operating fund, in accordance with generally accepted accounting practices, it also maintains several segregated accounts in its own name. The general operating account at First Fidelity Bank in Newark has sufficient funds to pay immediate bills. Surplus cash is invested in interest bearing accounts at First Fidelity and Chemical Bank. The interest from these accounts totaled approximately $4 million in fiscal year 1984-85. Of that amount, $1 million was allocated to the general operating account. The remaining $3 million was invested in a separate Chemical Bank account and dedicated to the discretionary use of the Board of Governors. This "reserve fund" is to be used for University purposes and has funded scholarship programs, intercollegiate athletics, Rutgers University Press, and other projects. Tr. of Joseph Whiteside, Rutgers' Senior Vice-President responsible for financial management, at 29-30.
Rutgers also has a separate investment account for self-insurance. Approximately $5 million was funneled through the general operating account and deposited in this account in fiscal year 1984-85. The account earned 9-10% interest. These funds have been used for settling property, fire, workmen's compensation, and general liability claims against the University. Id. at 43-44. Rutgers also maintains a separate internal settlement account in the amount of several hundred thousand dollars. Id. at 60.
Rutgers receives gifts and donations through the Rutgers University Foundation. Its 1984-85 receipts totalled more than $17 million, part of which was available for unrestricted use. About $200,000 of the unrestricted funds was dedicated to a discretionary account maintained by the University's President. Id. at 53-54.
Lastly, the Board of Trustees holds title to various properties and endowment funds in its own name. As of June 30, 1985, the Board of Trustees held title to land valued at more than $40 million, buildings worth more than $31 million, and $48 million in endowment funds.
(The Board of Governors controlled land worth more than $9.5 million, buildings worth more than $323 million, and $32 million in endowment funds.) Id. at 25; Reinhardt Aff., Ex. 37.
Rutgers' private origins help explain why title to certain University property is still held by the Trustees. The 1956 Act created a new entity and arrangement with the state. In exchange for the state's promise to appropriate funds, the Trustees relinquished their power to run Rutgers. They could not transfer title pursuant to the terms of the charitable trust they held and administered, so their holdings were impressed with a public trust for educational purposes. N.J.S.A. 18A:65-26. Although they have the power to withdraw the use of properties and funds, this right is "more theoretical than realistic." Rutgers, The State University v. Piluso, 60 N.J. 142, 157, 286 A.2d 697 (1972) (construing N.J.S.A. 18A:65-27.II.).
Income from the Trustees' assets must be turned over to the Board of Governors, N.J.S.A. 18A:65-26(2), and is then deposited in the commingled general operating account. Included in this income is a large amount of unrestricted monies. For example, approximately $5 million of the Trustees' $48 million endowment fund is unrestricted. It generated $400,000 in discretionary income in fiscal year 1984-85 which ended up in the general operating account. Whiteside Tr. at 26-27.
If plaintiffs prevail, Rutgers will have to pay up to $250,000 of any award from its self-insurance account. The source of such a judgment therefore would be Rutgers' commingled general operating account which contains state appropriations. Payments from commingled funds can constitute interference with the state's fiscal autonomy. Hall v. Medical College of Ohio at Toledo, 742 F.2d 299, 305 (6th Cir. 1984); Jagnandan v. Giles, 538 F.2d 1166, 1176 (5th Cir. 1976). However, where substantial restricted non-state funds are commingled with state appropriations or are otherwise available, as is the case here, commingling will not invoke Eleventh Amendment immunity. See Blake v. Kline, 612 F.2d 718, 724 (3d Cir. 1979) (inquiry must be made whether entity has sufficient funds in a segregated, noncommingled account to meet plaintiff's claim and whether title to the funds is in the state or the entity).
Rutgers insists that payment of a judgment from either commingled or segregated funds would interfere with the state's fiscal processes given its relationship with the state. It can hardly be disputed that the state is intimately involved in Rutgers' budgetary process. See my discussion of the appropriations process in Miller, 619 F. Supp. at 1389-90. Fees, tuition, endowment income, etc., are factored into the preparation of the state's annual appropriation to Rutgers. Projections for these categories of self-generating income are relied on by the state legislature in its calculations. Thus a diminution in sources available for educational purposes may be reflected annually through larger appropriations. In other words, payment of retroactive damage awards may be made up by increased state funding. But the state is under no obligation to answer for Rutgers' debts. N.J.S.A. 18A:65-8. Nothing in Title 18A:65-1 et seq. creates a debt or pledge of credit of the state on Rutgers' behalf. If the state elects to respond to the payment of a judgment by increasing its appropriations to Rutgers, the indirect effect on the state's treasury will be sufficiently "ancillary" to be permissible under the Eleventh Amendment. Edelman v. Jordan, 415 U.S. 651, 668, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974); Blake, 621 F.2d at 726; Gordenstein v. University of Delaware, 381 F. Supp. 718, 721 (D. Del. 1974).
Counsel for both parties have cited numerous cases concerning other state and state-related universities. I shall not discuss each since "(e)ach state university exists in a unique governmental context, and each must be considered on the basis of its own peculiar circumstances." Soni v. Board of Trustees of University of Tennessee, 513 F.2d 347, 352 (6th Cir. 1975). I take particular note of two cases decided by district judges in the Third Circuit finding the University of Pittsburgh, Temple University, Penn State, Samuel v. University of Pittsburgh, 375 F. Supp. 1119 (W.D. Pa. 1974), and the University of Delaware, Gordenstein, supra, not immune under the Eleventh Amendment.
In neither case did the state's Governor have the power to appoint a majority of the University's governing body. Also, state funding in each case in Samuel was somewhat less than that contributed by New Jersey to Rutgers. But the precise amount of appropriation is not dispositive. Blake, 612 F.2d at 723. More telling is the fact that each school has broad autonomy in fiscal matters. The schools have the power to issue bonds which create no state obligation, and they hold title to some of their facilities. Also, the University of Delaware maintains an endowment in its own name. Samuel, 375 F. Supp. at 1126, 1127; Gordenstein, 381 F. Supp. at 722.
I find more significant the Third Circuit's recent treatment of the University of Medicine and Dentistry of New Jersey (UMDNJ) in Mauriello, supra. The UMDNJ appears to be an even stronger candidate for Eleventh Amendment immunity than Rutgers. Like Rutgers, the UMDNJ can acquire and own property,
borrow money without creating an obligation on the part of the state,
enter into contracts,
and sue and be sued.
In addition, it is the public policy and responsibility of the state to provide operating funds to UMDNJ
as well as to grant it a high degree of self-governance.
The UMDNJ has greater state ties than Rutgers in two areas: its governance is vested in an eleven-member Board of Trustees all of whom are appointed by the Governor;
and, the state's Director of the Division of Investment, a division of the New Jersey Department of the Treasury, controls the investment of funds within the jurisdiction of the Board of Trustees.
The UMDNJ argued it was entitled to Eleventh Amendment immunity before the trial court. Had it not, the jurisdictional defense could have been considered for the first time at the appellate level. Edelman, 415 U.S. at 677. The Third Circuit, however, proceeded directly to the merits. Mauriello, supra.
I conclude that, although the question is a close one, the new evidence and arguments submitted require departure from the conclusion in Miller. I find the Urbano factors, on balance, demonstrate Rutgers is not an alter ego of the state entitled to Eleventh Amendment immunity. I need not address Rutgers' alleged waiver of its immunity given this ruling.
The parties concede that the immunity claimed for the Board of Governors essentially flows from its status as a part of Rutgers. It therefore does not enjoy Eleventh Amendment immunity. The same holds true for defendants Bloustein and Martin in their official capacities. The University's voluntary decision to indemnify these officers for any judgment against them does not alter this conclusion.
II. Motions for leave to amend
Defendants move for leave to amend the Answer to add the defense of qualified immunity for defendants Bloustein and Martin. (Presumably they will seek to assert this defense on behalf of defendant Cole as well.) Plaintiffs move for leave to amend the Complaint to set forth specific acts and practices with which the individual defendants are charged and to add as a defendant Susan Cole, defendant Martin's successor. Both parties object to their opponent's motion citing prejudice. Defendants also contend plaintiffs have unduly delayed this request. I find both sides' contentions are without merit.
Fed. R. Civ. P. 15(a) commands that leave to amend "shall be freely given when justice so requires." It shall be granted freely in the absence of "undue delay," "dilatory motive," or "undue prejudice to the opposing party." Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). Since the issues raised by the amendments have been the subject of ongoing discovery, I fail to see how either party will be prejudiced by the amendments. Any alleged delay absent a showing of bad faith does not warrant denial of leave to amend. Hoffman v. Charnita, Inc., 58 F.R.D. 86, 94 (M.D. Pa. 1973); Wright, Miller & Kane, Federal Practice and Procedure: Civil § 1488. Both motions are accordingly granted.
III. § 1983 claims
Defendants raise two threshold challenges to the maintenance of a claim under 42 U.S.C. § 1983. First, they contend the claims against the University and the Board of Governors must be dismissed because they are not "persons" within the meaning of the statute. This argument cannot withstand scrutiny. In Monell v. Department of Social Services of the City of New York, 436 U.S. 658, 56 L. Ed. 2d 611, 98 S. Ct. 2018 (1978), the Supreme Court held that municipalities and other local governmental units are "persons" to whom § 1983 applies. There does not appear to be an analytical difference between universities and other governing bodies. Gay Student Services v. Texas A & M University, 612 F.2d 160, 163-64 (5th Cir. 1980).
Prior to Monell the Third Circuit entertained an action against the University of Pittsburgh, Temple University, and Penn State under 42 U.S.C. § 1983 affirming the trial court's finding they were persons within the meaning of § 1983. Samuel, supra. In Mauriello, supra, the Third Circuit likewise entertained a § 1983 action against the UMDNJ. I find these decisions persuasive. Additionally, Rutgers asserts the analysis for determining whether it is a "person" is related to the question of Eleventh Amendment immunity. See Bailey v. Ohio State University, 487 F. Supp. 601 (S.D. Ohio 1980). I have found the University distinct from the state for Eleventh Amendment purposes. It is sufficiently distinct for purposes of § 1983 as well.
Second, defendants challenge the sufficiency of the allegations against Bloustein and Martin. The Complaint, as amended, alleges they encouraged, affirmed, ratified, and directed the acts of subordinates in terminating plaintiffs. These charges allege sufficient personal involvement to satisfy 42 U.S.C. § 1983. They are sufficient to satisfy a motion to dismiss under the standard of Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1956). In order to prevail on a motion for summary judgment, the moving party must prove that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. A motion for summary judgment may only be granted if there are no remaining issues of material fact which, if believed by the trier of fact, would justify a finding for the party opposing that judgment. Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir. 1980). All evidence submitted must be viewed in a light most favorable to the party opposing the motion. Wahl v. Rexnord, 624 F.2d 1169, 1181 (3d Cir. 1980).
Plaintiffs contend that defendants and their agents have consistently acknowledged through 1982 the possibility of de facto tenure via length of service. They offer an affidavit by Wells Keddie, President of Rutgers Council of AAUP, the faculty's representative for collective negotiation. Keddie avers that there is "a common understanding among faculty members and University Administrators that the University Regulation on page 60.1 confers tenure without limitation of term upon the passage of the requisite number of years in the appropriate rank."
As evidence of this "understanding," Keddie appended to the affidavit a typical settlement agreement of a faculty grievance. In the particular case, a Dr. Michael Hayes received an extension of time in his position, but the University exacted a promise from him that he "will (not) claim tenure on the basis of length of service." 9/21/83 Keddie Aff., Ex. A. Looking at this agreement in a light most favorable to plaintiffs as I must, it appears Rutgers' administrators -- here, the Associate Provost for Personnel -- acknowledged the possibility of obtaining tenure through length of service alone. This evidence, thus, presents a material issue of fact for trial.
Defendants, however, maintain that damage claims against the individual defendants must be dismissed on grounds of qualified immunity. As officers of a state university who exercise discretionary powers in performing their duties, defendants Bloustein and Martin are entitled to qualified immunity. See Trotman v. Board of Trustees of Lincoln University, 635 F.2d 216 (3d Cir. 1980); Skehan v. Board of Trustees of Bloomsburg State College, 538 F.2d 53 (3d Cir. 1976).
The standard governing claims of qualified immunity was set forth by the Supreme Court in Harlow v. Fitzgerald, 457 U.S. 800, 73 L. Ed. 2d 396, 102 S. Ct. 2727 (1982) as follows:
. . . government officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.