JOYCE TAKLE, Plaintiff-Appellant, v. UNIVERSITY OF WISCONSIN HOSPITAL AND CLINICS AUTHORITY, Defendant-Appellee.
No. 04-3097
United States Court of Appeals For the Seventh Circuit
Argued January 7, 2005—Decided March 30, 2005
Before POSNER, RIPPLE, and ROVNER, Circuit Judges.
Appeal from the United States District Court for the Western District of Wisconsin. No. 04-C-0217-S—John C. Shabaz, Judge.
After the break from England but before the adoption оf the Constitution, the states had sovereign immunity from suit. The framers did not intend to abrogate that immunity, although they failed to say so in the Constitution. They should have, for as a result of Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 467-68 (1793), which held that a citizen of one state could sue another state in a federаl court, the Eleventh Amendment had to be added to the Constitution, precluding such suits. No negative inference was intended by the narrow wording of the amendment; that is, there was no intention of authorizing the citizen of a state to sue his own state in federal court—no intention, in other words, of abrogating the states’ sovereign immunity. E.g., Federal Maritime Comm‘n v. South Carolina State Ports Authority, 535 U.S. 743, 752-53 (2002); Alden v. Maine, 527 U.S. 706, 723-24 (1999); Seminole Tribe v. Florida, 517 U.S. 44, 69-70 (1996).
But what exactly is the “state“? The defendant in this case is, as we are about to see, a hybrid entity; it has characteristics of both a state agency and a private foundation. Where
The hospital is not financed by the state, howеver, and this leaves us rather at sea. We are mindful of the cases that say that the purpose of sovereign immunity is to protect not only the state‘s fiscal independence but also its “dignity.” E.g., Federal Maritime Comm‘n v. South Carolina State Ports Authority, supra, 535 U.S. at 765-66; S.J. v. Hamilton County, 374 F.3d 416, 420-22 (6th Cir. 2004). But thе notion of state dignity is difficult to translate into an operational legal standard.
About all that is clear on the level of doctrine is the futility of the hospital‘s pointing out that a judgment against it might impair its ability to continue to provide benefits that rеduce the burdens on the state treasury; for example, the hospital provides charity care that the state would otherwise be under strong pressure to provide. Were the loss of a benefit to the state enough to confer sovеreign immunity on the provider of the benefit, an ordinary taxpayer would be covered by sovereign immunity, at least if a judgment
Until 1996 the hospital was a part of the University of Wisconsin, a state university conceded to be part of the state. That year the legislature, having the previous year created the University of Wisconsin Hospital and Clinics Authority, 1995 Wis. Laws 27, § 6301 (codified at
The hospital—which is described in a report titled An Evaluatiоn: University of Wisconsin Hospital and Clinics Authority (June 2001), prepared (as required by
So far, there is nothing to indicate that the hospital should be viewed as a part of state government. So far, we are
It would be nice if the hospital‘s organic statute stated outright that the hospital is a private entity rather than an arm of the state—that would resolve the issue—but it does not say that. Not quite, at any rate. The hospital points out that some members of its board of directors are appointed by the governor and others are members by virtue of holding a public office, such as the dean of the University of Wisconsin‘s medical school.
Certain other public-entity characteristics of the hospital are merely incidental to the transition from public to private, rather than being indicative of continued state control. For example, most of the hospital‘s employees continue to be deemed state employees, though stripped of the usual privileges and рrotections of such employees. Their continued classification as state employees mainly enables them to remain in the state‘s pension system. That‘s simpler than creating a new pension system that would have to be integrated with the old one because many of the employees acquired vested rights under the old. It may also enable the hospital to bargain with the employees without subjecting itself to the jurisdiction of the National Labor Relations Board,
Ignoring such really minor strings as the subjection of the board of directors to the state‘s open-meeting laws, see Durning v. Citibank, N.A., supra, 950 F.2d at 1427, we are left to consider the significance of the twin facts that thе state owns the hospital‘s existing buildings, although the hospital can acquire additional buildings that it will own, and that it‘s required by state law to finance the university‘s medical school and to provide health services required by the state. Neither point is significant. Mаny private entities operate on public land or in public buildings; consider concessionaires in airports. And we noted earlier that the fact that an entity
What we have, then—making this indeed much like the Illinois Clean Energy Community Foundation case—is a state‘s creation of a private entity, with the state using its leverage as the creator of the entity to insist that it serve the state‘s interests as well as its own. The strings that tie the hospital to the state are found in many cases in which a state decides to privatize a formerly state function. They do not require that privatization be treated as a farce in which the privatized entity enjoys the benefits both of not being the state and so being freed from the regulations that constrain state agencies, and of being the state and so being immune from suit in federal court.
Our conclusion that the hospital does not have sovereign immunity is in accord with the other decisions that deal with similar hybrid entities. See United States ex rel. Barron v. Deloitte & Touche, L.L.P., 381 F.3d 438, 439-42 (5th Cir. 2004); United States ex rel. Ali v. Daniel, Mann, Johnson & Mendenhall, 355 F.3d 1140, 1147-48 (9th Cir. 2004); Fresenius Medical Care Cardiovascular Resources, Inc. v. Puerto Rico & Caribbean Cardiovascular Center Corp., supra, 322 F.3d at 68-75; Durning v. Citibank, N.A., supra, 950 F.2d at 1423-28. (Fresenius is particularly close.) But we must consider the bearing of our decision in Thiel v. State Bar of Wisconsin, 94 F.3d 399 (7th Cir. 1996), the principal decision on which the district court relied. In the course of ruling that the Wisconsin State Bar is
The first twо factors are certainly sound and the decision in Thiel is unquestionably correct. The state bar is a limb of the Supreme Court of Wisconsin and the rule challenged in the case dealt with the method of determining the dues paid by the members of the bar. Mоreover, though enforced by the state bar, the rule had been promulgated by the supreme court. Had the rule been enjoined, the bar‘s performance of duties directly related to the administration of justice would have been impeded. See also Kaimowitz v. Florida Bar, 996 F.2d 1151, 1155 (11th Cir. 1993) (per curiam); Lewis v. Louisiana State Bar Ass‘n, 792 F.2d 493, 497-98 (5th Cir. 1986); Ginter v. State Bar, 625 F.2d 829, 830 (9th Cir. 1980) (per curiam).
In such a case, the fact that a judgment against the state treasury is not sought is of no importance. But Thiel does not hold that it is never of any importance. The issue was not presented; and to say that the effect of a judgment on state finances is never important would be inconsistent with numerous decisions of the Supreme Court and the courts of appeals, including this court. E.g., Regents of University of California v. Doe, supra, 519 U.S. at 430; Hess v. Port Authority Trans-Hudson Corp., supra, 513 U.S. at 48-49; Luder v. Endicott, 253 F.3d 1020, 1023 (7th Cir. 2001); Kashani v. Purdue University, supra, 813 F.2d at 845; Beentjes v. Placer County Air Pollution Control District, 397 F.3d 775, 778 (9th Cir. 2005); United States ex rel. Barron v. Deloitte & Touche, L.L.P., supra, 381 F.3d at 440; Cash v. Granville County Board of Education, supra, 242 F.3d at 223-24. In fact though not in legal fiction, damages suits and injunctive suits against a state are treated differently. The former are bаrred, but the latter are permitted under the doctrine of Ex parte Young by the device of the plaintiff‘s naming as the defendants the responsible state officials rather than the state itself; for pertinent illustrations see Board of Trustees of University of Alabama v. Garrett, supra, 531 U.S. at 374 n. 9; Radaszewski ex rel. Radaszewski v. Maram, 383 F.3d 599, 606 (7th Cir. 2004); Bruggeman ex rel. Bruggeman v. Blagojevich, 324 F.3d 906, 912-13 (7th Cir. 2003). Such a suit has the identical effect as enjoining the state itself would have, and this shows that on a practical level the law treats injunctive actions against a state differently from damages actions. In a case such as this, in which a privatized “independent” entity for which the state bears no financial responsibility is being sued over its personnel policies, which are entirely within its discretion, the fact that the suit can have no adverse effect on the state‘s finances is highly relevant.
The grant of the motion to dismiss is REVERSED and the case REMANDED.
Teste:
_____________________________
Clerk of the United States Court of Appeals for the Seventh Circuit
USCA-02-C-0072—3-30-05