Be Attentive to Sovereign Immunity and Inadvertent Waiver
December 20, 2007
The 11th Amendment is not bulletproof. Recent developments counsel public institutions of higher education to attend carefully to the interplay between contract law and sovereign immunity. In its October 10, 2007 decision, Baum Research and Development Co., Inc. v. University of Massachusetts at Lowell, the Court of Appeals for the Federal Circuit held that UMass waived its 11th Amendment sovereign immunity protections by effectively agreeing to federal jurisdiction. Baum, the inventor of two patents for a hitting machine that tests baseball bats, licensed the patents to UMass in 1998. The nonexclusive license allowed UMass to use the patents for noncommercial purposes. In the license agreement, the parties agreed “to proper venue and hereby submit to jurisdiction in the appropriate State or Federal Courts of Record sitting in the State of Michigan.” When UMass allegedly used the patents for commercial purposes, Baum filed suit and charged UMass with breach of contract and patent infringement.
UMass moved to dismiss and asserted, among other bases for relief, that as a state entity, it was entitled to 11th Amendment immunity from suits in federal court. The district court disagreed, finding that UMass waived its sovereign immunity by affirmatively agreeing to submit disputes for resolution in federal court, as stated in the above contractual provision. This provision was neither vague nor ambiguous as to the mutual obligations of the parties. UMass filed an interlocutory appeal with the Federal Circuit; however, the provision was no more ambiguous in the appellate court’s eyes.
How did this happen? The 11th Amendment protects the United States and state governments and agencies from suits brought by its citizens, or by citizens of another state. As such, a state cannot be sued in its own courts, or in any federal court, without the state’s express and unequivocal consent. The Supreme Court has stated, “each State is a sovereign entity in our federal system; and it is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent.”1 It would seem that any person or entity in a dispute with a state faces an insurmountable barrier.
Even absent a state’s consent, a public institution may inadvertently drop its shield of 11th Amendment immunity protection. States asserting this defense may find that they have already waived their immunity; indeed, a state may find that it has shot itself in the foot with its own actions. Waiver can occur in many ways. Prior to a suit, a state may waive immunity through a state statute or constitutional provision, or as a condition to receiving federal funds. As disputes proceed toward litigation, waiver may occur with a state’s voluntary appearance in federal court or voluntary removal to federal court. Waivers generally are to be strictly construed in favor of the sovereign. Although there are several waiver traps in which a state may find itself ensnared, it is crucial that waiver, like consent, be unequivocally expressed; immunity cannot be impliedly or constructively waived. The Supreme Court notes that waiver occurs “only where stated by the most express language or by such overwhelming implication from the text as [will] leave no room for any other reasonable construction.”2
This is perhaps why UMass found itself in a predicament. The agreement specifically stated that both parties agreed to jurisdiction in Michigan’s state and federal courts. The Federal Circuit found this contractual language to differ from general consent provisions, like general sue-and-be-sued clauses, which have been found insufficient to waive 11th Amendment immunity. This provision, the court reasoned, was an unequivocal expression of UMass’ intent to submit itself to federal jurisdiction; its specificity was the root of UMass’ waiver. Indeed, had the agreement simply stated that the parties submitted to jurisdiction in the state of Michigan, it is possible that UMass’ immunity arguments would have prevailed.
UMass sought to counter the language by arguing that neither the university nor its associate director had authority to enter into an agreement that waived sovereign immunity, because only the Massachusetts legislature could waive the state’s immunity. The district court dismissed this as having no support; to the contrary, the associate director who signed the agreement testified that UMass had entered into hundreds of contracts with this provision. According to the associate director, at no time did UMass prevent her from entering into these contracts.
The take-home message from Baum Research and Development Co. is clear: state entities must take care when it comes to sovereign immunity. A clear contractual jurisdiction provision, like the one in this case, gives a court little option to construe in favor of a sovereign. To avoid inadvertent waiver of 11th Amendment immunity, state entities would be well-served to review their standard contracts and to carefully consider immunity in the early stages of every dispute. This will minimize the risk of state entities’ setting themselves up for a fall from the sovereign’s throne.
For more information, email Gillian Rattray at gillian.rattray@hklaw.com or call toll free, 1-888-688-8500.
1 Seminole Tribe of Florida v. Florida, 517 U.S. 44, 54, 116 S.CT. 1114, 1122 (1996).
2 Port Authority Trans Hudson Corp. v. Feeney, 495 U.S. 299, 305, 110 S.Ct. 1868, 1873 (1990).
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