Thiel v. State Bar of Wisconsin, 95-3442

• Decision Date: 03 September 1996
• Docket Number: No. 95-3442,95-3442
• Citation: 94 F.3d 399
• Parties: James S. THIEL and Barbara E. James, Plaintiffs-Appellants, v. STATE BAR OF WISCONSIN, Stephen L. Smay, John Albert, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 399

94 F.3d 399

James S. THIEL and Barbara E. James, Plaintiffs-Appellants, v. STATE BAR OF WISCONSIN, Stephen L. Smay, John Albert, et al., Defendants-Appellees.

No. 95-3442.

United States Court of Appeals Seventh Circuit.

Argued March 25, 1996.

Decided Sept. 3, 1996.

Steven Levine, Public Service Com'n of Wis. (argued), Madison, WI, for plaintiffs-appellants.

Daniel W. Hildebrand, Dewitt, Ross & Stevens, (argued), Madison, WI, for defendants-appellees.

Before BAUER, RIPPLE, and EVANS, Circuit Judges.

BAUER, Circuit Judge.

This case represents the latest chapter in the seemingly neverending battle between Wisconsin attorneys and the Wisconsin State Bar. ¹ The plaintiffs, two Wisconsin attorneys, challenge the Bar's method for determining which activities the Bar may fund with compulsory dues. Specifically, they argue that Wisconsin Supreme Court Rule ("SCR") 10.03(5)(b)1 is unconstitutional because it permits the Bar to use compulsory dues to fund non-ideological activities which do not serve the purpose of regulating the legal profession or improving the quality of legal services. ²

The plaintiffs' lawsuit sought a declaration that SCR 10.03(5)(b)1 is unconstitutional and that the Bar must recalculate the plaintiffs' dues for certain years to rectify the allegedly unconstitutional use of the compelled fees for non-germane, non-ideological expenditures. As a result, the plaintiffs would receive a small rebate. The Bar and the individual defendants moved for summary judgment on the merits, with the Bar adding the procedural defense that it was immune from suit under the Eleventh Amendment. The district court found the Bar immune under the Eleventh Amendment, but the court permitted the suit to proceed against the individual defendants (members of the Bar's Board of Governors responsible for administering SCR 10.03(5)(b)1) for prospective injunctive relief; that is, to enjoin the future enforcement of the allegedly unconstitutional rule. On the merits, the district court granted summary judgment for the individual defendants. We review the district court's summary judgment ruling, including its Eleventh Amendment analysis, de novo. We affirm.

Before proceeding to the merits, we must decide whether the Eleventh Amendment protects the Bar from suit. We begin with the observation that the Supreme Court has recently taken an "expansive view of sovereign immunity." Gorka by Gorka v. Sullivan, 82 F.3d 772, 774 (7th Cir.1996), citing Seminole Tribe of Florida v. Florida, --- U.S. ----, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). The Eleventh Amendment bars suit against an entity in addition to the state itself, when the defendant is an "arm" or "alter ego" of the state. Edelman v. Jordan 415 U.S. 651, 663, 94 S.Ct. 1347, 1355-56, 39 L.Ed.2d 662 (1974).

The question therefore, is whether the Bar is the "state" for Eleventh Amendment purposes. We have addressed, though not resolved, this question in an earlier decision. In Crosetto v. State Bar of Wisconsin, 12 F.3d 1396 (7th Cir.1993), we remanded to the district court a similar challenge to the Wisconsin State Bar in order for the district court to resolve the factual question of whether the "State Bar ... is vested with sufficient state characteristics to qualify for sovereign immunity." 12 F.3d at 1402.

In Crosetto, we set forth the appropriate analysis for determining whether the Eleventh Amendment bars suit against the Wisconsin State Bar in federal court. However, the plaintiffs argue that our analysis is contrary to Hess v. Port Authority Trans-Hudson, --- U.S. ----, 115 S.Ct. 394, 130 L.Ed.2d 245 (1994), "the most recent decision of the U.S. Supreme Court on the issue of Eleventh Amendment immunity." ³ In particular, they argue that Hess stands for the proposition that the "most important factor in determining whether a state created entity is entitled to Eleventh Amendment immunity is whether a judgment against it would impact the state treasury or ... whether the entity has an independent source of funding." Without resolving whether this is an accurate construction of Hess, we note that the Court more recently asserted that the "Eleventh Amendment does not exist solely to 'prevent federal court judgments that must be paid out of a State's treasury.' " Seminole, --- U.S. at ----, 116 S.Ct. at 1124. In fact, "the relief sought by a plaintiff suing a State is irrelevant to the question whether the suit is barred by the Eleventh Amendment." Id.; see also Will v. Michigan Dept. of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 2312, 105 L.Ed.2d 45 (1989) (sovereign immunity forbids a suit against an individual or entity who occupies the position of a state office--even if there is no fiscal impact on state funds-just as if the state had been named directly as a party to the suit.).

Given these considerations, we held in Crosetto that the effect on the state treasury was the least important of the three factors, and would be irrelevant if the first two weigh in favor of Eleventh Amendment immunity. 12 F.3d at 1402. The other two factors are: (1) The extent of control the Wisconsin Supreme Court exercised over the Bar; and (2) whether the Bar acted as the agent of the Wisconsin Supreme Court when it promulgated the rule in question. Id.

As we noted in Crosetto, "with respect to state bar associations and sovereign immunity the lower federal courts that have addressed this issue unanimously have found particular state bars entitled to the sovereign immunity defense." 12 F.3d at 1401 (collecting cases). The plaintiffs acknowledge, as they must, that they are facing a mountain of contrary authority, but attempt to distinguish the Wisconsin State Bar from the other bar associations found to be the state for Eleventh Amendment purposes, mainly on the ground that the Bar does not have primary responsibility for disciplining attorneys and organizing continuing legal education.

The plaintiffs' argument goes something like this: All of the bars found to have immunity under the Eleventh Amendment are valid "integrated" bars because they have primary responsibility for disciplining attorneys and organizing continuing legal education. ⁴ The Wisconsin State Bar lacks those responsibilities, and therefore it is an invalid integrated bar and is not immune under the Eleventh Amendment. We are not persuaded by this distinction.

Although we acknowledge that the Bar does not have responsibility over discipline and continuing legal education, we reject the plaintiffs' contention that this strips the Bar of its state character legitimacy, thereby denying it Eleventh Amendment immunity. In Levine v. Heffernan, we held that "the diminution in the bar associations' role in the areas of attorney discipline and continuing legal education" did not alter the character of the Bar such that it was unconstitutional. ⁵ 864 F.2d at 462. Given that ruling, we are bound to treat the Wisconsin State Bar as a valid integrated bar association. Accordingly, we reject the plaintiffs' efforts to distinguish the Wisconsin State Bar from the other state bars that have Eleventh Amendment immunity. See Crosetto, 12 F.3d at 1401-02.

Under Crosetto, the first factor we consider is the Wisconsin Supreme Court's control over the Bar, and more precisely, whether the Supreme Court had the ultimate authority to adopt and enforce the Bar rule in question. The Wisconsin Supreme Court created the Bar in 1956. The Court also retains control over Bar dues and the Bar's budget in a variety of ways. See, e.g., SCR 10.03(5), 10.03(5)(b), 10.05(4)(e)(4). Court rules set the deadlines within which members must enroll and pay dues. SCR 10.03(2). Those same rules also establish the penalty for nonpayment of Bar dues. SCR 10.03(6). The Court limits the ability of the Bar to spend dues on political or ideological activities. SCR 10.03(5)(b)1. The Court requires the Bar to include in each year's membership dues the amount necessary to pay the costs of the Board of Attorneys Professional Responsibility and the continuing legal education functions of the Board of Bar Examiners. SCR 10.03(5)(a). Wisconsin Supreme Court rules establish the manner in which the Bar conducts its daily business, establishes the Bar's governing bodies and offices, and defines their respective powers, functions, and duties. SCR 10.04-.08. Finally, the Court retains ultimate authority to review amendments of the Bar's bylaws. SCR 10.05(4)(a)(8). In sum, the Wisconsin Supreme Court exercises a great deal of control over the Bar.

This does not mean that the Court micromanages every aspect of the Bar. "[F]or the purposes of carrying out the purposes for which it is organized," the Bar "may sue and be sued, enter into contracts, acquire, hold, and encumber and dispose of real and personal property." SCR 10.02(1). It also deposits its funds into accounts held in the name of the State Bar of Wisconsin. Finally, it handles its own personnel matters, setting its own wage rates and classifications, provides its own pension, health insurance and other benefit plans, and pays its employees on checks drawn on State Bar accounts. Nevertheless, we conclude that the Wisconsin Supreme Court has sufficient control over the Bar to weigh in favor of invoking Eleventh Amendment immunity.

Next, we consider whether the Bar was acting as the agent of the Wisconsin Supreme Court when it promulgated the rule in question. The Wisconsin Supreme Court has ultimate authority over SCR 10.03(5)(b)1. Although the Bar enforces this Rule, the Court established the Rule and has the sole authority to adopt and amend it. We agree with the district court that "the Bar's role is completely defined by the Court" and that "the Bar acts as an agent of the Court." This factor also weighs in favor of Eleventh Amendment immunity. Given our conclusion that the first two Crosetto factors weigh in favor of Eleventh Amendment immunity, we need not consider whether a judgment...