AFSCME Council 25, and its affiliated locals v. Charter County of Wayne et al
Filing
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MEMORANDUM OPINION Denying Plaintiffs' 2 Motion for Preliminary Injunction and Granting 16 Defendants' Motion to Dismiss - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AFSCME Council 25 and its
Affiliated Locals,
Plaintiffs,
Case No. 15-cv-13288
Hon. Judith E. Levy
Mag. Judge R. Steven Whalen
v.
Charter County of Wayne and
Warren Evans,
Defendants.
________________________________/
OPINION AND ORDER DENYING PLAINTIFFS’ MOTION FOR
PRELIMINARY INJUNCTION [2] AND GRANTING
DEFENDANTS’ MOTION TO DISMISS [16]
Plaintiffs AFSCME Council 25 and their affiliated Locals
(“AFSCME”), the collective bargaining representatives for roughly 2,500
employees in Wayne County, are suing the county and its County
Executive/Chief Administrative Officer Warren Evans.
Defendants
have entered into a Consent Agreement with the state of Michigan,
under 2012 Mich. Pub. Acts 436 (“Act 436”), that grants Evans a set of
powers designed to deal with what the state of Michigan has
determined is a financial crisis in Wayne County. Plaintiffs allege that
defendants are without power to take a variety of actions to address the
financial crisis that would negatively affect various rights of plaintiffs’
member employees.
I.
Background
On June 17, 2015, defendant Warren Evans, Wayne County’s
Chief Executive Officer, sent a letter to Michigan’s state treasurer, Nick
Khouri, seeking to invoke the powers of Act 436 to address Wayne
County’s financial situation. On August 21, 2015, Khouri approved a
consent agreement with Wayne County and Evans under Act 436 (the
“Consent Agreement”). One of the primary areas in which defendants
seek to use powers under Act 436 is to curtail historical and current
labor costs.
Evans has been designated a “chief administrative officer” as
defined under M.C.L. § 141.1542(b).
“[T]he consent agreement may
include a grant to the chief administrative officer . . . by the state
treasurer of 1 or more of the powers prescribed for emergency managers
as otherwise provided in this act for such periods and upon such terms
and conditions as the state treasurer considers necessary or convenient,
in the state treasurer's discretion to enable the local government to
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achieve the goals and objectives of the consent agreement. However, the
consent agreement shall not include a grant to the chief administrative
officer, the chief financial officer, the governing body, or other officers of
the local government of the powers prescribed for emergency managers
in section 12(1)(k).” M.C.L. § 141.1548(10).
Section 12(1)(k) permits the emergency manager to “reject,
modify, or terminate 1 or more terms and conditions of an existing
collective bargaining agreement” if the emergency manager and state
treasurer determine that certain qualifications are met.
M.C.L. §
141.1552(1)(k).
Under the Consent Agreement, the County’s obligation to bargain
with its unions is suspended after thirty days – in this case, on
September 21, 2015. (Dkt. 16-3 at 3.) The chief administrative officer
may, pursuant to § 141.1552(1)(ee), “exercise powers prescribed for
emergency managers to impose by order matters relating to wages,
hours, and other terms and conditions of employment, whether
economic or noneconomic, for County employees previously covered by
the expired collective bargaining agreement.” (Id.)
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Wayne County’s employees are members of ten unions. At the
time the complaint was filed, nine of the ten unions had agreed to vote
on tentative agreements offered by defendants on September 21, 2015,
regarding wages, hours, and other terms of conditions of employment.
Plaintiffs are the lone holdout, and another union, the Police Officers’
Association of Michigan (“POAM”), had indicated that it would not seek
ratification of its tentative agreement unless plaintiffs agree to do so, as
well.
Plaintiffs have challenged defendants’ authority to impose
conditions of employment on its members in front of the Michigan
Employee Relations Commission (“MERC”) and in Michigan state court.
Under 1969 Mich. Pub. Act 312, M.C.L. § 423.231 et seq. (“Act 312”),
plaintiffs had the right to seek arbitration through MERC as long as
their collective bargaining agreement was in effect. Plaintiffs sought
arbitration in September 2014. The final extension agreement of the
CBA expired on June 23, 2015.
(Dkt. 16 at 16.) Defendants moved to
dismiss the arbitration on September 1, 2015, following the invocation
of Act 436 powers. On September 16, 2015, MERC voted unanimously
to dismiss the Act 312 petition, finding that Act 436 governed.
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On September 14, 2015, plaintiffs filed an action requesting a
temporary restraining order and bringing a claim for breach of contract
in Wayne County Circuit Court. The Circuit Court granted the TRO,
but the Michigan Court of Appeals reversed the Circuit Court on
September 16, 2015. The breach of contract claim is still pending in
Wayne County Circuit Court.
Plaintiffs filed suit in federal court on September 16, 2015,
seeking a temporary restraining order and/or preliminary injunction
against defendants.
(Dkts. 1, 2.)
On September 18, 2015, Judge
Matthew Leitman (who recused himself on September 21, 2015) denied
the TRO and set a briefing schedule on the preliminary injunction
motion. (Dkt. 8.) Plaintiffs filed an amended complaint on September
21, 2015. (Dkt. 9.) The motions are now fully briefed.
On October 6, 2015, the Court held a telephonic status conference
concerning oral argument on this motion. During that call, the Court
indicated that it would not need to hear testimony related to plaintiffs’
request for a preliminary injunction because the relevant facts are not
in dispute, and plaintiffs waived their request for argument. Pursuant
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to E.D. Mich. Local R. 7.1(f)(2), the Court has determined that oral
argument is not necessary for these motions, and will determine them
on the briefs.
II.
Legal Standard
When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6),
the Court must “construe the complaint in the light most favorable to
the plaintiff and accept all allegations as true.” Keys v. Humana, Inc.,
684 F.3d 605, 608 (6th Cir.2012). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). A plausible claim need not contain “detailed
factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of
action[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
The Court must balance four factors when considering a motion
for a preliminary injunction: “(1) whether the movant has a strong
likelihood of success on the merits; (2) whether the movant would suffer
irreparable injury without the injunction; (3) whether issuance of the
injunction would cause substantial harm to others; and (4) whether the
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public interest would be served by issuance of the injunction.” City of
Pontiac Retired Employees Ass'n v. Schimmel, 751 F.3d 427, 430 (6th
Cir. 2014) (further citation omitted).
“When a party seeks a
preliminary injunction on the basis of a potential constitutional
violation, ‘the likelihood of success on the merits often will be the
determinative factor.’” Obama for Am. v. Husted, 697 F.3d 423, 436 (6th
Cir.2012) (quoting Jones v. Caruso, 569 F.3d 258, 265 (6th Cir.2009)).
III. Analysis
Because the first prong of the preliminary injunction standard
requires the Court to determine plaintiffs’ likelihood of success on the
merits, the Court will first address defendants’ motion to dismiss, as
dismissal would conclusively demonstrate that there is no likelihood of
success on the merits of a particular claim and render the rest of the
preliminary injunction analysis moot.
A. First Amendment – Right To Peaceably Assemble
and Petition the Government for a Redress of
Grievances
Plaintiffs have brought a three-count amended complaint against
defendants. It is evident from the tone of the complaint, as well as the
record in the case thus far, that plaintiffs are deeply troubled by what is
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permitted by Act 436, and distrustful that a financial emergency truly
exists.
The first claim is titled “Violation of First Amendment Rights to
Petition Government and Present Grievances.” (Dkt. 9 at 5.) It alleges
“[t]he total ejection and elimination of citizen assembly and right to
petition the County government under P.A. 436[.]” (Id. at 6.)
The First Amendment states that the government “shall make no
law . . . abridging the freedom . . . to petition the Government for a
redress of grievances.”
U.S. Const. Amend. I. An identical argument
was made in Phillips v. Snyder, Case No. 13-cv-11370, 2014 WL
6474344, at *18 (E.D. Mich. Nov. 19, 2014), which also presented a
challenge to Act 436. The court held the following:
States are free to make decisions regarding the political
control of localities as long as the state citizens are free to
“urge proposals” to the state. Holt Civic Club v. City of
Tuscaloosa, 439 U.S. 60, 73-74 (1978). This is because states
have final authority over local matters: “Municipal
corporations are political subdivisions of the state, created as
convenient agencies for exercising such of the governmental
powers of the state as may be instructed to them.” Hunter v.
City of Pittsburgh, 207 U.S. 161, 178 (1907). “[U]ltimate
control of every state-created entity resides with the State ...
[and] political subdivisions exist solely at the whim of their
state.” Hess v. Port Authority Trans–Hudson Corp., 513 U.S.
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30, 47 (1994) (citations omitted). The limitations on this
power exist at the borders of constitutional limits: for
example, the state may not intentionally discriminate among
localities in a manner that violates the Equal Protection
Clause. Additionally, the Petition Clause does not require
that the state actually respond to citizen petitions; it only
requires that the state allow its citizens to make the
government aware of its views. Confora v. Olds, 562 F.2d
363, 364 (6th Cir. 1977) (“[N]either in the First Amendment
nor elsewhere in the Constitution is there a provision
guaranteeing that all petitions for the redress of grievances
will meet with success.”).
Plaintiffs have not alleged that defendants prevented them
from petitioning the state government. Despite their claim
that the emergency manager is politically unaccountable,
plaintiffs have the power to petition their locally elected
officials to remove the emergency manager. Other options
are available as well: they can petition the state government
to alter state law, can promote and elect state representative
candidates who promise to repeal or amend PA 436, and can
bring a referendum petition to invalidate PA 436. Plaintiffs
have failed to state a valid claim that defendants violated
their constitutional right to petition their government.
Phillips, 2014 WL 6474344, at *18.
Plaintiffs have not alleged any specific manner in which Act 436
impairs their rights to assemble or to petition the government, and
have instead argued that the Act renders “County elections . . .
nugatory and meaningless.” (Dkt. 9 at 6.) Although this case involves a
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chief administrative officer with some emergency manager powers
rather than an actual emergency manager, the Phillips analysis still
holds true: plaintiffs have a variety of options available to them at the
municipal and state levels to petition the government and attempt to
alter or repeal Act 436, and to request that the County government
exercise its Act 436 powers in certain ways.
Further, to the extent Phillips can be read to deal only with the
right to petition the government, plaintiffs have also failed to state a
claim under the First Amendment’s Assembly Clause protecting “the
right of the people to peaceably assemble.”
U.S. Const. Amend. I.
Nothing in plaintiffs’ complaint suggests that defendants have violated
this right. Plaintiffs mention no attempt to assemble, nor do they allege
any act by defendants that could be construed as a violation of the right
to assemble.
Accordingly, plaintiffs’ claim for violation of the First Amendment
right to assemble and petition the government is dismissed.1
Plaintiffs also assert in the final paragraph of their First Amendment count that
the “clone-like reincarnation of 2011 P.A. 4 [in the guise of Act 436] violates Article
I, §10 of the U.S. Constitution, by again impairing contracts.” (Dkt. 9 at 6.)
However, other than this cursory assertion, plaintiffs allege no facts giving rise to a
Contracts Clause claim.
Further, the paragraph alleges that ‘[t]he State
Legislature,” which is not a party to this case, violated the Contracts Clause, rather
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B. Deprivation of a Property Interest without Due
Process or Just Compensation
Plaintiffs allege that defendants have violated the Due Process
Clause of the Fourteenth Amendment, which states that no state shall
“deprive any person of life, liberty, or property, without due process of
law[.]” U.S. Const. Amend. XIV §1.
“To establish a procedural due process claim pursuant to § 1983,
plaintiffs must establish three elements: (1) that they have a life,
liberty, or property interest protected by the Due Process Clause of the
Fourteenth Amendment to the United States Constitution, (2) that they
were deprived of this protected interest within the meaning of the Due
Process Clause, and (3) that the state did not afford them adequate
procedural rights prior to depriving them of their protected interest.”
Hahn v. Star Bank, 190 F.3d 708, 716 (6th Cir. 1999).
“Property interests, of course, are not created by the Constitution.
Rather, they are created and their dimensions are defined by existing
rules or understandings that stem from an independent source such as
state law—rules or understandings that secure certain benefits and
than defendants. Accordingly, to the extent this claim has been brought against the
County or its chief executive, it is dismissed.
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that support claims of entitlement to those benefits.” Board of Regents
of State Colleges v. Roth, 408 U.S. 564, 577 (1972). “A contract, such as
a collective bargaining agreement, may create a property interest.”
Leary v. Daeschner, 228 F.3d 729, 741 (6th Cir. 2000).
Plaintiffs have failed to plead that they had any particular
property interest of which defendants deprived them.
Instead, they
have alleged that they had a contract with defendants that contained
unspecified “property rights.” (Dkt. 9 at 7.) Plaintiffs further allege
that defendants “will deprive Plaintiffs and the memberships [sic] of all
property rights related to wages, hours, and terms and conditions of
employment, without any due process or independent appeal[.]” (Id.)
Plaintiffs’ allegations, while compelling as a factual matter, are
insufficient to state a claim as a matter of law. As the Sixth Circuit has
held, a collective bargaining agreement may create a property interest.
Leary, 228 F.3d at 741. However, those property interests are created
by “either explicit or implied contractual terms.” Ramsey v. Board of
Educ., 844 F.2d 1268, 1271 (6th Cir. 1988). Plaintiffs must set forth the
specific property rights they are referencing in this count.
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Plaintiffs, in their response to defendant’s motion to dismiss, also
appear to argue that their right to seek arbitration of labor disputes
under Act 312 was a property right that was denied to them when
MERC held that the Act 312 arbitration could not proceed following the
County’s invocation of Act 436 powers.
However, the arbitration
proceeding is itself the process plaintiffs argue is due, rather than the
property interest to be protected by due process. Plaintiffs are alleging
that they are being deprived of protected property interests without due
process; the process cannot itself be the property interest.
Accord
Rodgers v. 36th Dist. Court, 529 Fed. Appx. 642, 648 (6th Cir. 2013)
(holding that a “just cause” provision in a collective bargaining
agreement created a property right, and the denial of post-termination
arbitration proceedings promised under the agreement failed to afford
plaintiffs adequate procedural rights).
Plaintiffs have filed a motion seeking leave to amend this count to
state the property interests of which they allege defendants have
deprived them. Accordingly, this claim is dismissed without prejudice
as to this particular allegation: that Act 436’s abrogation of Act 312’s
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arbitration requirements constitutes the deprivation of a property
interest.
C. Federal Preemption Under the Bankruptcy Code
Plaintiffs argue that Wayne County is legally insolvent, pursuant
to the state of Michigan’s June 30, 2015 report deeming the County in a
state of financial emergency.
This, plaintiffs argue, qualified Wayne
County for federal bankruptcy protection under 11 U.S.C. § 109(c)(3).
(Dkt. 9 at 8.)
Because Wayne County was qualified for federal
bankruptcy protection, plaintiff argues, the federal Bankruptcy Code
preempts Act 436.
This is a misreading of section 109(c).
That section of the
Bankruptcy Code sets certain mandatory requirements that must be
met by municipalities in order to become debtors under Chapter 9 of the
Code. See 11 U.S.C. § 109(c)(1)-(5). The municipality must meet all five
conditions listed under § 109 to be qualified as a debtor under the
Bankruptcy Code.
Contrary
to
plaintiff’s
argument,
fulfilling
the
insolvency
requirement of § 109(c)(3) is necessary for a municipality to be declared
a debtor, but is not sufficient.
Plaintiff argues that the Consent
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Agreement’s bar on a municipality declaring bankruptcy is a violation
of the Bankruptcy Code in that it bars a debtor from seeking the
bankruptcy protections to which it is entitled.
However, section
109(c)(2) requires a municipality to be “specifically authorized, in its
capacity as a municipality or by name, to be a debtor under such
chapter by State law, or by a governmental officer or organization
empowered by State law to authorize such entity to be a debtor under
such chapter[.]” Accordingly, the state of Michigan is permitted to bar a
municipality from declaring bankruptcy, because such a grant or denial
of permission is expressly contemplated in the portion of the
Bankruptcy Code governing municipal bankruptcies.
Plaintiffs’ preemption claim is dismissed.
D. Preliminary Injunction
Because plaintiff’s complaint fails to state a claim as a matter of
law, the Court cannot grant a motion for a preliminary injunction as to
any of those claims.
Plaintiffs’ motion for a preliminary injunction is denied.
IV.
Conclusion
For the reasons set forth above, it is hereby ordered that:
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Defendant’s motion to dismiss (Dkt. 16) is GRANTED;
Plaintiffs’ First Amendment (Count I) and Bankruptcy Code
preemption (Count III) claims are DISMISSED WITH PREJUDICE and
plaintiffs’ Due Process claim (Count II) is DISMISSED WITH
PREJUDICE inasmuch as it claims that an arbitration process
guaranteed under Michigan law is a property right that plaintiffs have
been denied without due process; and
Plaintiffs’ motion for a preliminary injunction (Dkt. 2) is DENIED.
IT IS SO ORDERED.
Dated: October 16, 2015
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on October 16, 2015.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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