University of Chicago Law Review

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The arm-of-the-state doctrine, which entitles certain governmental entities to the states’ sovereign immunity, is an embodiment of American federalism. In theory, this doctrine ensures that federal courts appreciate the concerns for state sovereignty and solvency that motivated the passage of the Eleventh Amendment. However, a combination of factors—the Supreme Court’s sparse guidance, the growth and diffusion of power across local, state, and federal governments, and the availability of other immunity doctrines—has rendered the arm-of-the-state doctrine an incomprehensible anachronism. Most courts determine whether an entity defendant receives arm-of-the-state immunity by examining the entity’s legal status and structure. But many courts applying “entity-based” reasoning either reach overbroad conclusions that limit recoveries of future litigants or avoid applying the arm-of-the-state doctrine at all—and sometimes a circuit does a bit of both.

This Comment proposes a reworking of the arm-of-the-state doctrine to make it more suitable for application to modern government, in which local, state, and federal entities interact through a complex web of relationships. Under the proposed approach, courts apply their arm-of-the-state tests only to the entity activity at issue in a lawsuit, rather than to the entity as a whole. This “activity-based” approach narrows the scope of arm-of-the-state holdings so that they more accurately reflect allocations of power between a state and a local entity, which can vary according to the activity that a local entity performs. The activity-based approach is consistent with the Supreme Court’s arm-of-the-state jurisprudence and parallels the Court’s approach to evaluating entities under the municipal liability doctrine. The proposed adaptation might well encourage more, and more consistent, application of the doctrine, reintroducing federalism concerns into analyses of state-local relationships. Further, the activity-based approach both aligns defendants’ liability more closely with control and ensures that potential future plaintiffs retain access to the federal courts over truly local entity action. Narrowing the doctrine’s scope ensures that it protects fully and only the action that the Eleventh Amendment was intended to protect

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