Ninth Circuit private corporation's sovereign immunity case

The Ninth Circuit Court of Appeals last Wednesday, as part of a larger class-action suit, ruled that state sovereign immunity didn’t extend to private contractors hired by state agencies, and that the Court “shouldn’t even undertake the test it uses when various government bodies seek immunity,” according to an article from Law.com this morning.

Defendant American Corrective Counseling Services, a private contractor employed by the Santa Clara County District Attorney’s Office to pursue individuals who had passed bad checks, had argued for immunity on the grounds that the district attorney had “acted in his state capacity in administering the program and that it, therefore, was an arm of the state entitled to immunity.”

In denying the claim, the Ninth Circuit relied on its own 2004 precedent in U.S. ex rel. Amir Ali v. Daniel, Mann, Johnson & Mendenhall, and its analysis of why private entries’ claims of state sovereign immunity had to fail, and “to the extent that DMJM appeared to leave any analytic distance… to close the gap.” (See highlight)

“State sovereign immunity,” the Court stated, citing Mt. Healthy City Sch. Dist. Bd. Of Educ. v. Doyle, “does not extend to counties and similar municipal corporations even though they share some portion of state power.”

“The Seventh Circuit well explained the difficulties inherent in extending the doctrine to private parties in Takle v. University of Wisconsin Hospital & Clinics Authority, a case concerning a recently privatized state hospital originally created by statute …parties closer to the private end of the spectrum have fared as poorly in their efforts to acquire state sovereign immunity (as in the Sixth Circuit’s 1999 case, Brotherton v. Cleveland), where ‘a nonprofit, private corporation’ authorized by Ohio statute to collect corneas was not accorded immunity as its only connection to the state was the authorizing statute.”