dissenting:
With all respect to the majority, I disagree with its conclusion that the Eleventh Amendment does not bar this action against the University and its officers acting in their official capacities.
As the majority opinion recognizes, we have previously held that the University of California is an arm of the California State Government entitled to Eleventh Amendment immunity from suit in federal court. E.g., Thompson v. City of Los Angeles, 885 F.2d 1439, 1443 (9th Cir.1989) (“It has long been established that UC is an instrumentality of the state for purposes of the Eleventh Amendment”); BV Engineering v. Univ. of Calif., Los Angeles, 858 F.2d 1394, 1395 (9th Cir.1988), cert. denied, 489 U.S. 1090, 109 S.Ct. 1557, 103 L.Ed.2d 859 (1989). In my view, these cases are controlling, and there is no call to reassess the status of the University in the absence of a change in its structure. If the University is the defendant, and judgment is sought against the University, the case may not be brought in federal court unless the immunity has been waived. BV Engineering, 858 F.2d at 1396.
The majority, however, does decide anew the question of the University’s immunity. *777In so doing, it reaches an incorrect result. The majority applies a five-factor test that originated in Mitchell v. Los Angeles Community College District, 861 F.2d 198, 201 (9th Cir.1988), cert. denied, 490 U.S. 1081, 109 S.Ct. 2102, 104 L.Ed.2d 663 (1989), and was repeated in Durning v. Citibank, N.A., 950 F.2d 1419, 1423 (9th Cir.1991), and ITSI TV Productions, Inc. v. Agricultural Associations, 3 F.3d 1289 (9th Cir.1993). The listed factors are:
[1] whether a money judgment would be satisfied out of state funds, [2] whether the entity performs central governmental functions, [3] whether the entity may sue or be sued, [4] whether the entity has power to take property in its own name or only the name of the state, and [5] the corporate status of the entity.
Id. at 1292. The majority here agrees that factor [2] favors immunity; the University has long been recognized as performing functions of the central government. The majority states, however, that factors [3], [4], and [5] work against immunity, because the University may sue or be sued, may take property in its own name, and enjoys corporate status. But none of these three attributes of the University of California has changed since we held it to be entitled to Eleventh Amendment immunity. Once we have decided that the University is an arm of the Government of California for Eleventh Amendment purposes, the role that these structural factors play should be put to rest.
The crux of the majority’s decision, as its opinion states, lies in the first factor. “[T]he source from which the sums sought by the plaintiff must come is the most important single factor in determining whether the Eleventh Amendment bars federal jurisdiction.” Rutledge v. Arizona Bd. of Regents, 660 F.2d 1345, 1349 (9th Cir.1981), aff'd sub nom. Kush v. Rutledge, 460 U.S. 719, 103 S.Ct. 1483, 75 L.Ed.2d 413 (1983). In my view, however, this factor must be viewed as a legal, not an economic matter. “[T]he question is whether the state treasury is legally obligated.” Durning, 950 F.2d at 1425 n. 3.
No one has disputed that a judgment against the University of California is a legal obligation of the State of California. The majority opinion concludes, however, that the agreement of the United States to “indemnify and hold the University harmless against any ... judgment or liability” arising out of its management of the Laboratory changes the Eleventh Amendment analysis. But that contractual clause is a separate matter. A judgment in this case will be a legal liability of the State of California. The fact that California has a legal means of collecting an indemnity from the United States does not affect its primary liability for the judgment. Doe, if he wins his case, must execute his judgment against the State, not the United States.
Several of our decisions establish that Eleventh Amendment immunity turns on the formal legal liability of the State, and not the economic impact of the judgment. In Markowitz v. United States, 650 F.2d 205, 206 (9th Cir.1981), we held that a State was entitled to Eleventh Amendment immunity even if it had liability insurance that would ultimately pay the judgment. It is true that part of our reasoning was that state funds pay the insurance premiums, id., but the same indirect economic consequences are present here. If the United States did not agree to indemnify the University, the University’s charge for managing the Laboratory would have to be higher. Lower receipts by the University are a form of insurance premium payment to the United States.
Conversely, the fact that a State volunteers to pay a judgment incurred by an agency does not create Eleventh Amendment immunity because the question is whether the state has a legal liability to pay the judgment. Durning, 950 F.2d at 1425, n. 3. Indeed, a suit against an individual officer does not become a suit against the State for Eleventh Amendment purposes even if a state statute provides that the officer may sue the State to recover indemnity. Blaylock v. Schwinden, 862 F.2d 1352, 1353-54 (9th Cir.1988); Demery v. Kupperman, 735 F.2d 1139, 1147-48 (9th Cir.1984), cert. denied, 469 U.S. 1127, 105 S.Ct. 810, 83 L.Ed.2d 803 (1985). The question is not who pays in the end; it is who is legally obligated *778to pay the judgment that is being sought. Here it is the State.
One difficulty with taking the federal indemnity agreement into account is that it is a judicial exercise that has no natural boundary. In deciding the threshold question of Eleventh Amendment immunity, we can determine from the pleadings before us and the state statutes whether the judgment that is sought would run against the State. It is far more difficult to determine whether the State, after such a judgment was rendered against it, would have rights of action against third parties that might lead it eventually to recoup the judgment. In this case, there is a relatively clear indemnity agreement, but does the United States have any defenses to a claim of indemnity? In the next case the State might not have the benefit of an indemnity agreement, but might have a common-law cause of action against a third party. Must we assess the State’s likelihood of success in order to decide the Eleventh Amendment question?
I would avoid all of these difficulties, first, by relying on our established precedent holding that the University of California is entitled to Eleventh Amendment immunity. If I failed in that approach, I would hold that the first Mitchell factor rendered the University immune, because the judgment sought against it would be a legal liability of the State. The University officials being sued in their official capacity would then share in the Eleventh Amendment immunity of the State. Will v. Michigan Dep’t of State Police, 491 U.S. 58, 71,109 S.Ct. 2304, 2312, 105 L.Ed.2d 45 (1989). The result would be to affirm the judgment of the district court that the Eleventh Amendment bars it from entertaining this action.