Charles Kaminski v. Brad Coulter , 865 F.3d 339 ( 2017 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 17a0162p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
CHARLES N. KAMINSKI; LINCOLN PARK POLICE AND ┐
FIRE RETIREES ASSOCIATION, INC.; MICHAEL J. │
MOULIOS; LINCOLN PARK MUNICIPAL EMPLOYEES │
RETIREES ASSOCIATION, INC., │
Plaintiffs-Appellees, │
> No. 16-1768
│
v. │
│
BRAD L. COULTER, et al., │
Defendants, │
│
R. KEVIN CLINTON; NICK KHOURI, │
Defendants-Appellants. │
┘
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:15-cv-12810—Gershwin A. Drain, District Judge.
Argued: March 8, 2017
Decided and Filed: July 25, 2017
Before: BOGGS, SILER, and MOORE, Circuit Judges.
_________________
COUNSEL
ARGUED: Joshua O. Booth, OFFICE OF THE MICHIGAN ATTORNEY GENERAL,
Lansing, Michigan, for Appellants. Mark A Porter, MARK A. PORTER & ASSOCIATES
P.L.L.C., Madison Heights, Michigan, for Appellees. ON BRIEF: Joshua O. Booth, Christina
M. Grossi, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for
Appellants. Mark A Porter, Jamil Akhtar, MARK A. PORTER & ASSOCIATES P.L.L.C.,
Madison Heights, Michigan, for Appellees.
BOGGS, J., delivered the opinion of the court in which SILER, J., joined. MOORE, J.
(pp. 14–17), delivered a separate dissenting opinion.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 2
_________________
OPINION
_________________
BOGGS, Circuit Judge. This is a complicated case about the scope of governmental
immunity. The plaintiffs-appellees are retirees of the City of Lincoln Park. In 2014, the city’s
dire financial condition led Michigan officials to place the city under the purview of an
Emergency Manager pursuant to the authority granted by P.A. 436.1 The Emergency Manager,
with the approval of Michigan’s then-Treasurer Kevin Clinton, issued ten orders that temporarily
replaced Lincoln Park retiree health-care benefits with monthly stipends that retirees could use to
purchase individual health-care coverage. Dissatisfied, some of the retirees brought suit in
federal court under 42 U.S.C. § 1983, asserting that, inter alia, the orders violated their
constitutional rights secured by the Contracts Clause, the Due Process Clause, and the Takings
Clause. In their complaint, the plaintiffs-appellees named a host of city and state officials and
government entities as defendants, including Michigan Treasurer Kevin Clinton, who was sued
in both his individual and official capacities. As the litigation progressed, Nick Khouri became
Treasurer of the State of Michigan and was subsequently substituted in Clinton’s place in his
official capacity.2 Both Clinton and Khouri filed motions to dismiss, arguing that qualified
immunity and Eleventh Amendment immunity rendered them immune from suit. The district
court disagreed, holding that neither immunity theory applied to their actions and that the suit
could proceed. For the following reasons, we reverse.
I
A
In August 2013, the City of Lincoln Park faced financial distress. Due to a combination
of poor planning and an economic recession, the city found itself unable to meet many of its
outstanding financial obligations. In response to this crisis, the Lincoln Park City Council voted
1
Local Financial Stability and Choice Act, Mich. Comp. Laws § 141.1541 et seq.
2
Clinton remained a party to the dispute in his individual capacity.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 3
to request that the State of Michigan perform a review of the city’s financial condition pursuant
to § 4(1)(a) of P.A. 436. The State commissioned Gabriel Roeder to perform the evaluation, and
he found, among other deficiencies, that the city’s retirement systems were insufficiently funded
and that immediate steps needed to be taken in order to ensure that the city’s assets were not
depleted.
In February 2014, Michigan Governor Rick Snyder appointed a financial-review team to
examine the city’s financial condition in greater detail. After reviewing the Roeder evaluation
and meeting with various Lincoln Park officials and representatives, the financial-review team
concluded that a local-government emergency existed in Lincoln Park and that the appointment
of an Emergency Manager was necessary for the city to avoid municipal bankruptcy.
Pursuant to the review team’s recommendation, Governor Snyder appointed Brad Coulter
as Emergency Manager for the City of Lincoln Park on July 3, 2014. In his first report to the
Michigan Treasurer, Coulter noted substantial problems with the funding for the city’s retirement
system. Of particular concern were both the city’s general pension fund, which was financed at
22% of its current and future obligations, and the city’s pension fund for police and fire
department retirees, which was financed at 31% of its current and future obligations. Despite the
fact that the city spent 40% of its budget contributing to these pension plans, both plans were
projected to be fully depleted within ten to fifteen years. In order to cure this funding deficiency,
Coulter proposed temporarily modifying the city’s collective-bargaining agreements. Under his
proposal, retiree health-care benefits would be replaced with a monthly stipend that could be
used to purchase individual health-care coverage. Coulter estimated that his proposal would save
the city $3.2 million per year, which could then be used to re-fund the pension system. Coulter
submitted his proposal to the city’s retirees, but they rejected his plan.
Coulter then submitted his proposal to Michigan State Treasurer (“Treasurer”) Clinton.
Under Michigan law, an Emergency Manager can modify an existing collective-bargaining
agreement with the approval of the Treasurer if good-faith negotiations between the city and the
represented parties fail and if the Treasurer finds that certain statutorily enumerated conditions
are met. See Mich. Comp. Laws § 141.1552(1)(k). Specifically, the Treasurer must find that (1)
a financial emergency in the local government “has created a circumstance in which it is
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 4
reasonable and necessary for the state to intercede to serve a legitimate and public purpose”;
(2) the modification of the agreement is reasonable and necessary to deal with a generalized
economic problem; (3) the modification is “directly related to and designed to address the
financial emergency for the benefit of the public as a whole”; and (4) the modification is
temporary and does not target specific classes of employees. Id. § 141.1552(1)(k)(i)–(iv). In a
letter dated April 10, 2015, Treasurer Clinton found that these statutory conditions had been met
and that Coulter could proceed with his proposal.
On April 22, 2015, Coulter issued ten orders consistent with the proposal that he sent to
Treasurer Clinton. The orders terminated “the sections of all Collective Bargaining Agreements
. . . regarding retiree health care and Medicare Part B reimbursement” for Lincoln Park retirees
and replaced the eliminated benefits with a monthly stipend that ranged from $150 to $425 per
month. In addition, because the orders eliminated Medicare Part B reimbursement, retirees over
65 years of age were required to begin paying individually into a Medicare Part B program.
B
Soon after these orders became effective, many of the affected retirees filed suit in
federal court under 42 U.S.C. § 1983. The complaint named several defendants, including
Emergency Manager Coulter, Treasurer Clinton, and various other retirement boards and entities.
Of relevance to this appeal, Treasurer Clinton was sued in both his official and individual
capacities for his role in the modification of the plaintiffs’ health-care benefits. The complaint
alleged numerous violations of the plaintiffs’ constitutional rights, including violations of the
Contracts Clause, the First Amendment, the Takings Clause, and the Due Process Clause. For
relief, the complaint requested class certification for all of the affected plaintiffs, a declaratory
judgment that Coulter’s orders were unconstitutional, an injunction requiring the defendants to
reinstate the health-care benefits outlined in the collective-bargaining agreements, attorney’s
fees, and to be otherwise “made whole.”
After the complaint was filed, Treasurer Clinton was succeeded in office by Treasurer
Nick Khouri. Pursuant to the Federal Rules of Civil Procedure, Khouri was automatically
substituted in Clinton’s place insofar as the complaint named Treasurer Clinton in his official
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 5
capacity. See Fed. R. Civ. P. 25(d). Although this extinguished the claims against Clinton in his
official capacity, he still remained a party to the suit in his individual capacity.
Both Clinton and Khouri filed motions to dismiss the claims against them, pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure. They each argued that the plaintiffs’
claims were substantively meritless, but they also raised various immunity defenses. Clinton
argued that he was entitled to qualified immunity because, even if the modification of Lincoln
Park’s collective bargaining agreements amounted to a violation of the plaintiffs’ constitutional
rights, those rights were not “clearly established” at the time that the violation occurred. Khouri
argued that, because the suit named him in his official capacity, he was entitled to Eleventh
Amendment immunity.
The district court ruled on the defendants’ motion to dismiss on May 5, 2016. It granted
the motion with respect to the plaintiffs’ First Amendment and Substantive Due Process claims,
reasoning that they were meritless. With respect to the plaintiffs’ remaining claims, however,
the district court concluded that the plaintiffs had stated a viable claim for relief and that the
defendants were not entitled to immunity. With respect to Clinton’s qualified-immunity defense,
the district court held that the plaintiffs’ constitutional rights “were clearly established” and that
thus qualified immunity was unavailable. With respect to Khouri’s Eleventh Amendment-
immunity defense, the district court concluded that, because the plaintiffs sought only
prospective injunctive relief, Eleventh Amendment immunity was also unavailable as to the
plaintiffs’ remaining claims.
Citing the “collateral order” doctrine, both Clinton and Khouri appeal the district court’s
denial of their immunity defenses. Litigation against the remaining defendants, including
Emergency Manager Coulter, currently continues in the district court below.
II
We have jurisdiction over only “final decisions of the district courts.” 28 U.S.C. § 1291.
Although the denial of a Rule 12(b)(6) motion to dismiss is not a final order, there are a few
exceptions that permit courts of appeals to review non-final orders on an interlocutory basis.
One exception is the collateral-order doctrine, which permits parties to appeal a non-final order
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 6
“if it (1) conclusively determines the disputed question; (2) resolves an important issue separate
from the merits of the action; and (3) is effectively unreviewable on appeal from a final
judgment.” Mohawk Indus., Inc v. Carpenter, 558 U.S. 100, 105 (2009) (citation omitted). The
Supreme Court has frequently applied the collateral-order doctrine in the context of immunity
defenses, reasoning that a core attribute of the immunity defense is immunity from suit
altogether. P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147 (1993)
(Eleventh Amendment immunity); Mitchell v. Forsyth, 472 U.S. 511, 525 (1985) (qualified
immunity). We therefore have jurisdiction to hear this interlocutory appeal.
The defendants-appellants’ immunity questions are presented in the context of a Rule
12(b)(6) motion to dismiss. We review a district court’s ruling on a Rule 12(b)(6) motion de
novo. Stew Farm, Ltd. v. Nat. Res. Conservation Serv., 767 F.3d 554, 558 (6th Cir. 2014).
When analyzing a Rule 12(b)(6) motion, “[t]he complaint is viewed in the light most favorable to
[the plaintiffs]; the allegations in the complaint are accepted as true, and all reasonable
inferences are drawn in [the plaintiffs’] favor.” Gavitt v. Born, 835 F.3d 623, 639–40 (6th Cir.
2016). However, “a legal conclusion couched as a factual allegation” need not be accepted as
true. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
When questions of immunity are presented in this context, the court’s task can be
difficult. The Supreme Court has repeatedly “stressed the importance of resolving immunity
questions at the earliest possible stage in litigation.” Pearson v. Callahan, 555 U.S. 223, 232
(2009) (quoting Hunter v. Bryant, 502 U.S. 224, 227 (1991) (per curiam)). However, “[w]hen
qualified immunity is asserted at the pleading stage, the precise factual basis for the plaintiff’s
claim or claims may be hard to identify.” Id. at 238–39 (citation omitted). Thus, we have held
that it is “generally inappropriate for a district court to grant a 12(b)(6) motion to dismiss on the
basis of qualified immunity,” preferring instead that courts resolve the issue at summary
judgment. Wesley v. Campbell, 779 F.3d 421, 433 (6th Cir. 2015). Nonetheless, certain
immunity questions can still be resolved at the pleading stage with a sufficiently developed
record. We have previously held that “a court may consider exhibits attached to the complaint,
public records, [and] items appearing in the record of the case, . . . so long as they are referred to
in the complaint and are central to the claims contained therein, without converting the motion to
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 7
one for summary judgment.” Gavitt, 835 F.3d at 640 (citing Kreipke v. Wayne State Univ.,
807 F.3d 768, 774 (6th Cir. 2015)).
III
The complaint first alleges that the modification of the city’s collective-bargaining
agreements constitutes a violation of the Contracts Clause, which provides that “[n]o State shall .
. . pass any . . . Law impairing the Obligation of Contracts.” U.S. Const. art. I § 10. The
Supreme Court has adopted a three-part test to interpret this “facially absolute” command.
Energy Reserves Grp., Inc. v. Kan. Power and Light Co., 459 U.S. 400, 410 (1983). First, we
must ask “whether the state law has, in fact, operated as a substantial impairment of a contractual
relationship.” Id. at 411 (citation omitted). If it does, then we must ask if “the State . . . [has] a
significant and legitimate public purpose behind the regulation.” Ibid. (citation omitted). If one
can be identified, the final inquiry is whether the adjustment of “the rights and responsibilities of
contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the
public purposes justifying” the state action. Id. at 412 (alteration in original) (citation omitted).
A
Before we reach the merits of the Contracts Clause claim, however, we must first
determine whether 42 U.S.C. § 1983 supports a cause of action based upon an alleged Contracts
Clause violation. Section 1983 permits a private cause of action to be brought against a “person
who, under color of any statute, ordinance, regulation, custom, or usage, of any State . . .
subjects, or causes to be subjected, any citizen of the United States . . . to the deprivation of any
rights, privileges, or immunities secured by the Constitution and laws.” 42 U.S.C. § 1983
(emphasis added). Although not briefed by either of the parties, there is considerable debate
over whether the Contracts Clause amounts to a “right, privilege, or immunity” secured by the
Constitution that is enforceable by § 1983.
A brief history on § 1983 illuminates this issue. The precursor to 42 U.S.C. § 1983 was
originally passed as § 1 of the Civil Rights Act of 1871. Ch. 22, 17 Stat. 13 (1871). Sometimes
referred to as the Ku Klux Klan Act or the Second Enforcement Act of 1871, “[i]t was one of the
means whereby Congress exercised the power vested in it by [§] 5 of the Fourteenth Amendment
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 8
to enforce the provisions of that Amendment.” Monroe v. Pape, 365 U.S. 167, 170 (1961).
Unlike the Civil Rights Act of 1866, which relied on criminal-enforcement mechanisms to
protect the rights secured by the Fourteenth Amendment, the Civil Rights Act of 1871 took the
additional step of providing a private cause of action.
In 1874, Congress sought to revise and consolidate federal law, which had become a
disjointed mess of uncoordinated and often overlapping provisions. The revision of 1874
produced the Revised Statutes of the United States, which represented the first official
codification of the Acts of Congress. The revisers made several small adjustments to the
language of the Civil Rights Act of 1871, including expanding the scope of the private cause of
action created by § 1 to include deprivations of rights “secured by the Constitution and laws.”
Cass R. Sunstein, Section 1983 and the Private Enforcement of Federal Law, 49 U. Chi. L. Rev.
394, 402 (1982) (emphasis added). The resulting statute, codified as Revised Statute 1979, “was
thus substantially identical to current [S]ection 1983.”3 Ibid.
Despite its promising scope, the statute languished in relative obscurity until 1961, when
the Supreme Court decided Monroe v. Pape. In Monroe, the Court examined the long history of
the act, concluding that “[i]t is abundantly clear that one reason the legislation was passed was to
afford a federal right in federal courts . . . [to enforce] the claims of citizens to the enjoyment of
rights, privileges, and immunities guaranteed by the Fourteenth Amendment [that] might be
denied by state agencies.” 365 U.S. at 180. Monroe opened the gates for § 1983 litigants,
transforming the little-used statute into a powerful tool for checking abuses by state officials. In
the years after Monroe, the Supreme Court permitted litigants to bring § 1983 claims over a
variety of alleged violations of the constitution and federal law. See Wilson v. Garcia, 471 U.S.
261, 273 (1985) (noting that by 1985, a “catalog of other constitutional claims” had been brought
under § 1983, including “discrimination in public employment on the basis of race or the
exercise of First Amendment rights, discharge or demotion without procedural due process,
mistreatment of schoolchildren, deliberate indifference to the medical needs of prison inmates,
[and] the seizure of chattels without advance notice or sufficient opportunity to be heard—to
identify only a few”).
3
Revised Statute 1979 was later re-codified as 42 U.S.C. § 1983.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 9
Despite the expansion of the § 1983 remedy post-Monroe, the Supreme Court has never
definitively held that an alleged Contracts Clause violation is cognizable as a § 1983 claim. On
the contrary, the only on-point Supreme Court decision suggests that the Contracts Clause does
not protect an individual constitutional right enforceable under § 1983, but is rather a structural
limitation placed upon the power of the States. In Carter v. Greenhow, the Supreme Court dealt
with an alleged Contracts Clause violation brought under § 1983’s predecessor statute, Revised
Statute 1979. 114 U.S. 317 (1885). The central question in that case was whether a violation of
the Contracts Clause subjected the plaintiff “to the deprivation of a right, privilege, or immunity
secured by the [C]onstitution” such that it gave rise to a private right of action under Revised
Statute 1979. Id. at 321. The Court noted that the Contracts Clause, “so far as it can be said to
confer upon or secure to any person any individual rights, does so only indirectly and
incidentally.” Id. at 322 (emphasis added). The remedy is not a private cause of action against
the state official responsible for the contractual impairment, but rather “a right to have a judicial
determination declaring the nullity of the attempt to impair its obligation” in a suit “to vindicate
his rights under a contract.” Ibid. Thus, an alleged Contracts Clause violation “does not show a
cause of action” within the terms of Revised Statute 1979.
If we apply Carter’s logic to the “substantially identical” language contained in § 1983, it
would seem to bar a potential plaintiff from raising a cognizable § 1983 claim based upon a
Contracts Clause violation. It is unclear, however, if Carter retains much precedential force. In
Dennis v. Higgins, 498 U.S. 439 (1991), for example, the Supreme Court held that § 1983 could
provide a cause of action for an alleged Commerce Clause violation. In a footnote in that
opinion, Justice White distinguished the Court’s holding in Carter, noting that it had only “held
as a matter of pleading that the particular cause of action set up in the plaintiff’s pleading was in
contract and was not to redress deprivation of . . . [the Contracts Clause], to which he had
‘chosen not to resort.’” Id. at 451 n.9 (citation omitted).
The uncertainty on this point has led to the development of an unresolved circuit split.
Pointing to the language in Dennis, the Ninth Circuit held that a violation of the Contracts Clause
can give rise to a cause of action under § 1983. See S. Cal. Gas Co. v. City of Santa Ana,
336 F.3d 885 (9th Cir. 2003) (per curiam). In a more recent opinion, the Fourth Circuit rejected
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 10
that approach and held that alleged Contracts Clause violations still could not give rise to a
viable § 1983 claim. Crosby v. City of Gastonia, 635 F.3d 634, 641 (4th Cir. 2011). The Fourth
Circuit opinion explicitly addressed Justice White’s footnote in Dennis, arguing that it “was
intended to address the usefulness of that case in providing a framework for the analysis of
§ 1983 claims invoking parts of the Constitution other than the Contracts Clause, or alleging the
deprivation of rights secured by other federal laws.” Id. at 640–41 (emphasis added). Insofar as
Carter stood “for the proposition that an attempted § 1983 action alleging state impairment of a
private contract will not lie,” the Fourth Circuit still found it to be good law.
This is an issue of first impression for the Sixth Circuit.4 We join the Fourth Circuit and
hold that an alleged Contracts Clause violation cannot give rise to a cause of action under
§ 1983. Not only does this view better reconcile the Supreme Court’s holdings in Carter and
Dennis with the text and history of § 1983, but it also better comports with the time-honored
principle that “it is [the Supreme Court’s] prerogative alone to overrule one of its precedents.”
State Oil Co. v. Khan, 522 U.S. 3 (1997). As Carter has never been overruled, it should serve to
bar the plaintiffs’ cause of action in this case. Because we hold that an alleged Contracts Clause
violation cannot give rise to a § 1983 claim, we need not address the defendants’ claimed
immunity defenses on this point.
IV
The plaintiffs-appellees next bring a procedural-due-process claim, alleging that they
were denied their right to a pre- or post-deprivation hearing. Unlike a Contracts Clause claim, a
due-process claim is cognizable under § 1983. See, e.g., Zinermon v. Burch, 494 U.S. 113
(1990).
“Procedural due process imposes constraints on governmental decisions which deprive
individuals of ‘liberty’ or ‘property’ interests within the meaning of the Due Process Clause of
the Fifth or Fourteenth Amendment.” Mathews v. Eldridge, 424 U.S. 319, 332 (1976). In a
4
A Sixth Circuit panel has, in at least one instance, implicitly permitted a § 1983 suit to proceed
on the basis of an alleged Contracts Clause violation. See Welch v. Brown, 551 F. App’x 804 (6th Cir.
2014). However, that case is a nonbinding unpublished opinion and was chiefly concerned with whether
the district court properly issued a preliminary injunction.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 11
procedural-due-process claim, “the deprivation of property by state action is not itself
unconstitutional; ‘what is unconstitutional is the deprivation of such an interest without due
process of law.’” Christophel v. Kukulinsky, 61 F.3d 479, 485 (6th Cir. 1995) (quoting
Zinermon, 494 U.S. at 125). In order to determine whether a due-process violation has occurred,
we must first ask whether the plaintiffs-appellees were deprived of a constitutionally protected
property right; if they were, we must then ask if the process provided was constitutionally
adequate. Ibid.
In procedural-due-process cases, however, there is also a preliminary inquiry: Does the
state action involve the kind of individualized determination that triggers due-process protections
in the first place? The Supreme Court has made clear that “[t]he Constitution does not require all
public acts to be done in town meeting or an assembly of the whole . . . . [Individuals’] rights are
protected in the only way that they can be in a complex society, by their power, immediate or
remote, over those who make the rule.” Bi-Metallic Inv. Co. v. State Bd. of Equalization,
239 U.S. 441, 445 (1915). Only where “[a] relatively small number of persons [are] concerned,
who [are] exceptionally affected, in each case upon individual grounds” has the Supreme Court
held that a right to a hearing is due. Id. at 446. Here, the contested orders terminated and
replaced retiree health-care benefits for all retirees of Lincoln Park. These were not
individualized determinations about specific retirees, but rather broad determinations about
Lincoln Park retirees as a whole. As such, their procedural-due-process rights were not violated.
Because no due-process violation occurred, Treasurer Clinton does not even need to rely upon
qualified immunity to defeat the plaintiffs-appellees’ claim; it fails on the merits.
Even if we were to hold that the state action was sufficiently individualized to trigger
further due-process inquiry, the plaintiffs-appellees’ claim still fails. Our case law makes clear
that a claim for a due-process violation does not lie where the thrust of the plaintiffs’ argument is
simply breach of contract. “This court has held that ‘a state breach of contract action may . . .
provide an adequate remedy for some deprivations of a contractually created property interest.’”
Taylor Acquisitions, L.L.C. v. City of Taylor, 313 F. App’x 826, 831 (6th Cir. 2009) (quoting
Ramsey v. Bd. of Educ., 844 F.2d 1268, 1273 (6th Cir. 1988)). Because a due-process claim is
predicated on the deprivation of a constitutionally protected interest without due process of law,
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 12
the availability of a state breach-of-contract remedy defeats the due-process claim. As the
Ramsey court explained, “it is neither workable nor within the intent of [§] 1983 to convert every
breach of contract claim against a state into a federal claim.” Ramsey, 844 F.2d at 1273
(citations omitted). Consequently, “[a] state breach of contract action is most clearly an adequate
remedy for a property deprivation when the only basis for federal jurisdiction is that a state actor
is one of the contracting parties.” Ibid.
Here, the plaintiffs-appellees’ claimed property right derives from contract—specifically,
the disputed collective-bargaining agreements. Coulter’s orders terminating and replacing “the
sections of all Collective Bargaining Agreements with the City . . . regarding retiree health care
and Medicare Part B reimbursement” are in direct violation of those agreements. The plaintiffs-
appellees do not attempt to explain why a state breach-of-contract claim against the City of
Lincoln Park is insufficient to safeguard their contractual property rights. As “the only
difference between this case and any other garden-variety breach of contract case is that the City
happened to be one of the contracting parties,” the plaintiffs-appellees have not made out a
viable due-process claim. Taylor Acquisitions, L.L.C., 313 F. App’x at 832. Because their claim
fails on the merits, there is no need to reach the issue of immunity.
V
Finally, the plaintiffs-appellees raise a Takings Clause claim. The Takings Clause and
the Due Process Clause both “stand directly in opposition to state action intended to deprive
people of their legally protected property interests.” Hudson v. Palmer, 468 U.S. 517, 539
(1984) (O’Connor, J., concurring). Just as with the Due Process Clause, “a mere allegation of
property deprivation does not by itself state a constitutional claim.” Ibid. Rather, “in
challenging a property deprivation, the claimant must either avail himself of the remedies
guaranteed by state law or prove that the available remedies are inadequate.” Ibid. (citation
omitted).
Here, the plaintiffs-appellees’ claimed property right can be vindicated through a suit in
contract upon the disputed collective-bargaining agreements. Because the state contract action
“is available as a remedy for any uncompensated taking” suffered by the plaintiffs-appellees,
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 13
their “challenges to the constitutionality of [Coulter’s orders] are not ripe for our resolution.”
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1019 (1984). Therefore, the plaintiffs-appellees’
Takings Clause claim fails for the same reason as their due-process claim: the availability of a
remedy in state contract law. As their claim fails on the merits, there is no need to evaluate the
appellants’ alleged immunity defenses.
VI
The plaintiffs-appellees present an undoubtedly sympathetic plight. They lost health-care
benefits that they believed to be secure because of the long-term financial mismanagement of
Lincoln Park, a factor which was largely out of their control. In seeking a legal remedy,
however, they bring the wrong kind of suit against the wrong parties. The proper recourse for
the plaintiffs-appellees is a suit against the City of Lincoln Park alleging a violation of the
collective-bargaining agreements, not a suit against current and former state treasurers alleging
violations of protected constitutional rights. Therefore, we REVERSE the decision of the district
court and DISMISS the plaintiffs’ case against the defendants-appellants.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 14
_________________
DISSENT
_________________
KAREN NELSON MOORE, Circuit Judge, dissenting. The majority today holds that a
violation of the Contracts Clause of the United States Constitution cannot give rise to a cause of
action under 42 U.S.C. § 1983.1 Because I find the majority’s conclusion in conflict with the
precedent of both the Supreme Court and our Circuit, and because the majority’s new rule runs
afoul of the Supreme Court’s directive that § 1983 be broadly construed, I respectfully dissent.
I.
Section 1983 of Title 42 of the United States Code “provides a civil cause of action for
individuals who are deprived of any rights, privileges, or immunities secured by the Constitution
or federal laws by those acting under color of state law.” Smith v. City of Salem, 378 F.3d 566,
576 (6th Cir. 2004). “The purpose of § 1983 is to deter state actors from using the badge of their
authority to deprive individuals of their federally guaranteed rights and to provide relief to
victims if such deterrence fails.” Wyatt v. Cole, 504 U.S. 158, 161 (1992). The Supreme Court,
relying on congressional intent, has instructed lower courts that § 1983 is to be “liberally
construed.” See Schultz v. Wellman, 717 F.2d 301, 305 n.10 (6th Cir. 1983) (quoting Lake
Country Estates v. Tahoe Regional Planning Agency, 440 U.S. 391, 400 (1979)).
The majority begins its incursion on § 1983 by stating that “the Supreme Court has never
definitively held that an alleged Contracts Clause violation is cognizable as a § 1983 claim. On
the contrary, the only on-point Supreme Court decision suggests that the Contracts Clause does
not protect an individual constitutional right enforceable under § 1983.” Maj. Op. at 9. In
Carter v. Greenhow, 114 U.S. 317 (1885), the Supreme Court addressed whether a Virginia
plaintiff could pay his property taxes using coupons cut from bonds that were issued by the
Commonwealth of Virginia. The plaintiff in Carter had received a certain number of coupons
1
Though this case was fully briefed and we heard oral argument, the majority concedes that this issue was
“not briefed by either of the parties.” Maj. Op. at 7. I am deeply troubled by the majority’s decision to issue such a
sweeping and consequential ruling when neither party has been heard on the issue.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 15
from the Commonwealth that he believed he could use to pay the taxes on his property. After
the Commonwealth changed its laws regarding accepting coupons for property-tax payments,
Carter’s coupons were rejected by the treasurer in Richmond, Virginia. Carter’s lawsuit was
brought under the precursor statute to § 1983, which provided relief for persons “subjected by
the defendant, under color of a statute of a State, to the deprivation of a right, privilege or
immunity secured by the Constitution.” Id. at 321. The Supreme Court concluded that Carter’s
lawsuit may have implicated the Contracts Clause but that he failed to plead that it did, and in
any event, his right to pay his taxes with coupons rather than money was not a right “directly
secured to him by the Constitution.” Id. at 322. Importantly, Carter never pleaded expressly a
violation of the Contracts Clause, and the Court held only that “the declaration now before us
does not show a cause of action within its terms.” Id. at 323.
I disagree with the Majority’s assertion that “[i]f we apply Carter’s logic to the
‘substantially identical’ language contained in § 1983, it would seem to bar a potential plaintiff
from raising a cognizable § 1983 claim based upon a Contracts Clause violation.” Maj. Op. at 9.
The Carter Court did not opine on whether a Contracts Clause violation could give rise to a suit
under the § 1983 precursor statute; it concluded, citing “the declaration now before us,” that a
complaint that failed even to allege a violation of the Contracts Clause could not give rise to such
a cause of action. Carter, 114 U.S. at 323. Further, the Court instructed that “[i]t might be
difficult to enumerate the several descriptions of rights secured to individuals by the
Constitution, the deprivation of which, by any person, would subject the latter to an action for
redress” under the precursor statute to § 1983. Id. It simply does not follow from a faithful
reading of Carter that the Court intended so severely to restrict, as the majority does today, the
force of what would eventually become § 1983.
The majority concedes that Carter may not retain “much precedential force.” Maj. Op. at
9. In Dennis v. Higgins, 498 U.S. 439, 440 (1991), the Supreme Court held that an alleged
violation of the Commerce Clause could give rise to a cause of action under § 1983. The dissent
in Dennis argued, as the majority today holds, that after Carter, “the Commerce Clause does not
secure any rights, privileges, or immunities within the meaning of § 1983.” Id. at 451 n.9. The
Dennis majority rejected the dissent’s reliance on Carter because Carter “held as a matter of
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 16
pleading that the particular cause of action set up in the plaintiff’s pleading was in contract and
was not to redress deprivation of the ‘right secured to him by that clause of the Constitution [the
contract clause], to which he had ‘chosen not to resort.’” Id. (quoting Chapman v. Houston
Welfare Rights Organization, 441 U.S. 600, 613 n.29 (1979)). The Court majority in Dennis
admonished that “This Court . . . has already given [Carter] a narrow reading.” Id. I therefore
cannot accept the majority’s invitation to give Carter its broadest possible interpretation, and to
ignore the Supreme Court’s directive to construe § 1983 liberally.
II.
The majority is correct that two of our sister circuits have addressed whether an alleged
violation of the Contracts Clause can give rise to a cause of action under § 1983. See S. Cal. Gas
Co. v. City of Santa Ana, 336 F.3d 885, 887 (9th Cir. 2003) (concluding that a violation of the
Contracts Clause can give rise to a cause of action under § 1983); Crosby v. City of Gastonia,
635 F.3d 634, 641 (4th Cir. 2011) (concluding that an action alleging state impairment of a
private contract cannot give rise to a § 1983 cause of action). The Ninth Circuit relied heavily on
the Dennis Court’s statement that § 1983 shall be “liberally and beneficently construed,” and on
the Supreme Court’s noting that Carter was dismissed because of a pleading deficiency and must
therefore be read narrowly. S. Cal. Gas Co., 336 F.3d at 887. The Fourth Circuit addressed
Dennis, but concluded that the “narrow reading” language meant only that Carter dealt with the
Contracts Clause and could not be applied to rights secured by other federal laws. Crosby,
635 F.3d at 641. The Fourth Circuit did not support its strained reading of Dennis with a single
citation, and the majority’s opinion today provides no precedential support for that interpretation.
Moreover, a panel of this Circuit has implicitly held that a Contracts Clause violation can give
rise to a cause of action under § 1983. See Welch v. Brown, 551 F. App’x 804, 812 (6th Cir.
2014) (affirming a district court’s grant of a preliminary injunction because a Contracts Clause
claim brought under § 1983 had a likelihood of success on the merits).
I would therefore follow the Supreme Court’s direction to read Carter narrowly and to
construe § 1983 liberally, and I conclude that an alleged violation of the Contracts Clause can
give rise to a violation of § 1983. Accordingly, I would AFFIRM the judgment of the district
court on the Contracts Clause claim.
No. 16-1768 Kaminski, et al. v. Coulter, et al. Page 17
III.
I would reverse the district court’s judgment on the Due Process Clause and Takings
Clause claims only because I conclude that the complaint fails to allege with specificity facts that
can state a claim for relief against these Defendants under either clause.