On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 01-cv-00140) District Judge: Hon. William G. Bassler
Before: Mckee, Smith and Cowen, Circuit Judges
The opinion of the court was delivered by: Cowen, Circuit Judge
Defendants the New Jersey Department of Education ("NJDOE"), Jeffrey Osowski, Barbara Gantwerk, and Melinda Zangrillo (collectively "State Defendants") appeal from the order of the United States District Court for the District of New Jersey denying their motion to dismiss. We must determine whether the State Defendants are entitled to constitutional immunity from plaintiff A.W.'s claims under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, and the Individuals with Disabilities in Education Act ("IDEA"), 20 U.S.C. § 1400 et seq. The District Court correctly held that the State Defendants have waived any immunity from these claims by the acceptance of federal financial assistance. We therefore will affirm.
In September 1988, A.W., who has dyslexia, enrolled as a second grade student in the Jersey City Public Schools. Until May 2000, he allegedly made only minimal progress in reading, writing, and spelling. According to A.W., the defendants knew or should have known of his medical condition. He was a nineteen year old high school student when he commenced this action.
A request was filed in December 1997 with the NJDOE on behalf of A.W. and other Jersey City students with dyslexia. The NJDOE is a recipient of financial assistance under the IDEA and other federal programs. The complainants sought an investigation of the alleged failure of the Jersey City Public Schools to diagnose dyslexia, provide specialized instruction to dyslexic students, and train its staff to handle dyslexia. They requested as relief independent evaluations of A.W. and other potentially dyslexic students as well as compensatory education. In a June 1998 report, the NJDOE found that the Jersey City Public Schools failed to demonstrate that its reading programs could be adapted "to meet the individual needs of classified pupils." App. at 86. It refused to consider whether the school district has failed to diagnose dyslexia and whether its personnel possessed sufficient expertise with this disability. The district was ordered to undertake corrective action regarding its reading curricula. The state agency allegedly did not provide any individual relief as to A.W. and "did not require the District to identify and implement knowledge derived from research and promising education practices in revising its reading curricula." Id. at 87.
Based on two new individual education programs, A.W. began to receive some instruction specially designed for dyslexia on February 29, 2000. A regular program of such instruction commenced in May 2000, and he allegedly is making progress in reading, writing, and spelling.
A.W. filed a complaint with the District Court on January 10, 2001. In addition to the Jersey City Public Schools and numerous school district employees, the complaint named as defendants: (1) the NJDOE; (2) Gantwerk, the director of the NJDOE Office of Special Education Programs; (3) Osowski, the former director of the NJDOE Division of Special Education; and (4) Zangrillo, the former NJDOE compliance coordinator. The State Defendants moved to dismiss, and A.W. cross-moved to amend his complaint. In an order filed on March 18, 2002, the District Court denied the motion to dismiss and granted A.W. leave to file an amended complaint, which served as the basis for the District Court's subsequent opinion disposing of this motion to dismiss. This amended complaint contained ten counts and sought such relief as the entry of a judgment declaring that A.W.'s rights were violated and both compensatory and punitive damages.
A.W. asserted two causes of action under the IDEA against the NJDOE as well as Gantwerk, Osowski, and Zangrillo named in their official capacities. He alleged that they failed to ensure the identification and remediation of his dyslexia. The State Defendants also allegedly lacked sufficient knowledge and expertise with this condition, did not require the Jersey City Public Schools to employ appropriately trained staff, and failed to adopt the standards and procedures to evaluate the effectiveness of the district's programs. This conduct allegedly resulted in the deprivation of a free appropriate public education. He also claimed that the NJDOE's denial of a free appropriate public education violated section 504. Gantwerk and Zangrillo, named in their individual capacities, were allegedly liable pursuant to 42 U.S.C. § 1983 for infringing his rights under the IDEA and section 504 by conducting an allegedly ineffective complaint investigation. A.W. finally asserted claims pursuant to the New Jersey Constitution and the New Jersey Law Against Discrimination.
Following a reference of this matter to mediation, the District Court issued a written opinion on May 1, 2002. The District Court considered inter alia the State Defendants' claim of Eleventh Amendment immunity. It declined to resolve the question of whether Congress properly exercised its power of abrogation under Section 5 of the Fourteenth Amendment. The District Court, however, found that New Jersey waived its immunity as to A.W.'s section 504 and IDEA claims by accepting federal funds when Congress clearly conditioned the receipt of any such assistance on the state's abandonment of immunity. The State Defendants appealed. The United States subsequently intervened in this appeal, arguing for affirmance.
The District Court's denial of the State Defendants' motion to dismiss does not constitute an otherwise appealable final decision pursuant to 28 U.S.C. § 1291. The District Court's rejection of Eleventh Amendment immunity is immediately appealable under the collateral order doctrine. See, e.g., P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147 (1993); Pa. Fed'n of Sportmen's Clubs, Inc. v. Hess, 297 F.3d 310, 315 (3d Cir. 2002). We must decide whether the District Court correctly rejected the State Defendants' claim of constitutional immunity from A.W.'s Rehabilitation Act and IDEA causes of action.*fn1 We exercise plenary review. See, e.g., Koslow v. Pennsylvania, 302 F.3d 161, 167 (3d Cir. 2002), cert. denied, 123 S. Ct. 1353 (2003).
We rule that Congress unequivocally expressed its intent to condition participation in these two federal assistance programs on the state's relinquishment of its immunity and that New Jersey, by accepting these funds, surrendered its constitutional right to immunity as to A.W.'s claims against the State Defendants. This waiver condition is also valid under the Spending Clause of the United States Constitution. The District Court therefore correctly rejected any claim of constitutional immunity.
The general principles governing the application of the Eleventh Amendment and Congress's right to attach conditions to federal funding under the Spending Clause are well established. The Eleventh Amendment provides:
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
U.S. Const. amend. XI. A state is generally entitled to immunity in federal court from suits by private parties, including their own citizens. See, e.g., Koslow v. Pennsylvania, 302 F.3d 161, 167 (3d Cir. 2002), cert. denied, 123 S. Ct. 1353 (2003); MCI Telecomm. Corp. v. Bell Atl.-Pa., 271 F.3d 491, 503 (3d Cir 2001), cert. denied, 123 S. Ct. 340 (2002). This protection from suit extends to state agencies as well as state officials sued in their official capacities for monetary damages. See, e.g., Broselow v. Fisher, 319 F.3d 605, 607 (3d Cir. 2003); MCI Telecomm. Corp., 271 F.3d at 503.
The parties raise two exceptions to this rule of constitutional immunity. Congress is permitted to abrogate the states' Eleventh Amendment immunity pursuant to its enforcement power under Section 5 of the Fourteenth Amendment. See, e.g., Koslow, 302 F.3d at 168. Although it is asserted that Congress validly abrogated state immunity from Rehabilitation Act and IDEA claims, we, like the District Court, need not reach this issue because a state may waive "its sovereign immunity by consenting to suit." College Sav. Bank v. Fl. Prepaid Post-secondary Educ. Expense Bd., 527 U.S. 666, 670 (1999) (citing Clark v. Barnard, 108 U.S. 436, 447-48 (1883)); see also, e.g., Koslow, 302 F.3d at 168.
We must apply a stringent test to determine whether a state has actually waived its Eleventh Amendment immunity from federal-court jurisdiction. College Sav. Bank, 527 U.S. at 675 (quoting Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241 (1985)); see also, e.g., MCI Telecomm. Corp., 271 F.3d at 503. Because a state's right to immunity is guaranteed by the Constitution, there must be an " 'intentional relinquishment or abandonment of a known right or privilege.' " MCI Telecomm. Corp., 271 F.3d at 504 (quoting College Sav. Bank, 527 U.S. at 681-82). A state is deemed to waive its immunity only where such waiver is " 'stated "by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction." ' " Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 239-40 (1999) (quoting Edelman v. Jordan, 415 U.S. 651, 673 (1974)); see also, e.g., Koslow, 302 F.3d at 172. A court must " 'indulge every reasonable presumption against waiver.' " College Sav. Bank, 527 U.S. at 682 (quoting Aetna Ins. Co. v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937)).
Under certain circumstances, a state may surrender its immunity by accepting federal funds conditioned on the state's waiver of immunity. This exception relies on an understanding of both the Eleventh Amendment itself as well as Congress's power under the Spending Clause to "lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States." U.S. Const. art. I, § 8, cl. 1. In the recent decision of Koslow v. Pennsylvania, 302 F.3d 161 (3d Cir. 2002), cert. denied, 123 S. Ct. 1353 (2003), we recognized that " 'Congress may require a waiver of state sovereign immunity as a condition for receiving federal funds even though Congress could not order the waiver directly.' " Id. at 172 (quoting Jim C. v. United States, 235 F.3d 1079, 1081 (8th Cir. 2000) (en banc)).
This understanding of waiver is based on the notion of gratuity or gift. The Supreme Court considered a theory of "constructive waiver" of immunity in College Savings Bank v. Florida Prepaid Post-secondary Education Expense Board, 527 U.S. 666 (1999). The plaintiff brought a Lanham Act claim against an agency of the Florida state government, arguing, inter alia, that any sovereign immunity was waived when the agency voluntarily engaged in the federally regulated activity of running a for-profit college tuition prepayment program following the enactment of the Trademark Remedy Reduction Act. Id. at 670-72, 676. The Supreme Court rejected this argument that a state's conduct of otherwise lawful activity gives rise to a waiver and overruled the "constructive waiver" doctrine announced in Parden v. Terminal Ry., 377 U.S. 184 (1964). College Sav. Bank, 527 U.S. at 675-87; see also, e.g., MCI Telecomm. Corp., 271 F.3d at 504 ("Congress no longer may statutorily coerce a state into relinquishing its sovereign immunity on threat of the state being excluded from participating in an otherwise lawful and permissible activity." (citations omitted)).
The Supreme Court, however, expressly distinguished Congress's bestowal of the gift of federal financial assistance from this rejected doctrine. College Sav. Bank, 527 U.S. at 678 n.2, 686-87. A waiver of immunity in exchange for a congressional gratuity or benefit to which a state is not otherwise entitled is ordinarily different from a "waiver" arising out of the threatened prohibition of permissible conduct. Id.; see also, e.g., MCI Telecomm. Corp., 271 F.3d at 505. Congress therefore may "require a state to waive immunity in order to engage in an activity in which the state may not engage absent congressional approval, or in order to receive a benefit to which the state is not entitled absent a grant or gift." MCI Telecomm. Corp., 271 F.3d at 505.
Congress must expressly indicate that this waiver constitutes a condition of its gratuity. It is necessary for Congress to "manifest[ ] a clear intent to condition participation in the programs funded under the [statute] on a State's consent to waive its constitutional immunity." Atascadero State Hosp., 473 U.S. at 247; see also, e.g., Koslow, 302 F.3d at 170. This requirement for Congress to "speak with a 'clear voice' ensures that the states exercise their choice knowingly and voluntarily, cognizant of the consequence (waiver of ...