State Does Not Waive Sovereign Immunity by Removing Case to Federal Court unless Removal Confers Unfair Advantage — Circuit Split

Bergemann v. R.I. Dep’t of Envt’l Mgmt., 2011 U.S. App. LEXIS 25148 (1st Cir. Dec. 20, 2011):

This appeal poses a question that has divided the circuits. The question, which is a matter of first impression for this court, is whether a state waives its sovereign immunity to a pleaded claim by removing that claim to the federal court. We conclude that a waiver occurs only if the removal confers an unfair advantage on the removing state. ***

In the main, states are immune from claims brought by private persons in federal courts. Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54 (1996); see U.S. Const. amend. XI. Yet, this immunity is not absolute. A state may waive immunity from suit. Sossamon v. Texas, 131 S. Ct. 1651, 1658 (2011). Alternatively, Congress may abrogate a state's immunity pursuant to its Fourteenth Amendment powers. See Alden v. Maine, 527 U.S. 706, 756 (1999). "But absent waiver or valid abrogation, federal courts may not entertain a private person's suit against a State." Va. Office for Prot. & Advocacy v. Stewart, 131 S. Ct. 1632, 1638 (2011).

Congress has not abrogated Rhode Island's immunity from FLSA claims. See Mills v. Maine, 118 F.3d 37, 48 (1st Cir. 1997). The relevant question, then, is whether Rhode Island has waived its immunity.

Leaving to one side waivers that occur by reason of a state's participation in federal programs that require a surrender of sovereign immunity, see, e.g., Petty v. Tenn.-Mo. Bridge Comm'n, 359 U.S. 275, 280-82 (1959), a state may waive immunity in one of two ways. First, a state may waive its immunity expressly; that is, by unequivocally expressing its consent to suit. Sossamon, 131 S. Ct. at 1658. Second, a state may waive its immunity impliedly; that is, by engaging in affirmative conduct during litigation sufficient to evince consent to suit. See New Hampshire v. Ramsey, 366 F.3d 1, 15 (1st Cir. 2004). The dispute in this case centers on waiver by conduct.

As a general proposition, waiver by litigation conduct requires a showing that a state has "voluntarily invoke[d]" the jurisdiction of the federal courts. Coll. Sav. Bank v. Fla. Prepaid Postsec. Educ. Expense Bd., 527 U.S. 666, 675-76 (1999); see Gunter v. Atl. Coast Line R.R., 200 U.S. 273, 284 (1906) (explaining that "where a state voluntarily become[s] a party to a cause, and submits its rights for judicial determination, it will be bound thereby, and cannot escape the result of its own voluntary act by invoking the prohibitions of the 11th Amendment"). A state voluntarily invokes federal jurisdiction when, for example, it files a claim in the bankruptcy court, Gardner v. New Jersey, 329 U.S. 565, 574 (1947), or when it chooses to intervene in federal-court litigation, Clark v. Barnard, 108 U.S. 436, 447-48 (1883).

Refined to its essence, waiver by litigation conduct represents a kind of tit for tat: a state's decision to avail itself of a federal forum as a means of garnering a material benefit that otherwise would not be available to it is deemed to betoken a willingness to subject itself to the federal court's jurisdiction with respect to the particular claim or claims at issue. See Gunter, 200 U.S. at 284. Put in colloquial terms, the state must take the bitter with the sweet.

In this instance, Rhode Island has neither asserted a federal-court claim nor intervened in an ongoing federal proceeding. It did, however, remove the action brought by the EPOs to the federal district court. The EPOs contend that, by so doing, the state waived its immunity to their embedded FLSA claim.

This contention is anchored in the Supreme Court's decision in Lapides v. Board of Regents of the University System of Georgia, 535 U.S. 613 (2002). There, an employee of a state university sued Georgia in a state court pursuant to 42 U.S.C. § 1983 and the Georgia Tort Claims Act (GTCA), Ga. Code Ann. §§ 50-21-20 to 50-21-37. By statute, Georgia had waived its immunity with respect to GTCA claims brought in state court but not with respect to those brought in federal court. See Ga. Code Ann. § 50-21-23(b). In a deft maneuver, Georgia removed the action on the basis of the federal section 1983 claim, see 28 U.S.C. §§ 1331, 1441(a), and then asserted its federal-court immunity to the GTCA claim. Lapides, 535 U.S. at 616. The Supreme Court held that by removing the action, Georgia had voluntarily invoked federal jurisdiction and thereby had waived its federal-court immunity with respect to the GTCA claim.***

The language of Lapides is broad, see, e.g., id. at 624, but the Supreme Court has limited its holding to its facts, id. at 617; see Magarian v. Hawkins, 321 F.3d 235, 240 n.6 (1st Cir. 2003) (stating that a "holding is, of course, limited to the facts of [the] case"). Those facts are materially different from the facts of this case.

In Lapides, removal operated in effect as an end-run around Georgia's state-court waiver of immunity. Here, by contrast, Rhode Island is immune from FLSA claims in both state and federal court. Thus, removal conferred no special advantage on the state: it would have enjoyed exactly the same immunity had it continued to litigate the claim in the state court. We believe that this is a crucial distinction. After all, the Lapides Court emphasized that waiver rules exist to avoid "inconsistency, anomaly, and unfairness." 535 U.S. at 620. The Court's finding of waiver by litigation conduct was driven by the fact that Georgia's invocation of federal jurisdiction had conferred the "unfair tactical advantage[]" of circumventing its state-court immunity waiver. Id. at 621. ***

Thus, Lapides leaves open the question of whether removal of a federal claim effects a waiver when a state has not waived immunity to that federal claim in its own courts.***

In the case at hand, Rhode Island's sovereign immunity defense is equally as robust in both the state and federal court. Consequently, there is nothing unfair about allowing the state to raise its immunity defense in the federal court after having removed the action. Simply put, removal did not change the level of the playing field.

In point of fact, it is the EPOs' position that would create potential unfairness. They argue that a state waives sovereign immunity whenever it removes a case to a federal court. If that position were to prevail, a state with a colorable immunity defense to a federal claim brought against it in its own courts would face a Morton's Fork: remove the federal claim to federal court and waive immunity or litigate the federal claim in state court regardless of its federal nature. Either way, the state would be compelled to relinquish a right: either its right to assert immunity from suit or its "right to a federal forum," Martin v. Franklin Capital Corp., 546 U.S. 132, 140 (2005); see Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985) (explaining that "[a] federal forum for federal claims is certainly a defendant's right"). We think that it would be anomalous if a doctrine born out of a concern for fairness were to be construed so as to place a sovereign defendant in such an unfair position.

To be sure, the challenge of interpreting Lapides has divided the courts of appeals. Some courts have concluded that removal does not waive a state's sovereign immunity to a claim unless the state previously had waived its immunity to such a claim in state court proceedings. See Stewart v. N. Carolina, 393 F.3d 484, 490 (4th Cir. 2005); Watters v. Wash. Metro. Area Transit Auth., 295 F.3d 36, 42 n.13 (D.C. Cir. 2002). Others read Lapides as operating more mechanically and take the position that, regardless of the circumstances, removal always waives immunity. See Bd. of Regents of Univ. of Wis. Sys. v. Phx. Int'l Software, Inc., 653 F.3d 448, 461 (7th Cir. 2011); Embury v. King, 361 F.3d 562, 564 (9th Cir. 2004); Estes v. Wyo. Dep't of Transp., 302 F.3d 1200, 1206 (10th Cir. 2002).

Two courts have charted a middle course, holding that removal of federal claims generally does not waive immunity from payment of money damages but does waive immunity from suit. See Lombardo v. Pa. Dep't of Pub. Welfare, 540 F.3d 190, 198-200 (3d Cir. 2008); Meyers ex rel. Benzing v. Texas, 410 F.3d 236, 252-55 (5th Cir. 2005).

In our judgment, Stewart and Watters are the best-reasoned of these decisions — and they are the most faithful to the teachings of the Lapides Court. Furthermore, they are congruent with our own post-Lapides precedents, which as we explain below stress that waiver by litigation conduct transpires only when a state employs procedural maneuvering to gain an unfair tactical advantage.

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