Baxter by Baxter v. Vigo County School Corp.

Decision Date14 June 1994
Docket NumberNo. 93-2540,93-2540
Parties92 Ed. Law Rep. 36 Chelsie BAXTER, by her parents, Wilma Baxter and James Baxter, Plaintiffs-Appellants, v. VIGO COUNTY SCHOOL CORPORATION, Ray Azar, in his individual and official capacities, Vigo County Welfare Department, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Kenneth M. Stanley, Terre Haute, IN, Yvonne Ferguson-Watkins (argued), Ferguson-Watkins & Harrold, Indianapolis, IN, for plaintiffs-appellants.

Nellie L. Simbol (argued), Terre Haute, IN, for Vigo County Welfare Dept.

Rebecca S. Bowman, Office of the Atty. Gen., Agency Litigation, Indianapolis, IN, for Indiana Dept. of Public Welfare, Pamela Connelly.

Nana Quay-Smith, Karl L. Mulvaney (argued), Jane Ann Himsel, Mary H. Watts, Bingham, Summers, Welsh & Spilman, Indianapolis, IN, Frederick T. Bauer, Terre Haute, IN, for Vigo County School Corp.

Before CUDAHY and RIPPLE, Circuit Judges, and WILLIAMS, District Judge. *

RIPPLE, Circuit Judge.

Wilma and James Baxter, on behalf of their child, Chelsie, appeal the dismissal of their civil rights action brought under 42 U.S.C. Sec. 1983. Although our analysis is different in several respects from that of the district court, we conclude that its judgment ought to be affirmed.


Because the Baxters appeal from the dismissal of their complaint for failure to state a claim, we must accept as true all well-pleaded factual allegations and the inferences reasonably drawn from them. Yeksigian v. Nappi, 900 F.2d 101, 102 (7th Cir.1990). We are not compelled to accept, however, conclusory allegations concerning the legal effect of facts set out in the complaint. See Nelson v. Monroe Medical Ctr., 925 F.2d 1555, 1559 (7th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 285, 116 L.Ed.2d 236 (1991); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure Sec. 1357, at 311 (1990).

In essence, the Baxters claim that they attempted to complain about grades, racism, and other unspecified policies at Lost Creek Elementary School. Their daughter wore T-shirts that read "Unfair Grades," "Racism," and "I Hate Lost Creek." The complaint continues by alleging that Ray Azar, principal of the school, prevented their daughter Chelsie from wearing the shirts and subjected her to unspecified punitive actions that prevented her from speaking out on matters of public concern. The complaint also alleges that Azar and an additional defendant, the Vigo County School Corporation ("VCSC"), thereby violated Chelsie's rights to freedom of speech, due process, and equal protection. The complaint further alleges, in conclusory fashion, that the defendants had violated the rights of the parents by subjecting them to "punitive and coercive measures" which resulted in restraining orders and false prosecutions. The complaint also names the Vigo County Department of Public Welfare ("VCDPW") and social worker Pamela Connelly. It alleges that they conspired with the VCSC and Azar to prosecute frivolous educational

                neglect and abuse charges against the Baxters.  Finally, although it did not level any specific allegations against this party, the complaint named the Indiana Department of Public Welfare ("IDPW") as a defendant.  Because the complaint is brief and because this appeal involves a challenge to its sufficiency, we set out verbatim the relevant portions below. 1  We shall state the disposition of the district court with respect to each defendant in the following discussion

The Baxters take issue with the district court's dismissals on four fronts. First, they submit that the district court erred in dismissing the IDPW and the VCDPW on the ground that these governmental entities were entitled to immunity under the Eleventh Amendment. Second, they dispute the dismissal of Pamela Connelly in both her individual and official capacities. Third, the Baxters argue that the district court erred by dismissing their complaint with respect to the VCSC and Ray Azar in his official capacity based on the alleged insufficiency of the complaint. Finally, the Baxters challenge the dismissal of Azar in his individual capacity based on qualified immunity.

A. The Eleventh Amendment

The district court dismissed the IDPW and the VCDPW on the ground that they were entitled to immunity under the Eleventh Amendment. We shall address each of these dismissals separately.

1. Indiana Department of Public Welfare

In an order dated March 4, 1993, the district court dismissed the IDPW both on Eleventh Amendment grounds and on the basis that the IDPW is not a "person" within the meaning of Sec. 1983. On appeal, the Baxters acknowledge the general rule that the Eleventh Amendment bars Sec. 1983 actions against a state or a state agency. Nevertheless, they rely on Department of Education, State of Hawaii v. Katherine D., 727 F.2d 809 (9th Cir.1983), cert. denied, 471 U.S. 1117, 105 S.Ct. 2360, 86 L.Ed.2d 260 (1985), to argue that there is an exception to this general rule when the state agency participates in a federally funded program, or when it engages in activity regulated by Congress. The Baxters' reliance on Katherine D. is misplaced. In Katherine D., the defendant state agency had received federal funds under a federal statute that, in the view of that court, conditioned the state's receipt of those funds upon "the state's amenability to suit in federal court." Id. at 819. Whatever the correctness of that decision with respect to the particular statutory scheme at issue, 2 the Baxters cite no similar statutory waiver of sovereign immunity on the part of the IDPW. There is no basis on which the Baxters can avoid the bar of the Eleventh Amendment. 3

2. Vigo County Department of Public Welfare

The district court granted the VCDPW's motion for dismissal on the ground that the VCDPW is a state agency under Indiana law and hence entitled to immunity under the Eleventh Amendment. As the only explanation for its decision, the court cited Indiana Code Sec. 12-1-2-1 and McCrum v. Elkhart County Dep't of Public Welfare, 806 F.Supp. 203, 209 (N.D.Ind.1992). Indiana Code Sec. 12-1-2-1, now codified in substance at Indiana Code Sec. 12-13-1-1 (1993), merely provided for the creation of the state department of public welfare. That provision did not establish that the county departments of public welfare were state agencies. Because the court in McCrum relied exclusively on former Indiana Code Sec. 12-1-2-1, that case offers no additional support for the district court's decision.

Relying on Mackey v. Stanton, 586 F.2d 1126 (7th Cir.1978), cert. denied, 444 U.S. 882, 100 S.Ct. 172, 62 L.Ed.2d 112 (1979), the Baxters maintain that the VCDPW is not a state agency entitled to Eleventh Amendment immunity. In Mackey, this court held that the Elkhart County Department of Public Welfare was not entitled to immunity under the Eleventh Amendment. At the outset of the analysis in Mackey, Judge Tone, writing for the court, recognized that, according to Mt. Healthy City School District v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977), the resolution of the immunity issue depends, in part, on the nature of the entity created by state law. Interpreting further the Mt. Healthy decision, Judge Tone concluded that the most significant factor is whether the entity in question has the power to raise its own funds by tax levy and by bond issuance. Mackey, 586 F.2d at 1131. In later cases, this court has followed the approach set out in Mackey. For instance, in Heiar v. Crawford County, Wisconsin, 746 F.2d 1190, 1194 (7th Cir.1984), cert. denied, 472 U.S. 1027, 105 S.Ct. 3500, 87 L.Ed.2d 631 (1985), Judge Posner, writing for the court, noted that an argument that Wisconsin counties are protected by Eleventh Amendment immunity "had no possible merit," id., because like the Indiana counties at issue in Mackey, Wisconsin counties did not have sufficient economic interdependence with the state government to characterize them as an arm of the state. See also Kashani v. Purdue Univ., 813 F.2d 843, 846 (7th Cir.) (placing heavy reliance on Purdue University's financial dependence on the state in determining that Purdue is like an arm of the state and hence entitled to immunity under the Eleventh Amendment), cert denied, 484 U.S. 846, 108 S.Ct. 141, 98 L.Ed.2d 97 (1987).

Following here the analysis established in the earlier cases, we examine the relevant Indiana statutes. This examination convinces us that the recodification of the Indiana statutes and the intermittent substantive changes did not alter the relationship of the county entity and the state department in such a way as to change the status of the county department for purposes of Eleventh Amendment immunity. Indiana Code Sec. 12-19-3-2 (1993) provides for the establishment of a county welfare fund in each county. Each fund is raised by a tax levy on all taxable property in the county. If there are insufficient funds to cover a county's obligations, the county is authorized to obtain money by issuing bonds, Ind.Code Sec. 12-19-3-12 through Sec. 12-19-3-16 (1993), or by borrowing from a financial institution, Ind.Code Sec. 12-19-5-1 through Sec. 12-19-5-12 (1993). In addition, a county has the power to satisfy a judgment against it by means other than resort to the state treasury. Ind.Code Sec. 12-19-3-28 (1993). Thus, the current statutory framework is similar to that in Mackey. See Ind.Code Sec. 12-1-11-1 (1976) (establishing county welfare funds to be raised by levying taxes on all taxable property in county); Ind.Code Sec. 12-1-11-5 through Sec. 12-1-11-13 (1976) (authorizing county welfare department to issue bonds for various purposes, including the paying of judgments against the county). The court in Mackey found these local financial powers to be of prime importance, even though the state exercised some supervision over the county departments. Mackey, ...

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