# State of Oregon v. City of Rajneeshpuram/1984 07 17

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State of Oregon v. City of Rajneeshpuram. United States District Court for the District of Oregon. July 17, 1984. Civil No. 84-359 FR.

## Case summary

STATE OF OREGON Plaintiff, v. CITY OF RAJNEESHPURAM, a putative Oregon municipal corporation; WASCO COUNTY, a political subdivision of the State of Oregon; ROBERT M. BROWN, Sheriff of Wasco County; RAJNEESH FOUNDATION INTERNATIONAL, a New Jersey corporation; RAJNEESH INVESTMENT CORPORATION, an Oregon corporation; RAJNEESH NEO-SANNYAS INTERNATIONAL COMMUNE, an Oregon corporation; MA ANAND SHEELA, individually; SWAMI PREM JAYANANDA, MA YOGA VIDYA, SWAMI KRISHNA DEVA, MA PREM ARCHAN, SWAMI DEVA SANDESH, MA PREM PATIPADA, MA DEVA JAYAMALA, MA SAT PRABODHI, MA PREM RIKTA, individually and as representatives of the class of all current residents of the City of Rajneeshpuram; Defendants
Civil No. 84-359 FR
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON
July 17, 1984, Decided and Filed
CASE SUMMARY
PROCEDURAL POSTURE: Defendant religious community, county and sheriff filed a petition to remove to the court an action filed by plaintiff state in state circuit court (Washington), seeking a declaration that the community was a governmental establishment of religion prohibited by the United States and Oregon Constitutions and could not exist as a legally incorporated city. Defendants' petition was granted, and the state filed a motion for remand to state court.
OVERVIEW: The state argued that removal of the case by the community to the court from state circuit court was improper as the sheriff and the county did not join in the petition for removal. The community argued, however, that the county and the sheriff were mere nominal parties in the suit and that no controversy existed with respect to the question of whether the county or sheriff would undertake to perform the duties required by state law once the issue of the community's validity as a city was determined. The court found, however, that the county and sheriff were not nominal parties because the decree sought by the state would necessarily affect their interests. The community also contended that the court should treat the county and sheriff as plaintiffs as they sought the same relief as the state. The court held that the law required realignment of the county and sheriff upon a factual showing that they took the same position as the state on the central issue of the suit. The court aligned the state, the county and the sheriff as they shared the same view that the community violated the state and federal constitution. Accordingly the state's motion to remand was denied.
OUTCOME: The motion to remand was denied.

## Opinion

COUNSEL: [*1] Dave Frohnmayer, Attorney General William F. Gary, Deputy Attorney General John A. Reuling, Jr., Special Counsel Robert W. Muir, Asst. Attorney General Margaret Rabin, Asst. Attorney General, Attorneys for Plaintiff.
Ma Prem Sangeet; Rajneesh Legal Services Corporation, Swami Prem Niren, Swami Prartho Subhan; Robert D. Durham Attorneys for Defendants
OPINION BY: FRYE
OPINION
OPINION AND ORDER
FRYE, Judge:
The matter before the court is plaintiff State of Oregon's motion for remand. This motion involves difficult issues of federal subject-matter and removal jurisdiction.

### History of State of Oregon v. City of Rajneeshpuram Relevant Litigation

History of State of Oregon v. City of Rajneeshpuram Relevant Litigation
Acting on the basis of an Attorney General's opinion, Op. Att'y Gen. No. 8148 (October 6, 1983), the State of Oregon brought a declaratory judgment action in Wasco County Circuit Court, seeking a judicial declaration that the City of Rajneeshpuram cannot exist as a legally incorporated city because such existence constitutes a governmental establishment of religion prohibited by the United States and Oregon Constitutions. All defendants in this first suit petitioned for removal of the case to federal court. After removal, the State moved to [*2] remandthe case back to State court, arguing that this court did not have subject-matter jurisdiction over the action and that the eleventh amendment prohibited this court from hearing the action. This court held that the State's action did "arise under" the United States Constitution for jurisdictional purposes and that the eleventh amendment did not bar adjudication of the action in federal court. State of Oregon v. City of Rajneeshpuram, Civ. No. 83-1892FR, 1984 U.S. Dist. (D. Ore. March 23, 1984). The Opinion and Order so holding was filed on a Friday. The following Monday the State filed a notice of dismissal of the action under Fed. R. Civ. P. 41(a)(1)(i), which dismissal this court upheld as valid. Thereafter the State filed the present declaratory judgment action in Wasco County Circuit Court, naming as defendants all those named in the first action and adding as defendants Wasco County and the Sheriff of Wasco County, Robert Brown. The present complaint is substantially identical to the complaint in the first action, except for the addition of Wasco County and its Sheriff as parties and the addition of certain allegations tending to strengthen [*3] the State's argument that the federal constitutionalissues arise only as a matter of defense. All defendants in the present case except Wasco County and its Sheriff petitioned for removal of the action to this court. The case was removed to this court, and the State then filed the present motion for remand.

### Analysis and Ruling

Analysis and Ruling
The State makes various arguments in support of its motion to remand. The first arguments are substantially identical to those made in the first case: that this action does not arise under the United States Constitution for jurisdictional purposes, and that the eleventh amendment prohibits adjudication of the action in this court. Defendants 1 contend that this issue has already been determined by the decision in Civil No. 83-1892FR and that res judicata bars the State from relitigating these matters. Even if the prior decision is not technically res judicata as to this action, the prior decision is a statement of the law, and the court will therefore apply the reasoning of that opinion to the present case. Although the State has added certain allegations to the complaint to bolster its argument that this court is without jurisdiction because the federal [*4] constitutional matter arises only as a defense (e.g., the State now alleges that it is presently treating Rajneeshpuram as if it were not a legally incorporated city, and at page 19 the complaint alleges "The State of Oregon therefore contends that it has a valid constitutional defense to the state law claims of the City and its officials and residents."), the reasoning of the prior opinion is applicable to the present case. A provision of the United States Constitution is a central, integral part of the legal logic the State uses in support of its requested declaration, and the fact that the State has not explicitly requested affirmative injunctive relief against the City does not change the fact that its claim arises under the federal constitution. The prior opinion is therefore incorporated by reference as a part of the present opinion.
The State's second argument is that removal of this case is improper because not all defendants joined in the petition for removal as required. See 1A J. Moore, B. Ringle & J. Wicker, Moore's Federal Practice A.O.168[3.-2-2] at 548 (2nd ed. [*5] 1983). Defendants concede that neither Wasco Countynor the Sheriff joined in the removal petition. However, defendants argue that the failure of Wasco County and the Sheriff to join in the petition is not fatal to removal because (1) these two defendants are mere nominal parties added by the State as defendants solely to defeat the remaining defendants' right to remove, and (2) the court should realign Wasco County and its Sheriff for purposes of determining jurisdiction because they have the same interest in this litigation as the State. Evaluation of the proper role of Wasco County and its Sheriff for jurisdictional purposes first requires an examination of the allegations of the State's complaint and the nature of the claims made by the State against these two defendants. The complaint makes clear that the central issue involved in this action is whether the existence of Rajneeshpuram as an otherwise legally incorporated city violates the establishment of religion provisions of the United States and Oregon Constitutions. Complaint, AAA.4, A.5. The basis of the complaint against Wasco County is (1) that the County issued the "Proclamation of Incorporation" giving Rajneeshpuram municipal [*6] status, and (2) that if it is determined thatRajneeshpuram cannot exist as a city, Wasco County will be obligated under state statutes to provide certain services within Rajneeshpuram, which the County presently is not providing. Complaint, AC.2. As to the Sheriff, the complaint similarly alleges that if the municipal status of Rajneeshpuram is voided, the Sheriff will be obligated to provide police services within Rajneeshpuram, which he presently is not providing. Complaint, AC.3. The State alleges that "a true, present, and bonafide controversy exists" between the State and these two defendants, because the defendants continue to act as if Rajneeshpuram is a legally incorporated city by their failure to provide services within the city. Complaint, AAH.1.b., H.1.c. The State seeks a declaration
Declaring the Proclamation of Incorporation issued by Wasco County on May 26, 1982, is null and void and that Wasco County and Sheriff Brown are required respectively to perform services and exercise governmental powers within the boundaries of the City of Rajneeshpuram as required by state law.
Complaint at 20.
Defendants first argue that Wasco County and the Sheriff are mere nominal [*7] parties in this suit. They contend that nocontroversy exists with respect to the question of whether Wasco County and its Sheriff will undertake to perform the duties required by State law once the issue of Rajneeshpuram's validity as a city is determined. Moreover, defendants have submitted some evidence that the county itself believes its position in this litigation to be that of a mere nominal party. (See Exhibit A to Defendants' Opposition to Motion for Remand.)
On the other hand, the State's complaint alleges that the County and its Sheriff are presently performing their duties under state law as if the City of Rajneeshpuram were legally incorporated. It is conceivable that Wasco County and its Sheriff might wish to advance interests in this litigation unrelated to the underlying constitutional issue. For example, the County might have an interest in keeping its budget down, and desire for that reason to support the legality of Rajneeshpuram so as not to have to provide services within the city.
The issue of whether a party is merely a nominal party for jurisdictional purposes is a matter of federal law. see Glenmede Trust Co. v. Dow Chemical Co., 384 F. Supp. 423, 430 (E.D. Pa. 1974). [*8] In Marsden v. Southern Flight Service, 192 F. Supp. 418 (M.D.N.C. 1961), relied upon by defendants, the court stated:
In determining removability, nominal or formal parties are to be disregarded and only indispensahle parties are to be considered, . . . and it is uniformly held that the question of whether the parties are indispensable must be determined by the federal courts according to federal rather than state rules. . . .
The issue of whether a party is merely a nominal party for jurisdictional purposes is a matter of federal law. see Glenmede Trust Co. v. Dow Chemical Co., 384 F. Supp. 423, 430 (E.D. Pa. 1974). [*8] In Marsden v. Southern Flight Service, 192 F. Supp. 418 (M.D.N.C. 1961), relied upon by defendants, the court stated:
In determining removability, nominal or formal parties are to be disregarded and only indispensahle parties are to be considered, . . . and it is uniformly held that the question of whether the parties are indispensable must be determined by the federal courts according to federal rather than state rules. . . .
While determination of whether a person or corporation is an indispensable party is not always an easy task, and there is no ready rule of thumb immediately available for making such determination, "* * * it is the general rule that an indispensable party is one who not only has an interest in the controversy, but an interest of such nature that a final decree cannot be rendered as between other claimants of interest who are parties without affecting that interest or leaving the controversy in such condition that its final determination may be wholly inconsistent with equity and good conscience."
Id. at 421 (citations omitted), quoting Reid v. Reid, 269 F.2d 923 at 926-27 (10th Cir. 1959). Applying [*9] this test, the court finds that Wasco County and the Sheriffare not nominal parties because the decree sought by the State in this case will necessarily affect their interests.
Defendants next contend that for purposes of determining whether removal of this action is proper, this court must treat Wasco County and its Sheriff as plaintiffs because Wasco County and its Sheriff want the same relief as the plaintiff. This is called realigning the parties. "It is the court's duty to 'look beyond the pleadings and arrange the parties according to their sides in the dispute."' 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3607 at 639 (1975), quoting City of Dawson v. Columbia Trust Co., 197 U.S. 178 at 180 (1905). Although most realignment cases involve diversity jurisdiction issues, parties may also be realigned for purposes of determining whether "all defendants" have joined in a petition for removal as required. See Moore's, supra, AO.168[3.-2-2] at 547. In realigning the parties, the court must place parties with the same "ultimate interest" in the outcome of the litigation on the same side. Wright & Miller, supra, at 641. Realignment [*10] is "not to be determined by mechanical rules. It must be ascertainedfrom the 'principal purpose of the suit' and the 'primary and controlling matter in dispute.'" City of Indianapolis v. Chase National Bank, 314 U.S. 63 at 69-70 (1941) (citations omitted). In City of Indianapolis, the Court rejected the view that "[t]he measure of jurisdiction should be taken from the pleadings, unless the claims are frivolous on their face." Id. at 79 (Jackson, J., dissenting). Rather, the Court indicated that even though a technical or hypothetical conflict between two parties may appear, those parties should nevertheless be aligned together for jurisdictional purposes if they share the same "attitude towards the actual and substantial controversy." Id. at 75, n. 4, quoting Sutton v. English, 246 U.S. 199 at 204 (1918). In City of Indianapolis the Court found that "one question permeates this litigation" (Id. at 72) and that the plaintiff and one defendant were united in their position as to this "one fundamental issue" (Id. at 73). Thus, the court realigned the defendant as a plaintiff, even though the final judgment [*11] in the action made the former defendant subject to tertiary liability to the plaintiff for more than one million dollars. Id. at 79 (Jackson, J., dissenting).
The realignment issue turns solely on matters of evidence. The law requires the realignment of Wasco County and its Sheriff as plaintiffs in this action upon a factual showing that with respect to the central, primary issue in dispute -- i.e., whether Rajneeshpuram may legally exist as a city given the constitutional constraints on establishment of religion -- Wasco County and its Sheriff take the same position as or are supportive of the position of the State. The burden of proof on this matter rests with the defendants: "The burden of proof . . . as to any controverted material issue necessary to support the petition [for removal] is upon the party who invoked the federal court's jurisdiction by removing." Moore's, supra, AO.168[4.-1] at 647.
Defendants have alleged in their petition for removal that "defendants Wasco County and Brown . . . seek the same relief in another action as plaintiff State of Oregon seeks here." Petition for Removal at 2. In support of this allegation, defendants have submitted copies [*12] of a number of pleadings submitted by Wasco County and parties with which Wasco County is aligned in the cases of McGreer v. City of Rajneeshpuram, CC 83-202, and 1000 Friends of Oregon v. Wasco County Court, LUBA No. 81.132. These cases represent challenges to the legality of the incorporation and municipal status of Rajneeshpuram, at least for land use purposes. These pleadings establish that, although nominally a defendant in these cases along with the City of Rajneeshpuram, the County has argued that the City of Rajneeshpuram was "unlawfully incorporated" (Motion for judicial Notice at 9); is "invalidated at least for land use purposes" (Id. at 16); that "the incorporation of Rajneeshpuram [is] void and invalid" (Id. at 17); and that Rajneeshpuram should be enjoined from exercising all municipal land use powers (Id. at 18-23). Parties with whom Wasco County has aligned itself in other litigation take the position that the "'religious right' to establish a religious city is . . . unconstitutional. See October 6, 1983 Opinion of the Attorney General (No. 8148)" (Id. at 26), and that "[t]o the extent that [the City] alleges a right to form a [*13] city controlled by a religious commune, it alleges a right to unconstitutional action" (Id. at 27, again citing to Op. Att'y Gen. No. 8148). The State does not challenge defendants' factual contention that Wasco County has taken a position adverse to the existence of Rajneeshpuram as a city in other litigation.
The State makes a number of arguments to rebut defendants' contention that Wasco County and its Sheriff should be realigned as plaintiffs. First, the Sheriff has never been involved in any litigation concerning the status of the City of Rajneeshpuram (see Affidavit of Bernard Smith), and thus has taken no prior position with respect to the issue of the legality of Rajneeshpuram. The State argues that defendants have failed to show any factual basis whatever for realigning the Sheriff (as opposed to Wasco County) as a plaintiff. Defendants contend, however, that as a county officer the Sheriff is simply an agent of the County, and that with respect to the central issue in this case, the Sheriff has no choice but to take whatever position the County takes. Under Oregon law, the County Court is the governing body of Wasco County and exercises "general legislative authority [*14] over all matters of county concern." ORS 203.111. The Sheriff is a county officer. ORS 204.005. The Sheriff must "obey [the CountyCourt's] lawful orders and directions." ORS 206.010(5). The County Court appoints counsel to advise "the board and other county officers . . . in connection with legal questions of a civil nature arising in the discharge of their functions . . . . " ORS 203.145(2). The same individual represents the County and the Sheriff in this litigation. (Affidavits of Bernard Smith.) Taken as a whole, the statutory scheme and the practicalities of litigation indicate that with respect to the central issue in this litigation, the position of Wasco County and the Sheriff are and will remain identical.
The State's next argument is that the position taken by Wasco County adverse to the existence of Rajneeshpuram as a city in the land use cases is wholly irrelevant to the determination of what position Wasco County will take with respect to the church-state issue in the present litigation. The State contends that Wasco County has never taken a position with respect to the church-state issue in the land use cases. (Affidavit of Mark Greenfield.) However, the pleadings [*15] cited earlier show that Wasco County takes the position that Rajneeshpuram's incorporation is invalid at least with respect to landuse issues, and that Wasco County has aligned itself in other cases with parties who take the position that the Attorney General's Opinion upon which the State relies in bringing the present action is an accurate statement of the law, and that the incorporation of Rajneeshpuram cannot stand in light of constitutional prohibitions of governmental establishment of religion.
The State's final argument rests on the allegation in its complaint that at the present time the State is treating Rajneeshpuram as if it were not a legally incorporated city, in that the State is refusing to provide funding and services to Rajneeshpuram that it is required to provide under state law to lawfully incorporated cities. On the other hand, the State alleges that Wasco County and its Sheriff continue to treat Rajneeshpuram as if it were a legally incorporated city, in that they are refusing to provide services within the boundaries of Rajneeshpuram that they would have to provide if the City did not exist. The State contends that this shows the divergence of interest between [*16] the State and the County and its Sheriff. The State argues, essentially, that actions speak louder than words, and that because WascoCounty and the Sheriff are acting as if Rajneeshpuram were legally incorporated, the court should find that their position in this litigation with respect to the church-state issue is aligned with the City and opposed to the State, and hence that Wasco County and the Sheriff are properly aligned as defendants.
The fact that the actions of Wasco County and its Sheriff differ from those of the State is not determinative. An obvious reason exists as to why the State would find it much easier than Wasco County and the Sheriff to "act" as if Rajneeshpuram were not a city. The State's "actions" in reliance on its view that Rajneeshpuram is not a valid city merely consist of cutting off funds and services to the City. The State's "actions" are really inaction or failure to act. Such action may anger the City (see Letter of Ma Prem Sangeet, April 10, 1984), but does not bring any state official into daily, direct conflict with any City officials or residents. In contrast, the actions Wasco County and the Sheriff would have to take in order to manifest a [*17] belief that Rajneeshpuram is not a legally incorporated city are affirmative, direct actions: actual physical presence by Wasco Countyand Sheriff's officials within the Rajneeshpuram city limits, and actual displacement of Rajneeshpuram officials by County officials in providing services within the city. Such actions would bring Wasco County and the Sheriff into actual, direct, daily conflict with officials and residents of Rajneeshpuram, including a conflict between the Sheriff and the Rajneeshpuram Peace Force. In such circumstances, it is entirely understandable why Wasco County and its Sheriff would await a judicial determination of Rajneeshpuram's status before taking such actions, and why on the other hand the State finds it easy and expedient to treat Rajneeshpuram as a non-entity.
The realignment issue presents a very close question. The State contends that, in doubtful cases, doubt must be resolved against removal and in favor of remand. See Moore's, supra, AO.157[1.-3]. The issue is whether under the evidence before the court, evaluated in a practical, non-technical, non-mechanical light, the State and Wasco County and its Sheriff are on the same side and share the [*18] same view of the matter in dispute, i.e., whether the existence of Rajneeshpuram violates the United States or Oregon constitution. Heeding the Supreme Court's admonition that "[l]itigation is the pursuit of practical ends, not a game of chess," City of Indianapolis, 314 U.S. at 69, the court finds that Wasco County and its Sheriff must be aligned with the State as plaintiffs for removal purposes.

## Order

IT IS THEREFORE ORDERED that plaintiff's motion to remand is DENIED.

## Footnotes

* ↑ 1 All references to "defendants" in this Opinion exclude Wasco County and Sheriff Brown.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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