Saturday, July 12, 2025
Interpleader and exclusive private enforcement
In the early days of S.B. 8 and all it has wrought, Teddy Rave (Texas) proposed a creative path to federal court for potential S.B. 8 defendants–statutory interpleader. The holder of a definite fund or res places the fund in the court, which litigates and resolves disputes over proper ownership among competing claimants to that fund. Dr. Alan Braid–a Texas doctor who announced in the Washington Post that he had performed a post-heartbeat abortion, triggering three lawsuits–tried it. He deposited $ 10,000 (the minimum amount recoverable for one violative abortion) in the Northern District of Illinois (where one of the S.B. 8 plaintiffs resides) and asked the Court to decide which of the three claimants should get the money–or to decide that none should get it, because S.B. 8 is constitutionally invalid.*
[*] Dobbs complicated the case, since the substantive ban on early abortions now is valid. Braid shifted his constitutional arguments to challenge S.B. 8’s procedural mechanisms, which I am not sure should be litigated in this posture.
The Seventh Circuit approved the process, sort of.*
The court acknowledge that this is not the typical interpleader, which involves a disinterested stakeholder and a fund such as an insurance fund or bank or estate assets. But Braid’s claim fits the deliberately broad statutory language for claims “in the nature of interpleader.” This can include money arising from a tort or statutory violation on which the stakeholder is not neutral-and-disinterested and on which the stakeholder resists any liability to any of the claimants on the fund. Braid’s potential liability was definite enough (even if not-yet determined)–he has a single pot of $10,000 which only one of three competing claimants can recover, on which claims exceed the value of the fund (since all seek at least $ 10,000 but only one shot of $10,000 is recoverable), and on which Braid contests his liability and responsibility to pay anyone.
Of course, it did not matter that this could fit interpleader–the court of appeals sua sponte raised and abstained under Colorado River. The federal action lacked “formal symmetry” with the state action–only one federal defendant had an ongoing state claim, the federal action is more efficient, and S.B. 8 imposes problematic procedures in state court. But they were parallel enough–similar parties litigating similar issues (the validity of S.B. 8). And enough of the 10 Colorado River factors weighed heavily in favor of abstention–the centrality of Texas-law issues to both actions, the fact that state courts obtained jurisdiction first, the risks of piecemeal litigation and conflicting judgments, and the appearance of forum-shopping. The court was not swayed, nor should it have been, by arguments about S.B. 8’s defective procedures.
Final thoughts:
1) I still think this is wrong as to interpleader. That process is designed to resolve competing claims over an existing fund, not to litigate liability on a state-law claim that might cause the fund to come into existence (or not). Otherwise, every tort defendant facing multiple damages actions in state court would try this move.
2) The limiting principle here might involve an S.B. 8 quirk. Multiple “any person” plaintiffs can sue over one abortion but a defendant can pay only one judgment for one violative procedure. Thus, unlike three tort plaintiffs recovering for their damages, three S.B. 8 plaintiffs fight over one statutory damage amount. Ironically, that limiting principle allows a state to enact S.B. 8 copycat and preempt this strategy by allowing multiple recoveries for one violation–cutting off interpleader (because the fund is less definitive) and making life more difficult for the targets of the law.
3) A further irony: Rocky and I argued that singular recovery was one (of three) keys to the argument that S.B. 8 plaintiffs act under color and are subject to § 1983 suit. Singular monetary recovery means the process looks more like criminal prosecution (a traditional-and-exclusive government function) than ordinary tort litigation–a singular sanction against the wrongdoer rather than damages to make an injured person whole. So a state shifting the recovery scheme to avoid interpleader might also avoid the under-color problem, all while making life worse for the targets of the law.
4) It is hard to imagine any attempted interpleader action that will not satisfy the same Colorado River factors, requiring the federal court to abstain. The interpleader requires the same initial steps–individual violates the statute and gets sued in state court under state law. There always will be parallel litigation to the federal action. State law always controls these parallel actions and the state-court action always will have been first-filed, two factors pushing towards abstention. The court thus opened the door to interpleader as a response to exclusive-private-enforcement regimes, but Colorado River makes it unlikely any person can avail themselves of that move.
Posted by Howard Wasserman on July 12, 2025 at 02:25 PM in Civil Procedure, Constitutional thoughts, Howard Wasserman, Judicial Process | Permalink
Comments
The comments to this entry are closed.