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APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS. (D.C. No. 5:13-CV-04007-JAR-KMH).
Glenn Howard Griffeth, Chief Counsel, Kansas Department of Labor, Topeka, Kansas (M. J. Willoughby, Assistant Attorney General, Topeka, Kansas, with him on the briefs), for Defendant-Appellant.
Alan V. Johnson (Danielle N. Davey with him on the brief), Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., Topeka, Kansas, for Plaintiff-Appellee.
Before KELLY, HOLMES, and McHUGH, Circuit Judges.
McHUGH, Circuit Judge.
Defendant-appellant Kansas Department of Labor (KDOL) brings this interlocutory appeal, arguing the district court should have dismissed plaintiff-appellee Kathleen Arbogast's suit because (1) KDOL
lacks the capacity to sue and to be sued under Kansas law and (2) even if KDOL is a proper defendant, it is immune from suit by operation of the Eleventh Amendment to the U.S. Constitution. We hold that we lack appellate jurisdiction to consider KDOL's capacity argument, but we exercise our jurisdiction under the collateral order doctrine and affirm the district court's determination that KDOL is not entitled to Eleventh Amendment immunity from Ms. Arbogast's claims.
Ms. Arbogast was employed in the Workers Compensation Division of KDOL, a governmental subdivision of the State of Kansas. Ms. Arbogast suffers from asthma and, in April 2008, complained that perfumes and other strong fragrances in the workplace were impairing her ability to work. In September 2010, Ms. Arbogast was moved to a workspace in the basement of her office building in an attempt to alleviate the problem. But Ms. Arbogast continued to suffer asthma attacks when coworkers wearing fragrances would come speak with her, prompting Ms. Arbogast to make additional complaints to her supervisor. On August 1, 2011, Karin Brownlee, then-Secretary of Labor, terminated Ms. Arbogast's employment at KDOL.
On January 22, 2013, Ms. Arbogast filed suit, asserting claims of discrimination and retaliation in violation of the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq.  Ms. Arbogast named as defendants the " State of Kansas, Department of Labor" and Ms. Brownlee in her individual capacity. She sought monetary damages in excess of $100,000.
KDOL moved to dismiss Ms. Arbogast's Rehabilitation Act claims pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(c). Relevant to this appeal, KDOL argued the district court did not have jurisdiction to adjudicate the claim because (1) KDOL lacks the capacity to sue or to be sued under Kansas law and (2) Kansas has not waived its Eleventh Amendment immunity from suit. Ms. Arbogast filed a motion seeking limited discovery on the jurisdictional issue, which the district court granted.
After the parties completed limited discovery, the district court denied KDOL's motion to dismiss. Specifically, the district court found KDOL had waived its Eleventh Amendment immunity by accepting federal funds for its Unemployment Insurance Division. Although Ms. Arbogast worked in the Workers Compensation Division, the district court concluded that KDOL's acceptance of federal funds for the Unemployment Insurance Division was sufficient to waive Eleventh Amendment immunity for the entirety of KDOL, including the Workers Compensation Division. The district court also rejected KDOL's argument that it did not have the capacity to be sued, finding it was merely a reiteration of KDOL's immunity argument. KDOL now brings this interlocutory appeal.
KDOL argues (1) the district court erred in not dismissing Ms. Arbogast's Rehabilitation Act claims because KDOL lacks the capacity to sue and to be sued under Kansas law and (2) even if KDOL is a proper defendant, it has not waived its Eleventh Amendment immunity from suit for purposes of Ms. Arbogast's Rehabilitation Act claims. We address each claim in turn.
A. We Do Not Have Appellate Jurisdiction to Consider KDOL's Claim that It Lacked the Capacity to be Sued
KDOL first argues the district court erred in refusing to dismiss Ms. Arbogast's suit because KDOL lacks the capacity to sue or to be sued under Kansas law and is therefore not a proper defendant. See Fed.R.Civ.P. 17(b) (indicating that a party's capacity to sue or be sued in federal court is determined by state law). Specifically, KDOL argues that, as merely a state agency, Kansas law does not endow it with the capacity to sue or to be sued. It further argued in its briefing before this court that we have jurisdiction to hear an immediate appeal of this issue under the collateral order doctrine. But counsel for KDOL conceded at oral argument that the collateral order doctrine may not permit interlocutory review of KDOL's lack of capacity argument. For the reasons discussed below, this concession was appropriate.
Normally, federal appellate courts only have jurisdiction to hear appeals from " final decisions of the district courts." 28 U.S.C. § 1291. But the U.S. Supreme Court has also recognized a " small class" of nonfinal orders, which, though not usually immediately appealable, are nonetheless amenable to interlocutory appeal under the collateral order doctrine.See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). Under this " narrow" exception to the final order rule, Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 868, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994), the Supreme Court has recognized two ways in which an interlocutory order may be immediately reviewable: (1) the order must independently meet all of the required elements of a collateral order or (2) the order must fall within this court's limited pendent jurisdiction. See Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 42, ...