TEDCO entitled to immunity in former employee’s discrimination lawsuit, 4th Circuit rules

The Maryland Technology and Development Corporation is considered an arm of the state of Maryland and cannot be sued by a former employee alleging discrimination and retaliation, the U.S. Court of Appeals for the 4th Circuit ruled Tuesday.

In a published opinion written by Judge Paul V. Niemeyer, a three-judge panel for the 4th Circuit affirmed the district court’s finding that TEDCO is entitled to immunity under the 11th Amendment because Maryland, while not directly legally liable for a judgment against TEDCO, would be “functionally” liable.

“To survive as a viable entity, TEDCO must have the money that it receives from the State on a yearly basis to pay its expenses and fund its operations,” the 4th Circuit wrote. “In other words, TEDCO is not ‘self-sustaining.’ ”

In April 2022, Angela Singleton sued TEDCO in federal district court, alleging she experienced sex-based and race-based discrimination during her eight years of employment with the company, in addition to claims of retaliation and defamation.

In a September 2022 opinion, the district court granted TEDCO’s motion to dismiss Singleton’s case for lack of jurisdiction based on 11th Amendment immunity. On appeal, Singleton argued the district court’s ruling overlooks the “vast reserves of substantial moneys” that TEDCO has available “to pay any judgment levied against it.”

Singleton also argued, among other claims, that TEDCO’s funds are held in segregated accounts apart from general state funds, including an “Enterprise Fund” that was projected to end the 2023 fiscal year with approximately $2.5 million, and a “Reserve Fund” that Singleton noted had approximately $22 million including non-cash assets.

The 4th Circuit rejected Singleton’s arguments, finding instead that it is “far from clear” that TEDCO could use either of these two funds to pay judgments against it.

“Even if TEDCO were to pay a judgment from these funds, its overarching financial relationship with the State and the State’s mission would be undermined, and payment of a judgment thus would end up ‘interfer[ing] with the State’s fiscal autonomy,” the 4^th Circuit wrote.

Counsel for Singleton did not respond to a request for comment on Wednesday.

The Maryland General Assembly created TEDCO to foster the growth of new business in Maryland and ultimately for the benefit of the state’s economy and Maryland residents, the 4th Circuit wrote in its opinion. TEDCO then administers more than a dozen funds and programs created by state law, much like a private corporation, the court said.

In fiscal year 2021, Maryland allocated approximately $27 million to TEDCO, with approximately $2.3 million used for the company’s operations. As such, Maryland plays an active role in determining TEDCO’s direction and priorities, the 4th Circuit noted, finding TEDCO is an arm of the state and the state has structural control over the company.

The state treasurer holds TEDCO’s funds, the state comptroller is required to account for the company’s funds and TEDCO must report annually to the governor and General Assembly, the 4th Circuit wrote.

A spokesperson for the Maryland Office of the Attorney General, who represented TEDCO, declined to comment.

In addition to her case against TEDCO, Singleton also filed a civil action in district court against three TEDCO employees, which is currently pending before that court.