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Fuchilla v. Layman

Decided: February 8, 1988.

ANNE FUCHILLA, RESPONDENT,
v.
WILLIAM A. LAYMAN, M.D.; UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY AND THE BOARD OF TRUSTEES OF THE UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY, APPELLANTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 210 N.J. Super. 574 (1986).

For affirmance -- Justices Handler, Clifford, O'Hern, Garibaldi, Pollock and Stein. For reversal -- None. The opinion of the Court was delivered by Pollock, Justice. Justice Handler has filed a separate concurring opinion in which Justice Clifford joins. Handler, Justice, concurring.

Pollock

[109 NJ Page 320] This appeal concerns the applicability of the notice provisions of the Tort Claims Act (the Act), N.J.S.A. 59:8-8, 9, to discrimination claims brought pursuant to the Civil Rights Act, 42 U.S.C.A. § 1983 (section 1983), and the New Jersey Law Against Discrimination (the Law), N.J.S.A. 10:5-1 to -42. Plaintiff, Anne Fuchilla, sued under both statutes, and the University of Medicine and Dentistry of New Jersey and its Board of Trustees (UMDNJ) moved to dismiss the complaint because of her failure to satisfy the notice provisions of the Act. The Law Division granted summary judgment in favor of UMDNJ, and the Appellate

Division reversed and remanded, 210 N.J. Super. 574. We granted certification, 105 N.J. 563 (1986), and now affirm the judgment of the Appellate Division.

We hold that UMDNJ is a "person" within the meaning of section 1983 and, therefore, may be liable for Civil Rights violations under that statute. We hold further that sexual harassment does not constitute an "injury" within the meaning of the Act. Consistent with that conclusion, the notice provisions of the Act, N.J.S.A. 59:8-8, 9, do not apply either to injuries arising from violations of the Law or to a violation of federal rights protected by section 1983. Consequently, Fuchilla may maintain her causes of action under section 1983 and under the Law.

-I-

This matter is presented on UMDNJ's motion for summary judgment. Consequently, we assume that the facts as alleged by Fuchilla are true, and give her the benefit of all inferences that may be drawn in her favor. R. 4:46-2; Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58, 65 (1980). Because the matter is presented on review of an order for summary judgment, our decision does not reflect any view of the appropriate disposition at trial.

Fuchilla was employed as a secretary at UMDNJ from January 1965 until June 1983, when UMDNJ terminated her employment. For most of the period of her employment, she was assigned to Dr. William A. Layman, but in July 1982, she began working for Dr. Darwin Prockop. While they were working together, Fuchilla and Dr. Layman engaged in an intimate relationship, which lasted until 1981. Between that date and the date of her transfer to Dr. Prockop, Fuchilla alleges that "Layman sexually harassed and intimidated plaintiff in the performance of her job functions and responsibilities, and retaliated against her for having terminated their intimate relations." She contends that the alleged acts of discrimination

began on November 3, 1981, and lasted until either August or November of 1982.

On September 3, 1982, while still employed by UMDNJ, Fuchilla instituted this action against UMDNJ, its trustees, and Dr. Layman. Insofar as UMDNJ is concerned, Fuchilla alleges that "[d]efendant UMDNJ has supported Layman in his continual sexual harassment actions and has failed to take any action or remedy to stop the discriminatory acts of defendant Layman." She claims that in November 1982 Dr. Prockop asked her to resign and that in June 1983 UMDNJ fired her. Fuchilla settled her claim against Dr. Layman for $25,000, and on August 4, 1983, she filed a notice of claim with UMDNJ. She filed the notice, however, beyond the ninety-day period permitted by the Act, N.J.S.A. 59:8-8, 9, and the Law Division granted UMDNJ's motion to dismiss her complaint. In reversing, the Appellate Division ruled that the notice provisions of the Act did not apply to Fuchilla's claims under either the Law or 42 U.S.C.A. section 1983. The court also ruled that Fuchilla's claim for injunctive relief was not subject to the provisions of the Act, a ruling that UMDNJ does not challenge on this appeal.

During the pendency of this action, Fuchilla instituted a suit in the United States District Court for the District of New Jersey against Dr. Prockop and UMDNJ, Fuchilla v. Prockop, No. 85-0693 (D.N.J. Oct. 13, 1987). That court granted summary judgment dismissing the complete complaint against Prockop and granting partial summary judgment on Fuchilla's claims against UMDNJ based on substantive due process and equal protection, but not on her claims based on her free speech and liberty rights under the fourteenth amendment to the United States Constitution. The effect of that judgment on this action is not before us.

-II-

To be liable under 42 U.S.C.A. section 1983,*fn1 the defendant must be a "person" within the meaning of that section. The statute does not define "person," and in defining the term, the United States Supreme Court has looked to the eleventh amendment,*fn2 under which the individual states are not subject to the jurisdiction of the federal courts. Quern v. Jordan, 440 U.S. 332, 350-51, 99 S. Ct. 1139, 1150, 59 L. Ed. 2d 358, 373 (1979) (Brennan, J., concurring). In Quern v. Jordan, according to Justice Brennan's concurring opinion, the Supreme Court impliedly held that a state is not a "person" within the meaning of section 1983. Id. at 350, 99 S. Ct. at 1150, 59 L. Ed. 2d at 372; Bailey v. Ohio, 487 F. Supp. 601, 603 (S.D.Ohio 1980) ("[t]he fact that Congress did not intend to abrogate eleventh amendment immunity for the states means, necessarily, that a state is not a 'person' under § 1983 and no suit for any relief may be maintained against the state under § 1983"). Following that interpretation, a majority of state courts have held that an entity considered to be a state or its alter ego for eleventh amendment purposes is not a "person" under section 1983. See State v. Green, 633 P. 2d 1381 (Alaska 1981); Pyne v. Meese, 172 Cal.App. 3d 392, 218 Cal.Rptr. 87 (1985); Merritt for Merritt v. State, 108 Idaho 20, 696 P. 2d 871 (1985); Hampton v. Michigan, 144 Mich.App. 794, 377 N.W. 2d 920 (1985); DeVargas v. State ex rel. N.M. Dep't of Corrections, 97 N.M. 447, 640 P. 2d 1327 (Ct.App.1981), cert. quashed,

97 N.M. 563, 642 P. 2d 166 (1982); Edgar v. State, 92 Wash. 2d 217, 595 P. 2d 534 (1979), cert. denied, 444 U.S. 1077, 100 S. Ct. 1026, 62 L. Ed. 2d 760 (1980); Boldt v. State, 101 Wis. 2d 566, 305 N.W. 2d 133, cert. denied, 454 U.S. 973, 102 S. Ct. 524, 70 L. Ed. 2d 393 (1981); but see Gumbhir v. Kansas State Bd. of Pharmacy, 231 Kan. 507, 646 P. 2d 1078 (1982), cert. denied, 459 U.S. 1103, 103 S. Ct. 724, 74 L. Ed. 2d 950 (1983); Lowery v. Department of Corrections, 146 Mich.App. 342, 380 N.W. 2d 99 (1985); Ramah Navajo School Bd. v. Bureau of Revenue, 104 N.M. 302, 720 P. 2d 1243 (Ct.App.), cert. quashed, 104 N.M. 201, 718 P. 2d 1349, cert. denied, U.S. , 107 S. Ct. 423, 93 L. Ed. 2d 373 (1986). In the ten years that have elapsed since Quern v. Jordan, supra, the United States Supreme Court has not rejected Justice Brennan's interpretation. Furthermore, the parties rely upon that interpretation in the present case. In sum, if a governmental entity enjoys immunity as the state or its alter ego under the eleventh amendment, it cannot be liable as a "person" under section 1983. See Kovats v. Rutgers, 633 F. Supp. 1469, 1477 (D.N.J.1986). Otherwise, section 1983, in effect, would abrogate the eleventh amendment. If, however, a governmental entity is not considered to be the "state" for eleventh amendment purposes, it is not immune from federal court jurisdiction, and a federal action may be maintained against it as a "person" under section 1983.

In the federal courts, a section 1983 action is subject to constraints not present in state courts. For example, the eleventh amendment limits the jurisdiction of federal, but not state, courts. Maine v. Thibotout, 448 U.S. 1, 9 n. 7, 100 S. Ct. 2502, 2507 n. 7, 65 L. Ed. 2d 555, 562 n. 7 (1980), One effect of the eleventh amendment is to subject a state in a federal court to prospective injunctive relief, but not to a claim for damages. Edelman v. Jordan, 415 U.S. 651, 94 S. Ct. 1347, 39 L. Ed. 2d 662 (1974); Ex Parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908). Because the present matter is pending in a state court, we are not concerned with eleventh amendment immunity as a defense or with the direct effect of that amendment

on the proceedings. The determination whether UMDNJ may be considered to be the State under the eleventh amendment, however, is necessary to determine whether UMDNJ is a "person" within the meaning of section 1983. In urging us not to remand the matter but to resolve that issue, the Attorney General has supplemented the record with part of the appropriations handbook for fiscal year 1985-86. Resolution of the issue requires us to determine whether UMDNJ would be considered the alter ego of the State under the eleventh amendment. If so, it is not a "person" and, therefore, not liable under section 1983.

In determining whether an entity is an "alter ego" of the state for eleventh amendment purposes, the Third Circuit has adopted the following criteria:

[L]ocal law and decisions defining the status and nature of the agency involved in its relation to the sovereign are factors to be considered, but only one of a number that are of significance. Among the other factors, no one of which is conclusive, perhaps the most important is whether, in the event plaintiff prevails, the payment of the judgment will have to be made out of the state treasury; significant here also is whether the agency has the funds or the power to satisfy the judgment. Other relevant factors are whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy over its operations; whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation, and whether the sovereign has immunized itself from responsibility for the agency's operations.

[ Urbano v. Board of Managers of N.J. State Prison, 415 F.2d 247, 250-51 (3d Cir.1969), cert. denied, 397 U.S. 948, 90 S. Ct. 967, 25 L. Ed. 2d 129 (1970) (quoting Krisel v. Duran, 258 F. Supp. 845, 849 (S.D.N.Y.1966), aff'd per curiam, 386 F.2d 179 (2d Cir.1967), cert. denied, 390 U.S. 1042, 88 S. Ct. 1635, 20 L. Ed. 2d 303 (1968) (footnotes omitted)).]

See Blake v. Kline, 612 F.2d 718, 722-26 (1979). Some federal courts have followed Urbano. E.g., Hall v. Medical College of Ohio at Toledo, 742 F.2d 299, 302-07 (6th Cir.1984); Bowen v. Hackett, 387 F. Supp. 1212, 1220 (D.R.I.1975). Other federal courts have cited Urbano with approval. E.g., Morrison-Knudsen Co. v. Massachusetts Bay Transp., 573 F. Supp. 698, 703 (D.Idaho 1983); Martin v. Choudhuri, 563 F. Supp. 207, 210 n. 2 (W.D.Wis.1983); Henry v. Texas Tech Univ., 466 F. Supp. 141, 145

(N.D.Tex.1979); Holley v. Lavine, 464 F. Supp. 718, 723 (W.D.N.Y.1979).

Stated separately, the nine Urbano factors, as they are known, are: (1) local law and decisions; (2) whether, in the event plaintiff prevails, the judgment will have to be paid out of the state treasury; (3) whether the entity has the funds or the power to satisfy the judgment; (4) whether the entity performs a proprietary or a governmental function; (5) whether the entity has been separately incorporated; (6) the entity's degree of autonomy over its operations; (7) whether it has the power to sue and be sued and to enter into contracts; (8) whether the entity's property is immune from state taxation; and (9) whether the sovereign has immunized itself from responsibility for the entity's operations.

Turning to the application of the factors to UMDNJ, the Third Circuit has concluded that a section 1983 action may be maintained against UMDNJ. Mauriello v. University of Medicine & Dentistry, 781 F.2d 46 (3d Cir.), cert. denied, U.S. , 107 S. Ct. 80, 93 L. Ed. 2d 35 (1986). Nonetheless, the Attorney General directs our attention to English v. College of Medicine and Dentistry of N.J., 73 N.J. 20 (1977), to support his argument that UMDNJ is the alter ego of the State. English, however, was concerned not with eleventh amendment immunity, but with UMDNJ's right to discharge the supervisor of the morgue. Similarly, none of the other reported decisions involving the then College of Medicine and Dentistry, the predecessor of UMDNJ, involved the immunity of the College under the eleventh amendment. College of Medicine and Dentistry of N.J. v. Morrison, 141 N.J. Super. 104 (App.Div.1976) (director of nursing is an employee-at-will subject to termination by College); Rich v. State, 171 N.J. Super. 91, 93 (Law Div.1979) (under predecessor statute, College is a state agency without power to sue and be sued, and suit for negligent scalding of patient was brought against State); De Angelis v. Addonizio, 103 N.J. Super. 238 (Law Div.1968) (UMDNJ employees not

entitled to Civil Service status). Furthermore, all these cases were decided before the 1981 amendments to the Medical and Dental Education Act, L. 1981, c. 325, which provided for "a greater degree of administrative autonomy" for UMDNJ, Senate Education Committee Statement Accompanying L. 1981, c. 325, a consideration that would diminish whatever persuasiveness might inhere in those decisions. From the foregoing, we conclude that "local law and decisions," the first Urbano factor, is not helpful in resolving the issue.

The most important consideration, represented by the second and third Urbano factors, is whether payment of any judgment against UMDNJ would be made from its funds or those of the State Treasury. Blake v. Kline, supra, 612 F.2d at 723; see also Ford Motor Co. v. Department of Treasury of Indiana, 323 U.S. 459, 464, 65 S. Ct. 347, 350, 89 L. Ed. 389, 394 (1945) ("when the action is in essence one for the recovery of money from the state, the state * * * is entitled to invoke its sovereign immunity from suit"). According to the 1985-86 appropriations handbook, the total appropriation for UMDNJ was $95,278,000, and the Attorney General informs us that according to the appropriations bill for that fiscal year, the appropriation constituted approximately 39% of UMDNJ's operating budget or 52.4% if payment of fringe benefits, payments in lieu of taxes, and debt service are included. The balance of UMDNJ's funds are derived from private sources, such as tuition fees or payments by patients at University Hospital. N.J.S.A. 18A:64G-6(e). Furthermore, the Medical and Dental Education Act expressly provides that none of its provisions "shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit, of the State of New Jersey." N.J.S.A. 18A:64G-15. From this, we conclude that the State will not be required to pay directly any judgment rendered against UMDNJ and that UMDNJ can satisfy any such judgment with funds from private sources. That conclusion does not deprecate the substantial funds appropriated by the State for UMDNJ, but "even significant state financial support will not

necessarily encase an entity with eleventh amendment immunity." Blake v. Kline, supra, 612 F.2d at 724. Although the Legislature might increase the size of an appropriation because of the payment by UMDNJ of any judgment rendered against it, the indirect effect of that payment on the State Treasury is not sufficient to invoke eleventh amendment immunity. Id. at 726 (citing Edelman v. Jordan, supra, 415 U.S. at 668, 94 S. Ct. at 1358, 39 L. Ed. 2d at 675).

As to the fourth Urbano factor, it is unclear whether UMDNJ is performing a governmental or proprietary function. The declaration in the authorizing legislation indicates that UMDNJ performs a governmental function. See N.J.S.A. 18A:64G-3 ("exercise by the university of the powers conferred by this act * * * shall be deemed to be public and essential governmental functions necessary for the welfare of the State and the people of New Jersey"); cf. Miller v. Rutgers, 619 F. Supp. 1386, 1391 (D.N.J.1985) ("as an educational institution, Rutgers is performing a governmental * * * function"). On the other hand, operating a medical school may be viewed as a proprietary activity often performed by private entities. In short, the nature of UMDNJ as a governmental or proprietary entity is unclear.

With respect to the fifth Urbano factor, the 1981 amendments to the enabling statute for the first time established UMDNJ as "a body corporate and politic." N.J.S.A. 18A:64G-3; Senate Education Committee Statement Accompanying L. 1981, c. 325. In respect of the sixth Urbano factor, which pertains to the autonomy of UMDNJ over its operations, the 1981 amendments further "declared [it] to be the public policy of the State that the university shall be given a high degree of self-government and that the government and conduct of the university shall be free of partisanship." N.J.S.A. 18A:64G-3.2. That autonomy is consistent with UMDNJ's power to contract, N.J.S.A. ...


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