We have found that the most important factor, that of funding, militates against the immunity, and that the factor of the colleges' status under New Jersey law weighs slightly in favor of immunity. We also have concluded that the third and final factor, which looks to the degree of the colleges' autonomy, is essentially in equipoise for purposes of finding that the colleges are alter egos of the state. Because this question is so close, and in recognition that the courts of New Jersey itself have shown reluctance to accord immunity to agencies whose status under New Jersey statutes is ambiguous, Fitchik, 873 F.2d at 663, this court finds that Trenton State College and Glassboro State College (Rowan College) are not alter egos of the State under the Eleventh Amendment.
2. The Psychiatric Hospitals
For the two psychiatric hospital third-party defendants (Ancora and Trenton), the picture is clearer for Eleventh Amendment analysis. These hospitals were created by statute, N.J.S.A. 30:1-7, and are operated by the Department of Human Services, which is "a principal department in the Executive Branch of the State Government," N.J.S.A. 30:1-2, under the control of the Commissioner of Human Services, N.J.S.A. 30:1-12, who serves at the pleasure of the Governor. N.J.S.A. 30:1-8 & 30:1-11.
These entities have established that their funding comes almost entirely from appropriations by the Legislature out of the general State treasury. (Certif. of Joseph Guider PP 4-6.) Less than 1% of the respective budgets of Ancora and Trenton come from sources other than state funds, such as those few patients who are able to reimburse the state for their mental health care. (Id. P 5.) Any judgment against these hospitals in this case would be paid from the State treasury. (Id. P 7.) Neither institution is statutorily authorized to sue or be sued in its own right.
These circumstances militate in favor of a finding, under the Fitchik factors, that the Trenton State Hospital and Ancora Psychiatric Hospital are alter egos of the State of New Jersey for Eleventh Amendment purposes. Unless New Jersey, by its conduct of the litigation upon these claims, has waived its Eleventh Amendment immunity, the state psychiatric entities are immune from suit in the federal court. Therefore the issue of waiver is next discussed.
B. Exception to Eleventh Amendment Immunity Arising from Waiver by State
The Supreme Court has recognized certain exceptions to the reach of the Eleventh Amendment. The Court, for example, has held that the Eleventh Amendment is "necessarily limited by the enforcement provisions of § 5 of the Fourteenth Amendment." Fitzpatrick v. Bitzer, 427 U.S. 445, 456, 49 L. Ed. 2d 614, 96 S. Ct. 2666 (1976). See also Welch v. Texas Department of Highways and Public Transportation, 483 U.S. 468, 474, 97 L. Ed. 2d 389, 107 S. Ct. 2941 (1987). In addition, a state may also expressly waive its own Eleventh Amendment immunity by statute and consent to suit in federal court. See Welch, 483 U.S. at 473. In general, a state will be deemed to have so waived its immunity to suit in federal court "only where stated by the most express language or by such overwhelming implications from the text as [will] leave no other room for any other reasonable construction." Id. (citations and internal quotation marks omitted).
The Generators do not contend that the state has expressly waived its Eleventh Amendment immunity. Rather, they argue that it has implicitly done so through its conduct as the plaintiff in this litigation. The Generators assert that "when a state proceeds deliberately in federal court, either as a plaintiff or a claimant, Eleventh Amendment immunity is inapplicable." Alleged Generators' Supp. Br. at 28, citing Gunter v. Atlantic Coast Line RR Co., 200 U.S. 273, 284 & 292, 50 L. Ed. 477, 26 S. Ct. 252 (1906). The Supreme Court noted in Gunter, "None of the prohibitions . . . of the [Eleventh] Amendment . . . relate to the power of a federal court to administer relief in causes where jurisdiction has been acquired as a result of voluntary action of the State in submitting its rights to judicial determination." 200 U.S. at 284 & 292.
Even before Gunter, a state's waiver of Eleventh Amendment immunity by voluntary appearance was well-established. In Clark v. Barnard, 108 U.S. 436, 27 L. Ed. 780, 2 S. Ct. 878 (1883), the plaintiff filed suit naming the General Treasurer of the State of Rhode Island as a defendant. The Treasurer moved to dismiss, arguing that the suit was in effect one against the State and was thus barred by the Eleventh Amendment. The Supreme Court denied the Treasurer's motion, finding that the State had waived its immunity when it "made itself a party" to the litigation by voluntarily appearing and prosecuting a claim in the nature of an interpleader against the fund in controversy. Id., 108 U.S. at 448. The Court stated that:
The circumstance that the appearance of the State was entered without prejudice to the demurrer of Clark, the General Treasurer, does not affect the result. For that demurrer could not reach beyond the question of the right to sue Clark by reason of his official character, which became insignificant when the State made itself a party.
Id. See also Gunter v. Atlantic Coast Line RR Co., 200 U.S. at 284, 292 (citing Clark). Clark has continuing vitality today, see e.g., Vecchione v. Wohlgemuth, 558 F.2d 150, 158 (3d Cir. 1977), cert. denied, 434 U.S. 943, 54 L. Ed. 2d 304, 98 S. Ct. 439 (1977) (finding waiver by litigating state's rights); Skehan v. Board of Trustees of Bloomsburg State College, 669 F.2d 142, 149 (3d Cir. 1982), cert. denied, 459 U.S. 1048, 74 L. Ed. 2d 617, 103 S. Ct. 468 (1982) (noting that Eleventh Amendment immunity can be "waived by a general or voluntary appearance in federal court by an officer of the state, such as the attorney general," citing Clark).
A state's consent to suit in federal court notwithstanding Eleventh Amendment immunity may be found by implication, such as where the state acts under a Congressionally-created interstate compact, Petty v. Tennessee-Missouri Bridge Comm., 359 U.S. 275, 3 L. Ed. 2d 804, 79 S. Ct. 785 (1959); Hess v. Port Authority Trans-Hudson Corp., 809 F. Supp. 1172 (D.N.J. 1992) (conditional statutory waiver). A state's participation in a federal program, however, will not necessarily be found to imply a consent to be sued for actions arising under that program, see Edelman v. Jordan, 415 U.S. 651, 673, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974); Florida Dept. of Health & Rehabilitative Servs. v. Florida Nursing Home Assn., 450 U.S. 147, 150, 67 L. Ed. 2d 132, 101 S. Ct. 1032 (1981) (per curiam). Thus, while a state's voluntary participation in a federal program will not generally operate to waive Eleventh Amendment immunity, a state's voluntary invocation of the federal court's power to adjudicate its rights may give rise to a waiver of Eleventh Amendment immunity, under the Clark/Welch/Gunter doctrine.
Applying these precepts to the four entities,
this court has not found any precedent which is directly on point. We find, however, that the circumstances of this case and the procedural history of this litigation compel the conclusion that the State has waived its Eleventh Amendment immunity with respect to state agencies that have allegedly contributed to the waste stream of the Almo entities, and that the moving state third-party defendants accordingly cannot assert such immunity as a bar to the Generators' claims against them for contribution upon these claims originally launched by the State as plaintiff.
After removal of this case to this federal court, the State, through a series of amended pleadings, has greatly enlarged the number of potentially responsible parties named as defendants in this case. The vast majority of the defendants are the alleged Generators. In its last pleading, the Eighth Amended Complaint, the State, acting through the NJDEP (which has since been renamed the "New Jersey Department of Environmental Protection and Energy" ("NJDEPE")), brought in a number of additional defendants based upon the alleged Almo connection. This is the same connection, as noted above, upon which the Generators have asserted their third-party claims against the moving state colleges and psychiatric hospitals, and the claims against these state entities are thus quite narrow.
The State has asserted both federal and state law claims. In its Seventh Amended Complaint, filed on February 1, 1990, the State asserted claims under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675. CERCLA claims may only be heard in federal court. 42 U.S.C. § 9613(b). The State also has asserted claims under the New Jersey Spill Compensation and Control Act (the "Spill Act"), N.J.S.A. 58:10-23.11, et seq.
The alleged Generators have not filed CERCLA claims against the third-party defendants. Rather, their third-party claims against the moving State entities track those filed by the State in its Eighth Amended Complaint vis-a-vis the alleged Almo connection, and they assert claims for contribution under, inter alia, the Spill Act and New Jersey common law. See Second Amended Third-Party Complaint, filed on or about October 24, 1990.
We agree with the State that it never explicitly conceded waiver of its Eleventh Amendment immunity by statute and that an excerpt from one of its prior briefs explicitly attempted to preserve Eleventh Amendment immunity. In the NJDEPE's Brief dated May 16, 1986, submitted in connection with an earlier jurisdictional motion before the Honorable Stanley S. Brotman, the State argued:
In addition, as recently as November 2, 1984, NJDEPE expressly reasserted its immunity under the Eleventh Amendment and other principles of sovereign immunity on the record in this very case. At that time, NJDEPE had argued in favor of this Court's retaining jurisdiction over this case (following its removal from the state court by the [EPA] and EPA's subsequent dismissal from the action) for reasons of judicial economy and to avoid a multiplicity of lawsuits. However, in arguing orally before this Court in favor of this result on November 2, 1984, counsel for NJDEPE was careful to state that in no way should its position be interpreted as a waiver by the State of New Jersey of its Eleventh Amendment and other sovereign immunity as to claims which may be asserted against it in this litigation.
NJDEPE Brief, dated May 16, 1986, at 12. We disagree with the State, however, that the four moving State entities can be treated as "involuntary" parties who can claim immunity notwithstanding the State's active and otherwise voluntary role in this litigation.
By its terms, the Eleventh Amendment affords immunity to "one of the United States." The Generators argue that although the NJDEPE is the designated plaintiff, the State of New Jersey is the real party in this case. They assert that the pleadings themselves lead unavoidably to that conclusion since, for example, they seek relief in the name of the State. See, e.g., the Seventh Amended Complaint. In other words, the NJDEPE is itself an alter ego of the State. We agree.
The claims asserted by the NJDEPE and the rights sought to be vindicated thereby belong to the State. For example, the Spill Act speaks in terms of discharges onto the State's lands and the State's waters. See, e.g., N.J.S.A. 58:10-23.11a. The State is the real party in interest in this litigation. The fact that the NJDEPE is the named plaintiff, rather than the "State of New Jersey," is a distinction without any legal or logical consequence to the Eleventh Amendment waiver analysis. The NJDEPE, which operates in the executive branch of the State (N.J.S.A. 13:1D-1) and whose Commissioner is appointed by and serves at the pleasure of the Governor (N.J.S.A. 13:1B-2), is charged with formulating and promoting the State's policy on environmental issues, and with enforcing those policies, to protect the state's environment. N.J.S.A. 13:1D-9.
The State acts through its various agencies and departments, and it is easily understood why the NJDEPE rather than any other State agency is the named plaintiff. We thus do not find it relevant or important that "the State third-party defendants belong to State agencies separate from the NJDEPE." State's Reply Brief, dated April 13, 1992. Because the NJDEPE has acted in this litigation as the State, this court must determine whether "the State," as one of "the United States," can be deemed to have waived its immunity under the facts of record. Thus, where state agencies have claimed and received the alter ego status of the State itself, the correct inquiry is not whether one State agency or entity can waive the immunity of other State agencies or entities, but instead whether the State's submission of its rights to the federal court's determination gives rise to waiver of the immunity of the State for claims directly arising from the State's own causes of action.
Similarly, when the State has removed an action from state to federal court and thereafter files a third-party complaint, it has been held to waive Eleventh Amendment immunity. M.A.I.N. v. Commissioner, Maine Dep't of Human Servs., 697 F. Supp. 557 (D.Me. 1988), vacated on other grounds, 876 F.2d 1051 (1st Cir. 1989). Further, a state plaintiff in a federal suit will be held to have made a "voluntary submission" to federal jurisdiction under the Clark test, supra, and thus to have waived its Eleventh Amendment immunity with respect to a counterclaim arising from the same subject matter and seeking recoupment against the state's claim, but not for a counterclaim seeking injunctive relief, Woelffer v. Happy States of America, Inc., 626 F. Supp. 499, 502 (N.D. Ill. 1985). A state plaintiff thus will be subject to suit by way of counterclaim arising from the same transaction, the consent to such countersuit being implied. See Fletcher v. U.S. Department of Energy, 763 F. Supp. 498, 502 (D. Kan. 1991) (but holding that state attorney general's intervention does not create a waiver as to all issues).
The State of New Jersey's participation in this case, through the NJDEPE, is much more extensive than was that of Rhode Island in Clark, where the State merely filed a claim for interpleader in an existing suit. Here, the State itself voluntarily enlarged the litigation by filing the Eighth Amended Complaint asserting only state law claims more than five years after the case was removed to federal court. It is true that it originally filed the suit in its own courts, but it did voluntarily enlarge the suit here in federal court once the EPA was dismissed, including the very claims at issue in this motion. Furthermore, as previously noted, the State has since asserted claims under CERCLA which can only be brought in federal court. We need not decide whether a state waives Eleventh Amendment immunity when it files a CERCLA action in federal court, since federal court jurisdiction is exclusive under CERCLA, and the notion that a state thereby acts voluntarily to submit its rights to federal court adjudication is fairly debatable. Such concerns are not presented here, however, where the sole basis of joinder of the state entities arises from the State's voluntary decision to launch an Eighth Amendment Complaint aimed at Almo-connection Generator defendants, asserting only claims arising at State law, and only after the case was in this Court.
The State's extensive participation also included the entry of the administrative consent order in 1989 confirming the negotiated settlement of the state's claims against over a hundred parties in exchange for a remediation of the GEMS Landfill in an extensive project funded by the alleged responsible parties for $ 32.5 million. This order also created the GEMS Site Trust to oversee compliance with the remediation plan in what is called the Phase I Settlement. Intensive negotiations to conclude an agreement on all remaining issues (the Phase II Settlement Process) are underway with court supervision and mediation under General Rule 49 of this court. Even if the State had not filed the Eighth Amended Complaint adding the Almo-connection parties, it would be difficult to square the State's intense federal court involvement with the notion that the State remains immune from claims against its agencies by third-party complaints.
The case at bar is distinguishable from the more oft-encountered case in which a defendant files a counterclaim against the State-plaintiff. The courts have consistently held that a State-plaintiff does not automatically waive its sovereign immunity with respect to all plausible counterclaims. See Woelffer v. Happy States of America, Inc., 626 F. Supp. at 502. In order to be cognizable and to fall outside of the Eleventh Amendment bar, the counterclaim must "1) arise from the same event underlying the state's action and 2) be asserted defensively, by way of recoupment, for the purpose of defeating or diminishing the State's recovery, but not for the purpose of obtaining an affirmative judgment against the State." Id. (internal quotation marks and citations omitted). See also CPC International, Inc. v. Aerojet-General Corp., 764 F. Supp. 479, 482 (W.D.Mich. 1991) (citations omitted).
Here, the defendant Generators have filed not a counterclaim against the NJDEPE, but rather a third-party claim against two state colleges and two state psychiatric hospitals, who are assumed in this motion to be the equivalents of the State itself. This is a distinction in terminology and procedure, but not in substance. The NJDEPE filed suit against the Generators to recover for environmental damage they caused or contributed to at the GEMS landfill, including through the Almo connection. The Generators, in turn, filed a third-party claim against the State colleges and hospitals seeking contribution for their connections to Almo. It is quite true, as the State emphasizes, that the colleges and hospitals did not become named "parties" to this suit until they were impleaded by the Generators. But although the Generators' claims were not filed as counterclaims against the NJDEPE, the agency empowered by the State to file suit, they were nevertheless filed, in effect, against the State--the entity protected by the Eleventh Amendment -- to seek a sharing of the Almo-related generators' liability.
As discussed above, this court has found that the two hospital movants have established that they are each the equivalent of the State for Eleventh Amendment purposes, and it has assumed for the sake of this discussion that the state colleges are too, notwithstanding the court's finding to the contrary, above. If the moving third-party defendant colleges and hospitals are entitled to claim Eleventh Amendment immunity in the first place, it is only because they are for all intents and purposes "the State." The State colleges and hospitals cannot in one breath claim to be the alter egos of the State and as such entitled to share in all of the State's immunities, and in the next breath argue, in effect, that they are not the same State which filed the suit in the first place, albeit through a different State agency. The Generators' third-party claims are in actuality more tantamount to a counterclaim against a plaintiff than to a "true" third-party claim which serves to bring in a completely new and separate party to the litigation.
We further find that the Generators' third-party claims against the State colleges and hospitals satisfy the previously mentioned conditions set forth in Woelffer and CPC International, supra. First, the Generators' claims against the State "arise from the same event underlying the State's action." CPC Intern., 764 F. Supp. at 482; Woelffer, 626 F. Supp. at 502. Second, the Generators are not seeking an affirmative judgment against the State, but rather are seeking the equivalent of a "recoupment for the purpose of defeating or diminishing the State's recovery[.]" CPC Intern. at 482; Woelffer at 502. In other words, the Generator defendants on the State's Almo-connection claim have not enlarged the relief sought against the allegedly responsible state entities beyond the narrow confines of the State's Almo-related claim itself.
For these reasons, this court holds that the State has waived the sovereign immunity of the four state entities named as third-party defendants upon the Almo-related claims, to the limited extent of subjecting the state entities to a judgment that diminishes the state's recovery upon its Almo-related causes of action.
For reasons discussed above, the motion of third-party defendants Ancora Psychiatric Hospital, Glassboro State College (Rowan College), New Jersey State Hospital (Trenton State Hospital), and Trenton State Teachers' College (Trenton State College) for summary judgment on grounds of Eleventh Amendment immunity will be denied. The accompanying Order is entered.
March 22, 1995
JEROME B. SIMANDLE
U. S. DISTRICT JUDGE
ORDER DENYING STATE ENTITIES' TYPE V SUMMARY JUDGMENT MOTION
This matter having come before the court upon motion of the Additional Third-Party Defendants Ancora Psychiatric Hospital, Glassboro State College (Rowan College), New Jersey State Hospital (Trenton State Hospital) and Trenton State Teachers' College (Trenton State College) [hereinafter "State Entities"] for summary judgment dismissing all claims against them based on the Eleventh Amendment of the United States Constitution; and
Having considered the briefs and supplemental briefs of the respective counsel, and having heard oral argument; and
Having concluded, for reasons stated in the Opinion of today's date that the motion shall be denied;
IT IS this 22nd day of March, 1995 hereby
ORDERED that the motion by these State Entities for summary judgment be, and it hereby is, DENIED.
JEROME B. SIMANDLE
U. S. DISTRICT JUDGE