                                PUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                               No. 12-2513


UNITED STATES ex rel. JON H. OBERG,

                 Plaintiff - Appellant,

           v.

PENNSYLVANIA HIGHER    EDUCATION ASSISTANCE AGENCY; VERMONT
STUDENT   ASSISTANCE   CORPORATION;  ARKANSAS STUDENT  LOAN
AUTHORITY,

                 Defendants - Appellees,

           and

NELNET, INC.; SLM CORPORATION; PANHANDLE PLAINS HIGHER
EDUCATION AUTHORITY; BRAZOS GROUP; EDUCATION LOANS INC/SD;
SOUTHWEST   STUDENT   SERVICES  CORPORATION;   BRAZOS   HIGHER
EDUCATION SERVICE CORPORATION; BRAZOS HIGHER EDUCATION
AUTHORITY, INC.; NELNET EDUCATION LOAN FUNDING, INC.;
PANHANDLE-PLAINS    MANAGEMENT AND   SERVICING    CORPORATION;
STUDENT LOAN FINANCE CORPORATION,

                 Defendants.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.    Claude M. Hilton, Senior
District Judge. (1:07-cv-00960-CMH-JFA)


Argued:   September 19, 2013                  Decided:    March 13, 2014


Before TRAXLER,    Chief   Judge,   and     MOTZ   and   KEENAN,   Circuit
Judges.
Affirmed in part, vacated in part, and remanded by published
opinion.   Judge Motz wrote the opinion, in which Judge Keenan
joined. Chief Judge Traxler wrote a separate opinion concurring
in the judgment in part and dissenting in part.


ARGUED: Bert Walter Rein, WILEY REIN, LLP, Washington, D.C., for
Appellant.      Daniel   B.  Huyett,  STEVENS   &   LEE,     Reading,
Pennsylvania; John Stone West, TROUTMAN SANDERS, LLP, Richmond,
Virginia; N. Thomas Connally, III, HOGAN LOVELLS US LLP, McLean,
Virginia,   for   Appellees.     ON  BRIEF:   Michael    L.    Sturm,
Christopher M. Mills, Brendan J. Morrissey, WILEY REIN, LLP,
Washington, D.C., for Appellant. Thomas L. Appler, WILSON ELSER
MOSKOWITZ EDELMAN & DICKER LLP, McLean, Virginia, for Appellee
Kentucky Higher Education Student Loan Corporation.         Megan C.
Rahman, TROUTMAN SANDERS LLP, Richmond, Virginia, for Appellee
Vermont Student Assistance Corporation.     Thomas M. Trucksess,
HOGAN LOVELLS US LLP, McLean, Virginia; Dustin McDaniel,
Arkansas Attorney General, Dennis R. Hansen, Deputy Attorney
General, Mark N. Ohrenberger, Assistant Attorney General, OFFICE
OF THE ARKANSAS ATTORNEY GENERAL, Little Rock, Arkansas, for
Appellee Arkansas Student Loan Authority.         Neil C. Schur,
STEVENS & LEE, P.C., Philadelphia, Pennsylvania; Jill M.
DeGraffenreid, McLean, Virginia, Joseph P. Esposito, HUNTON &
WILLIAMS LLP, Washington, D.C., for Appellee Pennsylvania Higher
Education Assistance Agency.




                                 2
DIANA GRIBBON MOTZ, Circuit Judge:

       This      appeal     returns     to    us    after    remand    to    the    district

court.      Dr. Jon Oberg, as relator for the United States, brought

this action against certain student loan corporations, alleging

that they defrauded the Department of Education and so violated

the False Claims Act (“FCA” or “the Act”), 31 U.S.C. §§ 3729 et

seq.     (2006).            The   district      court       initially       dismissed     the

complaint in its entirety.                    When Dr. Oberg appealed, we held

that the court had not employed the proper legal framework --

the arm-of-the-state analysis -- in reaching its conclusion and

thus vacated its judgment and remanded the case.                              See U.S. ex

rel. Oberg v. Ky. Higher Educ. Student Loan Corp., 681 F.3d 575,

579-81 (4th Cir. 2012) (“Oberg I”).                        After applying the arm-of-

the-state analysis on remand, the district court again concluded

that    all      of   the    student     loan       corporations      constituted       state

agencies not subject to suit under the Act and so again granted

their    motions       to    dismiss.         For    the    reasons    that    follow,     we

affirm      in      part,     vacate     in     part,      and     remand     for   further

proceedings consistent with this opinion.



                                               I.

       On   behalf      of      the   United    States,      Dr.    Oberg    brought      this

action      against       the     Pennsylvania        Higher     Education      Assistance

Agency,       the     Vermont     Student      Assistance        Corporation,       and   the

                                                3
Arkansas     Student        Loan    Authority          (collectively      “appellees”).

Appellees are corporate entities established by their respective

states to improve access to higher education by originating,

financing, and guaranteeing student loans. 1

     Dr. Oberg alleges that appellees defrauded the Department

of Education by submitting false claims for Special Allowance

Payments     (“SAP”),       a     generous    federal        student      loan      interest

subsidy.         According         to   Dr.       Oberg,     appellees         engaged   in

noneconomic sham transactions to inflate their loan portfolios

eligible    for      SAP,    and    the   Department         of   Education         overpaid

hundreds of millions of dollars to appellees as a result of the

scheme.     Dr. Oberg alleges that appellees violated the FCA when

they knowingly submitted these false SAP claims.

     The FCA provides a cause of action against “any person” who

engages    in     certain       fraudulent        conduct,     including        “knowingly

present[ing],        or     caus[ing]        to     be     presented,      a     false   or

fraudulent      claim       for    payment        or     approval”   to    an       officer,

employee,       or    agent        of   the       United     States.           31     U.S.C.

§ 3729(a)(1)(A).          The Act does not define the term “person.”                     In

Vermont Agency of Natural Resources v. United States, ex rel.


     1
       Dr. Oberg also sued other defendants not parties to this
appeal.    Among those defendants was another student loan
corporation,   the  Kentucky   Higher  Education  Student  Loan
Corporation, which reached a settlement with Dr. Oberg shortly
before the most recent appeal.


                                              4
Stevens, 529 U.S. 765, 787-88 (2000), the Supreme Court held

that a state or state agency does not constitute a “person”

subject to liability under the Act.                 But the Court also noted

that corporations, by contrast, are “presumptively covered by

the term ‘person.’”            Id. at 782 (emphasis in original).               And

three years later, the Court applied the latter presumption and

held       that   municipal    corporations      like   counties    are    ‘persons’

subject to suit under the FCA.                 See Cook Cnty. v. U.S. ex rel.

Chandler, 538 U.S. 119, 122 (2003).

       Accordingly, a court must walk a careful line between two

competing         presumptions     to     determine      if    a    state-created

corporation is “truly subject to sufficient state control to

render [it] a part of the state, and not a ‘person,’ for FCA

purposes.”        Oberg I, 681 F.3d at 579. 2           In the prior appeal, we

held       that   the   appropriate     legal    framework    for   this   delicate

inquiry is the arm-of-the-state analysis used in the Eleventh

Amendment context.            Id. at 579-80.       Because the district court

had not undertaken this analysis, we vacated its judgment and

       2
       Dr. Oberg insists that only one presumption applies: that
all corporate entities -- regardless of their affiliation with a
state -- must overcome a “presumption of ‘personhood.’”
Appellant’s Br. 15.   The dissent seems to agree.    See Dissent.
Op. at 34. But this assertion ignores the Supreme Court’s clear
instruction that in the context of corporations created by and
sponsored by a state, competing presumptions are at play.     See
Stevens, 529 U.S. at 782 (observing that “the presumption with
regard to corporations is just the opposite of the one governing
[state entities]”).


                                           5
remanded the case to the district court for application of the

proper legal framework.            Id. at 581.

       On   remand,      after    applying       the    arm-of-the-state       analysis,

the district court concluded that each appellee is part of its

respective state and thus not a “person” under the Act, and so

again granted appellees’ motions to dismiss pursuant to Fed. R.

Civ. P. 12(b)(6).          Dr. Oberg then timely noted this appeal.

       On review of a Rule 12(b)(6) dismissal, we consider a case

de novo.       See E.I. du Pont de Nemours & Co. v. Kolon Indus.,

Inc., 637 F.3d 435, 440 (4th Cir. 2011).                             We evaluate only

whether     the   complaint        states        “a    claim    to    relief   that    is

plausible on its face.”                 Bell Atl. Corp. v. Twombly, 550 U.S.

544, 547 (2007).           In doing so, we construe “facts in the light

most   favorable      to    the    plaintiff,”          Nemet   Chevrolet,      Ltd.   v.

Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009),

and    “draw   all    reasonable          inferences      in    [his]    favor”      Kolon

Indus., 637       F.3d     at    440.      Yet    “we    need   not   accept    as    true

unwarranted inferences, unreasonable conclusions, or arguments.”

Kloth v. Microsoft Corp., 444 F.3d 312, 319 (4th Cir. 2006).

Nor do we credit allegations that offer only “naked assertions

devoid of further factual enhancement.”                    Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (internal quotations marks, alteration, and

citation omitted).



                                             6
       Moreover, in reviewing a Rule 12(b)(6) dismissal, we are

not confined to the four corners of the complaint.                   It is well

established   that    “we    may    properly      take    judicial    notice   of

matters of public record,” including statutes.                Philips v. Pitt

Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).                     We may

also   consider   “documents       incorporated     into    the    complaint   by

reference,” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551

U.S. 308, 322 (2007), “as well as those attached to the motion

to dismiss, so long as they are integral to the complaint and

authentic,” Philips, 572 F.3d at 180.                    Thus, before us, the

parties properly cite to and rely on state statutes and exhibits

integral to the complaint.

       Finally, we note that although arm-of-the-state status may

well constitute an affirmative defense in the related Eleventh

Amendment context, this is not so in an FCA case.                  To succeed in

an FCA case, a relator must demonstrate that a defendant is a

“person”   within    the    meaning    of   the    Act.       As    the   dissent

recognizes, this is “a statutory question.”                Dissent. Op. at 36.

That is, personhood is an element of the statutory FCA claim,

not an immunity providing a defense from suit as in the Eleventh

Amendment context.     See, e.g., U.S. ex rel. Adrian v. Regents of

Univ. of Cal., 363 F.3d 398, 401-02 (5th Cir. 2004) (dismissing




                                       7
FCA action on 12(b)(6) motion because “the FCA does not provide

a cause of action against state agencies”). 3



                                II.

     In applying the arm-of-the-state analysis, we consider four

nonexclusive factors to determine whether an entity is “truly

subject to sufficient state control to render [it] a part of the

state.”   Oberg I, 681 F.3d at 579.

     First, when (as here), an entity is a defendant, we ask

“whether any judgment against the entity as defendant will be

paid by the State.”     Oberg I, 681 F.3d at 580 (quoting S.C.

Dep’t Disabilities & Special Needs v. Hoover Universal, Inc.,

535 F.3d 300, 303 (4th Cir. 2008)). 4      The Supreme Court has


     3
       The dissent’s suggestion to the contrary thus misses the
mark.   Tellingly, it offers only Eleventh Amendment cases in
support of its contention that arm-of-the-state status is an
affirmative defense.    See Dissent. Op. at 35-36.      But the
Supreme Court has made clear that the statutory FCA question is
distinct from the Eleventh Amendment inquiry. See Stevens, 529
U.S. at 779-80 (explaining that the Court initially considers
whether “the [FCA] itself permits the cause of action it creates
to be asserted against States” before reaching the Eleventh
Amendment sovereign immunity question).
     4
       When an entity is a plaintiff, this factor requires us to
determine “whether any recovery by the entity as plaintiff will
inure to the benefit of the State.” Hoover Universal, 535 F.3d
at 303.   We previously regarded the first factor as “the most
important consideration,” Ram Ditta v. Md. Nat’l Capital Park &
Planning Comm’n, 822 F.2d 456, 457 (4th Cir. 1987), and the
dissent seems to regard it as dispositive, see Dissent. Op. at
41.   But as we noted in Oberg I, 681 F.3d at 580 n.3, more
(Continued)
                                 8
instructed that in assessing this factor, an entity’s “potential

legal liability” is key.        Regents, 519 U.S. at 431; see also

Parker v. Franklin Cnty. Cmty. Sch. Corp., 667 F.3d 910, 927-28

(7th Cir. 2012) (focusing on legal liability for payment of a

judgment in the wake of Regents); Cooper v. Se. Penn. Transp.

Auth., 548 F.3d 296, 303 (3d Cir. 2008)(same); U.S. ex rel.

Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702,

718 (10th Cir. 2006) (same).           Thus, we consider whether state

law   “provides   that   obligations       of   [the   entity]   shall   not   be

binding on [the] State.”        Lake Country Estates, Inc. v. Tahoe

Reg’l Planning Agency, 440 U.S. 391, 402 (1979) (emphasis in

original).   In doing so, we look to whether “State law indicates

that a judgment against [the entity] can be enforced against the

State.”   Cash v. Granville Cnty. Bd. of Educ., 242 F.3d 219, 224

(4th Cir. 2001).

      An entity may also constitute an arm of the state “where

the state is functionally liable, even if not legally liable.”

Stoner v. Santa Clara Cnty. Office of Educ., 502 F.3d 1116, 1122

(9th Cir. 2007) (emphasis added); see also Hess v. Port Auth.

Trans-Hudson Corp., 513 U.S. 30, 50 (1994) (“Where an agency is



recent Supreme Court precedent suggests that although this
factor remains of “considerable importance,” Regents of the
Univ. of Cal. v. Doe, 519 U.S. 425, 430 (1997), it does not
deserve dispositive preeminence, see Fed. Maritime Comm’n v.
S.C. State Ports Auth., 535 U.S. 743, 765 (2002).


                                       9
so structured that, as a practical matter, if the agency is to

survive, a judgment must expend itself against state treasuries,

common sense and the rationale of the eleventh amendment require

that     sovereign      immunity      attach       to     the    agency.”)        (internal

quotation marks and alteration omitted).

       Second, we assess “the degree of autonomy exercised by the

entity,       including    such       circumstances         as     who       appoints     the

entity’s      directors    or     officers,        who     funds       the    entity,     and

whether the State retains a veto over the entity’s actions.”

Oberg I, 681 F.3d at 580 (quoting Hoover Universal, 535 F.3d at

303).         Also     relevant       to     the       autonomy        inquiry     is     the

determination whether an entity has the ability to contract, sue

and be sued, and purchase and sell property, see Cash, 242 F.3d

at     225;   Ram     Ditta,    822    F.2d       at    458,     and     whether    it    is

represented in legal matters by the state attorney general, see,

e.g., Md. Stadium Auth. v. Ellerbe Becket, Inc., 407 F.3d 255,

264 (4th Cir. 2005).

       Third, we consider “whether the entity is involved with

state concerns as distinct from non-state concerns, including

local    concerns.”       Oberg       I,    681    F.3d    at    580    (quoting     Hoover

Universal, 535 F.3d at 303).                “Non-state concerns,” however, do

not mean only “local” concerns, but rather also encompass other

non-state interests like out-of-state operations.                              See Hoover

Universal,      535    F.3d     at    307    (characterizing            this     factor    as

                                             10
“whether the entity is involved with statewide, as opposed to

local or other non-state concerns”) (emphasis added).

      Fourth, we look to “how the entity is treated under state

law, such as whether the entity’s relationship with the State is

sufficiently close to make the entity an arm of the State.”

Oberg I, 681 F.3d at 580 (quoting Hoover Universal, 535 F.3d at

303).      Whether an entity is an arm of the state is ultimately a

question of federal law, “[b]ut that federal question can be

answered only after considering the provisions of state law that

define the agency’s character.”              Regents, 519 U.S. at 429 n.5.

“In   addressing      this   factor,    a    court   may    consider   both   the

relevant      state     statutes,      regulations,        and   constitutional

provisions which characterize the entity, and the holdings of

state courts on the question.”               Md. Stadium Auth., 407 F.3d at

265 (internal quotation marks omitted).

      With these principles in mind, we now apply arm-of-the-

state analysis to each of the appellees.



                                       III.

      We    initially    consider   the      Pennsylvania    Higher    Education

Assistance Agency (“PHEAA”).           In 1963, the Pennsylvania General

Assembly created PHEAA, which, according to PHEAA itself, now

constitutes one of the nation’s largest providers of student

financial aid services.         Although PHEAA continues to administer

                                        11
state-funded      student         aid     programs         in      Pennsylvania,       it

acknowledges that it also operates nationally under the names

American Education Services and FedLoan Servicing.

      The first factor in the arm-of-the-state analysis, whether

Pennsylvania would pay a judgment against PHEAA in this case,

weighs decidedly against holding that PHEAA is an arm of the

state.     For    “instead     of       the    state      treasury    being    directly

responsible for judgments against [PHEAA], [state law] expressly

provides that obligations of [PHEAA] shall not be binding on

[the] State.”      Lake Country Estates, 440 U.S. at 402 (emphasis

in original).          Pennsylvania explicitly disavows liability for

all of PHEAA’s debts.           See 24 Pa. Cons. Stat. § 5104(3)(2012)

(“no obligation of the agency shall be a debt of the State”).

In addition, state law emphasizes that PHEAA’s debts are not

“payable out of any moneys except those of the corporation.”

Id.      Aside   from     state     appropriations          that     go   directly     to

students   in    the    form   of   education          grants,     moreover,     PHEAA’s

substantial “moneys” derive exclusively from its own operations.

The   Pennsylvania        treasury        is       thus     neither       legally     nor

functionally liable for any judgment against PHEAA.                        See Stoner,

502 F.3d at 1122.

      Nevertheless,       PHEAA     contends        that     the     important      first

factor weighs in favor of concluding that it is an arm of the

state because state statutes require that its funds be deposited

                                              12
into the state treasury and that “no money” be paid from the

treasury without approval from the state treasurer.                     See 24 Pa.

Cons. Stat. § 5104(3); 72 Pa. Cons. Stat. § 307 (2013).                            This

argument,     however,       ignores       “a    commonplace      of        statutory

construction that the specific governs the general.”                    Morales v.

Trans World Airlines, 504 U.S. 374, 384 (1992).                      The statutory

provisions    specifically     outlining        PHEAA’s    “powers     and    duties”

clearly indicate      that    PHEAA’s      board    of    directors    -–    not   the

state   treasurer    -–    controls     PHEAA’s      funds.      Those       statutes

provide that PHEAA’s funds “shall be available to the agency”

and “may be utilized at the discretion of the board of directors

for carrying out any of the corporate purposes of the agency.”

24 Pa. Cons. Stat. § 5104(3).              Further, the state treasurer may

use PHEAA’s funds only for purposes “consistent with guidelines

approved by the board of directors.”               Id.

     Moreover, PHEAA’s funds are held in a segregated account

apart from general state funds.                 Id. § 5105.10.          Our sister

circuits     have   recognized      that     such    an   arrangement        counsels

against establishing arm-of-the-state status under this factor.

The First Circuit, for instance, held that the University of

Rhode Island is not an arm of its state in part because its

funds are not “merged with[] the general fund, but are kept in

segregated      accounts      [in      the       state      treasury]         pending

discretionary disbursement by the [University’s] Board.”                       Univ.

                                        13
of R.I. v. A.W. Chesterton Co., 2 F.3d 1200, 1210 (1st Cir.

1993).     Similarly, the Third Circuit, in assessing whether the

Public School Employees’ Retirement Board of Pennsylvania was an

arm of the state, remanded the case for further consideration in

part because -– like PHEEA’s account -- the entity’s fund was

“set apart in the state treasury from general state funds and []

administered by the State Treasurer at the discretion of the

Board.”       Blake v. Kline, 612 F.2d 718, 723 (3d. Cir. 1979)

(footnote and citations omitted).          In sum, because state law

instructs that PHEAA would pay any judgment in this case with

its own moneys from its segregated fund, see 24 Pa. Cons. Stat.

§ 5104(3)(2012), the first factor weighs heavily against holding

that PHEAA is an arm of the state.

      The second factor, the degree of autonomy exercised by the

entity, presents a closer question.         PHEAA’s board of directors

is composed of gubernatorial appointees and state legislators or

officials.      See 24 Pa. Cons. Stat. § 5103 (repealed July 2010,

but effective during the period when PHEAA allegedly violated

the   FCA).      Such   an   arrangement   frequently   indicates   state

control.      See Md. Stadium Auth., 407 F.3d at 264.           Further,

state officials exercise some degree of veto power over PHEAA’s

operations.     For example, the Auditor General may review PHEAA’s

activities, 24 Pa. Cons. Stat. § 5108, and PHEAA must seek the

approval of the Governor in order to issue notes and bonds, id.

                                    14
§ 5104(3).         These factors may mean, as PHEAA contends, that it

is simply a tool of the state.

      But   other     indicia      relevant    to   the    autonomy       analysis    --

PHEAA’s     source     of    funding,     control    over    its    revenues,        and

corporate powers –- strongly suggest that PHEAA is not an arm of

the state.         Most critically, PHEAA is financially independent.

According     to    its   annual    reports,    which     were    attached     to    the

amended complaint, PHEAA receives no operational funding from

Pennsylvania.        See also Appellees’ Br. 53 (conceding the point).

Pennsylvania       law,     moreover,    expressly      instructs     that    PHEAA’s

funds “shall be available to the agency,” and that PHEAA’s board

may use those funds in any manner that furthers the agency’s

corporate purposes.           24 Pa. Cons. Stat. § 5104(3).                Meanwhile,

the   state    treasurer’s       use    of    PHEAA’s     funds    must    adhere     to

“guidelines approved by the board” of PHEAA.                        Id.      Finally,

PHEAA has the power to enter into contracts, sue and be sued,

and purchase and sell property in its own name, all of which

suggest operational autonomy.                See Cash, 242 F.3d at 225; Ram

Ditta, 822 F.2d at 458.                Although the facts relevant to this

second factor cut both ways, when we consider “all reasonable

inferences in favor of the plaintiff” as we must at this stage,

Kolon Indus., 637 F.3d at 440, we conclude that this factor also

counsels against holding that PHEAA is an arm of the state.



                                          15
      The   third        factor      is    whether      PHEAA     “is     involved     with

statewide, as opposed to local or other non-state concerns.”

Hoover    Universal,          535   F.3d     at   307.      Dr.     Oberg      poses    two

arguments relevant to this factor.

      Initially,         he    contends      that    due   to     PHEAA’s      commercial

focus, its operations do not involve an area of legitimate state

concern.      See        Appellant’s       Br.    43;    Reply    Br.     25-26.       This

argument fails.           Pennsylvania created PHEAA to finance, make,

and     guarantee        loans      for    higher       education,       and   “[h]igher

education    is     an    area      of    quintessential        state    concern     and    a

traditional state government function.”                     Md. Stadium Auth., 407

F.3d at 265.        PHEAA does not provide higher education directly,

but it nonetheless facilitates the attainment of education by

supplying student financial aid services.                       This work is clearly

of legitimate state concern.

      Dr. Oberg’s remaining argument as to the third factor is

that PHEAA’s operations from 2002 to 2006 -- during the time in

which     PHEAA   allegedly          conducted       fraudulent         transactions       in

violation of the FCA -- were so focused out of state that PHEAA

was not involved primarily with state concerns. 5                        See Ram Ditta,



      5
       PHEAA counters that out-of-state operations are irrelevant
because this factor is concerned only with whether an entity’s
focus is statewide as opposed to local.         The argument is
misguided. Rather, this factor looks to “whether the entity is
(Continued)
                                             16
822 F.2d at 459; cf. Hoover Universal, 535 F.3d at 307.                         To this

end,     Dr.   Oberg      alleges     that     “PHEAA        conducts       substantial

operations outside of Pennsylvania,” and that as early as 2005,

“one-third     of       PHEAA’s     earnings        c[a]me        from     outside   the

[C]ommonwealth,”         after      which      it     further            “expanded   its

operations.”        PHEAA’s financial reports, cited throughout Dr.

Oberg’s complaint, tend to corroborate these claims, so there is

little    doubt     that    during     the     period        in    question     PHEAA’s

operations     extended     well    beyond     the    borders       of     Pennsylvania.

Even so, if only one-third of PHEAA’s earnings came from outside

Pennsylvania in 2005, it does not seem plausible that by 2006 --

the last year encompassed by Dr. Oberg’s allegations -– PHEAA’s

operations focused primarily out of state.                        See Ram Ditta, 822

F.2d at 459; see also Iqbal, 556 U.S. at 678 (explaining that

“[w]here a complaint pleads facts that are merely consistent

with a defendant’s liability, it stops short of the line between

possibility       and     plausibility        of     entitlement           to   relief”)

(internal quotation marks and citation omitted).                          Therefore, we

believe this factor weighs in favor of arm-of-the-state status

for PHEAA.




involved with statewide, as opposed to local or other non-state
concerns.” Hoover Universal, 535 F.3d at 307 (emphasis added).


                                         17
       The final factor, how PHEAA is treated under state law,

also    supports         PHEAA’s       contention            that    it         is    an    arm     of

Pennsylvania.           A state statute provides that “the creation of

the    agency      [was]      in      all    respects        for     the    benefit         of    the

people . . . and the agency [performs] an essential governmental

function.”         24     Pa.      Cons.     Stat.     § 5105.6.            PHEAA’s         enabling

legislation was made effective by “amendment to the Constitution

of     Pennsylvania           authorizing           grants      or     loans          for    higher

education,”        id.     § 5112,         and    Pennsylvania            state      courts       have

concluded        that     PHEAA       is    a    state      agency     for       jurisdictional

purposes, see, e.g., Richmond v. Penn. Higher Educ. Assistance

Agency, 297 A.2d 544, 546 (1972); Penn. Higher Educ. Assistance

Agency v. Barksdale, 449 A.2d 688, 689-90 (1982).

       In sum, although the third and fourth factors suggest that

PHEAA is an arm of the state, the first (strongly) and second

(albeit less strongly) point in the opposite direction.                                     At this

early stage, construing the facts in the light most favorable to

the    plaintiff,         Nemet       Chevrolet,          591   F.3d       at     255,      we    must

conclude that Dr. Oberg has alleged sufficient facts that PHEAA

is    not   an   arm     of     the    state,       but     rather    a    “person”         for   FCA

purposes.         We     therefore         vacate     the    judgment       of       the    district

court as to PHEAA and remand to permit limited discovery on the

question whether PHEAA is “truly subject to sufficient state



                                                 18
control to render [it] a part of the state.”                           Oberg I, 681 F.3d

at 579.



                                              IV.

       We next consider whether Dr. Oberg’s complaint states a

plausible claim that the Vermont Student Assistance Corporation

(“VSAC”) is a “person” subject to suit under the FCA.                                       The

Vermont      legislature       created    VSAC       in   1965    to    provide       Vermont

residents       with     opportunities        to     attend      college     by     awarding

education grants and financing student loans.                            Vt. Stat. Ann.

tit.   16,     §   2821(a)      (2013).         According        to    VSAC’s      financial

statements -– referenced repeatedly in Dr. Oberg’s complaint --

the agency currently administers a state grant program and a

higher       education     investment        plan;    originates,         services,         and

guarantees         student      loans;       and     provides         higher       education

information and counseling services.

       The    upshot     of    the    first    arm-of-the-state          factor       --    who

would pay a judgment in this case -– is unclear.                                  State law

provides no definite guidance.                  On one hand, Dr. Oberg alleges

that     Vermont       would    not    pay     a    judgment      because       the     state

disclaims legal liability for VSAC’s debts.                       Yet, in contrast to

Pennsylvania,          which   disavows       liability       for      any   and      all   of

PHEAA’s obligations, see 24 Pa. Cons. Stat. § 5104(3), Vermont

does so only with respect to VSAC’s debt obligations issued to

                                              19
finance loans for higher education, see Vt. Stat. Ann. tit. 16,

§ 2823(f); id at § 2868(i).           Dr. Oberg has identified no state

law indicating that a judgment obligation could not be enforced

against the state, and we have found none.                    See Lake Country

Estates, 440 U.S. at 402 (finding relevant whether state law

“provides that obligations of [the entity] shall not be binding

on [the] State”).

       On the other hand, VSAC’s contention that Vermont would pay

a judgment rests on the state’s duty to “support and maintain”

VSAC.        Vt. Stat. Ann. tit. 16, § 2823(a).              But an obligation

stated    in    such    general   terms    is    not    conclusive.     Moreover,

although state appropriations compose nearly twenty percent of

VSAC’s revenues, such funding goes entirely to students in the

form    of    need-based    grants.       Thus,    whether    Vermont   would    be

legally or functionally liable for a judgment here is unclear.

At this stage, however, we must construe all facts in the light

most favorable to the plaintiff, Nemet Chevrolet, 591 F.3d at

255, so we assume that this critical (albeit not dispositive)

first factor weighs against arm-of-the-state status for VSAC.

       The     second   factor,   VSAC’s       degree   of   autonomy   from    the

state, also presents a close question.                    Vermont law provides

that eight members of VSAC’s eleven-member board of directors

are either state officials or gubernatorial appointees, and that

the board elects the remaining three members.                   Vt. Stat. Ann.

                                          20
tit. 16, § 2831.           Moreover, Vermont retains important oversight

authority over VSAC.          The state “reserves the right at any time

to    alter,    amend,     repeal    or    otherwise            change    the     structure,

organization, programs, or activities” of VSAC, id. § 2821(b),

and state law provides that VSAC may issue no debt obligation

“without       the     approval     in    writing          of    the     governor,”        id.

§ 2823(f).

       Other autonomy indicators, however, counsel against holding

that VSAC is an arm of the state.                          VSAC not only exercises

corporate powers including the capacity to contract and sue and

be sued, see Cash, 242 F.3d at 225, it is also, like PHEAA,

financially      independent.            VSAC’s         financial    statements,       cited

throughout       the     complaint,       indicate          that     VSAC       uses   state

appropriations only for need-based educational grants; no state

funds    finance     its   operations.             In    addition,       VSAC’s    board    is

broadly empowered to adopt policies and regulations governing

its lending activities, Vt. Stat. Ann. tit. 16, § 2834, and “to

do any and all acts and things as may be necessary” to secure

its     debt   obligations,       id.     §        2868(d).         Thus,    although       we

recognize that certain facts relevant to the autonomy analysis

suggest that VSAC is an arm of the state, others weigh decidedly

against that conclusion.             Once again “draw[ing] all reasonable

inferences in favor of the plaintiff,” Kolon Indus., 637 F.3d at



                                              21
440, we believe this factor also counsels against holding as a

matter of law that VSAC is an arm of the state.

       As    to    the   third      factor,      whether      VSAC    is   involved    with

statewide concerns, Dr. Oberg alleges that this factor weighs

against      holding     that       VSAC    is   an    arm    of     the   state    because

“Vermont law allows VSAC to conduct business in other States”

and   the    agency      has    “contracted        with      borrowers     and    companies

outside Vermont.”              But these assertions do not equate to an

allegation        that   VSAC’s      operations       centered       primarily      outside

Vermont at any point in time.                    See Ram Ditta, 822 F.2d at 459.

Indeed, Dr. Oberg’s allegations here fall short even of those he

offers as to PHEAA’s extra-state operations, which we have held

do not rise to the level of establishing a plausible claim of

arm-of-the-state status under this factor.                         See Iqbal, 556 U.S.

at    678.        Rather,      VSAC’s      financial      statements       indicate    that

during the period in question the agency was focused on the

statewide         concern      of   facilitating          postsecondary         educational

opportunities for residents of Vermont.

       With respect to the fourth factor, how state law treats the

entity, Dr. Oberg alleges that Vermont does not treat VSAC as it

treats “true agencies of the state.”                         But in fact Vermont law

expressly provides that VSAC “shall be an instrumentality of the

state,” Vt. Stat. Ann. tit. 16, § 2823(a), exempts VSAC from all

taxation,     id.     § 2825,       and    “designate[s]        [VSAC]     as    the   state

                                              22
agency to receive federal funds assigned to the state of Vermont

for student financial aid programs,” id. § 2823(c).

       In sum, although the first and second factors present close

questions, we must conclude in compliance with Rule 12(b)(6)

that    both   weigh      against    holding     VSAC     an   arm    of    the    state.

Accordingly,       while     the     third     and      fourth    factors         suggest

otherwise, we must also hold that Dr. Oberg’s allegations as to

VSAC are sufficient to survive a motion to dismiss.                         This is so

particularly given the first factor’s enduring importance.                            See

supra    at    8   n.4.      We     recognize     that     some      of    Dr.    Oberg’s

allegations test the outer bounds of the plausibility standard,

but at this juncture, we must construe all facts in the light

most    favorable      to   the     plaintiff.       We    therefore        vacate    the

judgment of the district court with respect to VSAC and remand

to permit limited discovery on this question.



                                         V.

       Finally,    we     consider     whether    the     Arkansas        Student    Loan

Authority (“ASLA”) is an arm of the state of Arkansas.                                The

state legislature created ASLA in 1977 to help Arkansas provide

higher educational opportunities for its residents.                          Ark. Code

Ann. § 6-81-102 (2013).             ASLA currently originates and disburses

student loans at postsecondary schools throughout the state.                           It



                                         23
also    sponsors      outreach       services         to     increase      awareness          about

financial aid in higher education.

        In contrast to PHEAA and VSAC, all four factors weigh in

favor of holding that ASLA is an arm of the state.                                         First,

although § 6-81-113 of the Arkansas Code disavows liability for

debt    obligations         issued      to      finance      student       loans,       it     says

nothing      about     liability         for        other     debts       like     a    judgment

obligation.          Critically,        Arkansas          statutes       elsewhere      indicate

that state revenues would be used to satisfy a judgment against

ASLA.        State    law    instructs          that       “[a]ll    moneys       received       by

[ASLA]” from its lending operations are “specifically declared

to be cash funds,” and further, that “cash funds” are “revenues

of     the    state.”             Id.      at       §§      6-81-118(a)(1),            19-6-103.

Accordingly, because ASLA’s income derives overwhelmingly from

its    lending    activities,           and     because       such       income    statutorily

belongs to Arkansas, it follows that the state would foot the

bulk of any judgment against ASLA.                          Dr. Oberg’s allegations to

the    contrary      establish       only       a    dubious       possibility         that    ASLA

could    procure      some    “other         income”        with     which    to       satisfy    a

judgment.      See Reply Br. at 14.                   More is required to survive a

motion to dismiss.           See Iqbal, 556 U.S. at 678.

        The dissent misses the mark in contending that Arkansas’s

statutory      scheme        is    “similar           in     many     ways       to     that     in

Pennsylvania,”        Dissent.       Op.      at     50    n.4,    and    that     state      funds

                                                24
would not be used to satisfy a judgment against ASLA because,

“in reality,” Arkansas “claims” only ASLA’s “surplus revenues,”

Dissent. Op. at 51.         Arkansas does not, “in reality,” “claim”

only    ASLA’s   “surplus        revenues”     as   revenues    of     the   state.

Arkansas law expressly provides that “all moneys” received by

ASLA in connection with its lending activities are revenues of

the state.       Ark. Code Ann. §§ 6-81-118(a)(1), 19-6-103.                     And

Arkansas law carefully cabins ASLA’s use of those state revenues

to certain lending costs, id. § 6-81-118(b)-(c), an arrangement

far    removed    from     the     Pennsylvania      scheme     granting       PHEAA

“discretion[ary]” authority to use its funds for any corporate

purpose, see 24 Pa. Cons. Stat. § 5104(3).

       The dissent also misses the mark in suggesting that our

analysis here is “directly contrary” to that in Hess v. Port

Authority    Trans-Hudson        Corp.,    513   U.S.   30    (1994),    for    this

contention ignores crucial differences between the two cases.

While ASLA is a corporation created by a single state to further

educational opportunities in that state, the Port Authority in

Hess    is   a   bistate    “Compact       Clause    entity”    with     “diffuse”

political accountability.            Id. at 42.         Because Congress must

authorize the creation of such bistate entities, see U.S. Const.

art. 1, § 10, cl. 3, they “owe their existence to [both] state

and federal sovereigns” and so “lack the tight tie to the people

of one State that an instrument of single State has,” Hess, 513

                                          25
U.S. at 42.      For this reason, the Supreme Court recognizes a

“general approach” for Compact Clause entities, like the Port

Authority, under which a court will “presume” that they are not

arms of the state.          Id. at 43.          (Of course, the Court has

established     no    similar    “general     approach”     for    state-created

corporations like ASLA.)

      Notwithstanding this presumption, and even though no state

appropriated     funds    to     the   Port     Authority     or    claimed    the

Authority’s income as its revenue, the Authority argued that it

was an arm of a state because it dedicated some of its surplus

to “public projects which the States themselves might otherwise

finance.”     Id. at 50.        The Supreme Court had little difficulty

rejecting that argument, noting that because the Authority was a

profitable Compact Clause entity that retained and controlled

its   income,   the    associated      states   would   not   pay    a   judgment

against it.     Id. at 51.      ASLA, by contrast, is “an instrument of

a single [s]tate,” id. at 43, and state law expressly provides

that all of its lending income belongs to that state.                         Thus,

state funds necessarily would be used to pay a judgment against

ASLA.   In sum, Hess does not in any way undermine our holding




                                        26
that this first factor indicates that ASLA is an arm of the

state. 6

      As   to   the   second   arm-of-the-state     factor,   ASLA    operates

with little autonomy from Arkansas despite its corporate powers.

State legislative       records   establish      that,   unlike   Pennsylvania

and   Vermont,    Arkansas     provides    its   student   loan    corporation

substantial funding. 7         Moreover, the Arkansas Attorney General


      6
        The dissent disputes this conclusion for two additional
reasons.    Relying on the principle that the “specific governs
the general,” Morales, 504 U.S. at 384, the dissent notes that
only general statutory provisions –- not those “exclusively
applicable to ASLA” -– define “cash funds” as “revenues of the
state.”    See Dissent. Op. at 48-49.      But the principle of
statutory construction on which the dissent relies applies only
where general and specific statutory provisions conflict, or
where a general provision would render a more specific one
superfluous. See RadLAX Gateway Hotel, LLC v. Amalgamated Bank,
132 S. Ct. 2065, 2071 (2012).     The principle finds no footing
where, as here, specific and general statutory provisions do not
conflict, but rather go hand in hand.      That is, the specific
provision defining ASLA’s revenues as “cash funds” is entirely
consistent with the general provision declaring that “cash
funds” are revenues of the state.
     The dissent also posits that “the fact that ASLA’s funds
are held in a segregated fund outside the state treasury
counsels against arm-of-state status.” Dissent. Op. at 49. As
a general rule, we agree that such an arrangement would weigh
against holding that an entity is an arm of its state.       But
Arkansas is an exception to this general rule, because state law
expressly declares agency income deposited outside the state
treasury to be revenue of the state. Ark. Code Ann. § 19-6-103.
In contrast to the dissent’s suggestion, see Dissent. Op. at 50
n.4, ASLA’s statutory scheme thus operates nothing like that
governing PHEAA.
      7
       The dissent unconvincingly suggests that this funding is
irrelevant to the autonomy inquiry because it derives from
ASLA’s own cash funds. Dissent. Op. at 51, 55. But the source
(Continued)
                                      27
represents ASLA in litigation, including the case at hand, and

state law limits ASLA’s powers in several significant ways.            For

example, Arkansas subjects ASLA’s use of cash funds to approval

by the General Assembly, Ark. Code Ann. § 19-4-802, and prevents

its sale of bonds “until the bond issue has the written approval

of the Governor after he or she has received the approval of the

State Board of Finance,” id. § 6-81-108.

       Critically, the Governor of Arkansas also appoints every

member of ASLA’s board of directors.           See id. § 6-81-102(d).

“The fact that all of [an entity’s] decisionmakers are appointed

by the Governor,” we have recognized, “is a key indicator of

state control.”     Md. Stadium Auth., 407 F.3d at 264; see also,

Hoover, 353 F.3d at 307; Kitchen, 286 F.3d at 185; Cash, 242

F.3d at 225.      The dissent all but ignores this fact, claiming

instead that ASLA is autonomous because its board members serve

fixed terms and may not be removed at will.          Dissent. Op. at 56.

This   argument   fails.   Even    where   board   members   serve   fixed

terms,    state   authority   to    appoint    all    of     an   entity’s



of state funds used to support ASLA’s operations matters not.
What matters is whether an entity’s funds belong to the state.
See supra at 25-26. In this case, state law expressly provides
that they do.     Every dollar ASLA earns through its lending
activities becomes a dollar of state revenue “to be used as
required and to be expended only for such purposes and in such
manner as determined by law.” Ark. Code Ann. § 19-6-103. That
Arkansas, in its discretion, returns some of this money to ASLA
to finance its operations does not change that fact.


                                   28
decisionmakers remains powerful evidence of state control.                                 See

Md. Stadium Auth., 407 F.3d at 258, 264 (stressing importance of

power     to    appoint       although    board     members         “serve     five    year

terms”).        Arkansas law, moreover, is equivocal with respect to

the    governor’s    removal       power.        Indeed,       it   suggests    that       the

governor may remove board members simply by selecting new ones,

as    appointments       to   ASLA’s     board    are    for     four-year     terms       “or

until a successor is appointed.”                 Ark. Code Ann. § 6-81-102(e).

        Third, with respect to whether ASLA is focused on state

concerns, Dr. Oberg merely alleges that Arkansas law “allows

ASLA to lend to any qualified borrower nationwide” and that ASLA

“can and has entered into contracts with institutions outside

Arkansas.”        The operative question, however, is whether ASLA is

primarily involved with state concerns.                       See Ram Ditta, 822 F.2d

at 459.        And Dr. Oberg has alleged no facts indicating that ASLA

is not primarily involved with the state concern of helping to

finance higher education for Arkansas residents.                            The dissent,

while    conceding       that    student-loan          financing       facilitates         the

important state goal of educating youth, maintains that ASLA is

also    engaged     in    non-state       concerns       like       “the    servicing       of

federal    student       loans.”         Dissent.       Op.    at    55.      But     ASLA’s

federal-loan       servicing     work     did    not    begin       until   2012,     so    is

irrelevant to the question whether ASLA was a “person” within



                                            29
the meaning of the FCA from 2002 to 2006 when it allegedly

violated the Act.

       Fourth, as the dissent agrees, Arkansas law plainly treats

ASLA as an arm of the state.               ASLA was established by state law

as “the instrumentality of the state charged with a portion of

the    responsibility         of     the      state     to     provide       educational

opportunities.”         Ark.    Code    Ann.      §    6-81-102(c).        Its   lending

revenues are statutorily defined as “revenues of the state,” id.

§§ 6-81-118, 19-6-103, and the Supreme Court of Arkansas has

described ASLA as “a state agency created by . . . the 1977 Acts

of    Arkansas,”     Turner    v.    Woodruff,        689    S.W.2d   527,    528   (Ark.

1985).

       In   short,    we     conclude      that       each    of   the    four   factors

counsels in favor of holding that ASLA is an arm of the state.

To be sure, as the dissent points out, arm-of-the-state analysis

is a fact-intensive inquiry often ill suited to judgment on the

pleadings.     See Dissent. Op. at 58-59.                   But where, as with ASLA,

the relevant facts are clear, Rule 12(b)(6) mandates dismissal.

See, e.g., Stoner, 502 F.3d at 1121-23 (dismissing FCA action on

12(b)(6)     motion);      Adrian,      363     F.3d     at    401-02     (same).      We

therefore    hold     that    ASLA    is   an     arm    of    Arkansas    and   so   not

subject to suit under the FCA.




                                           30
                                  VI.

      We affirm the judgment of the district court with respect

to   ASLA.   We   vacate   that   portion   of   the   district   court’s

judgment dismissing Dr. Oberg’s FCA claims against PHEAA and

VSAC and remand for further proceedings consistent with this

opinion.

                                                       AFFIRMED IN PART,
                                                        VACATED IN PART,
                                                            AND REMANDED




                                   31
TRAXLER, Chief Judge, concurring in the judgment in part and
dissenting in part:

     This is an appeal from the granting of a Rule 12(b)(6)

motion to dismiss, a motion that tests the plausibility of the

plaintiff’s allegations rather than the plaintiff’s ability to

ultimately prove his allegations or the defendant’s ability to

establish a defense.           In my view, plaintiff Jon Oberg’s Fourth

Amended Complaint plausibly alleges that all of the defendant

student-loan corporations (together, the “Loan Companies”) are

“persons” against whom an action under the False Claims Act (the

“FCA”) can be maintained.          Whether the Loan Companies qualify as

arms of their creating states is an affirmative defense that

need not be anticipated or negated by the allegations of the

complaint, see Goodman v. Praxair, Inc., 494 F.3d 458, 466 (4th

Cir. 2007) (en banc), and is a question that cannot be finally

resolved here without discovery and fact-finding by the district

court.

     Accordingly,       I     concur    in    that   portion     of    the     judgment

vacating    the    dismissal      of    Oberg’s      False    Claims     Act    claims

asserted    against     the    Pennsylvania      Higher      Education    Assistance

Agency (“PHEAA”) and the Vermont Student Assistance Corporation

(“VSAC”),    but    I   dissent        from    the   dismissal    of     the    claims

asserted against the Arkansas Student Loan Authority (“ASLA”).




                                          32
                                            I.

       “The   purpose      of   a   Rule    12(b)(6)    motion    is    to    test    the

sufficiency       of   a   complaint”;        the    motion    “does    not    resolve

contests surrounding the facts, the merits of a claim, or the

applicability of defenses.”                Butler v. United States, 702 F.3d

749, 752 (4th Cir. 2012) (internal quotation marks omitted),

cert. denied, 133 S. Ct. 2398 (2014).

       To survive a Rule 12(b)(6) motion to dismiss, a plaintiff

must allege facts plausibly establishing the elements of his

asserted cause of action.             See Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009); Walters v. McMahen, 684 F.3d 435, 439 (4th Cir.

2012),    cert.     denied,     133    S.     Ct.    1493     (2013).        While    the

plaintiff is not required to “forecast evidence sufficient to

prove the elements of the claim,” he “must allege sufficient

facts    to   establish     those     elements”      and    “advance    [his]        claim

across the line from conceivable to plausible.”                         Walters, 684

F.3d     at   439      (internal      quotation        marks    omitted).            When

considering a motion to dismiss, we give no deference to legal

conclusions asserted in the complaint, but we must accept all

factual allegations as true.               See id.



                                            II.

       Broadly speaking, the False Claims Act imposes liability on

a “person” who knowingly presents a false or fraudulent claim

                                            33
for    payment          or   knowingly            makes    or     uses     a    false          record    or

statement         material           to      a     false        claim.              See        31   U.S.C.

§ 3729(a)(1)(A)              &   (B).         In    order       to   survive         the       motion    to

dismiss, Oberg was therefore obliged to plead facts plausibly

establishing that the named defendants are “persons” within the

meaning of the FCA.

       While states are not “persons” subject to qui tam actions

under the FCA, see Vt. Agency of Natural Res. v. United States

ex    rel.    Stevens,           529      U.S.     765,    787-88        (2000),          corporations,

including municipal corporations like cities and counties, are

“persons” under the Act, see Cook Cnty. v. United States ex rel.

Chandler, 538 U.S. 119, 134 (2003); see also 1 U.S.C. § 1 (“In

determining         the      meaning         of    any     Act     of    Congress,          unless      the

context indicates otherwise[,] . . . the word[] ‘person’ . . .

include[s] corporations . . . .”).                                There is no dispute that

each of the Loan Companies is a corporation, and Oberg alleged

the   corporate          status        of    each       Loan     Company       in    his       complaint.

Because corporations are presumed to be “persons” under the FCA,

Chandler,         538    U.S.        at     126,    Oberg’s       allegations             of    corporate

status       plausibly           established            that      the     Loan       Companies          are

“persons” within the meaning of the FCA, see Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (“Factual allegations must be

enough       to    raise         a     right       to     relief        above       the     speculative

level.”).

                                                    34
       The    Loan       Companies,         however,      all      contend       that   they   are

alter-egos      or       arms    of   their     creating           states.       The    Companies

therefore argue that they, like the states themselves, do not

qualify as “persons” under the FCA.                            Arm-of-state status is an

Eleventh-Amendment-based inquiry focused on determining whether

a state-created entity is so closely related to the state that

it   should         be   permitted       to    share          in   the    state’s       sovereign

immunity.       See United States ex rel. Oberg v. Ky. Higher Educ.

Student Loan Corp., 681 F.3d 575, 580 (4th Cir. 2012) (“Oberg

I”).     Although         this    court       has       not   addressed       the    issue,    the

circuits that have considered similar assertions of arm-of-state

status       have     uniformly       concluded          that      it    is   an    affirmative

defense to be raised and established by the entity claiming to

be an arm of the state.                     See Sung Park v. Ind. Univ. Sch. of

Dentistry,      692       F.3d    828,       830     (7th      Cir.      2012)     (“[S]overeign

immunity is a waivable affirmative defense.”); Aholelei v. Dep’t

of Pub. Safety, 488 F.3d 1144, 1147 (9th Cir. 2007) (“Eleventh

Amendment immunity is an affirmative defense . . . .” (internal

quotation marks omitted)); Woods v. Rondout Valley Cent. Sch.

Dist.    Bd.        of   Educ.,       466     F.3d      232,       237-39     (2d    Cir.   2006)

(treating Eleventh Amendment immunity “as akin to an affirmative

defense”); see also Gragg v. Ky. Cabinet for Workforce Dev., 289

F.3d 958, 963 (6th Cir. 2002) (“[T]he entity asserting Eleventh

Amendment immunity has the burden to show that it is entitled to

                                                   35
immunity, i.e., that it is an arm of the state.”); Skelton v.

Camp, 234 F.3d 292, 297 (5th Cir. 2000) (holding that the party

seeking immunity “bear[s] the burden of proof in demonstrating

that [it] is an arm of the state entitled to Eleventh Amendment

immunity”); Christy v. Pa. Turnpike Comm’n, 54 F.3d 1140, 1144

(3d    Cir.       1995)   (“[T]he    party    asserting   Eleventh      Amendment

immunity (and standing to benefit from its acceptance) bears the

burden      of    proving    its    applicability.”).      I     believe      these

decisions were correctly decided and that the arm-of-state issue

raised by the Loan Companies is an affirmative defense. 1

       Preliminarily,        although    a    plaintiff   must     plead      facts

establishing that the court has jurisdiction over his claim,

see, e.g., Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399

(4th       Cir.     1999),   the     arm-of-state     issue      here    is     not

jurisdictional.           Instead, as the Supreme Court made clear in

Stevens, it is a statutory question of whether the defendants

named by Oberg qualify as “persons” under the FCA.                 See Stevens,

529 U.S. at 779 (distinguishing the question whether the FCA

       1
       In our first opinion, we concluded that the district court
had not applied the arm-of-state analysis, and we remanded the
case for the district court to apply that analysis in the first
instance.   See United States ex rel. Oberg v. Ky. Higher Educ.
Student Loan Corp., 681 F.3d 575, 581 (4th Cir. 2012). While we
noted that the ultimate question of whether the Loan Companies
were subject to suit under the FCA did not turn solely on their
corporate status, see id. at 579, we did not consider the
sufficiency of Oberg’s allegations or address whether arm-of-
state status was an affirmative defense.


                                         36
permits      actions     against        states        from      whether    the     Eleventh

Amendment would prohibit such an action and electing to resolve

the case on statutory grounds).

       Moreover,       the     arm-of-state           claim     operates     like       other

affirmative defenses, in that the claim would preclude liability

even if all of Oberg’s allegations of wrongdoing are true.                                See

Emergency One, Inc. v. Am. Fire Eagle Engine Co., 332 F.3d 264,

271 (4th Cir. 2003) (“[A]ffirmative defenses share the common

characteristic of a bar to the right of recovery even if the

general     complaint        were   more   or        less    admitted     to.”    (internal

quotation marks and alteration omitted)); Black’s Law Dictionary

(9th    ed.     2009)        (defining     “affirmative               defense”     as    “[a]

defendant’s assertion of facts and arguments that, if true, will

defeat the plaintiff’s or prosecution’s claim, even if all the

allegations in the complaint are true.”).                        In my view, then, the

arm-of-state     status        asserted        by    the     Loan     Companies    must    be

treated as an affirmative defense.                         And once the arm-of-state

issue in this case is recognized as an affirmative defense, the

error   in    dismissing       Oberg’s     claims          on   the    pleadings    becomes

apparent.

       As    noted   above,         a   Rule        12(b)(6)     motion     “test[s]      the

sufficiency of a complaint” but “does not resolve contests . . .

[about] the merits of a claim or the applicability of defenses.”

Butler, 702 F.3d at 752 (internal quotation marks omitted).                                A

                                               37
plaintiff   therefore     has   no   “obligation   to   anticipate”   an

affirmative defense by pleading facts that would refute the as-

yet unasserted defense.         Gomez v. Toledo, 446 U.S. 635, 640

(1980); see McMillan v. Jarvis, 332 F.3d 244, 248 (4th Cir.

2003); Guy v. E.I. DuPont de Nemours & Co., 792 F.2d 457, 460

(4th Cir. 1986); accord de Csepel v. Republic of Hungary, 714

F.3d 591, 607-08 (D.C. Cir. 2013) (“[A]lthough it is certainly

true that plaintiffs must plead the elements of their claims

with specificity, they are not required to negate an affirmative

defense in their complaint . . . .” (internal quotation marks

and alteration omitted)).

     As our en banc court explained in Goodman, an affirmative

defense may provide the basis for a Rule 12(b)(6) dismissal only

“in the relatively rare circumstances . . . [where] all facts

necessary to the affirmative defense clearly appear on the face

of the complaint.”      Goodman, 494 F.3d at 464 (internal quotation

marks and alteration omitted); see also Xechem, Inc. v. Bristol–

Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004) (“Only when

the plaintiff pleads itself out of court--that is, admits all

the ingredients of an impenetrable defense--may a complaint that

otherwise states a claim be dismissed under Rule 12(b)(6).”).

     Application of these principles to this case requires Oberg

to plausibly allege that the Loan Companies are “persons” within

the meaning of the FCA.         Oberg did just that by alleging that

                                     38
the Companies are corporations operating independently of their

creating states.      The Loan Companies’ contrary claim that they

are   alter-egos    of    their    creating      states   is   an    affirmative

defense   which    they   bear    the   burden    of   pleading     and   proving.

Because Oberg had no obligation to anticipate that defense by

alleging facts establishing that the multi-factored, factually

intensive arm-of-state inquiry should be resolved in his favor,

the dismissal of his claims at this stage of the proceedings is

improper.     See Butler, 702 F.3d at 752; Goodman, 494 F.3d at

464, 466. 2


      2
       The majority’s apparent view that arm-of-state status is
an affirmative defense in the Eleventh Amendment context but not
in this case is puzzling.     Although the arm-of-state inquiry
here presents a statutory rather than constitutional question,
the principles at stake are the same as in any case raising
Eleventh Amendment issues. If arm-of-state status is a waivable
affirmative defense when the Eleventh Amendment is directly
implicated, so too should it be a waivable affirmative defense
when the Eleventh Amendment is indirectly implicated.      While
“personhood” is clearly an element of a plaintiff’s claim under
the FCA, Oberg, as previously discussed, carried his burden of
demonstrating the Loan Companies’ personhood by alleging their
independent corporate status.   The burden should then fall to
the defendants to plead and prove that they are not persons but
rather are arms of their creating state. United States ex rel.
Adrian v. Regents of University of California, 363 F.3d 398 (5th
Cir. 2004), the case relied on by the majority, does not suggest
otherwise.   In that case, the plaintiff brought an FCA action
against an entity – the Regents of the University of California
– that courts had repeatedly found to be an arm of the state.
See id. at 401-02.      The Fifth Circuit did not address the
affirmative-defense issue, but its affirmance of a Rule 12(b)(6)
dismissal of the claims against an entity previously found to be
an arm of the state is consistent with the rule recognized by
this court in Goodman that an affirmative defense may be
(Continued)
                                        39
                                          III.

      Even if Oberg were somehow required to allege that the Loan

Companies      are    not   arms     of     their       states,       I    believe       the

allegations of the complaint are still more than sufficient to

withstand the motion to dismiss.

      As to PHEAA and VSAC, the majority concludes that Oberg’s

allegations     plausibly      establish         that    the    companies         are    not

alter-egos of their creating states.                    Although I agree with the

majority’s ultimate conclusion as to these defendants, I do not

agree   with    the    majority’s     application          of   the       Rule    12(b)(6)

standard to the arm-of-state state factors.                     The sufficiency of

the complaint as to PHEAA and VSAC is not a close question in my

view, and I therefore concur only in the judgment vacating the

dismissal of Oberg’s claims against PHEAA and VSAC.                              While the

question is perhaps a bit closer as to the claims against ASLA,

I   nonetheless      believe   the   Oberg       has     plausibly        alleged       facts

establishing that ASLA is not an arm of the state of Arkansas.

Accordingly, for the reasons set out below, I dissent from the

majority’s affirmance of the Rule 12(b)(6) dismissal of Oberg’s

claims against ASLA.




resolved on a Rule 12(b)(6) motion when the facts necessary to
the defense appear on the face of the complaint. See Goodman v.
Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc).


                                           40
        When determining whether an entity qualifies as an arm of

the state, we consider four non-exclusive factors:

             (1) whether any judgment against the entity as
        defendant will be paid by the State or whether any
        recovery by the entity as plaintiff will inure to the
        benefit of the State;
             (2) the degree of autonomy exercised by the
        entity, including such circumstances as who appoints
        the entity’s directors or officers, who funds the
        entity, and whether the State retains a veto over the
        entity’s actions;
             (3) whether the entity is involved with state
        concerns   as   distinct   from  non-state  concerns,
        including local concerns; and
             (4) how the entity is treated under state law,
        such as whether the entity’s relationship with the
        State is sufficiently close to make the entity an arm
        of the State.

Oberg    I,    681    F.3d    at     580   (quoting      Dep’t    of   Disabilities    &

Special Needs v. Hoover Universal, Inc., 535 F.3d 300, 303 (4th

Cir. 2008)).

      While the focus of the first factor is whether the “primary

legal liability” for a judgment will fall on the state, Regents

of Univ. of Ca. v. Doe, 519 U.S. 425, 428 (1997), we must also

consider the practical effect of a judgment against the entity,

see   Hess    v.     Port    Auth.    Trans-Hudson       Corp.,    513   U.S.   30,   51

(1994).       “[I]f the State treasury will be called upon to pay a

judgment against a governmental entity, then Eleventh Amendment

immunity applies to that entity, and consideration of any other

factor becomes unnecessary.”                  Cash v. Granville Cnty. Bd. of

Educ.,    242      F.3d     219,   223     (4th   Cir.   2001).        “[S]peculative,


                                             41
indirect,     and    ancillary        impact[s]     on    the    State    treasury,”

however, are insufficient to trigger immunity.                   Id. at 225.

      If the state would not be liable for a judgment rendered

against the entity, we must then consider the remaining factors,

which serve to determine whether the entity “is so connected to

the   State   that       the    legal    action    against      the   entity    would,

despite the fact that the judgment will not be paid from the

State treasury, amount to the indignity of subjecting a State to

the coercive process of judicial tribunals at the instance of

private     parties.”           Id.     at   224   (internal      quotation      marks

omitted); see Fed. Mar. Comm’n v. S.C. State Ports Auth., 535

U.S. 743, 760 (2002) (“The preeminent purpose of state sovereign

immunity is to accord States the dignity that is consistent with

their   status      as   sovereign      entities.”).       In    my   view,    Oberg’s

complaint     contains         factually      detailed,    specific      allegations

addressing the treasury factor and the dignity factors so as to

preclude the granting of the motion to dismiss.

                                             A.

      The complaint alleges that ASLA, not its creating state,

would be liable for any judgment rendered against it.                         See J.A.

116-18.     While that assertion is arguably a legal conclusion not

entitled to be treated as true, see, e.g., Iqbal, 556 U.S. at

678, the assertion is supported by specific factual allegations

that are supported by statutes, financial reports, and other

                                             42
information   specifically    referenced       in   the   complaint   and

properly considered in the context of a motion to dismiss.            See

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322

(2007); Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180

(4th Cir. 2009).      These allegations and information establish

the following:

          ●    ASLA is a corporation entitled to enter into
     contracts, own property, and sue and be sued in its own
     name. See Ark. Code Ann. § 6-81-102(c) (establishing ASLA
     as a “public body politic and corporate, with corporate
     succession”).

          ●     Arkansas has specifically disclaimed liability
     for ASLA’s obligations.     See Ark. Code Ann. § 6-81-
     113(a)(3).

          ●    Arkansas law authorizes ASLA to pay expenses
     associated with its lending activities from the revenues
     earned from those activities. See Ark. Code Ann. §§ 6-81-
     118(c)(3), 6-81-124(c)(1).

          ●    ASLA generates substantial income streams and
     relies   on  those  income  streams,   rather  than  state
     appropriations, to support its business operations, and
     ASLA has substantial assets from which a judgment could be
     paid. See J.A 781-827 (ASLA financial statements).

          ●    ASLA has a line of credit provided by Arkansas.
     ASLA borrowed $50,000,000 under the line of credit in 2008
     and repaid the note in full by September 2010.     See J.A.
     802. ASLA has also borrowed money from a private lender to
     improve its liquidity, with student loan revenues providing
     the source of repayment. See J.A. 802.

          ●    ASLA has commercial insurance to protect itself
     from losses arising out of torts and its errors and
     omissions. See J.A. 805.

In my view, these allegations are more than sufficient to make

plausible   Oberg’s   assertion   that   the   Arkansas   state   treasury

                                   43
would not be liable for a judgment rendered against ASLA.                     See

Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 288 (4th

Cir. 2012) (“Plausibility requires that the factual allegations

be enough to raise a right to relief above the speculative level

on the assumption that all the allegations in the complaint are

true.” (internal quotation marks and alteration omitted)).

     Although     the    majority     considers     ASLA’s    status     as     a

corporation only when analyzing the state-dignity factors, that

fact is clearly relevant to the state-treasury factor as well.

See Cash, 242 F.3d at 224 (considering entity’s corporate form

when analyzing state-treasury factor).             The fact that Arkansas

elected to structure ASLA as a corporation makes it plausible

that the state will not be liable for any judgments in this

case, since insulating others from liability for corporate debt

is one of the signal attributes of the corporate form.                    See,

e.g., Musikiwamba v. ESSI, Inc., 760 F.2d 740, 753 (7th Cir.

1985) (“General corporation law is clear that personal liability

for a corporation’s debts cannot be imposed on a person merely

because he is an officer, shareholder, and incorporator of that

corporation.”).         That     Arkansas   has   specifically     disclaimed

liability   for         ASLA’s      obligations     further       establishes

plausibility,   particularly        given   the   absence    of   any   statute

requiring Arkansas to pay a judgment against ASLA.                  See Cash,

242 F.3d at 224-25 (noting the absence of statute authorizing

                                       44
recovery      from   state     coffers        when   concluding      that    judgment

against entity would not affect state treasury); Gray v. Laws 51

F.3d 426, 436 (4th Cir. 1995) (noting the absence of statute

requiring payment by state).

     Moreover,        the    allegations        of    the   complaint       and   the

financial documents referenced in the complaint show that ASLA

generates significant revenue streams through its lending and

other     business    activities.         ASLA       uses   those     revenues,   as

required      by   state    law,   to   pay    the   expenses   of    its    business

activities.        In light of these revenue streams, ASLA’s ability

to raise revenues through other sources, see J.A. 802 (line of

credit and private lending available to ASLA), and its insurance

protection, it is entirely plausible a judgment in this case

will have no legal or practical effect on the Arkansas state

treasury.      See Burrus v. State Lottery Comm’n, 546 F.3d 417, 420

(7th Cir. 2008) (concluding that state lottery commission was

not an arm of the state, in part because the lottery “has no

need for recourse to the state treasury” given the “large stream

of revenue” it generates).

                                          B.

        The   allegations     of   Oberg’s      complaint    likewise       plausibly

demonstrate that ASLA has significant autonomy and independence

from its creating state.            The allegations of the complaint and

the documents referenced therein establish the following:

                                          45
            ●    ASLA is a corporation entitled to enter into
       contracts, own property, and sue and be sued in its own
       name. See Ark. Code Ann. § 6-81-102(l).

            ●    ASLA is governed by a board of directors, none of
       whom are state officials, who serve fixed terms and are not
       removable by the governor. See id. § 6-81-102(d) & (e).

            ●    ASLA has authority to structure and operate                             its
       business activities as it deems proper, including                                 the
       authority to issue general obligation bonds secured by                            its
       revenues and to create subsidiary corporations.    See                            id.
       §§ 6-81-102(k), 6-81-102(l)(8)-(10) & (25).

            ●    ASLA is supported by the revenues it earns from
       its business activities, not by the state.  Although ASLA
       receives appropriations from the state earmarked for
       salaries and certain operating expenses, the funds so
       appropriated are “cash funds” earned by ASLA through its
       business activities.  See Ark. Code Ann. § 6-18-118; J.A.
       412.

            ●    ASLA’s revenues are not deposited into the state
       treasury,   but   are  deposited  into   various   accounts
       controlled by ASLA. See Ark. Stat. § 6-81-118(a) & (f).

               ● ASLA’s business activities extend outside the
       state of Arkansas and include the buying and selling of
       loan pools on the secondary market and the servicing of
       loans made directly by the federal government.

            ●    ASLA has borrowed and repaid money from the state
       of Arkansas, executing a promissory in favor of the state
       and using its revenues to repay the loan. See J.A. 802.

       These       allegations      are   not    naked       factual    assertions      that

need    not        be   accepted     as   true,        nor    are      they     mere   legal

conclusions that can be disregarded.                         See Iqbal, 556 U.S. at

678.    Instead, they are specific, detailed factual allegations

that   paint        a   plausible    picture      of    an    autonomous        corporation

operating          in   the   commercial        sphere       largely     free     of   state


                                            46
oversight or interference, such that it would not be an affront

to the dignity of Arkansas to permit this action to proceed.

     Accordingly, given the operational independence established

by these allegations, and the financial independence established

by the state-treasury allegations discussed above, I believe it

is at least plausible that ASLA is a “person” within the meaning

of the FCA, not an arm of the state of Arkansas.     See id. (“A

claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.”).



                               IV.

     ASLA, however, makes various arguments about how a judgment

could affect the state treasury and points to various statutes

indicating that the state has more control over it than Oberg’s

allegations suggest.   In my view, these arguments do not provide

a basis for granting the motion to dismiss.   Even after Twombly

and Iqbal, we still must view the properly alleged facts in the

plaintiff’s favor and must give the plaintiff the benefit of all

reasonable inferences that can be drawn from those facts.      See

E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d

435, 440 (4th Cir. 2011); see also Sepulveda–Villarini v. Dep’t.

of Educ. of P.R., 628 F.3d 25, 30 (1st Cir. 2010) (Souter, J.)

(“A plausible but inconclusive inference from pleaded facts will

                                47
survive a motion to dismiss . . . .”).                    While ASLA’s arguments

are   not   frivolous,   they     are    not    so     conclusive   as    to    render

Oberg’s allegations implausible for purposes of Rule 12(b)(6).

See   Starr   v.   Baca,    652    F.3d        1202,      1216   (9th    Cir.   2011)

(“Plaintiff’s complaint may be dismissed only when defendant’s

plausible     alternative       explanation          is    so    convincing      that

plaintiff’s explanation is implausible.”); Watson Carpet & Floor

Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 458 (6th

Cir. 2011) (“[T]he plausibility of [the defendants’ theory] does

not render all other reasons implausible.”).

                                         A.

      ASLA argues that a judgment against it would affect the

state treasury.     Arkansas law requires the revenues from ASLA’s

business activities to be deposited into accounts outside the

state treasury.     See Ark. Code Ann. § 6-81-118(a), (b) & (f).

Under provisions of Arkansas law not exclusively applicable to

ASLA, all funds required to be deposited somewhere other than

the state treasury are “‘cash funds’” that are “declared to be

revenues of the state to be used as required and to be expended

only for such purposes and in such manner as determined by law.”

Ark. Code Ann. § 19-6-103.              Such cash funds must be “budgeted

and proposed expenditures approved by enactments of the General

Assembly.”     Id. § 19-4-802(a).         Relying on these statutes, ASLA

contends that a judgment against it is, as a practical matter, a

                                         48
judgment against Arkansas, since all of ASLA’s money is really

the state’s money under § 19-6-103.

     ASLA’s argument overlooks several important points.               First

of all, as the majority noted in its discussion of PHEAA’s arm-

of-state assertion, the fact that ASLA’s funds are held in a

segregated fund outside the state treasury counsels against arm-

of-state status.        See Majority Op. at 13-14; see also Burrus,

546 F.3d at 420; Univ. of R.I. v. A.W. Chesterton Co., 2 F.3d

1200,    1210   (1st   Cir.   1993).    Moreover,   unlike   the   generally

applicable      §   19-6-103,   the    statute   specifically      addressing

ASLA’s funds does not declare ASLA’s cash funds to be revenues

of the state, see Ark. Code Ann. § 6-18-118, and nothing in § 6-

18-118 appears to subject ASLA’s use of the funds to wholesale

control by the General Assembly. 3          Instead, § 6-18-118 simply

requires ASLA’s segregated cash funds to be “used as provided in

this subchapter” – subchapter 1 of Chapter 81 governing student

loans.     Id. § 6-18-118(b) (emphasis added).          Subchapter 1, in

turn, gives ASLA -- not the state legislature -- nearly complete

authority over the use of its funds, including the authority to

pay expenses arising from its lending activities.            See Ark. Code

     3
       As the majority recognized when considering PHEAA’s claim,
the terms of the statute specifically governing ASLA should be
given priority over the generally applicable § 19-6-103.      See
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992)
(“[I]t is a commonplace of statutory construction that the
specific governs the general . . . .”).


                                       49
Ann. § 6-81-118(c)(3) & (4) (giving ASLA authority to “use the

proceeds of any bond issues, together with any other available

funds”      for       “[p]aying       incidental    expenses    in   connection     with

loans”          and    “[p]aying       expenses     of    authorizing     and    issuing

bonds”); id. § 6-81-118(f) (“The revenues not deposited into the

State Treasury shall be deposited into an account or accounts

specified by resolution of the authority and used for carrying

out the provisions of any resolution, indenture securing bonds

of the authority, or other agreement of the authority under this

subchapter.”);           id.    §     6-81-124(a)    (requiring      “[a]ll     proceeds

derived from a particular obligation” to be deposited into a

“proceeds fund” to be “expended only on approval of [ASLA]”);

id. § 6-81-124(c)(1) (authorizing funds contained in proceeds

fund       to    be    used     for     “payment    of    the   necessary       expenses,

including,            without     limitation,       the    costs     of   issuing     the

authority’s obligations, incurred by the authority in carrying

out its responsibilities under this subchapter”). 4


       4
       Arkansas’ statutory arrangement thus is similar in many
ways to that in Pennsylvania.    Like Arkansas, Pennsylvania law
appears to treat the Loan Company’s funds as state funds, see 24
Pa. Cons. Stat. § 5104(3) (requiring PHEAA’s funds to be
deposited into state treasury), and to require state approval of
any expenditure of those funds, see 72 Pa. Cons. Stat. § 307,
but the statute specifically governing PHEAA’s operation gives
control of those funds to the company, see 24 Pa. Cons. Stat.
§ 5104(3); see Majority Op. at 11-13 (describing operation of
Pennsylvania statutes governing PHEAA).        After considering
Pennsylvania’s statutory structure, the majority concluded that
(Continued)
                                             50
     More importantly, however, the fact that Arkansas declares

all of ASLA’s cash funds to be state funds does not conclusively

establish that the Arkansas state treasury would be affected by

a judgment against ASLA in this case.      As shown by the relevant

statutes and other information in the record, the cash funds

“claimed” by the state consist entirely of revenues generated by

ASLA’s lending and other business activities.            And because the

expenses of those business activities must be paid from the cash

funds, the funds so claimed by the state in reality consist only

of ASLA’s surplus revenues.

     As the Supreme Court has explained, however, the state-

treasury factor focuses “not on the use of profits or surplus,

but rather . . . on losses and debts.”         Hess, 513 U.S. at 51

(emphasis   added)).   “If    the   expenditures   of    the   enterprise

exceed receipts, is the State in fact obligated to bear and pay

the resulting indebtedness of the enterprise?            When the answer

is ‘No’ -- both legally and practically -- then the Eleventh

Amendment’s core concern is not implicated.”       Id.

     The majority’s assertion that the source of the cash funds

claimed by Arkansas does not matter because Arkansas claims all




the state-treasury factor “weighs heavily against holding that
PHEAA is an arm of the state.” Majority Op. at 14. In my view,
Arkansas’ similar statutory scheme also weighs against arm-of-
state status.


                                    51
of the cash funds as its own, see Majority Op. at 27-28 n.7,

thus seems directly contrary to the Supreme Court’s analysis in

Hess.        Under the majority’s view, a self-supporting entity –

that       is,    an    entity       that    supports     itself    not     through     state

appropriations             but   through      the     revenues    earned     from     its   own

commercial activities – is dependent on the state as a matter of

law    because         a    state    statute        arguably     declares    the      entity’s

profits to be revenues of the state.                      The Supreme Court raised a

suspicious eyebrow at such an argument in Hess, see 513 U.S. at

51 n.21 (observing that “[i]t would indeed heighten a mystery of

legal evolution were we to spread an Eleventh Amendment cover

over an agency that consumes no state revenues but contributes

to the State’s wealth” (internal quotation marks and alteration

omitted)), and the argument is no more persuasive here.

       Oberg’s          allegations         of   a    self-supporting,          commercially

insured corporation with tens of millions of dollars in annual

revenue and access to a $50 million line of credit and other

private       loans        provide    a     non-speculative       basis     for   concluding

that       ASLA   would      not     need    Arkansas’s     help    to    pay     a   judgment

rendered against it. 5                Nothing more need be established at this

point       in    the      proceedings.          See     Twombly,    550     U.S.      at   555


       5
        Indeed, the financial statements referenced in the
pleadings show that ASLA absorbed an operational loss in 2011
without any financial assistance from the state. See J.A. 790.


                                                 52
(“Factual allegations must be enough to raise a right to relief

above    the     speculative       level.”);         Walters,          684     F.3d    at    439

(plaintiff’s allegations must be sufficient to “advance [his]

claim across the line from conceivable to plausible”).

                                              B.

       The     state-dignity       factors         of    the     arm-of-state           inquiry

include (1) “the degree of autonomy exercised by the entity”;

(2)    “whether     the   entity       is    involved      with        state    concerns      as

distinct from non-state concerns, including local concerns”; and

(3) “how the entity is treated under state law.”                               Oberg I, 681

F.3d at 580.           As previously discussed, I believe that Oberg’s

allegations of a corporate entity that is answerable to boards

of    directors       rather    than    elected          state       officials        and    that

operates largely free of state interference plausibly establish

that ASLA is not “so connected to the State that the legal

action    against      the     entity    would,         despite      the     fact     that   the

judgment will not be paid from the State treasury, amount to the

indignity      of     subjecting    a    State      to    the     coercive       process       of

judicial tribunals at the instance of private parties.”                                     Cash,

242 F.3d at 224 (internal quotation marks omitted).

       I recognize, however, that other inferences can reasonably

be    drawn    from    the     information         alleged      in     the   complaint        and

contained      in   the   record.           Nonetheless,         the    question       at    this

stage of the proceedings is not whether the defendant’s view of

                                              53
the    issues        is    reasonable,         but     whether       the        plaintiff         has

plausibly alleged an entitlement to relief.                               See, e.g., Butler

702 F.3d at 752 (motion to dismiss “test[s] the sufficiency of a

complaint” but “does not resolve contests surrounding the facts,

the    merits       of     a    claim,    or    the     applicability            of     defenses”

(internal quotation marks omitted)).                       And in my view, the state-

dignity      factors       do    not    conclusively            establish       that    the       Loan

Companies are arms of their creating states, notwithstanding the

fact    that    some      of    the    factors       might      reasonably        support         that

conclusion.

       For    example,         Arkansas      appears       to    treat     ASLA    as       a    state

agency.        See Ark. Code Ann. § 6-81-102(c) (describing ASLA an

“an    instrumentality           of    the    state”);          Turner    v.    Woodruff,          689

S.W.2d       527,    528       (Ark.    1985)     (describing            ASLA    as     a       “state

agency”).           While this factor thus points toward a finding of

arm-of-state status, whether an entity qualifies as an arm of

its creating state is a matter of federal law, see Regents, 519

U.S. at 429 n.5, and this single factor is not dispositive of

the inquiry.

       In addition, there can be no dispute that ASLA is involved,

at least in part, in matters of statewide concern.                                “[E]ducating

the youth” of a state and providing higher education is “clearly

an    area    of    statewide         concern,”      Md.     Stadium      Auth.       v.    Ellerbe

Becket Inc., 407 F.3d 255, 265 (4th Cir. 2005), and making loans

                                                54
available to students certainly facilitates that goal.                                  However,

ASLA is also engaged in other, more commercial activities, such

as the buying and selling of loan pools on the secondary market

and the servicing of federal student loans, that arguably are

more appropriately characterized as “non-state concerns.”                                      See

Hoover      Universal,        535   F.3d    at       307    (considering          “whether    the

entity is involved with statewide, as opposed to local or other

non-state concerns” (emphasis added)); cf. Fresenius Med. Care

Cardiovascular Res., Inc. v. Puerto Rico, 322 F.3d 56, 64 (1st

Cir. 2003) (“Not all entities created by states are meant to

share state sovereignty. . . .                   Some entities may be meant to be

commercial        enterprises,         viable              and     competitive          in    the

marketplace in which they operate.”).

       As    to   the    question          of    autonomy,             the     fact   that    ASLA

generates      its   own       revenues         and    is        not    dependent      on    state

appropriations is a strong indication of the Loan Companies’

operational independence from the states.                               While ASLA receives

an     appropriation       earmarked        for       salaries           and     certain     other

expenses, it is an appropriation of ASLA’s own “cash funds,”

J.A. 412, which, as previously discussed, are funds generated by

ASLA     through        its     business         activities.                   That    kind    of

appropriation does not make ASLA dependent on the state.                                      See

Burrus, 546 F.3d at 422 (appropriation of funds generated by

entity claiming arm-of-state status “is of a different kind than

                                                55
the appropriations we have found to be the mark of a state

agency, namely, those appropriations that come directly from the

state.” (internal quotation marks omitted)). 6

     Other facts, however, suggest that ASLA is not entirely

autonomous.         For    example,   all       members     of    ASLA’s      board    of

directors are appointed by the governor, see Ark. Stat. Ann.

§ 6-81-102(d), a fact that clearly provides some indication of

state    control.         See   Md.   Stadium         Auth.,     407   F.3d    at     264.

Arkansas law, however, provides that the board members serve

fixed    terms,     see    Ark.   Stat.        Ann.    §   6-81-102(e),       with      no

suggestion that they may be removed by the governor at will. 7

See Edmond v. United States, 520 U.S. 651, 664 (1997) (“The

power to remove officers, we have recognized, is a powerful tool


     6
       In any event, even if ASLA did receive some money from the
state, that fact alone would not conclusively establish that
ASLA is dependent on the state.    See, e.g., Kitchen v. Upshaw,
286 F.3d 179, 184-85 (4th Cir. 2002) (finding that an entity
that received some state funding was not an arm of the state);
Cash, 242 F.3d at 224, 226 (same).
     7
        According to the majority, the fact that ASLA board
members serve for four years “or until a successor is
appointed,” Ark. Code § 6-81-102(e), “suggests that the governor
may remove board members simply by selecting new ones.”
Majority Op. at 29 (emphasis added).    It seems highly unlikely
that   the   Arkansas legislature   would  hide  removal-at-will
authority in a clause that more reasonably seems to authorize
terms of more than four years in cases where an appointment is
not timely made. In any event, an ambiguous statutory scheme is
far from sufficient to establish for purposes of a Rule 12(b)(6)
motion that ASLA’s board is subject to the direct control of the
governor.


                                          56
for control.”); Auer v. Robbins, 519 U.S. 452, 456 n.1 (1997)

(concluding that Board of Police Commissioners was not an arm of

the state because the state was not responsible for the Board’s

financial liabilities and the only form of state control was the

governor’s power to appoint four of five Board members); P.R.

Ports Auth. v. Fed. Mar. Comm’n, 531 F.3d 868, 877 (D.C. Cir.

2008) (“The Governor’s power to remove a majority of the Board

at    will    allows       him   to    directly      supervise       and   control   PRPA’s

ongoing operations.”); Takle v. Univ. of Wisc. Hosp. & Clinics

Auth.,       402   F.3d     768,      770   (7th     Cir.    2005)    (“[T]he     power   to

appoint is not the power to control.”). 8

       In addition, all bonds issued by ASLA must be approved by

the    governor,       a    fact      the     majority      finds    significant.         See

Majority       Op.     at        27-28      (including       gubernatorial        approval

requirement        among     the      facts    establishing         that   ASLA   “operates

with little autonomy”).                The approval requirement, however, is a

function of federal law, which places a ceiling on the volume of


       8
       Contrary to the majority’s characterization of my views, I
do not contend that ASLA “is autonomous” because of the manner
in which its board is appointed, Majority op. at     28 (emphasis
added), only that Oberg has alleged specific facts relevant to
ASLA’s autonomy sufficient to survive a Rule 12(b)(6) motion.
As I have previously discussed, the fact that other inferences
can be drawn from the information in the record does not render
Oberg’s allegations implausible.     See Sepulveda–Villarini v.
Dep’t. of Educ. of P.R., 628 F.3d 25, 30 (1st Cir. 2010)
(Souter, J.) (“A plausible but inconclusive inference from
pleaded facts will survive a motion to dismiss . . . .”).


                                                57
certain tax-exempt “private activity” bonds (including student

loan bonds) that can be issued within a state and vests with the

state governor the authority to change the allocation of the

state ceiling among issuers, and which requires state approval

of   such     bond   issues.     See    26    U.S.C.    §     141(e)(1)(E);   id.

§ 144(b); id. § 146(a)-(e); id. § 147(f); see generally Steele

v. Indus. Dev. Bd. of Metro. Gov’t Nashville, 301 F.3d 401, 404

(6th   Cir.     2002);   Congressional       Research    Service,     Tax-Exempt

Bonds: A Description of State & Local Government Debt at 9-11

(June 19, 2012).         Under these circumstances, the gubernatorial-

approval requirement is less indicative of a lack of autonomy

than it might otherwise be.            In any event, the gubernatorial-

approval requirement does not conclusively establish that ASLA

lacks autonomy.

       Thus, on the record before us, the facts relevant to the

state-dignity        factors   cut    both   ways,     with    some   supporting

Oberg’s claim that ASLA is not an arm of the state, and others

supporting      ASLA’s     contrary     claim.         But     because   Oberg’s

allegations on this point more than satisfy the Iqbal-Twombly

plausibility requirement, ASLA’s arguments provide no basis for

affirming the dismissal of Oberg’s claims.




                                        58
                                          V.

      As is apparent from the arm-of-state test itself and the

nature of the considerations it entails, whether a state-created

entity is so closely connected to its creating state that it

should be permitted to share in the state’s immunity from suit

generally      is    a    fact-intensive          inquiry       dependent        on     an

understanding of the actual operations of the entity and the

actual relationship        between       the    entity    and    the    state.        See,

e.g.,    Hess,      513   U.S.      at     49     (considering          the     entity’s

“anticipated        and   actual        financial        independence         (emphasis

added)); Hoover, 535 F.3d at 303 (“The line separating a State-

created entity functioning independently of the State from a

State-created entity functioning as an arm of the State or its

alter    ego   is   determined     by    the    particular       legal    and    factual

circumstances of the entity itself.” (emphasis added)); Gray, 51

F.3d at 434 (remanding case to the district court because it was

“in   the   best    position   to    address      in     the    first    instance      the

competing questions of fact and state law necessary to resolve

the     eleventh     amendment      issue”        (internal       quotation        marks

omitted)).     While there certainly have been and will continue to

be cases where the arm-of-state issue can be resolved on the

pleadings, multi-factored balancing tests “do[] not easily lend

[themselves] to dismissal on a Rule 12(b)(6) motion.”                           Decotiis

v. Whittemore, 635 F.3d 22, 35 n.15 (1st Cir. 2011).                              In my

                                          59
view, this case is one of the typical cases that cannot be

resolved on the pleadings.              Indeed, the inconclusive nature of

most of the state-dignity factors highlights this very problem.

We have no information about the actual operations of the Loan

Companies   or     the     actual    amount      of   control     and     oversight

exercised by the states and thus cannot determine the actual

nature of the relationship between the Loan Companies and their

creating states.

      Nonetheless,       the    facts    as     alleged    by    Oberg    plausibly

establish that the state treasuries will not be affected by a

judgment against the Loan Companies and that the Loan Companies

are   sufficiently   independent         from    their    creating     states     that

permitting this action to proceed would not be an affront to the

dignity of the states.           To require anything more at this stage

of the proceedings is to ignore the purpose and scope of a

motion to dismiss, which is to test the facial sufficiency of

the   complaint,     not       resolve    contests       about   the     merits    or

applicable defenses.           See Butler, 702 F.3d at 752; Goodman, 494

F.3d at 464.

      Accordingly, while I concur in the judgment insofar as it

vacates the dismissal of the claims against PHEAA and VSAC, I

dissent from the opinion and judgment affirming the dismissal of

the claims against ASLA.



                                         60
