Berrada Props. Mgmt. Inc. v. Romanski
| Decision Date | 22 June 2022 |
| Docket Number | Case No. 20-cv-1872-bhl |
| Citation | 608 F.Supp.3d 746 |
| Parties | BERRADA PROPERTIES MANAGEMENT INC., Youssef Berrada, Plaintiffs, v. Randy ROMANSKI, Josh Kaul, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
Delanie Marie Breuer, Reinhart Boerner Van Deuren SC, Madison, WI, Jessica Hutson Polakowski, Reinhart Boerner Van Deuren SC, Milwaukee, WI, David G. Peterson, Reinhart Boerner Van Deuren SC, Waukesha, WI, for Plaintiffs.
Jody J. Schmelzer, Karla Z. Keckhaver, Wisconsin Department of Justice Office of the Attorney General, Madison, WI, for Defendants.
ORDER GRANTING MOTION TO DISMISS AND REMANDING THE CASE
In our system of dual sovereignty, out of respect for their coequal counterparts, federal courts must refuse to intrude on certain types of important state proceedings. See Younger v. Harris , 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 6697 (1971). The question in this case is whether that abstention principle applies when a plaintiff asks a federal court, not to enjoin parallel state proceedings, but instead to fashion an offensive weapon the plaintiff may use to reshape the nature of those proceedings. The answer is yes. Because the principles underlying Younger abstention apply with equal force here, the Court must abstain and allow the state courts to resolve the parties’ disputes.
Berrada Properties Management, Inc. (BPM) is the exclusive management agent for properties owned by various Wisconsin limited liability companies of which Youssef Berrada is the sole member. (ECF No. 8 ¶14.) BPM currently manages about 6,200 residential rental units in the greater Milwaukee area. (Id. ¶16.) Since July 13, 2018, BPM's allegedly unfair treatment of tenants has been the subject of several articles in the Milwaukee Journal Sentinel. (ECF No. 11 at 6.) These articles, along with three anonymous complaints, led the Wisconsin Department of Agriculture, Trade, and Consumer Protection (DATCP) to open an investigation into BPM and Berrada in April of 2020. (Id. at 6-7.) As part of this investigation, the DATCP issued a series of civil investigative demands (CIDs). (ECF No. 8 ¶¶28-60.)
Berrada and BPM timely responded to the CIDs. (Id. ¶47.) But they grew increasingly suspicious when the responses did not placate the government and the investigation continued to expand in both purpose and breadth. (Id. ¶¶49-50.) After obtaining new legal counsel, Berrada and BPM changed strategy and went on the offensive, bringing this lawsuit against Wisconsin Attorney General Josh Kaul and Randy Romanski, the Secretary-Designee of the DATCP. (ECF No. 1-2.) They filed their complaint in Ozaukee County Circuit Court but invoked federal law, 42 U.S.C. § 1983, as the basis to ask the state court to quash the CIDs and declare them violative of the Fourth and Fourteenth Amendments. (Id. ¶¶78-84.) The case then took a curious procedural turn. The defendants—both officers of the state of Wisconsin—elected not to have their conduct adjudicated by the state courts, but instead removed the case to this Court, invoking federal question jurisdiction. (ECF No. 1.) After removal, they promptly moved to dismiss. (ECF No. 10.)
Then, with the motion to dismiss pending, the State of Wisconsin, represented by Kaul, filed a second lawsuit—an enforcement action against Berrada and BPM—in Milwaukee County Circuit Court (rather than the Ozaukee County Circuit Court where this case began). (ECF No. 17 at 3.) Relying heavily on Berrada's and BPM's responses to the DATCP's CIDs, the state's lawsuit seeks injunctive relief, restitution, and civil forfeitures for violations of Wis. Stat. Sections 100.18, 100.195, 100.20, and Wis. Admin. Code ATCP chapter 134. (Id. ; ECF No. 20 at 2.)
After learning of the parallel state court proceeding, the Court ordered the parties to submit supplemental briefing on the issue of abstention. (ECF No. 15.) Having initially removed this case from state court, Defendants now urge the Court to abstain from exercising federal jurisdiction, a position that Plaintiffs oppose. (ECF Nos. 17 & 20.)
A federal district court does not normally choose its constituents. See Colorado River Water Conservation Dist. v. United States , 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (). The Younger abstention doctrine—which recognizes that, as coequal sovereigns, state courts ought to be able to work without federal courts lurking over their shoulder—is an exception to this general rule. See Mulholland v. Marion Cnty. Election Bd. , 746 F.3d 811, 815 (7th Cir. 2014) (). While Younger initially applied only to federal cases that interfered with state criminal proceedings, the Supreme Court has since expanded the principles it embraced to encompass federal lawsuits "filed by a party that is the target of state court or administrative proceedings in which the state's interests are so important that exercise of federal judicial power over those proceedings would disregard the comity between the states and federal government." SKS & Assocs., Inc. v. Dart , 619 F.3d 674, 678 (7th Cir. 2010) (citations omitted). In those instances, Younger prohibits federal courts from wading into ongoing state proceedings "that are (1) judicial in nature, (2) implicate important state interests, and (3) offer an adequate opportunity for review of constitutional claims." Forty One News, Inc. v. Cnty. of Lake , 491 F.3d 662, 665-66 (7th Cir. 2007) (citing Middlesex Cnty. Ethics Comm. v. Garden State Bar Assoc. , 457 U.S. 423, 432, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982) ).
In a twist befitting a Greek comedy, Defendants—the very parties that snatched this case from the hands of Wisconsin's state court system—now insist that federal adjudication on the merits would offend that system's sovereignty. If irony alone could confer jurisdiction, any further discussion would be superfluous. But Younger abstention turns instead on "principles of equity, comity, and federalism." SKS , 619 F.3d at 677. Plaintiffs assert that those principles do not apply because this case is not quintessentially Younger . (ECF No. 20 at 4.) While this may be true, Younger abstention is not subject to Cinderella's glass slipper test. See J.B. v. Woodard , 997 F.3d 714, 722 (7th Cir. 2021) (). Rather, Younger abstention applies when federal intervention would improperly disrupt ongoing state court proceedings, accomplishing the kind of interference that Younger sought to prevent, even if the specifics are distinguishable. See SKS , 619 F.3d at 677 ; Woodard , 997 F.3d at 723 ; O'Shea v. Littleton , 414 U.S. 488, 500, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974).
Here, Plaintiffs’ due process claims hinge on a particular interpretation of Wisconsin administrative procedure as codified in Wis. Stat. § 93.18. (ECF No. 8 at 13.) That provision states that "in any matter relating to issuing, revoking or amending a special order relating to named persons ... [t]he person complained against shall be entitled to be heard in person." Wis. Stat. § 93.18(2). According to Plaintiffs, this means that Defendants had to conduct an in-person hearing prior to the issuance of any CIDs. According to Defendants, this part of Section 93.18 applies only in the context of a "special order," which was not issued in this case. Rather, Plaintiffs were subject to a "preliminary investigation" under Wis. Stat. § 93.16, a different provision of state administrative law. Defendants contend that Section 93.16 allows the issuance of CIDs pursuant to Wis. Stat. § 93.15(1) without a pre-issuance hearing. Suffice it to say, the correct interplay between these state statutes under Wisconsin law is not self-evident.
In some sense, then, the intervention Plaintiffs seek is doubly offensive—it requires the Court to make the first pass at several Wisconsin statutory provisions and then, based upon federal construction of those state provisions, apply federal law to determine whether introduction of certain pieces of evidence in a parallel state court proceeding violates due process. While perhaps not a dead ringer for Younger , this case nevertheless fits neatly into the abstention canon. The Court will therefore abstain and allow the state courts to settle the dispute.
At bottom, Younger represents federal acknowledgement of the competency and coequal authority of state courts. It holds that, if federal adjudication of an issue would interfere with a state court proceeding that satisfies the Middlesex factors, the federal court must abstain, unless an exception applies. See Grandco Corp. v. Rochford , 536 F.2d 197, 203 (7th Cir. 1976). Because hearing this case would lead to improper disruption of a state court proceeding, and no exception applies, the Court must abstain.
As a threshold matter, Younger is inapposite unless the federal plaintiff's requested relief would actually interfere with an ongoing state court proceeding. See Mass. Delivery Ass'n v. Coakley , 671 F.3d 33, 40 (1st Cir. 2012). Plaintiffs argue that only an injunction—not the declaratory judgment they seek—constitutes interference of the kind Younger prohibits. See Hoover v. Wagner , 47 F.3d 845, 848 (7th Cir. 1995) () (emphasis added). But the caselaw adopts no such...
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