United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
For the Fifth Circuit March 26, 2007
Charles R. Fulbruge III
Clerk
No. 05-51656
LOUISE ELIZABETH HURST
Plaintiff - Appellant
VERSUS
TEXAS DEPARTMENT OF ASSISTIVE AND REHABILITATIVE SERVICES,
also known as DARS; TERRY MURPHY, Commissioner of DARS
Defendants - Appellees
Appeal from the United States District Court
For the Western District of Texas
Before DAVIS and STEWART, Circuit Judges, and CRONE*, District Judge.
W. EUGENE DAVIS, Circuit Judge:
This case presents the question of whether the State of Texas
waived its Eleventh Amendment immunity to suit in federal court by
accepting federal funding to support its Vocational Rehabilitation
Program under Title I of the Rehabilitation Act, 29 U.S.C. § 701-
796. The district court agreed with the State of Texas that 29
U.S.C. § 722(c)(5)(J)(i) did not represent a clear-statement of
*
District Judge of the Eastern District of Texas, sitting by
designation.
congressional intent to condition the State’s receipt of federal
funds upon the State’s waiver of Eleventh Amendment immunity. We
affirm.
I.
BACKGROUND.
Appellant, Louise Elizabeth Hurst (Hurst), filed this suit in
district court to review the denial of medical treatment by the
Texas Rehabilitation Commission (now the Texas Department of
Assistive and Rehabilitative Services, also referred to DARS).
Appellant exhausted all available remedies which culminated in an
administrative hearing before an administrative law judge who
affirmed the denial of medical services and the denial of a motion
for reconsideration of that decision.
The defendants in the district court responded to Hurst’s suit
with a motion to dismiss, based on Eleventh Amendment immunity of
the State of Texas to suit in federal court. The magistrate judge
to whom the motion was referred found that Congress in
§722(c)(5)(J)(i) clearly conditioned the State’s receipt of federal
funds under this program upon the State’s waiver of Eleventh
Amendment immunity. DARS filed objections to the magistrate
judge’s recommendation. The district court declined to accept the
magistrate judge’s recommendation and dismissed the case without
prejudice on grounds that Congress had not clearly declared its
intent to condition the State’s receipt of federal funds upon the
2
State’s waiver of Eleventh Amendment immunity. Hurst challenges
the district court’s ruling in this appeal.
II.
WAIVER OF ELEVENTH AMENDMENT IMMUNITY BY A STATE.
The Eleventh Amendment to the United States Constitution
states “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.” U.S.C.S.
Const. Amend. 11. There are two well-established exceptions to
Eleventh Amendment immunity. First, Congress can abrogate Eleventh
Amendment immunity without a state’s consent when acting under its
authority under the enforcement provisions of § 5 of the Fourteenth
Amendment. Atascadero State Hospital v. Scanlon, 473 U.S. 234, 238
(1985). Second, a state may waive its immunity and consent to suit
in federal court. Id. One way a state may waive its Eleventh
Amendment immunity is by accepting federal funds disbursed pursuant
to Congress’s Article I, § 8 spending power that were properly
conditioned on the state forgoing its sovereign immunity. Id., n.1;
Pederson v. Louisiana State Univ., 213 F.3d 858, 876 (5th Cir.
2000). Hurst argues that the state of Texas has waived its
immunity by accepting federal funding of its Vocational
Rehabilitation Program, under Title I of the Rehabilitation Act.
29 U.S.C. § 701-796.
3
A state’s receipt of federal funds does not automatically
constitute a waiver of its Eleventh Amendment immunity. The
Supreme Court in South Dakota v. Dole, 483 U.S. 203 (1987)
described the limited circumstances in which a waiver will be
recognized:
(1) Federal expenditures must benefit the general
welfare;
(2) The conditions imposed on the recipients must be
unambiguous;
(3) The conditions must be reasonably related to the
purpose of the expenditure; and
(4) No condition may violate any independent
constitutional prohibition.
Pace v. Bogalusa City Sch. Bd., 403 F.3d 272, 278 (5th Cir. 2005),
citing Dole, 483 U.S. at 207-08. Dole also recognizes a fifth
requirement that the condition may not be coercive. Id. DARS
concedes that the Rehabilitation Act satisfies four of the five
elements of this test. The parties dispute whether the second
requirement, of an unambiguous statement, has been met.
A state waives its immunity by voluntarily participating in
federal spending programs only when Congress includes a clear
statement of intent to condition participation in the programs on
a State's consent to waive its constitutional immunity.
Atascadero, 473 U.S. at 247. “By insisting that congress speak with
a clear voice, we enable the States to exercise their choice [to
waive sovereign immunity] knowingly.” Pace, 403 F.3d at 279
4
(quoting Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1,
17). In seeking to determine whether the language of a condition
is sufficiently clear, courts must view the statute “from the
perspective of a state official who is engaged in the process of
deciding whether the state should accept [federal] funds and the
obligations that go with those funds,” asking “whether . . . a
state official would clearly understand [the nature of the
condition].” Arlington Cent. Sch. Dist. Bd. Of Educ. v. Murphy,
___ U.S. ___, 126 S.Ct. 2455, 2459 (2006). “In a Spending Clause
case, the key is not [the intention of Congress] but what the
States are clearly told regarding the conditions that go along with
the acceptance of . . . funds.” Id. at 2463. A statute must
furnish “clear notice regarding the liability at issue” to which
the state has allegedly waived its immunity. Id. at 2459.
Hurst argues that § 102 of the Rehabilitation Act codified at
29 U.S.C. § 722(c)(5)(J)(i) provides a clear-statement of intent to
require a state to waive its Eleventh Amendment immunity in order
to receive federal funds based on the underlined language in this
subsection of § 722:
(i) in general. Any party aggrieved by a final decision
described in subparagraph (I), may bring a civil action
for review of such decision. The action may be brought in
any state court of competent jurisdiction or in a
district court of the United States of competent
jurisdiction without regard to the amount in controversy.
(Emphasis added.)
29 U.S.C. § 722(c)(5)(J)(i)(underlining added). We have found no
5
federal circuit court decisions addressing the specific issue
presented in this case, i.e. whether the above quoted provision
satisfies the clear statement rule.1 Fortunately, the United
States Supreme Court has addressed this issue in regard to a
different section of the Rehabilitation Act with language very
similar to that used in § 722.
In Atascadero the statute in question provided that:
the remedies, procedures and rights set forth in Title VI
of the Civil Rights Act of 1964 [42 U.S.C.A. § 2000d et
seq.] [including the right to sue in federal court to
enforce obligations imposed under the statute] shall be
available to any person aggrieved by any act or failure
to act by any recipient of federal assistance or federal
provider of such assistance under section 504 [29 U.S.C.
§ 794] of this title.
29 U.S.C. § 794a. In finding a lack of federal jurisdiction under
the Eleventh Amendment, the Court reasoned that “a general
authorization for suit in federal court is not the kind of
unequivocal statutory language sufficient to abrogate the Eleventh
Amendment.” Atascadero, 473 U.S. at 246. The court also
considered whether the above statute could support a conclusion
1
Several district courts have addressed this question. See
Hurst v. Tex. Dep’t of Assistive & Rehab. Serv., 392 F. Supp. 2d
794, 801-02 (W.D. Tex. 2005) (pending the instant appeal); White v.
Vocational Rehab., No. Civ. 04-842-HU, 2004 WL 3049760, at *2 (D.
Or. Dec. 20, 2004); adopted by No. CV-04-842-HU, 2005 WL 771395 (D.
Or. Apr. 5, 2005), aff’d on other grounds by No. 05-35439, 2006 WL
2633720 (9th Cir. Sept. 14, 2006); Richards v. Alibozek, No.
CV010510286S, 2002 WL 1815918, at *5-6 (Conn. Super. Ct. June 26,
2002); see also Diamond v. Michigan, 431 F.3d 262 (6th Cir. 2005);
Reaves v. Mo. Dep’t of Elem. & Secondary Educ., 422 F.3d 675 (8th
Cir. 2005).
6
that the State consented to suit in federal court by accepting
funds under § 504 of the Rehabilitation Act. The Court rejected
the reliance by the Ninth Circuit Court of Appeals on the fact that
the states were the express intended recipients of federal
assistance and that the statute authorized suits by designated
plaintiffs against a general class of defendants which literally
included States or state instrumentalities as consent by the State
to be sued in federal court. Id. at 247. Rather it concluded that
the statute “[fell] far short of manifesting a clear intent to
condition participation in the programs funded under the Act on a
State's consent to waive its constitutional immunity.” Id.2
Hurst’s argument is indistinguishable from the argument rejected in
Atascadero and the statutory language at issue in this case is
similarly indistinguishable from the language at issue in
Atascadero.
Hurst seeks to distinguish Atascadero on the basis that the
2
In response to Atascadero, Congress passed additional
legislation including a clear-statement of its intent to condition
the receipt of federal funds upon a State’s waiver of sovereign
immunity for liability incurred under § 504 of the Rehabilitation
Act. The statute now provides:
A State shall not be immune under the Eleventh Amendment of
the Constitution of the United States from suit in Federal
court for a violation of section 504 of the Rehabilitation Act
of 1973, title IX of the Education Amendments of 1972, the Age
Discrimination Act of 1975, title VI of the Civil Rights Act
of 1964, or the provisions of any other Federal statute
prohibiting discrimination by recipients of Federal financial
assistance.
42 U.S.C. § 2000d-7.
7
statute at issue there provided a federal court remedy against “any
recipient of federal assistance or federal provider of such
assistance” without expressly extending such liability to States.
Hurst points out that by contrast the statutory framework in this
case specifically makes acts by a “designated State unit” subject
to judicial review in state or federal courts. 29 U.S.C. § 722(c).
Hurst is correct that Congress’s lack of specificity concerning the
entity or entities it wished to subject to liability influenced the
Court’s decision in Atascadero. But Congress’s abrogation of state
immunity was also an issue in that case and the lack of specificity
was discussed in its consideration of the abrogation issue, not the
waiver issue. The court stated,
The statute thus provides remedies for violations of §
504 by “any recipient of Federal assistance.” There is
no claim here that the State of California is not a
recipient of federal aid under the statute. But given
their constitutional role, the States are not like any
other class of recipient of federal aid. A general
authorization for suit in federal court is not the kind
of unequivocal statutory language sufficient to abrogate
the Eleventh Amendment.
Atascadero, 473 U.S. at 245-46.
Hurst also relies on AT&T Communications v. Bellsouth
Telecomm. Inc., 238 F.3d 636 (5th Cir. 2001), as supporting her
assertion that the language of § 722(c)(5)(J)(i) makes a clear
statement of the state’s consent to suit. Ms. Hurst’s reliance on
AT&T is misplaced. Although AT&T involves voluntary waiver by a
State of its rights under the Eleventh Amendment, the nature of the
8
Telecommunications Act interpreted in that case makes its clearly
distinguishable from the Rehabilitation Act at issue in this case.
In 1996 Congress exercised its constitutional authority to create
a national regulatory scheme for telecommunications. In that act,
the Federal Telecommunications Act of 1996, Congress preempted
State and local regulation of telecommunications. 47 U.S.C. § 151
et. seq. The States were permitted to play a limited role in the
regulatory process and only as dictated by the FCC. State public
service commissions had the option of approving or rejecting any
interconnection agreement adopted by carriers. If the state chose
to approve or reject such an agreement and made a determination
under the act, a party aggrieved by the determination could
challenge it in an action in federal district court under the
following provision:
In any case in which a State commission makes a
determination under this section, any party aggrieved by
such determination may bring an action in an appropriate
Federal district court to determine whether the agreement
or statement meets the requirement of section 251 of this
title and this section.
47 U.S.C. § 252(e)(6). Significantly, Congress gave exclusive
jurisdiction to federal courts to review the commission’s orders
and appeals to state courts were prohibited. The Court stated
“Congress may still obtain a non-verbal waiver of a state’s
Eleventh Amendment immunity, if the waiver can be inferred from the
state’s conduct in accepting a gratuity after being given clear and
unambiguous statutory notice that it was conditioned on waiver of
9
immunity.” AT&T, 238 F.3d at 645, citing MCI Telcoms. Corp. v.
Illinois Bell Tel. Co., 222 F.3d 323, 339 (7th Cir. 2000). Non-
verbal waiver was found principally on the basis of the state’s
acceptance of an offer from Congress to act in an area otherwise
preempted by federal regulation, which state action was
unambiguously subject to review only in a federal court. The
pervasiveness of the federal preemption and the exclusivity of the
federal appeal make clear that participation by the state in the
federal regulatory scheme entailed waiver of immunity from suit in
federal court.3
3
In the MCI case, which the AT&T court relied upon, the Court
stated, in finding a voluntary waiver of Eleventh Amendment
immunity for the Telecommunications Act:
Although the language of the statute does not contain the
express waiver language that the commissions seek, the
structure of the pertinent section of the statute, notably 47
U.S.C. § 252 (Supp. II 1996),nevertheless makes clear that
Congress intended to provide for federal court review of any
regulatory determination made under the section, whether by a
state commission or, if the state commission chooses not to
act, by the FCC acting in its place.
. . .
In short, Congress has expressed unmistakably that, under
the 1996 Telecommunications Act, states could participate in
the federal regulatory function delegated to them by the
federal government on the condition that their participation
be reviewable in federal court. We therefore conclude that the
1996 Telecommunications Act satisfies the requirement that
Congress clearly state that participation by the state in the
regulatory scheme entails a waiver of immunity from suit in
federal court. Accord MCI Telecomms. Corp. v. Public Serv.
Comm'n, 216 F.3d 929, 938 (10th Cir.2000) (concluding that §
252 puts states on notice that Congress intends to subject
them to suit in federal court if they act under § 252).
MCI Telecoms. Corp. v. Illinois Bell Telephone Co., 222 F.3d 323,
341-42 (7th Cir. 2000).
10
This case contains neither of those elements. The
Rehabilitation Act is not a comprehensive regulatory scheme
preempting state action. States are free to offer similar services
with or without participation in the federal program. In addition,
Section 722(c)(5)(J)(i), which Hurst relies on, specifically allows
suits in state courts. In other words, unlike AT&T, this is not a
case where “the state has been put on notice clearly and
unambiguously by the federal statute that the state's particular
conduct or transaction will subject it to federal court suits
brought by individuals.” AT&T, 238 F.3d at 644.
Ms. Hurst contends finally that DARS voluntarily waived its
Eleventh Amendment immunity through the adoption of rules for
judicial review. She points out that prior to the enactment of the
Rehabilitation Act amendments of 1998 the TRC rules only allowed
judicial review in Texas state district courts in Travis County,
Texas. However, after Congress enacted the 1998 amendments to
Title I of the Rehabilitation Act the TRC adopted amendments to §
104.8 to provide for judicial review in federal court as well as in
state court. Hurst argues that DARS predecessor clearly conducted
itself as if it “knew” that it was required to allow federal
judicial review of its final decisions. We rejected a similar
“knowing acceptance of federal funds” argument in Pace:
Knowledge by the state equates with the clarity of the
statement of the requirement in the federal law, not a
subjective knowledge standard.
Pace, 403 F.3d at 285.
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III.
CONCLUSION
Section 102 of the Rehabilitation Act does not contain the
necessary “clear-statement” requiring a waiver of Eleventh
Amendment immunity if the State of Texas accepts federal funds for
this program. Neither has Texas voluntarily waived its Eleventh
Amendment immunity for this program. We, therefore, affirm the
judgment of the district court dismissing this suit.
AFFIRMED.
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