ELEPHANT BUTTE IRRIGATION DISTRICT OF NEW MEXICO; El Paso County Water Improvement, District No. 1 of Texas, Plaintiffs-Appellees, v. DEPARTMENT OF THE INTERIOR; Manuel Lujan, Secretary of the Interior; Dennis Underwood, Commissioner of Reclamation, Defendants, and Anita Lockwood, Secretary of the State of New Mexico; Gary Johnson, Governor of the State of New Mexico, Defendants-Appellants.
No. 97-2188
United States Court of Appeals, Tenth Circuit.
Nov. 6, 1998.
160 F.3d 602
Even if a
A rule permitting challenge of the appointment as fiduciary of a nonresident family member who has a beneficial interest in the recovery would provide an opportunity for delay tactics by defendants and force trial courts to hold hearings upon subjective motivations that would be time consuming and extremely difficult to resolve. We think the better view is to make immune from challenge, for diversity purposes, an appointment of a fiduciary who has a substantial beneficial interest in the litigation being conducted.
The reasoning of Hackney applies here. Tank has a real, beneficial interest in the lawsuit and, as one of decedent‘s heirs, is entitled to a share of any eventual recovery. It is therefore irrelevant that a local, non-diverse heir might more easily or logically serve as plaintiff. See Martinez v. United States Olympic Committee, 802 F.2d 1275, 1279 (10th Cir.1986) (holding inquiry into motive of appointment is necessary only if appointee has no personal economic stake in litigation).
AFFIRMED.
Christopher D. Coppin (Tom Udall, Attorney General, and Marilyn S. Hebert, Special Assistant Attorney General, Santa Fe, New Mexico, with him on the briefs), Assistant Attorney General, Albuquerque, New Mexico, for Defendants-Appellants.
Before BRORBY, McWILLIAMS and HENRY, Circuit Judges.
BRORBY, Circuit Judge.
Introduction
This case involves Eleventh Amendment state sovereign immunity and the doctrine of Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), as applied to state officials accused of a continuing violation of federal law. Plaintiffs, Elephant Butte Irrigation District of New Mexico and El Paso County Water Improvement District (collectively “Irrigation and Improvement Districts“) accuse the United States Department of the Interior and its Secretary (collectively “Federal Defendants“), the State of New Mexico, and certain state officials of illegally retaining net profits under a recreational land lease with the United States. Plaintiffs allege a portion of the net profit from the lease belongs to them under federal land reclamation laws that supersede and antedate the lease between the United States and New Mexico. Citing the general immunity provisions of the Eleventh Amendment and the doctrine of Ex parte Young, the district court dismissed New Mexico and the New Mexico Department of Energy, Minerals and Natural Resources but refused to dismiss Governor Gary Carruthers1 and Secretary of the New Mexico Energy, Minerals and Natural Resources Department, Anita Lockwood (collectively “state officials“). The district court also ruled Plaintiffs are entitled to their lawful share of net profits, and has ordered a hearing to reform the offending lease provision to properly reflect the division of profits under federal law.
The state officials appeal solely on the basis of the district court‘s refusal to dismiss them based on Eleventh Amendment immunity. We affirm.
I. Background
Although we review only the district court‘s decision not to dismiss the state officials pursuant to the Eleventh Amendment and express no opinion as to the merits of the underlying controversy, see Idaho v. Coeur d‘Alene Tribe, 521 U.S. 261, 117 S.Ct. 2028, 2043, 138 L.Ed.2d 438 (1997) (stating the question before the Court “[was] not the merit of either party‘s claim, but the relation between the sovereign [interest] at issue and the immunity the State asserts“), in order to determine whether federal jurisdiction is appropriate under the exception to Eleventh Amendment state immunity found in Ex parte Young, we must examine “the essential nature and effect of the proceeding, as it appears in the entire record.” In re State of New York, 256 U.S. 490, 500, 41 S.Ct. 588, 65 L.Ed. 1057 (1921) (applicability of Ex parte Young “is to be determined not by the mere names of the titular parties“). Therefore, we proceed with an examination of the facts.
This quarrel over profits involving Federal Defendants, the state officers of New Mexico and the Irrigation and Improvement Districts stems from a complex series of land management statutes and land use contracts arising over the course of the past century. The controversy begins with the Reclamation Act of 1902, 32 Stat. 388, as amended and compiled,
In 1937, the United States entered into a contract with the irrigation district and the predecessor in interest to the improvement district to sell Plaintiffs’ right to use and develop stored water on the Project lands for the purposes of hydroelectric power generation. In return for the sale of these power privileges, the Irrigation and Improvement Districts received, among other things, the benefits accorded under Subsection I of the Fact Finders Act of 1924,
The potential for conflict over these profits did not arise until many years later, when Congress enacted
Plaintiffs’ standing to claim credit for net profits as a third-party beneficiary of the lease between New Mexico and the United States did not begin until 1979 and 1981, when the Irrigation and Improvement Districts each took control of their respective portions of the Project area encompassing Elephant Butte Reservoir and Caballo Reservoir. However, Plaintiffs did not file their lawsuit until 1990, well beyond the six-year statute of limitations for federal claims. See
The Irrigation and Improvement Districts seek to vindicate their rights under federal law as third-party beneficiaries of the lease agreement between the United States and New Mexico. The majority of Plaintiffs’ complaint seeks relief only from the named Federal Defendants; however, Count II of the amended complaint is also directed at the state and state officials as co-defendants. Plaintiffs request, inter alia, “an order declaring the lease agreement with the State of New Mexico void as an ultra vires act and as unconscionable or, alternatively, for reformation of the lease contract in equity to require prospective compliance with Federal Law by providing revenues to the Project beneficia
The district court granted Plaintiffs’ motion for summary judgment as to Count II(B) of the complaint, and determined the Irrigation and Improvement Districts are entitled to have the lease between the Federal Defendants and the State of New Mexico reformed to reflect their preeminent right to profits from categorical uses of the recreation area lands. New Mexico moved to dismiss the suit based on state sovereign immunity under the Eleventh Amendment. The district court granted the motion to dismiss, but only as to the State of New Mexico, not the state officials. The district court ruled the state officials were committing an ongoing violation of federal law and thus their conduct fell squarely within the Ex parte Young exception to the general rule of Eleventh Amendment state immunity.
II. Discussion
A. Jurisdiction
This court has jurisdiction to hear this interlocutory appeal under the collateral order doctrine of Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993). See also Garramone v. Romo, 94 F.3d 1446, 1452 (10th Cir.1996) (allowing an interlocutory appeal from the denial of claim of Eleventh Amendment sovereign immunity under the collateral order doctrine). We review de novo a district court‘s consideration of subject-matter jurisdiction in the context of a
B. The Eleventh Amendment and Ex parte Young—An Overview
The Eleventh Amendment generally bars suits against a state in federal court commenced by citizens of that state or citizens of another state. See Hans v. Louisiana, 134 U.S. 1, 13-15, 10 S.Ct. 504, 33 L.Ed. 842 (1890). This concept of state sovereign immunity is based on the traditional notion that a state should not be “‘amenable to the suit of an individual without its consent.‘” Hans, 134 U.S. at 13 (quoting The Federalist, No. 81 (A. Hamilton)). There are, however, two clearly recognized exceptions to the general immunity protections of the Eleventh Amendment: (1) a state may consent to be sued, or (2) Congress may clearly and expressly abrogate the states’ immunity. See ANR Pipeline, 150 F.3d at 1187. Neither exception is applicable to the present appeal.5 So, we turn our attention to the third judicially created alternative for avoiding the general application of state sovereign immunity—the Ex parte Young doctrine.
The Ex parte Young doctrine is not actually an exception to Eleventh Amendment state immunity because it applies only when the lawsuit involves an action against state officials, not against the state. Generally, the law considers state officials acting in their official capacities to be acting on behalf of the state and immune from unconsented lawsuits under the Eleventh Amendment. Kentucky v. Graham, 473 U.S. 159, 165-66, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985) (“[A]n official-capacity suit is, in all respects other than name, to be treated as a suit against the entity.... It is not a suit against the official personally, for the real party in interest is the entity.“); see also Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 101-02, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). However, Ex parte Young creates a narrow exception to this general rule. In Ex parte Young, the Supreme Court held the Eleventh Amendment generally does not bar a suit against a state official in federal court which
The general doctrine from Ex parte Young allows expanded federal jurisdiction over state action, and gives the federal courts a powerful tool for ensuring state compliance with federal laws. However, the decision whether to apply Ex parte Young and allow a suit to proceed in federal court is often less than clear, and case law in this area reveals 6the difficulty of drawing principled distinctions on the facts of different cases. Courts struggle to find a compromise between vindicating the supremacy of federal law and upholding the immunity of the states under the Eleventh Amendment. This is especially true when, as in the case before us, the controversy involves not simply a violation of federal law, but relief impacting the validity of an asserted state property interest.6
The struggle to define the limits of the Ex parte Young doctrine is evident from recent Supreme Court precedent. In Coeur d‘Alene Tribe, the Supreme Court barred federal jurisdiction over claims for purely prospective relief against a state official to compel compliance with federal law.7 Coeur d‘Alene Tribe involved a suit by an Indian Tribe against Idaho‘s state officials to establish the Tribe‘s ownership rights to submerged lands within the boundaries of a reservation established under federal law in 1873. 521 U.S. at —, 117 S.Ct. at 2032. The Court held that even when a suit is commenced against state officials, and “the [plaintiff] has alleged an on-going violation of its property rights in contravention of federal law and seeks pro
Coeur d‘Alene Tribe imposes an important new requirement on us. We must examine whether the relief Plaintiffs seek against the state officials “implicates special sovereignty interests,” and “whether that requested relief is the functional equivalent to a form of legal relief against the state that would otherwise be barred by the Eleventh Amendment.” ANR Pipeline, 150 F.3d at 1190. Accordingly, we add this latest pronouncement to the traditional three-part inquiry articulated in Treasure Salvors to establish a framework for determining whether a suit against a state official is barred under the Eleventh Amendment. First, we must determine whether this is an action against the state officials or against the State of New Mexico itself; second, whether the alleged conduct of the state officials constitutes a violation of federal law, or merely a tortious interference with Plaintiffs’ property rights; third, whether the relief Plaintiffs seek is permissible prospective relief or is it analogous to a retroactive award of damages impacting the state treasury; Treasure Salvors, 458 U.S. at 690, and finally, whether the suit rises to the level of implicating “special sovereignty interests.” ANR Pipeline, 150 F.3d at 1193 (internal citation omitted).
C. Application
(1) Is this a proper suit against state officials?
The state officials argue the State of New Mexico is the real party in interest because the lease the district court intends to reform was entered into between the United States and an agency of the State of New Mexico. They also argue all of their conduct with regard to the lease and the disputed profits was authorized, official state action, thus immunizing them under the state‘s Eleventh Amendment protection. Although these alleged facts appear to immunize them, the state officials fail to accurately understand and apply the Ex parte Young exception. Because the states cannot authorize any act that violates federal law, the Supreme Court has established that an action seeking to prospectively enjoin a state official‘s ongoing violation of federal law is not barred by the Eleventh Amendment. Pennhurst, 465 U.S. at 102, 104 (“a suit challenging the constitutionality of a state official‘s action is not one against the State“). Even though the state officials claim to act under the authority of valid state law, if their conduct is not in accord with federal law the state cannot cloak their actions with state authority or state immunity. Ex parte Young, 209 U.S. at 160.
In the present case, the state officials were acting pursuant to state law authorizing the development of recreation areas under the lease agreement with the United States. See
(2) Is there a violation of federal law?
As a general rule, if the state officials’ conduct was authorized by state law, and no federal rights were infringed, then the alleged violation of Plaintiffs’ rights is merely tortious interference with property rights, and the Eleventh Amendment bars federal jurisdiction. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 693, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949). Although this rule from Larson appears to require us to ascertain whether state officials actually violated federal law, in fact we do not need to dispositively decide this question. The Supreme Court has ruled we need only determine whether Plaintiffs state a non-frivolous, substantial claim for relief against the state officials that does not merely allege a violation of federal law “solely for the purpose of obtaining jurisdiction.” Larson, 337 U.S. at 690 n. 10; see also Tindal v. Wesley, 167 U.S. 204, 216, 17 S.Ct. 770, 42 L.Ed. 137 (1897) (“It is to be presumed in favor of the jurisdiction of the court that the plaintiff may be able to prove the right which he asserts in his declaration.“). Even “[t]he possibility that a defendant will ultimately prevail on the merits does not clothe that defendant in Eleventh Amendment immunity.” Coeur d‘Alene Tribe v. Idaho, 42 F.3d 1244, 1251 (9th Cir.1994), cert. denied, 517 U.S. 1133, 116 S.Ct. 1416, 134 L.Ed.2d 542 (1996), and rev‘d on other grounds, 521 U.S. 261, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997).
Plaintiffs’ complaint seeks prospective equitable relief to enjoin the state officials from committing continuing violations of federal law. The Irrigation and Improvement Districts claim the lease between the United States and New Mexico contains an assignment clause that violates existing federal law, and, as parties to the lease and knowing recipients of the illegal benefits under the assignment provision, the state officials are committing an ongoing violation of federal law. State officials, on the other hand, argue they are not violating federal law and cannot violate the terms of Subsection I of the Fact Finders Act, upon which Plaintiffs base their claims to credit for profits. We find the state officials’ argument unpersuasive. The factual record indicates the United States assigned the right to profits from the operation, maintenance and development of a recreation area on Project lands to the State of New Mexico under the 1964 and 1973 leases. New Mexico has continued to retain the profits, if any, from use of the recreation areas over the term of the lease. This arrangement arguably contravenes prior agreements and statutory provisions that provide Plaintiffs with the preeminent right to a portion of the profits. We have, in this instance, a lease between the State of New Mexico and the United States that conflicts with existing federal law. The district court could find federal law was violated both at the inception of the lease and each time the state retained profits that ought to have been credited to the Irrigation and Improvement Districts. Simply because a federal law, like the Fact Finders Act, specifically imposes affirmative obligations on the federal government, does not mean state action cannot also violate that law. Such a conclusion would lead to absurd results and undermine the supremacy of federal law. If the state action aids, encourages, cooperates with, or accepts
(3) Is the relief sought permissible prospective relief?
Plaintiffs argue the relief they request will have no effect on the state treasury of New Mexico because they seek only prospective compliance with federal law. However, the prospective/retrospective analysis is often not as simple as it appears. In many instances, even prospective relief will burden the state‘s treasury to some degree. Edelman, 415 U.S. at 668. The “overriding question” is not whether the relief will require the payment of state funds, but whether the relief will “remedy future rather than past wrongs.” Coeur d‘Alene Tribe, 42 F.3d at 1252 (“An injunction that will in practical effect require payment of funds out of the state treasury is nonetheless permissible if it requires only that officials conform their future actions to federal law.” (Internal citation omitted.)).
Even though the request for relief against the state officials in this case will affect New Mexico‘s interest in profits under the assignment clause of the lease, the relief will have no retrospective effect. The relief Plaintiffs seek will only affect the state‘s right to future revenues. While this may cause difficulties for New Mexico and require additional expenditures from the state‘s coffers in order to effectively operate and maintain the affected recreation areas, it does not transform Plaintiffs’ claim into an impermissible request for retrospective relief or damages.
The state officials also argue the Ex parte Young doctrine does not allow the courts to interfere with their discretionary acts. Although this general premise is sound, Ex parte Young does not extend this rule to preclude judicial review of discretionary acts that violate federal law. See 209 U.S. at 158-59 (holding the state officials’ “general discretion regarding the enforcement of the laws ... is not interfered with by an injunction which restrains the state officer from taking any steps towards the enforcement of an unconstitutional enactment, to the injury of the complainant.“). In the present case, it is true the law will not permit the courts to force New Mexico officials into negotiating changes in lease agreements, but it certainly permits the courts to vindicate federal rights. Plaintiffs have sufficiently alleged a federal violation, and we will not deny jurisdiction solely on the basis that a ruling might indirectly impact state officials’ discretionary acts.
Even if Plaintiffs meet all the traditional requirements for the application of the Ex parte Young doctrine we have discussed above, that does not automatically allow the suit to proceed in federal court. The rule from Coeur d‘Alene Tribe requires a more thorough investigation into the nature of the claim, the state‘s interest and the potential effect of the requested relief in order to determine what sovereign interests the court‘s decision might affect and whether federal jurisdiction is appropriate.
(4) Are special sovereign interests at stake?
After Coeur d‘Alene, if we determine the relief Plaintiffs seek, although pro
The fundamental difficulty with the present suit in terms of the sovereign interests at stake, is that in addition to involving a possible continuing violation of federal law, it also has a direct bearing on the validity of New Mexico‘s claim to profits under the lease. The district court is primarily adjudicating the validity of the state‘s asserted property interest, even if the court decides the illegality of the assignment provision voided any state property interest from the inception of the lease. Any decision and remedy in this matter at the very least affects the validity of the state‘s asserted property interest in the revenues and poses a challenge to its current position with regard to the recreation area lands. Thus, we find ourselves in virtually the same dilemma the Ninth Circuit articulated in its Coeur d‘Alene Tribe opinion. We are constrained by two general principles: (1) “federal courts may not hear actions to quiet title to property in which the state claims an interest, without the state‘s consent,” and (2) “declaratory and injunctive relief against state officials to foreclose future violations of federal law is available even if that relief works to put the plaintiff in possession of property also claimed by the state.” 42 F.3d at 1252 (internal citation omitted). Admittedly, the district court is not “quieting title” to the state‘s real property in this case, but it is determining the validity of a property interest—New Mexico‘s claim to profits under the lease. Id. We struggle to find a principled means of distinguishing the real property interest at stake in Coeur d‘Alene Tribe with New Mexico‘s asserted right to income under the assignment provision of the lease in the present case. Both the State of Idaho‘s interest in submerged lands in Coeur d‘Alene Tribe, and New Mexico‘s interest in profits from the recreation areas, although qualitatively different, fall under the general heading of “state property.”
It is easy to understand how a majority of the Justices in Coeur d‘Alene Tribe could decide that the Tribe‘s suit to divest the State of Idaho of all authority and ownership over submerged lands was actually a suit against the state. 521 U.S. at —, 117 S.Ct. at 2047 (O‘Connor, J. concurring). However, it is more difficult to say whether the Court intended its ruling to extend to every situation where a state property interest is at issue. We believe the holding of Coeur d‘Alene Tribe does not extend that far, but instead reflects the extreme and unusual case in which, although the doctrine of Ex parte Young under traditional principles is applicable, the suit is prohibited because it involves “particular and special circumstances,” id. at —, 117 S.Ct. at 2043, that affect “special sovereignty interests” and cause “offense to [the state‘s] sovereign authority,” id. at —, 117 S.Ct. at 2040.
In this light, we examine whether the property interest rises to the level of a “special sovereignty interest,” ANR Pipeline, 150 F.3d at 1193 (internal citation omitted). After looking at the complete record before us, we decide that although the relief accorded to Plaintiffs will affect the State of New Mexico‘s future interest in profits under the recreational land lease, either through reformation of the lease or some other form of equitable relief, this impact on state interests does not rise to the level of implicating special sovereignty interests. We rest our decision on a variety of factors we find implicit in the Supreme Court‘s ruling in Coeur d‘Alene Tribe and our recent application of its holding in ANR Pipeline. First, we cannot say the relief the Irrigation and Improvement Districts request is as far-reaching or intrusive as that sought in Coeur d‘Alene Tribe and ANR Pipeline. The State of Idaho‘s interest in its submerged lands in Coeur d‘Alene Tribe, and the State of Kansas’ interest in its property tax scheme in ANR Pipeline present state sovereign interests to a degree not attained by New Mexico‘s claims in the present case. Second, the remedy in
IV. Summary & Disposition
Since the state property interest at stake in this proceeding does not rise to the level of a “special sovereign interest,” nor is this suit the “functional equivalent” of an action against the state “implicat[ing] special sovereignty interests,” the Eleventh Amendment is not a bar to federal jurisdiction over the state officials. Coeur d‘Alene Tribe, 521 U.S. at —, 117 S.Ct. at 2040. Accordingly, we AFFIRM the decision of the district court.
Lena R. GAINES-TABB; Stephen Abel; Gabriella Aleman, as surviving spouse of Lucio Aleman, Jr., deceased; Judy D. Alford; Fred Anderson, as surviving spouse of Rebecca Anderson, deceased; Adam Asher; Martha Asher; Janice Ayers; Ann Bailey, individually and as parent and next friend of Desirae Bailey, a minor; Cheryl Baker; Cindy Baker; Clayton Baker, Jr.; Ann Banks; Janet Battle, as next of kin of Peola Battle and Calvin Battle deceased; Larry Battle, as next of kin of Peola Battle and Calvin Battle, deceased; Anthony Beall; Mrs. Beall; Henry Biddy, as surviving spouse of Oleta Biddy, deceased; Freddy Bivens; David Blakenship; Lisa Blankenship; J.J. Blassengill, Rev.; Willie Mae Blassengill; Eva Maureen Bloomer, as co-personal representative of the estate of Olen Bloomer, deceased; Michael Blumenberg; William Bonner; Linda Borgert; K.R. Boyer; James Brannum; Lana Brannum; Brett Brooks; Drusilla Brooks; Lachris Brown; Damon Burgess, as surviving spouse of Kimberly Burgess, deceased; Barbara Burns, as surviving spouse of Donald E. Burns, Sr., deceased; Kimberly Burt; Glenda Buster; Vernon Buster; Almatene Byrd; Albert William Cagle, as personal representative of the estate of Catherine M. Leinen, deceased; Alice Caldwell; Connie Calhoun; Jacqueline Sue Carnes; Delynda Castel; Marsha Cato; Raymond Chafey, as surviving spouse of Rona Chafey, deceased; Gloria Chipman, as surviving spouse of Robert Chipman, deceased; Demetrick Clifton, special administrator of the estate of Larry Turner, deceased; Janice Clough; Richard Clough; Carol J. Cobb; Kenneth Coleman; Sherri Coleman; Anthony Conley; Larhonda Conley; Raymond Cooper; Shirley Cooper; Cleotia Cotton; Leroy Cotton; Jimmy Couch; Carol Covell, individually and as parent and next friend of Charles George, a minor; Pamela Coverdale, as special administrator of the estates of Elijah Coverdale and Aaron Coverdale, deceased minors; Marion Craig, Jr.; Christopher Cregan, as administrator of the estate of Katherine Cregan, deceased; Donald Crisp; Virginia Sue Crosthwait; Brenda Cudjoe; Katie Darling; Gloria Davis, as surviving spouse
Notes
(Emphasis added.)Whenever the water users take over the care, operation, and maintenance of a project, or a division of a project, the total accumulated net profits, as determined by the Secretary, derived from the operation of project power plants, leasing of project grazing and farm lands, and the sale or use of town sites shall be credited to the construction charge of the project, or a division thereof, and thereafter the net profits from such sources may be used by the water users to be credited annually....