NH Dept. of Admin. v. Ramsey

United States Court of Appeals
For the First Circuit

No. 03-1920 Volume I of II

STATE OF NEW HAMPSHIRE,

Plaintiff, Appellant,

NEW HAMPSHIRE DEPARTMENT OF ADMINISTRATIVE SERVICES; STATE OF NEW
HAMPSHIRE DEPARTMENT OF TRANSPORTATION; NEW HAMPSHIRE STATE
TREASURER; STATE OF NEW HAMPSHIRE DEPARTMENT OF EDUCATION,

Plaintiffs,

v.

DAVID RAMSEY, JOHN LOVEDAY, JOHN TOOMEY, MELINDA CONRAD, WAYNE
ALDRICH, NORMAN JITRAS, MICHAEL ROSSI, JOHN SCARLOTTO, and
MARTHA YORK, as members of the N.H. Committee of Blind Vendors;
NEW HAMPSHIRE COMMITTEE OF BLIND VENDORS;
UNITED STATES DEPARTMENT OF EDUCATION,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Steven J. McAuliffe, U.S. District Judge]

Before

Lynch, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lipez, Circuit Judge.

Nancy J. Smith, Senior Assistant Attorney General, with whom
Peter W. Heed, Attorney General, was on brief, for appellant.

Jack B. Middleton, with whom Andrea L. Daly, Laura B. Dodge,
and McLane, Graf, Raulerson & Middleton were on brief, for appellee
New Hampshire Committee of Blind Vendors.

Mark B. Stern, Attorney, Appellate Staff, Civil Division, with
whom Alisa B. Klein, Attorney, Appellate Staff, Civil Division,
Peter D. Keisler, Assistant Attorney General, and Thomas P.
Colantuono, United States Attorney, were on brief, for appellee
United States Department of Education.

Robert R. Humphreys on brief for Randolph-Sheppard Vendors of
America, American Council of the Blind, and National Educational
and Legal Defense Services for the Blind, amici curiae.

April 29, 2004
 LYNCH, Circuit Judge. The district court entered

judgment for the New Hampshire Committee of Blind Vendors and nine

of its individual members (collectively, the Blind Vendors) and the

United States Department of Education (USDOE), largely affirming a

federal arbitration panel award against New Hampshire of

compensatory damages of approximately $900,000 as well as

prospective equitable relief. The Blind Vendors' claim is that New

Hampshire did not give proper "priority" to blind vendors, as

required by federal law, in running lucrative vending machine

operations in rest areas along federally funded interstate

highways. New Hampshire gave others those concessions by contract

in exchange for a percentage of the proceeds, which the state put

into the state treasury. The district court characterized the

state's actions as "stealing from the blind."

Several major issues are presented in this complex and

difficult case. The threshold issue is whether New Hampshire, in

light of its Eleventh Amendment immunity, may be subject to either

the compensatory damages award or prospective equitable relief in

a federal forum. The district court found the state waived any

immunity it may have had by its litigation conduct. We hold that

the district court had jurisdiction to affirm an award of

prospective equitable relief because the state waived any immunity

to such relief in a federal forum (a) by its litigation conduct and

(b) by judicial estoppel and its participation in the program

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established by the Randolph-Sheppard Act (R-S Act), 20 U.S.C. § 107

et seq. Having determined that Eleventh Amendment immunity

presents no bar to prospective equitable relief here, we affirm

such relief on the merits, finding that the state has not given

proper "priority" to blind vendors as required by federal law and

that a conflicting state statute is preempted.

Our view of the state's Eleventh Amendment immunity from

damages is different. We hold that the state has not waived

immunity from damages by its litigation conduct; we also conclude

that § 111(b) of the Surface Transportation Assistance Act (STA

Act),1 23 U.S.C. §§ 101 et seq., under which the Blind Vendors seek

relief, does not clearly evidence an intent to subject states to

such damages. We vacate the damages award and order dismissal of

those claims.

I.

This case is shaped by two federal statutes. The first

is the Randolph-Sheppard Act, under which the federal government,

in partnership with consenting states, seeks to provide economic

opportunities to the blind by granting priority to licensed blind

vendors in contracts to operate vending facilities on federal

property. 20 U.S.C. § 107(a)-(b). The Act, which was first

1
The STA Act was later renamed the Transportation Equity
Act for the 21st Century. Pub. L. No. 105-178, 112 Stat. 107
(1998). The parties and papers in this case refer to the Act by
both names, but for clarity and convenience, this opinion will
refer to the Act as the STA Act.

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enacted in 1936, Pub. L. No. 74-732, 49 Stat. 1559 (1936), provides

that:

In authorizing the operation of vending facilities on
Federal property, priority shall be given to blind
persons licensed by a State agency as provided in this
chapter; and the Secretary, through the Commissioner,
shall, after consultation with the Administrator of
General Services and other heads of departments,
agencies, or instrumentalities of the United States in
control of the maintenance, operation, and protection of
Federal property, prescribe regulations designed to
assure that--

(1) the priority under this subsection is given to
such licensed blind persons (including assignment
of vending machine income pursuant to section 107d-
3 of this title to achieve and protect such
priority), and

(2) wherever feasible, one or more vending
facilities are established on all Federal property
to the extent that any such facility or facilities
would not adversely affect the interests of the
United States.

20 U.S.C. § 107(b).

Under the R-S Act, participating states, such as New

Hampshire, can gain access to federal property to benefit their own

blind vendors by having state agencies apply to the United States

Department of Education to participate in and administer the

program. 20 U.S.C. § 107b. In their applications, those state

agencies must agree to set up licensing programs for blind vendors,

match them with available contracts for vending facilities on

federal property, and provide them with equipment and stock. Id.

Once approved, those agencies are known as "state licensing

agencies" (SLAs). New Hampshire's SLA is the New Hampshire

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Department of Education, Division of Vocational Rehabilitation,

Bureau of Blind Services.

We quote a succinct description of the operation of the

R-S Act set forth by a sister circuit:

The Randolph-Sheppard Act was enacted in order to
provide employment opportunities for the blind. The Act
grants priority to those blind persons who desire to
operate vending facilities on federal property. 20
U.S.C. § 107(b). The Act divides responsibility for the
blind vendor program between the state and federal
agencies. The Secretary of Education is responsible for
interpreting and enforcing the Act's provisions, and more
specifically, for designating state licensing agencies.
20 U.S.C. §§ 107a(a)(5), 107b; 34 C.F.R. §§ 395.5, 395.8.
A person seeking a position as a blind vendor applies to
the designated state agency and is licensed by that
agency. The state agency in turn applies to the federal
government for the placement of the licensee on federal
property. 20 U.S.C. § 107b. Once the state and the
federal government have agreed on an appropriate location
for the vending facility, the state licensing agency is
responsible for equipping the facility and furnishing the
initial stock and inventory. 20 U.S.C. § 107b(2). The
blind vendor thereafter operates as a sole proprietor who
is entitled to the profits of the vending facility and
who is responsible for the facility's losses.
The Act requires that if the state licensing agency
operates vending machines that directly compete with a
vending facility operated by a blind vendor, then a
percentage of the income from such competing machines
must be given to the blind vendor licensed to do business
on that property. 20 U.S.C. § 107d-3. If no licensee is
operating a facility on the property, the income from
state-operated vending machines is used for a variety of
purposes that benefit all blind vendors in the state
program. 20 U.S.C. 107d-3(c).

Tenn. Dep't of Human Servs. v. United States Dep't of Educ., 979

F.2d 1162, 1163-64 (6th Cir. 1992).

States' participation in the program is voluntary.

States choose whether they wish to have their agencies apply to

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administer the program under the R-S Act and take on the

corresponding obligations. See 20 U.S.C. § 107b. The principal

benefit that a state receives for participating in the program is

an opportunity to improve the lot of its blind population. A

participating state also receives funds. For example, even if no

blind vendor operates vending facilities on a particular federal

property, the relevant SLA receives income from vending machines on

that property; these proceeds can be used to fund retirement,

health insurance, sick leave, and vacation time for blind vendors

and to defray various costs associated with running the program.

20 U.S.C. §§ 107d-3(a), (c).

SLAs also agree to a three-step process ("R-S grievance

procedures") for dealing with blind licensees who are dissatisfied

with the operation of the vending program: first, a hearing at the

state level before the SLA; then, an opportunity to appeal in an

arbitration before a USDOE panel; and finally, judicial review of

the arbitration panel's decision in the federal courts under the

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Administrative Procedure Act (APA), 5 U.S.C. § 701.2 At the first

stage, the SLA agrees:

to provide to any blind licensee dissatisfied with any
action arising from the operation or administration of
the vending facility program an opportunity for a fair
hearing, and . . . to submit the grievances of any blind
licensee not otherwise resolved by such hearing to
arbitration [before the USDOE].

20 U.S.C. § 107b(6). After the hearing before the SLA, a

dissatisfied blind licensee may go to arbitration before a panel

convened by the federal Secretary of Education, under 20 U.S.C. §

107d-2(b)(1). The procedures used by the panel are governed by the

APA, 5 U.S.C. § 551 et seq. 20 U.S.C. § 107d-2(a). The decision

of the panel is "subject to appeal and review as a final agency

action" under the APA, 5 U.S.C. § 701, in a federal district court.

20 U.S.C. § 107d-2(a).

2
We quote again from Tenn. Dep't of Human Servs.:

In order to resolve disputes arising under the Act, both
administrative and judicial remedies are available for
licensed blind vendors. The Secretary of Education may
decertify a state licensing agency that refuses to
cooperate with the Secretary. 34 C.F.R. § 395.17. In
all other situations, the Secretary must rely on a blind
vendor to file a complaint in order to enforce the Act's
substantive provisions. If a blind vendor has a
complaint regarding the state's operation of the program,
he or she may request an evidentiary hearing before the
state licensing agency and, if dissatisfied with the
outcome of the hearing, may ask the Secretary to convene
an arbitration panel to resolve the dispute. 20 U.S.C.
§§ 107d-1(a), 107d-2(b)(1). An arbitration panel's
decision is subject to review as a final agency action.
20 U.S.C. § 107d-1(a).

979 F.2d at 1164.

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 The R-S Act says nothing about what relief can be granted

at any of the three levels when the grievance is initiated by a

blind licensee, as here. It does specify, however, the relief that

can be granted when the grievance is initiated by an SLA.3 SLAs

may file complaints that a federal agency is violating the Act. 20

U.S.C. § 107d-1(b). In that situation, upon a finding by the panel

that "acts or practices of any such . . . agency are in violation

of [the R-S] Act, or any regulation issued thereunder," the head of

the offending agency "shall cause such acts or practices to be

terminated promptly and shall take such other action as may be

necessary to carry out the decision of the panel." 20 U.S.C. §

107d-2(b)(2). The statute does not expressly authorize the award

of damages.

The other federal statute involved is the Surface

Transportation Assistance Act. The STA Act seeks to increase

construction and safety on the interstate and national highway

systems. 23 U.S.C. §§ 101(b), 103. Most states receive large

amounts of federal funding under the Act; New Hampshire received

3
As one court has noted, § 107d-1 of the R-S Act

sets out a dual scheme of remedies. Subsection (a) gives the
blind licensee a direct action against the state licensing
agency. Subsection (b), however, gives the blind licensee
nothing; rather, it gives the state agency authority to bring
a complaint against a federal entity controlling property on
which vending facilities are located.

Ga. Dep't of Human Res. v. Nash, 915 F.2d 1482, 1490 (11th Cir.
1990).

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about $141 million in 2002. See U.S. Census Bureau, Federal Aid to

States for Fiscal Year 2002, at 17 tbl. 1 (2003).

Under the STA Act, a state cannot accept federal highway

funds without entering into an agreement with the Secretary of

Transportation. 23 U.S.C. §§ 106, 110. Included in such an

agreement is the promise to comply with the terms and conditions

set forth in Title 23. 23 C.F.R. § 630.112(a). Title 23, in turn,

sets forth a priority system for vending machines. Historically,

under the STA Act, states accepting federal aid for construction

projects on the interstate system had to agree not to construct

"commercial establishments for serving motor vehicle users" along

the rights-of-way of the interstate system. 23 U.S.C. § 111(a).

In 1983, Congress amended the Act to add 23 U.S.C. § 111(b), which

creates an exception to this general prohibition and sets forth a

priority system for vending machines:

[A]ny State may permit the placement of vending machines
in rest and recreation areas, and in safety rest areas,
constructed or located on rights-of-way of the Interstate
System in such State. Such vending machines may only
dispense such food, drink, and other articles as the
State transportation department determines are
appropriate and desirable. Such vending machines may
only be operated by the State. In permitting the
placement of vending machines, the State shall give
priority to vending machines which are operated through
the State licensing agency designated pursuant to section
2(a)(5) of the Act of June 20, 1936, commonly known as
the 'Randolph-Sheppard Act' (20 U.S.C. 107a(a)(5)). The
costs of installation, operation, and maintenance of
vending machines shall not be eligible for Federal
assistance under this title.

§ 111(b); Pub. L. No. 97-424, 96 Stat. 2097, 2106 (1983).

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 The STA Act, however, does not expressly state how

disputes concerning the "priority" created in § 111(b) should be

resolved. In general, authority to enforce the STA Act has been

delegated to the United States Department of Transportation (DOT),

see 23 U.S.C. § 315, whose regulations state:

If the [Federal Highway] Administrator determines that a
State has violated or failed to comply with the Federal
laws or the regulations in this part with respect to a
project, he may withhold payment to the State of Federal
funds on account of such project, withhold approval of
further projects in the State, and take such other action
that he deems appropriate under the circumstances, until
compliance or remedial action has been accomplished by
the State to the satisfaction of the Administrator.

23 C.F.R. § 1.36. Some provisions of the STA Act contain more

specific enforcement procedures, see, e.g., 23 U.S.C. §§ 116(c),

131(b), 133(e), but § 111 does not. The STA Act does not contain

a general suit mechanism or a provision requiring states to waive

sovereign immunity.

In 1985, two years after the STA Act was amended to add

§ 111(b), New Hampshire passed legislation to place vending

machines in rest areas along state turnpikes and the interstate

highway system. N.H. Rev. Stat. Ann. §§ 230:30-a, 229:3. The New

Hampshire Department of Administrative Services (NHDAS) was put in

charge of administering the vending contracts. NHDAS selected

vendors through a competitive bidding process open to all. See

N.H. Rev. Stat. Ann. § 21-I:11; N.H. Code Admin. R. Adm. 603.06.

Its policy was generally to award the contract to the bidder

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"offering the highest rate of return to the State of New

Hampshire," as long as that bidder satisfied basic requirements

like the ability to meet the contract specifications and to post a

performance bond. If two or more of the high bids were identical,

the contract would generally be awarded by "drawn lot." The

exception to this general rule was that if one of the high bidders

was the Bureau of Blind Services (the New Hampshire SLA), the

contract would be awarded to the Bureau (the Tie Rule).

Since the passage of N.H. Rev. Stat. Ann. § 230:30-a,

NHDAS has invited bids for vending machine contracts on five

occasions for rest areas along rights-of-way of the interstate

highway system: (1) in 1988 for rest areas in Hooksett on I-93; (2)

in 1991 for rest areas in Seabrook on I-95, Salem on I-93, and

Springfield on I-89; (3) in 1997 for rest areas in Lebanon on I-89,

Canterbury on I-93, Sanbornton on I-93, and Sutton on I-89; (4) in

1999 for those same rest areas when the 1997 contract had expired;

and (5) in 2001 for the same Hooksett rest areas. All of the rest

areas in question are owned by the state of New Hampshire. The

Hooksett rest areas are on toll roads and have been constructed and

maintained without federal aid. The Seabrook rest areas were

constructed with federal aid, but are on the state turnpike system

and are maintained through state funds. In the first four bid

opportunities, NHDAS followed its standard procedure as described

above. The SLA did not bid on the 1988 and 1991 contracts,

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apparently because both contracts contained specifications

requiring the construction of shelters to house the vending

machines and the SLA is precluded from making capital expenditures

under state law. The Bureau did bid on the 1997 and 1999 contracts

but lost to higher bidders in both instances. In 2001, after this

litigation had begun, NHDAS departed from its standard policy.

Instead of asking the SLA to submit a bid as the other contractors

did, NHDAS had the other contractors bid first and then offered the

Bureau the contract on the same terms as the high bid (the Match

Rule). After consulting with the New Hampshire Committee of Blind

Vendors, the SLA turned down the offer, stating that it preferred

to await clarification of its priority right in this action.

II.

A. First Federal Court Action

On January 6, 1998, the Blind Vendors4 brought suit under

28 U.S.C. § 1331, alleging that the state had violated the STA Act,

23 U.S.C. § 111(b), by awarding vending contracts without giving

priority to machines operated through the SLA. The named defendant

was the state of New Hampshire, through its Department of

Administrative Services. The complaint sought an injunction

voiding all existing vending machine contracts and requiring the

4
At this stage, the suit was brought only by the New
Hampshire Committee of Blind Vendors; the nine individual members
had not yet joined. For clarity and convenience, however, we refer
to the Committee alone as the Blind Vendors.

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state to grant the right to operate those vending machines to

licensed blind vendors, along with "such other relief as is

equitable and just." The complaint did not seek damages for the

alleged prior violations.

The state defendant moved to dismiss on the ground that

the court lacked subject matter jurisdiction because the Blind

Vendors had "failed to exhaust" their administrative remedies

before filing their judicial action, as required by 20 U.S.C. §

107d-1 of the R-S Act. The motion also stated that "[i]f the court

does not dismiss this action, this court should abstain from

accepting jurisdiction over this action," citing Colorado River

Water Conservation Dist. v. United States, 424 U.S. 800 (1976).

The state said that the Blind Vendors had simultaneously filed an

action in the New Hampshire state courts and that the federal court

should defer to the state court. As best we can tell, the state

court action also invoked the STA Act and sought damages.

The state's motion in federal court did not seek to

dismiss the action based on Eleventh Amendment immunity. Nor did

it seek dismissal on the ground that the state was not a proper

party or that no cause of action was stated.

In the supporting memorandum, the state also did not

argue that the case was barred by the Eleventh Amendment. The

state did argue that the Blind Vendors' claim arose under the R-S

Act because § 111(b) of the STA Act incorporated the R-S Act by

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referring to a priority for vending machines operated through "the

State licensing agency designated pursuant to" the R-S Act. The

state contended that R-S grievance procedures were available and

had to be exhausted. Inherent in its argument was the assertion

that a claim under the STA Act could not be brought before the

exhaustion of grievance procedures under the R-S Act. The state

qualified this argument in a footnote, stating that

Defendant does not agree that the Randolph-Sheppard Act
in general applies to the facts of this case nor that, to
the extent that it does apply, that it gives Petitioner
the rights claimed. However, for purposes of this Motion
to Dismiss only, it is assumed that Petitioner's
allegation that the Randolph-Sheppard Act applies will be
accepted as true.

In support of the abstention request, should the court

not dismiss the action, the state argued that the entire dispute

(both damages and injunctive relief) would be more readily resolved

in the pending state court action, noting:

Plaintiff's state and federal suits were filed
essentially at the same time and both are at very early
stages. Thus, the forums' order of jurisdiction is not
a factor. Finally, the parallel state-court proceeding
would be the better vehicle for the complete and prompt
resolution of the issues between the parties. See
Elmendorf, 48 F.2d at 50. Part of the relief which the
Plaintiff seeks is termination of contractual rights
between the State and third parties. The State has not
and does not waive its immunity to suit in federal court
under the Eleventh Amendment of the United States
Constitution in regards to suits involving contractual
rights. Therefore, only in the state court action can
all of the issues raised by this pleading be addressed.

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(emphasis added). Thus, the state conceded that even if the claim

could not go forward in federal court, the state court proceeding

could go forward.

The Blind Vendors opposed the motion to dismiss, arguing,

inter alia, that their claims arose under the STA Act rather than

the R-S Act, that R-S grievance procedures therefore did not apply,

and that the STA Act itself had no grievance procedures to be

exhausted. The Blind Vendors also argued that abstention was

improper, as they sought only prospective injunctive relief, while

the state court action did not seek any equitable relief.5 The

state did not file a reply.

The federal court issued an order and judgment on March

17, 1998, dismissing the complaint without prejudice, finding that

the Blind Vendors had failed to exhaust administrative remedies.

The court accepted the state's argument that the STA Act

incorporated the R-S Act's administrative procedures, and relied

principally on the statutory text of the R-S Act, which states that

R-S grievance procedures apply to "[a]ny blind licensee who is

dissatisfied with any action arising from the operation or

administration of the vending facility program." 20 U.S.C. § 107d-

1(a) (emphasis added). The court found that the term "vending

facility program" included the program under § 111(b) of the STA

5
The Blind Vendors noted that the state was free to ask
that any damages claim in state court be combined with the
equitable claim in federal court, if it wanted all issues combined.

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Act. The court also addressed in a footnote what it understood to

be the state's reference to the Eleventh Amendment:

Parenthetically, the court notes that the State also
claims that the Eleventh Amendment precludes any award of
monetary damages. At a minimum, that issue is open to
debate.

B. State Administrative Hearing

By letter dated March 30, 1998, the Blind Vendors6

requested a state administrative hearing before the SLA under the

first stage of R-S grievance procedures. The Blind Vendors sought

injunctive relief, "challeng[ing] the right of the State to grant

any vending contracts on Interstate Highways to anyone but licensed

blind vendors, unless blind vendors consent to another

arrangement." Significantly, the Blind Vendors also, for the first

time pertinent to the case before us, sought money damages in the

form of commissions paid to the state since the inception of the

STA Act as well as for lost profits. New Hampshire does not claim

that it asserted Eleventh Amendment immunity before the state

Hearing Officer, and our review of the record reveals no such claim

of immunity. (Of course, this was a state administrative

proceeding, albeit one required under a federal statute in an

agreement with the state.) Instead, the state moved to dismiss the

proceedings before the SLA on the basis that:

6
At this point, the Committee was joined by nine of its
individual members.

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 (1) the rest areas at issue are on state, not federal,
property and so are not subject to the R-S Act;

(2) the plaintiffs' claims arise under provisions of the R-S
Act that are not incorporated into the STA Act;

(3) any priority required by 20 U.S.C. § 111 has in fact been
provided;

(4) even assuming the plaintiffs had any rights under the R-S
Act, the statute does not authorize the state Hearing Officer
to terminate an existing concession agreement or to award
relief.

The state Hearing Officer granted the state's motion to

dismiss on July 3, 1998, saying:

Because the State has presented credible and unrebutted
evidence that the 'rest areas' in issue are located on
State land, and because the Federal statutes [i.e., the
R-S Act and STA Act] can reasonably be read [to] require
the requested State agency 'priority' apply only to
accommodate such an application to a vending machine rest
area on 'Federal' land, there is no factual issue that
will reasonably permit the Committee of Blind Vendors to
prevail on these facts. Therefore, the matter is
dismissed.7

The Blind Vendors moved for reconsideration. They did not dispute

that the R-S Act applies only to federal land, but argued that §

111(b), unlike the R-S Act, clearly applies to rest areas on both

state and federal land. The state responded by arguing that if the

R-S Act does not apply to these rest areas, the Hearing Officer had

no jurisdiction to issue relief. The Hearing Officer denied the

7
The Hearing Officer's ruling that § 111(b) applies only
on federal land is puzzling. The state never contested that §
111(b) applied to state-owned rest areas; it argued only that the
R-S Act did not apply to such rest areas and that the priority
required by § 111(b) was provided here.

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motion on July 23, 1998, reiterating its position that neither §

111(b) nor the R-S Act applies to state-owned land.

C. Proceedings Before Federal Arbitration Panel

In October 1998, the Blind Vendors appealed the state

Hearing Officer's decision, as authorized under 20 U.S.C. § 107d-

1(a), by filing a letter of complaint with the federal Secretary of

Education against the SLA. In the letter, the Blind Vendors sought

(1) recognition that the priority provisions of § 111(b) apply to

state-owned rest areas off of the interstate highway system, (2)

recognition that New Hampshire's competitive bidding process under

N.H. Rev. Stat. Ann. § 230:30-a violates § 111(b) by failing to

provide priority, (3) permission to interfere with existing

contracts to provide blind vendors a priority to operate vending

machines at New Hampshire rest areas, and (4) money damages in the

form of all commissions paid to the state since the inception of

the STA Act, as well as lost profits. The Secretary, as required

by 20 U.S.C. § 107d-2(a), convened an arbitration panel to hear the

case.

By letter dated October 28, 1998, the state8 moved to

dismiss for lack of jurisdiction, but not on Eleventh Amendment

grounds. The state argued principally that R-S grievance

8
At this stage, the SLA, rather than the state itself, was
the respondent, but we refer to the SLA as "the state" for clarity
and convenience.

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procedures did not apply to the Blind Vendors' complaint because

the claims arose under the STA Act, not the R-S Act.

Later, sometime between January and March of 2000, the

state filed an undated memorandum that included a challenge to the

panel's jurisdiction on the ground that "[a]bsent a clear intent of

the Congress to waive a State's sovereign immunity under the

Eleventh Amendment, the Constitution does not provide for federal

jurisdiction over disputes against states by federal court or by

extension a federally appointed arbitration panel." Because the

STA Act expressed no such intent, the state argued, there was no

jurisdiction.

This argument that no relief was available in a federal

forum was raised more than two years into the controversy. This

marks the first occasion that we have found in which the state

argued that the Eleventh Amendment precluded application of the STA

Act or the R-S Act to grant any form of relief. The state's

memorandum cited Kimel v. Fla. Bd. of Regents, 528 U.S. 62 (2000),

which was decided on January 11, 2000. Perhaps reading Kimel is

what prompted the state to assert Eleventh Amendment immunity for

the first time. We note, though, that as far back as 1973, the

state of New Hampshire has raised the issue of Eleventh Amendment

immunity from suit under federal statutes. See Carver v. Hooker,

369 F. Supp. 204, 216 (D.N.H. 1973) (discussing Eleventh Amendment

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immunity of state official from suit under 42 U.S.C. § 1983 and

other federal statutes).

The Blind Vendors also filed a memorandum on jurisdiction

on March 3, 2000. It is unclear whether this memorandum was filed

in reply to or simultaneously with the state's memorandum. In any

event, the Blind Vendors' memorandum did not respond to the new

Eleventh Amendment argument.

At a hearing before the arbitration panel on March 10,

during which the parties engaged in extensive oral argument, the

state made no mention of Eleventh Amendment immunity. Nor did the

state mention Eleventh Amendment immunity in the requested rulings

of law that it submitted to the arbitration panel.

On June 12, 2000, the arbitration panel rejected the

state's jurisdictional challenge, finding that Congress intended R-

S grievance procedures to apply to disputes over priority under §

111(b). The panel made no mention of the state's Eleventh

Amendment argument. There was a dissenting opinion, which argued

that the complaint should be dismissed because the STA Act does not

employ R-S grievance procedures; that opinion did not address the

Eleventh Amendment issue either. The state did not press its

Eleventh Amendment argument, nor did it go to federal court to

enjoin the R-S grievance procedures on Eleventh Amendment grounds.

In a separate order issued on July 11, 2001, the panel

ruled against the state on the merits. The most pertinent of the

-21-
panel's rulings of law and findings of fact can be found in the

appendix to this opinion. Principally, the panel held that the

priority provisions of § 111(b) required that SLAs be given a

"right of first refusal." The panel found that this meant that the

SLA had to "receive an opportunity to operate vending machines

before any private vendor is even pursued" (emphasis original), and

that the SLA "must waive its right to a priority in writing before

[the state] approaches any other entity." It held that N.H. Rev.

Stat. Ann. § 230:30-a, which it found to adopt a conflicting

priority policy, was preempted.

The panel also awarded what it termed "prospective[]"

damages in the amount of all commissions received from the disputed

rest areas after October 28, 1998 (when the panel determined that

the Blind Vendors had filed their complaint with the USDOE) and

ordered that these amounts be paid to the SLA for appropriate uses

to benefit blind vendors. The panel denied the Blind Vendors'

claim for attorneys' fees.

III.

On September 13, 2001, the New Hampshire Department of

Education, NHDAS, the New Hampshire Department of Transportation,

and the State Treasurer filed two suits in federal district court

against the USDOE and the Blind Vendors, seeking review of the

-22-
panel decision under 20 U.S.C. § 107d-2(a).9 The Blind Vendors

filed counterclaims in both suits, seeking confirmation and

enforcement of the panel's decision, an award of attorneys' fees,

and a modification to the panel's damages award to calculate

damages from 1985, when N.H. Rev. Stat. Ann. § 230:30-a was

enacted, or in the alternative, from January 6, 1998, when the

Blind Vendors had first brought suit. The two suits were

consolidated with the assent of the state agencies. On motion of

the Blind Vendors, and over the objection of the state agencies,

the district court then dismissed all of the state agencies except

for the state Department of Education, on the ground that the

agencies, as members of the executive branch, were barred from

taking positions independent or contrary to one another.

In response, the state Department of Education, now the

only remaining state agency in the case, moved to substitute the

state of New Hampshire as the real party in interest. New

Hampshire supported the motion, asserting that it was the "proper

real party in interest." The state does not now and has never

argued that it is not a properly named party. Nor has it ever

argued that state officers, not state agencies, were the only

proper parties before the court or that prospective equitable

relief could be awarded only against state officers.

9
One suit was brought by the New Hampshire Department of
Education, while the other was brought by NHDAS, the New Hampshire
Department of Transportation, and the State Treasurer.

-23-
 Both sides filed cross-motions for summary judgment. The

state asserted Eleventh Amendment immunity against both the

arbitration panel proceeding and any suit in federal court or

elsewhere based on 23 U.S.C. § 111(b). On the merits, the state

further argued that N.H. Rev. Stat. Ann. § 230:30-a is not

preempted because the NHDAS policy is consistent with the

"priority" required by § 111(b). Finally, the state argued that

the damages calculation should have excluded commissions from rest

areas where the SLA could not meet the necessary contract

specifications and should be further reduced to account for the

capital and maintenance costs incurred by the state to build

vending machine shelters.10 The state abandoned a number of

arguments it had made earlier.

The Blind Vendors contended that the state waived its

Eleventh Amendment immunity by participating in the program

established by the R-S Act and by appealing the arbitration panel's

decision to federal court. They further argued that the panel's

interpretation of "priority" under § 111(b) was proper, based on

10
In addition, the state argued that 23 U.S.C. § 111(b)
violates the equal protection guarantees of the Fifth and
Fourteenth Amendments because, the state said, there is no rational
basis for granting priority to blind vendors. The state further
argued that the damages award exceeded the arbitration panel's
statutory authority because the rest areas were all on state-owned
land and at least one rest area had been built and maintained
entirely with state funds. The district court rejected both
arguments, and the state has raised neither on appeal, so we do not
address them.

-24-
similar use of the term "priority" in the R-S Act. Finally, they

argued that the arbitration panel did not award them sufficient

damages: the amount of damages should have been calculated from

January 6, 1998 rather than October 28, 1998.

The district court granted in part and denied in part

both motions for summary judgment. The court largely affirmed the

arbitration panel's order, modifying only the amount of the damages

awarded. The court held that the state had waived its Eleventh

Amendment immunity by its litigation conduct, due to (a) the

state's failure to raise its Eleventh Amendment immunity in the

1998 federal court litigation and in the initial stages of the

administrative process, (b) the state's argument in its 1998 motion

to dismiss that R-S grievance procedures should apply, and (c) the

state's invocation of federal jurisdiction to review the

arbitration panel's order. Proceeding to the merits, the court

concluded that the arbitration panel's construction of "priority"

in § 111(b) was entitled to deference, see Chevron, U.S.A., Inc. v.

Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984), and that

the panel's construction was a reasonable one within the scope of

its discretion. Finally, the court modified the damages award,

reducing it to compensate the state for the capital and maintenance

costs of building vending machine shelters at several rest areas

and moving the start date for damages from October 28, 1998 to

-25-
March 30, 1998, the date on which the Blind Vendors first requested

a state administrative hearing. The state timely appealed.

IV.

The state argues that the Eleventh Amendment bars "the

USDOE Arbitration Panel proceeding, any suit for damages in federal

court and any suit in state court based on the STA [Act]."

A state's immunity under the Eleventh Amendment applies

whether a private plaintiff's suit is for monetary damages or some

other type of relief. Seminole Tribe v. Fla., 517 U.S. 44, 58

(1996). "Sovereign immunity does not merely constitute a defense

to monetary liability or even to all types of liability. Rather it

provides an immunity from suit." Fed. Mar. Comm'n v. S.C. State

Ports Auth., 535 U.S. 743, 766 (2002).

The state asserts Eleventh Amendment immunity from both

the arbitration panel proceedings and the federal court action.

See generally id.; R.I. Dep't of Envtl. Mgmt. v. United States, 304

F.3d 31 (1st Cir. 2002). It also asserts that it is beyond

Congress's power to subject it to suit in any forum. See generally

Kimel, 528 U.S. at 74-91; Alden v. Maine, 527 U.S. 706 (1999). The

issue is whether the state has waived any immunity that it may

have. Our review as to this issue is de novo. Arecibo Cmty.

Health Care, Inc. v. Puerto Rico, 270 F.3d 17, 22 (1st Cir. 2001).

A state can waive its Eleventh Amendment immunity to suit

in three ways: (1) by a clear declaration that it intends to submit

-26-
itself to the jurisdiction of a federal court or administrative

proceeding, Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ.

Expense Bd., 527 U.S. 666, 676 (1999); Great N. Life Ins. Co. v.

Read, 322 U.S. 47, 54 (1944); (2) by consent to or participation in

a federal program for which waiver of immunity is an express

condition, Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 246-47

(1985); or (3) by affirmative conduct in litigation, Lapides v. Bd.

of Regents, 535 U.S. 613, 620 (2002); Gardner v. New Jersey, 329

U.S. 565, 574 (1947).

The state here invokes two independent aspects of

immunity from suit: immunity from suit in a federal forum (judicial

or administrative) and substantive immunity from liability. See

Jonathan R. Siegel, Waivers of State Sovereign Immunity and the

Ideology of the Eleventh Amendment, 52 Duke L.J. 1167, 1192-93

(2003); Carlos Manuel Vazquez, What Is Eleventh Amendment

Immunity?, 106 Yale L.J. 1683, 1697-98 (1997). In fact, this case

involves two different aspects of a state's substantive liability

immunity from suits by private persons: immunity from damages and

immunity from prospective equitable relief. Certainly, a state may

waive its immunity from substantive liability without waiving its

immunity from suit in a federal forum. See Coll. Sav. Bank, 527

U.S. at 676; Atascadero, 473 U.S. at 241. The Supreme Court thus

far has not addressed whether a state may waive federal forum

-27-
immunity without waiving substantive liability immunity under the

Eleventh Amendment. We assume arguendo that a state may do so.

A. Waiver of Eleventh Amendment Immunity Against Suit for
Prospective Equitable Relief

1. Waiver by Litigation Conduct

The state argues that no prospective equitable relief may

be granted at all in either state or federal court against it for

violations of the federal statutes at issue. The state certainly

never argued to the district court in 1998 that such relief was not

available or that the Eleventh Amendment barred suit or any relief

against it.

We conclude that the state has waived by its litigation

conduct any Eleventh Amendment immunity that it may have from

federal proceedings (forum immunity) and from prospective equitable

relief (substantive liability immunity).11 When the state moved in

1998 to dismiss the federal court action, it did not assert that

Congress lacked the power or intent to submit the state to federal

jurisdiction under the STA Act or the R-S Act for prospective

equitable relief. When the state mentioned the Eleventh Amendment,

it was only to say that there would be no Eleventh Amendment issues

as to claims in a state court proceeding in which damages were

11
The state does not contend that its counsel lacked
authority under state law to waive immunity. That consideration
has not survived Lapides in cases such as this, where a state
voluntarily invokes federal jurisdiction. See Lapides v. Bd. of
Regents, 535 U.S. 613, 621-22 (2002).

-28-
sought. The fact that the state focused only on Eleventh Amendment

immunity to damages and simultaneously agreed to a federal

administrative forum reinforces our view that the state by its

conduct has waived its current objection to prospective equitable

relief in a federal forum. This case goes well beyond a simple

matter of failure to raise an immunity argument in earlier

proceedings.

The concept of waiver by litigation conduct is related to

the doctrine of judicial estoppel. Here, the state's failure to

raise Eleventh Amendment immunity was accompanied by an affirmative

assertion that the STA Act incorporates R-S grievance procedures

(with its concomitant process of judicial review) and that those

procedures must be exhausted before claims could be pursued under

the STA Act.12 The plaintiffs did not assert that the R-S Act

applied; it was the state that made that argument, and the state

is, as a result, judicially estopped. See Cadle Co. v.

Schlictmann, Conway, Crowley & Hugo, 338 F.3d 19, 22 (1st Cir.

2003); Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 23

(1st Cir. 1998). The state then acted consistently with its

assertion, participated in the grievance procedures, and in doing

so advantaged itself to the detriment of the Blind Vendors. The

12
It is true that in the 1998 federal court filing seeking
dismissal on exhaustion grounds, the state defendants reserved the
question whether the facts of the case brought it within the
statutory reach of the R-S Act. That is a very different argument.

-29-
district court relied on the position articulated by the state in

dismissing the Blind Vendors' initial federal court action in March

of 1998.

Attempting now to be excused, the state argues that in

1998 it never suggested to the federal court that the STA Act

incorporated the R-S Act procedures and that the action must be

dismissed for failure to exhaust. Based on a footnote in its

memorandum to the district court in 1998, the state says that its

argument was, at most, that if plaintiffs were basing their claim

on rights under the R-S Act, then R-S grievance procedures applied.

That argument mischaracterizes the content of its papers.

The state's argument is disingenuous: if the STA Act did

not incorporate R-S grievance procedures and those procedures

therefore did not apply to the case, then there was no basis for

the state's motion to dismiss on exhaustion grounds. Moreover, in

response to the state's 1998 motion to dismiss, the Blind Vendors

had argued that their claim was not based on the R-S Act at all,

but only on the STA Act, and no exhaustion was required. The state

did not withdraw or alter its position, and the district court then

dismissed the claims based on the state's position.

Having gained an advantage by obtaining the dismissal,

the state did not seek to clarify its position with the district

court, but rather took advantage of the dismissal. By invoking R-S

grievance procedures (knowing that those procedures ultimately

-30-
provided for federal judicial review) to obtain dismissal of a

claim for injunctive relief, and then participating in the

administrative process, the state has waived any immunity it may

have to a federal forum and prospective equitable relief.

In essence, the state voluntarily invoked the

jurisdiction of a federal agency, the USDOE, and the federal courts

in review of the agency determination, including their power to

grant prospective equitable relief, even though it was not formally

the plaintiff in the administrative proceeding. The state

voluntarily put itself in the position of being a party in a

federal administrative forum whose actions would be reviewed in

federal court. The state's actions expressed a clear choice to

submit its rights for adjudication in the federal courts.13 To

permit the state to reverse course would contravene the reasons for

the doctrine of waiver by litigation conduct recognized by Lapides

and Lapides's core concern that a state cannot selectively invoke

its Eleventh Amendment immunity to gain litigation advantage.

See Lapides, 535 U.S. at 622-23; see also Gardner, 329 U.S. at 573-

74; Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 393 (1998)

13
We note that the state is nominally the party in federal
court by its own choice to substitute itself as the party
defendant. See Gunter v. Atl. Coast Line R.R. Co., 200 U.S. 273,
284-87 (1906) (state voluntarily submitted to the jurisdiction of
the federal courts when Attorney General appeared "for and on
behalf of the State" in an earlier, related action brought against
state officers and not against the state itself).

-31-
(Kennedy, J., concurring). The same concerns about unfair

litigation advantage underlie the judicial estoppel doctrine.

When the federal court dismissed the action on exhaustion

grounds, the Blind Vendors immediately instituted the first step of

R-S Act grievance procedures by requesting a hearing before the

SLA. The state even then did not "clarify" its argument; rather,

it defended on the merits, and never mentioned the Eleventh

Amendment. It is true that the state finally, more than two years

into this matter in early 2000, did raise Eleventh Amendment

immunity before the USDOE panel, citing Kimel. But even then, the

issue was raised almost in passing -- in one paragraph at the end

of a memorandum concerned mostly with other issues -- and was not

mentioned in oral argument or in the state's requested conclusions

of law.14

The state relies on the doctrine that an "Eleventh

Amendment defense sufficiently partakes of the nature of a

jurisdictional bar" that it may be raised on appeal even if not

raised in the trial court. Edelman v. Jordan, 415 U.S. 651, 678

(1974). The scope of that "belated-raising" doctrine after Lapides

is unclear.15 Regardless, the state is wrong in arguing that the

14
In fairness, we note that Alden v. Maine was decided in
1999, and Federal Maritime Commission v. South Carolina State Ports
Authority was not decided until 2002.
15
The doctrine was articulated in Ford Motor Co. v. Dep't
of Treasury of Ind., 323 U.S. 459, 467 (1945), which Lapides
expressly overruled. See Lapides, 535 U.S. at 623.

-32-
"belated-raising" doctrine undercuts the waiver doctrine. The

doctrine that a state may waive its immunity by its litigation

conduct has been alive and well both before and after Edelman. See

Lapides, 535 U.S. at 618-24; Gunter v. Atl. Coast Line R.R. Co.,

200 U.S. 273, 284 (1906). To be clear, this case involves more

than a simple failure by the state to raise Eleventh Amendment

immunity in earlier proceedings; it involves a voluntary and

calculated choice by the state to gain the advantage of dismissal

of the 1998 federal action for injunctive relief by arguing that

the remedies and grievance procedures of the R-S Act applied to

claims under the STA Act and that those procedures had to be

exhausted.16 The state then entered those R-S Act procedures

without a whimper of protest. As to the Blind Vendors' claims for

prospective equitable relief in a federal forum, the state, having

16
There may be another possible basis for finding waiver of
immunity by litigation conduct. While states may assert Eleventh
Amendment immunity from suit by private parties in both state and
federal courts, there is a well-recognized exception to immunity
set forth in Ex parte Young, 209 U.S. 123 (1908), which allows the
award of prospective equitable relief against state officers. The
vitality of the Ex parte Young doctrine is demonstrated by the
Supreme Court's recent opinion in Verizon Md., Inc. v. Pub. Serv.
Comm'n of Md., 535 U.S. 635, 645-46 (2002).
It is true that the Blind Vendors here named state agencies
rather than state officers as defendants in federal court and in
the R-S grievance procedures. Nonetheless, the state (and its
agencies), faced with a claim for prospective equitable relief
since 1998, has never raised the argument that such relief is
available only against state officers. Indeed, the state moved to
substitute itself as the party defendant. Its litigation conduct
could be viewed as estopping any objection that it may have to the
application of the Ex parte Young exception.

-33-
gained the advantage that it sought, is bound by the choice that it

made.

2. Waiver of Prospective Equitable Relief in a Federal Forum
by Operation of the R-S Act

We also conclude that because the state is judicially

estopped from denying that R-S grievance procedures apply to claims

under § 111(b) of the STA Act and the state has voluntarily

participated in the R-S Act program, the state has waived any

Eleventh Amendment immunity it may have to awards of prospective

equitable relief in a federal forum resulting from R-S grievance

procedures. We do not decide the independent question whether the

state, solely by entering into agreements under the STA Act, has

waived any Eleventh Amendment immunity that it has to the

requirements of the STA Act.

This case does not involve a situation in which the state

may have been coerced into waiving its immunity by federal

requirements forcing it to choose between waiver and "exclusion .

. . from an otherwise permissible activity." See Coll. Sav. Bank,

527 U.S. at 687. By its voluntary agreement and participation in

the federal program created by the R-S Act, the state has been

given a right it would not otherwise have: access to federal

property. No argument is presented that, absent any agreement

otherwise, Congress could not constitutionally withhold that right

from states.

-34-
 Congress was quite clear in 20 U.S.C. § 107b that states

participating in the R-S Act program "shall . . . agree" to submit

any disputes that blind vendors may have regarding the vending

program to the hearing and arbitration procedures set forth in 20

U.S.C. § 107d-1. The thrust of the state's argument is that even

if it agreed to R-S grievance procedures, no relief of any sort can

be awarded against it as a result of those procedures. The effect

of this argument would be to render those procedures meaningless.

No court has ever agreed with the state's position that no relief

may be granted under R-S grievance procedures.

States whose SLAs apply to participate in the R-S Act

must have anticipated that by agreeing to the procedures, they

agreed to some form of relief, at least prospective equitable

relief, against them even if they are named directly as parties.

After all, "[t]he only parties with whom blind vendors can have

disputes to submit to arbitration are states." McNabb v. United

States Dep't of Educ., 862 F.2d 681, 685 (8th Cir. 1988) (Lay,

C.J., concurring in part and dissenting in part). The statute also

requires states to agree that the arbitration under the R-S Act

shall be final and binding on the parties, subject to APA review.

20 U.S.C. §§ 107b, 107d-1(a). That agreement supports waiver of

objections to a federal forum and, at least, to prospective

equitable relief. See Port Auth. Trans-Hudson Corp. v. Feeney, 495

U.S. 299, 307-08 (1990).

-35-
B. Waiver of Eleventh Amendment Immunity From Damages

1. Waiver of Immunity From Damages by Litigation Conduct

The question whether the state has waived Eleventh

Amendment immunity from substantive liability for damages resolves

differently on this record, largely because the Blind Vendors' 1998

complaint in federal court contained no demand for damages.

No waiver occurred in the 1998 federal action. The

complaint in that action sought only injunctive relief and "such

other relief as is equitable and just." The state was not put on

notice by the 1998 federal court complaint that damages were at

issue in that federal court proceeding, and so had no reason to

assert Eleventh Amendment immunity from damages. Indeed, the Blind

Vendors expressly stated that their claim in the federal court

action encompassed only prospective injunctive relief. The state

cannot be said to have voluntarily waived immunity from damages

when it faced no claim for damages at that time.

The argument that the state waived any immunity from

damages in the 1998 litigation is based on a perceived unfairness,

well-articulated by the USDOE as follows:

The State's decision to forego raising an immunity
argument allowed it to continue an illegal practice for
five years at the [Blind Vendors'] expense while
precluding any recovery for the blind vendors' losses.
If the State had raised and prevailed on a claim of
immunity in 1998, the [Blind Vendors] would,
nevertheless, have been able to obtain prospective relief
under Ex parte Young. By requiring that the [Blind
Vendors] pursue administrative remedies, the State
successfully postponed by years judicial resolution of

-36-
 the controversy. If the State is permitted to assert
immunity from the procedures it persuaded the district
court to require, it will have successfully deprived the
[Blind Vendors] of a judicial remedy to which it would
otherwise have been entitled. The Supreme Court
established in Lapides that in situations of this kind,
the claim of Eleventh Amendment immunity has been waived.

This was clearly how the district court viewed the matter.

We agree that, for reasons explained above, unfairness

would occur if the state were permitted now to assert immunity to

bar prospective equitable relief, but we think a closer analysis is

required to determine if the same logic applies in the context of

immunity from damages. The operating assumption behind the USDOE's

argument is that if the state had directly raised its Eleventh

Amendment immunity to damages in 1998, the Blind Vendors would

instead have sought only injunctive relief against state officers

under Ex parte Young and thus would not have had to go through the

lengthy R-S grievance procedures. But this assumption is wrong.

Exhaustion of R-S grievance procedures is required even when only

injunctive relief is sought.17 See Randolph-Sheppard Vendors of

17
Of course, exhaustion would not be necessary if the
district court in 1998 had been wrong in finding that R-S grievance
procedures applied to an STA Act claim. In that case, the Blind
Vendors could argue that, had it not been for the state's arguments
in its motion to dismiss, the Blind Vendors could have proceeded
directly to the question whether there is a cause of action,
outside of the R-S Act, for claims under § 111(b), and if so, would
have obtained injunctive relief in 1998 if successful on the
merits. The Blind Vendors could thus argue that the state's motion
to dismiss caused delay. But, in that case, any such delay would
have been caused by the state's urging the court to apply R-S
grievance procedures, not its failure to raise Eleventh Amendment
immunity. And, in any event, for reasons explained later, we

-37-
America v. Weinberger, 795 F.2d 90, 93, 96 (D.C. Cir. 1986)

(requiring exhaustion of R-S grievance procedures when plaintiffs

sought only injunctive relief); see also 20 U.S.C. § 107d-1(a) (R-S

grievance procedures apply to "[a]ny blind licensee who is

dissatisfied with any action arising from the operation or

administration of the vending facility program" (emphasis added)).

The state's failure to assert immunity has made the Blind Vendors

no worse off; it is the need for exhaustion, and not the failure to

assert Eleventh Amendment immunity, that caused the delay.

Moreover, a finding of waiver in this situation would

work its own type of unfairness. The Blind Vendors presumably did

not sue for damages in federal court because they were aware of

potential Eleventh Amendment problems; instead, the Blind Vendors

brought a state court action seeking damages. And the state did,

in 1998, allude to an Eleventh Amendment problem with a damages

action in federal court. In these circumstances, a finding of

waiver by litigation conduct would be unfair.

It is true that the state did not raise Eleventh

Amendment immunity when damages were claimed before the state

Hearing Officer in the R-S grievance procedures. But at that

point, the state had already taken the position in federal court

that an award of damages in a federal proceeding would pose an

conclude that R-S grievance procedures are properly applied to §
111(b) claims.

-38-
Eleventh Amendment problem but that there would be no such problem

in a state proceeding.

It is also true that the state did not immediately move

before the USDOE arbitration panel to dismiss the Blind Vendors'

damages claims on Eleventh Amendment grounds. But it did do so

eventually, and in light of its earlier posture in the controversy,

we cannot say the belated raising constitutes voluntary waiver by

litigation conduct.

Finally, the Blind Vendors, but not the USDOE, argue that

the state waived immunity simply by voluntarily seeking review of

the adverse administrative decision in this action in federal

court. They argue that if the state wanted to preserve its

immunity from damages, it should have simply waited for the Blind

Vendors to file an action in district court to enforce the award

and then defended by asserting Eleventh Amendment immunity at that

point.

This argument -- that the seeking of judicial review of

an agency decision under the APA by a state that was a defendant

before the agency is sufficient alone to infer a waiver of immunity

from damages -- fails, given the facts of this case. This court

held in R.I. Dep't of Envtl. Mgmt. v. United States, 304 F.3d 31

(1st Cir. 2002), that a state did not waive Eleventh Amendment

immunity solely by seeking judicial review of an agency's adverse

-39-
determination. Id. at 50.18 The court noted that the state in

Lapides had waived immunity in state court and was "attempt[ing] to

regain, by a change in forum, litigation advantage that the state

has already renounced by a general statute." Id. at 49; see

Lapides, 535 U.S. at 617-18 (expressly limiting its holding to

cases where the state's immunity in state court has been waived or

abrogated). The court noted that Rhode Island, by contrast, had

"consistently asserted its sovereign immunity, both [in federal

court] and in the administrative proceeding," and hence gained no

unfair advantage by seeking a change in forum. R.I. Dep't, 304

F.3d at 49. The same logic applies here as to damages. New

Hampshire gained no unfair advantage as to damages by seeking

judicial review of the administrative decision, given that it has

consistently asserted its immunity from damages when at issue.

2. Interpretation of the STA Act As to Authority To Award
Damages

Having determined that the state has not by its

litigation conduct waived its ability to assert an Eleventh

18
The Blind Vendors do not mention R.I. Dep't of Envtl.
Mgmt. v. United States, 304 U.S. F.3d 31 (1st Cir. 2002), in their
brief. But they do argue that Fed. Mar. Comm'n v. S.C. State Port
Auth., 535 U.S. 743 (2002), and by implication R.I. Dep't, differs
from the case at bar because it involved an administrative
adjudication of a complaint against a "non-consenting state."
Here, they argue, New Hampshire consented to administrative
adjudication because it sought and obtained dismissal of the 1998
suit on the ground that R-S grievance procedures should apply. We
disagree for the reasons stated earlier and add that it was not the
state but the Blind Vendors that filed a complaint before the
federal administrative tribunal.

-40-
Amendment defense to damages, we turn to the question whether

Congress intended to award damages in this situation. The Blind

Vendors argue that the state has waived immunity as to damages as

part of its agreement to participate in the R-S Act. Two circuit

courts have agreed with this theory. See Del. Dep't of Health &

Soc. Servs. Div. for Visually Impaired v. United States Dep't of

Educ., 772 F.2d 1123, 1137-38 (3d Cir. 1985); Premo v. Martin, 119

F.3d 764, 769-71 (9th Cir. 1997). One, the Sixth Circuit, has

disagreed, see Tenn. Dep't of Human Servs., 979 F.2d at 1167-68,19

as has at least one member of an Eighth Circuit panel. See McNabb,

862 F.2d at 687-88 (Doty, J., concurring in part and dissenting in

part).

Those courts finding that damages could be awarded in R-S

grievance procedures and were not precluded by the Eleventh

Amendment note that arbitrators were generally authorized to award

damages at the time § 107b(6) was passed. See Premo, 119 F.3d at

770. The argument is that an agreement to arbitration under the R-

S Act was inherently an agreement to waive immunity from damages.

An argument could also be made that the state and federal

19
The Sixth Circuit held that (1) the Eleventh Amendment
did not bar the arbitration panel from awarding damages because the
Amendment applied only in Article III proceedings, but (2) the
Amendment did prevent a subsequent attempt to collect the
arbitration award in federal court. Tenn. Dep't Hum. Servs., 979
F.2d at 1167-68. Our focus is on the court's second holding. The
reasoning behind court's first holding has since been overruled in
Fed. Mar. Comm'n, 535 U.S. at 760-61.

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government have a contractual relationship intended to benefit

blind vendors, and damages are a common remedy in such

relationships. See Delaware Dep't, 772 F.2d at 1136-37.20

The R-S Act statutory text is silent as to what remedies

may be awarded against states in grievances brought by blind

vendors. The regulations promulgated by the Secretary of Education

do not define what remedies the arbitration panel may award. The

only discussion of remedies in the R-S Act is 20 U.S.C. § 107d-

2(b)(2), which indicates that where a federal agency is the

defendant, it is the role of the federal agency head to remedy any

violation of the Act. See Ga. Dep't of Human Res. v. Nash, 915

F.2d 1482, 1492 (11th Cir. 1990). Section 107d-2(b)(2) does not

expressly authorize an award of damages, nor does it expressly

waive the federal government's immunity from damages. Differing

conclusions can be drawn about the state's immunity in this

statutory scheme.

At best, there is disagreement as to whether the R-S Act

arbitration panels can award damages, with reasoned arguments made

on both sides. Here, there is an additional layer of uncertainty.

Even assuming that the R-S Act allows damages to be awarded against

states based on complaints by blind vendors, it is not clear

whether Congress intended in § 111(b) of the STA Act to subject

20
Delaware Dep't was decided in 1985, without foreknowledge
of the Supreme Court's later articulation of tests for waiver of
Eleventh Amendment immunity.

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states to damages awards for violations found in R-S grievance

procedures. Given Congress's silence in the STA Act itself and the

disagreement about damages under the R-S grievance procedures, we

cannot, as a matter of statutory construction of the STA Act, find

an intent to subject states to damages awards under the STA Act.

See Vermont Agency of Nat. Res. v. United States ex rel. Stevens,

529 U.S. 765, 787 (2000) ("[I]f Congress intends to alter the usual

constitutional balance between States and the Federal Government,

it must make its intention to do so unmistakably clear in the

language of the statute." (citing Will v. Mich. Dep't of State

Police, 491 U.S. 58, 65 (1989))).

Accordingly, we vacate the damages award.

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