International College of Surgeons v. City of Chicago
Docket: Nos. 95-1293, 95-1315
Court: Court of Appeals for the Seventh Circuit; August 1, 1996; Federal Appellate Court
The International College of Surgeons and its U.S. Section applied to the Chicago Landmarks Commission for demolition permits to redevelop landmarked properties on Lake Shore Drive. The Commission denied both the demolition permit application and a subsequent request for an economic hardship exemption. The College challenged these decisions in the Circuit Court of Cook County, alleging violations of federal and state constitutional rights. The City of Chicago removed the case to federal court, where the district court dismissed several of the College's claims and granted summary judgment against it on the remaining issues. The appellate court reversed the district court's judgment and directed that the case be remanded to the Circuit Court.
The College owns two adjacent parcels on Lake Shore Drive, which contain the Edward T. Blair House and the Eleanor Robinson Countiss House, used for administrative offices and a museum. In 1988, the Landmarks Commission preliminarily determined that these buildings met the criteria for landmark designation, leading to the Chicago City Council passing the Designation Ordinance in 1989. Prior to this, the College had entered into a $17 million contract for redevelopment, contingent upon obtaining necessary permits, including plans to demolish all but the facades of the existing structures for a new condominium project. The Commission ultimately denied the College's permit requests in January 1991, leading to the first Circuit Court complaint. The College's subsequent economic hardship application was also denied, as the Commission determined the denial did not eliminate all reasonable use of the property.
The College filed a second complaint in the Circuit Court of Cook County (No. 91 CH 7289) seeking judicial review of the denial of an economic hardship exception. This action was removed to federal district court and assigned case number 91 C 5564. Additionally, the College's property was subject to the Lake Michigan and Chicago Lakefront Protection Ordinance, necessitating approval for proposed development, which the Chicago City Council denied. Consequently, the College filed a “Complaint for Declaratory Judgment and Other Relief” in federal court, noted as case 91 C 7849. The district court consolidated these three cases and stayed the declaratory judgment action pending the resolution of the other matters.
On January 10, 1992, the court partially granted and denied the City’s motion to dismiss cases 91 C 1587 and 91 C 5564, leading the College to submit an amended “Consolidated Complaint for Administrative Review” citing federal and state law claims. On December 30, 1994, the district court ruled in favor of the City, affirming the Landmarks Commission's decisions to deny both the demolition permits and the economic hardship exception. The court dismissed case 91 C 7849 with prejudice as moot but allowed for reinstatement if the judgments in the other cases were altered on appeal. The College subsequently filed a notice of appeal for all three cases.
Jurisdictional matters were also noted; the College's initial judicial proceedings were grounded in the Illinois Administrative Review Act (IARA), as the Landmarks Ordinance renders the Commission's decisions appealable. Each complaint was removed to federal court under 28 U.S.C. § 1441, which permits removal of civil actions with original jurisdiction from state to federal courts.
Removal jurisdiction under section 1441(a) requires that an action could have originally been brought in federal court for the district court to have jurisdiction. The presence of federal claims provides the basis for original jurisdiction under the federal question statute, 28 U.S.C. 1331. Whether a state action can be removed to federal court involves federal jurisdiction, subject to de novo review. The critical question is whether the College’s “Complaint for Administrative Review,” filed under the Illinois Administrative Review Act, qualifies as a “civil action” under 28 U.S.C. 1441(a).
The analysis references the Supreme Court's ruling in Chicago, Rock Island, Pacific Railroad v. Stude, where the court determined that federal district courts lack the authority to review state agency actions as they do not serve as appellate tribunals for state decisions. The railroad initially sought relief through diversity jurisdiction in federal court, which was dismissed, and the Supreme Court affirmed that dismissal. Subsequently, the railroad pursued state court appeal procedures for administrative decisions, but later sought to remove the case to federal court, highlighting the complexities surrounding jurisdiction in administrative review matters.
The district court's denial of the landowner's motion to remand the case to state court was reversed by the Court of Appeals, which ordered the case remanded. The Supreme Court upheld the Court of Appeals' decision, determining that under 28 U.S.C. § 1441(a), the railroad is classified as the plaintiff and thus lacks the ability to remove the case. The Supreme Court clarified that the initial proceeding before the sheriff is administrative until an appeal to the district court is filed, at which point it transitions to a civil action for judicial review of damages. The Court emphasized that not all agency actions become a “civil action” upon state court review; instead, the specific nature of the state proceeding in question is crucial. In the referenced case, the action was a de novo proceeding, treated by the state court as an ordinary civil action. The Supreme Court's rulings in Stude and Horton reinforced that federal district courts have removal jurisdiction over state court actions that involve de novo reviews of administrative decisions, distinguishing these from cases requiring deferential review. The Supreme Court has yet to address the removal of cases involving deferential reviews, but other circuits have ruled that federal district courts lack jurisdiction in such contexts, as illustrated by the Fourth Circuit’s decision in Fairfax County Redevelopment, Housing Authority v. W.M. Schlosser Co.
A dispute arose between Fairfax County and the W.M. Schlosser Company regarding unpaid contract amounts for a housing project. The contractor filed a state administrative claim, which the Fairfax County Executive upheld by ordering the county to pay the deficiency. The county appealed this decision to a Virginia circuit court, while the contractor removed the appeal to the district court for the Eastern District of Virginia, citing diversity jurisdiction. The Fourth Circuit determined that the district court lacked jurisdiction to review the County Executive's decision, emphasizing that the Virginia administrative review statute limits judicial review to findings that are fraudulent, arbitrary, capricious, or grossly erroneous. The court clarified that federal district courts, as courts of original jurisdiction, cannot act as appellate tribunals in state matters. Consequently, the case was remanded to the Virginia circuit court. The Fourth Circuit's reasoning aligned with similar findings in the First Circuit case Armistead v. C. M Transport, Inc., which also involved issues of removal and the nature of state administrative proceedings. The Fourth Circuit concluded that the nature of the state review process is critical in determining whether a state action seeking judicial review of an administrative decision is removable to federal court. If the state process allows for a trial de novo, removal is permissible; however, if it mandates a more deferential review, removal would improperly place the district court in an appellate role.
The district court lacks the capacity to engage in a "civil action" under its original jurisdiction, thus failing to meet the requirements of 28 U.S.C. 1441(a). The focus shifts to the Illinois courts' review of administrative actions relevant to this case, specifically under the Illinois Administrative Review Act (IARA), which establishes the exclusive process for judicial review of decisions made by certain administrative agencies in Illinois as per 735 ILCS 5/3-102. Under the IARA, judicial review is restricted to "final decisions" of agencies that explicitly reference the Act's provisions. The Illinois courts' review differs significantly from their original jurisdiction, as it involves statutory rather than general appellate jurisdiction with limited powers specified in 735 ILCS 5/3-111.
Judicial review encompasses all legal and factual questions from the complete record, prohibiting the introduction of new evidence. The agency's factual findings are presumed true. However, courts retain authority to address constitutional issues related to the ordinance underlying the administrative action. Challenges to the constitutionality of the governing legislation must exhaust administrative remedies unless the attack is facial, which does not require such exhaustion.
When constitutional claims arise from the fairness of administrative proceedings, courts rely solely on the existing administrative record. If the record is inadequate for determining constitutional claims, the court may remand the case to the agency for further evidence gathering. Conversely, facial constitutional challenges can be raised independently of the administrative process.
Judicial review under the Illinois Administrative Review Act (IARA) follows a deferential standard similar to that in W.M. Schlosser and Armistead, differing from a trial de novo as seen in Studs and Horton. The state trial court's review encompasses all legal and factual questions in the record but is limited to the agency's findings, which are deemed prima facie true. This review does not constitute original jurisdiction, nor is it a trial de novo, but rather an appellate proceeding not classified as a civil action under 28 U.S.C. 1441(a). Illinois law allows for facial challenges to statutes either independently or within the judicial review action.
Illinois courts permit separate actions under 42 U.S.C. 1983 to contest the federal constitutionality of administrative actions, accommodating both facial and "as applied" challenges. Such claims are independent of the administrative review process and not restricted by the administrative record, which allows for potential removal to federal court if the 1983 action is pursued alongside unrelated claims.
In this case, the complaints in Cook County's Circuit Court, now removed to federal court, include facial challenges to the statute, allegations of constitutional unfairness, and state claims requiring exhaustion of the administrative process based on the administrative record. The question arises whether the entire state action can be removed to federal court when it combines claims that could independently be removable with those grounded in the administrative record.
The court addressed the complexities of removing a case from state court to federal court, referencing the precedent set in Frances J. v. Wright. In that case, certain claims within a state proceeding were barred by the Eleventh Amendment and thus could not be removed to federal court, even if other claims were removable under 28 U.S.C. 1441(a). The court emphasized that if any claim in a case is jurisdictionally barred from federal court, the entire action cannot be removed. The analysis began with the text of section 1441(a), which permits removal only of actions within the original jurisdiction of federal courts. Claims barred by sovereign immunity or outside the original or supplemental jurisdiction of federal courts prevent removal.
Additionally, section 1441(c) was considered as a potential route for removal, but the court concluded that it also prohibits removal if not all issues can be adjudicated in federal court due to jurisdictional barriers. In the current case, the complaints included federal constitutional claims that could potentially be removed but also contained state law requests for agency action review, which did not constitute a civil action eligible for federal jurisdiction. Therefore, the removal to the district court could not be classified as a "civil action" under section 1441(a), nor could section 1441(c) provide a basis for removal, as both sections require the presence of a civil action within the federal jurisdiction framework.
The district court lacks original jurisdiction over the College's complaints for administrative review, thus removal under section 1441(c) cannot be justified. Consequently, these complaints are not classified as "civil actions" under 28 U.S.C. § 1441(a), prohibiting their removal and mandating their remand to the Circuit Court of Cook County. The district court's judgment is reversed, and the cases (91 C 1587 and 91 C 5564) are instructed to be remanded. The Chicago Landmarks Ordinance outlines the creation of the Commission and the procedures for designating Chicago Landmarks. Jurisdictional concerns raised in the Fourth Circuit case of Fairfax County Redevelopment, Housing Authority v. W.M. Schlosser Co., Inc. will be addressed through submitted letters from counsel. The excerpt emphasizes that federal courts have a responsibility to ensure their jurisdiction, regardless of party consent or the district court's prior analysis. The final decisions by the Commission regarding permit applications are deemed appealable to the Circuit Court of Cook County under the Illinois Administrative Review Act. The Supreme Court's examination of federal court review of state administrative decisions in Burford underscores that state legislative provisions cannot expand federal district court jurisdiction to act as an appellate tribunal.
Under Texas law, an administrative award is vacated and becomes unenforceable once a state court obtains jurisdiction over the case and the parties involved. This indicates that the legal dispute is not simply about whether the award will be overturned, as the initiation of the lawsuit automatically nullifies the award for a de novo liability determination. The First Circuit's reasoning in Armistead aligns with federal workers' compensation precedents, which assert that once the state administrative process concludes, the ability to challenge an award in federal court hinges on the nature of state statutory review. If a state court allows a de novo trial, it constitutes an original civil action; conversely, if only quasi-administrative appellate review is available, it does not qualify as a civil action under federal jurisdiction. Generally, a statutory review of an administrative decision is treated as a civil action unless it is deemed an extension of the administrative process. Various cases illustrate that district courts lack jurisdiction to appeal state agency findings, with specific statutes confirming that such appeals are not permissible in U.S. District Courts. Thus, this Court cannot consider claims asserting that a state agency's decision was arbitrary or capricious.
In Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations Bd., the First Circuit emphasized that federal district courts, when reviewing cases removed from state courts, should not defer to non-federal agency determinations, as this could compromise their proper judicial role. The court referenced several cases, including Trapp v. Goetz and Frison v. Franklin County Bd. of Educ., which assert that appeals from state administrative boards do not qualify as 'civil actions' under 28 U.S.C.A. §§ 1331 and 1332, thus lacking the basis for federal jurisdiction. Contrarily, the Eighth Circuit in Range Oil Supply Co. v. Chicago, Rock Island, Pacific Railroad held that once an appeal is made to state court, it becomes removable to federal court if jurisdictional requirements are satisfied, a view the First Circuit found unpersuasive. The Illinois statute 735 ILCS 5/3-111 outlines the limited powers of circuit courts in reviewing administrative decisions, allowing for actions such as affirming, reversing, or remanding decisions, while the Illinois Supreme Court clarified that prior administrative relief is unnecessary when confronting constitutional challenges. In cases of alleged discriminatory application of statutes, initial recourse must typically be to the relevant administrative board, underscoring the specialized expertise of these agencies in factual determinations.
A party challenging an ordinance as entirely void is not required to seek remedies through the ordinance's procedures. However, if the challenge concerns the unlawful application of a specific classification affecting the plaintiff's property, judicial relief is contingent upon exhausting available administrative remedies. The court indicates it need not evaluate whether these claims are based on Section 1983. The defendants argue that the College's complaints involve constitutional challenges to the Chicago Landmark Ordinance, suggesting federal jurisdiction under 28 U.S.C. § 1331, but the court finds that such claims are distinct from those raised in administrative review. It clarifies that both federal question and diversity statutes confer only original jurisdiction over civil actions and that an appeal from a state administrative board does not meet the definition of a civil action under these statutes. The district court dismissed a related federal declaratory judgment action (case 91 C 7849) as moot but allowed for reinstatement if prior judgments were altered on appeal. Consequently, the case is remanded to the district court to decide the appropriate handling of the declaratory judgment action following the resolution of the College's administrative review claims.
