Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01313/USCOURTS-ca7-15-01313-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 15-1313

KATHERINE CERAJESKI, Guardian for Walter Cerajeski,

Plaintiff-Appellant,

v.

GREG ZOELLER, Attorney General of the State of Indiana,

 et al.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:11-cv-01705-JMS-DKL — Jane E. Magnus-Stinson, Judge.

____________________

ARGUED JUNE 2, 2015 — DECIDED JULY 24, 2015

____________________

Before POSNER, EASTERBROOK, and SYKES, Circuit Judges.

POSNER, Circuit Judge. This appeal is a sequel to our decision reported at 735 F.3d 577 (7th Cir. 2013), in which we 

held unconstitutional a provision of the Indiana Unclaimed 

Property Act, Ind. Code §§ 32-34-1-1 et seq. (Indiana’s version of the Uniform Unclaimed Property Act) that authorized the state to confiscate private property without any 

compensation—let alone just compensation—to the owner.

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The Act stated that “property” is “presumed abandoned 

if the owner or apparent owner has not communicated in 

writing with the holder concerning the property or has not 

otherwise given an indication of interest in the property” 

within a specified period varying according to the type of 

property. § 32-34-1-20(c). By filing a valid claim with the 

state the owner could reclaim the property at any time up to 

25 years after it was delivered to the attorney general. § 32-

34-1-36. (After that, if still unclaimed, the property escheated

to the state.) But he was entitled only to his principal and not 

to any interest earned on it. We held that the state’s retention 

of the interest was a taking that violated the Fifth Amendment’s just compensation clause (deemed applicable to actions by state governments by interpretation of the Fourteenth Amendment’s due process clause) because the owner 

was paid nothing for his lost interest.

Our opinion concluded by stating that “the judgment is 

reversed and the case remanded for further proceedings 

consistent with this opinion. The plaintiff is entitled to just 

compensation from the state when she files her claim to 

[Walter] Cerajeski’s account [remember that the plaintiff is 

his guardian], but the amount of that just compensation has 

yet to be determined. The plaintiff has also sought an injunction—why we don’t know; and injunctive relief may well be 

unavailable in this case. ‘Equitable relief is not available to 

enjoin an alleged taking of private property for a public use.’ 

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984). The 

availability and propriety of injunctive relief are other issues 

to be resolved by the district judge in the first instance.”

So the case returned to the district court. Several months 

later the state, having in response to our decision amended 

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No. 15-1313 3

its Unclaimed Property Act to provide for payment of interest on property to which the owner had made a valid claim,

Ind. Code §§ 32-34-1-9.1, 32-34-1-30 (effective July 1, 2014),

moved to dismiss the suit as moot. The plaintiff, objecting,

asked the district court, pursuant to our judgment, to enter a 

declaratory judgment and also to award the attorneys’ fees 

incurred in prosecuting the appeal that had resulted in our 

judgment. (The plaintiff is not seeking an award of fees for 

any other part of the litigation in either the district court or 

this court.) The district judge refused, dismissed the suit as 

moot, and later denied the motion for attorneys’ fees primarily on the ground that, the suit having been dismissed, the 

plaintiff was not a prevailing party. The plaintiff has appealed.

The district judge was annoyed at the plaintiff because on

remand from our court she’d asked permission to file an 

amended complaint that would have converted the suit to a 

class action. She did that because of intimations that the state 

would, despite our decision, compensate only the plaintiff, 

forcing the multitude of similarly situated creditors to bring 

their own suits. But she withdrew that request (as distinct 

from her request for an award of attorneys’ fees) when the 

state amended the Unclaimed Property Act. For the amendment mooted her federal claim for damages by entitling her 

to payment by the state of the interest that she had sought in 

her lawsuit.

By amending the statute the state conceded that it owed 

the interest to the plaintiff. But its concession could not deprive the plaintiff of her status as the prevailing party in the 

litigation. Our decision had preceded the amendment of the 

statute and by holding that she was entitled to damages 

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equal to the unpaid interest had made her the prevailing 

party. See National Rifle Association of America, Inc. v. City of 

Chicago, 646 F.3d 992, 994 (7th Cir. 2011). She would not have 

been the prevailing party had the state, as in Zessar v. Keith, 

536 F.3d 788, 797 (7th Cir. 2008), amended its law before our 

decision—that would have mooted the case and we would 

have had to dismiss it for want of jurisdiction, thus not deciding the merits and not ordering any relief.

“[E]nforceable judgments on the merits ... create the ‘material alteration of the legal relationship of the parties’ necessary to permit an award of attorney’s fees” under federal 

statutes (in this case 42 U.S.C. § 1988(b)) that authorize such 

awards. Buckhannon Board & Care Home, Inc. v. West Virginia 

Dept. of Health & Human Resources, 532 U.S. 598, 604 (2001). 

“[R]elief need not be judicially decreed in order to justify a 

fee award under § 1988. A lawsuit sometimes produces voluntary action by the defendant that affords the plaintiff all or 

some of the relief he sought through a judgment—e.g., a 

monetary settlement or a change in conduct that redresses 

the plaintiff’s grievances.” Hewitt v. Helms, 482 U.S. 755, 760–

61 (1987). That is what happened in this case. It is not a case 

in which by filing a lawsuit a plaintiff prompts a change in 

law—the “catalyst theory” of prevailing-party status rejected 

in the Buckhannon case. 532 U.S. at 609–10. Nor is it a case 

like Hewitt, in which the appellate court explicitly conditioned judgment in the plaintiff’s favor on whether he could 

prove that the defendants were not entitled to official immunity. 482 U.S. at 758.

At the oral argument of the current appeal, the state argued that the sovereign immunity conferred on it by the 

Eleventh Amendment would have barred the plaintiff’s 

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No. 15-1313 5

claim for damages or alternatively that the defendants, being 

sued in their official capacities (making this effectively a suit 

against the state), aren’t “person[s]” within the meaning of

section 1983, the statute under which the plaintiff sued. The 

state briefed these alternative arguments in the district court 

but not in either appeal. Even if our holding in the previous 

round that the plaintiff was entitled to just compensation in 

a suit under section 1983 (or perhaps in any federal suit) was 

incorrect and the challenge to it not waived by not being 

made in our court, the plaintiff nevertheless had obtained a 

judgment which compelled a change in state law that gave 

her compensation equal to the damages she was seeking, 

and it was a result brought about by the efforts of her lawyers.

The district judge had her own alternative ground, similar to the defendants’, for denying the plaintiff attorneys’ 

fees: that the claim of an unconstitutional taking, the claim 

we upheld in rendering judgment in the plaintiff’s favor, 

was brought directly under the Constitution and not under 

42 U.S.C. § 1983—and 42 U.S.C. § 1988(b), the attorneys’ fees 

statute on which the plaintiff bases her claim for fees, applies

by its terms only to claims brought under section 1983 (and 

certain other statutes not relevant to this case). But section 

1983 imposes liability on anyone “who, under color of any 

statute, ordinance, regulation, custom, or usage, of any State 

or Territory or the District of Columbia, subjects, or causes to 

be subjected, any citizen of the United States or other person 

within the jurisdiction thereof to the deprivation of any 

rights, privileges, or immunities secured by the Constitution 

and laws,” and one of those rights is the right to just compensation for the taking of private property. Although 42 

U.S.C. § 1983 isn’t explicitly mentioned in Count III of the 

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complaint, which is captioned “CLAIM FOR PROSPECTIVE 

RELIEF (FIFTH AMENDMENT TAKINGS CLAUSE),” paragraphs 1 and 11 of the complaint invoke section 1983 and 

are expressly incorporated in Count III; and paragraph B, on 

the last page of the complaint, also bases the takings claim

on that statute.

We therefore reverse the judgment of the district court 

and remand the case for a determination of the amount of 

attorneys’ fees to which the plaintiff is entitled. We offer the 

tentative view that the amount sought—$258,462.50 for 

375.75 hours—is excessive, both in the amount of time for 

which fees are sought and in the average hourly billing rate 

($687.86). Remember that this was just time spent on the appeal (the first, not the present, appeal), and the high average 

billing rate implies that few junior members of the two law 

firms who handled the appeal for the plaintiff could have 

been assigned to work on the appeal. In fact it appears that

law-firm partners billed more than 93 percent of the total 

hours billed.

The plaintiff asks us to determine the amount of attorneys’ fees to which she is entitled, but we think it a task better left to the district court. District judges have more experience than appellate judges in determining reasonable 

awards of attorneys’ fees.

REVERSED AND REMANDED

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