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Dean Stone, Michael Kraycinovich, and Tracy Jones v. John T. Pepmeyer et al

April 28, 2011

DEAN STONE, MICHAEL KRAYCINOVICH, AND TRACY JONES, PLAINTIFFS,
v.
JOHN T. PEPMEYER ET AL., DEFENDANTS.



The opinion of the court was delivered by: Byron G. Cudmore United States Magistrate Judge

Thursday, 28 April, 2011 04:09:01 PM Clerk, U.S. District Court, ILCD

BEFORE U.S. MAGISTRATE JUDGE BYRON CUDMORE:

ORDER

The remaining parties in this case-Plaintiffs and Defendants John T. Pepmeyer and Knox County-have filed an agreed motion to name the State of Illinois as a necessary party pursuant to Federal Rule of Civil Procedure 19. However, the State does not so agree, and Eleventh Amendment immunity protects it from being compelled to do so. Accordingly, the motion will be denied.

ANALYSIS

The parties assert that the State has refused to participate in settlement discussions because it is not a party to this lawsuit, which "may impede the Plaintiffs' ability to obtain complete relief and may leave John Pepmeyer and Knox County at risk of incurring double and/or inconsistent obligations due to the two other proceedings currently pending based on the same set of facts." (d/e 97, p. 1).*fn1 They argue that the State is a necessary party because under state law "it should indemnify any judgment in this case and/or may be otherwise financially responsible." Id. They contend that settlement attempts have been unsuccessful in part because of the State's refusal to participate. (d/e 97, p. 3).

These difficulties, though, cannot get the parties around the State's Eleventh Amendment immunity. The State has already been dismissed as a party in part because of that immunity. (d/e 26, Judge Mihm's Order adopting this Court's Report and Recommendation, p. 10). And, Plaintiffs have already conceded that the Eleventh Amendment bars their § 1983 claims against the State. (d/e 19, p.10).

The parties assert that Eleventh Amendment immunity does not bar injunctive or prospective relief against the State, which is true as a general statement of law, but they do not explain what injunctive or prospective relief they seek against the State. Plaintiffs do not seek prospective relief against the State. They want to bring the State's purse to the table to pay a settlement or judgment, which directly implicates the Eleventh Amendment. *fn2 See Edelman v. Jordan, 415 U.S. 651, 663 (1974)("a suit by private parties seeking to impose a liability which must be paid from public funds in the state treasury is barred by the Eleventh Amendment."); Porco v. Trustees of Indiana University, 453 F.3d 390, 395 (7th Cir. 2006) (suit against state for monetary compensation barred by Eleventh Amendment). The parties hypothesize that the State could be liable for pension benefits, wages and/or attorney's fees if reinstatement is ordered, but that again would be a claim against the State to pay money, not a claim for injunctive or other prospective relief.

That the State may have to indemnify Pepmeyer or otherwise pay Plaintiffs under state law does not diminish its Eleventh Amendment immunity. Stoner v. Wisconsin Dept. of Agriculture, Trade and Consumer Protection, 50 F.3d 481, 483 (7th Cir. 1995)("Case law in this Circuit has rejected the notion . . . that a state which chooses to indemnify its employees for damages threatens its Eleventh Amendment immunity from suit."); Mann v. Vogel, 2010 WL 5395631 * 2 (C.D. Ill., Judge Mihm)(not reported in F.Supp.2d)(dismissing indemnity claim against State as barred by Eleventh Amendment).

The parties cite Carver v. Sheriff of LaSalle County, 324 F.3d 947, 948 (7th Cir. 2003), but the State is correct that Carver does not apply because Carver involved a county's obligation to pay, not a State's obligation. The Eleventh Amendment does not apply to counties. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 124 n. 34 (1984)("We have held that the Eleventh Amendment does not apply to 'counties and similar municipal corporations.'")(quoted cites omitted).

The other cases cited by the parties do not support their argument either. Lapides v. Board of Regents of the University System of Georgia, 535 U.S. 613 (2002), held that a State's voluntary removal of a case to federal court amounted to a waiver of Eleventh Amendment sovereign immunity. The State did not remove this case nor has it otherwise waived its Eleventh Amendment immunity. Kiersch v. Ogena, 230 Ill.App.3d 57, 64 (1992), another case cited by the parties, stands for the proposition that a state lawsuit against a state employee in an individual capacity does not become a Court of Claims suit simply because of the indemnification statutes. Kiersch did not involve Eleventh Amendment immunity nor did it involve claims for indemnity.

Ryan v. Consentino, 793 F.Supp. 822 (N.D. Ill. 1992), also cited by the parties, involved a plaintiff suing on behalf of the State, to recover funds fraudulently taken from the State. The plaintiff in Ryan sought to bring in the State as a nominal party, but the State objected on Eleventh Amendment grounds. The court held that Eleventh Amendment immunity was not an issue because the plaintiff was standing in the shoes of the State, pursuing the State's rights. The court reasoned that Eleventh Amendment immunity did not apply because adding the State as a nominal party would not restrain State action or target State funds. 793 F.Supp. at 824. Here, in contrast, the parties do seek to direct State action and to access State funds, so Eleventh Amendment immunity does apply.

Thus, the Eleventh Amendment bars the State's joinder. This is so even if the State is a necessary party under Rule 19, which it is not.*fn3 The State is correct that "[t]he Parties attempt to equate the indemnification provided by the State with liability in this matter. These are two separate inquires." (d/e 102, p. 9). The parties can pursue and defend the claims in this action without any determination of the State's indemnity and payment obligations under state law. If Defendants lose or settle, and if the State refuses to pay, Defendants can bring a state action to enforce the State's payment obligations. See, e.g., Braziel v. State, 35 Ill. Ct. Cl. 385 (1981)(plaintiff, as assignee of defendants' indemnity rights, successfully pursued claim against State to pay settlement).

An entity's potential duty to indemnify does not make it a necessary party. The Seventh Circuit recognized this in Askew v. Sheriff of Cook County, 568 F.3d 632, 636-37 (7th Cir. 2009), when it rejected the argument that a county is a necessary party in an individual ...


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