Michael Sato v. Orange Cty. Dept. of Education
861 F.3d 923
| 9th Cir. | 2017Background
- Michael Sato was hired by Orange County Department of Education (OCDE) in Aug. 2014 and terminated within weeks without notice or hearing; he sued for § 1983 due-process violations and state breach of contract.
- OCDE moved to dismiss, asserting Eleventh Amendment sovereign immunity based on Ninth Circuit precedent treating California school districts and county offices of education (COEs) as "arms of the state."
- Sato argued Assembly Bill 97 (AB 97, 2013) — which created the Local Control Funding Formula (LCFF) and required Local Control and Accountability Plans (LCAPs) — changed the legal relationship so districts/COEs are no longer state "arms."
- The district court dismissed Sato’s federal constitutional claims on immunity grounds, allowed dismissal of the state contract claim to be voluntarily filed by Sato, and entered final judgment for OCDE.
- On appeal, the Ninth Circuit reviewed de novo whether AB 97 abrogated Belanger and Eaglesmith and whether OCDE retained Eleventh Amendment immunity under the Mitchell factors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AB 97 converted CA school districts/COEs from state "arms" to local entities not entitled to Eleventh Amendment immunity | AB 97 replaced the old revenue-limit (maximum) scheme with LCFF (a purported minimum funding model) and decentralized control via LCAPs, so districts/COEs are like municipal entities | AB 97 did not eliminate constitutional equalization or state control; LCFF maintains a state-calculated funding target and Proposition 13/state law still centralize funding, so districts/COEs remain state "arms" | Held for defendant: AB 97 did not abrogate Belanger/Eaglesmith; OCDE remains an arm of the state and immune under the Eleventh Amendment |
| Whether the first Mitchell factor (state treasury vulnerability) now disfavors immunity because LCFF is a minimum-guarantee model | LCFF is a minimum support scheme; local revenue can be raised above state support, so state not legally required to backfill judgments | LCFF retains base/supplemental/concentration grants calculated like prior revenue-limit formula (state contribution = LCFF target minus local property tax); Serrano decisions still require equalization; state purse still at risk | Held for defendant: first Mitchell factor favors immunity (most important factor) |
| Whether LCAPs transferred core control over education to locals, affecting Mitchell’s "central government function" factor | LCAPs give districts/COEs authority to set local priorities and strategies, showing local control of education | LCAPs require state templates, address state-identified priorities and subgroups, require COE/state review and filing — state retains significant control; education remains a statewide function under CA Constitution | Held for defendant: second Mitchell factor favors immunity |
| Whether other Mitchell factors (sue/be sued, property, corporate status) negate immunity | Sato noted districts/COEs can sue/be sued and hold property in their own name, and OCDE has sued the state in prior litigation | Those powers were present pre-AB 97 and do not alter agency/arm status; corporate form and property holding are consistent with being state agents | Held: these factors tilt modestly against immunity but are outweighed by the first two factors; overall OCDE is an arm of the state |
Key Cases Cited
- Belanger v. Madera Unified Sch. Dist., 963 F.2d 248 (9th Cir. 1992) (held California school districts were "arms of the state" entitled to Eleventh Amendment immunity)
- Eaglesmith v. Ward, 73 F.3d 857 (9th Cir. 1996) (extended Belanger to county offices of education)
- Mitchell v. Los Angeles Cmty. Coll. Dist., 861 F.2d 198 (9th Cir. 1988) (articulated five-factor test for arm-of-state analysis)
- Eason v. Clark Cty. Sch. Dist., 303 F.3d 1137 (9th Cir. 2002) (review standard for Eleventh Amendment immunity and factor analysis)
- Savage v. Glendale Union High Sch., 343 F.3d 1036 (9th Cir. 2003) (discusses when school districts are not state "arms")
- Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30 (1994) (state purse vulnerability is the salient Eleventh Amendment factor)
- Serrano v. Priest, 487 P.2d 1241 (Cal. 1971) (Serrano I) (California constitutional decisions requiring equalization of per-pupil funding)
- Butt v. State, 842 P.2d 1240 (Cal. 1992) (recognizes California’s constitutional commitment to a statewide public education system)