Williams v. Dallas Area Rapid

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 00-10361
_______________
CHARLES ETTA WILLIAMS,
Plaintiff-Appellant,
VERSUS
DALLAS AREA RAPID TRANSIT,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________
February 22, 2001
Before POLITZ, SMITH, and PARKER,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Charles Etta Williams appeals the dismissal
of her suit against Dallas Area Rapid Transit
(“DART”) under the Age Discrimination in
Employment Act (“ADEA”), 29 U.S.C. § 621
et seq., arguing that the district court erred in
finding DART immune from suit under the
Eleventh Amendment. She contends both that
DART is not an arm of the state for purposes
of the Eleventh Amendment and that, even if
DART otherwise were entitled to such
immunity, it effectively waived it. Because we
agree that DART is not an arm of the state, we
do not reach waiver. We reverse the dismissal
and remand for further proceedings.
I.
DART is a regional transportation authority
organized under TEX. TRANSP. CODE ANN. ch.
452. Williams, a former DART employee, was
released as part of a reduction-in-force
program. Although DART allegedly found al-
ternative employment positions for younger,
lesser-qualified employees, it offered no such

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position to Williams, who sued, asserting a
claim for wrongful termination in violation of
the ADEA. After the parties conducted
discovery, the Supreme Court issued Kimel v.
Fla. Bd. of Regents, 528 U.S. 62, 82-83
(2000), holding that, because the ADEA is not
a proper exercise of Congress’s power under
the Fourteenth Amendment, the statute cannot
abrogate a state’s sovereign immunity without
an express waiver by the state.
Shortly thereafter, DART moved for
dismissal under FED. R. CIV. P. 12(b)(6), or al-
ternatively, for judgment on the pleadings un-
der rule 12(c). Concluding that judgment was
not proper under either rule, the court
nonetheless dismissed sua sponte under rule
12(h)(3) for lack of subject matter jurisdiction,
holding that DART, because it had not waived
its sovereign immunity, was not amenable to
suit in federal court under the ADEA.
II.
The district court held, as a matter of law,
that because “DART is a governmental unit or
instrumentality of the state of Texas, . . . it is
entitled to assert Eleventh Amendment immu-
nity” and that because DART had not waived
that immunity, Williams’s ADEA claim failed
for lack of subject matter jurisdiction.
Williams contests both that DART is entitled
to Eleventh Amendment immunity and that it
did not effectively waive immunity. When
addressing a dismissal for lack of subject
matter jurisdiction, we review application of
law de novo and disputed findings of fact for
clear error. See Williamson v. Tucker, 645
F.2d 404, 413 (5th Cir. May 1981).
“The Eleventh Amendment . . . bars suits in
federal court by citizens of a state against their
own state or a state agency or department.”
Richardson v. S. Univ., 118 F.3d 450, 452
(5th Cir. 1996) (quotation marks omitted).
Moreover, “a plaintiff cannot avoid the
sovereign immunity bar by suing a state agency
or an arm of the State rather than the State
itself.” Id.
When confronted with a governmental en-
tity asserting Eleventh Amendment immunity
as an arm of the state, we apply the test
established in Clark v. Tarrant County, 798
F.2d 736 (5th Cir. 1986). The district court
failed to analyze DART’s asserted immunity
under the Clark framework, instead relying on
three cases1 for the proposition that DART is
1 Anderson v. DART, Civ. Ac. No. 3:97-CV-
1834-BC, 1998 WL 686782 (N.D. Tex. Sept. 29,
1998), aff’d, 180 F.3d 265 (5th Cir. 1999) (per
curiam) (unpublished), cert. denied, 528 U.S. 1062
(1999); Tolbert v. Vasquez, Civ. Ac. No. 3:93-CV-
1468-X, 1998 U.S. Dist. LEXIS 17616 (N.D. Tex.
Mar. 27, 1998), aff’d, 163 F.3d 1355 (5th Cir.
1998) (per curiam) (unpublished); Davis v. Mathis,
846 S.W.2d 84 (Tex. AppSSDallas 1992, writ
denied). These cases are neither binding nor
persuasive, because none properly examined the
issue of Eleventh Amendment immunity. See
Young v. DART, Civ. Ac. No. 3:95-CV-2596-X,
1999 U.S. Dist. LEXIS 4470, at *3 (N.D. Tex.
Mar. 24, 1999) (declining to follow Anderson and
Tolbert because “neither case delivers a thoughtful
and/or detailed argument” with respect to Eleventh
Amendment immunity, and ordering the parties to
brief the issue under the Clark framework).
Davis, 846 S.W.2d at 87, held merely that
DART “[a]s a governmental unit,” was entitled to
the protections of the Texas Tort Claims Act
(“TTCA”), Tex. CIV. PRAC. & REM. CODE ch.
101. T hat holding is not probative for our
purposes, because the TTCA defines
“governmental unit” as
A) this state and all the several agencies of
(continued...)

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indeed a state agency and therefore is entitled
to sovereign immunity. Although all three
cases upheld DART’s immunity from suit, they
are neither binding nor persuasive in this
context. The court erred in failing properly to
analyze, under Clark, DART’s amenability to
suit.
A proper inquiry under Clark considers six
factors:
(1) whether the state statutes and case
law characterize the agency as an
arm of the state;
(2) the source of funds for the entity;
(3) the degree of local autonomy the
entity enjoys;
(4) whether the entity is concerned pri-
marily with local, as opposed to
statewide, problems;
1(...continued)
government that collectively constitute
the government of this state, including
other agencies bearing different
designations, and all departments,
bureaus, boards, commissions, offices,
agencies, councils, and courts;
(B) a political subdivision of this state,
including any city, county, school dis-
trict, junior college district, levee im-
provement district, drainage district, ir-
rigation district, water improvement
district, water control and improvement
district, water control and preservation
district, freshwater supply district,
navigation district, conservation and
reclamation district, soil conservation
district, communication district, public
health district, and river authority;
(C) an emergency service organization; and
(D) any other institution, agency, or organ
of government the status and authority
of which are derived from the
Constitution of Texas or from laws
passed by the legislature under the
constitution.
TEX. CIV. PRAC. & REM. CODE § 101.001. The
TTCA’s definition of “governmental unit” is un-
questionably broader than the term “arm of the
state,” as used for purposes of the Eleventh
Amendment, in that it includes cities, counties,
school boards, and other governmental entities that
are not entitled to Eleventh Amendment immunity.
See, e.g., Mt. Healthy City Sch. Dist. Bd. of Educ.
v. Doyle, 429 U.S. 274, 280-81 (1977) (“[A] local
school board such as petitioner is more like a
county or city than it is like an arm of the State.
We therefore hold that it was not entitled to assert
any Eleventh Amendment immunity from suit in
the federal courts.”).
(continued...)
1(...continued)
Anderson and Tolbert held that DART, as a
“political subdivision of the state” is not a “person”
within the meaning of 42 U.S.C. §§ 1981, 1983.
See Anderson v. DART, 1998 WL 686782 at *7;
Tolbert, 1998 LEXIS 17616, at *19-20. Although
it is not at all certain that “political subdivision,”
as used by those courts, is coextensive with “arm
of the state,” as used in analyzing Eleventh Amend-
ment immunity, to the extent that the two terms are
interchangeable, the district courts in Anderson v.
DART and Tolbert erred in failing to analyze
DART under the Clark framework, relying instead
on the Davis court’s characterization of DART.
Moreover, while the district court in Anderson v.
DART did find DART immune from suit under the
Eleventh Amendment, that finding is merely an
erroneous dictum, because the court already had
decided the case on the § 1983 issue. See
Anderson v. DART, 1998 WL 686782, at *7.

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(5) whether the entity has authority to
sue and be sued in its own name;
and
(6) whether the entity has the right to
hold and use property.
Anderson v. Red Riv. Waterway Comm’n, 231
F.3d 211, 214 (5th Cir. 2000). Although none
of the six factors is dispositive,2 some are more
important than others: The secondSSthe
source of fundsSSis the most important, while
the fifth and sixthSSwhether the agency has
authority to enter into litigation and hold prop-
ertySSare less so. See Hudson, 174 F.3d at
681-82. “Rather than forming a precise test,
[the Clark] factors help us balance the equities
and determine as a general matter ‘whether the
suit is in reality a suit against the state itself.’”
Id. (quoting Laje v. R.E. Thomason Gen.
Hosp., 665 F.2d 724, 727 (5th Cir. 1982)).
A proper Clark analysis compels the
conclusion that DART is not an arm of the
state for purposes of the Eleventh
Amendment. The first factorSS“whether the
state statutes and case law characterize the
agency as an arm of the state”SSweighs
against immunity, if anything. Neither party
can point to definitive authority establishing
DART’s status under Texas law. As DART
points out, it is an “authority” under Texas
law, and as such, is a “governmental unit under
Chapter 101, Civil Practice and Remedies
Code . . . .” TEX. TRANSP. CODE ANN.
§ 452.052. The statutory characterization of
DART as a “governmental unit” is not
probative of DART’s status for Eleventh
Amendment purposes, however. See supra
note 1.
On the other hand, Texas statute defines
“state government” as “an agency, board,
commission, department, or office . . . that:
(A) was created by the constitution or a
statute of this state; and (B) has statewide
jurisdiction.” TEX. CIV. PRAC. & REM. CODE
§ 101.001(5).3 Thus, the controlling factor in
analyzing DART's status as a “state agency”
under the TTCA is whether it has statewide
jurisdiction.
In its answer, DART conceded that “all of
2 Importantly, neither the state’s approach to the
issue of sovereign immunity nor the state’s
characterization of the entity in question controls
our inquiry. See Hudson v. City of New Orleans,
174 F.3d 677, 684-85 (5th Cir.), cert. denied, 528
U.S. 1004 (1999).
3 DART contends that the characterization of §
101.001(5) is not applicable in the Eleventh
Amendment context, because § 101.001’s
definitions are limited by their terms to chapter
101, which codified the TTCA, which DART
argues, deals only with governmental entities’
amenability to suit in state courts, ignoring any
federal immunity. Section 101.025(a) states that
“[s]overeign immunity to suit is waived and
abolished to the extent of liability created by this
chapter,” however, plainly contemplatingSSand by
implication, leaving intactSSthe state’s immunity
under the Eleventh Amendment.
To the extent the statute can be considered am-
biguous, the Revisor’s Note to that section is in-
structive: “Only the state and its agencies have
sovereign immunity. The revised law omits the
phrase ‘with reference to units of government’ to
avoid the implication that sovereign immunity
applies to local governmental units.” Moreover,
DART’s abandonment of the TTCA strikes us as
peculiar, given its reliance on Anderson v. DART,
Tolbert, and Davis, all of which (improperly) con-
strued the TTCA in finding DART immune from
federal suit as a “governmental unit.” See supra
note 1.

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its operations and actions take place within the
counties encompassed in the Northern District
of Texas.” Nowhere does DART assert that it
does have statewide jurisdiction. Thus, at
least for purposes of the TTCA, DART is not
a state agency. Admittedly, Texas law is not
unambiguous with respect to DART’s status,
but to the extent it favors either party, the first
factor weighs against characterizing DART as
an arm of the state.
The second factor in the Clark inquirySSthe
source of the funds for the governmental
entitySSis the most important one. See
Hudson, 174 F.3d at 687. Although we also
consider the source of general operating funds
for the entity, “because an important goal of
the eleventh amendment is the protection of
states’ treasuries, the most significant factor in
assessing an entity’s status is whether a
judgment against it will be paid with state
funds.” Richardson, 118 F.3d at 455 (quoting
McDonald v. Bd. of Miss. Levee Comm’rs,
832 F.2d 901, 907 (5th Cir. 1987)). It is
undisputed that DART receives funding from
several sources, including passenger fares,
bond revenues, and local sales and use tax
revenues,4 but DART concedes on appeal that
it receives no appropriated funds from the
state of Texas. It does contend, however, that
its authorized use of bond and tax revenues
constitutes state funding. We disagree.
DART is authorized by state statute to is-
sue bonds for capital improvement projects;
we cannot, however, infer merely from such
authorization that the state actually provides
funding to DART. The bonds must be
approved by the state attorney general and
registered by the state comptroller,5
butSSimportantlySSthe state does not
guarantee the bonds. Moreover, although
DART is authorized to pledge its tax and
operating revenues or mortgage its assets to
secure the bonds,6 DART can point to no
statute indicating that the state would back the
bonds with its full faith and credit. We find
nothing that we can interpret as indicating that
the State of Texas funds or guarantees
DART’s bond obligations.
DART also argues that the characteristics
of its sales and use tax render the tax a source
of state funding. This argument proves too
much, however. While it is true that DART’s
sales and use tax is administered by the state
comptroller and passes through the state treas-
ury before being rebated to DART, municipal
taxes in Texas are administered in the same
way.7 Nonetheless, it is undisputed that
municipalities are not arms of the state for
purposes of the Eleventh Amendment. No.
99-41444, Evans v. City of Bishop, 2000 U.S.
App. LEXIS 34479, at *5-*7 (5th Cir. Dec.
11, 2000) (per curiam). Moreover, except for
the mere administration of the tax by the state,
there is nothing to suggest that DART’s sales
and use tax is anything other than the
collection of local funds authorized by a local
election to accomplish a local objective.
Finally, DART argues that, if it were unable
4 See TEX. TRANSP. CODE ANN. §§ 452.055
(grants), 452.061 (fares), 452.352 (bonds), 452.-
401 (sales and use tax).
5 See id. § 452.355.
6 See id. § 452.357.
7 Compare TEX. TAX CODE ANN. §§ 321.301-
.302, 321.306, 321.501-.505 (administration pro-
visions for municipal sales and use tax), with id. §§
322.201-.203, 322.301-.305 (administration
provisions for special purpose sales and use tax).

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to pay a judgment from its own funds, it could
seek additional funding from the legislature.
DART does not contend that the legislature
would be obligated to provide the additional
funding, however, and we do not consider “a
state’s voluntary, after-the-fact payment” of a
judgment to be a liability against the state’s
treasury. Hudson, 174 F.3d at 689. There is
nothingSSeither in the record or of which we
can take judicial noticeSSindicating either that
DART receives state funding as a general
matter or that a judgment against it would be
satisfied out of the state treasury.
The third factor is the degree of local au-
tonomy. DART argues that this factor weighs
in its favor, because it is subject to the Texas
Sunset Act, TEX. GOV’T CODE. ANN. ch. 325.
That fact alone does not dispose of the issue:
The Sunset Act deals with the orderly closure
of obsolete state agencies, not the oversight of
agencies’ daily operations. See id. § 325.008
(detailing the duties of the Sunset Advisory
Commission). Moreover, DART must report
to the Sunset Advisory Commission only once
every twelve years. See TEX. TRANSP. CODE
ANN. § 452.453.
DART argues further that, because it is
subject to fiscal audits every year and
performance audits every fourth year,8 it falls
under state control. Like the Sunset Act, the
audit requirements are some evidence of state
oversight, but they are not dispositive with
respect to the issue of local control.
On the other side of the scale, the
responsibility for the “management, operation,
and control” of DART is vested in an
executive committee,9 which consists of
members appointed by the municipalities
served by DART. See id. §§ 452.502, 452.-
562, 452.572. Thus, the day-to-day
operations of DART fall under purely local
control. Moreover, any municipality served by
DART may hold an election to withdraw from
DART if it chooses to do so. See id. §
452.651. In this way, the localities also
control DART’s ultimate disposition. While
there is some state oversight of DART’s
operations, it enjoys considerable local
autonomy; this factor therefore weighs slightly
against Eleventh Amendment immunity, if
anything.
The fourth factor looks at whether DART
is concerned primarily with local or statewide
problems. DART concedes that its authority
is limited to the Dallas-Forth Worth region.
Although there is some authority for viewing
regional entities merely as local solutions to
statewide problems,10 the fourth factor
properly centers on “whether the entity acts
for the benefit and welfare of the state as a
whole or for the special advantage of local
inhabitants.” Pendergrass v. Greater New
8 See TEX. TRANSP. CODE ANN. §§ 452.451,
452.454.
9 See id. § 452.053; see also id. §§ 452.101-13
(empowering the executive committee, inter alia,
to create a budget, invest funds, establish a security
force, and appoint auditors and attorneys).
10 Cf. Clark, 798 F.2d at 745. Clark addressed
the state probation system, concluding that the
relevant statute “was enacted to address a
statewide problem and to put control of
probationers in the hands of state officers.
Dividing the responsibilities into judicial districts
is merely an administrative tool for handling a
statewide, state program.” Id. (citation omitted).
In contrast, DART is not an administrative division
of a statewide transportation systemSSit is an
entity unto itself.

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Orleans Expressway Comm’n, 144 F.3d 342,
347 (5th Cir. 1998) (citing Jacintoport Corp.
v. Greater Baton Rouge Port Comm’n, 762
F.2d 435, 443 (5th Cir. 1985)). DART plainly
acts for the benefit of the residents of Dallas,
Fort Worth, and the surrounding communities,
as distinguished from that of the state as a
whole; thus, the fourth factor also cuts against
DART.
The fifth and sixth factors weigh in favor of
Williams’s contention that DART is not an
arm of the state. DART has statutory
authority both to hold and use property and to
sue and be sued. See TEX. TRANSP. CODE.
ANN. §§ 452.054(b) & (d). Such abilities
favor categorization of DART as an
independent entity, not an arm of the state.
See Hudson, 174 F.3d at 691.
Taken as a whole, the Clark analysis
compel the conclusion that DART is not
immune from Williams’s claim. Though some
of the factors may be indeterminate, none
weighs strongly in DART’s favor. Moreover,
the most important second factor weighs
against considering DART an arm of the state.
The district court therefore erred in finding
DART immune from suit under the ADEA.
We REVERSE the dismissal and REMAND
for further proceedings.

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