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finding that the third McGinty factor "does not weigh either in favor of or against immunity" because "the record on this motion is unclear as to whether [the entity in question] has actually received appropriations from the State in recent years"
Summary of this case from Walker v. City of WaterburyOpinion
97 Civ. 0761 (NRB).
September 8, 2000.
OPINION AND ORDER
Plaintiff Barry Chafetz ("Chafetz") has brought this action for damages against his former employer, defendant Roosevelt Island Operating Corporation (the "RIOC"), alleging that RIOC terminated his employment and denied him sick leave and other benefits, in violation of the Family and Medical Leave Act of 1993, 29 U.S.C. 2601, et seq. (the "FMLA"). Now pending is defendant's motion, pursuant to Fed.R.Civ.P. 56, for summary judgment, asserting that RIOC is an arm of New York State (the "State") for purposes of Eleventh Amendment sovereign immunity. For the reasons stated below, we find that RIOC is an arm of the State, and therefore, is entitled to sovereign immunity. As the Second Circuit recently found the FMLA to be an invalid abrogation of states' immunity, see Hale v. Mann, 219 F.3d 61 (2d Cir. 2000), plaintiff's action under that statute is accordingly barred by the Eleventh Amendment.
Plaintiff's claims under 42 U.S.C. § 1983 and New York state law are similarly denied, as they are either derivative of the FMLA counts or dependant on them for federal court jurisdiction.
BACKGROUND
Though unnecessary to the resolution of this motion, the background facts of this case can be briefly summarized as follows. RIOC is a public corporation organized in 1984 and responsible for the development, operation, security and maintenance of 147-acre Roosevelt Island (the "Island"), which is located in the East River between Manhattan and Queens. Chafetz worked for RIOC for ten years, from June 24, 1986 when he was hired as Director of Operations, until his termination on June 21, 1996. On December 14, 1989, plaintiff was promoted to Vice-President of the Board of Directors, where he oversaw matters relating to human resources, fiscal administration, operations, security and transportation.On December 4, 1995, RIOC placed Chafetz on paid administrative leave, allegedly due to an ongoing investigation by the New York State Office of Inspector General into activities involving plaintiff and other former RIOC employees. Plaintiff asserts that the leave was involuntary and that he was willing and able to work. He further claims that the investigation was pretextual, since no criminal process was ever commenced as a result.
While on administrative leave, Chafetz claims he began to suffer from depression and stress, and on June 7, 1996, formally requested an extended sick leave of at least three months. Defendant, meanwhile, asserts that plaintiff provided no medical evidence in support of the leave request, despite his being asked to do so several times, and maintains that it did not learn of his condition until the commencement of discovery in this litigation.
RIOC terminated plaintiff's employment on June 21, 1996. The termination was purportedly due to a wider corporate reorganization, initiated by RIOC's newly appointed President, whereby eight management positions including plaintiff's were eliminated or consolidated. Chafetz, however, asserts that the termination was retaliatory, the result of his request for medical leave, and in violation of the FMLA. He has brought suit to recover damages, including the value of accrued employee benefits incurred as a result of the alleged, wrongful termination.
DISCUSSION
It is well-settled that the Eleventh Amendment bars suits against States and their agencies in federal court, unless Congress abrogates the State's immunity or the State has waived its immunity. Pennhurst State Sch. Hosp. v. Halderman, 465 U.S. 89, 99 (1984); see also Hans v. Louisiana, 134 U.S. 1, 10-11 (1890) ( Eleventh Amendment applicable to suits outside its express terms, including suits by state's own citizens). The Second Circuit has recently held that the FMLA provision at issue here does not constitute a valid abrogation of the state's immunity. Hale v. Mann, 219 F.3d 61, 69 (2d Cir. 2000) ("Congress did not have the authority to abrogate the sovereign immunity of the states on claims arising under the provisions [relating to] . . . medical leave to deal with one's own serious health condition . . . and related retaliation section") (internal quotation marks omitted). The relevant inquiry, therefore, is whether RIOC is entitled to sovereign immunity.
The Amendment provides that "[t]he 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. CONST. AMEND. XI.
While the Second Circuit's Opinion stated that it is limited to "the particular provisions at issue here," namely 26 U.S.C. § 2612 (a)(1)(D) and 2614(a)(1), an examination of the statutory sections relied on by plaintiff establishes that this case turns on the same fundamental provisions of the statute as did the Second Circuit's case.See infra.
We also note the overwhelming consensus among the other Circuit Courts of Appeals that the FMLA is not a valid abrogation of states' immunity. Sims v. Univ. of Cincinnati, 219 F.3d 559 (6th Cir. 2000);Garrett v. Univ. of Alabama at Birmingham Board of Trustees, 193 F.3d 1214 (11th Cir. 1999); Russell v. United States Dep't of the Army, 191 F.3d 1016 (9th Cir. 1999); Mann v. Haigh, 120 F.3d 34 (4th Cir. 1997).
A State-created entity like the RIOC, that is not an agency, can qualify for immunity only if it can demonstrate that it is more like an "arm of the State" than like a "political subdivision or other municipal corporation." Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280 (1977); Mancuso v. New York State Thruway Auth., 86 F.3d 289, 292 (2d Cir. 1996). "The appropriate analysis focuses both on the extent to which the state would be responsible for satisfying any judgment that might be entered against the defendant entity . . . and on the degree of supervision exercised by the state over the defendant entity." Pikulin v. City University of New York, 176 F.3d 598, 600 (2d Cir. 1999) (internal citations omitted).
The Second Circuit has set out a two-part test to determine whether a State entity qualifies as an arm of the State. First, the Court must consider the following six factors (the "Feeney factors"), derived from the Supreme Court's decision in Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391 (1979), and identified in Feeney v. Port Authority Trans-Hudson Corp., 873 F.2d 628, 630-31 (2d Cir. 1989), aff'd on other grounds, 495 U.S. 299 (1990):
(1) how the entity is referred to in the documents that created it; (2) how the governing members of the entity are appointed; (3) how the entity is funded; (4) whether the entity's function is traditionally one of local or state government; (5) whether the state has a veto power over the entity's actions; and (6) whether the entity's obligations are binding upon the state.Mancuso, 86 F.3d at 293. "[I]f those factors point in different directions," the second inquiry is whether allowing the entity to be sued in federal court would "threaten the integrity of the state" or "expose the state treasury to risk." Id. (citing Hess v. Port Authority Trans-Hudson Corporation, 513 U.S. 30 (1994)). If the first six factors are evenly balanced, the latter inquiry controls. Hess, 513 U.S. at 48 ("the vulnerability of the State's purse is the most salient factor in Eleventh Amendment determinations").
Applying the six Feeney factors, we find that the RIOC is in fact an arm of the State and therefore immune from suit in federal court. As to the first factor, we note that in creating RIOC the New York Legislature referred to it as a "body corporate and politic constituting a public benefit corporation and a political subdivision of New York State." N.Y. Unconsol. § 6387(1). However, the Second Circuit has found such language to be "unhelpful," and in the absence of state decisional law on the subject, has looked instead to the powers accorded to the entity. See Mancuso, 86 F.3d at 294. Thus, because the Legislature has accorded RIOC "some traditional state powers, such as immunity from taxes and the ability to acquire property by eminent domain," Id. at 295; see N.Y. Unconsol. §§ 6388(5), 6395(2), we find that the first factor tips in favor of Eleventh Amendment Immunity.
The second Feeney factor, regarding appointment of the entity's governing members, points in the same direction. Two of the nine members of RIOC's Board of Directors (the "Board") are members of state government and serve ex officio. See N Y Unconsol. § 6387(2). One is the Commissioner of the New York State Division of Housing and Community Renewal ("DHCR"), who is chairman of the Board and chief executive officer or RIOC, see id., while the other is the New York State Director of Budget, see id., both of whom are appointed by the Governor, and both of whose agencies are arms of New York State, see, e.g., Crockett v. Pataki, No. 97 Civ. 3539, 1998 WL 614134, at *5 (S.D.N.Y. Sep 14, 1998) (DHCR enjoys Eleventh Amendment immunity).
Also, the remaining seven members of RIOC's Board of Directors are appointed by the Governor upon the State Senate's consent. See N Y Unconsol. § 6387(2). While it is true that there are some restrictions on the Governor's ability to make appointments and to remove Board members, as plaintiff correctly points out, these are of little consequence here. Overall, the composition and process of selection of RIOC's Board demonstrates a sufficient degree of oversight and control by the State. Consequently, the second factor weighs decidedly in favor of immunity.
Among other things, (1) three of seven public members must be residents of Roosevelt Island, see N.Y. Unconsol. § 6387(2); (2) two selections must be based on the recommendation of the Mayor of New York City, see id., and (3) the Governor may only remove a Board member for cause, and only after the member has had an opportunity to be heard, see id. § 6387(3).
The third factor, which relates to the entity's funding, does not weigh either in favor of or against immunity. On the one hand, RIOC is structured to be dependent on state funding. It is prevented from levying taxes, issuing bonds, or creating other obligations to raise funds, and its budget and expenses are subject to review and approval by the Director of the Budget. See N Y Unconsol. § 6388(5). On the other hand, as plaintiff argues, RIOC successfully raises most of its funds from a variety of sources throughout the Island, including tramway fares, commercial leasing, use fees for fields and buildings, parking meters, parking garage fees, bus fares and special events. See Pl.'s Mem. at 11; Chafetz Decl. ¶¶ 9-11. Nevertheless, the record on this motion is unclear as to whether RIOC has actually received appropriations from the State in recent years or is self-funding. Compare Chafetz Decl. ¶ 10 with Reuss Decl. ¶¶ 8-9; see also Mancuso, 86 F.3d at 295 ("arm-of-the-state doctrine focuses not on initial funding, but on current funding"). Therefore, because the State's funding of an entity is a key consideration, we cannot say that the third factor tips the balance either for or against RIOC's immunity.
As to the next factor, we find that RIOC's function is traditionally one of local, rather than state, government. RIOC was created to manage and operate the 147-acre Island, located between two New York City boroughs, and its duties are strictly limited to those ends. See N.Y. Unconsol. §§ 6385, 6390. It has no functions or duties outside the Island. See id. At the same time, however, we note the Legislature's express finding that RIOC's creation and purpose is "for the benefit of the people of the state and is a public purpose . . . performing an essential governmental function in the exercise of the powers conferred upon it." N.Y. Unconsol. § 6395(2). And, while we agree with defendant's argument that "safe, affordable housing and related public services may be viewed as a state function, Def.'s Reply Mem. at 4, we find that RIOC's function, on the whole, is traditionally one of local, rather than state, government.
Turning to the fifth factor, we must determine whether the State has veto power over RIOC's actions. Among the indicators that may be considered here, see Mancuso, 86 F.3d at 295-96, we note: that (1) the Governor has the power to appoint almost the entire Board of Directors of RIOC, with state officials serving as the remaining members ex officio; (2) he also has the authority to remove members of the Board for cause, subject only to a hearing and the member's right to counsel; (3) the Commissioner of the State's DHCR serves as the chairman of the Board and as chief executive officer of RIOC; and finally, (4) the State's Director of Budget has authority over RIOC's budget and appropriations, see N Y Unconsol. §§ 6389(2), 6393(1), (2), 6399(1), (2). Nevertheless, because the State does not have formal veto power over RIOC's actions, as involved in the Supreme Court's decision in Hess, 513 U.S. at 36, the fifth factor weighs, however slightly, against immunity.
Lastly, the sixth and final Feeney factor, whether RIOC's obligations are binding on the State, also supports immunity. The parties agree that the State is not obligated to satisfy RIOC's corporate debts, see N.Y. Unconsol. § 6395(1), such as payroll and benefit obligations, but is obligated to indemnify RIOC and its employees against liabilities, claims or judgments arising out of the "development, management or operation of Roosevelt Island," id. § 6392(1). Plaintiff's claim for benefits arises out his employment, which concerned the "management" of Roosevelt Island. Accordingly, we conclude, despite conflicting provisions, therefore, that a judgment against RIOC "would have the practical effect of requiring payments from New York." Mancuso, 86 F.3d at 296. The fact that the State Attorney General's Office is representing defendant in this action only lends further support to our conclusion. See Vullo Decl. ¶¶ 2-3.
In sum, we find that three of the six factors identified in Feeney weigh strongly in favor of immunity, two weigh slightly against it, and the factor third is inconclusive. Based on the many traditional state powers accorded to RIOC, the Governor's power to appoint and remove members of its Board, and the State's obligation to indemnify the entity, it is clear that the State is responsible for the operation and governance of RIOC and would be liable for any judgments entered against the entity. Application of the six Feeney factors significantly support the proposition that RIOC is an arm of the state and is entitled to the state's immunity.
We note, nevertheless, despite the dispositive nature of the first inquiry, that the second arm-of-the-state inquiry also supports our analysis heretofore. Allowing RIOC to be sued in federal court would indeed be an affront to the dignity of the State, given the substantial degree of connectedness between the State and RIOC. Additionally, allowing the suit to proceed would expose the state treasury to risk, since as noted, the State would be liable for any judgment entered in this action. Thus, RIOC conclusively meets the Second Circuit's arm-of-the-state test.
CONCLUSION
For the foregoing reasons, we find that RIOC is more like an arm of New York State than like a political subdivision or municipal corporation, for purposes of sovereign immunity under the Eleventh Amendment. The entity is therefore entitled to protection from suit in federal court. Moreover, the relevant provision of the FMLA has been held not to be a valid abrogation of the states' protection. Accordingly, defendant's motion for summary judgment is granted. The Clerk of the Court is directed to enter judgment for defendant and to dismiss plaintiff's complaint.
IT IS SO ORDERED.