Ladera Taxpayers for Integrity in Governance v. Las Lomitas Elementary School District

Opinion

LADERA TAXPAYERS FOR INTEGRITY Case No. 24-cv-02412-WHO IN GOVERNANCE, Plaintiff, ORDER GRANTING MOTION TO v. Re: Dkt. No. 22 LAS LOMITAS ELEMENTARY SCHOOL DISTRICT, et al., Defendants.

Plaintiff Ladera Taxpayers for Integrity in Governance (the “Ladera Taxpayers”) alleges that defendants Las Lomitas Elementary School District (“LLESD” or the “District”), its governing board, and several of its administrators violated the plaintiff’s First and Fourteenth Amendment rights, along with California state law, when they leased out part of an LLESD campus to a private school for the private school’s exclusive use during school hours. Because LLESD and its agents are arms of the state and thus immune under the Eleventh Amendment from lawsuits in federal court, LLESD’s motion to dismiss is GRANTED and the case is dismissed without prejudice to it being refiled in a court of competent jurisdiction. Las Lomitas Elementary School District, a public school district, owns the Ladera School Site property (the “School Site”). The School Site is in an unincorporated part of San Mateo County. Ladera Taxpayers is a group of individuals who reside in that same unincorporated area, which the plaintiff refers to as the “Ladera Community.” See First Amended Complaint (“FAC”) [Dkt. No. 20] ¶¶ 19, 35. The District closed the School Site in 1979, and later leased it to the private Woodland School (“Woodland”). See Dkt. No. 1-1, Exs. B-D. Woodland has operated on the School Site since that time. To operate on the School Site, Woodland regularly applies for and receives Conditional Use Permits (“CUPs”) from the County. See County Zoning Regulation § 6500. The most recent CUP was issued this year, after the Planning Commission held a public hearing on June 12, 2024.1 The District’s lease agreement with Woodland includes a lease for the buildings and grounds appurtenant (the “Property”) and also an exclusive license to use the playing fields and the blacktop (the “Play Areas”) during defined school hours: 7:30 a.m. to 5:00 p.m. See Dkt. No. 1-1, Ex. F; FAC ¶¶ 130-37. For the last 12 years (the term of the current lease), Woodland has held exclusive use of the non-leased portion of the School Site for those hours. See id. Exs. D-F. The Ladera Taxpayers filed its complaint on April 23, 2024, alleging that LLESD’s lease with Woodland violated plaintiff’s First and Fourteenth Amendment rights as well as several California statutes. See Dkt. No. 1. The next day, it filed an Ex Parte Application for a Temporary Restraining Order (“TRO”), requesting that I enjoin the Planning Commission from considering Woodland’s CUP application because plaintiff asserted it contained an unlawful provision. See Dkt. No. 8. I held a hearing on May 1, 2024, and denied the TRO because, among other reasons, the Ladera Taxpayers failed to show exigent circumstances necessitating emergency relief. See Dkt. No. 18. It thereafter amended its complaint, and defendants now move to dismiss all claims. See Motion to Dismiss (“Mot.”) [Dkt. No. 22]. Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant

1 The Ladera Taxpayers’ counsel indicated at oral argument that it is her client’s intention to is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). If the court dismisses the complaint, it “should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making this determination, the court should consider factors such as “the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment.” Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989). Where the Eleventh Amendment bars federal suit, the federal court must dismiss the claim without prejudice to it being re-filed in a court of competent jurisdiction. See Freeman v. Oakland Unified School Dist., 179 F.3d 846, 847 (9th Cir. 1999). The Ladera Taxpayers’ claims fail as a matter of law because school districts in California are arms of the state and are thus protected by the Eleventh Amendment from suit in federal court. The Eleventh Amendment states that “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. “It is well established that agencies of the state are immune under the Eleventh Amendment from private damages or suits for injunctive relief brought in federal court.” Savage v. Glendale Union High Sch., 343 F.3d 1036, 1040 (9th Cir. 2003).2 State sovereign immunity does not extend to county and municipal governments unless state law treats them as arms of the state. Savage, 343 F.3d at 1040-41. To determine whether a governmental agency is an arm of the state, courts consider the following factors: (i) whether a money judgment would be satisfied out of state funds, (ii) whether the entity performs central governmental functions, (iii) whether the entity may sue or be sued, (iv) whether the entity has the power to take property in its own name or only the name of the state, and (v) the corporate status of the entity. See Mitchell v. Los Angeles Community College District, 861 F.2d 198, 201 (9th Cir. 1982).3 In 1992, the Ninth Circuit applied the Mitchell factors to hold that a public school in California is an arm of the state, immune from suit in federal court. See Belanger v. Madera Unified Sch. Dist., 963 F.2d 248, 254 (9th Cir. 1992) (agreeing with the district court’s determination that “the school district is an agent of the state that performs state governmental functions and that a judgment would be satisfied out of state funds.”). In 2013, the California Legislature enacted Assembly Bill 97 (AB 97), a massive reform package that was designed to make public education financing more streamlined and decentralize education governance. See 2013 Cal. Legis. Serv. ch. 47 (AB 97). In 2017, the Ninth Circuit was asked to clarify whether AB 97 abrogated Belanger; it concluded that it did not. See Sato v. Orange Cty. Dept. of Educ., 861 F.3d 923 (9th Cir. 2017). School districts and county offices of education (COEs), the court held, remained arms of the state, immune from suit even after AB 97. In Sato, the Orange County Department of Education (“OCDE”), a school district that is in all relevant ways indistinguishable from LLESD, sought to invoke its right to be immune from suit when a former employee sued for wrongful termination. See Sato, 861 F.3d at 931-32. The

2 This immunity applies to both federal and state law claims brought in federal court. See Sato, 861 F.3d at 927 (noting that plaintiff had voluntarily dismissed his state law claims against OCDE because he “recogniz[ed] that OCDE’s sovereign immunity defense applied equally to his federal and state law claims.”). district court, applying Belanger, granted OCDE’s motion to dismiss, prompting the plaintiff employee, Sato, to appeal. Sato argued that AB 97 had abrogated Belanger and rendered OCDE “no longer an arm of the state for [Eleventh Amendment] immunity purposes.” Id. at 927. He argued that OCDE’s funding structure evinced the California legislature’s intent to allow districts and COEs to raise local property tax revenues “above and beyond the state’s minimum ‘base’ support,” an intent that he believed rendered such districts no longer arms of the state and therefore unable to invoke Eleventh Amendment immunity. Id. at 931. The Ninth Circuit rejected his argument and affirmed dismissal on sovereign immunity grounds, explaining that while AB 97 may have partially decentralized state control over school funding and governance, it did not undercut the conclusion in Belanger. The court held that OCDE was still an arm of the state despite the change in its funding structure; it found that the first Mitchell factor favored immunity, reasoning that “there is nothing unusual about the fact that OCDE receives some of its funding from local tax dollars.” Id. at 931-32. It concluded that there was no intent “on the part of the California legislature to replace a maximum per-pupil funding formula with a minimum per-pupil formula,” and that “AB 97 did not eliminate the ‘centralized’ system of ‘strict state control’ over districts’ funding” that was discussed in Belanger. Id. at 932. Sato controls here. The passage of AB 97 in 2013 reformed California public schools’ funding and governance by “replac[ing] the old mechanism by which the state funded public education, which relied on a combination of ‘revenue limits’ funding and ‘categorical funding grants,’ with the Local Funding Formula (‘LCFF’).” Sato, 861 F.3d at 929 (internal citations omitted). The bill streamlined funding; it did not change California school districts’ status as arms of the state for Eleventh Amendment immunity purposes. See id. Accordingly, as a governmental agency and an arm of the state, LLESD and its governing officials are protected from suit by the Eleventh Amendment. The Ladera Taxpayers has a different read of Sato. It argues that the court found that after AB 97, some school districts in California like LLESD are “minimum” per-pupil funding districts that are not protected by Eleventh Amendment immunity. Oppo. 9-11. But it has misread Sato. 1 and “maximum” funding districts. To the contrary, it explained that “AB 97 left in place the 2 fundamental elements of Belanger: equalization of per-pupil spending and centralized control over 3 local education budgets.” See Sato, at 932. According to the Ninth Circuit, “[b]ecause the LCFF 4 keeps in place a maximum per-pupil funding formula, state and local funds are still ‘hopelessly 5 intertwined.’” Id. 6 I see no meaningful differences between the school district in this case and the school 7 district that the court considered in Sato. Las Lomitas Elementary School District is an arm of the 8 state; the defendants here are entitled to Eleventh Amendment immunity from suit in federal court 9 just as OCDE was in Sato.* This immunity bars all the plaintiff's claims. The motion to dismiss 10 is GRANTED. Because the Ladera Taxpayers cannot successfully amend its complaint, all claims 11 are DISMISSED.°

13 For the reasons set forth above, the motion to dismiss is GRANTED and the Ladera

v 14 || Taxpayers’ claims are DISMISSED without prejudice to its claims being re-filed in a court of

15 } competent jurisdiction.

17 || Dated: August 6, 2024 * \f CE

18 ° illiam H. Orrick 19 United States District Judge 20 21 22 3 “ Defendant Polito is the superintendent of the district, and defendant Hopkins is the President of the Board. See FAC 4] 22-23. Both are undisputedly state officials. This makes them similarly 94 immune in their official capacity from federal suits. 25 > Because I am dismissing on Eleventh Amendment grounds, I will not address defendants’ remaining arguments that the Ladera Taxpayers has failed to state plausible claims under the First 26 and Fourteenth Amendments, except to say that I agree that they do not state cognizable causes of action as pleaded. As for plaintiffs state law claims, those claims are also barred in federal court 07 by Eleventh Amendment immunity. See Sato, 861 F.3d at 927; see supra, n.3. This Order does not preclude the Ladera Taxpayers from refiling its claims in state court. 28