Seventh Circuit Applies What Is Left of the Rooker-Feldman Doctrine

23 December 2014 Wisconsin Appellate Law Blog

Not much is left of the holdings of Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), and of the eponymous Rooker-Feldman doctrine, but what remains was the subject of the Seventh Circuit’s recent decision in Harold v. Steel, No. 14-1875 (7th Cir. Dec. 11, 2014), written by Judge Easterbrook.

The Rooker-Feldman doctrine stands for the principle that the only federal court that can review judgments entered by a state court in civil litigation is the Supreme Court of the United States. Lower federal courts lack subject-matter jurisdiction “when the state court’s judgment is the source of the injury of which plaintiffs complain in federal court.” Slip op. 3. 

Harold began with a small-claims judgment in Marion County, Indiana. Harold had agreed to the judgment’s entry nearly two decades ago, but failed to pay, which caused the judgment’s (alleged) creditor, Steel, to secure a garnishment order from the Indiana court. Harold challenged that order, contending that “Steel had misrepresented the judgment creditor’s identity . . . and did not represent the only entity authorized to enforce the judgment.” Id. at 2. He lost in the Indiana court, but then filed his federal suit under 15 U.S.C. § 1692e of the Fair Debt Collection Practices Act, alleging that Steel had made false statements. The district court dismissed his federal suit under Rooker-Feldman.

Harold faced an uphill battle from the outset. The Seventh Circuit already had held, in Epps v. Creditnet, Inc., 320 F.3d 756 (7th Cir. 2003), that the “doctrine bars federal suits seeking to recover on a theory that a debt collector made false statements during state litigation.” Slip op. 2.

Harold persevered, nevertheless, arguing that Rooker-Feldman did not apply to interlocutory decisions in state courts, that his claim was independent of the state court’s decision, and that the doctrine did not apply to the procedures that state courts use or the evidence that state judges consider. The court noted that the circuits are split on the first issue, though it’s hard to see why an interlocutory decision should be “subject to review in any court,” let alone a separate tribunal. Slip op. 3. But the issue was academic here; Indiana treats garnishments as final and appealable orders. As to the independent nature of his claim, Harold was trying to benefit from the Court’s decision in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005), which held that the doctrine applies “only when the state court has caused the injury of which the federal suit complains.” Slip op. 4. Harold’s argument that Steel did not own the judgment would have required litigation one way or the other, so he was not injured independently by the costs of litigating about his judgment, as plaintiffs who benefit from Exxon Mobil typically are. In other words, the only injury that Harold suffered occurred when the state judge ruled against him. Harold’s last argument, concerning a “procedural exception” to the doctrine, was “embarrassed by the fact that Rooker itself” arose from a similar argument. Id. at 5. Overturning Rooker was not on the court’s agenda.

What’s the lesson from all this? It’s not to forget about the doctrine, despite its narrow scope. It should have been obvious to Harold, but the more natural course for him would have been to file his § 1692e claim as a counterclaim in Indiana and to proceed with his appeals there. “He did neither,” as the court noted, and “[h]is federal suit was properly dismissed.” Id. at 6.

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