                    United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                 _____________

                                 No. 02-2014NE
                                 _____________

John Doe; Mary Doe, Individually and     *
as Husband and Wife, and; JNT, by        *
and through John Doe, his next friend;   *
Jay Brummett, Personal Representative    *
of the Estate of GayLynn Brummett,       *
                                         *
      Plaintiffs - Appellees,            *
                                         *
United States of America,                *
                                         *
      Intervenor - Appellee,             *
                                         *
      v.                                 *
                                         *   On Appeal from the United
The State of Nebraska; Department of     *   States District Court
Health and Human Services; Michael       *   for the District of
Johanns, Governor of the State of        *   Nebraska.
Nebraska, in his official capacity;      *
Ron Ross, Director of the Nebraska       *
Department of Health & Human             *
Services, in his official capacity;      *
Sandy Thompson, Child Protective         *
Services Case Manager for the            *
Nebraska Department of Health &          *
Human Services, in her official          *
capacity; Patricia Squires, Deceased,    *
Child Protective Services Supervisor     *
and Adoption Unit Supervisor for the     *
Nebraska Department of Health &          *
Human Services, in her official          *
capacity; Daryl Wusk, Administrator      *
of the Lincoln District Office of the   *
Nebraska Department of Health &         *
Human Services, in his official         *
capacity,                               *
                                        *
      Defendants - Appellants.          *
                                   ___________

                             Submitted: January 15, 2003
                                Filed: October 7, 2003
                                 ___________

Before BOWMAN, RICHARD S. ARNOLD, and BYE, Circuit Judges.
                          ___________

RICHARD S. ARNOLD, Circuit Judge.

       GayLynn Brummett, through her estate, and Noah Brummett, a child adopted
by Jay Brummett and GayLynn,1 sued the State of Nebraska, the Nebraska
Department of Health and Human Services, and various state officials (collectively
the defendants or Nebraska) for damages under § 504 of the Rehabilitation Act of
1973, 29 U.S.C. § 794. The defendants moved for summary judgment on the § 504
claim on the basis that they are immune from suit under the Eleventh Amendment of
the United States Constitution. The District Court2 denied the motion, and this
interlocutory appeal followed. We affirm.




      1
       The plaintiffs filed this discrimination case under pseudonyms. The plaintiffs
now state in their brief that they no longer wish to be protected by the pseudonyms.
Accordingly, we will use their real names.
      2
       The Hon. Warren K. Urbom, Senior United States District Judge for the
District of Nebraska.

                                        -2-
                                         I.

       Jay and GayLynn were married in 1989. The following year, they discovered
that GayLynn had contracted HIV, the virus that causes AIDS. Because they wanted
children but did not want to risk infecting Jay or a child during conception or
gestation, the Brummetts decided to enroll in a foster-parenting program administered
by the Nebraska Department of Social Services (NDSS).3 The Brummetts met the
requirements for participating in the program, but they did not inform NDSS about
GayLynn's HIV status. After serving as temporary foster parents to several children,
the Brummetts decided they wanted to adopt a child and enrolled in the NDSS's "fos-
adopt" program. NDSS placed two children with the Brummetts as fos-adopt
placements. NDSS placed S.S. with the Brummetts in September 1991, and placed
Noah, a three-month old, with the family on March 27, 1992.

       On June 2, 1993, nine months after receiving a confidential complaint, NDSS
officials confronted GayLynn about her HIV status. At that time, she admitted that
she was HIV-positive. A month later, after Noah's biological parents relinquished
their parental rights, the Brummetts signed an adoption placement agreement for
Noah with NDSS. Shortly thereafter, NDSS officials met several times about the
placement of S.S. and Noah with the Does. S.S. was removed from the home in early
August 1993 and placed with his relatives. NDSS officials then solicited medical and
legal advice about removing Noah from the home. After lengthy administrative and
legal proceedings, a county court approved an NDSS plan to remove Noah from the
home. Noah was placed with another family on June 25, 1995. Noah's statutory
guardian ad litem appealed this ruling, and the Nebraska Court of Appeals reversed

      3
        Since this lawsuit was commenced, the State of Nebraska has reorganized
several of its agencies, including NDSS. As a result of this reorganization, NDSS is
no longer in existence, and its functions are now included within the Nebraska
Department of Health and Human Services. See Appellant's Br. 4 n.1. For the sake
of clarity, however, we will refer to this agency as NDSS.

                                        -3-
the holding of the county court, finding that Noah's best interests would be served by
being returned to the Brummetts. The Nebraska Supreme Court refused to hear
NDSS's appeal of that decision. NDSS then submitted a new plan to the county court,
recommending that Noah's current fos-adopt parents adopt him. The court adopted
that plan. In response, the Brummetts filed a petition with the Nebraska Supreme
Court, which issued a writ of mandamus ordering the county court to comply with the
appeals court's ruling. On February 22, 1996, Noah was returned to the Brummetts.
Approximately eight months later, the Brummetts filed with the county court a
petition for adoption and name change, which was accompanied by a consent of the
NDSS. The day after this filing, GayLynn died from complications related to AIDS.
On November 26, 1996, the county court entered a decree of adoption naming the
Brummetts the adoptive parents of Noah.

        The plaintiffs filed this suit in November 1995. Although the complaint
initially involved multiple causes of action, the claims have since been limited to a
suit for damages under § 504 by GayLynn's estate and Noah against the State of
Nebraska, NDSS, and various state officials sued in their official capacities. In short,
the plaintiffs allege that the defendants violated § 504 by excluding GayLynn,
because of her HIV status, from participating in Nebraska's foster care and adoption
programs. See, e.g., Complaint ¶¶ 60–64 (filed Nov. 8, 1995).

      In January 1998, the defendants moved for summary judgment on the § 504
claim on the ground that they are immune from suit under the Eleventh Amendment.
The District Court denied the motion, holding, inter alia, that the defendants had
waived their sovereign immunity, pursuant to the waiver provision of § 504, 42
U.S.C. § 2000d-7, by accepting federal funds for their foster care and adoption
programs. The defendants filed an interlocutory appeal from this order, and the
United States intervened on appeal to defend the waiver provision. We stayed
consideration of that appeal pending our decision in Jim C. v. United States, 235 F.3d
1079 (8th Cir. 2000) (en banc), cert. denied, 533 U.S. 949 (2001). Following our

                                          -4-
decision in Jim C., a three-judge panel of our Court issued an unpublished opinion
in the present case vacating the District Court's decision as to the § 504 claim and
remanding the case for reconsideration in light of Jim C. Doe v. Nebraska, No. 99-
1024 (8th Cir. Apr. 17, 2001).4 On remand, the defendants renewed their motion for
summary judgment, arguing that the state of Nebraska had been coerced into waiving
its Eleventh Amendment immunity by the federal government's conditioning receipt
of federal funding for their foster care and adoption programs on Nebraska's waiver
of immunity to suit under § 504. The defendants also argued, relying on Garcia v.
S.U.N.Y. Health Sciences Center, 280 F.3d 98 (2d Cir. 2001), that their waiver of
sovereign immunity is invalid because they mistakenly believed Congress had already
abrogated such immunity, and therefore they did not knowingly waive their Eleventh
Amendment immunity. The District Court rejected both arguments, and denied the
motion for summary judgment.

                                          II.

       We review de novo the question of whether a state (or its agencies and
officials) has waived sovereign immunity. Santee Sioux Tribe v. Nebraska, 121 F.3d
427, 430 (8th Cir. 1997), cert. denied, 525 U.S. 813 (1998).

      The Eleventh Amendment provides: "The 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. The Eleventh
Amendment provides states, and state agencies, see Hadley v. North Ark. Cmty.
Technical Coll., 76 F.3d 1437, 1438 (8th Cir. 1996), cert. denied, 519 U.S. 1148


      4
       In that decision, we also reversed the District Court's judgment as to the claims
under the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12101–12213, and
dismissed those claims.

                                          -5-
(1997), with immunity not only from suits brought by citizens of other states, but also
from suits brought by their own citizens. Hans v. Louisiana, 134 U.S. 1, 15 (1890).
Eleventh Amendment immunity, however, is not absolute. The Supreme Court has
recognized, among other exceptions, that a state may waive its sovereign immunity
by consenting to suit. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense
Bd., 527 U.S. 666, 670 (1999).

        A state may waive its immunity either by explicitly specifying its intention to
subject itself to suit or by voluntarily participating in federal spending programs
where Congress expressed a clear intent to condition receipt of federal funds on a
state's consent to waive its sovereign immunity. Atasacadero State Hosp. v. Scanlon,
473 U.S. 234, 238 n.1 (1985) ("A state may effectuate a waiver of its constitutional
immunity by . . . waiving its immunity to suit in the context of a particular federal
program."). A waiver of Eleventh Amendment immunity as a condition of the receipt
of federal funds should be found "only where stated 'by the most expressive language
or by such overwhelming implication from the text as [will] leave no room for any
other reasonable construction.' " Edelman v. Jordan, 415 U.S. 651, 673 (1974)
(quoting Murray v. Wilson Distilling Co., 213 U.S. 151, 171 (1909)) (alteration by
Edelman Court).

       Under the Rehabilitation Act, states that accept federal funds are required by
statute to waive their Eleventh Amendment immunity to § 504 claims. 42 U.S.C.
§ 2000d-7 ("A State shall not be immune under the Eleventh Amendment of the
Constitution of the United States from suit in Federal court for a violation of section
504 of the Rehabilitation Act . . . or the provisions of any other Federal statute
prohibiting discrimination by recipients of Federal financial assistance."); see Jim C.,
235 F.3d at 1081; Koslow v. Pennsylvania, 302 F.3d 161, 170 (3d Cir. 2002)
(detailing the origin of § 2000d-7 and noting that by enacting that provision
"Congress put states on notice that by accepting federal funds under the
Rehabilitation Act, they would waive their Eleventh Amendment immunity" to § 504

                                          -6-
claims), cert. denied, 123 S. Ct. 1353 (2003). As we stated in Jim C., this waiver of
sovereign immunity is limited and applies only to the individual agency that receives
the federal funds, i.e., a state can avoid waiver by "accepting federal funds for some
departments and declining them for others." 235 F.3d at 1081.

       In this case, as in Jim C., the defendants argue that they did not voluntarily
consent to suit because the financial inducement offered by Congress for Nebraska's
social-services programs administered by NDSS was so great that Nebraska had no
choice but to accept the federal funding and waive its immunity to suit under § 504.
We disagree.

        NDSS receives both state and federal funding. Nebraska state law authorizes
NDSS to apply for and accept federal grants. Neb. Rev. Stat. § 81-3102(7). The
federal grants received by NDSS vary in amount, and the percentage of any particular
NDSS program subsidized by the federal government also varies from time to time
and from one program to another. According to the defendants, "[h]istorically, the
federal funding component of the [NDSS] budget on both [an] appropriation basis,
with anticipated federal funding, and on an actual basis, is generally no less than
60%." Appellants' Br. at 10–11. The defendants also state that "the federal funding
component was no less than 60% of [NDSS's] operating budget" in the years 1990
to 1995 and that the "specific programs which would have provided assistance to . . .
[Noah Brummett], mirror this 60%, both as to budget and as to actual expenditures."
Id. at 11. In the year the Does filed this suit, 1995, the federal funding component of
the NDSS's expenditures, $557 million, constituted approximately 18.59% of
Nebraska's total expenditures for that year. Ibid.

      In Jim C., we held that Arkansas waived its sovereign immunity to suit for
§ 504 claims against the Arkansas Department of Education when it chose to accept
federal funds for that department. 235 F.3d at 1080. In so doing, we disagreed with
a panel decision that found § 504 was not a valid exercise of Congress's power under

                                         -7-
the Spending Clause because the conditions Congress imposed on the states were too
broad and therefore coercive. Ibid. (holding Congress validly exercised its power
under the Spending Clause by conditioning receipt of federal funds on a state
agency's waiver of its Eleventh Amendment immunity to § 504 claims), vacating
Bradley ex rel. Bradley v. Ark. Dep't of Educ., 189 F.3d 745, 757–58 (8th Cir. 1999).5
Notably, in Jim C. we rejected Arkansas's coercion argument, concluding that "[t]he
sacrifice of all federal education funds, approximately $250 million or 12 per cent.
of the annual state education budget . . . would be politically painful, but we cannot
say that it compels Arkansas's choice." 235 F.3d at 1082. In this case, the defendants
contend that coercion is readily apparent because the federal funding component for
NDSS's budget, both on an appropriation and on an actual basis, was no less than
sixty per cent. between 1990 to 1995 and amounted to $557 million in 1995 alone.

       While the Supreme Court in South Dakota v. Dole acknowledged that federal
financial inducement offered to the states could become coercive, the Court also
observed that states voluntarily exercise their own choice in accepting the conditions
attached to the receipt of federal funds. 483 U.S. 203, 211–12 (1987) (noting that
"not merely in theory but in fact," states decide whether to enact laws setting a higher
minimum drinking age in exchange for federal highway funds). We are not aware of,
nor did the defendants direct us to, any decision supporting their contention that the
level and amount of funding at issue here constitutes impermissible coercion. As
noted previously, we have found no coercion where a similarly large amount of
federal money was at stake. Jim C., 235 F.3d at 1082. Other circuits are in accord
with this view. See Lovell v. Chandler, 303 F.3d 1039, 1051 (9th Cir. 2002) (citing
Jim C. with approval in § 504 case), cert. denied, 123 S. Ct. 871 (2003); Kansas v.
United States, 214 F.3d 1196, 1202 (10th Cir.) (holding that conditioning of $131.2


      5
        We also left intact the holding of the panel that Congress exceeded its
authority under Section 5 of the Fourteenth Amendment in extending § 504 to the
states. Jim C., 235 F.3d at 1080.

                                          -8-
million in federal funds on Kansas's acceptance of certain federal requirements does
not constitute impermissible coercion), cert. denied, 531 U.S. 1035 (2000); see also
West Virginia v. United States Dep't of Health & Hum. Servs., 289 F.3d 281, 289 (4th
Cir. 2002) (observing that there has been "no decision from any court finding a
conditional grant to be impermissibly coercive"); Nevada v. Skinner, 884 F.2d 445,
448 (9th Cir. 1989), cert. denied, 493 U.S. 1070 (1990).

        Nothing in the facts of this case requires us to deviate from our holding in
Jim C. Nebraska applied for and received federal grants for its social-service
programs. As a condition of NDSS's receiving federal funding for these programs,
Nebraska agreed to waive its Eleventh Amendment immunity to discrimination claims
under § 504. As in Jim C., Nebraska could have avoided the requirements of § 504
by declining the federal funds. While the amount of federal funding at issue here is
significant, we cannot conclude that Nebraska's decision to accept the money was
impermissibly coerced. Nebraska was free to "take the money or leave it." Jim C.,
235 F.3d at 1082; see also Kansas, 214 F.3d at 1203 ("[A] difficult choice remains
a choice, and a tempting offer is still but an offer. If Kansas finds the . . .
requirements so disagreeable, it is ultimately free to reject both the conditions and the
funding, no matter how hard that choice may be."). Moreover, Nebraska retains the
ultimate control, through its state legislative process, to determine the amount of
federal funds allocated to any particular agency and the responsibilities of that
agency. If Nebraska wanted to avoid the requirements of § 504, it could have
transferred the adoption and foster-care programs out of NDSS to another agency that
did not receive federal funding. See Jim C., 235 F.3d at 1081 ("A State and its
instrumentalities can avoid Section 504's waiver requirement on a piecemeal basis,
by simply accepting federal funds for some departments and declining them for
others."); Lovell, 303 F.3d at 1051 (noting that § 504 "only covers all the activities
of the department or the agency receiving federal funds," not all the activities of the
state).



                                          -9-
                                         III.

       Relying on the Second Circuit's decision in Garcia, the defendants also argue
that Nebraska did not knowingly waive its Eleventh Amendment immunity at the time
the state accepted federal funds. As we have said, a state may waive its Eleventh
Amendment immunity by making "a 'clear declaration' that it intends to submit itself"
to federal court jurisdiction. Coll. Sav. Bank, 527 U.S. at 676 (quoting Great
Northern Life Ins. Co. v. Read, 322 U.S. 47, 54 (1944)). This test for waiver is
stringent. Id. at 675. An effective waiver of sovereign immunity requires an
"intentional relinquishment or abandonment of a known right or privilege." Id. at 682
(citation to quoted case omitted). In assessing whether there has been a knowing
waiver of sovereign immunity, courts must " 'indulge every reasonable presumption
against waiver' of fundamental constitutional rights." Id. (quoting Aetna Ins. Co. v.
Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937)).

       In enacting Title II of the ADA, Congress clearly expressed its intent to
abrogate state sovereign immunity. See 42 U.S.C. § 12202 (2000) ("A State shall not
be immune under the [E]leventh [A]mendment to the Constitution of the United
States from an action in Federal or State court . . . for a violation of this chapter."
(footnote omitted)). The abrogation/waiver provision of § 504 contains nearly
identical language. See 42 U.S.C. § 2000d-7(a)(1) ("A State shall not be immune
under the Eleventh Amendment of the Constitution of the United States from suit in
Federal court for a violation of section 504 of the Rehabilitation Act . . . or the
provisions of any other Federal statute prohibiting discrimination by recipients of
Federal financial assistance."). The abrogation provision of the ADA, however, has
since been called into serious doubt. In 2001, the Supreme Court in Board of
Trustees of the University of Alabama v. Garrett, 531 U.S. 356, 360 (2001), held that
Congress did not validly exercise its Section 5 enforcement powers under the




                                         -10-
Fourteenth Amendment6 in seeking to abrogate state sovereign immunity under Title I
of the ADA. Similarly, before the Supreme Court decided Garrett, we held in
Alsbrook v. City of Maumelle, Ark., 184 F.3d 999, 1010 (8th Cir. 1999) (en banc),
cert. dismissed, 529 U.S. 1001 (2000), that Title II of the ADA "was not a proper
exercise of Congress's power under Section 5 of the Fourteenth Amendment" and
therefore did not abrogate Eleventh Amendment immunity. Following our decision
in Alsbrook and again before the Supreme Court decided Garrett, we held in Bradley
that § 504 was not a valid exercise of Congress's power under the Fourteenth
Amendment to abrogate state sovereign immunity, 189 F.3d at 756, a holding that
was not disturbed by our en banc decision in Jim C., 235 F.3d at 1080.

       Nebraska argues that prior to these decisions, it had no reason to doubt the
validity of Congress's asserted abrogation of state sovereign immunity under the ADA
or § 504. Thus, according to the defendants, they could not know that they retained
any sovereign immunity to waive under § 2000d-7 because they would have been
justified in a belief that Nebraska's immunity from suit had already been abrogated
by Congress under Title II when it accepted Rehabilitation Act funds for NDSS from
roughly 1993 to 1996. In support of this claim, Nebraska cites the Second Circuit's
decision in Garcia. While the court in Garcia held that § 2000d-7 constitutes a clear
conditional waiver, it also held that New York did not knowingly waive its Eleventh
Amendment immunity from § 504 claims when it accepted federal funds for its
medical school. Garcia, 280 F.3d at 113–15. In reaching this conclusion, the court
reasoned that "[a]t the time that New York accepted the conditioned funds, Title II


      6
       "Section 5 of the Fourteenth Amendment grants Congress the power to enforce
the substantive guarantees contained in [Section 1 of the Fourteenth Amendment] by
enacting 'appropriate legislation.' " Garrett, 531 U.S. at 365 (quoting City of Boerne
v. Flores, 521 U.S. 507, 536 (1997)). Section 1 of the Fourteenth Amendment
provides, in part: "No State shall make or enforce any law which shall . . . deny to
any person within its jurisdiction the equal protection of the laws." U.S. Const.
amend. XIV, § 1.

                                        -11-
of the ADA was reasonably understood to abrogate New York's sovereign immunity
under Congress's Commerce Clause authority." Ibid. Accordingly, the court
determined that because "the proscriptions of Title II and § 504 are virtually
identical," the State of New York had not knowingly waived its Eleventh Amendment
immunity against § 504 claims because it appeared such immunity "had already been
lost." Id. The Second Circuit distinguished our decision in Jim C. on the issue of
whether a state knowingly waived its right to sovereign immunity because, in its
view, we focused "exclusively on whether Congress clearly expressed its intention
to condition waiver on the receipt of funds and whether the state in fact received the
funds," i.e., we did not address whether accepting conditioned funds constitutes a
knowing waiver of sovereign immunity. Id. at 115 n.5.

        Since Garcia was decided, some other courts have adopted its reasoning. See
Pace v. Bogalusa City Sch. Bd., 325 F.3d 609, 617 (5th Cir. 2003) (holding
defendants "did not knowingly waive their immunity by accepting federal IDEA
[Individual with Disabilities Act] funds" because at the time they accepted such
funds" no circuit court had held that § 1403 of the IDEA did not validly abrogate
state sovereign immunity"); Garrett v. Univ. of Ala. Bd. of Trustees, 223 F. Supp. 2d
1244, 1249 (N.D. Ala. 2002) ("This court finds Garcia well reasoned and
persuasive."); A.A. v. Bd. of Educ., Cent. Islip Union Free Sch. Dist., 196 F. Supp.
2d 259, 265 (E.D.N.Y. 2002) (holding New York's acceptance of federal funds cannot
abrogate the state's immunity from damages for violations of § 504 because the funds
were accepted years before the state "could have known that the ADA did not validly
abrogate the Eleventh Amendment"). But see Koslow, 302 F.3d at 172 n.12
(declining in dicta to adopt Garcia analysis); Shepard v. Irving, 204 F. Supp. 2d 902,
917 (E.D. Va. 2002) (rejecting "knowing waiver" argument because defendant "knew
that it was exposing itself to suit for actions under the Rehabilitation Act if it received
federal funds").




                                           -12-
       In our view, the State’s argument is not well taken. In the first place, the State
of Nebraska had reason to know that the ADA’s abrogation clause might be found
unconstitutional. We are, after all, dealing with a sovereign state, not an indigent,
uncounseled criminal defendant. The State of Nebraska, which here seeks to avoid
its agreement, is well supplied with lawyers and funds. It is not unreasonable to
expect such a party to inform itself as to the state of the law. Given this reasonable
expectation, we cannot accept the argument that Nebraska had no reason to doubt the
validity of Congress’s asserted abrogation of state sovereign immunity under the
ADA or § 504. It is true that between 1993 and 1996, the relevant time period for this
case, the Supreme Court had not yet declared the abrogation clause of the ADA
invalid. That did not occur until the Supreme Court decided Board of Trustees of the
University of Alabama v. Garrett, 531 U.S. 356, 364 (2001). At the same time,
neither this Court nor the Supreme Court had held that the abrogation clause found
in the ADA was constitutional. We conclude that the combination of the dearth of
precedent on the validity of the ADA’s abrogation clause and general legal
developments on the question of congressional abrogation of sovereign immunity
gave any reasonable litigant reason to wonder whether the abrogation clause would
withstand a constitutional challenge.

       The law was quite unsettled at the relevant time as to whether Congress could
use its power to regulate commerce to abrogate sovereign immunity. In 1989, the
Supreme Court ruled on the issue in Pennsylvania v. Union Gas Co., 491 U.S. 1
(1989), but there were so many opinions with such varied reasoning that the question
of the validity of Congress’s power to abrogate sovereign immunity under the
Commerce Clause remained in flux. In 1996, the Supreme Court definitively
answered the question in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996),
concluding that the Commerce Clause did not give Congress the power to abrogate
sovereign immunity. As the Supreme Court recounts in that opinion, that case had
been ongoing since September of 1991. Ibid. at 51. The Court of Appeals for the
Eleventh Circuit had ruled on the issue on January 18, 1994, concluding that

                                          -13-
Congress lacked the power to abrogate a state’s sovereign immunity under the Indian
Commerce Clause. Seminole Tribe of Florida v. Florida, 11 F.3d 1016 (11th Cir.
1994). Thus, when the State of Nebraska was accepting federal funds under the
Rehabilitation Act between 1993 and 1996, there was a live debate in the legal
community on the question of whether Congress could abrogate a state’s sovereign
immunity under the Commerce Clause.

       That being said, at the time the ADA’s abrogation clause also purported to rest
on Congress’s power to enforce the protections of the Fourteenth Amendment. See
Bd. of Trustees of University of Alabama v. Garrett, 531 U.S. 356, 364 n.3 (2001).
This fact hardly changes matters, however, as it has long been established that
Congress’s power under § 5 is limited. In Katzenbach v. Morgan, the Supreme Court
indicated that, although Congress’s power to enforce the Fourteenth Amendment
included power to go beyond the Amendment’s text, the enforcement power was not
unlimited — § 5 allows Congress to enact “appropriate legislation to enforce the
Equal Protection Clause.” 384 U.S. 641, 650 (1966). This language seemed to
indicate that Congress’s power to enforce the Fourteenth Amendment applied only
where there was a potential equal protection violation. And by the middle of the
1990's (the time period relevant to this case), federal courts were beginning to place
tighter limits on Congress’s power under § 5. See City of Boerne v. Flores, 521 U.S.
507 (1997) (recounting that the district court had ruled the Religious Freedom
Restoration Act unconstitutional in early 1995).

        In light of this precedent, the validity of the ADA as a § 5 enactment was far
from clear when Nebraska accepted Rehabilitation Act funds in 1996. The Supreme
Court had already decided that disabled persons were not a specially protected class
under the Equal Protection Clause. City of Cleburne v. Cleburne Living Center, 473
U.S. 432, 442-47 (1985). Indeed, the Court said that the treatment of the disabled
was “a task for legislators guided by qualified professionals and not by the perhaps
ill-informed opinions of the judiciary.” Id. at 443. In light of this approach, and the

                                         -14-
tightening standards for § 5 legislation, by the mid-1990's there was certainly reason
to regard the validity of the ADA as a § 5 enforcement statute as a debatable issue.

        We are not holding that Nebraska should have known that the abrogation
clause in the ADA was invalid, but only that there was reason to question it and to
consider the possibility that the abrogation clause would ultimately prove ineffective.
It is also interesting to note the total lack of factual support for the state’s argument.
The record is utterly devoid of evidence that any of the attorneys employed by
Nebraska ever thought that, by accepting funds, Nebraska would not actually lose
anything in light of the ADA’s abrogation clause. Did any of the lawyers actually say
to themselves, “Well, the abrogation statute is there, so we may as well sign the
waiver, because in doing so we give up nothing”? Did any of the lawyers actually
mention anything of this kind to their client? The State’s brief never even argues that
such a thing happened. In addition, we have no idea what the State would have done
if it had known that the abrogation clause was going to be declared invalid. Would
it have refused the funds? The State does not say so. Would it have accepted the
funds and waived immunity anyway? We are not told this either.

        Even if one accepts the assumption that Nebraska was actively considering the
existence of the abrogation clause in the ADA, Nebraska’s acceptance of the funds
is best understood as something like an insurance policy that the federal government
was buying--it was getting Nebraska to waive its immunity just in case the
congressional abrogation in the ADA was invalid. Indeed, the very fact that Congress
thought it necessary to provide two grounds for overcoming sovereign immunity
should have raised the State’s suspicion that Congress was not entirely confident of
either.

       Finally, the result advocated by the State would do violence to elementary and
well established principles of contract law. A basic purpose of a contract is to
allocate risks among parties. Generally, those who make contracts are bound by their

                                          -15-
agreement, even if they’re incorrect about the facts (except in the case of mutual
mistake) or the law. In general, a mistake of law will not be relieved against.
Contracting parties rarely, if ever, make their agreements with full knowledge of
every relevant fact and every relevant consideration of law. Instead, it is the office
of the contract to allocate the risks of error between the parties. See Restatement
(2d), Contracts § 154 (1981) (“a party bears the risk of a mistake when . . . (b) he is
aware, at the time the contract is made, that he has only limited knowledge with
respect to the facts to which the mistake relates but treats his limited knowledge as
sufficient . . ..”). There is nothing harsh about holding the State to this ordinary
principle, especially since, as we have attempted to demonstrate, the validity of the
statutory abrogation clause was very much a live issue at the time the waiver was
signed.

       Moreover, we wonder about the remedy that would result. Apparently
Nebraska would get to keep all the benefits of its bargain. Certainly it has not offered
to return any of the money it received. Is this not a remedy unknown to the law of
contracts? Even in the case of a mutual mistake, the remedy is to avoid the contract,
thereby relieving both parties of their duties of performance. Restatement (2d),
Contracts § 152; id. at Chapter 6 Introductory Note (“a party wishing to exercise a
power of avoidance will usually simply notify the other party of his rescission,
offering to return what he has received or the equivalent.”). This remedy is likewise
unknown in constitutional jurisprudence. Take the example of a plea bargain. The
government gives up its right to try the defendant on a more serious charge, and the
defendant, by pleading guilty, gives up the right to a trial, and other assorted rights,
with respect to remaining charges. If the defendant later seeks to avoid his plea by
asserting that he accepted the agreement without having been fully informed of his
rights, the plea can be avoided. But the government regains what it gave up in the
agreement, its right to try the defendant, even on the dismissed charges. Thus, the
parties are put back in their initial position. Here, however, the result would be quite



                                         -16-
different. Nebraska would simply keep the money. Such a remedy seems to us
foreign to both contract and constitutional law.

        We conclude that the State of Nebraska ought to have known, in 1996, that the
validity of the abrogation statute was an issue litigable in good faith. Its decision to
waive immunity by contract — an adequate and independent way of eliminating the
Eleventh Amendment defense — was therefore knowing. The State should be held
to its agreement.

      Affirmed.

BOWMAN, Circuit Judge, dissenting.

       I respectfully dissent. While I agree with the Court's decision that the State of
Nebraska, the Nebraska Department of Health and Human Services, and various state
officials (collectively, the defendants or Nebraska) were not coerced into waiving
their Eleventh Amendment immunity, I would reverse the District Court's decision
because the defendants did not knowingly waive their Eleventh Amendment
immunity at the time Nebraska accepted federal funds for its foster care and adoption
programs.

       The Court accurately notes that the Supreme Court has said that an Eleventh
Amendment waiver by a state must be clear, knowing, and intentional, see ante at 10
(citing Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S.
666, 675–76 (1999)), and that in assessing whether there has been a knowing waiver
of sovereign immunity, courts must "'indulge every reasonable presumption against
waiver' of fundamental constitutional rights," Coll. Sav. Bank, 527 U.S. at 682
(quoting Aetna Ins. Co. v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937)). The
opinion of the Court, however, is not faithful to these teachings. Instead, the opinion
merely pays lip service to the Supreme Court's admonition that we must indulge every

                                         -17-
reasonable presumption against waiver. In reality, the Court indulges every
presumption in favor of finding a waiver by Nebraska of its Eleventh Amendment
immunity.

       Nebraska argues, and I agree, that prior to our 1999 decisions in Alsbrook v.
City of Maumelle, Arkansas, 184 F.3d 999 (8th Cir. 1999) (en banc) (Title II of the
ADA), and Bradley v. Arkansas Department of Education, 189 F.3d 745 (8th Cir.
1999) (§ 504) (subsequent history omitted), and the Supreme Court's 2001 decision
in Board of Trustees of the University of Alabama v. Garrett, 531 U.S. 356 (2001),
the state had no reason to doubt the validity of Congress's asserted abrogation of state
sovereign immunity under the ADA or § 504. See ante at 10–11 (discussing
Congress's intent to abrogate state sovereign immunity in Title II of the ADA and
§ 504 of the Rehabilitation Act and acknowledging our decisions that the abrogation
clauses in those acts were not valid exercises of Congress's power under § 5 of the
Fourteenth Amendment). The defendants could not know that they retained any
sovereign immunity to waive under § 2000d-7 because they would have been justified
in their belief that Nebraska's immunity from suit had already been abrogated by
Congress under Title II when the state accepted Rehabilitation Act funds from
roughly 1993 to 1996. See Garcia v. S.U.N.Y. Health Sciences Ctr., 280 F.3d 98,
113–15 (2d Cir. 2001), discussed by the Court ante at 11–12. Consistent with the
decisions of the Second Circuit and other courts (cited by the Court ante at 12) that
have recently addressed this issue, I would hold that Nebraska did not knowingly
waive its Eleventh Amendment immunity by accepting Rehabilitation Act funds
because, at the pertinent time the state accepted those funds, it had no reason to doubt
the validity of Congress's abrogation of its Eleventh Amendment immunity under
§ 504. Simply put, the defendants "did not know that they retained any sovereign
immunity to waive." Pace v. Bogalusa City Sch. Bd., 325 F.3d 609, 617 (5th Cir.),
reh'g en banc granted, 339 F.3d 348 (5th Cir. 2003); cf. Douglas v. Cal. Dep't of
Youth Auth., 285 F.3d 1226, 1231 (9th Cir. 2002) (O'Scannlain, J., dissenting from
denial of reh'g en banc) ("How could a State waive that which has already been

                                         -18-
abrogated by Congress?"). Adhering to the stringent waiver standard articulated by
the Supreme Court in College Savings Bank, I conclude that Nebraska did not
knowingly relinquish its sovereign immunity to suit under § 504 by accepting federal
funds for its adoption and foster care programs.

       Our en banc decision in Jim C. v. United States, 235 F.3d 1079 (8th Cir. 2000)
(en banc), cert. denied, 533 U.S. 949 (2001), does not foreclose consideration of
whether Nebraska knowingly waived its right to sovereign immunity from suit for
§ 504 claims by accepting Rehabilitation Act funds because the issue was never
raised in that case. We simply considered whether § 504 was a valid exercise of
Congress's spending power and whether Arkansas waived its sovereign immunity to
suit under § 504 by accepting federal funds. Id. at 1080. We did not address, nor
have we ever addressed, the precise issue before us now: whether the state made a
knowing waiver.

       Finally, I do not believe the Court's reliance on "established principles of
contract law" is well-founded. Ante at 15. Indeed, the Court cites no authority for
its application of contract law to this case. We are dealing here not merely with a
"contract," if that is even a correct way to view the statutory abrogation-plus-waiver-
equals-receipt-of-federal-funds arrangement at issue in this case. Instead, we are
dealing with a sovereign state, its relationship to the federal government (a subject
on which the Constitution has a great deal to say), and what must be shown to
establish that the state, as a matter of constitutional law, has knowingly waived its
Eleventh Amendment immunity. Under the standards of College Savings Bank and
its declared presumption against such waivers, the requisite showing has not been
made.

      Regarding the Court's speculations as to the federal government's remedy in the
event a knowing waiver is not found, i.e., could the government recover the funds it
advanced to Nebraska, I simply note that this is not an issue raised or briefed in the

                                         -19-
present appeal. Unless and until the government were to assert a claim to get some
or all of the money back, it could not become an issue that would reach our Court.
Such a claim would necessarily raise novel and complex issues. It is best left for
another day, if such a day were ever to come. Meanwhile, speculation concerning
whether Nebraska would have accepted the Rehabilitation Act funds, had it known
that its sovereign immunity was not waived before it accepted the federal funds but
would be waived when it took the money, is irrelevant to the legal question at issue.

     For the reasons stated, the plaintiffs' claims brought under § 504 of the
Rehabilitation Act should be barred.
                      ______________________________




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