Court Opinion

ID: 7006816
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:52:44.826399+00
Date Added: 2024-06-11T16:10:06.153053
License: Public Domain

JOHN R. GIBSON, Circuit Judge,
dissenting.
I respectfully dissent. The court’s opinion today overlooks Hafer v. Melo, 502 U.S. 21, 112 S.Ct. 358, 116 L.Ed.2d 301 (1991), which should guide our interpretation of what actions may be filed against state employees in their individual capacities.
Here, the law firm as relator brought a qui tarn action under the False Claims Act, 31 U.S.C. §§ 3729-33 (1994), on March 28, 1997. The complaint named the State of Iowa, the Iowa Department of Human Services, and numerous employees, including Gary Gesaman, as defendants. The original complaint did not specify the capacity in which Gesaman was being sued. On May 22, 2000, the Supreme Court decided Vermont Agency of Natural Resources v. *938United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000), holding that a qui tarn action brought against a state under the False Claims Act must be dismissed because under the statute a state is not a person for the purposes of qui tarn actions.4 Stevens was based purely upon principles of statutory construction, and the Court found it unnecessary to consider whether the Eleventh Amendment would bar such actions. 529 U.S. at 787, 120 S.Ct. 1858. Thereafter, relators in this case filed a motion for leave to amend their complaint, dismissing the state and all of its agencies and asserting claims against Gesaman in his official and individual capacity.
The district court interpreted Stevens to mean that Gesaman, the state official who implemented the state policy on behalf of the Department of Human Services, was not subject to liability in either his individual or official capacity. It stated that the alleged conduct for which Gesaman was named as a defendant wás part of his duties as a state employee; thus, in performing the alleged acts, he was the State of Iowa personified, and so not subject to suit. In my view the district court erred and should have exercised its discretion to permit the filing of the amended complaint.5
The district court, and the court today, fail to take into consideration the teaching of the Supreme Court in Hafer, a 42 U.S.C. § 1983 case against state officers in their individual capacities that was based on actions the officers had taken in the course of their official duties. A prior decision had determined that “neither a state nor its officials acting in their official capacities are ‘persons’ under § 1983.” Will v. Michigan Dep’t of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989). A unanimous Supreme Court6 nonetheless determined that “state officials, sued in their individual capacities, are ‘persons’ within the meaning of § 1983.” Hafer, 502 U.S. at 31, 112 S.Ct. 358 (emphasis added). In reaching that conclusion, the Court expressly rejected any distinction based on whether the actions at issue were within the scope of the official’s authority. The Court reasoned that not to allow personal capacity suits against state officials acting within the scope of their authority would “absolutely immunize state officials from personal liability for acts within their authority .... Yet our cases do not extend absolute immunity to all officers who engage in necessary official acts.” Id. at 28, 112 S.Ct. 358.
Like the Court in Hafer, we confront a statute that excludes states and state agencies from its definition of “persons” that can be sued, Stevens, 529 U.S. at 788, 120 S.Ct. 1858, and we must decide whether that statute nonetheless allows state officials to be sued in their individual capacities. As the court recognizes, 1 U.S.C. § 1 (1994) creates a presumption that natural persons are covered by the use of the *939term “person” in a statute. Supra at 936; see also Stevens, 529 U.S. at 784 n. 14, 120 S.Ct. 1858. Neither the court nor Gesaman has provided any rationale of statutory construction to overcome that presumption. In light of Hafer, I would hold that state officials may be sued in their individual capacity under the False Claims Act. See Luder v. Endicott, 253 F.3d 1020, 1022 (7th Cir.2001) (interpreting Fair Labor Standards Act, in light of Hafer, to permit a claim against state officers in their individual capacities); cf. Alden v. Maine, 527 U.S. 706, 757, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999) (“[A] suit for money damages may be prosecuted against a state officer in his individual capacity for unconstitutional or wrongful conduct fairly attributable to the officer himself .... ”). But see Lizzi v. Alexander, 255 F.3d 128, 137 (4th Cir.2001) (declining to apply Hafer to Family and Medical Leave Act case, in part because Hafer was decided under § 1983).
Only after we have concluded that the False Claims Act permits state officials to be sued in their individual capacities do we ask whether the state is nevertheless the real party in interest and whether the suit is thus barred by the Eleventh Amendment. See Luder, 253 F.3d at 1022 (analyzing first whether plaintiff can state claim against supervisor in individual capacity under Fair Labor Standards Act, and only after answering that question in the affirmative discussing whether suit is really against the state for purposes of the Eleventh Amendment). This is the true significance of the Supreme Court’s statement in Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 270, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997), cited in part by the court today, supra at 936, that “[t]he real interests served by the Eleventh Amendment are not to be sacrificed to elementary mechanics of captions and pleading.”
In addressing the Eleventh Amendment question presented here, it is important to recognize that “[a]s a general rule, suits seeking damages from state officials in their individual capacities are not barred by the Eleventh Amendment.” Cornforth v. Univ. of Okla. Bd. of Regents, 263 F.3d 1129, 1131-32 (10th Cir.2001) (citing Hafer, 502 U.S. at 30-31, 112 S.Ct. 358, and Alden, 527 U.S. at 757, 119 S.Ct. 2240). However, even where a state official is sued in his or her individual capacity, the “Eleventh Amendment bars a suit against state officials when ‘the state is the real, substantial party in interest.’ ” Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (quoting Ford Motor Co. v. Dep’t of Treasury of Ind., 323 U.S. 459, 464, 65 S.Ct. 347, 89 L.Ed. 389 (1945)). The state is the real party in interest when the judgment is sought from the public treasury, when the judgment would interfere with public administration, or when the judgment would restrain or compel state action. Id., at 101 n. 11, 104 S.Ct. 900. The fact that the state here has chosen to indemnify its officials does not make it the real party in interest. Luder, 253 F.3d at 1023 (citing cases). Nor is this a case where the judgment sought will interfere with public administration or restrain the state from acting or compel it to act. Holding Gesaman personally liable for violating regulations of the state and thereby defrauding the United States would not place any type of onerous burden on the state, it would in fact “advance rather than thwart state policy.” Luder, 253 F.3d at 1024; see Comforth, 263 F.3d at 1133 (declining to find state real party in interest, in part because judgment against individual state employee would not “legally require” state university to comply with federal regulation). But cf. Lizzi, 255 F.3d at 137 (“The state would still suffer the indignity *940of having each discrete decision regarding personnel or organization matters subject to second-guessing by a federal court.”).
Finally, the court today quotes Bly-Magee v. California, 236 F.3d 1014, 1016 (9th Cir.2001), for the proposition that “[w]e should look at whether the alleged conduct of the defendant was ‘outside of [his] official duties.’ ” Supra at 936. This scope-of-duty analysis, however, is more properly applied to the defense of personal immunity, as it in fact was in Bly-Magee, 236 F.3d at 1017-18 (acknowledging that qui tam claims under the False Claims Act fail as to the state and its agencies in light of Stevens, but analyzing claims against individual state officials in terms of immunity); cf. Hafer, 502 U.S. at 31, 112 S.Ct. 358 (“To be sure, imposing personal liability on state officers may hamper their performance of public duties. But such concerns are. properly addressed within the framework of our personal immunity jurisprudence.”). Because the district court did not allow the complaint to be amended so as to include a claim against Gesaman in his individual capacity, any affirmative defenses, including qualified immunity, are not before us. See Barrett v. Thomas, 649 F.2d 1193, 1201 (5th Cir.1981).
I would reverse the district court and allow amendment of the complaint to include claims against Gesaman in his individual capacity.

. See 31 U.S.C. § 3729(a) (1994) ("any person” who knowingly presents a false or fraudulent claim to the United States for payment or approval is liable for damages).

. The district court also based its decision on the belief that this court, in light of Stevens, would overrule United States ex rel. Rodgers v. Arkansas, 154 F.3d 865, 868 (8th Cir.1998) (holding that a qui tam action under the False Claims Act "is a suit by the United States for Eleventh Amendment immunity purposes”). I agree that Rodgers has lost most of its validity in light of Stevens, and I also agree with the court today, supra at 936, that Stevens has overruled United States ex rel. Zissler v. Regents of the University of Minnesota, 154 F.3d 870 (8th Cir.1998), to the extent that decision held that states are persons under the False Claims Act.

.Justice Thomas took no part in the consideration or decision.