The US Court of Appeals for the Fifth Circuit rejected a claim Monday that local government institutions enjoy sovereign immunity.
The appeals court held that the Tarrant County Local Workforce Development Board (WDB) failed to provide sufficient evidence to support its claim that for all intents and purposes in this situation, it was the state of Texas.
The Texas Workforce Investment Act established the Texas Workforce Commission (TWC) to “operate an integrated workforce development system in [Texas] … and to administer the unemployment compensation insurance program in [the] state.” To facilitate the TWC’s mission, local government leaders are allowed to create local boards, such as WDB, to handle county level workforce training and services. WDB does receives some of its funding from the state government and the rest from other sources.
WDB hired Kathie Cutrer in May 2000, and in August she suffered serious injuries in a car accident. WDB accommodated Cutrer’s resulting disabilities until 2016, when it and Cutrer’s supervisor allegedly began discriminating against her prior to firing her. When she brought a complaint the parties agreed upon a settlement of $33,750. WDB refused to honor the settlement.
When Cutrer sued, WDB filed a motion to dismiss on a claim of sovereign immunity. The district court granted the motion, and Cutrer appealed.
Upon appeal, the appeals court determined that WDB did not have grounds to claim sovereign immunity. Though WDB was created in accords with a state statute and receives funding from the state government, it was created by local government leaders. According to the court, this makes its claim of being the state of Texas in this instance dubious at best.
WDB attempted to prove that it is an arm of the state government by claiming that its paying the settlement will hurt the state treasury. The court did not find this a compelling argument. It pointed out that WDB had previously agreed to the settlement and had to have had a plan for getting the money from somewhere. The court accepted that the settlement could potentially hurt the state treasury, but found it equally likely that it would not. As such, the court remanded the case to the district court for trial.