The Tenth Circuit Court of Appeals issued its opinion in Arbogast v. State of Kansas Department of Labor on Friday, June 19, 2015.
Kathleen Arbogast worked for the Kansas Department of Labor (KDOL) in the Workers’ Compensation Division and suffers from asthma. She complained that her co-workers’ perfumes were triggering asthma attacks, so the Division moved her to an office in the basement in September 2010, but she continued to have asthma attacks when co-workers would visit her office. In August 2011, Ms. Arbogast was terminated by her supervisor, Karin Brownlee. Ms. Arbogast filed suit in January 2013, asserting claims of discrimination and retaliation in violation of the Rehabilitation Act, and named as defendants KDOL and Brownlee in her individual capacity. KDOL sought to dismiss the Rehabilitation Act claims, arguing KDOL lacks the capacity to sue or be sued and Kansas has not waived its judicial immunity under the Eleventh Amendment. The district court denied KDOL’s motion to dismiss and KDOL brought an interlocutory appeal.
The Tenth Circuit first examined its appellate jurisdiction to consider KDOL’s claim that it lacked capacity to be sued. KDOL argued that under state law, as a mere agency of the state, it lacked capacity to sue or be sued, and the collateral order doctrine conferred immediate jurisdiction on the Tenth Circuit to hear the issue. However, at oral argument, KDOL’s counsel conceded that the collateral order doctrine may not permit interlocutory review of the capacity argument. The Tenth Circuit agreed with the concession. Citing three requirements to invoke jurisdiction under the collateral order doctrine, i.e., (1) the district court’s order conclusively resolved the disputed issue, (2) the order resolved an issue separate from the merits of the case, and (3) the order is effectively unreviewable on order from final judgment, the Tenth Circuit found KDOL’s argument failed at the first prong because the district court did not conclusively determine KDOL’s capacity to sue or be sued. The Tenth Circuit dismissed the issue on appeal.
Next, the Tenth Circuit evaluated whether KDOL waived Eleventh Amendment immunity by accepting funds for the Unemployment Insurance Division housed within the Department of Labor. KDOL contended that because Ms. Arbogast worked for the Workers’ Compensation Division, not the Unemployment Insurance Division, there was no waiver of immunity. Looking at the Rehabilitation Act, the Tenth Circuit found the plain language included in the waiver of immunity “all the operations of . . . a department . . . of a State.” Since the Workers’ Compensation Division and Unemployment Insurance Division were both housed in the Kansas Department of Labor, the acceptance of funds for the Unemployment Insurance Division constituted a waiver of Eleventh Amendment immunity for the entire Department of Labor. Kansas argued that extending the waiver of immunity to the Workers’ Compensation Division when it received no federal funds would violate the Spending Clause of the U.S. Constitution. The Tenth Circuit found the first Dole factor was satisfied because allowing those who suffer discrimination to bring private causes of action is “reasonably calculated” to achieve Congress’s goal of combating discrimination. KDOL also argued it did not have notice of its waiver, but the Tenth Circuit disagreed, finding the plain language of the Rehabilitation Act provided sufficient notice that the waiver extended to all the operations of the department. KDOL also argued that the waiver of immunity is unrelated to the federal interest justifying expenditure of the funds, but the Tenth Circuit again disagreed, finding that Congress’s intent to eliminate discrimination based on disability was reasonably related to its distribution of federal funds.
The Tenth Circuit dismissed due to lack of jurisdiction KDOL’s argument that it lacked capacity to be sued. The Tenth Circuit affirmed the district court’s finding of a waiver of Eleventh Amendment immunity.