Mary Cash v. Granville County Board of Education

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 MARY CASH,
Plaintiff-Appellant,
v.
GRANVILLE COUNTY BOARD OF
EDUCATION,
Defendant-Appellee,
NORTH CAROLINA ASSOCIATION OF No. 00-1496 EDUCATORS; AMERICAN CIVIL
LIBERTIES UNION OF NORTH
CAROLINA LEGAL FOUNDATION,
INCORPORATED; NORTH CAROLINA
ACADEMY OF TRIAL LAWYERS; NORTH
CAROLINA SCHOOL BOARDS
ASSOCIATION,
Amici Curiae. 
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-99-408)
Argued: December 6, 2000
Decided: March 1, 2001
Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.
Reversed and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Judge Michael and Judge Motz joined.

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COUNSEL
ARGUED: Susan Ashley Osment, MCSURELY & OSMENT,
Chapel Hill, North Carolina, for Appellant. Kenneth Alexander Soo,
THARRINGTON SMITH, L.L.P., Raleigh, North Carolina, for
Appellee. ON BRIEF: Lisa Lukasik, THARRINGTON SMITH,
L.L.P., Raleigh, North Carolina, for Appellee. S. Luke Largess, FER-
GUSON, STEIN, WALLAS, ADKINS, GRESHAM & SUMTER,
P.A., Charlotte, North Carolina, for Amicus Curiae Educators. Martha
A. Geer, PATTERSON, HARKAVY & LAWRENCE, L.L.P.,
Raleigh, North Carolina, for Amici Curiae ACLU and Trial Lawyers.
Allison B. Schafer, NORTH CAROLINA SCHOOL BOARDS
ASSOCIATION, Raleigh, North Carolina; Christopher Zemp Camp-
bell, ROBERTS & STEVENS, P.A., Asheville, North Carolina, for
Amicus Curiae School Boards.
OPINION
NIEMEYER, Circuit Judge:
We are required to determine in this case whether the Granville
County (North Carolina) Board of Education enjoys Eleventh Amend-
ment immunity in a suit brought by an employee against it under the
Fair Labor Standards Act for overtime pay. The district court, finding
that the Board was "an arm of the State" and that any monetary award
"would affect the State," held the Board immune. Because we con-
clude, for the reasons that follow, that the Board is more like a county
than an arm of the State, we reverse.
I
Mary Cash has, since 1975, been employed as a "Lead Secre-
tary/Bookkeeper (Secretary V)" at J. F. Webb High School in Oxford,
North Carolina. She alleges that during the period between 1996 and
1999 she often worked more than 40 hours per week and was not
compensated with overtime pay. She commenced this action against
the Granville County Board of Education (sometimes "School
Board") under the Fair Labor Standards Act, 29 U.S.C. §§ 201-219,
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to recover compensatory and liquidated damages, interest, costs, and
attorneys fees.
The School Board asserted a defense of sovereign immunity under
the Eleventh Amendment. On the School Board’s motion for sum-
mary judgment, the district court dismissed the action. In doing so,
the court assumed that Harter v. Vernon, 101 F.3d 334 (4th Cir.
1996), our most recent opinion on whether particular governmental
entities are "arms of the State" for Eleventh Amendment purposes, "is
no longer salient and [was] effectively overruled" by McMillian v.
Monroe County, 520 U.S. 781 (1997), and Regents of the University
of California v. Doe, 519 U.S. 425 (1997). The district court read
Regents’ requirement that an analysis of Eleventh Amendment immu-
nity consider "the provisions of State law that define the agency’s
character" to be in conflict with Harter’s holding that the "most
important consideration is whether the State treasury will be
affected." Similarly, it noted that the McMillian Court relied on "the
character of the [sheriff’s] office, rather than the impact of the judg-
ment on the State treasury."1 The district court then concluded:
Thus, while the question of funding and who would pay
for any monetary award is not the central question to be
answered in evaluating immunity, it must be evaluated. It is
clear that local school boards receive funds from the state
and local governments. However, the ability of local boards
to use those funds remains controlled by the state. Thus, it
appears that any monetary award to plaintiff would affect
the state.
Therefore, combining an analysis of the organizational
1In McMillian, the Supreme Court held that because the County Sheriff
was acting, in the particular circumstances of the case, as a policymaker
of the State and not the County, the plaintiff could not sue the County
as a person liable under 42 U.S.C. § 1983. See 520 U.S. at 783. And in
Regents, the Court held that the fact that a judgment against the State
would be covered by the voluntary indemnification agreement of a third
party did not strip away the State’s Eleventh Amendment immunity
because the State still bore the legal "risk of an adverse judgment." 519
U.S. at 431.
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and financial structure of the local school boards, in light of
relevant case and statutory law, defendant is an arm of the
state of North Carolina for purposes of this suit seeking
FLSA damages. As such, it is entitled to sovereign immu-
nity from a suit for monetary relief.
From the district court’s judgment dismissing her claim, Cash noticed
this appeal.
II
Even though the language of the Eleventh Amendment preserves
sovereign immunity of only the States of the Union,2 it is settled that
this protection extends also to "state agents and state instrumentali-
ties," Regents, 519 U.S. at 429, or stated otherwise, to "arm[s] of the
State" and State officials, Mt. Healthy City Sch. Dist. Bd. of Educ. v.
Doyle, 429 U.S. 274, 280 (1977). But Eleventh Amendment immunity
"does not extend to counties and similar municipal corporations." Id.
This is so, even if the counties and municipalities exercise a "slice of
State power." Lake Country Estates, Inc. v. Tahoe Reg’l Planning
Agency, 440 U.S. 391, 401 (1979) (citing Mt. Healthy). In Mt.
Healthy, the Supreme Court held that a local school board, as consti-
tuted by Ohio law, is "more like a county or city than it is like an arm
of the State." 429 U.S. at 280. Accordingly, the Court denied the local
school board Eleventh Amendment immunity.
The issue before us, as articulated by the Supreme Court, therefore
turns on whether the Granville County Board of Education "is to be
treated as an arm of the State partaking of the State’s Eleventh
Amendment immunity, or is instead to be treated as a municipal cor-
poration or other political subdivision to which the Eleventh Amend-
ment does not extend." Mt. Healthy, 429 U.S. at 280. Stated
otherwise, we must determine whether a North Carolina county
school board "has the same kind of independent status as a county or
2The Eleventh Amendment provides: "The 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 Cit-
izens of another State, or by Citizens or Subjects of any Foreign State."
(Emphasis added).
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is instead an arm of the State, and therefore ‘one of the United States’
within the meaning of the Eleventh Amendment." Regents, 519 U.S.
at 429 n.5. Because this question requires interpretation of the Elev-
enth Amendment, it is a federal question that we decide de novo, even
though State law must be considered in defining the School Board’s
"character." See id.
Before elucidating the factors necessary to resolve this question, it
is worthwhile to recognize that the immunity in question derives from
the original sovereignty of the states and not from the Eleventh
Amendment. "The Eleventh Amendment confirmed, rather than
established, sovereign immunity as a constitutional principle." Alden
v. Maine, 527 U.S. 706, 728-29 (1999). And, "it follows that the
scope of the States’ immunity from suit is demarcated not by the text
of the Amendment alone but by fundamental postulates implicit in the
constitutional design." Id. at 729. That design reserves to States "a
substantial portion of the Nation’s primary sovereignty, together with
the dignity and essential attributes inhering in that status," id. at 714,
and preserves "a system in which the State and Federal Governments
would exercise concurrent authority over the people," id. (quoting
Printz v. United States, 521 U.S. 898, 919-20 (1997)). The States thus
"retain the dignity, though not the full authority, of sovereignty." Id.
at 715. Central to the dignity of a State’s sovereignty is the proposi-
tion that the State not be amenable to suit without its consent. At the
time the federal Constitution was proposed, the fear expressed during
the debates was that adoption of the new Constitution would strip
States of their sovereign immunity, thereby exposing them to lawsuits
for collection of Revolutionary War debts. Id. at 716-17.
Even with a clear understanding of the source and nature of a
State’s sovereign immunity, no bright line of demarcation can be
drawn separating "state agents and state instrumentalities," which par-
take of the State’s Eleventh Amendment immunity, from local gov-
ernmental entities, which do not. But when the factors for resolving
whether a governmental entity is an arm of the State or more like a
county or municipality point in different directions, our inquiry seeks
guidance in the "twin reasons" for the Eleventh Amendment: (1) "the
States’ fears that ‘federal courts would force them to pay their Revo-
lutionary War debts, leading to their financial ruin,’" and (2) "the
integrity retained by each State in our federal system," including the
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States’ sovereign immunity from suit. Hess v. Port Auth. Trans-
Hudson Corp., 513 U.S. 30, 39 (1994) (quoting Pennhurst State Sch.
& Hosp. v. Halderman, 465 U.S. 89, 151 (1984)). Indeed, these twin
reasons must "dominate" any analysis of whether a governmental
entity is to be accorded Eleventh Amendment immunity. See Gray v.
Laws, 51 F.3d 426, 432 (4th Cir. 1995).
Consistent with the twin purposes of the Eleventh Amendment,
when we have asked the question of whether a governmental entity
within a State is an arm of the State, various factors have been identi-
fied for consideration. The principal factor, upon which courts have
virtually always relied, is whether a judgment against the governmen-
tal entity would have to be paid from the State’s treasury. See
Regents, 519 U.S. at 430 (pointing out that "whether a money judg-
ment against a state instrumentality or official would be enforceable
against the State is of considerable importance"); Hess, 513 U.S. at
49 (agreeing with "the vast majority of Circuits" that "the State trea-
sury factor is the most important factor to be considered" (internal
quotation marks omitted)); Harter v. Vernon, 101 F.3d 334, 338 (4th
Cir. 1996) (noting that the "state treasury factor is the most impor-
tant"); Gray, 51 F.3d at 434 (noting that the State treasury factor "is
generally the most important consideration" (internal quotation marks
omitted)); Ram Ditta v. Md. Nat’l Park & Planning Comm’n, 822
F.2d 456, 457 (4th Cir. 1987) (concluding that the State treasury fac-
tor generally is "most important consideration"). Indeed, it is because
the State treasury factor may be dispositive that it is primary. Conse-
quently, if the State treasury will be called upon to pay a judgment
against a governmental entity, then Eleventh Amendment immunity
applies to that entity, and consideration of any other factor becomes
unnecessary. See Hess, 513 U.S. at 50 ("Where an agency is so struc-
tured that . . . a judgment must expend itself against state treasuries,
common sense and the rationale of the eleventh amendment require
that sovereign immunity attach to the agency" (internal quotation
marks omitted)); Harter, 101 F.3d at 340 (holding that once the court
concludes that the State’s treasury is affected by a law suit, the officer
or entity is immune); Gray, 51 F.3d at 434 (observing that if "the
state’s treasury will not be affected by a judgment in the action, then
the availability of immunity . . . must be determined by resort to the
other relevant considerations" affecting the integrity retained by a
State within the federal system); Bockes v. Fields, 999 F.2d 788, 791
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(4th Cir. 1993) ("When the action seeks damages that would be satis-
fied by state funds, however, no further inquiry is necessary").
Because the State treasury factor is "the most salient factor in Elev-
enth Amendment determinations," Hess, 513 U.S. at 48, a finding that
the State treasury will not be affected by a judgment against the gov-
ernmental entity weighs against finding that entity immune. Nonethe-
less, the entity may still enjoy sovereign immunity if the judgment
would adversely affect the dignity of the State as a sovereign and as
one of the United States. To satisfy this further inquiry, the relation-
ship between the governmental entity and the State must be suffi-
ciently close to make the entity an arm of the State. Under this
inquiry, factors formed largely to determine the "relationship between
the State and the entity in question," Regents, 519 U.S. at 429, as well
as "the nature of the entity created by state law," Mt. Healthy, 429
U.S. at 280, become relevant. To examine the nature of the entity and
its relationship with the State, we keep the State treasury factor in the
calculus and look to three additional factors: (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. See Harter,
101 F.3d at 337; Gray, 51 F.3d at 434; Ram Ditta, 822 F.2d at 457-
58. Under this "sovereign dignity" inquiry, a court must, in the end,
determine whether 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." Seminole Tribe of Florida
v. Florida, 517 U.S. 44, 58 (1996) (internal quotation marks omitted);
see also Hess, 513 U.S. at 39-40 (noting that Eleventh Amendment
secures to the States "the respect" due them).
III
With these principles in hand, we turn first to the question of
whether a judgment in this case against the Granville County Board
of Education will affect the North Carolina State treasury. Only if this
question is answered in the negative do we proceed to inquire whether
a judgment would otherwise affront the sovereign dignity of North
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Carolina by demeaning its right not to be sued without its consent.
And this second inquiry raises the subsidiary question of whether,
under North Carolina law, the School Board functions more like a
county or municipality than like an arm of the State itself.
The parties agree that the State would not be legally obligated to
pay any judgment rendered against the School Board in this case. The
School Board is a corporate entity that can sue and be sued, and no
State law indicates that a judgment against it can be enforced against
the State. See N.C. Gen. Stat. § 115C-40. Indeed, the School Board
is unable to identify a provision in State law that would authorize it
even to use, for the purposes of satisfying an adverse judgment, funds
allocated by the State for specific educational purposes. Similarly, the
School Board admits that the record "does not demonstrate that the
State’s allocation of funds would increase to cover a judgment in a
FLSA suit." The School Board’s only argument on the State treasury
factor is that Mary Cash’s salary, which might be affected by a judg-
ment in this case, might prospectively be the subject of "a specific
annual state appropriation from the state’s general fund." We find this
effect too indirect and ancillary, however, because any such appropri-
ation would be brought about by the State’s obligation to comply with
federal law. See Alden, 527 U.S. at 755 (noting that Eleventh Amend-
ment immunity does not include the "right to disregard . . . valid fed-
eral law"); Edelman v. Jordan, 415 U.S. 651, 667-68 (1974) (noting
that when State officials, in order to comply with a decree of federal
court, must spend State funds, the effect on the State treasury is "an-
cillary" and thus permissible). Moreover, even such an indirect and
ancillary effect is not inevitable. The School Board itself could just
as well supplement wages of noninstructional support personnel out
of local funds. Indeed, under North Carolina law, counties have the
power to raise funds on behalf of local school boards to enable them
to discharge their duties, and local school boards are authorized to
bring suit to enforce a county’s obligation to raise funds. See N.C.
Gen. Stat. § 115C-431. In addition, local school boards are authorized
to spend their local funds for unforeseen emergencies with the
approval of the county. See id. § 115C-433(d). The speculative, indi-
rect, and ancillary impact on the State treasury that a judgment against
the School Board in this case would have does not give rise to Elev-
enth Amendment protection.
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Because the North Carolina treasury will not be affected by a judg-
ment against the School Board in this case, the question of whether
the School Board is entitled to Eleventh Amendment immunity will
turn on whether Mary Cash’s suit against the School Board would
nonetheless impinge upon the sovereign dignity of North Carolina as
a State within our federal system. This question may be resolved by
consideration of the other three factors identified above, see Gray, 51
F.3d at 434, keeping in mind that the most important factor — "the
vulnerability of the State’s purse" — counsels against a finding of
immunity. Hess, 513 U.S. at 48.
The first of these remaining factors addresses the degree of control
that the State has over the Board and, correspondingly, the degree of
autonomy exercised by the School Board. As the parties acknowl-
edge, school boards in North Carolina are independent corporate
bodies within each county that may sue and be sued, and, to respond
to the risk of being sued, they are authorized to purchase liability
insurance to answer for any judgments against them. See N.C. Gen.
Stat. §§ 115C-40, 115C-42. This independent will of local school
boards is further confirmed by provisions in North Carolina law
authorizing school boards to retain private counsel without permission
of the State’s Attorney General. See id. § 114-2.3. Indeed, in this case,
the School board is represented by its private counsel, and not by the
Attorney General. Local school boards are capable of holding "all
school property and . . . capable of purchasing and holding real and
personal property, of building and repairing school houses, of selling
and transferring the same for school purposes, and of prosecuting and
defending suits for or against the corporation." Id. § 115C-40. North
Carolina statute defines local school boards to be "unit[s] of local
government" authorized to enter into interlocal cooperative agree-
ments. See id. §§ 160A-460(2), 460A-461. The statutes also authorize
local school boards to declare bankruptcy under federal law. See id.
§ 23-48. Moreover, North Carolina law provides that local school
boards "shall have general control and supervision of all matters per-
taining to the public schools in their respective administrative units
and they shall enforce the school law in their respective units." Id.
§ 115C-36. Members of the local school boards are locally elected,
not appointed by the State, see id. § 115C-35; and vacancies can be
filled locally, see id. § 115C-37(c). Although local school boards
must comply with certain statewide rules for the certification of teach-
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ers, see id. § 115C-296, and core curriculum rules, id. § 115C-81(a1),
these general statewide criteria are enforced by the local board. More-
over, these State-imposed requirements involve only the substance of
the educational program and not the local school board’s prerogatives
in administration. The fact that in limited circumstances the State
Board of Education can suspend the powers of the local board, see id.
§§ 115C-39(b), 115C-105.39(d), does not mean that, in the matters of
administration and employee relations, the local school boards are not
autonomous. Indeed, "the State may destroy or reshape any unit it
creates. . . . [Y]et cities and counties do not enjoy Eleventh Amend-
ment immunity." Hess, 513 U.S. at 47. In short, North Carolina law
establishes local school boards with a sufficient degree of autonomy
and independence that any judgment rendered against a local school
board would not, in our judgment, affront the dignity of the State.
The second of the factors directs us to consider whether the School
Board is involved with local or statewide concerns. The evidence rel-
evant to this factor clearly points to local concerns as the School
Board’s jurisdiction is limited to Granville County. The fact that edu-
cation is a statewide concern does not indicate otherwise. Just as law
enforcement can be thought of as a statewide concern, we have never-
theless concluded that a county sheriff’s duties in North Carolina can
be primarily local. See Harter, 101 F.3d at 342.
The final factor directs us to consider how North Carolina law
characterizes its local school boards — an inquiry that overlaps with
our analysis of State control versus local autonomy. It appears almost
without exception that State law treats local school boards as local
entities, that is, more as counties than as arms of the State. Unlike the
State Board of Education, whose immunity to suit is waived in a lim-
ited sense by the North Carolina Tort Claims Act, N.C. Gen. Stat.
§ 143-291 et seq., local school boards remain immune until they pro-
cure liability insurance, see id. § 115C-42. The School Board is the
"governing board of a county administrative unit," which in turn is
denominated as a "local board." Id. § 115C-5. Finally, in the chapter
of North Carolina General Statutes dealing with State departments,
local school boards are expressly excluded from the definition of a
State agency. See id. § 143-336.
In addition to these statutory provisions, North Carolina Supreme
Court decisions have recognized school boards as local entities that
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are autonomous from the State. See Turner v. Gastonia Bd. of Educ.,
109 S.E.2d 211, 216-17 (N.C. 1959) (holding that local school boards
are not subject to suit under the North Carolina Tort Claims Act
which, by its terms, applies only to "tort claims against the State
Board of Education, the Board of Transportation, and all other depart-
ments, institutions and agencies of the State"); see also Leandro v.
North Carolina, 480 S.E.2d 249 (N.C. 1997) (deciding a case in
which a local school board sued the State in its own name in a school
funding case under the North Carolina constitution).
In short, we conclude that upon our consideration of each of the
factors identified for determining whether a governmental entity is an
arm of the State and therefore one of the United States within the
meaning of the Eleventh Amendment, the Granville County Board of
Education appears much more akin to a county in North Carolina than
to an arm of the State. See Regents, 519 U.S. at 429 & n.5; Mt.
Healthy, 429 U.S. at 280. Indeed, it is a part of the county’s govern-
mental structure that can look to the county for part of its funding.
The Supreme Court "has consistently refused to construe the [Elev-
enth] Amendment to afford protection to political subdivisions such
as counties and municipalities, even though such entities exercise a
‘slice of State power.’" Lake Country Estates, 440 U.S. at 401. The
circumstances presented here are similar to those presented in Mt.
Healthy, where the Supreme Court denied a local school board sover-
eign immunity.
In reaching our conclusion in this case, we continue to follow our
jurisprudence, as stated in Harter, Gray, Bockes, and Ram Ditta, and
in doing so, we believe that we are faithfully applying the relevant
Eleventh Amendment jurisprudence announced by the Supreme Court
in Regents, Hess, Lake Country Estates, and Mt. Healthy. We there-
fore reject the district court’s view that the Supreme Court’s recent
decisions in Regents and McMillian overruled our decisions in
Harter, Gray, Bockes, and Ram Ditta. Accordingly, for the reasons
given, the judgment of the district court is reversed, and the case is
remanded for further proceedings.
REVERSED AND REMANDED
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