# Reply Brief — Crosetto v. Wisconsin State Bar

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0353%3A5

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 1997
- **Citation:** 519 U.S. 1116

## Text

| Supremes Court, U.S. |
Mp.) FILED
‘4
7) | FEB 4 «(1997
) No. 96-975
CLER™
’ In THE

Supreme Court of the Gnited States
Ocroser Term, 1996

JOHN CROSETTO,

Petitioner,

vs.

STATE BAR OF WISCONSIN,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

REPLY TO BRIEF IN OPPOSITION

AMEDEO GRECO
Counsel of Record for Petitioner
6406 Masthead Drive
Madison, Wisconsin 53705
(608) 233-0017

TABLE OF CONTENTS

TABLE OF AUTHORITIES .........

I.

This Case Presents The Circuit Court
Split Identified In The Petition

A.

Respondent’s Manufactured

Conflict Is Not the Real Conflict
Between The Seventh Circuit And
The Other Circuits ..........

A Judgment Will Not Affect The
State Treasury Because
Respondent’s Funds Are Not
BURTON diuidcdundiactects

Not All Of The Issues Herein
Can Be Resolved In Regents of
the University of California v. Doe
Which Is Now Pending Before
WE bn dSwhwesvaanscene

Review Is Needed To Resolve
The Uncertainty Surrounding
Sovereign Immunity .........

This Case Presents Questions Left
Unaddressed In Keller ...........

A. Respondent Does Not Dispute
That Petitioner’s Pending
Constitutional Challenges Are
Identical To Those Raised In

iii

ii

1992 And That They Are Covered
By The Pretrial Order ........

B. No Court Has Ever Ruled On
The Substantive Merits Of These
CRONE ka vacesdewens

C. Respondent’s Other Practices Are
Unconstitutional ............

III. Review Is Needed To Determine
What Complaint Procedures Should
Be Followed After A Circuit Court
Raises A Sovereign Immunity Defense
At | BUSTT TT ey ree

IV. Respondent Is Not A State Entity
Under Keller And It Is Not The
COU AMEE 6 oe e FUSS ase es

CONCTARIION os scccnncneuecsauves

10

ee

iii
TABLE OF AUTHORITIES
Cases Page(s]

Crosetto v. State Bar of Wisconsin, 12 F.3d. 1396 (7th
Cir. 1993), cert. denied, _ U.S. __, 114 S. Ct. 2138
DE MECGUSGUGhs reed Céscecncdeieteeecese 8

Doe v. Lawrence Livermore Nat. Laboratory, 65 F.3d.
771 (9th Cir. 1995), cert. granted, 64 U.S.L.W. 3837

(June 17, 1996) (No. 95-1694) ................ 4,5
Esparza v. Valdez, 862 F.2d. 788 (10th Cir. 1988) ... 2
Foman v. Davis, 371 U.S. 178 (1962) ............ 9
Gary v. Laws, 51 F.3d. 426 (4th Cir. 1995) ........ 5

Hadley v. North Arkansas Community Technical

College, 76 F.3d. 1437 (8th Cir. 1996), petition for
cert. filed, 65 U.S.L.W. 3054 (June 24, 1996) (No.
95-2060) eeeoeveeeo eee ee eeeeeeeeeeeoeeeeeeeees 5, 6

Hess v. Port Auth. Trans-Hudson Corp., 115 S.Ct. 394
EE ae oe oe ee 5

Ns Rt BU dtnisals 6 ade vo RV RK b's oes 10
Keller v. State Bar of California, 496 U.S. 1 (1990) .. passim

Mancuso v. New York State Thruway Authority, 86
F.3d. 289 (2nd Cir. 1996), cert. denied, (Nov. 18,
SED iwe we dow awier e¥eveves dics 5

Page(s]
Matter of Discontinuation of Wis. State Bar, 93 Wis.
2¢. 385, 286 N.W. 2d 601 (1980) ...........605. 10
Mullaney v. Anderson, 342 U.S. 415 (1952) ........ 9
Sonnenfeld v. City and County of Denver, 100 F.3d.
PO4 (20R CR. IDPS). oo cnnss sodcewenvesvevens 2
Teachers v. Hudson, 475 U.S. 292 (1986) ......... passim
Thiel v. State Bar of Wisconsin, 94 F.3d. 399 (7th Cir.
| PPPET re eriit ee ci cre ) re Lye 6

CONSTITUTIONAL PROVISIONS
US. Comet. SOME AE cocncivcrswscevccauaee passim
RULES
Ped, R.. Cin. F.. 85. «svc ay 2hd vesiasiccent cindes 8
OTHER AUTHORITIES

48 Op. Atty. Gen. 30 (Wis. 1959) .............4. 4
75 Op. Atty. Gen. 153 (Wis. 1986) .............. 4

18 Wright, Miiler & Kane, Federal Practice &
Procedure § 4476 (1990) ......cccvcwccvcsdese 8

ot i ee eee,

Respondent’s Brief In Opposition ("Opp.") is a study in
avoidance.

Respondent tries to avoid review by incorrectly describing the
circuit court split identified in the Petition. That is why
Respondent’s Counterstatement to Question 1 (Opp. i) is so
generalized, as that enables Respondent to avoid dealing with
the precise question presented and the clear circuit split on that
question.

But, no matter how hard Respondent tries, it cannot avoid
one essential truth: the Seventh Circuit—unlike the First,
Second, Third, Fourth, Fifth, Sixth, Eighth, Ninth, Tenth, and
Eleventh Circuits—is the only circuit court to rule that
sovereign immunity can be granted to a claimed arm of the
State without inquiring whether a money judgment against
it—here about $3,000—will affect the state treasury.

This case thus presents an appropriate vehicle for the Court
to decide these conflicting principles of constitutional law
because they are not limited to the particular facts of this case.
Rather, this case presents a straight yes or no answer to a legal
question of national importance which is dividing the courts
below and which will go on dividing them until the Court
answers it.

This case also asks what procedural requirements unified bars
must follow under Keller v. State Bar of California, 496 U.S. 1
(1990), and Teachers v. Hudson, 475 U.S. 292 (1986). This issue
involves not only Wisconsin’s 18,000 attorneys, but also all
attorneys in the country’s 35 or so unified bars.

Respondent also avoids mentioning what will happen if
review is denied. Denial will enable Respondent to avoid
changing its dues reduction plan which violates Keller and
Hudson. Denial also will enable Respondent to avoid
Petitioner's prevailing party status through a simple technicality:
the Seventh Circuit’s flat-out refusal to let Petitioner on the

2

remand add nominal defendants to counter Respondent’s
sovereign immunity claim.

Given this experience, it is hardly likely that any other bar
members in Wisconsin will sue over these or any other
constitutional deprivations, just as it is unlikely that any
attorney will step forward to represent them. That, not review,
should be avoided.

I. This Case Presents The Circuit Court Split Identified In The
Petition

A. Respondent’s Manufactured Conflict Is Not The Real
Conflict Between the Seventh Circuit And The Other
Circuits

Respondent does not dispute that there is a circuit court split
between Seventh Circuit and the pirst, Second, Third, Fourth,
Fifth, Sixth, Eighth, Ninth, Tenth,“ and Eleventh Circuits over
whether the federal courts must inquire into whether sovereign
immunity can be granted to a claimed arm of the state if a
money judgment—here about $3,000—is not paid out of the
State treasury.” Respondent similarly does not dispute that the

I Respondent also tries to avoid the truth by challenging the accuracy of
Petitioner’s Statement of Facts (Opp. 1), but thereafter only challenges one
purported factual error. Opp. 7, n. 4. As related at pp. 9, 10, infra, it is
Respondent who errs on this point, not Petitioner. Hence, every fact in
Petitioner’s Statement of Facts is true and should be accepted by the Court.

Tenth Circuit ruled in Sonnenfeld v. City and County of Denver, 100
F.3d. 744, 749 (10th Cir. 1996), that: "The most important factor in
determining whether a governmental entity is entitled to Eleventh
Amendment immunity is whether a judgment against it would be paid from
the state treasury.” This decision supersedes Esparza v. Valdez, 862 F.2d. 788
(208, Ge. 1988), where the court reached a contrary conclusion. Pet. 18.
Respondent does not dispute that a money judgment against it wil] not
exceed about $3,000. Respondent instead only addresses the amount of
(continued...)

tte

3

Petition accurately reports the current circuit court thinking on
this issue and the Seventh Circuit’s minority position. Pet.
17-21.

Instead, Respondent seeks to obfuscate the need for review
by asserting that other circuit courts "have consistently held that
the impact of a judgment on the state treasury is not the only
factor to consider in determining whether a defendant is
entitled to immunity under the Eleventh Amendment and that
immunity may attach even in the absence of any fiscal impact
if other factors are present.” Opp. 11-12.

So what? Respondent knows that that is not the issue before
the Court. Petitioner has never claimed that this is the only
factor that all other circuit courts must consider. Rather, review
is needed because the Seventh Circuit below, unlike every other
circuit court, refuses to even consider this factor in determining
whether an entity is entitled to sovereign immunity. Pet. 17-18.
That is the real issue presented for review and that is the
source of the circuit court split identified here.

Respondent therefore engages in a gross mischaracterization
in baldly asserting: "The lack of meaningful conflict among the
circuits is not surprising.” Opp. 13. Since the phony conflict
addressed by Respondent is not the real conflict raised in the
Petition, its straw man is not relevant to the issue pending
before the Court—an issue Respondent has chosen to duck by
disingenuously raising a bogus issue and by thereby refusing to
correctly identify the real circuit court split referenced in the
Petition.

B. A Judgment Will Not Affect The State Treasury
Because Respondent’s Funds Are Not State Funds

3(...continued)
damages initially in dispute when class certification was being sought on
behalf of Wisconsin’s approximately 18,000 attorneys. Opp. 2.

4

Respondent errs in arguing that its funds are, state funds and
that review is not needed. Opp. 9, 15-16, n. 6.4

They are private funds. That is shown by Respondent’s
admissions that it purchased about $217,000 in private bonds
with its own funds and without any state authorization; that it
spent about $850,000 of its own funds in remodeling its building
without any state authorization; that the state does not disburse
any funds to it; that its funds are not part of the state budget;
that it does not receive any general revenue funds from the
state; and that membership dues are its prime source of income.
(R. 510) Is 60-61. Hence, Respondent can use its own private
funds to pay the approximately $3,000 money judgment sought
here without affecting the state treasury.

C. Not All Of The Issues Herein Can Be Resolved In
Regents of the University of California v. Doe Which Is
Now Pending Before The Court

Respondent asserts that review should not be granted here
because the Court in Regents (Case 95-1694) can "clarify how
the impact on a state treasury figures into Eleventh
Amendment jurisprudence .. ..” Opp. 14-15, n. 6.

That, though, is not necessarily true. There is no dispute in
that case that the University of California is an arm of the state

4Respondent cites 48 Op. Atty. Gen. 30 (Wis. 1959) and 75 Op. Atty.
Gen. 153 (Wis. 1986) in support of its claim that these are state funds. Opp.
9, 15. However, since Wisconsin’s Attorney General has sometimes
represented Respondent in the past, its opinions cannot be given much weight
particularly where, as here, Respondent’s status is a "federal question.” Keller,
496 U.S. 11 (1990). In addition, Respondent’s reliance on 75 Op. Atty. Gen.
is wholly misplaced. It states: "In December of 1983, the Bar petitioned the
Court to set up the State Bar as an ‘official arm’ of the court, acting in a
quasi-judicial capacity .. .. The supreme court denied the petition .. .” /d. at
157. Hence, that denial establishes that Respondent is not an “official arm”
of the Wisconsin Supreme Court. That being so, its funds are not state funds.

5

and that a legal judgment would run against the state. Here, on
the other hand, Respondent has admitted: The bar is not a

ity’ (Emphasis in original) (R. 510).
Furthermore, Petitioners in Regent sought review over a circuit
court split which centers on the effect of indemnification
agreements and whether "the immunity of State entities under
the Eleventh Amendment should be based solely on the legal
liability of the state entity for the judgment" or whether "the
immunity of State entities must be based on a prediction of the
likely financial impact of a particular judgment on State
resources."> Pet. 9.

Here, the Court is not being asked to review the circuit court
split regarding indemnification agreements. Hence, there is no
assurance that the Court will rule on this issue in Regents.
Furthermore, review is still needed to address the other two
Questions Presented which are not raised in Regents.

D. Review Is Needed To Resolve The Uncertainty
Surrounding Sovereign Immunity

Respondent errs in asserting that there is no uncertainty over
this issue. Opp. 13-14.

The Second Circuit in Mancuso v. New York State Thruway
Authority, 86 F.3d. 289, 293 (2nd Cir. 1996), cert. denied, (Nov.
18, 1996), (No. 96-381), stated: "The jurisprudence over how to
apply the arm-of-the-state doctrine is, at best confused.” The
Fourth Circuit in Gray v. Laws, 51 F.3d. 426, 431 (4th Cir.
1995), stated that Hess v. Port Auth. Trans-Hudson Corp., 115
S.Ct. 394 (1995), is "an opinion that is certain to generate
confusion.” In the Eighth Circuit, the dissenting opinion (Lay,
J.) in Hadley v. North Arkansas Community Technical College, 76

Petitioners in Regents thus assert as their main argument that immunity
does not depend on whether a state entity has a claim for reimbursement or
indemnification agains? @ “ied party. Pet. Br. 12.

6

F.3d. 1437, 1442 (1996), petition for cert. filed, 65 U.S.L.W.
3054 (June 24, 1996) (No. 95-2060), stated: "Today’s decision
amplifies the disarray of approaches applied by the lower courts
when confronted with the defense of Eleventh Amendment
immunity by state-created entities." Review is needed to answer
such questions.

Il. This Case Presents Questions Left Unaddressed In Keller

Keller held that unified bars should adopt "the sort of
procedures described in Hudson," but it did not spell them out.
496, U.S., at 17. Review thus is needed to determine whether
Respondent’s plan is unconstitutional.

A. Respondent Does Not Dispute That ~Petitioner’s
Pending Constitutional Challenges Are Identical To
Those Raised In 1992 And That They Are Covered
By The Pretrial Order

Respondent does not deny that its dues plan violates Keller
and Hudson because of its unlawful preclusion and exhaustion
requirements. Pet. 27. Respondent also does not deny that
these two constitutional challenges were first raised before the
District Court in 1992 and that they are covered by the Pretrial
Order. Pet. 27-29. Hence, they are not "new" claims.®

SRespondent asserts that the District Court properly denied Petitiones’s
amendment because it raised new claims and new challenges to the current
dues reduction plan. Opp. 18. However, Respondent does not identify these
supposed claims or challenges for a very good reason: they do not exist. But,
even if they did, they do not involve these two claims which have been
pending since 1992. Respondent also asserts that these supposed new claims
were already the subject of a parallel proceeding in Thiel v. State Bar of
Wisconsin, 94 F.3d. 399 (7th Cir. 1996). Opp. 16-19. Respondent knows that
is not true because Thiel did not involve the unconstitutional preclusion and
exhaustion requirements found here. Hence, Petitioner could not have
received the same legal relief in Thiel that he seeks here.

en

7

B. No Court Has Ever Ruled On The Substantive Merits
Of Petitioner’s Two Challenges

Respondent has not presented a counterstatement to
Question 3. Opp., p. i, n.1. Instead, Respondent misleads the
Court by asserting that the two challenges were decided
adversely to Petitioner on his first appeal. /d In fact,
Respondent has stipulated that these challenges were dismissed
on procedural grounds (i.c., that they were "moot" or not "ripe")
and that neither the District Court nor the Seventh Circuit ever
addressed their substantive merits. (R. 509), 16. Review
therefore is needed because Respondent today is subjecting
Wisconsin’s approximately 18,000 attorneys to _ its
unconstitutional dues reduction-arbitration plan.

C. Respondent’s Other Practices Are Unconstitutional

Respondent does not dispute its record-keeping practices. Pet
5. It, instead, asserts that they are constitutional Opp. 10.
Petitioner disagrees. It is manifestly absurd to claim that proper
time records can be maintained when bar employees are not
required to fill in and file their personal time sheets until up to
42 days after the fact.’ Review thus is needed to determine
whether unified bars under Keller can maintain such sorry
practices.

III. Review Is Needed To Determine What Complaint
Procedures Should Be Followed After A Circuit Court
Raises A Sovereign Immunity Defense Sua Sponte

This issue involves all cases where, as here, a federal court
raises a sovereign immunity defense sua sponte and then rules
that a plaintiff cannot amend a complaint by naming nominal

7 Respondent admits that no auditor independently verified employee
time records until after Petitioner raised this issue and that its auditor relies
on Respondent's claims that its records are being properly kept. (R. 510) 711.

8

defendants for the purpose of preserving subject matter
jurisdiction. The Seventh Circuit’s decision here is manifestly
unjust because it fails to recognize that a plaintiff in such a
situation has the right to amend under Fed. R. Civ. P. 15 and
because it prevents Petitioner from being declared a prevailing

party.

Thus, Respondent does not dispute that Petitioner has
brought needed changes in Respondent’s unconstitutional
record-keeping, time-keeping, and auditing practices and that
it fired one of its employees because of the abuses uncovered
in this litigation.® Pet. 5, 24-27.

Respondent similarly does not dispute that Petitioner needs
to add the nominal defendants to the Complaint only to
counter Respondent’s belated sovereign immunity defense and
to preserve his prevailing party status. It similarly does not
dispute that all of those nominal defendants were nominal
defendants in Thiel and that their addition here as nominal
defendants is a "routine, ministerial task." Pet. 25.

Instead, Respondent argues phantom facts and wrongly
asserts that the District Court did not abuse its discretion in
denying this necessary amendment. This is a bogus argument.
The Seventh Circuit ruled that, as a matter of law, the District
Court had no discretion to exercise because: "Amendment
would have been inconsistent with our mandate which required
the resolution of one specific issue.” Pet. App. 2a. The Seventh

Sespondent asserts that Petitioner is precluded from raising these issues
because the District Court decided that they were without merit and that its
ruling is the “law of the case.” Opp. 10. Its claim is without merit because this
Court gave no reason for denying Petitioner’s first petition for a writ of
certiorari and thus never addressed the merits of Petitioner’s claims. Hence,
"questions that may have been decided do not become law of the case merely
because they could have been decided . . .” 18 Wright, Miller & Kane,
Federal Practice & Procedure § 4478 (1900;,

9

Circuit did not offer an explanation as to why an amendment
was prohibited on the remand after it raised a sovereign
immunity defense sua sponte. Pet. App. 32a, n. 10. Its refusal to
do so is in conflict with Foman v. Davis, 371 U.S. 178, 182
(1962) which requires such an explanation.

It also conflicts with Mullaney v. Anderson, 342 U.S. 415, 417
(1952), where the Court allowed such an amendment under
similar circumstances. Indeed, Mullaney is so on point that
Respondent does not even try to distinguish it or even mention
it.

IV. Respondent Is Not A State Entity Under Keller And It Is
Not The Court’s Agent

While Respondent now asserts that it is a state entity (Opp.
9-10) and that it is an agent of the court (Opp. 4-9), it does not
dispute that it previously has represented: "The bar is not a

governmental entity.” (Emphasis in original.) (R. 509).

Respondent also admits that its funding does not come from
the state legislature, but rather, through membership dues; that
it does not admit, disbar, or suspend anyone from the practice
of law; and that it does not have ultimate power to adopt a
code of ethics. (R. 509) In short, it does not meet any of the
criteria set forth in Keller, 496 U.S., at 11, for being a state agency.”

Respondent «misrepresents the record by labeling as "false" (Opp. 7, n.
4) Petitioner’s representation that Respondent “has never been told by the
Wisconsin Supreme Court that it is free to disregard those procedures” which
govern all Wisconsin state entities. Pet. 8. In fact, Respondent’s Executive
Secretary Stephen L. Smay, (“Smay"), was asked at his June 8, 1995,
deposition: "And there is nothing in any of the [Supreme Court Rules] as far
as you know that says the State Bar does not have to follow the other
requirements established for other state agencies, isn’t that correct?”

A I think that’s correct. (R. 509), (Tab 30, p. 187).
(continued...)

10

Respondent’s other assertion that it was an agent of the
Wisconsin Supreme Court when it engaged in the activities in
dispute was blown apart by Smay’s admissions at another
deposition. He admitted there were no Supreme Court Rules,
decisions, or orders which authorized Respondent to establish
LAWPAC, its political action committee; to conceal its
LAWPAC activities; to force Petitioner to financially support
LAWPAC; to maintain its record-keeping, time-keeping, and
auditing practices; or to promulgate the exhaustion and
preclusion requirements in issue.! oR. 503), (pp. 8-12).

CONCLUSION

For the foregoing reasons and those stated in the Petition,
Petitioner respectfully submits that the Petition for a writ of
certiorari should be granted.

AMEDEO GRECO

Attorney for Petitioner
6406 Masthead Drive
Madison, Wisconsin 53705
(608) 233-0017

FEBRUARY 3, 1997

9(...continued)

Smay also admitted that there are no documents filed with either the state
or federal governments which identify Respondent as a state entity and that
there are no Rules promulgated by the Wisconsin Supreme Court which
identify it as a state agency. Id pp. 186-187.

established LAWPAC after it was told by the Wisconsin
Supreme Court that it was precluded from engaging in partisan politics and
it continued its unlawful LAWPAC activities for three more years after the
Wisconsin Supreme Court ruled they were "proscribed." In re Regulation of
the Bar of Wisconsin, 81 Wis. 2d xxxv, xxxix (1978); Matter of Discontinuation
of Wis. State Bar, 93 Wis. 2d 385, 387, 286 N.W. 2d 601, 606 (1980).

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0353%3A5. Public record. Not legal advice.