MOTHER GOOSE NURSERY SCHOOLS, INC., an Indiana
Not-For-Profit Corporation, Plaintiff-Appellee,
v.
Theodore L. SENDAK, Individually and as Attorney General of
the State of Indiana, Defendant-Appellant.
Nos. 84-2318, 84-2921.
United States Court of Appeals,
Seventh Circuit.
Argued April 23, 1985.
Decided Aug. 14, 1985.
Rosalie B. Levinson, Merrillville, Ind., for plaintiff-appellee.
David Michael Wallman, Office of Atty. Gen., Indianapolis, Ind., for defendant-appellant.
Before BAUER and COFFEY, Circuit Judges, and GRAY, Senior District Judge.*
BAUER, Circuit Judge.
Mother Goose Nursery Schools, Inc. (Mother Goose), an Indiana Not-for-Profit Corporation sued the then Attorney General of Indiana, Theodore L. Sendak,1 under 42 U.S.C. Sec. 1983 seeking damages for Sendak's refusal to approve a proposed contract for child care services between Mother Goose and the Indiana State Department of Public Welfare. The district court granted the plaintiff's motion for summary judgment on December 16, 1980. Mother Goose Nursery Schools, Inc. v. Sendak,
* Mother Goose has been licensed as a day care nursery in Indiana since 1954. Beginning in November 1975, Mother Goose entered into three yearly contracts with the Indiana Department of Public Welfare for the provision of day care services and transportation to children of parents participating in the Aid to Families with Dependent Children program. 42 U.S.C. ch. 7, subch. IV, pt. A. The last of these contracts expired on June 30, 1978. At this time another proposed contract between plaintiff and the Indiana State Department of Public Welfare for the period from July 1, 1978, to June 30, 1979, was submitted to Sendak, as the Indiana Attorney General, for approval.
This dispute arose when Sendak refused to approve the 1978 contract between Mother Goose and the Department. On September 26, 1978, Sendak wrote a letter to the Governor of Indiana in which he stated that he refused to approve the contract because Anthony Cifaldi, President, Administrator, and a director of Mother Goose, had twice been convicted of making false statements on his income tax returns. Mother Goose filed suit in the district court on November 21, 1978, under 42 U.S.C. Sec. 1983, alleging that Sendak's refusal to approve the contract was without sufficient legal reason and thereby deprived him of his property without due process of law.
Several Indiana statutes and regulations are directly at issue in this case. First and most critically, "[a]ll contracts and leases [to which the State is party] shall be approved as to form and legality by the attorney general," IND.CODE 4-13-2-14, and "[n]o contract with a state agency is legally binding until such approval has been secured." Citizen Energy Coalition of Indiana, Inc. v. Sendak,
(a) Each member of the staff [of an approved provider] shall be a competent and reliable person of good moral character and reputation who is mentally, physically and emotionally able to assume assigned responsibility for group care of children, or for the operation and maintenance of the child-care institution.
IND.ADMIN.CODE (17-3-2-12)-B8 (currently codified at 470 IND.ADMIN.CODE 3-4-11 (1984)).
The district court, on Mother Goose's motion for summary judgment, ruled that the Attorney General knowingly acted "beyond the scope of his statutory authority and outside of the law in not accepting the contract [in that] '[h]e has a mandatory duty to approve all contracts which are lawful as to form and content.' "
On appeal, Sendak claims that the district court committed four errors when it found him personally liable to Mother Goose: (1) that the district court erred in imposing personal liability on Sendak for allegedly misinterpreting his authority as Attorney General under an unconstrued state statute; (2) that the court erred in rejecting his defense of immunity; (3) that the Attorney General was entitled to immunity under the Eleventh Amendment; and (4) that the Mother Goose's claim was not actionable under 42 U.S.C. Sec. 1983.
II
Sendak's first and third arguments raise essentially the same claim that Sendak, acting in his official capacity as the Attorney General of Indiana, cannot be held personally liable for his actions and that consequently this action is barred by the Eleventh Amendment to the United States Constitution. The Eleventh Amendment provides: "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." However much these fairly simple words remain the subject of continuing debate, see, e.g., Atascadero State Hospital v. Scanlon, --- U.S. ----,
III
We thus turn to Sendak's claims of immunity from prosecution under Section 1983. He claims first that he is entitled to absolute immunity from liability under Section 1983 because his actions under Ind.Code 4-13-2-14 rejecting Mother Goose's proposed contract are quasi-judicial in nature, Citizens Energy Coalition v. Sendak,
Immunities recognized at the common law stem from the recognition that public officials require some form of protection from suits for damages "to shield them from undue interference with their duties and from potentially disabling threats of liability." Harlow v. Fitzgerald,
In each case where a government official has claimed that he is entitled to absolute immunity, we rely not upon that official's position in government, but on an examination of the nature of the functions he was performing in the case. Butz,
In Citizens Energy,
The district court in Citizens Energy issued a preliminary injunction against the Indiana Attorney General to prevent him from implementing his determination, made pursuant to the authority granted him by Ind.Code 4-13-2-14 to review contracts, that a proposed contract between Citizens Energy and the Public Counselor of Indiana was illegal. The Attorney General determined that because Citizens Energy maintained a paid lobbyist on its staff, Citizens Energy's role as a grant recipient from the state would essentially make the organization, and consequently its lobbyist, a public official. The Attorney General thus concluded that the proposed contract was illegal under Ind.Code 2-4-3-7, which prohibits lobbying for pay by public officials. The district court held that the Attorney General could not construe the statute to deny the proposed contract with Citizens Energy in such a way as to deprive them of their rights to petition the government under the first and fourteenth amendments. Such a restriction, the court reasoned, could not be upheld unless the state could show the existence of a compelling state interest. The court thus concluded that the Attorney General's construction of the Indiana anti-lobbying statute was not supported by a compelling state interest and issued a preliminary injunction.
With regard to the first factor of the Butz analysis, the historical basis for the immunity, we could find no cases which discussed the role of the Attorney General when performing functions comparable to the functions at issue here. We must also recognize that the Indiana Attorney General receives his powers and duties from statutes alone and holds no common law powers. State ex rel. Steers v. Criminal Court of Lake County,
There are, of course, some obvious differences between the role of the Attorney General as prosecutor and the Indiana Attorney General's role in reviewing proposed contracts with the state for correct "form and legality." But the similarities between the two are sufficient to make them analogous for immunity purposes. In both instances the state has vested the Attorney General with the responsibility to review the facts of a given case--in one, allegedly criminal conduct, and in the other, a proposed contractual relationship--and determine whether the conduct is legal. Both decisions require that the Attorney General use his legal expertise and practical experience to determine whether the proposed conduct is in accordance with the law. In fact, in the contract review area, the Attorney General's conduct is even more "judicial" than in the Attorney General's role as prosecutor. As prosecutor, he is vested with broad discretion to bring a suit, which discretion is seldom questioned by the court, especially if the Attorney General decides not to pursue the case further. Moreover, as a prosecutor, the Attorney General in a sense is merely initiating the formal judicial process. In his role as contract reviewer, he has no discretion in determining what cases are considered formally, much as a judge has little control over which cases are prosecuted. Moreover, rather than starting the prosecution, the Attorney General is vested with the "ultimate" decision on legality.
In Butz, the Supreme Court was faced with the issue of the immunity, if any, which should be afforded to the Chief Hearing Examiner, Judicial Officer, and prosecuting attorney for the Department of Agriculture who issued and reviewed an administrative action against a commodities futures commission merchant. In determining that these administrative officials were to receive absolute immunity, the Supreme Court reviewed the historical rationale for the absolute immunity for judges, and concluded that "[j]udges have absolute immunity not because of their particular location within the Government but because of the special nature of their responsibilities,"
The Court next considered the special nature of the hearing examiner and the ALJ's responsibilities. The Court determined that these officials must be free to "perform their respective functions without harassment or intimidation." Id. Just as the judicial process contains many safeguards which place checks on malicious actions by judges--"[t]he insulation of the judge from political influence, the importance of precedent is in resolving controversies, the adversary nature of the process, and the correctability of error on appeal" id.--the adjudicatory process in federal administrative agencies was given immunity because the framework within which the hearing examiner and administrative law judge work is functionally comparable to the judge.
Similarly, in this case, the Attorney General is vested by the state with a special power to review contracts, subject to certain checks which limit the chances of arbitrary or malicious actions in the contract review process. Mother Goose argues that because of the seemingly narrow construction which this court placed on Ind.Code 4-13-2-14 in Citizens Energy, the role of the Attorney General is more in the nature of an administrator than in the nature of a judge. It is true that in Citizens Energy we did hold that the statute which requires the Attorney General to approve all contracts which are correct as to "form and legality" allows him no discretion to disapprove those which are correct. But to state that it follows from this holding that the Attorney General's action in reviewing a contract is in a sense ministerial, ignores the very nature of the act which the Attorney General must perform. While a determination as to the correct "form" of the contract may be a simple task, the Attorney General's responsibility to determine the legality of contracts which state agencies wish to enter can hardly be a simple ministerial duty. One must examine more than the face of a contract to determine that it is not an illegal contract under State law.4
In this case, the Attorney General had the right, indeed the responsibility, to look beyond the mere words of the proposed contract. Just because the parties had had three previous contracts which were approved does not mean that the contract here had to be approved. It was certainly the prerogative of the Attorney General in this case to make the determination that because Cifaldi had twice been convicted of making false statements on his tax returns that he was not a "staff member" of "good moral character."5
The risk of vexatious litigation is also obvious in this case. As of September 30, 1984, the contracts section of the Indiana Attorney General's office had reviewed 6,609 documents for the calendar year. The Attorney General rejected 276 of those documents. It is inconceivable that we should open the Attorney General up to suit from nearly 300 rejected contractors a year. Such an opportunity for intimidation and harassment would inevitably diminish the impartiality of the Attorney General in reviewing proposed state contracts. See Butz,
Finally, the Attorney General is subject to checks upon abuses of his authority. Butz,
The action for mandate may be prosecuted against any inferior tribunal, corporation, public or corporate officer or person to compel the performance of any act which the law specifically enjoins, or any duty resulting from any office, trust or station.
The Indiana Supreme Court has held that "[t]he trial courts of this state clearly have the power to issue writs of prohibition and mandamus to administrative agencies in appropriate cases, such as where constitutional due process rights are being denied," State ex rel. Pickard v. Superior Court,
Any person or persons having or claiming to have a money demand against the state of Indiana, arising, at law or in equity, out of contract, express or implied, accruing within fifteen (15) years from the time of the commencement of this action, may bring suit against the state therefore in the superior court of Marion County, Indiana, by filing a complaint with the clerk of the said court and procuring a summons to be issued by said clerk, which summons shall be served upon the attorney-general of Indiana thirty (30) days before the return day of the summons.
The review procedures provide adequate checks upon abuse by the Attorney General to confirm our conclusion that when reviewing proposed contracts for the state, the Indiana Attorney General is performing a quasi-judicial function and his conduct thereunder is entitled to absolute immunity from prosecution for damages under Section 1983.6
As we established in Citizens Energy, the Attorney General's discretion is limited in the reasons for which he can reject a proposed contract. "The Attorney General has no discretion to reject a contract which is lawful as to form and context."
Therefore the district court's decision holding Sendak personally liable for rejecting Mother Goose's contract must be reversed.
IV
Because the district court found Sendak liable for damages under Section 1983, it also awarded Mother Goose attorney fees as authorized in 42 U.S.C. Sec. 1988. This award must obviously be vacated in light of our holding that Sendak is immune from liability. In his appeal challenging the award of attorney fees, Sendak also asks us to overrule our decision in Terket v. Lund,
In Terket we were asked to review a district court's decision to award attorney fees to the prevailing party under Section 1988 after the non-prevailing party had filed its notice of appeal in the underlying Section 1983 action. We held that
district courts in this circuit should proceed with attorney's fees motions, even after an appeal is filed, as expeditiously as possible. Any party dissatisfied with the court's ruling may then file an appeal and apply to this court for consolidation with the pending appeal of the merits.
We find Sendak's arguments that this procedure does not serve judicial economy unpersuasive. It is true that it is necessary for the non-prevailing party to file two appeals where the fees award is made separate from the underlying action. But it is not true that the losing party is "forced into the ludicrous position of appealing fee awards they might otherwise choose not to challenge" in order not to be faced with a fee award against it if the underlying action is reversed. Appellant's br. in No. 84-2921 at 5.
It is only necessary under Terket for the losing party to make a timely appeal of an award under Section 1983 if that party has some basis for challenging the award or he challenges substantive aspects of the fee. If the only reason for challenging the award is to preserve his rights in case this court reverses the Section 1983 decision, Rule 60(b), FED.R.CIV.PROC., provides an appropriate remedy. Rule 60(b) provides in part that
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding [when]:
* * *
* * *
(5) ... a prior judgment upon which it is based has been reversed or otherwise vacated....
We recognize, of course, that our review of trial court decisions under Rule 60(b) is for an abuse of discretion. McKnight v. United States Steel Corp.,
Concerns for judicial economy warrant the continued use of the Terket rule. The compelling reasons for the rule are to permit fee determinations to be made while the relevant factors of the Section 1983 action are fresh in the trial judge's mind and to prevent duplicative litigation. Judicial economy is best served by the consolidation of appeals from the Section 1983 action with the related attorney fee questions. Under the Terket rule both the trial court and this court are each given the opportunity to consider both claims at roughly the same time.
The judgments of the district court are reversed with directions to vacate the award of damages and attorney fees and to dismiss the suit.
SO ORDERED.
Notes
Honorable William P. Gray, Senior District Judge for the Central District of California, is sitting by designation
The record does not disclose whether Theodore Sendak has any relationship to Maurice Sendak, a popular author of children's literature. We thus think it appropriate at this point to relieve the anxieties of any reader of this case (whose caption could be appropriately abbreviated to Mother Goose v. Sendak ) who may think that this case is about fairy tales and make-believe; it is not
The district court's first order in this case was issued by Judge Phil McNagny, who died before the damages issues were decided. Consequently the case was assigned to Judge William Lee who issued the decision on damages and on attorney fees
Our decision in Citizens Energy should have been enough for the district court in this case to dismiss the action against the Sendak, but it was not. Judge McNagny, after quoting this court's language that the provision requires the exercise of a quasi-judicial discretion and therefore entitles the Attorney General to immunity, stated: "This Court cannot agree with this statement."
Questions regarding the "legality" of actions are those which are the everyday "work" of lawyers and judges. Thus for example, this court is called upon here to consider the "legality" of the Attorney General's actions. It can hardly be said that our task is the "ministerial" responsibility of applying intricate decisions under Section 1983 to the facts of this case
But the correctness of that determination by the Attorney General is not at issue here because we find that Sendak cannot be subject to an award of retrospective damages under Section 1983. If relief of another sort not barred by immunity concerns, such as an injunction, were at issue here, we would be required to examine the legality of the contract more closely, as we did in Citizens Energy. But although the complaint had initially sought injunctive relief, the district court did not award it and Mother Goose has not cross-appealed on the denial of the injunction
It is true, of course, that the General Assembly has not required that the Attorney General provide any hearing to the agency or the private contractor as part of the contract approval process. It may be that due process requires some sort of pre-deprivation hearing, see, e.g., Fuentes v. Shevin,
