O'Keefe v. Schmitz

• Decision Date: 08 April 2014
• Docket Number: Case No. 14-C-139
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: ERIC O'KEEFE and WISCONSIN CLUB FOR GROWTH, Inc., Plaintiffs, v. FRANCIS SCHMITZ, in his official and personal capacities, JOHN CHISHOLM, in his official and personal capacities, BRUCE LANDGRAF, in his official and personal capacities, DAVID ROBLES, in his official and personal capacities, DEAN NICKEL, in his official and personal capacities, and GREGORY PETERSON, in his official capacity, Defendants.

ERIC O'KEEFE and WISCONSIN CLUB FOR GROWTH, Inc., Plaintiffs, v. FRANCIS SCHMITZ, in his official and personal capacities,JOHN CHISHOLM, in his official and personal capacities,BRUCE LANDGRAF, in his official and personal capacities,DAVID ROBLES, in his official and personal capacities,

DEAN NICKEL, in his official and personal capacities,

and GREGORY PETERSON, in his official capacity, Defendants.

Case No. 14-C-139

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

Dated: April 8, 2014

DECISION AND ORDER

Eric O'Keefe is a director for the Wisconsin Club for Growth, Inc. ("WCFG"), a 501(c)(4) social welfare organization that promotes free-market ideas and policies. O'Keefe and WCFG are two among several targets of a secret five-county John Doe criminal investigation. Wis. Stat. § 968.26. This procedure, unique under Wisconsin law, is an "independent, investigatory tool used to ascertain whether a crime has beencommitted and if so, by whom." In re John Doe Proceeding, 660 N.W.2d 260, 268 (Wis. 2003). O'Keefe alleges that this investigation is being conducted for the primary purpose of intimidating conservative groups, impairing their fundraising efforts, and otherwise preventing their participation in the upcoming election cycle. O'Keefe seeks an order enjoining the defendants from continuing their investigation on the grounds that it is an abuse of prosecutorial power and infringes upon his right to freedom of speech.

Five of the six defendants move to dismiss O'Keefe's complaint: Francis Schmitz, special prosecutor in the current phase of the John Doe investigation; John Chisholm, Milwaukee County District Attorney; Bruce Landgraf and David Robles, Milwaukee County Assistant District Attorneys; and Dean Nickel, a contract investigator for the Government Accountability Board. The last defendant, Gregory Peterson, is a retired appeals court judge now presiding over the John Doe proceeding. Judge Peterson has been served with process, and his answer to the complaint is due on April 29.

For the reasons that follow, the motions to dismiss are denied in their entirety.

I. Abstention

A motion to dismiss based on an abstention doctrine implicates the Court's exercise of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1); City of N.Y. v. Milhelm Attea & Bros., Inc., 550 F. Supp. 2d 332, 341-42 (E.D.N.Y. 2008). Therefore, the Court may look outside the pleadings and consider extrinsic materials inmaking its ruling. Nissan N. Am., Inc. v. Andrew Chevrolet, Inc., 589 F. Supp. 2d 1036, 1039 (E.D. Wis. 2008). All five of the moving parties raise Younger abstention, so the Court will begin its analysis there.

A. Younger abstention

Younger abstention "generally requires federal courts to abstain from taking jurisdiction over federal constitutional claims that involve or call into question ongoing state proceedings." FreeEats.com, Inc. v. Indiana, 502 F.3d 590, 595 (7th Cir. 2007). Courts have typically analyzed whether the state proceedings are "judicial in nature," involve "important state interests," and offer "an adequate opportunity to review the federal claim." Majors v. Engelbrecht, 149 F.3d 709, 711 (7th Cir. 1998) (citing Middlesex Cnty. Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 429 (1982)). However, the Supreme Court recently "rephrased the question," such that the so-called Middlesex factors "were not dispositive; they were, instead, additional factors appropriately considered by the federal court before invoking Younger. These factors remain relevant, but the critical consideration . . . is how closely [the proceeding] resembles a criminal prosecution." Mulholland v. Marion Cnty. Elec. Bd., --- F.3d ---, 2014 WL 1063411, at *5 (7th Cir. March 20, 2014) (citing Sprint Comm'n, Inc. v. Jacobs, 134 S. Ct. 584, 593 (2013)). "Divorced from their quasi-criminal context, the three Middlesex conditions would extend Younger to virtually all parallel state and federal proceedings, at least where a party could identify a plausibly important state interest." Sprint at 593.

As stated and clarified in Sprint, Younger only applies in three "exceptional circumstances." Id. at 591. First, Younger precludes "federal intrusion into ongoing criminal prosecutions." Id. Second, certain "civil enforcement proceedings" warrant abstention. Id. Third, Younger precludes federal courts from interfering with pending civil proceedings involving certain orders "uniquely in furtherance of the state courts' ability to perform their judicial functions." Id. (quoting New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 368 (1989) (NOPSI)). "We have not applied Younger outside these three 'exceptional' categories, and today hold . . . that they define Younger's scope." Id.

Wisconsin's John Doe procedure is an investigatory device, similar to a grand jury proceeding, but lacking the oversight of a jury. It is "not so much a procedure for the determination of probable cause as it is an inquest for the discovery of crime in which the judge has significant powers." State v. Washington, 266 N.W.2d 597, 604 (Wis. 1978). "By invoking the formal John Doe investigative proceeding, law enforcement officers are able to obtain the benefit of powers not otherwise available to them, i.e., the power to subpoena witnesses, to take testimony under oath, and to compel the testimony of a reluctant witness." Id. The judge's responsibility is to "ensure procedural fairness. The John Doe judge should act with a view toward issuing a complaint or determining that no crime has occurred." Id. at 605. So understood, the John Doe proceeding does not fit into any of the categories for Younger abstention. It is an investigatory process, not an ongoing criminal prosecutionor civil enforcement proceeding. Nor is it a proceeding - like a civil contempt order, Juidice v. Vail, 430 U.S. 327, 336 n.12 (1977), or the requirement to post a bond pending appeal, Pennzoil Co. v. Texaco Inc., 481 U.S. 1, 13 (1987) - that implicates a State's interest in "enforcing the orders and judgments of its courts, . . ." Sprint at 588. The John Doe is a criminal investigation, but it is not "akin to a criminal prosecution." Id. at 592. Younger is inapplicable until a criminal proceeding is actually commenced. ACLU of Ill. v. Alvarez, 679 F.3d 583, 594 (7th Cir. 2012) ("Younger abstention is appropriate only where there is an action in state court against the federal plaintiff and the state is seeking to enforce the contested law in that proceeding") (emphasis added); United States v. South Carolina, 720 F.3d 518, 527 (4^th Cir. 2013) ("Younger does not bar the granting of federal injunctive relief when a state criminal prosecution is expected and imminent. We have also drawn a distinction between the commencement of 'formal enforcement proceedings,' at which point Younger applies, versus the period of time when there is only a 'threat of enforcement,' when Younger does not apply") (emphasis in original) (internal citations omitted); Guillemard-Ginorio v. Contreras-Gomez, 585 F.3d 508, 519 (1st Cir. 2009) (a rule "requiring the commencement of 'formal enforcement proceedings' before abstention is required, better comports with the Supreme Court's decisions in Younger and its progeny, in which an indictment or other formal charge had already been filed against the parties seeking relief at the time the federal action was brought").

Further, the Court notes that it would not abstain even if the investigation fitwithin one of Younger's exceptional circumstances. As the Court will explain in its discussion of Pullman abstention, infra, the John Doe proceeding does not offer O'Keefe the opportunity to adjudicate the federal constitutional issues that are raised in this lawsuit. See, e.g., Time Warner Cable v. Doyle, 66 F.3d 867, 884 (7th Cir. 1995) ("the critical fact for purposes of the Younger abstention doctrine is whether a party has an adequate opportunity to raise constitutional challenges").

Finally, Younger abstention does not apply when the plaintiff alleges "specific facts" that the state proceeding was "brought in bad faith for the purpose of retaliating for or deterring the exercise of constitutionally protected rights." Collins v. Kendall Cnty., Ill., 807 F.2d 95, 98 (7th Cir. 1986). O'Keefe's complaint easily satisfies this standard, precisely alleging that the defendants have used the John Doe proceeding as a pretext to target conservative groups across the state. See, e.g., In re John Doe Proceeding, 680 N.W.2d 792, 808 (Wis. 2004) (reminding "all who participate in John Doe investigations that the power wielded by the government is considerable. Accordingly, there is a potential for infringing on . . . constitutional rights").

B. Pullman abstention

Federal courts also have the discretion to abstain under what is known as Pullman abstention. Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496 (1941). This doctrine applies only when there is substantial uncertainty as to the meaning of state law, and there exists a reasonable probability that the state court's clarification of state law might obviate the need for a federal constitutional ruling. Int'l Coll. ofSurgeons v. City of Chi., 153 F.3d 356, 365 (7th Cir. 1998). The purpose of Pullman abstention is to "avoid the waste of a tentative decision as well as the friction of a premature constitutional adjudication." Pullman, 312 U.S. at 500. It is a narrow exception to the duty of federal courts to adjudicate cases properly before them and is used only in exceptional circumstances. Kansas Judicial Review v. Stout, 519 F.3d 1107, 1119 (10th Cir. 2008).

In granting a motion to quash subpoenas issued in the John Doe investigation, Judge Peterson held that the subpoenas did not show "probable cause that the moving parties committed any violations of the campaign finance laws. I am persuaded the statutes only prohibit coordination by candidates and independent organizations for a political...