JERRY E. SMITH, Circuit Judge:
Charles Etta Williams appeals the dismissal of her suit against Dallas Area Rapid Transit ("DART") under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., arguing that the district court erred in finding DART immune from suit under the Eleventh Amendment. She contends both that DART is not an arm of the state for purposes of the Eleventh Amendment and that, even if DART otherwise were entitled to such immunity, it effectively waived it. Because we agree that DART is not an arm of the state, we do not reach waiver. We reverse the dismissal and remand for further proceedings.
DART is a regional transportation authority organized under TEX. TRANSP. CODE ANN. ch. 452. Williams, a former DART employee, was released as part of a reduction-in-force program. Although DART allegedly found alternative employment positions for younger, lesser-qualified employees, it offered no such position to Williams, who sued, asserting a claim for wrongful termination in violation of the ADEA. After the parties conducted discovery, the Supreme Court issued Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 82-83, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000), holding that, because the ADEA is not a proper exercise of Congress's power under the Fourteenth Amendment, the statute cannot abrogate a state's sovereign immunity without an express waiver by the state.
Shortly thereafter, DART moved for dismissal under FED.R.CIV.P. 12(b)(6), or alternatively, for judgment on the pleadings under rule 12(c). Concluding that
The district court held, as a matter of law, that because "DART is a governmental unit or instrumentality of the state of Texas, ... it is entitled to assert Eleventh Amendment immunity" and that because DART had not waived that immunity, Williams's ADEA claim failed for lack of subject matter jurisdiction. Williams contests both that DART is entitled to Eleventh Amendment immunity and that it did not effectively waive immunity. When addressing a dismissal for lack of subject matter jurisdiction, we review application of law de novo and disputed findings of fact for clear error. See Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. May 1981).
"The Eleventh Amendment ... bars suits in federal court by citizens of a state against their own state or a state agency or department." Richardson v. S. Univ., 118 F.3d 450, 452 (5th Cir.1997) (quotation marks omitted). Moreover, "a plaintiff cannot avoid the sovereign immunity bar by suing a state agency or an arm of the State rather than the State itself." Id.
When confronted with a governmental entity asserting Eleventh Amendment immunity as an arm of the state, we apply the test established in Clark v. Tarrant County, 798 F.2d 736 (5th Cir.1986). The district court failed to analyze DART's asserted immunity under the Clark framework, instead relying on three cases
A proper inquiry under Clark considers six factors:
Anderson v. Red Riv. Waterway Comm'n, 231 F.3d 211, 214 (5th Cir.2000). Although none of the six factors is dispositive,
A proper Clark analysis compels the conclusion that DART is not an arm of the state for purposes of the Eleventh Amendment. The first factor — "whether the state statutes and case law characterize the agency as an arm of the state" — weighs against immunity, if anything. Neither party can point to definitive authority establishing DART's status under Texas law. As DART points out, it is an "authority" under Texas law, and as such, is a "governmental unit under Chapter 101, Civil Practice and Remedies Code...." TEX. TRANSP. CODE ANN. § 452.052. The statutory characterization of DART as a "governmental unit" is not probative of DART's status for Eleventh Amendment purposes, however. See supra note 1.
On the other hand, Texas statute defines "state government" as "an agency, board, commission, department, or office ... that: (A) was created by the constitution or a statute of this state; and (B) has statewide jurisdiction." TEX. CIV. PRAC. & REM.CODE § 101.001(5).
In its answer, DART conceded that "all of its operations and actions take place within the counties encompassed in the Northern District of Texas." Nowhere does DART assert that it does have statewide jurisdiction. Thus, at least for purposes of the TTCA, DART is not a state agency. Admittedly, Texas law is not unambiguous with respect to DART's status, but to the extent it favors either party, the first factor weighs against characterizing DART as an arm of the state.
The second factor in the Clark inquiry — the source of the funds for the governmental entity — is the most important one. See Hudson, 174 F.3d at 687. Although we also consider the source of general operating funds for the entity, "because an important goal of the eleventh amendment is the protection of states' treasuries, the most significant factor in assessing an entity's status is whether a judgment against it will be paid with state funds." Richardson, 118 F.3d at 455 (quoting McDonald v. Bd. of Miss. Levee Comm'rs, 832 F.2d 901, 907 (5th Cir.1987)). It is undisputed that DART receives funding from several sources, including passenger fares, bond revenues, and local sales and use tax revenues,
DART is authorized by state statute to issue bonds for capital improvement projects; we cannot, however, infer merely from such authorization that the state actually provides funding to DART. The bonds must be approved by the state attorney general and registered by the state comptroller,
DART also argues that the characteristics of its sales and use tax render the tax a source of state funding. This argument proves too much, however. While it is true that DART's sales and use tax is administered by the state comptroller and passes through the state treasury before being rebated to DART, municipal taxes in Texas are administered in the same way.
Finally, DART argues that, if it were unable to pay a judgment from its own funds, it could seek additional funding from the legislature. DART does not contend that the legislature would be obligated to provide the additional funding, however, and we do not consider "a state's voluntary, after-the-fact payment" of a judgment to be a liability against the state's treasury. Hudson, 174 F.3d at 689. There is nothing — either in the record or of which we can take judicial notice — indicating either that DART receives state funding as a general matter or that a judgment against it would be satisfied out of the state treasury.
The third factor is the degree of local autonomy. DART argues that this factor weighs in its favor, because it is subject to the Texas Sunset Act, TEX. GOV'T CODE. ANN. ch. 325. That fact alone does not dispose of the issue: The Sunset Act deals with the orderly closure of obsolete state agencies, not the oversight of agencies' daily operations. See id. § 325.008 (detailing the duties of the Sunset Advisory Commission). Moreover, DART must report to the Sunset Advisory Commission only once every twelve years. See TEX. TRANSP. CODE ANN. § 452.453.
DART argues further that, because it is subject to fiscal audits every year and performance audits every fourth year,
On the other side of the scale, the responsibility for the "management, operation, and control" of DART is vested in an executive committee,
The fourth factor looks at whether DART is concerned primarily with local or statewide problems. DART concedes that its authority is limited to the Dallas-Forth Worth region. Although there is some authority for viewing regional entities merely as local solutions to statewide problems,
The fifth and sixth factors weigh in favor of Williams's contention that DART is not an arm of the state. DART has statutory authority both to hold and use property and to sue and be sued. See TEX. TRANSP. CODE. ANN. §§ 452.054(b) & (d). Such abilities favor categorization of DART as an independent entity, not an arm of the state. See Hudson, 174 F.3d at 691.
Taken as a whole, the Clark analysis compel the conclusion that DART is not immune from Williams's claim. Though some of the factors may be indeterminate, none weighs strongly in DART's favor. Moreover, the most important second factor weighs against considering DART an arm of the state. The district court therefore erred in finding DART immune from suit under the ADEA. We REVERSE the dismissal and REMAND for further proceedings.
Davis, 846 S.W.2d at 87, held merely that DART "[a]s a governmental unit," was entitled to the protections of the Texas Tort Claims Act ("TTCA"), Tex. Civ. PRAC. & REM. CODE ch. 101. That holding is not probative for our purposes, because the TTCA defines "governmental unit" as
TEX. CIV. PRAC. & REM.CODE § 101.001. The TTCA's definition of "governmental unit" is unquestionably broader than the term "arm of the state," as used for purposes of the Eleventh Amendment, in that it includes cities, counties, school boards, and other governmental entities that are not entitled to Eleventh Amendment immunity. See, e.g., Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280-81, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) ("[A] local school board such as petitioner is more like a county or city than it is like an arm of the State. We therefore hold that it was not entitled to assert any Eleventh Amendment immunity from suit in the federal courts.").
Anderson and Tolbert held that DART, as a "political subdivision of the state" is not a "person" within the meaning of 42 U.S.C. §§ 1981, 1983. See Anderson v. DART, 1998 WL 686782 at *7; Tolbert, 1998 LEXIS 17616, at *19-20. Although it is not at all certain that "political subdivision," as used by those courts, is coextensive with "arm of the state," as used in analyzing Eleventh Amendment immunity, to the extent that the two terms are interchangeable, the district courts in Anderson v. DART and Tolbert erred in failing to analyze DART under the Clark framework, relying instead on the Davis court's characterization of DART. Moreover, while the district court in Anderson v. DART did find DART immune from suit under the Eleventh Amendment, that finding is merely an erroneous dictum, because the court already had decided the case on the § 1983 issue. See Anderson v. DART, 1998 WL 686782, at *7.
To the extent the statute can be considered ambiguous, the Revisor's Note to that section is instructive: "Only the state and its agencies have sovereign immunity. The revised law omits the phrase `with reference to units of government' to avoid the implication that sovereign immunity applies to local governmental units." Moreover, DART's abandonment of the TTCA strikes us as peculiar, given its reliance on Anderson v. DART, Tolbert, and Davis, all of which (improperly) construed the TTCA in finding DART immune from federal suit as a "governmental unit." See supra note 1.