OCTOBER TERM, 1996
certiorari to the united states court of appeals for the ninth circuit
No. 95-1694. Argued December 2, 1996—Decided February 19, 1997
Respondent Doe, a New York citizen, sued the Regents of the University of California and others, alleging, inter alia, that the University had agreed to employ him at a laboratory it operates pursuant to a contract with the federal Department of Energy, and that it had wrongfully breached its agreement with him upon determining that he could not obtain a required security clearance. Relying on Circuit precedent holding that the University is "an arm of the state," the District Court concluded that the Eleventh Amendment barred Doe from maintaining his breach-of-contract action in federal court. In reversing, the Ninth Circuit held that liability for money judgments is the single most important factor in determining whether an entity is an arm of the State, and gave decisive weight to the terms of the University's agreement with the Energy Department, under which the Department, not the State, is liable for any judgment rendered against the University in its performance of the contract.
Held: The fact that the Federal Government has agreed to indemnify a state instrumentality against litigation costs, including adverse judgments, does not divest the state agency of Eleventh Amendment immunity. Nothing in this Court's opinions supports the notion that the presence or absence of a third party's undertaking to indemnify a state agency should determine whether it is the kind of entity that should be treated as an arm of the State. Just as with the arm-of-the-state inquiry, see, e. g., Hess v. Port Authority Trans-Hudson Corporation, 513 U. S. 30, 51-52, it is the entity's potential legal liability for judgments, rather than its ability or inability to require a third party to reimburse it, or to discharge the liability in the first instance, that is relevant in determining the underlying Eleventh Amendment question. Accordingly, the Court rejects Doe's principal contention—that the Amendment does not apply to this litigation because any damages award would be paid by the Energy Department, and therefore have no impact upon California's treasury. Because the question on which certiorari was granted does not encompass Doe's alternative argument attacking the Ninth Circuit cases holding the University to be an arm of the State, the Court declines to address that argument. Pp. 429-432.
65 F. 3d 771, reversed.
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