Alabama Space Science Exhibit Commission v. Odysseia Co Ltd

Filing 52

MEMORANDUM OPINION AND ORDER - On the record before it, the Court concludes that ASSEC is not an arm of the State of Alabama. Rather, ASSEC is a separate and distinct entity from the state. Coastal Petroleum Co., 695 F.2d at 1318. Therefore, ASSEC i s a citizen for purposes of diversity of citizenship jurisdiction, and ASSEC and Odysseia are completely diverse.14 Accordingly, the Court DENIES ASSECs second motion to remand. By separate order, the Court will set a briefing schedule on ASSECs motion to dismiss Odysseias counterclaim. (See Doc. 43). Signed by Judge Madeline Hughes Haikala on 8/19/2016. (KEK)

FILED
2016 Aug-19 PM 04:36
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
ALABAMA SPACE SCIENCE
EXHIBIT COMMISSION d/b/a U.S.
SPACE & ROCKET CENTER,
Plaintiff-Counterclaim Defendant,
v.
ODYSSEIA CO., LTD.,
Defendant-Counterclaim-Plaintiff.

}
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}

Case No.: 5:14-CV-00413-MHH

MEMORANDUM OPINION AND ORDER
This declaratory judgment action began in state court. Plaintiff Alabama
Space Science Exhibit Commission d/b/a U.S. Space and Rocket Center or ASSEC
believes that the case should remain in a state forum. For a second time, ASSEC
has asked the Court to remand the action to state court. ASSEC argues that the
Court lacks subject matter jurisdiction over this action because ASSEC is not a
citizen for purposes of diversity of citizenship jurisdiction under 28 U.S.C. §
1332(a)(2).1 The Court disagrees.

1

ASSEC previously argued that defendant Odysseia Co., Ltd., a Korean limited company,
removed the action improperly because the amount in controversy did not meet 28 U.S.C.
§ 1332(a)’s $75,000 jurisdictional threshold. The Court rejected ASSEC’s arguments on this
point and denied ASSEC’s original motion to remand. (See Docs. 28, 30).
In its first motion to remand, ASSEC did not challenge diversity of citizenship. (See Doc. 8-1, p.
2). Nevertheless, ASSEC’s second motion to remand is timely because if at any time before
final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be

As the Court explained in its order denying ASSEC’s first motion to
remand, diversity jurisdiction exists when “the matter in controversy exceeds the
sum or value of $75,000, exclusive of interest and costs, and is between - (2)
citizens of a State and citizens or subjects of a foreign state . . .” 28 U.S.C. §
1332(a)(2); see also Underwriters at Lloyd’s, London v. Osting-Schwinn, 613 F.3d
1079, 1085 (11th Cir. 2010) (“For federal diversity jurisdiction to attach, all parties
must be completely diverse, and the amount in controversy must exceed $75,000,
28 U.S.C. § 1332(a).”) (citations omitted). ASSEC contends that it is not a citizen
for purposes of § 1332 because it is an arm of the State of Alabama. “[I]f a party is
deemed to be ‘an arm or alter ego of the State,’ then diversity jurisdiction must
fail;” however, a “public entity or political subdivision of a state, unless simply an
‘arm or alter ego of the State’” is “a citizen of the state for diversity purposes.”
Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 412 (11th Cir. 1999) (quoting
Moor v. Alameda Cnty., 411 U.S. 693, 717-718 (1973)). The Court’s task then is
to determine whether ASSEC is an arm or alter ego of the State of Alabama.

remanded.” 28 U.S.C. § 1447(c); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines at
any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”).
The Court held a hearing on ASSEC’s second motion to remand. A court reporter was present,
and a transcript is available upon request.

2

“Although the question of diversity jurisdiction is distinct from that of
immunity,” the Court must conduct an Eleventh Amendment immunity analysis to
determine whether ASSEC is an arm or alter ego of the State of Alabama “for the
purpose of diversity jurisdiction.” Univ. of S. Ala., 168 F.3d at 412; see also
Coastal Petroleum Co. v. U.S.S. Agri-Chemicals, A Div. of U. S. Steel Corp., 695
F.2d 1314, 1318 (11th Cir. 1983). To determine whether ASSEC is an “arm of the
state” for Eleventh Amendment immunity purposes, the Court considers the
following factors: “(1) how the state law defines the entity; (2) the degree of state
control over the entity; (3) where the entity derives its funds; and (4) who is
responsible for judgments against the entity.” Nichols v. Alabama State Bar, 815
F.3d 726, 732 (11th Cir. 2016); see also Lightfoot v. Henry Cty. School Dist., 771
F.3d 764, 769 (11th Cir. 2014); Manders v. Lee, 338 F. 3d 1304, 1309 (11th Cir.
2003.
“The issue of whether an entity is an ‘arm of the state’ for Eleventh
Amendment purposes is ultimately a question of federal law. But the federal
question can be answered only after considering provisions of state law.”
Manders, 338 F.3d at 1309. When determining whether a state entity is entitled to
Eleventh Amendment immunity, “the most important factor is how the entity has
been treated by state courts.” Versiglio v. Bd. of Dental Exam’rs of Ala., 686 F.3d
1290, 1292 (11th Cir. 2012). The Court has located no opinion in which an
3

Alabama state court has determined whether ASSEC is an arm of the state entitled
to Eleventh Amendment immunity. Therefore, the Court turns its attention to the
remaining Eleventh Amendment immunity factors.
A.

Degree of Control the State Maintains Over ASSEC

The Alabama legislature established ASSEC by statute in 1965 to operate
the U.S. Space and Rocket Center. Ala. Code §§ 41-9-430 – 4-9-439. The
enabling statute provides:
There is hereby created and established a state agency to be known as
the Alabama Space Science Exhibit Commission, which shall be a
public body corporate with all the powers and privileges of a
corporation, for the purpose of providing for and participating in the
management and control of facilities to house and display such visual
exhibits of space exploration and hardware used therefor as may be
made available by the National Aeronautics and Space
Administration. Such facility shall constitute a permanent housing for
the National Aeronautics and Space Administration exhibit, which
shall be open to the general public and shall be located at a place to be
designated and made available in Madison County for a nominal cost
through the cooperation of the Department of the Army or at such
other locations as the commission may deem appropriate.
Ala. Code § 41-9-430. The State empowered ASSEC to engage in activities to
maintain the U.S. Space & Rocket Center, and the State granted to ASSEC
numerous independent powers. See generally Ala. Code § 41-9-432.2

2

During the hearing on ASSEC’s second motion to remand, counsel for ASSEC conceded that
the State delegated broad powers to the Commission. Counsel stated, “Again, I stand here and
tell you that the powers that are delegated to Alabama Space Science Exhibit Commission are
very broad. I think when you read through that legislation, there is no way I could tell you we
have very limited powers period.” (Tr. p. 5).
4

When the Alabama legislature created ASSEC, it retained little control over
the public corporation, choosing instead to vest ASSEC with significant fiscal and
managerial autonomy.3 The first sentence of the enabling statute explains that
ASSEC “shall be a public body corporate with all the powers and privileges of a
corporation . . . .” Ala. Code § 41-9-430. The State of Alabama maintains some
limited control over ASSEC; however, for the most part, ASSEC operates like a
private corporation.
For example, ASSEC makes its own hiring and employment decisions.
Alabama Code § 41-9-432(13) states:
[ASSEC] shall be authorized: . . . [t]o employ an executive director
and such additional personnel as may be necessary to accomplish the
purposes of this article. The executive director and such additional
personnel as may be employed by [ASSEC] will serve at the pleasure
of [ASSEC]. [ASSEC] shall fix the compensation of the executive
director, and such additional personnel and such compensation shall
be paid from the funds of [ASSEC]. [ASSEC] shall designate the
duties and authority of the executive director and such additional
personnel. . . .
Id. Although the Governor appoints the public corporation’s 18 members (i.e.
directors in corporate lingo) and may remove any member “for just cause,” see
Ala. Code § 41-9-431, this limited state oversight is not dispositive. Tex. Dep’t of
3

Enactment by a state legislature does not automatically mean that a state agency is an “arm or
alter ego of the State” for purposes of diversity jurisdiction. See, e.g., Coastal Petroleum Co.,
695 F.2d at 1318; C.H. Leavell & Co., 424 F.2d 764, 765-67 (5th Cir. 1970) (holding that the
Board of Commissioners of the Port of New Orleans, a state agency created by the state
legislature, was “a sufficiently separate entity from the State of Louisiana to sustain diversity
jurisdiction”).
5

Housing Cmty. Affairs v. Verex Assurance, Inc., 68 F.3d 922, 927 (5th Cir. 1995),
partially overruled on other grounds by Mullins v. TestAmerica, Inc., 564 F.3d
386, 412 n.19 (5th Cir. 2009) (holding that the state-created agency with directors
appointed by the governor was a citizen for purposes of, and subject to, the federal
court’s jurisdiction).
ASSEC independently manages most financial matters affecting the
Commission. For example, ASSEC is liable for obligations related to revenue
bonds that the Commission issues. See Ala. Code § 41-9-435 (“All revenue bonds
issued by [ASSEC] shall be solely and exclusively the obligations of [ASSEC] and
shall not create an obligation or debt of the state or of any county or of any
municipality within the state.”). Additionally, “general obligation bonds shall also
be payable from and secured by a pledge of the revenues and income of [ASSEC]
remaining after the payment of the reasonable and necessary expenses of operating
and maintaining the facilities to be constructed by [ASSEC].” Ala. Code § 41-9434.
The state’s role in ASSEC’s financial matters is extremely limited. The
Governor must approve ASSEC’s decision to sell or issue “interest-bearing general
obligation bonds not in excess of $1,900,000.00 in principal amount as authorized
by constitutional amendment,” and these bonds are “general obligations of the
State of Alabama.” Ala. Code § 41-9-432(5). Otherwise, ASSEC may raise,
6

borrow, and allocate funds without State approval or oversight. See Ala. Code §
41-9-432(4);4 Ala. Code § 41-9-432(8);5 Ala. Code § 41-9-432(11);6 Ala. Code §
41-9-436(1).7 “[ASSEC]’s relative independence in controlling its operations and
managing its finances” demonstrates that ASSEC, not the State of Alabama, is the
real party in interest in this action. See Tex. Dep’t of Housing & Cmty. Affairs, 68

4

ASSEC is authorized to:
borrow money from private sources or such other sources as may be acceptable to
[ASSEC] under such terms and conditions as may be provided by law and, in
order to provide security for the repayment of any such private loans, to pledge
such future revenues from admissions and any other sources as may from time to
time be necessary or desirable.

Ala. Code § 41-9-432(4).
5

ASSEC is authorized to:
make such contracts in the issuance of its bonds as may seem necessary or
desirable to assure their marketability and to provide for their retirement by a
pledge of all or any revenue which may come to [ASSEC] from the investment of
the proceeds of the sale of such bonds or from any other source whatsoever.

Ala. Code § 41-9-432(8).
ASSEC may “allocate and expend funds from all donations, income and revenue from any
source whatsoever coming into its treasury for the fulfillment and accomplishment of its duties
and responsibilities.” Ala. Code § 41-9-432(11).
6

7

ASSEC:
shall have, in addition to the power and authority enumerated in Section 41-9-432,
the right, power and authority to: . . . [d]evelop and institute a program of
promotion and advertising of the exhibits and facilities provided for by this
article, said program of promotion and advertising to be conducted by [ASSEC]
both within and without the state in such manner and to such extent as may be
deemed economically advisable and appropriate by [ASSEC].

Ala. Code § 41-9-436(1).
7

F.3d at 928; compare Nichols, 815 F.3d at 732 (holding that the Alabama State Bar
is an arm of the State in part because “[t]he State Bar’s collection of fees is
authorized by the Alabama legislature, those fees are deposited into the state
treasury and can be spent only as appropriated by the Alabama legislature, and the
Alabama Department of Finance supervises the State Bar’s finances.”).
In addition to its relative financial independence, ASSEC is legislatively
authorized to contract in its own name. See Ala. Code § 41-9-432(3).8 Indeed,
ASSEC, and not the State of Alabama, entered into the contract that forms the
basis of this litigation. (See Doc. 1-1, p. 3, ¶ 9 (“Effective March 20, 2006, the
ASSEC and Odysseia entered into an agreement, called an Offer to Enter into
Licensing Agreement (the ‘Option’), pursuant to which Odysseia was to pay
ASSEC certain fees and to engage in certain activities related to the potential
development of a Space Camp® program in South Korea. . .”)).
ASSEC also owns the property at issue – the Space Camp® program. See
Ala. Code § 41-9-432(15) (providing that ASSEC is authorized “[t]o expend funds

8

ASSEC is authorized to:
enter into such contracts and cooperative agreements with the local, state and
federal governments, with agencies of such governments, including the
Department of the Army and the National Aeronautics and Space Administration,
with private individuals, corporations, associations and other organizations as
[ASSEC] may deem necessary or convenient to carry out the purpose of this
article, such contracts and agreements to include leases to private industry[.]

Ala. Code. § 41-9-432(3).
8

of [ASSEC] in the development, operation, promotion and expansion of the
programs and activities of [ASSEC] including the franchising, nationally and
internationally, of the United States Space Camp, a youth science program
developed and owned by [ASSEC]”). Because ASSEC entered into the contract at
issue and owns the property that is the subject of this dispute, this lawsuit does not
affect a “state contract or property right.” Armory Comm’n of Alabama v. Staudt,
388 So. 2d 991, 993 (Ala. 1980); see also Coastal Petroleum Co., 695 F.2d at 1318
(holding that a state agency was a citizen for purposes of diversity jurisdiction
when the “state [] vested title of the” property at issue in the agency); Tex. Dep’t of
Housing & Cmty. Affairs, 68 F.3d at 928 (recognizing that the state agency’s
“power to enter into its own contracts” weighed in favor of finding that the agency
was subject to diversity jurisdiction in federal court); compare Centraal Stikstof
Verkoopkantoor, N.A. v. Ala. State Docks Dep’t, 415 F.2d 452, 457 (5th Cir. 1969)
(finding that a state agency was an alter ego of the State of Alabama in part
because the legislation creating the agency allowed the agency to “develop and
harbor facilities in the name of the State,” and “title to all property vests in the
State of Alabama”).9

9

Centraal Stikstof Verkoopkantoor is binding in this Circuit. See Bonner v. Prichard, 661 F.2d
1206 (11th Cir. 1981) (en banc) (adopting as binding precedent all decisions of the former Fifth
Circuit handed down prior to the close of business on September 30, 1981).
9

With respect to property, ASSEC can acquire, sell, convey, transfer,
mortgage, lease, or donate property in its own name without approval from the
State of Alabama. See Ala. Code § 41-9-432(10) (ASSEC is authorized “[t]o
acquire property by purchase, lease, gift or license, such power not to include the
purchase of a site for the facility”); Ala. Code § 41-9-432(12) (ASSEC is
authorized “[t]o sell, convey, transfer, mortgage, lease, or donate any property,
franchise, grant, easement, license or lease or interest therein which it may own
and to transfer, assign, sell, mortgage, convey, or donate any right, title or interest
to which it may have in any lease, contract, agreement, license, or property”).
Beyond having property rights, ASSEC can sue and be sued in its own name
as evidenced by ASSEC filing this action on its own. In addition to this action,
ASSEC is or has been a party-defendant in a number of actions in this judicial
district. See Parker v. Alabama Space Science Exhibit Commission, 2:15-cv-40AKK; Stroik v. U.S. Alabama Space Exhibit Commission, No. 5:10-cv-00071-CLS;
Mullin v. Alabama Space Science Exhibit Commission; et al., No. 5:99-cv-00301UWC.

Citing a letter dated November 25, 2014 from the Commission’s

procurement manager to outside counsel explaining that the Legislative Contract
Review Oversight Committee had approved a contract between the Commission
and outside counsel in this case, ASSEC argues that the State of Alabama oversees
this litigation. (Doc. 35-1). The critical point though is that ASSEC engaged
10

outside attorneys to represent it in this lawsuit; the Alabama Attorney General’s
Office does not represent ASSEC. See C.H. Leavell & Co., 424 F.2d at 767 (in
holding that the state agency at issue was subject to diversity jurisdiction in federal
court, the court noted that the state agency had engaged its own counsel “rather
than being represented by the State’s legal officer, the Attorney General”).
Because ASSEC hires its own personnel; raises and spends money with
limited State oversight; contracts in its own name; owns property, including the
property at the center of this lawsuit; can sue and be sued in its own name; and is
not limited to representation by the State Attorney General’s Office, the Court
finds that ASSEC operates like a private corporation and is an entity separate from
the State of Alabama. Dep’t of Health and Rehab. Servs., State of Fla. v. Davis,
616 F.2d 828, 833 (5th Cir. 1980) (“There is . . . authority in this Circuit to support
jurisdiction in a diversity suit between a state agency and a citizen of another state
where the agency is invested with the power to sue and be sued, and possesses
generally recognized corporate powers.”); Texas Dep’t of Housing and Cmty
Affairs, 68 F.3d at 928 (“[T]he fact that the agency had the authority to hold and
use property, the authority to sue and be sued in its corporate name, the power to
enter into its own contracts, and the power to make its own hiring decisions, and
the fact that it managed its own finances and was responsible for its own debts
weigh in favor of finding that THA is an independent agency.”).
11

B.

Where the Entity Derives its Funds

The record indicates that ASSEC derives most, if not all, of its funds from
sources other than the State treasury. The enabling legislation neither requires the
State to appropriate funds to ASSEC nor suggests that the State might do so under
certain circumstances. The enabling legislation authorizes ASSEC to raise money
to support its operations.

For example, ASSEC is legislatively authorized to

“accept public or private gifts, grants and donations.” Ala. Code § 41-9-432(9).
The statute also empowers ASSEC to operate concessions at the U.S. Space &
Rocket Center to provide revenue. Ala. Code § 41-9-436(3).10 And ASSEC
derives revenue from the operation of lodging facilities at the Space and Rocket
Center. See Ala. Code § 41-9-435.11

10

ASSEC:
shall have, in addition to the power and authority enumerated in Section 41-9-432,
the right, power and authority to: . . . [o]perate itself or, in its discretion enter into
lease agreement with a person or agency of its choosing to operate, all
concessions located in or on the grounds and facilities operated by [ASSEC], any
such lease agreement to be so designated as to provide maximum services and
convenience to the patrons of the exhibit center and to provide reasonable revenue
return to [ASSEC].

Ala. Code § 41-9-436(3).
11

Ala. Code § 41-0-435 provides in relevant part:
All revenue bonds issued by the commission for the purpose of providing lodging
facilities shall be payable solely out of the revenues and receipts derived from the
operation, leasing or sale by the commission of such lodging facilities . . . .

Id.
12

In 2014, the U.S. Space & Rocket Center was the top tourist attraction in the
State for which visitors paid admission fees.

(Doc. 41, p. 8; Tr. p. 5).12

Information that ASSEC publishes on its website demonstrates that the
Commission raises significant revenue from, among other sources, admission and
special camp fees, membership packages, souvenirs and other merchandise, and
facility rentals.13
C.

Who is Responsible for Judgments Against the Entity

ASSEC’s enabling statute does not state explicitly whether ASSEC or the
State of Alabama is responsible for judgments against the Commission; however,
ASSEC has its own treasury and may “allocate and expend funds from all
12

See also U.S. Space & Rocket Center is Top paid tourist attraction in 2014, AL.com (Feb. 4,
2015) http://www.al.com/business/index.ssf/2015/02/alabama_tourism_attractions_in.html.)
13

See http://www.spacecampstore.com/Museum-Admission-Museum-Admission/ (children’s
admission to the museum is $15.00 and adult admission is $23.00);
http://www.spacecamp.com/space/camp (summer 2016 week long space camp fees range from
$949.00 per person to $1049.00 per person); http://www.spacecamp.com/aviation/machI
(summer
2016
aviation
challenge
fees
are
$949.00
per
person);
http://www.spacecamp.com/robotics (summer 2016 week long robotics camp fees are $649.00
person); http://rocketcenter.com/membership (explaining membership options ranging from
$30.00 to $1,000.00); http://www.spacecampstore.com/ (providing links to purchase space
apparel and accessories, space toys, space collectibles and gifts, space books, DVDs, and posters,
space souvenirs, and camp gear); http://rocketcenter.com/specialevents/eventspaces (providing
rental fee rates for corporate classrooms, training facilities, shuttle park, main exhibit area,
Apollo Courtyard, Apollo Terrace, digital theater, and Saturn V Hall).
The Court takes judicial notice of these facts from the U.S. Space & Rocket Center website
because the information “can accurately and readily be determined from sources whose accuracy
cannot reasonably be questioned.” See Fed. R. Evid. 201(b)(2); see also Coleman v. Dretke, 409,
F.3d 665, 667 (5th Cir. 2005) (finding that a previous panel did not err in taking judicial notice
of a state agency website); In re Everglades Island Boat Tours, LLC, 484 F. Supp. 2d 1259, 1261
(M.D. Fla. 2007) (taking judicial notice of state agency website).
13

donations, income and revenue from any source whatsoever coming into its
treasury for the fulfillment and accomplishment of its duties and responsibilities . .
. .” Ala Code. § 41-9-432(11). This provision suggests, and ASSEC has not
disputed, that the Commission, and not the State of Alabama, is responsible for
judgments against ASSEC. The Court has no information before it to suggest that
any entity other than ASSEC would be responsible for paying a judgment against
the Commission. Accordingly, the Court finds that a judgment against ASSEC
would not “adversely affect the state treasury.” Staudt, 388 So. 2d at 994; but see
Nichols, 815 F.3d at 732-33 (11th Cir. 2016) (“Judgments against the State Bar
will be paid out of its state treasury fund, but only ‘as budgeted and allotted’ by the
Alabama legislature, potentially affecting the treasury as a whole.”) (internal
citation omitted).
II.

CONCLUSION
On the record before it, the Court concludes that ASSEC is not an arm of the

State of Alabama. Rather, ASSEC is “a separate and distinct entity from the state.”
Coastal Petroleum Co., 695 F.2d at 1318. Therefore, ASSEC is a citizen for
purposes of diversity of citizenship jurisdiction, and ASSEC and Odysseia are
completely diverse.14 Accordingly, the Court DENIES ASSEC’s second motion to

14

The Court recognizes that its holding that ASSEC is not an arm of the State conflicts with a
recent decision from the Middle District of Alabama. See Ingalls v. U.S. Space & Rocket Center,
2015 WL 4528687, at *6 (M.D. Ala. July 27, 2015) (finding that ASSEC was entitled to
14

remand. By separate order, the Court will set a briefing schedule on ASSEC’s
motion to dismiss Odysseia’s counterclaim. (See Doc. 43).
DONE and ORDERED this August 19, 2016.

_________________________________
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE

Eleventh Amendment immunity because “the Commission operates as arm of the State”).
Ingalls is not binding on this Court. See Am. Elec. Power Co. v. Conn., 131 S. Ct. 2527, 2540
(2011) (explaining that “federal district judges, sitting as sole adjudicators, lack authority to rend
precedential decisions binding other judges, even members of the same court”); Camreta v.
Greene, 563 U.S. 692, n.7 (2011) (‘“A decision of a federal district court judge is not binding
precedent in either a different judicial district, the same judicial district, or even upon the same
judge in a different case.’”) (quoting 18 J. Moore et al., Moore's Federal Practice § 134.02[1] [d],
p. 134–26 (3d ed.2011)). The Court does not challenge the wisdom of the Ingalls holding;
however, the Court, on the record that the parties have presented regarding ASSEC’s second
motion to remand, finds that ASSEC is not an arm of the State.
The Court’s holding that ASSEC is not an arm of the State is consistent with a recent decision
from another judge on this court. See Parker v. Alabama Space Science Exhibit Commission,
2:15-cv-40-AKK (Doc. 12) (denying ASSEC’s motion to dismiss and finding that ASSEC is not
an arm of the State of Alabama for sovereign immunity purposes).
15