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BLAKE v. KLINE

UNITED STATES DISTRICT COURT, EASTERN DISTRICT OF PENNSYLVANIA


December 19, 1978

Margaret Ann BLAKE, a minor by James Blake, her guardian
v.
Caryl M. KLINE, Robert E. Casey, Fred M. Heddinger, William F. Jacobs, Jr., John D. Killian, Jacque D. Angle, Francis Moran, J. Henry Eisenhart, Benjamin L. Stackowski, Samuel Corrado, Richard C. Harris, and the Public School Employees' Retirement Board

The opinion of the court was delivered by: HANNUM

MEMORANDUM

Plaintiff instituted this two-count action to recover certain death benefits allegedly due her from the Pennsylvania Public School Employees' Retirement Board (the PSERB). Defendants have moved to dismiss the Complaint pursuant to Rule 12(b), F.R.Civ.P., thereby squarely presenting the question of whether this Court is without subject matter jurisdiction by virtue of the Eleventh Amendment to the Constitution of the United States.

 Defendants contend that the PSERB is the alter ego of the Commonwealth of Pennsylvania and hence, immune from suit in federal court. Concomitantly they argue, since the suit is one for money damages, and since suit against the PSERB is precluded, suit against the individual defendants is likewise barred. We now address those issues.

 Eleventh Amendment Immunity of the PSERB.

 Whether the PSERB is immune from suit by virtue of the Eleventh Amendment depends upon whether it can be said that it is the alter ego of the state. This question is one of federal, not state, law. Harris v. Pennsylvania Turnpike Commission, 410 F.2d 1332, 1333 n.1 (3d Cir. 1969). Nevertheless, as pointed out in 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), local law and decisions defining the status and nature of the agency involved in its relation to the sovereign is a factor to consider in making this determination.

 Other factors to be considered include whether any judgment plaintiff might be awarded would have to be made out of the state treasury; whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy it has 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 New Jersey State Prison, 415 F.2d 247, 250-51 (3d Cir. 1969), citing Krisel, supra.

 The Court has weighed these factors and, on balance, concludes that they point toward a finding that the PSERB is a separate arm of the Commonwealth entitled to Eleventh Amendment immunity from suit. We find support for this conclusion in the statutory scheme establishing the PSERB and the fund it administers, as well as from decisions by the Pennsylvania Commonwealth Court and the United States District Court for the Eastern District of Pennsylvania.

 In United Brokers Mortgage Co. v. Fidelity Philadelphia Trust Co., 26 Pa.Cmwlth. 260, 363 A.2d 817 (1976), the Commonwealth Court clearly held that the PSERB's fund was so identified with the state as to preclude suit in trespass against it, based on sovereign immunity. In its holding the court was careful to point out the indices that rendered the fund conjugal with the state. This decision assists the Court here in divining local law on the subject of the agency's relation with the sovereign. Although this decision is not automatically controlling since the highest court of the Commonwealth has not specifically addressed the issue, Commissioner of Internal Revenue v. Estate of Bosch, 387 U.S. 456, 87 S. Ct. 1776, 18 L. Ed. 2d 886 (1967), it is presumptive evidence of state law which this Court is not free to ignore, absent other persuasive data that a contrary result would be reached by the Pennsylvania Supreme Court. See National Surety Co. v. Midland Bank, 551 F.2d 21 (3d Cir. 1977). We find no such other persuasive data in light of the newly enacted Act 152, Act of September 28, 1978, P.L. -- , No. 152. This Act is, by its terms, intended to apply retroactively and to bar actions that would otherwise have been permitted under Mayle v. Pennsylvania Department of Highways, 479 Pa. 384, 388 A.2d 709 (1978).

 In United Brokers, supra, the court held that both the funds administered by the PSERB and by the State Employees' Retirement Board (the SERB) bore the same intimate relationship with the Commonwealth, recognizing that each has the same status viz-a-viz the state. With this consideration in mind, the Court finds additional support for its conclusion that the instant suit is barred by the Eleventh Amendment in Flesch v. Eastern Pennsylvania Psychiatric Institute, 434 F. Supp. 963 (E.D.Pa.1977). Therein the court reached the conclusion that the SERB was "a separate arm of the state entitled to Eleventh Amendment protection." Flesch, supra, at 977.

 The statutory scheme establishing the SERB and the fund it administers is virtually identical in all material respects to the statutory scheme adopted for the PSERB and the fund here in question. In particular, the following points of similarity, Inter alia, demonstrate the closeness of the boards' and funds' relations to the Commonwealth: both boards are defined as independent administrative boards, organized under state administrative departments; *fn1" the State Treasurer is an Ex officio member of both boards, *fn2" is custodian of both funds, *fn3" and all payments from the funds are made by him; *fn4" the Attorney General is designated legal advisor to both boards; *fn5" and cooperation between the two boards is mandated. *fn6" Further, compensation of employees of the boards is directed to be consistent with the Civil Service Act and compensation standards established by the Executive Board of the Commonwealth. *fn7" Other points of similarity also exist. *fn8" But perhaps most significant in this regard are the facts that the funds are exempted from Both municipal and state taxation, *fn9" and that payments of benefits are Expressly made obligations of the Commonwealth. *fn10"

 The intimate ties to the Commonwealth are thus evident, and compel the same conclusion reached in Flesch, supra: that the PSERB is so identified with the state as to be immune from suit under the Eleventh Amendment. Accordingly, it appearing that the Commonwealth of Pennsylvania is the real, substantial party against whom the instant claims are asserted, defendant PSERB's jurisdictional attack based upon Eleventh Amendment sovereign immunity must be upheld, even though the state is not specifically named as a defendant. Krisel, supra, at 848. *fn11"

 Immunity of Individual Board Members.

 Regarding her claims against the individual board members, plaintiff concedes that they are sued merely as nominal parties in an effort to reach the fund they administer. *fn12" Since the suit is one for money damages only, and since suit against the PSERB is barred by the Eleventh Amendment, she is precluded from so doing. Scheuer v. Rhodes, 416 U.S. 232, 237-38, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974). Thus, these claims, too, must be dismissed.

 Accordingly, the Court finds that it is without subject matter jurisdiction over the claims advanced in the complaint, and will, therefore, grant defendants' motion to dismiss. *fn13"

 An appropriate Order follows.


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