Reply Brief — South Dakota v. SDDS, Inc.

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No. 00-1273 APR}; 200:

Jn the Supreme Court of the Gnited States

STATE OF SOUTH DAKOTA,

Petitioner,

SDDS, INc.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth Circuit

PETITIONER’S REPLY BRIEF

MICHAEL J. SCHAFFER CHARLES A. ROTHFELD

SANDRA K. HOGLUND Counsel of Record

Davenport, Evans, Hurwitz DAVID GOSSETT

& Smith, LLP Mayer, Brown & Platt

513 South Main Avenue 1909 K Street, NW

Sioux Falls, SD 5710] Washington, DC 20006

(605) 336-2880 (202) 263-3000

WILLIAM P. FULLER

Woods, Fuller, Shultz &

Smith, P.C.

300 S. Philips Ave., Ste. 300

P.O. Box 5027

Sioux Falls, SD 57101

(605) 336-3890

Counsel for Petitioner

TABLE OF CONTENTS

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A. SDDS’s Account Of The Proceedings Below Should

Not Obscure The Eighth Circuit’s Holding That A State

Waives Its Eleventh Amendment Immunity By

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B. The Eighth Circuit’s Erroneous Interpretation of Rule

60(b)(4) Is Inconsistent With Decisions Of Other

Courts Of Appeals And Warrants Review ........... 3

C. This Court Should Review The Eighth Circuit’s

Holding That A State Waives Eleventh Amendment

Immunity By Participating In Litigation ............ 7

TABLE OF AUTHORITIES

Page(s)

Ackerman v. United States, 340 U.S. 193 (1950) ........ 5

Clark v. Barnard, 108 U.S. 436 (1883) ............... 8

Durfee v. Data, 7S UB. WOR GI ca ccnnveccvvccess 5

Federated Dept. Stores, Inc. v. Moitie,

452 US. FOR CURRED ok sh oe ee ee vanes 5

Florida Dep't of State v. Treasure Salvors, inc.,

438 U.S. GTO CHORD) buhivie si Cl este ees 8

Gunter v. Atlantic Coast Line R.R., 200 U.S. 273 (1906) . 8

Howlett v. Rose, 496 U.S. 356 (1990) ................ 9

Jordan v. Gilligan, 500 F.2d 701 (6th Cir. 1974) ........ 6

Kovacevich v. Kent State University, 224 F.3d 806

(60a Cm. PODS nc icc eae 6

Mathias v. WorldCom Technologies, Inc.,

Mo. GETS 0. .05:80unneee eee ees 9,10

Pennhurst State School & Hosp. v. Halderman,

465 U.S. BD CURBS). 5 xk ue eee a eke 9

Petty v. Tennessee-Missouri Bridge Comm'n,

399 US. 279 RS i eke ee ss 8

Port Authority Trans-Hudson Corp. v. Feeney,

GIS US. BFP 6 kad an eek eee eek aes 9

Saahir v. Estelle, 47 F.3d 758 (Sth Cir. 1995) .......... 8

United States v. United States Fidelity & Guar. Co.,

SOP US. SOR CIOS 5 bes ke xs cee eens esses 4,5

Watts v. Pinckney, 752 F.2d 406 (9th Cir. 1985) ........ 5

Wisconsin Dept. of Corrections v. Schacht,

SAUD. Bee COMO: 8 ok bea ko kk oe Keds ]

iil

TABLE OF AUTHORITIES — Continued

Page(s)

STATUTES ND RULES

MOR inc. sccccesceaccsecnsesoesssess 9

I oneness cacseceranne: 5

Fed. R. Civ. P. 60(b)(4) ....---- eee eee ee eres passim

Bed BR Civ. P. GOUDNG) ......- 0-2 e cece cee ceecees: 5

S._D. CopIFIED LAWS § 1-11-1(2) (Michie 2000) ......--. 9

S._D. CopIFIED LAWS § 3-21-10 (Michie 2000) .......-- 9

MISCELLANEOUS

MoorE’S FEDERAL PRACTICE

(Matthew Bender ed. 2000) ....--..-------+++-- 4,5

RESTATEMENT (SECOND) OF CONFLICT OF LAWS (1971) ..4

Respondent SDDS’s brief in opposition confirms that the

decision below departs from fundamental principles of state

sovereignty. SDDS’s basic argument against review is its

assertion that States may be deemed to waive Eleventh

Amendment immunity by participating in litigation, and that,

in any event, federal-court judgments overriding that immunity

should not be treated as void. As we explained in the petition,

however, these arguments are inconsistent with decisions both

of this Court and of other courts of appeals. Because the Eighth

Circuit’s holding creates considerable confusion in areas of

great practical importance, further review is essential.

A. SDDS’s Account Of The Proceedings Below Should

Not Obscure The Eighth Circuit’s Holding That A

State Waives Its Eleventh Amendment Immunity By

Engaging In Litigation

SDDS’s account of the procedural background of this case

attempts to create the impression that the State was inexcusably

manipulative or dilatory in raising its Eleventh Amendment

arguments. Although these contentions have no direct bearing

on the legal issues presented here, it is worth noting that they

are misleading in several significant respects.

First, SDDS is wrong in contending that the State, in a

calculated attempt to “ma[k]Je free use of the federal courts

whenever doing so suits its purposes” (Br. in Opp. 5), expressly

consented to (or acquiesced in) the exercise of federal

jurisdiction over the claims at issue here. See Br. In Opp. 3-7.

The State and its officers did not voluntarily invoke federal

jurisdiction; they simply responded to the Commerce Clause

claims advanced against them in SDDS VI. See Pet. 3:

compare, é.g., Wisconsin Dept. of Corrections v. Schacht, 524

U.S. 381, 395 (1998) (Kennedy, J., concurring). To be sure, in

doing so the State’s attorneys failed expressly to contest the

assertion of federal jurisdiction over the State itself. But that

oversight is, perhaps, understandable: because the federal court

unquestionably had Ex Parte Young jurisdiction to resolve

claims that the 1991 ballot referendum was unconstitutional —

claims that were advanced against South Dakota officers sued

in their official capacities — the fact that the complaint also

named the State was of limited practical importance.

In contrast, the State and its officials have vigorously

contested the exercise of federal jurisdiction over claims that

could effectively require South Dakota to pay money damages

— that is, the claims that were advanced in SDDS VIII and that

are principally at issue in this petition. As SDDS itself

acknowledges (at Br. in Opp. 3), the State’s answer to the

complaint expressly invoked the Eleventh Amendment “to the

extent that [the complaint] can be construed to involve a claim

for monetary relief.” See Pet. 7 n.3. The State went on to

argue this point at length to the Eighth Circuit in SDDS VIII.

In re SDDS, Inc., No. 96-2705 (CA8), Resp. Br. 12-13. As a

consequence, SDDS plainly is wrong in suggesting that this is

a case in which the State tried to “manipulate federal courts and

litigants by, first, consenting to suit, then litigating to achieve

a desired result, and finally, after the litigation is done and the

judgments are final, withdrawing its consent.” Br. in Opp. 14.

Second, SDDS also is incorrect in arguing that this Court’s

denial of the State’s petition for certiorari in South Dakota v.

SDDS, Inc., No. 97-1378, has any bearing on the current

petition. The questions presented in No. 97-1378, which sought

review of a decision of the South Dakota Supreme Court,

concerned the substantive scope of the Eleventh Amendment

and the res judicata effect of certain federal judgments on

subsequent state-court proceedings; this case, in contrast,

presents entirely different questions concerning waiver of

Eleventh Amendment immunity and the scope of Rule 60(b)(4).

In addition, SDDS’s central grounds for opposing certiorari in

No. 97-1378 were the arguments that the state-court decision

was not yet final and that the federal questions in the case had

not been addressed. No. 97-1378, Br. in Opp. 9-14. Neither of

those arguments has any application here.

Third, SDDS misstates the basis of the Eleventh

Amendment holding below. The Eighth Circuit did not, as

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SDDS asserts, premise its decision on a finding of “an express

waiver [that] was followed by acquiescence in three adverse

final judgments.” Br. in Opp. 11. Instead, the court of appeals

declared that it was the State’s “conduct” of litigation on the

merits that effected the waiver of immunity. Pet. App. 4a-Sa.

Nor was it crucial to the court’s finding of waiver in this latest

proceeding that the Eighth Circuit’s prior assertions of

jurisdiction had become final; indeed, as we note in the petition

(at 13 n.7), the authority cited by the Eighth Circuit as support

for its waiver theory was a decision in which the State had

asserted immunity during the course of the initial district court

proceedings. The questions presented in the petition therefore

come to this Court in stark terms: whether a State waives

immunity by litigating the merits of the claim against it in

federal court, and whether a party is barred from seeking

review of a void judgment under Rule 60(b)(4) whenever the

party did not first challenge that judgment by petitioning this

Court for a writ of certiorari.

B. The Eighth Circuit’s Erroneous Interpretation of

Rule 60(b)(4) Is Inconsistent With Decisions Of

Other Courts Of Appeals And Warrants Review

1. In defending the Eighth Circuit’s construction cf Rule

60(b)(4), SDDS argues principally that a judgment issued in

violation of the Eleventh Amendment cannot be “void” within

the meaning of the Rule because Eleventh Amendment

immunity is waivable. Br. in Opp. 15-16. That reasoning, we

note, was not the basis for the holding below, which turned on

the Eighth Circuit’s conclusion that Rule 60(b)(4) is

inapplicable whenever the party seeking 60(b)(4) relief

declined to first petition this Court for certiorari to overturn the

challenged judgment. SDDS’s new argument is, in any event,

plainly inconsistent with this Court’s precedents. As we noted

in the petition (at 24), the Court settled long ago that,

notwithstanding a sovereign’s ability to waive its immunity, a

judgment against the sovereign is void unless the sovereign

actually has waived its immunity: “Consent alone gives

jurisdiction to adjudge against a sovereign. Absent that

consent, the attempted exercise of judicial power is void.”

United States v. United States Fidelity & Guar. Co., 309 U.S.

506, 514 (1940) (emphasis added). As we also noted, the Court

went on to hold in United States Fidelity & Guaranty that a

sovereign may not be bound by such a void judgment. See id.

at 514-515. SDDS makes no response to this point.

Indeed, even where collateral attacks on judgments are

involved (and as we explain below, the attack on the judgment

in this case is direct rather than collateral), the judgment is

“void if it * * * was issued in-contravention of a * * * sovereign

immunity. * * * [Such judgments] remain subject to collateral

attack if recognition or enforcement is sought either in the

jurisdiction where reached or in another jurisdiction.” 18

Moore’S FEDERAL PRACTICE § 130.04[3], at 130-15, 130-16

(Matthew Bender ed. 2000). For this reason, the usual res

judicata and collateral estoppel rule — which bars collateral

attack on a court’s determination of its own jurisdiction — “is

not applicable in actions against a sovereign where the officials

who represent the sovereign in the action are not empowered to

waive the immunity of the sovereign or to bind the sovereign by

litigating the question of its immunity.” RESTATEMENT

(SECOND) OF CONFLICT OF LAWS § 96, cmt. a (1971) (emphasis

added) (citing United States Fidelity & Guaranty). As a

consequence, so long as the State did not waive its Eleventh

Amendment immunity here, the challenged judgments are void

within the meaning of Rule 60(b)(4).

2. The other arguments that SDDS asserts against review

of the court of appeals’ Rule 60(b)(4) holding are insubstantial.

First, SDDS argues, as the Eighth Circuit held, that recourse to

Rule 60(b)(4) is foreclosed by the State’s failure to petition this

Court for certiorari to review the challenged judgments. Br. in

Opp. 16-17. As we explain in the petition (at 22-25), however,

nothing in Rule 60(b)(4) makes pursuit even of a direct appeal

from the void judgment — let alone the filing of a petition for

certiorari in this Court — a prerequisite for relief under the

Rule. Indeed, imposition of such a requirement would run

directly contrary to the rationale for the Rule, which is that a

void judgment is a “nullity”; for this reason, although motions

for relief from judgment brought pursuant to other sections of

Rule 60(b) must be filed within a “reasonable” time, “[a]

motion under Rule 60(b)(4) challenging a judgment as void is

subject neither to the ‘reasonable’ time requirement * * * [nor]

to the equitable doctrine of laches, but rather may be made at

any time.” 12 MOORE’S FEDERAL PRACTICE, § 60.44[5][a], at

60-150, 60-151. Again, SDDS makes no response to this point.’

Second, SDDS argues that the State was obligated to seek

certiorari directly from the Eighth Circuit’s decision in SDDS

VIII — presumably, in SDDS’s view, in lieu of ever seeking

relief under Rule 60(b)(4) — because the court of appeals held

in SDDS VIII that it had jurisdiction to decide the claim against

South Dakota, and a court’s express determination of its

jurisdiction ordinarily is not subject to collateral attack. Br. in

Opp. 17-18. But this argument is wrong on two scores. To

begin with, as we explained in the petition (at 23-24), a

challenge under Rule 60(b)(4) is “direct, not collateral,” Watts

v. Pinckney, 752 F.2d 406 (9th Cir. 1985), and the rule of

jurisdictional finality invoked by SDDS simply has no

application to direct attacks on judgments. SDDS makes no

attempt to deal with this point. In addition, as we note above,

United States Fidelity & Guaranty holds that an erroneous

determination of jurisdiction may not bind a sovereign, even in

proceedings that really are collateral. See also Durfee v. Duke,

375 U.S. 106, 114 (1963). There accordingly is nothing in the

' The authorities cited by SDDS at Br. in Opp. 17 offer it no support.

Ackerman v. United States, 340 U.S. 193 (1950), involved a request

for relief from judgment pursuant to Rule 60(b)(6), not Rule 60(b)(4).

The judgment in Ackerman thus was not void, making the decision

irrelevant here. Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394

(1981), concerned rules of res judicata, rather than those governing

direct attacks on judgments pursuant to Rule 60(b)(4), and also did

not concern a judgment that was void.

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Eighth Circuit’s jurisdictional holding that bars recourse to

Rule 60(b)(4).

Third, SDDS is wrong in contending that there is no

conflict in the circuits on the proper construction of Rule

60(b)(4). In the petition (at 21-23), we cited decisions of the

Fifth, Sixth, and Ninth Circuits holding that Rule 60(b)(4) relief

is available even when the movant failed to first appeal the

challenged judgment. Those courts expressly rejected the

approach taken by the Eighth Circuit here. SDDS’s only

attempt to distinguish those decisions is its observation that two

of them did not involve the Eleventh Amendment, and that the

Eleventh Amendment analysis used by the third has been

undermined by more recent doctrine. This argument, however,

entirely misses the crucial point. For present purposes, the

relevant holdings of the Fifth, Sixth, and Ninth Circuits are that

parties may invoke Rule 60(b)(4) even when they did not

appeal the challenged judgment; the relevant holding of the

Eighth Circuit is that parties may not invoke Rule 60(b)(4) in

such circumstances. None of these courts regarded the reason

that the challenged judgment was void as having any bearing on

the Rule 60(b)(4) analysis.? Review to resolve this conflict

therefore is necessary.

SDDS is wrong in suggesting that the Sixth Circuit’s decision in

Kovacevich v. Kent State University, 224 F.3d 806 (6 Cir. 2000),

somehow impliedly overrules the aspect of Jordan v. Gilligan, 500

F.2d 701 (6" Cir. 1974), that conflicts with the decision below. See

Br. in Opp. 18. Kovacevich recognized that Eleventh Amendment

immunity is waivable, but it went on to reaffirm that the immunity

may be raised at any point in the proceedings — and it dismissed on

immunity grounds a claim that had been raised for the first time on

appeal. Other claims were allowed to proceed only because they

were brought pursuant to a federal statute, enacted to enforce the

Fourteenth Amendment, that abrogated Eleventh Amendment

immunity. 224 F.3d at 816. Nothing in this holding retreats from

Jordan’s conclusion an appeal is not a prerequisite to invocation of

Rule 60(b)(4).

Fourth, SDDS also is wrong in contending that review is

unwarranted because Rule 60(b)(4) relief is appropriate only

when there has been “‘a plain usurpation of [judicial] power’”

and that, because “the Eleventh Amendment does not

automatically deprive the federal courts of original jurisdiction

over a State,” the Eighth Circuit’s decision “was not [an]

egregious usurpation of power.” Br. in Opp. 19 (citation

omitted). This reasoning, again, was not the basis for the

decision below. And the argument is wrong on its own terms.

The fact that Eleventh Amendment immunity may be waived

surely does not mean that a judgment is insulated from attack

when a court commits plain error by exercising jurisdiction

over a State that has not waived its immunity. That, of course,

is precisely what happened here.

C. This Court Should Review The Eighth Circuit’s

Holding That A State Waives Eleventh Amendment

Immunity By Participating In Litigation

SDDS’s arguments against review of the Eighth Circuit’s

Eleventh Amendment holding are insubstantial. SDDS does

not deny that, to the extent that its claims are attempting to

obtain monetary relief from the State, the “waiver” of immunity

found by the Eighth Circuit is one that is implied from the

State’s conduct of litigation. And SDDS makes no attempt to

explain away the disagreement in the courts of appeals about

the rules governing implied waivers of Eleventh Amendment

immunity. Against this background, SDDS offers no reason for

the Court to deny certiorari.

1. SDDS’s principal argument against review is the

assertion that the State did waive its immunity. But this

contention assumes its conclusion. Like the Eighth Circuit,

SDDS premises its argument on the proposition that a State

surrenders its immunity when its attorneys “voluntarily

appear[] and participate[] on the merits of a case in federal

court.” Br. in Opp. 20. As we explained in the petition,

however, this Court consistently has rejected this argument,

holding that “[t]he fact that the State appeared and offered

defenses on the merits does not foreclose consideration of the

Eleventh Amendment issue.” Florida Dep’t of State v.

Treasure Salvors, Inc., 458 U.S. 670, 683 n.18 (1982) (plurality

opinion).°

To escape this precedent, SDDS contends that, although

Eleventh Amendment immunity may be raised at any time prior

to final judgment, South Dakota may not now claim immunity

in this case because the State failed to invoke the Eleventh

Amendment until after “the conclusion of the proceedings in

question.” Br. in Opp. 21. Once again, as we explain above (at

3) and also noted in the petition (at 13 n.7), that was not the

basis for the Eighth Circuit’s holding; the court of appeals

believed that waiver could be found simply because ““the State

has made a general appearance in federal court and defended a

lawsuit on the merits.”” Pet. App. 4a (citation omitted).

Indeed, the asserted “finality” of SDDS VIII could not have

been crucial to the holding below because South Dakota did

assert its immunity prior to judgment, both in its answer to

SDDS’s complaint and in its argument to the Eighth Circuit in

SDDS VIII. It may be added, however, that South Dakota

would be entitled to assert its immunity now even had it failed

to do so prior to issuance of the Eighth Circuit’s mandate in

SDDS VIII, courts of appeals routinely have held that States

may invoke the Eleventh Amendment to challenge the

enforcement of unappealed judgments that had long since

become final. See, e.g., Saahir v. Estelle, 47 F.3d 758, 762 (5"

Cir. 1995).

> Not surprisingly, the authorities cited by SDDS at Br. in Opp. 20

are inapposite. In Clark v. Barnard, 108 U.S. 436, 447-448 (1883),

and Gunter v. Atlantic Coast Line R.R.,200 U.S. 273, 292 (1906), the

State itself voluntarily invoked the jurisdiction of the federal court.

And Petty v. Tennessee-Missouri Bridge Comm'n, 359 U.S. 275,

278-282 (1959), involved an interstate compact, entered into by the

State, that this Court construed to waive immunity. There is nothing

remotely similar in this case.

2. SDDS’s argument that the Court should disregard the

South Dakota statute that prohibits state officials from waiving

Eleventh Amendment immunity has no merit at all. SDDS’s

contention that the statute is ambiguous (see Br. in Opp. 21) is

patently wrong; the provision provides, without exception, that

“{njo waiver of state immunity by statute or, where permitted,

by any officer or agent of the state may constitute or be

interpreted as a waiver of the state’s immunity from lawsuits in

federal court.” S.D. CODIFIED Laws § 3-21-10 (Michie 2000)

(emphasis added). As we noted in the petition (at 11-12), this

statute, with its express disapproval of attempted waivers by

state officers, has greater clarity than the provision at issue in

Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 103

n.12 (1984) — which the Court read to declare “an express

preservation of [the State’s] immunity from suit in federal

court.” SDDS also is incorrect in arguing that § 3-21-10 is

inconsistent with a South Dakota law that permits the State’s

attorney general to defend the State “in any court.” Br. in Opp.

21 (citing S.D. CopIFIED LAws § 1-11-1(2)). In fact, as this

Court has long held, such a general statutory reference to

“courts” may not be interpreted tc waive a State’s immunity

against suit in federal court. See, e.g, Port Authority Trans-

Hudson Corp. v. Feeney, 495 U.S. 299, 3060).

SDDS’s remaining argument — that § 3-21-10 is preempted

by 42 U.S.C. § 1983 (see Br. in Opp. 22-24) — is frivolous. It

doubtless is true that States may not, by statute, immunize state

officials against liability under § 1983, and the various decisions

cited by SDDS stand for that proposition. See, e.g., Howlett v.

Rose, 496 U.S. 356, 376-377 (1990). That hardly means,

however, that federal law preempts state statutes that decline to

waive a State’s constitutional immunity. If that were the case,

Eleventh Amendment immunity would be rendered nugatory.

3. Finally, we note that the recent grant of certiorari in

Mathias v. WorldCom Technologies, Inc., No. 00-878, confirms

that review in this case likewise is warranted. Mathias presents

the question whether a state regulatory commission’s

“acceptance of Congress’ invitation to participate in

implementing a federal regulatory scheme that provides that

state commission determinations are reviewable in federal court

constitutes a waiver of Eleventh Amendment immunity”; the

grant of certiorari suggests recognition of confusion in the courts

of appeals about the scope of the Amendment. At the same

time, it bears emphasis that it would not be appropriate for the

Court to hold this case pending disposition of No. 00-878. The

outcome in Mathias, which concerns the scope of congressional

authority and the significance of state participation in a field that

is regulated by Congress, will not control disposition of the

Eleventh Amendment issue in this case — and will have no

bearing at all on the Rule 60(b)(4) question. Holding the

petition therefore would not obviate the need for ultimate review

by this Court and would only delay final disposition of the case.

For the foregoing reasons and those stated in the petition, the

petition for a writ of certiorari should be granted.

Respectfully submitted.