United States District Court, S.D. Alabama, Southern Division
REPORT AND RECOMMENDATION
P.
BRADLEY MURRAY, UNITED STATES MAGISTRATE JUDGE
On
October 30, 2018, Defendant The Solid Waste Disposal
Authority of the City of Mobile, Alabama (“SWDA”)
filed a Motion to Dismiss Plaintiff's Complaint (Doc. 9).
This motion has been referred to the undersigned Magistrate
Judge, pursuant to 28 U.S.C. § 636(b)(1)(B) and S.D.
Ala. Gen. LR 72, for entry of a report and recommendation. At
the time it filed its motion, SWDA also filed a separate
brief in support of its motion alleging that this Court lacks
jurisdiction. (Doc. 10). Plaintiff filed its brief in
response to SWDA's motion to dismiss on November 14, 2018
(Doc. 20), and SWDA filed its reply brief on November 21,
2018 (Doc. 24). The Court heard oral argument on the motion
on January 22, 2019. Having reviewed and considered all
relevant material, the undersigned Magistrate Judge
RECOMMENDS that SWDA's motion to dismiss
Plaintiff's complaint be DENIED for the
reasons set forth below.
I.
SUMMARY OF ALLEGATIONS
On
October 4, 2018, Plaintiff WM Mobile Bay Environmental
Center, Inc. filed its complaint against the City of Mobile
(“the City”) and SWDA. (Doc. 1). The complaint
alleges causes of action for breach of contract (Counts I and
II) against SWDA. (Id. at pp. 6-7). Count I of the
complaint alleges that SWDA has failed to fulfill its
contractual duty to reimburse Plaintiff for certain capital
expenses and operational costs (Id. at pp. 6-7),
while Count II alleges that SWDA has breached its contract
with Plaintiff by failing to send all construction and
demolition wastes, as well as other wastes, to the Chastang
Landfill or Transfer Station (Id. at p. 7). SWDA
argues that this Court lacks jurisdiction based upon the
Eleventh Amendment because it is an independent
instrumentality of the State of Alabama and, therefore,
immune from suit. (Doc. 10 at p. 1). Plaintiff argues that
SWDA's argument that it is an arm of the state was
rejected by the Eleventh Circuit in WM Mobile Bay
Environmental Center, Inc. v. The City of Mobile Solid Waste
Authority, 672 Fed.Appx. 931 (11th Cir.
2016). In addition, Plaintiff argues that application of the
factors enumerated in Manders v. Lee, 338 F.3d 1304
(11th Cir. 2003) and its progeny also leads to the
conclusion that SWDA is not an arm of the state and,
therefore, not entitled to immunity.
II.
STANDARD OF REVIEW
The
issue of whether a motion to dismiss based upon Eleventh
Amendment immunity is properly brought pursuant to Rule
12(b)(1) or Rule 12(b)(6) is unclear. See Lambert v. Bd.
of Tr. of the Univ. of Ala., No. 2:18-cv-1112-JEO, 2019
WL 339178, at *7 (N.D. Ala. Jan. 28, 2109). While the
Eleventh Amendment immunity defense “partakes of the
nature of a jurisdictional bar, ” Edelman v.
Jordan, 415 U.S. 651, 678 (1974), prompting many courts
to apply the standard of review applicable to Rule 12(b)(1)
dismissals, see Boglin v. Bd. of Tr. of Ala. A&M
Univ., 290 F.Supp.3d 1257, 1261 (N.D. Ala. 2018) and
Harris v. Bd. of Tr. Univ. of Ala., 846 F.Supp.2d
1223, 1231 (N.D. Ala. 2012), unlike claims that lack subject
matter jurisdiction, federal courts are not obligated to
raise the Eleventh Amendment immunity issue sua
sponte and the immunity can be waived by the State,
see Wisconsin DOC v. Schacht, 524 U.S. 381, 389
(1998); therefore, some courts have applied the standard of
review applicable to Rule 12(b)(6) challenges. See Shands
Teaching Hosp. and Clinics, Inc. v. Beech St.
Corp., 208 F.3d 1308, 1310 (11th Cir.
2000). This Court agrees with those who apply the Rule
12(b)(1) standard, especially in a case such as this where
the defendant has raised a factual challenge to jurisdiction
and both parties seem to agree that matters outside the
pleadings should be considered.
“Rule
12(b)(1) motions to dismiss for lack of subject matter
jurisdiction can be asserted on either facial or factual
grounds.” Carmichael v. Kellogg, Brown & Root
Servs., Inc., 572 F.3d 1271, 1279 (11th Cir.
2009) (citing Morrison v. Amway Corp., 323 F.3d 920,
925 n.5 (11th Cir. 2003)). “Facial
challenges to subject matter jurisdiction are based solely on
the allegations in the complaint, ” and when
considering a facial challenge, “the court must
… take the complaint's allegations as true.”
Id. “However, where a defendant raises a
factual attack on subject matter jurisdiction, the district
court may consider extrinsic evidence such as deposition
testimony and affidavits.” Id. “In such
an instance, the court may hear conflicting evidence and
decide the factual issues bearing on jurisdiction.”
Boglin, 290 F.Supp.3d at 1261.
III.
CONCLUSIONS OF LAW
The
Eleventh Amendment provides that “[t]he 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.” U.S. Const.
amend. XI. The Eleventh Amendment does not extend to immunize
municipalities or counties within a state from suit. See,
e.g., Stanley v. Israel, 843 F.3d 920, 924
(11th Cir. 2016) (holding that an officer is not
entitled to Eleventh Amendment immunity “if he is
acting as an arm of the county”); Abusaid v.
Hillsborough Cty. Bd. Of Cty. Comm'rs, 405 F.3d
1298, 1301 (11th Cir. 2005) (holding that
“the Eleventh Amendment does not immunize
municipalities from suit”). Therefore, in this case,
SWDA is only entitled to Eleventh Amendment protection if it
was acting as an arm of the state of Alabama.
The
Eleventh Circuit “uses a four-factor test to determine
whether an entity is an arm of the state and thus entitled to
sovereign immunity.” Freyre v. Chronister, 910
F.3d 1371, 1380 (11th Cir. 2018). “These
factors, articulated in Manders v.Lee, 338 F.3d 1304
(11th Cir. 2003) (en banc), are ‘(1) how
state law defines the entity; (2) what degree of control the
State maintains over the entity; (3) where the entity derives
its funds, and (4) who is responsible for judgments against
the entity.'” Id. (quoting
Manders, 338 F.3d at 1309). “Analysis under
Manders is function specific; in addition to
determining the defendant's general status under state
law, [courts] also ask whether the defendant was acting as an
arm of the state ‘in light of the particular function
in which the defendant was engaged when taking the actions
out of which liability is asserted to arise.'”
Id. (quoting Manders, 338 F.3d at 1308). In
this case, SWDA is alleged to have breached its contractual
obligation to reimburse Plaintiff for certain capital
expenses and operational costs and its contractual obligation
to send all construction and demolition wastes, as well as
certain household wastes, commercial wastes, and yard
clippings and trimmings to the Chastang Landfill or Transfer
Station. (Doc. 1 at pp. 6-7). Thus, the question here is
whether SWDA was acting as an arm of the state of Alabama in
fulfilling its contractual obligations to Plaintiff. See
Freyre, 910 F.3d at 1380 (defining the issue as whether
the sheriff's office was “entitled to Eleventh
Amendment immunity when performing child-protective
investigations”).
With
regard to the first Manders factor, SWDA argues that
the statutory language of § 11-89-2 (the legislation
that provides for the establishment of water, sewer, solid
waste disposal, and fire protection districts), which states
that “[t]his chapter is intended to aid the state in
the execution of its duties by providing appropriate and
independent instrumentalities of the state with full and
adequate powers to fulfill their functions, ”
demonstrates that Alabama state law defines solid waste
disposal authorities created by counties and/or
municipalities in accordance with § 11-89A-1, et
seq., as “independent instrumentalities of the
state.” It further contends that this terminology leads
to the conclusion that the legislature intended solid waste
disposal authorities to be arms of the state of Alabama. To
support this argument, SWDA asserts that § 11-89A-1,
et seq., is a subsection of § 11-89-1, et
seq. Plaintiff, on the other hand, argues that these are
two separate and independent chapters of the Alabama Code.
While the Court tends to agree with Plaintiff on this issue,
the Court finds that determination of this question of
Alabama state law is not necessary here.
Section
11-89A-1, which is entitled “Legislative findings,
” states that “in order to provide for the
collection and disposal of solid waste …, it is
necessary and desirable to authorize the creation by
counties and municipalities (or any two or more
thereof) in the state of authorities which will have the
power to issue and sell bonds and notes and using the
proceeds of such bonds and notes to acquire and construct
such facilities.” (Emphasis added). Section 11-89A-2(2)
defines an “Authority” as “[a]ny public
corporation organized pursuant to the provisions of this
chapter.”[1] Section 11-89A-3 provides that potential
authorities are to file applications with a county or
municipality and that the county or municipality will
determine whether to deny or authorize incorporation of the
authority. Nowhere in § 11-89A-1, et seq., is
an Authority referred to as an “independent
instrumentality of the state” or an arm of the state.
Even if the SWDA was referred to as an independent
instrumentality of the state, such a reference does not
equate to SWDA being an arm of the state. Section 11-88-2,
which provides for the creation of water, sewer, and fire
protection authorities, includes the identical language as
that contained in § 11-89-2, stating that “this
article is intended to aid the state in the execution of its
duties by providing appropriate and independent
instrumentalities of the state with full and adequate
powers to fulfill their functions.” (Emphasis added).
In West Morgan-East Lawrence Water and Sewer Authority v.
3M Company, the Eleventh Circuit indicated that, for the
determination of a jurisdictional issue, the term
“independent instrumentality of the state” as
applied to a water authority did not make it an arm of the
state. 737 Fed.Appx. 457, 460 n.2 (11th Cir. 2018)
(citing Limestone Cty. Water & Sewer Auth. v. City of
Athens, 896 So.2d 531, 535-36 (Ala. Civ. App. 2004)
(holding that “a public corporation is an
‘instrumentality of the state' in the sense that it
is created pursuant to the laws of the State and for the
public benefit, but it is “independent' of the
State and ‘is not an agency of the state' because
the State does not own or operate the corporation”)).
Having
reviewed the applicable statute and the relevant case law and
considered the arguments of each party, the Court finds that
the first factor, how state law defines the entity, weighs in
favor of Plaintiff.
The
second Manders factor requires the Court “to
look at the degree of control the state exercises over the
entity generally as well as with respect to the specific
function at issue.” Freyre, 910 F.3d at
1382-83. SWDA argues that because it is subject to regulatory
control by the Alabama Department of Environmental Management
(“ADEM”), because its property and income is
exempt from state taxation, and because it is exempt from
laws governing usury, the state exercises sufficient control
to tilt the scale in its favor as to the second factor. The
Court is not persuaded by the argument that because SWDA is
required to comply with ADEM regulations, it is controlled by
the state. All entities which dispose of solid waste,
including private entities, are required to comply with
regulations promulgated by ADEM with respect to managing
disposal of solid waste. Nor does the fact that SWDA is
exempt from taxes or laws governing usury support its
argument that it is under state control. While the
legislation allowing counties and municipalities to approve
the creation of solid waste disposal ...