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Cooper v. Southeastern Pennsylvania Transportation Authority

November 26, 2008


On Appeal from the United States District Court for the Eastern District of Pennsylvania D.C. Civil Action No. 06-cv-0888 (Honorable Thomas M. Golden).

The opinion of the court was delivered by: Scirica, Chief Judge.


Argued March 4, 2008

Before: SCIRICA, Chief Judge, FISHER and ROTH, Circuit Judges.


At issue is whether the Southeastern Pennsylvania Transportation Authority ("SEPTA") is entitled to sovereign immunity under the Eleventh Amendment. In 1991, we determined SEPTA was not an arm of the state. Bolden v. SEPTA, 953 F.2d 807 (3d Cir. 1991) (en banc), cert. denied, 504 U.S. 943 (1992). Now SEPTA contends that subsequent changes in Eleventh Amendment jurisprudence and in SEPTA's state funding formula demand reconsideration and entitle it to sovereign immunity. The District Court disagreed. We will affirm.

Plaintiff Allison Cooper, a bus driver for SEPTA, brought a collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207(a). She contends SEPTA undercompensates its bus drivers by failing to fully account for their performance of required pre-trip safety inspections. SEPTA filed a motion to dismiss citing the Eleventh Amendment bar of sovereign immunity. After allowing discovery on SEPTA's funding, the District Court construed the motion as one for summary judgment and denied it. SEPTA appealed.


SEPTA, a metropolitan transportation authority created by the Commonwealth of Pennsylvania,*fn1 operates a mass-transit system within Philadelphia and its surrounding counties, as well as points in New Jersey. The pay period for SEPTA's bus drivers commences ten minutes before the bus is scheduled to pull out of the depot in the morning. Those who drive a "swing run" -- two shifts a day, with a break in between -- are compensated for the second shift commencing at the time of the scheduled pull-out in the afternoon. The bus drivers must perform a safety inspection before any departure, whether in the morning or afternoon. According to Cooper, these inspections take ten to thirty minutes to complete.

Cooper filed this collective action, bringing claims under the FLSA, 29 U.S.C. § 207(a), as well as under state law.*fn2 She contended SEPTA deprived its bus drivers of compensation by paying them for only a portion of the time it took to perform morning inspections and by failing to pay them at all for inspections before the second shift of a swing run. Proceedings in the District Court were stayed pending the outcome of this appeal.*fn3


The District Court had jurisdiction under 28 U.S.C. § 1331. An order denying Eleventh Amendment immunity is immediately appealable as a final order under the collateral order doctrine. P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144-45 (1993). Accordingly, we have jurisdiction under 28 U.S.C. § 1291. Our review of a denial of summary judgment is plenary. Hampe v. Butler, 364 F.3d 90, 93 (3d Cir. 2004). "The party asserting immunity bears the burden of production and persuasion." Febres v. Camden Bd. of Educ., 445 F.3d 227, 229 (3d Cir. 2006).


Since our decision in Bolden, the Supreme Court has refined its Eleventh Amendment jurisprudence. We have followed suit. SEPTA contends these changes have wrought a "fundamental shift in emphasis," so that a state's characterization of an agency as an arm of the state is essentially dispositive. SEPTA's Reply Br. 8. We have modified our own jurisprudence to reflect direction from the Supreme Court, but we have not concluded that a state's characterization warrants dispositive treatment in our sovereign immunity analysis.

A brief review of Bolden and subsequent case law is in order. In Bolden, we addressed en banc whether SEPTA was entitled to sovereign immunity. We applied the test set forth in our analysis of New Jersey Transit's claim of immunity in Fitchik v. New Jersey Transit Rail Operations, Inc., 873 F.2d 655 (3d Cir. 1989) (en banc). This test determines whether an agency is entitled to sovereign immunity by balancing three factors: (1) state treasury, (2) status under state law, and (3) autonomy.*fn4 Noting that the state-treasury factor was "the 'most important'" of the three, Bolden, 953 F.2dat 818 (quoting Fitchik, 873 F.2d at 659), we first addressed the Commonwealth's funding of SEPTA. With "only about 27% of its revenue [coming] from the state government," SEPTA did not derive its funding primarily from the Commonwealth. Id. at 819. "[T]his most important fact" weighed heavily against a finding of immunity. Id.Furthermore, the Commonwealth was shielded from liability for SEPTA's obligations. Id. Nor was SEPTA required to request funds from the Commonwealth to pay for adverse judgments because it could raise revenues by increasing fares. Id. And even though SEPTA contended it might not be able to meet a significant shortfall by raising fares and would be forced to rely on increased state subsidies, we rejected that argument. We found "discretionary subsidies committed in reaction to a judgment . . . would not necessarily transform the recipients into alter egos of the state." Id. Given this funding relationship between SEPTA and the Commonwealth, we found the state-treasury factor "weigh[ed] at least as strongly against SEPTA's Eleventh Amendment argument as it did against New Jersey Transit's argument in Fitchik." Id. at 820.*fn5

We then considered the second factor -- SEPTA's status under state law. We found some of SEPTA's attributes were not characteristic of an arm of the state: it had (1) a "separate corporate existence," (2) "the power to sue and be sued," and (3) "the power to enter into contracts and make purchases on [its] own behalf." Id. But we also found attributes of SEPTA that were characteristic of an arm of the state: (1) it was "exempt[] from state property taxation," (2) it possessed "certain public powers such as the power of eminent domain," and (3) it was "subject to the Pennsylvania Sovereign Immunity statute." Id. SEPTA shared all of these attributes with New Jersey Transit. We noted "SEPTA differ[ed] from [New Jersey Transit] in that SEPTA [was] proclaimed by statute to be 'an agency and instrumentality' of the Commonwealth, but this same provision also describe[d] SEPTA as a 'separate body corporate and public.'" Id. (quoting 55 Pa. Cons. Stat. Ann. § 600.303(a) (West 1991) (repealed 1991); Act 26, 74 Pa. Cons. Stat. § 1502 (repealed 1994)). Thus, we found SEPTA's status under state law, like that of New Jersey Transit in Fitchik, weighed only "'slightly' in favor" of sovereign immunity. Id.

Third, we considered SEPTA's degree of autonomy from the Commonwealth. Although in Fitchik this factor weighed slightly in favor of according New Jersey Transit immunity, we found SEPTA enjoyed more autonomy than New Jersey Transit. SEPTA possessed powers similar to New Jersey Transit's, which gave the entities "a measure of autonomy." Id. These powers included"the exclusive power to initiate action and the power 'to enter contracts, bring lawsuits, purchase and sell property, buy insurance, structure the corporation's internal management, and set and collect fares.'" Id. (quoting Fitchik, 873 F.2d at 663). Only five of SEPTA's fifteen board members were appointed by state officials, with the other ten appointed by the counties SEPTA served, whereas three of New Jersey Transit's seven board members were (by statute) members of the state's executive branch. Id. Significantly, New Jersey's Governor could veto the actions of New Jersey Transit's board, but SEPTA was not subject to the Commonwealth's gubernatorial veto. Id. Because SEPTA had greater control over its own actions, we found "the autonomy factor, which weighed 'slightly' in [New Jersey Transit's] favor, is appreciably weaker here." Id.

We considered these three factors, treating the state-treasury factor as the most important. Id. at 821. Finding SEPTA's argument for immunity weaker than New Jersey Transit's, we held SEPTA, like New Jersey ...

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