Zimmer-Rubert v. Board of Education

DAVIS, J. Appellant, Mireille Zimmer-Rubert, filed suit in the Circuit Court for Baltimore County against appellee, the Board of Education for Baltimore County, to recover $100,000 in compensatory damages for age discrimination based upon the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq. (Supp. Ill 1994). Pursuant to Maryland Rule 2-322, appellee filed a Motion to Dismiss for insufficiency of service of process, lack of jurisdiction and failure to state a claim upon which relief can be granted. The circuit court ⁵⁹² granted appellee’s motion and dismissed appellant’s claim without prejudice.

This appeal was thereafter timely noted in which appellant presents the following issues for our review: I. Whether [appellee] is a local autonomous entity, and not a state agency, making it subject to suit under the [ADEA].

II

Whether the [c]ircuit [c]ourt erred when it determined that .[Md.Code Ann., Cts. & Jud. Proc. § 5-518(c) (1974, 2001 RepLVol.) ] 1 did not waive sovereign immunity for [appellee]. For the reasons that follow, we conclude that, although appellee is a state agency, Md.Code Ann., Cts. & Jud. Proc. § 5-518(c) (1974, 2001 Repl.Vol.) constitutes a specific waiver of sovereign immunity for recovery of damages of up to $100,000.

Consequently, we shall reverse the judgment of the Circuit Court for Baltimore County and remand for further proceedings. FACTUAL BACKGROUND Born on January 16, 1949, appellant is an experienced educator qualified to teach English, Spanish, German and French. In March of 2004, appellant filed an application to teach foreign language in appellee’s high schools. Unsuccessful in her quest to secure a teaching position and, upon learning that young teachers were hired to fill vacant positions for which she was qualified, appellant filed a Charge of Discrimination with the Equal Employment Opportunity Commission.

On March 17, 2006, appellant was granted a Right to Sue letter. Within ninety days, appellant filed a Complaint in the circuit court 2 against appellee, alleging age discrimination and “de ⁵⁹³ manding judgment for compensatory damages in the amount of $100,000, attorney fees, pursuant to 29 U.S.C. § 626 (b), interest and the costs of [the] action.” Appellee subsequently moved to dismiss appellant’s suit on the grounds stated supra. A hearing on appellee’s motion was held on May 25, 2007. In a ruling from the bench on that same day, the trial court granted appellee’s motion, finding that appellant’s ADEA claim was barred by appellee’s Eleventh Amendment immunity.

Explaining her decision, the trial judge opined that, “on further reflection in looking at [C.J. § 5-518], as well as [Alden v. Maine, 527 U.S. 706 , 119 S.Ct. 2240 , 144 L.Ed.2d 636 (1999) ], that the 11th Amendment immunity must be specifically waived, and it’s not.” STANDARD OF REVIEW In reviewing a motion to dismiss, “we accept all wellpled facts in the complaint, and reasonable inferences drawn from them, in a light most favorable to the non-moving party.” Converge Servs. Group, LLC v. Curran, 383 Md. 462, 475 , 860 A.2d 871 (2004). We will only find that dismissal was proper “if the alleged facts and permissible inferences, so viewed, would, if proven, nonetheless fail to afford relief to the plaintiff.” Sprenger v. Public Serv. Comm’n of Maryland, 400 Md. 1, 21 , 926 A.2d 238 (2007).

Thus, our task is confined to determining whether the trial court was legally correct in its decision to dismiss. Id. ANALYSIS I In a four-prong argument, appellant argues that, when considering the factors for determining whether an entity is an agency of the State for Eleventh Amendment purposes, “the overwhelming and inescapable conclusion is that appellee is not a[S]tate agency, but an autonomous entity not entitled to sovereign immunity protection.” Appellee’s argument is two-fold. Preliminarily, appellee maintains that the issue sub ⁵⁹⁴ judice is not properly before us on appeal.

Appellee contends, however, that, if we choose to address this issue, the Court of Appeals and the United States District Court for the District of Maryland have consistently held that Maryland school boards are State agencies and, thus, afforded Eleventh Amendment immunity protections. 3 Throughout the May 25 hearing and responsive pleadings filed, appellant argued that the General Assembly prohibited the county boards of education from raising the defense of sovereign immunity to any claim of $100,000 or less and, therefore, appellee was barred from asserting Eleventh Amendment immunity. Upon our review of the record, we found no instances in which appellant challenged the “State agency” status of appellee. Maryland Rule 8—131(a) provides: Ordinarily, the appellate court will not decide any other issue unless it plainly appears by the record to have been raised in or decided by the trial court, but the Court may decide such an issue if necessary or desirable to guide the trial court or to avoid the expense and delay of another appeal. See In re Katherine C., 390 Md. 554, 560 , 890 A.2d 295 (2006) (quoting State v. Bell, 334 Md. 178, 189 , 638 A.2d 107 (1994)) (The primary purpose of Rule 8-131(a) is “to ensure fairness for all parties in a case and to promote the orderly administration of law.”).

Although appellant never raised the issue of whether appellee is a local autonomous entity or a State agency, the trial court, in finding that C. J. § 5-518(c) did not specifically waive ⁵⁹⁵ Eleventh Amendment immunity, made a threshold assumption that appellee is an “arm of the State.” 4 See Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 141-44 , 113 S.Ct. 684 , 121 L.Ed.2d 605 (1993) (opining that Eleventh Amendment immunity is only available to states and “state entities”). In order to review the propriety of the trial court’s ruling, we must determine whether appellee is a state entity entitled to Eleventh Amendment protections. See Weatherly v. Great Coastal Express Co., 164 Md.App. 354, 367 , 883 A.2d 924 (2005) (holding that “critical to our determination of an issue on appeal is the trial court’s opportunity to consider the issue”). Furthermore, for this Court to remand the issue sub judice to the trial court for “full consideration” would be a waste of judicial resources.

In an effort to avoid the expense and delay of another appeal, we shall determine whether appellee is an arm of the State or a local autonomous entity for the purposes of the Eleventh Amendment. The Eleventh Amendment provides that “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const, amend.

XI

The Supreme Court, in its interpretation of the Amendment, has held that it “largely shields [sjtates from suit in federal court without their consent, leaving parties with claims against a[s]tate to present them, if the [sjtate permits, in the [sjtate’s own tribunals.” Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 39 , 115 S.Ct. 394 , 130 L.Ed.2d 245 (1994). Similarly, the Court of Appeals has opined, “It was settled over a hundred years ago that the Eleventh Amendment to the United States Constitution provides a state with immunity to claims arising under federal law and asserted by a citizen of that state in federal court.” Maryland Military Dep’t v. Cherry, 382 Md. 117, 122 , 854 A.2d 1200 (2004). ⁵⁹⁶ While “[t]he bar of the Eleventh Amendment to suit in federal courts extends to states and state officials,” it “does not extend to counties and similar municipal corporations.” Mt. Healthy City Sck.

Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280 , 97 S.Ct. 568 , 50 L.Ed.2d 471 (1977) (internal citations omitted). Only the states themselves or a state agency or instrumentality that functions as an “arm of the state” is entitled to invoke sovereign immunity or the immunity afforded by the Eleventh Amendment. See Regents of the Univ. of California v. Doe, 519 U.S. 425, 429 , 117 S.Ct. 900 , 137 L.Ed.2d 55 (1997); see also Ram Ditta v. Maryland Nat.

Capital Park and Planning Comm’n, 822 F.2d 456, 457 (4th Cir.1987) (holding that, by its terms, the Eleventh Amendment applies only to “one of the United States” and “does not immunize political subdivisions of the state, such as municipalities and counties, even though such entities might exercise a ‘slice of state power’ ”). Determining whether appellee is an arm or instrumentality of the State, entitled to the protections of the Eleventh Amendment, or a county or local agency, to which immunity does not apply, requires careful scrutiny. The federal courts have suggested several factors in ascertaining whether an entity is the alter ego of the state. The principal factor, upon which courts have virtually always relied, is whether the state treasury will be responsible for paying any judgment that might be awarded against the entity.

Lewis v. Bd. Educ. of Talbot County, 262 F.Supp.2d 608, 612 (D.Md.2003). In the case sub judice, it is clear that a judgment in appellant’s favor would not have a direct impact upon the State treasury. Accordingly, our inquiry focuses on three critical factors, which may provide a sufficient nexus between appellee and the State so that appellant’s suit against appellee would amount to a suit against the State: (1) the degree of control that the State exercises over the entity or the degree of autonomy from the State that the entity enjoys; (2) the scope of the entity’s concerns-whether local or statewide-with which the entity is involved; and (3) the manner in which State law treats the entity. ⁵⁹⁷ Id.

(citing Cash v. Granville County Bd. of Educ., 242 F.3d 219 , 224 (4th Cir.2001)). In Lewis , a former employee of the Board of Education of Talbot County brought suit against the Board and its agents for breach of contract, wrongful discharge, promissory estoppel and violations of federal and state constitutional rights. Lewis, 262 F.Supp.2d at 610 . The Board asserted, inter alia, that it was protected from suit by sovereign immunity, pursuant to the Eleventh Amendment.

Id. at 612 . The federal court concluded that the Board was entitled to sovereign immunity with respect to all claims, because it was an arm of the State. Id. at 612-14 . Addressing the Board’s autonomy, the court found: Among other things, the Talbot County Board’s members are appointed by the Governor of Maryland, not locally elected.[ 5 ] See [Md.Code Ann., Educ. § 3-108 (1978, 2006 Repl.Vol.) ].[ 6 ] In Maryland, the Board may buy, sell, and hold property only with the approval of the State Superintendent.

See [Educ. § 4-115]. Each new school established by the Talbot County Board becomes a “part of the State program of public education.” [Educ. § 4-109]. The Board’s employment and teacher certification practices are more closely regulated in Maryland than those of the boards in North Carolina.[ 7 ] See, e.g., [Educ. §§ 6-202 & 4-205(c) ] (the [S]tate, through the State Board of Education, is the ⁵⁹⁸ ultimate judge of the validity of dismissals for both professional and non-professional employees); Md. Regs.Code tit. 13A § 07.02.01 ([S]tate controls form of contract for certificated employees); Md. Regs.Code tit. 13A §§ 12, et seq. ([Sjtate defines and enforces teacher certification requirements).

While both boards exercise some budgetary discretion, the Talbot County board must submit to an annual audit conducted by the. [S]tate. See [Educ. § 5-109]. Moreover, the State of Maryland retains the power to reconstitute and oversee the operation of schools that do not meet [S]tate standards for student performance. See Md. Regs.Code tit. 13A § 01.04.08.

Id. at 613. Similarly, in Jones v. Frederick County Bd. of Educ., 689 F.Supp. 535, 538 (D.Md.1988), the United States District Court for the District of Maryland concluded that the Frederick County Board of Education was an agent of the State, entitled to Eleventh Amendment immunity, reasoning Maryland law creates the county boards of education and governs their composition and membership. The statute requires the county boards to carry out the applicable provisions of [the Education Article of Maryland] and the bylaws, rules, regulations, and policies of the State Board [of Education]. The county boards must obtain the [S]tate’s approval regarding the establishment of schools, acquisition or disposition of property, construction or renovation of buildings, and curriculum.

The [S]tate appropriates substantial funds to support the county boards. In return, the county boards must acquiesce to an annual audit and submit an annual budget to the [S]tate. Id. at 537-38 (internal citations and quotations omitted); see, e.g., Adams v. Calvert County Pub. Schs., 201 F.Supp.2d 516, 521 (D.Md.2002) (“[Calvert County Public Schools are] immune from suit for monetary damages under the ADEA”); Biggs v. Bd. of Educ. of Cecil County, 229 F.Supp.2d 437, 444 (D.Md.2002) (“[T]he local school board is a state agency entitled to invoke the protections of Eleventh Amendment ⁵⁹⁹ immunity”); Dunn v. Baltimore County Bd. of Educ., 83 F.Supp.2d 611 (D.Md.2000) (dismissing claim pursuant to ADEA because Baltimore County Board of Education is an agency of the State and, thus, immune from suit); Rosenfeld v. Montgomery County Pub.

Schs., 41 F.Supp.2d 581, 586 (D.Md.1999) (“[Montgomery County Public Schools] and its members, in their official capacities, are [S]tate entities.”). Considering whether appellee’s scope of concern is local or statewide in nature, we note that the public school system in Maryland is a comprehensive statewide system, created by the General Assembly in conformance with the mandate of Article VIII, § 1 of the Maryland Constitution to establish, throughout the State, a thorough and efficient system of free public schools. Twenty-four county boards were thereafter created by the General Assembly as an integral part of that state system. Educ. § 3-103.

These county boards are subject to intensive supervision by the State Board of Education in virtually every aspect of their operations, which in turn affects the educational policy and administration of the entire public school system. Notwithstanding the supervision by the State Board of Education, each county board is charged with maintaining and improving the local education system. Educ. § 4-101 (providing that “[e]ducational matters that affect the counties shall be under the control of a county board of education in each county” and each board “shall seek in every way to promote the interests of the schools under its jurisdiction”). Each board also determines the educational policies of the county school system. § 4-108(3).

Although the “scope of concern” factor tilts both for and against a finding of sovereign immunity, the degree of control that the State exercises over appellee and the State’s treatment of appellee, as we shall explain infra, clearly outweighs this factor. The Court of Appeals undoubtedly considers county school boards instrumentalities of the State rather than independent, local bodies. See, e.g., State v. Bd. of Educ. of Montgomery County, 346 Md. 633 , 635 n. 1, 697 A.2d 1334 (1997) (“The ⁶⁰⁰ various county boards of education are state agencies.”); Bd. of Educ. of Prince George’s County v. Secretary of Personnel, 317 Md. 34 , 44 n. 5, 562 A.2d 700 (1989) (“It is settled that county boards of education are state agencies.”); Bd. of Educ. of Prince George’s County v. Prince George’s County Educators’ Ass’n, 309 Md. 85 , 95 n. 3, 522 A.2d 931 (1987) (“County boards of education are, of course, state agencies and not agencies of the county government.”); Montgomery County Educ. Ass’n v. Bd. of Educ. of Montgomery County, 311 Md. 303, 317 , 534 A.2d 980 (1987) (recognizing the local boards as state agencies); McCarthy v. Bd. of Educ. of Anne Arundel County, 280 Md. 634, 639-50 , 374 A.2d 1135 (1977) (examining the history of Maryland public education from colonial times, through the Constitutions of 1864 and 1867 and the concomitant statutes to conclude that the Board of Education of Anne Arundel County is a State agency); Bd. of Educ. of Montgomery County v. Montgomery County, 237 Md. 191, 197 , 205 A.2d 202 (1964) (noting the local school boards are not a branch of the county government nor an agency under its control); see also Norville v. Anne Arundel County Bd. of Educ., 160 Md.App. 12 , 862 A.2d 477 (2004), vacated on other grounds, 390 Md. 93 , 887 A.2d 1029 (2005) (extensively discussing and ultimately holding that the Anne Arundel Board of Education is an arm of the State for purposes of Eleventh Amendment immunity).

Appellant, however, contends that these “earlier decisions” of the Court of Appeals rely upon the basis of stare decisis and not an in-depth analysis in holding that county boards of education are State agencies. In support of her proposition, appellant places considerable emphasis on Chesapeake Charter, Inc. v. Anne Arundel County Bd. of Educ., 358 Md. 129 , 747 A.2d 625 (2000), in which Judge Wilner wrote: “In terms of their composition, jurisdiction, funding, and focus, [the county schools boards] clearly have a local flavor.” Appellant’s reliance on Chesapeake Charter, Inc., however, is misplaced as the case suggests to us that, under very limited circumstances, a county board of education in Maryland is to ⁶⁰¹ be treated as a local agency rather than as an arm of the State. Chesapeake Charter; Inc. involved “a procurement dispute” between three school bus contractors and the Anne Arundel County Board of Education. Id. at 131 , 747 A.2d 625 .

The Court had to determine whether the procurement of services by a county board of education was subject to the State’s General Procurement Law. The Court recognized that county school boards have consistently been regarded as State agencies, but carved out a particular area in which a board is not deemed an agency of the State, holding that “ [although legally State agencies ... they are not normally regarded, for structural or budgetary purposes, as units within the Executive Branch of the State government.” Id. at 137 , 747 A.2d 625 . After reviewing the history of the General Procurement Law and the Education Article, the Court concluded that a county school board is not a “unit” under State procurement law. Id. at 145-46 , 747 A.2d 625 .

As we read Chesapeake Charter Inc., the Court left intact the principle that county school boards are ordinarily state agencies. If the case were to signal a change in regard to the Court’s longstanding history of holding that county school boards are State entities, the Court of Appeals would have, with specificity, made that known. See Norville, 160 Md.App. at 59 , 862 A.2d 477 (concluding that the Court of Appeals recognized only a limited exception with respect to budgetary matters and procurement, but left virtually intact the principle that county boards are ordinarily considered arms of the State). Statutorily, Maryland does not include county school boards within the definition of “local government” in the Local Government Tort Claims Act.

C.J. § 5-301. Furthermore, upon reviewing the legislative scheme governing public education in Maryland, it is clear that, while broad authority is conferred upon county school boards, their respective powers are limited by the State. See Norville, 160 Md.App. at 45-50 , 862 A.2d 477 (providing an in-depth discussion of the legislative scheme ⁶⁰² governing public education in Maryland). For instance, considerable control over matters of personnel are conferred upon county boards.

On the other hand, all teachers in the State have identical contracts on forms mandated by the State Board, see COMAR 13A.07.02.01B, and the State Board of Education has the final word on local employee termination appeals brought by certified employees. See Educ. § 6-202(a)(4). Moreover, the State Superintendent has the sole authority to terminate a county superintendent. Educ. § 4-201(e) (providing the State Superintendent with the sole authority to remove a county superintendent from office); see also Educ. § 4-201(c)(2) (setting forth that the “appointment” of a county superintendent is not valid unless approved in writing by the State Superintendent).

County boards have the power to hold property, Educ. § 4-114, and to condemn property without State approval. Educ. § 4-119. In addition, a county school board may consolidate schools, Educ. § 4-120, and enter into cooperative agreements for the joint administration of programs. Educ. § 4-123.

The State, however, retains supervisory control over local development of school property. Although county boards may purchase real property, build and remodel school buildings and select land for school sites, they may only do so with the approval of the State Superintendent of Schools. Educ. §§ 2-303(f), 4-115, 4-116. Furthermore, even though Maryland’s twenty-four county boards of education enjoy considerable latitude in budgetary matters, Educ. §§ 5-102, 5-103, the boards have no independent taxing authority.

Consequently, Maryland school boards must rely completely upon federal, state and local government funding to carry out the educational programs mandated by the State Board. Each year, “Subject to the rules and regulations of the State Board and with the advice of the county superintendent,” each county prepares an annual budget in accordance with the operating and capital budget categories prescribed by statute. Educ. § 5-101. Discounting federal funds, the financing for the operating budgets of the school boards is. shared between the State and each county ⁶⁰³ pursuant to statutory mandates.

Educ. §§ 5-101, 5-202, et seq.; COMAR 13A.02.05.01. In calculating the amount of state funding for school system operating budgets, the Education Article sets forth a “wealth equalization” process whereby each county’s net taxable income is calculated so that school systems in counties with a relatively smaller tax base receive a larger proportion of State funding. See Hornbeck v. Somerset County Bd. of Educ., 295 Md. 597, 620-32 , 458 A.2d 758 (1983) (describing Maryland’s formula for State school budgeting and holding that Maryland’s