State Contracts: Alabama Agencies Can’t Be Sued

Alabama agencies immunity immune employment contracts Alabama Employment Law
Agencies of the State of Alabama are immune from law suits.

If you are an employee of an agency of the State of Alabama, your options are limited if that agency breaches your employment contract.  That’s a lesson that a physician learned the hard way in Ex parte Board of Trustess of Univ. of Ala., No. 1170183, 2018 WL 2276103 (Ala. May 18, 2018).  The State of Alabama and its agencies cannot be sued for violations of Alabama law. They are immune from suit under the provisions of Article I, Section 14 of the Alabama Constitution of 1901.

Article I, Section 14 provides:  “The State of Alabama shall never be made a defendant in any court of law or equity.”  This means that the State is entitled to sovereign immunity from law suits.  If you sue a State agency, your law suit is going to be dismissed.  And, the list of State agencies is immense.  State Universities like Alabama and Auburn are immune.  The Alabama Department of Transportation is immune.  Local boards of education are immune.

Apparently, Dr. Paul F. Castellanos was unfamiliar with the immunity enjoyed by the University of Alabama.  He possessed a written employment contract with the University of Alabama Health Services Foundation.  After he was terminated from employment, he sued the Foundation, the University of Alabama Board of Trustees, and several individuals.  Dr. Castellanos’s employment contract contained an arbitration provision.  All defendants except the Board of Trustees asked a circuit judge to compel arbitration.  But, the Board of Trustees asked the judge to dismiss on the basis of sovereign immunity.  The judge declined to dismiss, but instead ordered the Board of Trustee to go to arbitration.

The Alabama Supreme Court held that the circuit judge committed error.  Immunity prevented the judge from exercising any power whatsoever over the Trustees.  As a result, the judge’s only option was to dismiss the Board.

Alabama employers are also businesses.  They should be aware that contracts with the State of Alabama, and its agencies, can be difficult.  If the agency breaches a contract, a business has a few options.  Limited lawsuits are permitted directly against the agency director (as opposed to the agency itself).  Also, the State provides a limited remedy through the Alabama Board of Adjustment.  Before taking any legal action against a State agency, carefully consider the impact of sovereign immunity.