University v. A.W. Chesterton
Case Date: 08/27/1993
Court: United States Court of Appeals
Docket No: 92-1034
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August 26, 1993 UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT ____________________ No. 92-1034 UNIVERSITY OF RHODE ISLAND, Plaintiff, Appellant, v. A. W. CHESTERTON COMPANY, Defendant, Appellee. ____________________ ERRATA SHEET ERRATA SHEET The opinion of this Court issued on August 16, 1993, is amended as follows: Page 8, line 5, should read: as the nominal plaintiff . . . UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT ____________________ No. 92-1034 UNIVERSITY OF RHODE ISLAND, Plaintiff, Appellant, v. A. W. CHESTERTON COMPANY, Defendant, Appellee. ____________________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. Ronald R. Lagueux, U.S. District Judge] ___________________ ____________________ Before Cyr and Boudin, Circuit Judges, ______________ and Hornby,* District Judge. ______________ ____________________ Louis J. Saccoccio with whom Merlyn P. O'Keefe and Packer & ____________________ ___________________ ________ O'Keefe were on brief for appellant. _______ Steven E. Snow with whom Partridge, Snow & Hahn was on brief for ______________ ______________________ appellee. ____________________ August 16, 1993 ____________________ __________________ *Of the District of Maine, sitting by designation CYR, Circuit Judge. The University of Rhode Island CYR, Circuit Judge. _____________ ("URI") appeals a judgment disallowing its breach of warranty claims against A.W. Chesterton Company ("Chesterton"), contending that the district court lacked subject matter jurisdiction, and challenging various rulings at trial. Finding no error, we affirm. I I BACKGROUND BACKGROUND __________ We recite only those record facts essential to an understanding of the issues raised on appeal, drawing all reason- able inferences in favor of plaintiff-appellant URI. Richmond ________ Steel, Inc. v. Puerto Rican American Ins. Co., 954 F.2d 19, 20 ____________ _______________________________ (1st Cir. 1992). The R/V Endeavor is a vessel chartered by the National Science Foundation to URI's Graduate School of Oceanog- raphy (GSO) for research purposes. In the summer of 1985, John Metz, the GSO's port engineer, discovered serious rust corrosion on the inside of the Endeavor's steel ballast tanks, which are submerged in salt water during normal operation of the vessel. Responding to a Chesterton advertisement, Metz received test samples of "Rust Transformer," a Chesterton product which pur- portedly converts surface corrosion into a rust-inhibitor, which in turn serves as a base for further coats of paint. Satisfied with the test-sample results, Metz invited Chesterton sales representatives aboard the Endeavor. After inspecting the 2 Endeavor's ballast tank corrosion, Chesterton's representatives recommended that Metz use Chesterton's 1-2-3 System (using Rust Transformer, a primer, and a final enamel coat) to rehabilitate the tanks. Metz ordered the 1-2-3 System on September 11, 1985.1 Six months after URI completed the 1-2-3 System applica- tion, the new coating on the ballast tanks began to loosen and flake off. URI allegedly expended $100,000 to correct the problem. URI brought suit against Chesterton in Rhode Island state court on May 4, 1989, alleging negligence, strict liability, and breaches of an express warranty and implied warranties of merchantability and fitness for a particular purpose. Chesterton promptly removed the action to federal district court. URI moved for remand on the ground that URI, as an "alter ego, arm, or agent" of the State of Rhode Island, is not a "citizen" of Rhode Island for diversity purposes. The district court denied URI's remand motion without an evidentiary hearing, relying on an earlier district court decision, see ___ Vanlaarhoven v. Newman, 564 F. Supp. 145 (D.R.I. 1983) (Selya, ____________ ______ J.), which determined that URI was not an "arm" of the State for sovereign immunity purposes. ____________________ 1The original URI complaint alleged that Metz was reassured by Chesterton that the 1-2-3 System would work on Endeavor's ballast tanks. On the other hand, the product's written instruc- tions advised that the system was not recommended for surfaces regularly immersed in sea water. In an amended complaint, URI alleged that Chesterton representatives observed the URI crew applying the 1-2-3 System to the ballast tanks, but said nothing to URI representatives about the unsuitability of the system or its improper application. 3 This court declined to entertain URI's interlocutory appeal from the jurisdictional ruling but noted disagreement among the circuits as to the proper criteria for determining the citizenship of state universities for diversity purposes. We recommended that the district court conduct "limited factfinding" on remand relating to several factors pertinent to URI's citizen- ship, including (1) "the degree of URI's dependence on and functional integration with the state treasury," (2) "the per- centage of URI's annual budget that derives from state appropria- tions," and (3) "whether the legislature bases levels of such appropriations in part on the amount of nonappropriated funds available to URI."2 On remand, the district court denied URI's motion for a pretrial evidentiary hearing relating to these jurisdictional matters. The jury trial began on December 3, 1991. After the district court excluded the testimony of URI's only expert witness on the issue of contract damages, URI abrupt- ly rested its case. Judgment was entered for Chesterton on all counts, as a matter of law, pursuant to Fed. R. Civ. P. 50(a), and URI appealed. II II DISCUSSION DISCUSSION __________ ____________________ 2As an alternate and independent reason for declining to entertain the interlocutory appeal, this court noted that the litigation was unlikely to be so protracted as to warrant appel- late interruption, given the nature and scope of URI's contract claims. 4 A. Subject Matter Jurisdiction A. Subject Matter Jurisdiction ___________________________ URI urges us to set aside the judgment and remand the case to state court on the ground that Chesterton, a Massachu- setts corporation, has not established diversity. URI contends that it is not a Rhode Island "citizen," but a mere "arm" or "alter ego" of the State. See Gibbs v. Buck, 307 U.S. 66, 69 ___ _____ ____ (1939) (holding that party invoking diversity jurisdiction must establish sufficient facts to warrant its exercise); Bank One, _________ Texas, N.A. v. Montle, 964 F.2d 48, 50 (1st Cir. 1992) (same); ___________ ______ see also Shamrock Oil Corp. & Gas Co. v. Sheets, 313 U.S. 100, ___ ____ _____________________________ ______ 108-09 (1941) (removal statute should be strictly construed against removal); McNutt v. General Motors Acceptance Corp., 298 ______ _______________________________ U.S. 178, 187 (1936); Wilson v. Republic Iron & Steel Co., 257 ______ __________________________ U.S. 92, 97 (1921). We begin with first principles. A State cannot be a "citizen" of itself for purposes of diversity jurisdiction.3 Moor v. County of Alameda, 411 U.S. 693, 717 (1973); Postal Tel. ____ _________________ ___________ Cable Co. v. Alabama, 155 U.S. 482, 487 (1894). On the other _________ _______ hand, a political subdivision possessing the formal status of a "body politic and corporate," such as a county or municipality, is presumed a "citizen" for diversity purposes "unless it is simply 'the arm or alter ego of the State.'" Moor, 411 U.S. at _________ ____ 717, 721 (finding that Alameda County had a "sufficiently inde- ____________________ 3Section 1332(a) provides that "[t]he district courts shall have original jurisdiction of all civil actions . . . [involving over $50,000] . . . between . . . citizens of different States . . . ." 28 U.S.C. 1332(a)(1). 5 pendent corporate character" to be a "citizen" of California for diversity purposes) (citation omitted) (emphasis in original); Illinois v. City of Milwaukee, 406 U.S. 91, 97 (1972); Cowles v. ________ _________________ ______ Mercer County, 74 U.S. (7 Wall.) 118, 121-22 (1869).4 Thus, in _____________ ____________________ 4A political subdivision's "detachment" from the State generally will deprive it of the right to partake of the State's sovereign immunity under the Eleventh Amendment. See U.S. Const. ___ amend. XI ("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 . . . ."). Although we have noted the essential similarity between the immunity and diversity tests, see George ___ ______ R. Whitten, Jr. Inc. v. State Univ. Constr. Fund, 493 F.2d 177, ____________________ ________________________ 179 n.2 (1st Cir. 1974) (tests "closely allied and yet not identical"); cf. Krieger v. Trane Co., 765 F. Supp. 756, 758 (D. ___ _______ _________ D.C. 1991) (rejecting any distinction between the two tests), we have not had occasion to identify the precise nature of any differences. In this case, however, we address, and reject, two proposed distinctions. First, Eleventh Amendment analysis normally would focus primary attention on any financial drain on _____ the State treasury caused by a judgment adverse to URI, see Quern ___ _____ v. Jordan, 440 U.S. 332, 337 (1979); Edelman v. Jordan, 415 U.S. ______ _______ ______ 651, 663 (1974), a concern which obviously does not arise in a diversity case where the State-related plaintiff seeks to recover _______ a monetary judgment. Significantly, however, courts have not accepted the notion that sovereign immunity exists only if the ____ State treasury is threatened. See Cory v. White, 457 U.S. 85, ___ ____ _____ 90-91 (1982); Kroll v. Board of Trustees of Univ. of Illinois, _____ ________________________________________ 934 F.2d 904, 908 (7th Cir.), cert. denied, 112 S. Ct. 377 _____ ______ (1991); Harden v. Adams, 760 F.2d 1158, 1163 (11th Cir.) (Troy ______ _____ State University), cert. denied, 474 U.S. 1007 (1985). Whether _____ ______ in the diversity or the immunity context, the analysis must center on the State-related party's enduring legal identity as a juridical entity separate from the State. The second possible distinction we must consider is that, unlike sovereign immunity, nondiversity cannot be waived by the State. See State Highway Comm'n of Wyoming v. Utah Constr. Co., ___ ________________________________ ________________ 278 U.S. 194, 199 (1929); George R. Whitten, Jr., Inc., 493 F.2d _____________________________ at 179. Generally, however, the "waiver of immunity" inquiry would follow the initial determination that the State-related ______ entity was not sufficiently autonomous to escape characterization as an "alter ego" of the State. For example, in Vanlaarhoven, ____________ the court based its holding on the alternate ground that, even if URI were merely an "alter ego" of the State, the State had expressly waived URI's immunity under state law by granting it the authority to "sue or be sued" in its own name. Vanlaarhoven, __________ ____________ 564 F. Supp. at 149; see also infra note 7. While such a bypass ___ ____ _____ 6 principle at least, public and private corporations are accorded similar treatment as "citizens" for diversity purposes. See 28 ___ U.S.C. 1332(c)(1) ("For purposes of this section . . . a corporation shall be deemed to be a citizen of any State by which it has been incorporated . . . ."); see also Media Duplication ___ ____ _________________ Servs., Ltd. v. HDG Software, Inc., 928 F.2d 1228, 1236 (1st Cir. ____________ __________________ 1991). The Rhode Island Board of Higher Education ("Board") is nominally constituted by the State of Rhode Island as the legal entity which acts in behalf of URI and other public postsecondary educational institutions in Rhode Island.5 The Board has been constituted a "public corporation," R.I. Gen. Laws 16-59-1,6 see infra note 10, just as the County of Alameda is a "body ___ _____ ____________________ argument is impermissible where the sole issue is URI's citizen- ship for diversity purposes, sovereign immunity case law, and its identification of the relevant attributes of autonomy, is no less probative in diversity cases; hence, we cite to these cases as apposite. 5The complaint mistakenly designates URI as the plaintiff. Since URI is not a distinct legal entity under Rhode Island law, we treat the Board as the real party in interest, as did the district court. 6Section 16-59-1(a) provides, in pertinent part: "There is hereby created a board of governors for higher education, some- times hereinafter referred to as the 'board' or the 'board of governors,' which shall be and hereby is constituted a public corporation, empowered to sue and be sued in its own name, to have a corporate seal, and to exercise all the powers, in addi- tion to those hereinafter specifically enumerated, usually appertaining to public corporations entrusted with control of postsecondary educational institutions and functions." R.I. Gen. Laws 16-59-1(a) (1992). In all significant respects, this section, enacted in 1988, merely extended the extant powers possessed by the Board's immediate predecessor, the entity involved in Vanlaarhoven. ____________ 7 corporate and politic" under California law. Moor, 411 U.S. at ____ 719 (citing Cal. Gov't Code 23003). Several ancillary principles derive from Moor. The ____ criteria are substantially similar for evaluating whether an entity is a citizen of the State for diversity purposes, or a State for Eleventh Amendment sovereign immunity purposes, see ___ Northeast Fed. Credit Union v. Neves, 837 F.2d 531, 534 (1st Cir. ___________________________ _____ 1988) (tests "pretty much the same"); see supra note 4, and ___ _____ present the same ultimate question for decision: whether the State of Rhode Island remains the real party in interest, not- ____ _____ __ ________ withstanding URI's designation as the nominal plaintiff. See id. ___ ___ at 533 ("For the purpose of diversity jurisdiction, the determi- native factor is whether the state is the real party in inter- est.") (quoting Krisel v. Duran, 386 F.2d 179, 181 (2d Cir.), ______ _____ cert. denied, 390 U.S. 1042 (1967)); see also Kovats v. Rutgers, _____ ______ ___ ____ ______ _______ 822 F.2d 1303, 1307 (3d Cir. 1987) (immunity), cert. denied, 489 _____ ______ U.S. 1014 (1987); Ronwin v. Shapiro, 657 F.2d 1071, 1073 (9th ______ _______ Cir. 1981) (Board of Regents of Arizona) (immunity and diversi- ty); Jagnandan v. Giles, 538 F.2d 1166, 1173 (5th Cir. 1976) _________ _____ (Mississippi State University) (immunity), cert. denied, 432 U.S. _____ ______ 910 (1977); Krieger v. Trane Co., 765 F. Supp. 756, 757-58 _______ _________ (D.D.C. 1991) (diversity). Thus, most unincorporated state agencies and departments are readily recognizable as mere "arms" or "alter egos" of the State. On the other hand, though the State's formal incorpora- tion of a State-related entity is not necessarily dispositive on 8 the issue of its autonomy, either for immunity or diversity purposes, see, e.g., Jagnandan, 538 F.2d at 1174, 1176; Krieger, ___ ____ _________ _______ 765 F. Supp. at 760, 762, the legislative act of incorporation should prompt a thorough examination into the precise nature of the entity established under state law. See Moor, 411 U.S. at ___ ____ 719 (undertaking "a detailed examination of the relevant provi- sions of California law" in order to rule out Alameda County's "mere agency"); id. at 721 n.54 (generally repudiating resort to ___ "conclusory" determinations as to entity's legal character); see ___ also Lake Country Estates, Inc. v. Tahoe Regional Planning ____ _____________________________ _________________________ Agency, 440 U.S. 391, 401 (1979); Mt. Healthy City Sch. Dist. Bd. ______ _______________________________ of Educ. v. Doyle, 429 U.S. 274, 280 (1977); Kovats, 822 F.2d at ________ _____ ______ 1307; Goss v. San Jacinto Junior College, 588 F.2d 96, 98 (5th ____ ___________________________ Cir. 1979). Accordingly, comparing the incorporated public entity to the polar extremes (the State on the one hand, and political subdivisions on the other), we must determine whether the nominal public corporation possesses "a sufficiently indepen- dent corporate character to dictate that it be treated as a citizen of [the State of incorporation]." Moor, 411 U.S. at 721. ____ See Mt. Healthy, 429 U.S. at 280 (finding city board "more like a ___ ___________ ____ ____ county or city than it is like an arm of the State") (emphasis added); see also Kashani v. Purdue Univ., 813 F.2d 843, 845 (7th ___ ____ _______ ____________ Cir. 1987), cert. denied, 484 U.S. 846 (1988); Goss, 588 F.2d at _____ ______ ____ 98. Often these comparative appraisals unavoidably lead to imprecise distinctions in degree, rarely amenable to ready 9 resolution. Cf. Metcalf & Eddy, Inc. v. Puerto Rico Aqueduct & ___ ____________________ ______________________ Sewer Auth., ___ F.2d ___, ___ (1st Cir. 1993) [No. 91-1602, 1993 ___________ U.S. App. LEXIS 10064, at 10 (1st Cir. May 3, 1993)] (noting that agency's entitlement to immunity "poses an essentially functional __________ inquiry, not easily amenable to bright-line answers or mechanical solutions") (emphasis added). Like their private counterparts, public corporations are hardly monolithic, having been vested with whatever powers, rights, and privileges state legislatures may bestow to suit the public purpose for which the particular corporation was commissioned. Although the vast majority of state universities, incorporated and unincorporated alike, have been found to be "arms" of the State for immunity and diversity purposes, each state university must be evaluated in light of its unique characteristics. See Kovats, 822 F.2d at 1303; Kashani, ___ ______ _______ 813 F.2d at 845; Hall v. Medical College of Ohio, 742 F.2d 299, ____ ________________________ 302 (6th Cir. 1984), cert. denied, 469 U.S. 1113 (1985); United _____ ______ ______ Carolina Bank v. Board of Regents, 665 F.2d 553, 557 (5th Cir. _____________ _________________ 1982) (Austin State University); Soni v. Board of Trustees of ____ _____________________ Univ. of Tennessee, 513 F.2d 347, 352 (6th Cir. 1975), cert. ___________________ _____ denied, 426 U.S. 919 (1976); University Sys. of New Hampshire v. ______ ________________________________ United States Gypsum, 756 F. Supp. 640, 645 (D.N.H. 1991).7 ____________________ ____________________ 7Even if it were presumed that the immunity and diversity standards converge, see supra note 4, Vanlaarhoven was not ___ _____ ____________ conclusive as to URI's citizenship for diversity purposes. Chesterton argues that URI is barred, by Vanlaarhoven and col- ____________ lateral estoppel, from litigating the diversity jurisdiction issue. We do not agree. Chesterton did not raise the estoppel issue in the district court, nor did the court invoke collateral estoppel by way of reference to Vanlaarhoven. Thus, Chesterton ____________ waived the issue. McCoy v. Massachusetts Inst. of Technology, _____ __________________________________ 10 We have propounded an illustrative list of criteria by no means exhaustive often germane to the Eleventh Amendment "arm" or "alter ego" determination, including whether the entity (1) performs an "essential" or "traditional" governmental func- tion, as opposed to a nonessential or merely proprietary one; (2) exercises substantial autonomy over its internal operations; (3) ____________________ 950 F.2d 13, 22 (1st Cir. 1991), cert. denied, 112 S. Ct. 1939 _____ ______ (1992) (issues not "squarely" raised before trial court cannot be raised on appeal). Moreover, the "alter ego" determination in Vanlaarhoven was not "essential" to the judgment, in at least two ____________ respects. See Restatement (Second) of Judgments 27 ("When an ___ __________________________________ issue of fact or law is actually litigated by a valid and final judgment, and the determination is essential to the judgment, the ___ ___ _____________ __ _________ __ ___ ________ determination is conclusive . . . .") (emphasis added). First, the Vanlaarhoven court, as an alternate holding, assumed arguendo ____________ ________ that URI might be an "alter ego" of the State, but went on to hold that Rhode Island law had recognized similar grants of the power to sue and be sued as express waivers by the State of an alter ego's sovereign immunity from unconsented suit. Vanlaar- ________ hoven, 564 F. Supp. at 149; see supra note 4. Second, URI, the _____ ___ _____ defendant in Vanlaarhoven, prevailed on the merits. Except in ____________ limited circumstances not present here, the party that prevails on the merits is not obligated to appeal from an adverse ruling __ ___ _________ __ on a collateral issue. Cf. Deposit Guar. Nat'l Bank v. Roper, ___ _________________________ _____ 445 U.S. 326, 334-35 (1980) (noting that adverse ruling presum- ably would have no effect in later litigation). Although not binding, Vanlaarhoven nonetheless remains ____________ persuasive precedent in its own right. See Metcalf & Eddy, ___ ___ ______________ F.2d at ___ [No. 91-1602, 1993 U.S. App. LEXIS 10064, at 13 n.4 (1st Cir. May 3, 1993)] (noting that immunity of agency need not always be considered de novo; "[w]here the agency's activity and __ ____ its relation to the state remain essentially the same, prior ___________ ___ ____ circuit precedent will be controlling") (emphasis added); see ___ also infra note 16. URI argues that much of Vanlaarhoven's ____ _____ ____________ precedential weight was eroded by the later repeal of R.I. Gen. Laws 16-31-1 to 15 in 1988, and its replacement with the new statutory scheme. See R.I. Gen. Laws 16-59-1. We agree with ___ the district court that the legislative modifications in 1988 were largely inconsequential, see infra Section II.A.2.a., and ___ _____ that Vanlaarhoven's "lengthy description of the fiscal relation- ____________ ship between the University and the State of Rhode Island is as accurate today as when it was written in 1983 . . . ." Universi- _________ ty of Rhode Island v. A.W. Chesterton Co., 721 F. Supp. 400, 402 ___________________ ___________________ (D.R.I. 1989). 11 enjoys meaningful access to, and control over, funds not appro- priated from the State treasury; (4) possesses the status of a separate "public corporation"; (5) may sue and be sued in its own name; (6) can enter into contracts in its own name; (7) has been granted a state tax exemption on its property; or (8) has been expressly debarred from incurring debts in the State's name or behalf. See Metcalf & Eddy, ___ F.2d at ___ [No. 91-1602, 1993 ___ _______________ U.S. App. LEXIS 10064, at 11-12 (1st Cir. May 3, 1993)]; In re _____ San Juan DuPont Plaza Hotel Fire Litigation, 888 F.2d 940, 942 _____________________________________________ (1st Cir. 1989); Ainsworth Aristocrat Int'l Pty, Ltd. v. Tourism ____________________________________ _______ Co. of Puerto Rico, 818 F.2d 1034, 1038 (1st Cir. 1987). These __________________ diverse considerations are designed to disclose the extent to which state law endows the incorporated State-related entity with the operational authority, discretion, and proprietary resources with which to function independently of the State. See George R. _____________ ___ _________ Whitten, Jr., Inc. v. State Univ. Constr. Fund, 493 F.2d 177, 180 __________________ ________________________ (1st Cir. 1974); cf. Metcalf & Eddy, ___ F.2d at ___ [No. 91- ___ _______________ 1602, 1993 U.S. App. LEXIS 10064, at 12 (1st Cir. May 3, 1993)] ("[T]he more tightly the agency and the state are entangled, the more probable it becomes that the agency shares the state's Eleventh Amendment immunity.").8 ____________________ 8URI argues that Rhode Island case law provides a definitive statement on the functional interdependence of the Board and the State. See, e.g., State of Maryland Cent. Collection Unit v. ___ ____ __________________________________________ Board of Regents, 529 A.2d 144, 145 (R.I. 1987); Opinion to the _________________ ______________ Governor, 181 A.2d 618 (R.I. 1962). State court decisions are ________ entitled to great deference in our diversity and sovereign immunity determination. See Ainsworth, 818 F.2d at 1037; see ___ _________ ___ also Harden, 760 F.2d at 1163; Jackson v. Hayakawa, 682 F.2d ____ ______ _______ ________ 1344, 1350 (9th Cir. 1982) (California State University); Jag- ____ 12 1. The Board's Operational Autonomy 1. The Board's Operational Autonomy ________________________________ After reviewing many decisions relating to public postsecondary educational institutions, we are impressed, as was the district court in this case and in Vanlaarhoven, by the ____________ extraordinary measure of autonomy enjoyed by the Rhode Island Board of Higher Education. As with most "state" universities, the Board is charged with an essential and traditional governmen- ____________________ nandan, 538 F.2d at 1175-76; Brennan v. University of Kansas, 451 ______ _______ ____________________ F.2d 1287, 1290 (10th Cir. 1971). But see Kovats, 822 F.2d at ___ ___ ______ 1310 (state case law treating entity as "arm" does not undermine autonomy for diversity purposes). Nevertheless, the "real party in interest" analysis is ultimately a matter of federal law. See _______ ___ Moor, 411 U.S. at 720 (looking to California state court deci- ____ sions merely to confirm Court's independent diversity determina- _______ tion, based on California statutes); Hughes-Bechtol, Inc. v. West ____________________ ____ Va. Bd. of Regents, 737 F.2d 540, 543 (6th Cir.) (diversity), ___________________ cert. denied, 469 U.S. 1018 (1984); Long v. Richardson, 525 F.2d _____ ______ ____ __________ 74, 79 (6th Cir. 1975) (Memphis State University); cf. Jacin- ___ ______ toport Corp. v. Greater Baton Rouge Port Comm'n, 762 F.2d 435, _____________ ________________________________ 439 (5th Cir. 1985). In the instant case, we find the State of Maryland and its __________________ predecessor decisions inconclusive. First, State of Maryland __________________ involved the distinct question of the United States Supreme Court's original jurisdiction, not the issue of diversity juris- diction. State of Maryland, 529 A.2d at 147. Second, the court's _________________ finding that URI and the State were the same "party" is dictum, the State of Maryland having conceded the point. Id. Finally, ___ although State of Maryland cites to prior state case law, see __________________ ___ Opinion to the Governor, 181 A.2d 618, 621 (R.I. 1962), neither _______________________ case engages in an extended analysis of the Board's corporate powers or characteristics. See Moor, 411 U.S. at 721 n.54 ___ ____ (expressing disfavor for "conclusory" determinations of entity's legal character); Jacintoport Corp., 762 F.2d at 438 (refusing to _________________ follow state case law on immunity question where cited cases "did not deal with the precise question before us, nor was their inquiry based on even analogous jurisprudential concerns"). Thus, unlike the situation in Moor, where the Court was able to find ____ "the clearest indication possible from California's Supreme Court ________ __________ ________ of the status of California's counties," Moor, 411 U.S. at 720 ____ (emphasis added), neither the focus nor the nature of the analy- sis in State of Maryland enables us to derive a clear indication _________________ as to the Rhode Island Supreme Court's views on the critical factors controlling the "real party in interest" determination in the context of federal diversity jurisdiction. 13 tal function namely, the provision of postsecondary education- al facilities to the citizens of Rhode Island. See R.I. Const. ___ art. XII, 1; Chang v. University of Rhode Island, 375 A.2d 925, _____ __________________________ 933-34 (R.I. 1977); see also Kovats, 822 F.2d at 1310 (providing ___ ____ ______ educational facilities is an essential or traditional governmen- tal function, not a proprietary one); Hall, 742 F.2d at 305 ____ (same); Rutledge v. Arizona Bd. of Regents, 660 F.2d 1345, 1349 ________ _______________________ (9th Cir. 1981) (same); cf. also Kashani, 813 F.2d at 847-48 (if ___ ____ _______ entity serves entire state, instead of one region, more likely an "arm" of State). As a general rule, therefore, it may well be that an entity established to conduct a core governmental func- tion is less likely to be vested with meaningful freedom from governance by the State's elected officials. Nevertheless, this isolated factor is seldom dispositive.9 An exception must lie ____________________ 9For example, in Moor the county's responsibility for many ____ traditional and essential governmental functions, including the provision of water services, flood control, rubbish disposal, and harbor and airport facilities, appears to have been accepted by the Court as affirmative evidence of citizenship. See Moor, 411 ___ ____ U.S. at 720. These governmental responsibilities were noted by the Court in acknowledging the county's power to levy taxes to finance its functions. Similarly, URI is empowered to fix and collect tuitions and fees and enjoys plenary control over these nonappropriated funds, as well as its educational functions. Cf. ___ University of Tennessee v. United States Fidelity & Guar., Co., _______________________ ____________________________________ 670 F. Supp. 1379, 1384 (E.D. Tenn. 1987) (legislature's control of tuition rates suggests "arm"). We discern from Moor a general ____ rule of thumb: the State's delegation of essential governmental functions, together with the power to generate and control the nonappropriated revenues with which to perform those governmental functions, normally will be viewed as supporting, rather than undermining, the entity's independent status for citizenship purposes. Cf. Metcalf & Eddy, ___ F.2d at ___ [No. 91-1602, 1993 ___ _______________ U.S. App. LEXIS 10064, at 17, 17 n.6 (1st Cir. May 3, 1993)] (noting that, if all traditional government functions triggered immunity protection, local school boards would have been deemed "arms" of state, and that agencies which derive revenue through 14 where the statutory scheme, as a whole, confutes any legislative __ _ _____ intent to establish the entity as a mere "arm" of the State. See ___ Kovats, 822 F.2d at 1312 (performance of governmental, nonpropri- ______ etary function not necessarily indicative of lack of autonomy). Accordingly, we must examine the particular powers with which the Board is endowed under its statute of "incorporation." From an operational standpoint, the Board is denominat- ed a "public corporation," Moor, 411 U.S. at 719 (county's ____ corporate status and powers "most notabl[e]" attributes of citizenship); cf. Hall, 742 F.2d at 305 (noting that school's ___ ____ lack of separate corporate status suggests mere agency),10 which may "sue and be sued in its own name." R.I. Gen. Laws 16- 59-1(a).11 The Rhode Island statutes elsewhere define the term ____________________ "user fees" for performance of "governmental" functions are unlikely to be characterized as "arms" merely by virtue of the traditional nature of their mission) (citing Royal Caribbean ________________ Corp. v. Puerto Rico Ports Auth., 973 F.2d 8 (1st Cir. 1992)). _____ _______________________ 10Some courts have held that corporate status ought not be regarded as probative unless the legislature expresses its intent to confer perpetual corporate status upon the entity. See, e.g., _________ ___ ____ Hall, 742 F.2d at 299. The rationale of these cases appears to ____ be that the legislature reserves the right to revoke all delegat- ed powers to such a nonperpetual entity, at any time. Id. See ____________ ___ ___ also Kashani, 813 F.2d at 847; Jackson, 682 F.2d at 1350; Bren- ____ _______ _______ _____ nan, 451 F.2d at 1290. As we are unable to accept the premise ___ that legislative enactments can be immunized from amendment by succeeding legislatures, let alone be perpetuated, we respectful- ly decline to follow these decisions. We note also that these decisions conflict with Moor, insofar as they suggest that most ____ political subdivisions cannot be "citizens" because succeeding legislatures retain the power to alter or rescind prior delega- tions of the State's police power. 11It is not always clear in the Eleventh Amendment context whether the court has already determined that the entity is an "arm" of the State, and is referring to this provision (power to sue and be sued) only as evidence of an explicit waiver of the 15 "public corporation" as "a corporate entity which is considered a governmental agency but which has a distinct legal existence from ___ _____ ___ _ ________ _____ _________ ____ the state or any municipality, [and] does not constitute a ___ _____ __ ___ ____________ department of state or municipal government . . . ." Id. 16- ___ 62-4 (emphasis added). See Harden v. Adams, 760 F.2d 1158, 1163 ___ ______ _____ (11th Cir. 1985) (Troy State University) (holding that statutory definitions of "state" and "political subdivision" may be rele- vant factors); compare Kovats, 822 F.2d at 1310 (evidence that _______ ______ entity is "instrumentality," but otherwise excluded from some statutory definitions of "state," is probative of citizenship) with United Carolina Bank, 665 F.2d at 557 (noting that entity ____ ____________________ falls clearly within statutory definition of "state"). But cf. ___ ___ ____________________ dependent entity's sovereign immunity. See, e.g., Rozek v. ____ ____ _____ Topolnicki, 865 F.2d 1154, 1158 (10th Cir. 1989); Long, 525 F.2d __________ ____ at 77; Soni, 513 F.2d at 352; see also supra notes 4 & 7 (discus- ____ ___ ____ _____ sing Vanlaarhoven's alternative "waiver" holding). The bare ____________ power to sue is unlikely to hold complete sway in the threshold "alter ego" determination either in diversity or immunity cases. See Kashani, 813 F.2d at 847 (power to sue and be sued not ___ _______ conclusive of autonomy); Jagnandan, 538 F.2d at 1174, 1176; _________ Krieger, 765 F. Supp. at 760, 762; cf. Hall, 742 F.2d at 305 _______ ___ ____ (deliberate withholding of power to sue highly probative of lack of autonomy). But the power to sue in the entity's own name, when coupled with other powers of self-determination typically held by distinct juridical entities (power to contract, power to buy, hold, and sell property), undeniably affords the entity some additional independence from the State, since the entity need not seek the State's consent to bring, defend, or settle a lawsuit. In this case, we note in particular that (1) URI brought suit exclusively in its own name, and (2) its counsel of record is not a legal officer of the State of Rhode Island. See Jacintoport ___ ___________ Corp., 762 F.2d at 442 (noting commission's right to "employ _____ private attorneys to represent it" as evidence that it has separate legal identity from State); Tradigrain, Inc. v. Missis- ________________ _______ sippi State Port Auth., 701 F.2d 1131, 1136 (5th Cir. 1983) ________________________ (Thornberry, J., dissenting) (noting as evidence of citizenship that Authority "employs its own counsel, and is not represented by the State of Mississippi in this action"); cf. Hall, 742 F.2d ___ ____ at 305 (university's counsel is state attorney general). 16 Lewis v. Midwestern State Univ., 837 F.2d 197, 198 (5th Cir.), _____ ______________________ cert. denied, 488 U.S. 849 (1988) (mere statutory definition as _____ ______ "agency" suggests "alter ego"); Kashani, 813 F.2d at 847 (holding _______ that entity's designation as "separate" from State for some purposes is inconclusive of autonomy); Krieger, 765 F. Supp. at _______ 759(findingterm"independent agency"inconclusiveevidenceofautonomy). Ten of the thirteen Board members are appointed by the Governor,12 with the advice and consent of the senate, see R.I. ___ Gen. Laws 16-59-2(a), a legislative design most courts routine- ly view as evidence of an entity's lack of independence from State control. See, e.g., Lewis, 837 F.2d at 198; Kashani, 813 ___ ____ _____ _______ F.2d at 847 (7 of 10 members appointed); Harden, 760 F.2d at ______ 1163; Hall, 742 F.2d at 306; Gay Students Servs. v. Texas A & M ____ ___________________ ___________ Univ., 737 F.2d 1317, 1333 n.28 (5th Cir. 1984), cert. denied, _____ _____ ______ 471 U.S. 1001 (1985); United Carolina Bank, 665 F.2d at 558; _____________________ Rutledge, 660 F.2d at 1347 (all 8 appointed); Prebble v. Brod- ________ _______ _____ rick, 535 F.2d 605, 610 (10th Cir. 1976) (University of Wyoming). ____ But see Kovats, 822 F.2d at 1311 (concluding that, even if ___ ___ ______ majority is appointed by governor, that fact is not conclusive of "alter ego" status). The power of appointment (and reappoint- ment) is significant, and may entail risks of subtle or indirect manipulation of the entity's decisionmaking processes by elected officials. ____________________ 12The Governor appoints the chairperson as well, and two ex __ officio positions on the Board are occupied by members of the _______ legislative branch. Cf. Harden, 760 F.2d at 1163 (noting the fact __ ______ that executive branch officials serve as ex officio members of __ _______ Board as evidence of "alter ego" status). 17 On the other hand, the Rhode Island statutory scheme is somewhat unusual in the respect that it attempts to protect the Board from "partisan or personal" pressures. R.I. Gen. Laws 16-59-3 ("removal solely for partisan or personal reasons unre- lated to capacity or fitness for the office shall be unlawful"). Although individual Board members might be vulnerable to pres- sure, the Board as a whole is insulated to some degree from sudden "reversal[s] of policy" by fixed (three-year) and stag- _____ gered terms. Id. 16-59-1. Cf. Jacintoport Corp. v. Greater ___ ___ __________________ _______ Baton Rouge Port Comm'n, 762 F.2d 435, 442 (5th Cir. 1985) _________________________ (focusing on autonomy of Commission as an entity, not only on __ __ ______ independence of the individual commissioners). Board members receive minimal compensation ($50 per day of actual service, not to exceed $3000 annually). Since it is highly unlikely that members would depend on their Board compensation as a primary source of income, the economic coercion attending the threat of removal would be minimal. R.I. Gen. Laws 16-59-1(e). Aside from the power of appointment, the governor has no direct voice in Board decisionmaking. Cf., e.g., Fitchik v. New Jersey ___ ____ _______ ___________ Transit Rail Operations, Inc., 873 F.2d 655, 663 (3d Cir.) _______________________________ (finding entity not "alter ego," despite gubernatorial veto power), cert. denied, 493 U.S. 850 (1989). Finally, and most _____ ______ significantly, individual Board members are provided with signi- ficant insulation from partisan or personal pressure, in that no Board member may be removed except for cause, after a full ___ _____ hearing and appellate review. R.I. Gen. Laws 16-59-2, 3. 18 As a corporate entity, the Board's supervisory powers are pervasive. It unilaterally appoints, and may dismiss at its pleasure, the commissioner of higher education and the presidents of the individual educational institutions it oversees, see id. ___ ___ 16-59-4(5), (6). It possesses plenary power over the post- secondary school organizational structure, accounting procedures, the creation and abolition of all postsecondary school depart- ments and programs of study, as well as their affirmative action hiring practices. Id. 16-59-4(10), (11). See Kovats, 822 F.2d ___ ___ ______ at 1311-12 (finding that minimal state supervision over entity's operations suggests autonomy); cf. Hall, 742 F.2d at 306 (noting ___ ____ that state control through mandated programs of study suggests lack of independence); University of Tennessee v. United States _______________________ _____________ Fidelity & Guar, Co., 670 F. Supp. 1379, 1384 (E.D. Tenn. 1987) ____________________ (observing that entity must comply with controller's regulations, and legislature controls physical plant operations). But see ___ ___ Kashani, 813 F.2d at 847 (finding entity's power to prescribe _______ curricula not probative of its autonomy). The Board is expressly exempted from compliance with the Rhode Island Administrative Procedures Act, R.I. Gen. Laws 16-59-12, see Kovats, 822 F.2d ___ ______ at 1312 (APA exemption suggests autonomy); cf. Fitchik, 873 F.2d ___ _______ at 663 (APA applicability suggests "arm"); Jackson v. Hayakawa, _______ ________ 682 F.2d 1344, 1350 (9th Cir. 1982) (California State University) (same); Krieger, 765 F. Supp. at 760 (same), as well as from _______ certain personnel employment and equipment requisition regula- tions, R.I. Gen. Laws 16-59-21 (providing Board with exemption 19 from R.I. Gen. Laws 35-3-1(5), (6) in "the interest of educa- tional efficiency"). See Kovats, 822 F.2d at 1313 (exemption ___ ______ from civil service rules suggests autonomy); cf. United Carolina ___ _______________ Bank, 665 F.2d at 558 (applicability of employment regulations ____ suggests dependence); Krieger, 765 F. Supp. at 759-60 (lack of _______ exemption from general budget controls and procurement rules suggests "arm"); University of Tennessee, 670 F. Supp. at 1384 ________________________ (legislature's control of employee compensation |