Addressing the issue of whether a state university can waive its Eleventh Amendment immunity by expressly agreeing to federal jurisdiction in an agreement, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s holding that the University of Massachusetts at Lowell (the University) waived its immunity by agreeing to submit to jurisdiction in an appropriate federal court. Baum Research and Development Co., Inc. v. University of Massachusetts at Lowell, Case No. 06-1330 (Fed. Cir., Oct. 10, 2007) (Newman, J.).
The University and Baum entered into a license agreement that included a provision that the “agreement will be construed … according to the laws of the State of Michigan and all parties agree to … submit to jurisdiction in the appropriate State or Federal Courts.” Subsequently, Baum filed suit in a Michigan district court, claiming that the University breached the agreement and infringed the patents. The University responded by asserting immunity from the suit based on the Eleventh Amendment, which in essence bars non-consensual suits against a state or state entity in a federal court. The district court denied the University’s motion to dismiss, stating that any immunity had been waived by the agreement. After a jury found for Baum on the contract claim, the University filed a post-trial motion reasserting its claim of immunity. The district court again denied the motion and stayed further proceedings pending appeal.
The Federal Circuit agreed with the district court’s analysis, finding that immunity in this particular case was expressly waived by the license agreement. Relying on Supreme Court precedent in College Savings Bank, the Court noted that a state waives its immunity when it clearly makes manifest its intention to submit to federal jurisdiction, provided this intention is “unequivocally expressed.” The Court did, however, admonish against general “sue-and-be-sued” clauses, noting that such clauses have been held insufficient to waive immunity in the Supreme Court’s Port Authority decision. However, the Federal Circuit agreed with the district court that provision in the subject agreement met the requirements of College Savings Bank. The Federal Circuit also rejected the argument that the University acted in an ultra vires manner, stating that the record lacks sufficient support for the argument that the University and its officials did not have authority to enter into the agreement which provided for waiver of immunity.
Practice Note: In protecting and preserving immunity, a state or one of its entities should be careful in considering those provisions of an agreement that dealing with dispute resolution and governing law. Reviewers should keep in mind the “unequivocally expressed” test as articulated in College Savings Bank, as well as the admonishment provided in Port Authority.