Leff et al v. Clark County School District

Filing 24

ORDER Granting in part and Denying in part 9 Motion to Dismiss as follows: Count I (Violation of the Contracts Clause) is dismissed.Count II (Due Process Clause) is not dismissed. Signed by Judge Richard F. Boulware, II on 9/26/2016. (Copies have been distributed pursuant to the NEF - DL)

1
2
3

UNITED STATES DISTRICT COURT

4

DISTRICT OF NEVADA

5

***

6
7
8
9
10
11
12
13

JILL LEFF, CLAUDIA KRAUSE,
KRISTA SHIELDS, CHRISTOPHER
STEWART, NEKISHA SIMPSON,
CARRIE CHAPPELL, CAROLYN DOYEL,
KODZO ATTILA, JOSEPH PORTILLA,
AMANDA LA FORTE, PATRICIA WEBB,
MARY RICE, BARBARA GAMMAGE,
FRANCIS SIMONE BOJAR, GLEN
ROWLEY, and CLARK COUNTY
EDUCATION ASSOCIATION, an
employee organization,

Case No. 2:15-cv-01155-RFB-GWF
ORDER

Defendants’ Motion to Dismiss Plaintiff’s
Complaint (ECF No. 9)

14
Plaintiffs,

15
16

v.

17
18
19

CLARK COUNTY SCHOOL DISTRICT, a
county school district,
Defendant.

20
21
22
23
24
25
26
27
28

I.

INTRODUCTION
Before the Court is a Motion to Dismiss filed by Defendant Clark County School District

(“District”) (ECF No. 9). The Court has reviewed the parties’ papers and heard oral argument. For
the reasons discussed below, Defendant’s motion is granted in part, and denied in part.

1

II.

BACKGROUND

2

On June 18, 2015, Plaintiffs filed this complaint, listing causes of action for violation of

3

the Contracts Clause of the United States Constitution, and denial of procedural due process under

4

the United States Constitution. ECF No. 1. The Court will briefly summarize Plaintiffs’

5

allegations:

6

Plaintiffs are fifteen former teachers, and their collective bargaining representative, the

7

Clark County Education Association. ECF No. 1 at 1. At the end of the 2011-12 and 2012-13

8

school years, each of Plaintiff Teachers received “unsatisfactory” ratings for their performance.

9

On or around April 25, 2014, the District sent Plaintiff Teachers notices of nonrenewal, stating

10

that their employment would cease at the end of the 2013-14 school year. Id. at 7.

11

Under the applicable statutory framework prior to 2011, completion of a probationary

12

period of employment, and being rehired for the school year following that period, would confer

13

postprobationary status. Id. at 6. Probationary teachers can be nonrenewed without cause, and

14

without a notice or hearing, at the end of each school year. Id. Postprobationary teachers could

15

only be suspended, dismissed, or not reemployed, for cause (including inefficiency, immorality,

16

unprofessional conduct, insubordination, neglect of duty, inadequate performance, evident

17

unfitness for service, or failure to show normal improvement and evidence of professional training

18

and growth). Id. (internal quotations omitted). Further, postprobationary teachers are entitled to

19

notice and a hearing before an impartial hearing officer if recommended for dismissal or

20

nonrenewal, while probationary teachers are entitled to no process if nonrenewed at the end of a

21

school year. Id. (citing NRS 391.31297).

22
23

In June of 2011, the Nevada Legislature enacted AB 225, which amended NRS Chapter
391 to create a new section (codified as section 391.3129), which provides in relevant part:

24

A postprobationary employee who receives an unsatisfactory evaluation pursuant to NRS

25

391.3125 or 391.3127, as applicable, or other equivalent evaluation designating his or her

26

overall performance as below average, for 2 consecutive school years shall be deemed to

27

be a probationary employee for the purposes of NRS 391.311 to 391.3197, inclusive, and

28

-2-

1

must serve an additional probationary period in accordance with the provisions of NRS

2

391.3197. Id. at 7.

3

The effect of the statute was that two negative reviews by a school administrator would cause a

4

postprobationary teacher to revert to the status of probationary teacher with no right to

5

reemployment at the end of the school year and no right to notice and a hearing before being

6

nonrenewed. Id.

7

Because of “unsatisfactory” reviews at the end of the 2011-12 and 2012-13 school years,

8

Plaintiff teachers automatically reverted from postprobationary to probationary status pursuant to

9

the above-described statutory framework. Id. On or around April 25, 2014, the District sent

10

Plaintiff Teachers notices of nonrenewal, stating that their employment would cease at the end of

11

the 2013-2014 school year. Id. Plaintiff teachers were not renewed following the end of the 2013-

12

14 schoolyear. Id. at 9. Plaintiff teachers did not receive any notice or any hearing regarding their

13

postprobationary status at the end of the 2012-13 school year or regarding their nonrenewal at the

14

end of the 2013-14 school year.

15
16

III.

LEGAL STANDARD

17

An initial pleading must contain “a short and plain statement of the claim showing that the

18

pleader is entitled to relief.” Fed. R. Civ. P. 8(a). The court may dismiss a complaint for failing to

19

state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In ruling on a motion to

20

dismiss, “[a]ll well-pleaded allegations of material fact in the complaint are accepted as true and

21

are construed in the light most favorable to the non-moving party.” Faulkner v. ADT Sec. Servs.,

22

Inc., 706 F.3d 1017, 1019 (9th Cir. 2013) (citations omitted).

23

To survive a motion to dismiss, a complaint need not contain “detailed factual allegations,”

24

but merely asserting “‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause

25

of action’” is not sufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic

26

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, a claim will not be dismissed if it

27

contains “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its

28

face,” meaning that the court can reasonably infer “that the defendant is liable for the misconduct

-3-

1

alleged.” Iqbal, 556 U.S. at 678 (citation and internal quotation marks omitted). In elaborating on

2

the pleading standard described in Twombly and Iqbal, the Ninth Circuit has held that for a

3

complaint to survive dismissal, the plaintiff must allege non-conclusory facts that, together with

4

reasonable inferences from those facts, are “plausibly suggestive of a claim entitling the plaintiff

5

to relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).

6
7
8
9

IV.

DISCUSSION
A. Plaintiffs’ Contracts Clause Claim
1. Legal Standard

10

The Supreme Court “has maintained that absent some clear indication that the legislature

11

intends to bind itself contractually, the presumption is that a law is not intended to create private

12

contractual or vested rights but merely declares a policy to be pursued until the legislature shall

13

ordain otherwise.” Nat’l R.R. Passenger Corp. v. Atchinson Topeka and Santa Fe Ry. Co., 470

14

U.S. 451, 465-66 (1985). “In determining whether a particular statute gives rise to a contractual

15

obligation, it is of first importance to examine the language of the statute. . . If it provides for the

16

execution of a written contract on behalf of the state, the case for an obligation binding upon the

17

state is clear . . . But absent an adequate expression of an actual intent of the State to bind itself,

18

this Court simply will not lightly construe that which is undoubtedly a scheme of public regulation

19

to be, in addition, a private contract to which the State is a party.” Id. at 467 (internal quotations

20

and citations omitted). In Nat’l R.R. Passenger Corp., the Supreme Court found “absolutely no

21

congressional intention” to have the United States enter into private contractual agreement with

22

railroads where the Act did not explicitly speak of a contract between the United States and the

23

railroads, and “did not in any respect provide for the execution of a written contract on behalf of

24

the United States.” Id. at 467 (emphasis in original). In Pittman v. Chicago Bd. of Educ., 64 F.3d

25

1098, 1104 (7th Cir. 1995), the Seventh Circuit found that the elimination of tenure for public

26

school principals did not violate an alleged contract with the state, reiterating the rationale for the

27

presumption against finding that legislation establishes contracts with the state: “To treat statutes

28

as contracts would enormously curtail the operation of democratic government.” Id.

-4-

1

In State v. Indiana Ex Rel. v. Brand, 303 U.S. 95 (1937), the Supreme Court found that an

2

Indiana law created contracts with the state, where the law spoke explicitly in terms of contracts

3

with the state school corporation. See Id. at 101-102 (“By this act it was provided that a teacher

4

who had served under contract for five or more successive years . . . shall become a permanent

5

teacher and the contract . . . shall be deemed to continue in effect for an indefinite period, shall be

6

known as an indefinite contract[.]”) The Court noted that as to the question of whether the law

7

created contracts, “the sufficient answer is found in the statute.” Id. at 107. The case further states

8

that “the Supreme Court [of Indiana] had uniformly held that the teacher’s right to continued

9

employment by virtue of the indefinite contract created pursuant to the act was contractual.” Id. at

10

105.
2. Discussion

11
12

Relying extensively on State v. Indiana Ex Rel. v. Brand, 303 U.S. 95 (1937), Plaintiffs

13

argue that legislation that reflects “a policy of contracting . . . for a term longer than the life of the

14

current session of the legislature” may establish an obligation under the Contracts Clause. They

15

argue that the allegations that teachers had worked under the prior regime for fifty years, and that

16

postprobationary status under that regime guaranteed for cause employment as well as notice and

17

hearing prior to termination, among other allegations, satisfy that requirement and state a plausible

18

claim for violation of their rights under the Contracts Clause.

19

Defendant responds by noting that Brand relied on statutory text and Indiana law

20

unambiguously establishing that the statute created indefinite contracts with the state. It further

21

contends that Plaintiffs’ citation to and quotes of the relevant statute fails to establish the requisite

22

clear intent for a statute to create contracts with the state that cannot be overridden by subsequent

23

legislation.

24

The Supreme Court has held that statutory text is of “first importance” in determining

25

whether or not a statute creates vested contracts protected by the Contracts Clause. Plaintiffs’

26

complaint nowhere references or quotes statutory text (nor has the Court found any statutory

27

language in Nevada law) that could be construed as “an adequate expression of actual intent” to

28

bind the state, sufficient to overcome the presumption against a finding of vested contracts. Nor

-5-

1

does the complaint invoke any Nevada caselaw that might support an interpretation of the text to

2

create vested contracts. Rather, the complaint relies on the laws description of changes in status

3

and the concomitant benefits or lack thereof. As such, Plaintiffs have not plausibly demonstrated

4

that the law created vested contracts protected by the Contracts Clause.

5

Therefore, the Court grants Defendant’s Motion as to Count One.

6

B. Plaintiffs’ Procedural Due Process Claim

7

1. Legal Standard

8

“The Fourteenth Amendment protects against the deprivation of property or liberty without

9

procedural due process. [One] only has a constitutionally protected property interest in continued

10

employment, however, if [one] has a reasonable expectation or a legitimate claim of entitlement

11

to it, rather than a mere unilateral expectation. A legitimate claim of entitlement arises if it is

12

created by existing rules or understandings that stem from an independent source such as state law.

13

Thus, state law defines what is and what is not property that is subject to the due process clause of

14

the Fourteenth Amendment.” Brady v. Gebbie, 859 F.2d 1543, 1547-48 (9th Cir. 1988) (internal

15

quotations and citations omitted). “A state law which limits the grounds upon which an employee

16

may be discharged, such as conditioning dismissal on a finding of cause, creates a reasonable

17

expectation of continued employment, and thus a protected property right. Where state employees

18

serve at the will of the appointing authority, however, there is no such reasonable expectation of

19

continued employment, and thus no property right.” Id. at 1548 (internal quotations and citations

20

omitted); see also Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39 (1985) (“A statute

21

granting entitlement to continued employment absent malfeasance or nonfeasance in office creates

22

such a vested property right in continued employment.”).

23

Once it has conferred a protected property interest in tenured employment, the legislature

24

“may not constitutionally authorize the deprivation of such an interest . . . without appropriate

25

procedural protections.” Loudermill, 470 U.S. at 541. At a minimum, Due Process requires “notice

26

and an opportunity to respond” prior to an individualized determination that eliminates the

27

property interest in employment that, under state law, can only be terminated for cause. See Id. at

28

546-47 (finding a violation of procedural due process where a public employee security guard, a

-6-

1

“classified civil servant” terminable only for cause, was terminated because of an alleged felony

2

conviction without an opportunity to respond).

3

The protected property right in the reasonable expectation of continued employment,

4

created by the legislature, may also be extinguished by it. See Brady, 859 F.3d at 1550 (Alleged

5

agreement could not establish property right where legislature had reclassified state employee,

6

eliminating for cause protections). “The Nevada Supreme Court has held that Nevada's legislature

7

may modify or abolish any state office. When a state alters a state-conferred property right through

8

the legislative process, the legislative determination provides all the process that is due[.] Thus,

9

the legislative process is sufficient to comport with minimal federal due process requirements.”

10

Rea v. Matteucci, 121 F.3d 483, 485 (9th Cir. 2012) (internal quotations and citations omitted).

11

Thus when the legislature reclassifies an employee who can only be terminated for particular

12

reasons, as an employee who can be terminated for any reason, it eliminates the state-conferred

13

procedural due process property right, and the employee may be terminated for any reason. See

14

Id. (Nevada legislature extinguished property right when it eliminated requirement that hearing

15

officers could be terminated only for just cause). However, “a federal interest remains in protecting

16

the individual citizen from state action that is wholly arbitrary or irrational.” Id.

17

Where, however, the legislature enacts a scheme in which the state-conferred property right

18

may be eliminated only by particularized determinations, constitutional due process requires, at a

19

minimum, notice and an opportunity to respond. See Loudermill, 470 U.S. at 546-47 (state-

20

conferred property right in tenured employment terminable only for cause could not be denied

21

without notice and opportunity to be heard). In Greeene v. Babbitt, 64 F.3d 1266 (9th Cir. 1995),

22

the Ninth Circuit applied this standard to a pre-existing property right modified by statute.

23

Individual members of the Plaintiff Tribe had been receiving health and other benefits that

24

constituted vested property rights for purposes of due process analysis. Id. at 1274. The Court

25

found that when new law made continued receipt of the benefits contingent upon official

26

recognition of the tribe by the federal government, the individuals had a right to procedural due

27

process with regard to the determination of whether or not the federal government officially

28

-7-

1

recognized the Tribe, and that that right could be asserted by the Tribe on behalf of its members.

2

Id. at 1273-74.

3
4
5

2. Discussion
Plaintiffs have sufficiently pled an applied due process challenge to their loss of
postprobationary status.

6

Defendant’s Motion to Dismiss argues that this is a case in which the legislature

7

extinguished the property right to the expectation of future employment, as unambiguously

8

permitted by the Supreme Court and the Ninth Circuit. See, e.g. Rea, 121 F.3d at 485. Plaintiffs

9

respond that the legislature did not directly eliminate the property right, but delegated that function

10

to school officials required to do so based on individualized determinations (of whether or not

11

performance was “unsatisfactory”) as occurred in, among other cases, Loudermill, 470 U.S. 532

12

(1985). Defendant’s reply asserts that this argument cannot apply to the nonrenewal of teachers,

13

as at the point of nonrenewal, plaintiffs had already lost their property right to for cause

14

employment pursuant to the statutory scheme.

15

Defendant further argues that as applied to the loss of postprobationary status, this was a

16

case of “across-the-board” eligibility changes by which a legislature may extinguish property

17

rights without any constitutionally required process other than that of the legislative process itself,

18

as opposed to individual eligibility determinations requiring minimal procedures under the Due

19

Process Clause. It argues that the unsatisfactory reviews are not individualized determinations, but

20

rather a “simple calculation” that triggers the loss of the postproabtionary status. To support this

21

argument, Defendant cites Atkins v. Block, 472 U.S. 115 (1985), in which the Supreme Court

22

declined to find process requirements where changes in the income calculation used to determine

23

food stamps eligibility constituted a “legislatively mandated change in the scope of the entire

24

program,” as opposed to “individual eligibility determinations.” Id. at 128-29.

25

Plaintiffs have argued that their termination based upon individualized determinations, i.e.

26

their unsatisfactory evaluations, violates due process. The Plaintiffs have also alleged that they

27

lost their postprobationary status without notice or hearing. While the Plaintiffs have focused on

28

termination in their discussion, the Court finds that the focal inquiry for constitutional analysis is

-8-

1

the loss of the posprobationary status and not the terminations themselves. For it is the loss of the

2

status which creates the possibility for termination without cause. To the extent that Plaintiffs

3

have a property right, it is not a right to employment without termination, rather it is the right to

4

employment with termination only for cause.

5

The Court finds that the Plaintiffs have sufficiently pled a property interest in their

6

postprobationary status. The Ninth Circuit has characterized the property right at issue in these

7

cases as “a reasonable expectation of continued employment.” Brady v. Gebbie, 859 F.2d 1543,

8

1548 (9th Cir. 1988). That employment terminable only for cause creates a vested property right

9

for the purposes of procedural due process is well established. See e.g. Loudermill, 470 U.S. at

10

538-39. In Count 2, Plaintiffs allege that “Plaintiff Teachers did not receive any notice or any pre-

11

deprivation or post-deprivation hearing regarding their postprobationary status at the end of 2012-

12

13 school year or regarding their nonrenewal at the end of the 2013-14 school year.” ECF No. 1

13

at 9. This loss of status is, in effect, an allegation of a deprivation of the state-conferred property

14

right in tenured employment, based on individualized determinations as to whether performance

15

is “unsatisfactory” or not. The Defendant’s attempt to separate the postprobationary status from

16

the postprobationary employment is unpersuasive. The property right interest in the tenure status

17

is indistinguishable from the property right interest in the tenured employment itself. That is

18

because the effect of losing the status is the loss of the right to tenured employment regardless of

19

whether or not a person is terminated. Thus, the Plaintiffs have alleged a loss of a property right

20

by means of individualized determinations.

21

Defendant contends that these are not individualized determinations at all, but rather a

22

“simple calculation” that triggers the loss of the postprobationary status, the kind of “across-the-

23

board” change that does not trigger procedural due process protections. The Court rejects this

24

argument.

25

employee’s “performance” as the mechanism resulting in a loss of the status. N.R.S. 391.3129.

26

It is difficult to imagine a more clearly individualized determination or triggering mechanism than

27

an employee’s performance evaluation. It is not logical to conclude that this language applies to

28

an “across-the-board” evaluation of all District teachers.

The plain language of the statute references an “evaluation” of an individual

-9-

Plaintiffs have plausible alleged that

1

these are the kinds of individual determinations that require minimal due process when protected

2

property rights are at issue. While it is true that two unsatisfactory reviews automatically triggers

3

the change in status pursuant to the statute, it is ultimately the individualized determination of the

4

quality of performance that leads to the status change / loss of the protected right in tenured

5

employment.

6

Indeed, this case is not meaningfully distinguishable from Loudermill. Here the

7

individualized determination of whether or not performance was “unsatisfactory” eliminates

8

employment protections, making teachers terminable at a later time—the end of that school year—

9

while in Loudermill the individualized determination led to immediate termination. Id. Thus the

10

Legislature in this case is not simply altering or eliminating the property right, as it has a right to

11

do, but is designating the determination of the loss of the right to the District based upon an

12

individualized determination.

13

The Plaintiffs have alleged that the loss of this property right, their postprobationary status,

14

occurred without any notice or process. Therefore, having pled that they lost their protected

15

property interest in tenured employment based on individualized determinations made without

16

notice or a hearing, Plaintiffs have stated a claim for an as-applied violation of procedural due

17

process.

18
19
20
21

V.

CONCLUSION
IT IS THEREFORE ORDERED that Defendant’s [ECF No. 9] Motion to Dismiss

is GRANTED IN PART and DENIED IN PART, as follows:

22

Count I (Violation of the Contracts Clause) is dismissed.

23

Count II (Due Process Clause) is not dismissed.

24

DATED this 26th day of September, 2016.

25
___________________________________
RICHARD F. BOULWARE, II
UNITED STATES DISTRICT JUDGE

26
27
28

- 10 -