OCTOBER TERM, 1996
Syllabus
REGENTS OF THE UNIVERSITY OF CALIFORNIA ET AL.
v. DOE
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 95-1694. Argued December 2, 1996-Decided February 19,
1997
Respondent Doe, a New York citizen, sued the Regents of the
University of California and others, alleging,
inter alia,
that the University had agreed to employ him at a laboratory it
operates pursuant to a contract with the federal Department of
Energy, and that it had wrongfully breached its agreement with him
upon determining that he could not obtain a required security
clearance. Relying on Circuit precedent holding that the University
is "an arm of the state," the District Court concluded that the
Eleventh Amendment barred Doe from maintaining his
breach-of-contract action in federal court. In reversing, the Ninth
Circuit held that liability for money judgments is the single most
important factor in determining whether an entity is an arm of the
State, and gave decisive weight to the terms of the University's
agreement with the Energy Department, under which the Department,
not the State, is liable for any judgment rendered against the
University in its performance of the contract.
Held: The fact that the Federal Government has agreed to
indemnify a state instrumentality against litigation costs,
including adverse judgments, does not divest the state agency of
Eleventh Amendment immunity. Nothing in this Court's opinions
supports the notion that the presence or absence of a third party's
undertaking to indemnify a state agency should determine whether it
is the kind of entity that should be treated as an arm of the
State. Just as with the arm-of-the-state inquiry, see,
e. g.,
Hess v.
Port Authority Trans-Hudson Corporation, 513 U.
S. 30, 51-52, it is the entity's potential legal liability for
judgments, rather than its ability or inability to require a third
party to reimburse it, or to discharge the liability in the first
instance, that is relevant in determining the underlying Eleventh
Amendment question. Accordingly, the Court rejects Doe's principal
contention-that the Amendment does not apply to this litigation
because any damages award would be paid by the Energy Department,
and therefore have no impact upon California's treasury. Because
the question on which certiorari was granted does not encompass
Doe's alternative argument attacking the Ninth Circuit cases
holding the University to be an arm of the State, the Court
declines to address that argument. Pp. 429-432.
65 F.3d
771, reversed.
426
STEVENS, J., delivered the opinion for a unanimous Court.
Charles A. Miller argued the cause for petitioners. With him on
the briefs were Robert A. Long, Jr., John F. Duffy, James E. Holst,
and Patrick J. O'Hern.
Lisa Schiavo Blatt argued the cause for the United States as
amicus curiae urging reversal. With her on the brief were Acting
Solicitor General Dellinger, Assistant Attorney General Hunger,
Deputy Solicitor General Bender, and Mark B. Stern.
Richard Gayer, by appointment of the Court, 519 U. S.
804, argued the cause for respondent. With him on the brief was
Madeleine Tress. *
JUSTICE STEVENS delivered the opinion of the Court.
The narrow question presented by this case is whether the fact
that the Federal Government has agreed to indemnify a state
instrumentality against the costs of litigation, including adverse
judgments, divests the state agency of Eleventh Amendment immunity.
We hold that it does not.
I
Respondent, a citizen of New York, brought suit against the
Regents of the University of California and several individual
defendants in the United States District Court for the Northern
District of California. Although he alleged other claims, we are
concerned only with respondent's breach-ofcontract claim against
the University. Doe contends that the University agreed to employ
him as a mathematical physicist at the Lawrence Livermore National
Laboratory, which the University operates pursuant to a contract
with the Federal Government. According to his complaint, the
*
Richard Ruda and
James I. Crowley filed a brief
for the National Conference of State Legislatures et al. as
amici curiae urging reversal.
James K. T. Hunter, pro se, filed a brief as amicus curiae
urging affirmance.
427
University wrongfully refused to perform its agreement with Doe
because it determined that he could not obtain the required
security clearance from the Department of Energy (Department).
Relying on Ninth Circuit cases holding that the University is "an
arm of the state," 1 the District Court concluded that the Eleventh
Amendment barred respondent from maintaining his breach-of-contract
action in federal court.
The Court of Appeals for the Ninth Circuit reversed. Assuming
that in some, but not all, of its functions the University is
entitled to Eleventh Amendment immunity,2 the court addressed the
narrow question whether it is an arm of the State when "acting in a
managerial capacity" for the Livermore Laboratory.
Doe v.
Lawrence Livermore National Laboratory, 65 F.3d
771, 774 (1995). Although the majority applied "a five-factor
analysis,"3 it emphasized that "liability
1 See App. to Pet. for Cert. A-22, A-24, and A-28 (citing
Thompson v.
City of Los Angeles, 885 F.2d
1439, 1442-1443 (1989), and
Jackson v.
Hayakawa,
682 F.2d
1344, 1350 (1982)).
2 The court relied on one case holding that Congress had
abrogated the University's immunity from suit for patent
infringement,
Genentech, Inc. v.
Eli Lilly &
Co., 998 F.2d
931, 940-941
(CA Fed. 1993), cert. denied, 510 U. S.
1140 (1994), and another holding that the University had waived its
immunity in some cases,
In re Holoholo, 512 F. Supp. 889,
901-902 (Haw. 1981), for its conclusion that the "University is an
enormous entity which functions in various capacities and which is
not entitled to Eleventh Amendment immunity for all of its
functions."
Doe v.
Lawrence Livermore National
Laboratory, 65 F.3d
771, 775 (1995). We have no occasion to consider questions of
waiver or abrogation of immunity in this case. Nor is it necessary
to decide whether there may be some state instrumentalities that
qualify as "arms of the State" for some purposes but not
others.
3 The five factors considered by the court in evaluating whether
the University is an arm of the State were: "[1] whether a money
judgment would be satisfied out of state funds, [2] whether the
entity performs central governmental functions, [3] whether the
entity may sue or be sued, [4] whether the entity has power to take
property in its own name or only the name of the state, and [5] the
corporate status of the entity."
Id., at 774.
428
for money judgment is the single most important factor in
determining whether an entity is an arm of the state."
Ibid.
The majority opinion gave decisive weight to the terms of the
University's agreement with the Department, which made it "clear
that the Department, and not the State of California, is liable for
any judgment rendered against the University in its performance of
the Contract."
Ibid.
The dissenting judge did not take issue with the majority's
emphasis on the importance of the defendant's liability for a money
judgment, but he reasoned that the proper analysis should focus on
the primary legal liability rather than the ultimate economic
impact of the judgment. Noting that it was undisputed that a
judgment against the University "is a legal obligation of the State
of California," id., at 777, he discounted the significance of the
indemnitor's secondary, or indirect, liability. For his conclusion,
he relied on Ninth Circuit precedent suggesting that a State may
not confer Eleventh Amendment immunity on an entity or individual
who would otherwise not enjoy that immunity simply by volunteering
to satisfy judgments against the entity,
Durning v.
Citibank, N.
A., 950 F.2d
1419, 1425, n. 3 (1991), or by passing a statute indemnifying
individual officers from liability,
Blaylock v.
Schwinden, 862 F.2d
1352, 1353-1354 (1988). "The question is not who pays in the
end; it is who is legally obligated to pay the judgment that is
being sought." 65
Because other Courts of Appeals agree with the dissent's focus
on legal rather than financialliability,4 we granted certiorari to
resolve the conflict. 518 U. S. 1004 (1996).
4 See
Cronen v.
Texas Dept. of Human Services,
977 F.2d
934, 938
(CA5 1992) ("[T]he source of the damages is
irrelevant when the suit is against the state itself or a state
agency");
Cannon v.
University of Health Sciences/The
Chicago Medical School, 710 F.2d
351, 357
(CA7 1983) ("No authority supports Cannon's
argument that [the Eleventh Amendment] analysis is altered by the
possibility that a damage award would be met through insurance
proceeds or from federal funds").
429
II
The Eleventh Amendment provides:
"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."
It has long been settled that the reference to actions "against
one of the United States" encompasses not only actions in which a
State is actually named as the defendant, but also certain actions
against state agents and state instrumentalities.
Poindexter
v.
Greenhow, 114 U. S. 270, 287
(1885);
In re Ayers, 123 U. S. 443, 487
(1887);
Smith v.
Reeves, 178 U. S. 436, 438-439
(1900);
Ford Motor Co. v.
Department of Treasury of
Ind., 323 U. S.
459 (1945). Thus, "when the action is in essence one for the
recovery of money from the state, the state is the real,
substantial party in interest and is entitled to invoke its
sovereign immunity from suit even though individual officials are
nominal defendants."
Id., at 464.
When deciding whether a state instrumentality may invoke the
State's immunity, our cases have inquired into the relationship
between the State and the entity in question. In making this
inquiry, we have sometimes examined "the essential nature and
effect of the proceeding,"
ibid.; see also
Kennecott
Copper Corp. v.
State Tax Comm'n, 327 U. S. 573, 576
(1946), and sometimes focused on the "nature of the entity created
by state law" 5 to determine whether it should
5 Ultimately, of course, the question whether a particular state
agency has the same kind of independent status as a county or is
instead an arm of the State, and therefore "one of the United
States" within the meaning of the Eleventh Amendment, is a question
of federal law. But that federal question can be answered only
after considering the provisions of state law that define the
agency's character.
430
"be treated as an arm of the State,"
Mt. Healthy City Bd. of
Ed. v.
Doyle, 429 U. S. 274, 280
(1977).6
Of course, the question whether a money judgment against a state
instrumentality or official would be enforceable against the State
is of considerable importance to any evaluation of the relationship
between the State and the entity or individual being sued.
Hess v.
Port Authority TransHudson Corporation,
513 U. S. 30,
45-51 (1994);
Edelman v.
Jordan, 415 U. S. 651, 663
(1974);
Ford Motor, 323 U. S., at 464. In
Hess, we
evaluated the relationship between an entity created by a bistate
compact and the States that had joined to create that entity in
order to determine whether that entity could properly be
denominated as an "arm" of either of its founding States for the
purposes of the Eleventh Amendment. In addition to considering the
position of the bistate entity as a unique creature within the
federal system, 513 U. S., at 39-42, and the nature of the claims
at issue in the underlying proceeding, id., at 42, we focused
particular attention on the fact that "both legally and
practically" neither of the relevant States would have been
obligated to pay a judgment obtained against the bistate entity,
id., at 51-52.
Respondent seeks to detach the importance of a State's legal
liability for judgments against a state agency from its
6We relied in
Mt. Healthy on our earlier decision that a
California county is not an "arm of the State" and therefore may be
considered a "citizen" of California for the purpose of determining
the federal court's diversity jurisdiction over a state-law claim.
Moor v.
County of Alameda, 411 U. S. 693,717-721
(1973). In
Moor we made a "detailed examination of the
relevant provisions of California law" defining counties, noting
that the county "is liable for all judgments against it and is
authorized to levy taxes to pay such judgments," that it is
"empowered to issue general obligation bonds," and that it has
other characteristics that provide "persuasive indicia of the
independent status occupied by California counties relative to the
State of California."
Id., at 719-721.
431
moorings as an indicator of the relationship between the State
and its creation and to convert the inquiry into a formalistic
question of ultimate financial liability. But none of the reasoning
in our opinions lends support to the notion that the presence or
absence of a third party's undertaking to indemnify the agency
should determine whether it is the kind of entity that should be
treated as an arm of the State.
Just as with the arm-of-the-state inquiry, we agree with the
dissenting judge in the Court of Appeals that with respect to the
underlying Eleventh Amendment question, it is the entity's
potential legal liability, rather than its ability or inability to
require a third party to reimburse it, or to discharge the
liability in the first instance, that is relevant. Surely, if the
sovereign State of California should buy insurance to protect
itself against potential tort liability to pedestrians stumbling on
the steps of the State Capitol, it would not cease to be "one of
the United States."
Accordingly, we reject respondent's principal contentionthat the
Eleventh Amendment does not apply to this litigation because any
award of damages would be paid by the Department of Energy, and
therefore have no impact upon the treasury of the State of
California. The Eleventh Amendment protects the State from the risk
of adverse judgments even though the State may be indemnified by a
third party.
III
As an alternative ground for affirmance, respondent invites us
to reexamine the validity of the Ninth Circuit cases holding that
the University is an arm of the State. He argues that we should
look beyond the potential impact of an adverse judgment on the
state treasury, and examine the extent to which the elected state
government exercises "real, immediate control and oversight" over
the University, see id., at 62 (O'CONNOR, J., dissenting), as well
as the char-
432
acter of the function that gave rise to the litigation. Because
the question we granted certiorari to address does not encompass
this argument, we decline to address it.
The judgment of the Court of Appeals is reversed.
It is so ordered.
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