7th Circuit rules district court had jurisdiction over dispute previously decided in state courts

An Indiana federal court has jurisdiction over a dispute between a northern Indiana apartment owner and city officials, even though that dispute was already adjudicated in state court, the 7^th Circuit Court of Appeals ruled Wednesday.

Plaintiff-Appellant Jose Andrade owns an apartment building in Hammond. After he failed a city inspection in 2014, Andrade began preparing for a hearing before the Hammond Board of Public Works and Safety. He served the city’s chief of inspections with a subpoena duces tecum, but the city did not comply.

After an adverse ruling from the board, Andrade sought judicial review, arguing he did not get a fair hearing because the city did not comply with the subpoena and the board allegedly exceeded its statutory authority. But the Lake Superior Court ruled for the board, the Indiana Court of Appeals affirmed and the Indiana and United States supreme courts declined review.

Andrade then pursued a federal complaint against the city, board and city officials, alleging violations of his due-process rights for making “intentional false representations,” failing to comply with the subpoena and pursuing an “unannounced policy to deny subsidized residential units in more desirable neighborhoods.” The defendants moved to dismiss under the Rooker-Feldman doctrine, and the Indiana Northern District Court agreed.

But the 7^th Circuit reinstated the case in a Wednesday opinion, with Judge Michael Kanne writing that because Andrade’s claims against the defendants concerned their actions separate from a state-court judgment, Rooker-Feldman does not bar federal court jurisdiction.

“It is clear on the face of the complaint that Andrade’s claims are not ‘direct challenges to any state court order, so to be implicated by Rooker-Feldman they must be ‘inextricably intertwined’ with a state court judgment,’” Kanne wrote in Jose Andrade v. City of Hammond, Indiana, et al., 20-1541. “… Andrade’s federal claims are not inextricably intertwined with a state-court judgment because the defendants’ challenged conduct — for example, defying a subpoena and providing false testimony before the Board — occurred before any judicial involvement.

“… Whether the case may ultimately fail for other reasons — such as on preclusion grounds — will be for the district court to determine,” Kanne continued. “… It has jurisdiction to make that determination.”

In a concurrence, Chief Judge Diane Sykes wrote separately “to underscore the point that the Rooker-Feldman doctrine was pared back to its core in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005).”

“The Supreme Court has been clear that the application of Rooker-Feldman’s jurisdictional bar should not be a court’s first instinct when a federal lawsuit overlaps with earlier state litigation,” Sykes wrote. “… Yet the doctrine continues to be confused with nonjurisdictional preclusion rules.”

Under Exxon, Sykes said, federal courts should look to the source of a plaintiff’s injuries. Here, Andrade’s injuries preceded the state court judgments.

The Indiana Northern District Court relied on Swartz v. Heartland Equine Rescue, 940 F.3d 387 (7^th Cir. 2019), in dismissing Andrade’s case, but Sykes said that case is distinguishable because, in Swartz, the enforcement action began in a state court, not in an administrative proceeding. She added that the “inextricably intertwined” question was the wrong starting point in light of Exxon.

“We should therefore avoid the ‘inextricably intertwined’ framing and stick to the Exxon standard,” Sykes concluded. “That small change could go a long way toward correcting the lingering misconceptions about Rooker-Feldman’s reach.”