Argued and Submitted November 17, 2015 San Francisco, California
Appeal from the United States District Court for the District of Arizona D.C. No. 2:13-cv-00306-JWS John W. Sedwick, District Judge, Presiding
Stephen Montoya (argued), Montoya Jiminez, P.A., Phoenix, Arizona, for Plaintiff-Appellant.
Joseph Andrew Kanefield (argued) and Craig Carson Hoffman, Ballard Spahr LLP, Phoenix, Arizona, for Defendant-Appellee.
Before: John T. Noonan, Kim McLane Wardlaw, and Richard A. Paez, Circuit Judges.
The panel affirmed in part and reversed in part the dismissal of a complaint brought pursuant to 42 U.S.C. § 1983 by the Arizona Students' Association against the Arizona Board of Regents alleging First Amendment retaliation in connection with the Regents' decision to suspend its collection and remittance of the Arizona Students' Association fees and then to modify its fee collection policies.
The panel agreed with the district court that the Eleventh Amendment barred any claim by the Students' Association for retrospective relief, including money damages, against the Board of Regents. The panel held, however, that the Students' Association's claim for prospective injunctive relief and related declaratory relief was not barred by sovereign immunity, provided such relief was sought against individual members of the Board. The panel held that the district court abused its discretion when it failed to grant the Students' Association leave to amend its complaint to conform with the requirements of Ex Parte Young, 209 U.S. 123 (1908). The panel directed the district court, on remand, to afford the Students' Association a reasonable opportunity to file an amended complaint.
The panel held that the Students' Association adequately alleged that it had engaged in the kinds of core political speech that trigger the First Amendment's highest levels of protection. The panel stated that the Board of Regents had no affirmative obligation to collect or remit the Students' Association fees, but having done so for fifteen years at no cost, the Board of Regents could not deprive the Students' Association of the benefit of its fee collection and remittance services in retaliation for the Students' Association's exercise of its First Amendment rights. The panel held that the collection and remittance of funds is a valuable government benefit, and a change in policy undertaken for retaliatory purposes that results in the deprivation of those funds implicates the First Amendment.
PAEZ, Circuit Judge:
The Arizona Students' Association ("ASA") brought this First Amendment retaliation case against the Arizona Board of Regents ("ABOR" or "the Board"). The district court dismissed the ASA's complaint without leave to amend, concluding that the ASA's claims were barred by sovereign immunity, and in the alternative failed to state a claim upon which relief could be granted. Reviewing de novo, we conclude that the complaint states a plausible claim for First Amendment retaliation. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); O'Brien v. Welty, No. 13-16279, 2016 WL 1382240, at *11 (9th Cir. Apr. 7, 2016). We further conclude that the district court erred when it declined to grant the ASA leave to amend its complaint to comply with the requirements set forth in Ex Parte Young, 209 U.S. 123 (1908). We therefore reverse and remand for further proceedings consistent with this opinion.
The ASA is an Arizona non-profit corporation that represents students enrolled at the state's three public universities. Its primary purpose is to advocate for the affordability, accessibility, and quality of public higher education in Arizona, and the ASA frequently engages in political activity related to financial aid, public funding of higher education, and tuition policy.
From 1974 through 1998, ABOR, a state board whose members are appointed by the Governor and confirmed by the Arizona State Senate, directly funded the ASA. In 1998, students at Arizona's three public universities voted to impose a semesterly one-dollar fee per student to fund the ASA. In 2008, students voted to increase the fee to two dollars per semester. From 1998 through 2013, ABOR collected the student fee on the ASA's behalf and remitted proceeds to the ASA at no cost.
Throughout 2012, the ASA advocated for the passage of Proposition 204, a state ballot initiative that would increase funding for public education. In preparation for the November 2012 election, the ASA co-drafted the text of the initiative; collected over 20, 000 petition signatures to qualify the initiative for the election; co-drafted the ballot argument that appeared in the state's official Publicity Pamphlet (voter's guide); participated in media events in support of the initiative; hosted information sessions and distributed literature explaining the initiative; engaged in social media campaigning; phone-banked and canvassed neighborhoods to encourage voter turnout in support of the initiative; and contributed $120, 000 of its student-fee income to the Yes on Proposition 204 campaign. All of the ASA's activities complied with campaign disclosure and reporting laws and regulations.
Janice Brewer, the former Governor of Arizona and an ex-officio member of ABOR, opposed Proposition 204. Additionally, during the campaign and after the election, several Regents criticized the ASA for supporting Proposition 204. Within weeks of the November election, ABOR called a special meeting to discuss the ASA fee. At the special meeting, ABOR voted to suspend collection of the ASA fee, and it withheld the fee income it already had collected for the Spring 2013 semester. Several Regents commented that the suspension was "political" in nature and was undertaken in response to the ASA's Proposition 204 advocacy. ABOR held a second special meeting in January 2013, in which it proposed changing the Board's policies to collect the ASA fee only from students who "opted-in" and to require that the ASA reimburse the universities for the administrative costs of collecting the ASA fee. On February 7, 2013, ABOR adopted the policy revisions proposed at the January 2013 meeting. The ASA alleged that it lost "its only source of income" when ABOR suspended fee collection and then modified its policies to an opt-in model, and it argued to this court that since November 26, 2012, the Board has not remitted to the ASA the fees ABOR collected for Spring 2013.
The ASA filed suit pursuant to 42 U.S.C. § 1983, alleging that ABOR had modified its policies to retaliate against the ASA's exercise of its First Amendment free speech rights.The ASA alleged that ABOR's retaliatory policy change caused it harm by chilling students' political speech and depriving the ASA of its income. ABOR moved to dismiss the complaint on sovereign immunity grounds and, in the alternative, for failure to state a claim upon which relief could be granted. Fed.R.Civ.P. 12(b)(1), 12(b)(6). In opposing the motion, the ASA emphasized that it had pleaded a claim of First Amendment retaliation, and it argued that in addition to chilling the ASA's ability to exercise its free speech rights, ABOR had harmed the ASA by depriving it of a valuable government benefit. The district court granted ABOR's motion with prejudice, concluding that sovereign immunity barred all of the ASA's claims and, in the alternative, that the ASA had failed to allege a plausible claim for relief. Additionally, the district court denied the ASA's request for leave to amend to name individual regents, concluding that such amendment would be futile.
We review de novo a dismissal on the basis of sovereign immunity or for failure to state a claim upon which relief can be granted. O'Brien, 2016 WL 1382240, at *7; Kahle v. Gonzales, 487 F.3d 697, 699 (9th Cir. 2007). We limit our review to the complaint, accept the complaint's well-pleaded factual allegations as true, and construe all inferences in the plaintiff's favor for the purposes of evaluating a motion to dismiss under Federal Rule of Civil Procedure ...