Filed: Apr. 29, 2004
Latest Update: Feb. 22, 2020
Summary: While states may assert Eleventh, Amendment immunity from suit by private parties in both state and, federal courts, there is a well-recognized exception to immunity, set forth in Ex parte Young, 209 U.S. 123 (1908), which allows the, award of prospective equitable relief against state officers.
United States Court of Appeals
For the First Circuit
No. 03-1920 Volume I of II
STATE OF NEW HAMPSHIRE,
Plaintiff, Appellant,
NEW HAMPSHIRE DEPARTMENT OF ADMINISTRATIVE SERVICES; STATE OF NEW
HAMPSHIRE DEPARTMENT OF TRANSPORTATION; NEW HAMPSHIRE STATE
TREASURER; STATE OF NEW HAMPSHIRE DEPARTMENT OF EDUCATION,
Plaintiffs,
v.
DAVID RAMSEY, JOHN LOVEDAY, JOHN TOOMEY, MELINDA CONRAD, WAYNE
ALDRICH, NORMAN JITRAS, MICHAEL ROSSI, JOHN SCARLOTTO, and
MARTHA YORK, as members of the N.H. Committee of Blind Vendors;
NEW HAMPSHIRE COMMITTEE OF BLIND VENDORS;
UNITED STATES DEPARTMENT OF EDUCATION,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]
Before
Lynch, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lipez, Circuit Judge.
Nancy J. Smith, Senior Assistant Attorney General, with whom
Peter W. Heed, Attorney General, was on brief, for appellant.
Jack B. Middleton, with whom Andrea L. Daly, Laura B. Dodge,
and McLane, Graf, Raulerson & Middleton were on brief, for appellee
New Hampshire Committee of Blind Vendors.
Mark B. Stern, Attorney, Appellate Staff, Civil Division, with
whom Alisa B. Klein, Attorney, Appellate Staff, Civil Division,
Peter D. Keisler, Assistant Attorney General, and Thomas P.
Colantuono, United States Attorney, were on brief, for appellee
United States Department of Education.
Robert R. Humphreys on brief for Randolph-Sheppard Vendors of
America, American Council of the Blind, and National Educational
and Legal Defense Services for the Blind, amici curiae.
April 29, 2004
LYNCH, Circuit Judge. The district court entered
judgment for the New Hampshire Committee of Blind Vendors and nine
of its individual members (collectively, the Blind Vendors) and the
United States Department of Education (USDOE), largely affirming a
federal arbitration panel award against New Hampshire of
compensatory damages of approximately $900,000 as well as
prospective equitable relief. The Blind Vendors' claim is that New
Hampshire did not give proper "priority" to blind vendors, as
required by federal law, in running lucrative vending machine
operations in rest areas along federally funded interstate
highways. New Hampshire gave others those concessions by contract
in exchange for a percentage of the proceeds, which the state put
into the state treasury. The district court characterized the
state's actions as "stealing from the blind."
Several major issues are presented in this complex and
difficult case. The threshold issue is whether New Hampshire, in
light of its Eleventh Amendment immunity, may be subject to either
the compensatory damages award or prospective equitable relief in
a federal forum. The district court found the state waived any
immunity it may have had by its litigation conduct. We hold that
the district court had jurisdiction to affirm an award of
prospective equitable relief because the state waived any immunity
to such relief in a federal forum (a) by its litigation conduct and
(b) by judicial estoppel and its participation in the program
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established by the Randolph-Sheppard Act (R-S Act), 20 U.S.C. § 107
et seq. Having determined that Eleventh Amendment immunity
presents no bar to prospective equitable relief here, we affirm
such relief on the merits, finding that the state has not given
proper "priority" to blind vendors as required by federal law and
that a conflicting state statute is preempted.
Our view of the state's Eleventh Amendment immunity from
damages is different. We hold that the state has not waived
immunity from damages by its litigation conduct; we also conclude
that § 111(b) of the Surface Transportation Assistance Act (STA
Act),1 23 U.S.C. §§ 101 et seq., under which the Blind Vendors seek
relief, does not clearly evidence an intent to subject states to
such damages. We vacate the damages award and order dismissal of
those claims.
I.
This case is shaped by two federal statutes. The first
is the Randolph-Sheppard Act, under which the federal government,
in partnership with consenting states, seeks to provide economic
opportunities to the blind by granting priority to licensed blind
vendors in contracts to operate vending facilities on federal
property. 20 U.S.C. § 107(a)-(b). The Act, which was first
1
The STA Act was later renamed the Transportation Equity
Act for the 21st Century. Pub. L. No. 105-178, 112 Stat. 107
(1998). The parties and papers in this case refer to the Act by
both names, but for clarity and convenience, this opinion will
refer to the Act as the STA Act.
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enacted in 1936, Pub. L. No. 74-732, 49 Stat. 1559 (1936), provides
that:
In authorizing the operation of vending facilities on
Federal property, priority shall be given to blind
persons licensed by a State agency as provided in this
chapter; and the Secretary, through the Commissioner,
shall, after consultation with the Administrator of
General Services and other heads of departments,
agencies, or instrumentalities of the United States in
control of the maintenance, operation, and protection of
Federal property, prescribe regulations designed to
assure that--
(1) the priority under this subsection is given to
such licensed blind persons (including assignment
of vending machine income pursuant to section 107d-
3 of this title to achieve and protect such
priority), and
(2) wherever feasible, one or more vending
facilities are established on all Federal property
to the extent that any such facility or facilities
would not adversely affect the interests of the
United States.
20 U.S.C. § 107(b).
Under the R-S Act, participating states, such as New
Hampshire, can gain access to federal property to benefit their own
blind vendors by having state agencies apply to the United States
Department of Education to participate in and administer the
program. 20 U.S.C. § 107b. In their applications, those state
agencies must agree to set up licensing programs for blind vendors,
match them with available contracts for vending facilities on
federal property, and provide them with equipment and stock. Id.
Once approved, those agencies are known as "state licensing
agencies" (SLAs). New Hampshire's SLA is the New Hampshire
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Department of Education, Division of Vocational Rehabilitation,
Bureau of Blind Services.
We quote a succinct description of the operation of the
R-S Act set forth by a sister circuit:
The Randolph-Sheppard Act was enacted in order to
provide employment opportunities for the blind. The Act
grants priority to those blind persons who desire to
operate vending facilities on federal property. 20
U.S.C. § 107(b). The Act divides responsibility for the
blind vendor program between the state and federal
agencies. The Secretary of Education is responsible for
interpreting and enforcing the Act's provisions, and more
specifically, for designating state licensing agencies.
20 U.S.C. §§ 107a(a)(5), 107b; 34 C.F.R. §§ 395.5, 395.8.
A person seeking a position as a blind vendor applies to
the designated state agency and is licensed by that
agency. The state agency in turn applies to the federal
government for the placement of the licensee on federal
property. 20 U.S.C. § 107b. Once the state and the
federal government have agreed on an appropriate location
for the vending facility, the state licensing agency is
responsible for equipping the facility and furnishing the
initial stock and inventory. 20 U.S.C. § 107b(2). The
blind vendor thereafter operates as a sole proprietor who
is entitled to the profits of the vending facility and
who is responsible for the facility's losses.
The Act requires that if the state licensing agency
operates vending machines that directly compete with a
vending facility operated by a blind vendor, then a
percentage of the income from such competing machines
must be given to the blind vendor licensed to do business
on that property. 20 U.S.C. § 107d-3. If no licensee is
operating a facility on the property, the income from
state-operated vending machines is used for a variety of
purposes that benefit all blind vendors in the state
program. 20 U.S.C. 107d-3(c).
Tenn. Dep't of Human Servs. v. United States Dep't of Educ., 979
F.2d 1162, 1163-64 (6th Cir. 1992).
States' participation in the program is voluntary.
States choose whether they wish to have their agencies apply to
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administer the program under the R-S Act and take on the
corresponding obligations. See 20 U.S.C. § 107b. The principal
benefit that a state receives for participating in the program is
an opportunity to improve the lot of its blind population. A
participating state also receives funds. For example, even if no
blind vendor operates vending facilities on a particular federal
property, the relevant SLA receives income from vending machines on
that property; these proceeds can be used to fund retirement,
health insurance, sick leave, and vacation time for blind vendors
and to defray various costs associated with running the program.
20 U.S.C. §§ 107d-3(a), (c).
SLAs also agree to a three-step process ("R-S grievance
procedures") for dealing with blind licensees who are dissatisfied
with the operation of the vending program: first, a hearing at the
state level before the SLA; then, an opportunity to appeal in an
arbitration before a USDOE panel; and finally, judicial review of
the arbitration panel's decision in the federal courts under the
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Administrative Procedure Act (APA), 5 U.S.C. § 701.2 At the first
stage, the SLA agrees:
to provide to any blind licensee dissatisfied with any
action arising from the operation or administration of
the vending facility program an opportunity for a fair
hearing, and . . . to submit the grievances of any blind
licensee not otherwise resolved by such hearing to
arbitration [before the USDOE].
20 U.S.C. § 107b(6). After the hearing before the SLA, a
dissatisfied blind licensee may go to arbitration before a panel
convened by the federal Secretary of Education, under 20 U.S.C. §
107d-2(b)(1). The procedures used by the panel are governed by the
APA, 5 U.S.C. § 551 et seq. 20 U.S.C. § 107d-2(a). The decision
of the panel is "subject to appeal and review as a final agency
action" under the APA, 5 U.S.C. § 701, in a federal district court.
20 U.S.C. § 107d-2(a).
2
We quote again from Tenn. Dep't of Human Servs.:
In order to resolve disputes arising under the Act, both
administrative and judicial remedies are available for
licensed blind vendors. The Secretary of Education may
decertify a state licensing agency that refuses to
cooperate with the Secretary. 34 C.F.R. § 395.17. In
all other situations, the Secretary must rely on a blind
vendor to file a complaint in order to enforce the Act's
substantive provisions. If a blind vendor has a
complaint regarding the state's operation of the program,
he or she may request an evidentiary hearing before the
state licensing agency and, if dissatisfied with the
outcome of the hearing, may ask the Secretary to convene
an arbitration panel to resolve the dispute. 20 U.S.C.
§§ 107d-1(a), 107d-2(b)(1). An arbitration panel's
decision is subject to review as a final agency action.
20 U.S.C. § 107d-1(a).
979 F.2d at 1164.
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The R-S Act says nothing about what relief can be granted
at any of the three levels when the grievance is initiated by a
blind licensee, as here. It does specify, however, the relief that
can be granted when the grievance is initiated by an SLA.3 SLAs
may file complaints that a federal agency is violating the Act. 20
U.S.C. § 107d-1(b). In that situation, upon a finding by the panel
that "acts or practices of any such . . . agency are in violation
of [the R-S] Act, or any regulation issued thereunder," the head of
the offending agency "shall cause such acts or practices to be
terminated promptly and shall take such other action as may be
necessary to carry out the decision of the panel." 20 U.S.C. §
107d-2(b)(2). The statute does not expressly authorize the award
of damages.
The other federal statute involved is the Surface
Transportation Assistance Act. The STA Act seeks to increase
construction and safety on the interstate and national highway
systems. 23 U.S.C. §§ 101(b), 103. Most states receive large
amounts of federal funding under the Act; New Hampshire received
3
As one court has noted, § 107d-1 of the R-S Act
sets out a dual scheme of remedies. Subsection (a) gives the
blind licensee a direct action against the state licensing
agency. Subsection (b), however, gives the blind licensee
nothing; rather, it gives the state agency authority to bring
a complaint against a federal entity controlling property on
which vending facilities are located.
Ga. Dep't of Human Res. v. Nash, 915 F.2d 1482, 1490 (11th Cir.
1990).
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about $141 million in 2002. See U.S. Census Bureau, Federal Aid to
States for Fiscal Year 2002, at 17 tbl. 1 (2003).
Under the STA Act, a state cannot accept federal highway
funds without entering into an agreement with the Secretary of
Transportation. 23 U.S.C. §§ 106, 110. Included in such an
agreement is the promise to comply with the terms and conditions
set forth in Title 23. 23 C.F.R. § 630.112(a). Title 23, in turn,
sets forth a priority system for vending machines. Historically,
under the STA Act, states accepting federal aid for construction
projects on the interstate system had to agree not to construct
"commercial establishments for serving motor vehicle users" along
the rights-of-way of the interstate system. 23 U.S.C. § 111(a).
In 1983, Congress amended the Act to add 23 U.S.C. § 111(b), which
creates an exception to this general prohibition and sets forth a
priority system for vending machines:
[A]ny State may permit the placement of vending machines
in rest and recreation areas, and in safety rest areas,
constructed or located on rights-of-way of the Interstate
System in such State. Such vending machines may only
dispense such food, drink, and other articles as the
State transportation department determines are
appropriate and desirable. Such vending machines may
only be operated by the State. In permitting the
placement of vending machines, the State shall give
priority to vending machines which are operated through
the State licensing agency designated pursuant to section
2(a)(5) of the Act of June 20, 1936, commonly known as
the 'Randolph-Sheppard Act' (20 U.S.C. 107a(a)(5)). The
costs of installation, operation, and maintenance of
vending machines shall not be eligible for Federal
assistance under this title.
§ 111(b); Pub. L. No. 97-424, 96 Stat. 2097, 2106 (1983).
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The STA Act, however, does not expressly state how
disputes concerning the "priority" created in § 111(b) should be
resolved. In general, authority to enforce the STA Act has been
delegated to the United States Department of Transportation (DOT),
see 23 U.S.C. § 315, whose regulations state:
If the [Federal Highway] Administrator determines that a
State has violated or failed to comply with the Federal
laws or the regulations in this part with respect to a
project, he may withhold payment to the State of Federal
funds on account of such project, withhold approval of
further projects in the State, and take such other action
that he deems appropriate under the circumstances, until
compliance or remedial action has been accomplished by
the State to the satisfaction of the Administrator.
23 C.F.R. § 1.36. Some provisions of the STA Act contain more
specific enforcement procedures, see, e.g., 23 U.S.C. §§ 116(c),
131(b), 133(e), but § 111 does not. The STA Act does not contain
a general suit mechanism or a provision requiring states to waive
sovereign immunity.
In 1985, two years after the STA Act was amended to add
§ 111(b), New Hampshire passed legislation to place vending
machines in rest areas along state turnpikes and the interstate
highway system. N.H. Rev. Stat. Ann. §§ 230:30-a, 229:3. The New
Hampshire Department of Administrative Services (NHDAS) was put in
charge of administering the vending contracts. NHDAS selected
vendors through a competitive bidding process open to all. See
N.H. Rev. Stat. Ann. § 21-I:11; N.H. Code Admin. R. Adm. 603.06.
Its policy was generally to award the contract to the bidder
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"offering the highest rate of return to the State of New
Hampshire," as long as that bidder satisfied basic requirements
like the ability to meet the contract specifications and to post a
performance bond. If two or more of the high bids were identical,
the contract would generally be awarded by "drawn lot." The
exception to this general rule was that if one of the high bidders
was the Bureau of Blind Services (the New Hampshire SLA), the
contract would be awarded to the Bureau (the Tie Rule).
Since the passage of N.H. Rev. Stat. Ann. § 230:30-a,
NHDAS has invited bids for vending machine contracts on five
occasions for rest areas along rights-of-way of the interstate
highway system: (1) in 1988 for rest areas in Hooksett on I-93; (2)
in 1991 for rest areas in Seabrook on I-95, Salem on I-93, and
Springfield on I-89; (3) in 1997 for rest areas in Lebanon on I-89,
Canterbury on I-93, Sanbornton on I-93, and Sutton on I-89; (4) in
1999 for those same rest areas when the 1997 contract had expired;
and (5) in 2001 for the same Hooksett rest areas. All of the rest
areas in question are owned by the state of New Hampshire. The
Hooksett rest areas are on toll roads and have been constructed and
maintained without federal aid. The Seabrook rest areas were
constructed with federal aid, but are on the state turnpike system
and are maintained through state funds. In the first four bid
opportunities, NHDAS followed its standard procedure as described
above. The SLA did not bid on the 1988 and 1991 contracts,
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apparently because both contracts contained specifications
requiring the construction of shelters to house the vending
machines and the SLA is precluded from making capital expenditures
under state law. The Bureau did bid on the 1997 and 1999 contracts
but lost to higher bidders in both instances. In 2001, after this
litigation had begun, NHDAS departed from its standard policy.
Instead of asking the SLA to submit a bid as the other contractors
did, NHDAS had the other contractors bid first and then offered the
Bureau the contract on the same terms as the high bid (the Match
Rule). After consulting with the New Hampshire Committee of Blind
Vendors, the SLA turned down the offer, stating that it preferred
to await clarification of its priority right in this action.
II.
A. First Federal Court Action
On January 6, 1998, the Blind Vendors4 brought suit under
28 U.S.C. § 1331, alleging that the state had violated the STA Act,
23 U.S.C. § 111(b), by awarding vending contracts without giving
priority to machines operated through the SLA. The named defendant
was the state of New Hampshire, through its Department of
Administrative Services. The complaint sought an injunction
voiding all existing vending machine contracts and requiring the
4
At this stage, the suit was brought only by the New
Hampshire Committee of Blind Vendors; the nine individual members
had not yet joined. For clarity and convenience, however, we refer
to the Committee alone as the Blind Vendors.
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state to grant the right to operate those vending machines to
licensed blind vendors, along with "such other relief as is
equitable and just." The complaint did not seek damages for the
alleged prior violations.
The state defendant moved to dismiss on the ground that
the court lacked subject matter jurisdiction because the Blind
Vendors had "failed to exhaust" their administrative remedies
before filing their judicial action, as required by 20 U.S.C. §
107d-1 of the R-S Act. The motion also stated that "[i]f the court
does not dismiss this action, this court should abstain from
accepting jurisdiction over this action," citing Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800 (1976).
The state said that the Blind Vendors had simultaneously filed an
action in the New Hampshire state courts and that the federal court
should defer to the state court. As best we can tell, the state
court action also invoked the STA Act and sought damages.
The state's motion in federal court did not seek to
dismiss the action based on Eleventh Amendment immunity. Nor did
it seek dismissal on the ground that the state was not a proper
party or that no cause of action was stated.
In the supporting memorandum, the state also did not
argue that the case was barred by the Eleventh Amendment. The
state did argue that the Blind Vendors' claim arose under the R-S
Act because § 111(b) of the STA Act incorporated the R-S Act by
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referring to a priority for vending machines operated through "the
State licensing agency designated pursuant to" the R-S Act. The
state contended that R-S grievance procedures were available and
had to be exhausted. Inherent in its argument was the assertion
that a claim under the STA Act could not be brought before the
exhaustion of grievance procedures under the R-S Act. The state
qualified this argument in a footnote, stating that
Defendant does not agree that the Randolph-Sheppard Act
in general applies to the facts of this case nor that, to
the extent that it does apply, that it gives Petitioner
the rights claimed. However, for purposes of this Motion
to Dismiss only, it is assumed that Petitioner's
allegation that the Randolph-Sheppard Act applies will be
accepted as true.
In support of the abstention request, should the court
not dismiss the action, the state argued that the entire dispute
(both damages and injunctive relief) would be more readily resolved
in the pending state court action, noting:
Plaintiff's state and federal suits were filed
essentially at the same time and both are at very early
stages. Thus, the forums' order of jurisdiction is not
a factor. Finally, the parallel state-court proceeding
would be the better vehicle for the complete and prompt
resolution of the issues between the parties. See
Elmendorf, 48 F.2d at 50. Part of the relief which the
Plaintiff seeks is termination of contractual rights
between the State and third parties. The State has not
and does not waive its immunity to suit in federal court
under the Eleventh Amendment of the United States
Constitution in regards to suits involving contractual
rights. Therefore, only in the state court action can
all of the issues raised by this pleading be addressed.
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(emphasis added). Thus, the state conceded that even if the claim
could not go forward in federal court, the state court proceeding
could go forward.
The Blind Vendors opposed the motion to dismiss, arguing,
inter alia, that their claims arose under the STA Act rather than
the R-S Act, that R-S grievance procedures therefore did not apply,
and that the STA Act itself had no grievance procedures to be
exhausted. The Blind Vendors also argued that abstention was
improper, as they sought only prospective injunctive relief, while
the state court action did not seek any equitable relief.5 The
state did not file a reply.
The federal court issued an order and judgment on March
17, 1998, dismissing the complaint without prejudice, finding that
the Blind Vendors had failed to exhaust administrative remedies.
The court accepted the state's argument that the STA Act
incorporated the R-S Act's administrative procedures, and relied
principally on the statutory text of the R-S Act, which states that
R-S grievance procedures apply to "[a]ny blind licensee who is
dissatisfied with any action arising from the operation or
administration of the vending facility program." 20 U.S.C. § 107d-
1(a) (emphasis added). The court found that the term "vending
facility program" included the program under § 111(b) of the STA
5
The Blind Vendors noted that the state was free to ask
that any damages claim in state court be combined with the
equitable claim in federal court, if it wanted all issues combined.
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Act. The court also addressed in a footnote what it understood to
be the state's reference to the Eleventh Amendment:
Parenthetically, the court notes that the State also
claims that the Eleventh Amendment precludes any award of
monetary damages. At a minimum, that issue is open to
debate.
B. State Administrative Hearing
By letter dated March 30, 1998, the Blind Vendors6
requested a state administrative hearing before the SLA under the
first stage of R-S grievance procedures. The Blind Vendors sought
injunctive relief, "challeng[ing] the right of the State to grant
any vending contracts on Interstate Highways to anyone but licensed
blind vendors, unless blind vendors consent to another
arrangement." Significantly, the Blind Vendors also, for the first
time pertinent to the case before us, sought money damages in the
form of commissions paid to the state since the inception of the
STA Act as well as for lost profits. New Hampshire does not claim
that it asserted Eleventh Amendment immunity before the state
Hearing Officer, and our review of the record reveals no such claim
of immunity. (Of course, this was a state administrative
proceeding, albeit one required under a federal statute in an
agreement with the state.) Instead, the state moved to dismiss the
proceedings before the SLA on the basis that:
6
At this point, the Committee was joined by nine of its
individual members.
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(1) the rest areas at issue are on state, not federal,
property and so are not subject to the R-S Act;
(2) the plaintiffs' claims arise under provisions of the R-S
Act that are not incorporated into the STA Act;
(3) any priority required by 20 U.S.C. § 111 has in fact been
provided;
(4) even assuming the plaintiffs had any rights under the R-S
Act, the statute does not authorize the state Hearing Officer
to terminate an existing concession agreement or to award
relief.
The state Hearing Officer granted the state's motion to
dismiss on July 3, 1998, saying:
Because the State has presented credible and unrebutted
evidence that the 'rest areas' in issue are located on
State land, and because the Federal statutes [i.e., the
R-S Act and STA Act] can reasonably be read [to] require
the requested State agency 'priority' apply only to
accommodate such an application to a vending machine rest
area on 'Federal' land, there is no factual issue that
will reasonably permit the Committee of Blind Vendors to
prevail on these facts. Therefore, the matter is
dismissed.7
The Blind Vendors moved for reconsideration. They did not dispute
that the R-S Act applies only to federal land, but argued that §
111(b), unlike the R-S Act, clearly applies to rest areas on both
state and federal land. The state responded by arguing that if the
R-S Act does not apply to these rest areas, the Hearing Officer had
no jurisdiction to issue relief. The Hearing Officer denied the
7
The Hearing Officer's ruling that § 111(b) applies only
on federal land is puzzling. The state never contested that §
111(b) applied to state-owned rest areas; it argued only that the
R-S Act did not apply to such rest areas and that the priority
required by § 111(b) was provided here.
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motion on July 23, 1998, reiterating its position that neither §
111(b) nor the R-S Act applies to state-owned land.
C. Proceedings Before Federal Arbitration Panel
In October 1998, the Blind Vendors appealed the state
Hearing Officer's decision, as authorized under 20 U.S.C. § 107d-
1(a), by filing a letter of complaint with the federal Secretary of
Education against the SLA. In the letter, the Blind Vendors sought
(1) recognition that the priority provisions of § 111(b) apply to
state-owned rest areas off of the interstate highway system, (2)
recognition that New Hampshire's competitive bidding process under
N.H. Rev. Stat. Ann. § 230:30-a violates § 111(b) by failing to
provide priority, (3) permission to interfere with existing
contracts to provide blind vendors a priority to operate vending
machines at New Hampshire rest areas, and (4) money damages in the
form of all commissions paid to the state since the inception of
the STA Act, as well as lost profits. The Secretary, as required
by 20 U.S.C. § 107d-2(a), convened an arbitration panel to hear the
case.
By letter dated October 28, 1998, the state8 moved to
dismiss for lack of jurisdiction, but not on Eleventh Amendment
grounds. The state argued principally that R-S grievance
8
At this stage, the SLA, rather than the state itself, was
the respondent, but we refer to the SLA as "the state" for clarity
and convenience.
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procedures did not apply to the Blind Vendors' complaint because
the claims arose under the STA Act, not the R-S Act.
Later, sometime between January and March of 2000, the
state filed an undated memorandum that included a challenge to the
panel's jurisdiction on the ground that "[a]bsent a clear intent of
the Congress to waive a State's sovereign immunity under the
Eleventh Amendment, the Constitution does not provide for federal
jurisdiction over disputes against states by federal court or by
extension a federally appointed arbitration panel." Because the
STA Act expressed no such intent, the state argued, there was no
jurisdiction.
This argument that no relief was available in a federal
forum was raised more than two years into the controversy. This
marks the first occasion that we have found in which the state
argued that the Eleventh Amendment precluded application of the STA
Act or the R-S Act to grant any form of relief. The state's
memorandum cited Kimel v. Fla. Bd. of Regents, 528 U.S. 62 (2000),
which was decided on January 11, 2000. Perhaps reading Kimel is
what prompted the state to assert Eleventh Amendment immunity for
the first time. We note, though, that as far back as 1973, the
state of New Hampshire has raised the issue of Eleventh Amendment
immunity from suit under federal statutes. See Carver v. Hooker,
369 F. Supp. 204, 216 (D.N.H. 1973) (discussing Eleventh Amendment
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immunity of state official from suit under 42 U.S.C. § 1983 and
other federal statutes).
The Blind Vendors also filed a memorandum on jurisdiction
on March 3, 2000. It is unclear whether this memorandum was filed
in reply to or simultaneously with the state's memorandum. In any
event, the Blind Vendors' memorandum did not respond to the new
Eleventh Amendment argument.
At a hearing before the arbitration panel on March 10,
during which the parties engaged in extensive oral argument, the
state made no mention of Eleventh Amendment immunity. Nor did the
state mention Eleventh Amendment immunity in the requested rulings
of law that it submitted to the arbitration panel.
On June 12, 2000, the arbitration panel rejected the
state's jurisdictional challenge, finding that Congress intended R-
S grievance procedures to apply to disputes over priority under §
111(b). The panel made no mention of the state's Eleventh
Amendment argument. There was a dissenting opinion, which argued
that the complaint should be dismissed because the STA Act does not
employ R-S grievance procedures; that opinion did not address the
Eleventh Amendment issue either. The state did not press its
Eleventh Amendment argument, nor did it go to federal court to
enjoin the R-S grievance procedures on Eleventh Amendment grounds.
In a separate order issued on July 11, 2001, the panel
ruled against the state on the merits. The most pertinent of the
-21-
panel's rulings of law and findings of fact can be found in the
appendix to this opinion. Principally, the panel held that the
priority provisions of § 111(b) required that SLAs be given a
"right of first refusal." The panel found that this meant that the
SLA had to "receive an opportunity to operate vending machines
before any private vendor is even pursued" (emphasis original), and
that the SLA "must waive its right to a priority in writing before
[the state] approaches any other entity." It held that N.H. Rev.
Stat. Ann. § 230:30-a, which it found to adopt a conflicting
priority policy, was preempted.
The panel also awarded what it termed "prospective[]"
damages in the amount of all commissions received from the disputed
rest areas after October 28, 1998 (when the panel determined that
the Blind Vendors had filed their complaint with the USDOE) and
ordered that these amounts be paid to the SLA for appropriate uses
to benefit blind vendors. The panel denied the Blind Vendors'
claim for attorneys' fees.
III.
On September 13, 2001, the New Hampshire Department of
Education, NHDAS, the New Hampshire Department of Transportation,
and the State Treasurer filed two suits in federal district court
against the USDOE and the Blind Vendors, seeking review of the
-22-
panel decision under 20 U.S.C. § 107d-2(a).9 The Blind Vendors
filed counterclaims in both suits, seeking confirmation and
enforcement of the panel's decision, an award of attorneys' fees,
and a modification to the panel's damages award to calculate
damages from 1985, when N.H. Rev. Stat. Ann. § 230:30-a was
enacted, or in the alternative, from January 6, 1998, when the
Blind Vendors had first brought suit. The two suits were
consolidated with the assent of the state agencies. On motion of
the Blind Vendors, and over the objection of the state agencies,
the district court then dismissed all of the state agencies except
for the state Department of Education, on the ground that the
agencies, as members of the executive branch, were barred from
taking positions independent or contrary to one another.
In response, the state Department of Education, now the
only remaining state agency in the case, moved to substitute the
state of New Hampshire as the real party in interest. New
Hampshire supported the motion, asserting that it was the "proper
real party in interest." The state does not now and has never
argued that it is not a properly named party. Nor has it ever
argued that state officers, not state agencies, were the only
proper parties before the court or that prospective equitable
relief could be awarded only against state officers.
9
One suit was brought by the New Hampshire Department of
Education, while the other was brought by NHDAS, the New Hampshire
Department of Transportation, and the State Treasurer.
-23-
Both sides filed cross-motions for summary judgment. The
state asserted Eleventh Amendment immunity against both the
arbitration panel proceeding and any suit in federal court or
elsewhere based on 23 U.S.C. § 111(b). On the merits, the state
further argued that N.H. Rev. Stat. Ann. § 230:30-a is not
preempted because the NHDAS policy is consistent with the
"priority" required by § 111(b). Finally, the state argued that
the damages calculation should have excluded commissions from rest
areas where the SLA could not meet the necessary contract
specifications and should be further reduced to account for the
capital and maintenance costs incurred by the state to build
vending machine shelters.10 The state abandoned a number of
arguments it had made earlier.
The Blind Vendors contended that the state waived its
Eleventh Amendment immunity by participating in the program
established by the R-S Act and by appealing the arbitration panel's
decision to federal court. They further argued that the panel's
interpretation of "priority" under § 111(b) was proper, based on
10
In addition, the state argued that 23 U.S.C. § 111(b)
violates the equal protection guarantees of the Fifth and
Fourteenth Amendments because, the state said, there is no rational
basis for granting priority to blind vendors. The state further
argued that the damages award exceeded the arbitration panel's
statutory authority because the rest areas were all on state-owned
land and at least one rest area had been built and maintained
entirely with state funds. The district court rejected both
arguments, and the state has raised neither on appeal, so we do not
address them.
-24-
similar use of the term "priority" in the R-S Act. Finally, they
argued that the arbitration panel did not award them sufficient
damages: the amount of damages should have been calculated from
January 6, 1998 rather than October 28, 1998.
The district court granted in part and denied in part
both motions for summary judgment. The court largely affirmed the
arbitration panel's order, modifying only the amount of the damages
awarded. The court held that the state had waived its Eleventh
Amendment immunity by its litigation conduct, due to (a) the
state's failure to raise its Eleventh Amendment immunity in the
1998 federal court litigation and in the initial stages of the
administrative process, (b) the state's argument in its 1998 motion
to dismiss that R-S grievance procedures should apply, and (c) the
state's invocation of federal jurisdiction to review the
arbitration panel's order. Proceeding to the merits, the court
concluded that the arbitration panel's construction of "priority"
in § 111(b) was entitled to deference, see Chevron, U.S.A., Inc. v.
Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984), and that
the panel's construction was a reasonable one within the scope of
its discretion. Finally, the court modified the damages award,
reducing it to compensate the state for the capital and maintenance
costs of building vending machine shelters at several rest areas
and moving the start date for damages from October 28, 1998 to
-25-
March 30, 1998, the date on which the Blind Vendors first requested
a state administrative hearing. The state timely appealed.
IV.
The state argues that the Eleventh Amendment bars "the
USDOE Arbitration Panel proceeding, any suit for damages in federal
court and any suit in state court based on the STA [Act]."
A state's immunity under the Eleventh Amendment applies
whether a private plaintiff's suit is for monetary damages or some
other type of relief. Seminole Tribe v. Fla., 517 U.S. 44, 58
(1996). "Sovereign immunity does not merely constitute a defense
to monetary liability or even to all types of liability. Rather it
provides an immunity from suit." Fed. Mar. Comm'n v. S.C. State
Ports Auth.,
535 U.S. 743, 766 (2002).
The state asserts Eleventh Amendment immunity from both
the arbitration panel proceedings and the federal court action.
See generally id.; R.I. Dep't of Envtl. Mgmt. v. United States, 304
F.3d 31 (1st Cir. 2002). It also asserts that it is beyond
Congress's power to subject it to suit in any forum. See generally
Kimel, 528 U.S. at 74-91; Alden v. Maine,
527 U.S. 706 (1999). The
issue is whether the state has waived any immunity that it may
have. Our review as to this issue is de novo. Arecibo Cmty.
Health Care, Inc. v. Puerto Rico,
270 F.3d 17, 22 (1st Cir. 2001).
A state can waive its Eleventh Amendment immunity to suit
in three ways: (1) by a clear declaration that it intends to submit
-26-
itself to the jurisdiction of a federal court or administrative
proceeding, Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ.
Expense Bd., 527 U.S. 666, 676 (1999); Great N. Life Ins. Co. v.
Read,
322 U.S. 47, 54 (1944); (2) by consent to or participation in
a federal program for which waiver of immunity is an express
condition, Atascadero State Hosp. v. Scanlon,
473 U.S. 234, 246-47
(1985); or (3) by affirmative conduct in litigation, Lapides v. Bd.
of Regents,
535 U.S. 613, 620 (2002); Gardner v. New Jersey,
329
U.S. 565, 574 (1947).
The state here invokes two independent aspects of
immunity from suit: immunity from suit in a federal forum (judicial
or administrative) and substantive immunity from liability. See
Jonathan R. Siegel, Waivers of State Sovereign Immunity and the
Ideology of the Eleventh Amendment, 52 Duke L.J. 1167, 1192-93
(2003); Carlos Manuel Vazquez, What Is Eleventh Amendment
Immunity?, 106 Yale L.J. 1683, 1697-98 (1997). In fact, this case
involves two different aspects of a state's substantive liability
immunity from suits by private persons: immunity from damages and
immunity from prospective equitable relief. Certainly, a state may
waive its immunity from substantive liability without waiving its
immunity from suit in a federal forum. See Coll. Sav. Bank, 527
U.S. at 676;
Atascadero, 473 U.S. at 241. The Supreme Court thus
far has not addressed whether a state may waive federal forum
-27-
immunity without waiving substantive liability immunity under the
Eleventh Amendment. We assume arguendo that a state may do so.
A. Waiver of Eleventh Amendment Immunity Against Suit for
Prospective Equitable Relief
1. Waiver by Litigation Conduct
The state argues that no prospective equitable relief may
be granted at all in either state or federal court against it for
violations of the federal statutes at issue. The state certainly
never argued to the district court in 1998 that such relief was not
available or that the Eleventh Amendment barred suit or any relief
against it.
We conclude that the state has waived by its litigation
conduct any Eleventh Amendment immunity that it may have from
federal proceedings (forum immunity) and from prospective equitable
relief (substantive liability immunity).11 When the state moved in
1998 to dismiss the federal court action, it did not assert that
Congress lacked the power or intent to submit the state to federal
jurisdiction under the STA Act or the R-S Act for prospective
equitable relief. When the state mentioned the Eleventh Amendment,
it was only to say that there would be no Eleventh Amendment issues
as to claims in a state court proceeding in which damages were
11
The state does not contend that its counsel lacked
authority under state law to waive immunity. That consideration
has not survived Lapides in cases such as this, where a state
voluntarily invokes federal jurisdiction. See Lapides v. Bd. of
Regents, 535 U.S. 613, 621-22 (2002).
-28-
sought. The fact that the state focused only on Eleventh Amendment
immunity to damages and simultaneously agreed to a federal
administrative forum reinforces our view that the state by its
conduct has waived its current objection to prospective equitable
relief in a federal forum. This case goes well beyond a simple
matter of failure to raise an immunity argument in earlier
proceedings.
The concept of waiver by litigation conduct is related to
the doctrine of judicial estoppel. Here, the state's failure to
raise Eleventh Amendment immunity was accompanied by an affirmative
assertion that the STA Act incorporates R-S grievance procedures
(with its concomitant process of judicial review) and that those
procedures must be exhausted before claims could be pursued under
the STA Act.12 The plaintiffs did not assert that the R-S Act
applied; it was the state that made that argument, and the state
is, as a result, judicially estopped. See Cadle Co. v.
Schlictmann, Conway, Crowley & Hugo, 338 F.3d 19, 22 (1st Cir.
2003); Beddall v. State Street Bank and Trust Co.,
137 F.3d 12, 23
(1st Cir. 1998). The state then acted consistently with its
assertion, participated in the grievance procedures, and in doing
so advantaged itself to the detriment of the Blind Vendors. The
12
It is true that in the 1998 federal court filing seeking
dismissal on exhaustion grounds, the state defendants reserved the
question whether the facts of the case brought it within the
statutory reach of the R-S Act. That is a very different argument.
-29-
district court relied on the position articulated by the state in
dismissing the Blind Vendors' initial federal court action in March
of 1998.
Attempting now to be excused, the state argues that in
1998 it never suggested to the federal court that the STA Act
incorporated the R-S Act procedures and that the action must be
dismissed for failure to exhaust. Based on a footnote in its
memorandum to the district court in 1998, the state says that its
argument was, at most, that if plaintiffs were basing their claim
on rights under the R-S Act, then R-S grievance procedures applied.
That argument mischaracterizes the content of its papers.
The state's argument is disingenuous: if the STA Act did
not incorporate R-S grievance procedures and those procedures
therefore did not apply to the case, then there was no basis for
the state's motion to dismiss on exhaustion grounds. Moreover, in
response to the state's 1998 motion to dismiss, the Blind Vendors
had argued that their claim was not based on the R-S Act at all,
but only on the STA Act, and no exhaustion was required. The state
did not withdraw or alter its position, and the district court then
dismissed the claims based on the state's position.
Having gained an advantage by obtaining the dismissal,
the state did not seek to clarify its position with the district
court, but rather took advantage of the dismissal. By invoking R-S
grievance procedures (knowing that those procedures ultimately
-30-
provided for federal judicial review) to obtain dismissal of a
claim for injunctive relief, and then participating in the
administrative process, the state has waived any immunity it may
have to a federal forum and prospective equitable relief.
In essence, the state voluntarily invoked the
jurisdiction of a federal agency, the USDOE, and the federal courts
in review of the agency determination, including their power to
grant prospective equitable relief, even though it was not formally
the plaintiff in the administrative proceeding. The state
voluntarily put itself in the position of being a party in a
federal administrative forum whose actions would be reviewed in
federal court. The state's actions expressed a clear choice to
submit its rights for adjudication in the federal courts.13 To
permit the state to reverse course would contravene the reasons for
the doctrine of waiver by litigation conduct recognized by Lapides
and Lapides's core concern that a state cannot selectively invoke
its Eleventh Amendment immunity to gain litigation advantage.
See Lapides, 535 U.S. at 622-23; see also
Gardner, 329 U.S. at 573-
74; Wis. Dep't of Corr. v. Schacht,
524 U.S. 381, 393 (1998)
13
We note that the state is nominally the party in federal
court by its own choice to substitute itself as the party
defendant. See Gunter v. Atl. Coast Line R.R. Co., 200 U.S. 273,
284-87 (1906) (state voluntarily submitted to the jurisdiction of
the federal courts when Attorney General appeared "for and on
behalf of the State" in an earlier, related action brought against
state officers and not against the state itself).
-31-
(Kennedy, J., concurring). The same concerns about unfair
litigation advantage underlie the judicial estoppel doctrine.
When the federal court dismissed the action on exhaustion
grounds, the Blind Vendors immediately instituted the first step of
R-S Act grievance procedures by requesting a hearing before the
SLA. The state even then did not "clarify" its argument; rather,
it defended on the merits, and never mentioned the Eleventh
Amendment. It is true that the state finally, more than two years
into this matter in early 2000, did raise Eleventh Amendment
immunity before the USDOE panel, citing Kimel. But even then, the
issue was raised almost in passing -- in one paragraph at the end
of a memorandum concerned mostly with other issues -- and was not
mentioned in oral argument or in the state's requested conclusions
of law.14
The state relies on the doctrine that an "Eleventh
Amendment defense sufficiently partakes of the nature of a
jurisdictional bar" that it may be raised on appeal even if not
raised in the trial court. Edelman v. Jordan, 415 U.S. 651, 678
(1974). The scope of that "belated-raising" doctrine after Lapides
is unclear.15 Regardless, the state is wrong in arguing that the
14
In fairness, we note that Alden v. Maine was decided in
1999, and Federal Maritime Commission v. South Carolina State Ports
Authority was not decided until 2002.
15
The doctrine was articulated in Ford Motor Co. v. Dep't
of Treasury of Ind., 323 U.S. 459, 467 (1945), which Lapides
expressly overruled. See
Lapides, 535 U.S. at 623.
-32-
"belated-raising" doctrine undercuts the waiver doctrine. The
doctrine that a state may waive its immunity by its litigation
conduct has been alive and well both before and after Edelman. See
Lapides, 535 U.S. at 618-24; Gunter v. Atl. Coast Line R.R. Co.,
200 U.S. 273, 284 (1906). To be clear, this case involves more
than a simple failure by the state to raise Eleventh Amendment
immunity in earlier proceedings; it involves a voluntary and
calculated choice by the state to gain the advantage of dismissal
of the 1998 federal action for injunctive relief by arguing that
the remedies and grievance procedures of the R-S Act applied to
claims under the STA Act and that those procedures had to be
exhausted.16 The state then entered those R-S Act procedures
without a whimper of protest. As to the Blind Vendors' claims for
prospective equitable relief in a federal forum, the state, having
16
There may be another possible basis for finding waiver of
immunity by litigation conduct. While states may assert Eleventh
Amendment immunity from suit by private parties in both state and
federal courts, there is a well-recognized exception to immunity
set forth in Ex parte Young, 209 U.S. 123 (1908), which allows the
award of prospective equitable relief against state officers. The
vitality of the Ex parte Young doctrine is demonstrated by the
Supreme Court's recent opinion in Verizon Md., Inc. v. Pub. Serv.
Comm'n of Md.,
535 U.S. 635, 645-46 (2002).
It is true that the Blind Vendors here named state agencies
rather than state officers as defendants in federal court and in
the R-S grievance procedures. Nonetheless, the state (and its
agencies), faced with a claim for prospective equitable relief
since 1998, has never raised the argument that such relief is
available only against state officers. Indeed, the state moved to
substitute itself as the party defendant. Its litigation conduct
could be viewed as estopping any objection that it may have to the
application of the Ex parte Young exception.
-33-
gained the advantage that it sought, is bound by the choice that it
made.
2. Waiver of Prospective Equitable Relief in a Federal Forum
by Operation of the R-S Act
We also conclude that because the state is judicially
estopped from denying that R-S grievance procedures apply to claims
under § 111(b) of the STA Act and the state has voluntarily
participated in the R-S Act program, the state has waived any
Eleventh Amendment immunity it may have to awards of prospective
equitable relief in a federal forum resulting from R-S grievance
procedures. We do not decide the independent question whether the
state, solely by entering into agreements under the STA Act, has
waived any Eleventh Amendment immunity that it has to the
requirements of the STA Act.
This case does not involve a situation in which the state
may have been coerced into waiving its immunity by federal
requirements forcing it to choose between waiver and "exclusion .
. . from an otherwise permissible activity." See Coll. Sav. Bank,
527 U.S. at 687. By its voluntary agreement and participation in
the federal program created by the R-S Act, the state has been
given a right it would not otherwise have: access to federal
property. No argument is presented that, absent any agreement
otherwise, Congress could not constitutionally withhold that right
from states.
-34-
Congress was quite clear in 20 U.S.C. § 107b that states
participating in the R-S Act program "shall . . . agree" to submit
any disputes that blind vendors may have regarding the vending
program to the hearing and arbitration procedures set forth in 20
U.S.C. § 107d-1. The thrust of the state's argument is that even
if it agreed to R-S grievance procedures, no relief of any sort can
be awarded against it as a result of those procedures. The effect
of this argument would be to render those procedures meaningless.
No court has ever agreed with the state's position that no relief
may be granted under R-S grievance procedures.
States whose SLAs apply to participate in the R-S Act
must have anticipated that by agreeing to the procedures, they
agreed to some form of relief, at least prospective equitable
relief, against them even if they are named directly as parties.
After all, "[t]he only parties with whom blind vendors can have
disputes to submit to arbitration are states." McNabb v. United
States Dep't of Educ., 862 F.2d 681, 685 (8th Cir. 1988) (Lay,
C.J., concurring in part and dissenting in part). The statute also
requires states to agree that the arbitration under the R-S Act
shall be final and binding on the parties, subject to APA review.
20 U.S.C. §§ 107b, 107d-1(a). That agreement supports waiver of
objections to a federal forum and, at least, to prospective
equitable relief. See Port Auth. Trans-Hudson Corp. v. Feeney,
495
U.S. 299, 307-08 (1990).
-35-
B. Waiver of Eleventh Amendment Immunity From Damages
1. Waiver of Immunity From Damages by Litigation Conduct
The question whether the state has waived Eleventh
Amendment immunity from substantive liability for damages resolves
differently on this record, largely because the Blind Vendors' 1998
complaint in federal court contained no demand for damages.
No waiver occurred in the 1998 federal action. The
complaint in that action sought only injunctive relief and "such
other relief as is equitable and just." The state was not put on
notice by the 1998 federal court complaint that damages were at
issue in that federal court proceeding, and so had no reason to
assert Eleventh Amendment immunity from damages. Indeed, the Blind
Vendors expressly stated that their claim in the federal court
action encompassed only prospective injunctive relief. The state
cannot be said to have voluntarily waived immunity from damages
when it faced no claim for damages at that time.
The argument that the state waived any immunity from
damages in the 1998 litigation is based on a perceived unfairness,
well-articulated by the USDOE as follows:
The State's decision to forego raising an immunity
argument allowed it to continue an illegal practice for
five years at the [Blind Vendors'] expense while
precluding any recovery for the blind vendors' losses.
If the State had raised and prevailed on a claim of
immunity in 1998, the [Blind Vendors] would,
nevertheless, have been able to obtain prospective relief
under Ex parte Young. By requiring that the [Blind
Vendors] pursue administrative remedies, the State
successfully postponed by years judicial resolution of
-36-
the controversy. If the State is permitted to assert
immunity from the procedures it persuaded the district
court to require, it will have successfully deprived the
[Blind Vendors] of a judicial remedy to which it would
otherwise have been entitled. The Supreme Court
established in Lapides that in situations of this kind,
the claim of Eleventh Amendment immunity has been waived.
This was clearly how the district court viewed the matter.
We agree that, for reasons explained above, unfairness
would occur if the state were permitted now to assert immunity to
bar prospective equitable relief, but we think a closer analysis is
required to determine if the same logic applies in the context of
immunity from damages. The operating assumption behind the USDOE's
argument is that if the state had directly raised its Eleventh
Amendment immunity to damages in 1998, the Blind Vendors would
instead have sought only injunctive relief against state officers
under Ex parte Young and thus would not have had to go through the
lengthy R-S grievance procedures. But this assumption is wrong.
Exhaustion of R-S grievance procedures is required even when only
injunctive relief is sought.17 See Randolph-Sheppard Vendors of
17
Of course, exhaustion would not be necessary if the
district court in 1998 had been wrong in finding that R-S grievance
procedures applied to an STA Act claim. In that case, the Blind
Vendors could argue that, had it not been for the state's arguments
in its motion to dismiss, the Blind Vendors could have proceeded
directly to the question whether there is a cause of action,
outside of the R-S Act, for claims under § 111(b), and if so, would
have obtained injunctive relief in 1998 if successful on the
merits. The Blind Vendors could thus argue that the state's motion
to dismiss caused delay. But, in that case, any such delay would
have been caused by the state's urging the court to apply R-S
grievance procedures, not its failure to raise Eleventh Amendment
immunity. And, in any event, for reasons explained later, we
-37-
America v. Weinberger, 795 F.2d 90, 93, 96 (D.C. Cir. 1986)
(requiring exhaustion of R-S grievance procedures when plaintiffs
sought only injunctive relief); see also 20 U.S.C. § 107d-1(a) (R-S
grievance procedures apply to "[a]ny blind licensee who is
dissatisfied with any action arising from the operation or
administration of the vending facility program" (emphasis added)).
The state's failure to assert immunity has made the Blind Vendors
no worse off; it is the need for exhaustion, and not the failure to
assert Eleventh Amendment immunity, that caused the delay.
Moreover, a finding of waiver in this situation would
work its own type of unfairness. The Blind Vendors presumably did
not sue for damages in federal court because they were aware of
potential Eleventh Amendment problems; instead, the Blind Vendors
brought a state court action seeking damages. And the state did,
in 1998, allude to an Eleventh Amendment problem with a damages
action in federal court. In these circumstances, a finding of
waiver by litigation conduct would be unfair.
It is true that the state did not raise Eleventh
Amendment immunity when damages were claimed before the state
Hearing Officer in the R-S grievance procedures. But at that
point, the state had already taken the position in federal court
that an award of damages in a federal proceeding would pose an
conclude that R-S grievance procedures are properly applied to §
111(b) claims.
-38-
Eleventh Amendment problem but that there would be no such problem
in a state proceeding.
It is also true that the state did not immediately move
before the USDOE arbitration panel to dismiss the Blind Vendors'
damages claims on Eleventh Amendment grounds. But it did do so
eventually, and in light of its earlier posture in the controversy,
we cannot say the belated raising constitutes voluntary waiver by
litigation conduct.
Finally, the Blind Vendors, but not the USDOE, argue that
the state waived immunity simply by voluntarily seeking review of
the adverse administrative decision in this action in federal
court. They argue that if the state wanted to preserve its
immunity from damages, it should have simply waited for the Blind
Vendors to file an action in district court to enforce the award
and then defended by asserting Eleventh Amendment immunity at that
point.
This argument -- that the seeking of judicial review of
an agency decision under the APA by a state that was a defendant
before the agency is sufficient alone to infer a waiver of immunity
from damages -- fails, given the facts of this case. This court
held in R.I. Dep't of Envtl. Mgmt. v. United States, 304 F.3d 31
(1st Cir. 2002), that a state did not waive Eleventh Amendment
immunity solely by seeking judicial review of an agency's adverse
-39-
determination. Id. at 50.18 The court noted that the state in
Lapides had waived immunity in state court and was "attempt[ing] to
regain, by a change in forum, litigation advantage that the state
has already renounced by a general statute."
Id. at 49; see
Lapides, 535 U.S. at 617-18 (expressly limiting its holding to
cases where the state's immunity in state court has been waived or
abrogated). The court noted that Rhode Island, by contrast, had
"consistently asserted its sovereign immunity, both [in federal
court] and in the administrative proceeding," and hence gained no
unfair advantage by seeking a change in forum. R.I.
Dep't, 304
F.3d at 49. The same logic applies here as to damages. New
Hampshire gained no unfair advantage as to damages by seeking
judicial review of the administrative decision, given that it has
consistently asserted its immunity from damages when at issue.
2. Interpretation of the STA Act As to Authority To Award
Damages
Having determined that the state has not by its
litigation conduct waived its ability to assert an Eleventh
18
The Blind Vendors do not mention R.I. Dep't of Envtl.
Mgmt. v. United States, 304 U.S. F.3d 31 (1st Cir. 2002), in their
brief. But they do argue that Fed. Mar. Comm'n v. S.C. State Port
Auth., 535 U.S. 743 (2002), and by implication R.I. Dep't, differs
from the case at bar because it involved an administrative
adjudication of a complaint against a "non-consenting state."
Here, they argue, New Hampshire consented to administrative
adjudication because it sought and obtained dismissal of the 1998
suit on the ground that R-S grievance procedures should apply. We
disagree for the reasons stated earlier and add that it was not the
state but the Blind Vendors that filed a complaint before the
federal administrative tribunal.
-40-
Amendment defense to damages, we turn to the question whether
Congress intended to award damages in this situation. The Blind
Vendors argue that the state has waived immunity as to damages as
part of its agreement to participate in the R-S Act. Two circuit
courts have agreed with this theory. See Del. Dep't of Health &
Soc. Servs. Div. for Visually Impaired v. United States Dep't of
Educ., 772 F.2d 1123, 1137-38 (3d Cir. 1985); Premo v. Martin,
119
F.3d 764, 769-71 (9th Cir. 1997). One, the Sixth Circuit, has
disagreed, see Tenn. Dep't of Human
Servs., 979 F.2d at 1167-68,19
as has at least one member of an Eighth Circuit panel. See
McNabb,
862 F.2d at 687-88 (Doty, J., concurring in part and dissenting in
part).
Those courts finding that damages could be awarded in R-S
grievance procedures and were not precluded by the Eleventh
Amendment note that arbitrators were generally authorized to award
damages at the time § 107b(6) was passed. See Premo, 119 F.3d at
770. The argument is that an agreement to arbitration under the R-
S Act was inherently an agreement to waive immunity from damages.
An argument could also be made that the state and federal
19
The Sixth Circuit held that (1) the Eleventh Amendment
did not bar the arbitration panel from awarding damages because the
Amendment applied only in Article III proceedings, but (2) the
Amendment did prevent a subsequent attempt to collect the
arbitration award in federal court. Tenn. Dep't Hum. Servs., 979
F.2d at 1167-68. Our focus is on the court's second holding. The
reasoning behind court's first holding has since been overruled in
Fed. Mar.
Comm'n, 535 U.S. at 760-61.
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government have a contractual relationship intended to benefit
blind vendors, and damages are a common remedy in such
relationships. See Delaware Dep't, 772 F.2d at 1136-37.20
The R-S Act statutory text is silent as to what remedies
may be awarded against states in grievances brought by blind
vendors. The regulations promulgated by the Secretary of Education
do not define what remedies the arbitration panel may award. The
only discussion of remedies in the R-S Act is 20 U.S.C. § 107d-
2(b)(2), which indicates that where a federal agency is the
defendant, it is the role of the federal agency head to remedy any
violation of the Act. See Ga. Dep't of Human Res. v. Nash, 915
F.2d 1482, 1492 (11th Cir. 1990). Section 107d-2(b)(2) does not
expressly authorize an award of damages, nor does it expressly
waive the federal government's immunity from damages. Differing
conclusions can be drawn about the state's immunity in this
statutory scheme.
At best, there is disagreement as to whether the R-S Act
arbitration panels can award damages, with reasoned arguments made
on both sides. Here, there is an additional layer of uncertainty.
Even assuming that the R-S Act allows damages to be awarded against
states based on complaints by blind vendors, it is not clear
whether Congress intended in § 111(b) of the STA Act to subject
20
Delaware Dep't was decided in 1985, without foreknowledge
of the Supreme Court's later articulation of tests for waiver of
Eleventh Amendment immunity.
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states to damages awards for violations found in R-S grievance
procedures. Given Congress's silence in the STA Act itself and the
disagreement about damages under the R-S grievance procedures, we
cannot, as a matter of statutory construction of the STA Act, find
an intent to subject states to damages awards under the STA Act.
See Vermont Agency of Nat. Res. v. United States ex rel. Stevens,
529 U.S. 765, 787 (2000) ("[I]f Congress intends to alter the usual
constitutional balance between States and the Federal Government,
it must make its intention to do so unmistakably clear in the
language of the statute." (citing Will v. Mich. Dep't of State
Police, 491 U.S. 58, 65 (1989))).
Accordingly, we vacate the damages award.
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