F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
DEC 18 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
MARGARET B. FENT; JERRY R.
FENT, wife and husband as State of
Oklahoma resident taxpayers, State
of Oklahoma ex rel.,
Plaintiffs-Appellants,
v. No. 99-6188
OKLAHOMA WATER RESOURCES
BOARD, State of Oklahoma, ex rel.;
WATER CONSERVATION
STORAGE COMMISSION, State of
Oklahoma, ex rel.; J. ROSS
KIRTLEY; RICHARD MCDONALD;
DICK SEYBOLT; LONNIE
FARMER; GRADY GRANDSTAFF;
ERVIN MITCHELL; BILL
SECREST; RICHARD
SEVENOAKS; WENDELL E.
THOMASSON, all as private
individuals, and as public board and
commission members of the
Oklahoma Water Resources Board
and Water Conservation Storage
Commission; DEPARTMENT OF
DEFENSE; UNITED STATES
DEPARTMENT OF THE ARMY;
UNITED STATES ARMY CORPS
OF ENGINEERS, United States of
America, ex rel.,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. No. 98-CV-221)
Submitted on the briefs:
Russell B. Fister, Oklahoma City, Oklahoma, for Plaintiffs-Appellants.
Robert M. Anthony, Assistant Attorney General, Litigation Section, Oklahoma
City, Oklahoma, for Defendant-Appellee State of Oklahoma, and Peter
Coppelman, Acting Assistant Attorney General, Ellen J. Durkee and Ethan G.
Shenkman, Attorneys, U.S. Department of Justice, Environment & Nat. Resources
Div., Washington, D.C., for Defendant-Appellee United States.
Before TACHA , EBEL , and BRISCOE , Circuit Judges.
TACHA , Circuit Judge.
Plaintiffs appeal 1
from several orders resulting in the dismissal of their
state law qui tam action, which was removed to federal court by the defendant
United States ex rel. Department of Defense, Department of the Army, and Army
Corps of Engineers (United States). Specifically, plaintiffs challenge (1) the
denial of their motion to remand the case to state court; (2) the dismissal of their
1
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
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cause against the United States on sovereign immunity grounds; and (3) the
dismissal, without prejudice, of their remaining claims, against the State of
Oklahoma ex rel. Water Resources Board, Water Conservation Storage
Commission, and various officers working for those entities, on grounds of
Eleventh Amendment Immunity. 2
As to the last ruling, plaintiffs do not object to
application of the Eleventh Amendment per se, but to the consequent disposition
of the barred claims, which they contend should have been remanded to state
court rather than dismissed. We affirm the dismissal of the United States, but
vacate the orders relating to the state defendants and remand to the district court
with directions to remand the case, in turn, to state court.
State Qui Tam Scheme
Oklahoma’s qui tam scheme establishes treble liability for public officers
who direct payment of state or local funds “in pursuance of any unauthorized,
unlawful or fraudulent contract,” 62 Okla. Stat. tit. § 372, and permits resident
taxpayers to bring suit “in the name of the State of Oklahoma as plaintiff” to
enforce that liability, 62 Okla. Stat. tit. § 373. While § 373 also “requires naming
the state, or other affected governmental unit, as defendant, it does not do so for
2
Plaintiffs initially named the officers in their individual and official
capacities, but, in response to the state defendants’ motion to dismiss, plaintiffs
no longer pursued individual liability. Hence, the district court did not address
individual liability, see Appellant’s App. at 420, nor do we.
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the purpose of imposing liability. [Rather, the state’s] ‘status [is] that of a
statutory party beneficiary. The qui tam Taxpayer wages war for the [state].
If the battle is won, the “spoils of war” go to the [state] and a reward to the
qui tam plaintiff.’” State ex rel. Scott v. State ex rel. Univ. Hosp. Auth. , 887 P.2d
1385, 1387-88 (Okla. Ct. App. 1994) (quoting State ex rel. Trimble v. City of
Moore , 818 P.2d 889, 895 (Okla. 1991)). The plaintiff’s reward is “one half the
amount recovered” in the action. Id. at 1387.
Factual and Procedural Background
In 1974, the state Water Conservation Storage Commission entered into an
installment debt contract with the Army Corps. of Engineers for water storage
space in a lake to be constructed by the United States. The contract called for
fifty annual payments contingent upon construction costs. The state’s payment
obligations commenced when the project was completed in 1983. At the time this
action was filed, the state had paid $4,414,700.69 toward the contract and had
missed six installment payments. 3
Plaintiffs filed suit in state court under §§ 372 and 373, alleging the
installment contract violated Oklahoma constitutional restrictions regarding
3
In a separate action, the United States has sued the State of Oklahoma in
the federal district court for the Northern District of Oklahoma seeking to recoup
arrearages under the installment contract.
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public indebtedness. Their complaint sought recovery of the funds already paid to
the United States under the contract, and treble damages of $13,244,102.07. The
United States removed the action to federal court pursuant to 28 U.S.C.
§ 1442(a)(1) (authorizing removal of civil actions against “[t]he United States or
any agency thereof”), with sovereign immunity as the requisite federal defense.
See Mesa v. California , 489 U.S. 121, 136-139 (1989) (holding § 1442(a)(1)
“cannot independently support Art. III ‘arising under’ jurisdiction,” and, thus,
removal thereunder “must be predicated upon the averment of a federal defense”);
see also Dalrymple v. Grand River Dam Auth. , 145 F.3d 1180, 1185 (10th Cir.
1998) (citing “colorable federal immunity defense” as Article III support for
§ 1442(a)(1) removal under Mesa ).
Plaintiffs moved to remand, arguing the United States consented to joinder
as a defendant in state court through the passage of 43 U.S.C. § 666. That statute,
known as the McCarran Amendment, provides in relevant part as follows:
Consent is hereby given to join the United States as a
defendant in any suit (1) for the adjudication of rights to the use of
water of a river system or other source, or (2) for the administration
of such rights, where it appears that the United States is the owner of
or is in the process of acquiring water rights by appropriation under
State law, by purchase, by exchange, or otherwise, and the United
States is a necessary party to such suit.
As its terms plainly reflect, this waiver of sovereign immunity is limited to
suits involving the comprehensive adjudication or administration of all rights in
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a water system. See Gardner v. Stager , 103 F.3d 886, 888 (9th Cir. 1996)
(following Dugan v. Rank , 372 U.S. 609, 618 (1963)). The district court held that
plaintiffs’ action for damages and recovery of funds paid pursuant to an allegedly
illegal contract fell outside the compass of the McCarran Amendment and,
accordingly, denied plaintiffs’ motion for remand.
Sometime thereafter, the district court disposed of the entire case in two
separate orders issued on the same day. It dismissed plaintiffs’ claims against the
state defendants as barred by the Eleventh Amendment, and dismissed their cause
of action against the United States as barred by sovereign immunity. Plaintiffs
then moved for reconsideration in one limited respect. Contending that the
district court’s rulings reflected its lack of subject matter jurisdiction over the
case, they argued that the court should not have dismissed their claims against the
state defendants but, rather, should have remanded them back to state court
pursuant to 28 U.S.C. § 1447(c) (“If at any time before final judgment it appears
that the district court lacks subject matter jurisdiction [over a case removed from
state court], the case shall be remanded.”). The district court denied plaintiffs’
motion without resolving the subject matter jurisdiction question under § 1447(c),
holding that, in any event, it would be futile to remand any claims to state court
because the United States was an indispensable party and would not be subject to
suit in that (or any other) forum. Plaintiffs then appealed.
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Federal Sovereign Immunity
“[T]he doctrine of sovereign immunity prohibits suits against the United
States except in those instances in which it has specifically consented to be sued.”
United States v. Richman (In re Talbot) , 124 F.3d 1201, 1206 (10th Cir. 1997).
“The United States consents to be sued only when Congress unequivocally
expresses in statutory text its intention to waive the United States’ sovereign
immunity.” Id. We review de novo the district court’s determination that the
United States has not waived its immunity. Shaw v. United States , 213 F.3d 545,
548 (10th Cir. 2000). Further, whether the statutory bases for such waiver
invoked by plaintiffs are available under the circumstances “is a legal issue of
statutory interpretation which this court also reviews de novo .” Id.
Plaintiffs continue to insist the McCarran Amendment applies to this
action. We agree with the district court’s rejection of this argument for
substantially the reasons recited above. Plaintiffs’ contention on appeal, that
“[w]ater rights can be established and determined by grants, deed, contracts , etc.
and litigation is allowed under Section 666 in State Court regardless of the legal
vehicle that brings the issue,” Appellant’s Br. at 14, misses the point. The
McCarran Amendment is inapplicable here not because of the contractual source
or legal form of plaintiffs’ claims, but because of their substance–plaintiffs’
action to recover allegedly illegal debt payments and obtain treble damages
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therefor cannot by any stretch of the legal imagination be characterized as
an effort to obtain a comprehensive adjudication of all water rights in a
water system.
Plaintiffs also argue that the United States expressly waived its immunity
for claims arising out of water resource projects by passage of the Flood Control
Act of 1970, 42 U.S.C. § 1962d-5b, pursuant to which the United States and
Oklahoma entered into the water storage contract in question here. That section
provides in part:
(a) Cooperation of non-Federal interest
After December 31, 1970, the construction of any water
resources project . . . shall not be commenced until each non-Federal
interest has entered into a written agreement with the Secretary of the
Army to furnish its required cooperation . . . . In any such agreement
entered into by a State . . . or a governmental entity created by the
State legislature, the agreement may reflect that it does not obligate
future State legislative appropriations for such performance and
payment when obligating future appropriations would be inconsistent
with State constitutional or statutory limitations.
....
(c) Enforcement; jurisdiction
Every agreement entered into pursuant to this section shall be
enforceable in the appropriate district court of the United States.
The district court read this statute as permitting suits against the
government to enforce contracts executed thereunder, but not as creating an
open-ended waiver of sovereign immunity with respect to collateral causes of
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action which somehow derive from or arise out of the subject matter of such
contracts. We agree. A waiver of sovereign immunity “must be strictly construed
in favor of the sovereign and may not be extended beyond the explicit language of
the statute.” Kelley v. United States , 69 F.3d 1503, 1507 (10th Cir. 1995)
(quotation omitted). The district court’s interpretation of § 1962d-5b properly
adheres to the plain, limited language used by Congress. To the extent plaintiffs’
claims relate to a § 1962d-5b contract at all, they effectively seek its nullification,
not enforcement, and thus do not fall within the scope of the government’s waiver
of sovereign immunity.
Finally, plaintiffs argue that in filing its own independent suit against the
state to collect arrearages under the contract, the United States has mooted the
jurisdictional problems associated with the formally separate and substantively
distinct claims asserted by plaintiffs in this case. This argument, and plaintiffs’
“One U.S. District Court Theory” on which it is based, is meritless. In light of
the statutory language discussed above, there is no inconsistency in the United
States invoking § 1962d-5b to enforce its contract with the state in one action and
plaintiffs being unable to invoke the statute to nullify that contract and obtain
collateral damages in another.
In sum, the United States properly removed this action on the basis of
a valid assertion of its sovereign immunity. We therefore affirm the district
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court’s denial of plaintiffs’ initial motion for remand and its subsequent dismissal
of the United States from the suit.
Disposition of Claims against State Defendants
Plaintiffs do not dispute that the Eleventh Amendment precluded pursuit of
their claims against the state defendants in federal court; rather, they object to the
resultant dismissal of those claims in lieu of a § 1447(c) remand to state court
where the constitutional prohibition would not apply. 4
As noted above, the
district court refused to remand the state claims because of its conclusion that
their pursuit in state court without the presence of the United States would
be futile.
However, the courts generally recognize that “there is no implicit futility
exception hidden behind the plain language of § 1447(c).” Coyne v. Am. Tobacco
Co. , 183 F.3d 488, 496 (6th Cir. 1999) (collecting cases). In any event, it is not
at all evident why the United States would be necessary to a disposition of
4
It is not clear, but at some points in their briefing, particularly in their
Reply Brief, plaintiffs may be contending that § 1962d-5b, and its incorporation
in the water storage contract, waived the state defendants’ Eleventh Amendment
immunity with respect to the claims asserted herein. This argument, if indeed it is
one, is meritless for reasons that should be obvious from our discussion of
§ 1962d-5b and federal sovereign immunity. By its plain terms, the statute
permits actions to enforce water project contracts between states and the federal
government; nothing in the statute permits a citizen suit against a state for
collateral liabilities of the sort alleged here.
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plaintiffs’ claims for statutory damages against the state defendants. See State
ex rel. Scott , 887 P.2d at 1388 (noting true “adversarial defendant under our
qui tam statutes” is wrongdoing state official from whom damages are sought).
Thus, the district court’s disposition cannot stand on its stated rationale. We
must therefore resolve the subsidiary jurisdictional question the district court
was able to avoid: Did the district court “lack subject matter jurisdiction,”
within the meaning of § 1447(c), when it dismissed rather than remanded
plaintiffs’ state claims?
To put that question in context, we should correct a confusion in the
briefing submitted by the United States, which insists that the removal statute
allows but does not require that such pendent claims be remanded, citing
Carnegie Mellon Univ. v. Cohill , 484 U.S. 343, 354 (1988). Cohill involved an
older version of the statute, which specifically required a remand only for cases
removed without jurisdiction and said nothing about the disposition of properly
removed cases when, as here, other jurisdictional problems emerge after removal.
See id. at 354. The broad language added by the 1988 amendment to § 1447(c)
fills this gap. Now,
[r]emand to state court following removal is governed by
28 U.S.C.A. § 1447 (West 1994), and the statute is clear and
unambiguous. “ If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the case shall be
remanded .” 28 U.S.C.A. § 1447(c) (emphasis added). The plain
language of § 1447(c) gives “no discretion to dismiss rather than
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remand an action removed from state court over which the court
lacks subject-matter jurisdiction.” International Primate Protection
League v. Administrators of Tulane Educational Fund , 500 U.S. 72,
89, 111 S. Ct. 1700, 1710, 114 L. Ed.2d 134 (1991) (internal
quotation marks omitted).
Roach v. W. Va. Reg’l Jail & Corr. Facility Auth. , 74 F.3d 46, 48-49 (4th Cir.
1996) (vacating dismissal of pendent claims where district court ultimately lacked
jurisdiction over subject matter of properly removed action, and directing district
court to remand action to state court under 1447(c)) (emphasis altered); see, e.g. ,
Coyne , 183 F.3d at 496-97; Bromwell v. Mich. Mut. Ins. Co. , 115 F.3d 208, 214
(3d Cir. 1997); Smith v. Wis. Dep’t of Agric., Trade, & Consumer Prot. , 23 F.3d
1134, 1139-40 (7th Cir. 1994).
Thus, the controlling question under § 1447(c) is whether the district court
had subject matter jurisdiction over the case when it dismissed plaintiffs’ cause
against the United States as barred by sovereign immunity and the rest of their
claims against the state defendants as barred by the Eleventh Amendment. This
court has on many occasions recognized that where “the United States retains its
sovereign immunity, . . . the district court lacks subject matter jurisdiction to hear
the suit.” Franklin Sav. Corp. v. United States , 180 F.3d 1124, 1130 (10th Cir.),
cert. denied, 120 S. Ct. 398 (1999) (quotation omitted); see, e.g., Dahn v. United
States, 127 F.3d 1249, 1252 (10th Cir. 1997); Kelley, 69 F.3d at 1506-07. If the
Eleventh Amendment likewise deprived the district court of subject matter
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jurisdiction over the state defendants, the entire case would have been so barred
and § 1447(c) would by its terms require the remand plaintiffs seek. That is, in
fact, the conclusion reached under similar circumstances by the Fourth and
Seventh Circuits in Roach, 74 F.3d at 49, and Smith, 23 F.3d at 1140.
We have noted “it is unclear whether the Supreme Court would consider
Eleventh Amendment immunity to be an affirmative defense or a jurisdictional
bar (which nonetheless can be waived) for the purposes of the removal statute.”
Archuleta v. Lacuesta, 131 F.3d 1359, 1362 (10th Cir. 1997); see Wis. Dep’t of
Corr. v. Schacht, 524 U.S. 381, 391 (1998) (assuming arguendo “that Eleventh
Amendment immunity is a matter of subject matter jurisdiction,” but noting this is
“a question we have not decided”). On the other hand, we have held that “the
State’s assertion of Eleventh Amendment immunity challenges the subject matter
jurisdiction of the district court, [and hence] the issue must be resolved before
a court may address the merits.” Martin v. Kansas, 190 F.3d 1120, 1126
(10th Cir. 1999) (emphasis added); accord Seaborn v. Fla., Dep’t of Corr.,
143 F.3d 1405 1407 (11th Cir. 1998); contra Parella v. Ret. Bd. of R.I.
Employees’ Ret. Sys., 173 F.3d 46, 55-57 (1st Cir. 1999). Indeed, we have in
a number of contexts indicated that, in substance, the Eleventh Amendment
constitutes a bar to federal subject matter jurisdiction. See, e.g., Elephant Butte
Irrig. Dist. v. Dep’t of the Interior, 160 F.3d 602, 607 (10th Cir. 1998); ANR
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Pipeline Co. v. Lafaver, 150 F.3d 1178, 1182, 1186 (10th Cir. 1998). Accord
United States v. Tex. Tech Univ., 171 F.3d 279, 285 n.9 (5th Cir. 1999) (citing
similar decisions from several circuits), cert. denied, 120 S. Ct. 2194 (2000).
Whatever facial tension there may appear to be in the above cases is easily
resolved, however, and the key is in the emphasized language from Martin. If,
as Archuleta indicates, the primary feature potentially undercutting the otherwise
jurisdictional character of Eleventh Amendment immunity is that it can be
waived, see Archuleta, 131 F.3d at 1362–or, similarly, that it need not be raised
sua sponte by the courts, see Parella, 173 F.3d at 55–then it is consistent to hold,
as Martin and Seaborn do, that once effectively asserted such immunity
constitutes a bar to the exercise of federal subject matter jurisdiction.
Accordingly, when the district court concluded that the state defendants had
raised a valid Eleventh Amendment defense to the only part of the case not barred
by federal sovereign immunity, it necessarily recognized its lack of subject matter
jurisdiction over the action. 5 Thus,
5
We note that invocation of supplemental jurisdiction over the state claims
pursuant to 28 U.S.C. § 1367 does not affect this conclusion. “[S]upplemental
jurisdiction does not render the Eleventh Amendment inapplicable because the
Supreme Court has held that ‘neither pendent jurisdiction nor any other basis of
jurisdiction may override the Eleventh Amendment.’” Mascheroni v. Bd. of
Regents of the Univ. of Cal. , 28 F.3d 1554, 1559 (10th Cir. 1994) (quoting
Pennhurst State Sch. & Hosp. v. Halderman , 465 U.S. 89, 121 (1984)); accord
Freeman v. Oakland Unified Sch. Dist. , 179 F.3d 846, 847 (9th Cir. 1999) (“28
(continued...)
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[a]pplying the above principles, it is evident that the district court
erred by dismissing the action rather than remanding. The Eleventh
Amendment prevented the district court from exercising
subject-matter jurisdiction over [plaintiff’s] claims. Therefore,
§ 1447(c) required the court to remand the action to state court.
Roach, 74 F.3d at 49; see also Smith, 23 F.3d at 1140.
We therefore AFFIRM the district court’s orders pertaining to the United
States, VACATE its orders pertaining to the state defendants, and REMAND the
case with directions to the district court to remand the claims asserted against the
state defendants to the Oklahoma court from which this action was removed.
(...continued)
5
U.S.C. § 1367 is not a congressional abrogation of state sovereign immunity.”).
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