[00:00:00] Speaker 02:
Parties agree that to invoke state sovereign immunity, Mojila had to show that it was an arm of Missouri.

[00:00:05] Speaker 02:
But the state laws that Mojila invoked to meet its burden only show that Mojila is affiliated with the state.

[00:00:12] Speaker 02:
They do not show that it is an arm of the state, and those two things are not synonymous.

[00:00:18] Speaker 02:
That is why this court looks to a host of factors to decide whether a state-affiliated entity is sufficiently tied to the state to invoke the state sovereign immunity.

[00:00:28] Speaker 02:
Here, those factors point away from the conclusion that Mojilo is an arm of the state.

[00:00:33] Speaker 02:
Mojilo is established as an independent corporate body, and the State Supreme Court of Missouri has long held that such bodies are separate entities from the state, not part of the state itself.

[00:00:45] Speaker 02:
Mojilo's independence is reflected in the control that it exercises over the selection and compensation of its corporate officers and its employees.

[00:00:53] Speaker 02:
and the control it has over its business policies, properties, contracts, and debts.

[00:00:59] Speaker 03:
Let me ask you on that point.

[00:01:01] Speaker 03:
Do employees of Moheelah participate in the state retirement system?

[00:01:06] Speaker 02:
There's no evidence that they do.

[00:01:07] Speaker 02:
We do know from the statute that Moheelah hires its own employees, but Moheelah has not put anything in the record about their participation in the state employment system.

[00:01:22] Speaker 02:
system.

[00:01:24] Speaker 03:
Are Moheel employees subject to the merit system protections that apply to whatever protections apply to state employees?

[00:01:32] Speaker 02:
Not to my knowledge, Your Honor.

[00:01:33] Speaker 02:
I would point out in Tennessee, the court considered an entity that had the option of participating in the state system or not, and the fact that the entity had that option

[00:01:44] Speaker 02:
weighed against it being an arm of the state and it was weighed in favor of its autonomy.

[00:01:52] Speaker 02:
Here is nothing in the statute that describes whether Moheela's employees even have the option of participating

[00:02:00] Speaker 02:
in the state employment system, their compensation.

[00:02:05] Speaker 02:
We do know that Mojila sets its own compensation for its employees.

[00:02:12] Speaker 02:
That is in the statute.

[00:02:13] Speaker 02:
It's not bound by whatever the state

[00:02:16] Speaker 02:
state laws govern compensation and retirement benefits for its employees.

[00:02:25] Speaker 02:
There's no evidentiary record in this case.

[00:02:28] Speaker 02:
The district court's decision relied solely on the provisions of Missouri law that organized and set up Moheelah.

[00:02:38] Speaker 02:
And they grant Moheelah a great deal of autonomy, as I was mentioning,

[00:02:45] Speaker 03:
Yeah, but they refer to Mahila as being a public instrumentality and performing a public function and refers to it as being a public instrumentality of the state, does it not?

[00:02:56] Speaker 02:
It does.

[00:02:56] Speaker 02:
In the cases where you'll have arm of the state analysis, you'll have some connection between the entity and the state.

[00:03:03] Speaker 02:
I think in just about every case, that entity will be performing some positive function for the state.

[00:03:11] Speaker 02:
That has never been sufficient to tip the scales on all four of the steadfast factors in favor of finding an arm of the state.

[00:03:20] Speaker 02:
The other aspect of it, of course, is the third step factor, which is whether Moheel finances or independent of the states, and I don't think there's any dispute as to that.

[00:03:33] Speaker 02:
It raises its own revenues.

[00:03:34] Speaker 02:
There's no evidence that it gets any subsidies from the state government.

[00:03:40] Speaker 03:
Isn't its ability to sell student loans subject to MDHE approval?

[00:03:46] Speaker 02:
No, as I read that provision, the only student loans that it has that it requires approval to sell are those that are guaranteed by the state.

[00:03:55] Speaker 02:
There's no evidentiary record as to how much of Mohiel's portfolio consists of those loans.

[00:04:00] Speaker 02:
And in that situation, it appears the state is acting as its role as guarantor of those loans, as opposed to supervisor of Mohiel's operations.

[00:04:11] Speaker 03:
But it's not negligible control.

[00:04:13] Speaker 03:
I mean, it suggests a sense

[00:04:15] Speaker 03:
I mean, because there's revenue to be raised from selling those student loans, right?

[00:04:19] Speaker 03:
And it puts Moheela in a situation in which it is at least in part, to take your point, in part, subject to the control of the agency, right?

[00:04:33] Speaker 02:
I would point the court to the Ober case, which had a similar situation where the state officials had veto power over the Pennsylvania higher education loan authority.

[00:04:46] Speaker 02:
And the Fourth Circuit held that that alone was not sufficient to make the Pennsylvania authority an arm of the state, since that evidentiary hearing

[00:04:58] Speaker 02:
confirmed that, in fact, the Pennsylvania authority was not an arm of the state.

[00:05:02] Speaker 03:
Well, I'm not suggesting that alone it's sufficient.

[00:05:06] Speaker 03:
I'm saying that we're looking at how these factors cut, right, in the totality.

[00:05:11] Speaker 02:
I think that's right, and as the Court recognizes in Tennessee, when you have a state affiliated entity that serves a state purpose, there are going to be some connections between the entity and the state.

[00:05:21] Speaker 02:
And if you have the type of connections that you

[00:05:24] Speaker 02:
that are part and parcel of being a state entity as opposed to a purely private organization like a for-profit corporation, you're going to have some connections.

[00:05:35] Speaker 02:
But that's never been the

[00:05:37] Speaker 02:
In the Oberg case, the forcer called it minor strings.

[00:05:43] Speaker 02:
This court in Hennessy, citing Oberg, called those types of ties of limited importance.

[00:05:49] Speaker 02:
And what it emphasized were the financial and operational, day-to-day operational independence of the entity.

[00:05:56] Speaker 02:
And the statutes, which are all that are, which is the only thing that's in the record, largely indicate that Mojila

[00:06:05] Speaker 02:
operates on a day-to-day basis, independently of state governance.

[00:06:10] Speaker 04:
Could I just ask on the instrumentality of the state, the Supreme Court in Biden referred to Moheel as being an instrumentality, a public instrumentality of the state.

[00:06:24] Speaker 04:
And I realize it's addressing standing.

[00:06:28] Speaker 04:
But would this court be bound by that if it's a dictum?

[00:06:35] Speaker 02:
I wouldn't say it's dictum, it's also present, we don't dispute that it's present in the state statutes that define what Moheel is.

[00:06:44] Speaker 04:
Doesn't that pretty much take care at least of the first Steadman?

[00:06:51] Speaker 04:
Steadfast factors?

[00:06:54] Speaker 02:
Not quite.

[00:06:55] Speaker 02:
A couple of things on that point.

[00:06:57] Speaker 02:
First of all, I think the Supreme Court in Biden versus Nebraska in footnote three made very clear that its determinations as to Moheela's status did not extend to other purposes.

[00:07:12] Speaker 02:
And it cited the state Supreme Court's decision in the Norah Medical Hospital, which

[00:07:17] Speaker 02:
hell, that Mojilo is not part of the state.

[00:07:19] Speaker 02:
It cannot be part of the state under the state constitution because it would be bound by provisions regarding its revenues and its credit that would not allow it to even operate.

[00:07:29] Speaker 02:
And so what the Missouri has done, Mojilo was created two years after the Menorah decision.

[00:07:35] Speaker 02:
And what Missouri has done is say we're going to create these separate corporate entities, separate bodies.

[00:07:42] Speaker 02:
They're public corporations.

[00:07:43] Speaker 02:
They're not private corporations, but they're separate bodies.

[00:07:46] Speaker 02:
from the state so we can essentially get around these restrictions in the state constitution and allow Mohila to operate its student loan business free from these restrictions.

[00:07:57] Speaker 02:
It gave it all the normal powers that corporations have with some restrictions.

[00:08:02] Speaker 02:
They're not a purely private entity.

[00:08:05] Speaker 02:
But these are the types of restrictions that one would normally see, I think, in some entity that is affiliated with the state.

[00:08:12] Speaker 04:
You keep saying affiliated.

[00:08:15] Speaker 04:
What's the difference between an instrumentality and an arm?

[00:08:20] Speaker 02:
Well, the arm is, I think, well, I would say under the governing precedent in this court, the Supreme Court, and all the other circuits, they look to a host of factors to determine whether the benefits of state sovereign immunity, which is a constitutional benefit that Congress cannot abrogate except in limited circumstances, should extend to

[00:08:44] Speaker 02:
state-created entities, state-affiliated entities, or whether the state has in fact set up that entity to be so independent from the state that it would essentially not be consistent with the purpose of protecting the state dignity and the state treasury to confer arm of the state status on those entities.

[00:09:05] Speaker 02:
And that's why the court engages in an extensive analysis of not just whether there are instrumentalities

[00:09:13] Speaker 02:
in a formal sense, which is the first steadfast factor, but also the second and third factors, which were outcome determinative in Hennessy, and I think outcome determinative here.

[00:09:25] Speaker 02:
I would point out in Hennessy, the court spotted the entity, the first and fourth steadfast factors, and still found that was not sufficient to make the entity an arm of the state.

[00:09:36] Speaker 02:
You have a lot of the same characteristics in Moheel as you had in the hospital authority in Hennessey.

[00:09:45] Speaker 02:
Once again, it has the right to sue or be sued separately from the state.

[00:09:52] Speaker 02:
decides which contracts it's going to enter into, it controls its own property.

[00:09:56] Speaker 02:
These are facts that are not disputed.

[00:09:58] Speaker 02:
Its employees it hires, we talked about the employees earlier, and it's financially independent from the state.

[00:10:04] Speaker 02:
It earns its own revenues and there's no dispute that a judgment against Mojila would not put the state treasury at risk.

[00:10:14] Speaker 03:
Let me ask you about that judgment against Mojila.

[00:10:17] Speaker 03:
Where do we analytically place that?

[00:10:19] Speaker 03:
I mean, I understand from your briefing that you were placing that as the third steadfast factor.

[00:10:23] Speaker 03:
Why isn't it treated differently once you get beyond that threshold steadfast analysis?

[00:10:30] Speaker 03:
I mean, didn't Hennessy have something to say about that to suggest that that would be the case?

[00:10:36] Speaker 02:
Certainly the second step of the analysis, you do consider whether the judgment run against the state.

[00:10:41] Speaker 02:
The second step is somewhat of a tiebreaker if all of the steadfast factors point in the same direction.

[00:10:47] Speaker 03:
I thought if all of the steadfast factors pointed in different directions, it reached a second.

[00:10:52] Speaker 02:
Yes, I apologize.

[00:10:53] Speaker 02:
Yes, you're correct.

[00:10:54] Speaker 02:
I wouldn't say the court ignores it in the third step fast factor because it seems a bit odd to consider the entity's financial independence and not even take a look at whether a judgment would run against the state.

[00:11:09] Speaker 02:
That said, we don't need that.

[00:11:11] Speaker 02:
I think the district court thought we needed the judgment rule into

[00:11:16] Speaker 02:
conclude that the third step best factor weight in Mr. Good's favor.

[00:11:23] Speaker 02:
We don't need that because under the third step best factor, what the court looks at is to how the entity obtains its revenues.

[00:11:29] Speaker 02:
And does it get subsidies from the state or does it earn its own revenues?

[00:11:32] Speaker 02:
And under state law, it needs to earn its own revenues and pays expenses out of its own revenues, pays debts out of its own revenues.

[00:11:41] Speaker 04:
The court- So counsel, on the second,

[00:11:46] Speaker 04:
We get to the second step factors.

[00:11:49] Speaker 04:
Why isn't the suit against Mojila an affront to the state's dignity?

[00:11:56] Speaker 04:
By the way, what exactly does that mean?

[00:11:59] Speaker 02:
The cases talk refer to that.

[00:12:01] Speaker 02:
I don't think there's too many cases that turn on that question.

[00:12:06] Speaker 02:
It certainly includes hauling the state into court.

[00:12:09] Speaker 02:
So I think one can imagine a situation where somehow if you sue the entity, you somehow sue the state itself.

[00:12:15] Speaker 02:
That's not the case here.

[00:12:17] Speaker 02:
Mohila has a sue or be sued clause.

[00:12:19] Speaker 02:
There's no basis for concluding that Missouri is being brought into court when Mohila is brought into court.

[00:12:28] Speaker 02:
And Missouri law, in fact,

[00:12:33] Speaker 02:
by creating Moheel as a separate corporate entity and putting these financial and operational firewalls between the state and Moheel ensure that the state's dignity is not in any way impacted by a suit against Moheel.

[00:12:52] Speaker 02:
I would like to reserve the rest of my time for rebuttal if the court has no further questions.

[00:13:13] Speaker 01:
Good morning, Your Honors.

[00:13:16] Speaker 01:
May it please the Court.

[00:13:17] Speaker 01:
Matthew Gouletz on behalf of the Higher Education and Law Authority of the state of Missouri, or MOHELA.

[00:13:24] Speaker 01:
As counsel said, the issue in this case is whether MOHELA is entitled to 11th Amendment immunity under the US Constitution.

[00:13:33] Speaker 01:
And our position, as detailed in the Supreme Court, at least as it pertains to the factual underpinnings,

[00:13:42] Speaker 01:
is that MOHELA is an entity created by Missouri, governed by Missouri, and controlled by Missouri.

[00:13:50] Speaker 01:
And so the short answer is that MOHELA is entitled to 11th Amendment immunity.

[00:13:55] Speaker 01:
Even before the Biden decision, and through its reasoned order, that is the conclusion that the district court made.

[00:14:03] Speaker 01:
And as Judge Matheson pointed out, we think subsequent developments have only helped Mohila's argument through the Biden v. Nebraska decision last summer.

[00:14:14] Speaker 03:
You don't think that Biden, I thought it was Nebraska versus Biden, but either way, that doesn't resolve this matter, does it?

[00:14:20] Speaker 01:
I would agree that they are analytically distinct concepts.

[00:14:24] Speaker 01:
Sovereign immunity versus 11th Amendment immunity.

[00:14:28] Speaker 01:
I would point out that on the way to the Supreme Court, the Eighth Circuit, in assessing the character of Mohila under Missouri state law, did note that Mohila may well be

[00:14:40] Speaker 01:
in harm of the state of Missouri under the reasoning of our President.

[00:14:45] Speaker 01:
In terms of this question about sovereign immunity versus standing, I would point out, as Your Honors already know,

[00:14:56] Speaker 01:
Article 3 deals with what cases and controversies federal court can hear.

[00:15:01] Speaker 01:
Article 11 amends that to say citizens from one state can't sue another state in federal court.

[00:15:10] Speaker 01:
And even if the tests are a little bit different, I think the key is that there's substantial overlap in the inquiries that the court needs to undertake in employing those tests.

[00:15:22] Speaker 03:
And are you keying on the phrase public instrumentality?

[00:15:26] Speaker 01:
Yes, and Mark's part, but also I think what you can do is you can take what the Supreme Court said in Biden regarding Mohilla and the relationship with the state of Missouri, and you literally can graft most of that on to the Hennessey test in terms of the four factors.

[00:15:45] Speaker 01:
So our position candidly is, Supreme Court has said Mohilla is indeed part of the state of Missouri, end stop.

[00:15:54] Speaker 01:
But if you proceed to the fourth or to the four factors on the amnesty test, the four primary factors, I think you can look at what the Supreme Court has said and you can easily find that those factors weigh in Moheil's favor.

[00:16:09] Speaker 04:
Isn't the graph to the first factor?

[00:16:12] Speaker 01:
It's to the first factor, but I honestly believe you can go beyond that.

[00:16:16] Speaker 01:
I mean, you're exactly right.

[00:16:18] Speaker 01:
First factor, character of Mohila, Missouri says, or the Supreme Court says, indeed part of the state of Missouri.

[00:16:26] Speaker 01:
But the second factor is Mohila's autonomy and the degree of control the state has over Mohila.

[00:16:33] Speaker 01:
Well, the Supreme Court said, and I quote, Mohila is subject to the state supervision and control.

[00:16:40] Speaker 01:
Noted that two of Mohila's seven board members are officials of the state agency, the MDHE.

[00:16:48] Speaker 01:
The other five are directly appointed by the board, or appointed by the governor, removable by the governor.

[00:16:55] Speaker 01:
The Supreme Court says the state of Missouri has control over Mohila because it can dissolve

[00:17:01] Speaker 01:
exact quotes from the Supreme Court.

[00:17:03] Speaker 01:
Mohila is, quote, governed by Missouri.

[00:17:06] Speaker 01:
Mohila is, quote, answerable to Missouri.

[00:17:09] Speaker 01:
So we think those statements in the Biden decision further support what the lower court found here, which is that Mohila does not have a great deal of autonomy subject to the state control.

[00:17:25] Speaker 01:
I think it also bears on the fourth factor, which we've always thought is a fairly straightforward and easy one.

[00:17:31] Speaker 01:
That's the determination of whether Moheela is concerned primarily with local or state affairs.

[00:17:38] Speaker 01:
The Supreme Court noted that Missouri established Moheela in furtherance of the statewide purpose, namely to perform the essential public function of helping Missourians access student loans needed to pay for college.

[00:17:52] Speaker 01:
On that point, all of Moheela's efforts are statewide in nature.

[00:17:56] Speaker 01:
Their board comes from the broader geography of the state of Missouri.

[00:18:02] Speaker 01:
And so we think if you take those findings by the Biden court, they really do have great import on the proper application of the Hennessey test.

[00:18:14] Speaker 03:
Do you have the same understanding of the record that appellant does in terms of the issue of

[00:18:21] Speaker 03:
whether Mohila's employees are under the state retirement system or whether Mohila's employees are subject to merit system protection?

[00:18:30] Speaker 01:
I do.

[00:18:31] Speaker 01:
To be clear, Mohila's employees are not state employees in the classic sense.

[00:18:35] Speaker 01:
The way it works functionally is that, you know, the governor appoints the board, the board appoints the executive officers, the director, the executive director, CEO of Mohila, and then, you know, they fill out the rest of the staff with employees.

[00:18:50] Speaker 01:
To your questions earlier, they do not participate directly in like the state retirement plan.

[00:18:55] Speaker 01:
They're not treated as state employees.

[00:18:57] Speaker 03:
Is the record solid about that and you just know that or is there something in the record to address that?

[00:19:04] Speaker 01:
I'm not sure.

[00:19:04] Speaker 01:
You're testing my memory.

[00:19:07] Speaker 01:
That was addressed in the briefs to this court.

[00:19:10] Speaker 01:
I don't recall that the district court specifically looked at that.

[00:19:14] Speaker 01:
As your honors know, this autonomy control factor

[00:19:18] Speaker 01:
think Hennessy says you can look at as many as nine sub-factors.

[00:19:22] Speaker 01:
I'm not sure.

[00:19:23] Speaker 01:
Obviously, the lower court didn't have the benefit of Hennessy at the time, but she did look at a number of different issues, but I don't believe there was evidence about Moheela's employees in the record at that time.

[00:19:36] Speaker 00:
Okay.

[00:19:36] Speaker 00:
Jose, could I get you to turn to the finances?

[00:19:39] Speaker 00:
Yes.

[00:19:39] Speaker 00:
Because that seems to be the factor

[00:19:42] Speaker 00:
potentially that your case is the weakest done.

[00:19:46] Speaker 00:
So I'm just wondering, for example, I know this is the second step, but the fact that a judgment here would not go against the state treasury and the fact, correct me if I'm wrong, the fact that it's basically financially independent.

[00:20:05] Speaker 01:
Yes.

[00:20:06] Speaker 01:
So I would push back only on the phrase financially independent.

[00:20:10] Speaker 01:
OK.

[00:20:10] Speaker 01:
But with respect to your assessment of the judgment liability factor, I do not push back on the idea that it's our most vulnerable point.

[00:20:20] Speaker 01:
If Mr. Good's lawsuit, if he received a judgment or a settlement from Mohila, Mohila would pay that in the first instance.

[00:20:31] Speaker 01:
A couple things I would point out in that regard.

[00:20:33] Speaker 01:
One, it's our view that Hennessey clarified that that inquiry, which I think you just commented on, goes to the twin reasons behind.

[00:20:43] Speaker 00:
At the end.

[00:20:46] Speaker 00:
Let's just assume that the four factors are mixed and we have to get to that factor.

[00:20:53] Speaker 00:
Help me understand how you can

[00:20:57] Speaker 00:
how you prevail when you concede that the judgment would not be against the state treasury?

[00:21:04] Speaker 01:
I would refer this court to prior decisions from this court, one being Sturdivant, which I believe is from 2000, one being Colby from 2017.

[00:21:16] Speaker 01:
I think Judge Holmes was on the panel.

[00:21:19] Speaker 01:
Those are decisions where the court employed the full factors, but nevertheless found in favor of arm of the state immunity because the other factors weighed in favor of that finding.

[00:21:33] Speaker 00:
OK.

[00:21:34] Speaker 00:
But help me understand, then, how the fact that the direct judgment would not be against Mohina.

[00:21:43] Speaker 00:
How do you get around that, if that's kind of the tiebreaker at the end?

[00:21:47] Speaker 01:
Well, I think it's tough to answer because I think the first win reason weighs in Mohila's favor, avoiding an affront to the state of Missouri.

[00:21:57] Speaker 00:
Okay, well maybe you can help me understand that.

[00:22:00] Speaker 00:
Okay.

[00:22:00] Speaker 00:
How is it an affront?

[00:22:03] Speaker 01:
It's an affront because of what

[00:22:05] Speaker 01:
in large part what the state of Missouri has said about MOHELA.

[00:22:09] Speaker 01:
In the state of Missouri's brief to the Supreme Court, which the Supreme Court, although admittedly deciding a different issue, accepted, here's what the state of Missouri through the Attorney General's office says.

[00:22:25] Speaker 01:
MOHELA is a state created and state controlled public entity that performs essential public functions for the state.

[00:22:32] Speaker 01:
As such, Moheela is part of Missouri.

[00:22:34] Speaker 01:
The state of Missouri further argued that it's part of state government because the state created it by special law, established its powers, assigned it to a state agency, preserved its authority over Moheela's assets, and retained the right to abolish Moheela.

[00:22:51] Speaker 01:
So I do agree with opposing counsel that this phrase, avoiding an affront to the state of

[00:22:57] Speaker 01:
is not particularly developed.

[00:23:01] Speaker 01:
But I think you can look at the state's recent actions and you can conclude that holding that Mojila is not entitled to immunity, especially given its statutory framework, would be an affront to the state.

[00:23:14] Speaker 00:
Well, and I'm wondering about that factor because it helped me understand, maybe you're saying it's hard to give it a meaning, but

[00:23:23] Speaker 00:
How does it mean something more than the state now is declaring this an arm of the state?

[00:23:31] Speaker 01:
I'm not sure I follow that.

[00:23:32] Speaker 00:
Well, I mean, what you're reading to me, the state has said this is an arm of the state.

[00:23:37] Speaker 00:
That's what we're here to decide.

[00:23:39] Speaker 00:
So what beyond that potentially could mean a front to the state?

[00:23:47] Speaker 01:
Well, the only things that come to mind are that.

[00:23:50] Speaker 01:
While not directly liable for a judgment, it's clear, as laid out in Biden, that financial harm to Mohilla results in direct financial harm to the state of Missouri.

[00:24:04] Speaker 01:
So there may be an interest there.

[00:24:06] Speaker 01:
I didn't hear that now.

[00:24:07] Speaker 01:
What?

[00:24:08] Speaker 01:
I said in Biden, the court found, while looking at standing, that financial harm to Mohilla is a direct financial harm to the state of Missouri.

[00:24:19] Speaker 01:
which is why they found that the state had standing.

[00:24:23] Speaker 03:
Direct financial harm, but in a different sense than Hennessy thinks of what financial harm would be, right?

[00:24:28] Speaker 03:
It's not direct in the sense that... Correct.

[00:24:31] Speaker 01:
I was more trying to explain how finding that Mohilla is not entitled to 11th immunity could be an affront to the state.

[00:24:42] Speaker 01:
I fully can see that there is not direct liability in several other circuits.

[00:24:50] Speaker 01:
They look more functional or practical liability.

[00:24:53] Speaker 01:
I think we'd have a stronger argument there, but the reality is if you pin us to direct liability, we're on the hook for a judgment in the first instance.

[00:25:06] Speaker 04:
So there's this other entity, Mojifa.

[00:25:09] Speaker 04:
Yes, sir.

[00:25:11] Speaker 04:
If Mojifa is not a state entity or an arm of the state, why would Mojifa be?

[00:25:18] Speaker 01:
OK.

[00:25:19] Speaker 01:
Well, there's some differences, I think.

[00:25:22] Speaker 01:
The first and easiest is Mojifa, as counsel said, was created after Mojifa and after the Menorah decision, as I recall.

[00:25:32] Speaker 01:
Used different language when describing Mojifa.

[00:25:35] Speaker 01:
With respect to Mojifa, they use this language.

[00:25:38] Speaker 01:
They're declared to be performing a public function in behalf of the state.

[00:25:43] Speaker 01:
With respect to Mojila, they said they're performing a public function and they're to be a separate public instrumentality of the state.

[00:25:54] Speaker 01:
In behalf of and of the state, we argue, are different things.

[00:25:57] Speaker 01:
There's also significant differences in Mojifa and Mojila and how they operate under Missouri statutes that create them.

[00:26:06] Speaker 01:
Mojifa statutes do not impose limits on bond issuances.

[00:26:09] Speaker 01:
and financial restrictions to the degree that are imposed on Mojila by statute.

[00:26:15] Speaker 01:
Mojila does not provide money directly to the state as Mojila does.

[00:26:20] Speaker 01:
And unlike Mojila, Mojila actually has two members of an executive agency of the state of Missouri on its board, the entity MDHE within which Mojila is placed.

[00:26:34] Speaker 01:
And so we would argue that there's differences both in the definitional structure, but also in terms of various things that are imposed on Mohela and how they operate.

[00:26:46] Speaker 03:
What significance do we attach to the question of the state's ability to abolish Mohela?

[00:26:53] Speaker 03:
I mean, is that really relevant at all?

[00:26:54] Speaker 03:
We're always talking about, with these public creatures that have been created, the state can eliminate all of them.

[00:27:03] Speaker 03:
Why does that weigh in the balance at all?

[00:27:06] Speaker 01:
I think it just goes in line with the other factors in terms of why there's control there.

[00:27:11] Speaker 01:
At the end of the day, the fact that they could just do away with Mohila, I think helps further establish the control that's there.

[00:27:22] Speaker 01:
It is a point that the Supreme Court relied on in Biden.

[00:27:27] Speaker 01:
Whether it's more significant than that, I don't have a great response for you at this time.

[00:27:35] Speaker 01:
So with my time short, I would just say district court found three of the four, even if you put Biden aside, district court put three of the four factors in Mohila's favor.

[00:27:47] Speaker 01:
On the finances factor, the one that weighed against us, the court said it was neutral to slightly in our favor before addressing the judgment issue, which our position has now been moved to the twin reasons.

[00:28:00] Speaker 01:
And so we think the judgment should be affirmed just based on

[00:28:03] Speaker 01:
the application of the four primary factors.

[00:28:07] Speaker 01:
And I thank you very much for your time.

[00:28:24] Speaker 02:
I'll just make a few quick points.

[00:28:26] Speaker 02:
First, just to reiterate, Biden versus Nebraska did not engage in any of the, did not consider any of the factors this court considers in determining whether an entity is an arm of the state, including its control over property, contracts, the right to sue or be sued, and the financial independence of the entity from the state.

[00:28:50] Speaker 02:
opposing counsel mentioned Moheel operates for the benefit of the state.

[00:28:54] Speaker 02:
I will point out that there's no, there's almost certain, Moheel has 5.2 million federal accounts, student loan accounts at its services.

[00:29:05] Speaker 02:
We don't have a geographic reach for that, but we suspect if there were evidence in the record, it would show that Moheel has a nationwide reach, including into Kansas as Mr. Good or Mr. Good is located.

[00:29:19] Speaker 02:
Opposing counsel confirmed that Moheel's employees are not state employees.

[00:29:24] Speaker 02:
I would contrast that with the Fourth Circuit's decision in the Obert cases where the employees of the Pennsylvania entity were state employees and did participate in the state retirement plan.

[00:29:38] Speaker 02:
But nonetheless, that entity was not an arm of the state.

[00:29:41] Speaker 02:
And the last point I would make is to just refer the court to the Burris case in the Seventh Circuit.

[00:29:47] Speaker 02:
which involve a state lottery commission that has obvious financial benefits for the state, but nonetheless, that was not an arm of the state.

[00:29:55] Speaker 02:
The financial benefit to the state is not as much a relevant consideration as the entity's independence from the state, independence of state subsidies.

[00:30:05] Speaker 02:
If the court has no further questions, I'll rest on that.

[00:30:08] Speaker 03:
Thank you, Council.

[00:30:09] Speaker 03:
Thank you both for your fine arguments.

[00:30:12] Speaker 03:
As noted earlier, we'll take a ten-minute break.

[00:30:16] Speaker 03:
and then we'll return.

[00:30:17] Speaker 03:
Thank you.

[00:30:18] Speaker 00:
The case is submitted.