SEPTA is not an arm of the state and therefore does not have 11th Amendment sovereign immunity from railroad workers’ state claims under the Federal Employers Liability Act, the state Supreme Court ruled in a case of first impression.
The unanimous decision by the six justices in the consolidated cases of Goldman v. SEPTA and Davis v. SEPTA is a major victory for the plaintiffs whose claims would have been barred from both state and federal courts, and opens SEPTA up to liability under any federal law passed under the Commerce Clause of the U.S. Constitution, said attorneys for the plaintiffs in the case.
The Pennsylvania Supreme Court reversed a Commonwealth Court ruling that had found railroad workers were limited only to workers’ compensation claims and were barred from state court claims because SEPTA had 11th Amendment immunity.
“We discern no threat to the dignity of the commonwealth of Pennsylvania whenever a private individual commences a FELA suit in the courts of this commonwealth, nor do we find the treasury of the commonwealth to be threatened by a FELA suit in our courts,” Justice Debra M. Todd said for the Supreme Court. “Accordingly, we conclude SEPTA is not an arm of the commonwealth of Pennsylvania, and thus not entitled to claim immunity under the 11th Amendment.”
Lawrence Katz of Coffey Kaye Myers & Olley in Bala Cynwyd, Pa., represented the plaintiffs on appeal. He said that, ever since SEPTA started in the region in 1983, it had recognized its railroad workers’ rights under FELA. It was in 2005, Katz said, when SEPTA was looking to save money that it launched this legal argument to bring the railroad workers under the workers’ compensation scheme available to all other SEPTA employees.
“In addition, had SEPTA prevailed in its efforts to be viewed as an ‘alter ego’ of the commonwealth, it would have been able to evade a plethora of federal laws intended to protect its employees, the riding public and the citizens of, and visitors to, Southeastern Pennsylvania,” Katz said.
Jim McEldrew III, another of the plaintiffs attorneys, said the ruling restores the rights SEPTA employees always had.
“SEPTA has used this as a bargaining chip for five or six years and as a result the railroad workers have suffered,” McEldrew said. “This opens up the doors to the courts.”
A SEPTA spokesman declined to comment Thursday, having not yet read the opinion.
SEPTA has argued in Goldman and Davis that it is an arm of the state, reliant on state funding for a good portion of its annual budget. SEPTA further noted its enabling statute says that SEPTA is a “state authority.”
The railroad employees, however, have argued the descriptors given to SEPTA are less important than how it actually operates. The employees have argued SEPTA is autonomous from the state government because, in part, SEPTA can sue and be sued on its own, it approves its own budget, its employees are not considered state employees and it can purchase real estate without permission of the state.
Todd noted the 11th Amendment’s explicit bar of suits against states by private citizens of another state or of a foreign state has expanded over the centuries to include barring suits of a number of types as well as barring suits against not just states, but agents of those states.
Similarly, the U.S. Supreme Court’s analysis of whether an entity is an arm of the state entitled to sovereign immunity has morphed from one that considers only how an entity is structured to now primarily including consideration of the state sovereignty interests the 11th Amendment is recognized as protecting.
In determining whether SEPTA was an arm of the state under the extensive analysis of case law Todd underwent in her 49-page opinion, the justice first looked at SEPTA’s structure.
Todd specifically looked at the legal classification of SEPTA statutorily and in case law, the degree of control the state exercises over SEPTA, the power SEPTA’s board has to raise its own revenue, the degree of funding provided by the five Southeastern Pennsylvania counties SEPTA serves, whether any monetary obligation served on SEPTA is the responsibility of the state and whether SEPTA’s core function of providing public transportation can be categorized as a function normally performed by local or state governments.
“If these indicators of immunity do not all point towards the same conclusion, [case law] require[s] us to then address, primarily, whether a FELA suit against SEPTA would offend the dignity of the commonwealth of Pennsylvania, and, secondarily, whether the commonwealth has any actual legal liability for FELA suits against SEPTA,” Todd said.
Todd agreed with SEPTA that its enabling statute establishes it as an agency of the state. She found against SEPTA, however, on the second indicator. Todd noted the state does not exert enough control over SEPTA for it to be an arm of the state because 10 of the 15 SEPTA board members are appointed by local governments and the state has no power to remove a board member it didn’t appoint. The state or governor are also without the power to veto any decisions made by SEPTA, Todd noted.
As for the third immunity indicator, Todd said SEPTA has the ability to raise its own revenue, which is not dependent on the state’s approval or backing. SEPTA can set its own fares, Todd noted.
The fourth indicator involving funding provided to SEPTA weighs in favor of granting it immunity. Todd said the local counties pay only 15 percent of what the state pays toward SEPTA’s budget.
Todd said it is clear the state is not bound to pay any of SEPTA’s debt or obligations, causing the fifth indicator to weigh against immunity. The sixth indicator regarding whether public transportation is typically a government service was not possible to answer in this case, Todd said.
Because all of the immunity indicators did not point in one direction, Todd looked to whether allowing SEPTA to be sued under FELA in state court would thwart the purpose of the 11th Amendment. The main question there, Todd said, is whether allowing the suits would offend the “dignity” of the state by taking away its independent sovereign status.
“When a suit against SEPTA is brought in Pennsylvania’s courts under FELA, however, no such threats to the sovereign dignity of the commonwealth are presented,” Todd said. “In such a suit, the commonwealth is not a named defendant, as SEPTA has been designated by the legislature of the commonwealth as a distinct legal entity with the power to sue and be sued in its own capacity.”
Todd further ruled that denying SEPTA sovereign immunity is supported by the fact that the state will not have to pay any judgments SEPTA might face.
The high court heard arguments in September 2011 in the appeal of the consolidated cases of Marjorie Goldman, Edmund Wiza, Michael J. Maguire and Errol Davis, all of whom worked for SEPTA’s railroad division.
An en banc panel of the Commonwealth Court ruled 6-1 in August 2009 that sovereign immunity applies to SEPTA in state courts even when federal law is at issue.
In Goldman, which was consolidated from the start with the cases of Wiza and Maguire, Philadelphia Court of Common Pleas Judge Nitza I. Quiñones Alejandro found SEPTA was not protected by sovereign immunity when it came to federal claims. But in Davis, Philadelphia Court of Common Pleas Judge Sheldon Jelin ruled FELA was not an exception to the sovereign immunity defense and granted SEPTA’s motion to dismiss that case.
In writing for the majority, Commonwealth Court Judge Johnny J. Butler agreed with SEPTA’s argument that SEPTA is clearly entitled to sovereign immunity under state law and it is state law that applies in these cases.
Butler pointed to SEPTA’s “unique enabling statute” that expressly established it as a commonwealth party that enjoys state sovereign immunity. That, combined with case law finding SEPTA is a state agency protected by sovereign immunity, makes clear that it is protected under state claims, Butler had said.
(Copies of the 49-page opinion in Goldman v. SEPTA, PICS No. 12-2372, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •