26
Fla. L. Weekly Fed. C1663aTop of Form

Jurisdiction
— Diversity — Citizenship — District court lacked diversity jurisdiction
over suit between state university and a citizen of another state because state
university, which is an arm of the Florida state government, is not a “citizen”
of state for diversity jurisdiction purposes — Applying the same test that
applies to determine when a state entity is entitled to Eleventh Amendment
immunity, board of trustees of state university is an “arm” of Florida for
diversity jurisdiction purposes because State of Florida defines the board to
be a part of its government, exercises great control over it, funds it, and
pays judgments entered against the board

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. 11th Circuit.
Case No. 16-11341. June 30, 2017. Appeal from the U.S. District Court for the
Middle District of Florida (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) [18 Fla. L. Weekly Fed. C875a] (per curiam); Manders v. Lee,
338 F.3d 1304, 1309 (11th Cir. 2003) [16 Fla. L. Weekly Fed. C877a] (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. Fla. April 5, 2016); Schultz v. Bd. of
Trs. of Univ. of W. Fla., No. 3:06cv442, 2007 WL 1490714 (N.D. Fla. May 21,
2007); Dismuke v. Univ. S. Fla. Bd. of Trs., No. 8:05-CV-340, 2006 WL
166547 (M.D. Fla. Jan. 23, 2006).

To resist that analysis and to avoid
those authorities, CoMentis argues that a different test applies to determine
whether the USF Board is an “arm” of the state for diversity jurisdiction.
Instead of the above four-factor Eleventh Amendment test from Tuveson,
CoMentis argues, a five-factor test from Coastal Petroleum controls for
diversity jurisdiction, a test that focuses on whether the entity has corporate
powers such as the power to sue, to contract, and to plead in court. See
Coastal Petroleum, 695 F.2d at 1318.2 To accept the possibility of some
daylight between the two tests would mean that some state entity might be entitled
to Eleventh Amendment immunity, but still be able to bring a federal suit
alleging diversity jurisdiction.

Having different tests would not be
entirely anomalous. The purposes of diversity jurisdiction are somewhat
different from those of the Eleventh Amendment. A federal court in Hawaii has
pointed out the “divergent rationales for Eleventh Amendment immunity and
diversity jurisdiction,” with the former “aim[ing] to protect states from
lawsuits,” and the latter “meant to limit states’ appearances in federal
court,” suggesting that emphasizing the inquiry into the ultimate payer of
judgments therefore makes sense in the Eleventh Amendment context, but not so
much in the jurisdictional context. Befitel v. Glob. Horizons, Inc., 461
F. Supp. 2d 1218, 1222 (D. Haw. 2006); see also Univ. of R.I. v. A.W.
Chesterton Co., 2 F.3d 1200, 1202 n.4 (1st Cir. 1993). In addition, a
district court opinion that our predecessor Fifth Circuit referred to as “very
scholarly and well reasoned,” Centraal Stikstof Verkoopkantoor, 415 F.2d
at 457 n.3, conspicuously left open whether being an arm of the state for
Eleventh Amendment purposes means that an entity is not a citizen for diversity
purposes, while explicitly holding the reverse, i.e., that not being an arm of
the state for Eleventh Amendment purposes means that a public entity is a
citizen for diversity purposes, S.J. Groves & Sons Co. v. New Jersey
Turnpike Auth., 268 F. Supp. 568, 573 (D.N.J. 1967). Moreover, tying the
two doctrines means for instance that a state arm cannot agree to resolve its
contract suits with out-of-state vendors in federal court even if it wants to,
because even though a state can waive its Eleventh Amendment immunity, e.g.,
Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527
U.S. 666, 670 (1999), it cannot waive limits on diversity jurisdiction.

Nevertheless, CoMentis’s argument
fails for the following reasons.

First, we have already held that the
Eleventh Amendment test controls the diversity jurisdiction analysis, while recognizing
that the two contexts are different. In 1983, in the very case on which
CoMentis relies to argue for a different test, we stated: “Although the
determination made by the court in Aerojet concerned eleventh amendment
immunity, we conclude that the analysis for determining the Board’s status as a
‘citizen’ for the purposes of diversity is the same.” Coastal Petroleum,
695 F.2d at 1318 (citing Aerojet-Gen. Corp. v. Askew, 453 F.2d 819 (5th
Cir. 1971)). In 1998, we stated again: “Although the question of diversity
jurisdiction is distinct from that of immunity, we have also held that the
Eleventh Amendment immunity analysis is applicable to determinations of
citizenship for the purpose of diversity jurisdiction.” Univ. of S. Ala.,
168 F.3d at 412 (citing Coastal Petroleum, 695 F.2d at 1318) (internal
citation omitted). Other circuits as well have embraced Eleventh Amendment
tests like Tuveson‘s to determine whether an entity is an “arm” of a
state for diversity jurisdiction. See, e.g., Pub. Sch. Ret. Sys. v.
State St. Bank & Trust Co., 640 F.3d 821, 826-27 (8th Cir. 2011); Md.
Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255, 260-61 (4th Cir. 2005);
A.W. Chesterton, 2 F.3d at 1202 n.4, 1203 (1st Cir. 1995); Blake v.
Kline, 612 F.2d 718, 726 (3d Cir. 1979).

Second, while in Coastal
Petroleum we held that an entity was a citizen of the state for diversity
jurisdiction, we did so first and foremost because controlling Fifth Circuit
precedent, Aerojet-General, had held that the same entity was not
entitled to Eleventh Amendment immunity, in particular because “the appropriate
Florida statutes had vested title to the land in question with the” entity. 695
F.2d at 1317-18. It is true that we added a three-sentence paragraph
identifying the five-factor analysis used by the district court in that case,
noting that the factors “have been approved by this circuit.” Id. at
1318. We did not proceed to apply the factors, however, but instead cited two
Fifth Circuit cases that themselves did not apply the five factors. The final
sentence of the paragraph referred back to Aerojet and summarily stated
our conclusion: “Because the state has vested title of the land in the Trustees
and because the Trustees have acted and continue to act as a separate and
distinct entity from the state, we hold that the trustees are a citizen within
the meaning of diversity jurisdiction under 28 U.S.C. § 1332 (1976).” Id. This
paragraph hardly amounts to an application of a new and different standard for
the determination of whether an entity is an arm of the state for diversity
jurisdiction purposes.

Because the USF Board is an arm of
the Florida state government, the district court lacked diversity jurisdiction
over the suit between it and CoMentis, a citizen of another state. We therefore
vacate the order below, and remand the case to the district court with
instructions to dismiss the complaint for lack of subject matter jurisdiction.

__________________

*Honorable John M. Rogers, United
States Circuit Judge for the Sixth Circuit, sitting by designation.

1“[T]he Board of Governors is
established as a body corporate comprised of 17 members as follows: 14 citizen
members appointed by the Governor subject to confirmation by the Senate; the
Commissioner of Education; the chair of the advisory council of faculty senates
or the equivalent; and the president of the Florida student association or the
equivalent.” Fla. Stat. § 1001.70(1); see also Fla. Const. art. IX, §
7(d).

2“These
factors have been approved by this circuit and are as follows: (1) whether the
agency can be sued in its own name; (2) whether the agency can implead and be
impleaded in any competent court; (3) whether the agency can contract in its
own name; (4) whether the agency can acquire, hold title to, and dispose of
property in its own name; and (5) whether the agency can be considered a “body
corporate” having the rights, powers and immunities incident to corporations.” Id.
(citing C.H. Leavall & Co. v. Bd. of Comm’ns of Port of New Orleans,
424 F.2d 764 (5th Cir. 1970), and Centraal Stikstof Verkoopkantor, N.V. v.
Ala. State Docks Dep’t, 415 F.2d 452 (5th Cir. 1969)).

* * *