United States Ex Rel. Oberg v. Pennsylvania Higher Education Assistance Agency , 745 F.3d 131 ( 2014 )


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  •                                 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
    

Document Info

Docket Number: 12-2513

Citation Numbers: 745 F.3d 131

Judges: Keenan, Motz, Traxler

Filed Date: 3/13/2014

Precedential Status: Precedential

Modified Date: 8/31/2023

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