Alabama Space Science Exhibit Commission v. Odysseia Co. Ltd.

          MEMORANDUM OPINION

          MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE

         This case has been to the moon and back. After lengthy briefing on repeated motions to remand (three so far) and multiple mediations, including one before a magistrate judge, the case now has reached the dispositive motion stage.^[1] In its summary judgment motion, the Alabama Space Science Exhibit Commission - ASSEC, for short - renews its challenge to federal jurisdiction. ASSEC reiterates its argument that it is an arm of the State of Alabama and hence not a “citizen of a State” for purposes of diversity jurisdiction under 28 U.S.C.§ 1332(a)(2). ASSEC rests its updated remand argument on evidence that is new to the record in this case but that has been available to ASSEC since it filed its first motion to remand. ASSEC also adds to its legal authority in support of its request for remand a recent decision from the Alabama Supreme Court. Because a district court must examine its subject matter jurisdiction at every stage of a case, the Court will evaluate ASSEC's supplemental evidence and authority and reconsider its rulings on subject matter jurisdiction.^[2]

         PROCEDURAL BACKGROUND

         1. ASSEC's First Motion to Remand

         In its first motion to remand, filed in 2014, ASSEC argued that Odysseia removed this action improperly because the amount in controversy in this action does not meet the $75, 000 jurisdictional threshold in 28 U.S.C. § 1332(a). (Doc. 8). In its initial remand motion, ASSEC did not “dispute that diversity of citizenship exists in this matter.” (Doc. 8, p. 2). During a January 12, 2015 hearing regarding the amount in controversy, ASSEC stated: “we're ready to just move forward with this case . . . We think it's time to get to the merits.” (Doc. 30, p. 2). The Court rejected ASSEC's challenge to the amount in controversy and denied ASSEC's motion to remand. (Docs. 28, 30).

         2. ASSEC's Second Motion to Remand

         In its second motion to remand, filed in 2015, ASSEC argued that the Court lacks subject matter jurisdiction because ASSEC is an arm of the state and therefore is not a citizen for purposes of diversity jurisdiction. (Doc. 35). The Court issued an order in which the Court evaluated the evidence available to it concerning ASSEC's relationship to the State of Alabama and concluded that ASSEC is not an arm of the state. (Doc. 52). The Court held that ASSEC is a citizen of Alabama for purposes of diversity jurisdiction and that because Odysseia is a citizen of a foreign state, the parties to this action are completely diverse. The Court denied ASSEC's second motion to remand. (Doc. 52, pp. 14-15).

         3. ASSEC's Third Motion to Remand

         In its third motion to remand, filed in 2017, ASSEC argued that in an unpublished opinion in Ingalls v. U.S. Space and Rocket Center, 679 Fed.Appx. 935 (11th Cir. 2017), the Eleventh Circuit Court of Appeals implied that ASSEC is a state agency. (Doc. 69, pp. 1-2). The Ingalls decision did not alter this Court's analysis of ASSEC's citizenship because in Ingalls, the Eleventh Circuit did not consider the factors necessary to evaluate whether ASSEC is an arm of the state. (Doc. 72, p. 3). Based on the evidence then in the record, the Court maintained its finding that ASSEC is not an arm of the State of Alabama. The Court denied ASSEC's third motion to remand. (Doc. 72, p. 4).

         4. ASSEC's Fourth Motion to Remand

         In its motion for summary judgment, on “a more developed record, ” ASSEC argues again that it is an arm of the State of Alabama and therefore is not a “‘citizen of a State' for purposes of diversity jurisdiction under 28 U.S.C. § 1332(a)(2).” (Doc. 89, p. 1). The Court will discuss all of the jurisdictional evidence, old and new (again, new to the Court, not to ASSEC), as it evaluates the factors that govern its assessment of ASSEC's status for purposes of federal jurisdiction.

         JURISDICTIONAL ANALYSIS

         As the Court has explained in previous orders, “if a party is deemed to be ‘an arm or alter ego of the State,' then diversity jurisdiction must fail;” however, a “public entity or political subdivision of a state, unless simply an ‘arm or alter ego of the State'” is “a citizen of the state for diversity purposes.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 412 (11th Cir. 1999) (quoting Moor v. Alameda Cty., 411 U.S. 693, 717-18 (1973)). To determine whether ASSEC is an “arm of the state, ” the Court must consider: “(1) how the state law defines the entity; (2) the degree of state control over the entity; (3) where the entity derives its funds; and (4) who is responsible for judgments against the entity.” Nichols v. Ala. State Bar, 815 F.3d 726, 732 (11th Cir. 2016); see also Lightfoot v. Henry Cty. School Dist., 771 F.3d 764, 769 (11th Cir. 2014); Manders v. Lee, 338 F.3d 1304, 1309 (11th Cir. 2003). The Court discusses each factor in turn.

         1. Alabama Law Regarding ASSEC's Status

         The Court looks again to the Alabama Code and to decisions from the Alabama Supreme Court to consider how Alabama law characterizes ASSEC.

         In its 2016 order denying ASSEC's motion to remand, the Court stated that it had located no opinion in which an Alabama state court had determined whether ASSEC is an arm of the state. (Doc. 52, pp. 3-4). That is still true, but the Court has located dicta in which the Alabama Supreme Court indicated that ASSEC's sister entity, the Alabama Space Science Exhibit Finance Authority, is not an arm of the State of Alabama. In Hospital Systems, Inc. v. Hill Rom, Inc., the Alabama Supreme Court held that the Health Care Authority of Athens and Limestone County is an entity separate from the State of Alabama even though the Health Care Authority bears some of the characteristics of an arm of the state. Hospital Systems, Inc. v. Hill Rom, Inc., 545 So.2d 1324, 1326 (Ala. 1989). In reaching its decision, the Alabama Supreme Court analogized the Health Care Authority to the Alabama Space Science Exhibit Finance Authority.

         The Alabama Supreme Court discussed the Health Care Authority's status as part of the court's consideration of the extent to which the Health Care Authority had to comply with Alabama's Competitive Bid Law. The provision of the bid law at issue in Hill Rom provided:

All expenditures of funds of whatever nature for labor, services or work, or for the purchase of materials, equipment, supplies or other personal property made by ... the county commissions and the governing bodies of the municipalities of this State ... shall be made under contractual agreement entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder....

545 So.2d at 1326 (emphasis in Hill Rom). The Alabama Supreme Court determined that the Alabama Legislature separately incorporated the Health Care Authority and other public entities like the Alabama Space Science Exhibit Finance Authority so that those entities could function independent of state and local authorities. The Alabama Supreme Court explained that the Health Care Authority, which the Supreme Court referred to as the “Hospital, ” was:

incorporated pursuant to the provisions of Code 1975, § 22-21-310 et seq. It is “a separate entity from the state and from any local political subdivision, including a city or county within which it is organized” (Opinion of the Justices, 254 Ala. 506, 511, 49 So.2d 175, 180 (1950)); therefore, it is not one of the governmental entities within the contemplation of the prohibitions of § 22 of our state constitution or § 41-16-50(a). Furthermore, the § 22-21-335 exemption would apply to the Hospital even if the directors of the Hospital's board were appointed by either the governing body of the City of Athens or that of Limestone County. Alabama State Florists Association v. Lee County Hospital Bd., 479 So.2d 720 (Ala.1985).

The exemption from the Competitive Bid Law enjoyed by the Hospital is “part and parcel” of legislation creating and maintaining public authorities in Alabama. See, for example, § 4-3-60 (airport authorities); § 11-54A-17 (downtown redevelopment authorities); § 41-10-212 (Alabama Shakespeare Festival Theatre Finance Authority); and § 41-10-331 (Alabama Space Science Exhibit Finance Authority). The necessity for the services provided by the Hospital and other health care authorities, as well as the services provided by the myriad of boards and authorities authorized by our state legislature, is undisputed.

It is, however, equally true that the governmental entities normally responsible for providing these services too often lack sufficient funds to justify the expenditure of city or county tax revenues in these areas. Thus, the “authority, ” through its separate existence, provides the required service with funds obtained from sources other than the tax revenues of a governmental entity.

545 So.2d at 1326 (emphasis added).

         The Alabama Supreme Court's description of the Health Care Authority applies equally to ASSEC and to its sister entity, the Alabama Space Science Exhibit Finance Authority or ASSFA. The legislation creating ASSFA states:

It is the intent of the Legislature, by the passage of this article, to authorize the incorporation of a public corporation for the purposes of acquiring land, constructing and equipping facilities, leasing such facilities to [ASSEC] (or others, to the extent provided for herein), and providing financing therefor, and to vest such corporation with all powers, authority, rights, privileges and titles that may be necessary to enable it to accomplish such purposes. This article shall be liberally construed in conformity with the purpose herein stated.

Ala. Code § 41-10-301. The legislation creating the ASSEC states:

There is hereby created and established a state agency to be known as the Alabama Space Science Exhibit Commission, which shall be a public body corporate with all the powers and privileges of a corporation, for the purpose of providing for and participating in the management and control of facilities to house and display such visual exhibits of space exploration and hardware ...