Urbano v. Board of Managers of New Jersey State Prison

• Citation: 415 F.2d 247
• Decision Date: 05 September 1969
• Docket Number: No. 17475.,17475.
• Parties: Robert F. URBANO, Appellant, v. The BOARD OF MANAGERS OF the NEW JERSEY STATE PRISON.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

415 F.2d 247 (1969)

Robert F. URBANO, Appellant, v. The BOARD OF MANAGERS OF the NEW JERSEY STATE PRISON.

No. 17475.

United States Court of Appeals Third Circuit.

Submitted on Briefs February 17, 1969.

Decided September 5, 1969.

Robert F. Urbano, pro se.

Eugene T. Urbaniak, Deputy Atty. Gen., Dept. of Institutions and Agencies, Trenton, N. J. (Arthur J. Sills, Atty. Gen. of New Jersey, on the brief), for appellee.

Before VAN DUSEN, ALDISERT and STAHL, Circuit Judges.

OPINION OF THE COURT

STAHL, Circuit Judge.

This is a diversity suit by appellant, Robert F. Urbano, an inmate in the New Jersey State Prison, against the Board of Managers of the State Prison.¹ The suit was brought in the form of a class action² on behalf of all of the inmates of the institution who are alleged to be beneficiaries of an inmate trust or welfare fund³ claimed to have been established under two New Jersey statutes: N.J.S.A. 30:4-15, 30:4-67.1.⁴

According to appellant, the primary sources of the "trust fund," which has evidently been in existence for at least twenty years, and possibly longer, have been from

(a) a compulsory deduction from prisoners\' wages up to a maximum of $10,⁵ and

(b) profits from the sale of goods at the prison commissary.⁶

The fund may also have been the beneficiary of gifts from private individuals or groups⁷ or from state appropriations. The record does not disclose the present value of the corpus of the trust fund.⁸

In his complaint appellant charges the members of the Board of Managers of the New Jersey State Prison with "mismanagement, waste and expenditures contrary to * * * statutory provisions and not for the benefit of the inmate beneficiaries" and alleges that the benefits have not been "equally distributed among the beneficiaries as required by law." (App. 14a.)

Then, in his pro se brief, appellant Urbano claims that the members of the Board have used the trust fund moneys to cover "personal losses of officers from the Trust because the losses are attributed to the prisoners; subsidization of religious services * * *; purchase of airconditioners sic and other luxuries for private offices; use of confiscated food items intended for distribution to prisoners in the officers' mess of the prison * * *; etc." (Brief p. 13.)⁹

Appellant has asked for extensive relief, set forth in the margin,¹⁰ on allegations which, if true, are not insubstantial. However, we choose to affirm the lower court's dismissal of the complaint, but on a different basis, namely, abstention.

Decision of Lower Court

The district court dismissed the complaint on three alternative grounds.¹¹ First, the court held that "a suit seeking to control the performance of the official duties of state officials is, in substance, a suit against the State, and is therefore barred by the Eleventh Amendment to the United States Constitution."¹²

We have some doubt concerning the appropriateness here of the application of the Eleventh Amendment. The conclusion that must be reached before the Eleventh Amendment may be interposed by appellant is that the state is the real party in interest. Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945);¹³ Harris v. Pennsylvania Turnpike Comm., 410 F.2d 1332, 1333 n. 1 (3d Cir. 1969); Citizens Committee for Hudson Valley v. Volpe, 297 F.Supp. 809, 810-811 (S.D. N.Y.1969); Jackson v. Colorado, 294 F. Supp. 1065, 1071-1072 (D.Col.1968).

In determining whether an "alter ego" status attaches to the instrumentality of a state, it has been said:

* * * Local law and decisions defining the status and nature of the agency involved in its relation to the sovereign are factors to be considered, but only one of a number that are of significance.

Among the other factors, no one of which is conclusive, perhaps the most important is whether, in the event plaintiff prevails, the payment of the judgment will have to be made out of the state treasury; significant here also is whether the agency has the funds or the power to satisfy the judgment. Other relevant factors are whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy over its operations; whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation, and whether the sovereign has immunized itself from responsibility for the agency\'s operations. Krisel v. Duran, 258 F.Supp. 845, 849 (S.D.N.Y.1966), aff\'d per curiam, 386 F.2d 179 (2d Cir. 1967), cert. denied, 390 U.S. 1042, 88 S.Ct. 1635, 20 L.Ed.2d 303 (1968) (footnotes omitted).

See also the comprehensive treatment of the problems of immunity in S. J. Groves & Sons v. New Jersey Turnpike Authority, 268 F.Supp. 568 (D.N.J. 1967); Miller v. Vermont, 201 F.Supp. 930, 932 (D.Vt.1962); and Aerated Products Co. of Philadelphia v. Department of Health of State of New Jersey et al., 59 F.Supp. 652, 655, 660 (D.N.J. 1945), aff'd, 159 F.2d 851 (3d Cir. 1947). The court said in S. J. Groves:

Counties and municipalities do not partake of the Eleventh Amendment immunity enjoyed by the States * *, although they clearly are public bodies and in many cases perform functions on behalf of the State. * * * Whether other bodies come under the Amendment depends on their relationship to the State, on the powers and responsibilities, the attributes and limitations, with which they have been endowed. * * * 268 F.Supp. at 574.

Appellant's claim for money damages, the most significant factor listed in Krisel, is not against the treasury of the state but against the individual members of the Board of Managers.¹⁴ Moreover, the requested audit of the books of the trust fund would not seem to encroach directly upon the governmental functions of the state. As will be more fully developed later, however, since the authorizing statutes are not clear as to the status of the fund, and there are no state decisions regarding the "status and nature of the agency involved i. e., the Board of Managers in its relation to the sovereign * * *," Krisel v. Duran, supra, the state courts should be given an opportunity to adjudicate these matters before a federal court intervenes.

We should note that in Kisielewski v. New Jersey, 68 N.J.Super. 258, 172 A.2d 203, pet. for certification denied, 36 N.J. 144, 174 A.2d 927 (1961), a comparable agency of New Jersey, the State Home for Girls, was held to be "purely an administrative subdivision of the government," and therefore the alter ego of the state for sovereign immunity purposes, in a negligence suit involving a claim for damages for personal injury to an inmate.¹⁵

We do not believe that Kisielewski is dispositive of the "alter ego" question. In the first place, in the present action it is not the institution as such that is being sued, i. e., the New Jersey State Prison, but the Board of Managers of the institution. Secondly, this is not a conventional negligence action but a suit charging the instrumentality in control of the New Jersey State Prison with breaches of fiduciary duty in the handling of a trust fund of which the prisoners are claimed to be the beneficiaries. It may be that in its capacity as trustee of an inmate trust fund, the Board of Managers has a different relationship to the sovereign for immunity purposes.

If it should be concluded that the Board of Managers is not the alter ego of the state, the Eleventh Amendment would probably pose no bar to an action in the federal court. The mantle of protection afforded to the states by the Eleventh Amendment prohibits suits against state officials, unless consent is given, where they operate under the authority granted by law and in accordance with the United States Constitution. Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908); 3 Davis, Administrative Law § 27.01 (Supp.1965), § 27.03 (1958); 1 Barron and Holtzoff, Federal Practice and Procedure § 54.1 (Wright ed. 1960).

The Eleventh Amendment may not be used to shield activity which is lawless.¹⁶ The allegations contained in appellant's complaint, which, if true, would indicate at least malfeasance in office, would be sufficient, we believe, to avoid the application of the Eleventh Amendment. At worst, appellant alleges criminal acts by state officials. Without any intimation as to the legitimacy of these charges, such conduct, if proven, cannot be swept under the Eleventh Amendment rug. We are not disposed, therefore, to dismiss this suit on the basis of the Eleventh Amendment. Cf. Whitner v. Davis, 410 F.2d 24, 29-30 (9th Cir. 1969).

The second ground for the lower court's dismissal of the complaint was that a New Jersey statute, N.J.S.A. 30:4-16,¹⁷ "may be viewed as an express grant of immunity to defendants from any action seeking to hold them liable for the performance of their official duties." (App. 10a.)

Our research discloses no New Jersey case construing this statute. Although the interpretation of state statutes is generally left to the state courts, unless a constitutional violation is alleged, we perceive the language of the statute to deal primarily with the protection of various officials of state institutions, engaged in the different phases of the detention of inmates, from suits in the nature of false imprisonment. Whether this statute can also serve to grant immunity to officials alleged to have mismanaged a trust fund established for the benefit of prisoners, even though there is a reference in the act to the "management" of inmates, is far from clear, and we do not believe it is proper to dispose of the complaint on this ground.¹⁸ As we are constrained to dismiss this action under the doctrine of abstention, it will be up to the state courts, if this suit is pressed further, to gauge the applicability of this statutory grant of immunity to the facts here.¹⁹

The third ground for the decision below was the court's hesitancy to interfere with the discipline...