filed: January 20, 1994; As Corrected January 25, 1994.
On Appeal from the United States District Court for the Eastern District of Pennsylvania. D.C. Civ. No. 91-06814.
Before: Hutchinson, Cowen and Nygaard Circuit Judges.
Walter T. Peters ("Peters") filed a complaint alleging that the Delaware River Port Authority of Pennsylvania and New Jersey ("DRPA") violated his constitutional rights of freedom of belief and association by failing to reappoint him as its Secretary solely because he is a member of the New Jersey Republican Party. In a pretrial application, the district court ruled that the position of Secretary was not a politically sensitive position. Accordingly, the district court held that Peters' position as Secretary was protected by the First Amendment from termination by reason of his political affiliation. The case was thereafter tried to a jury, which rendered a verdict in favor of Peters. The ultimate question presented in this appeal is whether party affiliation is an appropriate requirement for the effective performance of the position of Secretary of the DRPA. Because we find that it is, we will reverse and direct the district court to enter judgment in favor of the DRPA.
The DRPA is an agency of Pennsylvania and New Jersey, formed by a Compact (the "Compact") between these two states that was formally approved by Congress.*fn1 The DRPA was created, among other things, to operate and maintain the bridges owned jointly by Pennsylvania and New Jersey across the Delaware River and between the cities of Philadelphia and Camden. Under the Compact, the DRPA has the authority to construct and maintain facilities for the transportation of passengers, to improve and develop the Port District*fn2 for port purposes, and to promote commerce on the Delaware River. It may also establish, maintain, and operate a rapid transit system between certain points in New Jersey and Pennsylvania. Compact art. I.
The DRPA is governed by a sixteen member Board of Commissioners, eight of whom are appointed by the Governor of New Jersey for periods of five years. Compact art. II. The Governor of Pennsylvania appoints six of the commissioners for five year terms, with the elected Auditor General and the elected State Treasurer of Pennsylvania filling the remaining two positions for their four year terms. Compact art. II. All commissioners, other than the Pennsylvania Auditor General and State Treasurer, continue to hold office after the expiration of their terms and until their successors are appointed and qualified. Compact art. II. The Board of Commissioners is empowered to elect various officers including a Secretary. Compact art. IV (d). The By-laws of the DRPA provide that the Board is to elect the Secretary for a two year term.
Peters became an officer of the DRPA when the Board of Commissioners elected him as Secretary on October 20, 1989 to fill a vacancy. However, the Board did not reappoint him when his term ended in January, 1991. Peters, a New Jersey Republican, claims that he was not retained because the Board wanted the position for an individual affiliated with the New Jersey Democratic Party. The person who succeeded Peters as Secretary is a Democrat.
Peters brought this suit pursuant to 42 U.S.C. § 1983, alleging that the commissioners violated his constitutional rights by not reappointing him solely because of his political affiliation. The district court entered two orders which are the subject of this appeal. The DRPA moved for summary judgment, arguing that it was an arm or instrumentality of both the Commonwealth of Pennsylvania and the State of New Jersey and, therefore, not subject to suit under 42 U.S.C. § 1983. In its March 6, 1992 decision, the district court denied defendant's motion for summary judgment, holding that the DRPA was a "person" for purposes of 42 U.S.C. § 1983. Peters v. Delaware River Port Auth. of Pa. and N.J., 785 F. Supp. 517, 518-21 (E.D. Pa. 1992).
In that same decision, the district court also addressed the DRPA's argument that it was entitled to summary judgment because the position of Secretary of the DRPA was a policymaking or confidential position, and party affiliation is a constitutionally acceptable requirement for the position. The district court initially determined that genuine issues of material fact existed, and denied defendant's motion. Id. at 521-22. At the Conclusion of discovery, the district court again entertained the question of whether party affiliation is a constitutionally acceptable requirement for the position of Secretary. In the second decision which we review in this appeal, the district court determined that the bi-state nature of the DRPA mandates that the function of the Secretary be carried out in a non-political manner. It denied defendant's motion for summary judgment and granted plaintiff's motion for partial summary judgment. Peters v. Delaware River Port Auth. of Pa. and N.J., 809 F. Supp. 13, 15-18 (E.D. Pa. 1992). The effect of the court's ruling was to foreclose the DRPA from taking into account political considerations when making personnel decisions regarding the office of Secretary. The case then proceeded to trial with the jury returning a verdict in favor of Peters. The district court had jurisdiction by virtue of 28 U.S.C. § 1331. We have jurisdiction over the appeal at No. 93-1278 pursuant to 28 U.S.C. § 1291.*fn3
We apply the same standards as the district court when it considered the summary judgment motions. Waldorf v. Shuta, 896 F.2d 723, 728 (3d Cir. 1990). Our review is plenary. Id. We must consider all of the facts and inferences in the light most favorable to the nonmoving party. Waskovich v. Morgano, 2 F.3d 1292, 1296 (3d Cir. 1993). The moving party can prevail in its motion for summary judgment only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Waldorf, 896 F.2d at 728.
A. The DRPA's Amenability to Suit Under 42 U.S.C. § 1983
We first consider the contention of the DRPA that it is not amenable to suit under § 1983. In Will v. Michigan Dep't of State Police, 491 U.S. 58, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989), the Supreme Court held that a state is not a "person" under 42 U.S.C. § 1983,*fn4 and is therefore not amenable to suit under that statute. Id. at 65-67, 70, 109 S. Ct. at 2309, 2311. The Court based this holding in part on the immunity to suit in federal court which the Eleventh Amendment provides to states. Id. The Court held that the rule that a state is not a person under § 1983 "applies only to States or governmental entities that are considered 'arms of the State' for Eleventh Amendment purposes." Id. at 70, 109 S. Ct. at 2311. The DRPA argues that it is an arm of the state for Eleventh Amendment purposes, and is therefore not a "person" under § 1983.*fn5
The district court determined that for purposes of the Eleventh Amendment the DRPA is not an arm of either Pennsylvania or New Jersey, and denied the DRPA's motion for summary judgment on this ground. 785 F. Supp. at 518-21. The district court's reasoning and Conclusion concerning this issue is thorough and persuasive. We agree with that portion of the opinion of the district court concerning the DRPA's amenability to suit under § 1983.
We have previously set forth criteria to be considered in determining whether an entity is an alter ego of a state for Eleventh Amendment purposes. Bolden v. Southeastern Pa. Transp. Auth., 953 F.2d 807, 814-18 (3d Cir. 1991), cert. denied, ___ U.S. ___, 112 S. Ct. 2281 (1992); Fitchik v. New Jersey Transit Rail Operations, Inc., 873 F.2d 655, 659 (3d Cir.), cert. denied, 493 U.S. 850, 110 S. Ct. 148, 107 L. Ed. 2d 107 (1989). We have condensed these criteria into three general factors: (1) whether, in the event plaintiff prevails, the payment of the judgment would come from the state (this includes three considerations: whether payment will come from the state's treasury, whether the agency has the money to satisfy the judgment, and whether the sovereign has immunized itself from responsibility for the agency's debts); (2) the status of the agency under state law (this includes four factors: how state law treats the agency generally, whether the entity is separately incorporated, whether the agency can sue and be sued in its own right, and whether it is immune from state taxation); and (3) what degree of autonomy the agency has. Bolden, 953 F.2d at 816. The first of the three factors is the most important one. Id. at 816, 818.
1. Funding. The first factor, whether the source of payment for any judgment would come from either New Jersey or Pennsylvania, weighs heavily against finding that the DRPA is an alter ego of either New Jersey or Pennsylvania for purposes of the Eleventh Amendment. According to the Compact, the DRPA is financially self-sustaining, raising revenues by means of bonds, tolls and rent collections. Compact arts. IV (j), VIII. Moreover, the Compact specifically provides that the DRPA has no power to pledge the credit or create any debt of either Pennsylvania or New Jersey. Compact art. VII. Hence, the debts of the DRPA are not the debts of either state.
The DRPA was initially funded by contribution from both states. However, that factor has become irrelevant, since the DRPA is now financially self-sustaining. Any judgment against the DRPA would not come from either state treasury, but rather from the DRPA itself.
In Fitchik we found that the New Jersey Transit Rail Operations, Inc. ("NJTRO") was not an arm of New Jersey even though the state provided approximately thirty-three percent of the NJTRO's revenues. 873 F.2d at 660-61, 664. Likewise, in Bolden we concluded that the Southeastern Pennsylvania Transportation Authority ("SEPTA") was not an alter ego of the state even though Pennsylvania provided twenty-seven percent of its revenues. 953 F.2d at 819, 821. In comparison to NJTRO and SEPTA, the DRPA is self-sustaining and not dependent on either state for funding, clearly dictating that it, like the NJTRO and SEPTA, is not an arm of New Jersey or Pennsylvania. The funding factor, the most important of the three factors, weighs very heavily in support of the Conclusion that the DRPA is not the alter ego of either state for purposes of the Eleventh Amendment.
2. Status under state law. The second factor to consider in determining whether the DRPA is an alter ego of New Jersey or Pennsylvania is the status which it has under state law. In Yancoskie v. Delaware River Port Auth., 478 Pa. 396, 387 A.2d 41 (1978), the Pennsylvania Supreme Court held that the DRPA was not an arm of the Commonwealth and not entitled to sovereign immunity. The court stated:
We believe that an analysis of the legislative acts defining the purposes and powers of the Delaware River Port Authority, together with the relevant judicial decisions, requires a Conclusion that . . . the Authority is not "an integral part of the Commonwealth" and that it is therefore subject to suit, as are "political subdivisions or governmental entities other than the Commonwealth itself."
Id. at 398-99, 387 A.2d at 42 (citations omitted).
Similarly, the New Jersey Supreme Court has held, in a personal injury suit, that the DRPA is not treated as a "public entity" within the New Jersey Tort Claims Act and therefore does not enjoy immunity under that Act. Bell v. Bell, 83 N.J. 417, 423, 416 A.2d 829, 832 (1980).
Like SEPTA in Bolden and NJTRO in Fitchik, the DRPA possesses "attributes not characteristic of an arm of a state." Bolden, 953 F.2d at 820. For example, the DRPA has the power to enter into contracts and to make purchases without state approval. Compact art. IV (f)-(h); see Bolden, 953 F.2d at 820. On the other hand, like SEPTA in Bolden and NJTRO in Fitchik, the DRPA possesses some attributes under state law which are normally associated with the state. These include the exemption from state property taxation, Compact art. XI, and the power of eminent domain, Compact art. IV (k); Bolden, 953 F.2d at 820. However, on balance, and especially in light of the clear holding in Yancoskie by the Pennsylvania Supreme Court that the DRPA is not "'an ...