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Challenging State Court Dismissals in Federal Court: Rooker-Feldman’s Murky Fraud Exception

Samuel David Harrison


  • Since it gained the second half of its name, Rooker-Feldman has proven to be a nettlesome doctrine for courts to apply. 
  • Indeed, even another trip to the Supreme Court in Exxon has not settled the complete contours of the doctrine, at least as far as a “fraud-on-the-court” exception is concerned.
  • Litigants should guide themselves accordingly when this partially unsettled doctrine rears its head.
Challenging State Court Dismissals in Federal Court: Rooker-Feldman’s Murky Fraud Exception
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When a client wants to file a new action that involves legal issues that were long ago litigated in state court, challenging the basis of that state court ruling in a federal action may seem like a good strategy. This is especially true if the appeal period in state court has elapsed. After all, if the legal claims can be reframed in a new federal action to avoid res judicata concerns, filing the case in a federal district court may provide friendlier legal standards than those that previously doomed the case. Rebooting the case in federal court may also present an opportunity to focus the case on new or different facts, or permit the federal judge to review the legal reasoning that the state court used to dismiss the case and reach a better result for your client.

But something about this strategy seems too good to be true. For litigants hoping for this second chance in federal court, the Supreme Court’s Rooker-Feldman doctrine typically prevents the strategy from finding much traction. Named for a pair of Supreme Court decisions, Rooker-Feldman prevents federal district courts from serving as appellate courts for the rulings by state courts on the ground that district courts lack subject matter jurisdiction to review state court decisions in most instances. The doctrine applies even if the case is pleaded differently in federal court; for instance, as a lawsuit claiming the state court’s dismissal violated constitutional rights. All that matters is that the federal court action is “inextricably intertwined” with the state court judgment—although that nebulous phrase has undergone much litigation and development.

While Rooker-Feldman’s jurisdictional bar seems straightforward and potentially duplicative of other more familiar doctrines like res judicata, the complicated history of Rooker-Feldman and one notable exception to it warrant close attention whenever the doctrine arises in litigation. In particular, litigants confronting a Rooker-Feldman argument (either advancing or defending against it) should be aware of the doctrine’s origins, which color its applicability. Litigants should also be aware that the doctrine may be inapplicable if the federal court plaintiff alleges that the state court decision was procured through fraud on the state court, a so-called “fraud exception.” But whether that fraud exception exists requires a close analysis of the fraud allegations raised in federal court because only a certain form of fraud can meet the exception. Just as importantly, whether the fraud exception is available is entirely dependent on the circuit in which the federal case is filed.

The Rooker-Feldman Doctrine

Rooker-Feldman began simply as Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923). In Rooker, the appellant challenged an Indiana state court judgment in federal district court, arguing that it violated the Contract Clause and the Fourteenth Amendment’s Due Process and Equal Protection Clauses. Id. at 414. The Supreme Court explained that federal trial courts’ jurisdiction is “strictly original” and does not permit appellate review of state court decisions. Id. at 415. In affirming the district court’s dismissal for lack of jurisdiction, the Court went as far as saying that, even if the state court judgment was wrongly decided or violated constitutional rights, that did not mean the judgment could be invalidated in a federal proceeding. Instead, the state judgment being wrongly decided “merely left it open to reversal or modification in an appropriate appellate proceeding.” Id. The Court explained that, while the Supreme Court possesses jurisdiction to review and reject the decisions of a state’s highest courts in certain contexts (e.g., interpretation of federal law), a litigant could not avoid state appellate procedures by challenging a state court’s ruling in a district court. This would, in essence, permit a litigant to do “indirectly what he no longer can do directly.” Id. at 416.

Sixty years later, the Supreme Court gave Rooker-Feldman the second half of its name in D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983). In Feldman, the Supreme Court reviewed “what authority the United States District Court for the District of Columbia and the United States Court of Appeals for the District of Columbia have to review decisions of the District of Columbia Court of Appeals in bar admission matters.” Id. at 463. (Under 28 U.S.C. § 1257, the term “highest court of a State” includes the District of Columbia Court of Appeals.) In the state court cases, two individuals who had not graduated from law schools accredited by the American Bar Association sought permission from the D.C. Court of Appeals to sit for the bar examination. Id. at 464–65. The D.C. Court of Appeals denied both petitions to sit for the exam, citing a rule that required examinees to have graduated from accredited law schools. Id. at 468, 472. Both individuals filed actions in the U.S. District Court for the District of Columbia challenging the denial of their petitions on constitutional and antitrust grounds. Id. at 468–69, 472. The district court dismissed both actions for lack of jurisdiction to review a state court judgment. Id. at 469, 473. On appeal, the U.S. Court of Appeals for the District of Columbia affirmed the dismissal of the antitrust claims but held that the requests for a waiver “were not judicial in the federal sense and thus did not foreclose litigation of the constitutional connections in the District Court.” Id. at 473 (citing Feldman v. Gardner, 661 F.2d 1295, 1298 (D.C. Cir. 1981)).

On certiorari, the Supreme Court first determined that the rulings by the D.C. Court of Appeals were judicial in nature, contrary to the circuit court holding. Id. at 478–82. The Court then reaffirmed Rooker’s holding that a district court “has no authority to review final judgments of a state court in judicial proceedings.” Id. at 476. Although the Court acknowledged that the petitioners could have filed a lawsuit alleging that the D.C. Court of Appeals’ rule requiring them to graduate from accredited law schools was unconstitutional, they could not specifically challenge the D.C. Court of Appeals’ ruling on their petitions to sit for a bar exam pursuant to that rule. Id. at 483–84 (“The difference between seeking review in a federal district court of a state court’s final judgment in a bar admission matter and challenging the validity of a state bar admission rule has been recognized in the lower courts and, at least implicitly, in the opinions of this Court.”). The distinction is a nuanced one. The Court concluded that the petitioners’ allegations required the district court “to review a final judicial decision of the highest court of a jurisdiction in a particular case.” Id. at 486–87. Because those allegations were “inextricably intertwined” with the D.C. Court of Appeals’ determination, the district court lacked jurisdiction to hear the case. Id. (emphasis added).

Although Feldman’s use of the phrase “inextricably intertwined” was simply an off-hand description of the allegations the petitioners lodged in the district court, federal courts after Feldman treated it as the authoritative standard for when Rooker-Feldman applied. See, e.g., FOCUS v. Allegheny County Court of Common Pleas, 75 F.3d 834, 840 (3d Cir. 1996) (“The Rooker-Feldman doctrine provides that ‘federal district courts lack subject matter jurisdiction to review final adjudications of a state’s highest court or evaluate constitutional claims that are ‘inextricably intertwined with the state court’s decision in a judicial proceeding.’” (quoting Blake v. Papadakos, 953 F.2d 68, 71 (3d Cir. 1992)). Despite having an alliterative simplicity, the “inextricably intertwined” standard was difficult to apply. As one contemporary observer explained, “the distinction between prohibited claims that are ‘inextricably intertwined’ with the state court action and ‘general attacks’ that are permissible has proven impossibly difficult to understand, as is apparent from the widespread confusion in the lower courts.” Barry Friedman & James E. Gaylord, “Rooker-Feldman, From the Ground Up,” 74 Notre Dame L. Rev. 1129, 1136 (1999). Despite the uncertainty (or maybe as a result of it), Rooker-Feldman experienced “explosive growth” in district courts using the doctrine to dismiss cases that touched on prior state court actions for lack of subject matter jurisdiction. Suzanna Sherry, “Judicial Federalism in the Trenches: The Rooker-Feldman Doctrine in Action,” 74 Notre Dame L. Rev. 1085, 1087–88 (1999) (also observing that between 1990 and 1999, “lower federal courts have used Rooker-Feldman to find jurisdiction lacking in more than 500 cases”).

Perhaps to stave off the rapid broadening of Rooker-Feldman as a tool to dismiss cases, the Supreme Court once again took up the doctrine in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005). In Exxon, the parties were involved in a royalty dispute, which resulted in a Delaware state court action seeking a declaratory judgment. Id. at 289. The Court held that Rooker-Feldman did not bar the federal action, which was filed during the pendency of the state court action, and therefore the parties could not have sought appellate review of the judgment. Id. at 293–94. In so holding, the Court again affirmed that cases that are “inextricably intertwined” with federal court judgments are barred by Rooker-Feldman, but the Court clarified exactly which kinds of cases are “inextricably intertwined.” Specifically, the Court held that “[t]he Rooker Feldman doctrine . . . is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. at 284.

The Fraud-on-the-Court Exception

While Rooker-Feldman’s scope is clearer after Exxon’s clarification of the “inextricably intertwined” standard, one question continues to needle its application by lower courts: What if the federal court plaintiff’s claims undermine the merits of the prior judgment by arguing the state court was misled by fraud? Given that the concept of fraud appears nowhere in Exxon’s clarification of Rooker-Feldman and the fact that the Supreme Court has not ever mentioned its impact on the doctrine, a tempting answer might be that alleging fraud on the state court does nothing to change the outcome for a suit otherwise barred by Rooker-Feldman. The answer is more complicated and less definitive.

Contrary to the Supreme Court’s silence on a fraud exception, some lower courts have read into Rooker-Feldman a fraud exception. This fraud exception’s origins in Rooker-Feldman are murky. At least one commentator has persuasively argued that the exception was inadvertently ported from res judicata to Rooker-Feldman in a decision by the Sixth Circuit. Steven N. Baker, “The Fraud Exception to the Rooker-Feldman Doctrine: How It Almost Wasn’t (and Probably Shouldn’t Be),” 5 Fed. Cts. L. Rev. 140, 149–57 (2011). Despite its obscure origins, however, the fraud exception is unquestionably alive and well in many district courts, permitting some federal court plaintiffs a detour around Rooker-Feldman by alleging fraud on the state court in the successor federal action.

Adding an additional layer of complexity, Rooker-Feldman’s fraud exception depends on the type of fraud alleged and the court in which the action is being litigated. Specifically, the exception permits a claim to get beyond Rooker-Feldman’s bar if it involves extrinsic fraud. “Extrinsic fraud is conduct which prevents a party from presenting his claim in court.” Kougasian v. TMSL, Inc., 359 F.3d 1136, 1140 (9th Cir. 2004) (quoting Wood v. McEwen, 644 F.2d 797, 801 (9th Cir. 1981)). In other words, the fraud cannot be the subject matter of the state court action; rather, it must be “collateral” to the matters involved in the action. Menna v. Radmanesh, No. CV 14-355-R (MAN), 2014 U.S. Dist. LEXIS 156641, at *25 (C.D. Cal. Oct. 7, 2014). In a jurisdiction applying the fraud exception, a federal court does have jurisdiction to hear the arguments of the lower court if the federal court plaintiff alleges the state court was the victim of extrinsic fraud. By contrast, allegations of “intrinsic fraud” in the state court—such as perjury—do not bypass Rooker-Feldman. “Intrinsic fraud ‘goes to the very heart of the issues litigated in the state court action.’” Lewis v. L.A. Metro. Transit Auth., No. CV 19-1456 PSG (JPRx), 2019 U.S. Dist. LEXIS 208440, at *7 (C.D. Cal. Sept. 10, 2019) (quoting Green v. Ancora-Citronelle Corp., 577 F.2d 1380, 1384 (9th Cir. 1978)). As the Eight Circuit has observed, whether fraud is extrinsic or intrinsic is a complex issue. Fielder v. Credit Acceptance Corp., 188 F.3d 1031, 1036 (8th Cir. 1999).

Finally, although the contours of extrinsic and intrinsic fraud may prove frustrating in application, there is at least one simplification that is potentially available: Certain circuits reject the fraud exception outright. For instance, while the Sixth Circuit and Ninth Circuit have categorically accepted it (Brown v. First Nationwide Mortg. Corp., 206 F. App’x 436, 440 (6th Cir. 2006) (“[Plaintiff’s allegations of fraud in connection with the state court proceedings . . . did not constitute ‘complaints of injuries caused by the state court judgments,’ because they do not claim that the source of [plaintiff’s] alleged injury is the foreclosure decree itself.”); Kougasian v. TMSL, Inc., 359 F.3d 1136, 1140 (9th Cir. 2004) (explaining that Rooker-Feldman does not bar a federal plaintiff from asserting that his adversary engaged in “conduct which prevent[ed] [him] from presenting his claim in [state] court”), the Eighth Circuit has observed that, despite “various courts [referring] to a possible fraud exception,” it was unwilling to create such a “piecemeal exception” to Rooker-Feldman. See Baker, supra (quoting Fielder, 188 F.3d at 1035–36). Likewise, the Tenth Circuit has recently confirmed that it does not recognize “an ‘extrinsic fraud’ exception to Rooker-Feldman.” See Myers v. Wells Fargo Bank, 685 F. App’x 679 (10th Cir. 2017) (citing Tal v. Hogan, 453 F.2d 1244, 1256 (10th Cir. 2006); Bradshaw v. Gatterman, 658 F. App’x 359, 362 (10th Cir. 2016)).

This article does not purport to completely summarize the degree to which a fraud exception has been accepted in each circuit, particularly where it is unclear in many circuits what the state of that exception is. For a thorough overview of the exception’s adoption throughout the circuits, see Baker, supra; see also Campbell v. Tabas, Civ. A. No. 16-6513, 2017 U.S. Dist. LEXIS 115722, at *7 (E.D. Pa. July 25, 2016) (explaining that the Sixth and Ninth Circuits have adopted the exception, but “the Second, Fifth, Seventh, Eighth, Tenth, and Eleventh Circuits have rejected the exception, as have district courts in the Fourth Circuit”) (citations omitted)). Instead, this article seeks to caution any litigant faced with a fraud exception argument to be vigilant as to the state of the doctrine in the litigant’s district and circuit. The exception is evolving and is at times inconsistent from district to district. Compare Frame v. Lowe, No. 09-2673 (RBK/AMD), 2010 U.S. Dist. LEXIS 10494, at *16 (D.N.J. Feb. 8, 2010) (“Fraud in the procurement of a judgment is an ‘independent claim’ that is not barred by Rooker-Feldman.”), with Campbell, 2017 U.S. Dist. LEXIS 115722, at *10 (rejecting fraud exception, noting that it is inconsistent with 28 U.S.C. § 1257).

Since it gained the second half of its name, Rooker-Feldman has proven to be a nettlesome doctrine for courts to apply. Indeed, even another trip to the Supreme Court in Exxon has not settled the complete contours of the doctrine, at least as far as a “fraud-on-the-court” exception is concerned. Litigants should guide themselves accordingly when this partially unsettled doctrine rears its head.