Court Opinion

ID: 3003109
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:39:03.591042+00
Date Added: 2024-06-11T11:39:11.980934
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 08-2527

C ORRINE W IESMUELLER and
H EATHER R. D EVAN, on their own
behalf and that of all others similarly situated,

                                           Plaintiffs-Appellants,
                               v.

JOHN K OSOBUCKI, et al.,
                                           Defendants-Appellees.

           Appeal from the United States District Court
               for the Western District of Wisconsin.
         No. 07-cv-211-bbc—Barbara B. Crabb, Chief Judge.

        A RGUED A PRIL 7, 2009—D ECIDED JULY 9, 2009

  Before P OSNER, R IPPLE, and W OOD , Circuit Judges.
  P OSNER, Circuit Judge. Wisconsin allows graduates of
the two law schools in the state (Marquette University
Law School and the University of Wisconsin Law School
at Madison) to be admitted to practice law in Wisconsin
without taking the Wisconsin bar exam. The plaintiffs,
and the class they represent (which has been certified),
2                                             No. 08-2527

are graduates of accredited out-of-state law schools who
want to practice law in Wisconsin. They have sued mem-
bers of the Wisconsin Board of Bar Examiners and the
Supreme Court of Wisconsin, charging a violation of the
commerce clause of Article I of the Constitution and
seeking injunctive relief. They argue that the “diploma
privilege” discriminates against graduates of out-of-
state law schools who would like to practice law in Wis-
consin. They appeal from the district court’s grant of
the defendants’ motion to dismiss the suit for failure
to state a claim.
  Graduates of accredited law schools in states other
than Wisconsin who would like to practice law in that
state are at a disadvantage vis-à-vis graduates of Wis-
consin’s two law schools, because, unlike those
graduates, to be admitted to the Wisconsin bar they have
either to have practiced law for five years in another
state or to have passed the Wisconsin bar exam. The
amount of preparation required for taking the bar exam
with a good chance of passing it is significant, and, for
applicants who prudently enroll in a bar-review course,
also costly. The ever-present risk of failing the bar exam
and having therefore to retake it (perhaps repeatedly)
imposes a further, contingent cost in time, money, and
reputation. Such applicants also pay a higher fee for
admission to the bar. And having to take the bar exam
delays their admission to the bar (though not for as long
as having to practice for five years in another state). It
comes as no surprise that more than two-thirds of the
lawyers in Wisconsin never took the Wisconsin bar
exam, though an unknown number were excused from
No. 08-2527                                              3

having to take it because, rather than graduating from
a Wisconsin law school, they had practiced law for at
least five years in another state—in exile, as it were,
from Wisconsin.
  The defendants concede these points but argue that as
a qualification for practice in the state the study of law
in a Wisconsin law school is a reasonable substitute for
passing the bar exam or for having practiced law for a
significant period of time in another state. They also
argue that the plaintiffs lack standing to sue because
the only relief they seek is an injunction against three
words in the rule of the Wisconsin Supreme Court that
confers the diploma privilege on the graduates of the in-
state law schools. We begin our consideration with
that argument.
 The rule provides, so far as bears on this case, that
   an applicant who has been awarded a first professional
   degree in law from a law school in this state that is
   fully, not provisionally, approved by the American
   bar association shall satisfy the legal competence
   requirement by presenting to the clerk certification
   of the board showing:
         (1) Satisfactory completion of legal studies
       leading to the first professional degree in law. The
       law school shall certify to the board satisfactory
       completion of not less than 84 semester credits
       earned by the applicant for purposes of the degree
       awarded.
         (2) Satisfactory completion of study in manda-
       tory and elective subject matter areas. The law
4                                                No. 08-2527

        school shall certify to the board satisfactory com-
        pletion of not less than 60 semester credits in the
        mandatory and elective subject matter areas as pro-
        vided in (a) and (b). All semester credits so certi-
        fied shall have been earned in regular law school
        courses having as their primary and direct
        purpose the study of rules and principles of sub-
        stantive and procedural law as they may arise
        in the courts and administrative agencies of the
        United States and this state.
Wis. S. Ct. R. 40.03 (emphasis added). Subsections (a) and
(b), to which Rule 40.03(2) refers, list standard law
school courses. The rule makes no reference to Wisconsin
law, and none of the listed course names has “Wisconsin”
or any cognate in it.
   The defendants argue that because all that the plain-
tiffs want by way of a judgment is an order expunging
the three words that we have italicized, they would still
be bound by subsection (2) and they have not contended
that they satisfy its requirements. But the defendants err
in assuming that the last sentence in subsection
(2) (“All semester credits so certified shall have been earned
in regular law school courses having as their primary and
direct purpose the study of rules and principles of sub-
stantive and procedural law as they may arise in the courts
and administrative agencies of the United States and this
state”) requires the study of Wisconsin law, or that the
law schools that the plaintiffs and the members of their
class have attended have less rigorous requirements
than those imposed by the subsection. Indeed, so far as
No. 08-2527                                                5

appears, every class member could establish that his or
her law school studies conformed to the requirements
set forth in the rule except that the law school was in
another state. Anyway the requirements of subsection
(2) are applicable only to graduates of Wisconsin law
schools, as the defendants concede and as is plain both
from the wording of the rule (in particular the words
“the law school”) and from Wis. S. Ct. R. 40.02, which sets
forth the qualifications for admission to practice in Wis-
consin, including those applicable to persons who do not
qualify for the diploma privilege. And this is further
shown by Rule 40.02(2).
   But the plaintiffs cannot be right that the Constitution
requires Wisconsin to extend the diploma privilege to
all graduates of any accredited law school in the United
States, which would be the effect of just striking the
three words. They overlook the fact that unequal treat-
ment can be eliminated without conferring any benefit
on the plaintiff that challenged it. If the diploma privilege
is invalidated and in response Wisconsin requires all
applicants for membership in the Wisconsin bar either
to take the Wisconsin bar exam or to have practiced for
five years in another state, the plaintiffs will be in
the same position they’re in now. Leveling down is a
permissible form of compliance with a command to end
unequal treatment. Iowa-Des Moines National Bank v.
Bennett, 284 U.S. 239, 247 (1931) (Brandeis, J.); see also
Heckler v. Mathews, 465 U.S. 728, 739-40 (1984); Palmer v.
Thompson, 403 U.S. 217, 218 (1971).
  But we do not know what exactly Wisconsin would do
to comply with a ruling invalidating the diploma privi-
6                                                   No. 08-2527

lege. It might require all applicants (or perhaps all appli-
cants who had not practiced for a period of time in
another state) to take a continuing legal education course
in Wisconsin law in lieu of a bar exam. (Some states
impose such requirements, though not in lieu of a bar
exam.) That would give the plaintiffs most of the relief
they seek. We cannot say that the probability of such a
mode of compliance is so slight that the plaintiffs cannot
show that they have anything to gain from winning
their suit and so cannot be permitted to maintain it.
MainStreet Organization of Realtors v. Calumet City, 505
F.3d 742, 744 (7th Cir. 2007); National Wildlife Federation
v. FERC, 801 F.2d 1505, 1506 n. 1 (9th Cir. 1986); cf. Pennell
v. City of San Jose, 485 U.S. 1, 6-8 (1988). A former
president of the Wisconsin Bar Association, an opponent
of the diploma privilege, has been quoted as saying that
“he has no ‘preconceived view’ as to whether Wisconsin
should abolish the diploma privilege altogether or extend
it to all graduates of ABA accredited law schools nation-
wide.” Mark Hansen, “Wisconsin Bar Weighs a Degree
of Change,” ABA Journal, April 2007, www.abajournal.com/
magazine/wisconsin_bar_weighs_a_degree_of_change/
(visited June 13, 2009).
  We said in MainStreet Organization of Realtors v. Calumet
City, supra, 505 F.3d at 744, that “as long as there is
some nonnegligible, nontheoretical, probability of harm
that the plaintiff’s suit if successful would redress . . . , the
fact that a loss or other harm on which a suit is based
is probabilistic rather than certain does not defeat stand-
ing.” This is confirmed by the Supreme Court’s ruling in
Northeastern Florida Chapter of Associated General Contractors
No. 08-2527                                                  7

of America v. City of Jacksonville, 508 U.S. 656, 664-66
(1993), that the loss of an opportunity to compete for a
position (for example because of discrimination) is
injury enough to support standing; there is no need to
show that the applicant would have won the competition
for the position, provided that he had a “realistic chance”
of winning. Nor-West Cable Communications Partnership
v. City of St. Paul, 924 F.2d 741, 749 (8th Cir. 1991); Doherty
v. Rutgers School of Law-Newark, 651 F.2d 893, 902 (3d Cir.
1981). This shows that a modest probability of injury is
enough for standing.
  So there is no jurisdictional obstacle to the appeal,
and we pass to the merits. The Supreme Court
“has adopted what amounts to a two-tiered approach to
analyzing state economic regulation under the Com-
merce Clause. When a state statute directly regulates or
discriminates against interstate commerce, or when its
effect is to favor in-state economic interests over out-of-
state interests, we have generally struck down the
statute without further inquiry. When, however, a statute
has only indirect effects on interstate commerce and regu-
lates evenhandedly, we have examined whether the
State’s interest is legitimate and whether the burden on
interstate commerce clearly exceeds the local benefits.”
Brown-Forman Distillers Corp. v. New York State Liquor
Authority, 476 U.S. 573, 578-79 (1986) (citations omitted).
But immediately the Court added that “we have also
recognized that there is no clear line separating the
category of state regulation that is virtually per se
invalid under the Commerce Clause, and the category
subject to the . . . balancing approach. In either situation
8                                                 No. 08-2527

the critical consideration is the overall effect of the statute
on both local and interstate activity.” Id. at 579. This is an
acknowledgement that the two tiers sometimes cannot
always be distinguished in practice—as this case illustrates.
On the one hand, the diploma privilege does favor the
economic interests of Wisconsin law schools, but on the
other hand it “has only indirect effects on interstate com-
merce and regulates evenhandedly.” For the privilege
is not limited to state residents, compare Daghlian v.
DeVry University, Inc., 582 F. Supp. 2d 1231, 1241-
43 (C.D. Cal. 2007); nor do Wisconsin law schools admit
only Wisconsin residents.
   A state’s right to regulate admission to the practice of
law in the state is unquestioned, even though the result
is to impede the interstate mobility of lawyers. But since
that is a consequence, the regulation must be at least mini-
mally reasonable. National Paint & Coatings Ass’n v. City
of Chicago, 45 F.3d 1124, 1130-32 (7th Cir. 1995); Govern-
ment Suppliers Consolidating Services, Inc. v. Bayh, 975 F.2d
1267, 1285-86 (7th Cir. 1992); Island Silver & Spice, Inc. v.
Islamorada, 542 F.3d 844, 847-48 (11th Cir. 2008). We empha-
size “minimally.” The judiciary lacks the time and the
knowledge to be able to strike a fine balance between
the burden that a particular state regulation lays on inter-
state commerce and the benefit of that regulation to the
state’s legitimate interests. Amanda Acquisition Corp. v.
Universal Foods Corp., 877 F.2d 496, 505 (7th Cir. 1989). We
applied this principle to regulations of bar admission
in Sestric v. Clark, 765 F.2d 655, 661-64 (7th Cir. 1985).
  But in this appeal we find ourselves in an evidentiary
vacuum created by the early termination of the case by
No. 08-2527                                                 9

the grant of a motion to dismiss. For suppose—a sup-
position not only consistent with but actually suggested
by the scanty record that the plaintiffs were not allowed
to amplify—that Wisconsin law is no greater part of
the curriculum of the Marquette and Madison law
schools than it is of the law schools of Harvard, Yale,
Columbia, Virginia, the University of Texas, Notre Dame,
the University of Chicago, the University of Oklahoma,
and the University of Northern Illinois (which happens
to be within a stone’s throw of Wisconsin, as are the
three law schools in Minneapolis). That would suggest
that the diploma privilege creates an arbitrary distinction
between graduates of the two Wisconsin law schools
and graduates of other accredited law schools. And it is
a distinction that burdens interstate commerce. Law
school applicants who intend to practice law in Wisconsin
have an incentive to attend one of the Wisconsin law
schools even if, were it not for the diploma privilege,
they would much prefer to attend law school in another
state.
  In Hunt v. Washington State Apple Advertising Commission,
432 U.S. 333 (1977), North Carolina had passed a law
requiring apples to be graded according to a local stan-
dard. Compliance would have required the unpacking
and relabeling of apples shipped from Washington state,
and the expense would have made Washington apples
noncompetitive with local apples. In both that case and
this, the plaintiffs have a good (apples in Hunt, legal repre-
sentation in this case) that they want to sell in a state
that makes them jump through more hoops than their
local competitors in order to be allowed to sell. It is true
10                                             No. 08-2527

that the out-of-state law schools are hurt along with
their graduates who would like to practice in Wisconsin,
and that no law schools are plaintiffs. But that cannot
help the defendants. The members of the plaintiff associa-
tion in the Hunt case were middlemen as well as producers,
and similarly we can think of the class members in our
case as sellers of legal talent “grown” by the law schools
they attend.
  The effect of the diploma privilege on the decision where
to attend law school is well recognized. “Would be
lawyers who intend to practice in Wisconsin would be
well advised to attend one of the state’s two law
schools. That’s because Wisconsin is the only state in the
country that still allows graduates of its two law schools
to be admitted to practice without having to take the
bar exam.” Hansen, supra. “Wisconsin is the only state
that still allows graduates of in-state law schools to
become lawyers without taking a bar exam (called
the diploma privilege). This creates some interesting
dynamics—UW and Marquette graduates have some
extra incentives to stay in WI because it means they
can avoid a bar exam, and out-of-state graduates/lawyers
have to jump through some extra hoops just to get to the
same place as in-state graduates.” Eric Goldman, “Wiscon-
sin’s Diploma Privilege Draws More Questions,”
Goldman’s Observations Blog, July 27, 2006, http://
blog.ericgoldman.org/personal/archives/2006/07/ (visited
June 13, 2009). Goldman tells “the sad story of Arnie
Moncada . . . , who went to Thomas Cooley Law School
in Michigan, failed the Wisconsin bar 4 times, and now
can’t be a lawyer in WI forever . . . while if he had just
No. 08-2527                                               11

graduated from Marquette or UW, he’d be a lawyer now.”
And he adds: “Personally, I always thought the diploma
privilege did Marquette graduates a disservice—it en-
couraged students to focus on Wisconsin job oppor-
tunities in preference of other great options else-
where. On the other hand, the diploma privilege helps UW
and Marquette in the US News rankings every year
(it’s hard to beat 100% ‘passage’).” Id.
  It is enough that an aspiring lawyer’s decision about
where to study, and therefore about where to live as a
student, can be influenced by the diploma privilege to
bring this case within at least the outer bounds of the
commerce clause; for the movement of persons across
state lines, for whatever purpose, is a form of interstate
commerce. Sestric v. Clark, supra, 765 F.2d at 661. The
effect on commerce of the discriminatory diploma
privilege may be small and, if so, not much would be
required to justify it. Id. at 664. Our concern is that there
may be nothing at all to justify it. The lawyer for the
state acknowledged at argument that she has no
personal knowledge that Wisconsin law occupies a
larger place in the curriculum of the Wisconsin law
schools than of law schools elsewhere. For all that
appears, the faculties of the Wisconsin law schools use
the same casebooks and other teaching materials used
at schools in other states—which is likely, since the
authors of casebooks aim at a national market. Marquette
and Madison are law schools of national stature, and we
can hardly infer without any evidence that they con-
centrate on educating their students in the law of the
state that these law schools happen to be located in
12                                                No. 08-2527

rather than prepare them to practice anywhere in the
United States. Indeed, since no graduates of these law
schools take the Wisconsin bar exam, the faculty has
less incentive to spend time drilling them on Wisconsin
law than the faculty of most law schools in other
states would have to concentrate their teaching on the
law of their state in order to increase the bar exam pass
rate of their law school’s graduates.
  The defendants argue that the rule of the Wisconsin
Supreme Court that we quoted requires that the cur-
riculum of the Wisconsin law schools include Wisconsin
law. But that cannot be inferred from the language of
the rule or from the list of mandatory and elective
courses. The rule merely requires the law schools to offer
a rigorous, well-rounded legal education, and it cannot
be assumed that such an education must be oriented
toward the law of a particular state, even the state in
which the school is located. The reference to “rules and
principles of substantive and procedural law as they may
arise in the courts and administrative agencies of the
United States and this state” may denote those rules and
principles that are common across American states, in-
cluding the rules and principles of federal law, of the
common law, and of uniform statutes such as the Uniform
Commercial Code—in short, the rules and principles that
are the common core of legal studies in all law schools
that have a national rather than local orientation. This inter-
pretation of the rule is consistent with the fact that
Wisconsin permits lawyers who have practiced in another
state for a time to practice in Wisconsin without having
to pass the bar exam or demonstrate any knowledge of
Wisconsin law.
No. 08-2527                                               13

  The fact that the Wisconsin bar exam includes both the
Multistate Professional Responsibility Examination and
the Multistate Essay Examination is a further indication
that the state supreme court does not believe that saturation
in Wisconsin law is a prerequisite for members of its bar,
though the more important point is that, so far as we can
judge from the present record, the Wisconsin law schools
include no more Wisconsin law in their curriculum than
the law schools of Illinois do.
  The defendants argue that the rule creating the diploma
privilege, having been issued by the Wisconsin Supreme
Court, gives the court a supervisory role in the curriculum
of the Wisconsin (but of no other) law schools so that it
can assure that the curriculum is rich in Wisconsin law. But
we are given no indication that the court plays such a
role, or indeed that the rule, which makes no reference to
Wisconsin law, would authorize the court to do so. In her
brief opinion granting the defendants’ motion to dismiss,
the district judge made no reference to this or any other
justification for the diploma privilege that the defendants
have raised in this court.
  An alternative possibility might seem to be that the
state supreme court, by virtue of its having created the
diploma privilege and not revoked it, decided that it trusts
the two local law schools to prepare its students for the
practice of law in Wisconsin, and trusts no others. But
that cannot make any sense if indeed the curriculum of
these schools is no more weighted to Wisconsin law than
that of countless schools in other states, including the ones
the plaintiffs and the members of their class attended. The
14                                                No. 08-2527

two law schools in Wisconsin are very fine law schools,
doubtless among the nation’s best, but the state does not
claim that they are superior to all other law schools; indeed
it has not tried to identify any law school that is less
worthy of the diploma privilege than the Wisconsin schools.
   The defendants cite cases that permit a state to discrim-
inate against interstate commerce when it is engaged in a
proprietary rather than a regulatory activity, such as, in
United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste
Management Authority, 550 U.S. 330 (2007), on which the
defendants principally rely, hauling trash—an activity that,
though certainly worthy, will not appeal to many lawyers
as a suitable analogy to the practice of law. And yes, a
state can as in United Haulers require trash collectors to
dump the trash they collect in a government-owned facility.
That is the “market participant” exception to the commerce
clause’s implied prohibition of discrimination by states
against interstate commerce. E.g., White v. Massachusetts
Council of Construction Employers, Inc., 460 U.S. 204 (1983);
Reeves, Inc. v. Stake, 447 U.S. 429, 434-40 (1980). The excep-
tion “emphasizes the freedom that states have under the
Constitution to provide, often selectively, for the welfare
of their residents.” W.C.M. Window Co., Inc. v. Bernardi, 730
F.2d 486, 494 (7th Cir. 1984). And so a state may if it wants
(and most states do want) own and operate a law school—the
University of Wisconsin is a state university—and it can if
it wants try to attract students from other states by discount-
ing tuition—or by not focusing on local law. A state
medical school was held entitled to favor old over new state
residents in admissions in Buchwald v. University of New
Mexico School of Medicine, 159 F.3d 487, 496 n. 9 (10th Cir.
No. 08-2527                                               15

1998). Any governmental participation in the economic
market is going to have an effect on interstate commerce
that people who think that the government governs best
that governs least will criticize, but those criticisms, even
when well founded, do not invalidate the activity.
  Marquette, however, is a private university, and the
state in its brief and argument makes no distinction
between the Marquette and University of Wisconsin law
schools. The state does not connect the diploma privilege
to its ownership of the latter school, and how could it,
since the privilege applies equally to Marquette? The only
governmental function that the state claims to be engaged
in that bears on this case is regulating the practice of law,
and while that is a legitimate government function it is not
exempt from scrutiny under the commerce clause. Every
state law invalidated under the commerce clause is a gov-
ernment regulation.
  The case was dismissed prematurely, and must go back
to the district court for further proceedings consistent
with this opinion. We intimate no view on the ultimate
outcome; we are remanding because the plaintiffs were
denied an opportunity to try to prove their case.
                                     REVERSED AND REMANDED.

                            7-9-09