Gail Hutto v. SC Retirement System

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 4:10-cv-02018-JMC. [999487881]. [13-1523]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 13-1523

GAIL M. HUTTO; ELIZABETH W. HODGE; MARGARET B. LINEBERGER;
LYNN R. ROGERS; NANCY G. SULLIVAN; JANE P. TERWILLIGER;
JULIAN W. WALLS; DEBRA J. ANDREWS, and all others similarly
situated,
Plaintiffs - Appellants,
v.
THE SOUTH CAROLINA RETIREMENT SYSTEM; THE POLICE OFFICERS
RETIREMENT SYSTEM; THE
SOUTH CAROLINA RETIREMENT SYSTEMS
GROUP TRUST; NIKKI R. HALEY, Governor of South Carolina, in
her official capacity as ex officio Chairwoman of the South
Carolina Budget and Control Board; CURTIS M. LOFTIS, JR.,
Treasurer of the State of South Carolina, in his official
capacity as an ex officio member of the South Carolina
Budget and Control Board; RICHARD ECKSTROM, Comptroller
General of the State of South Carolina, in his official
capacity as an ex officio member of the South Carolina
Budget and Control Board; HUGH K. LEATHERMAN, Chairman of
the South Carolina Senate Finance Committee, in his
official capacity as an ex officio member of the South
Carolina Budget and Control Board; W. BRIAN WHITE, Chairman
of the South Carolina House of Representatives Ways and
Means Committee, in his official capacity as an ex officio
member of the South Carolina Budget and Control Board;
MARCIA S. ADAMS, in her official capacity as Executive
Director of the South Carolina Budget and Control Board;
DAVID K. AVANT, in his official capacity as Executive
Director of the South Carolina Public Employee Benefit
Authority,
Defendants - Appellees.

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Appeal from the United States District Court for the District of
South Carolina, at Florence.
J. Michelle Childs, District
Judge. (4:10-cv-02018-JMC)

Argued:

October 29, 2014

Decided:

December 5, 2014

Before NIEMEYER, WYNN, and THACKER, Circuit Judges.

Affirmed by published opinion.
Judge Niemeyer wrote
opinion, in which Judge Wynn and Judge Thacker joined.

the

ARGUED:
Richard
Harpootlian,
RICHARD
A.
HARPOOTLIAN,
PA,
Columbia, South Carolina, for Appellants.
Tina Marie Cundari,
SOWELL, GRAY, STEPP, & LAFFITTE, LLC, Columbia, South Carolina,
for Appellees.
ON BRIEF: Graham L. Newman, Christopher P.
Kenney, RICHARD A. HARPOOTLIAN, PA, Columbia, South Carolina;
James M. Griffin, Margaret N. Fox, LEWIS, BABCOCK & GRIFFIN,
LLP, Columbia, South Carolina, for Appellants. Robert E. Stepp,
SOWELL, GRAY, STEPP, & LAFFITTE, LLC, Columbia, South Carolina,
for Appellees.

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NIEMEYER, Circuit Judge:
South Carolina public employees commenced this class action
challenging the constitutionality of the South Carolina State
Retirement System Preservation and Investment Reform Act, 2005
S.C.

Acts

Carolina’s

1697

(“the

retirement

2005
laws

Act”).
by

That

requiring

Act

amended

public

South

employees

who

retire and then return to work to make, beginning on July 1,
2005, the same contributions to state-created pension plans as
pre-retirement employees but without receiving further pension
benefits.

The plaintiffs claimed that the 2005 Act effected a

taking of their private property, in violation of the Takings
Clause of the Fifth Amendment and the Due Process Clause of the
Fourteenth

Amendment.

They

named

as

defendants

two

state-

created pension plans, in which they are participants; the South
Carolina

Retirement

Systems

Group

Trust

(“the

Trust”),

which

holds the pension plans’ assets; and state officials serving as
trustees and administrators of the pension plans.
they

sought

July 1,

2005,

repayment
and

of

all

injunctive

contributions
relief

For relief,

withheld

prohibiting

the

since
future

collection of such contributions.
Pursuant

to

the

defendants’

motion,

the

district

court

dismissed the complaint on the ground that all of the defendants
are entitled to sovereign immunity.

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We affirm, albeit on reasoning slightly different from that
given by the district court.

We conclude, as did the district

court, that the pension plans and the Trust are arms of the
State of South Carolina and therefore have sovereign immunity.
Likewise, we conclude that the state officials sued in their
official capacities for repayment of pension-plan contributions
have sovereign immunity.

Finally, we conclude that the state

officials

official

sued

in

their

capacities

for

prospective

injunctive relief have sovereign immunity because their duties
bear

no

relation

to

the

collection

of

the

public

employees’

contributions to the pension plans, precluding application of Ex
parte

Young,

conclusions,
claims

209
we

under

the

U.S.

reject

123
the

Takings

(1908).

In

plaintiffs’

Clause

of

the

reaching

argument
Fifth

that

these
their

Amendment

are

exempt from the protection of the Eleventh Amendment.

I
The plaintiffs are public employees and participants in two
pension plans created by South Carolina in 1962 -- the South
Carolina

Retirement

Officers

Retirement

System”). 1

System
System

and

the

South

(collectively,

Carolina
“the

See S.C. Code Ann. §§ 9-1-20, 9-11-20(1).

1

Police

Retirement
In their

In all, South Carolina has created five pension plans for
public employees, each referred to as a “Retirement System” -4

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complaint, they alleged that they and others similarly situated
are “retired contributing members” of the Retirement System, who
returned to work on or after July 1, 2005, when the 2005 Act
went

into

effect,

and

who

are,

by

reason

of

the

2005 Act,

required “to contribute a portion of their gross earnings” to
the Retirement System “without receiving any additional service
credit

or

interest

on

their

retirement

accounts.”

Before

July 1, 2005, retired participants could return to work for a
salary of up to $50,000 without forfeiting the right to receive
retirement

benefits

and

without

having

contributions to the Retirement System.
709 S.E.2d 54, 56-57 (S.C. 2011).

to

make

further

See Ahrens v. State,

But this changed with the

enactment of the 2005 Act, and retired participants who return
to work are now required to make the same contributions to the
Retirement

System

as

pre-retirement

employees

but

without

accruing additional service credit for pension benefits.
S.C.

Code

Carolina

Ann.

General

§§ 9-1-1790(C),
Assembly

made

9-11-90(4)(c).
the

change

to

The
help

See
South

fund

the

the South Carolina Retirement System, the Retirement System for
Judges and Solicitors of the State of South Carolina, the
Retirement System for members of the General Assembly of the
State of South Carolina, the National Guard Retirement System,
and the South Carolina Police Officers Retirement System. S.C.
Code Ann. §§ 9-1-20, 9-8-20, 9-9-20, 9-10-20(A), 9-11-20(1).
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Retirement System and, in particular, to secure future cost-ofliving adjustments.
The plaintiffs commenced this class action in August 2010
on behalf of themselves and all other participating employees
who returned to work on or after July 1, 2005, alleging that, by
enforcing

the

2005 Act,

the

defendants

“confiscated

their

private property,” in violation of the Takings Clause of the
Fifth Amendment and their procedural due process rights under
the Fourteenth Amendment.

In addition to naming as defendants

the two pension plans, the plaintiffs named the Trust, which
holds the assets of the Retirement System, and a number of state
officials

in

their

official

capacities

who,

as

members

or

executive directors of the State Budget and Control Board and
the Public Employee Benefit Authority, serve as trustees and
administrators of the Retirement System.

The State Budget and

Control Board and the Public Employee Benefit Authority are the
statutorily

designated

co-trustees

of

the

Retirement

System.

S.C. Code Ann. § 9-1-1310(A).
For
judgment
injunction

relief,
that

the

the

against

plaintiffs

2005
its

Act

is

enforcement;

sought

(1) a

declaratory

unconstitutional;
(3) an

accounting

(2) an
of

all

contributions they made to the Retirement System since July 1,
2005;

(4) an

injunction

compelling

6

the

return

of

all

such

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contributions; and (5) an order awarding them attorneys fees and
costs. 2
The Retirement System, the Trust, and the state officials
filed

a

Rules

motion

of

Civil

to

dismiss

Procedure

the

complaint

12(b)(1),

pursuant

12(b)(3),

to

and

Federal

12(b)(6),

asserting numerous grounds for their motion, including sovereign
immunity, claim and issue preclusion based on the prior state
litigation,

discretionary

abstention,

and

claim upon which relief can be granted.

failure

to

state

a

The district court

granted the motion and dismissed the complaint, relying only on
the defendants’ sovereign immunity under the Eleventh Amendment.

2

Before this action was commenced, public employees who
retired and then returned to work before July 1, 2005, also
commenced an action in state court, alleging that the 2005 Act
breached a legislatively created contract with the “old working
retirees” and violated the Takings Clause and the Due Process
Clause of the U.S. Constitution.
The South Carolina Supreme
Court rejected the argument, holding that the “old working
retiree statute [did] not create a binding contract between the
State and the old working retirees,” but the court did remand
the case to the trial court “for a case by case factual
determination of whether any actions of the State with regard to
individual old working retirees constituted a breach of
contract.” Layman v. State, 630 S.E.2d 265, 271-72 (S.C. 2006).
In 2011, the South Carolina Supreme Court affirmed the circuit
court’s conclusion that forms signed by the old working
retirees, stating that they would not be required to pay into
the pension plans, did not create a contract between the State
and the old working retirees.
Ahrens, 709 S.E.2d at 58-60.
Because the employees’ claims under the Takings Clause and the
Due Process Clause were “founded on the presumption that a
contractual right ha[d] been unfairly taken away,” the court
also affirmed the circuit court’s grant of summary judgment on
those claims. Id. at 63.
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With

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respect

to

the

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institutional

defendants,

the

court

determined that “the Retirement Systems should be considered an
arm of the State such that Eleventh Amendment immunity applies
to bar [a federal] court from hearing the claim.”

Hutto v. S.C.

Ret.

2012).

Sys.,

899 F. Supp.

2d

457,

473

(D.S.C.

And

“[b]ecause Plaintiffs seek monetary damages,” it held that the
claims against the individual defendants were similarly barred.
Id. at 475 n.14.

Having found that all of the defendants were

immune by reason of sovereign immunity, the court declined to
address the defendants’ remaining grounds for seeking dismissal
of the action.
The

plaintiffs

Rule 59(e),
dismissing

filed

asserting
their

a

motion

that

claims

the

for

a

for

reconsideration

district

court

declaratory

under

erred

judgment

in
and

injunctive relief against the state officials serving in their
official capacities.

They relied on Ex parte Young, 209 U.S.

123 (1908), which created an exception to Eleventh Amendment
immunity
relief

to

with

respect

remedy

to

ongoing

claims

for

violations

prospective
of

federal

injunctive
law.

The

district court denied the motion because, “in seeking to bar the
enforcement of [the 2005 Act], which requires Plaintiffs to pay
into

the

undeniably

Retirement
monetary”

System,
and

Plaintiffs’

because

8

an

requested

injunction

relief

ordering

is
the

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return of the contributions already withheld “would ultimately
impact the State treasury.”
This appeal followed.
II
The Eleventh Amendment shields a state entity from suit in
federal court “if, in [the entity’s] operations, the state is
the real party in interest,” in the sense that the “named party
[is]

the

alter

ego

of

the

state.”

Ram

Ditta

v.

Md.

Nat’l

Capital Park & Planning Comm’n, 822 F.2d 456, 457 (4th Cir.
1987).
The plaintiffs contend that the Retirement System and the
Trust do not have the sovereign immunity afforded a State under
the Eleventh Amendment because they are “non-state entit[ies]”
and that the district court’s contrary conclusion was based on
an erroneous application of the factors articulated in Ram Ditta
for determining whether an entity is an alter ego of the State.
They argue, “[T]he District Court should have given effect to
the

express,

unambiguous

language

of

[South

Carolina’s

retirement laws] and concluded that the Retirement Systems are
independent

corporate

entities

for

which

the

State

has

no

financial obligation as indemnitor.”
The defendants contend that “State law makes the financial
obligations of the state Retirement Systems obligations of the
State”; that the State controls the Retirement System; that the
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pension plans of the Retirement System “operate on a statewide
basis and have statewide concerns”; and that South Carolina law
treats the pension plans as state agencies.

The defendants thus

maintain that the Retirement System and the Trust are “arms of
the State and [therefore] immune from suit.”
Whether an action is barred by the Eleventh Amendment is a
question of law that we review de novo.

Cash v. Granville Cnty.

Bd. of Educ., 242 F.3d 219, 222 (4th Cir. 2001).
At the outset, we address which party has the burden of
proof when sovereign immunity under the Eleventh Amendment is
raised.

While

the

Supreme

Court

has

described

sovereign

immunity as a “jurisdictional bar” that can be raised for the
first time on appeal, Seminole Tribe of Fla. v. Florida, 517
U.S.

44,

73

(1996),

and

“a

constitutional

limitation

on

the

federal judicial power established in Art. III,” Pennhurst State
Sch. & Hosp. v. Halderman, 465 U.S. 89, 98 (1984), it “ha[s] not
decided” whether Eleventh Amendment immunity goes to a court’s
subject-matter jurisdiction, Wis. Dep’t of Corr. v. Schacht, 524
U.S. 381, 391 (1998).

Unlike subject-matter jurisdiction, which

cannot be waived, a State can always waive its immunity and
consent to be sued in federal court, Atascadero State Hosp. v.
Scanlon, 473 U.S. 234, 238 (1985), and a court need not raise
the issue on its own initiative, Wis. Dep’t of Corr., 524 U.S.
at 389.

Because a defendant otherwise protected by the Eleventh
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Amendment
matter,
assert

can

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waive

its

structurally
the

protection,

necessary

immunity.

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We

to

it

is,

require

therefore

as

the

conclude

a

practical

defendant
that

to

sovereign

immunity is akin to an affirmative defense, which the defendant
bears the burden of demonstrating.

In so concluding, we join

every other court of appeals that has addressed the issue.

See

Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ., 466 F.3d
232, 237-39 (2d Cir. 2006); Fresenius Med. Care Cardiovascular
Res., Inc. v. P.R. & the Caribbean Cardiovascular Ctr. Corp.,
322

F.3d

56,

61

(1st

Cir.

2003);

Gragg

v.

Ky.

Cabinet

for

Workforce Dev., 289 F.3d 958, 963 (6th Cir. 2002); Skelton v.
Camp, 234 F.3d 292, 297 (5th Cir. 2000); Christy v. Pa. Turnpike
Comm’n, 54 F.3d 1140, 1144 (3d Cir. 1995); Baxter v. Vigo Cnty.
Sch. Corp., 26 F.3d 728, 734 n.5 (7th Cir. 1994), superseded by
statute on other grounds as recognized in Holmes v. Marion Cnty.
Office

of

Family &

Children,

349

F.3d

914,

918-19

(7th

Cir.

2003); ITSI TV Prods., Inc. v. Agric. Ass’ns, 3 F.3d 1289, 1292
(9th Cir. 1993).
In analyzing whether entities such as the Retirement System
and

the

Trust

are

arms

of

the

State,

“the

most

important

consideration is whether the state treasury will be responsible
for paying any judgment that might be awarded.”
F.2d at 457.

Ram Ditta, 822

Thus, “if the State treasury will be called upon

to pay a judgment against a governmental entity, then Eleventh
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Amendment
at 223.

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immunity

applies

to

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that

entity.”

Cash,

242

F.3d

If, on the other hand, the State treasury will not be

liable for a judgment, sovereign immunity applies only where the
“governmental entity is so connected to the State that the legal
action

against

the

entity

would,

despite

the

fact

that

the

judgment will not be paid from the State treasury, amount to
‘the indignity of subjecting a State to the coercive process of
judicial tribunals at the instance of private parties.’”
at 224 (quoting Seminole Tribe, 517 U.S. at 58).
even

though

“state

sovereign

immunity

serves

Id.

At bottom,

the

important

function of shielding state treasuries and thus preserving the
States’ ability to govern in accordance with the will of their
citizens, . . . the doctrine’s central purpose is to accord the
States

the

respect

owed

them

as

joint

sovereigns.”

Fed.

Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 765
(2002) (internal quotation marks and citations omitted).

A
We address first the most important factor -- whether South
Carolina

could

be

responsible

for

the

payment

against the Retirement System and the Trust.

of

a

judgment

A State treasury

is responsible “where the state is functionally liable, even if
not legally liable.”

U.S. ex rel. Oberg v. Pa. Higher Educ.

Assistance Agency, 745 F.3d 131, 137 (4th Cir. 2014) (quoting

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Stoner v. Santa Clara Cnty. Office of Educ., 502 F.3d 1116, 1122
(9th Cir. 2007)) (internal quotation marks omitted); see also
Ristow v. S.C. Ports Auth., 58 F.3d 1051, 1053 (4th Cir. 1995)
(holding that courts must “[c]onsider[] the practical effect of
a

putative . . .

judgment

on

the

state

treasury”

(emphasis

added)).
The

plaintiffs

argue

that

“the

Retirement

Systems

Act

insulates the state treasury from any judgment entered in this
case” because it provides that “[a]ll agreements or contracts”
with members” of the Retirement System are “solely obligations”
of the individual pension plan and that “the full faith and
credit” of South Carolina or its subdivisions “is not, and shall
not be, pledged or obligated” beyond the State’s contributions
as an employer of participating employees.

S.C. Code Ann. §§ 9-

1-1690, 9-11-280.
This
context

statutory
of

Article

language,
X,

however,

Section 16

must

of

the

be

read

South

in

the

Carolina

Constitution, which provides that “[t]he General Assembly shall
annually

appropriate

funds

and

prescribe

member

contributions

for any state-operated retirement system which will insure the
availability of funds to meet all normal and accrued liability
of the system on a sound actuarial basis as determined by the
governing

body

of

(emphasis added).

the

system.”

S.C.

Const.

art. X,

§ 16

Any possible ambiguity resulting from reading
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the

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retirement

laws

in

the

Pg: 14 of 37

context

of

the

South

Carolina

Constitution was put to rest by the South Carolina Supreme Court
in Wehle v. South Carolina Retirement System, 611 S.E.2d 240,
242-43 (S.C. 2005) (per curiam), where the Court stated that,
“should the Board determine that any retirement system is not
funded on a sound actuarial basis, the General Assembly must
provide funding necessary to restore the fiscal integrity of the
System.”

Thus, in the event that a judgment in this case were

to render the Retirement System unable to meet its liabilities,
the

General

Assembly

would

be

obligated

to

account

for

any

deficiency by increasing appropriations to the Retirement System
or

by

requiring

employers,

including

the

State

itself,

to

increase their contributions.
In addition, the State’s ultimate responsibility for the
financial soundness of the Retirement System is reflected by the
fact that the Retirement System’s “actuarial valuation is relied
upon

in

statement
purposes

the

preparation

of

and

by

entities

of

outside

issuance

of

the

bonds.”

State’s
in

annual

rating

Wehle,

611

the

financial
State

S.E.2d

for

at 242.

Thus, if a judgment in this case were to render the Retirement
System or the Trust insolvent, that insolvency would harm the
State’s credit rating, making it more expensive for the State to
borrow money.

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Consequently,
functionally

we

liable

Pg: 15 of 37

conclude

for

any

that

South

judgment

Carolina

against

the

remains

Retirement

System and the Trust, which is sufficient to make the Retirement
System and the Trust arms of the State.

See Oberg, 745 F.3d

at 137.
We

reject

contrary.

the

plaintiffs’

various

arguments

to

the

First, they insist that Article X, Section 16 of the

South Carolina Constitution “merely compels the State to comply
with its funding obligations as an employer,” a requirement that
the

General

Assembly

could

not

legislatures by legislative act.

have

imposed

on

future

And they complain that “the

District Court unnecessarily construed the state Constitution in
a manner that rendered it irreconcilable with Sections 9-1-1690
and 9-11-280.”
course,

But the South Carolina Supreme Court, which, of

has the last word on the meaning of the South Carolina

Constitution, rejected the plaintiffs’ posited construction of
Article X,
Moreover,

Section 16.
the

plaintiffs’

See

Wehle,

argument

611

that

we

S.E.2d
must

at 242-43.
construe

a

constitutional provision so as not to conflict with a statute
turns the concept of constitutional supremacy on its head.
Second, the plaintiffs maintain that there is no evidence
that a judgment in their favor would in fact create a shortfall
in

the

Retirement

System’s

funds.

Yet,

given

that

the

plaintiffs’ complaint alleges that “the members of the proposed
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class will exceed tens of thousands of persons,” it is surely
plausible that a favorable judgment could create an actuarial
deficit.

More

importantly,

whether

or

not

a

judgment

would

render the Retirement System insolvent is of little consequence
to the analysis.

As the Supreme Court held in Regents of the

University of California v. Doe, 519 U.S. 425 (1997), “it is the
entity’s potential legal liability . . . that is relevant.”

Id.

at 431 (emphasis added); see also Owens v. Balt. City State’s
Att’ys

Office,

767

F.3d

379,

412

(4th

Cir.

2014)

(“When

an

entity has both state and local characteristics, ‘the entity’s
potential legal liability’ is relevant to the Eleventh Amendment
inquiry” (emphasis added) (quoting Regents, 519 U.S. at 431));
Oberg, 745 F.3d at 137 (“[I]n assessing [the State treasury]
factor,
(emphasis

an

entity’s
added)

Consequently,
treasury

(quoting

“the

would

‘potential

be

proper

legal

Regents,
inquiry

liable

in

is
this

liability’
519

not

U.S.

at

whether

case,

is

431)).

the

but

key”

state

whether,

hypothetically speaking, the state treasury would be subject to
‘potential legal liability’ if the retirement system did not
have the money to cover the judgment.”

Ernst v. Rising, 427

F.3d 351, 362 (6th Cir. 2005) (quoting Regents, 519 U.S. at
431)); see also Pub. Sch. Ret. Sys. v. State St. Bank & Trust
Co., 640 F.3d 821, 830 (8th Cir. 2011) (similar).

Here, as in

Ernst, the “plaintiffs fail to come to grips with the fiscal
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reality

that

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the

State’s

Pg: 17 of 37

funding

requirement

assuredly

could

increase if the retirement system were to use its current and
future funding to pay off a judgment against it.”

427 F.3d

at 362 (emphasis added).
Third,

the

plaintiffs

read

much

into

the

fact

that

the

funds and assets of the Retirement System “are not funds of the
State,” S.C. Code Ann. § 9-1-1310(C), but instead are held “in a
group

trust

under

Section 401(a)(24)

Code,” id. § 9-16-20(C).

of

the

Internal

Revenue

Section 401(a)(24) of the Internal

Revenue Code requires that group trust funds not be “used for,
or diverted to, purposes other than for the exclusive benefit
of . . .

employees or their beneficiaries in order to qualify

as a group trust.”

26 U.S.C. § 401(a)(24).

While we have

recognized that holding funds in a segregated account apart from
general state funds does “counsel[] against establishing arm-ofthe-state status,” Oberg, 745 F.3d at 139, that fact is not
dispositive.

The plaintiffs also argue that South Carolina is

violating § 401(a)(24) by diverting the contributions they made
to the Retirement System to benefit pre-retirement employees.
But even if South Carolina were indeed in violation of federal
law by using funds contrary to § 401(a)(24), that fact would be
irrelevant to whether a judgment against the Retirement System
or

the

Trust

could

potentially

Accord Ernst, 427 F.3d at 365.
17

affect

the

State

treasury.

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Fourth, the plaintiffs argue that courts generally, and the
district court in particular, should wait until the completion
of

discovery

resolving

the

affirmed

and

the

development

sovereign

immunity

Rule 12(b)(6)

motions

Eleventh Amendment immunity.

of

a

factual

issue.

to

But

dismiss

record
we

on

before

have

the

often

basis

of

See, e.g., Antrican v. Odom, 290

F.3d 178, 191 (4th Cir. 2002).

In Gray v. Laws, 51 F.3d 426,

434 (4th Cir. 1995), upon which the plaintiffs rely for their
argument, we vacated the district court’s dismissal under the
Eleventh

Amendment

not

because

the

district

court

failed

to

conduct sufficient factfinding, but rather because the Supreme
Court

had

changed

the

applicable

Eleventh

Amendment

standard

while the appeal was pending and “the barrenness of the record”
rendered us ill-suited to apply the new standard.
Finally, the plaintiffs contend that we are bound by our
earlier decision in Almond v. Boyles, 792 F.2d 451 (4th Cir.
1986).

In Almond, we rejected, “for the reasons stated by the

district court,” a claim that the Eleventh Amendment barred a
suit by a class of visually handicapped operators of vending
stands to recover employer contributions to the North Carolina
Teachers’

and

State

Employees’

Retirement

System,

which

claimed were collected in violation of federal law.
The

district

retirement

court

system

had

would

found
not

that

come
18

a

from

judgment
State

they

Id. at 456.
against

funds

for

the
three

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reasons,

Filed: 12/05/2014

the

“most

Pg: 19 of 37

important[]”

of

which

was

that

“the

defendants [had] not shown the court that the relief requested
by

the

plaintiffs

would

inevitably

appropriation of state funds.”
223,

228

(E.D.N.C.

requirement

that

1985)

the

lead

to

an

additional

Almond v. Boyles, 612 F. Supp.

(emphasis

defendants

added).

show

that

a

But

Almond’s

judgment

“would

inevitably” be satisfied by the State is fundamentally at odds
with Regents’ subsequent less demanding standard of potential
liability,

and

therefore

Almond’s

framework

is

no

longer

applicable.
As

the

Supreme

Court

has

framed

the

Eleventh

Amendment

inquiry, the question is whether, “[i]f the expenditures of the
enterprise exceed receipts, is the State in fact obligated to
bear and pay the resulting indebtedness of the enterprise?

When

the answer is ‘No’ -- both legally and practically -- then the
Eleventh Amendment’s core concern is not implicated.”

Hess v.

Port Auth. Trans-Hudson Corp., 513 U.S. 30, 51 (1994) (emphasis
added).

In

light

of

Wehle’s

interpretation

of

Article

X,

Section 16, the answer to that question here is undoubtedly yes,
and we therefore conclude that a judgment against the Retirement
System and the Trust would implicate South Carolina’s treasury.
B
In

addition

to

South

Carolina’s

potential

funding

obligation, we also conclude that state-dignity factors weigh in
19

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favor of finding that the Retirement System and the Trust are
arms of the State.
When

assessing

See Fed. Maritime Comm’n, 535 U.S. at 765.

whether

allowing

suit

against

a

state

entity

would offend a State’s dignity, we consider “(1) the degree of
control that the State exercises over the entity or the degree
of autonomy from the State that the entity enjoys; (2) the scope
of the entity’s concerns -- whether local or statewide -- with
which the entity is involved; and (3) the manner in which State
law treats the entity.”

Cash, 242 F.3d at 224.

Under the degree-of-state-control factor, we consider “who
appoints

the

entity’s

directors

or

officers,

who

funds

the

entity, and whether the State retains a veto over the entity’s
actions,” Oberg, 745 F.3d at 137 (quoting U.S. ex rel. Oberg v.
Ky. Higher Educ. Student Loan Corp., 681 F.3d 575, 580 (4th Cir.
2012)) (internal quotation marks omitted), as well as “whether
an entity has the ability to contract, sue and be sued, and
purchase and sell property, and whether it is represented in
legal matters by the state attorney general,” id. (citations
omitted).
In this case, the Retirement System does have the “power
and privileges of a corporation,” S.C. Code. Ann. §§ 9-1-20, 911-20,

including

to

“make

contracts,” and to buy and sell property, id. § 33-3-102.

But,

contrary

to

the

the

powers

plaintiffs’

to

“sue

argument,
20

and

the

be

sued,”

designation

of

an

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entity as a corporation with the power to sue and be sued is not
conclusive in establishing its autonomy.

See Oberg, 745 F.3d

at 139 (finding that the autonomy factor “cut both ways,” even
though the entity had the “power to enter into contracts, sue
and be sued, and purchase and sell property in its own name”);
see also State Highway Comm’n v. Utah Const. Co., 278 U.S. 194,
199 (1929) (“It is unnecessary for us to consider the effect of
the general grant of power to sue or be sued . . . -- this suit,
in effect, is against the state and must be so treated”).
And other factors point to state control.
which

the

entities’

officers

are

appointed

Retirement System is beholden to the State.

The means by

suggest

that

the

The State Budget

and Control Board and the Public Employee Benefit Authority,
which

are

Retirement

the

co-trustees

System

of

Investment

the

Retirement

Commission,

System,

which

has

and

the

exclusive

authority to invest the Trust’s assets, see S.C. Code Ann. § 916-20(A), are comprised almost entirely of the Governor of South
Carolina,

the

State

Treasurer,

the

Comptroller

General,

the

Chairman of the Senate Finance Committee, the Chairman of the
House Ways and Means Committee, the President Pro Tempore of the
Senate, the Speaker of the House of Representatives, and persons
appointed by these officials.
16-315(A).

Id. §§ 1-11-10, 9-4-10(B)(1), 9-

Although several of the appointees are required to

be participants in the Retirement System, even those members are
21

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selected

by

Filed: 12/05/2014

state

administrators

of

Pg: 22 of 37

officials.
the

Trust

While
are,

the

trustees

of

course,

and

required

to

discharge their fiduciary duties “solely in the interest of the
retirement systems, participants, and beneficiaries,” id. § 916-40, one would have to be naive to conclude that the State
lacks

any

influence

appointment.

or

control

when

it

has

the

power

of

State control is further evidenced by the facts

that: (1) the State Treasurer is the custodian of the Trust’s
funds and has sole authority to issue payments from the funds,
id. §§ 9-1-1320, 9-11-250; (2) the Retirement System Investment
Commission must provide quarterly reports to, among others, the
Speaker of the House of Representatives and the President Pro
Tempore
defend

of

the

and

Senate,

indemnify

id.
the

§

9-16-90(A);

members

of

the

(3) the

State

Retirement

must

System

Investment Commission, id. § 9-16-370; and (4) an entire title
of

the

Code

of

Laws

of

South

Carolina

is

devoted

to

the

extensive regulation of the Retirement System and the Trust.
In sum, because of the mixed indications as to control, we
conclude that application of the control factor, if not favoring
sovereign immunity, is inconclusive.
141

(finding

that

the

control

Accord Oberg, 745 F.3d at

factor

“present[ed]

a

close

question” in light of the fact that the board of directors was
largely

composed

of

“state

officials

or

gubernatorial

appointees” but also “exercise[d] corporate powers including the
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capacity to contract and sue and be sued”); Almond, 612 F. Supp.
at 227 (holding that the control factor did “not weigh heavily
in favor of either party,” after noting the detailed statutory
regime, the political nature of the appointment of the members
of

the

board

of

trustees,

the

retirement

system’s

corporate

status, and the board’s powers to sue and be sued and to buy and
sell property).
Turning

to

the

factor

considering

whether

the

entities’

concerns are local or statewide, we conclude that this factor
counsels

in

favor

of

sovereign

immunity.

In

assessing

this

factor, courts must consider whether the entity has statewide or
localized jurisdiction, Cash, 242 F.3d at 226, and “whether an
entity’s

functions

are

‘classified

as

typically

state

or

unquestionably local,’” Harter v. Vernon, 101 F.3d 334, 341 (4th
Cir.

1996)

(quoting

Hess,

513

U.S.

at

45).

The

System covers public employees throughout the State.

Retirement
And like

“educating the [State’s] youth,” Md. Stadium Auth. v. Ellerbe
Becket, Inc., 407 F.3d 255, 265 (4th Cir. 2005), providing for
public employees -- many of whom work for the State -- upon
retirement is an area of statewide concern.

Accord Pub. Sch.

Ret. Sys., 640 F.3d at 829 (“[T]he Retirement Systems do not
furnish the type of local services that political subdivisions
typically furnish, such as ‘water service, flood control, [or]
rubbish disposal’” (quoting Moor v. Cnty. of Alameda, 411 U.S.
23

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693, 720 (1973))); Ernst, 427 F.3d at 361 (“[W]hen, as in this
case, the retirement system is funded by annual appropriations
from

the

state

legislature,

operates

in

part

through

the

Michigan Treasury and in part through the State’s Department of
Management

and

Budget,

operates

on

a

statewide

basis

and

serves . . . state-wide officials, it is fair to say that the
retirement

system

performs

a

traditional

state

function”);

McGinty v. New York, 251 F.3d 84, 98 (2d Cir. 2001) (“Although
the

Retirement

System

does

not

service

state

employees

exclusively, it assists in the business of the state by enabling
the state to meet its pension and benefits obligations . . .”).
Finally, the factor assessing how South Carolina treats the
entities points strongly in favor of sovereign immunity.

This

factor requires courts to consider “the relevant state statutes,
regulations,

and

constitutional

provisions

which

characterize

the entity, and the holdings of state courts on the question.”
Harter, 101 F.3d at 342.

Title 9 of the Code of Laws of South

Carolina repeatedly uses the term “State agency” to refer to the
South Carolina Retirement System and the term “State agent” to
refer to the Director of the Retirement System.

S.C. Code Ann.

§§ 9-3-20(4), 9-5-30(5) to –30(6).

The Code also describes the

South

Benefit

Carolina

Public

Employee

Authority

administrative agency of state government.”
Similarly,

in

Layman,

the

South
24

Carolina

as

“an

Id. § 9-4-10(H).
Supreme

Court

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characterized

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the

Retirement

Pg: 25 of 37

System

as

a

“state

agency”

for

purposes of S.C. Code Ann. § 15-77-300, which permits an award
of attorneys fees to the prevailing party in an action brought
by or against the State or any political subdivision thereof.
658 S.E.2d at 326.

And in Ahrens, the Court analyzed whether,

as an “agency,” the Retirement System created a contract with
the

working

Carolina

retirees.

courts

have

709 S.E.2d
frequently

at

58–60.

referred

to

Indeed,
the

pension plans of the Retirement System as agencies.

South

individual
See, e.g.,

Kennedy v. S.C. Ret. Sys., 549 S.E.2d 243, 251 (S.C. 2001); S.C.
Police Officers Ret. Sys. v. City of Spartanburg, 391 S.E.2d
239, 241 (S.C. 1990).
At

bottom,

we

conclude

that

the

relevant

indicators

strongly indicate that the Retirement System and the Trust are
arms of the State of South Carolina and are therefore protected
under the Eleventh Amendment.

This conclusion is consistent

with the holdings of the overwhelming number of federal courts
that have held that similar retirement systems in other States
are

arms

of

the

State.

See

Pub.

Sch.

Ret.

Sys.,

640

F.3d

at 827–33; Ernst, 427 F.3d at 359–66; McGinty, 251 F.3d at 100;
Mo. State Employees’ Ret. Sys. v. Credit Suisse, N.Y. Branch,
No. 09–4224–CV–C–NKL, 2010 WL 318652, at *6 (W.D. Mo. Jan. 21,
2010); N.M. ex rel. Nat’l Educ. Ass’n of N.M. v. Austin Capital
Mgmt. Ltd., 671 F. Supp. 2d 1248, 1253 (D.N.M. 2009); Cal. Pub.
25

Appeal: 13-1523

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Filed: 12/05/2014

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Emps. Ret. Sys. v. Moody’s Corp., Nos. C 09–03628 SI, C 09–03629
JCS, 2009 WL 3809816, at *6 (N.D. Cal. Nov. 10, 2009); Turner v.
Ind.

Teachers’

2324114,

at

Ret.

*1

Fund,

(S.D.

No.

Ind.

1:07–cv–1637–DFH–JMS,

June

5,

2008);

Larsen

2008
v.

WL

State

Employees’ Ret. Sys., 553 F. Supp. 2d 403, 420 (M.D. Pa. 2008);
JMB Grp. Trust IV v. Pa. Mun. Ret. Sys., 986 F. Supp. 534, 538
(N.D. Ill. 1997); Sculthorpe v. Va. Ret. Sys., 952 F. Supp. 307,
309–10 (E.D. Va. 1997); Hair v. Tenn. Consol. Ret. Sys., 790 F.
Supp. 1358, 1364 (M.D. Tenn. 1992); Mello v. Woodhouse, 755 F.
Supp. 923, 930 (D. Nev. 1991); Reiger v. Kan. Pub. Emps. Ret.
Sys.,

755

F.

Supp.

360,

361

(D.

Kan.

1990);

Retired

Pub.

Employees’ Ass’n of Cal., Chapter 22 v. California, 614 F. Supp.
571, 573, 581 (N.D. Cal. 1984); United States v. South Carolina,
445 F. Supp. 1094, 1099–1100 (D.S.C. 1977); 21 Props., Inc. v.
Romney, 360 F. Supp. 1322, 1326 (N.D. Tex. 1973).

III
Turning

to

the

claims

against

the

state

officials,

the

plaintiffs alleged in their complaint that “[a]s a result of
Defendants’
and

the

deduction

class

have

from

[Plaintiffs’]

suffered

and

will

earnings,
continue

Plaintiffs
to

suffer

irreparable and immediate harm and injury to their property and
rights under the laws and Constitution of the United States.”
Accordingly,

they

requested,

among

26

other

relief,

injunctions

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(1) “compelling Defendants to immediately return to Plaintiffs
and

the

class

all

monies

Defendants

have

deducted

as

contributions to the Retirement Systems since July 1, 2005,” and
(2) “preventing for all time enforcement of [the 2005 Act].”
The plaintiffs contend that their requests for injunctive relief
against the state officials are excepted from Eleventh Amendment
protection under Ex parte Young.
First,

we

interpret

the

plaintiffs’

request

for

an

injunction compelling the return of “all monies Defendants have
deducted as contributions to the Retirement Systems” as a claim
for

money

capacities

damages.
for

State

officials

retrospective

money

sued

in

damages

sovereign immunity accorded to the State.

their
have

official
the

same

See Buckhannon Bd. &

Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S.
598, 609 n.10 (2001); Edelman v. Jordan, 415 U.S. 651 (1974);
Martin v. Wood, ___ F.3d ___, No. 13-2283 (4th Cir. Nov. 18,
2014).

Therefore, as did the district court, we hold that the

plaintiffs’ claim against the state officials for the return of
their contributions is barred by the Eleventh Amendment.
Second, we agree with plaintiffs that their claim for the
second injunction -- to prevent “for all time” the enforcement
of the 2005 Act -- is prospective and seeks to remedy an ongoing
violation of federal law.

See Verizon Md., Inc. v. Pub. Serv.

Comm’n, 535 U.S. 635, 645 (2002) (“In determining whether the
27

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doctrine of Ex parte Young avoids an Eleventh Amendment bar to
suit, a court need only conduct a “straightforward inquiry into
whether

[the]

federal

law

Complaint
and

prospective’”

[1] alleges

[2] seeks

(first

relief

alteration

in

an

ongoing

of

characterized

properly

violation

as

original)

(quoting

Coeur

d’Alene Tribe, 521 U.S. at 296 (O’Connor, J., concurring in part
and

concurring

in

the

judgment)));

see

also

Va.

Office

for

Protection & Advocacy v. Stewart, 131 S. Ct. 1632, 1639 (2011);
Constantine v. Rectors & Visitors of George Mason Univ., 411
F.3d 474, 496 (4th Cir. 2005).
Nonetheless, for a reason supported by the record but not
relied on by the district court, we conclude that the district
court

was

also

correct

in

dismissing

the

second injunction against state officials.

claim

seeking

the

See Greenhouse v.

MCG Capital Corp., 392 F.3d 650, 660 (4th Cir. 2004) (“[W]e ‘may
affirm the dismissal by the district court upon the basis of any
ground supported by the record even if it is not the basis
relied

upon

by

the

district

court’”

(quoting

Ostrzenski

v.

Seigel, 177 F.3d 245, 253 (4th Cir. 1999))).
The Ex parte Young exception to Eleventh Amendment immunity
applies only where a party “defendant in a suit to enjoin the
enforcement of an act alleged to be unconstitutional” has “some
connection with the enforcement of the act.”

209 U.S. at 157;

see also S.C. Wildlife Fed’n v. Limehouse, 549 F.3d 324, 333
28

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(4th Cir. 2008); Lytle v. Griffith, 240 F.3d 404, 410 (4th Cir.
2001).

Thus, we have held that a governor cannot be enjoined by

virtue of his general duty to enforce the laws, Waste Mgmt.
Holdings, Inc. v. Gilmore, 252 F.3d 316, 331 (4th Cir. 2001),
and that an attorney general cannot be enjoined where he has no
specific statutory authority to enforce the statute at issue,
McBurney v. Cuccinelli, 616 F.3d 393, 400 (4th Cir. 2010).
contrast,

we

have

held

that

a

circuit

court

clerk

bore

In
the

requisite connection to the enforcement of state marriage laws
to

be

enjoined

from

enforcing

them,

because

the

clerk

was

responsible for granting and denying applications for marriage
licenses.

See Bostic v. Schaefer, 760 F.3d 352, 371 n.3 (4th

Cir.), cert. denied, 135 S. Ct. 308 (2014).
The requirement that there be a relationship between the
state officials sought to be enjoined and the enforcement of the
state

statute

prevents

parties

Eleventh Amendment immunity.

from

circumventing

a

State’s

See McBurney, 616 F.3d at 399;

Lytle, 240 F.3d at 412 (Wilkinson, C.J., dissenting).

As the

Court explained in Ex parte Young, if the “constitutionality of
every act passed by the legislature could be tested by a suit
against the governor and attorney general, based upon the theory
that

the

former,

as

the

executive

of

the

State,

was,

in

a

general sense, charged with the execution of all its laws, and
the latter, as attorney general, might represent the state in
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litigation involving the enforcement of its statutes,” it would
eviscerate

“the

fundamental

principle

that

[States]

cannot,

without their assent, be brought into any court at the suit of
private persons.”

209 U.S. at 157 (quoting Fitts v. McGhee, 172

U.S. 516, 530 (1899)).
In this case, the plaintiffs named as defendants members of
the State Budget and Control Board, the Executive Director of
the State Budget and Control Board, and the Executive Director
of the Public Employee Benefit Authority, seeking to enjoin them
from deducting from the plaintiffs’ paychecks the contributions
mandated by the 2005 Act.

The State Budget and Control Board

and the Public Employee Benefit Authority serve as co-trustees
of the Retirement System, S.C. Code Ann. § 9-1-1310, and South
Carolina

law

vests

“general

administration

and

responsibility

for the proper operation” of the Retirement System in the Public
Employee
neither

Benefit
the

State

Authority,
Budget

id.

and

§§ 9-1-210,

Control

Board

9-11-30.
nor

the

But
Public

Employee Benefit Authority has responsibility for ensuring that
employee contributions to the Retirement System be deducted from
the

employees’

System.

paychecks

and

transmitted

to

the

Retirement

Employers of covered employees are required to deduct

the requisite contributions from the employees’ paychecks and
furnish the withheld amounts to the Retirement System, and any
person

who

fails

to

remit

withheld
30

contributions

to

the

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Retirement

Filed: 12/05/2014

System

is

“guilty

Pg: 31 of 37

of

a

misdemeanor

punished by fine or imprisonment, or both.”
see also id. § 9-1-1160(A).

and

must

be

Id. § 9-11-210(7);

The Code of Laws of South Carolina

nowhere gives the Retirement System, the Trust, or the trustees
and administrators of the Retirement System the authority to
deduct or refuse to deduct funds from participating employees’
paychecks or to prosecute employers who violate their duties.
Instead, the role of the state officials named in the complaint
is merely to wait passively for the funds to be transmitted to
the

Retirement

System

and,

manage and invest them.
the

Retirement

once

the

funds

have

arrived,

to

As such, the complaint seeks to enjoin

System’s

trustees

and

administrators

from

participating in a process in which they actually have no role.
Because the state officials named as defendants have no
connection with the enforcement of the 2005 Act -- specifically
S.C. Code Ann. § 9-1-1790(C) and § 9-11-90(4)(c) -- we hold that
the Ex parte Young exception does not apply and that the state
officials are thus entitled to Eleventh Amendment immunity on
the claims seeking prospective injunctive relief.
IV
The

plaintiffs

contend

that

notwithstanding

any

Eleventh

Amendment protection to which the defendants may be entitled,
“sovereign immunity never bars a constitutional takings claim.”
They

maintain

that

the

Takings
31

Clause

provides

an

absolute

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guarantee of just compensation when private property is taken
for public use and argue that if the States were immune from
takings claims in federal court, the Fifth Amendment would be
“effectively abrogated” by the Eleventh Amendment.
It is true that under the Eleventh Amendment, States enjoy
sovereign immunity except “where there has been ‘a surrender of
this immunity in the plan of the convention.’”

Coeur d’Alene

Tribe of Idaho, 521 U.S. at 267 (quoting Principality of Monaco
v. Mississippi, 292 U.S. 313, 322-23 (1934)).

But the Supreme

Court has recognized that “the plan of the convention” or the
States themselves have surrendered sovereign immunity in only
six contexts: (1) when a State consents to suit; (2) when a case
is

brought

by

the

United

States

or

another

State;

(3) when

Congress abrogates sovereign immunity pursuant to Section 5 of
the Fourteenth Amendment or pursuant to the Bankruptcy Clause;
(4) when a suit is brought against an entity that is not an arm
of the State; (5) when a private party sues a state official in
his official capacity to prevent an ongoing violation of federal
law; and (6) when an individual sues a state official in his
individual capacity for ultra vires conduct.

See S.C. State

Ports Auth. v. Fed. Maritime Comm’n, 243 F.3d 165, 176-77 (4th
Cir. 2001), aff’d, 535 U.S. 743 (2002).

The plaintiffs now

invite us to recognize a seventh exception for claims brought
under the Takings Clause of the Fifth Amendment.
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The Fifth Amendment provides that “private property [shall
not] be taken for public use, without just compensation,” U.S.
Const. amend. V, and the Eleventh Amendment provides that “[t]he
judicial power of the United States shall not be construed to
extend to any suit . . . , commenced or prosecuted against one
of

the

United

States”

by

State, id. amend. XI.

citizens

of

that

State

or

another

While there is arguably some tension

between the protections of these amendments, that tension is not
irreconcilable.
Just as the Constitution guarantees the payment of just
compensation for a taking, so too does the Due Process Clause
provide the right to a remedy for taxes collected in violation
of federal law.

See, e.g., McKesson Corp. v. Div. of Alcoholic

Beverages & Tobacco, 496 U.S. 18, 51 (1990).

But despite the

constitutional requirement that there be a remedy, the Supreme
Court expressly noted in Reich v. Collins, 513 U.S. 106 (1994),
that

“the

court,

sovereign

under

the

immunity

Eleventh

[that]

Amendment,

States
does

enjoy

generally

refund claims from being brought in that forum.”
(second emphasis added).

in

federal
bar

tax

Id. at 110

To ensure that taxpayers possess an

avenue for relief, the Court held that state courts must hear
suits

to

recover

taxes

unlawfully

exacted,

the

“sovereign

immunity [that] States traditionally enjoy in their own courts
notwithstanding.”

Id.; cf. Alden v. Maine, 527 U.S. 706, 740
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(1999) (holding that Congress cannot subject States to suits in
state courts but taking care not to overrule Reich).

Reasoning

analogously, we conclude that the Eleventh Amendment bars Fifth
Amendment taking claims against States in federal court when the
State’s courts remain open to adjudicate such claims.
South
persons

to

Carolina

courts

sue

State

the

have
for

long

recognized

unconstitutional

a

right

takings.

of
See

Graham v. Charleston Cnty. Sch. Bd., 204 S.E.2d 384, 386 (S.C.
1974) (“In this jurisdiction neither the State nor any of its
political subdivisions is liable in an action ex delicto unless
by express enactment of the General Assembly, except where the
acts complained of, in effect, constitute a taking of private
property

for

public

use

without

just

compensation”

(emphasis

added)), overruled on other grounds by McCall v. Batson, 329
S.E.2d 741 (S.C. 1985).
takings

claims

heard

Because the plaintiffs can have their
in

South

Carolina

state

courts,

the

Eleventh Amendment does not render the Takings Clause an empty
promise.

But in concluding that the Fifth Amendment Takings

Clause does not, in this case, trump the Eleventh Amendment, we
do not decide the question whether a State can close its doors
to

a

takings

claim

or

the

question

whether

the

Eleventh

Amendment would ban a takings claim in federal court if the
State courts were to refuse to hear such a claim.

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The plaintiffs direct our attention to numerous cases in
which

suits

to

recover
held

property

not

to

illegally

have

been

seized

barred

the

government

were

immunity.

But in none of those cases did the plaintiffs sue

either the sovereign itself or its alter ego.
United

States

permitted
officers
Robert

an
who

E.

States.

v.

Lee,

106

ejectment
served

Lee

as

because

U.S.

196,

action

to

custodians
the

suit

222

(1882),

was

the
not

sovereign

For example, in

proceed
of

by

by

the

against
estate

against

of
the

Court

federal
General
United

In Tindal v. Wesley, 167 U.S. 204 (1897), the Court

permitted a suit against two state officials to recover property
wrongly held by them on behalf of the State, because the case
was “a suit against individuals,” id. at 221, and the Court
could not perceive how it could “be regarded as one against the
state,” id. at 218.
College
Court

of

South

permitted

And in Hopkins v. Clemson Agricultural

Carolina,
a

suit

221

U.S.

636,

a

takings

alleging

648-49
claim

(1911),
to

the

proceed

against a university, but under the law in effect at the time,
the fact that the university was set up as a corporation meant
that it was not an arm of the State, see P.R. Ports Auth. v.
Fed.

Mar.

Comm’n,

531

F.3d

868,

884

(D.C.

Cir.

2008).

By

contrast, in Larson v. Domestic & Foreign Commerce Corp., 337
U.S.

682,

689

(1949),

the

Court

dismissed

an

action

brought

against the head of the War Assets Administration alleging that
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he had refused to deliver coal that he had contracted to sell to
the plaintiff and seeking an injunction prohibiting him from
selling

or

delivering

that

coal

to

anyone

relief sought was “against the sovereign.”
has

sometimes

decided

takings

claims

else,

because

the

And while the Court
without

considering

Eleventh Amendment immunity, see, e.g., Brown v. Legal Found. of
Wash., 538 U.S. 216 (2003); Lucas v. S.C. Coastal Council, 505
U.S. 1003 (1992), we cannot glean much from that fact given that
a State can waive its Eleventh Amendment protection.
Finally, we note that every other court of appeals to have
decided the question has held that the Takings Clause does not
override the Eleventh Amendment.

See Seven Up Pete Venture v.

Schweitzer, 523 F.3d 948, 954 (9th Cir. 2008) (“[W]e conclude
that the constitutionally grounded self-executing nature of the
Takings Clause does not alter the conventional application of
the Eleventh Amendment”); DLX, Inc. v. Kentucky, 381 F.3d 511,
526 (6th Cir. 2004) (“Treating DLX’s claim as a self-executing
reverse condemnation claim, . . . we conclude that the Eleventh
Amendment’s

grant

of

immunity

protects

Kentucky

from

that

claim . . .”); Harbert Int’l, Inc. v. James, 157 F.3d 1271, 1279
(11th Cir. 1998) (holding that a takings claim was barred under
the Eleventh Amendment, where state courts provided a means of
redress for such claims); John G. & Marie Stella Kenedy Mem’l
Found. v. Mauro, 21 F.3d 667, 674 (5th Cir. 1994) (holding that
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the district court “correctly determined that the Foundation’s
Fifth

Amendment

against

the

inverse

State

of

condemnation
Texas”

was

claim
barred

brought

directly

by

Eleventh

the

Amendment); Citadel Corp. v. P.R. Highway Auth., 695 F.2d 31, 33
n.4

(1st

require

Cir.

1982)

compensation

(“Even
in

an

if

the

inverse

constitution

is

condemnation

read

case,

to
the

Eleventh Amendment should prevent a federal court from awarding
it”); Garrett v. Illinois, 612 F.2d 1038, 1040 (7th Cir. 1980)
(“Even though the Fifth Amendment alone may support a cause of
action

for

Amendment

damages

stands

as

against
an

the

express

United
bar

to

States,

the

Eleventh

federal

power

when

a

similar action is brought against one of the states” (citation
omitted)).
*

*

*

For the reasons given, the judgment of the district court
is
AFFIRMED.

37