers

previously held by the board of governors of

West Virginia University, W.Va.—Code §18-26-11

(1969), and those formerly held by the West

Virginia Board of Education, W.Va. Code §18-26-

12 (1969). In 1972, after these amendments

were adopted, the West Virginia Supreme Court,

citing Morgantown, ruled that the West Virginia

Board of Regents, as an arm of the state of

West Virginia, had the authority to acquire

land by condemnation without special legisla-

tive authority. West Virginia Board of Regents

v. Fairmont, Morgantown, and Pittsburgh R.R.

Co., 155 W.Va. 863, 866-867, 189 S.E.2d 40, 43

(1972) (emphasis added). These decisions indi-

cate that, in the opinion of West Virginia's

highest state court, the Board of Regents is an

arm, or alter ego, of the State of West

Virginia.

As a final matter, this Court notes that

in Kondos, 318 F. Supp. 394 (S.D. W.Va. 1970),

aff'd 441 F.2d 1172 (4th Cir. 1972), a West

Virginia district court conducted a thorough

survey of the applicable West Virginia Supreme

Court decisions, many of which have been cited

herein, and concluded that the West Virginia

Board of Regents, as an arm of the State of

West Virginia, was immune from suit under the

doctrine of scvereign immunity. Id. at 396-

397. That decision was upheld on appeal by the

Fourth Circuit as “proper for the reasons

stated by the District Judge." 441 F.2d at

1172. Plaintiff has, however, attempted to

distinguish the Kondos decision on several

grounds, none of which are legally correct.

For example, Plaintif‘ has contended that

diversity jurisdiction was permitted in Kondos,

and should therefore be found to exist herein

by this Court. (Doc. #10, p. 2). While Kondos

was filed as a diversity action, 318 F. Supp.

at 396, that does not mean that the requirements

for diversity jurisdiction were found to be

satisfied therein; the Kondos Court merely dis-

missed the action against the Board on the

alternative ground of sovereign immunity. In

this context, it must be emphasized that a

resolution of either issue requires a thres-

hold determination of whether the agency in

question is but an alter ego, or arm of the

State. Id.; Postal Telegraph, 155 U.S. 482

(1894); Wyoming Highway Comm'n, 278 U.S. 194,

199-200 (1929). Thus, the Kondos case cannot

be viewed as supporting a finding that

diversity jurisdiction is present herein, since

the same considerations involved in the dis-

missal therein due to sovereign immunity lead

this Court to conclude that the Board of Regents,

as an arm or alter ego of the State, cannot be

considered a citizen for diversity purposes.

The preceding discussion has illustrated

that the highest courts of West Virginia, both

federal and state, have spoken unequivocaly and

affirmatively on the issue of whether the

Board of Regents is an arm of the state.

Accordingly, this Court need inquire no further,

beyond commenting, in response to Plaintiff's

"funding source" argument, that the material

distinction noted in Morgantown, 153 W.Va. 121,

168 S.E. 2d 298 (1969), of payment of funds

into the State treasury, id. at 131, 168 S.E.

2d 304, still exists herein, whether the

Henderson Center project was financed by a

bond issue secured by student tuition fees, or

by general state revenues. In either event,

100

tuition fees and other funds collected by the

University are required to be deposited into

the State treasury. In this context, see: W.

Va. Code §18-24-1 (1981) (authorizing the

Board to fix tuition and fees for state uni-

versities); §§18-23-5, 18-23-7 (1969) (requiring

that all money belonging to the state, and

coming into the hands of the governing boards

of state universities be transmitted into the

State treasury, with expenditure therefrom

permitted only upon submission of requisitions

by the governing boards, and appropriation by

the state legislature).

Plaintiff has repeatedly asserted that

the inguiry into the Board's status and con-

duct is a "fact-specific" one (Doc. #8, p. 9;

Doc. #20, p. 2), and that theretore, at the

present stage of the proceedings, the matters

under consideration by the Court are not ripe

for determination.? Initially, the Court

notes that summary judgment is not required

herein because reference to the complaint and

101

the previously cited case law, of which the

Court can take judicial notice, obviates the

need for factual determinations, Moreover,

even assuming the application herein of Hope

Natural Gas, 143 W.Va. 913, 105 S.E.2d 630

(1958), the inquiry required by that case is

not factual, but is one into the legislative

provisions which have created the agency in

question. Jd. at 928-929, 105 S.E.2d 639. Be-

cause an analysis of the statutes creating the

Board has been conducted herein (although not

strictly necessary in view of the dispositive

rulings of the West Virginia courts), and has

revealed that the Board is an arm of the State

of West Virginia, this Court can find no further

barriers to concluding that the Board of

Regents may not be considered a citizen for

the purpose of invoking diversity jurisdiction.

Having determined then, that jurisdiction

trootnote located at end of opinion.

102

yp:

herein may not be premised upon diversity of

citizenship, the Court will next consider what

alternate jurisdictional grounds, if any, may

be present.

2. Other Jurisdictional Grounds

Although diversity jurisdiction does not

exist herein, Postal Telegraph, 155 U.S. 482

(1894), would still permit this Court to assume

jurisdiction over the present action if an

alternate basis of jurisdiction, such as federal

question jurisdiction, exists. Id. at 487.

Although the complaint herein alleges that a

federal question has arisen under the Eleventh

Amendment, the sole Eleventh Amendment issue

which has been presented is whether the

Plaintiff's claim against the Board is barred

under the doctrine of sovereign immunity.

This issue is merely an anticipation of a

defense and does not constitute an element of

Plaintiff's claim, which is for a declaratory

judgment and for the .nforcement of an arbi-

tration decision. As such, the Eleventh

103

Amendment issue does not invoke this Court's

federal question jurisdiction in light of the

Supreme Court's ruling in Phillips Petroleum

Co. v. Texaco, Inc., 415 U.S. 125 (1974),

wherein the Court stated that:

This Court has repeatedly held that,

in order for a claim to arise "under

the Constitution, laws, or treaties

of the United States," "a right or

immunity created by the Constitution

or laws of the United States must be

an element, and an essential one, of

the Plaintiff's cause of action."

- . . The federal questions "must be

disclosed upon the face of the

complaint, unaided by the answer."

Moreover, “the complaint itself will

not avail as a basis of jurisdiction

insofar as it goes beyond a statement

of the plaintiff's cause of action

and anticipates or replies to a

probable defense."

Id. at 127-128. (citations omitted). Conse-

quently, as Plaintiff's assertion of an

Eleventh Amendment issue does nothing more

than anticipate the sovereign immunity defense

which has in fact been raised by Defendant, no

federal question jurisdiction has been invoked

by the inclusion of that issue in Plaintiff's

complaint. In addition, although Plaintiff's

104

complaint requests a Declaratory Judgment,

under 28 U.S.C. §2201 (1958) and Fed. R. Civ.

P. 57, of the legal relations between the

parties, the Declaratory Judgment Act does not

extend the jurisdiction of the federal courts,

but is a procedural remedy which can only be

afforded where another basis of jurisdiction

already exists. Skelly Oil Co. v. Phillips

Petroleum Co., 339 U.S. 666, 671 (1950).

Finally while the potential application

herein of the United States Arbitration Act,

9 U.S.C. §§1 et seq. (1970) has not been

raised by Plaintiff's Complaint, the relevance

of that Act has been discussed by both parties

in various memoranda submitted to the Court.

Therefore, the Court will assume that Plaintiff

would, if offered an opportunity, amend its

Complaint to allege the application of the

United States Arbitration Act. In addition,

the Court assumes, for purposes of ruling on

this motion, that the contract herein involved

interstate commerce, as the Act only extends

105

to such contracts. 9 U.S.C. §§l1, 2 (1970).

As was previously noted herein, in order

for federal question jurisdiction to be

present, the right or immunity involved must

be created by the Constitution or laws of the

United States, and must be an essential element

of the Plaintiff's claim. Phillips Petroleum

Co. v. Texaco, Inc., 415 U.S. 125, it27-128

(1974). Assuming arguendo that Plaintiff would

allege the application of the Arbitration Act,

the Complaint herein would be brought pursuant

to 9 U.S.C. §4 (1970), which provides that upon

a party's failure to arbitrate under a written

arbitration agreement, the aggrieved party may |

petition a district court for an order directing

that arbitration proceed. Although the Act

would be an essential element of a plaintiff's

Claim, and is clearly a federal law, the Courts,

by looking to the wording of the Act itself,

have consistently held that the United States

Arbitration Act does not, in and of itself,

106

operate to invoke the jurisdiction of the

federal courts. Litton FCS, Inc. v. Pennsyl-

vania Turnpike Comm'n, 396 F. Supp. 579, 585

(E.D. Pa. 1974), aff'd mem. Litten Business

Systems, Inc. v. Pennsylvania Turnpike Comm'n,

511 F.2d 1394 (3rd Cir. 1975) (Litton) (cita-

tions omitted). One of the first major deci-

sions in this area was Robert Lawrence Co. v.

Devonshire Fabrics, Inc., 271 F. 2d 402 (2nd

Cir. 1959), cert. granted 362 U.S. 909 (1960),

petition for cert. dism'd per stipulation,

364 U.S. 801 (1961) (Robert Lawrence). In

that case, the Court noted that while new

substantive federal rights were created by

the Arbitration Act, suits involving the

Act did not provide an independent basis of

federal jurisdiction. Id. at 408 (citations

omitted). In so holding, the Court speci-

fically pointed to §§3, 4, and 8 of the Act,

which appeared to require a jurisdictional

basis other than the Arbitration Act for

actions brought in federal courts. Id.

107

This view has been followed in other jur-

isdictions. Commercial Metals Co. v.

Balfour, Guthrie and Co., LTD., 577 F. 2d

264, 268-269 (5th Cir. 1978); Collins Radio

Co. v. Ex-Cello Corp., 467 F. 2d 995, 996,

n. 1 (8th Cir. 1972); Monte v. Southern

Delaware County Authority, 321 F. 2d 870

(3rd Cir. 1963); Sear v. Cadillac Automobile

Co., 501 F. Supp. 1350, 1358 (D. Mass. 1980);

Litton, 376 F. Supp. 579, 585 (E.D. Pa. 1974),

aff'd mem. 511 F.2d 1394 (3rd Cir. 1975)2

In American Airlines, Inc. v. Louisville

and Jefferson County Air Board, 269 F.2d 81l

(6th Cir. 1959) (American Airlines), the Sixth

Circuit rendered a decision which appears to

comport with the generally accepted view of the

intended role of the Arbitration Act. In

American Airlines, since jurisdiction was

premised upon diversity, id. at 822, the Court

had no need to directly address that issue.

-Footnote located at end of opinion.

dass ¥ sth basta einai

AIAN) Nil eit Ae ots OL A es

nish ad aml

108

The Court did consider, inter alia, whether

Kentucky law or federal law would govern the

validity and enforceability of an arbitration

clause contained in leases entered into by

several airlines and the Louisville and Jef-

ferson County Air Board. Id. at 814-815. The

Court discussed the Arbitration Act, and

stated that:

Consideration of the legislative

history reveals that what the

Congress intended was merely to

overrule by legislation long-

standing judicial precedent, which

declared agreements to submit

judiciable controversies to arbi-

tration contrary to public policy,

on the ground that enforcement of

such agreements would oust the

courts of their jurisdiction.

Thus, the congressional purpose

was to make arbitration agreements

within the scope of the Federal

statute as effective [sic] enforce-

able as any other contract, and so

permit contracting parties thereby

to avoid, if they chose so to do,

the “delay and expense of litiga-

t2cn.”

Id. at 816. (citations omitted) (emphasis

added). The Court also noted that the

legislative history of the Act indicated that

""an arbitration agreement is placed upon the

109

same footing as other contracts.'" Id. (cita-

tion omitted). Although the Court did not

discuss the jurisdictional aspects of the

Arbitration Act, the above-quoted language

indicates the Court's awareness that the Act

did nothing more than eliminate established

judicial reluctance to enforce arbitration

clauses in contracts. Since federal jurisdic-

tion is unquestionably not present in an

ordinary contract case, even one involving

interstate commerce, unless the parties are of

diverse citizenship, the Sixth Circuit appears

to at least implicitly support those decisions

which have held that the United States Arbi-

tration Act contemplates a source of federal

jurisdiction other than itself in actions

involving the Act. As a final point pertinent

to analysis, this Court notes that a thorough

analysis of the case law pertinent herein has

not disclosed any Sixth Circuit decisions

wherein the Arbitration Act constitutes the

sole basis of jurisdiction. Therefore, having

110

concluded that Local 19, as discussed in Foot-

note 2, supra, does not dictate the decision

herein, and that later Sixth Circuit authority

indicates a contrary intent to that expressed

in Local 19, this Court will now briefly

explain its reasons for agreeing with the

weight of authority that in actions involving

the United States Arbitration Act, an inde-

pendent ground of federal jurisdiction is

required.

The starting point for inquiry must be the

Act itself, which the Supreme Court has indi-

cated should be read as a whole. Bernhardt v.

Polygraphic Co. of America, Inc., 350 U.S. 198,

201 (1956) (Bernhardt). 9 U.C.S. §1 (1970) de-

fines commerce as used in the Arbitration Act;

§2 provides that agreements to arbitrate in

contracts involving commerce shall be valid

and enforceable, and the remaining provisions

of the Act in general provide for certain pro-

cedures to be followed where parties have

agreed to arbitrate, but fail to do so, or

lll

where an award has been made, and is required

to be confirmed. As noted in Robert Lawrence,

271 F.2d 402 (2nd Cir. 1959), cert. granted,

362 U.S. 909 (1960), petition for cert. dism'd

per stipulation, 364 U.S. 801 (1961), certain

sections of the Act specifically contemplate a

jurisdictional basis other than the Arbitration

Act itself. Id. at 408. In particular, §4

provides that:

A party aggrieved by the alleged

failure, neglect, or refusal of

another to arbitrate under a writ-

ten agreement for arbitration may

' petition any United States district

court which, save for such agreement,

would have jurisdiction under Title

28, in a civil action or in admiralty

of the subject matter of a suit arising

Out of the controversy between the

parties, for an order directing that

such arbitration proceed in the manner

provided for in such agreement.

(emphasis added). Likewise, §8 gives the

Court jurisdiction to deal with maritime

cases, "if the basis of jurisdiction be a

cause of action otherwise justiciable in

admiralty." (Emphasis added). These clear

jurisdictional limitations comport with the

112

legislative history of the Act, which is devoid

of any interference that contracts containing

arbitration clauses were intended to invoke

federal jurisdiction where a contract without

such a clause could not. Representative Graham,

who authored the report accompanying the

arbitration bill submitted to the House of

Representatives, H.R. Rep. No. 96, 68th Cong.,

lst Sess. 1 (1924), emphasized during debate

on the bill in the House, that the bill "does

not involve any new principle of law...

creates no new legislation, grants no new

rights, except a remedy to enforce an agree-

ment in commercial contracts and in admiralty

contracts." 65 Cong. Rec. 1931 (1924) (remarks

of Rep. Graham). In addition, H.R. Rep. No.

96 stated that the Act was intended to alter

the common law doctrine whereby courts

refused to enforce such agreements, H.R. Rep.

No. 96, 68th Cong., lst Sess. l, 2 (1924),

and further stressed that "[a]rbitration

agreements are purely matters of contract,

113 |

and the effect of the bill is simply to make

the contracting party live up to his agreement.

-+. an arbitration agreement is placed upon

the same footing as other contracts, where it

belongs." Id. at 1 (emphasis added).

The Committee hearings held on the pro-

posed arbitration resolutions evidence a |

Similar understanding with regard to the Act's

limitations. Julius Cohen, who had assisted

in drafting the Arbitration Act inserted a

brief explaning the proposed Act's provisions

into the Committee record. Arbitration of

Interstate Commercial disputes: Joint Hearings

te 00 Re es eagle rs 2 2

on S. 1005 and H.R. 646 Before the suscom-

mittees of the Committees on the Judiciary,

68th Cong. lst Sess. 15, 33 (1924) (Statement

of Julius H. Cohen) (hereinafter Joint

Hearings). The brief stated that:

eae eh! vem

[A] provision for arbitration con-

tained in any contract which

involved maritime transactions ...

and interstate commerce ... is made

“valid, enforceable, and irrevocable," .

except upon the grounds for which any &

contract may be revoked. ’

114

The Federal Courts are given juris-

diction to enforce such agreements

whenever under the Judicial Code they

would normally have jurisdiction of a

controversy between the parties.

Id. at 34. (emphasis added)

Based on the above expressions of intent,

and the explicit jurisdictional limitations

contained in the Act itself, Congress

appears to have intended that an independent

basis of jurisdiction other than the United

States Arbitration Act would be required in

actions involving the Act.

One other matter remains for resolution,

and that is the effect of 9 U.S.C. §9 (1970),

which provides that:

If the parties in their agreement

have agreed that a judgment of the

court shall be entered upon the

award made pursuant to the arbitra-

tion, and shall specify the court,

then at any time within one year

after the award is made any party to

the arbitration may apply to the

court so specified for an order con-

firming the award, and thereupon the

court must grant such an order unless

the award is vacated, modified, or

corrected as prescribed in sections

10 and ll of this title. If no court

115

is specified in agreement of the

parties, then such application may

be made to the United States court

in and for the district within

which such award was made. Notice

of the application shall be served

upon the adverse party and there-

upon the court shall have jurisdic-

tion of such party as though he had

appeared generally in the proceeding.

The «ontract herein does contain a provision

stating that judgment may be entered upon an

arbitration award in any cour: having juris-

diction. §7.9.1. Further, as the arbitration

award upon which Plaintiff relies was appar-

ently rendered in this judicial district

(Doc. #1, 414, 415; Doc. #20, p. 1), §9 would

appear to permit this Court to enforce that

award. However, given the express statutory

directives in §§4 and 8, which limit the

district court's jurisdiction to cases wherein

the court would otherwise have subject matter

jurisdiction, and the Supreme Court's in-

struction that the Act be read as a whole,

Bernhardt, 350 U.S. 198, 201 (1956), this

116

Court cannot read §9 in so illogical a manner.

Such an interpretation would make jurisdiction

of actions brought on the basis of identical

contracts contingent upon whether the parties

involved sought to compel arbitration, or

merely wished confirmation of an award already

granted through arbitration. It is difficult

to perceive the basis for such a

jurisdictional distinction, because in both

situations, the ultimate result desired would

be the same. For a similar decision, refusing

to construe the Arbitration Act in a manner

which would result in "an odd patchwork of

individual statutes, bereft of any coherent

plan," see: Bangor Aroostock R.R. Co. v.

Maine Central R.R. Co., 359 F. Supp. 261, 263

(D.C. 1973). Cf£. Ballantine Books, Inc. v.

Capital Distributing Co., 302 F.2d 17, 19 (2nd

Cir. 1962) (concluding without discussion,

that on the basis of the Robert Lawrence

decision, an independent source of federal

jurisdiction was required in a proceeding

under §9)..

117

Again, the legislative history of the

Arbitration Act sheds light upon the intended

meaning of the Act. During the sub-committee

hearings held on the proposed Senate and House

Arbitration bills, the following exchange took

place:

Representative HICKEY. Without a

written agreement, Mr. Cohen, where

would an arbitration be held?

MR. COHEN. It would be held in

accordance with the direction of the

court; by direction of the court to

which you apply.

Representative HICKEY. And the

application would be made to _ the

court where the party asking for the

arbitration resides?

MR. COHEN. You would have to get

jurisdiction just as you do now in a

Federal court; by personal service.

Representative HICKEY. Where the

defendant lives?

MR. COHEN. Where the defendant

lives. That would mean practically

that you have to go to_ the

jurisdiction where the defendant is,

or wait until he comes into your

jurisdiction so that process may be

served upon him. The process is

exactly the same as in civil

procedure in the Federal courts.

118

Joint Hearings, 68th Cong., lst Sess. 18

(1924) (statement of Julius H. Cohen)

(emphasis added). In response to the above

colloquy, the Committee Chairman then said:

Here is the provision relating to that.

Representative HICKEY. The

fourth section?

The CHAIRMAN. This is on page 7, section

10, beginning with line 8 [reading]:

If no court is specified in the

agr:ement of the parties, then such

application may be made to the

United States court in and for the

district within which such award was

made. Notice of the application

shall be served upon the adverse

party.

Then this [continuing reading]:

119

If the adverse party is a resident

of the district within which the

award was made, such service shall

be made upon the adverse party or

his attorney as prescribed by law

for service of notice of motion in

an action in the same court.

That makes it very clear.

Id. at 18-19. This explanation contained in

the relevant legislative history indicates

that §9 was only intended as a guide to where

arbitration should take place when no

agreement had been made by the parties, and

was not intended as an independent grant of

jurisdiction in federal courts.

Based on the foregoing reasoning, the

Court concludes that in actions brought to

confirm arbitorial awards under §9 of the

Arbitration Act, the same prerequisite, of an

independent ground of federal jurisdiction,

applies as has been required in actions

involving other sections of the Act. Having

120

found no diversity jurisdiction between the

parties herein, and no basis for federal

jurisdiction other than the United States

Arbitration Act, the Court concludes that it

does not have subject matter jurisdiction over

the present controversy. Therefore,

Defendant's Motion to Dismiss must be granted.

Although this ruling is dispositive with

regard to the continuance of the present

action, the Court has determined to address as

well the sovereign immunity. arguments raised

by the Defendant.

C. Sovereign Immunity

The Defendant has maintained that the

within action must be dismissed because the

Board, as an arm of the State of West

Virginia, is immune from suit under the

doctrine of sovereign immunity. Defendant has

not specified under which portion of Fed. R.

Civ. P. 12(b), this ground of dismissal has

been raised, but there have been indications

by the Supreme Court that such a motion

relates to the subject matter jurisdiction of

121

the Court. Scheuer v. Rhodes, 416 U.S. 232,

236 (1974) (Rhodes). Therefore, the Court

will, on the basis of that ruling, consider

Defendant's motion as having been brought

pursuant to Fed. R. Civ. P. 12(b) (1), for lack

of subject matter jurisdiction. The Court

also notes that the standards applicable to

Rule 12(b) (1) and (b) (6) motions are the same.

Id. at 236. Thus, the Court must construe the

allegations of the complaint favorably to the

pleader, and must in addition follow the

accepted rule that "a complaint should not be

dismissed for failure to state a claim unless

it appears beyond doubt that the plaintiff can

prove no set of facts in support of his claim

which would entitle him to relief." Id.

citing Conley v. Gibson, 355 U.S. 41, 45-46

(1957).

Before engaging in the analysis required

for determining whether the present action

against the Board may be maintained, a few

comments are in order. First, although the

Supreme Court in Rhodes disapproved the

122

Gistrict court's dismissal of the case as a

premature decision "precluding any opportunity

for the plaintiff by subsequent proof to

establish a claim, 416 U.S. at 236, that

ruling does not mandate a similar decision

herein. Unlike the present case, Rhodes,

involved claims against individual state

officers for deprivation of federal rights.

Those matters were found by the Supreme Court

to be judicially cognizable and to not be

barred by the application of the Eleventh

Amendment. Id. at 237-238. With respect to

the alternate ground for dismissal, which had

been premised upon executive immunity, id. at

238, the Court indicated that since the

immunity to be accorded the executive officers

was qualified rather than absolute, id. at

242, 243, 247, and required a determination

with regard to whether the state officials

acted in good faith, id. at 250, a further

development of the factual background of the

action was required. Id. Implicit in the

Court's statements, however, is that where the

123

immunity involved is absolute, or is not

premised upon a factual question such as the

existence of good faith, a decision at the

pleading state is appropriate. Therefore,

Since the issue before this Court involves an

immunity which if present, will be absolute,

and further, necessitates resolution of no

factual matters, the Court concludes that

under Rhodes, it may properly proceed to

determine whether this action is barred under

the doctrine of sovereign immunity.

The Eleventh Amendment provides that:

The Judicial power of the United

States shall not be construed to

extend to any suit in law or equity,

commenced or prosecuted against one

of the United States by Citizens of

another State, or by Citizens or

Subjects of any Foreign State.

The Eleventh Amendment has long been construed

as prohibiting suit against a state by its own

citizens or citizens of another state. Hans

v. Louisiana, 134 U.S. 1, 10, 14-15 (1889).

Therefore, if the present action had been

initiated directly against the State of West

Virginia, it would unquestionably be barred.

124

The Defendant herein, however, is the Board of

Regents rather than the State of West

Virginia. Under Wyoming Highway Comm'n, 278

U.S. 194 (1929), a state agency may enjoy the

State's immunity from suit if the agency is

found to be an arm, or alter ego, of the

state. Id. at 199. By virtue of this theory,

then, the Board has claimed that it is merely

an arm of the State of West Virginia, and is

not subject to suit, except in the West

Virginia Court of Claims. In response to this

argument, Plaintiff has contended that the

Board is not an arm or alter ego of the State

of West Virginia; that that the Board is not

performing a government function; and that,

even assuming that the Board would be immune

from suit, the Board has waived its immunity

by engaging in interstate commerce.

In Morgantown, 153 W. VA, 121, 168 S.E.

2d 298 (1969), the West Virginia Supreme Court

indicated that in order for sovereign immunity

to apply, the agency in question must be

acting as an arm of the state, and must be

125

performing a governmental function. Id. at

125-127, 168 S.E. 2d 301-302. This Court has

already determined that the Board of Regents

is an arm or alter ego of the State of West

Virginia, and sees no reason to repeat that

lengthy discussion. Moreover, in Morgantown,

the Court specifically found administration of |

the affairs of a state educational association

to be a governmental function. Id. at

126-127, 168 S.E. 2d 302. Further, as

previously mentioned, the federal courts which

are concerned with interpreting and applying

West Virginia law, have concluded that suit

against the West Virginia Board of Regents is

barred under the doctrine of sovereign

immunity. Kondas, 318 F. Supp. 394, 396-397

(E.D. W. Va 1970), aff'd. 441 F.2d 1172 (4th

Cir. 1972)? Given the unequivocal rulings by

the State and federal courts of West Virginia,

which have been previously cited and

thoroughly examined by this Court, the present

action against the Board must, absent other

circumstances be dismissed. Plaintiff,

"Footnote located at end of opinion.

nisdirencton |) an

126

however, has contended that federal law rather

than state law, must be applied, and that

under Parden v. Terminal Railway of the

Alabama State Docks Dept., 377 U.S. 184 (1964)

(Parden), the Board has waived its immunity,

or consented to suit, by engaging in

interstate commerce. The Board has replied by

distinguishing Parden from the present

Situation, and by noting that Parden has been

Significantly limited by subsequent Supreme

Court decision. In addition to these

arguments, other points have been raised in

the memoranda filed by the parties, and will

be addressed to the extent they may be

pertinent to the resolution of the matters

under discussion.

In Parden, an employee of the Alabama

Terminal Railway brought suit in federal court

against the Railway pursuant to the Federal

Employer's Liability Act, requesting damages

for personal injuries sustained while employed

by the Railway. Id. The State of Alabama

moved to dismiss the action because the

127

Railway was a state agency, and the State had

not waived its immunity from suit. Id. at

185. The Supreme Court found that in enacting

the F.E.L.A., Congress had intended to make

the statute applicable to every common carrier

by railroad in interstate commerce, including

state-owned railroads. Id. at 187-188.

Specifically, ‘he Court pointed to the “broad

and all-embracing” language of the Act, id. at

189, and the fact that if states were exempted

from suit under the F.E.L.A., the injured

employees of State-owned railroads would have

no effective remedy. Id. at 190. The Court

further found that by authorizing Congress to

regulate commerce, the States had empowered

Congress to create a right of action against

interstate railroads, id. at 192, and stated

that:

By enacting the F.E.L.A. in the

exercise of this power, Congress

conditioned the right to operate a

railroad in interstate commerce upon

amenability to suit in federal court

as provided by the act; by

thereafter operating a railroad in

interstate commerce, Alabama must be

taken to have consented to suit.

—

Sictnengmatcsitand pctegpmpandags

128

Id. Four members of the Court dissented in

Parden, id. at 198, on the basis that the

legislative history of the F.E.L.A. indicated

that “Congress did not even consider the

possible impact of its legislation upon State

immunity from suits." Id. at 199. The

dissent noted that conditioning a state's

power to operate in interstate commerce in the

manner decreed by the majority should be a

decision for Congress rather than the Courts,

id. at 198, and further observed that:

In previous opinions the Court has

indicated that waiver of sovereign

immunity will be found only where

stated by "the most express language

or by such overwhelming implication

for the text as would leave no room

for any other reasonable

construction."

Id. at 200, quoting from Murray v. Wilson

Distilling Co., 213 U.S. 151, 171 (1909);

citing as supportive Ford Motor Co. v. Dept.

of Treasury, 323 U.S. 459, 468-470 (1945).

This Court has taken particular care to

discuss the dissenting opinion in Parden,

because later modification of the Parden

129

doctrine has lent increasing importance to the

views expressed by the dissent. In Employees

v. Dept. of Public Health and Welfare of

Missouri, 411 U.S. 279 (1973) (Missouri

Employees), the majority opinion was authored

by Justice Douglas, who had dissented in

Parden. The Supreme Court in Missouri

Employees considered whether employees of a

Missouri state agency were entitled to bring

suit against the State for overtime

compensation due to them under §16(b) of the

Fair Labor Standards Act of 1938. Id. at 281.

Although the state enterprise involved was

technically covered by the Act, id. at 283,

Justice Douglas and five other members of the

Court determined that Congress did not intend

to deprive the States of their constitutional

immunity from suit. Id. at 285. In Missouri

Employees, Douglas did not expressly overrule

Parden, but his opinion implicitly rejects the

majority language in Parden, and clearly

changes the focus of the Parden analysis to

that advocated by the Parden dissent.

130

First, Douglas distinguished Parden from

Missouri Employees by noting that Parden

involved a business operated by the State "for

profit," id. at 284, and "was in the area

where private persons and corporations

normally ran the enterprise." Id. Douglas

then found that where the state activity was

not conducted for profit, Congress could only

act where the employees “have such a relation

to interstate commerce that national policy,

of which Congress is the keeper, indicates

that their status should be raised." Id. In

addition, Douglas noted that when Congress did

act, enormous fiscal burdens could be placed

upon the States, and he commented that

"Congress, acting responsibly, would not be

presumed to take such action silently." Id.

at 284-285. Following these remarks, the

Court stated that:

It would . . . be surprising in the

present case to infer that Congress

deprived Missouri of her

constitutional immunity without

changing the old §16(b) under which

she could not be sued or indicating

in some way by clear language that

131

the constitutional immunity was

swept away.

Id. at 285. (Emphasis added). This

emphasized language in particular, alters the

majority Parden analysis to fit the view

advocated by the dissent in Parden, which

would have required an indication by express

language that Congress intended to abrogate a

state's sovereign immunity. Parden, 377 U.S.

at 200.

Plaintiff has suggested in its reply

memorandum (Doc. #10) that the Missouri

Employees decision has been overruled by

Congress' Amendment of the Fair Labor

Standards Act in 1974. Congress dic’ amend 29

U.S.C. §216(b) in 1974 to provide that suit

could be brought by state employees against

their employers. National League of Cities v.

Usery, 426 U.S. 833, 838 (1976). However,

that action by Congress had no effect upon the

analytical framework used by the Supreme Court

in the Missouri Employees decision, but

rather, indicated Congress' express compliance

ee eC. OU |

a ns eal ps ila Whee

132

with the Court's directive in Missouri

immunity would be found to have been

indication of such an intent. Missouri

Employees, 411 U.S. 279, 285 (1973).

Congress'

abundantly clear in the House of

Missouri Employees instruction is made

abrogated, Congress must provide a clear

Employees that, before a state's traditional

compliance with the Supreme Court’s

Representatives Report which accompanied the

Fair Labor Standards Amendments of 1974. H.R.

Rep. No. 93-913, 93rd Cong. 2d Sess. l,

reprinted in [1974] U.S. Code of Cong. & Ad.

News 2811. Therein, it was stated that:

Section 16(b) of the Act is amended

to make it clear that suits by

public employees to recover unpaid

wages and liquidated damages under

such section may be maintained in a

Federal or State court of competent

jurisdiction. This amendment is

intended to overcome that part of

the decision of the Supreme Court in

Employees of the Department of

Public Heath v. Missouri (93 S. Ct.

1614, April 18, 1973), which stated

that Congress had not explicitly

provided in enacting the 1966

amendments that newly covered State

and local employees could bring an

133

action against their employer in a

Federal court under section 16.

Id. at 2853. (Emphasis added). Obviously

then, the 1974 Amendment of 16(b) was intended

only to provide the specific statement of

Congressional intent to abrogate immunity

which had been requested by the Supreme Court

in Missouri Employees, and operated to alter

only that part of the decision which exempted

States from suit under §16(b).

Although there is no question in this

Court's mind regarding the effect of the 1974

Amendments upon the continued vitality of the

Missouri Employees decision, the Court notes

that in National League of Cities v. Usery,

426 U.S. 833 (1976), the Supreme Court in a

plurality opinion written by Justice

Rehnquist, id. at 834, ruled that insofar as

the 1974 Amendments operated "to directly

displace the State's freedom to structure

integral operations in areas of traditional

governmental functions," id. at 852, they were

not within the authority granted to Commerce

134

by the Commerce Clause. Id. Therefore, the

Court reversed the district court's dismissal

of the complaint below, which had been brought

by various parties, including several states,

for a declaration that the 1974 Amendments

were invalid as an unconstitutional

interference with the states qua States. Id.

at 836-837, 839. In addition, the case relied

upon by Plaintiff herein, as support for its

theory that Missouri Employees is no longer

valid, was vacated and remanded by the Supreme

Court in light of the decision in National

League of Cities v. Usery. See, Dunlop v.

State of New Jersey, 522 F.2d 504 (3rd Cir.

1975) vacated and remanded sub. nom. New

Jersey v. Usery, 427 U.S. 909 (1976).

The preceding discussion has illustrated

that the 1974 amendment of the Fair Labor

Standards Act did not overrule the Missouri

Employees decision. In order to finally lay

to rest any doubts concerning the current

effect of that decision, this Court wili

briefly outline the Supreme Court decisions

135

after Missouri Employees which have applied or

altered the “express language" analysis

required by Missouri Employees. The only

significant change in the Missouri Employees

doctrine appears to have occurred in Hutto v.

Finney, 437 U.S. 678 (1978) (Hutto), wherein

the Court, in a plurality opinion, ruled that

attorney fees could be awarded against the

States in actions brought under 42 U.S.C.

§1983, even where Congress had not provided

express statutory language making a state

liable for such fees. Id. at 693-694. In

making this determination, the Court first

pointed to the extreme breadth of the Civil

Rights Attorneys Fees Awards Act, which

contained no hint of an exemption for States

who happened to be defending injunction

actions. Id. The Court then surveyed the

legislative history of the Act, and found

express evidence therein that Congress had

intended to permit attorney fees to be awarded

against the States. Id. In addition, the

Court distinguished Missouri Employees, and

136

Edelman v. Jordan, 415 U.S. 651, 672 (1972)

(holding Congressional authorization of suit

to be a threshold requirement under Parden and

Missouri Employees) from Hutto, by noting that

those actions had been concerned with

"retroactive liability for prelitigation

conduct," 437 U.S. at 695, while Hutto

involved prospective relief. Id. The Court

further restricted its holding by noting that

attorney fees had traditionally been awarded

without regard to a state's sovereign

immunity, id., and by indicating that the

limitations placed upon the States by the

Fourteenth Amendment may be more stringent

than those imposed under the Commerce Clause.

Id. at 698-699, n. 27, citing National League

of Cities v. Usery, 426 U.S. 833, 852, n. 7

(1976).

Pour members of the Court dissented from

this portion of the Hutto decision, 437 U.S.

at 704, objecting to what they termed "the

dilution of the ‘clear statement' rule,” id.

at 707, occasioned by the plurality's reliance

137

on legislative history rather than explicit

statutory language authorizing a monetary

recovery against the States. Id. at 706.

Justice Powell, writing for the dissent, also

stated that he did not find either of the

limitations cited by the Court to be

justification for such a dilution. Id. at

707. Despite this disagreement, the Hutto

modification was applied in Quern v. Jordan,

440 U.S. 332 (1979) (Quern), which considered

whether a district court was prohibited by the

Eleventh Amendment from ordering the State of

Illinois to send a notice to class members,

advising them that they might be entitled to

past welfare benefits. Id. at 334-335.

In the process of reaffirming its prior

holding in Edelman v. Jordan, 415 U.S. 651

(1972), that §1983 did not abrogate the

traditional sovereign immunity of the States,

440 U.S. 338-345, and in concluding that the

notice involved in Quern constituted the type

of prospective relief permitted by Ex Parte

Young, 209 U.S. 123 (1908) even in the face of

138

the Eleventh Amendment, 440 U.S. at 345, 347,

the Supreme Court applied the modified Hutto

analysis. Id. at 344-345. The Court

emphasized, however, that an express statutory

waiver of State immunity was required by

Missouri Employees, id. at 344, n. 16, and

noted again that Hutto was concerned with

prospective relief rather than retroactive

liability for prelitigation conduct. Id.

The foregoing analysis has indicated that

Missouri Employees has contained to be applied

in Supreme Court decisions, with a slight

analytical modification for cases which

involve prospective relief rather than

retroactive liability for prelitigation

conduct. In addition, the distinction noted

by Douglas in Missouri Employees, 411 U.S. 279

(1973), concerning the classification of a

state activity as for profit, or not for

profit, id. at 284, appears to have been

discarded, as later cases concentrate

primarily on the threshold issue of whether

Congress has authorized suit against the

139

states. Edelman v. Jordan, 415 U.S. 651, 672

(1972). Assuming arguendo that such a

distinction exists, this Court can find no

inference of profit-making in the construction

of buildings on a state university campus,

with all funds pertaining thereto to be

deposited in the state treasury. Therefore,

because the presert case involves retroactive

liability for pre-litigation conduct, unlike

Hutto, and activity not conducted for profit,

the criteria outlined in Missouri Employees,

without the Hutto "dilution," are properly

applicable to the determination of whether

West Virginia's traditional sovereign immunity

may be herein set aside.

In order to properly consider the above

question, the Court makes two related but

necessary assumptions. First, since a

Statutory basis for waiver of immunity is

required under Missouri Employees, the Court

assumes that the United States Arbitration Act

applies to this proceeding. Again, although

Plaintiff did not raise the Act in its

140

pleadings, the Act has been mentioned by both

parties in their memoranda. Therefore, the

Court must assume that Plaintiff would amend

its pleadings to allege the application of the

Act, if offered an opportunity. Secondly, the

Court assumes that the Board engaged in the

interstate commerce during the transaction at

hand. Plaintiff has claimed the Board's

participation in interstate commerce involves

a factual inquiry and precludes dismissal of

the present action at the pleading stage.

However, the resolution of this issue in

Plaintiff's favor, for purposes of ruling upon

the within motion, obviates the necessity of

searching beyond the pleadings. Again, while

the complaint did not allege interstate

commerce activity on the part of the Board,

that contention has been raised and discussed

by the parties, and is a prerequisite under

Missouri Employees, for a finding that West

Virginia has waived its immunity, or consented

to suit, by engaging in interstate commerce.

With these assumptions in mind, the Court now

141

turns to the threshold question of whether

Congress intended the traditional immunity of

the States when it enacted the United State

Arbitration Act.

First, the Court notes that, on its face,

the United States Arbitration Act does not

expressly authorize suit against States qua

States, or evidence a Congressional intent to

abrogate state immunity from suit. Although 9

U.S.C. §1 (1970) defines commerce broadly,

that section by its terms does not authorize

Suit against anyone, but instead merely

identifies those transactions which may come

within the Act, that is, those involving

maritime or interstate commerce. Moreover,

although commerce is defined in §1 as

“commerce among the several states, ... or

with foreign nations," that definition is only

a repetition of the phrasing of U.S. Const.

Art. I, §8, cl. 3, wherein Congress is given

the power "(t]o regulate Commerce with foreign

nations, and among the several states, and

with the Indian Tribes." Simply because

142

interstate commerce is included within the

purview of the Arbitration Act, the conclusion

does not follow that the Act was intended to

abolish the sovereign immunity of those states

engaging in interstate commerce.

The provision of the Arbitration Act

which does authorize suit, or provide "a

federal remedy," Prima Paint Corp. v. Flood &

Conklin Mfg. Co., 388 U.S. 395, 400 (1967), is

9 U.S.C. §4 (1970). In that section as

originally enacted in 1925, and contained

virtually unchanged until the present time, a

party aggrieved by the failure of another

party to arbitrate under a written agreement,

could apply to a district court which, except

for the agreement, would have jurisdiction of

the subject matter of the controversy. As

previously noted, in 1925, a federal court

could not have had diversity jurisdiction over

a contract claim between a state and a citizen

of another state. Postal Telegraph, 155 U.S.

482, 487 (1894). Moreover, since the subject

matter of an arbitration agreement is purely

143

contractual, and thus, traditionally within

the domain of state courts, it is exceedingly

unlikely that a federal court would have had

jurisdiction over such an action on any other

basis in 1925. However, because that

possibility cannot be totally eliminated by

the statutory language, which does not exclude

states, an analysis of the legislative history

of the Arbitration Act is proper in order to

determine whether "Congress has brought the

States to heel, in the sense of lifting their

immunity from suit in a federal court.”

Missouri Employees, 411 U.S. 279, 282 (1973).

An examination of the legislative history of

the United States Arbitration Act establishes

beyond peradventure that Congress had no

intention of abolishing state immunity from

Suit when it enacted the Arbitration Act.

The United States Arbitration Act was

reported to the House of Representatives as

H.R. 646 on January 24, 1924. H.R. 646, 68th

Cong. lst Sess., 65 Cong. Rec. 1430 (1924).

144

The Judiciary Committee Report which

accompanied the bill stated that:

The purpose of this bill is to make

valid and enforcible agreements for

arbitration contained in contracts

involving interstate commerce or

within the jurisdiction of

admiralty, or which may be the

subject of litigation in the Federal

courts .. . there was no opposition

to th bill before the Committee.

The bill declares simply ihat such

agreements for arbitration snall be

enforced, and provides a procedure

in the Federal Courts for their

enforcement.

H.R. Rep. No. 96, 68th Cong., lst Sess. l, 2

(1924). When the bill was first debated in

the House of Representatives, Mr. Graham, from

the House Judiciary Committee, id. at l,

explained that the bill represented an attempt

to correct a practice inherited from English

Common Law, whereby courts refused to enforce

arbitration agreements. Although the parties

involved might have contracted to arbitrate,

the courts believed that such agreements

usurped their jurisdiction. 65 Cong. Rec.

1931 (1924) (remarks of Rep. Graham). As has

ER Ae ee a

145

been previously noted, Graham further

commented that the bill “does not involve any

new principle of law... creates no new

legislation, grants no new rights, except a

remedy to enforce an agreement in commercial

contracts and in admiralty contracts." Id.

The bill was then passed unanimously, without

debate, by the House on June 26, 1924, 65

Cong. Rec 11081, 11082 (1924), and was then

referred to the Senate for consideration by

that body. 65 Cong. Rec. 11124 (1924). The

Senate also had under evaluation an

arbitration bill, S. 1005, which was amended

by the Senate Judiciary Committee to conform

with H.R. 646 in all essential respects. 66

Cong. Rec. 2759, 2761 (1925). The Senate

Judiciary Committee Report accompanying S.

1005 echoed the concerns and legislative

purpose expressed by the members of the House

of Representatives. S. Rep. No. 536, 63th

Cong., lst Sess. 2, 3 (1924). The Report also

specifically set forth a desire to avoid delay

in litigation, and noted that "[t]Jhe

146

settlement of disputes by arbitration appeals

to big business and little business alike, to

corporate interests as well as to

individuals." Id. at 3 (emphasis added).

On January 31, 1925, the Senate debated

the Arbitration Act, and adopted the Senate

counterpart to H.R. 646. 66 Cong. Rec. 2759,

2761 (1925). The Senate debate, like that in

the House of Representatives, was very brief,

and did not address any matter even remotely

| connected to the subject of sovereign

immunity. Id. Finally, on February 4, 1925,

the House of Representatives adopted the

| version of the United States Arbitration Act

approved by the Senate, while specifically

noting that there were no substantive

differences between the Senate version of the

Act and that originally passed by the House of

Representatives and sent to the Senate. 66

Cong. Rec. 3003, 3004 (1925).

As a final indication of legislative

intent, the joint subcommittee hearings held

concerning S. 1005 and H.R. 646, do not at any

147

point address the issue of sovereign immunity,

and do not contain any evidence that the Act's

contemplated reach would extend to states

participating in interstate commerce. Joint

Hearings, 68th Cong. lst Sess. 1 (1924). To

the contrary, the hearings illustrate that the

transactions thought to be covered by the Act

were merely those ordinary dealings between

merchants who happened to live in different

states. This fact is illustrated by the

following colloguy:

Rep. Charles Stengle: What you

have in mind is that this proposed

legislation relates to contracts

arising in interstate commerce.

Mr. Bernheimer: Yes; entirely.

The farmer who will sell his car

load of potatoes, from Wyoming, to a

dealer in the State of New Jersey,

for example.

Id. at 7 (Statement of Charles L.Bernheimer).

The preceding survey of the legislative

history of the Arbitration Act has indicated

that congress intended the Act to remedy the

practice whereby courts had refused to enforce

valid arbitration agreements entered into by

148

parties, but did not intend the Act to create

any new rights or obligations. Since

permitting suit to be brought against a state

on the basis of a contract would

unguestionably have created novel rights by

abrogating traditional concepts of state

immunity, Congress cannot “be presumed to have

taken such action silently," Missouri

Employees, 411 U.S. 279, 284-285 (1973),

particularly when the language of the statute

itself does not indicate an intent to sweep

away constitutional immunity. Id at 285.

Having concluded that the legislative

history and explicit statutory language of the

United States Arbitration Act do not evidence

a Congressional intention to abrogate the

States’ sovereign immunity, the Court further

finds that Congress did not, in fact, abolish

the States' traditional immunity frem suit by

passage of the Arbitration Act. Because this

conclusion is dispositive under Missouri

Employees, the Court need not address the

further question of whether the Board has

149

waived its immunity by engaging in interstate

commerce after the passage of the Act. Thus,

Since the Board, as an arm of the State of

West Virginia, is immune from suit under both

State and federal law, the within action

against the Board of Regents is barred. In so

holding, the Court notes that the Plaintiff

does have a viable remedy against the Board in

the West Virginia Court of Claims. Parden,

377 U.S. 184, 190 (1964); Morgantown, 153 W.

Va. 121, 168 S.E. 2d 298 (1969).

IV. Conclusion

Based on the preceding analysis, the Court

finds that:

Plaintiff's request for a

preliminary injunction is

denied, due to the fact that

Plaintiff has failed to

demonstrate either a likelihood

of success on the merits, or

the existence of irreparable

harm;

r Defendant's Motion to Dismiss

is granted, because this Court

does not have jurisdiction over

the subject matter of the

present action.

ae The Plaintiff's motions,

seeking orders of the Court to

compel discovery and expressing

150

a disinclination to sustain the

Defendant's motion to dismiss,

are deemed moot and @will,

therefore, not be ruled upon.

The captioned cause is hereby ordered

terminated upon the docket records of the

United States District Court for the Southern

District of Ohio, Western Division, at Dayton.

/S/ WALTER H. RICE

WALTER H. RICE

UNITED STATES DISTRICT

JUDGE

Copies mailed to:

John O. Henry, Attorney

Daina B. Van Dervort, Attorney

2100 First National Plaza

Dayton, Ohio 45402

Victor A. Barone, Attorney

Deputy Attorney General

State Capitol

Charleston, West Virginia 24305

Daniel Lee Swigert, Attorney

22 Brown Street

Dayton, Ohio 45402

151

Iplaintiff has once more raised this issue in

a Motion to Compel Discovery, filed on

November 3, 1981. In the Memorandum

accompanying that Motion, Plaintiff has cited

the case of Soni v. Board of Trustees of the

University of Tennessee, 513 F.2d 347 (6th

Cir. 1975), cert. denied, 426 U.S. 919 (1976)

(Soni), as support for the theory that the

Plaintiff must be permitted to conduct an

inquiry into the factual circumstances

surrounding the transaction in question

herein. However, the Court does not feel that

the Soni decision requires allowance of such .

an inquiry, for several reasons. First, and

most important, the legal situation presented

in Soni was fundamentally different from that

of the present case. In Soni, the Court noted

that it had “been unable to find any case

discussing the University's status under the

Eleventh Amendment.” Id at 352. The Court

then stated:

We are uncertain whether the University

of Tennessee is a state instrumentality

protected by the eleventh amendment. The

record before us contains little data on

the University's financial relationship

with the State of Tennessee, and _ the

Tennessee cases and statutory materials

do not compel a conclusion one way or the

other.

Id. at 352. In the present case, as is more

fully set forth in the body of this Opinion,

the state and federal courts of West Virginia

have in this Court's view, indicated

unequivocably that the Eleventh Amendment

immunity of the State of West Virginia extends

to the West Virginia Board of Regents.

Therefore, this Court concludes that the

factors which prompted the decision in Soni

are simply not found herein, and that

cansequently, no factual inquiry is necessary.

152

Second, assuming arguendo that the Soni

decision is applicable to this case, there are

several reasons why a factual inquiry is still

not in order. Merely because the Sixth

Circuit stated that each state university

"must be considered on the basis of its own

peculiar circumstances," id, the conclusion

does not automatically follow that the inquiry

involved must be factual. When the Court in

Soni made the foregoing statement, it was

referring to the importance of the

governmental context of each state university.

In particular, the Court noted that the

Tennessee State Constitution did not grant

immunity to Tennessee University, while in

some other cases wherein immunity had been

found to exist, the University in question had

been granted immunity by a specific provision

of the state constitution. id. In the

present case, this Court has conducted an

examination into the governmental context of

the Board by reviewing the West Virginia

statutes which create and define the Board's

status and responsibilities, and has concluded

that under the law of West Virginia, the Board

of Regents would not be subject to suit on the

basis of the activities involved herein.

Moreover, aS was noted in the main text of

this Opinion, such an analysis was not

required in view of the dispositive rulings of

the West Virginia state and federal courts,

but was nevertheless conducted, in order to

provide the most thorough foundation for this

Court's conclusions.

Having concluded then, that Soni does not

mandate an analysis dissimilar to that which

has been previously employed herein, the Court

therefore finds that there is no need to

further postpone the resolution of this matter

in order to permit Plaintiff to inquire into

the factual circumstances surrounding the

Board's conduct. Accordingly, the Court must

deny Plaintiff's Alternative Motion for a

Statement of the Court's Disinclination to

153

Sustain Defendant's Motion to Dismiss, as well

as Plaintiff's Motiom to Compel Discovery,

since that Motion has been rendered moot by

the Court's disposition of Defendant's Motion

to Dismiss. Further, even if Plaintiff's

Motion had been well taken, the Court would

not have been inclined to award Plaintiff

expenses under Fed. R. Civ. P. 37(a). In

light of the Court's announcement in August,

1981, that it intended to grant Defendant's

Motion to Dismiss, the Defendant's refusal to

engage in further discovery was not without

substantial justification.

2The Sixth Circuit, however, did state in

Local 19, Warehouse, Processin and

Distributive Workers Union, Retail, wholesale

and Department Store Union v. Buckeye Cotton

Oil Co., 236 F.2d 776 (6 Cir. 195 cert.

denied 354 U.S. 910 (1957), (Local 19) that

under Section 301 of the Labor Management

Relations Act of 1947, 29 U.S.C. §185, and 9

U.S.C. §1 et seq., “jurisdiction is derived

from Article lll of the United States

Constitution, which gives the courts of the

United States jurisdiction in cases ‘in Law

and Equity’ arising ...the Laws of the United

States." Id. at 780. (citation omitted).

This language, insofar as it tracks’ the

“arising under" language of 28 U.S.C. §1331

(1966), which gives federal courts original

jurisdiction of actions arising under the laws

of the United States, appears to be an

indication that the Sixth Circuit views the

United States Arbitration Act as providing a

jurisdictional basis for arbitration actions.

However, for several reasons, which will be

hereinafter set forth, this Court has

concluded that the Sixth Circuit did not

intend to adopt such a ruling in Local 19.

First, the above comments by the Sixth

Circuit arose in the context of a discussion

of the appropriate substantive law to be

applied in Local 19. In that case, the Union

——_—

154

and Buckeye Cotton Oil Co. had entered into a

collective bargaining agreement providing for

arbitration of contractual disputes. Id. at

779. In the petition filed with the District

Court, the Union alleged that Buckeye had

violated the agreement by working employees

overtime without appropriate compensation, and

had refused to arbitrate when requested to do

so by the Union. Id. at 780. The Union asked

that the Court enjoin Buckeye from violating

the agreement for overtime pay, and that

Buckeye be ordered to submit the dispute to

arbitration. Id.

The District Court dismissed the

complaint by applying Westinghouse Salaried

Employees v. Westinghouse Electric Corp., 348

U.S. 437 (1955) (Westinghouse), wherein the

Supreme Court had severely restricted the

extension of §301. In Westinghouse, the Union

brought suit against the erployer on behalf of

unnamed employees, alleging that the employer

had violated the collective bargaining

agreement by deducting wages for a date when

the employees were absent from work. Id. at

439. The Union requested an interpretation

and declaration of the contractual rights of

the parties, an accounting, and a judgment for

the amount of the unpaid wages. Id. Five

members of the Supreme Court agreed ‘to affirm

the dismissal of the complaint for lack of

jurisdiction, holding that Congress did not

intend, under §301, to confer jurisdiction in

federal courts over actions brought by unions

to enforce “individual” id. at 460, or

"personal" id. at 461, rights of employees.

The Supreme Court in Westinghouse did

not define which contractual rights would not

be considered personal to employees and would

thus be sufficient to confer jurisdiction on a

federal court. The right to recover unpaid

overtime compensation which was involved in

Local 19 appears to fall directly within the

Westinghouse prohibition, and indeed, that was

155

the foundation for the District Court's

dismissal of the complaint. Local 19, 236

F.2d at 778. The Sixth Circuit, however, held

that Westinghouse was not controlling, by

finding that a promise to arbitrate was not a

personal right of an employee. Id at 779.

(emphasis added).

The District Court in Local 19 had also

premised its dismissal of the complaint on the

fact that executory agreements to arbitrate

were not enforceable under Tennessee law, and

on the fact that injunctive relief in labor

disputes was forbidden by the Norris LaGuardia |

Act. Id. at 778. The Court of Appeals found

that the rights involved in Local 19 were not

purely state-created rights, and that

therefore Tennessee state law was not

controlling. Id. at 780-781. In reaching

this conclusion, the Court noted, as

previously mentioned, that an action under

§301 and the Arbitration Act was one “arising

under...the Laws of the United States." Id.

at 780, citing Local 205, United Electrical,

Radio and Machine workers of America v.

General Electric Co., 233 F.2d 85; aff'd 353

U.S. 547 (1957) (Local 205). Local 205, which

was cited by the Sixth Circuit made no comment

regarding the jurisdictional effect of the

Arbitration Act, but instead only stated that

jurisdiction under §301 arose under Article

III of the Constitution. Id. The Sixth

Circuit concluded, however, that since the

rights involved were created in part by

federal law, then Erie R. Co. v. Tompkins, 304

U.S. 64 (1938) and other related cases did not

require the application of Tennessee law. 236

F.2d at 780.

The employer in Local 13, however, also

cited the Westinghouse decision as having held

that state law governed §301 actions. Id. at

781. The Sixth Circuit disagreed, by first

stating that the Supreme Court in Westinghouse

had construed §301 solely with reference to a

156

suit for payment of wages, and had not

construed the term "suits for violation of

contracts between an employer and a labor

organization." Id. The Court then concluded

that its prior decisions, which had authorized

injunctions in suits based on violations of

such contracts, were still good law. Id,

This distinction is somewhat less than

persuasive, however, given the fact that

Westinghouse involved a violation of a

collective bargaining agree

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