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Schlafly v. Volpe

decided: February 28, 1974.

PHYLLIS SCHLAFLY, GREATER ALTON ASSOCIATION OF COMMERCE AND WILLIAM C. LINEBARGER, PLAINTIFFS-APPELLANTS,
v.
JOHN A. VOLPE, SECRETARY OF TRANSPORTATION, JOHN B. CONNOLLY, JR., SECRETARY OF THE TREASURY, WILLIAM F. CELLINI, DIRECTOR OF THE DEPARTMENT OF PUBLIC WORKS AND BUILDINGS, AND RICHARD H. GOLTERMAN, CHIEF HIGHWAY ENGINEER, DEPARTMENT OF PUBLIC WORKS AND BUILDINGS, STATE OF ILLINOIS. DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Southern District of Illinois, Southern Division.

Fairchild and Pell, Circuit Judges, and Campbell, Senior District Judge.*fn* Fairchild, Circuit Judge (dissenting in part, concurring in part).

Author: Campbell

CAMPBELL, Senior District Judge.

This suit challenges the legality of the suspension of federal funding applicable to certain highway construction projects in Madison County, Illinois, and the closing of several other Madison highway projects by Illinois officials. Plaintiffs appeal from an order granting defendants' motions to dismiss. With respect to the federal officials named as defendants, the district court ruled that it had "no jurisdiction under the doctrine of sovereign immunity to order expenditure of federal funds or other such relief against government officials acting in their official capacity." Regarding the state officials named as defendants, William Cellini and Richard Golterman, the district court found that Count I of the complaint failed to state a cause of action and that Count II had been rendered moot by S.I.B.A. v. Ogilvie, 327 F. Supp. 1154 (S.D. Ill. 1971), aff'd 471 F.2d 680 (7th Cir. 1972). We reverse the dismissal of the federal defendants and affirm the dismissal of the state defendants.

Count I of the complaint alleges that plaintiffs are residents and taxpayers of Madison County, Illinois, and that on July 5, 1968 the Federal Highway Administrator of the Department of Transportation caused a written order to issue to the Illinois Department of Public Works and Buildings directing that all new federal-aid construction contract authorizations in Madison County be withheld. Among the reasons stated for this "freeze order" was the "failure to achieve substantial improvement in compliance with Federal laws and directives with reference to equal employment opportunity in the East St. Louis area."

Count I alleges that pursuant to this order, all work was stopped for approximately two years on some fifteen highway and bridge construction projects which had previously been approved by the Secretary of Transportation. Plaintiffs contend that the "freeze order" was unlawful because it was not issued in compliance with the conditions set forth in Section 602 of the Civil Rights Act of 1964, 42 U.S.C. § 2000 d-1,*fn1 and that the order constituted a breach of the contractual obligations which plaintiffs contend were created upon approval by the Secretary of Transportation of the construction projects in question.

With respect to the Illinois officials named as defendants, Count II alleges that on January 20, 1971, Cellini and Golterman directed the closing of four other highway projects, financed in part by federal-aid funds, because of the "failure to have the required number of minority trainees on the job." Again, plaintiffs allege that this action was unlawful because it was not taken in compliance with the provisions of § 602 of the Civil Rights Act of 1964.

42 U.S.C. § 2000 d-1 (§ 602 of the Civil Rights Act of 1964) provides that:

"No person in the United States shall, on the ground of race, color or national origin, be excluded from participation in, be denied the benefit of, or be subjected to discrimination under any program or activity receiving federal financial assistance."

42 U.S.C. § 2000 d-1 (§ 602 of the Civil Rights Act of 1964) directs federal departments and agencies empowered to extend federal financial assistance to any program or activity to "effectuate the provisions of section 2000 d of this title . . . by issuing rules, regulations or orders of general applicability which shall be consistent with the achievement of the objectives of the statute authorizing the financial assistance . . .."

§ 2000 d-1 requires that such rules, regulations and orders shall be effective only upon approval of the President. It provides that compliance with any requirement so adopted may be effected:

"(1) by the termination of or refusal to grant or to continue assistance . . . to any recipient as to whom there has been an express finding on the record, after opportunity for hearing, of a failure to comply with such requirement, but such termination . . . shall be limited to the particular political entity, or part thereof, or other recipient as to whom such a finding has been made and, shall be limited in its effect to the particular program, or part thereof, in which such non-compliance has been so found . . . ."

Before termination of federal assistance under § 2000 d-1 may become effective, the statute requires that the department or agency concerned must have advised "the appropriate person or persons of the failure to comply with the requirement" and must have determined "that compliance cannot be secured by voluntary means . . .."

Finally, § 2000 d-1 provides that no such agency action shall become effective until thirty days after the head of the federal department concerned has filed "with the committees of the House and Senate having legislative jurisdiction over the program or activity involved a full written report of the circumstances and the grounds for such action."

The complaint alleges that several of these conditions precedent to the termination of federal assistance were not satisfied prior to issuance of the July 5, 1968 "freeze order," and that the order was therefore unlawful. The defendants respond, inter alia, that plaintiffs lack standing to sue; that because the freeze order has since been cancelled, the issue is moot; and that plaintiffs' claim is barred by operation of the doctrine of sovereign immunity, since the relief sought by plaintiffs includes the expenditure of federal highway funds.

I. THE FEDERAL DEFENDANTS.

(A) MOOTNESS

Defendants' claim that the issues presented are moot may ultimately be established, but it cannot be sustained upon a motion to dismiss. Whether the alleged unlawful action by federal officials did, in fact, result in the loss of funds, and whether the construction projects involved have actually been resumed without any attendant loss of funds, are representative of the factual issues which clearly affect any determination of whether plaintiffs' claims were mooted by cancellation of the "freeze order" on June 3, 1970. The district court apparently recognized the inappropriateness of dismissing this action as moot on the strength of the present record, and relied instead on the doctrine of sovereign immunity as the basis for dismissal.

(B) STANDING

Under § 209 of the Federal-Aid Highway Act of 1956,*fn2 the "Highway Trust Fund" was created. The Act provides that specified percentages of highway taxes, (e.g., taxes on gasoline, diesel fuel, tires, etc.) shall be appropriated to the Highway Trust Fund; these funds are then used to reimburse the various states for expeditures under the Federal-Aid Highway Act, 23 U.S.C. § 101 et seq. The complaint alleges that plaintiffs are residents and taxpayers of Madison County, that four cents of the per gallon price of gasoline purchased by them is paid into the Highway Trust Fund, and that the funds which were suspended pursuant to the "freeze order" of July 5, 1968 were payable from the Highway Trust Fund for the construction projects in question. Plaintiffs argue that because taxes which they are obliged to pay are used to fund the highway projects subject to the "freeze order," they are "aggrieved" persons within the meaning of § 603 of the Civil Rights Act of 1964, 42 U.S.C. § 2000 d-2,*fn3 and therefore have standing to sue.

In Flast v. Cohen, 392 U.S. 83, 20 L. Ed. 2d 947, 88 S. Ct. 1942 (1968), the Supreme Court thoroughly examined the concept of standing in the context of taxpayer suits, stating that "the question of standing is related only to whether the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution." 392 U.S. at 101. The test enunciated in Flast to determine "the circumstances under which a federal taxpayer will be deemed to have the personal stake and interest that impart the necessary concrete adverseness to such litigation" 392 U.S. at 101, was subsequently adopted in a somewhat modified form in two cases which, unlike Flast, were not concerned with the constitutionality of a federal statute, Data Processing Service v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970) and Barlow v. Collins, 397 U.S. 159, 25 L. Ed. 2d 192, 90 S. Ct. 832 (1970). Justice Douglas, speaking for the Court, viewed the issue of standing in those cases as involving two separate but related questions:

(1) "The first question is whether the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise." 397 U.S. at 152.

(2) The second question concerns "whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute . . . in question." 397 U.S. at 153.

In the instant case, plaintiffs' payment of taxes specifically ear-marked for the Highway Trust Fund, the subsequent suspension in payment of such funds for all highway construction projects in the county wherein plaintiffs reside, and the allegation that the "freeze order" suspending the funds was illegal, combine to satisfy both criteria enunciated in Data Processing and Barlow. Plaintiffs have clearly suffered an alleged economic "injury" through the payment of fuel taxes, as well as non-economic injury owing to the loss of improved highways on which to travel. We are also satisfied that the interests sought to be protected are within the "zone of interests" to be protected under the Civil Rights Act of 1964, particularly since 42 U.S.C. § 2000 d-2 provides for judicial review on behalf of "any person aggrieved" by action taken pursuant to § 2000 d-1. In so providing, § 2000 d-2 includes within the zone of interests to be protected the interests of virtually all persons satisfying the first requirement of standing, for if the challenged action has injured plaintiffs, economically or otherwise, they must be considered persons "aggrieved" within the meaning of § 2000 d-2.

(C) SOVEREIGN IMMUNITY

The defendants' assertion that this action is barred by the doctrine of sovereign immunity compels us to examine one of the more ill-defined aspects of federal jurisdiction. Perhaps the only irrefutable statement that can be made regarding this doctrine is that it appears to offer something for everyone. In anticipation of the government's cry that the sovereign cannot be sued without consent, complaints are drawn with a covetous eye on the doctrine's "exceptions," only to be confronted with assertions that the facts present an "exception to the exception," Zapata v. Smith, 437 F.2d 1024 (5th Cir. 1971), or "qualify" the exceptions, Knight v. State of New York, 443 F.2d 415 (2nd Cir. 1971), or that entertainment of the plaintiff's claim would create an "intolerable burden on governmental functions," requiring use of the doctrine despite its otherwise applicable exceptions, State of Washington v. Udall, 417 F.2d 1310 (9th Cir. 1969). Warnings that absent sovereign immunity, government would be "stopped in its tracks," Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 704, 93 L. Ed. 1628, 69 S. Ct. 1457 (1948), ...


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