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University of South Florida Board of Trustees v. Comentis, Inc.

United States Court of Appeals, Eleventh Circuit

June 30, 2017

UNIVERSITY OF SOUTH FLORIDA BOARD OF TRUSTEES, a public body corporate of the State of Florida, Plaintiff-Appellant,
v.
COMENTIS, INC., a Delaware corporation, Defendant-Appellee.

         Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:15-cv-01544-EAK-AEP

          Before HULL, MARCUS, and ROGERS, [*] Circuit Judges.

          ROGERS, Circuit Judge.

         The board of trustees of the University of South Florida sued CoMentis, Inc., in federal court, asserting jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332(a). The district court dismissed the complaint on the merits, and the university appeals. However, because the plaintiff state university is an arm of the state, it is not a "citizen" of the state for diversity jurisdiction purposes. As the plaintiff now concedes on appeal, the district court should therefore have dismissed the suit for lack of jurisdiction. This conclusion is required by the same analysis that would give the university Eleventh Amendment immunity if sued in federal court.

         While Congress has authorized diversity jurisdiction over suits between "citizens of different States, " 28 U.S.C. § 1332(a)(1), that authorization does not extend to suits between a state and a citizen of another state because "a state is not a citizen of a state for the purpose of diversity jurisdiction under 28 U.S.C. § 1332, " Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 412 (11th Cir. 1999) (citing Moor v. Alameda Cty., 411 U.S. 693, 717 (1973)). Similarly, the statutory authorization does not extend to suits between "[a] public entity or political subdivision of a state" and a citizen of another state, if the entity or division is "simply an 'arm or alter ego of the State.'" Univ. of S. Ala., 168 F.3d at 412 (citing Moor, 411 U.S. at 717-18). "Therefore, if a party is deemed to be 'an arm or alter ego of the State, ' then diversity jurisdiction must fail" under 28 U.S.C. § 1332(a)(1). Univ. of S. Ala., 168 F.3d at 412.

         The USF Board is an "arm or alter ego of the State" for diversity jurisdiction because it meets the same test that applies to determining whether the USF Board is entitled to Eleventh Amendment immunity. We have held that the Eleventh Amendment immunity analysis applies to determinations of citizenship for diversity jurisdiction purposes. Id.; see also Coastal Petroleum Co. v. U.S.S. Agri- Chems., 695 F.2d 1314, 1318 (11th Cir. 1983).

         The USF Board is an "arm" of Florida because the State of Florida defines the USF Board to be a part of its government, exercises great control over it, funds it, and pays judgments entered against it. We have repeatedly applied this test in determining whether a state entity is entitled to Eleventh Amendment immunity. See Tuveson v. Fla. Governor's Council on Indian Affairs, Inc., 734 F.2d 730, 732 (11th Cir. 1984) (stating the four-factor test); see also, e.g., Williams v. District Bd. of Trs. of Edison Cmty. Coll., Fla., 421 F.3d 1190, 1192 (11th Cir. 2005) (per curiam); Manders v. Lee, 338 F.3d 1304, 1309 (11th Cir. 2003) (en banc).

         First, Florida defines the USF Board to be a part of the state government. Florida lists USF as a "[s]tate university." Fla. Stat. § 1000.21(6)(d). Florida declares that the "boards of trustees [of state universities] are a part of the executive branch of state government." Id. § 1001.71(3). The state therefore clearly defines the USF Board to be a part of its government.

         This conclusion is strongly supported by our decision in Williams, in which we held that a Florida community college was entitled to Eleventh Amendment immunity. We concluded that "[a] community college is a creature of state law, " Williams, 421 F.3d at 1194-95, and stated that that conclusion "favor[ed] a determination that a community college is an arm of the state, " id. at 1193. In doing so we relied on Florida's statutory provisions that empower the state government to supervise the community colleges, id. at 1192-93, although we also noted that "[t]he board of a community college is not an agent of the executive branch of state government under Florida law, " id. at 1193. Florida law empowers the state government to control community colleges and state universities similarly, compare Fla. Stat. § 1004.21-32 (state universities), with id. § 1004.65- 726 (community colleges), and while we indicated in Williams that a Florida community college is not an agent of the state's executive branch, Florida explicitly defines the board of trustees of a state university to be a part of the state government's executive branch. Id. § 1001.71(3).

         Second, the State of Florida exercises great control over the USF Board by defining the USF Board's powers and by appointing its members. The USF Board is not only subject to control by a statewide Board of Governors, but the USF Board itself is appointed mostly by the state Governor or the Board of Governors. Of the USF Board's thirteen members, six are appointed by the Governor of Florida, and five by the Board of Governors. Fla. Const. art. IX, § 7(c).

         The Florida Constitution states that "[t]here shall be a single state university system, " that "[a] board of trustees shall administer each public university, " and that "a board of governors shall govern the state university system." Fla. Const. art. IX, § 7(b). The Board of Governors is almost entirely appointed by the Governor of Florida.[1] That Board of Governors "establish[es] the powers and duties of the boards of trustees" of state universities. Fla. Const. art. IX, § 7(c). The Board of Governors also closely scrutinizes the USF Board's activities, as it "oversee[s] the enforcement of all state university laws and rules and regulations and the timely provision of direction, resources, assistance, intervention when needed, and strong incentives and disincentives to force accountability for results." Fla. Stat. § 1000.03(2)(c).

         Third, the State of Florida funds USF. While the USF Board initially prepares the budget, Fla. Bd. of Governors Reg. 1.001(6)(a), the Board of Governors must approve the proposed budget, id., and submits the approved budget, along with the approved budgets of all other state universities, to the state legislature, Fla. Stat. § 1001.705(2)(f). The Board of Governors sets rules for any independent fundraising by the USF Board through tuition and fees. Fla. Bd. of Governors Reg. 1.001(6)(b). The Board of Governors also annually audits the USF Board's finances. Id. at 1.001(6)(g).

         Finally, Florida ultimately pays the judgments entered against the USF Board. While each state university board of trustees is "a public body corporate" that can enter into contracts, sue and be sued, implead and be impleaded, and therefore hold property and have judgments entered against them, Fla. Stat. § 1001.72(1), (3), Florida ultimately pays such judgments. Not only does the state legislature fund the USF's budget as determined under the executive branch's control, the Board of Governors secures a comprehensive general liability insurance for state universities, id. § 1001.706(4)(d), and the boards of trustees must maintain coverage under the State Risk Management Trust Fund, id. § 1001.72(2). Florida ultimately pays any judgments entered against the USF Board by funding the USF's activities in general, and by mandating the USF's enrolling in risk-management insurance. Examining a similar insurance scheme for community colleges, we reasoned in Williams that the state "laws [that] ensure that community colleges are able to satisfy their liabilities . . . reflect that the state is ultimately responsible for those liabilities." Williams, 421 F.3d at 1194. The same is true here.

         Unsurprisingly given how tightly Florida's government controls its public education system, we have concluded, for Eleventh Amendment purposes, that boards of trustees of Florida's community colleges are "arms" of the state, id. at 1195, and also in unpublished opinions that the boards of trustees of Florida's state universities are "arms" of the state, Crisman v. Fla. Atl. Univ. Bd. of Trs., 572 F.App'x 946 (11th Cir. 2014) (per curiam); Luna v. Larkin, 563 F.App'x 739 (11th Cir. 2014) (per curiam); Hillemann v. Univ. of Cent. Fla., 167 F.App'x 747, 748 (11th Cir. 2006) (per curiam); see also Irwin v. Miami-Dade Cty. Pub. Schs., 398 F.App'x 503, 507 (11th Cir. 2010) (per curiam). District courts have reached the same result, in some cases with respect to the USF Board in particular. See, e.g., Debose v. Univ. of S. Fla., No: 8:15-cv-2787, 2016 WL 1367173 (M.D. ...


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