Missouri Corrections Officers Assocation, Inc. et al v. Missouri Department of Corrections et al

Filing 50

ORDER entered by Judge Nanette Laughrey. Defendants' Motion to Dismiss [Doc. # 14] is GRANTED.(Kanies, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
)
)
)
)
)
)
)
Plaintiffs,
)
)
v.
)
)
MISSOURI DEPARTMENT OF
)
CORRECTIONS, JEREMIAH NIXON,
CHRIS KOSTER, GEORGE LOMBARDI, )
)
and TOM CLEMENTS,
)
)
Defendants.
MISSOURI CORRECTIONS OFFICERS
ASSOCIATION, INC., and
CHARLES DAVIS II, ROBERT BRODY,
KIMBERLEY FERGUSON, and PAUL
THOMAS, as class representatives,

Case No. 10-4168-CV-NKL

ORDER
Before the Court is the Motion to Dismiss [Doc. # 14] filed by Defendants Missouri
Department of Corrections (“DOC”), Jeremiah Nixon, Chris Koster, George Lombardi, and
Tom Clements. For the following reasons, the Court grants the motion.
I.

Background
Plaintiffs Missouri Corrections Officers Association, Inc., and putative class

representatives, Charles Davis II, Robert Brody, Kimberley Ferguson, and Paul Thomas,
bring this suit under 42 U.S.C. § 1983. Purporting to seek only prospective injunctive relief,
Plaintiffs assert that Defendants Missouri DOC, Governor Nixon, Attorney General Koster,
DOC Director Lombardi, and Adult Institutions Director Clements are violating the U.S.

Constitution’s Contracts Clause and the Due Process Clause of its Fourteenth Amendment.
The following facts are taken from Plaintiffs’ Amended Complaint and are assumed true for
purposes of this motion to dismiss.
Missouri corrections officers frequently work in excess of their assigned daily shifts.
According to the DOC Compensatory Time Policy – found in the Department’s Manual –
when certain corrections officers have worked in excess of their assigned daily shifts, but
have not yet worked more than 40 hours in a particular work week, they earn “state
compensatory time.” [Doc. # 1, Ex. B at II.N.2.] Corrections officers have been able to use
state compensatory time to obtain either additional pay or additional leave. Until March
2009, the DOC’s Policy also provided:
Employees may use accrued balances of federal overtime, state compensatory
time, or holiday time as compensatory leave when both the employee and the
supervisor agree on such use. Consequently, the chief administrative
officer/designee may not require these employees to use federal overtime, state
compensatory time, or holiday time as compensatory leave.
Id. at III.H.2b.
In 2007, the Missouri DOC entered into a collective bargaining agreement (“CBA”)
with corrections officers that guarantees corrections officers the right to 14 days’ notice
before the DOC schedules a “mandatory compensatory time reduction” – a term which the
CBA itself does not define. [Doc. # 1, Ex. A at 11.] The CBA also provides:
ARTICLE 2: MANAGEMENT RIGHTS
Section 2.1
It is understood and agreed that the Employer possesses the sole right and
authority to operate and direct its employees and its various divisions,
2

agencies, and operations in all aspects including, but not necessarily limited
to, all rights and authority exercised by the Employer prior to the execution of
this Agreement, except as modified by the terms of this Agreement.
Section 2.2
These rights include, but are not limited to:
...
• The right to hire, assign, reassign, transfer, promote and to determine
hours of work and shifts and assign overtime;
• The right to suspend, demote and dismiss in accordance with applicable
statutes;
• The right to furlough and layoff employees.
...
Id. at 4.
In 2009, the Missouri General Assembly reduced appropriations for corrections
officers’ overtime pay from $10 million to $6.2 million. In 2010, the General Assembly
reduced appropriations for overtime pay even more, to $5.1 million.
As a result of the budget crunch, Defendants amended Part III.H.2.b of the DOC
Compensatory Time Policy as follows:
Employees may use accrued balances of federal overtime, state compensatory
time, or holiday time as compensatory leave when both the employee and the
supervisor agree on such use[;] however, III.H.2.a is also applicable to state
compensatory time usage.
The chief administrative officer/designee may not require these employees to
use federal overtime or holiday time as compensatory leave.
[Doc. # 1, Ex. F at III.H.2.b.] Thus, the DOC Policy now excludes state compensatory time
from the categories of time which the DOC may not require employees to use as
compensatory leave. Id. In other words, the DOC Policy now allows management to require
employees to use state compensatory time as compensatory leave rather than as additional
3

pay. Additionally, the Policy now provides that “III.H.2.a is also applicable to state
compensatory time usage.” Id. Part III.H.2.a of the Compensatory Time Policy allows
management to adjust employees’ work schedules during the work week. [Doc. # 1, Ex. F
at III.H.2.a.] Applied to state compensatory time “usage” – as opposed to “accrual” – the
Policy change would appear to allow DOC management to require employees to use their
state compensatory time as compensatory leave the same week in which it was earned.
Plaintiffs assert that such a practice violates the CBA’s provision granting corrections
officers the right to 14 days’ notice before the DOC schedules a “mandatory compensatory
time reduction.” In Count I of their Amended Complaint, Plaintiffs assert a claim under
Section 1983 for the violation of the Contracts Clause of the U.S. Constitution. According
to the Amended Complaint, by interfering with the rights and expectations of the employees
as to their salary and time off, the two Missouri appropriations statutes, “as implemented by
Defendants,” substantially impair Plaintiffs’ employment contract. [Doc. # 26, Ex. 1 at ¶ 72.]
Under Count II, Plaintiffs assert a violation of the Due Process Clause of the Fourteenth
Amendment under the theory that they had a constitutionally protected property interest in
state compensatory time and that the legislature’s objective in passing the appropriations
statutes was not rationally related to a legitimate state purpose. Id. at ¶¶ 82-83.
Defendants now move to dismiss this action with prejudice under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6). Defendants argue that (1) DOC policies and practices
have not impaired the CBA; (2) even if there is substantial impairment of the CBA, no
legislative action has itself impaired the contract, and thus Plaintiffs have confused a breach
4

of contract claim with a Contracts Clause claim; (3) Plaintiffs have also failed to state a claim
under the Due Process Clause; and (4) the Eleventh Amendment bars any recovery beyond
prospective injunctive relief – which would not include crediting Plaintiffs with
compensatory time convertible to additional pay.
II.

Discussion
A.

Whether Plaintiffs have Stated a Claim under the Contracts Clause

The Contracts Clause of the U.S. Constitution provides: “No State shall . . . pass any
. . . Law impairing the Obligation of Contracts . . . .” Art. I, § 10, cl. 1. In considering
Contracts Clause claims, courts look first to whether a state law has operated to substantially
impair a contractual relationship. Energy Reserves Group, Inc. v. Kansas Power & Light
Co., 459 U.S. 400, 411 (1983). To allege a Contracts Clause claim, Plaintiffs must plead:
(1) a contractual relationship; (2) a change in

law which impairs that contractual

relationship; and (3) the impairment is substantial. See General Motors Corp. v. Romein, 503
U.S. 181, 186 (1992). If these components are satisfied, courts then consider whether the
impairment is nevertheless justified as reasonable and necessary in serving an important
public interest. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 29 (1977).
Here, Plaintiffs have properly alleged a contractual relationship between themselves
and the Missouri DOC in the form of the CBA. The question before the Court is whether a
change in the law substantially impaired the CBA.
Citing a case decided in 1913, Plaintiffs argue that the Contracts Clause reaches
“every form in which the legislative power of a state is exerted, whether it be a constitution,
5

a constitutional amendment, an enactment of the legislature, a by-law or ordinance of a
municipal corporation, or a regulation or order of some other instrumentality of the state
exercising delegated legislative authority.” Ross v. Oregon, 227 U.S. 150, 162-63 (1913)
(citations omitted). Even under this broad definition of “legislative power,” the Policy found
in the Department Manual does not qualify as the exertion of Missouri’s legislative power.
The DOC Policy is not legally binding, in contrast to the other delegated forms of legislative
power enumerated in Ross. The only exertions of legislative power at issue in this case are
Missouri’s two appropriations statutes, which together operated to reduce funding for
corrections officers’ overtime pay from $10 million to $5.1 million.
Having identified the relevant change in the law, the remaining question is whether
those 2009 and 2010 statutes themselves substantially impaired the CBA. In answering this
question in the affirmative, Plaintiffs assert that “but for the appropriation bills, the collective
bargaining agreement would not have been impaired.” [Doc. # 36 at 8.] However, the Court
notes that Plaintiffs provide very little authority for their “but for” theory of Contracts Clause
causation. While Plaintiffs cite a handful of cases in which appropriations bills contained
specific provisions directly mandating contractual impairments, they cite only one case in
which a court applied a “but for” test to determine whether mere budget reduction legislation
“prompted” the impairment of a contract through subsequent discretionary action undertaken
within the executive branch. Arriaga v. Members of Bd. of Regents, 825 F. Supp. 1, 5 (D.
Mass. 1992).

6

In Arriaga, members of the Massachusetts Board of Regents of Higher Education
increased the tuition of non-resident students pursuant to a budget bill passed by the state’s
legislature, and students challenged the increase as a violation of the Contracts Clause. Id.
at 3. The district court denied Massachusetts’ motion to dismiss, reasoning that “the
legislation at issue not only motivated the Regents’ action, but was the event which gave
effect to the Regents’ vote to raise non-resident tuition.” Id. Arriaga, in turn, cited only
two Lochner-era cases supporting its expansive view of causation under the Contracts
Clause. Id. at 4-5 (citing Cross Lake Shooting & Fishing Club v. Louisiana, 224 U.S. 632
(1912); Carondelet Canal & Navigation Co. v. Louisiana, 233 U.S. 362 (1914)).
First, Arriaga noted that in Cross Lake Justice Van Devanter referred to a contractual
impairment that “results from” the exertion of legislative power. Id. at 4 (quoting Cross
Lake, 224 U.S. at 638). However, taken in context, Cross Lake clearly did not establish a
“but for” causation test under the Contracts Clause:
[The Contracts C]lause, as its terms disclose, is not directed against all
impairment of contract obligations, but only against such as results from a
subsequent exertion of the legislative power of the state. It does not reach
mere errors committed by a state court when passing upon the validity or effect
of a contract under the laws in existence when it was made. And so, while
such errors may oporate [sic] to impair the obligation of the contract, they do
not give rise to a Federal question. But when the state court, either expressly
or by necessary implication, gives effect to a subsequent law of the state
whereby the obligation of the contract is alleged to be impaired, a Federal
question is presented. . . . But if there be no such law, or if no effect be given
to it by the state court, we cannot take jurisdiction . . . .
Cross Lake, 224 U.S. at 638-39. In other words, a contractual impairment “results from” the
exertion of legislative power where the impairment is the direct legal result of the legislation
7

in question – as the statute itself is interpreted in state court – not whatever real-world
vicissitudes might follow a legislative enactment.
Second, Arriaga explained that in Carondelet, Justice McKenna “indicated that it was
‘the effect of the enactment’ which was controlling in determining whether the Contracts
Clause was implicated.” Arriaga, 825 F. Supp. at 5 (quoting Carondelet, 233 U.S. at 375).
Once again, taken in its full context, Carondelet clearly did not establish a “but for” test:
The question, then, is whether the act of 1906, appointing the board of control
and investing it with powers, was an act which impaired the obligation of the
contract; and in the solution of the question we must assume that the act of
1858 constituted a contract between the state and the canal company. . . . Nor
need bad motives be imputed to the legislature. It is not the motive which
caused the enactment of the law which is of account, but the effect of the
enactment, impairing the rights resting in the contract. And this, we think, was
the effect of the act of 1906. . . . [T]he board exercised the power given it; and
to remove the impediments to the exercise of the power, “all laws and parts of
laws in conflict with” the act of 1906, which conferred the power, were
repealed. The repeal of a law which constitutes a contract is an impairment of
its obligation.
233 U.S. at 376-78. Thus, closer inspection of Carondelet reveals that the Supreme Court
referred only to the legislation’s binding legal “effect,” as contrasted with the legislature’s
motives. Id. at 376. In Carondelet, the legislation (1) delegated to the board quasi-legislative
power, and (2) repealed all laws in conflict with it. Id at 377-78. Therefore, the legal effect
of the legislation itself was to impair a contractual obligation that Louisiana had assumed
through legislation: “The repeal of a law which constitutes a contract is an impairment of its
obligation.” Id.

8

The Supreme Court in Carondelet also articulated the purpose of the Contracts
Clause: “The prohibition is directed against the exertions of sovereignty which the citizens,
unless protected by the organic law, would be impotent to resist . . . .” Id. at 378. Indeed,
the Seventh Circuit has more recently explained:
Mere refusal to perform a contract by a state does not raise a constitutional
issue . . . . If the action of the state does not preclude a damage remedy the
contract has been breached and the non-breaching party can be made whole.
If this happens there has been no law impairing the obligation of the contract.
E & E Hauling, Inc. v. Forest Pres. Dist. of Du Page County, Ill., 613 F.2d 675, 678-79 (7th
Cir. 1980) (citing Hays v. Port of Seattle, 251 U.S. 233, 237 (1920)).
The Eighth Circuit has expressed a similar view as E & E Hauling. See Jackson
Sawmill Co. v. United States, 580 F.2d 302, 312 (8th Cir. 1978), cert. denied, 439 U.S. 1070
(1979). In Jackson Sawmill, the Eighth Circuit rejected a Contracts Clause claim because
no legislative action mandated the impairment of the plaintiffs’ contract rights. There,
holders of municipal bonds issued to finance a bridge brought suit against the City of East
St. Louis’s construction of a competing bridge because it would reduce the tolls collected by
the first bridge used to pay the principal and interest on their bonds. Id. at 304-05. In other
words, the plaintiffs in Jackson Sawmill argued that their contracts would not have been
impaired “but for” the subsequent exercise of delegated legislative power. In response, the
Eighth Circuit wrote:
In the United States Trust Co. case, the Supreme Court found an
unconstitutional impairment of contract by the states of New Jersey and New
York. The two states had passed similar statutes that repealed prior contractual
obligations undertaken by the states. In the present case, in contrast, no
9

attempt was made to use the law, federal or state, to repudiate a contractual
obligation. Assuming the obligation did exist, all defendants were open to a
suit for breach of contract. In short, appellants have confused impairment of
performance of a contract with impairment of the obligation of the contract.
The Constitution does not provide a federal action for simple breach of
contract.
Id. at 312.
Therefore, the Court finds not only that Arriaga – relied on so heavily by Plaintiffs
– is unpersuasive, but also that the Massachusetts case runs counter to Eighth Circuit
precedent. As in Jackson Sawmill, Plaintiffs have confused failure to perform a contract with
the legal impairment of a contractual obligation.
Finally, it should be noted that Plaintiffs have recently suggested that the Court might
prefer to follow TM Park Avenue Associates v. Pataki, 214 F.3d 344 (2d Cir. 2000), to find
that Plaintiffs’ federal claims are not yet ripe. [Doc. # 46 at 1.] This Second Circuit case
does not persuade the Court that it should deny Defendants’ Motion to Dismiss. In TM Park
Avenue Associates, it was the defendant rather than the plaintiffs who raised the ripeness
challenge. 214 F.3d at 347. If the Plaintiffs here brought their federal action before it
became ripe, that is hardly a reason to deny the Motion to Dismiss. In fact, TM Park Avenue
Associates quoted the Eighth Circuit’s Jackson Sawmill: “[A]n individual breach of contract
. . . does not reach constitutional dimensions and create a cause of action based on the
contracts clause.” Id. at 348 (quoting Jackson Sawmill, 580 F.2d at 311-12). The Second
Circuit also cited E & E Hauling: “Mere refusal to perform a contract by a state does not
raise a constitutional issue.” Id. (quoting E & E Hauling, 613 F.2d at 678). The Court agrees

10

that Plaintiffs here have failed to raise a constitutional issue with respect to the Contracts
Clause.
Here, Plaintiffs have alleged only that Missouri’s two appropriations statutes reduced
funding for corrections officers’ overtime pay from $10 million to $5.1 million. Plaintiffs
do not allege that the statutes themselves had the legal effect of impairing the CBA. Instead,
Plaintiffs assert that “but for the appropriation bills, the collective bargaining agreement
would not have been impaired.” [Doc. # 36 at 8.] Although the DOC’s alleged practices –
permitted by the 2009 Policy change – may violate the CBA, Missouri has not used its
legislative power to repudiate a contractual obligation, and legislation has not foreclosed a
simple breach of contract remedy.
For the reasons stated above, Plaintiffs have not alleged that a change in the law of
Missouri has substantially impaired the CBA. Therefore, Plaintiffs have failed to state a
claim for which relief may be granted under the Contracts Clause as enforced through
Section 1983.
B.

Whether Plaintiffs have Stated a Claim under the Due Process Clause

Plaintiffs’ Amended Complaint also asserts a violation of the Due Process Clause of
the Fourteenth Amendment under the theory that Plaintiffs had a constitutionally protected
property interest in state compensatory time and that the legislature’s objective in passing the
appropriations statutes was not rationally related to a legitimate state purpose.
The Court finds persuasive the Seventh Circuit’s reasoning in an analogous case,
Brown v. Brienen, which held that the Due Process Clause does not require more than a post11

deprivation state lawsuit for a breach of contract involving a denial of accrued compensatory
time. 722 F.2d 360, 367 (7th Cir. 1983). There, Justice Posner applied the balancing test of
Mathews v. Eldridge, 424 U.S. 319 (1976), after assuming arguendo that the alleged breach
of contract deprived the plaintiffs of a property interest under the Fourteenth Amendment.
Id. at 365. Under Mathews, courts consider three factors to decide whether there has been
a denial of procedural due process: (1) the importance of the interest of which the plaintiff
has been deprived; (2) the risk that the deprivation was erroneous because a particular
procedural safeguard was not provided, and (3) the burden to the state of providing that
procedure. 424 U.S. at 335. Judge Posner summarized his Mathews analysis as follows:
[T]he “property” of which the plaintiffs were deprived, if property it is in a
Fourteenth Amendment sense (which as we have said we doubt), is far down
on the scale of Fourteenth Amendment interests. In addition, the deprivation
was merely a postponement. Indeed, since the plaintiffs’ loss was of a kind
readily compensable in monetary terms, it may even be doubted whether any
deprivation in the constitutional sense has yet occurred, or will occur unless
and until the state courts turn down a meritorious contract claim. And the
additional procedural safeguard that the plaintiffs seek, a pre-deprivation
administrative hearing, would have been burdensome to the local officials who
would have had to conduct it but of little utility to the plaintiffs in inducing the
[defendant] to change his mind.
722 F.2d at 366.
Here, as well, Plaintiffs’ loss was of a kind readily compensable in monetary terms.
Even assuming that a deprivation under the Fourteenth Amendment has occurred in the
absence of a state court rejecting a meritorious contract claim – especially in a class action
suit such as this – the burden of providing a pre-deprivation administrative hearing
overwhelms the risk that the deprivation was erroneous because that procedural safeguard
12

was not provided. To resolve the claims of this entire class of corrections officers, a state
court breach of contract action is the proper procedure. See Ramsey v. Bd. of Educ. of
Whitley County, Ky., 844 F.2d 1268, 1274-75 (6th Cir. 1988) (teacher’s claim that she was
deprived of property without due process when school board reduced number of accumulated
sick leave days “can be and should be redressed by a state breach of contract action and not
by a federal action under section 1983”). As Judge Posner noted, it is doubtful that the
Fourteenth Amendment was intended to allow every person with a breach of contract claim
against a state to bring that claim in federal court. Brown, 722 F.2d at 364 (citing Green v.
Bd. of School Comm’rs, 716 F.2d 1191, 1192 (7th Cir. 1983)).
Finally, Plaintiffs argue that a state court breach of contract action may not be
available to them because of sovereign immunity. However, Defendants concede that it is
well settled in Missouri that “when the State enters into a validly authorized contract, it lays
aside whatever privilege of sovereign immunity it otherwise possesses and binds itself to
performance, just as any private citizen would do by so contracting.” V. S. DiCarlo Constr.
Co. v. State, 485 S.W.2d 52, 54 (Mo. 1972) (en banc). Defendants further concede that they
entered into a binding contract with the corrections officers, thereby “disclaim[ing] any right
to assert the sovereign immunity from damages defenses raised pro forma in their answer”
to the state court petition which Plaintiffs previously filed but voluntarily dismissed before
filing this federal action. [Doc. # 48 at 4.]

13

For the reasons stated above, Plaintiffs’ Due Process Clause theory must also fail.
Because Plaintiffs have failed to state a claim for which relief may be granted, it is
unnecessary for the Court to address Defendants’ Eleventh Amendment argument.
III.

Conclusion
Accordingly, it is hereby ORDERED that Defendants’ Motion to Dismiss [Doc. # 14]

is GRANTED.

s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: May 23, 2011
Jefferson City, Missouri

14