McDonough Associates, Incorpor v. Ann Schneider

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-2702
M C D ONOUGH A SSOCIATES, INC.,
Plaintiff-Appellee,
v.
B ILL G RUNLOH and A NN L. S CHNEIDER,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:12-cv-05035—Milton I. Shadur, Judge.
A RGUED N OVEMBER 13, 2012—D ECIDED JULY 16, 2013
Before C UDAHY, S YKES, and H AMILTON, Circuit Judges.
H AMILTON, Circuit Judge. This case presents an attempt
by a state contractor, plaintiff McDonough Associates,
Inc., to pursue what amounts to a breach of contract
claim against the State of Illinois in federal court. Threat-
ened with bankruptcy and collapse if it did not receive
payments it contends were due from the state,
McDonough presented the district court with a creative
2 No. 12-2702
theory for relief under the Due Process Clause of the
Fourteenth Amendment. Facing these exigencies, the
district court entered a temporary restraining order
(TRO) that effectively ordered state officials to pay
McDonough from the state treasury to compensate for
alleged breaches of contract. While McDonough has
cloaked its claim in the language of federal due
process, its suit remains in substance an effort to have
a federal court order state officials to make payments
from the state treasury to remedy past alleged breaches
of contract. Such relief is prohibited by the Eleventh
Amendment. We reject McDonough’s attempt to side-
step the Eleventh Amendment, and we vacate the
district court’s TRO.
I. Factual and Procedural Background
Plaintiff McDonough Associates, Inc. is an architecture
and engineering firm that frequently bid on and won
contracts for design jobs for the Illinois Department of
Transportation, commonly known as IDOT. IDOT regu-
larly contracts with private firms like McDonough. To
appreciate the relief the district court ordered, we need
to provide some background information regarding
IDOT’s practices for negotiating supplemental terms
when the scope of an original contract is not large
enough to complete the needed work.
When that happens, IDOT negotiates terms with the
contractor for the remaining work. IDOT then sends the
contractor a “prior approval” letter. The prior approval
letter reflects this negotiation and asks the contractor to
No. 12-2702 3
draft a supplemental agreement package for IDOT’s
consideration. The prior approval letter authorizes the
contractor to continue working until it has accrued $50,000
in additional costs. The letter explains that, up to the
$50,000, “[a]ll costs accrued under this authorization will
be included in, and this letter of authorization superseded
by, the supplemental agreement.” The prior approval
letter makes clear that it is not a contractual agreement
that supplements the old contract. It states explicitly
(in bold and underlined text) that until the supplemental
agreement “is fully executed,” the firm “may not invoice
for any of this additional work until the required supple-
mental agreement between the Department and your firm
is fully executed.” The state thus disclaims liability absent
a signed supplemental agreement for work beyond the
$50,000 stopgap authorization.
The Illinois Procurement Code governs the state’s
contractual relationships and imposes certain require-
ments that must be met for a contract with the state to
be fully executed. The Code provides that “The State
shall be under no obligation to issue an award or execute
a contract,” and “No person shall have any right to a
specific contract with the State unless that person has
a contract that has been signed by an officer or
employer of the purchasing agency with appropriate
signature authority.” 30 ILCS 500/1-25. Illinois statutes
include specific provisions for contracts over $250,000,
one of which is the requirement that certain individuals
sign a contract before it is considered validly executed.
Under Illinois law, the agency’s chief executive officer
must sign the contract and the chief legal counsel and
4 No. 12-2702
chief fiscal officer must either sign the contract or other-
wise approve the contract in writing. 30 ILCS
105/9.02(a)(1). Within IDOT, internal policy also requires
that the chief procurement officer signs the contract.
Absent these signatures, under Illinois state law
a contract of the type in dispute here is not valid and
therefore not an enforceable debt. 30 ILCS 500/20-80(d).
IDOT’s chief executive officer is defendant Ann Schneider
and IDOT’s chief procurement officer is defendant
Bill Grunloh. Thus, for a supplemental agreement to
have been fully executed and contractually binding
on the state under Illinois law, it must have had
Grunloh’s and Schneider’s signatures. Their decisions not
to sign the supplemental agreements in question form
the basis of McDonough’s federal due process claim.
McDonough claims that IDOT owed it nearly $2 million
accrued from additional work beyond the limits of the
original contracts in three separate projects. In each of
these projects, a prior approval letter had been sent to
and received by McDonough between June and October
2011. In none of these projects had a supplemental agree-
ment been fully executed, yet McDonough continued
working on the contracts beyond the $50,000 caps.
In January 2012, based on findings that McDonough
had made significant accounting errors that called its
business integrity into question, chief procurement
officer Grunloh, pursuant to his power under 44 Ill.
Admin. Code § 6.530, suspended (on an interim basis)
McDonough’s status as a “prequalified vendor” automati-
cally eligible to bid on IDOT projects. In June 2012, follow-
No. 12-2702 5
ing an investigation, hearing, and recommendation by
a neutral decision-maker, as required by 44 Ill. Admin.
Code § 6.630, Grunloh converted the interim suspension
to a three year suspension.
In other words, in the interim after prior
approval letters had been sent but before supplemental
agreements had been executed, McDonough’s status
with IDOT changed considerably. Its billing practices
had been questioned and were ultimately adjudicated
as lacking integrity and being untrustworthy. Informed
by the same findings that resulted in McDonough’s
suspension, IDOT’s Grunloh and Schneider declined
to approve or sign any further contractual agreements
with McDonough, including the three supplemental
agreements in question. The supplemental agree-
ments were therefore not legally binding on IDOT because
they lacked Schneider’s signature, required by Illinois law.
McDonough claims that it continued working on the
three projects beyond the $50,000 caps without executing
supplemental agreements because it was IDOT’s normal
business practice always to sign a supplemental agree-
ment once a prior approval letter had been sent.
McDonough claims that the supplemental agreement is
something of a bureaucratic formality. 1 Based on this
1
The transmission and receipt of these prior approval letters
and their contents saying that contractors may not invoice
for work prior to the execution of a supplemental agreement
are all undisputed. The parties dispute, however, IDOT’s
customary business practices. McDonough argues that the
(continued...)
6 No. 12-2702
understanding, McDonough alleged, Grunloh’s and
Schneider’s refusal to sign the supplemental agreements
deprived it of its property interests in payment on
the accrued debts without receiving federally guaran-
teed due process of law.2
McDonough argued to the district court that the defen-
dants’ refusal to release the funds it claimed it had
earned would render it bankrupt, resulting in immediate
(...continued)
text of the prior approval letters is contrary to IDOT’s
customary practice. McDonough claims that the $50,000 figure
in the prior approval letters is a “universally used plug-in
dollar amount” that “has no relation to the amount agreed upon
between IDOT and its consultants.” Furthermore, McDonough
argues that it is “IDOT’s practice, not only to allow, but to
require, consultants [such as McDonough Associates, Inc.]
continue to work on projects after the $50,000 stated plug-in
amount has been exhausted.” Without conceding the point,
IDOT argues that whatever its customary practice might be, it
is not relevant here because McDonough’s suspension took
the parties’ business relationship well outside the normal
course of business. We need not resolve this factual dispute,
which does not affect the controlling constitutional question.
2
McDonough’s original complaint sued Grunloh and Schneider
in both their individual and official capacities and included
additional claims related to McDonough’s suspension from
IDOT’s pre-approved contractor list after an audit revealed
questionable business practices. Prior to this appeal of the
TRO, McDonough voluntarily dismissed all claims without
prejudice except the due process claim against Grunloh and
Schneider in their official capacities. We thus do not consider
or discuss the dismissed claims.
No. 12-2702 7
layoffs and corporate collapse. McDonough requested
and the district court granted a TRO that compelled
Grunloh and Schneider to sign the supplemental agree-
ments, ordering them to “cease and desist from
interfering with the processing of any paperwork in the
normal course of business related to monies claimed
by McDonough Associates, Inc.” The district court ap-
preciated that the relief it fashioned via the TRO
compelled state officials to execute contracts with
private parties, necessarily resulting in payment to
private parties. The court explained that “what is going
to happen is that your — Mr. Grunloh is going to take
his hot little hand and a pen in hand or whatever has to
be done . . . and he is going to sign the thing that is neces-
sary for the processing in the orderly course.” As a
result of that TRO, the supplemental agreements were
fully executed and binding under Illinois state contract
law and thus IDOT disbursed nearly $1.3 million to
McDonough before we stayed the TRO on an emergency
basis.
While defendants were complying with the TRO, they
also moved the district court to dissolve or decline to
extend the TRO, arguing that it was essentially a “contract
claim for money damages against the State of Illinois,
and the Eleventh Amendment forbids retrospective
awards of damages directly against the State Treasury.”
The district court denied defendants’ request, concluding
that the relief granted fell under the Ex parte
Young, 209 U.S. 123 (1908), exception to state sovereign
immunity. Defendants next requested that we issue an
emergency stay of the TRO pending appeal, which
we granted though, as noted, $1.3 million had already
8 No. 12-2702
been paid. We now consider the appeal on a non-emergent
basis.
II. Analysis
Under 28 U.S.C. § 1331, the district court had jurisdic-
tion to consider McDonough’s complaint alleging viola-
tions of federal due process rights. We have jurisdiction
under 28 U.S.C.§ 1292(a) to review the TRO and the
district court’s determination that the Eleventh Amend-
ment did not bar the TRO. Moreover, district court deci-
sions rejecting state claims of sovereign immunity
under the Eleventh Amendment are immediately
reviewable under 28 U.S.C. § 1291 as final decisions
pursuant to the collateral order doctrine. Puerto Rico
Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S.
139 (1993); Goshtasby v. Bd. of Trustees of Univ. of Illinois, 123
F.3d 427, 427-29 (7th Cir. 1997). When considering
the appeal of a TRO, we review the district court’s
legal conclusions de novo, its findings of fact for clear
error, and its balance of the equities for abuse of discre-
tion. H-D Michigan, LLC v. Hellenic Duty Free Shops S.A.,
694 F.3d 827, 841 (7th Cir. 2012). The denial of state sover-
eign immunity is a legal conclusion that we therefore
review de novo. Burrus v. State Lottery Comm’n of Indiana,
546 F.3d 417, 419 (7th Cir. 2008); Richman v. Sheahan, 270
F.3d 430, 434 (7th Cir. 2001).3
3
After oral argument, McDonough was put into Chapter 7
bankruptcy proceedings, but that does not prevent our
decision in this appeal. The automatic stay under 11 U.S.C.
(continued...)
No. 12-2702 9
A. Mootness
The TRO in question expired on August 8, 2012. The
expiration of the TRO, however, has not mooted the
appeal. Compliance with injunctions “does not moot
an appeal if it remains possible to undo the effects of
compliance or if the order will have a continuing impact
on future action.” 13B Wright & Miller, Federal Practice
& Procedure, Jurisdiction & Related Matters, § 3533.2.2 (3d
ed. 2012). “Mootness is particularly inapposite if an ill-
conceived injunction creates a standoff by compelling
conduct that is prohibited by other law.” Id. See also
Dale M. ex rel. Alice M. v. Bd. of Educ. of Bradley Bourbonnais
High Sch. Dist. No. 307, 237 F.3d 813, 815 (7th Cir. 2001)
(“A judgment creditor who pays the judgment pending
appeal instead of posting a supersedeas bond . . . is entitled
to the return of its money if the decision is reversed, and
3
(...continued)
§ 362(a)(1) for judicial proceedings against the debtor does not
apply to suits brought by the debtor. Martin-Trigona v.
Champion Federal Savings and Loan Ass’n, 892 F.2d 575, 577 (7th
Cir. 1989). The fact that plaintiff McDonough is now the
appellee does not matter. Whether a suit is “against the
debtor” depends on the party’s status at the time the initial
action was filed. Cathey v. Johns-Manville Sales Corp., 711 F.2d
60, 61-62 (6th Cir. 1983); Ass’n of St. Croix Condominium Owners
v. St. Croix Hotel Corp., 682 F.2d 446, 449 (3d Cir. 1982); In re Mid-
City Parking, Inc., 332 B.R. 798, 807 (Bankr. N. D. Ill. 2005)
(collecting cases). If the state seeks restitution from
McDonough on remand, of course, it may need to deal with
the complications caused by the bankruptcy, including the stay.
10 No. 12-2702
so the payment does not moot the appeal unless the
appellant has relinquished his right to seek repay-
ment if he wins.”).4
Before we granted the emergency stay, IDOT paid
McDonough approximately $1.3 million as a result of
the TRO. These disputed payments were made
because, and only because, the TRO compelled Grunloh
and Schneider to execute otherwise unenforceable con-
tracts. These contracts, which the district court required
Grunloh and Schneider to sign under threat of contempt
sanctions, would remain legally binding even after the
expiration of the TRO. As the parties explained at oral
argument, the emergency stay interrupted the ongoing
payments that the district court had ordered, and those
4
If a private party appeals a TRO or preliminary injunction that
forced it to make payment to the state, mootness is a more
pressing concern. Ordering a state to reimburse a private party
based on payments compelled by an erroneous injunction
exceeds our judicial power. In such cases, the Eleventh Amend-
ment would bar the relief sought on appeal, namely the pay-
ment of funds back to the plaintiff. See Porco v. Trustees of
Indiana Univ., 453 F.3d 390 (7th Cir. 2006) (dismissing as moot
an appeal of an injunction ordering private party to make
payments to state university; plaintiff had already made
payments to state defendants, so the Eleventh Amendment
barred the remedy sought by the appeal); 13B Wright & Miller,
Federal Practice & Procedure, Jurisdiction & Related Matters,
§ 3533.2.2 (3d ed. 2012) (“Payment of a money judgment,
however, may moot an appeal if some legal obstacle, such as
the Eleventh Amendment, prevents the court from ordering
repayment.”).
No. 12-2702 11
payments would continue absent a decision by this
court on the propriety of the TRO in the first place.
Thus the question of the state’s Eleventh Amendment
immunity “is not merely academic.” Alabama v. Pugh,
438 U.S. 781, 782 (1978) (per curiam). The state officials
have “an interest in being dismissed from this action
in order to eliminate the danger of being held in
contempt if [they] should fail to comply with the man-
datory injunction.” Id.B. The Eleventh Amendment
Having established jurisdiction, we turn to the applica-
tion of the Eleventh Amendment. In Chisholm v. Georgia,
2 U.S. (2 Dall.) 419 (1793), the Supreme Court allowed
an action by a private citizen of South Carolina against
the State of Georgia to collect a debt incurred during
the American Revolution. One member of the majority
explained that the “concept of sovereignty had no place
in democracy [and] sovereign immunity could not pre-
clude federal court jurisdiction.” John E. Nowak, The
Scope of Congressional Power to Create Causes of Action
Against State Governments and the History of the Eleventh
and Fourteenth Amendments, 75 Colum. L. Rev. 1413, 1431
n.109 (1975), citing Chisholm, 2 U.S. (2 Dall.) at 454-58
(opinion of Wilson, J.). The Chisholm decision “created
such a shock of surprise that the Eleventh Amendment
was at once proposed and adopted.” Monaco v.
Mississippi, 292 U.S. 313, 325 (1934). The Eleventh Amend-
ment rejected Chisholm, commanding: “The Judicial
power of the United States shall not be construed to
12 No. 12-2702
extend to any suit in law or equity, commenced or prose-
cuted against one of the United States by Citizens of
another State, or by Citizens or Subjects of any Foreign
State.” The Eleventh Amendment established that “each
State is a sovereign entity in our federal system; and
second, that [it] is inherent in the nature of sovereignty
not to be amenable to the suit of an individual without
[a State’s] consent . . . .” Seminole Tribe of Florida v.
Florida, 517 U.S. 44, 54 (1996) (internal quotations omit-
ted). Accordingly, the general rule is that private indi-
viduals are unable to sue a state in federal court absent
the state’s consent.
Ex parte Young recognized what has become one of
several well-established exceptions to the Eleventh
Amendment bar on suing states in federal court, permit-
ting private citizens to sue state officials in their official
capacities to require them to comply with federal law on
an ongoing basis. 209 U.S. 123 (1908). In such cases,
the state official is violating federal law and therefore
“the use of the name of the state to enforce an uncon-
stitutional act to the injury of complainants is a
proceeding without the authority of, and one which
does not affect, the state in its sovereign or govern-
mental capacity.” Id. at 159. Ex parte Young employed a
chameleon-like legal fiction, reasoning that when a state
official violates the federal Constitution, that official is
“stripped of his official or representative character” and
thus also of any immunity defense. Id. at 160. In these
kinds of cases, “the officer is simply prohibited from
doing an act which he had no legal right to do.” Id. at 159;
see also Indiana Protection & Advocacy Svcs. v. Indiana
No. 12-2702 13
Family & Social Svcs. Admin, 603 F.3d 365, 371 (7th Cir.
2010) (en banc) (collecting cases applying Ex parte
Young exception). The Ex parte Young exception allows
the lower federal courts to enforce federal law against
the states themselves, so that plaintiffs asserting
federal rights against the states have recourse to federal
courts short of the Supreme Court itself.
Edelman v. Jordan explained the limits of the relief a
court may grant under Ex parte Young. 415 U.S. 651 (1974).
In Edelman, plaintiffs sought declaratory and injunctive
relief for injuries suffered when a state agency incor-
rectly administered a federal-state program providing
aid to the elderly, blind, and disabled. Plaintiffs also
sought money damages for all “benefits wrongfully
withheld.” Id. at 656. The Court affirmed the grant
of injunctive and declaratory relief but vacated the retro-
active monetary award as barred by the Eleventh Amend-
ment. Edelman thus prohibited relief that was not pros-
pective in nature, specifically barring awards of
“accrued monetary liability which must be met from
the general revenues of a State.” Id. at 664. The Court
recognized, of course, that, in some cases injunctive
relief ordering the state to stop violating federal law on
an ongoing basis might cost the state money. Id. at 667-
68, discussing Goldberg v. Kelly, 397 U.S. 254 (1970). This
was acceptable in such cases because “the fiscal conse-
quences to state treasuries in these cases were the neces-
sary result of compliance with decrees which by their
terms were prospective in nature.” Id. at 667-68.
In such cases, the state expenditure was an ancillary
rather than primary effect of the relief ordered and there-
14 No. 12-2702
fore did “not involve individual citizens’ conducting a
raid on the state treasury for an accrued monetary liabil-
ity.” Milliken v. Bradley, 433 U.S. 267, 290 n.22 (1977). Cf.
Bowen v. Massachusetts, 487 U.S. 879, 893-94 (1988)
(“The fact that a judicial remedy may require one party
to pay money to another is not a sufficient reason to
characterize the relief as ‘money damages.’ Thus, we
have recognized that relief that orders a town to
reimburse parents for educational costs that Congress
intended the town to pay is not ‘damages.’ ”).
A payment of state funds, however, that is not “a neces-
sary consequence of compliance in the future with a
substantive federal-question determination,” is not per-
mitted. Edelman, 415 U.S. at 668. The Eleventh Amend-
ment was adopted to ensure that such retroactive
damages claims would not be heard in federal court
absent the state’s consent. Thus, courts may enjoin
ongoing behavior by state officials that violates federal
law. They may also order state officials to act in a
certain manner going forward that may cost the state
money to implement. They may not, however, direct a
state to make payments to resolve a private debt or to
remedy a past injury to a private party.5 The district
5
The federal courts retain the ability to ensure that state
agencies and departments comply with the conditions and
requirements set forth in federal grant and aid programs, for
example. See, e.g., Quern v. Jordan, 440 U.S. 332 (1979) (holding
that injunction that state officials must inform individuals
that they are entitled to apply to state for wrongly withheld
(continued...)
No. 12-2702 15
court determined that the relief sought by McDonough
fell under the Ex parte Young exception and therefore
was not barred by the Eleventh Amendment. This deter-
mination was in error for reasons we now explain.
C. The TRO
“In determining whether the doctrine of Ex parte Young
avoids an Eleventh Amendment bar to suit, a court
need only conduct a ‘straightforward inquiry into
5
(...continued)
benefits is not retroactive and thus not barred by Eleventh
Amendment, even though such applications may ultimately
result in state expenditures of money); see also James M.
Hirschhorn, Where the Money Is: Remedies to Finance Compliance
with Strict Structural Injunctions, 82 Mich. L. Rev. 1815, 1864
(1984) (pointing out that in these types of cases “the payment of
retroactive benefits will depend on the assent of the state
authorities, including the appropriation of funds by the legisla-
ture”). State sovereign immunity and federal oversight are
thus compatible because the state has the “option to stop
providing a program if it chooses not to meet federal legal
requirements for engaging in the activity.” Id. Cf. Bowen v.
Massachusetts, 487 U.S. 879, 893-95 (1988) (explaining distinc-
tion between money damages understood properly as compen-
satory relief “to substitute for a suffered loss” and specific
remedies that do not substitute for a loss “but attempt to give
the plaintiff the very thing to which he is entitled”) (internal
quotations and citations omitted). Nothing in this opinion
should call into question this established power of the
federal government.
16 No. 12-2702
whether [the] complaint alleges an ongoing violation of
federal law and seeks relief properly characterized as
prospective.’ ” Verizon Md. Inc. v. Public Svcs. Comm’n of
Md., 535 U.S. 635, 645 (2002), quoting Idaho v. Coeur
d’Alene Tribe of Idaho, 521 U.S. 261, 296 (1997). McDonough
argues it has a property right to the money bound up in
the unsigned supplemental agreements and that defen-
dants’ refusal to sign the supplemental agreements de-
prived it of this property right without its federal Con-
stitutional right to due process. Based on this argument,
McDonough persuaded the district court to order the
state officials, Grunloh and Schneider, to sign the agree-
ments and thus authorize payment of the alleged debts.
McDonough recognizes that the Eleventh Amend-
ment bars federal courts from ordering the state to dis-
burse funds to a private party for retroactive damages
but argues that this case falls under the Ex parte Young
exception to state sovereign immunity. McDonough
argues that the relief requested is not payment for a past
injury but rather a court order that defendants resume
the normal course of business. Framing the relief in
this way, McDonough has tried to shoehorn its request
into Ex parte Young by characterizing it as a prospective
decree that merely ordered state officials to stop
violating its federal due process rights. As we explained
above, however, the only prospective action that remains
before payment is for Grunloh and Schneider to sign
the supplemental agreements.
While the payment of funds is indeed the second step
following from the TRO after the procedural act of
No. 12-2702 17
signing, it is more importantly the primary effect. Ex parte
Young and its progeny permit equitable relief resulting
in the state expenditure of funds only when that expendi-
ture is an ancillary, not primary, effect of the relief.
McDonough essentially requested and received retro-
active damages for the alleged breaches of contracts or,
as the district court put it, “payment for past services.”
The TRO restored “any flow of funds that were
attributable not to the future services, not to the con-
tinuation of services, but the prior services.” We find
that this relief is clearly barred by the Eleventh Amend-
ment as reflected in Edelman.
Here the relief sought, “processing of paperwork,”
was tantamount to signing a check made out to plaintiff,
as all parties and the district court understood. Such
relief clearly violates Edelman and thus cannot be saved
by reliance on Ex parte Young. Casting this relief in terms
of the act of signing as opposed to the act of paying
does not make the payment, though second in time,
ancillary. The only purpose of the compelled signatures
was to secure payment. “Ex parte Young cannot be used
to obtain an injunction requiring the payment of funds
from the State’s treasury . . . or an order for specific
performance of a State’s contract . . . .” Virginia Office
for Protection & Advocacy v. Stewart, 131 S. Ct. 1632, 1639
(2011) (internal quotations omitted); see also MSA
Realty Corp. v. Illinois, 990 F.2d 288, 294 (7th Cir. 1993)
(“Even after Ex parte Young was decided in 1908, the
Supreme Court has never approved a lower court order
requiring officials of a state to take actions that con-
stitute performance by a state of obligations that are the
18 No. 12-2702
state’s in its political capacity.”); Zych v. Wrecked Vessel
Believed to be the Lady Elgin, 960 F.2d 665, 669 (7th Cir.
1992) (“Edelman holds that courts may command
public officials to obey the Constitution and federal
statutes as they carry out their duties in the future but
may not direct them to invade the state treasury to
make good for past misdeeds.”).
Council 31 of AFSCME v. Quinn, recently decided by
this court, is instructive. 680 F.3d 875 (7th Cir. 2012). In
Council 31, we considered the claim that the state’s
decision to freeze employees’ salaries and wages
violated the employees’ collective bargaining agree-
ments. A public employee union requested a preliminary
injunction compelling the state to pay the wages set by
the collective bargaining agreements, arguing that the
failure to do so would violate the Contracts and Equal
Protection Clauses of the federal Constitution. We
found the fact that the injunction requested by the
union would not “specifically require the court to
direct payment of funds out of the State’s treasury” to be
“immaterial.” Id. at 883-84.
We explained: “It is necessary to look not at the type
of relief sought, but the effect the relief would have on
the State if it were afforded to the plaintiff.” Id. at 883.
The essential nature of the relief sought would “require
direct payments by the state from its treasury,” which
would thus “force the defendants acting in their official
capacities to extract funds from the State’s treasury for the
ultimate benefit of the plaintiffs.” Id. at 883-84 (internal
quotations omitted). This ultimate result would have
No. 12-2702 19
violated the Eleventh Amendment and we therefore
affirmed the district court’s denial of the requested relief,
holding that the Ex parte Young exception did not apply.
That same analysis applies equally here. Thus, we are not
persuaded by McDonough’s creative styling of its claim.
It remains in substance a prayer for relief based on
state law for an alleged “monetary loss resulting from
a past breach of a legal duty on the part of the
defendant state officials,” which is barred by the
Eleventh Amendment. Edelman, 415 U.S. at 668. The TRO
thus exceeded the boundaries set by the Eleventh Amend-
ment by ordering state officials to pay a private party
for an alleged debt.
The idea that a state should make good on its
contracts has considerable appeal to judges, lawyers, and
state creditors, and that was exactly what the Supreme
Court ordered in Chisholm v. Georgia:
A state, like a merchant, makes a contract. A
dishonest State like a dishonest merchant, willfully
refuses to discharge it: The latter is amenable to a
Court of Justice: Upon general principles of right, shall
the former when summoned to answer the fair de-
mands of its creditor, be permitted, proteus-like, to
assume a new appearance, and to insult him and
justice by declaring I am a Sovereign State? Surely not.
2 U.S. (2 Dall.) 419, 456 (1793) (opinion of Wilson, J.). As
understandable as that view may be, the Eleventh Amend-
ment was a swift and direct rejection of it, and it
deprived federal courts of the power to issue such
orders without the state’s consent. We understand
the predicament that McDonough described and the
20 No. 12-2702
district court’s response to it, especially when the court
was told that failure to enter the TRO would result in
bankruptcy and lost jobs. Those reasons, however,
do not authorize the district court or us to avoid
complying with the Eleventh Amendment.
The temporary restraining order of the district court
is V ACATED and the case is R EMANDED for further pro-
ceedings consistent with this opinion.
7-16-13