DIXON O’BRIEN, et al., Plaintiffs-Appellants, v. VILLAGE OF LINCOLNSHIRE, a Municipal Corporation, et al., Defendants-Appellees.
No. 19-1349
United States Court of Appeals For the Seventh Circuit
ARGUED SEPTEMBER 4, 2019 — DECIDED APRIL 7, 2020
Before ROVNER, SCUDDER, and ST. EVE, Circuit Judges.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:18-cv-01310 — John Robert Blakey, Judge.
I.
In reviewing a grant of a motion to dismiss, we are required to assume that the facts alleged in the complaint are true. Savory v. Cannon, 947 F.3d 409, 411–12 (7th Cir. 2020). At the time they filed their Complaint, both O’Brien and Cook were residents of Lincolnshire.1 Both paid a variety of municipal taxes including property and sales taxes to the Village. O’Brien is a member of the International Union of Operating Engineers, Local 150, AFL-CIO. Cоok is a member of Carpenters Local 250, an affiliate of the Chicago Regional Council of Carpenters, United Brotherhood of Carpenters and Joiners of America. We will refer to them collectively as the Unions. The Unions represent members who reside in, work in, and pay taxes to Lincolnshire.
Under Illinois law:
The corporate authorities of each municipality may provide for joining the municipality in membership in the Illinois Municipal League, an unincorporated, nonprofit, nonpolitical associa-
tion of Illinois cities, villages and incorporated towns and may provide for the payment of annual membership dues and fees. The member cities, villages and incorporated towns acting by, through and in the name of such instrumentality may provide and disseminate information and research services, and may do all other acts for the purpose of improving local government.
Consistent with the statutory description of the League, the organization’s Bylaws provide that the League:
shall be an instrumentality of its member cities, villages and incorporated towns. Its purpose shall be to cooperate with its member municipalities in the development and improvement of their governments and to promote efficient municipal administration. The League shall furnish such service to municipalities as may be determined by the Board of Directors and through the Executive Director.
The plaintiffs allege that the League is a “private, nonpublic organization” that, contrary to the statutory description of the League as nonpolitical, engages in political activity including lobbying and contributing to candidates.3 According to the
The March 23, 2015 IML email acknowledged ongoing correspondence between the IML and the Governor’s office, stating, “[t]he Governor’s office has asked that we follow-up with mayors and managers on the Turnaround Agenda information and provide a resolution … that is supportive of his administration’s effort to address collective bargaining, unfunded mandates, prevailing wage requirements, workers’ compensation costs and legal empowerment zones, among other things noted in the attachment … [i]f you do adopt it locally, please send me a copy electronically … and mail me a coрy to the Governor’s office …”
The plaintiffs complain that, as tax-paying residents of Lincolnshire, some of their money goes to support the Village’s payment of dues to the League, thereby subsidizing private speech with which the plaintiffs disagree. O’Brien demanded a refund of the portion of his tax money that went to fund Lincolnshire’s dues in the League, a demand that has gone unanswered by the Village. Citing these allegations, the first count of the Complaint asserted that Lincolnshire violated the First Amendment rights of O’Brien and Cook by compelling them to support private speech with which they disagreed. The second count pled that Lincolnshire violated the First Amendmеnt rights of O’Brien, Cook and the members of their respective Unions who reside in the Village by compelling
On the defendants’ motion, the district court dismissed the federal claims and declined to exercise supplemental jurisdiction over the state law claims. The court rejected the defendants’ assertion that the plaintiffs lacked standing to bring their claims, finding that they adequately alleged an injury-in-fact as municipal taxpayers. See Hinrichs v. Speaker of House of Representatives of Indiana General Assembly, 506 F.3d 584, 600 n.9 (7th Cir. 2007) (municipal taxpayer challenges to municipal action are not subject to the same stringent standing requirements as state and federal taxpayers seeking to challenge state and federal actions, respectively); Clay v. Fort Wayne Community Schools, 76 F.3d 873, 879 (7th Cir. 1996) (municipal taxpayers have standing when they object to a disbursement of funds occasioned solely by the alleged unconstitutional conduct). But the court concluded that the plaintiffs’ First Amendment claims failed as a matter of law because the challenged
II.
On appeal, the plaintiffs contend that the district court erred in dismissing their First Amendment claims for violation of their speech and association rights as well as the Equal Protection claim because Lincolnshire compelled them to subsidize private speech on matters of substantial public concern. They also contend that the district court abused its discretion in dismissing the Complaint with prejudice. Finally, they contend that the district court abused its discretion by denying their post-judgment
A.
We review de novo the district court’s decision to dismiss claims pursuant to
In the first two federal counts of the Complaint, the plaintiffs alleged that the Village violated their First Amendment rights by using their tax dollars to join the League, thereby compelling them to subsidize the private speech of the League and to associate with the League. In each instance, they emphasized that the League is a private organization that issued private speech with which they disagree. As we detailed above, the objectionable speech consisted of emаils from the League to its own members purportedly encouraging them to adopt then-Governor Rauner’s “Turnaround Agenda.” The plaintiffs rely heavily on Janus v. American Federation of State, County, and Municipal Employees, Council 31, 138 S. Ct. 2448 (2018), and other cases addressing compelled or subsidized speech for the proposition that the government may not force a citizen to subsidize private speech with which the citizen disagrees. But Janus and the cases prohibiting the government from compelling subsidies in support of private speech are a poor fit for the federal counts alleged by the plaintiffs.
In Janus, the Supreme Court considered an Illinois law that forced public employees to subsidize a union, even if they chose not to join the union and strongly objected to the positions that the union took in collective bargaining. 138 S. Ct. at 2459–60. The Court concluded that the arrangement “violates the free speech rights of nonmembers by compelling
The plaintiffs relied on Janus to contend that they were wrongfully compelled to support, through mandatory taxes paid to Lincolnshire, the speech of the League, which they characterized on appeal as a “private, third-party entity that engaged in lobbying efforts that were initiated by other third parties.” Brief of Appellants, at 17–18. They also cited Johanns v. Livestock Marketing Association, 544 U.S. 550 (2005), and other cases in arguing that the “government can violate the First Amendment when it compels individuals to subsidize the speech of a private party.” Brief of Appellants at 17. Johanns is relevant to determining the outcome here, but not in the
In Johanns, the Court considered a First Amendment challenge to the Beef Promotion and Research Act (“Beef Act”), as implemented by the Secretary of Agriculture (“Secretary”) through a Beef Promotion and Research Order (“Beef Order”). The Beef Act announced a federal pоlicy of promoting the marketing and consumption of beef, using funds raised by an assessment on cattle sales and importation. The statute directed the Secretary to implement the Beef Order by appointing a Beef Board consisting of beef producers and importers, and imposing a $1 per head assessment on all sales or importation of cattle. The Beef Board, in turn, created an Operating Committee consisting of ten Beef Board members and ten representatives named by a federation of state beef councils. Although only half of the members of the Operating Committee were appointed by the Secretary, all were subject to removal by the Secretary. The Operating Committee was charged with designing promotional campaigns for beef products, subject to the approval of the Secretary. Johanns, 544 U.S. at 553–54.
More than a billion dollars was collected through the assessment and a large portion went to advertising promotions such as the “Beef. It’s What’s for Dinner.” campaign. Associations of beef producers who were required to pay the assessment sued the Secretary, objecting on First Amendment grounds to the compelled subsidy of speech with which they
“Compelled support of government”—even those programs of government one does not approve—is of course perfectly constitutional, as every taxpayer must attest. And some government programs involve, or entirely consist of, advocating a position. “The government, as a general rule, may support valid programs and policies by taxes or other exactions binding on protesting parties. Within this broader principle it seems inevitable that funds raised by the government will be spent for speech and other expression to advocate and defend its own policies.”
Johanns, 544 U.S. at 559 (quoting Board of Regents of University of Wisconsin System v. Southworth, 529 U.S. 217, 229 (2000)). Prior to Johanns, the Court had assumed, though not yet held,
The plaintiffs asserted that, because the content of the speech was effectively controlled by a nongovernmental entity—the Operating Committee—the advertisements could not be considered government speech. The Court rejected the premise of the argument and declined to consider whether the Operating Committee was “governmental” or “nongovernmental.” Johanns, 544 U.S. at 560 n.4. Instead, the Court concluded that the message of the promotional campaigns wаs effectively controlled by the government itself. Congress and the Secretary “set out the overarching message and some of its elements, and they have left the development of the remaining details to an entity whose members are answerable to the Secretary (and in some cases appointed by him as well).” Johanns, 544 U.S. at 561. Moreover, the Secretary exercised final approval authority over the wording of the promotional campaign. All of the messages were reviewed by government officials both for substance and wording, and some were rewritten or rejected. Government officials also attended and participated in the meetings where proposals were developed. Further:
[w]hen, as here, the government sets the overall message to be communicated and approves every word that is disseminated, it is not precluded from relying on the government-speech doctrine merely because it solicits assistancе from nongovernmental sources in developing specific messages.
The Court also rejected a contention that the beef program did not qualify as government speech because it was funded by a targeted assessment rather than by general revenues, which, the plaintiffs argued, had the dual effect of giving control not to politically accountable legislators but to a narrow interest group, and also creating a perception that the advertisements speak for all beef producers.
Citizens may challenge compelled support of private speech, but have no First Amendment right not to fund government speech. And that is no less true when the funding is achieved through targeted assessments devoted exclusively to the program to which the assessed citizens object.
Johanns, 544 U.S. at 562. It was enough that a federal statute authorized the program and prescribed the basic message,
and specific requirements for the promotions’ content are imposed by federal regulations promulgated after notice and comment. The Secretary of Agriculture, a politically accountable official, oversees the program, appoints and dismisses the key personnel, and retains absolute veto power over the advertisements’ content, right down to the wording. And Congress, of course, retains oversight authority, not to mention the ability to reform the program at any time. No more is required.
Following Johanns, the Court reiterated that the First Amendment does not regulate government speech. See e.g., Walker v. Texas Division, Sons of Confederate Veterans, Inc., 135 S. Ct. 2239, 2245 (2015); Pleasant Grove City, Utah v. Summum, 555 U.S. 460, 467 (2009). “A government entity has the right to ‘speak for itself.’” Pleasant Grove, 555 U.S. at 467 (quoting Southworth, 529 U.S. at 229). A government may say what it wishes and select the viewpoints that it wants to express. Pleasant Grove, 555 U.S. at 467–68. See also Walker, 135 S.Ct. at 2245 (when the government speaks, it is not barred by the First Amendment from determining the content of what it says).
Indeed, it is not easy to imagine how government could function if it lacked this freedom. If every citizen were to have a right to insist that no one paid by public funds express a view with which he disagreed, debate over issues of great concern to the public would be limited to those in the private sector, and the process of government as we know it radically transformed.
Pleasant Grove, 555 U.S. at 468 (internal quotation marks and citations omitted). See also Walker, 135 S. Ct. at 2246 (noting that a city government must have the freedom to choose its message in order to promote its preferred programs such as recycling). Echoing Johanns, the Court said that a “government entity may exercise this same freedom to express its views when it receives assistance from private sources for the purpose of delivering a government-controlled message.” Pleasant Grove, 555 U.S. at 468. Government speech is not
With these principles in mind, we turn to the salient facts alleged in the Complaint as supplemented by the documents that are attached to the complaint. Lincolnshire is the only defendant named in the three federal counts, and relief is sought from Lincolnshire alone. The only bad act alleged is the Village’s statutorily authorized voluntary use of taxpayer funds to join the League, a purportedly private organization, which in turn issued the speech that offended the plaintiffs. The central question is whether, in joining the League, the Village has compelled the plaintiffs to subsidize private speech or that of the government itself.7
Although the parties dispute whether the League may be characterized as a private or governmental organization, such a designation is not determinative of whether the plaintiffs have been compelled to subsidize private speech.9 Johanns, 544 U.S. at 560 & n.4 (declining to consider whether the Operating Committee was “governmental” or “nongovernmental” and instead turning to whether the message of the promotional campaigns was effectively controlled by the government itself). Based on the plaintiffs’ own allegations, the conduct of joining the League and the message at issue here are ultimately controlled by the government of Lincolnshire itself and also by the League’s other governmental members. That the Village
Lincolnshire itself, which the plaintiffs agree (as they must) has the right to speak for itself and also a right to associate, voluntarily joined the League as it is authorized to do by statute. As a member, Lincolnshire could adopt the speech of the League if it wished or could denounce the speech or leave the League at any time if it disagreed with the message issued. But as the plaintiffs pled, Lincolnshire was unique in Illinois in its whole-hearted adoption of the League’s promotion of the Governor’s Turnaround Agenda. It was the only unit of local government to adopt an ordinance legalizing local “right to work zones,” as promoted in the Turnaround Agenda. Although the plaintiffs vehemently disagree with the Turnaround Agenda, they cannot plausibly claim that Lincolnshire—by itself or through an association of local governments—lacked the right to speak and to take a position on that Agenda.
Indeed, the plaintiffs conceded at oral argument that if the League had acted as described in the statute, the speech at issue would properly be characterized as government speech that is not subject to First Amendment scrutiny. The problem, they assert, is that the League exceeded the scope of its
It is true that the statute describes the League as “nonpolitical,” but the entire purpose of the League is to act as an instrumentality of its governmental members in order to “provide and disseminate information and research services, and … do all other acts for the purpose of improving local government,” all of which can be described as political acts in the sense that they are related to government and governing.10 See Concise Oxford English Dictionary, Oxford University Press, Eleventh Edition (2004) (defining “political” as “relating to the government or public affairs of a country”). It is difficult to see how the League could accomplish its purpose as described by statute unless it could lobby its own members and the state legislature on issues related to improving local government. To adopt the plaintiffs’ definition of the word
As for the new allegations that the Board did not actually control the message but allowed the Executive Director to craft the message with the influence of third parties, the plaintiffs do not dispute that, had the Executive Director engaged in rogue actions beyond his authority or with which the Board disagreed, the Board was entitled to remove him, and all members were within their rights to denounce the message and withdraw from the voluntary association.11 Lincolnshire did not denounce the message or terminate its membership in the
In short, the facts alleged here bear no resemblance to Janus, where the plaintiffs alleged that they were compelled to support private speech issued by unions and not controlled by the government. The plaintiffs here pled themselves out of court when they alleged that Lincolnshire did nothing more than join the League, a voluntary association of local governments, an act it has every right to do, and that the League issued speech to its own members, under Bylaws that expressly gave the League‘s governmental members ultimate control over the association‘s message. The plaintiffs failed to allege private control of the speech; they instead pled facts that conclusively demonstrated that the conduct and messages at issue were governmental speech and association not subject to First Amendment scrutiny.
The viability of the plaintiffs’ Equal Protection claim depends on the validity of the First Amendment claims. Because Lincolnshire did not violate the plaintiffs’ rights under the First Amendment, the Equal Protection claim fails as well.
B.
The plaintiffs next argue that the court erred by dismissing the federal claims with prejudice, and by denying their Rule 59(e) motion to reconsider in order to allow them to seek leave to file a Fourth Amended Complaint. In particular, the plaintiffs contend that they should have been allowed an opportunity to amend because the Complaint that the court dismissed was the first one to include the League as a defendant. We review a district court‘s denial of a
In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be
“freely given.” Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.
Foman v. Davis, 371 U.S. 178, 182 (1962).
However, once a district court has entered final judgment dismissing a case, the plaintiff may not amend under
In this case, the district court used the higher standard of
O‘Brien and his union filed the first complaint against Lincolnshire on February 21, 2018, raising the same federal claims that are at issue here. A week later, prior to the filing of an answer, O‘Brien аnd his union filed an amended complaint containing additional factual allegations and further explanation of the legal basis of the constitutional claims. In March 2018, Lincolnshire answered the amended complaint, and in May, the plaintiffs moved for leave to file a second amended complaint in order to add Cook and his union as plaintiffs. The court granted that motion, and two weeks later, on May 21, 2018, Lincolnshire moved to dismiss the second amended complaint. In that motion, the Village challenged the plaintiffs’ standing and also argued that the payment of dues to the League and the adoption of the League‘s speech constituted government speech and association that was not subject to First Amendment review.
The day after Lincolnshire filed its motion to dismiss, the district court advised the plaintiffs to review the court‘s Standing Order regarding motions to dismiss, and elect either to amend their most recent complaint or proceed with briefing on the motiоn to dismiss:
When a motion to dismiss is filed, the non-moving party has a right to amend its pleading once within 21 days.
Fed. R. Civ. P. 15(a)(1)(B) . If the non-moving party elects not to amend its pleading to address the purporteddeficiencies raised by the motion (or seek leave to amend its pleading again), then the motion to dismiss will proceed in its normal course and, if the moving party prevails, the Court may dismiss the case with prejudice and not provide further opportunity to amend the pleading absent extraordinary circumstances. If the non-moving party amends its pleading, then the moving party (unless ordered otherwise by the Court) shall file within 21 days of the amended pleading either: (1) an answer or (2) a new motion to dismiss.
Standing Order of Judge John Robert Blakey, https://www.ilnd.uscourts.gov/judge-info.aspx?RxIItJ+3ldN99GnKt+Q4wg== (last visited March 19, 2020). Part of this Standing Order was problematic. “A district court does not have the discretion to remove the liberal amendment standard by standing order or other mechanisms requiring plaintiffs to propose amendments before the cоurt rules on a
The plaintiffs elected to amend and filed their Third Amended Complaint (the Complaint at issue in this appeal) on June 19, 2018. The Complaint contained new factual allegations related to standing, and added two state law counts. One of those new counts was filed against the League, the first time the League was named as a defendant in the case. On August 3, the defendants moved jointly to dismiss the Complaint. In that motion, they argued that the plaintiffs lacked standing to
The plaintiffs did not seek leave to amend the Complaint again but instead responded to the motion to dismiss. In that response, the plaintiffs asked only that the court deny the motion; they did not request in the alternative for leave to amend the Complaint. The court heard oral argument on the motion to dismiss on September 13 and took the motion under advisement. At the same time, discovery proceeded and the plaintiffs gathered additional information about the League through documents and depositions, including the deposition of the League‘s Executive Director. Discovery was set to close on December 5, 2018. On November 29, the court held a hearing related to discovery issues. At that hearing, “Plaintiffs’ counsel admitted that nothing in the discovery would change how they drafted the [Complaint], and thus it would fall or stand on its allegations at that time.” R. 93, at 6-7 (Memorandum Opinion and Order, Jan. 24, 2019). On December 7, 2018, the court granted the defendants’ motion to dismiss the Complaint with prejudice and declined to exercise supplemental jurisdiction over the state law claims. The plaintiffs then filed a Rule 59(e) motion seeking to convert the dismissal to one without prejudice based upon newly discovered evidence. In the motion, the plaintiffs indicated their intention to request leave to file a fourth amended complaint if the court granted the
In its ruling on those motions, the district court clarified that the state law claims were dismissed without prejudice. Although the court errоneously applied the
In discussing the new evidence and allegations that the plaintiffs wished to add to a fourth amended complaint, the court repeatedly noted that the plaintiffs had not explained how any of this evidence was relevant to the government speech doctrine. Although the court did not use the word “futile” in describing the proposed additions to the Complaint, it is clear that the court found that none of the new allegations would alter the outcome of its ruling on the motion to dismiss because none of the new evidence affected the government speech analysis. In other words, the proposed amendments would be futile.
The Complaint that the court dismissed was the fourth complaint that the plaintiffs lodged against Lincolnshire, but the first complaint filed against the League. But the only count against the League was a state law claim that the court dismissed without prejudice, declining to exercise supplemental jurisdiction over both state law claims. As is apparent from this record, this is not an instance where a plaintiff lacked an opportunity to amend. The plaintiffs had already been granted leave to amend the federal counts asserted against Lincolnshire (the only counts dismissed with prejudice here) after the first motion to dismiss. The second motion to dismiss largely echoed the first, and so the plaintiffs were fully aware of the import of the government speech doctrine when they filed the Third Amended Complaint, the one at issue in this appeal. None of the amendments in the proposed Fourth Amended
AFFIRMED.