Petition — Batt v. Marion Heights, Inc.

| a Supreme Court, U,

FILED’

78-1181 |

} JAN 29 1979

IN THE j°

MICHAEL RODAK, JR., CLERK

SUPREME COURT OF THE UNITED-STATES7————

October Term, 1978

No.

PATRICK BATT, Petitioner,

Vv.

MARION HEIGHTS, INC., et al, Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

DAVID L. WALTHER

JOHN SUNDQUIST

Attorneys for Petitioner

Of Counsel:

WALTHER & HALLING

222 East Mason Street

Milwaukee, Wisconsin 53202

(414) 271-3400

INDEX

Page

ee Oe. Ck eee oe ee 2

JURI SDICT ION . . . . . . . > . . . . . . . 2

QuEstaens ORUSEETER. 2. wi ccc we «(CO

STATUTORY PROVISIONS INVOLVED. ...... 3

STATEMENT OF THE CASE. . . . «© 2 « e e « « -

REASONS FOR GRANTING THE WRIT. ...... 9

I. Respondent, Marion Heights,

II.

Although Nominally A Private

Health Care Facility, Is, For

The Purposes Of Sec. 1983, A

Public Entity Due To Its Heavy

Governmental Funding, Pervasive

Regulatory Scheme And Applicable

Provisions Of State Law Which

Convert It To A State Agent In

Certain Instances. Furthermore,

The Respondent Performed A Public

Function In The Care Of Its

Elderly And Infirm Residents And As

A Provider Of Employment Training

_And Opportunities For Welfare

Recipients And Unemployed Persons ... 9

The Decision Below Conflicts With

The Law In Other Cicuits As To

Whether The Receipt Of Federal Funds

Under The Yill-Burton Act By A

Health Care Facility Renders Such

ii

Recipient A Government Instrumentality

So That Its Actions Are Governed By

The Constitutional Requirements

Generally Applicable To The State

And Federal Government. .. +++ -s >»

III. "State Action" Decisions Of The

Seventh Circuit Have Imposed

Overly Strict Pleading Requirements

Resulting In The Erroneous Dis~

missal of Petitioner's Complaint

For Failure To State A Claim Upon

Which Relief May Be Granted. .....

CONCLUSION. 2 se se eo eee eee ee 0 8

ot ee ee ee ee

CITATIONS

Cases:

Amalgamated Food Employees Union v. Logan

Valley Plaza, Inc., 391 U.S. 308

(1968) . . . 7 . . . . . * . * >. 7 . *

Braden v. University of Pittsburgh, 447

F* 68+: SU) ee ee

Burton v. Wilmington Parking Authority,

ae Gules PES GAUOA)s « 0 $$ 0 6 0 8 8

Citta v. Delaware Valley Hsopital, 313

F. Supp. 301 (E.D. Pa. 1970) .....

Page

28

30

34

App. 1

16, 17

33, 34

12, 14

31, 32

29

1ii

Cohen v. Illinois Institute of

Technology, 524 F.2d 818 (7th Cir.

1975), cert. denied, 425 U.S. 943

twa ee 6 6 wh eb ee we

Conley v. Gibson, 355 U.S. 41 (1957). .

Doe v. Bellin Memorial Hospital, 479

F.2d 756 (7th Cir. 1973) ..

Doyle v. Unicare Health Care Services,

Inc., 399 F. Supp 69 (N.D. I1l.

1975), aff'd. mem., 541 F.2d 283

c7eh Cit. I97G). « «

Evans v. Newton, 382 U.S. 296 (1966)...

Flagg Bros., Inc. v. Brooks, 436 U.S. 149

(1978) i oe er i ko oe ‘ ee @

Gilmore v. Montgomery, 417 U.S. 556 (1974).

Ginn v. Mathews, 533 F.2d 477 (9th Cir.

(1976) ek Se a on oe A ee oe ae ee ee a a

Jackson v. Metropolitan Edison Co.,

419 U.S. 345 (1974). ee e tet 6 © 8 ©

Jackson v. Norton-Children's Hospital,

Inc., 487 F.2d 502 (6th Cir.

1973). ‘+ 6 64 2.4% .8- 3

Jackson v. The Statler Foundation, 496

Dome Gad €20-COE. 2OTads 0 6 6 ee

Page

11, 12

13

31

16, 29

15, 17

9, 14,

15, 26

Ne ee ov

McQueen v. Druker, 438 F.2d 781 (lst Cir.

1971). ° . ° . . 7 e ° om e ° ° ° ° . .

Marsh v. Alabama, 326 U.S. 501 (1946) .. .

Mercy Medical Center v. Winnebago County,

58 Wis.2d 260, 206 N.W.2d 198 (1973) .

Morrison v. Henke, 165 Wis. 166, 160 N.W.

173 (1917)...

Norton v. Macy, 417 F.2d 1161 (D.C. Cir.

1969) Lis a2 ££ & 8 21 eK, 2S RO OS OS

Perez v. Sugarman, 499 F.2d 761 (2d Cir.

1974) . . . . . . . * . . . . 7 e . .

Pitts v. Department of Revenue, 333 F.

, Supp. 662 (B.D. Wis. 1971). .....

Robinson v. Price, 553 F.2d 918 (5th Cir.

1977) e ° . ° . . ° . . . ° ° ° . . .

Ruffler v. Phelps Memorial Hospital, 453

F. Supp. 1062 (S.D. N.Y. 1978)... .

Sams v. Ohio Valley General Hospital

Association, 413 F.2d 826 (4th Cir.

1969) . ° . 7 ° . - . . 7 ° o +. * e .

Scott v. Macy, 349 F.2d 182 (D.C. Cir.

1965) eo 6 2 & oases & Oe O28 02 &@ @

Simkins v. Moses H. Cone Memorial

Hospital, 323 F.2d 959 (4th Cir.

1963), cert. denied, 376 U.S. 938

(1964):. . . .

Page

20

16, 17

21

21

28

20

32

19

23

29

28

16, 29

Vv vi

Page Page

Taylor v. St. Vincent's Hospital, 424 Wisconsin Administrative Code H 32. .... ll

U.S. 948 (1976), denying cert. to

523 F. 2d 775 (9th Cir. 1976) . e <3 . ° ° 30

Terry v. Adams, 345 U.S. 461 (1953). ....417

Wahba v. New York University, 492 F.2d

96 (2d Cir. 1974), cert. denied,

419 U.S. 874 (1974). . 7-_ °©« © @ ._ 6¢ @ . 27

Ward v. St. Anthony's Hospital, 476 F.2d

671 (10th Cir. 1973) *-_ e* © © @© @ © # @ ae 16

Weise v. Syracruse University, 522 F.2d

Soe uae Gas. 20peees o ww 6 6 ee ore Bg Ze

STATUTES: .

42 U.S.C. See. 190 es i ee

42 U.S.C. Sec. 1983 . . 2. 2 «2 « « ces Passim

Wis. Stat. Sec. 231.02. . . «2. 6 eeeee 22

Wis. Stat. See. Bakse 0 et ee 6 4 tee.

OTHER AUTHORITIES:

45 CFR Sec. 224.13. . . «© © © © we ew © ow @ 2S |

45 CFR Sec. 224.40(c) (4). . «© «© «© «© ow ow ow @ 25 }

U.S. Civil Service Commission F.P.M.

Letter 731-3 (July 3, 1975) 44 U.S.

Law Week 2032 (1975) . .. . «+ « « « 28

ae Wty fee Steere te + -

IN THE . i 9

SUPREME COURT OF THE UNITED STATES

October Term, 1978 OPINION BELOW

The opinion of the Court of Appeals for the

No. Seventh Circuit affirming the order of the District

Court for the Eastern District of Wisconsin dismiss-

ing the petitioner's complaint is reported at 586

PATRICK BATT, Petitioner, F.2d 59. A copy appears in the appendix hereto.

¥. A copy of the petitioner's complaint is also in-

MARION HEIGHTS, INC., et al, Respondents. | cluded. i

JURISDICTION

The judgment of the Court of Appeals for the

PETITION FOR A WRIT OF CERTIORARI TO THE Seventh Circuit was entered on November 2, 1978.

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT This petition for certiorari was filed within

ninety (90) days of that date. This court's

jurisdiction is invoked under 28 U.S.C. Sec. 1254(1).

The petitioner, Patrick Batt, respectfully

i QUESTIONS PRESENTED

prays that a writ of certiorari issue to review |

l. Is the action of a nominally private

the judgment and opinion of the United States nie

nursing home, in dismissing from employment its

Court of Appeals for the Seventh Circuit,

affirmative action officer, action under color of

entered in this proceeding on November 2, 1978.

law, for purposes of 42 U.S.C. Sec. 1983 where it

receives the majority of its funding from govern-

mental sources, including Hill-Burton, Medicare,

Medicaid, and the Work eoniees Program, is regula-

ted in every facet of its operation; and by being

totally responsible for the care and welfare of

its elderly residents has become the functional

equivalent of a "company town!

2. Whether the instant complaint was

properly dismissed for failure to affirmatively

allege that "the governmental funding and regula-

‘

tions" have "fostered the challenged activities

of [the] private health care facilities."

STATUTORY PROVISIONS INVOLVED

United States Code, Title 42:

Sec. 1983

Every person who, under color of any

statutes, iebtiininna. regulation, custom or usage,

of any State or Territory, subjects or causes to

be subjected any citizen of the United States or

other person within the jurisdiction thereof to the

deprivation of any rights, privileges, or immuni-

ties secured by the Constitution and laws, shall

be liable to the party injured in an action at

law, suit and equity, or other proper proceedings

for redress.

STATEMENT OF THE CASE

Petitioner commenced this action against re-

spondent Marion Heights, Inc., and its directors,

Sister Lillian Van Domlen, Sister Rosalie Klein,

Sister M. Mel O'Dowd, Sister Angiola Strickelmaier,

Sister Peyton Ryan, Delores Gencuski, Mrs. A. Boehm,

John Conway, Robert Hackett and Gerald Falci. Also

named as a defendant was the administrator of

Marion Heights, Inc., Roger 5. teedtien.

The suit was filed in the United States

District Court for the Eastern District of Wiscon-

sin, the ee Robert W. Warren, District

Judge, presiding, seeking equitable relief and

money damages for violations of 42 U.S.C. Sec.

1983, and the United States Constitution. Federal

District Court jurisdiction was grounded on 28

U.S.C. Sec. 1343 and 28 U.S.C. Sec. 1331. The

amount in controversy, exclusive of interest and

costs, exceeds $10,000.00.

Respondents filed a Rule 12(b)(1) and (6)

motion to dismiss on the grounds that respondents

had not acted under color of state law. In a mem-

orandum decision and order dated Janaury 18, 1978,

the District Court granted this motion. Final judg-

ment was entered on January 25, 1978, dismissing

the action.

Timely appeal was taken to the Court of

Appeals for the Seventh Circuit. The case was

argued before the court on September 15, 1978,

and the lower court's order was affirmed by judg-

ment entered November 2, 1978.

Petitioner Patrick Batt (Batt), seeks equi-

table relief and money damages for his unlawful

discharge from employment as personnel director of

Marion Heights, Inc. (Marion Heights), solely be-

cause of his homosexual lifestyle.

Regarding state action, the complaint alleges

that Marion Heights is a Wisconsin non-profit cor-

poration operating a health care facility subject

ee extensive state regulation. (Complaint, Par. 7,

Pet. App. p. 14). The majority of operating funds

for Marion Heights is pee by the federal

government to the State of Wisconsin, in the form

of Medicare and Medicaid benefits. | (Complaint,

Par. 8, Pet. App. p. 14). Marion Heights parti-

cipates in the WIN Employment Training Program,

funded by the United States and administered by

the State of Wisconsin. (Complaint, Par. 9, Pet.

App. p- 15). The occupational and physical

therapy programs at Marion Heights are funded

by the United States Government. (Complaint,

Par. 10, Pet. App. p. 15).

Respondent Hamilton, the administrator, is

licensed by the State of Wisconsin as a health

care admin.strator (Complaint, Par. 11, Pet. App.

p- 15), and acting under the direction of the

Board of Directors, caused plaintiff's termination.

(Complaint, Pars. 14-16, Pet. App. pp. 17-19). The

other named respondents are members of the Board

of Directors and are responsible for plaintiff's

termination. (Complaint, Pars. 14-16, Pet. App.

pp- 17-19).

Batt was employed by Marion Heights as Per-

sonnel director from August 2, 1976, until his

termination on May 6, 1977. As personnel direc-

tor, Batt was responsible for the recruitment,

placement and employment of the work force at

the nursing home, for the management of the

employees’ relation program, for the coordination

of the educational training programs at the

facility, for wage and salary administration

be

‘

and for the interns audit program. (Complaint,

Par. 12, Pet. App. p. 16). More snpoxtentiy,

Batt, under Hamilton's supervision, was primarily

responsible for the administration of various

state and federal programs and regulations.

(Complaint, Par. 13, Pet. App. pp. 16-12). Batt

was the affirmative action officer for Marion

Heights, primarily responsible under Hamilton's

supervision for Marion Heights" compliance

with EEO regulations and litigation. Batt was

pedunetiy responsible for Marion Heights'

compliance with OSHA regulations; and was

primarily responsible for administration of

the WIN Program at Marion Heights. (Id.)

Batt alleged that respondents" actions deprived

him of freedom of speech and association, of the

right to privacy, of equal protection of the law,

and the due process of the law, all in violation

of the First, Fourth, Fifth, Ninth and

Fourteenth Amendments to the United States Consti-

tution.

REASONS FOR GRANTING THE WRIT

I. RESPONDENT, MARION HEIGHTS, ALTHOUGH

NOMINALLY A PRIVATE HEALTH CARE FACILITY,

IS, FOR THE PURPOSES OF SEC. 1983, A PUBLIC

ENTITY DUE TO ITS HEAVY GOVERNMENTAL

FUNDING, PERVASIVE REGULATORY SCHEME AND

APPLICABLE PROVISIONS OF STATE LAW

WHICH CONVERT IT TO A STATE AGENT IN

CERTAIN INSTANCE. FURTHERMORE, THE

RESPONDENT PERFORMED A PUBLIC FUNCTION

IN THE CARE OF ITS ELDERLY AND INFIRM

RESIDENTS AND AS A PROVIDER OF EMPLOYMENT

TRAINING AND OPPORTUNITIES FOR WELFARE

RECIPIENTS AND UNEMPLOYED PERSONS.

There are several avenues to a finding of

state action for Sec. 1983 purposes. Jackson v.

The Statler Foundation, 496 F.2d 623 (2d Cir. 1974),

_ sets forth an oft-quoted analysis as follows:

" (1)

"(2)

The degree to which the

‘private’ organization

is dependent on govern-

mental aid;

The extent and intru-

siveness of the govern-

mental regulatory

scheme;

Mite nics wis, 4 my

10

"(3) Whether that scheme

connotes government

approval of the activity

or whether the assis-

tance is merely provided

to all without such

connotation;

"(4) The extent to which

the organization serves

a public function or

acts as a surrogate for

the state;

"(5) Whether the organiza-

tion has legitimate

claims to recognition

as a ‘private’ associa-

tional or other consti-

tutional terms." Id.

496 F.2d at 629.

Petitioner urges that under those standards

Marion Heights was acting under color of law in

dismissing Batt from its employ.

Marion Heights’ operating budget is derived

from state and federal funding. Batt contends

that the public support of the nursing home has

reached the level where it is "so heavily dependent

on the State as to be considered the equivalent

1l

of a public [institution] for all purposes and in

all of its activities." Cohen v. Illinois Insti-

tute of Technology, 524 F.2d 818 (7th Cir. 1975)

cert. denied, 425 U.S. 943 (1976).

Accompanying the governmental funding is a

comprehensive regulatory scheme which oversees

_ every aspect of respondent's operation. See,

e.g., Wisconsin Administrative Code H 323 42

U.S.C. Sec. 1396 et. seq. While the mere existence

of detailed regulations does not make every act of

tin “petite entity" action of the State, Cohen,

524 F.2d at 825, it does make such a private

entity more susceptible to a finding of state

_ action. Jackson v. Metropolitan Edison Company,

419 U.S. 345, 351 (1974).

-The third factor in a state action analysis

was examined in Jackson v. Metropolitan Edison

Company, 419 U.S. at 351:

"(T]he inquiry must be whether there

is a sufficiently close nexus

12

between the State and the challenged

action of the regulated entity so

that the action of the latter may

be fairly treated as that of the

State itself."

See also, Burton v. Wilmington Parking Authority,

365 U.S. 715 (1961).

The Seventh Circuit cases with regard to this

suatie "the nexus requirement" have exceeded the

Supreme Court standards. Cohen states the rule

in the Seventh Circuit:

"Unless it is alleged that the

regulatory agency has encouraged

the practice in question, or at

least given its affirmative approval

to the practice, the fact that a

business or an institution is sub-

ject to regulation is not of de-

cisive importance." Id., 524 F.2d

at 826.

Complaints which fail to allege such a "nexus" are

being uniformly dismissed at the district court

level in the Seventh Circuit, e.g., Doyle v. Unicare

Health Care Services, Inc., 399 F. Supp. 69 (N.D.

Ill. 1975), aff'd. mem. 541 F.2d 283 (7th Cir. 1976).

13

The decision of the Seventh Circuit in this

case adheres to the Cohen rationale that the sole

route to a finding of state action on the part of

a heavily regulated "private" entity is through

a finding of state encouragement or control of

the challenged activity. (Pet. App. p. 5 ).

Petitioner's complaint does contain suffi-

cient allegations to meet the "nexus" requirement.

Batt was emp loyed by Marion Heights to ensure its

compliance with the realm of governmental cesnle~

tions applicable to it. He supervised respondent's

participation in the WIN Program. He was respon-

sible for compliance with OSHA regulations. As

a recipient of Medicare and Medicaid benefits,

Marion Heights was required to maintain an affir-

mative action program. Batt was the affirmative

action officer.

Respondent employed Batt, as it was required

to do, to ensure that it obeyed federal and state

Tce

14

law. It, in turn, must not be allowed to set

criteria for such a "private policeman" that con-

travene federal law, because the practice of the

policeman will affect the nature of the compliance.

An examination of Supreme Court opinions re-

veals that the Seventh Circuit is erroneously ex-

‘ cluding other viable routes to a finding of state

action when dealing with a governmentally regulated

"private" institutions.

For example, in Jackson v. Metropolitan Edison

Company, 419 U.S. at 352-53, this court stated that

a private entity would be acting under color of

law when it exercises delegated powers "tradi-

' The court

tionally associated with sovereignty.’

in Burton indicated that a consideration of all

relevant factors, in light of the facts and cir-

cumstnces of each case, must be undertaken in any

state action analysis. See also, Jackson v. The

Statler Foundation, 496 F.2d at 629. The singular

15

approach followed by the Seventh Circuit leads to

the erroneous conclusion that no state action

exists when in fact governmental regulation and/or

funding «has esstiieed the point where an otherwise

private insitution is converted into a public :

institution for constitutional purposes. See

Ward v. St. Anthony's Hospital, 476 F.2d 671, 675

(10th Cir. 1973).

Petitioner contends that the court below gave

only cursory treatment to the fourth factor in

* state action analysis: "The extent to which

the organization serves a public function or acts

as a surrogate for the State." Jackson v. The

Statler Foundation, 496 F.2d at 629.

In Evans v. Newton, 382 U.S. 296, 299 (1966),

this court stated:

"[c]onduct that is formally 'private'

may become so entwined with govern-

mental policies or so impregnated

with a governmental character as to

become subject to the constitutional

limitations placed upon state actions."

16

Batt is aware that actions of private hospitals

have frequently been challenged under Sec. 1983 and

that the courts are divided in their response to

such challenges. Compare, Doe v. Bellin Memorial

Hospital, 479 F.2d 756 (7th Cir. 1973); Ward v.

St. Anthony's Hospital, 476 F.2d 671 (10th Cir.

1973); with Simkins v. Moses H. Cone Memorial

Hospital, 323 F.2d 959 (4th Cir. 1963), cert.

denied, 376 U.S. 938 (1964). However, Batt contends

that this court should examine the conduct of

nursing homes in a somewhat different light

than that of private hospitals.

Nursing homes are often a permanent and final

residence for many elderly citizens. Surely a

"private" nursing home could not ignore the con-

stitutional rights of its residents. Batt argues

that the rationale employed by the Court in Marsh

v. Alabama, 326 U.S. 501 (1946), and subsequent

“public function" cases, Amalgamated Food Employees

Union v. Logan Valley Plaza, Inc., 391 U.S. 308

17

(1968); Terry v. Adams, 345 U.S. 461 (1953); and

Evans v. Newton, 382 U.S. 296 (1966), should be

considered in this instance.

While geographically not a town as in Marsh,

nor a business district as in Logan Valley,

realistically, for its patients, the nursing

home is their town, their community. A nursing

home provides its residents with all the essential

services that the company town did in Marsh.

Moreover, the primary source of funding for

these services is the government via Medicare,

Medicaid and lenient tax treatment afforded

the nursing home.

Petitioner urges this court to consider Justice

Black's statement in Marsh v. Alabama:

"Ownership does not always mean

absolute dominion. The more an

owner, for his advantage, opens up

his property for use by the public

in general, the more do his rights

become circumscribed by the

18

statutory and consitutional rights

of those who use it." Id. 326 U.S.

at 508.

The court below held that the petitioner's

public function argument must fail because the

"(clare of the elderly and infirm has traditionally

been a function associated with the family, not

with sovereignty." The court cited this court's

recent decision in Flagg Brothers, Inc. v. Brooks,

436 U.S. 149, (1978) and concluded that petitioner's

complaint failed to meet both the standards espoused

by the majority in Flagg Brothers: "traditionally

and exclusively a state function", and the standard

espoused by the four dissenting justices: "tra-

ditionally and historically associated with

sovereignty." Batt, 586 F.2d at 63. (Pet. App.

p. 8).

Petitioner respectfully submits that the con-

clusion of the Seventh Circuit is erroneous in

19

two respects. First, it directly conflicts with

decisions from other circuits wherein a private

insitution charged with welfare-related duties,

such as care and education of the indigent, has

been found to be acting with a public purpose

and performing a public function.

In Robinson v. Price, 553 F.2d 918 (5th

Cir. 1977), the court distinguished Jackson v.

Metropolitan Edison Company on the basis that

Jackson did not involve "the exercise by a

private entity of powers or functions tradi-

tionally associated with sovereignty. The

handling of welfare-related problems, however,

‘ has been a function that has been traditionally

dealt with by the state." Robinson, 553 F.2d

at 920.

The Ninth Circuit voiced similar sentiments

in Ginn v. Mathews, 553 F.2d 477 (9th Cir. 1976),

wherein it stated:

20

"[W]hen a specific governmental function

is carried out by heavily subsidized

private firms for individuals whose

freedom of decision-making has, by

contract and the reserved govern-

mental power of continuing over-

sight, been circumscribed substan-

tially more than that generally

accorded an independent contractor,

the coloration of state action

fairly attaches." Id. at 481

(quoting McQueen v. Druker,

438 F.2d 781 (1971)) (discussing

the Federal Headstart funding of

a private entity).

The public function theory was also applied

in Perez v. Sugarman, 499 F.2d 761 (2d Cir.

1974):

"In certain circumstances the

actions of private entities may

be considered to be infused

with ‘state action’ if those

private entities are perform-

ing a function public or

governmental in nature and

which would have to be performed

by the Government but for the

activities of the private

parties." Id. 499 F.2d at

765.

21

In Wisconsin, providing medical care and

services to the needy is an essential public

function. Even before state and federal medical

assistance programs, Wisconsin courts have held

that non-profit, private hospitals "perform a

quasi-public function in administering to the

poor and the sick" and liken those services to

the exercise by a municipality of a governmental

function. Morrison v. Henke, 165 Wis. 166, 116

N.W. 173 (1917). In Mercy Medical Center v. Winnne-

bago County, 58 Wis.2d 260, 206 N.W.2d 198 (1973),

the Wisconsin Supreme Court held that "the health

of individual citizens is a legitimate public

.concern" and that "today's cost of medical and

hospital care has reached such heights that the

means of payment necessitate such social devices

as Medicare, medical and hospital insurance, and

public relief." Id. 58 Wis.2d at 268, 206 N.W.2d

at 201.

22

Legislative approval of this public nature

of health care in Wisconsin is evidenced by

Chapter 231 of the Wisconsin Statutes. Accord-

ing to Sec. 231.05(1), ". . .[I]t is the intent of

the legislature to provide assistance and

alternative methods of financing to non-profit

health ‘ietieakties to aid them in providing

needed health services consistent with the

state's health plan." Participating health

facilities may be appointed an agent of the

state health authority for funding purposes.

Under such circumstances Marion Heights is,

by statutory definition, an agent of a

"public instrumentality. . . perform[ing].. .

an essential public function." Sec.

231.02(1), Wis. Stats.

Federal courts must look to state law to

determine whether certain activities undertzcken

23

by private institutions are in fact state functions.

Jackson v. Metropolitan Edison Company, 419 U.S.

at 353. It is clear from Wisconsin law that

private nursing homes provide an essential, dele-

gated public function.

Cases holding that private colleges and uni-

versities are aoe wabdel with a public function

are not controlling in the health care field.

There is no analagous legislative provision for

a unitary educational system. This is not the

case in the area of health care, especially health

care for the elderly.

In the field of mental health care a private

‘ hospital has been recognized as performing a

"public function". In Ruffler v. Phelps Memorial

Hospital, 453 F. Supp. 1062 (S.D. N.Y¥., 1978),

the fact that "the State expressly depends on

the use of private facilities to effectuate its

public policy of providing treatment for those

24

who need it" led to a finding of ane action on

the part of a private mental hospital. Id. 453

F. Supp. at 1067. A private mental hospital is

not unlike a private nursing home in that both

provide long-time twenty-four hour total care for

its patients. Both perform an essential function

which, if they did not, must be assumed by the

State.

Secondly, the concept of "public function"

is not a static and inflexible notion. As the

size and complexity of society has grown, it

cannot be disputed that government has assumed

growing responsibilites formerly dealt with by

' the private sector. The private nursing home has

become an integral part of the public welfare

scheme and should be recognized as such.

In addition to the public functions performed

by respondent with regards to its residents, the

25

nursing home has also involved itself in other

governmental activities which lend support to a

finding of state action.

Under the Federal Work Incentive Program (WIN),

Title IV of the Social Security Act, respondent re-

ceives federal and matching state funds and tax

credits to subsidize employment and training of

welfare recipients. According to 45 CFR Sec. 224.13,

a participating non-profit private employer must be

one "organized for a public purpose." (Emphasis

added). See also, 45 CFR Sec. 224.40(c) (4):

"An eligible employer. . .any private nonprofit

organization established to serve a public

service." (Emphasis added).

Respondent, by virtue of Title VII and its

Status as a federal contractor, is also required

to establish and implement affirmative action guide-

lines. Provisions such as the WIN Program, and

26

affirmative action programs dealing with work

training and employment for the indigent, unemployed

and minorities constitute services traditionally

reserved to the state. Respondent, in exchange for

liberal tax benefits and governmental funding, per-

forms these services for the state. Petitioner was

primarily responsible for the administration of both

the WIN and affirmative action programs at Marion

Heights. His discharge must be subject to consti-

tutional scrutiny in view of his intimate involve-

ment with the respondent's participation in the

governmental programs.

The fifth area of inquiry under the Statler

‘Foundation analysis involves a balancing between

the right of a "private" insitution to retain its

private status and the nature of the right in-

fringed upon. Weise v. Syracuse University, 522

F.2d 397 (2d Cir. 1975). Respondent's claim to

retain its private status pales in comparison to

27

the fundamental consitutional rights of petitioner

which it has violated. Wahba v. New York University,

492 F.2d 96 (2d Cir. 1974), cert. denied, 419 U.S.

874 (1974); Weise v. Syracuse University, 522 F.2d

at 405.

No substantial private interests are involved

in this case. Respondent, by entering the nursing

home field, voluntarily submits to multitudinous

governmental regulation. It provides health care

services in the same manner as any other public health

care facility. Any claim to private status is

miniscule. On the other hand, petitioner represents

a substantial minority of citizens who stand to

suffer permanent exclusion from employment.

The clear trend is to provide consitutional

protection for homosexuals, at least where sexual

preference does not have a detrimental effect

upon the employment relationship. Federal courts

have been almost unanimous in reversing discharges

28

involving civil service employees dismissed on

the grounds of homosexuality. See, Norton v.

Macy, 417 F.2d 1161 (D.C. Cir. 1969); Scott v.

Macy, 349 F.2d 182 (D.C. Cir. 1965). In response

to such litigation, the Civil Service Commission

has recently promulgated guidelines forbidding

discharge of homosexuals solely on the basis of

homosexuality. U.S. Civil Service Commission,

F.P.M. Letter 731-3 (July 3, 1975), 44 U.S.L.W.

2032 (1975).

II. THE DECISION BELOW CONFLICTS WITH THE

LAW IN OTHER CIRCUITS AS TO WHETHER

THE RECEIPT OF FEDERAL FUNDS UNDER

THE HILL-BURTON ACT BY A HEALTH CARE

FACILITY RENDERS SUCH RECIPIENT A

GOVERNMENT INSTRUMENTALITY SO THAT

ITS ACTIONS ARE GOVERNED BY THE CON-

STITUTIONAL REQUIREMENTS GENERALLY

APPLICABLE TO THE STATE AND FEDERAL

GOVERNMENT.

This case presents the Courts with yet another

opportunity to resolve a 15-year old conflict among

the several circuits.

29

In Simkins v. Moses H. Cone Memorial Hospital,

323 F.2d 959 (4th Cir. 1963), cert. denied, 376

U.S. 938 (1964), the Fourth Circuit took the position

that receipt of Hill-Burton monies was sufficient

to convert an otherwise private health care facility

into a public one for purposes of the Fourteenth

Amendment. This remains the law in the Fourth

Circuit. See also Sams v. Ohio Valley General

Hospital Association, 413 F.2d 826 (4th ‘Cir.

1969). The reasoning of the Fourth Circuit has

also been followed by district courts in other

circuits, e.g., Citta v. Delaware Valley Hospital,

313 F. Supp. 301 (E.D. Pa. 1970).

A contrary view has been taken by at least

three other Circuits: Doe v. Bellin Memorial

Hospital, 479 F.2d 756 (7th Cir. 1973); Ward v.

St. Anthony's Hospital, 476 F.2d 671 (10th Cir.

1973); Jackson v. Norton-Children's Hospital,

Inc., 487 F.2d 502 (6th Cir. 1973). This conflict

30

in the law should not be allowed to continue. Such

diverse interpretations of the effect of a federal

program clearly runs contrary to the idea that

all citizens are to be treated alike in the eyes

of the law. In this instance, the geographic

location of the "eyes of the law" is determinative

of the fate of the constitutional rights being

threatened.

Such fundamental inequity demands that this

court "consistent with a responsible exercise of

its certiorari jurisdiction" resolve the conflict.

Taylor v. St. Vincent's Hospital, cert. denied

424 U.S. 948 (1976) (Mr. Justice White and Chief

Justice Burger dissenting from denial of

certiorari).

III. "STATE ACTION" DECISIONS OF THE SEVENTH

CIRCUIT HAVE IMPOSED OVERLY STRICT

PLEADING REQUIREMENTS RESULTING IN

THE ERRONEOUS DISMISSAL OF PETITIONER'S

COMPLAINT FOR FAILURE TO STATE A CLAIM

UPON WHICH RELIEF MAY BE GRANTED.

31

In Burton v. Wilmington Parking Authority, 365

U.S. 715, 722, this court, in addressing the issue

of state action said: "Only by sifting facts and

weighing circumstances can the nonobvious involve-

ment of the State in private conduct be attributed

its true significance."

More recently in Jackson v. Metropolitan Edison

Company, 419 U.S. 345, 351, Mr. Justice Rehnquist

wrote: "The true nature of the state's involvement

may not be immediately obvious, and detailed inquiry

may be required in order to determine whether the

test is met."

| Those statements are consistent with the well-

established rules of notice-pleading. A complaint

must not be dismissed for failure to state a claim

unless it appears beyond doubt that the plaintiff

can prove no set of facts which would entitle him

to relief. Conley v. Gibson, 355 U.S. 41, 45

(1957).

32

Complaints against nominally private insti-

tutions and allegations of state action present

a difficult judicial task upon a motion to dismiss.

Findings of state action rest totally on the

unique factual circumstances of each case. Courts

"cannot decide in the abstract or in a vacuum the

issue of whether sufficient state action exists

to impregnate private conduct with governmental

character so as to proscribe that conduct under

the Fourteenth Amendment." Pitts v. Department

of Revenue, 333 F. Supp. 662, 669 (E.D. Wis. 1971).

See also, Gilmore v. Montgomery, 417 U.S. 556

(1974), where this court after citing the Burton

requirement of "sifting the facts. . .to determine

the nonobvious involvement of the State", remanded

a state action to the district court level for

factual development.

The Court below upheld the dismissal of

petitioner's complaint, holding that it "fail[ed]

33

to allege any set of facts supporting the conclu-

sion or inference that defendants have either

acted as a state instrumentality, performed

traditionally exclusively sovereign functions, or

been compelled or even encouraged by the state

to.make the decisions challenged in these suits."

586 F.2d at 63, ~ (Pet. App. pp. 8-9).

Petitioner respectfully submits that the

Seventh Circuit erred in its dismissal. This case

is unique both in terms of governmental involvement

with respondent and the constitutional rights

claimed by the petitioner. Petitioner suggests

that the court should have heeded the words of

the Third Circuit in Braden v. University of

Pittsburgh, 447 F. 2d 1 (3rd Cir. 1973):

"It would perhaps be possible for us to

decide this last issue state action

on the present record but we think we

should not do so. Very important con-

stitutional questions are presented

and the Supreme Court has repeatedly in-

formed us that such difficult issues

34

should not be decided exempt lenin a

full record and after adequate hearing."

Id., 447 F. 2d at 4.

The court below, by imposing overly strict

pleading requirements has made it nearly impossible

to achieve reasoned results in the already difficult

area of state action. Inequitable and premature

dismissals of serious claims of constitutional

violations leave petitioner and other claimants

without any means of judicial recourse.

CONCLUSION

For these reasons, a writ of certiorari should

issue to reivew the judgment and opinion of the

Seventh Circuit.

Respectfully submitted,

WALTHER AND HALLING

By

David L. Walther

John Sundquist

APPENDIX

In the

Gnited States Court of Appeals

For the Seventh Circuit -

Plaintiff-Appellant,

Vv,

MARION HEIGHTS, INC., SISTER LILLIAN VAN DOMLEN,

SISTER ROSALIE KLEIN, SISTER M. MEL O’Dowp,

SISTER ANGIOLA STICKELMAIER, SISTER PEYTON RYAN,

DELORES GENCUSKI, MRS. A. BOEHM, JOHN CONWAY,

ROBERT HACKETT, GERALD FALCI, and ROGER N. HAMILTON,

Defendants-A ppellees.

Appeal from the United States District Court for the

Eastern District of Wisconsin,

No. 77-C-380—Robert W. Warren, Jucye.

No. 78-1248

STEPHEN J. KAVKA, M.D.,

Plaintiff-Appellant,

Vv.

EDGEWATER HOSPITAL, INC.,

Defendant-A ppellee.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division,

No. 77-C-3378—Joseph S. Perry, Judge.

(Caption continued on following page)

2 Nos. 78-1216, 78-1248 & 78-1302

No. 78-1302

JOSEPH Musso,

Plaintiff-A ppellant,

Vv

RAFFAELE SuRIANO, Dean, Loyola University School of

Dentistry, JOHN MapDoniA, Associate Dean, Loyola Uni-

versity School of Dentistry, and LOYOLA UNIVERSITY

SCHOOL OF DENTISTRY,

Defendants-A ppellees.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division,

No. 77-C-4014—George N. Leighton, Judye.

ARGUED SEPTEMBER 15, 1978—DECIDED NOVEMBER 2, 1978

Before SPRECHER, Circuit Judge, NICHOLS, Judge* and

BAUER, Circuit Judge.

SPRECHER, Circuit Judge. These three cases have been

consolidated for opinion on the recurring issue of when

the actions of a private entity can properly be

characterized as occurring “under color of state law”

allowing maintenance of an action under 42 U.S.C.

§ 1983.

I

In all three cases, the district court granted defen-

dant’s motions to dismiss the complaints for lack of sub-

ject matter jurisdiction. In each case the district court

eld that there were insufficient allegations of state or

federal action.!

* Honorable Philip Nichols, Jr., Associate Judge, United

States Court of Claims, is sitting by designation.

1 Allegations of governmental action are necessary to confer

federal jurisdiction under 28 U.S.C. § 1343. See note 8 infra.

"=

ee ee ee

Nos. 78-1216, 78-1248 & 78-1302 3

In Batt v. Marion Heights, Inc., — Patrick Batt

brought suit for damages against the defendant nursing

home, its Board of Directors and an individual serving

as administrator of the facility. Batt had been employed

by Marion Heights as personnel director. On May 6,

1977, Batt was discharged, allegedly for the sole reason

that he was a homosexual. Batt claims his dismissal on

this ground deprived him freedom of speech and associa-

tion, his right to privacy, due process, and equal protec-

tion in violation of the First, Fourth, Fifth, Ninth and

Fourteenth Amendments to the United States Constitu-

tion. In support of his charge that he was terminated

“under color of state law,” Batt relies principally on two

factors: 1) Marion Heights receives extensive state and

federal funding under Medicare and Medicaid as well as

through specific governmental programs; and 2) Marion

Heights is regulated and licensed by the State of

Wisconsin. Plaintiff does not allege that this funding or

regulation encouraged or required the defendants’ deci-

sion to discharge homosexual employees.

In Kavka v. Edgewater Hospital, Inc., Dr. Stephen

Kavka alleges that the hospital acted under color of

state law in suspending him from the hospital staff for

failure to self-insure against malpractice. This dismissal

was alleged to be in violation of his rights to due process

and equal protection secured by the Fifth and

Fourteenth Amendments. State action, as formulated in

the complaint, is supported by allegations of substantial

state and federal funding to the defendant under

Medicare, Medicaid, and the Hill Burton Act. Dr. Kavka

does not allege any relation between the governmental

funding and the hospital rule requiring staff physicians

to maintain malpractice insurance. In_ plaintiff's

memorandum in opposition to the defendants’ motion to

dismiss, and in his brief to this court, plaintiff expands

the allegations of his complaint. He alleges that the

State of Illinois in addition has undertaken to regulate

the field of malpractice and has prohibited hospitals

from using exculpatory clauses. Furthermore, he argues

that the federal and state governments, in the course of

regulating participants eligible for Medicare and

Medicaid programs, have effectively approved the use of

4 Nos. 78-1216, 78-1248 & 78-1302

the insurance requirement imposed by Edgewater.’ But

again, the plaintiff fails to demonstrate any relation

eta these actions of the State and the decision of the

ospital.

In the third case, Musso v. Suriano, a dental student

at Loyola University brought an action alleging that he

was expelled by the University without a hearing, in

violation of due process rights secured him by the Fifth

and Fourteenth Amendments to the United States Con-

stitution. It is argued that this expulsion was conducted

under color of state law since Loyola receives substantial

state and federal funding—allegedly fifty percent of its

budget. Additionally, it is stated that the Illinois Depart-

ment of Registration and Education monitors the

curriculum and graduation requirements of the Dental

School. Plaintiff, however, does not allege any impact cf

governmental funding on Loyola’s decision xot to

provide plaintiff with a pre-expulsion hearing.

II

In two recent cases, Cannon v. University of Chicago,

559 F.2d 1063 (7th Cir. 1976), cert. granted, 46 U.S.L.W.

3803 (July 3, 1978), and Cohen v. Illinois Institute 4

Technology, 524 F.2d 818 (7th Cir. 1975), cert. denied,

425 U.S. 943 (1976), this court outlined the elements of

“state action” prerequisite to any 42 U.S.C. § 1983 civil

¢ Specifically, plaintiff charges that the Department of

Health, Education and Welfare requires hospitals par-

ticipating in Medicare and Medicaid programs to have an

“effective governing body legally responsible for the conduct

of the hospital” which has “adopted bylaws in accordance with

legal requirements.” 20 C.F.R. § 405.1021 (1977). Plaintiff

deduces from this that by allowing Edgewater to participate

in the programs, the government has concluded that

Edgewater’s malpractice regulation is necessarily in accord

with “legal requirements.” Plaintiff did not amend his com-

plaint to reflect this theory of state action. Nevertheless, a re-

mand on the issue is unnecessary since we do not — plain-

tiff’s construction of the HEW regulation, nor would plain-

= construction satisfy the elements of state action discussed

infra.

Nos. 78-1216, 78-1248 & 78-1302 5

rights action.? Cohen and Cannon, fairly read, leave no

doubt as to the prevailing legal requirements for a sec-

tion 1983 claim. Nonetheless, actions are still being

filed, as represented by the three complaints in issue

here, without regard to the dictates of those decisions,

necessitating another admonition concerning the

allegations essential to establish state action.

The plaintiffs in each of these three actions on appeal

Support their allegation of state (or federal) action .

primarily through reliance on the distribution of sub-

stantial state and federal funds to defendants and the

imposition of accompanying regulatory measures.‘

The allegations of governmental funding and general

regulation, standing alone, however, cannot support a

finding of state action. The courts, including this one,

have uniformly dismissed claims of state action ground-

ed merely on governmental funding and regulation

where neither has fostered the challenged activities of

Hp health care facilities such as defendants

dgewater Hospital and Marion Heights, Hodge v. Paoli

Memorial Hospital, 576 F.2d 563 (3d Cir. 1978); Schlein

v. Milford Hospital, Inc., 561 F.2d 427 (2d Cir. 1977);

Greco v. Orange Memorial Hospital Corp., 513 F.2d 873

(5th Cir.), cert. denied, 423 U.S. 1000 (1975); Doe v.

3 42 U.S.C. § 1983 states:

Every person who, under color of any statute, ordinance,

regulation, custom, or usage, of any State or Territory,

subjects, or causes to be subjected, any citizen of the United

States or other persons within the jurisdiction thereof

to the deprivation of any rights, privileges, or immunities,

secured by the Constitution and laws, shall be liable to the

party injured in an action at law, suit in equity, or other

proceeding for redress.

‘ The central question presented is that of action b par-

ticular states. Nonetheless, plaintiffs have also invoked federal

action at various points in their argument. Since state and

federal action share similar factual prerequisites, we do not

afford a separate discussion of the relevant principles. See

Cannon v. cog hg, of Chicago, 559 F.2d at 1671 n.8. But as

we pointed out in Cannon, although state and federal actions

must be viewed analogously, federal funding is not relevant to

the existence of state action under section 1983. Jd.

6 , Nos. 78-1216, 78-1248 & 78-1302

Bellin Memorial Hospital, 479 F.2d 756 (7th Cir. 1973);

Mills v. Fox, 421 F. Supp. 519 (E.D.N.Y. 1976) (nursing

home); Doyle v. Unicare Health Service, Inc., 399 F.

Supp. 69 (N.D. Ill. 1975), affd mem., 541 F.2d 283 (7th

Cir. 1976) (nursing home), or of educational institutions

such as defendant Loyola University. Lamb v. Rantone,

561 F.2d 409 (1st Cir. 1977); Cannon v. University of

Chicago, 559 F.2d 1063 (7th Cir. 1976); Cohen v. Illinois

Institute of Technology, 524 F.2d 818 (7th Cir. 1975), cert.

denied, 425 U.S. 943 (1976); Spark v. Catholic University

of America, 510 F.2d 1277 (D.C. Cir. 1975); Sanford v.

oward University, 415 F. Supp. 23 (D.D.C. 1976), affd

mem., 549 F.2d 830 (D.C. Cir. 1977).

Cannon and Cohen, adhering to Supreme Court

decisions in Moose Lodge No. 107 v. Irvis, 407 U.S. 163

(1972) and Jackson v: Metropolitan Edison Co., 419 U.S.

345 (1974), established that a claim under section 1983

must be based on no less than the state’s “affirmative

support” of the private conduct challenged. Cannon v.

University of Chicago, 559 F.2d at 1069; Cohen v. Illinois

Institute of Technology, 524 F.2d at 825-26. The Supreme

Court’s most recent opinion on state action, Flagg

Brothers, Inc. v. Brooks, 46 U.S.L.W. 4438 (May 15,

1978), leaves open the question whether even “affir-

mative support” short of compulsion will suffice to

render a private act attributable to the state. The ques-

§ In Flagg Brothers, four justices voted to affirm the district

court judgment that a warehouseman’s ——— sale of bailed

oods pursuant to a procedure ed in the New York

Uniform Commercial Code § 7-210 was not state action. The

opinion affirms on the ground that the proposed sale was

neither a traditionally exclusive sovereign function nor a sale

“compelled” by the state statute. Statutory permission of such

a sale was considered insufficient nexus to render the action

attributable to the state. The four dissenting justices, although

suggesting that statutory authorization rather than compul-

sion might be sufficient, found state action by characterizin

§ 7-210 as the delegation of a function traditionally associate

with sovereignty. It is also not clear whether actual compul-

sion would be required by the four affirming justices when

the state activity might be characterized as an affirmative act

rather than mere “inaction.”

Nos. 78-1216, 78-1248 & 78-1302 7

tion need not be reached here, however, since plaintiffs

have not established any degree of state encouragement

of the challenged activity. Plaintiffs have not claimed

that state regulations encouraged, or that state funds

were conditioned upon, defendants’ dismissal of homosex-

ual employees, suspension of hospital physicians who

refuse to carry malpractice insurance, or denial of

hearings to dental students expelled for disciplinary

reasons. Plaintiffs have failed to allege any “nexus.” Dis-

missal of the complaints on that ground by the respec-

tive district courts was therefore proper.

Plaintiffs argue that the level of state support of

defendant institutions is so high that they are relieved of

the necessity for pleading or proving a nexus, citing our

decision in Cohen. We do not suggest that nexus is the

exclusive means of establishing state action. Cohen and

Cannon held that under certain limited circumstances

the on need not establish a nexus between the state

funding and/or regulation and the challenged act. The

language of reservation in the cases cannot be ex-

trapolated, as the plaintiffs have done here, however, to

support the assertion that a high level of financial sup-

port, without more, gives rise to state action. The

passage in Cohen cited by plaintiffs states that IIT “is

not so heavily dependent on the State as to be considered

the equivalent of a public university for all purposes and

in all its activities,” and then goes on to distinguish in a

footnote cases of other courts where financial support

was far greater. 524 F.2d at 825 & n.18.

_The alternative to nexus referred to in Cohen suf-

ficient to sustain a claim of state action is not simply a

higher level of state support. Rather, nexus can be

avoided only by an allegation of facts suggesting that the

ostensibly private entity has acted as a state instrumen-

a or a “joint participant,” in the language of Burton

v. Wilminaton Park Authority, 365 U.S. 715, 725 (1961).

Such, an allegation is dependent upon more than fund-

ing; it is dependent 7 facts suggesting control. This

interpretation of the Cohen reservation is buttressed by

Judge (now Justice) Stevens’ citation of Powe v. Miles,

407 F.2d 73 (2d Cir. 1968). Cohen v. Illinois Institute of

Technology, 524 F.2d at 825 n.19. In Powe, Judge

8 Nos. 78-1216, 78-1248 & 78-1302

Friendly found that the state of New York’s comprehen-

sive financing and administration of the New York

State College of Ceramics allowed a finding of state ac-

tion. Judge Friendly emphasized however that the State

had concrete ability to control all the policies of the

college, even though that control had not been specifical-

ly exercised in Powe. 407 F.2d at 83. Recent decisions

premised on an instrumentality theory of state action

Support our conclusion here that mere allegations of

state funding and general regulation, without some

evidence of state administration or practical control, are

insufficient. See Chalfant v. Wilmington Institute, 574

F.2d 739 (3d Cir. 1978) (en banc); Downs v. Sawtelle, 574

F.2d 1 (lst Cir. 1978); Braden v. University of

Pittsburgh, 552 F.2d 948, 965, 970 (3d Cir. 1977) (con-

curring opinion); Hollenbaugh v. Carnegie Free Library,

545 F.2d 382 (3d Cir. 1976); Kerr v. Enoch Pratt Free

Library, 149 F.2d 212 (4th Cir. 1945). Thus, the com-

plaints in the instant actions cannot be sustained on an

instrumentality theory.

_ A third route to state action is also available by depict-

ing the private activity as a public function. Plaintiff

Batt relies heavily on this characterization of nursing

homes. Whether measured by the test of a “traditionally

exclusive state function” forwarded by the four justices

writing the opinion for the court in Flagg Brothers, Inc.

v. Brooks, 46 U.S.L.W. 4488, 4440 (May 15, 1978), or a

function “traditionally and historically associated with

sovereignty,” adopted by the four dissenting justices, 46

U.S.L.W. at 4444, plaintiff’s claim must obviously fail.®

Care of the elderly and infirm has traditionally been a

function associated with the family, not with sovereign-

ty.

Finally, plaintiffs also challenge the procedural

propriety of dismissal based on the insufficiency of the

allegations. We are not imposing rigid pleading re-

quirements. Plaintiffs’ complaints simply fail to allege

* It should be noted that this circuit has used the exclusivity

test. See Anastasia v. Cosmopolitan National Bank of Chicago,

Cio7 é) .2d 150, 157 (7th Cir. 1975), cert. denied, 424 U.S. 928

7 OR peer

Nos. 78-1216, 78-1248 & 78-1302 9

t of facts supporting the conclusion or inference

that detenduats wee either acted as a state instrumen-

tality, performed traditionally exclusive sovereign func-

tions, or been compelled or even encouraged by the state

to make the decisions challenged in these suits. Dis-

missal of the complaints was therefore appropriate. As

we stated in Cohen:

We agree that plaintiff is entitled to the fullest

opportunity to adduce evidence in support of her

claim. But she is not entitled to a trial, or even to

discovery, merely to find out whether or not there

may be a factual basis for her claim which she has

not made. Her complaint omits any allegation of

state support or approval of the defendants’ dis-

criminatory conduct, and the detailed facts set forth

in the complaint, even if wholly true and liberally

construed in her favor, do not warrant the conclu-

sion that I.I.T. is a public university. It is clear

beyond doubt that the claim which she has alleged

does not entitle her to relief.

524 F.2d at 827.

In some cases, extensive discovery and trial will be

necessary to adequately determine whether state action

existed. See Braden v. University of Pittsburgh, 552 F.2d

948 (3d Cir. 1977); Weise v. Syracuse University, 522

F.2d 397 (2d Cir. 1975). But in cases such as these where

plaintiffs’ claim that state action, if present, has taken

the form of statutes or regulations, it is entirely ap-

propriate to resolve the issue on a motion to dismiss the

complaint. The procedure has been affirmed by the

Supreme Court in comparable cases. Flagg Brothers,

Inc. v. Brooks, 46 U.S.L.W. 4438 (May 15, 1978); Jackson

v. Metropolitan Edison Co., 419 U.S. 345 (1974).’

7 The district court opinion affirmed in Jackson dismissed

the complaint finding: No state official participated in the

practice complained of, nor is it alleged that the state re-

uested or cooperated in the suspension of service.” 348 F.

Save. 954, 958 (M.D. Pa. 1972) (emphasis added).

10 Nos. 78-1216, 78-1248 & 78-1302

Furthermore, there is no showing that the plaintiffs in

any of the actions requested to amend their complaints

or to delay judgment on the motions until discovery had

been completed. The judgments are affirmed.®

AFFIRMED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

_Plaintiff Kavka has requested this court to modify the dis-

trict court judgment to reflect a dismissal without prejudice.

We do not consider such a modification necessary since the

order is phrased in jurisdictional terms, and a dismissal for

insufficient gy mi oe of state action is ordinarily construed

as a dismissal or lack of subject matter jurisdiction in any

event. See Flagg Brothers, Inc. v. Brooks, 46 U.S.L.W. 4438,

4439 (May 15, 1978); Carter v. Telectron, Inc., 554 F.2d 1369

oth Cir. 1977): Schlein v. Milford Hospital, Inc., 561 F.2d 427

2d Cir. 1977); Sparks v. Catholic University of America, 510

2d at 1281. Feb. R. Civ. P. 41(b) clearly provides that a dis-

missal for lack of jurisdiction is a dismissal without prejudice.

Carter v. Telectron, Inc., 554 F.2d at 1370.

USCA 4412—Midwest Law Printing Co.. Inc.. Chicago—11-2-78—300

11

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

PATRICK BATT

1628 North Franklin Place #22

Milwaukee, Wisconsin 53202,

Plaintiff, COMPLAINT

Ve

MARION HEIGHTS, INC. Case No. 77-C-380

3333 West Highland Blvd.

Milwaukee, Wisconsin 53208,

SISTER LILLIAN VON DOMLEN,

SISTER ROSALIE KLEIN,

SISTER M. MEL O'DOWD,

SISTER ANGIOLA STICKELMAIER,

SISTER PEYTON RYAN,

DELORES GENCUSKI,

MRS. A. BOEHM,

JOHN CONWAY,

ROBERT HACKETT,

GERALD FALCI, and

ROGER N. HAMILTON

9024 North 70th Street

Milwaukee, Wisconsin,

Defendants.

Now comes the plaintiff, Patrick Batt, by

his attorneys, Walther & Halling, and alleges and

shows to the Court as follows:

12

JURISDICTION

1. This action seeks equitable relief

and damages against detendents pursuant to 42

U.S.C.A. Sec. 1983 on the grounds that defendants;

actions deprive plaintiff of freedom of speech

and association, of the right to privacy, of

equal protection of the laws, and the due process

of the law, all in violation of the First, Fourth,

Fifth, Ninth and Fourteenth Amendments to the

United States Constitution.

2. The jurisdiction of this court is

based upon 42 U.S.C.A. Sec. 1983, 29 U.S.C.A.

Sec. 1343, and 28 U.S.C.A. Sec. 1331. The

amount in controversy, exclusive of interest

and costs, exceeds $10,000.00.

PARTIES

36 Plaintiff, Patrick Batt, is a citizen

of the United States and resides at 1628 North

Franklin Place, Milwaukee, Wisconsin 53202.

13

4. Defendant, Marion Heights, Inc.,

3333 West Highland Blvd., Milwaukee, Wisconsin

53208, is a non-profit Wisconsin corporation

operating a health care facility. At all

material times, defendant Marion Heights, Inc.,

acted through its agents and representatives

under color of state law.

5. Defendants, Sister Lillian Van

Domlen, Sister Rosalie Klein, Sister M. Mel

O'Dowd, Sister Angiola Stickelmaier, Sister

Peyton Ryan, Delores Gencuski, Mrs. A. Boehn,

John Conway, Robert Hackett, and Gerald Falci,

are members of the Board of Directors of Marion

Heights, Inc., and are sued individually, and

in their capacity as members of the Board

of Directors. At all material times defendant

members of the Board of Directors of Marion

Heights, Inc., acted under color of state law.

14

6. Defendant Roger N. Hamilton, 9024

North 70th Street, Milwaukee, Wisconsin 53223, is

the administrator for Marion Heights, Inc. He

is sued in his capacity as administrator and as

an individual. At all material times defendant

Hamilton acted under color of state law.

STATEMENT OF FACT

7. Defendant, Marion Heights, Inc.,

is a private, non-profit corporation, incor-

porated under the laws of the State of Wisconsin.

As a health care facility it is subject to

extensive regulation by the State of Wisconsin

pursuant to Ch. 456, Wis. Stats., and the Wis-

_consin Administrative Code, Health & Social

Services, H 32.

8. The majority of the operating funds

for defendant Marion Heights, Inc., are pro-

vided by the U.S. Department of Health, Education

15

and Welfare, through the State of Wisconsin, in

the form of medicare and medicaid benefits, pur-

suant to 42 U.S.C.A. Sec. 1395.

9. Defendant, Marion Heights, Inc.,

participates in the WIN Employment Training

Program, funded rf the United States Department

of Labor, Manpower Administration and the

State of Wisconsin, and administered by the

State Department of Industry, Labor and Human

Relations, pursuant to 28 U.S.C.A. Secs.

630-644.

10. The occupational and physical therapy

programs at defendant, Marion Heights, Inc.,

health care facility are funded by the United

States government, pursuant to 42 U.S.C.A.

Sec. 1395.

ll. Defendant Hamilton is licensed by the

State of Wisconsin pursuant to Ch. 456 Wis. Stats.

as a health care administrator.

16

12. From August 2, 1976, to May 6, 1977,

plaintiff was employed by defendant Marion

Heights, Inc., as personnel director. In that

capacity, plaintiff was responsible for the

recruitment, placement and employment of

the work force throughout the nursing home, for

the management of the employee relations program,

for the coordination of the education and

training program at the facility, for wage and

salary administration, and for the internal

audit program.

13. Under the supervision of defendant

Hamilton, plaintiff had extensive and primary

responsibility for the administration of state

and federal programs and regulations:

A. Plaintiff was the affirmative

action officer for the center

and in that capacity he was re-

sponsible for compliance with

sine piastc a es

eet etre,

17

Equal Employment Opportunity

regulations and for replying to

EEOC complaints filed against

defendant, Marion Heights, Inc.

B. Plaintiff was primarily respon-

sible for the facility's compliance

with all Occupational Safety and

Health Administration regulations.

C. Plaintiff was primarily responsible

for the administration of the WIN

Program at the facility.

14. On May 6, 1977, defendant Hamilton,

acting for defendant Marion Heights, Inc. and

‘acting under the direction of the defendant

Board of Directors, informed plaintiff that de-

fendant Board of Directors had asked for his

resignation. Defendant Hamilton stated that

18

‘the reason for the request was the objection

of the Board to plaintiff's homosexual life-

style. Plaintiff stated that he had no inten-

tion of quitting and would resist any effort

to force his resignation, since he had been

performing competently and had been guilty of

no wrongdoing.

15. At all times during the course

of his employment with Marion Heights, Inc.,

plaintiff performed his duties as personnel

director in an exemplary fashion; at no time

did his lifestyle intrude upon his duties. |

Furthermore, at no time was there any suggestion

that plaintiff's performance as personnel

director was less than completely satisfactory.

16. Some time later on May 6, 1977,

plaintiff was called into defendant Hamilton's

office and was again asked to resign. At that

time, defendant Hamilton stated that defendant

ee

19

Board of Directors was prepared to offer

plaintiff one month's severance pay and a good

performance recommendation in’ exchange for

plaintiff's immediate resignation. When

plaintiff refused to resign, defendant Hamilton

fired him and told him to be out of the building

by 5:00 p.m. that afternoon. When plaintiff

requested a reason for his discharge, defendant

Hamilton stated that the reason was his homo-

sexual lifestyle. Plaintiff left the building

at 7:30 p.m. on May 6, 1977.

CAUSES OF ACTION

17. At all material times, all defendants

acted under color of state law to willfully

deprive plaintiff of rights, privileges and

immunities secured by the Constitution of the

United States in the following respects:

A. Acting under color of state law,

defendants deprived plaintiff of

20

freedom of speech and associ-

ation as guaranteed by the First

Amendment. f

B. Acting under color of state law,

defendants deprived plaintiff of

the right to privacy as guaran-

teed by the First, Rierch:, Ninth

and Fourteenth Amendments.

'€. Acting under color of state law,

defendants deprived plaintiff of

the right to due process of law

and equal protection of the laws

as guaranteed by the Fifth and

Fourteenth Amendments.

WHEREFORE, plaintiff respectfully prays

that the court assume jurisdiction in this case,

and,

A. That a permanent injunction be issued

21

enjoining defendants, their agents, successors,

employees, attorneys, and those acting in concert

with them, or under their direction, from con-

tinuing or maintaining the policy of dis-

criminating against plaintiff in employment on

the basis of sexual preference, in contravention

of his constitutional rights under the First,

Fourth, Fifth, Ninth and Fourteenth Amendments.

That a permanent injunction be kena

compelling plaintiff's reinstatement to his

former position with defendant Marion Heights,

Inc., or a comparable post, with back pay,

and all other seniority and employment benefits.

C. That damages be awarded to plaintiff

in the amount of $25,000.00.

D. That plaintiff be awarded actual

attorneys fees pursuant to 28 U.S.C.A. Sec.

1988.

22

E. That such further relief be granted

as the court may deem just and proper.

Respectfully submitted,

/s/ David L. Walther

David L. Walther

/s/ John Sundquist

John Sundquist

Attorneys for Plaintiff

WALTHER & HALLING

222 East Mason Street

Milwaukee, Wisconsin 53202

(414) 271-3400