Skidmore v. Access Group, Inc.
149 F. Supp. 3d 807
E.D. Mich.2015Background
- Plaintiff Daniel Skidmore sued multiple defendants alleging improper processing of student loan payments and adverse credit reporting; KHESLC (Kentucky Higher Education Student Loan Corporation) was sued on a negligence count in the First Amended Complaint.
- KHESLC moved to dismiss under Rule 12(b)(1), arguing Eleventh Amendment sovereign immunity as an arm of the State of Kentucky; it also moved to stay discovery pending resolution.
- Skidmore argued the motion was premature (requiring discovery) and alternatively that KHESLC is a municipal corporation (waiver via statute allowing it to "sue and be sued") or otherwise not an arm of the state. He also argued Michigan law might govern and that KHESLC engaged in proprietary/out-of-state activity.
- The court treated KHESLC’s motion as a factual 12(b)(1) attack and considered materials beyond the complaint. It required Skidmore to show why jurisdictional discovery was necessary but found his proposed discovery mostly irrelevant to the statutory arm-of-the-state factors.
- The court applied the four-factor arm-of-the-state test (state treasury liability; statutory language/state control; appointment of directors; traditional state function) and concluded all four factors favored KHESLC being an arm of Kentucky.
- The court dismissed KHESLC from the suit on sovereign immunity grounds and denied the discovery-stay motion as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural propriety of 12(b)(1) motion | Motion is premature and discovery is needed to oppose immunity | 12(b)(1) is proper and may be decided on factual record now | Court: 12(b)(1) procedural; discovery not required because plaintiff failed to show relevant facts would be produced |
| Whether KHESLC waived sovereign immunity by statute ("sue and be sued" / municipal corp. label) | Kentucky statute and municipal-corporation label show waiver / municipal status | Such statutory language is insufficient to waive Eleventh Amendment immunity; waiver must be unequivocal | Court: No waiver; "sue and be sued" label not an unequivocal federal-waiver of immunity |
| Whether KHESLC is an arm of the State (Eleventh Amendment) | KHESLC performs proprietary/out-of-state activities and thus is not an arm | KHESLC was created by Kentucky, board appointed/controllable by Governor, state oversight, statutory purpose is statewide education finance | Court: All four arm-of-the-state factors favor state-arm status; KHESLC is an arm and entitled to sovereign immunity |
| Whether discovery should be stayed/allowed while immunity resolved | Discovery needed to show KHESLC is not an arm (revenue sources, activities, contracts) | Immunity shields defendant from burdens of defending/discovery; no relevant additional facts shown | Court: Discovery request denied as unnecessary; stay motion moot after dismissal |
Key Cases Cited
- O’Bryan v. Holy See, 556 F.3d 361 (6th Cir.) (Rule 12(b)(1) and sovereign-immunity jurisdictional principles)
- United States v. Ritchie, 15 F.3d 592 (6th Cir.) (distinguishing facial and factual 12(b)(1) attacks)
- Mumford v. Basinski, 105 F.3d 264 (6th Cir.) (Eleventh Amendment immunity of state arms)
- Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30 (U.S.) (factors for arm-of-the-state analysis)
- Ernst v. Rising, 427 F.3d 351 (6th Cir.) (application and interpretation of Hess factors)
- Sossamon v. Texas, 563 U.S. 277 (U.S.) (stringent requirement for state waiver of federal-court sovereign immunity)
- College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U.S. 666 (U.S.) (waiver of sovereign immunity must be unequivocal)
- United States ex rel. Oberg v. Pennsylvania Higher Educ. Assistance Agency, 745 F.3d 131 (4th Cir.) (analysis of state-entity functions and revenue/commercial activities)
- Comair, Inc. v. Lexington-Fayette Urban Cnty. Airport Corp., 295 S.W.3d 91 (Ky.) (Kentucky Supreme Court factors for municipal vs. state-agency status)