P. Sidney Neuwirth, D.D.S. v. Louisiana State Board of Dentistry

WISDOM, Circuit Judge,

dissenting:

Dr. P. Sidney Neuwirth is a qualified and experienced dentist who practised in the state of Illinois from 1938 until 1981 when he accepted a position to serve as an Assistant Clinical Professor at the Louisiana State University School of Dentistry. The Louisiana State Board of Dentistry has denied his requests for a license based on a reciprocity statute. 1 Unfortunately for Dr. Neuwirth, his pleadings are flawed — at least at this point.

As this case has been pleaded, I agree with the majority that the eleventh amendment determines the outcome. Under this court’s decision in Darlak v. Bobear, 2 the Louisiana State Board of Dentistry is an alter ego of the State of Louisiana and is therefore immune from suit. Because of Dr. Neuwirth's failure to name all the members of the Board as defendants, his request for relief does not fit within the reach of Ex parte Young. 3

The majority, however, ventures far beyond the principles necessary to decide this appeal. The declaratory judgment and injunction Dr. Neuwirth requests are not relief necessarily barred by the eleventh amendment. 4 Only a pleading defect puts Dr. Neuwirth’s request for an injunction outside Young: Dr. Neuwirth asks for an order that the Board grant him a license, but names only Dr. Chustz defendant in his official capacity as Board president. Dr. Neuwirth should have joined the other members of the Board. By himself, Dr. Chustz is powerless to grant Dr. Neu-wirth’s application for a license. 5 The appropriate response to Dr. Neuwirth’s error is dismissal without prejudice. 6

The merits of Dr. Neuwirth’s claim need not have been addressed. 7 Because the *561 majority has reached the merits, however, it is appropriate for me to express my dissent from its view of them.

I.

It is important to emphasize that the majority does not hold that Papasan and Pennhurst bar a fourteenth amendment due process claim merely because that claim is based upon a property interest defined by state law. The Supreme Court has long recognized that determining what constitutes “property” is a matter of measuring the interest defined by state law against a fourteenth amendment yardstick. In this sense, all due process claims — including the one in Young — are premised upon a violation of state law. Reading Papasan and Pennhurst to bar them on this basis would eviscerate the due process clause.

The message Papasan and Pennhurst send is that the eleventh amendment ensures that the fourteenth does not go so far as to open the federal courts as a forum for the remedy of every state law wrong: “federal supremacy is not implicated [when] the state official is acting contrary to state law only”. 8 If not restrained in some way, federal power under the fourteenth amendment could raise any state law wrong to the level of a due process violation. All state laws set out rules that each citizen has a right to expect will be followed. Were this expectation generally recognized as “property” or “liberty” protected by the fourteenth amendment, each citizen would have a federal cause of action under Young whenever a state official disappointed these state law expectations without due process. This would go too far, as Pennhurst and Papasan sensibly recognize. 9

But the threshold inquiry in each due process case remains whether the state law interest at stake rises to the level of constitutionally-protected “property” or “liberty”. In Roth, Perry v. Sindermann, 10 and their progeny, the Court fleshed out the substance of this inquiry. 11 The innovation of Pennhurst, followed in Papasan, was to restate these fourteenth amendment principles in eleventh amendment terms: if the plaintiff has a “property” or “liberty” interest, Young affords a federal cause of action under the fourteenth amendment; if not, the cause of action is under state law and suit may be barred in the federal courts by the eleventh amendment. 12

II.

Whether or not this innovation puts us on the right track, 13 it will take us nowhere without an understanding of what constitutes “property” and “liberty” protected by the due process clause. Pennhurst and Papasan provide little guidance on this point. 14 The majority’s treatment of the *562 subject, although correct as far as it goes, makes short shrift of the concept of constitutionally-protected “property”. This court’s recent opinion in Mahone v. Addicks Utility District discusses the concept more fully:

In Roth, the Supreme Court explained that the definition of “property interest,” when it arises in the context of the fourteenth amendment, is not limited by traditional concepts of ownership. Indeed, “the property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or money.” ... Consequently, besides protecting individual interests in real and personal property, the fourteenth amendment’s due process safeguards also extend to the “interests that a person has already acquired in specific benefits.” ... The questions, therefore are when and how a person acquires an “interest in specific benefits” which will trigger the due process clause. The Supreme Court explained “when” in Roth:

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims.

... In a nutshell, therefore, when a person has a legitimate claim of entitlement to a benefit, he has a protected property interest sufficient to entitle him to due process. How these “legitimate claims of entitlement” arise is equally clear. As the Supreme Court explained, “[Property interests are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.” 15

With these principles in mind, I do not find it so clear as the majority that Dr. Neuwirth has no “legitimate claim of entitlement” to a reciprocal license. I agree with the majority that the place to begin the Roth inquiry is language of the statute establishing the interest. But the majority’s inquiry begins and ends with construing the word “may” as conferring absolute discretion in the Board never to grant a license to a qualified dentist moving to Louisiana from another state. This view of the interest Louisiana law gives Dr. Neu-wirth strikes me as myopic.

Constitutionally-protected property interests do not hang on a single word. Broad administrative discretion in the award of a benefit, indicated by precatory language in the relevant statute, does not give rise to constitutionally-protected “property”. 16 Nonetheless, the appearance of “may” in R.S. 37:768 does not necessarily render Dr. Neuwirth’s interest in a reciprocal license “a mere unilateral expectation”. To say that the Board has “discretion” in the granting of reciprocal licenses. begs the question whether Dr. Neuwirth has a con *563 stitutionally-protected interest. All agencies exercise discretion when implementing legislative commands. To determine the extent of the interest R.S. 37:768 creates, this court should look further, to the remainder of the licensing statute as well as the broader context of how the statute is commonly understood.

Recently, in Board of Pardons v. Allen, the Supreme Court again explained the proper method of inquiry:

The Court ... held in Greenholtz that the presence of general or broad release criteria — delegating significant discretion to the decisionmaker — did not deprive the prisoner of the liberty interest in parole release created by the Nebraska statute. In essence, the Court made a distinction between two entirely distinct uses of the term discretion. In one sense of the word, an official has discretion when he or she “is simply not bound by standards set by the authority in question.” R. Dworkin, Taking Rights Seriously 32 (1977). In this sense, officials who have been told to parole whomever they wish have discretion. In Greenholtz, the Court determined that a scheme awarding officials this type of discretion does not create a liberty interest in parole release. But the term discretion may instead signify that “an official must use judgment in applying the standards set him [or her] by authority”; in other words, an official has discretion when the standards set by a statutory or regulatory scheme “cannot be applied mechanically.” Dworkin, supra, at 31, 32 ... . The Court determined in Greenholtz that the presence of official discretion in this sense is not incompatible with the existence of a liberty interest in parole release is required after the Board determines (in its broad discretion) that the necessary prerequisites exist. 17

Here, the word “may” in R.S. 37:768 gives the Board discretion to grant reciprocal licenses to applicants meeting certain, specific criteria. This does not, however, give the Board “absolute discretion” to refuse all such applicants as the majority contends.

Rather, R.S. 37:776, passed at the same time and as part of the same licensing act as R.S. 37:768, sets out in great detail “causes for nonissuance, suspension, revocation, or imposition of restrictions of a dental license”. 18 This list of twenty-four grounds for refusing an application for a dental license clearly limits the Board’s discretion and strongly suggests that the exercise of discretion to deny a license should be tailored to the particular application. 19 *564 R.S. 37:776 seems sufficiently specific and objective to constitute a requirement that, unless Dr. Neuwirth can be refused for one of the reasons listed, he be granted a license under R.S. 37:768. 20

The reciprocal nature of the interest defined by R.S. 37:768 adds a distinctive twist to Dr. Neuwirth’s claim of entitlement. It presents an opportunity to verify objectively the plain meaning of R.S. 37:768 and 37:776. If, on the strength of Louisiana’s licensing laws, Illinois and other states have been granting reciprocal licenses to dentists from Louisiana, this would confirm that Dr. Neuwirth’s expectations are a widely-shared and reasonable basis for reliance. The Supreme Court made clear in Roth that reliance is an important indicator of constitutionally-protected property. 21 Reasonable reliance on Louisiana law by Illinois and other states would strengthen the entitlement of dentists from those states to similar treatment in Louisiana.

Unfortunately, the record does not reveal whether other states honored Louisiana’s offer of reciprocal licenses. The question, however, merits serious inquiry by the trial court. If the Louisiana legislature intended to offer a deal to other states and their dentists, and if that offer was accepted, what is at stake in this case is more than a “mere unilateral expectation” or “an abstract need or desire”. It is much more than an “interest in practicing dentistry in Louisiana without passing an examination.” 22 What is at stake — what Dr. Neu-wirth moved to Louisiana expecting to get and what Illinois and other states may have licensed Louisiana dentists expecting to receive — is a legitimate claim of entitlement to a reciprocal license. 23

*565 III.

If Dr. Neuwirth has a legitimate claim of entitlement to a reciprocal license, there can be no doubt that he did not receive due process in his appearances before the Board. Due process entitles Dr. Neuwirth to an individualized decision on his application for a reciprocal license. As the Second Circuit said in Tomanio v. Board of Regents:

Where, as here, such broad discretionary power is granted to admit or deny entrance or continuance in a learned profession, it “must be construed to mean the exercise of a discretion ... after fair investigation, with such notice, hearing and opportunity to answer for the applicant as would constitute due process.” Goldsmith v. Board of Tax Appeals, 270 U.S. 117, 123 [ 46 S.Ct. 215, 217 , 70 L.Ed. 494 ] (per Ch. Justice Taft 1926).

The adjudicative fact to be determined in considering whether to grant a waiver is not whether [the plaintiff] may practice her profession in New York, as she can do in Maine and New Hampshire, as a matter of grace from her sovereign or at the whim of the Regents. Rather, it is whether [she complies with the statutory requirements for waiver]. Of course, the state legislature need not have provided for any waiver of the examination. But once it did so, denial of the waiver implicates procedural due process rights. An adjudicative fact of such significance to [the plaintiffs] interests cannot, in logic or constitutionally, be resolved without a hearing before an impartial fact finder, followed by a statement of reasons in the event of denial. 24

In this case, the Board’s policy never to grant reciprocal licenses rendered any hearing Dr. Neuwirth received a sham: the Board had determined to rule against him whatever his qualifications and regardless of the requirements of R.S. 37:768 and 37:776. A Board committed to denying all such applications for reciprocal licenses cannot be “an impartial fact-finder”. A statement that the Board denies all such applications is not a legitimate “reason” for denial under R.S. 37:768 and 37:776. Thus, in no sense did Dr. Neuwirth receive a genuinely individualized decision on his application. He received three opportunities to waste his time in futile efforts to convince the Board not to nullify R.S. 37:768. That is not due process.

IV.

But for Dr. Neuwirth’s pleading error, this case states a due process violation and falls squarely within the parameters of Ex parte Young. As the Court in Papasan described it,

... Young has been focused on cases in which a violation of federal law by a state official is ongoing as opposed to cases in which federal law has been violated at one time or over a period of time in the past, as well as on cases in which the relief against the state official directly ends the violation of federal law as opposed to cases in which that relief is intended indirectly to encourage compliance with federal law through deterrence or directly to meet third-party interests such as compensation. 25

Dr. Neuwirth’s contentions, undisputed by the Board, meet both of these requirements. First, they state an ongoing denial of federal due process. According to an announced policy, the Board not only denied Dr. Neuwirth a reciprocal license, but plans to deny all such applications. Second, this ongoing wrong would be ended directly by an order to the members of the Board to (1) determine whether Dr. Neu-wirth — or any other applicant for a reciprocal license before R.S. 37:768 was repealed — meets the requirements of R.S. 37:768 and 37:776 and (2) if so, to issue the requested license.

Had Dr. Neuwirth joined the appropriate defendants, this court should have vacated the district court’s summary judgment and remanded the cause for a trial on whether Dr. Neuwirth’s expectation of a license rises to a legitimate claim of entitlement. As *566 he did not, it was necessary for this court only to vacate the judgment of the district court and dismiss Dr. Neuwirth’s complaint without prejudice to his filing a new or amended complaint based on the same cause of action. Instead, the majority goes out of its way in disservice to both a qualified dentist and the law of due process.

. La.Rev.Stat.Ann. § 37:768 (West 1974).

. 814 F.2d 1055 (5th Cir.1987).

. I also agree that the repeal of La. 37:768 does not moot this case. See majority opinion note 3 above.

. Gay Student Services v. Texas A & M University, 612 F.2d 160 , 164 n. 3, 165 (5th Cir.) cert. denied, 449 U.S. 1034 , 101 S.Ct. 608 , 66 L.Ed.2d 495 (1980). As the Supreme Court said in Papa-san,

Relief that in essence serves to compensate a party injured in the past by an action of a state official ... illegal under federal law is barred even when the state official is the named defendant. ... On the other hand, relief that serves directly to bring an end to a present violation of federal law is not barred by the Eleventh Amendment even though accompanied by a substantial ancillary effect on the state treasury.

478 U.S. at 278, 106 S.Ct. at 2940, 92 L.Ed.2d at 227 (emphasis added). See also Wright, Miller, and Cooper, Federal Practice and Procedure § 3524 at 196-96 & n. 141 (1984 & Supp.1987).

. See La.Rev.Stat.Ann. § 37:754(A) (West 1974).

. Voisin’s Oyster House, 799 F.2d at 188-89.

. Our inability to grant the injunctive relief Dr. Neuwirth requests does not, of course, preclude declaratory relief. Fed.R.Civ.P. 57. See Wright, Miller, and Cooper § 2758 at 620-21 & nn. 3-4. But because the harm Dr. Neuwirth alleges he suffered is effectively remedied only by an injunction ordering the Board to grant him a license, this court reasonably could have refused declaratory relief until it could also issue an injunction. See id. § 2758 at 621-23 & n. 6, 627-30 & nn. 9-10.

. Papasan, 478 U.S. at 277, 106 S.Ct. at 2940, 92 L.Ed.2d at 226.

. See Dwyer, Pendent Jurisdiction and the Eleventh Amendment, 75 Calif.L.Rev. 129, 141-42 (1987).

. 408 U.S. 593 , 92 S.Ct. 2694 , 33 L.Ed.2d 570 (1972).

. See, e.g., Goss v. Lopez, 419 U.S. 565 , 95 S.Ct. 729 , 42 L.Ed.2d 725 (1975); Paul v. Davis, 424 U.S. 693 , 96 S.Ct. 1155 , 47 L.Ed.2d 405 (1976); Bishop v. Wood, 426 U.S. 341 , 96 S.Ct. 2074 , 48 L.Ed.2d 684 (1976); Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1 , 98 S.Ct. 1554 , 56 L.Ed.2d 30 (1978); Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1 , 99 S.Ct. 2100 , 60 L.Ed.2d 668 (1979); Board of Pardons v. Allen, 482 U.S. -, 107 S.Ct. 2415 , 96 L.Ed.2d 303 (1987).

. Whether the Pennhurst limits on federal jurisdiction apply also depends on the nature of the relief requested. See Papasan, 478 U.S. at 277, 106 S.Ct. at 2940, 92 L.Ed.2d at 226-27, quoted at note 25 below. See also Dwyer, 75 Calif.L.Rev. at 145-51.

. For a thoughtful argument that it does not, see Shapiro, Wrong Turns: The Eleventh Amendment and the Pennhurst Case, 98 Harv.L. Rev. 61 (1984).

. Papasan does not address the issue. It held that even if Mississippi’s school land grants created a binding trust with the state as trustee, and even if this trust was constitutionally-protected "property”, the plaintiffs’ -request that the governor and other state officials be ordered to pay the original corpus and accumulated earnings from the state treasury amounted to a "retroactive award of monetary relief’ barred by Edelman v. Jordan, 415 U.S. 651 , 94 S.Ct. 1347 , 39 L.Ed.2d 662 (1974). Papasan, 478 U.S. at 279-81, 106 S.Ct. at 2941-42, 92 L.Ed.2d at 228-29.

*562 In Pennhurst, two considerations relevant to a definition of "property" or “liberty” underlie the Court's holding that the eleventh amendment barred relief for the undisputed failure by the state administrators in charge of the Penhurst State School and Hospital to provide the school’s residents “minimally adequate habilitation”. 465 U.S. at 93, 104 S.Ct. at 904. First, the Pennsylvania Mental Health and Mental Retardation Act gave the administrators so much discretion that their actions — although later found to be in violation of the Act — could not be called "ultra vires". Id. at 101 & n. 11, 109-111, 104 S.Ct. at 909 & n. 11, 912-13. Second, the officials acted in a “good faith" belief that they complied with the Act. Id. at 107, 104 S.Ct. at

911. Both considerations speak indirectly to whether the plaintiffs had a "legitimate claim of entitlement” to the particular treatment they sought: both the Court, reviewing state law after the fact, and health care administrators, acting in good faith before the fact, found the claim open to dispute.

. 836 F.2d 921, 929-30 (5th Cir. 1988) (citations to Roth, 408 U.S. at 571-72, 576-77 , 92 S.Ct. at 2706, 2708-09 , omitted).

. This was, for example, one basis of this court’s rejection of the due process claim in Mahone. at 931.

. 482 U.S. at -, 107 S.Ct. at 2419 , 96 L.Ed.2d at 311 (original emphasis).

. La.Rev.Stat.Ann. § 37:776 (West 1974 & Supp.1987) (emphasis added).

. I reproduce them in the margin:

The board may refuse to issue ... any dental license under this Chapter for any of the following reasons:

(1) Affliction with a contagious ... disease.

(2) Conviction of a crime ....

(3) Fraud, deceit, or perjury in obtaining any diploma, license, or permit ....

(4) Providing false testimony before the board or in any judicial proceeding.

(5) Habitual indulgence in the use of drugs, narcotics, or intoxicating liquors.

(6) Prescribing ... legally-controlled substances in other than a legal ... manner.

(7) Professional or dental incompetency.

(8) Continuing or recurring dental practice which fails to satisfy the prevailing acceptable standards of dental practice in this state.

(9) Division of fees ... for dental services with any person for bringing or referring a patient without the knowledge of the patient

(10) Employing ... or abetting a person not licensed ... as a dentist to engage in the practice of dentistry ....

(11) Employing unlicensed persons to perform work which under this Chapter can only be done by persons licensed to practice dental hygiene in this state.

(12) Making any misrepresentations ... to influence ... dental patronage.

(13) Professional connection or association with ... any person holding himself out in any manner contrary to this Chapter.

(14) Practicing under any name other than that which appears on the license ....

(15) Unprofessional conduct as defined in R.S. 37:775.

(16) Any conduct intended to deceive or defraud the public.

(17) Conduct ... which disqualifies the licensee to practice dentistry with safety to the public ..., including but not limited to deterioration through the aging process or loss of motor skills.

*564 (18) The refusal of ... another state to issue or renew a license ... to practice dentistry ... .

(19) Employing solicitors ... for the purpose of securing patients, other than advertising permitted by law.

(20) Refusing to submit to the examinations and inquiries of medical physicians ... designated by the board ... to inquire into the dentist's physical or mental fitness ....

(21) Making ... false or deceptive claims to any patient, insurance company, ... or governmental authority for the purpose of obtaining monetary compensation for services rendered.

(22) Immoral conduct in exercising the privileges provided for by license or permit issued under this Chapter.

(23) Interdiction or committment by due process of law.

(24) Violation of any rule or regulation of the board or any provision of this Chapter.

La.Rev.Stat.Ann. § 37:776(A) (West Supp.1987). That the Board “may” refuse to issue a license to an otherwise qualified applicant for any of these twenty-four reasons, implies that it may not refuse for any other reason.

. See Allen, 482 U.S. at -, 107 S.Ct. at 2419-22 , 96 L.Ed.2d at 311-14 (discussing language that created presumption of entitlement). Cf. Irving v. Thigpen, 732 F.2d 1215, 1216-17 (5th Cir.1984) (subjective conditions create no presumption of entitlement); Williams v. Briscoe, 641 F.2d 274, 277 (5th Cir.1981) (same). In Tomanio v. Board of Regents, for example, the Second Circuit found the New York’s statutory waiver of the “education, experience, and exam- . ¡nation requirements for a [chiropractor's] professional license ... provided the Board of Regents shall be satisfied that the requirements ... have been substantially met” created a constitutionally-protected property interest. 603 F.2d 255 , 257 (2d Cir.1979) rev'd on other grounds, 446 U.S. 478 , 100 S.Ct. 179 , 64 L.Ed.2d 440 (1980). It did so because (1) the statute spelled out the "education, experience, and examination” requirements in detail and (2) "substantial” compliance with the requirements had a "plain meaning”. 603 F.2d at 258.

I also note here that I cannot agree with the majority that its conclusion “harmonizes” with Leis v. Flynt. The Supreme Court's holding in Leis is premised upon a finding that Ohio law gives trial judges unfettered discretion to grant or deny an out-of-state attorney the right to appear pro hac vice in their court. 439 U.S. at 442-43, 99 S.Ct. at 701 . In taking this view of the Ohio law, the Leis Court had the benefit of Ohio decisions construing the law in question. Id. at 453-56, 99 S.Ct. at 706-08 (Stevens, J., dissenting). Here, we have not the benefit of a Louisiana court decision construing R.S. 37:768.

. 408 U.S. at 577 , 92 S.Ct. at 2709 , quoted at note 11 above.

. Majority opinion note 8 above. Dr. Neu-wirth asks here only for what he could reasonably expect from the plain language of R.S. 37:768: permission to practice in Louisiana based on his Illinois license.

. Viewed from another perspective, what is at stake is the duty of state officials to carry out the plain meaning of the state's laws. This duty is rooted in the substantive components of the due process requirement. See Daniels v. Williams, 474 U.S. 327, 337-39 , 106 S.Ct. 662, 677-79 , 88 L.Ed.2d 662 (1986) (Stevens, J., concurring).

. 603 F.2d at 258-59.

. 478 U.S. at 277-78, 106 S.Ct. at 2940 , 92 L.Ed.2d at 226-27 (emphasis added).