Steele-Brown v. Stoddard
Filing
15
OPINION AND ORDER REGARDING DEFENDANT'S 7 MOTION TO DISMISS. Signed by District Judge Gerald E. Rosen. (KWin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SALLY STEELE-BROWN,
Plaintiff,
Case No. 15-11817
vs.
Hon. Gerald E. Rosen
PHIL STODDARD, in his official
capacity as Director of the Michigan
Office of Retirement Services,
Defendant.
/
OPINION AND ORDER REGARDING
DEFENDANT’S MOTION TO DISMISS
At a session of said Court, held in
the U.S. Courthouse, Detroit, Michigan
on
June 15, 2016
PRESENT:
Honorable Gerald E. Rosen
United States District Judge
I. INTRODUCTION
Plaintiff Sally Steele-Brown, a recently retired public schoolteacher,
commenced this action in this Court on May 20, 2015, asserting federal civil rights
claims under 42 U.S.C. § 1983 and a state-law claim of gross negligence against
Defendant Phil Stoddard, a state official who serves as the director of the
Michigan Office of Retirement Services (“MORS”). In support of these claims,
Plaintiff alleges that MORS, under Defendant’s direction, sent her misleading
communications that led her to inadvertently opt out of employer-provided retiree
health insurance, and to instead elect a personal healthcare fund that was grossly
underfunded at the time of her retirement. This Court’s subject matter jurisdiction
rests upon Plaintiff’s assertion of claims arising under federal law. See 28 U.S.C.
§ 1331.
In lieu of answering Plaintiff’s complaint, Defendant has filed a July 17,
2015 motion in which he seeks the dismissal of each of Plaintiff’s claims on
various grounds. In particular, Defendant argues (i) that Plaintiff has failed to
state viable due process or takings claims under 42 U.S.C. § 1983, (ii) that
Plaintiff’s federal § 1983 claims for money damages and her state-law claim of
gross negligence are defeated by the immunity conferred under the Eleventh
Amendment to the U.S. Constitution, (iii) that Plaintiff’s claims are barred by the
doctrine of res judicata, in light of the parallel proceedings instituted by Plaintiff
before an administrative law judge and in the Michigan courts, and (iv) that, in the
event it is determined that Plaintiff’s claims are not subject to dismissal, the Court
nonetheless should abstain from addressing these claims while Plaintiff’s state
court challenge remains pending.
On November 17, 2015, Plaintiff filed a response in opposition to
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Defendant’s motion to dismiss. Having reviewed the parties’ briefs in support of
and in opposition to Defendant’s motion, as well as the accompanying exhibits
and the remainder of the record, the Court finds that the pertinent facts,
allegations, and legal issues are adequately presented in these written submissions,
and that oral argument would not assist in the resolution of this motion.
Accordingly, the Court will decide Defendant’s motion “on the briefs.” See Local
Rule 7.1(f)(2), U.S. District Court, Eastern District of Michigan. This opinion sets
forth the Court’s rulings on this motion.
II. FACTUAL AND PROCEDURAL BACKGROUND
Prior to her retirement on July 1, 2013, Plaintiff Sally Steele-Brown was
employed as a public school teacher for 31 years. Shortly before Plaintiff retired,
the Michigan Legislature amended the state law governing the retirement benefits
granted to public school employees. Under this 2012 amendment, employees
hired on or after September 4, 2012 were no longer eligible upon their retirement
for health insurance coverage that was paid for in part by their employer. See
Mich. Comp. Laws § 38.1391a(1). Instead, these employees could contribute to a
so-called “Tier 2” account, with limited matching contributions from their
employer, that they could draw upon to pay the health care expenses they incurred
after their retirement. See Mich. Comp. Laws §§ 38.1391a(1),(2). Public school
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employees who, like Plaintiff, were hired prior to September 4, 2012 could elect to
either (i) maintain their existing employer-provided retiree health insurance, with
the employer paying 80 percent of the monthly premiums for this coverage, or (ii)
opt out of this health insurance coverage and instead open a “Tier 2” account that
would be used to pay health care expenses upon the employee’s retirement. See
Mich. Comp. Laws §§ 38.1391, 38.1391a(5).
In September of 2012, the Michigan Office of Retirement Services
(“MORS”), under the direction of Defendant Phil Stoddard, sent correspondence
to Plaintiff and other public school employees advising them of the options
available to them under the recent amendments to the law governing their
retirement benefits. According to Plaintiff’s complaint, the mailings sent by
MORS were misleading in various respects, and neither this correspondence nor
the MORS website provided the notice and complete information needed by
Plaintiff to make an appropriate selection among the retiree health care options
offered under Michigan law. In particular, Plaintiff alleges that the mailings she
received from MORS (i) indicated that she was compelled to select one of the two
options referenced in the correspondence, when in fact she “did not have to elect
either and could simply maintain [her existing] retiree health insurance,” (ii)
misstated the deadline by which she had to act, (iii) used “technical jargon” that
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operated to “obfuscate[] the decision” faced by Plaintiff, (iv) omitted any mention
that if she selected the “personal healthcare fund” option referenced in the MORS
correspondence, she “would forfeit or waive her entitlement to employer-provided
retiree health insurance and would have to go on the open market to purchase
insurance,” (v) failed to advise Plaintiff that the “personal healthcare fund” was
“more appropriate for a young employee who is s[ufficiently] far away from
retirement to build [up] such account or has access to retiree health insurance
through an alternative source,” and (vi) lacked notice of Plaintiff’s opportunity to
revoke her selection of a “personal healthcare fund” within a specified time after
making this election. (Complaint at ¶¶ 7, 9, 13-15.)
Upon receiving these mailings from MORS, Plaintiff “unknowingly”
elected to surrender her existing retiree health insurance coverage, and to instead
begin contributing to a personal healthcare fund. (Id. at ¶ 16.) Plaintiff alleges
that MORS did not send her notice of this election until February 26, 2013, after
the statutory period for rescinding this choice had already expired, and that this
notice used “healthcare jargon” rather than “plain English” to characterize her
selection. (Id. at ¶ 17.) Thus, Plaintiff alleges that she did not become aware of
her “inadvertent[]” surrender of her retiree health insurance coverage until August
2, 2013, a month after she retired. (Id. at ¶ 18.)
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Upon learning that she had inadvertently chosen a personal healthcare fund
over continued retiree health insurance, Plaintiff “immediately contacted [M]ORS
to change her selection,” but this request was denied. (Id.) As a result, Plaintiff’s
personal healthcare fund is significantly underfunded, with “a value of
approximately $1,000 upon her retirement,” and she “has been forced to purchase
health care insurance on the open market for a premium amount significantly
higher than what she would have had to pay” if she had retained the retiree health
insurance coverage that was largely paid for by her employer. (Id. at ¶¶ 19-20.)
In an effort to rectify this situation, Plaintiff first requested a hearing before
an administrative law judge (“ALJ”) as provided for under Michigan law.
Following this hearing, the ALJ recommended that the Public School Employees’
Retirement Board (the “Board”) deny Plaintiff’s administrative appeal, finding
that MORS had “acted in accordance with the law” when it denied Plaintiff’s
request to revoke her selection of a personal healthcare fund. (See Defendants’
Motion, Ex. A, Admin. Record at 40-41.) Plaintiff filed objections to the ALJ’s
proposed findings, but the Board adopted the ALJ’s decision in an order dated
November 13, 2014. (See id. at 3.)
As noted in a letter advising Plaintiff of the Board’s unfavorable decision,
(see id. at 2), Plaintiff had a right under Michigan law to appeal the Board’s order
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to the Michigan courts, and she elected to do so. By order dated June 24, 2015,
the Ingham County Circuit Court ruled in Plaintiff’s favor, directing the Public
School Employees’ Retirement System to (i) reinstate Plaintiff’s coverage under
the retiree health insurance plan subsidized by her former employer, and (ii)
reimburse Plaintiff for any additional expenses she incurred as a result of the
discontinuation of this coverage and Plaintiff’s purchase of substitute health
insurance. (See Defendant’s Motion, Ex. C, Circuit Court 6/24/2015 Order.) The
Public School Employees’ Retirement System filed an application with the
Michigan Court of Appeals for leave to appeal the circuit court’s decision, and the
state appellate court granted this application on October 7, 2015. This appeal has
been briefed and remains pending before the Court of Appeals.
After Plaintiff instituted her state court challenge to the Board’s decision,
but before the Michigan circuit court ruled in her favor, Plaintiff commenced the
present suit in this Court on May 20, 2015, alleging that Defendant Stoddard,
acting in his official capacity as the director of MORS, violated her federal
constitutional right to due process and effected an unconstitutional taking of her
property interest in retiree health insurance by administering a “thoroughly
confusing” program that led Plaintiff to unknowingly surrender her right to
employer-subsidized health insurance upon her retirement. (Complaint at ¶¶ 25,
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31.) Plaintiff also has asserted a state-law claim of gross negligence against
Defendant Stoddard. As relief, Plaintiff seeks (i) a declaration that her
constitutional and statutory rights were violated, (ii) an order enjoining any further
such violations and requiring that Defendant establish appropriate procedures for
administering retiree healthcare benefits, (iii) compensatory damages for the losses
suffered by Plaintiff as a result of Defendant’s unlawful actions, and (iv) an award
of attorney fees and costs.
III. ANALYSIS
A.
The Standards Governing Defendant’s Motion
Through the present motion, Defendant seeks the dismissal under Fed. R.
Civ. P. 12(b)(1) and 12(b)(6) of each of the claims asserted in Plaintiff’s
complaint. When considering a motion brought under Rule 12(b)(1) mounting a
facial challenge to the existence of subject matter jurisdiction, the Court “takes the
allegations in the complaint as true,” inquiring whether these allegations establish
a basis for the exercise of subject matter jurisdiction. Gentek Building Products,
Inc. v. Steel Peel Litigation Trust, 491 F.3d 320, 330 (6th Cir. 2007). Yet,
“conclusory allegations or legal conclusions masquerading as factual conclusions
will not suffice” to withstand a properly supported Rule 12(b)(1) motion to
dismiss. O’Bryan v. Holy See, 556 F.3d 361, 376 (6th Cir. 2009) (internal
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quotation marks and citation omitted).
To the extent that Defendant contends that certain of Plaintiff’s claims are
subject to dismissal under Rule 12(b)(6) for failure to state a claim, the Court must
construe the complaint in a light most favorable to Plaintiff and accept all wellpleaded factual allegations as true. League of United Latin American Citizens v.
Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). However, “the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable
to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949
(2009). In addition, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the grounds of his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955,
1964-65 (2007) (internal quotation marks, alteration, and citations omitted).
Rather, to withstand a motion to dismiss, the complaint’s factual allegations,
accepted as true, “must be enough to raise a right to relief above the speculative
level,” and to “state a claim to relief that is plausible on its face.” Twombly, 550
U.S. at 555, 570, 127 S. Ct. at 1965, 1974. “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable
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inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678, 129 S. Ct. at 1949.
B.
Plaintiff Has Failed to Plead a Viable Substantive or Procedural Due
Process Claim Arising from Defendant’s Determination That Plaintiff
Surrendered Her Right to Employer-Subsidized Health Insurance upon
Her Retirement.
In the first count of her complaint, Plaintiff alleges that Defendant violated
her right to due process, as guaranteed under the U.S. Constitution, by depriving
her of an alleged property interest in employer-subsidized health insurance upon
her retirement as a public school teacher. Although it is not evident from the face
of Plaintiff’s complaint whether she means to pursue a substantive or procedural
due process claim, she contends in her response to Defendant’s present motion
that the allegations of her complaint would support either of these two theories of
recovery. Defendant now challenges the viability of this claim, arguing that it is
insufficiently pled without regard to the due process theory Plaintiff seeks to
pursue. As discussed below, the Court agrees that the allegations of Plaintiff’s
complaint fail as a matter of law to establish either a substantive or procedural due
process violation.
1.
Substantive Due Process
Turning first to Plaintiff’s claim of a substantive due process violation, such
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claims arise from the Supreme Court’s recognition that the Due Process Clause of
the Fourteenth Amendment guarantees “more than fair process” and “cover[s] a
substantive sphere as well, barring certain government actions regardless of the
fairness of the procedures used to implement them.” County of Sacramento v.
Lewis, 523 U.S. 833, 840, 118 S. Ct. 1708, 1713 (1998) (internal quotation marks
and citations omitted). The parties here agree that to state a substantive due
process claim, Plaintiff must allege that the Defendant state official acted in a
manner that “can properly be characterized as arbitrary, or conscience shocking, in
a constitutional sense.” Lewis, 523 U.S. at 847, 118 S. Ct. at 1717 (internal
quotation marks and citation omitted); see also Bowers v. City of Flint, 325 F.3d
758, 766 (6th Cir. 2003) (explaining that where the plaintiff’s complaint “does not
allege the violation of a fundamental right,” a substantive due process claim “must
be based on behavior that shocks the conscience” (internal quotation marks and
citation omitted)).
In arguing that Plaintiff has failed to allege the requisite conscienceshocking behavior, Defendant points to the Sixth Circuit’s repeated unwillingness
to find that a government official’s misconduct meets this standard absent the
official’s use or threatened use of physical force. In Braley v. City of Pontiac, 906
F.2d 220, 226 (6th Cir. 1990), for example, the Sixth Circuit opined that it was
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“problematic” to “[a]pply[] the ‘shock the conscience’ test in an area other than
excessive force,” and the court “doubt[ed] the utility of such a standard outside the
realm of physical abuse.” The court has reiterated this view in a number of
subsequent rulings. See, e.g., Mansfield Apartment Owners Ass’n v. City of
Mansfield, 988 F.2d 1469, 1478 (6th Cir. 1993) (“[B]ecause the present case does
not concern physical abuse, we are reluctant to apply the ‘shock the conscience’
standard, and decline to do so.” (citation and footnote omitted)); Cassady v.
Tackett, 938 F.2d 693, 698 (6th Cir. 1991) (“Since the present case, like Braley,
does not concern physical abuse, we are reluctant to apply the ‘shock the
conscience’ standard.” (footnote omitted)); Puckett v. Lexington-Fayette Urban
County Gov’t, No. 13-5898, 566 F. App’x 462, 472 (6th Cir. May 21, 2014)
(“Generally, the ‘shocks the conscience’ strain of successful substantive due
process claims is recognized in the exclusive context of cases involving physical
abuse.” (internal quotation marks and citations omitted)); Choate’s Air
Conditioning & Heating, Inc. v. Light, Gas & Water Division of the City of
Memphis, No. 00-5399, 16 F. App’x 323, 329 (6th Cir. June 22, 2001) (observing
that the Sixth Circuit recognizes “shock the conscience” claims “in the exclusive
context of cases involving physical abuse”).
This Court likewise has invoked Braley and its progeny to dismiss
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substantive due process claims that, like Plaintiff’s claim here, rested upon alleged
deprivations of the plaintiffs’ property by government officials. In Kawecki v.
County of Macomb, Nos. 04-70907, 05–73498, 2008 WL 205241, at *1 (E.D.
Mich. Jan. 24, 2008), aff’d sub nom., Birkholz v. Mial, Nos. 08-1239, 08-1269,
312 F. App’x 752 (Feb. 3, 2009), the plaintiffs alleged that the defendant
governmental entities and court-appointed officials mismanaged and
misappropriated funds belonging to the plaintiffs and held in conservatorships
established by a state probate court. The Court found that the plaintiffs’ claims of
substantive due process violations were foreclosed by the law of this Circuit:
To be sure, the Court shares Plaintiffs’ view that the
misconduct allegedly engaged in by Defendants here is deeply
troubling, and might even be said to “shock the conscience” in a
colloquial sense. As a moral and ethical matter, the Court is
dismayed by the notion that government officials would abuse their
position of authority by misappropriating property that was entrusted
to them for safekeeping. Worse yet, the property belonged to
individuals who could not look out for themselves, and thus were
uniquely dependent upon these court-appointed officials to preserve
their estates and act in their best interests. Nonetheless, in light of
clear Sixth Circuit precedent declining to extend the “shocks the
conscience” standard beyond cases involving physical abuse, this
Court finds that the property deprivations alleged by Plaintiffs in the
present cases cannot sustain their substantive due process claims.
Kawecki, 2008 WL 205241, at *25. The Sixth Circuit affirmed this ruling,
explaining that the plaintiffs had “cite[d] no authority for the award of damages on
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a substantive due process theory for governmental action that neither threatens nor
causes physical injury.” Birkholz, 312 F. App’x at 752.
In her response to Defendant’s present motion, Plaintiff does not even
acknowledge this body of Sixth Circuit law, much less endeavor to distinguish it.
Rather, she simply asserts, without citation to any supporting authority, that
Defendant acted in a conscience-shocking manner by establishing a “confusing
website” with “obscure jargon” that led her to unwittingly surrender her
entitlement to employer-subsidized retiree health insurance, and by “stubborn[ly]
refus[ing] to allow Plaintiff to correct an obvious mistake” in her election of
retiree healthcare benefits. (Plaintiff’s Response Br. at 14.) Yet, even assuming
that Plaintiff lost her retiree health insurance as a result of Defendant’s deliberate
misconduct, as opposed to negligence or carelessness in a state agency’s
communication of the healthcare benefit options available to Plaintiff and other
public school employees upon their retirement, this would not serve to distinguish
the allegations here from the facts addressed by this Court in Kawecki. In that
case, after all, the plaintiffs charged that the defendant government officials had
intentionally misappropriated property that had been entrusted to them for
safekeeping, but this Court held (and the Sixth Circuit affirmed) that these
allegations of deliberate property deprivations could not sustain a § 1983 claim
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under a substantive due process theory. In light of this Court’s ruling in Kawecki,
as well as the Sixth Circuit precedents on which it relies, it follows that Plaintiff
has failed to plead a viable substantive due process claim.
2.
Procedural Due Process
Alternatively, Plaintiff suggests that the first count of her complaint should
be construed as advancing a procedural due process theory of recovery. This
theory rests on the “procedural component” of the Fourteenth Amendment’s Due
Process Clause, which imposes “the requirement that the government provide a
fair procedure when depriving someone of life, liberty, or property.” Daily
Services, LLC v. Valentino, 756 F.3d 893, 904 (6th Cir. 2014) (internal quotation
marks and citations omitted). “To establish a procedural due process claim, a
plaintiff must show that (1) [she] had a life, liberty, or property interest protected
by the Due Process Clause; (2) [she] was deprived of this protected interest; and
(3) the state did not afford [her] adequate procedural rights.” Daily Services, 756
F.3d at 904. Although the parties debate whether Plaintiff has identified a
property interest that would support her claim of a procedural due process
violation, the Court will assume, for present purposes, that Plaintiff has
sufficiently alleged the first two elements of a procedural due process claim, and
will focus exclusively on the question whether the state provided constitutionally
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adequate process in connection with the property deprivation alleged by Plaintiff.
In arguing that Plaintiff has failed to plead this element of a procedural due
process claim, Defendant points to the administrative and judicial avenues that
were available to Plaintiff, and that she in fact pursued, in order to challenge the
loss of her employer-subsidized retiree health insurance. Specifically, upon
learning that she had inadvertently surrendered this health insurance benefit,
Plaintiff requested a hearing before an ALJ, and then filed objections with the
Public School Employees’ Retirement Board challenging the ALJ’s unfavorable
decision. When this administrative process failed to provide the desired relief,
Plaintiff commenced an action in state court and secured a ruling in her favor,
under which the Public School Employees’ Retirement System was ordered to
restore Plaintiff’s employer-subsidized retiree health insurance coverage and
reimburse Plaintiff for the expenses she incurred as a result of her loss of this
coverage and her purchase of substitute health insurance.1 Thus, not only did the
State of Michigan provide procedures through which Plaintiff could challenge the
loss of her retiree health insurance, but she has successfully invoked these
procedures to redress this alleged deprivation of property and regain her retiree
1
As noted earlier, the Public School Employees’ Retirement System has appealed
this ruling, and this appeal remains pending before the Michigan Court of Appeals.
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insurance benefits. In Defendant’s view, this opportunity to be heard defeats
Plaintiff’s claim of a procedural due process violation. See Parratt v. Taylor, 451
U.S. 527, 540, 101 S. Ct. 1908, 1915 (1981) (emphasizing that “[t]he fundamental
requirement of due process is the opportunity to be heard”).
In an effort to avoid this result, Plaintiff tersely asserts that she was entitled
to a “pre-termination hearing” before Defendant deprived her of her claimed
property interest in employer-subsidized retiree health insurance. (Plaintiff’s
Response Br. at 15.) She questions, in other words, “[w]hat process [wa]s due”
under federal procedural due process law in connection with the loss of her retiree
health insurance benefits, and this inquiry, in turn, “depends upon whether the
deprivation of property occurs pursuant to an established state procedure or results
from a random, unauthorized act of a state employee.” Walsh v. Cuyahoga
County, 424 F.3d 510, 513 (6th Cir. 2005) (internal quotation marks and citation
omitted). Unfortunately, Plaintiff offers no discussion or analysis whatsoever in
support of her claim that a pre-termination hearing was required under the
circumstances presented here. This bare, undeveloped assertion operates as a
waiver of Plaintiff’s contention that she was entitled to a pre-termination hearing.
See Dillery v. City of Sandusky, 398 F.3d 562, 569 (6th Cir. 2005).
In any event, the Court’s own inquiry leads to the conclusion that a pre17
termination hearing was not feasible in this case, and hence was not required.
Plaintiff’s due process claim rests upon allegations that Defendant sent
correspondence to Plaintiff and other public school employees that misrepresented
the health care options available to them upon their retirement. According to
Plaintiff, this correspondence failed in various respects to accurately inform public
school employees of the ramifications of the 2012 amendments to the Michigan
law governing their retirement benefits. Specifically, Defendant’s mailings
allegedly (i) advised Plaintiff and other recipients that they must choose between
retiree health insurance and a so-called “Tier 2” health care expense account
created under the 2012 legislation, when in fact the pertinent Michigan statute
provided that employees in Plaintiff’s position who failed to make an election
would maintain their existing retiree health insurance coverage, see Mich. Comp.
Laws § 38.1391a(6); (ii) misstated the statutory deadline of January 9, 2013 by
which an election had to be made, see Mich. Comp. Laws § 38.1391a(5); (iii) used
terminology that differed from the language of the statute, “to the point that a
reasonable person could not distinguish what was being elected,” (Complaint at ¶
11), and (iv) failed to advise Plaintiff and the other recipients of a “statutory
revocation period” within which they could change their elections, (id. at ¶¶ 1617).
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In essence, then, Plaintiff charges Defendant with a due process violation
arising from his alleged failure to properly implement the Michigan statutory
scheme under which public school employees may select the health care coverage
they will receive upon their retirement. As stated in Plaintiff’s complaint, the
program created by Defendant for administering the health care benefits available
to public school retirees under Michigan law “is so thoroughly confusing and
without legal definition” that Plaintiff and other employees “were unable to
decipher what exactly they were ‘electing’” under this program. (Complaint at ¶
25.) The due process violation, in other words, arises not from the Michigan
statutory scheme that governs retirement benefits for public school employees,
but instead from Defendant’s implementation of this scheme in a manner that led
Plaintiff to unknowingly surrender her entitlement to employer-subsidized retiree
health insurance.
Under comparable circumstances, where an alleged procedural due process
violation rests upon a government official’s deviation from, rather than adherence
to, established state law or procedures, the Sixth Circuit has held that a postdeprivation hearing suffices to meet the dictates of the Due Process Clause. In
Daily Services, 756 F.3d at 896, for example, the plaintiff temporary employment
agency brought suit against “various employees of the Ohio Bureau of Workers’
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Compensation after the Bureau filed a series of judgments and liens against the
[plaintiff] company in violation of Ohio’s statutory and administrative
procedures.” Because the plaintiff was not challenging “established state
procedures” governing the filing of judgments and liens, but instead alleged that
Bureau workers deviated from these procedures in a manner that was
“unpredictable or ‘random’ from the state’s perspective,” the court reasoned that it
was not “foreseeable to the state that its employees would not follow state law,”
and that it therefore was impracticable for the state to implement pre-deprivation
procedures to protect against this risk of noncompliance with the law. Daily
Services, 756 F.3d at 908-09. In accordance with the Supreme Court’s ruling in
Parratt, 451 U.S. at 541-43, 101 S. Ct. at 1916-17, and its progeny, the Sixth
Circuit held that the post-deprivation remedies available to the plaintiff company
under Ohio law were “all the process that is due, simply because they are the only
remedies the State could be expected to provide.” Daily Services, 756 F.3d at
909-10 (internal quotation marks and citation omitted).
Similarly, in Walsh, 424 F.3d at 512, the plaintiff civil service employee
was abruptly discharged when her supervisor instructed her at the conclusion of a
performance review meeting to “clean out [her] desk” and submit a letter of
resignation. The Sixth Circuit found it “clear” that the supervisor “was not acting
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pursuant to an ‘established state procedure’” by terminating the plaintiff’s
employment in this fashion, where the state agency for which the plaintiff worked
had an “established disciplinary procedure” that called for a “written request for
disciplinary action, a pre-disciplinary conference, and . . . an order of removal”
before an employee could be discharged. Walsh, 424 F.3d at 513-14.
Accordingly, because the termination of the plaintiff’s employment was a product
of the random and unauthorized act of her supervisor, the court held that “an
adequate post-deprivation remedy satisfie[d] [the plaintiff’s] right to due process
of law.” 424 F.3d at 514; see also Fields v. Benningfield, No. 13-5316, 544 F.
App’x 626, 629 (6th Cir. Nov. 6, 2013) (explaining that “[w]hen a person is
deprived of his property because state agents failed to follow a state procedure, . . .
due process is satisfied if a means of challenging the deprivation afterwards
remains available”).
Viewing Plaintiff’s allegations here against the backdrop of these
precedents, the Court fails to see how the State of Michigan could have provided
pre-deprivation procedures to protect against Plaintiff’s inadvertent and
unknowing election of a personal healthcare account rather than employersubsidized retiree health insurance. Under the statutory scheme that granted
public school employees the opportunity to make this election, various safeguards
21
were put in place to ensure that employees were aware of their options and had
sufficient time to make a knowledgeable decision, but Plaintiff alleges that the
program created by Defendant to implement the statutory scheme lacked these
procedural safeguards. Just as in Daily Services, it would likewise be impractical
here for the State to offer procedural protection against the unanticipated risk that
a state official such as Defendant might issue communications that misled public
school employees in their selection of retiree healthcare coverage. Certainly,
Plaintiff has not suggested what sort of pre-deprivation procedures the State might
have provided to overcome Defendant’s allegedly misleading communications and
other alleged deviations from the statutory scheme governing healthcare coverage
for public school retirees. Rather, the State could only be expected to provide
post-deprivation remedies in the event that an employee was not properly advised
of the healthcare options available to her upon her retirement and the process for
selecting among these options. Because the State of Michigan has provided these
post-deprivation remedies, in the form of both administrative and judicial avenues
of appeal, and because Plaintiff has not alleged or argued that these postdeprivation remedies are inadequate,2 the Court finds that Plaintiff has failed to
2
It would be difficult for Plaintiff to make this claim, where her pursuit of these
post-deprivation remedies has resulted in a state court ruling in her favor that seemingly
redresses her injuries.
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plead a viable claim that her procedural due process rights were violated.
C.
Plaintiff’s Claim of an Unconstitutional Taking Is Barred by Eleventh
Amendment Immunity.
In the second count of her complaint, Plaintiff alleges that the loss of her
employer-subsidized retiree health insurance amounts to an unconstitutional
taking of her property interest in this insurance. As discussed below, however, the
Court finds that this claim is barred by the immunity conferred upon the State of
Michigan under the Eleventh Amendment to the U.S. Constitution.
As the Supreme Court has explained, “[t]he ultimate guarantee of the
Eleventh Amendment is that non-consenting States may not be sued by private
individuals in federal court.” Board of Trustees of the University of Alabama v.
Garrett, 531 U.S. 356, 363, 121 S. Ct. 955, 962 (2000). Moreover, to the extent
that the Eleventh Amendment immunizes a state from a federal court suit, this
immunity extends as well to claims in the suit that are brought “against state
officials sued in their official capacity for money damages.” Ernst v. Rising, 427
F.3d 351, 358 (6th Cir. 2005). This follows readily from the principle that “an
official capacity suit is, in all respects other than name, to be treated as a suit
against the [governmental] entity” for which the official serves as an agent.
Kentucky v. Graham, 473 U.S. 159, 166, 105 S. Ct. 3099, 3105 (1985); see also
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Cady v. Arenac County, 574 F.3d 334, 342 (6th Cir. 2009) (noting that “a lawsuit
against an officer in his official capacity and against the governmental entity [for
which he serves] . . . are functionally the same and should therefore be subjected
to the same analysis”). Consequently, because each of Plaintiff’s claims has been
brought against Defendant Stoddard solely in his official capacity as the director
of a state agency, the Michigan Office of Retirement Services, the same Eleventh
Amendment immunity that would bar a claim if brought against the State of
Michigan would likewise preclude Plaintiff from pursuing this claim against
Defendant Stoddard, at least to the extent that Plaintiff seeks a monetary recovery.3
In DLX, Inc. v. Kentucky, 381 F.3d 511, 526-28 (6th Cir. 2004), the Sixth
Circuit held that the plaintiff’s federal takings claims against the Commonwealth
of Kentucky, a Kentucky state agency, and a state official sued in his official
capacity were barred by Eleventh Amendment immunity. In so ruling, the court
observed that a “federal-court suit alleging a taking seeks not just compensation
per se but rather damages for the unconstitutional denial of such compensation.”
3
As Plaintiff points out in her response to Defendant’s motion, this rule extends
only to claims for money damages. Under the Supreme Court’s ruling in Ex parte Young,
209 U.S. 123, 28 S.Ct. 441 (1908), Eleventh Amendment immunity does not bar Plaintiff
from seeking prospective injunctive or declaratory relief against Defendant Stoddard for
actions taken in his official capacity that violate federal law. See Cady, 574 F.3d at 344;
Ernst, 427 F.3d at 358.
24
DLX, 381 F.3d at 527 (internal quotation marks and citation omitted). In light of
the inherently compensatory nature of the relief sought through a federal takings
claim, the court reasoned that such a claim, whether asserted directly against a
state or against a state official sued in his official capacity, could not be saved
from Eleventh Amendment immunity by resort to Ex parte Young. See DLX, 381
F.3d at 527; see also Hutto v. South Carolina Retirement System, 773 F.3d 536,
553 (4th Cir. 2014) (observing that “every other court of appeals to have decided
the question has held that the Takings Clause does not override the Eleventh
Amendment” (collecting cases, including the Sixth Circuit’s decision in DLX)). It
follows under DLX that the Eleventh Amendment immunity granted to the State of
Michigan dictates the dismissal of Plaintiff’s federal takings claim.4
D.
Plaintiff’s State-Law Tort Claim Also Is Barred by Eleventh
Amendment Immunity.
Finally, in Count 3 of her complaint, Plaintiff has asserted a state-law tort
claim against Defendant Stoddard, alleging that he acted with gross negligence by
making “false, misleading, incomplete and untimely representations to Plaintiff”
concerning her retiree healthcare benefits. (Complaint at ¶¶ 36-38.) This claim,
4
In addition, Plaintiff’s takings claim likely is subject to dismissal on the merits for
lack of an allegation that Defendant Stoddard, acting in his official capacity on behalf of a
state agency, took control of Plaintiff’s property “and put[] it to public use.” Guba v.
Huron County, No. 14-3022, 600 F. App’x 374, 386 (6th Cir. Jan. 22, 2015).
25
like the others in Plaintiff’s complaint, has been asserted against Defendant
Stoddard in his official capacity only.
It readily follows that this claim is barred in its entirety by Eleventh
Amendment immunity. The Sixth Circuit has emphasized that “the States’
constitutional [Eleventh Amendment] immunity from suit prohibits all state-law
claims filed against a State in federal court, whether those claims are monetary or
injunctive in nature.” Ernst, 427 F.3d at 368. Moreover, as explained earlier, a
claim asserted against a state employee in his official capacity is functionally
equivalent, for purposes of Eleventh Amendment immunity, to a claim asserted
against the state itself. See Graham, 473 U.S. at 166, 105 S. Ct. at 3105; Cady,
574 F.3d at 342. The sole exception to this rule — i.e., an official-capacity claim
for prospective injunctive relief under Ex parte Young — does not apply to claims
alleging non-compliance with state law. See Ernst, 427 F.3d at 368-69; Freeman
v. Michigan Department of State, 808 F.2d 1174, 1179 (6th Cir. 1987).
Consequently, Plaintiff’s state-law claim is subject to dismissal.5
5
In light of the Court’s conclusion that Plaintiff’s claims are subject to dismissal
either for failure to state a claim or on Eleventh Amendment grounds, the Court need not
address Defendant’s contention that Plaintiff’s claims are barred by claim preclusion.
The Court also need not decide whether, as Defendant urges, the proceedings before this
Court should be stayed under the authority of Younger v. Harris, 401 U.S. 37, 91 S. Ct.
746 (1971), while Plaintiff’s state court suit remains pending.
26
IV. CONCLUSION
For the reasons set forth above,
NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant’s July 17,
2015 motion to dismiss (docket #7) is GRANTED.
s/Gerald E. Rosen
United States District Judge
Dated: June 15, 2016
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on June 15, 2016, by electronic and/or ordinary mail.
s/Kelly Winslow for Julie Owens
Case Manager, (313) 234-5135
27
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