3 CIR 548 (1978)



ASSOCIATION, An Unincorporated |
Association, |
Plaintiff, |
NEBRASKA, A Political |
Subdivision, |
Defendant. |

Filed October 4, 1978.


For the Plaintiff:Theodore Kessner

For the Defendant: A. Stevenson Bogue

Before: Judges Wall, Kratz and McGinley.


This action brings before us the dispute between ESU 15 Ed. Assn. and ESU 15. The Structure of the defendant as created by the Legislature presents us with substantial initial jurisdictional and constitutional issues for resolution prior to reaching the substantive question, which has been reduced by stipulation to the single issue of whether the unit and the districts it serves are joint employers.

Section 79-2201, R.R.S. 1943, provides:

"In order to provide supplementary educational services to local school districts, there are hereby established seventeen educational service units. The official name of such units shall be Educational Service Unit No. __ of the State of Nebraska, the individual number thereof to be determined as provided in section 79-2202."

Significantly, the units are not declared bodies corporate or politic, nor given directly the power or capacity to sue and be sued. Cf. §79-2639 or §79-901, R.R.S. 1943. Nor are they specifically declared instrumentalities of the State of Nebraska. Cf. §79-2104, R.R.S. 1943. In its only consideration of the status of these units, the Supreme Court found the tax levied by the units to be constitutional as against a challenge under the Constitution of Nebraska, Article VII, Section 6. Frye v. Haas, 182 Neb. 73, 152 N.W.2d 121 (1967). The tax was not challenged under Article VII, Section 1A of the Constitution. See State v. Tallon, 192 Neb. 201, 219 N.W. 2d 454 (1974). In Frye v. Haas, supra, the Supreme Court assumed for purposes of decision that the units were corporations created by special statute, holding this proper under Article XII, Section 1, Constitution of Nebraska, and that the units were properly created. Left specifically undecided were the questions of constitutionality under other provisions of the Nebraska Constitution and the exact status of the units as to corporate status and powers.

The boards of the units have the power to purchase, lease, or lease-purchase real estate (§79-2201.01, R.R.S. 1943), to issue warrants (§79-2203.03, R. R. S. 1943), to determine the participation of the unit in providing supplementary educational services (§79-2204, R.R.S. 1943), to employ and fix the compensation and duties of an administrator and other professional and clerical assistants (§79-2205, R.R.S. 1943), to locate its office, acquire office space and personal property (§ 79-2206, R.R.S. 1943), provide school systems with supplementary services, plan and coordinate educational services within its area, and contract for educational services with the board of any other unit, any school district, any other educational agency or any appropriate state or federal officer or agency (§79-2208, R.R.S. 1943), to receive and expend funds and utilize personnel or services lawfully offered by any state or federal agency or unit (§79-2209, R.R.S. 1943), and to provide health, accident and life insurance coverage for its members (§79-2214, R.R.S. 1943). The bond of the treasurer runs to the board and not to the unit, §79-2207, R.R.S. 1943.

The repeated use in the granting of powers of the term "board," together with the apparently deliberate failure to designate E.S.U.s as "bodies corporate" convinces us that the Legislature created something other than a public corporation. While this may have significance for the personal liability of the members of the boards of E.S.U.s, as hereinafter explained, it does not affect our decision herein.

In State v. Stuht, 52 Neb. 209, 71 N.W. 941 (1897), our Supreme court held that the mere fact that the Legislature may have acted imperfectly, or have created a governmental body without all necessary powers, does not mean that the body so attempted to be created does not exist. It appears here that the Legislature created the units without giving board members the explicit shield of protection from individual liability, and without the explicit right to sue and be sued. The personal liability of board members is irrelevant to this inquiry. Section 25-313, R.R.S. 1943 grants any company or association formed for the purpose of holding property in the state, the right to sue and be sued in the usual name it is known by. Thus, if the legislative incorporation is imperfect, the grant of the power to own real estate carries with it the right to sue and be sued. In addition, the right to sue and be sued may be implied from other powers granted. See e.g., Clinton, J., in dissent, State v. Tallon, 196 Neb. 603, 244 N.W. 2d 183, 188 (1976). We hold the units to have the capacity to sue and be sued in the name given them by the Legislature.

We then turn to the question of whether the units are arms of state government, or are local subdivisions. The question of education as a state or local matter has divided our Supreme Court twice in the last decade. See State v. Tallon, 192 Neb. 201, 219 N.W. 2d 454 (1974) and State v. Tallon, 196 Neb. 603, 244 N.W. 2d 183 (1976). We find the units here to meet the criteria of Tallon II, free of a statewide board, and also free of a compulsory tax levy, operating much as a local school board. We note also that contemporary accounts of the formation of the units reveal them to have been provided, in part, to avoid some school district consolidation and to permit the people to maintain local control of their schools - a principle to which Nebraskans are fiercely devoted. We thus find the units to be local subdivisions of the governmental powers of the people. This solves two problems for us - the statute is constitutional under Tallon II, and the Governor and Attorney General need not be served under §48-813, R.S. Supp. 1976.

We turn, finally, to the question of joint employment by the unit and by the local school district. The unit contracts for professional services with the several individuals providing those services, as authorized by §79-2205, R.R.S. 1943. It then contracts to provide professional services to local school districts, as authorized by §79-2208, R.R.S. 1943. The districts reimburse the units for the total cost, including administration and "overhead" for certain of the professional employees. School nurses are generally provided by the ESU without reimbursement, but in two instances, where the school districts concerned desired to have a particular person continue to be assigned to them, the districts reimbursed the ESU for portions of the nurses' salaries, but not to include "overhead." T80 and Ex. B. As to one teacher, the unit uses a district employment form, but signs for its board (Ex. I) and as to another teacher, the unit uses a district form and purports to contract on behalf of the district. As noted above, the units are creatures of government of very specifically provided and limited powers. We can find no authority for the unit to act as agent of a district - on the contrary, the unit is directed to plan and coordinate supplemental services itself - and we, therefore, hold so much of Ex-J as purports to make the unit the agent of the district, to be surplusage, and the contract to be enforceable against the unit only.

The unit determines which services to offer, Ex. D, and has, on occasion, turned down requests from districts. While within the premises of a district, the local administrator has direct supervisory authority over unit professionals working on the offered program. Ex. D. Local administrators do not assign unit personnel to duties outside the unit's programs, but do evaluate the performance of unit personnel while in their schools. Ex. H. Unit personnel are hired, disciplined and discharged only by the unit, but the unit administrator generally accedes to local requests to assign or not assign a particular person to a given school. Based on all the evidence, we find the management of personnel of the unit to be centralized in the unit, with only peripheral assistance in evaluation and timekeeping by the districts. There is no all pervasive control or supervision by the districts, such as found on the part of the state by the Supreme Court in AFSCME v. Lancaster County, 196 Neb. 89, 241 N.W. 2d 523 (1976). On the contrary, the statutes clearly vest control of employees in the unit alone. There is no joint employer relationship. We note specifically the testimony of Mr. Hagan, the unit's administrator, that when a district discontinued a program and part of a professional's time thereby became unused, the unit "bore the loss."

Accordingly, we find the appropriate unit to be:

All certificated teachers, nurses and therapists, including special education teachers, employed by Educational Service Unit No. 15 of the State of Nebraska, excluding artists in residence, administrative and supervisory employees, and office clerical employees.

ORDERED, that a secret ballot election be conducted within a reasonable time from the date of this Opinion within the unit above described.

IT IS FURTHER ORDERED that the Court's representative in the conduct of such election shall be Judge Benjamin M. Wall and that the election shall be held under the immediate supervision of the Clerk of the Court, Janet Stewart Arnold.

IT IS FURTHER ORDERED that Janet Stewart Arnold is appointed hearing examiner to determine initially all questions arising during the election process.

IT IS FURTHER ORDERED that counsel for the parties shall meet with the Clerk of the Court on October 13, 1978, at 10:00 o'clock A.M., in the office of the Court at Lincoln, Nebraska, to agree upon or have determined all matters not covered by Rule 9.