IN THE UNITED STATES DISTRICT COURT FOR THE
`MIDDLE DISTRICT OF TENNESSEE
`NASHVILLE DIVISION
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`
`
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`CHS/COMMUNITY HEALTH
`SYSTEMS, INC. and CHSOSC, LLC,
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`
`Plaintiffs,
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`
`
`NO. 3:20-cv-00163
`JUDGE RICHARDSON
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`
`v.
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`MEDICAL UNIVERSITY HOSPITAL
`AUHTORITY,
`
`
`Defendant.
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`)
`)
`)
`)
`)
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`)
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`)
`)
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`MEMORANDUM OPINION
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`
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`Pending before the Court is Defendant’s Motion to Dismiss and Memorandum in Support
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`(Doc. No. 27, “Motion”).1 Plaintiffs have responded (Doc. No. 28). Defendant has replied. (Doc.
`
`No. 29). The Motion is ripe for review.
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`
`
`
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`For the reasons discussed herein, the Court will deny Defendant’s Motion.
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`BACKGROUND2
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`The present lawsuit arises out of the Medical University Hospital Authority (“Defendant”
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`or “Defendant MUHA”)’s breaches of an asset purchase agreement (“APA”) entered into between
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`Plaintiffs and Defendant. (Doc. No. 26). The APA constituted an agreement for Plaintiffs to sell,
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`and Defendant to purchase, substantially all of the assets of four hospitals, as well as the sale of
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`certain related businesses, clinics, facilities, and real property. (Id. at 9). Through the terms of the
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`1 Defendant filed its Motion and Memorandum in the same document, instead of in separate
`documents as required by the local rule. L.R. 7.01(a)(2).
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` 2
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` The facts herein are taken from the Amended Complaint, which is the operative complaint in this
`matter. See Parry v. Mohawk Motors of Mich., Inc., 236 F.3d 299, 306 (6th Cir. 2000).
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`
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`1
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`

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`APA, Defendant also agreed to enter into a Transition Services Agreement (“TSA”) with
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`Plaintiff’s affiliate. (Id. at 2).
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`
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`Plaintiffs allege that Defendant breached the APA in several ways, including: 1) failure to
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`pay the full purchase price under the APA, including a net working capital adjustment, 2) failing
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`to forward correspondence relating to seller cost reports and remit funds received, and not
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`remitting all misdirected funds, and 3) breaching a transition services agreement by inaccurately
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`reporting its collected accounts receivable and not paying the amount of service fees owed. (Id.).
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`
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`This matter was filed in Williamson County Chancery Court and removed to this Court.
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`(Doc. No. 1).
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`LEGAL STANDARD
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`Rule 12(b)(1) “provides for the dismissal of an action for lack of subject matter
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`jurisdiction.”3 Cartwright v. Garner, 751 F.3d 752, 759 (6th Cir. 2014). “Subject matter
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`3 Defendant does not clarify in its Motion the subsection of Fed. R. Civ. P. 12(b) under which it
`moves to dismiss, instead merely arguing that it is entitled to dismissal based on the Eleventh
`Amendment and sovereign immunity. (Doc. No. 27 at 1). This issue is not one of mere formality,
`because a motion under subsection (b)(6) portends dismissal on the merits and thus with prejudice
`while motions under other subsections (including (b)(1)) portend dismissal without prejudice. The
`case law is conflicted regarding the subsection under which such a motion should be brought in
`the Sixth Circuit. E.g., Martinson v. Regents of Univ. of Michigan, 562 F. App’x 365, 370 (6th Cir.
`2014) (employing both 12(b)(1) and 12(b)(6)); Castanias v. Lipton, No. CIV.A. 11-296-HJW,
`2011 WL 3739035, at *4 (S.D. Ohio July 14, 2011), report and recommendation adopted, No. C-
`1-11-296, 2011 WL 3705971 (S.D. Ohio Aug. 24, 2011) (same); Uttilla v. City of Memphis, 40 F.
`Supp. 2d 968, 970 (W.D. Tenn. 1999), aff’d sub nom. Uttilla v. Tennessee Highway Dep’t, 208
`F.3d 216 (6th Cir. 2000) (considering a facial challenge under 12(b)(1)); Seider v. Hutchison, No.
`3:06-CV-215, 2009 WL 2430824, at *5 (E.D. Tenn. Aug. 5, 2009) (“The Sixth Circuit has
`recognized that “ ‘[w]hile the Eleventh Amendment is jurisdictional in the sense that it is a
`limitation on the federal court’s judicial power,’ the defense ‘is not coextensive with the limitations
`on judicial power in Article III.’ Thus, the Court does not believe that dismissal pursuant to Fed.
`R. Civ. P. 12(b)(1) would be proper based on the Eleventh Amendment. However, Defendant []
`has also moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the claims against him, which
`permits dismissal when there is an unsurmountable bar on the face of the complaint.” (quoting
`Nair v. Oakland County Cmty. Mental Health Auth., 443 F.3d 469, 474 (6th Cir. 2006) (internal
`citation omitted)); U.S. ex rel. Moore v. Univ. of Michigan, 860 F. Supp. 400, 402 (E.D. Mich.
`
`
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`2
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`jurisdiction is always a threshold determination.” Am. Telecom Co. v. Republic of Lebanon, 501
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`F.3d 534, 537 (6th Cir. 2007).
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`There are two types of motions to dismiss for lack of subject-matter jurisdiction: facial and
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`factual attacks. Gentek Bldg. Products, Inc. v. Sherman-Williams Co., 491 F.3d 320, 330 (6th Cir.
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`2007). A facial attack questions merely the sufficiency of the pleading. When reviewing a facial
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`attack, a district court takes the allegations in the complaint as true. Id. If those allegations establish
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`federally-cognizable claims, jurisdiction exists. Id. A factual attack instead raises a factual
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`controversy concerning whether subject-matter jurisdiction exists. Id.
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`Where there is a factual attack on the subject-matter jurisdiction of the court under Fed. R.
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`Civ. P. 12(b)(1), no presumptive truthfulness applies to the complaint’s allegations; instead, the
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`court must weigh the conflicting evidence to arrive at the factual predicate that subject-matter
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`jurisdiction does or does not exist. Gentek Bldg. Products, Inc., 491 F.3d at 330. “[T]he district
`
`court has considerable discretion in devising procedures for resolving questions going to subject
`
`
`1994) (when motion to dismiss on Eleventh Amendment grounds was brought under both 12(b)(1)
`and (12)(b)(6), noting that “[a] complaint that is barred by the Eleventh Amendment fails to state
`a claim upon which relief can be granted, and hence, should be dismissed by this Court. Fed. R.
`Civ. P. 12(b)(6).”); Darwall v. Michigan Dep’t of Corr., 933 F.2d 1007 (6th Cir. 1991) (finding
`dismissal on Eleventh Amendment grounds proper when brought solely under 12(b)(6)).
`However, it has been the practice (a prudent one, in the view of the undersigned) of this
`Court to view challenges to jurisdiction under the Eleventh Amendment as factual challenges
`under 12(b)(1). As neither party has briefed this issue, in accordance with this Court’s precedent
`the Court will construe the Motion as making a 12(b)(1) factual attack. Dunn v. Spivey, No. 2:09-
`0007, 2009 WL 1322600, at *3 (M.D. Tenn. May 11, 2009); Gaffney v. Kentucky Higher Educ.
`Student Loan Corp., No. 3:15-CV-01441, 2016 WL 3688934, at *2 (M.D. Tenn. July 12, 2016);
`Hornberger v. Tennessee, 782 F. Supp. 2d 561, 563 (M.D. Tenn. 2011); Hemenway v. 16th
`Judicial Dist. Attorney’s Office, No. 3:15-CV-00997, 2020 WL 6364486, at *3 (M.D. Tenn. Oct.
`29, 2020); see also Giorgadze v. Tennessee Tech. Ctr., No. 2:06CV264, 2007 WL 2327034, at *2
`(E.D. Tenn. Aug. 10, 2007).
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`
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`
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`3
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`matter jurisdiction[.]” Ohio Nat. Life Ins. Co. v. United States, 922 F.2d 320, 327 (6th Cir. 1990).
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`The Sixth Circuit has noted that:
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`The factual attack, however, differs greatly for here the trial court may proceed as
`it never could under 12(b)(6) or Fed. R. Civ. Pro. 56. Because at issue in a factual
`12(b)(1) motion is the trial court’s jurisdiction—its very power to hear the case—
`there is substantial authority that the trial court is free to weigh the evidence and
`satisfy itself as to the existence of its power to hear the case. In short, no
`presumptive truthfulness attaches to plaintiff’s allegations, and the existence of
`disputed material facts will not preclude the trial court from evaluating for itself the
`merits of jurisdictional claims.
`
`RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996) (quoting
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`Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 890 (3d Cir. 1977)).
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`In making its decision, the district court has wide discretion to allow affidavits, documents,
`
`and even a limited evidentiary hearing to resolve jurisdictional facts.4 Gentek Bldg. Products, Inc.,
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`491 F.3d at 330; see also Nichols v. Muskingum Coll., 318 F.3d 674, 677 (6th Cir. 2003) (“In
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`reviewing a 12(b)(1) motion, the court may consider evidence outside the pleadings to resolve
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`factual disputes concerning jurisdiction, and both parties are free to supplement the record by
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`affidavits.”); Cunningham v. Rapid Response Monitoring Servs., Inc., 251 F. Supp. 3d 1187, 1192
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`(M.D. Tenn. 2017) (discussing Gentek).
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`Defendant here lodges a factual attack on subject-matter jurisdiction. “An assertion of
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`Eleventh Amendment sovereign immunity, as has been made by the defendants here, constitutes a
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`factual attack.” Dunn v. Spivey, No. 2:09-0007, 2009 WL 1322600, at *3 (M.D. Tenn. May 11,
`
`2009); see also Gaffney v. Kentucky Higher Educ. Student Loan Corp., No. 3:15-CV-01441, 2016
`
`WL 3688934, at *2 (M.D. Tenn. July 12, 2016); Giorgadze v. Tennessee Tech. Ctr., No.
`
`
`4 Neither party has requested an evidentiary hearing or pointed the Court to additional evidence
`they might submit at such a hearing. The Court therefore exercises its discretion to rule on the
`present Motion without an evidentiary hearing. See e.g., Ohio Nat. Life Ins. Co. v. United States,
`922 F.2d 320, 327 (6th Cir. 1990).
`
`
`
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`4
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`2:06CV264, 2007 WL 2327034, at *2 (E.D. Tenn. Aug. 10, 2007). Defendant bears the burden of
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`proving that it is entitled to immunity under the Eleventh Amendment. Town of Smyrna, Tenn. v.
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`Mun. Gas Auth. of Georgia, 723 F.3d 640, 650 (6th Cir. 2013); Gragg v. Kentucky Cabinet for
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`Workforce Dev., 289 F.3d 958, 963 (6th Cir. 2002).
`
`DISCUSSION
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`Defendant argues that this case must be dismissed because (according to Defendant)
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`Defendant is entitled to Eleventh Amendment immunity as a state agency. (Doc. No. 27). Plaintiffs
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`respond that 1) Defendant is not entitled to immunity, and 2) alternatively, if Defendant is
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`(otherwise) entitled to immunity, Defendant has waived its immunity. (Doc. No. 28). In response,
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`Plaintiffs primarily argue that Defendant is not entitled to immunity because Defendant is not a
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`state agency (or “instrumentality”) inasmuch as a judgment against Defendant would not be a
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`judgment against the State of South Carolina. (Doc. No. 28 at 5). Plaintiffs argue that the Court
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`should consider Defendant to be not a state agency, but rather a political subdivision, akin to a
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`county or municipality. (Id.). In reply, Defendant argues that Plaintiffs ignore the language in the
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`statute creating Defendant and base their arguments on inapplicable case law. (Doc. No. 29).
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`Because the Court finds that Defendant is not entitled to immunity, the Court does not
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`reach the question of whether immunity has been waived.
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`A. Whether Defendant is protected by immunity
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` “The Judicial power of the United States shall not be construed to extend to any suit in
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`law or equity, commenced or prosecuted against one of the United States by Citizens of another
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`State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. Under the Eleventh
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`Amendment, states and state agencies or departments have sovereign immunity from suit in federal
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`
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`5
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`court.5 Boler v. Earley, 865 F.3d 391, 409–10 (6th Cir. 2017) (citing Ernst v. Rising, 427 F.3d
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`351, 358 (6th Cir. 2005) (en banc) and Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,
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`100 (1984)). However, political subdivisions, such as counties and cities, are not entitled to
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`Eleventh Amendment immunity. Ernst, 427 F.3d at 355.
`
`The Sixth Circuit has summarized the factors to consider when determining whether an
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`entity is an arm of the state:
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`(1) the State’s potential liability for a judgment against the entity; (2) the language
`by which state statutes and state courts refer to the entity and the degree of state
`control and veto power over the entity’s actions; (3) whether state or local officials
`appoint the board members of the entity; and (4) whether the entity’s functions fall
`within the traditional purview of state or local government.
`
`
`Kreipke v. Wayne State Univ., 807 F.3d 768, 775 (6th Cir. 2015) (quoting Ernst, 427 F.3d at 359).
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`The factors are not “a checklist,” and they should be “weighed and balanced against each other
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`based on the unique circumstances of the case.” Id. at 778. “The only factor that gets special weight
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`is the state’s potential liability for judgment, which . . . creates a strong presumption that [an entity]
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`is a state actor.” Id. As previously noted, “[w]hether an entity qualifies is a question of federal law
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`and the entity asserting the defense bears the burden of proof.” Town of Smyrna, Tenn., 723 F.3d
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`at 650; Gragg, 289 F.3d at 963.
`
`The undersigned here will reiterate what he has said previously about multi-factor tests
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`generally:
`
`“The undersigned has noted on multiple occasions that multi-factor (or balancing)
`tests, though often having considerable desirability and merit, tend to foster
`outcomes that are unpredictable on the front end, given such tests’ subjectivity.”
`Memphis A. Phillip Randolph Inst. v. Hargett, No. 3:20-CV-00374, 2020 WL
`5095459, at *16 (M.D. Tenn. Aug. 28, 2020) (quoting Eli J. Richardson,
`Eliminating the Limitations of Limitations Law, 29 Ariz. St. L.J. 1015, 1050 (1997)
`
`
`5 States, agencies, instrumentalities, and “arms of the state” all are terms that generally refer to an
`entity that is entitled to immunity under the Eleventh Amendment. The Court uses these terms
`interchangeably, as appropriate, to refer to such an immune entity.
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`
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`6
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`(proposing a multi-factor test to resolve civil limitations issues, while conceding
`that when courts “apply[ ] a multi-factor test, [it is] always an unpredictable
`endeavor”) and Eli J. Richardson, Taking Issue with Issue Preclusion: Reinventing
`Collateral Estoppel, 65 Miss. L.J. 41, 95 (1995) (proposing multi-factor test to
`resolve collateral estoppel issues, while conceding that its drawback is that it
`“would produce unpredictable resolutions of collateral estoppel issues, in that it is
`so flexible and calls for very subjective judicial determinations”)). This reality
`tends not to bode well for the prospects of a multi-factor test to resolve a question
`as a matter of law at the summary judgment stage.
`
`
`Acosta v. Peregrino, No. 3:17-CV-01381, 2020 WL 5995049, at *6 (M.D. Tenn. Oct. 9, 2020).
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`The undersigned is well aware that room for disagreement exists with respect to the result of the
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`outcome of the multi-factor test to be employed here. But after weighing each factor in turn, the
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`Court believes that they collectively militate substantially against a finding that Defendant is a
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`state agency.
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`1. South Carolina’s potential liability for a judgment against Defendant
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`Plaintiffs argue that Defendant is not entitled to Eleventh Amendment immunity because
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`the debts of Defendant are not the debts of the State of South Carolina. (Doc. No. 28 at 2, 5).
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`Defendant does not respond to this point and seems to agree tacitly that the first factor weighs
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`against it. Defendant instead argues that the multi-factor “arm of the state” test does not apply
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`because there is simply no reason to resort to it at all, since it is entirely clear from the relevant
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`state statute that Defendant is a state agency. (Doc. No. 29 at 3-4). Defendant argues in the
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`alternative that if the “arm of the state” test does apply, its final three factors (which Plaintiffs do
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`not address) indicate that Defendant is entitled to immunity under the Eleventh Amendment.
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`This Court has previously explained the appropriate analysis when determining whether a
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`state has potential liability under the first factor:
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`the Sixth Circuit has clearly held that “it is the state treasury’s potential legal
`liability for the judgment, not whether the state treasury will pay for the judgment
`in that case, that controls the inquiry.” Ernst, 427 F.3d at 359 (citing Regents of the
`Univ. of Cal. v. Doe, 519 U.S. 425, 431 (1997)). Accordingly, the court must ask
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`
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`7
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`“whether, hypothetically speaking, the state treasury would be subject to ‘potential
`legal liability’ if the [relevant entity] did not have the money to cover the
`judgment.” Id. at 362 (quoting Doe, 519 U.S. at 431). In practice, the formal
`approach embraced by Ernst has proven a doubled-edged sword for entities seeking
`to assert sovereign immunity. On one hand, a plaintiff cannot overcome the State’s
`potential liability merely by showing that the specific claim at issue can be satisfied
`with the entity’s own funds. Id. On the other hand, however, an entity cannot rely
`on a so-called “reimbursement theory” to transform its own liability into a state
`liability based merely on “the state’s willingness . . . to reimburse the entity for
`damages paid as a result of the judgment.” Lowe v. Hamilton Cty. Dep’t of Job &
`Family Servs., 610 F.3d 321, 326 (6th Cir. 2010). Rather, cases involving entities
`with independent revenue sources have typically looked to whether “a State’s
`constitution and statutory law make the State responsible for funding [the entity’s]
`programs” in the event of a shortfall. Ernst, 427 F.3d at 364. Ernst, for example,
`relied on a statutory provision requiring the state legislature to “annually
`appropriate to the retirement system the amount [of money needed] . . . to reconcile
`the estimated appropriation made in the previous fiscal year with the actual
`appropriation needed to adequately fund the retirement system for the previous
`fiscal year,” Mich. Comp. Laws § 38.2302(1), as well as a constitutional provision,
`Mich. Const. art. 9, § 24, making that duty a “ ‘contractual obligation’ owed by the
`State to each retiree.” Ernst, 427 F.3d at 360 (citing Musselman v. Governor, 533
`N.W.2d 237, 246 (1995) (“We hold that the state is obligated to prefund health care
`benefits under art. 9, § 24.”)); see also Kreipke v. Wayne State Univ., 807 F.3d 768,
`776 (6th Cir. 2015) (finding sovereign immunity where constitutional and statutory
`provisions required state to fund university), petition for cert. filed, Case No. 15-
`1419 (U.S. May 19, 2016).
`
`While Ernst focuses on the formal relationship between the state and the
`entity at issue, the Sixth Circuit’s subsequent cases make clear that factual
`considerations are not irrelevant to the court’s inquiry. In some cases, the relevant
`funding and enabling statutes alone may not “conclusively determine” whether the
`State potentially will be liable for a judgment against the entity. See Barachkov v.
`41B Dist. Court, 311 Fed. Appx. 863, 867 (6th Cir. 2009). In such instances, a
`factual record of the concrete fiscal details of the entity’s operations may be
`relevant. See, e.g., Lowe, 610 F.3d at 326–28 (holding that statutes cited by entity,
`without additional factual support, were insufficient to carry burden of showing
`potential state liability); Perry v. Se. Boll Weevil Eradication Found., 154 Fed.
`Appx. 467, 473 (6th Cir. 2005) (holding that the first Ernst factor disfavored
`application of sovereign immunity because “there is no indication that the state
`contributes to the fund” earmarked for funding entity).
`
`Gaffney, 2016 WL 3688934, at *3.
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`The statute creating Defendant specifically states that the debts of Defendant are not the
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`debts of the State of South Carolina: “Any guarantee or indebtedness of the authority [MUHA]
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`
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`8
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`shall not create an obligation of the State, nor shall such guarantee or indebtedness be considered
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`a debt against the general revenue of the State.” S.C. Code Ann. § 59-123-60(E)(3)(c).
`
`Unsurprisingly, the Sixth Circuit has found a similar statutory provision to be evidence that the
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`relevant state was not liable for the judgment. Perry v. Se. Boll Weevil Eradication Found., 154 F.
`
`App’x 467, 473 (6th Cir. 2005) (not finding Eleventh Amendment immunity when “any debt of
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`the cotton growers’ organization ‘shall not constitute a debt of the state or any department, agency,
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`political subdivision, official, or employee of the state.’” (citing to the relevant statute)).
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`Additionally, it is unclear from the statute where Defendant’s funding comes from. Two
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`subsections in the statute seem to contemplate in some places that Defendant might receive funding
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`from the state, as Defendant has the power to:
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`(9) receive, expend, and control under its own name and account any appropriated
`funds, federal funds, donations, and grants made available to the authority;
`provided, however, that these funds are funds which must be used for a public
`purpose, and further, that the authority may not use or authorize the use of funds,
`property, or time to influence the outcome of an election [and . . . ]
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`(11) prepare and submit an annual budget to the General Assembly and the
`Governor for review
`
`
`S.C. Code Ann. § 59-123-60(E)(9), (11); see also S.C. Code Ann. § 59-123-70 (explaining the
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`procedure for the board of trustees to present the budget to the state legislature). Additionally, the
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`statute provides:
`
`Beginning in fiscal year 2000-2001 state appropriations to the Medical University
`of South Carolina for support of the Medical University hospitals and clinics shall
`be redirected to the Department of Health and Human Services. These funds shall
`be used as match funds for the disproportionate share for the hospital’s federal
`program. Any excess funding may be used for hospital base rate increases.
`Beginning in fiscal year 2000-2001 and in subsequent years, the Department of
`Health and Human Services shall pay to the Medical University of South Carolina
`Hospital Authority an amount equal to the amount appropriated for its
`disproportionate share to the Department of Health and Human Services. This
`payment shall be in addition to any other funds that are available to the authority
`from the Medicaid program inclusive of the disproportionate share for the hospital's
`
`
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`9
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`federal program. The authority shall continue to operate the hospital as a health
`provider for the citizens of South Carolina and the clinical site for the education
`and training programs of the Medical University of South Carolina.
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`Id. at (I). Though these provisions seem to imply that Defendant may receive some funding from
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`the State of Carolina, none of the provisions mandate the State to provide a certain amount of
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`funding to Defendant or help Defendant in the event of a budget shortfall. In fact, on the Medical
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`University of South Carolina (“MUSC”)’s website, it states that Defendant MUHA does not
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`receive state appropriations, while MUSC receives about 3% of its funding from the State. MUSC
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`Medical University of South Carolina, https://web.musc.edu/about (last accessed March 15,
`
`2021).6
`
`As noted above, Defendant carries the burden of showing that it is entitled to Eleventh
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`Amendment immunity. Despite this burden, Defendant has submitted no evidence or even
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`argument to enable this Court to determine who pays judgments against Defendant; nor has it
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`shown or even discussed any other financial considerations or arrangements that may show that
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`this factor leans in Defendant’s favor. In fact, Defendant seems to concede that this factor weighs
`
`
`6 The Court is able to take sua sponte judicial notice of the contents of a .edu website or a
`government website, and this website is both. See e.g., Demis v. Sniezek, 558 F.3d 508, 513 n.2
`(6th Cir. 2009) (taking judicial notice of contents of the Bureau of Prisons’ website); United States
`v. Harris, 331 F.2d 600, 601 (6th Cir. 1964) (“The Court may take judicial notice sua sponte.”);
`Jeandron v. Bd. of Regents of Univ. Sys. of Maryland, 510 F. App’x 223, 227 (4th Cir. 2013) (“A
`court may take judicial notice of information publicly announced on a party’s web site, so long as
`the web site’s authenticity is not in dispute and ‘it is capable of accurate and ready determination.’”
`(quoting Fed. R. Evid. 201(b))); Caner v. Autry, 16 F. Supp. 3d 689, 693 n.3 (W.D. Va. 2014)
`(taking judicial notice of various facts on university .edu website); Energy Automation Sys., Inc.
`v. Saxton, 618 F. Supp. 2d 807, 810 n.1 (M.D. Tenn. 2009) (“A court may take judicial notice of
`the contents of an Internet website.”); Oak Ridge Envtl. Peace All. v. Perry, 412 F. Supp. 3d 786,
`810 (E.D. Tenn. 2019) (“Information taken from government websites is self-authenticating under
`FED. R. EVID. 902, and courts may accordingly take judicial notice of the information found on
`these websites.”)
`
`
`
`
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`10
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`against it. Meanwhile, Plaintiffs have pointed the Court to the statute itself, which indicates that
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`the State is not liable for any judgment against Defendant. Ruling on a similar situation with
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`lackluster evidence and argument from a defendant, this Court previously found that the first factor
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`weighed against finding Eleventh Amendment immunity, explaining that “[i]n order to establish
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`that the potential for state liability favors an extension of sovereign immunity, [Defendant] must
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`show—through citation to formal legal obligations, a factual account of fiscal practice, or some
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`combination of the two—that its liabilities are potentially liabilities of the state. It simply has not
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`done so.” Gaffney, 2016 WL 3688934, at *5. Defendant here has similarly not done so.
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`Therefore, the Court finds this first factor, which is “the most salient issue,” leans strongly
`
`in favor of finding that Defendant does not qualify for Eleventh Amendment immunity. Town of
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`Smyrna, Tenn., 723 F.3d at 651.
`
`2. How the state law and state courts define the entity and the degree of state control and
`veto power over the entity’s actions
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`Defendant MUHA was created in the same act as was MUSC. Defendant MUHA is
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`comprised of the board of trustees of MUSC, which acts as Defendant MUHA when the board
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`“functions in its capacity as the governing body of the hospital.” S.C. Code Ann. § 59-123-60(E).
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`The statute specifically designates Defendant MUHA as “an agency of the State of South
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`Carolina.” Id.
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`Defendant MUHA asserts that no courts have considered whether it is entitled to Eleventh
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`Amendment immunity, then notes that several courts have found that MUSC (which was created
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`under the same act) is protected by Eleventh Amendment immunity. E.g., von Fox v. Med. Univ.
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`of S.C., No. 2:16-CV-179-RMG-MGB, 2016 WL 8732360, at *4 (D.S.C. Feb. 12, 2016), report
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`and recommendation adopted sub nom. Fox v. Med. Univ. of S.C., No. CV 2:16-179-RMG, 2016
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`WL 693525 (D.S.C. Feb. 19, 2016), dismissed sub nom. Fox v. South Carolina, 668 F. App’x 442
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`
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`Case 3:20-cv-00163 Document 43 Filed 03/15/21 Page 11 of 19 PageID #: 311
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`(4th Cir. 2016); Alsharif v. Med. Univ. of S.C., No. CV 2:14-4438-SB-BM, 2015 WL 13732639,
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`at *4 (D.S.C. Oct. 21, 2015), report and recommendation adopted, No. CV 2:14-4438-SB, 2016
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`WL 270913 (D.S.C. Jan. 22, 2016); Beryl Ming Yu You v. Tolley, No. 2:13-CV-1683 DCN, 2014
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`WL 3881039, at *2 (D.S.C. Aug. 6, 2014), aff’d, 588 F. App’x 291 (4th Cir. 2014); Harrison-
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`Jenkins v. Med. Univ. of S.C., No. CIV.A. 2:11-2551-DCN, 2012 WL 1533046, at *5 (D.S.C. Apr.
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`9, 2012), report and recommendation adopted, No. CA 2:11-2551 DCN, 2012 WL 1534711
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`(D.S.C. May 1, 2012), aff’d, 479 F. App’x 449 (4th Cir. 2012); Yarborough v. King, No. CA 2:11-
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`2602-MBS-BHH, 2011 WL 5238920, at *3 (D.S.C. Oct. 3, 2011), report and recommendation
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`adopted, No. CA 2:11-2602 DCN, 2011 WL 5151757 (D.S.C. Oct. 31, 2011); Peltier v. Metts, No.
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`CA 2:09-44-DCN-RSC, 2009 WL 6593943, at *3 (D.S.C. Jan. 12, 2009), report and
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`recommendation adopted, No. CA 2:09-0044 DCN, 2009 WL 6593938 (D.S.C. Jan. 28, 2009),
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`aff’d, 329 F. App’x 396 (4th Cir. 2009). According to Defendant, this Court should afford it the
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`same protection afforded MUSC in these opinions. In addition to being unreported, however, these
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`opinions do not provide much, if any, analysis regarding why MUSC is entitled to Eleventh
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`Amendment protection.
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`As indicated above, Defendant explains its reliance on case law involving MUSC by
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`contending that there is no applicable case law addressing Defendant MUHA and Eleventh
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`Amendment immunity. (Doc. No. 27 at 4). The Court is unsure why Defendant makes this
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`contention, as several cases have found that Defendant MUHA is entitled to Eleventh Amendment
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`immunity. E.g., Chambers v. Med. Univ. Hosp. Auth., No. 2:11-CV-0261-RMG-BM, 2012 WL
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`2888804, at *6 (D.S.C. May 18, 2012), report and recommendation adopted, No. 2:11-CV-261-
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`RMG, 2012 WL 2888802 (D.S.C. July 13, 2012); aff’d, 512 F. App’x 352 (4th Cir. 2013); see also
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`Mitchell v. Med. Univ. Hosp. Auth., No. CA 2:11-2028-RMG, 2013 WL 4041954, at *11 (D.S.C.
`
`
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`Case 3:20-cv-00163 Document 43 Filed 03/15/21 Page 12 of 19 PageID #: 312
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`Aug. 7, 2013). In fact, despite Defendant’s contention that no court has examined its entitlement
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`to Eleventh Amendment immunity, one of the cases Defendant cited as an example of dismissing
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`MUSC under the Eleventh Amendment also dismissed Defendant MUHA as a defendant to the
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`action. Yarborough, 2011 WL 5238920, at *2. It might seem that Defendant missed an opportunity
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`to call to the Court’s attention compelling case law support its position. But in fact such case law
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`would not have been compelling, because similar to the cases discussing MUSC, these opinions
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`are unreported and provide little or no analysis of why Defendant MUHA is an agency entitled to
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`Eleventh Amendment protection. Thus, the Court assigns them no precedential or persuasive
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`value.
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`Strangely, though Defendant adamantly argues in briefing to this Court that it is an agency
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`based on the statute and case law, Defendant is referred to instead as a “political subdivision of the
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`State of South Carolina” in both the APA and TSA at issue. (Doc. No. 28-2). For this reason and
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`the ones indicated in the prior two paragraphs, the Court finds that although the statute and the
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`case law indicate that Defendant is a state agency, this does not weigh strongly in favor of finding
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`Eleventh Amendment immunity.
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`The Court must also look at how much control the State exerts over Defendant, including
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`any veto power. The statute imbues Defendant with a multitude of independent powers. Among
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`many other things, Defendant has the powers of the Board of Trustees of MUSC, the power to
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`make contracts, the power to issue its own bonds and pledge its own property, and the power to
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`maintain hospital premises. S.C. Code Ann. § 59-123-60.
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`On the other hand, the State retains some power over Defendant. The Governor retains the
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`power to remove board members for certain conduct (such as malfeasance, incapacity, etc.) after
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`notice and an opportunity to be heard. Id. at (G). In such an instance, the governor then fills the
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`
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`Case 3:20-cv-00163 Document 43 Filed 03/15/21 Page 13 of 19 PageID #: 313
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`vacancy until the election process (discussed below) can be completed again. Id. As this Court has
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`previously noted, “[w]hile the fact that board members cannot be removed merely at the whim of
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`the governor allows some room for independence, the governor’s removal authority is nevertheless
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`a meaningful lever of control.” Gaffney, 2016 WL 3688934, at *7.
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`The State also retains power in some other ways, such as exempting contracts entered into
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`by Defendant from the South Carolina Consolidated Procurement Codes and Regulations, but
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`requiring submission of a procurement policy to the State Fiscal Accountability Authority. Id. at
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`(E)(3)(a). Defendant’s issuance of bonds, notes, or other obligations of indebtedness is generally
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`subject to the approval of the