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Click here for the full text of this decision FACTS:Louisiana’s Department of Education (LADOE)and Department of Social Services (DSS) and Texas Tech University Health Sciences Center (TTUHSC) (collectively “defendants”) appeal rulings by district courts which held that, by accepting federal funds offered on explicit conditions of waiver, defendants in fact waived their right to 11th Amendment immunity. Separate district courts in the Eastern District of Louisiana dismissed all claims against the defendants based on state sovereign immunity except for those under the Rehabilitation Act of 1973 504. HOLDING:LADOE, DSS and TTUHSC are not entitled to 11th Amendment immunity in these consolidated cases. The court affirms the district courts’ denials of defendants’ motions to dismiss plaintiffs’ claims under 504 on the basis of such immunity, and the court remands the cases. Grant programs based on the spending clause are to be interpreted under ordinary contractual principles. The court rejects defendants’ argument that they retain 11th Amendment immunity because they lacked express statutory authority to waive their states’ 11th Amendment immunity. TTUHSC argues that 504 and 42 U.S.C. 2000d-7 are unconstitutional spending clause legislation because they place conditions on federal grants that are not reasonably related to the purpose of the expenditure. This is often referred to as the relatedness prong of the test for valid spending clause legislation enunciated in South Dakota v. Dole, 483 U.S. 203 (1987). Under Dole, conditions attached to spending clause legislation are only valid if they are 1. attached to expenditures that benefit the general welfare; 2. unambiguous; 3. reasonably related to the purpose of the expenditure to which they are attached; and 4. not in violation of an independent constitutional provision. The court first points out that a party who fails to make an argument before either the district court or the original panel waives it for purposes of en banc consideration. “If we are required to address this argument because it relates to Eleventh Amendment immunity, and as such may be a”jurisdictional’ defense that cannot be waived, we reject it.” If the involved state agency or department accepts federal financial assistance, it waives its 11th Amendment immunity even though the federal funds are not earmarked for programs that further the antidiscrimination and rehabilitation goals of 504. The court rejects the TTUHSC’s argument that the substantial federal financial assistance for education it received is unrelated to the goals of 504 and therefore fails Dole’s relatedness requirement. LADOE argues that it did not knowingly waive 11th Amendment immunity from suit in federal court under 504 in accordance with 2000d-7 by accepting federal funds. As LADOE acknowledges, this argument was considered and rejected by an en banc majority in Pace v. Bogalusa City School Board (Pace II), 403 F.3d 272 (5th Cir. 2005) (en banc). LADOE nevertheless argues that the U.S. Supreme Court’s decision in Jackson v. Birmingham Board of Education, 125 S.Ct. 1497 (2005), requires this court to re-examine the issue, repudiate the reasoning of Pace II, and adopt the analysis of Pace I. In Pace I, the panel held that the state defendant did not knowingly waive its 11th Amendment immunity by accepting federal funds because, at the time it received those funds, the prevailing legal authorities suggested that it had no 11th Amendment immunity from suits under 504. The court decides that nothing in Jackson undermines Pace II’s holding that a clear statement like the one found in 2000d-7 is sufficient to satisfy the knowing requirement for a waiver to be valid. Even if Jackson can be interpreted as standing for the proposition that a clear and unambiguous statement from Congress is not the exclusive road to a knowing waiver, it cannot be read to call into question the holding in Pace II that the presence of a clear statement is sufficient to satisfy the need for a waiver to be knowing. OPINION:Davis and Wiener, JJ.; King, C.J., Jolly, Higginbotham, Davis, Jones, Smith, Wiener, Barksdale, Garza, DeMoss, Benavides, Stewart, Dennis, Clement and Prado, JJ.

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