Opposition Brief — Stromanman Realty, Inc. v. Martinez (No. 07-1096)

FILED

APR 2 5 2008

OFFICE OF THE CLERK

No. 07-1096 SUPREME COURT, U.S.

In the

Supreme Court of the United States

STROMAN REALTY, INC., PETITIONER,

Vv.

DEAN MARTINEZ, SECRETARY, ILLINOIS DEPARTMENT

OF FINANCIAL AND PROFESSIONAL REGULATION,

RESPONDENT.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Seventh Circuit

BRIEF IN OPPOSITION

LISA MADIGAN

Attorney General of Illinois

MICHAEL A. SCODRO

Solicitor General

MARY ELLEN MARGARET WELSH*

Assistant Attorney General

100 West Randolph Street

Chicago, Illinois 60601

(312) 814-2106

*Counsel of Record

Counsel for Respondent

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i

QUESTIONS PRESENTED

Absent “exceptional circumstances,” such as a

“flagrantly and patently” unconstitutional state law,

Younger v. Harris, 401 U.S. 37 (1971), and its progeny

require that federal courts abstain from interfering in

an ongoing state proceeding that is judicial in nature,

serves an important state interest, and provides an

adequate opportunity to assert the federal claim.

Under Hicks v. Miranda, 422 U.S. 332 (1975), a state

proceeding is “ongoing” for Younger purposes so long as

it is initiated “before any proceedings of substance on

the merits have taken place in the federal court.”

The questions this case presents are:

1. Whether the district court properly abstained

from petitioner's Commerce Clause action to enjoin

enforcement of facially-neutral state laws in a state

disciplinary proceeding against petitioner.

2. Whether this Court should resolve a question

not raised in the lower courts and on which petitioner

alleges no split in authority: whether Hicks applies to

the disciplinary proceeding against petitioner, who

may raise its constitutional claim if it seeks judicial

review of any adverse administrative decision.

3. Whether this Court should resolve two questions

not raised in the lower courts, on which petitioner has

alleged no split in authority, and that are not ripe: (1)

whether Younger would require petitioner to exhaust

its state law remedies by seeking judicial review if

petitioner receives an adverse ruling in the pending

disciplinary proceeding; and (2) whether an adverse

administrative decision would have preclusive effect if

petitioner did not seek judicial review.

li

TABLE OF CONTENTS

QUESTIONS PRESENTED

TABLE OF AUTHORITIES

BRIEF IN OPPOSITION

STATEMENT

I. There Is No Confusion, Much Less a Direct

Conflict, Among the Circuits Regarding

Younger Abstention in Commerce Clause

A. The Court Has Consistently Approved

Abstention for Commerce Clause Claims,

Both Before and After Younger

Federal Courts Apply NOPSI

Consistently When Analyzing Younger

Abstention in Cases Involving Important

Federal Interests, Including the

Commerce Clause

1. The Seventh Circuit's Decision Is

Consistent With NOPSI, Which

Forecloses Petitioner’s Per Se Rule

Barring Abstention in Commerce

Clause Cases

The Circuit Courts’ Consistent

Application of Younger to Commerce

Clause Claims Exhibits No Confusion

Over NOPSI

II.

ill

3. This Case Would Come Out No

Differently in the Third and Fourth

Circuits

Hicks Has Been Applied to Administrative

Proceedings

. Petitioner's Other Questions — Whether

Younger Will Require It to Pursue Judicial

Review if the Department’s Decision Is

Adverse, and Whether That Decision Will

Have Preclusive Effect If Petitioner Does Not

Seek Review — Prematurely Ask This

Court’s Advice About Litigation Strategy ...

A. The Seventh Circuit Did Not “Expand”

Younger by “Mandating” Exhaustion

Petitioner's Request for Advice About

Seeking Judicial Review of Any Adverse

Administrative Decision IsImproper ...

. This Case Is an Exceptionally Poor Vehicle

for Resolving the Questions the Petition

31

iV

TABLE OF AUTHORITIES

Cases:

Alleghany Corp. v. McCartney,

896 F.2d 1138 (8th Cir. 1990)

Alleghany Corp. v. Pomeroy,

898 F.2d 1314 (8th Cir. 1990)

CSXT, Inc. v. Pitz,

883 F.2d 468 (6th Cir. 1989)

Canatella v. State of California,

404 F.3d 1106 (9th Cir. 2005)

Cedar Rapids Cellular Tel., L.P., v. Miller,

280 F.3d 874 (8th Cir. 2002)

Chapman v. Houston Welfare Rights Org.,

441 U.S. 600 (1979)

Communications Telesystems Inti v.

Cal. Pub. Util. Comm’n,

196 F.3d 1011 (9th Cir. 1999)

DIRECTV, L.L.C. v. Tolson,

513 F.3d 119 (4th Cir. 2008)

Dombrowski v. Pfister.

380 U.S. 479 (1965)

Doran v. Salem Inc, Inc.,

422 U.S. 922 (1975)

Fed. Express Corp. v. Tenn. Pub. Serv. Comm’n,

925 F.2d 962 (6th Cir. 1991)

Felder v. Casey,

487 U.S. 131 (1988)

Fenner v. Boykin,

271 U.S. 240 (1926)

Ford Motor Co. v. Ins. Comm’ of the

Comm. of Penn.,

874 F.2d 926 (3d Cir. 1989)

Green v. Benden,

281 F.3d 661 (7th Cir. 2002) ....

Harper v. Pub. Serv. Comm'n of W. Va.,

396 F.3d 348 (4th Cir. 2005) .... 7, 9, 10, 20-22

Hawaii Hous. Auth. v. Midkiff,

467 U.S. 229 (1984)

Hi Tech Trans, LLC v. New Jersey,

382 F.3d 295 (3d Cir. 2004)

Hicks v. Miranda,

422 U.S. 332 (1975)

Huffman v. Pursue, Lid.,

420 U.S. 592 (1975)

Life Partners v. Morrison,

484 F.3d 284 (4th Cir.),

cert. dented, 128 S. Ct. 708 (2007) ... 10, 20-22

Middlesex County Ethics Comm'n v.

Garden State Bar Ass’n,

457 U.S. 423 (1982)

Mitchum v. Foster,

407 U.S. 225 (1972)

New Orleans Pub. Serv. Inc. v.

Council of New Orleans,

491 U.S. 350 (1989)

vi

Olde Discount Corp. v. Tupman,

1 F.3d 202 (3d Cir. 1993)

Pacific Frontier v. Pleasant Grove City,

414 F.3d 1221 (10th Cir. 2005)

Patsy v. Fl. Bd. of Regents,

457 U.S. 496 (1982)

Spector Motor Serv. v. McLaughlin,

323 U.S. 101 (1944)

Steffel v. Thompson,

415 U.S. 452 (1974)

Stroman Realty, Inc. v. Grillo,

2006 WL 492458 (S.D. Tex., Feb. 28, 2006) ... 7

Stroman Realty, Inc., v. Lyons,

No. 07 CH 09985 (Cir. Ct. Cook County)

appeal pend’g (No. 1-07-2276, Ill. App.) ...... 6

Stroman Realty, Inc. v. Marstiller,

Nos. 05-20803, 05-20804 (5th Cir.).......... 7

Stroman Realty, Inc. v. Wercinski,

513 F.3d 476 (5th Cir. 2008)

Trans Shuttle, Inc. v. Pub. Utils. Comm’n

2001 WL 1355987 (10th Cir. 2001)

United States v. Mendoza,

464 U.S. 154 (1984)

Univ. of Tenn. v. Elliot,

478 U.S. 788 (1986)

Wooley v. Maynard,

430 U.S. 705 (1977)

Vil

Woodfeathers, Inc. v. Washington County, Or.,

180 F.3d 1017 (Oth Cir. 1999) .-........... 18

Younger v. Harris,

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Statutes:

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220 TLASS 454/5-15 (2006) ... 2... eee 3,4

220 ECCS 4506-25 (2006) .. ww cc cee ses 3

Bae Gee RT COMP) «ws cc ce eee 3

225 ICCS 454/5-35 (2006) ...... Stee e cece ee eees 3

295 11.08 4606-46 C006)... ...............:.. 3

Me RRA I CED ew ewe teens 3

225 ILCS 6 og so hoes Sieg ia San Reo 3

225 ICCS 4545-75 (2006) ........:....0 02 e cee 3

2a Shee SOME CQ0UG) . 0... eee eee 4

au satan Gee Ce) 2... 2 a ee wee 4

225 ICCS 454/20-60 (2006) .................... 4

BE RAMs BOM FO CR. Bw cc ccc tees acne 4

Sa BIAS BOW GIO) ok ce ce een ees 4

Pee EAS BOUIS- 70 GOUG) ow wwe een cess 3

1

BRIEF IN OPPOSITION

This Court’s review is not necessary either to

ensure compliance with the Court’s decisions or to

resolve any split in authority.

It is undisputed that Younger and its progeny

require abstention for an ongoing state administrative

proceeding that is judicial in nature, serves an

important state interest, and provides an opportunity

to assert the federal claim. The Seventh Circuit

properly applied this settled test to affirm the district

court’s decision to abstain here, where petitioner raised

a Commerce Clause challenge to respondent’s

regulation of petitioner's unlicensed real estate

brokerage services in Illinois, when petitioner was the

subject of an ongoing I}inois disciplinary proceeding

under that regulation. Petitioner asserts that the

Seventh Circuit’s decision conflicts with Third and

Fourth Circuit cases holding that comity did not

require abstention for facial Commerce Clause

challenges to facially discriminatory statutes, but the

lower courts here correctly distinguished such attacks

from petitioner’s challenge to facially neutral state

laws furthering legitimate state interests. In any

event, more recent Fourth Circuit case law (not cited

by petitioner) makes clear that that court would reject

the per se prohibition on abstention in Commerce

Clause cases that petitioner uses as the basis for its

alleged split. And there is no confusion on this issue,

given that other circuit courts consistently abstain

under Younger in Commerce Clause cases.

Petitioner also asks this Court to decide a question

not raised below — whether Hicks applies when the

J

2

initial state proceeding is administrative — but

petitioner does not allege a split in authority on this

question and omits cases that have applied Hicks in

precisely these circumstances. Petitioner's remaining

two-pronged question likewise concerns issues not

raised below and over which petitioner does not allege

any split in authority. Moreover, these hypothetical

questions — whether Younger requires petitioner to

seek judicial review if the Department’s decision is

adverse and whether any such adverse administrative

decision would have preclusive effect if petitioner did

not — may never ripen, for petitioner may prevail in

the administrative proceeding or on its pending state

mandamus action. Petitioner's unripe request for

advice on its future litigation strategy should be

summarily rejected.

This case is a poor vehicle to answer any of the

questions presented in any event. First, even an

outright victory in this Court would have no effect on

the lower court’s decision to abstain, for even without

Younger, abstention is appropriate here on the

alternative grounds that federal courts must avoid

unauthoritative guesses about Illinois law and

unnecessary constitutional decisions. Abstention also

may be appropriate here under general principles

governing the award of equitable relief, given

petitioner's available legal remedies in state court.

Second, petitioner already has a federal forum for its

analogous Commerce Clause claims against California

and Florida regulators, whose Fifth Circuit appeal is

pending.

In sum, petitioner identifies no unsettled question

of federal law, or cognizable split in authority, or

3

conflict with this Court’s precedents. Instead, it

merely alleges error in the Seventh Circuit's

straightforward application of Younger.

For all these reasons, the petition should be denied.

STATEMENT

1. As of 1997, Illinois residents owned over 51,000

timeshares throughout the United States. Pet. App.

32a. In addition, Illinois contains three timeshare

resorts. Pet. App. 32a.

The Illinois Department of Financial and

Professional Regulation, of which respondent is

director, enforces the Illinois Real Estate Timeshare

Act (765 ILCS 101/15-70(a) (2006)), which in turn

incorporates the Illinois Real Estate License Act (225

ILCS 454/20-10(a) (2006)) (together, the Act). The Act

is intended to evaluate the competence of those

engaged in the real estate business and to regulate this

business to protect the public. 225 ILCS 454/1-5

(2006). To this end, the Act generally requires I]linois

licensure for those who provide brokerage services to

Illinois residents or involving Illinois properties. 225

ILCS 454/1-10, 454/5-15 (2006). Brokers and

salespeople must satisfy education requirements, pass

an exam, and pay a bi-annual licensing fee. 225 1LCS

454/5-25, 454/5-30, 454/5-35, 454/5-65 (2006). They

also must meet continuing education requirements,

which may be satisfied out-of-state. 225 ILCS 454/5-

70, 454/5-75 (2006). No in-state office is required if a

broker maintains an active broker's license in its state

of domicile and agrees to be subject to service of

process for its licensed activities in Illinois. 225 ILCS

454/5-45 (2006). The Act also prohibits paying

4

compensation to unlicensed persons for licensed

activities or filing suit for such compensation. 225

ILCS 454/10-15 (2006).

Unlicensed brokerage activity is a Class C

misdemeanor and may result in a fine of up to $25,000

for each offense. 225 ILCS 454/5-15, 454/20-10,

454/20-60, 454/20-80 (2006). The Department

investigates alleged unlicensed brokerage activity and

conducts disciplinary proceedings, which may include

a formal hearing; its final administrative decision is

subject to judicial review. 225 ILCS 454/20-10, 454/20-

60, 454/20-75 (2006). An action to enjoin unlicensed

practice in Illinois also may be brought directly in state

court, on behalf of the People of Illinois. 225 ILCS

454/20-80 (2006).

2. Petitioner engages in the interstate and

international business of brokering timeshare resales

and bills itself as the world’s largest timeshare resale

broker. Pet. App. 2a-3a, 14a, 35a. It advertises its

services daily in international, national, regional, and

local media, as well as on its active website, and it

targets buyers and sellers with over 4.5 million pieces

of direct mail annually, sent to recipients in Illinois

and elsewhere. Pet. App. 15a, 37a-38a. Its business is

based on a computer marketing system tailored to the

timeshare resale market, with a database of over 1

million buyers, sellers, and renters. Pet. App. 36a.

Petitioner provides its services via mail, telephone, and

internet, and its transactions frequently involve

parties or properties in two or more states. Pet. App.

14a-15a. Each seller pays an up-front fee for a three-

year advertising agreement and, in the event of a sale,

pays petitioner a commission. Pet. App. 14a.

5

3. On May 11, 2005, the Department sent

petitioner a cease-and-desist letter, stating that it had

received a complaint from an Illinois citizen who

retained petitioner for the purpose of reselling a

timeshare interest. Pet. App. 6la-64a. The letter

explained that representation of an Illinois seller

requires an Illinois license, which petitioner did not

have. Pet. App. 6la-62a. The letter further stated

that, in addition to soliciting Illinois residents as

timeshare sellers, buyers, lessors, or lessees, petitioner

had client relationships with (1) owners o* timeshare

properties located in Illinois; (2) the compi@*nant, an

Illinois resident who was a timeshare seller; and (3)

timeshare developers whose business offices are

located in Illinois. Pet. App. 63a. Because these

activities constituted the practice of real estate

brokerage in Illinois, the letter explained, petitioner

had to either obtain an II]linois real estate license or

cease and desist these activities. Pet. App. 63a.

On August 1, 2005, respondent issued an

administrative complaint against petitioner, seeking a

civil penalty. Pet. App. 7la-75a. The complaint

alleged that petitioner had acted as a timeshare resale

agent in Illinois between August 1, 2000 and August

2005 without a proper license by (1) entering into

client relationships to serve as a timeshare resale

agent for timeshare developers with offices in Illinois

and with owners of timeshare properties physically

located in Illinois; (2) issuing direct mail to Illinois

citizens offering its services as a timeshare resale

agent; and (3) holding itself out as a timeshare resale

6

agent in advertising in local Illinois newspapers. Pet.

App. 72a-74a. The disciplinary proceeding is pending.’

4. ‘Meanwhile, about a month after the

Department’s cease-and-desist letter and about six

weeks before the Department issued its complaint,

petitioner commenced this action in the Southern

District of Texas, alleging that enforcement of the Act

against it violated the dormant Commerce Clause.

Pet. App. 3a, 28a-60a. It sought to enjoin respondent

“from enforcing [the Act] and the regulations

thereunder against [petitioner] in the conduct of its

business in the timeshare resale market... .” Pet.

App. 59a. The district court found that it lacked

personal jurisdiction over respondent and transferred

the matter to the Northern District of Illinois.”

' Petitioner filed a state mandamus action,

seeking dismissal of the administrative proceeding for

lack of personal jurisdiction, but that action was

dismissed for failure to exhaust administrative

remedies. Stroman Realty, Inc., v. Lyons, No. 0'7 CH

09985 (Cir. Ct. Cook County). Petitioner’s appeal from

that dismissal is pending in the Appellate Court of

Illinois, where it is fully briefed. Stroman Realty, Inc.,

v. Lyons, No. 1-07-2276. On April 14, 2008, an

administrative law judge denied petitioner's motion to

stay the Department proceeding pending resolution of

that appeal.

> Petitioner filed a similar suit against

respondent’s Arizona counterpart, in which the Fifth

Circuit recently upheld dismissal for lack of personal

jurisdiction. Stroman Realty, Inc. v. Wercinski, 513

F.3d 476 (5th Cir. 2008). Petitioner also filed similar

7

Stroman Realty, Inc. v. Grillo, 2006 WL 492458 (S.D.

Tex., Feb. 28, 2006).

The district court granted respondent’s motion to

dismiss the case on Younger abstention grounds. Pet.

App. 12a-26a. In finding that the state proceeding

served a traditional and important state interest in

regulating real estate professionals, the district court

distinguished the state interest at issue in Harper v.

Pub. Serv. Comm’n of W. Va., 396 F.3d 348 (4th Cir.

2005), which the Fourth Circuit held was to limit

access to the interstate market. Pet. App. 2la-22a.

5. The Seventh Circuit affirmed unanimously. Pet.

App. la-1la.

Addressing Younger’s first factor and noting that

petitioner agreed the Department proceeding was

judicial in nature, the court rejected petitioner’s

argument that the proceeding was not “ongoing” for

Younger purposes because it commenced after

petitioner filed its federal complaint. Pet. App. 6a.

Citing Hicks, the court reasoned that the Department

proceeding was “ongoing” because the administrative

complaint was filed even before the answer was due in

the federal case, so no “proceeding of substance on the

merits” had yet occurred there. Pet. App. 6a. Next,

suits against respondent’s Florida and California

counterparts, whose appeal from the entry of summary

judgment against them is pending. Stroman Realty,

Inc. v. Marstiller, Nos. 05-20803, 05-20804 (5th Cir.)

(oral argument heard April 30, 2007). Younger

abstention is not among the issues raised in that

appeal.

8

the court addressed the third Younger factor, finding

“no reason why Stroman’s dormant Commerce Clause

claim could not also be adequately addressed on

judicial review in the event of an adverse

administrative decision,” relying on its own prior

decision that judicial review of the Department’s

decisions satisfies this element of Younger. Pet. App.

6a (citing Green v. Benden, 281 F.3d 661 (7th Cir.

2002)).

The court then turned to petitioner’s argument on

the second Younger factor: that the State’s interest in

regulating and disciplining real estate brokerage

services provided to Illinois residents or involving

Illinois properties was insufficient because petitioner’s

Commerce Clause claim implicated an important

federal interest. Pet. App. 7a. The court observed that

the same argument had been rejected in New Orleans

Pub. Serv. Inc. v. Council of New Orleans, 491 U.S. 350

(1989) (NOPSDJ), which held that “[t]he mere assertion

of a substantial constitutional challenge to state action

will not alone compel the exercise of federal

jurisdiction.” Pet. App. 7a (quoting NOPSI, 491 U.S.

at 364-65, which cited Younger, 401 U.S. at 53).

Rather than “look[ing] narrowly to [the State’s]

interest in the outcome of the particular case — which

could arguably be offset by a substantial federal

interest in the opposite outcome,” the court

emphasized, NOPSI instructed that Younger requires

federal courts to “look to the importance of the generic

proceeding tothe State.” Pet. App. 7a-8a (quoting

NOPSI, 491 U.S. at 365) (emphasis in NOPSJ). The

court also found significant that the Department

regulates conduct that is not under even partial federal

control. Pet. App. 9a.

9

Like the district court, the Seventh Circuit rejected

petitioner’s reliance on Harper, observing that the

Fourth Circuit had emphasized that the state law

there “did not reflect a valid interest in preventing the

improper disposal of waste, but rather, ‘by its very

nature serve[d] to impede interstate commerce” by

restricting interstate access to the waste removal

market. Pet. App. 8a (quoting Harper, 396 F.3d at

354-55 (emphasis in Harper)). The Seventh Circuit

contrasted West Virginia’s facially discriminatory state

interest in Harper with the “legitimate and substantial

interest [of Illinois] in setting and enforcing the

standards for those who deal with property sales

involving its citizens.” Pet. App. 8a-9a. Based on the

complaint before it, the court concluded, “[a]t best,

Stroman has argued that the statutes the Department

seeks to enforce have the type of incidental effects that

a valid licensing scheme has on _ out-of-state

companies.” Pet. App. 9a (emphasis in original).

Lastly, finding that petitioner had made no

showing of “exceptional circumstances,” such as that

the Department proceeding “flagrantly and patently”

violated an express constitutional prohibition, the

court held that Younger abstention was proper. Pet.

App. 9a-10a.

_ 6. Petitioner's petition for panel rehearing and en

banc review was denied without a single dissenting

vote. Pet. App. 27a.

REASONS FOR DENYING THE PETITION

The petition raises three questions, only one of

which actually challenges the Seventh Circuit's

decision. The other two concern issues never argued

10

below, and petitioner also seeks advice on the effect of

a hypothetical adverse disciplinary ruling. None of the

questions requires review.

Petitioner first asserts that the Seventh Circuit’s

decision conflicts with the purported rule in the Fourth

Circuit, which petitioner characterizes as providing

that Younger does not apply to Commerce Clause

challenges. Pet. 11-23 (citing Harper and Life Partners

uv. Morrison, 484 F.3d 284 (4th Cir.), cert. denied, 128

S. Ct. 708 (2007)). Petitioner also relies on two Third

Circuit cases, but they too are inapposite and one is not

even a Commerce Clause case. But Harper did not

hold that comity never requires abstention in

Commerce Clause cases, as indicated by the Fourth

Circuit’s own more recent case law. Harper merely

held that abstention was inappropriate for a facial

challenge to a state law that patently discriminated

against interstate commerce. The lower courts here

both properly distinguished Harper from petitioner’s

Commerce Clause challenge to the Act’s facially

neutral licensing and disciplinary regime. In short, the

split that petitioner alleges is entirely illusory, and

provides no ground for this Court’s review. And at

least four other circuits have consistently applied

Younger abstention in Commerce Clause cases, belying

petitioner’s concerns about confusion on this issue.

Petitioner does not allege that its other questions

implicate any split in authority. Rather, petitioner

merely insists that this Court “should” decide if Hicks

applies when the initial state proceeding is

administrative. Pet. 23-28. But this Court has already

decided that Younger applies to administrative

proceedings that are judicial in nature (Middlesex

11

County Ethics Comm'n v. Garden State Bar Ass’n, 457

U.S. 423, 433-34 (1982)), and there is no authority for

the proposition that Hicks somehow would not apply in

this context. On the contrary, other courts have

followed Hicks under these circumstances.

Petitioner also invites this Court to decide a two-

fold question that may never become ripe, again

without alleging a circuit split: whether Younger will

require petitionet to seek judicial review if the

Department renders an adverse decision, and whether

such a decision, if unreviewed, would have preclusive

effect on petitioner’s federal claim. These questions

are not properly before the Court.

Lastly, other abstention principles would require

affirmance of the dismissal here even if Younger would

not. To address the merits of petitioner's Commerce

Clause claim would require unnecessary guesses about

Illinois law, which also would not be binding on Illinois

tribunals. Moreover, abstention would avoid

unnecessary adjudication of the constitutional question

here, which may be obviated (or at least narrowed)

when the Department or Illinois courts construe the

Act. And general principles of equity provide yet

another independent ground for affirmance, for

petitioner has an adequate legal remedy in state court

that precludes the award of the injunctive relief it

seeks here. In any event, petitioner's Commerce

Clause claim already has a federal forum in a closely

analogous case: the Fifth Circuit, which is considering

a judgment in petitioner’s favor on an almost identical

issue.

In sum, the petition fails to satisfy any of this

Court’s criteria for a grant of certiorari. It poses no

12

important question of law and the alleged circuit split

is illusory. At bottom, petitioner merely contends that

the Seventh Circuit misapplied settled principles

governing Younger abstention to its Commerce Clause

challenge to the pending disciplinary proceeding in this

case. Certiorari should be denied.

I. There Is No Confusion, Much Less a Direct

Conflict, Among the Circuits Regarding

Younger Abstention in Commerce Clause

Cases.

Petitioner alleges a split between the Seventh

Circuit and the Fourth and Third Circuits and claims

there is confusion after NOPSI over the importanc> of

comity in Younger analysis for Commerce Clause

claims. Pet. 11-23. Petitioner isimistaken. This Court

and lower courts, including the Fourth Circuit, have

held that comity requires abstention even in the

context of a Commerce Clause claim. There is no

confusion, let alone a direct circuit split, on this point.

A. The Court Has Consistently Approved

Abstention for Commerce Clause Claims,

Both Before and After Younger.

Long before Younger, the Court applied general

abstention principles — avoiding unnecessary

resolution of constitutional questions and “preliminary

guesses” about local law — to approve abstention

notwithstanding “the overriding national interests

embodied in the Commerce Clause.” Spector Motor

Serv. v. McLaughlin, 323 U.S. 101, 103 (1944)

(nonresident interstate business’s challenge to state

tax on “doing business” within State). —

13

Even earlier, when approving abstention from a

Commerce Clause challenge to a state criminal

proceeding, the Court warned that “[a]n intolerable

condition would arise, if, whenever about to be charged

with violating a state law, one were permitted freely to

contest its validity by an original proceeding in some

federal court.” Fenner v. Boykin, 271 U.S. 240, 244

(1926). Instead, given the opportunity for review by

this Court, “[t]he accused should first set up and rely

upon his defense in the state courts, even though this

involves a challenge of the validity of some statute,

unless it plainly appears that this course would not

afford adequate protection.” Id. at 244.

To these general policy principles, Younger added

two more: (1) “the basic doctrine of equity

jurisprudence that courts of equity should not act

... when the moving party has an adequate remedy at

law and will not suffer irreparable injury if denied

equitable relief,” unless that harm is “both great and

immediate,” and (2) comity, or “our Federalism,” which

requires “a proper respect for state functions... anda

continuance of the belief that the National

Government will fare best if the States and their

institutions are left free to perform their separate

functions in their Separate ways.” 401 U.S. at 44.

Younger reiterated the general rule, “repeat[ed] time

and again that the normal thing to do when federal

courts are asked to enjoin pending proceedings in state

courts is not to issue such injunctions,” absent

“extraordinary circumstances,” e.g., a state law that is

“flagrantly and patently violative of express

constitutional prohibitions in every clause, sentence

and paragraph, and in whatever manner and against

14

whomever an effort might be made to apply it.” Jd. at

45-53 (internal quotation marks omitted).

Although petitioner asserts that the Court has

never addressed whether Younger abstention applies

to Commerce Clause claims (Pet. 11), the Court in fact

applied Younger in Pennzoil, where the plaintiff

challenged enforcement of a state judgment on several

grounds, including the Commerce Clause. 418 U.S. at

6 n.6. Pennzoil’s reasoning is instructive here:

principles of comity and “proper respect for the ability

of state courts to resolve federal questions” required

deference to the state proceeding, in light of the State’s

important interest in its authority to enforce state

court judgments. Id. at 13.

Pennzoil, Spector Motor Serv., and Fenner thus

foreclose petitioners argument that the federal

interest undergirding the dormant Commerce Clause

necessarily precludes abstention.

B. Federal Courts Apply NOPSI Consistently

When Analyzing Younger Abstention in

Cases Involving Important Federal

Interests, Including the Commerce Clause.

The Seventh Circuit’s opinion is consistent with

NOPSI and decisions by at least four other circuits

applying Younger abstention in the face of a Commerce

Clause claim. The decisions that petitioner asserts

conflict with the Seventh Circuit’s opinion do no such

thing. Instead, they are straightforward applications

of Younger’s criteria to the particular state statutes

and interests at issue. Those decisions did not — and

could not, in light of Pennzoil and the other cases cited

above — hold that abstention is never required for a

15

Commerce Clause claim, as petitioner suggests. Pet.

23 (claiming that Fourth Circuit had “determine[d]

that claims brought under the commerce clause are

appropriately resolved in federal court”). Indeed, the

Fourth Circuit itself more récently held that comity

required abstention in a Commerce Clause claim. And

the consistent decisions from four other circuits

demonstrate no confusion on this point.

L The Seventh Circuit’s Decision Is

Consistent With NOPSI, Which

Forecloses Petitioner’s Per Se Rue

Barring Abstention in Commerce

Clause Cases.

As noted above, the Seventh Circuit rejected

petitioner’s argument that its Commerce Clause claim

precluded Younger abstention, relying on NOPSIs

rejection of the same argument, and stressed that the

federal government has demonstrated no interest in

regulating real estate brokerage services, a traditional

state interest. Pet. App. 7a (quoting NOPSI, 491 U.S.

at 364-65, which cited Younger, 401 U.S. at 53). The

Seventh Circuit’s reasoning is fully consistent with

NOPSI.

NOPSI held that Younger abstention was

inappropriate when a plaintiff challenged (on

preemption grounds) a state action that was legislative

rather than judicial, likening the case to “a facial

challenge to an allegedly unconstitutional statute or

zoning ordinance — which we would assuredly not

require to be brought in state court.” 491 U.S. at 372-

73 (citing Wooley v. Maynard, 430 U.S. 705, 711

(1977)). Of importance here is that NOPSI also

16

clarified when a State’s interest is sufficiently

“important” to warrant Younger abstention.

NOPSI recognized that although “constitutional

challenges to state action. . . call into question the

legitimacy of the State’s interest in its proceedings

reviewing or enforcing that action[,] .. . the mere

assertion of a substantial constitutional challenge to

state action will not alone compel the exercise of

federal jurisdiction.” Id. at 365 (citing Younger, 401

U.S. at 53). In so doing, NOPSI echoed Younger’s

caution that even the chilling effect of a criminal

prosecution under a statute regulating speech “should

not by itself justify federal intervention.” 401 U.S. at

50 (distinguishing Dombrowski v. Pfister, 380 U.S. 479

(1965)).

NOPSI also warned that Younger analysis does not

permit even a “quick look at the merits,” even when

the federal claim appears to be “substantial.” 491 U.S.

at 372, 364-65. Moreover, NOPSI stressed,

when we inquire into the substantiality of the

State’s interest in its proceedings we do not look

narrowly to its interest in the outcome of the

particular case — which could arguably be offset

by a substantial federal interest in the opposite

outcome. Rather, what we look to is the

importance of the generic proceedings to the

State.

Id. at 365 (emphasis in originai). NOPSI concluded

that the State’s action there could “hardly be deemed

‘flagrantly’ unlawful for purposes of a threshold

[Younger] abstention determination,” given the need

for further factual development. Jd. at 367.

17

Here, the Seventh Circuit correctly followed

NOPSTs instructions and did not accept petitioner’s

mere assertion that its Commerce Clause challenge

required the federal courts to exercise jurisdiction.

Instead, as NOPSI teaches, the court took into account

the importance of the State’s general interest in

regulating real estate professionals, and indicated that

the federal interest in protecting interstate real estate

brokerage is only negligible, given that the federal

government does not even partially regulate it. Pet.

App. 7a-9a. And as in NOPSI, the Act cannot be

deemed flagrantly unlawful for purposes of Younger,

given the need for factual development of petitioner’s

claim.

2. The Circuit Courts’ Consistent

Application of Younger to Commerce

Clause Claims Exhibits No Confusion

Over NOPSI.

Petitioner implies that only the Fourth and Seventh

Circuits have addressed whether comity requires

abstention in a Commerce Clause case, and asserts

that courts are confused about how to apply NOPSI.

But at least four other circuits have approved Younger

abstention in such a case. In short, petitioner’s alleged

split is illusory.

Thus, the Eighth Circuit relied on NOPSI to

squarely reject the argument that Younger abstention

was inappropriate due to the “inherently interstate

nature” of a proposed securities transaction that ten

States purported to regulate. Alleghany Corp. uv.

McCartney, 896 F.2d 1138, 1140, 1142 (8th Cir. 1990);

see also Alleghany Corp. v. Pomeroy, 898 F.2d 1314

(8th Cir. 1990). The court stressed that what mattered

18

was not the State’s interest in the particular interstate

transaction at issue, but rather the State’s substantial,

legitimate interest in protecting its insurance

policyholders. 896 F.2d at 1144-45. More recently, the

same court cited NOPSI and rejected the argument

that the State’s interest in enforcing consumer

protection laws was insufficient for Younger purposes,

finding that “Younger clearly applies despite the

nature of the [plaintiffs’] claims,” which included a

Commerce Clause claim. Cedar Rapids Cellular Tel.,

L.P., v. Miller, 280 F.3d 874, 881 (8th Cir. 2002). The

court observed, however, that NOPSI left open the

possibility of an exception to Younger for “facially

conclusive” preemption claims, such as those that are

“readily apparent” or involve matters that “clearly are

under exclusive federal control.” Jd. at 880 (internal

quotation marks omitted).

Similarly, in Woodfeathers, Inc. v. Washington

County, Or., 180 F.3d 1017 (9th Cir. 1999), the Ninth

Circuit reversed an injunction issued in a Commerce

Clause case, citing Younger. After holding that

enforcement of solid waste laws implicated an

important state interest, the court noted that its

inquiry was limited to determining if the federal

interest was “readily apparent,” reasoning that to

decide whether to abstain based on a determination

about whether the state law was preempted “would

render Younger a nullity.” Jd. at 1021. The court

defined “readily apparent” to include, for example, an

issue that this Court previously decided or a state law

that fell under an express preemption provision. Id. at

1021-22; see also Canatella v. State of California, 404

F.3d 1106, 1112 (9th Cir. 2005) (rejecting argument

that claim of patently unconstitutional state law,

19

standing alone, constituted “extraordinary

circumstance” for Younger purposes).

The Tenth Circuit is in accord, based on an

unpublished decision rejecting the argument that the

state agency had no valid interest in regulating the

plaintiffs in light of the dormant Commerce Clause.

Trans Shuttle, Inc. v. Pub. Utils. Comm’n, 2001 WL

1355987 (10th Cir. 2001) (unpublished). The court’s

reason is instructive here:

[t]his argument does no more than restate the

central controversy. It is not so much an

argument against the importance of the state’s

interests as it is a conclusion drawn from an

earlier assumption that the [plaintiffs] are

exempt from state regulation, an assumption

that is under attack from [the state agency] and

is currently being litigated in state court.

Id. at *5.

The Sixth Circuit agrees. It affirmed Younger

abstention, even though one of the plaintiffs claims

was based on the Commerce Clause, reiterating that

there is “no reason to analyze abstention cases

involving a preemption claim differently than other

abstention cases,” so long as the state court has

concurrent jurisdiction to decide the question. Fed.

Express Corp. v. Tenn. Pub. Serv. Comm'n, 925 F.2d

962, 967-68 (6th Cir. 1991) (quoting CSXT, Inc. v. Pitz,

883 F.2d 468, 471 (6th Cir.1989)).

Given all these cases, in which the circuits applied

NOPSI to Commerce Clause claims in the same way

the Seventh Circuit did here, there is no confusion

about NOPSI.

20

This Case Would Come Out No

Differently in the Third and Fourth

Circuits.

Petitioners cite cases from the Third and Fourth

Circuits, claiming a conflict with the Seventh Circuit’s

decision here. Pet. 11-23. But those cases held that

abstention was not required due to the particular state

interests and the particular Commerce Clause claims

at issue in those cases: both were facial challenges to

state laws whose violation of the Commerce Clause

was “readily apparent’ or “facially conclusive,” unlike

petitioner's challenge here. Thus, the purported

conflict is illusory. And to the extent that petitioner

reads Harper and Life Partners as holding that a

Commerce Clause claim always trumps abstention, it

is wrong.

In Harper, the Fourth Circuit determined from the

face of the state law that it was motivated by an

illegitimate desire to restrict foreign access to the

State’s solid waste removal market. 396 F.3d at 355.

Not surprisingly, the court reasoned that such obvious

discrimination against interstate commerce was not an

“important” state interest for Younger purposes. Ibid.

Thus, Harper itself contemplates that only where the

State’s manifest interest is discrimination against

interstate commerce does “the commerce power itself

justify a narrower view of state interests in the

abstention context.” Jd. at 357. And this reasoning is

consistent with Younger, which held that abstention is

not appropriate for challenges to state laws that are

“flagrantly and patently violative of express

constitutional prohibitions.” 401 U.S. at 53. It is also

consistent with -NOPSIs observation that facial

21

attacks are not proper candidates for abstention (491

U.S. at 372-73), as well as with the reasoning in the

Sixth, Eighth, Ninth, and Tenth Circuit cases

described above, which all recognized that Younger

abstention is not required for a “facially conclusive” or

“readily apparent” Commerce Clause challenge.

Of significance here is that Harper took pains to

distinguish between a state interest in neutral police

power regulations and a _ state interest in

discrimination against interstate commerce, indicating

that Younger abstention would have been appropriate

if West Virginia’s interest had in fact been to prevent

improper disposal of solid waste. 396 F.3d at 354-55.

Indeed, the court recognized that “federal judicial

interference would ‘disregard the comity’ that Our

Federalism requires [for] interests that the

Constitution and our traditions assign primarily to the

States,” including “property law concerns” and “certain

businesses historically under state oversight.” Id. at

352-53. Thus, to the extent that petitioner sees Harper

as a per se rule that comity never requires abstention

for Commerce Clause cases, even when the state

interest is a traditional one and not discrimination

against interstate commerce, and even when a factual

record must be developed (Pet. 23), Harper does not

support that reading. And if there were any doubt that

Harper is not a per se rule, the Fourth Circuit’s more

recent decision that comity required abstention in a

Commerce Clause case, albeit not under Younger

(DIRECTV, L.L.C. vu. Tolson, 513 F.3d 119, 126 (4th

Cir. 2008)), eliminates that doubt.

Petitioner also relies on Life Partners, but that

decision adds little of moment, and is not inconsistent

22

with the Seventh Circuit’s decision in any event. That

case concerned a facial Commerce Clause challenge to

state laws governing viatical settlements, and the

court summarily affirmed the denial of Younger

abstention in just seven sentences that did not even

mention, much less apply, NOPSI. 484 F.3d at 300-01.

Nor did Life Partners read Harper as a per se rule

against abstention in Commerce Clause cases. Rather,

the decision’ suggests that the Commerce Clause

challenge to the insurance regulations at issue was

“facially conclusive” for NOPSI purposes, and would

have succeeded if not for Congress's express delegation

to the States of the power to regulate insurance. See

id. at 301. This reasoning, like that of Harper, is

consistent with Younger and NOPSI (and the other

cases described above), and in no way conflicts with the

Seventh Circuit’s decision here.

As explained above, the Fourth Circuit would have

agreed with the Seventh Circuit that comity requires

abstention here. Unlike the State’s discriminatory

interest in limiting access to the interstate market in

Harper (and implicitly in Life Partners), the State’s

interest here is in regulating and disciplining

unlicensed brokerage services to Illinois residents and

for Illinois real property, a traditional state interest.

And unlike the facial challenge in Harper, petitioner’s

challenge to the Act requires development of a factual

record. Under these circumstances, the lower courts

properly distinguished Harper. There is no conflict.

Petitioner’s reliance on two Third Circuit cases is

similarly misplaced. In Hi Tech Trans, LLC v. New

Jersey, 382 F.3d 295 (3d Cir. 2004), which is not a

Commerce Clause case, the court held that abstention

23

was inappropriate for a claim concerning the Surface

Transportation Board’s exclusive jurisdiction. Id. at

309-10 & n.21. In so doing, Hi Tech characterized as

mere dicta NOPSIs reliance on Younger, for the

proposition that “the mere assertion of a substantial

constitutional challenge to state action will not alone

compel the exercise of federal jurisdiction” (NOPSI,

491 U.S. at 365), despite its own reliance on that very

language in an earlier case. 382 F.3d at 306 (citing

Olde Discount Corp. v. Tupman, 1 F.3d 202, 214 (3d

Cir. 1993)). Instead, the court (like petitioner) relied

on one of its own pre-NOPSI decisions: Ford Motor Co.

v. Ins. Comm’r of the Comm. of Penn., 874 F.2d 926 (3d

Cir. 1989), which held that Younger abstention was

inappropriate in a Commerce Clause claim because the

State’s interest in prohibiting affiliation with savings

and loan companies was not sufficiently important for

Younger purposes due to pervasive federal regulation

of banking, especially savings and loan bailouts. Jd. at

934-35. As with petitioners Fourth Circuit

authorities, nothing in these two Third Circuit cases

indicates that the court would have decided that

Younger abstention from petitioner's Commerce Clause

claim was inappropriate. And because Ford Motor Co.

pre-dates NOPSI, it is of questionable vitality in any

event. Here, of course, petitioner did not assert that a

federal agency has “exclusive,” or even pervasive,

authority over real estate brokerage. Indeed, as the

Seventh Circuit pointedly stated, there is no federal

regulation whatsoever in this area. Pet. App. 9a.

In sum, petitioner’s alleged circuit split is entirely

manufactured, for nothing in Third or Fourth Circuit

jurisprudence establishes that Younger abstention

would be inappropriate in this case, where petitioner

24

challenges a facially neutral statutory regime in an

area that is traditionally governed exclusively by the

States. Rather, petitioner seeks a complete overhaul

of Younger abstention, under which Younger becomes

a nullity whenever “core national interests” are at

stake. Pet. 11. Younger and its progeny do not permit

this result, and neither the Third nor the Fourth

Circuit has adopted it.

II. Hicks Has Been Applied to Aguminiatrative

Proceedings.

As petitioner admits, Hicks expanded the definition

of “ongoing” for Younger purposes to include a state

proceeding that commences before a proceeding of

substance on the merits has occurred in the federal

action (Pet. 24 (citing 422 U.S. at 349)), and Middlesex

held that Younger applies when the'state proceeding is

an administrative one that is judicial in nature.

Nevertheless, petitioner urges the Court to use this

case to carve out an exception from Hicks for

administrative proceedings. Pet. 23-28. But petitioner

forfeited this claim by not raising it below. And even

now, petitioner does not allege that there is any split in

authority on this issue. In any event, no exception is

warranted, especially here.

Although petitioner argues that it cannot be

inferred from this Court’s opinions that Younger

applies when the later-filed initial state proceeding is

administrative (Pet. 24 n.13), petitioner is mistaken.

In Ohio Civil Rights Comm'n v. Dayton Christian

Schs., 477 U.S. 619 (1986), Younger applied because,

among other things, the administrative proceeding

there “began before any substantial advancement in

the federal action took place” (id. at 627), as in Hicks.

25

Petitioner also ignores cases from other circuits in

which Hicks was applied when an administrative

proceeding commenced after the filing of the federal

complaint but before any proceeding of substance on

the merits in the federal case. One such decision is

among petitioner's own authorities for the first

question in the petition: in Ford Motor Co., the Third

Circuit applied Hicks and held that the state

administrative proceeding, which was initiated after

the federal complaint was filed but before any

proceeding of substance on the merits occurred in the

federal case, was “ongoing” for Younger purposes. 874

F.2d at 932 n.8. The Ninth Circuit has done so too.

Communications Telesystems Intl v. Cal. Pub. Util.

Comm ’n, 196 F.3d 1011, 1016 (9th Cir. 1999) (applying

Younger when federal plaintiff initiated state

administrative proceeding three weeks after filing

federal complaint but before district court had done

anything of substance on the merits).

Undaunted by the lack of any contrary authority,

petitioner instead stresses Hicks’s “distinctive and

determinative condition of plaintiff-defendant privity”

(Pet. 27), but that privity exists here in any event.

Petitioner also complains about “substantial

distinctions” between administrative proceedings

generally and the criminal proceeding in Hicks, citing

the State’s “paramount interest” in criminal

proceedings and the immediate attention given to

constitutional claims, and contrasting an

administrative proceeding’s lack of (unidentified)

“procedural safeguards,” restricted discovery, and the

limited record for judicial review. Pet. 25-28 & n.15.

Yet the Third Circuit and the Ninth Circuit applied

Hicks to later-commenced administrative proceedings,

26

implicitly finding such differences immaterial. Indeed,

petitioner’s concerns about discovery and the like are

relevant to Younger’s “adequacy” inquiry, not the

“ongoing” inquiry, and according to petitioner, its

constitutional claim will be considered de novo if it

seeks judicial review. Pet. 26 n.15. In fact, the

Seventh Circuit recently examined this same system

for judicial review in another case against the

Department and concluded that it satisfies Younger’s

“adequacy” inquiry. Green v. Benden, 281 F.3d 661,

666-67 (7th Cir. 2002).

As for petitioner’s Scylla and Charybdis argument

(Pet. 26 (citing Steffel v. Thompson, 415 U.S. 452, 462

(1974)), petitioner is not a “hapless plaintiff.” Steffel

permits declaratory relief when a prosecution is merely

threatened, whereas petitioner seeks injunctive relief

against an ongoing prosecution that petitioner itself is

trying to stall, thereby delaying state court resolution

of its constitutional claim. This distinction is critical.

See Doran v. Salem Inc., 422 U.S. 922, 928-31 (1975)

(holding Younger inapplicable for plaintiffs who

complied with state law when threatened with

prosecution but applying Younger for claim by plaintiff

for whom criminal summons was issued just days after

federal suit was filed); Wooley, 430 U.S. at 712 (finding

Younger inapplicable where plaintiff sought injunctive

relief against future prosecutions after being

prosecuted three times in five weeks, and

distinguishing a first threatened prosecution).

Nor are petitioner’s criticisms unique _ to

administrative actions begun after the filing of a

federal complaint: they would apply with equal force

to an indisputably “ongoing” administrative action

27

initiated the day before the filing of a federal

complaint. Thus, it appears that petitioner objects to

Younger abstention in all administrative proceedings,

not just when Hicks applies. Indeed, petitioner’s

reliance on the dissent in Hicks for its criticism that

Hicks turns Younger’s “ongoing” inquiry “on its head”

(Pet. 27-28) could be asserted just as well against all

state proceedings, including criminal ones. And as one

of petitioner’s own authorities indicates, Hicks is not

an absolute bar to a federal forum. A plaintiff can

avoid its effect by quickly obtaining a preliminary

injunction and thereby moving the federal case “well

beyond ‘the embryonic stage’ ....” Hawaii Hous. Auth.

v. Midkiff, 467 U.S. 229, 238 (1984).

In sum, for the first time in this litigation and

without identifying any split in authority, petitioner

urges an exception to Hicks for administrative

proceedings. Petitioner cannot identify a single court

that has found fit to adopt such a rule, and other courts

have implicitly rejected it. Moreover, petitioner’s

reasons for this exception to Hicks would apply with

equal force to administrative proceedings filed before

the federal compiaint, and perhaps even t all after-

filed state proceedings. This invitation to adopt

petitioner's novel position should be declined.

28

Petitioner’s Remaining Questions —

Whether Younger Will Require Petitioner

to Pursue, Judicial Review if the

Department’s Decision Is Adverse, and

Whether That Decision Will Have

Preclusive Effect If Petitioner Does Not

Seek Review — Prematurely Ask This

Court’s Advice on Future Litigation

Strategy.

Petitioner’s third ground for seeking review, which

petitioner also forfeited by not raising it in the Seventh

Circuit, is a two-fold request for advice on how to

handle a hypothetical, future contingency. Petitioner

wants to know, in the event that the Department

issues a decision adverse to it in the disciplinary

proceeding, whether petitioner must seek judicial

review of that decision and, if petitioner does not,

whether that decision would have preclusive effect.

Pet. 28-35. But the proceeding may result in a decision

that petitioner’s conduct did not violate the Act, or that

the Act does not authorize the Department to exercise

personal jurisdiction over it. Until the state

proceeding runs its course, the third question

presented is not ripe for the Court’s review, and

petitioner therefore is seeking advisory opinions on

questions not properly before the Court. In any event,

even if the question were not forfeited, and even if it

were not premature, it does not warrant this Court’s

review.

A. The Seventh Circuit Did Not “Expand”

Younger by “Mandating” Exhaustion Here.

Petitioner asserts that the Seventh Circuit held

that petitioner must pursue judicial review of any

29

adverse administrative decision and thus is precluded

from ever bringing its dormant Commerce Clause

claim in federal court.. Pet. 28-34. Petitioner

mischaracterizes the opinion. The Seventh Circuit

neither “extends” Younger nor “mandates” that

petitioner pursue judicial review of any adverse

administrative decision. Rather, it merely holds that

the administrative proceeding here is “adequate” for

Younger purposes because petitioner will have the

opportunity to raise its constitutional claim in the

event of any adverse administrative decision. Pet.

App. 6a-7a.

Exhaustion of available state court review was

addressed in Huffman v. Pursue, Ltd., 420 U.S. 592,

608 (1975), which held that “a necessary concomitant

of Younger is that a party must exhaust his state

appellate remedies before seeking relief in” federal

court. Since then, the Court has consistently held that

a party cannot circumvent Younger by choosing not to

pursue available state appellate remedies. See, e.g.,

Pennzoil, 481 U.S. at 16-17. Citing Huffman, Dayton

Christian Schs. held that the normal rule against

exhaustion of administrative remedies in Section 1983

cases (Patsy v. Fl. Bd. of Regents, 457 U.S. 496 (1982))

was inapplicable in the Younger context because “the

administrative proceedings [in Dayton Christian Schs.]

are coercive rather than remedial, began before any

substantial advancement in the federal action took

place, and involve an important state interest.” 477

U.S. at 627.

Thereafter, when addressing the different question

of whether a state proceeding is “ongoing” throughout

its appellate court stages, NOPSI recognized that

30

because a State’s trial-and-appeals process is unitary,

a party that loses in state court may neither pursue a

state court appeal while concurrently seeking a federal

remedy nor forgo that appeal and then seek a federal

remedy. 491 U.S. at 368. NOPSI reasoned that “for a

federal court to disrupt [that unitary state process’s]

integrity by intervening in mid-process would

demonstrate a lack of respect for the State as

sovereign.” Id. at 369. NOPSI then assumed, without

deciding, that Huffman’s rationale applies when an

agency is the initial tribunal, and concluded that

federal intervention, which is not permitted during the

administrative phase, would not be permitted after it

either. Ibid. In so doing, NOPSI relied on Dayton

Christian Schs. and Middlesex. Ibid. n.4.

Thus, contrary to petitioner’s view (Pet. 29-30),

there is no inconsistency between NOPSI and Dayton

Christian Schs on this point. Pet. 29-30. To find

Younger inapplicable at this stage and allow the

federal court to intervene mid-process “would

demonstrate a lack of respect for the State as

sovereign,” as NOPSI warned. 491 U.S. at 369. It also

threatens an advisory ruling on petitioner's Commerce

Clause claim, for the administrative proceeding here

could result in a decision that obviates, or at least

narrows, the Commerce Clause inquiry. It would also

require guessing about Illinois law, and [llinois

tribunals (including the Department) would not be

bound by those guesses.

Lastly, petitioner asserts that exhaustion should

not be required when a plaintiff requests only

prospective relief against future enforcement actions

(Pet. 33), but petitioner's unsuccessful request to stay

31

the administrative proceeding here (Pet. App. 13a)

means that it did not seek only prospective relief in

federal court. Accordingly, this case does not present

the issue on which petitioner seeks review. Also,

petitioner’s reliance on Wooley (Pet. 33) is misplaced.

Wooley found Younger inapplicable to an action

brought after, not during, a third prosecution in five

weeks, all of which had resulted in adverse decisions

that were not appealed, and the federal plaintiffs

therefore were seeking purely prospective relief. 430

U.S. at 711 (distinguishing Huffman); see also Pacific

Frontier v. Pleasant Grove City, 414 F.3d 1221, 1227

(10th Cir. 2005) (approving plaintiffs pleading no

contest in state prosecution and agreeing to pay

resulting fines under protest to avoid dismissal under

Younger).

In sum, even if petitioner’s exhaustion question

were properly preserved below, ripe for decision, and

the subject of a split in authority (and it is none of

these things), NOPSI and Dayton Christian Schs.

already indicate that to permit petitioner to avoid

Younger simply by sitting out judicial review after any

adverse administrative decision would demonstrate a

profound lack of respect for state sovereignty.

B. Petitioner’s Request for Advice on the

Preclusive Effect of an Unreviewed

Administrative Decision Is Improper.

The Seventh Circuit was silent about whether any

adverse administrative decision, if unreviewed, would

have preclusive effect on petitioner’s Commerce Clause

claim. And because there is as yet no Department

decision, adverse or otherwise, the preclusive effect of

that decision remains unripe for _ resolution.

32

Nevertheless, petitioner criticizes the Seventh Circuit

for the unremarkable observation that petitioner can

raise its Commerce Clause claim on judicial review in

state court, although petitioner also agrees (Pet. 26

n.15), and then seeks advice as to the res judicata

effect of the Department’s decision, if it is adverse and

if petitioner does not seek judicial review. Pet. 30-34.

Even if this question were ripe, it is not certworthy.

On section 1983 claims, this Court has held that

“when a state agency acting in a judicial capacity...

resolves disputed issues of fact properly before it which

the parties have had an adequate opportunity to

litigate, federal courts must give the agency's

factfinding the same preclusive effect to which it would

be entitled in the State’s courts.” Univ. of Tenn. v.

Elliot, 478 U.S. 788, 799 (1986). The conflict that

petitioner sees among cases from other jurisdictions,

including a vacated Second Circuit decision and no

Younger cases (Pet. 31-34), is a non-starter.

Plainly, petitioner’s argument is with this Court,

not the Seventh Circuit. It criticizes Younger as

requiring federal courts to “shrug off’ section 1983

claims, apparently: believing that every section 1983

plaintiff has a right to be in federal court. Pet. 32-33

(citing Mitchum v. Foster, 407 U.S. 225 (1972), and

Felder v. Casey, 487 U.S. 131 -(1988)). Petitioner is

wrong. Section 1983 merely provides a federal cause

of action for the violation of a federal right established

by a federal law or constitutional provision. Chapman

v. Houston Welfare Rights Org., 441 U.S. 600, 617

(1979). It neither creates substantive rights nor

mandates a federal forum. As for Mitchum, it held

only that the Anti-Injunction Act does not bar claims

brought under section 1983 (407 U.S. at 242-43), and

33

Felder held only that a state procedural law that

conflicts with section 1983’s purpose is preempted in

state court actions (487 U.S. at 153). And in any event,

petitioner already has a federal forum for its almost

identical Commerce Clause challenge against Florida

and California regulators, which is pending on appeal

in the Fifth Circuit. See, supra, pp. 6-7 n.2.

IV. This Case ls an Exceptionally Poor Vehicle

for Resolving the Questions the Petition

Raises.

Even if petitioner had raised certworthy questions

that were ripe and properly raised below, this case is

not the vehicle for answering them.

The petition concentrates on comity, implying that

it is the sole criterion for abstention, yet it ignores

other policy considerations that provide alternative

grounds for abstention here. Perhaps the most

important is Younger’s instruction on “the basic

doctrine of equity jurisprudence that courts of equity

should not act .. . when the moving party has an

adequate remedy at law,” absent irreparable harm that

is both great andimmediate. Younger, 401 U.S. at 43-

44. Here, petitioner has an adequate legal remedy in

the state proceeding, so abstention would be warranted

on general equitable principles.

Moreover, without abstention, or even if petitioner

prevailed in its challenge to comity-based abstention,

federal courts necessarily would have to guess about

how to construe Illinois law, and that guess would not

bind Illinois tribunals. Spector Motor Serv., 323 U.S.

at 103. With abstention, however, Illinois tribunals

have the opportunity to construe the Act in a way that

34

obviates or narrows the constitutional question.

Pennzoil, 481 U.S. at 11. Indeed, the state tribunals

may resolve this case on state law grounds without

reaching the dormant Commerce Clause claim, either

in the administrative proceeding or on judicial review

(or in petitioner’s pending state mandamus case). If

petitioner is allowed to pursue its constitutional claim

in a federal forum, however, it will be impossible to be

certain that enforcement of the Act truly requires a

resolution of that constitutional claim. This is yet

another. basis for federal abstention in this case, quite

apart from Younger.

Furthermore, petitioner already has a federal

forum for its Commerce Clause challenge to other

States’ regulation ofits activities, t.e., the Fifth Circuit,

which is reviewing the judgment on petitioner’s almost

identical Commerce Clause claim against California

and Florida regulators. The Fifth Circuit’s decision, if

on the merits and adverse to petitioner, will have

preclusive effect on its almost identical Commerce

Clause claim against respondent. United States v.

Mendoza, 464 U.S. 154, 158-59 & nn.3, 4 (1984). And

if petitioner prevails in that case, the Fifth Circuit

decision (while not preclusive against respondent)

would be powerful persuasive authority on judicial

review of any adverse Department decision.

In sum, petitioner identifies no true circuit split or

conflict with the decisions of the Court, it did not

preserve its current claims by raising them in the

Seventh Circuit (with one exception), and some of its

claims are not ripe. Moreover, given the several other

grounds for affirmance, this case presents a poor

vehicle for resolving any of the questions presented.

35

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted,

LISA MADIGAN

Attorney General of Illinois

MICHAEL A. SCODRO

Solicitor General

MARY ELLEN MARGARET WELSH*

Assistant Attorney General

100 West Randolph Street

Chicago, Illinois 60601

(312) 814-2106

*Counsel of Record

April 25, 2008